<PAGE>

     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------

                                   FORM 20-F

<Table>
<S>       <C>
[ ]       REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF
          THE SECURITIES EXCHANGE ACT OF 1934
                                       OR
[X]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934
          FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
                                       OR
[ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934
          FOR THE TRANSITION PERIOD FROM                TO
</Table>

                    COMMISSION FILE NUMBER:

                            VIVENDI UNIVERSAL, S.A.
             (Exact name of Registrant as specified in its charter)

<Table>
<S>                                                    <C>
                        N/A                                             REPUBLIC OF FRANCE
  (Translation of Registrant's name into English)        (Jurisdiction of incorporation or organization)
</Table>

                            42, AVENUE DE FRIEDLAND
                              75380 PARIS CEDEX 08
                                     FRANCE
                    (Address of principal executive offices)

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

<Table>
<Caption>
                                                               NAME OF EACH EXCHANGE
                    TITLE OF EACH CLASS                         ON WHICH REGISTERED
                    -------------------                        ---------------------
<S>                                                           <C>
Ordinary Shares, nominal value E 5.50 per share               New York Stock Exchange*
American Depositary Shares (as evidenced by American
  Depositary Receipts), each representing one share, nominal
  value E 5.50 per share                                      New York Stock Exchange
</Table>

---------------
* Listed, not for trading or quotation purposes, but only in connection with the
  registration of American Depositary Shares, pursuant to the requirements of
  the Securities and Exchange Commission.

                             ---------------------

   SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE
                                   ACT:  NONE

 SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(d)
                               OF THE ACT:  NONE

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report:

<Table>
<S>                                                            <C>
American Depositary Shares..................................      92,029,885
Ordinary Shares, nominal value E 5.50 per share.............   1,068,558,994
</Table>

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.

<Table>
<C>                             <S>
      Yes [X]                   No [ ]
</Table>

Indicate by check mark which financial statement item the Registrant has elected
to follow:

<Table>
<C>                             <S>
  Item 17 [ ]                   Item 18 [X]
</Table>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                          PRESENTATION OF INFORMATION

     This Annual Report on Form 20-F (referred to herein as this "annual report"
or this "document") has been filed with the United States Securities and
Exchange Commission (SEC).

     "Vivendi Universal" refers to Vivendi Universal, S.A., a societe anonyme, a
form of limited liability company, organized under the laws of the Republic of
France, and its direct and indirect subsidiaries. "Vivendi" refers to Vivendi,
S.A., the predecessor company to Vivendi Universal. Unless the context requires
otherwise, references to "we," "us" and "our" mean Vivendi Universal, S.A. and
its subsidiaries or its predecessor company and its subsidiaries. "Vivendi
Universal Entertainment" and "VUE" refer to Vivendi Universal Entertainment
LLLP, a limited liability limited partnership organized under the laws of the
State of Delaware. "Vivendi Environnement" changed its name pursuant to a
shareholder resolution adopted on April 30, 2003 to "Veolia Environnement."
"Shares" refers to the ordinary shares of Vivendi Universal. The principal
trading market for the ordinary shares of Vivendi Universal is EuroNext Paris
S.A., or the Paris Bourse. "ADS" or "ADR" refers to the American Depositary
Shares or Receipts, respectively, of Vivendi Universal which are listed on the
New York Stock Exchange, or NYSE, each of which represents the right to receive
one Vivendi Universal ordinary share.

     This annual report includes Vivendi Universal's Consolidated Financial
Statements for the years ended December 31, 2002, 2001 and 2000 and as of
December 31, 2002 and 2001. Vivendi Universal's Consolidated Financial
Statements, including the notes thereto, are included in "Item 18--Financial
Statements" and have been prepared in accordance with generally accepted
accounting principles in France, which we refer to in this annual report as
"French GAAP." Unless otherwise noted, the financial information contained in
this annual report is presented in accordance with French GAAP. French GAAP is
based on requirements set forth in French law and in European regulations and
differs significantly from generally accepted accounting principles in the
United States, which we refer to in this annual report as "US GAAP." See Note 17
to our Consolidated Financial Statements for a description of the significant
differences between French GAAP and US GAAP, a reconciliation of net income,
shareholders' equity and other measures from French GAAP to US GAAP and
condensed consolidated US GAAP balance sheets and statements of income.

     Various amounts in this document are shown in millions for presentation
purposes. Such amounts have been rounded and, accordingly, may not total.
Rounding differences may also exist for percentages.

                              CURRENCY TRANSLATION

     Under the provisions of the Treaty on European Union negotiated at
Maastricht in 1991 and signed by the then 12 member states of the European Union
in early 1992, a European Monetary Union, known as the EMU, was implemented on
January 1, 1999 and a single European currency, known as the euro, was
introduced. The following 12 member states participate in the EMU and have
adopted the euro as their national currency: Austria, Belgium, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal and
Spain. The legal rate of conversion between the French franc and the euro (Euro,
euro or E) was fixed on December 31, 1998 at E 1.00 = FF6.55957, and we have
translated French francs into euros at that rate.

     Share capital in Vivendi Universal is represented by ordinary shares with a
nominal value of E 5.50 per share. Our shares are denominated in euros. Because
we intend to pay cash dividends denominated in euros, exchange rate fluctuations
will affect the US dollar amounts that shareholders will receive on conversion
of dividends from euros to dollars.

     We publish our Consolidated Financial Statements in euros. Unless noted
otherwise, all amounts in this annual report are expressed in euros. The
currency of the United States will be referred to as "US dollars," "US$," "$" or
"dollars." For historical exchange rate information, refer to "Item 3--Key
Information--Exchange Rate Information." For a discussion of the impact of
foreign currency fluctuations on Vivendi Universal's financial condition and
results of operations, see "Item 5--Operating and Financial Review and
Prospects."

                                        i
<PAGE>

                           FORWARD-LOOKING STATEMENTS

     This annual report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, or the Securities Act, and Section
21E of the Securities Exchange Act of 1934, or Exchange Act. Forward-looking
statements include statements concerning our plans, objectives, goals,
strategies, future events, future revenues or performance, capital expenditures,
financing needs, plans or intentions relating to dispositions, acquisitions,
working capital and capital requirements, available liquidity, maturity of debt
obligations, business trends and other information that is not historical
information. Forward-looking statements can be identified by context. For
example, when we use the words such as "estimate(s)," "aim(s)," "expect(s),"
"feel(s)," "will," "may," "believe(s)," "anticipate(s)" and similar expressions
in this document, we are intending to identify those statements as
forward-looking. All forward-looking statements, including without limitation
the launching or prospective development of new business initiatives and
products, anticipated music or motion picture releases, Internet or theme park
projects, and anticipated cost savings from asset divestitures and synergies are
based upon our current expectations and various assumptions. Our expectations,
beliefs, assumptions and projections are expressed in good faith, and we believe
there is a reasonable basis for them. There can be no assurance, however, that
managements' expectations, beliefs and projections will be achieved.

     There are a number of risks and uncertainties that could cause our actual
results to differ materially from our forward-looking statements. These include,
among others:

     - general economic and business conditions, particularly a general economic
       downturn;

     - industry trends;

     - increases in our leverage;

     - reduced liquidity;

     - the terms and conditions of our asset divestitures and the timing
       thereof;

     - changes in our ownership structure;

     - competition;

     - changes in our business strategy and development plans;

     - challenges to, or losses or infringement of, our intellectual property
       rights;

     - changes in customer preference;

     - technological advancements;

     - political conditions;

     - financial and equity markets;

     - foreign currency exchange rate fluctuations;

     - legal and regulatory requirements and the outcome of legal proceedings
       and pending investigations;

     - environmental liabilities;

     - natural disasters; and

     - war or acts of terrorism.

     The foregoing list is not exhaustive and there are other factors that may
cause actual results to differ materially from the forward-looking statements.
We urge you to review and consider carefully the various disclosures we make
concerning the factors that may affect our business, including the disclosures
made in "Item 3--Key Information--Risk Factors," "Item 5--Operating and
Financial Review and Prospects," and "Item 11--Quantitative and Qualitative
Disclosures About Market Risk." All forward-forward looking statements
attributable to us or persons acting on our behalf apply only as of the date of
this document and are

                                        ii
<PAGE>

expressly qualified in their entirety by the cautionary statements included in
this document. We undertake no obligation to publish revised forward-looking
statements to reflect events or circumstances after the date of this document or
to reflect the occurrence of unanticipated events.

                                EXPLANATORY NOTE

     Unless otherwise indicated, all references to our competitive positions
made in this document are in terms of revenue generated.

          ENFORCEABILITY OF CIVIL LIABILITIES AGAINST FOREIGN PERSONS

     Vivendi Universal is a corporation organized under the laws of the Republic
of France. Many of Vivendi Universal's directors and officers are citizens or
residents of countries other than the United States. Substantial portions of
Vivendi Universal's assets are located outside the United States. Accordingly,
it may be difficult for investors:

     - to obtain jurisdiction over Vivendi Universal or its directors or
       officers in courts in the United States in actions predicated on the
       civil liability provisions of the US federal securities laws;

     - to enforce against Vivendi Universal or its directors or officers
       judgments obtained in such actions;

     - to obtain judgments against Vivendi Universal or its directors or
       officers in original actions in non-US courts predicated solely upon the
       US federal securities laws; or

     - to enforce against Vivendi Universal or its directors or officers in
       non-US courts judgments of courts in the United States predicated upon
       the civil liability provisions of the US federal securities laws.

     Actions brought in France for enforcement of judgments of US courts
rendered against French persons, including directors and officers of Vivendi
Universal, would require those persons to waive their right to be sued in France
under Article 15 of the French Civil Code. In addition, actions in the United
States under the US federal securities laws could be affected under certain
circumstances by the French law of July 16, 1980, which may preclude or restrict
the obtaining of evidence in France or from French persons in connection with
those actions.

                                       iii
<PAGE>

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                                        PAGE
                                                                        ----
<S>       <C>                                                           <C>
Item 1:   Identity of Directors, Senior Management and Advisers.......    1
Item 2:   Offer Statistics and Expected Timetable.....................    1
Item 3:   Key Information.............................................    1
Item 4:   Information on the Company..................................   13
Item 5:   Operating and Financial Review and Prospects................   68
Item 6:   Directors, Senior Management and Employees..................  109
Item 7:   Major Shareholders and Related Party Transactions...........  126
Item 8:   Financial Information.......................................  127
Item 9:   The Offer and Listing.......................................  132
Item 10:  Additional Information......................................  134
          Quantitative and Qualitative Disclosures About Market
Item 11:  Risk........................................................  150
Item 12:  Description of Securities Other than Equity Securities......  153
Item 13:  Default, Dividend Arrearages and Delinquencies..............  153
Item 14:  Material Modifications to the Rights of Security Holders....  153
Item 15:  Controls and Procedures.....................................  153
Item 16:  [Reserved]..................................................  154
Item 17:  Financial Statements........................................  154
Item 18:  Financial Statements........................................  154
Item 19:  Exhibits....................................................  154
</Table>
<PAGE>

ITEM 1:  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

     Not applicable.

ITEM 2:  OFFER STATISTICS AND EXPECTED TIMETABLE

     Not applicable.

ITEM 3:  KEY INFORMATION

  SELECTED FINANCIAL DATA

     The selected consolidated financial data at year end and for each of the
years in the three-year period ended December 31, 2002 has been derived from our
Consolidated Financial Statements and the related notes appearing elsewhere in
this annual report. The selected consolidated financial data at year end and for
each of the years in the two-year period ended December 31, 1999 has been
derived from our Consolidated Financial Statements not included in this annual
report. You should read this section together with "Item 5--Operating and
Financial Review and Prospects" and our Consolidated Financial Statements
included in this annual report.

     Our Consolidated Financial Statements have been prepared in accordance with
French GAAP, which differs in certain significant respects from US GAAP. The
principal differences between French GAAP and US GAAP, as they relate to us, are
described in Note 17 to our Consolidated Financial Statements. For a discussion
of significant transactions and accounting changes that affect the comparability
of our Consolidated Financial Statements and the financial data presented below,
refer to "Item 5--Operating and Financial Review and Prospects" and the notes to
our Consolidated Financial Statements.

     Our Consolidated Financial Statements and the selected financial data
presented below are reported in euros. For periods presented prior to January 1,
1999, our financial statements are reported in French francs and translated into
euros using the official fixed exchange rate of E 1.00 = FF6.55957, applicable
since December 31, 1998.

<Table>
<Caption>
                                                                    YEAR ENDED DECEMBER 31,
                                          ----------------------------------------------------------------------------
                                          2002(1)   2002(3)    2001     2000(4)    2000     1999(5)    1999      1998
                                          -------   -------   -------   -------   -------   -------   -------   ------
                                                         (MILLIONS OF EUROS, EXCEPT PER SHARE AMOUNTS)
<S>                                       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
INCOME STATEMENT
Amounts in accordance with French GAAP
  Revenue...............................   28,112    58,150    57,360    41,580    41,798    40,855    41,623   31,737
  Revenue outside France................   16,405    31,759    33,075    20,647    20,624    17,244    17,829   10,313
  Operating income......................    1,877     3,788     3,795     1,823     2,571     1,836     2,281    1,331
  Exceptional items, net................    1,125     1,049     2,365     3,812     2,947      (846)     (838)     249
  Goodwill amortization.................   19,434    19,719    15,203       634       634       606       612      210
  Minority interest.....................      574       844       594       625       625      (159)        5      212
  Net income (loss).....................  (23,301)  (23,301)  (13,597)    2,299     2,299     1,435     1,431    1,121
  Basic earnings (loss) per share.......   (21.43)   (21.43)   (13.53)     3.63      3.63      2.70      2.70     2.46
  Diluted earnings (loss) per share.....   (21.43)   (21.43)   (13.53)     3.41      3.41      2.49      2.49     2.40
  Dividends per share...................      1.0       1.0       1.0       1.0       1.0       1.0       1.0      0.9
  Average shares outstanding
    (millions)(7).......................  1,087.4   1,087.4   1,004.8     633.8     633.8     530.5     530.5    456.6
  Shares outstanding at year-end
    (millions)..........................  1,068.6   1,068.6   1,085.8   1,080.8   1,080.8     595.6     595.6    478.4
Amounts in accordance with US GAAP(2)
  Revenue...............................       --    40,062    51,733    34,276    34,276    36,543    36,543       --
  Net income............................       --   (44,447)   (1,172)    1,908     1,908       246       246      565
  Basic earnings per share..............       --    (40.89)    (1.19)     3.24      3.24      0.48      0.48     1.29
  Diluted earnings per share............       --    (40.89)    (1.19)     3.03      3.03      0.48      0.48     1.25
</Table>

                                        1
<PAGE>

<Table>
<Caption>
                                                                    YEAR ENDED DECEMBER 31,
                                          ----------------------------------------------------------------------------
                                          2002(1)   2002(3)    2001     2000(4)    2000     1999(5)    1999      1998
                                          -------   -------   -------   -------   -------   -------   -------   ------
                                                         (MILLIONS OF EUROS, EXCEPT PER SHARE AMOUNTS)
<S>                                       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
FINANCIAL POSITION
Amounts in accordance with French GAAP
  Shareholders' equity..................       --    14,020    36,748    56,675    56,675    10,777    10,892    7,840
  Minority interest.....................       --     5,497    10,208     9,787     9,787     3,755     4,052    2,423
  Net financial debt(6).................       --    10,753    28,879    25,514    25,514    22,833    22,833    6,502
  Total assets..........................       --    69,333   139,002   150,738   150,738    84,614    82,777   48,982
  Total long-term assets................       --    48,495    99,074   112,580   112,580    47,916    45,341   26,073
Amounts in accordance with US GAAP
  Shareholders' equity..................       --    11,065    54,268    64,729    64,729    16,954    16,954   10,265
  Total assets..........................       --    69,200   151,139   151,818   151,818    74,497    74,497       --
CASH FLOW DATA
Amounts in accordance with French GAAP
  Net cash provided by operating
    activities..........................    2,795     4,670     4,500     2,514     2,514       772     1,409    2,898
  Net cash provided by (used for)
    investing activities................    4,109       405     4,340    (1,481)   (1,481)  (12,918)  (13,556)  (2,926)
  Net cash (used for) provided by
    financing activities................   (2,461)   (3,792)   (7,469)     (631)     (631)   13,746    13,746      223
  Capital expenditures..................    1,729     4,134     5,338     5,800     5,800     6,154     6,792    4,478
</Table>

---------------

(1) This French GAAP consolidated statement of income and cash flow data has
    been shown to present our scope of consolidation as of December 31, 2002. It
    illustrates the accounting of Veolia Environnement using the equity method
    from January 1, 2002, instead of December 31, 2002. See Note 2 to our
    Consolidated Financial Statements.

(2) 2002 amounts under US GAAP reflect the use of the equity method of
    accounting for our investment in Veolia Environnement beginning July 1,
    2002, which represents a significant difference in revenues and the
    presentation of cash flows in the French GAAP financial statements.

(3) On December 31, 2002, Vivendi Universal applied the option proposed in the
    paragraph 23100 of the French rules 99-02 and presents the equity in
    (losses) earnings of businesses which were sold during the year on one line
    in the consolidated statement of income as "equity in (losses) earnings of
    disposed businesses." Divested businesses include all of the Vivendi
    Universal Publishing activities excluding: Vivendi Universal Games;
    publishing activities in Brazil; the consumer press division, the
    divestiture of which was completed in February 2003; and Comareg, the
    divestiture of which was completed in May 2003. See Notes 2 and 3 to our
    Consolidated Financial Statements.

(4) Restated to give effect to changes in accounting policies adopted in 2001
    (see Note 1 to our Consolidated Financial Statements).

(5) In order to facilitate the comparability of 2000 and 1999 consolidated
    financial results, the 1999 consolidated results are presented in accordance
    with accounting policies in effect in 2000.

(6) Net financial debt is defined as the sum of long-term debt, bank overdrafts
    and other short-term borrowings, cash and cash equivalents, other marketable
    securities and financial receivables. The first four components are separate
    line items in the Consolidated Balance Sheet. Financial receivables are
    comprised of short-term loans receivable (also a separate line item in the
    Consolidated Balance Sheet) and net interest-bearing long-term loans
    receivable (included in other investments in the Consolidated Balance
    Sheet). Net interest-bearing long-term loans receivable were E 855 million
    and E 1,455 million, respectively, at December 31, 2002 and December 31,
    2001.

(7) Excluding treasury shares recorded as a reduction of shareholders' equity.

                                        2
<PAGE>

EXCHANGE RATE INFORMATION

     The following table sets forth, for the periods indicated, the
end-of-period, average, high and low noon buying rates in the City of New York
for cable transfers as certified for customs purposes by the Federal Reserve
Bank of New York. Unless otherwise indicated, such rates are set forth as US
dollars per euro. On June 25, 2003, the noon buying rate was E 1.00 = $1.16.

<Table>
<Caption>
                                                          PERIOD   AVERAGE
MONTH ENDED                                                END     RATE(1)   HIGH   LOW
-----------                                               ------   -------   ----   ----
<S>                                                       <C>      <C>       <C>    <C>
May 31, 2003............................................   1.18     1.16     1.19   1.12
April 30, 2003..........................................   1.12     1.09     1.12   1.06
March 31, 2003..........................................   1.09     1.08     1.11   1.05
February 28, 2003.......................................   1.08     1.08     1.09   1.07
January 31, 2003........................................   1.07     1.06     1.09   1.04
December 2002...........................................   1.05     1.02     1.05   0.99
</Table>

<Table>
<Caption>
                                                          PERIOD   AVERAGE
YEAR ENDED                                                 END     RATE(2)   HIGH   LOW
----------                                                ------   -------   ----   ----
<S>                                                       <C>      <C>       <C>    <C>
December 31, 2002.......................................   0.95     1.06     1.17   0.95
December 31, 2001.......................................   0.89     0.89     0.95   0.84
December 31, 2000.......................................   0.94     0.92     1.03   0.83
December 31, 1999.......................................   1.00     1.06     1.17   1.00
December 31, 1998(3)....................................   5.59     5.90     6.21   5.38
</Table>

---------------

(1) The average of the exchange rates for all days during the applicable month.

(2) The average of the exchange rates on the last day of each month during the
    applicable year.

(3) The exchange rates for the year ended December 31, 1998, are set forth as
    French francs per US dollar and are based on the rates quoted by the Federal
    Reserve Bank of New York for French francs per $1.00.

DIVIDENDS

     The table below sets forth the total dividends paid per Vivendi Universal
ordinary share and Vivendi Universal American Depositary Share (ADS) from 1998
through 2002. The amounts shown exclude the avoir fiscal, a French tax credit
described under "Item 10--Additional Information--Taxation." We have
historically paid annual dividends in respect of our prior fiscal year. We have
rounded dividend amounts to the nearest cent.

<Table>
<Caption>
                                                              DIVIDEND PER    DIVIDEND PER
                                                             ORDINARY SHARE       ADS
                                                             --------------   ------------
                                                               (EUROS)(1)     (DOLLARS)(2)
<S>                                                          <C>              <C>
1998(3)....................................................       0.92            0.17
1999.......................................................       1.00            0.22
2000(4)....................................................       1.00            0.89
2001.......................................................       1.00            0.89
2002.......................................................       1.00            0.91
</Table>

---------------

(1) Until 1999 (i.e., until the dividend for the year ended December 31, 1998),
    we paid dividends in French francs. Amounts in French francs have been
    translated at the official fixed exchange rate of E 1.00 = FF6.55957.

(2) Translated solely for convenience into US dollars at the noon buying rates
    on the respective dividend payments date, or on the following business day
    if such date was not a business day in the US. The noon buying rate may
    differ from the rate that may be used by the depositary to convert euros to
    US dollars for the purpose of making payments to holders of ADSs.

                                        3
<PAGE>

(3) Restated for a 3-for-1 stock split which occurred on May 11, 1999.

(4) Prior to December 8, 2000, the date of the completion of the Vivendi S.A.,
    The Seagram Company Ltd. and Canal Plus S.A. merger transactions (described
    below under "Item 4--Information on the Company--History and Development of
    the Company"), each Vivendi ADS represented one-fifth of a Vivendi ordinary
    share, while each Vivendi Universal ADS now represents one Vivendi Universal
    ordinary share.

RISK FACTORS

     You should carefully review the risk factors described below in addition to
the other information presented in this document.

WE AND OUR SUBSIDIARIES REQUIRE A SIGNIFICANT AMOUNT OF CASH TO SERVICE AND
REPAY OUR DEBT. OUR ABILITY TO GENERATE SUFFICIENT CASH DEPENDS ON MANY FACTORS
BEYOND OUR CONTROL.

     While our ability and the ability of our subsidiaries to fund working
capital for our operations, research and development and capital expenditures
depends on our future operating performance which cannot be predicted with
assurance, we believe that our current cash position plus our unused credit
facilities should provide a sound basis for funding these cash requirements.

     Despite the significant extension of the maturity profile of our debt
achieved through the refinancing plan that we have undertaken in 2003, we expect
that there will be a shortfall in the funding necessary to meet our debt-service
obligations. In addition, we face a significant number of contingent
obligations, some of which are likely to require significant cash payments by
us. We expect to meet these funding requirements with the proceeds from our
asset divestiture program described in "Item 4--History and Development of the
Company--Our Strategy." There can be no assurance, however, that asset
divestitures will be sufficient to make up the shortfall or that our cash needs
over the term of the divestiture program will not exceed our current estimates.

     If our future cash flows from operations, capital resources and from sales
of assets are insufficient to pay our obligations as they mature or to fund our
liquidity needs, we and our subsidiaries may be forced to:

     - reduce or delay our business activities, capital expenditures or research
       and development;

     - obtain additional debt or equity capital; or

     - restructure or refinance all or a portion of our debt on or before
       maturity.

     In particular, our subsidiaries Vivendi Universal Entertainment LLLP, or
VUE, and Societe d'Investissement pour la Telephonie S.A., or SIT, have
significant indebtedness and are relying on refinancing and operating cash flow
to service and repay that indebtedness.

     We cannot assure you that we and our subsidiaries would be able to
accomplish any of these alternatives on a timely basis or on satisfactory terms,
if at all. In addition, our existing debt and any future debt may limit our and
our subsidiaries' ability to pursue any of these alternatives.

WE ARE SELLING A PORTION OF OUR ASSETS AND BUSINESSES TO MEET OUR DEBT
OBLIGATIONS AND DECREASE OUR LEVERAGE.

     To meet our debt obligations and decrease our leverage, we are in the
process of disposing of a portion of our assets and businesses. After new
management was appointed in July 2002, we announced a goal of E 16 billion in
asset divestitures by the end of 2004. In the second half of 2002, we sold
assets and businesses for aggregate consideration of approximately E 6.7
billion, including approximately E 0.4 billion in assumed debt. For 2003, we
have announced the goal of E 7 billion in asset sales and, through March 31,
2003, we have sold assets for aggregate consideration of approximately E .7
billion. We are currently also evaluating bids for the purchase of all or
portions of VUE and VU Games as well as a possible initial public offering of
the

                                        4
<PAGE>

equity of VUE. If we disposed of assets worth E 7 billion in 2003, we anticipate
our net debt would decrease by only a portion of that amount. See "Item
4--History and Development of the Company--Our Strategy."

     We can offer no assurances that we will be able to locate potential buyers
for our assets and businesses or will be able to consummate any sales to
potential buyers we do locate. For example, certain asset transfer restrictions
contained in the amended and restated limited liability limited partnership
agreement of VUE (the "Partnership Agreement") that certain of Vivendi
Universal's affiliates entered into in connection with Vivendi Universal's
acquisition of the entertainment assets of InterActiveCorp (formerly known as
USA Interactive and prior thereto as USA Networks, Inc.), or USAi, will require
us to obtain the consent of our partner for certain transactions. See "Item
4--History and Development of the Company--2002 Significant Transactions." Some
other factors that may make it difficult or impossible for us to sell our assets
or businesses are:

     - restrictive covenants in our current and future debt facilities;

     - shareholders agreements and minority interests;

     - ongoing litigation and investigations; and

     - the need to receive governmental approvals, including antitrust and
       regulatory approvals.

     Our divestitures may prove unsuccessful or may otherwise have a material
adverse effect on our ability to conduct business, our operations and our
financial condition. For example, we may not always be able to obtain the
optimal price for assets and businesses we are required or plan to sell or may
receive a price that is substantially lower than the price we paid for the
assets or businesses being disposed of. In addition, our continuing operations
may suffer as a result of losing synergies with the assets and businesses sold.
On December 23, 2002, we sold Houghton Mifflin and have received approximately
$1.3 billion in consideration therefor. We paid approximately $2.2 billion for
Houghton Mifflin in July 2001. On December 23, 2002, we sold our approximately
10% interest in Echostar for total consideration of approximately E 1.0 billion;
we had paid a total consideration of approximately E 1.7 billion for that
interest on January 22, 2002.

OUR SUBSTANTIAL DEBT COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION OR RESULTS
OF OPERATIONS AND PREVENT US FROM FULFILLING OUR OBLIGATIONS.

     We have a significant amount of debt. As of December 31, 2002, we had
E 19.6 billion of gross debt on a consolidated basis. See "Item 5--Operating and
Financial Review and Prospects -- Liquidity and Capital Resources" and our
Consolidated Financial Statements for further information about our substantial
debt.

     Our substantial debt and the covenants in our debt instruments could have
important consequences. For example, these instruments are causing us to dispose
of assets and businesses and they could:

     - require us to dedicate a substantial portion of our cash flows from
       operations to payments on our debt, which will reduce our funds available
       for working capital, capital expenditures, research and development and
       other general corporate purposes;

     - limit our flexibility in planning for, or reacting to, changes in
       distribution or marketing of our products, customer demands and
       competitive pressures in the industries we serve;

     - limit our ability to undertake acquisitions;

     - place us at a competitive disadvantage compared to our competitors that
       have less debt than we do;

     - restrict our use of proceeds from asset sales or new issuances of equity
       or debt or from new bank debt facilities;

     - increase our vulnerability, and reduce our flexibility to respond, to
       general and industry-specific adverse economic conditions; and

     - limit our ability to borrow additional funds and increase the cost of any
       such borrowing.

                                        5
<PAGE>

     We may incur substantial additional debt in the future. The terms of our
debt restrict but do not prohibit us from incurring additional debt. The
addition of further debt to our current debt levels could further increase the
leverage-related risks discussed herein.

OUR SALES OF ASSETS AND BUSINESSES HAVE RESULTED IN, AND WILL RESULT IN, THE
REMOVAL OF THE RESULTS OF THOSE BUSINESSES AND ASSETS FROM OUR FINANCIAL RESULTS
AND MAY INCREASE THE VOLATILITY OF OUR FINANCIAL RESULTS.

     Sales of our assets and businesses have caused, and will continue to cause,
our revenues and operating income to decrease and may cause our financial
results to become more volatile or may otherwise materially adversely affect us.
Since the beginning of 2002, we have disposed of businesses and assets that, if
we had held them, would have contributed significantly to our revenue and
operating income.

WE HAVE ENGAGED IN A SUBSTANTIAL NUMBER OF SIGNIFICANT ACQUISITION AND
DISPOSITION TRANSACTIONS IN RECENT YEARS, WHICH MAKES IT DIFFICULT TO COMPARE
OUR RESULTS FROM PERIOD TO PERIOD.

     We have engaged in a substantial number of significant acquisitions and
dispositions and other complex financial transactions in recent years, which
makes it difficult to analyze our results and to compare them from period to
period. In order to facilitate comparison of our results between recent periods,
we present financial information on a pro forma basis, both on a consolidated
basis and for our individual business segments, giving effect to these
transactions as if they had occurred on earlier dates. However, pro forma
financial information is not necessarily indicative of results that would have
been achieved had the transactions actually occurred on such earlier dates.
Moreover, we present pro forma information based on a number of assumptions. For
example, we present pro forma information consistent with French GAAP, as if the
transactions had occurred at the beginning of 2001. Given our asset divestiture
program, our results will continue to be difficult to compare from period to
period in the future.

WE HAVE BEEN, AND COULD BE, ADVERSELY AFFECTED BY A DOWNGRADE OF OUR DEBT
RATINGS BY RATING AGENCIES.

     In the second half of 2002, we experienced a number of debt rating
downgrades. Moody's cut Vivendi Universal's senior debt rating on July 1, 2002,
from Baa3 to Ba1, under review for possible further downgrade. Standard & Poor's
followed the next day with a one-notch downgrade in our credit rating to BBB-
with a negative outlook. On August 14, 2002, Moody's lowered the long term
senior unsecured debt rating of Vivendi Universal to B1 and assigned a Ba2
senior implied rating to the company under review for possible downgrade, and
Standard & Poor's downgraded the long term senior unsecured debt to B+ and
assigned a BB corporate credit rating to Vivendi Universal on credit watch with
negative implications. On October 30, 2002, Moody's downgraded Vivendi
Universal's senior implied rating to Ba3, leaving the senior unsecured ratings
unchanged at B1, under review for possible downgrade. These downgrades caused us
to lose, to a significant extent, access to the capital markets, and, most
importantly, to the commercial paper market, historically our main source of
funding for working capital needs, and they also triggered default and covenant
provisions under some of our debt facilities. While our current debt facilities
do not contain further rating triggers, additional downgrades by either Standard
& Poor's or Moody's could exacerbate our liquidity problems, increase our costs
of borrowing, result in our being unable to secure new financing and affect our
ability to make payments on outstanding debt instruments and to comply with
other existing obligations.

WE ARE A PARTY TO NUMEROUS LEGAL PROCEEDINGS AND INVESTIGATIONS THAT COULD HAVE
A NEGATIVE EFFECT ON US.

     We are party to lawsuits and investigations in France and in the United
States that could have a material adverse effect on us. In France, the
Commission des Operations de Bourse commenced in July 2002 an investigation
regarding certain of our financial statements. In the United States, Vivendi
Universal is party to a number of suits and investigations concerning
allegations challenging the accuracy of our financial statements and certain
public statements made by us describing our financial condition from late 2000
through 2002:

     - Vivendi Universal is named as a defendant in a consolidated securities
       class action filed in the United States District Court for the Southern
       District of New York.

                                        6
<PAGE>

     - Vivendi Universal is being investigated by the Office of the United
       States Attorney for the Southern District of New York, and by the SEC.

     - Vivendi Universal is named as a defendant in a suit filed by Liberty
       Media on March 28, 2003, which on May 13, 2003, was consolidated for
       pre-trial purposes into the securities class action pending in the United
       States District Court for the Southern District of New York.

     In addition, Vivendi Universal, USI Entertainment Inc. and VUE have been
sued by USAi and one of its affiliates for specific performance of what the
plaintiffs contend to be VUE's obligation to make certain tax payments. Vivendi
Universal may also be liable to pay, in accordance with an investment agreement
with Elektrim S.A., a substantial portion of any damages awarded against
Elektrim in two ongoing arbitrations to resolve disputes concerning the
acquisition and transfer of certain shares in a subsidiary company by Elektrim.

     In the opinion of Vivendi Universal, the plaintiffs' claims in the legal
proceedings lack merit, and Vivendi Universal intends to defend against such
claims vigorously. However, the outcome of any of these legal proceedings or
investigations or any additional proceedings or investigations that may be
initiated in the future could have a material adverse effect on us. For a more
complete discussion of our legal proceedings and investigations, see "Item
8--Litigation."

WE HAVE A NUMBER OF CONTINGENT LIABILITIES THAT COULD CAUSE US TO MAKE
SUBSTANTIAL PAYMENTS.

     We have a number of significant contingent liabilities. These liabilities
are generally described in "Item 5--Operating and Financial Review and
Prospects" and in Notes 11 and 17.4 to our Consolidated Financial Statements
included in this document. If we were forced to make a payment due to one or
more of these contingent liabilities, it could have an adverse effect on our
financial condition and our ability to make payments under our debt instruments.

OUR BUSINESS OPERATIONS IN SOME COUNTRIES ARE SUBJECT TO ADDITIONAL RISKS.

     We conduct business in markets around the world. The risks associated with
conducting business internationally, and in particular in some countries outside
of Western Europe, the US and Canada, can include, among other risks:

     - fluctuations in currency exchange rates (including the dollar/euro
       exchange rate) and currency devaluations;

     - restrictions on the repatriation of capital;

     - differences and unexpected changes in regulatory environment, including
       environmental, health and safety, local planning, zoning and labor laws,
       rules and regulations;

     - varying tax regimes which could adversely affect our results of
       operations or cash flows, including regulations relating to transfer
       pricing and withholding taxes on remittances and other payments by
       subsidiaries and joint ventures;

     - exposure to different legal standards and enforcement mechanisms and the
       associated cost of compliance therewith;

     - difficulties in attracting and retaining qualified management and
       employees or rationalizing our workforce;

     - tariffs, duties, export controls and other trade barriers;

     - longer accounts receivable payment cycles and difficulties in collecting
       accounts receivable;

     - limited legal protection and enforcement of intellectual property rights;

     - insufficient provisions for retirement obligations;

     - recessionary trends, inflation and instability of the financial markets;

                                        7
<PAGE>

     - higher interest rates; and

     - political instability and the possibility of wars and terrorist acts.

     We may not be able to insure or hedge against these risks and we may not be
able to ensure compliance with all of the applicable regulations without
incurring additional costs. Furthermore, financing may not be available in
countries with less than investment-grade sovereign credit ratings. As a result,
it may be difficult to create or maintain profit-making operations in developing
markets.

UNFAVORABLE CURRENCY EXCHANGE RATE FLUCTUATIONS COULD ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS.

     We have substantial assets, liabilities, revenues and costs denominated in
currencies other than euros. To prepare our Consolidated Financial Statements we
must translate those assets, liabilities, revenues and expenses into euros at
then-applicable exchange rates. Consequently, increases and decreases in the
value of the euro versus other currencies will affect the amount of these items
in our Consolidated Financial Statements, even if their value has not changed in
their original currency. These translations could result in significant changes
to our results of operations from period to period.

     In addition, to the extent that we incur expenses that are not denominated
in the same currency as the related revenues, exchange rate fluctuations could
cause our expenses to increase as a percentage of net sales, affecting our
profitability and cash flows.

WE MAY NOT BE ABLE TO MEET ANTICIPATED CAPITAL REQUIREMENTS FOR CERTAIN
TRANSACTIONS.

     We may engage in projects that require us to seek substantial amounts of
funds through various forms of financing. Our ability to arrange financing for
projects and our cost of capital depends on numerous factors, including general
economic and capital market conditions, availability of credit from banks and
other financial institutions, investor confidence in our businesses,
restrictions in debt instruments, success of current projects, perceived quality
of new projects and tax and securities laws. We may forego attractive business
opportunities and lose market share if we cannot secure financing on
satisfactory terms.

WE MAY SUFFER REDUCED PROFITS OR LOSSES AS A RESULT OF INTENSE COMPETITION.

     The majority of the industries in which we operate are highly competitive
and require substantial human and capital resources. Many other companies serve
the markets in which we compete. From time to time, our competitors may reduce
their prices in an effort to expand market share and introduce new technologies
or services, or improve the quality of their services. We may lose business if
we are unable to match the prices, technologies or service quality offered by
our competitors.

     In addition, most of our main businesses rely on some important third-party
content. There is no assurance that the desired rights to content will be
available on commercially reasonable terms, and as the markets in which our
businesses operate become more competitive, the cost of obtaining this
third-party content could increase. Any of these competitive effects could have
a material adverse effect on our business and financial performance.

WE MAY NOT BE SUCCESSFUL IN DEVELOPING NEW TECHNOLOGIES OR INTRODUCING NEW
PRODUCTS AND SERVICES.

     Many of the industries in which we operate are subject to rapid and
significant changes in technology and are characterized by the frequent
introduction of new products and services. Pursuit of necessary technological
advances may require substantial investments of time and resources and we may
not succeed in developing marketable technologies. Furthermore, we may not be
able to identify and develop new product and service opportunities in a timely
manner. Finally, technological advances may render our existing products
obsolete, forcing us to write off investments made in those products and
services and to make substantial new investments.

                                        8
<PAGE>

WE MAY HAVE DIFFICULTY ENFORCING OUR INTELLECTUAL PROPERTY RIGHTS.

     The decreasing cost of electronic and computer equipment and related
technology has made it easier to create unauthorized versions of audio and
audiovisual products such as compact discs, videotapes and DVDs. A substantial
portion of our revenue comes from the sale of audio and audiovisual products
that are potentially subject to unauthorized copying. Similarly, advances in
Internet technology have increasingly made it possible for computer users to
share audio and audiovisual information without the permission of the copyright
owners and without paying royalties to holders of applicable intellectual
property or other rights. A large portion of intellectual property is
potentially subject to widespread, uncompensated dissemination on the Internet.
If we fail to obtain appropriate relief through the judicial process or the
complete enforcement of judicial decisions issued in our favor, or if we fail to
develop effective means of protecting our intellectual property or
entertainment-related products and services, our results of operations and
financial position may suffer.

CHALLENGES TO OUR RIGHTS TO USE INTELLECTUAL PROPERTY COULD HAVE A NEGATIVE
EFFECT ON US.

     Many of our main businesses are heavily dependent on intellectual property
owned and licensed by us. Challenges by third parties claiming infringement of
their proprietary rights, if upheld, could result in the loss of intellectual
property which we depend on to generate revenues and could result in damages or
injunctive relief being imposed against us. Even challenges that we are
successful in defending may result in substantial costs and diversion of
resources, which could have an adverse effect on our operations.

WE MAY NOT BE ABLE TO RETAIN OR OBTAIN REQUIRED LICENSES, PERMITS, APPROVALS AND
CONSENTS.

     We need to retain or obtain a variety of permits and approvals from
regulatory authorities to conduct and expand each of our businesses. The process
for obtaining these permits and approvals is often lengthy, complex and
unpredictable. Moreover, the cost for renewing or obtaining permits and
approvals may be prohibitive. If we are unable to retain or obtain the permits
and approvals we need to conduct and expand our businesses at a reasonable cost
and in a timely manner -- in particular, licenses to provide telecommunications
services -- our ability to achieve our strategic objectives could be impaired.
The regulatory environment in which our businesses operate is complex and
subject to change, and adverse changes in that environment could impose costs on
us or limit our revenue.

THE LOSS OF KEY PERSONNEL COULD HURT OUR OPERATIONS.

     Our success and the success of our business units depends upon the
continuing contributions of our executive officers and other key operating
personnel. The complete or partial loss of their services could adversely affect
our businesses.

RESTRUCTURING AT OUR BUSINESS UNITS MAY ADVERSELY AFFECT OUR OPERATIONS AND
FINANCIAL CONDITION.

     In an effort to cut costs and rationalize operations, our business units
may engage in restructuring, including closures of facilities and reduction of
workforce. If a business unit fails to properly carry out any restructuring, the
relevant business's ability to conduct its operations and the business's results
could be adversely affected. Restructurings, closures and layoffs may also harm
our employee relationships, public relationships and governmental relationships
which would in turn adversely affect our operations and results. For example, in
March 2003, Canal+ Group announced an employee reduction as part of its overall
restructuring plan. The program calls for a reduction of 305 positions, mainly
administration and technical support personnel. In addition, 138 positions in
certain support functions will be outsourced. The announcement of this program
may result in a deterioration of our labor relations and may have an adverse
effect on our operations.

CEGETEL GROUP EXPECTS TO MAKE SIGNIFICANT INVESTMENTS IN NETWORKS AND NEW
TECHNOLOGY AND ANTICIPATED BENEFITS OF THESE INVESTMENTS MAY NOT BE REALIZED.

     Cegetel Group expects to make substantial investments in its mobile
networks, particularly in connection with the rollout of its UMTS mobile network
over the next several years in view of increased usage and the
                                        9
<PAGE>

need to offer new services and greater functionality afforded by UMTS
technology. Accordingly, the level of Cegetel Group's capital expenditures in
future years is expected to exceed current levels. The development of UMTS
technology is taking longer than anticipated. Consumer acceptance of UMTS or
other new technology may be less than expected and will depend on a number of
factors, including the availability of applications which exploit the potential
of the technology and the breadth and quality of available content. If the
introduction of UMTS services is further delayed or UMTS fails to achieve the
expected advantages over existing technologies, Cegetel Group may be unable to
recoup its network investment.

REGULATIONS REGARDING ELECTROMAGNETIC RADIATION OR FUTURE CLAIMS WITH RESPECT TO
ELECTROMAGNETIC RADIATION COULD HAVE AN ADVERSE EFFECT ON OUR MOBILE TELEPHONE
REVENUES AND OPERATIONS.

     The International Commission for Non-Ionizing Radiation Protection, an
independent organization that advises the World Health Organization, has
established a series of recommendations setting exposure limits from
electromagnetic radiation from antennas. These regulations were driven by
concern over a potential connection between electromagnetic radiation and
certain negative health effects, including some forms of cancer. They were
enacted into French law on May 3, 2002. SFR, an 80% owned subsidiary of Cegetel
Group, is also, along with the other French mobile telephony operators, in the
process of entering into agreements with various cities, including the city of
Paris, that will set up local guidelines. The International Cancer Research
Center, authorized by the World Health Organization, is currently conducting a
large-scale epidemiological study, the conclusions of which are expected to be
published in 2004. We cannot assure you that future regulations will not have a
negative impact on our revenues operations. We also cannot assure you that
claims, relating to electromagnetic radiation will not arise against us and our
mobile telephony operations in the future and have an adverse effect on our
revenues and operations. In addition, even the perception of possible health
risks, could lead to reduced demand for our mobile telephony services and have
an adverse effect on our revenues and operations.

OUR CONTENT ASSETS IN TELEVISION, MOTION PICTURES AND MUSIC MAY NOT BE
COMMERCIALLY SUCCESSFUL.

     A significant amount of our revenue comes from the production and
distribution of content offerings such as feature films, television series and
audio recordings. The success of content offerings depends primarily upon their
acceptance by the public, which is difficult to predict. The market for these
products is highly competitive and competing products are often released into
the marketplace at the same time. The commercial success of a motion picture,
television series or audio recording depends on the quality and acceptance of
competing offerings released into the marketplace at or near the same time, the
availability of alternative forms of entertainment and leisure time activities,
general economic conditions and other tangible and intangible factors, all of
which can change quickly. Our motion picture business is particularly dependent
on the success of a limited number of releases. Universal Picture Group, or UPG,
typically releases 14 to 16 motion pictures a year and the commercial failure of
just a few of these motion pictures can have a significant adverse impact on
UPG's results for both the year of release and the following year. This is
particularly true for motion pictures with high production costs, and in 2003,
UPG intends to release an unusually large number of high production cost motion
pictures. Our failure to produce and distribute motion pictures, television
series and audio recordings with broad consumer appeal could materially harm our
business, financial condition and prospects for growth.

THE RECORDED MUSIC MARKET HAS BEEN DECLINING AND MAY CONTINUE TO DECLINE.

     Economic recession, CD-R piracy and illegal downloading of music from the
Internet and growing competition for consumer discretionary spending and shelf
space are all contributing to a declining recorded music market. Additionally,
the period of growth in recorded music sales driven by the introduction and
penetration of the CD format has ended and no profitable new format has emerged
to take its place. Worldwide sales were down as the music market witnessed an
estimated market decline of 9.5% in 2002. Double-digit declines were experienced
in the US, Japan and Germany. Of the world's five major music markets only
France reported growth. There are no assurances that the recorded music market
will not

                                        10
<PAGE>

continue to decline. A declining recorded music market is likely to lead to the
loss of revenue and operating income at Universal Music Group, or UMG.

UMG HAS BEEN LOSING, AND IS LIKELY TO CONTINUE TO LOSE, SALES DUE TO
UNAUTHORIZED COPIES AND PIRACY.

     Technological advances and the conversion of music into digital formats
have made it easy to create, transmit and "share" high quality unauthorized
copies of music through pressed disc and CD-R piracy, home CD burning and the
downloading of music from the Internet. Unauthorized copies and piracy cost the
recorded music industry an estimated $4.3 billion in lost revenues during 2001,
the last year for which data is available, according to the International
Federation of the Phonographic Industry, or IFPI. IFPI estimates that 1.9
billion pirated units were manufactured in 2001, equivalent to about 40% of all
CDs and cassettes sold globally. According to IFPI estimates, about 28% of all
CDs sold in 2001 were pirated, up from about 20% in 2000. We believe that these
percentages are continuing to increase. Unauthorized copies and piracy both
decrease the volume of legitimate sales and put pressure on the price at which
legitimate sales can be made and have had, and, we believe, will continue to
have, an adverse effect on UMG.

OUR MOTION PICTURE BUSINESSES MAY LOSE SALES DUE TO UNAUTHORIZED COPIES AND
PIRACY.

     Technological advances and the conversion of motion pictures into digital
formats have made it easier to create, transmit and "share" high quality
unauthorized copies of motion pictures in theatrical release, on videotapes and
DVDs, from pay-per-view through unauthorized set top boxes and other devices and
through unlicensed broadcasts on free TV and the Internet. Unauthorized copies
and piracy of these products compete against legitimate sales of these products.
The motion picture business is dependent upon the enforcement of copyrights. A
failure to obtain appropriate relief from unauthorized copying through judicial
decisions and legislation and an inability to curtail piracy rampant in some
regions of the world are threats to the motion picture business and may have an
adverse effect on our motion picture business.

CHANGES IN ECONOMIC CONDITIONS COULD AFFECT THE REVENUE WE RECEIVE FROM
TELEVISION PROGRAMMING THAT WE PRODUCE AND FROM OUR TELEVISION CHANNELS.

     Our television production and distribution and cable networks are directly
and indirectly dependent on advertising for their revenue. Changes in US, global
or regional economic conditions may affect the advertising market for broadcast
and cable television programming, which in turn may affect the volume of, and
price for, the advertising on our cable networks and shows and the volume of,
and price for, the programming we are able to sell.

CONSOLIDATION AMONG CABLE AND SATELLITE DISTRIBUTORS MAY HARM OUR CABLE
TELEVISION NETWORKS.

     Cable and satellite operators continue to consolidate, making our cable
television networks increasingly dependent on fewer operators. If these
operators fail to carry our cable television networks or use their increased
bargaining power to negotiate less favorable terms of carriage, our cable
television network business could be adversely affected.

THE INCREASE IN THE NUMBER OF CABLE TELEVISION NETWORKS MAY ADVERSELY AFFECT OUR
CABLE TELEVISION NETWORKS.

     Our cable networks compete directly with other cable television networks as
well as with local and network broadcast channels for distribution, programming,
viewing audience and advertising revenue. Growth in distribution platforms has
led to the introduction of many new cable television networks. The increased
competition may make it more difficult to place our cable networks on satellite
and cable distribution networks, acquire attractive programming or attract
necessary audiences or suitable advertising revenue.

OUR TELEVISION PRODUCTION AND DISTRIBUTION BUSINESSES FACE INCREASED
COMPETITION.

     Our produced programs, including television series, made-for-television and
made-for-video motion pictures, compete in a worldwide television marketplace
that has become ever more competitive as digital
                                        11
<PAGE>

cable and satellite delivery increasingly expand the number of channels (and
competing programs) available to consumers. Competition in the critical US
production market has also been increased by the growing consolidation and
vertical integration of several large television and media giants. The 1995
repeal of the financial interest and syndication rules in the US has permitted
these conglomerates to combine ownership of television production businesses
with broadcast networks. As a result, the current US broadcast networks -- ABC,
CBS, NBC, Fox, The WB and UPN -- are able to fill their schedules with a large
percentage of self-owned programs, thus reducing the number of time slots
available to VUE's Universal Television Group and other "outside" producers. For
the fall 2002 season, the top five producers in total hours on network
television were all affiliated with a broadcast network. Approximately 40% of
Universal Television Group's revenues came from broadcast license program fees
in 2002. We can offer no assurances that we will be able to maintain or grow
these revenues in the face of increased competition.

NEW TECHNOLOGIES MAY HARM OUR CABLE TELEVISION NETWORKS.

     A number of new personal video recorders, such as TIVO in the United
States, have emerged in recent years. These recorders often contain features
allowing viewers to watch pre-recorded programs without advertising. The effect
of these recorders on viewing patterns and exposure to advertising could have an
adverse effect on our operations and results.

OUR THEME PARK AND RESORT GROUP MAY CONTINUE TO BE NEGATIVELY AFFECTED BY
INTERNATIONAL, POLITICAL AND MILITARY DEVELOPMENTS.

     The terrorist attacks of September 11, 2001, the threat and outbreak of war
and the threat of further terrorist attacks have resulted in significant
reductions in domestic and international travel that negatively affected our
theme park and resort activities. These developments have had a continued impact
on vacation travel, group conventions and tourism in general. Any further
outbreak or escalation of hostilities, any further terrorist attack, the
perceived threat of hostilities or terrorist attack or a change in public
perception regarding current developments would be likely to have an additional
negative impact on our operations.

CANAL+ GROUP IS SUBJECT TO FRENCH AND OTHER EUROPEAN CONTENT AND EXPENDITURE
PROVISIONS THAT RESTRICT ITS ABILITY TO CONDUCT ITS BUSINESS.

     Canal+ Group is regulated by various statutes, regulations and orders. In
particular, under its French broadcast authorization, the premium channel Canal+
is subject to the following regulations: (i) no more than 49% of its capital
stock may be held by a single shareholder and (ii) 60% of the films broadcast by
the channel must be European films and 40% must be French Language films. Each
year Canal+ must invest 20% of its total prior-year revenues in the acquisition
of film rights, including 9% which must be devoted to French language films and
3% to non-French language European films. At least 75% of the French movies must
not be acquired from Canal+ Group controlled companies. Canal+ has an obligation
to invest 4.5% of its revenues in original TV movies and dramas. Canal+ Group
also operates in Belgium, Spain, the Netherlands, Poland and the Nordic
countries pursuant to the regulations of each of these countries which generally
stipulate, as do the French, financing levels for European and national content.
These regulations severely limit Canal+ Group's ability to choose content and
otherwise manage its business and could have an adverse effect on its operations
and results.

ONE OF OUR TWO INDEPENDENT PUBLIC ACCOUNTANTS, BARBIER FRINAULT & CIE, WAS
FORMERLY A MEMBER OF ANDERSEN WORLDWIDE, AS WAS ARTHUR ANDERSEN LLP, WHICH HAS
BEEN FOUND GUILTY OF A FEDERAL OBSTRUCTION OF JUSTICE CHARGE, AND HOLDERS OF OUR
SECURITIES LIKELY WILL BE UNABLE TO EXERCISE EFFECTIVE REMEDIES AGAINST ANDERSEN
WORLDWIDE IN ANY LEGAL ACTION.

     One of our two independent public accountants, Barbier Frinault & Cie, was
formerly a member of Andersen Worldwide, as was Arthur Andersen LLP, and during
that period provided us with auditing services, including issuing an audit
report with respect to our audited consolidated financial statements for the
fiscal years ended December 30, 2001, and December 31, 2002. On June 15, 2002, a
jury in Houston, Texas found

                                        12
<PAGE>

Arthur Andersen LLP guilty of a federal obstruction of justice charge arising
from the federal government's investigation of Enron Corp. On August 31, 2002,
Arthur Andersen LLP ceased practicing before the SEC.

     Andersen Worldwide has not reissued its audit report with respect to our
audited consolidated financial statements prepared by it. Furthermore, Andersen
Worldwide has not consented to the inclusion of its audit report herein. As a
result, investors in our securities likely will not have an effective remedy
against Andersen Worldwide in connection with a material misstatement or
omission with respect to our audited consolidated financial statements, any
registration statement or any other filing we make with the SEC, including any
claim under Section 11 of the Securities Act with respect to such registration
statement. In addition, even if investors were able to assert such a claim, as a
result of its conviction and other lawsuits, Andersen Worldwide may not have
sufficient assets to satisfy claims made by investors or by us that might arise
under federal securities laws or otherwise relating to any alleged material
misstatement or omission with respect to our audited consolidated financial
statements.

ITEM 4:  INFORMATION ON THE COMPANY

HISTORY AND DEVELOPMENT OF THE COMPANY

     The commercial name of our company is Vivendi Universal, and the legal name
of our company is Vivendi Universal, S.A. Vivendi Universal is a societe
anonyme, a form of limited liability company, initially organized under the name
Sofiee, S.A. on December 11, 1987, for a term of 99 years in accordance with the
French commercial code. Our registered office is located at 42, avenue de
Friedland, 75380 Paris Cedex 08, France, and the telephone number of our
registered office is 33 1 71 71 1000. Our agent in the US is Vivendi Universal
US Holding Co., located at 800 Third Avenue, 5th Floor, New York, New York
10022. All matters addressed to our agent should be to the attention of the Vice
President.

     We were formed through the merger in December 2000 of Vivendi S.A., The
Seagram Company Ltd. and Canal+ S.A., with Vivendi Universal continuing as the
surviving parent entity, or the Merger Transactions. From our origins as a water
company, we expanded our business rapidly in the 1990s and transformed ourselves
into a media and telecommunications company with the December 2000 merger and
the May 2002 acquisition of the entertainment assets of InterActiveCorp
(formerly known as USA Interactive and prior thereto as USA Networks), or USAi.
Following the appointment of new management in July 2002, we commenced a
significant asset divestiture program aimed at reducing the group's
indebtedness, which we are pursuing actively. We have already largely exited the
environmental services and publishing businesses and sold various smaller
operations. See "Item 5--Operating and Financial Review and Prospects--Recent
Developments" and "--Our Strategy" below.

     We are one of the largest media and telecommunications groups in the world.
Our attractive portfolio of assets include, among others, the following
businesses: mobile and fixed-line telecommunications, recorded music, film,
television, theme parks and resorts and interactive entertainment and
educational software. See "--Business Overview."

  Our Strategy

     We are a company in transition. Our principal strategic focus is to return
to an investment grade credit profile by continuing to reduce our leverage while
maintaining sufficient liquidity.

     The primary means by which we intend to achieve this goal is through the
completion of our E 16 billion asset divestiture program by the end of 2004. In
the second half of 2002, we sold E 6.7 billion of assets. In 2003, we intend to
sell an additional E 7.0 billion of assets. We have initiated numerous asset
divestiture processes, and we are not dependent on any single asset sale to meet
our divestiture target. We have begun exploring strategic options that could
lead to the partial or total divestiture of VUE and VU Games. We have received
multiple, preliminary bids relating to one or more of these businesses and are
currently evaluating them. As of yet there is no pre-established structure or
calendar for any particular divestiture. In parallel, we are also exploring the
option of listing up to 25 to 30% of the share capital of VUE in an initial
public equity offering. In the first quarter of 2003, we have closed asset sales
for an aggregate consideration of

                                        13
<PAGE>

approximately E 726 million. From April 1, 2003 to June 25, 2003, we have signed
and closed asset sales for an estimated aggregate consideration of E 1.7
billion.

<Table>
<Caption>
                                                                             TOTAL         CASH
DATE                                    ASSET                            CONSIDERATION   RECEIVED
----                                    -----                            -------------   --------
                                                                              (IN MILLIONS)
<S>            <C>                                                       <C>             <C>
July 2002      B2B/Health.............................................      E   150      E   150
July 2002      Lagardere..............................................           44           44
July 2002      Vinci..................................................          291          291
August 2002    Vizzavi................................................          143          143
December 2002  Houghton Mifflin.......................................        1,567        1,195
December 2002  Other Publishing.......................................        1,138        1,121
December 2002  Veolia Environnement...................................        1,856        1,856
December 2002  Echostar...............................................        1,037        1,037
December 2002  Sithe Energies Inc.....................................          319          319
               Others.................................................          108          108
                                                                            -------      -------
               TOTAL 2ND HALF 2002(1).................................      E 6,653      E 6,264
                                                                            -------      -------
February 2003  Express-Expansion-Etudiant.............................      E   200      E   200
February 2003  Canal+ Technologies....................................          191          170(2)
February 2003  USAi Warrants..........................................          256          256
               Others.................................................           79           79
                                                                            -------      -------
               TOTAL 1ST QUARTER 2003(1)..............................      E   726      E   705
                                                                            -------      -------
               TOTAL 2ND HALF 2002 & 1ST QUARTER 2003(1)..............      E 7,379      E 6,969
                                                                            =======      =======
</Table>

---------------

(1) Actual numbers after deduction of divestiture fees and expenses

(2) Of which E 90 million of cash consideration was received in 2002 (excludes
    E 21 million received in May 2003)

<Table>
<Caption>
                                                                           TOTAL           CASH
DATE                                  ASSET                           CONSIDERATION(1)   RECEIVED
----                                  -----                           ----------------   --------
                                                                             (IN MILLIONS)
<S>            <C>                                                    <C>                <C>
April 2003     Telepiu.............................................       E   871        E   407(2)
May 2003       Vivendi Telecom Hungary.............................           325             10(3)
May 2003       Egypt (telecom).....................................            43             43
May 2003       Comareg.............................................           135            135
June 2003      Sithe Asia..........................................            40             40
June 2003      VUE: 10 Universal City Plaza........................           160            160
               Other closed transactions as of June 25, 2003.......           169            169(4)
                                                                          -------        -------
               TOTAL APRIL 1 -- JUNE 25, 2003......................       E 1,743        E   964
                                                                          =======        =======
</Table>

---------------

(1) Amounts subject to adjustment to reflect the deduction of divestiture fees
    and expenses, currency rate fluctuations and purchase price adjustments

(2) Does not include a remaining amount of E 50 million of consideration held in
    escrow that may be received

(3) Does not include a remaining amount of E 10 million of deferred purchase
    consideration that may be received

(4) Includes E39 million to be received by Vivendi Universal in the second half
    of 2003.

                                        14
<PAGE>

  2003 Significant Transactions

     For a discussion of significant transactions that have occurred in 2003,
see "Item 5--Operating and Financial Review and Prospects--Subsequent Events."

  2002 Significant Transactions

     Acquisition of the Entertainment Assets of USA Networks, Inc.

     On May 7, 2002, Vivendi Universal consummated its acquisition of the
entertainment assets of InterActiveCorp (formerly known as USA Interactive and
prior thereto as USA Networks, Inc.), or USAi, through the limited liability
limited partnership, Vivendi Universal Entertainment LLLP, or VUE, in which
Vivendi Universal has an approximately 93% voting interest and an approximately
86% economic interest. As part of the transaction, Vivendi Universal and its
affiliates surrendered 320.9 million shares of USANi LLC that were previously
exchangeable into shares of USAi stock. In addition, Vivendi Universal
transferred 27.6 million treasury shares to Liberty Media Corporation in
exchange for (i) 38.7 million USANi LLC shares (which were among the 320.9
million surrendered) and (ii) 25 million shares of USAi common stock, which were
retained by Vivendi Universal.

     As consideration for the transaction, USAi received a $1.62 billion cash
distribution from VUE, a 5.44% common interest in VUE and Class A and Class B
preferred interests in VUE with initial face values of $750 million and $1.75
billion, respectively. The Class B preferred interests are subject to put/call
provisions at any time following the 20-year anniversary of issuance (May 2022).
USAi may require Vivendi Universal to purchase the Class B preferred interests,
and Vivendi Universal may require USAi to sell to it the Class B preferred
interests, for a number of USAi shares having a market value equal to the
accreted face value of the Class B preferred interests at such time, subject to
a maximum of 56.6 million USAi shares. The parties also agreed to put and call
options on USAi's common interests. The call may be exercised by Vivendi
Universal at any time after the fifth anniversary of the transaction (May 2007)
and the put may be exercised by USAi at any time after the eighth anniversary of
the transaction (May 2010), in either case, at its fair market value, payable at
the option of Universal Studios in cash or Vivendi Universal listed common
equity securities.

     In addition, Mr. Diller, USAi's chairman and chief executive officer,
received a 1.5% common interest in VUE in return for agreeing to specific
non-competition provisions for a minimum of 18 months, for informally agreeing
to serve as VUE's chairman and chief executive officer and as consideration for
his agreement not to exercise his veto right over this transaction. At any time
after the first anniversary of the closing, Mr. Diller may require Universal to
purchase his common interest and, at any time after the second anniversary of
the closing, Universal may purchase Mr. Diller's common interest. In either
case, the purchase price will be equal to the greater of $275 million and the
private market value of his common interest, payable at the option of Universal
in cash or Vivendi Universal listed common equity securities. The fair value of
$275 million of Mr. Diller's common interest has been recorded as part of the
total purchase consideration at the acquisition date. As part of Vivendi
Universal's preliminary purchase price allocation, $15 million has been recorded
as the value of Mr. Diller's non-competition arrangement, which is being
amortized on a straight-line basis over a period of 18 months. The $275 million
minimum value of the common interest is accounted for by Vivendi Universal as a
minority interest in VUE. Any increases in fair value above the minimum put
price of the common interest and any subsequent decreases in fair value to the
minimum put price of the common interest are recognized in operations by Vivendi
Universal (for US GAAP purposes only).

     Under the VUE partnership agreement, VUE is subject to a number of
covenants for the benefit of the holder of the Class A Preferred Interests in
VUE (currently USAi), including a cap on indebtedness and a restriction on asset
transfers by VUE and its subsidiaries. Certain of the covenants, including those
specified above, would cease to apply if an irrevocable letter of credit were
issued in an amount equal to the accrued value of such interests at maturity
(approximately $2 billion in 2022).

     In addition, Vivendi Universal has agreed to indemnify USAi for any "tax
detriment" (defined to mean the present value of the loss of USAi's tax deferral
on the transaction) arising from certain actions taken by

                                        15
<PAGE>

VUE prior to May 7, 2017, including selling assets contributed by USAi to VUE
and repaying the $1.62 billion in debt used to finance the cash distribution
made to USAi at the closing.

     In connection with the transaction, Vivendi Universal received
approximately 60.5 million warrants to purchase common stock of USAi, with
exercise prices ranging from $27.50 to $37.50 per share. The warrants were
issued to Vivendi Universal in return for an agreement to enter into certain
commercial arrangements with USAi. At this time, no commercial arrangement is in
place. A portion of the warrants were sold in February 2003. The remainder of
the warrants are expected to be sold on June 30, 2003. For more information, see
"Item 5--Operating and Financial Review and Prospects--Subsequent Events."

     The entertainment assets acquired by Vivendi Universal were USAi's
television programming, cable networks and film businesses, including USA Films,
Studios USA and USA Cable. These assets, combined with the film, television and
theme park assets of the Universal Studios Group, formed a new entertainment
group, Vivendi Universal Entertainment LLLP, in which Vivendi Universal has an
approximately 93% voting interest and an approximately 86% economic interest
(due to the minority stake of Matsushita Electric Industrial Co., Ltd., or
Matsushita).

     The acquisition cost of the USAi entertainment assets amounts to E 11,008
million and was determined with the assistance of an independent third-party
valuation firm.

     Acquisition of Additional Interest in Multithematiques

     In connection with the sale of its shares in USAi, Liberty Media
transferred to Vivendi Universal its 27.4% share in the European cable
television company, Multithematiques and its current account balances in
exchange for 9.7 million Vivendi Universal shares. The share value is based on
the average closing price of Vivendi Universal shares during a reference period
before and after December 16, 2001, the date the agreement was announced.
Following this acquisition, Canal+ Group holds 63.9% of Multithematiques' share
capital. The additional goodwill resulting from Vivendi Universal taking a
controlling stake in this company, which had been consolidated until March 31,
2002 using the equity method, amounted to E 542 million.

     Divestiture of Interest in Veolia Environnement

     Following a decision taken by its Board of Directors on June 17, 2002,
Vivendi Universal reduced its ownership interest in Veolia Environnement in
three steps. Prior to taking these steps, an agreement was signed with Mrs.
Esther Koplowitz by which she agreed not to exercise the call option on Veolia
Environnement's participation in Fomento de Construcciones y Contratas which
otherwise would have been exercisable once Vivendi Universal ownership interest
in Veolia Environnement fell below 50%.

     The first step occurred on June 28, 2002, when 53.8 million Veolia
Environnement shares were sold on the market (approximately 15.5% of share
capital before capital increase). The shares were sold by a financial
institution which had owned the shares since June 12, 2002 following a
repurchase transaction, known in France as a "pension livree," carried out with
Vivendi Universal. In parallel, in order to make it possible for the financial
institution to return the same number of shares to Vivendi Universal at the
maturity of the repurchase agreement on December 27, 2002, Vivendi Universal
entered into a forward sale for the same number of shares to this financial
institution at the price of the investment. As a result, Vivendi Universal
reduced its debt by E 1,479 million and held 47.7% of the share capital of
Veolia Environnement.

     In the second step, on August 2, 2002, Veolia Environnement increased its
share capital by E 1,529 million, following the issuance of approximately 58
million new shares (14.3% of the capital after the capital increase), subscribed
to by a group of investors to whom Vivendi Universal had already sold its
preferential subscription rights pursuant to an agreement dated June 24, 2002.
Following this second transaction, Vivendi Universal owned 40.8% of Veolia
Environnement's share capital and Veolia Environnement continued to be
consolidated using the full consolidation method in accordance with generally
accepted accounting principles in France.

     The third step occurred on December 24, 2002, a month after the banks that
managed the June transaction and a group of new investors entered into an
amendment to the June 24, 2002 agreement. Under
                                        16
<PAGE>

the terms of the amended agreement, Vivendi Universal agreed to sell 82.5
million shares of Veolia Environnement, representing 20.4 % of Veolia
Environnement's share capital, and the new investors agreed to become subject to
the lock-up on dispositions of these shares previously agreed to by Vivendi
Universal for the remaining term of that lock-up agreement, i.e. until December
21, 2003.

     Each of these shares of Veolia Environnement includes a call option that
entitles these investors to acquire additional Veolia Environnement shares at
any time until December 23, 2004 at an exercise price of E 26.50 per share.
After the exercise of all the call options, Vivendi Universal would no longer
hold any shares of Veolia Environnement. On December 24, 2002, Vivendi Universal
received, in exchange for the shares and the call options, E 1,856 million. The
call options on the Veolia Environnement shares are recorded as deferred items
in liabilities for an amount of E 173 million.

     Following this divestiture, Vivendi Universal holds 82.5 million shares, or
20.4%, of Veolia Environnement's share capital which is held in an escrow
account to cover the call options. This investment is accounted for using the
equity method as of December 31, 2002.

     Vivendi Universal recorded a E 1,419 million capital gain for these
operations in 2002.

     Divestiture of Vivendi Universal Publishing's Professional and Health
Divisions

     On April 18, 2002, Vivendi Universal Publishing (VUP) signed a definitive
agreement pursuant to which the Cinven, Carlyle and Apax investment funds
acquired 100% of the professional and health information divisions of VUP. In
parallel with this divestiture, Vivendi Universal acquired 25% of the capital
stock of the acquisition vehicle, alongside Cinven (37.5%), Carlyle (28%) and
Apax (9.5%). The transaction was concluded on July 19, 2002 with Vivendi
Universal's sale to the investors of the shares acquired in the leveraged
buy-out. The transaction reduced profit before tax by E 298 million.

     Sale of Stake in Vizzavi Europe

     On August 30, 2002, Vivendi Universal sold to Vodafone its 50% share of
Vizzavi Europe. As a result, Vivendi Universal received E 143 million in cash.
As part of the transaction, Vivendi Universal took over 100% of Vizzavi France.
This transaction generated a capital gain of E 90 million.

     Divestiture of Publishing Activities

     The Board of Directors of Vivendi Universal on August 13, 2002, decided to
sell the American publisher Houghton Mifflin acquired in 2001. On September 25,
2002, the Board decided that the sale should occur as soon as possible and
cover, in addition to Houghton Mifflin, all of the activities of VUP.

     These assets, with revenues and employees totaling approximately E 2.3
billion and 7000, respectively, were presented to several buyers.

     Following receipt of indicative offers, Vivendi Universal decided to
conduct separate sale processes for the European and American businesses. The
Board of Directors meeting held on October 29, 2002 approved the divestiture of
VUP's European activities to the Lagardere Group, which had made the most
competitive offer. This transaction was finalized on December 20, 2002 after the
approval of the personnel representative bodies of Vivendi Universal and VUP.
The European publishing activities were acquired by Investima 10, a company
wholly-owned by Natexis Banques Populaires for Lagardere. Investima 10 will
transfer the acquired assets to the Lagardere Group as soon as the latter
obtains the competition approval to be given by the European Commission. The
gross proceeds from the sale amounted to E 1,198 million. This transaction has
resulted in a gain of E 329 million on Vivendi Universal's net income before
tax.

     Following this transaction, Vivendi Universal retains its 50% interest in
the company that owns Atica and Scipione, the Brazilian publishers.

     Three investors participated in the separate auction to sell the publisher
Houghton Mifflin. On December 30, 2002, Vivendi Universal finalized the sale of
Houghton Mifflin to a consortium comprised of Thomas H. Lee and Bain Capital.
The purchase price was approximately E1.6 billion, of which approximately
                                        17
<PAGE>

E1.2 billion in cash has been received. As a result of this transaction, Vivendi
Universal recognized a capital loss of E 822 million before tax, including a
foreign currency translation loss of E 236 million.

     Acquisition of Additional Interest in UGC

     On December 23, 2002, following the exercise by Banque Nationale de Paris
of the put granted by Vivendi Universal in July 1997, Vivendi Universal
acquired, for a total consideration of E 59.3 million, 5.3 million of UGC shares
representing 16% of share capital of UGC. Vivendi Universal's 58% interest in
UGC does not provide for operational control of the company due to a
shareholders' agreement. Accordingly, this investment is still accounted for
using the equity method.

     Divestiture of Telepiu

     News Corporation and Telecom Italia signed, on October 1, 2002, a
definitive agreement with Vivendi Universal and Canal+ Group to acquire Telepiu,
the Italian pay-TV business. The transaction was approved by the European
Commission on April 2, 2003 and completed on April 30, 2003. As part of the
acquisition agreement, all litigation between the parties, including Canal+'s
litigation against NDS, will be dropped. The purchase price was E 871 million,
consisting of the assumption of E 414 million in debt and a cash payment of
E 457 million. The cash payment includes a E 13 million adjustment corresponding
to the reimbursement of the accounts payable net of debt adjustment.

    Unwinding of the Total Return Swap in Connection with the Divestiture of
    Vivendi Universal's Investment in BSkyB plc

     In order to comply with the conditions imposed by the European Commission
in October 2001 on the merger of Vivendi, Seagram and Canal+, Vivendi Universal
sold 96% (approximately 400 million common shares) of its investment in BSkyB's
common shares and E 81 million of money market securities to two qualifying
special purpose entities (QSPEs). Concurrently, Vivendi Universal entered into a
total rate of return swap with the same financial institution that held all of
the beneficial interests of the QSPEs, thus allowing Vivendi Universal to
maintain its exposure to rises and falls in the price of BSkyB shares until
October 2005.

     In December 2001, the financial institution controlling the beneficial
interest of the QSPEs issued 150 million equity certificates repayable in BSkyB
shares, at 700 pence per share. As a result, Vivendi Universal and the financial
institution were able to reduce the nominal amount of the swap by 37% and thus
fix a value of 150 million BSkyB shares and create a capital gain of E 647
million after tax.

     In May 2002, this financial institution sold the remaining 250 million
BSkyB shares held by the QSPEs, and concurrently, Vivendi Universal and the
financial institution terminated the total return swap on those shares, which
were settled at approximately 670 pence per share, before Vivendi Universal's
payment of related costs. As a result of this transaction, Vivendi Universal
recognized a pre-tax gain of approximately E 1.6 billion, net of expenses, and
was able to reduce gross debt by E 3.9 billion.

     In addition, in February 2002, Vivendi Universal released its remaining
holding of 14.4 million shares in BSkyB by exercising its option to exchange a
convertible bond for BSkyB shares issued by Pathe that came into Vivendi
Universal's possession when it acquired Pathe. The redemption date was fixed on
March 6, 2002, at a redemption price of 100% of the principal amount plus
accrued interest to that date. Holders of the bonds were entitled to convert
them into 188.5236 shares of BSkyB per FFr10,000 principal amount of bonds up to
and including February 26, 2002.

    Divestiture of an Investment in EchoStar Communication Corporation

     On December 18, 2002, Vivendi Universal sold its entire EchoStar equity
position, 57.6 million Class A common shares, back to EchoStar. Total net
proceeds of the sale were $1.066 billion, generating a capital loss of E 674
million before tax.

                                        18
<PAGE>

     Vivendi Universal held these Class A common shares following the conversion
of the 5.8 million Echostar Class D preferred stock acquired in January 2002 for
$1.5 billion. Each Class D preferred stock was convertible into 10 EchoStar
Class A common shares.

     Divestiture of Investment in Vinci

     In July 2002, Vivendi Universal sold 5.3 million Vinci shares for a total
of E 343.8 million, thereby generating a pre-tax, capital gain of E 153 million.
At the same time, Vivendi Universal bought call options on 5.3 million shares at
E 88.81 for E 53 million allowing the group to cover the bonds exchangeable for
Vinci shares issued in February 2001 for E 527.4 million.

     Disposition of Sithe

     In December 2000, Vivendi Universal, along with other shareholders of Sithe
Energies, Inc. (Sithe), a US power generation company, finalized the sale of a
49.9% stake in Sithe to Exelon (Fossil) Holdings, Inc., (Exelon), for
approximately $696 million. The net proceeds of the transaction to Vivendi
Universal were approximately $475 million. Following this transaction, Exelon
became the controlling shareholder of Sithe, with Vivendi Universal retaining an
interest of approximately 34%. As a result of the transaction, Vivendi Universal
ceased to consolidate Sithe's results of operations for accounting purposes
effective December 31, 2000.

     On December 18, 2002, Vivendi Universal sold its remaining 34% stake in
Sithe Energies, to Apollo Energy LLC. Net cash proceeds of this transaction were
E 319 million, generating a capital loss of E 232 million before tax. Under the
terms of this transaction, Vivendi Universal retained the rights and obligations
to take legal ownership of a minority stake in certain power generating
operations in Asia from Sithe. Vivendi Universal transferred these rights and
obligations to Marubeni for $47 million on June 11, 2003. See "Item 5--Operating
and Financial Review and Prospects--Subsequent Events."

     Settlement Agreement with Pernod Ricard-Diageo

     On August 7, 2002, Vivendi Universal, Pernod Ricard and Diageo reached a
global settlement of outstanding claims relating to post-closing adjustments
arising from the acquisition of Seagram's spirits and wine concluded in December
2000 and closed in December 2001.

     Notes Mandatorily Redeemable for New Shares of Vivendi Universal

     In November 2002, Vivendi Universal issued 78,678,206 bonds for a total
amount of E 1 billion, redeemable in Vivendi Universal new shares on November
25, 2005, at a rate of one share for one bond. The bonds bear interest at 8.25%
per annum. The total amount of discounted interest was paid to the bondholders
on November 28, 2002, for an amount of E 233 million. The bondholders can call
for redemption of the bonds in new shares at any time after May 26, 2003, at the
minimum redemption rate of 1 -- (annual rate of interest multiplied by the
outstanding bond lifetime expressed in years).

     Events between January 1 and December 31, 2002 related to Treasury Shares

     At December 31, 2001, Vivendi Universal and its subsidiaries held
107,386,662 Vivendi Universal shares, representing a gross amount of E 6,762
million and 9.9% of share capital at an average cost per share of E 63.

     During 2002, Vivendi Universal:

     - bought on the market, between January and April, 6, 969,865 shares at an
       average price of E 48.5 per share. These purchases occurred under the
       terms of the COB prospectus n(LOGO) 00-1737 which authorized Vivendi
       Universal to go public;

     - sold 55 million shares to two financial institutions on January 7 at a
       price of E 60 per share;

                                        19
<PAGE>

     - transferred 37.4 million shares in May 2002 to Liberty Media in exchange
       for equity in USANi LLC and USAi and the 27% interest in
       Multithematiques;

     - sold a further 94,157 shares to employees exercising their stock options;
       and

     - cancelled 20,469,967 shares on December 20, 2002 following the decision
       by the Board of Directors on August 13, 2002 based on the authorization
       obtained in General Meeting of Shareholders held on April 24, 2002. The
       cancellation of these shares previously held in connection with employee
       stock option plans has reduced the shareholders' equity by E 1,191.3
       million. In connection with French legal obligations, Vivendi Universal
       acquired 14.1 million of call options on Vivendi Universal shares in
       order to cover future stock option plans from December 31, 2002.

     At December 31, 2002, Vivendi Universal and its subsidiaries (excluding
Veolia Environnement, which is accounted for under the equity method as from
December 31, 2002) held 562,375 Vivendi Universal shares, or 0.05% of its share
capital which represents a gross amount of E 44 million and an average cost per
share of E 77.9. The majority of these treasury shares are classified as
marketable securities and held in connection with certain employee stock option
plans of MP3.com, Inc.

     Sale of Put Options on Its Own Shares

     In connection with its share repurchase program, Vivendi Universal sold put
options on its own shares by which it agrees to buy its own shares on specified
dates at the exercise price. As of December 31, 2002 and December 31, 2001,
Vivendi Universal had outstanding obligations on 3.1 million and 22.8 million
shares respectively. The average exercise prices were E 50.5 and E 70,
respectively, resulting in a potential commitment of E 154 million and E 1,597
million, respectively. These put options are only exercisable on their exercise
date and expire during the first quarter of 2003. According to the terms of the
contracts for these put options, they may be settled at the option of Vivendi
Universal either by the purchase of the shares at the exercise price or payment,
in cash, of the difference between the market price of the shares and the
exercise price.

     The cost to Vivendi Universal during 2002 from option holders exercising
their rights was E 589 million, which represents the premium paid in the event
of a cash settlement of the difference between their market price and the
exercise price. Further, at the end of December 2002, Vivendi Universal marked
to market put options with a specific, future exercise date. This resulted in a
provision of E 104 million, corresponding to the premium that will have to be
paid out by Vivendi Universal in the event of a cash settlement.

     Renunciation by Convertible Bondholders on the Guarantee agreed by Vivendi
     Universal

     Holders of 1.5% 1999 -- 2005 Veolia Environnement bonds exchangeable for
new or existing Vivendi Universal shares held a general meeting on August 20,
2002. At this meeting, the bondholders renounced, effective September 1, 2002,
any rights to the guarantee provided by Vivendi Universal in respect of Veolia
Environnement's obligations under these bonds and, as a consequence, renounced
certain rights under the liability clause in the event of a default by Vivendi
Universal. In exchange, the nominal interest rate was increased by 0.75%,
thereby increasing the interest rate from 1.5% to 2.25%.

     Reorganization of Vivendi Universal Headquarters

     In October 2002, Vivendi Universal initiated a reorganization plan
regarding its headquarters in Paris, as well as its locations outside France. It
aims to:

     - redefine and refocus the headquarters' tasks on holding company
       activities;

     - concentrate all those tasks in Paris, with New York becoming a
       representative office for the company, primarily responsible for
       functions relating to North America; and

     - achieve full-year savings of around E 140 million compared with the total
       2002 budget of E 313 million. These savings will be generated by a very
       significant cut in non-payroll costs (fees for external services, in
       particular), as well as a reduction in the number of employees at all
       headquarters sites.
                                        20
<PAGE>

     With regard to the Paris headquarters, the plan provides for eliminating
146 positions out of a total of 327 employees. To address potential employment
ramifications, in consultation with the labor unions, Vivendi Universal is
taking measures -- in particular, with regard to job mobility -- to ensure that
all employees are offered the most optimal solutions possible.

  2001 SIGNIFICANT TRANSACTIONS

     Purchase of Interest in Maroc Telecom

     In the course of the partial privatization of Maroc Telecom, Vivendi
Universal was chosen to be a strategic partner in the purchase of an interest in
Morocco's national telecommunications operator for approximately E 2.4 billion.
The transaction was finalized in April 2001, at which time Maroc Telecom began
to be consolidated in the accounts of Vivendi Universal, as we obtained control
through majority board representation and shared voting rights.

     Acquisition of Houghton Mifflin Company

     In July 2001, Vivendi Universal acquired the Houghton Mifflin Company, a
leading US educational publisher, for a total of approximately $2.2 billion,
including assumption of Houghton Mifflin's average net debt of approximately
$500 million. Houghton Mifflin was sold on December 30, 2002.

     Acquisition of MP3.com, Inc.

     On August 28, 2001, Vivendi Universal completed its acquisition of MP3.com,
Inc., for approximately $400 million, or $5 per share in a combined cash and
stock transaction.

     Disposition of Interest in France Loisirs

     In July 2001, Vivendi Universal sold its interest in France Loisirs to
Bertelsmann. Proceeds from the sale approximated E 153 million, generating a
capital loss of E 1 million.

     Disposition of AOL France

     In March 2001, Vivendi Universal announced the conclusion of a deal with
America Online, Inc., a subsidiary of the AOL Time Warner Group, under which
Cegetel and Canal+ Group swapped their interest in the AOL France joint venture
for AOL Europe shares. Both groups also signed distribution and marketing
agreements. Cegetel and Canal+ Group thus swapped their 55% share of AOL France
for junior preferred shares of AOL Europe valued at $725 million and paying a 6%
annual dividend. These preferred shares were sold, in late June 2001, to an
unrelated financial company for a price corresponding to their present value
marked up by their coupon value, or a total of $719 million. If this investment
was consolidated, an asset representing the junior preferred shares and a
liability representing the corresponding debt would be recorded in the
Consolidated Financial Statements in the amount of $812 million. This
transaction generated a net capital gain of E 402 million.

    Issuance of bonds exchangeable for Veolia Environnement shares

     In February 2001, Vivendi Universal placed E 1.8 billion principal amount
of bonds exchangeable into Veolia Environnement stock on a one-for-one basis.
The bonds correspond to 9.3% of the capital stock of Veolia Environnement. The
2%, five-year bonds were issued at a price of E 55.90, a 30% premium over the
previous day's weighted-average price.

     Issuance of bonds exchangeable for Vinci shares

     In February 2001, Vivendi Universal placed E 457 million principal amount
of bonds exchangeable for shares of Vinci, a company in which Vivendi Universal
has an 8.67% stake. The 1%, five-year bonds were issued at a price of E 77.35, a
30% premium to Vinci's then-current stock price. Each bond is exchangeable for
one Vinci share. On February 5, 2001, the lead manager for the bond offering
exercised an over-allotment
                                        21
<PAGE>

option to purchase E 70 million additional principal amount of the bonds, thus
increasing the overall amount of the issuance to E 527 million.

     Sale of 9.3% Interest in Veolia Environnement

     In December 2001, Vivendi Universal sold 32.4 million shares or a 9.3%
interest in Veolia Environnement for approximately E 38 per share or total
proceeds of E 1.2 billion, generating pre-tax capital gains of E 116 million
(net of E 10 million fees). The 9.3% interest sold had been held separately as
it was allocated to exchangeable bonds issued in February 2001. At the same
time, Veolia Environnement agreed to issue one free warrant for each share held
to its shareholders, with every seven warrants giving holders the right to a new
share of Veolia Environnement at E 55 per share until March 2006. These
transactions did not modify Vivendi Universal's 63% consolidated interest in
Veolia Environnement as the warrant issue replaces the shares sold that were
allocated to the exchangeable bonds.

     Canal+ Group's Sale of its Stake in Eurosport

     In January 2001, Canal+ Group announced that it had sold its 49.5% interest
in European sports channel Eurosport International and its 39% interest in
Eurosport France to TF1. Proceeds from the sale amounted to E 303 million for
Canal+ Group and E 345 million for Vivendi Universal, as its subsidiary Havas
Image also sold its interest in Eurosport France. Canal+ Group will remain a
distribution channel for Eurosport. Canal+ Group had acquired its interest in
Eurosport International and Eurosport France from ESPN in May 2000.

     Sale of Stake in Havas Advertising

     In June 2001, Vivendi Universal sold its remaining 9.9% interest in Havas
Advertising, the world's fifth largest advertising and communications consulting
group, to institutional investors and Havas Advertising itself. The E 484
million transaction, conducted with the approval of Havas Advertising
management, generated pre-tax capital gains of E 125 million. In December 2001,
Vivendi Universal sold the rights to the "Havas" name to Havas Advertising for
approximately E 4.6 million.

     Participation in Elektrim

     In September 2001, Elektrim Telekomunikacja, in which Vivendi Universal has
a 49% interest, acquired all of Elektrim SA's landline telecommunications and
Internet assets. Vivendi Universal loaned Elektrim Telekomunikacja E 485
million, at arm's-length conditions, to provide them with the necessary funds
for the acquisition.

     UMTS License

     In July 2001, the French government officially granted SFR, an indirect
subsidiary of Vivendi Universal, a license to provide 3G (third generation) UMTS
mobile telephony services in France. UMTS is a high-speed standard for mobile
telephony that will allow Vivendi Universal, through SFR, to provide an
extensive range of new services, including video telephony and high-speed access
to the Internet and to corporate intranets. The license was initially granted
for a period of 15 years and a license fee of E 4.95 billion, with payments
spread over the 15-year period. However, as a result of a delay in the
manufacture of equipment and infrastructure for UMTS technology and the economic
weakness in the telecommunications industry, the original terms of the license
were renegotiated with the French government. In October 2001, the French
government announced the revised terms of the 3G UMTS license. The license was
extended to a period of 20 years and the license fee was split into two
parts -- a fixed upfront fee of E 619 million, which was paid in September 2001,
and future payments equal to 1% of 3G revenues earned when the service
commences. The new arrangement reduces cash expenditures related to the license
during 2001 to 2003 by more than E 2 billion and is expected to contribute to an
improvement in Vivendi Universal's cash flow and debt position.

                                        22
<PAGE>

     UPC Alliance

     In August 2001, Canal+ Group and United Pan-Europe Communications N.V.
(UPC) agreed to merge their respective Polish satellite TV platforms Cyfra+ and
Wizja TV as well as the Canal+ Polska premium channel, to form a common Polish
digital TV platform. The new company (TKP) is managed and controlled by Canal+
Group, which owns 75% of TKP. UPC will contributed its Polish satellite assets
to TKP in exchange for a 25% interest and E 150 million in cash. As part of this
transaction Canal+ Polska is available on UPC's Polish cable network, in which
UPC will retain 100% control. The agreement was finalized in December 2001 after
having received regulatory approval. TKP was consolidated in the accounts of
Vivendi Universal at December 31, 2001. The new joint platform were launched in
the first quarter of 2002 with a base of more than 700,000 subscribers.

  2000 SIGNIFICANT TRANSACTIONS

     Merger of Vivendi, Seagram and Canal+

     On December 8, 2000, Vivendi, Seagram and Canal+ completed a series of
transactions in which the three companies combined to create Vivendi Universal.
The terms of the merger transactions included: Vivendi Universal's combination,
through its subsidiaries, with Seagram in accordance with a plan of arrangement
under Canadian law, in which holders of Seagram common shares (other than those
exercising dissenters' rights) received 0.80 Vivendi Universal American
Depositary Shares (ADSs), or a combination of 0.80 non-voting exchangeable
shares of Vivendi Universal's wholly-owned Canadian subsidiary Vivendi Universal
Exchangeco (exchangeable shares) and an equal number of related voting rights in
Vivendi Universal, for each Seagram common share held; Vivendi Universal's
merger with Canal+, in which Canal+ shareholders received two Vivendi Universal
ordinary shares for each Canal+ ordinary share they held and kept their existing
shares in Canal+, which retained the French premium pay television channel
business.

     In connection with the merger transactions, on December 19, 2000, Vivendi
Universal entered into an agreement with Diageo and Pernod Ricard to sell its
spirits and wine business. The sale closed on December 21, 2001 and Vivendi
Universal received approximately $8.1 billion in cash, an amount that resulted
in after-tax proceeds of approximately $7.7 billion. The spirits and wine
business generated revenues of E 5 billion and operating income of E 0.8 billion
in 2001. Prior to its sale, Vivendi Universal accounted for the spirits and wine
business as an investment held for sale on the balance sheet, and net income of
the spirits and wine business in 2001 effectively reduced goodwill associated
with the Seagram acquisition. No gain was recognized upon the ultimate sale of
the spirits and wine business.

     Disposition of Non-Core Construction and Real Estate Businesses

     In order to facilitate our withdrawal from our non-core construction and
real estate businesses, we restructured Compagnie Generale d'Immobilier et de
Services (CGIS), our wholly owned real estate subsidiary, into two principal
groups of companies: Nexity and Vivendi Valorisation. In July 2000, we sold 100%
of Nexity to a group of investors and to Nexity's senior management for E 42
million, an amount that approximated book value of these operations. Vivendi
Valorisation holds our remaining property assets, which consist primarily of
investments arising out of past property development projects. These assets are
managed by Nexity pending their sale. In February 2000, we reduced our interest
in Vinci (Europe's leading construction company) from 49.3% to 16.9%, receiving
in exchange E 572 million, which resulted in a capital gain of approximately
E 374 million. Subsequently, Vinci merged with the construction company, Groupe
GTM, which reduced our interest in the combined entity to 8.67%. As a result of
these transactions we ceased to consolidate Vinci's results effective July 1,
2000.

     Formation/IPO of Veolia Environnement

     Veolia Environnement was formed at the end of 1999. It brought together the
majority of our water, waste management, energy services and transportation
businesses, as well as our interest in Fomento de Construcciones y Contratas
(FCC). Veolia Environnement's formation was achieved by either the contribution
of existing businesses and companies or the purchase of shares. Generale des
Eaux, Dalkia and
                                        23
<PAGE>

Compagnie Generale d'Entreprises Automobiles were transferred at book value in
accordance with tax provisions applicable to certain mergers. United States
Filter Corporation (US Filter) and our interest in FCC were acquired by Veolia
Environnement in December 1999. In July 2000, Veolia Environnement sold
approximately 37% of its shares to the French public and to institutional
investors in France and elsewhere in an initial public offering (IPO).

     Lagardere alliance

     In July 2000, pursuant to an alliance between Canal+ Group and Lagardere, a
French media company, Lagardere acquired an approximate 34% stake in
CanalSatellite and a 27.4% stake in MultiThematiques. Canal+ reduced its stake
in Multithematiques to 27.4% (Vivendi reduced its indirect interest to 9%).
Canal+ and Lagardere also set up three joint ventures. The first, 51% owned by
Lagardere and 49% by Canal+, will own and operate existing theme channels and
intends to create others. The second, 51% owned by Lagardere and 49% by
CanalSatellite, will oversee interactive services for new channels jointly
created by CanalSatellite and Lagardere. The third, a 50/50 joint venture
between Lagardere and MultiThematiques, will create and distribute new
theme-based channels based on Lagardere's international brands.

  PUBLIC TAKEOVER OFFERS

     To our knowledge, we have not been the target of any public takeover offer
by third parties in respect of our shares during the last or current fiscal
year. Moreover, we have not sought to acquire another company in a public
takeover except as might be disclosed in this document in the last or current
fiscal year.

BUSINESS OVERVIEW

GENERAL

     We are one of the largest media and telecommunications groups in the world.
We focus on the following six distinct businesses which are leaders in
telecommunications, music, TV & film, and games, with a variety of other
non-core operations and investments:

     CEGETEL GROUP.  Cegetel Group, through its 80% owned subsidiary, Societe
Francaise du Radiotelephone, or SFR, is the second largest mobile
telecommunications operator in France and through its 90% owned subsidiary,
Cegetel S.A., is the second largest fixed-line operator in France. SFR has a
35.1% market share in a stable three-operator market in France, and is well
positioned to benefit from the strong growth of the French wireless market. In
early 2003, we increased our ownership interest to 70% of Cegetel Group.

     UNIVERSAL MUSIC GROUP (UMG).  UMG is the largest recorded music business in
the world. UMG acquires, manufactures, markets and distributes recorded music in
71 countries. Key recording artists include Eminem, Shania Twain, U2 and
Ashanti. In addition to its recorded music business, UMG is the third largest
music publisher in the world. UMG also manufactures, sells and distributes music
video and DVD products, and owns mail-order music/video clubs. We own
approximately 92% of UMG.

     VIVENDI UNIVERSAL ENTERTAINMENT (VUE).  We own approximately 86% of VUE, a
US-based entertainment company active in the film, television, and theme parks
and resorts businesses. We are currently evaluating proposals from potential
bidders for the possible sale of all or a portion of VUE. VUE operates through
the following entities:

     - UNIVERSAL PICTURES GROUP (UPG).  UPG is a major film studio, engaged in
       the production and distribution of motion pictures worldwide in the
       theatrical, non-theatrical, home video/DVD and television markets. Recent
       motion picture releases include Gladiator, The Mummy franchise, A
       Beautiful Mind, 8 Mile, Erin Brockovich, Red Dragon and The Fast and The
       Furious. UPG's 2003 movie slate includes Bruce Almighty, The Hulk, 2 Fast
       2 Furious, Peter Pan and Dr. Seuss' The Cat in the Hat.

                                        24
<PAGE>

     - UNIVERSAL TELEVISION GROUP (UTG).  UTG owns and operates four US cable
       television networks including USA Network and the Sci Fi Channel as well
       as a portfolio of international television channels. UTG produces and
       distributes original television programming worldwide, including Law and
       Order, Jerry Springer, Taken and Monk.

     - UNIVERSAL PARKS & RESORTS (UPR).  UPR is the second largest destination
       theme park operator in the world. UPR owns interests and operates theme
       parks and resorts in the US, Japan and Spain, including Universal Studios
       in Hollywood, California and Universal Studios in Orlando, Florida.

     CANAL+ GROUP.  Canal+ Group is the leader in the production and
distribution of digital and analog pay-TV in France (principally through its
premium channel, Canal+, and its digital satellite platform, CanalSatellite).
Canal+ Group has 6.95 million individual subscriptions in France. Canal+ Group
is also a leading European studio involved in the production, co-production,
acquisition and distribution of feature films and television programs and owns
interests in pay-TV activities in Spain, Poland and elsewhere. We own 100% of
Canal+ Group, which in turn owns 49% of Canal+ S.A., which holds the broadcast
license for our premium channel Canal+ and 66% of CanalSatellite.

     MAROC TELECOM.  Maroc Telecom is the incumbent fixed line and the leading
mobile telecommunications operator in Morocco, with a 70% share of the wireless
market. We have a 35% ownership stake in Maroc Telecom. However, through our
control of the executive board and management, we exercise day-to-day control
over the business and, in accordance with French GAAP, consolidate it in our
financial statements.

     VIVENDI UNIVERSAL GAMES (VU GAMES).  VU Games is a worldwide leader in the
development, marketing and distribution of games and educational software for
PC, handheld devices and consoles. We own 99% of VU Games, and we are currently
evaluating proposals for the possible disposition of all or a portion of this
business.

SEGMENT DATA

     The contribution of our business segments to our consolidated revenues for
each of 2002, 2001 and 2000, in each case after the elimination of intersegment
transactions, is as follows:

<Table>
<Caption>
                                                  YEAR ENDED DECEMBER 31,
                                    ----------------------------------------------------
                                                ACTUAL                  PRO FORMA(3)
                                    ------------------------------   -------------------
                                    2002(1)      2001     2000(2)      2002       2001
                                    --------   --------   --------   --------   --------
                                                       (IN MILLIONS)
<S>                                 <C>        <C>        <C>        <C>        <C>
REVENUES
Cegetel Group.....................  E  7,067   E  6,384   E  5,129   E  7,067   E  6,384
Universal Music Group.............     6,276      6,560        495      6,276      6,560
Vivendi Universal Entertainment...     6,270      4,938        194      6,978      6,874
Canal+ Group......................     4,833      4,563      4,054      4,742      4,563
Maroc Telecom.....................     1,487      1,013         --      1,487      1,351
Vivendi Universal Games(4)........       794        657        572        794        657
                                    --------   --------   --------   --------   --------
                                      26,727     24,115     10,444     27,344     26,389
Other(5)(7).......................     1,385      1,289      2,667      1,385      1,344
                                    --------   --------   --------   --------   --------
Total Vivendi Universal (excluding
  businesses sold in 2002)........    28,112     25,404     13,111     28,729     27,733
Veolia Environnement..............    30,038     29,094     26,294         --         --
                                    --------   --------   --------   --------   --------
                                      58,150     54,498     39,405     28,729     27,733
VUP assets sold during
  2002(6)(7)......................        --      2,862      2,175         --         --
                                    --------   --------   --------   --------   --------
                                    E 58,150   E 57,360   E 41,580   E 28,729   E 27,733
                                    ========   ========   ========   ========   ========
</Table>

                                        25
<PAGE>

---------------

(1) At December 31, 2002, Vivendi Universal applied the option proposed in
    paragraph 23100 of the French rules 99-02 and has presented the results of
    businesses sold during 2002 on one line in the consolidated statement of
    income as "equity in earnings of disposed businesses." Disposed businesses
    include all of Vivendi Universal Publishing's operations excluding Vivendi
    Universal Games, publishing activities in Brazil, the consumer press
    division (the divestiture of which was completed in February 2003) and
    Comareg (the divestiture of which was completed in May 2003).

(2) 2000 results restated for changes in accounting policies adopted in 2001, as
    discussed further in "Item 5--Operating and Financial Review and Prospects."

(3) The pro forma information illustrates the effect of the acquisitions of the
    entertainment assets of InterActiveCorp (formerly known as USA Interactive
    and prior thereto as USA Networks, Inc.), or USAi, in May 2002, Maroc
    Telecom in April 2001 and MP3.com in August 2001, and the disposition of
    certain interests in Veolia Environnement and Vivendi Universal Publishing,
    as if these transactions had occurred at the beginning of 2001.
    Additionally, the pro forma information includes the results of Universal
    Studios international television networks in Vivendi Universal Entertainment
    in both 2002 and 2001 (in the actual 2002 results, the results of Universal
    Studios international television networks were reported by Canal+ Group).
    This reclassification has no impact on the total results of Vivendi
    Universal. We believe that pro forma results may help the reader to better
    understand our business results as they include comparable operations in
    each year presented. However, it should be noted that the pre-acquisition
    results of an acquired business accounted for on a historical cost basis are
    not directly comparable to the post-acquisition results of acquired entities
    whose initial purchase price was allocated on a fair value basis. 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
    2001.

(4) Formerly part of Vivendi Universal Publishing. Includes Kids Activities
    (e.g., Adi/Adibou in France and Jumpstart in the United States).

(5) Principally comprised of Vivendi Telecom International, Internet, Vivendi
    Valorisation (previously reported in non-core businesses) and Vivendi
    Universal Publishing assets not sold during 2002 (Consumer Press Division,
    Comareg and the Brazilian operations -- Atica & Scipione).

(6) Comprised of Vivendi Universal Publishing's European publishing assets
    (excluding those described above) and Houghton Mifflin sold in December 2002
    and Vivendi Universal Publishing's Business to Business and Health divisions
    sold in June 2002.

(7) The presentation of "Other" and "Vivendi Universal Publishing assets sold in
    2002" differs from the disclosure in our Business Segment Data in Note 12.2
    to Consolidated Financial Statements. In such Note 12.2, Publishing
    excluding Games includes both assets sold and assets retained. In the table
    above, publishing assets sold are reflected as a separate line item.

GEOGRAPHIC DATA

     The contribution of selected geographic markets to our consolidated revenue
for each of 2002, 2001 and 2000 is as follows:

<Table>
<Caption>
                                                           YEAR ENDED DECEMBER 31,
                                                        ------------------------------
                                                          2002       2001       2000
                                                        --------   --------   --------
                                                                (IN MILLIONS)
<S>                                                     <C>        <C>        <C>
France................................................  E 26,391   E 24,285   E 20,933
United Kingdom........................................     3,765      4,170      2,992
Rest of Europe........................................    11,327     10,456      7,421
United States of America..............................    10,810     12,654      7,009
Rest of World.........................................     5,857      5,795      3,225
                                                        --------   --------   --------
                                                        E 58,150   E 57,360   E 41,580
                                                        ========   ========   ========
</Table>

                                        26
<PAGE>

OUR SEGMENTS

  CEGETEL GROUP

     Cegetel Group, formed at the end of 1997, is the second largest
telecommunications operator in France with approximately 16.8 million customers,
and more than 8,700 employees as of December 31, 2002. Cegetel Group is the only
private operator in France to cover all telecommunications activities: mobile
telephony, through SFR, an 80% owned subsidiary of Cegetel Group, and fixed
telephony and data and Internet transmission, through Cegetel S.A., a directly
and indirectly 90% owned subsidiary of Cegetel Group. Its customer base includes
residential, professional and corporate customers. Cegetel Group's presence in
all these fields forms the core of its business and one of its major assets.

     In January 2003, Vivendi Universal acquired an additional 26% interest in
Cegetel Group from the BT Group, raising its direct and indirect interest to its
current 70%. Our strategic partner in Cegetel Group is Vodafone.

     The following table sets forth the breakdown of Cegetel Group's revenues by
activity for each of the periods indicated.

                                    REVENUES

<Table>
<Caption>
                                                             YEAR ENDED DECEMBER 31,
                                                        ---------------------------------
                                                         2002         2001         2000
                                                        -------   -------------   -------
                                                                  (IN MILLIONS)
<S>                                                     <C>       <C>             <C>
Mobile Telephony......................................  E 6,146      E 5,606      E 4,626
Fixed Telephony, Data and Internet....................      905          756          469
Holdings and Other....................................       16           22           34
                                                        -------      -------      -------
TOTAL.................................................  E 7,067      E 6,384      E 5,129
                                                        =======      =======      =======
</Table>

  Mobile Telephony

     SFR is the second largest mobile telephony operator in France. In 2002, it
increased its customer base from 12.6 million to 13.5 million, and its market
share from 33.9% to 35.1%, at year end according to Autorite de Regulation des
Telecommunications (ART), the French telecom regulatory authority. In terms of
geographic coverage, SFR covers 98% of the population in France, and has signed
international roaming agreements with operators in more than 150 countries or
territories. The market share of SFR's two competitors, the France Telecom
subsidiary, Orange France, and Bouygues Telecom were 49.8% and 15.1%,
respectively, at the end of 2002, according to ART.

     SFR operates in a stable three operator market. The French market has
relatively low penetration compared to other European Union countries with 64%
penetration compared to a European Union average of 78% as of December 31, 2002
according to ART and the Mobile Communications survey of December 2002,
respectively.

     SFR's mobile services are provided using the global system for mobile
communications standard (GSM), the dominant digital standard in Europe. SFR's
GSM license expires in 2006.

                                        27
<PAGE>

     The following table sets forth a breakdown of SFR's revenues from mobile
telephony services and equipment sales for each of the periods indicated.

                                    REVENUES

<Table>
<Caption>
                                                             YEAR ENDED DECEMBER 31,
                                                           ---------------------------
                                                            2002      2001      2000
                                                           -------   -------   -------
                                                                  (IN MILLIONS)
<S>                                                        <C>       <C>       <C>
Mobile telephony services................................  E 5,675   E 5,086   E 4,121
Equipment sales..........................................      471       520       505
                                                           -------   -------   -------
TOTAL MOBILE.............................................  E 6,146   E 5,606   E 4,626
                                                           =======   =======   =======
</Table>

     The following table sets forth mobile telephony operating information for
the French market and for SFR for each of the periods indicated.

                             OPERATING INFORMATION

<Table>
<Caption>
                                                                  YEAR ENDED
                                                                 DECEMBER 31,
                                                              ------------------
                                                              2002   2001   2000
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
French(1) mobile telephony users (at year end, in
  millions)(2)..............................................  38.6   37.0   29.7
  Postpaid..................................................  21.5   18.9   16.4
  Prepaid...................................................  17.1   18.1   13.3
SFR/SRR customers (at year end, in millions)(1)(2)..........  13.5   12.6   10.2
  Postpaid..................................................   7.2    6.3    5.8
  Prepaid...................................................   6.4    6.2    4.3
SFR Churn (in %/month)......................................   2.2%   2.0%   1.8%
</Table>

---------------

(1) French metropolitan and overseas departments.

(2) According to ART as of December 2002.

     In 2002, SFR saw an increase in its total customer base of 0.9 million or
8%. SFR saw an increase in its higher revenue generating postpaid customers in
2002 of 0.8 million or 13%, in line with the market as a whole. This was
partially due to the successful development of the Universal Music Mobile offer
launched in September 2001 in the teen market segment, which reached 500,000
customers at the end of December 2002 and to the implementation of a strong
retention policy. Prepaid customers increased by 0.1 million or 2% compared to a
decline of 5% for the French prepaid market as a whole.

     SFR takes pro-active measures to attract and retain postpaid contract
customers, focusing on the high-end and long-term customer. In 2002, over 50% of
SFR's new postpaid contract customers signed up for an initial period of 24
months. SFR seeks to re-engage high value postpaid contract customers beyond
their initial

                                        28
<PAGE>

period through new tariffs and options and at end 2002 approximately 75% of the
SFR contract base was re-engaged after their initial period.

     SFR operates a dense, high-quality GSM mobile telecommunications network.
This network is capable of providing service to 98% of the French population.
SFR has roaming agreements with 150 countries. In addition, since December 2000,
SFR has been providing General Packet Radio System (GPRS) on its network, which
permits greater bandwidth data communications. GPRS is deployed throughout the
company's network.

     SFR has been awarded a 3G license for a 20 year period (2001-2021) by the
French government, for consideration consisting of a one time fixed payment of
E 619 million, which was paid in September 2001, and annual fees equal to 1% of
the future revenues generated from the UMTS network. UMTS is a third generation
mobile radio system that creates additional mobile radio capacity and enables
broadband media applications while also providing high speed Internet access. In
connection with the development of its UMTS network in the next few years SFR
plans to significantly increase its capital expenditures. As a result of the
UMTS roll out in France occurring after the roll out in some other major
European countries, SFR believes it should benefit from the experience of
telecommunication companies in those countries.

     The use of mobile phones for text messages and multimedia experienced
significant growth in 2002, with nearly 2.3 billion Short Messaging Services, or
SMS, sent by SFR customers. This was twice the number of SMS sent in 2001, and
15% above SFR's initial objective of 2 billion for 2002. SFR also recorded more
than 400,000 multimedia messages sent from its network between the introduction
of its multimedia services in October 2002 and the end of 2002. 260,000 SFR
Packs integrating multimedia terminals were sold between October 2002 and the
end of 2002. At year-end, multimedia phones represented 45% of new SFR customers
and more than half of mobile renewals.

     Generally, tariffs in the French mobile telephony market have been stable,
with the introduction of new low-end postpaid plans. In 2002, the French mobile
telephony market also saw the introduction of per second rates for voice
communications.

  Fixed Telephony, Data and Internet

     Cegetel is the leading private operator for fixed telecommunications in
France with 3.3 million residential and professional customers and more than
16,000 business customers at the end of 2002. 70% of the businesses listed on
the CAC 40 index are Cegetel customers.

     Since its formation five years ago, Cegetel's fixed telephony, data and
Internet has seen sustained revenue growth. The following table sets forth
revenues generated by fixed telephony, data and Internet for the periods
indicated.

                                    REVENUES

<Table>
<Caption>
                                                                   YEAR ENDED
                                                                  DECEMBER 31,
                                                              ---------------------
                                                              2002    2001    2000
                                                              -----   -----   -----
<S>                                                           <C>     <C>     <C>
Revenues (millions).........................................  E 905   E 756   E 469
  Of which Residential and Professional (in %)..............     48%     45%     41%
  Of which Corporate (in %).................................     52%     55%     59%
</Table>

     Since its formation five years ago, Cegetel's fixed telephony, data and
Internet has also seen sustained growth in its operations. The table below sets
forth fixed telephony operational information for the periods indicated.

                                        29
<PAGE>

                            OPERATIONAL INFORMATION

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                               2002     2001     2000
                                                              ------   ------   ------
<S>                                                           <C>      <C>      <C>
Traffic (minutes, in billions)..............................    8.2      5.2      3.8
Customers
  Residential and Professional (in thousands)...............  3,286    2,860    2,418
  Corporate Voice sites (in thousands)......................     60       55       35
  Corporate Data sites (in thousands).......................     15       12        9
</Table>

     In 2002, Cegetel transported more than 8 billion minutes of phone
telecommunications, an increase of nearly 60% over 2001. At the same time,
Cegetel won more than 400,000 new residential and professional customers, and
was the first French fixed telecom operator to earn ISO 9001 version 2000
certification for all its operations for corporate customers.

     In addition to traditional fixed telephony products, Cegetel offers
small-and medium-sized businesses Internet protocol virtual private networks (IP
VPN) and high-speed data offerings (ADSL) specifically designed to meet their
needs. Since October 2002, Cegetel has offered very high-speed network services
(Ethernet) to large businesses. Cegetel Group also manages France's Reseau Sante
Social, or RSS, France's Social Security Network, the intranet for health
professionals under a public service license, which was the leading network for
the medical world in 2002, with 48,200 subscribers and 300 health institutions
connected, including half of the University Hospitals in France.

     The year 2002 was also marked by the continued deregulation of the local
telecommunications market in France. The market was first deregulated in 2001
and Cegetel began to compete with the incumbent operator, France Telecom, in May
2001. In 2002, Cegetel began to offer flat rates, a first in the French private
fixed market.

     In 2002, Cegetel completed the installation of a large national
distribution network. Cegetel also expanded its telephone services for
businesses in 2002 by offering to manage their customer relations through 800
numbers and call center services.

  Network

     The strategy of Cegetel Group is to invest in its own telecommunications
networks in order to offer its customers a broad range of services and ensure
complete quality control. Cegetel Group's mobile and fixed activities are based
on a common transport platform, the network of Telecom Developpement (TD), a
joint subsidiary of Cegetel Group and SNCF (the French national railway), which
carried 33.8 billion minutes in 2002, representing approximately 14% of the
French telecommunications traffic and nearly one-fourth of French Internet
traffic. Cegetel Group has a 49.9% interest in TD. The mobile network of SFR was
composed of 12,500 GSM sites at the end of 2002.

     SFR continues to make investments in its GSM network in order to maintain
high quality of service and to increase capacity. In 2002, Cegetel Group had
capital expenditures of E 300 million relating to its mobile network. As noted
above, SFR expects to significantly increase its capital expenditures in
connection with the build out of its UMTS network.

     With respect to its fixed telephony network, Cegetel Group relies on TD,
which has the most extensive alternative network of telecom infrastructures in
France, with 20,000 km of optical fibers and more than 500 points of presence.

     This network control strategy benefits from the new possibilities linked to
the arrival of high-speed transmission and the unbundling of the local loop.

                                        30
<PAGE>

  Competition

     Cegetel Group faces a high degree of competition in both the mobile and
fixed telephony markets. Currently, Cegetel Group's principal competitors in
mobile telephony are Orange France and Bouygues Telecom. SFR also expects Orange
France and Bouygues Telecom will be its principal competitors for 3G customers
when commercial UMTS services are introduced in France. The French government
offered a fourth UMTS license on December 29, 2001, but to date there has not
been any candidate for this license. In fixed telephony, Cegetel Group's main
competitors, in addition to the incumbent operator France Telecom, are
LDCom/Siris, Tele2, and Completel. As with other telecommunications operators,
Cegetel Group is also subject to indirect competition from providers of other
telecommunications services in France.

     Competitive pressures have led to reductions in tariffs and increased
customer retention costs as operators seek to manage the level of customer
churn.

  Regulatory Environment

     The French telecommunications market was broadly deregulated with the
adoption of the Telecommunications Regulatory Act of July 26, 1996 and its
related regulations. Many of the provisions of the applicable regulations are
designed to foster competition in the French telecommunications market. These
regulations apply both to operators of fixed line networks and to operators of
mobile networks.

     The operator of any public telecommunications network in France exerting
significant influence over the fixed line market is required to permit
interconnection with its network on the basis of the long run incremental cost
of providing the relevant service. Access to the local loop (unbundling of the
copper pair) was authorized by decree in September 2000, and established by
European regulation at the end of 2000.

     All fixed line operators are required to allow their customers to select a
long distance carrier on a call by call basis by entering a numeric prefix when
dialing. Customers may also opt to "pre-select" their long distance carrier so
that the subscriber can access his carrier's network without having to dial a
prefix. In 2002, carrier pre-selection was extended to local numbers. Prior to
this, all local calls were routed over France Telecom. Accordingly, France
Telecom's access subscribers may now pre-select an alternative carrier for all
of their fixed line calls.

     Mobile operators in France exerting significant influence over the wireless
public telephony market are also required to offer interconnection. The ART
deems both Orange France and SFR to have significant influence over the wireless
retail market and the domestic interconnection market, and SFR is therefore
subject to the rules governing this type of operator. As a result, SFR has been
required to reduce its interconnection rates for terminating calls on its
network.

     ART, the French telecom regulatory authority, monitors application of the
law and is consulted on proposed laws, decrees and regulations for the sector.
It assigns frequencies and numbers and has the authority to settle disputes
concerning interconnection.

     Two types of licenses apply to the telecommunications market, licenses
issued by the Minister for Telecommunications to operators that establish and
operate networks open to the public (L 33-1 licenses) or issued by the ART (L
33-2 licenses) for independent networks, and licenses issued by the Minister to
telephone service providers (L 34-1 licenses). The market for providing other
telecommunications services is not regulated.

     Through SFR, TD and Cegetel, Cegetel Group holds national licenses that
allow us to provide all telecommunications services: transmission and access,
voice and data, fixed and mobile.

     The International Commission for Non-Ionizing Radiation Protection, an
independent organization that advises the World Health Organization, has
established a series of recommendations setting exposure limits from
electromagnetic radiation from antennas. These regulations were driven by
concern over a potential connection between electromagnetic radiation and
certain negative health effects, including some forms of cancer. They were
enacted into French law on May 3, 2002. SFR is also, along with the other French
mobile

                                        31
<PAGE>

telephony operators, in the process of entering into agreements with different
cities of France including the city of Paris, that will set up local guidelines.

  Research and Development

     Through projects initiated several years ago, Cegetel Group focuses its
research and development efforts in four complementary areas:

     - involvement in national research networks through cooperative research
       projects and an active presence in decision-making agencies and strategic
       authorities;

     - contribution to university research projects via the Cegetel -- SFR
       Foundation and significant contacts with the academic world;

     - active participation in standardization in the IP and 3G mobile segments;
       and

     - increasing introductions of prototypes of new services with about twenty
       services.

     Cegetel Group conducts pre-competitive research and development, with
particular emphasis on integrating standard components. Through experiments on
existing platforms, Cegetel Group also conducts research and development on the
preparation of next generation technologies, such as the all IP network, and, in
collaboration with Monaco Telecom, in which VTI holds a 55% stake, 3G wireless
technology.

     Because of its structure and size, Cegetel Group has a network research
strategy. The complementary nature of the academic world, manufacturers, public
laboratories and operator partners contributes to an optimized effort and an
efficient pooling of project results.

     This substantial research and development effort is reflected in a number
of patents, primarily for services related to the mobile Internet,
geopositioning, and voice services.

     Cegetel Group's research and development costs in 2002 totaled E 58.7
million.

  MUSIC

     Our music business is operated through UMG, the largest recorded music
business in the world measured by revenues according to management estimates for
2002 and the International Federation of Phonographic Industry (IFPI) for 2001.
We have a 92.3% interest in UMG. UMG acquires, manufactures, markets and
distributes recorded music through a network of subsidiaries, joint ventures and
licensees in 71 countries. UMG also manufactures, sells and distributes music
video and DVD products, licenses music copyrights, and owns music/video clubs in
certain territories. By way of licenses to third parties, UMG participates in
and encourages online electronic music distribution.

     UMG is also active in the music publishing market, in which UMG acquires
rights to musical compositions (as opposed to recordings) in order to license
them for use in recordings and related uses, such as films, advertisements or
live performances. Management believes that UMG is the number three global music
publishing company with over one million owned or administered titles.

                                        32
<PAGE>

     The following table provides a breakdown of UMG's revenues and selected
market share information on a geographic basis for the periods indicated:

                                    REVENUES

<Table>
<Caption>
                                           YEAR ENDED                        YEAR ENDED
                                       DECEMBER 31, 2002,                DECEMBER 31, 2001,
                                 -------------------------------   -------------------------------
                                    REVENUE      MARKET SHARE(1)      REVENUE      MARKET SHARE(2)
                                 -------------   ---------------   -------------   ---------------
                                 (IN MILLIONS)         (%)         (IN MILLIONS)         (%)
<S>                              <C>             <C>               <C>             <C>
North America..................     E 2,772           29.0            E 2,921           28.3
Europe.........................       2,588           27.3              2,655           26.5
Far East.......................         588           12.2                671           11.0
ANZ/Africa.....................         139           24.5                137           22.7
Latin America..................         190           18.3                176           15.0
                                    -------           ----            -------           ----
TOTAL..........................     E 6,276           24.4            E 6,560           23.5
                                    =======           ====            =======           ====
</Table>

---------------

(1) Market share data is based on UMG estimates. Market share data from third
    party sources is not available in all regions. Third party market share data
    is not available for 2002.

(2) 2001 market share data is based on IFPI estimates.

  Recorded Music

     UMG's recorded music business is the largest in the world. UMG holds
particularly strong positions in the important North American and European music
markets, which together account for nearly three-quarters of global sales.

     UMG has a strong collection of major recording labels including: popular
music labels Island/Def Jam, Interscope/Geffen/A&M, MCA Records, Mercury
Records, Polydor and Universal Motown Records Group; classical labels Decca,
Deutsche Grammophon and Philips; and jazz labels Verve and Impulse! Records.
Interscope/Geffen/A&M, with artists such as Eminem, Sheryl Crow, No Doubt,
Enrique Iglesias and Vanessa Carlton, was the number one label in the US in
current album market share in 2002 according to SoundScan. Island/Def Jam, with
artists such as Ashanti, Musiq and Cam'ron, was the number two US label.

     In an industry in which size confers significant scale benefits, UMG's
recorded music business has been steadily increasing its market share. While
2002 was a challenging year for the music industry, with global market sales
declining an estimated 9.5% due to the combined effect of economic downturn,
piracy and illegal downloading of music from the Internet, UMG outperformed its
major competitors, increasing its global market share, according to UMG
management estimates, from 23.5% at year end 2001 to 24.5% at year end 2002.

     The key to UMG's success in growing its market share has been its ability
to consistently spot, attract and retain a relatively high proportion of
successful artists and market them effectively. We believe this is mainly due
to:

     - The relative stability of the management team compared to UMG's major
       competitors, which has allowed UMG to have a consistent strategy to
       respond effectively to industry and social trends and challenges;

     - UMG's size and strength in distribution which builds on itself by
       attracting established artists;

     - UMG's huge catalog of prior hit releases that provide a stable and
       profitable revenue stream, accounting for nearly one-third of sales,
       without significant additional investment;

     - UMG's diverse array of decentralized labels that complement each other
       through their focus on different genres, sub-genres and market segments
       thereby mitigating the effect of changes in consumer tastes; and

                                        33
<PAGE>

     - Multi-album contracts which secure long-term relationships with some of
       the most important artists in the industry.

     UMG generally acquires the contractual right to the output of musical
artists by paying them an advance against a percentage royalty on the wholesale
or retail price of their recordings. With a few exceptions, rights are
contracted on an exclusive and global basis. UMG manages approximately 2,000
active artists and has approximately 50,000 albums in its active product
catalog.

     In line with the rest of the industry, UMG's revenues and profits are
driven by hits, with a relatively small proportion of releases accounting for
the majority of sales. Therefore, UMG's labels usually sign new artists for
multi-album contracts, typically up to six albums (most of these albums at UMG's
option) so that those artists that become successful are tied-in sufficiently to
support the cost of producing the vast majority of recordings that are not as
commercially successful. Established artists command higher advances and royalty
rates and it is not unusual for a recording company to renegotiate contract
terms with a successful artist. However, UMG is not dependent on any one artist.
UMG's top 15 album releases accounted for 14% of unit volume in 2002.

     Best selling albums in 2002 included those by Eminem, Shania Twain and
Nelly. Eminem recordings, including the 8 Mile original sound track, sold over
21 million copies worldwide in 2002. The strength and depth of UMG's catalog was
highlighted once again with Greatest Hits albums for U2, Nirvana and Elton John
selling over 11 million units in the aggregate. New artists also made a
significant contribution to activity and releases from Ashanti and Vanessa
Carlton shipped in excess of 6 million units in the aggregate. In 2003, UMG
released the successful 50 Cent debut album and also has scheduled releases of
new albums by Ashanti, Blink 182, Dr. Dre, Jay Z, Limp Bizkit, Nickelback, Sting
and Texas.

     In addition to recently released recordings, we also market and sell
recordings from our catalog of prior releases. Sales from this library account
for a significant and stable part of our recorded music revenues each year. We
own the largest catalog of recorded music in the world, with performers from the
US and the UK and around the world, including: ABBA, Louis Armstrong, Chuck
Berry, James Brown, Eric Clapton, Patsy Cline, John Coltrane, Count Basie, Bill
Evans, Ella Fitzgerald, The Four Tops, Marvin Gaye, Jimi Hendrix, Billie
Holiday, Buddy Holly, The Jackson Five, Antonio Carlos Jobim, Herbert von
Karajan, Bob Marley, Nirvana, The Police, Smokey Robinson, Diana Ross & The
Supremes, Rod Stewart, Muddy Waters, Hank Williams and The Who.

     The average price of a CD album in the US has fallen at a compound annual
rate of 2.5% from $21.50 in 1983 to $14.02 by 2000 according to the Recording
Industry Association of America (RIAA). Discounting to drive momentum on certain
releases, increased competition from other forms of entertainment, such as home
video DVDs, and discounting by retailers to build store traffic, have all
contributed to lowered prices. In general, the period of growth in recorded
music sales driven by the introduction and penetration of the CD format has
ended, and no profitable new format has emerged to drive growth.

     Technological advances and the conversion of music into digital formats
have made it easy to create, transmit and "share" high quality, unauthorized
copies of music through pressed disc and CD-R piracy, home CD burning and the
downloading of music from the Internet. Unauthorized copies and piracy cost the
recorded music industry an estimated $4.3 billion in lost revenues during 2001,
the last year for which data is available, according to the International
Federation of the Phonographic Industry. IFPI estimates that 1.9 billion pirated
units were manufactured in 2001, equivalent to about 40% of all CDs and
cassettes sold globally. According to IFPI estimates, about 28% of all CDs sold
in 2001 were pirated, up from about 20% in 2000. We believe that these
percentages are continuing to increase. The industry is, however, increasing its
enforcement activities against piracy. Unauthorized copies and piracy both
decrease the volume of legitimate sales and put pressure on the price at which
legitimate sales can be made. In order to address unauthorized copying and
pirating threats, UMG continues to experiment with a variety of technologies
designed to prevent CD copying and duplication. In 2002, UMG released a number
of titles with copy protection primarily in Europe and, to a lesser extent, in
North America.

                                        34
<PAGE>

     UMG markets its recordings and artists through advertising and otherwise
gaining exposure for them through magazines, radio, TV, Internet, other media
and point-of-sale material. Public appearances and performances are an important
element in the marketing process. We arrange for television and radio
appearances and may provide financing for concert tours by some artists. TV
marketing of both specially compiled products and new albums is becoming
increasingly important. Marketing is carried out on a country-by-country basis,
although global priorities and strategies for certain artists are set centrally.
Music sales are weighted towards the last quarter of the calendar year, when
approximately one-third of annual revenues are generated.

     In all major countries in which our products are sold except Japan, we have
our own distribution services for the warehousing and delivery of finished
products to wholesalers and retailers. In certain countries we have entered into
distribution joint ventures with other record companies. We also sell music and
video products directly to the consumer, principally through two direct mail
club organizations: Britannia Music in the UK and D.I.A.L. in France.

  E-Commerce and Electronic Delivery

     UMG continues to encourage and participate in new methods to distribute,
market, sell, program and syndicate music and music-related programming by
exploiting the potential of new technological platforms. We believe that
emerging technologies will be strategically important to the future of the music
business. Evolving technology will allow current customers to sample and
purchase music in a variety of new ways and will expose potential customers to
new music. Through a variety of independent initiatives and strategic alliances,
we continue to invest resources in the technology and electronic commerce areas
that will allow the music business to be conducted over the Internet, cellular
networks, cable and satellite.

     pressplay, a joint venture of UMG and Sony Music Entertainment, offers
access to hundreds of thousands of tracks from all five majors and many
independent record companies for a monthly fee. pressplay's subscribers also may
retain tracks permanently for an additional fee. UMG also licenses its music to
other subscription services including Musicnet, Listen.com's Rhapsody, Full
Audio and Streamwaves. Consumers may customize Internet radio streams so that
the music they prefer is played more often, or they may simply listen to
programming provided for everyone. In all of these cases, UMG receives a fee or
commission each time someone accesses music to which it owns the rights. On May
19, 2003, Roxio, Inc. acquired substantially all of the interests of pressplay.
See "Item 5--Operating and Financial Review and Prospects--Subsequent Events."

     UMG also offers over 90,000 of its recorded music tracks for purchase as
permanent downloads through third party sites. UMG's music is available through
the Apple Music Store. UMG is also working with Liquid Audio to power download
sales that are available on Liquid.com, Windowsmedia.com, Towerrecords.com,
Musicrebellion.com, MP3.com and more than 25 other affiliate partner websites.
The Liquid Audio tracks are available in the Windows Media and Liquid Audio
formats, and like the tracks available at the Apple Music Store, can be
downloaded, burned to a CD-R, or transferred to a secure portable device. UMG
also continues to sell or license its music catalog through various other
non-exclusive agreements, both for digital "a la carte" downloading services as
well as interactive radio services. For example, UMG has issued catalog licenses
to Listen.com and MusicNet for their on-demand subscription services and to
Musicmatch and RCS for their interactive radio services.

  Music Publishing

     Music publishing involves the acquisition of rights to, and licensing of,
musical compositions (as opposed to recordings). We enter into agreements with
composers and authors of musical compositions for the purpose of licensing the
compositions for use in sound recordings, films, videos and by way of live
performances and broadcasting. In addition, we license compositions for use in
printed sheet music and song folios. We also license and acquire catalogs of
musical compositions from third parties such as other music publishers and
composers and authors who have retained or re-acquired rights. Accordingly,
revenues in this sector are

                                        35
<PAGE>

generated largely through licensing fees, with much smaller revenues from sales
of printed sheet music and song folios.

     Our publishing catalog includes more than one million titles that we own or
administer, including some of the world's most popular songs, such as "American
Pie," "Strangers in the Night," "Good Vibrations," "I Wanna Hold Your Hand,"
"Candle in the Wind," "I Will Survive" and "Sitting on the Dock of the Bay,"
among many others. Among the significant artists and songwriters represented are
ABBA, Prince, The Beach Boys, George Brassens, Bon Jovi, Gloria Estefan, Eddy
Mitchell, Andre Rieu, Shania Twain, Andrew Lloyd Webber and U2. Legendary
composers represented include Leonard Bernstein, Elton John and Bernie Taupin,
and Henry Mancini. Significant acquisitions in 2002 included Koch Music
Publishing and the Tupac Shakur catalog as well as compositions by Ashanti,
Avril Lavigne, Gloria Estefan, Anastacia, Rob Davis, Royksopp, Liam Gallagher,
Jorge Luis Piloto, Paul Kelly, Murlyn Songs, Jack Johnson and The Hives, among
others.

  Competition

     The profitability of a company's recorded music business depends on its
ability to attract, develop and promote recording artists, the public acceptance
of those artists and the recordings released in a particular period. UMG
competes for creative talent both for new artists and those artists who have
already established themselves through another label with the following major
record companies: EMI, Bertelsmann Music Group, Warner Music Group and Sony
Music Entertainment. UMG also faces competition from independents that are
frequently distributed by other major record companies. Although independent
labels have a significant combined market share, no label on its own has
influence over the market. Changes in market share are essentially a function of
a company's artist rosters and release schedules.

     The music industry also competes for consumer discretionary spending with
other entertainment products such as video games and motion pictures.
Competition for shelf space has intensified in recent years due to the success
of DVD video and further consolidation in the retail sector in the US and in
Europe which is increasing the quantity of product being sold through
multinational retailers and buying groups and other discount chains.

     Finally, the recorded music business continues to be adversely affected by
pressed disc and CD-R piracy, home CD burning and the downloading of music from
the Internet. On-demand music subscription services such as pressplay and
on-demand "a la carte" services are being developed to offer the consumer a
viable, legitimate, copy-protected online source of music. See "--Recorded
Music."

  Regulatory Environment

     The recorded music, music publishing, manufacturing and distribution
businesses that comprise UMG are subject to applicable national statutes, common
law and regulations in each territory in which it operates. In the US, these
agencies include, without limitation, the US Department of Justice, the Federal
Trade Commission (FTC), the Environmental Protection Agency and the Occupational
Safety and Health Administration, and in the various states they include the
Attorney General and other labor, health and safety agencies. Additionally, in
the US, certain UMG companies entered into a Consent Decree in 2000 with the
Federal Trade Commission for seven years wherein they agreed not to make the
receipt of any co-operative advertising funds for their pre-recorded music
product contingent on the price or price level at which such product is
advertised or promoted.

     In the European Union, UMG is subject to additional pan-territorial
regulatory controls, in particular relating to merger control and antitrust
regulation. UMG is also subject to an undertaking given to the European
Commission arising out of Vivendi's purchase of Seagram, which, for a five-year
period (ending in December 2005), requires that UMG shall not discriminate in
favor of Vizzavi (formerly a joint venture between Vivendi Universal and
Vodafone) in supplying music for downloading and streaming online in the
European Economic area. An undertaking given in connection with Vivendi's
purchase of Seagram to the Canadian Department of Heritage also requires UMG to
continue its investments in Canada's domestic music industry.

                                        36
<PAGE>

     Continuing compliance with the consent decree and undertakings mentioned
above do not have a material effect on the business of UMG.

  Research and Development

     UMG seeks to participate to the fullest extent in the digital distribution
of recorded music and to protect its copyrights and the rights of its contracted
artists from unauthorized digital or physical distribution. To this end, UMG has
established a new business and technology arm, eLabs. This unit supervises UMG's
digitization of content and the online distribution of that content, and
generally reviews the licensing of that content to third parties. In addition,
it generally reviews and considers the technologies being developed by others
for application in UMG businesses, such as technological defenses against piracy
in all forms, and is engaged in various projects intended to open new
distribution channels or improve existing ones.

VIVENDI UNIVERSAL ENTERTAINMENT (VUE)

     Our film, television and parks and resorts businesses are conducted
primarily through VUE, a limited liability limited partnership 86% held by
Vivendi Universal. VUE was formed in April 2002 and used for the May 2002
transaction among Vivendi Universal, Universal Studios, Inc., USA Networks, Inc.
(now known as InterActiveCorp, which we refer to as USAi), USANi LLC, Liberty
Media Corporation and Barry Diller. In this transaction, Universal Studios, Inc.
contributed to VUE the Universal Studios Group, consisting of Universal's film,
television and recreation businesses, and USA Networks Inc. contributed its
ownership interest in the USA Entertainment Group, consisting of USA Cable (now
known as Universal Television Networks), USA Films (now Focus Features) and
Studios USA (now known as Universal TV LLC).

     The primary businesses in which VUE engages are:

     - Universal Pictures Group (UPG).  UPG is a major film studio, engaged in
       the production and distribution of motion pictures worldwide in the
       theatrical, non-theatrical, home video/DVD and television markets;

     - Universal Television Group (UTG).  UTG is engaged in the production and
       distribution of television programming worldwide as well as the ownership
       and operation of four domestic cable television networks, including USA
       Network and the Sci Fi Channel, and a network of international television
       channels outside of the United States; and

     - Universal Parks & Resorts (UPR).  UPR owns and operates theme parks,
       entertainment complexes and specialty retail stores worldwide.

     In addition to VUE's three primary businesses, VUE also has a Universal
Studios Operations Group which is responsible for providing quality
production/post production facilities and services to both internal and external
productions. It is also responsible for managing VUE's lower lot facility in Los
Angeles and ensuring that services to VUE's employees, tenants and productions
are uninterrupted.

     Effective April 1, 2003, Barry Diller resigned as interim chief executive
of Vivendi Universal Entertainment.

                                        37
<PAGE>

     The following table shows the pro forma revenue for each of the primary
businesses in which VUE is engaged for each of the periods indicated:

                                    REVENUES

<Table>
<Caption>
                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                                (IN MILLIONS)
<S>                                                           <C>       <C>
UPG.........................................................  E 3,927   E 3,803
UTG.........................................................    2,199     2,134
UPR and Other...............................................      852       937
                                                              -------   -------
Total.......................................................  E 6,978   E 6,874
                                                              =======   =======
</Table>

     The revenue and operational information and data relating to VUE and its
businesses set forth in this section is presented on a pro forma basis, adjusted
to include the results of the entertainment assets of USAi, which was acquired
in May 2002, as if it had been acquired on January 1, 2001, and the results of
Universal Studios international television networks in 2002 (in the actual 2002
results, the results of Universal Studios international television networks were
reported by Canal+ Group).

UNIVERSAL PICTURES GROUP (UPG)

     VUE, through Universal Pictures and Focus Features, is a major producer and
distributor of feature films worldwide. Universal Pictures and Focus Features
produce feature films that are initially distributed to theatres and,
thereafter, through other "windows" of distribution, including non-theatrical,
home video and DVD, pay-per-view and video-on-demand, and pay, free and basic
cable and satellite television.

     Key geographic markets for motion picture distribution, as described in the
preceding paragraph, include the United States, Canada, Europe, Asia, Latin
America and Australia.

     The following tables show information on VUE's motion picture revenue for
each of the periods indicated, broken down by geographic market and "release
window":

                               GEOGRAPHIC MARKET

<Table>
<Caption>
                                                                  YEAR ENDED
                                                               DECEMBER 31, 2002
                                                               -----------------
                                                                 (IN MILLIONS)
<S>                                                            <C>
North America...............................................        E 2,239
Europe......................................................          1,217
Rest of the World...........................................            471
                                                                    -------
Total.......................................................        E 3,927
                                                                    =======
</Table>

                                 RELEASE WINDOW

<Table>
<Caption>
                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                                (IN MILLIONS)
<S>                                                           <C>       <C>
Theatrical..................................................  E   746   E   913
Home Video..................................................    2,239     2,016
Television..................................................      943       875
                                                              -------   -------
Total.......................................................  E 3,927   E 3,803
                                                              =======   =======
</Table>

                                        38
<PAGE>

     Major motion pictures released in recent years include Erin Brockovich,
Gladiator, The Mummy Returns, Meet the Parents, The Fast and the Furious,
Jurassic Park III, Dr. Seuss' How The Grinch Stole Christmas, A Beautiful Mind,
The Scorpion King, Red Dragon, The Bourne Identity and 8 Mile. In addition, the
Universal Pictures Group produces animated and live-action family programming
for home video and television distribution and licenses merchandise in various
parts of the world.

     VUE, through its wholly-owned subsidiaries, distributes its motion pictures
in the United States and Canada to theaters. Throughout the rest of the world,
VUE distributes its motion pictures through United International Pictures B.V.,
a joint venture owned equally by Universal Studios International B.V., a wholly
owned subsidiary of VUE, and Viacom International (Netherlands) B.V.
(Paramount). Through an agreement with DreamWorks SKG, VUE also distributes
theatrically DreamWorks' motion pictures outside of the United States and
Canada.

     The distribution of VUE's products on videocassettes and DVDs is handled by
wholly-owned subsidiaries of VUE throughout the world. Through a servicing
agreement with DreamWorks SKG, VUE also distributes DreamWorks' home video
products throughout the world.

     After a motion picture's theatrical exhibition and its home video/DVD
release, VUE seeks to generate revenues from various other distribution
channels, including non-theatrical distribution (such as airlines, hotels,
cruise ships and armed forces facilities) and various forms of television
distribution. Television distribution includes worldwide exhibition on
pay-per-view and video-on-demand services, subscription pay television services,
network and basic cable and satellite television services, and independent
television stations. VUE does not always have rights in all media of exhibition
to all motion pictures that it theatrically releases and does not necessarily
distribute a given motion picture in all of the foregoing media in all markets.

     VUE's licensing arrangements may be on an "output" basis, where the
licensee is obligated to exhibit some or all of VUE's future motion pictures or
programs over a given period of time, or on a package basis, where the licensee
is obligated to exhibit one or more specified motion pictures or programs. In
the US, VUE has output arrangements for pay-per-view and/or video-on-demand
exhibition with parties such as DirecTV, EchoStar and iNDemand. As for pay
television, VUE has output arrangements with Home Box Office, providing for the
licensing of films released for theatrical exhibition through the year 2010, as
well as a partially overlapping arrangement with Starz Encore Group, providing
for the licensing of a portion of the films released for theatrical exhibition
through the year 2004. VUE also licenses motion pictures and other programs to
the broadcast television networks ABC, NBC, CBS, Fox, UPN and The WB, to
independent broadcast television stations and to basic cable networks, such as
AMC, Bravo, Comedy Central, MTV, Sci Fi Channel, TBS and USA; domestically,
these licenses are generally made on a package basis. In international markets,
VUE licenses motion pictures and other programs on both an output and package
basis to leading third-party pay-per-view and video-on-demand services and to
free, basic and pay television services, including programming services operated
by various affiliated entities and several joint ventures with various other
major studios and other partners.

  UNIVERSAL TELEVISION GROUP (UTG)

     UTG is engaged in two primary businesses:

     - UTG Cable.  UTG's cable business owns and operates four domestic cable
       television networks and a network of international pay television
       channels outside of the United States; and

     - Television Production and Distribution.  UTG's television production and
       distribution business is engaged in the production and distribution of
       television programming worldwide.

                                        39
<PAGE>

     The following table shows UTG's revenues for each of the primary businesses
in which UTG is engaged broken down for each of the periods indicated:

                                    REVENUES

<Table>
<Caption>
                                                                  YEAR ENDED
                                                                 DECEMBER 31,
                                                              ------------------
                                                               2002       2001
                                                              -------    -------
                                                                (IN MILLIONS)
<S>                                                           <C>        <C>
Cable Television Networks...................................  E 1,252(1) E 1,338
Television Production and Distribution......................      947        795
                                                              -------    -------
Total.......................................................  E 2,199    E 2,134
                                                              =======    =======
</Table>

---------------

(1) Includes international TV channels (in the actual 2002 results, the results
    of Universal Studios international television networks were reported by
    Canal+ Group).

     In 2002, 78% of UTG's revenues were generated in North America. VUE also
distributes worldwide current television series and made-for-video and
made-for-television motion pictures, as well as titles from its extensive motion
picture and television library, which consists of varying rights to thousands of
previously released feature films and many well-known television series and
made-for-video and made-for-television motion pictures. In the US, such licenses
are generally made on a package basis, while outside the US such licenses may be
either on an output or package basis depending on the territory and licensee
involved.

  Cable Television Networks

     In the US, VUE operates four domestic 24-hour, basic cable television
networks, USA Network, Sci Fi Channel, TRIO and NewsWorld International (NWI).

     Cable television networks derive virtually all of their revenue from two
sources:

     - Affiliate revenues.  Per subscriber fees paid by the cable television
       operators and other distributors to cable television channel providers.
       These revenues generally provide more stable and predictable cash flow;
       and

     - Advertising revenues.  The sale of advertising time to national
       advertisers during the programming carried on each of the networks.

     The relative stability of affiliate revenues helps reduce cable television
networks' sensitivity to advertising cycles. UTG's cable television network
combined revenue streams have grown at an average rate of 10% over the past 5
years. The total market size, between affiliate and revenue fees, is estimated
to be $17.5 billion (Kagan/UTV Research).

     The following table shows a breakdown of UTG's cable television network
revenues for each of the periods indicated:

                                    REVENUES

<Table>
<Caption>
                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                              2002(1)    2001
                                                              -------   -------
                                                                (IN MILLIONS)
<S>                                                           <C>       <C>
Cable Television Networks
  Affiliate revenues (subscription fees)....................  E   721   E   695
  Advertising revenues......................................      531       643
                                                              -------   -------
Total.......................................................  E 1,252   E 1,338
                                                              =======   =======
</Table>

                                        40
<PAGE>

---------------

(1) Includes international television networks (in the actual 2002 results, the
    results of Universal Studios international television networks were reported
    by Canal+ Group).

     USA Network is a general entertainment network featuring original series
and movies, theatrical movies, off-network television series and major sporting
events, designed to appeal to the available audiences during particular viewing
hours. In general, USA Network's programming is targeted at viewers between the
ages of 18 and 54. According to Nielsen Media Research, as of December 31, 2002,
USA Network was available in approximately 87 million US households. According
to Nielsen Media Research, for 2002, USA Network was first among all domestic
basic cable television networks in primetime ratings among adults 18-49 (Mon-Sun
7pm-11pm).

     USA Network's program line-up features original series, including the two
highest rated original dramatic series on basic cable television (Dead Zone and
Monk) and approximately six movies/mini-series produced exclusively for it each
year. USA Network's programming also includes off-network series, such as JAG,
Nash Bridges, Walker, Texas Ranger, Law & Order: Special Victims Unit and Law &
Order: Criminal Intent, and major theatrically released feature films. USA
Network is home to the AFI Life Achievement Awards, Eco-Challenge, exclusive
midweek coverage of the US Open Tennis Championships, The Westminster Kennel
Club Dog Show, and early round coverage of The Masters, The Ryder Cup and other
major PGA Tour golf events.

     Sci Fi Channel was launched in 1992. Sci Fi Channel features science
fiction, horror, fantasy, paranormal and reality programming. In general, Sci Fi
Channel's programming is designed to appeal to viewers between the ages of 25 to
54. According to Nielsen Media Research, as of December 31, 2002, Sci Fi Channel
was available in approximately 79.4 million US households. According to Nielsen
Media Research, in 2002, Sci Fi Channel was sixth among all basic cable
television networks in adults 25-54 and ninth in adults 18-49.

     Sci Fi Channel's program lineup includes many original dramatic and reality
series, such as: Stargate: SG-1, Farscape, Tremors: The Series, Crossing Over
With John Edward and Scare Tactics. Additionally, Sci Fi Channel airs popular
vintage series ranging from The Twilight Zone to Quantum Leap to digitally-
remastered episodes of the original Star Trek series. Sci Fi Channel
continuously updates its programming library with popular current sci-fi fare
such as X-Files, The Outer Limits, Babylon 5 and Beyond Belief: Fact or Fiction.
Additionally, Sci Fi Channel features many popular theatrical movies, as well as
movies and mini-series made specifically for the network. In 2002, Sci Fi
Channel grabbed headlines with the record-breaking 20-hour original premiere
mini-series, Stephen Spielberg Presents Taken. In 2003, Sci Fi Channel will
telecast two more mini-series made directly for it -- Frank Herbert's Children
of Dune and Battlestar Gallactica.

     TRIO and NWI were acquired by USA Cable from the Canadian Broadcasting
Corporation and Power Broadcasting Inc. in May 2000. TRIO relaunched in June
2001 as "popular arts television" featuring the best in film, fashion, music,
stage and popular culture. NWI is a 24-hour international news channel that
presents newscasts every hour as well as long-form contemporary magazine shows.
At December 31, 2002, TRIO and NWI were available in 15 million and 14 million
households, respectively.

     USA Network and Sci Fi Channel typically enter into long-term agreements
for their major off-network series programming. Their original series
commitments usually start with less than a full year's commitment, generally a
pilot episode, but contain options for further production over several years.
These original productions will include specials, series, and
made-for-television movies. USA Network, and to a lesser extent, Sci Fi Channel,
acquire theatrical films in both their "network" windows and "pre-syndication"
windows. Under these arrangements, the acquisition of such rights is often
concluded many years before the actual exhibition of the films begins on the
network. Each network's original films start production less than a year prior
to their initial exhibition.

  International Television Networks

     Universal Studios Networks Worldwide Limited and various other indirect
subsidiaries of Universal Studios, Inc. operate a network of international
television channels. As of December 31, 2002, Universal Studios Networks
Worldwide manages branded television channels in 25 countries outside of the
United

                                        41
<PAGE>

States. 13th Street -- The Action & Suspense Channel reaches television
subscribers via satellite and cable systems in France, Germany and Spain. Studio
Universal, a basic-tier television movie channel, is currently available to
cable and satellite subscribers in Germany, and to satellite subscribers in
Italy. The Sci Fi Channel, a basic-tier television channel with a
science-fiction theme, is currently available to cable and satellite subscribers
in the UK. Finally, the USA Network channel, a basic-tier general entertainment
channel, is offered to cable and satellite subscribers in Brazil, through a
local joint venture partially owned by a Universal Studios subsidiary, and in 19
other countries in Latin America. In 2002, the results of Universal Studios
international television networks were reported by Canal+ Group.

  Television Production and Distribution

     VUE is one of the major suppliers of television programs made for worldwide
exhibition. Through its various subsidiaries, VUE either directly produces, or
finances and acquires ownership of, and distributes a broad variety of
television series, made-for-television movies, mini-series, children's shows and
game and reality-based programs.

     The production business tends to be less predictable than the cable
television business as it requires significant upfront investment with no
guarantee of the success of a television series. Typically, a show is created on
a pilot format, which, if successful, will be licensed by a broadcast network
for a number of seasons. License fees paid by the network typically do not cover
costs, meaning that a television show typically only becomes profitable after
entering syndication (usually after four seasons). However, approximately 90% of
shows are cancelled before the fourth season. This means that the key drivers
for the television production and distribution business are the recruitment and
retention of creative talent and a good "hit ratio" of successful television
shows that are launched.

     VUE is a supplier of primetime dramatic and comedy programming for initial
exhibition on the US broadcast networks, including (during the 2002/03
television season) the long-running series Law & Order and its spinoffs, Law &
Order: Special Victims Unit and Law & Order: Criminal Intent, the newly launched
Dragnet and several series co-produced with individual US networks, including
The District and The Agency on CBS, and American Dreams on NBC. VUE is likewise
a leading supplier of programs for initial exhibition in US domestic syndication
(i.e., sales to individual television stations or station groups). During the
2002/03 season, these programs included talk shows -- Maury (hosted by Maury
Povich) and The Jerry Springer Show -- and such game and reality shows as Blind
Date, Fifth Wheel and Crossing Over With John Edward. VUE also finances,
acquires and distributes programs produced for initial exhibition on VUE's US
cable television networks, including the dramatic series Tremors on Sci Fi
Channel and Monk on USA Network, as well as the epic mini-series Helen of Troy
for USA Network. VUE also has a majority interest in the new production label
Reveille LLC, which recently launched the new series Nashville Star on USA
Network, as well as two new series -- The Restaurant and The Fast & the
Furious -- on NBC.

  UNIVERSAL PARKS & RESORTS (UPR)

     Universal Parks & Resorts is a leader in the development and operation of
theme parks. UPR owns 100% of Universal Studios Hollywood, the world's largest
combined movie studio and movie theme park, and Universal CityWalk Hollywood, a
complex that offers shopping, dining, cinemas and entertainment, each located in
Universal City, California. Additionally, through joint ventures with
Blackstone, UPR owns 50% of Universal Studios Florida -- a combined movie studio
and movie theme park, Universal's Islands of Adventure -- an adjacent theme park
in Orlando, Florida, and Universal CityWalk Orlando -- a complex that offers
shopping, dining, cinemas and entertainment. Further stakes include a 25%
interest in UCF Hotel Venture -- a joint venture owning three hotels adjacent to
the Orlando theme parks, a 37% interest in Universal Mediterranea near
Barcelona, Spain, comprised of a theme park, water park and two hotels, and a
24% interest in Universal Studios Japan in Osaka. The Universal Orlando joint
venture has recently completed a $500 million bond offering. In connection with
this offering, Blackstone and VUE agreed that Blackstone will lend to VUE (or a
subsidiary of VUE) its share of certain distributions from the joint ventures,
up to approximately $22.5 million.

                                        42
<PAGE>

     The US market is now mature and further growth is more likely to come from
business expansion in Asia and Europe.

     UPR's business is seasonal and bad weather can adversely impact attendance
at theme parks and resorts. Attendance at theme parks follows a seasonal pattern
which coincides closely with holiday and school schedules. Prolonged bad or
mixed weather conditions during seasonal peak attendance periods may reduce
attendance causing a greater decline in revenues than if those conditions
occurred during a low attendance period.

     Theme park construction and operation is capital-intensive. Maintenance
capital expenditures can absorb 5% to 10% of revenues, while the cost of
developing a new destination park can range from $1 to $2 billion. UPR attempts
to share the costs of developing the parks by taking only a partial equity
interest while signing agreements to manage the completed parks. For managing
the parks, UPR receives an annual management fee.

     On February 10, 2003, UPR (through its wholly owned Mauritius entity
Universal Studios Holding, Ltd.) entered into a joint venture with two partners
in the People's Republic of China for the construction of a theme park in
Shanghai. UPR will have a 25% interest in the joint venture. The agreement
provides that UPR will manage day-to-day operations of the park and will have
key veto rights. The total project cost is estimated to be $875 million. The
agreement remains subject to governmental approval in China and other
significant conditions subsequent.

     VUE has agreed to provide a project completion guarantee in respect of the
Shanghai theme park joint venture on a pro rata basis based upon its
subsidiary's 25% ownership interest in the joint venture. This project
completion guarantee is expected to include the guarantee of UPR's pro rata
share of all amounts owing under an approximately $563 million bank loan to the
joint venture. The obligations under this guarantee will be payable if the
Shanghai theme park is abandoned or is not completed on or prior to the Project
Completion Date. The "Project Completion Date" is expected to be a date no
earlier than 42 months and no later than 51 months after the physical site,
including certain improvements, is delivered to the joint venture so that it can
commence construction. That delivery could occur as early as June 2003. The
guarantee will be released upon completion of project construction.

  COMPETITION

  Competition in the Motion Picture Industry

     There are eight major competitors in the motion picture industry in the US
and several independents that compete aggressively against each other in all
aspects of the production, acquisition and distribution of motion pictures.
These companies include Universal Pictures, The Walt Disney Company, Warner
Bros., DreamWorks SKG, Paramount Pictures Corporation, Metro-Goldwyn-Mayer
Studios, Inc., Twentieth-Century Fox Film Corporation and Sony (through
Columbia/Tri-Star and Sony Pictures). These US "majors" compete against each
other and against independent motion picture companies for product, talent and
revenue received at the box office from the distribution of motion pictures
through all of the distribution channels discussed above. Market share in the US
and international markets varies widely from picture to picture, by "window" and
geographic market, and year to year given the volatility in the commercial
acceptance of motion pictures by consumers. In 2002, according to the Motion
Picture Association of America, Universal Pictures ranked fifth in the US
theatrical market with a 9.3% market share.

     Competition is also intense in distributing VUE's theatrical motion
pictures in the various television markets. There are numerous suppliers of
television programming worldwide, including the television networks, the other
major studios and independent producers, all of which compete actively for the
limited number of broadcast hours available on free, basic cable and pay
television. In addition, unlike VUE, many of the other major studios are
affiliated with major broadcast television networks, which can provide a ready
means of distributing their products, as well as an additional source of
earnings that can offset the fluctuations in the financial performance of their
motion picture and television operations.

                                        43
<PAGE>

  Competition in Television Production and Distribution

     VUE produces television programs in a highly competitive environment, as
such programs must compete with television product supplied by other producers,
as well as all other forms of entertainment and leisure time activities. Within
the television industry, VUE must first compete for the creative
talent -- writers, actors, producers -- and the underlying literary properties
needed to produce television shows. VUE's produced programs, including
television series and made-for-television and made-for-video motion pictures,
must then strive for success in a worldwide television marketplace that has
become ever more competitive as digital cable and satellite delivery
increasingly expand the number of channels (and competing programs) available to
consumers. Competition in the critical US production market has also been
increased by the growing consolidation and vertical integration of several large
television and media giants. In particular, the 1995 repeal of the financial
interest and syndication rules in the US has permitted these conglomerates to
combine ownership of television production businesses with broadcast networks.
As a result, the current US broadcast networks -- ABC, CBS, NBC, Fox, The WB and
UPN -- are able to fill their schedules with a large percentage of self-owned
programs, thus reducing the number of time slots available to VUE and other
"outside" producers. Nonetheless, up through the current 2002/03 season, VUE
continues to be one of the primary "independent" suppliers of broadcast network
programming. VUE has also achieved success in producing original programming for
VUE's own cable networks and remains a leading producer of "first-run"
syndicated product. Internationally, competition can be exacerbated due to
regulatory and local market factors, including the imposition of quotas,
limiting the amount of foreign programming those television services are
permitted to exhibit, and increases in the availability of locally produced
programs.

  Competition in the Cable Television Industry

     VUE's basic cable television networks compete for access to customers and
for audience share and revenue with other cable program services, broadcasters,
and other forms of entertainment. Cable operators and other distributors only
contract to carry a limited number of the available networks. Therefore, they
may decide not to offer a particular network to their subscribers, or they may
package a network with other networks in a manner that only a portion of their
subscribers will receive the service (for example, by charging an additional
fee). In addition, there has been increased consolidation among cable operators,
so that VUE's networks have become increasingly subject to the carriage
decisions made by a small number of operators. This consolidation may reduce the
per-subscriber fees received from cable operators in the future. This
consolidation also means that the loss by any network of any one or more of its
major distributors could have a material adverse impact on the network. The
competition for advertising revenues also has become more intense as the number
of television networks has increased. While many factors affect advertising
rates, ultimately they are dependent on the numbers and types of viewers that a
program attracts. As more networks compete for viewers, it becomes increasingly
difficult to increase or even maintain a network's number of viewers. Moreover,
to do so may require a network to spend significantly greater amounts of money
on programming. Therefore, greater pressure may be placed on a network's ability
to maintain advertising revenue levels and to try and generate increases. The
competition for third-party programming also is likely to increase. Many
networks, including VUE's networks, are affiliated with companies that produce
programming. This programming is becoming increasingly difficult to acquire by
third parties or unaffiliated networks. As a result, there is likely to be
strong competition to acquire remaining programming.

  Competition in the Theme Park Industry

     Theme parks can be separated into two main categories: destination parks
(the largest parks, historically located within the US territory, attracting
both US and overseas visitors) and regional parks (smaller parks, attended by
visitors living in the same area). UPR operates in the first category together
with market leader Disney, though recent declines in travel have decreased the
proportion of non-local visitors. Companies such as Six Flags and Cedar Fair
operate in the regional park segment. Barriers to entry, especially in the
destination park segment, are high as development of new parks is constrained by
availability of land and capital.

                                        44
<PAGE>

     VUE, through Universal Parks & Resorts, competes aggressively against other
major theme park operators including The Walt Disney Company, Anheuser Busch
Companies, Paramount Parks, Six Flags and Cedar Fair.

  LEGAL AND REGULATORY ENVIRONMENT

  Legal and Regulatory Environment in Motion Picture Production and Distribution

     In the US, the motion picture production and distribution businesses are
largely unregulated due to protections given to expressive works under the
United States Constitution. There are, however, many federal, state and local
statutes and regulations that are integral to the business and under which the
businesses operate including, without limitation, the copyright, trademark,
antitrust, anti-discrimination and environmental, health and safety laws and
regulations. In addition, many federal and state agencies exercise some degree
of oversight and, at times, may initiate investigations and enforcement
proceedings with regard to industry practices. These agencies include, without
limitation, the United States Department of Justice, the Federal Trade
Commission, the Department of Labor, the Equal Employment Opportunity
Commission, the Environmental Protection Agency and the Occupational Safety and
Health Administration and, in the State of California, the Attorney General, the
Department of Toxic Substances Control and the California Department of
Industrial Relations. VUE, through a variety of internal policies and compliance
procedures, regulates itself in many of these areas. In a few limited areas, a
consent decree and undertakings further regulate the operations of VUE. In the
US, the motion picture distribution and exhibition industries are regulated by
the consent decree in US v. Paramount Pictures, Inc.; this consent decree,
affirmed in 1950, prohibits certain conduct by film distributors, including
price fixing and product tying, and requires film distributors to license
products on a film-by-film and theater-by-theater basis. In the European Union,
VUE is regulated by an undertaking in the pay-TV area which, for a five-year
period in each affected country, starting from the end of Universal's existing
first window output deal in that country, will regulate certain business with
Canal+; and is regulated in the film distribution area through an undertaking
given by United International Pictures, the joint venture through which VUE
distributes its feature films theatrically outside of the US and Canada. An
undertaking with the Canadian Department of Heritage also regulates certain
operations of Universal Studios Canada. Continuing compliance with the laws,
regulations, consent decree and undertakings mentioned in this paragraph do not
have a material effect on the business of VUE.

  Legal and Regulatory Environment in Television Production and Distribution

     Many countries enforce quotas that restrict the amount of US-produced
television programming that may be aired on television in such countries. There
can be no assurances that additional television quotas will not be enacted or
that countries that already impose quotas will not more strictly enforce them.
Additional or more restrictive quotas or stricter enforcement of existing quotas
could adversely affect VUE's business by limiting its ability to exploit its
motion pictures and television products internationally.

     Distribution rights to motion pictures and other programs are granted legal
protection under US copyright law and the copyright laws of many foreign
countries, which generally provide civil and criminal penalties for the
unauthorized duplication and exhibition thereof. VUE's ability to distribute and
exploit its motion pictures and other television programming is affected by the
strength and effectiveness of these laws. VUE attempts to take appropriate and
reasonable measures to secure, protect and maintain copyright protection for all
of its motion pictures and other television programming under the laws of
applicable jurisdictions. However, despite these measures, motion picture piracy
continues to be extensive in many parts of the world, including South America,
Asia, the countries of the former Soviet Union and other former Eastern Bloc
countries. In the past, various trade associations have enacted voluntary
embargoes of motion picture exports to certain countries in order to pressure
the governments of those countries to be more aggressive in preventing motion
picture piracy. In addition, the US government has publicly considered trade
sanctions against specific countries that do not take steps to prevent copyright
infringement of US-produced motion pictures. There can be no assurance that
voluntary industry embargoes or US government trade sanctions will be enacted or
be effective. If enacted, such actions could impact the amount of revenue that
VUE realizes from the international exploitation of its motion pictures
depending upon the countries subject to such action and the duration of
                                        45
<PAGE>

such action, and if not enacted or not effective or if other measures are not
taken, VUE may continue to lose an indeterminate amount of revenue as a result
of piracy.

     US television stations and networks, as well as foreign governments, impose
content restrictions on motion pictures that may restrict in whole or in part
exhibition on television or in a particular territory. There can be no assurance
that such restrictions will not limit or alter VUE's ability to exhibit certain
motion pictures in such media or markets.

     VUE is subject to certain regulations by the European Union and other
international regulatory authorities. The European Commission recently initiated
investigations into certain aspects of licensing relationships between studios
and channel operators, and there are no assurances that limitations or
restrictions enacted as a result of those investigations or otherwise will not
adversely affect VUE's business and financial results.

  Legal and Regulatory Environment Affecting Television Channels and Programming

     The communications industry, including the operation of television
broadcast stations, cable television systems, satellite distribution systems and
other multichannel distribution systems and, in some respects, vertically
integrated cable programmers, is subject to a substantial federal regulation,
particularly under the Communications Act of 1934, as amended, and the related
rules and regulations of the Federal Communications Commission (FCC).

     Cable Programming.  The Cable Television Consumer Protection and
Competition Act of 1992 prohibits a cable operator from engaging in unfair
methods of competition that prevent or significantly hinder competing
multichannel video programming distributors from providing satellite-delivered
programming to their subscribers. The FCC has adopted regulations to (1) prevent
a cable operator that has an attributable interest, including voting or
non-voting stock ownership of at least 5%, in a programming vendor from
exercising improper influence over the programming vendor in the latter's
dealings with competitors to cable; and (2) prevent a programmer in which a
cable operator has an attributable interest from discriminating among cable
operators and other multichannel video programming distributors, including other
cable operators.

     Cable television systems in the US are also subject to regulation pursuant
to franchises granted by a municipality or other state or local governmental
entity.

     Digital Television.  The FCC has taken a number of steps to implement
digital television service (including high-definition television) in the US,
including the adoption of a final table of digital channel allotments and rules
for the implementation of digital television. The table of digital allotments
provides each existing television station licensee or permittee with a second
broadcast channel to be used during the transition to digital television,
conditioned upon surrender of one of the channels at the end of the digital
television transition period. The FCC set a target date of May 2002 for
completion of construction of digital television facilities and 2006 for
expiration of the digital transition period, subject to biennial reviews to
evaluate the progress of digital television, including the rate of consumer
acceptance. Although the FCC has granted waivers of the May 2002 target date to
a number of stations and a number of requests for waivers are pending, the
number of stations providing both digital and analog programming has steadily
increased and is expected to do so at an accelerated rate during the next
several years. Under the FCC's rules, deployment of digital television is taking
place in the major television markets more rapidly than in smaller markets; and,
in those markets where digital television channels are now operational, cable
programmers face competition from both over-the-air analog and over-the-air
digital television service.

     Must-Carry/Retransmission Consent.  Full-power television broadcasters are
required to make triennial elections to exercise "must-carry" or "retransmission
consent" rights with respect to their carriage by cable systems in each
broadcaster's local market. By electing must-carry rights, a television
broadcaster demands carriage on a specified channel on cable systems within its
television market, defined by Nielsen as a Designated Market Area.
Alternatively, if a television broadcaster chooses to exercise retransmission
consent rights, it can prohibit cable systems from carrying its signal or grant
the appropriate cable system the authority

                                        46
<PAGE>

to retransmit the broadcast signal for a fee or other consideration. The FCC
currently is conducting a rulemaking proceeding to determine whether, in certain
circumstances, it should require carriage of a television station's digital and
analog signals. Some stations have exercised retransmission consent rights with
respect to digital programming with the result that cable operators are carrying
some combination of the digital and analog programming on their systems.

     Regulations Applicable to Cable Systems Affecting Programming.  Cable
television operators also are subject to regulations concerning the commercial
limits in children's programming, and closed captioning. The FCC's closed
captioning rules, which became effective January 1, 1998, provide for the phased
implementation, beginning in the year 2000, of a universal on-screen captioning
requirement with respect to the vast majority of video programming. Cable
television operators are also subject to regulations concerning commercial
limits on children's programming, political advertising and indecency standards.
Although all of these content regulations formally apply to the cable operator,
cable programmers are required to distribute programming that meets these
restrictions.

  Legal and Regulatory Environment in the Theme Park Business

     VUE, through Universal Parks & Resorts, operates theme parks around the
world in accordance with the highest health, safety and environmental standards.
In the State of California, legislation and implementing regulations require the
reporting to the state of certain incidents that occur on permanent amusement
rides, which result in the death or serious injury to a guest. VUE and the other
major theme park operators in Florida voluntarily report similar incidents that
occur in their Florida theme parks to the state. These requirements and
practices do not have a material effect on the business of VUE.

  CANAL+ GROUP

     Canal+ Group has two principal lines of business:

          Pay-TV France:  the leader in the production and distribution of
     pay-TV in France, through Canal+ premium channel, CanalSatellite digital
     platform, NC Numericable cable platform and multiThematiques theme
     channels; and

          StudioCanal:  a leading European studio involved in the production,
     co-production, acquisition and distribution of feature films and television
     programs.

     In addition to its two primary lines of business, Canal+ Group also has
other European pay-TV and sports interests.

     We own 100% of Canal+ Group, which in turn owns 49% of Canal+ S.A. and 66%
of CanalSatellite.

     The following table shows Canal+ Group's revenues for the periods
indicated, broken down by business line.

                                    REVENUES

<Table>
<Caption>
                                                             YEAR ENDED DECEMBER 31,
                                                           ---------------------------
                                                            2002      2001      2000
                                                           -------   -------   -------
                                                                  (IN MILLIONS)
<S>                                                        <C>       <C>       <C>
Pay-TV -- France.........................................  E 2,652   E 2,530   E 2,427
StudioCanal..............................................      455       429       328
Other(1).................................................    1,635     1,604     1,299
                                                           -------   -------   -------
CANAL+ GROUP.............................................  E 4,742   E 4,563   E 4,054
                                                           =======   =======   =======
</Table>

---------------

(1) Other is primarily comprised of international pay-TV, including Telepiu,
    Canal+ Benelux, Canal+ Nordic, Cyfra+, Canal+ Technologies and Expand.

                                        47
<PAGE>

     The revenue and operational information relating to Canal+ Group and its
businesses is presented on a pro forma basis to exclude the results of Universal
Studio's international television networks in 2002. In the actual 2002 results,
the results of Universal Studios international television networks were reported
by Canal+ Group.

     Subscription revenues, which are the largest portion of Canal+ Group's
revenues, depend primarily on four factors: subscription growth, churn rates and
programming packages chosen by subscribers which may increase monthly
subscription rates.

     Pay-TV is a subscription business. As a result, Canal+ Group has steady
monthly income and predictable revenues. Over 50% of new subscriptions for
Canal+ Group's pay-TV operations are gained during the last four months of the
year.

     Canal+ Group has suffered losses in recent years in large part due to its
international growth strategy. In late 2002, Canal+ Group announced that it
would restructure its business around its French pay-TV and film production
businesses, and certain of its other assets have been or are in the process of
being sold. On February 5, 2003, Canal+ Group disposed of its 89% interest in
Canal+ Technologies, a supplier of software for digital television. Canal+ Group
has also agreed to sell Telepiu, the Italian pay-TV business, to News
Corporation. The Telepiu divestiture received the approval of the European
Commission on April 2, 2003 and was completed on April 30, 2003.

  Pay-TV -- France

     Canal+ Group's pay-TV operations in France are engaged in the production of
pay-TV channels (Canal+, Multithematiques and others) and the operation of
satellite and cable platforms (CanalSatellite and NC Numericable).

     The cost of purchasing rights for premium channel programming, including
investments required in French and European programming described below, is the
largest operating cost for Canal+ Group, representing over 70% of operating
costs in 2002. Other operating expenses include subscriber acquisition costs
(sales commissions and marketing expenses), subscriber management costs (cost of
set-top boxes which are rented to the subscribers, call centers, etc.), and
transmission costs.

     The French Audiovisual Council has granted licenses to Canal+ Group for
five channels (the maximum number allowed to be under common ownership) for
future digital terrestrial broadcasting in France. Those channels are Canal+,
Sport+, I-Television, Planete and CineCinema.

  Canal+

     Canal+ was the first premium pay-TV channel in Europe and remains the
leading pay-TV channel in France. Canal+, which broadcasts recent films and
sports events on an exclusive basis, is available through customized local
versions in eleven European countries. In France, Canal+ is available both as an
analog channel and on cable and satellite. French digital satellite and cable
subscribers have access to a multiplex of four Canal+ channels.

     Under French law, Canal+ Group cannot own more than its existing 49%
interest in the broadcasting activities of Canal+. Canal+ Group holds this
interest through a 49% interest in Canal+ S.A., a publicly traded company listed
on the Paris Second Marche, which owns the Canal+ channel.

     Canal+'s 2002 revenues were generated mainly by subscriptions (94%) and
advertising (5%).

                                        48
<PAGE>

     The following table shows information about Canal+'s subscriptions, for the
periods indicated:

                                 SUBSCRIPTIONS

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                               2002     2001     2000
                                                              ------   ------   ------
                                                              (IN THOUSANDS, EXCEPT %)
<S>                                                           <C>      <C>      <C>
Subscription base French pay-TV market(1)
  Digital...................................................  5,631    5,075    4,473
  Analog....................................................  4,554    4,625    4,723
Subscription base Canal+ (premium)
  Digital...................................................  1,613    1,505    1,396
  Analog....................................................  2,864    3,046    3,224
Churn (annual)..............................................   10.6%    10.8%     9.9%
</Table>

---------------

(1) Includes cable, satellite and direct-to-air.

     Subscription information is based on Canal+ Group's compilation of
subscription figures provided by the relevant companies and the cable
association Aform.

     Canal+ attracts subscribers principally through its films and sports
offerings. Canal+ broadcasts more than 400 films annually, about 80% of which
are French TV premieres. Canal+ sports offerings include French premier league
soccer, Champions League and other major European soccer leagues, horse racing,
rugby union, golf, boxing and various US sports. Canal+ also offers original
premium programs.

     Among Canal+'s sports offerings, French soccer premier league is an
important driver of our subscriber base and Canal+ pays significant licensing
fees for the right to broadcast games. The French premier league current
contract expires in June 2004. Canal+ and the French soccer premier league
negotiated an agreement whereby Canal+ would have had exclusive broadcasting
rights for the premier league 2004-2007 seasons. However, upon petition by
Canal+'s competitor Television par Satellite (TPS), the French competition
council stayed effectiveness of this agreement. As a result of a court
recommended mediation with TPS, all parties concerned agreed in April 2003 to
extend the existing contract for the duration of one year (i.e., through the end
of the 2004-2005 season). See "Item 8--Financial Information--Litigation."

     Obligations contained in Canal+'s broadcasting license impose significant
requirements on Canal+'s investments, broadcasting and use of revenues. See
"--Regulatory Environment."

  Theme Channels

     Canal+ Group has approximately 40 theme channels across Europe including
approximately 20 theme channels in France. As part of its strategic
restructuring, Canal+ will be focusing this activity on the French market.

  CanalSatellite

     Canal+ Group owns 66% of CanalSatellite, the leading French Satellite TV
platform. The remaining shares are held by Group Lagardere. Launched in 1992 as
a small platform distributed through analog technology, CanalSatellite upgraded
to digital technology in 1996 and is now the leading satellite platform in
France. At the end of 2002, CanalSatellite had a share of approximately 63% of
the French satellite market with over two million subscribers. CanalSatellite
offers over 230 channels, some of which are exclusive.

                                        49
<PAGE>

     CanalSatellite's revenues are driven by subscriptions. The following table
shows information about CanalSatellite's subscriptions for the periods
indicated:

                                 SUBSCRIPTIONS

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                               2002     2001     2000
                                                              ------   ------   ------
<S>                                                           <C>      <C>      <C>
CanalSatellite subscriptions (thousands)....................  2,046    1,822    1,598
Churn (annual)..............................................    8.4%     9.9%    10.3%
</Table>

     With the assistance of Canal+ Technologies the digital platforms of Canal+
Group in Spain, Poland and France, including CanalSatellite, launched the
digital TV industry's largest-ever operation to change the smart cards in set
top boxes. More than 7 million cards with a new chip and a new version of the
access control software were exchanged in 2002 to combat piracy.

     Canal+ Group sold Canal+ Technologies in early 2003 to Thomson. Canal+
Technologies will continue to provide the services it previously provided to
Canal+ Group pursuant to a long term contract. CanalSatellite started marketing
in early 2003 a new generation of digital set top boxes equipped with a hard
drive that uses a new version of MediaHighway, the digital interactive system
developed by Canal+ Technologies and based on the new international standards
for interactive television (DVB-MHP). These set-top boxes, known as Pilotime,
offer a broad range of original and innovative services.

  NC Numericable

     Canal+ Group operates the French cable platform, NC Numericable. At the end
of 2002, NC Numericable had a share of approximately 16% of the French cable
market, with 406,933 subscriptions. NC Numericable leases its network from
France Telecom.

  StudioCanal

     StudioCanal is a major player in the production, co-production, acquisition
and distribution of European and American films for theaters. StudioCanal has
one of the largest film libraries in the world, including over 5,000 well-known
films of different genres, including Terminator 2, Basic Instinct, The Graduate,
The Producers, The Third Man, Breathless, Chicken Run, Billy Elliot, Grand
Illusion, Bridget Jones's Diary, Brotherhood of the Wolf. Some of StudioCanal's
distribution rights are worldwide, others are limited to Europe and France.
StudioCanal's TV program library represents more than 40,000 hours of viewing.

     Along with Canal+, StudioCanal is involved in the financing of
approximately 80% of French films, which together makes them the main sponsor of
the domestic industry.

     StudioCanal is also engaged in audiovisual production (through its
subsidiary StudioExpand) and is active in video and DVD distribution, music
publishing, and product licensing.

     In 2002, StudioCanal produced, co-produced or acquired six films that sold
more than one million tickets in France, including Roman Polanski's The Pianist,
L'Auberge espagnole (Euro Pudding) by Cedric Klapisch, Decalage horaire (Jet
Lag) by Daniele Thompson, and Michael Mann's Ali. Two films co-produced by
StudioCanal earned two prestigious awards at the 2002 Cannes Festival: the Palme
d'Or for The Pianist and the award for Best Director for Im Kwon Taek's
Chiwaseon. The company has been extremely successful with the video and DVD
releases in France of Bridget Jones's Diary, Zinedine Zidane "Comme dans un
reve," Traffic and We Were Soldiers. Roman Polanski's The Pianist received three
Academy Awards (Best Director, Best Actor and Best Adapted Screenplay) in 2003.

                                        50
<PAGE>

  Other

     In addition to its two primary lines of business, Canal+ Group also has the
following other European pay-TV and sports interests:

          Sogecable.  Sogecable, a listed Spanish holding company, is 21.3%
     owned by Canal+ Group. Sogecable's other strategic shareholder is Prisa,
     the leading Spanish media group, which also owns 21.3% of Sogecable.
     Sogecable's two main activities, which represent more than 80% of its
     revenues, are Canal+, a terrestrial premium channel for sports and films,
     and CanalSatelite Digital, a DTH platform. CanalSatelite Digital is the
     largest and most successful satellite TV operator in Spain, and competes
     with Via Digital, a Telefonica affiliate. In January 2003, Sogecable and
     Telefonica agreed to merge their digital platforms, CanalSatelite Digital
     and Via Digital, subject to local regulatory and other approvals. On
     completion of the merger, Via Digital shareholders will receive 23% of the
     capital stock of Sogecable in return for their Via Digital shares. The
     merger of the two companies will create the largest pay-TV operator in
     Spain with more than 3 million subscriptions. The merged company will be
     the only satellite television operator in Spain.

          Nordic Countries.  In the Nordic countries, in June 2002 Canal+ Group
     sold its 50% stake in the Canal Digital distribution platform to Telenor,
     which already held the other 50% stake. We are in the process of selling
     the Group's Nordic channels. In the interim, Canal Digital continues to
     exclusively distribute the satellite segment of such channels.

          Cyfra+.  In Poland, the digital television platforms Cyfra+ and Wizja
     TV merged into a single satellite system, TKP, in 2002. The merged Cyfra+
     package is now the leading pay-TV and satellite platform in Poland with an
     expanded premium offer and a stronger programming package and is 75% owned
     by Canal+ Group and Polcom Invest and 25% owned by UPC. As of December 31,
     2002, Cyfra+ had one million subscriptions.

          Telepiu.  In October 2002, an agreement was signed with News
     Corporation and Telecom Italia for the sale of 100% of the pay-TV platform
     Telepiu in Italy to News Corporation. The acquisition of Telepiu by News
     Corporation, which intends to merge it with its Stream platform, was
     approved by the European Commission on April 2, 2003 and completed on April
     30, 2003. As of December 31, 2002, Telepiu had 1.55 million subscriptions
     to its premium channel and 1.75 million subscriptions to its digital
     platform.

          Canal+ Benelux.  Canal+ Group operates in Belgium and the Netherlands
     through its wholly-owned subsidiary, Canal+ Benelux, by offering premium
     channels and packages of theme channels. As of December 2002, Canal+
     Benelux had 689,000 subscriptions.

          Media Overseas.  Media Overseas is a 100% Vivendi Universal affiliate,
     managed by Canal+ Group and dealing with over 500,000 subscriptions of
     Canal+/CanalSatellite in the French overseas territories and some
     French-speaking African countries.

          Sportfive.  Canal+ Group and RTL Group each own 46% of Sportfive, with
     the balance held by Mr. Jean-Claude Darmon. Sportfive, created from the
     combination of the sports rights activities of Sport+ (a subsidiary of
     Canal+ Group), UFA Sports (a subsidiary of RTL Group) and Groupe Jean-
     Claude Darmon, holds a leading market position with a broad range of
     international TV and marketing of sports rights, primarily for football
     clubs and leagues around the world. Sportfive has more than 320 football
     clubs under contract, more than 40 national federations and leagues, as
     well as the international basketball, handball and rugby federations.

          PSG.  Paris Saint Germain is the only Paris based premier league
     soccer club and is one of France's leading soccer clubs. In 2001, Canal+
     Group increased its interest in PSG to 90.88%.

  Competition

     Competition in the basic pay-TV market remains largely national due to
language and cultural factors specific to each country. The French pay-TV market
is dominated by satellite and Canal+. Cable penetration is low compared to
America and certain other European countries.
                                        51
<PAGE>

     In its French pay-TV business, Canal+ Group's principal competitor is TPS.
Cable operators (other than our subsidiary NC Numericable) also compete in this
market. The increase in broadcast channels being made possible by new digital
technology (such as digital broadcast television already introduced in several
European countries and the anticipated introduction of ADSL) will lead to the
arrival of newcomers in the pay-TV sectors.

     The development of new distribution media, particularly DVDs, which offer a
certain number of films before they are released on pay-TV channels, also
fosters real competition for a premium channel such as Canal+.

     In the theme channel business, competition is more international than in
the basic pay-TV business. International labels initiated by American
communication companies and studios such as MTV, Fox Kids or the Disney Channel
are developing rapidly.

     In the film and TV programming sector, StudioCanal's main competitors are
the American and other national production companies.

  Regulatory Environment

     The media industry in Europe is regulated by various national statutes,
regulations and orders, often administered by national agencies such as the
French Audiovisual Council. These agencies usually grant renewable broadcast
licenses for specific terms. In France, Canal+ holds a pay-TV broadcast license
for over-the-air, satellite and cable broadcasts, which was renewed for a
five-year period starting in December 2000.

     Under Canal+'s French broadcast authorization, Canal+ is subject to the
following regulations: (i) no more than 49% of its capital stock may be held by
a single shareholder and (ii) 60% of the films broadcast by the channel must be
European films, and 40% must be French Language films. Each year Canal+ must
invest 20% of its total prior-year revenues in the acquisition of film rights,
9% of which must be devoted to French language films and 3% to European films
other than French films. At least 75% of the French movies must be acquired from
non-Canal+ Group controlled companies. Canal+ has an obligation to invest 4.5%
of its turnover in original TV movies and dramas.

     Canal+ Group also operates in Belgium, Spain, the Netherlands, Poland and
the Nordic countries pursuant to the regulations of each of these countries
which generally stipulate, as does France, financing levels for European and
national content.

     The European Union generally regulates competitive matters, including
strategic combinations. The European Union has also adopted a series of
directives that influence the communications business, in particular the
directive known as "Television without Frontiers," and directives governing
intellectual property, e-commerce, data protection, and telecommunications.

  Research and Development

     Canal+ Group's research and development costs in 2002 totaled E 51 million,
primarily consisting of costs of Canal+ Technologies, and were incurred
primarily for new digital and image processing technologies.

  MAROC TELECOM

     The following table shows Maroc Telecom's revenues for the periods
indicated:

                                    REVENUES

<Table>
<Caption>
                                                         YEAR ENDED DECEMBER 31,
                                                  -------------------------------------
                                                       ACTUAL             PRO FORMA
                                                  -----------------   -----------------
                                                   2002      2001      2002      2001
                                                  -------   -------   -------   -------
                                                              (IN MILLIONS)
<S>                                               <C>       <C>       <C>       <C>
Maroc Telecom revenues..........................  E 1,487   E 1,013   E 1,487   E 1,351
</Table>

                                        52
<PAGE>

     The revenue and operational information and data relating to Maroc Telecom
set forth in this section is presented on a pro forma basis, adjusted to include
the results of Maroc Telecom for all periods.

     The actual 2001 results only include nine months of Maroc Telecom's
operations since the completion of the acquisition by us in April 2001.

     Maroc Telecom is Morocco's incumbent telecommunications operator. The
company was created in 1998 following its spin-off from the ONPT (the Moroccan
national postal and telecommunications administration). Morocco's mobile
telephone market opened to competition in 2000 with the successful bid for
licenses by a consortium led by Telefonica of Spain. In the past three years and
with Vivendi Universal's assistance, the company has transformed itself into a
highly profitable, market-oriented business focused on its customers, in
accordance with international standards of the industry.

     Vivendi Universal acquired its current ownership interest and became Maroc
Telecom's strategic partner in 2001 following an auction process organized by
the Moroccan government. With our 35% shareholding interest, we control Maroc
Telecom under the terms of a shareholder's agreement entered into in connection
with the acquisition of our stake. The remaining shares of Maroc Telecom are
owned by the Kingdom of Morocco.

     Under the shareholders' agreement, the Kingdom has put options on an
additional 16% of the Maroc Telecom shares exercisable beginning in September
2003 at a fair market price determined by an appraisal procedure. If the Kingdom
exercises this put right and we acquire the shares, we will also have a right of
first refusal on the Kingdom's remaining shares. We have granted the Kingdom a
pledge on our existing 35% interest in Maroc Telecom to secure the purchase
price of the 16% interest for the period between the exercise of the put and its
settlement in cash. Under the shareholders' agreement we cannot sell our shares
in Maroc Telecom without the approval of the Kingdom of Morocco for a period of
five years from the date of the shareholder's agreement.

     In accordance with the Articles of Association and pursuant to the
Shareholders' Agreement, we appoint a majority of both the Supervisory board and
the Executive board of Maroc Telecom, including the chairman of the executive
board. In addition, we exercise the majority voting rights at shareholder's
meetings. As a result, Maroc Telecom is fully consolidated in our financial
statements.

     Maroc Telecom is Morocco's largest (and Africa's second largest)
telecommunications operator, operating in both the fixed line business, where it
currently remains the sole provider, and the fast growing mobile business, where
it is the country's largest operator. Maroc Telecom revenues increased 10% to
E 1.5 billion in 2002. Fixed-line, data and international revenues represented
62% of Maroc Telecom's revenues in 2002, while mobile revenues represented the
remaining 38%.

  Fixed Line Telephony

     Fixed line telephony remains Maroc Telecom's largest business in terms of
revenues. Our fixed line business includes traditional residential,
international and business services and our public telephony service, data
transmission solutions for companies, and our Internet access and portal
businesses.

     The number of fixed lines in Morocco grew steadily until 1999, reaching a
total of 1.5 million, before falling between 1999 and 2002. The two main factors
explaining this trend are the introduction of competition from the mobile
network as of 1999 and the company's clean-up of its fixed-line customer base in
2001, when a significant number of customers who had stopped using or were no
longer paying for their service were removed. The number of fixed lines has now
stabilized and is expected to be stable in the future.

     Revenue growth was maintained over the period despite the decline in the
number of fixed lines, as international and fixed-to-mobile business revenues
and public telephony all grew. The public telephony business comprises the
public pay telephone network as well as a network of approximately 17,000
teleboutiques. Teleboutiques are managed by private sector entrepreneurs who
rent on average four or five lines per store. They are charged reduced rates due
to the high volume of calls per line and resell calls to customers at retail
prices.

                                        53
<PAGE>

  Data Transmission and Internet

     Maroc Telecom's growing data transfer business provides companies with data
transfer solutions including x.25, frame relay, digital and analogue leased
lines and IP, primarily for its business customers.

     Our Internet business offers packet switched ISP services to fixed-line
subscribers under the Menara brand. At the end of 2002, Maroc Telecom got its
ADSL service ready to launch; which it believes will be one of its primary
growth areas at its launch, upon receipt of approval by the appropriate
regulatory authority. At year end 2002, the company had approximately 32,000
subscribers to its Internet access services.

  Mobile Telephony

     Maroc Telecom launched its prepaid services in 1999 and its customer base
has grown rapidly since. At year-end 2002, the company had over 4.5 million
mobile users.

     Maroc Telecom offered the only mobile service in Morocco until mid-2000,
when a second operator commenced business. At year-end 2002, the company
estimates that it had an approximate 70% share in the mobile telephony market.
At the end of 2002, the overall penetration rate in mobile telephony in Morocco
was estimated at 21.6%.

     Maroc Telecom's customer base is over 95% prepaid, reflecting preferences
in the Moroccan market. Maroc Telecom believes that its network of 17,000
teleboutiques, which is a key distribution channel for prepaid cards, is a major
competitive advantage.

     After eliminating delinquent customers from its postpaid customer base in
2001, postpaid subscribers increased in 2002. The company particularly targets
business customers for its postpaid services.

  Network

     Fixed-line services and data transmission

     Maroc Telecom's fully digital network has a switching capacity of 2 million
lines and provides national coverage thanks to the emphasis placed on servicing
newly created urban areas and improving network reliability.

     Maroc Telecom operates a fully digital network and an optic fiber
inter-city transmission infrastructure with high-speed data transmission
capacity. International bandwidth has been gradually increased to reach
4*34Mbit/s.

     Mobile telephony

     Maroc Telecom has emphasized growing both its population and its country
coverage. At the end of 2002 Maroc Telecom had 3,000 GSM sites, against 2,600 in
2001 and 600 in 1999. In 2002, over 95% of the Moroccan population was covered,
the efficiency rate was greater than 95% and the drop call rate was less than
2%.

     Maroc Telecom has signed 179 roaming agreements with operators in 85
countries around the world.

  Competition

     The auction for a second fixed telephony license in 2002 was unsuccessful,
and Maroc Telecom remains the single fixed-line operator in the Moroccan market.
The government has, however, announced its intention to hold another auction
before the end of 2003.

     Competition has existed in the mobile telephony market since the granting
of a second mobile license in 1999 to Medi Telecom. Medi Telecom, with an
estimated 30% market share in 2002, is a subsidiary of Telefonica, Portugal
Telecom and a group of Moroccan investors led by BMCE.

                                        54
<PAGE>

     Maroc Telecom has an estimated 72% share of the Moroccan Internet market.
Maroc Telecom main competitors in this market are: Maroc Connect (subsidiary of
Wanadoo) with an 18% market share, and various other smaller ISPs.

     Specific licenses (VSAT, 3RP, GMPCS) have been granted for specific market
segments (businesses and international communications).

  Regulatory Environment

     The Kingdom has created a regulatory authority Agence Nationale de
Reglementation des Telecommunications (ANRT) which is responsible for
implementing free competition and regulating the telecommunications market. The
liberalization and privatization of the Moroccan telecommunications market
advocated by the World Bank is implemented and managed by the ANRT.

     The terms and conditions governing Maroc Telecom set out its rights and
obligations as the fixed-line operator regarding universal service. The ANRT has
not announced the granting of UMTS licenses.

     Principal regulatory developments in 2002 were the leveling of retail
tariffs and other price regulations and the authorization for Internet traffic
to use the public telephone network.

  Vivendi Universal Games (VU Games)

     VU Games is one of the world's leading publishers of interactive
entertainment and educational software. VU Games develops, markets and
distributes its games and educational software products for all major platforms,
including PC, consoles (Sony's PlayStation2, Microsoft's Xbox and Nintendo's
GameCube) and handheld (Nintendo's GameBoy Advance). VU Games' revenue for the
2002 fiscal year was E 794 million and for the 2001 fiscal year was E 657
million. In 2002, 63% of VU Games' revenue came from North America, 27% came
from Europe and 10% came from Asia/Pacific and Rest of the World.

     VU Games is the sixth largest publisher of consumer software with an
approximate 5% share of worldwide market. VU Games is the second-largest
publisher of PC consumer software worldwide, holding the number-one position in
South Korea, and the number two position in North America, France, Germany, UK,
Spain and Australia (source: NPD Funworld, PC Data, Chart-Track, GFK, Inform,
Interbase. Figures include sales of PC kids, PC education, PC productivity, PC
games and all console software categories. Latest available 12 months (December
2002) except for Germany (November 2002).

     VU Games maintains a strong heritage as a leader in PC games and
educational software. For 2002, VU Games' PC revenues represented 56% of total
revenues. VU Games' performance in the PC segment was driven by key releases
such as Warcraft III, NASCAR 2002, The Thing, J.R.R. Tolkien's The Lord of the
Rings: The Fellowship of the Ring, Jumpstart Advanced, and Barbie. VU Games'
development studios -- Black Label Games, Blizzard Entertainment, Coktel,
Knowledge Adventure, Massive Entertainment and Sierra Entertainment -- have
delivered some of the industry's most successful PC titles across numerous
genres.

     VU Games entered the console software business in 2001, with the assumption
of management responsibility for Universal Interactive (UI), which is held
through Universal Studios. Since then, VU Games has expanded its publishing
business with the establishment of Black Label and an affiliate-label program
called the Partner Publishing Group. Within one year, VU Games increased its
console sales from 21% to 44% of total revenues. Today, all of VU Games' studios
are engaged in the development of console titles while maintaining their
commitment to the PC segment.

     In the online games arena, VU Games has sophisticated groups of developers
whose experience includes Battle.net, a leading online games network launched in
1997 with over 12 million active users; Half-Life, the number-one online action
game; and Tribes: Aerial Assault, one of the first third-party titles to support
online game-play over the Internet using Sony's PlayStation 2 system.

     Strong game brands are a cornerstone of VU Games' success. VU Games'
product library consists of 378 active titles, including industry-leading,
multi-million unit selling brand franchises such as Diablo, Starcraft,
                                        55
<PAGE>

Warcraft, Spyro the Dragon, Crash Bandicoot, Half-Life and Jumpstart. In March
2003, The Simpsons was added to VU Games' product library as a result of an
agreement with Fox Interactive.

     VU Games' brand portfolio includes a balanced mix of original content (52%
of all titles), licensed properties (30% of all titles) and third-party releases
(18% of all titles).

     In the future, VU Games intends to continue producing high-quality and
innovative game franchises such as The Hulk and X-Files, expansion sets and
updated versions of blockbuster series such as Warcraft, Counter Strike and
Crash Bandicoot, and the migration of best-selling franchises such as Starcraft
and SWAT from PC to console.

  Competition

     The consumer software market is quite fragmented. The worldwide leader is
Electronic Arts Games, with a 15% share. The top-ten players have a combined 60%
worldwide market share.

  Regulatory Environment

     VU Games voluntarily participates in self-regulatory ratings systems
established by various industry organizations around the world. In the US, VU
Games adheres to ratings, advertising guidelines and online privacy principles
adopted by the Entertainment Software Association. Pursuant to these guidelines,
VU Games indicates in its product-packaging and advertising the age group for
which the particular product is appropriate and a brief description of its
content. VU Games operates in compliance with local legal requirements where
applicable to computer games and video games (in countries such as Germany and
South Korea) as well as with local statutory rating systems. Complying with such
rating systems and local laws does not have a material effect on the business of
VU Games.

  OTHER

  Veolia Environnement (VE)

     Until June 2002, we held approximately 63% of the share capital of Veolia
Environnement, an environmental services business with global operations. In
July 2002, we reduced our stake to approximately 40.8% of the outstanding share
capital of Veolia Environnement and through an additional sale on December 24,
2002, we reduced our stake to approximately 20.4%. Our investment in Veolia
Environnement is now accounted for using the equity method. As part of the
December sale, we granted to the purchasers a call option exercisable until
December 23, 2004 to purchase our remaining stake in Veolia Environnement at
E 26.5 per share. For information on this call option, see "Item 5--Operating
and Financial Review and Prospects--Contingent Liabilities."

     Veolia Environnement has operations in more than 100 countries on five
continents, divided into four main divisions:

     - Vivendi Water for water services;

     - Dalkia for energy services;

     - Onyx for waste management; and

     - Connex for transport.

     Veolia Environnement's revenues were E 30.1 billion in 2002, E 29.1 billion
in 2001 and E 26.3 billion in 2000.

     Veolia Environnement's stock has been listed for trading on the Premier
Marche of Euronext Paris since July 2000, and has also been listed on the New
York Stock Exchange in the form of American Depositary Receipts (ADRs) since
October 2001.

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<PAGE>

  Vivendi Telecom International (VTI)

     Vivendi Telecom International operates our fixed and mobile
telecommunications businesses outside France and Morocco. While Vivendi
Universal's interest in Maroc Telecom is held through VTI, it is reported as a
separate segment and is discussed separately herein.

     VTI's revenue, excluding Maroc Telecom, was E 461 million in 2002, E 242
million in 2001 and E 141 million in 2000.

     In 2002, we decided to explore selling VTI's stakes in Hungary, Poland,
Egypt and Kenya in order to focus on our core businesses.

     Monaco

     VTI owns 55% of Monaco Telecom, the incumbent telecommunications operator
in the Principality. The remaining 45% stake is held by the Principality of
Monaco.

     Spain

     VTI is one of the principal shareholders of the Spanish communication
company Xfera Moviles, which won one of the four UMTS licenses in Spain in 2000.
Due to technological delays in the development of UMTS, the date of the
commercial launch and deployment of the UMTS network has been postponed. As a
result of this postponement, Xfera cut its work force in 2002. The Xfera
Shareholders' Agreement dated January 12, 2000 contains a provision which gives
the founding shareholders (including VTI) the possibility to acquire the shares
held by Vodafone in Xfera in certain defined circumstances. Vodafone claims that
such provision amounts to a call option and that, together with the other two
founding shareholders, VTI exercised such call option by way of letters sent to
Vodafone in January 2001. VTI contests Vodafone's claims, including its
interpretation of such provision. See "Item 5--Operating and Financial Review
and Prospects--Commitments and Contingencies."

     Hungary

     Operating under the name Vivendi Telecom Hungary, VTI's subsidiary Matel BV
is the second largest fixed line telecommunications operator in Hungary.

     VTI signed an agreement to sell Vivendi Telecom Hungary for E 325 million,
including the assumption of E 305 million in net debt in December 2002. The sale
was completed in May 2003.

     Poland

     Vivendi Universal and VTI jointly hold 49% of Elektrim Telekomunikacja
(ET), a major player in the Polish telecommunications market.

     In November 2002, ET entered into an agreement to sell the cable television
services of its wholly owned subsidiary, EI Viv Telecom for E 110 million. The
completion of this sale remains subject to Polish regulatory approval.

     In February 2003, ET sold part of its Polish fixed telephony business for
approximately E 17 million. ET is exploring various options with respect to its
fixed telephony operations as well as its 51% stake in PTC, a mobile telephone
operator with approximately 5 million customers at the end of 2002.

     For a description of certain litigation relating to Vivendi Universal's
interest in ET, see "Item 8--Financial Information--Litigation."

     Kenya

     In 2002, KenCell, VTI's 60% subsidiary, showed strong growth in spite of a
difficult economic climate. At the end of 2002, KenCell had more than 450,000
customers (compared to 56,000 at the end of 2000 and 250,000 at the end of
2001), and a 49% market share.
                                        57
<PAGE>

     Egypt

     On February 25, 2003, VTI signed a share purchase agreement to sell its
interest in Vodafone Egypt Telecommunications for an aggregate consideration of
E 40 million. The transaction completion is subject to regulatory approvals and
various other closing conditions.

  Vivendi Universal Net (VUNet)

     VUNet, a wholly owned subsidiary of Vivendi Universal, and its subsidiary,
Vivendi Universal Net USA Group, Inc., hold Vivendi Universal's Internet and new
technology operations.

     In 2002, Vivendi Universal carried out a strategic review of its Internet
operations. This led to the implementation of a cost and investment reduction
program, and the closure of a number of subsidiaries. We anticipate closing some
of the remaining Internet division companies and integrating the others into the
businesses to which they report within Vivendi Universal.

  Publishing

     In late 2002, Vivendi Universal sold its principal publishing assets,
including Houghton Mifflin (which had been acquired in 2001) and almost all of
its other publishing assets worldwide.

  Vivendi Valorisation

     Vivendi Valorisation holds a portfolio of real estate assets which formerly
were part of our property and construction segment.

     The majority of these assets, which we intend to sell, are associated with
our past involvement in long-term residential and commercial property
developments.

SEASONALITY

     Our business is not seasonal, except as noted in the descriptions of UPR
and UMG. See "--Our Segments--Vivendi Universal Entertainment (VUE)--Universal
Parks & Resorts (UPR)" and "--Our Segments--Music."

RAW MATERIALS

     Raw materials are not important to our business in a material way, except
as they are used in the production of motion picture and television, in the
production of video products and in the production of compact disks.

     The primary material utilized in motion picture and television production
is raw film stock. Film stock is purchased by subsidiaries of VUE for initial
film production, and by third party film laboratories that produce release
prints of theatrical films for VUE. Film stock is purchased from large
manufacturers of photographic products located in the United States and other
countries. Availability of raw film stock is good and no problems have been
encountered. The price of raw film stock has had low volatility, and VUE and
such third party film laboratories further reduce their exposure to price
changes by securing pricing under long-term contracts with such film suppliers.

     The primary materials used in production of video products are videotape,
and polycarbonate to produce DVDs. These materials are purchased by third party
video duplicators from large manufacturers located in the United States and
other countries. Availability of such materials is good and no problems have
been encountered. The price of videotape has had low volatility, and such cost
is a small percentage of the cost to VUE of the final videotape product. The
price of polycarbonate has had some volatility related to petroleum price
fluctuations, but these have not been significant enough to be passed through to
VUE by the third party duplicators.

     The primary material used in production of compact discs is polycarbonate.
UMG purchases polycarbonate from large suppliers located in the United States
and other countries. Availability of polycarbonate
                                        58
<PAGE>

is good and no problems have been encountered. The price of polycarbonate has
had some volatility related to petroleum price fluctuations, but such cost is a
small percentage of UMG's cost of goods.

ORGANIZATIONAL STRUCTURE

     The following table sets forth the subsidiaries through which we conducted
the majority of our operations as of December 31, 2002 (subsidiaries are
indented following their respective parent companies).

<Table>
<Caption>
                                    COUNTRY OF      ACCOUNTING     VOTING           OWNERSHIP
                                   INCORPORATION      METHOD      INTEREST          INTEREST
                                   -------------   ------------   --------          ---------
<S>                                <C>             <C>            <C>        <C>    <C>         <C>
CEGETEL GROUP
Cegetel Groupe S.A...............     France       Consolidated      59%               44%
  Cegetel S.A....................     France       Consolidated               80%                  90%
  Societe Francaise du
    Radiotelephone S.A. (SFR)....     France       Consolidated               80%                  80%
  Telecom Developpement (TD).....     France          Equity                  50%                  50%
MUSIC
Centenary Holding N.V............   Netherlands    Consolidated      92%               92%
  Universal Music (UK) Holdings
    Ltd..........................       UK         Consolidated              100%                 100%
  Universal Entertainment GmbH...     Germany      Consolidated              100%                 100%
  Universal Music K.K............      Japan       Consolidated              100%                 100%
  Universal Music S.A.S..........     France       Consolidated              100%                 100%
Universal Studios, Inc...........       USA        Consolidated      92%               92%
  PolyGram Holding, Inc..........       USA        Consolidated              100%                 100%
  Interscope Records.............       USA        Consolidated              100%                 100%
  UMG Recordings, Inc. ..........       USA        Consolidated              100%                 100%

VIVENDI UNIVERSAL ENTERTAINMENT
Universal Pictures International
  B.V............................   Netherlands    Consolidated      92%               92%
Universal Studios, Inc...........       USA        Consolidated      92%               92%
  Vivendi Universal Entertainment
    LLLP.........................       USA        Consolidated               93%                  86%

CANAL+ GROUP
Groupe Canal+ S.A................     France       Consolidated     100%              100%
  Canal Plus S.A.................     France       Consolidated               49%                  49%
  CanalSatellite S.A.............     France       Consolidated               67%                  67%
  StudioCanal S.A................     France       Consolidated              100%                 100%
  Multithematiques...............     France       Consolidated               64%                  64%

MAROC TELECOM S.A................     Morocco      Consolidated               51%                  35%

VIVENDI UNIVERSAL GAMES, INC.....       USA        Consolidated               99%                  99%

HOLDING & CORPORATE
  Societe d'Investissement pour
    la Telephonie (SIT)..........     France       Consolidated     100%              100%
  UGC............................     France          Equity         58%               58%

VIVENDI TELECOM INTERNATIONAL
  S.A............................     France       Consolidated     100%              100%
  Vivendi Telecom Hungary........     Hungary      Consolidated              100%                 100%
  Kencell S.A....................      Kenya       Consolidated               60%                  60%
  Monaco Telecom S.A.M...........     Monaco       Consolidated               55%                  55%
  Elektrim Telekomunikacja
    S.A..........................     Poland          Equity                  49%                  49%
  Xfera Moviles S.A..............      Spain          Equity                  26%                  26%
</Table>

                                        59
<PAGE>

<Table>
<Caption>
                                    COUNTRY OF      ACCOUNTING     VOTING           OWNERSHIP
                                   INCORPORATION      METHOD      INTEREST          INTEREST
                                   -------------   ------------   --------          ---------
<S>                                <C>             <C>            <C>        <C>    <C>         <C>

PUBLISHING ACTIVITIES EXCL. VU
  GAMES
Vivendi Universal Publishing
  S.A............................     France       Consolidated     100%              100%
  Groupe Express-Expansion
    S.A..........................     France       Consolidated              100%                 100%
  Comareg S.A....................     France       Consolidated              100%                 100%
  Atica..........................     Brazil       Consolidated               98%                  49%

VIVENDI UNIVERSAL NET
Vivendi Universal Net S.A........     France       Consolidated     100%              100%
  i-France S.A...................     France       Consolidated              100%                 100%
  Scoot Europe N.V...............     Belgium      Consolidated              100%                 100%
  Ad-2-One S.A...................     France       Consolidated              100%                 100%
  CanalNumedia S.A...............     France       Consolidated              100%                 100%
Vivendi Universal Net U.S.A.
  Group, Inc.....................       USA        Consolidated     100%              100%
  MP3.com, Inc...................       USA        Consolidated              100%                 100%
  Emusic.com, Inc................       USA        Consolidated              100%                 100%
  Flipside, Inc./Uproar, Inc.....       USA        Consolidated              100%                 100%
VEOLIA ENVIRONNEMENT S.A.........     France          Equity         20%               20%
</Table>

For more information on the above table, see Note 13 to our Consolidated
Financial Statements included in this document.

PROPERTY, PLANT AND EQUIPMENT

     In connection with our music, publishing, and TV & film businesses, we own
manufacturing facilities in the US and Germany and office buildings and
warehouse facilities in various countries. To support the rest of its business
operations around the world, Vivendi Universal leases the majority of the real
estate it requires.

     USG owns, develops and manages the Universal City complex in Hollywood,
California, spanning approximately 415 acres and is comprised of: Universal
Studios, a complex of production and studio facilities and supporting office
space; the Universal Studios Hollywood Theme Park and CityWalk, an integrated
retail and entertainment complex offering shopping, cinemas, dining and
open-area food and beverage facilities; the Sheraton-Universal Hotel, owned by
Universal Studios and leased to Sheraton; and the Hilton Hotel, which Universal
Studios leases to the entity owning and operating the hotel. In addition,
Universal Studios owns the following theme park facilities: Universal Studios
Florida and Islands of Adventure, in Orlando, Florida; Universal Studios Japan
in Osaka, Japan; and Universal Mediterranean near Barcelona, Spain.

     We have various commitments for the purchase of property, plant and
equipment, materials, supplies and items of investment related to the ordinary
conduct of business.

PATENTS, LICENSES, CONTRACTS, MANUFACTURING PROCESSES

     Although we have patents, licenses, contracts and manufacturing processes,
no one of these in particular is material to Vivendi Universal.

     Canal+ Group acquires films and the rights to sports events, which are then
broadcast on its channels. TV programs are acquired through exclusive
medium-term contracts for the broadcasting of upcoming productions from US
studios. For sports events, multi-year contracts are signed with sports clubs
and federations. In 2001, the main broadcasting rights CANAL+ Group has acquired
are the French soccer championship through to 2004, retransmission rights for
the Champions League through to 2003, and the national and international rights
for some Italian soccer clubs, including Juventus (Turin), Inter (Milan) and
Milan AC.

     Canal+ TV's broadcasting license in France expires in December 2005.

                                        60
<PAGE>

ENVIRONMENTAL MATTERS

     Our operations are subject to evolving and increasingly stringent
environmental regulations in a number of jurisdictions. In December 2002, the
Los Angeles Regional Water Quality Control Board proposed a $308,000 civil
penalty in connection with certain alleged exceedances of VUE's wastewater
discharge permit in Universal City. We believe the exceedances are not the
result of our operations and are working with the agency to resolve the matter.
Other than this proposed penalty, as of March 21, 2003, there have been no
significant losses or claims related to environmental matters.

SUMMARY OF INDEBTEDNESS

     Set forth below is a description of certain of our outstanding debt
instruments as of June 25, 2003. The descriptions set forth below do not purport
to be complete and are qualified in their entirety by reference to the
agreements themselves.

DUAL CURRENCY CREDIT FACILITY

     Vivendi Universal has entered into a E 2.5 billion dual currency term and
revolving credit facility (the Dual Currency Credit Facility) dated as of May
13, 2003, among Vivendi Universal, as borrower, certain of its subsidiaries, as
guarantors, the lenders party thereto, and Societe Generale, as facility and
security agent. The facility is available as a liquidity back-up to the disposal
of assets and subject to certain exceptions for general corporate purposes.

     The facility is comprised of (a) a three-year E 1.5 billion revolving
credit facility (Tranche A) at LIBOR or EURIBOR plus an applicable margin that,
depending on Vivendi Universal's credit ratings, ranges from 1.00% to 2.75% per
annum and (b) a E 1.0 billion term loan (Tranche B) with a 2.75% per annum
margin over LIBOR or EURIBOR maturing on the third anniversary of the date of
the Dual Currency Credit Facility. Borrowings under the Dual Currency Credit
Facility may be made in Euros or U.S. Dollars. Currently, Tranche B is fully
drawn and Tranche A is undrawn.

     Vivendi Universal is required to pay commitment fees at an annual rate of
40% of the then applicable margin for Tranche A (subject to a cap of 1.00% per
annum) and 1.00% per annum for Tranche B, in each case calculated on the undrawn
and uncanceled amount of commitments of the applicable tranche during the
availability period. Accrued commitment fees are payable quarterly in arrear and
on the final maturity date of the Dual Currency Credit Facility. Vivendi
Universal also pays the facility agent an annual agency fee.

     The respective obligations of Vivendi Universal and the subsidiary
guarantors under the Dual Currency Credit Facility rank pari passu with their
obligations under the Multicurrency Revolving Credit Facility (described below).
The obligations of Vivendi Universal and the subsidiary guarantors under each of
the Dual Currency Credit Facility and the Multicurrency Revolving Credit
Facility are secured on a pro rata basis among the respective lenders by a first
priority lien on certain assets of Vivendi Universal and the subsidiary
guarantors, including (a) capital stock in certain subsidiaries, (b) deposit
accounts and (c) 85% of all intercompany loans owed to Vivendi Universal and
such subsidiary guarantors. In addition, Vivendi Universal and the subsidiary
guarantors have agreed to subordinate their obligations under 85% of their
intercompany loans to their obligations under each of the Dual Currency Credit
Facility and the Multicurrency Revolving Credit Facility. The security and
subordination obligations are suspended after Vivendi Universal attains and
maintains an investment grade rating for a continuous period of 180 days.

     The Dual Currency Credit Facility contains customary negative covenants
which place restrictions on, among other things, the ability of Vivendi
Universal and the subsidiary guarantors to incur debt, to incur financial
guarantees, to pay distributions in respect of capital stock or to repay capital
stock, to make certain investments, to enter into leasing arrangements or
mergers and acquisitions, to dispose of assets and to create security interests.
Furthermore, the Dual Currency Credit Facility places certain limitations on the
ability of Vivendi Universal and certain of its subsidiaries to make or incur
intra group loans, subject to certain exceptions. Certain of these restrictions
are suspended three months after Vivendi Universal attains an investment grade
rating.

                                        61
<PAGE>

     The Dual Currency Credit Facility also requires Vivendi Universal and the
subsidiary guarantors to observe certain customary affirmative covenants,
including, but not limited to, relevant authorizations, maintenance of status,
certain bank accounts and insurance, protection of intellectual property rights,
payment of taxes, compliance with ERISA reporting requirements, compliance with
laws (including environmental laws), provision of financial and other
information and notification of defaults. Furthermore, Vivendi Universal and the
subsidiary guarantors must ensure that in any three-month period, the aggregate
amount of net cash available plus the aggregate undrawn amount under all
existing facilities is more than E 100 million.

     In addition, Vivendi Universal must maintain various financial ratios,
including:

     - maximum ratios of net financial debt to cash EBITDA;

     - minimum ratios of cash EBITDA to net financing costs; and

     - maximum total gross financial debt.

     Subject to certain other exceptions, Vivendi Universal has also agreed to
procure that the part of the net financial debt incurred by its subsidiaries
shall not at any time exceed in the aggregate an amount equal to 30% of the net
financial debt.

     The Dual Currency Credit Facility allows for voluntary prepayment if
Vivendi Universal gives at least three business days' notice, subject to a
minimum payment threshold and integral multiple requirements. Such voluntary
prepayments will be applied pro rata among the lenders. Vivendi Universal must
also prepay at the same time and in the same amount, the Multicurrency Revolving
Credit Facility.

     Provided that Vivendi Universal gives at least three business days' notice,
it may, without penalty or indemnity obligations, cancel the unutilized portions
of the total commitments in whole or in part, subject to a minimum threshold and
integral multiple requirements. Such voluntary cancellations will be applied pro
rata against the commitments under each tranche, subject to certain exceptions,
and against each lender's commitment in the relevant tranche Vivendi Universal
must also cancel, at the same time and in the same amount, the Multicurrency
Revolving Credit Facility.

     Unless Vivendi Universal attains and maintains an investment grade rating
for a continuous period of 90 days and subject to certain other exceptions, the
Dual Currency Credit Facility is subject to mandatory prepayment with certain
proceeds, including but not limited to, 33% of net debt issue proceeds, 50% of
net dividend proceeds, 16 2/3% of net equity issue proceeds and 16 2/3% of net
asset disposal proceeds (other than the disposal of VE shares (of which 50% is
required to be prepaid), and the disposal of Cegetel Group and SIT (of which 25%
is required to be prepaid).

     In addition, the Dual Currency Credit Facility is subject to, regardless of
Vivendi Universal's rating, mandatory prepayment upon (a) Vivendi Universal's
failure to comply with the specified financial ratios or (b) the occurrence of a
change of control event or (c) the occurrence of a special mandatory cancelation
of the Senior Notes.

     The Dual Currency Credit Facility contains customary event of default
provisions including, but not limited to, provisions relating to nonpayment,
misrepresentation and breach of other obligations under the loan documents,
cross-default, breach of covenants, insolvency, and insolvency proceedings,
material adverse changes, certain material ERISA events and cessation of
business.

MULTICURRENCY REVOLVING CREDIT FACILITY

     Vivendi Universal has entered into a E 3 billion multicurrency revolving
credit facility (Multicurrency Revolving Credit Facility) dated March 15, 2002,
as amended on February 6, 2003, and as further amended and restated on May 13,
2003, among Vivendi Universal, as a borrower and the obligors' agent, certain of
its subsidiaries, as guarantors, the lenders party thereto and Societe Generale,
as facility and security agent. Currently, E 2.3 billion of the Multicurrency
Revolving Credit Facility is drawn.

     Borrowings under the Multicurrency Revolving Credit Facility that are
denominated in Euros bear interest at EURIBOR plus a margin of 1.50% per annum,
which margin will be reduced to 1.00% per annum
                                        62
<PAGE>

after Vivendi Universal attains and maintains an investment grade rating for a
continuous period of 90 days. Borrowings under the Multicurrency Revolving
Credit Facility that are denominated in any permissible currency other than
Euros bear interest at LIBOR plus a margin of 1.50% per annum, which margin will
be reduced to 1.00% per annum after Vivendi Universal attains and maintains an
investment grade rating for a continuous period of 90 days. The Multicurrency
Revolving Credit Facility matures on March 15, 2007.

     Vivendi Universal is required to pay commitment fees at an annual rate of
50% of the then applicable margin on the undrawn, uncanceled amount of each
bank's commitment until the final maturity date of the Multicurrency Revolving
Credit Facility. Accrued commitment fees are payable quarterly in arrear and on
the final maturity date of the Multicurrency Revolving Credit Facility. Vivendi
Universal is also required to pay a utilization fee at a rate of 0.05% per annum
on the aggregate amount of all loans then outstanding for each day the aggregate
amount of all loans then outstanding exceeds 50% of the then total commitments
under the Multicurrency Revolving Credit Facility. In addition, Vivendi
Universal has agreed to pay certain fees to those banks that consented to
certain waivers and consents under the Multicurrency Revolving Credit Facility.
The amount of any such waiver fee is computed at a rate of 0.20% per annum on
the consenting bank's commitment or, if greater, its participation in the loans
on the applicable waiver fee date. We also pay the facility agent an annual
agency fee.

     The respective obligations of Vivendi Universal and the subsidiary
guarantors under the Multicurrency Revolving Credit Facility rank pari passu
with their obligations under the Dual Currency Credit Facility. The obligations
of Vivendi Universal and the subsidiary guarantors under each of the Dual
Currency Credit Facility and the Multicurrency Revolving Credit Facility are
secured on a pro rata basis among the respective lenders as described above
under the description of the Dual Currency Credit Facility.

     The Multicurrency Revolving Credit Facility contains customary negative
covenants which place restrictions on, among other things, the incurrence of
certain security interests, guarantees, disposal of assets, mergers and
acquisitions. Furthermore, the Multicurrency Revolving Credit Facility places
restrictions that prevent Vivendi Universal from making any substantial change
to the general nature or scope of its business and its subsidiaries from that
conducted on May 13, 2003. Also, Vivendi Universal may not make certain
amendments to the Senior Notes.

     The Multicurrency Revolving Credit Facility also requires Vivendi Universal
and the subsidiary guarantors to observe certain customary affirmative
covenants, including, but not limited to, relevant authorizations, maintenance
of insurance and status, perfection and protection of security interest,
compliance with environmental laws and notification of defaults. Vivendi
Universal is also required to provide financial and other information to the
facility agent. In addition, Vivendi Universal must maintain various financial
ratios, including:

     - maximum ratios of net financial debt to cash EBITDA;

     - minimum ratios of cash EBITDA to net financing costs; and

     - maximum total gross financial debt.

     Subject to certain other exceptions, Vivendi Universal has also agreed to
procure that the part of the net financial debt incurred by its subsidiaries
shall not at any time exceed in the aggregate an amount equal to 30% of the net
financial debt.

     Any borrower under the Multicurrency Revolving Credit Facility may
voluntarily prepay any loan made to it in whole or in part if such borrower
gives at least ten days' notice, subject to a minimum payment threshold and
integral multiple requirements. Such voluntary prepayments will be applied pro
rata among the lenders. Provided the obligor's agent gives at least ten days'
notice, it may, without penalty or obligation to indemnify, cancel the
unutilized portions of the total commitments in whole or in part, subject to a
minimum threshold and integral multiple requirements. Any voluntary cancelation
in part will be applied pro rata against the commitment of each bank. In the
case of a voluntary prepayment or cancelation, Vivendi Universal must also
prepay or cancel at the same time and in the same amount, the Dual Currency
Credit Facility.

                                        63
<PAGE>

     Unless Vivendi Universal attains and maintains an investment grade rating
for a continuous period of 90 days and subject to certain other exceptions, the
Multicurrency Revolving Credit Facility is subject to, mandatory prepayment with
certain proceeds, including but not limited to, 50% of net dividend proceeds,
16 2/3% of net equity issue proceeds and 16 2/3% of net asset disposal proceeds
(other than the disposal of VE shares (of which 50% is required to be prepaid),
and the disposal of Cegetel Group and SIT (of which 25% is required to be
prepaid).

     In addition, subject to certain conditions, the Multicurrency Revolving
Credit Facility is subject to, regardless of Vivendi Universal's rating,
mandatory prepayment upon (a) Vivendi Universal's failure to comply with the
specified financial ratios or (b) the occurrence of a change of control event.

     The Multicurrency Revolving Credit Facility contains customary event of
default provisions including, but not limited to, provisions relating to
nonpayment, misrepresentation and breach of other obligations under the loan
documents, cross-default, breach of covenants, insolvency and insolvency
proceedings, material adverse changes, cessation of business and unlawfulness.

SENIOR NOTES DUE 2010

     On April 3, 2003, Vivendi Universal issued $935 million in aggregate
principal amount of 9.25% Senior Notes due 2010 and E 325 million in aggregate
principal amount of 9.50% Senior Notes due 2010 (collectively referred to as the
Senior Notes). The Euro denominated Senior Notes were issued at a discount to
yield 9.75%. The Senior Notes are issued under an Indenture dated as of April 8,
2003, between Vivendi Universal and The Bank of New York, as trustee (the
Indenture). In connection with the issuance of the Senior Notes, we have entered
into an Exchange and Registration Rights Agreement dated April 8, 2003, with the
initial purchasers of the Senior Notes (the Registration Rights Agreement).

     The Senior Notes mature on April 15, 2010, and interest payments are
payable on April 15 and October 15 of each year, commencing on October 15, 2003.

     Pursuant to the Registration Rights Agreement, Vivendi Universal will, at
its cost, for the benefit of the holders of the Senior Notes, to:

     - no later than 90 days after the issue date of the Senior Notes, file a
       registration statement with the SEC with respect to a registered offer to
       exchange the Senior Notes for new Senior Notes of Vivendi Universal
       (Exchange Notes) having terms substantially identical in all material
       respects to the Senior Notes (except that the Exchange Notes will not
       contain terms with respect to transfer restrictions or payment of
       additional interest); and

     - use its reasonable best efforts to cause the exchange offer registration
       statement to be declared effective under the Securities Act as soon as
       practicable but not later than 240 days after the issue date of the
       Senior Notes.

     The Senior Notes are Vivendi Universal's general unsecured obligations.
They rank pari passu in right of payment with all of Vivendi Universal's
existing and future unsecured senior indebtedness and senior in right of payment
to any of Vivendi Universal's future subordinated indebtedness. The Senior Notes
are effectively junior to Vivendi Universal's secured indebtedness up to the
value of the collateral securing such indebtedness.

     Prior to the time that the Senior Notes receive an investment grade rating
from both Standard & Poor's and Moody's and certain other conditions are
satisfied (a Fall Away Event), the Indenture places certain restrictions on,
Vivendi Universal's and its restricted subsidiaries' among other things,
incurrence of debt, issuance preferred stock, payment of dividends in respect
of, or a repurchase of, capital stock of Vivendi Universal, investments,
creation of liens, or restrictions on the ability of our restricted subsidiaries
to pay dividends or other amounts to Vivendi Universal, sale and leaseback
transactions, transactions with affiliates, expansion into unrelated businesses,
incurrence of financial guarantees, incurrence of indebtedness which is, subject
to certain conditions, subordinated in right of payment to any other
indebtedness of Vivendi Universal, and consolidation, merger or sale of all or
substantially all assets.

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<PAGE>

     After a Fall Away Event occurs with respect to either series of Senior
Notes, the above limitations will no longer apply to that series of Senior
Notes, except that the indenture will continue to place restrictions on the
ability of Vivendi Universal and its restricted subsidiaries to, among other
things, create liens, enter into specified sale and leaseback transactions and
consolidate, merge or sell all or substantially all assets.

     At any time prior to April 15, 2006, Vivendi Universal may use, subject to
certain conditions, the net cash proceeds from any equity offering with gross
proceeds of at least E 50 million to redeem up to 35% of the Senior Notes at a
redemption price equal to 109.25% of the principal amount plus accrued and
unpaid interest, in the case of the US dollar-denominated Senior Notes, and
109.50% of the principal amount plus accrued and unpaid interest, in the case of
Euro-denominated Senior Notes. At any time prior to April 15, 2007, Vivendi
Universal may redeem at its option the Senior Notes, in whole or in part, upon
not less than 30 nor more than 60 day's prior notice at a redemption price equal
to 100% of their principal amount and accrued and unpaid interest plus the
applicable make-whole premium. At any time on or after April 15, 2007, Vivendi
Universal may redeem at its option the Senior Notes, in whole or in part, upon
not less than 30 nor more than 60 day's prior notice at the redemption prices
(expressed as a percentage of principal amount) set forth below plus accrued and
unpaid interest, if redeemed during the 12-month period beginning on April 15 of
the years indicated below:

<Table>
<Caption>
YEAR                                             DOLLAR NOTE PERCENTAGE   EURO NOTE PERCENTAGE
----                                             ----------------------   --------------------
<S>                                              <C>                      <C>
2007...........................................         104.625%                104.750%
2008...........................................         102.313%                102.375%
2009 and thereafter............................         100.000%                100.000%
</Table>

     Before the occurrence of a Fall Away Event, the holders of the Senior Notes
may, subject to certain conditions, require Vivendi Universal to repurchase the
Senior Notes (a) for a price equal to 101% of the principal amount plus accrued
and unpaid interest upon a change of control or (b) for a price equal to 100% of
the principal amount plus accrued and unpaid interest with a portion of the net
cash proceeds of certain assets sales.

     The indenture contains customary event of default provisions including
nonpayment, cross-default, failure to pay judgments, bankruptcy, insolvency and
breach of covenants or other obligations.

SECURITIZATION FACILITY

     On March 31, 2003, Film Funding, a subsidiary of VUE, borrowed $750 million
under a securitization facility (the Securitization Facility) based on future
video (including DVD and VHS) and television revenues in the United States from
part of its existing film library and future theatrical pictures. As part of the
Securitization Facility, certain subsidiaries of VUE transferred film assets
which generate these revenues and certain other related assets to Film Funding
and agreed to sell additional similar assets relating to future theatrical
pictures. The proceeds of the Securitization Facility were used by VUE to retire
$700 million of the $1.62 billion owed under the VUE Bridge Facility (described
below), and to establish a funded reserve account required under the terms of
the Securitization Facility, to be used to fund certain expenses related to
exploitation of the film assets (e.g., costs of duplication and distribution
expenses). Borrowings under the Securitization Facility currently bear interest
at a rate of 1.50% over one-month LIBOR. The Securitization Facility has the
benefit of a financial guaranty insurance policy issued by Ambac Assurance
Corporation which guarantees to the lenders timely payment of interest and
ultimate payment of principal. The Securitization Facility is scheduled to
amortize over three years, commencing three years after the initial borrowing.

     The Securitization Facility was arranged by Banc of America Securities LLC
and J.P. Morgan Securities, Inc. with the funding being provided to Film Funding
by a number of commercial paper conduit purchasers. Film Funding also received
364-day commitments from banks to provide funding if the conduit purchasers do
not provide funding. If the commitments are not renewed, all or a portion of the
Securitization Facility could commence amortization earlier than the third
anniversary of the initial borrowing.

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<PAGE>

     The Securitization Facility contains partial amortization events, early
amortization events and event of default provisions that are triggered by, among
other things, a failure to satisfy collateral performance tests, nonpayment,
misrepresentation and breach of other obligations under the securitization
documents, cross-default, insolvency and insolvency proceedings, judgments, and
the ineffectiveness of the security interests and failure to satisfy an interest
coverage test for VUE. Occurrence of any of these events could cause a
requirement to amortize a portion or all of the Securitization Facility prior to
the scheduled date.

     The Securitization Facility places certain obligations on Film Funding and
VUE and its other subsidiaries to maintain their distinct corporate identity,
including but not limited to restrictions on the commingling of funds,
maintenance of records, books of account and financial statements, and
restrictions on the ability of Film Funding on the one hand, and VUE and its
subsidiaries, on the other hand, to guarantee, hold themselves out as liable for
or pledge assets to secure obligations of the other.

SOCIETE D'INVESTISSEMENT POUR LA TELEPHONIE FACILITY

     We have entered into a E 1.3 billion facility (the Acquisition Facility)
dated December 6, 2002, as amended as of June 25, 2003, among SIT, as the
borrower, Vivendi Universal, a syndicate of lenders, Credit Lyonnais, as agent,
and The Royal Bank of Scotland, as security trustee. The Acquisition Facility
was entered into by SIT to finance the purchase by SIT of 26% of the share
capital of Cegetel Group.

     The outstanding amount of the loan under the Acquisition Facility is E 1.3
billion. The maturity date of the loan is June 30, 2004. SIT may request an
extension of the maturity date to June 30, 2010, by providing notice prior to
June 1, 2004. If SIT requests such an extension, the loan will be repaid in
periodic installments over the term of the loan until the final installment on
June 30, 2010. There is a scheduled repayment of E 105 million on June 30, 2003.

     Borrowings under the Acquisition Facility bear interest at EURIBOR plus a
margin of 4.00%, subject to certain adjustments.

     The Acquisition Facility contains certain negative covenants which restrict
or limit the ability of SIT and Cegetel Group and its subsidiaries to, among
other things, create certain liens, dispose of certain assets, incur certain
indebtedness, declare or pay certain dividends or distributions and pay certain
management, advisory or other fees. In addition, SIT and Cegetel Group are
required to maintain various financial ratios, including:

     - minimum Cegetel Group EBITDA;

     - maximum ratios of Cegetel Group total net debt to Cegetel Group EBITDA;
       and

     - minimum ratios of Cegetel Group cash flow to the total funding costs of
       SIT.

     SIT may, on not less than five business days' notice, cancel all or part of
the undrawn part of the Acquisition Facility or prepay all or part of the
outstanding loan, in each case subject to certain minimum requirements. The
Acquisition Facility also provides for mandatory prepayment upon, among other
things:

     - Vivendi Universal ceasing to own the entire issued share capital of SIT;

     - SIT disposing of all or any of the Cegetel Group shares acquired by it in
       the transaction financed by loans made under the Acquisition Facility;

     - Vivendi Universal or its subsidiaries disposing of all or any Cegetel
       Group shares owned by any of them as of the date of the acquisition
       agreement, subject to certain exceptions; and

     - Cegetel Group disposing of any shares held by it in Societe Francaise du
       Radiotelephone or any of its material subsidiaries.

     The Acquisition Facility also requires, subject to certain exceptions,
mandatory repayment of the loan from the net proceeds of new equity share
capital issued by SIT and certain dividends or distributions from Cegetel Group
received by SIT.

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<PAGE>

     The Acquisition Facility contains customary event of default provisions,
including provisions relating to nonpayment, misrepresentation, insolvency,
unlawfulness, cessation of business and material adverse change.

VUE LOAN AGREEMENT

     On June 24, 2003, VUE entered into a $920 million loan agreement with Bank
of America, N.A. and JPMorgan Chase Bank, as co-administrative agents, the
lenders party thereto, Barclays Bank PLC, as syndication agent, and JPMorgan
Chase Bank, as collateral agent and as paying agent (the VUE Loan Agreement).
The full amount of the facility was drawn at closing and the proceeds have been
used to repay the remaining outstanding portion of the $1.62 billion loan dated
May 3, 2002, as amended and restated as of November 25, 2002.

     Borrowings under the VUE Loan Agreement are denominated in US Dollars and
bear interest at either Eurodollar rate plus a margin of 2.75% or ABR plus a
margin of 1.75%. The loan will mature in 16 consecutive quarterly installments
commencing on September 30, 2004, each of which shall be equal to, in the case
of the first 12 installments, 0.25% of the loan principal and, in the case of
each of the last four installments, 24.25% of the loan principal.

     Certain of VUE's subsidiaries guarantee VUE's obligations under the VUE
Loan Agreement. VUE's obligations as borrower and the guarantors' obligations
are secured by a first priority lien on the assets of VUE and the guarantors,
and portions of the collateral may be released in certain transactions and
circumstances. In addition, Vivendi Universal and certain of its subsidiaries
have agreed to the subordination of inter-company indebtedness owing to them by
VUE and the guarantors.

     The VUE Loan Agreement contains negative covenants that restrict the
ability of VUE and certain of its subsidiaries to engage in certain activities,
including, but not limited to:

     - limitations on creating or permitting to subsist certain security
       interests on their assets;

     - limitations on disposals of assets;

     - limitations on the incurrence of indebtedness (including financial
       guarantees);

     - limitations on investment;

     - limitations on restricted payments (unless the loans are rated investment
       grade), such as limitations on the payment of dividends or distributions
       of other amounts in respect of equity interests, as well as limitations
       on investments in, purchases of any indebtedness owing to, or other
       payments on account of, Vivendi Universal and its subsidiaries, and
       intercompany loans to Vivendi Universal and its subsidiaries;

     - limitations on transactions with affiliates, sale and leaseback
       transactions, swap agreements, changes in fiscal periods, negative
       pledges, restrictions on subsidiary distributions, and permitted lines of
       business; and

     - limitations on fundamental changes, including mergers, consolidations,
       and amalgamations.

     In addition, VUE must maintain certain financial ratios at all times,
namely:

     - maximum ratios of consolidated indebtedness to consolidated EBITDA;

     - maximum cash leverage ratios;

     - maximum senior leverage ratios;

     - minimum ratios of consolidated EBITDA to consolidated interest expense;
       and

     - minimum ratios of cash EBITDA to consolidated fixed charges.

     Unless the loans under the VUE Loan Agreement are rated investment grade,
the VUE Loan Agreement, subject to certain exceptions, (a) places limitations on
the ability of VUE and its subsidiaries to make loans, advances or pay dividends
to Vivendi Universal and certain of its subsidiaries that are not VUE or
                                        67
<PAGE>

subsidiaries of VUE, (b) limits the net balance of loans between VUE, including
its subsidiaries, and Vivendi Universal, including its subsidiaries, to an
aggregate of $600 million and (c) prohibits VUE from distributing the net
proceeds from the disposal of certain assets.

     The VUE Loan Agreement also requires VUE and certain of its subsidiaries to
observe certain affirmative covenants, including, but not limited to, relevant
authorizations, maintenance of property and insurance, compliance with laws and
obligations, provision of financial and other information, maintenance of the
separateness of Vivendi Universal entities and VUE entities in respect of funds,
assets, accounts, records and corporate formalities, maintenance and
contributions of collateral, interest rate protection and notification of
defaults.

     VUE may voluntarily prepay loans under the VUE Loan Agreement in whole or
in part if it gives at least three business days' notice, subject to a minimum
payment threshold and integral multiple requirements. Subject to certain
conditions, VUE must prepay the loans (or, in some cases, cash collateralize its
obligations) under the VUE Loan Agreement with the proceeds of certain issuances
of indebtedness, asset sales, issuances of equity interests and recovery events.

ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     The following discussion of our operations should be read in conjunction
with our Consolidated Financial Statements and related notes included elsewhere
in this document.

BASIS OF PRESENTATION

     The discussion presented below focuses on an analysis of Vivendi
Universal's financial and business segment results prepared in accordance with
generally accepted accounting principles in France (French GAAP), which differ
in certain significant respects from accounting principles generally accepted in
the United States (US GAAP). For a discussion of the most significant
reconciling items see "Results of Operations--Adjustments to Conform to US GAAP"
in Note 17 to our Consolidated Financial Statements included in this document.

     The company, under previous management, announced that it intended to fully
adopt US GAAP reporting standards beginning in 2002 as supplemental financial
information for investors. Following the change in senior management in July
2002, it was decided that Vivendi Universal, as a French Company, would
prospectively only report its primary financial statements in French GAAP with a
reconciliation to US GAAP. The company will, however, periodically publish
selected US GAAP financial information as required under certain of its debt
agreements.

RECENT DEVELOPMENTS

     Following a period of significant acquisition-related growth from the late
1990's through the first half of 2002, the associated increase in leverage led
to heightened concerns during the first half of 2002 over the validity of
Vivendi Universal's strategy in a deteriorating environment and, eventually, to
the appointment of a new management team. See "Item 4--Information on the
Company--History and Development of the Company." Concerns over Vivendi
Universal's strategy and financial flexibility led Moody's to reduce Vivendi
Universal's senior debt rating on July 1, 2002, from Baa3 to Ba1, under review
for possible further downgrade. Standard & Poor's followed suit the next day,
with a one-notch downgrade to BBB- with a negative outlook. The unfavorable
development in our rating continued during the balance of 2002. See "--Liquidity
and Capital Resources." The July downgrades had an immediate impact on Vivendi
Universal's short-term liquidity. In particular Vivendi Universal lost, to a
significant extent, access to the capital markets, and most importantly to the
commercial paper market, historically its main source of funding for working
capital needs.

     The new management team addressed Vivendi Universal's immediate liquidity
concerns by securing on July 10, 2002, a E 1.0 billion multi-currency term loan
facility, which was repaid in December 2002. This was done with a view of
putting in place a longer-term solution once the new management had the
opportunity to better assess the medium-term situation. Following its review,
the new management revised the previous

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<PAGE>

management's cash-flow projections for the period from July 2002 to December
2004 and wrote-off E 11 billion in acquisition-related goodwill while adding
E 3.4 billion in financial provisions. This resulted in a E 12.3 billion net
loss in the first half of 2002, which was publicly announced on August 14, 2002.
At the same time, Vivendi Universal announced a E 16 billion asset divestiture
program intended to be completed by 2004 in order to substantially reduce debt.

     During the second half of 2002, Vivendi Universal closed asset sales for
total consideration of approximately E 6.7 billion, including the assumption by
the acquirers of the assets of approximately E 0.4 billion in debt, and we have
continued to complete divestitures in 2003. At December 31, 2002, Vivendi
Universal's net debt was E 12.3 billion compared with E 37.1 billion at December
31, 2001. Excluding the net debt of Veolia Environnement which, following
divestitures of an additional portion of our shareholding interest therein in
2002, was deconsolidated from Vivendi Universal's balance sheet on December 31,
2002, net debt fell by approximately E 9.0 billion. In the first half of 2003 we
implemented a refinancing plan in order to give us substantial flexibility in
connection with the execution of our asset divestiture program, to increase
funds available to Vivendi Universal and to extend the scheduled maturities of
our debt facilities. For a description of our material outstanding indebtedness,
see "Item 4--Information on the Company--Summary of Indebtedness."

COMPARABILITY

 PRO FORMA INFORMATION; ACQUISITIONS AND DIVESTITURES.

     The pro forma information presented below, which is not compliant with
Article 11 of the Securities and Exchange Commission Regulation SX, has been
included since it is required under French GAAP in Vivendi Universal's
Consolidated Financial Statements to promote comparability. Such information has
been presented in Note 2 to our Consolidated Financial Statements.

     As several significant transactions completed in 2001 and 2002 have
realigned our businesses and impacted the comparability of our financial
statements, we present financial information for these years both for our
consolidated group and for each of our business segments on a pro forma basis.
The pro forma information illustrates the effect of the acquisitions of the
entertainment assets of InterActiveCorp (formerly known as USA Interactive and
prior thereto as USA Networks, Inc.), or USAi, in May 2002, Maroc Telecom in
April 2001 and MP3.com in August 2001, and the disposition of certain interests
in Veolia Environnement and Vivendi Universal Publishing, as if these
transactions had occurred at the beginning of 2001. Additionally, the pro forma
information include the results of Universal Studios international television
networks in Vivendi Universal Entertainment in both 2002 and 2001 (in the actual
2002 results, the results of Universal Studios international television networks
were reported by Canal+ Group). This reclassification has no impact on the
overall results of Vivendi Universal. We believe that pro forma results may help
the reader to better understand our business results as they include comparable
operations in each year presented. However, it should be noted that the
pre-acquisition results of an acquired business accounted for on a historical
cost basis are not directly comparable to the post-acquisition results of
acquired entities whose initial purchase price was allocated on a fair value
basis. 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 2001.

     For a discussion of the above transactions and other significant
transactions that have occurred during the period 2000 to 2002, see "Item
4--Information on the Company--History and Development of the Company."

     Given our ongoing asset divestiture program, our year to year comparisons
of financial results will continue to be difficult in coming years.

 REALIGNMENT OF SEGMENT REPORTING

     In 2002, we realigned our segment reporting to reflect the new business
organization and management structures resulting from the change in management
and the dispositions of businesses which occurred in the second half of the
year.

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<PAGE>

 CHANGES IN ACCOUNTING PRINCIPLES AND FINANCIAL STATEMENT PRESENTATION

     In 2001, Vivendi Universal adopted new accounting principles and modified
its financial statement presentation in order to more closely align accounting
policies between French GAAP and US GAAP. The principal changes, as they relate
to the discussion presented below, are as follows:

     - As permitted by French Regulation 99.02 (sec.41), Vivendi Universal
       elected to present its Consolidated Statement of Income in a format that
       classifies income and expenses by function rather than by nature, which
       was the format presented in prior years.

     - For our subsidiary Veolia Environnement (which was deconsolidated from
       the Vivendi Universal balance sheet as of December 31, 2002), revenues
       include operating subsidiaries and exclude revenues related to
       construction of assets for internal use.

     - The definition of exceptional items has been restricted to include only
       material items of an unusual nature that arise from events or
       transactions outside the ordinary course of business and which are not
       expected to recur. For Vivendi Universal, exceptional items are primarily
       comprised of gains and losses on the divestiture of businesses.
       Exceptional items are presented as a separate component in our
       Consolidated Statement of Income after operating income and financial
       expenses but before income taxes. Prior to 2001, Vivendi Universal had a
       broader definition of exceptional items, including restructuring costs,
       plant dismantling and closure costs and the effect of guarantees given
       when exercised, among others. These items are now included as a component
       of operating income.

     In order to facilitate the discussion and comparability of 2001 and 2000
financial results, we have presented the 2000 financial statements on a
comparable basis.

     In 2000, Vivendi Universal adopted new accounting principles related to
foreign currency translation/ transactions, subscriber acquisition costs and
sports broadcasting rights as follows:

     - Income and expenses of subsidiaries whose functional currency is not the
       euro, which were previously translated at the year-end exchange rate, are
       now translated at the average exchange rate during the period. Gains on
       foreign currency transactions, which were previously deferred, are now
       recorded in current period earnings.

     - Subscriber acquisition costs, which were previously spread over 12 months
       from the date the line was put into service, are now charged to expense.

     - Broadcasting rights acquired by Canal+ Group are now capitalized as
       intangible assets and are amortized over the period of the agreement. The
       cumulative effect of this change had no impact on net income in 2000.
       Total assets increased by E 2 billion in 2000 (most of which related to
       intangible assets) and total liabilities and shareholders' equity
       increased by the same amount.

     For further discussion of some of the policies used in preparing our
financial statements and comparability see Note 1 to our Consolidated Financial
Statements.

GOODWILL, IMPAIRMENT OF GOODWILL AND FINANCIAL ASSETS

     Vivendi Universal's acquisition-related growth strategy resulted in
significant goodwill on its balance sheet. By the end of 2000, goodwill amounted
to E 47.1 billion. In view of the continuing deterioration of the economy since
December 2000, Vivendi Universal recorded significant goodwill impairment in
both 2001 (E 13.5 billion) and 2002 (E 18.4 billion).

     Following these impairments, and the other changes in goodwill described in
Note 3 to our Consolidated Financial Statements, goodwill at December 31, 2002
stood at E 20 billion. Vivendi Universal is required under French GAAP to add
goodwill of approximately E 3 billion to its balance sheet as a consequence of
the acquisition of an additional interest in Cegetel Group in January 2003.
Under French GAAP, goodwill is amortized over a 40 year period. Recurring
amortization totaled E 1.3 billion in 2002 and E 1.7 billion in 2001, and
Vivendi Universal expects to continue to incur significant expense for goodwill
amortization in the coming years. Under US GAAP, goodwill is no longer amortized
but is subject to annual impairment tests.
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<PAGE>

     Impairments are calculated using the group's accounting principles for
long-term assets. Long-term assets are subject to an exceptional impairment of
goodwill if events result in, or show a risk of, an unexpected reduction in the
value of the assets. In this situation, their fair value is re-assessed and a
provision is made to cover any eventual significant difference between the book
value and the realizable value.

     This exceptional impairment, in both 2002 and 2001, was calculated as the
difference between the net book value of the impacted businesses and their
value, as estimated with the assistance of independent valuation experts. Fair
value is determined as follows:

     - The fair value of the business units is determined by an analysis of
       discounted cash flows.

     - If this method is irrelevant for the business unit, other standard
       criteria are available: comparison to similar listed companies,
       assessment to the value attributed to the business units involved in
       recent transactions, and the market price for publicly-listed business
       units.

     - The fair values of the business units included in the asset divestiture
       program are assessed on the basis of their market value. Market value is
       defined as the amount that could be obtained at the date of sale for an
       asset where the transaction is concluded at normal market conditions, net
       of transaction costs.

     Regarding the discounted cash flow method of analysis, the three factors
taken into account were cash flow, rate of return and perpetual growth rate. The
source of the cash flow statements used for the analysis were the business plans
of the business units concerned available at the time of the analysis, approved
by the management and presented to the Board of directors. The rate of return
was based upon an analysis of the average cost of capital of the relevant
business units. Their cost of capital and growth rate were determined by taking
into account the specific business environment in which each business unit
operated, and specifically the maturity of the market and the geographic
localization of its operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Accounting policies discussed in this section are those that we consider to
be critical to an understanding of our financial statements because their
application places the most significant demands on our ability to judge the
effect of inherently uncertain matters on our financial results. For all of
these policies, we caution that future events rarely develop exactly as
forecast, and that the best estimates routinely require adjustment.

     USE OF ESTIMATES -- The preparation of these financial statements requires
management to make informed estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. On an on-going basis,
management evaluates its estimates and judgments, including those related to the
sale of future and existing music and publishing related products, as well as
from the distribution of theatrical and television products, in order to
evaluate the ultimate recoverability of accounts receivable, film inventory,
artist and author advances and investments and in determining valuation
allowances for investments, long-lived assets, pension liabilities and deferred
taxes. Estimates and judgments are also required and regularly evaluated
concerning financing operations, restructuring costs, contingencies and
litigation. Management bases its estimates and judgments on historical
experience and on various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results could differ significantly from
these estimates under different assumptions or conditions.

     MERGER ACCOUNTING -- Vivendi Universal completed several significant
transactions during the periods covered by its Consolidated Financial Statements
included in this document. Generally accepted accounting principles require that
acquisitions be recorded based on an assessment of the fair value at the
acquisition date of the tangible and intangible assets acquired and liabilities
assumed. As a result of recent acquisitions, Vivendi Universal, with the
assistance of third-party valuation experts in certain areas, has estimated the
fair value of intangible assets (such as film and television libraries, music
catalogs and trade names), tangible assets (such as property, equipment,
inventory and marketable securities), liabilities and commitments (such as
favorable or unfavorable leases and contracts and certain restructuring costs
incident to the acquisitions)
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<PAGE>

and preacquisition contingencies (such as litigation) for use in recording the
purchase price of its acquisitions. The excess of purchase price over net assets
acquired is reflected as goodwill. Should the value of acquired intangible or
tangible assets, including goodwill, become impaired, a non-cash write-down of
these assets may be required. Should restructuring costs incidental to the
acquisition, which in the case of Vivendi Universal generally relate to employee
severance costs, differ from the liability established at the time of
acquisition, additional cash charges to operations or non-cash releases of the
established liability to operations may be required. Ultimate settlement of
preacquisition contingencies could differ significantly from the contingency
reflected at the time of acquisition, which could lead to additional cash
charges to operations or non-cash release of the established liability to
operations.

     REVENUE RECOGNITION -- For Music, revenues from the sale of recorded music,
net of provision for estimated returns and allowances, are recognized on
shipment to third parties.

     For VUE and Canal+ Group segments, theatrical revenues from the
distribution of films are recognized as the films are exhibited. Home video
product revenues, less a provision for estimated returns and allowances, are
recognized upon availability of product for retail sale to the ultimate
customer. Revenues from television and pay television licensing agreements are
recognized when the films are available for telecast, and all other conditions
of the sale have been met. Revenues from television subscription services
related to cable and satellite programming are recognized as the services are
provided. Revenues at theme parks are recognized at the time of visitor
attendance. Revenue for retail operations is recognized at point-of-sale.

     Revenues from telephone service and installation are recognized as they
occur. Subscriptions are billed monthly in advance, and recorded as a deferred
revenue liability, before transfer to earnings of the period during which the
service is provided. Prepaid fees are deferred and recognized as the purchased
minutes are used. Service discounts are accounted for as a reduction of revenue
when the service is used, or on provision of line access in the case of pack
discounts.

     Vivendi Universal records VU Games revenue when goods are shipped to the
customer except if risk of ownership does not transfer to the customer upon
shipment.

     Finally, Internet revenues are primarily derived from subscriptions,
advertising and e-commerce activities. Subscription revenues are recognized over
the period that services are provided. Advertising revenues are recognized in
the period that advertisements are displayed.

     VALUATION OF LONG-LIVED ASSETS -- Vivendi Universal reviews the carrying
value of its long lived assets held and used, intangible assets that do not have
indefinite lives and long lived assets to be disposed of whenever events or
changes in circumstances indicate that the carrying value of the assets may not
be recoverable. This review is performed using estimates of future cash flows.
Management believes that the estimates of future cash flows and fair value are
reasonable; however, changes in estimates resulting from lower future cash flows
and fair value due to unforeseen changes in business assumptions could
negatively affect the valuations of those long-lived assets.

     GOODWILL AND OTHER INTANGIBLE ASSETS WITH INDEFINITE LIVES -- Vivendi
Universal regularly reviews the carrying value of goodwill and other intangible
assets that are determined to have an indefinite life. These assets are tested
for impairment on an annual basis and more frequently if an event occurs or
circumstances change that would more likely than not reduce the fair value of
these assets below the carrying value. The fair value of these assets is
determined using a discounted cash flow analysis, which is based on business
plans approved by the Board or, if this method is irrelevant for the business
unit, other standard criteria are used including: a comparison to similar listed
companies, an assessment of the value attributed to the business units involved
in recent transactions and an assessment of the fair value of the business unit
included in the asset divestiture program. Management believes that the
estimates of future cash flows and fair value are reasonable; however, changes
in estimates resulting in lower cash flows and fair value due to unforeseen
changes in business assumptions could negatively affect the valuations.

     PENSION BENEFIT COSTS -- Vivendi Universal's pension benefit obligations
and the related costs are calculated using actuarial models and assumptions
applicable in the countries where the plans are located, principally the United
States, Canada, United Kingdom, France, Germany and Japan. Two critical assump-
                                        72
<PAGE>

tions, discount rate and expected return on assets, are important elements of
plan expense and/or liability measurement. We evaluate these critical
assumptions at least annually. Other assumptions involve demographic factors
such as retirement, mortality, turnover and rate of compensation increase. These
assumptions are evaluated periodically and are updated to reflect our
experience. Actual results in any given year will often differ from actuarial
assumptions because of economic and other factors. The discount rate enables us
to state expected future cash flows at a present value on the measurement date.
We have little latitude in selecting this rate, as it is required to represent
the market rate for high-quality fixed income investments. A lower discount rate
increases the present value of benefit obligations and increases pension
expense. We reduced our weighted average discount rate from 6.3% in 2001 to 5.7%
in 2002 to reflect market interest rate conditions. For our US plans, a further
50 basis point decrease in the discount rate would increase pension expense by
approximately E 1 million per year. To determine the expected long-term rate of
return on pension plan assets, we consider the current and expected asset
allocations, as well as historical and expected returns on various categories of
plan assets. For our US plans, a 50 basis point decrease in the expected return
on assets of principal plans would increase pension expense on our principal
plans by approximately E 2 million per year. We assumed that the weighted
average of long-term returns on our pension plans were 7.2% in 2002 and 7.4% in
2001. Further information on our principal pension plans is provided in Note
17.4 to our Consolidated Financial Statements, including disclosure of these
assumptions.

     FILM AND TELEVISION REVENUES AND COSTS -- Vivendi Universal expenses the
cost of film and television production over the applicable product life cycle
based on the ratio of current period's gross revenues to the estimated remaining
total gross revenues. These estimates are calculated based on an individual
production basis. Estimates of total gross revenues can change for a variety of
factors, including the level of market acceptance, advertising rates and
subscriber fees. Television rights for sports, theatrical movies, series and
other programs are charged to expense based on the life cycle of the program
over the license period. Estimates of usage of television network programming
can change based on competition and audience acceptance. Accordingly, revenue
estimates and planned usage are reviewed periodically and are revised if
necessary. A change in revenue projections or planned usage could have an impact
on our results of operations. Costs of film and television productions and
programming rights are subject to valuation adjustments pursuant to the
applicable accounting rules. If actual demand or market conditions are less
favorable than our projections, potentially significant film, television or
programming cost write-downs may be required.

     MUSIC ADVANCES TO ARTISTS -- For established artists, Vivendi Universal
capitalizes advances and direct costs associated with the creation of record
masters and expenses these costs as the related royalties are earned or when the
amounts are determined to be unrecoverable. An established recording artist is
an artist whose past performance and current popularity provides a sound basis
for estimating the recoverability of the advance. Advances to artists who are
not established are expensed as incurred. Estimates of recoverability can change
based on the current popularity of the artist based on sales through the
reporting period. If it appears that a portion of the advance is not recoverable
from royalties to be earned by the artist, a provision is made in the period
that a loss becomes apparent.

     FINANCIAL INSTRUMENTS -- Vivendi Universal uses various techniques designed
to manage risk and costs associated with its financing. Vivendi Universal
commonly uses exchangeable debt, which represents long-term debt exchangeable
for common stock of another publicly traded company or Vivendi Universal itself.
Generally, the bondholder may choose to receive either cash or the underlying
security at settlement. Should the underlying security decline in value, this
may result in the recording of an allowance related to the valuation of the
security by Vivendi Universal and could result in the bondholder electing to
receive cash at settlement. In addition, Vivendi Universal uses various
derivative financial instruments to hedge exposure to fluctuations in interest
rates, currency exchange rates and investments in debt and equity securities.

     RECEIVABLES FROM EQUITY AFFILIATES -- Vivendi Universal holds minority
interest receivables in companies having operations or technology in areas
within or adjacent to its strategic focus. Some of these companies are publicly
traded and their share prices are highly volatile while some of these companies
are non-publicly traded and their value is difficult to determine. Vivendi
Universal records an investment impairment charge when it believes an investment
has experienced a decline in value that is other than temporary, and records an
allowance for receivables if recoverability is uncertain. Future adverse changes
in market conditions or poor
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<PAGE>

operating results of underlying investments could result in losses or an
inability to recover the carrying value of the investments or receivables,
thereby possibly requiring an impairment charge in the future.

     DEFERRED TAX ASSETS -- Vivendi Universal records deferred tax assets in the
amount that it believes is more likely than not to be realized. While we have
future taxable income and ongoing prudent and feasible tax planning strategies,
in the event we were to determine that we would not be able to realize all or
part of our net deferred tax assets in the future, an adjustment to the deferred
tax assets would be charged to income in the period such determination was made.
Likewise, should Vivendi Universal determine that it would be able to realize
its deferred tax assets in the future in excess of its net recorded amount, an
adjustment to the deferred tax assets would increase income in the period such
determination was made.

     CONTINGENCIES -- Vivendi Universal records liabilities when it is probable
that a liability has been incurred and the amount of the loss is reasonably
estimable. Disclosure is required when there is a reasonable possibility that
the ultimate loss will exceed the recorded provision. Contingent liabilities are
often resolved over long time periods. Estimating probable losses requires
analysis of multiple forecasts that often depend on judgments about potential
actions by third parties such as regulators. Further information on commitments
and contingencies is included in Note 11 to our Consolidated Financial
Statements.

                                        74
<PAGE>

                             RESULTS OF OPERATIONS

EARNINGS SUMMARY

<Table>
<Caption>
                                                        YEAR ENDED DECEMBER 31,
                                        --------------------------------------------------------
                                                     ACTUAL                    PRO FORMA(3)
                                        --------------------------------   ---------------------
                                         2002(1)      2001      2000(2)      2002        2001
                                        ---------   ---------   --------   ---------   ---------
                                                (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S>                                     <C>         <C>         <C>        <C>         <C>
REVENUES..............................  E  58,150   E  57,360   E 41,580   E  28,729   E  27,733
OPERATING INCOME......................      3,788       3,795      1,823       2,037       2,113
Financial expenses, net...............     (1,333)     (1,455)    (1,288)       (624)       (724)
Financial provisions..................     (2,895)       (482)      (196)     (2,786)       (410)
Other income (expense)................       (514)          9        722        (658)         26
                                        ---------   ---------   --------   ---------   ---------
INCOME (LOSS) BEFORE EXCEPTIONAL
  ITEMS, INCOME TAXES, GOODWILL
  AMORTIZATION, EQUITY INTEREST AND
  MINORITY INTEREST...................       (954)      1,867      1,061      (2,031)      1,005
Exceptional items, net................      1,049       2,365      3,812         561       2,328
Income tax expense....................     (2,556)     (1,579)    (1,009)     (2,319)     (1,043)
                                        ---------   ---------   --------   ---------   ---------
INCOME (LOSS) BEFORE GOODWILL
  AMORTIZATION, EQUITY INTEREST AND
  MINORITY INTEREST...................     (2,461)      2,653      3,864      (3,789)      2,290
Equity in earnings of disposed
  businesses(1).......................         17          --         --          --          --
Equity in losses of unconsolidated
  companies...........................       (294)       (453)      (306)       (266)       (802)
Goodwill amortization.................     (1,277)     (1,688)      (634)     (1,040)     (1,438)
Goodwill impairment...................    (18,442)    (13,515)        --     (18,442)    (12,519)
                                        ---------   ---------   --------   ---------   ---------
INCOME (LOSS) BEFORE MINORITY
  INTEREST............................    (22,457)    (13,003)     2,924     (23,537)    (12,469)
Minority interest.....................       (844)       (594)      (625)       (571)       (759)
                                        ---------   ---------   --------   ---------   ---------
NET INCOME (LOSS).....................  E (23,301)  E (13,597)  E  2,299   E (24,108)  E (13,228)
                                        =========   =========   ========   =========   =========
EARNINGS (LOSS) PER SHARE
  Basic...............................  E  (21.43)  E  (13.53)  E   3.63   E  (22.17)  E  (12.81)
WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING(4)
  Basic...............................    1,087.4     1,004.8      633.8         n/a         n/a
Net cash provided by operating
  activities..........................  E   4,670   E   4,500   E  2,514         n/a         n/a
Net cash provided by (used for)
  investing activities................        405       4,340     (1,481)        n/a         n/a
Net cash used for financing
  activities..........................     (3,792)     (7,469)      (631)        n/a         n/a
</Table>

---------------

(1) At December 31, 2002, Vivendi Universal applied the option proposed in
    paragraph 23100 of the French rules 99-02 and has presented the equity in
    (losses) earnings of businesses which were sold during the year on one line
    in the consolidated statement of income as "equity in (losses) earnings of
    disposed businesses." Disposed businesses include all of the Vivendi
    Universal Publishing activities excluding: Vivendi Universal Games,
    publishing activities in Brazil, the consumer press division (the
    divestiture of which was completed in February 2003) and Comareg (the
    divestiture of which was completed in May 2003).

                                        75
<PAGE>

(2) Reflects changes in accounting principles and financial statement
    presentation adopted in 2001, as discussed in "--Comparability--Changes in
    Accounting Principles and Financial Statement Presentation."

(3) The pro forma information illustrates the effect of the acquisitions of the
    entertainment assets of InterActiveCorp (formerly known as USA Interactive
    and prior thereto as USA Networks, Inc.), or USAi, in May 2002, Maroc
    Telecom in April 2001 and MP3.com in August 2001, and the disposition of
    certain interests in Veolia Environnement and Vivendi Universal Publishing,
    as if these transactions had occurred at the beginning of 2001.
    Additionally, the pro forma information includes the results of Universal
    Studios international television networks in Vivendi Universal Entertainment
    in both 2002 and 2001 (in the actual 2002 results, the results of Universal
    Studios international television networks were reported by Canal+ Group).
    This reclassification has no impact on the total results of Vivendi
    Universal. We believe that pro forma results may help the reader to better
    understand our business results as they include comparable operations in
    each year presented. However, it should be noted that the pre-acquisition
    results of an acquired business accounted for on a historical cost basis are
    not directly comparable to the post-acquisition results of acquired entities
    whose initial purchase price was allocated on a fair value basis. 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
    2001.

(4) Excludes treasury shares recorded as a reduction of shareholders' equity.

COMPARISON OF 2002 VERSUS 2001

     Where indicated, the following comparison of 2002 versus 2001 discusses
results of operations on both an actual basis and a pro forma basis. Pro forma
results of operations reflects the effect of the acquisitions of the
entertainment assets of USAi, Maroc Telecom and MP3.com, disposition of certain
interests in Veolia Environnement and Vivendi Universal Publishing, as if these
transactions had occurred at the beginning of 2001. See Note 2 to our
Consolidated Financial Statements for further information on pro forma results
of operations.

 REVENUES

     Actual -- Total revenues increased 1% (3% on a constant currency basis)
from E 57.4 billion in 2001 to E 58.1 billion in 2002, primarily reflecting the
acquisition in May 2002 of USAi's entertainment assets, partially offset by the
fact that revenues generated by Vivendi Universal Publishing operations sold in
2002 are not included in 2002 revenues whereas they are included in 2001
revenues. See the discussion in "-- Comparability."

     Pro Forma -- On a pro forma basis, revenues increased 4% (6% on a constant
currency basis) from E 27.7 billion in 2001 to E 28.7 billion in 2002, with
Cegetel Group leading revenue increases in all our operating segments other than
Universal Music Group.

     For an analysis of revenues by business segment, see "-- Business Segment
Results."

 COST OF REVENUES

     Cost of revenues represented 69.8% of revenues or E 40.6 billion in 2002
compared to 68.9% of revenues or E 39.5 billion in 2001. The loss in gross
margin came from: Canal+ Group, due to increases in programming costs and the
write-off of films at Studio Canal, Universal Music due to declining revenues
and higher Artist & Repertoire (A&R) and royalty costs, the deconsolidation of
Publishing businesses sold which operated at gross margins of 50% and Veolia
Environnement, mainly due to negative impact of currency exchange rates. Cegetel
and Maroc reported margin improvements as the result of managing costs
efficiently as revenues rose, in particular thanks to productivity gains in
interconnection and network costs at Cegetel. Vivendi Universal Entertainment's
margins improved mainly due to the inclusion of eight months of performance of
USA Entertainment assets in 2002. USA Entertainment assets include USA Networks,
Sci Fi Channel as well as the highly profitable Law & Order franchise. The full
year consolidation of Maroc Telecom and the seven-

                                        76
<PAGE>

month consolidation of USAi entertainment assets also contributed to the E 1.1
billion increase in cost of revenues.

 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling, general and administrative expenses represented 22.2% of revenues
or E 12.9 billion in 2002 compared to 23.9% of revenues or E 13.7 billion in
2001. In relation to revenues, the cost improvements are attributed to the
deconsolidation of the Publishing businesses sold as they carried higher
selling, general and administrative costs at 38% of revenues compared to the
group average and cost management at Cegetel and Maroc Telecom, which reflects
the effect of economies of scale as fixed costs were spread over a larger
revenue base and the contributive margin from the acquired USAi entertainment
assets at Vivendi Universal Entertainment. These improvements were offset by a
significant increase in expenses at Holding and Corporate related to pensions
and insurance.

 OPERATING INCOME

     Actual -- Total operating income was unchanged at E 3.8 billion in 2002
compared to 2001 as increases in cost of revenues and other operating expenses
were offset by a decline in selling, general and administrative expenses.

     Pro Forma -- On a pro forma basis, operating income declined 4% (1% on a
constant currency basis) from E 2.1 billion to E 2.0 billion as increases in
cost of revenues and other operating expenses were partially offset by a decline
in selling, general and administrative expenses. Operating income in our six
core operating segments increased 18% (21% on a constant currency basis) from
E 2.7 billion to E 3.2 billion, primarily reflecting strength at Cegetel Group
and reduced losses at Canal+ Group. However, operating losses incurred by other
businesses, including holding and corporate, at E 1.1 billion, more than offset
the overall improvement in our core businesses.

     For an analysis of operating income (loss) by business segment, see
"-- Business Segment Results."

 Financial Expenses, Net

     In 2002, net financial expenses amounted to E 1.3 billion, a decline of 8%
compared to 2001. The sales of Houghton Mifflin, the majority of Vivendi
Universal Publishing's other operations, our investment in EchoStar and a
portion of our interest in Veolia Environnement at the end of the year
significantly reduced our debt level. However, the first half of the year
included the cost of financing the acquisition of the entertainment assets of
USAi and EchoStar. The average cost of debt in 2002 was 4.1% (excluding Veolia
Environnement) compared to 4.0% in 2001. Of the total financing costs in 2002,
E 683 million pertained to Veolia Environnement, which was deconsolidated at the
end of the year.

 Financial Provisions

     Financial provisions increased significantly in 2002 to E 2.9 billion from
E 482 million in 2001, primarily due to non-cash charges required to reduce the
carrying value of certain publicly traded and privately held investments that
experienced other-than-temporary declines. The most significant provisions
related to: the investment in Elektrim Telecommunikacja (E 609 million); the
USAi warrants (E 454 million); interest rate swaps (E 261 million); Vivendi
Universal call option premium (E 226 million); investments in UGC and UGC Cine
Cite (E 220 million); investments in international telecoms operations (E 175
million); and the investment in DuPont shares (E 173 million). For additional
details, see Note 10 to our Consolidated Financial Statements.

 Other Income (Expense)

     Other income (expense) is principally comprised of capital gains on the
sale of portfolio investments, foreign exchange gains or losses and dividends
from unconsolidated companies. Other expense of E 514 million was incurred in
2002 compared to other income earned of E 9 million in 2001. In 2002, other
expense was

                                        77
<PAGE>

primarily comprised of expenses of E 589 million related to the buy-back of
Vivendi Universal puts and E 193 million in fees related to the renegotiation of
credit facilities resulting from the liquidity crisis, partially offset by
capital gains of E 255 million (primarily related to the sale of Vinci shares
and divestitures by Veolia Environnement), E 58 million in dividends from
unconsolidated companies and foreign exchange gains of E 24 million. In 2001,
other income was primarily comprised of capital gains of E 143 million,
principally related to the sale of Sante Luxembourg and St. Gobain shares,
foreign exchange gains of E 51 million, dividends from unconsolidated companies
of E 13 million and E 71 million premium expense on the buy-back of Vivendi
Universal puts.

 Exceptional Items, Net

     As discussed above under "--Comparability--Changes in Accounting Principles
and Financial Statement Presentation," the definition of exceptional items was
restricted in 2001 to include only material items of an unusual nature that
arise from events or transactions outside the ordinary course of business and
which are not expected to recur. In 2002, net exceptional income totaled E 1
billion, the principal components of which were capital gains on the divestiture
of and/or dilution of our interest in other companies, including: E 1.6 billion
for BSkyB; E 1.4 billion for Veolia Environnement; E 329 million for Vivendi
Universal Publishing's European publishing operations; E 172 million for Canal
Digital and E 90 million for Vizzavi Europe. Partially offsetting these gains
were capital losses on the divestitures of Houghton Mifflin (E 822 million),
EchoStar (E 674 million), Vivendi Universal Publishing's business-to-business
and health divisions (E 298 million) and Sithe (E 232 million), and a E 360
million provision related to the anticipated sale of Telepiu.

     Net exceptional income in 2001 totaled E 2.4 billion, the principal
components of which were capital gains on the divestiture of and/or dilution of
our interest in other companies, including: E 1 billion on the BSkyB
transactions, E 712 million on the disposition of AOL France, E 151 million on
the sale of Eurosport, E 116 million on the sale of a 9.3% interest in Veolia
Environnement (net of E 10 million in fees), E 125 million on the sale of Havas
Advertising and E 121 million on the Dalkia/EDF transactions.

 Income Taxes

     In 2002, income tax expense totaled E 2.6 billion, an increase of 62% over
the prior year. Of the total, approximately E 1.1 billion related to recurring
operations, including E 544 million for Cegetel Group, and E 1.0 billion related
to exceptional items (mainly the use of deferred tax), which did not generate
any cash outflow. Cegetel Group and Maroc Telecom are not part of our
consolidated tax group, which has the effect that losses elsewhere in the group
are not available to offset profits taxable at those entities. As a result,
excluding exceptional items, goodwill amortization, equity losses and minority
interest, Vivendi Universal's effective tax rate in 2002 was 84% compared to
40.8% in 2001.

 Equity in Earnings of Disposed Businesses

     Equity in earnings of disposed businesses was E 17 million in 2002.
Disposed businesses include all of Vivendi Universal Publishing's operations
excluding Vivendi Universal Games, publishing activities in Brazil, the consumer
press division (the divestiture of which was completed in February 2003) and
Comareg (the divestiture of which was completed in May 2003).

 Equity in Losses of Unconsolidated Companies

     In 2002, equity in losses of unconsolidated companies decreased 35% to
E 294 million primarily due to decreased losses from Internet affiliates and
Canal+ Group. Partially offsetting these improvements was the loss of equity
income following the May 2002 acquisition and consolidation of the entertainment
assets of USAi, which had previously been accounted for using the equity method,
and increased losses at international telecoms affiliates.

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<PAGE>

 Goodwill Amortization

     In 2002, recurring goodwill amortization declined 24% to E 1.3 billion,
primarily due to the impact of goodwill impairment charges taken in prior
periods.

 Goodwill Impairment

     In view of the continued deterioration of the economy in 2002 and the
resulting decline in the value of some media and telecommunications assets,
combined with the impact of the future increased cost of capital to the group as
a result of liquidity issues, E 18.4 billion of goodwill was written down in
2002, including E 11 billion recorded as of June 30, 2002.

     This exceptional goodwill impairment is broken down as follows:

     - E 5.3 billion for Universal Music Group;

     - E 6.5 billion for Vivendi Universal Entertainment;

     - E 5.4 billion for Canal+ Group; and

     - E 1.2 billion for international telecoms and Internet assets.

     As previously permitted under French GAAP, a portion of the goodwill
arising from acquisitions paid for in equity securities was originally recorded
as a reduction to shareholders' equity, in proportion to the amount of the
related purchase price paid in shares. Upon the recommendation of the COB,
Vivendi Universal determined the total goodwill impairment based on total
goodwill, including the portion originally recorded as a reduction of
shareholders' equity, as adjusted for accumulated goodwill amortization recorded
since the acquisition. However, the impairment charge does not reflect any
proportional "theoretical" impairment of goodwill originally recorded as a
reduction of shareholders' equity. The "theoretical" goodwill impairment for
2002 amounts to E 0.7 billion.

     For further discussion of goodwill impairment, see Note 3 to our
Consolidated Financial Statements.

 Minority Interest

     In 2002, minority interest expense increased 42% to E  844 million,
primarily due to the May 2002 acquisition of the entertainment assets of USAi,
the dilution of our interest in Veolia Environnement and improved profitability
at Cegetel Group.

 Net Income (Loss) and Earnings (Loss) Per Share

     A net loss of E 23.3 billion or E 21.43 per share (basic and diluted) was
incurred in 2002, compared with a net loss of E 13.6 billion or E 13.53 per
share (basic and diluted) in 2001.

 Adjustments to Conform to US GAAP

     Net Income -- For the years ended December 31, 2002 and 2001, the net loss
under US GAAP was E 44,447 million and E 1,172 million, respectively, compared
to a net loss of E 23,301 million and E 13,597 million under French GAAP. The
most significant reconciling item in both periods was goodwill impairment. In
2001, under French GAAP, following the market decline particularly in the
Internet, media and telecommunications industries, our annual review resulted in
a non-cash, non-recurring goodwill impairment charge of E 12.9 billion (E 12.6
billion after minority interest concerning Veolia Environnement). Under US GAAP,
according to SFAS 121, no impairment was indicated as of December 31, 2001, and
accordingly the goodwill impairment charge accounted for under French GAAP was
reversed, increasing US GAAP net income in 2001 by approximately E 12.6 billion.
In 2002, under French GAAP, in light of the deteriorating economic conditions
and the impact of the higher financing cost for Vivendi Universal, an additional
impairment charge of approximately E 18.4 billion was recorded. Under US GAAP,
Vivendi Universal adopted SFAS 142 and 144 and recorded an impairment charge of
E 38.3 billion. Another reconciling item, specific to 2002 and 2001, resulted
from the differential accounting treatment for the sale of our investment in
BSkyB, which decreased
                                        79
<PAGE>

US GAAP net income by approximately E 1,417 million in 2002 and increased US
GAAP net income by approximately E 73 million in 2001.

     Operating Income -- In 2001 and prior years, the most significant
reconciling item between French and US GAAP operating income was goodwill
amortization. Under French GAAP, goodwill amortization is excluded from
operating income, while under US GAAP goodwill amortization was included as a
component of operating income. Under US GAAP, with the adoption of SFAS 142 in
2002, Vivendi Universal ceased amortizing goodwill thus eliminating this
reconciling item. In 2002, the accounting for Vivendi Universal's investment in
Veolia Environnement gave rise to a reconciling item specific only to that year.
Under French GAAP, Vivendi Universal consolidated its investment in Veolia
Environnement until December 31, 2002, when Vivendi Universal reduced its
ownership interest in Veolia Environnement from 41% down to 20.4%. Until that
date, Vivendi Universal held more than 40% of Veolia Environnement's outstanding
shares and no other shareholder held, directly or indirectly, a greater
proportion of Veolia Environnement's voting rights than Vivendi Universal. Under
US GAAP, the equity method of accounting was applied beginning July 1, 2002, the
date at which Vivendi Universal's equity and voting interest was reduced to 48%.
While this difference between French GAAP and US GAAP had no impact on the
reconciliation of shareholders' equity, net income and comprehensive income to
US GAAP, it is a reconciling item at the operating income level. The most
significant reconciling items impacting operating income in all periods
presented relate to exceptional items and proportionate consolidation. French
GAAP defines exceptional items differently from the definition of extraordinary
items under US GAAP. None of the items included in exceptional items under
French GAAP qualify as extraordinary items under US GAAP. Consequently, these
items are reclassified to the appropriate income statement captions determined
under US GAAP. Under French GAAP, exceptional items are excluded from operating
income. Under US GAAP, with the exception of gains and losses on sales of shares
of affiliated companies, exceptional items have been included in the
determination of operating income. Gains and losses on sales of shares of
affiliated companies are classified as other income (loss), which is not a
component of operating income under US GAAP. Under French GAAP, investments in
jointly controlled companies, where Vivendi Universal and outside shareholders
have agreed to exercise joint control over significant financial and operational
policies are accounted for using the proportionate consolidation method. Under
US GAAP, these investments would be consolidated or accounted for using the
equity method depending on the percentage of voting interest held. Summarized
financial information for investments accounted for using the proportionate
consolidation method is provided in Note 4 to our Consolidated Financial
Statements. While this difference in accounting policy has no effect on either
net income or shareholders' equity, it is a reconciling item at the operating
income level.

     For further discussion of the significant items in reconciling French GAAP
and US GAAP, as they apply to the Vivendi Universal, see Note 17 to our
Consolidated Financial Statements.

COMPARISON OF 2001 VERSUS 2000

 REVENUES

     Total revenues increased 38% to E 57.4 billion in 2001, primarily due to
the inclusion of full twelve-month results of the acquired Seagram's operations
in 2001 (compared to twenty-three days in 2000) and the impact of the 2001
acquisitions of Maroc Telecom, Houghton Mifflin and MP3.com.

     For a detailed analysis of revenues by business segment, see "--Business
Segment Results."

  COST OF REVENUES

     Cost of revenues represented 68.9% of revenues or E 39.5 billion in 2001
compared to 72.6% of revenues or E 30.2 billion in 2000. The gross margin
improvement was due to reduction of handset costs at Cegetel and the mix effect
of including the Music business for a full twelve months in 2001 versus less
than one month in 2000. Music reported a gross margin of 55% in 2001. The E 9.3
billion increase in cost of revenues is primarily due to: growth at the Cegetel
and Veolia Environnement units plus the full year consolidation of Universal
Music Group, Vivendi Universal Entertainment (formerly Universal Studios Group)
and the part year consolidations of Maroc Telecom and Houghton Mifflin.
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<PAGE>

  SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling, general and administrative expenses represented 23.9 % of revenues
or E 13.7 billion compared to 21.7% of revenues or E 9.0 billion in 2000. The
increase in these expenses relative to revenues is primarily due to the
inclusion of the Music business for a full twelve months in 2001 versus less
than one month in 2000. The Music business reported a higher ratio compared to
the group average of selling, general and administrative expenses to revenues of
44% in 2001. In addition, the Internet and Holding costs were higher due to the
expansion of activities in these areas. Cegetel reduced expenses as a percentage
of revenues due to the effect of economies of scale as fixed costs were spread
over a larger revenue base. The E 4.7 billion increase in these expenses is
primarily due to the full year consolidation of Universal Music Group, Vivendi
Universal Entertainment (formerly Universal Studios Group) and the part year
consolidations of Maroc Telecom and Houghton Mifflin.

  OPERATING INCOME

     In 2001, total operating income more than doubled to E 3.8 billion,
principally due to the inclusion of full twelve-month results of the acquired
Seagram's operations in 2001 and the 2001 acquisitions of Maroc Telecom,
Houghton Mifflin and MP3.com, as discussed above.

     For a detailed analysis of operating income by business segment, see
"--Business Segment Results."

  Financial Expenses, Net

     In 2001, net financial expenses at E 1.5 billion, increased E 167 million
or 13%, as a higher average level of debt associated with our acquisitions was
partially offset by a lower average cost of debt of 4.02% compared to 5.15% in
2000.

  Financial Provisions

     Financial provisions increased 146% in 2001 to E 482 million, primarily due
to non-cash charges required to reduce the carrying value of certain publicly
traded and privately held investments that experienced other than temporary
declines.

  Other Income (Expense)

     Other income (expense) is principally comprised of capital gains on the
sale of portfolio investments, foreign exchange gains or losses and dividends
from unconsolidated companies. Other income declined E 713 million in 2001 to
E 9 million, primarily due to reduced capital gains on the sale of portfolio
investments. In 2001, capital gains were E 143 million, primarily related to the
sale of Sante Luxembourg and St. Gobain shares. In 2000, capital gains were
E 702 million, primarily related to the sale of Alcatel shares and treasury
stock. Other income in 2001 also included E 51 million of foreign exchange
gains, E 13 million of dividends from unconsolidated companies and E 71 million
premium expense on the buy-back of Vivendi Universal puts.

  Exceptional Items, Net

     In 2001, net exceptional income totaled E 2.4 billion, the principal
components of which were capital gains on the divestiture of and/or dilution of
our interest in other companies, including: E 1 billion on the BSkyB
transactions, E 712 million on the disposition of AOL France, E 151 million on
the sale of Eurosport, E 116 million on the sale of 9.3% interest in Veolia
Environnement (net of E 10 million in fees), E 125 million on the sale of Havas
Advertising and E 121 million on the Dalkia/EDF transactions.

     Net exceptional income in 2000 totaled E 3.8 billion, the principal
components of which were gains of: E 780 million on the dilution of our interest
in Veolia Environnement due to its IPO (initial public offering), E 735 million
in the Dalkia/EDF transactions, E 534 million and E 473 million on the dilution
of our interests in Vinci and BSkyB, respectively, E 408 million on the
Lagardere/CanalSatellite/MultiThematiques alliance, E 372 million on the
dilution of our interest in Sithe and sale of the GPU power plants and E 178
million on the dilution of our interest in Havas Advertising.
                                        81
<PAGE>

  Income Taxes

     In 2001, our income and deferred tax provision increased 56% to E 1.6
billion, primarily due to the inclusion of full twelve-month results of the
acquired Seagram operations in 2001 (compared to twenty-three days in 2000).
Excluding exceptional items, goodwill amortization, equity losses and minority
interest, Vivendi Universal's effective tax rate in 2001 was 40.8%.

  Equity in Losses of Unconsolidated Companies

     In 2001, equity in losses of unconsolidated companies increased 48% to
E 453 million, primarily due to increased losses from Internet affiliates,
principally Vizzavi and Scoot.com, which increased 200% to E 291 million. Losses
at Canal+ Group's affiliates more than doubled to E 236 million, primarily due
to the poor performance of operations in Poland. Partially offsetting these
increases was the divestiture of BSkyB, which reduced equity losses by E 119
million year-on-year. In 2001, equity earnings of USAi also had a positive
impact of E 141 million.

  Goodwill Amortization

     In 2001, recurring goodwill amortization increased to almost E 1.7 billion,
primarily due to the inclusion of a full twelve-months of goodwill amortization
related to the merger with Seagram and Canal+.

  Goodwill Impairment

     Our 2001 annual review for impairment of the carrying value of long-lived
assets resulted in a non-recurring, non-cash charge of E 13.5 billion. This
charge is comprised of the following:

     - E 3.1 billion for Universal Music Group;

     - E 1.3 billion for Universal Studios Group;

     - E 6.0 billion for Canal+ Group;

     - E 1.6 billion for international telecoms and Internet assets;

     - E 0.9 billion for Veolia Environnement (including E 0.3 billion minority
       interest); and

     - E 0.6 billion for equity investments.

  Minority Interest

     In 2001, minority interest, at E 594 million, decreased 5%. The merger with
Seagram and acquisition of an interest in Maroc Telecom increased minority
interest by approximately E 174 million, and improved profitability at Cegetel
Group increased minority interest by approximately E 247 million. Offsetting
these increases were reductions of approximately E 459 million related to our
environmental services businesses (including E 0.3 billion related to the
goodwill impairment charge) and E 106 million related to the divestiture of
non-core businesses.

  Net Income (Loss) and Earnings (Loss) Per Share

     A net loss of E 13.6 billion or E 13.53 per share (basic and diluted) was
incurred in 2001, compared with net income earned of E 2.3 billion or E 3.63 per
basic share in 2000.

                                        82
<PAGE>

                            BUSINESS SEGMENT RESULTS

<Table>
<Caption>
                                                     YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------
                                                   ACTUAL                PRO FORMA(3)
                                         ---------------------------   -----------------
                                         2002(1)    2001     2000(2)    2002      2001
                                         -------   -------   -------   -------   -------
                                                          (IN MILLIONS)
<S>                                      <C>       <C>       <C>       <C>       <C>
REVENUES
  Cegetel Group........................  E 7,067   E 6,384   E 5,129   E 7,067   E 6,384
  Universal Music Group................    6,276     6,560       495     6,276     6,560
  Vivendi Universal Entertainment......    6,270     4,938       194     6,978     6,874
  Canal+ Group.........................    4,833     4,563     4,054     4,742     4,563
  Maroc Telecom........................    1,487     1,013        --     1,487     1,351
  Vivendi Universal Games(4)...........      794       657       572       794       657
                                         -------   -------   -------   -------   -------
                                          26,727    24,115    10,444    27,344    26,389
  Other(5)(7)..........................    1,385     1,289     2,667     1,385     1,344
                                         -------   -------   -------   -------   -------
  Total Vivendi Universal (excluding
     businesses sold in 2002)..........   28,112    25,404    13,111    28,729    27,733
  Veolia Environnement.................   30,038    29,094    26,294        --        --
                                         -------   -------   -------   -------   -------
                                          58,150    54,498    39,405    28,729    27,733
  VUP assets sold during 2002(6)(7)....       --     2,862     2,175        --        --
                                         -------   -------   -------   -------   -------
                                          58,150    57,360    41,580    28,729    27,733
                                         =======   =======   =======   =======   =======
OPERATING INCOME (LOSS)
  Cegetel Group........................    1,449       928       453     1,449       928
  Universal Music Group................      556       719        86       556       719
  Vivendi Universal Entertainment......      816       300       (13)      946       928
  Canal+ Group.........................     (325)     (374)     (341)     (295)     (374)
  Maroc Telecom........................      468       387        --       468       475
  Vivendi Universal Games(4)...........       63        18       (41)       63        18
                                         -------   -------   -------   -------   -------
                                           3,027     1,978       144     3,187     2,694
  Holding & Corporate..................     (665)     (326)     (212)     (665)     (326)
  Other(5)(7)..........................     (485)     (244)      192      (485)     (255)
                                         -------   -------   -------   -------   -------
  Total Vivendi Universal (excluding
     businesses sold in 2002)..........    1,877     1,408       124     2,037     2,113
  Veolia Environnement.................    1,911     1,964     1,589        --        --
                                         -------   -------   -------   -------   -------
                                           3,788     3,372     1,713     2,037     2,113
  VUP assets sold during 2002(6)(7)....       --       423       110        --        --
                                         -------   -------   -------   -------   -------
                                         E 3,788   E 3,795   E 1,823   E 2,037   E 2,113
                                         =======   =======   =======   =======   =======
</Table>

---------------

(1) December 31, 2002, Vivendi Universal applied the option proposed in
    paragraph 23 100 of the French rules 99-02 and has presented the results of
    businesses sold during 2002 on one line in the consolidated statement of
    income as "equity in earnings of disposed businesses." Disposed businesses
    include all of Vivendi Universal Publishing's operations excluding Vivendi
    Universal Games, publishing activities in Brazil, the consumer press
    division (the divestiture of which was completed in February 2003) and
    Comareg (the divestiture of which was completed in May 2003).

                                        83
<PAGE>

(2) Reflects changes in accounting principles and financial statements
    presentation adopted in 2001, as discussed in "--Comparability--Changes in
    Accounting Principles and Financial Statement Presentation."

(3) The pro forma information illustrates the effect of the acquisitions of the
    entertainment assets of InterActiveCorp (formerly known as USA Interactive
    and prior thereto as USA Networks, Inc.), or USAi, in May 2002, Maroc
    Telecom in April 2001 and MP3.com in August 2001, and the disposition of
    certain interests in Veolia Environnement and Vivendi Universal Publishing,
    as if these transactions had occurred at the beginning of 2001.
    Additionally, the pro forma information includes the results of Universal
    Studios international television networks in Vivendi Universal Entertainment
    in both 2002 and 2001 (in the actual 2002 results, the results of Universal
    Studios international television networks were reported by Canal+ Group).
    This reclassification has no impact on the total results of Vivendi
    Universal. We believe that pro forma results may help the reader to better
    understand our business results as they include comparable operations in
    each year presented. However, it should be noted that the pre-acquisition
    results of an acquired business accounted for on a historical cost basis are
    not directly comparable to the post-acquisition results of acquired entities
    whose initial purchase price was allocated on a fair value basis. 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
    2001.

(4) Formerly part of Vivendi Universal Publishing. Includes Kids Activities e.g.
    Adi/Adibou in France and Jumpstart in the US.

(5) Principally comprised of Vivendi Telecoms International, Internet, Vivendi
    Valorisation (previously reported in non-core businesses) and Vivendi
    Universal Publishing assets not sold during 2002 (Consumer Press Division,
    Comareg and the Brazilian operations -- Atica & Scipione).

(6) Comprised of Vivendi Universal Publishing's European publishing assets
    (excluding those described in note 5 above) and Houghton Mifflin sold in
    December 2002 and Vivendi Universal Publishing's Business to Business and
    Health divisions sold in June 2002.

(7) The presentation of "Other" and "Vivendi Universal Publishing assets sold in
    2002" differs from the disclosure in our Business Segment Data in Note 12.2
    to our Consolidated Financial Statements. In Note 12.2, "Publishing
    excluding Games" includes both assets sold and assets retained. In the table
    above, publishing assets sold are reflected as a separate line item.

                                 CEGETEL GROUP

<Table>
<Caption>
                                                     YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------
                                                   ACTUAL                  PRO FORMA
                                         ---------------------------   -----------------
                                          2002      2001      2000      2002      2001
                                         -------   -------   -------   -------   -------
                                                          (IN MILLIONS)
<S>                                      <C>       <C>       <C>       <C>       <C>
REVENUES
  Mobile...............................  E 6,146   E 5,606   E 4,626   E 6,146   E 5,606
  Fixed and Other......................      921       778       503       921       778
                                         -------   -------   -------   -------   -------
     Cegetel Group.....................    7,067     6,384     5,129     7,067     6,384
                                         =======   =======   =======   =======   =======
OPERATING INCOME (LOSS)
  Mobile...............................    1,552     1,107       630     1,552     1,107
  Fixed and Other......................     (103)     (179)     (177)     (103)     (179)
                                         -------   -------   -------   -------   -------
     Cegetel Group.....................  E 1,449   E   928   E   453   E 1,449   E   928
                                         =======   =======   =======   =======   =======
</Table>

  2002 versus 2001

     In 2002, Cegetel Group's revenues increased 11% to E 7.1 billion and
operating income increased 56% to E 1.4 billion. The improved results reflect
strong performances at both our mobile and fixed telephony divisions.

                                        84
<PAGE>

  Mobile:

     In 2002, despite a slowdown in overall market growth, SFR's revenues
increased 10% to E 6.1 billion. This revenue growth was driven primarily by
growth in the number of customers, which increased 8% to 13.55 million (13.18
million customers excluding SRR, SFR's subsidiary in La Reunion, an overseas
department of France). The number of prepaid customers increased 2% to 6.36
million, while the number of postpaid customers increased 13% to 7.19 million.

     In 2002, SFR's operating income increased 40% to E 1.55 billion. The
improvement in operating margin reflects the effect of economies of scale, as
fixed costs are being spread over a larger revenue base, and reduced customer
acquisition costs, which declined 5% year-on-year.

  Fixed and Other:

     In 2002, revenue generated by Cegetel Group's fixed telephony and other
services grew 18% to E 921 million, primarily due to the introduction of
customer pre-selection for local calls on January 1, 2002 and an increase in
subscribers. Total voice traffic minutes increased 58% year-on-year, while data
and Internet traffic revenues increased 11%.

     Cegetel Group's fixed telephony and other services operating losses
declined 43% year-on-year to E 103 million primarily due to increased revenues
and continued cost control measures.

  2001 versus 2000

     In 2001, Cegetel Group's revenues increased 24% to E 6.4 billion and
operating income more than doubled to E 928 million. The significantly improved
results reflect the strong performance at both our mobile and fixed telephony
divisions.

  Mobile:

     In 2001, SFR's revenues increased 21% to E 5.6 billion. SFR's revenue
growth was driven primarily by growth in the number of customers, which
increased 24% to 12.6 million customers (12.2 million customers excluding SRR,
SFR's subsidiary in La Reunion). The number of prepaid customers increased 44%
to 6.2 million, while the number of postpaid customers increased 9% to 6.4
million.

     In 2001, SFR's operating income increased 76% to E 1.1 billion. The
improvement in operating margin reflects the effect of economies of scale, as
fixed costs are being spread over a larger revenue base, and reduced customer
acquisition costs, which declined 23% year-on-year.

  Fixed and Other:

     In 2001, revenue generated by Cegetel Group's fixed telephony and other
services grew 55% to E 778 million, primarily due to an increase in the number
of subscribers. Total voice traffic minutes increased 36% year-on-year, while
data and Internet traffic revenues increased 49%.

     Cegetel Group's fixed telephony and other services operating losses
increased 1% year-on-year to E 179 million primarily due to start-up costs on
new business.

                                        85
<PAGE>

                             UNIVERSAL MUSIC GROUP

<Table>
<Caption>
                                                     YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------
                                                   ACTUAL                  PRO FORMA
                                         ---------------------------   -----------------
                                          2002      2001     2000(1)    2002      2001
                                         -------   -------   -------   -------   -------
                                                          (IN MILLIONS)
<S>                                      <C>       <C>       <C>       <C>       <C>
REVENUES
  North America........................  E 2,772   E 2,921   E   179   E 2,772   E 2,921
  Europe...............................    2,588     2,655       229     2,588     2,655
  Far East.............................      588       671        60       588       671
  ANZ/Africa...........................      139       137        10       139       137
  Latin America........................      190       176        17       190       176
                                         -------   -------   -------   -------   -------
     Universal Music Group.............    6,276     6,560       495     6,276     6,560
OPERATING INCOME
     Universal Music Group.............  E   556   E   719   E    86   E   556   E   719
                                         =======   =======   =======   =======   =======
</Table>

---------------

(1) Includes twenty-three days of Universal Music Group's operations since the
    completion of the merger on December 8, 2000.

     2002 versus 2001

     The year 2002 was challenging for the music industry due to the combined
effects of a downturn in the global economy, CD-R piracy and illegal downloading
of music from the Internet and growing competition for consumer discretionary
spending and shelf space at retail outlets. Worldwide music sales were down as
the music market witnessed an estimated global market decline of 9.5%.
Double-digit declines were experienced in the US, Japan and Germany, with only
France of the world's five major music markets reporting growth.

     While UMG outperformed the market, increasing its global market share,
revenue declined 4% to E 6.3 billion due to the unfavorable market conditions
and adverse currency movements, particularly the strengthening of the euro
versus the dollar, and higher returns reserves. In constant currency, revenues
declined 1%. In 2002, North American revenues were down 4% year-on-year due to
the strengthening of the euro. On a constant currency basis, revenues were up 1%
despite weak music market conditions, with sales in the overall North American
music market estimated to have declined 10.6%. In Europe, where music sales are
estimated to have declined 5.8%, UMG revenues were down 3% versus 2001, with
solid growth in France more than offset by declines in UMG's European Music Club
operations and in Germany. In Asia, where the music market is estimated to have
declined 13.4%, UMG revenues were down 13% due to adverse currency movements,
higher returns reserves and discounts. In constant currency, revenues were down
6%. Sales in the music market in ANZ/Africa were down an estimated 6.4% in 2002
after growing 5.9% last year. However, UMG revenues increased by 1% (5% in
constant currency) due to a strong performance in South Africa. The Latin
American music market contracted an estimated 8.2% in 2002. In this market, UMG
revenues were down 13% due to adverse currency movements. In constant currency,
revenues rose 4% with all key Latin America markets reporting growth.

     In 2002, operating income at UMG declined 23% (19% in constant currency) to
E 556 million reflecting reduced margins on lower levels of activity and higher
Artist and Repertoire (A&R) development costs and royalty costs, which were
partly offset by reductions in overhead and marketing costs and gains on the
sale of UMG's share of MTV Asia, real estate and other assets.

     UMG continues to focus on strengthening its worldwide leadership position
and believes that it has a strong 2003 release schedule. However, the worldwide
music market is expected to further decline in 2003. In this challenging
environment, UMG continues to win market share. Despite continued focus on cost
control, operating margin is expected to decline.

                                        86
<PAGE>

     2001 versus 2000

     As 2000 results only include twenty-three days of UMG operations since the
completion of the merger on December 8, 2000, a comparison between 2001 and 2000
results is not meaningful.

                        VIVENDI UNIVERSAL ENTERTAINMENT

<Table>
<Caption>
                                                     YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------
                                                   ACTUAL                  PRO FORMA
                                         ---------------------------   -----------------
                                          2002      2001     2000(1)    2002      2001
                                         -------   -------   -------   -------   -------
                                                          (IN MILLIONS)
<S>                                      <C>       <C>       <C>       <C>       <C>
REVENUES
  Universal Pictures Group.............  E 3,877   E 3,615             E 3,927   E 3,803
  Universal Television Group...........    1,522       333               2,199     2,134
  Universal Parks & Resorts and
     Other(2)..........................      871       990                 852       937
                                         -------   -------    -----    -------   -------
     Vivendi Universal Entertainment...    6,270     4,938      194      6,978     6,874
OPERATING INCOME (LOSS)
  Universal Pictures Group.............      662       376                 648       365
  Universal Television Group...........      430        11                 573       649
  Universal Parks & Resorts and
     Other(2)..........................     (276)      (87)               (275)      (86)
                                         -------   -------    -----    -------   -------
     Vivendi Universal Entertainment...  E   816   E   300    E (13)   E   946   E   928
                                         =======   =======    =====    =======   =======
</Table>

---------------

(1) Includes twenty-three days of VUE (formerly USG) operations since the
    completion of the merger on December 8, 2000.

(2) Other includes primarily Spencer Gifts and Universal Operations Group.

     2002 versus 2001

     Vivendi Universal Entertainment (VUE) revenues in 2002 increased 27% to
E 6.3 billion principally due to the acquisition of the entertainment assets of
USAi in May 2002. On a pro forma basis, VUE revenues increased 2% (5% on a
constant currency basis) to E 7 billion, driven by increased revenues of
Universal Pictures and Universal Television, which were partially offset by
lower revenues at Universal Parks & Resorts and Other.

     VUE operating income reached E 816 million, up 172% on an actual basis. On
a pro forma basis, VUE's operating income increased 2% (6% on a constant
currency basis) to E 946 million, primarily as a result of strong video sales at
Universal Pictures, partially offset by lower results at Universal Television,
Universal Parks & Resorts and Other.

     Full year highlights by business segment, on a pro forma basis, include:

     Universal Pictures:

     Universal Pictures' revenues were E 3.9 billion, an increase of 3% versus
the prior year (7% increase on a constant currency basis). The studio benefited
from strong performance in home video and television, driven by prior years'
theatrical releases, which included such titles as The Mummy, The Mummy Returns,
The Fast and the Furious, and American Pie 2.

     Operating income increased 78% (85% on a constant currency basis) versus
the prior year to E 648 million. Results were driven by strong video performance
combined with lower film amortization expense as a result of a less robust 2002
film slate. The 2003 film slate includes several major releases, including Bruce
Almighty, The Hulk, 2 Fast 2 Furious, Dr. Seuss' Cat in the Hat and Peter Pan.
The commercial success of these films will be a particularly important factor
for results in 2003.

                                        87
<PAGE>

  Universal Television:

     Universal Television revenues were E 2.2 billion, an increase of 3% from
the prior year (6% increase on a constant currency basis). Universal Television
Production's revenues increased 15%, to E 1 billion, due to increased license
fees for continuing series, such as the Law & Order franchise and Just Shoot Me,
and the success of new series, such as American Dreams. These results were
partially offset by lower advertising revenues at Universal Television Networks
as a result of the weak advertising market.

     Operating income decreased 12% from the prior year (down 9% on a constant
currency basis) due to weakness in the advertising market in addition to higher
programming costs from investments in new original programming at Universal
Television Networks.

  Universal Parks & Resorts and Other:

     The Universal Parks & Resorts and Other segment revenues were E 852
million, down 9% versus the prior year (down 5% on a constant currency basis).
Universal Parks & Resorts revenues, which represent roughly half of the
segment's revenues, were down 11% on a constant currency basis as a result of
lower management fees from theme park joint ventures and lower land sales. Lower
theme park management fees reflect in part continued reduced travel and park
visits following the September 11 terrorist attacks. Spencer Gifts' revenues
were down 3% as a result of lower holiday sales.

     Operating income decreased 220% versus the prior year (down 238% on a
constant currency basis). Lower management fees from theme park joint ventures,
reduced land sales and lower holiday sales at Spencer Gifts contributed to the
decline, but the primary driver was a E 107 million charge taken at Spencer
Gifts. The write down effectively reduces the asset value of this non-core asset
to its current market value.

     2001 versus 2000

     As 2000 results only include twenty-three days of VUE operations since the
completion of the merger of Vivendi, Seagram and Canal+ on December 8, 2000, a
comparison between 2001 and 2000 results is not meaningful.

                                  CANAL+ GROUP

<Table>
<Caption>
                                                     YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------
                                                   ACTUAL                  PRO FORMA
                                         ---------------------------   -----------------
                                          2002      2001      2000      2002      2001
                                         -------   -------   -------   -------   -------
                                                          (IN MILLIONS)
<S>                                      <C>       <C>       <C>       <C>       <C>
REVENUES
  Pay-TV -- France.....................  E 2,652   E 2,530   E 2,427   E 2,652   E 2,530
  Film -- StudioCanal..................      455       429       328       455       429
  Other................................    1,726     1,604     1,299     1,635     1,604
                                         -------   -------   -------   -------   -------
     Canal+ Group......................    4,833     4,563     4,054     4,742     4,563
                                         =======   =======   =======   =======   =======
OPERATING INCOME (LOSS)
  Pay-TV -- France.....................      182       182       154       182       182
  Film -- StudioCanal..................      (91)     (162)       22       (91)     (162)
  Other................................     (416)     (394)     (517)     (386)     (394)
                                         -------   -------   -------   -------   -------
     Canal+ Group......................  E  (325)  E  (374)  E  (341)  E  (295)  E  (374)
                                         =======   =======   =======   =======   =======
</Table>

     2002 versus 2001

     At Canal+ Group, revenues increased 6% to E 4.8 billion and operating
losses declined by 13% to E 325 million. On a pro forma basis, which excludes
the results of Universal Studios international television

                                        88
<PAGE>

networks (now reported by VUE), Canal+ Group reported 4% revenue growth to E 4.7
billion and a 21% improvement in operating losses to E 295 million.

     Full year highlights by business line, on a pro forma basis adjusted as
described above, include:

  Pay-TV -- France:

     In 2002, pay-TV revenues in France increased 5% to E 2.7 billion on overall
subscription growth. At the end of 2002, in total, pay-TV activities in France
(Canal+, CanalSatellite and NC Numericable) represented approximately 7 million
subscriptions, an increase of 2% over the prior year end. At the French premium
channel, Canal+, overall revenues were flat year-on-year as the full year impact
of the 2001 fee increase was offset by a decline in subscriptions of 74,000.
Canal+ ended the year with 4.8 million subscriptions. The revenue increase in
the pay-TV -- France operations was attributable to the solid performance at
CanalSatellite, which reached the two million subscription mark in December 2002
(representing a net increase of 224,000 new subscriptions). NC Numericable also
performed strongly due to an increase in the number of subscribers to its
Internet access service.

     In 2002, operating income from pay-TV in France was unchanged at E 182
million. The performance improvement in the business units in 2002 was offset by
the reversal of a provision in 2001 and a change in the consolidation of
multiThematiques in 2002 (100% consolidation of the loss in 2002, compared to
equity in 2001).

  Film -- StudioCanal:

     In 2002, StudioCanal's revenues were up 6% to E 455 million. Revenues from
UK operations (Working Title) compensated for lower film library revenues in
France and a decline in distribution revenues in Germany.

     In 2002, StudioCanal reduced its operating loss by 44% to E 91 million.
This loss is primarily attributable to the write-off of films on StudioCanal's
balance sheet.

  Other:

     Other is primarily non-core activities comprised of international pay-TV,
including Telepiu, Canal+ Benelux, Canal+ Nordic, Cyfra+, Canal+ Technologies
and Expand, which have been or are in the process of being sold. Other revenues,
at E 1.6 billion, were stable year-on-year. Revenue growth generated by the
international pay-TV business units reflects a 20% increase in international
subscriptions but was offset by a revenue decline at Canal+ Technologies (due to
the ITV Digital and Winfirst bankruptcies).

     Operating losses improved slightly from E 394 million in 2001 to E 386
million in 2002. The improvement is primarily due to an approximate E 120
million reduction in operating losses at Telepiu reflecting increased revenues
attributable to increased subscribers and reduced piracy following the
introduction of new encryption technology. The reduced Telepiu losses were
partially offset by restructuring costs at the holding company level.

     2001 versus 2000

     At Canal+ Group, revenues increased 13% to E 4.6 billion, while the
operating loss increased 9.7% to E 374 million.

  Pay-TV -- France:

     Revenues increased 4% to E 2.5 billion primarily due to the strong
performance of CanalSatellite. Total pay-TV France subscriptions at the end of
2001 were 6.8 million, a 2.5% increase compared to 2000, primarily reflecting
digital platform growth, which added 224,000 subscriptions, up 14% compared to
2000.

     Operating income increased 18% to E 182 million due to the strong
performance by CanalSatellite.

                                        89
<PAGE>

  Film -- StudioCanal:

     At StudioCanal revenues increased 30% to E 429 million reflecting the
success of several films produced and/or distributed, including Hannibal and
Crimson River in Germany, and Brotherhood of the Wolf, Traffic, What Women Want,
Belphegor and Bridget Jones's Diary in France. Video and DVD sales also
increased, driven by the success of Scary Movie, Chicken Run, Scream 3, Jamel
and Brotherhood of the Wolf.

     An operating loss of E 162 million was incurred in 2001 compared to
operating income earned of E 22 million in 2000, primarily due to higher film
amortization on a larger film slate.

  Other:

     Other revenues, at E 1.6 billion, increased 23%, primarily due to the
growth in European Pay-TV activities. Operating losses improved from E 517
million in 2000 to E 394 million in 2001. These losses were largely driven by
Telepiu, which reduced its loss from its 2000 level but still suffered from
piracy and increased churn. Canal+ Nordic strongly improved its performance in
2001, reducing its loss to near break-even, due to a significant decrease in
churn.

                                 MAROC TELECOM

<Table>
<Caption>
                                                   YEAR ENDED DECEMBER 31,
                                       ------------------------------------------------
                                                  ACTUAL                  PRO FORMA
                                       ----------------------------   -----------------
                                        2002      2001       2000      2002      2001
                                       -------   -------   --------   -------   -------
                                                        (IN MILLIONS)
<S>                                    <C>       <C>       <C>        <C>       <C>
REVENUES
  Maroc Telecom......................  E 1,487   E 1,013         NA   E 1,487   E 1,351
OPERATING INCOME
  Maroc Telecom......................      468       387         NA       468       475
</Table>

     The actual 2001 results only include nine months of Maroc Telecom's
operations since the completion of its acquisition in April 2001. In order to
present meaningful comparative information for assessing earnings trends at
Maroc Telecom, the following discussion focuses on pro forma results, which
include twelve months of operations in both 2002 and 2001.

     2002 versus 2001

     In 2002, revenues at Maroc Telecom increased to E 1.5 billion in 2002, up
10%. On a constant currency basis, revenues were up by 14%. Revenues grew in
both our fixed-line and mobile business, with the substantial increase in the
mobile subscriber base accounting for most of the increase. Fixed-line and
international revenues represented 62% of 2002 total revenues, with mobile
revenue accounting for the remaining 38% on a constant currency basis. At
December 31, 2002, Maroc Telecom had over 4.5 million mobile users.

     Operating income decreased 1% (increased 1% on a constant currency basis)
to E 468 million reflecting the impact of restructuring costs and amortization
of the value of the acquired GSM license, both of which were recognized for the
first time in 2002.

                                        90
<PAGE>

     2001 versus 2000

     The 2000 results do not include the operations of Maroc Telecom as it was
only acquired in April 2001.

                            VIVENDI UNIVERSAL GAMES

<Table>
<Caption>
                                                       YEAR ENDED DECEMBER 31,
                                                -------------------------------------
                                                       ACTUAL             PRO FORMA
                                                ---------------------   -------------
                                                2002    2001    2000    2002    2001
                                                -----   -----   -----   -----   -----
                                                            (IN MILLIONS)
<S>                                             <C>     <C>     <C>     <C>     <C>
REVENUES
  Vivendi Universal Games.....................  E 794   E 657   E 572   E 794   E 657
OPERATING INCOME (LOSS)
  Vivendi Universal Games.....................     63      18     (41)     63      18
</Table>

     2002 versus 2001

     Revenues increased to E 794 million for the year, an increase of 21% over
the prior year. On a constant currency basis, revenues were up 25%. Growth was
driven by the company's continued strength in the PC games market, as well as
its rapidly escalating presence in the console games market.

     Operating income was E 63 million for the year, an increase of E 45
million, over the prior year. The 2001 operating income included restructuring
costs of approximately E 37 million. The balance of the increase in 2002 was due
to higher gross profit on sales, partially offset by increased marketing and
product development costs.

     2001 versus 2000

     Revenues increased in 2001 to E 657 million, an increase of 15% over the
prior year, primarily due to the full year impact of the December 2000
acquisition of Universal Studio's interactive games business as part of the
merger of Vivendi, Seagram and Canal+ S.A.

     Operating income in 2001 was E 18 million, an improvement over an operating
loss of E 41 million in 2000. The turnaround reflects the improvement in
operating efficiencies following the combination of the two companies. The 2001
operating income includes a restructuring charge of approximately E 37 million.

OTHER BUSINESSES

     Other businesses principally include:

     - Vivendi Telecom International (VTI) -- Operating income at VTI increased
       to E 44 million in 2002 from E 15 million in 2001, primarily reflecting
       the full consolidation of Monaco Telecom in the second half of 2001 and
       Kencell (Kenya) in December 2001.

     - Internet -- Operating losses incurred by our Internet businesses improved
       to E 232 million in 2002 from E 290 million in 2001. This improvement
       reflects our ongoing efforts to close unprofitable operations and control
       costs.

     - Other -- Other principally includes Vivendi Valorisation, the holder of
       real estate assets which we intend to sell. The operating loss in 2002
       amounted to E 299 million primarily as a result of increased provisions
       related to the reduction in rental value of the real estate holdings.

     - Vivendi Universal Publishing assets not sold during 2002 -- Comprised of
       the Consumer Press division (Groupe Express-Expansion -- Groupe
       l'Etudiant) sold in February 2003, Comareg, sold in May 2003, and the
       Brazilian operations -- Atica & Scipione. These businesses generated
       operating income of E 2 million in 2002.

                                        91
<PAGE>

  Veolia Environnement

     In 2002, total revenues for Veolia Environnement increased 3% (5% on a
constant currency basis) to E 30 billion. Revenues from core businesses, at
E 28.1 billion, increased almost 6% (7% on a constant currency basis), of which
5% resulted from internal growth. The revenue growth was generated by new
contracts for municipal and industrial outsourcing services, including several
that combined the services of two or more divisions.

     Operating income declined 3% to E 1.9 billion. Operating income from core
businesses rose 2% (3% on a constant currency basis) in 2002 while the
contribution from non-core businesses was down due to divestitures made during
the year. All core business contributed to operating income growth. In the Water
division, the good level of business activity in France, the gradually
increasing impact of outsourcing contracts won outside of France and the
turnaround of Vivendi Water Systems offset the slowdown in the industrial
equipment market in the United States and higher insurance costs. The Waste
division benefited from measures taken to improve profitability. In the Energy
Services division, growth was primarily attributable to the integration of the
Italian company SIRAM and developments in Northern and Central Europe. In the
Transportation division, new contracts signed in Europe and the United States
more than offset the cancellation of the South Central contract in the United
Kingdom. FCC's operating income increased principally due to its service
businesses.

     Veolia Environnement's published figures may differ from the figures
presented in Vivendi Universal's Consolidated Financial Statements, primarily
due to the elimination of non-material intercompany transactions. Moreover,
Vivendi Universal's definition of operating income differs from Veolia
Environnement's definition of EBIT utilized in their December 31, 2002 accounts,
which does not include restructuring charges of E 56 million.

  Vivendi Universal Publishing Assets Sold in 2002

     Vivendi Universal Publishing assets sold in 2002 include the European
publishing operations (excluding those described above) and Houghton Mifflin,
both of which were sold in December 2002 and the Business to Business and Health
divisions sold in June 2002.

  Holding & Corporate

     Holding and corporate expenses doubled year-on-year from E 326 million in
2001 to E 665 million in 2002. The key drivers of this increase were a E 122
million provision for headquarters restructuring, E 92 million in pension and
benefits charges primarily related to North American employees, a E 28 million
one-time provision for risk on a vacant lease and a E 56 million exceptional
insurance charge.

IMPACT OF INFLATION

     Inflation did not have a material effect on our financial results during
the year ended December 31, 2002.

FOREIGN CURRENCY

     Vivendi Universal is exposed to changes in foreign currency exchange rates.
Currency fluctuations may adversely affect its operational and financial
earnings. In seeking to minimize the risks and costs associated with currency
fluctuations, Vivendi Universal follows a centrally administered risk management
policy approved by its Board of Directors. As part of this policy, Vivendi
Universal uses various derivative financial instruments to manage foreign
currency exchange rate. Vivendi Universal generally does not use derivative
financial instruments for trading or speculative purposes. For more information
on Vivendi Universal's foreign currency risk management, see "Item
11--Quantitative and Qualitative Disclosures About Market Risk."

                                        92
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     Financial Position -- At December 31, 2002, Vivendi Universal had E 12.3
billion of total financial debt and E 7.3 billion of cash and cash equivalents
compared to E 37.1 billion of total financial debt and E 4.7 billion of cash and
equivalents at December 31, 2001. Of the total financial debt at December 31,
2002, total long-term debt was E 10.5 billion. For more information, see Note 7
to our Consolidated Financial Statements included in this document.

  CASH FLOW

<Table>
<Caption>
                                                           YEAR ENDED DECEMBER 31,
                                                        ------------------------------
                                                          2002       2001       2000
                                                        --------   --------   --------
                                                                (IN MILLIONS)
<S>                                                     <C>        <C>        <C>
Cash flow from operating activities...................  E  4,670   E  4,500   E  2,514
Cash flow from investing activities...................       405      4,340     (1,481)
Cash flow from financing activities...................    (3,792)    (7,469)      (631)
Effect of foreign currency exchange rate changes on
  cash and cash equivalents...........................     1,287         83          7
                                                        --------   --------   --------
CHANGE IN CASH AND CASH EQUIVALENTS...................  E  2,570   E  1,454   E    409
                                                        ========   ========   ========
</Table>

     As described in "Item 3--Risk Factors," we believe there will be a
shortfall in the funding necessary to meet our cash needs. See "Item 3--Risk
Factors" for a description of how we propose to provide the additional working
capital needed.

  Cash Flow from Operating Activities

     Cash flow from operating activities totaled E 4.7 billion in 2002, an
increase of E 0.2 billion from 2001 primarily due to improvements in working
capital. Excluding Veolia Environnement, Cegetel Group and Maroc Telecom, cash
flow from operations was negative E 0.1 billion, including dividends received
from Veolia Environnement and Maroc Telecom of E 0.1 billion.

     In 2001, cash flow from operating activities totaled E 4.5 billion compared
to E 2.5 billion in 2000. The significant improvement was primarily due to
operating earnings generating incremental cash flow of E 1.1 billion and
improvements in working capital of E 1.5 billion, which was partially offset by
E 600 million relating to the restructuring costs in connection with the
December 2000 merger. In 2000, cash flow from operating activities was E 2.5
billion, primarily coming from Cegetel Group, Vivendi Universal Publishing and
Veolia Environnement.

  Cash Flow from Investing Activities

     Cash flow from investing activities was E 0.4 billion in 2002 compared to
E 4.3 billion in 2001. Contributing to cash from investing activities in 2002
were sales for aggregate consideration of E 11.0 billion including Vivendi
Universal Publishing assets for E 3.2 billion, Veolia Environnement shares for
E 3.3 billion and EchoStar for E 1.0 billion. Offsetting divestiture proceeds
were net capital expenditures of E 4.0 billion and other investing activities of
E 6.6 billion, including investing activities made by Veolia Environnement of
E 2.8 billion and the acquisition of EchoStar for E 1.7 billion.

     In 2001 investing activities included the sale of the spirits and wine
business for E 9.4 billion and the divestiture of BSkyB shares for E 4.0 billion
offset by net capital expenditures of E 4.4 billion and the acquisitions of
Houghton Mifflin for E 2.0 billion and Maroc Telecom for E 2.4 billion.

     In 2000 net cash used for investing activities was E 1.5 billion,
reflecting notably the purchase of treasury shares held as marketable securities
for E 2.5 billion.

                                        93
<PAGE>

  Cash Flow from Financing Activities

     In 2002, cash flow from financing activities was negative E 3.8 billion
compared to negative E 7.5 billion in 2001. In 2002, the principal components
included the repayment of short and long-term debt of E 7.9 billion, dividends
paid of E 1.3 billion, a cash payment to USAi of $1.62 billion, partially offset
by the issuance of long-term debt of E 2.7 billion, proceeds from the issuance
of Veolia Environnement shares of E 1.5 billion, the net proceeds from the sale
of treasury shares of E 2.9 billion including payments related to Vivendi
Universal put options of E 0.9 billion.

     In 2001, the principal components included a E 5.9 billion repayment of
long-term borrowings and other liabilities, a E 1.7 billion repayment of
short-term borrowings, the purchase of treasury stock for E 4.3 billion and cash
dividends paid of E 1.4 billion, partially offset by E 5.2 billion proceeds from
the issuance of long-term borrowings and other liabilities and E 0.6 billion net
proceeds from the issuance of common stock. In 2000, cash flow from financing
activities was negative E 0.6 billion.

CAPITAL RESOURCES

     In the second half of 2002 we experienced a number of debt rating
downgrades. Moody's cut Vivendi Universal's senior debt rating on July 1, 2002
from Baa3 to Ba1, under review for possible further downgrade. Standard & Poor's
followed suit the next day, with a one-notch downgrade to BBB- with a negative
outlook. On August 14, Moody's lowered the long-term senior unsecured debt
rating of Vivendi Universal to B1 and assigned a Ba2 senior implied rating to
Vivendi Universal, with this rating under review for possible downgrade, and
Standard & Poor's downgraded the long-term senior unsecured debt to B+ and
assigned a BB corporate credit rating to Vivendi Universal on credit watch with
negative implications. On October 30, Moody's downgraded Vivendi Universal's
senior implied rating to Ba3, leaving the senior unsecured ratings unchanged at
B1, under review for possible downgrade. On January 3, 2003, Standard & Poor's
removed Vivendi Universal's long-term ratings credit watch. Beginning in July of
2002, these downgrades caused us to lose, to a significant extent, access to the
capital markets, and, most importantly, to the commercial paper market,
historically our main source of funding for working capital needs and triggered
default and covenant provisions under some of our debt documents. While our
current debt instruments do not contain rating triggers, further downgrades by
either Standards & Poor's or Moody's could result in liquidity problems,
increase our costs of borrowing, result in our being unable to secure new
financing and affect our ability to make payments on outstanding debt
instruments and to comply with other existing obligations.

     At December 31, 2002, our consolidated net debt was E 12.3 billion compared
with E 37.1 billion at December 31, 2001. Excluding the net debt of Veolia
Environnement, which, following divestitures of a portion of our shareholding
interest therein in 2002, was deconsolidated from Vivendi Universal's balance
sheet on December 31, 2002, net debt fell by approximately E 9.0 billion.

     The principal terms of our currently outstanding credit facilities are
described under "Item 4--Information on the Company--Summary of Indebtedness."
Under these facilities, Vivendi Universal and VUE are subject to certain
financial covenants which require them to maintain various financial ratios,
including:

     - For VUE, maximum ratios of consolidated financial indebtedness to
       consolidated EBITDA and minimum ratios to consolidated EBITDA to
       consolidated interest expense; and

     - For Vivendi Universal on a consolidated basis, maximum ratios of net
       financial debt to cash EBITDA, minimum ratios of cash EBITDA to net
       financing costs and maximum total gross financial debt.

     The definition of the above items is specified in the agreements.

     Vivendi Universal believes that Vivendi Universal and VUE are each in
compliance with each of their respective financial covenants as of December 31,
2002.

                                        94
<PAGE>

  Maturity Profile

     The following table provides a summary of the impact of the refinancing
transactions undertaken prior to May 2003 on the maturity profile of debt and
undrawn facilities of Vivendi Universal through December 31, 2004.

             MATURITY PROFILE -- VIVENDI UNIVERSAL (PARENT COMPANY)
                                 (IN BILLIONS)

<Table>
<Caption>
                                                 AGGREGATE MATURITIES   AGGREGATE
                                                 PRE-REFINANCING PLAN   MATURITIES   EXTENSION
                                                 --------------------   ----------   ---------
<S>                                              <C>                    <C>          <C>
Q2 2003........................................         E 0.17            E 0.17      E   --
Q3 2003........................................           1.78(1)           1.51(1)     0.27
Q4 2003........................................           1.07              0.20        0.87
Q1 2004........................................           3.48(2)           2.58(2)     0.90
Q2 2004........................................             --                --          --
Q3 2004........................................           0.15              0.15          --
Q4 2004........................................           0.51              0.01        0.50
                                                        ------            ------      ------
Total maturities Q2 2003 -- Q4 2004............         E 7.16            E 4.62      E 2.54
                                                        ======            ======      ======
</Table>

---------------

(1) Includes cash redemption amount of BSkyB exchangeable 1% notes issued in
    July 2000 and maturing on July 5, 2003.

(2) Assumes early redemption, at the option of the bondholders on March 1, 2004,
    of Vinci exchangeable 1% notes issued in February 2001 with scheduled
    maturity of March 1, 2006, and includes the cash redemption amount of
    Vivendi Universal convertible 1.25% bonds issued in January 1999 and
    maturing on January 1, 2004.

     Certain indebtedness of Vivendi Universal outstanding at December 31, 2002
has been repaid or otherwise cancelled. See "Item 5--Subsequent Events."

RESTRICTIONS ON TRANSFERS FROM SUBSIDIARIES TO VIVENDI UNIVERSAL

     Our cash flow on a consolidated basis is not all available to Vivendi
Universal at the parent company level. In particular:

     - Dividends and other distributions (including payment of interest,
       repayments of loans and other returns on investment or other payments)
       from our subsidiaries are restricted under certain agreements. For
       example, the VUE Loan Agreement, described in "Item 4--Information on the
       Company--Summary of Indebtedness," places limitations on the ability of
       VUE to pay dividends to Vivendi Universal and otherwise limits the net
       balance of loans between VUE and Vivendi Universal to an aggregate of
       $600 million outstanding at any one time. As of March 31, 2003, VUE had
       aggregate outstanding loans of $114 million to Vivendi Universal.

     - Many of our subsidiaries who are less than wholly owned are unable to
       pool their cash with us and must pay a portion of any dividends to other
       shareholders. These subsidiaries include Cegetel Group and Maroc Telecom.
       In 2002, Cegetel Group did not pay a dividend and Maroc Telecom paid a
       dividend of E 19 million to Vivendi Telecom International.

     In addition, the ability of our subsidiaries to make certain distributions
also may be limited by financial assistance rules, corporate benefit laws and
other legal restrictions which, if violated, might require the recipient to
refund unlawful payments. In particular, under company law (including the French
Civil Code (code civil) and the French Commercial Code (code de commerce) and
similar laws in other jurisdictions) our subsidiaries are generally prohibited
from paying dividends except out of profits legally available for distribution.

                                        95
<PAGE>

COMMITMENTS AND CONTINGENCIES

     Vivendi Universal and its subsidiaries maintain detailed records on all
contractual obligations, commercial commitments and contingent liabilities,
which are reviewed with senior management and updated on a regular basis. In
order to ensure completeness, accuracy and consistency of the records, many
procedures are performed, including but not limited to:

     - review of minutes of meetings of stockholders, Directors, committees of
       the Board, and management committees for matters such as contracts,
       litigation, and authorization of fixed asset acquisitions or
       divestitures;

     - review with banks of items such as guarantees, endorsements and
       discounted receivables;

     - review with internal and/or external legal counsel of pending litigation,
       claims (in dispute) and environmental matters as well as related
       assessments for unrecorded contingencies;

     - review of tax examiner's reports, notices of assessments and income tax
       analyses for additional prior year amounts;

     - review with risk management, insurance agents and brokers of coverage for
       unrecorded contingencies;

     - review of related party transactions for guarantees and other
       commitments; and

     - review of all contracts and agreements.

  Contractual Obligations

     Vivendi Universal and its subsidiaries have various contractual obligations
and commercial commitments, which have been defined as items for which we are
contractually obligated or committed to pay a specified amount at a specific
point in time. Certain of these items are required to be recorded as liabilities
in our Consolidated Financial Statements, for example long-term debt. Others,
such as certain purchase commitments and other executory contracts are not
permitted to be recognized as liabilities in our Consolidated Financial
Statements, but are required to be disclosed. The following table summarizes our
significant contractual obligations and commercial commitments at December 31,
2002:

<Table>
<Caption>
                                                        PAYMENTS DUE IN
                                ----------------------------------------------------------------
                                            LESS THAN      BETWEEN 1       BETWEEN 2      AFTER
                                 TOTAL       A YEAR       AND 2 YEARS     AND 5 YEARS    5 YEARS
                                --------   -----------   -------------   -------------   -------
                                                         (IN MILLIONS)
<S>                             <C>        <C>           <C>             <C>             <C>
RECORDED AS LIABILITIES IN THE
  CONSOLIDATED BALANCE SHEET
Long-term debt(1).............  E 10,455          --        E 2,878         E 4,013      E 3,564
Bank overdrafts and other
  short-term borrowings.......     9,177       9,177             --              --           --
Sports rights(2)..............     1,065         469            331             265           --
Broadcasting rights(3)........       506         214            140             121           31
Creative talent and employment
  agreements(4)...............       250          55             50              60           85
Other(5)......................       240         223             15               2           --
                                --------    --------        -------         -------      -------
Total.........................  E 21,693    E 10,138        E 3,414         E 4,461      E 3,680
                                ========    ========        =======         =======      =======
</Table>

                                        96
<PAGE>

<Table>
<Caption>
                                                         PAYMENTS DUE IN
                                 ---------------------------------------------------------------
                                            LESS THAN      BETWEEN 1       BETWEEN 2     AFTER 5
                                  TOTAL      A YEAR       AND 2 YEARS     AND 5 YEARS     YEARS
                                 -------   -----------   -------------   -------------   -------
                                                          (IN MILLIONS)
<S>                              <C>       <C>           <C>             <C>             <C>
OTHER CONTRACTUAL OBLIGATIONS
  AND COMMERCIAL COMMITMENTS
Operating leases(6)............  E 1,868    E    373        E   330         E   655      E   510
Sports rights(2)...............    1,440          --            265           1,175           --
Broadcasting rights(3).........    2,690         834            513           1,056          287
Creative talent and employment
  agreements(4)................    1,473         823            296             289           65
Real estate defeasance(7)......      846                                                     846
Other..........................      701         213            121             280           87
                                 -------    --------        -------         -------      -------
Total..........................  E 9,018    E  2,243        E 1,525         E 3,455      E 1,795
                                 =======    ========        =======         =======      =======
</Table>

---------------

(1) Long-term debt, including capital lease obligations of E 274 million, which
    French GAAP requires to be recognized as long-term debt when the lease
    contract includes a purchase option, known in France as "credit bail" (see
    Note 7).

(2) Exclusivity contracts for broadcasting sporting events by Canal+ Group
    (E 1,065 million recorded in other non-current liabilities and E 1,440
    million shown in other contractual obligations and commercial commitments in
    connection with the potential acquisition of soccer rights).

(3) Primarily exclusivity contracts for broadcasting future film productions,
    acquisitions of program catalogs and leasing of satellite capacity at VUE
    and Canal+ Group.

(4) Agreements in the normal course of business, which relate to creative talent
    and employment agreements principally at VUE and UMG.

(5) Principally comprised of Universal Music's liability related to Rondor Music
    International, E 223 million settled in March 2003 (see the discussion below
    under "--Contingencies").

(6) Lease obligations assumed in the normal course of business for rental of
    buildings and equipment.

(7) Lease obligations related to real estate defeasances. In April 1996, the
    divestiture to Philip Morris Capital Corporation of three office buildings
    under construction was accompanied by a 30-year lease back agreement
    effective upon completion of the buildings. Two of the buildings were
    completed in April 1998 and the third was completed in April 2000. The
    annual rental expenses approximate E 34.4 million. In December 1996, three
    buildings in Berlin were sold and leased back under ten to thirty year
    leases at an annual rental expense of approximately E 29.6 million. The
    difference between Vivendi Universal's rental obligation under the leases
    and the market rent received by Vivendi Universal is provided for when
    unfavorable.

  Contingencies

     In addition to contractual obligations and commercial commitments given,
Vivendi Universal and its subsidiaries have entered into various guarantees or
other agreements pursuant to which they have contingent liabilities not recorded
as liabilities on the balance sheet. Our most significant contingent liabilities
at December 31, 2002 are summarized below:

     Cegetel Group

     - In connection with the August 2001 sale of AOL Europe Category E
       preferred shares by Canal+ Group and Cegetel Group to LineInvest, Vivendi
       Universal entered into a total return swap agreement with the latter.
       LineInvest is a special purpose vehicle in which Vivendi Universal has no
       ownership interest created in connection with the transaction. Under the
       terms of the agreement, Cegetel Group and Canal+ Group retained the
       financial risk on the value of the AOL Europe preferred shares up to a

                                        97
<PAGE>

       share of 66% and 34%, respectively, through a mirror total return swap
       with Vivendi Universal. In December 2002, a portion of the total return
       swap between Vivendi Universal and LineInvest was transferred directly to
       Cegetel Group corresponding to its share (notional amount of $541.3
       million). As a result, Vivendi Universal continued to guarantee the
       Canal+ Group commitment (notional amount of $270.7 million). Under the
       arrangements, Cegetel Group and Vivendi Universal were obligated to repay
       the notional amounts of the swaps to LineInvest on April 7, 2003 and
       October 30, 2003, respectively.

      On February 14, 2003, LineInvest received notification from AOL Time
      Warner whereby AOL Time Warner agreed to acquire the AOL Europe preferred
      shares through the exercise of a call option on April 8, 2003 for an
      amount of $812.5 million, payable in either cash or shares of AOL Time
      Warner common stock or a combination of both. AOL Time Warner elected to
      make the payment for the call option in cash and, as a result, the total
      return swap was unwound on April 9, 2003 and no further amounts are
      payable pursuant to the transaction. Vivendi Universal recorded a
      provision of $100 million in its 2002 accounts to cover market risk under
      the terms of the total return swap in the event AOL Time Warner had opted
      for payment for the call option in its own shares. This provision has now
      become unnecessary and will be reversed in the second quarter 2003
      accounts.

     Universal Music Group

     - In connection with the purchase of Rondor Music International in 2000,
       there existed a contingent purchase price adjustment based on the market
       value of Vivendi Universal shares. The contingent price adjustment was
       triggered in April 2002 when the market value of Vivendi Universal's
       shares fell below $37.50 for 10 consecutive days and the former
       shareholders of Rondor requested early settlement. A liability for this
       adjustment was recorded in the consolidated balance sheet at December 31,
       2002 for its estimated amount of E 223 million (approximately $230
       million). On March 3, 2003 settlement of this liability was made and the
       former shareholders of Rondor received 8.8 million shares of Vivendi
       Universal, representing 0.8% of capital stock and cash of $100.3 million
       (E 92.6 million).

     Vivendi Universal Entertainment

     - In connection with Vivendi Universal's acquisition of the entertainment
       assets of USAi, USAi and Mr. Barry Diller received 5.44% and 1.50%,
       respectively, of the common interests in VUE, the group formed by
       combining such assets and those of the Universal Studios Group. Vivendi
       Universal agreed to certain put arrangements with respect to the common
       interests in VUE. Beginning on May 7, 2003, Mr. Barry Diller may put his
       common interests to Universal Studios, Inc. for the greater of their fair
       market value and $275 million. Beginning on May 7, 2010, USAi may put its
       common interests to Universal Studios, Inc. for their fair market value.
       In each case, these amounts may, at Universal Studio, Inc.'s election, be
       paid in cash or in Vivendi Universal shares.

      Under the VUE partnership agreement, VUE is subject to a number of
      covenants for the benefit of the holder of the Class A Preferred Interests
      in VUE (currently USAi), including a cap on indebtedness and a restriction
      on asset transfers by VUE and its subsidiaries. Certain of the covenants,
      including those specified above, would cease to apply if an irrevocable
      letter of credit were issued in an amount equal to the accrued value of
      such interests at maturity (approximately $2 billion in 2022).

      In addition, Vivendi Universal has agreed to indemnify USAi for any "tax
      detriment" (defined to mean the present value of the loss of USAi's tax
      deferral on the transaction) arising from certain actions taken by VUE
      prior to May 7, 2017, including selling assets contributed by USAi to VUE
      and repaying the $1.62 billion in debt used to finance the cash
      distribution made to USAi at the closing.

     - In 1987, Universal City Development Partners, Ltd., or Universal City
       Development Partners, entered into an agreement with a creative
       consultant to supply consulting services for a fee based on its gross
       revenues. The consultant is also entitled to a fee based on the gross
       revenues of all gated motion picture and/or television themed attractions
       owned or operated, in whole or in part, by (or pursuant to a license
       from) Universal City Development Partners or MCA Inc. (now Universal
       Studios, Inc.), any
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<PAGE>

       of their partners or any of their affiliates ("comparable projects"),
       other than at Universal City, California. At present, the only theme park
       which may be a comparable project is VUE's partially owned park in Osaka,
       Japan. It is possible that comparable projects will be created in the
       future that would fall under the consulting agreement.

      For 2000, 2001 and 2002, the fees paid by Universal City Development
      Partners for its parks were $14.8 million, $16.6 million and $14.7
      million, respectively. Fees with respect to the park in Japan were $13.2
      million for 2001 and $10.5 million for 2002. The consultant may also be
      entitled to participate in certain sales of equity by the partners of
      Universal City Development Partners and to participate in certain real
      estate development activities of the partners of Universal City
      Development Partners or their affiliates.

      Although the agreement has no expiration date, starting in June 2010, the
      consultant has the right under certain circumstances to terminate the
      periodic payments under the agreement and receive instead one payment
      equal to the fair market value of the consultant's interest in our parks
      and all comparable projects that have been open at that time for at least
      one year. If the parties cannot agree on the fair market value of that
      interest, it will be determined by a binding appraisal procedure.
      Universal City Development Partners represented under the agreement that
      the consultant's interest in each of its parks and in any comparable
      projects will have priority over the interests of all financiers, lenders
      and others who may have an interest in that park or project. Universal
      City Development Partners's obligations under the agreement are guaranteed
      by Universal Studios, Inc. and Universal Studios, Inc.'s obligations under
      that guarantee have in turn been assumed by VUE.

     Canal+ Group

     - In connection with the acquisition by Sportfive (Sport+ S.A. in 2001) of
       its three year right to broadcast English Premier League football
       matches, Vivendi Universal has agreed to provide a guarantee related to
       the payment of license fees, which is limited to L200 million and expires
       July 31, 2004, and of which 50% is counter-guaranteed by the RTL Group.

     Maroc Telecom

     - In connection with the acquisition of its 35% interest in Maroc Telecom,
       Vivendi Universal granted a put option to the Kingdom of Morocco related
       to a further interest in Maroc Telecom equal to 16% of the capital of the
       company, except that if, prior to September 2003, the Kingdom sells
       shares to a third party investor, the option is cancelled to the extent
       of the number of shares so sold. At the end of an appraisal proceeding to
       determine the exercise price starting from September 1, 2003, the Kingdom
       of Morocco will be entitled to exercise its put option during a two month
       period (i.e. in October and November 2003), if no delay in the appraisal
       process has occurred. If the put option is not exercised during this
       first period, the option will be extended and the Kingdom of Morocco can
       decide to start the proceeding again at any time during an 18 month
       period following the end of the first put option period. The exercise
       price will be the then fair market value of the shares independently
       determined by the appraisal procedure, except if the fair market value of
       the shares were between 85% and 115% of a reference price derived from
       the purchase price of Vivendi Universal's initial stake, the reference
       price would be used to determine the exercise price. In addition, Vivendi
       Universal plans to pledge its stake in Maroc Telecom to guarantee the
       payment of the above put option, if exercised.

     Vivendi Telecom International

     - In connection with the acquisition of its 55% interest in Monaco Telecom,
       Vivendi Universal granted a put option to the Principality of Monaco,
       which owns the remaining 45% of Monaco Telecom. The option grants the
       Societe Nationale de Financement in Monaco the right to sell to Compagnie
       Monegasque de Communication, a subsidiary of Vivendi Universal, at any
       time until December 31, 2009, its 45% interest in Monaco Telecom under
       the following terms. Prior to May 26, 2004, Societe Nationale de
       Financement can put (i) up to 29% of its interest in Monaco Telecom for
       approximately

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<PAGE>

       E 51 million (or the proportionate value of E 51 million if less than 29%
       is sold) and (ii) its residual 16% interest at fair value. Between May
       26, 2004 and December 31, 2009, Societe Nationale de Financement can put
       its entire 45% interest at fair value. The option may be exercised in
       increments but each exercise must be for not less than 10% of the shares.
       The fair value of Monaco Telecom will be independently determined by an
       appraisal procedure.

     - In connection with its approximate 26% equity stake in the Xfera joint
       venture, the recipient of a third generation UMTS mobile
       telecommunications license in Spain, Vivendi Universal entered into a
       E 920 million surety contract related to performance guarantees granted
       to the Spanish government (notably capital expenditures related to the
       roll-out of the network and the coverage of the territory). These
       guarantees could be called upon up to the amount of corresponding Xfera
       commitments only upon the commercial launch of UMTS services. Given the
       very low likelihood of the roll-out of the network, negotiations have
       commenced between the parties to terminate these guarantees.

      The arrangements, with several vendors, were entered into to potentially
      finance amounts payable for network equipment up to a total amount of
      E 1.0 billion. At the same time, a pledge of Xfera shares was provided to
      equipment vendors in connection with their financing contracts.

      Separately, Vivendi Universal has granted a counter guarantee in an amount
      of E 48 million to a group of banks which have guaranteed the Spanish
      government in respect of the UMTS frequency spectrum.

      The Xfera Shareholders' Agreement dated January 12, 2002, contains a
      provision which gives the founding shareholders (including VTI) the
      possibility to acquire the shares held by Vodafone in Xfera in certain
      defined circumstances. Vodafone claims that such provision amounts to a
      call option (for an amount of E 7.2 million which would be increased up to
      E 13.6 million taking into account Xfera equity capital increases,
      determined through an appraisal procedure, representing 3.3% of Xfera's
      capital). If Vodafone's claims were accepted following the ongoing
      arbitration proceeding, Vivendi Universal would have to take on an
      additional commitment equal to approximately E 90 million.

     Corporate and Other

     - In connection with the Seagram merger, Vivendi Universal entered into a
       Shareholder's Governance Agreement with members of the Bronfman family,
       pursuant to which Vivendi Universal agreed, among other things, not to
       dispose of Seagram shares in a taxable transaction and not to dispose of
       substantially all of the assets acquired by Vivendi Universal from
       Seagram in a transaction that would trigger the Gain Recognition
       Agreement (GRA) entered into by the Bronfmans and result in recognition
       of taxable gain to them. Under the applicable US income tax regulations,
       to comply with the foregoing, Vivendi Universal must retain at least 30%
       of the gross assets or at least 10% of the net assets (values are
       determined as of December 8, 2000) until the end of the five year period
       ending on December 31, 2005. At the present time, Vivendi Universal is in
       compliance with this provision. Vivendi Universal does not intend to
       violate the provision and trigger the GRA.

     - On December 20, 2002, Vivendi Universal and Veolia Environnement entered
       into an agreement in order to finalize the separation of the two
       companies, following Vivendi Universal's divestiture of 20.4% of Veolia
       Environnement's capital stock. Pursuant to this agreement, some of the
       guarantee and counter-guarantee agreements originally established between
       the two companies in June 2000 were modified as described in Note 3.2.3
       to the Consolidated Financial Statements. Vivendi Universal's most
       important contingent liabilities under these agreements are:

      -- Certain recurring expenses involving network renewal costs in the water
         and energy businesses were originally to be reimbursed by Vivendi
         Universal up to an initial limit of E 15.2 million a year indexed over
         a period of 12 years. This limit has now been raised to E 30.4 million
         indexed starting in the year 2002. The additional amount potentially
         due above the E 15.2 million initial limit will, however, be payable
         only from January 2005 and bear interest at the legal rate. If the
         aggregate amount of replacement costs borne by Veolia Environnement
         were to exceed the initial limit of

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<PAGE>

         E 228.6 million, this excess would be covered by Vivendi Universal up
         to a maximum amount of E 76.2 million.

      -- It has been agreed that the current Vivendi Universal interest in the
         company Aguas Argentinas will be retained by Vivendi Universal.
         Guarantees related to this company, which made up an amount of
         approximately $50 million have been retained by Vivendi Universal above
         a first tranche of $5 million assumed by Veolia Environnement.

     - In connection with Vivendi Universal's December 2002 divestiture of 82.5
       million shares of Veolia Environnement shares to a group of investors, a
       call option was granted on the remaining 20.4% of Veolia Environnement
       (82.5 million shares) at a strike price equal to E 26.5. This option can
       be exercised at any time until December 23, 2004. If it were to be
       exercised, it would provide Vivendi Universal with E 2.2 billion of net
       cash proceeds. The remaining 82.5 million shares have been deposited in
       an escrow account (compte-sequestre) and have been pledged in favor of
       new investors as well as banks participating in the E 2.5 billion Dual
       Currency Credit Facility and the E 3 billion Multicurrency Revolving
       Credit Facility. Under an arrangement entered into in connection with the
       December 2002 divestiture, Vivendi Universal has committed to pay an
       indemnity equal to E 3 per call option to new investors in the event that
       the loans or guarantees related to the Dual Currency Credit Facility or
       the Multicurrency Revolving Credit Facility are called for reimbursement.

     - In connection with the sale of puts on its shares, Vivendi Universal had
       a remaining commitment, as of December 31, 2002, to buy 3.1 million
       shares at an exercise price of E 50.50 during the first quarter of 2003.
       These puts were exercised in January and February 2003.

     - A group of shareholders, which holds 19.7% of the shares of UGC, has a
       put option to sell these shares to Vivendi Universal. This option may be
       exercised at any time until December 31, 2007. The value of UGC shares
       covered by the put (currently estimated at E 70 million) would be
       determined on the basis of a contractual formula by an appraiser mutually
       designated by the two parties.

     - At December 31, 2002 three different bonds issued by Vivendi Universal
       are outstanding which are exchangeable into shares of Veolia
       Environnement, Vinci and BSkyB, respectively. The terms of these bonds
       include early redemption features which allow the holders to require
       redemption of the outstanding bonds by Vivendi Universal prior to their
       due dates at a premium over the principal amount. Premiums potentially
       due to bondholders amounted to E 287.3 million, of which E 17.8 million
       would be cross-charged to Veolia Environnement under the terms of a
       contract associated with the issuance of the bonds. Given the reduced
       probability of exchange by the holders of bonds exchangeable into Veolia
       Environnement and Vinci shares, the Group decided to provision the
       premiums due in case of early redemption of these two bonds in March 2003
       and March 2004, respectively. At December 31, 2002, accumulated
       provisions and allowances amounted to E 137.9 million and also included a
       provision for the premium which is payable in July 2003 to holders of
       bonds exchangeable for BSkyB shares. In March 2003, a premium amounting
       to E 63.4 million was paid to Veolia Environnement bondholders who
       exercised their right of early redemption. If holders of Vinci
       Exchangeable bonds do not exercise their right of early redemption, there
       remains a premium payable at maturity in March 2006 amounting to E 27.1
       million.

     The following table summarizes the contingencies described above and the
other contingencies described in note 11 to the Consolidated Financial
Statements.

<Table>
<Caption>
TRANSACTIONS AND GUARANTEES                        AMOUNT                   EXPIRY
---------------------------          -----------------------------------   ---------
<S>                                  <C>                                   <C>
Telecom Developpement buy/sell       Price to be determined                --
  agreement with SNCF
3G UMTS license                      1% revenue earned when service        2021
                                     commences (expected to be in 2004)
Miscellaneous guarantees granted by  E 40 million                          2003/2012
  Cegetel
Rondor contingent purchase price     E 223 million                         Settled
</Table>

                                       101
<PAGE>

<Table>
<Caption>
TRANSACTIONS AND GUARANTEES                        AMOUNT                   EXPIRY
---------------------------          -----------------------------------   ---------
<S>                                  <C>                                   <C>
Put option on Roc-a-fella record     0 to E 15 million                     2005
  label joint venture
Put option on Murder Inc. records    0 to $20 million                      2007
Guarantee for operating shortfall    0 to $20 million                      --
  of pressplay joint venture
Put option on VUE
-- 1.5% of common interest in VUE    Greater of fair market value and      --
   to Barry Diller from May 7, 2003  $275 million
-- 5.4% of common interest in VUE    At fair value                         --
   to USAi from May 2010
Two guarantees in connection with    Residual guarantee of $1 million      --
  VUE's Equity investment in UCDP
Guarantee for operating shortfall    $7.5 million                          --
  of Universal City Florida Hotel
  Venture
Guarantee of lease payments in       0 to $154 million                     --
  connection with UCI/CIC equity
  Investment
Capital contributions in connection  $19.5 million                         --
  with equity investment in
  MovieLink
Surety bond related to ITC           $27.8 million                         --
  Entertainment's "Streetscenes"
  film Property
Agreement with creative consultant
-- consulting services               Fee based on gross revenues           --
-- additional fee                    Based on gross revenues of themed     --
                                     attractions at certain parks
-- right of termination              Fair market value, starting in 2010   --
Executive officer option to acquire  Approximately $24.9 million           2005
  0.2% of VUE's affiliate shares
Guarantee provided to English        L200 million, 50% of which is         2004
  Premier League football            counterguaranteed by the RTL Group
Put option equal to 16% of Maroc     At fair market value                  2005
  Telecom
Grant of a put option of 45% of
  Monaco Telecom
-- until May 25, 2004                0 to 29% for a proportionate of 0     2004
                                     to 51 million euros and the
                                     residual 16% interest at fair value
-- between May 26, 2004 and          45% interest at fair value or in      2009
   December 31, 2009                 increments but each exercise must
                                     be not for less than 10%
Guarantees to Afghan state re:       Capped at $2.4 million                --
  performance of obligations of
  Telecom Development Company of
  Afghanistan and to the Agha Khan
  Fund for Economic Development
Commitment to fund Afghan Telecom    Up to $10.5 million                   --
  BV Company
Bank guarantee Xfera                 Approximately E 140 million           --
</Table>

                                       102
<PAGE>

<Table>
<Caption>
TRANSACTIONS AND GUARANTEES                        AMOUNT                   EXPIRY
---------------------------          -----------------------------------   ---------
<S>                                  <C>                                   <C>
Bank guarantee provided to Spanish   E 48 million                          --
  authorities related to the UMTS
  license frequent spectrum fee re:
  Xfera
"Call option" of the Xfera stake     Subject to arbitration proceedings    --
  held by Vodafone
Shareholders' governance agreement                                         2005
  with members of the Bronfman
  family
Divestiture of Interest in Veolia
  Environnement
-- Reimbursement of replacement      E 30.4 million indexed starting in    --
   costs                             the year 2002 payable from January
                                     2005 subject to legal interest rate
                                     If total amount paid by VE exceeds    --
                                     E 228.6 million excess would be
                                     covered by VU up to an amount of
                                     E 76.2 million
-- Guarantees re: Aguas Argentinas   Approximately $50 million with        --
                                     first $5 million assumed by VE
-- Other guarantees re: commitments  Approximately E 250 million           --
   made by VE subsidiaries
-- Comfort letters issued in favor   Approximately E 20 million            --
   of VE subsidiaries
Indemnity to VE share call option    E 3 per call option (approximately    2004
  Holders                            E 250 million)
Sale of put options on own shares    3.1 million shares at an exercise     Settled
  in 2003                            price of E 50.50
Put option on 19.7% of capital       Currently estimated at E 70 million   2007
  stake in UGC
Debt premiums potentially due to     E 27.6 million                        2006
  holders of bonds exchangeable
  into VE and Vinci shares
Counter-guarantee on surety bonds    $47.5 million                         --
Pledges and guarantees related to    E 274 million                         2002/2020
  real estate operations
Sale of Seagram's spirits and wine   0 to $1 billion                       2003
  Assets
Sale of VUP's B2B and Health         Price adjustment clause and           2004
  divisions                          guarantee clause related to
                                     liabilities up to E 500 million per
                                     division
Sale of VUP's European publishing    Guarantees capped at E 240 million    --
  Activities
Sale of Houghton Mifflin             Losses in excess of $20 million not   --
                                     to exceed $166 million
Sale of 50% stake in Vizzavi         Certain standard guarantees up to     --
                                     its 50% share
Sale of Sithe                        Guarantees capped at $480 million     2004/2005
Guarantees on sale of land and       Guarantees capped at E 150 million    2017
  buildings businesses
</Table>

                                       103
<PAGE>

<Table>
<Caption>
TRANSACTIONS AND GUARANTEES                        AMOUNT                   EXPIRY
---------------------------          -----------------------------------   ---------
<S>                                  <C>                                   <C>
Sale of hotels to the consortium     Commercialization guarantee kept at   2004
  ABC                                80% of the value of each hotel
Shareholders' governance agreement   --                                    --
  with members of the Bronfman
  Family
</Table>

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

     In 2001, commitments received were E 1,618 million, principally comprised
of Veolia Environnement. Due to the deconsolidation of Veolia Environnement
which is now accounted for using the equity method, commitments received were
E 204 million in 2002.

COLLATERAL AND PLEDGES

     The principal pledges and collateral issued by the Group on its assets were
as follows at December 31, 2002:

     - collateral issued by Vivendi Universal Entertainment in favor of banking
       institutions having provided the bridging loan of $1.6 billion, maturing
       at June 30, 2003, or under certain conditions at December 30, 2003;

     - first ranking collateral issued to borrowers in connection with the E 1
       billion loan, available through December 31, 2004. The same collateral
       was issued to CDC-IXIS for the E 300 million line of credit, maturing at
       March 31, 2004;

     - first ranking pledge for 20% of the residual equity interest held by
       Vivendi Universal in Veolia Environnement, in favor of the holders of
       share options allocated on December 20, 2002, and exercisable up to
       December 23, 2004;

     - second ranking collateral after that issued in connection with the E 1
       billion Dual Currency Revolving Credit Facility and the E 300 million CDX
       IXIS Revolving Facility, and that issued to holders of call options on
       Veolia Environnement shares, allocated in connection with the syndicated
       lines of credit of E 3 billion and E 850 million set up, respectively, in
       March 2002 and March 1999 to Societe Generale in connection with two
       loans of E 490 million in the aggregate, and Bayerische Landesbank and
       LineInvest Limited, in connection with financing of the purchase of AOL
       Europe preferred shares or to an amount equal to one-third of the total
       amount of the transaction (i.e. about E 270 million);

     - pledge on assets of Hungarian telephone companies in favor of the
       syndicate of banks participating in the financing (approximately E 300
       million);

     - collateral on the assets of Universal Music in the United Kingdom, issued
       to lenders in connection with financing up to an amount of L136 million
       set up on December 31, 2002 for a period of five years;

     - payment of deposits to an amount of E 27 million in favor of Fleet
       National Bank and Wachovia in connection with its financing of Universal
       City Development Partners (UCDP);

     - pledge on Xfera shares in favor of equipment suppliers in connection with
       their financing contract; and

     - other collateral issued, to an amount of approximately E 70 million.

     In addition, Vivendi Universal plans to pledge its stake in Maroc Telecom
to guarantee payment of the put option issued by the Kingdom in respect of a 16%
of the share capital of Maroc Telecom, if exercised.

     Certain indebtedness of Vivendi Universal outstanding at December 31, 2002
has been repaid or otherwise cancelled. See "Item 5--Operating and Financial
Review and Prospects--Subsequent Events." Vivendi Universal has new indebtedness
incurred since December 31, 2002. For a description of Vivendi Universal's
material indebtedness, see "Item 4--Information on the Company--Summary of
Indebtedness."

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<PAGE>

LITIGATION

     We are subject to various litigation. See "Item 8--Financial
Information--Litigation."

RESEARCH AND DEVELOPMENT

     Research and development plays an important role in several of our
businesses. See "Item 4--Information on the Company--Our Segments--Cegetel
Group," "Item 4--Information on the Company--Our Segments--Music" and "Item
4--Information on the Company--Our Segments--Canal+ Group."

SUBSEQUENT EVENTS

     On December 3, 2002, Vivendi Universal's board of directors unanimously
decided to exercise its pre-emptive rights on BT Group's 26% interest in Cegetel
Group, in order to obtain a 70% interest in the French telecommunications
operator. In January 2003, Vivendi Universal purchased BT Group's 26% interest
in Cegetel Group for E 4 billion.

     The acquisition of this participation from BT Group was carried out through
the Societe d'Investissement pour la Telephonie S.A. (SIT), as follows: (i) SIT,
owned, controlled and consolidated by Vivendi Universal, became the legal owner
of the 26% shareholding at an acquisition cost of E 4 billion and (ii) SIT was
financed by E 2.7 billion equity, contributed in cash by Vivendi Universal and
by the E 1.3 billion Acquisition Facility described below. Debt service of this
loan, which was drawn on January 23, 2003, will be provided through dividends
paid in respect of its 26% shareholding in Cegetel Group.

     As a result, Cegetel Group will continue to be consolidated by Vivendi
Universal, with a 70% interest (the 26% shareholding acquired from BT Group in
addition to its historical 44% interest). The goodwill recognized as a result of
this transaction is expected to amount to approximately E 3 billion and will be
amortized on a straight-line basis over 40 years.

     On December 6, 2002, Vivendi Universal entered into a E 1.3 billion
facility (the Acquisition Facility) among SIT, as the borrower, Vivendi
Universal, a syndicate of lenders, Credit Lyonnais, as agent, and The Royal Bank
of Scotland, as security trustee. The Acquisition Facility was entered into by
SIT to finance the purchase of the share capital of Cegetel Group described
above. The outstanding amount of the loan under the Acquisition Facility is
E 1.3 billion. The maturity date of the loan is June 30, 2004. SIT may request
an extension of the maturity date to June 30, 2010 by providing notice prior to
June 1, 2004. If SIT requests such an extension, the loan will be repaid in
periodic installments over the term of the loan until the final installment on
June 30, 2010. Borrowings under the Acquisition Facility bear interest at
EURIBOR plus a margin of 4.00%, subject to certain adjustments. See "Item
4--Information on the Company--Summary of Indebtedness."

     On February 4, 2003, the sale of Consumer Press Division (Groupe
Express-Expansion/Groupe l'Etudiant) to the Socpresse Group was finalized,
following the authorization by The Economy and Finance Ministry in January 2003.
The amount collected was E 200 million.

     On February 5, 2003, Vivendi Universal closed the sale of its 89% stake in
Canal+ Technologies to Thomson for E 190 million in cash, of which E 90 million
was collected in 2002, E 79 million was collected in 2003 and the remainder is
expected to be paid pending any post-closing purchase price adjustments.

     On February 6, 2003, Mr. Bertrand Meheut was appointed as Member and
Chairman of Group Canal+ S.A. Management Board, in replacement of Mr. Xavier
Couture, who resigned at the Supervisory board's session of February 7, 2003.

     In February 2003, Vivendi Universal sold 32 million warrants relating to
USAi to a financial institution. These warrants were initially acquired in
connection with the acquisition of the entertainment assets of USAi. Pursuant to
this transaction, Vivendi Universal received $276 million, net of fees.

                                       105
<PAGE>

     Pursuant to the put by investors in March 2003, Vivendi Universal
reimbursed Veolia Environnement exchangeable notes issued in February 2001 for a
total consideration of E 1.8 billion.

     In March 2003, Canal+ Group announced an employee reduction as part of its
overall restructuring plan. The program calls for a reduction of 305 positions,
mainly administration and technical support personnel. In addition, 138
positions in certain support functions will be outsourced.

     On March 11, 2003, Vivendi Universal Canada Inc. (VU Canada), a company in
the Vivendi Universal group, announced that it had satisfied its contractual
guarantee made on August 1, 2000, to the former shareholders of the California
company, Rondor Music International, Inc. The former Rondor shareholders
received 8.844 million shares, representing 0.8% of capital stock and the
remainder in cash of US $100.3 million (E 92.6 million).

     Rondor's shareholders were paid in Seagram shares when Rondor was acquired
by The Seagram Company Ltd., which became VU Canada after the
Seagram-Vivendi-Canal+ merger. The payment was accompanied with a contractual
guarantee on the value of the shares given to the former shareholders of Rondor.
At the time of the Seagram-Vivendi-Canal+ merger, these Seagram shares were
converted into Vivendi Universal ADSs, and the contractual guarantee became
applicable to the Vivendi Universal ADSs held by the former Rondor shareholders.

     The contractual guarantee provided, among other things, that if the price
of Vivendi Universal ADSs dropped below a certain threshold ($37.50 per ADS), VU
Canada would pay the former Rondor shareholders a makeup payment for ADSs sold
by them during a specified period of time equal to the difference between US
$82.7875 per ADS and their sale proceeds. In April and May 2002, all Vivendi
Universal ADSs then owned by these shareholders were sold and VU Canada became
obligated to pay the makeup payment to them in March 2003. Under the terms of
the original agreements, the difference was to be paid in full or in part in
Vivendi Universal shares.

     On March 19, 2003, VUE received a commitment from Banc of America
Securities LLC and J.P. Morgan Securities Inc. to syndicate a new $500 million
senior secured credit facility and underwrite $300 million thereof. On March 19,
2003, VUE also received a commitment for an extension from September 30, 2003 to
December 31, 2003 of up to $420 million under its term facility dated as of May
3, 2002 (the VUE Bridge Facility).

     On March 19, 2003, Mr. Barry Diller announced his resignation from his
temporary position as chief executive officer of VUE. Mr. Diller had been
serving in such capacity since the formation of VUE in May 2002 and was not
party to an employment agreement. Mr. Jean-Rene Fourtou has assumed the role of
chief executive officer of VUE and is working with the existing management team.
Mr. Diller's resignation has no effect on the rights and obligations of Vivendi
Universal, VUE, USAi or Mr. Diller under the VUE partnership agreement. The
termination date for USAi's and Mr. Diller's noncompetition agreements with VUE
is now November 7, 2003, Mr. Diller's put on his common stock remains
exercisable beginning on May 7, 2003, and Universal's call option on Mr.
Diller's common interest in VUE is exercisable beginning on May 7, 2004.

     On March 28, 2003, Liberty Media Corporation and certain of its affiliates
filed suit against Vivendi Universal, Jean-Marie Messier (the former CEO of
Vivendi Universal), Guillaume Hannezo (the former CFO of Vivendi Universal) and
Universal Studios, Inc. The complaint arises from the transaction that was
agreed in December 2001 and resulted in the formation of VUE in May 2002. As
part of that transaction, Vivendi Universal transferred 37.4 million shares of
Vivendi Universal to Liberty Media in exchange for equity in USANI LLC and USAi
and Liberty Media's 27.4% interest in the European cable television company,
MultiThematiques.

     In the opinion of Vivendi Universal, the plaintiffs' claims are without
merit, and Vivendi Universal intends to defend against these claims vigorously.
It is not possible at this early stage of this suit to predict the outcome and
duration with any certainty or to quantify any potential damages or the
likelihood of any other remedies. The impact of this litigation on Vivendi
Universal could be material if Vivendi Universal were not to prevail in a final,
non-appealable determination of this litigation. Vivendi does not expect this
litigation to have
                                       106
<PAGE>

any material effect on its asset divestiture program. For more information, see
"Item 8--Financial Information--Litigation."

     On March 31, 2003, a subsidiary of VUE, Universal Film Funding LLC, or Film
Funding, borrowed $750 million under a securitization facility, based on future
video (including DVD and VHS) and television revenues in the United States from
part of Universal's film library and future theatrical pictures to be released
by Universal. As part of the securitization facility, certain subsidiaries of
VUE transferred assets relating to Universal's film library which generate these
revenues and certain other related assets to Film Funding and agreed to sell
additional similar assets relating to its future theatrical pictures. The
proceeds of the Securitization Facility were used by VUE to retire $700 million
of the $1.62 billion owed under the VUE Bridge Facility, and to establish a
funded reserve account required under the terms of the securitization facility,
to be used to fund certain expenses related to exploitation of the film assets
(e.g., costs of duplication and distribution expenses). The securitization
facility is scheduled to amortize over three years, commencing three years after
the initial borrowing. See "Item 4--Information on the Company--Summary of
Indebtedness."

     On April 2, 2003, the European Commission issued its approval of the sale
by Canal+ Group of Telepiu, the Italian pay-TV business, to News Corporation.
The transaction was completed on April 30, 2003 and amounted to E 871 million,
comprised of E 414 million of debt assumption and E 457 million of cash. The
cash payment includes a E 13 million adjustment corresponding to the
reimbursement of the accounts payable net of debt adjustment.

     On April 3, 2003, Vivendi Universal closed an offering of E 1.2 billion
senior notes due 2010 (Senior Notes), consisting of $935 million 9.25%
dollar-denominated notes and E 325 million 9.5% euro-denominated notes, sold at
a discount to yield 9.75%. The gross proceeds from the offering were placed in
escrow pending the entry by Vivendi Universal into a new credit facility, which
was consummated on May 13, 2003. See "Item 4--Information on the
Company--Summary of Indebtedness."

     On May 13, 2003, Vivendi Universal amended its E 3 billion multicurrency
revolving credit facility (Multicurrency Revolving Credit Facility) dated March
15, 2002, as previously amended on February 6, 2003, with a syndicate of banks,
as lenders, and Barclays Capital, Bayerische Landesbank Girozentrale, BNP
Paribas, Credit Agricole Indosuez, Credit Lyonnais, Deutsche Bank AG, SG
Investment Banking and Sumitomo Mitsui Banking Corporation, as mandated lead
arrangers, and Societe Generale, as facility agent. Borrowings under the
Multicurrency Revolving Credit Facility that are denominated in Euros bear
interest at EURIBOR plus a margin of 1.50%, which margin reduces to 1.00% upon
the occurrence of certain events. Borrowings under the Multicurrency Revolving
Credit Facility that are denominated in a currency other than Euros bear
interest at LIBOR plus a margin of 1.50%, which margin reduces to 1.00% upon the
occurrence of certain events. The Multicurrency Revolving Credit Facility
matures on March 15, 2007. E 2.3 billion of the Multicurrency Revolving Credit
Facility is currently drawn. See "Item 4--Information on the Company--Summary of
Indebtedness."

     On May 13, 2003, Vivendi Universal concluded an agreement on the
divestiture of its fixed-line telephony activities in Hungary to a consortium
led by AIG Emerging Europe Infrastructure Fund and GMT Communications Partners
Ltd. The amount of the transaction is E 325 million and, upon closing, will
lower Vivendi Universal's debt by E 315 million.

     On May 13, 2003, Vivendi Universal entered into a E 2.5 billion dual
currency term and revolving credit facility (the Dual Currency Credit Facility)
dated as of May 13, 2003, among Vivendi Universal, as a borrower and as a
guarantor, certain of its subsidiaries, as guarantors (Vivendi Universal and the
guarantors are collectively referred to as the Obligors), the lenders party
thereto and Societe Generale, as facility and security agent. The facility is
comprised of (a) a three-year E 1.5 billion revolving credit facility (Tranche
A) at EURIBOR or LIBOR plus an applicable margin that, depending on Vivendi
Universal's credit ratings, ranges from 1.00% to 2.75% and (b) a E 1.0 billion
term loan (Tranche B) with a 2.75% per annum margin over EURIBOR or LIBOR
maturing on the third anniversary of the date of the Dual Currency Credit
Facility. See "Item 4--Information on the Company--Summary of Indebtedness."

                                       107
<PAGE>

     Following the closing of the Dual Currency Credit Facility and the Senior
Notes offering, Vivendi Universal repaid and cancelled the following
indebtedness: (i) E 200 million outstanding under the CDC IXIS Revolving Credit
Facility dated as of January 15, 2003, as amended on February 6, 2003, (ii)
E 850 million outstanding under the E 850 million Revolving Credit Facility,
dated March 2, 1999, as amended as of February 6, 2003, (iii) E 215 million
outstanding under the E 215 million Revolving Credit Facility, dated June 6,
2002, as amended on February 6, 2003, and (iv) E 275 million outstanding under
the E 275 million Revolving Credit Facility dated June 28, 2002, as amended on
February 6, 2003. In addition, Vivendi Universal canceled the undrawn E 1.0
billion dual Currency Revolving Credit Facility, dated as of November 26, 2002,
as amended on February 6, 2003.

     On May 19, 2003, Roxio, Inc. acquired substantially all of the interests of
pressplay, the joint venture of Universal Music Group (UMG) and Sony Music
Entertainment. Each of UMG and Sony Music Entertainment received 1,957,262
shares of Roxio common stock and $6,250,000 in cash from the transaction. In
addition, UMG has retained a 0.2% interest in pressplay, which has been renamed
"Napster, LLC."

     Edgar Bronfman, Jr. has informed Vivendi Universal of his intention to lead
a consortium to purchase American assets of Vivendi Universal. As a result, on
May 20, 2003, Vivendi Universal, Edgar Bronfman, Jr. and Edgar M. Bronfman
mutually agreed to suspend (i) the participation of Edgar M. Bronfman and Edgar
Bronfman, Jr. in the Board of Directors and any committee thereof, (ii) certain
provisions of agreements between the Bronfman family and Vivendi Universal and
(iii) the employment agreement between Edgar Bronfman, Jr. and a subsidiary of
Vivendi Universal.

     On May 28, 2003, Vivendi Universal sold Comareg for cash proceeds of E 135
million to the France Antilles group.

     On May 30, 2003, Vivendi Universal sold Spencer Gifts, a US novelty
knick-knack chain, to an investor group led by privately held Gordon Brothers
Group and Palladin Capital Group Inc. for consideration consisting of preferred
and common stock of Spencer Gifts LLC, the surviving entity following the
transaction.

     On June 6, 2003, Barry Diller gave notice that his designee, USAi, would
exercise his right of first refusal to purchase all of the remaining 28.8
million warrants to acquire shares of USAi that Vivendi Universal owns. This
transaction is expected to close on June 30, 2003. The warrants were acquired in
connection with the acquisition of the entertainment assets of USAi.

     As a result of its reduced interests in USAi, Vivendi Universal and its
affiliates will no longer be subject to the right of first refusal or other
transfer restrictions in its stockholders agreement with Liberty Media
Corporation and Mr. Diller. Under agreements with USAi, however, Universal
Studios, Inc. and its affiliates must continue to hold the 56.6 million USAi
shares generally free of liens and in special purpose entities until
satisfaction of the put or call on the Class B preferred interests in VUE (held
by USAi), which can occur no earlier than May 2022. Mr. Diller will continue to
hold a proxy on all such USAi shares. In addition, Mr. Diller's standstill
obligations under the Stockholders Agreement, including his obligation not to
acquire Vivendi Universal or any of its subsidiaries, will continue to apply in
accordance with the stockholders agreement.

     On June 11, 2003, Vivendi Universal transferred its rights and obligations
to take legal ownership of a minority stake in certain power generating
operations in Asia from Sithe to the Japanese group Marubeni for $47 million.
See "Item 4--Information on the Company--History and Development of the
Company--2002 Significant Transactions--Disposition of Sithe."

     On June 24, 2003, VUE closed and syndicated the $920 million VUE Loan
Agreement. See "Item 4--Information on the Company--Summary of Indebtedness."

     On June 18, 2003, Vivendi Universal sold 10 Universal City Plaza to a group
of U.S. investors. The asset is a 35-story Los Angeles tower block and Universal
Studios will continue to rent the building. The amount of the transaction is
$190 million and has already been received.

                                       108
<PAGE>

     On June 23, 2003, an agreement was signed by Venditelecom and VTI for the
sale of their entire stake in Xfera for E 1 to FCC, ACS, Inversiones Aramayona,
Acesa Telecom and Telvent. Under the terms of the transaction, the purchasers
will put in place new license guarantees within 30 days, at which time the
existing guarantees provided by Vivendi Universal in favor of the Spanish
government will be released except for those deriving from the spectrum fee tax
claims for the years 2001, 2002 and 2003. The purchasers have also indemnified
Vivendi Universal for damages arising out of certain disputes. Upon consummation
of the transaction and release of the guarantees, Vivendi Universal will have no
further interest in Xfera.

     Vivendi Universal has begun exploring strategic options that could lead to
the partial or total divestiture of VUE and VU Games. Vivendi Universal has
received multiple, preliminary bids relating to one or more of these businesses
and is currently evaluating them. As of yet there is no pre-established
structure or calendar for any particular divestiture. In parallel, Vivendi
Universal is also exploring the option of listing up to 25 to 30% of the share
capital of Vivendi Universal Entertainment in an initial public equity offering.

ITEM 6:  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

THE BOARD OF DIRECTORS

 General

     Vivendi Universal's board of directors is currently composed of twelve
directors including our Chairman and Chief Executive Officer. The board of
directors can be composed of three to eighteen members. Our directors are
elected by our shareholders for renewable terms of a maximum of four years,
subject to the provisions of Vivendi Universal's statutes relating to age
limits. The board of directors of Vivendi Universal is composed as follows:

<Table>
<Caption>
                                                                             EXPIRATION OF
NAME                                      AGE            POSITION            CURRENT TERM
----                                      ---            --------            -------------
<S>                                       <C>   <C>                          <C>
Jean-Rene Fourtou(4)....................  64         Chairman and CEO            2004
Edgar Bronfman, Jr.(1)(3)(4)............  48    Director and Vice Chairman       2004
Claude Bebear(4)........................  67             Director                2004
Gerard Bremond..........................  65             Director                2004
Edgar M. Bronfman(2)(3)(4)..............  74             Director                2004
Bertrand Collomb........................  60             Director                2004
Fernando Falco y Fernandez de Cordova...  64             Director                2006
Paul Fribourg...........................  49             Director                2004
Gabriel Hawawini........................  55             Director                2006
Gerard Kleisterlee......................  56             Director                2004
Marie-Josee Kravis......................  53             Director                2005
Henri Lachmann..........................  64             Director                2004
</Table>

---------------
(1) Son of Edgar M. Bronfman.

(2) Father of Edgar Bronfman, Jr.

(3) Edgar Bronfman, Jr. informed Vivendi Universal of his intention to lead a
    consortium to purchase American assets of Vivendi Universal. As a result, on
    May 20, 2003, Vivendi Universal, Edgar Bronfman, Jr. and Edgar M. Bronfman
    mutually agreed to suspend (i) the participation of Edgar M. Bronfman and
    Edgar Bronfman, Jr. in the Board of Directors and any committee thereof,
    (ii) certain provisions of agreements between the Bronfman family and
    Vivendi Universal and (iii) the employment agreement between Edgar Bronfman,
    Jr. and a subsidiary of Vivendi Universal.

(4) Under French law, this director is not considered independent.

     Other than those described in the footnotes above, there are no familial
relationships among our directors and executive officers.

                                       109
<PAGE>

 Biographies

     JEAN-RENE FOURTOU was appointed to the board of directors of Vivendi
Universal in July 2002 and has served as Chairman and Chief Executive Officer of
Vivendi Universal since July 2002. He has also served as Chief Executive Officer
of USI Entertainment Inc. since that date. He is Chairman of the supervisory
board of the Canal+ Group and member of the supervisory boards of AXA and
Aventis. Mr. Fourtou is currently a director of AXA Financial Inc, Cap Gemini
and EADS, among others. He also serves as President of the International Chamber
of Commerce. From December 1999 to May 2002, Mr. Fourtou carried out the
functions of Vice-Chairman and Chief Executive Officer of Aventis. Since that
date, he has been Honorary Chairman of Aventis and Vice-Chairman of the
supervisory board.

     EDGAR BRONFMAN, JR.  was appointed to the board of directors of Vivendi
Universal in 2000, serving as Vice-Chairman of the board until he and Vivendi
Universal mutually agreed that his participation in the Board of Directors and
any committee thereof would be suspended following May 20, 2003, when he
informed Vivendi Universal of his intention to lead a consortium to purchase
American assets of Vivendi Universal. He is Chief Executive of Lexa Partners LLC
and a partner of Accretive Technologies LLC. He is also a director of
InterActiveCorp, A&G Group Limited, Equitant Inc., Fandago and NewRoads, and a
member of the Board of The New York University Medical Center and the Board of
Governors of The Joseph H. Lauder Institute of Management & International
Studies at the University of Pennsylvania. Prior to December 2000, he had been
President and Chief Executive Officer of The Seagram Company Ltd., a post he had
held since June 1994, and from 1989 to June 1994 he was President and Chief
Operating Officer of Seagram.

     CLAUDE BEBEAR was appointed to the board of directors of Vivendi Universal
in July 2002. He currently serves as Chairman of the supervisory board of the
AXA Group and Chairman and Chief Executive Officer of FINAXA. From 1982 to 2000,
Mr. Bebear served as Chairman and Chief Executive Officer of Mutuelles Unies,
which became Axa in 1984. Mr. Bebear set up and presides over the Institut du
Mecenat de Solidarite, an organization with a humanitarian and social vocation,
as well as the Institut Montaigne, an independent political think-tank. He is
also a Director of BNP Paribas, Schneider Electric and various AXA Group
subsidiaries.

     GERARD BREMOND was appointed to the board of directors of Vivendi Universal
in January 2003. He currently serves as Chairman of the SA Pierre et Vacances
Tourisme, SA Pierre et Vacances Tourisme France, SA Pierre et Vacances Conseil
Immobilier and of Maeva Group. He is also a director of Med Pierre et Vacances
SI (Spain) and Groupe Maeva, among others.

     EDGAR M. BRONFMAN was appointed to the board of directors of Vivendi
Universal in December 2000. He and Vivendi Universal mutually agreed that his
participation in the Board of Directors and any committee thereof would be
suspended following May 20, 2003, when Edgar Bronfman, Jr. informed Vivendi
Universal of his intention to lead a consortium to purchase American assets of
Vivendi Universal. Mr. Bronfman is currently Chairman of the World Jewish
Congress, the World Jewish Restitution Organization and World Jewish Campus Life
(Hillel). The Universities of Rochester and New York, the Hebrew University of
Jerusalem, the A. B. Freeman School of Business at Tulane University, Williams
College and Pace University have all awarded him various honorary degrees in the
arts, business and philosophy. He received the Presidential Medal of Freedom,
the highest American civil award, from President Clinton, and he is also a
Chevalier de la Legion d'Honneur. Mr. Bronfman serves as Chairman of the
Presidential Advisory Commission on Holocaust Assets in the United States, the
Samuel Bronfman Foundation, Inc. and the Anti-Defamation League. He is also a
director of the American Society for Technion and the Weizmann Institute of
Science. He is also a member of the Council on Foreign Relations, the Foreign
Policy Association and the Museum of Jewish Heritage. He is the former Chairman
of the Board of The Seagram Company Ltd.

     BERTRAND COLLOMB was appointed to the board of directors of Vivendi
Universal in January 2003. He has served as Chairman and Chief Executive Officer
of the Lafarge Group. He is also Chairman of the Association Francaise des
Entreprises Privees (AFEP) and, on December 10, 2001, was elected to the
Academie des Sciences Morales et Politiques. Mr. Collomb is also a director of
TotalFinalElf, Atco and Unilever plc. He is also a member of the supervisory
board of Allianz.

                                       110
<PAGE>

     FERNANDO FALCO Y FERNANDEZ DE CORDOVA was appointed to the board of
directors of Vivendi Universal in September 2002. He served as Chairman of the
Organization and the Syndicate of Riesgos del Tietat, Chairman of the Group Vins
Rene Barbier -- Conde de Caralt et Segura Viudas and Vice-Chairman of the Banco
de Extremadura, as well as a member of the boards of directors of various
companies. He served as Chairman of the Real Automovil Club de Espana until
November 14, 2002. He was also a member of the Higher Council for Traffic and
Road Safety (Ministry of the Interior) and participates in the Group for Urban
Mobility (Madrid). Until 2002, he served as Vice-Chairman of the World Council
for Tourism and Motoring of the FIA, whose head office is in Paris. In June
1998, he was appointed Chairman of the AIT based in Geneva, a function he
carried out until 2001. He is a member of the Regional Council of the ASEPEYO of
Madrid. He currently serves as director of Fomento de Construcciones y Contratas
(FCC) and Vinexco Espagne. He is also Chairman of the Committee of the
Organizador del Salon International des Automovil de Madrid.

     PAUL FRIBOURG was appointed to the board of directors of Vivendi Universal
in January 2003. He currently serves as Chairman and Chief Executive Officer of
the ContiGroup Companies (formerly Continental Grain Company). He is also
Chairman of the Lauder Institute at Wharton Business School. He is a member of
the Council on Foreign Relations, and a director of the Appeal of Conscience
Foundation. He is also a director of Park East Synagogue, The Browning School,
New York University, Nightingale-Bamford School, America-China Society, Loews
Corporation, Appeal of Conscience Foundation, The Lauder Institute/Wharton
Business School and Wyndham International.

     GABRIEL HAWAWINI was appointed to the board of directors of Vivendi
Universal in May 2003. He is The Henry Grunfeld Professor of Investment Banking
of INSEAD in Fontainebleau, France, where he also currently serves as Dean. His
previous appointments include the deanship of the school's development campaign
(1998 - 2000), the deanship of the Doctoral Program (1998 - 1999), the
directorship of the Euro-Asia Centre (1988 - 1994), the Yamaichi Professorship
in Finance (1989 - 1994), and the coordination of the Finance Area (1985 - 1987
and 1996 - 1999). Trained in France as a chemical engineer (University of
Toulouse), he received his doctorate in economics and finance from New York
University in 1977. Before joining INSEAD, he taught at New York University, the
City University of New York and Columbia University (1974-1982).

     GERARD KLEISTERLEE was appointed to the board of directors of Vivendi
Universal in July 2002. Since April 30, 2001, he has been Chairman and Chief
Executive Officer of the Royal Philips Electronics Group and Chairman of the
Executive Committee. In 1981, he was appointed General Manager of the Group's
Professional Audio Systems division (today a division of Consumer Electronics).
In 1996, he became Chairman of Philips Taiwan and Regional Manager of Philips
Components for the Asia Pacific region. From September 1997 to June 1998, he was
also in charge of the group's activities in China. Finally, from January 1999 to
September 2000, he was Chairman and Chief Executive Officer of Philips
Components. Mr. Kleisterlee is also Chairman of the supervisory board of The
Technical University in Eindhoven.

     MARIE-JOSEE KRAVIS was appointed to the board of directors of Vivendi
Universal in April 2001. Ms. Kravis has also served as director of USAi since
March 2001. Ms. Kravis is an economist specializing in the analysis of
government policies and strategic plans; and is a lead writer on economic
analyses for the "National Post," a Canadian newspaper. In 1994, she was made a
Senior Fellow of the Hudson Institute. Ms. Kravis is a director of Hollinger
International Inc. and The Ford Motor Company, as well as a member of the board
of trustees of The Hudson Institute, The Museum of Modern Art and The Institute
for Advanced Study. She is also Senior Fellow of the Council on Foreign
Relations and a member of the US Secretary of Energy's Advisory Board.

     HENRI LACHMANN was appointed to the board of directors of Vivendi Universal
in 2000. He currently serves as Chairman and Chief Executive Officer of
Schneider Electric Group SAS. He is also a member of supervisory boards or a
director of various AXA Group subsidiaries. Mr. Lachmann is a director of FINAXA
and ANSA, a member of the supervisory board of Norbert Dentressangle Group, and
a member of the Guidance Committee of L'Institut de l'Entreprise.

                                       111
<PAGE>

SENIOR EXECUTIVES

 General

     The table below shows the names of our senior executives and members of the
executive committee, their current positions and principal responsibilities:

<Table>
<Caption>
NAME                                 AGE         POSITIONS AND RESPONSIBILITIES
----                                 ---         ------------------------------
<S>                                  <C>   <C>
Jean-Rene Fourtou..................  64    Chairman and Chief Executive Officer
Jean-Bernard Levy..................  48    Chief Operating Officer
Jacques Espinasse..................  60    Senior Executive Vice President and Chief
                                           Financial Officer
Robert de Metz.....................  51    Senior Executive Vice President,
                                           Divestitures, Mergers and Acquisitions
Andrew J. Kaslow...................  53    Senior Executive Vice President, Human
                                           Resources
Jean-Francois Dubos................  58    Executive Vice President and General
                                           Counsel
Michel Bourgeois...................  53    Executive Vice President, Corporate
                                           Communications
Rene Penisson......................  61    Advisor, Social Relations and Organization
Hubert Joly........................  43    Executive Vice President, Monitoring of US
                                           Assets, and Deputy Chief Financial Officer
Regis Turrini......................  44    Executive Vice President Divestitures,
                                           Mergers and Acquisitions
</Table>

 Biographies

     Biographies of all Senior Executives are set forth below. The biography for
Jean-Rene Fourtou is provided under "--The Board of Directors--Biographies."

     JEAN-BERNARD LEVY was appointed Chief Operating Officer of Vivendi
Universal in August 2002. From 1998 to 2002, he was Managing Partner, Corporate
Finance, of the French equities broker Oddo Pinatton. Mr. Levy was also Chairman
and Chief Executive Officer of Matra Communication from 1995 to 1998. From 1993
to 1994, he was Chief of Staff to the French Minister for Industry, Post Office,
Telecommunications and Foreign Trade, Mr. Gerard Longuet. From 1988 to 1993, he
was General Manager, Communication Satellites, of Matra Marconi Space. From 1986
to 1988, he acted as Technical Adviser to the French Minister for Post Office
and Telecommunications, Mr. Gerard Longuet, and from 1982 to 1986, served as
Vice President, Human Resources Corporate Headquarters Department of France
Telecom.

     JACQUES ESPINASSE was appointed Senior Executive Vice President and Chief
Financial Officer of Vivendi Universal in July 2002. He is also a member of the
Executive Committee of Vivendi Universal. Mr. Espinasse formerly was Chief
Operating Officer of TPS, a French satellite television channel, since 1999. He
became a member of the board of directors of TPS in 2001. Previously, he held a
variety of senior management positions in major French companies, including CEP
Communication and Groupe Larousse Nathan, where he was appointed Senior
Executive Vice President in 1984. In 1985, he became Chief Financial Officer of
the Havas group. He was named Senior Executive Vice President of the group when
it was privatized in May 1987 and held such position until January 1994.

     ROBERT DE METZ was appointed Senior Executive Vice President, Divestitures,
Mergers and Acquisitions of Vivendi Universal in September 2002. He previously
worked as a fund manager. He was a member of the executive board of directors of
Paribas from 1997 to 2000, where his main responsibilities included the
execution of many mergers and acquisitions.

     ANDREW J. KASLOW was appointed Senior Executive Vice President of Human
Resources for Vivendi Universal in January 2002. Mr. Kaslow was most recently
Senior Vice President, People Development, of AOL Time Warner. Previously,
Andrew Kaslow was Senior Vice President, Human Resources, of Time

                                       112
<PAGE>

Warner, appointed to that position in January 1999. Prior to joining Time
Warner, he was Senior Vice President of Human Resources at Becton Dickinson and
Company, a global medical devices and diagnostics company. From 1993 to 1996,
Mr. Kaslow was Vice President of Human Resources at Pepsico Inc. Mr. Kaslow
serves on the board of directors of New Jersey Public Broadcasting (NJN), Newark
Public Radio (WBGO-FM), Ramapo College and the Labor Policy Association (LPA).

     JEAN-FRANCOIS DUBOS is Executive Vice President and General Counsel of
Vivendi Universal. In this capacity, Mr. Dubos is responsible for managing the
group's legal and administrative services departments. He is also a member of
the French Administrative Supreme Court (Maitre des Requetes au Conseil d'Etat),
currently on temporary leave. Mr. Dubos joined Compagnie Generale des Eaux, the
predecessor of Vivendi Universal, as deputy to the Chief Executive Officer in
1991, and since 1994, has held the position of General Counsel. From 1993 to
1999, he was the Chief Executive Officer of the group's subsidiary Carrousel du
Louvre. From 1984 to 1991, while a full-time member of the French Administrative
Supreme Court (Conseil d'Etat), he worked on a wide range of matters, including
education, interior affairs, urban planning, historical preservation and
codification of laws. From 1981 to 1984, he was co-head of the cabinet of the
French Ministry of Defense. Mr. Dubos currently serves on the board of directors
of two of our subsidiaries, Fomento de Construcciones y Contratas and Portland
Valderrivas, and several water distribution companies (e.g., Societe des Eaux de
Melun and Mediterranea de Aguas), as well as on the supervisory board of Groupe
Canal+ S.A.

     MICHEL BOURGEOIS was appointed Executive Vice President Corporate
Communications of Vivendi Universal in September 2002. In this position, he is
responsible for corporate communications, internal communications, media, public
relations and public affairs. From 2000 to 2002, Michel Bourgeois was Executive
Vice President Corporate Communications, France, of the pharmaceuticals company
Aventis. Mr. Bourgeois previously held successive positions at Rhone Poulenc
from 1987 to 2000, in Media Relations, Corporate Communications and was Adviser
to the Chairman, Jean-Rene Fourtou, from 1995 to 2000.

     RENE PENISSON was appointed Adviser to the Chairman and Chief Executive
Officer, Social Relations and Organization of Vivendi Universal in September
2002. From 1999 to 2002 he was a member of the Executive Committee of Aventis;
Senior Executive Vice President, Human Resources of Aventis and Chairman of
Aventis Animal Nutrition and of RP Industrialization. From 1997 to 1999, he
served as member of the Executive Committee of Rhone Poulenc S.A. From 1982 to
1997, Mr. Penisson was Executive Vice President, Basic Chemicals Division of
Rhone Poulenc; Chief Operating Officer of Rhone Poulenc Chimie and Senior
Executive Vice President, Human Resources of the Rhone Poulenc Group.

     HUBERT JOLY was appointed Executive Vice President, Monitoring of US Assets
in August 2002 and Deputy Chief Financial Officer in April 2003. Prior to this,
Mr. Joly was Executive Vice President and Group Chief Information Officer of
Vivendi Universal from November 2001 to November 2002. From December 2000 to
October 2001, Mr. Joly was responsible for the integration of Vivendi
Universal's North American activities. Between July 1999 and June 2001, Mr. Joly
was Chief Executive Officer of Havas Interactive, known today as Vivendi
Universal Games, Vivendi Universal's interactive entertainment and educational
software publishing division. Prior to joining Havas Interactive, Hubert Joly
served as Vice President of Electronic Data Systems (EDS) Europe and Chairman
and Chief Executive Officer of EDS France. Previously, he spent 12 years at
McKinsey & Company, Inc. in San Francisco, New York and Paris, specializing in
high technology.

     REGIS TURRINI was appointed Executive Vice President of Vivendi Universal,
in charge of divestitures, mergers and acquisitions in January 2003. He reports
to Robert de Metz, Senior Executive Vice President of Vivendi Universal. Mr.
Turrini is an attorney admitted to the Paris bar, and a graduate of the Paris
Institute of Political Sciences and ENA. He began his career as a judge to the
court dealing with disputes in the French civil service. He then joined law
firms Cleary Gottlieb Steen & Hamilton (1989 - 1992), followed by Jeantet &
Associes (1992 - 1995), as a corporate lawyer. In 1995, Mr. Turrini joined the
investment bank ARJIL & Associes (Lagardere group) as executive director. He was
then appointed managing director and, from 2000, managing partner.

                                       113
<PAGE>

BOARD PRACTICES

     Under our statuts, as modified in accordance with the provisions of the
French New Economic Regulations Act and approved at the Shareholders' Meeting
held on April 24, 2002, Vivendi Universal is managed by a board of directors
composed of no less than three members and no more than eighteen members. The
Board currently consists of 12 members. Under our statuts, shareholders elect
board members for four year renewable terms.

BOARD'S JURISDICTION

     The Board reviews, among other things:

     - Strategic agreements and directions;

     - New business acquisitions, asset divestitures and internally developed
       activities which could significantly affect its earnings or materially
       modify its balance sheet structure;

     - The annual, half-yearly and quarterly financial statements and the Audit
       Committee's report;

     - Material agreements entered into and, at the Audit Committee's
       suggestion, the accounting methods used;

     - Terms for implementing the compliance program and the environmental and
       social report; and

     - The annual report of important litigation.

     Based on the recommendation of the Human Resources Committee, the Board
determines the compensation of senior executives.

     The Chairman represents the Board. He organizes and directs its operations
and ensures its smooth functioning.

     The general management of Vivendi Universal is the responsibility of the
Chief Executive Officer, who is currently also the Chairman of the Board. The
Chief Executive Officer is vested with the broadest powers to act in all
circumstances on behalf of Vivendi Universal. He exercises these powers subject
to the limitations imposed by law.

CORPORATE GOVERNANCE

     Vivendi Universal is seeking to apply the highest international standards
of corporate governance and, through the Disclosure Committee, is organizing the
implementation of the new rules and procedures imposed by the Sarbanes-Oxley
Act. Vivendi Universal's board of directors has therefore taken the following
new actions:

     - Increased the number of committees, drawn from the board of directors, to
       four: the Audit Committee, the Human Resources Committee, the Strategy
       and Finance Committee and the Corporate Governance Committee. Their
       respective compositions and missions have been enlarged (see below);

     - Created special Disclosure Committee to ensure accuracy of publicly
       disclosed information;

     - Adopted an Internal Charter governing the operation of the board of
       directors;

     - Empowered the board of directors to appoint two independent advisors for
       their expertise;

     - Established a Vigilance Program reviewed by the Audit Committee and
       remitted to the Group's workers' committee and to the European Social
       Dialogue Committee;

     - Created Internet retransmission of general meetings;

     - Created voting at general meetings via the Internet and holding meetings
       by video-conference; and

     - Provided for representation of the workers' committee at general
       meetings.

                                       114
<PAGE>

     In addition, it had previously taken the following actions:

     - Suppression of double voting rights in order to assure equality of
       shareholder rights;

     - Suppression of the policy of issuing stock in the event of a takeover
       bid;

     - Shortening the length of time securities need to be blocked for the
       exercise of voting rights;

     - Suppression of the proportioning of voting rights at the general
       shareholders meeting upon voting participation reaching 60%;

     - Shortening directors' terms to four years; and

     - Appointment of an employee director when employee participation in the
       share capital reaches 3%.

BOARD COMMITTEES

 CREATION AND FUNCTIONING OF COMMITTEES--COMMON ATTRIBUTES

     The permanent committees of the board are as follows: (i) Strategy and
Finance Committee, (ii) Audit Committee, (iii) Human Resources Committee and
(iv) Corporate Governance Committee.

     Each committee shall fulfill a role of review, analysis and preparation
with respect to certain deliberations of the board. Each committee shall
produce, within its area of expertise, proposals, recommendations and opinions,
where appropriate. The committees have no decision-making authority; they serve
a purely consultative function, acting under the authority of the board, to
which they are accountable.

     Committee members shall be appointed by the board and cannot appoint
proxies. Unless otherwise decided by the board, the committee members' terms
shall be the same as their respective director's terms, and shall be renewable.
The board shall appoint a chairman for each committee, who shall preside over
the committee for the duration of his or her mandate as a committee member. The
committee chairman or one of its members shall report upon the committee's work
to the board at its next scheduled meeting.

     Each committee shall meet upon being convened by its chairman and shall set
its own meeting schedule. Committee meetings shall be held at Vivendi
Universal's headquarters or in any other location designated by the chairman.
Committee meetings may also be held by telephone conference or videoconference.
The chairman of each committee shall draw up the agenda of the meetings and
shall preside over the committee's deliberations. Minutes of each meeting shall
be drawn up by the Secretary of the board, who shall attend the meetings of each
of the board committees.

     Each committee shall be able to invite to its meetings, as it deems
necessary or appropriate, any member of Vivendi Universal's management. Each
committee will set forth its own charter, which has to be approved by the board,
pursuant to the provisions of the board's internal charter.

     In addition to the permanent committees, the board may decide to form ad
hoc committees, for a limited term, with regard to certain exceptional
transactions or assignments.

 AUDIT COMMITTEE

 Composition

     The Audit Committee shall be comprised of at least 3 directors, all of whom
must be independent and must have finance or accounting skills. At least one
member shall be a financial expert (as defined in the Sarbanes-Oxley Act), with
a thorough understanding of accounting standards, as well as practical
experience in the preparation of financial statements and the application of
prevailing accounting regulations. The current members are Henri Lachmann
(Chairman), Gerard Bremond, Fernando Falco and Gabriel Hawawini.

                                       115
<PAGE>

 Functions

     The mission of the Audit Committee is to prepare the board's decisions, and
to render its recommendations or issue its opinions with regard to the
accounting procedures governing the Group's functioning, particularly in the
following areas:

     - review of Vivendi Universal's accounts and consolidated annual,
       semi-annual and, possibly, quarterly accounts before they are presented
       to the board;

     - coherence and effectiveness of Vivendi Universal's internal control
       measures;

     - follow-up of the mandates accorded to the external and internal auditors
       and review of the conclusions of their audits;

     - accounting methods and principles; activities to be included within
       Vivendi Universal's consolidated accounts;

     - Vivendi Universal's off-balance sheet risks and commitments;

     - mode of selection of the statutory auditors, issuance of an opinion on
       the amount of the fees solicited for the carrying out of the legally
       mandated audit, and verification of compliance with the regulations
       ensuring their independence;

     - issuance of an opinion with respect to the annual report of the
       Compliance Program and proposal of any measures that may render it more
       effective; and

     - any matter that it considers may constitute a risk for Vivendi Universal
       or a serious procedural problem.

 Mode of Functioning

     The Audit Committee shall meet at least 4 times a year and at any other
time that Vivendi Universal requires. The members of the committee shall
receive, upon their appointment, current and detailed information with regard to
the accounts, finances and operations of Vivendi Universal and its group. For
the purpose of carrying out its tasks, the committee may, with no executive
directors present, meet with the statutory auditors and the members of Vivendi
Universal's management responsible for preparing financial statements and
conducting internal audits, including the Chief Financial Officer, the Chief
Accounting Officer and the Treasurer.

     With respect to internal audit and risk management, the committee shall
review the most significant off-balance sheet commitments, meet with the
Director of Internal Audit, render its opinion on the organization of, and work
performed by, the internal audit department. The committee shall receive the
reports of the internal audit department or a periodic summary of these reports.

     For the purpose of carrying out its task of selecting Vivendi Universal's
statutory auditors, the committee shall have at its disposal information
regarding (i) the amount of the fees paid by Vivendi Universal, and, if need be,
its subsidiaries, to Vivendi Universal's auditors and (ii) the global networks
to which the statutory auditors belong; with a view to ensuring that the amount
of such fees, the conditions of payment, or the percentage of such fees in these
firms' overall revenues do not compromise the independence of the statutory
auditors. More generally, the committee shall be responsible for ensuring
compliance with the rules guaranteeing the independence of the statutory
auditors.

     The committee shall review Vivendi Universal's financial statements no less
than two days before the presentation of the statements to the board. The
committee shall receive a memorandum from the statutory auditors summarizing the
results and the accounting options adopted, and a memorandum from the Chief
Financial Officer describing the exposure to off-balance sheet risks and
commitments. The statutory auditors shall be present at the meetings of the
Audit Committee at which Vivendi Universal's accounts are reviewed. The Audit
Committee may have recourse to external experts, when it deems necessary, at
Vivendi Universal's expense.

                                       116
<PAGE>

 STRATEGY AND FINANCE COMMITTEE

 Composition

     The Strategy and Finance Committee shall be comprised of at least 4
directors, none of whom shall be an insider director. The current members are
Claude Bebear (Chairman), Gerard Kleisterlee, Paul Fribourg and Gerard Bremond.
Edgar Bronfman, Jr. was also a member until Mr. Bronfman and Vivendi Universal
mutually agreed that his participation in the Board of Directors and any
committee thereof would be suspended following May 20, 2003, when he informed
Vivendi Universal of his intention to lead a consortium to purchase American
assets of Vivendi Universal.

 Functions

     Its mission is to prepare the board's decisions, and to render its
recommendations or issue its opinions with regard to the procedures governing
the Group's functioning, particularly in the following areas:

     - Vivendi Universal's strategic direction;

     - acquisitions and sales of participations and assets of a sizeable nature;

     - strategic joint ventures and/or industry and financial cooperation
       agreements;

     - sizeable internal restructuring operations;

     - transactions falling outside Vivendi Universal's announced strategy;

     - financial transactions likely to affect the structure of the balance
       sheet;

     - sizeable financial transactions; and

     - the liquidity and debt situation of Vivendi Universal.

 Mode of Functioning

     The Strategy and Finance Committee shall meet at least 4 times a year and
at any other time that Vivendi Universal requires. For the purpose of carrying
out its tasks, the committee may, with no executive directors present, meet with
the members of Vivendi Universal's management responsible for preparing
financial statements and conducting internal audits, including the Chief
Financial Officer, the Chief Accounting Officer and the Treasurer. The Strategy
and Finance Committee may have recourse to external experts, when it deems
necessary, at Vivendi Universal's expense.

 HUMAN RESOURCES COMMITTEE

 Composition

     The Human Resources Committee shall be comprised of at least 3 directors, a
majority of whom must be independent and none of whom shall be an insider
director. The current members are Marie-Josee Kravis (Chairperson), Bertrand
Collomb and Paul Fribourg.

 Functions

     The mission of the Human Resources Committee shall be to prepare the
board's decisions and issue its recommendations with regard to the following
matters:

     - compensation of the Chief Executive Officer and executive management and,
       in particular, determination of the variable component of their
       compensation; analysis of the alignment of the method of determining the
       variable component of their compensation with (i) the evaluation carried
       out annually, as the case may be, of their performance, and (ii) the
       implementation of Vivendi Universal's medium-term strategy. The committee
       may choose to commission a comparative study or analysis by an
       independent consultant of the contributing factors on which the
       compensation of the executive directors is based.
                                       117
<PAGE>

     - policy of allocation of options to subscribe for or purchase shares
       ("stock options") to the executive directors, principal executives and
       management teams of Vivendi Universal and its Group;

     - proposal for the allocation and modes of payment of directors' fees paid
       to the members of the board and its committees;

     - the Group's overall policy of remuneration of its principal executives;

     - review and issuance of an opinion with regard to liability coverage and
       complementary retirement packages for Vivendi Universal's officers and
       directors; and

     - review and issuance of an opinion with regard to the recruitment of
       management personnel.

 Mode of Functioning

     The Human Resources Committee shall meet at least 3 times a year and at any
other time that Vivendi Universal requires. The Human Resources Committee may
have recourse to external experts, when it deems necessary, at Vivendi
Universal's expense.

 CORPORATE GOVERNANCE COMMITTEE

 Composition

     The Corporate Governance Committee shall be comprised of at least 3
directors, with no insider directors. The current members are Claude Bebear
(Co-Chairman), Marie-Josee Kravis and Bertrand Collomb. Edgar Bronfman, Jr.
served as Co-Chairman with Claude Bebear until Mr. Bronfman and Vivendi
Universal mutually agreed that his participation in the Board of Directors and
any committee thereof would be suspended following May 20, 2003, when he
informed Vivendi Universal of his intention to lead a consortium to purchase
American assets of Vivendi Universal.

 Functions

     The mission of the Corporate Governance Committee shall be to prepare the
board's resolutions and give its recommendations to the board with regard to the
following matters:

     - review of candidates for directorship and composition and functions of
       the board committees;

     - determination and review of the criteria of independence with respect to
       directors;

     - succession plan with regard to the Chairman;

     - evaluation of the organization and functioning of the board;

     - preparation of the annual meeting concerning the evaluation of Vivendi
       Universal's Chief Executive Officer;

     - review of national and international practices in the field of corporate
       governance, and their conditions of application; and

     - review of and recommendations regarding Vivendi Universal's corporate
       governance measures.

 Mode of Functioning

     The Corporate Governance Committee shall meet at least three times a year.
The Corporate Governance Committee may have recourse to external experts, when
it deems necessary, at Vivendi Universal's expense.

 COMPENSATION

     The board establishes compensation for officers, upon recommendation of the
Human Resources Committee, and for directors, upon recommendation of the
Corporate Governance Committee. Such compensation may be comprised of both a
fixed and a variable component.

                                       118
<PAGE>

  COMPENSATION OF DIRECTORS

     For a full year, each director receives director's fees of E 50,000.

     This amount is increased by E 11,000 for the function of member of the
Human Resources Committee and E 22,000 for the function of member of the Audit
Committee. This amount is doubled for the chairmen of these two committees.

     Director's fees paid in 2002 were as follows:

<Table>
<Caption>
                                                              (IN EUROS)
                                                              ----------
<S>                                                           <C>
CURRENT MEMBERS OF THE BOARD OF DIRECTORS
Mr. Jean-Rene Fourtou(1)....................................          0
Mr. Claude Bebear...........................................     23,500
Mr. Edgar Bronfman, Jr. ....................................     60,404
Mr. Edgar M. Bronfman.......................................     65,807
Mr. Gerard Kleisterlee......................................     18,000
Mrs. Marie-Josee Kravis.....................................     76,807
Mr. Henri Lachmann..........................................     82,307
FORMER DIRECTORS WHO HELD A MANDATE IN 2002 AND EARLY 2003
Mr. Bernard Arnault.........................................     45,108
Mr. Jean-Louis Beffa........................................     36,904
Mr. Richard Brown...........................................     52,464
Mr. Jean-Marc Espalioux.....................................     54,904
Mr. Dominique Hoenn.........................................     18,000
Mr. Philippe Foriel-Destezet................................     36,724
Mr. Jacques Friedmann.......................................     54,904
Mrs. Esther Koplowitz.......................................     42,298
Mr. Pierre Lescure..........................................     36,904
Mr. Eric Licoys.............................................     50,737
Mr. Jean-Marie Messier......................................     36,904
Mr. Samuel Minzberg.........................................     57,938
Mr. Simon Murray............................................     36,904
Mr. Serge Tchuruk...........................................     60,358
Mr. Rene Thomas.............................................     36,904
Mr. Marc Vienot.............................................     90,964
                                                              ---------
TOTAL.......................................................  1,075,744
                                                              =========
</Table>

---------------

(1) Mr. Fourtou waived the payment of his director's fees for year 2002.

     Upon recommendation of the Human Resources Committee, the board of
directors decided on September 25, 2002 to modify the distribution of director's
fees, decreed at its meeting on December 11, 2000. As of the fourth quarter
2002, payment of director's fees to members of the board of directors and the
committees shall be made depending on their actual presence at meetings and on
the specific work carried out.

  Additional Arrangements with Edgar M. Bronfman and Edgar Bronfman, Jr.

     In connection with Edgar M. Bronfman's retirement from executive positions
with Vivendi Universal and its affiliates effective December 31, 2001, Vivendi
Universal agreed to provide Mr. Bronfman with office space, the services of an
assistant and a driver, and the use of a Vivendi Universal leased vehicle in New
York City until December 2011.

                                       119
<PAGE>

     Pursuant to an employment agreement with Vivendi Universal U.S. Holding Co.
(Vivendi Universal U.S.), dated September 25, 2002 (the Agreement), Edgar
Bronfman, Jr. currently serves as an executive employee and an advisor to the
Chief Executive Officer of Vivendi Universal U.S. in connection with the U.S.
entertainment businesses of Vivendi Universal and its U.S. affiliates.

     Subject to the provisions of the Agreement regarding earlier termination of
Mr. Bronfman's employment, the term of his employment under the Agreement
commenced on September 25, 2002 and will continue through December 31, 2004.
During the term of his employment under the Agreement, Mr. Bronfman is required
to devote a substantial time commitment to the performance of his duties under
the Agreement, but he is not precluded or prohibited from securing one or more
additional part-time employment or consulting positions. Mr. Bronfman's annual
salary under the Agreement is $1,000,000.

     If Mr. Bronfman's employment under the Agreement is terminated by Vivendi
Universal US for "Cause" or by Mr. Bronfman without "Good Reason" (as those
terms are defined under the Agreement), or by reason of Mr. Bronfman's death or
disability, Mr. Bronfman or Mr. Bronfman's estate, as the case may be, will be
entitled to receive his accrued salary and benefits under the Agreement through
the date of termination.

     If Mr. Bronfman's employment under the Agreement is terminated by Vivendi
Universal U.S. without "Cause" (other than by reason of death or "disability")
or by Mr. Bronfman for "Good Reason" (as these terms are defined under the
Agreement), Mr. Bronfman will also be entitled to receive a lump-sum payment
equal to the total amount of salary that Mr. Bronfman would have received had
his employment under the Agreement continued through December 31, 2004.

     In the event that Mr. Bronfman is subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, Mr. Bronfman is
entitled to receive an additional payment such that he will receive the same net
after-tax benefit as if no excise tax were imposed. In addition, Vivendi
Universal U.S. will reimburse Mr. Bronfman for all legal fees and related
expenses incurred in connection with, or arising out of, any dispute in respect
of severance following termination of his employment other than for Cause or for
Good Reason.

     The Agreement also provides that Vivendi Universal U.S. will indemnify Mr.
Bronfman to the fullest extent permitted by applicable law against damages in
connection with his status or performance of duties as an officer of Vivendi
Universal U.S. and will maintain and cover Mr. Bronfman under customary and
appropriate directors and officers liability insurance during the term of his
employment and throughout the period of any applicable statute of limitations.

     In 2003, Edgar Bronfman, Jr. informed Vivendi Universal of his intention to
lead a consortium to purchase American assets of Vivendi Universal. As a result,
on May 20, 2003, Vivendi Universal and Edgar Bronfman, Jr. mutually agreed to
suspend certain provisions of the Agreement.

  COMPENSATION OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER

     On the recommendation of the Human Resources Committee, the remuneration of
the Chairman and Chief Executive Officer for 2002 is composed of the following
elements: annual fixed salary: E 1 million; bonus target 150% (maximum: 250%);
options: 1,000,000 stock options without discount. Retirement: 2.5% of the
target compensation per year of service as Chairman and Chief Executive Officer,
cash exit possible. In 2002, Mr. Jean-Rene Fourtou, Chairman and Chief Executive
Officer since July 3, 2002, received from Vivendi Universal a gross remuneration
of E 497,368, including fringe benefits. Mr. Jean-Rene Fourtou holds 193,959
Vivendi Universal shares. He waived his director's fees as a director of Vivendi
Universal and received director's fees of E 9,767 as a director and member of
the supervisory board for the subsidiaries of Vivendi Universal, controlled
within the meaning of article 233-16 of the French commercial code.

  COMPENSATION OF EXECUTIVE OFFICERS

     In 2002, Mr. Jean-Marie Messier, Chairman and Chief Executive Officer until
July 1, 2002, received a gross remuneration of E 5,635,854, including fringe
benefits. He did not benefit from any attribution of stock options. He received
E 84,384 in director's fees as a director of Vivendi Universal and as a director
and
                                       120
<PAGE>

member of the supervisory board for the subsidiaries of Vivendi Universal,
controlled within the meaning of article 233-16 of the French commercial code.
At June 30, 2002, Mr. Jean-Marie Messier held 361,377 Vivendi Universal shares.

     On September 25, 2002, the board of directors ratified the decision taken
by the general management of Vivendi Universal, upon the advice of its lawyers,
to refuse a severance package to Mr. Messier and to put an end to the fringe
benefits he was enjoying. The board of directors left it to its Chairman to
decide on the possibility of starting a proceeding and the choice of arbitration
proceedings. Following an arbitration convention on October 31, 2002, the
dispute was submitted to an Arbitration Tribunal constituted on January 17,
2003, under the aegis of the American Arbitration Association in New York and
composed of three arbitrators.

     On June 27, 2003, the arbitration tribunal issued its award. It denied
Vivendi Universal's claim that Mr. Messier's so-called U.S. Termination
Agreement be voided. The arbitration tribunal ordered Vivendi Universal to pay
Mr. Messier the aggregate amount of E20.5 million provided for in this
agreement, less the portion of Mr. Messier's compensation that had been paid to
him during the third quarter of 2002, which Vivendi Universal asked to be
reimbursed. The arbitration tribunal also denied Vivendi Universal's claim for
the repayment of the unpaid rent and charges of the New York apartment.

     Mr. Edgar Bronfman, Jr., Vice-Chairman, received in 2002, E 17,108,366 in
gross remuneration, fringe benefits and a severance package relating to his
duties as an executive officer of Vivendi Universal. His Consultancy Agreement
was terminated, at his request, on September 25, 2002. Since this date, he has
been a part-time employee of Vivendi Universal U.S. Holding Co. pursuant to an
employment agreement. Mr. Bronfman and Vivendi Universal mutually agreed to
suspend certain provisions his employment agreement following May 20, 2003, when
he informed Vivendi Universal of his intention to lead a consortium to purchase
American assets of Vivendi Universal. For more information, see "--Additional
Arrangements with Edgar M. Bronfman and Edgar Bronfman, Jr."

     Mr. Eric Licoys, Co-Chief Operating Officer and a director until September
5, 2002, received from Vivendi Universal a gross remuneration of E 5,098,444,
including fringe benefits and a severance package. In addition, he received
E 103,784 in director's fees as a director of Vivendi Universal and as a
director and member of the supervisory board for the subsidiaries of Vivendi
Universal controlled within the meaning of article 233-16 of the French
commercial code.

     Mr. Pierre Lescure, Co-Chief Operating Officer and a director until April
24, 2002, received from Canal+ Group gross remuneration of E 4,124,915,
including fringe benefits and a severance package. In addition, he received
E 43,764 in director's fees as a director of Vivendi Universal and as a director
and member of the supervisory board for the subsidiaries of Vivendi Universal,
controlled within the meaning of article 233-16 of the French commercial code.

  COMPENSATION OF SENIOR EXECUTIVES

     The ten most highly compensated of Vivendi Universal's senior executives
earned an aggregate of E 55.24 million in 2002. Nine of these top ten executives
were US senior executives.

LOANS AND GUARANTEES GRANTED TO DIRECTORS OR MEMBERS OF THE GENERAL MANAGEMENT

     Vivendi Universal has not granted or agreed to any loan or guarantee for
the benefit of members of board of directors nor members of the general
management.

                                       121
<PAGE>

EMPLOYEES

     The number of Vivendi Universal employees on December 31, 2002, was
approximately 61,815. The table below shows a breakdown of employees by business
segments as of the end of the period specified:

<Table>
<Caption>
                                            NUMBER OF           NUMBER OF           NUMBER OF
                                        EMPLOYEES IN 2002   EMPLOYEES IN 2001   EMPLOYEES IN 1999
                                        -----------------   -----------------   -----------------
<S>                                     <C>                 <C>                 <C>
Telecoms..............................       24,375               30,023              10,261
Music.................................       11,754               12,017              12,102
TV & Film.............................       22,146               20,344              27,624
Publishing (2000 & 2001)..............        2,074               22,010                  --
Games (2002)..........................           --                   --              21,434
Internet..............................          995                1,138                 958
Head Office...........................          471                  687               1,012
Other*................................          N/A              295,285             253,989
                                             ------              -------             -------
TOTAL.................................       61,815              381,504             327,380
                                             ======              =======             =======
</Table>

---------------

* Veolia Environnement

     Our employees' membership in trade unions varies from country to country,
and we are party to numerous collective bargaining agreements. As is generally
required by law, we renegotiate our labor agreements in Europe annually in each
country in which we operate.

     Although we have experienced strikes and work stoppages in the past, we
believe that relations with our employees are generally good. We are not aware
of any material labor arrangement that has expired or is soon to expire and that
is not expected to be satisfactorily renewed or replaced in a timely manner.

THE GOVERNANCE AGREEMENT

     We are a party to a governance agreement with certain former Seagram
shareholders that are members or affiliates of the Bronfman family (the
"Bronfman Shareholders") entered into December 2000. In addition to the
provisions described below, the governance agreement restricts the transfer of
Vivendi Universal shares held by the Bronfman Shareholders and contains other
provisions relating to the ownership, holding, transfer and registration of our
shares.

     In the governance agreement Vivendi Universal agreed, among other things,
not to dispose of Seagram shares in a taxable transaction and not to dispose of
substantially all of the assets acquired by Vivendi Universal from Seagram in a
transaction that would trigger the Gain Recognition Agreement (GRA) entered into
by the Bronfmans and result in recognition of taxable gain to them. under the
applicable US income tax regulations, to comply with the foregoing, Vivendi
Universal must retain at least 30% of the gross assets or at least 10% of the
net assets (values are determined as of December 8, 2000) until the end of the
five-year period ending on December 31, 2005. Vivendi Universal is in compliance
with this provision and does not intend to violate it and trigger the GRA.

     Edgar Bronfman, Jr. informed Vivendi Universal of his intention to lead a
consortium to purchase American assets of Vivendi Universal. As a result, on May
20, 2003, Vivendi Universal, Edgar Bronfman, Jr. and Edgar M. Bronfman mutually
agreed to suspend the participation of Edgar M. Bronfman and Edgar Bronfman, Jr.
in the Board of Directors and any committee thereof. Also, as of May 20, 2003,
Vivendi Universal has suspended certain provisions of the Governance Agreement,
thereby allowing the Bronfman Shareholders to make a bid to purchase American
assets of Vivendi Universal.

  DESIGNEES TO OUR BOARD OF DIRECTORS

     Under the governance agreement, Vivendi Universal has elected to, and is
required to use best efforts to, cause the continuation for a four-year term on
its board of directors of five former members of Seagram's

                                       122
<PAGE>

board of directors or their replacements. Two of the designees are parties to
the governance agreement (Edgar M. Bronfman and Edgar Bronfman, Jr.), one
designee is unaffiliated with the Bronfman family (non-Bronfman designees), and
the two remaining seats are vacant.

     Following the expiration of the initial four-year period, and for so long
as the Bronfman Shareholders continue beneficially to own the applicable
percentage of the number of Vivendi Universal voting securities (as described
below) owned by them immediately following the effective time of the
arrangement, we will use our best efforts to cause the election of the number of
individuals designated by the Bronfman Shareholders indicated below:

<Table>
<Caption>
                                                              NUMBER OF
                                                              BRONFMAN
PERCENTAGE OF INITIAL INVESTMENT                              DESIGNEES
--------------------------------                              ---------
<S>                                                           <C>
more than 75%...............................................      3
more than 50% but less than or equal to 75%.................      2
more than 25% but less than or equal to 50%.................      1
</Table>

     After the initial four-year term, the re-appointment of the non-Bronfman
designees will be at our discretion.

     "Vivendi Universal voting securities" are securities that generally entitle
the holder to vote for members of Vivendi Universal's board of directors, or
securities issued in substitution for such securities, including Vivendi
Universal ordinary shares, Vivendi Universal ADSs and Exchangeable Shares.

  DESIGNEES TO THE COMMITTEES OF OUR BOARD OF DIRECTORS

     For so long as either (i) the Bronfman Shareholders have the right to
designate at least two members of Vivendi Universal's board of directors or (ii)
the Bronfman Shareholders are collectively the largest holders of Vivendi
Universal voting securities other than Vivendi Universal and its affiliates, we
must:

     - appoint and maintain a designee of the Bronfman Shareholders as the
       chairman of the Human Resources Committee of our board of directors;

     - cause the chairman of the Human Resources Committee to be appointed and
       maintained as a member of the nominating committee of our board of
       directors;

     - cause the Human Resources Committee to be responsible for proposing the
       nomination of all directors, other than the Bronfman designees;

     - cause a designee of the Bronfman Shareholders to be appointed and
       maintained as a member of the Audit Committee of our board of directors;
       and

     - cause a designee of the Bronfman Shareholders to be appointed and
       maintained as a member of any subsequently formed executive or similar
       committee, if the failure of the Bronfman Shareholders to participate
       would be inconsistent with the purposes of the board and committee
       participation rights described above.

     In 2003, Edgar Bronfman, Jr. informed Vivendi Universal of his intention to
lead a consortium to purchase American assets of Vivendi Universal. As a result,
on May 20, 2003, Vivendi Universal, Edgar Bronfman, Jr. and Edgar M. Bronfman
mutually agreed to suspend the participation of Edgar M. Bronfman and Edgar
Bronfman, Jr. in the Board of Directors and any committee thereof.

SHARE OWNERSHIP

     The following table shows the number of Vivendi Universal voting securities
beneficially owned, percentage of voting securities beneficially owned and
number of options beneficially owned by each of the

                                       123
<PAGE>

members of the Vivendi Universal board of directors that beneficially owns more
than 1% of Vivendi Universal voting securities as of December 31, 2002:

<Table>
<Caption>
                                                 NUMBER OF         PERCENTAGE OF      NUMBER OF
BENEFICIAL OWNER                             VOTING SECURITIES   VOTING SECURITIES*   OPTIONS(1)
----------------                             -----------------   ------------------   ----------
<S>                                          <C>                 <C>                  <C>
Edgar M. Bronfman..........................     26,376,563(2)          2.47%            452,960
Edgar Bronfman, Jr.........................     28,486,209(3)          2.67%          3,751,666
</Table>

---------------

 *  Less than 1%

(1) References to quantity of options in this table are to the number of voting
    securities which are acquired upon exercise of the options held by the
    optionholder.

(2) Includes 24,541,219 ADSs owned indirectly by The Edgar Miles Bronfman Trust,
    a trust established for the benefit of Edgar M. Bronfman and his descendants
    (the "EMBT"), and 1,189,212 ADSs owned directly by the PBBT/Edgar Miles
    Bronfman Family Trust, a trust established for the benefit of Edgar M.
    Bronfman and his descendants ("PBBT/EMBFT"), trusts for which Mr. Bronfman
    serves as a trustee, 888 ADSs owned directly by Mr. Bronfman, 452,960 ADSs
    issuable upon the exercise of options which are currently exercisable, and
    192,284 ADSs owned by two charitable foundations of which Mr. Bronfman is
    among the trustees or directors. Mr. Bronfman disclaims beneficial ownership
    of the foregoing ADSs, except to the extent of his beneficial interest in
    the EMBT and the PBBT/EMBFT and with respect to ADSs owned directly by him.

(3) Includes 24,541,219 ADSs owned indirectly by the EMBT trust for which Mr.
    Bronfman serves as a trustee, 792 ADSs owned directly by Mr. Bronfman,
    3,751,666 ADSs issuable upon exercise of options which are currently
    exercisable, 192,000 ADSs owned by a charitable foundation of which Mr.
    Bronfman is among the trustees and 532 ADSs in which Mr. Bronfman has an
    indirect interest through an investment in the Retirement Savings and
    Investment Plan for Employees of Joseph E. Seagram & Sons, Inc. and
    Affiliates (based on the value of such investment as of December 4, 2000).
    Mr. Bronfman disclaims beneficial ownership of the foregoing ADSs, except to
    the extent of his beneficial interest in the EMBT and with respect to ADSs
    owned directly by him.

STOCK OPTION PLANS

     Since the Vivendi-Seagram-Canal+ merger in December 2000, Vivendi Universal
has granted stock options to senior executives, as well as within its
subsidiaries and affiliates, under three stock option plans and one stock
subscription option plan. With the exception of the Outperformance Plan (SO IV),
options granted to U.S.-based executives are options to purchase Vivendi
Universal American Depositary Shares (ADS). Senior Executives employed outside
of the United States are granted options to purchase Vivendi Universal shares.
Vivendi Universal uses several criteria for determining whether and to whom
stock options will be granted: his/her degree of responsibility; job
performance; recognition and reward to those executives who have accomplished
significant operations; and as a means of identifying and recognizing executives
of high potential.

     Since December 2000, Vivendi Universal has made significant option grants
to a select group of executives in the following manner:

     - 10,886,898 options to purchase ADSs or Vivendi Universal shares,
       representing 1% of Vivendi Universal's outstanding share capital, were
       granted to 3,681 beneficiaries in December 2000, exercisable at a strike
       price, without discount, of E 78.64 or $67.85.

     - 5,200,000 options, representing 0.48% of Vivendi Universal's outstanding
       share capital, were granted to a select group (approximately 100) senior
       executives in December 2000 under the Outperformance Plan. The vesting
       and exercisability of these stock options are linked to the
       outperformance of Vivendi Universal against a weighted index media
       company performance comprised of 60% Media MSCI and 40% Stoxx Media.

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     - 13,333,627 options to purchase ADSs, representing 1.23% of Vivendi
       Universal's share capital then outstanding, were granted to 2,816
       beneficiaries in October 2001, exercisable at a strike price, without
       discount, of E 48.20 or $44.25.

     - 3,619,300 options to purchase ADSs, representing 0.33% of Vivendi
       Universal's share capital then outstanding, were granted to 51
       beneficiaries in September 2002, exercisable at a strike price of E 12.10
       or $11.79.

     As a consequence of the 2002 dividend payment taken from the retained
earnings (in accordance with applicable rules), we adjusted the exercise prices
and number of Vivendi Universal shares or ADSs subject to each outstanding stock
option and the number of Vivendi Universal shares or ADSs reserved for issuance
under each of the existing stock option plans in order to preserve the value of
each option.

     The significant features of the stock option plans and the stock
subscription option plan under which we have made option grants are the
following:

     SO I (TRADITIONAL OPTIONS)

          Options granted under SO I have an eight-year term. These options
     normally vest over three years from the date of grant in equal one-third
     amounts, and become exercisable, with respect to the then vested portion of
     the grant after the second anniversary of the grant date. After the third
     anniversary of the grant date, the entire grant is vested and exercisable.
     Employees terminated by Vivendi Universal and its subsidiaries and
     affiliates retain any options granted under this plan that have vested
     before their termination date and the plan permits the acceleration of
     vesting in connection with an optionholder's termination of employment upon
     approval of Vivendi Universal's Chief Executive Officer and the board of
     directors. In the event of a bid or tender offer for all or substantially
     all of the shares of Vivendi Universal, options granted under SO I
     immediately vest and become exercisable and the underlying shares are
     freely transferable without any condition.

     SO II

          The options granted under SO II are exercisable from September 18,
     2000, to September 17, 2003, at an adjusted unit price of E 48.64, and from
     September 18, 2003 to September 17, 2004, at an adjusted unit price of
     E 52.05.

     SO III

          The options granted under SO III vest and become exercisable after a
     5-year period following the date of grant (May 11, 1999) and remain
     exercisable until the expiration of the 8-year validity period of the plan.
     The number of options that can be exercised will be determined based on the
     performance of Vivendi Universal's stock vis-a-vis a benchmark price index
     composed of a basket of indexes (10% Media, 35% Telecoms, 10% Utilities).

     SO IV (SO-CALLED OVER PERFORMANCE OPTIONS)

          The options granted under SO IV vest and become exercisable after a
     6-year period following the date of grant and remain exercisable until the
     expiration of the 8-year validity period of the plan; provided, however,
     that the vesting of such options will be accelerated based on the
     performance of Vivendi Universal's stock price vis-a-vis the movement of
     the combined index, 60% MSCI and 40% Stoxx Media as follows:

          - if, after a 3-year period, the performance of Vivendi Universal's
            stock price exceeds the index performance by 9% or more;

          - if, after a 4-year period, the performance of Vivendi Universal's
            stock price exceeds the index performance by 12% or more; or

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          - if, after a 5-year period, the performance of Vivendi Universal's
            stock price exceeds the index performance by 15% or more.

          In addition, following each of the third, fourth and fifth
     anniversaries of the date of grant, the vesting of such options will be
     accelerated after each quarter if the performance of Vivendi Universal's
     stock price exceeds the index performance by the percentage required for
     the period examined, increased by 0.75% per quarter (x% + 0.75% per
     quarter).

          In the event of a public offering, the options granted under SO IV
     will become vested and immediately exercisable and the shares underlying
     such options will be immediately transferable.

ITEM 7:  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDER

     To our knowledge, no individual shareholder owns beneficially, or exercises
control or direction over, 5% or more of the outstanding Vivendi Universal
ordinary shares. There are 43,167,709 (excluding exercisable options) Vivendi
Universal ADSs and exchangeable shares held by the Bronfman shareholders and
subject to the governance agreement. The foregoing shares, collectively,
represent approximately 4% of the voting securities of Vivendi Universal. The
information for the Bronfman shareholders is based on their holdings as of
December 31, 2002. The governance agreement is described under "Item
6--Directors, Senior Management and Employees--The Governance Agreement".

RELATED PARTY TRANSACTIONS

  Claridge Inc.

     For the period January 1, 2001, through December 1, 2001, Claridge Inc.
(Claridge) reimbursed Seagram for the use of aircraft owned by such subsidiary
in the amount of $26,712. The payment represented Claridge's pro rata share of
the applicable operating expenses of the aircraft. For the same period, Seagram
paid or accrued rent and reimbursed expenses to Claridge in the amount of
Cdn$133,338 (and Cdn$2,090 for the current fiscal year) for the use by Seagram
of office and parking space and secretarial services. The Charles Rosner
Bronfman Family Trust, a trust established for the benefit of Charles R.
Bronfman and his descendants, owns all the shares of Claridge. Charles R.
Bronfman and Samuel Minzberg are among the directors and officers of Claridge.

  The Andrea & Charles Bronfman Philanthropies, Inc.

     For the period January 1, 2001, through December 31, 2001, The Andrea &
Charles Bronfman Philanthropies, Inc., a charitable organization, paid or
accrued rent and reimbursed Vivendi Universal in the amount of $67,368 (and
$87,635 during the current fiscal year) for use by such organization of office
space in Vivendi Universal's offices in New York. Andrea Bronfman and Charles R.
Bronfman are directors of The Andrea & Charles Bronfman Philanthropies, Inc.

  Frank Alcock

     As of December 21, 2001, we divested the spirits and wine business to which
Frank Alcock, Edgar Bronfman, Jr.'s father-in-law, previously had provided
consulting services.

  Purchase of Vivendi Universal Shares from the Bronfman Family

     Vivendi Universal purchased 15,400,000 American Depository Shares (ADS),
representing Vivendi Universal shares held by various members of the Bronfman
family, at a price equal to the average share price on the Paris stock market on
May 29, 2001, with a 3.5% discount. Additionally, Vivendi Universal also
purchased 1,500,000 ADSs representing Vivendi Universal shares owned by various
entities controlled by the Bronfman family, at a price equal to the average
share on the Paris stock market on May 29, 2001, with a 0.9% discount.

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  Acquisition of The Four Seasons Restaurant

     Pursuant to a Stock Purchase Agreement dated as of October 28, 2002,
between FS Investments LLC ("FSI") and Vivendi Universal Holding I Corp.
("VUHI"), an indirect, wholly owned subsidiary of Vivendi Universal, VUHI has
sold its entire 51% equity interest in Classic Restaurants Corp. ("Classics"),
together with certain debt owed by Classics to VUHI, to FSI for approximately
$4.3 million in cash. Classics, together with other shareholders, owns The Four
Seasons Restaurant in New York City. Edgar Bronfman, Jr., together with his
father and other family members, control FSI. This transaction, which closed on
May 22, 2003, arose pursuant to agreements governing the terms of Mr. Bronfman's
resignation as Executive Vice Chairman of Vivendi Universal on March 31, 2002.
Under those agreements, Mr. Bronfman exercised an option to purchase VUHI's
equity interest in Classics for its fair market value as determined by an
independent, expert appraisal.

  Employment Arrangement with Edgar Bronfman, Jr.

     Pursuant to an employment agreement with Vivendi Universal U.S. Holding Co.
dated September 25, 2002, Edgar Bronfman, Jr. currently serves as an executive
employee and an advisor to the Chief Executive Officer of Vivendi Universal U.S.
in connection with the U.S. entertainment businesses of Vivendi Universal and
its U.S. affiliates. For a description of the employment agreement, see "Item
6--Directors, Senior Management and Employees--Compensation--Compensation of
Directors--Additional Arrangements with Edgar M. Bronfman and Edgar Bronfman,
Jr."

  Related Companies

     On August 1, 2001, Vivendi Universal and Cegetel Group opened a cash
account in the name of both parties into which Cegetel Group deposited certain
excess cash (the amount of which changed over time). Vivendi Universal paid
interest on the funds in the account. That agreement, as extended by an
amendment dated January 2, 2002, provided that the account would remain open
until July 31, 2002, subject to the right of either party to terminate the
agreement earlier. Vivendi Universal fully repaid the outstanding balance of the
cash account on July 5, 2002. The balance repaid on that date was
E720,147,923.30.

     For a description of other transactions with related companies, see Note 14
to our Consolidated Financial Statements.

ITEM 8:  FINANCIAL INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS (SEE ITEM 18)

LITIGATION

     In addition to the legal proceedings described below, Vivendi Universal is
involved in a number of legal proceedings incidental to the normal conduct of
our business.

  SECURITIES CLASS ACTION LITIGATION

     In July 2002, following the announcement of the resignation of Jean-Marie
Messier (our former CEO), sixteen separate putative class action suits were
filed against Vivendi Universal, Mr. Messier and (in nine cases) Guillaume
Hannezo (our former CFO), challenging the accuracy of certain public disclosures
made by Vivendi Universal regarding Vivendi Universal's financial condition
during 2001 and 2002. Those actions have been consolidated in the United States
District Court for the Southern District of New York as In re Vivendi Universal,
S.A. Securities Litigation (Master File No. 02 CV 5571 (HB)).

     The consolidated class action complaint, filed January 7, 2003, alleges
violations of the Securities Act and the Exchange Act against Vivendi Universal
and Messrs. Messier and Hannezo. The Securities Act allegations relate to
allegedly false and materially misleading statements or omissions in the
registration and proxy statements that were issued at the time of our merger
with Seagram in late 2000. These "false statements" are primarily alleged to be
violations of French or US GAAP that caused the financial statements

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of Vivendi to be wrong. The Exchange Act allegations relate to allegedly false
or materially misleading statements or omissions in certain of our public
statements made between October 30, 2000, and August 14, 2002, such as press
releases and financial statements, which purportedly failed to disclose Vivendi
Universal's true financial condition. Plaintiffs seek damages from all three
defendants in an unspecified amount.

     The alleged classes pleaded in the consolidated complaint include all
purchasers of our ADSs and common stock from October 30, 2000, to August 14,
2002, as well as all holders of the common stock of Seagram that was exchanged
for Vivendi Universal stock in the merger with Seagram and the acquisition of
Canal Plus, and those shareholders of Vivendi Universal or Seagram who were
entitled to vote on the merger (excluding certain specified holders). The Court
has not yet certified these classes.

     Vivendi Universal, Mr. Messier and Mr. Hannezo each filed a separate motion
to dismiss the consolidated complaint on February 24, 2003. Those motions each
ask the Court to dismiss the case in its entirety on the grounds that the
consolidated complaint is not legally sufficient. Plaintiffs filed papers
opposing those motions to dismiss on March 26, 2003. Vivendi Universal, Mr.
Messier and Mr. Hannezo filed reply papers in further support of the motions on
April 10, 2003. The Court heard oral argument on the motions on May 15, 2003. A
decision on the motions to dismiss by the Court is still pending, and is not
expected before late June 2003.

     It is not possible at this early stage of the litigation to predict the
outcome and duration with any certainty or to quantify any potential damages;
the impact of this litigation on Vivendi Universal could be material if Vivendi
Universal were not to prevail in a final, non-appealable determination of this
litigation. In the opinion of Vivendi Universal, the plaintiffs' claims lack
merit, and Vivendi Universal intends to defend against such claims vigorously.

  LIBERTY MEDIA CORPORATION SUIT

     On March 28, 2003, Liberty Media Corporation ("Liberty Media") and certain
of its affiliates filed suit against Vivendi Universal, Jean-Marie Messier (our
former CEO), Guillaume Hannezo (our former CFO) and Universal Studios, Inc. in
the United States District Court for the Southern District of New York. That
suit is captioned Liberty Media Corp., et al. v. Vivendi Universal, S.A., et al.
(CA No. 03 CV 2175 (HB)). The complaint arises from the transaction among
Vivendi Universal, Universal Studios, Inc., USAi, USANi LLC, Liberty Media and
Barry Diller that was agreed in December 2001 and resulted in the formation of
VUE in May 2002. As part of the transaction, Vivendi Universal transferred 37.4
million shares of Vivendi Universal to Liberty Media in exchange for equity in
USANi LLC and USAi and Liberty Media's 27.4% interest in the European cable
television company, multiThematiques.

     Plaintiffs' claims are based upon allegedly false or materially misleading
statements or omissions by the defendants during the period March 2001 to June
2002, in certain press releases, conference calls, financial statements and
filings, which purportedly failed to disclose Vivendi Universal's true financial
condition, and/or other information allegedly material to investors in its
shares. Plaintiffs seek damages from all four defendants in an unspecified
amount, as well as equitable and/or injunctive relief.

     In the opinion of Vivendi Universal, while the purported legal bases for
the Liberty Media plaintiffs' claims differ in certain respects, the allegations
are based upon substantially the same underlying circumstances and events
identified in the securities class action litigation filed in the United States
District Court for the Southern District of New York and described above. By
letters to the Court dated April 3 and April 15, 2003, Vivendi Universal
accordingly requested the consolidation of the Liberty Media suit with the
securities class action litigation. The Court held a hearing on May 8, 2003, to
address Vivendi Universal's request. On May 13, 2003, the Court issued an order
consolidating, for all pre-trial purposes, the Liberty Media suit with the
securities class action litigation pending before Judge Baer in the United
States District Court for the Southern District of New York.

     In the opinion of Vivendi Universal, the Liberty Media plaintiffs' claims
are without merit, and Vivendi Universal intends to defend against such claims
vigorously.

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  INVESTIGATION BY THE FRENCH COB

     On July 4, 2002, the French COB (Commission des Operations de Bourse)
commenced an investigation into certain of Vivendi Universal's financial
statements. The investigation is being led by the COB's Inspection Services
division. Vivendi Universal is co-operating fully with the Inspection Services
in its investigation. This investigation is continuing. As of the date hereof,
it is not possible to predict the outcome with any certainty.

  INVESTIGATIONS BY THE SEC AND THE OFFICE OF THE U.S. ATTORNEY FOR THE SOUTHERN
  DISTRICT OF NEW YORK

     Vivendi Universal is presently being investigated as part of two ongoing
investigations being conducted by the SEC and the Office of the U.S. Attorney
for the Southern District of New York. On July 29, 2002, the Southeast Regional
Office of the SEC advised Vivendi Universal that it had commenced an informal
inquiry into certain conduct at Vivendi Universal during the period January 1,
2000, to date. By letter dated November 19, 2002, the SEC advised Vivendi
Universal that its informal inquiry had been transformed into a formal
investigation. As part of those investigations, the SEC and the U.S. Attorney
are examining Vivendi Universal's accounting treatment of certain transactions
after October 2000, as well as the accuracy of the Vivendi Universal's financial
statements and various public statements relating thereto from approximately
October 2000 to July 2002.

     The SEC has issued three subpoenas dated November 19, 2002, January 9,
2003, and April 2, 2003, seeking the production of certain documents by Vivendi
Universal. On November 26, 2002, the Office of the U.S. Attorney for the
Southern District of New York served Vivendi Universal with a Grand Jury
subpoena seeking copies of the same documents produced to the SEC pursuant to
its first subpoena dated November 19, 2002. On March 18, 2003, the SEC requested
additional information from Vivendi Universal on a variety of accounting issues.
Vivendi Universal is actively cooperating with both investigations, and has
produced documents to both the SEC and the Office of the U.S. Attorney for the
Southern District of New York. Vivendi Universal has made presentations to the
staffs on certain issues, and Vivendi Universal made certain of its directors
and employees available for depositions and interviews. Those investigations are
both continuing. At the present time it is not possible to predict the outcome
of either investigation with any certainty.

  MP3.COM SECURITIES LITIGATION

     Commencing in May, 2001, MP3.com and certain of its previous and current
managers and directors have been the subject of certain class action suits filed
in the United States District Court for the Southern District of New York
alleging publication of misleading information in the prospectus and certain of
the documents relating to MP3.com's initial public offering. These actions have
been consolidated by way of an order dated September 6, 2001. On February 19,
2003, the Court denied a motion to dismiss the claim. This litigation is
ongoing.

  MP3.COM COPYRIGHT INFRINGEMENT LITIGATION

     MP3.com is currently involved in various copyright infringement suits filed
in Federal courts in New York, New Jersey and California related to the
availability of content on its My.M3.com service from January to May of 2000.
This litigation is ongoing.

  PARTNERSHIP AGREEMENT BETWEEN VIVENDI UNIVERSAL AND INTERACTIVECORP

     In connection with Vivendi Universal's acquisition of the entertainment
assets of InterActiveCorp (formerly known as USA Interactive and prior thereto
as USA Networks, Inc.), or USAi, certain of Vivendi Universal's affiliates
entered into an amended and restated limited liability limited partnership
agreement of Vivendi Universal Entertainment LLLP, or VUE (the group formed by
combining such assets and those of Universal Studios Group), dated as of May 7,
2002 (the "Partnership Agreement"), with USAi and certain of its affiliates and
Mr. Barry Diller. Pursuant to the Partnership Agreement, certain affiliates of
Vivendi Universal, USAi and certain of its affiliates and Mr. Barry Diller
received approximately 93.1%, 5.4% and 1.5%, respectively, of the common
interests in VUE. A subsidiary of USAi also received preferred interests in
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VUE, with initial face values of $750 million and $1.75 billion. There is a
disagreement among the parties relating to the interpretation of the provision
for tax distributions set forth in the Partnership Agreement.

     USAi has advised Vivendi Universal and has publicly disclosed that it
believes VUE is obligated, pursuant to the Partnership Agreement, to make cash
distributions after the close of each taxable year with respect to the taxable
income of VUE allocated to USAi's preferred interests for such taxable year.
Although USAi has stated that the actual amounts of cash distributions that it
believes are payable with respect to taxable income allocated to the preferred
interests would depend on several factors, it has estimated that those cash
distributions could have a present value to USAi of up to approximately $620
million. Vivendi Universal believes that USAi's position is without merit and
has so advised USAi.

     On April 15, 2003, USAi and one if its affiliates filed suit against
Vivendi Universal, USI Entertainment, Inc. and VUE in the Court of Chancery of
the State of Delaware. That suit is captioned USA Interactive, et al. v. Vivendi
Universal, S.A., et al., (CA No. 20260-NC). Vivendi was served with the
complaint on April 24, 2003. Plaintiffs seek an order requiring specific
performance of what they contend to be VUE's obligation to make tax
distributions to USAi and its affiliates, as well as a declaration from the
Court that VUE is obligated to make cash distributions to USAi and its
affiliates in that amount.

     To date the disagreement remains unresolved. Vivendi Universal believes
that the USAi plaintiffs' claims are without merit, and Vivendi Universal
intends to defend against such claims vigorously.

  ARBITRATION PROCEEDINGS BETWEEN ELEKTRIM S.A. AND DEUTSCHE TELEKOM

     Pursuant to an Investment Agreement dated June 1999, Vivendi Universal and
Elektrim S.A. ("Elektrim") created a holding company, Elektrim Telekomunikacja
Sp. zo.o ("Elektrim Telekomunikacja"), owned 30% by VU and 70% by Elektrim.
Pursuant to that Investment Agreement, Elektrim agreed to contribute to Elektrim
Telekomunikacja its 34.1% direct interest in Polska Telefonia Cyfrowa Sp. zo.o
("PTC") plus an additional 13.9% interest to be acquired from PTC's minority
shareholders. Before such contributions were made, Vivendi Universal and
Elektrim signed a Second Amended and Restated Investment Agreement in December
1999 pursuant to which Vivendi Universal increased its ownership in Elektrim
Telekomunikacja to 49% and Elektrim contributed its 48% direct interest in PTC,
as well as its 100% shareholding in the Bresnan Company, to Elektrim
Telekomunikacja.

     In October 1999, Dete Mobil Deutsche Telekom Mobil Net GmbH ("DT")
commenced arbitration proceedings in Vienna ("the first arbitration") alleging
that the acquisition by Elektrim on August 26, 1999, of PTC shares from four
minority shareholders in PTC violated certain pre-emption rights held by DT in
respect of 3.126% of the PTC shares acquired by Elektrim.

     DT sought (a) a declaration that the acquisition of PTC shares by Elektrim
on August 26, 1999, breached DT's pre-emptive rights set forth in the PTC
shareholders' agreement and was therefore ineffective; (b) an order requiring
3.126% of the PTC shares acquired by Elektrim to be transferred to DT at fair
market value; and (c) an order for certain damages. The first arbitration took
place in November 2001 with subsequent hearings in March and May 2002. On April
24, 2003, the arbitral panel issued its decision with respect to the first
arbitration. The panel rejected DT's allegation that its pre-emption rights had
been violated, and dismissed DT's claim.

     In December 2000, DT commenced a second arbitration proceeding against
Elektrim and Elektrim Telekomunikacja. DT alleged that the transfer by Elektrim
of its 48% interest in PTC's share capital to Elektrim Telekomunikacja in
December 1999 breached the PTC shareholders' agreement and certain provisions of
the governing documents of PTC. In this second arbitration proceeding, DT is
seeking either a declaration that the transfer of the PTC shares by Elektrim to
Elektrim Telekomunikacja in December 1999 was ineffective and that the shares
remained owned by Elektrim or an order requiring the transfer of all of the PTC
shares currently held by Elektrim Telekomunikacja to Elektrim. A declaration
that Elektrim had violated the PTC shareholders' agreement would allow DT to
exercise a call option under the PTC shareholders' agreement to purchase at net
book value the PTC shares contributed by Elektrim to Elektrim Telekomunikacja. A
hearing relating to this arbitration took place in February 2003 and a further
hearing is

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planned for September or October 2003. No indication has been given as to when a
decision will be issued with respect to this second arbitration.

  VOTING IRREGULARITIES AT GENERAL SHAREHOLDERS MEETING

     In a judgment dated May 2, 2002, the Commercial Court of Paris, following
submissions from Vivendi Universal, various shareholders and other interested
parties, stated that certain irregularities in the voting at the general
shareholders meeting on April 24, 2002, may cause the nullification of certain
resolutions rejected by shareholders at that meeting. The Court appointed an
expert to ascertain the possibility and existence of electronic manipulation of
the voting. In his report submitted on December 10, 2002, the Court's expert
accepted that there may have been radio interference with, or a malfunction of,
the voting equipment used at the general shareholders meeting.

     Following a determination that the resolutions at issue are no longer
pertinent to Vivendi Universal in 2003, Vivendi Universal and its shareholders
submitted a request for dismissal of this suit, which the Commercial Court
granted on February 4, 2003.

  INVESTIGATION RELATING TO CERTAIN FINANCIAL ACCOUNTS AND INFORMATION

     In July 2002, a French association of minority shareholders, APPAC, as well
as the president of that association in an individual capacity as a Vivendi
Universal shareholder, each filed a criminal complaint, in accordance with
French law, against an unspecified defendant. The two complaints were
consolidated on November 13, 2002, and three examining magistrates were
appointed. The French public prosecutor's initial indictment in this matter
specified potential crimes relating to the presentation and publication of
inaccurate, untrue and unfaithful accounts for Vivendi Universal for the 2000
and 2001 fiscal years; the distribution of sham dividends by Vivendi Universal
for the 2001 fiscal year; and the public distribution of false or deceptive
information concerning Vivendi Universal's condition and future prospects.
Vivendi Universal's application to join the action as a plaintiff was accepted
by order dated January 14, 2003. The other plaintiffs have appealed against this
order. That appeal was considered by the Court on May 14, 2003. On June 25,
2003, the Court of Appeals confirmed the order permitting Vivendi Universal to
join the action as a plaintiff.

  TRANSFER OF BROADCASTING RIGHTS FOR SOCCER PREMIER LEAGUE MATCHES TO CANAL+
  AND KIOSQUE

     On December 14, 2002, the board of the French soccer premier league (LFP)
awarded the exclusive broadcasting rights for French soccer premier league
matches for the 2004-2007 seasons to Canal+. By an order dated January 23, 2003,
the French competition authorities, pursuant to a complaint filed by TPS,
suspended attribution of the rights to Canal+ until such time as the authorities
could render a decision on the merits of the tender process and its outcome. On
February 6, 2003, Canal+ and Kiosque sought to have the court of appeal in Paris
cancel or amend the authorities' order. On February 16, 2003, the Court of
Appeal invited the parties to enter into a legal mediation procedure and the
parties agreed to do so. The Court of Appeal appointed two mediators on February
25, 2003. As a result of this court recommended mediation, all parties concerned
agreed to extend the duration of the existing contracts for an additional year
(i.e., through the 2004-2005 season). All suits have now been dismissed.

  INVESTIGATION BY THE U.S. INTERNAL REVENUE SERVICE

     The IRS has challenged the reported tax treatment by The Seagram Company
Ltd. ("Seagram") of the redemption in April 1995 of 156 million of the DuPont
shares held by Seagram. The IRS has proposed an adjustment against Seagram
which, if ultimately sustained, would result in Seagram owing approximately $1.5
billion in additional tax in respect of such redemption, plus interest from 1995
through March 2003 of approximately $1.2 billion (before tax benefits). Vivendi
Universal believes that it has adequately reserved in its financial statements
with respect to such matter. The matter is currently before the Appeals Division
of the IRS. While the outcome of any controversy cannot be predicted with
complete certainty, Vivendi Universal believes that this dispute with the IRS
will be resolved so as not to have a material adverse effect on its financial
statements as a whole.

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  MESSIER TERMINATION AGREEMENT

     In July, 2002, an agreement relating to the termination of Jean-Marie
Messier, as Chief Executive Officer of Vivendi Universal, was submitted to the
Board of Directors of Vivendi Universal for approval. Following the Board's
refusal to approve that agreement, the management of Vivendi Universal, upon the
advice of Vivendi Universal's lawyers, decided to refuse to pay a severance
package to Mr. Messier, to put an end to the fringe benefits he was enjoying and
to ask for the repayment by Mr. Messier of his salary for July and August 2002,
which was paid to him by a U.S. subsidiary of Vivendi Universal. On September
25, 2002, the Vivendi Universal Board of Directors ratified the decision made by
Vivendi Universal's management.

     Pursuant to an arbitration agreement dated October 31, 2002 the dispute was
submitted to an arbitration tribunal constituted on January 17, 2003, under the
sponsorship of the American Arbitration Association in New York and composed of
three arbitrators. On June 27, 2003, the arbitration tribunal issued its award.
It denied Vivendi Universal's claim that Mr. Messier's so-called U.S.
Termination Agreement be voided. The arbitration tribunal ordered Vivendi
Universal to pay Mr. Messier the aggregate amount of E20.5 million provided for
in this agreement, less the portion of Mr. Messier's compensation that had been
paid to him during the third quarter of 2002, which Vivendi Universal asked to
be reimbursed. After reviewing the tribunal findings, Vivendi Universal intends
to challenge this decision through all available legal means, both in France and
in the United States.

  TVT RECORDS AND TVT MUSIC

     On August 20, 2002, TVT Records and TVT Music (collectively "TVT") filed
suit in Federal court in New York against The Island Def Jam Music Group ("IDJ")
and its Chairman, Lyor Cohen ("Cohen"), for breach of contract, tortious
interference with contract, promissory estoppel, and fraud in connection with
TVT's claim that IDJ and Cohen blocked the delivery of an album to TVT by the
band "CMC." TVT also alleged related copyright infringement claims against IDJ.
After a trial on liability in March 2003, IDJ and Cohen were found liable on all
claims, except that the jury did not find liability for fraudulent
misrepresentation or fraudulent inducement, but did find liability for
fraudulent concealment. Following the subsequent damages trial, on May 6, 2003,
the jury awarded TVT $132 million in damages, comprised of approximately $24
million in compensatory damages and $108 million in punitive damages. On June
16, 2003, IDJ and Cohen filed post-trial motions seeking to set aside the jury's
verdict. IDJ and Cohen are likely to file an appeal.

ITEM 9:  THE OFFER AND LISTING

MARKET PRICE INFORMATION

     Our ordinary shares currently trade on Euronext Paris SA and our ADSs trade
on the NYSE. The table below sets forth the reported high and low sales prices
of Vivendi and Vivendi Universal ordinary shares and ADSs on the Paris Bourse
and on the NYSE, respectively (and, for periods before September 2000, the high
and low bids for Vivendi ADSs in the over-the-counter market). For periods
before the completion of the Merger Transactions on December 8, 2000, the table
sets forth price information for Vivendi ordinary shares and ADSs; for periods
after that date, the table sets forth price information for Vivendi Universal
ordinary shares and ADSs. Each Vivendi ADS represented one-fifth of a Vivendi
ordinary share before the completion of the Merger Transactions, while each
Vivendi Universal ADS now represents one Vivendi Universal ordinary share. To
facilitate comparison of information (i) for periods before and after December
8, 2000, price information for the Vivendi ADSs is shown as if each Vivendi ADS
represented one Vivendi ordinary share, and (ii) the market prices for periods
prior to May 11, 1999 are restated to reflect the 3:1 stock split that occurred
on May 11, 1999. Prices are rounded to the nearest cent.

                                       132
<PAGE>

  Last Six Months

<Table>
<Caption>
                                                    EURONEXT PARIS          NYSE
                                                   (ORDINARY SHARES)       (ADSS)
                                                   -----------------   ---------------
                                                    HIGH       LOW      HIGH     LOW
                                                   -------   -------   ------   ------
<S>                                                <C>       <C>       <C>      <C>
May, 2003........................................  E 15.95   E 13.28   $17.50   $15.55
April, 2003......................................    14.93     12.03    16.66    13.36
March, 2003......................................    14.80     11.03    15.85    12.15
February, 2003...................................    16.39     11.63    17.57    12.75
January, 2003....................................    17.98     14.92    18.90    16.40
December, 2002...................................    17.65     14.65    17.36    14.93
November, 2002...................................    17.29     10.86    16.79    11.06
</Table>

  Last Two Years by Quarter

<Table>
<Caption>
                                                   EURONEXT PARIS           NYSE
                                                 (ORDINARY SHARES)         (ADSS)
                                                 ------------------   ----------------
                                                   HIGH       LOW      HIGH      LOW
                                                 --------   -------   -------   ------
<S>                                              <C>        <C>       <C>       <C>
2003
Second Quarter (through May 31)................  E  15.95   E 12.03   $ 17.50   $13.36
First Quarter..................................     17.98     11.03     18.90    12.15
2002
Fourth Quarter.................................  E  17.65   E 10.72   $ 17.36   $10.80
Third Quarter..................................     26.11      8.62     24.20     8.90
Second Quarter.................................     44.24     16.10     39.10    17.79
First Quarter..................................     64.40     40.66     57.90    35.65
2001
Fourth Quarter.................................     62.15     45.65     54.80    42.57
Third Quarter..................................     71.50     40.22     61.01    37.30
Second Quarter.................................     79.70     61.40     69.23    54.85
First Quarter..................................     82.00     61.20     76.00    54.30
</Table>

  Last Five Years

<Table>
<Caption>
                                                    EURONEXT PARIS          NYSE
                                                   (ORDINARY SHARES)       (ADSS)
                                                   -----------------   ---------------
                                                    HIGH       LOW      HIGH     LOW
                                                   -------   -------   ------   ------
<S>                                                <C>       <C>       <C>      <C>
2003 (through May 31, 2003).....................   E 17.98   E 11.03   $57.90   $26.75
2002............................................     64.40      8.62   57.90      8.90
2001............................................     82.00     40.22   76.00     37.30
2000............................................    150.00     68.60   142.50    50.00
1999............................................     92.95     61.10   101.65    66.25
1998............................................     72.35     39.82   85.85     43.55
</Table>

     We urge you to obtain current market quotations.

ARRANGEMENTS FOR TRANSFER AND RESTRICTIONS ON TRANSFERABILITY

     Our statuts do not contain any restrictions relating to the transfer of
shares.

     Registered shares must be converted into bearer form before being
transferred on the Euronext Paris and, accordingly, must be recorded in an
account maintained by an accredited intermediary. A shareholder may initiate a
transfer by giving instructions to the relevant accredited intermediary. For
dealings on the Euronext

                                       133
<PAGE>

Paris, a tax assessed on the price at which the securities are traded, or impot
sur les operations de bourse, is payable at the rate of 0.3% on transactions of
less than E 152,449 and at a rate of 0.15% for larger trades. This tax is
subject to a maximum assessment of E 612 per transaction. Non-residents of
France are not required to pay this tax. In addition, a fee or commission is
payable to the broker involved in the transaction, regardless of whether the
transaction occurs in France. No registration duty is normally payable in
France, unless a transfer instrument has been executed in France.

ITEM 10:  ADDITIONAL INFORMATION

GENERAL

     As of December 31, 2002, there were 1,068,148,584 Vivendi Universal
ordinary shares outstanding (including treasury shares). As of April 30, 2003,
we had 283,970 ordinary shares in treasury, with a gross book value of E 19.8
million. All of these ordinary shares were issued to Vivendi Universal and were
fully paid. Our ordinary shares have a nominal value of E 5.50 per share.
Vivendi Universal's statuts provide that ordinary shares may be held in
registered or bearer form, at the option of the shareholder.

SHARE CAPITAL INFORMATION

     As of April 29, 2003, we had 1,070,554,674 ordinary shares outstanding. We
estimate that as of that date, approximately 33.4% of our shares traded on the
Euronext Paris SA were held by French residents and approximately 23.9% by
residents of the US.

     As of April 29, 2003, there were 2,170 registered holders of ADSs holding a
total of 92,160,022 ADSs. As of April 29, 2003, there were 1,615 registered
holders of ADSs within the US holding a total of 91,570,190 ADSs.

UNDERTAKINGS TO INCREASE VIVENDI UNIVERSAL'S SHARE CAPITAL

     As of December 31, 2002, Vivendi Universal had undertaken to increase its
capital in connection with redeemable and convertible bonds, options, and
exchangeable shares.

     - Convertible bonds -- In January 1999, Vivendi issued 6,028,369 bonds to
       the public. Each bond is convertible into 3.124 Vivendi Universal
       ordinary shares. As of May 23, 2003, 6,024,329 of these bonds were
       outstanding and convertible into a total of 18,820,004 ordinary shares
       (which may be treasury or newly issued shares). The bonds are scheduled
       to be redeemed in 2003;

     - Veolia Environnement convertible bonds -- In April 1999, Veolia
       Environnement issued 10,516,606 bonds to the public. Each bond is
       convertible into 3.124 ordinary shares of Vivendi Universal or Veolia
       Environnement. As of May 23, 2003, 5,331,055 of these bonds were
       outstanding and convertible into a total of 16,654,225 shares (which may
       be treasury or newly-issued shares). The bonds are scheduled to be
       redeemed in 2005;

     - Options granted pursuant to Vivendi Universal share subscription
       plans -- As of December 31, 2002, there were outstanding options to
       subscribe for 31,579,751 Vivendi Universal ordinary shares or ADSs
       granted to Vivendi Universal's executive officers, management and
       employees pursuant to Vivendi Universal's share subscription plans
       (including 5,518,568 pursuant to Vivendi plans and 26,061,183 pursuant to
       former Seagram plans); As of May 23, 2003, there were outstanding options
       to subscribe for 33,233,550 Vivendi Universal ordinary shares or ADSs
       granted to Vivendi Universal's executive officers, management and
       employees pursuant to Vivendi Universal's share subscription plans
       (including 7,172,367 pursuant to former Vivendi plans and 26,061,183
       pursuant to former Seagram plans).

     - Convertible Bonds -- In connection with the Merger Transactions, we
       issued on December 8, 2000, bonds redeemable into 401,582,689 Vivendi
       Universal ordinary shares. These bonds were or are to be redeemed for (i)
       the ADSs of Vivendi Universal received by holders of Seagram common
       shares on closing of the merger, (ii) ADSs of Vivendi Universal to be
       issued to holders of exchangeable shares of Vivendi Universal Exchangeco
       Inc. when such holders exchange such shares from time to time,

                                       134
<PAGE>

       (iii) ADSs of Vivendi Universal to be issued to holders of stock options
       or stock appreciation rights of Seagram on exercise of such options or
       rights, and (iv) ADSs of Vivendi Universal to be issued to holders of
       other convertible securities of Seagram, such as the ACES, on conversion
       of such securities. As of May 23, 2003, bonds redeemable into 35,125,424
       Vivendi Universal ordinary shares were outstanding.

     - Notes mandatorily redeemable into ordinary shares -- On November 19,
       2002, Vivendi Universal issued 78,678,206 bonds to the public. Each bond
       is redeemable into one Vivendi Universal ordinary share. As of May 23,
       2003, 78,678,206 of these bonds were outstanding and redeemable into
       78,678,206 shares. The bonds are scheduled to be redeemed in 2005.

     Under the French commercial code, shareholders of French companies such as
Vivendi Universal have certain rights to purchase, on a pro rata basis,
securities issued by Vivendi Universal.

OPTIONS TO PURCHASE VIVENDI UNIVERSAL SECURITIES

     We have several share purchase option plans for the benefit of our
executive officers, management and other staff. As of May 23, 2003, options to
purchase approximately 57,771,981 Vivendi Universal ordinary shares or ADSs were
outstanding pursuant to these plans. The average expiration date of these
options was August 2008 and the average exercise price was E 65.58 for ordinary
shares and $53.61 for ADSs. Options to purchase shares of common stock of
MP3.com were converted into options to purchase ADSs of Vivendi Universal on
August 28, 2001. As of May 23, 2003, options to purchase approximately 431,575
Vivendi Universal ADSs were outstanding pursuant to these plans. The average
expiration date of these options was February 2010 and the average exercise
price was $136.84.

     Options to purchase shares of common stock of USAi were converted into
options to purchase ADSs of Vivendi Universal on May 7, August 5 and August 7,
2002. As of May 23, 2003, options to purchase approximately 5,987,114 Vivendi
Universal ADSs were outstanding pursuant to these plans. The average expiration
date of these options was October 2010 and the average exercise price was
$20.89.

HISTORY OF SHARE CAPITAL

     The table below sets forth the history of the share capital of Vivendi
Universal, S.A., formerly known as Sofiee S.A. Sofiee was a shell company
incorporated in 1987, and on December 8, 2000 it was the recipient of all the
assets in connection with the Merger Transactions described under "Item
4--Information on the Company--History and Development of the Company."

<Table>
<Caption>
                                                 NOMINAL
MEETING                           NUMBER OF      VALUE OF      NOMINAL VALUE OF     TOTAL AMOUNT OF    TOTAL NUMBER
  DATE        TRANSACTION       SHARES ISSUED   THE SHARES   THE CAPITAL INCREASE    CAPITAL STOCK       OF SHARES
-------   -------------------   -------------   ----------   --------------------   ----------------   -------------
<C>       <S>                   <C>             <C>          <C>                    <C>                <C>
12/17/87  Formation                     2,500     FF 100          FF 250,000.00              250,000           2,500
05/14/98  Capital increase         16,784,000        100       1,678,400,000.00        1,678,650.000      16,786,500
06/15/00  Conversion of the                 0       E 16                 E 0.00          268,584,000      16,786,500
          capital to Euros
06/15/00  Capital increase                  0       16.5                   0.00          276,977,250      16,786,500
06/15/00  Three-for-one stock               0        5.5                   0.00          276,977,250      50,359,500
          split
12/08/00  Merger Transactions   1,029,666,247        5.5       5,663,164,358.50        5,940,141,609   1,080,025,747
12/31/00  Bonds redemption,           782,696        5.5           4,304,828.00        5,944,446,437   1,080,808,443
          warrants
          conversion,
          exercise of
          subscription option
01/18/01  Capital increase            343,127        5.5           1,887,198.50        5,946,333,635   1,081,151,570
          Group savings Plan
          3rd block 2000
</Table>

                                       135
<PAGE>

<Table>
<Caption>
                                                 NOMINAL
MEETING                           NUMBER OF      VALUE OF      NOMINAL VALUE OF     TOTAL AMOUNT OF    TOTAL NUMBER
  DATE        TRANSACTION       SHARES ISSUED   THE SHARES   THE CAPITAL INCREASE    CAPITAL STOCK       OF SHARES
-------   -------------------   -------------   ----------   --------------------   ----------------   -------------
<C>       <S>                   <C>             <C>          <C>                    <C>                <C>
04/24/01  Bonds redemption,        25,026,898        5.5         137,647,939.00     6,083,981,574.00   1,106,178,468
          warrants
          conversion,
          exercise of
          subscription option
04/26/01  Capital increase            350,392        5.5           1,927,156.00     6,085,908,730.00   1,106,528,860
          Group Savings Plan
          1st block 2001
06/28/01  Bonds redemption,        11,448,920        5.5             62,969,060        6,148,877,790   1,117,977,780
          warrants
          conversion,
          exercise of
          subscription option
06/28/01  Cancellation --        (10,301,924)        5.5           (56,660,582)        6,092,217,208   1,107,675,856
          consolidation of
          bare legal and
          beneficial
          ownership rights
06/28/01  Cancellation           (22,000,000)        5.5          (121,000,000)        5,971,217,208   1,085,675,856
          Treasury Shares
07/25/01  Capital increase            917,745        5.5           5,047,597,50        5,976,264,805   1,086,593,601
          Group Savings Plan
          2nd block 2001
09/25/01  Bonds redemption,         3,221,230        5.5             17,716,765        5,993,981,570   1,089,814,831
          exercise of
          subscription option
09/25/01  Cancellation --         (3,153,175)        5.5        (17,342,462.50)        5,976,639,108   1,086,661,656
          consolidation of
          bare legal and
          beneficial
          ownership rights
11/14/01  Bonds redemption,         3,304,178        5.5             18,172,979        5,994,812,087   1,089,965,834
          exercise of
          subscription option
11/14/01  Cancellation --         (3,183,881)        5.5        (17,511,345.50)     5,977,300,741.50   1,086,781,953
          consolidation of
          bare legal and
          beneficial
          ownership rights
11/14/01  Cancellation            (1,484,560)        5.5            (8,165,080)     5,969,135,661.50   1,085,297,393
          Treasury Shares
12/31/01  Bonds redemption,           530,126        5.5              2,915,693     5,972,051,354.50   1,085,827,519
          exercise of
          subscription option
01/17/02  Capital increase          1,337,609        5.5           7,356,849.50        5,979,408,204   1,087,165,128
          Group Savings Plan
          3rd block 2001
01/24/02  Bonds redemption,           737,593        5.5           4,056,761.50     5,983,464,965.50   1,087,902,721
          exercise of
          subscription option
01/24/02  Cancellation --           (203,560)        5.5            (1,119,580)     5,982,345,385.50   1,087,699,161
          consolidation of
          bare legal and
          beneficial
          ownership rights
04/24/02  Bonds redemption,           961,530        5.5              5,288,415     5,987,633,800.50   1,088,660,691
          exercise of
          subscription option
04/24/02  Cancellation --           (351,988)        5.5            (1,935,934)     5,985,697,866.50   1,088,308,703
          consolidation of
          bare legal and
          beneficial
          ownership rights
</Table>

                                       136
<PAGE>

<Table>
<Caption>
                                                 NOMINAL
MEETING                           NUMBER OF      VALUE OF      NOMINAL VALUE OF     TOTAL AMOUNT OF    TOTAL NUMBER
  DATE        TRANSACTION       SHARES ISSUED   THE SHARES   THE CAPITAL INCREASE    CAPITAL STOCK       OF SHARES
-------   -------------------   -------------   ----------   --------------------   ----------------   -------------
<C>       <S>                   <C>             <C>          <C>                    <C>                <C>
06/25/02  Bonds redemption,         3,455,065        5.5          19,002,857.50        6,004,700,724   1,091,763,768
          exercise of
          subscription option
06/25/02  Cancellation --         (3,450,553)        5.5        (18,978,041.50)     5,985,722,682.50   1,088,313,215
          consolidation of
          bare legal and
          beneficial
          ownership rights
08/13/02  Bonds redemption,         7,195,874        5.5             39,577,307     6,025,299,989.50   1,095,509,089
          exercise of
          subscription option
08/13/02  Cancellation --         (6,890,538)        5.5           (37,897,959)     5,987,402,030.50   1,088,618,551
          consolidation of
          bare legal and
          beneficial
          ownership Rights
12/20/02  Cancellation of        (20,469,967)        5.5       (112,584,818.50)        5,874,817,212   1,068,148,584
          Treasury Shares
01/15/03  Capital increase          2,402,142        5.5             13,211,781        5,888,028,993   1,070,550,726
          Group Savings Plan
          2002
01/29/03  Bonds redemption            455,510        5.5              2,505,305        5,890,534,298   1,071,006,236
01/29/03  Cancellation --           (451,562)        5.5              2,483,591        5,888,050,707   1,070,554,674
          consolidation of
          bare legal and
          beneficial
          ownership Rights
</Table>

ORGANIZATIONAL DOCUMENT OF VIVENDI UNIVERSAL

  PURPOSES

     Under Article 2 of our statuts, the corporate purpose of Vivendi Universal
is to engage in all media and communications activities and all activities
related to the environment, to manage, acquire and sell securities of other
companies and to engage in any transactions related to the foregoing purposes.

  DIRECTORS

     Under the French commercial code, each director must be a shareholder of
Vivendi Universal. Our statuts provide that a director must own at least 750
shares of Vivendi Universal for as long as he or she serves as a director.

     The French commercial code provides that each director is eligible for
reappointment upon the expiration of his or her term of office. Our statuts fix
the term of reappointment at four years, provided that no more than one-fifth of
the directors may be 70 or older. No individual director may be over 75.

     Under the French commercial code, any transaction directly or indirectly
between a company and a member of its board of directors, its officers or one of
its shareholders holding more than 5% of voting securities, if any, that cannot
be reasonably considered to be in the ordinary course of business of the company
or is not at arm's-length, is subject to the board of directors' prior consent.
A member of the board of directors may not participate in a vote to consent to a
transaction in which he or she is directly or indirectly interested. Any such
transaction concluded without the prior consent of the board of directors can be
voided if it is harmful to the company. The interested member of the board of
directors or officer can be held liable on this basis. The statutory auditor
must be informed of the transaction within one month following its conclusion
and must prepare a special report to be submitted to the shareholders for
approval at their next meeting. In the event the transaction is not ratified by
the shareholders at a shareholders meeting, it will remain enforceable by third
parties against the company, but the company may in turn hold the interested
member of the board of directors and, in some circumstances, the other members
of the board of directors, liable for any damages it

                                       137
<PAGE>

may suffer as a result. In addition, the transaction may be canceled if it is
fraudulent. Moreover, certain transactions between a corporation and a member of
its board of directors who is a natural person or its officers, if any, are
prohibited under the French commercial code.

     Our directors are not authorized, in the absence of an independent quorum,
to vote compensation to themselves or other directors.

ORDINARY AND EXTRAORDINARY MEETINGS

  GENERAL

     In accordance with the French commercial code, there are two types of
shareholders general meetings: ordinary and extraordinary.

     Ordinary general meetings of shareholders are required for matters that are
not specifically reserved by law to extraordinary general meetings, such as:

     - approving annual financial statements (individual and consolidated);

     - electing, replacing and removing members of the board of directors;

     - appointing independent auditors;

     - declaring dividends or authorizing dividends to be paid in shares; and

     - issuing debt securities.

     Extraordinary general meetings of shareholders are required for approval of
matters such as amendments to our statuts, including any amendment required in
connection with extraordinary corporate actions.

     Extraordinary corporate actions also include:

     - changing our name or corporate purpose;

     - increasing or decreasing our share capital;

     - creating a new class of equity securities;

     - authorizing the issuance of investment certificates or convertible or
       exchangeable securities;

     - establishing any other rights to equity securities;

     - selling or transferring substantially all of our assets; and

     - our voluntary liquidation.

  SHAREHOLDERS MEETINGS

     The French commercial code requires our board of directors to convene an
annual ordinary general meeting of shareholders for approval of the annual
accounts. This meeting must be held within six months of the end of each fiscal
year. This period may be extended by an order of the President of the Commercial
Court (Tribunal de Commerce). The board of directors may also convene an
ordinary or extraordinary meeting of shareholders upon proper notice at any time
during the year. If the board of directors fails to convene a shareholders
meeting, our independent auditors or a court-appointed agent may call the
meeting. Any of the following may request the court to appoint an agent:

     - one or several shareholders holding at least 5% of our share capital;

     - the workers' committee (Comite d'Entreprise) in an emergency;

     - an interested party in an emergency;

     - duly qualified associations of shareholders who have held their shares in
       registered form for at least two years and who together hold at least 2%
       of the voting rights of Vivendi Universal; or

                                       138
<PAGE>

     - in a bankruptcy, our liquidator or court-appointed agent may also call a
       shareholders meeting in some instances.

     Shareholders holding more than 50% of our share capital or voting rights
may also convene a shareholders meeting after a public offer or a sale of a
controlling stake of Vivendi Universal's capital.

  NOTICE OF SHAREHOLDERS MEETINGS

     We must announce general meetings at least 30 days in advance by means of a
preliminary notice published in the Bulletin des Annonces Legales Obligatoires
(the BALO). The preliminary notice must first be sent to the COB. The COB also
recommends that the preliminary notice be published in a financial newspaper of
national circulation in France. The preliminary notice must disclose, among
other things, the time, date, and place of the meeting, whether the meeting will
be ordinary or extraordinary, the agenda, a draft of the resolutions to be
submitted to the shareholders, a description of the procedures which holders of
bearer shares must follow to attend the meeting, the procedure for voting by
mail, and a statement informing the shareholders that they may propose
additional resolutions to the board of directors within ten days of the
publication of the notice.

     We must send a final notice containing the agenda and other information
about the meeting at least 15 days prior to the meeting or at least six days
prior to the resumption of any meeting adjourned for lack of a quorum. The final
notice must be sent by mail to all registered shareholders who have held shares
for more than one month prior to the date of the preliminary notice. The final
notice must also be published in the BALO and in a newspaper authorized to
publish legal announcements in the local administrative department in which we
are registered, with prior notice having been given to the COB.

     In general, shareholders can take action at shareholders meetings only on
matters listed in the agenda for the meeting. One exception to this rule is that
shareholders may take action with respect to the dismissal of members of the
board of directors and various other matters regardless of whether these actions
are on the agenda. Additional resolutions to be submitted for approval by the
shareholders at the meeting may be proposed to the board of directors (within
ten days of the publication of the preliminary notice in the BALO) by:

     - one or several shareholders holding a specified percentage of shares
       (currently 0.5%); or

     - duly qualified associations of shareholders who have held their shares in
       registered form for at least two years and who together hold at least a
       specified percentage of Vivendi Universal's voting rights (currently 1%).

     The board of directors must submit properly proposed resolutions to a vote
of the shareholders.

     Before a meeting of shareholders, any shareholder may submit written
questions to the board of directors relating to the agenda for the meeting. The
management board must respond to these questions during the meeting.

  ATTENDANCE AND VOTING AT SHAREHOLDERS MEETINGS

     Each share confers on the shareholder the right to cast one vote, subject
to certain limited exceptions under our statuts. Shareholders may attend
ordinary meetings and extraordinary meetings and exercise their voting rights
subject to the conditions specified in the French commercial code and our
statuts. There is no requirement that shareholders have a minimum number of
shares in order to attend or to be represented at an ordinary or extraordinary
general meeting.

     To participate in any general meeting, a holder of shares held in
registered form must have shares registered in his or her name in a shareholder
account maintained by Vivendi Universal or on its behalf by an agent appointed
by Vivendi Universal at the latest at 3:00 pm (Paris time) on the day preceding
the meeting. A holder of bearer shares must obtain a certificate from the
accredited intermediary with whom the holder has deposited his or her shares.
This certificate must indicate the number of bearer shares the holder owns and
must state that these shares are not transferable until the time fixed for the
meeting. The holder must deposit
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this certificate at the place specified in the notice of the meeting at the
latest at 3:00 pm (Paris time) on the day preceding the meeting.

  PROXIES AND VOTES BY MAIL

     In general, all shareholders who have properly registered their shares or
duly presented a certificate from their accredited financial intermediary may
participate in general meetings. Shareholders may participate in general
meetings either in person or by proxy. Shareholders may vote in person, by proxy
or by mail. Upon decision of the board of directors specified in the notice of
meeting, shareholders may also vote by Internet.

     Proxies will be sent to any shareholder on request. To be counted, those
proxies must be received at Vivendi Universal's registered office, or at any
other address indicated on the notice convening the meeting, prior to the date
of the meeting. A shareholder may grant proxies to his or her spouse or to
another shareholder. A shareholder that is a corporation may grant proxies to a
legal representative. Alternatively, the shareholder may send a blank proxy
without nominating any representative. In this case, the chairman of the meeting
will vote those blank proxies in favor of all resolutions proposed by the board
of directors and against all others.

     With respect to votes by mail, we are required to send shareholders a
voting form. The completed form must be returned to Vivendi Universal at least
three days prior to the date of the shareholders meeting.

  QUORUM

     The French commercial code requires that 25% of the shares entitled to
voting rights must be represented by shareholders present in person or voting by
mail or by proxy to fulfill the quorum requirement for:

     - an ordinary general meeting; or

     - an extraordinary general meeting where an increase in Vivendi Universal's
       share capital is proposed through incorporation of reserves, profits or
       share premium.

     The quorum requirement is one-third of the shares entitled to voting
rights, on the same basis, for any other extraordinary general meeting.

     If a quorum is not present at a meeting, the meeting is adjourned. When an
adjourned meeting is resumed, there is no quorum requirement for an ordinary
meeting or for an extraordinary general meeting where an increase in Vivendi
Universal's share capital is proposed through incorporation of reserves, profits
or share premium. However, only questions that are on the agenda of the
adjourned meeting may be discussed and voted upon. In the case of any other
reconvened extraordinary general meeting, shareholders representing at least 25%
of outstanding voting rights must be present in person or be voting by mail or
proxy for a quorum. If a quorum is not present, the reconvened meeting may be
adjourned for a maximum of two months. Any deliberation by the shareholders that
takes place without a quorum is void.

  MAJORITY

     A simple majority of shareholders may pass any resolution on matters
required to be considered at an ordinary general meeting, or concerning a
capital increase by incorporation of reserves, profits or share premium at an
extraordinary general meeting. At any other extraordinary general meeting, a
two-thirds majority of the shareholder votes cast is required.

     A unanimous shareholder vote is required to increase liabilities of
shareholders.

     Abstention from voting by those present or those represented by proxy or
voting mail is counted as a vote against the resolution submitted to the
shareholder vote.

     In general, a shareholder is entitled to one vote per share at any general
meeting. Under the French commercial code, shares of a company held by entities
controlled directly or indirectly by that company are not entitled to voting
rights and are not considered for quorum purposes.

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  Limitations on Right to Own Securities

     Neither French law nor our statuts contain any provision that limits the
right to own Vivendi Universal's securities or limits the rights of
shareholders, including non-resident or foreign shareholders, to hold or
exercise voting rights associated with those securities, except as described
below under "--Anti-Takeover Provisions."

  Anti-Takeover Provisions

     Our statuts provide that any person or group that fails to notify the
company within 15 days of acquiring or disposing of 0.5% or any multiple of 0.5%
of our ordinary shares may be deprived of voting rights for shares in excess of
the unreported fraction. Vivendi Universal's statuts also adjust the voting
rights of shareholders who own (within the meaning of the statuts and Article L
233-9 of the French commercial code to which those statuts refer) in excess of
2% of the total voting power of Vivendi Universal through the application of a
formula designed to limit the voting power of these shareholders to that which
they would possess if 100% of the shareholders were present at the meeting at
which the vote in question takes place. This last provision is not applicable to
any shareholders meeting where a quorum of 60% or more is present.

  ANTI-TAKEOVER EFFECTS OF APPLICABLE LAW REGULATIONS

     In addition, the French commercial code provides that any individual or
entity, acting alone or in concert with others, that becomes the owner, directly
or indirectly, of more than 5%, 10%, 20%, one-third, 50% or two-thirds of the
outstanding shares or voting rights of a listed company in France, such as
Vivendi Universal, or that increases or decreases its shareholding or voting
rights above or below any of those percentages, must notify Vivendi Universal
within 15 calendar days of the date it crosses such thresholds of the number of
shares it holds and their voting rights. The individual or entity must also
notify the Conseil des Marches Financiers (CMF) within five trading days of the
date it crosses these thresholds.

     The French New Economic Regulation Act has also imposed the notification to
the CMF of any agreement which provides preferential conditions of acquisition
or divestiture of shares representing 0.5% or more of the share capital or
voting securities, failing which such provision will be unenforceable during the
course of a tender offer.

     French law and COB regulations impose additional reporting requirements on
persons who acquire more than 10% or 20% of the outstanding shares or voting
rights of a listed company. These persons must file a report with the company,
the COB and the CMF within fifteen days of the date they cross the threshold. In
the report, the acquirer must specify its intentions for the following 12-month
period, including whether or not it intends to continue its purchases, to
acquire control of the company in question or to nominate candidates for the
board of directors. The CMF makes the notice public. The acquirer must also
publish a press release stating its intentions in a financial newspaper of
national circulation in France. The acquirer may amend its stated intentions,
provided that it does soon the basis of significant changes in its own situation
or that of its shareholders. Upon any change of intention, it must file a new
report.

     Under CMF regulations, and subject to limited exemptions granted by the
CMF, any person or persons acting in concert that own in excess of one-third of
the share capital or voting rights of a French listed company must initiate a
public tender offer for the balance of the share capital of such company.

     To permit holders to give the required notice, Vivendi Universal is
required to publish in the BALO no later than 15 calendar days after the annual
ordinary general meeting of shareholders information with respect to the total
number of voting rights outstanding as of the date of such meeting. In addition,
if the number of outstanding voting rights changes by 5% or more between two
annual ordinary general meetings, Vivendi Universal is required to publish in
the BALO, within 15 calendar days of such change, the number of voting rights
outstanding and provide the CMF with written notice of such information. The CMF
publishes the total number of voting rights so notified by all listed companies
in a weekly notice (avis), noting the date each such number was last updated.

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     If any shareholder fails to comply with the notification requirement
described above, the shares or voting rights in excess of the relevant threshold
will be deprived of voting rights for all shareholders meetings until the end of
a two-year period following the date on which their owner complies with the
notification requirements. In addition, any shareholder who fails to comply with
these requirements may have all or part of its voting rights suspended for up to
five years by the Commercial Court at the request of the chairman, any
shareholder or the COB, and may be subject to a fine.

VIVENDI UNIVERSAL ORDINARY SHARES

  DIVIDENDS

     Dividends on our ordinary shares are distributed to shareholders pro rata.
Outstanding dividends are payable to shareholders on the date of the
shareholders meeting at which the distribution of dividends is approved, subject
to any conditions imposed by the shareholders at the meeting. The dividend
payment date is decided by the shareholders at an ordinary general meeting (or
by the board of directors in the absence of such a decision by the
shareholders). Under the French commercial code, we must pay any dividends
within nine months of the end of our fiscal year unless otherwise authorized by
court order. Subject to certain conditions, the board of directors can decide
the distribution of interim dividends during the course of the fiscal year, but
in any case before the approval of the annual accounts by the annual ordinary
general meeting of shareholders. Dividends on shares that are not claimed within
five years of the date of declared payment revert to the French government.

  VOTING RIGHTS

     In general, each Vivendi Universal ordinary share carries the right to cast
one vote in shareholder elections. However, our statuts adjust the voting rights
of shareholders who own in excess of 2% of the total voting power of Vivendi
Universal through the application of a formula designed to limit the voting
power of those shareholders to that which they would possess if 100% of the
shareholders were present at the meeting at which the vote in question takes
place. See above "--Anti-Takeover Provisions." This provision is not applicable
to any shareholders meeting where a quorum of 60% or more is present.

  LIQUIDATION RIGHTS

     If Vivendi Universal is liquidated, any assets remaining after payment of
its debts, liquidation expenses and all of its remaining obligations will be
distributed first to repay in full the nominal value of its shares. Any surplus
will be distributed pro rata among shareholders in proportion to the nominal
value of their shareholdings.

  PRE-EMPTIVE RIGHTS

     Under the French commercial code, if we issue additional shares, or any
equity securities or other specific kinds of additional securities carrying a
right, directly or indirectly, to purchase equity securities issued by us for
cash, current shareholders will have pre-emptive rights on these securities on a
pro rata basis. These pre-emptive rights will require Vivendi Universal to give
priority treatment to those shareholders over other persons wishing to subscribe
for the securities. The rights entitle the individual or entity that holds them
to subscribe to an issue of any securities that may increase our share capital
by means of a cash payment or a set-off of cash debts. Pre-emptive rights are
transferable during the subscription period relating to a particular offering.
These rights may also be listed on the Euronext Paris SA.

     A two-thirds majority of our ordinary shares entitled to vote at an
extraordinary general meeting may vote to waive pre-emptive rights with respect
to any particular offering. French law requires a company's board of directors
and independent auditors to present reports that specifically address any
proposal to waive pre-emptive rights. In the event of a waiver, the issue of
securities must be completed within the period prescribed by law. The
shareholders may also decide at an extraordinary general meeting to give the
existing shareholders a non-transferable priority right to subscribe for the new
securities during a limited period of time. Shareholders may also waive their
own pre-emptive rights with respect to any particular offering.
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  AMENDMENTS TO RIGHTS OF HOLDERS

     The rights of holders of our ordinary shares can be amended only by action
of an extraordinary general meeting. Pursuant to French law, in some cases where
an amendment would increase shareholders obligations, a special majority is
required for approval. Depending on the particular proposed amendment, the
special majority may be two-thirds, three-quarters or unanimity of the voting
shares. Consistent with French law, the Vivendi Universal statuts require a
quorum of one-third of the voting shares for an extraordinary general meeting.

MATERIAL CONTRACTS

     In view of the size and scope of the operations of our company, we believe
that the only agreements to which we or any of our subsidiaries are a party that
could be considered material to our company as a whole are as follows: (1) the E
2.5 billion Dual Currency Credit Facility, (2) the E 3.0 billion Multicurrency
Revolving Credit Facility, (3) the $920 million VUE Facility, (4) the E1.3
billion SIT Acquisition Facility and (5) the indenture governing the Senior
Notes. For a description of each of these contracts, see "Item 4--Information on
the Company--Summary of Indebtedness."

EXCHANGE CONTROLS

     The French commercial code currently does not limit the right of
nonresidents of France or non-French persons to own and vote shares. However,
nonresidents of France must file an administrative notice with French
authorities in connection with the acquisition of a controlling interest in our
company. Under existing administrative rulings, ownership of 20% or more of our
share capital or voting rights is regarded as a controlling interest, but a
lower percentage might be held to be a controlling interest in some
circumstances depending upon factors such as:

     - the acquiring party's intentions; and

     - the acquiring party's ability to elect directors, and financial reliance
       by us on the acquiring party.

     French exchange control regulations currently do not limit the amount of
payments that we may remit to nonresidents of France. Laws and regulations
concerning foreign exchange controls do require, however, that all payments or
transfers of funds made by a French resident to a nonresident be handled by an
accredited intermediary. In France, all registered banks and most credit
establishments are accredited intermediaries.

TAXATION

     On August 31, 1994, the United States and France entered into the
Convention between the United States of America and France for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on
Income and Capital (the Treaty). The following is a general summary of the
principal tax effects that may apply to you as a holder of our ordinary shares
or ADSs for purposes of US federal income tax and French tax, if all of the
following apply to you:

     - you own, directly or indirectly, less than 10% of our share capital;

     - you are:

        - an individual who is a citizen or resident of the US for US federal
          income tax purposes;

        - a corporation or other entity taxable as a corporation that is created
          or organized in or under the laws of the US or any political
          subdivision thereof;

        - an estate, the income of which is subject to US federal income
          taxation regardless of its source; or

        - a trust, if a court within the US is able to exercise primary
          supervision over its administration and one or more US persons have
          the authority to control all of the substantial decisions of the
          trust;

     - you are entitled to the benefits of the Treaty under the "Limitations of
       Benefits" article of the Treaty;

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     - you hold your ordinary shares or ADSs of our company as capital assets;
       and

     - your functional currency is the US dollar.

     If a partnership holds ordinary shares or ADSs, the US federal income tax
treatment of a partner will generally depend upon the status of the partner and
upon the activities of the partnership. If you are a partner of a partnership
holding ordinary shares or ADSs, you should consult your own tax advisor.

     This summary is based in part upon the representations of the depositary,
and the assumption that each obligation in the deposit agreement and any related
agreement will be performed in accordance with its terms. In general, and taking
into account these assumptions, holders of ADSs will be treated as the owners of
the ordinary shares represented by such ADSs, and exchanges of ordinary shares
for ADSs, and ADSs for ordinary shares, will not be subject to US federal income
or French tax.

     YOU ARE STRONGLY URGED TO CONSULT YOUR OWN TAX ADVISOR REGARDING THE
CONSEQUENCES TO YOU OF ACQUIRING, OWNING OR DISPOSING OF VIVENDI UNIVERSAL
ORDINARY SHARES OR ADSS, RATHER THAN RELYING ON THIS SUMMARY. The summary may
not apply to you or may not completely or accurately describe tax consequences
to you. For example, special rules may apply to US expatriates, insurance
companies, tax-exempt organizations, financial institutions, persons subject to
the alternative minimum tax, securities broker-dealers, traders in securities
that elect to mark-to-market and persons holding their ordinary shares or ADSs
as parties to a straddle or conversion transaction, among others. Those special
rules are not discussed in this annual report. The summary is based on the laws,
conventions and treaties in force as of the date of this annual report, all of
which are subject to changes, possibly with retroactive effect. Also, this
summary does not discuss any tax rules other than US federal income tax and
French tax rules. Further, the US and French tax authorities and courts are not
bound by this summary and may disagree with its conclusions.

  TAXATION OF DIVIDENDS

  Withholding Tax and Avoir Fiscal

     We will withhold tax from your dividend at the reduced rate of 15%,
provided that you have complied with the following procedures:

     - You must complete French Treasury Form RF1 A EU-No. 5052, "Application
       for Refund," and send it to the French tax authorities before the date of
       payment of the dividend. If you are not an individual, you must also send
       the French tax authorities an affidavit attesting that you are the
       beneficial owner of all the rights attached to the full ownership of the
       ordinary shares or ADSs, including, among other things, the dividend
       rights, at the Centre des Impots des Non Residents, 9 rue d'Uzes, 75094
       Paris Cedex 2, France.

     - If you cannot complete Form RF1 A EU-No. 5052 before the date of payment
       of the dividend, you may complete a simplified certificate and send it to
       the French tax authorities. This certificate must state that:

     - you are a resident of the US for purposes of the Treaty;

     - your ownership of our ordinary shares or ADSs is not effectively
       connected with a permanent establishment or a fixed base in France;

     - you own all the rights attached to the full ownership of the ordinary
       shares or ADSs, including, among other things, the dividend rights;

     - you meet all the requirements of the Treaty for the reduced rate of
       withholding tax; and

     - you claim the reduced rate of withholding tax.

     If you have not completed Form RF1 A EU-No. 5052 or the simplified
certificate before the dividend payment date, we will deduct French withholding
tax at the rate of 25%. In that case, you may claim a refund of the excess
withholding tax by completing and providing the French tax authorities with Form
RF1 A EU-No. 5052 before December 31 of the calendar year following the year
during which the dividend is paid.
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     The Application for Refund, together with instructions, can be obtained
from the US Internal Revenue Service or from the Centre des Impots des Non
Residents upon request. After completing it, you send it to the Centre des
Impots des Non Residents.

     Under the Treaty, you may be entitled, in certain circumstances, to a
French tax credit (called the avoir fiscal). Effective January 1, 2002, under
French tax law, a resident of France is entitled to an avoir fiscal in respect
of a dividend received from a French corporation. Under regulation n degrees 4
J-2-01 of the French Revenue Code, the avoir fiscal is limited to dividends
approved at the annual general meeting of shareholders. The avoir fiscal is
equal to 50% of the amount of the dividend for individuals, 50% for companies
owning more than 5% of Vivendi Universal's capital and 10% for other
shareholders. You may be entitled to a payment equal to the avoir fiscal, less a
15% withholding tax, if any one of the following applies to you:

     - you are an individual or other non-corporate holder that is a resident of
       the US for purposes of the Treaty;

     - you are a US corporation, other than a regulated investment company that
       owns less than 10% of our share capital;

     - you are a US corporation that is a regulated investment company and that
       owns, directly or indirectly, less than 10% of the share capital of our
       company, provided that less than 20% of your ordinary shares or ADSs are
       beneficially owned by persons who are neither citizens nor residents of
       the US; or

     - you are a partnership or trust that is a resident of the US for purposes
       of the Treaty, but only to the extent that your partners, beneficiaries
       or grantors would qualify as eligible under the first or second points on
       this list and are subject to US income tax with respect to such dividends
       and payment of the avoir fiscal.

     If you are eligible, you may claim the avoir fiscal by completing Form RF1
A EU-No. 5052 and sending it to the French tax authorities at the Centre des
Impots des Non Residents before December 31 of the year following the year in
which the dividend is paid. As noted below, you will not receive this payment
until after January 15 of the calendar year following the year in which the
dividend was paid. To receive the payment, you must submit a claim to the French
tax authorities and attest that you are subject to US federal income taxes on
the payment of the avoir fiscal and the related dividend. For partnerships or
trusts, the partners, beneficiaries or grantors, as applicable, must make this
attestation.

     Specific rules apply to the following:

     - tax-exempt US pension funds, which include the exempt pension funds
       established and managed in order to pay retirement benefits subject to
       the provisions of Section 401(a) of the Internal Revenue Code (qualified
       retirement plans), Section 403 of the Internal Revenue Code (tax deferred
       annuity contracts) or Section 457 of the Internal Revenue Code (deferred
       compensation plans); and

     - various other tax-exempt entities, including certain state-owned
       institutions, not-for-profit organizations and individuals (with respect
       to dividends they beneficially own and that are derived from an
       individual retirement account).

     Entities in these two categories are eligible for a reduced withholding tax
rate of 15% on dividends, subject to the same withholding tax filing
requirements as eligible US holders, except that they may have to supply
additional documentation evidencing their entitlement to these benefits. These
entities are not entitled to the full avoir fiscal. They may claim a partial
avoir fiscal equal to 30/85 of the gross avoir fiscal, provided that they own,
directly or indirectly, less than 10% of our capital and that they satisfy the
filing formalities specified in Internal Revenue Service regulations.

     The avoir fiscal or partial avoir fiscal and any French withholding tax
refund are generally expected to be paid within 12 months after the holder of
ordinary shares or ADSs files Form RF1 A EU-No. 5052. However, they will not be
paid before January 15 following the end of the calendar year in which the
dividend is paid.

     For US federal income tax purposes, the gross amount of a dividend and any
avoir fiscal, including any French withholding tax, will be included in your
gross income as dividend income when payment is actually or
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constructively received by the shareholder in the case of ordinary shares or the
depositary in the case of ADSs, to the extent they are paid out of our current
or accumulated earnings and profits as calculated for US federal income tax
purposes. If those dividends constitute qualified dividend income ("QDI") and
you are an individual holder of our ordinary shares or ADSs, you will generally
pay tax on such dividends at rates applicable to net capital gains (see
"Taxation of Capital Gains"), provided that certain holding period requirements
are satisfied. Dividends paid by our company will be QDI if we are a Qualified
Foreign Corporation ("QFC") at the time the dividends are paid. We believe that
we are currently, and will continue to be, a QFC so as to allow dividends paid
by us to be QDI for US federal income tax purposes. If you are a corporate
holder of our ordinary shares or ADSs, you will not benefit from the reduced
rate on dividends available to individual holders. Dividends paid by our company
will not give rise to any US dividends received deduction.

     Also for US federal income tax purposes, the amount of any dividend paid in
euros or French francs, including any French withholding taxes, will be equal to
the US dollar value of the euros or French francs on the date the dividend is
included in income, regardless of whether the payment is in fact converted into
US dollars. You will generally be required to recognize US source ordinary
income or loss when you sell or dispose of euros or French francs. You may also
be required to recognize foreign currency gain or loss if you receive a refund
under the Treaty of tax withheld in excess of the Treaty rate. This foreign
currency gain or loss will generally be US source ordinary income or loss.

     To the extent that any dividends paid exceed our current and accumulated
earnings and profits as calculated for US federal income tax purposes, the
distribution will be treated as follows:

     - first, as a tax-free return of capital to the extent of the adjusted tax
       basis in your ordinary shares or ADSs, which will cause a reduction in
       the adjusted tax basis of your ordinary shares or ADSs in our company.
       This adjustment will increase the amount of gain, or decrease the amount
       of loss, that you will recognize if you later dispose of those ordinary
       shares or ADSs; and

     - second, the balance of the dividend in excess of the adjusted tax basis
       in your ordinary shares or ADSs will be taxed as capital gain recognized
       on a sale or exchange.

     French withholding tax imposed on the dividends you receive and on any
avoir fiscal at 15% under the Treaty is treated as payment of a foreign income
tax. You may take this amount as a deduction from your gross income or a credit
against your US federal income tax liability, subject to specific conditions and
limitations. Dividends will generally constitute foreign source "passive" income
for foreign tax credit purposes. For recipients predominantly engaged in the
active conduct of a banking, insurance, financing or similar business, dividends
paid by our company will generally constitute foreign source "financial
services" income for foreign tax credit purposes.

  THE PRECOMPTE

     A French company must pay an equalization tax (called the precompte) to the
French tax authorities if it distributes dividends out of:

     - profits that have not been taxed at the ordinary corporate income tax
       rate, or

     - profits that have been earned and taxed more than five years before the
       distribution.

     The amount of the precompte is 50% of the net dividends before withholding
tax.

     If you are not entitled to the full avoir fiscal, you may generally obtain
a refund from the French tax authorities of any precompte paid by us with
respect to dividends distributed to you. Under the Treaty, the amount of the
precompte refunded to US residents is reduced by the 15% withholding tax applied
to dividends and by the partial avoir fiscal, if any. You are entitled to a
refund of any precompte that we actually pay in cash, but not to any precompte
that we pay by offsetting French and/or foreign tax credits. To apply for a
refund of the precompte, you should file French Treasury Form RF1 B EU-No. 5053
before the end of the year following the year in which the dividend was paid.
The form and its instructions are available from the Internal Revenue Service in
the United States or from the Centre des Impots des Non Residents.
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     For US federal income tax purposes, the amount of the precompte, including
any French withholding tax, will be included in your gross income as dividend
income in the year you receive it to the extent the precompte is paid out of our
current or accumulated earnings and profits as calculated for US federal income
tax purposes. If you are an individual holder of our ordinary shares or ADSs,
you will generally pay tax on such dividends at rates applicable to net capital
gains (see "Taxation of Capital Gains"), provided that certain holding period
requirements are satisfied. If you are a corporate holder of our ordinary shares
or ADSs, you will not benefit from the reduced rate on dividends available to
individual holders. The amount of precompte included in your gross income as
dividend income will not give rise to any US dividends received deduction. The
amount of any precompte paid in euros or French francs, including any French
withholding taxes, will be equal to the US dollar value of the euros or French
francs on the date the precompte is included in income, regardless of whether
the payment is in fact converted into US dollars. You will generally be required
to recognize a US source ordinary income or loss when you sell or dispose of the
euros or French francs.

     To the extent that any precompte paid exceeds our current and accumulated
earnings and profits as calculated for US federal income tax purposes, the
amount of precompte you receive will be treated first as a tax-free return of
capital to the extent of the adjusted tax basis in your ordinary shares or ADSs
and the balance will be taxed as capital gain recognized on a sale or exchange
(see "Withholding Tax and Avoir Fiscal").

     French withholding tax imposed on the precompte you receive is treated as
payment of a foreign income tax. You may take this amount as a deduction from
your gross income or a credit against your US federal income tax liability,
subject to specific conditions and limitations. The refund of precompte will
generally constitute foreign source "passive" income for foreign tax credit
purposes. For recipients predominantly engaged in the active conduct of a
banking, insurance, financing or similar business, the refund of precompte will
generally constitute foreign source "financial services" income for foreign tax
credit purposes.

  TAXATION OF CAPITAL GAINS

     If you are a resident of the US for purposes of the Treaty, you will not be
subject to French tax on any capital gain if you sell or exchange your ordinary
shares or ADSs, unless you have a permanent establishment or fixed base in
France and the ordinary shares or ADSs you sold or exchanged were part of the
business property of that permanent establishment or fixed base. Special rules
apply to individuals who are residents of more than one country.

     In general, for US federal income tax purposes, you will recognize capital
gain or loss if you sell or exchange your ordinary shares or ADSs. in an amount
equal to the difference between the amount realized on such sale or other
taxable exchange and your adjusted tax basis in your ordinary shares or ADSs.
Under current law, capital gains realized by corporate and individual taxpayers
are generally subject to US federal income tax at the same rate as ordinary
income, except that long term capital gains realized by individuals, trusts and
estates are subject to US federal income tax at a maximum rate of 15% for
taxable years beginning before January 1, 2009 (20% thereafter). Any gain or
loss will generally be US source gain or loss. The deductibility of capital
losses may be subject to certain limitations.

     If you are a cash basis holder who receives foreign currency in connection
with a sale or other taxable exchange of your ordinary shares or ADSs, your
amount realized will be based on the US dollar value of the foreign currency you
receive with respect to such ordinary shares or ADSs, as determined on the
settlement date of such sale or other taxable exchange.

     If you are an accrual basis holder, you may elect the same treatment
required of cash basis holders with respect to a sale or other taxable exchange
of your ordinary shares or ADSs provided that the election is applied
consistently from year to year. Such election may not be changed without the
consent of the Internal Revenue Service. If you are an accrual basis holder and
do not elect to be treated as a cash basis holder (pursuant to the Treasury
Regulations applicable to foreign currency transactions) for this purpose, you
may have a foreign currency gain or loss for US federal income tax purposes
because of differences between the US dollar value of the foreign currency
received prevailing on the date of the sale or other taxable exchange of
ordinary shares or ADSs and the date of payment. Any such currency gain or loss
generally will be treated as
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ordinary income or loss and would be in addition to gain or loss, if any, that
you recognized on the sale or other taxable exchange of your ordinary shares or
ADSs.

  PASSIVE FOREIGN INVESTMENT COMPANY RULES

     We believe that we will not be treated as a passive foreign investment
company, or PFIC, for US federal income tax purposes for the current taxable
year or for future taxable years. However, an actual determination of PFIC
status is fundamentally factual in nature and cannot be made until the close of
the applicable taxable year. We will be a PFIC for any taxable year in which
either:

     - 75% or more of our gross income is passive income; or

     - our assets that produce passive income or that are held for the
       production of passive income amount to at least 50% of the value of our
       total assets on average.

     For purposes of this test, we will be treated as directly owning our
proportionate share of the assets, and directly receiving our proportionate
share of the gross income, of each corporation in which we own, directly or
indirectly, at least 25% of the value of the shares of such corporation.

     If we were to become a PFIC, the tax applicable to distributions on our
ordinary shares or ADSs and any gains you realize when you dispose of our
ordinary shares or ADSs may be less favorable to you. You should consult your
own tax advisors regarding the PFIC rules and their effect on you if you
purchase our ordinary shares or ADSs.

  FRENCH ESTATE AND GIFT TAXES

     Under "The Convention between the United States of America and the French
Republic for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with Respect to Taxes on Estates, Inheritance and Gifts of November 24,
1978," if you transfer your ordinary shares or ADSs by gift or if they are
transferred by reason of your death, that transfer will be subject to French
gift or inheritance tax only if one of the following applies:

     - you are domiciled in France at the time of making the gift, or at the
       time of your death; or

     - you used the shares in conducting a business through a permanent
       establishment or fixed base in France, or you held the ordinary shares or
       ADSs for that use.

  FRENCH WEALTH TAX

     The French wealth tax does not generally apply to our ordinary shares or
ADSs if governance agreement restricts the transfer of Vivendi Universal shares.

  US INFORMATION REPORTING AND BACKUP WITHHOLDING

     Dividend payments on the ordinary shares or ADSs and proceeds from the
sale, exchange or other disposition of the ordinary shares or ADSs may be
subject to information reporting to the Internal Revenue Service and possible US
backup withholding. US federal backup withholding generally is imposed,
currently at a rate of 28% (31% for 2011 and thereafter), on specified payments
to persons that fail to furnish required information. Backup withholding will
not apply to a holder who furnishes a correct taxpayer identification number or
certificate of foreign status and makes any other required certification, or who
is otherwise exempt from backup withholding. Any US persons required to
establish their exempt status generally must file Internal Revenue Service Form
W-9, entitled Request for Taxpayer Identification Number and Certification.

     Backup withholding is not an additional tax. Amounts withheld as backup
withholding may be credited against your US federal income tax liability. You
may obtain a refund of any excess amounts withheld under the backup withholding
rules by filing the appropriate claim for refund with the Internal Revenue
Service and furnishing any required information.

                                       148
<PAGE>

DIVIDENDS

  DIVIDENDS

     We may only pay dividends out of our "distributable profits," plus any
amounts held in our reserve that the shareholders decide to make available for
distribution. These amounts may not include those that are specifically required
to be held in reserve by law or our statuts. Distributable profits consist of
the unconsolidated statutory net profit we generate in each fiscal year, as
increased or reduced by any profit or loss carried forward from prior years,
less any contributions to the reserve accounts made pursuant to law or our
statuts. This restriction on the payment of dividends also applies to each of
our French subsidiaries on an unconsolidated basis.

  LEGAL RESERVE

     The French commercial code provides that societes anonymes such as our
company must allocate 5% of their unconsolidated statutory net profit each year
to their legal reserve fund before dividends may be paid with respect to that
year. Funds must be allocated until the amount in the legal reserve is equal to
10% of the aggregate nominal value of the issued and outstanding share capital.
As of December 31, 2002, the legal reserve amounted 82.16 million euros. The
legal reserve of any company subject to this requirement may be distributed to
shareholders only upon liquidation of the company.

  APPROVAL OF DIVIDENDS

     Under the French commercial code, the board may propose a dividend for
approval by the shareholders at the annual general meeting of shareholders. If
we have earned distributable profits since the end of the preceding fiscal year,
as reflected in an interim income statement certified by our auditors, the board
may distribute interim dividends to the extent of the distributable profits for
the period covered by the interim income statement. The board exercises this
authority subject to French law and regulations and may do so without obtaining
shareholder approval, unless such distribution is of shares.

  DISTRIBUTION OF DIVIDENDS

     Dividends are distributed to shareholders pro rata. Outstanding dividends
are payable to shareholders on the date of the shareholders meeting at which the
distribution of dividends is approved. In the case of interim dividends,
distributions are made to shareholders on the date of the management board
meeting at which the distribution of interim dividends is approved. The actual
dividend payment date is decided by the shareholders in an ordinary general
meeting (or by the board of directors in the absence of such a decision by the
shareholders).

  TIMING OF PAYMENT

     According to the French commercial code, we must pay any dividends within
nine months of the end of our fiscal year unless otherwise authorized by court
order. Dividends on shares that are not claimed within five years of the date of
declared payment revert to the French State.

  DOCUMENTS ON DISPLAY

     Documents referred to in this document can be inspected at our offices at
42, avenue de Friedland, Paris Cedex 75380, France.

     We are subject to the periodic reporting and other informational
requirements of the Exchange Act. Under the Exchange Act, we are required to
file reports and other information with the SEC. Specifically, we are required
to file annually a Form 20-F no later than six months after the close of each
fiscal year. Copies of reports and other information, when so filed, may be
inspected without charge and may be obtained at prescribed rates at the public
reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street,
NW, Washington, D.C. 20549. The public may obtain information regarding the
Washington, D.C. Public Reference Room by calling the Commission at
1-800-SEC-0330. The public may also view documents we
                                       149
<PAGE>

have filed with the SEC on the internet at www.sec.gov. As a foreign private
issuer, we are exempt from the rules under the Exchange Act prescribing the
furnishing and content of quarterly reports and proxy statements, and officers,
directors and principal shareholders are exempt from the reporting and
short-swing profit recovery provisions in Section 16 of the Exchange Act.

ITEM 11:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Vivendi Universal, as the result of its global operating and financing
activities, is exposed to changes in interest rates, foreign currency exchange
rates and equity markets. These positions may adversely affect its operational
and financial earnings. In seeking to minimize the risks and costs associated
with such activities, Vivendi Universal follows a centrally administered risk
management policy approved by its Board of Directors. As part of this policy,
Vivendi Universal uses various derivative financial instruments to manage
interest rate, foreign currency exchange rate and equity market risks and their
impact on earnings and cash flows. Vivendi Universal generally does not use
derivative financial instruments for trading or speculative purposes.

     Vivendi Universal currently has primary exposures to several market risks,
principally interest rate risk, exchange rate and currency risk and equity
market risk.

     Interest rate exposures are primarily related to the indebtedness of
Vivendi Universal. See Note 7 to the Consolidated Financial Statements included
in this document.

     Currency exposures are primarily related to the operational activities of
several business units of Vivendi Universal that operate globally and collect
revenues in foreign currencies, in particular the US dollar.

     Equity market exposure is primarily related to several investments and
equity-linked derivatives held by Vivendi Universal. See Note 8 and Note 9 to
the Consolidated Financial Statements included in this document.

     Vivendi Universal manages these exposures by entering into derivatives
contracts, as described below.

  Interest Rate Risk Management

     Interest rate risk management instruments are used by Vivendi Universal to
manage net exposure to interest rate changes, to adjust the proportion of total
debt that is subject to variable and fixed interest rates and to lower overall
borrowing costs. Interest rate risk management instruments used by Vivendi
Universal include pay-variable and pay-fixed interest rate swaps and interest
rate caps. Pay-variable swaps effectively convert fixed rate debt obligations to
LIBOR and EURIBOR. Pay-fixed swaps and interest rate caps convert variable rate
debt obligations to fixed rate instruments and are considered to be a financial
hedge against changes in future cash flows required for interest payments on
variable rate debt. The following table summarizes information about Vivendi
Universal's interest rate risk management instruments:

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31,
                                                              -----------------------
                                                                  2002         2001
                                                              ------------   --------
                                                               (IN MILLIONS, EXCEPT
                                                                   PERCENTAGES)
<S>                                                           <C>            <C>
Pay-variable interest rate swaps:
  Notional amount of indebtedness...........................    E   626      E  5,868
  Average interest rate paid................................       5.80%         3.36%
  Average interest rate received............................       2.85%         5.01%
  Expiry:
     Due within one year....................................    E   387      E  2,282
     Due between two and five years.........................        208         1,526
     Due after five years...................................         31         2,060
</Table>

                                       150
<PAGE>

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31,
                                                              -----------------------
                                                                  2002         2001
                                                              ------------   --------
                                                               (IN MILLIONS, EXCEPT
                                                                   PERCENTAGES)
<S>                                                           <C>            <C>
Pay-fixed interest rate swaps:
  Notional amount of indebtedness...........................    E 8,492      E 10,284
  Average interest rate paid................................       4.50%         4.25%
  Average interest rate received............................       2.82%         2.97%
  Expiry:
     Due within one year....................................    E 1,818      E  2,766
     Due between two and five years.........................      4,410         3,951
     Due after five years...................................      2,264         3,567
Interest rate caps, floors and collars(1):
  Notional amount of indebtedness...........................    E    --      E  3,392
  Guarantee rate............................................                     4.78%
  Expiry:
     Due within one year....................................    E    --      E    150
     Due between two and five years.........................         --         1,391
     Due after five years...................................         --         1,851
</Table>

---------------

(1) These instruments were sold in 2002.

     A sensitivity analysis of the impact of a global increase of interest rates
of 1% on the net income (loss) generates an additional accounting charge of E19
million, assuming a constant level of indebtedness.

  Foreign Currency Risk Management

     Foreign currency risk management instruments are used by Vivendi Universal
to reduce earnings and cash flow volatility associated with changes in foreign
currency exchange rates. To protect the value of foreign currency forecasted
cash flows, including royalties, licenses, rights purchases and service fees,
and the value of existing foreign currency assets and liabilities, Vivendi
Universal enters into various instruments, including forward contracts, option
contracts and cross-currency swaps, that hedge a portion of its anticipated
foreign currency exposures for periods not to exceed two years. The gains and
losses on these instruments offset changes in the value of the related
exposures. At December 31, 2002, Vivendi Universal had effectively hedged
approximately 80% of its estimated foreign currency exposures, primarily related
to anticipated cash flows to be remitted over the following year. The principal
currencies hedged were the US dollar, Japanese yen, British pound and Canadian
dollar. The following table summarizes information about Vivendi Universal's
foreign currency risk management instruments:

<Table>
<Caption>
                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                                (IN MILLIONS)
<S>                                                           <C>       <C>
Forward contracts:
  Notional amount...........................................  E 3,360   E 1,705
  Sale against the euro.....................................    3,315       640
  Purchase against the euro.................................       45     1,065
  Expiry:
     Due within one year....................................    3,360     1,705
     Due between two and five years.........................       --        --
     Due after five years...................................       --        --
</Table>

                                       151
<PAGE>

<Table>
<Caption>
                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                                (IN MILLIONS)
<S>                                                           <C>       <C>
Currency swaps:
  Notional amount...........................................  E 2,031   E 2,710
  Sale against the euro.....................................    1,437     1,027
  Purchase against the euro.................................      594     1,683
  Expiry:
     Due within one year....................................    2,031     2,447
     Due between two and five years.........................       --       263
     Due after five years...................................       --        --
</Table>

     Approximately 90% of these derivatives are US dollar denominated. As of
December 31, 2002, an unfavorable movement of 10% of the currencies held by
Vivendi Universal would generate an additional accounting charge of E122 million
for 2003, assuming constant net currency exposures over the year.

     Another sensitivity analysis, based on an exchange rate of E1 = $1,
presents the impact of a hypothetical change of 8% in this exchange rate: (i) an
appreciation of the US dollar against euro would generate an increase of around
2.5% in consolidated revenues, and (ii) depreciation of the US dollar against
euro would generate a decrease of around 2.5% in consolidated revenues.

  Equity Market Risk Management

     Our exposure to equity markets risk relates to our investments in the
marketable securities of unconsolidated entities and in debt securities, as well
as to exposures relating to equity options linked to the hedging of several of
our convertible bonds and other options. During 2002 and 2001, Vivendi Universal
hedged certain equity-linked debts using specialized indexed swaps. These swaps,
with notional amounts totaling E 266 million in 2002 versus E 377 million in
2001 will progressively expire over eight years. The swaps are used to hedge the
underlying debts.

     Furthermore, a description of the total return swap of AOL Europe is
presented in Note 11 Commitments and Contingencies.

<Table>
<Caption>
                                                                    YEAR ENDED
                                                                   DECEMBER 31,
                                                              ----------------------
                                                               2002        2001
                                                              ------   -------------
                                                                       (IN MILLIONS)
<S>                                                           <C>      <C>
Equity-linked swaps:
Notional amount.............................................  E  266      E  377
Expiry:
  Due within one year.......................................     132          46
  Due between two and five years............................      11         208
  Due after five years......................................     123         123
Equity Options & others
  Notional Amount...........................................  E5,630      E3,155(1)
  Expiry
     Due within one year....................................     157       1,190
     Due between two and five years.........................   4,522       1,966
     Due after five years...................................     951
</Table>

                                       152
<PAGE>

<Table>
<Caption>
                                                                    YEAR ENDED
                                                                   DECEMBER 31,
                                                              ----------------------
                                                               2002        2001
                                                              ------   -------------
                                                                       (IN MILLIONS)
<S>                                                           <C>      <C>
Total return swaps:
  Notional amount...........................................  E  788      E3,511
  Expiry:
     Due within one year....................................     788          --
     Due between two and five years.........................      --       3,511
</Table>

---------------
(1) This figure includes the notional amount, i.e. the strike price, of the
    equity-linked derivatives. These instruments are described in Note 2, Note
    8, Note 9 and Note 11 to the Consolidated Financial Statements included in
    this document.

     In addition to these instruments, Vivendi Universal is exposed to
fluctuations in the share price of InterActiveCorp price through VUE Preferred B
Shares. This exposure is matched by InterActiveCorp shares held by several
subsidiaries of Vivendi Universal. The terms of these shares are described in
the Notes to the Consolidated Financial Statements included in this document.

     A sensitivity analysis made using assumption related to a one-time global
decrease of 10% in share price of all securities owned would reduce the
valuation of the equity-linked portfolio of Vivendi Universal by E194 million.

  Credit Concentrations and Counter-Party Risk

     Vivendi Universal minimizes its credit exposure to counter-parties by
entering into contracts only with highly-rated commercial banks or financial
institutions and by distributing the transactions among the selected
institutions. Although Vivendi Universal's credit risk is the replacement cost
at the then-estimated fair value of the instrument, management believes that the
risk of incurring losses is remote and those losses, if any, would not be
material. The market risk related to the foreign exchange agreements should be
offset by changes in the valuation of the underlying items being hedged. Vivendi
Universal's receivables and investments do not represent a significant
concentration of credit risk due to the wide variety of customers and markets in
which our products are sold, their dispersion across many geographic areas, and
the diversification of our portfolio among instruments and issuers.

ITEM 12:  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not applicable

                                    PART II

ITEM 13:  DEFAULT, DIVIDEND ARREARAGES AND DELINQUENCIES

     [None.]

ITEM 14:  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS

     [None.]

ITEM 15:  CONTROLS AND PROCEDURES

     Our Chairman and Chief Executive Officer and our Chief Financial Officer
have evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Exchange Act Rule 13a-14(c)) as of a date
within 90 days of the filing of this Annual Report on Form 20-F. Based on that
evaluation, our Chief Executive Officer and our Chief Financial Officer have
concluded that, as of the evaluation date, our disclosure controls and
procedures were effective to ensure that material information

                                       153
<PAGE>

relating to us and our consolidated subsidiaries would be made known to them by
others within these entities, particularly during the period in which this
annual report was being prepared, in order to allow timely decisions regarding
required disclosure.

     Following a change in senior management in the summer of 2002, Vivendi
Universal is engaged in a reorganization of its business activities, through
refinancing efforts and an asset divestiture program. As a result, we have
effected significant changes to the structure of the group. In the context of
these changes, we are taking the opportunity to reevaluate our internal controls
and have begun to implement changes. To our knowledge and except as noted above,
there are no other factors that could significantly affect our internal controls
subsequent to the evaluation date.

ITEM 16:  [RESERVED]

ITEM 16A:  AUDIT COMMITTEE FINANCIAL EXPERT

     Not applicable.

ITEM 16B:  CODE OF ETHICS

     Not applicable.

ITEM 16C:  PRINCIPAL ACCOUNTING FEES AND SERVICES

     Not applicable.

                                    PART III

ITEM 17:  FINANCIAL STATEMENTS

     Not applicable.

ITEM 18:  FINANCIAL STATEMENTS

     See our Consolidated Financial Statements beginning at page F1.

ITEM 19:  EXHIBITS

<Table>
<Caption>
EXHIBIT
NUMBER                               DESCRIPTION
-------                              -----------
<C>          <S>
  1.1        Vivendi Universal Restated Corporate statuts (organizational
             document) (English translation).
  2.1        Deposit Agreement dated as of April 19, 1995, as amended and
             restated as of September 11, 2000, and as further amended
             and restated as of December 8, 2000, among Vivendi
             Universal, S.A., The Bank of New York, as Depositary, and
             all the Owners and Beneficial Owners from time to time of
             American Depositary Shares issued thereunder (incorporated
             by reference to Vivendi Universal's Registration Statement
             on Form 8-A dated December 29, 2000, file number 001-16301).
  2.2        Vivendi Universal agrees to furnish to the Commission on
             request a copy of any instrument defining the rights of
             holders of long-term debt of Vivendi Universal and of any
             subsidiary for which consolidated or unconsolidated
             financial statements are required to be filed.
  4.1        Merger Agreement, dated as of June 19, 2000, by and among
             Vivendi S.A., Canal Plus S.A., Sofiee S.A., 3744531 Canada
             Inc. and The Seagram Company Ltd. (incorporated by reference
             to Vivendi Universal's Registration Statement on Form F-4
             dated October 30, 2000, file number 333-48966).
  4.2        Shareholder Governance Agreement, dated as of June 19, 2000,
             by and among Vivendi S.A., Sofiee S.A. and certain
             shareholders of The Seagram Company Ltd. (incorporated by
             reference to Vivendi Universal's Registration Statement on
             Form F-4 dated October 30, 2000, file number 333-48966).
</Table>

                                       154
<PAGE>

<Table>
<Caption>
EXHIBIT
NUMBER                               DESCRIPTION
-------                              -----------
<C>          <S>
  4.3        Stock and Asset Purchase Agreement, dated as of December 19,
             2000, among Vivendi Universal S.A., Pernod Ricard S.A. and
             Diageo plc (incorporated by reference to Vivendi Universal's
             Registration Statement on Form F-4 dated February 5, 2001,
             file number 333-55000).
  4.4        Transaction Agreement, dated as of December 16, 2001, by and
             among Vivendi Universal, S.A., Universal Studios, Inc., USA
             Networks, Inc., USANi LLC and Liberty Media Corporation
             (incorporated by reference to Vivendi Universal's Report of
             Foreign Private Issuer on Form 6-K dated December 19, 2001,
             file number 001-16301).
  4.5        Amended and Restated Limited Liability Limited Partnership
             Agreement of Vivendi Universal Entertainment LLLP dated as
             of May 7, 2002, by and among USI Entertainment Inc., USANI
             Holding XX, Inc., Universal Pictures International Holdings
             BV, Universal Pictures International Holdings 2 BV,
             NYCSpirit Corp. II, USA Networks, Inc., USANi Sub LLC, New-U
             Studios Holdings, Inc. and Barry Diller (incorporated by
             reference to Vivendi Universal's Schedule 13D/A dated May
             17, 2002, file number 005-42990).
  4.6        Amendment No. 1 dated as of November 25, 2002, to the
             Amended and Restated Limited Liability Limited Partnership
             Agreement of Vivendi Universal Entertainment LLLP dated as
             of May 7, 2002, by and among USI Entertainment Inc., USANI
             Holdings XX, Inc., Universal Pictures International Holdings
             BV, Universal Pictures International Holdings 2 BV,
             NYCSpirit Corp. II, USA Interactive, (formerly known as USA
             Networks, Inc.), USANi Sub LLC, New-U Studios Holdings,
             Inc., Barry Diller, Vivendi Universal S.A., Universal
             Studios, Inc., Sub I -- USA Holding LLC, USI -- USA Holding
             LLC, USIE -- USA Holding LLC and V -- USA Holding LLC
             (incorporated by reference to Vivendi Universal's Schedule
             13D/A dated February 20, 2003, file number 005-42990).
  4.7        E2.5 billion Dual Currency Term and Revolving Credit
             Facility dated as of May 13, 2003, among Vivendi Universal
             S.A., as borrower, certain of its subsidiaries, as
             guarantors, the lenders party thereto, and Societe Generale,
             as facility agent and security agent.
  4.8        Restated Credit Agreement dated as of March 15, 2002, as
             amended on February 6, 2003, and as further amended and
             restated on May 13, 2003, among Vivendi Universal S.A., as a
             borrower and the obligors' agent, certain of its
             subsidiaries, as guarantors, the lenders party thereto and
             Societe Generale, as facility and security agent.
  4.9        Loan Agreement dated as of June 24, 2003, among Vivendi
             Universal Entertainment LLLP, as borrower, the lenders from
             time to time party thereto, Bank of America, N.A. and
             JPMorgan Chase Bank, as co-administrative agents, Barclays
             Bank PLC, as syndication agent, and JPMorgan Chase Bank, as
             collateral agent and paying agent.
  4.10       Facility Agreement dated December 6, 2002, among Societe
             d'Investissement pour la Telephonie S.A., as borrower, the
             lenders party thereto, Credit Lyonnais, as agent, and The
             Royal Bank of Scotland PLC, as security trustee; as amended
             by an Amendment Letter, dated January 20, 2003; as further
             amended by a 2nd Amendment Letter, dated January 21, 2003;
             as further amended by a 3rd Amendment Letter, dated March
             31, 2003; and as further amended by a 4th Amendment Letter,
             dated June 25, 2003.
  4.11       Indenture dated as of April 8, 2003, between Vivendi
             Universal S.A. and The Bank of New York, as trustee.
  4.12       Letter Agreement dated December 17, 2001, between Vivendi
             Universal S.A. and Edgar M. Bronfman.
</Table>

                                       155
<PAGE>

<Table>
<Caption>
EXHIBIT
NUMBER                               DESCRIPTION
-------                              -----------
<C>          <S>
  4.13       Employment Agreement dated September 25, 2002, by and
             between Vivendi Universal U.S. Holding Co. and Edgar
             Bronfman, Jr.
  8.1        Subsidiaries of Vivendi Universal S.A.
 11.1        Consent of RSM Salustro Reydel and Barbier Frinault & Cie.
 11.2        Consent of RSM Salustro Reydel.
 11.3        Certification of Chief Executive Officer and Chief Financial
             Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
             2002.
 11.4        Certification furnished pursuant to 18 U.S.C. Section 1350,
             as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
             of 2002.
</Table>

                                       156
<PAGE>

                                   SIGNATURES

     The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.

                                          VIVENDI UNIVERSAL, S.A.

                                          By:     /s/ JACQUES ESPINASSE
                                            ------------------------------------
                                            Name: Jacques Expinasse
                                            Title: Senior Executive Vice
                                                   President and Chief Financial
                                                   Officer

Date: June 30, 2003

                                       157
<PAGE>

                               VIVENDI UNIVERSAL

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Independent Public Accountants....................  F-2
Report of Independent Public Accountants....................  F-3
Consolidated Statement of Income............................  F-4
Consolidated Balance Sheet..................................  F-5
Consolidated Statement of Cash Flows........................  F-6
Consolidated Statement of Shareholders' Equity..............  F-8
Notes to Consolidated Financial Statements..................  F-9
</Table>

                                       F-1
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of Vivendi Universal:

     We have audited the accompanying consolidated balance sheet of Vivendi
Universal and subsidiaries (together the "Company"), as of December 31, 2002 and
the related consolidated statements of income, changes in shareholders' equity
and cash flows for the year then ended, expressed in Euros. We have also audited
the information presented in Note 17 which includes the effect of the
differences between accounting principles generally accepted in France and the
United States of America on the consolidated net income of the company and
shareholder's equity as of and for the year ended December 31, 2002. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The consolidated financial statements of the Company as of December
31, 2001 and December 31, 2000 and for each of the two years in the period ended
December 31, 2001, were jointly audited by Barbier Frinault & Cie, a member firm
of Andersen Worldwide and RSM Salustro Reydel and whose report dated March 28,
2002, except for Note 14 as to which the date is May 24, 2002, expressed an
unqualified opinion on these statements. Andersen Worldwide has ceased operating
as a member of the Securities and Exchange Commission Practice Section of the
American Institute of the Certified Public Accountants.

     We conducted our audit in accordance with auditing standards generally
accepted in France and 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 statements presentation. We believe that our
audit provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, (i) the financial position of the Company as of
December 31, 2002 and the results of its operations and its cash flows for the
year then ended in conformity with accounting principles generally accepted in
France and (ii) the information with respect to accounting principles generally
accepted in the United States of America as of and for the year ended December
31, 2002 set forth in Note 17.

     The accounting practices of the Company used in preparing the accompanying
financial statements vary in certain respects from accounting principles
generally accepted in the United States. A description of the significant
differences between the Company's accounting practices and accounting principles
generally accepted in the United States of America and the effect of those
differences on consolidated net income for year ended December 31, 2002 and
shareholders' equity as of December 31, 2002 is set forth in Note 17 to the
consolidated financial statements.

<Table>
<S>                                                <C>
/s/ RSM Salustro Reydel                                     /s/ Barbier Frinault & Cie
RSM Salustro Reydel                                Barbier Frinault & Cie
                                                   A member firm of Ernst & Young International
</Table>

                                 Paris, France
                                 April 2, 2003
 (Except with respect to matters discussed in Note 17 as to which date is June
                                   27, 2003)
                                       F-2
<PAGE>

                  REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS(1)

To the Shareholders of Vivendi Universal:

     We have audited the accompanying consolidated balance sheet of Vivendi
Universal and subsidiaries (together the "Company"), as of December 31, 2001 and
December 31, 2000 and the related consolidated statements of income, changes in
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 2001, expressed in Euros. We have also audited the
information presented in Note 14, which includes the approximate effect of the
differences between accounting principles generally accepted in France and the
United States of America on the consolidated net income of the Company for the
years ended December 31, 2001, 2000 and 1999 and on shareholders' equity of the
Company as of December 31, 2001 and 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in France and 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 statements presentation. We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, (a) the financial position of Vivendi Universal and
subsidiaries as of December 31, 2001 and 2000 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted in
France and (b) the information with respect to accounting principles generally
accepted in the United States of America as of December 31, 2001 and 2000 and
for the years ended December 31, 2001, 2000 and 1999 set forth in Note 14.

     Without calling into question the opinion expressed above, we wish to draw
your attention to the sub-section "Changes in Accounting Principles and
Financial Statement Presentation" of the section of the notes "Summary of
Significant Accounting Policies and Practices" which states the change in
presentation of the Consolidated Statement of Income and the change in
definition of the exceptional items.

     The accounting practices of the Company used in preparing the accompanying
financial statements vary in certain respects from accounting principles
generally accepted in the United States. A description of the significant
differences between the Company's accounting practices and accounting principles
generally accepted in the United States and the approximate effect of those
differences on consolidated net income for each of the three years in the period
ended December 31, 2001 and shareholders' equity as of December 31, 2001 and
2000 is set forth in Note 14 to the consolidated financial statements.

/s/ Barbier Frinault & Cie                               /s/ RSM Salustro Reydel
Barbier Frinault & Cie,                                      RSM Salustro Reydel
a member firm of Andersen Worldwide

                                 Paris, France
                                 March 28, 2002
(Except with respect to the matters discussed in Note 14 as to which the date is
                                 May 24, 2002)

---------------

     1 This report is a copy of the previously issued joint audit report which
has not been reissued.
                                       F-3
<PAGE>

                        CONSOLIDATED STATEMENT OF INCOME

<Table>
<Caption>
                                                             YEARS ENDED DECEMBER 31,
                                                  -----------------------------------------------
                                                      2002
                                                  ILLUSTRATION
                                                    VE EQUITY       2002        2001
                                                  ACCOUNTING(1)   ACTUAL(2)    ACTUAL    2000(4)
                                                  -------------   ---------   --------   --------
                                                   (UNAUDITED)
                                                  (IN MILLIONS OF EUROS EXCEPT PER SHARE AMOUNTS)
<S>                                               <C>             <C>         <C>        <C>
REVENUES........................................    E 28,112      E 58,150    E 57,360   E 41,580
Cost of revenues................................     (16,749)      (40,574)    (39,526)   (30,181)
Selling, general and administrative Expenses....      (8,919)      (12,937)    (13,699)    (9,004)
Other operating expenses, net...................        (567)         (851)       (340)      (572)
                                                    --------      --------    --------   --------
OPERATING INCOME................................       1,877         3,788       3,795      1,823
Financing expenses..............................        (650)       (1,333)     (1,455)    (1,288)
Financial provisions............................      (2,786)       (2,895)       (482)      (196)
Other income (expense)..........................        (658)         (514)          9        722
                                                    --------      --------    --------   --------
INCOME BEFORE EXCEPTIONAL ITEMS, INCOME TAXES,
  GOODWILL AMORTIZATION, EQUITY INTEREST AND
  MINORITY INTEREST.............................      (2,217)         (954)      1,867      1,061
Exceptional items, net..........................       1,125         1,049       2,365      3,812
Income tax (expense) benefit....................      (2,119)       (2,556)     (1,579)    (1,009)
                                                    --------      --------    --------   --------
INCOME BEFORE GOODWILL AMORTIZATION, EQUITY
  INTEREST AND MINORITY INTEREST................      (3,211)       (2,461)      2,653      3,864
Equity in (losses) earnings of disposed
  businesses(2).................................          17            17          --         --
Equity in (losses) earnings of unconsolidated
  Companies.....................................         (99)         (294)       (453)      (306)
Goodwill amortization...........................        (992)       (1,277)     (1,688)      (634)
Goodwill impairment.............................     (18,442)      (18,442)    (13,515)        --
                                                    --------      --------    --------   --------
INCOME (LOSS) BEFORE MINORITY INTEREST..........     (22,727)      (22,457)    (13,003)     2,924
Minority interest...............................        (574)         (844)       (594)      (625)
                                                    --------      --------    --------   --------
NET INCOME (LOSS)...............................    E(23,301)     E(23,301)   E(13,597)  E  2,299
                                                    ========      ========    ========   ========
EARNINGS (LOSS) PER BASIC SHARE.................    E (21.43)     E (21.43)   E (13.53)  E   3.63
                                                    ========      ========    ========   ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (IN
  MILLIONS)(3)..................................     1,087.4       1,087.4     1,004.8      633.8
</Table>

---------------

(1) This consolidated statement of income has been shown to present the Group's
    scope of consolidation as at December 31, 2002. It illustrates the
    accounting of Veolia Environnement using the equity method from January 1st,
    2002 instead of December 31st, 2002. (See Note 2).

(2) At December 31, 2002, Vivendi Universal has applied the option proposed in
    the paragraph 23100 of the French rules 99-02 and presents the equity in
    (losses) earnings of businesses which were sold during the year on one line
    in the consolidated statement of income as "equity in (losses) earnings of
    disposed businesses". Disposed businesses include all of the Vivendi
    Universal Publishing activities excluding: Vivendi Universal Games;
    publishing activities in Brazil; the consumer press division, the disposal
    of which was completed in February 2003; and Comareg, the disposal of which
    is pending (see Note 2 and 3).

(3) Excluding treasury shares recorded as a reduction of shareholders' equity.

(4) Reflects changes in accounting principles and financial statement
    presentation adopted in 2001.

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-4
<PAGE>

                           CONSOLIDATED BALANCE SHEET

<Table>
<Caption>
                                                                        DECEMBER 31,
                                                              ---------------------------------
                                                       NOTE     2002        2001        2000
                                                       ----   ---------   ---------   ---------
                                                                   (IN MILLIONS OF EUROS)
<S>                                                    <C>    <C>         <C>         <C>
                                            ASSETS
Goodwill, net........................................    3    E  20,062   E  37,617   E  47,133
Other intangible assets, net.........................   10       14,706      23,302      20,180
Property, plant and equipment, net...................   10        7,686      23,396      19,989
Investments accounted for using the equity method....    4        1,903       9,176       9,177
Other investments....................................    4        4,138       5,583       7,342
Seagram's spirit and wine net assets held for sale...                --          --       8,759
                                                              ---------   ---------   ---------
TOTAL LONG-TERM ASSETS...............................            48,495      99,074     112,580
                                                              ---------   ---------   ---------
Inventories and work-in-progress.....................   10        1,310       3,163       3,219
Accounts receivable..................................   10        9,892      21,094      19,242
Deferred tax assets..................................    9        1,613       4,225       3,908
Short-term loans receivable..........................               640       2,948       1,171
Cash and cash equivalents............................    7        7,295       4,725       3,271
Other marketable securities..........................   10           88       3,773       7,347
                                                              ---------   ---------   ---------
TOTAL CURRENT ASSETS.................................            20,838      39,928      38,158
                                                              ---------   ---------   ---------
TOTAL ASSETS.........................................         E  69,333   E 139,002   E 150,738
                                                              =========   =========   =========
                             LIABILITIES AND SHAREHOLDERS' EQUITY
Share capital........................................         E   5,877   E   5,972   E   5.945
Additional paid-in capital...........................            27,687      28,837      27,913
Retained earnings....................................           (19,544)      1,939      22,817
                                                              ---------   ---------   ---------
TOTAL SHAREHOLDERS' EQUITY...........................    5       14,020      36,748      56,675
Minority interest....................................    5        5,497      10,208       9,787
Other equity.........................................    5        1,000          --          --
Deferred income......................................               579       1,856       1,560
Provisions and allowances............................    6        3,581       6,331       5,946
Long-term debt.......................................    7       10,455      27,777      23,954
Other non-current liabilities and accrued expenses...   10        3,894       5,688       6,337
                                                              ---------   ---------   ---------
                                                                 39,026      88,608     104,259
                                                              ---------   ---------   ---------
Accounts payable.....................................   10       13,273      26,414      23,497
Deferred taxes.......................................    9        7,857       9,977       8,130
Bank overdrafts and other short-term borrowings......    7        9,177      14,003      14,852
                                                              ---------   ---------   ---------
TOTAL CURRENT LIABILITIES............................            30,307      50,394      46,479
                                                              ---------   ---------   ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...........         E  69,333   E 139,002   E 150,738
                                                              =========   =========   =========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-5
<PAGE>

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                             YEARS ENDED DECEMBER 31,
                                                  -----------------------------------------------
                                                  2002(1)(2)     2002(1)      2001       2000(3)
                                                  -----------   ---------   ---------   ---------
                                                  (UNAUDITED)
                                                              (IN MILLIONS OF EUROS)
<S>                                               <C>           <C>         <C>         <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss)...............................   E (23,301)   E (23,301)  E (13,597)  E   2,299
Reversal of equity in (losses) earnings of sold
  businesses....................................         (17)         (17)         --
Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and amortization.................      22,103       24,040      19,050       4,038
  Financial provisions(8).......................       2,786        2,895         482          92
  Gain on sale of property and equipment and
     financial assets, net......................      (1,541)      (1,748)     (2,546)     (3,910)
  Undistributed earnings from affiliates, net...         373          473         439         343
  Deferred taxes................................       1,589        1,608         379         231
  Minority interest.............................         574          844         594         625
Changes in assets and liabilities, net of effect
  of acquisitions and dispositions:.............         229         (124)       (301)     (1,204)
                                                   ---------    ---------   ---------   ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES.......       2,795        4,670       4,500       2,514
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property, plant, equipment and
  other.........................................      (1,729)      (4,134)     (5,338)     (5,800)
Proceeds from sale of property, plant, equipment
  and other.....................................         158          158         464       2,822
Purchase of investments(4)......................      (2,000)      (4,792)     (8,203)     (3,133)
Sale of investments(4)..........................       9,233       10,987       1,947       3,787
Sale of spirits and wine business...............          --           --       9,359          --
Sale (Purchase) of portfolio investments........          --           --       4,395         233
Net decrease (increase) in financial
  receivables...................................      (1,875)      (2,027)        278       4,452
Purchase of treasury shares held as marketable
  securities....................................          --           --        (141)     (2,456)
Sales (purchases) of other marketable
  securities....................................         322          213       1,579      (1,386)
                                                   ---------    ---------   ---------   ---------
NET CASH PROVIDED BY (USED FOR) INVESTING
  ACTIVITIES....................................       4,109          405       4,340      (1,481)
CASH FLOW FROM FINANCING ACTIVITIES:
Net increase (decrease) in short-term
  borrowings....................................      (3,271)      (5,991)     (1,670)      2,432
Notes mandatorily redeemable for new shares of
  Vivendi Universal.............................         767          767
Proceeds from issuance of borrowings and other
  long-term debt................................         369        2,748       5,195      16,370
Principal payment on borrowings and other
  long-term liabilities.........................         510       (1,854)     (5,900)    (21,923)
Net proceeds from issuance of common shares.....          68        1,622         582       3,396
Sales (purchases) of treasury shares(5).........       1,973        1,973      (4,253)       (106)
Cash dividends paid(6)..........................      (1,120)      (1,300)     (1,423)       (800)
Cash payment to USA Interactive(7)..............      (1,757)      (1,757)         --          --
                                                   ---------    ---------   ---------   ---------
NET CASH (USED FOR) PROVIDED BY FINANCING
  ACTIVITIES....................................      (2,461)      (3,792)     (7,469)       (631)
</Table>

                                       F-6
<PAGE>

<Table>
<Caption>
                                                             YEARS ENDED DECEMBER 31,
                                                  -----------------------------------------------
                                                  2002(1)(2)     2002(1)      2001       2000(3)
                                                  -----------   ---------   ---------   ---------
                                                  (UNAUDITED)
                                                              (IN MILLIONS OF EUROS)
<S>                                               <C>           <C>         <C>         <C>
Effect of foreign currency exchange rate changes
  on cash and cash equivalents..................         981        1,287          83           7
                                                   ---------    ---------   ---------   ---------
CHANGE IN CASH AND CASH EQUIVALENTS.............   E   5,424    E   2,570   E   1,454   E     409
                                                   =========    =========   =========   =========
CASH AND CASH EQUIVALENTS:
Beginning.......................................   E   1,871    E   4,725   E   3,271   E   2,862
                                                   =========    =========   =========   =========
Ending..........................................   E   7,295    E   7,295   E   4,725   E   3,271
                                                   =========    =========   =========   =========
</Table>

---------------

(1) Includes 100% of Cegetel, Maroc Telecom and Vivendi Universal Entertainment
    which are controlled by Vivendi Universal with a 44%, 35% and 86% interest,
    respectively (see Note 13). The cash contribution from these companies for
    the year ended December 31, 2002 is disclosed in paragraph 10.3.1.

    At the beginning of July 2002, Vivendi Universal reimbursed to Cegetel the
    loan which was granted in accordance with the optimization of Cegetel
    financing management. This decision was taken by Vivendi Universal and
    Cegetel mutual agreement, considering Vivendi Universal cash flow situation
    at the beginning of July 2002.

(2) This statement of cash flows has been shown to present the Group's scope of
    consolidation as at December 31, 2002. It illustrates the accounting of
    Veolia Environnement using the equity method from January 1st, 2002 instead
    of December 31st, 2002.

(3) Reflects changes in accounting policies and financial statement presentation
    adopted in 2001.

(4) Includes net cash from acquired or disposed companies. As of December 31,
    2002, the impact on net debt of these transactions is shown in paragraph
    7.2.

(5) Including impact of settlement of put options on Vivendi Universal shares
    (E 883) million as of December 31, 2002.

(6) Including E 1,048 million of dividends paid by Vivendi Universal SA.

(7) See Note 3.

(8) See Note 10.1.3.

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-7
<PAGE>

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<Table>
<Caption>
                                          COMMON SHARES       ADDITIONAL                  NET
                                      ---------------------    PAID-IN     RETAINED     INCOME     SHAREHOLDERS'
                                        NUMBER      AMOUNT     CAPITAL     EARNINGS     (LOSS)        EQUITY
                                      -----------   -------   ----------   ---------   ---------   -------------
                                      (THOUSANDS)                      (IN MILLIONS OF EUROS)
<S>                                   <C>           <C>       <C>          <C>         <C>         <C>
BALANCE AT DECEMBER 31, 1999........     595,648    E 3,276    E 4,351     E   1,834   E   1,431     E  10,892
Changes in accounting method........          --         --         --          (120)          4          (116)
                                       ---------    -------    -------     ---------   ---------     ---------
BALANCE AT DECEMBER 31, 1999........     595,648      3,276      4,351         1,714       1,435        10,776
Net loss for the year 2000..........          --         --         --            --       2,299         2,299
Foreign currency translation
  adjustment........................          --         --         --          (735)         --          (735)
Appropriation of net income.........          --         --         --         1,435      (1,435)           --
Dividends paid, E 1 per share.......          --         --         --          (566)         --          (566)
Goodwill from business combinations
  reversed following the disposition
  of BSkyB, Vinci, Nexity and 34% of
  Multithematique...................          --         --        781           (44)         --           737
Merger transactions among Vivendi,
  Seagram and Canal Plus............     486,561      2,676     23,372        18,792          --        44,840
Conversion of bonds, warrants, stock
  options and issuances under the
  employee stock purchase plan......      11,185         62        585            --          --           647
Treasury shares allocation..........     (12,586)       (69)    (1,176)           --          --        (1,245)
Release of revaluation surplus and
  other.............................          --         --         --           (78)         --           (78)
                                       ---------    -------    -------     ---------   ---------     ---------
BALANCE AT DECEMBER 31, 2000........   1,080,808      5,945     27,913        20,518       2,299        56,675
Net loss for the year 2001..........          --         --         --            --     (13,597)      (13,597)
Foreign currency translation
  adjustment........................          --         --         --         1,483          --         1,483
Appropriation of net income.........          --         --         --         2,299      (2,299)           --
Dividends paid, E 1 per share.......          --         --         --        (1,203)         --        (1,203)
Goodwill from business combination
  reversed following the disposition
  of TV Sport.......................          --         --         --            35          --            35
Conversion of ex-Seagram
  exchangeables.....................      31,549        173      2,335        (2,508)         --            --
Conversion of ex-Seagram stock
  options...........................       3,452         19        255            --          --           274
Conversion of bonds, warrants, stock
  options and issuances under the
  employee stock purchase plan......      10,142         56        419            --          --           475
Common shares cancelled (treasury
  shares)...........................     (40,123)      (221)    (2,070)           --          --        (2,291)
Treasury shares allocation..........          --         --         --        (4,634)         --        (4,634)
Release of revaluation surplus and
  other.............................          --         --        (15)         (454)         --          (469)
                                       ---------    -------    -------     ---------   ---------     ---------
BALANCE AT DECEMBER 31, 2001........   1,085,828      5,972     28,837        15,536     (13,597)       36,748
Net loss for the year 2002..........          --         --         --            --     (23,301)      (23,301)
Foreign currency translation
  adjustment........................          --         --         --        (3,615)         --        (3,615)
Appropriation of net income.........          --         --         --       (13,597)     13,597            --
Dividends paid, E 1 per share(1)....          --         --       (890)         (421)         --        (1,311)
Goodwill from business combination
  reversed..........................          --         --         --         1,001          --         1,001
Conversion of ex-Seagram
  exchangeables.....................      11,463         63        848          (887)         --            24
Conversion of ex-Seagram stock
  options...........................       1,239          7         92            --          --            99
Conversion of bonds, warrants, stock
  options and issuances under the
  employee stock purchase plan......       1,396          8         48            --          --            56
Common shares cancelled (treasury
  shares)...........................     (31,367)      (173)    (1,248)           --          --        (1,421)
Treasury shares allocation..........          --         --         --         5,907          --         5,907
Release of revaluation surplus and
  other.............................          --         --         --          (167)         --          (167)
                                       ---------    -------    -------     ---------   ---------     ---------
BALANCE AT DECEMBER 31, 2002........   1,068,559      5,877     27,687         3,757     (23,301)       14,020
</Table>

---------------

(1) Of which "precompte" of E 263 million.

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-8
<PAGE>

NOTE 1 DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.1 DESCRIPTION OF BUSINESS

     Vivendi Universal is one of the largest media and telecommunications groups
in the world.

     Vivendi Universal's portfolio of assets includes operations in six
principal segments:

     Cegetel Group -- Cegetel Group, through its 80% owned subsidiary, SFR, is a
mobile telecommunications operator in France and through its 90% owned
subsidiary, Cegetel S.A., is also a fixed line operator in France.

     Universal Music Group (UMG) -- UMG is a recorded music business. UMG
acquires, manufactures, markets and distributes recorded music in 63 countries.
In addition to its recorded music business, UMG also publishes music. UMG
manufactures, sells and distributes music video and DVD products, and owns mail-
order music/video clubs. Vivendi Universal owns approximately 92% of UMG.

     Vivendi Universal Entertainment (VUE) -- Vivendi Universal owns
approximately 86% of VUE, a US-based entertainment company active in the film,
television, and theme parks and resorts businesses through the following
entities:

     - Universal Pictures Group (UPG) -- UPG is a major film studio, engaged in
       the production and distribution of motion pictures worldwide in the
       theatrical, non-theatrical, home video/DVD and television markets.

     - Universal Television Group (UTG) -- UTG owns and operates four US cable
       television networks including USA Network and the Sci Fi Channel as well
       as a portfolio of international television channels. UTG produces and
       distributes original television programming worldwide.

     - Universal Parks and Resorts (UPR) -- UPR is a destination theme park
       operator. UPR owns interests in and operates theme parks and resorts in
       the US, Japan and Spain including Universal Studios in Hollywood,
       California and Universal Studios in Orlando, Florida.

     Canal+ Group -- Canal+ Group produces and distributes digital and analog
pay-TV in France (principally through its premium channel, Canal+, and its
digital satellite platform, CanalSatellite). Canal+ Group has 6.95 million
individual subscriptions in France. Canal+ Group is also a leading European
studio involved in the production, co-production, acquisition and distribution
of feature films and television programs and owns interests in pay-TV activities
in Italy, Spain, Poland and elsewhere. Vivendi Universal owns 100% of Canal+
Group, which in turn owns 49% of Canal+ S.A., which holds the broadcast license
for the premium channel Canal+, and Vivendi Universal owns 67% of
CanalSatellite.

     Maroc Telecom -- Maroc Telecom is the incumbent fixed line and the leading
mobile telecommunications operator in Morocco. Vivendi Universal has a 35%
ownership stake in Maroc Telecom. However, through its control of the executive
board and management, Vivendi Universal exercises day-to-day control over the
business and consolidates it in its financial statements.

     Vivendi Universal Games (VU Games) -- VU Games is a worldwide leader in the
development, marketing and distribution of games and educational software for
PC, handhelds and consoles. Vivendi Universal owns 99% of VU Games.

     Vivendi Universal was formed through the merger of Vivendi S.A., The
Seagram Company Ltd. and Canal+ S.A. in December 2000. From its origins as a
water company, Vivendi expanded its business rapidly in the 1990s and
transformed itself into a media and telecommunications company with the December
2000 merger and the May 2002 acquisition of the entertainment assets of USA
Networks. Following the appointment of new management in July 2002, Vivendi
Universal commenced a significant asset disposal program aimed at reducing the
group's indebtedness, which Vivendi Universal is pursuing actively. Vivendi
Universal has already largely exited the environmental services and publishing
businesses and sold various smaller operations.

                                       F-9
<PAGE>

1.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

1.2.1 BASIS OF PRESENTATION

     Vivendi Universal has prepared its consolidated financial statements in
accordance with accounting principles generally accepted in France (French
GAAP). Vivendi Universal has applied the methodology for consolidated financial
statements based on Regulation 99.02 as approved by the "Comite de la
Reglementation Comptable" (French Accounting Standards Board). The financial
statements of foreign subsidiaries have, when necessary, been adjusted to comply
with French GAAP rules.

     French GAAP rules differ in certain respects from accounting principles
generally accepted in the United States (US GAAP). A description of these
differences and their effects on net income and shareholders' equity is
discussed in Note 17.

     The consolidated financial statements are presented in French GAAP format,
but also incorporate certain modifications and additional disclosures designed
to conform more closely with US GAAP style financial statements.

     Vivendi Universal has a December 31 year-end. Subsidiaries that do not have
a December 31 year-end prepare interim financial statements, except when their
year-end falls within the three months prior to December 31. Subsidiaries
acquired are included in the consolidated financial statements from the
acquisition date, or, for convenience reasons and if the impact is not material,
the most recent balance sheet date. The consolidated financial statements
include the accounts of Vivendi Universal and its subsidiaries after elimination
of material intercompany accounts and transactions.

1.2.2 PRINCIPLES OF CONSOLIDATION AND ACCOUNTING FOR INVESTMENTS

     All companies in which Vivendi Universal has an interest exceeding 50%, or
over which it has another form of legal or effective control (including Cegetel
and Maroc Telecom), are consolidated. In addition, Vivendi Universal only
consolidates a subsidiary if no other shareholder or group of shareholders
exercises substantive participating rights which would enable it to veto or
block routine decisions taken by Vivendi Universal.

     Subsidiaries in which Vivendi Universal has an interest exceeding 20% or
otherwise exercises significant influence are consolidated by the equity method.
Vivendi Universal also uses the equity method for consolidating its investments
in certain subsidiaries in which it owns less than 20% of the voting shares. In
these cases, Vivendi Universal exercises significant influence over the
operating and financial decisions of the subsidiary either (a) through
representation on the subsidiary's Board of Directors in excess of its
percentage interest, or (b) because there is no other shareholder with a
majority voting interest in the subsidiary, or (c) because Vivendi Universal
exercises substantive participating rights that enable Vivendi Universal to veto
or block decisions taken by the subsidiary board.

     The proportionate method of consolidation is used for investments in
jointly controlled companies, where Vivendi Universal and outside shareholders
have agreed to exercise joint control over significant financial and operational
policies. For such entities, which are within the Veolia Environnement Group
only, Vivendi Universal records its proportionate interest in the consolidated
balance sheet and consolidated income statement accounts.

     All other investments, which are not consolidated, are accounted for at
cost. A valuation allowance is established for any negative difference between
carrying value and fair value that is determined to be other than temporary.

     For additional explanations on the accounting treatment difference under
French and US GAAP regarding Special Purpose Entity (SPE), please refer to Note
17.1.

                                       F-10
<PAGE>

1.2.3 USE OF ESTIMATES

     The preparation of these financial statements requires management to make
informed estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. On an on-going basis, management evaluates its
estimates and judgments, including those related to the sale of future and
existing music and publishing related products, as well as from the distribution
of theatrical and television products, in order to evaluate the ultimate
recoverability of accounts receivable, film inventory, artist and author
advances and investments and in determining valuation allowances for
investments, long-lived assets, pension liabilities and deferred taxes.
Estimates and judgments are also required and regularly evaluated concerning
financing operations, restructuring costs, contingencies and litigation.
Management bases its estimates and judgments on historical experience and on
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results could differ significantly from these estimates
under different assumptions or conditions.

1.2.4 FOREIGN CURRENCY TRANSLATION

     Translation of subsidiaries' financial statements -- Financial statements
of subsidiaries for which the reporting currency is not the euro are translated
into euros at applicable exchange rates. All asset and liability accounts are
translated at the appropriate year-end exchange rate, and all income and expense
accounts and cash flow statements are translated at average exchange rates for
the year. The resulting translation gains and losses are recorded in
shareholders' equity. For subsidiaries operating in highly inflationary
economies, the financial statements are translated into the stable currency of a
dominant country in the same economic region. Related translation gains or
losses are recorded in current period earnings. These financial statements are
then translated from the stable currency into euros at the closing exchange
rates, and related translation gains or losses are recorded in shareholders'
equity. The exchange rates for the main currencies used to establish the
consolidated financial statements were as followed:

<Table>
<Caption>
                                            DECEMBER 31, 2002             DECEMBER 31, 2001
                                       ---------------------------   ---------------------------
                                       CLOSING RATE   AVERAGE RATE   CLOSING RATE   AVERAGE RATE
                                       ------------   ------------   ------------   ------------
<S>                                    <C>            <C>            <C>            <C>
US Dollar............................     1.030          0.934          0.878          0.897
GBP..................................     0.646          0.626          0.608          0.623
</Table>

     Foreign currency transactions -- Foreign currency transactions are
converted into euros at the exchange rate on the transaction date. The resulting
exchange gains and losses are recorded in current period earnings. Exchange
gains or losses on borrowings denominated in foreign currencies that qualify as
hedges for net investments in foreign subsidiaries are recorded in shareholders'
equity.

1.2.5 CONSOLIDATED STATEMENT OF INCOME

     As permitted by Regulation 99.02 (Section 41), Vivendi Universal has
elected to present its Consolidated Statement of Income in a format that
classifies income and expenses by function rather than by nature.

1.2.6 REVENUES AND COSTS

     Music -- Revenues from the sale of recorded music, net of a provision for
estimated returns and allowances, are recognized on shipment to third parties
(for additional information on revenue recognition, please refer to Note 17.9).
Advances to established recording artists and direct costs associated with the
creation of record masters are capitalized and are expensed as the related
royalties are earned, or when the amounts are determined to be unrecoverable.
The advances are expensed when past performance or current popularity does not
provide a sound basis for estimating that the advance will be recovered from
future royalties.

     TV & Film -- Generally, theatrical films are produced or acquired for
initial exhibition in the worldwide theatrical market followed by distribution
in the home video, pay television, network exhibition, television

                                       F-11
<PAGE>

syndication and basic cable television market. Television films from our library
may be licensed for domestic and foreign syndication, cable or pay television
and home video. Theatrical revenues from the distribution of films are
recognized as the films are exhibited. Home video product revenues, less a
provision for estimated returns and allowances, are recognized upon availability
of product for retail sale to the ultimate customer. Revenues from television
and pay television licensing agreements are recognized when the films are
available for telecast, and all other conditions of the sale have been met.
Revenues from television subscription services related to cable and satellite
programming are recognized as the services are provided. Revenues at theme parks
are recognized at the time of visitor attendance. Revenues for retail operations
are recognized at point-of-sale.

     Film and television costs are stated at the lower of cost less accumulated
amortization, or net realizable value. The estimated total film and television
production and participation costs are expensed based on the ratio of the
current periods gross revenues to estimated total gross revenues from all
sources on an individual production basis. The costs of licenses and rights to
exhibit theatrical movies and other programming on cable and pay TV channels are
recorded at the contract price, generally when the screening certificate has
been obtained and the programming is available for exhibition, or on the date
the contract is signed, if later. The costs for theatrical movies and other
long-term programming are amortized as the programming is exhibited. The costs
of multi-year sports rights are amortized over the term of the contract.

     Estimates of TV & Film total gross revenues and costs can change
significantly due to a variety of factors, including the level of market
acceptance of film and television products and subscriber fees. Accordingly,
revenue and cost estimates are reviewed periodically and prospective revisions
to amortization rates or write-downs to net realizable value may occur. Such
adjustments could have a material effect on the results of operations in future
periods.

     Telecoms -- Telephone service and installation revenues are recognized as
they occur. Subscriptions are billed monthly in advance, and recorded as a
deferred revenue liability, before transfer to earnings of the period during
which the service is provided. Prepaid fees are deferred and recognized as the
purchased minutes are used. Service discounts are accounted for as a reduction
of revenue when the service is used, or on provision of line access in the case
of pack discounts.

     Games -- Vivendi Universal Games records revenue when goods are shipped to
the customer except if risk of ownership does not transfer to the customer upon
shipment.

     Internet -- Internet revenues are primarily derived from subscriptions,
advertising and e-commerce activities. Subscription revenues are recognized over
the period that services are provided. Advertising revenues are recognized in
the period that advertisements are displayed. Revenues from e-commerce
activities are recognized when the products sold are shipped to customers.

     Publishing -- Magazine advertising revenues are recognized when the
advertisements are published. Publication subscription revenues are recognized
over the term of the subscription on a straight-line basis. Revenues from the
sale of books, magazines, interactive games and other multimedia products are
recognized when the products are shipped based on gross sales less a provision
for future returns.

     Environmental Services -- Revenues on public service contracts are
recognized on transfer of ownership or as services are provided, according to
the terms of the contract. Title is considered to have passed to the customer
when goods are shipped. The revenues include operating subsidies and exclude
production for own use. Specific measures concerning this activity are discussed
in the Document de reference issued by Veolia Environnement for the year ended
December 31, 2002.

                                       F-12
<PAGE>

1.2.7 RESEARCH AND DEVELOPMENT COSTS

     Research and development costs are expensed as incurred.

1.2.8 ACCOUNTING FOR COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED OR OTHERWISE
      MARKETED

     All costs incurred to establish the technological feasibility of a computer
software product to be sold, leased, or otherwise marketed are research and
development costs, and are expensed as they are incurred. The technological
feasibility of a computer software product is established when all planning,
designing, coding, and testing activities that are necessary to establish that
the product can be produced to meet its design specifications have been
completed.

1.2.9 ACCOUNTING FOR INTERNAL USE SOFTWARE

     Direct internal and external costs incurred to develop computer software
for internal use, including web site development costs, are capitalized during
the application development stage. Application development stage costs generally
include software configuration, coding, installation and testing. Costs of
significant upgrades and enhancements that result in additional functionality
are also capitalized. Costs incurred for maintenance and minor upgrades and
enhancements are expensed as incurred.

1.2.10 ADVERTISING COSTS

     The cost of advertising is expensed as incurred. However, certain costs
specifically related to the change of Vivendi Universal's corporate name have
been capitalized and are amortized over five years (for additional information
on advertising costs, please refer to Note 17.9).

1.2.11 INCOME OF CONSOLIDATED COMPANIES BEFORE EXCEPTIONAL ITEMS, INCOME TAXES,
       GOODWILL AMORTIZATION, EQUITY INTEREST AND MINORITY INTEREST

     Income from operations before exceptional items and income taxes includes
the business activities of consolidated companies and the cost of financing. It
does not include exceptional items.

1.2.12 EXCEPTIONAL ITEMS

     The definition of exceptional items is restricted to material items of an
unusual nature that arise from events or transactions outside the ordinary
course of business and which are not expected to recur. They principally include
capital gains and losses on the disposal of business activities and the
abandonment of related receivables where relevant.

1.2.13 DEFERRED TAXES

     Deferred tax assets and liabilities are recognized based on the differences
between the financial statement and tax base values of assets and liabilities.
Deferred tax amounts, recorded at the applicable rate at closing date, are
adjusted to allow for the impact of changes in French tax law and current tax
rates. Deferred tax assets are recognized for deductable timing differences, tax
losses and tax losses carry-overs. Their net realizable value is estimated
according to recovery prospects. Deferred tax assets on retained earnings of
foreign subsidiaries are not recorded.

1.2.14 EARNINGS PER SHARE

     The Group presents two earnings per share (EPS) amounts, basic and diluted.
Basic EPS is calculated by dividing net income by the weighted average number of
common shares outstanding, including treasury shares reported as marketable
securities, during the year. Diluted EPS adjusts basic EPS for the effects of
convertible securities, stock options and other potentially dilutive financial
instruments, where such effect is dilutive during the exercise period.

                                       F-13
<PAGE>

1.2.15 GOODWILL AND BUSINESS COMBINATIONS

     All business combinations are accounted for as purchases. Under the
purchase accounting method, assets acquired and liabilities assumed are recorded
at fair value. The excess of the purchase price over the fair value of net
assets acquired, if any, is capitalized as goodwill and amortized over the
estimated period of benefit on a straight-line basis.

     Prior to December 31, 1999, French GAAP permitted certain significant
acquisitions to be accounted for as mergers. Under this method, assets and
liabilities of the acquired company were accounted for at historical cost. The
difference between the value of shares issued in the merger and the value of net
assets acquired was recorded as goodwill.

     Up to the end of 1999, acquisitions completed through the issuance of
shares, that portion of goodwill attributable to such proceeds could be recorded
as a reduction of shareholders' equity, up to the amount of the related share
premium.

     Amortization periods for goodwill range from 20 to 40 years for our
Environmental Services businesses and from 7 to 40 years for our other
businesses.

     Following exceptional depreciation in 2001 and the first half of 2002 based
on a comparison of goodwill current fair value and net book value, Vivendi
Universal prospectively modified the amortization base for the goodwill
concerned as from July 1, 2002. This base is now taken as the net value of
goodwill after recurring amortization and exceptional depreciation as at June
30, 2002. The straight-line method is applied over the residual period of the
depreciation schedule.

1.2.16 OTHER INTANGIBLE ASSETS

     Vivendi Universal has acquired substantial intangible assets, including
music catalogs, artists' contracts, music and audiovisual publishing assets,
film and television libraries, international television networks, editorial
inventories, distribution networks, customer bases, copyrights and trademarks.
Music catalogs, artists' contracts and music publishing assets are amortized
over periods ranging from 14 to 20 years (for additional information on other
intangible assets, please refer to Note 17.9).

1.2.17 UMTS LICENSE

     In August 2001, SFR acquired a 20-year license to provide 3G (third
generation) UMTS mobile telephony services in France. The license fee was split
in two: a fixed upfront fee of E 619 million, which was paid in September 2001,
and future payments equal to 1% of 3G revenues earned when the service
commences. Pursuant to a notice issued by the "Conseil National de la
Comptabilite" on January 9, 2002, the license was recognized as intangible
assets for E 619 million. It will be amortized on a straight-line basis from the
date when the service commences until the license maturity (i.e. August 2021).
Regarding future payments, they will be expensed when they occur since they are
not easily valuable.

1.2.18 PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is carried at cost. Depreciation is computed
using the straight-line method based on the estimated useful life of the assets,
generally 20-30 years for buildings and 3-15 years for equipment and machinery.
Assets financed by lease contracts that include a purchase option (known in
France as "credit-bail") are capitalized and amortized over the shorter of the
lease term or the estimated useful life of the assets. Amortization expenses on
assets acquired under such leases are included in depreciation expenses.

1.2.19 VALUATION OF LONG-LIVED ASSETS

     Vivendi Universal reviews the carrying value of long-lived assets,
including goodwill and other intangible assets, for impairment at each closing
or whenever facts, events or changes in circumstances, both internally and
externally, indicate that the carrying amount may not be recoverable. Any such
conceptual impairment is measured, for each reporting unit, by comparing the net
book value and current fair value of the asset where

                                       F-14
<PAGE>

the current value depends on the underlying nature of its market value or value
in use. The reporting unit is defined as an operating segment, or one level
below an operating segment if the components of an operating segment constitute
businesses with no similar economic characteristics. Market value is defined as
the amount that could be obtained at the date of sale for an asset where the
transaction is concluded at normal market conditions, net of transaction costs.
Normal market conditions are those for transactions between fully informed,
independent and consenting parties. Value in use is defined as the value of
future economic benefits to be obtained from utilisation or write-off of the
asset. It is calculated from estimated future economic benefits:

     - generally, the fair value of business units is determined by the analysis
       of discounted cash flows;

     - if this method is irrelevant for the business unit, other standard
       criteria are available: comparison to similar listed companies,
       assessment to the value attributed to the business units involved in
       recent transactions, market price for business units quoted at the Stock
       Exchange;

     - when using these two standard evaluation methods, the fair market value
       of business units is determined with the assistance of an independent
       valuation expert appointed by Vivendi Universal.

1.2.20 INVENTORIES

     Inventories are valued either on a first-in-first-out or a weighted average
cost basis and are recorded at the lower of cost or net realizable value.

1.2.21 CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

     Cash and cash equivalents consist of cash in banks and highly liquid
investments with original maturities of three months or less and are recorded at
cost, which approximates fair value due to the short-term maturity.

     Marketable securities consist of other highly liquid investments and
Vivendi Universal treasury shares acquired in open market transactions or in
connection with stock options granted to directors and employees. Vivendi
Universal treasury shares held for other reasons are recorded as a reduction of
shareholders' equity. Marketable securities are carried at cost and a valuation
allowance is accrued if the fair value is less than the carrying value.

1.2.22 BONDS EXCHANGEABLE FOR VIVENDI UNIVERSAL SHARES

     On issuance of bonds exchangeable for shares the premium is not recorded as
a liability. This is because the borrowing is intended to be redeemed in the
form of shares and consequently represents a contingent liability. An accrual is
made from issuance to redemption or conversion, as soon as the share price
passes below the redemption price, to cover probable cash redemption of the
bonds.

1.2.23 DERIVATIVE FINANCIAL INSTRUMENTS

     The Group uses various derivative financial instruments that predominantly
qualify as hedges to manage its exposure to fluctuations in interest rates,
foreign currency exchange rates and investments in equity and debt securities.
These instruments include interest rate and cross-currency swap agreements,
forward exchange contracts and interest rate caps. Interest rate swaps and caps
are used to manage net exposure to interest rate changes related to borrowings
and to lower overall borrowing costs. Interest rate swaps that modify borrowings
or designated assets are accounted for on an accrual basis. Premiums paid for
interest rate caps are expensed as incurred. Cross-currency swaps and forward
exchange contracts are used to reduce earnings and cash flow volatility
associated with changes in foreign exchange rates and to protect the value of
existing foreign currency assets and liabilities. Gains and losses arising from
the change in the fair value of currency instruments that qualify for hedge
accounting treatment are deferred until related gains or losses on hedged items
are realized. Other derivative financial instruments are used by the Group to
hedge a part of public debt with principal repayment terms based on the value of
Vivendi Universal stock. These instruments effectively modify the principal
terms to a fixed amount and the rates to floating rates. Any derivative
financial instruments that do not qualify as hedges for financial reporting
purposes are recorded at the lower of cost or
                                       F-15
<PAGE>

fair value. Loss relating to the periodic change in fair value is recorded as
income or expense of the current period.

1.2.24 EMPLOYEE BENEFIT PLANS

     In accordance with the laws and practices of each country in which we
operate, Vivendi Universal participates in, or maintains, employee benefit plans
providing retirement pensions, postretirement health care and life insurance and
postemployment benefits, principally severance for eligible employees.
Retirement pensions are provided for substantially all of our employees through
defined benefit or defined contribution plans, which are integrated with local
social security and multi-employer plans.

     For defined benefit plans, pension expense and plan contributions are
determined by independent actuaries using the projected unit cost method. This
method considers the probability of employees remaining with Vivendi Universal
until retirement, foreseeable changes in future compensation and an appropriate
discount rate for each country in which we maintain a pension plan. This results
in the recognition of pension-related assets and liabilities and related net
expense over the estimated term of service of our employees. Our funding policy
is consistent with applicable government funding requirements and regulations.
Pension plans may be funded with investments in various instruments such as
insurance contracts and equity and debt investment securities, but they do not
hold investments in Vivendi Universal's shares. Contributions to defined
contribution and multi-employer plans are funded and expensed currently. The
costs of post-retirement and post-employment benefits are accrued based on
actuarial studies performed by independent third-party acturial firms.

     Furthermore, Vivendi Universal has adopted the following rules:

     - Vivendi Universal uses fair value of plan assets in order to compute
       expected return, as well as to determine the amount of unrecognized
       actuarial gains and losses to be amortized during the reporting period;

     - The actuarial gains and losses are amortized using the minimal
       amortization method: the amounts of unamortized actuarial gains and
       losses recognized is the excess of 10 percent of the greater of the
       projected benefit obligation or the fair value of plan assets divided by
       the average remaining service period of active employees (or, if all or
       almost all of a plan's participants are inactive, the average remaining
       life expectancy of the inactive participants).

1.2.25 STOCK BASED COMPENSATION

     Vivendi Universal maintains stock option incentive plans that grant options
on its common shares to certain directors and employees and also to certain
employees of equity method investees. The purpose of these stock options plans
is to align the interest of management with the interest of shareholders by
providing an additional incentive to improve company performance and increase
share price on a long-term basis.

     In case of the issuance of new shares, shareholders' equity is credited for
the cumulative strike price to reflect the issuance of shares upon the exercise
of options. In the other cases, treasury shares held to fulfill obligations
under stock options granted are recorded as marketable securities and are
carried at the lower of their historical cost or their fair value or the strike
price of the stock-options hedged. Vivendi Universal recognizes any resulting
holding gain in the period that the shares are sold to the plan.

     Vivendi Universal also maintains employee stock purchase plans that allow
substantially all its full-time employees and those of certain of its
subsidiaries and equity method investees to purchase shares in Vivendi
Universal. Shares purchased by employees under these plans are subject to
certain restrictions relating to their sale or transfer.

1.2.26 CONSOLIDATED CASH FLOW STATEMENT

     The Consolidated Cash Flow Statement contains the information necessary to
analyze changes in the Group's cash position. The cash definition applied by the
Group prior to January 1, 2001, led to deduction of

                                       F-16
<PAGE>

bank overdrafts from cash and cash equivalents. As from January 1, 2001, bank
overdrafts are now classified as short-term borrowings within the Consolidated
Cash Flow Statement. Since that date, "cash" now only represents cash and cash
equivalents recorded as Consolidated Balance Sheet assets.

NOTE 2 SUPPLEMENTARY FINANCIAL INFORMATION

2.1 DATA COMPARABILITY

     At December 31, 2002, Vivendi Universal has applied the option proposed in
the paragraph 23100 of the French rules 99-02 and presents the equity in
(losses) earnings of businesses which were sold during the year on one line in
the consolidated statement of income. This treatment concerns all of Vivendi
Universal Publishing excluding: Vivendi Universal Games; publishing activities
in Brazil; the consumer press division, which was sold in February 2003; and
Comareg, the sale of which is currently pending. Furthermore, in order to
present the Group's scope of consolidation as at December 31, 2002, a statement
of income illustrating the accounting for Veolia Environnement by using the
equity method from January 1st, 2002 instead of December 31st, 2002, has been
shown page 1.

<Table>
<Caption>
                                                    VEOLIA        SOLD PUBLISHING
                                               ENVIRONNEMENT(1)    BUSINESSES(2)     TOTAL
                                               ----------------   ---------------   --------
                                                          (IN MILLIONS OF EUROS)
<S>                                            <C>                <C>               <C>
Revenues.....................................      E 30,038           E 2,838       E 32,876
Operating income.............................         1,911               268          2,179
Financial income.............................          (648)             (116)          (764)
Exceptional items............................           (76)              (50)          (126)
Net income (loss) at December 31, 2002.......           235                17            252
                                                   ========           =======       ========
</Table>

---------------

(1) Veolia Environnement is fully consolidated in the consolidated statement of
    income actual 2002.

(2) Vivendi Universal publishing activities, excluding: Vivendi Universal Games;
    publishing activities in Brazil; the consumer press division, which was sold
    in February 2003; and Comareg, the sale of which is currently pending. These
    items are presented on the line "equity in (losses) earnings of disposed
    businesses" in the consolidated statement of income actual 2002.

2.2 2001 AND 2002 PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

     2001 and 2002 unaudited pro forma financial information is reported as if
the following transactions (described in Note 3) had occurred on January 1, 2001
for the pro forma income statements for the 2001 and 2002 financial years, and
at December 31, 2001 for the pro forma balance sheet at that date:

     - Reduction of participation in Veolia Environnement.

     - Disposal of all Vivendi Universal publishing activities(1) (activities
       disposed over 2002), excluding Vivendi Universal Games, publishing
       activities in Brazil, the consumer press division and Comareg.

     - Acquisition of the entertainment assets of USA Networks Inc.
       (consolidated in the actual financial statements as from May 7, 2002).

     - Acquisition of Maroc Telecom (consolidated in the actual financial
       statements as from April 1, 2001).

     - Acquisition of MP3 (consolidated in the actual financial statements as
       from September 1, 2001).

     This unaudited pro forma financial information is not necessarily
indicative of the results Vivendi Universal would have reported had the
transactions described above actually occurred at the dates adopted for

---------------

     1 Houghton Mifflin has been consolidated in the actual financial statements
       of the Group since July 1, 2001.
                                       F-17
<PAGE>

preparation of the pro forma financial information. The accompanying pro forma
information is not intended to comply with Article 11 of regulation SX.

2.2.1 CONSOLIDATED STATEMENT OF INCOME PRO FORMA 2002 (UNAUDITED)

<Table>
<Caption>
                                                      YEAR ENDED DECEMBER 31, 2002
                               --------------------------------------------------------------------------
                                           REDUCTION OF       DISPOSAL OF   ACQUISITIONS
                                           PARTICIPATION      PUBLISHING        USA            PROFORMA
                                ACTUAL         IN VE          ACTIVITIES    NETWORKS(1)       (UNAUDITED)
                               ---------   -------------      -----------   ------------      -----------
                                                         (IN MILLIONS OF EUROS)
<S>                            <C>         <C>                <C>           <C>               <C>
REVENUES.....................  E  58,150     E (30,038)(a)      E   --         E  617(h)       E  28,729
Cost of revenues.............    (40,574)       23,825(a)           --           (340)(h)        (17,089)
Selling, general and
  administrative expenses....    (12,937)        4,018(a)           --           (117)(h)         (9,036)
Other operating expenses,
  net........................       (851)          284(a)           --             --(h)            (567)
                               ---------     ---------          ------         ------          ---------
OPERATING INCOME.............      3,788        (1,911)(a)          --            160(h)           2,037
Financial expenses, net......     (1,333)          713(a)(d)        78(g)         (82)(h)(j)        (624)
Financial provisions.........     (2,895)          109(a)           --             --(h)          (2,786)
Other income (expense).......       (514)         (144)(a)          --             --(h)            (658)
                               ---------     ---------          ------         ------          ---------
INCOME BEFORE EXCEPTIONAL
  ITEMS, INCOME TAXES,
  GOODWILL AMORTIZATION,
  EQUITY INTEREST AND
  MINORITY INTEREST..........       (954)       (1,233)(a)          78             78(h)          (2,031)
Exceptional items, net.......      1,049        (1,332)(a)(c)      844(f)          --(h)             561
Income tax (expense)
  benefit....................     (2,556)          437(a)         (192)(f)         (8)(h)(k)      (2,319)
                               ---------     ---------          ------         ------          ---------
INCOME BEFORE GOODWILL
  AMORTIZATION, EQUITY
  INTEREST AND MINORITY
  INTEREST...................     (2,461)       (2,128)(a)         730             70(h)          (3,789)
Equity in (losses) earnings
  of disposed businesses.....         17            --(a)          (17)(e)         --                 --
Equity in (losses) earnings
  of unconsolidated
  companies..................       (294)           72(a)(b)        --            (44)(h)(i)        (266)
Goodwill amortization........     (1,277)          285(a)           --            (48)(h)         (1,040)
Goodwill impairment..........    (18,442)           --(a)           --             --(h)         (18,442)
                               ---------     ---------          ------         ------          ---------
INCOME (LOSS) BEFORE MINORITY
  INTEREST...................    (22,457)       (1,771)(a)         713            (22)(h)        (23,537)
Minority interest............       (844)          270(a)           --              3(h)(l)         (571)
                               ---------     ---------          ------         ------          ---------
NET INCOME (LOSS)............  E (23,301)       (1,501)            713            (19)         E (24,108)
                               =========     =========          ======         ======          =========
EARNINGS (LOSS) PER BASIC
  SHARE......................  E  (21.43)                                                      E  (22.17)
                               =========                                                       =========
</Table>

---------------

(1) Related to the Entertainment Assets of USA Networks, Inc. purchased on May
    7, 2002.

                                       F-18
<PAGE>

2.2.2 CONSOLIDATED STATEMENT OF INCOME PRO FORMA 2001 (UNAUDITED)

<Table>
<Caption>
                                                   YEAR ENDED DECEMBER 31, 2001
                           -----------------------------------------------------------------------------
                                                                           ACQUISITION
                                       REDUCTION OF       DISPOSAL OF     USA NETWORKS,
                                       PARTICIPATION      PUBLISHING      MAROC TELECOM       PROFORMA
                            ACTUAL         IN VE          ACTIVITIES       AND MP3(1)        (UNAUDITED)
                           ---------   -------------      -----------     -------------      -----------
                                                      (IN MILLIONS OF EUROS)
<S>                        <C>         <C>                <C>             <C>                <C>
REVENUES.................  E  57,360     E (29,094)(a)     E (2,862)(e)     E  2,329(h)       E  27,733
Cost of revenues.........    (39,526)       23,404(a)         1,309(e)        (1,014)(h)        (15,827)
Selling, general and
  administrative
  expenses...............    (13,699)        3,664(a)         1,084(e)          (610)(h)         (9,561)
Other operating expenses,
  net....................       (340)           62(a)            46(e)            --(h)            (232)
                           ---------     ---------         --------         --------          ---------
OPERATING INCOME.........      3,795        (1,964)(a)         (423)(e)          705(h)           2,113
Financial expenses,
  net....................     (1,455)          826(a)(d)        153(e)(g)       (248)(h)(j)        (724)
Financial provisions.....       (482)           54(a)            18(e)            --(h)            (410)
Other income (expense)...          9            36(a)            (2)(e)          (17)(h)             26
                           ---------     ---------         --------         --------          ---------
INCOME BEFORE EXCEPTIONAL
  ITEMS, INCOME TAXES,
  GOODWILL AMORTIZATION,
  EQUITY INTEREST AND
  MINORITY INTEREST......      1,867        (1,048)(a)         (254)(e)          440(h)           1,005
Exceptional items, net...      2,365           (39)(a)(c)         2(e)            --(h)           2,328
Income tax (expense)
  benefit................     (1,579)          462(a)           119(e)           (45)(h)(k)      (1,043)
                           ---------     ---------         --------         --------          ---------
INCOME BEFORE GOODWILL
  AMORTIZATION, EQUITY
  INTEREST AND MINORITY
  INTEREST...............      2,653          (625)(a)         (133)(e)          395(h)           2,290
Equity in (losses)
  earnings of
  unconsolidated
  companies..............       (453)         (209)(a)(b)         4(e)          (144)(h)(i)        (802)
Goodwill amortization....     (1,688)          341(a)            38(e)          (129)(h)         (1,438)
Goodwill impairment......    (13,515)          996(a)            --(e)            --(h)         (12,519)
                           ---------     ---------         --------         --------          ---------
INCOME (LOSS) BEFORE
  MINORITY INTEREST......    (13,003)          503(a)           (91)(e)          122(h)         (12,469)
Minority interest........       (594)         (136)(a)            5(e)           (34)(h)(l)        (759)
                           ---------     ---------         --------         --------          ---------
NET INCOME (LOSS)........  E (13,597)    E     367         E    (86)        E     88          E (13,228)
                           =========     =========         ========         ========          =========
EARNINGS (LOSS) PER BASIC
  SHARE..................  E  (13.53)                                                         E  (12.81)
                           =========                                                          =========
</Table>

---------------

(1) Related to the Entertainment Assets of USA Networks, Inc., Maroc Telecom and
    MP3.com

     The unaudited pro forma adjustments for the income statement are as
follows:

- REDUCTION OF PARTICIPATION IN VEOLIA ENVIRONNEMENT

     (a) Deconsolidate 2002 and 2001 Veolia Environnement income statements.

     (b) Record 2002 and 2001 equity earnings for Veolia Environnement,
respectively E 113 million and E (147) million, at the December 2002 interest
rate (20.4%).
                                       F-19
<PAGE>

     (c) Eliminate capital gains and dilution profit of E 1,408 million (net of
fees) recorded in 2002 as a result of the reduction of Vivendi Universal's
participation in Veolia Environnement.

     (d) Record the reduction in interest expense, assuming that the E 1,479
million proceeds from the disposal of 15.5% of Veolia Environnement shares
received on June 28, 2002 were received at the beginning of 2001, and assuming
that they were utilized for the purpose of reducing financial debt. The proceeds
taken into account for this calculation represent only the fraction of the
proceeds from the disposals of Vivendi Universal's participation in Veolia
Environnement not allocated to the financing of the January 2003 acquisition of
British Telecom's 26% participation in Cegetel. Using the group's average
financing cost for 2001 and 2002 (4.0% and 4.1%, respectively), the reduction in
interest expense amounts to E 30 million in 2002 (prorata temporis) and E 60
million in 2001.

     No tax effect has been recorded on adjustments (c) and (d) as described
above, since taxes on capital gains realized in France have been offset against
tax loss carryforwards within the French tax group.

- DISPOSAL OF VIVENDI UNIVERSAL PUBLISHING ACTIVITIES

     (e) Deconsolidate 2001 income statement of publishing activities and
eliminate equity in earnings of disposed businesses recorded for a net amount of
E 17 million in 2002.

     (f) Eliminate E 844 million of capital losses (net of fees) recorded in
2002 as a result of the disposal of publishing activities.

     (g) Record the reduction in interest expense, assuming that a fraction of
the proceeds from the disposal of publishing activities, which occurred in 2002,
was received at the beginning of 2001, and assuming that it has been utilized
for the purpose of reducing financial debt. The proceeds taken into account for
this calculation represents only the fraction of the proceeds from the disposals
of Vivendi Universal's publishing activities not allocated to the financing of
the January 2003 acquisition of British Telecom's 26% participation in Cegetel.
Using the group's average financing cost for 2001 and 2002 (4.0% and 4.1%,
respectively), the reduction in interest expense amounts to E 78 million in 2002
(prorata temporis) and E 94 million in 2001.

     No tax effect has been recorded on adjustments (f) and (g) as described
above, since capital losses realized in France have been offset against tax loss
carryforwards within the French tax group.

- ACQUISITION OF THE ENTERTAINMENT ASSETS OF USA NETWORKS, OF MAROC TELECOM AND
  OF MP3.COM

     (h) Consolidate the income statement of the entities detailed below,
starting at the beginning of 2001.

          a.  Entertainment assets of USA Networks, Inc. (fully consolidated
     starting May 7 in 2002 actual financial statements and consolidated as an
     equity investment in 2001 actual financial statements)

          b.  Maroc Telecom (consolidated starting April 1, 2001 in actual
     financial statements)

          c.  MP3.com (consolidated starting September 1, 2001 in actual
     financial statements)

     (i) Eliminate equity earnings in USANi LLC. Until May 7, 2002, Vivendi
Universal accounted for its 47.9% interest in USANi LLC as an equity investment,
which earnings amounted to E 44 million and E 144 million, respectively in 2002
and 2001.

     (j) Record the additional interest expense, assuming that the
acquisitions -- as described in note (h) -- were completed at the beginning of
the financial year. For Maroc Telecom and MP3.com, the interest rate used is the
group's average financing cost for 2001 (4.0%), resulting in increased interest
expense of E 24 million and E 7 million, respectively.

Regarding the entertainment assets of USA Networks, the interest expense has
been calculated using the interest rates of the $1.6 billion bridge loan and of
the preferred A and B interests (totalling $2.5 billion).

     (k) Includes tax effect on adjustment (j) as described above.

                                       F-20
<PAGE>

     (l) Record minority interest, mainly related to USA Interactive and Barry
Diller interest in Vivendi Universal Entertainment.

2.2.3 CONSOLIDATED BALANCE SHEET PRO FORMA 2001 (UNAUDITED)

<Table>
<Caption>
                                                        DECEMBER 31, 2001
                          ------------------------------------------------------------------------------
                                      REDUCTION OF        DISPOSAL OF      ACQUISITION
                                      PARTICIPATION       PUBLISHING           USA
                           ACTUAL         IN VE           ACTIVITIES       NETWORKS(1)        PROFORMA
                          ---------   -------------       -----------      -----------       -----------
                                                                                             (UNAUDITED)
                                                      (IN MILLIONS OF EUROS)
<S>                       <C>         <C>                 <C>              <C>               <C>
ASSETS
Goodwill, net...........  E  37,617     E  (4,875)(a)      E (2,151)(f)     E  9,221(k)(l)    E 39,812
Other intangible assets,
  net...................     23,302        (4,486)(a)        (3,006)(f)        1,771(k)         17,581
Equity investments......      9,176          (170)(a)(b)          3(f)        (6,669)(k)(m)      2,340
Tangible and other
  financial assets......     28,979       (15,514)(a)          (452)(f)(g)     1,247(k)(m)      14,260
                          ---------     ---------          --------         --------          --------
TOTAL LONG-TERM
  ASSETS................     99,074       (25,045)           (5,606)           5,570            73,993
                          ---------     ---------          --------         --------          --------
Accounts receivable.....     21,094       (11,003)(a)        (1,613)(f)        1,232(k)(n)       9,710
Other current assets....     14,109        (3,616)(a)          (789)(f)          253(k)          9,957
Cash and cash
  equivalents...........      4,725          (998)(a)(c)        694(f)(h)         --(k)          4,421
                          ---------     ---------          --------         --------          --------
TOTAL CURRENT ASSETS....     39,928       (15,617)           (1,708)           1,485            24,088
                          ---------     ---------          --------         --------          --------
TOTAL ASSETS............  E 139,002     E (40,662)         E (7,314)        E  7,055          E 98,081
                          =========     =========          ========         ========          ========
LIABILITIES AND
  SHAREHOLDERS' EQUITY
Shareholders' equity....  E  36,748     E   3,297(a)(d)    E   (844)(f)(i)  E    356(k)(o)    E 39,557
Minority interests......     10,208        (5,538)(a)           (43)(f)        1,025(k)(p)       5,652
Other long term
  liabilities...........     13,875        (4,700)(a)          (351)(f)          440(k)          9,264
Long-term debt..........     27,777       (14,539)(a)(e)       (997)(f)(j)     2,848(k)(q)      15,089
                          ---------     ---------          --------         --------          --------
                             88,608       (21,480)           (2,235)           4,669            69,562
                          ---------     ---------          --------         --------          --------
Accounts payable........     26,414       (12,345)(a)        (1,661)(f)          540(k)         12,948
Deferred taxes..........      9,977        (1,340)(a)          (279)(f)           --(k)          8,358
Short-term debt.........     14,003        (5,497)(a)        (3,139)(f)        1,846(k)(q)       7,213
                          ---------     ---------          --------         --------          --------
TOTAL CURRENT
  LIABILITIES...........     50,394       (19,182)           (5,079)           2,386            28,519
                          ---------     ---------          --------         --------          --------
TOTAL LIABILITIES AND
  SHAREHOLDERS'
  EQUITY................  E 139,002     E (40,662)         E (7,314)        E  7,055          E 98,081
                          =========     =========          ========         ========          ========
</Table>

---------------

(1) Related to the Entertainment Assets of USA Networks, Inc. purchased on May
    7, 2002

- REDUCTION OF PARTICIPATION IN VEOLIA ENVIRONNEMENT

     (a) Deconsolidate the balance sheet of Veolia Environnement.

     (b) Record as an equity investment Veolia Environnement for an amount of
E 448 million.

     (c) Record the proceeds resulting from the disposal of 20.4% of Veolia
Environnement shares sold on December 24, 2002, for an amount of E 1,856
million. These proceeds have been allocated to the financing of the January 2003
acquisition of British Telecom's 26% participation in Cegetel.

     (d) Record the proceeds and the associated capital gains.

                                       F-21
<PAGE>

     (e) Record the proceeds resulting from the disposal of 15.5% of Veolia
Environnement shares sold on June 28, 2002, for an amount of E 1,479 million,
considering that these proceeds have been allocated to the reduction of Vivendi
Universal financial debt.

- DISPOSAL OF VIVENDI UNIVERSAL PUBLISHING ACTIVITIES

     (f) Deconsolidate the balance sheet of Vivendi Universal publishing
activities sold in 2002.

     (g) Record the intercompany transactions between Vivendi Universal and the
publishing activities sold in 2002 that were historically eliminated in the
consolidated balance sheet of Vivendi Universal.

     (h) Record the proceeds resulting from the disposal of Houghton Mifflin for
an amount of E 879 million, corresponding to the portion of the proceeds
allocated to the financing of the January 2003 acquisition of BT Group's 26%
participation in Cegetel.

     (i) Record the proceeds and the associated capital losses.

     (j) Record the proceeds resulting from the disposal of Houghton Mifflin for
an amount of E 316 million, corresponding to the portion of the proceeds
allocated to the reduction of Vivendi Universal financial debt; record the
proceeds resulting from the disposal of other publishing activities sold in
2002.

- ACQUISITION OF THE ENTERTAINMENT ASSETS OF USA NETWORKS

     (k) Consolidate the balance sheet of the acquired entertainment assets of
USA Networks, Inc.

     (l) Record the goodwill resulting from the preliminary purchase price
allocation of the acquired entertainment assets of USA Networks, Inc.

     (m) Includes the following items (see Note 3.2.1)

          a.  Eliminate of 282 million shares held by Vivendi Universal and
     previously consolidated as an equity investment, for an amount of E 6,669
     million.

          b.  Record USA Interactive warrants issued to Vivendi Universal, for a
     amount of E 475 million, net of allowance.

          c.  Record 25 million USA Interactive shares acquired from Liberty
     Media in connection with the acquisition of the entertainment assets of USA
     Networks, for an amount of E 623 million.

     (n) Record the reimbursement premium on Class A and Class B preferred
interests, for an amount of E 861 million.

     (o) Record the value of the 27.6 million treasury shares transferred to
Liberty Media, for an amount of E 971 million; record the depreciation allowance
of USA Interactive warrants, for an amount of E 615 million.

     (p) Record USA Interactive and Barry Diller's common interest in VUE of
5.44% and 1.5% respectively.

     (q) Record cash payment to USA Interactive for an amount of E 1,846
million; record Class A and Class B preferred interests issued to USA
Interactive for a total amount of E 2,848 million.

     The pro forma information presented above, which is not compliant with
Article 11 of SEC Regulation SX, has been included since it is required under
French GAAP in the Company's consolidated financial statement to promote
comparability.

                                       F-22
<PAGE>

NOTE 3 GOODWILL

3.1 CHANGES IN GOODWILL

<Table>
<Caption>
                                                                ACCUMULATED    GOODWILL,
                                                     GOODWILL   AMORTIZATION      NET
                                                     --------   ------------   ---------
                                                           (IN MILLIONS OF EUROS)
<S>                                                  <C>        <C>            <C>
BALANCE AT DECEMBER 31, 2000.......................  E 49,054    E  (1,921)    E  47,133
Changes in consolidation scope.....................     3,541           62         3,603
Amortization.......................................        --       (2,148)       (2,148)
Impairment.........................................        --      (12,194)      (12,194)
Foreign currency translation adjustments...........     1,564         (341)        1,223
                                                     --------    ---------     ---------
BALANCE AT DECEMBER 31, 2001.......................  E 54,159    E (16,542)    E  37,617
                                                     ========    =========     =========
Changes in consolidation scope.....................     1,705        3,742         5,447
Amortization.......................................        --       (1,277)       (1,277)
Impairment.........................................        --      (18,442)      (18,442)
Foreign currency translation adjustments...........    (4,114)         831        (3,283)
                                                     --------    ---------     ---------
BALANCE AT DECEMBER 31, 2002.......................  E 51,750    E (31,688)    E  20,062
                                                     ========    =========     =========
</Table>

3.2 ACQUISITIONS AND DISPOSITIONS

SIGNIFICANT ACQUISITIONS AND DISPOSITIONS THAT OCCURRED IN 2002

3.2.1 ACQUISITION OF THE ENTERTAINMENT ASSETS OF USA NETWORKS, INC.

     On May 7, 2002, Vivendi Universal consummated its acquisition of the
entertainment assets of USA Interactive (formerly USA Networks, Inc.) with the
formation of Vivendi Universal Entertainment LLLP (VUE), a limited liability
limited partnership that is approximately 93% owned by non-wholly owned
subsidiaries of Vivendi Universal. As part of the transaction, Vivendi Universal
and its affiliates surrendered 320.9 million shares of USANi LLC that were
previously exchangeable into shares of USA stock. In addition, Vivendi Universal
transferred 27.6 million treasury shares to Liberty Media Corporation in
exchange for (i) 38.7 million USANi LLC shares (which were among the 320.9
million surrendered) and (ii) 25 million shares of USA common stock, which were
retained by Vivendi Universal (see Note 4.3).

     As consideration for the transaction, USA received a $1.62 billion cash
distribution from VUE, a 5.44% common interest in VUE and Class A and Class B
preferred interests in VUE with initial face values of $750 million and $1.75
billion, respectively. The Class B preferred interests are subject to put/call
provisions at any time following the 20-year anniversary of issuance (i.e. May
2022). USA may require Vivendi Universal to purchase the Class B preferred
interests, and Vivendi Universal may require USA to sell to it the Class B
preferred interests, for a number of USA shares having a market value equal to
the accreted face value of the Class B preferred interests at such time, subject
to a maximum of 56.6 million USA shares. The parties also agreed to put and call
options on USA's common interests. The call may be exercised by Vivendi
Universal at any time after the fifth anniversary of the transaction (May 2007)
and the put may be exercised by USA at any time after the eighth anniversary of
the transaction (May 2010), in either case, at its fair market value, payable at
the option of Universal Studio in cash or Vivendi Universal listed common equity
securities. For information on the VUE Partnership Agreement, see Note 11.

     In addition, Mr. Diller, USA's chairman and chief executive officer,
received a 1.5% common interest in VUE in return for agreeing to specific
non-competition provisions for a minimum of 18 months, for informally agreeing
to serve as VUE's chairman and chief executive officer and as consideration for
his agreement not to exercise his veto right over this transaction. At any time
after the first anniversary of the closing, Mr. Diller may require Universal
Studio, Inc. (a subsidiary of Vivendi Universal) to purchase his common interest
and at any time after the later of (a) the second anniversary of the closing and
(b) the time Mr. Diller is no longer the VUE chief executive officer, Universal
Studio, Inc. may purchase Mr. Diller's common interest. In either

                                       F-23
<PAGE>

case, the purchase price will be equal to the greater of $275 million and the
private market value of his common interest, payable at the option of Universal
Studio, Inc. in cash or Vivendi Universal listed common equity securities. The
fair value of $275 million of Mr. Diller's common interest has been recorded as
part of the total purchase consideration at the acquisition date. As part of
Vivendi Universal's preliminary purchase price allocation, $15 million has been
recorded as the value of Mr. Diller's non-competition arrangement, which is
being amortized on a straight-line basis over a period of 18 months. The $275
million minimum value of the common interest is accounted for by Vivendi
Universal as a minority interest in VUE. Any increases in fair value above the
minimum put price of the common interest and any subsequent decreases in fair
value to the minimum put price of the common interest, are recognized in
operations by Vivendi Universal (for US GAAP purposes, only).

     In connection with the transaction, Vivendi Universal received
approximately 60.5 million warrants to purchase common stock of USA, with
exercise prices ranging from $27.5 to $37.5 per share. The warrants were issued
to Vivendi Universal in return for an agreement to enter into certain commercial
arrangements with USA. At this time, no commercial arrangement is in place. A
portion of the warrants were sold in February 2003 (see Note 16).

     The entertainment assets acquired by Vivendi Universal were USA's
television programming, cable networks and film businesses, including USA Films,
Studios USA and USA Cable. These assets, combined with the film, television and
theme park assets of the Universal Studios Group, formed a new entertainment
group, Vivendi Universal Entertainment LLLP, in which Vivendi Universal has an
approximately 93% voting interest and an approximately 86% economic interest
(due to the minority stake of Matsushita).

     The acquisition cost of the USA entertainment assets amounts to E 11,008
million, and was determined with the assistance of an independent third-party
valuation firm, and is detailed as follows:

<Table>
<Caption>
                                                              IN MILLIONS OF
                                                                 EUROS(1)
                                                              --------------
<S>                                                           <C>
320.9 million USANi LLC shares surrendered(2)...............       7,386
Cash paid to USA Interactive(3).............................       1,774
Class B preferred interests VUE issued to USA
  Interactive(4)............................................       1,918
Premiums on class B preferred shares(5).....................        (529)
Class A preferred interests VUE issued to USA
  Interactive(6)............................................         822
Premiums on class A preferred shares(5).....................        (299)
Common interest of 5,44% in VUE issued to USA
  Interactive(7)............................................         707
Common interest of 1,5% in VUE issued to Barry Diller(7)....         278
USA Interactive warrants issued to Vivendi Universal(8).....      (1,049)
                                                                  ------
PURCHASE PRICE..............................................      11,008
                                                                  ======
</Table>

---------------

(1) Exchange rate euro/dollar: 0.9125 as of May 7, 2002.

(2) Approximately 282 million shares of USANi LLC already held by Vivendi
    Universal and its affiliates and 38.7 million shares of USANi LLC acquired
    from Liberty Media. The shares already held were valued at their book value,
    i.e. E 6,415 million. The shares acquired in exchange for Vivendi Universal
    common shares were valued using the average closing price of Vivendi
    Universal's common shares 11 days before and after the transaction
    announcement date of December 16, 2001.

(3) Leveraged partnership distribution of $1.62 billion.

(4) Corresponds to face value of these securities. Their key features are:

     -- 1.4% annual paid-in-kind dividend accreting quarterly,

     -- 3.6% annual cash dividend.

                                       F-24
<PAGE>

     -- Put/call arrangement exercisable from May 2022,

     -- Redeemed immediately after a put/call in cash in the amount equal to the
        accreted face value at such time.

(5) Corresponds to the difference between the fair value (calculated based on a
    7.5% discount rate) and the reimbursement value of the preferred interests
    A&B. This difference is assimilated to a premium, which is amortized on a
    straight-line basis until the maturity date.

(6) Corresponds to face value of these securities. Their key features are:

     -- Maturity: 20 years,

     -- Annual PIK dividend of 5%, accreting quarterly,

     -- Settlement at maturity in cash in the amount equal to accreted face
        value.

(7) Portion of VUE fair value estimated as of May 7, 2002, including discounts
    for lack of control and marketability.

(8) The value of the warrants was estimated using the Black-Scholes option
    pricing model. The key assumptions used are: USA Interactive volatility:
    50%, and risk-free rate: 5.54%.

     With the assistance of an independent third-party valuation firm, Vivendi
Universal has performed a preliminary purchase price allocation study in order
to allocate the purchase price among assets acquired and the liabilities
assumed.

     A final purchase price allocation will be completed by April 2003 and may
result in modifications to certain items. The following table shows this
preliminary allocation:

<Table>
<Caption>
                                                              IN MILLIONS OF
                                                                 EUROS(1)
                                                              --------------
<S>                                                           <C>
Goodwill(2).................................................       9,608
Film costs, trademarks and other intangible assets..........       1,704
Other assets................................................         639
Other liabilities...........................................        (943)
                                                                  ------
PURCHASE PRICE..............................................      11,008
                                                                  ======
</Table>

---------------

(1) Exchange rate euro/dollar : 0.9125 as of May 7, 2002.

(2) Amortized over a 40-year period, on a straight-line basis.

3.2.2 INCREASED HOLDING IN MULTITHEMATIQUES

     In connection with the sale of its shares in USA Networks, Liberty Media
transferred to Vivendi Universal its 27.4% share in the European cable
television company, Multithematiques and its current account balances in
exchange for 9.7 million Vivendi Universal shares. The share value is based on
the average closing price of Vivendi Universal shares during a reference period
before and after December 16, 2001, the date the agreement was announced.
Following this acquisition, Canal+ Group holds 63.9% of Multithematiques' share
capital. The additional goodwill resulting from Vivendi Universal taking a
controlling stake in this company, which had been consolidated until March 31,
2002 using the equity method, amounted to E 542 million.

3.2.3 REDUCTION OF HOLDING IN VEOLIA ENVIRONNEMENT

     Following a decision taken by the Board of Directors on June 17, 2002,
Vivendi Universal reduced its ownership interest in Veolia Environnement in
three steps. Prior to taking these steps, an agreement was signed with Mrs.
Esther Koplowitz by which she agreed not to exercise the call option on Veolia
Environnement's participation in FCC which otherwise would have been
exerciseable once Vivendi Universal ownership interest in Veolia Environnement
fell below 50%.

                                       F-25
<PAGE>

     The first step occurred on June 28, 2002, when 53.8 million Veolia
Environnement shares were sold on the market (approximately 15.5% of share
capital before capital increase). The shares were sold by a financial
institution which had owned the shares since June 12, 2002 following a
repurchase transaction, known in France as a "pension livree", carried out with
Vivendi Universal. In parallel, in order to make it possible for the financial
institution to return the same number of shares to Vivendi Universal at the
maturity of the repo on December 27, 2002, Vivendi Universal entered into a
forward sale for the same number of shares to this financial institution at the
price of the investment. As a result, Vivendi Universal reduced its debt by
E 1,479 million and held 47.7% of the share capital of Veolia Environnement.

     In the second step, on August 2, 2002, Veolia Environnement increased its
share capital by E 1,529 million, following the issuance of approximately 58
million new shares (14.3% of the capital after the capital increase), subscribed
to by a group of investors to whom Vivendi Universal had already sold its
preferential subscription rights pursuant to an agreement dated June 24, 2002.
Following this second transaction, Vivendi Universal owned 40.8% of Veolia
Environnement's share capital and Veolia Environnement continued to be
consolidated using the full consolidation method in accordance with generally
accepted accounting principles in France.

     The third step occurred on December 24, 2002, a month after the amendment
to the contract signed on June 24, 2002 was signed with the banks which managed
the June transaction and a group of new investors. Under the terms of the
amended agreement, Vivendi Universal agreed to sell 82.5 million shares of
Veolia Environnement, representing 20.4% of Veolia Environnement's share
capital, and the new investors agreed to assume a lock-up on these shares
previously agreed to by Vivendi Universal for the remaining term of that
commitment, i.e. until December 21, 2003.

     Each of these shares of Veolia Environnement includes a call option that
entitles these investors to acquire additional Veolia Environnement shares at
any time until December 23, 2004 at an exercise price of E 26.50 per share.
After the exercise of all the call options, Vivendi Universal would no longer
hold any shares of Veolia Environnement. On December 24, 2002, Vivendi Universal
received, in exchange for the shares and the call options, E 1,856 million. The
call options on the Veolia Environnement shares are recorded as deferred items
in liabilities for an amount of E 173 million.

     Following this disposal, Vivendi Universal holds 82.5 million shares, or
20.4%, of Veolia Environnement's share capital which is held in an escrow
account to cover the call options. This investment is accounted for using the
equity method as of December 31, 2002.

     Vivendi Universal recorded a E 1,419 million capital gain for these
operations in 2002.

3.2.4 DISPOSAL OF VIVENDI UNIVERSAL PUBLISHING'S PROFESSIONAL AND HEALTH
      DIVISION

     On April 18, 2002, Vivendi Universal Publishing (VUP) signed a definitive
agreement pursuant to which the Cinven, Carlyle and Apax investment funds
acquired 100% of the professional and health information divisions. In parallel
with this disposal, Vivendi Universal acquired 25% of the capital stock of the
acquisition vehicle, alongside Cinven (37.5%), Carlyle (28%) and Apax (9.5%).
The transaction was concluded on July 19, 2002 with Vivendi Universal's sale to
the investors of the shares acquired in the leveraged buy out. The transaction
reduced profit before tax by E 298 million.

3.2.5 SALE OF STAKE IN VIZZAVI EUROPE

     On August 30, 2002, Vivendi Universal sold to Vodafone its 50% share of
Vizzavi Europe. As a result, Vivendi Universal received E 143 million in cash.
As a part of the transaction, Vivendi Universal took over 100% of Vizzavi
France. This transaction generated a capital gain of E 90 million.

3.2.6 DISPOSITION OF PUBLISHING ACTIVITIES

     The Board of Directors on August 13, 2002, decided to sell the American
publisher Houghton Mifflin acquired in 2001. On September 25, 2002, the Board
decided that the sale should occur as soon as possible and cover, in addition to
Houghton Mifflin, all of Vivendi Universal Publishing's activities.
                                       F-26
<PAGE>

     These assets, with revenues and employees totaling approximately E 2.3
billion and 7000, respectively, were presented to several buyers.

     Following receipt of indicative offers, Vivendi Universal decided to
conduct separate sale processes for the European and American businesses. The
Board of Directors meeting held on October 29, 2002 approved the disposal of the
VUP's European activities to the Lagardere Group, which had made the most
competitive offer. This transaction was finalized on December 20, 2002 after the
approval of the personnel representative bodies of Vivendi Universal and VUP.
The European publishing activities were acquired by Investima 10, a company
wholly owned by Natexis Banques Populaires for Lagardere. Investima 10 will
transfer the acquired assets to the Lagardere Group as soon as the latter
obtains competition law approval to be given by the European Commission. The
gross proceeds from the sale amounted to E 1,198 million. This transaction has
resulted in a gain of E 329 million on Vivendi Universal's net income before
tax.

     Following this transaction, Vivendi Universal retains its 50% interest in
the company that owns Atica and Scipione, the Brazilian publishers.

     Three investors participated in the separate auction to sell the publisher
Houghton Mifflin. On December 30, 2002, Vivendi Universal finalized the sale of
Houghton Mifflin to a consortium comprising Thomas H. Lee and Bain Capital. The
gross proceeds from the sale amounted to $1,660 million. As a result of this
transaction, Vivendi Universal recognized a capital loss of E 822 million before
tax, including a foreign currency translation loss of E 236 million.

     THE IMPACTS OF DISPOSITIONS IN 2002 ON THE FINANCIAL DEBT AND THE INCOME
BEFORE TAX AND MINORITY INTEREST ARE SUMMARIZED IN NOTES 7.2 AND 10.1.4.

     SOME DISPOSITIONS AGREED TO IN 2002 ARE BEING FINALIZED AT THE CLOSING. THE
MAIN TRANSACTIONS ARE THE FOLLOWING:

3.2.7 DISPOSAL OF TELEPIU

     News Corporation and Telecom Italia signed, on October 1, 2002, a
definitive agreement with Vivendi Universal and Canal+ Group to acquire Telepiu,
the Italian pay-TV business. The stated purchase price was E 920 million,
consisting of the assumption of up to E 450 million in debt and a cash payment
of E 470 million. However, this cash payment will be adjusted downward by the
amount of outstanding accounts payable at closing. A provision of E 360 million
was recorded to cover the estimated loss. (see Note 6)

     The acquisition, which is subject to regulatory approval, is expected to be
completed soon. As part of the acquisition agreement, all litigation between the
parties, including Canal+'s litigation against NDS, has been suspended and will
be permanently withdrawn when the transaction closes.

3.2.8 DISPOSAL OF CANAL+ TECHNOLOGIES

     Canal+ Group, a Vivendi Universal subsidiary, sold its 89% stake in Canal+
Technologies on September 25, 2002, to Thomson Multimedia for E 190 million in
cash. This transaction, approved by the respective Boards authorized by the
relevant competition authorities was closed on January 31, 2003 on the basis of
E 190 million in cash, of which E 90 million was collected in 2002, E 79 million
has been collected in 2003 and the remainder is expected to be paid after any
post-closing adjustments. (See Note 16)

3.2.9 DISPOSAL OF VIVENDI UNIVERSAL PUBLISHING'S CONSUMER PRESS DIVISION

     On August 30, 2002 Vivendi Universal and the Socpresse group entered into
an agreement to sell the consumer press division of Vivendi Universal Publishing
(Groupe Express-Expansion and Groupe l'Etudiant) and Comareg (including Delta
Diffusion, which is to join Mediapost). The two transactions are together worth
a total cash amount of E 330 million. The sale of Consumer Press Division to the
Socpresse Group was finalized on February 4, 2003 following the authorization by
The Economy and Finance Ministry in January 2003. The amount collected was E 200
million. The sale of Comareg to France Antilles is expected to take place at a
later time, as it remains subject to the approval of the European Commission.
(See Note 16)

                                       F-27
<PAGE>

MAIN ACQUISITIONS AND DISPOSITIONS IN 2001 INCLUDED:

3.2.10 PURCHASE OF INTEREST IN MAROC TELECOM

     In the course of the partial privatization of Maroc Telecom, Vivendi
Universal was chosen to be a strategic partner in the purchase of an interest in
Morocco's national telecommunications operator for approximately E 2.4 billion.
The transaction was finalized in April 2001, at which time Maroc Telecom began
to be consolidated in the accounts of Vivendi Universal, as we obtained control
through majority board representation and share voting rights. The following
table shows the final allocation of the purchase price:

<Table>
<Caption>
                                                              MAROC TELECOM
                                                              -------------
                                                              (IN MILLIONS
                                                                OF EUROS)
<S>                                                           <C>
Fair value of net assets acquired...........................     E   335
Telecom license(1)..........................................         340
Deferred tax liabilities....................................        (119)
Goodwill recorded as an asset(2)............................       1,862
                                                                 -------
Purchase price..............................................     E 2,418
                                                                 =======
</Table>

---------------

(1) The telecom license is amortized on a straight line basis over 15 years.

(2) The goodwill is amortized on a straight line basis over 40 years.

3.2.11 ACQUISITION OF HOUGHTON MIFFLIN COMPANY

     In July 2001, Vivendi Universal acquired the Houghton Mifflin Company
(Houghton Mifflin), a leading US educational publisher, for a total of
approximately US$2.2 billion, including assumption of Houghton Mifflin's average
net debt of approximately US$500 million. Houghton Mifflin was sold on December
30, 2002.

3.2.12 ACQUISITION OF MP3.COM, INC.

     On August 28, 2001, Vivendi Universal completed its acquisition of MP3.com,
Inc. (MP3.com) for approximately US$400 million or US$5 per share in a combined
cash and stock transaction.

3.2.13 DISPOSITION OF INTEREST IN FRANCE LOISIRS

     In July 2001, Vivendi Universal sold its interest in France Loisirs to
Bertelsmann. Proceeds from the sale approximated E 153 million, generating a
capital loss of E 1 million.

MAIN ACQUISITIONS AND DISPOSITIONS IN 2000 INCLUDED:

3.2.14 MERGER OF VIVENDI, SEAGRAM AND CANAL PLUS

     On December 8, 2000, Vivendi, Seagram and Canal Plus completed a series of
transactions in which the three companies combined to create Vivendi Universal
(the "Merger Transactions"). The terms of the Merger Transactions included:

     - Vivendi's combination, through its subsidiaries, with Seagram in
       accordance with a plan of arrangement under Canadian law, in which
       holders of Seagram common shares (other than those exercising dissenters'
       rights) received 0.80 Vivendi Universal American Depositary Shares
       (ADSs), or a combination of 0.80 non-voting exchangeable shares of
       Vivendi Universal's wholly owned Canadian subsidiary Vivendi Universal
       Exchangeco (exchangeable shares) and an equal number of related voting
       rights in Vivendi Universal, for each Seagram common share held;

     - Vivendi Universal's merger with Canal Plus, in which Canal Plus
       shareholders received two Vivendi Universal ordinary shares for each
       Canal Plus ordinary share they held and kept their existing shares in
       Canal Plus, which retained the French premium pay television channel
       business;

                                       F-28
<PAGE>

     - Vivendi accounted for the Merger Transactions with Seagram and Canal Plus
       using the purchase method of accounting for business combinations.

SEAGRAM

     Seagram was acquired for an aggregate cost of E 32,565 million, consisting
of the issuance of approximately 356.1 million common shares valued at E 91.45
per share. The value of the shares issued was determined based on the average
market price of Vivendi's common shares over the five day period before and
after the final terms of the acquisition were announced, which was on July 4,
2000.

     Allocation of Purchase Price -- At the time of the Merger Transactions,
Vivendi Universal recorded each asset acquired and liability assumed at its
estimated fair value. This preliminary purchase price study has been reviewed
and adjusted when appraisals or other valuation data were obtained within the
one-year period from the completion of the Merger Transactions. Subsequent to
the recording of the preliminary purchase price allocation, adjustments were
made in respect of the value of the investment in USA Networks, deferred taxes,
and the completion of a trademark valuation study. The excess of the total
consideration paid over the fair value of the tangible and intangible assets
acquired less liabilities assumed was recorded as goodwill, which is amortized
on a straight-line basis over a 40-year period. Acquired film library, music
catalogs, artists' contracts and music publishing assets are amortized over
periods ranging from 14 to 20 years. Other intangible assets are amortized over
a 40-year period, on a straight-line basis.

     The following table shows the final allocation of the purchase price to the
fair values of assets and liabilities recorded, adjusted in order to reflect the
changes in fair values of assets and liabilities recorded in the preliminary
allocation of the purchase price in December 2000.

<Table>
<Caption>
                                                                SEAGRAM
                                                              ------------
                                                              (IN MILLIONS
                                                               OF EUROS)
<S>                                                           <C>
Accounts receivable, net....................................   E   2,721
Film library, music catalogs, artists' contracts and
  advances..................................................       7,781
Trade names.................................................       1,600
Goodwill....................................................      25,859
Investment in USA Networks..................................       6,940
Spirits and wine assets held for sale.......................       8,693
Other assets................................................       7,383
Accrued expenses and other current liabilities..............      (3,680)
Royalties payable and participations........................      (3,181)
Other non-current liabilities...............................      (2,700)
Minority interest...........................................      (2,275)
Deferred income tax liability...............................      (7,840)
Cash acquired...............................................       1,288
Debt assumed................................................     (10,024)
                                                               ---------
Purchase price..............................................   E  32,565
                                                               =========
</Table>

     Disposal of Seagram's Spirits and Wine Business -- In connection with the
Merger Transactions, on December 19, 2000, Vivendi Universal entered into an
agreement with Diageo and Pernod Ricard to sell its spirits and wine business.
The sale closed on December 21, 2001 and Vivendi Universal received
approximately US$8.1 billion in cash, an amount that resulted in after-tax
proceeds of approximately US$7.7 billion. The spirits and wine business
generated revenues of E 5 billion and operating income of E 0.8 billion in 2001.
Prior to its sale, Vivendi Universal accounted for the spirits and wine business
as an investment held for sale on the balance sheet, and net income of the
spirits and wine business in 2001 effectively reduced goodwill associated with
the Seagram acquisition. No gain was recognized upon the ultimate sale of the
spirits and wine business.

                                       F-29
<PAGE>

CANAL PLUS

     Canal Plus was acquired for an aggregate cost of E 12,537 million,
consisting of the issuance of approximately 130.6 million ordinary shares valued
at E 94.88 per share, and the cost induced by the conversion of stock options
plans of Canal Plus. The value of the shares issued was determined based on the
average market price of Vivendi's ordinary shares over the five day period
before and after the final terms of the acquisition were announced, which was on
June 20, 2000.

     At the time the step acquisition was made, Vivendi Universal recorded each
asset acquired and each liability assumed at its estimated fair value. The
excess of the total consideration paid for the acquired company over the fair
value of the tangible and intangible assets acquired less liabilities assumed
was recorded as goodwill. As a result of the acquisition of Canal Plus, Vivendi
Universal recorded approximately E 12,544 million as goodwill, which is
amortized on a straight-line basis over a 40-year period. Prior to the Merger
Transactions, Vivendi acquired control of Canal Plus in September 1999, through
the acquisition of an additional 15% of the outstanding shares for approximately
E 1.4 billion. Goodwill of E 1,159 million arising in connection with the
acquisition was recorded as a reduction of shareholders' equity, as a charge to
issue premiums in connection with the capital increases used in part to finance
the acquisition. The acquisition increased Vivendi's ownership percentage from
34% at December 31, 1998 to 49% at December 31, 1999. (For additional
information on the purchase price allocation of Canal Plus, please refer to Note
17.9)

3.2.15 DISPOSITION OF SITHE

     In December 2000, Vivendi Universal, along with other shareholders of Sithe
Energies, Inc. (Sithe), finalized the sale of a 49.9% stake in Sithe to Exelon
(Fossil) Holdings Inc. (Exelon) for approximately US$696 million. The net
proceeds of the transaction to Vivendi Universal were approximately US$475
million. Following the transaction, Exelon is the controlling shareholder of
Sithe and Vivendi Universal ceased to consolidate Sithe's results of operations
for accounting purposes effective December 31, 2000. In April 2000, Sithe sold
21 independent power production plants to Reliant Energy Power Generation for
E 2.13 billion. This transaction generated a capital gain of E 415 million. In
December 2002 Vivendi Universal sold its remaining stake, excluding Asia
subsidiaries, to Apollo Energy LLC. (For additional information on the
disposition of Sithe, please refer to Note 17.9)

3.2.16 DISPOSITION OF NON-CORE CONSTRUCTION AND REAL ESTATE BUSINESSES

     In order to facilitate our withdrawal from our non-core construction and
real estate businesses, we restructured Compagnie Generale d'Immobilier et de
Services (CGIS), our wholly owned real estate subsidiary, into two principal
groups of companies: Nexity and Vivendi Valorisation. In July 2000, we sold 100%
of Nexity to a group of investors and to Nexity's senior management for E 42
million, an amount that approximated book value of these operations. Vivendi
Valorisation holds our remaining property assets, which consist primarily of
investments arising out of past property development projects. These assets are
managed by Nexity pending their sale. In February 2000, we reduced our interest
in Vinci (Europe's leading construction company) from 49.3% to 16.9%, receiving
in exchange E 572 million, which resulted in a capital gain of approximately
E 374 million. Subsequently, Vinci merged with the construction company, Groupe
GTM, which reduced our interest in the combined entity to 8.67%. As a result of
these transactions we ceased to consolidate Vinci's results effective July 1,
2000.

3.2.17 TELECOMS AND INTERNET ACQUISITIONS

     Additionally, in January 2000, Vivendi Telecom International (VTI), a
wholly owned direct subsidiary of Vivendi Universal, acquired 100% of the
outstanding shares of United Telecom International (UTI), a Hungarian
telecommunications company for E 130 million, including E 123 million of
goodwill, which is being amortized on a straight line basis over 20 years. In
March 2000, Vivendi Universal acquired 100% of I-France for E 149 million,
including E 146 million of goodwill. In April and July 2000, Vivendi Universal
acquired 22.4% of Scoot.com PLC for E 443 million, including E 359 million of
goodwill.

                                       F-30
<PAGE>

3.3 IMPAIRMENT OF GOODWILL, INTANGIBLE ASSETS AND FINANCIAL ASSETS

3.3.1 GOODWILL

     In 2001, following the market decline, the annual review of goodwill
resulted in a non-cash, non-recurring impairment charge of E 12.9 billion
(E 12.6 billion after E 0.3 billion minority interest related to Veolia
Environnement). The charge was comprised of:

     - E 3.1 billion for Universal Music Group

     - E 1.3 billion for Universal Studio Group

     - E 6.0 billion for Canal+

     - E 1.6 billion for international telecoms and internet assets

     - E 0.6 billion for Veolia Environnement (net of E 0.3 billion minority
       interest)

     In view of the deterioration of the economy since December 2001, and the
recent decline in value of some media assets, combined with the impact of the
increase in the cost of capital, the group has taken the decision to take a
provision against goodwill on certain acquisitions of E 18.4 billion as at
December 31, 2002, including E 11 billion registered as of June 30, 2002. This
impairment has been calculated using the group's accounting principles for
long-term assets. Long-term assets are subject to an exceptional impairment of
goodwill if events result in, or show a risk of, an unexpected reduction in the
value of the assets. In this situation, their fair value is re-assessed and a
provision is made to cover any eventual, significant difference between the book
value and the realizable value.

     This exceptional goodwill impairment is broken down as follows:

     - E 5.3 billion for Universal Music Group

     - E 6.5 billion for Vivendi Universal Entertainment

     - E 5.4 billion for Canal+

     - E 1.2 billion for international telecoms and internet assets

     As previously permitted under French GAAP, a portion of the goodwill
arising from acquisitions paid for in equity securities was originally recorded
as a reduction to shareholders' equity in proportion to the amount of the
related purchase price paid in shares. Upon the recommendation of the COB,
Vivendi Universal determined the total goodwill impairment based on total
goodwill, including the portion originally recorded as a reduction of
shareholders' equity, adjusted for theoretical accumulated goodwill amortization
recorded since the acquisition. The "theoretical" goodwill impairment for 2002
amounts to E 0.7 billion. The impairment charge does not reflect any
proportional "theoretical" impairment of goodwill originally recorded as a
reduction of shareholders equity. The total amount of goodwill recorded as a
reduction of shareholder's equity as at December 31, 2002 is discussed in Note
5.

     This exceptional write-off was calculated as the difference between the net
book value of the business units and the fair value we estimated with the
assistance of a third party appraiser when necessary. The impacted business
units are those for which the deterioration of the economy combined with the
impact of the increase in the cost of capital resulted in a risk of a reduction
of their value. Standard evaluation methods have allowed us to establish fair
values, as described in the next paragraph.

     The fair values of the business units durably owned by the group are
assessed at the value in use. Value in use is defined as the value of future
economic benefits to be obtained from utilization plus terminal value of the
asset. It is calculated from estimated future economic benefits:

     - Generally, the fair value of business units is determined by the analysis
       of discounted cash flows.

     - If this method is irrelevant for the business unit, other standard
       criteria are available: comparison to similar listed companies,
       assessment based on the value attributed to the business units involved
       in recent transactions, market price for business units quoted at the
       Stock Exchange.
                                       F-31
<PAGE>

     - When using these two standard evaluation methods, the fair market value
       of business units is determined with the assistance of an independent
       valuation expert appointed by Vivendi Universal.

     The fair values of the business units involved in the asset disposal
program, which was approved by the Board of Directors on September 25, 2002, are
assessed on the basis of their market value. Market value is defined as the
amount that could be obtained at the date of sale for an asset where the
transaction is concluded at normal market conditions, net of transactions costs.
It generally corresponds to the most recent valuation of the business unit
presented to Vivendi Universal's Board of Directors.

     Regarding the discounted cash flow method of analysis, the three factors
taken into account were cash flow, discount rate and perpetual growth rate. The
source of the cash flow statements used for the analysis were the business plans
of the business units concerned available at the time of the analysis, approved
by the management and presented to the Board of Directors. The discount rate was
based upon an analysis of the average cost of capital of the relevant business
units. Their cost of capital and growth rate were determined by taking into
account the specific business environment in which each business unit operated,
and specifically the maturity of the market and the geographic localization of
its operations.

     For information, the principal assumptions by business were:

     - Cegetel Group: evaluation from the transaction with BT Group as of
       January 22, 2003 (acquisition of 26% interest in Cegetel for E 4
       billion).

     - Music: analysis of discounted cash flow (discount rate of 9%, versus a
       range of 8% to 9% at December 31, 2001, growth rate of 4%, versus 4% and
       6% at December 31, 2001) or comparison to similar listed companies.

     - VUE: analysis of future discounted cash flow (with the following discount
       rate and growth rate) and comparison to similar listed companies:

        - Universal Picture Group: a discount rate of 10%, versus a range of 6%
          to 7% at December 31, 2001, and a growth rate of 3%, versus -1% and 5%
          at December 31, 2001.

        - USA Cable: a discount rate of 10%, and a growth rate of 6%.

        - Universal Parks and Resorts: a discount rate of 8.5%, versus 8% at
          December 31, 2001, and a growth rate of 3%, versus 3% at December 31,
          2001.

     - Canal+ Group:

        - Canal+ (Canal+ France, CanalSatellite, Media Overseas,
          Multithematique): analysis of discounted cash flows with a discount
          rate of 9.1%, versus 9% at December 31, 2001; growth rate between 2%
          (Canal+ France) and 4.5% (CanalSatellite), versus 3% (Canal+ France)
          and 4% (CanalSatellite) at December 31, 2001.

        - Studio Canal: analysis of discounted cash flow (discount rate of 9.2%,
          growth rate of 2.5% to 3.5%).

        - Sogecable and Sport Five are valued at the stock market price, after
          including a liquidity discount for the latter.

        - Other international assets or under disposal: (including Telepiu,
          Canal+ Benelux, Canal+ Poland, Canal+ Nordic, Canal+ Technologies and
          Numericable): latest market value.

     - VU Games: analysis of discounted cash flow (discount rate of 13%; growth
       rate of 7%) and comparison to similar listed companies.

     - Maroc Telecom: analysis of discounted cash flow (discount rate of 13.1%,
       versus 11% and 13% at December 31, 2001, and a growth rate of 2.5% to
       3.5%, versus 3.5% and 5.5% at December 31, 2001).

     - Other International assets in telecommunications and the internet: latest
       market value.

                                       F-32
<PAGE>

     The net impact in changes in goodwill can be summarized as follows:

<Table>
<Caption>
                                                                                           NET BALANCE
                              NET BALANCE                                  CHANGES IN           AT
                             AT JANUARY 1,                                CONSOLIDATION    DECEMBER 31,
                                 2002        AMORTIZATION   IMPAIRMENT   SCOPE AND OTHER       2002
                             -------------   ------------   ----------   ---------------   ------------
                                                       (IN MILLIONS OF EUROS)
<S>                          <C>             <C>            <C>          <C>               <C>
Telecoms...................      3,043             (75)         (744)          (474)           1,750
Music......................     12,763            (355)       (5,300)        (1,629)           5,479
Vivendi Universal
  Entertainment............      7,472            (250)       (6,500)         7,915            8,637
Groupe Canal+..............      8,002            (189)       (5,436)         1,580            3,957
Holding & Corporate........     (1,353)             34            --          1,367               48
Internet...................        638            (140)         (462)           (28)               8
Publishing.................      2,161             (17)           --         (1,966)             178
Environmental Services.....      4,888            (285)           --         (4,603)              --
Other......................          3              --            --              2                5
                                ------          ------       -------         ------           ------
TOTAL VIVENDI UNIVERSAL....     37,617          (1,277)      (18,442)         2,164           20,062
                                ======          ======       =======         ======           ======
</Table>

3.3.2 FINANCIAL ASSETS

     Financial provisions of E 2.2 billion were recorded in 2002, E 1.2 billion
of which was reflected by a reduction in asset value and E 0.9 billion as a
provision. This action was taken to reflect the decline in the market since the
beginning of the year and the reevaluation by the Board of Directors of the
growth potential of certain listed and unlisted investments. Standard evaluation
methods used were, notably:

     - Investments involving recent transactions or those that are currently
       under discussion have been assessed at the value attributed to them in
       the respective transaction.

     - Investments in listed companies have been valued at the market value.

3.3.3 SUMMARY

     The impact of impairment described above can be summarized as follows:

<Table>
<Caption>
                                                        PROVISIONS
                                        IMPAIRMENT OF      AND         GOODWILL      TOTAL
                                           ASSETS       ALLOWANCES    IMPAIRMENT   IMPAIRMENT
                                        -------------   ----------    ----------   ----------
                                                        (IN MILLION OF EUROS)
<S>                                     <C>             <C>           <C>          <C>
Telecoms..............................        (728)(1)      (142)(2)       (744)      (1,614)
Music.................................          --            --         (5,300)      (5,300)
Vivendi Universal Entertainment.......          --            --         (6,500)      (6,500)
Group Canal+..........................          --          (360)(3)     (5,436)      (5,796)
Internet..............................        (120)(4)        --           (462)        (582)
Other.................................        (393)(5)      (427)(6)         --         (820)
                                          --------        ------      ---------    ---------
                                          E (1,241)       E (929)     E (18,442)   E (20,612)
                                          ========        ======      =========    =========
</Table>

---------------

(1) Of which, Elektrim Telekomunikacja represents (E 609) million (see Note 4).

(2) Representing international telecom assets (see Note 6).

(3) Representing Telepiu, disposal of which has to be completed (see Note 6).

(4) Representing Softbank Capital Partners (see Note 4).

(5) Of which Dupont (E 173) million (see Note 4), provision related to UGC/UGC
    Cine Cite investments (E 220) million (see Note 4).

                                       F-33
<PAGE>

(6) Of which amortization of the BNP call (E 226) million (see Note 6), a
    provision for Vivendi Universal puts of (E 104) million (see Note 6).

NOTE 4 INVESTMENTS

     Vivendi Universal's investments consist of:

<Table>
<Caption>
                                                                 DECEMBER 31,
                                                              ------------------
                                                               2002       2001
                                                              -------   --------
                                                               (IN MILLIONS OF
                                                                    EUROS)
<S>                                                           <C>       <C>
Investments accounted for using the equity method...........  E 1,903   E  9,176
Other investments
  Investments accounted for using the cost method...........      378      1,150
  Portfolio investments -- securities.......................    1,899      1,814
  Portfolio investments -- other............................    1,861      2,619
                                                              -------   --------
                                                                4,138      5,583
                                                              -------   --------
                                                              E 6,041   E 14,759
                                                              =======   ========
</Table>

4.1 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

  THE FOLLOWING TABLE SUMMARIZES INFORMATION ABOUT EQUITY METHOD INVESTMENTS:

<Table>
<Caption>
                                                            PROPORTIONATE SHARE
                               OWNERSHIP CONTROL                 OF EQUITY             PROPORTIONATE SHARE OF NET INCOME (LOSS)
                          ---------------------------   ---------------------------   ------------------------------------------
                          DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                              2002           2001           2002           2001           2002           2001           2000
                          ------------   ------------   ------------   ------------   ------------   ------------   ------------
                                                                  (IN MILLIONS OF EUROS)
<S>                       <C>            <C>            <C>            <C>            <C>            <C>            <C>
Veolia
  Environnement(1)......      20.4%            --         E   304        E    --         E   --         E   --         E   --
USANi LLC(2)............        --           47.9%             --          6,669             44            144             --
UC Development
  Partners(3)...........      50.0%          50.0%            358            364             (6)           (46)            --
Sundance Channel(4).....      50.0%          10.0%            156            185             --             --             --
Universal Studios
  Florida(3)............      50.0%          50.0%            147            168              1              5             --
Port Aventura...........      37.0%          37.0%             85            101              1             (2)            --
Universal Studios
  Japan.................      24.0%          24.0%             40             85            (30)            25             --
UGC(5)..................      58.0%          39.3%             47             83            (12)             7             (2)
UGC Cine cite(6)........      15.6%          15.6%             31             69             --              1             (3)
SPORTFIVE(7)............      46.4%          35.6%            294            229              2             --             --
TKP and Cyfra+(8).......        --             --              --             --             --           (122)           (26)
Elektrim Telekomunikacja
  SP(9).................      49.0%          49.0%             --            521           (115)           (28)           (31)
Telecom
  Developpement(10).....      49.9%          49.9%            286            281              5             12             27
Xfera Moviles...........      26.2%          26.2%             --             72            (59)           (35)            (6)
Societe Financiere de
  Distribution (SFD)....      49.0%          49.0%             --            (74)            --            (23)           (37)
Vizzavi Europe(11)......        --           50.0%             --           (466)           (71)          (193)           (44)
Other(12)...............        --             --             155            889            (54)          (198)          (184)
                                                          -------        -------         ------         ------         ------
                                                          E 1,903        E 9,176         E (294)        E (453)        E (306)
                                                          =======        =======         ======         ======         ======
</Table>

                                       F-34
<PAGE>

---------------

 (1) Following the dispositions and dilution occurred in 2002, Vivendi
     Universal's interest in Veolia Environnement is accounted for under the
     equity method from December 31, 2002. (see Note 3) The market value of this
     participation as of December 31, 2002 amounted to E 1,833 million.

 (2) Year-on-year change reflects the USA Networks transaction. (see Note 3)

 (3) There is no shareholder with the majority voting interest in these
     companies. Moreover, shareholders exercise substantive participating rights
     that enable them to veto or block decisions taken by the subsidiary's
     board. Vivendi Universal consequently consolidates its interest in UCDP and
     Universal Studio Florida by the equity method.

 (4) Vivendi Universal has loans to the Sundance partnership (approximately
     US$49 million), which can be converted to Sundance Channels shares.

 (5) On December 23, 2002, following the exercise by BNP of the put granted by
     Vivendi Universal in July 1997, Vivendi Universal acquired, for a total
     consideration of E 59.3 million, 5.3 million of UGC shares representing 16%
     of share capital. Vivendi Universal's 58% interest in UGC does not provide
     for operational control of the company due to a shareholders' agreement.
     Accordingly, this investment is still accounted for using the equity
     method.

 (6) Vivendi Universal has a direct interest of 15.6% in UGC Cine Cite and an
     indirect interest of 49% through its investment in UGC.

 (7) New entity created through the merger between the Jean-Claude Darmon Group
     and Sport+ in 2001.

 (8) Consolidated from December 31, 2001.

 (9) Please refer to Note 13. Vivendi Universal's share of equity in Elektrim
     Telekomunikacja was written down to zero further to an impairment test
     performed on various assets held for sale.

(10) A majority of Telecom Developpement's board is nominated by SNCF.
     Accordingly, Cegetel Group accounts for this investment by the equity
     method.

(11) Participation sold to Vodafone on August 30, 2002 (See Note 3).

(12) Other investments consist of various entities accounted for under the
     equity method whose proportionate share of equity is under E 50 million at
     December 31, 2002.

                                       F-35
<PAGE>

     The following table provides a reconciliation of the change in equity
method investments during the year:

<Table>
<Caption>
                           PROPORTIONATE     CHANGES IN     PROPORTIONATE                 FOREIGN      PROPORTIONATE
                          SHARE OF EQUITY     SCOPE OF      SHARE OF NET                 CURRENCY     SHARE OF EQUITY
                           DECEMBER 31,     CONSOLIDATION      INCOME       DIVIDENDS   TRANSLATION    DECEMBER 31,
                               2001            & OTHER         (LOSS)       RECEIVED    ADJUSTMENTS        2002
                          ---------------   -------------   -------------   ---------   -----------   ---------------
                                                             (IN MILLIONS OF EUROS)
<S>                       <C>               <C>             <C>             <C>         <C>           <C>
Veolia Environnement....      E    --         E    304         E   --        E   --       E   --              304
USANi LLC...............        6,669           (6,415)            44          (141)        (157)              --
UC Development
  Partners..............          364               59             (6)           --          (59)             358
Sundance Channel(1).....          185               (2)            --            --          (27)             156
Universal Studios
  Florida...............          168                2              1            --          (24)             147
Port Aventura...........          101               (6)             1            --          (11)              85
Universal Studios
  Japan.................           85               (3)           (30)           --          (12)              40
UGC(2)..................           83              (15)           (12)           (1)          (8)              47
UGC Cine cite(2)........           69              (26)            --            --          (12)              31
SPORTFIVE(3)............          229               66              2            (3)          --              294
Elektrim Telekomunikacja
  SP(4).................          521             (488)          (115)           --           82               --
Telecom
  Developpement(5)......          281               --              5            --           --              286
Xfera Moviles(6)........           72              (13)           (59)           --           --               --
Societe Financiere de
  Distribution (SFD)....          (74)              74             --            --           --               --
Vizzavi Europe..........         (466)             537            (71)           --           --               --
Other...................          889             (630)           (54)          (34)         (16)             155
                              -------         --------         ------        ------       ------          -------
                              E 9,176         E (6,556)        E (294)       E (179)      E (244)         E 1,903
                              =======         ========         ======        ======       ======          =======
</Table>

---------------

(1) Changes in scope of consolidation reflect the acquisition of 40% interest of
    Sundance Television and SIFO Two for $4 million.

(2) Provisions recorded as at December 31, 2002, total E 220 million, of which
    E 101 million relates to the reduction in shareholding and E119 million to
    the UGC bonds (see Note 4.4).

(3) Changes in scope of consolidation reflect the acquisition of 10.8% interest
    of this entity for E 122 million. Additional goodwill of E 54 million has
    been recorded.

(4) Provisions recorded as at December 31, 2002, total E609 million, of which
    E406 million in reduction in shareholding and E 203 million to an increase
    in the bad debt provision (see Note 3 and 10). Moreover goodwill impairment
    has been recorded for E 32 million.

(5) Impairment has been recorded for E 206 million at December 31, 2002 (see
    Note 3).

(6) Of which E 33 million relates to a provision recorded at December 31, 2002
    (see Note 3).

  SUMMARIZED FINANCIAL INFORMATION FOR EQUITY METHOD INVESTMENTS IS AS FOLLOWS:

     Veolia Environnement was consolidated as an equity method investment at
December 31, 2002. In Vivendi Universal's statement of income, Veolia
Environnement was accounted for on a fully consolidated basis until December 31,
2002. Consequently, only balance sheet information relating to this subsidiary
is mentioned in the tables below.

                                       F-36
<PAGE>

     The following summary information relating to companies consolidated by the
equity method is derived from unaudited data.
<Table>
<Caption>
                                                           DECEMBER 31, 2002
                        ---------------------------------------------------------------------------------------
                                        UNIVERSAL                                          OTHERS       TOTAL
                           TELECOM       STUDIO                            ELEKTRIM       EXCLUDING   EXCLUDING
                        DEVELOPPEMENT    FLORIDA     UGC    SPORTFIVE   TELEKOMUNIKACJA      VE          VE
                        -------------   ---------   -----   ---------   ---------------   ---------   ---------
                                                         (IN MILLION OF EUROS)
<S>                     <C>             <C>         <C>     <C>         <C>               <C>         <C>
REVENUES..............      1,054           763       527       639            749          3,067       6,799
OPERATING INCOME......         25           (56)       10        31            125           (251)       (116)
NET INCOME............         15           (53)      (32)        4         (1,063)          (825)     (1,954)
Long-term assets......        776         2,059       795       580          2,987          4,169      11,366
Current assets........        324            69       235       464            176          1,897       3,165
                            -----         -----     -----     -----         ------          -----      ------
TOTAL ASSETS..........      1,100         2,128     1,030     1,044          3,163          6,066      14,531
Shareholders'
  Equity..............        464           748       190       633          1,428            700       4,163
Long-term
  liabilities.........          8           137       246        15                           215         621
Current liabilities...        562           284       205       387          1,023          2,800       5,261
Third Party Financial
  Long term Debt......         66           959       389         9            712          2,351       4,486
                            -----         -----     -----     -----         ------          -----      ------
TOTAL LIABILITIES AND
  SHAREHOLDERS'
  EQUITY..............      1,100         2,128     1,030     1,044          3,163          6,066      14,531
                            =====         =====     =====     =====         ======          =====      ======

<Caption>
                          DECEMBER 31, 2002
                        ----------------------

                           VEOLIA
                        ENVIRONNEMENT   TOTAL
                        -------------   ------
                        (IN MILLION OF EUROS)
<S>                     <C>             <C>
REVENUES..............         --        6,799
OPERATING INCOME......         --         (116)
NET INCOME............         --       (1,954)
Long-term assets......     26,568       37,934
Current assets........     15,450       18,615
                           ------       ------
TOTAL ASSETS..........     42,018       56,549
Shareholders'
  Equity..............      8,915       13,078
Long-term
  liabilities.........      4,787        5,408
Current liabilities...     15,403       20,664
Third Party Financial
  Long term Debt......     12,913       17,399
                           ------       ------
TOTAL LIABILITIES AND
  SHAREHOLDERS'
  EQUITY..............     42,018       56,549
                           ======       ======
</Table>

---------------

(1) Before elimination of Vivendi Universal's loan to Elektrim Telekomunikacja
    for E 525 million (or E 322 million, net of provisions).

(2) Including E 3,796 million short term financial debt.

<Table>
<Caption>
                                                              DECEMBER 31, 2001
                              ---------------------------------------------------------------------------------
                                              UNIVERSAL
                                 TELECOM       STUDIO                            ELEKTRIM
                              DEVELOPPEMENT    FLORIDA     UGC    SPORTFIVE   TELEKOMUNIKACJA   OTHERS   TOTAL
                              -------------   ---------   -----   ---------   ---------------   ------   ------
                                                           (IN MILLIONS OF EUROS)
<S>                           <C>             <C>         <C>     <C>         <C>               <C>      <C>
REVENUES....................      1,089           723       516        --             59        10,956   13,343
OPERATING INCOME............         24            29        40        --            (26)        2,180    2,247
NET INCOME..................         11           (93)       14        --            (57)         (645)    (770)
Long-term assets............        818         2,162     1,003       587          3,027        19,539   27,136
Current assets..............        435           137       276       455            559         5,093    6,955
                                  -----         -----     -----     -----          -----        ------   ------
TOTAL ASSETS................      1,253         2,299     1,279     1,042          3,586        24,632   34,091
Shareholders' Equity........        460           737       283       642          2,699        11,337   16,158
Long-term liabilities.......          2           113       240        35            192         3,434    4,016
Current liabilities.........        721           290       215       325            535(1)      7,869    9,955
Third Party Financial Long
  term Debt.................         70         1,159       541        40            160         1,992    3,962
                                  -----         -----     -----     -----          -----        ------   ------
TOTAL LIABILITIES AND
  SHAREHOLDERS' EQUITY......      1,253         2,299     1,279     1,042          3,586        24,632   34,091
                                  =====         =====     =====     =====          =====        ======   ======
</Table>

---------------

(1) Before elimination of Vivendi Universal's loan to Elektrim Telekomunikacja
    for E 485 million.

     In 2000, revenue, operating income and net income generated by companies
consolidated by the equity method accounted for E 2,644, E 181 and E (26)
million, respectively. The following is balance sheet data for these companies
consolidated by the equity method:

     - Long term assets: E 23,202 million,

     - Current assets: E 3,937 million,

     - Total assets: E 27,139 million,

                                       F-37
<PAGE>

     - Shareholders' equity: E 13,292 million,

     - Long-term liabilities: E 8,560 million,

     - Current liabilities: E 5,287 million,

     - Total liabilities and Shareholders' equity: E 27,139 million.

4.2 INVESTMENTS ACCOUNTED FOR USING THE COST METHOD

     The following table summarizes information about investments accounted for
using the cost method:

<Table>
<Caption>
                                                     DECEMBER 31, 2002   DECEMBER 31, 2001
                                                     -----------------   ------------------
                                                     INTEREST    COST    INTEREST    COST
                                                     --------   ------   --------   -------
                                                             (IN MILLIONS OF EUROS)
<S>                                                  <C>        <C>      <C>        <C>
Sithe Energies Inc.(1).............................      --         --     34.2%        604
Elektrim SA(2).....................................    10.0%        96     10.0%         96
Mauritel...........................................    18.9%        42     18.9%         52
Vodafone Egypt.....................................     7.0%        23      7.0%         23
Other(3)...........................................                672                  872
                                                                ------              -------
                                                                   833                1,647
Valuation allowance................................               (455)                (497)
                                                                ------              -------
                                                                E  378              E 1,150
                                                                ======              =======
</Table>

---------------

(1) On December 19, 2002, Vivendi Universal sold its remaining interest in Sithe
    Energies Inc. for E 319 million generating a loss of E 232 million.

(2) Included in the valuation allowance is a E 91 million provision for Elektrim
    S.A., of which E 21 million was recorded in 2002 (see Note 3). In addition
    to its 10% interest in Elektrim S.A.'s share capital, Vivendi Universal
    exercises 4.99% of Elektrim S.A.'s voting rights following the acquisition
    of a 4.99% interest in Elektrim S.A.'s share capital in February 2003, due
    to the termination of a carrying agreement, upon request of the third party.
    As a result, Vivendi Universal holds 15% of Elektrim S.A.'s voting rights.
    Furthermore, Vivendi Universal appoints two representatives at the
    Supervisory Board of Elektrim S.A.

(3) Other investments consist of various entities accounted for under the cost
    method whose carrying value was under E 60 million at December 31, 2002.

4.3 PORTFOLIO INVESTMENTS -- SECURITIES

     The following table summarizes information about portfolio investments --
securities:

<Table>
<Caption>
                                                               DECEMBER 31, 2002
                               ---------------------------------------------------------------------------------
                                           FOREIGN                             GROSS        GROSS      ESTIMATED
                                          CURRENCY     VALUATION     NET     UNREALIZED   UNREALIZED     FAIR
                                COST     TRANSLATION   ALLOWANCE    VALUE      GAINS        LOSSES       VALUE
                               -------   -----------   ---------   -------   ----------   ----------   ---------
                                                            (IN MILLIONS OF EUROS)
<S>                            <C>       <C>           <C>         <C>       <C>          <C>          <C>
British Sky
  Broadcasting(1)............  E    --     E   --       E   --     E    --     E  --        E   --      E    --
Dupont(2)....................      853        (68)        (173)        612        65            --          677
USA Interactive(3)...........    1,323        (68)          --       1,255       (26)           --        1,229
Softbank Capital.............      230         --         (230)         --        --            --           --
Partners(4)..................
Saint-Gobain(5)..............       --         --           --          --        --            --           --
Other(6).....................       33         (1)          --          32        --            --           32
                               -------     ------       ------     -------     -----        ------      -------
                               E 2,439     E (137)      E (403)    E 1,899     E  39        E   --      E 1,938
                               =======     ======       ======     =======     =====        ======      =======
</Table>

                                       F-38
<PAGE>

<Table>
<Caption>
                                                         DECEMBER 31, 2001
                         ---------------------------------------------------------------------------------
                                     FOREIGN                             GROSS        GROSS      ESTIMATED
                                    CURRENCY     VALUATION     NET     UNREALIZED   UNREALIZED     FAIR
                          COST     TRANSLATION   ALLOWANCE    VALUE      GAINS        LOSSES       VALUE
                         -------   -----------   ---------   -------   ----------   ----------   ---------
                                                      (IN MILLIONS OF EUROS)
<S>                      <C>       <C>           <C>         <C>       <C>          <C>          <C>
British Sky
  Broadcasting.........  E     1      E --        E   --     E     1     E  15        E   --      E    16
Dupont.................      853        50            --         903        --          (106)         797
USA Interactive........      699        42            --         741       137            --          878
Softbank Capital.......      230        --          (110)        120        --            (7)         113
Partners
  Saint-Gobain.........       14        --            --          14         7            --           21
Other..................       44        --            (9)         35        --             2           37
                         -------      ----        ------     -------     -----        ------      -------
                         E 1,841      E 92        E (119)    E 1,814     E 159        E (111)     E 1,862
                         =======      ====        ======     =======     =====        ======      =======
</Table>

<Table>
<Caption>
                                                         DECEMBER 31, 2000
                         ---------------------------------------------------------------------------------
                                     FOREIGN                             GROSS        GROSS      ESTIMATED
                                    CURRENCY     VALUATION     NET     UNREALIZED   UNREALIZED     FAIR
                          COST     TRANSLATION   ALLOWANCE    VALUE      GAINS        LOSSES       VALUE
                         -------   -----------   ---------   -------   ----------   ----------   ---------
                                                      (IN MILLIONS OF EUROS)
<S>                      <C>       <C>           <C>         <C>       <C>          <C>          <C>
British Sky
  Broadcasting.........  E 1,233     E   --        E  --     E 1,233    E 4,946       E  --       E 6,179
Dupont.................      853         --           --         853         --          --           853
USA Interactive........      572         --           --         572         --          --           572
Saint-Gobain...........      124         --           --         124        104          --           228
Facic..................      181         --           --         181          5          --           186
Eillage................       57         --           --          57         --         (17)           40
Other..................      261         --          (17)        244         21         (76)          189
                         -------     ------        -----     -------    -------       -----       -------
                         E 3,281     E   --        E (17)    E 3,264    E 5,076       E (93)      E 8,247
                         =======     ======        =====     =======    =======       =====       =======
</Table>

---------------

(1) In February 2002, these BSkyB shares were sold for cash, which was used in
    part for the redemption of the Pathe exchangeable bonds, which took place in
    March 2002 (see Note 7).

(2) Represents 16,444,062 shares with a book value of $713 million. The quoted
    market price of DuPont as at December 31, 2002 was $42.40 per share. A
    provision of E 173 million was recorded in the accounts at June 30, 2002 in
    order to bring the book value in line with the market value at this date.

(3) Represents 18,181,308 shares of common stock with a book value of $374
    million and 13,430,000 Class B shares with a book value of $276 million, as
    well as 25,000,000 shares acquired through Liberty Media in Vivendi
    Universal's acquisition of the entertainment assets of USA Networks (see
    Note 3). The quoted market price for the common stock of USA Interactive,
    which combines the USA Networks assets not acquired by Vivendi Universal,
    was $22.92 per share as at December 31, 2002.

(4) A provision of E 120 million was recorded in the accounts in 2002.

(5) Sold during the first half of 2002.

(6) Other investments consists of various entities whose cost was under E 22
    million at December 31, 2002.

                                       F-39
<PAGE>

4.4 OTHER PORTFOLIO INVESTMENTS

     The following table summarizes information about other portfolio
investments:

<Table>
<Caption>
                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                               (IN MILLIONS OF
                                                                   EUROS)
<S>                                                           <C>       <C>
Long-term loans(1)..........................................  E 1,250   E 1,586
Other(2)....................................................    1,593     1,231
                                                              -------   -------
                                                                2,843     2,817
Valuation allowance.........................................     (982)     (198)
                                                              -------   -------
                                                              E 1,861   E 2,619
                                                              =======   =======
</Table>

---------------

(1) As of December 31, 2002, comprised of a loan to Elektrim Telekomunikacja
    (E 525 million, provisioned at E 203 million, see Note 3), and a loan to
    Veolia Environnement related to bonds exchangeable for Vinci shares (E 120
    million, see Note 7).

(2) As of December 31, 2002, comprised of USA Interactive warrants (E 929
    million provisioned at E 454 million, see Note 3), and UGC bonded debt
    (E 153 million provisioned at E 119 million).

4.5 INVESTMENTS ACCOUNTED FOR USING THE PROPORTIONATE CONSOLIDATION METHOD

     Investments accounted for using the proportionate consolidation method
represent companies in which Vivendi Universal and other shareholders have
agreed to exercise joint control over significant financial and operating
policies. They exist in Veolia Environnement only. Due to the deconsolidation of
Veolia Environnement on December 31, 2002, the investments accounted for using
the proportionate consolidation method contribute only to consolidated statement
of income in 2002.

     Summarized financial information for major subsidiaries consolidated under
the proportionate consolidation method in 2000, 2001 and 2002 is as follows:

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                            ---------------------------
                                                             2002      2001      2000
                                                            -------   -------   -------
                                                              (IN MILLIONS OF EUROS)
<S>                                                         <C>       <C>       <C>
Revenues..................................................  E 5,570   E 4,293   E 3,055
Operating income..........................................  E   464   E   426   E   354
Net income................................................  E   204   E   128   E   171
</Table>

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                             -------------------------
                                                             2002     2001      2000
                                                             ----   --------   -------
                                                              (IN MILLIONS OF EUROS)
<S>                                                          <C>    <C>        <C>
Long-term assets...........................................   --    E  8,082   E 5,276
Current assets.............................................   --       4,694     2,180
                                                             ----   --------   -------
Total assets...............................................   --    E 12,776   E 7,456
                                                             ====   ========   =======
Shareholders' equity.......................................   --    E  5,146   E 2,095
Minority interest..........................................   --         163       279
Financial debt.............................................   --       2,852     1,830
Reserves and other liabilities.............................   --       4,615     3,252
                                                             ----   --------   -------
Total liabilities and shareholders' equity.................   --    E 12,776   E 7,456
                                                             ====   ========   =======
</Table>

     For summarized cash flow information for major subsidiaries consolidated
under the proportionate consolidation method, please refer to Note 17.9.

                                       F-40
<PAGE>

NOTE 5 SHAREHOLDERS' EQUITY

5.1 GROUP SHAREHOLDERS' EQUITY

     The number of common shares outstanding was 1,068,558,994 and
1,085,827,519, respectively, as of December 31, 2002, and December 31, 2001.
Each common share, with the exception of treasury shares, has one voting right
which may be registered upon request by the owner. The number of voting rights
outstanding was 1,067,996,619 and 978,216,347, respectively, as at December 31,
2002, and December 31, 2001.

5.1.1 TREASURY SHARES

     As of December 31, 2001, Vivendi Universal and its subsidiaries held
107,386,662 Vivendi Universal shares, representing a gross amount of E 6,762
million and 9.9% of share capital with an average cost per share of E 63.

     During 2002, Vivendi Universal:

     - bought on the market, between January and April 2002, 6,969,865 shares at
       an average price of E 48.5 per share. These purchases occurred under the
       terms of the COB prospectus n(LOGO) 00-1737 which authorized Vivendi
       Universal to go public,

     - sold 55 million shares to two financial institutions on January 7, 2002,
       at a price of E 60 per share,

     - transferred 37.4 million shares in May 2002 to Liberty Media in exchange
       for equity in USANi, LLC and USA Networks, Inc and the 27% interest in
       Multithematiques (see Note 3),

     - a further 94,157 shares were sold to employees exercising their stock
       options,

     - cancelled 20,469,967 shares on December 20, 2002, following the decision
       by the Board of Directors on August 13, 2002, based on the authorization
       obtained in General Meeting of Stockholders held on April 24, 2002. The
       cancellation of these shares previously held in connection with employee
       stock option plans has reduced the shareholders' equity by E 1,191.3
       million. In connection with French legal obligations, Vivendi Universal
       acquired 14.1 million call options on Vivendi Universal shares in order
       to cover future stock option plans from December 31, 2002.

     At December 31, 2002, Vivendi Universal and its subsidiaries (excluding
Veolia Environnement which is accounted for under the equity method as from
December 31, 2002) held 562,375 Vivendi Universal shares, or 0.05% of its share
capital, which represents a gross amount of E 44 million at an average cost per
share of E 77.9. The majority of these treasury shares are classified under
marketable securities and are held in connection with certain employee stock
option plans of the US company MP3. The remaining balance of 84,360 treasury
shares was recorded as a reduction of shareholders' equity.

     At December 31, 2002, Vivendi Universal had outstanding convertible bonds
and stock options representing approximately 146.3 million common shares,
compared with 64.1 million shares as at December 31, 2001.

5.1.2 STRIPPED SHARES

     8.9 million stripped shares have been deducted from shareholders' equity
compared with 19.7 million at December 31, 2001. These shares were split to
allow for exchange transactions in the context of the Sofiee/Vivendi/Seagram
merger in December 2000. Bare ownership was transferred to Seagram Canadian
shareholders who elected to acquire their Vivendi Universal stock on a deferred
basis. The Board of Directors, at its meetings of January 24, 2002, April 24,
2002, June 25, 2002 and August 13, 2002, duly noted the recombination, and
approved the cancellation of 203,560, 351,988, 3,450,553 and 6,890,538 shares
respectively. At the same time, the Board of Directors noted the creation of the
same number of shares as a result of the redemption of Vivendi Universal
convertible bonds. Because each share that was divided and then recombined was
then cancelled, and because, at the same time, the conversion of each equity
note (ORA) resulted in the creation of a new share, these transactions had no
effect on the number of shares comprising the share capital.
                                       F-41
<PAGE>

5.1.3 GOODWILL RECORDED AS A REDUCTION OF SHAREHOLDERS' EQUITY

     Vivendi Universal previously recorded goodwill as a reduction of
shareholders' equity pursuant to rules issued by the COB in 1988 that are no
longer in effect. This was done in particular, in connection with the mergers
with Havas and Pathe in 1998 and 1999, and the acquisition of US Filter and an
additional investment in Canal+ in 1999. As of December 31, 2002, goodwill
recorded as a reduction of shareholders' equity amounts to E 1,983 million after
theoretical straight-line amortization, compared with E 4,333 million at
December 31, 2001, mainly due to the partial disposal of the investment in
Veolia Environnement in 2002. (See Note 3)

     Without adjustments to shareholders' equity, the total write-off of
goodwill at December 31, 2002, would have been E 202 million (on the basis of
straight-line amortization over the normal time period prescribed by the
accounting policies of the Group), of which E 79 million relates to the current
accounting period and after a E 279 million reversal related to the disposal.
This amount excludes an exceptional, notional write-off of E 1.7 billion (of
which E 0.7 billion relates to the current accounting period and after a E 1.3
billion reversal related to the disposal) which would have impacted the initial
goodwill amount accounted for under shareholders' equity. This exceptional
notional write-off has no impact on the Income Statement (see Note 3). Goodwill
recorded as a reduction of shareholders' equity, net of notional aggregate
write-off amounts to approximately E 256 million and mainly concerns the
residual participation held in Veolia Environnement.

5.2 CHANGES IN MINORITY INTERESTS

<Table>
<Caption>
                                                                  DECEMBER 31,
                                                          -----------------------------
                                                            2002       2001      2000
                                                          --------   --------   -------
                                                             (IN MILLIONS OF EUROS)
<S>                                                       <C>        <C>        <C>
Opening balance.........................................  E 10,208   E  9,787   E 4,052
Changes in consolidation scope(1).......................    (4,229)       411     4,990
TSAR Issue (Redeemable in Veolia Environnement
  shares)(2)............................................        --        300        --
Minority interest in income of consolidated
  subsidiaries..........................................       844        594       625
Dividends paid by consolidated subsidiaries.............      (200)      (981)      (80)
Impact of foreign currency fluctuations on minority
  interest..............................................      (798)        97       190
Other changes...........................................      (328)        --        10
                                                          --------   --------   -------
Closing balance.........................................  E  5,497   E 10,208   E 9,787
                                                          ========   ========   =======
</Table>

---------------

(1) These principally relate to the change of consolidation method for Veolia
    Environnement (application of the equity method since December 31, 2002) and
    the acquisition of the entertainment assets of USA Networks (see Note 3).

(2) In December 2001, Veolia Environnement Financiere de l'Ouest (a holding
    company held at over 99% by Veolia Environnement), issued E 300 million
    "Titres Subordonne Remboursable en Actions Prioritaires" (TSAR, or obligated
    mandatorily redeemable security of subsidiary holding parent debentures)
    maturing at December 28, 2006. As a result of its nature, the TSAR issue was
    recorded as a minority interest in the balance sheet.

5.3 OTHER EQUITY: NOTES MANDATORILY REDEEMABLE FOR NEW SHARES OF VIVENDI
    UNIVERSAL

     In November 2002, Vivendi Universal issued 78,678,206 bonds for a total
amount of E 1 billion redeemable in Vivendi Universal new shares on November 25,
2005 at a rate of one share for one bond. The bonds bear interest at 8.25% per
annum. The total amount of discounted interest was paid to the bondholders on
November 28, 2002, for an amount of E 233 million. The bondholders can call for
redemption of the bonds in new shares at any time after May 26, 2003, at the
minimum redemption rate of 1 - (annual rate of interest X outstanding bond
lifetime expressed in years). Only new shares can be used for reimbursement, and
the holders would have the same rights as the shareholders if Vivendi Universal
goes into receivership. As a consequence, the notes are classified in other
equity in pursuance of French GAAP.

                                       F-42
<PAGE>

NOTE 6 PROVISIONS AND ALLOWANCES

6.1 CHANGES IN PROVISIONS

<Table>
<Caption>
                         BALANCE AT        CHANGES IN                                              BALANCE AT
                        DECEMBER 31,     CONSOLIDATION                                            DECEMBER 31,
                            2001       SCOPE AND OTHER(1)   ADDITIONS   UTILIZATION   REVERSALS       2002
                        ------------   ------------------   ---------   -----------   ---------   ------------
                                                        (IN MILLIONS OF EUROS)
<S>                     <C>            <C>                  <C>         <C>           <C>         <C>
Litigation............    E   610           E   (395)        E   282     E   (170)     E   (7)      E   320
Warranties and
  customer care.......        311               (299)            142          (75)         (1)           78
Maintenance and repair
  costs accrued in
  advance.............        273               (215)             92          (96)         (1)           53
Reserves related to
  fixed assets........        106                (67)              3           --          (4)           38
Valuation allowance on
  real estate.........        527               (109)             24         (104)         (1)          337
Valuation allowance on
  work in progress and
  losses on long-term
  contracts...........        484               (314)             53         (113)        (41)           69
Closure and post
  closure costs.......        455               (484)             73          (42)         (1)            1
Pensions..............        652               (364)             50          (92)         (6)          240
Restructuring costs...        314                (81)            107         (265)        (18)           57
Losses on investments
  in unconsolidated
  companies...........        320               (154)             74         (146)         (7)           87
Exceptional financial
  provisions..........         --                 --             929           --          --           929
Other financial
  provisions..........        151                 (6)            518          (73)         --           590
Other(2)..............       2128               (961)            537         (892)        (30)          782
                          -------           --------         -------     --------      ------       -------
PROVISIONS............    E 6,331           E (3,449)        E 2,884     E (2,068)     E (117)      E 3,581
                          =======           ========         =======     ========      ======       =======
</Table>

---------------

(1) Changes in the consolidation scope are mainly linked with the
    deconsolidation of Veolia Environnement accounted for by using the equity
    method at December 31, 2002.

(2) At December 31, 2001, E 630 million related to financial depreciation of
    public service contract fixed assets of Veolia Environnement.

6.2  FINANCIAL PROVISIONS

     The Exceptional Financial Provisions consist mainly of provisions related
to the anticipated Telepiu disposal (E 360 million), the amortization of call
options on Vivendi Universal shares granted by BNP (E 226 million),
international telecom assets (E 142 million) and put options on Vivendi
Universal shares (E 104 million).

     The Other Financial Provisions mainly concern the following items:

     - The evolution of the nature of the interest rate swap portfolio and of
       the underlying debt structure do not allow this portfolio to qualify for
       hedge accounting. As a result, a related provision has been recorded for
       E 261 million at December 31, 2002.

                                       F-43
<PAGE>

     - Provisions recorded in respect of premium related to bonds exchangeable
       into Veolia Environnement, Vinci and BSkyB shares amounted to E 137.9
       million. These provisions correspond to the premiums due in case of early
       redemption of the bonds exchangeable into Veolia Environnement and Vinci
       shares, in March 2003 and March 2004, respectively, and also cover the
       premium which is expected to be paid in July 2003 to holders of bonds
       exchangeable into BSkyB shares. (See Note 11).

NOTE 7 FINANCIAL DEBT

7.1 FINANCIAL DEBT

<Table>
<Caption>
                                                            YEARS ENDED DECEMBER 31,
                                                         ------------------------------
                                                           2002       2001       2000
                                                         --------   --------   --------
                                                             (IN MILLIONS OF EUROS)
<S>                                                      <C>        <C>        <C>
Bonds and bank loans(14)...............................  E  3,516   E 15,218   E 15,803
BSkyB 0.5%(1)..........................................        --      3,948         --
Veolia Environnement exchangeable 2%(2)................     1,809      1,809         --
Vivendi Universal convertible 1.25%(3).................     1,699      1,699      1,699
Veolia Environnement convertible 1.5%(4)...............        --      1,535      1,535
BSkyB exchangeable 1%(5)...............................        --      1,440      1,440
VUE "preferred interests" A&B(6).......................     2,507         --         --
Vinci exchangeable 1%(7)...............................       527        527         --
BSkyB exchangeable 3%(8)...............................        --        117        155
Mediaset SpA 3.5%(9)...................................        --         --         52
Seagram remaining debt(10).............................        98        354      2,491
Capital leases(11).....................................       274        997        629
Subordinated securities(12)............................        25        133        150
                                                         --------   --------   --------
Total long-term debt...................................  E 10,455   E 27,777   E 23,954
                                                         --------   --------   --------
Bank overdrafts and other short-term borrowings(13)....     9,177     14,003     14,852
Cash and cash equivalents..............................    (7,295)    (4,725)    (3,271)
                                                         --------   --------   --------
TOTAL FINANCIAL DEBT...................................  E 12,337   E 37,055   E 35,535
                                                         ========   ========   ========
</Table>

---------------

 (1) In October 2001, Vivendi Universal sold approximately 96% of its investment
     in BSkyB to two QSPEs (Qualifying Special Purpose Entities) and,
     concurrently, Vivendi Universal entered into a total return swap with the
     same financial institution that held all of the QSPEs' beneficial
     interests. Under French GAAP, the disposal of the investment in BSkyB was
     not recognized as a sale. Consequently, the BSkyB shares held by the two
     QSPEs, in an amount of E 1.5 billion, and financing for the acquisition of
     these shares, were consolidated by Vivendi Universal at December 31, 2001.
     In December 2001, following issue of 150 million certificates repayable in
     BSkyB shares at 700 pence per share by the financial institution
     controlling the QSPEs, Vivendi Universal and this financial institution
     reduced the nominal amount of the swap by 37%, fixing the value of the 150
     million shares and generating a capital gain of E 647 million after tax and
     charges. In May 2002, the financial institution sold the remaining 250
     million BSkyB shares held by the QSPEs. Vivendi Universal and the financial
     institution then terminated the total return swap concerning these shares.
     This transaction resulted in a reduction of gross debt by E 4 billion.

 (2) In February 2001, Vivendi Universal issued 32,352,941 bonds exchangeable,
     at any time after April 17, 2002, for shares in Veolia Environnement
     (interest 2%; yield to maturity 3.75%; expiring March 2006; nominal value
     E 55.90, or 30% above the average weighted price of Vivendi Universal
     shares the previous day). The redemption price of the bonds at maturity
     will be E 61.17. These bonds may be exchanged at any time if the closing
     price of Veolia Environnement shares for 20 out of 30 consecutive days
     equals or exceeds 125% of the anticipated redemption price. These bonds may
     be redeemed by the

                                       F-44
<PAGE>

     bondholder on March 8, 2003 at an exercise unit price of E 57.89. As at
     December 31, 2002, 32,352,941 bonds were outstanding.

 (3) In January 1999, Vivendi issued 6,028,363 bonds at a unit par value of
     E 282 earning interest at 1.25%, with a conversion/ exchange option at a
     rate of one bond for 3,124 existing or new shares. Redemption price is at
     par. Vivendi Universal can redeem these bonds in full at any time between
     January 1, 2002 and December 31, 2003, if the average price of Vivendi
     Universal shares exceeds 115% of the adjusted par value. These bonds will
     be redeemed in full on January 1, 2004 at par. 6,024,329 bonds were
     outstanding as at December 31, 2002.

 (4) In April 1999, Veolia Environnement issued 10,516,606 bonds at a unit par
     value of E 271, earning interest at 1.5%, with a conversion/exchange option
     concerning Vivendi or Veolia Environnement shares. 5,183,704 bonds were
     converted to Veolia Environnement shares in July 2000 when Veolia
     Environnement went public. The balance can now only be converted to Vivendi
     Universal shares, at a rate of one Veolia Environnement bond to 3.124
     shares. Maturity date for the bonds is January 1, 2005, at a redemption
     price of E 288 per bond. In the absence of conversion, exchange or early
     redemption, the bonds earn interest at a yield to maturity rate of 2.54%.
     Vivendi Universal may require Veolia Environnement to exercise its early
     redemption option if the average price of Vivendi Universal shares over a
     specified period exceeds 115% of the adjusted bond redemption value. Veolia
     Environnement called a general meeting of bondholders on August 20, 2002.
     By a 64.8% majority, the bondholders voted to waive their rights to the
     Vivendi Universal guarantee covering this loan, and the liability clause
     applicable in the event of default by Vivendi Universal, as from September
     1, 2002. The nominal interest rate was consequently increased by 0.75%,
     from 1.5% to 2.25%. As at December 31, 2002, due to Veolia Environnement's
     deconsolidation, these bonds are no longer consolidated.

 (5) In July 2000, Vivendi issued 59,455,000 bonds exchangeable for BSkyB shares
     or cash, at a unit par value of E 24.22. Following the Vivendi merger,
     these bonds are now held in the Vivendi Universal balance sheet, earn
     interest at 1% and mature in three years (2000-2003). The conversion rate
     is one BSkyB share (with a par value of 50 pence) for one Vivendi Universal
     bond. Each bond can be exchanged at any time during the term of the loan.
     The bonds are subject to early redemption in full by Vivendi Universal, at
     an early redemption price guaranteeing the bondholder a yield to maturity
     of 1.88%, if the average price of BSkyB shares reaches or exceeds 115% of
     the bond par value. The bonds mature on July 5, 2003, at which point any
     bonds outstanding will be redeemed at a unit price of E 24.87. All BSkyB
     shares corresponding to issued bonds were sold in October 2001. The
     59,455,000 bonds outstanding as at December 31, 2002 are reported as
     short-term borrowings.

 (6) In May 2002, Vivendi Universal acquired the entertainment assets of USA
     Networks Inc. Following this transaction, USA Interactive received VUE
     class A and class B preferred interests, the par value of which was $750
     million and $1.75 billion (the latter being exchangeable for 56.6 million
     common shares in USA Interactive, via put and call options agreed between
     Vivendi Universal and USA Interactive). These preferred interests mature at
     20 years and have the following characteristics (see Note 3):

     - class A preferred interests: PIK interest at 5% per year,

     - class B preferred interests: cash interest at 3.6% and PIK interest at
       1.4% per year.

 (7) In February 2001, Vivendi Universal issued 6,818,695 bonds exchangeable, at
     any time after April 10, 2001, for Vinci shares, for an amount of E 527.4
     million. The bonds bear interest at 1%, with 3.75% yield to maturity, and
     mature on March 1, 2006. The issue price was E 77.35, 30% above the
     previous day closing rates for Vinci shares. This transaction allows
     Vivendi Universal to complete its disengagement from Vinci, by exchanging
     its residual interest of 8.2% as at December 31, 2001. These bonds are
     subject to early redemption by the holders on March 1, 2004 (redemption
     price E 83.97 per bond). Revenue from this loan has been on lent to Veolia
     Environnement in the amount of its capital interest in Vinci (1,552,305
     shares of the 6,818,695 held by the Group) via a mirror loan of E 120
     million (see Note 4.4). The residual interest held by Vivendi Universal was
     placed on the market in 2002. To cover its obligations under the bond,
     Vivendi Universal concomitantly purchased, for E 53 million, 5.3 million
     Vinci share options at a price of E 88.81, corresponding to the bond par
     value as at March 1, 2006, in the absence of early redemption. As at
     December 31, 2002, 6,817,684 bonds were outstanding.

                                       F-45
<PAGE>

 (8) During the first half of 2002, Vivendi Universal redeemed the exchangeable
     bonds held in its balance sheet following the acquisition of Pathe in 1999,
     for shares in BSkyB. A total of 14,494,819 BSkyB shares were consequently
     transferred to the bondholders (see Note 4).

 (9) In April 1997, Canal+ issued exchangeable bonds in the total amount of
     E 304.9. These bonds bore interest at 3.5%, and matured on April 1, 2002.
     Each bond was convertible, at the option of the holder, at a rate of one
     bond for 341.74 shares in Mediaset SPA. These bonds were reported under
     short-term borrowings as at December 31, 2001.

(10) Following the merger of Vivendi, Canal+ and Seagram, Vivendi Universal
     reimbursed the majority of the Seagram credit lines in use at the time of
     the merger during the first quarter of 2001. This amount is made up of
     several credit lines with terms up to 2023.

(11) Lease contracts and lease contracts including a purchase option in favor of
     the lessee (French "credit bail" contracts) also include various rental
     guarantees relating to real-estate defeasance transactions.

(12) Subordinated debt principally comprises $70 million of securities repayable
     over 15 years issued by Energy USA on January 29, 1991. As at December 31,
     2001, the total also included a loan of E 244 million to finance a waste
     water treatment plant in Zaragoza, Spain, underwritten by OTV (a subsidiary
     of Veolia Environnement).

(13) Of the total at December 31, 2002, bridge loan of Vivendi Universal
     Entertainment that matures on June 30, 2003 in the amount of $1.6 billion
     and BSkyB exchangeable bonds which mature in July 2003 for E 1,440 million
     (See (5)). For additional information on bank overdrafts and other
     short-term borrowings, please refer to Note 17.9.

(14) For additional information on bonds and bank loans, please refer to Note
     17.9.

     Most financing contracts concluded by Vivendi Universal contain customary
clauses covering events of default provisions and may also contain financial
covenants. These can lead to accelerated redemption of the debt, or
renegotiation or even suspension of financing.

7.2 CHANGE IN FINANCIAL DEBT DURING 2002(1)

<Table>
<Caption>
                                                           CASH     DEBT     NET IMPACT
                                                          ------   -------   ----------
                                                             (IN MILLIONS OF EUROS)
<S>                                                       <C>      <C>       <C>
FINANCIAL NET DEBT AT DECEMBER 31, 2001.................                     E  37,055
Net cash flow from operating activities.................  (2,795)               (2,795)
Acquisitions tangible assets net of disposals...........   1,571                 1,571
Dividends paid..........................................   1,120                 1,120
Disposal of 55 million treasury shares..................  (2,856)               (2,856)
Disposal of puts on Vivendi Universal shares............     883                   883
Capital increase........................................     (68)                  (68)
ORA issued by Vivendi Universal in November 2002........    (767)                 (767)
ACQUISITIONS(2)
USA Networks/Multithematiques...........................   1,757     2,538       4,295
Echostar................................................   1,699                 1,699
10.8% interest in Sportfive.............................     122                   122
Other acquisitions......................................     179                   179
DISPOSALS(3)
Veolia Environnement(4).................................  (3,335)       --      (3,335)
  Disposal of 1st part (15.5%)..........................  (1,479)       --      (1,479)
  Disposal of 2nd part (20.4%)(4).......................  (1,856)       --      (1,856)
Termination of the BSkyB total return swap..............     (86)   (3,948)     (4,034)
Echostar(5).............................................  (1,037)       --      (1,037)
</Table>

                                       F-46
<PAGE>

<Table>
<Caption>
                                                           CASH     DEBT     NET IMPACT
                                                          ------   -------   ----------
                                                             (IN MILLIONS OF EUROS)
<S>                                                       <C>      <C>       <C>
Houghton Mifflin........................................  (1,195)     (372)     (1,567)
European publishing activities..........................  (1,121)      (17)     (1,138)
BtoB/Health.............................................    (894)      (37)       (931)
Sithe...................................................    (319)       --        (319)
Vinci shares(6).........................................    (291)       --        (291)
Canal+ Digital (50%)....................................    (264)       --        (264)
Vizzavi Europe (50%)....................................    (143)       --        (143)
Other disposals.........................................    (152)       --        (152)
OTHER (of which change in scope impacts)(7).............      --   (14,890)    (14,890)
                                                          ------   -------   ---------
                                                          (7,992)  (16,726)    (24,718)
                                                                             ---------
FINANCIAL NET DEBT AT DECEMBER 31, 2002.................                     E  12,337
                                                                             =========
</Table>

---------------

(1) Flows illustrate the accounting of Veolia Environnement using the equity
    method from January 1, 2002.

(2) Includes cash payment to USA Interactive. (see Note 3)

(3) These disposals include current accounts redemption and fees related to
    operations.

(4) Includes call related to Veolia Environnement for E 173 million. (see Note
    3)

(5) Excluding foreign exchange profit of E 37.1 million.

(6) Includes call related to Vinci for E 53 million. (see Note 11)

(7) Includes deconsolidation of Veolia Environnement debt for E 15.7 billion as
    of January 1, 2002.

7.3 LONG-TERM DEBT DETAILED BY CURRENCY(1)

<Table>
<Caption>
                                                                  DECEMBER 31,
                                                         ------------------------------
                                                           2002       2001       2000
                                                         --------   --------   --------
                                                             (IN MILLIONS OF EUROS)
<S>                                                      <C>        <C>        <C>
Euros..................................................  E  7,146   E 18,077   E 20,004
US dollars.............................................     2,933      4,443      3,422
Pounds sterling........................................       288      4,229        180
Other..................................................        88      1,028        348
                                                         --------   --------   --------
  Total long-term debt.................................  E 10,455   E 27,777   E 23,954
                                                         ========   ========   ========
</Table>

7.4 LONG-TERM DEBT DETAILED BY MATURITY(1)

<Table>
<Caption>
                                                                  DECEMBER 31,
                                                         ------------------------------
                                                           2002       2001       2000
                                                         --------   --------   --------
                                                             (IN MILLIONS OF EUROS)
<S>                                                      <C>        <C>        <C>
Due between one and two years..........................  E  2,878   E  3,434   E  7,325
Due between two and five years.........................     4,013     14,288     12,712
Due after five years...................................     3,564     10,055      3,917
                                                         --------   --------   --------
  Total long-term debt.................................  E 10,455   E 27,777   E 23,954
                                                         ========   ========   ========
</Table>

                                       F-47
<PAGE>

7.5 LONG-TERM DEBT DETAILED BY NATURE OF INTEREST RATE(1)

<Table>
<Caption>
                                                                  DECEMBER 31,
                                                         ------------------------------
                                                           2002       2001       2000
                                                         --------   --------   --------
                                                             (IN MILLIONS OF EUROS)
<S>                                                      <C>        <C>        <C>
Fixed interest rate....................................  E  8,925   E 18,646   E 11,429
Variable interest rate.................................     1,530      9,131     12,525
                                                         --------   --------   --------
  Total long-term debt.................................  E 10,455   E 27,777   E 23,954
                                                         ========   ========   ========
</Table>

---------------

(1) Excluding financial instruments which are described in Note 8

NOTE 8 FINANCIAL INSTRUMENTS

     Vivendi Universal, as the result of its global operating and financing
activities, is exposed to changes in interest rates, foreign currency exchange
rates and equity markets. These positions may adversely affect its operational
and financial earnings. In seeking to minimize the risks and costs associated
with such activities, Vivendi Universal follows a centrally administered risk
management policy approved by its Board of Directors. As part of this policy,
Vivendi Universal uses various derivative financial instruments to manage
interest rate, foreign currency exchange rate and equity market risks and their
impact on earnings and cash flows. Vivendi Universal generally does not use
derivative financial instruments for trading or speculative purposes.

8.1 INTEREST RATE RISK MANAGEMENT

     Interest rate risk management instruments are used by Vivendi Universal to
manage net exposure to interest rate changes, to adjust the proportion of total
debt that is subject to variable and fixed interest rates and to lower overall
borrowing costs. Interest rate risk management instruments used by Vivendi
Universal include pay-variable and pay-fixed interest rate swaps and interest
rate caps. Pay-variable swaps effectively convert fixed rate debt obligations to
LIBOR and EURIBOR. Pay-fixed swaps and interest rate caps convert variable rate
debt obligations to fixed rate instruments and are considered to be a financial
hedge against

                                       F-48
<PAGE>

changes in future cash flows required for interest payments on variable rate
debt. The following table summarizes information about Vivendi Universal's
interest rate risk management instruments:

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                              ----------------------
                                                                2002         2001
                                                              ---------   ----------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>         <C>
Pay-variable interest rate swaps:
  Notional amount of indebtedness...........................   E   626     E  5,868
  Average interest rate paid................................      5.80%        3.36%
  Average interest rate received............................      2.85%        5.01%
  Expiry:
     Due within one year....................................   E   387     E  2,282
     Due between two and five years.........................   E   208     E  1,526
     Due after five years...................................   E    31     E  2,060
Pay-fixed interest rate swaps:
  Notional amount of indebtedness...........................   E 8,492     E 10,284
  Average interest rate paid................................      4.50%        4.25%
  Average interest rate received............................      2.82%        2.97%
  Expiry:
     Due within one year....................................   E 1,818     E  2,766
     Due between two and five years.........................   E 4,410     E  3,951
     Due after five years...................................   E 2,264     E  3,567
Interest rate caps, floors and collars(1):
  Notional amount of indebtedness...........................   E    --     E  3,392
  Guarantee rate............................................                   4.78%
  Expiry:
     Due within one year....................................   E    --     E    150
     Due between two and five years.........................   E    --     E  1,391
     Due after five years...................................   E    --     E  1,851
</Table>

---------------

(1) These instruments were sold in 2002.

8.2 FOREIGN CURRENCY RISK MANAGEMENT

     Foreign currency risk management instruments are used by Vivendi Universal
to reduce earnings and cash flow volatility associated with changes in foreign
currency exchange rates. To protect the value of foreign currency forecasted
cash flows, including royalties, licenses, rights purchases and service fees,
and the value of existing foreign currency assets and liabilities, Vivendi
Universal enters into various instruments, including forward contracts, option
contracts and cross-currency swaps, that hedge a portion of its anticipated
foreign currency exposures for periods not to exceed two years. The gains and
losses on these instruments offset changes in the value of the related
exposures. At December 31, 2002, Vivendi Universal had effectively hedged
approximately 80% of its estimated foreign currency exposures, primarily related
to anticipated cash flows to be remitted over the following year. The principal
currencies hedged were the US dollar, Japanese

                                       F-49
<PAGE>

yen, British pound and Canadian dollar. The following table summarizes
information about Vivendi Universal's foreign currency risk management
instruments:

<Table>
<Caption>
                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                               (IN MILLIONS OF
                                                                   EUROS)
<S>                                                           <C>       <C>
Forward contracts:
  Notional amount...........................................  E 3,360   E 1,705
  Sale against the euro.....................................  E 3,315   E   640
  Purchase against the euro.................................  E    45   E 1,065
  Expiry:
     Due within one year....................................  E 3,360   E 1,705
Currency swaps:
  Notional amount...........................................  E 2,031   E 2,710
  Sale against the euro.....................................  E 1,437   E 1,027
  Purchase against the euro.................................  E   594   E 1,683
  Expiry:
     Due within one year....................................  E 2,031   E 2,447
     Due between two and five years.........................  E    --   E   263
</Table>

8.3 EQUITY MARKET RISK MANAGEMENT

     Our exposure to equity markets risk relates to our investments in the
marketable securities of unconsolidated entities and in debt securities. During
2002 and 2001, Vivendi Universal hedged certain equity-linked debts using
specialized indexed swaps. These swaps, with notional amounts totaling E 266
million in 2002 versus E 377 million in 2001 will progressively expire over
eight years.

     Furthermore, a description of the total return swap of AOL Europe is
presented in Note 11 Commitments and Contingencies.

<Table>
<Caption>
                                                               DECEMBER 31,
                                                              ---------------
                                                              2002     2001
                                                              -----   -------
                                                              (IN MILLIONS OF
                                                                  EUROS)
<S>                                                           <C>     <C>
Equity-linked swaps:
  Notional amount...........................................  E 266   E   377
  Expiry:
     Due within one year....................................  E 132   E    46
     Due between two and five years.........................  E  11   E   208
     Due after five years...................................  E 123   E   123
Total return swaps:
  Notional amount...........................................  E 788   E 3,511
  Expiry:
     Due within one year....................................  E 788   E    --
     Due between two and five years.........................  E  --   E 3,511
</Table>

8.4 FAIR VALUE OF FINANCIAL INSTRUMENTS

     At December 31, 2002, and 2001, Vivendi Universal's financial instruments
included cash, cash equivalents, marketable securities, receivables,
investments, accounts payable, borrowings, interest rate, foreign currency and
equity market risk management contracts. The carrying value of cash, cash
equivalents, marketable securities, receivables, accounts payable, short-term
borrowings and current portion of long-term

                                       F-50
<PAGE>

debt approximated fair value because of the short-term nature of these
instruments. The estimated fair value of other financial instruments, as set
forth below, has generally been determined by reference to market prices
resulting from trading on a national securities exchange or in an
over-the-counter market. In cases where quoted market prices are not available,
fair value is based on estimates using present value or other valuation
techniques.

<Table>
<Caption>
                                               DECEMBER 31, 2002     DECEMBER 31, 2001
                                              -------------------   -------------------
                                              CARRYING     FAIR     CARRYING     FAIR
                                               VALUE      VALUE      VALUE      VALUE
                                              --------   --------   --------   --------
                                                       (IN MILLIONS OF EUROS)
<S>                                           <C>        <C>        <C>        <C>
Investments(1)..............................  E  4,138   E  4,138   E  7,398   E  7,503
Long-term debt..............................  E 10,455   E 10,622   E 27,777   E 28,128
Foreign currency instruments and interest
  rate agreements:
  Interest rate swaps(2)....................  E     --   E   (256)  E     --   E    219
  Interest caps.............................        --         --         --         44
  Cross currency swaps......................        --         46         --          4
  Forward exchange contracts(2).............        --        115         --        163
  Puts and calls on marketable securities...        --       (104)        --       (214)
                                              --------   --------   --------   --------
                                              E     --   E   (199)  E     --   E    216
                                              ========   ========   ========   ========
</Table>

---------------

(1) Comprised of Other Investments (see Note 4) and treasury shares classified
    in marketable securities, excluding those held for stock option purposes. As
    of December 31, 2002, due to the provisions recognized, the net carrying
    value of the investments corresponds to their fair value.

(2) Provisions were recorded on these elements in respect of potential losses at
    December 31, 2002. (see Note 6)

8.5 CREDIT CONCENTRATIONS AND COUNTER-PARTY RISK

     Vivendi Universal minimizes its credit exposure to counter-parties by
entering into contracts only with highly-rated commercial banks or financial
institutions and by distributing the transactions among the selected
institutions. Although Vivendi Universal's credit risk is the replacement cost
at the then-estimated fair value of the instrument, management believes that the
risk of incurring losses is remote and those losses, if any, would not be
material. The market risk related to the foreign exchange agreements should be
offset by changes in the valuation of the underlying items being hedged. Vivendi
Universal's receivables and investments do not represent a significant
concentration of credit risk due to the wide variety of customers and markets in
which our products are sold, their dispersion across many geographic areas, and
the diversification of our portfolio among instruments and issuers.

                                       F-51
<PAGE>

NOTE 9 INCOME TAXES

     The following tables summarize the sources of pre-tax income and the
resulting income tax expense (benefit).

9.1 COMPONENTS OF INCOME TAX EXPENSE (BENEFIT)

<Table>
<Caption>
                                                             YEARS ENDED DECEMBER 31,
                                                            ---------------------------
                                                             2002      2001     2000(1)
                                                            -------   -------   -------
                                                              (IN MILLIONS OF EUROS)
<S>                                                         <C>       <C>       <C>
Income tax expense (benefit) applicable to:
  Current
     France...............................................  E   741   E   451   E   383
     US...................................................      133       223        14
     Other jurisdictions..................................       74       526       381
                                                            -------   -------   -------
                                                                948     1,200       778
                                                            -------   -------   -------
  Deferred
     France...............................................      940       290       224
     US...................................................      523        90       (18)
     Other jurisdictions..................................      145        (1)       25
                                                            -------   -------   -------
                                                              1,608       379       231
                                                            -------   -------   -------
Total income tax expense (benefit)........................  E 2,556   E 1,579   E 1,009
                                                            =======   =======   =======
</Table>

---------------

(1) Reflects changes in accounting policies and financial statement presentation
    adopted in 2001.

9.2 COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>          <C>
Deferred tax assets
  Employee benefits.........................................   E     64     E    142
  Tax credit and net operating loss carryforwards...........      8,383        3,813
  Provisions for risks and liabilities......................        324          542
  Other, net................................................      1,595        1,915
                                                               --------     --------
  Gross deferred tax assets.................................     10,366        6,412
  Deferred tax assets not recorded in the books.............     (8,753)      (2,187)
                                                               --------     --------
Total deferred tax assets...................................      1,613        4,225
                                                               --------     --------
Deferred tax liabilities
  Depreciation..............................................         65          261
  Revaluation of assets.....................................      2,250        2,454
  DuPont share redemption...................................      1,574        1,656
  Spirits and wine sale.....................................      1,711        1,769
  Other, net................................................      2,257        3,837
                                                               --------     --------
Total deferred tax liabilities..............................      7,857        9,977
                                                               --------     --------
Net deferred tax liability..................................   E (6,244)    E (5,752)
                                                               ========     ========
</Table>

                                       F-52
<PAGE>

9.3 TAX CARRYFORWARD EXPIRATION CALENDAR

     The utilization of certain tax carry forwards is subject to limitations
under income tax laws. The tax carry forwards expire in varying amounts as
follows:

<Table>
<Caption>
                                                                    TAX
                                                               CARRYFORWARDS
                                                              ---------------
                                                              (IN MILLIONS OF
                                                                  EUROS)
<S>                                                           <C>
2003........................................................      E    25
2004........................................................            3
2005........................................................        1,268
2006........................................................          635
2007........................................................        2,160
Thereafter up to 2007.......................................        4,179
Unlimited...................................................          113
                                                                  -------
                                                                  E 8,383
</Table>

9.4 EFFECTIVE INCOME TAX RATE

     The reconciliation of the differences between the French statutory tax rate
and Vivendi Universal's effective income tax rate is as follows:

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                              2002     2001     2000
                                                              -----    -----    -----
<S>                                                           <C>      <C>      <C>
French statutory rate.......................................   35.4%    36.4%    37.8%
Non deductible goodwill amortization........................  (35.1)   (48.4)     6.1
Long-term capital gains/losses taxed at lower tax rates.....   (2.4)     4.0     (5.7)
Tax losses..................................................  (13.4)    (3.0)     6.0
Other, net..................................................    3.2     (2.8)   (18.3)
                                                              -----    -----    -----
Effective income tax rate...................................  (12.3)%  (13.8)%   25.9%
                                                              =====    =====    =====
</Table>

     The years ended December 31, 2000 to December 31, 2002 are subject to tax
audits by the respective tax authorities of the jurisdictions in which Vivendi
Universal has operations. Various taxation authorities have proposed or levied
assessments for additional income taxes of prior years. Management believes that
the settlements will not have a material effect on the results of operations,
financial position or liquidity of Vivendi Universal.

                                       F-53
<PAGE>

NOTE 10 ADDITIONAL FINANCIAL STATEMENT INFORMATION

10.1 INCOME STATEMENT DATA

<Table>
<Caption>
                                                                  DECEMBER 31,
                                                         ------------------------------
                                                           2002       2001       2000
                                                         --------   --------   --------
                                                             (IN MILLIONS OF EUROS)
<S>                                                      <C>        <C>        <C>
10.1.1 Research and Development Costs..................  E    117   E    237   E    179
10.1.2 Personnel Costs, Including Employee Profit
  Sharing..............................................  E 12,147   E 11,926   E  9,487
10.1.3 Financial Expenses, Provisions and Other
  Financing expenses(1)................................  E (1,333)  E (1,455)  E (1,288)
                                                         --------   --------   --------
  Financial provisions.................................    (2,895)      (482)      (196)
                                                         --------   --------   --------
  Capital gains on sale of portfolio investments(2)....       255        143        702
  Foreign exchange gains (losses)......................        24         51         (7)
  Other(3).............................................      (793)      (185)        27
                                                         --------   --------   --------
                                                         E   (514)  E      9   E    722
                                                         --------   --------   --------
</Table>

---------------

(1) The average cost of debt in 2002 was 4.1% excluding Veolia Environnement.
    This subsidiary, accounted for using the equity method from December 31,
    2002, contributed to financing cost for (E 683) million in 2002.

(2) Of which, as at December 31, 2002, disposal of Vinci shares (E 153 million),
    disposals concluded by Veolia Environnement (E 112 million).

(3) As at December 31, 2002, losses relating to put options on Vivendi Universal
    shares (E 589 million).

     The following schedule shows details of financial provisions as at December
31, 2002:

<Table>
<Caption>
                                                     IN MILLIONS
                                                      OF EUROS         SEE PARAGRAPH
                                                     -----------       -------------
<S>                                                  <C>           <C>
Investment in Elektrim Telekomunikacja.............       (609)    Section 4.1
USA Interactive warrants...........................       (454)    Section 4.4
Interest rate swaps................................       (261)    Note 6
Premiums on call option on Vivendi Universal
  shares...........................................       (226)    Note 6
UGC and UGC Cine Cite shares.......................       (220)    Section 4.1
International telecom assets.......................       (175)    Section 4.2 and Note 6
DuPont shares......................................       (173)    Section 4.3
Provision on premiums on bonded debts..............       (122)    Note 6
Softbank Capital Partners..........................       (120)    Section 4.3
Put options on Vivendi Universal shares............       (104)    Note 6
Other..............................................       (431)
                                                      --------
                                                      E (2,895)
                                                      ========
</Table>

     For additional information on financial provisions as at December 31, 2001
and 2000, please refer to Note 17.9.

                                       F-54
<PAGE>

10.1.4 EXCEPTIONAL ITEMS, NET

<Table>
<Caption>
                                                                  DECEMBER 31,
                                                          -----------------------------
                                                           2002        2001      2000
                                                          -------     -------   -------
                                                             (IN MILLIONS OF EUROS)
<S>                                                       <C>         <C>       <C>
Net capital gains and gains on the dilution of our
  interests in other companies(1).......................  E 1,049     E 2,365   E 3,772
Other...................................................       --          --        40
                                                          -------     -------   -------
                                                          E 1,049(2)  E 2,365   E 3,812
                                                          =======     =======   =======
</Table>

---------------

(1) 2001 consisted mainly of E 1 billion from the disposal of 150 million BSkyB
    shares and E 712 million from the disposal of AOL France.

(2) At December 31, 2002, tax and minority interest related to exceptional items
    amount to E (1,022) and E 211 million.

     The following schedule shows details of capital gains and losses and gains
relating to the dilution of participations in other companies as of December 31,
2002, before tax:

<Table>
<Caption>
                                                              IN MILLIONS
                                                               OF EUROS     SEE PARAGRAPH
                                                              -----------   -------------
<S>                                                           <C>           <C>
Disposal of 250 million of BSkyB shares.....................      1,588     Section 7.1.1
Disposal of Echostar shares(1)..............................       (674)
Disposals and dilution of Veolia Environnement..............      1,419     Section 3.2.3
Disposal of Houghton Mifflin................................       (822)    Section 3.2.6
Disposal of European publishing activities..................        329     Section 3.2.6
Reserve related to anticipated Telepiu disposal.............       (360)    Section 3.2.7
Disposal of business to business and health divisions.......       (298)    Section 3.2.4
Disposal of Sithe shares....................................       (232)    Section 4.2
Disposal of Vizzavi Europe..................................         90     Section 3.2.5
Disposal of Canal Digital(2)................................        172
Other.......................................................       (163)
                                                                -------
                                                                E 1,049
                                                                =======
</Table>

---------------

(1) On December 18, 2002, Vivendi Universal sold its entire EchoStar equity
    position, 57.6 million Class A common shares, back to EchoStar. Total net
    proceeds of the sale were $1.066 billion. Vivendi Universal held these Class
    A common shares following the conversion of 5.8 million Class D Echostar
    preferred stock in January 2002 for an amount of $1.5 billion.

(2) Canal+ Group sold its whole participation in Canal Digital to Telenor for an
    amount of E 289 million.

                                       F-55
<PAGE>

10.1.5 DEPRECIATION AND AMORTIZATION

<Table>
<Caption>
                                                                  DECEMBER 31,
                                                          -----------------------------
                                                            2002       2001      2000
                                                          --------   --------   -------
                                                             (IN MILLIONS OF EUROS)
<S>                                                       <C>        <C>        <C>
Depreciation of property, plant and equipment...........  E  3,223   E  2,578   E 2,105
Goodwill amortization...................................     1,277      1,688       634
Goodwill impairment(1)..................................    18,442     13,515        --
Amortization of other intangible assets.................     1,098      1,253       904
Other non-financial provisions and allowances, excluding
  financial provisions..................................        --         16       395
                                                          --------   --------   -------
                                                          E 24,040   E 19,050   E 4,038
                                                          ========   ========   =======
</Table>

---------------

(1) See Note 3.3.

10.2 BALANCE SHEET DATA

10.2.1 OTHER INTANGIBLE ASSETS, NET

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>          <C>
Audiovisual and music rights................................   E  5,558     E  7,821
Trademarks, market share, editorial resources...............      2,903        7,984
Film costs, net of amortization.............................      3,367        2,587
Editorial & plate costs.....................................         39          118
Telecom licenses............................................        989          680
Deferred charges............................................        542        1,391
Software....................................................        627          703
Fees paid to local authorities..............................         --          568
Other.......................................................        681        1,450
                                                               --------     --------
                                                               E 14,706     E 23,302
                                                               ========     ========
</Table>

<Table>
<Caption>
                                                        OTHER                        OTHER
                                                      INTANGIBLE   ACCUMULATED    INTANGIBLE
                                                        ASSETS     AMORTIZATION   ASSETS, NET
                                                      ----------   ------------   -----------
                                                              (IN MILLIONS OF EUROS)
<S>                                                   <C>          <C>            <C>
Balance at December 31, 2001........................   E 30,128      E (6,826)     E 23,302
Additions/allocations...............................        116        (1,189)     E (1,073)
Disposals/reversals.................................       (442)           90      E   (352)
Changes in scope of consolidation and other.........     (5,762)          120      E (5,642)
Foreign currency translation adjustments............     (1,872)          343      E (1,529)
                                                       --------      --------      --------
Balance at December 31, 2002........................   E 22,168      E (7,462)     E 14,706
                                                       ========      ========      ========
</Table>

                                       F-56
<PAGE>

10.2.2 PROPERTY PLANT AND EQUIPMENT, NET

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                2002          2001
                                                              ---------    ----------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>          <C>
Land........................................................   E   859      E  2,199
Buildings...................................................     1,839         3,941
Machinery and equipment.....................................     3,316         9,138
Construction-in-progress....................................       394         1,030
Other.......................................................     1,261         2,823
                                                               -------      --------
Property, plant and equipment...............................     7,669        19,131
Publicly-owned utility networks.............................        17         4,265
                                                               -------      --------
Property, plant and equipment, net..........................   E 7,686      E 23,396
                                                               =======      ========
</Table>

<Table>
<Caption>
                                                       PUBLICLY-                  PROPERTY,
                                           PROPERTY,     OWNED                    PLANT AND
                                           PLANT AND    UTILITY    ACCUMULATED    EQUIPMENT,
                                           EQUIPMENT   NETWORKS    DEPRECIATION      NET
                                           ---------   ---------   ------------   ----------
                                                        (IN MILLIONS OF EUROS)
<S>                                        <C>         <C>         <C>            <C>
Balance at December 31, 2001.............  E  32,031   E  6,187     E (14,822)    E  23,396
Additions/allocations....................      3,221        383        (3,308)          296
Disposals/reversals......................       (800)      (104)           85          (819)
Changes in scope of consolidation and
  other..................................    (18,921)    (6,436)       10,611       (14,746)
Foreign currency translation
  adjustments............................       (580)        --           139          (441)
                                           ---------   --------     ---------     ---------
Balance at December 31, 2002.............  E  14,951   E     30     E  (7,295)    E   7,686
                                           =========   ========     =========     =========
</Table>

10.2.3 INVENTORIES AND WORK-IN-PROGRESS

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                              ----------------------
                                                                2002         2001
                                                              ---------    ---------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>          <C>
Inventories.................................................   E 1,822      E 4,090
Valuation allowance.........................................      (512)        (927)
                                                               -------      -------
                                                               E 1,310      E 3,163
                                                               =======      =======
</Table>

10.2.4 ACCOUNTS RECEIVABLE

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>          <C>
Trade accounts receivable(1)................................   E  9,601     E 19,994
Allowance for doubtful accounts.............................     (1,492)      (2,274)
Total trade accounts receivable.............................      8,109       17,720
Other(1)(2).................................................      1,783        3,374
                                                               --------     --------
                                                               E  9,892     E 21,094
                                                               ========     ========
</Table>

---------------

(1) Due within one year.

(2) Of which as of December 2002, premium on VUE class A & B preferred interests
    (E 734 million amortized for E 22 million, see Note 3).

                                       F-57
<PAGE>

10.2.5 MARKETABLE SECURITIES

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                2002          2001
                                                              ---------    ----------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>          <C>
Treasury shares(1)..........................................   E   38       E 1,840
Listed marketable securities(2).............................       10         1,866
Unlisted marketable securities(3)...........................      168           403
Valuation allowance.........................................     (128)         (336)
                                                               ------       -------
                                                               E   88       E 3,773
                                                               ======       =======
</Table>

---------------

(1) 478,015 shares, with an associated provision of E 12 million.

(2) The drop in value of listed marketable securities is mostly related to the
    sale of shares in BSkyB for E 1.6 billion (See paragraph 7.1.1) and Vinci
    for E 0.2 billion. These Vinci shares were placed on the market in June 2002
    for a total of E 344 million of euros, generating a pre-tax capital gain of
    153 millions of euros.

(3) Unlisted marketable securities consist principally of shares in investment
    companies, with an associated provision of E 116 million. It is comprised of
    the following investments:

     - Non-voting shares in an investment company which has enabled investment
       company Ymer to acquire a 2% interest in Elektrim Telekomunikacja. Please
       refer to Note 13. The carrying value of this investment is E 38 million,
       net of provision of E 66 million.

     - Non-voting shares in an investment company which, by virtue of a carrying
       agreement entered in with a third party financial institution, entitles
       Vivendi Universal to acquire, and the third party may put to Vivendi
       Universal, 4.99% of Elektrim SA's share capital. Please refer to Note
       4.2. The carrying value of this investment is E 7 million, net of
       provision of E 50 million.

10.2.6 OTHER NON-CURRENT LIABILITIES AND ACCRUED EXPENSES

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                              ----------------------
                                                                2002         2001
                                                              ---------    ---------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>          <C>
Sports rights...............................................   E 1,065      E 1,440
Medium-term vendor credits..................................        --          847
Royalties payable, participations and commitments...........     1,386          911
Accrued compensation and other benefits.....................       184          402
Accrual for exit activities related to the acquisition of
  Seagram...................................................        56          300
Litigation and contingencies................................        57          528
Contingent price adjustment towards Rondor's previous
  shareholders(1)...........................................       223          134
Other(2)....................................................       923        1,126
                                                               -------      -------
                                                               E 3,894      E 5,688
                                                               =======      =======
</Table>

---------------

(1) See Note 11.

(2) As of December 31, 2001, including Veolia Environnement for E 668 million.

                                       F-58
<PAGE>

10.2.7 ACCOUNTS PAYABLE

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                2002          2001
                                                              ---------     ---------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>           <C>
Trade accounts payable and other............................  E 11,955      E 19,178
Social costs payable........................................     1,318         7,236
                                                              --------      --------
                                                              E 13,273(1)   E 26,414
                                                              ========      ========
</Table>

---------------

(1) Due within one year.

10.3 CASH FLOW STATEMENT DATA

10.3.1 SELECTED CONTRIBUTION DATA AS OF DECEMBER 31, 2002

<Table>
<Caption>
                                                                  MAROC    VIVENDI UNIVERSAL
                                                    CEGETEL(1)   TELECOM   ENTERTAINMENT(2)
                                                    ----------   -------   -----------------
                                                             (IN MILLIONS OF EUROS)
<S>                                                 <C>          <C>       <C>
Net cash provided by operating activities.........      2,120       770            351
Net cash provided by (or used for) investing
  activities......................................       (497)     (225)           308
Net cash provided (or used for) by financing
  activities......................................     (1,056)     (149)          (771)
Effect of foreign currency exchange rate
  changes.........................................         --       (18)           (19)
                                                     --------    ------         ------
Change in cash and cash equivalents...............   E    567    E  378         E (131)
                                                     ========    ======         ======
Dividends paid by these subsidiaries to Vivendi
  Universal.......................................   E     --    E   19         E   --
                                                     ========    ======         ======
</Table>

---------------

(1) At the beginning of July 2002, Vivendi Universal reimbursed to Cegetel the
    loan which was granted in accordance with the optimization of Cegetel
    financing management. This decision was taken by Vivendi Universal and
    Cegetel mutual agreement, considering Vivendi Universal cash flow situation
    at the beginning of July 2002.

(2) Has been consolidated since May 7, 2002.

10.3.2 CASH PAYMENTS

<Table>
<Caption>
                                                             YEARS ENDED DECEMBER 31,
                                                            ---------------------------
                                                             2002      2001      2000
                                                            -------   -------   -------
                                                              (IN MILLIONS OF EUROS)
<S>                                                         <C>       <C>       <C>
Interest paid, net........................................  E 1,333   E 1,402   E 1,288
Income taxes paid.........................................  E 1,252   E   684   E   229
</Table>

10.4 OTHER DATA

10.4.1 NON-CASH INVESTING AND FINANCING ACTIVITIES

<Table>
<Caption>
                                                             YEARS ENDED DECEMBER 31,
                                                            --------------------------
                                                             2002     2001      2000
                                                            -------   -----   --------
                                                              (IN MILLIONS OF EUROS)
<S>                                                         <C>       <C>     <C>
Purchase of affiliates by issuance of common stock........  E 1,219   E 207   E 28,809
Issuance of common stock in settlement of note
  payable(1)..............................................  E    --   E 177   E  1,405
</Table>

---------------

(1) At December 31, 2001 and 2000 only concerned Veolia Environnement.

                                       F-59
<PAGE>

10.4.2 AVERAGE NUMBER OF EMPLOYEES (UNAUDITED)

<Table>
<Caption>
                                                               DECEMBER 31,
                                                              ---------------
                                                              2002      2001
                                                              -----     -----
                                                              (IN THOUSANDS)
<S>                                                           <C>       <C>
Average number of employees(1)..............................   335       321
</Table>

---------------

(1) Of which 50,818 and 47,570 from companies consolidated by using the
    proportionate method at December 31, 2002 and 2001.

10.4.3 COMPENSATION FOR EXECUTIVE OFFICERS, SENIOR MANAGERS AND DIRECTORS

     i) Executive Directors

     Executive Directors' remuneration is determined by the Board of Directors
after hearing the Human Resources Committee report.

     ii) Senior Managers

     Among Senior Managers heading up the Group's Business Units, the ten
highest remunerations (including nine American managers) totalled E 55.24
million in 2002.

     iii) Non-Executive Directors

     Each Non-Executive Director receives E 50,000 in director's fees per year.
This amount is increased by E 11,000 for members of the Human Resources
Committee and E 22,000 for members of the Audit Committee. This amount is
doubled for the Chairman of each Committee.

     Directors' fees are paid "prorata temporis" depending on the appointment or
resignation date, at the end of each quarter.

     Directors' fees paid in 2002 by Vivendi Universal to non-executive
directors amounted to E 0.9 million (total payment of E 1.1 million of which
E 0.2 million to Executive Directors).

NOTE 11 COMMITMENTS AND CONTINGENCIES

11.1 PROCEDURES

     Vivendi Universal and its subsidiaries maintain detailed records on all
contractual obligations, commercial commitments and contingent liabilities,
which are reviewed with senior management and updated on a regular basis. In
order to ensure completeness, accuracy and consistency of the records, many
procedures are performed, including but not limited to:

     - review of minutes of meetings of stockholders, directors, committees of
       the board, and management committees for matters such as contracts,
       litigation, and authorization of fixed asset acquisitions or disposals;

     - review with banks of items such as guarantees, endorsements and
       discounted receivables;

     - review with internal and/or external legal counsel of pending litigation,
       claims (in dispute) and environmental matters as well as related
       assessments for unrecorded contingencies;

     - review of tax examiner's reports, notices of assessments and income tax
       analyses for additional prior year amounts;

     - review with risk management, insurance agents and brokers of coverage for
       unrecorded contingencies;

     - review of related party transactions for guarantees and other
       commitments;

     - review of all contracts and agreements.

                                       F-60
<PAGE>

11.2 CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS GIVEN

     Vivendi Universal and its subsidiaries have various contractual obligations
and commercial commitments, which have been defined as items for which we are
contractually obligated or committed to pay a specified amount at a specific
point in time. Certain of these items are required to be recorded as liabilities
in our consolidated financial statements, for example long-term debt. Others,
such as certain purchase commitments and other executory contracts are not
permitted to be recognized as liabilities in our consolidated financial
statements, but are required to be disclosed. The following table summarizes
Vivendi Universal's significant contractual obligations and commercial
commitments at December 31, 2002:

<Table>
<Caption>
                                                             PAYMENTS DUE IN
                                           ---------------------------------------------------
                                           LESS THAN      BETWEEN         BETWEEN       AFTER
                                 TOTAL      A YEAR     1 AND 2 YEARS   2 AND 5 YEARS   5 YEARS
                                --------   ---------   -------------   -------------   -------
                                                    (IN MILLIONS OF EUROS)
<S>                             <C>        <C>         <C>             <C>             <C>
RECORDED AS LIABILITIES IN THE
  CONSOLIDATED BALANCE SHEET
Long-term debt(1).............  E 10,455   E     --       E 2,878         E 4,013      E 3,564
Bank overdrafts and other
  short-term borrowings.......     9,177      9,177            --              --           --
  Sports rights(2)............     1,065        469           331             265           --
Broadcasting rights(3)........       506        214           140             121           31
Creative talent and employment
  agreements(4)...............       250         55            50              60           85
Other(5)......................       240        223            15               2           --
                                --------   --------       -------         -------      -------
Total.........................  E 21,693   E 10,138       E 3,414         E 4,461      E 3,680
                                ========   ========       =======         =======      =======
</Table>

<Table>
<Caption>
                                                             PAYMENTS DUE IN
                                           ---------------------------------------------------
                                           LESS THAN      BETWEEN         BETWEEN       AFTER
                                  TOTAL     A YEAR     1 AND 2 YEARS   2 AND 5 YEARS   5 YEARS
                                 -------   ---------   -------------   -------------   -------
                                                    (IN MILLIONS OF EUROS)
<S>                              <C>       <C>         <C>             <C>             <C>
OTHER CONTRACTUAL OBLIGATIONS
  AND COMMERCIAL COMMITMENTS
Operating leases(6)............  E 1,868    E   373       E   330         E   655      E   510
Sport rights(2)................    1,440         --           265           1,175           --
Broadcasting rights(3).........    2,690        834           513           1,056          287
Creative talent and employment
  agreements(4)................    1,473        823           296             289           65
Real estate defeasance(7)......      846         --            --              --          846
Other..........................      701        213           121             280           87
                                 -------    -------       -------         -------      -------
Total..........................  E 9,018    E 2,243       E 1,525         E 3,455      E 1,795
                                 =======    =======       =======         =======      =======
</Table>

---------------

(1) Long-term debt, including capital lease obligations of E 274 million, which
    French GAAP requires to be recognized as long-term debt when the lease
    contract includes a purchases option, known in France as "credit bail" (see
    Note 7).

(2) Exclusivity contracts for broadcasting sporting events by Canal+ Group
    (E 1,065 million recorded in other non-current liabilities and E 1,440
    million shown in other contractual obligations and commercial commitments in
    connection with the potential acquisition of football rights).

(3) Primarily exclusivity contracts for broadcasting future film productions,
    acquisitions of program catalogs and leasing of satellite capacity at VUE
    and Canal+ Group.

                                       F-61
<PAGE>

(4) Agreements in the normal course of business, which relate to creative talent
    and employment agreements principally at VUE and UMG.

(5) Principally comprised of Universal Music's liability related to Rondor Music
    International, E 223 million settled in March 2003 (see the discussion below
    under Contingencies and Note 10.2.6).

(6) Lease obligations assumed in the normal course of business for rental of
    buildings and equipment.

(7) Lease obligations related to real estate defeasances. In April 1996, the
    disposal to Philip Morris Capital Corporation of three office buildings
    under construction was accompanied by a 30-year lease back agreement
    effective upon completion of the buildings. Two of the buildings were
    completed in April 1998 and the third in April 2000. The annual rental
    expenses approximate E 34.4 million. In December 1996, three buildings in
    Berlin were sold and leased back under ten to thirty year leases at an
    annual rental expense of approximately E 29.6 million. The difference
    between Vivendi Universal's rental obligation under the leases and the
    market rent received by Vivendi Universal is provided for when unfavorable.

11.3 CONTINGENCIES

     In addition to contractual obligations and commercial commitments given,
Vivendi Universal and its subsidiaries have entered into various guarantees or
other agreements pursuant to which they have contingent liabilities not recorded
as liabilities on the balance sheet. The most significant contingencies at
December 31, 2002 are summarized as follows:

  CEGETEL GROUP

     - In connection with the August 2001 sale of AOL Europe (AOLE) Category E
       preferred shares by Canal+ Group and Cegetel Group to LineInvest, Vivendi
       Universal entered into a total return swap agreement with the latter.
       LineInvest is a special purpose vehicle in which Vivendi Universal has no
       ownership interest created in connection with the transaction. Under the
       terms of the agreement, Cegetel Group and Canal+ Group retained the
       financial risk on the value of the AOLE preferred shares up to a share of
       66% and 34%, respectively, through a mirror total return swap with
       Vivendi Universal. In December 2002, a portion of the total return swap
       between Vivendi Universal and LineInvest was transferred directly to
       Cegetel Group corresponding to its share (notional amount of $541.3
       million). As a result, Vivendi Universal continues to guarantee the
       Canal+ Group commitment (notional amount of $270.7 million). Under the
       arrangements, Cegetel Group and Vivendi Universal are obligated to repay
       the notional amounts of the swaps to LineInvest on April 7, 2003 and
       October 30, 2003, respectively.

      On February 14, 2003, LineInvest received notification from AOL Time
      Warner (AOLTW) whereby AOLTW will acquire the AOLE preferred shares
      through the exercise of a call option on April 8, 2003 for an amount of
      $812 million, payable in either cash or shares of AOLTW common stock or a
      combination of both. AOLTW must make its election as to cash or shares by
      April 4, 2003. If AOLTW determines to pay in shares, the number of shares
      to be delivered will be based on the average closing price of the regular
      trading session for AOLTW common stock for the fifteen consecutive trading
      days ending on the second business day preceding April 8, 2003. If payment
      for the call option is made in cash, the LineInvest payment to Cegetel is
      due on April 30, 2003 and the payment to Vivendi Universal is due on
      October 30, 2003. If payment for the call option is made in shares, the
      date of payment to Cetegel and Vivendi Universal will be the April 30,
      July 30, October 30, or January 30 following receipt by LineInvest of any
      proceeds of the sale of the AOLTW shares. In the case of Vivendi
      Universal, however, the first such payment by LineInvest could not occur
      until October 30, 2003. In the case of both Vivendi Universal and Cetegel,
      the final date for payment by LineInvest is October 30, 2006.

      If LineInvest receives AOLTW shares in consideration for the sale of the
      AOLE preferred shares to AOLTW, such shares will not be freely tradeable
      in the United States prior to registration with the SEC and are subject to
      certain other restrictions affecting their resale. Since there can be no
      assurance as to the precise timing of the sale of the shares by LineInvest
      or the amount of proceeds it will receive,

                                       F-62
<PAGE>

      Vivendi Universal and Cegetel Group retain a contingent liability in
      respect of the difference between the ultimate sales proceeds of the AOLTW
      shares and the notional amount due under the total return swaps.

      The asset representing the preferred shares and the liability representing
      the corresponding debt in LineInvest's financial statements amounts to
      $812 million.

     - The shareholders agreement between Cegetel Groupe and Societe Nationale
       des Chemins de Fer Francais (SNCF) related to their interest in Telecom
       Developpement includes exit conditions for both parties in certain
       specific circumstances at a price still to be determined.

     - In connection with the 3G UMTS license granted to SFR by the French
       government in 2001, we are committed to make future license payments
       equal to 1% of 3G revenues earned when the service commences, currently
       expected to be in 2004.

     - Cegetel has provided miscellaneous guarantees in connection with
       operating activities. The total guarantees approximate E 40 million, of
       which the largest is a guarantee made in relation to a credit agreement
       between Societe Financiere de Distribution, a distribution company in
       which Cegetel has an equity investment, and Credit Mutuel for
       approximately E 24 million, which expires in July 30, 2006.

  UNIVERSAL MUSIC GROUP

     - In connection with the purchase of Rondor Music International in 2000,
       there existed a contingent purchase price adjustment based on the market
       value of Vivendi Universal shares. The contingent price adjustment was
       triggered in April 2002 when the market value of Vivendi Universal's
       shares fell below $37.50 for 10 consecutive days and the former
       shareholders of Rondor requested early settlement. A liability for this
       adjustment was recorded in the consolidated balance sheet at December 31,
       2002 for its estimated amount of E 223 million (approximately $230
       million). On March 3, 2003 settlement of this liability was made and the
       former shareholders of Rondor received 8.8 million shares of Vivendi
       Universal, representing 0.8% of capital stock and cash of US$100.3
       million (E 92.6 million). (See Note 16, below)

     - The initial 5-year term of UMG's 50% joint venture in the Roc-a-fella
       record label was to end on February 28, 2002. Instead, the term was
       extended for 3 more years to February 28, 2005. UMG's joint venture
       partner has a put option in its interest that is exercisable on February
       28, 2005, which was valued at E 34 million at the time of the extension.
       At the time of the extension E 19 million was paid as both an advance on
       the option and for a 3-year extension. Based on estimated performance,
       the potential liability if the put is exercised is between zero and E 15
       million.

     - The original 3 year term of UMG's 50% joint venture in the Murder, Inc.
       Records label was extended as of February 10, 2002 for an additional 5
       years until February 10, 2007. On the date 90 days after expiration or
       termination of the term, UMG is obligated to purchase its joint venture
       partner's 50% interest under a formula based on prior performance. It is
       not possible to predict the future performance of the joint venture, but
       based on recent performance being constant through the end of the term,
       the Group estimates the potential obligation at approximately $20
       million.

     - In connection with UMG's 50% equity investment in pressplay, a joint
       venture with Sony Music that offers online access to music tracks, UMG is
       obligated to cover its proportionate share of the amount of shortfall, if
       any, of operating fees. Under the terms of the joint venture agreement,
       each of Sony and UMG has agreed to contribute up to $50,000,000. To date,
       UMG's contributions have amounted to approximately $30,000,000.

  VIVENDI UNIVERSAL ENTERTAINMENT

     - In connection with Vivendi Universal's acquisition of the entertainment
       assets of USA Interactive, Inc. (USA), USA and Mr. Barry Diller received
       5.44% and 1.50%, respectively, of the common interests in Vivendi
       Universal Entertainment LLLP (VUE), the group formed by combining such
       assets and those

                                       F-63
<PAGE>

       of the Universal Studios Group. Vivendi Universal agreed to certain put
       arrangements with respect to the common interests in VUE. Beginning on
       May 7, 2003, Mr. Barry Diller may put his common interests to Universal
       Studios, Inc. for the greater of their fair market value and $275
       million. Beginning on May 7, 2010, USA may put its common interests to
       Universal Studios, Inc. for their fair market value. In each case, these
       amounts may, at Universal Studio Inc's election, be paid in cash or in
       Vivendi Universal shares.

      Under the VUE Partnership Agreement, VUE is subject to a number of
      covenants for the benefit of the holder of the Class A Preferred Interests
      in VUE (currently USA), including a cap on indebtedness and a restriction
      on asset transfers. Certain of the covenants, including those specified
      above, would cease to apply if an irrevocable letter of credit were issued
      in an amount equal to the accrued value of such interests at maturity
      (approximately $2 billion in 2022).

      In addition, Vivendi Universal has agreed to indemnify USA for any "tax
      detriment" (defined to mean the present value of the loss of USA's tax
      deferral on the transaction) arising from certain actions taken by VUE
      prior to May 7, 2017, including selling assets contributed by USA to VUE
      and repaying the $1.62 billion in debt used to finance the cash
      distribution made to USA at the closing.

     - In connection with VUE's equity investment in Universal City Development
       Partners (UCDP), a joint venture that operates Universal Orlando's theme
       parks, Vivendi Universal has two guarantees, each up to $14 million, in
       favor of Fleet National Bank and Wachovia. Following Vivendi Universal's
       debt downgrading in June 30, 2002 and in accordance with the terms of the
       guarantees, cash collateral of $13.5 million was put in place for each
       guarantee, leaving a total residual guarantee of $1 million. The theme
       park venture is currently in the process of raising new financing through
       a $500 million bond offering. The new borrowing will be non-recourse as
       are the other loans already in place. The new funds will be used to pay
       various debt instruments, deferred management fees to VUE and improve the
       parks' liquidity position.

     - In connection with VUE's equity investment in Universal City Florida
       Hotel Venture (UCF-HV), a joint venture that operates Universal Orlando's
       hotels, Vivendi Universal has a commitment to cover its proportionate
       share of the operating expense shortfall, if any, of the hotels. The
       total is capped at $30 million per year, and Vivendi Universal's
       proportionate share is 25% or $7.5 million. To date, no expense shortfall
       has occurred and the guarantee has not been called.

     - In connection with its equity investment in UCI/CIC (United Cinema
       International/Cinema International Corporation), a joint venture that
       operates international movie theatres, VUE has guaranteed lease payments
       for approximately $154 million (VUE's 50% share). To date, none of these
       guarantees have ever been called as the joint venture has been able to
       meet its obligations.

     - In connection with its 20% equity investment in MovieLink, a joint
       venture formed in February 2001 to provide film programming via the
       internet, VUE has committed to make capital contributions up to $30
       million and may be obligated to fund payment obligations of MovieLink
       with respect to certain intellectual property liabilities in excess of
       $30 million. As of December 31, 2002, VUE has contributed $10.5 million
       and expects to contribute the remaining $19.5 million over the next
       several years pursuant to future capital calls that may be made from time
       to time. As MovieLink has only been operating since 2001, there is no
       assurance that the outstanding capital contributions will be sufficient
       to fund future operations.

     - VUE has received an unfavorable legal judgment related to ITC
       Entertainment's "Streetscenes" film property, which it acquired as part
       of Seagram's acquisition of PolyGram. A surety bond of $27.8 million was
       issued in October 2001 in connection with this matter and
       counter-guaranteed by Vivendi Universal. The Court of Appeal reduced
       compensatory damages to $1.2 million, which VUE has paid. However,
       punitive damages have not yet been determined as VUE is awaiting new
       trial court proceedings.

     - In 1987, Universal City, Florida entered into an agreement with a
       creative consultant to supply consulting services for a fee based on its
       gross revenues. The consultant is also entitled to a fee based on
                                       F-64
<PAGE>

       the gross revenues of all gated motion picture and/or television themed
       attractions owned or operated, in whole or in part, by (or pursuant to a
       licence from) Universal City, Florida or MCA Inc. (now Universal Studios,
       Inc.), any of their partners or any of their affiliates ("comparable
       projects"), other than at Universal City, California. At present, the
       only theme park which may be a comparable project is VUE's partially
       owned park in Osaka, Japan. It is possible that comparable projects will
       be created in the future that would fall under the consulting agreement.

      For 2000, 2001 and 2002, the fees paid by Universal City, Florida for its
      parks were $14.8 million, $16.6 million and $14.7 million, respectively.
      Fees with respect to the park in Japan were $13.2 million for 2001 and
      $10.5 million for 2002. The consultant may also be entitled to participate
      in certain sales of equity by Universal City, Florida's partners and to
      participate in certain real estate development activities of Universal
      City, Florida's partners or their affiliates.

      Although the agreement has no expiration date, starting in June 2010, the
      consultant has the right under certain circumstances to terminate the
      periodic payments under the agreement and receive instead one payment
      equal to the fair market value of the consultant's interest in our parks
      and all comparable projects that have been open at that time for at least
      one year. If the parties cannot agree on the fair market value of that
      interest, it will be determined by a binding appraisal procedure.
      Universal City, Florida represented under the agreement that the
      consultant's interest in each of its parks and in any comparable projects
      will have priority over the interests of all financiers, lenders and
      others who may have an interest in that park or project. Universal City,
      Florida's obligations under the agreement are guaranteed by Universal
      Studios, Inc. and Universal Studios, Inc.'s obligations under that
      guarantee have in turn been assumed by VUE.

     - In 1995, affiliates of VUE granted an executive officer an option (as
       amended in 2000) to acquire 0.2% of their shares, subject to adjustment
       for certain changes in their capital structure and other extraordinary
       events. This option vests over a 10-year period commencing in 1995 and is
       exercisable by the officer in full for approximately $24.9 million. In
       connection with the acquisition of Seagram by Vivendi Universal on
       December 8, 2000, VUE recorded deferred compensation of $22.9 million,
       which represents the intrinsic value of the unvested portion of the
       option. This deferred compensation is being amortized over the remaining
       vesting period of the option.

  CANAL+ GROUP

     - In connection with the acquisition by Sportfive (Sport+ S.A. in 2001) of
       its three year right to broadcast English Premier League football
       matches, Vivendi Universal has agreed to provide a guarantee related to
       the payment of licence fees, which is limited to L200 million and expires
       July 31, 2004, and of which 50% is counter-guaranteed by the RTL Group.

  MAROC TELECOM

     - In connection with the acquisition of its 35% interest in Maroc Telecom,
       Vivendi Universal granted a put option to the Kingdom of Morocco related
       to a further interest in Maroc Telecom equal to 16% of the capital of the
       company, except that if, prior to September 2003, the Kingdom sells
       shares to a third party investor, the option is cancelled to the extent
       of the number of shares so sold. At the end of an appraisal proceeding to
       determine the exercise price starting from September 1, 2003, the Kingdom
       of Morocco will be entitled to exercise its put option during a two month
       period (i.e. in October and November 2003), if no delay in the appraisal
       process has occurred. If the put option is not exercised during this
       first period, the option will be extended and the Kingdom of Morocco can
       decide to start the proceeding again at any time during an 18 month
       period following the end of the first put option period. The exercise
       price will be the then fair market value of the shares independently
       determined by the appraisal procedure, except if the fair market value of
       the shares were between 85% and 115% of a reference price derived from
       the purchase price of Vivendi Universal's initial stake, the reference
       price would be used to determine the exercise price. In addition, Vivendi
       Universal plans to pledge its stake

                                       F-65
<PAGE>

       in Maroc Telecom to guarantee the payment of the above put option, if
       exercised. (see Note 11.5, below).

  VIVENDI TELECOM INTERNATIONAL

     - In connection with the acquisition of its 55% interest in Monaco Telecom,
       Vivendi Universal granted a put option to the Principality of Monaco,
       which owns the remaining 45% of Monaco Telecom. The option grants the
       Societe Nationale de Financement in Monaco the right to sell to Compagnie
       Monegasque de Communication, a subsidiary of Vivendi Universal, at any
       time until December 31, 2009, its 45% interest in Monaco Telecom under
       the following terms. Prior to May 26, 2004, Societe Nationale de
       Financement can put (i) up to 29% of its interest in Monaco Telecom for
       approximately E 51 million (or the proportionate value of E 51 million if
       less than 29% is sold) and (ii) its residual 16% interest at fair value.
       Between May 26, 2004 and December 31, 2009, Societe Nationale de
       Financement can put its entire 45% interest at fair value. The option may
       be exercised in increments but each exercise must be for not less than
       10% of the shares. The fair value of Monaco Telecom will be independently
       determined by an appraisal procedure.

     - Monaco Telecom International (MTI), subsidiary of Monaco Telecom has
       granted guarantees to the Afghan state related to the Telecom Development
       Company of Afghanistan's (TDCA) performance of its obligations and to the
       Agha Khan Fund for Economic Development, capped at $2.4 million. In
       addition, MTI has committed to fund the Afghan Telecom BV Company, the
       parent of TDCA, up to $10.5 million.

     - In connection with its approximate 26% equity stake in the Xfera joint
       venture, the recipient of a third generation UMTS mobile
       telecommunications license in Spain, Vivendi Universal entered into a
       E 920 million surety contract related to performance guarantees granted
       to the Spanish government (notably capital expenditures related to the
       roll-out of the network and the coverage of the territory), which Vivendi
       Universal expects to be reduced to approximately E 146 million following
       publication of the ruling of the Spanish government in April 2003. These
       guarantees could be called upon up to the amount of corresponding Xfera
       commitments only upon commercial launch of UMTS services. Given the very
       low likelihood of the roll-out of the network, negotiations have
       commenced between the parties to terminate these guarantees.

      The arrangements, with several vendors, were entered into to potentially
      finance amounts payable for network equipment up to a total amount of
      E 1.0 billion. At the same time, a pledge of Xfera shares was provided to
      equipment vendors in connection with their financing contracts.

      Separately, Vivendi Universal has granted a counter guarantee in an amount
      of E 48 million to a group of banks which have guaranteed the Spanish
      government in respect of the UMTS frequency spectrum.

      The Xfera Shareholders' Agreement dated January 12, 2002, contains a
      provision which gives the founding shareholders (including VTI) the
      possibility to acquire the shares held by Vodafone in Xfera in certain
      defined circumstances. Vodafone claims that such provision amounts to a
      call option (for an amount of E 7.2 million which would be increased up to
      E 13.6 million taking into account Xfera equity capital increases,
      determined through an appraisal procedure, representing 3.3% of Xfera's
      capital). If Vodafone's claims were accepted following the ongoing
      arbitration proceeding, Vivendi Universal would have to take on an
      additional commitment equal to approximately E 90 million.

  CORPORATE AND OTHER

     - In connection with the Seagram merger, Vivendi Universal entered into a
       Shareholders' Governance Agreement with members of the Bronfman family,
       pursuant to which Vivendi Universal agreed, among other things, not to
       dispose of Seagram shares in a taxable transaction and not to dispose of
       substantially all of the assets acquired by Vivendi Universal from
       Seagram in a transaction that would trigger the Gain Recognition
       Agreement (GRA) entered into by the Bronfmans and result in recognition
       of taxable gain to them. Under the applicable US income tax regulations,
       to comply with

                                       F-66
<PAGE>

the foregoing, Vivendi Universal must retain at least 30% of the gross assets or
at least 10% of the net assets (values are determined as of December 8, 2000)
until the end of the five year period ending on December 31, 2005. At the
      present time, Vivendi Universal is in compliance with this provision.

     - On December 20, 2002, Vivendi Universal and Veolia Environnement entered
       into an agreement in order to finalize the separation of the two
       companies, following Vivendi Universal's disposal of 20.4% of Veolia
       Environnement's capital stock. Pursuant to this agreement, some of the
       guarantee and counter-guarantee agreements originally established between
       the two companies in June 2000 were modified as follows:

        - Certain recurring expenses involving network renewal costs in the
          water and energy businesses were originally to be reimbursed by
          Vivendi Universal up to an initial limit of E 15.2 million a year
          indexed over a period of 12 years. This limit has now been raised to
          E 30.4 million indexed starting in the year 2002. The additional
          amount potentially due above the E 15.2 million initial limit will,
          however, be payable only from January 2005 and bear interest at the
          legal rate. If the aggregate amount of replacement costs borne by
          Veolia Environnement were to exceed the initial limit of E 228.6
          million, this excess would be covered by Vivendi Universal up to a
          maximum amount of E 76.2 million.

        - Veolia Environnement's right to claim reimbursement of exceptional
          expenses, provided by the June 2000 agreement, has been removed.

        - Certain matters relating to the implementation process of the counter
          guarantee agreement dated June 20, 2000 pursuant to which Veolia
          Environnement will indemnify Vivendi Universal for any costs, losses
          or expenses in connection with the subsidiary guarantees have been
          detailed.

        - It has been agreed that the current Vivendi Universal interest in the
          company Aguas Argentinas will be retained by Vivendi Universal.
          Guarantees related to this company, which made up an amount of
          approximately $50 million have been retained by Vivendi Universal
          above a first tranche of $5 million assumed by Veolia Environnement.

        - Vivendi Universal has retained stakes in certain operating companies
          in the water sector (notably Genova Acque E 25 million; Societe des
          Eaux et de l'Electricite du Nord E 6.5 million; and VNAC preferred
          shares $10.2 million) for reasons relating to the transferability of
          the concession; these will be sold as soon as practicable and at the
          latest on December 31, 2004.

         Separately, at December 31, 2002, Vivendi Universal continued to
         guarantee commitments made by Veolia Environnement subsidiaries for a
         total amount of approximately E 250 million, including: E 122 million
         related to a perpetual loan issued by OTV, E 58 million related to
         performance guarantees given to local authorities (Council of the shire
         of Noosa, Adelaide, Sydney) and E 41 million of guarantees granted to
         financial institutions lending funds to US operating subsidiaries of
         Vivendi Water. In addition, comfort letters were outstanding in favor
         of Veolia Environnement subsidiaries for a total amount of
         approximately E 20 million. All these commitments are being
         progressively transferred to Veolia Environnement and have been
         counter-guaranteed by the latter.

     - In connection with Vivendi Universal's December 2002 disposal of 82.5
       million shares of Veolia Environnement shares to a group of investors, a
       call option was granted on the remaining 20.4% of Veolia Environnement
       (82.5 million shares) at a strike price equal to E 26.5. This option can
       be exercised at any time until December 23, 2004. If it were to be
       exercised, it would provide Vivendi Universal with E 2.2 billion of net
       cash proceeds. The remaining 82.5 million shares have been deposited in
       an escrow account (compte-sequestre) and have been pledged in favour of
       new investors as well as banks participating in the new E 1 billion Dual
       Currency Revolving Facility, the E 300 million CDC IXIS Credit Facility
       and the existing facilities. Under an arrangement entered into in
       connection with the December 2002 disposal, Vivendi Universal has
       committed to pay an indemnity equal to E 3 per call option to new
       investors in the event that the guarantees related to the new E 1 billion
       Dual

                                       F-67
<PAGE>

       Currency Revolving Credit Facility are called or a default of payment
       occurs under specified significant credit facilities or bond issues.

     - In connection with the sale of puts on its shares, Vivendi Universal had
       a remaining commitment, as at December 31, 2002, to buy 3.1 million
       shares at an exercise price of E 50.50 during the first quarter of 2003.
       These puts were exercised in January and February 2003.

     - A group of shareholders, which holds 19.7% of the shares of UGC, has a
       put option to sell these shares to Vivendi Universal. This option may be
       exercised at any time until December 31, 2007. The value of UGC shares
       covered by the put (currently estimated at E 70 million) would be
       determined on the basis of a contractual formula by an appraiser mutually
       designated by the two parties.

     - At December 31, 2002, three different bonds issued by Vivendi Universal
       are outstanding which are exchangeable into shares of Veolia
       Environnement, Vinci and BSkyB, respectively. The terms of these bonds
       include early redemption features which allow the holders to require
       redemption of the outstanding bonds by Vivendi Universal prior to their
       due dates at a premium over the principal amount. Premiums potentially
       due to bondholders amounted to E 287.3 million, of which E 17.8 million
       would be cross-charged to Veolia Environnement under the terms of a
       contract associated with the issuance of the bonds. Given the reduced
       probability of exchange by the holders of bonds exchangeable into Veolia
       Environnement and Vinci shares, the Group decided to provision the
       premiums due in case of early redemption of these two bonds in March 2003
       and March 2004, respectively. At December 31, 2002, accumulated
       provisions and allowances amounted to E 137.9 million and also included a
       provision for the premium which is payable in July 2003 to holders of
       bonds exchangeable for BSkyB shares. In March 2003, a premium amounting
       to E 63.4 million was paid to Veolia Environnement bondholders who
       exercised their right of early redemption. If holders of Vinci
       Exchangeable bonds do not exercise their right of early redemption, there
       remains a premium payable at maturity in March 2006 amounting to E 27.1
       million.

     - Vivendi Universal has counter-guaranteed US financial institutions which
       have issued surety bonds in favour of Vivendi Universal operating
       companies for an amount of $47.5 million.

     - The two interest rate and indices swap agreement contracts entered into
       by Vivendi Universal with GenRE in 1997 were terminated in December 2002.
       While Vivendi Universal has retained certain indemnification obligations
       to GenRe regarding the structure of these transactions, the company
       believes that the likelihood that these obligations could materialize is
       remote.

     - Various other miscellaneous guarantees which individually range from
       E 43,000 to E 48 million and together total approximately E 274 million.
       In addition, subsidiaries grant guarantees, including in relation to
       vendor financing, in the ordinary course of business, and Vivendi
       Universal grants guarantees to financial institutions for its
       subsidiaries in their pursuit of their operational activity. In the case
       of vendor guarantees issued in 2002 and prior, to the best of our
       knowledge we have received no material claims to date.

  ASSETS SOLD

     - On December 21, 2001, Vivendi Universal completed the sale of its spirits
       and wine business to Diageo plc and Pernod Ricard S.A. Under the Stock
       and Asset Purchase Agreement relating to that sale, Vivendi Universal
       made certain indemnifications to the purchasers including, among others,
       an indemnity for breaches of representations and warranties to a maximum
       of US$1 billion; however, any individual claim for breach of
       representation and warranty must exceed $10 million to qualify for
       indemnification and the purchasers would only receive indemnification for
       any such qualified claims which exceed $81.5 million in the aggregate.
       Vivendi Universal's obligation to indemnify the purchasers with respect
       to substantially all of these representations and warranties expire on
       June 21, 2003 as to any claim not made prior to such date. To date we
       have not received any material claims and have no knowledge of any
       pending material claims.

                                       F-68
<PAGE>

     - The sale agreement relating to the sale of Vivendi Universal Publishing's
       business-to-business and health divisions to Cinven carries a price
       adjustment clause reliant on the accounts of June 30, 2002 and a
       guarantee clause, valid until December 31, 2004, related to liabilities
       up to E 500 million per division.

     - In connection with the sale of VUP's European publishing activities to
       Investima 10, except with respect to claims for indemnification with
       respect to tax matters, the purchaser shall only be indemnified for
       claims which exceed in the aggregate E 15 million and then only to the
       extent of such excess. In no event shall the aggregate indemnification to
       be paid by seller exceed 20% of the adjusted Share Purchase Price (i.e.
       E 240 million), other than with respect to tax matters and losses based
       upon a breach of representations or warranties with respect to
       capitalization, authorization, consents and approvals, non-contravention
       and transfers of real estate since December 31, 2001. Additionally VUP
       and VU specifically indemnify the purchaser for losses based upon (a) a
       breach of representations or warranties with respect to the Ivry
       Distribution Centre, (b) claims under guarantees including in respect to
       shares, equity interests, or real estate previously sold, (c) property
       disposals mentioned in the contract, (d) dormant or in liquidation
       subsidiaries not related to the sold activities when they were active,
       (e) deferred purchase price obligations, (f) liabilities not related to
       the purchased business, (g) clauses of "retour a meilleure fortune", (h)
       VUP transferred employee profit sharing scheme, (i) the purchased assets
       to VUP (other than company stock)", (j) assistance by employees in
       preparation of the consolidated financial statements of Vivendi Universal
       for 2002 and the first quarter of 2003, and (k) certain losses of
       Larousse-Bordas. With respect to clauses (b) and (f) only, the purchaser
       shall only be indemnified for claims which exceed in the aggregate
       E 500,000 and then only to the extent of such excess.

     - Vivendi Universal has jointly granted with Vivendi Communications North
       America (VCNA) a guarantee to Versailles Acquisition Corporation, the
       vehicle which acquired Houghton Mifflin. In the event of a breach of
       representations and warranties, except in respect of tax matters or title
       to shares, no indemnification shall be made unless and until the
       aggregate amount of losses sustained by the purchaser exceeds $20 million
       in which event the seller will be required to pay only the amount of
       losses in excess of $20 million. In no event shall the aggregate
       indemnification exceed 10% of the Purchase price (i.e. $166 million),
       except with respect to due organization or title to shares. In the event
       of a claim for breach of representations and warranties other than in
       respect of title to shares, the amount of losses from such claim covered
       by the indemnification will have to be (or reasonably be expected to be)
       at least $1 million.

     - As part of the sale of the 50% stake held by Vivendi Net UK Ltd in
       Vizzavi Limited and Vizzavi Europe Holding BV to Vodafone, in August
       2002, Vivendi Universal has granted certain standard guarantees to
       Vodafone up to its 50% share.

     - In connection with the sale of Sithe 49.9% to Exelon in December 2000,
       Vivendi Universal has granted guarantees on its own representations and
       those of Sithe. The claims other than those made in relation to foreign
       subsidiaries are capped at $480 million. In addition, they can be made if
       they exceed $15 million, except if they are related to foreign
       subsidiaries and the disposal of some electrical stations to Reliant in
       February 2000. Some of these guarantees will expire December 18, 2005.
       The sale of the remaining stake, excluding Asian subsidiaries occurred in
       December 2002, to Apollo has been covered by a guarantee valid until
       December 18, 2004.

     - As part of the sale of real estate assets in June 2002 to Nexity, Vivendi
       Universal granted two autonomous first demand guarantees, one for E 40
       million and one for E 110 million for the benefit of several subsidiaries
       of Nexity (SAS Nexim 1 to 6). The guarantees are effective until June 30,
       2017. These autonomous guarantees have completed the one issued by Sig
       35, Vivendi Universal's subsidiary, to SAS Nexim 1-6 in connection with
       guarantee contracts dated June 28, 2002. It is effective during 5 years,
       from June 28, 2002, except litigations (valid until the end of
       proceedings), tax, custom, and social liabilities subject to a statute of
       limitation plus 3 months and the decennial guarantee applicable to real
       property works.

                                       F-69
<PAGE>

     - In connection with the sale of hotels to the consortium ABC in 1999,
       Vivendi Universal delivered a commercialization guarantee effective until
       December 2004, capped at 80% of the value of each hotel, and guarantees
       related to social and tax liabilities subject to a statute of limitation.

     - In connection with the sale of the La Defense to Unibail in 1999, Vivendi
       Universal granted certain guarantees related to the ownership of real
       estate assets, administrative authorizations, preemption rights and the
       validity of the share capital of companies are still effective as well as
       tax and social ones.

     The following chart summarizes information related to the specific
contingent liabilities discussed above:

<Table>
<Caption>
TRANSACTIONS AND GUARANTEES                                AMOUNT                    EXPIRY
---------------------------                                ------                   ---------
<S>                                       <C>                                       <C>
Disposal of AOL Europe preferred shares   $812 million market risk on AOL share
                                          put price to be determined                     2003
Telecom Developpement buy/sell
  agreement with SNCF 3G UMTS license     1% revenue earned when service commences
                                          (expected to be in 2004)                       2021
Miscellaneous guarantees granted by
  Cegetel                                 E 40 million                              2003/2012
Rondor contingent purchase price          E 223 million                               Settled
Put option on Roc-a-fella record label
  joint venture                           0 to E 15 million                              2005
Put option on Murder Inc. records         0 to $20 million                               2007
Guarantee for operating shortfall of
  pressplay joint venture                 0 to $20 million                                 --
Put option on VUE
  - 1.5% of common interest in VUE to
    Barry Diller from May 7, 2003         Greater of fair market value and $275
                                          million                                          --
  - 5.4% of common interest in VUE to
    USA Interactive from May 2010         At fair value                                    --
Two guarantees in connection with VUE's
  equity investment in UCDP               Residual guarantee of $1 million                 --
Guarantee for operating shortfall of
  Universal City Florida Hotel Venture    $7.5 million                                     --
Guarantee of lease payments in
  connection with UCI/CIC equity
  investment                              0 to $154 million                                --
Capital contributions in connection with
  equity investment in MovieLink          $19.5 million                                    --
Surety bond related to ITC
  Entertainment's "Streetscenes" film
  property                                $27.8 million                                    --
Agreement with creative consultant
  - consulting services                   Fee based on gross revenues                      --
  - additional fee                        Based on gross revenues of themed
                                          attractions at certain parks                     --
  - right of termination                  Fair market value, starting in 2010              --
Executive officer option to acquire 0.2%
  of VUE's affiliate shares               Approximately $24.9 million                    2005
Guarantee provided to English Premier
  League football                         L200 million, 50% of which is
                                          counterguaranteed by the RTL Group             2004
Put option equal to 16% of Maroc Telecom  At fair market value                           2005
</Table>

                                       F-70
<PAGE>

<Table>
<Caption>
TRANSACTIONS AND GUARANTEES                                AMOUNT                    EXPIRY
---------------------------                                ------                   ---------
<S>                                       <C>                                       <C>
Grant of a put option of 45% of Monaco
  Telecom
  - until May 25, 2004                    0 to 29% for a proportionate of 0 to 51
                                          million euros and the residual 16%
                                          interest at fair value                         2004
  - between May 26, 2004 and December
    31, 2009                              45% interest at fair value or in
                                          increments but each exercise must be not
                                          for less than 10%                              2009
Guarantees to Afghan state re:
  performance of obligations of Telecom
  Development Company of Afghanistan and
  to the Agha Khan Fund for Economic
  Development                             Capped at $2.4 million                           --
Commitment to fund Afghan Telecom BV
  Company                                 Up to $10.5 million                              --
Bank guarantee Xfera                      Approximately E 146 million                      --
Bank guarantee provided to Spanish
  authorities related to the UMTS
  license frequent spectrum fee re:
  Xfera                                   E 48 million                                     --
"Call option" of the Xfera stake held by
  Vodafone                                Subject to arbitration proceedings               --
Shareholders' governance agreement with
  members of the Bronfman family          E 30.4 million indexed starting in the
                                          year 2002 payable from January 2005
                                          subject to legal interest rate                 2005
Disposal of Interest in Veolia
  Environnement
  - Reimbursement of replacement costs    If total amount paid by VE exceeds
                                          E 228.6 million excess would be covered
                                          by VU up to an amount of E 76.2 million          --
  - Guarantees re: Aguas Argentinas       Approximately $50 million with first $5
                                          million assumed by VE                            --
  - Other guarantees re: commitments
    made by VE subsidiaries               Approximately E 250 million                      --
  - Comfort letters issued in favor of
    VE subsidiaries                       Approximately E 20 million                       --
Indemnity to VE share call option
  holders                                 E 3 per call option (approximately E 250
                                          million)                                       2004
Sale of put options on own shares in
  2003                                    3.1 million shares at an exercise price
                                          of E 50.50                                  Settled
Put option on 19.7% of capital stake in
  UGC                                     Currently estimated at E 70 million            2007
Debt premiums potentially due to holders
  of bonds exchangeable into VE and
  Vinci shares                            E 27.6 million                                 2006
Counter-guarantee on surety bonds         $47.5 million                                    --
Pledges and guarantees related to real
  estate operations                       E 274 million                             2002/2020
Sale of Seagram's spirits and wine
  assets                                  0 to $1 billion                                2003
Sale of VUP's B2B and Health divisions    Price adjustment clause and guarantee
                                          clause related to liabilities up to
                                          E 500 million per division                     2004
</Table>

                                       F-71
<PAGE>

<Table>
<Caption>
TRANSACTIONS AND GUARANTEES                                AMOUNT                    EXPIRY
---------------------------                                ------                   ---------
<S>                                       <C>                                       <C>
Sale of VUP's European publishing
  activities                              Guarantees capped at E 240 million               --
Sale of Houghton Mifflin                  Losses in excess of $20 million not to
                                          exceed $166 million                              --
Sale of 50% stake in Vizzavi              Certain standard guarantees up to its
                                          50% share                                        --
Sale of Sithe                             Guarantees capped at $480 million         2004/2005
Guarantees on sale of land and buildings
  businesses                              Guarantees capped at E 150 million             2017
Sale of hotels to the consortium ABC      Commercialization guarantee kept at 80%
                                          of the value of each hotel                     2004
</Table>

11.4 CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS RECEIVED

     In 2001, commitments received were E 1,618 million, principally comprised
of Veolia Environnement. Due to the deconsolidation of Veolia Environnement
which is now accounted for using the equity method, commitments received were
E 204 million in 2002.

11.5 COLLATERAL AND PLEDGES

     The principal pledges and collateral issued by the Group on its assets are
as follows:

     - collateral issued by Vivendi Universal Entertainment in favor of banking
       institutions having provided the bridging loan of $1.6 billion, maturing
       at June 30, 2003, or under certain conditions at December 30, 2003;

     - first ranking collateral issued to borrowers in connection with the E 1
       billion loan, available through December 31, 2004. The same collateral
       was issued to CDC-IXIS for the E300 million line of credit, maturing at
       March 31, 2004;

     - first ranking pledge for 20% of the residual equity interest held by
       Vivendi Universal in Veolia Environnement, in favor of the holders of
       share options allocated on December 20, 2002, and exercisable up to
       December 23, 2004 (see 3.2.3 above);

     - second ranking collateral after that issued in connection with the E 1
       billion loan and the E 300 million loan, and that issued to holders of
       call options on Veolia Environnement shares, allocated in connection with
       the syndicated lines of credit of E 3 billion and E 850 million set up,
       respectively, in March 2002 and March 1999 to Societe Generale in
       connection with two loans of E 490 million in the aggregate, and
       Bayerische Landesbank and LineInvest Limited, in connection with
       financing of the purchase of AOL Europe preferred shares or to an amount
       equal to one-third of the total amount of the transaction (i.e. about
       E 270 million) (see 11.2 above);

     - pledge on assets of Hungarian telephone companies in favor of the
       syndicate of banks participating in the financing (approximately E 300
       million).

     - collateral on the assets of Universal Music in the United Kingdom, issued
       to lenders in connection with financing up to an amount of L136 million
       set up on December 31, 2002 for a period of five years;

     - payment of deposits to an amount of E 27 million in favor of Fleet
       National Bank and Wachovia in connection with its financing of Universal
       City Development Partners (UCDP) (see 11.2 above);

                                       F-72
<PAGE>

     - pledge on Xfera shares in favor of equipment suppliers in connection with
       their financing contract (see 11.2 above);

     - other collateral issued, to an amount of approximately E 70 million.

     In addition, Vivendi Universal plans to pledge its stake in Maroc Telecom
to guarantee payment of the put option issued by the Kingdom in respect of a 16%
of the share capital of Maroc Telecom if exercised (see 11.2 above).

11.6 LITIGATION

     Vivendi Universal is subject to various litigation in the normal course of
business. Although it is not possible to predict the outcome of such litigation
with certainty, as determined by the courts of the applicable jurisdiction,
based on the facts known to us and after consultation with counsel, management
believes that such litigation will not have a material adverse effect on our
financial position or results of operations.

  INVESTIGATIONS BY THE FRENCH C.O.B., THE S.E.C. AND THE U.S. ATTORNEY

     The French Commission des Operations de Bourse ("C.O.B.") has commenced an
investigation into certain of Vivendi Universal's financial statements. The
investigation began in July 2002, and is being led by the C.O.B.'s Inspection
Services division. Vivendi Universal has provided the Inspection Services
division with documents it has requested, and has made certain employees
available for interviews. Vivendi Universal is cooperating fully with the
Inspection Services division in its investigation, which is continuing.

     The U.S. Securities and Exchange Commission ("S.E.C.") and the Office of
the US Attorney for the Southern District of NewYork have also commenced
separate investigations into the accuracy of Vivendi Universal's financial
statements and various public statements relating thereto from approximately
October 2000 to July 2002. Vivendi Universal is actively cooperating with both
investigations. It has produced documents for both the S.E.C. and the Office of
the US Attorney, and has made certain directors and employees available for
depositions and interviews. Those investigations are both continuing. Those
investigations could also result in the filing of civil claims or criminal
charges in the United States against Vivendi Universal.

     Vivendi Universal, together with Messrs. Messier and Hannezo (its former
CEO and CFO, respectively) are defendants in a consolidated securities class
action filed in the United States District Court for the Southern District of
New York, In re Vivendi Universal, S.A. Securities Litigation (Master File No.
02 CV 5571 (HB)). The consolidated class action complaint, filed January 7,
2003, alleges violations of the Securities Act of 1933 (concerning allegedly
false and materially misleading statements or omissions in the registration and
proxy statements issued in October 2000) and of the Securities Exchange Act of
1934 (concerning allegedly false and materially misleading statements or
omissions in certain public statements, including financial statements, between
October 30, 2000, and August 14, 2002). Vivendi Universal, as well as Messrs.
Messier and Hannezo, have each filed separate motions to dismiss the
consolidated class action complaint on the grounds that it is not legally
sufficient. A decision on those motions by the Court is not expected before late
June 2003.

     It is not possible at this early stage of the litigation and investigation
to predict the outcome and duration with any certainty or to quantify any
potential damages; the impact of this litigation and investigation on Vivendi
Universal could be material if Vivendi Universal were not to prevail in a final,
non-appealable determination of such litigation and investigation. In the
opinion of Vivendi Universal, the plaintiffs' claims lack merit, and Vivendi
Universal intends to defend against such claims vigorously.

  PARTNERSHIP AGREEMENT BETWEEN VIVENDI UNIVERSAL AND USA INTERACTIVE

     In connection with Vivendi Universal's acquisition of the entertainment
assets of USA Interactive, (USAi) there is a disagreement among the parties
relating to the interpretation of the provision for tax distributions set forth
in the Partnership Agreement.

                                       F-73
<PAGE>

     USAi has advised Vivendi Universal that it believes VUE is obligated,
pursuant to the Partnership Agreement, to make cash distributions after the
close of each taxable year with respect to the taxable income of VUE allocated
to USAi's preferred interests for such taxable year. Although USAi has stated
that the actual amounts of cash distributions that it believes are payable with
respect to taxable income allocated to the preferred interests would depend on
several factors, it has estimated that those cash distributions could have a
present value to USAi of up to approximately $620 million.

     Vivendi Universal believes that USAi's position is without merit and has so
advised USAi. Additionally, VUE has informed USAi that it does not intend to
make such distributions for the taxable year ended December 31, 2002. To date
the disagreement remains unresolved.

  ARBITRATION PROCEEDINGS BETWEEN ELEKTRIM S.A. AND DEUTSCHE TELEKOM

     Vivendi Universal and Elektrim S.A. ("Elektrim") created a holding company,
Elektrim Telekomunikacja Sp. zo.o ("Elektrim Telekomunikacja"), owned 30% by VU
and 70% by Elektrim. Elektrim agreed to contribute to Elektrim Telekomunikacja
its 34.1% direct interest in Polska Telefonia Cyfrowa Sp. zo.o ("PTC") plus an
additional 13.9% interest to be acquired from PTC's minority shareholders.
Before such contributions were made, Vivendi Universal and Elektrim signed a
Second Agreement in December 1999 pursuant to which Vivendi Universal increased
its ownership in Elektrim Telekomunikacja to 49% and Elektrim contributed its
48% direct interest in PTC, as well as its 100% shareholding in the Bresnan
Company, to Elektrim Telekomunikacja.

     In October 1999, Dete Mobil Deutsche Telekom Mobil Net GmbH ("DT")
commenced arbitration proceedings in Vienna ("the first arbitration") alleging
that the acquisition by Elektrim on August 26, 1999, of PTC shares from four
minority shareholders in PTC violated certain pre-emption rights held by DT in
respect of 3.126% of the PTC shares acquired by Elektrim.

     DT has sought a declaration that the acquisition of PTC shares by Elektrim
on August 26, 1999 breached DT's pre-emptive rights set forth in the PTC
shareholders' agreement and was therefore ineffective, an order requiring 3.126%
of the PTC shares acquired by Elektrim to be transferred to DT at fair market
value and an order for certain damages. The first arbitration took place in
November 2001 with subsequent hearings in March and May 2002. Although the first
arbitration proceedings have been completed, the arbitrators have not yet
announced their decision.

     In December 2000, DT commenced a second arbitration proceeding against
Elektrim and Elektrim Telekomunikacja. DT alleged that the transfer by Elektrim
of its 48% interest in PTC's share capital to Elektrim Telekomunikacja in
December 1999 breached the PTC shareholders' agreement and the governing
documents of PTC. In this arbitration proceeding, DT sought either a declaration
that the transfer of the PTC shares by Elektrim to Elektrim Telekomunikacja in
December 1999 was ineffective and that the shares remained owned by Elektrim or
an order requiring the transfer of all of the PTC shares currently held by
Elektrim Telekomunikacja to Elektrim. A declaration that Elektrim had violated
the PTC shareholders agreement would allow DT to exercise a call option under
the PTC shareholders' agreement to purchase at net book value the PTC shares
contributed by Elektrim to Elektrim Telekomunikacja. A hearing relating to this
arbitration took place in February 2003 and a further hearing is planned for
September or October 2003. No indication has been given as to when the
arbitration decision in either arbitration will be given.

     Pursuant to the Third Amended and Restated Investment Agreement dated
September 3, 2001, between Vivendi Universal and Elektrim, Vivendi Universal may
be liable for the first $100 million of damages and liable for 50% of any
damages in excess of $100 million awarded to DT against Elektrim.

  TRANSFER OF BROADCASTING RIGHTS FOR PREMIER LEAGUE FOOTBALL MATCHES TO CANAL
  PLUS AND KIOSQUE

     On December 14, 2002, the board of the French Professional Football League
agreed to grant the broadcasting rights for premier league football matches for
the 2004-2007 season, to Canal Plus and Kiosque. By order dated January 23,
2003, the French Competition Board stayed the growth of such rights until such
time as the Board is able to issue a decision on the merits of the growth. On
February 6, 2003, Canal Plus and

                                       F-74
<PAGE>

Kiosque sought to have the Court of Appeal in Paris cancel or amend the Board's
order. On February 16, 2003, the Court of Appeal proposed that the parties enter
into a legal mediation procedure and the parties agreed to do so. The Court of
Appeal appointed two mediators on February 25, 2003. In the event that the
parties fail to reach an agreement before April 2003, the matter will be decided
by the Court of Appeal.

11.7 ENVIRONMENTAL MATTERS

     Vivendi Universal's operations are subject to evolving and increasingly
stringent environmental regulations. Vivendi Universal's operations are covered
by insurance policies. At December 31, 2002, there were no significant
environmental losses.

NOTE 12 SEGMENT INFORMATION

12.1 GEOGRAPHIC DATA

     The following table presents by geographic area revenues for 2002, 2001 and
2000 and long-lived assets for 2002 and 2001.

<Table>
<Caption>
                                                       YEARS ENDED DECEMBER 31,
                                           ------------------------------------------------
                                                2002
                                           ILLUSTRATION VE     2002
                                            EQUITY METHOD     ACTUAL      2001     2001(1)
                                           ---------------   --------   --------   --------
                                             (UNAUDITED)
                                                        (IN MILLIONS OF EUROS)
<S>                                        <C>               <C>        <C>        <C>
REVENUES
  France.................................     E 11,707       E 26,391   E 24,285   E 20,933
  United Kingdom.........................        1,404          3,765      4,170      2,992
  Rest of Europe.........................        3,882         11,327     10,456      7,421
  United States of America...............        7,586         10,810     12,654      7,009
  Rest of World..........................        3,533          5,857      5,795      3,225
                                              --------       --------   --------   --------
                                              E 28,112       E 58,150   E 57,360   E 41,580
                                              ========       ========   ========   ========
</Table>

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>          <C>
LONG-LIVED ASSETS
  France....................................................   E 15,356     E 26,402
  United Kingdom............................................        960        2,781
  Rest of Europe............................................      3,127       10,770
  United States of America..................................     17,477       53,522
  Rest of World.............................................     11,575        5,599
                                                               --------     --------
                                                               E 48,495     E 99,074
                                                               ========     ========
</Table>

---------------

(1) Reflects changes in accounting policies and financial statement presentation
    adopted in 2001.

12.2 BUSINESS SEGMENT DATA

     Each reportable segment is a business unit that offers different products
and services that are marketed through different channels. Segments are managed
separately because of their unique customers, technology, and marketing and
distribution requirements. As at December 31, 2002, main segments are the
following: Cegetel Group, Music, Vivendi Universal Entertainment, Canal+ Group,
Maroc Telecom and Vivendi Universal Games. (See each segment's scope of
consolidation in Note 13). Management evaluates the performance of its segments
and allocates resources to them based on several performance measures. There are
no significant inter-segment revenues; however, corporate headquarters allocates
a portion of its costs to each of the operating segments.

                                       F-75
<PAGE>

                                INCOME STATEMENT
<Table>
<Caption>
                                                                                                                          VTI
                                  UNIVERSAL                                     VIVENDI                   PUBLISHING   EXCLUDING
                        CEGETEL     MUSIC               CANAL+      MAROC      UNIVERSAL    HOLDING &     EXCLUDING      MAROC
                         GROUP      GROUP      VUE     GROUP(2)   TELECOM(3)     GAMES     CORPORATE(6)     GAMES       TELECOM
                        -------   ---------   ------   --------   ----------   ---------   ------------   ----------   ---------
                                                                 (IN MILLIONS OF EUROS)
<S>                     <C>       <C>         <C>      <C>        <C>          <C>         <C>            <C>          <C>
DECEMBER 31, 2002
Revenues..............   7,067      6,276      6,270     4,833      1,487         794            --            663        461
Operating expenses
  exc. depreciation...  (4,738)    (5,315)    (5,073)   (4,609)      (701)       (623)         (483)          (638)      (331)
Depreciation and
  amortization........    (865)      (450)      (258)     (490)      (272)       (109)          (57)           (24)       (83)
Other.................     (15)        45       (123)      (59)       (46)          1          (125)             1         (3)
                        ------     ------     ------    ------      -----        ----          ----         ------       ----
Operating income
  (loss)..............   1,449        556        816      (325)       468          63          (665)             2         44
                        ======     ======     ======    ======      =====        ====          ====         ======       ====
DECEMBER 31, 2001
Revenues..............   6,384      6,560      4,938     4,563      1,013         657            --          3,629        242
Operating expenses
  exc. depreciation...  (4,679)    (5,402)    (4,285)   (4,379)      (473)       (525)         (261)        (2,944)      (180)
Depreciation and
  amortization........    (777)      (439)      (353)     (403)      (153)        (75)          (65)          (194)       (48)
Other.................      --         --         --      (155)        --         (39)           --            (30)         1
                        ------     ------     ------    ------      -----        ----          ----         ------       ----
Operating income
  (loss)..............     928        719        300      (374)       387          18          (326)           461         15
                        ======     ======     ======    ======      =====        ====          ====         ======       ====
DECEMBER 31, 2000(1)
Revenues..............   5,129        495        194     4,054         --         572            --          2,968        141
Operating expenses
  exc. depreciation...  (4,039)      (401)      (198)   (3,524)        --        (511)         (137)        (2,536)      (100)
Depreciation and
  amortization........    (612)        (8)        (9)     (628)        --         (64)          (58)           (84)       (33)
Other.................     (25)        --         --      (243)        --         (38)          (17)          (135)         3
                        ------     ------     ------    ------      -----        ----          ----         ------       ----
Operating income
  (loss)..............     453         86        (13)     (341)        --         (41)         (212)           213         11
                        ======     ======     ======    ======      =====        ====          ====         ======       ====

<Caption>

                                                                 TOTAL
                                              ENVIRONMENTAL     VIVENDI
                        INTERNET   OTHER(6)   SERVICES(4)(5)   UNIVERSAL
                        --------   --------   --------------   ---------
                                     (IN MILLIONS OF EUROS)
<S>                     <C>        <C>        <C>              <C>
DECEMBER 31, 2002
Revenues..............     174          87        30,038        58,150
Operating expenses
  exc. depreciation...    (301)       (134)
Depreciation and
  amortization........     (41)        (20)
Other.................     (64)       (232)
                          ----      ------
Operating income
  (loss)..............    (232)       (299)        1,911         3,788
                          ====      ======        ======        ======
DECEMBER 31, 2001
Revenues..............     129         151        29,094        57,360
Operating expenses
  exc. depreciation...    (338)       (178)
Depreciation and
  amortization........     (44)         (7)
Other.................     (37)         27
                          ----      ------
Operating income
  (loss)..............    (290)         (7)        1,964         3,795
                          ====      ======        ======        ======
DECEMBER 31, 2000(1)
Revenues..............      48       1,685        26,294        41,580
Operating expenses
  exc. depreciation...    (231)     (1,345)
Depreciation and
  amortization........     (11)        (82)
Other.................      (1)         15
                          ----      ------
Operating income
  (loss)..............    (195)        273         1,589         1,823
                          ====      ======        ======        ======
</Table>

                                       F-76
<PAGE>

                     BALANCE SHEET AND CASH FLOW STATEMENT
<Table>
<Caption>
                                                                                                                            VTI
                                 UNIVERSAL                                        VIVENDI                   PUBLISHING   EXCLUDING
                       CEGETEL     MUSIC                CANAL+        MAROC      UNIVERSAL    HOLDING &     EXCLUDING      MAROC
                        GROUP      GROUP      VUE     GROUP(2)(6)   TELECOM(3)     GAMES     CORPORATE(6)     GAMES       TELECOM
                       -------   ---------   ------   -----------   ----------   ---------   ------------   ----------   ---------
                                                                 (IN MILLIONS OF EUROS)
<S>                    <C>       <C>         <C>      <C>           <C>          <C>         <C>            <C>          <C>
DECEMBER 31, 2002
Goodwill.............     919      5,479      8,637      3,957          793           74            48          104           38
Other intangible
  assets.............   1,205      4,218      5,480      2,895          333          303            64           96           91
Investments accounted
  for using the
  equity method......     316         31        859        320           --           --           382           (5)          --
Total assets.........   7,190     12,581     21,302     11,158        3,509        1,002         9,081          710        1,444
                        -----     ------     ------     ------        -----        -----        ------        -----        -----
Capital
  expenditures.......     595         92        167        443          257           15            17            9         1,15
                        =====     ======     ======     ======        =====        =====        ======        =====        =====
DECEMBER 31, 2001
Goodwill.............   1,420     12,763      7,472      8,002        1,332          104        (1,353)       2,057          291
Other intangible
  assets.............   1,123      5,926      4,602      4,035            5          418            91        2,534           97
Investments accounted
  for using the
  equity method......     311         30      7,717        271           --           --           132          (13)         588
Total assets.........   7,757     21,907     25,267     17,269        3,569        1,209         9,881        6,200        1,434
                        -----     ------     ------     ------        -----        -----        ------        -----        -----
Capital
  expenditures.......   1,202        133        217        339          223           84             6          109          109
                        =====     ======     ======     ======        =====        =====        ======        =====        =====

<Caption>

                                                                TOTAL
                                             ENVIRONMENTAL     VIVENDI
                       INTERNET   OTHER(6)   SERVICES(4)(5)   UNIVERSAL
                       --------   --------   --------------   ---------
                                    (IN MILLIONS OF EUROS)
<S>                    <C>        <C>        <C>              <C>
DECEMBER 31, 2002
Goodwill.............       8          5             --         20,062
Other intangible
  assets.............      17          4             --         14,706
Investments accounted
  for using the
  equity method......      --         --             --          1,903
Total assets.........     138      1,218             --        69 ,333
                         ----      -----         ------        -------
Capital
  expenditures.......      13          6          2,405          4,134
                         ====      =====         ======        =======
DECEMBER 31, 2001
Goodwill.............     638          3          4,888         37,617
Other intangible
  assets.............      37          7          4,427         23,302
Investments accounted
  for using the
  equity method......    (465)        --            605          9,176
Total assets.........     825      1,792         41,892        139,002
                         ----      -----         ------        -------
Capital
  expenditures.......      20         17          2,879          5,338
                         ====      =====         ======        =======
</Table>

---------------

(1) Reflects changes in accounting policies and financial statement presentation
    adopted in 2001.

(2) In the 2000 and 2001 published financial statements, Canal+ recorded the
    amortization of film costs and allowances related to debtors in depreciation
    and amortization. As of January 1, 2002, and reclassified in the comparable
    period for 2001, the amortization of film costs and allowances related to
    debtors were recorded as operating expenses before depreciation and
    amortization. This reclassification has no impact on operating income.

(3) Company consolidated since April 1, 2001.

(4) Includes Veolia Environnement accounted for by using the equity method since
    December 31, 2002.

(5) The results published by Veolia Environnement may differ from those
    presented by Vivendi Universal where non-material, inter-segment
    transactions impact the financial contribution brought by Veolia
    Environnement to the accounts of Vivendi Universal. Furthermore, the
    definition of operating profit used by Vivendi Universal differs from the
    EBIT figure published by Veolia Environnement, as the latter does not
    include restructuring charges (E 56.5 million as at December 31, 2002).

(6) For additional information on the definition of Holding & Corporate and
    Other segments, please refer to Note 17.9.

                                       F-77
<PAGE>

NOTE 13 SIGNIFICANT SUBSIDIARIES

<Table>
<Caption>
                                                          2002                                   2001
                                          ------------------------------------   ------------------------------------
                                           ACCOUNTING    OWNERSHIP   OWNERSHIP    ACCOUNTING    OWNERSHIP   OWNERSHIP
                                             METHOD       CONTROL    INTEREST       METHOD       CONTROL    INTEREST
                                          ------------   ---------   ---------   ------------   ---------   ---------
<S>                                       <C>            <C>         <C>         <C>            <C>         <C>
CEGETEL GROUP
Cegetel Group(1)........................  Consolidated   59%         44%         Consolidated   59%         44%
  Cegetel...............................  Consolidated       80%         90%     Consolidated       80%         90%
  Societe Francaise du Radiotelephone
    (S.F.R.)............................  Consolidated       80%         80%     Consolidated       80%         80%
  Telecom Developpement(TD)(2)..........  Equity             50%         50%     Equity             50%         50%
MUSIC
Centenary Holding N.V. .................  Consolidated   92%             92%     Consolidated   92%         92%
  Universal Music (UK) Holdings Ltd. ...  Consolidated      100%        100%     Consolidated      100%        100%
  Universal Entertainment GmbH..........  Consolidated      100%        100%     Consolidated      100%        100%
  Universal Music K.K. .................  Consolidated      100%        100%     Consolidated      100%        100%
  Universal Music S.A.S. ...............  Consolidated      100%        100%     Consolidated      100%        100%
Universal Studios, Inc. ................  Consolidated   92%         92%         Consolidated   92%         92%
  PolyGram Holding, Inc.................  Consolidated      100%        100%     Consolidated      100%        100%
  Interscope Records....................  Consolidated      100%        100%     Consolidated      100%        100%
  UMG Recordings, Inc. .................  Consolidated      100%        100%     Consolidated      100%        100%
VIVENDI UNIVERSAL ENTERTAINMENT
Universal Pictures International
  B.V. .................................  Consolidated   92%         92%         Consolidated   92%         92%
Universal Studios Inc. .................  Consolidated   92%         92%         Consolidated   92%         92%
  Universal City Studios LLLP(3)........            --        --          --     Consolidated      100%        100%
  USANi LLC(3)..........................            --        --          --     Equity             49%         49%
  Vivendi Universal Entertainment
    LLLP(3).............................  Consolidated       93%         86%               --        --          --
CANAL+ GROUP
Groupe Canal S.A. ......................  Consolidated      100%        100%     Consolidated      100%        100%
  Canal Plus(4).........................  Consolidated       49%         49%     Consolidated       49%         49%
  CanalSatellite........................  Consolidated       66%         66%     Consolidated       66%         66%
  StudioCanal...........................  Consolidated      100%        100%     Consolidated      100%        100%
  Multithematiques......................  Consolidated       64%         64%     Equity             27%         27%
MAROC TELECOM(5)........................  Consolidated       51%         35%     Consolidated       51%         35%
VIVENDI UNIVERSAL GAMES.................  Consolidated       99%         99%     Consolidated       99%         99%
HOLDING & CORPORATE
  Societe d'Investisement pour la
    Telephonie (SIT)(6).................  Consolidated   100%        100%                  --   --          --
  UGC(7)................................  Equity         58%         58%         Equity         39%         39%
VIVENDI TELECOM INTERNATIONAL...........  Consolidated   100%        100%        Consolidated   100%        100%
  Vivendi Telecom Hungary...............  Consolidated      100%        100%     Consolidated      100%        100%
  Kencell...............................  Consolidated       60%         60%     Consolidated       60%         60%
  Monaco Telecom........................  Consolidated       55%         55%     Consolidated       55%         55%
  Elektrim Telekomunikacja(8)...........  Equity             49%         49%     Equity             49%         49%
  Xfera.................................  Equity             26%         26%     Equity             26%         26%
</Table>

                                       F-78
<PAGE>

<Table>
<Caption>
                                                          2002                                   2001
                                          ------------------------------------   ------------------------------------
                                           ACCOUNTING    OWNERSHIP   OWNERSHIP    ACCOUNTING    OWNERSHIP   OWNERSHIP
                                             METHOD       CONTROL    INTEREST       METHOD       CONTROL    INTEREST
                                          ------------   ---------   ---------   ------------   ---------   ---------
<S>                                       <C>            <C>         <C>         <C>            <C>         <C>
PUBLISHING ACTIVITIES
  EXCL. VU GAMES
Vivendi Universal Publishing............  Consolidated      100%        100%     Consolidated      100%        100%
  Groupe Expansion......................  Consolidated      100%        100%     Consolidated      100%        100%
  Comareg...............................  Consolidated      100%        100%     Consolidated      100%        100%
  Atica.................................  Consolidated       98%         49%     Consolidated       98%         49%
  Houghton Mifflin Company(9)...........            --        --          --     Consolidated      100%        100%
  Editions Robert Laffont(9)............            --        --          --     Consolidated      100%        100%
  Promotec(9)...........................            --        --          --     Consolidated      100%        100%
  Larousse-Bordas(9)....................            --        --          --     Consolidated      100%        100%
VIVENDI UNIVERSAL NET
Vivendi Universal Net...................  Consolidated      100%        100%     Consolidated      100%        100%
  i-France..............................  Consolidated      100%        100%     Consolidated      100%        100%
  Scoot Europe..........................  Consolidated      100%        100%     Consolidated      100%        100%
  Ad-2-One..............................  Consolidated      100%        100%     Consolidated      100%        100%
  CanalNumedia..........................  Consolidated      100%        100%     Consolidated      100%        100%
  Vizzavi Europe(9).....................            --        --          --     Equity             50%         50%
Vivendi Universal Net U.S.A. Group,
  Inc. .................................  Consolidated      100%        100%     Consolidated      100%        100%
  MP3.com, Inc. ........................  Consolidated      100%        100%     Consolidated      100%        100%
  Emusic.com, Inc. .....................  Consolidated      100%        100%     Consolidated      100%        100%
  Flipside, Inc./Uproar, Inc. ..........  Consolidated      100%        100%     Consolidated       83%         83%
VEOLIA ENVIRONNEMENT(10)................  Equity             20%         20%     Consolidated       63%         63%
</Table>

---------------

 (1) Vivendi Universal consolidates Cegetel because following a shareholders'
     agreement, Vivendi Universal has the management control of the company, has
     majority control over the Board of Directors and appoints the Chairman, has
     majority control over the shareholders' general assembly, and because no
     other shareholder or shareholder group is in a position to exercise
     substantive participating rights which would allow them to veto or block
     decisions taken by Vivendi Universal. Vivendi controls 59% + 1 voting right
     of Cegetel voting rights, 9% of which directly, and 50% + 1 voting right
     indirectly, via the Transtel company, in which Vivendi Universal owns a 70%
     controlling interest. Vivendi Universal and Cegetel consolidate SFR,
     because following a shareholders' agreement, Vivendi Universal has the
     management control of the company, has majority control over the Board of
     Directors and appoints the Chairman, has majority control over the
     shareholders' general assembly (Cegetel holds 80% of SFR) and because no
     other shareholder or shareholder group is in a position to exercise
     substantive participating rights which would allow them to veto or block
     decisions taken by Vivendi Universal.

 (2) Telecom Developpement's board is by majority nominated by SNCF, thus
     Cegetel Group accounted this investment for by equity method.

 (3) See Note 3 Acquisition of the entertainment assets of USA Networks.

 (4) Consolidated because, through a shareholders' agreement, Vivendi Universal
     has a majority of the shareholder voting rights and no other shareholder or
     groups of shareholders exercise substantive participating rights, which
     would allow them to veto or block decisions taken by Vivendi Universal.

 (5) Vivendi Universal owns a 35% interest in Maroc Telecom, and the Kingdom of
     Morocco holds the remaining 65%. Vivendi Universal consolidates Maroc
     Telecom because under company by-laws and shareholders' agreements, Vivendi
     Universal has majority control over its Supervisory Board and Management
     Board. Under shareholders' agreements, Vivendi Universal appoints 3 of the
     5 members of the Management Board, appoints the Chairman of the Management
     Board, exercises 51% of all voting

                                       F-79
<PAGE>

     rights at shareholders' general assemblies, and this grants it, under the
     majority rules set forth in the company's by-laws, control over the
     shareholders' general assembly, as well as over the Supervisory and
     Management Boards of Maroc Telecom. Should Vivendi Universal not acquire
     the shares that would give it the majority of Maroc Telecom's share
     capital, the 16% voting rights granted to Vivendi Universal through
     shareholders' agreements would expire on September 1, 2005, unless the
     Kingdom of Morocco exercises its put option (please refer to Note 11)
     requiring Vivendi Universal to acquire an additional 16% interest in Maroc
     Telecom's share capital prior to that date.

 (6) Special purpose vehicle which became in January 2003 the legal owner of a
     26% stake Cegetel. (See Note 15)

 (7) Due to a shareholders' agreement, Vivendi Universal does not have the
     operational control of this company. Thus, this investment is still
     accounted for using the equity method.

 (8) Since December 1999, Vivendi Universal has held a 49% interest in Elektrim
     Telekomunikacja, with Elektrim SA holding the remaining 51% until September
     3, 2001. An agreement concerning the shareholding and management of
     Elektrim Telekomunikacja was signed by Vivendi Universal and Elektrim on
     September 3, 2001. This agreement had no impact on Vivendi Universal's
     ownership or control interest in Elektrim Telekomunikacja, which is
     unchanged at 49%. Investment company Ymer has since acquired a 2% equity
     interest in Elektrim Telekomunikacja from Elektrim. Ymer is a company
     independent from Vivendi Universal, which does not own it nor control it,
     directly or indirectly. Vivendi Universal has purchased non-voting shares
     in an investment company which enabled Ymer to make its acquisition.
     Vivendi Universal is by no means committed to acquire the shares owned by
     Ymer. Similarly, Ymer has neither a right or obligation to sell those
     shares to Vivendi Universal and is free to sell them to a third-party at
     any time. The value of Vivendi Universal's original investment in the
     investment company has since varied according to the fair value of the
     assets held by Ymer. Agreements between Vivendi Universal and Elektrim
     retain Vivendi Universal's pre-existing rights. Vivendi Universal, Elektrim
     SA and Ymer have 3, 3 and 1 representatives on the Elektrim Telekomunikacja
     Supervisory Board, respectively, and 2, 2 and 2 representatives on the
     Management Board, respectively, all of whom are appointed independently by
     Vivendi Universal, Elektrim, and Ymer. Vivendi Universal consequently
     consolidates its interest in Elektrim Telekomunikacja according to the
     equity method. Finally, as announced at the close of Vivendi Universal's
     Board meeting held September 25, 2002, Vivendi Universal is currently
     negotiating the disposal of this interest.

 (9) Sold in 2002. (See Note 3)

(10) Variation due to disposals and dilution. (See Note 3)

NOTE 14 RELATED PARTY TRANSACTIONS

14.1 RELATED COMPANIES

     During 2002, main companies related to Vivendi Universal are its
subsidiaries accounted for by using the equity method, e.g. Veolia Environnement
(accounted by the equity method as at December 31, 2002), Elektrim
Telecomunikacja and Telecom Development. The main related party transactions and
amounts outstanding by these companies or Vivendi Universal are detailed below:

<Table>
<Caption>
                                                              DECEMBER 31,
                                                                  2002
                                                              ------------
                                                              (IN MILLIONS
                                                               OF EUROS)
<S>                                                           <C>
ASSETS
  Other investments(1)......................................     E  559
  Accounts receivable.......................................        154
  Short-term loans receivable...............................        257
LIABILITIES
  Accounts payable..........................................        116
  Short term borrowings.....................................          9
</Table>

                                       F-80
<PAGE>

<Table>
<Caption>
                                                              DECEMBER 31,
                                                                  2002
                                                              ------------
                                                              (IN MILLIONS
                                                               OF EUROS)
<S>                                                           <C>
PROFIT AND LOSS ACCOUNT
  Revenues..................................................        414
  Operating expenses........................................       (919)
  Financial income..........................................         62
  Financial expenses........................................        (14)
                                                                 ------
                                                                 E (457)
                                                                 ======
</Table>

---------------

(1) of which E 525 million advance granted to Elektrim Telekomunikacja and
    provisioned for E 203 million.

     IN 2002, THE MAIN RELATED COMPANY TRANSACTIONS ARE THE FOLLOWING:

VEOLIA ENVIRONNEMENT

  VIVENDI UNIVERSAL AND VEOLIA ENVIRONNEMENT

     On December 20, Vivendi Universal and Veolia Environnement entered into an
agreement in order to finalize the separation of the two companies, following
Vivendi Universal's disposal of 20.4% of Veolia Environnement's capital stock.
Pursuant to this agreement, guarantee and counter-guarantee agreements
originally established in June 2000 have been modified. This agreement is
described in Note 11.

  VINCI BONDS

     Veolia Environnement took part indirectly in the issuance of the Vivendi
Universal bonds exercisable into Vinci shares or in cash. Vivendi Universal lent
to Veolia Environnement E 120 million against 1,552,305 shares of Vinci held by
Veolia Environnement through Dalkia France. The terms of the loan are similar to
those of the bond issued by Vivendi Universal: a fixed rate of 1% per annum and
maturing on March 1, 2006 (see Note 4.4 and Note 7).

  CEGETEL GROUP

  Telecom Developpement

     Telecom Developpement (TD) owned by Cegetel Group (49.9%) and Societe
Nationale des Chemins de Fer Francais (SNCF) (50.1%), the leading French railway
company is linked by a commercial agreement with Cegetel Group. It gives TD the
exclusive right to carry Cegetel Group's long distance calls.

  Vivendi Universal Entertainment (VUE)

     VUE has equity investments in certain companies that operate theme parks
for which it provides operational management services and pay television
channels for which it licenses film product. VUE earns management fees for
operating the theme parks and license fees for the licensing of its film
product. VUE includes management and license fees in revenues and eliminates
intercompany profit. During the years ended December 31, 2002 and 2001, VUE
included approximately $68.7 million and $84.0 million of these fees in
revenues. In addition, VUE has deferred recognition of management fees earned of
$51.1 million through December 31, 2002 as collection is not reasonably assured.
When the uncertainties regarding collectibility are resolved, VUE could
recognize revenues up to the deferred amount or the portion considered
collectible.

                                       F-81
<PAGE>

14.2 RELATED PARTIES

     IN 2002 AND 2001, THE MAIN RELATED PARTY TRANSACTIONS ARE THE FOLLOWING:

  TRANSACTIONS WITH USA INTERACTIVE

     Prior to May 7, 2002, VUE has various arrangements with USA under which VUE
earns fees and incurs costs. These arrangements are summarized below:

     VUE provides certain support services to USA under a Transition Services
agreement. These services include use of pre-production, production and
post-production facilities, information technology services, physical
distribution, contract administration, legal services and office space. VUE
earned $3.2 million and $8.5 million during the period from January 1, 2002 to
May 6, 2002 and the year ended December 31, 2001, respectively, for providing
these services.

     VUE and USA have an International Television Distribution Agreement under
which all programming owned or controlled by USA outside of the United States is
distributed by VUE. VUE earns a 10% distribution fee for these services. VUE and
USA also have a Domestic Television Distribution Agreement under which USA
distributes certain of VUE's programming in the United States. Additionally, VUE
licenses certain television programming to USA to be aired on its cable
channels. VUE earned $9.7 million and $42.9 million during the period from
January 1, 2002 to May 6, 2002 and the year ended December 31, 2001,
respectively, for providing these services. VUE incurred $.5 million and $2.9
million during the period from January 1, 2002 to May 6, 2002 and the year ended
December 31, 2001, respectively, for receiving these services.

     Under an agreement covering approximately 50 of VUE's films, USA earns a
distribution fee for the distribution of these films in the United States. USA
is responsible for the collection and remitting the net amount, after its fee,
to VUE, except for amounts applied against the advance of fees initially given
to VUE. An affiliate of VUE provides certain fulfillment services on behalf of
USA in the United States and Canadian home video markets. Beginning January 1,
2002, VUE replaced the affiliate in providing these services. VUE incurred $6.8
million and $17.0 million during the period from January 1, 2002 to May 6, 2002
and the year ended December 31, 2001, respectively, for receiving these
services.

     VUE has several other arrangements with USA for the purchase of advertising
time and the licensing of certain properties for merchandising. VUE incurred $.5
million and $3.4 million during the period from January 1, 2002 to May 6, 2002
and the year ended December 31, 2001, respectively, for receiving these
services.

     VUE had receivables of $61.5 million and payables $159.4 million at
December 31, 2001 with USA.

  EDGAR BRONFMAN, JR.'S EMPLOYMENT ARRANGEMENT

     Pursuant to an employment agreement with Vivendi Universal US Holding Co.
("Vivendi Universal US"), dated September 25, 2002 (the "Agreement"), Edgar
Bronfman, Jr. currently serves as an executive employee and an advisor to the
Chief Executive Officer of Vivendi Universal US in connection with the US
entertainment businesses of Vivendi Universal US and its US affiliates.

     Subject to the provisions of the Agreement regarding earlier termination of
Mr. Bronfman's employment, the term of his employment under the Agreement
commenced on September 25, 2002 and will continue through December 31, 2004.
During the term of his employment under the Agreement, Mr. Bronfman is required
to devote a substantial time commitment to the performance of his duties under
the Agreement, but he is not precluded or prohibited from securing one or more
additional part-time employment or consulting positions. Mr. Bronfman's annual
salary under the Agreement is $1,000,000.

     If Mr. Bronfman's employment under the Agreement is terminated by Vivendi
Universal US for "Cause" or by Mr. Bronfman without "Good Reason" (as those
terms are defined under the Agreement), or by reason of Mr. Bronfman's death or
disability, Mr. Bronfman or Mr. Bronfman's estate, as the case may be, will be
entitled to receive his accrued salary and benefits under the Agreement through
the date of termination.
                                       F-82
<PAGE>

     If Mr. Bronfman's employment under the Agreement is terminated by Vivendi
Universal US without Cause (other than by reason of death or disability) or by
Mr. Bronfman for Good Reason, Mr. Bronfman will also be entitled to receive his
accrued salary and benefits under the Agreement through the date of termination,
plus a lump-sum payment equal to the total amount of salary that Mr. Bronfman
would have received had his employment under the Agreement continued through
December 31, 2004.

     In the event that Mr. Bronfman is subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, Mr. Bronfman is
entitled to receive an additional payment such that he will receive the same net
after-tax benefit as if no excise tax were imposed. In addition, Vivendi
Universal US will reimburse Mr. Bronfman for all legal fees and related expenses
incurred in connection with, or arising out of, any dispute in respect of
severance following termination of his employment other than for Cause or for
Good Reason.

     The Agreement also provides that Vivendi Universal US will indemnify Mr.
Bronfman to the fullest extent permitted by applicable law against damages in
connection with his status or performance of duties as an officer of Vivendi
Universal US and will maintain and cover Mr. Bronfman under customary and
appropriate directors and officers liability insurance during the term of his
employment and throughout the period of any applicable statute of limitations.

  CANAL+: NEGOTIATION OF "CLUB EUROPE" MATCH TV RIGHTS VIA JEAN-CLAUDE DARMON
  GROUP

     A contract was signed with the Jean-Claude Darmon Group, which acts as
intermediary between the "Club Europe" member clubs and Canal+, in 1999. The
clubs accorded a priority option to Canal+ for acquisition of TV rights for all
matches for all seasons from 2000/2001 to 2005/2006. The amount of this option
is due to the Jean-Claude Darmon Group and represents a total of E 252 million,
plus an option on derivative rights to an initial amount of E 23 million. As at
December 31, 2002, a total of E165 million was outstanding for payment under the
terms of this contract. This amount has been accrued in full in the Canal+
financial statements. In February 2003, the priority option related to French
competition was terminated, whereas some options on derivative rights are still
underway (E 23 million recognized in reserve and allowances).

  PURCHASE OF VIVENDI UNIVERSAL SHARES FROM THE BRONFMAN FAMILY

     Vivendi Universal purchased 15,400,000 American Depositary Shares (ADS),
representing Vivendi Universal shares held by various members of the Bronfman
family, at a price equal to the average share price on the Paris stock market on
May 29, 2001, with a 3.5% discount. Additionally, Vivendi Universal also
purchased 1,500,000 ADS representing Vivendi Universal shares owned by various
entities controlled by the Bronfman family, at a price equal to the average
share price on the Paris stock market on May 29, 2001, with a 0.9% discount.

NOTE 15 MANAGEMENT'S LIQUIDITY STRATEGY

     Vivendi Universal was formed through the merger of Vivendi S.A. (Vivendi),
the Seagram Company Ltd. and Canal Plus S.A. in December 2000. From its origins
as a water company, Vivendi expanded its business rapidly in the 1990s and
transformed itself into a media, communications and environmental services
company. It continued to expand through acquisitions, notably through the
acquisition of the entertainment assets of USA Networks in May 2002.

     Following a period of significant acquisition-led growth until May 2002,
the associated increase in leverage led to heightened concerns during the first
half of 2002 over the validity of Vivendi Universal's strategy and, eventually,
to the appointment of a new management team. Concerns over Vivendi Universal's
strategy and financial flexibility led Moody's to cut Vivendi Universal's senior
debt rating on July 1, 2002 from Baa3 to Ba1, with the credit remaining on
negative credit watch, Standard & Poor's followed suit the next day, with a
one-notch downgrade to BBB- with a negative outlook. The July downgrades had an
immediate impact on Vivendi Universal's short-term liquidity. In particular
Vivendi Universal lost, to a significant extent,

                                       F-83
<PAGE>

access to the capital markets, and most importantly to the commercial paper
market, historically its main source of funding for working capital needs.

     The new management team addressed Vivendi Universal's immediate liquidity
concerns by securing, on July 10, 2002, a E 1.0 billion multi-currency term loan
facility, which was repaid in December 2002. This was done with a view to
putting in place a longer-term solution once the new management had had the
opportunity to better assess the medium term situation. Following their review,
new management revised the previous managements' cash-flow projections for the
period from July 2002 to December 2004 and wrote-off E 11 billion in
acquisition-related goodwill while adding E 3.4 billion in financial provisions.
This resulted in a E 12.3 billion net loss in the first half of 2002, which was
publicly announced on August 14, 2002. At the same time, Vivendi Universal
announced a commitment to reduce debt by divesting assets. Corporate credit
ratings were subsequently cut to Ba2 by Moody'sand BB by Standard & Poor's.
Outstanding bonds at the Vivendi Universal level were downgraded a further two
notches to B1 by Moody's and to B+ by Standard & Poor's in anticipation of the
bonds subordination resulting from the expected creation of security and bank
lending at the group subsidiary level. On October 30, 2002, Moody's downgraded
Vivendi Universal's senior implied rating to Ba3, leaving the senior unsecured
ratings unchanged at B1, under review for possible downgrade.

     During the second half of 2002, Vivendi Universal asset sales for total
consideration of approximately E 6.7 billion, including the assumption by the
acquirors of the assets of approximately E 0.5 billion in debt. At December 31,
2002, Vivendi Universal's net debt was E 12.3 billion compared with E 37.1
billion at December 31, 2001, excluding Veolia Environnement, which was
deconsolidated from Vivendi Universal's balance sheet on December 31, 2002
following the disposal of Vivendi Universal's interest therein, net debt fell by
approximately E 9.0 billion.

     Under the terms of the current outstanding debt, Vivendi Universal and the
subsidiaries part of the cash pooling system have principal repayment
obligations totalling approximately E 4.5 billion due in 2003 (assuming that the
$1.62 billion VUE bridge facility is refinanced) and approximately E 3.5 billion
due in the first quarter of 2004 (including our E 850 million syndicated credit
facility).

     Vivendi Universal is engaged in the following financing transactions:

     - The offering of E 1.0 billion Senior Notes due 2010; and

     - The concurrent establishment of a dual currency E 2.5 billion 3-year
       Senior Secured Credit Facility (the "New Credit Facility"), consisting of
       two tranches as follows:

        - Tranche A: E 1.5 billion revolving facility; and

        - Tranche B: E 1.0 billion term loan facility.

     These refinancing transactions will increase funds available to Vivendi
Universal's by approximately E 0.9 billion upon completion and, extend scheduled
maturity of E 2.5 billion of debt through December 31, 2004.

     Concurrently, VUE is refinancing its $1.62 billion bridge facility.

     To meet its payment obligations in 2003 and the first quarter of 2004,
Vivendi Universal is substantially dependent upon the receipt of proceeds from
asset disposals or new financings. Vivendi Universal has announced a plan to
dispose of E 7 billion of assets in 2003. By March 15, 2003, it had closed
approximately E 700 million of these asset sales and has entered into agreements
to sell another E 1.2 billion of assets in the future, subject to regulatory and
other approvals. Vivendi Universal believes that the improvement in its
liquidity position following the receipt of proceeds from the Notes and the $2.5
billion credit facility will improve its ability to successfully consummate its
E 7 billion asset disposal plan in 2003.

     The current facilities contain negative covenants, which place restrictions
on, among other things, the incurrence of debt, the incurrence of financial
guarantees, the payment of distributions in respect of capital stock,
investments, mergers and acquisitions, asset disposals, intercompany loans and
liens, sale and loan bank transactions and require us to meet various financial
ratios. Pursuant to the facilities, each obligor must ensure that in any
three-month period, the aggregate amount of net cash available plus the
aggregate undrawn
                                       F-84
<PAGE>

amount under the facilities is more than E 100 million. The facilities require
Vivendi Universal to maintain various financial ratios, including:

     - maximum ratios of net financial debt to cash EBITDA(2);

     - minimum ratios of cash EBITDA to net financing costs; and

     - maximum total gross financial debt.

     The facilities place certain limitations on the ability of Vivendi
Universal and certain of its subsidiaries other than VUE and its subsidiaries to
make loans or advances to, and to borrow or receive advances from, VUE and its
subsidiaries.

NOTE 16 SUBSEQUENT EVENTS

16.1 ACQUISITION OF AN ADDITIONAL INVESTMENT INTEREST IN CEGETEL

     Vivendi Universal's Board of Directors has unanimously decided on December
3, 2002, to exercise its pre-emptive rights on BT Group's 26% interest in
Cegetel Group, in order to obtain a 70% interest in the French
telecommunications operator. In January 2003, Vivendi Universal purchased BT
Group's 26% interest in Cegetel Group for E 4 billion.

     The acquisition of this participation from BT Group was realized through
the SIT (Societe d'Investissements pour la Telephonie), as follows:

          a.  Societe d'Investissements pour la Telephonie, owned, controlled
     and consolidated by Vivendi Universal, became the legal owner of the 26%
     shareholding at an acquisition cost of E 4 billion.

          b.  SIT was financed by E 2.7 billion paid in cash by Vivendi
     Universal and by a non-recourse loan of E 1.3 billion which matures in
     2010. Debt service of this loan, which was drawn on January 23, 2003, will
     be provided through dividends paid in respect of its 26% shareholding in
     Cegetel Group.

     As a result, Cegetel will continue to be consolidated by Vivendi Universal,
with a 70% interest (the 26% shareholding acquired from BT Group in addition to
our historical 44% interest). The goodwill recognized as a result of this
transaction is expected to amount to approximately E 3 billion and will be
amortized on a straight-line basis over 40 years.

     The non-recourse E 1.3 billion loan will be integrated in Vivendi Universal
Financial Statements from January 2003 due to the consolidation of SIT.

---------------

     2 EBITDA plus dividends from Veolia Environnement, Cegetel Group and Maroc
Telecom.
                                       F-85
<PAGE>

     Due to this transaction, the capital structure of Cegetel Group is as
follows:

                               BEFORE PREEMPTION

                                  [FLOWCHART]

16.2 DISPOSAL OF CANAL+ TECHNOLOGIES

     The sale of Vivendi Universal's 89% stake in Canal+ Technologies to Thomson
was closed on January 31, 2003 on the basis of E 190 million in cash, of which
E 90 million was collected in 2002, E 79 million was collected in 2003 and the
remainder is expected to be collected after any post-closing adjustments. (See
Note 3).

16.3 DISPOSAL OF CONSUMER PRESS DIVISION

     The sale of Consumer Press Division (Groupe Express-Expansion-Groupe
l'Etudiant) to the Socpresse Group was finalized on February 4, 2003 (see Note
3) following the authorization by The Economy and finance Ministry in January
2003. The amount collected was E 200 million. The sale of Comareg to France
Antilles is expected to take place at a later time, as approval for the
transaction has to be given by the Monopolies Commission.

                                       F-86
<PAGE>

16.4 MR. BERTRAND MEHEUT'S APPOINTMENT

     Mr. Bertrand Meheut was nominated as Member and President of Canal+ Group's
Executive Board, in replacement of Mr. Xavier Couture, who resigned at the
Supervisory board's session of February 7, 2003.

16.5 PARTIAL DISPOSAL OF USA INTERACTIVE WARRANTS

     In February 2003, Vivendi Universal sold 32.19 million warrants of USA
Interactive to a financial institution. These warrants were initially acquired
in connection with the acquisition of the entertainment assets of USA Networks
(see Note 3). Pursuant to this transaction, Vivendi Universal received $276
million, net of fees.

16.6 CASH SETTLEMENT OF VEOLIA ENVIRONNEMENT EXCHANGEABLE NOTES

     Pursuant to the put by investors in March 2003, Vivendi Universal
reimbursed Veolia Environnement exchangeable notes issued in February 2001 for a
total consideration of E 1.8 billion.

16.7 RESTRUCTURING PROJECT OF CANAL+ GROUP

     In March 2003, Canal+ Group announced an employee reduction as part of its
overall restructuring plan. The program calls for a reduction of 305 positions,
mainly administration and technical support personnel. In addition, 138
positions in certain support functions will be outsourced.

16.8 CLOSING OF CONTRACTUAL GUARANTEES TO FORMER RONDOR SHAREHOLDERS

     Vivendi Universal Canada Inc. ("VU Canada"), a company in the Vivendi
Universal group, announced on March 11, 2003, that it had satisfied its
contractual guarantee made on August 1, 2000, to the former shareholders of the
Californian company, Rondor Music International, Inc. ("Rondor") (see Note 11).
The former Rondor shareholders received 8.844 million shares, representing 0.8%
of capital stock and the remainder in cash of US$100.3 million (E 92.6 million).

     Rondor's shareholders were paid in Seagram shares when Rondor was acquired
by The Seagram Company Ltd., which became VU Canada after the
Seagram-Vivendi-Canal+ merger. The payment was accompanied with a contractual
guarantee on the value of the shares given to the former shareholders of Rondor.
At the time of the Seagram-Vivendi-Canal+ merger, these Seagram shares were
converted into Vivendi Universal ADSs, and the contractual guarantee became
applicable to the Vivendi Universal ADSs held by the former Rondor shareholders.

     The contractual guarantee provided, among other things, that if the price
of Vivendi Universal ADSs dropped below a certain threshold ($37.5 per ADS), VU
Canada would pay the former Rondor shareholders a makeup payment for ADSs sold
by them during a specified period of time equal to the difference between
U.S.$82.7875 per ADS and their sale proceeds. In April and May 2002, all Vivendi
Universal ADSs then owned by these shareholders were sold and VU Canada became
obligated to pay the makeup payment to them in March 2003. Under the terms of
the original agreements, the difference was to be paid in full or in part in
Vivendi Universal shares.

16.9 RESIGNATION OF CHIEF EXECUTIVE OFFICER OF VUE

     On March 19, 2003, Mr. Barry Diller in full agreement with Vivendi
Universal, announced his resignation from his temporary position as chief
executive officer of VUE. Mr. Diller had been serving in such capacity since the
formation of VUE in May 2002 and was not party to an employment agreement. Mr.
Jean Rene Fourtou has assumed the role of chief executive officer of VUE and is
working with the existing management team. Mr. Diller's resignation has no
effect on the rights and obligations of Vivendi Universal, VUE, USA or Mr.
Diller under the VUE Partnership Agreement. The termination date for USA's and
Mr. Diller's noncompetition agreements with VUE is now November 7, 2003, Mr.
Dillers's put on his common stock remains exercisable beginning on May 7, 2003,
and Universal's call option on Mr. Diller's common interest in VUE is
exercisable beginning on May 7, 2004.
                                       F-87
<PAGE>

NOTE 17 SUPPLEMENTAL DISCLOSURES REQUIRED UNDER US GAAP AND SEC REGULATIONS

     The following information has been prepared to present supplemental
disclosures required under US GAAP and Securities Exchange Commission (SEC)
regulations applicable to Vivendi Universal.

17.1 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED
     BY VIVENDI UNIVERSAL AND U.S. GAAP

     Vivendi Universal has prepared its consolidated financial statements in
accordance with French GAAP at December 31, 2002, as discussed in Note 1. French
GAAP differs in certain respects from US GAAP, the principal differences of
which, as they relate to Vivendi Universal, are as follows:

  NEW U.S. ACCOUNTING POLICIES APPLIED BY THE GROUP FROM JANUARY 1, 2002

     In July and August 2001, the FASB (Financial Accounting Standards Board)
issued Statement of Financial Accounting Standard (SFAS) No. 141, Business
Combinations (SFAS 141), SFAS No. 142 Goodwill and Other Intangible Assets (SFAS
142) and SFAS No. 144 Accounting for the Impairment or Disposal of Long-lived
Assets (SFAS 144). SFAS 141 is effective for any business combination completed
after June 30, 2001, and SFAS 142 and 144 are effective for fiscal years
beginning after December 15, 2001. These statements are described below.

  BUSINESS COMBINATIONS AND GOODWILL

     As permitted under French GAAP prior to December 31, 1999, goodwill could
be recorded as a reduction of shareholders' equity when the acquisition was paid
for with equity securities, whereas under US GAAP goodwill is always recognized
as an asset. Additionally, under French GAAP, certain acquisitions, notably
Havas and Pathe, were accounted for as mergers. Under this method, goodwill is
computed as the difference between the consideration paid and the net historical
book value acquired.

     Under US GAAP applied until June 30, 2001, the Havas and Pathe acquisitions
did not meet the criteria for pooling and, therefore, were accounted for as
purchase business combinations. Accordingly, goodwill was computed as the excess
of consideration paid over the fair value of assets acquired and liabilities
assumed. The reconciliation impact is that French GAAP potentially results in a
lower net asset value being assigned to acquisitions, which results in higher
gains on the sales of businesses as compared to US GAAP. Additionally, the
amortization of goodwill charged to earnings is lower under French GAAP than
under US GAAP.

     SFAS 141 requires the use of the purchase method of accounting for all
business combinations completed after June 30, 2001, forbidding the use of
"pooling of interests", and further clarifies the criteria to recognize
intangible assets separately from goodwill. Additionally, it is likely that more
intangible assets will be recognized under SFAS 141 than its predecessor, while
in some instances previously recognized intangibles will be included as part of
goodwill.

     Additionally, for fiscal years beginning after December 15, 2001, SFAS 142
requires that companies stop amortizing goodwill and certain other intangible
assets with indefinite useful lives, including such assets recorded in past
business combinations. Instead, goodwill and other indefinite-lived intangible
assets will be subject to a annual review for impairment (or more frequently if
impairment indicators arise). A two-step impairment test is used. The first step
is a screen for potential impairment, while the second step measures the amount
of the impairment, if any. An impairment that is required to be recognized when
adopting SFAS 142 will be reflected as the cumulative effect of a change in
accounting principle.

     Vivendi Universal adopted SFAS 142 effective January 1, 2002, and in
accordance with its provisions ceased amortizing goodwill (including goodwill
included in the carrying value of certain investments accounted for under the
equity method of accounting) and other indefinite-lived intangible assets.
Additionally, upon adoption of SFAS 142, Vivendi Universal recorded a
non-recurring, non-cash impairment charge of approximately E 17 billion to
reduce the carrying value of its goodwill to its implied fair value. The charge,
which is non operational in nature, was recorded as a cumulative effect of a
change in accounting principle.

                                       F-88
<PAGE>

  IMPAIRMENT OF OTHER LONG-LIVED ASSETS

     As required under both French and US GAAP, Vivendi Universal reviews the
carrying value of long-lived assets, including goodwill and other intangible
assets, for impairment at least annually or whenever facts, events or changes in
circumstances, both internally and externally, indicate that the carrying amount
may not be recoverable.

     Under French GAAP, the impairment is measured by comparing the net book
value with the current value of the asset where the current value depends on the
underlying nature of its market value or value in use. The value in use is
generally determined on the basis of discounted cash flows. (See Section 1.2.18)

     Under US GAAP, until December 31, 2001 measurement of any impairment was
based on the provisions of SFAS No. 121, Accounting for the Impairment of
Long-lived Assets and for Long-Lived Assets to Be Disposed Of (SFAS 121). SFAS
121 required that an impairment loss be recognized whenever the sum of the
undiscounted future cash flows estimated to be generated from the use and
ultimate disposal of an asset were less than the net carrying value of the
asset.

     From January 1, 2002, SFAS 144 replaces SFAS 121 and while it supersedes
APB Opinion 30, Reporting the Results of operations -- Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions, it retains the presentation of discontinued
operations but broadens that presentation to include a component of an entity
(rather than a segment of a business). However, under SFAS 144, discontinued
operations are recorded at the lower of their carrying amount or fair value less
cost to sell, and future operating losses are no longer recognized before they
occur. Under SFAS 144, there is no longer a requirement to allocate goodwill to
long-lived assets to be tested for impairment. It also establishes a probability
weighted cash flow estimation approach to deal with situations in which there is
a range of cash flows that may be generated by the asset being tested for
impairment. SFAS 144 also establishes criteria for determining when an asset
should be treated as held for sale.

     SFAS 144 has been applied since January 1, 2002 and the adoption of SFAS
144 had no material impact on the group's results of operations or on its
financial position.

  INTANGIBLE ASSETS

     Under French GAAP, certain types of advertising costs are capitalized and
amortized over their useful lives. Business trademarks acquired in a purchase
business combination are not required to be amortized. The costs of television
and station rights relating to theatrical movies and other long-term programming
are expensed upon first broadcast or showing of the film. Under US GAAP,
advertising costs are charged to expense in the period they are incurred.
Trademarks acquired are amortized over their estimated useful life. The costs of
television and station rights relating to theatrical movies and other long-term
programming are expensed over the estimated number of times the film or program
is broadcast.

  DERIVATIVE FINANCIAL INSTRUMENTS

     Under French GAAP, the criteria for hedge accounting for derivative
financial instruments does not require documentation of specific designation to
the hedged item, or the documentation of ongoing effectiveness of the hedge
relationship. Derivative financial instruments that meet hedge criteria under
French GAAP are not recorded on the consolidated balance sheet. The impact of
the derivative financial instruments on the statement of income is recorded upon
settlement or the payment or receipt of cash, but potential loss, if any, is
accrued against the financial income.

     Vivendi Universal adopted SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, effective January 1, 2001. Upon adoption,
all derivative instruments (including certain derivative instruments embedded in
other contracts) were recognized in the balance sheet at their fair values.
Changes in the fair value of derivative instruments are recorded each period in
current earnings or accumulated other comprehensive income, depending on whether
the derivative is used to hedge fair value or cash flow exposures. Changes in
derivative fair values that are designated as fair value hedges are recognized
in earnings as offset to the changes in fair value of related hedged assets,
liabilities or firm commitments. Changes in the derivative
                                       F-89
<PAGE>

fair values that are designated as cash flow hedges are deferred and recorded as
a component of accumulated other comprehensive income until the hedged
transactions occur and are recognized in earnings at the same time the hedged
transaction is recognized in earnings. Instruments used as hedges must be
effective at reducing the risk associated with the exposure being hedged and
must be designated as a hedge at the inception of the contract. Accordingly,
changes in market values of hedge instruments must be highly correlated with
changes in market values of underlying hedged items both at inception of the
hedge and over the life of the hedge contract. The ineffective portion of a
hedging derivative's change in fair value is reported in earnings. Derivatives
that are executed for risk management purposes but not designated as hedges
under SFAS 133 are recorded at their fair value and the change in fair value is
recognized in current earnings.

     The financing activities of Vivendi Universal necessarily involve the
management of various market risks, including those related to changes in
interest rates or currency exchange rates. Management uses derivative financial
instruments to mitigate or eliminate certain of those risks. However,
significant part of those derivative instruments do not qualify as hedge
derivatives under the strict hedge criteria of SFAS 133. Since derivative
instruments that do not qualify for hedge accounting are marked to their fair
market value on the balance sheet, and their changes in fair value is recognized
in earnings, this may induce volatility in earnings for the effect of this new
standard.

  EMPLOYEE BENEFIT PLANS

     Under French GAAP, since January 1998 Vivendi Universal has recorded its
pension obligations, covering all eligible employees, using the projected unit
credit method. Under US GAAP, the projected unit credit method was required to
be applied beginning January 1, 1989. The transition obligation or fund excess
determined as of January 1, 1989 is amortized over the average remaining service
period of the population that was covered under the plan at that date. No
minimum liability adjustment is recognized in French GAAP, whereas under US
GAAP, a minimum pension liability is required to be recognized when the
accumulated benefit obligation exceeds the fair value of plan assets by an
amount in excess of any prepaid pension cost.

     Under French GAAP, some postretirement benefits other than pensions are
recorded as expense when amounts are paid. Under US GAAP, an obligation for
amounts to be paid under postretirement plans other than pensions must be
recognized. A postretirement transition obligation may be determined as of
January 1, 1995 and amortized over the average remaining service period of
employees covered by the plan. Current period charges are based on estimated
future payments to expected retirees.

  STOCK BASED COMPENSATION

     Under French GAAP, in case of the issuance of new shares, shareholders'
equity is credited for the cumulative strike price to reflect the issuance of
shares upon the exercise of options. In the other cases, treasury shares held to
fulfill obligations under stock options granted are recorded as marketable
securities and are carried at the lower of their historical cost or their fair
value or the strike price of the stock-options hedged. Vivendi Universal
recognizes any resulting holding gain in the period that the shares are sold to
the plan. Vivendi Universal shares sold to employees through qualified employee
stock purchase plans are reclassified from marketable securities to share
capital. In accordance with French GAAP, Vivendi Universal has not recorded
compensation expense on stock-based plans with a discounted strike price up to
20% from the average market price of Vivendi Universal shares over the last 20
business days prior to the date of authorization by the Board of Directors.

     Under US GAAP plans that sell or grant common shares or stock options to
employees are qualified as compensatory if such plans are not open to
substantially all employees and do not require the employee to make a reasonable
investment in the shares, usually defined as no less than 85% of the market
value at the grant date. If a stock purchase plan is deemed to be compensatory,
compensation arising from such plan is measured based on the intrinsic value of
the shares sold or options granted to employees. If a stock option plan is
deemed to be compensatory, the compensation expense is calculated as the
difference between the fair value of the stock at the grant date and the strike
price. Compensation expense for compensatory stock based compensation plans is
generally recognized over the vesting period.

                                       F-90
<PAGE>

     Vivendi Universal accounts for its stock compensation arrangement under the
intrinsic value method in accordance with Accounting Principles Board (APB)
opinion No 25, accounting for stock issued to employees, and FASB interpretation
No 44, Accounting for Certain Transactions Involving Stock Compensation. The
company has adopted the disclosure -- only provisions of FASB Statement No 123,
accounting for stock based compensation. If Vivendi Universal had elected to
recognize compensation expense for the granting of options under stock options
plans based on the fair value of the grant date consistent with the methodology
prescribed by Statement No 123, net income (loss) and net income (loss) per
share would have been reported at the following pro forma amounts.

<Table>
<Caption>
                                                                YEAR ENDED DECEMBER 31,
                                                        ---------------------------------------
                                                            2002          2001          2000
                                                        ------------   -----------   ----------
                                                        (IN MILLIONS, EXCEPT PER SHARE AMOUNT)
<S>                                                     <C>            <C>           <C>
Net income under US GAAP as reported..................   E (44,447)     E (1,172)     E 1,908
Add: Stock-based employee compensation expense
  included in reported net income, net of related tax
  effects.............................................          68            33           96
Deduct: Total stock-based employee compensation
  expense determined under fair value based method for
  all awards, net of related tax effects..............        (524)         (514)        (154)
                                                         ---------      --------      -------
Pro forma net income under US GAAP....................   E (44,903)     E (1,653)     E 1,850
                                                         =========      ========      =======
Earnings per share:
  Basic -- as reported................................   E  (40.89)     E  (1.19)     E  3.24
  Basic -- pro forma..................................   E  (41.31)     E  (1.69)     E  3.14
Earnings per share:
  Diluted -- as reported..............................   E  (40.89)     E  (1.19)     E  3.03
  Diluted -- pro forma................................   E  (41.31)     E  (1.69)     E  2.94
</Table>

  INVESTMENTS IN DEBT AND EQUITY SECURITIES

     Under French GAAP, investments in debt and non-consolidated equity
securities are recorded at acquisition cost and an allowance is provided if
management deems that there has been an other-than-temporary decline in fair
value. Unrealized gains and temporary unrealized losses are not recognized.
Under US GAAP, investments in debt and equity securities are classified into
three categories and accounted for as follows: debt securities that Vivendi
Universal has the intention and ability to hold to maturity are carried at cost
and classified as "held-to-maturity"; debt and equity securities that are
acquired and held principally for the purpose of sale in the near term are
classified as "trading securities" and are reported at fair value, with
unrealized gains and losses included in earnings; all other investment
securities not otherwise classified as either "held-to-maturity" or "trading"
are classified as "available-for-sale" securities and reported at fair value,
with unrealized gains and losses excluded from earnings and reported in
shareholders' equity, net of deferred income taxes.

  TREASURY SHARES

     Under French GAAP, treasury shares are recorded as a reduction of
shareholders' equity except when the shares have been acquired to stabilize the
market price or in connection with stock options granted to employees, in which
case they are recorded as marketable securities. Gains or losses on the disposal
of treasury shares recorded as marketable securities are recorded in current
period earnings. Under US GAAP, treasury shares are recorded as a reduction of
shareholders' equity. Gains or losses on the disposal of treasury shares are
recognized as an adjustment to shareholders' equity.

                                       F-91
<PAGE>

  PRINCIPLES OF CONSOLIDATION

  Use of the Proportionate Consolidation Method

     As discussed in Note 1, under French GAAP, investments in jointly
controlled companies, where Vivendi Universal and outside shareholders have
agreed to exercise joint control over significant financial and operational
policies are accounted for using the proportionate consolidation method. Under
US GAAP, these investments would be consolidated or accounted for using the
equity method depending on the percentage of voting interest held. Summarized
financial information for investments accounted for using the proportionate
consolidation method is provided in Note 4. This difference in accounting policy
has no effect on either net income or shareholders' equity.

  Special Purpose Entity

     Under French GAAP, a Special Purpose Entity (SPE) is included in the scope
of consolidation whenever one or more controlled enterprises have in substance,
by virtue of contracts, agreements or statutory clauses, control of the entity
and are its shareholders or partners. Where one or more enterprises controlled
by Vivendi Universal have, in substance, control of a SPE but do not hold any
ownership share of this entity, the SPE is not consolidated and the Notes to
Consolidated Financial Statements disclose in detail the assets, liabilities and
profits or losses of the SPE.

     Under US GAAP, a Special Purpose Entity (SPE) where one or more enterprises
controlled by Vivendi Universal have, in substance, control of a SPE but do not
hold any ownership share of this entity, could be consolidated if the
enterprises controlled by Vivendi Universal hold the majority of the risks and
rewards, even if they do not hold any ownership share of the SPE.

  Exceptional Items

     French GAAP defines exceptional items differently from the definition of
extraordinary items under US GAAP, thus items classified as exceptional for
French GAAP purposes are reclassified to the appropriate income statement
captions determined under US GAAP. With the exception of gains and losses on
sales of shares of affiliated companies, exceptional items relating to the
operations of the group have been included in the determination of operating
income. Capital gains or losses on the sale of consolidated entities or equity
affiliates are considered for French GAAP purposes as exceptional income (loss),
whereas they are classified for US GAAP purposes as other income (loss).

  NEW US ACCOUNTING PRONOUNCEMENTS TO BE APPLIED BY THE GROUP FROM JANUARY 1,
  2003

     In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations (SFAS 143). SFAS 143 requires legal obligations associated with the
retirement of long-lived assets to be recognized at their fair value at the time
that the obligations are incurred. Upon initial recognition of a liability, that
cost should be capitalized as part of the related long-lived asset and allocated
to expense over the useful life of the asset. SFAS 143 is effective for fiscal
years beginning after June 15, 2002. Vivendi Universal does not anticipate that
adoption of SFAS 143 will have a material impact on its results of operations or
its financial position.

     In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections
(SFAS 145). SFAS 145 also amends other existing authoritative pronouncements to
make various technical corrections, clarify meanings, or describe their
applicability under changed conditions. SFAS 145 is effective for fiscal years
beginning after May 15, 2002. Vivendi Universal does not anticipate that
adoption of SFAS 145 will have a material impact on its results of operations or
its financial position.

     In June 2002, the FASB issued SFAS 146, Accounting for Costs Associated
with Exit or Disposal Activities (SFAS 146) that nullifies EITF 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring), and changes the
timing of recognition for certain exit costs associated with restructuring
activities. Under
                                       F-92
<PAGE>

SFAS 146 certain exit costs, including some employee termination benefits, would
be recognized over the period in which the restructuring activities occur.
Currently, exit costs are recognized when a company commits to a restructuring
plan. SFAS 146 is effective for exit or disposal activities that are initiated
after December 31, 2002. Vivendi Universal does not anticipate that adoption of
SFAS 146 will have a material impact on its results of operations or its
financial position.

     In December 2002, the FASB issued SFAS No. 148, Accounting for Stock Based
Compensation-Transition and Disclosure (SFAS 148). SFAS 148 addresses financial
accounting and reporting for recording expenses for the fair value of stock
options. It amends the disclosure provisions of SFAS 123 to require prominent
disclosure in the summary of significant account policies of the effects of an
entity's accounting policy with respect to stock-based employee compensation on
reported net income and earnings per share in annual financial statements. The
annual disclosure requirements of SFAS 148 are effective for fiscal years ending
after December 15, 2002. Vivendi Universal does not anticipate that adaption of
SFAS 148 will have a material impact on its results of operations or its
financial position.

     In November 2002, the FASB issued FASB interpretation No. ("FIN") 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, including
Indirect Guarantees of Indebtedness of Others." FIN 45 elaborates on the
disclosure requirements of a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has issued. It
also requires a guarantor to recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing certain
guarantees. FIN 45 also incorporates, without change, the guidance in FIN 34,
"Disclosure of Indirect Guarantees of Indebtedness of Others," which it
supersedes. The incremental disclosure requirements of FIN 45 are effective for
financial statements of interim or annual periods ending after December 15,
2002. The initial recognition and initial measurement provisions are applicable
to guarantees issued or modified after December 31, 2002. The accounting
followed by a guarantor on prior guarantees may not be changed to conform to the
guidance of FIN 45. Vivendi Universal has adopted the incremental disclosure
requirements of FIN 45. Vivendi Universal is currently in the process of
evaluating the impact of adopting FIN 45 on its consolidated balance sheet and
statements of operations.

     In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation
of Variable Interest Entities an interpretation of ARB No. 51 ("FIN 46"). FIN 46
requires certain variable interest entities to be consolidated by the primary
beneficiary of the entity if the equity investors in the entity do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. The disclosure provisions of
FIN 46 are effective for financial statements initially issued after January 31,
2003. Public entities with a variable interest in a variable interest entity
created before February 1, 2003 shall apply the consolidation requirements of
FIN 46 to that entity no later than the beginning of the first annual reporting
period beginning after June 15, 2003. FIN 46 is effective for all new variable
interest entities created or acquired after January 31, 2003. Vivendi Universal
is currently assessing what the impact of FIN 46 will be on its financial
statements.

17.2 SPECIFIC TRANSACTIONS OCCURRED IN 2002 AND 2001

17.2.1 GOODWILL IMPAIRMENT CHARGE

  French GAAP

     At December 31, 2001, following the market decline, particularly in the
Internet, media and telecommunications industries, our annual review resulted in
a non-cash, non-recurring goodwill impairment charge of E 12.9 billion (E 12.6
billion after E 0.3 billion minority interest concerning Veolia Environnement).
In light of deteriorating economic conditions since this date and the impact of
higher financing cost for the company, management has recorded a complementary
impairment charge of approximately E 18.4 billion as at December 31, 2002.

                                       F-93
<PAGE>

  US GAAP

     According to SFAS 121, no impairment was indicated as of December 31, 2001
and, accordingly, the goodwill impairment charge accounted for under French GAAP
was reversed on December 31, 2001. Upon the adoption of SFAS 142 and SFAS 144,
Vivendi Universal recorded on December 31, 2002, an impairment charge of E 38.3
billion.

17.2.2 DISPOSAL OF INVESTMENT IN BSKYB

  The Transaction

     In October 2001, Vivendi Universal sold approximately 96% (400.6 million
shares) of its investment in BSkyB to two British companies for proceeds of
approximately E 4 billion. This transaction was entered into in order to comply
with requirements imposed by the European Commission in October 2000, whereby
approval of the Merger Transactions was conditional on the disposal of the
investment in BSkyB before the end of 2002. Additionally, the sale relieved the
overhang which weighed on the BSkyB share price by allowing for the placement of
the shares on the market over an extended period of time. The sale also resulted
in the irrevocable and definitive loss of all voting rights attached to the
BSkyB shares, which cannot, under any circumstances, revert back to Vivendi
Universal. BSkyB Holding, a Vivendi Universal subsidiary, also irrevocably lost
the directorship held in its name.

     The two British companies were financed by the issuance of bonds
exchangeable into BSkyB shares. The bonds, which mature in October 2005, were
sold to a financial institution to which the BSkyB shares were pledged.
Concurrently, Vivendi Universal and the same financial institution entered into
a total return swap agreement with a nominal value of L2.5 billion or 629 pence
per share (sale price of 616 pence per share plus 13 pence per share for
financing the exchangeable bond). The total return swap agreement results in
Vivendi Universal retaining the financial risk or benefit associated with
BSkyB's market value until no later than October 2005. At inception, the swap
had a notional amount of L2.5 billion and a nil fair market value. The swap
features a resetting mechanism at the end of each calendar quarter or each
trigger date (any date on which the BSkyB share price varies by more than 10%
since the preceding quarter-end or previous trigger date). In the event the
BSkyB share price falls below 629 pence per share, Vivendi Universal will pay
the difference to the financial institution at the end of each calendar quarter
or immediately if the share price falls by more than 10%. In the event the BSkyB
share price increases above 629 pence per share, the difference is posted to a
deferred account until the swap agreement matures. Additionally, at the end of
each calendar quarter Vivendi Universal incurs interest at Libor +0.60% on the
nominal value of the swap. The European Commission designated an independent
expert to verify the legality of the transaction. Based on his findings, the
European Commission concluded that the transaction was compliant with
requirements imposed in October 2000. On behalf of the European Commission, the
independent expert has continued to monitor Vivendi Universal's commitments
related to the transaction until its conclusion.

     In December 2001, the financial institution issued share certificates
exchangeable into 150 million BSkyB shares, representing 37% of the shares held
by the British companies. At the same time, Vivendi Universal and the financial
institution agreed to reduce the nominal value of the total return swap by the
same proportion (37%). This definitively established the value of the 150
million BSkyB shares at 700 pence per share, including a block discount of 11%
(higher than a standard discount due to the characteristics of the financial
instrument placed on the market).

     In May 2002, the financial institution sold the remaining 250 million BSkyB
shares held by the QSPEs, and concurrently, Vivendi Universal and the financial
institution terminated the total rate of return swap on those shares, which were
settled at approximately 670 pence per share, before Vivendi Universal's payment
of related costs.

  French GAAP

     Under French GAAP, the disposal of the investment in BSkyB was not
recognized as a sale in 2001 because, although the beneficial interests of the
two British companies are held by the financial institution,

                                       F-94
<PAGE>

Vivendi Universal remains a shareholder of the two companies and retains the
financial exposure relative to their assets through the total return swap
agreement. Accordingly, an asset representing the BSkyB shares held by the
British companies (E 1,547 million) and a liability representing the borrowings
(E 3,948 million) used to acquire them are recorded in Vivendi Universal's
consolidated financial statements. However, the December 2001 capital gain
before tax of E 1.1 billion was recognized as definitive due to the reduction in
the nominal value of the total return swap in connection with the issuance of
150 million exchangeable shares certificates.

     In May 2002, as a result of the termination of the total rate of return
swap on those shares, Vivendi Universal recognized a pre-tax gain of
approximately E 1.6 billion, net of expenses, and was able to reduce gross debt
by approximately E 4 billion.

  US GAAP

     Under US GAAP, the disposal of the BSkyB shares to the two British
companies was recognized as a sale as defined by SFAS No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities a
replacement of FASB Statement 125, as the British companies met all the criteria
of Qualified Special Purpose Entities (QSPE). Consequently, a E 1.3 billion
pre-tax capital gain was recognized in 2001. The total return swap was accounted
for a derivative instrument under SFAS 133, at fair value with changes in fair
value recognized in current period earnings. It was recognized as income in the
amount of E 523 million at December 31, 2001.

     As a result of the termination of the total return swap in May 2002,
Vivendi Universal recognized a pre-tax loss of E 523 million.

17.2.3 ACCOUNTING FOR VEOLIA ENVIRONNEMENT

  French GAAP

     Note 3.2.3 to the consolidated financial statements describes a series of
transactions that took place during 2002 in connection with the reduction of the
Vivendi Universal's holdings in Veolia Environnement. Under French GAAP, Vivendi
Universal consolidated its investment in Veolia Environnement until December 31,
2002, when Vivendi Universal reduced its ownership interest in Veolia
Environnement from 41% down to 20.4%. Until that date, Vivendi Universal held
more than 40% of Veolia Environnement's outstanding shares and no other
shareholder held, directly or indirectly, a greater proportion of Veolia
Environnement's voting rights than Vivendi Universal.

  US GAAP

     Under US GAAP, the equity method of accounting was applied beginning July
1, 2002, the date at which Vivendi Universal's equity and voting interest was
reduced to 48%. This difference between French GAAP and US GAAP has no impact on
the reconciliation of shareholders' equity, net income and comprehensive income
to US GAAP.

     The following special purpose condensed statement of income and statement
of cash flows have been prepared on the basis of French GAAP, with the use of
the equity method of accounting for the Vivendi Universal's investment in Veolia
Environnement applied beginning July 1, 2002. The statement of income should be
read in conjunction with the reconciliation of net income under French GAAP to
US GAAP included in Note 17.3.2 to the Financial Statements.

                                       F-95
<PAGE>

                   CONDENSED SPECIAL PURPOSE INCOME STATEMENT

<Table>
<Caption>
                                                                    YEAR ENDED
                                                                DECEMBER 31, 2002
                                                                   ON THE BASIS
                                                                 DESCRIBED ABOVE
                                                              ----------------------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>
REVENUES....................................................        E  43,063
Cost of revenues............................................          (28,754)
Selling, general and administrative expenses................          (10,871)
Other operating expenses, net...............................             (550)
                                                                    ---------
OPERATING INCOME............................................            2,888
Financial expenses, net.....................................             (996)
Financial provisions........................................           (2,839)
Other income (expense)......................................             (696)
                                                                    ---------
INCOME BEFORE EXCEPTIONAL ITEMS, INCOME TAXES, GOODWILL
  AMORTIZATION, EQUITY INTEREST AND MINORITY INTEREST.......           (1,643)
Exceptional items, net......................................            1,694
Income tax (expense) benefit................................           (2,416)
                                                                    ---------
INCOME BEFORE GOODWILL AMORTIZATION, EQUITY INTEREST AND
  MINORITY INTEREST.........................................           (2,365)
Equity in (losses) earnings of disposed businesses..........               17
Equity in (losses) earnings of unconsolidated companies.....             (685)
Goodwill amortization.......................................           (1,129)
Goodwill impairment.........................................          (18,442)
                                                                    ---------
INCOME (LOSS) BEFORE MINORITY INTEREST......................          (22,604)
Minority interest...........................................             (697)
                                                                    ---------
NET INCOME (LOSS)...........................................        E (23,301)
                                                                    =========
EARNINGS (LOSS) PER BASIC SHARE.............................        E  (21.43)
                                                                    =========
ADJUSTMENTS TO CONFORM TO U.S. GAAP:
  Cumulative effect of change in accounting principles,
     after tax, impairment resulting from adoption of FAS
     142....................................................        E (15,540)
  Business combination and goodwill.........................              (36)
  Goodwill impairment charge................................           (4,425)
  Impairment of long-lived assets...........................              113
  Intangible assets.........................................               (5)
  Financial instruments.....................................              854
  Disposal of investment in BSkyB...........................           (2,025)
  Employee benefit plans....................................              (70)
  Other.....................................................              (51)
Tax effect on adjustments...................................            1,509
Adjustments to conform to U.S. GAAP relative to Veolia
  Environnement.............................................           (1,470)
                                                                    ---------
     Sub-total..............................................          (21,146)
                                                                    ---------
U.S. GAAP NET INCOME (LOSS).................................        E (44,447)
                                                                    ---------
</Table>

                                       F-96
<PAGE>

               CONDENSED SPECIAL PURPOSE STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                                    YEAR ENDED
                                                                DECEMBER 31, 2002
                                                                   ON THE BASIS
                                                                 DESCRIBED ABOVE
                                                              ----------------------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>
CASH FLOW FROM OPERATING ACTIVITIES:
  Net income (loss).........................................        E (23,301)
  Reversal of equity in (losses) earnings of sold
     businesses.............................................              (17)
  Adjustments to reconcile net income to net cash provided
     by operating activities:                                              --
     Depreciation and amortization..........................           23,163
     Financial provisions...................................            2,839
     Gain on sale of property and equipment and financial
      assets, net...........................................           (2,119)
     Undistributed earnings from affiliates, net............              840
     Deferred taxes.........................................            1,704
     Minority interest......................................              697
  Changes in assets and liabilities, net of effect of
     acquisitions and dispositions:                                      (517)
                                                                    ---------
       NET CASH PROVIDED BY OPERATING ACTIVITIES............            3,289
CASH FLOW FROM INVESTING ACTIVITIES:
  Purchase of property, plant, equipment and other..........           (2,837)
  Proceeds from sale of property, plant, equipment and
     other..................................................              217
  Purchase of investments...................................           (4,682)
  Sale of investments.......................................            9,714
  Sale of spirits and wine business.........................               --
  Sale (purchase) of portfolio investments..................               --
  Net decrease (increase) in financial receivables..........           (1,626)
  Purchase of treasury shares held as marketable
     securities.............................................               --
  Sales (purchases) of other marketable securities..........              312
                                                                    ---------
       NET CASH PROVIDED BY (USED FOR) INVESTING
        ACTIVITIES..........................................            1,098
CASH FLOW FROM FINANCING ACTIVITIES:
  Net increase (decrease) in short-term borrowings..........           (3,235)
  Notes mandatorily redeemable for new shares of Vivendi
     Universal..............................................              767
  Proceeds from issuance of borrowings and other long-term
     debt...................................................            2,152
  Principal payment on borrowings and other long-term
     liabilities............................................           (1,515)
  Net proceeds from issuance of common shares...............               63
  Sales (purchases) of treasury shares......................            1,973
  Cash dividends paid.......................................           (1,243)
  Cash payment to USA Interactive...........................           (1,757)
                                                                    ---------
       NET CASH (USED FOR) PROVIDED BY FINANCING
        ACTIVITIES..........................................           (2,795)
  Effect of foreign currency exchange rate changes on cash
     and cash equivalents...................................              978
                                                                    ---------
CHANGE IN CASH AND CASH EQUIVALENTS.........................        E   2,570
                                                                    =========
CASH AND CASH EQUIVALENTS:
  Beginning.................................................        E   4,725
                                                                    =========
  Ending....................................................        E   7,295
                                                                    =========
</Table>

                                       F-97
<PAGE>

17.2.4 AMORTIZATION OF ACQUIRED FILM COST

  FRENCH GAAP

     Under French GAAP, Vivendi Universal estimated the fair value of films
acquired in the context of the Seagram Transaction in accordance with the
normalized margin method.

  US GAAP

     Under US GAAP, FAS 142, which became effective in 2002, recommends that the
fair value of films acquired in the context of a business combination should be
based on the discounted cash flow methodology rather than any other methodology.

     This difference between French GAAP and US GAAP has no impact on 2002
reconciliation of shareholders' equity, net income and comprehensive income to
US GAAP.

17.3 RECONCILIATION OF SHAREHOLDERS' EQUITY, NET INCOME AND COMPREHENSIVE INCOME
     TO US GAAP

17.3.1 RECONCILIATION OF SHAREHOLDERS' EQUITY TO US GAAP

<Table>
<Caption>
                                                                       DECEMBER 31,
                                                              ------------------------------
                                                                2002       2001       2000
                                                              --------   --------   --------
                                                                  (IN MILLIONS OF EUROS)
<S>                                                           <C>        <C>        <C>
Shareholders' equity as reported in the Consolidated
  Statement of Shareholders' Equity.........................  E 14,020   E 36,748   E 56,675
  Adjustments to conform to US GAAP:(2)
  Business combinations and goodwill(3).....................     8,171      8,158      8,783
  Goodwill impairment charge................................    (8,861)    12,626         --
  Impairment of long-lived assets(1)........................        23        (90)       (88)
  Intangible assets(4)......................................      (462)      (427)      (329)
  Financial instruments.....................................    (1,241)    (1,492)       823
  Disposal of investment in BSkyB...........................    (1,307)       774         --
  Employee benefit plans....................................      (196)        --        (23)
  Other.....................................................      (208)      (127)       192
Tax effect on adjustments...................................     1,281       (268)    (1,304)
                                                              --------   --------   --------
                                                                11,220     55,902     64,729
                                                              --------   --------   --------
Fees associated with BSkyB swap, after tax..................        --        (37)        --
                                                              --------   --------   --------
                                                                11,220     55,865     64,729
Puts on Vivendi Universal's own shares......................      (155)    (1,597)        --
                                                              --------   --------   --------
US GAAP shareholders' equity................................  E 11,065   E 54,268   E 64,729
                                                              ========   ========   ========
</Table>

---------------

(1) Those provisions relate to real estate assets.

(2) For 2002, 2001, 2000 impacts of those adjustments on French GAAP balance
    sheet are:

     - Business combinations and goodwill: "Goodwill, net"

     - Goodwill impairment charge: "Goodwill, net"

     - Impairment of long lived assets: "Property, plant and equipment, net"

     - Intangible assets: "Other intangible assets, net"

     - Financial instruments: "Other marketable securities" & "Other
       investments"

     - Disposal of investment in BSkyB: "Short-term loans receivable", "Other
       marketable securities" & "Long-term debt"

                                       F-98
<PAGE>

     - Employee benefit plans: "Reserves & allowances"

     - Tax effect on adjustments: "Deferred tax assets" & "Deferred taxes"

(3) Adjustments related to business combination and goodwill mainly impact gross
    amount of goodwill due to differences in accounting policy between French
    and US GAAP -- see note 17.1.

(4) Adjustments related to intangible assets mainly impact the accumulated
    amortization line on these assets -- see note 17.1.

17.3.2 RECONCILIATION OF NET INCOME AND EARNINGS PER SHARE TO US GAAP

<Table>
<Caption>
                                                                 YEARS ENDED DECEMBER 31,
                                                              -------------------------------
                                                                2002        2001       2000
                                                              ---------   ---------   -------
                                                                  (IN MILLIONS OF EUROS)
<S>                                                           <C>         <C>         <C>
Net income as reported in the Consolidated Statement of
  Income....................................................  E (23,301)  E (13,597)  E 2,299
Adjustments to conform to US GAAP:
  Business combination and goodwill.........................         32        (333)     (263)
  Goodwill impairment charge................................     (4,425)     12,626        --
  Impairment of long-lived assets...........................        113          (1)      (23)
  Intangible assets.........................................        (23)        (62)     (106)
  Financial instruments.....................................        869         377       105
  Disposal of investment in BSkyB...........................     (2,025)        774        --
  Employee benefit plans....................................        (72)        (33)     (108)
  Other(2)..................................................        (83)       (290)      (46)
Tax effect on adjustments...................................      1,530        (557)       50
                                                              ---------   ---------   -------
                                                                (27,385)     (1,096)    1,908
                                                              =========   =========   =======
Fees associated with BSkyB swap, after tax..................         --         (37)       --
                                                              ---------   ---------   -------
     US GAAP net income (loss), before cumulative effect of
       change in accounting principles, after tax...........  E (27,385)  E  (1,133)  E 1,908
                                                              =========   =========   =======
Cumulative effect of change in accounting principles, after
  tax(1)....................................................    (17,062)        (39)       --
                                                              ---------   ---------   -------
US GAAP net income (loss)...................................  E (44,447)  E  (1,172)  E 1,908
</Table>

---------------

(1) Adoption of FAS 142 in 2002 and FAS 133 in 2001.

(2) Other adjustments mainly relate to insignificant adjustments from French
    GAAP to US GAAP net income: lease contracts, public service contracts in
    environment business & reserves not recognized under US GAAP. For 2001 this
    line includes a negative E 262 million adjustment in US GAAP on reserves
    mainly due to decoders replacement at Canal+ level.

<Table>
<Caption>
                                                                    YEARS ENDED
                                                                    DECEMBER 31,
                                                              ------------------------
                                                                 2002          2001
                                                              -----------   ----------
                                                               (IN MILLIONS OF EUROS,
                                                              EXCEPT PER SHARE AMOUNT)
<S>                                                           <C>           <C>
Net income -- basic.........................................   E (44,447)    E (1,172)
  Dilutive effect of
     Shares issuable on conversion of debt..................          33           27
                                                               ---------     --------
  Net income diluted........................................   E (44,414)    E (1,145)
                                                               =========     ========
  Weighted average number of shares outstanding -- basic
     (millions).............................................     1,086.9        980.9
</Table>

                                       F-99
<PAGE>

<Table>
<Caption>
                                                                    YEARS ENDED
                                                                    DECEMBER 31,
                                                              ------------------------
                                                                 2002          2001
                                                              -----------   ----------
                                                               (IN MILLIONS OF EUROS,
                                                              EXCEPT PER SHARE AMOUNT)
<S>                                                           <C>           <C>
  Dilutive effect of
     Shares issuable on conversion of debt..................       114.2         34.6
     Shares issuable on exercise of dilution options........         3.0          4.0
     Shares attributable to stock purchase plans............         1.1          4.4
     Shares applicable to warrants..........................         0.0          1.1
     Shares applicable to put options sold..................        19.9          7.2
                                                               ---------     --------
Weighted average number of shares outstanding -- diluted
  (millions)................................................     1,225.1      1,032.2
                                                               =========     ========
Earning per share -- basic..................................   E  (40.89)    E  (1.19)
Earning per share -- diluted................................   E  (40.89)    E  (1.19)
Earning per share before cumulative effect of change in
  accounting principles, after tax-basis....................   E  (25.19)    E  (1.16)
Earnings per share before cumulative effect of change in
  accounting principles after tax and dilution..............   E  (25.19)    E  (1.16)
</Table>

  GOODWILL AND OTHER INTANGIBLE ASSETS: ADOPTION OF STATEMENT 142

<Table>
<Caption>
                                                                  YEARS ENDED DECEMBER 31,
                                                              ---------------------------------
                                                                 2002        2001        2000
                                                              ----------   ---------   --------
                                                              (IN MILLIONS OF EUROS, EXCEPT PER
                                                                        SHARE AMOUNT)
<S>                                                           <C>          <C>         <C>
Reported US GAAP net income.................................  E (44,447)   E (1,172)   E 1,908
Add back Goodwill amortization..............................         --       1,706        699
                                                              ---------    --------    -------
Adjusted US GAAP net income.................................  E (44,447)   E    534    E 2,607
  Basic earnings per share..................................  E  (40.89)   E   0.54    E  4.43
  Diluted earnings per share................................  E  (40.89)   E   0.54    E  4.13
</Table>

17.3.3 STATEMENT OF COMPREHENSIVE INCOME (LOSS)

     Under US GAAP, the following information would be presented within the
Consolidated Financial Statements as either a separate statement or as a
component within the Consolidated Statement of Shareholders' Equity:

<Table>
<Caption>
                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2002        2001      2000
                                                              ---------   --------   -------
                                                                  (IN MILLIONS OF EUROS)
<S>                                                           <C>         <C>        <C>
US GAAP net income..........................................  E (44,447)  E (1,135)  E 1,908
Other comprehensive income, net of tax:.....................         --
  Foreign currency translation adjustments..................     (3,615)     1,470      (700)
  Unrealized gains (losses) on equity securities............       (560)    (3,438)    3,158
  Unrealized gains on cash flow hedges......................         --         13        --
  Minimum pension liabilities adjustment....................        (19)      (164)       (5)
                                                              ---------   --------   -------
US GAAP comprehensive income................................  E (48,641)  E (3,254)  E 4,361
                                                              =========   ========   =======
</Table>

                                      F-100
<PAGE>

17.3.4 CONSOLIDATED STATEMENT OF INCOME

     Under Rule S-03 of Regulation S-X, revenue and related costs would be
presented within the statement of income as follows:

<Table>
<Caption>
                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2002       2001       2000
                                                              --------   --------   --------
                                                               (FRENCH GAAP, IN BILLIONS OF
                                                                          EUROS)
<S>                                                           <C>        <C>        <C>
Product sales, net..........................................  E  19.3    E  20.8    E   8.8
Service revenues(1).........................................     38.8       36.5       32.7
Other revenues..............................................       --         --        0.1
                                                              -------    -------    -------
  Total revenues............................................  E  58.1    E  57.3    E  41.6
                                                              =======    =======    =======
Cost of products sold.......................................  E (12.7)   E (13.0)   E  (5.4)
Cost of service revenues....................................    (27.8)     (26.5)     (24.7)
Expenses applicable to other revenues.......................       --         --       (0.1)
                                                              -------    -------    -------
  Total costs and expenses applicable to sales and
     revenues...............................................  E (40.5)   E (39.5)   E (30.2)
                                                              =======    =======    =======
</Table>

---------------

(1) Includes excise taxes and contributions collected on behalf of local
    authorities in an amount of E 1.7 billion, E 1.8 billion and E 1.7 billion
    in 2002, 2001 and 2000, respectively.

17.3.5 CONSOLIDATED STATEMENT OF CASH FLOWS

     Reconciliation of Summarized Cash Flow Statement Information to US GAAP

<Table>
<Caption>
                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2002       2001       2000
                                                              --------   --------   --------
                                                                  (IN MILLIONS OF EUROS)
<S>                                                           <C>        <C>        <C>
Net cash provided by operating activities as reported in the
  Consolidated Statement of Cash Flows......................  E  4,670   E  4,500   E  2,514
  Adjustments to conform to US GAAP:
     VE proportionate consolidation adjustment..............      (591)      (449)      (275)
     VE accounted for using the equity method as of July 1,
       2002.................................................      (969)        --         --
     Canal+ consolidated under the equity method until
       December 2000........................................        --         --         (4)
                                                              --------   --------   --------
Net cash provided by operating activities under US GAAP.....  E  3,110   E  4,051   E  2,235
                                                              ========   ========   ========
Net cash provided by (used for) investing activities as
  reported in the Consolidated Statement of Cash Flows......  E    405   E  4,340   E (1,481)
  Adjustments to conform to US GAAP:
     VE proportionate consolidation adjustment..............       850        678        309
     VE accounted for using the equity method as of July 1,
       2002.................................................       190         --         --
     Purchase of treasury shares reclassification...........        --        141      2,456
     Canal+ consolidated under the equity method until
       December 2000........................................        --         --        885
                                                              --------   --------   --------
Net cash provided by investing activities under US GAAP.....  E  1,445   E  5,159   E  2,169
                                                              ========   ========   ========
</Table>

                                      F-101
<PAGE>

<Table>
<Caption>
                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2002       2001       2000
                                                              --------   --------   --------
                                                                  (IN MILLIONS OF EUROS)
<S>                                                           <C>        <C>        <C>
Net cash (used for) financing activities as reported in the
  Consolidated Statement of Cash Flows......................  E (3,792)  E (7,469)  E   (631)
  Adjustments to conform to US GAAP:
     VE proportionate consolidation adjustment..............      (145)      (311)      (202)
     VE accounted for using the equity method as of July 1,
       2002.................................................     1,067         --         --
     Purchase of treasury shares reclassification...........        --       (141)    (2,456)
     Canal+ consolidated under the equity method until
       December 2000........................................        --         --     (1,934)
                                                              --------   --------   --------
Net cash (used for) financing activities under US GAAP......  E (2,870)  E (7,921)  E (5,223)
                                                              ========   ========   ========
</Table>

     Under US GAAP, changes in assets and liabilities, net of effect of
acquisitions and dispositions would be presented within the consolidated
statement of cash flows as follows:

<Table>
<Caption>
                                                                2002       2001
                                                              --------   --------
                                                               (FRENCH GAAP, IN
                                                              MILLIONS OF EUROS)
<S>                                                           <C>        <C>
Inventories and work-in-progress............................   E  0.2     E  0.3
Accounts receivable.........................................     (0.4)      (1.4)
Other assets................................................     (0.8)      (0.6)
                                                               ------     ------
  CHANGE IN ASSETS..........................................   E (1.0)    E (1.7)
                                                               ------     ------
Accounts payable............................................   E (1.8)    E (0.6)
Other liabilities and accrued expenses......................      0.9       (0.8)
                                                               ------     ------
  CHANGE IN LIABILITIES.....................................   E (0.9)    E (1.4)
                                                               ------     ------
  CHANGE IN ASSETS AND LIABILITIES, NET OF EFFECT OF
     ACQUISITIONS AND DISPOSITIONS..........................   E (0.1)    E (0.3)
</Table>

17.4 EMPLOYEE BENEFIT PLANS

     In accordance with the laws and practices of each country in which we
operate, Vivendi Universal participates in, or maintains, employee benefit plans
providing retirement pensions and other post-retirement benefits to eligible
employees, as discussed in Note 1. Disclosures in accordance with SFAS No. 132,
Employers Disclosures about Pensions and Other Postretirement Benefits, are
presented below.

     The following tables pertain to Vivendi Universal's defined benefit and
post-retirement plans principally in the US, the UK, Canada, France, Germany and
Japan, and provide reconciliations of the changes in benefit

                                      F-102
<PAGE>

obligations, fair value of plan assets and funded status for the two-year period
ending December 31, 2001 and 2002:

<Table>
<Caption>
                                                                                POSTRETIREMENT
                                                            PENSION BENEFITS       BENEFITS
                                                           ------------------   ---------------
                                                             2002      2001      2002     2001
                                                           --------   -------   ------   ------
                                                                  (IN MILLIONS OF EUROS)
<S>                                                        <C>        <C>       <C>      <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year..................  E  2,712   E 2,137   E  274   E  187
Service cost.............................................        54       106        2        1
Interest cost............................................       109       146       17       16
Plan participants' contributions.........................         2         8       --       --
Business combinations....................................        19       568       --       53
Disposals................................................    (1,088)     (242)     (65)      (1)
Curtailments.............................................        (2)       (9)      --       (7)
Settlements..............................................      (118)       --       --       --
Transfers................................................        54        --       --       --
Plan modifications.......................................        64        --       --       --
Actuarial loss, net......................................       109        20       38       34
Benefits paid............................................      (139)      (80)     (16)     (12)
Special termination benefits.............................         4         2       --       --
Other (foreign currency transaction).....................      (200)       56      (31)       3
                                                           --------   -------   ------   ------
Benefit obligation at end of year........................  E  1,580   E 2,712   E  219   E  274
                                                           ========   =======   ======   ======
PROJECTED BENEFIT OBLIGATION AT END OF THE YEAR
US companies.............................................       826     1,108      201      257
French companies.........................................        79     1,017       --       --
Other....................................................       675       587       18       17
                                                           --------   -------   ------   ------
                                                           E  1,580   E 2,712   E  219   E  274
                                                           ========   =======   ======   ======
CHANGE IN FAIR VALUE OF PLAN ASSETS
Fair value of plan assets at beginning of year...........     2,049     2,036       --       --
Actual return on plan assets.............................       (85)     (265)      --       --
Employers' contributions.................................        96        44       16       12
Plan participants' contributions.........................         2         8       --       --
Business combinations....................................        14       551       --       --
Disposals................................................      (980)     (315)      --       --
Settlements..............................................      (118)       --       --       --
Transfers................................................        75        --       --       --
Benefits paid............................................      (138)      (64)     (16)     (12)
Other (foreign currency translation).....................      (107)       54       --       --
                                                           --------   -------   ------   ------
Fair value of plan assets at end of year.................  E    808   E 2,049   E   --   E   --
                                                           ========   =======   ======   ======
FAIR VALUE OF PLAN ASSETS AT END OF YEAR
US companies.............................................       369       714       --       --
French companies.........................................        25       942       --       --
Other....................................................       414       393       --       --
                                                           --------   -------   ------   ------
                                                           E    808   E 2,049   E   --   E   --
                                                           ========   =======   ======   ======
</Table>

                                      F-103
<PAGE>

<Table>
<Caption>
                                                                                POSTRETIREMENT
                                                            PENSION BENEFITS       BENEFITS
                                                           ------------------   ---------------
                                                             2002      2001      2002     2001
                                                           --------   -------   ------   ------
                                                                  (IN MILLIONS OF EUROS)
<S>                                                        <C>        <C>       <C>      <C>
FUNDED STATUS
Underfunded obligation...................................      (772)     (663)    (219)    (274)
Unrecognized actuarial (gain) loss.......................       424       480       54       37
Unrecognized prior service benefit.......................        39       (70)      (4)      (4)
Unrecognized net transition asset........................        --       (16)      --       --
Write-off of prepaid on multi-employer scheme
  overtime(1)............................................        --       (38)      --       --
                                                           --------   -------   ------   ------
US GAAP net accrued liability............................  E   (309)  E  (307)  E (169)  E (241)
                                                           ========   =======   ======   ======
</Table>

---------------

(1) Prepaid arising from multi-employer plans overtime (activities under lease
    contract) are written off since it is unlikely that they will be recoverable
    through future contribution holidays.

     The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were E 1,462 million, E 1,383 million and E 660
million, respectively, as of December 31, 2002 and E 1,864 million, E 1,654
million and E 1,008 million, respectively, as of December 31, 2001. These
amounts are shown in detail in the table below:

<Table>
<Caption>
                                                               2002      2001
                                                              -------   -------
                                                               (IN MILLIONS OF
                                                                   EUROS)
<S>                                                           <C>       <C>
U.S. COMPANIES
  Accumulated benefit obligation............................  E   799   E   984
  Projected benefit obligation..............................  E   825   E 1,108
  Plan assets at fair value.................................  E   368   E   714
                                                              -------   -------
UK COMPANIES
  Accumulated benefit obligation............................  E   310   E   216
  Projected benefit obligation..............................  E   336   E   236
  Plan assets at fair value.................................  E   243   E   208
                                                              -------   -------
FRENCH COMPANIES
  Accumulated benefit obligation............................  E    56   E   262
  Projected benefit obligation..............................  E    69   E   318
  Plan assets at fair value.................................  E    10   E    67
                                                              -------   -------
OTHER COMPANIES
  Accumulated benefit obligation............................  E   218   E   192
  Projected benefit obligation..............................  E   232   E   202
  Plan assets at fair value.................................  E    39   E    19
                                                              -------   -------
TOTAL
  Accumulated benefit obligation............................  E 1,383   E 1,654
  Projected benefit obligation..............................  E 1,462   E 1,864
  Plan assets at fair value.................................  E   660   E 1,008
                                                              -------   -------
</Table>

                                      F-104
<PAGE>

     Amounts recognized in the balance sheet at December 31 consist of:

<Table>
<Caption>
                                                                        POSTRETIREMENT
                                                   PENSION BENEFITS        BENEFITS
                                                   -----------------   -----------------
                                                    2002      2001      2002       2001
                                                   -------   -------   ------     ------
                                                          (IN MILLIONS OF EUROS)
<S>                                                <C>       <C>       <C>        <C>
Prepaid benefit cost.............................  E   73    E  240    E   --     E   --
Accrued benefit liability........................    (778)     (810)     (169)      (241)
                                                   ------    ------    ------     ------
US GAAP net accrued liability....................  E (705)   E (570)   E (169)    E (241)
Minimum liability adjustment(1)..................     396       263        --         --
                                                   ------    ------    ------     ------
US GAAP net accrued liability recognized.........  E (309)   E (307)   E (169)    E (241)
                                                   ======    ======    ======     ======
</Table>

---------------

(1) US GAAP requires the recognition of a liability when the accumulated benefit
    obligation exceeds the fair value of plan assets by an amount in excess of
    any accrued or prepaid pension cost reported. The additional liability is
    offset by an intangible asset, up to the amount of any unamortized prior
    service cost and the excess, if any, is recorded as a reduction of
    shareholder's equity, net of tax. US GAAP does not permit the recognition of
    an asset if the fair value of the plan assets exceeds the accumulated
    benefit obligation.

Net accruals in the accompanying consolidated balance sheet can be compared with
the balances determined under US GAAP as follows:

<Table>
<Caption>
                                                                        POSTRETIREMENT
                                                   PENSION BENEFITS        BENEFITS
                                                   -----------------   -----------------
                                                    2002      2001      2002       2001
                                                   -------   -------   ------     ------
                                                          (IN MILLIONS OF EUROS)
<S>                                                <C>       <C>       <C>        <C>
US GAAP net accrued liability....................  E (705)   E (570)   E (169)    E (241)
Excess funding of plans recognized in income only
  when paid back to Vivendi Universal............      (1)       (2)       --         --
Impacts of transition obligation, prior service
  costs and actuarial gains recognized with a
  different timing under local regulations.......      --       (74)       --         (1)
Minimum liability adjustment.....................     396       263        --         --
                                                   ------    ------    ------     ------
French GAAP net accrued liability in consolidated
  financial statements...........................  E (310)   E (383)   E (169)    E (242)
                                                   ======    ======    ======     ======
Accrued..........................................  E (383)   E (623)   E (169)    E (242)
Prepaid..........................................  E   73    E  240    E   --     E   --
</Table>

                                      F-105
<PAGE>

     Net periodic pension cost and other post-retirement benefit costs under US
GAAP for the years ended December 31 2000, 2001 and 2002 include the following
components:

<Table>
<Caption>
                                                                       POST-RETIREMENT
                                               PENSION BENEFITS            BENEFITS
                                            ----------------------   --------------------
                                            2002     2001    2000    2002   2001    2000
                                            -----   ------   -----   ----   ----   ------
                                                       (IN MILLIONS OF EUROS)
<S>                                         <C>     <C>      <C>     <C>    <C>    <C>
Service cost..............................  E  54   E  106   E  56   E  2   E  1   E   --
Expected interest cost....................    109      146      66     17     16        1
Expected return on plan assets............    (83)    (171)    (91)    --     --       --
Amortization of prior service costs.......      4       (8)     (9)    (1)    (1)      --
Amortization of actuarial gains...........     32        7     (12)     1     --       --
Amortization of transition asset..........     --       (5)     (2)    --     --       --
Curtailments/settlements..................     85       (3)     (1)    --     (7)      --
Write-off of prepaid on multi-employer
  scheme overtime.........................      3        7      22     --     --       --
                                            -----   ------   -----   ----   ----   ------
US GAAP net benefit cost..................  E 204   E   79   E  31   E 19   E  9   E    1
                                            =====   ======   =====   ====   ====   ======
</Table>

     Annual cost under French GAAP was E 198 million and E 31 million for the
years ended December 31, 2002 and 2001, respectively. The difference between
these amounts and the annual cost under US GAAP primarily results from the
amortization of the initial transition liability and of actuarial gains and
losses. In addition, certain companies do not recognize the excess funding.

     The weighted-average rates and assumptions utilized in accounting for these
plans for the years ended December 31 2001 and 2002 were:

<Table>
<Caption>
                                                                             POST-
                                                              PENSION     RETIREMENT
                                                             BENEFITS      BENEFITS
                                                            -----------   -----------
                                                            2002   2001   2002   2001
                                                            ----   ----   ----   ----
                                                             (IN MILLIONS OF EUROS)
<S>                                                         <C>    <C>    <C>    <C>
Discount rate.............................................   5,7%   6,3%  6,0%    6,9%
Expected return on plan assets............................   7,2%   7,4%  N/A     6,0%
Rate of compensation increase.............................   3,5%   4,3%  3,7%    3,0%
Expected residual active life (in years)..................  12,5   14,5   16,1   13,0
</Table>

     Expected long-term rates of return for the plan assets have been determined
taking into account, for each country where Vivendi Universal has plan assets,
the structure of the asset portfolio and the expected rates of return for each
of the components. Vivendi Universal mainly has plan assets in the US, the UK
and Canada. In these three countries the expected long-term rates of return for
plan assets were respectively 9% as of December 31, 2002 and 10% as of December
31, 2001 for the US plans, 6.25% as of December 31, 2002 and 6.75% as of
December 31, 2001 for the UK plans and 5% as of December 31, 2002 and 5.75% as
of December 31, 2001 for the Canadian plans.

     For post-retirement benefit measurement purposes, Vivendi Universal assumed
growth in the per capita cost of covered health care benefits (the health care
cost trend rate) would gradually decline from 10% and 12% in the pre-age 65 and
post-age 65 categories, respectively in 2002 to 5.5% and 5.5%, pre-age 65 and
post-age 65, respectively by 2010. In 2002, a one-percentage-point increase in
the annual trend rate would have increased the post-retirement obligation by
E 12 million and the pre-tax expense by E 1 million; conversely, a
one-percentage-point decrease in the annual trend rate would have decreased the
post-retirement benefit obligation by almost E 11 million and the pre-tax
expense by E 1 million.

     Retirement costs of multi-employer plans in France consist of defined
contributions determined in accordance with the French law. Defined
contributions for the French businesses retained at the end of 2002

                                      F-106
<PAGE>

amounted to E 73 million in 2002 compared to E 67 million in 2001 for those same
businesses and were expensed during the year in which they were incurred.

17.5 STOCK BASED COMPENSATION

17.5.1 EMPLOYEE STOCK OPTION PLANS

     Since its creation through the Merger Transactions on December 8, 2000,
Vivendi Universal has adopted several stock options plans under which options
may be granted to employees to purchase Vivendi Universal common shares at not
less than the fair market value of the shares on the date of the grant. For the
most common plans, one third of the outstanding options vest annually at the end
of each of three years from the grant date. Two-thirds of the outstanding
options become exercisable at the beginning of the third year from the grant
date, the remaining one third becomes exercisable at the beginning of the fourth
year from the grant date.

     For one exceptional performance-related plan, the "out-performance" plan
granted on December 8, 2000, outstanding options vest after six years, but can
be accelerated after three years based upon the performance of Vivendi Universal
common stock versus a composite of the MSCI and Stoxx Media Indices. Under all
plans, outstanding options expire eight years from the date of the grant. Under
both French and US GAAP, no compensation expense has been recorded in connection
with these plans.

     Prior to the Merger Transactions, both Vivendi and Canal+ Group had adopted
various stock options plans under which options were granted to employees to
purchase common shares at strike prices below the fair market value of the
shares on the dates of the grants. At Vivendi, the strike prices were discounted
12.5% to 20% below the fair market value of the shares on the dates of the
grants, at Canal+ Group, the discounts were between 0% and 10%. Under these
plans, outstanding options vest over a 3 to 5 year period from the date of the
grant, become exercisable over a 3 to 5 year period from the date of the grant
and expire 7 to 10 years from the date of the grant. On December 8, 2000,
outstanding options under the Canal+ Group options plans were converted to or
replaced by Vivendi Universal stock options plans. On this date, the plans were
modified so that the options vest in the same way than the new options of the
most common plans of Vivendi Universal, described above. Under French GAAP, no
compensation expense has been recorded in connection with these stock options
plans. Under US GAAP the compensation cost recorded in connection with these
plans was E (17.8) million and E 29.9 million for the years ended December 31,
2002 and 2001.

     At the end of June 2002, Veolia Environnement was no longer considered as a
subsidiary of Vivendi Universal under US GAAP, which implied a change of status
of its employees, who are thus no longer considered as employees of Vivendi
Universal. Some of these employees were granted stock-options of Vivendi
Universal during the past three years and part of these options were not vested
at that date. Since no specific clause was included in the rules of the stock
options plans that foresees the terms of a change of status of the grantees, the
stock options were neither cancelled nor modified and vest in the same way than
before the change of status.

     Therefore, the compensation cost for stock options plans on Vivendi
Universal shares held by Veolia Environnement employees has to be remeasured
using the fair value method, until these options are definitively vested. The
compensation cost recorded in connection with these stock options plans for the
year ended December 31, 2002 is non significant before the change in status and
E 0.7 million after the change in status.

     In 2001 and 2002, Vivendi Universal granted stock options to the employees
of companies it acquired in order to replace their existing stock-options plans.
The most important companies are USA Networks, MP3.com and StudioCanal. Under
both French and US GAAP, the fair value of the stock options was recorded in
addition to the purchase price; however some compensation cost will be
recognized under US GAAP for the unvested portion of these options until they
are vested to the grantees. The compensation cost recorded in connection with
these plans was E 20.9 million and nil for the years ended December 31, 2002 and
2001.

                                      F-107
<PAGE>

     Transactions involving the combined stock options of Vivendi Universal and
CANAL+ are summarized as follows:

<Table>
<Caption>
                                                                           EXERCISE PRICE OF
                                                           STOCK OPTIONS     STOCK OPTIONS
                                                            OUTSTANDING       OUTSTANDING
                                                           -------------   -----------------
<S>                                                        <C>             <C>
BALANCE, DECEMBER 31, 1999...............................   25,902,867          E 46,2
Granted..................................................   15,131,761          E 85,7
Exercised................................................   (2,329,062)         E 17,3
Cancelled................................................     (126,216)         E 19,2
                                                            ----------          ------
BALANCE, DECEMBER 31, 2000...............................   38,579,350          E 67,0
Granted..................................................    8,827,226          E 48,9
Exercised................................................   (1,630,306)         E 36,8
Cancelled................................................     (180,315)         E 24,4
                                                            ----------          ------
BALANCE, DECEMBER 31, 2001...............................   45,595,955          E 61,0
Granted..................................................    3,186,392          E 19,2
Adjusted.................................................    1,435,325          E 60,8
Exercised................................................     (176,510)         E 20,2
Cancelled................................................   (1,325,335)         E 56,9
                                                            ----------          ------
BALANCE, DECEMBER 31, 2002...............................   48,715,827          E 58,5
                                                            ==========          ======
</Table>

     On December 8, 2000, 39,999,747 Seagram stock options were converted into
32,061,549 Vivendi Universal stock options on ADS's. Under both French and US
GAAP, no compensation expense has been recorded in connection with the Seagram
stock options plans. Transactions involving the stock options on ADSs are
summarized as follows:

<Table>
<Caption>
                                                                               WEIGHTED
                                                                               AVERAGE
                                                                            EXERCISE PRICE
                                                                                OF ADS
                                                              ADS OPTIONS      OPTIONS
                                                              OUTSTANDING    OUTSTANDING
                                                              -----------   --------------
<S>                                                           <C>           <C>
BALANCE, DECEMBER 8, 2000...................................  32,061,549        $54,1
Granted.....................................................   6,878,697        $67,9
Exercised...................................................    (116,257)       $45,7
Cancelled...................................................     (29,941)       $56,1
                                                              ----------        -----
BALANCE, DECEMBER 31, 2000..................................  38,794,048        $56,6
Granted.....................................................   7,626,536        $55,9
Exercised...................................................  (3,520,575)       $45,4
Cancelled...................................................  (1,204,118)       $72,9
                                                              ----------        -----
BALANCE, DECEMBER 31, 2001..................................  41,695,891        $56,9
Granted.....................................................  10,096,389        $26,5
Adjusted....................................................   1,128,744        $49,6
Exercised...................................................  (1,212,832)       $34,8
Cancelled...................................................  (3,246,871)       $63,7
                                                              ----------        -----
BALANCE, DECEMBER 31, 2002..................................  48,461,321        $49,0
                                                              ==========        =====
</Table>

                                      F-108
<PAGE>

     The following table summarizes information concerning currently outstanding
and vested stock options and options on ADSs:

<Table>
<Caption>
                                                          WEIGHTED
                                                           AVERAGE
                                           WEIGHTED       REMAINING                    WEIGHTED
                            NUMBER         AVERAGE       CONTRACTUAL     NUMBER        AVERAGE
RANGE OF EXERCISE PRICES  OUTSTANDING   EXERCISE PRICE      LIFE         VESTED     EXERCISE PRICE
------------------------  -----------   --------------   -----------   ----------   --------------
<S>                       <C>           <C>              <C>           <C>          <C>
Stock options in euros
Under E 20..............   4,871,516        E 15.8          4.63        2,420,516      E 19.6
E 20 - E 30.............   1,815,018        E 25.5          1.38        1,815,018      E 25.5
E 30 - E 40.............   2,582,226        E 34.1          3.45        2,091,776      E 33.4
E 40 - E 50.............  12,358,814        E 47.5          5.41        6,788,798      E 48.0
E 50 - E 60.............     883,291        E 56.2          6.70          233,877      E 57.6
E 60 - E 70.............   5,452,883        E 62.3          4.52         5,451505      E 62.3
E 70 - E 80.............  14,918,511        E 74.3          5.32       11,829,602      E 73.8
E 80 and more...........   5,833,568        E 94.6          5.65        3,850,155      E 94.6
                          ----------        ------          ----       ----------       -----
                          48,715,827        E 58.5          5.00       34,481,247      E 60.3
                          ==========        ======          ====       ==========       =====
Stock options on ADS's
  in US dollars
Under $20...............   4,261,870         $15.8          7.79        2,418,557       $16.6
</Table>

<Table>
<Caption>
                                                       WEIGHTED
                                           WEIGHTED     AVERAGE
                                           AVERAGE     REMAINING                    WEIGHTED
                               NUMBER      EXERCISE   CONTRACTUAL     NUMBER        AVERAGE
RANGE OF EXERCISE PRICES     OUTSTANDING    PRICE        LIFE         VESTED     EXERCISE PRICE
------------------------     -----------   --------   -----------   ----------   --------------
<S>                          <C>           <C>        <C>           <C>          <C>
$20 - $30..................   3,327,980     $ 23.7       7.96        2,838,375       $ 23.2
$30 - $40..................   5,147,935     $ 35.2       2.40        4,617,155       $ 35.3
$40 - $50..................  17,423,065     $ 44.1       5.43       10,428,106       $ 44.5
$50 - $60..................   3,457,511     $ 57.6       5.73        3,243,688       $ 58.0
$60 - $70..................   7,486,958     $ 65.7       5.86        5,649,250       $ 65.9
$70 - $80..................   7,125,806     $ 73.8       7.02        7,125,806       $ 73.8
Over $80...................     230,196     $268.7       6.95          230,196       $268.7
                             ----------     ------       ----       ----------       ------
                             48,461,321     $ 49.0       5.82       36,551,133       $ 51.5
                             ==========     ======       ====       ==========       ======
</Table>

     At December 31, 2002, 34,481,247 stock options and 36,551,133 stock options
on ADS's were exercisable at weighted average exercise prices of E 60.3 and
US$51.5, respectively. The options outstanding at December 31, 2002 expire in
various years through 2010.

     The weighted -- average grant-date fair value of options granted during the
year was E 13.49 in 2002, E 23.51 in 2001 and E 32.76 in 2000.

     The fair value of Vivendi Universal options grants is estimated on the date
of grant using the Binomial Option Pricing Model with the following assumptions
for the grants:

<Table>
<Caption>
                                                                 DECEMBER 31,
                                                              ------------------
                                                              2002   2001   2000
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
Expected life (years).......................................   5.5    6.3    7.9
Interest rate...............................................   5.0%   4.9%   4.8%
Volatility..................................................  60.0%  35.0%  35.0%
Dividend yield..............................................     0%     1%     1%
</Table>

                                      F-109
<PAGE>

     In addition to the Vivendi Universal corporate plans described above,
several consolidated subsidiaries maintained stock-based plans for their
employees which are denominated in the subsidiary's stock. However, these plans
are insignificant.

     Under US GAAP, the total compensation cost recorded in connection with
employee stock options plans was E 4 million at December 31, 2002.

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                               2002     2001    2000
                                                              ------   ------   -----
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>      <C>      <C>
Vivendi Universal and Canal+ Group's plan prior to the
  merger of December 8, 2000................................  (17.8)    29.9     8.6
Vivendi Environment's plan..................................    0.7      1.0     1.3
</Table>

17.5.2 EMPLOYEE STOCK PURCHASE PLANS

     Vivendi Universal maintains savings plans that allow substantially all full
time non-US employees of Vivendi Universal and its subsidiaries to purchase
shares of Vivendi Universal. The shares are sold to employees at a 15% discount
from the lower of the average market price of Vivendi Universal shares over the
last 20 business days prior to the date of authorization by the Board of
Directors and the market price on the date of authorization by the Board of
Directors. Shares purchased by employees under these plans are subject to
certain restrictions over their sale or transfer. The compensation cost recorded
in connection with these plans was E 4.4 million, E 1 million and E 86 million,
respectively, for the years ended December 31, 2002, 2001 and 2000.

     Vivendi Universal maintains a leveraged stock purchase plan named Pegasus,
which is available exclusively to the employees of non-French subsidiaries. At
the end of a five-year period, the employees are given assurance that they will
receive the maximum amount of either their personal contribution plus 6 times
the performance of the Vivendi Universal share or their personal contribution
plus interest of 5% per year compounded annually. The risk carried by Vivendi
Universal is hedged through a trustee based in Jersey by Societe Generale. The
compensation cost recorded in connection with Pegasus was E 59.6 million and
E 17 million and E 10 million, respectively, for the years ended December 31,
2002, 2001 and 2000.

     Shares sold to employee stock purchase plans are as follows:

<Table>
<Caption>
                                                                DECEMBER 31,
                                                      ---------------------------------
                                                        2002        2001        2000
                                                      ---------   ---------   ---------
<S>                                                   <C>         <C>         <C>
Number of shares....................................  2,402,142   2,604,670   8,937,889
Proceeds on sales (in millions of euros)............         25         133         555
Average cost if treasury stock sales (in euros).....         10          51          62
</Table>

     Under US GAAP, the total compensation cost recorded in connection with
employee stock purchase plans was E 64 million, E 18 million and E 96 million,
respectively, for the years ended December 31, 2002, 2001 and 2000.

17.6 RESTRUCTURING COSTS

     Under US GAAP, the requirements for recording a reserve for restructuring
include the development of a formal plan, specific identification of operations
and activities to be restructured, approval and commitment of management and
notification to the employees to be terminated. Additionally, restructuring
reserves may only be recorded if the related costs are not associated with or do
not benefit continuing activities of Vivendi Universal and if the plan is
expected to be largely completed within one year of initiation and no
significant

                                      F-110
<PAGE>

changes to the plan are likely. The reconciliation between the French and US
GAAP provision for restructuring is as follows:

<Table>
<Caption>
                                                                DECEMBER 31,
                                                              ----------------
                                                               2002     2001
                                                              ------   -------
                                                              (IN MILLIONS OF
                                                                   EUROS)
<S>                                                           <C>      <C>
French GAAP provision for restructuring:
  Reorganization and restructuring costs(1).................  E  57    E  314
  Accrual for exit activities related to Seagram
     acquisition(2).........................................     56       300
  Other(3)..................................................     --        18
                                                              -----    ------
                                                                113       632
  Adjustments to conform to US GAAP(4)......................     --      (157)
                                                              -----    ------
  US GAAP provision for restructuring.......................  E 113    E  475
                                                              =====    ======
</Table>

---------------

(1) Recorded in provisions and allowances in the consolidated balance sheet (see
    Note 6).

(2) Recorded in other non-current liabilities and accrued expenses in the
    consolidated balance sheet (see Note 10).

(3) Relates to Vivendi Universal Publishing's interactive games operations.
    Recorded in accounts payable in the consolidated balance sheet.

(4) As of December 31, 2001 primarily relates to accruals and reorganization
    costs at Veolia Environnement, which qualify as restructuring costs under
    French GAAP but not under US GAAP (E 120 million at December 31, 2001).
    Certain of the accruals qualified as probable and estimable liabilities
    under SFAS No. 5, Accounting for Contingencies, thus the adjustment is only
    a reclassification with no impact on net income or shareholders' equity.
    Other accruals, recorded in prior years, did not comply with the provisions
    of Issues Task Force (EITF) 94-3, Liability Recognition for Certain Employee
    Termination Benefits and Other Costs to Exit an Activity (including Certain
    Costs Incurred in a Restructuring) and as such their reversal resulted in a
    net income/shareholders' equity adjustment.

     In connection with the Merger Transactions and the integration of several
other significant acquisitions, as discussed in Note 3, Vivendi Universal's
management developed and committed to a variety of formal restructuring programs
that were communicated to employees. The restructuring programs impacted several
business segments and primarily related to the consolidation of facilities and
related reductions in employee headcount. Costs incurred, include amounts
associated with employee termination and early retirement programs, asset
divestitures and costs associated with lease and other contract terminations.
These plans are generally completed within one year of initiation.

     In addition to restructuring programs initiated by Vivendi Universal,
certain of the acquired businesses had initiated and were executing their own
restructuring programs at the time of acquisition. Vivendi Universal evaluated
these programs at the time of acquisition to determine whether they were
consistent with the integration strategy. If consistent, restructuring reserves
were established through purchase accounting and

                                      F-111
<PAGE>

are reflected as "Changes in scope of consolidation and purchase accounting
adjustments" in the following summary of reserves for restructuring:

<Table>
<Caption>
                                                                                         HOLDING,                      TOTAL
                                                                                        CORPORATE       VEOLIA        VIVENDI
                                 MUSIC   PUBLISHING   TV & FILM   TELECOMS   INTERNET   & NON-CORE   ENVIRONNEMENT   UNIVERSAL
                                 -----   ----------   ---------   --------   --------   ----------   -------------   ---------
                                                                     (EN MILLIONS D'EUROS)
<S>                              <C>     <C>          <C>         <C>        <C>        <C>          <C>             <C>
EMPLOYEE TERMINATION RESERVES
Balance at December 31, 1999...  E  --     E  27        E  --      E  --      E  --       E  43          E  52        E  122
  Changes in scope of
    consolidation and purchase
    accounting adjustments.....     --        (4)          --         --         --         (39)            --           (43)
  Additions charged to
    income.....................     --        64           --         --         --          --             --            64
  Utilization..................     --       (10)          --         --         --          (3)           (17)          (30)
  Reversals....................     --        (4)          --         --         --          --             --            (4)
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2000...     --        73           --         --         --           1             35           109
Acquisition of Seagram.........      5        --           --         --         --         118             --           123
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2000...      5        73           --         --         --         119             35           232
  Changes in scope of
    consolidation and purchase
    accounting adjustments.....     --        (5)          --         --         --          --             24            19
  Additions charged to
    income.....................     --        42           --         --         19          --             18            79
  Utilization..................     (5)      (65)          --         --        (12)        (49)           (35)         (166)
  Reversals....................     --        (2)          --         --         --          --             --            (2)
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2001...  E  --     E  43        E  --      E  --      E   7       E  70          E  42        E  162
                                 =====     =====        =====      =====      =====       =====          =====        ======
  Changes in scope of
    consolidation and purchase
    accounting adjustments.....     --        11           --         --         (1)         --            (28)          (18)
  Additions charged to
    income.....................     --         4           --         --         56          --             21            81
  Utilization..................     --       (44)          --         --        (33)        (70)           (35)         (182)
  Reversals....................     --       (10)          --         --         (7)         --             --           (17)
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2002...  E  --     E   4        E  --      E  --      E  22       E  --          E  --        E   26
                                 =====     =====        =====      =====      =====       =====          =====        ======
OTHER RESTRUCTURING RESERVES
Balance at December 31, 1999...  E  --     E   5        E  --      E  19      E  --       E  --          E  75        E   99
  Changes in scope of
    consolidation and purchase
    accounting adjustments.....     --        --           20          5         --          --             17            42
  Additions charged to
    income.....................     --        12           --         --         --          --             --            12
  Utilization..................     --        (3)          --        (11)        --          --            (43)          (57)
  Reversals....................     --        (1)          --         (4)        --          --             --            (5)
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2000...     --        13           20          9         --          --             49            91
Acquisition of Seagram.........    140        --           51         --         --          86             --           277
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2000...    140        13           71          9         --          86             49           368
  Changes in scope of
    consolidation..............     --        --           --         --         --          --             --            --
    and purchase accounting
      adjustments..............     --         4          (20)        --         --          --              2           (14)
  Additions charged to
    income.....................     --        33           24         --         18          --              9            84
  Utilization..................    (23)      (22)         (31)        (9)       (11)         --            (24)         (120)
  Reversals....................     --        (5)          --         --         --          --             --            (5)
                                 -----     -----        -----      -----      -----       -----          -----        ------
</Table>

                                      F-112
<PAGE>

<Table>
<Caption>
                                                                                         HOLDING,                      TOTAL
                                                                                        CORPORATE       VEOLIA        VIVENDI
                                 MUSIC   PUBLISHING   TV & FILM   TELECOMS   INTERNET   & NON-CORE   ENVIRONNEMENT   UNIVERSAL
                                 -----   ----------   ---------   --------   --------   ----------   -------------   ---------
                                                                     (EN MILLIONS D'EUROS)
<S>                              <C>     <C>          <C>         <C>        <C>        <C>          <C>             <C>
Balance at December 31, 2001...    117        23           44         --          7          86             36           313
  Changes in scope of
    consolidation and purchase
    accounting adjustments.....     --        (8)          79         --          2          --            (34)           39
  Additions charged to
    income.....................     --        --           (8)        --         18          --             20            30
  Utilization..................   (117)       (9)         (54)        --         (8)        (26)           (21)         (235)
  Reversals....................     --        (3)         (48)        --         (8)         --             (1)          (60)
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2002...  E  --     E   3        E  13      E  --      E  11       E  60          E  --        E   87
                                 =====     =====        =====      =====      =====       =====          =====        ======
TOTAL RESTRUCTURING RESERVES
  Balance at December 31,
    2002.......................  E  --     E   7        E  13      E  --      E  33       E  60          E  --        E  113
                                 -----     -----        -----      -----      -----       -----          -----        ------
</Table>

  SEAGRAM ACQUISITION

     In connection with the acquisition and integration of Seagram, Vivendi
Universal management developed a formal exit activity plan that was committed to
by management and communicated to employees at the time the merger was
consummated. The E 400 million accrual for exit activities consists principally
of relocation and severance costs, facility elimination costs, including
leasehold termination payments and incremental facility closure costs and
contract terminations, related to the acquired companies. In 2002 and 2001, cash
payments made on the settlement of exit activities approximated E 244 million.

  MUSIC

     Employee termination reserves of E 5 million and other restructuring
reserves of E 140 million were established as part of the accrual for exit
activities related to the Seagram acquisition as discussed above. At December
31, 2001, all of the employee termination reserves and E 23 million of the other
restructuring reserves had been utilized. In 2002, the remaining part of the
latter has been utilized.

  PUBLISHING

     Prior to their acquisitions in 1998 by Vivendi Universal, Havas and Grupo
Anaya had initiated and were executing their own restructuring programs,
primarily focused on headcount reduction. Vivendi Universal evaluated these
programs and determined they were consistent with their integration strategy and
thus E 48 million of employee termination reserves were established through
purchase accounting and were reflected as "Changes in scope of consolidation and
purchase accounting adjustments". Concurrent with the acquisitions, Vivendi
Universal determined that certain sales and administrative offices were
redundant. This resulted in the establishment of E 11 million in termination
reserves related to approximately 240 employees of Grupo Anaya (12 management
employees and 228 sales and administrative employees) and E 5 million in
termination reserves to reduce the administrative headcount at Havas. In
addition to the reserves for acquired companies, E 10 million of restructuring
reserves were established related to historical subsidiaries. During 1998, E 35
million of the reserves discussed above were utilized and E 1 million were
reversed, resulting in a E 38 million employee termination reserve at December
31, 1998.

     In connection with the acquisition of Medi-Media in 1999, E 15 million of
employee termination reserves and E 7 million of other restructuring reserves
related to the closure and disposal of several operating facilities were
established through purchase accounting and were reflected as "Changes in scope
of consolidation and purchase accounting adjustments". As part of the
integration, a restructuring plan was implemented to terminate approximately 40
employees. In addition to reserves established due to changes in the scope of
consolidation, E 18 million of additional employee termination reserves were
charged to income in 1999, E 1 million of employee termination reserves were
reversed and E 45 million of reserves were utilized, including E 43 million of
employee termination reserves and E 2 million of other restructuring reserves.

                                      F-113
<PAGE>

     During 2000, several divisions within the Publishing business initiated
restructuring plans. The games division implemented a down sizing plan,
reorganization of shared services and a reallocation of business. These plans
resulted in the accrual of E 24 million of employee termination reserves for
approximately 570 employees and E 6 million of other restructuring reserves. The
education division implemented several restructuring plans, including the
downsizing of the French structure, the reorganization of the supply chain in
Brazil and Spain and the closure of a site in Belgium. These plans generated
restructuring reserves totaling E 22 million, including E 18 million allocated
to the termination of approximately 210 employees. The information division
implemented a reorganization of its back office department, primarily through
mutualization and reallocation of services. Restructuring reserves for this plan
totaled E 14 million, resulting in the termination of approximately 220
employees. The services department decided to close down a logistic site,
resulting in an employee termination reserve of E 7 million for 117 employees
and other facility closure reserves of E 1 million. Headquarters also initiated
a restructuring plan that will lead to the termination of 17 employees. The
reserve for this plan totaled E 2 million.

     During 2001, changes in the scope of consolidation and purchase accounting
adjustments at VUP reduced reserves for restructuring by E 1 million, primarily
due to the disposal of France Loisirs. Additional restructuring reserves of E 8
million at Grupo Anaya were recorded due to a change in local legislation, which
increased employee termination costs. Under this plan, 37 employees were
terminated in 2001 at a cost of E 3 million. At the games division restructuring
programs related to logistic reorganization and centralization of shared
services continued throughout the year, resulting in the termination of 887
employees for E 18 million and the utilization of other restructuring reserves
for E 27 million. Additional reserves of E 33 million were recorded for the
closure and downsizing of two studios, including E 13 million for the
termination of 337 employees. At the education division, approximately 100
employees were terminated in 2001 related to the downsizing of corporate
functions and reorganization of logistics in France, Belgium, Brazil and the US
for E 12 million. Additional reserves of E 15 million were recorded in order to
complete the plan. At the information division restructuring reserves of E 6
million were utilized in connection with the centralization of Comareg's
headquarters in Lyon. Additional reserves of E 10 million were recorded for a
new plan initiated for the merger of the consumer press titles. The
restructuring program for the centralization of shared services at the B2B
division was abandoned generating a E 6 million reversal of reserves. The
services division have implemented a new plan to close a logistic site at a cost
of E 8 million, E 5 million of which relate to employee termination reserves for
63 employees. The health division completed the closure of its London
headquarters and other administrative reorganization plans, utilizing E 21
million in employee termination and other restructuring reserves.

     During 2002, most of Vivendi Universal Publishing assets were sold. The
remaining provision for restructuring are mainly related to Games (E 3 million)
and the Express-Expansion group which was sold in February 2003 (E 2 million).

  TV & FILM

     Other restructuring reserves of E 51 million were established as part of
the accrual for exit activities related to the Seagram acquisition discussed
above, of which E 22 million had been utilized by December 31, 2001. The
remaining part of the latter has been utilized in 2002. Additional other
restructuring reserves of E 24 million were established in 2001 by Canal+
Horizons, a subsidiary of Canal+ Group. Of the total, approximately E 9 million
related to their withdrawal from Maghreb and the Middle East (primarily contract
termination fees), of which E 1 million had been utilized by December 31, 2001.
The remaining E 15 million related to antenna restructuring, of which E 8
million in contract termination fees were paid to American Studios in 2001. The
E 20 million restructuring reserve related to the operations of Canal+ Group,
which was established as a result of the Merger Transactions in 2001, was
reclassified to operating liabilities. As at the beginning of 2002, following
purchase of Wizja TV platform to UPC, Canal+ Group's stake in TKP increased
which led to change the consolidation method from Equity Method to Full
integration. This change was responsible for scope entry in the restructuring
provision amounting to E 92.9 million in the consolidated balance-sheet
corresponding to the restructuring of this new platform. The decrease of the
provision during 2002 amounted to E 70.1 million. The currency translation
adjustment amounted to E 13.4 million. It reduced

                                      F-114
<PAGE>

therefore the global provision at end of December 2002 to E 9.4 million. By the
end of the period this provision can be detailed as follows: closing of the
British subsidiary amount to E 2.6 million, change of subscribers cards and
loading new software to Wizja decoders to make them ready to work on one
encryption system (E 2.5 million), administrative issues: down-sizing of offices
(E 2.3 million), technical issues amount to E 1.7 million and correspond to
secure encryption systems and set up software for interactive services.

  TELECOMS

     In December 1997, SFR decided to discontinue mobile telephone service
operations utilizing analog technology. In connection with this decision, a
reserve of approximately E 59 million was established related to the phasing out
of the subscriber base and associated technology. The program was essentially
completed by December 31, 2000. The remaining reserves of E 9 million related to
other technological changes accrued during previous years, all of which were
utilized in 2001.

  INTERNET

     As the result of the general dotcom slowdown, Vivendi Universal's Internet
business has made significant changes to its business strategy. In 2001, this
resulted in restructuring programs involving employee reduction and other costs
associated with the reorganization and reallocation of business. In the US,
Flipside finalized a restructuring plan in connection with the acquisition of
Uproar. The total costs of the plan amount to approximately E 15 million,
comprised of E 9 million in severance and employee termination costs and E 6
million in facility exits costs, including assets writedowns, lease terminations
and other exit costs. Additionally, the consolidation of all US Web properties
into a single entity called Vivendi Universal Net USA has resulted in a
restructuring plan in 2001. Costs associated with this plan are expected to
total E 4 million, 95% of which relate to facility and other exit costs. In
Europe, restructuring of education and entertainment activities, horizontal
portals and support and services activities are expected to cost E18 million, of
which employee termination costs account for E 10 million and other
restructuring costs for E 8 million.

     Further to Group refocusing strategy implemented in the mid-2002, the
restructuring process started in 2001 has been accelerated with a comprehensive
plan to either reclassify certain units into other group divisions, or to
dispose off others or to shut down those with no foreseeable earning potential.
The Net loss for year was therefore impacted by this restructuring program
including employee termination, and other exit costs for a total amount of
E 59,2 million.

     In Europe, Scoot's was shut down and this resulted in an E 16,7 million
cost on the year including both employee termination costs and other exit costs
such as contract's termination with various suppliers. Vivendi Universal Net
holding incorporated a E 16,8 million provision as of December 31st connected
with the holding closing process and the risk or costs with other subsidiaries
foreseeable close down.

     In the US, Get Music was shut down and long term liabilities related to
lease agreements were reserved for a total amount of E 8,4 million. Vivendi
Universal Net USA holding company was downsized resulting in E 9,3 million
severance payments to employees.

  HOLDING, CORPORATE & NON-CORE

     Employee termination reserves of E 118 million and other restructuring
reserves of E 86 million were established as part of the accrual for exit
activities related to the Seagram acquisition as discussed above. At December
31, 2002, the total of the employee termination reserves and E 30 million of the
other restructuring reserves had been utilized.

     Vivendi Universal's withdrawal from its non-core businesses, primarily
construction and real estate, has been an ongoing process over the past few
years. All of the restructuring reserves related to non-core businesses consist
of severance and employee termination costs related to headcount reductions.
During 1996, 1997 and 1998, employee termination reserves totaling E 174 million
were recorded in connection with the termination of 5,611 employees in
construction operations (936 management employees and 4,675 construction
employees) and reserves of E 11 million were recorded in connection with real
estate operations. During

                                      F-115
<PAGE>

the same period, E 132 million of the reserves for construction operations were
utilized and 4,263 employees were terminated (801 management employees and 3,462
construction employees). The remaining 1,348 employees, for whom there was a
reserve of E 42 million at December 31, 1998, were terminated in 1999.
Utilization of the real estate operations reserve was E 1 million during the
period, leaving a balance of E 10 million at December 31, 1998.

     During 1999, as a result of a general decline in the demand for
construction in markets serviced by its German subsidiaries, Vivendi Universal
established a new restructuring plan. Additionally, Vivendi Universal
implemented restructuring plans in its civil engineering entities to adapt them
to new technology, including digital technology related to electrical
contracting. These plans resulted in the accrual of a E 44 million reserve in
connection with the termination of 1,460 employees in construction operations
(277 management employees and 1,183 workers), of which E 9 million was utilized
during the year and 288 employees terminated (49 management employees and 239
construction employees). Also during 1999, additional reserves of E 6 million
were recorded for real estate operations, E 6 million were utilized and a
reduction of E 2 million was recorded due to changes in the scope of
consolidation.

     During 2000, the employee termination reserves related to non-core
construction and real estate businesses were reduced to E 1 million primarily
due to the disposal of Vinci. These were utilized in 2001.

  ENVIRONMENTAL SERVICES

     Over the past few years, our former Environmental Services business has
engaged in several plans to restructure its activities, particularly to
rationalize its regional organization. The E 13 million employee termination
reserve at December 31, 1998, primarily related to a restructuring plan,
implemented during 1997, to rationalize the energy division formed through the
merger of Compagnie Generale de Chauffe and EsysMontenay. This plan resulted in
a workforce reduction of 1,271 employees, approximately 10% of which were
executives and was completed in 2000. The E 25 million other restructuring
reserve at December 31, 1998, primarily comprised of lease termination costs and
other costs to exit facilities related to a three-year restructuring plan
associated with the water businesses in France. This plan, also implemented
during 1997, resulted in the closure of approximately 20 regional agencies and
200 local units and was completed in 2000.

     Concurrently with the acquisition of US Filter in April 1999, our
Environmental Services business designed and implemented a restructuring plan to
streamline its manufacturing and production base, redesign its distribution
network, improve its efficiency and enhance its competitiveness. The
restructuring plan focused on two primary activities: (i) the combination of
certain US Filter operating groups outside the United States with OTV and (ii)
the combination and restructuring of the remaining US Filter entities, primarily
in North America, with the operations of PSG, a subsidiary of Aqua Alliance.
These restructuring plans identified certain manufacturing facilities,
distribution sites, sales and administration offices and related assets that
became redundant or non-strategic upon consummation of the transaction. The
original costs associated with these plans totaled E 109 million. Of the total,
E 63 million related to the combination with OTV, consisting of E 45 million in
severance and employee termination costs and E 18 million in facility exit
costs. The remaining E 46 million related to the North American combination,
consisting of E 9 million in severance and employee termination costs and E 37
million in facility exit costs. Facility exit costs include lease termination
costs, relocation costs and other exit costs. These costs are reflected in
"Changes in scope of consolidation and purchase accounting adjustments' in 1999
and were included in the purchase price allocation for US Filter.

     The combination of US Filter International with OTV, to create Vivendi
Water Systems, was achieved through several restructuring plans, the most
significant of which was in Benelux. This plan involved the closure or sale of
three facilities and the significant down-sizing of a fourth and will result in
the severance of 221 employees (including 23 executive employees) for a total
amount of E 29 million. This plan is expected to extend until the beginning of
2002 due to significant legal constraints requiring long termination periods. No
employee had been terminated as of December 31, 2000. During 2001, 17 employees
(including 8 executives) were terminated for a total cost of approximately E 13
million. Facility exit costs associated with this plan originally amounted to
E 2 million, however, additional reserves of E 7 million were recorded in 2000
as adjustments to the cost of US Filter International. They are reflected in
"Changes in scope of consolidation

                                      F-116
<PAGE>

and purchase accounting adjustments" and had no impact on net income for the
period. During 2001, E 1 million of these reserves were utilized.

     Plans related to the other locations involved severance costs of E 16
million in connection with the termination of approximately 147 employees and
E 16 million in facility exit costs. During 1999, employee termination costs of
E 10 million were utilized in the termination of 81 employees and facility exit
costs of E 10 million were utilized. During 2000, employee termination costs of
E 4 million were utilized in the termination of 36 employees and the remaining
E 6 million of facility exit costs were also utilized. The remaining employees'
termination reserve of E 2 million was utilized in 2001 with the termination of
5 senior executives included in a total of approximately 30 terminated
employees.

     In the North American restructuring plan, the E 9 million in severance and
employee termination costs related to a reduction in the combined workforce of
443 employees (66 management employees, 111 administrative employees, 234
manufacturing employees and 32 sales employees). The E 37 million of facility
exit costs, consisted of lease termination costs of E 20 million and other
related charges of E 17 million (primarily pension termination accruals). The
restructuring plan involved the closure of four manufacturing facilities in US
Filter's water and wastewater group. Within US Filter's consumer group, the plan
identified the closure of one manufacturing facility, one distribution facility
and numerous company-owned dealerships. In addition, the plan identified two
additional manufacturing sites and several distribution centers for the
remaining US Filter operating groups. During 1999, E 12 million of reserves were
utilized, including E 2 million in severance payments in connection with the
termination of approximately 141 employees. Also in 1999, E 13 million of
preexisting PSG accruals were added to the North American restructuring plan.
They are reflected in "Additions charged to income" as they were recorded by PSG
in their 1999 statement of income. To complete the North American restructuring
plan, additional reserves of E 11 million, including E 4 million of lease
termination costs and E 7 million of other related charges, were recorded in
2000 as adjustments to the cost of US Filter International. They are reflected
in "Changes in scope of consolidation and purchase accounting adjustments" and
had no impact on net income for the period. All additions through "Changes in
scope of consolidation and purchase accounting adjustments" in 2000 result from
the revision of the calculation of liabilities recorded as of December 31, 1999,
which was performed in the first quarter of 2000. No new actions were identified
that would result in additional liabilities. During 2000, E 17 million of
reserves were utilized, including E 6 million in severance payments in
connection with the termination of approximately 250 employees, leaving E 41
million unutilized at December 31, 2000. In 2001, E 23 million of reserves were
utilized, including the remaining E 1 million in severance payments in
connection with the termination of 52 employees. As of December 31, 2001, E 18
million of the original reserves remained, consisting primarily of lease
terminations with extended payment terms and pension termination benefits that
will be paid to participants upon settlement of the related plans. Additionally,
due to the continued decline in North America, US Filter initiated a new
restructuring program in 2001 to reduce headcount and consolidate its
manufacturing capacity. Under this program, restructuring reserves of E 18
million were established in connection with the termination of 696 employees,
including 264 professionals. During 2001, E 4 million of the reserves were
utilized and 142 employees were terminated. Five surface preparation regional
headquarters have been combined into two service centers and five manufactory
facilities and an after-market facility have been closed. Also in response to
the business conditions certain regeneration plants were identified for closure
and the company exited the copper etchant recovery business. At December 31,
2001, E 14 million of the new reserves remained unutilized.

     In connection with the acquisitions of Apa Nova Bucuresti and the
ex-services division of EDF in 2001, restructuring reserves were established
through purchase accounting and were reflected as "Changes in scope of
consolidation and purchase accounting adjustments". As part of the integration
of Apa Nova Bucuresti, a restructuring plan was implemented to terminate
approximately 1,700 employees, of which 85 were professionals. Employee
termination reserves of E 19 million were established, primarily related to
severance, of which E 12 million was utilized in connection with the termination
of 1,200 employees in 2001. As part of the integration of the ex-services
division of EDF with their existing operations, Dalkia implemented a
restructuring plan to terminate 80 employees, of which 42 were professionals.
Employee termination reserves of approximately E 5 million were established,
none of which was unutilized in 2001.

                                      F-117
<PAGE>

     In addition to these plans related to acquired companies, our Environmental
Services business implemented less significant restructuring measures in its
historical subsidiaries. In 2001, Onyx, as part of a program to reduce their
overhead costs, implemented a reorganization of their IT (information
technology) services. Restructuring reserves of approximately E 7 million were
established, including E 1 million in severance payments, none of which was
utilized in 2001. In 1999, an E 11 million reserve, consisting of E 6 million in
connection with the closing of Aqua Alliance's headquarters and E 5 million in
connection with the consolidation of facilities in subsidiaries of OTV was
recorded. The reserve, which was related to lease terminations and asset
disposals, was utilized in 2000.

     Following the disposals which occurred in the 2002 financial year, Vivendi
Universal is accounted for using the equity method as at December 31, 2002.
Thus, at that date, restructuring reserves recorded by this subsidiary have been
deconsolidated.

17.7 FILM AND TELEVISION COSTS

<Table>
<Caption>
                                              DECEMBER 31, 2002            DECEMBER 31, 2001
                                          --------------------------   --------------------------
                                            VUE     CANAL+    TOTAL      VUE     CANAL+    TOTAL
                                          -------   ------   -------   -------   ------   -------
                                                          (IN MILLIONS OF EUROS)
<S>                                       <C>       <C>      <C>       <C>       <C>      <C>
Theatrical film costs:
  Released, less amortization...........  E 1,085   E 350    E 1,435   E 1,376   E 624    E 2,000
  Completed, not released...............        5       8         13        31       8         39
  In production.........................      583      62        645       343       8        351
  In development........................       17      --         17        22      --         22
                                          -------   -----    -------   -------   -----    -------
                                          E 1,690   E 420    E 2,110   E 1,772   E 640    E 2,412
                                          =======   =====    =======   =======   =====    =======
Television costs:
  Released, less amortization...........      483      24        507       300      22        322
  Completed, not released...............       32      --         32         5      --          5
  In production.........................       77      26        103        33      31         64
  In development........................        2      --          2        --      --         --
                                          -------   -----    -------   -------   -----    -------
                                              594      50        644       338      53        391
                                          =======   =====    =======   =======   =====    =======
Program costs, less amortization:
  Current...............................      241      --        241        --      --         --
  Non current...........................      303      --        303        --      --         --
                                          -------   -----    -------   -------   -----    -------
                                              544      --        544        --      --         --
                                          =======   =====    =======   =======   =====    =======
Total...................................    2,828     470      3,298     2,110     693      2,803
Less current portion....................      241      --        241        --      --         --
                                          -------   -----    -------   -------   -----    -------
Film costs, net of amortization.........  E 2,587   E 470    E 3,057   E 2,110   E 693    E 2,803
                                          =======   =====    =======   =======   =====    =======
</Table>

     At VUE, based on management's total gross revenue estimates as of December
31, 2002, approximately 59% of completed and unamortized film and television
costs (excluding amounts allocated to acquired libraries) are expected to be
amortized during 2003, and approximately 92% by December 31, 2005. Amortization
of acquired film libraries in 2002 and 2001 was E 43 million and E 45 million,
respectively. As of December 31, 2002, the Company estimated that approximately,
E 619 million of accrued participation and residual liabilities will be payable
in 2003".

     At Canal+, based on management's total gross revenue estimates as of
December 31, 2002, approximately 41% of completed and unamortized film and
television costs (excluding amounts allocated to acquired libraries) are
expected to be amortized during 2003, and approximately 72% by December 31,
2005. An amortization level of 80% will be reached by December 2006.
Amortization of acquired film libraries in 2002

                                      F-118
<PAGE>

and 2001 was E 31 million and E 40 million, respectively. As of December 31,
2002, the Company estimated that approximately, E 54 million of accrued
participation and residual liabilities will be payable in 2003.

17.8 SFAS 142

     Vivendi Universal adopted SFAS 142 effective January 1, 2002. The adoption
of SFAS 142 resulted in ceasing amortizing goodwill, and testing goodwill and
indefinite-lived intangible assets for potential impairment, although goodwill
on business combinations consummated after July 1, 2001 had not been amortized.
The total impairment loss resulting from the adoption in the first quarter of
2002 and the implementation in the fourth quarter of SFAS 142 was approximately
E 33.2 billion, of which E 17.1 billion was recorded as a cumulative effect of a
change in accounting principle on January 1, 2002. This loss primarily reflects
the continued deterioration of the economy since December 2001, as well as the
resulting decline in value of some media and telecom assets, which has occurred
since the Vivendi, Seagram and Canal Plus merger was announced in June 2000,
combined with the impact of the increase in the future financing cost due to the
liquidity issues of the Company in 2002. Vivendi Universal has implemented the
following goodwill impairment procedures in 2002:

     - Upon adoption of the new standard, Vivendi Universal completed its
       initial review for impairment, which required the allocation of goodwill
       and other intangible assets to various reporting units. The fair value of
       each reporting unit was compared to its carrying value to determine if
       there was potential impairment. When the fair value of the reporting unit
       was less than its carrying value, an impairment loss was recognized to
       the extent that the fair value of goodwill and other intangibles assets
       within the reporting unit was less than the carrying value. Fair value of
       goodwill and other intangible assets was determined on a discounted cash
       flow approach, supported by a market approach, reviewed by third-party
       appraisers. The total impairment loss resulting from the adoption of SFAS
       142 was approximately E 17.1 billion, which was recorded as a cumulative
       effect of a change in accounting principle in the first quarter of 2002.

     - As of October 1, 2002, Vivendi Universal performed its annual impairment
       review. The total impairment loss resulting from this annual impairment
       review of goodwill in accordance with SFAS 142 was approximately E 16.1
       billion, which was recorded as a charge in reconciliation of net income
       to U.S. GAAP, as presented in note 17.3.2 to the Financial Statements, as
       of December 31, 2002. Fair value of goodwill and other intangible assets
       was determined on a discounted cash flow approach, supported by a market
       approach, reviewed by third-party appraisers. Vivendi Universal will
       perform its annual impairment review during the fourth quarter of each
       year, having commenced in the fourth quarter of 2002.

     - Valuation procedures implemented and assumptions made to assess the fair
       value of reporting units are summarized in note 3.3 to the Financial
       Statements.

     The change in the carrying value of goodwill for the year ended December
31, 2002, is as follows:
<Table>
<Caption>
                                                    IMPAIRMENT LOSSES(1)
                       ------------------------------------------------------------------------------
                        NET BALANCE                       AT ADOPTION     YEAR ENDED     CHANGES IN
                       AT JANUARY 1,   RECLASSIFICATION   (JANUARY 1,    DECEMBER 31,   CONSOLIDATION
                           2002            & OTHER           2002)           2002           SCOPE
                       -------------   ----------------   ------------   ------------   -------------
                                                   (IN MILLIONS OF EUROS)
<S>                    <C>             <C>                <C>            <C>            <C>
Telecoms(2)..........      2,954               600             (710)          (536)             8
Music................     15,862                --           (3,900)        (5,000)            49
Vivendi Universal
  Entertainment......      9,360                --           (2,660)        (8,044)         7,866
Groupe Canal+........     16,435              (350)          (7,590)        (5,336)           750
Holding &
  Corporate..........      1,368            (1,368)              --             --             --
Internet.............        559               200             (250)          (462)            (4)
Publishing...........      3,888               (31)              --           (130)        (3,432)

<Caption>
                           IMPAIRMENT LOSSES(1)
                       -----------------------------
                        CURRENCY       NET BALANCE
                       TRANSLATION   AT DECEMBER 31,
                       ADJUSTMENT         2002
                       -----------   ---------------
                          (IN MILLIONS OF EUROS)
<S>                    <C>           <C>
Telecoms(2)..........         1           2,316
Music................    (1,182)          5,830
Vivendi Universal
  Entertainment......    (1,662)          4,860
Groupe Canal+........        (1)          3,909
Holding &
  Corporate..........        --              --
Internet.............       (43)             --
Publishing...........        (4)            291
</Table>

                                      F-119
<PAGE>
<Table>
<Caption>
                                                    IMPAIRMENT LOSSES(1)
                       ------------------------------------------------------------------------------
                        NET BALANCE                       AT ADOPTION     YEAR ENDED     CHANGES IN
                       AT JANUARY 1,   RECLASSIFICATION   (JANUARY 1,    DECEMBER 31,   CONSOLIDATION
                           2002            & OTHER           2002)           2002           SCOPE
                       -------------   ----------------   ------------   ------------   -------------
                                                   (IN MILLIONS OF EUROS)
<S>                    <C>             <C>                <C>            <C>            <C>
Environmental
  Services...........      7,499               900           (1,522)            --         (6,485)
Other................          3                --               --             (9)             2
                          ------            ------          -------        -------         ------
Total................     57,927               (49)         (16,632)       (19,517)        (1,246)
                          ======            ======          =======        =======         ======

<Caption>
                           IMPAIRMENT LOSSES(1)
                       -----------------------------
                        CURRENCY       NET BALANCE
                       TRANSLATION   AT DECEMBER 31,
                       ADJUSTMENT         2002
                       -----------   ---------------
                          (IN MILLIONS OF EUROS)
<S>                    <C>           <C>
Environmental
  Services...........      (392)             --
Other................        --              (4)
                         ------          ------
Total................    (3,282)         17,202
                         ======          ======
</Table>

---------------

(1) At December 31, 2002, impairment losses not only include E 16,146 million
    relative to the annual impairment review of goodwill prescribed by SFAS 142,
    but also include E 4,486 million relative to various entities held for sale
    (E 2,564 million for Canal Plus, E 462 million for Internet, E 206 million
    for Vivendi Telecom International and E 130 million for Publishing).
    Impairment losses do not include E 430 million (E 300 million for Elektrim
    Telekomunikacja SP and E 130 million for Vizzavi Europe) as of January 1,
    2002 and E 1,115 million (E 503 million for Sportfive, E 374 million for
    Sogecable, E 206 million for Telecom Developpement and E 32 million for
    Elektrim Telekomunikajca SP) at December 31, 2002.

(2) Impairment losses relate entirely to Vivendi Telecom International.

     Vivendi Universal's other intangible assets primarily consist of:

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>          <C>
Other definite-lived intangible assets:
Audiovisual and music rights................................      5,558        7,840
Trademarks, market share, editorial resources...............         --          711
Film costs, net of amortization.............................      3,599        2,587
Editorial & plate costs.....................................         39          118
Telecom licenses............................................        967          680
Software....................................................         50          146
Other.......................................................        367          544
Veolia Environnement........................................         --        1,373
                                                               --------     --------
Total.......................................................   E 10,580     E 13,999
                                                               ========     ========
Other indefinite-lived intangible assets:
Brands, trademarks and other................................      2,298        3,566
Multiple service operator (MSO) agreements..................        669           --
Veolia Environnement........................................         --        2,350
                                                               --------     --------
Total.......................................................   E  2,967     E  5,916
                                                               ========     ========
</Table>

     In French GAAP, of the E 1,704 million of acquired intangible assets (refer
to Note 3.2.1. Acquisition of the entertainment assets of USA Networks, Inc.,
preliminary allocation of purchase price with an exchange rate euro/dollar as of
May 7, 2002), E 648 million was assigned to film costs that are amortized based
on the ratio of the current period's gross revenues to estimated total gross
revenues from all sources on an individual film forecast basis and E 880 million
was assigned to trademarks and Multiple Service Operator (MSO) agreements for
E 125 million and E 755 million respectively, that are not subject to
amortization. The remaining E 176 million of acquired intangible assets have a
weighted-average useful life of approximately 6 years. The intangible assets
that make up that amount include deferred charges for E 92 million (4-year
weighted-average useful life) and MSO agreements for E 84 million (8-year
weighted-average useful life). In US GAAP, the E 92 million deferred charges
would be classified as other non current assets instead of intangible assets.

                                      F-120
<PAGE>

     The Fiscal Year 2001 results on a historical basis do not reflect the
provisions of SFAS 142. The following table presents the impact of SFAS 142 on
net income (loss) and net income (loss) per share had the standard been in
effect for the Fiscal Year 2001:

<Table>
<Caption>
                                                                       DECEMBER 31,
                                                              ------------------------------
                                                                2002        2001      2000
                                                              ---------   --------   -------
                                                                  (IN MILLIONS OF EUROS)
<S>                                                           <C>         <C>        <C>
Reported net loss...........................................  E (44,447)  E (1,172)  E 1,908
Cumulative effect of change in accounting principle(1)......    (17,062)       (39)       --
                                                              ---------   --------   -------
Loss before cumulative effect of change in accounting
  principle.................................................    (27,385)    (1,133)    1,908
Add back amortization of goodwill...........................         --      1,706       699
                                                              ---------   --------   -------
Adjusted US GAAP net income.................................  E (27,385)  E    573   E 2,607
Earning per share -- basic..................................     (25.20)      0.58      4.43
Earning per share -- diluted................................     (25.20)      0.56      4.07
                                                              ---------   --------   -------
</Table>

---------------

(1) Adoption of SFAS 142 in 2002 and SFAS 133 in 2001.

17.9 SUPPLEMENTAL INFORMATION REQUESTED BY US REGULATORS

NOTE 1

1.2.6 REVENUES AND COSTS

     Music -- Revenues from the sale of recorded music, net of a provision for
estimated returns and allowances, are recognized on shipment to third parties
for product sales with terms FOB shipping point and on delivery for products
sold FOB destination.

  COST OF REVENUES AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Music -- Cost of revenues includes manufacturing costs, royalty expense,
copyright expenses, artist costs and recording costs. Included in selling,
general and administrative expenses are marketing and advertising expenses,
selling and distribution costs, provisions for doubtful receivables and obsolete
inventory and overheads.

     TV & Film -- For our TV & Film businesses, cost of revenues includes film
and television costs amortization, participation and residual expenses,
subscriber management and acquisition costs, television distribution expenses,
theatrical print costs, home video inventory costs and theatrical, television
and home video marketing costs. Selling, general and administrative expenses
include salaries and benefits, rent expense, consulting and auditing fees,
insurance expense, travel and entertainment expense, administrative departments
costs (e.g. Finance, Human Resources, Legal, Information Technology,
Head-quarters) and other operating expenses. For our parks, recreation and
retail businesses, included in cost of revenues are cost of food, beverage and
merchandise, inventory damage and obsolescence expenses and duty and freight
costs. Selling, general and administrative expenses include indirect warehouse
expense including receiving and inspection expense.

     Telecoms -- Cost of revenues include purchasing costs, interconnection and
access costs, network costs and equipment costs. Selling, general and
administrative expenses include commercial costs, which consist of marketing
costs, commissions to dealers, customer care, head office and administrative
costs including wages and salary costs for senior management, human resources,
finance, fees, and computer costs.

     Games -- Costs of revenues includes manufacturing costs,
warehousing/logistics costs and royalty expense in cost of revenues.

     We are not aware of any differences under US GAAP, with the exception that
for our games business, cost of revenues includes internal research and
development expense and the amortization of capitalized internal development
under French GAAP. Under US GAAP, research and development expense is not a

                                      F-121
<PAGE>

component of cost of revenues. Research & development expense for our games
business was approximately $119 million and $90 million in 2002 and 2001,
respectively.

  SHIPPING AND HANDLING COSTS

     Actual shipping and handling costs are included in the cost of revenues
line item with the following exceptions: at UMG, actual costs for shipping and
handling are reported in selling, general and administrative expenses; at
Cegetel, shipping and handling costs are recorded as selling, general and
administrative expenses; and at VUE, shipping and handling costs, excluding
freight and duty fees are included in selling, general and administrative
expenses. The total of these costs not included in the cost of revenue line item
amounted to E 130 million, E 135 million and E 36 million in 2002, 2001 and
2000, respectively.

     Shipping and handling costs reimbursed by customers for invoice charges
such as postage, freight packing and small order surcharges are netted against
selling expense under French GAAP. Under US GAAP, these amounts were recorded as
revenue. The total of these amounts was less than E 65 million in each of the
last two years.

  SLOTTING FEES AND COOPERATIVE ADVERTISING PROGRAMS

     Slotting fees and cooperative advertising are generally recorded as a
reduction of revenues. However, cooperative advertising at our games business
and placement costs and other price support classified and administered as
cooperative marketing costs at our music business were treated as marketing
expenses under French GAAP. Under US GAAP these expenses would have been treated
as a reduction of sales. In 2002 the impact of this difference was approximately
$94 million.

1.2.10 ADVERTISING COSTS

     The cost of advertising is expensed as incurred. However, certain costs
specifically related to the change of Vivendi Universal's corporate name have
been capitalized and are amortized over five years. Advertising expense was
approximately E 1.5 billion and E 1.6 billion for the years ending December 31,
2002 and 2001, respectively. For the year ended December 31, 2000, advertising
expense was immaterial, less than E 300 million due to the effect that the
Seagram merger only occurred at the end of the year.

1.2.16 OTHER INTANGIBLE ASSETS

     Catalog -- Other intangible assets includes E 3.8 billion and E 5.4 billion
as of December 31, 2002 and 2001, respectively, for catalogs of recorded music
and music publishing rights. These amounts include acquired intangibles,
primarily those acquired with the acquisition of The Seagram Company Ltd. in
December 2000, which were recorded on the basis of third-party appraisals
obtained at that time and which were subsequently reduced as a result of an
updated appraisal in 2002. The valuations were conducted on the basis of the
discounted expected future cash flows from the entire portfolio of recordings
from artists under contract with the Company at the time of acquisition and
recordings from artists no longer under contract, but for which the Company had
continuing rights. Management believes that the catalogs are long-term assets of
indeterminate (but not indefinite) life and they are being amortized on a
straight line basis over 20 years.

     Recoupable Long-Term Artist Advances -- Other intangible assets includes
E 301 million and E 313 million as of December 31, 2002 and 2001, respectively,
for net long-term advances to artists which are recoupable against future
royalties. Advances are capitalized only in the case of "proven" artists, which
are defined as those whose past performance and current popularity supports
capitalization. Unearned balances are reviewed periodically and if future
performance is no longer assured, the balances are appropriately reserved.

                                      F-122
<PAGE>

NOTE 3

3.2.14 MERGER OF VIVENDI, SEAGRAM AND CANAL PLUS

     The following table shows the final allocation of the purchase price of
Canal Plus:

<Table>
<Caption>
                                                              CANAL+ GROUP
                                                              ------------
                                                              (IN MILLIONS
                                                               OF EUROS)
<S>                                                           <C>
Fair value of net tangible/intangible assets acquired.......    E     (7)
Goodwill recorded as an asset...............................      12,544
                                                                --------
Purchase price..............................................    E 12,537
                                                                ========
</Table>

3.2.15 DISPOSITION OF SITHE

     In December 2000, Vivendi Universal, along with other shareholders of Sithe
Energies, Inc. (Sithe), finalized the sale of a 49.9% stake in Sithe to Exelon
(Fossil) Holdings Inc. (Exelon) for approximately US$696 million. The net
proceeds of the transaction to Vivendi Universal were approximately US$475
million. This operation generated a pre-tax gain of E 15 million, which was the
difference between the selling price and the basis of the investment.

     Following the transaction, Exelon is the controlling shareholder of Sithe.
Vivendi Universal retains an interest of approximately 34%. For a period of
three years beginning in December 2002, Vivendi Universal can put to Exelon, or
Exelon can call from Vivendi Universal, Vivendi Universal's remaining interest.
As a result of the transaction, Vivendi Universal ceased to consolidate Sithe's
results of operations for accounting purposes effective December 31, 2000 and
accounted for its investment in Sithe, under French GAAP, under the cost method
from January 1, 2001 until December 19, 2002 when Vivendi Universal sold its
remaining interest.

     In April 2000, Sithe sold 21 independent power production plants to Reliant
Energy Power Generation for E 2.13 billion. This transaction generated a pre-tax
capital gain of E 415 million before E 58 million direct costs incurred in
connection with the disposal of these assets (accounting and other MIS systems
write-off, staff retention accrual, severance costs for terminated employees).

     As of December 31, 2000, total exceptional pre-tax gain related to the sale
of interest in Sithe and the sale of the GPU power plants amounted to E 372
million.

NOTE 4

4.5 INVESTMENTS ACCOUNTED FOR USING THE PROPORTIONATE CONSOLIDATION METHOD

     Summarized cash flow information for major subsidiaries consolidated under
the proportionate consolidation method in 2000, 2001 and 2002 is as follows:

<Table>
<Caption>
                                                             YEARS ENDED DECEMBER 31,
                                                             ------------------------
                                                              2002     2001     2000
                                                             ------   ------   ------
                                                              (IN MILLIONS OF EUROS)
<S>                                                          <C>      <C>      <C>
Net cash provided by operating activities..................  E  591   E  449   E  275
Net cash used for investing activities.....................  E (850)  E (678)  E (309)
Net cash provided by financing activities..................  E  145   E  311   E  202
</Table>

NOTE 7

     On May 3, 2002 Moody's downgraded Vivendi Universal's (VU) long-term
unsecured debt rating to Baa3 from Baa2. This first downgrading did not trigger
any event of default under any VU financing arrangement. However, a $750 million
Barclays facility was subject to a mandatory prepayment in the event that VU did
not have a credit rating of at least BBB or Baa2. Despite the downgrading,
Barclays agreed to

                                      F-123
<PAGE>

maintain this facility until its maturity date, on June 25, 2002. Given the
short remaining maturity of this facility, the waiver was never documented and
the facility was cancelled on June 25, 2002.

     Following the press release issued by Standard & Poors on May 15, 2002
(entitled "Identifying Ratings Triggers and Other Contingent Calls on
Liquidity -- Part 2") on which VU appeared as one of the companies presenting a
meaningful degree of liquidity risk linked to significant rating triggers in its
credit facilities, VU initiated negotiations with some of its main creditors in
order to remove such rating triggers and replace them with financial covenants
similar to those contained in the E 3 billion syndicated facility dated March
15, 2002.

     The instruments and facilities with significant rating triggers identified
by S&P had an aggregate principal amount of E 5.4 billion and included:

     - the total return swap on BSkyB shares, which was totally unwound on May
       14, 2002 (E 2.5 billion);

     - the preferred shares issued by Home Video Inc and subscribed to by
       Societe Generale for $200 million, which were redeemed, in June 2002 and
       replaced in June by a bilateral loan to VU without a rating trigger. The
       agreement to replace the preferred shares by a new facility and
       concurrently to remove the rating trigger provision was obtained from
       Societe Generale before May 30, 2002;

     - the total return swap on AOL Europe shares ($812 million), for which VU
       received a letter from Bayerische Landesbank on May 30, 2002 agreeing to
       remove the rating trigger;

     - two Bayerische Landesbank facilities (E 1 billion and E 200 million), for
       which VU received a letter agreeing to remove the rating trigger on May
       30, 2002;

     - the preferred shares issued by Universal Music Operations Ltd (L136
       million) and by McDougall Litell ($125 million), respectively subscribed
       to by Credit Lyonnais and BNP Paribas, which contained an early put event
       upon a rating downgrade. Both banks have given their agreement to remove
       the early put event based on a rating trigger before end of May 2002.

     No waivers with respect to any events of default needed to be obtained in
connection with the amendments to the facilities described above, as VU entered
into these negotiations with its creditors voluntarily. VU agreed to pay
approximately E 22 million in fees to various financial institutions in order to
amend the facilities described above to remove and replace the ratings
covenants.

     On July 1, 2002, Moody's downgraded VU's senior debt rating from Baa3 to
Ba1, under review with possible further downgrades and the next day S&P
downgraded VU to BBB- with negative outlook. The Moody's downgrade caused around
E 170 million of credit lines and financial guarantees subject to rating
triggers to be cancelled or replaced:

     - an undrawn Fortis back-up line of E 100 million which expired on October
       22, 2002. The downgrading of VU resulted in a draw stop of such facility;
       the utilization of this facility was lost thereafter;

     - two guarantees of $14 million each provided by VU to financial
       institutions in respect of Universal City Development Partners. The
       guarantees provided that in case of a downgrade of VU below investment
       grade, a cash collateral had to be put in place by VU to secure such
       guarantees. Such cash collateral in an amount of $13.5 million each was
       put in place in July 2002; and

     - a E 40 million lease-back transaction entered into for the financing of
       the movie Fierce Creatures. Joseph Seagram & Sons (JES) had granted a
       guarantee in December 1996 to the bank financing this lease-back. Upon
       the terms of this guarantee, the JES unsecured debt had to be rated at
       least BBB- or Baa3 for the first six years. As this obligation could not
       be met any longer by JES from 2001 because it had stopped preparing
       consolidated accounts due to the acquisition of its parent company by VU,
       the latter had started negotiations in December 2001 in which those
       negotiations were taking place with the lessor to replace the initial
       guarantee by a Vivendi Universal guarantee. Given the context, this
       guarantee, which would have contained a rating trigger provision, could
       not be provided any more. Therefore, this leasing transaction was
       terminated in December 2002.

                                      F-124
<PAGE>

     The guarantee granted by VU in July 1998 in connection with the financing
of an incineration plant in UK (Tyseley) contained a rating trigger provision
whereby, in the event of the loss of the investment grade status by Vivendi
Universal, the L18.5 million cash collateral initially put up would be required
to be replaced by another of L42 million or an additional letter of credit.
However, this commitment was subject to a back-to back counter-guarantee by
Veolia Environnement since its inception. This obligation, the transfer of which
was decided on previously has been handed over to Veolia Environnement in
September 2002 and assumed by the latter from then on.

     No waivers were obtained at that time under any of the facilities described
above as a result of the July 1, 2002 downgradings, and there was no
consideration paid in connection with the actions described above that were
taken.

     On August 14, 2002, VU's long term unsecured debt was downgraded to B1 from
Ba1 with possible further downgrade by Moody's and to B+ from BBB- with negative
outlook by S&P. Following this further downgrade, a financial institution,
Lehman Brothers, which entered into an ISDA master agreement with VU in December
2000, accelerated the exercise of put options on Vivendi Universal shares,
entailing the payment of E 150 million in August 2002, which obligations would
have otherwise become due between September and December, at the time of the
maturity of the options. There was no waiver needed with respect to this
agreement at that time and there was no consideration paid to Lehman Brothers.

     Lastly, a guarantee provided by VU in favour of a bank of certain
obligations of Universal Studios Inc. and UCF Hotel Venture provides that the
Consolidated Net Worth of VU must be at least $40 billion. Due to the impairment
provisions recorded by VU, this requirement could not be met any longer after
March 31, 2002. The guarantee contract, which currently amounts to $7.5 million,
is still under negotiation with the bank with a view to lowering the threshold
to E 10 billion which the bank has already agreed to in principle. In the
interim, a waiver of the Consolidated Net Worth covenant has been obtained. VU
did not pay any consideration in order to obtain this waiver.

     There were no other material debt covenants that VU was not in compliance
with other than those described above.

     Bank overdrafts and other short-term borrowings are comprised of numerous
individual items. In 2002, bank overdrafts and other short-term borrowings were
comprised of E 1,501 million in fixed interest rate debt with interest rates
ranging from 1% to 6.5% and E 7,676 million in variable interest rate debt with
interest rates of Euribor +0% and Libor $+5%. In 2001, bank overdrafts and other
short-term borrowings were comprised of E 1,003 million in fixed interest rate
debt ranging with interest rates ranging from 0% to 13.9% and E 13,000 million
in variable interest rate debt with interest rates of ranging from Euribor
-0.60% to Euribor +4%. Of the total in 2001, E 5,497 million related to Veolia
Environnement. In 2000, bank overdrafts and other short-term borrowings were
comprised of E 79 million in fixed interest rate debt with interest rates
ranging from 3.5% to 13.9% and E 14,773 million in variable interest rate debt
with interest rates ranging from Euribor +0.05% to Euribor 1.8%. Of the total in
2000, E 3,992 million related to Veolia Environnement.

     Bonds and bank loans are comprised of numerous individual items. In 2002,
bonds and bank loans were comprised of E 2,309 million in fixed interest rate
debt with interest rates ranging from 0% to 15%, maturing from 2004 to 2040 and
E 1,207 million in variable interest rate debt with interest rates ranging from
Libor L-.58% to Euribor +3%, maturing from 2004 to 2012. In 2001, bonds and bank
loans were comprised of E 6,832 million in fixed interest rate debt ranging with
interest rates ranging from 0% to 15%, maturing from 2003 to 2040 and E 8,386
million in variable interest rate debt with interest rates of ranging from
Euribor -0.27% to Euribor +8.5%, maturing from 2003 to 2018. Of the total in
2001, E 10,814 million related to Veolia Environnement. In 2000, bonds and bank
loans were comprised of E 4,654 million in fixed interest rate debt ranging with
interest rates ranging from 0.5% to 13.9%, maturing from 2002 to 2021 and
E 11,149 million in variable interest rate debt with interest rates ranging from
Euribor -0.27% to Euribor 6%, maturing from 2002 to 2018. Of the total in 2000,
E 9,409 million related to Veolia Environnement.

     Under French GAAP, proceeds from future receivables sales are accounted as
deferred income and the discounting of receivables are accounted for as a sale.
Under U.S. GAAP, the deferred income is reclassified

                                      F-125
<PAGE>

as long-term financial debt since the discounting of receivables does not
qualify as a true sale under the provisions of SFAS 140.

     At December 31, 2001, Veolia Environnement ("VE") securitized through its
water segment accounts receivables for which it received net proceeds in the
amount of E 714 million from a Special Purpose Entity ("SPE"). VE recognized
pretax loss of E 17 million on such securitization and retained subordinate
interests of E 96 million which were recorded at their fair value. At the
closing of the securitization program in May 2002, VE received E 53 million in
cash and received receivables for E 33 million. Under US GAAP, E 322 million was
recorded as short term financial debt at December 31, 2001.

NOTE 10

10.1.3 FINANCIAL EXPENSES, PROVISIONS AND OTHER

     In 2001, financial provisions were primarily comprised of non-cash charges
required to reduce the carrying value of certain publicly traded and privately
held investments that experienced other than temporary declines. In 2000,
financial provisions related mainly to loss provisions on internet and telecom
assets.

NOTE 12

12.2 BUSINESS SEGMENT DATA

  HOLDING AND CORPORATE

     Amounts included in Holding & Corporate line items are not considered fully
allocable to individual business segments. However, certain costs that are
considered directly related to business segments are allocated on a basis
consistent with the historical practices of the Company. In the income
statement, Holding and Corporate operating expenses are primarily comprised of
occupancy costs and compensation & benefits related to corporate employees. In
the balance sheet, assets allocated to Holding & Corporate are those not
considered to be directly related to the operations of our business segments,
including:

     - Non-consolidated investments (e.g. In 2002, Dupont shares and USAi
       warrants. In 2001, Dupont shares, BSkyB remaining investment consolidated
       in French GAAP, Vinci shares, Sithe investment, VU treasury shares)

     - Non operating short-term assets such as deferred income tax

     - Subsidiaries consolidated under equity method (e.g. In 2002, Veolia
       Environnement)

     - Cash equivalents related to proceeds from disposals (In 2002, Publishing
       activities, participation in VE and EchoStar).

  OTHER

     In 2002 and 2001, Other is comprised of Vivendi Valorisation, the holder of
real estate assets that we intend to sell. In 2000, in addition to Vivendi
Valorisation, Oher also included our other real estate business, Nexity, until
its sale in July 2000 and Sithe until December 2000 when we reduced our interest
to approximately 34%.

                                      F-126
<PAGE>

SUPPLEMENTARY FINANCIAL DATA

     At the request of the COB (French Securities and Exchange Commission), and
to enable shareholders to clearly assess the impact of the consolidation methods
used, we provide, for strictly guidance purposes, the following supplementary
financial data in condensed form, concerning the contribution of the Cegetel
Group and Maroc Telecom to the consolidated financial statements, together with
financial statements for Elektrim Telekomunikacja and Elektrim SA.

1. FULLY CONSOLIDATED COMPANIES

     The following financial data indicates the contribution of the Cegetel
Group and Maroc Telecom to the consolidated financial statements of Vivendi
Universal. Vivendi Universal fully consolidates these two companies, with
controlling interests of 59% (85% as from January 23, 2003 following acquisition
of an additional 26% interest from the BT Group) and 51% respectively, and
corresponding ownership interests of 44% (70% as from January 23, 2003) and 35%
respectively.

1.1 CONDENSED STATEMENT OF INCOME

<Table>
<Caption>
                                                   YEAR ENDED             YEAR ENDED
                                                DECEMBER 31, 2002      DECEMBER 31, 2001
                                               -------------------     -----------------
                                               CEGETEL      MAROC      CEGETEL    MAROC
                                                GROUP      TELECOM      GROUP    TELECOM
                                               -------     -------     -------   -------
                                                        (IN MILLIONS OF EUROS)
<S>                                            <C>         <C>         <C>       <C>
Revenues.....................................    7,067       1,487       6,384     1,013
Operating Income.............................    1,449         468         928       387
Income before exceptional items, income
  taxes, goodwill amortization, equity
  interest and minority interest.............    1,409         479         799       365
Income before goodwill amortization, equity
  interest and minority interest.............      562(a)      306         867       265
Income (loss) before minority interest
  recorded by Vivendi Universal..............      109(b)     (109)(c)     714      (523)(c)
                                               -------     -------     -------   -------
Net income (loss)............................  E    50     E  (233)    E   319   E  (638)
                                               -------     -------     -------   -------
</Table>

     As at December 31, 2002, Cegetel Group income includes a corporate income
tax expense of E 846 million (a), and an impairment of goodwill for Telecom
Developpement, consolidated using the equity method, for E 206 million (b).
Income for Maroc Telecom includes goodwill impairment relating to this company,
for an amount of E 300 million at December 31, 2002, and E 700 million at
December 31, 2001 (c).

1.2 CONDENSED BALANCE SHEET

<Table>
<Caption>
                                                   DECEMBER 31, 2002   DECEMBER 31, 2001
                                                   -----------------   -----------------
                                                   CEGETEL    MAROC    CEGETEL    MAROC
                                                    GROUP    TELECOM    GROUP    TELECOM
                                                   -------   -------   -------   -------
                                                          (IN MILLIONS OF EUROS)
<S>                                                <C>       <C>       <C>       <C>
Long-term assets.................................    4,565     2,352     5,582     2,736
Current assets...................................    2,625     1,157     2,175(d)     833
  including cash and cash-equivalents............      595       575        28       198
                                                   -------   -------   -------   -------
Total assets.....................................  E 7,190   E 3,509   E 7,757   E 3,569
                                                   =======   =======   =======   =======
</Table>

                                       S-1
<PAGE>

<Table>
<Caption>
                                                   DECEMBER 31, 2002   DECEMBER 31, 2001
                                                   -----------------   -----------------
                                                   CEGETEL    MAROC    CEGETEL    MAROC
                                                    GROUP    TELECOM    GROUP    TELECOM
                                                   -------   -------   -------   -------
                                                          (IN MILLIONS OF EUROS)
<S>                                                <C>       <C>       <C>       <C>
Shareholders' equity.............................    1,214     1,494     1,420     1,765
Minority interests...............................    2,005       936     1,722       804
Long-term debt...................................      692       205       709       259
Other non-current liabilities and accrued
  expenses.......................................      351        12     1,116        14
Bank overdrafts and other short-term
  borrowings.....................................      109        30       290        57
Other short-term liabilities.....................    2,819       832     2,500       670
                                                   -------   -------   -------   -------
Total liabilities and shareholders' equity.......  E 7,190   E 3,509   E 7,757   E 3,569
                                                   -------   -------   -------   -------
</Table>

---------------

(d) After elimination of the loan of E 609 million by the Cegetel Group to
    Vivendi Universal at this date.

1.3 CONDENSED CASH FLOW STATEMENT

<Table>
<Caption>
                                                     YEAR ENDED           YEAR ENDED
                                                 DECEMBER 31, 2002    DECEMBER 31, 2001
                                                 ------------------   ------------------
                                                 CEGETEL     MAROC    CEGETEL     MAROC
                                                  GROUP     TELECOM    GROUP     TELECOM
                                                 --------   -------   --------   -------
                                                         (IN MILLIONS OF EUROS)
<S>                                              <C>        <C>       <C>        <C>
Cash flow from operating activities............     2,120      770       1,678      410
Cash flow from investing activities............      (497)    (225)       (675)    (165)
Cash flow from financing activities............    (1,056)    (149)     (1,002)     (64)
Effect of foreign exchange rate changes........        --      (18)         --       (5)
                                                 --------   ------    --------   ------
Cash and cash-equivalents......................  E    567   E  378    E      1   E  176
                                                 --------   ------    --------   ------
</Table>

2. COMPANY ACCOUNTED FOR USING THE EQUITY METHOD

     The following financial data summarize the financial statements of Elektrim
Telekomunikacja. Vivendi Universal accounts for this company using the equity
method, with a controlling and ownership interest of 49%. In 2002, Elektrim
Telekomunikacja consolidated PTC using the proportionate method, this company
having previously been accounted for using the equity method, following the
contribution by Elektrim SA of its interest in PTC to Elektrim Telekomunikacja
in September 2001.

     As indicated in note 13 to the consolidated financial statements (footnote
No. 8), Ymer acquired a 2% interest in Elektrim Telekomunikacja in September
2001, after purchasing the corresponding shares from Elektrim. Ymer is a Belgian
company independent from Vivendi Universal.

     Vivendi Universal had previously acquired non-voting shares in an
investment company, operating as a mutual fund, which enabled Ymer to make its
acquisition, for an amount of E 105 million.

     Vivendi Universal is by no means committed to acquire the shares owned by
Ymer. Similarly, Ymer has neither a right or obligation to sell those shares to
Vivendi Universal and is free to sell them to a third-party at any time. Ymer is
consequently not consolidated by Vivendi Universal. However, the economic
exposure is carried by Vivendi Universal, which consequently records valuation
allowances where appropriate, on the basis of quarterly values communicated by
the mutual fund manager.

     The value of the initial investment by Vivendi Universal in the investment
company has been written down. The net carrying value was E 103 million at
December 31, 2001 and E 38 million at December 31, 2002.

                                       S-2
<PAGE>

2.1 CONDENSED STATEMENT OF INCOME

<Table>
<Caption>
                                                                     ELEKTRIM
                                                                  TELEKOMUNIKACJA
                                                              -----------------------
                                                                2002           2001
                                                              ---------       -------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>             <C>
Revenues....................................................      749            59
Operating Income............................................      125           (26)
Income before exceptional items, income taxes, goodwill
  amortization, equity interest and minority interest.......     (132)          (55)
Income before goodwill amortization, equity interest and
  minority interest.........................................     (163)          (55)
                                                               ------           ---
Net income (loss)...........................................   (1,063)          (57)
                                                               ------           ---
</Table>

2.2 CONDENSED BALANCE SHEET

<Table>
<Caption>
                                                                     ELEKTRIM
                                                                  TELEKOMUNIKACJA
                                                              -----------------------
                                                                2002          2001
                                                              ---------     ---------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>           <C>
Long-term assets............................................     2,987         3,027
Current assets..............................................       176           559
  including cash and cash-equivalents.......................         8             5
                                                               -------       -------
Total assets................................................   E 3,163       E 3,586
                                                               =======       =======
Shareholders' equity........................................     1,428         2,699
Long-term debt..............................................       712           160
Other non-current liabilities and accrued expenses..........        --           192
Bank overdrafts and other short-term borrowings.............       818(a)        485(b)
Other short-term liabilities................................       205            50
                                                               -------       -------
Total liabilities and shareholders' equity..................   E 3,163       E 3,586
                                                               -------       -------
</Table>

---------------

(a) Before elimination of Vivendi Universal's loan to Elektrim Telekomunikacja
    for E 525 million (E 322 million, net of provision).

(b) Before elimination of Vivendi Universal's loan to Elektrim Telekomunikacja
    for E 485 million.

2.3 CONDENSED CASH FLOW STATEMENT

<Table>
<Caption>
                                                                     ELEKTRIM
                                                                  TELEKOMUNIKACJA
                                                              -----------------------
                                                               2002           2001
                                                              -------       ---------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>           <C>
Cash flow from operating activities.........................     na              71
Cash flow from investing activities.........................     na            (650)
Cash flow from financing activities.........................     na             589
                                                                ---          ------
Cash and cash-equivalents...................................     na          E   10
                                                                ---          ------
</Table>

---------------

na:  Data not available.

3. UNCONSOLIDATED COMPANY

     The following financial data concerning Elektrim SA have been extracted
from the quarterly report on the financial statements for the fourth quarter of
2002 published by this company. As of December 31, 2001, Elektrim SA accounted
for Elektrim Telekomunikacja using the equity method, with a 49% controlling and

                                       S-3
<PAGE>

ownership interest. Elektrim SA was declared insolvent in December 2001, and
discharged from receivership in October 2002.

     As indicated in note 4.2 to the consolidated financial statements (footnote
No. 2), in addition to its 10% interest in the share capital of Elektrim SA,
Vivendi Universal entered into a carrying agreement with a third party for an
additional 4.99% interest in Elektrim SA. For this purpose, as indicated in note
10.2.5 to the consolidated financial statements (footnote No. 3), Vivendi
Universal acquired non-voting shares in an investment company operating as a
mutual fund, to an amount of E 58 million. The value of the total investment by
Vivendi Universal in Elektrim SA (direct + carrying agreement) amounts to E 154
million gross, for which valuation allowances have been accrued according to
evolution of the market price of Elektrim SA shares. The net value of this
investment was E 33 million at December 31, 2001, and E 12 million at December
31, 2002. The valuation allowances so accrued have reduced the net carrying
value of the Vivendi Universal investment to an amount not exceeding its share
in the consolidated shareholders' equity of Elektrim SA at these dates. In
accordance with the terms of the carrying agreement set up, and at the request
of the third party, Vivendi Universal acquired the capital and current account
of MMD, holding a 4.99% interest in Elektrim SA at the end of February 2003 for
E 54 million. Vivendi Universal simultaneously collected reimbursement of the
mutual fund shares in which it had invested for an amount of E 58 million. Given
the valuation allowances already accrued, this operation will have no impact on
Vivendi Universal's financial statements in 2003.

3.1 CONDENSED STATEMENT OF INCOME

<Table>
<Caption>
                                                                   ELEKTRIM SA
                                                              ----------------------
                                                               2002           2001
                                                              -------        -------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>            <C>
Revenues....................................................    618            993
Operating Income............................................    (47)          (131)
Income before tax...........................................   (163)          (146)
                                                               ----           ----
Net income (loss)...........................................   (178)          (126)
                                                               ----           ----
</Table>

3.2 CONDENSED BALANCE SHEET

<Table>
<Caption>
                                                                   ELEKTRIM SA
                                                              ----------------------
                                                                2002         2001
                                                              ---------    ---------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>          <C>
Long-term assets............................................     1,202        1,348
Current assets..............................................       535          808
  including cash and cash-equivalents.......................       148          278
                                                               -------      -------
Total assets................................................   E 1,737      E 2,156
                                                               =======      =======
Shareholders' equity........................................       288          569
Long-term debt..............................................       581          156
Short-term liabilities......................................       868        1,431
                                                               -------      -------
Total liabilities and shareholders'equity...................   E 1,737      E 2,156
                                                               -------      -------
</Table>

                                       S-4
<PAGE>

3.3 CONDENSED CASH FLOW STATEMENT

<Table>
<Caption>
                                                                    ELEKTRIM SA
                                                              -----------------------
                                                                2002          2001
                                                              ---------     ---------
                                                              (IN MILLIONS OF EUROS)
<S>                                                           <C>           <C>
Cash flow from operating activities.........................      (14)          214
Cash flow from investing activities.........................      (50)          196
Cash flow from financing activities.........................      (47)         (239)
                                                               ------        ------
Cash and cash-equivalents...................................   E (111)       E  171
                                                               ------        ------
</Table>

                                       S-5
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------

                                   FORM 20-F
[ ]       REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF
          THE SECURITIES EXCHANGE ACT OF 1934
                                       OR
[X]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934
          FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
                                       OR
[ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934
          FOR THE TRANSITION PERIOD FROM                TO
COMMISSION FILE NUMBER:

                            VIVENDI UNIVERSAL, S.A.
             (Exact name of Registrant as specified in its charter)
N/A                                             REPUBLIC OF FRANCE
  (Translation of Registrant's name into English)        (Jurisdiction of incorporation or organization)
42, AVENUE DE FRIEDLAND
                              75380 PARIS CEDEX 08
                                     FRANCE
                    (Address of principal executive offices)

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
                    TITLE OF EACH CLASS                         ON WHICH REGISTERED
                    -------------------                        ---------------------
Ordinary Shares, nominal value E 5.50 per share               New York Stock Exchange*
American Depositary Shares (as evidenced by American
  Depositary Receipts), each representing one share, nominal
  value E 5.50 per share                                      New York Stock Exchange
---------------
* Listed, not for trading or quotation purposes, but only in connection with the
  registration of American Depositary Shares, pursuant to the requirements of
  the Securities and Exchange Commission.

                             ---------------------

   SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE
                                   ACT:  NONE

 SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(d)
                               OF THE ACT:  NONE

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report:
American Depositary Shares..................................      92,029,885
Ordinary Shares, nominal value E 5.50 per share.............   1,068,558,994
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 [ ]
Indicate by check mark which financial statement item the Registrant has elected
to follow:
Item 17 [ ]                   Item 18 [X]
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PRESENTATION OF INFORMATION

     This Annual Report on Form 20-F (referred to herein as this "annual report"
or this "document") has been filed with the United States Securities and
Exchange Commission (SEC).

     "Vivendi Universal" refers to Vivendi Universal, S.A., a societe anonyme, a
form of limited liability company, organized under the laws of the Republic of
France, and its direct and indirect subsidiaries. "Vivendi" refers to Vivendi,
S.A., the predecessor company to Vivendi Universal. Unless the context requires
otherwise, references to "we," "us" and "our" mean Vivendi Universal, S.A. and
its subsidiaries or its predecessor company and its subsidiaries. "Vivendi
Universal Entertainment" and "VUE" refer to Vivendi Universal Entertainment
LLLP, a limited liability limited partnership organized under the laws of the
State of Delaware. "Vivendi Environnement" changed its name pursuant to a
shareholder resolution adopted on April 30, 2003 to "Veolia Environnement."
"Shares" refers to the ordinary shares of Vivendi Universal. The principal
trading market for the ordinary shares of Vivendi Universal is EuroNext Paris
S.A., or the Paris Bourse. "ADS" or "ADR" refers to the American Depositary
Shares or Receipts, respectively, of Vivendi Universal which are listed on the
New York Stock Exchange, or NYSE, each of which represents the right to receive
one Vivendi Universal ordinary share.

     This annual report includes Vivendi Universal's Consolidated Financial
Statements for the years ended December 31, 2002, 2001 and 2000 and as of
December 31, 2002 and 2001. Vivendi Universal's Consolidated Financial
Statements, including the notes thereto, are included in "Item 18--Financial
Statements" and have been prepared in accordance with generally accepted
accounting principles in France, which we refer to in this annual report as
"French GAAP." Unless otherwise noted, the financial information contained in
this annual report is presented in accordance with French GAAP. French GAAP is
based on requirements set forth in French law and in European regulations and
differs significantly from generally accepted accounting principles in the
United States, which we refer to in this annual report as "US GAAP." See Note 17
to our Consolidated Financial Statements for a description of the significant
differences between French GAAP and US GAAP, a reconciliation of net income,
shareholders' equity and other measures from French GAAP to US GAAP and
condensed consolidated US GAAP balance sheets and statements of income.

     Various amounts in this document are shown in millions for presentation
purposes. Such amounts have been rounded and, accordingly, may not total.
Rounding differences may also exist for percentages.

                              CURRENCY TRANSLATION

     Under the provisions of the Treaty on European Union negotiated at
Maastricht in 1991 and signed by the then 12 member states of the European Union
in early 1992, a European Monetary Union, known as the EMU, was implemented on
January 1, 1999 and a single European currency, known as the euro, was
introduced. The following 12 member states participate in the EMU and have
adopted the euro as their national currency: Austria, Belgium, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal and
Spain. The legal rate of conversion between the French franc and the euro (Euro,
euro or E) was fixed on December 31, 1998 at E 1.00 = FF6.55957, and we have
translated French francs into euros at that rate.

     Share capital in Vivendi Universal is represented by ordinary shares with a
nominal value of E 5.50 per share. Our shares are denominated in euros. Because
we intend to pay cash dividends denominated in euros, exchange rate fluctuations
will affect the US dollar amounts that shareholders will receive on conversion
of dividends from euros to dollars.

     We publish our Consolidated Financial Statements in euros. Unless noted
otherwise, all amounts in this annual report are expressed in euros. The
currency of the United States will be referred to as "US dollars," "US$," "$" or
"dollars." For historical exchange rate information, refer to "Item 3--Key
Information--Exchange Rate Information." For a discussion of the impact of
foreign currency fluctuations on Vivendi Universal's financial condition and
results of operations, see "Item 5--Operating and Financial Review and
Prospects."

                                        i
FORWARD-LOOKING STATEMENTS

     This annual report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, or the Securities Act, and Section
21E of the Securities Exchange Act of 1934, or Exchange Act. Forward-looking
statements include statements concerning our plans, objectives, goals,
strategies, future events, future revenues or performance, capital expenditures,
financing needs, plans or intentions relating to dispositions, acquisitions,
working capital and capital requirements, available liquidity, maturity of debt
obligations, business trends and other information that is not historical
information. Forward-looking statements can be identified by context. For
example, when we use the words such as "estimate(s)," "aim(s)," "expect(s),"
"feel(s)," "will," "may," "believe(s)," "anticipate(s)" and similar expressions
in this document, we are intending to identify those statements as
forward-looking. All forward-looking statements, including without limitation
the launching or prospective development of new business initiatives and
products, anticipated music or motion picture releases, Internet or theme park
projects, and anticipated cost savings from asset divestitures and synergies are
based upon our current expectations and various assumptions. Our expectations,
beliefs, assumptions and projections are expressed in good faith, and we believe
there is a reasonable basis for them. There can be no assurance, however, that
managements' expectations, beliefs and projections will be achieved.

     There are a number of risks and uncertainties that could cause our actual
results to differ materially from our forward-looking statements. These include,
among others:

     - general economic and business conditions, particularly a general economic
       downturn;

     - industry trends;

     - increases in our leverage;

     - reduced liquidity;

     - the terms and conditions of our asset divestitures and the timing
       thereof;

     - changes in our ownership structure;

     - competition;

     - changes in our business strategy and development plans;

     - challenges to, or losses or infringement of, our intellectual property
       rights;

     - changes in customer preference;

     - technological advancements;

     - political conditions;

     - financial and equity markets;

     - foreign currency exchange rate fluctuations;

     - legal and regulatory requirements and the outcome of legal proceedings
       and pending investigations;

     - environmental liabilities;

     - natural disasters; and

     - war or acts of terrorism.

     The foregoing list is not exhaustive and there are other factors that may
cause actual results to differ materially from the forward-looking statements.
We urge you to review and consider carefully the various disclosures we make
concerning the factors that may affect our business, including the disclosures
made in "Item 3--Key Information--Risk Factors," "Item 5--Operating and
Financial Review and Prospects," and "Item 11--Quantitative and Qualitative
Disclosures About Market Risk." All forward-forward looking statements
attributable to us or persons acting on our behalf apply only as of the date of
this document and are

                                        ii
expressly qualified in their entirety by the cautionary statements included in
this document. We undertake no obligation to publish revised forward-looking
statements to reflect events or circumstances after the date of this document or
to reflect the occurrence of unanticipated events.

                                EXPLANATORY NOTE

     Unless otherwise indicated, all references to our competitive positions
made in this document are in terms of revenue generated.

          ENFORCEABILITY OF CIVIL LIABILITIES AGAINST FOREIGN PERSONS

     Vivendi Universal is a corporation organized under the laws of the Republic
of France. Many of Vivendi Universal's directors and officers are citizens or
residents of countries other than the United States. Substantial portions of
Vivendi Universal's assets are located outside the United States. Accordingly,
it may be difficult for investors:

     - to obtain jurisdiction over Vivendi Universal or its directors or
       officers in courts in the United States in actions predicated on the
       civil liability provisions of the US federal securities laws;

     - to enforce against Vivendi Universal or its directors or officers
       judgments obtained in such actions;

     - to obtain judgments against Vivendi Universal or its directors or
       officers in original actions in non-US courts predicated solely upon the
       US federal securities laws; or

     - to enforce against Vivendi Universal or its directors or officers in
       non-US courts judgments of courts in the United States predicated upon
       the civil liability provisions of the US federal securities laws.

     Actions brought in France for enforcement of judgments of US courts
rendered against French persons, including directors and officers of Vivendi
Universal, would require those persons to waive their right to be sued in France
under Article 15 of the French Civil Code. In addition, actions in the United
States under the US federal securities laws could be affected under certain
circumstances by the French law of July 16, 1980, which may preclude or restrict
the obtaining of evidence in France or from French persons in connection with
those actions.

                                       iii
TABLE OF CONTENTS
PAGE
                                                                        ----
Item 1:   Identity of Directors, Senior Management and Advisers.......    1
Item 2:   Offer Statistics and Expected Timetable.....................    1
Item 3:   Key Information.............................................    1
Item 4:   Information on the Company..................................   13
Item 5:   Operating and Financial Review and Prospects................   68
Item 6:   Directors, Senior Management and Employees..................  109
Item 7:   Major Shareholders and Related Party Transactions...........  126
Item 8:   Financial Information.......................................  127
Item 9:   The Offer and Listing.......................................  132
Item 10:  Additional Information......................................  134
          Quantitative and Qualitative Disclosures About Market
Item 11:  Risk........................................................  150
Item 12:  Description of Securities Other than Equity Securities......  153
Item 13:  Default, Dividend Arrearages and Delinquencies..............  153
Item 14:  Material Modifications to the Rights of Security Holders....  153
Item 15:  Controls and Procedures.....................................  153
Item 16:  [Reserved]..................................................  154
Item 17:  Financial Statements........................................  154
Item 18:  Financial Statements........................................  154
Item 19:  Exhibits....................................................  154
ITEM 1:  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

     Not applicable.

ITEM 2:  OFFER STATISTICS AND EXPECTED TIMETABLE

     Not applicable.

ITEM 3:  KEY INFORMATION

  SELECTED FINANCIAL DATA

     The selected consolidated financial data at year end and for each of the
years in the three-year period ended December 31, 2002 has been derived from our
Consolidated Financial Statements and the related notes appearing elsewhere in
this annual report. The selected consolidated financial data at year end and for
each of the years in the two-year period ended December 31, 1999 has been
derived from our Consolidated Financial Statements not included in this annual
report. You should read this section together with "Item 5--Operating and
Financial Review and Prospects" and our Consolidated Financial Statements
included in this annual report.

     Our Consolidated Financial Statements have been prepared in accordance with
French GAAP, which differs in certain significant respects from US GAAP. The
principal differences between French GAAP and US GAAP, as they relate to us, are
described in Note 17 to our Consolidated Financial Statements. For a discussion
of significant transactions and accounting changes that affect the comparability
of our Consolidated Financial Statements and the financial data presented below,
refer to "Item 5--Operating and Financial Review and Prospects" and the notes to
our Consolidated Financial Statements.

     Our Consolidated Financial Statements and the selected financial data
presented below are reported in euros. For periods presented prior to January 1,
1999, our financial statements are reported in French francs and translated into
euros using the official fixed exchange rate of E 1.00 = FF6.55957, applicable
since December 31, 1998.
YEAR ENDED DECEMBER 31,
                                          ----------------------------------------------------------------------------
                                          2002(1)   2002(3)    2001     2000(4)    2000     1999(5)    1999      1998
                                          -------   -------   -------   -------   -------   -------   -------   ------
                                                         (MILLIONS OF EUROS, EXCEPT PER SHARE AMOUNTS)
INCOME STATEMENT
Amounts in accordance with French GAAP
  Revenue...............................   28,112    58,150    57,360    41,580    41,798    40,855    41,623   31,737
  Revenue outside France................   16,405    31,759    33,075    20,647    20,624    17,244    17,829   10,313
  Operating income......................    1,877     3,788     3,795     1,823     2,571     1,836     2,281    1,331
  Exceptional items, net................    1,125     1,049     2,365     3,812     2,947      (846)     (838)     249
  Goodwill amortization.................   19,434    19,719    15,203       634       634       606       612      210
  Minority interest.....................      574       844       594       625       625      (159)        5      212
  Net income (loss).....................  (23,301)  (23,301)  (13,597)    2,299     2,299     1,435     1,431    1,121
  Basic earnings (loss) per share.......   (21.43)   (21.43)   (13.53)     3.63      3.63      2.70      2.70     2.46
  Diluted earnings (loss) per share.....   (21.43)   (21.43)   (13.53)     3.41      3.41      2.49      2.49     2.40
  Dividends per share...................      1.0       1.0       1.0       1.0       1.0       1.0       1.0      0.9
  Average shares outstanding
    (millions)(7).......................  1,087.4   1,087.4   1,004.8     633.8     633.8     530.5     530.5    456.6
  Shares outstanding at year-end
    (millions)..........................  1,068.6   1,068.6   1,085.8   1,080.8   1,080.8     595.6     595.6    478.4
Amounts in accordance with US GAAP(2)
  Revenue...............................       --    40,062    51,733    34,276    34,276    36,543    36,543       --
  Net income............................       --   (44,447)   (1,172)    1,908     1,908       246       246      565
  Basic earnings per share..............       --    (40.89)    (1.19)     3.24      3.24      0.48      0.48     1.29
  Diluted earnings per share............       --    (40.89)    (1.19)     3.03      3.03      0.48      0.48     1.25
1
YEAR ENDED DECEMBER 31,
                                          ----------------------------------------------------------------------------
                                          2002(1)   2002(3)    2001     2000(4)    2000     1999(5)    1999      1998
                                          -------   -------   -------   -------   -------   -------   -------   ------
                                                         (MILLIONS OF EUROS, EXCEPT PER SHARE AMOUNTS)
FINANCIAL POSITION
Amounts in accordance with French GAAP
  Shareholders' equity..................       --    14,020    36,748    56,675    56,675    10,777    10,892    7,840
  Minority interest.....................       --     5,497    10,208     9,787     9,787     3,755     4,052    2,423
  Net financial debt(6).................       --    10,753    28,879    25,514    25,514    22,833    22,833    6,502
  Total assets..........................       --    69,333   139,002   150,738   150,738    84,614    82,777   48,982
  Total long-term assets................       --    48,495    99,074   112,580   112,580    47,916    45,341   26,073
Amounts in accordance with US GAAP
  Shareholders' equity..................       --    11,065    54,268    64,729    64,729    16,954    16,954   10,265
  Total assets..........................       --    69,200   151,139   151,818   151,818    74,497    74,497       --
CASH FLOW DATA
Amounts in accordance with French GAAP
  Net cash provided by operating
    activities..........................    2,795     4,670     4,500     2,514     2,514       772     1,409    2,898
  Net cash provided by (used for)
    investing activities................    4,109       405     4,340    (1,481)   (1,481)  (12,918)  (13,556)  (2,926)
  Net cash (used for) provided by
    financing activities................   (2,461)   (3,792)   (7,469)     (631)     (631)   13,746    13,746      223
  Capital expenditures..................    1,729     4,134     5,338     5,800     5,800     6,154     6,792    4,478
---------------

(1) This French GAAP consolidated statement of income and cash flow data has
    been shown to present our scope of consolidation as of December 31, 2002. It
    illustrates the accounting of Veolia Environnement using the equity method
    from January 1, 2002, instead of December 31, 2002. See Note 2 to our
    Consolidated Financial Statements.

(2) 2002 amounts under US GAAP reflect the use of the equity method of
    accounting for our investment in Veolia Environnement beginning July 1,
    2002, which represents a significant difference in revenues and the
    presentation of cash flows in the French GAAP financial statements.

(3) On December 31, 2002, Vivendi Universal applied the option proposed in the
    paragraph 23100 of the French rules 99-02 and presents the equity in
    (losses) earnings of businesses which were sold during the year on one line
    in the consolidated statement of income as "equity in (losses) earnings of
    disposed businesses." Divested businesses include all of the Vivendi
    Universal Publishing activities excluding: Vivendi Universal Games;
    publishing activities in Brazil; the consumer press division, the
    divestiture of which was completed in February 2003; and Comareg, the
    divestiture of which was completed in May 2003. See Notes 2 and 3 to our
    Consolidated Financial Statements.

(4) Restated to give effect to changes in accounting policies adopted in 2001
    (see Note 1 to our Consolidated Financial Statements).

(5) In order to facilitate the comparability of 2000 and 1999 consolidated
    financial results, the 1999 consolidated results are presented in accordance
    with accounting policies in effect in 2000.

(6) Net financial debt is defined as the sum of long-term debt, bank overdrafts
    and other short-term borrowings, cash and cash equivalents, other marketable
    securities and financial receivables. The first four components are separate
    line items in the Consolidated Balance Sheet. Financial receivables are
    comprised of short-term loans receivable (also a separate line item in the
    Consolidated Balance Sheet) and net interest-bearing long-term loans
    receivable (included in other investments in the Consolidated Balance
    Sheet). Net interest-bearing long-term loans receivable were E 855 million
    and E 1,455 million, respectively, at December 31, 2002 and December 31,
    2001.

(7) Excluding treasury shares recorded as a reduction of shareholders' equity.

                                        2
EXCHANGE RATE INFORMATION

     The following table sets forth, for the periods indicated, the
end-of-period, average, high and low noon buying rates in the City of New York
for cable transfers as certified for customs purposes by the Federal Reserve
Bank of New York. Unless otherwise indicated, such rates are set forth as US
dollars per euro. On June 25, 2003, the noon buying rate was E 1.00 = $1.16.
PERIOD   AVERAGE
MONTH ENDED                                                END     RATE(1)   HIGH   LOW
-----------                                               ------   -------   ----   ----
May 31, 2003............................................   1.18     1.16     1.19   1.12
April 30, 2003..........................................   1.12     1.09     1.12   1.06
March 31, 2003..........................................   1.09     1.08     1.11   1.05
February 28, 2003.......................................   1.08     1.08     1.09   1.07
January 31, 2003........................................   1.07     1.06     1.09   1.04
December 2002...........................................   1.05     1.02     1.05   0.99
PERIOD   AVERAGE
YEAR ENDED                                                 END     RATE(2)   HIGH   LOW
----------                                                ------   -------   ----   ----
December 31, 2002.......................................   0.95     1.06     1.17   0.95
December 31, 2001.......................................   0.89     0.89     0.95   0.84
December 31, 2000.......................................   0.94     0.92     1.03   0.83
December 31, 1999.......................................   1.00     1.06     1.17   1.00
December 31, 1998(3)....................................   5.59     5.90     6.21   5.38
---------------

(1) The average of the exchange rates for all days during the applicable month.

(2) The average of the exchange rates on the last day of each month during the
    applicable year.

(3) The exchange rates for the year ended December 31, 1998, are set forth as
    French francs per US dollar and are based on the rates quoted by the Federal
    Reserve Bank of New York for French francs per $1.00.

DIVIDENDS

     The table below sets forth the total dividends paid per Vivendi Universal
ordinary share and Vivendi Universal American Depositary Share (ADS) from 1998
through 2002. The amounts shown exclude the avoir fiscal, a French tax credit
described under "Item 10--Additional Information--Taxation." We have
historically paid annual dividends in respect of our prior fiscal year. We have
rounded dividend amounts to the nearest cent.
DIVIDEND PER    DIVIDEND PER
                                                             ORDINARY SHARE       ADS
                                                             --------------   ------------
                                                               (EUROS)(1)     (DOLLARS)(2)
1998(3)....................................................       0.92            0.17
1999.......................................................       1.00            0.22
2000(4)....................................................       1.00            0.89
2001.......................................................       1.00            0.89
2002.......................................................       1.00            0.91
---------------

(1) Until 1999 (i.e., until the dividend for the year ended December 31, 1998),
    we paid dividends in French francs. Amounts in French francs have been
    translated at the official fixed exchange rate of E 1.00 = FF6.55957.

(2) Translated solely for convenience into US dollars at the noon buying rates
    on the respective dividend payments date, or on the following business day
    if such date was not a business day in the US. The noon buying rate may
    differ from the rate that may be used by the depositary to convert euros to
    US dollars for the purpose of making payments to holders of ADSs.

                                        3
(3) Restated for a 3-for-1 stock split which occurred on May 11, 1999.

(4) Prior to December 8, 2000, the date of the completion of the Vivendi S.A.,
    The Seagram Company Ltd. and Canal Plus S.A. merger transactions (described
    below under "Item 4--Information on the Company--History and Development of
    the Company"), each Vivendi ADS represented one-fifth of a Vivendi ordinary
    share, while each Vivendi Universal ADS now represents one Vivendi Universal
    ordinary share.

RISK FACTORS

     You should carefully review the risk factors described below in addition to
the other information presented in this document.

WE AND OUR SUBSIDIARIES REQUIRE A SIGNIFICANT AMOUNT OF CASH TO SERVICE AND
REPAY OUR DEBT. OUR ABILITY TO GENERATE SUFFICIENT CASH DEPENDS ON MANY FACTORS
BEYOND OUR CONTROL.

     While our ability and the ability of our subsidiaries to fund working
capital for our operations, research and development and capital expenditures
depends on our future operating performance which cannot be predicted with
assurance, we believe that our current cash position plus our unused credit
facilities should provide a sound basis for funding these cash requirements.

     Despite the significant extension of the maturity profile of our debt
achieved through the refinancing plan that we have undertaken in 2003, we expect
that there will be a shortfall in the funding necessary to meet our debt-service
obligations. In addition, we face a significant number of contingent
obligations, some of which are likely to require significant cash payments by
us. We expect to meet these funding requirements with the proceeds from our
asset divestiture program described in "Item 4--History and Development of the
Company--Our Strategy." There can be no assurance, however, that asset
divestitures will be sufficient to make up the shortfall or that our cash needs
over the term of the divestiture program will not exceed our current estimates.

     If our future cash flows from operations, capital resources and from sales
of assets are insufficient to pay our obligations as they mature or to fund our
liquidity needs, we and our subsidiaries may be forced to:

     - reduce or delay our business activities, capital expenditures or research
       and development;

     - obtain additional debt or equity capital; or

     - restructure or refinance all or a portion of our debt on or before
       maturity.

     In particular, our subsidiaries Vivendi Universal Entertainment LLLP, or
VUE, and Societe d'Investissement pour la Telephonie S.A., or SIT, have
significant indebtedness and are relying on refinancing and operating cash flow
to service and repay that indebtedness.

     We cannot assure you that we and our subsidiaries would be able to
accomplish any of these alternatives on a timely basis or on satisfactory terms,
if at all. In addition, our existing debt and any future debt may limit our and
our subsidiaries' ability to pursue any of these alternatives.

WE ARE SELLING A PORTION OF OUR ASSETS AND BUSINESSES TO MEET OUR DEBT
OBLIGATIONS AND DECREASE OUR LEVERAGE.

     To meet our debt obligations and decrease our leverage, we are in the
process of disposing of a portion of our assets and businesses. After new
management was appointed in July 2002, we announced a goal of E 16 billion in
asset divestitures by the end of 2004. In the second half of 2002, we sold
assets and businesses for aggregate consideration of approximately E 6.7
billion, including approximately E 0.4 billion in assumed debt. For 2003, we
have announced the goal of E 7 billion in asset sales and, through March 31,
2003, we have sold assets for aggregate consideration of approximately E .7
billion. We are currently also evaluating bids for the purchase of all or
portions of VUE and VU Games as well as a possible initial public offering of
the

                                        4
equity of VUE. If we disposed of assets worth E 7 billion in 2003, we anticipate
our net debt would decrease by only a portion of that amount. See "Item
4--History and Development of the Company--Our Strategy."

     We can offer no assurances that we will be able to locate potential buyers
for our assets and businesses or will be able to consummate any sales to
potential buyers we do locate. For example, certain asset transfer restrictions
contained in the amended and restated limited liability limited partnership
agreement of VUE (the "Partnership Agreement") that certain of Vivendi
Universal's affiliates entered into in connection with Vivendi Universal's
acquisition of the entertainment assets of InterActiveCorp (formerly known as
USA Interactive and prior thereto as USA Networks, Inc.), or USAi, will require
us to obtain the consent of our partner for certain transactions. See "Item
4--History and Development of the Company--2002 Significant Transactions." Some
other factors that may make it difficult or impossible for us to sell our assets
or businesses are:

     - restrictive covenants in our current and future debt facilities;

     - shareholders agreements and minority interests;

     - ongoing litigation and investigations; and

     - the need to receive governmental approvals, including antitrust and
       regulatory approvals.

     Our divestitures may prove unsuccessful or may otherwise have a material
adverse effect on our ability to conduct business, our operations and our
financial condition. For example, we may not always be able to obtain the
optimal price for assets and businesses we are required or plan to sell or may
receive a price that is substantially lower than the price we paid for the
assets or businesses being disposed of. In addition, our continuing operations
may suffer as a result of losing synergies with the assets and businesses sold.
On December 23, 2002, we sold Houghton Mifflin and have received approximately
$1.3 billion in consideration therefor. We paid approximately $2.2 billion for
Houghton Mifflin in July 2001. On December 23, 2002, we sold our approximately
10% interest in Echostar for total consideration of approximately E 1.0 billion;
we had paid a total consideration of approximately E 1.7 billion for that
interest on January 22, 2002.

OUR SUBSTANTIAL DEBT COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION OR RESULTS
OF OPERATIONS AND PREVENT US FROM FULFILLING OUR OBLIGATIONS.

     We have a significant amount of debt. As of December 31, 2002, we had
E 19.6 billion of gross debt on a consolidated basis. See "Item 5--Operating and
Financial Review and Prospects -- Liquidity and Capital Resources" and our
Consolidated Financial Statements for further information about our substantial
debt.

     Our substantial debt and the covenants in our debt instruments could have
important consequences. For example, these instruments are causing us to dispose
of assets and businesses and they could:

     - require us to dedicate a substantial portion of our cash flows from
       operations to payments on our debt, which will reduce our funds available
       for working capital, capital expenditures, research and development and
       other general corporate purposes;

     - limit our flexibility in planning for, or reacting to, changes in
       distribution or marketing of our products, customer demands and
       competitive pressures in the industries we serve;

     - limit our ability to undertake acquisitions;

     - place us at a competitive disadvantage compared to our competitors that
       have less debt than we do;

     - restrict our use of proceeds from asset sales or new issuances of equity
       or debt or from new bank debt facilities;

     - increase our vulnerability, and reduce our flexibility to respond, to
       general and industry-specific adverse economic conditions; and

     - limit our ability to borrow additional funds and increase the cost of any
       such borrowing.

                                        5
We may incur substantial additional debt in the future. The terms of our
debt restrict but do not prohibit us from incurring additional debt. The
addition of further debt to our current debt levels could further increase the
leverage-related risks discussed herein.

OUR SALES OF ASSETS AND BUSINESSES HAVE RESULTED IN, AND WILL RESULT IN, THE
REMOVAL OF THE RESULTS OF THOSE BUSINESSES AND ASSETS FROM OUR FINANCIAL RESULTS
AND MAY INCREASE THE VOLATILITY OF OUR FINANCIAL RESULTS.

     Sales of our assets and businesses have caused, and will continue to cause,
our revenues and operating income to decrease and may cause our financial
results to become more volatile or may otherwise materially adversely affect us.
Since the beginning of 2002, we have disposed of businesses and assets that, if
we had held them, would have contributed significantly to our revenue and
operating income.

WE HAVE ENGAGED IN A SUBSTANTIAL NUMBER OF SIGNIFICANT ACQUISITION AND
DISPOSITION TRANSACTIONS IN RECENT YEARS, WHICH MAKES IT DIFFICULT TO COMPARE
OUR RESULTS FROM PERIOD TO PERIOD.

     We have engaged in a substantial number of significant acquisitions and
dispositions and other complex financial transactions in recent years, which
makes it difficult to analyze our results and to compare them from period to
period. In order to facilitate comparison of our results between recent periods,
we present financial information on a pro forma basis, both on a consolidated
basis and for our individual business segments, giving effect to these
transactions as if they had occurred on earlier dates. However, pro forma
financial information is not necessarily indicative of results that would have
been achieved had the transactions actually occurred on such earlier dates.
Moreover, we present pro forma information based on a number of assumptions. For
example, we present pro forma information consistent with French GAAP, as if the
transactions had occurred at the beginning of 2001. Given our asset divestiture
program, our results will continue to be difficult to compare from period to
period in the future.

WE HAVE BEEN, AND COULD BE, ADVERSELY AFFECTED BY A DOWNGRADE OF OUR DEBT
RATINGS BY RATING AGENCIES.

     In the second half of 2002, we experienced a number of debt rating
downgrades. Moody's cut Vivendi Universal's senior debt rating on July 1, 2002,
from Baa3 to Ba1, under review for possible further downgrade. Standard & Poor's
followed the next day with a one-notch downgrade in our credit rating to BBB-
with a negative outlook. On August 14, 2002, Moody's lowered the long term
senior unsecured debt rating of Vivendi Universal to B1 and assigned a Ba2
senior implied rating to the company under review for possible downgrade, and
Standard & Poor's downgraded the long term senior unsecured debt to B+ and
assigned a BB corporate credit rating to Vivendi Universal on credit watch with
negative implications. On October 30, 2002, Moody's downgraded Vivendi
Universal's senior implied rating to Ba3, leaving the senior unsecured ratings
unchanged at B1, under review for possible downgrade. These downgrades caused us
to lose, to a significant extent, access to the capital markets, and, most
importantly, to the commercial paper market, historically our main source of
funding for working capital needs, and they also triggered default and covenant
provisions under some of our debt facilities. While our current debt facilities
do not contain further rating triggers, additional downgrades by either Standard
& Poor's or Moody's could exacerbate our liquidity problems, increase our costs
of borrowing, result in our being unable to secure new financing and affect our
ability to make payments on outstanding debt instruments and to comply with
other existing obligations.

WE ARE A PARTY TO NUMEROUS LEGAL PROCEEDINGS AND INVESTIGATIONS THAT COULD HAVE
A NEGATIVE EFFECT ON US.

     We are party to lawsuits and investigations in France and in the United
States that could have a material adverse effect on us. In France, the
Commission des Operations de Bourse commenced in July 2002 an investigation
regarding certain of our financial statements. In the United States, Vivendi
Universal is party to a number of suits and investigations concerning
allegations challenging the accuracy of our financial statements and certain
public statements made by us describing our financial condition from late 2000
through 2002:

     - Vivendi Universal is named as a defendant in a consolidated securities
       class action filed in the United States District Court for the Southern
       District of New York.

                                        6
- Vivendi Universal is being investigated by the Office of the United
       States Attorney for the Southern District of New York, and by the SEC.

     - Vivendi Universal is named as a defendant in a suit filed by Liberty
       Media on March 28, 2003, which on May 13, 2003, was consolidated for
       pre-trial purposes into the securities class action pending in the United
       States District Court for the Southern District of New York.

     In addition, Vivendi Universal, USI Entertainment Inc. and VUE have been
sued by USAi and one of its affiliates for specific performance of what the
plaintiffs contend to be VUE's obligation to make certain tax payments. Vivendi
Universal may also be liable to pay, in accordance with an investment agreement
with Elektrim S.A., a substantial portion of any damages awarded against
Elektrim in two ongoing arbitrations to resolve disputes concerning the
acquisition and transfer of certain shares in a subsidiary company by Elektrim.

     In the opinion of Vivendi Universal, the plaintiffs' claims in the legal
proceedings lack merit, and Vivendi Universal intends to defend against such
claims vigorously. However, the outcome of any of these legal proceedings or
investigations or any additional proceedings or investigations that may be
initiated in the future could have a material adverse effect on us. For a more
complete discussion of our legal proceedings and investigations, see "Item
8--Litigation."

WE HAVE A NUMBER OF CONTINGENT LIABILITIES THAT COULD CAUSE US TO MAKE
SUBSTANTIAL PAYMENTS.

     We have a number of significant contingent liabilities. These liabilities
are generally described in "Item 5--Operating and Financial Review and
Prospects" and in Notes 11 and 17.4 to our Consolidated Financial Statements
included in this document. If we were forced to make a payment due to one or
more of these contingent liabilities, it could have an adverse effect on our
financial condition and our ability to make payments under our debt instruments.

OUR BUSINESS OPERATIONS IN SOME COUNTRIES ARE SUBJECT TO ADDITIONAL RISKS.

     We conduct business in markets around the world. The risks associated with
conducting business internationally, and in particular in some countries outside
of Western Europe, the US and Canada, can include, among other risks:

     - fluctuations in currency exchange rates (including the dollar/euro
       exchange rate) and currency devaluations;

     - restrictions on the repatriation of capital;

     - differences and unexpected changes in regulatory environment, including
       environmental, health and safety, local planning, zoning and labor laws,
       rules and regulations;

     - varying tax regimes which could adversely affect our results of
       operations or cash flows, including regulations relating to transfer
       pricing and withholding taxes on remittances and other payments by
       subsidiaries and joint ventures;

     - exposure to different legal standards and enforcement mechanisms and the
       associated cost of compliance therewith;

     - difficulties in attracting and retaining qualified management and
       employees or rationalizing our workforce;

     - tariffs, duties, export controls and other trade barriers;

     - longer accounts receivable payment cycles and difficulties in collecting
       accounts receivable;

     - limited legal protection and enforcement of intellectual property rights;

     - insufficient provisions for retirement obligations;

     - recessionary trends, inflation and instability of the financial markets;

                                        7
- higher interest rates; and

     - political instability and the possibility of wars and terrorist acts.

     We may not be able to insure or hedge against these risks and we may not be
able to ensure compliance with all of the applicable regulations without
incurring additional costs. Furthermore, financing may not be available in
countries with less than investment-grade sovereign credit ratings. As a result,
it may be difficult to create or maintain profit-making operations in developing
markets.

UNFAVORABLE CURRENCY EXCHANGE RATE FLUCTUATIONS COULD ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS.

     We have substantial assets, liabilities, revenues and costs denominated in
currencies other than euros. To prepare our Consolidated Financial Statements we
must translate those assets, liabilities, revenues and expenses into euros at
then-applicable exchange rates. Consequently, increases and decreases in the
value of the euro versus other currencies will affect the amount of these items
in our Consolidated Financial Statements, even if their value has not changed in
their original currency. These translations could result in significant changes
to our results of operations from period to period.

     In addition, to the extent that we incur expenses that are not denominated
in the same currency as the related revenues, exchange rate fluctuations could
cause our expenses to increase as a percentage of net sales, affecting our
profitability and cash flows.

WE MAY NOT BE ABLE TO MEET ANTICIPATED CAPITAL REQUIREMENTS FOR CERTAIN
TRANSACTIONS.

     We may engage in projects that require us to seek substantial amounts of
funds through various forms of financing. Our ability to arrange financing for
projects and our cost of capital depends on numerous factors, including general
economic and capital market conditions, availability of credit from banks and
other financial institutions, investor confidence in our businesses,
restrictions in debt instruments, success of current projects, perceived quality
of new projects and tax and securities laws. We may forego attractive business
opportunities and lose market share if we cannot secure financing on
satisfactory terms.

WE MAY SUFFER REDUCED PROFITS OR LOSSES AS A RESULT OF INTENSE COMPETITION.

     The majority of the industries in which we operate are highly competitive
and require substantial human and capital resources. Many other companies serve
the markets in which we compete. From time to time, our competitors may reduce
their prices in an effort to expand market share and introduce new technologies
or services, or improve the quality of their services. We may lose business if
we are unable to match the prices, technologies or service quality offered by
our competitors.

     In addition, most of our main businesses rely on some important third-party
content. There is no assurance that the desired rights to content will be
available on commercially reasonable terms, and as the markets in which our
businesses operate become more competitive, the cost of obtaining this
third-party content could increase. Any of these competitive effects could have
a material adverse effect on our business and financial performance.

WE MAY NOT BE SUCCESSFUL IN DEVELOPING NEW TECHNOLOGIES OR INTRODUCING NEW
PRODUCTS AND SERVICES.

     Many of the industries in which we operate are subject to rapid and
significant changes in technology and are characterized by the frequent
introduction of new products and services. Pursuit of necessary technological
advances may require substantial investments of time and resources and we may
not succeed in developing marketable technologies. Furthermore, we may not be
able to identify and develop new product and service opportunities in a timely
manner. Finally, technological advances may render our existing products
obsolete, forcing us to write off investments made in those products and
services and to make substantial new investments.

                                        8
WE MAY HAVE DIFFICULTY ENFORCING OUR INTELLECTUAL PROPERTY RIGHTS.

     The decreasing cost of electronic and computer equipment and related
technology has made it easier to create unauthorized versions of audio and
audiovisual products such as compact discs, videotapes and DVDs. A substantial
portion of our revenue comes from the sale of audio and audiovisual products
that are potentially subject to unauthorized copying. Similarly, advances in
Internet technology have increasingly made it possible for computer users to
share audio and audiovisual information without the permission of the copyright
owners and without paying royalties to holders of applicable intellectual
property or other rights. A large portion of intellectual property is
potentially subject to widespread, uncompensated dissemination on the Internet.
If we fail to obtain appropriate relief through the judicial process or the
complete enforcement of judicial decisions issued in our favor, or if we fail to
develop effective means of protecting our intellectual property or
entertainment-related products and services, our results of operations and
financial position may suffer.

CHALLENGES TO OUR RIGHTS TO USE INTELLECTUAL PROPERTY COULD HAVE A NEGATIVE
EFFECT ON US.

     Many of our main businesses are heavily dependent on intellectual property
owned and licensed by us. Challenges by third parties claiming infringement of
their proprietary rights, if upheld, could result in the loss of intellectual
property which we depend on to generate revenues and could result in damages or
injunctive relief being imposed against us. Even challenges that we are
successful in defending may result in substantial costs and diversion of
resources, which could have an adverse effect on our operations.

WE MAY NOT BE ABLE TO RETAIN OR OBTAIN REQUIRED LICENSES, PERMITS, APPROVALS AND
CONSENTS.

     We need to retain or obtain a variety of permits and approvals from
regulatory authorities to conduct and expand each of our businesses. The process
for obtaining these permits and approvals is often lengthy, complex and
unpredictable. Moreover, the cost for renewing or obtaining permits and
approvals may be prohibitive. If we are unable to retain or obtain the permits
and approvals we need to conduct and expand our businesses at a reasonable cost
and in a timely manner -- in particular, licenses to provide telecommunications
services -- our ability to achieve our strategic objectives could be impaired.
The regulatory environment in which our businesses operate is complex and
subject to change, and adverse changes in that environment could impose costs on
us or limit our revenue.

THE LOSS OF KEY PERSONNEL COULD HURT OUR OPERATIONS.

     Our success and the success of our business units depends upon the
continuing contributions of our executive officers and other key operating
personnel. The complete or partial loss of their services could adversely affect
our businesses.

RESTRUCTURING AT OUR BUSINESS UNITS MAY ADVERSELY AFFECT OUR OPERATIONS AND
FINANCIAL CONDITION.

     In an effort to cut costs and rationalize operations, our business units
may engage in restructuring, including closures of facilities and reduction of
workforce. If a business unit fails to properly carry out any restructuring, the
relevant business's ability to conduct its operations and the business's results
could be adversely affected. Restructurings, closures and layoffs may also harm
our employee relationships, public relationships and governmental relationships
which would in turn adversely affect our operations and results. For example, in
March 2003, Canal+ Group announced an employee reduction as part of its overall
restructuring plan. The program calls for a reduction of 305 positions, mainly
administration and technical support personnel. In addition, 138 positions in
certain support functions will be outsourced. The announcement of this program
may result in a deterioration of our labor relations and may have an adverse
effect on our operations.

CEGETEL GROUP EXPECTS TO MAKE SIGNIFICANT INVESTMENTS IN NETWORKS AND NEW
TECHNOLOGY AND ANTICIPATED BENEFITS OF THESE INVESTMENTS MAY NOT BE REALIZED.

     Cegetel Group expects to make substantial investments in its mobile
networks, particularly in connection with the rollout of its UMTS mobile network
over the next several years in view of increased usage and the
                                        9
need to offer new services and greater functionality afforded by UMTS
technology. Accordingly, the level of Cegetel Group's capital expenditures in
future years is expected to exceed current levels. The development of UMTS
technology is taking longer than anticipated. Consumer acceptance of UMTS or
other new technology may be less than expected and will depend on a number of
factors, including the availability of applications which exploit the potential
of the technology and the breadth and quality of available content. If the
introduction of UMTS services is further delayed or UMTS fails to achieve the
expected advantages over existing technologies, Cegetel Group may be unable to
recoup its network investment.

REGULATIONS REGARDING ELECTROMAGNETIC RADIATION OR FUTURE CLAIMS WITH RESPECT TO
ELECTROMAGNETIC RADIATION COULD HAVE AN ADVERSE EFFECT ON OUR MOBILE TELEPHONE
REVENUES AND OPERATIONS.

     The International Commission for Non-Ionizing Radiation Protection, an
independent organization that advises the World Health Organization, has
established a series of recommendations setting exposure limits from
electromagnetic radiation from antennas. These regulations were driven by
concern over a potential connection between electromagnetic radiation and
certain negative health effects, including some forms of cancer. They were
enacted into French law on May 3, 2002. SFR, an 80% owned subsidiary of Cegetel
Group, is also, along with the other French mobile telephony operators, in the
process of entering into agreements with various cities, including the city of
Paris, that will set up local guidelines. The International Cancer Research
Center, authorized by the World Health Organization, is currently conducting a
large-scale epidemiological study, the conclusions of which are expected to be
published in 2004. We cannot assure you that future regulations will not have a
negative impact on our revenues operations. We also cannot assure you that
claims, relating to electromagnetic radiation will not arise against us and our
mobile telephony operations in the future and have an adverse effect on our
revenues and operations. In addition, even the perception of possible health
risks, could lead to reduced demand for our mobile telephony services and have
an adverse effect on our revenues and operations.

OUR CONTENT ASSETS IN TELEVISION, MOTION PICTURES AND MUSIC MAY NOT BE
COMMERCIALLY SUCCESSFUL.

     A significant amount of our revenue comes from the production and
distribution of content offerings such as feature films, television series and
audio recordings. The success of content offerings depends primarily upon their
acceptance by the public, which is difficult to predict. The market for these
products is highly competitive and competing products are often released into
the marketplace at the same time. The commercial success of a motion picture,
television series or audio recording depends on the quality and acceptance of
competing offerings released into the marketplace at or near the same time, the
availability of alternative forms of entertainment and leisure time activities,
general economic conditions and other tangible and intangible factors, all of
which can change quickly. Our motion picture business is particularly dependent
on the success of a limited number of releases. Universal Picture Group, or UPG,
typically releases 14 to 16 motion pictures a year and the commercial failure of
just a few of these motion pictures can have a significant adverse impact on
UPG's results for both the year of release and the following year. This is
particularly true for motion pictures with high production costs, and in 2003,
UPG intends to release an unusually large number of high production cost motion
pictures. Our failure to produce and distribute motion pictures, television
series and audio recordings with broad consumer appeal could materially harm our
business, financial condition and prospects for growth.

THE RECORDED MUSIC MARKET HAS BEEN DECLINING AND MAY CONTINUE TO DECLINE.

     Economic recession, CD-R piracy and illegal downloading of music from the
Internet and growing competition for consumer discretionary spending and shelf
space are all contributing to a declining recorded music market. Additionally,
the period of growth in recorded music sales driven by the introduction and
penetration of the CD format has ended and no profitable new format has emerged
to take its place. Worldwide sales were down as the music market witnessed an
estimated market decline of 9.5% in 2002. Double-digit declines were experienced
in the US, Japan and Germany. Of the world's five major music markets only
France reported growth. There are no assurances that the recorded music market
will not

                                        10
continue to decline. A declining recorded music market is likely to lead to the
loss of revenue and operating income at Universal Music Group, or UMG.

UMG HAS BEEN LOSING, AND IS LIKELY TO CONTINUE TO LOSE, SALES DUE TO
UNAUTHORIZED COPIES AND PIRACY.

     Technological advances and the conversion of music into digital formats
have made it easy to create, transmit and "share" high quality unauthorized
copies of music through pressed disc and CD-R piracy, home CD burning and the
downloading of music from the Internet. Unauthorized copies and piracy cost the
recorded music industry an estimated $4.3 billion in lost revenues during 2001,
the last year for which data is available, according to the International
Federation of the Phonographic Industry, or IFPI. IFPI estimates that 1.9
billion pirated units were manufactured in 2001, equivalent to about 40% of all
CDs and cassettes sold globally. According to IFPI estimates, about 28% of all
CDs sold in 2001 were pirated, up from about 20% in 2000. We believe that these
percentages are continuing to increase. Unauthorized copies and piracy both
decrease the volume of legitimate sales and put pressure on the price at which
legitimate sales can be made and have had, and, we believe, will continue to
have, an adverse effect on UMG.

OUR MOTION PICTURE BUSINESSES MAY LOSE SALES DUE TO UNAUTHORIZED COPIES AND
PIRACY.

     Technological advances and the conversion of motion pictures into digital
formats have made it easier to create, transmit and "share" high quality
unauthorized copies of motion pictures in theatrical release, on videotapes and
DVDs, from pay-per-view through unauthorized set top boxes and other devices and
through unlicensed broadcasts on free TV and the Internet. Unauthorized copies
and piracy of these products compete against legitimate sales of these products.
The motion picture business is dependent upon the enforcement of copyrights. A
failure to obtain appropriate relief from unauthorized copying through judicial
decisions and legislation and an inability to curtail piracy rampant in some
regions of the world are threats to the motion picture business and may have an
adverse effect on our motion picture business.

CHANGES IN ECONOMIC CONDITIONS COULD AFFECT THE REVENUE WE RECEIVE FROM
TELEVISION PROGRAMMING THAT WE PRODUCE AND FROM OUR TELEVISION CHANNELS.

     Our television production and distribution and cable networks are directly
and indirectly dependent on advertising for their revenue. Changes in US, global
or regional economic conditions may affect the advertising market for broadcast
and cable television programming, which in turn may affect the volume of, and
price for, the advertising on our cable networks and shows and the volume of,
and price for, the programming we are able to sell.

CONSOLIDATION AMONG CABLE AND SATELLITE DISTRIBUTORS MAY HARM OUR CABLE
TELEVISION NETWORKS.

     Cable and satellite operators continue to consolidate, making our cable
television networks increasingly dependent on fewer operators. If these
operators fail to carry our cable television networks or use their increased
bargaining power to negotiate less favorable terms of carriage, our cable
television network business could be adversely affected.

THE INCREASE IN THE NUMBER OF CABLE TELEVISION NETWORKS MAY ADVERSELY AFFECT OUR
CABLE TELEVISION NETWORKS.

     Our cable networks compete directly with other cable television networks as
well as with local and network broadcast channels for distribution, programming,
viewing audience and advertising revenue. Growth in distribution platforms has
led to the introduction of many new cable television networks. The increased
competition may make it more difficult to place our cable networks on satellite
and cable distribution networks, acquire attractive programming or attract
necessary audiences or suitable advertising revenue.

OUR TELEVISION PRODUCTION AND DISTRIBUTION BUSINESSES FACE INCREASED
COMPETITION.

     Our produced programs, including television series, made-for-television and
made-for-video motion pictures, compete in a worldwide television marketplace
that has become ever more competitive as digital
                                        11
cable and satellite delivery increasingly expand the number of channels (and
competing programs) available to consumers. Competition in the critical US
production market has also been increased by the growing consolidation and
vertical integration of several large television and media giants. The 1995
repeal of the financial interest and syndication rules in the US has permitted
these conglomerates to combine ownership of television production businesses
with broadcast networks. As a result, the current US broadcast networks -- ABC,
CBS, NBC, Fox, The WB and UPN -- are able to fill their schedules with a large
percentage of self-owned programs, thus reducing the number of time slots
available to VUE's Universal Television Group and other "outside" producers. For
the fall 2002 season, the top five producers in total hours on network
television were all affiliated with a broadcast network. Approximately 40% of
Universal Television Group's revenues came from broadcast license program fees
in 2002. We can offer no assurances that we will be able to maintain or grow
these revenues in the face of increased competition.

NEW TECHNOLOGIES MAY HARM OUR CABLE TELEVISION NETWORKS.

     A number of new personal video recorders, such as TIVO in the United
States, have emerged in recent years. These recorders often contain features
allowing viewers to watch pre-recorded programs without advertising. The effect
of these recorders on viewing patterns and exposure to advertising could have an
adverse effect on our operations and results.

OUR THEME PARK AND RESORT GROUP MAY CONTINUE TO BE NEGATIVELY AFFECTED BY
INTERNATIONAL, POLITICAL AND MILITARY DEVELOPMENTS.

     The terrorist attacks of September 11, 2001, the threat and outbreak of war
and the threat of further terrorist attacks have resulted in significant
reductions in domestic and international travel that negatively affected our
theme park and resort activities. These developments have had a continued impact
on vacation travel, group conventions and tourism in general. Any further
outbreak or escalation of hostilities, any further terrorist attack, the
perceived threat of hostilities or terrorist attack or a change in public
perception regarding current developments would be likely to have an additional
negative impact on our operations.

CANAL+ GROUP IS SUBJECT TO FRENCH AND OTHER EUROPEAN CONTENT AND EXPENDITURE
PROVISIONS THAT RESTRICT ITS ABILITY TO CONDUCT ITS BUSINESS.

     Canal+ Group is regulated by various statutes, regulations and orders. In
particular, under its French broadcast authorization, the premium channel Canal+
is subject to the following regulations: (i) no more than 49% of its capital
stock may be held by a single shareholder and (ii) 60% of the films broadcast by
the channel must be European films and 40% must be French Language films. Each
year Canal+ must invest 20% of its total prior-year revenues in the acquisition
of film rights, including 9% which must be devoted to French language films and
3% to non-French language European films. At least 75% of the French movies must
not be acquired from Canal+ Group controlled companies. Canal+ has an obligation
to invest 4.5% of its revenues in original TV movies and dramas. Canal+ Group
also operates in Belgium, Spain, the Netherlands, Poland and the Nordic
countries pursuant to the regulations of each of these countries which generally
stipulate, as do the French, financing levels for European and national content.
These regulations severely limit Canal+ Group's ability to choose content and
otherwise manage its business and could have an adverse effect on its operations
and results.

ONE OF OUR TWO INDEPENDENT PUBLIC ACCOUNTANTS, BARBIER FRINAULT & CIE, WAS
FORMERLY A MEMBER OF ANDERSEN WORLDWIDE, AS WAS ARTHUR ANDERSEN LLP, WHICH HAS
BEEN FOUND GUILTY OF A FEDERAL OBSTRUCTION OF JUSTICE CHARGE, AND HOLDERS OF OUR
SECURITIES LIKELY WILL BE UNABLE TO EXERCISE EFFECTIVE REMEDIES AGAINST ANDERSEN
WORLDWIDE IN ANY LEGAL ACTION.

     One of our two independent public accountants, Barbier Frinault & Cie, was
formerly a member of Andersen Worldwide, as was Arthur Andersen LLP, and during
that period provided us with auditing services, including issuing an audit
report with respect to our audited consolidated financial statements for the
fiscal years ended December 30, 2001, and December 31, 2002. On June 15, 2002, a
jury in Houston, Texas found

                                        12
Arthur Andersen LLP guilty of a federal obstruction of justice charge arising
from the federal government's investigation of Enron Corp. On August 31, 2002,
Arthur Andersen LLP ceased practicing before the SEC.

     Andersen Worldwide has not reissued its audit report with respect to our
audited consolidated financial statements prepared by it. Furthermore, Andersen
Worldwide has not consented to the inclusion of its audit report herein. As a
result, investors in our securities likely will not have an effective remedy
against Andersen Worldwide in connection with a material misstatement or
omission with respect to our audited consolidated financial statements, any
registration statement or any other filing we make with the SEC, including any
claim under Section 11 of the Securities Act with respect to such registration
statement. In addition, even if investors were able to assert such a claim, as a
result of its conviction and other lawsuits, Andersen Worldwide may not have
sufficient assets to satisfy claims made by investors or by us that might arise
under federal securities laws or otherwise relating to any alleged material
misstatement or omission with respect to our audited consolidated financial
statements.

ITEM 4:  INFORMATION ON THE COMPANY

HISTORY AND DEVELOPMENT OF THE COMPANY

     The commercial name of our company is Vivendi Universal, and the legal name
of our company is Vivendi Universal, S.A. Vivendi Universal is a societe
anonyme, a form of limited liability company, initially organized under the name
Sofiee, S.A. on December 11, 1987, for a term of 99 years in accordance with the
French commercial code. Our registered office is located at 42, avenue de
Friedland, 75380 Paris Cedex 08, France, and the telephone number of our
registered office is 33 1 71 71 1000. Our agent in the US is Vivendi Universal
US Holding Co., located at 800 Third Avenue, 5th Floor, New York, New York
10022. All matters addressed to our agent should be to the attention of the Vice
President.

     We were formed through the merger in December 2000 of Vivendi S.A., The
Seagram Company Ltd. and Canal+ S.A., with Vivendi Universal continuing as the
surviving parent entity, or the Merger Transactions. From our origins as a water
company, we expanded our business rapidly in the 1990s and transformed ourselves
into a media and telecommunications company with the December 2000 merger and
the May 2002 acquisition of the entertainment assets of InterActiveCorp
(formerly known as USA Interactive and prior thereto as USA Networks), or USAi.
Following the appointment of new management in July 2002, we commenced a
significant asset divestiture program aimed at reducing the group's
indebtedness, which we are pursuing actively. We have already largely exited the
environmental services and publishing businesses and sold various smaller
operations. See "Item 5--Operating and Financial Review and Prospects--Recent
Developments" and "--Our Strategy" below.

     We are one of the largest media and telecommunications groups in the world.
Our attractive portfolio of assets include, among others, the following
businesses: mobile and fixed-line telecommunications, recorded music, film,
television, theme parks and resorts and interactive entertainment and
educational software. See "--Business Overview."

  Our Strategy

     We are a company in transition. Our principal strategic focus is to return
to an investment grade credit profile by continuing to reduce our leverage while
maintaining sufficient liquidity.

     The primary means by which we intend to achieve this goal is through the
completion of our E 16 billion asset divestiture program by the end of 2004. In
the second half of 2002, we sold E 6.7 billion of assets. In 2003, we intend to
sell an additional E 7.0 billion of assets. We have initiated numerous asset
divestiture processes, and we are not dependent on any single asset sale to meet
our divestiture target. We have begun exploring strategic options that could
lead to the partial or total divestiture of VUE and VU Games. We have received
multiple, preliminary bids relating to one or more of these businesses and are
currently evaluating them. As of yet there is no pre-established structure or
calendar for any particular divestiture. In parallel, we are also exploring the
option of listing up to 25 to 30% of the share capital of VUE in an initial
public equity offering. In the first quarter of 2003, we have closed asset sales
for an aggregate consideration of

                                        13
approximately E 726 million. From April 1, 2003 to June 25, 2003, we have signed
and closed asset sales for an estimated aggregate consideration of E 1.7
billion.
TOTAL         CASH
DATE                                    ASSET                            CONSIDERATION   RECEIVED
----                                    -----                            -------------   --------
                                                                              (IN MILLIONS)
July 2002      B2B/Health.............................................      E   150      E   150
July 2002      Lagardere..............................................           44           44
July 2002      Vinci..................................................          291          291
August 2002    Vizzavi................................................          143          143
December 2002  Houghton Mifflin.......................................        1,567        1,195
December 2002  Other Publishing.......................................        1,138        1,121
December 2002  Veolia Environnement...................................        1,856        1,856
December 2002  Echostar...............................................        1,037        1,037
December 2002  Sithe Energies Inc.....................................          319          319
               Others.................................................          108          108
                                                                            -------      -------
               TOTAL 2ND HALF 2002(1).................................      E 6,653      E 6,264
                                                                            -------      -------
February 2003  Express-Expansion-Etudiant.............................      E   200      E   200
February 2003  Canal+ Technologies....................................          191          170(2)
February 2003  USAi Warrants..........................................          256          256
               Others.................................................           79           79
                                                                            -------      -------
               TOTAL 1ST QUARTER 2003(1)..............................      E   726      E   705
                                                                            -------      -------
               TOTAL 2ND HALF 2002 & 1ST QUARTER 2003(1)..............      E 7,379      E 6,969
                                                                            =======      =======
---------------

(1) Actual numbers after deduction of divestiture fees and expenses

(2) Of which E 90 million of cash consideration was received in 2002 (excludes
    E 21 million received in May 2003)
TOTAL           CASH
DATE                                  ASSET                           CONSIDERATION(1)   RECEIVED
----                                  -----                           ----------------   --------
                                                                             (IN MILLIONS)
April 2003     Telepiu.............................................       E   871        E   407(2)
May 2003       Vivendi Telecom Hungary.............................           325             10(3)
May 2003       Egypt (telecom).....................................            43             43
May 2003       Comareg.............................................           135            135
June 2003      Sithe Asia..........................................            40             40
June 2003      VUE: 10 Universal City Plaza........................           160            160
               Other closed transactions as of June 25, 2003.......           169            169(4)
                                                                          -------        -------
               TOTAL APRIL 1 -- JUNE 25, 2003......................       E 1,743        E   964
                                                                          =======        =======
---------------

(1) Amounts subject to adjustment to reflect the deduction of divestiture fees
    and expenses, currency rate fluctuations and purchase price adjustments

(2) Does not include a remaining amount of E 50 million of consideration held in
    escrow that may be received

(3) Does not include a remaining amount of E 10 million of deferred purchase
    consideration that may be received

(4) Includes E39 million to be received by Vivendi Universal in the second half
    of 2003.

                                        14
2003 Significant Transactions

     For a discussion of significant transactions that have occurred in 2003,
see "Item 5--Operating and Financial Review and Prospects--Subsequent Events."

  2002 Significant Transactions

     Acquisition of the Entertainment Assets of USA Networks, Inc.

     On May 7, 2002, Vivendi Universal consummated its acquisition of the
entertainment assets of InterActiveCorp (formerly known as USA Interactive and
prior thereto as USA Networks, Inc.), or USAi, through the limited liability
limited partnership, Vivendi Universal Entertainment LLLP, or VUE, in which
Vivendi Universal has an approximately 93% voting interest and an approximately
86% economic interest. As part of the transaction, Vivendi Universal and its
affiliates surrendered 320.9 million shares of USANi LLC that were previously
exchangeable into shares of USAi stock. In addition, Vivendi Universal
transferred 27.6 million treasury shares to Liberty Media Corporation in
exchange for (i) 38.7 million USANi LLC shares (which were among the 320.9
million surrendered) and (ii) 25 million shares of USAi common stock, which were
retained by Vivendi Universal.

     As consideration for the transaction, USAi received a $1.62 billion cash
distribution from VUE, a 5.44% common interest in VUE and Class A and Class B
preferred interests in VUE with initial face values of $750 million and $1.75
billion, respectively. The Class B preferred interests are subject to put/call
provisions at any time following the 20-year anniversary of issuance (May 2022).
USAi may require Vivendi Universal to purchase the Class B preferred interests,
and Vivendi Universal may require USAi to sell to it the Class B preferred
interests, for a number of USAi shares having a market value equal to the
accreted face value of the Class B preferred interests at such time, subject to
a maximum of 56.6 million USAi shares. The parties also agreed to put and call
options on USAi's common interests. The call may be exercised by Vivendi
Universal at any time after the fifth anniversary of the transaction (May 2007)
and the put may be exercised by USAi at any time after the eighth anniversary of
the transaction (May 2010), in either case, at its fair market value, payable at
the option of Universal Studios in cash or Vivendi Universal listed common
equity securities.

     In addition, Mr. Diller, USAi's chairman and chief executive officer,
received a 1.5% common interest in VUE in return for agreeing to specific
non-competition provisions for a minimum of 18 months, for informally agreeing
to serve as VUE's chairman and chief executive officer and as consideration for
his agreement not to exercise his veto right over this transaction. At any time
after the first anniversary of the closing, Mr. Diller may require Universal to
purchase his common interest and, at any time after the second anniversary of
the closing, Universal may purchase Mr. Diller's common interest. In either
case, the purchase price will be equal to the greater of $275 million and the
private market value of his common interest, payable at the option of Universal
in cash or Vivendi Universal listed common equity securities. The fair value of
$275 million of Mr. Diller's common interest has been recorded as part of the
total purchase consideration at the acquisition date. As part of Vivendi
Universal's preliminary purchase price allocation, $15 million has been recorded
as the value of Mr. Diller's non-competition arrangement, which is being
amortized on a straight-line basis over a period of 18 months. The $275 million
minimum value of the common interest is accounted for by Vivendi Universal as a
minority interest in VUE. Any increases in fair value above the minimum put
price of the common interest and any subsequent decreases in fair value to the
minimum put price of the common interest are recognized in operations by Vivendi
Universal (for US GAAP purposes only).

     Under the VUE partnership agreement, VUE is subject to a number of
covenants for the benefit of the holder of the Class A Preferred Interests in
VUE (currently USAi), including a cap on indebtedness and a restriction on asset
transfers by VUE and its subsidiaries. Certain of the covenants, including those
specified above, would cease to apply if an irrevocable letter of credit were
issued in an amount equal to the accrued value of such interests at maturity
(approximately $2 billion in 2022).

     In addition, Vivendi Universal has agreed to indemnify USAi for any "tax
detriment" (defined to mean the present value of the loss of USAi's tax deferral
on the transaction) arising from certain actions taken by

                                        15
VUE prior to May 7, 2017, including selling assets contributed by USAi to VUE
and repaying the $1.62 billion in debt used to finance the cash distribution
made to USAi at the closing.

     In connection with the transaction, Vivendi Universal received
approximately 60.5 million warrants to purchase common stock of USAi, with
exercise prices ranging from $27.50 to $37.50 per share. The warrants were
issued to Vivendi Universal in return for an agreement to enter into certain
commercial arrangements with USAi. At this time, no commercial arrangement is in
place. A portion of the warrants were sold in February 2003. The remainder of
the warrants are expected to be sold on June 30, 2003. For more information, see
"Item 5--Operating and Financial Review and Prospects--Subsequent Events."

     The entertainment assets acquired by Vivendi Universal were USAi's
television programming, cable networks and film businesses, including USA Films,
Studios USA and USA Cable. These assets, combined with the film, television and
theme park assets of the Universal Studios Group, formed a new entertainment
group, Vivendi Universal Entertainment LLLP, in which Vivendi Universal has an
approximately 93% voting interest and an approximately 86% economic interest
(due to the minority stake of Matsushita Electric Industrial Co., Ltd., or
Matsushita).

     The acquisition cost of the USAi entertainment assets amounts to E 11,008
million and was determined with the assistance of an independent third-party
valuation firm.

     Acquisition of Additional Interest in Multithematiques

     In connection with the sale of its shares in USAi, Liberty Media
transferred to Vivendi Universal its 27.4% share in the European cable
television company, Multithematiques and its current account balances in
exchange for 9.7 million Vivendi Universal shares. The share value is based on
the average closing price of Vivendi Universal shares during a reference period
before and after December 16, 2001, the date the agreement was announced.
Following this acquisition, Canal+ Group holds 63.9% of Multithematiques' share
capital. The additional goodwill resulting from Vivendi Universal taking a
controlling stake in this company, which had been consolidated until March 31,
2002 using the equity method, amounted to E 542 million.

     Divestiture of Interest in Veolia Environnement

     Following a decision taken by its Board of Directors on June 17, 2002,
Vivendi Universal reduced its ownership interest in Veolia Environnement in
three steps. Prior to taking these steps, an agreement was signed with Mrs.
Esther Koplowitz by which she agreed not to exercise the call option on Veolia
Environnement's participation in Fomento de Construcciones y Contratas which
otherwise would have been exercisable once Vivendi Universal ownership interest
in Veolia Environnement fell below 50%.

     The first step occurred on June 28, 2002, when 53.8 million Veolia
Environnement shares were sold on the market (approximately 15.5% of share
capital before capital increase). The shares were sold by a financial
institution which had owned the shares since June 12, 2002 following a
repurchase transaction, known in France as a "pension livree," carried out with
Vivendi Universal. In parallel, in order to make it possible for the financial
institution to return the same number of shares to Vivendi Universal at the
maturity of the repurchase agreement on December 27, 2002, Vivendi Universal
entered into a forward sale for the same number of shares to this financial
institution at the price of the investment. As a result, Vivendi Universal
reduced its debt by E 1,479 million and held 47.7% of the share capital of
Veolia Environnement.

     In the second step, on August 2, 2002, Veolia Environnement increased its
share capital by E 1,529 million, following the issuance of approximately 58
million new shares (14.3% of the capital after the capital increase), subscribed
to by a group of investors to whom Vivendi Universal had already sold its
preferential subscription rights pursuant to an agreement dated June 24, 2002.
Following this second transaction, Vivendi Universal owned 40.8% of Veolia
Environnement's share capital and Veolia Environnement continued to be
consolidated using the full consolidation method in accordance with generally
accepted accounting principles in France.

     The third step occurred on December 24, 2002, a month after the banks that
managed the June transaction and a group of new investors entered into an
amendment to the June 24, 2002 agreement. Under
                                        16
the terms of the amended agreement, Vivendi Universal agreed to sell 82.5
million shares of Veolia Environnement, representing 20.4 % of Veolia
Environnement's share capital, and the new investors agreed to become subject to
the lock-up on dispositions of these shares previously agreed to by Vivendi
Universal for the remaining term of that lock-up agreement, i.e. until December
21, 2003.

     Each of these shares of Veolia Environnement includes a call option that
entitles these investors to acquire additional Veolia Environnement shares at
any time until December 23, 2004 at an exercise price of E 26.50 per share.
After the exercise of all the call options, Vivendi Universal would no longer
hold any shares of Veolia Environnement. On December 24, 2002, Vivendi Universal
received, in exchange for the shares and the call options, E 1,856 million. The
call options on the Veolia Environnement shares are recorded as deferred items
in liabilities for an amount of E 173 million.

     Following this divestiture, Vivendi Universal holds 82.5 million shares, or
20.4%, of Veolia Environnement's share capital which is held in an escrow
account to cover the call options. This investment is accounted for using the
equity method as of December 31, 2002.

     Vivendi Universal recorded a E 1,419 million capital gain for these
operations in 2002.

     Divestiture of Vivendi Universal Publishing's Professional and Health
Divisions

     On April 18, 2002, Vivendi Universal Publishing (VUP) signed a definitive
agreement pursuant to which the Cinven, Carlyle and Apax investment funds
acquired 100% of the professional and health information divisions of VUP. In
parallel with this divestiture, Vivendi Universal acquired 25% of the capital
stock of the acquisition vehicle, alongside Cinven (37.5%), Carlyle (28%) and
Apax (9.5%). The transaction was concluded on July 19, 2002 with Vivendi
Universal's sale to the investors of the shares acquired in the leveraged
buy-out. The transaction reduced profit before tax by E 298 million.

     Sale of Stake in Vizzavi Europe

     On August 30, 2002, Vivendi Universal sold to Vodafone its 50% share of
Vizzavi Europe. As a result, Vivendi Universal received E 143 million in cash.
As part of the transaction, Vivendi Universal took over 100% of Vizzavi France.
This transaction generated a capital gain of E 90 million.

     Divestiture of Publishing Activities

     The Board of Directors of Vivendi Universal on August 13, 2002, decided to
sell the American publisher Houghton Mifflin acquired in 2001. On September 25,
2002, the Board decided that the sale should occur as soon as possible and
cover, in addition to Houghton Mifflin, all of the activities of VUP.

     These assets, with revenues and employees totaling approximately E 2.3
billion and 7000, respectively, were presented to several buyers.

     Following receipt of indicative offers, Vivendi Universal decided to
conduct separate sale processes for the European and American businesses. The
Board of Directors meeting held on October 29, 2002 approved the divestiture of
VUP's European activities to the Lagardere Group, which had made the most
competitive offer. This transaction was finalized on December 20, 2002 after the
approval of the personnel representative bodies of Vivendi Universal and VUP.
The European publishing activities were acquired by Investima 10, a company
wholly-owned by Natexis Banques Populaires for Lagardere. Investima 10 will
transfer the acquired assets to the Lagardere Group as soon as the latter
obtains the competition approval to be given by the European Commission. The
gross proceeds from the sale amounted to E 1,198 million. This transaction has
resulted in a gain of E 329 million on Vivendi Universal's net income before
tax.

     Following this transaction, Vivendi Universal retains its 50% interest in
the company that owns Atica and Scipione, the Brazilian publishers.

     Three investors participated in the separate auction to sell the publisher
Houghton Mifflin. On December 30, 2002, Vivendi Universal finalized the sale of
Houghton Mifflin to a consortium comprised of Thomas H. Lee and Bain Capital.
The purchase price was approximately E1.6 billion, of which approximately
                                        17
E1.2 billion in cash has been received. As a result of this transaction, Vivendi
Universal recognized a capital loss of E 822 million before tax, including a
foreign currency translation loss of E 236 million.

     Acquisition of Additional Interest in UGC

     On December 23, 2002, following the exercise by Banque Nationale de Paris
of the put granted by Vivendi Universal in July 1997, Vivendi Universal
acquired, for a total consideration of E 59.3 million, 5.3 million of UGC shares
representing 16% of share capital of UGC. Vivendi Universal's 58% interest in
UGC does not provide for operational control of the company due to a
shareholders' agreement. Accordingly, this investment is still accounted for
using the equity method.

     Divestiture of Telepiu

     News Corporation and Telecom Italia signed, on October 1, 2002, a
definitive agreement with Vivendi Universal and Canal+ Group to acquire Telepiu,
the Italian pay-TV business. The transaction was approved by the European
Commission on April 2, 2003 and completed on April 30, 2003. As part of the
acquisition agreement, all litigation between the parties, including Canal+'s
litigation against NDS, will be dropped. The purchase price was E 871 million,
consisting of the assumption of E 414 million in debt and a cash payment of
E 457 million. The cash payment includes a E 13 million adjustment corresponding
to the reimbursement of the accounts payable net of debt adjustment.

    Unwinding of the Total Return Swap in Connection with the Divestiture of
    Vivendi Universal's Investment in BSkyB plc

     In order to comply with the conditions imposed by the European Commission
in October 2001 on the merger of Vivendi, Seagram and Canal+, Vivendi Universal
sold 96% (approximately 400 million common shares) of its investment in BSkyB's
common shares and E 81 million of money market securities to two qualifying
special purpose entities (QSPEs). Concurrently, Vivendi Universal entered into a
total rate of return swap with the same financial institution that held all of
the beneficial interests of the QSPEs, thus allowing Vivendi Universal to
maintain its exposure to rises and falls in the price of BSkyB shares until
October 2005.

     In December 2001, the financial institution controlling the beneficial
interest of the QSPEs issued 150 million equity certificates repayable in BSkyB
shares, at 700 pence per share. As a result, Vivendi Universal and the financial
institution were able to reduce the nominal amount of the swap by 37% and thus
fix a value of 150 million BSkyB shares and create a capital gain of E 647
million after tax.

     In May 2002, this financial institution sold the remaining 250 million
BSkyB shares held by the QSPEs, and concurrently, Vivendi Universal and the
financial institution terminated the total return swap on those shares, which
were settled at approximately 670 pence per share, before Vivendi Universal's
payment of related costs. As a result of this transaction, Vivendi Universal
recognized a pre-tax gain of approximately E 1.6 billion, net of expenses, and
was able to reduce gross debt by E 3.9 billion.

     In addition, in February 2002, Vivendi Universal released its remaining
holding of 14.4 million shares in BSkyB by exercising its option to exchange a
convertible bond for BSkyB shares issued by Pathe that came into Vivendi
Universal's possession when it acquired Pathe. The redemption date was fixed on
March 6, 2002, at a redemption price of 100% of the principal amount plus
accrued interest to that date. Holders of the bonds were entitled to convert
them into 188.5236 shares of BSkyB per FFr10,000 principal amount of bonds up to
and including February 26, 2002.

    Divestiture of an Investment in EchoStar Communication Corporation

     On December 18, 2002, Vivendi Universal sold its entire EchoStar equity
position, 57.6 million Class A common shares, back to EchoStar. Total net
proceeds of the sale were $1.066 billion, generating a capital loss of E 674
million before tax.

                                        18
Vivendi Universal held these Class A common shares following the conversion
of the 5.8 million Echostar Class D preferred stock acquired in January 2002 for
$1.5 billion. Each Class D preferred stock was convertible into 10 EchoStar
Class A common shares.

     Divestiture of Investment in Vinci

     In July 2002, Vivendi Universal sold 5.3 million Vinci shares for a total
of E 343.8 million, thereby generating a pre-tax, capital gain of E 153 million.
At the same time, Vivendi Universal bought call options on 5.3 million shares at
E 88.81 for E 53 million allowing the group to cover the bonds exchangeable for
Vinci shares issued in February 2001 for E 527.4 million.

     Disposition of Sithe

     In December 2000, Vivendi Universal, along with other shareholders of Sithe
Energies, Inc. (Sithe), a US power generation company, finalized the sale of a
49.9% stake in Sithe to Exelon (Fossil) Holdings, Inc., (Exelon), for
approximately $696 million. The net proceeds of the transaction to Vivendi
Universal were approximately $475 million. Following this transaction, Exelon
became the controlling shareholder of Sithe, with Vivendi Universal retaining an
interest of approximately 34%. As a result of the transaction, Vivendi Universal
ceased to consolidate Sithe's results of operations for accounting purposes
effective December 31, 2000.

     On December 18, 2002, Vivendi Universal sold its remaining 34% stake in
Sithe Energies, to Apollo Energy LLC. Net cash proceeds of this transaction were
E 319 million, generating a capital loss of E 232 million before tax. Under the
terms of this transaction, Vivendi Universal retained the rights and obligations
to take legal ownership of a minority stake in certain power generating
operations in Asia from Sithe. Vivendi Universal transferred these rights and
obligations to Marubeni for $47 million on June 11, 2003. See "Item 5--Operating
and Financial Review and Prospects--Subsequent Events."

     Settlement Agreement with Pernod Ricard-Diageo

     On August 7, 2002, Vivendi Universal, Pernod Ricard and Diageo reached a
global settlement of outstanding claims relating to post-closing adjustments
arising from the acquisition of Seagram's spirits and wine concluded in December
2000 and closed in December 2001.

     Notes Mandatorily Redeemable for New Shares of Vivendi Universal

     In November 2002, Vivendi Universal issued 78,678,206 bonds for a total
amount of E 1 billion, redeemable in Vivendi Universal new shares on November
25, 2005, at a rate of one share for one bond. The bonds bear interest at 8.25%
per annum. The total amount of discounted interest was paid to the bondholders
on November 28, 2002, for an amount of E 233 million. The bondholders can call
for redemption of the bonds in new shares at any time after May 26, 2003, at the
minimum redemption rate of 1 -- (annual rate of interest multiplied by the
outstanding bond lifetime expressed in years).

     Events between January 1 and December 31, 2002 related to Treasury Shares

     At December 31, 2001, Vivendi Universal and its subsidiaries held
107,386,662 Vivendi Universal shares, representing a gross amount of E 6,762
million and 9.9% of share capital at an average cost per share of E 63.

     During 2002, Vivendi Universal:

     - bought on the market, between January and April, 6, 969,865 shares at an
       average price of E 48.5 per share. These purchases occurred under the
       terms of the COB prospectus n(LOGO) 00-1737 which authorized Vivendi
       Universal to go public;

     - sold 55 million shares to two financial institutions on January 7 at a
       price of E 60 per share;

                                        19
- transferred 37.4 million shares in May 2002 to Liberty Media in exchange
       for equity in USANi LLC and USAi and the 27% interest in
       Multithematiques;

     - sold a further 94,157 shares to employees exercising their stock options;
       and

     - cancelled 20,469,967 shares on December 20, 2002 following the decision
       by the Board of Directors on August 13, 2002 based on the authorization
       obtained in General Meeting of Shareholders held on April 24, 2002. The
       cancellation of these shares previously held in connection with employee
       stock option plans has reduced the shareholders' equity by E 1,191.3
       million. In connection with French legal obligations, Vivendi Universal
       acquired 14.1 million of call options on Vivendi Universal shares in
       order to cover future stock option plans from December 31, 2002.

     At December 31, 2002, Vivendi Universal and its subsidiaries (excluding
Veolia Environnement, which is accounted for under the equity method as from
December 31, 2002) held 562,375 Vivendi Universal shares, or 0.05% of its share
capital which represents a gross amount of E 44 million and an average cost per
share of E 77.9. The majority of these treasury shares are classified as
marketable securities and held in connection with certain employee stock option
plans of MP3.com, Inc.

     Sale of Put Options on Its Own Shares

     In connection with its share repurchase program, Vivendi Universal sold put
options on its own shares by which it agrees to buy its own shares on specified
dates at the exercise price. As of December 31, 2002 and December 31, 2001,
Vivendi Universal had outstanding obligations on 3.1 million and 22.8 million
shares respectively. The average exercise prices were E 50.5 and E 70,
respectively, resulting in a potential commitment of E 154 million and E 1,597
million, respectively. These put options are only exercisable on their exercise
date and expire during the first quarter of 2003. According to the terms of the
contracts for these put options, they may be settled at the option of Vivendi
Universal either by the purchase of the shares at the exercise price or payment,
in cash, of the difference between the market price of the shares and the
exercise price.

     The cost to Vivendi Universal during 2002 from option holders exercising
their rights was E 589 million, which represents the premium paid in the event
of a cash settlement of the difference between their market price and the
exercise price. Further, at the end of December 2002, Vivendi Universal marked
to market put options with a specific, future exercise date. This resulted in a
provision of E 104 million, corresponding to the premium that will have to be
paid out by Vivendi Universal in the event of a cash settlement.

     Renunciation by Convertible Bondholders on the Guarantee agreed by Vivendi
     Universal

     Holders of 1.5% 1999 -- 2005 Veolia Environnement bonds exchangeable for
new or existing Vivendi Universal shares held a general meeting on August 20,
2002. At this meeting, the bondholders renounced, effective September 1, 2002,
any rights to the guarantee provided by Vivendi Universal in respect of Veolia
Environnement's obligations under these bonds and, as a consequence, renounced
certain rights under the liability clause in the event of a default by Vivendi
Universal. In exchange, the nominal interest rate was increased by 0.75%,
thereby increasing the interest rate from 1.5% to 2.25%.

     Reorganization of Vivendi Universal Headquarters

     In October 2002, Vivendi Universal initiated a reorganization plan
regarding its headquarters in Paris, as well as its locations outside France. It
aims to:

     - redefine and refocus the headquarters' tasks on holding company
       activities;

     - concentrate all those tasks in Paris, with New York becoming a
       representative office for the company, primarily responsible for
       functions relating to North America; and

     - achieve full-year savings of around E 140 million compared with the total
       2002 budget of E 313 million. These savings will be generated by a very
       significant cut in non-payroll costs (fees for external services, in
       particular), as well as a reduction in the number of employees at all
       headquarters sites.
                                        20
With regard to the Paris headquarters, the plan provides for eliminating
146 positions out of a total of 327 employees. To address potential employment
ramifications, in consultation with the labor unions, Vivendi Universal is
taking measures -- in particular, with regard to job mobility -- to ensure that
all employees are offered the most optimal solutions possible.

  2001 SIGNIFICANT TRANSACTIONS

     Purchase of Interest in Maroc Telecom

     In the course of the partial privatization of Maroc Telecom, Vivendi
Universal was chosen to be a strategic partner in the purchase of an interest in
Morocco's national telecommunications operator for approximately E 2.4 billion.
The transaction was finalized in April 2001, at which time Maroc Telecom began
to be consolidated in the accounts of Vivendi Universal, as we obtained control
through majority board representation and shared voting rights.

     Acquisition of Houghton Mifflin Company

     In July 2001, Vivendi Universal acquired the Houghton Mifflin Company, a
leading US educational publisher, for a total of approximately $2.2 billion,
including assumption of Houghton Mifflin's average net debt of approximately
$500 million. Houghton Mifflin was sold on December 30, 2002.

     Acquisition of MP3.com, Inc.

     On August 28, 2001, Vivendi Universal completed its acquisition of MP3.com,
Inc., for approximately $400 million, or $5 per share in a combined cash and
stock transaction.

     Disposition of Interest in France Loisirs

     In July 2001, Vivendi Universal sold its interest in France Loisirs to
Bertelsmann. Proceeds from the sale approximated E 153 million, generating a
capital loss of E 1 million.

     Disposition of AOL France

     In March 2001, Vivendi Universal announced the conclusion of a deal with
America Online, Inc., a subsidiary of the AOL Time Warner Group, under which
Cegetel and Canal+ Group swapped their interest in the AOL France joint venture
for AOL Europe shares. Both groups also signed distribution and marketing
agreements. Cegetel and Canal+ Group thus swapped their 55% share of AOL France
for junior preferred shares of AOL Europe valued at $725 million and paying a 6%
annual dividend. These preferred shares were sold, in late June 2001, to an
unrelated financial company for a price corresponding to their present value
marked up by their coupon value, or a total of $719 million. If this investment
was consolidated, an asset representing the junior preferred shares and a
liability representing the corresponding debt would be recorded in the
Consolidated Financial Statements in the amount of $812 million. This
transaction generated a net capital gain of E 402 million.

    Issuance of bonds exchangeable for Veolia Environnement shares

     In February 2001, Vivendi Universal placed E 1.8 billion principal amount
of bonds exchangeable into Veolia Environnement stock on a one-for-one basis.
The bonds correspond to 9.3% of the capital stock of Veolia Environnement. The
2%, five-year bonds were issued at a price of E 55.90, a 30% premium over the
previous day's weighted-average price.

     Issuance of bonds exchangeable for Vinci shares

     In February 2001, Vivendi Universal placed E 457 million principal amount
of bonds exchangeable for shares of Vinci, a company in which Vivendi Universal
has an 8.67% stake. The 1%, five-year bonds were issued at a price of E 77.35, a
30% premium to Vinci's then-current stock price. Each bond is exchangeable for
one Vinci share. On February 5, 2001, the lead manager for the bond offering
exercised an over-allotment
                                        21
option to purchase E 70 million additional principal amount of the bonds, thus
increasing the overall amount of the issuance to E 527 million.

     Sale of 9.3% Interest in Veolia Environnement

     In December 2001, Vivendi Universal sold 32.4 million shares or a 9.3%
interest in Veolia Environnement for approximately E 38 per share or total
proceeds of E 1.2 billion, generating pre-tax capital gains of E 116 million
(net of E 10 million fees). The 9.3% interest sold had been held separately as
it was allocated to exchangeable bonds issued in February 2001. At the same
time, Veolia Environnement agreed to issue one free warrant for each share held
to its shareholders, with every seven warrants giving holders the right to a new
share of Veolia Environnement at E 55 per share until March 2006. These
transactions did not modify Vivendi Universal's 63% consolidated interest in
Veolia Environnement as the warrant issue replaces the shares sold that were
allocated to the exchangeable bonds.

     Canal+ Group's Sale of its Stake in Eurosport

     In January 2001, Canal+ Group announced that it had sold its 49.5% interest
in European sports channel Eurosport International and its 39% interest in
Eurosport France to TF1. Proceeds from the sale amounted to E 303 million for
Canal+ Group and E 345 million for Vivendi Universal, as its subsidiary Havas
Image also sold its interest in Eurosport France. Canal+ Group will remain a
distribution channel for Eurosport. Canal+ Group had acquired its interest in
Eurosport International and Eurosport France from ESPN in May 2000.

     Sale of Stake in Havas Advertising

     In June 2001, Vivendi Universal sold its remaining 9.9% interest in Havas
Advertising, the world's fifth largest advertising and communications consulting
group, to institutional investors and Havas Advertising itself. The E 484
million transaction, conducted with the approval of Havas Advertising
management, generated pre-tax capital gains of E 125 million. In December 2001,
Vivendi Universal sold the rights to the "Havas" name to Havas Advertising for
approximately E 4.6 million.

     Participation in Elektrim

     In September 2001, Elektrim Telekomunikacja, in which Vivendi Universal has
a 49% interest, acquired all of Elektrim SA's landline telecommunications and
Internet assets. Vivendi Universal loaned Elektrim Telekomunikacja E 485
million, at arm's-length conditions, to provide them with the necessary funds
for the acquisition.

     UMTS License

     In July 2001, the French government officially granted SFR, an indirect
subsidiary of Vivendi Universal, a license to provide 3G (third generation) UMTS
mobile telephony services in France. UMTS is a high-speed standard for mobile
telephony that will allow Vivendi Universal, through SFR, to provide an
extensive range of new services, including video telephony and high-speed access
to the Internet and to corporate intranets. The license was initially granted
for a period of 15 years and a license fee of E 4.95 billion, with payments
spread over the 15-year period. However, as a result of a delay in the
manufacture of equipment and infrastructure for UMTS technology and the economic
weakness in the telecommunications industry, the original terms of the license
were renegotiated with the French government. In October 2001, the French
government announced the revised terms of the 3G UMTS license. The license was
extended to a period of 20 years and the license fee was split into two
parts -- a fixed upfront fee of E 619 million, which was paid in September 2001,
and future payments equal to 1% of 3G revenues earned when the service
commences. The new arrangement reduces cash expenditures related to the license
during 2001 to 2003 by more than E 2 billion and is expected to contribute to an
improvement in Vivendi Universal's cash flow and debt position.

                                        22
UPC Alliance

     In August 2001, Canal+ Group and United Pan-Europe Communications N.V.
(UPC) agreed to merge their respective Polish satellite TV platforms Cyfra+ and
Wizja TV as well as the Canal+ Polska premium channel, to form a common Polish
digital TV platform. The new company (TKP) is managed and controlled by Canal+
Group, which owns 75% of TKP. UPC will contributed its Polish satellite assets
to TKP in exchange for a 25% interest and E 150 million in cash. As part of this
transaction Canal+ Polska is available on UPC's Polish cable network, in which
UPC will retain 100% control. The agreement was finalized in December 2001 after
having received regulatory approval. TKP was consolidated in the accounts of
Vivendi Universal at December 31, 2001. The new joint platform were launched in
the first quarter of 2002 with a base of more than 700,000 subscribers.

  2000 SIGNIFICANT TRANSACTIONS

     Merger of Vivendi, Seagram and Canal+

     On December 8, 2000, Vivendi, Seagram and Canal+ completed a series of
transactions in which the three companies combined to create Vivendi Universal.
The terms of the merger transactions included: Vivendi Universal's combination,
through its subsidiaries, with Seagram in accordance with a plan of arrangement
under Canadian law, in which holders of Seagram common shares (other than those
exercising dissenters' rights) received 0.80 Vivendi Universal American
Depositary Shares (ADSs), or a combination of 0.80 non-voting exchangeable
shares of Vivendi Universal's wholly-owned Canadian subsidiary Vivendi Universal
Exchangeco (exchangeable shares) and an equal number of related voting rights in
Vivendi Universal, for each Seagram common share held; Vivendi Universal's
merger with Canal+, in which Canal+ shareholders received two Vivendi Universal
ordinary shares for each Canal+ ordinary share they held and kept their existing
shares in Canal+, which retained the French premium pay television channel
business.

     In connection with the merger transactions, on December 19, 2000, Vivendi
Universal entered into an agreement with Diageo and Pernod Ricard to sell its
spirits and wine business. The sale closed on December 21, 2001 and Vivendi
Universal received approximately $8.1 billion in cash, an amount that resulted
in after-tax proceeds of approximately $7.7 billion. The spirits and wine
business generated revenues of E 5 billion and operating income of E 0.8 billion
in 2001. Prior to its sale, Vivendi Universal accounted for the spirits and wine
business as an investment held for sale on the balance sheet, and net income of
the spirits and wine business in 2001 effectively reduced goodwill associated
with the Seagram acquisition. No gain was recognized upon the ultimate sale of
the spirits and wine business.

     Disposition of Non-Core Construction and Real Estate Businesses

     In order to facilitate our withdrawal from our non-core construction and
real estate businesses, we restructured Compagnie Generale d'Immobilier et de
Services (CGIS), our wholly owned real estate subsidiary, into two principal
groups of companies: Nexity and Vivendi Valorisation. In July 2000, we sold 100%
of Nexity to a group of investors and to Nexity's senior management for E 42
million, an amount that approximated book value of these operations. Vivendi
Valorisation holds our remaining property assets, which consist primarily of
investments arising out of past property development projects. These assets are
managed by Nexity pending their sale. In February 2000, we reduced our interest
in Vinci (Europe's leading construction company) from 49.3% to 16.9%, receiving
in exchange E 572 million, which resulted in a capital gain of approximately
E 374 million. Subsequently, Vinci merged with the construction company, Groupe
GTM, which reduced our interest in the combined entity to 8.67%. As a result of
these transactions we ceased to consolidate Vinci's results effective July 1,
2000.

     Formation/IPO of Veolia Environnement

     Veolia Environnement was formed at the end of 1999. It brought together the
majority of our water, waste management, energy services and transportation
businesses, as well as our interest in Fomento de Construcciones y Contratas
(FCC). Veolia Environnement's formation was achieved by either the contribution
of existing businesses and companies or the purchase of shares. Generale des
Eaux, Dalkia and
                                        23
Compagnie Generale d'Entreprises Automobiles were transferred at book value in
accordance with tax provisions applicable to certain mergers. United States
Filter Corporation (US Filter) and our interest in FCC were acquired by Veolia
Environnement in December 1999. In July 2000, Veolia Environnement sold
approximately 37% of its shares to the French public and to institutional
investors in France and elsewhere in an initial public offering (IPO).

     Lagardere alliance

     In July 2000, pursuant to an alliance between Canal+ Group and Lagardere, a
French media company, Lagardere acquired an approximate 34% stake in
CanalSatellite and a 27.4% stake in MultiThematiques. Canal+ reduced its stake
in Multithematiques to 27.4% (Vivendi reduced its indirect interest to 9%).
Canal+ and Lagardere also set up three joint ventures. The first, 51% owned by
Lagardere and 49% by Canal+, will own and operate existing theme channels and
intends to create others. The second, 51% owned by Lagardere and 49% by
CanalSatellite, will oversee interactive services for new channels jointly
created by CanalSatellite and Lagardere. The third, a 50/50 joint venture
between Lagardere and MultiThematiques, will create and distribute new
theme-based channels based on Lagardere's international brands.

  PUBLIC TAKEOVER OFFERS

     To our knowledge, we have not been the target of any public takeover offer
by third parties in respect of our shares during the last or current fiscal
year. Moreover, we have not sought to acquire another company in a public
takeover except as might be disclosed in this document in the last or current
fiscal year.

BUSINESS OVERVIEW

GENERAL

     We are one of the largest media and telecommunications groups in the world.
We focus on the following six distinct businesses which are leaders in
telecommunications, music, TV & film, and games, with a variety of other
non-core operations and investments:

     CEGETEL GROUP.  Cegetel Group, through its 80% owned subsidiary, Societe
Francaise du Radiotelephone, or SFR, is the second largest mobile
telecommunications operator in France and through its 90% owned subsidiary,
Cegetel S.A., is the second largest fixed-line operator in France. SFR has a
35.1% market share in a stable three-operator market in France, and is well
positioned to benefit from the strong growth of the French wireless market. In
early 2003, we increased our ownership interest to 70% of Cegetel Group.

     UNIVERSAL MUSIC GROUP (UMG).  UMG is the largest recorded music business in
the world. UMG acquires, manufactures, markets and distributes recorded music in
71 countries. Key recording artists include Eminem, Shania Twain, U2 and
Ashanti. In addition to its recorded music business, UMG is the third largest
music publisher in the world. UMG also manufactures, sells and distributes music
video and DVD products, and owns mail-order music/video clubs. We own
approximately 92% of UMG.

     VIVENDI UNIVERSAL ENTERTAINMENT (VUE).  We own approximately 86% of VUE, a
US-based entertainment company active in the film, television, and theme parks
and resorts businesses. We are currently evaluating proposals from potential
bidders for the possible sale of all or a portion of VUE. VUE operates through
the following entities:

     - UNIVERSAL PICTURES GROUP (UPG).  UPG is a major film studio, engaged in
       the production and distribution of motion pictures worldwide in the
       theatrical, non-theatrical, home video/DVD and television markets. Recent
       motion picture releases include Gladiator, The Mummy franchise, A
       Beautiful Mind, 8 Mile, Erin Brockovich, Red Dragon and The Fast and The
       Furious. UPG's 2003 movie slate includes Bruce Almighty, The Hulk, 2 Fast
       2 Furious, Peter Pan and Dr. Seuss' The Cat in the Hat.

                                        24
- UNIVERSAL TELEVISION GROUP (UTG).  UTG owns and operates four US cable
       television networks including USA Network and the Sci Fi Channel as well
       as a portfolio of international television channels. UTG produces and
       distributes original television programming worldwide, including Law and
       Order, Jerry Springer, Taken and Monk.

     - UNIVERSAL PARKS & RESORTS (UPR).  UPR is the second largest destination
       theme park operator in the world. UPR owns interests and operates theme
       parks and resorts in the US, Japan and Spain, including Universal Studios
       in Hollywood, California and Universal Studios in Orlando, Florida.

     CANAL+ GROUP.  Canal+ Group is the leader in the production and
distribution of digital and analog pay-TV in France (principally through its
premium channel, Canal+, and its digital satellite platform, CanalSatellite).
Canal+ Group has 6.95 million individual subscriptions in France. Canal+ Group
is also a leading European studio involved in the production, co-production,
acquisition and distribution of feature films and television programs and owns
interests in pay-TV activities in Spain, Poland and elsewhere. We own 100% of
Canal+ Group, which in turn owns 49% of Canal+ S.A., which holds the broadcast
license for our premium channel Canal+ and 66% of CanalSatellite.

     MAROC TELECOM.  Maroc Telecom is the incumbent fixed line and the leading
mobile telecommunications operator in Morocco, with a 70% share of the wireless
market. We have a 35% ownership stake in Maroc Telecom. However, through our
control of the executive board and management, we exercise day-to-day control
over the business and, in accordance with French GAAP, consolidate it in our
financial statements.

     VIVENDI UNIVERSAL GAMES (VU GAMES).  VU Games is a worldwide leader in the
development, marketing and distribution of games and educational software for
PC, handheld devices and consoles. We own 99% of VU Games, and we are currently
evaluating proposals for the possible disposition of all or a portion of this
business.

SEGMENT DATA

     The contribution of our business segments to our consolidated revenues for
each of 2002, 2001 and 2000, in each case after the elimination of intersegment
transactions, is as follows:
YEAR ENDED DECEMBER 31,
                                    ----------------------------------------------------
                                                ACTUAL                  PRO FORMA(3)
                                    ------------------------------   -------------------
                                    2002(1)      2001     2000(2)      2002       2001
                                    --------   --------   --------   --------   --------
                                                       (IN MILLIONS)
REVENUES
Cegetel Group.....................  E  7,067   E  6,384   E  5,129   E  7,067   E  6,384
Universal Music Group.............     6,276      6,560        495      6,276      6,560
Vivendi Universal Entertainment...     6,270      4,938        194      6,978      6,874
Canal+ Group......................     4,833      4,563      4,054      4,742      4,563
Maroc Telecom.....................     1,487      1,013         --      1,487      1,351
Vivendi Universal Games(4)........       794        657        572        794        657
                                    --------   --------   --------   --------   --------
                                      26,727     24,115     10,444     27,344     26,389
Other(5)(7).......................     1,385      1,289      2,667      1,385      1,344
                                    --------   --------   --------   --------   --------
Total Vivendi Universal (excluding
  businesses sold in 2002)........    28,112     25,404     13,111     28,729     27,733
Veolia Environnement..............    30,038     29,094     26,294         --         --
                                    --------   --------   --------   --------   --------
                                      58,150     54,498     39,405     28,729     27,733
VUP assets sold during
  2002(6)(7)......................        --      2,862      2,175         --         --
                                    --------   --------   --------   --------   --------
                                    E 58,150   E 57,360   E 41,580   E 28,729   E 27,733
                                    ========   ========   ========   ========   ========
25
---------------

(1) At December 31, 2002, Vivendi Universal applied the option proposed in
    paragraph 23100 of the French rules 99-02 and has presented the results of
    businesses sold during 2002 on one line in the consolidated statement of
    income as "equity in earnings of disposed businesses." Disposed businesses
    include all of Vivendi Universal Publishing's operations excluding Vivendi
    Universal Games, publishing activities in Brazil, the consumer press
    division (the divestiture of which was completed in February 2003) and
    Comareg (the divestiture of which was completed in May 2003).

(2) 2000 results restated for changes in accounting policies adopted in 2001, as
    discussed further in "Item 5--Operating and Financial Review and Prospects."

(3) The pro forma information illustrates the effect of the acquisitions of the
    entertainment assets of InterActiveCorp (formerly known as USA Interactive
    and prior thereto as USA Networks, Inc.), or USAi, in May 2002, Maroc
    Telecom in April 2001 and MP3.com in August 2001, and the disposition of
    certain interests in Veolia Environnement and Vivendi Universal Publishing,
    as if these transactions had occurred at the beginning of 2001.
    Additionally, the pro forma information includes the results of Universal
    Studios international television networks in Vivendi Universal Entertainment
    in both 2002 and 2001 (in the actual 2002 results, the results of Universal
    Studios international television networks were reported by Canal+ Group).
    This reclassification has no impact on the total results of Vivendi
    Universal. We believe that pro forma results may help the reader to better
    understand our business results as they include comparable operations in
    each year presented. However, it should be noted that the pre-acquisition
    results of an acquired business accounted for on a historical cost basis are
    not directly comparable to the post-acquisition results of acquired entities
    whose initial purchase price was allocated on a fair value basis. 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
    2001.

(4) Formerly part of Vivendi Universal Publishing. Includes Kids Activities
    (e.g., Adi/Adibou in France and Jumpstart in the United States).

(5) Principally comprised of Vivendi Telecom International, Internet, Vivendi
    Valorisation (previously reported in non-core businesses) and Vivendi
    Universal Publishing assets not sold during 2002 (Consumer Press Division,
    Comareg and the Brazilian operations -- Atica & Scipione).

(6) Comprised of Vivendi Universal Publishing's European publishing assets
    (excluding those described above) and Houghton Mifflin sold in December 2002
    and Vivendi Universal Publishing's Business to Business and Health divisions
    sold in June 2002.

(7) The presentation of "Other" and "Vivendi Universal Publishing assets sold in
    2002" differs from the disclosure in our Business Segment Data in Note 12.2
    to Consolidated Financial Statements. In such Note 12.2, Publishing
    excluding Games includes both assets sold and assets retained. In the table
    above, publishing assets sold are reflected as a separate line item.

GEOGRAPHIC DATA

     The contribution of selected geographic markets to our consolidated revenue
for each of 2002, 2001 and 2000 is as follows:
YEAR ENDED DECEMBER 31,
                                                        ------------------------------
                                                          2002       2001       2000
                                                        --------   --------   --------
                                                                (IN MILLIONS)
France................................................  E 26,391   E 24,285   E 20,933
United Kingdom........................................     3,765      4,170      2,992
Rest of Europe........................................    11,327     10,456      7,421
United States of America..............................    10,810     12,654      7,009
Rest of World.........................................     5,857      5,795      3,225
                                                        --------   --------   --------
                                                        E 58,150   E 57,360   E 41,580
                                                        ========   ========   ========
26
OUR SEGMENTS

  CEGETEL GROUP

     Cegetel Group, formed at the end of 1997, is the second largest
telecommunications operator in France with approximately 16.8 million customers,
and more than 8,700 employees as of December 31, 2002. Cegetel Group is the only
private operator in France to cover all telecommunications activities: mobile
telephony, through SFR, an 80% owned subsidiary of Cegetel Group, and fixed
telephony and data and Internet transmission, through Cegetel S.A., a directly
and indirectly 90% owned subsidiary of Cegetel Group. Its customer base includes
residential, professional and corporate customers. Cegetel Group's presence in
all these fields forms the core of its business and one of its major assets.

     In January 2003, Vivendi Universal acquired an additional 26% interest in
Cegetel Group from the BT Group, raising its direct and indirect interest to its
current 70%. Our strategic partner in Cegetel Group is Vodafone.

     The following table sets forth the breakdown of Cegetel Group's revenues by
activity for each of the periods indicated.

                                    REVENUES
YEAR ENDED DECEMBER 31,
                                                        ---------------------------------
                                                         2002         2001         2000
                                                        -------   -------------   -------
                                                                  (IN MILLIONS)
Mobile Telephony......................................  E 6,146      E 5,606      E 4,626
Fixed Telephony, Data and Internet....................      905          756          469
Holdings and Other....................................       16           22           34
                                                        -------      -------      -------
TOTAL.................................................  E 7,067      E 6,384      E 5,129
                                                        =======      =======      =======
Mobile Telephony

     SFR is the second largest mobile telephony operator in France. In 2002, it
increased its customer base from 12.6 million to 13.5 million, and its market
share from 33.9% to 35.1%, at year end according to Autorite de Regulation des
Telecommunications (ART), the French telecom regulatory authority. In terms of
geographic coverage, SFR covers 98% of the population in France, and has signed
international roaming agreements with operators in more than 150 countries or
territories. The market share of SFR's two competitors, the France Telecom
subsidiary, Orange France, and Bouygues Telecom were 49.8% and 15.1%,
respectively, at the end of 2002, according to ART.

     SFR operates in a stable three operator market. The French market has
relatively low penetration compared to other European Union countries with 64%
penetration compared to a European Union average of 78% as of December 31, 2002
according to ART and the Mobile Communications survey of December 2002,
respectively.

     SFR's mobile services are provided using the global system for mobile
communications standard (GSM), the dominant digital standard in Europe. SFR's
GSM license expires in 2006.

                                        27
The following table sets forth a breakdown of SFR's revenues from mobile
telephony services and equipment sales for each of the periods indicated.

                                    REVENUES
YEAR ENDED DECEMBER 31,
                                                           ---------------------------
                                                            2002      2001      2000
                                                           -------   -------   -------
                                                                  (IN MILLIONS)
Mobile telephony services................................  E 5,675   E 5,086   E 4,121
Equipment sales..........................................      471       520       505
                                                           -------   -------   -------
TOTAL MOBILE.............................................  E 6,146   E 5,606   E 4,626
                                                           =======   =======   =======
The following table sets forth mobile telephony operating information for
the French market and for SFR for each of the periods indicated.

                             OPERATING INFORMATION
YEAR ENDED
                                                                 DECEMBER 31,
                                                              ------------------
                                                              2002   2001   2000
                                                              ----   ----   ----
French(1) mobile telephony users (at year end, in
  millions)(2)..............................................  38.6   37.0   29.7
  Postpaid..................................................  21.5   18.9   16.4
  Prepaid...................................................  17.1   18.1   13.3
SFR/SRR customers (at year end, in millions)(1)(2)..........  13.5   12.6   10.2
  Postpaid..................................................   7.2    6.3    5.8
  Prepaid...................................................   6.4    6.2    4.3
SFR Churn (in %/month)......................................   2.2%   2.0%   1.8%
---------------

(1) French metropolitan and overseas departments.

(2) According to ART as of December 2002.

     In 2002, SFR saw an increase in its total customer base of 0.9 million or
8%. SFR saw an increase in its higher revenue generating postpaid customers in
2002 of 0.8 million or 13%, in line with the market as a whole. This was
partially due to the successful development of the Universal Music Mobile offer
launched in September 2001 in the teen market segment, which reached 500,000
customers at the end of December 2002 and to the implementation of a strong
retention policy. Prepaid customers increased by 0.1 million or 2% compared to a
decline of 5% for the French prepaid market as a whole.

     SFR takes pro-active measures to attract and retain postpaid contract
customers, focusing on the high-end and long-term customer. In 2002, over 50% of
SFR's new postpaid contract customers signed up for an initial period of 24
months. SFR seeks to re-engage high value postpaid contract customers beyond
their initial

                                        28
period through new tariffs and options and at end 2002 approximately 75% of the
SFR contract base was re-engaged after their initial period.

     SFR operates a dense, high-quality GSM mobile telecommunications network.
This network is capable of providing service to 98% of the French population.
SFR has roaming agreements with 150 countries. In addition, since December 2000,
SFR has been providing General Packet Radio System (GPRS) on its network, which
permits greater bandwidth data communications. GPRS is deployed throughout the
company's network.

     SFR has been awarded a 3G license for a 20 year period (2001-2021) by the
French government, for consideration consisting of a one time fixed payment of
E 619 million, which was paid in September 2001, and annual fees equal to 1% of
the future revenues generated from the UMTS network. UMTS is a third generation
mobile radio system that creates additional mobile radio capacity and enables
broadband media applications while also providing high speed Internet access. In
connection with the development of its UMTS network in the next few years SFR
plans to significantly increase its capital expenditures. As a result of the
UMTS roll out in France occurring after the roll out in some other major
European countries, SFR believes it should benefit from the experience of
telecommunication companies in those countries.

     The use of mobile phones for text messages and multimedia experienced
significant growth in 2002, with nearly 2.3 billion Short Messaging Services, or
SMS, sent by SFR customers. This was twice the number of SMS sent in 2001, and
15% above SFR's initial objective of 2 billion for 2002. SFR also recorded more
than 400,000 multimedia messages sent from its network between the introduction
of its multimedia services in October 2002 and the end of 2002. 260,000 SFR
Packs integrating multimedia terminals were sold between October 2002 and the
end of 2002. At year-end, multimedia phones represented 45% of new SFR customers
and more than half of mobile renewals.

     Generally, tariffs in the French mobile telephony market have been stable,
with the introduction of new low-end postpaid plans. In 2002, the French mobile
telephony market also saw the introduction of per second rates for voice
communications.

  Fixed Telephony, Data and Internet

     Cegetel is the leading private operator for fixed telecommunications in
France with 3.3 million residential and professional customers and more than
16,000 business customers at the end of 2002. 70% of the businesses listed on
the CAC 40 index are Cegetel customers.

     Since its formation five years ago, Cegetel's fixed telephony, data and
Internet has seen sustained revenue growth. The following table sets forth
revenues generated by fixed telephony, data and Internet for the periods
indicated.

                                    REVENUES
YEAR ENDED
                                                                  DECEMBER 31,
                                                              ---------------------
                                                              2002    2001    2000
                                                              -----   -----   -----
Revenues (millions).........................................  E 905   E 756   E 469
  Of which Residential and Professional (in %)..............     48%     45%     41%
  Of which Corporate (in %).................................     52%     55%     59%
Since its formation five years ago, Cegetel's fixed telephony, data and
Internet has also seen sustained growth in its operations. The table below sets
forth fixed telephony operational information for the periods indicated.

                                        29
OPERATIONAL INFORMATION
YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                               2002     2001     2000
                                                              ------   ------   ------
Traffic (minutes, in billions)..............................    8.2      5.2      3.8
Customers
  Residential and Professional (in thousands)...............  3,286    2,860    2,418
  Corporate Voice sites (in thousands)......................     60       55       35
  Corporate Data sites (in thousands).......................     15       12        9
In 2002, Cegetel transported more than 8 billion minutes of phone
telecommunications, an increase of nearly 60% over 2001. At the same time,
Cegetel won more than 400,000 new residential and professional customers, and
was the first French fixed telecom operator to earn ISO 9001 version 2000
certification for all its operations for corporate customers.

     In addition to traditional fixed telephony products, Cegetel offers
small-and medium-sized businesses Internet protocol virtual private networks (IP
VPN) and high-speed data offerings (ADSL) specifically designed to meet their
needs. Since October 2002, Cegetel has offered very high-speed network services
(Ethernet) to large businesses. Cegetel Group also manages France's Reseau Sante
Social, or RSS, France's Social Security Network, the intranet for health
professionals under a public service license, which was the leading network for
the medical world in 2002, with 48,200 subscribers and 300 health institutions
connected, including half of the University Hospitals in France.

     The year 2002 was also marked by the continued deregulation of the local
telecommunications market in France. The market was first deregulated in 2001
and Cegetel began to compete with the incumbent operator, France Telecom, in May
2001. In 2002, Cegetel began to offer flat rates, a first in the French private
fixed market.

     In 2002, Cegetel completed the installation of a large national
distribution network. Cegetel also expanded its telephone services for
businesses in 2002 by offering to manage their customer relations through 800
numbers and call center services.

  Network

     The strategy of Cegetel Group is to invest in its own telecommunications
networks in order to offer its customers a broad range of services and ensure
complete quality control. Cegetel Group's mobile and fixed activities are based
on a common transport platform, the network of Telecom Developpement (TD), a
joint subsidiary of Cegetel Group and SNCF (the French national railway), which
carried 33.8 billion minutes in 2002, representing approximately 14% of the
French telecommunications traffic and nearly one-fourth of French Internet
traffic. Cegetel Group has a 49.9% interest in TD. The mobile network of SFR was
composed of 12,500 GSM sites at the end of 2002.

     SFR continues to make investments in its GSM network in order to maintain
high quality of service and to increase capacity. In 2002, Cegetel Group had
capital expenditures of E 300 million relating to its mobile network. As noted
above, SFR expects to significantly increase its capital expenditures in
connection with the build out of its UMTS network.

     With respect to its fixed telephony network, Cegetel Group relies on TD,
which has the most extensive alternative network of telecom infrastructures in
France, with 20,000 km of optical fibers and more than 500 points of presence.

     This network control strategy benefits from the new possibilities linked to
the arrival of high-speed transmission and the unbundling of the local loop.

                                        30
Competition

     Cegetel Group faces a high degree of competition in both the mobile and
fixed telephony markets. Currently, Cegetel Group's principal competitors in
mobile telephony are Orange France and Bouygues Telecom. SFR also expects Orange
France and Bouygues Telecom will be its principal competitors for 3G customers
when commercial UMTS services are introduced in France. The French government
offered a fourth UMTS license on December 29, 2001, but to date there has not
been any candidate for this license. In fixed telephony, Cegetel Group's main
competitors, in addition to the incumbent operator France Telecom, are
LDCom/Siris, Tele2, and Completel. As with other telecommunications operators,
Cegetel Group is also subject to indirect competition from providers of other
telecommunications services in France.

     Competitive pressures have led to reductions in tariffs and increased
customer retention costs as operators seek to manage the level of customer
churn.

  Regulatory Environment

     The French telecommunications market was broadly deregulated with the
adoption of the Telecommunications Regulatory Act of July 26, 1996 and its
related regulations. Many of the provisions of the applicable regulations are
designed to foster competition in the French telecommunications market. These
regulations apply both to operators of fixed line networks and to operators of
mobile networks.

     The operator of any public telecommunications network in France exerting
significant influence over the fixed line market is required to permit
interconnection with its network on the basis of the long run incremental cost
of providing the relevant service. Access to the local loop (unbundling of the
copper pair) was authorized by decree in September 2000, and established by
European regulation at the end of 2000.

     All fixed line operators are required to allow their customers to select a
long distance carrier on a call by call basis by entering a numeric prefix when
dialing. Customers may also opt to "pre-select" their long distance carrier so
that the subscriber can access his carrier's network without having to dial a
prefix. In 2002, carrier pre-selection was extended to local numbers. Prior to
this, all local calls were routed over France Telecom. Accordingly, France
Telecom's access subscribers may now pre-select an alternative carrier for all
of their fixed line calls.

     Mobile operators in France exerting significant influence over the wireless
public telephony market are also required to offer interconnection. The ART
deems both Orange France and SFR to have significant influence over the wireless
retail market and the domestic interconnection market, and SFR is therefore
subject to the rules governing this type of operator. As a result, SFR has been
required to reduce its interconnection rates for terminating calls on its
network.

     ART, the French telecom regulatory authority, monitors application of the
law and is consulted on proposed laws, decrees and regulations for the sector.
It assigns frequencies and numbers and has the authority to settle disputes
concerning interconnection.

     Two types of licenses apply to the telecommunications market, licenses
issued by the Minister for Telecommunications to operators that establish and
operate networks open to the public (L 33-1 licenses) or issued by the ART (L
33-2 licenses) for independent networks, and licenses issued by the Minister to
telephone service providers (L 34-1 licenses). The market for providing other
telecommunications services is not regulated.

     Through SFR, TD and Cegetel, Cegetel Group holds national licenses that
allow us to provide all telecommunications services: transmission and access,
voice and data, fixed and mobile.

     The International Commission for Non-Ionizing Radiation Protection, an
independent organization that advises the World Health Organization, has
established a series of recommendations setting exposure limits from
electromagnetic radiation from antennas. These regulations were driven by
concern over a potential connection between electromagnetic radiation and
certain negative health effects, including some forms of cancer. They were
enacted into French law on May 3, 2002. SFR is also, along with the other French
mobile

                                        31
telephony operators, in the process of entering into agreements with different
cities of France including the city of Paris, that will set up local guidelines.

  Research and Development

     Through projects initiated several years ago, Cegetel Group focuses its
research and development efforts in four complementary areas:

     - involvement in national research networks through cooperative research
       projects and an active presence in decision-making agencies and strategic
       authorities;

     - contribution to university research projects via the Cegetel -- SFR
       Foundation and significant contacts with the academic world;

     - active participation in standardization in the IP and 3G mobile segments;
       and

     - increasing introductions of prototypes of new services with about twenty
       services.

     Cegetel Group conducts pre-competitive research and development, with
particular emphasis on integrating standard components. Through experiments on
existing platforms, Cegetel Group also conducts research and development on the
preparation of next generation technologies, such as the all IP network, and, in
collaboration with Monaco Telecom, in which VTI holds a 55% stake, 3G wireless
technology.

     Because of its structure and size, Cegetel Group has a network research
strategy. The complementary nature of the academic world, manufacturers, public
laboratories and operator partners contributes to an optimized effort and an
efficient pooling of project results.

     This substantial research and development effort is reflected in a number
of patents, primarily for services related to the mobile Internet,
geopositioning, and voice services.

     Cegetel Group's research and development costs in 2002 totaled E 58.7
million.

  MUSIC

     Our music business is operated through UMG, the largest recorded music
business in the world measured by revenues according to management estimates for
2002 and the International Federation of Phonographic Industry (IFPI) for 2001.
We have a 92.3% interest in UMG. UMG acquires, manufactures, markets and
distributes recorded music through a network of subsidiaries, joint ventures and
licensees in 71 countries. UMG also manufactures, sells and distributes music
video and DVD products, licenses music copyrights, and owns music/video clubs in
certain territories. By way of licenses to third parties, UMG participates in
and encourages online electronic music distribution.

     UMG is also active in the music publishing market, in which UMG acquires
rights to musical compositions (as opposed to recordings) in order to license
them for use in recordings and related uses, such as films, advertisements or
live performances. Management believes that UMG is the number three global music
publishing company with over one million owned or administered titles.

                                        32
The following table provides a breakdown of UMG's revenues and selected
market share information on a geographic basis for the periods indicated:

                                    REVENUES
YEAR ENDED                        YEAR ENDED
                                       DECEMBER 31, 2002,                DECEMBER 31, 2001,
                                 -------------------------------   -------------------------------
                                    REVENUE      MARKET SHARE(1)      REVENUE      MARKET SHARE(2)
                                 -------------   ---------------   -------------   ---------------
                                 (IN MILLIONS)         (%)         (IN MILLIONS)         (%)
North America..................     E 2,772           29.0            E 2,921           28.3
Europe.........................       2,588           27.3              2,655           26.5
Far East.......................         588           12.2                671           11.0
ANZ/Africa.....................         139           24.5                137           22.7
Latin America..................         190           18.3                176           15.0
                                    -------           ----            -------           ----
TOTAL..........................     E 6,276           24.4            E 6,560           23.5
                                    =======           ====            =======           ====
---------------

(1) Market share data is based on UMG estimates. Market share data from third
    party sources is not available in all regions. Third party market share data
    is not available for 2002.

(2) 2001 market share data is based on IFPI estimates.

  Recorded Music

     UMG's recorded music business is the largest in the world. UMG holds
particularly strong positions in the important North American and European music
markets, which together account for nearly three-quarters of global sales.

     UMG has a strong collection of major recording labels including: popular
music labels Island/Def Jam, Interscope/Geffen/A&M, MCA Records, Mercury
Records, Polydor and Universal Motown Records Group; classical labels Decca,
Deutsche Grammophon and Philips; and jazz labels Verve and Impulse! Records.
Interscope/Geffen/A&M, with artists such as Eminem, Sheryl Crow, No Doubt,
Enrique Iglesias and Vanessa Carlton, was the number one label in the US in
current album market share in 2002 according to SoundScan. Island/Def Jam, with
artists such as Ashanti, Musiq and Cam'ron, was the number two US label.

     In an industry in which size confers significant scale benefits, UMG's
recorded music business has been steadily increasing its market share. While
2002 was a challenging year for the music industry, with global market sales
declining an estimated 9.5% due to the combined effect of economic downturn,
piracy and illegal downloading of music from the Internet, UMG outperformed its
major competitors, increasing its global market share, according to UMG
management estimates, from 23.5% at year end 2001 to 24.5% at year end 2002.

     The key to UMG's success in growing its market share has been its ability
to consistently spot, attract and retain a relatively high proportion of
successful artists and market them effectively. We believe this is mainly due
to:

     - The relative stability of the management team compared to UMG's major
       competitors, which has allowed UMG to have a consistent strategy to
       respond effectively to industry and social trends and challenges;

     - UMG's size and strength in distribution which builds on itself by
       attracting established artists;

     - UMG's huge catalog of prior hit releases that provide a stable and
       profitable revenue stream, accounting for nearly one-third of sales,
       without significant additional investment;

     - UMG's diverse array of decentralized labels that complement each other
       through their focus on different genres, sub-genres and market segments
       thereby mitigating the effect of changes in consumer tastes; and

                                        33
- Multi-album contracts which secure long-term relationships with some of
       the most important artists in the industry.

     UMG generally acquires the contractual right to the output of musical
artists by paying them an advance against a percentage royalty on the wholesale
or retail price of their recordings. With a few exceptions, rights are
contracted on an exclusive and global basis. UMG manages approximately 2,000
active artists and has approximately 50,000 albums in its active product
catalog.

     In line with the rest of the industry, UMG's revenues and profits are
driven by hits, with a relatively small proportion of releases accounting for
the majority of sales. Therefore, UMG's labels usually sign new artists for
multi-album contracts, typically up to six albums (most of these albums at UMG's
option) so that those artists that become successful are tied-in sufficiently to
support the cost of producing the vast majority of recordings that are not as
commercially successful. Established artists command higher advances and royalty
rates and it is not unusual for a recording company to renegotiate contract
terms with a successful artist. However, UMG is not dependent on any one artist.
UMG's top 15 album releases accounted for 14% of unit volume in 2002.

     Best selling albums in 2002 included those by Eminem, Shania Twain and
Nelly. Eminem recordings, including the 8 Mile original sound track, sold over
21 million copies worldwide in 2002. The strength and depth of UMG's catalog was
highlighted once again with Greatest Hits albums for U2, Nirvana and Elton John
selling over 11 million units in the aggregate. New artists also made a
significant contribution to activity and releases from Ashanti and Vanessa
Carlton shipped in excess of 6 million units in the aggregate. In 2003, UMG
released the successful 50 Cent debut album and also has scheduled releases of
new albums by Ashanti, Blink 182, Dr. Dre, Jay Z, Limp Bizkit, Nickelback, Sting
and Texas.

     In addition to recently released recordings, we also market and sell
recordings from our catalog of prior releases. Sales from this library account
for a significant and stable part of our recorded music revenues each year. We
own the largest catalog of recorded music in the world, with performers from the
US and the UK and around the world, including: ABBA, Louis Armstrong, Chuck
Berry, James Brown, Eric Clapton, Patsy Cline, John Coltrane, Count Basie, Bill
Evans, Ella Fitzgerald, The Four Tops, Marvin Gaye, Jimi Hendrix, Billie
Holiday, Buddy Holly, The Jackson Five, Antonio Carlos Jobim, Herbert von
Karajan, Bob Marley, Nirvana, The Police, Smokey Robinson, Diana Ross & The
Supremes, Rod Stewart, Muddy Waters, Hank Williams and The Who.

     The average price of a CD album in the US has fallen at a compound annual
rate of 2.5% from $21.50 in 1983 to $14.02 by 2000 according to the Recording
Industry Association of America (RIAA). Discounting to drive momentum on certain
releases, increased competition from other forms of entertainment, such as home
video DVDs, and discounting by retailers to build store traffic, have all
contributed to lowered prices. In general, the period of growth in recorded
music sales driven by the introduction and penetration of the CD format has
ended, and no profitable new format has emerged to drive growth.

     Technological advances and the conversion of music into digital formats
have made it easy to create, transmit and "share" high quality, unauthorized
copies of music through pressed disc and CD-R piracy, home CD burning and the
downloading of music from the Internet. Unauthorized copies and piracy cost the
recorded music industry an estimated $4.3 billion in lost revenues during 2001,
the last year for which data is available, according to the International
Federation of the Phonographic Industry. IFPI estimates that 1.9 billion pirated
units were manufactured in 2001, equivalent to about 40% of all CDs and
cassettes sold globally. According to IFPI estimates, about 28% of all CDs sold
in 2001 were pirated, up from about 20% in 2000. We believe that these
percentages are continuing to increase. The industry is, however, increasing its
enforcement activities against piracy. Unauthorized copies and piracy both
decrease the volume of legitimate sales and put pressure on the price at which
legitimate sales can be made. In order to address unauthorized copying and
pirating threats, UMG continues to experiment with a variety of technologies
designed to prevent CD copying and duplication. In 2002, UMG released a number
of titles with copy protection primarily in Europe and, to a lesser extent, in
North America.

                                        34
UMG markets its recordings and artists through advertising and otherwise
gaining exposure for them through magazines, radio, TV, Internet, other media
and point-of-sale material. Public appearances and performances are an important
element in the marketing process. We arrange for television and radio
appearances and may provide financing for concert tours by some artists. TV
marketing of both specially compiled products and new albums is becoming
increasingly important. Marketing is carried out on a country-by-country basis,
although global priorities and strategies for certain artists are set centrally.
Music sales are weighted towards the last quarter of the calendar year, when
approximately one-third of annual revenues are generated.

     In all major countries in which our products are sold except Japan, we have
our own distribution services for the warehousing and delivery of finished
products to wholesalers and retailers. In certain countries we have entered into
distribution joint ventures with other record companies. We also sell music and
video products directly to the consumer, principally through two direct mail
club organizations: Britannia Music in the UK and D.I.A.L. in France.

  E-Commerce and Electronic Delivery

     UMG continues to encourage and participate in new methods to distribute,
market, sell, program and syndicate music and music-related programming by
exploiting the potential of new technological platforms. We believe that
emerging technologies will be strategically important to the future of the music
business. Evolving technology will allow current customers to sample and
purchase music in a variety of new ways and will expose potential customers to
new music. Through a variety of independent initiatives and strategic alliances,
we continue to invest resources in the technology and electronic commerce areas
that will allow the music business to be conducted over the Internet, cellular
networks, cable and satellite.

     pressplay, a joint venture of UMG and Sony Music Entertainment, offers
access to hundreds of thousands of tracks from all five majors and many
independent record companies for a monthly fee. pressplay's subscribers also may
retain tracks permanently for an additional fee. UMG also licenses its music to
other subscription services including Musicnet, Listen.com's Rhapsody, Full
Audio and Streamwaves. Consumers may customize Internet radio streams so that
the music they prefer is played more often, or they may simply listen to
programming provided for everyone. In all of these cases, UMG receives a fee or
commission each time someone accesses music to which it owns the rights. On May
19, 2003, Roxio, Inc. acquired substantially all of the interests of pressplay.
See "Item 5--Operating and Financial Review and Prospects--Subsequent Events."

     UMG also offers over 90,000 of its recorded music tracks for purchase as
permanent downloads through third party sites. UMG's music is available through
the Apple Music Store. UMG is also working with Liquid Audio to power download
sales that are available on Liquid.com, Windowsmedia.com, Towerrecords.com,
Musicrebellion.com, MP3.com and more than 25 other affiliate partner websites.
The Liquid Audio tracks are available in the Windows Media and Liquid Audio
formats, and like the tracks available at the Apple Music Store, can be
downloaded, burned to a CD-R, or transferred to a secure portable device. UMG
also continues to sell or license its music catalog through various other
non-exclusive agreements, both for digital "a la carte" downloading services as
well as interactive radio services. For example, UMG has issued catalog licenses
to Listen.com and MusicNet for their on-demand subscription services and to
Musicmatch and RCS for their interactive radio services.

  Music Publishing

     Music publishing involves the acquisition of rights to, and licensing of,
musical compositions (as opposed to recordings). We enter into agreements with
composers and authors of musical compositions for the purpose of licensing the
compositions for use in sound recordings, films, videos and by way of live
performances and broadcasting. In addition, we license compositions for use in
printed sheet music and song folios. We also license and acquire catalogs of
musical compositions from third parties such as other music publishers and
composers and authors who have retained or re-acquired rights. Accordingly,
revenues in this sector are

                                        35
generated largely through licensing fees, with much smaller revenues from sales
of printed sheet music and song folios.

     Our publishing catalog includes more than one million titles that we own or
administer, including some of the world's most popular songs, such as "American
Pie," "Strangers in the Night," "Good Vibrations," "I Wanna Hold Your Hand,"
"Candle in the Wind," "I Will Survive" and "Sitting on the Dock of the Bay,"
among many others. Among the significant artists and songwriters represented are
ABBA, Prince, The Beach Boys, George Brassens, Bon Jovi, Gloria Estefan, Eddy
Mitchell, Andre Rieu, Shania Twain, Andrew Lloyd Webber and U2. Legendary
composers represented include Leonard Bernstein, Elton John and Bernie Taupin,
and Henry Mancini. Significant acquisitions in 2002 included Koch Music
Publishing and the Tupac Shakur catalog as well as compositions by Ashanti,
Avril Lavigne, Gloria Estefan, Anastacia, Rob Davis, Royksopp, Liam Gallagher,
Jorge Luis Piloto, Paul Kelly, Murlyn Songs, Jack Johnson and The Hives, among
others.

  Competition

     The profitability of a company's recorded music business depends on its
ability to attract, develop and promote recording artists, the public acceptance
of those artists and the recordings released in a particular period. UMG
competes for creative talent both for new artists and those artists who have
already established themselves through another label with the following major
record companies: EMI, Bertelsmann Music Group, Warner Music Group and Sony
Music Entertainment. UMG also faces competition from independents that are
frequently distributed by other major record companies. Although independent
labels have a significant combined market share, no label on its own has
influence over the market. Changes in market share are essentially a function of
a company's artist rosters and release schedules.

     The music industry also competes for consumer discretionary spending with
other entertainment products such as video games and motion pictures.
Competition for shelf space has intensified in recent years due to the success
of DVD video and further consolidation in the retail sector in the US and in
Europe which is increasing the quantity of product being sold through
multinational retailers and buying groups and other discount chains.

     Finally, the recorded music business continues to be adversely affected by
pressed disc and CD-R piracy, home CD burning and the downloading of music from
the Internet. On-demand music subscription services such as pressplay and
on-demand "a la carte" services are being developed to offer the consumer a
viable, legitimate, copy-protected online source of music. See "--Recorded
Music."

  Regulatory Environment

     The recorded music, music publishing, manufacturing and distribution
businesses that comprise UMG are subject to applicable national statutes, common
law and regulations in each territory in which it operates. In the US, these
agencies include, without limitation, the US Department of Justice, the Federal
Trade Commission (FTC), the Environmental Protection Agency and the Occupational
Safety and Health Administration, and in the various states they include the
Attorney General and other labor, health and safety agencies. Additionally, in
the US, certain UMG companies entered into a Consent Decree in 2000 with the
Federal Trade Commission for seven years wherein they agreed not to make the
receipt of any co-operative advertising funds for their pre-recorded music
product contingent on the price or price level at which such product is
advertised or promoted.

     In the European Union, UMG is subject to additional pan-territorial
regulatory controls, in particular relating to merger control and antitrust
regulation. UMG is also subject to an undertaking given to the European
Commission arising out of Vivendi's purchase of Seagram, which, for a five-year
period (ending in December 2005), requires that UMG shall not discriminate in
favor of Vizzavi (formerly a joint venture between Vivendi Universal and
Vodafone) in supplying music for downloading and streaming online in the
European Economic area. An undertaking given in connection with Vivendi's
purchase of Seagram to the Canadian Department of Heritage also requires UMG to
continue its investments in Canada's domestic music industry.

                                        36
Continuing compliance with the consent decree and undertakings mentioned
above do not have a material effect on the business of UMG.

  Research and Development

     UMG seeks to participate to the fullest extent in the digital distribution
of recorded music and to protect its copyrights and the rights of its contracted
artists from unauthorized digital or physical distribution. To this end, UMG has
established a new business and technology arm, eLabs. This unit supervises UMG's
digitization of content and the online distribution of that content, and
generally reviews the licensing of that content to third parties. In addition,
it generally reviews and considers the technologies being developed by others
for application in UMG businesses, such as technological defenses against piracy
in all forms, and is engaged in various projects intended to open new
distribution channels or improve existing ones.

VIVENDI UNIVERSAL ENTERTAINMENT (VUE)

     Our film, television and parks and resorts businesses are conducted
primarily through VUE, a limited liability limited partnership 86% held by
Vivendi Universal. VUE was formed in April 2002 and used for the May 2002
transaction among Vivendi Universal, Universal Studios, Inc., USA Networks, Inc.
(now known as InterActiveCorp, which we refer to as USAi), USANi LLC, Liberty
Media Corporation and Barry Diller. In this transaction, Universal Studios, Inc.
contributed to VUE the Universal Studios Group, consisting of Universal's film,
television and recreation businesses, and USA Networks Inc. contributed its
ownership interest in the USA Entertainment Group, consisting of USA Cable (now
known as Universal Television Networks), USA Films (now Focus Features) and
Studios USA (now known as Universal TV LLC).

     The primary businesses in which VUE engages are:

     - Universal Pictures Group (UPG).  UPG is a major film studio, engaged in
       the production and distribution of motion pictures worldwide in the
       theatrical, non-theatrical, home video/DVD and television markets;

     - Universal Television Group (UTG).  UTG is engaged in the production and
       distribution of television programming worldwide as well as the ownership
       and operation of four domestic cable television networks, including USA
       Network and the Sci Fi Channel, and a network of international television
       channels outside of the United States; and

     - Universal Parks & Resorts (UPR).  UPR owns and operates theme parks,
       entertainment complexes and specialty retail stores worldwide.

     In addition to VUE's three primary businesses, VUE also has a Universal
Studios Operations Group which is responsible for providing quality
production/post production facilities and services to both internal and external
productions. It is also responsible for managing VUE's lower lot facility in Los
Angeles and ensuring that services to VUE's employees, tenants and productions
are uninterrupted.

     Effective April 1, 2003, Barry Diller resigned as interim chief executive
of Vivendi Universal Entertainment.

                                        37
The following table shows the pro forma revenue for each of the primary
businesses in which VUE is engaged for each of the periods indicated:

                                    REVENUES
YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                                (IN MILLIONS)
UPG.........................................................  E 3,927   E 3,803
UTG.........................................................    2,199     2,134
UPR and Other...............................................      852       937
                                                              -------   -------
Total.......................................................  E 6,978   E 6,874
                                                              =======   =======
The revenue and operational information and data relating to VUE and its
businesses set forth in this section is presented on a pro forma basis, adjusted
to include the results of the entertainment assets of USAi, which was acquired
in May 2002, as if it had been acquired on January 1, 2001, and the results of
Universal Studios international television networks in 2002 (in the actual 2002
results, the results of Universal Studios international television networks were
reported by Canal+ Group).

UNIVERSAL PICTURES GROUP (UPG)

     VUE, through Universal Pictures and Focus Features, is a major producer and
distributor of feature films worldwide. Universal Pictures and Focus Features
produce feature films that are initially distributed to theatres and,
thereafter, through other "windows" of distribution, including non-theatrical,
home video and DVD, pay-per-view and video-on-demand, and pay, free and basic
cable and satellite television.

     Key geographic markets for motion picture distribution, as described in the
preceding paragraph, include the United States, Canada, Europe, Asia, Latin
America and Australia.

     The following tables show information on VUE's motion picture revenue for
each of the periods indicated, broken down by geographic market and "release
window":

                               GEOGRAPHIC MARKET
YEAR ENDED
                                                               DECEMBER 31, 2002
                                                               -----------------
                                                                 (IN MILLIONS)
North America...............................................        E 2,239
Europe......................................................          1,217
Rest of the World...........................................            471
                                                                    -------
Total.......................................................        E 3,927
                                                                    =======
RELEASE WINDOW
YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                                (IN MILLIONS)
Theatrical..................................................  E   746   E   913
Home Video..................................................    2,239     2,016
Television..................................................      943       875
                                                              -------   -------
Total.......................................................  E 3,927   E 3,803
                                                              =======   =======
38
Major motion pictures released in recent years include Erin Brockovich,
Gladiator, The Mummy Returns, Meet the Parents, The Fast and the Furious,
Jurassic Park III, Dr. Seuss' How The Grinch Stole Christmas, A Beautiful Mind,
The Scorpion King, Red Dragon, The Bourne Identity and 8 Mile. In addition, the
Universal Pictures Group produces animated and live-action family programming
for home video and television distribution and licenses merchandise in various
parts of the world.

     VUE, through its wholly-owned subsidiaries, distributes its motion pictures
in the United States and Canada to theaters. Throughout the rest of the world,
VUE distributes its motion pictures through United International Pictures B.V.,
a joint venture owned equally by Universal Studios International B.V., a wholly
owned subsidiary of VUE, and Viacom International (Netherlands) B.V.
(Paramount). Through an agreement with DreamWorks SKG, VUE also distributes
theatrically DreamWorks' motion pictures outside of the United States and
Canada.

     The distribution of VUE's products on videocassettes and DVDs is handled by
wholly-owned subsidiaries of VUE throughout the world. Through a servicing
agreement with DreamWorks SKG, VUE also distributes DreamWorks' home video
products throughout the world.

     After a motion picture's theatrical exhibition and its home video/DVD
release, VUE seeks to generate revenues from various other distribution
channels, including non-theatrical distribution (such as airlines, hotels,
cruise ships and armed forces facilities) and various forms of television
distribution. Television distribution includes worldwide exhibition on
pay-per-view and video-on-demand services, subscription pay television services,
network and basic cable and satellite television services, and independent
television stations. VUE does not always have rights in all media of exhibition
to all motion pictures that it theatrically releases and does not necessarily
distribute a given motion picture in all of the foregoing media in all markets.

     VUE's licensing arrangements may be on an "output" basis, where the
licensee is obligated to exhibit some or all of VUE's future motion pictures or
programs over a given period of time, or on a package basis, where the licensee
is obligated to exhibit one or more specified motion pictures or programs. In
the US, VUE has output arrangements for pay-per-view and/or video-on-demand
exhibition with parties such as DirecTV, EchoStar and iNDemand. As for pay
television, VUE has output arrangements with Home Box Office, providing for the
licensing of films released for theatrical exhibition through the year 2010, as
well as a partially overlapping arrangement with Starz Encore Group, providing
for the licensing of a portion of the films released for theatrical exhibition
through the year 2004. VUE also licenses motion pictures and other programs to
the broadcast television networks ABC, NBC, CBS, Fox, UPN and The WB, to
independent broadcast television stations and to basic cable networks, such as
AMC, Bravo, Comedy Central, MTV, Sci Fi Channel, TBS and USA; domestically,
these licenses are generally made on a package basis. In international markets,
VUE licenses motion pictures and other programs on both an output and package
basis to leading third-party pay-per-view and video-on-demand services and to
free, basic and pay television services, including programming services operated
by various affiliated entities and several joint ventures with various other
major studios and other partners.

  UNIVERSAL TELEVISION GROUP (UTG)

     UTG is engaged in two primary businesses:

     - UTG Cable.  UTG's cable business owns and operates four domestic cable
       television networks and a network of international pay television
       channels outside of the United States; and

     - Television Production and Distribution.  UTG's television production and
       distribution business is engaged in the production and distribution of
       television programming worldwide.

                                        39
The following table shows UTG's revenues for each of the primary businesses
in which UTG is engaged broken down for each of the periods indicated:

                                    REVENUES
YEAR ENDED
                                                                 DECEMBER 31,
                                                              ------------------
                                                               2002       2001
                                                              -------    -------
                                                                (IN MILLIONS)
Cable Television Networks...................................  E 1,252(1) E 1,338
Television Production and Distribution......................      947        795
                                                              -------    -------
Total.......................................................  E 2,199    E 2,134
                                                              =======    =======
---------------

(1) Includes international TV channels (in the actual 2002 results, the results
    of Universal Studios international television networks were reported by
    Canal+ Group).

     In 2002, 78% of UTG's revenues were generated in North America. VUE also
distributes worldwide current television series and made-for-video and
made-for-television motion pictures, as well as titles from its extensive motion
picture and television library, which consists of varying rights to thousands of
previously released feature films and many well-known television series and
made-for-video and made-for-television motion pictures. In the US, such licenses
are generally made on a package basis, while outside the US such licenses may be
either on an output or package basis depending on the territory and licensee
involved.

  Cable Television Networks

     In the US, VUE operates four domestic 24-hour, basic cable television
networks, USA Network, Sci Fi Channel, TRIO and NewsWorld International (NWI).

     Cable television networks derive virtually all of their revenue from two
sources:

     - Affiliate revenues.  Per subscriber fees paid by the cable television
       operators and other distributors to cable television channel providers.
       These revenues generally provide more stable and predictable cash flow;
       and

     - Advertising revenues.  The sale of advertising time to national
       advertisers during the programming carried on each of the networks.

     The relative stability of affiliate revenues helps reduce cable television
networks' sensitivity to advertising cycles. UTG's cable television network
combined revenue streams have grown at an average rate of 10% over the past 5
years. The total market size, between affiliate and revenue fees, is estimated
to be $17.5 billion (Kagan/UTV Research).

     The following table shows a breakdown of UTG's cable television network
revenues for each of the periods indicated:

                                    REVENUES
YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                              2002(1)    2001
                                                              -------   -------
                                                                (IN MILLIONS)
Cable Television Networks
  Affiliate revenues (subscription fees)....................  E   721   E   695
  Advertising revenues......................................      531       643
                                                              -------   -------
Total.......................................................  E 1,252   E 1,338
                                                              =======   =======
40
---------------

(1) Includes international television networks (in the actual 2002 results, the
    results of Universal Studios international television networks were reported
    by Canal+ Group).

     USA Network is a general entertainment network featuring original series
and movies, theatrical movies, off-network television series and major sporting
events, designed to appeal to the available audiences during particular viewing
hours. In general, USA Network's programming is targeted at viewers between the
ages of 18 and 54. According to Nielsen Media Research, as of December 31, 2002,
USA Network was available in approximately 87 million US households. According
to Nielsen Media Research, for 2002, USA Network was first among all domestic
basic cable television networks in primetime ratings among adults 18-49 (Mon-Sun
7pm-11pm).

     USA Network's program line-up features original series, including the two
highest rated original dramatic series on basic cable television (Dead Zone and
Monk) and approximately six movies/mini-series produced exclusively for it each
year. USA Network's programming also includes off-network series, such as JAG,
Nash Bridges, Walker, Texas Ranger, Law & Order: Special Victims Unit and Law &
Order: Criminal Intent, and major theatrically released feature films. USA
Network is home to the AFI Life Achievement Awards, Eco-Challenge, exclusive
midweek coverage of the US Open Tennis Championships, The Westminster Kennel
Club Dog Show, and early round coverage of The Masters, The Ryder Cup and other
major PGA Tour golf events.

     Sci Fi Channel was launched in 1992. Sci Fi Channel features science
fiction, horror, fantasy, paranormal and reality programming. In general, Sci Fi
Channel's programming is designed to appeal to viewers between the ages of 25 to
54. According to Nielsen Media Research, as of December 31, 2002, Sci Fi Channel
was available in approximately 79.4 million US households. According to Nielsen
Media Research, in 2002, Sci Fi Channel was sixth among all basic cable
television networks in adults 25-54 and ninth in adults 18-49.

     Sci Fi Channel's program lineup includes many original dramatic and reality
series, such as: Stargate: SG-1, Farscape, Tremors: The Series, Crossing Over
With John Edward and Scare Tactics. Additionally, Sci Fi Channel airs popular
vintage series ranging from The Twilight Zone to Quantum Leap to digitally-
remastered episodes of the original Star Trek series. Sci Fi Channel
continuously updates its programming library with popular current sci-fi fare
such as X-Files, The Outer Limits, Babylon 5 and Beyond Belief: Fact or Fiction.
Additionally, Sci Fi Channel features many popular theatrical movies, as well as
movies and mini-series made specifically for the network. In 2002, Sci Fi
Channel grabbed headlines with the record-breaking 20-hour original premiere
mini-series, Stephen Spielberg Presents Taken. In 2003, Sci Fi Channel will
telecast two more mini-series made directly for it -- Frank Herbert's Children
of Dune and Battlestar Gallactica.

     TRIO and NWI were acquired by USA Cable from the Canadian Broadcasting
Corporation and Power Broadcasting Inc. in May 2000. TRIO relaunched in June
2001 as "popular arts television" featuring the best in film, fashion, music,
stage and popular culture. NWI is a 24-hour international news channel that
presents newscasts every hour as well as long-form contemporary magazine shows.
At December 31, 2002, TRIO and NWI were available in 15 million and 14 million
households, respectively.

     USA Network and Sci Fi Channel typically enter into long-term agreements
for their major off-network series programming. Their original series
commitments usually start with less than a full year's commitment, generally a
pilot episode, but contain options for further production over several years.
These original productions will include specials, series, and
made-for-television movies. USA Network, and to a lesser extent, Sci Fi Channel,
acquire theatrical films in both their "network" windows and "pre-syndication"
windows. Under these arrangements, the acquisition of such rights is often
concluded many years before the actual exhibition of the films begins on the
network. Each network's original films start production less than a year prior
to their initial exhibition.

  International Television Networks

     Universal Studios Networks Worldwide Limited and various other indirect
subsidiaries of Universal Studios, Inc. operate a network of international
television channels. As of December 31, 2002, Universal Studios Networks
Worldwide manages branded television channels in 25 countries outside of the
United

                                        41
States. 13th Street -- The Action & Suspense Channel reaches television
subscribers via satellite and cable systems in France, Germany and Spain. Studio
Universal, a basic-tier television movie channel, is currently available to
cable and satellite subscribers in Germany, and to satellite subscribers in
Italy. The Sci Fi Channel, a basic-tier television channel with a
science-fiction theme, is currently available to cable and satellite subscribers
in the UK. Finally, the USA Network channel, a basic-tier general entertainment
channel, is offered to cable and satellite subscribers in Brazil, through a
local joint venture partially owned by a Universal Studios subsidiary, and in 19
other countries in Latin America. In 2002, the results of Universal Studios
international television networks were reported by Canal+ Group.

  Television Production and Distribution

     VUE is one of the major suppliers of television programs made for worldwide
exhibition. Through its various subsidiaries, VUE either directly produces, or
finances and acquires ownership of, and distributes a broad variety of
television series, made-for-television movies, mini-series, children's shows and
game and reality-based programs.

     The production business tends to be less predictable than the cable
television business as it requires significant upfront investment with no
guarantee of the success of a television series. Typically, a show is created on
a pilot format, which, if successful, will be licensed by a broadcast network
for a number of seasons. License fees paid by the network typically do not cover
costs, meaning that a television show typically only becomes profitable after
entering syndication (usually after four seasons). However, approximately 90% of
shows are cancelled before the fourth season. This means that the key drivers
for the television production and distribution business are the recruitment and
retention of creative talent and a good "hit ratio" of successful television
shows that are launched.

     VUE is a supplier of primetime dramatic and comedy programming for initial
exhibition on the US broadcast networks, including (during the 2002/03
television season) the long-running series Law & Order and its spinoffs, Law &
Order: Special Victims Unit and Law & Order: Criminal Intent, the newly launched
Dragnet and several series co-produced with individual US networks, including
The District and The Agency on CBS, and American Dreams on NBC. VUE is likewise
a leading supplier of programs for initial exhibition in US domestic syndication
(i.e., sales to individual television stations or station groups). During the
2002/03 season, these programs included talk shows -- Maury (hosted by Maury
Povich) and The Jerry Springer Show -- and such game and reality shows as Blind
Date, Fifth Wheel and Crossing Over With John Edward. VUE also finances,
acquires and distributes programs produced for initial exhibition on VUE's US
cable television networks, including the dramatic series Tremors on Sci Fi
Channel and Monk on USA Network, as well as the epic mini-series Helen of Troy
for USA Network. VUE also has a majority interest in the new production label
Reveille LLC, which recently launched the new series Nashville Star on USA
Network, as well as two new series -- The Restaurant and The Fast & the
Furious -- on NBC.

  UNIVERSAL PARKS & RESORTS (UPR)

     Universal Parks & Resorts is a leader in the development and operation of
theme parks. UPR owns 100% of Universal Studios Hollywood, the world's largest
combined movie studio and movie theme park, and Universal CityWalk Hollywood, a
complex that offers shopping, dining, cinemas and entertainment, each located in
Universal City, California. Additionally, through joint ventures with
Blackstone, UPR owns 50% of Universal Studios Florida -- a combined movie studio
and movie theme park, Universal's Islands of Adventure -- an adjacent theme park
in Orlando, Florida, and Universal CityWalk Orlando -- a complex that offers
shopping, dining, cinemas and entertainment. Further stakes include a 25%
interest in UCF Hotel Venture -- a joint venture owning three hotels adjacent to
the Orlando theme parks, a 37% interest in Universal Mediterranea near
Barcelona, Spain, comprised of a theme park, water park and two hotels, and a
24% interest in Universal Studios Japan in Osaka. The Universal Orlando joint
venture has recently completed a $500 million bond offering. In connection with
this offering, Blackstone and VUE agreed that Blackstone will lend to VUE (or a
subsidiary of VUE) its share of certain distributions from the joint ventures,
up to approximately $22.5 million.

                                        42
The US market is now mature and further growth is more likely to come from
business expansion in Asia and Europe.

     UPR's business is seasonal and bad weather can adversely impact attendance
at theme parks and resorts. Attendance at theme parks follows a seasonal pattern
which coincides closely with holiday and school schedules. Prolonged bad or
mixed weather conditions during seasonal peak attendance periods may reduce
attendance causing a greater decline in revenues than if those conditions
occurred during a low attendance period.

     Theme park construction and operation is capital-intensive. Maintenance
capital expenditures can absorb 5% to 10% of revenues, while the cost of
developing a new destination park can range from $1 to $2 billion. UPR attempts
to share the costs of developing the parks by taking only a partial equity
interest while signing agreements to manage the completed parks. For managing
the parks, UPR receives an annual management fee.

     On February 10, 2003, UPR (through its wholly owned Mauritius entity
Universal Studios Holding, Ltd.) entered into a joint venture with two partners
in the People's Republic of China for the construction of a theme park in
Shanghai. UPR will have a 25% interest in the joint venture. The agreement
provides that UPR will manage day-to-day operations of the park and will have
key veto rights. The total project cost is estimated to be $875 million. The
agreement remains subject to governmental approval in China and other
significant conditions subsequent.

     VUE has agreed to provide a project completion guarantee in respect of the
Shanghai theme park joint venture on a pro rata basis based upon its
subsidiary's 25% ownership interest in the joint venture. This project
completion guarantee is expected to include the guarantee of UPR's pro rata
share of all amounts owing under an approximately $563 million bank loan to the
joint venture. The obligations under this guarantee will be payable if the
Shanghai theme park is abandoned or is not completed on or prior to the Project
Completion Date. The "Project Completion Date" is expected to be a date no
earlier than 42 months and no later than 51 months after the physical site,
including certain improvements, is delivered to the joint venture so that it can
commence construction. That delivery could occur as early as June 2003. The
guarantee will be released upon completion of project construction.

  COMPETITION

  Competition in the Motion Picture Industry

     There are eight major competitors in the motion picture industry in the US
and several independents that compete aggressively against each other in all
aspects of the production, acquisition and distribution of motion pictures.
These companies include Universal Pictures, The Walt Disney Company, Warner
Bros., DreamWorks SKG, Paramount Pictures Corporation, Metro-Goldwyn-Mayer
Studios, Inc., Twentieth-Century Fox Film Corporation and Sony (through
Columbia/Tri-Star and Sony Pictures). These US "majors" compete against each
other and against independent motion picture companies for product, talent and
revenue received at the box office from the distribution of motion pictures
through all of the distribution channels discussed above. Market share in the US
and international markets varies widely from picture to picture, by "window" and
geographic market, and year to year given the volatility in the commercial
acceptance of motion pictures by consumers. In 2002, according to the Motion
Picture Association of America, Universal Pictures ranked fifth in the US
theatrical market with a 9.3% market share.

     Competition is also intense in distributing VUE's theatrical motion
pictures in the various television markets. There are numerous suppliers of
television programming worldwide, including the television networks, the other
major studios and independent producers, all of which compete actively for the
limited number of broadcast hours available on free, basic cable and pay
television. In addition, unlike VUE, many of the other major studios are
affiliated with major broadcast television networks, which can provide a ready
means of distributing their products, as well as an additional source of
earnings that can offset the fluctuations in the financial performance of their
motion picture and television operations.

                                        43
Competition in Television Production and Distribution

     VUE produces television programs in a highly competitive environment, as
such programs must compete with television product supplied by other producers,
as well as all other forms of entertainment and leisure time activities. Within
the television industry, VUE must first compete for the creative
talent -- writers, actors, producers -- and the underlying literary properties
needed to produce television shows. VUE's produced programs, including
television series and made-for-television and made-for-video motion pictures,
must then strive for success in a worldwide television marketplace that has
become ever more competitive as digital cable and satellite delivery
increasingly expand the number of channels (and competing programs) available to
consumers. Competition in the critical US production market has also been
increased by the growing consolidation and vertical integration of several large
television and media giants. In particular, the 1995 repeal of the financial
interest and syndication rules in the US has permitted these conglomerates to
combine ownership of television production businesses with broadcast networks.
As a result, the current US broadcast networks -- ABC, CBS, NBC, Fox, The WB and
UPN -- are able to fill their schedules with a large percentage of self-owned
programs, thus reducing the number of time slots available to VUE and other
"outside" producers. Nonetheless, up through the current 2002/03 season, VUE
continues to be one of the primary "independent" suppliers of broadcast network
programming. VUE has also achieved success in producing original programming for
VUE's own cable networks and remains a leading producer of "first-run"
syndicated product. Internationally, competition can be exacerbated due to
regulatory and local market factors, including the imposition of quotas,
limiting the amount of foreign programming those television services are
permitted to exhibit, and increases in the availability of locally produced
programs.

  Competition in the Cable Television Industry

     VUE's basic cable television networks compete for access to customers and
for audience share and revenue with other cable program services, broadcasters,
and other forms of entertainment. Cable operators and other distributors only
contract to carry a limited number of the available networks. Therefore, they
may decide not to offer a particular network to their subscribers, or they may
package a network with other networks in a manner that only a portion of their
subscribers will receive the service (for example, by charging an additional
fee). In addition, there has been increased consolidation among cable operators,
so that VUE's networks have become increasingly subject to the carriage
decisions made by a small number of operators. This consolidation may reduce the
per-subscriber fees received from cable operators in the future. This
consolidation also means that the loss by any network of any one or more of its
major distributors could have a material adverse impact on the network. The
competition for advertising revenues also has become more intense as the number
of television networks has increased. While many factors affect advertising
rates, ultimately they are dependent on the numbers and types of viewers that a
program attracts. As more networks compete for viewers, it becomes increasingly
difficult to increase or even maintain a network's number of viewers. Moreover,
to do so may require a network to spend significantly greater amounts of money
on programming. Therefore, greater pressure may be placed on a network's ability
to maintain advertising revenue levels and to try and generate increases. The
competition for third-party programming also is likely to increase. Many
networks, including VUE's networks, are affiliated with companies that produce
programming. This programming is becoming increasingly difficult to acquire by
third parties or unaffiliated networks. As a result, there is likely to be
strong competition to acquire remaining programming.

  Competition in the Theme Park Industry

     Theme parks can be separated into two main categories: destination parks
(the largest parks, historically located within the US territory, attracting
both US and overseas visitors) and regional parks (smaller parks, attended by
visitors living in the same area). UPR operates in the first category together
with market leader Disney, though recent declines in travel have decreased the
proportion of non-local visitors. Companies such as Six Flags and Cedar Fair
operate in the regional park segment. Barriers to entry, especially in the
destination park segment, are high as development of new parks is constrained by
availability of land and capital.

                                        44
VUE, through Universal Parks & Resorts, competes aggressively against other
major theme park operators including The Walt Disney Company, Anheuser Busch
Companies, Paramount Parks, Six Flags and Cedar Fair.

  LEGAL AND REGULATORY ENVIRONMENT

  Legal and Regulatory Environment in Motion Picture Production and Distribution

     In the US, the motion picture production and distribution businesses are
largely unregulated due to protections given to expressive works under the
United States Constitution. There are, however, many federal, state and local
statutes and regulations that are integral to the business and under which the
businesses operate including, without limitation, the copyright, trademark,
antitrust, anti-discrimination and environmental, health and safety laws and
regulations. In addition, many federal and state agencies exercise some degree
of oversight and, at times, may initiate investigations and enforcement
proceedings with regard to industry practices. These agencies include, without
limitation, the United States Department of Justice, the Federal Trade
Commission, the Department of Labor, the Equal Employment Opportunity
Commission, the Environmental Protection Agency and the Occupational Safety and
Health Administration and, in the State of California, the Attorney General, the
Department of Toxic Substances Control and the California Department of
Industrial Relations. VUE, through a variety of internal policies and compliance
procedures, regulates itself in many of these areas. In a few limited areas, a
consent decree and undertakings further regulate the operations of VUE. In the
US, the motion picture distribution and exhibition industries are regulated by
the consent decree in US v. Paramount Pictures, Inc.; this consent decree,
affirmed in 1950, prohibits certain conduct by film distributors, including
price fixing and product tying, and requires film distributors to license
products on a film-by-film and theater-by-theater basis. In the European Union,
VUE is regulated by an undertaking in the pay-TV area which, for a five-year
period in each affected country, starting from the end of Universal's existing
first window output deal in that country, will regulate certain business with
Canal+; and is regulated in the film distribution area through an undertaking
given by United International Pictures, the joint venture through which VUE
distributes its feature films theatrically outside of the US and Canada. An
undertaking with the Canadian Department of Heritage also regulates certain
operations of Universal Studios Canada. Continuing compliance with the laws,
regulations, consent decree and undertakings mentioned in this paragraph do not
have a material effect on the business of VUE.

  Legal and Regulatory Environment in Television Production and Distribution

     Many countries enforce quotas that restrict the amount of US-produced
television programming that may be aired on television in such countries. There
can be no assurances that additional television quotas will not be enacted or
that countries that already impose quotas will not more strictly enforce them.
Additional or more restrictive quotas or stricter enforcement of existing quotas
could adversely affect VUE's business by limiting its ability to exploit its
motion pictures and television products internationally.

     Distribution rights to motion pictures and other programs are granted legal
protection under US copyright law and the copyright laws of many foreign
countries, which generally provide civil and criminal penalties for the
unauthorized duplication and exhibition thereof. VUE's ability to distribute and
exploit its motion pictures and other television programming is affected by the
strength and effectiveness of these laws. VUE attempts to take appropriate and
reasonable measures to secure, protect and maintain copyright protection for all
of its motion pictures and other television programming under the laws of
applicable jurisdictions. However, despite these measures, motion picture piracy
continues to be extensive in many parts of the world, including South America,
Asia, the countries of the former Soviet Union and other former Eastern Bloc
countries. In the past, various trade associations have enacted voluntary
embargoes of motion picture exports to certain countries in order to pressure
the governments of those countries to be more aggressive in preventing motion
picture piracy. In addition, the US government has publicly considered trade
sanctions against specific countries that do not take steps to prevent copyright
infringement of US-produced motion pictures. There can be no assurance that
voluntary industry embargoes or US government trade sanctions will be enacted or
be effective. If enacted, such actions could impact the amount of revenue that
VUE realizes from the international exploitation of its motion pictures
depending upon the countries subject to such action and the duration of
                                        45
such action, and if not enacted or not effective or if other measures are not
taken, VUE may continue to lose an indeterminate amount of revenue as a result
of piracy.

     US television stations and networks, as well as foreign governments, impose
content restrictions on motion pictures that may restrict in whole or in part
exhibition on television or in a particular territory. There can be no assurance
that such restrictions will not limit or alter VUE's ability to exhibit certain
motion pictures in such media or markets.

     VUE is subject to certain regulations by the European Union and other
international regulatory authorities. The European Commission recently initiated
investigations into certain aspects of licensing relationships between studios
and channel operators, and there are no assurances that limitations or
restrictions enacted as a result of those investigations or otherwise will not
adversely affect VUE's business and financial results.

  Legal and Regulatory Environment Affecting Television Channels and Programming

     The communications industry, including the operation of television
broadcast stations, cable television systems, satellite distribution systems and
other multichannel distribution systems and, in some respects, vertically
integrated cable programmers, is subject to a substantial federal regulation,
particularly under the Communications Act of 1934, as amended, and the related
rules and regulations of the Federal Communications Commission (FCC).

     Cable Programming.  The Cable Television Consumer Protection and
Competition Act of 1992 prohibits a cable operator from engaging in unfair
methods of competition that prevent or significantly hinder competing
multichannel video programming distributors from providing satellite-delivered
programming to their subscribers. The FCC has adopted regulations to (1) prevent
a cable operator that has an attributable interest, including voting or
non-voting stock ownership of at least 5%, in a programming vendor from
exercising improper influence over the programming vendor in the latter's
dealings with competitors to cable; and (2) prevent a programmer in which a
cable operator has an attributable interest from discriminating among cable
operators and other multichannel video programming distributors, including other
cable operators.

     Cable television systems in the US are also subject to regulation pursuant
to franchises granted by a municipality or other state or local governmental
entity.

     Digital Television.  The FCC has taken a number of steps to implement
digital television service (including high-definition television) in the US,
including the adoption of a final table of digital channel allotments and rules
for the implementation of digital television. The table of digital allotments
provides each existing television station licensee or permittee with a second
broadcast channel to be used during the transition to digital television,
conditioned upon surrender of one of the channels at the end of the digital
television transition period. The FCC set a target date of May 2002 for
completion of construction of digital television facilities and 2006 for
expiration of the digital transition period, subject to biennial reviews to
evaluate the progress of digital television, including the rate of consumer
acceptance. Although the FCC has granted waivers of the May 2002 target date to
a number of stations and a number of requests for waivers are pending, the
number of stations providing both digital and analog programming has steadily
increased and is expected to do so at an accelerated rate during the next
several years. Under the FCC's rules, deployment of digital television is taking
place in the major television markets more rapidly than in smaller markets; and,
in those markets where digital television channels are now operational, cable
programmers face competition from both over-the-air analog and over-the-air
digital television service.

     Must-Carry/Retransmission Consent.  Full-power television broadcasters are
required to make triennial elections to exercise "must-carry" or "retransmission
consent" rights with respect to their carriage by cable systems in each
broadcaster's local market. By electing must-carry rights, a television
broadcaster demands carriage on a specified channel on cable systems within its
television market, defined by Nielsen as a Designated Market Area.
Alternatively, if a television broadcaster chooses to exercise retransmission
consent rights, it can prohibit cable systems from carrying its signal or grant
the appropriate cable system the authority

                                        46
to retransmit the broadcast signal for a fee or other consideration. The FCC
currently is conducting a rulemaking proceeding to determine whether, in certain
circumstances, it should require carriage of a television station's digital and
analog signals. Some stations have exercised retransmission consent rights with
respect to digital programming with the result that cable operators are carrying
some combination of the digital and analog programming on their systems.

     Regulations Applicable to Cable Systems Affecting Programming.  Cable
television operators also are subject to regulations concerning the commercial
limits in children's programming, and closed captioning. The FCC's closed
captioning rules, which became effective January 1, 1998, provide for the phased
implementation, beginning in the year 2000, of a universal on-screen captioning
requirement with respect to the vast majority of video programming. Cable
television operators are also subject to regulations concerning commercial
limits on children's programming, political advertising and indecency standards.
Although all of these content regulations formally apply to the cable operator,
cable programmers are required to distribute programming that meets these
restrictions.

  Legal and Regulatory Environment in the Theme Park Business

     VUE, through Universal Parks & Resorts, operates theme parks around the
world in accordance with the highest health, safety and environmental standards.
In the State of California, legislation and implementing regulations require the
reporting to the state of certain incidents that occur on permanent amusement
rides, which result in the death or serious injury to a guest. VUE and the other
major theme park operators in Florida voluntarily report similar incidents that
occur in their Florida theme parks to the state. These requirements and
practices do not have a material effect on the business of VUE.

  CANAL+ GROUP

     Canal+ Group has two principal lines of business:

          Pay-TV France:  the leader in the production and distribution of
     pay-TV in France, through Canal+ premium channel, CanalSatellite digital
     platform, NC Numericable cable platform and multiThematiques theme
     channels; and

          StudioCanal:  a leading European studio involved in the production,
     co-production, acquisition and distribution of feature films and television
     programs.

     In addition to its two primary lines of business, Canal+ Group also has
other European pay-TV and sports interests.

     We own 100% of Canal+ Group, which in turn owns 49% of Canal+ S.A. and 66%
of CanalSatellite.

     The following table shows Canal+ Group's revenues for the periods
indicated, broken down by business line.

                                    REVENUES
YEAR ENDED DECEMBER 31,
                                                           ---------------------------
                                                            2002      2001      2000
                                                           -------   -------   -------
                                                                  (IN MILLIONS)
Pay-TV -- France.........................................  E 2,652   E 2,530   E 2,427
StudioCanal..............................................      455       429       328
Other(1).................................................    1,635     1,604     1,299
                                                           -------   -------   -------
CANAL+ GROUP.............................................  E 4,742   E 4,563   E 4,054
                                                           =======   =======   =======
---------------

(1) Other is primarily comprised of international pay-TV, including Telepiu,
    Canal+ Benelux, Canal+ Nordic, Cyfra+, Canal+ Technologies and Expand.

                                        47
The revenue and operational information relating to Canal+ Group and its
businesses is presented on a pro forma basis to exclude the results of Universal
Studio's international television networks in 2002. In the actual 2002 results,
the results of Universal Studios international television networks were reported
by Canal+ Group.

     Subscription revenues, which are the largest portion of Canal+ Group's
revenues, depend primarily on four factors: subscription growth, churn rates and
programming packages chosen by subscribers which may increase monthly
subscription rates.

     Pay-TV is a subscription business. As a result, Canal+ Group has steady
monthly income and predictable revenues. Over 50% of new subscriptions for
Canal+ Group's pay-TV operations are gained during the last four months of the
year.

     Canal+ Group has suffered losses in recent years in large part due to its
international growth strategy. In late 2002, Canal+ Group announced that it
would restructure its business around its French pay-TV and film production
businesses, and certain of its other assets have been or are in the process of
being sold. On February 5, 2003, Canal+ Group disposed of its 89% interest in
Canal+ Technologies, a supplier of software for digital television. Canal+ Group
has also agreed to sell Telepiu, the Italian pay-TV business, to News
Corporation. The Telepiu divestiture received the approval of the European
Commission on April 2, 2003 and was completed on April 30, 2003.

  Pay-TV -- France

     Canal+ Group's pay-TV operations in France are engaged in the production of
pay-TV channels (Canal+, Multithematiques and others) and the operation of
satellite and cable platforms (CanalSatellite and NC Numericable).

     The cost of purchasing rights for premium channel programming, including
investments required in French and European programming described below, is the
largest operating cost for Canal+ Group, representing over 70% of operating
costs in 2002. Other operating expenses include subscriber acquisition costs
(sales commissions and marketing expenses), subscriber management costs (cost of
set-top boxes which are rented to the subscribers, call centers, etc.), and
transmission costs.

     The French Audiovisual Council has granted licenses to Canal+ Group for
five channels (the maximum number allowed to be under common ownership) for
future digital terrestrial broadcasting in France. Those channels are Canal+,
Sport+, I-Television, Planete and CineCinema.

  Canal+

     Canal+ was the first premium pay-TV channel in Europe and remains the
leading pay-TV channel in France. Canal+, which broadcasts recent films and
sports events on an exclusive basis, is available through customized local
versions in eleven European countries. In France, Canal+ is available both as an
analog channel and on cable and satellite. French digital satellite and cable
subscribers have access to a multiplex of four Canal+ channels.

     Under French law, Canal+ Group cannot own more than its existing 49%
interest in the broadcasting activities of Canal+. Canal+ Group holds this
interest through a 49% interest in Canal+ S.A., a publicly traded company listed
on the Paris Second Marche, which owns the Canal+ channel.

     Canal+'s 2002 revenues were generated mainly by subscriptions (94%) and
advertising (5%).

                                        48
The following table shows information about Canal+'s subscriptions, for the
periods indicated:

                                 SUBSCRIPTIONS
YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                               2002     2001     2000
                                                              ------   ------   ------
                                                              (IN THOUSANDS, EXCEPT %)
Subscription base French pay-TV market(1)
  Digital...................................................  5,631    5,075    4,473
  Analog....................................................  4,554    4,625    4,723
Subscription base Canal+ (premium)
  Digital...................................................  1,613    1,505    1,396
  Analog....................................................  2,864    3,046    3,224
Churn (annual)..............................................   10.6%    10.8%     9.9%
---------------

(1) Includes cable, satellite and direct-to-air.

     Subscription information is based on Canal+ Group's compilation of
subscription figures provided by the relevant companies and the cable
association Aform.

     Canal+ attracts subscribers principally through its films and sports
offerings. Canal+ broadcasts more than 400 films annually, about 80% of which
are French TV premieres. Canal+ sports offerings include French premier league
soccer, Champions League and other major European soccer leagues, horse racing,
rugby union, golf, boxing and various US sports. Canal+ also offers original
premium programs.

     Among Canal+'s sports offerings, French soccer premier league is an
important driver of our subscriber base and Canal+ pays significant licensing
fees for the right to broadcast games. The French premier league current
contract expires in June 2004. Canal+ and the French soccer premier league
negotiated an agreement whereby Canal+ would have had exclusive broadcasting
rights for the premier league 2004-2007 seasons. However, upon petition by
Canal+'s competitor Television par Satellite (TPS), the French competition
council stayed effectiveness of this agreement. As a result of a court
recommended mediation with TPS, all parties concerned agreed in April 2003 to
extend the existing contract for the duration of one year (i.e., through the end
of the 2004-2005 season). See "Item 8--Financial Information--Litigation."

     Obligations contained in Canal+'s broadcasting license impose significant
requirements on Canal+'s investments, broadcasting and use of revenues. See
"--Regulatory Environment."

  Theme Channels

     Canal+ Group has approximately 40 theme channels across Europe including
approximately 20 theme channels in France. As part of its strategic
restructuring, Canal+ will be focusing this activity on the French market.

  CanalSatellite

     Canal+ Group owns 66% of CanalSatellite, the leading French Satellite TV
platform. The remaining shares are held by Group Lagardere. Launched in 1992 as
a small platform distributed through analog technology, CanalSatellite upgraded
to digital technology in 1996 and is now the leading satellite platform in
France. At the end of 2002, CanalSatellite had a share of approximately 63% of
the French satellite market with over two million subscribers. CanalSatellite
offers over 230 channels, some of which are exclusive.

                                        49
CanalSatellite's revenues are driven by subscriptions. The following table
shows information about CanalSatellite's subscriptions for the periods
indicated:

                                 SUBSCRIPTIONS
YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                               2002     2001     2000
                                                              ------   ------   ------
CanalSatellite subscriptions (thousands)....................  2,046    1,822    1,598
Churn (annual)..............................................    8.4%     9.9%    10.3%
With the assistance of Canal+ Technologies the digital platforms of Canal+
Group in Spain, Poland and France, including CanalSatellite, launched the
digital TV industry's largest-ever operation to change the smart cards in set
top boxes. More than 7 million cards with a new chip and a new version of the
access control software were exchanged in 2002 to combat piracy.

     Canal+ Group sold Canal+ Technologies in early 2003 to Thomson. Canal+
Technologies will continue to provide the services it previously provided to
Canal+ Group pursuant to a long term contract. CanalSatellite started marketing
in early 2003 a new generation of digital set top boxes equipped with a hard
drive that uses a new version of MediaHighway, the digital interactive system
developed by Canal+ Technologies and based on the new international standards
for interactive television (DVB-MHP). These set-top boxes, known as Pilotime,
offer a broad range of original and innovative services.

  NC Numericable

     Canal+ Group operates the French cable platform, NC Numericable. At the end
of 2002, NC Numericable had a share of approximately 16% of the French cable
market, with 406,933 subscriptions. NC Numericable leases its network from
France Telecom.

  StudioCanal

     StudioCanal is a major player in the production, co-production, acquisition
and distribution of European and American films for theaters. StudioCanal has
one of the largest film libraries in the world, including over 5,000 well-known
films of different genres, including Terminator 2, Basic Instinct, The Graduate,
The Producers, The Third Man, Breathless, Chicken Run, Billy Elliot, Grand
Illusion, Bridget Jones's Diary, Brotherhood of the Wolf. Some of StudioCanal's
distribution rights are worldwide, others are limited to Europe and France.
StudioCanal's TV program library represents more than 40,000 hours of viewing.

     Along with Canal+, StudioCanal is involved in the financing of
approximately 80% of French films, which together makes them the main sponsor of
the domestic industry.

     StudioCanal is also engaged in audiovisual production (through its
subsidiary StudioExpand) and is active in video and DVD distribution, music
publishing, and product licensing.

     In 2002, StudioCanal produced, co-produced or acquired six films that sold
more than one million tickets in France, including Roman Polanski's The Pianist,
L'Auberge espagnole (Euro Pudding) by Cedric Klapisch, Decalage horaire (Jet
Lag) by Daniele Thompson, and Michael Mann's Ali. Two films co-produced by
StudioCanal earned two prestigious awards at the 2002 Cannes Festival: the Palme
d'Or for The Pianist and the award for Best Director for Im Kwon Taek's
Chiwaseon. The company has been extremely successful with the video and DVD
releases in France of Bridget Jones's Diary, Zinedine Zidane "Comme dans un
reve," Traffic and We Were Soldiers. Roman Polanski's The Pianist received three
Academy Awards (Best Director, Best Actor and Best Adapted Screenplay) in 2003.

                                        50
Other

     In addition to its two primary lines of business, Canal+ Group also has the
following other European pay-TV and sports interests:

          Sogecable.  Sogecable, a listed Spanish holding company, is 21.3%
     owned by Canal+ Group. Sogecable's other strategic shareholder is Prisa,
     the leading Spanish media group, which also owns 21.3% of Sogecable.
     Sogecable's two main activities, which represent more than 80% of its
     revenues, are Canal+, a terrestrial premium channel for sports and films,
     and CanalSatelite Digital, a DTH platform. CanalSatelite Digital is the
     largest and most successful satellite TV operator in Spain, and competes
     with Via Digital, a Telefonica affiliate. In January 2003, Sogecable and
     Telefonica agreed to merge their digital platforms, CanalSatelite Digital
     and Via Digital, subject to local regulatory and other approvals. On
     completion of the merger, Via Digital shareholders will receive 23% of the
     capital stock of Sogecable in return for their Via Digital shares. The
     merger of the two companies will create the largest pay-TV operator in
     Spain with more than 3 million subscriptions. The merged company will be
     the only satellite television operator in Spain.

          Nordic Countries.  In the Nordic countries, in June 2002 Canal+ Group
     sold its 50% stake in the Canal Digital distribution platform to Telenor,
     which already held the other 50% stake. We are in the process of selling
     the Group's Nordic channels. In the interim, Canal Digital continues to
     exclusively distribute the satellite segment of such channels.

          Cyfra+.  In Poland, the digital television platforms Cyfra+ and Wizja
     TV merged into a single satellite system, TKP, in 2002. The merged Cyfra+
     package is now the leading pay-TV and satellite platform in Poland with an
     expanded premium offer and a stronger programming package and is 75% owned
     by Canal+ Group and Polcom Invest and 25% owned by UPC. As of December 31,
     2002, Cyfra+ had one million subscriptions.

          Telepiu.  In October 2002, an agreement was signed with News
     Corporation and Telecom Italia for the sale of 100% of the pay-TV platform
     Telepiu in Italy to News Corporation. The acquisition of Telepiu by News
     Corporation, which intends to merge it with its Stream platform, was
     approved by the European Commission on April 2, 2003 and completed on April
     30, 2003. As of December 31, 2002, Telepiu had 1.55 million subscriptions
     to its premium channel and 1.75 million subscriptions to its digital
     platform.

          Canal+ Benelux.  Canal+ Group operates in Belgium and the Netherlands
     through its wholly-owned subsidiary, Canal+ Benelux, by offering premium
     channels and packages of theme channels. As of December 2002, Canal+
     Benelux had 689,000 subscriptions.

          Media Overseas.  Media Overseas is a 100% Vivendi Universal affiliate,
     managed by Canal+ Group and dealing with over 500,000 subscriptions of
     Canal+/CanalSatellite in the French overseas territories and some
     French-speaking African countries.

          Sportfive.  Canal+ Group and RTL Group each own 46% of Sportfive, with
     the balance held by Mr. Jean-Claude Darmon. Sportfive, created from the
     combination of the sports rights activities of Sport+ (a subsidiary of
     Canal+ Group), UFA Sports (a subsidiary of RTL Group) and Groupe Jean-
     Claude Darmon, holds a leading market position with a broad range of
     international TV and marketing of sports rights, primarily for football
     clubs and leagues around the world. Sportfive has more than 320 football
     clubs under contract, more than 40 national federations and leagues, as
     well as the international basketball, handball and rugby federations.

          PSG.  Paris Saint Germain is the only Paris based premier league
     soccer club and is one of France's leading soccer clubs. In 2001, Canal+
     Group increased its interest in PSG to 90.88%.

  Competition

     Competition in the basic pay-TV market remains largely national due to
language and cultural factors specific to each country. The French pay-TV market
is dominated by satellite and Canal+. Cable penetration is low compared to
America and certain other European countries.
                                        51
In its French pay-TV business, Canal+ Group's principal competitor is TPS.
Cable operators (other than our subsidiary NC Numericable) also compete in this
market. The increase in broadcast channels being made possible by new digital
technology (such as digital broadcast television already introduced in several
European countries and the anticipated introduction of ADSL) will lead to the
arrival of newcomers in the pay-TV sectors.

     The development of new distribution media, particularly DVDs, which offer a
certain number of films before they are released on pay-TV channels, also
fosters real competition for a premium channel such as Canal+.

     In the theme channel business, competition is more international than in
the basic pay-TV business. International labels initiated by American
communication companies and studios such as MTV, Fox Kids or the Disney Channel
are developing rapidly.

     In the film and TV programming sector, StudioCanal's main competitors are
the American and other national production companies.

  Regulatory Environment

     The media industry in Europe is regulated by various national statutes,
regulations and orders, often administered by national agencies such as the
French Audiovisual Council. These agencies usually grant renewable broadcast
licenses for specific terms. In France, Canal+ holds a pay-TV broadcast license
for over-the-air, satellite and cable broadcasts, which was renewed for a
five-year period starting in December 2000.

     Under Canal+'s French broadcast authorization, Canal+ is subject to the
following regulations: (i) no more than 49% of its capital stock may be held by
a single shareholder and (ii) 60% of the films broadcast by the channel must be
European films, and 40% must be French Language films. Each year Canal+ must
invest 20% of its total prior-year revenues in the acquisition of film rights,
9% of which must be devoted to French language films and 3% to European films
other than French films. At least 75% of the French movies must be acquired from
non-Canal+ Group controlled companies. Canal+ has an obligation to invest 4.5%
of its turnover in original TV movies and dramas.

     Canal+ Group also operates in Belgium, Spain, the Netherlands, Poland and
the Nordic countries pursuant to the regulations of each of these countries
which generally stipulate, as does France, financing levels for European and
national content.

     The European Union generally regulates competitive matters, including
strategic combinations. The European Union has also adopted a series of
directives that influence the communications business, in particular the
directive known as "Television without Frontiers," and directives governing
intellectual property, e-commerce, data protection, and telecommunications.

  Research and Development

     Canal+ Group's research and development costs in 2002 totaled E 51 million,
primarily consisting of costs of Canal+ Technologies, and were incurred
primarily for new digital and image processing technologies.

  MAROC TELECOM

     The following table shows Maroc Telecom's revenues for the periods
indicated:

                                    REVENUES
YEAR ENDED DECEMBER 31,
                                                  -------------------------------------
                                                       ACTUAL             PRO FORMA
                                                  -----------------   -----------------
                                                   2002      2001      2002      2001
                                                  -------   -------   -------   -------
                                                              (IN MILLIONS)
Maroc Telecom revenues..........................  E 1,487   E 1,013   E 1,487   E 1,351
52
The revenue and operational information and data relating to Maroc Telecom
set forth in this section is presented on a pro forma basis, adjusted to include
the results of Maroc Telecom for all periods.

     The actual 2001 results only include nine months of Maroc Telecom's
operations since the completion of the acquisition by us in April 2001.

     Maroc Telecom is Morocco's incumbent telecommunications operator. The
company was created in 1998 following its spin-off from the ONPT (the Moroccan
national postal and telecommunications administration). Morocco's mobile
telephone market opened to competition in 2000 with the successful bid for
licenses by a consortium led by Telefonica of Spain. In the past three years and
with Vivendi Universal's assistance, the company has transformed itself into a
highly profitable, market-oriented business focused on its customers, in
accordance with international standards of the industry.

     Vivendi Universal acquired its current ownership interest and became Maroc
Telecom's strategic partner in 2001 following an auction process organized by
the Moroccan government. With our 35% shareholding interest, we control Maroc
Telecom under the terms of a shareholder's agreement entered into in connection
with the acquisition of our stake. The remaining shares of Maroc Telecom are
owned by the Kingdom of Morocco.

     Under the shareholders' agreement, the Kingdom has put options on an
additional 16% of the Maroc Telecom shares exercisable beginning in September
2003 at a fair market price determined by an appraisal procedure. If the Kingdom
exercises this put right and we acquire the shares, we will also have a right of
first refusal on the Kingdom's remaining shares. We have granted the Kingdom a
pledge on our existing 35% interest in Maroc Telecom to secure the purchase
price of the 16% interest for the period between the exercise of the put and its
settlement in cash. Under the shareholders' agreement we cannot sell our shares
in Maroc Telecom without the approval of the Kingdom of Morocco for a period of
five years from the date of the shareholder's agreement.

     In accordance with the Articles of Association and pursuant to the
Shareholders' Agreement, we appoint a majority of both the Supervisory board and
the Executive board of Maroc Telecom, including the chairman of the executive
board. In addition, we exercise the majority voting rights at shareholder's
meetings. As a result, Maroc Telecom is fully consolidated in our financial
statements.

     Maroc Telecom is Morocco's largest (and Africa's second largest)
telecommunications operator, operating in both the fixed line business, where it
currently remains the sole provider, and the fast growing mobile business, where
it is the country's largest operator. Maroc Telecom revenues increased 10% to
E 1.5 billion in 2002. Fixed-line, data and international revenues represented
62% of Maroc Telecom's revenues in 2002, while mobile revenues represented the
remaining 38%.

  Fixed Line Telephony

     Fixed line telephony remains Maroc Telecom's largest business in terms of
revenues. Our fixed line business includes traditional residential,
international and business services and our public telephony service, data
transmission solutions for companies, and our Internet access and portal
businesses.

     The number of fixed lines in Morocco grew steadily until 1999, reaching a
total of 1.5 million, before falling between 1999 and 2002. The two main factors
explaining this trend are the introduction of competition from the mobile
network as of 1999 and the company's clean-up of its fixed-line customer base in
2001, when a significant number of customers who had stopped using or were no
longer paying for their service were removed. The number of fixed lines has now
stabilized and is expected to be stable in the future.

     Revenue growth was maintained over the period despite the decline in the
number of fixed lines, as international and fixed-to-mobile business revenues
and public telephony all grew. The public telephony business comprises the
public pay telephone network as well as a network of approximately 17,000
teleboutiques. Teleboutiques are managed by private sector entrepreneurs who
rent on average four or five lines per store. They are charged reduced rates due
to the high volume of calls per line and resell calls to customers at retail
prices.

                                        53
Data Transmission and Internet

     Maroc Telecom's growing data transfer business provides companies with data
transfer solutions including x.25, frame relay, digital and analogue leased
lines and IP, primarily for its business customers.

     Our Internet business offers packet switched ISP services to fixed-line
subscribers under the Menara brand. At the end of 2002, Maroc Telecom got its
ADSL service ready to launch; which it believes will be one of its primary
growth areas at its launch, upon receipt of approval by the appropriate
regulatory authority. At year end 2002, the company had approximately 32,000
subscribers to its Internet access services.

  Mobile Telephony

     Maroc Telecom launched its prepaid services in 1999 and its customer base
has grown rapidly since. At year-end 2002, the company had over 4.5 million
mobile users.

     Maroc Telecom offered the only mobile service in Morocco until mid-2000,
when a second operator commenced business. At year-end 2002, the company
estimates that it had an approximate 70% share in the mobile telephony market.
At the end of 2002, the overall penetration rate in mobile telephony in Morocco
was estimated at 21.6%.

     Maroc Telecom's customer base is over 95% prepaid, reflecting preferences
in the Moroccan market. Maroc Telecom believes that its network of 17,000
teleboutiques, which is a key distribution channel for prepaid cards, is a major
competitive advantage.

     After eliminating delinquent customers from its postpaid customer base in
2001, postpaid subscribers increased in 2002. The company particularly targets
business customers for its postpaid services.

  Network

     Fixed-line services and data transmission

     Maroc Telecom's fully digital network has a switching capacity of 2 million
lines and provides national coverage thanks to the emphasis placed on servicing
newly created urban areas and improving network reliability.

     Maroc Telecom operates a fully digital network and an optic fiber
inter-city transmission infrastructure with high-speed data transmission
capacity. International bandwidth has been gradually increased to reach
4*34Mbit/s.

     Mobile telephony

     Maroc Telecom has emphasized growing both its population and its country
coverage. At the end of 2002 Maroc Telecom had 3,000 GSM sites, against 2,600 in
2001 and 600 in 1999. In 2002, over 95% of the Moroccan population was covered,
the efficiency rate was greater than 95% and the drop call rate was less than
2%.

     Maroc Telecom has signed 179 roaming agreements with operators in 85
countries around the world.

  Competition

     The auction for a second fixed telephony license in 2002 was unsuccessful,
and Maroc Telecom remains the single fixed-line operator in the Moroccan market.
The government has, however, announced its intention to hold another auction
before the end of 2003.

     Competition has existed in the mobile telephony market since the granting
of a second mobile license in 1999 to Medi Telecom. Medi Telecom, with an
estimated 30% market share in 2002, is a subsidiary of Telefonica, Portugal
Telecom and a group of Moroccan investors led by BMCE.

                                        54
Maroc Telecom has an estimated 72% share of the Moroccan Internet market.
Maroc Telecom main competitors in this market are: Maroc Connect (subsidiary of
Wanadoo) with an 18% market share, and various other smaller ISPs.

     Specific licenses (VSAT, 3RP, GMPCS) have been granted for specific market
segments (businesses and international communications).

  Regulatory Environment

     The Kingdom has created a regulatory authority Agence Nationale de
Reglementation des Telecommunications (ANRT) which is responsible for
implementing free competition and regulating the telecommunications market. The
liberalization and privatization of the Moroccan telecommunications market
advocated by the World Bank is implemented and managed by the ANRT.

     The terms and conditions governing Maroc Telecom set out its rights and
obligations as the fixed-line operator regarding universal service. The ANRT has
not announced the granting of UMTS licenses.

     Principal regulatory developments in 2002 were the leveling of retail
tariffs and other price regulations and the authorization for Internet traffic
to use the public telephone network.

  Vivendi Universal Games (VU Games)

     VU Games is one of the world's leading publishers of interactive
entertainment and educational software. VU Games develops, markets and
distributes its games and educational software products for all major platforms,
including PC, consoles (Sony's PlayStation2, Microsoft's Xbox and Nintendo's
GameCube) and handheld (Nintendo's GameBoy Advance). VU Games' revenue for the
2002 fiscal year was E 794 million and for the 2001 fiscal year was E 657
million. In 2002, 63% of VU Games' revenue came from North America, 27% came
from Europe and 10% came from Asia/Pacific and Rest of the World.

     VU Games is the sixth largest publisher of consumer software with an
approximate 5% share of worldwide market. VU Games is the second-largest
publisher of PC consumer software worldwide, holding the number-one position in
South Korea, and the number two position in North America, France, Germany, UK,
Spain and Australia (source: NPD Funworld, PC Data, Chart-Track, GFK, Inform,
Interbase. Figures include sales of PC kids, PC education, PC productivity, PC
games and all console software categories. Latest available 12 months (December
2002) except for Germany (November 2002).

     VU Games maintains a strong heritage as a leader in PC games and
educational software. For 2002, VU Games' PC revenues represented 56% of total
revenues. VU Games' performance in the PC segment was driven by key releases
such as Warcraft III, NASCAR 2002, The Thing, J.R.R. Tolkien's The Lord of the
Rings: The Fellowship of the Ring, Jumpstart Advanced, and Barbie. VU Games'
development studios -- Black Label Games, Blizzard Entertainment, Coktel,
Knowledge Adventure, Massive Entertainment and Sierra Entertainment -- have
delivered some of the industry's most successful PC titles across numerous
genres.

     VU Games entered the console software business in 2001, with the assumption
of management responsibility for Universal Interactive (UI), which is held
through Universal Studios. Since then, VU Games has expanded its publishing
business with the establishment of Black Label and an affiliate-label program
called the Partner Publishing Group. Within one year, VU Games increased its
console sales from 21% to 44% of total revenues. Today, all of VU Games' studios
are engaged in the development of console titles while maintaining their
commitment to the PC segment.

     In the online games arena, VU Games has sophisticated groups of developers
whose experience includes Battle.net, a leading online games network launched in
1997 with over 12 million active users; Half-Life, the number-one online action
game; and Tribes: Aerial Assault, one of the first third-party titles to support
online game-play over the Internet using Sony's PlayStation 2 system.

     Strong game brands are a cornerstone of VU Games' success. VU Games'
product library consists of 378 active titles, including industry-leading,
multi-million unit selling brand franchises such as Diablo, Starcraft,
                                        55
Warcraft, Spyro the Dragon, Crash Bandicoot, Half-Life and Jumpstart. In March
2003, The Simpsons was added to VU Games' product library as a result of an
agreement with Fox Interactive.

     VU Games' brand portfolio includes a balanced mix of original content (52%
of all titles), licensed properties (30% of all titles) and third-party releases
(18% of all titles).

     In the future, VU Games intends to continue producing high-quality and
innovative game franchises such as The Hulk and X-Files, expansion sets and
updated versions of blockbuster series such as Warcraft, Counter Strike and
Crash Bandicoot, and the migration of best-selling franchises such as Starcraft
and SWAT from PC to console.

  Competition

     The consumer software market is quite fragmented. The worldwide leader is
Electronic Arts Games, with a 15% share. The top-ten players have a combined 60%
worldwide market share.

  Regulatory Environment

     VU Games voluntarily participates in self-regulatory ratings systems
established by various industry organizations around the world. In the US, VU
Games adheres to ratings, advertising guidelines and online privacy principles
adopted by the Entertainment Software Association. Pursuant to these guidelines,
VU Games indicates in its product-packaging and advertising the age group for
which the particular product is appropriate and a brief description of its
content. VU Games operates in compliance with local legal requirements where
applicable to computer games and video games (in countries such as Germany and
South Korea) as well as with local statutory rating systems. Complying with such
rating systems and local laws does not have a material effect on the business of
VU Games.

  OTHER

  Veolia Environnement (VE)

     Until June 2002, we held approximately 63% of the share capital of Veolia
Environnement, an environmental services business with global operations. In
July 2002, we reduced our stake to approximately 40.8% of the outstanding share
capital of Veolia Environnement and through an additional sale on December 24,
2002, we reduced our stake to approximately 20.4%. Our investment in Veolia
Environnement is now accounted for using the equity method. As part of the
December sale, we granted to the purchasers a call option exercisable until
December 23, 2004 to purchase our remaining stake in Veolia Environnement at
E 26.5 per share. For information on this call option, see "Item 5--Operating
and Financial Review and Prospects--Contingent Liabilities."

     Veolia Environnement has operations in more than 100 countries on five
continents, divided into four main divisions:

     - Vivendi Water for water services;

     - Dalkia for energy services;

     - Onyx for waste management; and

     - Connex for transport.

     Veolia Environnement's revenues were E 30.1 billion in 2002, E 29.1 billion
in 2001 and E 26.3 billion in 2000.

     Veolia Environnement's stock has been listed for trading on the Premier
Marche of Euronext Paris since July 2000, and has also been listed on the New
York Stock Exchange in the form of American Depositary Receipts (ADRs) since
October 2001.

                                        56
Vivendi Telecom International (VTI)

     Vivendi Telecom International operates our fixed and mobile
telecommunications businesses outside France and Morocco. While Vivendi
Universal's interest in Maroc Telecom is held through VTI, it is reported as a
separate segment and is discussed separately herein.

     VTI's revenue, excluding Maroc Telecom, was E 461 million in 2002, E 242
million in 2001 and E 141 million in 2000.

     In 2002, we decided to explore selling VTI's stakes in Hungary, Poland,
Egypt and Kenya in order to focus on our core businesses.

     Monaco

     VTI owns 55% of Monaco Telecom, the incumbent telecommunications operator
in the Principality. The remaining 45% stake is held by the Principality of
Monaco.

     Spain

     VTI is one of the principal shareholders of the Spanish communication
company Xfera Moviles, which won one of the four UMTS licenses in Spain in 2000.
Due to technological delays in the development of UMTS, the date of the
commercial launch and deployment of the UMTS network has been postponed. As a
result of this postponement, Xfera cut its work force in 2002. The Xfera
Shareholders' Agreement dated January 12, 2000 contains a provision which gives
the founding shareholders (including VTI) the possibility to acquire the shares
held by Vodafone in Xfera in certain defined circumstances. Vodafone claims that
such provision amounts to a call option and that, together with the other two
founding shareholders, VTI exercised such call option by way of letters sent to
Vodafone in January 2001. VTI contests Vodafone's claims, including its
interpretation of such provision. See "Item 5--Operating and Financial Review
and Prospects--Commitments and Contingencies."

     Hungary

     Operating under the name Vivendi Telecom Hungary, VTI's subsidiary Matel BV
is the second largest fixed line telecommunications operator in Hungary.

     VTI signed an agreement to sell Vivendi Telecom Hungary for E 325 million,
including the assumption of E 305 million in net debt in December 2002. The sale
was completed in May 2003.

     Poland

     Vivendi Universal and VTI jointly hold 49% of Elektrim Telekomunikacja
(ET), a major player in the Polish telecommunications market.

     In November 2002, ET entered into an agreement to sell the cable television
services of its wholly owned subsidiary, EI Viv Telecom for E 110 million. The
completion of this sale remains subject to Polish regulatory approval.

     In February 2003, ET sold part of its Polish fixed telephony business for
approximately E 17 million. ET is exploring various options with respect to its
fixed telephony operations as well as its 51% stake in PTC, a mobile telephone
operator with approximately 5 million customers at the end of 2002.

     For a description of certain litigation relating to Vivendi Universal's
interest in ET, see "Item 8--Financial Information--Litigation."

     Kenya

     In 2002, KenCell, VTI's 60% subsidiary, showed strong growth in spite of a
difficult economic climate. At the end of 2002, KenCell had more than 450,000
customers (compared to 56,000 at the end of 2000 and 250,000 at the end of
2001), and a 49% market share.
                                        57
Egypt

     On February 25, 2003, VTI signed a share purchase agreement to sell its
interest in Vodafone Egypt Telecommunications for an aggregate consideration of
E 40 million. The transaction completion is subject to regulatory approvals and
various other closing conditions.

  Vivendi Universal Net (VUNet)

     VUNet, a wholly owned subsidiary of Vivendi Universal, and its subsidiary,
Vivendi Universal Net USA Group, Inc., hold Vivendi Universal's Internet and new
technology operations.

     In 2002, Vivendi Universal carried out a strategic review of its Internet
operations. This led to the implementation of a cost and investment reduction
program, and the closure of a number of subsidiaries. We anticipate closing some
of the remaining Internet division companies and integrating the others into the
businesses to which they report within Vivendi Universal.

  Publishing

     In late 2002, Vivendi Universal sold its principal publishing assets,
including Houghton Mifflin (which had been acquired in 2001) and almost all of
its other publishing assets worldwide.

  Vivendi Valorisation

     Vivendi Valorisation holds a portfolio of real estate assets which formerly
were part of our property and construction segment.

     The majority of these assets, which we intend to sell, are associated with
our past involvement in long-term residential and commercial property
developments.

SEASONALITY

     Our business is not seasonal, except as noted in the descriptions of UPR
and UMG. See "--Our Segments--Vivendi Universal Entertainment (VUE)--Universal
Parks & Resorts (UPR)" and "--Our Segments--Music."

RAW MATERIALS

     Raw materials are not important to our business in a material way, except
as they are used in the production of motion picture and television, in the
production of video products and in the production of compact disks.

     The primary material utilized in motion picture and television production
is raw film stock. Film stock is purchased by subsidiaries of VUE for initial
film production, and by third party film laboratories that produce release
prints of theatrical films for VUE. Film stock is purchased from large
manufacturers of photographic products located in the United States and other
countries. Availability of raw film stock is good and no problems have been
encountered. The price of raw film stock has had low volatility, and VUE and
such third party film laboratories further reduce their exposure to price
changes by securing pricing under long-term contracts with such film suppliers.

     The primary materials used in production of video products are videotape,
and polycarbonate to produce DVDs. These materials are purchased by third party
video duplicators from large manufacturers located in the United States and
other countries. Availability of such materials is good and no problems have
been encountered. The price of videotape has had low volatility, and such cost
is a small percentage of the cost to VUE of the final videotape product. The
price of polycarbonate has had some volatility related to petroleum price
fluctuations, but these have not been significant enough to be passed through to
VUE by the third party duplicators.

     The primary material used in production of compact discs is polycarbonate.
UMG purchases polycarbonate from large suppliers located in the United States
and other countries. Availability of polycarbonate
                                        58
is good and no problems have been encountered. The price of polycarbonate has
had some volatility related to petroleum price fluctuations, but such cost is a
small percentage of UMG's cost of goods.

ORGANIZATIONAL STRUCTURE

     The following table sets forth the subsidiaries through which we conducted
the majority of our operations as of December 31, 2002 (subsidiaries are
indented following their respective parent companies).
COUNTRY OF      ACCOUNTING     VOTING           OWNERSHIP
                                   INCORPORATION      METHOD      INTEREST          INTEREST
                                   -------------   ------------   --------          ---------
CEGETEL GROUP
Cegetel Groupe S.A...............     France       Consolidated      59%               44%
  Cegetel S.A....................     France       Consolidated               80%                  90%
  Societe Francaise du
    Radiotelephone S.A. (SFR)....     France       Consolidated               80%                  80%
  Telecom Developpement (TD).....     France          Equity                  50%                  50%
MUSIC
Centenary Holding N.V............   Netherlands    Consolidated      92%               92%
  Universal Music (UK) Holdings
    Ltd..........................       UK         Consolidated              100%                 100%
  Universal Entertainment GmbH...     Germany      Consolidated              100%                 100%
  Universal Music K.K............      Japan       Consolidated              100%                 100%
  Universal Music S.A.S..........     France       Consolidated              100%                 100%
Universal Studios, Inc...........       USA        Consolidated      92%               92%
  PolyGram Holding, Inc..........       USA        Consolidated              100%                 100%
  Interscope Records.............       USA        Consolidated              100%                 100%
  UMG Recordings, Inc. ..........       USA        Consolidated              100%                 100%

VIVENDI UNIVERSAL ENTERTAINMENT
Universal Pictures International
  B.V............................   Netherlands    Consolidated      92%               92%
Universal Studios, Inc...........       USA        Consolidated      92%               92%
  Vivendi Universal Entertainment
    LLLP.........................       USA        Consolidated               93%                  86%

CANAL+ GROUP
Groupe Canal+ S.A................     France       Consolidated     100%              100%
  Canal Plus S.A.................     France       Consolidated               49%                  49%
  CanalSatellite S.A.............     France       Consolidated               67%                  67%
  StudioCanal S.A................     France       Consolidated              100%                 100%
  Multithematiques...............     France       Consolidated               64%                  64%

MAROC TELECOM S.A................     Morocco      Consolidated               51%                  35%

VIVENDI UNIVERSAL GAMES, INC.....       USA        Consolidated               99%                  99%

HOLDING & CORPORATE
  Societe d'Investissement pour
    la Telephonie (SIT)..........     France       Consolidated     100%              100%
  UGC............................     France          Equity         58%               58%

VIVENDI TELECOM INTERNATIONAL
  S.A............................     France       Consolidated     100%              100%
  Vivendi Telecom Hungary........     Hungary      Consolidated              100%                 100%
  Kencell S.A....................      Kenya       Consolidated               60%                  60%
  Monaco Telecom S.A.M...........     Monaco       Consolidated               55%                  55%
  Elektrim Telekomunikacja
    S.A..........................     Poland          Equity                  49%                  49%
  Xfera Moviles S.A..............      Spain          Equity                  26%                  26%
59
COUNTRY OF      ACCOUNTING     VOTING           OWNERSHIP
                                   INCORPORATION      METHOD      INTEREST          INTEREST
                                   -------------   ------------   --------          ---------
PUBLISHING ACTIVITIES EXCL. VU
  GAMES
Vivendi Universal Publishing
  S.A............................     France       Consolidated     100%              100%
  Groupe Express-Expansion
    S.A..........................     France       Consolidated              100%                 100%
  Comareg S.A....................     France       Consolidated              100%                 100%
  Atica..........................     Brazil       Consolidated               98%                  49%

VIVENDI UNIVERSAL NET
Vivendi Universal Net S.A........     France       Consolidated     100%              100%
  i-France S.A...................     France       Consolidated              100%                 100%
  Scoot Europe N.V...............     Belgium      Consolidated              100%                 100%
  Ad-2-One S.A...................     France       Consolidated              100%                 100%
  CanalNumedia S.A...............     France       Consolidated              100%                 100%
Vivendi Universal Net U.S.A.
  Group, Inc.....................       USA        Consolidated     100%              100%
  MP3.com, Inc...................       USA        Consolidated              100%                 100%
  Emusic.com, Inc................       USA        Consolidated              100%                 100%
  Flipside, Inc./Uproar, Inc.....       USA        Consolidated              100%                 100%
VEOLIA ENVIRONNEMENT S.A.........     France          Equity         20%               20%
For more information on the above table, see Note 13 to our Consolidated
Financial Statements included in this document.

PROPERTY, PLANT AND EQUIPMENT

     In connection with our music, publishing, and TV & film businesses, we own
manufacturing facilities in the US and Germany and office buildings and
warehouse facilities in various countries. To support the rest of its business
operations around the world, Vivendi Universal leases the majority of the real
estate it requires.

     USG owns, develops and manages the Universal City complex in Hollywood,
California, spanning approximately 415 acres and is comprised of: Universal
Studios, a complex of production and studio facilities and supporting office
space; the Universal Studios Hollywood Theme Park and CityWalk, an integrated
retail and entertainment complex offering shopping, cinemas, dining and
open-area food and beverage facilities; the Sheraton-Universal Hotel, owned by
Universal Studios and leased to Sheraton; and the Hilton Hotel, which Universal
Studios leases to the entity owning and operating the hotel. In addition,
Universal Studios owns the following theme park facilities: Universal Studios
Florida and Islands of Adventure, in Orlando, Florida; Universal Studios Japan
in Osaka, Japan; and Universal Mediterranean near Barcelona, Spain.

     We have various commitments for the purchase of property, plant and
equipment, materials, supplies and items of investment related to the ordinary
conduct of business.

PATENTS, LICENSES, CONTRACTS, MANUFACTURING PROCESSES

     Although we have patents, licenses, contracts and manufacturing processes,
no one of these in particular is material to Vivendi Universal.

     Canal+ Group acquires films and the rights to sports events, which are then
broadcast on its channels. TV programs are acquired through exclusive
medium-term contracts for the broadcasting of upcoming productions from US
studios. For sports events, multi-year contracts are signed with sports clubs
and federations. In 2001, the main broadcasting rights CANAL+ Group has acquired
are the French soccer championship through to 2004, retransmission rights for
the Champions League through to 2003, and the national and international rights
for some Italian soccer clubs, including Juventus (Turin), Inter (Milan) and
Milan AC.

     Canal+ TV's broadcasting license in France expires in December 2005.

                                        60
ENVIRONMENTAL MATTERS

     Our operations are subject to evolving and increasingly stringent
environmental regulations in a number of jurisdictions. In December 2002, the
Los Angeles Regional Water Quality Control Board proposed a $308,000 civil
penalty in connection with certain alleged exceedances of VUE's wastewater
discharge permit in Universal City. We believe the exceedances are not the
result of our operations and are working with the agency to resolve the matter.
Other than this proposed penalty, as of March 21, 2003, there have been no
significant losses or claims related to environmental matters.

SUMMARY OF INDEBTEDNESS

     Set forth below is a description of certain of our outstanding debt
instruments as of June 25, 2003. The descriptions set forth below do not purport
to be complete and are qualified in their entirety by reference to the
agreements themselves.

DUAL CURRENCY CREDIT FACILITY

     Vivendi Universal has entered into a E 2.5 billion dual currency term and
revolving credit facility (the Dual Currency Credit Facility) dated as of May
13, 2003, among Vivendi Universal, as borrower, certain of its subsidiaries, as
guarantors, the lenders party thereto, and Societe Generale, as facility and
security agent. The facility is available as a liquidity back-up to the disposal
of assets and subject to certain exceptions for general corporate purposes.

     The facility is comprised of (a) a three-year E 1.5 billion revolving
credit facility (Tranche A) at LIBOR or EURIBOR plus an applicable margin that,
depending on Vivendi Universal's credit ratings, ranges from 1.00% to 2.75% per
annum and (b) a E 1.0 billion term loan (Tranche B) with a 2.75% per annum
margin over LIBOR or EURIBOR maturing on the third anniversary of the date of
the Dual Currency Credit Facility. Borrowings under the Dual Currency Credit
Facility may be made in Euros or U.S. Dollars. Currently, Tranche B is fully
drawn and Tranche A is undrawn.

     Vivendi Universal is required to pay commitment fees at an annual rate of
40% of the then applicable margin for Tranche A (subject to a cap of 1.00% per
annum) and 1.00% per annum for Tranche B, in each case calculated on the undrawn
and uncanceled amount of commitments of the applicable tranche during the
availability period. Accrued commitment fees are payable quarterly in arrear and
on the final maturity date of the Dual Currency Credit Facility. Vivendi
Universal also pays the facility agent an annual agency fee.

     The respective obligations of Vivendi Universal and the subsidiary
guarantors under the Dual Currency Credit Facility rank pari passu with their
obligations under the Multicurrency Revolving Credit Facility (described below).
The obligations of Vivendi Universal and the subsidiary guarantors under each of
the Dual Currency Credit Facility and the Multicurrency Revolving Credit
Facility are secured on a pro rata basis among the respective lenders by a first
priority lien on certain assets of Vivendi Universal and the subsidiary
guarantors, including (a) capital stock in certain subsidiaries, (b) deposit
accounts and (c) 85% of all intercompany loans owed to Vivendi Universal and
such subsidiary guarantors. In addition, Vivendi Universal and the subsidiary
guarantors have agreed to subordinate their obligations under 85% of their
intercompany loans to their obligations under each of the Dual Currency Credit
Facility and the Multicurrency Revolving Credit Facility. The security and
subordination obligations are suspended after Vivendi Universal attains and
maintains an investment grade rating for a continuous period of 180 days.

     The Dual Currency Credit Facility contains customary negative covenants
which place restrictions on, among other things, the ability of Vivendi
Universal and the subsidiary guarantors to incur debt, to incur financial
guarantees, to pay distributions in respect of capital stock or to repay capital
stock, to make certain investments, to enter into leasing arrangements or
mergers and acquisitions, to dispose of assets and to create security interests.
Furthermore, the Dual Currency Credit Facility places certain limitations on the
ability of Vivendi Universal and certain of its subsidiaries to make or incur
intra group loans, subject to certain exceptions. Certain of these restrictions
are suspended three months after Vivendi Universal attains an investment grade
rating.

                                        61
The Dual Currency Credit Facility also requires Vivendi Universal and the
subsidiary guarantors to observe certain customary affirmative covenants,
including, but not limited to, relevant authorizations, maintenance of status,
certain bank accounts and insurance, protection of intellectual property rights,
payment of taxes, compliance with ERISA reporting requirements, compliance with
laws (including environmental laws), provision of financial and other
information and notification of defaults. Furthermore, Vivendi Universal and the
subsidiary guarantors must ensure that in any three-month period, the aggregate
amount of net cash available plus the aggregate undrawn amount under all
existing facilities is more than E 100 million.

     In addition, Vivendi Universal must maintain various financial ratios,
including:

     - maximum ratios of net financial debt to cash EBITDA;

     - minimum ratios of cash EBITDA to net financing costs; and

     - maximum total gross financial debt.

     Subject to certain other exceptions, Vivendi Universal has also agreed to
procure that the part of the net financial debt incurred by its subsidiaries
shall not at any time exceed in the aggregate an amount equal to 30% of the net
financial debt.

     The Dual Currency Credit Facility allows for voluntary prepayment if
Vivendi Universal gives at least three business days' notice, subject to a
minimum payment threshold and integral multiple requirements. Such voluntary
prepayments will be applied pro rata among the lenders. Vivendi Universal must
also prepay at the same time and in the same amount, the Multicurrency Revolving
Credit Facility.

     Provided that Vivendi Universal gives at least three business days' notice,
it may, without penalty or indemnity obligations, cancel the unutilized portions
of the total commitments in whole or in part, subject to a minimum threshold and
integral multiple requirements. Such voluntary cancellations will be applied pro
rata against the commitments under each tranche, subject to certain exceptions,
and against each lender's commitment in the relevant tranche Vivendi Universal
must also cancel, at the same time and in the same amount, the Multicurrency
Revolving Credit Facility.

     Unless Vivendi Universal attains and maintains an investment grade rating
for a continuous period of 90 days and subject to certain other exceptions, the
Dual Currency Credit Facility is subject to mandatory prepayment with certain
proceeds, including but not limited to, 33% of net debt issue proceeds, 50% of
net dividend proceeds, 16 2/3% of net equity issue proceeds and 16 2/3% of net
asset disposal proceeds (other than the disposal of VE shares (of which 50% is
required to be prepaid), and the disposal of Cegetel Group and SIT (of which 25%
is required to be prepaid).

     In addition, the Dual Currency Credit Facility is subject to, regardless of
Vivendi Universal's rating, mandatory prepayment upon (a) Vivendi Universal's
failure to comply with the specified financial ratios or (b) the occurrence of a
change of control event or (c) the occurrence of a special mandatory cancelation
of the Senior Notes.

     The Dual Currency Credit Facility contains customary event of default
provisions including, but not limited to, provisions relating to nonpayment,
misrepresentation and breach of other obligations under the loan documents,
cross-default, breach of covenants, insolvency, and insolvency proceedings,
material adverse changes, certain material ERISA events and cessation of
business.

MULTICURRENCY REVOLVING CREDIT FACILITY

     Vivendi Universal has entered into a E 3 billion multicurrency revolving
credit facility (Multicurrency Revolving Credit Facility) dated March 15, 2002,
as amended on February 6, 2003, and as further amended and restated on May 13,
2003, among Vivendi Universal, as a borrower and the obligors' agent, certain of
its subsidiaries, as guarantors, the lenders party thereto and Societe Generale,
as facility and security agent. Currently, E 2.3 billion of the Multicurrency
Revolving Credit Facility is drawn.

     Borrowings under the Multicurrency Revolving Credit Facility that are
denominated in Euros bear interest at EURIBOR plus a margin of 1.50% per annum,
which margin will be reduced to 1.00% per annum
                                        62
after Vivendi Universal attains and maintains an investment grade rating for a
continuous period of 90 days. Borrowings under the Multicurrency Revolving
Credit Facility that are denominated in any permissible currency other than
Euros bear interest at LIBOR plus a margin of 1.50% per annum, which margin will
be reduced to 1.00% per annum after Vivendi Universal attains and maintains an
investment grade rating for a continuous period of 90 days. The Multicurrency
Revolving Credit Facility matures on March 15, 2007.

     Vivendi Universal is required to pay commitment fees at an annual rate of
50% of the then applicable margin on the undrawn, uncanceled amount of each
bank's commitment until the final maturity date of the Multicurrency Revolving
Credit Facility. Accrued commitment fees are payable quarterly in arrear and on
the final maturity date of the Multicurrency Revolving Credit Facility. Vivendi
Universal is also required to pay a utilization fee at a rate of 0.05% per annum
on the aggregate amount of all loans then outstanding for each day the aggregate
amount of all loans then outstanding exceeds 50% of the then total commitments
under the Multicurrency Revolving Credit Facility. In addition, Vivendi
Universal has agreed to pay certain fees to those banks that consented to
certain waivers and consents under the Multicurrency Revolving Credit Facility.
The amount of any such waiver fee is computed at a rate of 0.20% per annum on
the consenting bank's commitment or, if greater, its participation in the loans
on the applicable waiver fee date. We also pay the facility agent an annual
agency fee.

     The respective obligations of Vivendi Universal and the subsidiary
guarantors under the Multicurrency Revolving Credit Facility rank pari passu
with their obligations under the Dual Currency Credit Facility. The obligations
of Vivendi Universal and the subsidiary guarantors under each of the Dual
Currency Credit Facility and the Multicurrency Revolving Credit Facility are
secured on a pro rata basis among the respective lenders as described above
under the description of the Dual Currency Credit Facility.

     The Multicurrency Revolving Credit Facility contains customary negative
covenants which place restrictions on, among other things, the incurrence of
certain security interests, guarantees, disposal of assets, mergers and
acquisitions. Furthermore, the Multicurrency Revolving Credit Facility places
restrictions that prevent Vivendi Universal from making any substantial change
to the general nature or scope of its business and its subsidiaries from that
conducted on May 13, 2003. Also, Vivendi Universal may not make certain
amendments to the Senior Notes.

     The Multicurrency Revolving Credit Facility also requires Vivendi Universal
and the subsidiary guarantors to observe certain customary affirmative
covenants, including, but not limited to, relevant authorizations, maintenance
of insurance and status, perfection and protection of security interest,
compliance with environmental laws and notification of defaults. Vivendi
Universal is also required to provide financial and other information to the
facility agent. In addition, Vivendi Universal must maintain various financial
ratios, including:

     - maximum ratios of net financial debt to cash EBITDA;

     - minimum ratios of cash EBITDA to net financing costs; and

     - maximum total gross financial debt.

     Subject to certain other exceptions, Vivendi Universal has also agreed to
procure that the part of the net financial debt incurred by its subsidiaries
shall not at any time exceed in the aggregate an amount equal to 30% of the net
financial debt.

     Any borrower under the Multicurrency Revolving Credit Facility may
voluntarily prepay any loan made to it in whole or in part if such borrower
gives at least ten days' notice, subject to a minimum payment threshold and
integral multiple requirements. Such voluntary prepayments will be applied pro
rata among the lenders. Provided the obligor's agent gives at least ten days'
notice, it may, without penalty or obligation to indemnify, cancel the
unutilized portions of the total commitments in whole or in part, subject to a
minimum threshold and integral multiple requirements. Any voluntary cancelation
in part will be applied pro rata against the commitment of each bank. In the
case of a voluntary prepayment or cancelation, Vivendi Universal must also
prepay or cancel at the same time and in the same amount, the Dual Currency
Credit Facility.

                                        63
Unless Vivendi Universal attains and maintains an investment grade rating
for a continuous period of 90 days and subject to certain other exceptions, the
Multicurrency Revolving Credit Facility is subject to, mandatory prepayment with
certain proceeds, including but not limited to, 50% of net dividend proceeds,
16 2/3% of net equity issue proceeds and 16 2/3% of net asset disposal proceeds
(other than the disposal of VE shares (of which 50% is required to be prepaid),
and the disposal of Cegetel Group and SIT (of which 25% is required to be
prepaid).

     In addition, subject to certain conditions, the Multicurrency Revolving
Credit Facility is subject to, regardless of Vivendi Universal's rating,
mandatory prepayment upon (a) Vivendi Universal's failure to comply with the
specified financial ratios or (b) the occurrence of a change of control event.

     The Multicurrency Revolving Credit Facility contains customary event of
default provisions including, but not limited to, provisions relating to
nonpayment, misrepresentation and breach of other obligations under the loan
documents, cross-default, breach of covenants, insolvency and insolvency
proceedings, material adverse changes, cessation of business and unlawfulness.

SENIOR NOTES DUE 2010

     On April 3, 2003, Vivendi Universal issued $935 million in aggregate
principal amount of 9.25% Senior Notes due 2010 and E 325 million in aggregate
principal amount of 9.50% Senior Notes due 2010 (collectively referred to as the
Senior Notes). The Euro denominated Senior Notes were issued at a discount to
yield 9.75%. The Senior Notes are issued under an Indenture dated as of April 8,
2003, between Vivendi Universal and The Bank of New York, as trustee (the
Indenture). In connection with the issuance of the Senior Notes, we have entered
into an Exchange and Registration Rights Agreement dated April 8, 2003, with the
initial purchasers of the Senior Notes (the Registration Rights Agreement).

     The Senior Notes mature on April 15, 2010, and interest payments are
payable on April 15 and October 15 of each year, commencing on October 15, 2003.

     Pursuant to the Registration Rights Agreement, Vivendi Universal will, at
its cost, for the benefit of the holders of the Senior Notes, to:

     - no later than 90 days after the issue date of the Senior Notes, file a
       registration statement with the SEC with respect to a registered offer to
       exchange the Senior Notes for new Senior Notes of Vivendi Universal
       (Exchange Notes) having terms substantially identical in all material
       respects to the Senior Notes (except that the Exchange Notes will not
       contain terms with respect to transfer restrictions or payment of
       additional interest); and

     - use its reasonable best efforts to cause the exchange offer registration
       statement to be declared effective under the Securities Act as soon as
       practicable but not later than 240 days after the issue date of the
       Senior Notes.

     The Senior Notes are Vivendi Universal's general unsecured obligations.
They rank pari passu in right of payment with all of Vivendi Universal's
existing and future unsecured senior indebtedness and senior in right of payment
to any of Vivendi Universal's future subordinated indebtedness. The Senior Notes
are effectively junior to Vivendi Universal's secured indebtedness up to the
value of the collateral securing such indebtedness.

     Prior to the time that the Senior Notes receive an investment grade rating
from both Standard & Poor's and Moody's and certain other conditions are
satisfied (a Fall Away Event), the Indenture places certain restrictions on,
Vivendi Universal's and its restricted subsidiaries' among other things,
incurrence of debt, issuance preferred stock, payment of dividends in respect
of, or a repurchase of, capital stock of Vivendi Universal, investments,
creation of liens, or restrictions on the ability of our restricted subsidiaries
to pay dividends or other amounts to Vivendi Universal, sale and leaseback
transactions, transactions with affiliates, expansion into unrelated businesses,
incurrence of financial guarantees, incurrence of indebtedness which is, subject
to certain conditions, subordinated in right of payment to any other
indebtedness of Vivendi Universal, and consolidation, merger or sale of all or
substantially all assets.

                                        64
After a Fall Away Event occurs with respect to either series of Senior
Notes, the above limitations will no longer apply to that series of Senior
Notes, except that the indenture will continue to place restrictions on the
ability of Vivendi Universal and its restricted subsidiaries to, among other
things, create liens, enter into specified sale and leaseback transactions and
consolidate, merge or sell all or substantially all assets.

     At any time prior to April 15, 2006, Vivendi Universal may use, subject to
certain conditions, the net cash proceeds from any equity offering with gross
proceeds of at least E 50 million to redeem up to 35% of the Senior Notes at a
redemption price equal to 109.25% of the principal amount plus accrued and
unpaid interest, in the case of the US dollar-denominated Senior Notes, and
109.50% of the principal amount plus accrued and unpaid interest, in the case of
Euro-denominated Senior Notes. At any time prior to April 15, 2007, Vivendi
Universal may redeem at its option the Senior Notes, in whole or in part, upon
not less than 30 nor more than 60 day's prior notice at a redemption price equal
to 100% of their principal amount and accrued and unpaid interest plus the
applicable make-whole premium. At any time on or after April 15, 2007, Vivendi
Universal may redeem at its option the Senior Notes, in whole or in part, upon
not less than 30 nor more than 60 day's prior notice at the redemption prices
(expressed as a percentage of principal amount) set forth below plus accrued and
unpaid interest, if redeemed during the 12-month period beginning on April 15 of
the years indicated below:
YEAR                                             DOLLAR NOTE PERCENTAGE   EURO NOTE PERCENTAGE
----                                             ----------------------   --------------------
2007...........................................         104.625%                104.750%
2008...........................................         102.313%                102.375%
2009 and thereafter............................         100.000%                100.000%
Before the occurrence of a Fall Away Event, the holders of the Senior Notes
may, subject to certain conditions, require Vivendi Universal to repurchase the
Senior Notes (a) for a price equal to 101% of the principal amount plus accrued
and unpaid interest upon a change of control or (b) for a price equal to 100% of
the principal amount plus accrued and unpaid interest with a portion of the net
cash proceeds of certain assets sales.

     The indenture contains customary event of default provisions including
nonpayment, cross-default, failure to pay judgments, bankruptcy, insolvency and
breach of covenants or other obligations.

SECURITIZATION FACILITY

     On March 31, 2003, Film Funding, a subsidiary of VUE, borrowed $750 million
under a securitization facility (the Securitization Facility) based on future
video (including DVD and VHS) and television revenues in the United States from
part of its existing film library and future theatrical pictures. As part of the
Securitization Facility, certain subsidiaries of VUE transferred film assets
which generate these revenues and certain other related assets to Film Funding
and agreed to sell additional similar assets relating to future theatrical
pictures. The proceeds of the Securitization Facility were used by VUE to retire
$700 million of the $1.62 billion owed under the VUE Bridge Facility (described
below), and to establish a funded reserve account required under the terms of
the Securitization Facility, to be used to fund certain expenses related to
exploitation of the film assets (e.g., costs of duplication and distribution
expenses). Borrowings under the Securitization Facility currently bear interest
at a rate of 1.50% over one-month LIBOR. The Securitization Facility has the
benefit of a financial guaranty insurance policy issued by Ambac Assurance
Corporation which guarantees to the lenders timely payment of interest and
ultimate payment of principal. The Securitization Facility is scheduled to
amortize over three years, commencing three years after the initial borrowing.

     The Securitization Facility was arranged by Banc of America Securities LLC
and J.P. Morgan Securities, Inc. with the funding being provided to Film Funding
by a number of commercial paper conduit purchasers. Film Funding also received
364-day commitments from banks to provide funding if the conduit purchasers do
not provide funding. If the commitments are not renewed, all or a portion of the
Securitization Facility could commence amortization earlier than the third
anniversary of the initial borrowing.

                                        65
The Securitization Facility contains partial amortization events, early
amortization events and event of default provisions that are triggered by, among
other things, a failure to satisfy collateral performance tests, nonpayment,
misrepresentation and breach of other obligations under the securitization
documents, cross-default, insolvency and insolvency proceedings, judgments, and
the ineffectiveness of the security interests and failure to satisfy an interest
coverage test for VUE. Occurrence of any of these events could cause a
requirement to amortize a portion or all of the Securitization Facility prior to
the scheduled date.

     The Securitization Facility places certain obligations on Film Funding and
VUE and its other subsidiaries to maintain their distinct corporate identity,
including but not limited to restrictions on the commingling of funds,
maintenance of records, books of account and financial statements, and
restrictions on the ability of Film Funding on the one hand, and VUE and its
subsidiaries, on the other hand, to guarantee, hold themselves out as liable for
or pledge assets to secure obligations of the other.

SOCIETE D'INVESTISSEMENT POUR LA TELEPHONIE FACILITY

     We have entered into a E 1.3 billion facility (the Acquisition Facility)
dated December 6, 2002, as amended as of June 25, 2003, among SIT, as the
borrower, Vivendi Universal, a syndicate of lenders, Credit Lyonnais, as agent,
and The Royal Bank of Scotland, as security trustee. The Acquisition Facility
was entered into by SIT to finance the purchase by SIT of 26% of the share
capital of Cegetel Group.

     The outstanding amount of the loan under the Acquisition Facility is E 1.3
billion. The maturity date of the loan is June 30, 2004. SIT may request an
extension of the maturity date to June 30, 2010, by providing notice prior to
June 1, 2004. If SIT requests such an extension, the loan will be repaid in
periodic installments over the term of the loan until the final installment on
June 30, 2010. There is a scheduled repayment of E 105 million on June 30, 2003.

     Borrowings under the Acquisition Facility bear interest at EURIBOR plus a
margin of 4.00%, subject to certain adjustments.

     The Acquisition Facility contains certain negative covenants which restrict
or limit the ability of SIT and Cegetel Group and its subsidiaries to, among
other things, create certain liens, dispose of certain assets, incur certain
indebtedness, declare or pay certain dividends or distributions and pay certain
management, advisory or other fees. In addition, SIT and Cegetel Group are
required to maintain various financial ratios, including:

     - minimum Cegetel Group EBITDA;

     - maximum ratios of Cegetel Group total net debt to Cegetel Group EBITDA;
       and

     - minimum ratios of Cegetel Group cash flow to the total funding costs of
       SIT.

     SIT may, on not less than five business days' notice, cancel all or part of
the undrawn part of the Acquisition Facility or prepay all or part of the
outstanding loan, in each case subject to certain minimum requirements. The
Acquisition Facility also provides for mandatory prepayment upon, among other
things:

     - Vivendi Universal ceasing to own the entire issued share capital of SIT;

     - SIT disposing of all or any of the Cegetel Group shares acquired by it in
       the transaction financed by loans made under the Acquisition Facility;

     - Vivendi Universal or its subsidiaries disposing of all or any Cegetel
       Group shares owned by any of them as of the date of the acquisition
       agreement, subject to certain exceptions; and

     - Cegetel Group disposing of any shares held by it in Societe Francaise du
       Radiotelephone or any of its material subsidiaries.

     The Acquisition Facility also requires, subject to certain exceptions,
mandatory repayment of the loan from the net proceeds of new equity share
capital issued by SIT and certain dividends or distributions from Cegetel Group
received by SIT.

                                        66
The Acquisition Facility contains customary event of default provisions,
including provisions relating to nonpayment, misrepresentation, insolvency,
unlawfulness, cessation of business and material adverse change.

VUE LOAN AGREEMENT

     On June 24, 2003, VUE entered into a $920 million loan agreement with Bank
of America, N.A. and JPMorgan Chase Bank, as co-administrative agents, the
lenders party thereto, Barclays Bank PLC, as syndication agent, and JPMorgan
Chase Bank, as collateral agent and as paying agent (the VUE Loan Agreement).
The full amount of the facility was drawn at closing and the proceeds have been
used to repay the remaining outstanding portion of the $1.62 billion loan dated
May 3, 2002, as amended and restated as of November 25, 2002.

     Borrowings under the VUE Loan Agreement are denominated in US Dollars and
bear interest at either Eurodollar rate plus a margin of 2.75% or ABR plus a
margin of 1.75%. The loan will mature in 16 consecutive quarterly installments
commencing on September 30, 2004, each of which shall be equal to, in the case
of the first 12 installments, 0.25% of the loan principal and, in the case of
each of the last four installments, 24.25% of the loan principal.

     Certain of VUE's subsidiaries guarantee VUE's obligations under the VUE
Loan Agreement. VUE's obligations as borrower and the guarantors' obligations
are secured by a first priority lien on the assets of VUE and the guarantors,
and portions of the collateral may be released in certain transactions and
circumstances. In addition, Vivendi Universal and certain of its subsidiaries
have agreed to the subordination of inter-company indebtedness owing to them by
VUE and the guarantors.

     The VUE Loan Agreement contains negative covenants that restrict the
ability of VUE and certain of its subsidiaries to engage in certain activities,
including, but not limited to:

     - limitations on creating or permitting to subsist certain security
       interests on their assets;

     - limitations on disposals of assets;

     - limitations on the incurrence of indebtedness (including financial
       guarantees);

     - limitations on investment;

     - limitations on restricted payments (unless the loans are rated investment
       grade), such as limitations on the payment of dividends or distributions
       of other amounts in respect of equity interests, as well as limitations
       on investments in, purchases of any indebtedness owing to, or other
       payments on account of, Vivendi Universal and its subsidiaries, and
       intercompany loans to Vivendi Universal and its subsidiaries;

     - limitations on transactions with affiliates, sale and leaseback
       transactions, swap agreements, changes in fiscal periods, negative
       pledges, restrictions on subsidiary distributions, and permitted lines of
       business; and

     - limitations on fundamental changes, including mergers, consolidations,
       and amalgamations.

     In addition, VUE must maintain certain financial ratios at all times,
namely:

     - maximum ratios of consolidated indebtedness to consolidated EBITDA;

     - maximum cash leverage ratios;

     - maximum senior leverage ratios;

     - minimum ratios of consolidated EBITDA to consolidated interest expense;
       and

     - minimum ratios of cash EBITDA to consolidated fixed charges.

     Unless the loans under the VUE Loan Agreement are rated investment grade,
the VUE Loan Agreement, subject to certain exceptions, (a) places limitations on
the ability of VUE and its subsidiaries to make loans, advances or pay dividends
to Vivendi Universal and certain of its subsidiaries that are not VUE or
                                        67
subsidiaries of VUE, (b) limits the net balance of loans between VUE, including
its subsidiaries, and Vivendi Universal, including its subsidiaries, to an
aggregate of $600 million and (c) prohibits VUE from distributing the net
proceeds from the disposal of certain assets.

     The VUE Loan Agreement also requires VUE and certain of its subsidiaries to
observe certain affirmative covenants, including, but not limited to, relevant
authorizations, maintenance of property and insurance, compliance with laws and
obligations, provision of financial and other information, maintenance of the
separateness of Vivendi Universal entities and VUE entities in respect of funds,
assets, accounts, records and corporate formalities, maintenance and
contributions of collateral, interest rate protection and notification of
defaults.

     VUE may voluntarily prepay loans under the VUE Loan Agreement in whole or
in part if it gives at least three business days' notice, subject to a minimum
payment threshold and integral multiple requirements. Subject to certain
conditions, VUE must prepay the loans (or, in some cases, cash collateralize its
obligations) under the VUE Loan Agreement with the proceeds of certain issuances
of indebtedness, asset sales, issuances of equity interests and recovery events.

ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     The following discussion of our operations should be read in conjunction
with our Consolidated Financial Statements and related notes included elsewhere
in this document.

BASIS OF PRESENTATION

     The discussion presented below focuses on an analysis of Vivendi
Universal's financial and business segment results prepared in accordance with
generally accepted accounting principles in France (French GAAP), which differ
in certain significant respects from accounting principles generally accepted in
the United States (US GAAP). For a discussion of the most significant
reconciling items see "Results of Operations--Adjustments to Conform to US GAAP"
in Note 17 to our Consolidated Financial Statements included in this document.

     The company, under previous management, announced that it intended to fully
adopt US GAAP reporting standards beginning in 2002 as supplemental financial
information for investors. Following the change in senior management in July
2002, it was decided that Vivendi Universal, as a French Company, would
prospectively only report its primary financial statements in French GAAP with a
reconciliation to US GAAP. The company will, however, periodically publish
selected US GAAP financial information as required under certain of its debt
agreements.

RECENT DEVELOPMENTS

     Following a period of significant acquisition-related growth from the late
1990's through the first half of 2002, the associated increase in leverage led
to heightened concerns during the first half of 2002 over the validity of
Vivendi Universal's strategy in a deteriorating environment and, eventually, to
the appointment of a new management team. See "Item 4--Information on the
Company--History and Development of the Company." Concerns over Vivendi
Universal's strategy and financial flexibility led Moody's to reduce Vivendi
Universal's senior debt rating on July 1, 2002, from Baa3 to Ba1, under review
for possible further downgrade. Standard & Poor's followed suit the next day,
with a one-notch downgrade to BBB- with a negative outlook. The unfavorable
development in our rating continued during the balance of 2002. See "--Liquidity
and Capital Resources." The July downgrades had an immediate impact on Vivendi
Universal's short-term liquidity. In particular Vivendi Universal lost, to a
significant extent, access to the capital markets, and most importantly to the
commercial paper market, historically its main source of funding for working
capital needs.

     The new management team addressed Vivendi Universal's immediate liquidity
concerns by securing on July 10, 2002, a E 1.0 billion multi-currency term loan
facility, which was repaid in December 2002. This was done with a view of
putting in place a longer-term solution once the new management had the
opportunity to better assess the medium-term situation. Following its review,
the new management revised the previous

                                        68
management's cash-flow projections for the period from July 2002 to December
2004 and wrote-off E 11 billion in acquisition-related goodwill while adding
E 3.4 billion in financial provisions. This resulted in a E 12.3 billion net
loss in the first half of 2002, which was publicly announced on August 14, 2002.
At the same time, Vivendi Universal announced a E 16 billion asset divestiture
program intended to be completed by 2004 in order to substantially reduce debt.

     During the second half of 2002, Vivendi Universal closed asset sales for
total consideration of approximately E 6.7 billion, including the assumption by
the acquirers of the assets of approximately E 0.4 billion in debt, and we have
continued to complete divestitures in 2003. At December 31, 2002, Vivendi
Universal's net debt was E 12.3 billion compared with E 37.1 billion at December
31, 2001. Excluding the net debt of Veolia Environnement which, following
divestitures of an additional portion of our shareholding interest therein in
2002, was deconsolidated from Vivendi Universal's balance sheet on December 31,
2002, net debt fell by approximately E 9.0 billion. In the first half of 2003 we
implemented a refinancing plan in order to give us substantial flexibility in
connection with the execution of our asset divestiture program, to increase
funds available to Vivendi Universal and to extend the scheduled maturities of
our debt facilities. For a description of our material outstanding indebtedness,
see "Item 4--Information on the Company--Summary of Indebtedness."

COMPARABILITY

 PRO FORMA INFORMATION; ACQUISITIONS AND DIVESTITURES.

     The pro forma information presented below, which is not compliant with
Article 11 of the Securities and Exchange Commission Regulation SX, has been
included since it is required under French GAAP in Vivendi Universal's
Consolidated Financial Statements to promote comparability. Such information has
been presented in Note 2 to our Consolidated Financial Statements.

     As several significant transactions completed in 2001 and 2002 have
realigned our businesses and impacted the comparability of our financial
statements, we present financial information for these years both for our
consolidated group and for each of our business segments on a pro forma basis.
The pro forma information illustrates the effect of the acquisitions of the
entertainment assets of InterActiveCorp (formerly known as USA Interactive and
prior thereto as USA Networks, Inc.), or USAi, in May 2002, Maroc Telecom in
April 2001 and MP3.com in August 2001, and the disposition of certain interests
in Veolia Environnement and Vivendi Universal Publishing, as if these
transactions had occurred at the beginning of 2001. Additionally, the pro forma
information include the results of Universal Studios international television
networks in Vivendi Universal Entertainment in both 2002 and 2001 (in the actual
2002 results, the results of Universal Studios international television networks
were reported by Canal+ Group). This reclassification has no impact on the
overall results of Vivendi Universal. We believe that pro forma results may help
the reader to better understand our business results as they include comparable
operations in each year presented. However, it should be noted that the
pre-acquisition results of an acquired business accounted for on a historical
cost basis are not directly comparable to the post-acquisition results of
acquired entities whose initial purchase price was allocated on a fair value
basis. 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 2001.

     For a discussion of the above transactions and other significant
transactions that have occurred during the period 2000 to 2002, see "Item
4--Information on the Company--History and Development of the Company."

     Given our ongoing asset divestiture program, our year to year comparisons
of financial results will continue to be difficult in coming years.

 REALIGNMENT OF SEGMENT REPORTING

     In 2002, we realigned our segment reporting to reflect the new business
organization and management structures resulting from the change in management
and the dispositions of businesses which occurred in the second half of the
year.

                                        69
CHANGES IN ACCOUNTING PRINCIPLES AND FINANCIAL STATEMENT PRESENTATION

     In 2001, Vivendi Universal adopted new accounting principles and modified
its financial statement presentation in order to more closely align accounting
policies between French GAAP and US GAAP. The principal changes, as they relate
to the discussion presented below, are as follows:

     - As permitted by French Regulation 99.02 (sec.41), Vivendi Universal
       elected to present its Consolidated Statement of Income in a format that
       classifies income and expenses by function rather than by nature, which
       was the format presented in prior years.

     - For our subsidiary Veolia Environnement (which was deconsolidated from
       the Vivendi Universal balance sheet as of December 31, 2002), revenues
       include operating subsidiaries and exclude revenues related to
       construction of assets for internal use.

     - The definition of exceptional items has been restricted to include only
       material items of an unusual nature that arise from events or
       transactions outside the ordinary course of business and which are not
       expected to recur. For Vivendi Universal, exceptional items are primarily
       comprised of gains and losses on the divestiture of businesses.
       Exceptional items are presented as a separate component in our
       Consolidated Statement of Income after operating income and financial
       expenses but before income taxes. Prior to 2001, Vivendi Universal had a
       broader definition of exceptional items, including restructuring costs,
       plant dismantling and closure costs and the effect of guarantees given
       when exercised, among others. These items are now included as a component
       of operating income.

     In order to facilitate the discussion and comparability of 2001 and 2000
financial results, we have presented the 2000 financial statements on a
comparable basis.

     In 2000, Vivendi Universal adopted new accounting principles related to
foreign currency translation/ transactions, subscriber acquisition costs and
sports broadcasting rights as follows:

     - Income and expenses of subsidiaries whose functional currency is not the
       euro, which were previously translated at the year-end exchange rate, are
       now translated at the average exchange rate during the period. Gains on
       foreign currency transactions, which were previously deferred, are now
       recorded in current period earnings.

     - Subscriber acquisition costs, which were previously spread over 12 months
       from the date the line was put into service, are now charged to expense.

     - Broadcasting rights acquired by Canal+ Group are now capitalized as
       intangible assets and are amortized over the period of the agreement. The
       cumulative effect of this change had no impact on net income in 2000.
       Total assets increased by E 2 billion in 2000 (most of which related to
       intangible assets) and total liabilities and shareholders' equity
       increased by the same amount.

     For further discussion of some of the policies used in preparing our
financial statements and comparability see Note 1 to our Consolidated Financial
Statements.

GOODWILL, IMPAIRMENT OF GOODWILL AND FINANCIAL ASSETS

     Vivendi Universal's acquisition-related growth strategy resulted in
significant goodwill on its balance sheet. By the end of 2000, goodwill amounted
to E 47.1 billion. In view of the continuing deterioration of the economy since
December 2000, Vivendi Universal recorded significant goodwill impairment in
both 2001 (E 13.5 billion) and 2002 (E 18.4 billion).

     Following these impairments, and the other changes in goodwill described in
Note 3 to our Consolidated Financial Statements, goodwill at December 31, 2002
stood at E 20 billion. Vivendi Universal is required under French GAAP to add
goodwill of approximately E 3 billion to its balance sheet as a consequence of
the acquisition of an additional interest in Cegetel Group in January 2003.
Under French GAAP, goodwill is amortized over a 40 year period. Recurring
amortization totaled E 1.3 billion in 2002 and E 1.7 billion in 2001, and
Vivendi Universal expects to continue to incur significant expense for goodwill
amortization in the coming years. Under US GAAP, goodwill is no longer amortized
but is subject to annual impairment tests.
                                        70
Impairments are calculated using the group's accounting principles for
long-term assets. Long-term assets are subject to an exceptional impairment of
goodwill if events result in, or show a risk of, an unexpected reduction in the
value of the assets. In this situation, their fair value is re-assessed and a
provision is made to cover any eventual significant difference between the book
value and the realizable value.

     This exceptional impairment, in both 2002 and 2001, was calculated as the
difference between the net book value of the impacted businesses and their
value, as estimated with the assistance of independent valuation experts. Fair
value is determined as follows:

     - The fair value of the business units is determined by an analysis of
       discounted cash flows.

     - If this method is irrelevant for the business unit, other standard
       criteria are available: comparison to similar listed companies,
       assessment to the value attributed to the business units involved in
       recent transactions, and the market price for publicly-listed business
       units.

     - The fair values of the business units included in the asset divestiture
       program are assessed on the basis of their market value. Market value is
       defined as the amount that could be obtained at the date of sale for an
       asset where the transaction is concluded at normal market conditions, net
       of transaction costs.

     Regarding the discounted cash flow method of analysis, the three factors
taken into account were cash flow, rate of return and perpetual growth rate. The
source of the cash flow statements used for the analysis were the business plans
of the business units concerned available at the time of the analysis, approved
by the management and presented to the Board of directors. The rate of return
was based upon an analysis of the average cost of capital of the relevant
business units. Their cost of capital and growth rate were determined by taking
into account the specific business environment in which each business unit
operated, and specifically the maturity of the market and the geographic
localization of its operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Accounting policies discussed in this section are those that we consider to
be critical to an understanding of our financial statements because their
application places the most significant demands on our ability to judge the
effect of inherently uncertain matters on our financial results. For all of
these policies, we caution that future events rarely develop exactly as
forecast, and that the best estimates routinely require adjustment.

     USE OF ESTIMATES -- The preparation of these financial statements requires
management to make informed estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. On an on-going basis,
management evaluates its estimates and judgments, including those related to the
sale of future and existing music and publishing related products, as well as
from the distribution of theatrical and television products, in order to
evaluate the ultimate recoverability of accounts receivable, film inventory,
artist and author advances and investments and in determining valuation
allowances for investments, long-lived assets, pension liabilities and deferred
taxes. Estimates and judgments are also required and regularly evaluated
concerning financing operations, restructuring costs, contingencies and
litigation. Management bases its estimates and judgments on historical
experience and on various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results could differ significantly from
these estimates under different assumptions or conditions.

     MERGER ACCOUNTING -- Vivendi Universal completed several significant
transactions during the periods covered by its Consolidated Financial Statements
included in this document. Generally accepted accounting principles require that
acquisitions be recorded based on an assessment of the fair value at the
acquisition date of the tangible and intangible assets acquired and liabilities
assumed. As a result of recent acquisitions, Vivendi Universal, with the
assistance of third-party valuation experts in certain areas, has estimated the
fair value of intangible assets (such as film and television libraries, music
catalogs and trade names), tangible assets (such as property, equipment,
inventory and marketable securities), liabilities and commitments (such as
favorable or unfavorable leases and contracts and certain restructuring costs
incident to the acquisitions)
                                        71
and preacquisition contingencies (such as litigation) for use in recording the
purchase price of its acquisitions. The excess of purchase price over net assets
acquired is reflected as goodwill. Should the value of acquired intangible or
tangible assets, including goodwill, become impaired, a non-cash write-down of
these assets may be required. Should restructuring costs incidental to the
acquisition, which in the case of Vivendi Universal generally relate to employee
severance costs, differ from the liability established at the time of
acquisition, additional cash charges to operations or non-cash releases of the
established liability to operations may be required. Ultimate settlement of
preacquisition contingencies could differ significantly from the contingency
reflected at the time of acquisition, which could lead to additional cash
charges to operations or non-cash release of the established liability to
operations.

     REVENUE RECOGNITION -- For Music, revenues from the sale of recorded music,
net of provision for estimated returns and allowances, are recognized on
shipment to third parties.

     For VUE and Canal+ Group segments, theatrical revenues from the
distribution of films are recognized as the films are exhibited. Home video
product revenues, less a provision for estimated returns and allowances, are
recognized upon availability of product for retail sale to the ultimate
customer. Revenues from television and pay television licensing agreements are
recognized when the films are available for telecast, and all other conditions
of the sale have been met. Revenues from television subscription services
related to cable and satellite programming are recognized as the services are
provided. Revenues at theme parks are recognized at the time of visitor
attendance. Revenue for retail operations is recognized at point-of-sale.

     Revenues from telephone service and installation are recognized as they
occur. Subscriptions are billed monthly in advance, and recorded as a deferred
revenue liability, before transfer to earnings of the period during which the
service is provided. Prepaid fees are deferred and recognized as the purchased
minutes are used. Service discounts are accounted for as a reduction of revenue
when the service is used, or on provision of line access in the case of pack
discounts.

     Vivendi Universal records VU Games revenue when goods are shipped to the
customer except if risk of ownership does not transfer to the customer upon
shipment.

     Finally, Internet revenues are primarily derived from subscriptions,
advertising and e-commerce activities. Subscription revenues are recognized over
the period that services are provided. Advertising revenues are recognized in
the period that advertisements are displayed.

     VALUATION OF LONG-LIVED ASSETS -- Vivendi Universal reviews the carrying
value of its long lived assets held and used, intangible assets that do not have
indefinite lives and long lived assets to be disposed of whenever events or
changes in circumstances indicate that the carrying value of the assets may not
be recoverable. This review is performed using estimates of future cash flows.
Management believes that the estimates of future cash flows and fair value are
reasonable; however, changes in estimates resulting from lower future cash flows
and fair value due to unforeseen changes in business assumptions could
negatively affect the valuations of those long-lived assets.

     GOODWILL AND OTHER INTANGIBLE ASSETS WITH INDEFINITE LIVES -- Vivendi
Universal regularly reviews the carrying value of goodwill and other intangible
assets that are determined to have an indefinite life. These assets are tested
for impairment on an annual basis and more frequently if an event occurs or
circumstances change that would more likely than not reduce the fair value of
these assets below the carrying value. The fair value of these assets is
determined using a discounted cash flow analysis, which is based on business
plans approved by the Board or, if this method is irrelevant for the business
unit, other standard criteria are used including: a comparison to similar listed
companies, an assessment of the value attributed to the business units involved
in recent transactions and an assessment of the fair value of the business unit
included in the asset divestiture program. Management believes that the
estimates of future cash flows and fair value are reasonable; however, changes
in estimates resulting in lower cash flows and fair value due to unforeseen
changes in business assumptions could negatively affect the valuations.

     PENSION BENEFIT COSTS -- Vivendi Universal's pension benefit obligations
and the related costs are calculated using actuarial models and assumptions
applicable in the countries where the plans are located, principally the United
States, Canada, United Kingdom, France, Germany and Japan. Two critical assump-
                                        72
tions, discount rate and expected return on assets, are important elements of
plan expense and/or liability measurement. We evaluate these critical
assumptions at least annually. Other assumptions involve demographic factors
such as retirement, mortality, turnover and rate of compensation increase. These
assumptions are evaluated periodically and are updated to reflect our
experience. Actual results in any given year will often differ from actuarial
assumptions because of economic and other factors. The discount rate enables us
to state expected future cash flows at a present value on the measurement date.
We have little latitude in selecting this rate, as it is required to represent
the market rate for high-quality fixed income investments. A lower discount rate
increases the present value of benefit obligations and increases pension
expense. We reduced our weighted average discount rate from 6.3% in 2001 to 5.7%
in 2002 to reflect market interest rate conditions. For our US plans, a further
50 basis point decrease in the discount rate would increase pension expense by
approximately E 1 million per year. To determine the expected long-term rate of
return on pension plan assets, we consider the current and expected asset
allocations, as well as historical and expected returns on various categories of
plan assets. For our US plans, a 50 basis point decrease in the expected return
on assets of principal plans would increase pension expense on our principal
plans by approximately E 2 million per year. We assumed that the weighted
average of long-term returns on our pension plans were 7.2% in 2002 and 7.4% in
2001. Further information on our principal pension plans is provided in Note
17.4 to our Consolidated Financial Statements, including disclosure of these
assumptions.

     FILM AND TELEVISION REVENUES AND COSTS -- Vivendi Universal expenses the
cost of film and television production over the applicable product life cycle
based on the ratio of current period's gross revenues to the estimated remaining
total gross revenues. These estimates are calculated based on an individual
production basis. Estimates of total gross revenues can change for a variety of
factors, including the level of market acceptance, advertising rates and
subscriber fees. Television rights for sports, theatrical movies, series and
other programs are charged to expense based on the life cycle of the program
over the license period. Estimates of usage of television network programming
can change based on competition and audience acceptance. Accordingly, revenue
estimates and planned usage are reviewed periodically and are revised if
necessary. A change in revenue projections or planned usage could have an impact
on our results of operations. Costs of film and television productions and
programming rights are subject to valuation adjustments pursuant to the
applicable accounting rules. If actual demand or market conditions are less
favorable than our projections, potentially significant film, television or
programming cost write-downs may be required.

     MUSIC ADVANCES TO ARTISTS -- For established artists, Vivendi Universal
capitalizes advances and direct costs associated with the creation of record
masters and expenses these costs as the related royalties are earned or when the
amounts are determined to be unrecoverable. An established recording artist is
an artist whose past performance and current popularity provides a sound basis
for estimating the recoverability of the advance. Advances to artists who are
not established are expensed as incurred. Estimates of recoverability can change
based on the current popularity of the artist based on sales through the
reporting period. If it appears that a portion of the advance is not recoverable
from royalties to be earned by the artist, a provision is made in the period
that a loss becomes apparent.

     FINANCIAL INSTRUMENTS -- Vivendi Universal uses various techniques designed
to manage risk and costs associated with its financing. Vivendi Universal
commonly uses exchangeable debt, which represents long-term debt exchangeable
for common stock of another publicly traded company or Vivendi Universal itself.
Generally, the bondholder may choose to receive either cash or the underlying
security at settlement. Should the underlying security decline in value, this
may result in the recording of an allowance related to the valuation of the
security by Vivendi Universal and could result in the bondholder electing to
receive cash at settlement. In addition, Vivendi Universal uses various
derivative financial instruments to hedge exposure to fluctuations in interest
rates, currency exchange rates and investments in debt and equity securities.

     RECEIVABLES FROM EQUITY AFFILIATES -- Vivendi Universal holds minority
interest receivables in companies having operations or technology in areas
within or adjacent to its strategic focus. Some of these companies are publicly
traded and their share prices are highly volatile while some of these companies
are non-publicly traded and their value is difficult to determine. Vivendi
Universal records an investment impairment charge when it believes an investment
has experienced a decline in value that is other than temporary, and records an
allowance for receivables if recoverability is uncertain. Future adverse changes
in market conditions or poor
                                        73
operating results of underlying investments could result in losses or an
inability to recover the carrying value of the investments or receivables,
thereby possibly requiring an impairment charge in the future.

     DEFERRED TAX ASSETS -- Vivendi Universal records deferred tax assets in the
amount that it believes is more likely than not to be realized. While we have
future taxable income and ongoing prudent and feasible tax planning strategies,
in the event we were to determine that we would not be able to realize all or
part of our net deferred tax assets in the future, an adjustment to the deferred
tax assets would be charged to income in the period such determination was made.
Likewise, should Vivendi Universal determine that it would be able to realize
its deferred tax assets in the future in excess of its net recorded amount, an
adjustment to the deferred tax assets would increase income in the period such
determination was made.

     CONTINGENCIES -- Vivendi Universal records liabilities when it is probable
that a liability has been incurred and the amount of the loss is reasonably
estimable. Disclosure is required when there is a reasonable possibility that
the ultimate loss will exceed the recorded provision. Contingent liabilities are
often resolved over long time periods. Estimating probable losses requires
analysis of multiple forecasts that often depend on judgments about potential
actions by third parties such as regulators. Further information on commitments
and contingencies is included in Note 11 to our Consolidated Financial
Statements.

                                        74
RESULTS OF OPERATIONS

EARNINGS SUMMARY
YEAR ENDED DECEMBER 31,
                                        --------------------------------------------------------
                                                     ACTUAL                    PRO FORMA(3)
                                        --------------------------------   ---------------------
                                         2002(1)      2001      2000(2)      2002        2001
                                        ---------   ---------   --------   ---------   ---------
                                                (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
REVENUES..............................  E  58,150   E  57,360   E 41,580   E  28,729   E  27,733
OPERATING INCOME......................      3,788       3,795      1,823       2,037       2,113
Financial expenses, net...............     (1,333)     (1,455)    (1,288)       (624)       (724)
Financial provisions..................     (2,895)       (482)      (196)     (2,786)       (410)
Other income (expense)................       (514)          9        722        (658)         26
                                        ---------   ---------   --------   ---------   ---------
INCOME (LOSS) BEFORE EXCEPTIONAL
  ITEMS, INCOME TAXES, GOODWILL
  AMORTIZATION, EQUITY INTEREST AND
  MINORITY INTEREST...................       (954)      1,867      1,061      (2,031)      1,005
Exceptional items, net................      1,049       2,365      3,812         561       2,328
Income tax expense....................     (2,556)     (1,579)    (1,009)     (2,319)     (1,043)
                                        ---------   ---------   --------   ---------   ---------
INCOME (LOSS) BEFORE GOODWILL
  AMORTIZATION, EQUITY INTEREST AND
  MINORITY INTEREST...................     (2,461)      2,653      3,864      (3,789)      2,290
Equity in earnings of disposed
  businesses(1).......................         17          --         --          --          --
Equity in losses of unconsolidated
  companies...........................       (294)       (453)      (306)       (266)       (802)
Goodwill amortization.................     (1,277)     (1,688)      (634)     (1,040)     (1,438)
Goodwill impairment...................    (18,442)    (13,515)        --     (18,442)    (12,519)
                                        ---------   ---------   --------   ---------   ---------
INCOME (LOSS) BEFORE MINORITY
  INTEREST............................    (22,457)    (13,003)     2,924     (23,537)    (12,469)
Minority interest.....................       (844)       (594)      (625)       (571)       (759)
                                        ---------   ---------   --------   ---------   ---------
NET INCOME (LOSS).....................  E (23,301)  E (13,597)  E  2,299   E (24,108)  E (13,228)
                                        =========   =========   ========   =========   =========
EARNINGS (LOSS) PER SHARE
  Basic...............................  E  (21.43)  E  (13.53)  E   3.63   E  (22.17)  E  (12.81)
WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING(4)
  Basic...............................    1,087.4     1,004.8      633.8         n/a         n/a
Net cash provided by operating
  activities..........................  E   4,670   E   4,500   E  2,514         n/a         n/a
Net cash provided by (used for)
  investing activities................        405       4,340     (1,481)        n/a         n/a
Net cash used for financing
  activities..........................     (3,792)     (7,469)      (631)        n/a         n/a
---------------

(1) At December 31, 2002, Vivendi Universal applied the option proposed in
    paragraph 23100 of the French rules 99-02 and has presented the equity in
    (losses) earnings of businesses which were sold during the year on one line
    in the consolidated statement of income as "equity in (losses) earnings of
    disposed businesses." Disposed businesses include all of the Vivendi
    Universal Publishing activities excluding: Vivendi Universal Games,
    publishing activities in Brazil, the consumer press division (the
    divestiture of which was completed in February 2003) and Comareg (the
    divestiture of which was completed in May 2003).

                                        75
(2) Reflects changes in accounting principles and financial statement
    presentation adopted in 2001, as discussed in "--Comparability--Changes in
    Accounting Principles and Financial Statement Presentation."

(3) The pro forma information illustrates the effect of the acquisitions of the
    entertainment assets of InterActiveCorp (formerly known as USA Interactive
    and prior thereto as USA Networks, Inc.), or USAi, in May 2002, Maroc
    Telecom in April 2001 and MP3.com in August 2001, and the disposition of
    certain interests in Veolia Environnement and Vivendi Universal Publishing,
    as if these transactions had occurred at the beginning of 2001.
    Additionally, the pro forma information includes the results of Universal
    Studios international television networks in Vivendi Universal Entertainment
    in both 2002 and 2001 (in the actual 2002 results, the results of Universal
    Studios international television networks were reported by Canal+ Group).
    This reclassification has no impact on the total results of Vivendi
    Universal. We believe that pro forma results may help the reader to better
    understand our business results as they include comparable operations in
    each year presented. However, it should be noted that the pre-acquisition
    results of an acquired business accounted for on a historical cost basis are
    not directly comparable to the post-acquisition results of acquired entities
    whose initial purchase price was allocated on a fair value basis. 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
    2001.

(4) Excludes treasury shares recorded as a reduction of shareholders' equity.

COMPARISON OF 2002 VERSUS 2001

     Where indicated, the following comparison of 2002 versus 2001 discusses
results of operations on both an actual basis and a pro forma basis. Pro forma
results of operations reflects the effect of the acquisitions of the
entertainment assets of USAi, Maroc Telecom and MP3.com, disposition of certain
interests in Veolia Environnement and Vivendi Universal Publishing, as if these
transactions had occurred at the beginning of 2001. See Note 2 to our
Consolidated Financial Statements for further information on pro forma results
of operations.

 REVENUES

     Actual -- Total revenues increased 1% (3% on a constant currency basis)
from E 57.4 billion in 2001 to E 58.1 billion in 2002, primarily reflecting the
acquisition in May 2002 of USAi's entertainment assets, partially offset by the
fact that revenues generated by Vivendi Universal Publishing operations sold in
2002 are not included in 2002 revenues whereas they are included in 2001
revenues. See the discussion in "-- Comparability."

     Pro Forma -- On a pro forma basis, revenues increased 4% (6% on a constant
currency basis) from E 27.7 billion in 2001 to E 28.7 billion in 2002, with
Cegetel Group leading revenue increases in all our operating segments other than
Universal Music Group.

     For an analysis of revenues by business segment, see "-- Business Segment
Results."

 COST OF REVENUES

     Cost of revenues represented 69.8% of revenues or E 40.6 billion in 2002
compared to 68.9% of revenues or E 39.5 billion in 2001. The loss in gross
margin came from: Canal+ Group, due to increases in programming costs and the
write-off of films at Studio Canal, Universal Music due to declining revenues
and higher Artist & Repertoire (A&R) and royalty costs, the deconsolidation of
Publishing businesses sold which operated at gross margins of 50% and Veolia
Environnement, mainly due to negative impact of currency exchange rates. Cegetel
and Maroc reported margin improvements as the result of managing costs
efficiently as revenues rose, in particular thanks to productivity gains in
interconnection and network costs at Cegetel. Vivendi Universal Entertainment's
margins improved mainly due to the inclusion of eight months of performance of
USA Entertainment assets in 2002. USA Entertainment assets include USA Networks,
Sci Fi Channel as well as the highly profitable Law & Order franchise. The full
year consolidation of Maroc Telecom and the seven-

                                        76
month consolidation of USAi entertainment assets also contributed to the E 1.1
billion increase in cost of revenues.

 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling, general and administrative expenses represented 22.2% of revenues
or E 12.9 billion in 2002 compared to 23.9% of revenues or E 13.7 billion in
2001. In relation to revenues, the cost improvements are attributed to the
deconsolidation of the Publishing businesses sold as they carried higher
selling, general and administrative costs at 38% of revenues compared to the
group average and cost management at Cegetel and Maroc Telecom, which reflects
the effect of economies of scale as fixed costs were spread over a larger
revenue base and the contributive margin from the acquired USAi entertainment
assets at Vivendi Universal Entertainment. These improvements were offset by a
significant increase in expenses at Holding and Corporate related to pensions
and insurance.

 OPERATING INCOME

     Actual -- Total operating income was unchanged at E 3.8 billion in 2002
compared to 2001 as increases in cost of revenues and other operating expenses
were offset by a decline in selling, general and administrative expenses.

     Pro Forma -- On a pro forma basis, operating income declined 4% (1% on a
constant currency basis) from E 2.1 billion to E 2.0 billion as increases in
cost of revenues and other operating expenses were partially offset by a decline
in selling, general and administrative expenses. Operating income in our six
core operating segments increased 18% (21% on a constant currency basis) from
E 2.7 billion to E 3.2 billion, primarily reflecting strength at Cegetel Group
and reduced losses at Canal+ Group. However, operating losses incurred by other
businesses, including holding and corporate, at E 1.1 billion, more than offset
the overall improvement in our core businesses.

     For an analysis of operating income (loss) by business segment, see
"-- Business Segment Results."

 Financial Expenses, Net

     In 2002, net financial expenses amounted to E 1.3 billion, a decline of 8%
compared to 2001. The sales of Houghton Mifflin, the majority of Vivendi
Universal Publishing's other operations, our investment in EchoStar and a
portion of our interest in Veolia Environnement at the end of the year
significantly reduced our debt level. However, the first half of the year
included the cost of financing the acquisition of the entertainment assets of
USAi and EchoStar. The average cost of debt in 2002 was 4.1% (excluding Veolia
Environnement) compared to 4.0% in 2001. Of the total financing costs in 2002,
E 683 million pertained to Veolia Environnement, which was deconsolidated at the
end of the year.

 Financial Provisions

     Financial provisions increased significantly in 2002 to E 2.9 billion from
E 482 million in 2001, primarily due to non-cash charges required to reduce the
carrying value of certain publicly traded and privately held investments that
experienced other-than-temporary declines. The most significant provisions
related to: the investment in Elektrim Telecommunikacja (E 609 million); the
USAi warrants (E 454 million); interest rate swaps (E 261 million); Vivendi
Universal call option premium (E 226 million); investments in UGC and UGC Cine
Cite (E 220 million); investments in international telecoms operations (E 175
million); and the investment in DuPont shares (E 173 million). For additional
details, see Note 10 to our Consolidated Financial Statements.

 Other Income (Expense)

     Other income (expense) is principally comprised of capital gains on the
sale of portfolio investments, foreign exchange gains or losses and dividends
from unconsolidated companies. Other expense of E 514 million was incurred in
2002 compared to other income earned of E 9 million in 2001. In 2002, other
expense was

                                        77
primarily comprised of expenses of E 589 million related to the buy-back of
Vivendi Universal puts and E 193 million in fees related to the renegotiation of
credit facilities resulting from the liquidity crisis, partially offset by
capital gains of E 255 million (primarily related to the sale of Vinci shares
and divestitures by Veolia Environnement), E 58 million in dividends from
unconsolidated companies and foreign exchange gains of E 24 million. In 2001,
other income was primarily comprised of capital gains of E 143 million,
principally related to the sale of Sante Luxembourg and St. Gobain shares,
foreign exchange gains of E 51 million, dividends from unconsolidated companies
of E 13 million and E 71 million premium expense on the buy-back of Vivendi
Universal puts.

 Exceptional Items, Net

     As discussed above under "--Comparability--Changes in Accounting Principles
and Financial Statement Presentation," the definition of exceptional items was
restricted in 2001 to include only material items of an unusual nature that
arise from events or transactions outside the ordinary course of business and
which are not expected to recur. In 2002, net exceptional income totaled E 1
billion, the principal components of which were capital gains on the divestiture
of and/or dilution of our interest in other companies, including: E 1.6 billion
for BSkyB; E 1.4 billion for Veolia Environnement; E 329 million for Vivendi
Universal Publishing's European publishing operations; E 172 million for Canal
Digital and E 90 million for Vizzavi Europe. Partially offsetting these gains
were capital losses on the divestitures of Houghton Mifflin (E 822 million),
EchoStar (E 674 million), Vivendi Universal Publishing's business-to-business
and health divisions (E 298 million) and Sithe (E 232 million), and a E 360
million provision related to the anticipated sale of Telepiu.

     Net exceptional income in 2001 totaled E 2.4 billion, the principal
components of which were capital gains on the divestiture of and/or dilution of
our interest in other companies, including: E 1 billion on the BSkyB
transactions, E 712 million on the disposition of AOL France, E 151 million on
the sale of Eurosport, E 116 million on the sale of a 9.3% interest in Veolia
Environnement (net of E 10 million in fees), E 125 million on the sale of Havas
Advertising and E 121 million on the Dalkia/EDF transactions.

 Income Taxes

     In 2002, income tax expense totaled E 2.6 billion, an increase of 62% over
the prior year. Of the total, approximately E 1.1 billion related to recurring
operations, including E 544 million for Cegetel Group, and E 1.0 billion related
to exceptional items (mainly the use of deferred tax), which did not generate
any cash outflow. Cegetel Group and Maroc Telecom are not part of our
consolidated tax group, which has the effect that losses elsewhere in the group
are not available to offset profits taxable at those entities. As a result,
excluding exceptional items, goodwill amortization, equity losses and minority
interest, Vivendi Universal's effective tax rate in 2002 was 84% compared to
40.8% in 2001.

 Equity in Earnings of Disposed Businesses

     Equity in earnings of disposed businesses was E 17 million in 2002.
Disposed businesses include all of Vivendi Universal Publishing's operations
excluding Vivendi Universal Games, publishing activities in Brazil, the consumer
press division (the divestiture of which was completed in February 2003) and
Comareg (the divestiture of which was completed in May 2003).

 Equity in Losses of Unconsolidated Companies

     In 2002, equity in losses of unconsolidated companies decreased 35% to
E 294 million primarily due to decreased losses from Internet affiliates and
Canal+ Group. Partially offsetting these improvements was the loss of equity
income following the May 2002 acquisition and consolidation of the entertainment
assets of USAi, which had previously been accounted for using the equity method,
and increased losses at international telecoms affiliates.

                                        78
Goodwill Amortization

     In 2002, recurring goodwill amortization declined 24% to E 1.3 billion,
primarily due to the impact of goodwill impairment charges taken in prior
periods.

 Goodwill Impairment

     In view of the continued deterioration of the economy in 2002 and the
resulting decline in the value of some media and telecommunications assets,
combined with the impact of the future increased cost of capital to the group as
a result of liquidity issues, E 18.4 billion of goodwill was written down in
2002, including E 11 billion recorded as of June 30, 2002.

     This exceptional goodwill impairment is broken down as follows:

     - E 5.3 billion for Universal Music Group;

     - E 6.5 billion for Vivendi Universal Entertainment;

     - E 5.4 billion for Canal+ Group; and

     - E 1.2 billion for international telecoms and Internet assets.

     As previously permitted under French GAAP, a portion of the goodwill
arising from acquisitions paid for in equity securities was originally recorded
as a reduction to shareholders' equity, in proportion to the amount of the
related purchase price paid in shares. Upon the recommendation of the COB,
Vivendi Universal determined the total goodwill impairment based on total
goodwill, including the portion originally recorded as a reduction of
shareholders' equity, as adjusted for accumulated goodwill amortization recorded
since the acquisition. However, the impairment charge does not reflect any
proportional "theoretical" impairment of goodwill originally recorded as a
reduction of shareholders' equity. The "theoretical" goodwill impairment for
2002 amounts to E 0.7 billion.

     For further discussion of goodwill impairment, see Note 3 to our
Consolidated Financial Statements.

 Minority Interest

     In 2002, minority interest expense increased 42% to E  844 million,
primarily due to the May 2002 acquisition of the entertainment assets of USAi,
the dilution of our interest in Veolia Environnement and improved profitability
at Cegetel Group.

 Net Income (Loss) and Earnings (Loss) Per Share

     A net loss of E 23.3 billion or E 21.43 per share (basic and diluted) was
incurred in 2002, compared with a net loss of E 13.6 billion or E 13.53 per
share (basic and diluted) in 2001.

 Adjustments to Conform to US GAAP

     Net Income -- For the years ended December 31, 2002 and 2001, the net loss
under US GAAP was E 44,447 million and E 1,172 million, respectively, compared
to a net loss of E 23,301 million and E 13,597 million under French GAAP. The
most significant reconciling item in both periods was goodwill impairment. In
2001, under French GAAP, following the market decline particularly in the
Internet, media and telecommunications industries, our annual review resulted in
a non-cash, non-recurring goodwill impairment charge of E 12.9 billion (E 12.6
billion after minority interest concerning Veolia Environnement). Under US GAAP,
according to SFAS 121, no impairment was indicated as of December 31, 2001, and
accordingly the goodwill impairment charge accounted for under French GAAP was
reversed, increasing US GAAP net income in 2001 by approximately E 12.6 billion.
In 2002, under French GAAP, in light of the deteriorating economic conditions
and the impact of the higher financing cost for Vivendi Universal, an additional
impairment charge of approximately E 18.4 billion was recorded. Under US GAAP,
Vivendi Universal adopted SFAS 142 and 144 and recorded an impairment charge of
E 38.3 billion. Another reconciling item, specific to 2002 and 2001, resulted
from the differential accounting treatment for the sale of our investment in
BSkyB, which decreased
                                        79
US GAAP net income by approximately E 1,417 million in 2002 and increased US
GAAP net income by approximately E 73 million in 2001.

     Operating Income -- In 2001 and prior years, the most significant
reconciling item between French and US GAAP operating income was goodwill
amortization. Under French GAAP, goodwill amortization is excluded from
operating income, while under US GAAP goodwill amortization was included as a
component of operating income. Under US GAAP, with the adoption of SFAS 142 in
2002, Vivendi Universal ceased amortizing goodwill thus eliminating this
reconciling item. In 2002, the accounting for Vivendi Universal's investment in
Veolia Environnement gave rise to a reconciling item specific only to that year.
Under French GAAP, Vivendi Universal consolidated its investment in Veolia
Environnement until December 31, 2002, when Vivendi Universal reduced its
ownership interest in Veolia Environnement from 41% down to 20.4%. Until that
date, Vivendi Universal held more than 40% of Veolia Environnement's outstanding
shares and no other shareholder held, directly or indirectly, a greater
proportion of Veolia Environnement's voting rights than Vivendi Universal. Under
US GAAP, the equity method of accounting was applied beginning July 1, 2002, the
date at which Vivendi Universal's equity and voting interest was reduced to 48%.
While this difference between French GAAP and US GAAP had no impact on the
reconciliation of shareholders' equity, net income and comprehensive income to
US GAAP, it is a reconciling item at the operating income level. The most
significant reconciling items impacting operating income in all periods
presented relate to exceptional items and proportionate consolidation. French
GAAP defines exceptional items differently from the definition of extraordinary
items under US GAAP. None of the items included in exceptional items under
French GAAP qualify as extraordinary items under US GAAP. Consequently, these
items are reclassified to the appropriate income statement captions determined
under US GAAP. Under French GAAP, exceptional items are excluded from operating
income. Under US GAAP, with the exception of gains and losses on sales of shares
of affiliated companies, exceptional items have been included in the
determination of operating income. Gains and losses on sales of shares of
affiliated companies are classified as other income (loss), which is not a
component of operating income under US GAAP. Under French GAAP, investments in
jointly controlled companies, where Vivendi Universal and outside shareholders
have agreed to exercise joint control over significant financial and operational
policies are accounted for using the proportionate consolidation method. Under
US GAAP, these investments would be consolidated or accounted for using the
equity method depending on the percentage of voting interest held. Summarized
financial information for investments accounted for using the proportionate
consolidation method is provided in Note 4 to our Consolidated Financial
Statements. While this difference in accounting policy has no effect on either
net income or shareholders' equity, it is a reconciling item at the operating
income level.

     For further discussion of the significant items in reconciling French GAAP
and US GAAP, as they apply to the Vivendi Universal, see Note 17 to our
Consolidated Financial Statements.

COMPARISON OF 2001 VERSUS 2000

 REVENUES

     Total revenues increased 38% to E 57.4 billion in 2001, primarily due to
the inclusion of full twelve-month results of the acquired Seagram's operations
in 2001 (compared to twenty-three days in 2000) and the impact of the 2001
acquisitions of Maroc Telecom, Houghton Mifflin and MP3.com.

     For a detailed analysis of revenues by business segment, see "--Business
Segment Results."

  COST OF REVENUES

     Cost of revenues represented 68.9% of revenues or E 39.5 billion in 2001
compared to 72.6% of revenues or E 30.2 billion in 2000. The gross margin
improvement was due to reduction of handset costs at Cegetel and the mix effect
of including the Music business for a full twelve months in 2001 versus less
than one month in 2000. Music reported a gross margin of 55% in 2001. The E 9.3
billion increase in cost of revenues is primarily due to: growth at the Cegetel
and Veolia Environnement units plus the full year consolidation of Universal
Music Group, Vivendi Universal Entertainment (formerly Universal Studios Group)
and the part year consolidations of Maroc Telecom and Houghton Mifflin.
                                        80
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling, general and administrative expenses represented 23.9 % of revenues
or E 13.7 billion compared to 21.7% of revenues or E 9.0 billion in 2000. The
increase in these expenses relative to revenues is primarily due to the
inclusion of the Music business for a full twelve months in 2001 versus less
than one month in 2000. The Music business reported a higher ratio compared to
the group average of selling, general and administrative expenses to revenues of
44% in 2001. In addition, the Internet and Holding costs were higher due to the
expansion of activities in these areas. Cegetel reduced expenses as a percentage
of revenues due to the effect of economies of scale as fixed costs were spread
over a larger revenue base. The E 4.7 billion increase in these expenses is
primarily due to the full year consolidation of Universal Music Group, Vivendi
Universal Entertainment (formerly Universal Studios Group) and the part year
consolidations of Maroc Telecom and Houghton Mifflin.

  OPERATING INCOME

     In 2001, total operating income more than doubled to E 3.8 billion,
principally due to the inclusion of full twelve-month results of the acquired
Seagram's operations in 2001 and the 2001 acquisitions of Maroc Telecom,
Houghton Mifflin and MP3.com, as discussed above.

     For a detailed analysis of operating income by business segment, see
"--Business Segment Results."

  Financial Expenses, Net

     In 2001, net financial expenses at E 1.5 billion, increased E 167 million
or 13%, as a higher average level of debt associated with our acquisitions was
partially offset by a lower average cost of debt of 4.02% compared to 5.15% in
2000.

  Financial Provisions

     Financial provisions increased 146% in 2001 to E 482 million, primarily due
to non-cash charges required to reduce the carrying value of certain publicly
traded and privately held investments that experienced other than temporary
declines.

  Other Income (Expense)

     Other income (expense) is principally comprised of capital gains on the
sale of portfolio investments, foreign exchange gains or losses and dividends
from unconsolidated companies. Other income declined E 713 million in 2001 to
E 9 million, primarily due to reduced capital gains on the sale of portfolio
investments. In 2001, capital gains were E 143 million, primarily related to the
sale of Sante Luxembourg and St. Gobain shares. In 2000, capital gains were
E 702 million, primarily related to the sale of Alcatel shares and treasury
stock. Other income in 2001 also included E 51 million of foreign exchange
gains, E 13 million of dividends from unconsolidated companies and E 71 million
premium expense on the buy-back of Vivendi Universal puts.

  Exceptional Items, Net

     In 2001, net exceptional income totaled E 2.4 billion, the principal
components of which were capital gains on the divestiture of and/or dilution of
our interest in other companies, including: E 1 billion on the BSkyB
transactions, E 712 million on the disposition of AOL France, E 151 million on
the sale of Eurosport, E 116 million on the sale of 9.3% interest in Veolia
Environnement (net of E 10 million in fees), E 125 million on the sale of Havas
Advertising and E 121 million on the Dalkia/EDF transactions.

     Net exceptional income in 2000 totaled E 3.8 billion, the principal
components of which were gains of: E 780 million on the dilution of our interest
in Veolia Environnement due to its IPO (initial public offering), E 735 million
in the Dalkia/EDF transactions, E 534 million and E 473 million on the dilution
of our interests in Vinci and BSkyB, respectively, E 408 million on the
Lagardere/CanalSatellite/MultiThematiques alliance, E 372 million on the
dilution of our interest in Sithe and sale of the GPU power plants and E 178
million on the dilution of our interest in Havas Advertising.
                                        81
Income Taxes

     In 2001, our income and deferred tax provision increased 56% to E 1.6
billion, primarily due to the inclusion of full twelve-month results of the
acquired Seagram operations in 2001 (compared to twenty-three days in 2000).
Excluding exceptional items, goodwill amortization, equity losses and minority
interest, Vivendi Universal's effective tax rate in 2001 was 40.8%.

  Equity in Losses of Unconsolidated Companies

     In 2001, equity in losses of unconsolidated companies increased 48% to
E 453 million, primarily due to increased losses from Internet affiliates,
principally Vizzavi and Scoot.com, which increased 200% to E 291 million. Losses
at Canal+ Group's affiliates more than doubled to E 236 million, primarily due
to the poor performance of operations in Poland. Partially offsetting these
increases was the divestiture of BSkyB, which reduced equity losses by E 119
million year-on-year. In 2001, equity earnings of USAi also had a positive
impact of E 141 million.

  Goodwill Amortization

     In 2001, recurring goodwill amortization increased to almost E 1.7 billion,
primarily due to the inclusion of a full twelve-months of goodwill amortization
related to the merger with Seagram and Canal+.

  Goodwill Impairment

     Our 2001 annual review for impairment of the carrying value of long-lived
assets resulted in a non-recurring, non-cash charge of E 13.5 billion. This
charge is comprised of the following:

     - E 3.1 billion for Universal Music Group;

     - E 1.3 billion for Universal Studios Group;

     - E 6.0 billion for Canal+ Group;

     - E 1.6 billion for international telecoms and Internet assets;

     - E 0.9 billion for Veolia Environnement (including E 0.3 billion minority
       interest); and

     - E 0.6 billion for equity investments.

  Minority Interest

     In 2001, minority interest, at E 594 million, decreased 5%. The merger with
Seagram and acquisition of an interest in Maroc Telecom increased minority
interest by approximately E 174 million, and improved profitability at Cegetel
Group increased minority interest by approximately E 247 million. Offsetting
these increases were reductions of approximately E 459 million related to our
environmental services businesses (including E 0.3 billion related to the
goodwill impairment charge) and E 106 million related to the divestiture of
non-core businesses.

  Net Income (Loss) and Earnings (Loss) Per Share

     A net loss of E 13.6 billion or E 13.53 per share (basic and diluted) was
incurred in 2001, compared with net income earned of E 2.3 billion or E 3.63 per
basic share in 2000.

                                        82
BUSINESS SEGMENT RESULTS
YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------
                                                   ACTUAL                PRO FORMA(3)
                                         ---------------------------   -----------------
                                         2002(1)    2001     2000(2)    2002      2001
                                         -------   -------   -------   -------   -------
                                                          (IN MILLIONS)
REVENUES
  Cegetel Group........................  E 7,067   E 6,384   E 5,129   E 7,067   E 6,384
  Universal Music Group................    6,276     6,560       495     6,276     6,560
  Vivendi Universal Entertainment......    6,270     4,938       194     6,978     6,874
  Canal+ Group.........................    4,833     4,563     4,054     4,742     4,563
  Maroc Telecom........................    1,487     1,013        --     1,487     1,351
  Vivendi Universal Games(4)...........      794       657       572       794       657
                                         -------   -------   -------   -------   -------
                                          26,727    24,115    10,444    27,344    26,389
  Other(5)(7)..........................    1,385     1,289     2,667     1,385     1,344
                                         -------   -------   -------   -------   -------
  Total Vivendi Universal (excluding
     businesses sold in 2002)..........   28,112    25,404    13,111    28,729    27,733
  Veolia Environnement.................   30,038    29,094    26,294        --        --
                                         -------   -------   -------   -------   -------
                                          58,150    54,498    39,405    28,729    27,733
  VUP assets sold during 2002(6)(7)....       --     2,862     2,175        --        --
                                         -------   -------   -------   -------   -------
                                          58,150    57,360    41,580    28,729    27,733
                                         =======   =======   =======   =======   =======
OPERATING INCOME (LOSS)
  Cegetel Group........................    1,449       928       453     1,449       928
  Universal Music Group................      556       719        86       556       719
  Vivendi Universal Entertainment......      816       300       (13)      946       928
  Canal+ Group.........................     (325)     (374)     (341)     (295)     (374)
  Maroc Telecom........................      468       387        --       468       475
  Vivendi Universal Games(4)...........       63        18       (41)       63        18
                                         -------   -------   -------   -------   -------
                                           3,027     1,978       144     3,187     2,694
  Holding & Corporate..................     (665)     (326)     (212)     (665)     (326)
  Other(5)(7)..........................     (485)     (244)      192      (485)     (255)
                                         -------   -------   -------   -------   -------
  Total Vivendi Universal (excluding
     businesses sold in 2002)..........    1,877     1,408       124     2,037     2,113
  Veolia Environnement.................    1,911     1,964     1,589        --        --
                                         -------   -------   -------   -------   -------
                                           3,788     3,372     1,713     2,037     2,113
  VUP assets sold during 2002(6)(7)....       --       423       110        --        --
                                         -------   -------   -------   -------   -------
                                         E 3,788   E 3,795   E 1,823   E 2,037   E 2,113
                                         =======   =======   =======   =======   =======
---------------

(1) December 31, 2002, Vivendi Universal applied the option proposed in
    paragraph 23 100 of the French rules 99-02 and has presented the results of
    businesses sold during 2002 on one line in the consolidated statement of
    income as "equity in earnings of disposed businesses." Disposed businesses
    include all of Vivendi Universal Publishing's operations excluding Vivendi
    Universal Games, publishing activities in Brazil, the consumer press
    division (the divestiture of which was completed in February 2003) and
    Comareg (the divestiture of which was completed in May 2003).

                                        83
(2) Reflects changes in accounting principles and financial statements
    presentation adopted in 2001, as discussed in "--Comparability--Changes in
    Accounting Principles and Financial Statement Presentation."

(3) The pro forma information illustrates the effect of the acquisitions of the
    entertainment assets of InterActiveCorp (formerly known as USA Interactive
    and prior thereto as USA Networks, Inc.), or USAi, in May 2002, Maroc
    Telecom in April 2001 and MP3.com in August 2001, and the disposition of
    certain interests in Veolia Environnement and Vivendi Universal Publishing,
    as if these transactions had occurred at the beginning of 2001.
    Additionally, the pro forma information includes the results of Universal
    Studios international television networks in Vivendi Universal Entertainment
    in both 2002 and 2001 (in the actual 2002 results, the results of Universal
    Studios international television networks were reported by Canal+ Group).
    This reclassification has no impact on the total results of Vivendi
    Universal. We believe that pro forma results may help the reader to better
    understand our business results as they include comparable operations in
    each year presented. However, it should be noted that the pre-acquisition
    results of an acquired business accounted for on a historical cost basis are
    not directly comparable to the post-acquisition results of acquired entities
    whose initial purchase price was allocated on a fair value basis. 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
    2001.

(4) Formerly part of Vivendi Universal Publishing. Includes Kids Activities e.g.
    Adi/Adibou in France and Jumpstart in the US.

(5) Principally comprised of Vivendi Telecoms International, Internet, Vivendi
    Valorisation (previously reported in non-core businesses) and Vivendi
    Universal Publishing assets not sold during 2002 (Consumer Press Division,
    Comareg and the Brazilian operations -- Atica & Scipione).

(6) Comprised of Vivendi Universal Publishing's European publishing assets
    (excluding those described in note 5 above) and Houghton Mifflin sold in
    December 2002 and Vivendi Universal Publishing's Business to Business and
    Health divisions sold in June 2002.

(7) The presentation of "Other" and "Vivendi Universal Publishing assets sold in
    2002" differs from the disclosure in our Business Segment Data in Note 12.2
    to our Consolidated Financial Statements. In Note 12.2, "Publishing
    excluding Games" includes both assets sold and assets retained. In the table
    above, publishing assets sold are reflected as a separate line item.

                                 CEGETEL GROUP
YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------
                                                   ACTUAL                  PRO FORMA
                                         ---------------------------   -----------------
                                          2002      2001      2000      2002      2001
                                         -------   -------   -------   -------   -------
                                                          (IN MILLIONS)
REVENUES
  Mobile...............................  E 6,146   E 5,606   E 4,626   E 6,146   E 5,606
  Fixed and Other......................      921       778       503       921       778
                                         -------   -------   -------   -------   -------
     Cegetel Group.....................    7,067     6,384     5,129     7,067     6,384
                                         =======   =======   =======   =======   =======
OPERATING INCOME (LOSS)
  Mobile...............................    1,552     1,107       630     1,552     1,107
  Fixed and Other......................     (103)     (179)     (177)     (103)     (179)
                                         -------   -------   -------   -------   -------
     Cegetel Group.....................  E 1,449   E   928   E   453   E 1,449   E   928
                                         =======   =======   =======   =======   =======
2002 versus 2001

     In 2002, Cegetel Group's revenues increased 11% to E 7.1 billion and
operating income increased 56% to E 1.4 billion. The improved results reflect
strong performances at both our mobile and fixed telephony divisions.

                                        84
Mobile:

     In 2002, despite a slowdown in overall market growth, SFR's revenues
increased 10% to E 6.1 billion. This revenue growth was driven primarily by
growth in the number of customers, which increased 8% to 13.55 million (13.18
million customers excluding SRR, SFR's subsidiary in La Reunion, an overseas
department of France). The number of prepaid customers increased 2% to 6.36
million, while the number of postpaid customers increased 13% to 7.19 million.

     In 2002, SFR's operating income increased 40% to E 1.55 billion. The
improvement in operating margin reflects the effect of economies of scale, as
fixed costs are being spread over a larger revenue base, and reduced customer
acquisition costs, which declined 5% year-on-year.

  Fixed and Other:

     In 2002, revenue generated by Cegetel Group's fixed telephony and other
services grew 18% to E 921 million, primarily due to the introduction of
customer pre-selection for local calls on January 1, 2002 and an increase in
subscribers. Total voice traffic minutes increased 58% year-on-year, while data
and Internet traffic revenues increased 11%.

     Cegetel Group's fixed telephony and other services operating losses
declined 43% year-on-year to E 103 million primarily due to increased revenues
and continued cost control measures.

  2001 versus 2000

     In 2001, Cegetel Group's revenues increased 24% to E 6.4 billion and
operating income more than doubled to E 928 million. The significantly improved
results reflect the strong performance at both our mobile and fixed telephony
divisions.

  Mobile:

     In 2001, SFR's revenues increased 21% to E 5.6 billion. SFR's revenue
growth was driven primarily by growth in the number of customers, which
increased 24% to 12.6 million customers (12.2 million customers excluding SRR,
SFR's subsidiary in La Reunion). The number of prepaid customers increased 44%
to 6.2 million, while the number of postpaid customers increased 9% to 6.4
million.

     In 2001, SFR's operating income increased 76% to E 1.1 billion. The
improvement in operating margin reflects the effect of economies of scale, as
fixed costs are being spread over a larger revenue base, and reduced customer
acquisition costs, which declined 23% year-on-year.

  Fixed and Other:

     In 2001, revenue generated by Cegetel Group's fixed telephony and other
services grew 55% to E 778 million, primarily due to an increase in the number
of subscribers. Total voice traffic minutes increased 36% year-on-year, while
data and Internet traffic revenues increased 49%.

     Cegetel Group's fixed telephony and other services operating losses
increased 1% year-on-year to E 179 million primarily due to start-up costs on
new business.

                                        85
UNIVERSAL MUSIC GROUP
YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------
                                                   ACTUAL                  PRO FORMA
                                         ---------------------------   -----------------
                                          2002      2001     2000(1)    2002      2001
                                         -------   -------   -------   -------   -------
                                                          (IN MILLIONS)
REVENUES
  North America........................  E 2,772   E 2,921   E   179   E 2,772   E 2,921
  Europe...............................    2,588     2,655       229     2,588     2,655
  Far East.............................      588       671        60       588       671
  ANZ/Africa...........................      139       137        10       139       137
  Latin America........................      190       176        17       190       176
                                         -------   -------   -------   -------   -------
     Universal Music Group.............    6,276     6,560       495     6,276     6,560
OPERATING INCOME
     Universal Music Group.............  E   556   E   719   E    86   E   556   E   719
                                         =======   =======   =======   =======   =======
---------------

(1) Includes twenty-three days of Universal Music Group's operations since the
    completion of the merger on December 8, 2000.

     2002 versus 2001

     The year 2002 was challenging for the music industry due to the combined
effects of a downturn in the global economy, CD-R piracy and illegal downloading
of music from the Internet and growing competition for consumer discretionary
spending and shelf space at retail outlets. Worldwide music sales were down as
the music market witnessed an estimated global market decline of 9.5%.
Double-digit declines were experienced in the US, Japan and Germany, with only
France of the world's five major music markets reporting growth.

     While UMG outperformed the market, increasing its global market share,
revenue declined 4% to E 6.3 billion due to the unfavorable market conditions
and adverse currency movements, particularly the strengthening of the euro
versus the dollar, and higher returns reserves. In constant currency, revenues
declined 1%. In 2002, North American revenues were down 4% year-on-year due to
the strengthening of the euro. On a constant currency basis, revenues were up 1%
despite weak music market conditions, with sales in the overall North American
music market estimated to have declined 10.6%. In Europe, where music sales are
estimated to have declined 5.8%, UMG revenues were down 3% versus 2001, with
solid growth in France more than offset by declines in UMG's European Music Club
operations and in Germany. In Asia, where the music market is estimated to have
declined 13.4%, UMG revenues were down 13% due to adverse currency movements,
higher returns reserves and discounts. In constant currency, revenues were down
6%. Sales in the music market in ANZ/Africa were down an estimated 6.4% in 2002
after growing 5.9% last year. However, UMG revenues increased by 1% (5% in
constant currency) due to a strong performance in South Africa. The Latin
American music market contracted an estimated 8.2% in 2002. In this market, UMG
revenues were down 13% due to adverse currency movements. In constant currency,
revenues rose 4% with all key Latin America markets reporting growth.

     In 2002, operating income at UMG declined 23% (19% in constant currency) to
E 556 million reflecting reduced margins on lower levels of activity and higher
Artist and Repertoire (A&R) development costs and royalty costs, which were
partly offset by reductions in overhead and marketing costs and gains on the
sale of UMG's share of MTV Asia, real estate and other assets.

     UMG continues to focus on strengthening its worldwide leadership position
and believes that it has a strong 2003 release schedule. However, the worldwide
music market is expected to further decline in 2003. In this challenging
environment, UMG continues to win market share. Despite continued focus on cost
control, operating margin is expected to decline.

                                        86
2001 versus 2000

     As 2000 results only include twenty-three days of UMG operations since the
completion of the merger on December 8, 2000, a comparison between 2001 and 2000
results is not meaningful.

                        VIVENDI UNIVERSAL ENTERTAINMENT
YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------
                                                   ACTUAL                  PRO FORMA
                                         ---------------------------   -----------------
                                          2002      2001     2000(1)    2002      2001
                                         -------   -------   -------   -------   -------
                                                          (IN MILLIONS)
REVENUES
  Universal Pictures Group.............  E 3,877   E 3,615             E 3,927   E 3,803
  Universal Television Group...........    1,522       333               2,199     2,134
  Universal Parks & Resorts and
     Other(2)..........................      871       990                 852       937
                                         -------   -------    -----    -------   -------
     Vivendi Universal Entertainment...    6,270     4,938      194      6,978     6,874
OPERATING INCOME (LOSS)
  Universal Pictures Group.............      662       376                 648       365
  Universal Television Group...........      430        11                 573       649
  Universal Parks & Resorts and
     Other(2)..........................     (276)      (87)               (275)      (86)
                                         -------   -------    -----    -------   -------
     Vivendi Universal Entertainment...  E   816   E   300    E (13)   E   946   E   928
                                         =======   =======    =====    =======   =======
---------------

(1) Includes twenty-three days of VUE (formerly USG) operations since the
    completion of the merger on December 8, 2000.

(2) Other includes primarily Spencer Gifts and Universal Operations Group.

     2002 versus 2001

     Vivendi Universal Entertainment (VUE) revenues in 2002 increased 27% to
E 6.3 billion principally due to the acquisition of the entertainment assets of
USAi in May 2002. On a pro forma basis, VUE revenues increased 2% (5% on a
constant currency basis) to E 7 billion, driven by increased revenues of
Universal Pictures and Universal Television, which were partially offset by
lower revenues at Universal Parks & Resorts and Other.

     VUE operating income reached E 816 million, up 172% on an actual basis. On
a pro forma basis, VUE's operating income increased 2% (6% on a constant
currency basis) to E 946 million, primarily as a result of strong video sales at
Universal Pictures, partially offset by lower results at Universal Television,
Universal Parks & Resorts and Other.

     Full year highlights by business segment, on a pro forma basis, include:

     Universal Pictures:

     Universal Pictures' revenues were E 3.9 billion, an increase of 3% versus
the prior year (7% increase on a constant currency basis). The studio benefited
from strong performance in home video and television, driven by prior years'
theatrical releases, which included such titles as The Mummy, The Mummy Returns,
The Fast and the Furious, and American Pie 2.

     Operating income increased 78% (85% on a constant currency basis) versus
the prior year to E 648 million. Results were driven by strong video performance
combined with lower film amortization expense as a result of a less robust 2002
film slate. The 2003 film slate includes several major releases, including Bruce
Almighty, The Hulk, 2 Fast 2 Furious, Dr. Seuss' Cat in the Hat and Peter Pan.
The commercial success of these films will be a particularly important factor
for results in 2003.

                                        87
Universal Television:

     Universal Television revenues were E 2.2 billion, an increase of 3% from
the prior year (6% increase on a constant currency basis). Universal Television
Production's revenues increased 15%, to E 1 billion, due to increased license
fees for continuing series, such as the Law & Order franchise and Just Shoot Me,
and the success of new series, such as American Dreams. These results were
partially offset by lower advertising revenues at Universal Television Networks
as a result of the weak advertising market.

     Operating income decreased 12% from the prior year (down 9% on a constant
currency basis) due to weakness in the advertising market in addition to higher
programming costs from investments in new original programming at Universal
Television Networks.

  Universal Parks & Resorts and Other:

     The Universal Parks & Resorts and Other segment revenues were E 852
million, down 9% versus the prior year (down 5% on a constant currency basis).
Universal Parks & Resorts revenues, which represent roughly half of the
segment's revenues, were down 11% on a constant currency basis as a result of
lower management fees from theme park joint ventures and lower land sales. Lower
theme park management fees reflect in part continued reduced travel and park
visits following the September 11 terrorist attacks. Spencer Gifts' revenues
were down 3% as a result of lower holiday sales.

     Operating income decreased 220% versus the prior year (down 238% on a
constant currency basis). Lower management fees from theme park joint ventures,
reduced land sales and lower holiday sales at Spencer Gifts contributed to the
decline, but the primary driver was a E 107 million charge taken at Spencer
Gifts. The write down effectively reduces the asset value of this non-core asset
to its current market value.

     2001 versus 2000

     As 2000 results only include twenty-three days of VUE operations since the
completion of the merger of Vivendi, Seagram and Canal+ on December 8, 2000, a
comparison between 2001 and 2000 results is not meaningful.

                                  CANAL+ GROUP
YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------
                                                   ACTUAL                  PRO FORMA
                                         ---------------------------   -----------------
                                          2002      2001      2000      2002      2001
                                         -------   -------   -------   -------   -------
                                                          (IN MILLIONS)
REVENUES
  Pay-TV -- France.....................  E 2,652   E 2,530   E 2,427   E 2,652   E 2,530
  Film -- StudioCanal..................      455       429       328       455       429
  Other................................    1,726     1,604     1,299     1,635     1,604
                                         -------   -------   -------   -------   -------
     Canal+ Group......................    4,833     4,563     4,054     4,742     4,563
                                         =======   =======   =======   =======   =======
OPERATING INCOME (LOSS)
  Pay-TV -- France.....................      182       182       154       182       182
  Film -- StudioCanal..................      (91)     (162)       22       (91)     (162)
  Other................................     (416)     (394)     (517)     (386)     (394)
                                         -------   -------   -------   -------   -------
     Canal+ Group......................  E  (325)  E  (374)  E  (341)  E  (295)  E  (374)
                                         =======   =======   =======   =======   =======
2002 versus 2001

     At Canal+ Group, revenues increased 6% to E 4.8 billion and operating
losses declined by 13% to E 325 million. On a pro forma basis, which excludes
the results of Universal Studios international television

                                        88
networks (now reported by VUE), Canal+ Group reported 4% revenue growth to E 4.7
billion and a 21% improvement in operating losses to E 295 million.

     Full year highlights by business line, on a pro forma basis adjusted as
described above, include:

  Pay-TV -- France:

     In 2002, pay-TV revenues in France increased 5% to E 2.7 billion on overall
subscription growth. At the end of 2002, in total, pay-TV activities in France
(Canal+, CanalSatellite and NC Numericable) represented approximately 7 million
subscriptions, an increase of 2% over the prior year end. At the French premium
channel, Canal+, overall revenues were flat year-on-year as the full year impact
of the 2001 fee increase was offset by a decline in subscriptions of 74,000.
Canal+ ended the year with 4.8 million subscriptions. The revenue increase in
the pay-TV -- France operations was attributable to the solid performance at
CanalSatellite, which reached the two million subscription mark in December 2002
(representing a net increase of 224,000 new subscriptions). NC Numericable also
performed strongly due to an increase in the number of subscribers to its
Internet access service.

     In 2002, operating income from pay-TV in France was unchanged at E 182
million. The performance improvement in the business units in 2002 was offset by
the reversal of a provision in 2001 and a change in the consolidation of
multiThematiques in 2002 (100% consolidation of the loss in 2002, compared to
equity in 2001).

  Film -- StudioCanal:

     In 2002, StudioCanal's revenues were up 6% to E 455 million. Revenues from
UK operations (Working Title) compensated for lower film library revenues in
France and a decline in distribution revenues in Germany.

     In 2002, StudioCanal reduced its operating loss by 44% to E 91 million.
This loss is primarily attributable to the write-off of films on StudioCanal's
balance sheet.

  Other:

     Other is primarily non-core activities comprised of international pay-TV,
including Telepiu, Canal+ Benelux, Canal+ Nordic, Cyfra+, Canal+ Technologies
and Expand, which have been or are in the process of being sold. Other revenues,
at E 1.6 billion, were stable year-on-year. Revenue growth generated by the
international pay-TV business units reflects a 20% increase in international
subscriptions but was offset by a revenue decline at Canal+ Technologies (due to
the ITV Digital and Winfirst bankruptcies).

     Operating losses improved slightly from E 394 million in 2001 to E 386
million in 2002. The improvement is primarily due to an approximate E 120
million reduction in operating losses at Telepiu reflecting increased revenues
attributable to increased subscribers and reduced piracy following the
introduction of new encryption technology. The reduced Telepiu losses were
partially offset by restructuring costs at the holding company level.

     2001 versus 2000

     At Canal+ Group, revenues increased 13% to E 4.6 billion, while the
operating loss increased 9.7% to E 374 million.

  Pay-TV -- France:

     Revenues increased 4% to E 2.5 billion primarily due to the strong
performance of CanalSatellite. Total pay-TV France subscriptions at the end of
2001 were 6.8 million, a 2.5% increase compared to 2000, primarily reflecting
digital platform growth, which added 224,000 subscriptions, up 14% compared to
2000.

     Operating income increased 18% to E 182 million due to the strong
performance by CanalSatellite.

                                        89
Film -- StudioCanal:

     At StudioCanal revenues increased 30% to E 429 million reflecting the
success of several films produced and/or distributed, including Hannibal and
Crimson River in Germany, and Brotherhood of the Wolf, Traffic, What Women Want,
Belphegor and Bridget Jones's Diary in France. Video and DVD sales also
increased, driven by the success of Scary Movie, Chicken Run, Scream 3, Jamel
and Brotherhood of the Wolf.

     An operating loss of E 162 million was incurred in 2001 compared to
operating income earned of E 22 million in 2000, primarily due to higher film
amortization on a larger film slate.

  Other:

     Other revenues, at E 1.6 billion, increased 23%, primarily due to the
growth in European Pay-TV activities. Operating losses improved from E 517
million in 2000 to E 394 million in 2001. These losses were largely driven by
Telepiu, which reduced its loss from its 2000 level but still suffered from
piracy and increased churn. Canal+ Nordic strongly improved its performance in
2001, reducing its loss to near break-even, due to a significant decrease in
churn.

                                 MAROC TELECOM
YEAR ENDED DECEMBER 31,
                                       ------------------------------------------------
                                                  ACTUAL                  PRO FORMA
                                       ----------------------------   -----------------
                                        2002      2001       2000      2002      2001
                                       -------   -------   --------   -------   -------
                                                        (IN MILLIONS)
REVENUES
  Maroc Telecom......................  E 1,487   E 1,013         NA   E 1,487   E 1,351
OPERATING INCOME
  Maroc Telecom......................      468       387         NA       468       475
The actual 2001 results only include nine months of Maroc Telecom's
operations since the completion of its acquisition in April 2001. In order to
present meaningful comparative information for assessing earnings trends at
Maroc Telecom, the following discussion focuses on pro forma results, which
include twelve months of operations in both 2002 and 2001.

     2002 versus 2001

     In 2002, revenues at Maroc Telecom increased to E 1.5 billion in 2002, up
10%. On a constant currency basis, revenues were up by 14%. Revenues grew in
both our fixed-line and mobile business, with the substantial increase in the
mobile subscriber base accounting for most of the increase. Fixed-line and
international revenues represented 62% of 2002 total revenues, with mobile
revenue accounting for the remaining 38% on a constant currency basis. At
December 31, 2002, Maroc Telecom had over 4.5 million mobile users.

     Operating income decreased 1% (increased 1% on a constant currency basis)
to E 468 million reflecting the impact of restructuring costs and amortization
of the value of the acquired GSM license, both of which were recognized for the
first time in 2002.

                                        90
2001 versus 2000

     The 2000 results do not include the operations of Maroc Telecom as it was
only acquired in April 2001.

                            VIVENDI UNIVERSAL GAMES
YEAR ENDED DECEMBER 31,
                                                -------------------------------------
                                                       ACTUAL             PRO FORMA
                                                ---------------------   -------------
                                                2002    2001    2000    2002    2001
                                                -----   -----   -----   -----   -----
                                                            (IN MILLIONS)
REVENUES
  Vivendi Universal Games.....................  E 794   E 657   E 572   E 794   E 657
OPERATING INCOME (LOSS)
  Vivendi Universal Games.....................     63      18     (41)     63      18
2002 versus 2001

     Revenues increased to E 794 million for the year, an increase of 21% over
the prior year. On a constant currency basis, revenues were up 25%. Growth was
driven by the company's continued strength in the PC games market, as well as
its rapidly escalating presence in the console games market.

     Operating income was E 63 million for the year, an increase of E 45
million, over the prior year. The 2001 operating income included restructuring
costs of approximately E 37 million. The balance of the increase in 2002 was due
to higher gross profit on sales, partially offset by increased marketing and
product development costs.

     2001 versus 2000

     Revenues increased in 2001 to E 657 million, an increase of 15% over the
prior year, primarily due to the full year impact of the December 2000
acquisition of Universal Studio's interactive games business as part of the
merger of Vivendi, Seagram and Canal+ S.A.

     Operating income in 2001 was E 18 million, an improvement over an operating
loss of E 41 million in 2000. The turnaround reflects the improvement in
operating efficiencies following the combination of the two companies. The 2001
operating income includes a restructuring charge of approximately E 37 million.

OTHER BUSINESSES

     Other businesses principally include:

     - Vivendi Telecom International (VTI) -- Operating income at VTI increased
       to E 44 million in 2002 from E 15 million in 2001, primarily reflecting
       the full consolidation of Monaco Telecom in the second half of 2001 and
       Kencell (Kenya) in December 2001.

     - Internet -- Operating losses incurred by our Internet businesses improved
       to E 232 million in 2002 from E 290 million in 2001. This improvement
       reflects our ongoing efforts to close unprofitable operations and control
       costs.

     - Other -- Other principally includes Vivendi Valorisation, the holder of
       real estate assets which we intend to sell. The operating loss in 2002
       amounted to E 299 million primarily as a result of increased provisions
       related to the reduction in rental value of the real estate holdings.

     - Vivendi Universal Publishing assets not sold during 2002 -- Comprised of
       the Consumer Press division (Groupe Express-Expansion -- Groupe
       l'Etudiant) sold in February 2003, Comareg, sold in May 2003, and the
       Brazilian operations -- Atica & Scipione. These businesses generated
       operating income of E 2 million in 2002.

                                        91
Veolia Environnement

     In 2002, total revenues for Veolia Environnement increased 3% (5% on a
constant currency basis) to E 30 billion. Revenues from core businesses, at
E 28.1 billion, increased almost 6% (7% on a constant currency basis), of which
5% resulted from internal growth. The revenue growth was generated by new
contracts for municipal and industrial outsourcing services, including several
that combined the services of two or more divisions.

     Operating income declined 3% to E 1.9 billion. Operating income from core
businesses rose 2% (3% on a constant currency basis) in 2002 while the
contribution from non-core businesses was down due to divestitures made during
the year. All core business contributed to operating income growth. In the Water
division, the good level of business activity in France, the gradually
increasing impact of outsourcing contracts won outside of France and the
turnaround of Vivendi Water Systems offset the slowdown in the industrial
equipment market in the United States and higher insurance costs. The Waste
division benefited from measures taken to improve profitability. In the Energy
Services division, growth was primarily attributable to the integration of the
Italian company SIRAM and developments in Northern and Central Europe. In the
Transportation division, new contracts signed in Europe and the United States
more than offset the cancellation of the South Central contract in the United
Kingdom. FCC's operating income increased principally due to its service
businesses.

     Veolia Environnement's published figures may differ from the figures
presented in Vivendi Universal's Consolidated Financial Statements, primarily
due to the elimination of non-material intercompany transactions. Moreover,
Vivendi Universal's definition of operating income differs from Veolia
Environnement's definition of EBIT utilized in their December 31, 2002 accounts,
which does not include restructuring charges of E 56 million.

  Vivendi Universal Publishing Assets Sold in 2002

     Vivendi Universal Publishing assets sold in 2002 include the European
publishing operations (excluding those described above) and Houghton Mifflin,
both of which were sold in December 2002 and the Business to Business and Health
divisions sold in June 2002.

  Holding & Corporate

     Holding and corporate expenses doubled year-on-year from E 326 million in
2001 to E 665 million in 2002. The key drivers of this increase were a E 122
million provision for headquarters restructuring, E 92 million in pension and
benefits charges primarily related to North American employees, a E 28 million
one-time provision for risk on a vacant lease and a E 56 million exceptional
insurance charge.

IMPACT OF INFLATION

     Inflation did not have a material effect on our financial results during
the year ended December 31, 2002.

FOREIGN CURRENCY

     Vivendi Universal is exposed to changes in foreign currency exchange rates.
Currency fluctuations may adversely affect its operational and financial
earnings. In seeking to minimize the risks and costs associated with currency
fluctuations, Vivendi Universal follows a centrally administered risk management
policy approved by its Board of Directors. As part of this policy, Vivendi
Universal uses various derivative financial instruments to manage foreign
currency exchange rate. Vivendi Universal generally does not use derivative
financial instruments for trading or speculative purposes. For more information
on Vivendi Universal's foreign currency risk management, see "Item
11--Quantitative and Qualitative Disclosures About Market Risk."

                                        92
LIQUIDITY AND CAPITAL RESOURCES

     Financial Position -- At December 31, 2002, Vivendi Universal had E 12.3
billion of total financial debt and E 7.3 billion of cash and cash equivalents
compared to E 37.1 billion of total financial debt and E 4.7 billion of cash and
equivalents at December 31, 2001. Of the total financial debt at December 31,
2002, total long-term debt was E 10.5 billion. For more information, see Note 7
to our Consolidated Financial Statements included in this document.

  CASH FLOW
YEAR ENDED DECEMBER 31,
                                                        ------------------------------
                                                          2002       2001       2000
                                                        --------   --------   --------
                                                                (IN MILLIONS)
Cash flow from operating activities...................  E  4,670   E  4,500   E  2,514
Cash flow from investing activities...................       405      4,340     (1,481)
Cash flow from financing activities...................    (3,792)    (7,469)      (631)
Effect of foreign currency exchange rate changes on
  cash and cash equivalents...........................     1,287         83          7
                                                        --------   --------   --------
CHANGE IN CASH AND CASH EQUIVALENTS...................  E  2,570   E  1,454   E    409
                                                        ========   ========   ========
As described in "Item 3--Risk Factors," we believe there will be a
shortfall in the funding necessary to meet our cash needs. See "Item 3--Risk
Factors" for a description of how we propose to provide the additional working
capital needed.

  Cash Flow from Operating Activities

     Cash flow from operating activities totaled E 4.7 billion in 2002, an
increase of E 0.2 billion from 2001 primarily due to improvements in working
capital. Excluding Veolia Environnement, Cegetel Group and Maroc Telecom, cash
flow from operations was negative E 0.1 billion, including dividends received
from Veolia Environnement and Maroc Telecom of E 0.1 billion.

     In 2001, cash flow from operating activities totaled E 4.5 billion compared
to E 2.5 billion in 2000. The significant improvement was primarily due to
operating earnings generating incremental cash flow of E 1.1 billion and
improvements in working capital of E 1.5 billion, which was partially offset by
E 600 million relating to the restructuring costs in connection with the
December 2000 merger. In 2000, cash flow from operating activities was E 2.5
billion, primarily coming from Cegetel Group, Vivendi Universal Publishing and
Veolia Environnement.

  Cash Flow from Investing Activities

     Cash flow from investing activities was E 0.4 billion in 2002 compared to
E 4.3 billion in 2001. Contributing to cash from investing activities in 2002
were sales for aggregate consideration of E 11.0 billion including Vivendi
Universal Publishing assets for E 3.2 billion, Veolia Environnement shares for
E 3.3 billion and EchoStar for E 1.0 billion. Offsetting divestiture proceeds
were net capital expenditures of E 4.0 billion and other investing activities of
E 6.6 billion, including investing activities made by Veolia Environnement of
E 2.8 billion and the acquisition of EchoStar for E 1.7 billion.

     In 2001 investing activities included the sale of the spirits and wine
business for E 9.4 billion and the divestiture of BSkyB shares for E 4.0 billion
offset by net capital expenditures of E 4.4 billion and the acquisitions of
Houghton Mifflin for E 2.0 billion and Maroc Telecom for E 2.4 billion.

     In 2000 net cash used for investing activities was E 1.5 billion,
reflecting notably the purchase of treasury shares held as marketable securities
for E 2.5 billion.

                                        93
Cash Flow from Financing Activities

     In 2002, cash flow from financing activities was negative E 3.8 billion
compared to negative E 7.5 billion in 2001. In 2002, the principal components
included the repayment of short and long-term debt of E 7.9 billion, dividends
paid of E 1.3 billion, a cash payment to USAi of $1.62 billion, partially offset
by the issuance of long-term debt of E 2.7 billion, proceeds from the issuance
of Veolia Environnement shares of E 1.5 billion, the net proceeds from the sale
of treasury shares of E 2.9 billion including payments related to Vivendi
Universal put options of E 0.9 billion.

     In 2001, the principal components included a E 5.9 billion repayment of
long-term borrowings and other liabilities, a E 1.7 billion repayment of
short-term borrowings, the purchase of treasury stock for E 4.3 billion and cash
dividends paid of E 1.4 billion, partially offset by E 5.2 billion proceeds from
the issuance of long-term borrowings and other liabilities and E 0.6 billion net
proceeds from the issuance of common stock. In 2000, cash flow from financing
activities was negative E 0.6 billion.

CAPITAL RESOURCES

     In the second half of 2002 we experienced a number of debt rating
downgrades. Moody's cut Vivendi Universal's senior debt rating on July 1, 2002
from Baa3 to Ba1, under review for possible further downgrade. Standard & Poor's
followed suit the next day, with a one-notch downgrade to BBB- with a negative
outlook. On August 14, Moody's lowered the long-term senior unsecured debt
rating of Vivendi Universal to B1 and assigned a Ba2 senior implied rating to
Vivendi Universal, with this rating under review for possible downgrade, and
Standard & Poor's downgraded the long-term senior unsecured debt to B+ and
assigned a BB corporate credit rating to Vivendi Universal on credit watch with
negative implications. On October 30, Moody's downgraded Vivendi Universal's
senior implied rating to Ba3, leaving the senior unsecured ratings unchanged at
B1, under review for possible downgrade. On January 3, 2003, Standard & Poor's
removed Vivendi Universal's long-term ratings credit watch. Beginning in July of
2002, these downgrades caused us to lose, to a significant extent, access to the
capital markets, and, most importantly, to the commercial paper market,
historically our main source of funding for working capital needs and triggered
default and covenant provisions under some of our debt documents. While our
current debt instruments do not contain rating triggers, further downgrades by
either Standards & Poor's or Moody's could result in liquidity problems,
increase our costs of borrowing, result in our being unable to secure new
financing and affect our ability to make payments on outstanding debt
instruments and to comply with other existing obligations.

     At December 31, 2002, our consolidated net debt was E 12.3 billion compared
with E 37.1 billion at December 31, 2001. Excluding the net debt of Veolia
Environnement, which, following divestitures of a portion of our shareholding
interest therein in 2002, was deconsolidated from Vivendi Universal's balance
sheet on December 31, 2002, net debt fell by approximately E 9.0 billion.

     The principal terms of our currently outstanding credit facilities are
described under "Item 4--Information on the Company--Summary of Indebtedness."
Under these facilities, Vivendi Universal and VUE are subject to certain
financial covenants which require them to maintain various financial ratios,
including:

     - For VUE, maximum ratios of consolidated financial indebtedness to
       consolidated EBITDA and minimum ratios to consolidated EBITDA to
       consolidated interest expense; and

     - For Vivendi Universal on a consolidated basis, maximum ratios of net
       financial debt to cash EBITDA, minimum ratios of cash EBITDA to net
       financing costs and maximum total gross financial debt.

     The definition of the above items is specified in the agreements.

     Vivendi Universal believes that Vivendi Universal and VUE are each in
compliance with each of their respective financial covenants as of December 31,
2002.

                                        94
Maturity Profile

     The following table provides a summary of the impact of the refinancing
transactions undertaken prior to May 2003 on the maturity profile of debt and
undrawn facilities of Vivendi Universal through December 31, 2004.

             MATURITY PROFILE -- VIVENDI UNIVERSAL (PARENT COMPANY)
                                 (IN BILLIONS)
AGGREGATE MATURITIES   AGGREGATE
                                                 PRE-REFINANCING PLAN   MATURITIES   EXTENSION
                                                 --------------------   ----------   ---------
Q2 2003........................................         E 0.17            E 0.17      E   --
Q3 2003........................................           1.78(1)           1.51(1)     0.27
Q4 2003........................................           1.07              0.20        0.87
Q1 2004........................................           3.48(2)           2.58(2)     0.90
Q2 2004........................................             --                --          --
Q3 2004........................................           0.15              0.15          --
Q4 2004........................................           0.51              0.01        0.50
                                                        ------            ------      ------
Total maturities Q2 2003 -- Q4 2004............         E 7.16            E 4.62      E 2.54
                                                        ======            ======      ======
---------------

(1) Includes cash redemption amount of BSkyB exchangeable 1% notes issued in
    July 2000 and maturing on July 5, 2003.

(2) Assumes early redemption, at the option of the bondholders on March 1, 2004,
    of Vinci exchangeable 1% notes issued in February 2001 with scheduled
    maturity of March 1, 2006, and includes the cash redemption amount of
    Vivendi Universal convertible 1.25% bonds issued in January 1999 and
    maturing on January 1, 2004.

     Certain indebtedness of Vivendi Universal outstanding at December 31, 2002
has been repaid or otherwise cancelled. See "Item 5--Subsequent Events."

RESTRICTIONS ON TRANSFERS FROM SUBSIDIARIES TO VIVENDI UNIVERSAL

     Our cash flow on a consolidated basis is not all available to Vivendi
Universal at the parent company level. In particular:

     - Dividends and other distributions (including payment of interest,
       repayments of loans and other returns on investment or other payments)
       from our subsidiaries are restricted under certain agreements. For
       example, the VUE Loan Agreement, described in "Item 4--Information on the
       Company--Summary of Indebtedness," places limitations on the ability of
       VUE to pay dividends to Vivendi Universal and otherwise limits the net
       balance of loans between VUE and Vivendi Universal to an aggregate of
       $600 million outstanding at any one time. As of March 31, 2003, VUE had
       aggregate outstanding loans of $114 million to Vivendi Universal.

     - Many of our subsidiaries who are less than wholly owned are unable to
       pool their cash with us and must pay a portion of any dividends to other
       shareholders. These subsidiaries include Cegetel Group and Maroc Telecom.
       In 2002, Cegetel Group did not pay a dividend and Maroc Telecom paid a
       dividend of E 19 million to Vivendi Telecom International.

     In addition, the ability of our subsidiaries to make certain distributions
also may be limited by financial assistance rules, corporate benefit laws and
other legal restrictions which, if violated, might require the recipient to
refund unlawful payments. In particular, under company law (including the French
Civil Code (code civil) and the French Commercial Code (code de commerce) and
similar laws in other jurisdictions) our subsidiaries are generally prohibited
from paying dividends except out of profits legally available for distribution.

                                        95
COMMITMENTS AND CONTINGENCIES

     Vivendi Universal and its subsidiaries maintain detailed records on all
contractual obligations, commercial commitments and contingent liabilities,
which are reviewed with senior management and updated on a regular basis. In
order to ensure completeness, accuracy and consistency of the records, many
procedures are performed, including but not limited to:

     - review of minutes of meetings of stockholders, Directors, committees of
       the Board, and management committees for matters such as contracts,
       litigation, and authorization of fixed asset acquisitions or
       divestitures;

     - review with banks of items such as guarantees, endorsements and
       discounted receivables;

     - review with internal and/or external legal counsel of pending litigation,
       claims (in dispute) and environmental matters as well as related
       assessments for unrecorded contingencies;

     - review of tax examiner's reports, notices of assessments and income tax
       analyses for additional prior year amounts;

     - review with risk management, insurance agents and brokers of coverage for
       unrecorded contingencies;

     - review of related party transactions for guarantees and other
       commitments; and

     - review of all contracts and agreements.

  Contractual Obligations

     Vivendi Universal and its subsidiaries have various contractual obligations
and commercial commitments, which have been defined as items for which we are
contractually obligated or committed to pay a specified amount at a specific
point in time. Certain of these items are required to be recorded as liabilities
in our Consolidated Financial Statements, for example long-term debt. Others,
such as certain purchase commitments and other executory contracts are not
permitted to be recognized as liabilities in our Consolidated Financial
Statements, but are required to be disclosed. The following table summarizes our
significant contractual obligations and commercial commitments at December 31,
2002:
PAYMENTS DUE IN
                                ----------------------------------------------------------------
                                            LESS THAN      BETWEEN 1       BETWEEN 2      AFTER
                                 TOTAL       A YEAR       AND 2 YEARS     AND 5 YEARS    5 YEARS
                                --------   -----------   -------------   -------------   -------
                                                         (IN MILLIONS)
RECORDED AS LIABILITIES IN THE
  CONSOLIDATED BALANCE SHEET
Long-term debt(1).............  E 10,455          --        E 2,878         E 4,013      E 3,564
Bank overdrafts and other
  short-term borrowings.......     9,177       9,177             --              --           --
Sports rights(2)..............     1,065         469            331             265           --
Broadcasting rights(3)........       506         214            140             121           31
Creative talent and employment
  agreements(4)...............       250          55             50              60           85
Other(5)......................       240         223             15               2           --
                                --------    --------        -------         -------      -------
Total.........................  E 21,693    E 10,138        E 3,414         E 4,461      E 3,680
                                ========    ========        =======         =======      =======
96
PAYMENTS DUE IN
                                 ---------------------------------------------------------------
                                            LESS THAN      BETWEEN 1       BETWEEN 2     AFTER 5
                                  TOTAL      A YEAR       AND 2 YEARS     AND 5 YEARS     YEARS
                                 -------   -----------   -------------   -------------   -------
                                                          (IN MILLIONS)
OTHER CONTRACTUAL OBLIGATIONS
  AND COMMERCIAL COMMITMENTS
Operating leases(6)............  E 1,868    E    373        E   330         E   655      E   510
Sports rights(2)...............    1,440          --            265           1,175           --
Broadcasting rights(3).........    2,690         834            513           1,056          287
Creative talent and employment
  agreements(4)................    1,473         823            296             289           65
Real estate defeasance(7)......      846                                                     846
Other..........................      701         213            121             280           87
                                 -------    --------        -------         -------      -------
Total..........................  E 9,018    E  2,243        E 1,525         E 3,455      E 1,795
                                 =======    ========        =======         =======      =======
---------------

(1) Long-term debt, including capital lease obligations of E 274 million, which
    French GAAP requires to be recognized as long-term debt when the lease
    contract includes a purchase option, known in France as "credit bail" (see
    Note 7).

(2) Exclusivity contracts for broadcasting sporting events by Canal+ Group
    (E 1,065 million recorded in other non-current liabilities and E 1,440
    million shown in other contractual obligations and commercial commitments in
    connection with the potential acquisition of soccer rights).

(3) Primarily exclusivity contracts for broadcasting future film productions,
    acquisitions of program catalogs and leasing of satellite capacity at VUE
    and Canal+ Group.

(4) Agreements in the normal course of business, which relate to creative talent
    and employment agreements principally at VUE and UMG.

(5) Principally comprised of Universal Music's liability related to Rondor Music
    International, E 223 million settled in March 2003 (see the discussion below
    under "--Contingencies").

(6) Lease obligations assumed in the normal course of business for rental of
    buildings and equipment.

(7) Lease obligations related to real estate defeasances. In April 1996, the
    divestiture to Philip Morris Capital Corporation of three office buildings
    under construction was accompanied by a 30-year lease back agreement
    effective upon completion of the buildings. Two of the buildings were
    completed in April 1998 and the third was completed in April 2000. The
    annual rental expenses approximate E 34.4 million. In December 1996, three
    buildings in Berlin were sold and leased back under ten to thirty year
    leases at an annual rental expense of approximately E 29.6 million. The
    difference between Vivendi Universal's rental obligation under the leases
    and the market rent received by Vivendi Universal is provided for when
    unfavorable.

  Contingencies

     In addition to contractual obligations and commercial commitments given,
Vivendi Universal and its subsidiaries have entered into various guarantees or
other agreements pursuant to which they have contingent liabilities not recorded
as liabilities on the balance sheet. Our most significant contingent liabilities
at December 31, 2002 are summarized below:

     Cegetel Group

     - In connection with the August 2001 sale of AOL Europe Category E
       preferred shares by Canal+ Group and Cegetel Group to LineInvest, Vivendi
       Universal entered into a total return swap agreement with the latter.
       LineInvest is a special purpose vehicle in which Vivendi Universal has no
       ownership interest created in connection with the transaction. Under the
       terms of the agreement, Cegetel Group and Canal+ Group retained the
       financial risk on the value of the AOL Europe preferred shares up to a

                                        97
share of 66% and 34%, respectively, through a mirror total return swap
       with Vivendi Universal. In December 2002, a portion of the total return
       swap between Vivendi Universal and LineInvest was transferred directly to
       Cegetel Group corresponding to its share (notional amount of $541.3
       million). As a result, Vivendi Universal continued to guarantee the
       Canal+ Group commitment (notional amount of $270.7 million). Under the
       arrangements, Cegetel Group and Vivendi Universal were obligated to repay
       the notional amounts of the swaps to LineInvest on April 7, 2003 and
       October 30, 2003, respectively.

      On February 14, 2003, LineInvest received notification from AOL Time
      Warner whereby AOL Time Warner agreed to acquire the AOL Europe preferred
      shares through the exercise of a call option on April 8, 2003 for an
      amount of $812.5 million, payable in either cash or shares of AOL Time
      Warner common stock or a combination of both. AOL Time Warner elected to
      make the payment for the call option in cash and, as a result, the total
      return swap was unwound on April 9, 2003 and no further amounts are
      payable pursuant to the transaction. Vivendi Universal recorded a
      provision of $100 million in its 2002 accounts to cover market risk under
      the terms of the total return swap in the event AOL Time Warner had opted
      for payment for the call option in its own shares. This provision has now
      become unnecessary and will be reversed in the second quarter 2003
      accounts.

     Universal Music Group

     - In connection with the purchase of Rondor Music International in 2000,
       there existed a contingent purchase price adjustment based on the market
       value of Vivendi Universal shares. The contingent price adjustment was
       triggered in April 2002 when the market value of Vivendi Universal's
       shares fell below $37.50 for 10 consecutive days and the former
       shareholders of Rondor requested early settlement. A liability for this
       adjustment was recorded in the consolidated balance sheet at December 31,
       2002 for its estimated amount of E 223 million (approximately $230
       million). On March 3, 2003 settlement of this liability was made and the
       former shareholders of Rondor received 8.8 million shares of Vivendi
       Universal, representing 0.8% of capital stock and cash of $100.3 million
       (E 92.6 million).

     Vivendi Universal Entertainment

     - In connection with Vivendi Universal's acquisition of the entertainment
       assets of USAi, USAi and Mr. Barry Diller received 5.44% and 1.50%,
       respectively, of the common interests in VUE, the group formed by
       combining such assets and those of the Universal Studios Group. Vivendi
       Universal agreed to certain put arrangements with respect to the common
       interests in VUE. Beginning on May 7, 2003, Mr. Barry Diller may put his
       common interests to Universal Studios, Inc. for the greater of their fair
       market value and $275 million. Beginning on May 7, 2010, USAi may put its
       common interests to Universal Studios, Inc. for their fair market value.
       In each case, these amounts may, at Universal Studio, Inc.'s election, be
       paid in cash or in Vivendi Universal shares.

      Under the VUE partnership agreement, VUE is subject to a number of
      covenants for the benefit of the holder of the Class A Preferred Interests
      in VUE (currently USAi), including a cap on indebtedness and a restriction
      on asset transfers by VUE and its subsidiaries. Certain of the covenants,
      including those specified above, would cease to apply if an irrevocable
      letter of credit were issued in an amount equal to the accrued value of
      such interests at maturity (approximately $2 billion in 2022).

      In addition, Vivendi Universal has agreed to indemnify USAi for any "tax
      detriment" (defined to mean the present value of the loss of USAi's tax
      deferral on the transaction) arising from certain actions taken by VUE
      prior to May 7, 2017, including selling assets contributed by USAi to VUE
      and repaying the $1.62 billion in debt used to finance the cash
      distribution made to USAi at the closing.

     - In 1987, Universal City Development Partners, Ltd., or Universal City
       Development Partners, entered into an agreement with a creative
       consultant to supply consulting services for a fee based on its gross
       revenues. The consultant is also entitled to a fee based on the gross
       revenues of all gated motion picture and/or television themed attractions
       owned or operated, in whole or in part, by (or pursuant to a license
       from) Universal City Development Partners or MCA Inc. (now Universal
       Studios, Inc.), any
                                        98
of their partners or any of their affiliates ("comparable projects"),
       other than at Universal City, California. At present, the only theme park
       which may be a comparable project is VUE's partially owned park in Osaka,
       Japan. It is possible that comparable projects will be created in the
       future that would fall under the consulting agreement.

      For 2000, 2001 and 2002, the fees paid by Universal City Development
      Partners for its parks were $14.8 million, $16.6 million and $14.7
      million, respectively. Fees with respect to the park in Japan were $13.2
      million for 2001 and $10.5 million for 2002. The consultant may also be
      entitled to participate in certain sales of equity by the partners of
      Universal City Development Partners and to participate in certain real
      estate development activities of the partners of Universal City
      Development Partners or their affiliates.

      Although the agreement has no expiration date, starting in June 2010, the
      consultant has the right under certain circumstances to terminate the
      periodic payments under the agreement and receive instead one payment
      equal to the fair market value of the consultant's interest in our parks
      and all comparable projects that have been open at that time for at least
      one year. If the parties cannot agree on the fair market value of that
      interest, it will be determined by a binding appraisal procedure.
      Universal City Development Partners represented under the agreement that
      the consultant's interest in each of its parks and in any comparable
      projects will have priority over the interests of all financiers, lenders
      and others who may have an interest in that park or project. Universal
      City Development Partners's obligations under the agreement are guaranteed
      by Universal Studios, Inc. and Universal Studios, Inc.'s obligations under
      that guarantee have in turn been assumed by VUE.

     Canal+ Group

     - In connection with the acquisition by Sportfive (Sport+ S.A. in 2001) of
       its three year right to broadcast English Premier League football
       matches, Vivendi Universal has agreed to provide a guarantee related to
       the payment of license fees, which is limited to L200 million and expires
       July 31, 2004, and of which 50% is counter-guaranteed by the RTL Group.

     Maroc Telecom

     - In connection with the acquisition of its 35% interest in Maroc Telecom,
       Vivendi Universal granted a put option to the Kingdom of Morocco related
       to a further interest in Maroc Telecom equal to 16% of the capital of the
       company, except that if, prior to September 2003, the Kingdom sells
       shares to a third party investor, the option is cancelled to the extent
       of the number of shares so sold. At the end of an appraisal proceeding to
       determine the exercise price starting from September 1, 2003, the Kingdom
       of Morocco will be entitled to exercise its put option during a two month
       period (i.e. in October and November 2003), if no delay in the appraisal
       process has occurred. If the put option is not exercised during this
       first period, the option will be extended and the Kingdom of Morocco can
       decide to start the proceeding again at any time during an 18 month
       period following the end of the first put option period. The exercise
       price will be the then fair market value of the shares independently
       determined by the appraisal procedure, except if the fair market value of
       the shares were between 85% and 115% of a reference price derived from
       the purchase price of Vivendi Universal's initial stake, the reference
       price would be used to determine the exercise price. In addition, Vivendi
       Universal plans to pledge its stake in Maroc Telecom to guarantee the
       payment of the above put option, if exercised.

     Vivendi Telecom International

     - In connection with the acquisition of its 55% interest in Monaco Telecom,
       Vivendi Universal granted a put option to the Principality of Monaco,
       which owns the remaining 45% of Monaco Telecom. The option grants the
       Societe Nationale de Financement in Monaco the right to sell to Compagnie
       Monegasque de Communication, a subsidiary of Vivendi Universal, at any
       time until December 31, 2009, its 45% interest in Monaco Telecom under
       the following terms. Prior to May 26, 2004, Societe Nationale de
       Financement can put (i) up to 29% of its interest in Monaco Telecom for
       approximately

                                        99
E 51 million (or the proportionate value of E 51 million if less than 29%
       is sold) and (ii) its residual 16% interest at fair value. Between May
       26, 2004 and December 31, 2009, Societe Nationale de Financement can put
       its entire 45% interest at fair value. The option may be exercised in
       increments but each exercise must be for not less than 10% of the shares.
       The fair value of Monaco Telecom will be independently determined by an
       appraisal procedure.

     - In connection with its approximate 26% equity stake in the Xfera joint
       venture, the recipient of a third generation UMTS mobile
       telecommunications license in Spain, Vivendi Universal entered into a
       E 920 million surety contract related to performance guarantees granted
       to the Spanish government (notably capital expenditures related to the
       roll-out of the network and the coverage of the territory). These
       guarantees could be called upon up to the amount of corresponding Xfera
       commitments only upon the commercial launch of UMTS services. Given the
       very low likelihood of the roll-out of the network, negotiations have
       commenced between the parties to terminate these guarantees.

      The arrangements, with several vendors, were entered into to potentially
      finance amounts payable for network equipment up to a total amount of
      E 1.0 billion. At the same time, a pledge of Xfera shares was provided to
      equipment vendors in connection with their financing contracts.

      Separately, Vivendi Universal has granted a counter guarantee in an amount
      of E 48 million to a group of banks which have guaranteed the Spanish
      government in respect of the UMTS frequency spectrum.

      The Xfera Shareholders' Agreement dated January 12, 2002, contains a
      provision which gives the founding shareholders (including VTI) the
      possibility to acquire the shares held by Vodafone in Xfera in certain
      defined circumstances. Vodafone claims that such provision amounts to a
      call option (for an amount of E 7.2 million which would be increased up to
      E 13.6 million taking into account Xfera equity capital increases,
      determined through an appraisal procedure, representing 3.3% of Xfera's
      capital). If Vodafone's claims were accepted following the ongoing
      arbitration proceeding, Vivendi Universal would have to take on an
      additional commitment equal to approximately E 90 million.

     Corporate and Other

     - In connection with the Seagram merger, Vivendi Universal entered into a
       Shareholder's Governance Agreement with members of the Bronfman family,
       pursuant to which Vivendi Universal agreed, among other things, not to
       dispose of Seagram shares in a taxable transaction and not to dispose of
       substantially all of the assets acquired by Vivendi Universal from
       Seagram in a transaction that would trigger the Gain Recognition
       Agreement (GRA) entered into by the Bronfmans and result in recognition
       of taxable gain to them. Under the applicable US income tax regulations,
       to comply with the foregoing, Vivendi Universal must retain at least 30%
       of the gross assets or at least 10% of the net assets (values are
       determined as of December 8, 2000) until the end of the five year period
       ending on December 31, 2005. At the present time, Vivendi Universal is in
       compliance with this provision. Vivendi Universal does not intend to
       violate the provision and trigger the GRA.

     - On December 20, 2002, Vivendi Universal and Veolia Environnement entered
       into an agreement in order to finalize the separation of the two
       companies, following Vivendi Universal's divestiture of 20.4% of Veolia
       Environnement's capital stock. Pursuant to this agreement, some of the
       guarantee and counter-guarantee agreements originally established between
       the two companies in June 2000 were modified as described in Note 3.2.3
       to the Consolidated Financial Statements. Vivendi Universal's most
       important contingent liabilities under these agreements are:

      -- Certain recurring expenses involving network renewal costs in the water
         and energy businesses were originally to be reimbursed by Vivendi
         Universal up to an initial limit of E 15.2 million a year indexed over
         a period of 12 years. This limit has now been raised to E 30.4 million
         indexed starting in the year 2002. The additional amount potentially
         due above the E 15.2 million initial limit will, however, be payable
         only from January 2005 and bear interest at the legal rate. If the
         aggregate amount of replacement costs borne by Veolia Environnement
         were to exceed the initial limit of

                                       100
E 228.6 million, this excess would be covered by Vivendi Universal up
         to a maximum amount of E 76.2 million.

      -- It has been agreed that the current Vivendi Universal interest in the
         company Aguas Argentinas will be retained by Vivendi Universal.
         Guarantees related to this company, which made up an amount of
         approximately $50 million have been retained by Vivendi Universal above
         a first tranche of $5 million assumed by Veolia Environnement.

     - In connection with Vivendi Universal's December 2002 divestiture of 82.5
       million shares of Veolia Environnement shares to a group of investors, a
       call option was granted on the remaining 20.4% of Veolia Environnement
       (82.5 million shares) at a strike price equal to E 26.5. This option can
       be exercised at any time until December 23, 2004. If it were to be
       exercised, it would provide Vivendi Universal with E 2.2 billion of net
       cash proceeds. The remaining 82.5 million shares have been deposited in
       an escrow account (compte-sequestre) and have been pledged in favor of
       new investors as well as banks participating in the E 2.5 billion Dual
       Currency Credit Facility and the E 3 billion Multicurrency Revolving
       Credit Facility. Under an arrangement entered into in connection with the
       December 2002 divestiture, Vivendi Universal has committed to pay an
       indemnity equal to E 3 per call option to new investors in the event that
       the loans or guarantees related to the Dual Currency Credit Facility or
       the Multicurrency Revolving Credit Facility are called for reimbursement.

     - In connection with the sale of puts on its shares, Vivendi Universal had
       a remaining commitment, as of December 31, 2002, to buy 3.1 million
       shares at an exercise price of E 50.50 during the first quarter of 2003.
       These puts were exercised in January and February 2003.

     - A group of shareholders, which holds 19.7% of the shares of UGC, has a
       put option to sell these shares to Vivendi Universal. This option may be
       exercised at any time until December 31, 2007. The value of UGC shares
       covered by the put (currently estimated at E 70 million) would be
       determined on the basis of a contractual formula by an appraiser mutually
       designated by the two parties.

     - At December 31, 2002 three different bonds issued by Vivendi Universal
       are outstanding which are exchangeable into shares of Veolia
       Environnement, Vinci and BSkyB, respectively. The terms of these bonds
       include early redemption features which allow the holders to require
       redemption of the outstanding bonds by Vivendi Universal prior to their
       due dates at a premium over the principal amount. Premiums potentially
       due to bondholders amounted to E 287.3 million, of which E 17.8 million
       would be cross-charged to Veolia Environnement under the terms of a
       contract associated with the issuance of the bonds. Given the reduced
       probability of exchange by the holders of bonds exchangeable into Veolia
       Environnement and Vinci shares, the Group decided to provision the
       premiums due in case of early redemption of these two bonds in March 2003
       and March 2004, respectively. At December 31, 2002, accumulated
       provisions and allowances amounted to E 137.9 million and also included a
       provision for the premium which is payable in July 2003 to holders of
       bonds exchangeable for BSkyB shares. In March 2003, a premium amounting
       to E 63.4 million was paid to Veolia Environnement bondholders who
       exercised their right of early redemption. If holders of Vinci
       Exchangeable bonds do not exercise their right of early redemption, there
       remains a premium payable at maturity in March 2006 amounting to E 27.1
       million.

     The following table summarizes the contingencies described above and the
other contingencies described in note 11 to the Consolidated Financial
Statements.
TRANSACTIONS AND GUARANTEES                        AMOUNT                   EXPIRY
---------------------------          -----------------------------------   ---------
Telecom Developpement buy/sell       Price to be determined                --
  agreement with SNCF
3G UMTS license                      1% revenue earned when service        2021
                                     commences (expected to be in 2004)
Miscellaneous guarantees granted by  E 40 million                          2003/2012
  Cegetel
Rondor contingent purchase price     E 223 million                         Settled
101
TRANSACTIONS AND GUARANTEES                        AMOUNT                   EXPIRY
---------------------------          -----------------------------------   ---------
Put option on Roc-a-fella record     0 to E 15 million                     2005
  label joint venture
Put option on Murder Inc. records    0 to $20 million                      2007
Guarantee for operating shortfall    0 to $20 million                      --
  of pressplay joint venture
Put option on VUE
-- 1.5% of common interest in VUE    Greater of fair market value and      --
   to Barry Diller from May 7, 2003  $275 million
-- 5.4% of common interest in VUE    At fair value                         --
   to USAi from May 2010
Two guarantees in connection with    Residual guarantee of $1 million      --
  VUE's Equity investment in UCDP
Guarantee for operating shortfall    $7.5 million                          --
  of Universal City Florida Hotel
  Venture
Guarantee of lease payments in       0 to $154 million                     --
  connection with UCI/CIC equity
  Investment
Capital contributions in connection  $19.5 million                         --
  with equity investment in
  MovieLink
Surety bond related to ITC           $27.8 million                         --
  Entertainment's "Streetscenes"
  film Property
Agreement with creative consultant
-- consulting services               Fee based on gross revenues           --
-- additional fee                    Based on gross revenues of themed     --
                                     attractions at certain parks
-- right of termination              Fair market value, starting in 2010   --
Executive officer option to acquire  Approximately $24.9 million           2005
  0.2% of VUE's affiliate shares
Guarantee provided to English        L200 million, 50% of which is         2004
  Premier League football            counterguaranteed by the RTL Group
Put option equal to 16% of Maroc     At fair market value                  2005
  Telecom
Grant of a put option of 45% of
  Monaco Telecom
-- until May 25, 2004                0 to 29% for a proportionate of 0     2004
                                     to 51 million euros and the
                                     residual 16% interest at fair value
-- between May 26, 2004 and          45% interest at fair value or in      2009
   December 31, 2009                 increments but each exercise must
                                     be not for less than 10%
Guarantees to Afghan state re:       Capped at $2.4 million                --
  performance of obligations of
  Telecom Development Company of
  Afghanistan and to the Agha Khan
  Fund for Economic Development
Commitment to fund Afghan Telecom    Up to $10.5 million                   --
  BV Company
Bank guarantee Xfera                 Approximately E 140 million           --
102
TRANSACTIONS AND GUARANTEES                        AMOUNT                   EXPIRY
---------------------------          -----------------------------------   ---------
Bank guarantee provided to Spanish   E 48 million                          --
  authorities related to the UMTS
  license frequent spectrum fee re:
  Xfera
"Call option" of the Xfera stake     Subject to arbitration proceedings    --
  held by Vodafone
Shareholders' governance agreement                                         2005
  with members of the Bronfman
  family
Divestiture of Interest in Veolia
  Environnement
-- Reimbursement of replacement      E 30.4 million indexed starting in    --
   costs                             the year 2002 payable from January
                                     2005 subject to legal interest rate
                                     If total amount paid by VE exceeds    --
                                     E 228.6 million excess would be
                                     covered by VU up to an amount of
                                     E 76.2 million
-- Guarantees re: Aguas Argentinas   Approximately $50 million with        --
                                     first $5 million assumed by VE
-- Other guarantees re: commitments  Approximately E 250 million           --
   made by VE subsidiaries
-- Comfort letters issued in favor   Approximately E 20 million            --
   of VE subsidiaries
Indemnity to VE share call option    E 3 per call option (approximately    2004
  Holders                            E 250 million)
Sale of put options on own shares    3.1 million shares at an exercise     Settled
  in 2003                            price of E 50.50
Put option on 19.7% of capital       Currently estimated at E 70 million   2007
  stake in UGC
Debt premiums potentially due to     E 27.6 million                        2006
  holders of bonds exchangeable
  into VE and Vinci shares
Counter-guarantee on surety bonds    $47.5 million                         --
Pledges and guarantees related to    E 274 million                         2002/2020
  real estate operations
Sale of Seagram's spirits and wine   0 to $1 billion                       2003
  Assets
Sale of VUP's B2B and Health         Price adjustment clause and           2004
  divisions                          guarantee clause related to
                                     liabilities up to E 500 million per
                                     division
Sale of VUP's European publishing    Guarantees capped at E 240 million    --
  Activities
Sale of Houghton Mifflin             Losses in excess of $20 million not   --
                                     to exceed $166 million
Sale of 50% stake in Vizzavi         Certain standard guarantees up to     --
                                     its 50% share
Sale of Sithe                        Guarantees capped at $480 million     2004/2005
Guarantees on sale of land and       Guarantees capped at E 150 million    2017
  buildings businesses
103
TRANSACTIONS AND GUARANTEES                        AMOUNT                   EXPIRY
---------------------------          -----------------------------------   ---------
Sale of hotels to the consortium     Commercialization guarantee kept at   2004
  ABC                                80% of the value of each hotel
Shareholders' governance agreement   --                                    --
  with members of the Bronfman
  Family
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

     In 2001, commitments received were E 1,618 million, principally comprised
of Veolia Environnement. Due to the deconsolidation of Veolia Environnement
which is now accounted for using the equity method, commitments received were
E 204 million in 2002.

COLLATERAL AND PLEDGES

     The principal pledges and collateral issued by the Group on its assets were
as follows at December 31, 2002:

     - collateral issued by Vivendi Universal Entertainment in favor of banking
       institutions having provided the bridging loan of $1.6 billion, maturing
       at June 30, 2003, or under certain conditions at December 30, 2003;

     - first ranking collateral issued to borrowers in connection with the E 1
       billion loan, available through December 31, 2004. The same collateral
       was issued to CDC-IXIS for the E 300 million line of credit, maturing at
       March 31, 2004;

     - first ranking pledge for 20% of the residual equity interest held by
       Vivendi Universal in Veolia Environnement, in favor of the holders of
       share options allocated on December 20, 2002, and exercisable up to
       December 23, 2004;

     - second ranking collateral after that issued in connection with the E 1
       billion Dual Currency Revolving Credit Facility and the E 300 million CDX
       IXIS Revolving Facility, and that issued to holders of call options on
       Veolia Environnement shares, allocated in connection with the syndicated
       lines of credit of E 3 billion and E 850 million set up, respectively, in
       March 2002 and March 1999 to Societe Generale in connection with two
       loans of E 490 million in the aggregate, and Bayerische Landesbank and
       LineInvest Limited, in connection with financing of the purchase of AOL
       Europe preferred shares or to an amount equal to one-third of the total
       amount of the transaction (i.e. about E 270 million);

     - pledge on assets of Hungarian telephone companies in favor of the
       syndicate of banks participating in the financing (approximately E 300
       million);

     - collateral on the assets of Universal Music in the United Kingdom, issued
       to lenders in connection with financing up to an amount of L136 million
       set up on December 31, 2002 for a period of five years;

     - payment of deposits to an amount of E 27 million in favor of Fleet
       National Bank and Wachovia in connection with its financing of Universal
       City Development Partners (UCDP);

     - pledge on Xfera shares in favor of equipment suppliers in connection with
       their financing contract; and

     - other collateral issued, to an amount of approximately E 70 million.

     In addition, Vivendi Universal plans to pledge its stake in Maroc Telecom
to guarantee payment of the put option issued by the Kingdom in respect of a 16%
of the share capital of Maroc Telecom, if exercised.

     Certain indebtedness of Vivendi Universal outstanding at December 31, 2002
has been repaid or otherwise cancelled. See "Item 5--Operating and Financial
Review and Prospects--Subsequent Events." Vivendi Universal has new indebtedness
incurred since December 31, 2002. For a description of Vivendi Universal's
material indebtedness, see "Item 4--Information on the Company--Summary of
Indebtedness."

                                       104
LITIGATION

     We are subject to various litigation. See "Item 8--Financial
Information--Litigation."

RESEARCH AND DEVELOPMENT

     Research and development plays an important role in several of our
businesses. See "Item 4--Information on the Company--Our Segments--Cegetel
Group," "Item 4--Information on the Company--Our Segments--Music" and "Item
4--Information on the Company--Our Segments--Canal+ Group."

SUBSEQUENT EVENTS

     On December 3, 2002, Vivendi Universal's board of directors unanimously
decided to exercise its pre-emptive rights on BT Group's 26% interest in Cegetel
Group, in order to obtain a 70% interest in the French telecommunications
operator. In January 2003, Vivendi Universal purchased BT Group's 26% interest
in Cegetel Group for E 4 billion.

     The acquisition of this participation from BT Group was carried out through
the Societe d'Investissement pour la Telephonie S.A. (SIT), as follows: (i) SIT,
owned, controlled and consolidated by Vivendi Universal, became the legal owner
of the 26% shareholding at an acquisition cost of E 4 billion and (ii) SIT was
financed by E 2.7 billion equity, contributed in cash by Vivendi Universal and
by the E 1.3 billion Acquisition Facility described below. Debt service of this
loan, which was drawn on January 23, 2003, will be provided through dividends
paid in respect of its 26% shareholding in Cegetel Group.

     As a result, Cegetel Group will continue to be consolidated by Vivendi
Universal, with a 70% interest (the 26% shareholding acquired from BT Group in
addition to its historical 44% interest). The goodwill recognized as a result of
this transaction is expected to amount to approximately E 3 billion and will be
amortized on a straight-line basis over 40 years.

     On December 6, 2002, Vivendi Universal entered into a E 1.3 billion
facility (the Acquisition Facility) among SIT, as the borrower, Vivendi
Universal, a syndicate of lenders, Credit Lyonnais, as agent, and The Royal Bank
of Scotland, as security trustee. The Acquisition Facility was entered into by
SIT to finance the purchase of the share capital of Cegetel Group described
above. The outstanding amount of the loan under the Acquisition Facility is
E 1.3 billion. The maturity date of the loan is June 30, 2004. SIT may request
an extension of the maturity date to June 30, 2010 by providing notice prior to
June 1, 2004. If SIT requests such an extension, the loan will be repaid in
periodic installments over the term of the loan until the final installment on
June 30, 2010. Borrowings under the Acquisition Facility bear interest at
EURIBOR plus a margin of 4.00%, subject to certain adjustments. See "Item
4--Information on the Company--Summary of Indebtedness."

     On February 4, 2003, the sale of Consumer Press Division (Groupe
Express-Expansion/Groupe l'Etudiant) to the Socpresse Group was finalized,
following the authorization by The Economy and Finance Ministry in January 2003.
The amount collected was E 200 million.

     On February 5, 2003, Vivendi Universal closed the sale of its 89% stake in
Canal+ Technologies to Thomson for E 190 million in cash, of which E 90 million
was collected in 2002, E 79 million was collected in 2003 and the remainder is
expected to be paid pending any post-closing purchase price adjustments.

     On February 6, 2003, Mr. Bertrand Meheut was appointed as Member and
Chairman of Group Canal+ S.A. Management Board, in replacement of Mr. Xavier
Couture, who resigned at the Supervisory board's session of February 7, 2003.

     In February 2003, Vivendi Universal sold 32 million warrants relating to
USAi to a financial institution. These warrants were initially acquired in
connection with the acquisition of the entertainment assets of USAi. Pursuant to
this transaction, Vivendi Universal received $276 million, net of fees.

                                       105
Pursuant to the put by investors in March 2003, Vivendi Universal
reimbursed Veolia Environnement exchangeable notes issued in February 2001 for a
total consideration of E 1.8 billion.

     In March 2003, Canal+ Group announced an employee reduction as part of its
overall restructuring plan. The program calls for a reduction of 305 positions,
mainly administration and technical support personnel. In addition, 138
positions in certain support functions will be outsourced.

     On March 11, 2003, Vivendi Universal Canada Inc. (VU Canada), a company in
the Vivendi Universal group, announced that it had satisfied its contractual
guarantee made on August 1, 2000, to the former shareholders of the California
company, Rondor Music International, Inc. The former Rondor shareholders
received 8.844 million shares, representing 0.8% of capital stock and the
remainder in cash of US $100.3 million (E 92.6 million).

     Rondor's shareholders were paid in Seagram shares when Rondor was acquired
by The Seagram Company Ltd., which became VU Canada after the
Seagram-Vivendi-Canal+ merger. The payment was accompanied with a contractual
guarantee on the value of the shares given to the former shareholders of Rondor.
At the time of the Seagram-Vivendi-Canal+ merger, these Seagram shares were
converted into Vivendi Universal ADSs, and the contractual guarantee became
applicable to the Vivendi Universal ADSs held by the former Rondor shareholders.

     The contractual guarantee provided, among other things, that if the price
of Vivendi Universal ADSs dropped below a certain threshold ($37.50 per ADS), VU
Canada would pay the former Rondor shareholders a makeup payment for ADSs sold
by them during a specified period of time equal to the difference between US
$82.7875 per ADS and their sale proceeds. In April and May 2002, all Vivendi
Universal ADSs then owned by these shareholders were sold and VU Canada became
obligated to pay the makeup payment to them in March 2003. Under the terms of
the original agreements, the difference was to be paid in full or in part in
Vivendi Universal shares.

     On March 19, 2003, VUE received a commitment from Banc of America
Securities LLC and J.P. Morgan Securities Inc. to syndicate a new $500 million
senior secured credit facility and underwrite $300 million thereof. On March 19,
2003, VUE also received a commitment for an extension from September 30, 2003 to
December 31, 2003 of up to $420 million under its term facility dated as of May
3, 2002 (the VUE Bridge Facility).

     On March 19, 2003, Mr. Barry Diller announced his resignation from his
temporary position as chief executive officer of VUE. Mr. Diller had been
serving in such capacity since the formation of VUE in May 2002 and was not
party to an employment agreement. Mr. Jean-Rene Fourtou has assumed the role of
chief executive officer of VUE and is working with the existing management team.
Mr. Diller's resignation has no effect on the rights and obligations of Vivendi
Universal, VUE, USAi or Mr. Diller under the VUE partnership agreement. The
termination date for USAi's and Mr. Diller's noncompetition agreements with VUE
is now November 7, 2003, Mr. Diller's put on his common stock remains
exercisable beginning on May 7, 2003, and Universal's call option on Mr.
Diller's common interest in VUE is exercisable beginning on May 7, 2004.

     On March 28, 2003, Liberty Media Corporation and certain of its affiliates
filed suit against Vivendi Universal, Jean-Marie Messier (the former CEO of
Vivendi Universal), Guillaume Hannezo (the former CFO of Vivendi Universal) and
Universal Studios, Inc. The complaint arises from the transaction that was
agreed in December 2001 and resulted in the formation of VUE in May 2002. As
part of that transaction, Vivendi Universal transferred 37.4 million shares of
Vivendi Universal to Liberty Media in exchange for equity in USANI LLC and USAi
and Liberty Media's 27.4% interest in the European cable television company,
MultiThematiques.

     In the opinion of Vivendi Universal, the plaintiffs' claims are without
merit, and Vivendi Universal intends to defend against these claims vigorously.
It is not possible at this early stage of this suit to predict the outcome and
duration with any certainty or to quantify any potential damages or the
likelihood of any other remedies. The impact of this litigation on Vivendi
Universal could be material if Vivendi Universal were not to prevail in a final,
non-appealable determination of this litigation. Vivendi does not expect this
litigation to have
                                       106
any material effect on its asset divestiture program. For more information, see
"Item 8--Financial Information--Litigation."

     On March 31, 2003, a subsidiary of VUE, Universal Film Funding LLC, or Film
Funding, borrowed $750 million under a securitization facility, based on future
video (including DVD and VHS) and television revenues in the United States from
part of Universal's film library and future theatrical pictures to be released
by Universal. As part of the securitization facility, certain subsidiaries of
VUE transferred assets relating to Universal's film library which generate these
revenues and certain other related assets to Film Funding and agreed to sell
additional similar assets relating to its future theatrical pictures. The
proceeds of the Securitization Facility were used by VUE to retire $700 million
of the $1.62 billion owed under the VUE Bridge Facility, and to establish a
funded reserve account required under the terms of the securitization facility,
to be used to fund certain expenses related to exploitation of the film assets
(e.g., costs of duplication and distribution expenses). The securitization
facility is scheduled to amortize over three years, commencing three years after
the initial borrowing. See "Item 4--Information on the Company--Summary of
Indebtedness."

     On April 2, 2003, the European Commission issued its approval of the sale
by Canal+ Group of Telepiu, the Italian pay-TV business, to News Corporation.
The transaction was completed on April 30, 2003 and amounted to E 871 million,
comprised of E 414 million of debt assumption and E 457 million of cash. The
cash payment includes a E 13 million adjustment corresponding to the
reimbursement of the accounts payable net of debt adjustment.

     On April 3, 2003, Vivendi Universal closed an offering of E 1.2 billion
senior notes due 2010 (Senior Notes), consisting of $935 million 9.25%
dollar-denominated notes and E 325 million 9.5% euro-denominated notes, sold at
a discount to yield 9.75%. The gross proceeds from the offering were placed in
escrow pending the entry by Vivendi Universal into a new credit facility, which
was consummated on May 13, 2003. See "Item 4--Information on the
Company--Summary of Indebtedness."

     On May 13, 2003, Vivendi Universal amended its E 3 billion multicurrency
revolving credit facility (Multicurrency Revolving Credit Facility) dated March
15, 2002, as previously amended on February 6, 2003, with a syndicate of banks,
as lenders, and Barclays Capital, Bayerische Landesbank Girozentrale, BNP
Paribas, Credit Agricole Indosuez, Credit Lyonnais, Deutsche Bank AG, SG
Investment Banking and Sumitomo Mitsui Banking Corporation, as mandated lead
arrangers, and Societe Generale, as facility agent. Borrowings under the
Multicurrency Revolving Credit Facility that are denominated in Euros bear
interest at EURIBOR plus a margin of 1.50%, which margin reduces to 1.00% upon
the occurrence of certain events. Borrowings under the Multicurrency Revolving
Credit Facility that are denominated in a currency other than Euros bear
interest at LIBOR plus a margin of 1.50%, which margin reduces to 1.00% upon the
occurrence of certain events. The Multicurrency Revolving Credit Facility
matures on March 15, 2007. E 2.3 billion of the Multicurrency Revolving Credit
Facility is currently drawn. See "Item 4--Information on the Company--Summary of
Indebtedness."

     On May 13, 2003, Vivendi Universal concluded an agreement on the
divestiture of its fixed-line telephony activities in Hungary to a consortium
led by AIG Emerging Europe Infrastructure Fund and GMT Communications Partners
Ltd. The amount of the transaction is E 325 million and, upon closing, will
lower Vivendi Universal's debt by E 315 million.

     On May 13, 2003, Vivendi Universal entered into a E 2.5 billion dual
currency term and revolving credit facility (the Dual Currency Credit Facility)
dated as of May 13, 2003, among Vivendi Universal, as a borrower and as a
guarantor, certain of its subsidiaries, as guarantors (Vivendi Universal and the
guarantors are collectively referred to as the Obligors), the lenders party
thereto and Societe Generale, as facility and security agent. The facility is
comprised of (a) a three-year E 1.5 billion revolving credit facility (Tranche
A) at EURIBOR or LIBOR plus an applicable margin that, depending on Vivendi
Universal's credit ratings, ranges from 1.00% to 2.75% and (b) a E 1.0 billion
term loan (Tranche B) with a 2.75% per annum margin over EURIBOR or LIBOR
maturing on the third anniversary of the date of the Dual Currency Credit
Facility. See "Item 4--Information on the Company--Summary of Indebtedness."

                                       107
Following the closing of the Dual Currency Credit Facility and the Senior
Notes offering, Vivendi Universal repaid and cancelled the following
indebtedness: (i) E 200 million outstanding under the CDC IXIS Revolving Credit
Facility dated as of January 15, 2003, as amended on February 6, 2003, (ii)
E 850 million outstanding under the E 850 million Revolving Credit Facility,
dated March 2, 1999, as amended as of February 6, 2003, (iii) E 215 million
outstanding under the E 215 million Revolving Credit Facility, dated June 6,
2002, as amended on February 6, 2003, and (iv) E 275 million outstanding under
the E 275 million Revolving Credit Facility dated June 28, 2002, as amended on
February 6, 2003. In addition, Vivendi Universal canceled the undrawn E 1.0
billion dual Currency Revolving Credit Facility, dated as of November 26, 2002,
as amended on February 6, 2003.

     On May 19, 2003, Roxio, Inc. acquired substantially all of the interests of
pressplay, the joint venture of Universal Music Group (UMG) and Sony Music
Entertainment. Each of UMG and Sony Music Entertainment received 1,957,262
shares of Roxio common stock and $6,250,000 in cash from the transaction. In
addition, UMG has retained a 0.2% interest in pressplay, which has been renamed
"Napster, LLC."

     Edgar Bronfman, Jr. has informed Vivendi Universal of his intention to lead
a consortium to purchase American assets of Vivendi Universal. As a result, on
May 20, 2003, Vivendi Universal, Edgar Bronfman, Jr. and Edgar M. Bronfman
mutually agreed to suspend (i) the participation of Edgar M. Bronfman and Edgar
Bronfman, Jr. in the Board of Directors and any committee thereof, (ii) certain
provisions of agreements between the Bronfman family and Vivendi Universal and
(iii) the employment agreement between Edgar Bronfman, Jr. and a subsidiary of
Vivendi Universal.

     On May 28, 2003, Vivendi Universal sold Comareg for cash proceeds of E 135
million to the France Antilles group.

     On May 30, 2003, Vivendi Universal sold Spencer Gifts, a US novelty
knick-knack chain, to an investor group led by privately held Gordon Brothers
Group and Palladin Capital Group Inc. for consideration consisting of preferred
and common stock of Spencer Gifts LLC, the surviving entity following the
transaction.

     On June 6, 2003, Barry Diller gave notice that his designee, USAi, would
exercise his right of first refusal to purchase all of the remaining 28.8
million warrants to acquire shares of USAi that Vivendi Universal owns. This
transaction is expected to close on June 30, 2003. The warrants were acquired in
connection with the acquisition of the entertainment assets of USAi.

     As a result of its reduced interests in USAi, Vivendi Universal and its
affiliates will no longer be subject to the right of first refusal or other
transfer restrictions in its stockholders agreement with Liberty Media
Corporation and Mr. Diller. Under agreements with USAi, however, Universal
Studios, Inc. and its affiliates must continue to hold the 56.6 million USAi
shares generally free of liens and in special purpose entities until
satisfaction of the put or call on the Class B preferred interests in VUE (held
by USAi), which can occur no earlier than May 2022. Mr. Diller will continue to
hold a proxy on all such USAi shares. In addition, Mr. Diller's standstill
obligations under the Stockholders Agreement, including his obligation not to
acquire Vivendi Universal or any of its subsidiaries, will continue to apply in
accordance with the stockholders agreement.

     On June 11, 2003, Vivendi Universal transferred its rights and obligations
to take legal ownership of a minority stake in certain power generating
operations in Asia from Sithe to the Japanese group Marubeni for $47 million.
See "Item 4--Information on the Company--History and Development of the
Company--2002 Significant Transactions--Disposition of Sithe."

     On June 24, 2003, VUE closed and syndicated the $920 million VUE Loan
Agreement. See "Item 4--Information on the Company--Summary of Indebtedness."

     On June 18, 2003, Vivendi Universal sold 10 Universal City Plaza to a group
of U.S. investors. The asset is a 35-story Los Angeles tower block and Universal
Studios will continue to rent the building. The amount of the transaction is
$190 million and has already been received.

                                       108
On June 23, 2003, an agreement was signed by Venditelecom and VTI for the
sale of their entire stake in Xfera for E 1 to FCC, ACS, Inversiones Aramayona,
Acesa Telecom and Telvent. Under the terms of the transaction, the purchasers
will put in place new license guarantees within 30 days, at which time the
existing guarantees provided by Vivendi Universal in favor of the Spanish
government will be released except for those deriving from the spectrum fee tax
claims for the years 2001, 2002 and 2003. The purchasers have also indemnified
Vivendi Universal for damages arising out of certain disputes. Upon consummation
of the transaction and release of the guarantees, Vivendi Universal will have no
further interest in Xfera.

     Vivendi Universal has begun exploring strategic options that could lead to
the partial or total divestiture of VUE and VU Games. Vivendi Universal has
received multiple, preliminary bids relating to one or more of these businesses
and is currently evaluating them. As of yet there is no pre-established
structure or calendar for any particular divestiture. In parallel, Vivendi
Universal is also exploring the option of listing up to 25 to 30% of the share
capital of Vivendi Universal Entertainment in an initial public equity offering.

ITEM 6:  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

THE BOARD OF DIRECTORS

 General

     Vivendi Universal's board of directors is currently composed of twelve
directors including our Chairman and Chief Executive Officer. The board of
directors can be composed of three to eighteen members. Our directors are
elected by our shareholders for renewable terms of a maximum of four years,
subject to the provisions of Vivendi Universal's statutes relating to age
limits. The board of directors of Vivendi Universal is composed as follows:
EXPIRATION OF
NAME                                      AGE            POSITION            CURRENT TERM
----                                      ---            --------            -------------
Jean-Rene Fourtou(4)....................  64         Chairman and CEO            2004
Edgar Bronfman, Jr.(1)(3)(4)............  48    Director and Vice Chairman       2004
Claude Bebear(4)........................  67             Director                2004
Gerard Bremond..........................  65             Director                2004
Edgar M. Bronfman(2)(3)(4)..............  74             Director                2004
Bertrand Collomb........................  60             Director                2004
Fernando Falco y Fernandez de Cordova...  64             Director                2006
Paul Fribourg...........................  49             Director                2004
Gabriel Hawawini........................  55             Director                2006
Gerard Kleisterlee......................  56             Director                2004
Marie-Josee Kravis......................  53             Director                2005
Henri Lachmann..........................  64             Director                2004
---------------
(1) Son of Edgar M. Bronfman.

(2) Father of Edgar Bronfman, Jr.

(3) Edgar Bronfman, Jr. informed Vivendi Universal of his intention to lead a
    consortium to purchase American assets of Vivendi Universal. As a result, on
    May 20, 2003, Vivendi Universal, Edgar Bronfman, Jr. and Edgar M. Bronfman
    mutually agreed to suspend (i) the participation of Edgar M. Bronfman and
    Edgar Bronfman, Jr. in the Board of Directors and any committee thereof,
    (ii) certain provisions of agreements between the Bronfman family and
    Vivendi Universal and (iii) the employment agreement between Edgar Bronfman,
    Jr. and a subsidiary of Vivendi Universal.

(4) Under French law, this director is not considered independent.

     Other than those described in the footnotes above, there are no familial
relationships among our directors and executive officers.

                                       109
Biographies

     JEAN-RENE FOURTOU was appointed to the board of directors of Vivendi
Universal in July 2002 and has served as Chairman and Chief Executive Officer of
Vivendi Universal since July 2002. He has also served as Chief Executive Officer
of USI Entertainment Inc. since that date. He is Chairman of the supervisory
board of the Canal+ Group and member of the supervisory boards of AXA and
Aventis. Mr. Fourtou is currently a director of AXA Financial Inc, Cap Gemini
and EADS, among others. He also serves as President of the International Chamber
of Commerce. From December 1999 to May 2002, Mr. Fourtou carried out the
functions of Vice-Chairman and Chief Executive Officer of Aventis. Since that
date, he has been Honorary Chairman of Aventis and Vice-Chairman of the
supervisory board.

     EDGAR BRONFMAN, JR.  was appointed to the board of directors of Vivendi
Universal in 2000, serving as Vice-Chairman of the board until he and Vivendi
Universal mutually agreed that his participation in the Board of Directors and
any committee thereof would be suspended following May 20, 2003, when he
informed Vivendi Universal of his intention to lead a consortium to purchase
American assets of Vivendi Universal. He is Chief Executive of Lexa Partners LLC
and a partner of Accretive Technologies LLC. He is also a director of
InterActiveCorp, A&G Group Limited, Equitant Inc., Fandago and NewRoads, and a
member of the Board of The New York University Medical Center and the Board of
Governors of The Joseph H. Lauder Institute of Management & International
Studies at the University of Pennsylvania. Prior to December 2000, he had been
President and Chief Executive Officer of The Seagram Company Ltd., a post he had
held since June 1994, and from 1989 to June 1994 he was President and Chief
Operating Officer of Seagram.

     CLAUDE BEBEAR was appointed to the board of directors of Vivendi Universal
in July 2002. He currently serves as Chairman of the supervisory board of the
AXA Group and Chairman and Chief Executive Officer of FINAXA. From 1982 to 2000,
Mr. Bebear served as Chairman and Chief Executive Officer of Mutuelles Unies,
which became Axa in 1984. Mr. Bebear set up and presides over the Institut du
Mecenat de Solidarite, an organization with a humanitarian and social vocation,
as well as the Institut Montaigne, an independent political think-tank. He is
also a Director of BNP Paribas, Schneider Electric and various AXA Group
subsidiaries.

     GERARD BREMOND was appointed to the board of directors of Vivendi Universal
in January 2003. He currently serves as Chairman of the SA Pierre et Vacances
Tourisme, SA Pierre et Vacances Tourisme France, SA Pierre et Vacances Conseil
Immobilier and of Maeva Group. He is also a director of Med Pierre et Vacances
SI (Spain) and Groupe Maeva, among others.

     EDGAR M. BRONFMAN was appointed to the board of directors of Vivendi
Universal in December 2000. He and Vivendi Universal mutually agreed that his
participation in the Board of Directors and any committee thereof would be
suspended following May 20, 2003, when Edgar Bronfman, Jr. informed Vivendi
Universal of his intention to lead a consortium to purchase American assets of
Vivendi Universal. Mr. Bronfman is currently Chairman of the World Jewish
Congress, the World Jewish Restitution Organization and World Jewish Campus Life
(Hillel). The Universities of Rochester and New York, the Hebrew University of
Jerusalem, the A. B. Freeman School of Business at Tulane University, Williams
College and Pace University have all awarded him various honorary degrees in the
arts, business and philosophy. He received the Presidential Medal of Freedom,
the highest American civil award, from President Clinton, and he is also a
Chevalier de la Legion d'Honneur. Mr. Bronfman serves as Chairman of the
Presidential Advisory Commission on Holocaust Assets in the United States, the
Samuel Bronfman Foundation, Inc. and the Anti-Defamation League. He is also a
director of the American Society for Technion and the Weizmann Institute of
Science. He is also a member of the Council on Foreign Relations, the Foreign
Policy Association and the Museum of Jewish Heritage. He is the former Chairman
of the Board of The Seagram Company Ltd.

     BERTRAND COLLOMB was appointed to the board of directors of Vivendi
Universal in January 2003. He has served as Chairman and Chief Executive Officer
of the Lafarge Group. He is also Chairman of the Association Francaise des
Entreprises Privees (AFEP) and, on December 10, 2001, was elected to the
Academie des Sciences Morales et Politiques. Mr. Collomb is also a director of
TotalFinalElf, Atco and Unilever plc. He is also a member of the supervisory
board of Allianz.

                                       110
FERNANDO FALCO Y FERNANDEZ DE CORDOVA was appointed to the board of
directors of Vivendi Universal in September 2002. He served as Chairman of the
Organization and the Syndicate of Riesgos del Tietat, Chairman of the Group Vins
Rene Barbier -- Conde de Caralt et Segura Viudas and Vice-Chairman of the Banco
de Extremadura, as well as a member of the boards of directors of various
companies. He served as Chairman of the Real Automovil Club de Espana until
November 14, 2002. He was also a member of the Higher Council for Traffic and
Road Safety (Ministry of the Interior) and participates in the Group for Urban
Mobility (Madrid). Until 2002, he served as Vice-Chairman of the World Council
for Tourism and Motoring of the FIA, whose head office is in Paris. In June
1998, he was appointed Chairman of the AIT based in Geneva, a function he
carried out until 2001. He is a member of the Regional Council of the ASEPEYO of
Madrid. He currently serves as director of Fomento de Construcciones y Contratas
(FCC) and Vinexco Espagne. He is also Chairman of the Committee of the
Organizador del Salon International des Automovil de Madrid.

     PAUL FRIBOURG was appointed to the board of directors of Vivendi Universal
in January 2003. He currently serves as Chairman and Chief Executive Officer of
the ContiGroup Companies (formerly Continental Grain Company). He is also
Chairman of the Lauder Institute at Wharton Business School. He is a member of
the Council on Foreign Relations, and a director of the Appeal of Conscience
Foundation. He is also a director of Park East Synagogue, The Browning School,
New York University, Nightingale-Bamford School, America-China Society, Loews
Corporation, Appeal of Conscience Foundation, The Lauder Institute/Wharton
Business School and Wyndham International.

     GABRIEL HAWAWINI was appointed to the board of directors of Vivendi
Universal in May 2003. He is The Henry Grunfeld Professor of Investment Banking
of INSEAD in Fontainebleau, France, where he also currently serves as Dean. His
previous appointments include the deanship of the school's development campaign
(1998 - 2000), the deanship of the Doctoral Program (1998 - 1999), the
directorship of the Euro-Asia Centre (1988 - 1994), the Yamaichi Professorship
in Finance (1989 - 1994), and the coordination of the Finance Area (1985 - 1987
and 1996 - 1999). Trained in France as a chemical engineer (University of
Toulouse), he received his doctorate in economics and finance from New York
University in 1977. Before joining INSEAD, he taught at New York University, the
City University of New York and Columbia University (1974-1982).

     GERARD KLEISTERLEE was appointed to the board of directors of Vivendi
Universal in July 2002. Since April 30, 2001, he has been Chairman and Chief
Executive Officer of the Royal Philips Electronics Group and Chairman of the
Executive Committee. In 1981, he was appointed General Manager of the Group's
Professional Audio Systems division (today a division of Consumer Electronics).
In 1996, he became Chairman of Philips Taiwan and Regional Manager of Philips
Components for the Asia Pacific region. From September 1997 to June 1998, he was
also in charge of the group's activities in China. Finally, from January 1999 to
September 2000, he was Chairman and Chief Executive Officer of Philips
Components. Mr. Kleisterlee is also Chairman of the supervisory board of The
Technical University in Eindhoven.

     MARIE-JOSEE KRAVIS was appointed to the board of directors of Vivendi
Universal in April 2001. Ms. Kravis has also served as director of USAi since
March 2001. Ms. Kravis is an economist specializing in the analysis of
government policies and strategic plans; and is a lead writer on economic
analyses for the "National Post," a Canadian newspaper. In 1994, she was made a
Senior Fellow of the Hudson Institute. Ms. Kravis is a director of Hollinger
International Inc. and The Ford Motor Company, as well as a member of the board
of trustees of The Hudson Institute, The Museum of Modern Art and The Institute
for Advanced Study. She is also Senior Fellow of the Council on Foreign
Relations and a member of the US Secretary of Energy's Advisory Board.

     HENRI LACHMANN was appointed to the board of directors of Vivendi Universal
in 2000. He currently serves as Chairman and Chief Executive Officer of
Schneider Electric Group SAS. He is also a member of supervisory boards or a
director of various AXA Group subsidiaries. Mr. Lachmann is a director of FINAXA
and ANSA, a member of the supervisory board of Norbert Dentressangle Group, and
a member of the Guidance Committee of L'Institut de l'Entreprise.

                                       111
SENIOR EXECUTIVES

 General

     The table below shows the names of our senior executives and members of the
executive committee, their current positions and principal responsibilities:
NAME                                 AGE         POSITIONS AND RESPONSIBILITIES
----                                 ---         ------------------------------
Jean-Rene Fourtou..................  64    Chairman and Chief Executive Officer
Jean-Bernard Levy..................  48    Chief Operating Officer
Jacques Espinasse..................  60    Senior Executive Vice President and Chief
                                           Financial Officer
Robert de Metz.....................  51    Senior Executive Vice President,
                                           Divestitures, Mergers and Acquisitions
Andrew J. Kaslow...................  53    Senior Executive Vice President, Human
                                           Resources
Jean-Francois Dubos................  58    Executive Vice President and General
                                           Counsel
Michel Bourgeois...................  53    Executive Vice President, Corporate
                                           Communications
Rene Penisson......................  61    Advisor, Social Relations and Organization
Hubert Joly........................  43    Executive Vice President, Monitoring of US
                                           Assets, and Deputy Chief Financial Officer
Regis Turrini......................  44    Executive Vice President Divestitures,
                                           Mergers and Acquisitions
Biographies

     Biographies of all Senior Executives are set forth below. The biography for
Jean-Rene Fourtou is provided under "--The Board of Directors--Biographies."

     JEAN-BERNARD LEVY was appointed Chief Operating Officer of Vivendi
Universal in August 2002. From 1998 to 2002, he was Managing Partner, Corporate
Finance, of the French equities broker Oddo Pinatton. Mr. Levy was also Chairman
and Chief Executive Officer of Matra Communication from 1995 to 1998. From 1993
to 1994, he was Chief of Staff to the French Minister for Industry, Post Office,
Telecommunications and Foreign Trade, Mr. Gerard Longuet. From 1988 to 1993, he
was General Manager, Communication Satellites, of Matra Marconi Space. From 1986
to 1988, he acted as Technical Adviser to the French Minister for Post Office
and Telecommunications, Mr. Gerard Longuet, and from 1982 to 1986, served as
Vice President, Human Resources Corporate Headquarters Department of France
Telecom.

     JACQUES ESPINASSE was appointed Senior Executive Vice President and Chief
Financial Officer of Vivendi Universal in July 2002. He is also a member of the
Executive Committee of Vivendi Universal. Mr. Espinasse formerly was Chief
Operating Officer of TPS, a French satellite television channel, since 1999. He
became a member of the board of directors of TPS in 2001. Previously, he held a
variety of senior management positions in major French companies, including CEP
Communication and Groupe Larousse Nathan, where he was appointed Senior
Executive Vice President in 1984. In 1985, he became Chief Financial Officer of
the Havas group. He was named Senior Executive Vice President of the group when
it was privatized in May 1987 and held such position until January 1994.

     ROBERT DE METZ was appointed Senior Executive Vice President, Divestitures,
Mergers and Acquisitions of Vivendi Universal in September 2002. He previously
worked as a fund manager. He was a member of the executive board of directors of
Paribas from 1997 to 2000, where his main responsibilities included the
execution of many mergers and acquisitions.

     ANDREW J. KASLOW was appointed Senior Executive Vice President of Human
Resources for Vivendi Universal in January 2002. Mr. Kaslow was most recently
Senior Vice President, People Development, of AOL Time Warner. Previously,
Andrew Kaslow was Senior Vice President, Human Resources, of Time

                                       112
Warner, appointed to that position in January 1999. Prior to joining Time
Warner, he was Senior Vice President of Human Resources at Becton Dickinson and
Company, a global medical devices and diagnostics company. From 1993 to 1996,
Mr. Kaslow was Vice President of Human Resources at Pepsico Inc. Mr. Kaslow
serves on the board of directors of New Jersey Public Broadcasting (NJN), Newark
Public Radio (WBGO-FM), Ramapo College and the Labor Policy Association (LPA).

     JEAN-FRANCOIS DUBOS is Executive Vice President and General Counsel of
Vivendi Universal. In this capacity, Mr. Dubos is responsible for managing the
group's legal and administrative services departments. He is also a member of
the French Administrative Supreme Court (Maitre des Requetes au Conseil d'Etat),
currently on temporary leave. Mr. Dubos joined Compagnie Generale des Eaux, the
predecessor of Vivendi Universal, as deputy to the Chief Executive Officer in
1991, and since 1994, has held the position of General Counsel. From 1993 to
1999, he was the Chief Executive Officer of the group's subsidiary Carrousel du
Louvre. From 1984 to 1991, while a full-time member of the French Administrative
Supreme Court (Conseil d'Etat), he worked on a wide range of matters, including
education, interior affairs, urban planning, historical preservation and
codification of laws. From 1981 to 1984, he was co-head of the cabinet of the
French Ministry of Defense. Mr. Dubos currently serves on the board of directors
of two of our subsidiaries, Fomento de Construcciones y Contratas and Portland
Valderrivas, and several water distribution companies (e.g., Societe des Eaux de
Melun and Mediterranea de Aguas), as well as on the supervisory board of Groupe
Canal+ S.A.

     MICHEL BOURGEOIS was appointed Executive Vice President Corporate
Communications of Vivendi Universal in September 2002. In this position, he is
responsible for corporate communications, internal communications, media, public
relations and public affairs. From 2000 to 2002, Michel Bourgeois was Executive
Vice President Corporate Communications, France, of the pharmaceuticals company
Aventis. Mr. Bourgeois previously held successive positions at Rhone Poulenc
from 1987 to 2000, in Media Relations, Corporate Communications and was Adviser
to the Chairman, Jean-Rene Fourtou, from 1995 to 2000.

     RENE PENISSON was appointed Adviser to the Chairman and Chief Executive
Officer, Social Relations and Organization of Vivendi Universal in September
2002. From 1999 to 2002 he was a member of the Executive Committee of Aventis;
Senior Executive Vice President, Human Resources of Aventis and Chairman of
Aventis Animal Nutrition and of RP Industrialization. From 1997 to 1999, he
served as member of the Executive Committee of Rhone Poulenc S.A. From 1982 to
1997, Mr. Penisson was Executive Vice President, Basic Chemicals Division of
Rhone Poulenc; Chief Operating Officer of Rhone Poulenc Chimie and Senior
Executive Vice President, Human Resources of the Rhone Poulenc Group.

     HUBERT JOLY was appointed Executive Vice President, Monitoring of US Assets
in August 2002 and Deputy Chief Financial Officer in April 2003. Prior to this,
Mr. Joly was Executive Vice President and Group Chief Information Officer of
Vivendi Universal from November 2001 to November 2002. From December 2000 to
October 2001, Mr. Joly was responsible for the integration of Vivendi
Universal's North American activities. Between July 1999 and June 2001, Mr. Joly
was Chief Executive Officer of Havas Interactive, known today as Vivendi
Universal Games, Vivendi Universal's interactive entertainment and educational
software publishing division. Prior to joining Havas Interactive, Hubert Joly
served as Vice President of Electronic Data Systems (EDS) Europe and Chairman
and Chief Executive Officer of EDS France. Previously, he spent 12 years at
McKinsey & Company, Inc. in San Francisco, New York and Paris, specializing in
high technology.

     REGIS TURRINI was appointed Executive Vice President of Vivendi Universal,
in charge of divestitures, mergers and acquisitions in January 2003. He reports
to Robert de Metz, Senior Executive Vice President of Vivendi Universal. Mr.
Turrini is an attorney admitted to the Paris bar, and a graduate of the Paris
Institute of Political Sciences and ENA. He began his career as a judge to the
court dealing with disputes in the French civil service. He then joined law
firms Cleary Gottlieb Steen & Hamilton (1989 - 1992), followed by Jeantet &
Associes (1992 - 1995), as a corporate lawyer. In 1995, Mr. Turrini joined the
investment bank ARJIL & Associes (Lagardere group) as executive director. He was
then appointed managing director and, from 2000, managing partner.

                                       113
BOARD PRACTICES

     Under our statuts, as modified in accordance with the provisions of the
French New Economic Regulations Act and approved at the Shareholders' Meeting
held on April 24, 2002, Vivendi Universal is managed by a board of directors
composed of no less than three members and no more than eighteen members. The
Board currently consists of 12 members. Under our statuts, shareholders elect
board members for four year renewable terms.

BOARD'S JURISDICTION

     The Board reviews, among other things:

     - Strategic agreements and directions;

     - New business acquisitions, asset divestitures and internally developed
       activities which could significantly affect its earnings or materially
       modify its balance sheet structure;

     - The annual, half-yearly and quarterly financial statements and the Audit
       Committee's report;

     - Material agreements entered into and, at the Audit Committee's
       suggestion, the accounting methods used;

     - Terms for implementing the compliance program and the environmental and
       social report; and

     - The annual report of important litigation.

     Based on the recommendation of the Human Resources Committee, the Board
determines the compensation of senior executives.

     The Chairman represents the Board. He organizes and directs its operations
and ensures its smooth functioning.

     The general management of Vivendi Universal is the responsibility of the
Chief Executive Officer, who is currently also the Chairman of the Board. The
Chief Executive Officer is vested with the broadest powers to act in all
circumstances on behalf of Vivendi Universal. He exercises these powers subject
to the limitations imposed by law.

CORPORATE GOVERNANCE

     Vivendi Universal is seeking to apply the highest international standards
of corporate governance and, through the Disclosure Committee, is organizing the
implementation of the new rules and procedures imposed by the Sarbanes-Oxley
Act. Vivendi Universal's board of directors has therefore taken the following
new actions:

     - Increased the number of committees, drawn from the board of directors, to
       four: the Audit Committee, the Human Resources Committee, the Strategy
       and Finance Committee and the Corporate Governance Committee. Their
       respective compositions and missions have been enlarged (see below);

     - Created special Disclosure Committee to ensure accuracy of publicly
       disclosed information;

     - Adopted an Internal Charter governing the operation of the board of
       directors;

     - Empowered the board of directors to appoint two independent advisors for
       their expertise;

     - Established a Vigilance Program reviewed by the Audit Committee and
       remitted to the Group's workers' committee and to the European Social
       Dialogue Committee;

     - Created Internet retransmission of general meetings;

     - Created voting at general meetings via the Internet and holding meetings
       by video-conference; and

     - Provided for representation of the workers' committee at general
       meetings.

                                       114
In addition, it had previously taken the following actions:

     - Suppression of double voting rights in order to assure equality of
       shareholder rights;

     - Suppression of the policy of issuing stock in the event of a takeover
       bid;

     - Shortening the length of time securities need to be blocked for the
       exercise of voting rights;

     - Suppression of the proportioning of voting rights at the general
       shareholders meeting upon voting participation reaching 60%;

     - Shortening directors' terms to four years; and

     - Appointment of an employee director when employee participation in the
       share capital reaches 3%.

BOARD COMMITTEES

 CREATION AND FUNCTIONING OF COMMITTEES--COMMON ATTRIBUTES

     The permanent committees of the board are as follows: (i) Strategy and
Finance Committee, (ii) Audit Committee, (iii) Human Resources Committee and
(iv) Corporate Governance Committee.

     Each committee shall fulfill a role of review, analysis and preparation
with respect to certain deliberations of the board. Each committee shall
produce, within its area of expertise, proposals, recommendations and opinions,
where appropriate. The committees have no decision-making authority; they serve
a purely consultative function, acting under the authority of the board, to
which they are accountable.

     Committee members shall be appointed by the board and cannot appoint
proxies. Unless otherwise decided by the board, the committee members' terms
shall be the same as their respective director's terms, and shall be renewable.
The board shall appoint a chairman for each committee, who shall preside over
the committee for the duration of his or her mandate as a committee member. The
committee chairman or one of its members shall report upon the committee's work
to the board at its next scheduled meeting.

     Each committee shall meet upon being convened by its chairman and shall set
its own meeting schedule. Committee meetings shall be held at Vivendi
Universal's headquarters or in any other location designated by the chairman.
Committee meetings may also be held by telephone conference or videoconference.
The chairman of each committee shall draw up the agenda of the meetings and
shall preside over the committee's deliberations. Minutes of each meeting shall
be drawn up by the Secretary of the board, who shall attend the meetings of each
of the board committees.

     Each committee shall be able to invite to its meetings, as it deems
necessary or appropriate, any member of Vivendi Universal's management. Each
committee will set forth its own charter, which has to be approved by the board,
pursuant to the provisions of the board's internal charter.

     In addition to the permanent committees, the board may decide to form ad
hoc committees, for a limited term, with regard to certain exceptional
transactions or assignments.

 AUDIT COMMITTEE

 Composition

     The Audit Committee shall be comprised of at least 3 directors, all of whom
must be independent and must have finance or accounting skills. At least one
member shall be a financial expert (as defined in the Sarbanes-Oxley Act), with
a thorough understanding of accounting standards, as well as practical
experience in the preparation of financial statements and the application of
prevailing accounting regulations. The current members are Henri Lachmann
(Chairman), Gerard Bremond, Fernando Falco and Gabriel Hawawini.

                                       115
Functions

     The mission of the Audit Committee is to prepare the board's decisions, and
to render its recommendations or issue its opinions with regard to the
accounting procedures governing the Group's functioning, particularly in the
following areas:

     - review of Vivendi Universal's accounts and consolidated annual,
       semi-annual and, possibly, quarterly accounts before they are presented
       to the board;

     - coherence and effectiveness of Vivendi Universal's internal control
       measures;

     - follow-up of the mandates accorded to the external and internal auditors
       and review of the conclusions of their audits;

     - accounting methods and principles; activities to be included within
       Vivendi Universal's consolidated accounts;

     - Vivendi Universal's off-balance sheet risks and commitments;

     - mode of selection of the statutory auditors, issuance of an opinion on
       the amount of the fees solicited for the carrying out of the legally
       mandated audit, and verification of compliance with the regulations
       ensuring their independence;

     - issuance of an opinion with respect to the annual report of the
       Compliance Program and proposal of any measures that may render it more
       effective; and

     - any matter that it considers may constitute a risk for Vivendi Universal
       or a serious procedural problem.

 Mode of Functioning

     The Audit Committee shall meet at least 4 times a year and at any other
time that Vivendi Universal requires. The members of the committee shall
receive, upon their appointment, current and detailed information with regard to
the accounts, finances and operations of Vivendi Universal and its group. For
the purpose of carrying out its tasks, the committee may, with no executive
directors present, meet with the statutory auditors and the members of Vivendi
Universal's management responsible for preparing financial statements and
conducting internal audits, including the Chief Financial Officer, the Chief
Accounting Officer and the Treasurer.

     With respect to internal audit and risk management, the committee shall
review the most significant off-balance sheet commitments, meet with the
Director of Internal Audit, render its opinion on the organization of, and work
performed by, the internal audit department. The committee shall receive the
reports of the internal audit department or a periodic summary of these reports.

     For the purpose of carrying out its task of selecting Vivendi Universal's
statutory auditors, the committee shall have at its disposal information
regarding (i) the amount of the fees paid by Vivendi Universal, and, if need be,
its subsidiaries, to Vivendi Universal's auditors and (ii) the global networks
to which the statutory auditors belong; with a view to ensuring that the amount
of such fees, the conditions of payment, or the percentage of such fees in these
firms' overall revenues do not compromise the independence of the statutory
auditors. More generally, the committee shall be responsible for ensuring
compliance with the rules guaranteeing the independence of the statutory
auditors.

     The committee shall review Vivendi Universal's financial statements no less
than two days before the presentation of the statements to the board. The
committee shall receive a memorandum from the statutory auditors summarizing the
results and the accounting options adopted, and a memorandum from the Chief
Financial Officer describing the exposure to off-balance sheet risks and
commitments. The statutory auditors shall be present at the meetings of the
Audit Committee at which Vivendi Universal's accounts are reviewed. The Audit
Committee may have recourse to external experts, when it deems necessary, at
Vivendi Universal's expense.

                                       116
STRATEGY AND FINANCE COMMITTEE

 Composition

     The Strategy and Finance Committee shall be comprised of at least 4
directors, none of whom shall be an insider director. The current members are
Claude Bebear (Chairman), Gerard Kleisterlee, Paul Fribourg and Gerard Bremond.
Edgar Bronfman, Jr. was also a member until Mr. Bronfman and Vivendi Universal
mutually agreed that his participation in the Board of Directors and any
committee thereof would be suspended following May 20, 2003, when he informed
Vivendi Universal of his intention to lead a consortium to purchase American
assets of Vivendi Universal.

 Functions

     Its mission is to prepare the board's decisions, and to render its
recommendations or issue its opinions with regard to the procedures governing
the Group's functioning, particularly in the following areas:

     - Vivendi Universal's strategic direction;

     - acquisitions and sales of participations and assets of a sizeable nature;

     - strategic joint ventures and/or industry and financial cooperation
       agreements;

     - sizeable internal restructuring operations;

     - transactions falling outside Vivendi Universal's announced strategy;

     - financial transactions likely to affect the structure of the balance
       sheet;

     - sizeable financial transactions; and

     - the liquidity and debt situation of Vivendi Universal.

 Mode of Functioning

     The Strategy and Finance Committee shall meet at least 4 times a year and
at any other time that Vivendi Universal requires. For the purpose of carrying
out its tasks, the committee may, with no executive directors present, meet with
the members of Vivendi Universal's management responsible for preparing
financial statements and conducting internal audits, including the Chief
Financial Officer, the Chief Accounting Officer and the Treasurer. The Strategy
and Finance Committee may have recourse to external experts, when it deems
necessary, at Vivendi Universal's expense.

 HUMAN RESOURCES COMMITTEE

 Composition

     The Human Resources Committee shall be comprised of at least 3 directors, a
majority of whom must be independent and none of whom shall be an insider
director. The current members are Marie-Josee Kravis (Chairperson), Bertrand
Collomb and Paul Fribourg.

 Functions

     The mission of the Human Resources Committee shall be to prepare the
board's decisions and issue its recommendations with regard to the following
matters:

     - compensation of the Chief Executive Officer and executive management and,
       in particular, determination of the variable component of their
       compensation; analysis of the alignment of the method of determining the
       variable component of their compensation with (i) the evaluation carried
       out annually, as the case may be, of their performance, and (ii) the
       implementation of Vivendi Universal's medium-term strategy. The committee
       may choose to commission a comparative study or analysis by an
       independent consultant of the contributing factors on which the
       compensation of the executive directors is based.
                                       117
- policy of allocation of options to subscribe for or purchase shares
       ("stock options") to the executive directors, principal executives and
       management teams of Vivendi Universal and its Group;

     - proposal for the allocation and modes of payment of directors' fees paid
       to the members of the board and its committees;

     - the Group's overall policy of remuneration of its principal executives;

     - review and issuance of an opinion with regard to liability coverage and
       complementary retirement packages for Vivendi Universal's officers and
       directors; and

     - review and issuance of an opinion with regard to the recruitment of
       management personnel.

 Mode of Functioning

     The Human Resources Committee shall meet at least 3 times a year and at any
other time that Vivendi Universal requires. The Human Resources Committee may
have recourse to external experts, when it deems necessary, at Vivendi
Universal's expense.

 CORPORATE GOVERNANCE COMMITTEE

 Composition

     The Corporate Governance Committee shall be comprised of at least 3
directors, with no insider directors. The current members are Claude Bebear
(Co-Chairman), Marie-Josee Kravis and Bertrand Collomb. Edgar Bronfman, Jr.
served as Co-Chairman with Claude Bebear until Mr. Bronfman and Vivendi
Universal mutually agreed that his participation in the Board of Directors and
any committee thereof would be suspended following May 20, 2003, when he
informed Vivendi Universal of his intention to lead a consortium to purchase
American assets of Vivendi Universal.

 Functions

     The mission of the Corporate Governance Committee shall be to prepare the
board's resolutions and give its recommendations to the board with regard to the
following matters:

     - review of candidates for directorship and composition and functions of
       the board committees;

     - determination and review of the criteria of independence with respect to
       directors;

     - succession plan with regard to the Chairman;

     - evaluation of the organization and functioning of the board;

     - preparation of the annual meeting concerning the evaluation of Vivendi
       Universal's Chief Executive Officer;

     - review of national and international practices in the field of corporate
       governance, and their conditions of application; and

     - review of and recommendations regarding Vivendi Universal's corporate
       governance measures.

 Mode of Functioning

     The Corporate Governance Committee shall meet at least three times a year.
The Corporate Governance Committee may have recourse to external experts, when
it deems necessary, at Vivendi Universal's expense.

 COMPENSATION

     The board establishes compensation for officers, upon recommendation of the
Human Resources Committee, and for directors, upon recommendation of the
Corporate Governance Committee. Such compensation may be comprised of both a
fixed and a variable component.

                                       118
COMPENSATION OF DIRECTORS

     For a full year, each director receives director's fees of E 50,000.

     This amount is increased by E 11,000 for the function of member of the
Human Resources Committee and E 22,000 for the function of member of the Audit
Committee. This amount is doubled for the chairmen of these two committees.

     Director's fees paid in 2002 were as follows:
(IN EUROS)
                                                              ----------
CURRENT MEMBERS OF THE BOARD OF DIRECTORS
Mr. Jean-Rene Fourtou(1)....................................          0
Mr. Claude Bebear...........................................     23,500
Mr. Edgar Bronfman, Jr. ....................................     60,404
Mr. Edgar M. Bronfman.......................................     65,807
Mr. Gerard Kleisterlee......................................     18,000
Mrs. Marie-Josee Kravis.....................................     76,807
Mr. Henri Lachmann..........................................     82,307
FORMER DIRECTORS WHO HELD A MANDATE IN 2002 AND EARLY 2003
Mr. Bernard Arnault.........................................     45,108
Mr. Jean-Louis Beffa........................................     36,904
Mr. Richard Brown...........................................     52,464
Mr. Jean-Marc Espalioux.....................................     54,904
Mr. Dominique Hoenn.........................................     18,000
Mr. Philippe Foriel-Destezet................................     36,724
Mr. Jacques Friedmann.......................................     54,904
Mrs. Esther Koplowitz.......................................     42,298
Mr. Pierre Lescure..........................................     36,904
Mr. Eric Licoys.............................................     50,737
Mr. Jean-Marie Messier......................................     36,904
Mr. Samuel Minzberg.........................................     57,938
Mr. Simon Murray............................................     36,904
Mr. Serge Tchuruk...........................................     60,358
Mr. Rene Thomas.............................................     36,904
Mr. Marc Vienot.............................................     90,964
                                                              ---------
TOTAL.......................................................  1,075,744
                                                              =========
---------------

(1) Mr. Fourtou waived the payment of his director's fees for year 2002.

     Upon recommendation of the Human Resources Committee, the board of
directors decided on September 25, 2002 to modify the distribution of director's
fees, decreed at its meeting on December 11, 2000. As of the fourth quarter
2002, payment of director's fees to members of the board of directors and the
committees shall be made depending on their actual presence at meetings and on
the specific work carried out.

  Additional Arrangements with Edgar M. Bronfman and Edgar Bronfman, Jr.

     In connection with Edgar M. Bronfman's retirement from executive positions
with Vivendi Universal and its affiliates effective December 31, 2001, Vivendi
Universal agreed to provide Mr. Bronfman with office space, the services of an
assistant and a driver, and the use of a Vivendi Universal leased vehicle in New
York City until December 2011.

                                       119
Pursuant to an employment agreement with Vivendi Universal U.S. Holding Co.
(Vivendi Universal U.S.), dated September 25, 2002 (the Agreement), Edgar
Bronfman, Jr. currently serves as an executive employee and an advisor to the
Chief Executive Officer of Vivendi Universal U.S. in connection with the U.S.
entertainment businesses of Vivendi Universal and its U.S. affiliates.

     Subject to the provisions of the Agreement regarding earlier termination of
Mr. Bronfman's employment, the term of his employment under the Agreement
commenced on September 25, 2002 and will continue through December 31, 2004.
During the term of his employment under the Agreement, Mr. Bronfman is required
to devote a substantial time commitment to the performance of his duties under
the Agreement, but he is not precluded or prohibited from securing one or more
additional part-time employment or consulting positions. Mr. Bronfman's annual
salary under the Agreement is $1,000,000.

     If Mr. Bronfman's employment under the Agreement is terminated by Vivendi
Universal US for "Cause" or by Mr. Bronfman without "Good Reason" (as those
terms are defined under the Agreement), or by reason of Mr. Bronfman's death or
disability, Mr. Bronfman or Mr. Bronfman's estate, as the case may be, will be
entitled to receive his accrued salary and benefits under the Agreement through
the date of termination.

     If Mr. Bronfman's employment under the Agreement is terminated by Vivendi
Universal U.S. without "Cause" (other than by reason of death or "disability")
or by Mr. Bronfman for "Good Reason" (as these terms are defined under the
Agreement), Mr. Bronfman will also be entitled to receive a lump-sum payment
equal to the total amount of salary that Mr. Bronfman would have received had
his employment under the Agreement continued through December 31, 2004.

     In the event that Mr. Bronfman is subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, Mr. Bronfman is
entitled to receive an additional payment such that he will receive the same net
after-tax benefit as if no excise tax were imposed. In addition, Vivendi
Universal U.S. will reimburse Mr. Bronfman for all legal fees and related
expenses incurred in connection with, or arising out of, any dispute in respect
of severance following termination of his employment other than for Cause or for
Good Reason.

     The Agreement also provides that Vivendi Universal U.S. will indemnify Mr.
Bronfman to the fullest extent permitted by applicable law against damages in
connection with his status or performance of duties as an officer of Vivendi
Universal U.S. and will maintain and cover Mr. Bronfman under customary and
appropriate directors and officers liability insurance during the term of his
employment and throughout the period of any applicable statute of limitations.

     In 2003, Edgar Bronfman, Jr. informed Vivendi Universal of his intention to
lead a consortium to purchase American assets of Vivendi Universal. As a result,
on May 20, 2003, Vivendi Universal and Edgar Bronfman, Jr. mutually agreed to
suspend certain provisions of the Agreement.

  COMPENSATION OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER

     On the recommendation of the Human Resources Committee, the remuneration of
the Chairman and Chief Executive Officer for 2002 is composed of the following
elements: annual fixed salary: E 1 million; bonus target 150% (maximum: 250%);
options: 1,000,000 stock options without discount. Retirement: 2.5% of the
target compensation per year of service as Chairman and Chief Executive Officer,
cash exit possible. In 2002, Mr. Jean-Rene Fourtou, Chairman and Chief Executive
Officer since July 3, 2002, received from Vivendi Universal a gross remuneration
of E 497,368, including fringe benefits. Mr. Jean-Rene Fourtou holds 193,959
Vivendi Universal shares. He waived his director's fees as a director of Vivendi
Universal and received director's fees of E 9,767 as a director and member of
the supervisory board for the subsidiaries of Vivendi Universal, controlled
within the meaning of article 233-16 of the French commercial code.

  COMPENSATION OF EXECUTIVE OFFICERS

     In 2002, Mr. Jean-Marie Messier, Chairman and Chief Executive Officer until
July 1, 2002, received a gross remuneration of E 5,635,854, including fringe
benefits. He did not benefit from any attribution of stock options. He received
E 84,384 in director's fees as a director of Vivendi Universal and as a director
and
                                       120
member of the supervisory board for the subsidiaries of Vivendi Universal,
controlled within the meaning of article 233-16 of the French commercial code.
At June 30, 2002, Mr. Jean-Marie Messier held 361,377 Vivendi Universal shares.

     On September 25, 2002, the board of directors ratified the decision taken
by the general management of Vivendi Universal, upon the advice of its lawyers,
to refuse a severance package to Mr. Messier and to put an end to the fringe
benefits he was enjoying. The board of directors left it to its Chairman to
decide on the possibility of starting a proceeding and the choice of arbitration
proceedings. Following an arbitration convention on October 31, 2002, the
dispute was submitted to an Arbitration Tribunal constituted on January 17,
2003, under the aegis of the American Arbitration Association in New York and
composed of three arbitrators.

     On June 27, 2003, the arbitration tribunal issued its award. It denied
Vivendi Universal's claim that Mr. Messier's so-called U.S. Termination
Agreement be voided. The arbitration tribunal ordered Vivendi Universal to pay
Mr. Messier the aggregate amount of E20.5 million provided for in this
agreement, less the portion of Mr. Messier's compensation that had been paid to
him during the third quarter of 2002, which Vivendi Universal asked to be
reimbursed. The arbitration tribunal also denied Vivendi Universal's claim for
the repayment of the unpaid rent and charges of the New York apartment.

     Mr. Edgar Bronfman, Jr., Vice-Chairman, received in 2002, E 17,108,366 in
gross remuneration, fringe benefits and a severance package relating to his
duties as an executive officer of Vivendi Universal. His Consultancy Agreement
was terminated, at his request, on September 25, 2002. Since this date, he has
been a part-time employee of Vivendi Universal U.S. Holding Co. pursuant to an
employment agreement. Mr. Bronfman and Vivendi Universal mutually agreed to
suspend certain provisions his employment agreement following May 20, 2003, when
he informed Vivendi Universal of his intention to lead a consortium to purchase
American assets of Vivendi Universal. For more information, see "--Additional
Arrangements with Edgar M. Bronfman and Edgar Bronfman, Jr."

     Mr. Eric Licoys, Co-Chief Operating Officer and a director until September
5, 2002, received from Vivendi Universal a gross remuneration of E 5,098,444,
including fringe benefits and a severance package. In addition, he received
E 103,784 in director's fees as a director of Vivendi Universal and as a
director and member of the supervisory board for the subsidiaries of Vivendi
Universal controlled within the meaning of article 233-16 of the French
commercial code.

     Mr. Pierre Lescure, Co-Chief Operating Officer and a director until April
24, 2002, received from Canal+ Group gross remuneration of E 4,124,915,
including fringe benefits and a severance package. In addition, he received
E 43,764 in director's fees as a director of Vivendi Universal and as a director
and member of the supervisory board for the subsidiaries of Vivendi Universal,
controlled within the meaning of article 233-16 of the French commercial code.

  COMPENSATION OF SENIOR EXECUTIVES

     The ten most highly compensated of Vivendi Universal's senior executives
earned an aggregate of E 55.24 million in 2002. Nine of these top ten executives
were US senior executives.

LOANS AND GUARANTEES GRANTED TO DIRECTORS OR MEMBERS OF THE GENERAL MANAGEMENT

     Vivendi Universal has not granted or agreed to any loan or guarantee for
the benefit of members of board of directors nor members of the general
management.

                                       121
EMPLOYEES

     The number of Vivendi Universal employees on December 31, 2002, was
approximately 61,815. The table below shows a breakdown of employees by business
segments as of the end of the period specified:
NUMBER OF           NUMBER OF           NUMBER OF
                                        EMPLOYEES IN 2002   EMPLOYEES IN 2001   EMPLOYEES IN 1999
                                        -----------------   -----------------   -----------------
Telecoms..............................       24,375               30,023              10,261
Music.................................       11,754               12,017              12,102
TV & Film.............................       22,146               20,344              27,624
Publishing (2000 & 2001)..............        2,074               22,010                  --
Games (2002)..........................           --                   --              21,434
Internet..............................          995                1,138                 958
Head Office...........................          471                  687               1,012
Other*................................          N/A              295,285             253,989
                                             ------              -------             -------
TOTAL.................................       61,815              381,504             327,380
                                             ======              =======             =======
---------------

* Veolia Environnement

     Our employees' membership in trade unions varies from country to country,
and we are party to numerous collective bargaining agreements. As is generally
required by law, we renegotiate our labor agreements in Europe annually in each
country in which we operate.

     Although we have experienced strikes and work stoppages in the past, we
believe that relations with our employees are generally good. We are not aware
of any material labor arrangement that has expired or is soon to expire and that
is not expected to be satisfactorily renewed or replaced in a timely manner.

THE GOVERNANCE AGREEMENT

     We are a party to a governance agreement with certain former Seagram
shareholders that are members or affiliates of the Bronfman family (the
"Bronfman Shareholders") entered into December 2000. In addition to the
provisions described below, the governance agreement restricts the transfer of
Vivendi Universal shares held by the Bronfman Shareholders and contains other
provisions relating to the ownership, holding, transfer and registration of our
shares.

     In the governance agreement Vivendi Universal agreed, among other things,
not to dispose of Seagram shares in a taxable transaction and not to dispose of
substantially all of the assets acquired by Vivendi Universal from Seagram in a
transaction that would trigger the Gain Recognition Agreement (GRA) entered into
by the Bronfmans and result in recognition of taxable gain to them. under the
applicable US income tax regulations, to comply with the foregoing, Vivendi
Universal must retain at least 30% of the gross assets or at least 10% of the
net assets (values are determined as of December 8, 2000) until the end of the
five-year period ending on December 31, 2005. Vivendi Universal is in compliance
with this provision and does not intend to violate it and trigger the GRA.

     Edgar Bronfman, Jr. informed Vivendi Universal of his intention to lead a
consortium to purchase American assets of Vivendi Universal. As a result, on May
20, 2003, Vivendi Universal, Edgar Bronfman, Jr. and Edgar M. Bronfman mutually
agreed to suspend the participation of Edgar M. Bronfman and Edgar Bronfman, Jr.
in the Board of Directors and any committee thereof. Also, as of May 20, 2003,
Vivendi Universal has suspended certain provisions of the Governance Agreement,
thereby allowing the Bronfman Shareholders to make a bid to purchase American
assets of Vivendi Universal.

  DESIGNEES TO OUR BOARD OF DIRECTORS

     Under the governance agreement, Vivendi Universal has elected to, and is
required to use best efforts to, cause the continuation for a four-year term on
its board of directors of five former members of Seagram's

                                       122
board of directors or their replacements. Two of the designees are parties to
the governance agreement (Edgar M. Bronfman and Edgar Bronfman, Jr.), one
designee is unaffiliated with the Bronfman family (non-Bronfman designees), and
the two remaining seats are vacant.

     Following the expiration of the initial four-year period, and for so long
as the Bronfman Shareholders continue beneficially to own the applicable
percentage of the number of Vivendi Universal voting securities (as described
below) owned by them immediately following the effective time of the
arrangement, we will use our best efforts to cause the election of the number of
individuals designated by the Bronfman Shareholders indicated below:
NUMBER OF
                                                              BRONFMAN
PERCENTAGE OF INITIAL INVESTMENT                              DESIGNEES
--------------------------------                              ---------
more than 75%...............................................      3
more than 50% but less than or equal to 75%.................      2
more than 25% but less than or equal to 50%.................      1
After the initial four-year term, the re-appointment of the non-Bronfman
designees will be at our discretion.

     "Vivendi Universal voting securities" are securities that generally entitle
the holder to vote for members of Vivendi Universal's board of directors, or
securities issued in substitution for such securities, including Vivendi
Universal ordinary shares, Vivendi Universal ADSs and Exchangeable Shares.

  DESIGNEES TO THE COMMITTEES OF OUR BOARD OF DIRECTORS

     For so long as either (i) the Bronfman Shareholders have the right to
designate at least two members of Vivendi Universal's board of directors or (ii)
the Bronfman Shareholders are collectively the largest holders of Vivendi
Universal voting securities other than Vivendi Universal and its affiliates, we
must:

     - appoint and maintain a designee of the Bronfman Shareholders as the
       chairman of the Human Resources Committee of our board of directors;

     - cause the chairman of the Human Resources Committee to be appointed and
       maintained as a member of the nominating committee of our board of
       directors;

     - cause the Human Resources Committee to be responsible for proposing the
       nomination of all directors, other than the Bronfman designees;

     - cause a designee of the Bronfman Shareholders to be appointed and
       maintained as a member of the Audit Committee of our board of directors;
       and

     - cause a designee of the Bronfman Shareholders to be appointed and
       maintained as a member of any subsequently formed executive or similar
       committee, if the failure of the Bronfman Shareholders to participate
       would be inconsistent with the purposes of the board and committee
       participation rights described above.

     In 2003, Edgar Bronfman, Jr. informed Vivendi Universal of his intention to
lead a consortium to purchase American assets of Vivendi Universal. As a result,
on May 20, 2003, Vivendi Universal, Edgar Bronfman, Jr. and Edgar M. Bronfman
mutually agreed to suspend the participation of Edgar M. Bronfman and Edgar
Bronfman, Jr. in the Board of Directors and any committee thereof.

SHARE OWNERSHIP

     The following table shows the number of Vivendi Universal voting securities
beneficially owned, percentage of voting securities beneficially owned and
number of options beneficially owned by each of the

                                       123
members of the Vivendi Universal board of directors that beneficially owns more
than 1% of Vivendi Universal voting securities as of December 31, 2002:
NUMBER OF         PERCENTAGE OF      NUMBER OF
BENEFICIAL OWNER                             VOTING SECURITIES   VOTING SECURITIES*   OPTIONS(1)
----------------                             -----------------   ------------------   ----------
Edgar M. Bronfman..........................     26,376,563(2)          2.47%            452,960
Edgar Bronfman, Jr.........................     28,486,209(3)          2.67%          3,751,666
---------------

 *  Less than 1%

(1) References to quantity of options in this table are to the number of voting
    securities which are acquired upon exercise of the options held by the
    optionholder.

(2) Includes 24,541,219 ADSs owned indirectly by The Edgar Miles Bronfman Trust,
    a trust established for the benefit of Edgar M. Bronfman and his descendants
    (the "EMBT"), and 1,189,212 ADSs owned directly by the PBBT/Edgar Miles
    Bronfman Family Trust, a trust established for the benefit of Edgar M.
    Bronfman and his descendants ("PBBT/EMBFT"), trusts for which Mr. Bronfman
    serves as a trustee, 888 ADSs owned directly by Mr. Bronfman, 452,960 ADSs
    issuable upon the exercise of options which are currently exercisable, and
    192,284 ADSs owned by two charitable foundations of which Mr. Bronfman is
    among the trustees or directors. Mr. Bronfman disclaims beneficial ownership
    of the foregoing ADSs, except to the extent of his beneficial interest in
    the EMBT and the PBBT/EMBFT and with respect to ADSs owned directly by him.

(3) Includes 24,541,219 ADSs owned indirectly by the EMBT trust for which Mr.
    Bronfman serves as a trustee, 792 ADSs owned directly by Mr. Bronfman,
    3,751,666 ADSs issuable upon exercise of options which are currently
    exercisable, 192,000 ADSs owned by a charitable foundation of which Mr.
    Bronfman is among the trustees and 532 ADSs in which Mr. Bronfman has an
    indirect interest through an investment in the Retirement Savings and
    Investment Plan for Employees of Joseph E. Seagram & Sons, Inc. and
    Affiliates (based on the value of such investment as of December 4, 2000).
    Mr. Bronfman disclaims beneficial ownership of the foregoing ADSs, except to
    the extent of his beneficial interest in the EMBT and with respect to ADSs
    owned directly by him.

STOCK OPTION PLANS

     Since the Vivendi-Seagram-Canal+ merger in December 2000, Vivendi Universal
has granted stock options to senior executives, as well as within its
subsidiaries and affiliates, under three stock option plans and one stock
subscription option plan. With the exception of the Outperformance Plan (SO IV),
options granted to U.S.-based executives are options to purchase Vivendi
Universal American Depositary Shares (ADS). Senior Executives employed outside
of the United States are granted options to purchase Vivendi Universal shares.
Vivendi Universal uses several criteria for determining whether and to whom
stock options will be granted: his/her degree of responsibility; job
performance; recognition and reward to those executives who have accomplished
significant operations; and as a means of identifying and recognizing executives
of high potential.

     Since December 2000, Vivendi Universal has made significant option grants
to a select group of executives in the following manner:

     - 10,886,898 options to purchase ADSs or Vivendi Universal shares,
       representing 1% of Vivendi Universal's outstanding share capital, were
       granted to 3,681 beneficiaries in December 2000, exercisable at a strike
       price, without discount, of E 78.64 or $67.85.

     - 5,200,000 options, representing 0.48% of Vivendi Universal's outstanding
       share capital, were granted to a select group (approximately 100) senior
       executives in December 2000 under the Outperformance Plan. The vesting
       and exercisability of these stock options are linked to the
       outperformance of Vivendi Universal against a weighted index media
       company performance comprised of 60% Media MSCI and 40% Stoxx Media.

                                       124
- 13,333,627 options to purchase ADSs, representing 1.23% of Vivendi
       Universal's share capital then outstanding, were granted to 2,816
       beneficiaries in October 2001, exercisable at a strike price, without
       discount, of E 48.20 or $44.25.

     - 3,619,300 options to purchase ADSs, representing 0.33% of Vivendi
       Universal's share capital then outstanding, were granted to 51
       beneficiaries in September 2002, exercisable at a strike price of E 12.10
       or $11.79.

     As a consequence of the 2002 dividend payment taken from the retained
earnings (in accordance with applicable rules), we adjusted the exercise prices
and number of Vivendi Universal shares or ADSs subject to each outstanding stock
option and the number of Vivendi Universal shares or ADSs reserved for issuance
under each of the existing stock option plans in order to preserve the value of
each option.

     The significant features of the stock option plans and the stock
subscription option plan under which we have made option grants are the
following:

     SO I (TRADITIONAL OPTIONS)

          Options granted under SO I have an eight-year term. These options
     normally vest over three years from the date of grant in equal one-third
     amounts, and become exercisable, with respect to the then vested portion of
     the grant after the second anniversary of the grant date. After the third
     anniversary of the grant date, the entire grant is vested and exercisable.
     Employees terminated by Vivendi Universal and its subsidiaries and
     affiliates retain any options granted under this plan that have vested
     before their termination date and the plan permits the acceleration of
     vesting in connection with an optionholder's termination of employment upon
     approval of Vivendi Universal's Chief Executive Officer and the board of
     directors. In the event of a bid or tender offer for all or substantially
     all of the shares of Vivendi Universal, options granted under SO I
     immediately vest and become exercisable and the underlying shares are
     freely transferable without any condition.

     SO II

          The options granted under SO II are exercisable from September 18,
     2000, to September 17, 2003, at an adjusted unit price of E 48.64, and from
     September 18, 2003 to September 17, 2004, at an adjusted unit price of
     E 52.05.

     SO III

          The options granted under SO III vest and become exercisable after a
     5-year period following the date of grant (May 11, 1999) and remain
     exercisable until the expiration of the 8-year validity period of the plan.
     The number of options that can be exercised will be determined based on the
     performance of Vivendi Universal's stock vis-a-vis a benchmark price index
     composed of a basket of indexes (10% Media, 35% Telecoms, 10% Utilities).

     SO IV (SO-CALLED OVER PERFORMANCE OPTIONS)

          The options granted under SO IV vest and become exercisable after a
     6-year period following the date of grant and remain exercisable until the
     expiration of the 8-year validity period of the plan; provided, however,
     that the vesting of such options will be accelerated based on the
     performance of Vivendi Universal's stock price vis-a-vis the movement of
     the combined index, 60% MSCI and 40% Stoxx Media as follows:

          - if, after a 3-year period, the performance of Vivendi Universal's
            stock price exceeds the index performance by 9% or more;

          - if, after a 4-year period, the performance of Vivendi Universal's
            stock price exceeds the index performance by 12% or more; or

                                       125
- if, after a 5-year period, the performance of Vivendi Universal's
            stock price exceeds the index performance by 15% or more.

          In addition, following each of the third, fourth and fifth
     anniversaries of the date of grant, the vesting of such options will be
     accelerated after each quarter if the performance of Vivendi Universal's
     stock price exceeds the index performance by the percentage required for
     the period examined, increased by 0.75% per quarter (x% + 0.75% per
     quarter).

          In the event of a public offering, the options granted under SO IV
     will become vested and immediately exercisable and the shares underlying
     such options will be immediately transferable.

ITEM 7:  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDER

     To our knowledge, no individual shareholder owns beneficially, or exercises
control or direction over, 5% or more of the outstanding Vivendi Universal
ordinary shares. There are 43,167,709 (excluding exercisable options) Vivendi
Universal ADSs and exchangeable shares held by the Bronfman shareholders and
subject to the governance agreement. The foregoing shares, collectively,
represent approximately 4% of the voting securities of Vivendi Universal. The
information for the Bronfman shareholders is based on their holdings as of
December 31, 2002. The governance agreement is described under "Item
6--Directors, Senior Management and Employees--The Governance Agreement".

RELATED PARTY TRANSACTIONS

  Claridge Inc.

     For the period January 1, 2001, through December 1, 2001, Claridge Inc.
(Claridge) reimbursed Seagram for the use of aircraft owned by such subsidiary
in the amount of $26,712. The payment represented Claridge's pro rata share of
the applicable operating expenses of the aircraft. For the same period, Seagram
paid or accrued rent and reimbursed expenses to Claridge in the amount of
Cdn$133,338 (and Cdn$2,090 for the current fiscal year) for the use by Seagram
of office and parking space and secretarial services. The Charles Rosner
Bronfman Family Trust, a trust established for the benefit of Charles R.
Bronfman and his descendants, owns all the shares of Claridge. Charles R.
Bronfman and Samuel Minzberg are among the directors and officers of Claridge.

  The Andrea & Charles Bronfman Philanthropies, Inc.

     For the period January 1, 2001, through December 31, 2001, The Andrea &
Charles Bronfman Philanthropies, Inc., a charitable organization, paid or
accrued rent and reimbursed Vivendi Universal in the amount of $67,368 (and
$87,635 during the current fiscal year) for use by such organization of office
space in Vivendi Universal's offices in New York. Andrea Bronfman and Charles R.
Bronfman are directors of The Andrea & Charles Bronfman Philanthropies, Inc.

  Frank Alcock

     As of December 21, 2001, we divested the spirits and wine business to which
Frank Alcock, Edgar Bronfman, Jr.'s father-in-law, previously had provided
consulting services.

  Purchase of Vivendi Universal Shares from the Bronfman Family

     Vivendi Universal purchased 15,400,000 American Depository Shares (ADS),
representing Vivendi Universal shares held by various members of the Bronfman
family, at a price equal to the average share price on the Paris stock market on
May 29, 2001, with a 3.5% discount. Additionally, Vivendi Universal also
purchased 1,500,000 ADSs representing Vivendi Universal shares owned by various
entities controlled by the Bronfman family, at a price equal to the average
share on the Paris stock market on May 29, 2001, with a 0.9% discount.

                                       126
Acquisition of The Four Seasons Restaurant

     Pursuant to a Stock Purchase Agreement dated as of October 28, 2002,
between FS Investments LLC ("FSI") and Vivendi Universal Holding I Corp.
("VUHI"), an indirect, wholly owned subsidiary of Vivendi Universal, VUHI has
sold its entire 51% equity interest in Classic Restaurants Corp. ("Classics"),
together with certain debt owed by Classics to VUHI, to FSI for approximately
$4.3 million in cash. Classics, together with other shareholders, owns The Four
Seasons Restaurant in New York City. Edgar Bronfman, Jr., together with his
father and other family members, control FSI. This transaction, which closed on
May 22, 2003, arose pursuant to agreements governing the terms of Mr. Bronfman's
resignation as Executive Vice Chairman of Vivendi Universal on March 31, 2002.
Under those agreements, Mr. Bronfman exercised an option to purchase VUHI's
equity interest in Classics for its fair market value as determined by an
independent, expert appraisal.

  Employment Arrangement with Edgar Bronfman, Jr.

     Pursuant to an employment agreement with Vivendi Universal U.S. Holding Co.
dated September 25, 2002, Edgar Bronfman, Jr. currently serves as an executive
employee and an advisor to the Chief Executive Officer of Vivendi Universal U.S.
in connection with the U.S. entertainment businesses of Vivendi Universal and
its U.S. affiliates. For a description of the employment agreement, see "Item
6--Directors, Senior Management and Employees--Compensation--Compensation of
Directors--Additional Arrangements with Edgar M. Bronfman and Edgar Bronfman,
Jr."

  Related Companies

     On August 1, 2001, Vivendi Universal and Cegetel Group opened a cash
account in the name of both parties into which Cegetel Group deposited certain
excess cash (the amount of which changed over time). Vivendi Universal paid
interest on the funds in the account. That agreement, as extended by an
amendment dated January 2, 2002, provided that the account would remain open
until July 31, 2002, subject to the right of either party to terminate the
agreement earlier. Vivendi Universal fully repaid the outstanding balance of the
cash account on July 5, 2002. The balance repaid on that date was
E720,147,923.30.

     For a description of other transactions with related companies, see Note 14
to our Consolidated Financial Statements.

ITEM 8:  FINANCIAL INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS (SEE ITEM 18)

LITIGATION

     In addition to the legal proceedings described below, Vivendi Universal is
involved in a number of legal proceedings incidental to the normal conduct of
our business.

  SECURITIES CLASS ACTION LITIGATION

     In July 2002, following the announcement of the resignation of Jean-Marie
Messier (our former CEO), sixteen separate putative class action suits were
filed against Vivendi Universal, Mr. Messier and (in nine cases) Guillaume
Hannezo (our former CFO), challenging the accuracy of certain public disclosures
made by Vivendi Universal regarding Vivendi Universal's financial condition
during 2001 and 2002. Those actions have been consolidated in the United States
District Court for the Southern District of New York as In re Vivendi Universal,
S.A. Securities Litigation (Master File No. 02 CV 5571 (HB)).

     The consolidated class action complaint, filed January 7, 2003, alleges
violations of the Securities Act and the Exchange Act against Vivendi Universal
and Messrs. Messier and Hannezo. The Securities Act allegations relate to
allegedly false and materially misleading statements or omissions in the
registration and proxy statements that were issued at the time of our merger
with Seagram in late 2000. These "false statements" are primarily alleged to be
violations of French or US GAAP that caused the financial statements

                                       127
of Vivendi to be wrong. The Exchange Act allegations relate to allegedly false
or materially misleading statements or omissions in certain of our public
statements made between October 30, 2000, and August 14, 2002, such as press
releases and financial statements, which purportedly failed to disclose Vivendi
Universal's true financial condition. Plaintiffs seek damages from all three
defendants in an unspecified amount.

     The alleged classes pleaded in the consolidated complaint include all
purchasers of our ADSs and common stock from October 30, 2000, to August 14,
2002, as well as all holders of the common stock of Seagram that was exchanged
for Vivendi Universal stock in the merger with Seagram and the acquisition of
Canal Plus, and those shareholders of Vivendi Universal or Seagram who were
entitled to vote on the merger (excluding certain specified holders). The Court
has not yet certified these classes.

     Vivendi Universal, Mr. Messier and Mr. Hannezo each filed a separate motion
to dismiss the consolidated complaint on February 24, 2003. Those motions each
ask the Court to dismiss the case in its entirety on the grounds that the
consolidated complaint is not legally sufficient. Plaintiffs filed papers
opposing those motions to dismiss on March 26, 2003. Vivendi Universal, Mr.
Messier and Mr. Hannezo filed reply papers in further support of the motions on
April 10, 2003. The Court heard oral argument on the motions on May 15, 2003. A
decision on the motions to dismiss by the Court is still pending, and is not
expected before late June 2003.

     It is not possible at this early stage of the litigation to predict the
outcome and duration with any certainty or to quantify any potential damages;
the impact of this litigation on Vivendi Universal could be material if Vivendi
Universal were not to prevail in a final, non-appealable determination of this
litigation. In the opinion of Vivendi Universal, the plaintiffs' claims lack
merit, and Vivendi Universal intends to defend against such claims vigorously.

  LIBERTY MEDIA CORPORATION SUIT

     On March 28, 2003, Liberty Media Corporation ("Liberty Media") and certain
of its affiliates filed suit against Vivendi Universal, Jean-Marie Messier (our
former CEO), Guillaume Hannezo (our former CFO) and Universal Studios, Inc. in
the United States District Court for the Southern District of New York. That
suit is captioned Liberty Media Corp., et al. v. Vivendi Universal, S.A., et al.
(CA No. 03 CV 2175 (HB)). The complaint arises from the transaction among
Vivendi Universal, Universal Studios, Inc., USAi, USANi LLC, Liberty Media and
Barry Diller that was agreed in December 2001 and resulted in the formation of
VUE in May 2002. As part of the transaction, Vivendi Universal transferred 37.4
million shares of Vivendi Universal to Liberty Media in exchange for equity in
USANi LLC and USAi and Liberty Media's 27.4% interest in the European cable
television company, multiThematiques.

     Plaintiffs' claims are based upon allegedly false or materially misleading
statements or omissions by the defendants during the period March 2001 to June
2002, in certain press releases, conference calls, financial statements and
filings, which purportedly failed to disclose Vivendi Universal's true financial
condition, and/or other information allegedly material to investors in its
shares. Plaintiffs seek damages from all four defendants in an unspecified
amount, as well as equitable and/or injunctive relief.

     In the opinion of Vivendi Universal, while the purported legal bases for
the Liberty Media plaintiffs' claims differ in certain respects, the allegations
are based upon substantially the same underlying circumstances and events
identified in the securities class action litigation filed in the United States
District Court for the Southern District of New York and described above. By
letters to the Court dated April 3 and April 15, 2003, Vivendi Universal
accordingly requested the consolidation of the Liberty Media suit with the
securities class action litigation. The Court held a hearing on May 8, 2003, to
address Vivendi Universal's request. On May 13, 2003, the Court issued an order
consolidating, for all pre-trial purposes, the Liberty Media suit with the
securities class action litigation pending before Judge Baer in the United
States District Court for the Southern District of New York.

     In the opinion of Vivendi Universal, the Liberty Media plaintiffs' claims
are without merit, and Vivendi Universal intends to defend against such claims
vigorously.

                                       128
INVESTIGATION BY THE FRENCH COB

     On July 4, 2002, the French COB (Commission des Operations de Bourse)
commenced an investigation into certain of Vivendi Universal's financial
statements. The investigation is being led by the COB's Inspection Services
division. Vivendi Universal is co-operating fully with the Inspection Services
in its investigation. This investigation is continuing. As of the date hereof,
it is not possible to predict the outcome with any certainty.

  INVESTIGATIONS BY THE SEC AND THE OFFICE OF THE U.S. ATTORNEY FOR THE SOUTHERN
  DISTRICT OF NEW YORK

     Vivendi Universal is presently being investigated as part of two ongoing
investigations being conducted by the SEC and the Office of the U.S. Attorney
for the Southern District of New York. On July 29, 2002, the Southeast Regional
Office of the SEC advised Vivendi Universal that it had commenced an informal
inquiry into certain conduct at Vivendi Universal during the period January 1,
2000, to date. By letter dated November 19, 2002, the SEC advised Vivendi
Universal that its informal inquiry had been transformed into a formal
investigation. As part of those investigations, the SEC and the U.S. Attorney
are examining Vivendi Universal's accounting treatment of certain transactions
after October 2000, as well as the accuracy of the Vivendi Universal's financial
statements and various public statements relating thereto from approximately
October 2000 to July 2002.

     The SEC has issued three subpoenas dated November 19, 2002, January 9,
2003, and April 2, 2003, seeking the production of certain documents by Vivendi
Universal. On November 26, 2002, the Office of the U.S. Attorney for the
Southern District of New York served Vivendi Universal with a Grand Jury
subpoena seeking copies of the same documents produced to the SEC pursuant to
its first subpoena dated November 19, 2002. On March 18, 2003, the SEC requested
additional information from Vivendi Universal on a variety of accounting issues.
Vivendi Universal is actively cooperating with both investigations, and has
produced documents to both the SEC and the Office of the U.S. Attorney for the
Southern District of New York. Vivendi Universal has made presentations to the
staffs on certain issues, and Vivendi Universal made certain of its directors
and employees available for depositions and interviews. Those investigations are
both continuing. At the present time it is not possible to predict the outcome
of either investigation with any certainty.

  MP3.COM SECURITIES LITIGATION

     Commencing in May, 2001, MP3.com and certain of its previous and current
managers and directors have been the subject of certain class action suits filed
in the United States District Court for the Southern District of New York
alleging publication of misleading information in the prospectus and certain of
the documents relating to MP3.com's initial public offering. These actions have
been consolidated by way of an order dated September 6, 2001. On February 19,
2003, the Court denied a motion to dismiss the claim. This litigation is
ongoing.

  MP3.COM COPYRIGHT INFRINGEMENT LITIGATION

     MP3.com is currently involved in various copyright infringement suits filed
in Federal courts in New York, New Jersey and California related to the
availability of content on its My.M3.com service from January to May of 2000.
This litigation is ongoing.

  PARTNERSHIP AGREEMENT BETWEEN VIVENDI UNIVERSAL AND INTERACTIVECORP

     In connection with Vivendi Universal's acquisition of the entertainment
assets of InterActiveCorp (formerly known as USA Interactive and prior thereto
as USA Networks, Inc.), or USAi, certain of Vivendi Universal's affiliates
entered into an amended and restated limited liability limited partnership
agreement of Vivendi Universal Entertainment LLLP, or VUE (the group formed by
combining such assets and those of Universal Studios Group), dated as of May 7,
2002 (the "Partnership Agreement"), with USAi and certain of its affiliates and
Mr. Barry Diller. Pursuant to the Partnership Agreement, certain affiliates of
Vivendi Universal, USAi and certain of its affiliates and Mr. Barry Diller
received approximately 93.1%, 5.4% and 1.5%, respectively, of the common
interests in VUE. A subsidiary of USAi also received preferred interests in
                                       129
VUE, with initial face values of $750 million and $1.75 billion. There is a
disagreement among the parties relating to the interpretation of the provision
for tax distributions set forth in the Partnership Agreement.

     USAi has advised Vivendi Universal and has publicly disclosed that it
believes VUE is obligated, pursuant to the Partnership Agreement, to make cash
distributions after the close of each taxable year with respect to the taxable
income of VUE allocated to USAi's preferred interests for such taxable year.
Although USAi has stated that the actual amounts of cash distributions that it
believes are payable with respect to taxable income allocated to the preferred
interests would depend on several factors, it has estimated that those cash
distributions could have a present value to USAi of up to approximately $620
million. Vivendi Universal believes that USAi's position is without merit and
has so advised USAi.

     On April 15, 2003, USAi and one if its affiliates filed suit against
Vivendi Universal, USI Entertainment, Inc. and VUE in the Court of Chancery of
the State of Delaware. That suit is captioned USA Interactive, et al. v. Vivendi
Universal, S.A., et al., (CA No. 20260-NC). Vivendi was served with the
complaint on April 24, 2003. Plaintiffs seek an order requiring specific
performance of what they contend to be VUE's obligation to make tax
distributions to USAi and its affiliates, as well as a declaration from the
Court that VUE is obligated to make cash distributions to USAi and its
affiliates in that amount.

     To date the disagreement remains unresolved. Vivendi Universal believes
that the USAi plaintiffs' claims are without merit, and Vivendi Universal
intends to defend against such claims vigorously.

  ARBITRATION PROCEEDINGS BETWEEN ELEKTRIM S.A. AND DEUTSCHE TELEKOM

     Pursuant to an Investment Agreement dated June 1999, Vivendi Universal and
Elektrim S.A. ("Elektrim") created a holding company, Elektrim Telekomunikacja
Sp. zo.o ("Elektrim Telekomunikacja"), owned 30% by VU and 70% by Elektrim.
Pursuant to that Investment Agreement, Elektrim agreed to contribute to Elektrim
Telekomunikacja its 34.1% direct interest in Polska Telefonia Cyfrowa Sp. zo.o
("PTC") plus an additional 13.9% interest to be acquired from PTC's minority
shareholders. Before such contributions were made, Vivendi Universal and
Elektrim signed a Second Amended and Restated Investment Agreement in December
1999 pursuant to which Vivendi Universal increased its ownership in Elektrim
Telekomunikacja to 49% and Elektrim contributed its 48% direct interest in PTC,
as well as its 100% shareholding in the Bresnan Company, to Elektrim
Telekomunikacja.

     In October 1999, Dete Mobil Deutsche Telekom Mobil Net GmbH ("DT")
commenced arbitration proceedings in Vienna ("the first arbitration") alleging
that the acquisition by Elektrim on August 26, 1999, of PTC shares from four
minority shareholders in PTC violated certain pre-emption rights held by DT in
respect of 3.126% of the PTC shares acquired by Elektrim.

     DT sought (a) a declaration that the acquisition of PTC shares by Elektrim
on August 26, 1999, breached DT's pre-emptive rights set forth in the PTC
shareholders' agreement and was therefore ineffective; (b) an order requiring
3.126% of the PTC shares acquired by Elektrim to be transferred to DT at fair
market value; and (c) an order for certain damages. The first arbitration took
place in November 2001 with subsequent hearings in March and May 2002. On April
24, 2003, the arbitral panel issued its decision with respect to the first
arbitration. The panel rejected DT's allegation that its pre-emption rights had
been violated, and dismissed DT's claim.

     In December 2000, DT commenced a second arbitration proceeding against
Elektrim and Elektrim Telekomunikacja. DT alleged that the transfer by Elektrim
of its 48% interest in PTC's share capital to Elektrim Telekomunikacja in
December 1999 breached the PTC shareholders' agreement and certain provisions of
the governing documents of PTC. In this second arbitration proceeding, DT is
seeking either a declaration that the transfer of the PTC shares by Elektrim to
Elektrim Telekomunikacja in December 1999 was ineffective and that the shares
remained owned by Elektrim or an order requiring the transfer of all of the PTC
shares currently held by Elektrim Telekomunikacja to Elektrim. A declaration
that Elektrim had violated the PTC shareholders' agreement would allow DT to
exercise a call option under the PTC shareholders' agreement to purchase at net
book value the PTC shares contributed by Elektrim to Elektrim Telekomunikacja. A
hearing relating to this arbitration took place in February 2003 and a further
hearing is

                                       130
planned for September or October 2003. No indication has been given as to when a
decision will be issued with respect to this second arbitration.

  VOTING IRREGULARITIES AT GENERAL SHAREHOLDERS MEETING

     In a judgment dated May 2, 2002, the Commercial Court of Paris, following
submissions from Vivendi Universal, various shareholders and other interested
parties, stated that certain irregularities in the voting at the general
shareholders meeting on April 24, 2002, may cause the nullification of certain
resolutions rejected by shareholders at that meeting. The Court appointed an
expert to ascertain the possibility and existence of electronic manipulation of
the voting. In his report submitted on December 10, 2002, the Court's expert
accepted that there may have been radio interference with, or a malfunction of,
the voting equipment used at the general shareholders meeting.

     Following a determination that the resolutions at issue are no longer
pertinent to Vivendi Universal in 2003, Vivendi Universal and its shareholders
submitted a request for dismissal of this suit, which the Commercial Court
granted on February 4, 2003.

  INVESTIGATION RELATING TO CERTAIN FINANCIAL ACCOUNTS AND INFORMATION

     In July 2002, a French association of minority shareholders, APPAC, as well
as the president of that association in an individual capacity as a Vivendi
Universal shareholder, each filed a criminal complaint, in accordance with
French law, against an unspecified defendant. The two complaints were
consolidated on November 13, 2002, and three examining magistrates were
appointed. The French public prosecutor's initial indictment in this matter
specified potential crimes relating to the presentation and publication of
inaccurate, untrue and unfaithful accounts for Vivendi Universal for the 2000
and 2001 fiscal years; the distribution of sham dividends by Vivendi Universal
for the 2001 fiscal year; and the public distribution of false or deceptive
information concerning Vivendi Universal's condition and future prospects.
Vivendi Universal's application to join the action as a plaintiff was accepted
by order dated January 14, 2003. The other plaintiffs have appealed against this
order. That appeal was considered by the Court on May 14, 2003. On June 25,
2003, the Court of Appeals confirmed the order permitting Vivendi Universal to
join the action as a plaintiff.

  TRANSFER OF BROADCASTING RIGHTS FOR SOCCER PREMIER LEAGUE MATCHES TO CANAL+
  AND KIOSQUE

     On December 14, 2002, the board of the French soccer premier league (LFP)
awarded the exclusive broadcasting rights for French soccer premier league
matches for the 2004-2007 seasons to Canal+. By an order dated January 23, 2003,
the French competition authorities, pursuant to a complaint filed by TPS,
suspended attribution of the rights to Canal+ until such time as the authorities
could render a decision on the merits of the tender process and its outcome. On
February 6, 2003, Canal+ and Kiosque sought to have the court of appeal in Paris
cancel or amend the authorities' order. On February 16, 2003, the Court of
Appeal invited the parties to enter into a legal mediation procedure and the
parties agreed to do so. The Court of Appeal appointed two mediators on February
25, 2003. As a result of this court recommended mediation, all parties concerned
agreed to extend the duration of the existing contracts for an additional year
(i.e., through the 2004-2005 season). All suits have now been dismissed.

  INVESTIGATION BY THE U.S. INTERNAL REVENUE SERVICE

     The IRS has challenged the reported tax treatment by The Seagram Company
Ltd. ("Seagram") of the redemption in April 1995 of 156 million of the DuPont
shares held by Seagram. The IRS has proposed an adjustment against Seagram
which, if ultimately sustained, would result in Seagram owing approximately $1.5
billion in additional tax in respect of such redemption, plus interest from 1995
through March 2003 of approximately $1.2 billion (before tax benefits). Vivendi
Universal believes that it has adequately reserved in its financial statements
with respect to such matter. The matter is currently before the Appeals Division
of the IRS. While the outcome of any controversy cannot be predicted with
complete certainty, Vivendi Universal believes that this dispute with the IRS
will be resolved so as not to have a material adverse effect on its financial
statements as a whole.

                                       131
MESSIER TERMINATION AGREEMENT

     In July, 2002, an agreement relating to the termination of Jean-Marie
Messier, as Chief Executive Officer of Vivendi Universal, was submitted to the
Board of Directors of Vivendi Universal for approval. Following the Board's
refusal to approve that agreement, the management of Vivendi Universal, upon the
advice of Vivendi Universal's lawyers, decided to refuse to pay a severance
package to Mr. Messier, to put an end to the fringe benefits he was enjoying and
to ask for the repayment by Mr. Messier of his salary for July and August 2002,
which was paid to him by a U.S. subsidiary of Vivendi Universal. On September
25, 2002, the Vivendi Universal Board of Directors ratified the decision made by
Vivendi Universal's management.

     Pursuant to an arbitration agreement dated October 31, 2002 the dispute was
submitted to an arbitration tribunal constituted on January 17, 2003, under the
sponsorship of the American Arbitration Association in New York and composed of
three arbitrators. On June 27, 2003, the arbitration tribunal issued its award.
It denied Vivendi Universal's claim that Mr. Messier's so-called U.S.
Termination Agreement be voided. The arbitration tribunal ordered Vivendi
Universal to pay Mr. Messier the aggregate amount of E20.5 million provided for
in this agreement, less the portion of Mr. Messier's compensation that had been
paid to him during the third quarter of 2002, which Vivendi Universal asked to
be reimbursed. After reviewing the tribunal findings, Vivendi Universal intends
to challenge this decision through all available legal means, both in France and
in the United States.

  TVT RECORDS AND TVT MUSIC

     On August 20, 2002, TVT Records and TVT Music (collectively "TVT") filed
suit in Federal court in New York against The Island Def Jam Music Group ("IDJ")
and its Chairman, Lyor Cohen ("Cohen"), for breach of contract, tortious
interference with contract, promissory estoppel, and fraud in connection with
TVT's claim that IDJ and Cohen blocked the delivery of an album to TVT by the
band "CMC." TVT also alleged related copyright infringement claims against IDJ.
After a trial on liability in March 2003, IDJ and Cohen were found liable on all
claims, except that the jury did not find liability for fraudulent
misrepresentation or fraudulent inducement, but did find liability for
fraudulent concealment. Following the subsequent damages trial, on May 6, 2003,
the jury awarded TVT $132 million in damages, comprised of approximately $24
million in compensatory damages and $108 million in punitive damages. On June
16, 2003, IDJ and Cohen filed post-trial motions seeking to set aside the jury's
verdict. IDJ and Cohen are likely to file an appeal.

ITEM 9:  THE OFFER AND LISTING

MARKET PRICE INFORMATION

     Our ordinary shares currently trade on Euronext Paris SA and our ADSs trade
on the NYSE. The table below sets forth the reported high and low sales prices
of Vivendi and Vivendi Universal ordinary shares and ADSs on the Paris Bourse
and on the NYSE, respectively (and, for periods before September 2000, the high
and low bids for Vivendi ADSs in the over-the-counter market). For periods
before the completion of the Merger Transactions on December 8, 2000, the table
sets forth price information for Vivendi ordinary shares and ADSs; for periods
after that date, the table sets forth price information for Vivendi Universal
ordinary shares and ADSs. Each Vivendi ADS represented one-fifth of a Vivendi
ordinary share before the completion of the Merger Transactions, while each
Vivendi Universal ADS now represents one Vivendi Universal ordinary share. To
facilitate comparison of information (i) for periods before and after December
8, 2000, price information for the Vivendi ADSs is shown as if each Vivendi ADS
represented one Vivendi ordinary share, and (ii) the market prices for periods
prior to May 11, 1999 are restated to reflect the 3:1 stock split that occurred
on May 11, 1999. Prices are rounded to the nearest cent.

                                       132
Last Six Months
EURONEXT PARIS          NYSE
                                                   (ORDINARY SHARES)       (ADSS)
                                                   -----------------   ---------------
                                                    HIGH       LOW      HIGH     LOW
                                                   -------   -------   ------   ------
May, 2003........................................  E 15.95   E 13.28   $17.50   $15.55
April, 2003......................................    14.93     12.03    16.66    13.36
March, 2003......................................    14.80     11.03    15.85    12.15
February, 2003...................................    16.39     11.63    17.57    12.75
January, 2003....................................    17.98     14.92    18.90    16.40
December, 2002...................................    17.65     14.65    17.36    14.93
November, 2002...................................    17.29     10.86    16.79    11.06
Last Two Years by Quarter
EURONEXT PARIS           NYSE
                                                 (ORDINARY SHARES)         (ADSS)
                                                 ------------------   ----------------
                                                   HIGH       LOW      HIGH      LOW
                                                 --------   -------   -------   ------
2003
Second Quarter (through May 31)................  E  15.95   E 12.03   $ 17.50   $13.36
First Quarter..................................     17.98     11.03     18.90    12.15
2002
Fourth Quarter.................................  E  17.65   E 10.72   $ 17.36   $10.80
Third Quarter..................................     26.11      8.62     24.20     8.90
Second Quarter.................................     44.24     16.10     39.10    17.79
First Quarter..................................     64.40     40.66     57.90    35.65
2001
Fourth Quarter.................................     62.15     45.65     54.80    42.57
Third Quarter..................................     71.50     40.22     61.01    37.30
Second Quarter.................................     79.70     61.40     69.23    54.85
First Quarter..................................     82.00     61.20     76.00    54.30
Last Five Years
EURONEXT PARIS          NYSE
                                                   (ORDINARY SHARES)       (ADSS)
                                                   -----------------   ---------------
                                                    HIGH       LOW      HIGH     LOW
                                                   -------   -------   ------   ------
2003 (through May 31, 2003).....................   E 17.98   E 11.03   $57.90   $26.75
2002............................................     64.40      8.62   57.90      8.90
2001............................................     82.00     40.22   76.00     37.30
2000............................................    150.00     68.60   142.50    50.00
1999............................................     92.95     61.10   101.65    66.25
1998............................................     72.35     39.82   85.85     43.55
We urge you to obtain current market quotations.

ARRANGEMENTS FOR TRANSFER AND RESTRICTIONS ON TRANSFERABILITY

     Our statuts do not contain any restrictions relating to the transfer of
shares.

     Registered shares must be converted into bearer form before being
transferred on the Euronext Paris and, accordingly, must be recorded in an
account maintained by an accredited intermediary. A shareholder may initiate a
transfer by giving instructions to the relevant accredited intermediary. For
dealings on the Euronext

                                       133
Paris, a tax assessed on the price at which the securities are traded, or impot
sur les operations de bourse, is payable at the rate of 0.3% on transactions of
less than E 152,449 and at a rate of 0.15% for larger trades. This tax is
subject to a maximum assessment of E 612 per transaction. Non-residents of
France are not required to pay this tax. In addition, a fee or commission is
payable to the broker involved in the transaction, regardless of whether the
transaction occurs in France. No registration duty is normally payable in
France, unless a transfer instrument has been executed in France.

ITEM 10:  ADDITIONAL INFORMATION

GENERAL

     As of December 31, 2002, there were 1,068,148,584 Vivendi Universal
ordinary shares outstanding (including treasury shares). As of April 30, 2003,
we had 283,970 ordinary shares in treasury, with a gross book value of E 19.8
million. All of these ordinary shares were issued to Vivendi Universal and were
fully paid. Our ordinary shares have a nominal value of E 5.50 per share.
Vivendi Universal's statuts provide that ordinary shares may be held in
registered or bearer form, at the option of the shareholder.

SHARE CAPITAL INFORMATION

     As of April 29, 2003, we had 1,070,554,674 ordinary shares outstanding. We
estimate that as of that date, approximately 33.4% of our shares traded on the
Euronext Paris SA were held by French residents and approximately 23.9% by
residents of the US.

     As of April 29, 2003, there were 2,170 registered holders of ADSs holding a
total of 92,160,022 ADSs. As of April 29, 2003, there were 1,615 registered
holders of ADSs within the US holding a total of 91,570,190 ADSs.

UNDERTAKINGS TO INCREASE VIVENDI UNIVERSAL'S SHARE CAPITAL

     As of December 31, 2002, Vivendi Universal had undertaken to increase its
capital in connection with redeemable and convertible bonds, options, and
exchangeable shares.

     - Convertible bonds -- In January 1999, Vivendi issued 6,028,369 bonds to
       the public. Each bond is convertible into 3.124 Vivendi Universal
       ordinary shares. As of May 23, 2003, 6,024,329 of these bonds were
       outstanding and convertible into a total of 18,820,004 ordinary shares
       (which may be treasury or newly issued shares). The bonds are scheduled
       to be redeemed in 2003;

     - Veolia Environnement convertible bonds -- In April 1999, Veolia
       Environnement issued 10,516,606 bonds to the public. Each bond is
       convertible into 3.124 ordinary shares of Vivendi Universal or Veolia
       Environnement. As of May 23, 2003, 5,331,055 of these bonds were
       outstanding and convertible into a total of 16,654,225 shares (which may
       be treasury or newly-issued shares). The bonds are scheduled to be
       redeemed in 2005;

     - Options granted pursuant to Vivendi Universal share subscription
       plans -- As of December 31, 2002, there were outstanding options to
       subscribe for 31,579,751 Vivendi Universal ordinary shares or ADSs
       granted to Vivendi Universal's executive officers, management and
       employees pursuant to Vivendi Universal's share subscription plans
       (including 5,518,568 pursuant to Vivendi plans and 26,061,183 pursuant to
       former Seagram plans); As of May 23, 2003, there were outstanding options
       to subscribe for 33,233,550 Vivendi Universal ordinary shares or ADSs
       granted to Vivendi Universal's executive officers, management and
       employees pursuant to Vivendi Universal's share subscription plans
       (including 7,172,367 pursuant to former Vivendi plans and 26,061,183
       pursuant to former Seagram plans).

     - Convertible Bonds -- In connection with the Merger Transactions, we
       issued on December 8, 2000, bonds redeemable into 401,582,689 Vivendi
       Universal ordinary shares. These bonds were or are to be redeemed for (i)
       the ADSs of Vivendi Universal received by holders of Seagram common
       shares on closing of the merger, (ii) ADSs of Vivendi Universal to be
       issued to holders of exchangeable shares of Vivendi Universal Exchangeco
       Inc. when such holders exchange such shares from time to time,

                                       134
(iii) ADSs of Vivendi Universal to be issued to holders of stock options
       or stock appreciation rights of Seagram on exercise of such options or
       rights, and (iv) ADSs of Vivendi Universal to be issued to holders of
       other convertible securities of Seagram, such as the ACES, on conversion
       of such securities. As of May 23, 2003, bonds redeemable into 35,125,424
       Vivendi Universal ordinary shares were outstanding.

     - Notes mandatorily redeemable into ordinary shares -- On November 19,
       2002, Vivendi Universal issued 78,678,206 bonds to the public. Each bond
       is redeemable into one Vivendi Universal ordinary share. As of May 23,
       2003, 78,678,206 of these bonds were outstanding and redeemable into
       78,678,206 shares. The bonds are scheduled to be redeemed in 2005.

     Under the French commercial code, shareholders of French companies such as
Vivendi Universal have certain rights to purchase, on a pro rata basis,
securities issued by Vivendi Universal.

OPTIONS TO PURCHASE VIVENDI UNIVERSAL SECURITIES

     We have several share purchase option plans for the benefit of our
executive officers, management and other staff. As of May 23, 2003, options to
purchase approximately 57,771,981 Vivendi Universal ordinary shares or ADSs were
outstanding pursuant to these plans. The average expiration date of these
options was August 2008 and the average exercise price was E 65.58 for ordinary
shares and $53.61 for ADSs. Options to purchase shares of common stock of
MP3.com were converted into options to purchase ADSs of Vivendi Universal on
August 28, 2001. As of May 23, 2003, options to purchase approximately 431,575
Vivendi Universal ADSs were outstanding pursuant to these plans. The average
expiration date of these options was February 2010 and the average exercise
price was $136.84.

     Options to purchase shares of common stock of USAi were converted into
options to purchase ADSs of Vivendi Universal on May 7, August 5 and August 7,
2002. As of May 23, 2003, options to purchase approximately 5,987,114 Vivendi
Universal ADSs were outstanding pursuant to these plans. The average expiration
date of these options was October 2010 and the average exercise price was
$20.89.

HISTORY OF SHARE CAPITAL

     The table below sets forth the history of the share capital of Vivendi
Universal, S.A., formerly known as Sofiee S.A. Sofiee was a shell company
incorporated in 1987, and on December 8, 2000 it was the recipient of all the
assets in connection with the Merger Transactions described under "Item
4--Information on the Company--History and Development of the Company."
NOMINAL
MEETING                           NUMBER OF      VALUE OF      NOMINAL VALUE OF     TOTAL AMOUNT OF    TOTAL NUMBER
  DATE        TRANSACTION       SHARES ISSUED   THE SHARES   THE CAPITAL INCREASE    CAPITAL STOCK       OF SHARES
-------   -------------------   -------------   ----------   --------------------   ----------------   -------------
12/17/87  Formation                     2,500     FF 100          FF 250,000.00              250,000           2,500
05/14/98  Capital increase         16,784,000        100       1,678,400,000.00        1,678,650.000      16,786,500
06/15/00  Conversion of the                 0       E 16                 E 0.00          268,584,000      16,786,500
          capital to Euros
06/15/00  Capital increase                  0       16.5                   0.00          276,977,250      16,786,500
06/15/00  Three-for-one stock               0        5.5                   0.00          276,977,250      50,359,500
          split
12/08/00  Merger Transactions   1,029,666,247        5.5       5,663,164,358.50        5,940,141,609   1,080,025,747
12/31/00  Bonds redemption,           782,696        5.5           4,304,828.00        5,944,446,437   1,080,808,443
          warrants
          conversion,
          exercise of
          subscription option
01/18/01  Capital increase            343,127        5.5           1,887,198.50        5,946,333,635   1,081,151,570
          Group savings Plan
          3rd block 2000
135
NOMINAL
MEETING                           NUMBER OF      VALUE OF      NOMINAL VALUE OF     TOTAL AMOUNT OF    TOTAL NUMBER
  DATE        TRANSACTION       SHARES ISSUED   THE SHARES   THE CAPITAL INCREASE    CAPITAL STOCK       OF SHARES
-------   -------------------   -------------   ----------   --------------------   ----------------   -------------
04/24/01  Bonds redemption,        25,026,898        5.5         137,647,939.00     6,083,981,574.00   1,106,178,468
          warrants
          conversion,
          exercise of
          subscription option
04/26/01  Capital increase            350,392        5.5           1,927,156.00     6,085,908,730.00   1,106,528,860
          Group Savings Plan
          1st block 2001
06/28/01  Bonds redemption,        11,448,920        5.5             62,969,060        6,148,877,790   1,117,977,780
          warrants
          conversion,
          exercise of
          subscription option
06/28/01  Cancellation --        (10,301,924)        5.5           (56,660,582)        6,092,217,208   1,107,675,856
          consolidation of
          bare legal and
          beneficial
          ownership rights
06/28/01  Cancellation           (22,000,000)        5.5          (121,000,000)        5,971,217,208   1,085,675,856
          Treasury Shares
07/25/01  Capital increase            917,745        5.5           5,047,597,50        5,976,264,805   1,086,593,601
          Group Savings Plan
          2nd block 2001
09/25/01  Bonds redemption,         3,221,230        5.5             17,716,765        5,993,981,570   1,089,814,831
          exercise of
          subscription option
09/25/01  Cancellation --         (3,153,175)        5.5        (17,342,462.50)        5,976,639,108   1,086,661,656
          consolidation of
          bare legal and
          beneficial
          ownership rights
11/14/01  Bonds redemption,         3,304,178        5.5             18,172,979        5,994,812,087   1,089,965,834
          exercise of
          subscription option
11/14/01  Cancellation --         (3,183,881)        5.5        (17,511,345.50)     5,977,300,741.50   1,086,781,953
          consolidation of
          bare legal and
          beneficial
          ownership rights
11/14/01  Cancellation            (1,484,560)        5.5            (8,165,080)     5,969,135,661.50   1,085,297,393
          Treasury Shares
12/31/01  Bonds redemption,           530,126        5.5              2,915,693     5,972,051,354.50   1,085,827,519
          exercise of
          subscription option
01/17/02  Capital increase          1,337,609        5.5           7,356,849.50        5,979,408,204   1,087,165,128
          Group Savings Plan
          3rd block 2001
01/24/02  Bonds redemption,           737,593        5.5           4,056,761.50     5,983,464,965.50   1,087,902,721
          exercise of
          subscription option
01/24/02  Cancellation --           (203,560)        5.5            (1,119,580)     5,982,345,385.50   1,087,699,161
          consolidation of
          bare legal and
          beneficial
          ownership rights
04/24/02  Bonds redemption,           961,530        5.5              5,288,415     5,987,633,800.50   1,088,660,691
          exercise of
          subscription option
04/24/02  Cancellation --           (351,988)        5.5            (1,935,934)     5,985,697,866.50   1,088,308,703
          consolidation of
          bare legal and
          beneficial
          ownership rights
136
NOMINAL
MEETING                           NUMBER OF      VALUE OF      NOMINAL VALUE OF     TOTAL AMOUNT OF    TOTAL NUMBER
  DATE        TRANSACTION       SHARES ISSUED   THE SHARES   THE CAPITAL INCREASE    CAPITAL STOCK       OF SHARES
-------   -------------------   -------------   ----------   --------------------   ----------------   -------------
06/25/02  Bonds redemption,         3,455,065        5.5          19,002,857.50        6,004,700,724   1,091,763,768
          exercise of
          subscription option
06/25/02  Cancellation --         (3,450,553)        5.5        (18,978,041.50)     5,985,722,682.50   1,088,313,215
          consolidation of
          bare legal and
          beneficial
          ownership rights
08/13/02  Bonds redemption,         7,195,874        5.5             39,577,307     6,025,299,989.50   1,095,509,089
          exercise of
          subscription option
08/13/02  Cancellation --         (6,890,538)        5.5           (37,897,959)     5,987,402,030.50   1,088,618,551
          consolidation of
          bare legal and
          beneficial
          ownership Rights
12/20/02  Cancellation of        (20,469,967)        5.5       (112,584,818.50)        5,874,817,212   1,068,148,584
          Treasury Shares
01/15/03  Capital increase          2,402,142        5.5             13,211,781        5,888,028,993   1,070,550,726
          Group Savings Plan
          2002
01/29/03  Bonds redemption            455,510        5.5              2,505,305        5,890,534,298   1,071,006,236
01/29/03  Cancellation --           (451,562)        5.5              2,483,591        5,888,050,707   1,070,554,674
          consolidation of
          bare legal and
          beneficial
          ownership Rights
ORGANIZATIONAL DOCUMENT OF VIVENDI UNIVERSAL

  PURPOSES

     Under Article 2 of our statuts, the corporate purpose of Vivendi Universal
is to engage in all media and communications activities and all activities
related to the environment, to manage, acquire and sell securities of other
companies and to engage in any transactions related to the foregoing purposes.

  DIRECTORS

     Under the French commercial code, each director must be a shareholder of
Vivendi Universal. Our statuts provide that a director must own at least 750
shares of Vivendi Universal for as long as he or she serves as a director.

     The French commercial code provides that each director is eligible for
reappointment upon the expiration of his or her term of office. Our statuts fix
the term of reappointment at four years, provided that no more than one-fifth of
the directors may be 70 or older. No individual director may be over 75.

     Under the French commercial code, any transaction directly or indirectly
between a company and a member of its board of directors, its officers or one of
its shareholders holding more than 5% of voting securities, if any, that cannot
be reasonably considered to be in the ordinary course of business of the company
or is not at arm's-length, is subject to the board of directors' prior consent.
A member of the board of directors may not participate in a vote to consent to a
transaction in which he or she is directly or indirectly interested. Any such
transaction concluded without the prior consent of the board of directors can be
voided if it is harmful to the company. The interested member of the board of
directors or officer can be held liable on this basis. The statutory auditor
must be informed of the transaction within one month following its conclusion
and must prepare a special report to be submitted to the shareholders for
approval at their next meeting. In the event the transaction is not ratified by
the shareholders at a shareholders meeting, it will remain enforceable by third
parties against the company, but the company may in turn hold the interested
member of the board of directors and, in some circumstances, the other members
of the board of directors, liable for any damages it

                                       137
may suffer as a result. In addition, the transaction may be canceled if it is
fraudulent. Moreover, certain transactions between a corporation and a member of
its board of directors who is a natural person or its officers, if any, are
prohibited under the French commercial code.

     Our directors are not authorized, in the absence of an independent quorum,
to vote compensation to themselves or other directors.

ORDINARY AND EXTRAORDINARY MEETINGS

  GENERAL

     In accordance with the French commercial code, there are two types of
shareholders general meetings: ordinary and extraordinary.

     Ordinary general meetings of shareholders are required for matters that are
not specifically reserved by law to extraordinary general meetings, such as:

     - approving annual financial statements (individual and consolidated);

     - electing, replacing and removing members of the board of directors;

     - appointing independent auditors;

     - declaring dividends or authorizing dividends to be paid in shares; and

     - issuing debt securities.

     Extraordinary general meetings of shareholders are required for approval of
matters such as amendments to our statuts, including any amendment required in
connection with extraordinary corporate actions.

     Extraordinary corporate actions also include:

     - changing our name or corporate purpose;

     - increasing or decreasing our share capital;

     - creating a new class of equity securities;

     - authorizing the issuance of investment certificates or convertible or
       exchangeable securities;

     - establishing any other rights to equity securities;

     - selling or transferring substantially all of our assets; and

     - our voluntary liquidation.

  SHAREHOLDERS MEETINGS

     The French commercial code requires our board of directors to convene an
annual ordinary general meeting of shareholders for approval of the annual
accounts. This meeting must be held within six months of the end of each fiscal
year. This period may be extended by an order of the President of the Commercial
Court (Tribunal de Commerce). The board of directors may also convene an
ordinary or extraordinary meeting of shareholders upon proper notice at any time
during the year. If the board of directors fails to convene a shareholders
meeting, our independent auditors or a court-appointed agent may call the
meeting. Any of the following may request the court to appoint an agent:

     - one or several shareholders holding at least 5% of our share capital;

     - the workers' committee (Comite d'Entreprise) in an emergency;

     - an interested party in an emergency;

     - duly qualified associations of shareholders who have held their shares in
       registered form for at least two years and who together hold at least 2%
       of the voting rights of Vivendi Universal; or

                                       138
- in a bankruptcy, our liquidator or court-appointed agent may also call a
       shareholders meeting in some instances.

     Shareholders holding more than 50% of our share capital or voting rights
may also convene a shareholders meeting after a public offer or a sale of a
controlling stake of Vivendi Universal's capital.

  NOTICE OF SHAREHOLDERS MEETINGS

     We must announce general meetings at least 30 days in advance by means of a
preliminary notice published in the Bulletin des Annonces Legales Obligatoires
(the BALO). The preliminary notice must first be sent to the COB. The COB also
recommends that the preliminary notice be published in a financial newspaper of
national circulation in France. The preliminary notice must disclose, among
other things, the time, date, and place of the meeting, whether the meeting will
be ordinary or extraordinary, the agenda, a draft of the resolutions to be
submitted to the shareholders, a description of the procedures which holders of
bearer shares must follow to attend the meeting, the procedure for voting by
mail, and a statement informing the shareholders that they may propose
additional resolutions to the board of directors within ten days of the
publication of the notice.

     We must send a final notice containing the agenda and other information
about the meeting at least 15 days prior to the meeting or at least six days
prior to the resumption of any meeting adjourned for lack of a quorum. The final
notice must be sent by mail to all registered shareholders who have held shares
for more than one month prior to the date of the preliminary notice. The final
notice must also be published in the BALO and in a newspaper authorized to
publish legal announcements in the local administrative department in which we
are registered, with prior notice having been given to the COB.

     In general, shareholders can take action at shareholders meetings only on
matters listed in the agenda for the meeting. One exception to this rule is that
shareholders may take action with respect to the dismissal of members of the
board of directors and various other matters regardless of whether these actions
are on the agenda. Additional resolutions to be submitted for approval by the
shareholders at the meeting may be proposed to the board of directors (within
ten days of the publication of the preliminary notice in the BALO) by:

     - one or several shareholders holding a specified percentage of shares
       (currently 0.5%); or

     - duly qualified associations of shareholders who have held their shares in
       registered form for at least two years and who together hold at least a
       specified percentage of Vivendi Universal's voting rights (currently 1%).

     The board of directors must submit properly proposed resolutions to a vote
of the shareholders.

     Before a meeting of shareholders, any shareholder may submit written
questions to the board of directors relating to the agenda for the meeting. The
management board must respond to these questions during the meeting.

  ATTENDANCE AND VOTING AT SHAREHOLDERS MEETINGS

     Each share confers on the shareholder the right to cast one vote, subject
to certain limited exceptions under our statuts. Shareholders may attend
ordinary meetings and extraordinary meetings and exercise their voting rights
subject to the conditions specified in the French commercial code and our
statuts. There is no requirement that shareholders have a minimum number of
shares in order to attend or to be represented at an ordinary or extraordinary
general meeting.

     To participate in any general meeting, a holder of shares held in
registered form must have shares registered in his or her name in a shareholder
account maintained by Vivendi Universal or on its behalf by an agent appointed
by Vivendi Universal at the latest at 3:00 pm (Paris time) on the day preceding
the meeting. A holder of bearer shares must obtain a certificate from the
accredited intermediary with whom the holder has deposited his or her shares.
This certificate must indicate the number of bearer shares the holder owns and
must state that these shares are not transferable until the time fixed for the
meeting. The holder must deposit
                                       139
this certificate at the place specified in the notice of the meeting at the
latest at 3:00 pm (Paris time) on the day preceding the meeting.

  PROXIES AND VOTES BY MAIL

     In general, all shareholders who have properly registered their shares or
duly presented a certificate from their accredited financial intermediary may
participate in general meetings. Shareholders may participate in general
meetings either in person or by proxy. Shareholders may vote in person, by proxy
or by mail. Upon decision of the board of directors specified in the notice of
meeting, shareholders may also vote by Internet.

     Proxies will be sent to any shareholder on request. To be counted, those
proxies must be received at Vivendi Universal's registered office, or at any
other address indicated on the notice convening the meeting, prior to the date
of the meeting. A shareholder may grant proxies to his or her spouse or to
another shareholder. A shareholder that is a corporation may grant proxies to a
legal representative. Alternatively, the shareholder may send a blank proxy
without nominating any representative. In this case, the chairman of the meeting
will vote those blank proxies in favor of all resolutions proposed by the board
of directors and against all others.

     With respect to votes by mail, we are required to send shareholders a
voting form. The completed form must be returned to Vivendi Universal at least
three days prior to the date of the shareholders meeting.

  QUORUM

     The French commercial code requires that 25% of the shares entitled to
voting rights must be represented by shareholders present in person or voting by
mail or by proxy to fulfill the quorum requirement for:

     - an ordinary general meeting; or

     - an extraordinary general meeting where an increase in Vivendi Universal's
       share capital is proposed through incorporation of reserves, profits or
       share premium.

     The quorum requirement is one-third of the shares entitled to voting
rights, on the same basis, for any other extraordinary general meeting.

     If a quorum is not present at a meeting, the meeting is adjourned. When an
adjourned meeting is resumed, there is no quorum requirement for an ordinary
meeting or for an extraordinary general meeting where an increase in Vivendi
Universal's share capital is proposed through incorporation of reserves, profits
or share premium. However, only questions that are on the agenda of the
adjourned meeting may be discussed and voted upon. In the case of any other
reconvened extraordinary general meeting, shareholders representing at least 25%
of outstanding voting rights must be present in person or be voting by mail or
proxy for a quorum. If a quorum is not present, the reconvened meeting may be
adjourned for a maximum of two months. Any deliberation by the shareholders that
takes place without a quorum is void.

  MAJORITY

     A simple majority of shareholders may pass any resolution on matters
required to be considered at an ordinary general meeting, or concerning a
capital increase by incorporation of reserves, profits or share premium at an
extraordinary general meeting. At any other extraordinary general meeting, a
two-thirds majority of the shareholder votes cast is required.

     A unanimous shareholder vote is required to increase liabilities of
shareholders.

     Abstention from voting by those present or those represented by proxy or
voting mail is counted as a vote against the resolution submitted to the
shareholder vote.

     In general, a shareholder is entitled to one vote per share at any general
meeting. Under the French commercial code, shares of a company held by entities
controlled directly or indirectly by that company are not entitled to voting
rights and are not considered for quorum purposes.

                                       140
Limitations on Right to Own Securities

     Neither French law nor our statuts contain any provision that limits the
right to own Vivendi Universal's securities or limits the rights of
shareholders, including non-resident or foreign shareholders, to hold or
exercise voting rights associated with those securities, except as described
below under "--Anti-Takeover Provisions."

  Anti-Takeover Provisions

     Our statuts provide that any person or group that fails to notify the
company within 15 days of acquiring or disposing of 0.5% or any multiple of 0.5%
of our ordinary shares may be deprived of voting rights for shares in excess of
the unreported fraction. Vivendi Universal's statuts also adjust the voting
rights of shareholders who own (within the meaning of the statuts and Article L
233-9 of the French commercial code to which those statuts refer) in excess of
2% of the total voting power of Vivendi Universal through the application of a
formula designed to limit the voting power of these shareholders to that which
they would possess if 100% of the shareholders were present at the meeting at
which the vote in question takes place. This last provision is not applicable to
any shareholders meeting where a quorum of 60% or more is present.

  ANTI-TAKEOVER EFFECTS OF APPLICABLE LAW REGULATIONS

     In addition, the French commercial code provides that any individual or
entity, acting alone or in concert with others, that becomes the owner, directly
or indirectly, of more than 5%, 10%, 20%, one-third, 50% or two-thirds of the
outstanding shares or voting rights of a listed company in France, such as
Vivendi Universal, or that increases or decreases its shareholding or voting
rights above or below any of those percentages, must notify Vivendi Universal
within 15 calendar days of the date it crosses such thresholds of the number of
shares it holds and their voting rights. The individual or entity must also
notify the Conseil des Marches Financiers (CMF) within five trading days of the
date it crosses these thresholds.

     The French New Economic Regulation Act has also imposed the notification to
the CMF of any agreement which provides preferential conditions of acquisition
or divestiture of shares representing 0.5% or more of the share capital or
voting securities, failing which such provision will be unenforceable during the
course of a tender offer.

     French law and COB regulations impose additional reporting requirements on
persons who acquire more than 10% or 20% of the outstanding shares or voting
rights of a listed company. These persons must file a report with the company,
the COB and the CMF within fifteen days of the date they cross the threshold. In
the report, the acquirer must specify its intentions for the following 12-month
period, including whether or not it intends to continue its purchases, to
acquire control of the company in question or to nominate candidates for the
board of directors. The CMF makes the notice public. The acquirer must also
publish a press release stating its intentions in a financial newspaper of
national circulation in France. The acquirer may amend its stated intentions,
provided that it does soon the basis of significant changes in its own situation
or that of its shareholders. Upon any change of intention, it must file a new
report.

     Under CMF regulations, and subject to limited exemptions granted by the
CMF, any person or persons acting in concert that own in excess of one-third of
the share capital or voting rights of a French listed company must initiate a
public tender offer for the balance of the share capital of such company.

     To permit holders to give the required notice, Vivendi Universal is
required to publish in the BALO no later than 15 calendar days after the annual
ordinary general meeting of shareholders information with respect to the total
number of voting rights outstanding as of the date of such meeting. In addition,
if the number of outstanding voting rights changes by 5% or more between two
annual ordinary general meetings, Vivendi Universal is required to publish in
the BALO, within 15 calendar days of such change, the number of voting rights
outstanding and provide the CMF with written notice of such information. The CMF
publishes the total number of voting rights so notified by all listed companies
in a weekly notice (avis), noting the date each such number was last updated.

                                       141
If any shareholder fails to comply with the notification requirement
described above, the shares or voting rights in excess of the relevant threshold
will be deprived of voting rights for all shareholders meetings until the end of
a two-year period following the date on which their owner complies with the
notification requirements. In addition, any shareholder who fails to comply with
these requirements may have all or part of its voting rights suspended for up to
five years by the Commercial Court at the request of the chairman, any
shareholder or the COB, and may be subject to a fine.

VIVENDI UNIVERSAL ORDINARY SHARES

  DIVIDENDS

     Dividends on our ordinary shares are distributed to shareholders pro rata.
Outstanding dividends are payable to shareholders on the date of the
shareholders meeting at which the distribution of dividends is approved, subject
to any conditions imposed by the shareholders at the meeting. The dividend
payment date is decided by the shareholders at an ordinary general meeting (or
by the board of directors in the absence of such a decision by the
shareholders). Under the French commercial code, we must pay any dividends
within nine months of the end of our fiscal year unless otherwise authorized by
court order. Subject to certain conditions, the board of directors can decide
the distribution of interim dividends during the course of the fiscal year, but
in any case before the approval of the annual accounts by the annual ordinary
general meeting of shareholders. Dividends on shares that are not claimed within
five years of the date of declared payment revert to the French government.

  VOTING RIGHTS

     In general, each Vivendi Universal ordinary share carries the right to cast
one vote in shareholder elections. However, our statuts adjust the voting rights
of shareholders who own in excess of 2% of the total voting power of Vivendi
Universal through the application of a formula designed to limit the voting
power of those shareholders to that which they would possess if 100% of the
shareholders were present at the meeting at which the vote in question takes
place. See above "--Anti-Takeover Provisions." This provision is not applicable
to any shareholders meeting where a quorum of 60% or more is present.

  LIQUIDATION RIGHTS

     If Vivendi Universal is liquidated, any assets remaining after payment of
its debts, liquidation expenses and all of its remaining obligations will be
distributed first to repay in full the nominal value of its shares. Any surplus
will be distributed pro rata among shareholders in proportion to the nominal
value of their shareholdings.

  PRE-EMPTIVE RIGHTS

     Under the French commercial code, if we issue additional shares, or any
equity securities or other specific kinds of additional securities carrying a
right, directly or indirectly, to purchase equity securities issued by us for
cash, current shareholders will have pre-emptive rights on these securities on a
pro rata basis. These pre-emptive rights will require Vivendi Universal to give
priority treatment to those shareholders over other persons wishing to subscribe
for the securities. The rights entitle the individual or entity that holds them
to subscribe to an issue of any securities that may increase our share capital
by means of a cash payment or a set-off of cash debts. Pre-emptive rights are
transferable during the subscription period relating to a particular offering.
These rights may also be listed on the Euronext Paris SA.

     A two-thirds majority of our ordinary shares entitled to vote at an
extraordinary general meeting may vote to waive pre-emptive rights with respect
to any particular offering. French law requires a company's board of directors
and independent auditors to present reports that specifically address any
proposal to waive pre-emptive rights. In the event of a waiver, the issue of
securities must be completed within the period prescribed by law. The
shareholders may also decide at an extraordinary general meeting to give the
existing shareholders a non-transferable priority right to subscribe for the new
securities during a limited period of time. Shareholders may also waive their
own pre-emptive rights with respect to any particular offering.
                                       142
AMENDMENTS TO RIGHTS OF HOLDERS

     The rights of holders of our ordinary shares can be amended only by action
of an extraordinary general meeting. Pursuant to French law, in some cases where
an amendment would increase shareholders obligations, a special majority is
required for approval. Depending on the particular proposed amendment, the
special majority may be two-thirds, three-quarters or unanimity of the voting
shares. Consistent with French law, the Vivendi Universal statuts require a
quorum of one-third of the voting shares for an extraordinary general meeting.

MATERIAL CONTRACTS

     In view of the size and scope of the operations of our company, we believe
that the only agreements to which we or any of our subsidiaries are a party that
could be considered material to our company as a whole are as follows: (1) the E
2.5 billion Dual Currency Credit Facility, (2) the E 3.0 billion Multicurrency
Revolving Credit Facility, (3) the $920 million VUE Facility, (4) the E1.3
billion SIT Acquisition Facility and (5) the indenture governing the Senior
Notes. For a description of each of these contracts, see "Item 4--Information on
the Company--Summary of Indebtedness."

EXCHANGE CONTROLS

     The French commercial code currently does not limit the right of
nonresidents of France or non-French persons to own and vote shares. However,
nonresidents of France must file an administrative notice with French
authorities in connection with the acquisition of a controlling interest in our
company. Under existing administrative rulings, ownership of 20% or more of our
share capital or voting rights is regarded as a controlling interest, but a
lower percentage might be held to be a controlling interest in some
circumstances depending upon factors such as:

     - the acquiring party's intentions; and

     - the acquiring party's ability to elect directors, and financial reliance
       by us on the acquiring party.

     French exchange control regulations currently do not limit the amount of
payments that we may remit to nonresidents of France. Laws and regulations
concerning foreign exchange controls do require, however, that all payments or
transfers of funds made by a French resident to a nonresident be handled by an
accredited intermediary. In France, all registered banks and most credit
establishments are accredited intermediaries.

TAXATION

     On August 31, 1994, the United States and France entered into the
Convention between the United States of America and France for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on
Income and Capital (the Treaty). The following is a general summary of the
principal tax effects that may apply to you as a holder of our ordinary shares
or ADSs for purposes of US federal income tax and French tax, if all of the
following apply to you:

     - you own, directly or indirectly, less than 10% of our share capital;

     - you are:

        - an individual who is a citizen or resident of the US for US federal
          income tax purposes;

        - a corporation or other entity taxable as a corporation that is created
          or organized in or under the laws of the US or any political
          subdivision thereof;

        - an estate, the income of which is subject to US federal income
          taxation regardless of its source; or

        - a trust, if a court within the US is able to exercise primary
          supervision over its administration and one or more US persons have
          the authority to control all of the substantial decisions of the
          trust;

     - you are entitled to the benefits of the Treaty under the "Limitations of
       Benefits" article of the Treaty;

                                       143
- you hold your ordinary shares or ADSs of our company as capital assets;
       and

     - your functional currency is the US dollar.

     If a partnership holds ordinary shares or ADSs, the US federal income tax
treatment of a partner will generally depend upon the status of the partner and
upon the activities of the partnership. If you are a partner of a partnership
holding ordinary shares or ADSs, you should consult your own tax advisor.

     This summary is based in part upon the representations of the depositary,
and the assumption that each obligation in the deposit agreement and any related
agreement will be performed in accordance with its terms. In general, and taking
into account these assumptions, holders of ADSs will be treated as the owners of
the ordinary shares represented by such ADSs, and exchanges of ordinary shares
for ADSs, and ADSs for ordinary shares, will not be subject to US federal income
or French tax.

     YOU ARE STRONGLY URGED TO CONSULT YOUR OWN TAX ADVISOR REGARDING THE
CONSEQUENCES TO YOU OF ACQUIRING, OWNING OR DISPOSING OF VIVENDI UNIVERSAL
ORDINARY SHARES OR ADSS, RATHER THAN RELYING ON THIS SUMMARY. The summary may
not apply to you or may not completely or accurately describe tax consequences
to you. For example, special rules may apply to US expatriates, insurance
companies, tax-exempt organizations, financial institutions, persons subject to
the alternative minimum tax, securities broker-dealers, traders in securities
that elect to mark-to-market and persons holding their ordinary shares or ADSs
as parties to a straddle or conversion transaction, among others. Those special
rules are not discussed in this annual report. The summary is based on the laws,
conventions and treaties in force as of the date of this annual report, all of
which are subject to changes, possibly with retroactive effect. Also, this
summary does not discuss any tax rules other than US federal income tax and
French tax rules. Further, the US and French tax authorities and courts are not
bound by this summary and may disagree with its conclusions.

  TAXATION OF DIVIDENDS

  Withholding Tax and Avoir Fiscal

     We will withhold tax from your dividend at the reduced rate of 15%,
provided that you have complied with the following procedures:

     - You must complete French Treasury Form RF1 A EU-No. 5052, "Application
       for Refund," and send it to the French tax authorities before the date of
       payment of the dividend. If you are not an individual, you must also send
       the French tax authorities an affidavit attesting that you are the
       beneficial owner of all the rights attached to the full ownership of the
       ordinary shares or ADSs, including, among other things, the dividend
       rights, at the Centre des Impots des Non Residents, 9 rue d'Uzes, 75094
       Paris Cedex 2, France.

     - If you cannot complete Form RF1 A EU-No. 5052 before the date of payment
       of the dividend, you may complete a simplified certificate and send it to
       the French tax authorities. This certificate must state that:

     - you are a resident of the US for purposes of the Treaty;

     - your ownership of our ordinary shares or ADSs is not effectively
       connected with a permanent establishment or a fixed base in France;

     - you own all the rights attached to the full ownership of the ordinary
       shares or ADSs, including, among other things, the dividend rights;

     - you meet all the requirements of the Treaty for the reduced rate of
       withholding tax; and

     - you claim the reduced rate of withholding tax.

     If you have not completed Form RF1 A EU-No. 5052 or the simplified
certificate before the dividend payment date, we will deduct French withholding
tax at the rate of 25%. In that case, you may claim a refund of the excess
withholding tax by completing and providing the French tax authorities with Form
RF1 A EU-No. 5052 before December 31 of the calendar year following the year
during which the dividend is paid.
                                       144
The Application for Refund, together with instructions, can be obtained
from the US Internal Revenue Service or from the Centre des Impots des Non
Residents upon request. After completing it, you send it to the Centre des
Impots des Non Residents.

     Under the Treaty, you may be entitled, in certain circumstances, to a
French tax credit (called the avoir fiscal). Effective January 1, 2002, under
French tax law, a resident of France is entitled to an avoir fiscal in respect
of a dividend received from a French corporation. Under regulation n degrees 4
J-2-01 of the French Revenue Code, the avoir fiscal is limited to dividends
approved at the annual general meeting of shareholders. The avoir fiscal is
equal to 50% of the amount of the dividend for individuals, 50% for companies
owning more than 5% of Vivendi Universal's capital and 10% for other
shareholders. You may be entitled to a payment equal to the avoir fiscal, less a
15% withholding tax, if any one of the following applies to you:

     - you are an individual or other non-corporate holder that is a resident of
       the US for purposes of the Treaty;

     - you are a US corporation, other than a regulated investment company that
       owns less than 10% of our share capital;

     - you are a US corporation that is a regulated investment company and that
       owns, directly or indirectly, less than 10% of the share capital of our
       company, provided that less than 20% of your ordinary shares or ADSs are
       beneficially owned by persons who are neither citizens nor residents of
       the US; or

     - you are a partnership or trust that is a resident of the US for purposes
       of the Treaty, but only to the extent that your partners, beneficiaries
       or grantors would qualify as eligible under the first or second points on
       this list and are subject to US income tax with respect to such dividends
       and payment of the avoir fiscal.

     If you are eligible, you may claim the avoir fiscal by completing Form RF1
A EU-No. 5052 and sending it to the French tax authorities at the Centre des
Impots des Non Residents before December 31 of the year following the year in
which the dividend is paid. As noted below, you will not receive this payment
until after January 15 of the calendar year following the year in which the
dividend was paid. To receive the payment, you must submit a claim to the French
tax authorities and attest that you are subject to US federal income taxes on
the payment of the avoir fiscal and the related dividend. For partnerships or
trusts, the partners, beneficiaries or grantors, as applicable, must make this
attestation.

     Specific rules apply to the following:

     - tax-exempt US pension funds, which include the exempt pension funds
       established and managed in order to pay retirement benefits subject to
       the provisions of Section 401(a) of the Internal Revenue Code (qualified
       retirement plans), Section 403 of the Internal Revenue Code (tax deferred
       annuity contracts) or Section 457 of the Internal Revenue Code (deferred
       compensation plans); and

     - various other tax-exempt entities, including certain state-owned
       institutions, not-for-profit organizations and individuals (with respect
       to dividends they beneficially own and that are derived from an
       individual retirement account).

     Entities in these two categories are eligible for a reduced withholding tax
rate of 15% on dividends, subject to the same withholding tax filing
requirements as eligible US holders, except that they may have to supply
additional documentation evidencing their entitlement to these benefits. These
entities are not entitled to the full avoir fiscal. They may claim a partial
avoir fiscal equal to 30/85 of the gross avoir fiscal, provided that they own,
directly or indirectly, less than 10% of our capital and that they satisfy the
filing formalities specified in Internal Revenue Service regulations.

     The avoir fiscal or partial avoir fiscal and any French withholding tax
refund are generally expected to be paid within 12 months after the holder of
ordinary shares or ADSs files Form RF1 A EU-No. 5052. However, they will not be
paid before January 15 following the end of the calendar year in which the
dividend is paid.

     For US federal income tax purposes, the gross amount of a dividend and any
avoir fiscal, including any French withholding tax, will be included in your
gross income as dividend income when payment is actually or
                                       145
constructively received by the shareholder in the case of ordinary shares or the
depositary in the case of ADSs, to the extent they are paid out of our current
or accumulated earnings and profits as calculated for US federal income tax
purposes. If those dividends constitute qualified dividend income ("QDI") and
you are an individual holder of our ordinary shares or ADSs, you will generally
pay tax on such dividends at rates applicable to net capital gains (see
"Taxation of Capital Gains"), provided that certain holding period requirements
are satisfied. Dividends paid by our company will be QDI if we are a Qualified
Foreign Corporation ("QFC") at the time the dividends are paid. We believe that
we are currently, and will continue to be, a QFC so as to allow dividends paid
by us to be QDI for US federal income tax purposes. If you are a corporate
holder of our ordinary shares or ADSs, you will not benefit from the reduced
rate on dividends available to individual holders. Dividends paid by our company
will not give rise to any US dividends received deduction.

     Also for US federal income tax purposes, the amount of any dividend paid in
euros or French francs, including any French withholding taxes, will be equal to
the US dollar value of the euros or French francs on the date the dividend is
included in income, regardless of whether the payment is in fact converted into
US dollars. You will generally be required to recognize US source ordinary
income or loss when you sell or dispose of euros or French francs. You may also
be required to recognize foreign currency gain or loss if you receive a refund
under the Treaty of tax withheld in excess of the Treaty rate. This foreign
currency gain or loss will generally be US source ordinary income or loss.

     To the extent that any dividends paid exceed our current and accumulated
earnings and profits as calculated for US federal income tax purposes, the
distribution will be treated as follows:

     - first, as a tax-free return of capital to the extent of the adjusted tax
       basis in your ordinary shares or ADSs, which will cause a reduction in
       the adjusted tax basis of your ordinary shares or ADSs in our company.
       This adjustment will increase the amount of gain, or decrease the amount
       of loss, that you will recognize if you later dispose of those ordinary
       shares or ADSs; and

     - second, the balance of the dividend in excess of the adjusted tax basis
       in your ordinary shares or ADSs will be taxed as capital gain recognized
       on a sale or exchange.

     French withholding tax imposed on the dividends you receive and on any
avoir fiscal at 15% under the Treaty is treated as payment of a foreign income
tax. You may take this amount as a deduction from your gross income or a credit
against your US federal income tax liability, subject to specific conditions and
limitations. Dividends will generally constitute foreign source "passive" income
for foreign tax credit purposes. For recipients predominantly engaged in the
active conduct of a banking, insurance, financing or similar business, dividends
paid by our company will generally constitute foreign source "financial
services" income for foreign tax credit purposes.

  THE PRECOMPTE

     A French company must pay an equalization tax (called the precompte) to the
French tax authorities if it distributes dividends out of:

     - profits that have not been taxed at the ordinary corporate income tax
       rate, or

     - profits that have been earned and taxed more than five years before the
       distribution.

     The amount of the precompte is 50% of the net dividends before withholding
tax.

     If you are not entitled to the full avoir fiscal, you may generally obtain
a refund from the French tax authorities of any precompte paid by us with
respect to dividends distributed to you. Under the Treaty, the amount of the
precompte refunded to US residents is reduced by the 15% withholding tax applied
to dividends and by the partial avoir fiscal, if any. You are entitled to a
refund of any precompte that we actually pay in cash, but not to any precompte
that we pay by offsetting French and/or foreign tax credits. To apply for a
refund of the precompte, you should file French Treasury Form RF1 B EU-No. 5053
before the end of the year following the year in which the dividend was paid.
The form and its instructions are available from the Internal Revenue Service in
the United States or from the Centre des Impots des Non Residents.
                                       146
For US federal income tax purposes, the amount of the precompte, including
any French withholding tax, will be included in your gross income as dividend
income in the year you receive it to the extent the precompte is paid out of our
current or accumulated earnings and profits as calculated for US federal income
tax purposes. If you are an individual holder of our ordinary shares or ADSs,
you will generally pay tax on such dividends at rates applicable to net capital
gains (see "Taxation of Capital Gains"), provided that certain holding period
requirements are satisfied. If you are a corporate holder of our ordinary shares
or ADSs, you will not benefit from the reduced rate on dividends available to
individual holders. The amount of precompte included in your gross income as
dividend income will not give rise to any US dividends received deduction. The
amount of any precompte paid in euros or French francs, including any French
withholding taxes, will be equal to the US dollar value of the euros or French
francs on the date the precompte is included in income, regardless of whether
the payment is in fact converted into US dollars. You will generally be required
to recognize a US source ordinary income or loss when you sell or dispose of the
euros or French francs.

     To the extent that any precompte paid exceeds our current and accumulated
earnings and profits as calculated for US federal income tax purposes, the
amount of precompte you receive will be treated first as a tax-free return of
capital to the extent of the adjusted tax basis in your ordinary shares or ADSs
and the balance will be taxed as capital gain recognized on a sale or exchange
(see "Withholding Tax and Avoir Fiscal").

     French withholding tax imposed on the precompte you receive is treated as
payment of a foreign income tax. You may take this amount as a deduction from
your gross income or a credit against your US federal income tax liability,
subject to specific conditions and limitations. The refund of precompte will
generally constitute foreign source "passive" income for foreign tax credit
purposes. For recipients predominantly engaged in the active conduct of a
banking, insurance, financing or similar business, the refund of precompte will
generally constitute foreign source "financial services" income for foreign tax
credit purposes.

  TAXATION OF CAPITAL GAINS

     If you are a resident of the US for purposes of the Treaty, you will not be
subject to French tax on any capital gain if you sell or exchange your ordinary
shares or ADSs, unless you have a permanent establishment or fixed base in
France and the ordinary shares or ADSs you sold or exchanged were part of the
business property of that permanent establishment or fixed base. Special rules
apply to individuals who are residents of more than one country.

     In general, for US federal income tax purposes, you will recognize capital
gain or loss if you sell or exchange your ordinary shares or ADSs. in an amount
equal to the difference between the amount realized on such sale or other
taxable exchange and your adjusted tax basis in your ordinary shares or ADSs.
Under current law, capital gains realized by corporate and individual taxpayers
are generally subject to US federal income tax at the same rate as ordinary
income, except that long term capital gains realized by individuals, trusts and
estates are subject to US federal income tax at a maximum rate of 15% for
taxable years beginning before January 1, 2009 (20% thereafter). Any gain or
loss will generally be US source gain or loss. The deductibility of capital
losses may be subject to certain limitations.

     If you are a cash basis holder who receives foreign currency in connection
with a sale or other taxable exchange of your ordinary shares or ADSs, your
amount realized will be based on the US dollar value of the foreign currency you
receive with respect to such ordinary shares or ADSs, as determined on the
settlement date of such sale or other taxable exchange.

     If you are an accrual basis holder, you may elect the same treatment
required of cash basis holders with respect to a sale or other taxable exchange
of your ordinary shares or ADSs provided that the election is applied
consistently from year to year. Such election may not be changed without the
consent of the Internal Revenue Service. If you are an accrual basis holder and
do not elect to be treated as a cash basis holder (pursuant to the Treasury
Regulations applicable to foreign currency transactions) for this purpose, you
may have a foreign currency gain or loss for US federal income tax purposes
because of differences between the US dollar value of the foreign currency
received prevailing on the date of the sale or other taxable exchange of
ordinary shares or ADSs and the date of payment. Any such currency gain or loss
generally will be treated as
                                       147
ordinary income or loss and would be in addition to gain or loss, if any, that
you recognized on the sale or other taxable exchange of your ordinary shares or
ADSs.

  PASSIVE FOREIGN INVESTMENT COMPANY RULES

     We believe that we will not be treated as a passive foreign investment
company, or PFIC, for US federal income tax purposes for the current taxable
year or for future taxable years. However, an actual determination of PFIC
status is fundamentally factual in nature and cannot be made until the close of
the applicable taxable year. We will be a PFIC for any taxable year in which
either:

     - 75% or more of our gross income is passive income; or

     - our assets that produce passive income or that are held for the
       production of passive income amount to at least 50% of the value of our
       total assets on average.

     For purposes of this test, we will be treated as directly owning our
proportionate share of the assets, and directly receiving our proportionate
share of the gross income, of each corporation in which we own, directly or
indirectly, at least 25% of the value of the shares of such corporation.

     If we were to become a PFIC, the tax applicable to distributions on our
ordinary shares or ADSs and any gains you realize when you dispose of our
ordinary shares or ADSs may be less favorable to you. You should consult your
own tax advisors regarding the PFIC rules and their effect on you if you
purchase our ordinary shares or ADSs.

  FRENCH ESTATE AND GIFT TAXES

     Under "The Convention between the United States of America and the French
Republic for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with Respect to Taxes on Estates, Inheritance and Gifts of November 24,
1978," if you transfer your ordinary shares or ADSs by gift or if they are
transferred by reason of your death, that transfer will be subject to French
gift or inheritance tax only if one of the following applies:

     - you are domiciled in France at the time of making the gift, or at the
       time of your death; or

     - you used the shares in conducting a business through a permanent
       establishment or fixed base in France, or you held the ordinary shares or
       ADSs for that use.

  FRENCH WEALTH TAX

     The French wealth tax does not generally apply to our ordinary shares or
ADSs if governance agreement restricts the transfer of Vivendi Universal shares.

  US INFORMATION REPORTING AND BACKUP WITHHOLDING

     Dividend payments on the ordinary shares or ADSs and proceeds from the
sale, exchange or other disposition of the ordinary shares or ADSs may be
subject to information reporting to the Internal Revenue Service and possible US
backup withholding. US federal backup withholding generally is imposed,
currently at a rate of 28% (31% for 2011 and thereafter), on specified payments
to persons that fail to furnish required information. Backup withholding will
not apply to a holder who furnishes a correct taxpayer identification number or
certificate of foreign status and makes any other required certification, or who
is otherwise exempt from backup withholding. Any US persons required to
establish their exempt status generally must file Internal Revenue Service Form
W-9, entitled Request for Taxpayer Identification Number and Certification.

     Backup withholding is not an additional tax. Amounts withheld as backup
withholding may be credited against your US federal income tax liability. You
may obtain a refund of any excess amounts withheld under the backup withholding
rules by filing the appropriate claim for refund with the Internal Revenue
Service and furnishing any required information.

                                       148
DIVIDENDS

  DIVIDENDS

     We may only pay dividends out of our "distributable profits," plus any
amounts held in our reserve that the shareholders decide to make available for
distribution. These amounts may not include those that are specifically required
to be held in reserve by law or our statuts. Distributable profits consist of
the unconsolidated statutory net profit we generate in each fiscal year, as
increased or reduced by any profit or loss carried forward from prior years,
less any contributions to the reserve accounts made pursuant to law or our
statuts. This restriction on the payment of dividends also applies to each of
our French subsidiaries on an unconsolidated basis.

  LEGAL RESERVE

     The French commercial code provides that societes anonymes such as our
company must allocate 5% of their unconsolidated statutory net profit each year
to their legal reserve fund before dividends may be paid with respect to that
year. Funds must be allocated until the amount in the legal reserve is equal to
10% of the aggregate nominal value of the issued and outstanding share capital.
As of December 31, 2002, the legal reserve amounted 82.16 million euros. The
legal reserve of any company subject to this requirement may be distributed to
shareholders only upon liquidation of the company.

  APPROVAL OF DIVIDENDS

     Under the French commercial code, the board may propose a dividend for
approval by the shareholders at the annual general meeting of shareholders. If
we have earned distributable profits since the end of the preceding fiscal year,
as reflected in an interim income statement certified by our auditors, the board
may distribute interim dividends to the extent of the distributable profits for
the period covered by the interim income statement. The board exercises this
authority subject to French law and regulations and may do so without obtaining
shareholder approval, unless such distribution is of shares.

  DISTRIBUTION OF DIVIDENDS

     Dividends are distributed to shareholders pro rata. Outstanding dividends
are payable to shareholders on the date of the shareholders meeting at which the
distribution of dividends is approved. In the case of interim dividends,
distributions are made to shareholders on the date of the management board
meeting at which the distribution of interim dividends is approved. The actual
dividend payment date is decided by the shareholders in an ordinary general
meeting (or by the board of directors in the absence of such a decision by the
shareholders).

  TIMING OF PAYMENT

     According to the French commercial code, we must pay any dividends within
nine months of the end of our fiscal year unless otherwise authorized by court
order. Dividends on shares that are not claimed within five years of the date of
declared payment revert to the French State.

  DOCUMENTS ON DISPLAY

     Documents referred to in this document can be inspected at our offices at
42, avenue de Friedland, Paris Cedex 75380, France.

     We are subject to the periodic reporting and other informational
requirements of the Exchange Act. Under the Exchange Act, we are required to
file reports and other information with the SEC. Specifically, we are required
to file annually a Form 20-F no later than six months after the close of each
fiscal year. Copies of reports and other information, when so filed, may be
inspected without charge and may be obtained at prescribed rates at the public
reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street,
NW, Washington, D.C. 20549. The public may obtain information regarding the
Washington, D.C. Public Reference Room by calling the Commission at
1-800-SEC-0330. The public may also view documents we
                                       149
have filed with the SEC on the internet at www.sec.gov. As a foreign private
issuer, we are exempt from the rules under the Exchange Act prescribing the
furnishing and content of quarterly reports and proxy statements, and officers,
directors and principal shareholders are exempt from the reporting and
short-swing profit recovery provisions in Section 16 of the Exchange Act.

ITEM 11:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Vivendi Universal, as the result of its global operating and financing
activities, is exposed to changes in interest rates, foreign currency exchange
rates and equity markets. These positions may adversely affect its operational
and financial earnings. In seeking to minimize the risks and costs associated
with such activities, Vivendi Universal follows a centrally administered risk
management policy approved by its Board of Directors. As part of this policy,
Vivendi Universal uses various derivative financial instruments to manage
interest rate, foreign currency exchange rate and equity market risks and their
impact on earnings and cash flows. Vivendi Universal generally does not use
derivative financial instruments for trading or speculative purposes.

     Vivendi Universal currently has primary exposures to several market risks,
principally interest rate risk, exchange rate and currency risk and equity
market risk.

     Interest rate exposures are primarily related to the indebtedness of
Vivendi Universal. See Note 7 to the Consolidated Financial Statements included
in this document.

     Currency exposures are primarily related to the operational activities of
several business units of Vivendi Universal that operate globally and collect
revenues in foreign currencies, in particular the US dollar.

     Equity market exposure is primarily related to several investments and
equity-linked derivatives held by Vivendi Universal. See Note 8 and Note 9 to
the Consolidated Financial Statements included in this document.

     Vivendi Universal manages these exposures by entering into derivatives
contracts, as described below.

  Interest Rate Risk Management

     Interest rate risk management instruments are used by Vivendi Universal to
manage net exposure to interest rate changes, to adjust the proportion of total
debt that is subject to variable and fixed interest rates and to lower overall
borrowing costs. Interest rate risk management instruments used by Vivendi
Universal include pay-variable and pay-fixed interest rate swaps and interest
rate caps. Pay-variable swaps effectively convert fixed rate debt obligations to
LIBOR and EURIBOR. Pay-fixed swaps and interest rate caps convert variable rate
debt obligations to fixed rate instruments and are considered to be a financial
hedge against changes in future cash flows required for interest payments on
variable rate debt. The following table summarizes information about Vivendi
Universal's interest rate risk management instruments:
YEAR ENDED DECEMBER 31,
                                                              -----------------------
                                                                  2002         2001
                                                              ------------   --------
                                                               (IN MILLIONS, EXCEPT
                                                                   PERCENTAGES)
Pay-variable interest rate swaps:
  Notional amount of indebtedness...........................    E   626      E  5,868
  Average interest rate paid................................       5.80%         3.36%
  Average interest rate received............................       2.85%         5.01%
  Expiry:
     Due within one year....................................    E   387      E  2,282
     Due between two and five years.........................        208         1,526
     Due after five years...................................         31         2,060
150
YEAR ENDED DECEMBER 31,
                                                              -----------------------
                                                                  2002         2001
                                                              ------------   --------
                                                               (IN MILLIONS, EXCEPT
                                                                   PERCENTAGES)
Pay-fixed interest rate swaps:
  Notional amount of indebtedness...........................    E 8,492      E 10,284
  Average interest rate paid................................       4.50%         4.25%
  Average interest rate received............................       2.82%         2.97%
  Expiry:
     Due within one year....................................    E 1,818      E  2,766
     Due between two and five years.........................      4,410         3,951
     Due after five years...................................      2,264         3,567
Interest rate caps, floors and collars(1):
  Notional amount of indebtedness...........................    E    --      E  3,392
  Guarantee rate............................................                     4.78%
  Expiry:
     Due within one year....................................    E    --      E    150
     Due between two and five years.........................         --         1,391
     Due after five years...................................         --         1,851
---------------

(1) These instruments were sold in 2002.

     A sensitivity analysis of the impact of a global increase of interest rates
of 1% on the net income (loss) generates an additional accounting charge of E19
million, assuming a constant level of indebtedness.

  Foreign Currency Risk Management

     Foreign currency risk management instruments are used by Vivendi Universal
to reduce earnings and cash flow volatility associated with changes in foreign
currency exchange rates. To protect the value of foreign currency forecasted
cash flows, including royalties, licenses, rights purchases and service fees,
and the value of existing foreign currency assets and liabilities, Vivendi
Universal enters into various instruments, including forward contracts, option
contracts and cross-currency swaps, that hedge a portion of its anticipated
foreign currency exposures for periods not to exceed two years. The gains and
losses on these instruments offset changes in the value of the related
exposures. At December 31, 2002, Vivendi Universal had effectively hedged
approximately 80% of its estimated foreign currency exposures, primarily related
to anticipated cash flows to be remitted over the following year. The principal
currencies hedged were the US dollar, Japanese yen, British pound and Canadian
dollar. The following table summarizes information about Vivendi Universal's
foreign currency risk management instruments:
YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                                (IN MILLIONS)
Forward contracts:
  Notional amount...........................................  E 3,360   E 1,705
  Sale against the euro.....................................    3,315       640
  Purchase against the euro.................................       45     1,065
  Expiry:
     Due within one year....................................    3,360     1,705
     Due between two and five years.........................       --        --
     Due after five years...................................       --        --
151
YEAR ENDED
                                                                DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                                (IN MILLIONS)
Currency swaps:
  Notional amount...........................................  E 2,031   E 2,710
  Sale against the euro.....................................    1,437     1,027
  Purchase against the euro.................................      594     1,683
  Expiry:
     Due within one year....................................    2,031     2,447
     Due between two and five years.........................       --       263
     Due after five years...................................       --        --
Approximately 90% of these derivatives are US dollar denominated. As of
December 31, 2002, an unfavorable movement of 10% of the currencies held by
Vivendi Universal would generate an additional accounting charge of E122 million
for 2003, assuming constant net currency exposures over the year.

     Another sensitivity analysis, based on an exchange rate of E1 = $1,
presents the impact of a hypothetical change of 8% in this exchange rate: (i) an
appreciation of the US dollar against euro would generate an increase of around
2.5% in consolidated revenues, and (ii) depreciation of the US dollar against
euro would generate a decrease of around 2.5% in consolidated revenues.

  Equity Market Risk Management

     Our exposure to equity markets risk relates to our investments in the
marketable securities of unconsolidated entities and in debt securities, as well
as to exposures relating to equity options linked to the hedging of several of
our convertible bonds and other options. During 2002 and 2001, Vivendi Universal
hedged certain equity-linked debts using specialized indexed swaps. These swaps,
with notional amounts totaling E 266 million in 2002 versus E 377 million in
2001 will progressively expire over eight years. The swaps are used to hedge the
underlying debts.

     Furthermore, a description of the total return swap of AOL Europe is
presented in Note 11 Commitments and Contingencies.
YEAR ENDED
                                                                   DECEMBER 31,
                                                              ----------------------
                                                               2002        2001
                                                              ------   -------------
                                                                       (IN MILLIONS)
Equity-linked swaps:
Notional amount.............................................  E  266      E  377
Expiry:
  Due within one year.......................................     132          46
  Due between two and five years............................      11         208
  Due after five years......................................     123         123
Equity Options & others
  Notional Amount...........................................  E5,630      E3,155(1)
  Expiry
     Due within one year....................................     157       1,190
     Due between two and five years.........................   4,522       1,966
     Due after five years...................................     951
152
YEAR ENDED
                                                                   DECEMBER 31,
                                                              ----------------------
                                                               2002        2001
                                                              ------   -------------
                                                                       (IN MILLIONS)
Total return swaps:
  Notional amount...........................................  E  788      E3,511
  Expiry:
     Due within one year....................................     788          --
     Due between two and five years.........................      --       3,511
---------------
(1) This figure includes the notional amount, i.e. the strike price, of the
    equity-linked derivatives. These instruments are described in Note 2, Note
    8, Note 9 and Note 11 to the Consolidated Financial Statements included in
    this document.

     In addition to these instruments, Vivendi Universal is exposed to
fluctuations in the share price of InterActiveCorp price through VUE Preferred B
Shares. This exposure is matched by InterActiveCorp shares held by several
subsidiaries of Vivendi Universal. The terms of these shares are described in
the Notes to the Consolidated Financial Statements included in this document.

     A sensitivity analysis made using assumption related to a one-time global
decrease of 10% in share price of all securities owned would reduce the
valuation of the equity-linked portfolio of Vivendi Universal by E194 million.

  Credit Concentrations and Counter-Party Risk

     Vivendi Universal minimizes its credit exposure to counter-parties by
entering into contracts only with highly-rated commercial banks or financial
institutions and by distributing the transactions among the selected
institutions. Although Vivendi Universal's credit risk is the replacement cost
at the then-estimated fair value of the instrument, management believes that the
risk of incurring losses is remote and those losses, if any, would not be
material. The market risk related to the foreign exchange agreements should be
offset by changes in the valuation of the underlying items being hedged. Vivendi
Universal's receivables and investments do not represent a significant
concentration of credit risk due to the wide variety of customers and markets in
which our products are sold, their dispersion across many geographic areas, and
the diversification of our portfolio among instruments and issuers.

ITEM 12:  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not applicable

                                    PART II

ITEM 13:  DEFAULT, DIVIDEND ARREARAGES AND DELINQUENCIES

     [None.]

ITEM 14:  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS

     [None.]

ITEM 15:  CONTROLS AND PROCEDURES

     Our Chairman and Chief Executive Officer and our Chief Financial Officer
have evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Exchange Act Rule 13a-14(c)) as of a date
within 90 days of the filing of this Annual Report on Form 20-F. Based on that
evaluation, our Chief Executive Officer and our Chief Financial Officer have
concluded that, as of the evaluation date, our disclosure controls and
procedures were effective to ensure that material information

                                       153
relating to us and our consolidated subsidiaries would be made known to them by
others within these entities, particularly during the period in which this
annual report was being prepared, in order to allow timely decisions regarding
required disclosure.

     Following a change in senior management in the summer of 2002, Vivendi
Universal is engaged in a reorganization of its business activities, through
refinancing efforts and an asset divestiture program. As a result, we have
effected significant changes to the structure of the group. In the context of
these changes, we are taking the opportunity to reevaluate our internal controls
and have begun to implement changes. To our knowledge and except as noted above,
there are no other factors that could significantly affect our internal controls
subsequent to the evaluation date.

ITEM 16:  [RESERVED]

ITEM 16A:  AUDIT COMMITTEE FINANCIAL EXPERT

     Not applicable.

ITEM 16B:  CODE OF ETHICS

     Not applicable.

ITEM 16C:  PRINCIPAL ACCOUNTING FEES AND SERVICES

     Not applicable.

                                    PART III

ITEM 17:  FINANCIAL STATEMENTS

     Not applicable.

ITEM 18:  FINANCIAL STATEMENTS

     See our Consolidated Financial Statements beginning at page F1.

ITEM 19:  EXHIBITS
EXHIBIT
NUMBER                               DESCRIPTION
-------                              -----------
1.1        Vivendi Universal Restated Corporate statuts (organizational
             document) (English translation).
  2.1        Deposit Agreement dated as of April 19, 1995, as amended and
             restated as of September 11, 2000, and as further amended
             and restated as of December 8, 2000, among Vivendi
             Universal, S.A., The Bank of New York, as Depositary, and
             all the Owners and Beneficial Owners from time to time of
             American Depositary Shares issued thereunder (incorporated
             by reference to Vivendi Universal's Registration Statement
             on Form 8-A dated December 29, 2000, file number 001-16301).
  2.2        Vivendi Universal agrees to furnish to the Commission on
             request a copy of any instrument defining the rights of
             holders of long-term debt of Vivendi Universal and of any
             subsidiary for which consolidated or unconsolidated
             financial statements are required to be filed.
  4.1        Merger Agreement, dated as of June 19, 2000, by and among
             Vivendi S.A., Canal Plus S.A., Sofiee S.A., 3744531 Canada
             Inc. and The Seagram Company Ltd. (incorporated by reference
             to Vivendi Universal's Registration Statement on Form F-4
             dated October 30, 2000, file number 333-48966).
  4.2        Shareholder Governance Agreement, dated as of June 19, 2000,
             by and among Vivendi S.A., Sofiee S.A. and certain
             shareholders of The Seagram Company Ltd. (incorporated by
             reference to Vivendi Universal's Registration Statement on
             Form F-4 dated October 30, 2000, file number 333-48966).
154
EXHIBIT
NUMBER                               DESCRIPTION
-------                              -----------
4.3        Stock and Asset Purchase Agreement, dated as of December 19,
             2000, among Vivendi Universal S.A., Pernod Ricard S.A. and
             Diageo plc (incorporated by reference to Vivendi Universal's
             Registration Statement on Form F-4 dated February 5, 2001,
             file number 333-55000).
  4.4        Transaction Agreement, dated as of December 16, 2001, by and
             among Vivendi Universal, S.A., Universal Studios, Inc., USA
             Networks, Inc., USANi LLC and Liberty Media Corporation
             (incorporated by reference to Vivendi Universal's Report of
             Foreign Private Issuer on Form 6-K dated December 19, 2001,
             file number 001-16301).
  4.5        Amended and Restated Limited Liability Limited Partnership
             Agreement of Vivendi Universal Entertainment LLLP dated as
             of May 7, 2002, by and among USI Entertainment Inc., USANI
             Holding XX, Inc., Universal Pictures International Holdings
             BV, Universal Pictures International Holdings 2 BV,
             NYCSpirit Corp. II, USA Networks, Inc., USANi Sub LLC, New-U
             Studios Holdings, Inc. and Barry Diller (incorporated by
             reference to Vivendi Universal's Schedule 13D/A dated May
             17, 2002, file number 005-42990).
  4.6        Amendment No. 1 dated as of November 25, 2002, to the
             Amended and Restated Limited Liability Limited Partnership
             Agreement of Vivendi Universal Entertainment LLLP dated as
             of May 7, 2002, by and among USI Entertainment Inc., USANI
             Holdings XX, Inc., Universal Pictures International Holdings
             BV, Universal Pictures International Holdings 2 BV,
             NYCSpirit Corp. II, USA Interactive, (formerly known as USA
             Networks, Inc.), USANi Sub LLC, New-U Studios Holdings,
             Inc., Barry Diller, Vivendi Universal S.A., Universal
             Studios, Inc., Sub I -- USA Holding LLC, USI -- USA Holding
             LLC, USIE -- USA Holding LLC and V -- USA Holding LLC
             (incorporated by reference to Vivendi Universal's Schedule
             13D/A dated February 20, 2003, file number 005-42990).
  4.7        E2.5 billion Dual Currency Term and Revolving Credit
             Facility dated as of May 13, 2003, among Vivendi Universal
             S.A., as borrower, certain of its subsidiaries, as
             guarantors, the lenders party thereto, and Societe Generale,
             as facility agent and security agent.
  4.8        Restated Credit Agreement dated as of March 15, 2002, as
             amended on February 6, 2003, and as further amended and
             restated on May 13, 2003, among Vivendi Universal S.A., as a
             borrower and the obligors' agent, certain of its
             subsidiaries, as guarantors, the lenders party thereto and
             Societe Generale, as facility and security agent.
  4.9        Loan Agreement dated as of June 24, 2003, among Vivendi
             Universal Entertainment LLLP, as borrower, the lenders from
             time to time party thereto, Bank of America, N.A. and
             JPMorgan Chase Bank, as co-administrative agents, Barclays
             Bank PLC, as syndication agent, and JPMorgan Chase Bank, as
             collateral agent and paying agent.
  4.10       Facility Agreement dated December 6, 2002, among Societe
             d'Investissement pour la Telephonie S.A., as borrower, the
             lenders party thereto, Credit Lyonnais, as agent, and The
             Royal Bank of Scotland PLC, as security trustee; as amended
             by an Amendment Letter, dated January 20, 2003; as further
             amended by a 2nd Amendment Letter, dated January 21, 2003;
             as further amended by a 3rd Amendment Letter, dated March
             31, 2003; and as further amended by a 4th Amendment Letter,
             dated June 25, 2003.
  4.11       Indenture dated as of April 8, 2003, between Vivendi
             Universal S.A. and The Bank of New York, as trustee.
  4.12       Letter Agreement dated December 17, 2001, between Vivendi
             Universal S.A. and Edgar M. Bronfman.
155
EXHIBIT
NUMBER                               DESCRIPTION
-------                              -----------
4.13       Employment Agreement dated September 25, 2002, by and
             between Vivendi Universal U.S. Holding Co. and Edgar
             Bronfman, Jr.
  8.1        Subsidiaries of Vivendi Universal S.A.
 11.1        Consent of RSM Salustro Reydel and Barbier Frinault & Cie.
 11.2        Consent of RSM Salustro Reydel.
 11.3        Certification of Chief Executive Officer and Chief Financial
             Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
             2002.
 11.4        Certification furnished pursuant to 18 U.S.C. Section 1350,
             as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
             of 2002.
156
SIGNATURES

     The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.

                                          VIVENDI UNIVERSAL, S.A.

                                          By:     /s/ JACQUES ESPINASSE
                                            ------------------------------------
                                            Name: Jacques Expinasse
                                            Title: Senior Executive Vice
                                                   President and Chief Financial
                                                   Officer

Date: June 30, 2003

                                       157
VIVENDI UNIVERSAL

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
                                                              ----
Report of Independent Public Accountants....................  F-2
Report of Independent Public Accountants....................  F-3
Consolidated Statement of Income............................  F-4
Consolidated Balance Sheet..................................  F-5
Consolidated Statement of Cash Flows........................  F-6
Consolidated Statement of Shareholders' Equity..............  F-8
Notes to Consolidated Financial Statements..................  F-9
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of Vivendi Universal:

     We have audited the accompanying consolidated balance sheet of Vivendi
Universal and subsidiaries (together the "Company"), as of December 31, 2002 and
the related consolidated statements of income, changes in shareholders' equity
and cash flows for the year then ended, expressed in Euros. We have also audited
the information presented in Note 17 which includes the effect of the
differences between accounting principles generally accepted in France and the
United States of America on the consolidated net income of the company and
shareholder's equity as of and for the year ended December 31, 2002. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The consolidated financial statements of the Company as of December
31, 2001 and December 31, 2000 and for each of the two years in the period ended
December 31, 2001, were jointly audited by Barbier Frinault & Cie, a member firm
of Andersen Worldwide and RSM Salustro Reydel and whose report dated March 28,
2002, except for Note 14 as to which the date is May 24, 2002, expressed an
unqualified opinion on these statements. Andersen Worldwide has ceased operating
as a member of the Securities and Exchange Commission Practice Section of the
American Institute of the Certified Public Accountants.

     We conducted our audit in accordance with auditing standards generally
accepted in France and 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 statements presentation. We believe that our
audit provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, (i) the financial position of the Company as of
December 31, 2002 and the results of its operations and its cash flows for the
year then ended in conformity with accounting principles generally accepted in
France and (ii) the information with respect to accounting principles generally
accepted in the United States of America as of and for the year ended December
31, 2002 set forth in Note 17.

     The accounting practices of the Company used in preparing the accompanying
financial statements vary in certain respects from accounting principles
generally accepted in the United States. A description of the significant
differences between the Company's accounting practices and accounting principles
generally accepted in the United States of America and the effect of those
differences on consolidated net income for year ended December 31, 2002 and
shareholders' equity as of December 31, 2002 is set forth in Note 17 to the
consolidated financial statements.
/s/ RSM Salustro Reydel                                     /s/ Barbier Frinault & Cie
RSM Salustro Reydel                                Barbier Frinault & Cie
                                                   A member firm of Ernst & Young International
Paris, France
                                 April 2, 2003
 (Except with respect to matters discussed in Note 17 as to which date is June
                                   27, 2003)
                                       F-2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS(1)

To the Shareholders of Vivendi Universal:

     We have audited the accompanying consolidated balance sheet of Vivendi
Universal and subsidiaries (together the "Company"), as of December 31, 2001 and
December 31, 2000 and the related consolidated statements of income, changes in
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 2001, expressed in Euros. We have also audited the
information presented in Note 14, which includes the approximate effect of the
differences between accounting principles generally accepted in France and the
United States of America on the consolidated net income of the Company for the
years ended December 31, 2001, 2000 and 1999 and on shareholders' equity of the
Company as of December 31, 2001 and 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in France and 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 statements presentation. We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, (a) the financial position of Vivendi Universal and
subsidiaries as of December 31, 2001 and 2000 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted in
France and (b) the information with respect to accounting principles generally
accepted in the United States of America as of December 31, 2001 and 2000 and
for the years ended December 31, 2001, 2000 and 1999 set forth in Note 14.

     Without calling into question the opinion expressed above, we wish to draw
your attention to the sub-section "Changes in Accounting Principles and
Financial Statement Presentation" of the section of the notes "Summary of
Significant Accounting Policies and Practices" which states the change in
presentation of the Consolidated Statement of Income and the change in
definition of the exceptional items.

     The accounting practices of the Company used in preparing the accompanying
financial statements vary in certain respects from accounting principles
generally accepted in the United States. A description of the significant
differences between the Company's accounting practices and accounting principles
generally accepted in the United States and the approximate effect of those
differences on consolidated net income for each of the three years in the period
ended December 31, 2001 and shareholders' equity as of December 31, 2001 and
2000 is set forth in Note 14 to the consolidated financial statements.

/s/ Barbier Frinault & Cie                               /s/ RSM Salustro Reydel
Barbier Frinault & Cie,                                      RSM Salustro Reydel
a member firm of Andersen Worldwide

                                 Paris, France
                                 March 28, 2002
(Except with respect to the matters discussed in Note 14 as to which the date is
                                 May 24, 2002)

---------------

     1 This report is a copy of the previously issued joint audit report which
has not been reissued.
                                       F-3
CONSOLIDATED STATEMENT OF INCOME
YEARS ENDED DECEMBER 31,
                                                  -----------------------------------------------
                                                      2002
                                                  ILLUSTRATION
                                                    VE EQUITY       2002        2001
                                                  ACCOUNTING(1)   ACTUAL(2)    ACTUAL    2000(4)
                                                  -------------   ---------   --------   --------
                                                   (UNAUDITED)
                                                  (IN MILLIONS OF EUROS EXCEPT PER SHARE AMOUNTS)
REVENUES........................................    E 28,112      E 58,150    E 57,360   E 41,580
Cost of revenues................................     (16,749)      (40,574)    (39,526)   (30,181)
Selling, general and administrative Expenses....      (8,919)      (12,937)    (13,699)    (9,004)
Other operating expenses, net...................        (567)         (851)       (340)      (572)
                                                    --------      --------    --------   --------
OPERATING INCOME................................       1,877         3,788       3,795      1,823
Financing expenses..............................        (650)       (1,333)     (1,455)    (1,288)
Financial provisions............................      (2,786)       (2,895)       (482)      (196)
Other income (expense)..........................        (658)         (514)          9        722
                                                    --------      --------    --------   --------
INCOME BEFORE EXCEPTIONAL ITEMS, INCOME TAXES,
  GOODWILL AMORTIZATION, EQUITY INTEREST AND
  MINORITY INTEREST.............................      (2,217)         (954)      1,867      1,061
Exceptional items, net..........................       1,125         1,049       2,365      3,812
Income tax (expense) benefit....................      (2,119)       (2,556)     (1,579)    (1,009)
                                                    --------      --------    --------   --------
INCOME BEFORE GOODWILL AMORTIZATION, EQUITY
  INTEREST AND MINORITY INTEREST................      (3,211)       (2,461)      2,653      3,864
Equity in (losses) earnings of disposed
  businesses(2).................................          17            17          --         --
Equity in (losses) earnings of unconsolidated
  Companies.....................................         (99)         (294)       (453)      (306)
Goodwill amortization...........................        (992)       (1,277)     (1,688)      (634)
Goodwill impairment.............................     (18,442)      (18,442)    (13,515)        --
                                                    --------      --------    --------   --------
INCOME (LOSS) BEFORE MINORITY INTEREST..........     (22,727)      (22,457)    (13,003)     2,924
Minority interest...............................        (574)         (844)       (594)      (625)
                                                    --------      --------    --------   --------
NET INCOME (LOSS)...............................    E(23,301)     E(23,301)   E(13,597)  E  2,299
                                                    ========      ========    ========   ========
EARNINGS (LOSS) PER BASIC SHARE.................    E (21.43)     E (21.43)   E (13.53)  E   3.63
                                                    ========      ========    ========   ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (IN
  MILLIONS)(3)..................................     1,087.4       1,087.4     1,004.8      633.8
---------------

(1) This consolidated statement of income has been shown to present the Group's
    scope of consolidation as at December 31, 2002. It illustrates the
    accounting of Veolia Environnement using the equity method from January 1st,
    2002 instead of December 31st, 2002. (See Note 2).

(2) At December 31, 2002, Vivendi Universal has applied the option proposed in
    the paragraph 23100 of the French rules 99-02 and presents the equity in
    (losses) earnings of businesses which were sold during the year on one line
    in the consolidated statement of income as "equity in (losses) earnings of
    disposed businesses". Disposed businesses include all of the Vivendi
    Universal Publishing activities excluding: Vivendi Universal Games;
    publishing activities in Brazil; the consumer press division, the disposal
    of which was completed in February 2003; and Comareg, the disposal of which
    is pending (see Note 2 and 3).

(3) Excluding treasury shares recorded as a reduction of shareholders' equity.

(4) Reflects changes in accounting principles and financial statement
    presentation adopted in 2001.

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-4
CONSOLIDATED BALANCE SHEET
DECEMBER 31,
                                                              ---------------------------------
                                                       NOTE     2002        2001        2000
                                                       ----   ---------   ---------   ---------
                                                                   (IN MILLIONS OF EUROS)
ASSETS
Goodwill, net........................................    3    E  20,062   E  37,617   E  47,133
Other intangible assets, net.........................   10       14,706      23,302      20,180
Property, plant and equipment, net...................   10        7,686      23,396      19,989
Investments accounted for using the equity method....    4        1,903       9,176       9,177
Other investments....................................    4        4,138       5,583       7,342
Seagram's spirit and wine net assets held for sale...                --          --       8,759
                                                              ---------   ---------   ---------
TOTAL LONG-TERM ASSETS...............................            48,495      99,074     112,580
                                                              ---------   ---------   ---------
Inventories and work-in-progress.....................   10        1,310       3,163       3,219
Accounts receivable..................................   10        9,892      21,094      19,242
Deferred tax assets..................................    9        1,613       4,225       3,908
Short-term loans receivable..........................               640       2,948       1,171
Cash and cash equivalents............................    7        7,295       4,725       3,271
Other marketable securities..........................   10           88       3,773       7,347
                                                              ---------   ---------   ---------
TOTAL CURRENT ASSETS.................................            20,838      39,928      38,158
                                                              ---------   ---------   ---------
TOTAL ASSETS.........................................         E  69,333   E 139,002   E 150,738
                                                              =========   =========   =========
                             LIABILITIES AND SHAREHOLDERS' EQUITY
Share capital........................................         E   5,877   E   5,972   E   5.945
Additional paid-in capital...........................            27,687      28,837      27,913
Retained earnings....................................           (19,544)      1,939      22,817
                                                              ---------   ---------   ---------
TOTAL SHAREHOLDERS' EQUITY...........................    5       14,020      36,748      56,675
Minority interest....................................    5        5,497      10,208       9,787
Other equity.........................................    5        1,000          --          --
Deferred income......................................               579       1,856       1,560
Provisions and allowances............................    6        3,581       6,331       5,946
Long-term debt.......................................    7       10,455      27,777      23,954
Other non-current liabilities and accrued expenses...   10        3,894       5,688       6,337
                                                              ---------   ---------   ---------
                                                                 39,026      88,608     104,259
                                                              ---------   ---------   ---------
Accounts payable.....................................   10       13,273      26,414      23,497
Deferred taxes.......................................    9        7,857       9,977       8,130
Bank overdrafts and other short-term borrowings......    7        9,177      14,003      14,852
                                                              ---------   ---------   ---------
TOTAL CURRENT LIABILITIES............................            30,307      50,394      46,479
                                                              ---------   ---------   ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...........         E  69,333   E 139,002   E 150,738
                                                              =========   =========   =========
The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-5
CONSOLIDATED STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31,
                                                  -----------------------------------------------
                                                  2002(1)(2)     2002(1)      2001       2000(3)
                                                  -----------   ---------   ---------   ---------
                                                  (UNAUDITED)
                                                              (IN MILLIONS OF EUROS)
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss)...............................   E (23,301)   E (23,301)  E (13,597)  E   2,299
Reversal of equity in (losses) earnings of sold
  businesses....................................         (17)         (17)         --
Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and amortization.................      22,103       24,040      19,050       4,038
  Financial provisions(8).......................       2,786        2,895         482          92
  Gain on sale of property and equipment and
     financial assets, net......................      (1,541)      (1,748)     (2,546)     (3,910)
  Undistributed earnings from affiliates, net...         373          473         439         343
  Deferred taxes................................       1,589        1,608         379         231
  Minority interest.............................         574          844         594         625
Changes in assets and liabilities, net of effect
  of acquisitions and dispositions:.............         229         (124)       (301)     (1,204)
                                                   ---------    ---------   ---------   ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES.......       2,795        4,670       4,500       2,514
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property, plant, equipment and
  other.........................................      (1,729)      (4,134)     (5,338)     (5,800)
Proceeds from sale of property, plant, equipment
  and other.....................................         158          158         464       2,822
Purchase of investments(4)......................      (2,000)      (4,792)     (8,203)     (3,133)
Sale of investments(4)..........................       9,233       10,987       1,947       3,787
Sale of spirits and wine business...............          --           --       9,359          --
Sale (Purchase) of portfolio investments........          --           --       4,395         233
Net decrease (increase) in financial
  receivables...................................      (1,875)      (2,027)        278       4,452
Purchase of treasury shares held as marketable
  securities....................................          --           --        (141)     (2,456)
Sales (purchases) of other marketable
  securities....................................         322          213       1,579      (1,386)
                                                   ---------    ---------   ---------   ---------
NET CASH PROVIDED BY (USED FOR) INVESTING
  ACTIVITIES....................................       4,109          405       4,340      (1,481)
CASH FLOW FROM FINANCING ACTIVITIES:
Net increase (decrease) in short-term
  borrowings....................................      (3,271)      (5,991)     (1,670)      2,432
Notes mandatorily redeemable for new shares of
  Vivendi Universal.............................         767          767
Proceeds from issuance of borrowings and other
  long-term debt................................         369        2,748       5,195      16,370
Principal payment on borrowings and other
  long-term liabilities.........................         510       (1,854)     (5,900)    (21,923)
Net proceeds from issuance of common shares.....          68        1,622         582       3,396
Sales (purchases) of treasury shares(5).........       1,973        1,973      (4,253)       (106)
Cash dividends paid(6)..........................      (1,120)      (1,300)     (1,423)       (800)
Cash payment to USA Interactive(7)..............      (1,757)      (1,757)         --          --
                                                   ---------    ---------   ---------   ---------
NET CASH (USED FOR) PROVIDED BY FINANCING
  ACTIVITIES....................................      (2,461)      (3,792)     (7,469)       (631)
F-6
YEARS ENDED DECEMBER 31,
                                                  -----------------------------------------------
                                                  2002(1)(2)     2002(1)      2001       2000(3)
                                                  -----------   ---------   ---------   ---------
                                                  (UNAUDITED)
                                                              (IN MILLIONS OF EUROS)
Effect of foreign currency exchange rate changes
  on cash and cash equivalents..................         981        1,287          83           7
                                                   ---------    ---------   ---------   ---------
CHANGE IN CASH AND CASH EQUIVALENTS.............   E   5,424    E   2,570   E   1,454   E     409
                                                   =========    =========   =========   =========
CASH AND CASH EQUIVALENTS:
Beginning.......................................   E   1,871    E   4,725   E   3,271   E   2,862
                                                   =========    =========   =========   =========
Ending..........................................   E   7,295    E   7,295   E   4,725   E   3,271
                                                   =========    =========   =========   =========
---------------

(1) Includes 100% of Cegetel, Maroc Telecom and Vivendi Universal Entertainment
    which are controlled by Vivendi Universal with a 44%, 35% and 86% interest,
    respectively (see Note 13). The cash contribution from these companies for
    the year ended December 31, 2002 is disclosed in paragraph 10.3.1.

    At the beginning of July 2002, Vivendi Universal reimbursed to Cegetel the
    loan which was granted in accordance with the optimization of Cegetel
    financing management. This decision was taken by Vivendi Universal and
    Cegetel mutual agreement, considering Vivendi Universal cash flow situation
    at the beginning of July 2002.

(2) This statement of cash flows has been shown to present the Group's scope of
    consolidation as at December 31, 2002. It illustrates the accounting of
    Veolia Environnement using the equity method from January 1st, 2002 instead
    of December 31st, 2002.

(3) Reflects changes in accounting policies and financial statement presentation
    adopted in 2001.

(4) Includes net cash from acquired or disposed companies. As of December 31,
    2002, the impact on net debt of these transactions is shown in paragraph
    7.2.

(5) Including impact of settlement of put options on Vivendi Universal shares
    (E 883) million as of December 31, 2002.

(6) Including E 1,048 million of dividends paid by Vivendi Universal SA.

(7) See Note 3.

(8) See Note 10.1.3.

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-7
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
COMMON SHARES       ADDITIONAL                  NET
                                      ---------------------    PAID-IN     RETAINED     INCOME     SHAREHOLDERS'
                                        NUMBER      AMOUNT     CAPITAL     EARNINGS     (LOSS)        EQUITY
                                      -----------   -------   ----------   ---------   ---------   -------------
                                      (THOUSANDS)                      (IN MILLIONS OF EUROS)
BALANCE AT DECEMBER 31, 1999........     595,648    E 3,276    E 4,351     E   1,834   E   1,431     E  10,892
Changes in accounting method........          --         --         --          (120)          4          (116)
                                       ---------    -------    -------     ---------   ---------     ---------
BALANCE AT DECEMBER 31, 1999........     595,648      3,276      4,351         1,714       1,435        10,776
Net loss for the year 2000..........          --         --         --            --       2,299         2,299
Foreign currency translation
  adjustment........................          --         --         --          (735)         --          (735)
Appropriation of net income.........          --         --         --         1,435      (1,435)           --
Dividends paid, E 1 per share.......          --         --         --          (566)         --          (566)
Goodwill from business combinations
  reversed following the disposition
  of BSkyB, Vinci, Nexity and 34% of
  Multithematique...................          --         --        781           (44)         --           737
Merger transactions among Vivendi,
  Seagram and Canal Plus............     486,561      2,676     23,372        18,792          --        44,840
Conversion of bonds, warrants, stock
  options and issuances under the
  employee stock purchase plan......      11,185         62        585            --          --           647
Treasury shares allocation..........     (12,586)       (69)    (1,176)           --          --        (1,245)
Release of revaluation surplus and
  other.............................          --         --         --           (78)         --           (78)
                                       ---------    -------    -------     ---------   ---------     ---------
BALANCE AT DECEMBER 31, 2000........   1,080,808      5,945     27,913        20,518       2,299        56,675
Net loss for the year 2001..........          --         --         --            --     (13,597)      (13,597)
Foreign currency translation
  adjustment........................          --         --         --         1,483          --         1,483
Appropriation of net income.........          --         --         --         2,299      (2,299)           --
Dividends paid, E 1 per share.......          --         --         --        (1,203)         --        (1,203)
Goodwill from business combination
  reversed following the disposition
  of TV Sport.......................          --         --         --            35          --            35
Conversion of ex-Seagram
  exchangeables.....................      31,549        173      2,335        (2,508)         --            --
Conversion of ex-Seagram stock
  options...........................       3,452         19        255            --          --           274
Conversion of bonds, warrants, stock
  options and issuances under the
  employee stock purchase plan......      10,142         56        419            --          --           475
Common shares cancelled (treasury
  shares)...........................     (40,123)      (221)    (2,070)           --          --        (2,291)
Treasury shares allocation..........          --         --         --        (4,634)         --        (4,634)
Release of revaluation surplus and
  other.............................          --         --        (15)         (454)         --          (469)
                                       ---------    -------    -------     ---------   ---------     ---------
BALANCE AT DECEMBER 31, 2001........   1,085,828      5,972     28,837        15,536     (13,597)       36,748
Net loss for the year 2002..........          --         --         --            --     (23,301)      (23,301)
Foreign currency translation
  adjustment........................          --         --         --        (3,615)         --        (3,615)
Appropriation of net income.........          --         --         --       (13,597)     13,597            --
Dividends paid, E 1 per share(1)....          --         --       (890)         (421)         --        (1,311)
Goodwill from business combination
  reversed..........................          --         --         --         1,001          --         1,001
Conversion of ex-Seagram
  exchangeables.....................      11,463         63        848          (887)         --            24
Conversion of ex-Seagram stock
  options...........................       1,239          7         92            --          --            99
Conversion of bonds, warrants, stock
  options and issuances under the
  employee stock purchase plan......       1,396          8         48            --          --            56
Common shares cancelled (treasury
  shares)...........................     (31,367)      (173)    (1,248)           --          --        (1,421)
Treasury shares allocation..........          --         --         --         5,907          --         5,907
Release of revaluation surplus and
  other.............................          --         --         --          (167)         --          (167)
                                       ---------    -------    -------     ---------   ---------     ---------
BALANCE AT DECEMBER 31, 2002........   1,068,559      5,877     27,687         3,757     (23,301)       14,020
---------------

(1) Of which "precompte" of E 263 million.

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                       F-8
NOTE 1 DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.1 DESCRIPTION OF BUSINESS

     Vivendi Universal is one of the largest media and telecommunications groups
in the world.

     Vivendi Universal's portfolio of assets includes operations in six
principal segments:

     Cegetel Group -- Cegetel Group, through its 80% owned subsidiary, SFR, is a
mobile telecommunications operator in France and through its 90% owned
subsidiary, Cegetel S.A., is also a fixed line operator in France.

     Universal Music Group (UMG) -- UMG is a recorded music business. UMG
acquires, manufactures, markets and distributes recorded music in 63 countries.
In addition to its recorded music business, UMG also publishes music. UMG
manufactures, sells and distributes music video and DVD products, and owns mail-
order music/video clubs. Vivendi Universal owns approximately 92% of UMG.

     Vivendi Universal Entertainment (VUE) -- Vivendi Universal owns
approximately 86% of VUE, a US-based entertainment company active in the film,
television, and theme parks and resorts businesses through the following
entities:

     - Universal Pictures Group (UPG) -- UPG is a major film studio, engaged in
       the production and distribution of motion pictures worldwide in the
       theatrical, non-theatrical, home video/DVD and television markets.

     - Universal Television Group (UTG) -- UTG owns and operates four US cable
       television networks including USA Network and the Sci Fi Channel as well
       as a portfolio of international television channels. UTG produces and
       distributes original television programming worldwide.

     - Universal Parks and Resorts (UPR) -- UPR is a destination theme park
       operator. UPR owns interests in and operates theme parks and resorts in
       the US, Japan and Spain including Universal Studios in Hollywood,
       California and Universal Studios in Orlando, Florida.

     Canal+ Group -- Canal+ Group produces and distributes digital and analog
pay-TV in France (principally through its premium channel, Canal+, and its
digital satellite platform, CanalSatellite). Canal+ Group has 6.95 million
individual subscriptions in France. Canal+ Group is also a leading European
studio involved in the production, co-production, acquisition and distribution
of feature films and television programs and owns interests in pay-TV activities
in Italy, Spain, Poland and elsewhere. Vivendi Universal owns 100% of Canal+
Group, which in turn owns 49% of Canal+ S.A., which holds the broadcast license
for the premium channel Canal+, and Vivendi Universal owns 67% of
CanalSatellite.

     Maroc Telecom -- Maroc Telecom is the incumbent fixed line and the leading
mobile telecommunications operator in Morocco. Vivendi Universal has a 35%
ownership stake in Maroc Telecom. However, through its control of the executive
board and management, Vivendi Universal exercises day-to-day control over the
business and consolidates it in its financial statements.

     Vivendi Universal Games (VU Games) -- VU Games is a worldwide leader in the
development, marketing and distribution of games and educational software for
PC, handhelds and consoles. Vivendi Universal owns 99% of VU Games.

     Vivendi Universal was formed through the merger of Vivendi S.A., The
Seagram Company Ltd. and Canal+ S.A. in December 2000. From its origins as a
water company, Vivendi expanded its business rapidly in the 1990s and
transformed itself into a media and telecommunications company with the December
2000 merger and the May 2002 acquisition of the entertainment assets of USA
Networks. Following the appointment of new management in July 2002, Vivendi
Universal commenced a significant asset disposal program aimed at reducing the
group's indebtedness, which Vivendi Universal is pursuing actively. Vivendi
Universal has already largely exited the environmental services and publishing
businesses and sold various smaller operations.

                                       F-9
1.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

1.2.1 BASIS OF PRESENTATION

     Vivendi Universal has prepared its consolidated financial statements in
accordance with accounting principles generally accepted in France (French
GAAP). Vivendi Universal has applied the methodology for consolidated financial
statements based on Regulation 99.02 as approved by the "Comite de la
Reglementation Comptable" (French Accounting Standards Board). The financial
statements of foreign subsidiaries have, when necessary, been adjusted to comply
with French GAAP rules.

     French GAAP rules differ in certain respects from accounting principles
generally accepted in the United States (US GAAP). A description of these
differences and their effects on net income and shareholders' equity is
discussed in Note 17.

     The consolidated financial statements are presented in French GAAP format,
but also incorporate certain modifications and additional disclosures designed
to conform more closely with US GAAP style financial statements.

     Vivendi Universal has a December 31 year-end. Subsidiaries that do not have
a December 31 year-end prepare interim financial statements, except when their
year-end falls within the three months prior to December 31. Subsidiaries
acquired are included in the consolidated financial statements from the
acquisition date, or, for convenience reasons and if the impact is not material,
the most recent balance sheet date. The consolidated financial statements
include the accounts of Vivendi Universal and its subsidiaries after elimination
of material intercompany accounts and transactions.

1.2.2 PRINCIPLES OF CONSOLIDATION AND ACCOUNTING FOR INVESTMENTS

     All companies in which Vivendi Universal has an interest exceeding 50%, or
over which it has another form of legal or effective control (including Cegetel
and Maroc Telecom), are consolidated. In addition, Vivendi Universal only
consolidates a subsidiary if no other shareholder or group of shareholders
exercises substantive participating rights which would enable it to veto or
block routine decisions taken by Vivendi Universal.

     Subsidiaries in which Vivendi Universal has an interest exceeding 20% or
otherwise exercises significant influence are consolidated by the equity method.
Vivendi Universal also uses the equity method for consolidating its investments
in certain subsidiaries in which it owns less than 20% of the voting shares. In
these cases, Vivendi Universal exercises significant influence over the
operating and financial decisions of the subsidiary either (a) through
representation on the subsidiary's Board of Directors in excess of its
percentage interest, or (b) because there is no other shareholder with a
majority voting interest in the subsidiary, or (c) because Vivendi Universal
exercises substantive participating rights that enable Vivendi Universal to veto
or block decisions taken by the subsidiary board.

     The proportionate method of consolidation is used for investments in
jointly controlled companies, where Vivendi Universal and outside shareholders
have agreed to exercise joint control over significant financial and operational
policies. For such entities, which are within the Veolia Environnement Group
only, Vivendi Universal records its proportionate interest in the consolidated
balance sheet and consolidated income statement accounts.

     All other investments, which are not consolidated, are accounted for at
cost. A valuation allowance is established for any negative difference between
carrying value and fair value that is determined to be other than temporary.

     For additional explanations on the accounting treatment difference under
French and US GAAP regarding Special Purpose Entity (SPE), please refer to Note
17.1.

                                       F-10
1.2.3 USE OF ESTIMATES

     The preparation of these financial statements requires management to make
informed estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. On an on-going basis, management evaluates its
estimates and judgments, including those related to the sale of future and
existing music and publishing related products, as well as from the distribution
of theatrical and television products, in order to evaluate the ultimate
recoverability of accounts receivable, film inventory, artist and author
advances and investments and in determining valuation allowances for
investments, long-lived assets, pension liabilities and deferred taxes.
Estimates and judgments are also required and regularly evaluated concerning
financing operations, restructuring costs, contingencies and litigation.
Management bases its estimates and judgments on historical experience and on
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results could differ significantly from these estimates
under different assumptions or conditions.

1.2.4 FOREIGN CURRENCY TRANSLATION

     Translation of subsidiaries' financial statements -- Financial statements
of subsidiaries for which the reporting currency is not the euro are translated
into euros at applicable exchange rates. All asset and liability accounts are
translated at the appropriate year-end exchange rate, and all income and expense
accounts and cash flow statements are translated at average exchange rates for
the year. The resulting translation gains and losses are recorded in
shareholders' equity. For subsidiaries operating in highly inflationary
economies, the financial statements are translated into the stable currency of a
dominant country in the same economic region. Related translation gains or
losses are recorded in current period earnings. These financial statements are
then translated from the stable currency into euros at the closing exchange
rates, and related translation gains or losses are recorded in shareholders'
equity. The exchange rates for the main currencies used to establish the
consolidated financial statements were as followed:
DECEMBER 31, 2002             DECEMBER 31, 2001
                                       ---------------------------   ---------------------------
                                       CLOSING RATE   AVERAGE RATE   CLOSING RATE   AVERAGE RATE
                                       ------------   ------------   ------------   ------------
US Dollar............................     1.030          0.934          0.878          0.897
GBP..................................     0.646          0.626          0.608          0.623
Foreign currency transactions -- Foreign currency transactions are
converted into euros at the exchange rate on the transaction date. The resulting
exchange gains and losses are recorded in current period earnings. Exchange
gains or losses on borrowings denominated in foreign currencies that qualify as
hedges for net investments in foreign subsidiaries are recorded in shareholders'
equity.

1.2.5 CONSOLIDATED STATEMENT OF INCOME

     As permitted by Regulation 99.02 (Section 41), Vivendi Universal has
elected to present its Consolidated Statement of Income in a format that
classifies income and expenses by function rather than by nature.

1.2.6 REVENUES AND COSTS

     Music -- Revenues from the sale of recorded music, net of a provision for
estimated returns and allowances, are recognized on shipment to third parties
(for additional information on revenue recognition, please refer to Note 17.9).
Advances to established recording artists and direct costs associated with the
creation of record masters are capitalized and are expensed as the related
royalties are earned, or when the amounts are determined to be unrecoverable.
The advances are expensed when past performance or current popularity does not
provide a sound basis for estimating that the advance will be recovered from
future royalties.

     TV & Film -- Generally, theatrical films are produced or acquired for
initial exhibition in the worldwide theatrical market followed by distribution
in the home video, pay television, network exhibition, television

                                       F-11
syndication and basic cable television market. Television films from our library
may be licensed for domestic and foreign syndication, cable or pay television
and home video. Theatrical revenues from the distribution of films are
recognized as the films are exhibited. Home video product revenues, less a
provision for estimated returns and allowances, are recognized upon availability
of product for retail sale to the ultimate customer. Revenues from television
and pay television licensing agreements are recognized when the films are
available for telecast, and all other conditions of the sale have been met.
Revenues from television subscription services related to cable and satellite
programming are recognized as the services are provided. Revenues at theme parks
are recognized at the time of visitor attendance. Revenues for retail operations
are recognized at point-of-sale.

     Film and television costs are stated at the lower of cost less accumulated
amortization, or net realizable value. The estimated total film and television
production and participation costs are expensed based on the ratio of the
current periods gross revenues to estimated total gross revenues from all
sources on an individual production basis. The costs of licenses and rights to
exhibit theatrical movies and other programming on cable and pay TV channels are
recorded at the contract price, generally when the screening certificate has
been obtained and the programming is available for exhibition, or on the date
the contract is signed, if later. The costs for theatrical movies and other
long-term programming are amortized as the programming is exhibited. The costs
of multi-year sports rights are amortized over the term of the contract.

     Estimates of TV & Film total gross revenues and costs can change
significantly due to a variety of factors, including the level of market
acceptance of film and television products and subscriber fees. Accordingly,
revenue and cost estimates are reviewed periodically and prospective revisions
to amortization rates or write-downs to net realizable value may occur. Such
adjustments could have a material effect on the results of operations in future
periods.

     Telecoms -- Telephone service and installation revenues are recognized as
they occur. Subscriptions are billed monthly in advance, and recorded as a
deferred revenue liability, before transfer to earnings of the period during
which the service is provided. Prepaid fees are deferred and recognized as the
purchased minutes are used. Service discounts are accounted for as a reduction
of revenue when the service is used, or on provision of line access in the case
of pack discounts.

     Games -- Vivendi Universal Games records revenue when goods are shipped to
the customer except if risk of ownership does not transfer to the customer upon
shipment.

     Internet -- Internet revenues are primarily derived from subscriptions,
advertising and e-commerce activities. Subscription revenues are recognized over
the period that services are provided. Advertising revenues are recognized in
the period that advertisements are displayed. Revenues from e-commerce
activities are recognized when the products sold are shipped to customers.

     Publishing -- Magazine advertising revenues are recognized when the
advertisements are published. Publication subscription revenues are recognized
over the term of the subscription on a straight-line basis. Revenues from the
sale of books, magazines, interactive games and other multimedia products are
recognized when the products are shipped based on gross sales less a provision
for future returns.

     Environmental Services -- Revenues on public service contracts are
recognized on transfer of ownership or as services are provided, according to
the terms of the contract. Title is considered to have passed to the customer
when goods are shipped. The revenues include operating subsidies and exclude
production for own use. Specific measures concerning this activity are discussed
in the Document de reference issued by Veolia Environnement for the year ended
December 31, 2002.

                                       F-12
1.2.7 RESEARCH AND DEVELOPMENT COSTS

     Research and development costs are expensed as incurred.

1.2.8 ACCOUNTING FOR COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED OR OTHERWISE
      MARKETED

     All costs incurred to establish the technological feasibility of a computer
software product to be sold, leased, or otherwise marketed are research and
development costs, and are expensed as they are incurred. The technological
feasibility of a computer software product is established when all planning,
designing, coding, and testing activities that are necessary to establish that
the product can be produced to meet its design specifications have been
completed.

1.2.9 ACCOUNTING FOR INTERNAL USE SOFTWARE

     Direct internal and external costs incurred to develop computer software
for internal use, including web site development costs, are capitalized during
the application development stage. Application development stage costs generally
include software configuration, coding, installation and testing. Costs of
significant upgrades and enhancements that result in additional functionality
are also capitalized. Costs incurred for maintenance and minor upgrades and
enhancements are expensed as incurred.

1.2.10 ADVERTISING COSTS

     The cost of advertising is expensed as incurred. However, certain costs
specifically related to the change of Vivendi Universal's corporate name have
been capitalized and are amortized over five years (for additional information
on advertising costs, please refer to Note 17.9).

1.2.11 INCOME OF CONSOLIDATED COMPANIES BEFORE EXCEPTIONAL ITEMS, INCOME TAXES,
       GOODWILL AMORTIZATION, EQUITY INTEREST AND MINORITY INTEREST

     Income from operations before exceptional items and income taxes includes
the business activities of consolidated companies and the cost of financing. It
does not include exceptional items.

1.2.12 EXCEPTIONAL ITEMS

     The definition of exceptional items is restricted to material items of an
unusual nature that arise from events or transactions outside the ordinary
course of business and which are not expected to recur. They principally include
capital gains and losses on the disposal of business activities and the
abandonment of related receivables where relevant.

1.2.13 DEFERRED TAXES

     Deferred tax assets and liabilities are recognized based on the differences
between the financial statement and tax base values of assets and liabilities.
Deferred tax amounts, recorded at the applicable rate at closing date, are
adjusted to allow for the impact of changes in French tax law and current tax
rates. Deferred tax assets are recognized for deductable timing differences, tax
losses and tax losses carry-overs. Their net realizable value is estimated
according to recovery prospects. Deferred tax assets on retained earnings of
foreign subsidiaries are not recorded.

1.2.14 EARNINGS PER SHARE

     The Group presents two earnings per share (EPS) amounts, basic and diluted.
Basic EPS is calculated by dividing net income by the weighted average number of
common shares outstanding, including treasury shares reported as marketable
securities, during the year. Diluted EPS adjusts basic EPS for the effects of
convertible securities, stock options and other potentially dilutive financial
instruments, where such effect is dilutive during the exercise period.

                                       F-13
1.2.15 GOODWILL AND BUSINESS COMBINATIONS

     All business combinations are accounted for as purchases. Under the
purchase accounting method, assets acquired and liabilities assumed are recorded
at fair value. The excess of the purchase price over the fair value of net
assets acquired, if any, is capitalized as goodwill and amortized over the
estimated period of benefit on a straight-line basis.

     Prior to December 31, 1999, French GAAP permitted certain significant
acquisitions to be accounted for as mergers. Under this method, assets and
liabilities of the acquired company were accounted for at historical cost. The
difference between the value of shares issued in the merger and the value of net
assets acquired was recorded as goodwill.

     Up to the end of 1999, acquisitions completed through the issuance of
shares, that portion of goodwill attributable to such proceeds could be recorded
as a reduction of shareholders' equity, up to the amount of the related share
premium.

     Amortization periods for goodwill range from 20 to 40 years for our
Environmental Services businesses and from 7 to 40 years for our other
businesses.

     Following exceptional depreciation in 2001 and the first half of 2002 based
on a comparison of goodwill current fair value and net book value, Vivendi
Universal prospectively modified the amortization base for the goodwill
concerned as from July 1, 2002. This base is now taken as the net value of
goodwill after recurring amortization and exceptional depreciation as at June
30, 2002. The straight-line method is applied over the residual period of the
depreciation schedule.

1.2.16 OTHER INTANGIBLE ASSETS

     Vivendi Universal has acquired substantial intangible assets, including
music catalogs, artists' contracts, music and audiovisual publishing assets,
film and television libraries, international television networks, editorial
inventories, distribution networks, customer bases, copyrights and trademarks.
Music catalogs, artists' contracts and music publishing assets are amortized
over periods ranging from 14 to 20 years (for additional information on other
intangible assets, please refer to Note 17.9).

1.2.17 UMTS LICENSE

     In August 2001, SFR acquired a 20-year license to provide 3G (third
generation) UMTS mobile telephony services in France. The license fee was split
in two: a fixed upfront fee of E 619 million, which was paid in September 2001,
and future payments equal to 1% of 3G revenues earned when the service
commences. Pursuant to a notice issued by the "Conseil National de la
Comptabilite" on January 9, 2002, the license was recognized as intangible
assets for E 619 million. It will be amortized on a straight-line basis from the
date when the service commences until the license maturity (i.e. August 2021).
Regarding future payments, they will be expensed when they occur since they are
not easily valuable.

1.2.18 PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is carried at cost. Depreciation is computed
using the straight-line method based on the estimated useful life of the assets,
generally 20-30 years for buildings and 3-15 years for equipment and machinery.
Assets financed by lease contracts that include a purchase option (known in
France as "credit-bail") are capitalized and amortized over the shorter of the
lease term or the estimated useful life of the assets. Amortization expenses on
assets acquired under such leases are included in depreciation expenses.

1.2.19 VALUATION OF LONG-LIVED ASSETS

     Vivendi Universal reviews the carrying value of long-lived assets,
including goodwill and other intangible assets, for impairment at each closing
or whenever facts, events or changes in circumstances, both internally and
externally, indicate that the carrying amount may not be recoverable. Any such
conceptual impairment is measured, for each reporting unit, by comparing the net
book value and current fair value of the asset where

                                       F-14
the current value depends on the underlying nature of its market value or value
in use. The reporting unit is defined as an operating segment, or one level
below an operating segment if the components of an operating segment constitute
businesses with no similar economic characteristics. Market value is defined as
the amount that could be obtained at the date of sale for an asset where the
transaction is concluded at normal market conditions, net of transaction costs.
Normal market conditions are those for transactions between fully informed,
independent and consenting parties. Value in use is defined as the value of
future economic benefits to be obtained from utilisation or write-off of the
asset. It is calculated from estimated future economic benefits:

     - generally, the fair value of business units is determined by the analysis
       of discounted cash flows;

     - if this method is irrelevant for the business unit, other standard
       criteria are available: comparison to similar listed companies,
       assessment to the value attributed to the business units involved in
       recent transactions, market price for business units quoted at the Stock
       Exchange;

     - when using these two standard evaluation methods, the fair market value
       of business units is determined with the assistance of an independent
       valuation expert appointed by Vivendi Universal.

1.2.20 INVENTORIES

     Inventories are valued either on a first-in-first-out or a weighted average
cost basis and are recorded at the lower of cost or net realizable value.

1.2.21 CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

     Cash and cash equivalents consist of cash in banks and highly liquid
investments with original maturities of three months or less and are recorded at
cost, which approximates fair value due to the short-term maturity.

     Marketable securities consist of other highly liquid investments and
Vivendi Universal treasury shares acquired in open market transactions or in
connection with stock options granted to directors and employees. Vivendi
Universal treasury shares held for other reasons are recorded as a reduction of
shareholders' equity. Marketable securities are carried at cost and a valuation
allowance is accrued if the fair value is less than the carrying value.

1.2.22 BONDS EXCHANGEABLE FOR VIVENDI UNIVERSAL SHARES

     On issuance of bonds exchangeable for shares the premium is not recorded as
a liability. This is because the borrowing is intended to be redeemed in the
form of shares and consequently represents a contingent liability. An accrual is
made from issuance to redemption or conversion, as soon as the share price
passes below the redemption price, to cover probable cash redemption of the
bonds.

1.2.23 DERIVATIVE FINANCIAL INSTRUMENTS

     The Group uses various derivative financial instruments that predominantly
qualify as hedges to manage its exposure to fluctuations in interest rates,
foreign currency exchange rates and investments in equity and debt securities.
These instruments include interest rate and cross-currency swap agreements,
forward exchange contracts and interest rate caps. Interest rate swaps and caps
are used to manage net exposure to interest rate changes related to borrowings
and to lower overall borrowing costs. Interest rate swaps that modify borrowings
or designated assets are accounted for on an accrual basis. Premiums paid for
interest rate caps are expensed as incurred. Cross-currency swaps and forward
exchange contracts are used to reduce earnings and cash flow volatility
associated with changes in foreign exchange rates and to protect the value of
existing foreign currency assets and liabilities. Gains and losses arising from
the change in the fair value of currency instruments that qualify for hedge
accounting treatment are deferred until related gains or losses on hedged items
are realized. Other derivative financial instruments are used by the Group to
hedge a part of public debt with principal repayment terms based on the value of
Vivendi Universal stock. These instruments effectively modify the principal
terms to a fixed amount and the rates to floating rates. Any derivative
financial instruments that do not qualify as hedges for financial reporting
purposes are recorded at the lower of cost or
                                       F-15
fair value. Loss relating to the periodic change in fair value is recorded as
income or expense of the current period.

1.2.24 EMPLOYEE BENEFIT PLANS

     In accordance with the laws and practices of each country in which we
operate, Vivendi Universal participates in, or maintains, employee benefit plans
providing retirement pensions, postretirement health care and life insurance and
postemployment benefits, principally severance for eligible employees.
Retirement pensions are provided for substantially all of our employees through
defined benefit or defined contribution plans, which are integrated with local
social security and multi-employer plans.

     For defined benefit plans, pension expense and plan contributions are
determined by independent actuaries using the projected unit cost method. This
method considers the probability of employees remaining with Vivendi Universal
until retirement, foreseeable changes in future compensation and an appropriate
discount rate for each country in which we maintain a pension plan. This results
in the recognition of pension-related assets and liabilities and related net
expense over the estimated term of service of our employees. Our funding policy
is consistent with applicable government funding requirements and regulations.
Pension plans may be funded with investments in various instruments such as
insurance contracts and equity and debt investment securities, but they do not
hold investments in Vivendi Universal's shares. Contributions to defined
contribution and multi-employer plans are funded and expensed currently. The
costs of post-retirement and post-employment benefits are accrued based on
actuarial studies performed by independent third-party acturial firms.

     Furthermore, Vivendi Universal has adopted the following rules:

     - Vivendi Universal uses fair value of plan assets in order to compute
       expected return, as well as to determine the amount of unrecognized
       actuarial gains and losses to be amortized during the reporting period;

     - The actuarial gains and losses are amortized using the minimal
       amortization method: the amounts of unamortized actuarial gains and
       losses recognized is the excess of 10 percent of the greater of the
       projected benefit obligation or the fair value of plan assets divided by
       the average remaining service period of active employees (or, if all or
       almost all of a plan's participants are inactive, the average remaining
       life expectancy of the inactive participants).

1.2.25 STOCK BASED COMPENSATION

     Vivendi Universal maintains stock option incentive plans that grant options
on its common shares to certain directors and employees and also to certain
employees of equity method investees. The purpose of these stock options plans
is to align the interest of management with the interest of shareholders by
providing an additional incentive to improve company performance and increase
share price on a long-term basis.

     In case of the issuance of new shares, shareholders' equity is credited for
the cumulative strike price to reflect the issuance of shares upon the exercise
of options. In the other cases, treasury shares held to fulfill obligations
under stock options granted are recorded as marketable securities and are
carried at the lower of their historical cost or their fair value or the strike
price of the stock-options hedged. Vivendi Universal recognizes any resulting
holding gain in the period that the shares are sold to the plan.

     Vivendi Universal also maintains employee stock purchase plans that allow
substantially all its full-time employees and those of certain of its
subsidiaries and equity method investees to purchase shares in Vivendi
Universal. Shares purchased by employees under these plans are subject to
certain restrictions relating to their sale or transfer.

1.2.26 CONSOLIDATED CASH FLOW STATEMENT

     The Consolidated Cash Flow Statement contains the information necessary to
analyze changes in the Group's cash position. The cash definition applied by the
Group prior to January 1, 2001, led to deduction of

                                       F-16
bank overdrafts from cash and cash equivalents. As from January 1, 2001, bank
overdrafts are now classified as short-term borrowings within the Consolidated
Cash Flow Statement. Since that date, "cash" now only represents cash and cash
equivalents recorded as Consolidated Balance Sheet assets.

NOTE 2 SUPPLEMENTARY FINANCIAL INFORMATION

2.1 DATA COMPARABILITY

     At December 31, 2002, Vivendi Universal has applied the option proposed in
the paragraph 23100 of the French rules 99-02 and presents the equity in
(losses) earnings of businesses which were sold during the year on one line in
the consolidated statement of income. This treatment concerns all of Vivendi
Universal Publishing excluding: Vivendi Universal Games; publishing activities
in Brazil; the consumer press division, which was sold in February 2003; and
Comareg, the sale of which is currently pending. Furthermore, in order to
present the Group's scope of consolidation as at December 31, 2002, a statement
of income illustrating the accounting for Veolia Environnement by using the
equity method from January 1st, 2002 instead of December 31st, 2002, has been
shown page 1.
VEOLIA        SOLD PUBLISHING
                                               ENVIRONNEMENT(1)    BUSINESSES(2)     TOTAL
                                               ----------------   ---------------   --------
                                                          (IN MILLIONS OF EUROS)
Revenues.....................................      E 30,038           E 2,838       E 32,876
Operating income.............................         1,911               268          2,179
Financial income.............................          (648)             (116)          (764)
Exceptional items............................           (76)              (50)          (126)
Net income (loss) at December 31, 2002.......           235                17            252
                                                   ========           =======       ========
---------------

(1) Veolia Environnement is fully consolidated in the consolidated statement of
    income actual 2002.

(2) Vivendi Universal publishing activities, excluding: Vivendi Universal Games;
    publishing activities in Brazil; the consumer press division, which was sold
    in February 2003; and Comareg, the sale of which is currently pending. These
    items are presented on the line "equity in (losses) earnings of disposed
    businesses" in the consolidated statement of income actual 2002.

2.2 2001 AND 2002 PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

     2001 and 2002 unaudited pro forma financial information is reported as if
the following transactions (described in Note 3) had occurred on January 1, 2001
for the pro forma income statements for the 2001 and 2002 financial years, and
at December 31, 2001 for the pro forma balance sheet at that date:

     - Reduction of participation in Veolia Environnement.

     - Disposal of all Vivendi Universal publishing activities(1) (activities
       disposed over 2002), excluding Vivendi Universal Games, publishing
       activities in Brazil, the consumer press division and Comareg.

     - Acquisition of the entertainment assets of USA Networks Inc.
       (consolidated in the actual financial statements as from May 7, 2002).

     - Acquisition of Maroc Telecom (consolidated in the actual financial
       statements as from April 1, 2001).

     - Acquisition of MP3 (consolidated in the actual financial statements as
       from September 1, 2001).

     This unaudited pro forma financial information is not necessarily
indicative of the results Vivendi Universal would have reported had the
transactions described above actually occurred at the dates adopted for

---------------

     1 Houghton Mifflin has been consolidated in the actual financial statements
       of the Group since July 1, 2001.
                                       F-17
preparation of the pro forma financial information. The accompanying pro forma
information is not intended to comply with Article 11 of regulation SX.

2.2.1 CONSOLIDATED STATEMENT OF INCOME PRO FORMA 2002 (UNAUDITED)
YEAR ENDED DECEMBER 31, 2002
                               --------------------------------------------------------------------------
                                           REDUCTION OF       DISPOSAL OF   ACQUISITIONS
                                           PARTICIPATION      PUBLISHING        USA            PROFORMA
                                ACTUAL         IN VE          ACTIVITIES    NETWORKS(1)       (UNAUDITED)
                               ---------   -------------      -----------   ------------      -----------
                                                         (IN MILLIONS OF EUROS)
REVENUES.....................  E  58,150     E (30,038)(a)      E   --         E  617(h)       E  28,729
Cost of revenues.............    (40,574)       23,825(a)           --           (340)(h)        (17,089)
Selling, general and
  administrative expenses....    (12,937)        4,018(a)           --           (117)(h)         (9,036)
Other operating expenses,
  net........................       (851)          284(a)           --             --(h)            (567)
                               ---------     ---------          ------         ------          ---------
OPERATING INCOME.............      3,788        (1,911)(a)          --            160(h)           2,037
Financial expenses, net......     (1,333)          713(a)(d)        78(g)         (82)(h)(j)        (624)
Financial provisions.........     (2,895)          109(a)           --             --(h)          (2,786)
Other income (expense).......       (514)         (144)(a)          --             --(h)            (658)
                               ---------     ---------          ------         ------          ---------
INCOME BEFORE EXCEPTIONAL
  ITEMS, INCOME TAXES,
  GOODWILL AMORTIZATION,
  EQUITY INTEREST AND
  MINORITY INTEREST..........       (954)       (1,233)(a)          78             78(h)          (2,031)
Exceptional items, net.......      1,049        (1,332)(a)(c)      844(f)          --(h)             561
Income tax (expense)
  benefit....................     (2,556)          437(a)         (192)(f)         (8)(h)(k)      (2,319)
                               ---------     ---------          ------         ------          ---------
INCOME BEFORE GOODWILL
  AMORTIZATION, EQUITY
  INTEREST AND MINORITY
  INTEREST...................     (2,461)       (2,128)(a)         730             70(h)          (3,789)
Equity in (losses) earnings
  of disposed businesses.....         17            --(a)          (17)(e)         --                 --
Equity in (losses) earnings
  of unconsolidated
  companies..................       (294)           72(a)(b)        --            (44)(h)(i)        (266)
Goodwill amortization........     (1,277)          285(a)           --            (48)(h)         (1,040)
Goodwill impairment..........    (18,442)           --(a)           --             --(h)         (18,442)
                               ---------     ---------          ------         ------          ---------
INCOME (LOSS) BEFORE MINORITY
  INTEREST...................    (22,457)       (1,771)(a)         713            (22)(h)        (23,537)
Minority interest............       (844)          270(a)           --              3(h)(l)         (571)
                               ---------     ---------          ------         ------          ---------
NET INCOME (LOSS)............  E (23,301)       (1,501)            713            (19)         E (24,108)
                               =========     =========          ======         ======          =========
EARNINGS (LOSS) PER BASIC
  SHARE......................  E  (21.43)                                                      E  (22.17)
                               =========                                                       =========
---------------

(1) Related to the Entertainment Assets of USA Networks, Inc. purchased on May
    7, 2002.

                                       F-18
2.2.2 CONSOLIDATED STATEMENT OF INCOME PRO FORMA 2001 (UNAUDITED)
YEAR ENDED DECEMBER 31, 2001
                           -----------------------------------------------------------------------------
                                                                           ACQUISITION
                                       REDUCTION OF       DISPOSAL OF     USA NETWORKS,
                                       PARTICIPATION      PUBLISHING      MAROC TELECOM       PROFORMA
                            ACTUAL         IN VE          ACTIVITIES       AND MP3(1)        (UNAUDITED)
                           ---------   -------------      -----------     -------------      -----------
                                                      (IN MILLIONS OF EUROS)
REVENUES.................  E  57,360     E (29,094)(a)     E (2,862)(e)     E  2,329(h)       E  27,733
Cost of revenues.........    (39,526)       23,404(a)         1,309(e)        (1,014)(h)        (15,827)
Selling, general and
  administrative
  expenses...............    (13,699)        3,664(a)         1,084(e)          (610)(h)         (9,561)
Other operating expenses,
  net....................       (340)           62(a)            46(e)            --(h)            (232)
                           ---------     ---------         --------         --------          ---------
OPERATING INCOME.........      3,795        (1,964)(a)         (423)(e)          705(h)           2,113
Financial expenses,
  net....................     (1,455)          826(a)(d)        153(e)(g)       (248)(h)(j)        (724)
Financial provisions.....       (482)           54(a)            18(e)            --(h)            (410)
Other income (expense)...          9            36(a)            (2)(e)          (17)(h)             26
                           ---------     ---------         --------         --------          ---------
INCOME BEFORE EXCEPTIONAL
  ITEMS, INCOME TAXES,
  GOODWILL AMORTIZATION,
  EQUITY INTEREST AND
  MINORITY INTEREST......      1,867        (1,048)(a)         (254)(e)          440(h)           1,005
Exceptional items, net...      2,365           (39)(a)(c)         2(e)            --(h)           2,328
Income tax (expense)
  benefit................     (1,579)          462(a)           119(e)           (45)(h)(k)      (1,043)
                           ---------     ---------         --------         --------          ---------
INCOME BEFORE GOODWILL
  AMORTIZATION, EQUITY
  INTEREST AND MINORITY
  INTEREST...............      2,653          (625)(a)         (133)(e)          395(h)           2,290
Equity in (losses)
  earnings of
  unconsolidated
  companies..............       (453)         (209)(a)(b)         4(e)          (144)(h)(i)        (802)
Goodwill amortization....     (1,688)          341(a)            38(e)          (129)(h)         (1,438)
Goodwill impairment......    (13,515)          996(a)            --(e)            --(h)         (12,519)
                           ---------     ---------         --------         --------          ---------
INCOME (LOSS) BEFORE
  MINORITY INTEREST......    (13,003)          503(a)           (91)(e)          122(h)         (12,469)
Minority interest........       (594)         (136)(a)            5(e)           (34)(h)(l)        (759)
                           ---------     ---------         --------         --------          ---------
NET INCOME (LOSS)........  E (13,597)    E     367         E    (86)        E     88          E (13,228)
                           =========     =========         ========         ========          =========
EARNINGS (LOSS) PER BASIC
  SHARE..................  E  (13.53)                                                         E  (12.81)
                           =========                                                          =========
---------------

(1) Related to the Entertainment Assets of USA Networks, Inc., Maroc Telecom and
    MP3.com

     The unaudited pro forma adjustments for the income statement are as
follows:

- REDUCTION OF PARTICIPATION IN VEOLIA ENVIRONNEMENT

     (a) Deconsolidate 2002 and 2001 Veolia Environnement income statements.

     (b) Record 2002 and 2001 equity earnings for Veolia Environnement,
respectively E 113 million and E (147) million, at the December 2002 interest
rate (20.4%).
                                       F-19
(c) Eliminate capital gains and dilution profit of E 1,408 million (net of
fees) recorded in 2002 as a result of the reduction of Vivendi Universal's
participation in Veolia Environnement.

     (d) Record the reduction in interest expense, assuming that the E 1,479
million proceeds from the disposal of 15.5% of Veolia Environnement shares
received on June 28, 2002 were received at the beginning of 2001, and assuming
that they were utilized for the purpose of reducing financial debt. The proceeds
taken into account for this calculation represent only the fraction of the
proceeds from the disposals of Vivendi Universal's participation in Veolia
Environnement not allocated to the financing of the January 2003 acquisition of
British Telecom's 26% participation in Cegetel. Using the group's average
financing cost for 2001 and 2002 (4.0% and 4.1%, respectively), the reduction in
interest expense amounts to E 30 million in 2002 (prorata temporis) and E 60
million in 2001.

     No tax effect has been recorded on adjustments (c) and (d) as described
above, since taxes on capital gains realized in France have been offset against
tax loss carryforwards within the French tax group.

- DISPOSAL OF VIVENDI UNIVERSAL PUBLISHING ACTIVITIES

     (e) Deconsolidate 2001 income statement of publishing activities and
eliminate equity in earnings of disposed businesses recorded for a net amount of
E 17 million in 2002.

     (f) Eliminate E 844 million of capital losses (net of fees) recorded in
2002 as a result of the disposal of publishing activities.

     (g) Record the reduction in interest expense, assuming that a fraction of
the proceeds from the disposal of publishing activities, which occurred in 2002,
was received at the beginning of 2001, and assuming that it has been utilized
for the purpose of reducing financial debt. The proceeds taken into account for
this calculation represents only the fraction of the proceeds from the disposals
of Vivendi Universal's publishing activities not allocated to the financing of
the January 2003 acquisition of British Telecom's 26% participation in Cegetel.
Using the group's average financing cost for 2001 and 2002 (4.0% and 4.1%,
respectively), the reduction in interest expense amounts to E 78 million in 2002
(prorata temporis) and E 94 million in 2001.

     No tax effect has been recorded on adjustments (f) and (g) as described
above, since capital losses realized in France have been offset against tax loss
carryforwards within the French tax group.

- ACQUISITION OF THE ENTERTAINMENT ASSETS OF USA NETWORKS, OF MAROC TELECOM AND
  OF MP3.COM

     (h) Consolidate the income statement of the entities detailed below,
starting at the beginning of 2001.

          a.  Entertainment assets of USA Networks, Inc. (fully consolidated
     starting May 7 in 2002 actual financial statements and consolidated as an
     equity investment in 2001 actual financial statements)

          b.  Maroc Telecom (consolidated starting April 1, 2001 in actual
     financial statements)

          c.  MP3.com (consolidated starting September 1, 2001 in actual
     financial statements)

     (i) Eliminate equity earnings in USANi LLC. Until May 7, 2002, Vivendi
Universal accounted for its 47.9% interest in USANi LLC as an equity investment,
which earnings amounted to E 44 million and E 144 million, respectively in 2002
and 2001.

     (j) Record the additional interest expense, assuming that the
acquisitions -- as described in note (h) -- were completed at the beginning of
the financial year. For Maroc Telecom and MP3.com, the interest rate used is the
group's average financing cost for 2001 (4.0%), resulting in increased interest
expense of E 24 million and E 7 million, respectively.

Regarding the entertainment assets of USA Networks, the interest expense has
been calculated using the interest rates of the $1.6 billion bridge loan and of
the preferred A and B interests (totalling $2.5 billion).

     (k) Includes tax effect on adjustment (j) as described above.

                                       F-20
(l) Record minority interest, mainly related to USA Interactive and Barry
Diller interest in Vivendi Universal Entertainment.

2.2.3 CONSOLIDATED BALANCE SHEET PRO FORMA 2001 (UNAUDITED)
DECEMBER 31, 2001
                          ------------------------------------------------------------------------------
                                      REDUCTION OF        DISPOSAL OF      ACQUISITION
                                      PARTICIPATION       PUBLISHING           USA
                           ACTUAL         IN VE           ACTIVITIES       NETWORKS(1)        PROFORMA
                          ---------   -------------       -----------      -----------       -----------
                                                                                             (UNAUDITED)
                                                      (IN MILLIONS OF EUROS)
ASSETS
Goodwill, net...........  E  37,617     E  (4,875)(a)      E (2,151)(f)     E  9,221(k)(l)    E 39,812
Other intangible assets,
  net...................     23,302        (4,486)(a)        (3,006)(f)        1,771(k)         17,581
Equity investments......      9,176          (170)(a)(b)          3(f)        (6,669)(k)(m)      2,340
Tangible and other
  financial assets......     28,979       (15,514)(a)          (452)(f)(g)     1,247(k)(m)      14,260
                          ---------     ---------          --------         --------          --------
TOTAL LONG-TERM
  ASSETS................     99,074       (25,045)           (5,606)           5,570            73,993
                          ---------     ---------          --------         --------          --------
Accounts receivable.....     21,094       (11,003)(a)        (1,613)(f)        1,232(k)(n)       9,710
Other current assets....     14,109        (3,616)(a)          (789)(f)          253(k)          9,957
Cash and cash
  equivalents...........      4,725          (998)(a)(c)        694(f)(h)         --(k)          4,421
                          ---------     ---------          --------         --------          --------
TOTAL CURRENT ASSETS....     39,928       (15,617)           (1,708)           1,485            24,088
                          ---------     ---------          --------         --------          --------
TOTAL ASSETS............  E 139,002     E (40,662)         E (7,314)        E  7,055          E 98,081
                          =========     =========          ========         ========          ========
LIABILITIES AND
  SHAREHOLDERS' EQUITY
Shareholders' equity....  E  36,748     E   3,297(a)(d)    E   (844)(f)(i)  E    356(k)(o)    E 39,557
Minority interests......     10,208        (5,538)(a)           (43)(f)        1,025(k)(p)       5,652
Other long term
  liabilities...........     13,875        (4,700)(a)          (351)(f)          440(k)          9,264
Long-term debt..........     27,777       (14,539)(a)(e)       (997)(f)(j)     2,848(k)(q)      15,089
                          ---------     ---------          --------         --------          --------
                             88,608       (21,480)           (2,235)           4,669            69,562
                          ---------     ---------          --------         --------          --------
Accounts payable........     26,414       (12,345)(a)        (1,661)(f)          540(k)         12,948
Deferred taxes..........      9,977        (1,340)(a)          (279)(f)           --(k)          8,358
Short-term debt.........     14,003        (5,497)(a)        (3,139)(f)        1,846(k)(q)       7,213
                          ---------     ---------          --------         --------          --------
TOTAL CURRENT
  LIABILITIES...........     50,394       (19,182)           (5,079)           2,386            28,519
                          ---------     ---------          --------         --------          --------
TOTAL LIABILITIES AND
  SHAREHOLDERS'
  EQUITY................  E 139,002     E (40,662)         E (7,314)        E  7,055          E 98,081
                          =========     =========          ========         ========          ========
---------------

(1) Related to the Entertainment Assets of USA Networks, Inc. purchased on May
    7, 2002

- REDUCTION OF PARTICIPATION IN VEOLIA ENVIRONNEMENT

     (a) Deconsolidate the balance sheet of Veolia Environnement.

     (b) Record as an equity investment Veolia Environnement for an amount of
E 448 million.

     (c) Record the proceeds resulting from the disposal of 20.4% of Veolia
Environnement shares sold on December 24, 2002, for an amount of E 1,856
million. These proceeds have been allocated to the financing of the January 2003
acquisition of British Telecom's 26% participation in Cegetel.

     (d) Record the proceeds and the associated capital gains.

                                       F-21
(e) Record the proceeds resulting from the disposal of 15.5% of Veolia
Environnement shares sold on June 28, 2002, for an amount of E 1,479 million,
considering that these proceeds have been allocated to the reduction of Vivendi
Universal financial debt.

- DISPOSAL OF VIVENDI UNIVERSAL PUBLISHING ACTIVITIES

     (f) Deconsolidate the balance sheet of Vivendi Universal publishing
activities sold in 2002.

     (g) Record the intercompany transactions between Vivendi Universal and the
publishing activities sold in 2002 that were historically eliminated in the
consolidated balance sheet of Vivendi Universal.

     (h) Record the proceeds resulting from the disposal of Houghton Mifflin for
an amount of E 879 million, corresponding to the portion of the proceeds
allocated to the financing of the January 2003 acquisition of BT Group's 26%
participation in Cegetel.

     (i) Record the proceeds and the associated capital losses.

     (j) Record the proceeds resulting from the disposal of Houghton Mifflin for
an amount of E 316 million, corresponding to the portion of the proceeds
allocated to the reduction of Vivendi Universal financial debt; record the
proceeds resulting from the disposal of other publishing activities sold in
2002.

- ACQUISITION OF THE ENTERTAINMENT ASSETS OF USA NETWORKS

     (k) Consolidate the balance sheet of the acquired entertainment assets of
USA Networks, Inc.

     (l) Record the goodwill resulting from the preliminary purchase price
allocation of the acquired entertainment assets of USA Networks, Inc.

     (m) Includes the following items (see Note 3.2.1)

          a.  Eliminate of 282 million shares held by Vivendi Universal and
     previously consolidated as an equity investment, for an amount of E 6,669
     million.

          b.  Record USA Interactive warrants issued to Vivendi Universal, for a
     amount of E 475 million, net of allowance.

          c.  Record 25 million USA Interactive shares acquired from Liberty
     Media in connection with the acquisition of the entertainment assets of USA
     Networks, for an amount of E 623 million.

     (n) Record the reimbursement premium on Class A and Class B preferred
interests, for an amount of E 861 million.

     (o) Record the value of the 27.6 million treasury shares transferred to
Liberty Media, for an amount of E 971 million; record the depreciation allowance
of USA Interactive warrants, for an amount of E 615 million.

     (p) Record USA Interactive and Barry Diller's common interest in VUE of
5.44% and 1.5% respectively.

     (q) Record cash payment to USA Interactive for an amount of E 1,846
million; record Class A and Class B preferred interests issued to USA
Interactive for a total amount of E 2,848 million.

     The pro forma information presented above, which is not compliant with
Article 11 of SEC Regulation SX, has been included since it is required under
French GAAP in the Company's consolidated financial statement to promote
comparability.

                                       F-22
NOTE 3 GOODWILL

3.1 CHANGES IN GOODWILL
ACCUMULATED    GOODWILL,
                                                     GOODWILL   AMORTIZATION      NET
                                                     --------   ------------   ---------
                                                           (IN MILLIONS OF EUROS)
BALANCE AT DECEMBER 31, 2000.......................  E 49,054    E  (1,921)    E  47,133
Changes in consolidation scope.....................     3,541           62         3,603
Amortization.......................................        --       (2,148)       (2,148)
Impairment.........................................        --      (12,194)      (12,194)
Foreign currency translation adjustments...........     1,564         (341)        1,223
                                                     --------    ---------     ---------
BALANCE AT DECEMBER 31, 2001.......................  E 54,159    E (16,542)    E  37,617
                                                     ========    =========     =========
Changes in consolidation scope.....................     1,705        3,742         5,447
Amortization.......................................        --       (1,277)       (1,277)
Impairment.........................................        --      (18,442)      (18,442)
Foreign currency translation adjustments...........    (4,114)         831        (3,283)
                                                     --------    ---------     ---------
BALANCE AT DECEMBER 31, 2002.......................  E 51,750    E (31,688)    E  20,062
                                                     ========    =========     =========
3.2 ACQUISITIONS AND DISPOSITIONS

SIGNIFICANT ACQUISITIONS AND DISPOSITIONS THAT OCCURRED IN 2002

3.2.1 ACQUISITION OF THE ENTERTAINMENT ASSETS OF USA NETWORKS, INC.

     On May 7, 2002, Vivendi Universal consummated its acquisition of the
entertainment assets of USA Interactive (formerly USA Networks, Inc.) with the
formation of Vivendi Universal Entertainment LLLP (VUE), a limited liability
limited partnership that is approximately 93% owned by non-wholly owned
subsidiaries of Vivendi Universal. As part of the transaction, Vivendi Universal
and its affiliates surrendered 320.9 million shares of USANi LLC that were
previously exchangeable into shares of USA stock. In addition, Vivendi Universal
transferred 27.6 million treasury shares to Liberty Media Corporation in
exchange for (i) 38.7 million USANi LLC shares (which were among the 320.9
million surrendered) and (ii) 25 million shares of USA common stock, which were
retained by Vivendi Universal (see Note 4.3).

     As consideration for the transaction, USA received a $1.62 billion cash
distribution from VUE, a 5.44% common interest in VUE and Class A and Class B
preferred interests in VUE with initial face values of $750 million and $1.75
billion, respectively. The Class B preferred interests are subject to put/call
provisions at any time following the 20-year anniversary of issuance (i.e. May
2022). USA may require Vivendi Universal to purchase the Class B preferred
interests, and Vivendi Universal may require USA to sell to it the Class B
preferred interests, for a number of USA shares having a market value equal to
the accreted face value of the Class B preferred interests at such time, subject
to a maximum of 56.6 million USA shares. The parties also agreed to put and call
options on USA's common interests. The call may be exercised by Vivendi
Universal at any time after the fifth anniversary of the transaction (May 2007)
and the put may be exercised by USA at any time after the eighth anniversary of
the transaction (May 2010), in either case, at its fair market value, payable at
the option of Universal Studio in cash or Vivendi Universal listed common equity
securities. For information on the VUE Partnership Agreement, see Note 11.

     In addition, Mr. Diller, USA's chairman and chief executive officer,
received a 1.5% common interest in VUE in return for agreeing to specific
non-competition provisions for a minimum of 18 months, for informally agreeing
to serve as VUE's chairman and chief executive officer and as consideration for
his agreement not to exercise his veto right over this transaction. At any time
after the first anniversary of the closing, Mr. Diller may require Universal
Studio, Inc. (a subsidiary of Vivendi Universal) to purchase his common interest
and at any time after the later of (a) the second anniversary of the closing and
(b) the time Mr. Diller is no longer the VUE chief executive officer, Universal
Studio, Inc. may purchase Mr. Diller's common interest. In either

                                       F-23
case, the purchase price will be equal to the greater of $275 million and the
private market value of his common interest, payable at the option of Universal
Studio, Inc. in cash or Vivendi Universal listed common equity securities. The
fair value of $275 million of Mr. Diller's common interest has been recorded as
part of the total purchase consideration at the acquisition date. As part of
Vivendi Universal's preliminary purchase price allocation, $15 million has been
recorded as the value of Mr. Diller's non-competition arrangement, which is
being amortized on a straight-line basis over a period of 18 months. The $275
million minimum value of the common interest is accounted for by Vivendi
Universal as a minority interest in VUE. Any increases in fair value above the
minimum put price of the common interest and any subsequent decreases in fair
value to the minimum put price of the common interest, are recognized in
operations by Vivendi Universal (for US GAAP purposes, only).

     In connection with the transaction, Vivendi Universal received
approximately 60.5 million warrants to purchase common stock of USA, with
exercise prices ranging from $27.5 to $37.5 per share. The warrants were issued
to Vivendi Universal in return for an agreement to enter into certain commercial
arrangements with USA. At this time, no commercial arrangement is in place. A
portion of the warrants were sold in February 2003 (see Note 16).

     The entertainment assets acquired by Vivendi Universal were USA's
television programming, cable networks and film businesses, including USA Films,
Studios USA and USA Cable. These assets, combined with the film, television and
theme park assets of the Universal Studios Group, formed a new entertainment
group, Vivendi Universal Entertainment LLLP, in which Vivendi Universal has an
approximately 93% voting interest and an approximately 86% economic interest
(due to the minority stake of Matsushita).

     The acquisition cost of the USA entertainment assets amounts to E 11,008
million, and was determined with the assistance of an independent third-party
valuation firm, and is detailed as follows:
IN MILLIONS OF
                                                                 EUROS(1)
                                                              --------------
320.9 million USANi LLC shares surrendered(2)...............       7,386
Cash paid to USA Interactive(3).............................       1,774
Class B preferred interests VUE issued to USA
  Interactive(4)............................................       1,918
Premiums on class B preferred shares(5).....................        (529)
Class A preferred interests VUE issued to USA
  Interactive(6)............................................         822
Premiums on class A preferred shares(5).....................        (299)
Common interest of 5,44% in VUE issued to USA
  Interactive(7)............................................         707
Common interest of 1,5% in VUE issued to Barry Diller(7)....         278
USA Interactive warrants issued to Vivendi Universal(8).....      (1,049)
                                                                  ------
PURCHASE PRICE..............................................      11,008
                                                                  ======
---------------

(1) Exchange rate euro/dollar: 0.9125 as of May 7, 2002.

(2) Approximately 282 million shares of USANi LLC already held by Vivendi
    Universal and its affiliates and 38.7 million shares of USANi LLC acquired
    from Liberty Media. The shares already held were valued at their book value,
    i.e. E 6,415 million. The shares acquired in exchange for Vivendi Universal
    common shares were valued using the average closing price of Vivendi
    Universal's common shares 11 days before and after the transaction
    announcement date of December 16, 2001.

(3) Leveraged partnership distribution of $1.62 billion.

(4) Corresponds to face value of these securities. Their key features are:

     -- 1.4% annual paid-in-kind dividend accreting quarterly,

     -- 3.6% annual cash dividend.

                                       F-24
-- Put/call arrangement exercisable from May 2022,

     -- Redeemed immediately after a put/call in cash in the amount equal to the
        accreted face value at such time.

(5) Corresponds to the difference between the fair value (calculated based on a
    7.5% discount rate) and the reimbursement value of the preferred interests
    A&B. This difference is assimilated to a premium, which is amortized on a
    straight-line basis until the maturity date.

(6) Corresponds to face value of these securities. Their key features are:

     -- Maturity: 20 years,

     -- Annual PIK dividend of 5%, accreting quarterly,

     -- Settlement at maturity in cash in the amount equal to accreted face
        value.

(7) Portion of VUE fair value estimated as of May 7, 2002, including discounts
    for lack of control and marketability.

(8) The value of the warrants was estimated using the Black-Scholes option
    pricing model. The key assumptions used are: USA Interactive volatility:
    50%, and risk-free rate: 5.54%.

     With the assistance of an independent third-party valuation firm, Vivendi
Universal has performed a preliminary purchase price allocation study in order
to allocate the purchase price among assets acquired and the liabilities
assumed.

     A final purchase price allocation will be completed by April 2003 and may
result in modifications to certain items. The following table shows this
preliminary allocation:
IN MILLIONS OF
                                                                 EUROS(1)
                                                              --------------
Goodwill(2).................................................       9,608
Film costs, trademarks and other intangible assets..........       1,704
Other assets................................................         639
Other liabilities...........................................        (943)
                                                                  ------
PURCHASE PRICE..............................................      11,008
                                                                  ======
---------------

(1) Exchange rate euro/dollar : 0.9125 as of May 7, 2002.

(2) Amortized over a 40-year period, on a straight-line basis.

3.2.2 INCREASED HOLDING IN MULTITHEMATIQUES

     In connection with the sale of its shares in USA Networks, Liberty Media
transferred to Vivendi Universal its 27.4% share in the European cable
television company, Multithematiques and its current account balances in
exchange for 9.7 million Vivendi Universal shares. The share value is based on
the average closing price of Vivendi Universal shares during a reference period
before and after December 16, 2001, the date the agreement was announced.
Following this acquisition, Canal+ Group holds 63.9% of Multithematiques' share
capital. The additional goodwill resulting from Vivendi Universal taking a
controlling stake in this company, which had been consolidated until March 31,
2002 using the equity method, amounted to E 542 million.

3.2.3 REDUCTION OF HOLDING IN VEOLIA ENVIRONNEMENT

     Following a decision taken by the Board of Directors on June 17, 2002,
Vivendi Universal reduced its ownership interest in Veolia Environnement in
three steps. Prior to taking these steps, an agreement was signed with Mrs.
Esther Koplowitz by which she agreed not to exercise the call option on Veolia
Environnement's participation in FCC which otherwise would have been
exerciseable once Vivendi Universal ownership interest in Veolia Environnement
fell below 50%.

                                       F-25
The first step occurred on June 28, 2002, when 53.8 million Veolia
Environnement shares were sold on the market (approximately 15.5% of share
capital before capital increase). The shares were sold by a financial
institution which had owned the shares since June 12, 2002 following a
repurchase transaction, known in France as a "pension livree", carried out with
Vivendi Universal. In parallel, in order to make it possible for the financial
institution to return the same number of shares to Vivendi Universal at the
maturity of the repo on December 27, 2002, Vivendi Universal entered into a
forward sale for the same number of shares to this financial institution at the
price of the investment. As a result, Vivendi Universal reduced its debt by
E 1,479 million and held 47.7% of the share capital of Veolia Environnement.

     In the second step, on August 2, 2002, Veolia Environnement increased its
share capital by E 1,529 million, following the issuance of approximately 58
million new shares (14.3% of the capital after the capital increase), subscribed
to by a group of investors to whom Vivendi Universal had already sold its
preferential subscription rights pursuant to an agreement dated June 24, 2002.
Following this second transaction, Vivendi Universal owned 40.8% of Veolia
Environnement's share capital and Veolia Environnement continued to be
consolidated using the full consolidation method in accordance with generally
accepted accounting principles in France.

     The third step occurred on December 24, 2002, a month after the amendment
to the contract signed on June 24, 2002 was signed with the banks which managed
the June transaction and a group of new investors. Under the terms of the
amended agreement, Vivendi Universal agreed to sell 82.5 million shares of
Veolia Environnement, representing 20.4% of Veolia Environnement's share
capital, and the new investors agreed to assume a lock-up on these shares
previously agreed to by Vivendi Universal for the remaining term of that
commitment, i.e. until December 21, 2003.

     Each of these shares of Veolia Environnement includes a call option that
entitles these investors to acquire additional Veolia Environnement shares at
any time until December 23, 2004 at an exercise price of E 26.50 per share.
After the exercise of all the call options, Vivendi Universal would no longer
hold any shares of Veolia Environnement. On December 24, 2002, Vivendi Universal
received, in exchange for the shares and the call options, E 1,856 million. The
call options on the Veolia Environnement shares are recorded as deferred items
in liabilities for an amount of E 173 million.

     Following this disposal, Vivendi Universal holds 82.5 million shares, or
20.4%, of Veolia Environnement's share capital which is held in an escrow
account to cover the call options. This investment is accounted for using the
equity method as of December 31, 2002.

     Vivendi Universal recorded a E 1,419 million capital gain for these
operations in 2002.

3.2.4 DISPOSAL OF VIVENDI UNIVERSAL PUBLISHING'S PROFESSIONAL AND HEALTH
      DIVISION

     On April 18, 2002, Vivendi Universal Publishing (VUP) signed a definitive
agreement pursuant to which the Cinven, Carlyle and Apax investment funds
acquired 100% of the professional and health information divisions. In parallel
with this disposal, Vivendi Universal acquired 25% of the capital stock of the
acquisition vehicle, alongside Cinven (37.5%), Carlyle (28%) and Apax (9.5%).
The transaction was concluded on July 19, 2002 with Vivendi Universal's sale to
the investors of the shares acquired in the leveraged buy out. The transaction
reduced profit before tax by E 298 million.

3.2.5 SALE OF STAKE IN VIZZAVI EUROPE

     On August 30, 2002, Vivendi Universal sold to Vodafone its 50% share of
Vizzavi Europe. As a result, Vivendi Universal received E 143 million in cash.
As a part of the transaction, Vivendi Universal took over 100% of Vizzavi
France. This transaction generated a capital gain of E 90 million.

3.2.6 DISPOSITION OF PUBLISHING ACTIVITIES

     The Board of Directors on August 13, 2002, decided to sell the American
publisher Houghton Mifflin acquired in 2001. On September 25, 2002, the Board
decided that the sale should occur as soon as possible and cover, in addition to
Houghton Mifflin, all of Vivendi Universal Publishing's activities.
                                       F-26
These assets, with revenues and employees totaling approximately E 2.3
billion and 7000, respectively, were presented to several buyers.

     Following receipt of indicative offers, Vivendi Universal decided to
conduct separate sale processes for the European and American businesses. The
Board of Directors meeting held on October 29, 2002 approved the disposal of the
VUP's European activities to the Lagardere Group, which had made the most
competitive offer. This transaction was finalized on December 20, 2002 after the
approval of the personnel representative bodies of Vivendi Universal and VUP.
The European publishing activities were acquired by Investima 10, a company
wholly owned by Natexis Banques Populaires for Lagardere. Investima 10 will
transfer the acquired assets to the Lagardere Group as soon as the latter
obtains competition law approval to be given by the European Commission. The
gross proceeds from the sale amounted to E 1,198 million. This transaction has
resulted in a gain of E 329 million on Vivendi Universal's net income before
tax.

     Following this transaction, Vivendi Universal retains its 50% interest in
the company that owns Atica and Scipione, the Brazilian publishers.

     Three investors participated in the separate auction to sell the publisher
Houghton Mifflin. On December 30, 2002, Vivendi Universal finalized the sale of
Houghton Mifflin to a consortium comprising Thomas H. Lee and Bain Capital. The
gross proceeds from the sale amounted to $1,660 million. As a result of this
transaction, Vivendi Universal recognized a capital loss of E 822 million before
tax, including a foreign currency translation loss of E 236 million.

     THE IMPACTS OF DISPOSITIONS IN 2002 ON THE FINANCIAL DEBT AND THE INCOME
BEFORE TAX AND MINORITY INTEREST ARE SUMMARIZED IN NOTES 7.2 AND 10.1.4.

     SOME DISPOSITIONS AGREED TO IN 2002 ARE BEING FINALIZED AT THE CLOSING. THE
MAIN TRANSACTIONS ARE THE FOLLOWING:

3.2.7 DISPOSAL OF TELEPIU

     News Corporation and Telecom Italia signed, on October 1, 2002, a
definitive agreement with Vivendi Universal and Canal+ Group to acquire Telepiu,
the Italian pay-TV business. The stated purchase price was E 920 million,
consisting of the assumption of up to E 450 million in debt and a cash payment
of E 470 million. However, this cash payment will be adjusted downward by the
amount of outstanding accounts payable at closing. A provision of E 360 million
was recorded to cover the estimated loss. (see Note 6)

     The acquisition, which is subject to regulatory approval, is expected to be
completed soon. As part of the acquisition agreement, all litigation between the
parties, including Canal+'s litigation against NDS, has been suspended and will
be permanently withdrawn when the transaction closes.

3.2.8 DISPOSAL OF CANAL+ TECHNOLOGIES

     Canal+ Group, a Vivendi Universal subsidiary, sold its 89% stake in Canal+
Technologies on September 25, 2002, to Thomson Multimedia for E 190 million in
cash. This transaction, approved by the respective Boards authorized by the
relevant competition authorities was closed on January 31, 2003 on the basis of
E 190 million in cash, of which E 90 million was collected in 2002, E 79 million
has been collected in 2003 and the remainder is expected to be paid after any
post-closing adjustments. (See Note 16)

3.2.9 DISPOSAL OF VIVENDI UNIVERSAL PUBLISHING'S CONSUMER PRESS DIVISION

     On August 30, 2002 Vivendi Universal and the Socpresse group entered into
an agreement to sell the consumer press division of Vivendi Universal Publishing
(Groupe Express-Expansion and Groupe l'Etudiant) and Comareg (including Delta
Diffusion, which is to join Mediapost). The two transactions are together worth
a total cash amount of E 330 million. The sale of Consumer Press Division to the
Socpresse Group was finalized on February 4, 2003 following the authorization by
The Economy and Finance Ministry in January 2003. The amount collected was E 200
million. The sale of Comareg to France Antilles is expected to take place at a
later time, as it remains subject to the approval of the European Commission.
(See Note 16)

                                       F-27
MAIN ACQUISITIONS AND DISPOSITIONS IN 2001 INCLUDED:

3.2.10 PURCHASE OF INTEREST IN MAROC TELECOM

     In the course of the partial privatization of Maroc Telecom, Vivendi
Universal was chosen to be a strategic partner in the purchase of an interest in
Morocco's national telecommunications operator for approximately E 2.4 billion.
The transaction was finalized in April 2001, at which time Maroc Telecom began
to be consolidated in the accounts of Vivendi Universal, as we obtained control
through majority board representation and share voting rights. The following
table shows the final allocation of the purchase price:
MAROC TELECOM
                                                              -------------
                                                              (IN MILLIONS
                                                                OF EUROS)
Fair value of net assets acquired...........................     E   335
Telecom license(1)..........................................         340
Deferred tax liabilities....................................        (119)
Goodwill recorded as an asset(2)............................       1,862
                                                                 -------
Purchase price..............................................     E 2,418
                                                                 =======
---------------

(1) The telecom license is amortized on a straight line basis over 15 years.

(2) The goodwill is amortized on a straight line basis over 40 years.

3.2.11 ACQUISITION OF HOUGHTON MIFFLIN COMPANY

     In July 2001, Vivendi Universal acquired the Houghton Mifflin Company
(Houghton Mifflin), a leading US educational publisher, for a total of
approximately US$2.2 billion, including assumption of Houghton Mifflin's average
net debt of approximately US$500 million. Houghton Mifflin was sold on December
30, 2002.

3.2.12 ACQUISITION OF MP3.COM, INC.

     On August 28, 2001, Vivendi Universal completed its acquisition of MP3.com,
Inc. (MP3.com) for approximately US$400 million or US$5 per share in a combined
cash and stock transaction.

3.2.13 DISPOSITION OF INTEREST IN FRANCE LOISIRS

     In July 2001, Vivendi Universal sold its interest in France Loisirs to
Bertelsmann. Proceeds from the sale approximated E 153 million, generating a
capital loss of E 1 million.

MAIN ACQUISITIONS AND DISPOSITIONS IN 2000 INCLUDED:

3.2.14 MERGER OF VIVENDI, SEAGRAM AND CANAL PLUS

     On December 8, 2000, Vivendi, Seagram and Canal Plus completed a series of
transactions in which the three companies combined to create Vivendi Universal
(the "Merger Transactions"). The terms of the Merger Transactions included:

     - Vivendi's combination, through its subsidiaries, with Seagram in
       accordance with a plan of arrangement under Canadian law, in which
       holders of Seagram common shares (other than those exercising dissenters'
       rights) received 0.80 Vivendi Universal American Depositary Shares
       (ADSs), or a combination of 0.80 non-voting exchangeable shares of
       Vivendi Universal's wholly owned Canadian subsidiary Vivendi Universal
       Exchangeco (exchangeable shares) and an equal number of related voting
       rights in Vivendi Universal, for each Seagram common share held;

     - Vivendi Universal's merger with Canal Plus, in which Canal Plus
       shareholders received two Vivendi Universal ordinary shares for each
       Canal Plus ordinary share they held and kept their existing shares in
       Canal Plus, which retained the French premium pay television channel
       business;

                                       F-28
- Vivendi accounted for the Merger Transactions with Seagram and Canal Plus
       using the purchase method of accounting for business combinations.

SEAGRAM

     Seagram was acquired for an aggregate cost of E 32,565 million, consisting
of the issuance of approximately 356.1 million common shares valued at E 91.45
per share. The value of the shares issued was determined based on the average
market price of Vivendi's common shares over the five day period before and
after the final terms of the acquisition were announced, which was on July 4,
2000.

     Allocation of Purchase Price -- At the time of the Merger Transactions,
Vivendi Universal recorded each asset acquired and liability assumed at its
estimated fair value. This preliminary purchase price study has been reviewed
and adjusted when appraisals or other valuation data were obtained within the
one-year period from the completion of the Merger Transactions. Subsequent to
the recording of the preliminary purchase price allocation, adjustments were
made in respect of the value of the investment in USA Networks, deferred taxes,
and the completion of a trademark valuation study. The excess of the total
consideration paid over the fair value of the tangible and intangible assets
acquired less liabilities assumed was recorded as goodwill, which is amortized
on a straight-line basis over a 40-year period. Acquired film library, music
catalogs, artists' contracts and music publishing assets are amortized over
periods ranging from 14 to 20 years. Other intangible assets are amortized over
a 40-year period, on a straight-line basis.

     The following table shows the final allocation of the purchase price to the
fair values of assets and liabilities recorded, adjusted in order to reflect the
changes in fair values of assets and liabilities recorded in the preliminary
allocation of the purchase price in December 2000.
SEAGRAM
                                                              ------------
                                                              (IN MILLIONS
                                                               OF EUROS)
Accounts receivable, net....................................   E   2,721
Film library, music catalogs, artists' contracts and
  advances..................................................       7,781
Trade names.................................................       1,600
Goodwill....................................................      25,859
Investment in USA Networks..................................       6,940
Spirits and wine assets held for sale.......................       8,693
Other assets................................................       7,383
Accrued expenses and other current liabilities..............      (3,680)
Royalties payable and participations........................      (3,181)
Other non-current liabilities...............................      (2,700)
Minority interest...........................................      (2,275)
Deferred income tax liability...............................      (7,840)
Cash acquired...............................................       1,288
Debt assumed................................................     (10,024)
                                                               ---------
Purchase price..............................................   E  32,565
                                                               =========
Disposal of Seagram's Spirits and Wine Business -- In connection with the
Merger Transactions, on December 19, 2000, Vivendi Universal entered into an
agreement with Diageo and Pernod Ricard to sell its spirits and wine business.
The sale closed on December 21, 2001 and Vivendi Universal received
approximately US$8.1 billion in cash, an amount that resulted in after-tax
proceeds of approximately US$7.7 billion. The spirits and wine business
generated revenues of E 5 billion and operating income of E 0.8 billion in 2001.
Prior to its sale, Vivendi Universal accounted for the spirits and wine business
as an investment held for sale on the balance sheet, and net income of the
spirits and wine business in 2001 effectively reduced goodwill associated with
the Seagram acquisition. No gain was recognized upon the ultimate sale of the
spirits and wine business.

                                       F-29
CANAL PLUS

     Canal Plus was acquired for an aggregate cost of E 12,537 million,
consisting of the issuance of approximately 130.6 million ordinary shares valued
at E 94.88 per share, and the cost induced by the conversion of stock options
plans of Canal Plus. The value of the shares issued was determined based on the
average market price of Vivendi's ordinary shares over the five day period
before and after the final terms of the acquisition were announced, which was on
June 20, 2000.

     At the time the step acquisition was made, Vivendi Universal recorded each
asset acquired and each liability assumed at its estimated fair value. The
excess of the total consideration paid for the acquired company over the fair
value of the tangible and intangible assets acquired less liabilities assumed
was recorded as goodwill. As a result of the acquisition of Canal Plus, Vivendi
Universal recorded approximately E 12,544 million as goodwill, which is
amortized on a straight-line basis over a 40-year period. Prior to the Merger
Transactions, Vivendi acquired control of Canal Plus in September 1999, through
the acquisition of an additional 15% of the outstanding shares for approximately
E 1.4 billion. Goodwill of E 1,159 million arising in connection with the
acquisition was recorded as a reduction of shareholders' equity, as a charge to
issue premiums in connection with the capital increases used in part to finance
the acquisition. The acquisition increased Vivendi's ownership percentage from
34% at December 31, 1998 to 49% at December 31, 1999. (For additional
information on the purchase price allocation of Canal Plus, please refer to Note
17.9)

3.2.15 DISPOSITION OF SITHE

     In December 2000, Vivendi Universal, along with other shareholders of Sithe
Energies, Inc. (Sithe), finalized the sale of a 49.9% stake in Sithe to Exelon
(Fossil) Holdings Inc. (Exelon) for approximately US$696 million. The net
proceeds of the transaction to Vivendi Universal were approximately US$475
million. Following the transaction, Exelon is the controlling shareholder of
Sithe and Vivendi Universal ceased to consolidate Sithe's results of operations
for accounting purposes effective December 31, 2000. In April 2000, Sithe sold
21 independent power production plants to Reliant Energy Power Generation for
E 2.13 billion. This transaction generated a capital gain of E 415 million. In
December 2002 Vivendi Universal sold its remaining stake, excluding Asia
subsidiaries, to Apollo Energy LLC. (For additional information on the
disposition of Sithe, please refer to Note 17.9)

3.2.16 DISPOSITION OF NON-CORE CONSTRUCTION AND REAL ESTATE BUSINESSES

     In order to facilitate our withdrawal from our non-core construction and
real estate businesses, we restructured Compagnie Generale d'Immobilier et de
Services (CGIS), our wholly owned real estate subsidiary, into two principal
groups of companies: Nexity and Vivendi Valorisation. In July 2000, we sold 100%
of Nexity to a group of investors and to Nexity's senior management for E 42
million, an amount that approximated book value of these operations. Vivendi
Valorisation holds our remaining property assets, which consist primarily of
investments arising out of past property development projects. These assets are
managed by Nexity pending their sale. In February 2000, we reduced our interest
in Vinci (Europe's leading construction company) from 49.3% to 16.9%, receiving
in exchange E 572 million, which resulted in a capital gain of approximately
E 374 million. Subsequently, Vinci merged with the construction company, Groupe
GTM, which reduced our interest in the combined entity to 8.67%. As a result of
these transactions we ceased to consolidate Vinci's results effective July 1,
2000.

3.2.17 TELECOMS AND INTERNET ACQUISITIONS

     Additionally, in January 2000, Vivendi Telecom International (VTI), a
wholly owned direct subsidiary of Vivendi Universal, acquired 100% of the
outstanding shares of United Telecom International (UTI), a Hungarian
telecommunications company for E 130 million, including E 123 million of
goodwill, which is being amortized on a straight line basis over 20 years. In
March 2000, Vivendi Universal acquired 100% of I-France for E 149 million,
including E 146 million of goodwill. In April and July 2000, Vivendi Universal
acquired 22.4% of Scoot.com PLC for E 443 million, including E 359 million of
goodwill.

                                       F-30
3.3 IMPAIRMENT OF GOODWILL, INTANGIBLE ASSETS AND FINANCIAL ASSETS

3.3.1 GOODWILL

     In 2001, following the market decline, the annual review of goodwill
resulted in a non-cash, non-recurring impairment charge of E 12.9 billion
(E 12.6 billion after E 0.3 billion minority interest related to Veolia
Environnement). The charge was comprised of:

     - E 3.1 billion for Universal Music Group

     - E 1.3 billion for Universal Studio Group

     - E 6.0 billion for Canal+

     - E 1.6 billion for international telecoms and internet assets

     - E 0.6 billion for Veolia Environnement (net of E 0.3 billion minority
       interest)

     In view of the deterioration of the economy since December 2001, and the
recent decline in value of some media assets, combined with the impact of the
increase in the cost of capital, the group has taken the decision to take a
provision against goodwill on certain acquisitions of E 18.4 billion as at
December 31, 2002, including E 11 billion registered as of June 30, 2002. This
impairment has been calculated using the group's accounting principles for
long-term assets. Long-term assets are subject to an exceptional impairment of
goodwill if events result in, or show a risk of, an unexpected reduction in the
value of the assets. In this situation, their fair value is re-assessed and a
provision is made to cover any eventual, significant difference between the book
value and the realizable value.

     This exceptional goodwill impairment is broken down as follows:

     - E 5.3 billion for Universal Music Group

     - E 6.5 billion for Vivendi Universal Entertainment

     - E 5.4 billion for Canal+

     - E 1.2 billion for international telecoms and internet assets

     As previously permitted under French GAAP, a portion of the goodwill
arising from acquisitions paid for in equity securities was originally recorded
as a reduction to shareholders' equity in proportion to the amount of the
related purchase price paid in shares. Upon the recommendation of the COB,
Vivendi Universal determined the total goodwill impairment based on total
goodwill, including the portion originally recorded as a reduction of
shareholders' equity, adjusted for theoretical accumulated goodwill amortization
recorded since the acquisition. The "theoretical" goodwill impairment for 2002
amounts to E 0.7 billion. The impairment charge does not reflect any
proportional "theoretical" impairment of goodwill originally recorded as a
reduction of shareholders equity. The total amount of goodwill recorded as a
reduction of shareholder's equity as at December 31, 2002 is discussed in Note
5.

     This exceptional write-off was calculated as the difference between the net
book value of the business units and the fair value we estimated with the
assistance of a third party appraiser when necessary. The impacted business
units are those for which the deterioration of the economy combined with the
impact of the increase in the cost of capital resulted in a risk of a reduction
of their value. Standard evaluation methods have allowed us to establish fair
values, as described in the next paragraph.

     The fair values of the business units durably owned by the group are
assessed at the value in use. Value in use is defined as the value of future
economic benefits to be obtained from utilization plus terminal value of the
asset. It is calculated from estimated future economic benefits:

     - Generally, the fair value of business units is determined by the analysis
       of discounted cash flows.

     - If this method is irrelevant for the business unit, other standard
       criteria are available: comparison to similar listed companies,
       assessment based on the value attributed to the business units involved
       in recent transactions, market price for business units quoted at the
       Stock Exchange.
                                       F-31
- When using these two standard evaluation methods, the fair market value
       of business units is determined with the assistance of an independent
       valuation expert appointed by Vivendi Universal.

     The fair values of the business units involved in the asset disposal
program, which was approved by the Board of Directors on September 25, 2002, are
assessed on the basis of their market value. Market value is defined as the
amount that could be obtained at the date of sale for an asset where the
transaction is concluded at normal market conditions, net of transactions costs.
It generally corresponds to the most recent valuation of the business unit
presented to Vivendi Universal's Board of Directors.

     Regarding the discounted cash flow method of analysis, the three factors
taken into account were cash flow, discount rate and perpetual growth rate. The
source of the cash flow statements used for the analysis were the business plans
of the business units concerned available at the time of the analysis, approved
by the management and presented to the Board of Directors. The discount rate was
based upon an analysis of the average cost of capital of the relevant business
units. Their cost of capital and growth rate were determined by taking into
account the specific business environment in which each business unit operated,
and specifically the maturity of the market and the geographic localization of
its operations.

     For information, the principal assumptions by business were:

     - Cegetel Group: evaluation from the transaction with BT Group as of
       January 22, 2003 (acquisition of 26% interest in Cegetel for E 4
       billion).

     - Music: analysis of discounted cash flow (discount rate of 9%, versus a
       range of 8% to 9% at December 31, 2001, growth rate of 4%, versus 4% and
       6% at December 31, 2001) or comparison to similar listed companies.

     - VUE: analysis of future discounted cash flow (with the following discount
       rate and growth rate) and comparison to similar listed companies:

        - Universal Picture Group: a discount rate of 10%, versus a range of 6%
          to 7% at December 31, 2001, and a growth rate of 3%, versus -1% and 5%
          at December 31, 2001.

        - USA Cable: a discount rate of 10%, and a growth rate of 6%.

        - Universal Parks and Resorts: a discount rate of 8.5%, versus 8% at
          December 31, 2001, and a growth rate of 3%, versus 3% at December 31,
          2001.

     - Canal+ Group:

        - Canal+ (Canal+ France, CanalSatellite, Media Overseas,
          Multithematique): analysis of discounted cash flows with a discount
          rate of 9.1%, versus 9% at December 31, 2001; growth rate between 2%
          (Canal+ France) and 4.5% (CanalSatellite), versus 3% (Canal+ France)
          and 4% (CanalSatellite) at December 31, 2001.

        - Studio Canal: analysis of discounted cash flow (discount rate of 9.2%,
          growth rate of 2.5% to 3.5%).

        - Sogecable and Sport Five are valued at the stock market price, after
          including a liquidity discount for the latter.

        - Other international assets or under disposal: (including Telepiu,
          Canal+ Benelux, Canal+ Poland, Canal+ Nordic, Canal+ Technologies and
          Numericable): latest market value.

     - VU Games: analysis of discounted cash flow (discount rate of 13%; growth
       rate of 7%) and comparison to similar listed companies.

     - Maroc Telecom: analysis of discounted cash flow (discount rate of 13.1%,
       versus 11% and 13% at December 31, 2001, and a growth rate of 2.5% to
       3.5%, versus 3.5% and 5.5% at December 31, 2001).

     - Other International assets in telecommunications and the internet: latest
       market value.

                                       F-32
The net impact in changes in goodwill can be summarized as follows:
NET BALANCE
                              NET BALANCE                                  CHANGES IN           AT
                             AT JANUARY 1,                                CONSOLIDATION    DECEMBER 31,
                                 2002        AMORTIZATION   IMPAIRMENT   SCOPE AND OTHER       2002
                             -------------   ------------   ----------   ---------------   ------------
                                                       (IN MILLIONS OF EUROS)
Telecoms...................      3,043             (75)         (744)          (474)           1,750
Music......................     12,763            (355)       (5,300)        (1,629)           5,479
Vivendi Universal
  Entertainment............      7,472            (250)       (6,500)         7,915            8,637
Groupe Canal+..............      8,002            (189)       (5,436)         1,580            3,957
Holding & Corporate........     (1,353)             34            --          1,367               48
Internet...................        638            (140)         (462)           (28)               8
Publishing.................      2,161             (17)           --         (1,966)             178
Environmental Services.....      4,888            (285)           --         (4,603)              --
Other......................          3              --            --              2                5
                                ------          ------       -------         ------           ------
TOTAL VIVENDI UNIVERSAL....     37,617          (1,277)      (18,442)         2,164           20,062
                                ======          ======       =======         ======           ======
3.3.2 FINANCIAL ASSETS

     Financial provisions of E 2.2 billion were recorded in 2002, E 1.2 billion
of which was reflected by a reduction in asset value and E 0.9 billion as a
provision. This action was taken to reflect the decline in the market since the
beginning of the year and the reevaluation by the Board of Directors of the
growth potential of certain listed and unlisted investments. Standard evaluation
methods used were, notably:

     - Investments involving recent transactions or those that are currently
       under discussion have been assessed at the value attributed to them in
       the respective transaction.

     - Investments in listed companies have been valued at the market value.

3.3.3 SUMMARY

     The impact of impairment described above can be summarized as follows:
PROVISIONS
                                        IMPAIRMENT OF      AND         GOODWILL      TOTAL
                                           ASSETS       ALLOWANCES    IMPAIRMENT   IMPAIRMENT
                                        -------------   ----------    ----------   ----------
                                                        (IN MILLION OF EUROS)
Telecoms..............................        (728)(1)      (142)(2)       (744)      (1,614)
Music.................................          --            --         (5,300)      (5,300)
Vivendi Universal Entertainment.......          --            --         (6,500)      (6,500)
Group Canal+..........................          --          (360)(3)     (5,436)      (5,796)
Internet..............................        (120)(4)        --           (462)        (582)
Other.................................        (393)(5)      (427)(6)         --         (820)
                                          --------        ------      ---------    ---------
                                          E (1,241)       E (929)     E (18,442)   E (20,612)
                                          ========        ======      =========    =========
---------------

(1) Of which, Elektrim Telekomunikacja represents (E 609) million (see Note 4).

(2) Representing international telecom assets (see Note 6).

(3) Representing Telepiu, disposal of which has to be completed (see Note 6).

(4) Representing Softbank Capital Partners (see Note 4).

(5) Of which Dupont (E 173) million (see Note 4), provision related to UGC/UGC
    Cine Cite investments (E 220) million (see Note 4).

                                       F-33
(6) Of which amortization of the BNP call (E 226) million (see Note 6), a
    provision for Vivendi Universal puts of (E 104) million (see Note 6).

NOTE 4 INVESTMENTS

     Vivendi Universal's investments consist of:
DECEMBER 31,
                                                              ------------------
                                                               2002       2001
                                                              -------   --------
                                                               (IN MILLIONS OF
                                                                    EUROS)
Investments accounted for using the equity method...........  E 1,903   E  9,176
Other investments
  Investments accounted for using the cost method...........      378      1,150
  Portfolio investments -- securities.......................    1,899      1,814
  Portfolio investments -- other............................    1,861      2,619
                                                              -------   --------
                                                                4,138      5,583
                                                              -------   --------
                                                              E 6,041   E 14,759
                                                              =======   ========
4.1 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

  THE FOLLOWING TABLE SUMMARIZES INFORMATION ABOUT EQUITY METHOD INVESTMENTS:
PROPORTIONATE SHARE
                               OWNERSHIP CONTROL                 OF EQUITY             PROPORTIONATE SHARE OF NET INCOME (LOSS)
                          ---------------------------   ---------------------------   ------------------------------------------
                          DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                              2002           2001           2002           2001           2002           2001           2000
                          ------------   ------------   ------------   ------------   ------------   ------------   ------------
                                                                  (IN MILLIONS OF EUROS)
Veolia
  Environnement(1)......      20.4%            --         E   304        E    --         E   --         E   --         E   --
USANi LLC(2)............        --           47.9%             --          6,669             44            144             --
UC Development
  Partners(3)...........      50.0%          50.0%            358            364             (6)           (46)            --
Sundance Channel(4).....      50.0%          10.0%            156            185             --             --             --
Universal Studios
  Florida(3)............      50.0%          50.0%            147            168              1              5             --
Port Aventura...........      37.0%          37.0%             85            101              1             (2)            --
Universal Studios
  Japan.................      24.0%          24.0%             40             85            (30)            25             --
UGC(5)..................      58.0%          39.3%             47             83            (12)             7             (2)
UGC Cine cite(6)........      15.6%          15.6%             31             69             --              1             (3)
SPORTFIVE(7)............      46.4%          35.6%            294            229              2             --             --
TKP and Cyfra+(8).......        --             --              --             --             --           (122)           (26)
Elektrim Telekomunikacja
  SP(9).................      49.0%          49.0%             --            521           (115)           (28)           (31)
Telecom
  Developpement(10).....      49.9%          49.9%            286            281              5             12             27
Xfera Moviles...........      26.2%          26.2%             --             72            (59)           (35)            (6)
Societe Financiere de
  Distribution (SFD)....      49.0%          49.0%             --            (74)            --            (23)           (37)
Vizzavi Europe(11)......        --           50.0%             --           (466)           (71)          (193)           (44)
Other(12)...............        --             --             155            889            (54)          (198)          (184)
                                                          -------        -------         ------         ------         ------
                                                          E 1,903        E 9,176         E (294)        E (453)        E (306)
                                                          =======        =======         ======         ======         ======
F-34
---------------

 (1) Following the dispositions and dilution occurred in 2002, Vivendi
     Universal's interest in Veolia Environnement is accounted for under the
     equity method from December 31, 2002. (see Note 3) The market value of this
     participation as of December 31, 2002 amounted to E 1,833 million.

 (2) Year-on-year change reflects the USA Networks transaction. (see Note 3)

 (3) There is no shareholder with the majority voting interest in these
     companies. Moreover, shareholders exercise substantive participating rights
     that enable them to veto or block decisions taken by the subsidiary's
     board. Vivendi Universal consequently consolidates its interest in UCDP and
     Universal Studio Florida by the equity method.

 (4) Vivendi Universal has loans to the Sundance partnership (approximately
     US$49 million), which can be converted to Sundance Channels shares.

 (5) On December 23, 2002, following the exercise by BNP of the put granted by
     Vivendi Universal in July 1997, Vivendi Universal acquired, for a total
     consideration of E 59.3 million, 5.3 million of UGC shares representing 16%
     of share capital. Vivendi Universal's 58% interest in UGC does not provide
     for operational control of the company due to a shareholders' agreement.
     Accordingly, this investment is still accounted for using the equity
     method.

 (6) Vivendi Universal has a direct interest of 15.6% in UGC Cine Cite and an
     indirect interest of 49% through its investment in UGC.

 (7) New entity created through the merger between the Jean-Claude Darmon Group
     and Sport+ in 2001.

 (8) Consolidated from December 31, 2001.

 (9) Please refer to Note 13. Vivendi Universal's share of equity in Elektrim
     Telekomunikacja was written down to zero further to an impairment test
     performed on various assets held for sale.

(10) A majority of Telecom Developpement's board is nominated by SNCF.
     Accordingly, Cegetel Group accounts for this investment by the equity
     method.

(11) Participation sold to Vodafone on August 30, 2002 (See Note 3).

(12) Other investments consist of various entities accounted for under the
     equity method whose proportionate share of equity is under E 50 million at
     December 31, 2002.

                                       F-35
The following table provides a reconciliation of the change in equity
method investments during the year:
PROPORTIONATE     CHANGES IN     PROPORTIONATE                 FOREIGN      PROPORTIONATE
                          SHARE OF EQUITY     SCOPE OF      SHARE OF NET                 CURRENCY     SHARE OF EQUITY
                           DECEMBER 31,     CONSOLIDATION      INCOME       DIVIDENDS   TRANSLATION    DECEMBER 31,
                               2001            & OTHER         (LOSS)       RECEIVED    ADJUSTMENTS        2002
                          ---------------   -------------   -------------   ---------   -----------   ---------------
                                                             (IN MILLIONS OF EUROS)
Veolia Environnement....      E    --         E    304         E   --        E   --       E   --              304
USANi LLC...............        6,669           (6,415)            44          (141)        (157)              --
UC Development
  Partners..............          364               59             (6)           --          (59)             358
Sundance Channel(1).....          185               (2)            --            --          (27)             156
Universal Studios
  Florida...............          168                2              1            --          (24)             147
Port Aventura...........          101               (6)             1            --          (11)              85
Universal Studios
  Japan.................           85               (3)           (30)           --          (12)              40
UGC(2)..................           83              (15)           (12)           (1)          (8)              47
UGC Cine cite(2)........           69              (26)            --            --          (12)              31
SPORTFIVE(3)............          229               66              2            (3)          --              294
Elektrim Telekomunikacja
  SP(4).................          521             (488)          (115)           --           82               --
Telecom
  Developpement(5)......          281               --              5            --           --              286
Xfera Moviles(6)........           72              (13)           (59)           --           --               --
Societe Financiere de
  Distribution (SFD)....          (74)              74             --            --           --               --
Vizzavi Europe..........         (466)             537            (71)           --           --               --
Other...................          889             (630)           (54)          (34)         (16)             155
                              -------         --------         ------        ------       ------          -------
                              E 9,176         E (6,556)        E (294)       E (179)      E (244)         E 1,903
                              =======         ========         ======        ======       ======          =======
---------------

(1) Changes in scope of consolidation reflect the acquisition of 40% interest of
    Sundance Television and SIFO Two for $4 million.

(2) Provisions recorded as at December 31, 2002, total E 220 million, of which
    E 101 million relates to the reduction in shareholding and E119 million to
    the UGC bonds (see Note 4.4).

(3) Changes in scope of consolidation reflect the acquisition of 10.8% interest
    of this entity for E 122 million. Additional goodwill of E 54 million has
    been recorded.

(4) Provisions recorded as at December 31, 2002, total E609 million, of which
    E406 million in reduction in shareholding and E 203 million to an increase
    in the bad debt provision (see Note 3 and 10). Moreover goodwill impairment
    has been recorded for E 32 million.

(5) Impairment has been recorded for E 206 million at December 31, 2002 (see
    Note 3).

(6) Of which E 33 million relates to a provision recorded at December 31, 2002
    (see Note 3).

  SUMMARIZED FINANCIAL INFORMATION FOR EQUITY METHOD INVESTMENTS IS AS FOLLOWS:

     Veolia Environnement was consolidated as an equity method investment at
December 31, 2002. In Vivendi Universal's statement of income, Veolia
Environnement was accounted for on a fully consolidated basis until December 31,
2002. Consequently, only balance sheet information relating to this subsidiary
is mentioned in the tables below.

                                       F-36
The following summary information relating to companies consolidated by the
equity method is derived from unaudited data.
DECEMBER 31, 2002
                        ---------------------------------------------------------------------------------------
                                        UNIVERSAL                                          OTHERS       TOTAL
                           TELECOM       STUDIO                            ELEKTRIM       EXCLUDING   EXCLUDING
                        DEVELOPPEMENT    FLORIDA     UGC    SPORTFIVE   TELEKOMUNIKACJA      VE          VE
                        -------------   ---------   -----   ---------   ---------------   ---------   ---------
                                                         (IN MILLION OF EUROS)
REVENUES..............      1,054           763       527       639            749          3,067       6,799
OPERATING INCOME......         25           (56)       10        31            125           (251)       (116)
NET INCOME............         15           (53)      (32)        4         (1,063)          (825)     (1,954)
Long-term assets......        776         2,059       795       580          2,987          4,169      11,366
Current assets........        324            69       235       464            176          1,897       3,165
                            -----         -----     -----     -----         ------          -----      ------
TOTAL ASSETS..........      1,100         2,128     1,030     1,044          3,163          6,066      14,531
Shareholders'
  Equity..............        464           748       190       633          1,428            700       4,163
Long-term
  liabilities.........          8           137       246        15                           215         621
Current liabilities...        562           284       205       387          1,023          2,800       5,261
Third Party Financial
  Long term Debt......         66           959       389         9            712          2,351       4,486
                            -----         -----     -----     -----         ------          -----      ------
TOTAL LIABILITIES AND
  SHAREHOLDERS'
  EQUITY..............      1,100         2,128     1,030     1,044          3,163          6,066      14,531
                            =====         =====     =====     =====         ======          =====      ======
DECEMBER 31, 2002
                        ----------------------

                           VEOLIA
                        ENVIRONNEMENT   TOTAL
                        -------------   ------
                        (IN MILLION OF EUROS)
REVENUES..............         --        6,799
OPERATING INCOME......         --         (116)
NET INCOME............         --       (1,954)
Long-term assets......     26,568       37,934
Current assets........     15,450       18,615
                           ------       ------
TOTAL ASSETS..........     42,018       56,549
Shareholders'
  Equity..............      8,915       13,078
Long-term
  liabilities.........      4,787        5,408
Current liabilities...     15,403       20,664
Third Party Financial
  Long term Debt......     12,913       17,399
                           ------       ------
TOTAL LIABILITIES AND
  SHAREHOLDERS'
  EQUITY..............     42,018       56,549
                           ======       ======
---------------

(1) Before elimination of Vivendi Universal's loan to Elektrim Telekomunikacja
    for E 525 million (or E 322 million, net of provisions).

(2) Including E 3,796 million short term financial debt.
DECEMBER 31, 2001
                              ---------------------------------------------------------------------------------
                                              UNIVERSAL
                                 TELECOM       STUDIO                            ELEKTRIM
                              DEVELOPPEMENT    FLORIDA     UGC    SPORTFIVE   TELEKOMUNIKACJA   OTHERS   TOTAL
                              -------------   ---------   -----   ---------   ---------------   ------   ------
                                                           (IN MILLIONS OF EUROS)
REVENUES....................      1,089           723       516        --             59        10,956   13,343
OPERATING INCOME............         24            29        40        --            (26)        2,180    2,247
NET INCOME..................         11           (93)       14        --            (57)         (645)    (770)
Long-term assets............        818         2,162     1,003       587          3,027        19,539   27,136
Current assets..............        435           137       276       455            559         5,093    6,955
                                  -----         -----     -----     -----          -----        ------   ------
TOTAL ASSETS................      1,253         2,299     1,279     1,042          3,586        24,632   34,091
Shareholders' Equity........        460           737       283       642          2,699        11,337   16,158
Long-term liabilities.......          2           113       240        35            192         3,434    4,016
Current liabilities.........        721           290       215       325            535(1)      7,869    9,955
Third Party Financial Long
  term Debt.................         70         1,159       541        40            160         1,992    3,962
                                  -----         -----     -----     -----          -----        ------   ------
TOTAL LIABILITIES AND
  SHAREHOLDERS' EQUITY......      1,253         2,299     1,279     1,042          3,586        24,632   34,091
                                  =====         =====     =====     =====          =====        ======   ======
---------------

(1) Before elimination of Vivendi Universal's loan to Elektrim Telekomunikacja
    for E 485 million.

     In 2000, revenue, operating income and net income generated by companies
consolidated by the equity method accounted for E 2,644, E 181 and E (26)
million, respectively. The following is balance sheet data for these companies
consolidated by the equity method:

     - Long term assets: E 23,202 million,

     - Current assets: E 3,937 million,

     - Total assets: E 27,139 million,

                                       F-37
- Shareholders' equity: E 13,292 million,

     - Long-term liabilities: E 8,560 million,

     - Current liabilities: E 5,287 million,

     - Total liabilities and Shareholders' equity: E 27,139 million.

4.2 INVESTMENTS ACCOUNTED FOR USING THE COST METHOD

     The following table summarizes information about investments accounted for
using the cost method:
DECEMBER 31, 2002   DECEMBER 31, 2001
                                                     -----------------   ------------------
                                                     INTEREST    COST    INTEREST    COST
                                                     --------   ------   --------   -------
                                                             (IN MILLIONS OF EUROS)
Sithe Energies Inc.(1).............................      --         --     34.2%        604
Elektrim SA(2).....................................    10.0%        96     10.0%         96
Mauritel...........................................    18.9%        42     18.9%         52
Vodafone Egypt.....................................     7.0%        23      7.0%         23
Other(3)...........................................                672                  872
                                                                ------              -------
                                                                   833                1,647
Valuation allowance................................               (455)                (497)
                                                                ------              -------
                                                                E  378              E 1,150
                                                                ======              =======
---------------

(1) On December 19, 2002, Vivendi Universal sold its remaining interest in Sithe
    Energies Inc. for E 319 million generating a loss of E 232 million.

(2) Included in the valuation allowance is a E 91 million provision for Elektrim
    S.A., of which E 21 million was recorded in 2002 (see Note 3). In addition
    to its 10% interest in Elektrim S.A.'s share capital, Vivendi Universal
    exercises 4.99% of Elektrim S.A.'s voting rights following the acquisition
    of a 4.99% interest in Elektrim S.A.'s share capital in February 2003, due
    to the termination of a carrying agreement, upon request of the third party.
    As a result, Vivendi Universal holds 15% of Elektrim S.A.'s voting rights.
    Furthermore, Vivendi Universal appoints two representatives at the
    Supervisory Board of Elektrim S.A.

(3) Other investments consist of various entities accounted for under the cost
    method whose carrying value was under E 60 million at December 31, 2002.

4.3 PORTFOLIO INVESTMENTS -- SECURITIES

     The following table summarizes information about portfolio investments --
securities:
DECEMBER 31, 2002
                               ---------------------------------------------------------------------------------
                                           FOREIGN                             GROSS        GROSS      ESTIMATED
                                          CURRENCY     VALUATION     NET     UNREALIZED   UNREALIZED     FAIR
                                COST     TRANSLATION   ALLOWANCE    VALUE      GAINS        LOSSES       VALUE
                               -------   -----------   ---------   -------   ----------   ----------   ---------
                                                            (IN MILLIONS OF EUROS)
British Sky
  Broadcasting(1)............  E    --     E   --       E   --     E    --     E  --        E   --      E    --
Dupont(2)....................      853        (68)        (173)        612        65            --          677
USA Interactive(3)...........    1,323        (68)          --       1,255       (26)           --        1,229
Softbank Capital.............      230         --         (230)         --        --            --           --
Partners(4)..................
Saint-Gobain(5)..............       --         --           --          --        --            --           --
Other(6).....................       33         (1)          --          32        --            --           32
                               -------     ------       ------     -------     -----        ------      -------
                               E 2,439     E (137)      E (403)    E 1,899     E  39        E   --      E 1,938
                               =======     ======       ======     =======     =====        ======      =======
F-38
DECEMBER 31, 2001
                         ---------------------------------------------------------------------------------
                                     FOREIGN                             GROSS        GROSS      ESTIMATED
                                    CURRENCY     VALUATION     NET     UNREALIZED   UNREALIZED     FAIR
                          COST     TRANSLATION   ALLOWANCE    VALUE      GAINS        LOSSES       VALUE
                         -------   -----------   ---------   -------   ----------   ----------   ---------
                                                      (IN MILLIONS OF EUROS)
British Sky
  Broadcasting.........  E     1      E --        E   --     E     1     E  15        E   --      E    16
Dupont.................      853        50            --         903        --          (106)         797
USA Interactive........      699        42            --         741       137            --          878
Softbank Capital.......      230        --          (110)        120        --            (7)         113
Partners
  Saint-Gobain.........       14        --            --          14         7            --           21
Other..................       44        --            (9)         35        --             2           37
                         -------      ----        ------     -------     -----        ------      -------
                         E 1,841      E 92        E (119)    E 1,814     E 159        E (111)     E 1,862
                         =======      ====        ======     =======     =====        ======      =======
DECEMBER 31, 2000
                         ---------------------------------------------------------------------------------
                                     FOREIGN                             GROSS        GROSS      ESTIMATED
                                    CURRENCY     VALUATION     NET     UNREALIZED   UNREALIZED     FAIR
                          COST     TRANSLATION   ALLOWANCE    VALUE      GAINS        LOSSES       VALUE
                         -------   -----------   ---------   -------   ----------   ----------   ---------
                                                      (IN MILLIONS OF EUROS)
British Sky
  Broadcasting.........  E 1,233     E   --        E  --     E 1,233    E 4,946       E  --       E 6,179
Dupont.................      853         --           --         853         --          --           853
USA Interactive........      572         --           --         572         --          --           572
Saint-Gobain...........      124         --           --         124        104          --           228
Facic..................      181         --           --         181          5          --           186
Eillage................       57         --           --          57         --         (17)           40
Other..................      261         --          (17)        244         21         (76)          189
                         -------     ------        -----     -------    -------       -----       -------
                         E 3,281     E   --        E (17)    E 3,264    E 5,076       E (93)      E 8,247
                         =======     ======        =====     =======    =======       =====       =======
---------------

(1) In February 2002, these BSkyB shares were sold for cash, which was used in
    part for the redemption of the Pathe exchangeable bonds, which took place in
    March 2002 (see Note 7).

(2) Represents 16,444,062 shares with a book value of $713 million. The quoted
    market price of DuPont as at December 31, 2002 was $42.40 per share. A
    provision of E 173 million was recorded in the accounts at June 30, 2002 in
    order to bring the book value in line with the market value at this date.

(3) Represents 18,181,308 shares of common stock with a book value of $374
    million and 13,430,000 Class B shares with a book value of $276 million, as
    well as 25,000,000 shares acquired through Liberty Media in Vivendi
    Universal's acquisition of the entertainment assets of USA Networks (see
    Note 3). The quoted market price for the common stock of USA Interactive,
    which combines the USA Networks assets not acquired by Vivendi Universal,
    was $22.92 per share as at December 31, 2002.

(4) A provision of E 120 million was recorded in the accounts in 2002.

(5) Sold during the first half of 2002.

(6) Other investments consists of various entities whose cost was under E 22
    million at December 31, 2002.

                                       F-39
4.4 OTHER PORTFOLIO INVESTMENTS

     The following table summarizes information about other portfolio
investments:
DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                               (IN MILLIONS OF
                                                                   EUROS)
Long-term loans(1)..........................................  E 1,250   E 1,586
Other(2)....................................................    1,593     1,231
                                                              -------   -------
                                                                2,843     2,817
Valuation allowance.........................................     (982)     (198)
                                                              -------   -------
                                                              E 1,861   E 2,619
                                                              =======   =======
---------------

(1) As of December 31, 2002, comprised of a loan to Elektrim Telekomunikacja
    (E 525 million, provisioned at E 203 million, see Note 3), and a loan to
    Veolia Environnement related to bonds exchangeable for Vinci shares (E 120
    million, see Note 7).

(2) As of December 31, 2002, comprised of USA Interactive warrants (E 929
    million provisioned at E 454 million, see Note 3), and UGC bonded debt
    (E 153 million provisioned at E 119 million).

4.5 INVESTMENTS ACCOUNTED FOR USING THE PROPORTIONATE CONSOLIDATION METHOD

     Investments accounted for using the proportionate consolidation method
represent companies in which Vivendi Universal and other shareholders have
agreed to exercise joint control over significant financial and operating
policies. They exist in Veolia Environnement only. Due to the deconsolidation of
Veolia Environnement on December 31, 2002, the investments accounted for using
the proportionate consolidation method contribute only to consolidated statement
of income in 2002.

     Summarized financial information for major subsidiaries consolidated under
the proportionate consolidation method in 2000, 2001 and 2002 is as follows:
DECEMBER 31,
                                                            ---------------------------
                                                             2002      2001      2000
                                                            -------   -------   -------
                                                              (IN MILLIONS OF EUROS)
Revenues..................................................  E 5,570   E 4,293   E 3,055
Operating income..........................................  E   464   E   426   E   354
Net income................................................  E   204   E   128   E   171
DECEMBER 31,
                                                             -------------------------
                                                             2002     2001      2000
                                                             ----   --------   -------
                                                              (IN MILLIONS OF EUROS)
Long-term assets...........................................   --    E  8,082   E 5,276
Current assets.............................................   --       4,694     2,180
                                                             ----   --------   -------
Total assets...............................................   --    E 12,776   E 7,456
                                                             ====   ========   =======
Shareholders' equity.......................................   --    E  5,146   E 2,095
Minority interest..........................................   --         163       279
Financial debt.............................................   --       2,852     1,830
Reserves and other liabilities.............................   --       4,615     3,252
                                                             ----   --------   -------
Total liabilities and shareholders' equity.................   --    E 12,776   E 7,456
                                                             ====   ========   =======
For summarized cash flow information for major subsidiaries consolidated
under the proportionate consolidation method, please refer to Note 17.9.

                                       F-40
NOTE 5 SHAREHOLDERS' EQUITY

5.1 GROUP SHAREHOLDERS' EQUITY

     The number of common shares outstanding was 1,068,558,994 and
1,085,827,519, respectively, as of December 31, 2002, and December 31, 2001.
Each common share, with the exception of treasury shares, has one voting right
which may be registered upon request by the owner. The number of voting rights
outstanding was 1,067,996,619 and 978,216,347, respectively, as at December 31,
2002, and December 31, 2001.

5.1.1 TREASURY SHARES

     As of December 31, 2001, Vivendi Universal and its subsidiaries held
107,386,662 Vivendi Universal shares, representing a gross amount of E 6,762
million and 9.9% of share capital with an average cost per share of E 63.

     During 2002, Vivendi Universal:

     - bought on the market, between January and April 2002, 6,969,865 shares at
       an average price of E 48.5 per share. These purchases occurred under the
       terms of the COB prospectus n(LOGO) 00-1737 which authorized Vivendi
       Universal to go public,

     - sold 55 million shares to two financial institutions on January 7, 2002,
       at a price of E 60 per share,

     - transferred 37.4 million shares in May 2002 to Liberty Media in exchange
       for equity in USANi, LLC and USA Networks, Inc and the 27% interest in
       Multithematiques (see Note 3),

     - a further 94,157 shares were sold to employees exercising their stock
       options,

     - cancelled 20,469,967 shares on December 20, 2002, following the decision
       by the Board of Directors on August 13, 2002, based on the authorization
       obtained in General Meeting of Stockholders held on April 24, 2002. The
       cancellation of these shares previously held in connection with employee
       stock option plans has reduced the shareholders' equity by E 1,191.3
       million. In connection with French legal obligations, Vivendi Universal
       acquired 14.1 million call options on Vivendi Universal shares in order
       to cover future stock option plans from December 31, 2002.

     At December 31, 2002, Vivendi Universal and its subsidiaries (excluding
Veolia Environnement which is accounted for under the equity method as from
December 31, 2002) held 562,375 Vivendi Universal shares, or 0.05% of its share
capital, which represents a gross amount of E 44 million at an average cost per
share of E 77.9. The majority of these treasury shares are classified under
marketable securities and are held in connection with certain employee stock
option plans of the US company MP3. The remaining balance of 84,360 treasury
shares was recorded as a reduction of shareholders' equity.

     At December 31, 2002, Vivendi Universal had outstanding convertible bonds
and stock options representing approximately 146.3 million common shares,
compared with 64.1 million shares as at December 31, 2001.

5.1.2 STRIPPED SHARES

     8.9 million stripped shares have been deducted from shareholders' equity
compared with 19.7 million at December 31, 2001. These shares were split to
allow for exchange transactions in the context of the Sofiee/Vivendi/Seagram
merger in December 2000. Bare ownership was transferred to Seagram Canadian
shareholders who elected to acquire their Vivendi Universal stock on a deferred
basis. The Board of Directors, at its meetings of January 24, 2002, April 24,
2002, June 25, 2002 and August 13, 2002, duly noted the recombination, and
approved the cancellation of 203,560, 351,988, 3,450,553 and 6,890,538 shares
respectively. At the same time, the Board of Directors noted the creation of the
same number of shares as a result of the redemption of Vivendi Universal
convertible bonds. Because each share that was divided and then recombined was
then cancelled, and because, at the same time, the conversion of each equity
note (ORA) resulted in the creation of a new share, these transactions had no
effect on the number of shares comprising the share capital.
                                       F-41
5.1.3 GOODWILL RECORDED AS A REDUCTION OF SHAREHOLDERS' EQUITY

     Vivendi Universal previously recorded goodwill as a reduction of
shareholders' equity pursuant to rules issued by the COB in 1988 that are no
longer in effect. This was done in particular, in connection with the mergers
with Havas and Pathe in 1998 and 1999, and the acquisition of US Filter and an
additional investment in Canal+ in 1999. As of December 31, 2002, goodwill
recorded as a reduction of shareholders' equity amounts to E 1,983 million after
theoretical straight-line amortization, compared with E 4,333 million at
December 31, 2001, mainly due to the partial disposal of the investment in
Veolia Environnement in 2002. (See Note 3)

     Without adjustments to shareholders' equity, the total write-off of
goodwill at December 31, 2002, would have been E 202 million (on the basis of
straight-line amortization over the normal time period prescribed by the
accounting policies of the Group), of which E 79 million relates to the current
accounting period and after a E 279 million reversal related to the disposal.
This amount excludes an exceptional, notional write-off of E 1.7 billion (of
which E 0.7 billion relates to the current accounting period and after a E 1.3
billion reversal related to the disposal) which would have impacted the initial
goodwill amount accounted for under shareholders' equity. This exceptional
notional write-off has no impact on the Income Statement (see Note 3). Goodwill
recorded as a reduction of shareholders' equity, net of notional aggregate
write-off amounts to approximately E 256 million and mainly concerns the
residual participation held in Veolia Environnement.

5.2 CHANGES IN MINORITY INTERESTS
DECEMBER 31,
                                                          -----------------------------
                                                            2002       2001      2000
                                                          --------   --------   -------
                                                             (IN MILLIONS OF EUROS)
Opening balance.........................................  E 10,208   E  9,787   E 4,052
Changes in consolidation scope(1).......................    (4,229)       411     4,990
TSAR Issue (Redeemable in Veolia Environnement
  shares)(2)............................................        --        300        --
Minority interest in income of consolidated
  subsidiaries..........................................       844        594       625
Dividends paid by consolidated subsidiaries.............      (200)      (981)      (80)
Impact of foreign currency fluctuations on minority
  interest..............................................      (798)        97       190
Other changes...........................................      (328)        --        10
                                                          --------   --------   -------
Closing balance.........................................  E  5,497   E 10,208   E 9,787
                                                          ========   ========   =======
---------------

(1) These principally relate to the change of consolidation method for Veolia
    Environnement (application of the equity method since December 31, 2002) and
    the acquisition of the entertainment assets of USA Networks (see Note 3).

(2) In December 2001, Veolia Environnement Financiere de l'Ouest (a holding
    company held at over 99% by Veolia Environnement), issued E 300 million
    "Titres Subordonne Remboursable en Actions Prioritaires" (TSAR, or obligated
    mandatorily redeemable security of subsidiary holding parent debentures)
    maturing at December 28, 2006. As a result of its nature, the TSAR issue was
    recorded as a minority interest in the balance sheet.

5.3 OTHER EQUITY: NOTES MANDATORILY REDEEMABLE FOR NEW SHARES OF VIVENDI
    UNIVERSAL

     In November 2002, Vivendi Universal issued 78,678,206 bonds for a total
amount of E 1 billion redeemable in Vivendi Universal new shares on November 25,
2005 at a rate of one share for one bond. The bonds bear interest at 8.25% per
annum. The total amount of discounted interest was paid to the bondholders on
November 28, 2002, for an amount of E 233 million. The bondholders can call for
redemption of the bonds in new shares at any time after May 26, 2003, at the
minimum redemption rate of 1 - (annual rate of interest X outstanding bond
lifetime expressed in years). Only new shares can be used for reimbursement, and
the holders would have the same rights as the shareholders if Vivendi Universal
goes into receivership. As a consequence, the notes are classified in other
equity in pursuance of French GAAP.

                                       F-42
NOTE 6 PROVISIONS AND ALLOWANCES

6.1 CHANGES IN PROVISIONS
BALANCE AT        CHANGES IN                                              BALANCE AT
                        DECEMBER 31,     CONSOLIDATION                                            DECEMBER 31,
                            2001       SCOPE AND OTHER(1)   ADDITIONS   UTILIZATION   REVERSALS       2002
                        ------------   ------------------   ---------   -----------   ---------   ------------
                                                        (IN MILLIONS OF EUROS)
Litigation............    E   610           E   (395)        E   282     E   (170)     E   (7)      E   320
Warranties and
  customer care.......        311               (299)            142          (75)         (1)           78
Maintenance and repair
  costs accrued in
  advance.............        273               (215)             92          (96)         (1)           53
Reserves related to
  fixed assets........        106                (67)              3           --          (4)           38
Valuation allowance on
  real estate.........        527               (109)             24         (104)         (1)          337
Valuation allowance on
  work in progress and
  losses on long-term
  contracts...........        484               (314)             53         (113)        (41)           69
Closure and post
  closure costs.......        455               (484)             73          (42)         (1)            1
Pensions..............        652               (364)             50          (92)         (6)          240
Restructuring costs...        314                (81)            107         (265)        (18)           57
Losses on investments
  in unconsolidated
  companies...........        320               (154)             74         (146)         (7)           87
Exceptional financial
  provisions..........         --                 --             929           --          --           929
Other financial
  provisions..........        151                 (6)            518          (73)         --           590
Other(2)..............       2128               (961)            537         (892)        (30)          782
                          -------           --------         -------     --------      ------       -------
PROVISIONS............    E 6,331           E (3,449)        E 2,884     E (2,068)     E (117)      E 3,581
                          =======           ========         =======     ========      ======       =======
---------------

(1) Changes in the consolidation scope are mainly linked with the
    deconsolidation of Veolia Environnement accounted for by using the equity
    method at December 31, 2002.

(2) At December 31, 2001, E 630 million related to financial depreciation of
    public service contract fixed assets of Veolia Environnement.

6.2  FINANCIAL PROVISIONS

     The Exceptional Financial Provisions consist mainly of provisions related
to the anticipated Telepiu disposal (E 360 million), the amortization of call
options on Vivendi Universal shares granted by BNP (E 226 million),
international telecom assets (E 142 million) and put options on Vivendi
Universal shares (E 104 million).

     The Other Financial Provisions mainly concern the following items:

     - The evolution of the nature of the interest rate swap portfolio and of
       the underlying debt structure do not allow this portfolio to qualify for
       hedge accounting. As a result, a related provision has been recorded for
       E 261 million at December 31, 2002.

                                       F-43
- Provisions recorded in respect of premium related to bonds exchangeable
       into Veolia Environnement, Vinci and BSkyB shares amounted to E 137.9
       million. These provisions correspond to the premiums due in case of early
       redemption of the bonds exchangeable into Veolia Environnement and Vinci
       shares, in March 2003 and March 2004, respectively, and also cover the
       premium which is expected to be paid in July 2003 to holders of bonds
       exchangeable into BSkyB shares. (See Note 11).

NOTE 7 FINANCIAL DEBT

7.1 FINANCIAL DEBT
YEARS ENDED DECEMBER 31,
                                                         ------------------------------
                                                           2002       2001       2000
                                                         --------   --------   --------
                                                             (IN MILLIONS OF EUROS)
Bonds and bank loans(14)...............................  E  3,516   E 15,218   E 15,803
BSkyB 0.5%(1)..........................................        --      3,948         --
Veolia Environnement exchangeable 2%(2)................     1,809      1,809         --
Vivendi Universal convertible 1.25%(3).................     1,699      1,699      1,699
Veolia Environnement convertible 1.5%(4)...............        --      1,535      1,535
BSkyB exchangeable 1%(5)...............................        --      1,440      1,440
VUE "preferred interests" A&B(6).......................     2,507         --         --
Vinci exchangeable 1%(7)...............................       527        527         --
BSkyB exchangeable 3%(8)...............................        --        117        155
Mediaset SpA 3.5%(9)...................................        --         --         52
Seagram remaining debt(10).............................        98        354      2,491
Capital leases(11).....................................       274        997        629
Subordinated securities(12)............................        25        133        150
                                                         --------   --------   --------
Total long-term debt...................................  E 10,455   E 27,777   E 23,954
                                                         --------   --------   --------
Bank overdrafts and other short-term borrowings(13)....     9,177     14,003     14,852
Cash and cash equivalents..............................    (7,295)    (4,725)    (3,271)
                                                         --------   --------   --------
TOTAL FINANCIAL DEBT...................................  E 12,337   E 37,055   E 35,535
                                                         ========   ========   ========
---------------

 (1) In October 2001, Vivendi Universal sold approximately 96% of its investment
     in BSkyB to two QSPEs (Qualifying Special Purpose Entities) and,
     concurrently, Vivendi Universal entered into a total return swap with the
     same financial institution that held all of the QSPEs' beneficial
     interests. Under French GAAP, the disposal of the investment in BSkyB was
     not recognized as a sale. Consequently, the BSkyB shares held by the two
     QSPEs, in an amount of E 1.5 billion, and financing for the acquisition of
     these shares, were consolidated by Vivendi Universal at December 31, 2001.
     In December 2001, following issue of 150 million certificates repayable in
     BSkyB shares at 700 pence per share by the financial institution
     controlling the QSPEs, Vivendi Universal and this financial institution
     reduced the nominal amount of the swap by 37%, fixing the value of the 150
     million shares and generating a capital gain of E 647 million after tax and
     charges. In May 2002, the financial institution sold the remaining 250
     million BSkyB shares held by the QSPEs. Vivendi Universal and the financial
     institution then terminated the total return swap concerning these shares.
     This transaction resulted in a reduction of gross debt by E 4 billion.

 (2) In February 2001, Vivendi Universal issued 32,352,941 bonds exchangeable,
     at any time after April 17, 2002, for shares in Veolia Environnement
     (interest 2%; yield to maturity 3.75%; expiring March 2006; nominal value
     E 55.90, or 30% above the average weighted price of Vivendi Universal
     shares the previous day). The redemption price of the bonds at maturity
     will be E 61.17. These bonds may be exchanged at any time if the closing
     price of Veolia Environnement shares for 20 out of 30 consecutive days
     equals or exceeds 125% of the anticipated redemption price. These bonds may
     be redeemed by the

                                       F-44
bondholder on March 8, 2003 at an exercise unit price of E 57.89. As at
     December 31, 2002, 32,352,941 bonds were outstanding.

 (3) In January 1999, Vivendi issued 6,028,363 bonds at a unit par value of
     E 282 earning interest at 1.25%, with a conversion/ exchange option at a
     rate of one bond for 3,124 existing or new shares. Redemption price is at
     par. Vivendi Universal can redeem these bonds in full at any time between
     January 1, 2002 and December 31, 2003, if the average price of Vivendi
     Universal shares exceeds 115% of the adjusted par value. These bonds will
     be redeemed in full on January 1, 2004 at par. 6,024,329 bonds were
     outstanding as at December 31, 2002.

 (4) In April 1999, Veolia Environnement issued 10,516,606 bonds at a unit par
     value of E 271, earning interest at 1.5%, with a conversion/exchange option
     concerning Vivendi or Veolia Environnement shares. 5,183,704 bonds were
     converted to Veolia Environnement shares in July 2000 when Veolia
     Environnement went public. The balance can now only be converted to Vivendi
     Universal shares, at a rate of one Veolia Environnement bond to 3.124
     shares. Maturity date for the bonds is January 1, 2005, at a redemption
     price of E 288 per bond. In the absence of conversion, exchange or early
     redemption, the bonds earn interest at a yield to maturity rate of 2.54%.
     Vivendi Universal may require Veolia Environnement to exercise its early
     redemption option if the average price of Vivendi Universal shares over a
     specified period exceeds 115% of the adjusted bond redemption value. Veolia
     Environnement called a general meeting of bondholders on August 20, 2002.
     By a 64.8% majority, the bondholders voted to waive their rights to the
     Vivendi Universal guarantee covering this loan, and the liability clause
     applicable in the event of default by Vivendi Universal, as from September
     1, 2002. The nominal interest rate was consequently increased by 0.75%,
     from 1.5% to 2.25%. As at December 31, 2002, due to Veolia Environnement's
     deconsolidation, these bonds are no longer consolidated.

 (5) In July 2000, Vivendi issued 59,455,000 bonds exchangeable for BSkyB shares
     or cash, at a unit par value of E 24.22. Following the Vivendi merger,
     these bonds are now held in the Vivendi Universal balance sheet, earn
     interest at 1% and mature in three years (2000-2003). The conversion rate
     is one BSkyB share (with a par value of 50 pence) for one Vivendi Universal
     bond. Each bond can be exchanged at any time during the term of the loan.
     The bonds are subject to early redemption in full by Vivendi Universal, at
     an early redemption price guaranteeing the bondholder a yield to maturity
     of 1.88%, if the average price of BSkyB shares reaches or exceeds 115% of
     the bond par value. The bonds mature on July 5, 2003, at which point any
     bonds outstanding will be redeemed at a unit price of E 24.87. All BSkyB
     shares corresponding to issued bonds were sold in October 2001. The
     59,455,000 bonds outstanding as at December 31, 2002 are reported as
     short-term borrowings.

 (6) In May 2002, Vivendi Universal acquired the entertainment assets of USA
     Networks Inc. Following this transaction, USA Interactive received VUE
     class A and class B preferred interests, the par value of which was $750
     million and $1.75 billion (the latter being exchangeable for 56.6 million
     common shares in USA Interactive, via put and call options agreed between
     Vivendi Universal and USA Interactive). These preferred interests mature at
     20 years and have the following characteristics (see Note 3):

     - class A preferred interests: PIK interest at 5% per year,

     - class B preferred interests: cash interest at 3.6% and PIK interest at
       1.4% per year.

 (7) In February 2001, Vivendi Universal issued 6,818,695 bonds exchangeable, at
     any time after April 10, 2001, for Vinci shares, for an amount of E 527.4
     million. The bonds bear interest at 1%, with 3.75% yield to maturity, and
     mature on March 1, 2006. The issue price was E 77.35, 30% above the
     previous day closing rates for Vinci shares. This transaction allows
     Vivendi Universal to complete its disengagement from Vinci, by exchanging
     its residual interest of 8.2% as at December 31, 2001. These bonds are
     subject to early redemption by the holders on March 1, 2004 (redemption
     price E 83.97 per bond). Revenue from this loan has been on lent to Veolia
     Environnement in the amount of its capital interest in Vinci (1,552,305
     shares of the 6,818,695 held by the Group) via a mirror loan of E 120
     million (see Note 4.4). The residual interest held by Vivendi Universal was
     placed on the market in 2002. To cover its obligations under the bond,
     Vivendi Universal concomitantly purchased, for E 53 million, 5.3 million
     Vinci share options at a price of E 88.81, corresponding to the bond par
     value as at March 1, 2006, in the absence of early redemption. As at
     December 31, 2002, 6,817,684 bonds were outstanding.

                                       F-45
(8) During the first half of 2002, Vivendi Universal redeemed the exchangeable
     bonds held in its balance sheet following the acquisition of Pathe in 1999,
     for shares in BSkyB. A total of 14,494,819 BSkyB shares were consequently
     transferred to the bondholders (see Note 4).

 (9) In April 1997, Canal+ issued exchangeable bonds in the total amount of
     E 304.9. These bonds bore interest at 3.5%, and matured on April 1, 2002.
     Each bond was convertible, at the option of the holder, at a rate of one
     bond for 341.74 shares in Mediaset SPA. These bonds were reported under
     short-term borrowings as at December 31, 2001.

(10) Following the merger of Vivendi, Canal+ and Seagram, Vivendi Universal
     reimbursed the majority of the Seagram credit lines in use at the time of
     the merger during the first quarter of 2001. This amount is made up of
     several credit lines with terms up to 2023.

(11) Lease contracts and lease contracts including a purchase option in favor of
     the lessee (French "credit bail" contracts) also include various rental
     guarantees relating to real-estate defeasance transactions.

(12) Subordinated debt principally comprises $70 million of securities repayable
     over 15 years issued by Energy USA on January 29, 1991. As at December 31,
     2001, the total also included a loan of E 244 million to finance a waste
     water treatment plant in Zaragoza, Spain, underwritten by OTV (a subsidiary
     of Veolia Environnement).

(13) Of the total at December 31, 2002, bridge loan of Vivendi Universal
     Entertainment that matures on June 30, 2003 in the amount of $1.6 billion
     and BSkyB exchangeable bonds which mature in July 2003 for E 1,440 million
     (See (5)). For additional information on bank overdrafts and other
     short-term borrowings, please refer to Note 17.9.

(14) For additional information on bonds and bank loans, please refer to Note
     17.9.

     Most financing contracts concluded by Vivendi Universal contain customary
clauses covering events of default provisions and may also contain financial
covenants. These can lead to accelerated redemption of the debt, or
renegotiation or even suspension of financing.

7.2 CHANGE IN FINANCIAL DEBT DURING 2002(1)
CASH     DEBT     NET IMPACT
                                                          ------   -------   ----------
                                                             (IN MILLIONS OF EUROS)
FINANCIAL NET DEBT AT DECEMBER 31, 2001.................                     E  37,055
Net cash flow from operating activities.................  (2,795)               (2,795)
Acquisitions tangible assets net of disposals...........   1,571                 1,571
Dividends paid..........................................   1,120                 1,120
Disposal of 55 million treasury shares..................  (2,856)               (2,856)
Disposal of puts on Vivendi Universal shares............     883                   883
Capital increase........................................     (68)                  (68)
ORA issued by Vivendi Universal in November 2002........    (767)                 (767)
ACQUISITIONS(2)
USA Networks/Multithematiques...........................   1,757     2,538       4,295
Echostar................................................   1,699                 1,699
10.8% interest in Sportfive.............................     122                   122
Other acquisitions......................................     179                   179
DISPOSALS(3)
Veolia Environnement(4).................................  (3,335)       --      (3,335)
  Disposal of 1st part (15.5%)..........................  (1,479)       --      (1,479)
  Disposal of 2nd part (20.4%)(4).......................  (1,856)       --      (1,856)
Termination of the BSkyB total return swap..............     (86)   (3,948)     (4,034)
Echostar(5).............................................  (1,037)       --      (1,037)
F-46
CASH     DEBT     NET IMPACT
                                                          ------   -------   ----------
                                                             (IN MILLIONS OF EUROS)
Houghton Mifflin........................................  (1,195)     (372)     (1,567)
European publishing activities..........................  (1,121)      (17)     (1,138)
BtoB/Health.............................................    (894)      (37)       (931)
Sithe...................................................    (319)       --        (319)
Vinci shares(6).........................................    (291)       --        (291)
Canal+ Digital (50%)....................................    (264)       --        (264)
Vizzavi Europe (50%)....................................    (143)       --        (143)
Other disposals.........................................    (152)       --        (152)
OTHER (of which change in scope impacts)(7).............      --   (14,890)    (14,890)
                                                          ------   -------   ---------
                                                          (7,992)  (16,726)    (24,718)
                                                                             ---------
FINANCIAL NET DEBT AT DECEMBER 31, 2002.................                     E  12,337
                                                                             =========
---------------

(1) Flows illustrate the accounting of Veolia Environnement using the equity
    method from January 1, 2002.

(2) Includes cash payment to USA Interactive. (see Note 3)

(3) These disposals include current accounts redemption and fees related to
    operations.

(4) Includes call related to Veolia Environnement for E 173 million. (see Note
    3)

(5) Excluding foreign exchange profit of E 37.1 million.

(6) Includes call related to Vinci for E 53 million. (see Note 11)

(7) Includes deconsolidation of Veolia Environnement debt for E 15.7 billion as
    of January 1, 2002.

7.3 LONG-TERM DEBT DETAILED BY CURRENCY(1)
DECEMBER 31,
                                                         ------------------------------
                                                           2002       2001       2000
                                                         --------   --------   --------
                                                             (IN MILLIONS OF EUROS)
Euros..................................................  E  7,146   E 18,077   E 20,004
US dollars.............................................     2,933      4,443      3,422
Pounds sterling........................................       288      4,229        180
Other..................................................        88      1,028        348
                                                         --------   --------   --------
  Total long-term debt.................................  E 10,455   E 27,777   E 23,954
                                                         ========   ========   ========
7.4 LONG-TERM DEBT DETAILED BY MATURITY(1)
DECEMBER 31,
                                                         ------------------------------
                                                           2002       2001       2000
                                                         --------   --------   --------
                                                             (IN MILLIONS OF EUROS)
Due between one and two years..........................  E  2,878   E  3,434   E  7,325
Due between two and five years.........................     4,013     14,288     12,712
Due after five years...................................     3,564     10,055      3,917
                                                         --------   --------   --------
  Total long-term debt.................................  E 10,455   E 27,777   E 23,954
                                                         ========   ========   ========
F-47
7.5 LONG-TERM DEBT DETAILED BY NATURE OF INTEREST RATE(1)
DECEMBER 31,
                                                         ------------------------------
                                                           2002       2001       2000
                                                         --------   --------   --------
                                                             (IN MILLIONS OF EUROS)
Fixed interest rate....................................  E  8,925   E 18,646   E 11,429
Variable interest rate.................................     1,530      9,131     12,525
                                                         --------   --------   --------
  Total long-term debt.................................  E 10,455   E 27,777   E 23,954
                                                         ========   ========   ========
---------------

(1) Excluding financial instruments which are described in Note 8

NOTE 8 FINANCIAL INSTRUMENTS

     Vivendi Universal, as the result of its global operating and financing
activities, is exposed to changes in interest rates, foreign currency exchange
rates and equity markets. These positions may adversely affect its operational
and financial earnings. In seeking to minimize the risks and costs associated
with such activities, Vivendi Universal follows a centrally administered risk
management policy approved by its Board of Directors. As part of this policy,
Vivendi Universal uses various derivative financial instruments to manage
interest rate, foreign currency exchange rate and equity market risks and their
impact on earnings and cash flows. Vivendi Universal generally does not use
derivative financial instruments for trading or speculative purposes.

8.1 INTEREST RATE RISK MANAGEMENT

     Interest rate risk management instruments are used by Vivendi Universal to
manage net exposure to interest rate changes, to adjust the proportion of total
debt that is subject to variable and fixed interest rates and to lower overall
borrowing costs. Interest rate risk management instruments used by Vivendi
Universal include pay-variable and pay-fixed interest rate swaps and interest
rate caps. Pay-variable swaps effectively convert fixed rate debt obligations to
LIBOR and EURIBOR. Pay-fixed swaps and interest rate caps convert variable rate
debt obligations to fixed rate instruments and are considered to be a financial
hedge against

                                       F-48
changes in future cash flows required for interest payments on variable rate
debt. The following table summarizes information about Vivendi Universal's
interest rate risk management instruments:
DECEMBER 31,
                                                              ----------------------
                                                                2002         2001
                                                              ---------   ----------
                                                              (IN MILLIONS OF EUROS)
Pay-variable interest rate swaps:
  Notional amount of indebtedness...........................   E   626     E  5,868
  Average interest rate paid................................      5.80%        3.36%
  Average interest rate received............................      2.85%        5.01%
  Expiry:
     Due within one year....................................   E   387     E  2,282
     Due between two and five years.........................   E   208     E  1,526
     Due after five years...................................   E    31     E  2,060
Pay-fixed interest rate swaps:
  Notional amount of indebtedness...........................   E 8,492     E 10,284
  Average interest rate paid................................      4.50%        4.25%
  Average interest rate received............................      2.82%        2.97%
  Expiry:
     Due within one year....................................   E 1,818     E  2,766
     Due between two and five years.........................   E 4,410     E  3,951
     Due after five years...................................   E 2,264     E  3,567
Interest rate caps, floors and collars(1):
  Notional amount of indebtedness...........................   E    --     E  3,392
  Guarantee rate............................................                   4.78%
  Expiry:
     Due within one year....................................   E    --     E    150
     Due between two and five years.........................   E    --     E  1,391
     Due after five years...................................   E    --     E  1,851
---------------

(1) These instruments were sold in 2002.

8.2 FOREIGN CURRENCY RISK MANAGEMENT

     Foreign currency risk management instruments are used by Vivendi Universal
to reduce earnings and cash flow volatility associated with changes in foreign
currency exchange rates. To protect the value of foreign currency forecasted
cash flows, including royalties, licenses, rights purchases and service fees,
and the value of existing foreign currency assets and liabilities, Vivendi
Universal enters into various instruments, including forward contracts, option
contracts and cross-currency swaps, that hedge a portion of its anticipated
foreign currency exposures for periods not to exceed two years. The gains and
losses on these instruments offset changes in the value of the related
exposures. At December 31, 2002, Vivendi Universal had effectively hedged
approximately 80% of its estimated foreign currency exposures, primarily related
to anticipated cash flows to be remitted over the following year. The principal
currencies hedged were the US dollar, Japanese

                                       F-49
yen, British pound and Canadian dollar. The following table summarizes
information about Vivendi Universal's foreign currency risk management
instruments:
DECEMBER 31,
                                                              -----------------
                                                               2002      2001
                                                              -------   -------
                                                               (IN MILLIONS OF
                                                                   EUROS)
Forward contracts:
  Notional amount...........................................  E 3,360   E 1,705
  Sale against the euro.....................................  E 3,315   E   640
  Purchase against the euro.................................  E    45   E 1,065
  Expiry:
     Due within one year....................................  E 3,360   E 1,705
Currency swaps:
  Notional amount...........................................  E 2,031   E 2,710
  Sale against the euro.....................................  E 1,437   E 1,027
  Purchase against the euro.................................  E   594   E 1,683
  Expiry:
     Due within one year....................................  E 2,031   E 2,447
     Due between two and five years.........................  E    --   E   263
8.3 EQUITY MARKET RISK MANAGEMENT

     Our exposure to equity markets risk relates to our investments in the
marketable securities of unconsolidated entities and in debt securities. During
2002 and 2001, Vivendi Universal hedged certain equity-linked debts using
specialized indexed swaps. These swaps, with notional amounts totaling E 266
million in 2002 versus E 377 million in 2001 will progressively expire over
eight years.

     Furthermore, a description of the total return swap of AOL Europe is
presented in Note 11 Commitments and Contingencies.
DECEMBER 31,
                                                              ---------------
                                                              2002     2001
                                                              -----   -------
                                                              (IN MILLIONS OF
                                                                  EUROS)
Equity-linked swaps:
  Notional amount...........................................  E 266   E   377
  Expiry:
     Due within one year....................................  E 132   E    46
     Due between two and five years.........................  E  11   E   208
     Due after five years...................................  E 123   E   123
Total return swaps:
  Notional amount...........................................  E 788   E 3,511
  Expiry:
     Due within one year....................................  E 788   E    --
     Due between two and five years.........................  E  --   E 3,511
8.4 FAIR VALUE OF FINANCIAL INSTRUMENTS

     At December 31, 2002, and 2001, Vivendi Universal's financial instruments
included cash, cash equivalents, marketable securities, receivables,
investments, accounts payable, borrowings, interest rate, foreign currency and
equity market risk management contracts. The carrying value of cash, cash
equivalents, marketable securities, receivables, accounts payable, short-term
borrowings and current portion of long-term

                                       F-50
debt approximated fair value because of the short-term nature of these
instruments. The estimated fair value of other financial instruments, as set
forth below, has generally been determined by reference to market prices
resulting from trading on a national securities exchange or in an
over-the-counter market. In cases where quoted market prices are not available,
fair value is based on estimates using present value or other valuation
techniques.
DECEMBER 31, 2002     DECEMBER 31, 2001
                                              -------------------   -------------------
                                              CARRYING     FAIR     CARRYING     FAIR
                                               VALUE      VALUE      VALUE      VALUE
                                              --------   --------   --------   --------
                                                       (IN MILLIONS OF EUROS)
Investments(1)..............................  E  4,138   E  4,138   E  7,398   E  7,503
Long-term debt..............................  E 10,455   E 10,622   E 27,777   E 28,128
Foreign currency instruments and interest
  rate agreements:
  Interest rate swaps(2)....................  E     --   E   (256)  E     --   E    219
  Interest caps.............................        --         --         --         44
  Cross currency swaps......................        --         46         --          4
  Forward exchange contracts(2).............        --        115         --        163
  Puts and calls on marketable securities...        --       (104)        --       (214)
                                              --------   --------   --------   --------
                                              E     --   E   (199)  E     --   E    216
                                              ========   ========   ========   ========
---------------

(1) Comprised of Other Investments (see Note 4) and treasury shares classified
    in marketable securities, excluding those held for stock option purposes. As
    of December 31, 2002, due to the provisions recognized, the net carrying
    value of the investments corresponds to their fair value.

(2) Provisions were recorded on these elements in respect of potential losses at
    December 31, 2002. (see Note 6)

8.5 CREDIT CONCENTRATIONS AND COUNTER-PARTY RISK

     Vivendi Universal minimizes its credit exposure to counter-parties by
entering into contracts only with highly-rated commercial banks or financial
institutions and by distributing the transactions among the selected
institutions. Although Vivendi Universal's credit risk is the replacement cost
at the then-estimated fair value of the instrument, management believes that the
risk of incurring losses is remote and those losses, if any, would not be
material. The market risk related to the foreign exchange agreements should be
offset by changes in the valuation of the underlying items being hedged. Vivendi
Universal's receivables and investments do not represent a significant
concentration of credit risk due to the wide variety of customers and markets in
which our products are sold, their dispersion across many geographic areas, and
the diversification of our portfolio among instruments and issuers.

                                       F-51
NOTE 9 INCOME TAXES

     The following tables summarize the sources of pre-tax income and the
resulting income tax expense (benefit).

9.1 COMPONENTS OF INCOME TAX EXPENSE (BENEFIT)
YEARS ENDED DECEMBER 31,
                                                            ---------------------------
                                                             2002      2001     2000(1)
                                                            -------   -------   -------
                                                              (IN MILLIONS OF EUROS)
Income tax expense (benefit) applicable to:
  Current
     France...............................................  E   741   E   451   E   383
     US...................................................      133       223        14
     Other jurisdictions..................................       74       526       381
                                                            -------   -------   -------
                                                                948     1,200       778
                                                            -------   -------   -------
  Deferred
     France...............................................      940       290       224
     US...................................................      523        90       (18)
     Other jurisdictions..................................      145        (1)       25
                                                            -------   -------   -------
                                                              1,608       379       231
                                                            -------   -------   -------
Total income tax expense (benefit)........................  E 2,556   E 1,579   E 1,009
                                                            =======   =======   =======
---------------

(1) Reflects changes in accounting policies and financial statement presentation
    adopted in 2001.

9.2 COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES
DECEMBER 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
                                                              (IN MILLIONS OF EUROS)
Deferred tax assets
  Employee benefits.........................................   E     64     E    142
  Tax credit and net operating loss carryforwards...........      8,383        3,813
  Provisions for risks and liabilities......................        324          542
  Other, net................................................      1,595        1,915
                                                               --------     --------
  Gross deferred tax assets.................................     10,366        6,412
  Deferred tax assets not recorded in the books.............     (8,753)      (2,187)
                                                               --------     --------
Total deferred tax assets...................................      1,613        4,225
                                                               --------     --------
Deferred tax liabilities
  Depreciation..............................................         65          261
  Revaluation of assets.....................................      2,250        2,454
  DuPont share redemption...................................      1,574        1,656
  Spirits and wine sale.....................................      1,711        1,769
  Other, net................................................      2,257        3,837
                                                               --------     --------
Total deferred tax liabilities..............................      7,857        9,977
                                                               --------     --------
Net deferred tax liability..................................   E (6,244)    E (5,752)
                                                               ========     ========
F-52
9.3 TAX CARRYFORWARD EXPIRATION CALENDAR

     The utilization of certain tax carry forwards is subject to limitations
under income tax laws. The tax carry forwards expire in varying amounts as
follows:
TAX
                                                               CARRYFORWARDS
                                                              ---------------
                                                              (IN MILLIONS OF
                                                                  EUROS)
2003........................................................      E    25
2004........................................................            3
2005........................................................        1,268
2006........................................................          635
2007........................................................        2,160
Thereafter up to 2007.......................................        4,179
Unlimited...................................................          113
                                                                  -------
                                                                  E 8,383
9.4 EFFECTIVE INCOME TAX RATE

     The reconciliation of the differences between the French statutory tax rate
and Vivendi Universal's effective income tax rate is as follows:
DECEMBER 31,
                                                              -----------------------
                                                              2002     2001     2000
                                                              -----    -----    -----
French statutory rate.......................................   35.4%    36.4%    37.8%
Non deductible goodwill amortization........................  (35.1)   (48.4)     6.1
Long-term capital gains/losses taxed at lower tax rates.....   (2.4)     4.0     (5.7)
Tax losses..................................................  (13.4)    (3.0)     6.0
Other, net..................................................    3.2     (2.8)   (18.3)
                                                              -----    -----    -----
Effective income tax rate...................................  (12.3)%  (13.8)%   25.9%
                                                              =====    =====    =====
The years ended December 31, 2000 to December 31, 2002 are subject to tax
audits by the respective tax authorities of the jurisdictions in which Vivendi
Universal has operations. Various taxation authorities have proposed or levied
assessments for additional income taxes of prior years. Management believes that
the settlements will not have a material effect on the results of operations,
financial position or liquidity of Vivendi Universal.

                                       F-53
NOTE 10 ADDITIONAL FINANCIAL STATEMENT INFORMATION

10.1 INCOME STATEMENT DATA
DECEMBER 31,
                                                         ------------------------------
                                                           2002       2001       2000
                                                         --------   --------   --------
                                                             (IN MILLIONS OF EUROS)
10.1.1 Research and Development Costs..................  E    117   E    237   E    179
10.1.2 Personnel Costs, Including Employee Profit
  Sharing..............................................  E 12,147   E 11,926   E  9,487
10.1.3 Financial Expenses, Provisions and Other
  Financing expenses(1)................................  E (1,333)  E (1,455)  E (1,288)
                                                         --------   --------   --------
  Financial provisions.................................    (2,895)      (482)      (196)
                                                         --------   --------   --------
  Capital gains on sale of portfolio investments(2)....       255        143        702
  Foreign exchange gains (losses)......................        24         51         (7)
  Other(3).............................................      (793)      (185)        27
                                                         --------   --------   --------
                                                         E   (514)  E      9   E    722
                                                         --------   --------   --------
---------------

(1) The average cost of debt in 2002 was 4.1% excluding Veolia Environnement.
    This subsidiary, accounted for using the equity method from December 31,
    2002, contributed to financing cost for (E 683) million in 2002.

(2) Of which, as at December 31, 2002, disposal of Vinci shares (E 153 million),
    disposals concluded by Veolia Environnement (E 112 million).

(3) As at December 31, 2002, losses relating to put options on Vivendi Universal
    shares (E 589 million).

     The following schedule shows details of financial provisions as at December
31, 2002:
IN MILLIONS
                                                      OF EUROS         SEE PARAGRAPH
                                                     -----------       -------------
Investment in Elektrim Telekomunikacja.............       (609)    Section 4.1
USA Interactive warrants...........................       (454)    Section 4.4
Interest rate swaps................................       (261)    Note 6
Premiums on call option on Vivendi Universal
  shares...........................................       (226)    Note 6
UGC and UGC Cine Cite shares.......................       (220)    Section 4.1
International telecom assets.......................       (175)    Section 4.2 and Note 6
DuPont shares......................................       (173)    Section 4.3
Provision on premiums on bonded debts..............       (122)    Note 6
Softbank Capital Partners..........................       (120)    Section 4.3
Put options on Vivendi Universal shares............       (104)    Note 6
Other..............................................       (431)
                                                      --------
                                                      E (2,895)
                                                      ========
For additional information on financial provisions as at December 31, 2001
and 2000, please refer to Note 17.9.

                                       F-54
10.1.4 EXCEPTIONAL ITEMS, NET
DECEMBER 31,
                                                          -----------------------------
                                                           2002        2001      2000
                                                          -------     -------   -------
                                                             (IN MILLIONS OF EUROS)
Net capital gains and gains on the dilution of our
  interests in other companies(1).......................  E 1,049     E 2,365   E 3,772
Other...................................................       --          --        40
                                                          -------     -------   -------
                                                          E 1,049(2)  E 2,365   E 3,812
                                                          =======     =======   =======
---------------

(1) 2001 consisted mainly of E 1 billion from the disposal of 150 million BSkyB
    shares and E 712 million from the disposal of AOL France.

(2) At December 31, 2002, tax and minority interest related to exceptional items
    amount to E (1,022) and E 211 million.

     The following schedule shows details of capital gains and losses and gains
relating to the dilution of participations in other companies as of December 31,
2002, before tax:
IN MILLIONS
                                                               OF EUROS     SEE PARAGRAPH
                                                              -----------   -------------
Disposal of 250 million of BSkyB shares.....................      1,588     Section 7.1.1
Disposal of Echostar shares(1)..............................       (674)
Disposals and dilution of Veolia Environnement..............      1,419     Section 3.2.3
Disposal of Houghton Mifflin................................       (822)    Section 3.2.6
Disposal of European publishing activities..................        329     Section 3.2.6
Reserve related to anticipated Telepiu disposal.............       (360)    Section 3.2.7
Disposal of business to business and health divisions.......       (298)    Section 3.2.4
Disposal of Sithe shares....................................       (232)    Section 4.2
Disposal of Vizzavi Europe..................................         90     Section 3.2.5
Disposal of Canal Digital(2)................................        172
Other.......................................................       (163)
                                                                -------
                                                                E 1,049
                                                                =======
---------------

(1) On December 18, 2002, Vivendi Universal sold its entire EchoStar equity
    position, 57.6 million Class A common shares, back to EchoStar. Total net
    proceeds of the sale were $1.066 billion. Vivendi Universal held these Class
    A common shares following the conversion of 5.8 million Class D Echostar
    preferred stock in January 2002 for an amount of $1.5 billion.

(2) Canal+ Group sold its whole participation in Canal Digital to Telenor for an
    amount of E 289 million.

                                       F-55
10.1.5 DEPRECIATION AND AMORTIZATION
DECEMBER 31,
                                                          -----------------------------
                                                            2002       2001      2000
                                                          --------   --------   -------
                                                             (IN MILLIONS OF EUROS)
Depreciation of property, plant and equipment...........  E  3,223   E  2,578   E 2,105
Goodwill amortization...................................     1,277      1,688       634
Goodwill impairment(1)..................................    18,442     13,515        --
Amortization of other intangible assets.................     1,098      1,253       904
Other non-financial provisions and allowances, excluding
  financial provisions..................................        --         16       395
                                                          --------   --------   -------
                                                          E 24,040   E 19,050   E 4,038
                                                          ========   ========   =======
---------------

(1) See Note 3.3.

10.2 BALANCE SHEET DATA

10.2.1 OTHER INTANGIBLE ASSETS, NET
DECEMBER 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
                                                              (IN MILLIONS OF EUROS)
Audiovisual and music rights................................   E  5,558     E  7,821
Trademarks, market share, editorial resources...............      2,903        7,984
Film costs, net of amortization.............................      3,367        2,587
Editorial & plate costs.....................................         39          118
Telecom licenses............................................        989          680
Deferred charges............................................        542        1,391
Software....................................................        627          703
Fees paid to local authorities..............................         --          568
Other.......................................................        681        1,450
                                                               --------     --------
                                                               E 14,706     E 23,302
                                                               ========     ========
OTHER                        OTHER
                                                      INTANGIBLE   ACCUMULATED    INTANGIBLE
                                                        ASSETS     AMORTIZATION   ASSETS, NET
                                                      ----------   ------------   -----------
                                                              (IN MILLIONS OF EUROS)
Balance at December 31, 2001........................   E 30,128      E (6,826)     E 23,302
Additions/allocations...............................        116        (1,189)     E (1,073)
Disposals/reversals.................................       (442)           90      E   (352)
Changes in scope of consolidation and other.........     (5,762)          120      E (5,642)
Foreign currency translation adjustments............     (1,872)          343      E (1,529)
                                                       --------      --------      --------
Balance at December 31, 2002........................   E 22,168      E (7,462)     E 14,706
                                                       ========      ========      ========
F-56
10.2.2 PROPERTY PLANT AND EQUIPMENT, NET
DECEMBER 31,
                                                              -----------------------
                                                                2002          2001
                                                              ---------    ----------
                                                              (IN MILLIONS OF EUROS)
Land........................................................   E   859      E  2,199
Buildings...................................................     1,839         3,941
Machinery and equipment.....................................     3,316         9,138
Construction-in-progress....................................       394         1,030
Other.......................................................     1,261         2,823
                                                               -------      --------
Property, plant and equipment...............................     7,669        19,131
Publicly-owned utility networks.............................        17         4,265
                                                               -------      --------
Property, plant and equipment, net..........................   E 7,686      E 23,396
                                                               =======      ========
PUBLICLY-                  PROPERTY,
                                           PROPERTY,     OWNED                    PLANT AND
                                           PLANT AND    UTILITY    ACCUMULATED    EQUIPMENT,
                                           EQUIPMENT   NETWORKS    DEPRECIATION      NET
                                           ---------   ---------   ------------   ----------
                                                        (IN MILLIONS OF EUROS)
Balance at December 31, 2001.............  E  32,031   E  6,187     E (14,822)    E  23,396
Additions/allocations....................      3,221        383        (3,308)          296
Disposals/reversals......................       (800)      (104)           85          (819)
Changes in scope of consolidation and
  other..................................    (18,921)    (6,436)       10,611       (14,746)
Foreign currency translation
  adjustments............................       (580)        --           139          (441)
                                           ---------   --------     ---------     ---------
Balance at December 31, 2002.............  E  14,951   E     30     E  (7,295)    E   7,686
                                           =========   ========     =========     =========
10.2.3 INVENTORIES AND WORK-IN-PROGRESS
DECEMBER 31,
                                                              ----------------------
                                                                2002         2001
                                                              ---------    ---------
                                                              (IN MILLIONS OF EUROS)
Inventories.................................................   E 1,822      E 4,090
Valuation allowance.........................................      (512)        (927)
                                                               -------      -------
                                                               E 1,310      E 3,163
                                                               =======      =======
10.2.4 ACCOUNTS RECEIVABLE
DECEMBER 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
                                                              (IN MILLIONS OF EUROS)
Trade accounts receivable(1)................................   E  9,601     E 19,994
Allowance for doubtful accounts.............................     (1,492)      (2,274)
Total trade accounts receivable.............................      8,109       17,720
Other(1)(2).................................................      1,783        3,374
                                                               --------     --------
                                                               E  9,892     E 21,094
                                                               ========     ========
---------------

(1) Due within one year.

(2) Of which as of December 2002, premium on VUE class A & B preferred interests
    (E 734 million amortized for E 22 million, see Note 3).

                                       F-57
10.2.5 MARKETABLE SECURITIES
DECEMBER 31,
                                                              -----------------------
                                                                2002          2001
                                                              ---------    ----------
                                                              (IN MILLIONS OF EUROS)
Treasury shares(1)..........................................   E   38       E 1,840
Listed marketable securities(2).............................       10         1,866
Unlisted marketable securities(3)...........................      168           403
Valuation allowance.........................................     (128)         (336)
                                                               ------       -------
                                                               E   88       E 3,773
                                                               ======       =======
---------------

(1) 478,015 shares, with an associated provision of E 12 million.

(2) The drop in value of listed marketable securities is mostly related to the
    sale of shares in BSkyB for E 1.6 billion (See paragraph 7.1.1) and Vinci
    for E 0.2 billion. These Vinci shares were placed on the market in June 2002
    for a total of E 344 million of euros, generating a pre-tax capital gain of
    153 millions of euros.

(3) Unlisted marketable securities consist principally of shares in investment
    companies, with an associated provision of E 116 million. It is comprised of
    the following investments:

     - Non-voting shares in an investment company which has enabled investment
       company Ymer to acquire a 2% interest in Elektrim Telekomunikacja. Please
       refer to Note 13. The carrying value of this investment is E 38 million,
       net of provision of E 66 million.

     - Non-voting shares in an investment company which, by virtue of a carrying
       agreement entered in with a third party financial institution, entitles
       Vivendi Universal to acquire, and the third party may put to Vivendi
       Universal, 4.99% of Elektrim SA's share capital. Please refer to Note
       4.2. The carrying value of this investment is E 7 million, net of
       provision of E 50 million.

10.2.6 OTHER NON-CURRENT LIABILITIES AND ACCRUED EXPENSES
DECEMBER 31,
                                                              ----------------------
                                                                2002         2001
                                                              ---------    ---------
                                                              (IN MILLIONS OF EUROS)
Sports rights...............................................   E 1,065      E 1,440
Medium-term vendor credits..................................        --          847
Royalties payable, participations and commitments...........     1,386          911
Accrued compensation and other benefits.....................       184          402
Accrual for exit activities related to the acquisition of
  Seagram...................................................        56          300
Litigation and contingencies................................        57          528
Contingent price adjustment towards Rondor's previous
  shareholders(1)...........................................       223          134
Other(2)....................................................       923        1,126
                                                               -------      -------
                                                               E 3,894      E 5,688
                                                               =======      =======
---------------

(1) See Note 11.

(2) As of December 31, 2001, including Veolia Environnement for E 668 million.

                                       F-58
10.2.7 ACCOUNTS PAYABLE
DECEMBER 31,
                                                              -----------------------
                                                                2002          2001
                                                              ---------     ---------
                                                              (IN MILLIONS OF EUROS)
Trade accounts payable and other............................  E 11,955      E 19,178
Social costs payable........................................     1,318         7,236
                                                              --------      --------
                                                              E 13,273(1)   E 26,414
                                                              ========      ========
---------------

(1) Due within one year.

10.3 CASH FLOW STATEMENT DATA

10.3.1 SELECTED CONTRIBUTION DATA AS OF DECEMBER 31, 2002
MAROC    VIVENDI UNIVERSAL
                                                    CEGETEL(1)   TELECOM   ENTERTAINMENT(2)
                                                    ----------   -------   -----------------
                                                             (IN MILLIONS OF EUROS)
Net cash provided by operating activities.........      2,120       770            351
Net cash provided by (or used for) investing
  activities......................................       (497)     (225)           308
Net cash provided (or used for) by financing
  activities......................................     (1,056)     (149)          (771)
Effect of foreign currency exchange rate
  changes.........................................         --       (18)           (19)
                                                     --------    ------         ------
Change in cash and cash equivalents...............   E    567    E  378         E (131)
                                                     ========    ======         ======
Dividends paid by these subsidiaries to Vivendi
  Universal.......................................   E     --    E   19         E   --
                                                     ========    ======         ======
---------------

(1) At the beginning of July 2002, Vivendi Universal reimbursed to Cegetel the
    loan which was granted in accordance with the optimization of Cegetel
    financing management. This decision was taken by Vivendi Universal and
    Cegetel mutual agreement, considering Vivendi Universal cash flow situation
    at the beginning of July 2002.

(2) Has been consolidated since May 7, 2002.

10.3.2 CASH PAYMENTS
YEARS ENDED DECEMBER 31,
                                                            ---------------------------
                                                             2002      2001      2000
                                                            -------   -------   -------
                                                              (IN MILLIONS OF EUROS)
Interest paid, net........................................  E 1,333   E 1,402   E 1,288
Income taxes paid.........................................  E 1,252   E   684   E   229
10.4 OTHER DATA

10.4.1 NON-CASH INVESTING AND FINANCING ACTIVITIES
YEARS ENDED DECEMBER 31,
                                                            --------------------------
                                                             2002     2001      2000
                                                            -------   -----   --------
                                                              (IN MILLIONS OF EUROS)
Purchase of affiliates by issuance of common stock........  E 1,219   E 207   E 28,809
Issuance of common stock in settlement of note
  payable(1)..............................................  E    --   E 177   E  1,405
---------------

(1) At December 31, 2001 and 2000 only concerned Veolia Environnement.

                                       F-59
10.4.2 AVERAGE NUMBER OF EMPLOYEES (UNAUDITED)
DECEMBER 31,
                                                              ---------------
                                                              2002      2001
                                                              -----     -----
                                                              (IN THOUSANDS)
Average number of employees(1)..............................   335       321
---------------

(1) Of which 50,818 and 47,570 from companies consolidated by using the
    proportionate method at December 31, 2002 and 2001.

10.4.3 COMPENSATION FOR EXECUTIVE OFFICERS, SENIOR MANAGERS AND DIRECTORS

     i) Executive Directors

     Executive Directors' remuneration is determined by the Board of Directors
after hearing the Human Resources Committee report.

     ii) Senior Managers

     Among Senior Managers heading up the Group's Business Units, the ten
highest remunerations (including nine American managers) totalled E 55.24
million in 2002.

     iii) Non-Executive Directors

     Each Non-Executive Director receives E 50,000 in director's fees per year.
This amount is increased by E 11,000 for members of the Human Resources
Committee and E 22,000 for members of the Audit Committee. This amount is
doubled for the Chairman of each Committee.

     Directors' fees are paid "prorata temporis" depending on the appointment or
resignation date, at the end of each quarter.

     Directors' fees paid in 2002 by Vivendi Universal to non-executive
directors amounted to E 0.9 million (total payment of E 1.1 million of which
E 0.2 million to Executive Directors).

NOTE 11 COMMITMENTS AND CONTINGENCIES

11.1 PROCEDURES

     Vivendi Universal and its subsidiaries maintain detailed records on all
contractual obligations, commercial commitments and contingent liabilities,
which are reviewed with senior management and updated on a regular basis. In
order to ensure completeness, accuracy and consistency of the records, many
procedures are performed, including but not limited to:

     - review of minutes of meetings of stockholders, directors, committees of
       the board, and management committees for matters such as contracts,
       litigation, and authorization of fixed asset acquisitions or disposals;

     - review with banks of items such as guarantees, endorsements and
       discounted receivables;

     - review with internal and/or external legal counsel of pending litigation,
       claims (in dispute) and environmental matters as well as related
       assessments for unrecorded contingencies;

     - review of tax examiner's reports, notices of assessments and income tax
       analyses for additional prior year amounts;

     - review with risk management, insurance agents and brokers of coverage for
       unrecorded contingencies;

     - review of related party transactions for guarantees and other
       commitments;

     - review of all contracts and agreements.

                                       F-60
11.2 CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS GIVEN

     Vivendi Universal and its subsidiaries have various contractual obligations
and commercial commitments, which have been defined as items for which we are
contractually obligated or committed to pay a specified amount at a specific
point in time. Certain of these items are required to be recorded as liabilities
in our consolidated financial statements, for example long-term debt. Others,
such as certain purchase commitments and other executory contracts are not
permitted to be recognized as liabilities in our consolidated financial
statements, but are required to be disclosed. The following table summarizes
Vivendi Universal's significant contractual obligations and commercial
commitments at December 31, 2002:
PAYMENTS DUE IN
                                           ---------------------------------------------------
                                           LESS THAN      BETWEEN         BETWEEN       AFTER
                                 TOTAL      A YEAR     1 AND 2 YEARS   2 AND 5 YEARS   5 YEARS
                                --------   ---------   -------------   -------------   -------
                                                    (IN MILLIONS OF EUROS)
RECORDED AS LIABILITIES IN THE
  CONSOLIDATED BALANCE SHEET
Long-term debt(1).............  E 10,455   E     --       E 2,878         E 4,013      E 3,564
Bank overdrafts and other
  short-term borrowings.......     9,177      9,177            --              --           --
  Sports rights(2)............     1,065        469           331             265           --
Broadcasting rights(3)........       506        214           140             121           31
Creative talent and employment
  agreements(4)...............       250         55            50              60           85
Other(5)......................       240        223            15               2           --
                                --------   --------       -------         -------      -------
Total.........................  E 21,693   E 10,138       E 3,414         E 4,461      E 3,680
                                ========   ========       =======         =======      =======
PAYMENTS DUE IN
                                           ---------------------------------------------------
                                           LESS THAN      BETWEEN         BETWEEN       AFTER
                                  TOTAL     A YEAR     1 AND 2 YEARS   2 AND 5 YEARS   5 YEARS
                                 -------   ---------   -------------   -------------   -------
                                                    (IN MILLIONS OF EUROS)
OTHER CONTRACTUAL OBLIGATIONS
  AND COMMERCIAL COMMITMENTS
Operating leases(6)............  E 1,868    E   373       E   330         E   655      E   510
Sport rights(2)................    1,440         --           265           1,175           --
Broadcasting rights(3).........    2,690        834           513           1,056          287
Creative talent and employment
  agreements(4)................    1,473        823           296             289           65
Real estate defeasance(7)......      846         --            --              --          846
Other..........................      701        213           121             280           87
                                 -------    -------       -------         -------      -------
Total..........................  E 9,018    E 2,243       E 1,525         E 3,455      E 1,795
                                 =======    =======       =======         =======      =======
---------------

(1) Long-term debt, including capital lease obligations of E 274 million, which
    French GAAP requires to be recognized as long-term debt when the lease
    contract includes a purchases option, known in France as "credit bail" (see
    Note 7).

(2) Exclusivity contracts for broadcasting sporting events by Canal+ Group
    (E 1,065 million recorded in other non-current liabilities and E 1,440
    million shown in other contractual obligations and commercial commitments in
    connection with the potential acquisition of football rights).

(3) Primarily exclusivity contracts for broadcasting future film productions,
    acquisitions of program catalogs and leasing of satellite capacity at VUE
    and Canal+ Group.

                                       F-61
(4) Agreements in the normal course of business, which relate to creative talent
    and employment agreements principally at VUE and UMG.

(5) Principally comprised of Universal Music's liability related to Rondor Music
    International, E 223 million settled in March 2003 (see the discussion below
    under Contingencies and Note 10.2.6).

(6) Lease obligations assumed in the normal course of business for rental of
    buildings and equipment.

(7) Lease obligations related to real estate defeasances. In April 1996, the
    disposal to Philip Morris Capital Corporation of three office buildings
    under construction was accompanied by a 30-year lease back agreement
    effective upon completion of the buildings. Two of the buildings were
    completed in April 1998 and the third in April 2000. The annual rental
    expenses approximate E 34.4 million. In December 1996, three buildings in
    Berlin were sold and leased back under ten to thirty year leases at an
    annual rental expense of approximately E 29.6 million. The difference
    between Vivendi Universal's rental obligation under the leases and the
    market rent received by Vivendi Universal is provided for when unfavorable.

11.3 CONTINGENCIES

     In addition to contractual obligations and commercial commitments given,
Vivendi Universal and its subsidiaries have entered into various guarantees or
other agreements pursuant to which they have contingent liabilities not recorded
as liabilities on the balance sheet. The most significant contingencies at
December 31, 2002 are summarized as follows:

  CEGETEL GROUP

     - In connection with the August 2001 sale of AOL Europe (AOLE) Category E
       preferred shares by Canal+ Group and Cegetel Group to LineInvest, Vivendi
       Universal entered into a total return swap agreement with the latter.
       LineInvest is a special purpose vehicle in which Vivendi Universal has no
       ownership interest created in connection with the transaction. Under the
       terms of the agreement, Cegetel Group and Canal+ Group retained the
       financial risk on the value of the AOLE preferred shares up to a share of
       66% and 34%, respectively, through a mirror total return swap with
       Vivendi Universal. In December 2002, a portion of the total return swap
       between Vivendi Universal and LineInvest was transferred directly to
       Cegetel Group corresponding to its share (notional amount of $541.3
       million). As a result, Vivendi Universal continues to guarantee the
       Canal+ Group commitment (notional amount of $270.7 million). Under the
       arrangements, Cegetel Group and Vivendi Universal are obligated to repay
       the notional amounts of the swaps to LineInvest on April 7, 2003 and
       October 30, 2003, respectively.

      On February 14, 2003, LineInvest received notification from AOL Time
      Warner (AOLTW) whereby AOLTW will acquire the AOLE preferred shares
      through the exercise of a call option on April 8, 2003 for an amount of
      $812 million, payable in either cash or shares of AOLTW common stock or a
      combination of both. AOLTW must make its election as to cash or shares by
      April 4, 2003. If AOLTW determines to pay in shares, the number of shares
      to be delivered will be based on the average closing price of the regular
      trading session for AOLTW common stock for the fifteen consecutive trading
      days ending on the second business day preceding April 8, 2003. If payment
      for the call option is made in cash, the LineInvest payment to Cegetel is
      due on April 30, 2003 and the payment to Vivendi Universal is due on
      October 30, 2003. If payment for the call option is made in shares, the
      date of payment to Cetegel and Vivendi Universal will be the April 30,
      July 30, October 30, or January 30 following receipt by LineInvest of any
      proceeds of the sale of the AOLTW shares. In the case of Vivendi
      Universal, however, the first such payment by LineInvest could not occur
      until October 30, 2003. In the case of both Vivendi Universal and Cetegel,
      the final date for payment by LineInvest is October 30, 2006.

      If LineInvest receives AOLTW shares in consideration for the sale of the
      AOLE preferred shares to AOLTW, such shares will not be freely tradeable
      in the United States prior to registration with the SEC and are subject to
      certain other restrictions affecting their resale. Since there can be no
      assurance as to the precise timing of the sale of the shares by LineInvest
      or the amount of proceeds it will receive,

                                       F-62
Vivendi Universal and Cegetel Group retain a contingent liability in
      respect of the difference between the ultimate sales proceeds of the AOLTW
      shares and the notional amount due under the total return swaps.

      The asset representing the preferred shares and the liability representing
      the corresponding debt in LineInvest's financial statements amounts to
      $812 million.

     - The shareholders agreement between Cegetel Groupe and Societe Nationale
       des Chemins de Fer Francais (SNCF) related to their interest in Telecom
       Developpement includes exit conditions for both parties in certain
       specific circumstances at a price still to be determined.

     - In connection with the 3G UMTS license granted to SFR by the French
       government in 2001, we are committed to make future license payments
       equal to 1% of 3G revenues earned when the service commences, currently
       expected to be in 2004.

     - Cegetel has provided miscellaneous guarantees in connection with
       operating activities. The total guarantees approximate E 40 million, of
       which the largest is a guarantee made in relation to a credit agreement
       between Societe Financiere de Distribution, a distribution company in
       which Cegetel has an equity investment, and Credit Mutuel for
       approximately E 24 million, which expires in July 30, 2006.

  UNIVERSAL MUSIC GROUP

     - In connection with the purchase of Rondor Music International in 2000,
       there existed a contingent purchase price adjustment based on the market
       value of Vivendi Universal shares. The contingent price adjustment was
       triggered in April 2002 when the market value of Vivendi Universal's
       shares fell below $37.50 for 10 consecutive days and the former
       shareholders of Rondor requested early settlement. A liability for this
       adjustment was recorded in the consolidated balance sheet at December 31,
       2002 for its estimated amount of E 223 million (approximately $230
       million). On March 3, 2003 settlement of this liability was made and the
       former shareholders of Rondor received 8.8 million shares of Vivendi
       Universal, representing 0.8% of capital stock and cash of US$100.3
       million (E 92.6 million). (See Note 16, below)

     - The initial 5-year term of UMG's 50% joint venture in the Roc-a-fella
       record label was to end on February 28, 2002. Instead, the term was
       extended for 3 more years to February 28, 2005. UMG's joint venture
       partner has a put option in its interest that is exercisable on February
       28, 2005, which was valued at E 34 million at the time of the extension.
       At the time of the extension E 19 million was paid as both an advance on
       the option and for a 3-year extension. Based on estimated performance,
       the potential liability if the put is exercised is between zero and E 15
       million.

     - The original 3 year term of UMG's 50% joint venture in the Murder, Inc.
       Records label was extended as of February 10, 2002 for an additional 5
       years until February 10, 2007. On the date 90 days after expiration or
       termination of the term, UMG is obligated to purchase its joint venture
       partner's 50% interest under a formula based on prior performance. It is
       not possible to predict the future performance of the joint venture, but
       based on recent performance being constant through the end of the term,
       the Group estimates the potential obligation at approximately $20
       million.

     - In connection with UMG's 50% equity investment in pressplay, a joint
       venture with Sony Music that offers online access to music tracks, UMG is
       obligated to cover its proportionate share of the amount of shortfall, if
       any, of operating fees. Under the terms of the joint venture agreement,
       each of Sony and UMG has agreed to contribute up to $50,000,000. To date,
       UMG's contributions have amounted to approximately $30,000,000.

  VIVENDI UNIVERSAL ENTERTAINMENT

     - In connection with Vivendi Universal's acquisition of the entertainment
       assets of USA Interactive, Inc. (USA), USA and Mr. Barry Diller received
       5.44% and 1.50%, respectively, of the common interests in Vivendi
       Universal Entertainment LLLP (VUE), the group formed by combining such
       assets and those

                                       F-63
of the Universal Studios Group. Vivendi Universal agreed to certain put
       arrangements with respect to the common interests in VUE. Beginning on
       May 7, 2003, Mr. Barry Diller may put his common interests to Universal
       Studios, Inc. for the greater of their fair market value and $275
       million. Beginning on May 7, 2010, USA may put its common interests to
       Universal Studios, Inc. for their fair market value. In each case, these
       amounts may, at Universal Studio Inc's election, be paid in cash or in
       Vivendi Universal shares.

      Under the VUE Partnership Agreement, VUE is subject to a number of
      covenants for the benefit of the holder of the Class A Preferred Interests
      in VUE (currently USA), including a cap on indebtedness and a restriction
      on asset transfers. Certain of the covenants, including those specified
      above, would cease to apply if an irrevocable letter of credit were issued
      in an amount equal to the accrued value of such interests at maturity
      (approximately $2 billion in 2022).

      In addition, Vivendi Universal has agreed to indemnify USA for any "tax
      detriment" (defined to mean the present value of the loss of USA's tax
      deferral on the transaction) arising from certain actions taken by VUE
      prior to May 7, 2017, including selling assets contributed by USA to VUE
      and repaying the $1.62 billion in debt used to finance the cash
      distribution made to USA at the closing.

     - In connection with VUE's equity investment in Universal City Development
       Partners (UCDP), a joint venture that operates Universal Orlando's theme
       parks, Vivendi Universal has two guarantees, each up to $14 million, in
       favor of Fleet National Bank and Wachovia. Following Vivendi Universal's
       debt downgrading in June 30, 2002 and in accordance with the terms of the
       guarantees, cash collateral of $13.5 million was put in place for each
       guarantee, leaving a total residual guarantee of $1 million. The theme
       park venture is currently in the process of raising new financing through
       a $500 million bond offering. The new borrowing will be non-recourse as
       are the other loans already in place. The new funds will be used to pay
       various debt instruments, deferred management fees to VUE and improve the
       parks' liquidity position.

     - In connection with VUE's equity investment in Universal City Florida
       Hotel Venture (UCF-HV), a joint venture that operates Universal Orlando's
       hotels, Vivendi Universal has a commitment to cover its proportionate
       share of the operating expense shortfall, if any, of the hotels. The
       total is capped at $30 million per year, and Vivendi Universal's
       proportionate share is 25% or $7.5 million. To date, no expense shortfall
       has occurred and the guarantee has not been called.

     - In connection with its equity investment in UCI/CIC (United Cinema
       International/Cinema International Corporation), a joint venture that
       operates international movie theatres, VUE has guaranteed lease payments
       for approximately $154 million (VUE's 50% share). To date, none of these
       guarantees have ever been called as the joint venture has been able to
       meet its obligations.

     - In connection with its 20% equity investment in MovieLink, a joint
       venture formed in February 2001 to provide film programming via the
       internet, VUE has committed to make capital contributions up to $30
       million and may be obligated to fund payment obligations of MovieLink
       with respect to certain intellectual property liabilities in excess of
       $30 million. As of December 31, 2002, VUE has contributed $10.5 million
       and expects to contribute the remaining $19.5 million over the next
       several years pursuant to future capital calls that may be made from time
       to time. As MovieLink has only been operating since 2001, there is no
       assurance that the outstanding capital contributions will be sufficient
       to fund future operations.

     - VUE has received an unfavorable legal judgment related to ITC
       Entertainment's "Streetscenes" film property, which it acquired as part
       of Seagram's acquisition of PolyGram. A surety bond of $27.8 million was
       issued in October 2001 in connection with this matter and
       counter-guaranteed by Vivendi Universal. The Court of Appeal reduced
       compensatory damages to $1.2 million, which VUE has paid. However,
       punitive damages have not yet been determined as VUE is awaiting new
       trial court proceedings.

     - In 1987, Universal City, Florida entered into an agreement with a
       creative consultant to supply consulting services for a fee based on its
       gross revenues. The consultant is also entitled to a fee based on
                                       F-64
the gross revenues of all gated motion picture and/or television themed
       attractions owned or operated, in whole or in part, by (or pursuant to a
       licence from) Universal City, Florida or MCA Inc. (now Universal Studios,
       Inc.), any of their partners or any of their affiliates ("comparable
       projects"), other than at Universal City, California. At present, the
       only theme park which may be a comparable project is VUE's partially
       owned park in Osaka, Japan. It is possible that comparable projects will
       be created in the future that would fall under the consulting agreement.

      For 2000, 2001 and 2002, the fees paid by Universal City, Florida for its
      parks were $14.8 million, $16.6 million and $14.7 million, respectively.
      Fees with respect to the park in Japan were $13.2 million for 2001 and
      $10.5 million for 2002. The consultant may also be entitled to participate
      in certain sales of equity by Universal City, Florida's partners and to
      participate in certain real estate development activities of Universal
      City, Florida's partners or their affiliates.

      Although the agreement has no expiration date, starting in June 2010, the
      consultant has the right under certain circumstances to terminate the
      periodic payments under the agreement and receive instead one payment
      equal to the fair market value of the consultant's interest in our parks
      and all comparable projects that have been open at that time for at least
      one year. If the parties cannot agree on the fair market value of that
      interest, it will be determined by a binding appraisal procedure.
      Universal City, Florida represented under the agreement that the
      consultant's interest in each of its parks and in any comparable projects
      will have priority over the interests of all financiers, lenders and
      others who may have an interest in that park or project. Universal City,
      Florida's obligations under the agreement are guaranteed by Universal
      Studios, Inc. and Universal Studios, Inc.'s obligations under that
      guarantee have in turn been assumed by VUE.

     - In 1995, affiliates of VUE granted an executive officer an option (as
       amended in 2000) to acquire 0.2% of their shares, subject to adjustment
       for certain changes in their capital structure and other extraordinary
       events. This option vests over a 10-year period commencing in 1995 and is
       exercisable by the officer in full for approximately $24.9 million. In
       connection with the acquisition of Seagram by Vivendi Universal on
       December 8, 2000, VUE recorded deferred compensation of $22.9 million,
       which represents the intrinsic value of the unvested portion of the
       option. This deferred compensation is being amortized over the remaining
       vesting period of the option.

  CANAL+ GROUP

     - In connection with the acquisition by Sportfive (Sport+ S.A. in 2001) of
       its three year right to broadcast English Premier League football
       matches, Vivendi Universal has agreed to provide a guarantee related to
       the payment of licence fees, which is limited to L200 million and expires
       July 31, 2004, and of which 50% is counter-guaranteed by the RTL Group.

  MAROC TELECOM

     - In connection with the acquisition of its 35% interest in Maroc Telecom,
       Vivendi Universal granted a put option to the Kingdom of Morocco related
       to a further interest in Maroc Telecom equal to 16% of the capital of the
       company, except that if, prior to September 2003, the Kingdom sells
       shares to a third party investor, the option is cancelled to the extent
       of the number of shares so sold. At the end of an appraisal proceeding to
       determine the exercise price starting from September 1, 2003, the Kingdom
       of Morocco will be entitled to exercise its put option during a two month
       period (i.e. in October and November 2003), if no delay in the appraisal
       process has occurred. If the put option is not exercised during this
       first period, the option will be extended and the Kingdom of Morocco can
       decide to start the proceeding again at any time during an 18 month
       period following the end of the first put option period. The exercise
       price will be the then fair market value of the shares independently
       determined by the appraisal procedure, except if the fair market value of
       the shares were between 85% and 115% of a reference price derived from
       the purchase price of Vivendi Universal's initial stake, the reference
       price would be used to determine the exercise price. In addition, Vivendi
       Universal plans to pledge its stake

                                       F-65
in Maroc Telecom to guarantee the payment of the above put option, if
       exercised. (see Note 11.5, below).

  VIVENDI TELECOM INTERNATIONAL

     - In connection with the acquisition of its 55% interest in Monaco Telecom,
       Vivendi Universal granted a put option to the Principality of Monaco,
       which owns the remaining 45% of Monaco Telecom. The option grants the
       Societe Nationale de Financement in Monaco the right to sell to Compagnie
       Monegasque de Communication, a subsidiary of Vivendi Universal, at any
       time until December 31, 2009, its 45% interest in Monaco Telecom under
       the following terms. Prior to May 26, 2004, Societe Nationale de
       Financement can put (i) up to 29% of its interest in Monaco Telecom for
       approximately E 51 million (or the proportionate value of E 51 million if
       less than 29% is sold) and (ii) its residual 16% interest at fair value.
       Between May 26, 2004 and December 31, 2009, Societe Nationale de
       Financement can put its entire 45% interest at fair value. The option may
       be exercised in increments but each exercise must be for not less than
       10% of the shares. The fair value of Monaco Telecom will be independently
       determined by an appraisal procedure.

     - Monaco Telecom International (MTI), subsidiary of Monaco Telecom has
       granted guarantees to the Afghan state related to the Telecom Development
       Company of Afghanistan's (TDCA) performance of its obligations and to the
       Agha Khan Fund for Economic Development, capped at $2.4 million. In
       addition, MTI has committed to fund the Afghan Telecom BV Company, the
       parent of TDCA, up to $10.5 million.

     - In connection with its approximate 26% equity stake in the Xfera joint
       venture, the recipient of a third generation UMTS mobile
       telecommunications license in Spain, Vivendi Universal entered into a
       E 920 million surety contract related to performance guarantees granted
       to the Spanish government (notably capital expenditures related to the
       roll-out of the network and the coverage of the territory), which Vivendi
       Universal expects to be reduced to approximately E 146 million following
       publication of the ruling of the Spanish government in April 2003. These
       guarantees could be called upon up to the amount of corresponding Xfera
       commitments only upon commercial launch of UMTS services. Given the very
       low likelihood of the roll-out of the network, negotiations have
       commenced between the parties to terminate these guarantees.

      The arrangements, with several vendors, were entered into to potentially
      finance amounts payable for network equipment up to a total amount of
      E 1.0 billion. At the same time, a pledge of Xfera shares was provided to
      equipment vendors in connection with their financing contracts.

      Separately, Vivendi Universal has granted a counter guarantee in an amount
      of E 48 million to a group of banks which have guaranteed the Spanish
      government in respect of the UMTS frequency spectrum.

      The Xfera Shareholders' Agreement dated January 12, 2002, contains a
      provision which gives the founding shareholders (including VTI) the
      possibility to acquire the shares held by Vodafone in Xfera in certain
      defined circumstances. Vodafone claims that such provision amounts to a
      call option (for an amount of E 7.2 million which would be increased up to
      E 13.6 million taking into account Xfera equity capital increases,
      determined through an appraisal procedure, representing 3.3% of Xfera's
      capital). If Vodafone's claims were accepted following the ongoing
      arbitration proceeding, Vivendi Universal would have to take on an
      additional commitment equal to approximately E 90 million.

  CORPORATE AND OTHER

     - In connection with the Seagram merger, Vivendi Universal entered into a
       Shareholders' Governance Agreement with members of the Bronfman family,
       pursuant to which Vivendi Universal agreed, among other things, not to
       dispose of Seagram shares in a taxable transaction and not to dispose of
       substantially all of the assets acquired by Vivendi Universal from
       Seagram in a transaction that would trigger the Gain Recognition
       Agreement (GRA) entered into by the Bronfmans and result in recognition
       of taxable gain to them. Under the applicable US income tax regulations,
       to comply with

                                       F-66
the foregoing, Vivendi Universal must retain at least 30% of the gross assets or
at least 10% of the net assets (values are determined as of December 8, 2000)
until the end of the five year period ending on December 31, 2005. At the
      present time, Vivendi Universal is in compliance with this provision.

     - On December 20, 2002, Vivendi Universal and Veolia Environnement entered
       into an agreement in order to finalize the separation of the two
       companies, following Vivendi Universal's disposal of 20.4% of Veolia
       Environnement's capital stock. Pursuant to this agreement, some of the
       guarantee and counter-guarantee agreements originally established between
       the two companies in June 2000 were modified as follows:

        - Certain recurring expenses involving network renewal costs in the
          water and energy businesses were originally to be reimbursed by
          Vivendi Universal up to an initial limit of E 15.2 million a year
          indexed over a period of 12 years. This limit has now been raised to
          E 30.4 million indexed starting in the year 2002. The additional
          amount potentially due above the E 15.2 million initial limit will,
          however, be payable only from January 2005 and bear interest at the
          legal rate. If the aggregate amount of replacement costs borne by
          Veolia Environnement were to exceed the initial limit of E 228.6
          million, this excess would be covered by Vivendi Universal up to a
          maximum amount of E 76.2 million.

        - Veolia Environnement's right to claim reimbursement of exceptional
          expenses, provided by the June 2000 agreement, has been removed.

        - Certain matters relating to the implementation process of the counter
          guarantee agreement dated June 20, 2000 pursuant to which Veolia
          Environnement will indemnify Vivendi Universal for any costs, losses
          or expenses in connection with the subsidiary guarantees have been
          detailed.

        - It has been agreed that the current Vivendi Universal interest in the
          company Aguas Argentinas will be retained by Vivendi Universal.
          Guarantees related to this company, which made up an amount of
          approximately $50 million have been retained by Vivendi Universal
          above a first tranche of $5 million assumed by Veolia Environnement.

        - Vivendi Universal has retained stakes in certain operating companies
          in the water sector (notably Genova Acque E 25 million; Societe des
          Eaux et de l'Electricite du Nord E 6.5 million; and VNAC preferred
          shares $10.2 million) for reasons relating to the transferability of
          the concession; these will be sold as soon as practicable and at the
          latest on December 31, 2004.

         Separately, at December 31, 2002, Vivendi Universal continued to
         guarantee commitments made by Veolia Environnement subsidiaries for a
         total amount of approximately E 250 million, including: E 122 million
         related to a perpetual loan issued by OTV, E 58 million related to
         performance guarantees given to local authorities (Council of the shire
         of Noosa, Adelaide, Sydney) and E 41 million of guarantees granted to
         financial institutions lending funds to US operating subsidiaries of
         Vivendi Water. In addition, comfort letters were outstanding in favor
         of Veolia Environnement subsidiaries for a total amount of
         approximately E 20 million. All these commitments are being
         progressively transferred to Veolia Environnement and have been
         counter-guaranteed by the latter.

     - In connection with Vivendi Universal's December 2002 disposal of 82.5
       million shares of Veolia Environnement shares to a group of investors, a
       call option was granted on the remaining 20.4% of Veolia Environnement
       (82.5 million shares) at a strike price equal to E 26.5. This option can
       be exercised at any time until December 23, 2004. If it were to be
       exercised, it would provide Vivendi Universal with E 2.2 billion of net
       cash proceeds. The remaining 82.5 million shares have been deposited in
       an escrow account (compte-sequestre) and have been pledged in favour of
       new investors as well as banks participating in the new E 1 billion Dual
       Currency Revolving Facility, the E 300 million CDC IXIS Credit Facility
       and the existing facilities. Under an arrangement entered into in
       connection with the December 2002 disposal, Vivendi Universal has
       committed to pay an indemnity equal to E 3 per call option to new
       investors in the event that the guarantees related to the new E 1 billion
       Dual

                                       F-67
Currency Revolving Credit Facility are called or a default of payment
       occurs under specified significant credit facilities or bond issues.

     - In connection with the sale of puts on its shares, Vivendi Universal had
       a remaining commitment, as at December 31, 2002, to buy 3.1 million
       shares at an exercise price of E 50.50 during the first quarter of 2003.
       These puts were exercised in January and February 2003.

     - A group of shareholders, which holds 19.7% of the shares of UGC, has a
       put option to sell these shares to Vivendi Universal. This option may be
       exercised at any time until December 31, 2007. The value of UGC shares
       covered by the put (currently estimated at E 70 million) would be
       determined on the basis of a contractual formula by an appraiser mutually
       designated by the two parties.

     - At December 31, 2002, three different bonds issued by Vivendi Universal
       are outstanding which are exchangeable into shares of Veolia
       Environnement, Vinci and BSkyB, respectively. The terms of these bonds
       include early redemption features which allow the holders to require
       redemption of the outstanding bonds by Vivendi Universal prior to their
       due dates at a premium over the principal amount. Premiums potentially
       due to bondholders amounted to E 287.3 million, of which E 17.8 million
       would be cross-charged to Veolia Environnement under the terms of a
       contract associated with the issuance of the bonds. Given the reduced
       probability of exchange by the holders of bonds exchangeable into Veolia
       Environnement and Vinci shares, the Group decided to provision the
       premiums due in case of early redemption of these two bonds in March 2003
       and March 2004, respectively. At December 31, 2002, accumulated
       provisions and allowances amounted to E 137.9 million and also included a
       provision for the premium which is payable in July 2003 to holders of
       bonds exchangeable for BSkyB shares. In March 2003, a premium amounting
       to E 63.4 million was paid to Veolia Environnement bondholders who
       exercised their right of early redemption. If holders of Vinci
       Exchangeable bonds do not exercise their right of early redemption, there
       remains a premium payable at maturity in March 2006 amounting to E 27.1
       million.

     - Vivendi Universal has counter-guaranteed US financial institutions which
       have issued surety bonds in favour of Vivendi Universal operating
       companies for an amount of $47.5 million.

     - The two interest rate and indices swap agreement contracts entered into
       by Vivendi Universal with GenRE in 1997 were terminated in December 2002.
       While Vivendi Universal has retained certain indemnification obligations
       to GenRe regarding the structure of these transactions, the company
       believes that the likelihood that these obligations could materialize is
       remote.

     - Various other miscellaneous guarantees which individually range from
       E 43,000 to E 48 million and together total approximately E 274 million.
       In addition, subsidiaries grant guarantees, including in relation to
       vendor financing, in the ordinary course of business, and Vivendi
       Universal grants guarantees to financial institutions for its
       subsidiaries in their pursuit of their operational activity. In the case
       of vendor guarantees issued in 2002 and prior, to the best of our
       knowledge we have received no material claims to date.

  ASSETS SOLD

     - On December 21, 2001, Vivendi Universal completed the sale of its spirits
       and wine business to Diageo plc and Pernod Ricard S.A. Under the Stock
       and Asset Purchase Agreement relating to that sale, Vivendi Universal
       made certain indemnifications to the purchasers including, among others,
       an indemnity for breaches of representations and warranties to a maximum
       of US$1 billion; however, any individual claim for breach of
       representation and warranty must exceed $10 million to qualify for
       indemnification and the purchasers would only receive indemnification for
       any such qualified claims which exceed $81.5 million in the aggregate.
       Vivendi Universal's obligation to indemnify the purchasers with respect
       to substantially all of these representations and warranties expire on
       June 21, 2003 as to any claim not made prior to such date. To date we
       have not received any material claims and have no knowledge of any
       pending material claims.

                                       F-68
- The sale agreement relating to the sale of Vivendi Universal Publishing's
       business-to-business and health divisions to Cinven carries a price
       adjustment clause reliant on the accounts of June 30, 2002 and a
       guarantee clause, valid until December 31, 2004, related to liabilities
       up to E 500 million per division.

     - In connection with the sale of VUP's European publishing activities to
       Investima 10, except with respect to claims for indemnification with
       respect to tax matters, the purchaser shall only be indemnified for
       claims which exceed in the aggregate E 15 million and then only to the
       extent of such excess. In no event shall the aggregate indemnification to
       be paid by seller exceed 20% of the adjusted Share Purchase Price (i.e.
       E 240 million), other than with respect to tax matters and losses based
       upon a breach of representations or warranties with respect to
       capitalization, authorization, consents and approvals, non-contravention
       and transfers of real estate since December 31, 2001. Additionally VUP
       and VU specifically indemnify the purchaser for losses based upon (a) a
       breach of representations or warranties with respect to the Ivry
       Distribution Centre, (b) claims under guarantees including in respect to
       shares, equity interests, or real estate previously sold, (c) property
       disposals mentioned in the contract, (d) dormant or in liquidation
       subsidiaries not related to the sold activities when they were active,
       (e) deferred purchase price obligations, (f) liabilities not related to
       the purchased business, (g) clauses of "retour a meilleure fortune", (h)
       VUP transferred employee profit sharing scheme, (i) the purchased assets
       to VUP (other than company stock)", (j) assistance by employees in
       preparation of the consolidated financial statements of Vivendi Universal
       for 2002 and the first quarter of 2003, and (k) certain losses of
       Larousse-Bordas. With respect to clauses (b) and (f) only, the purchaser
       shall only be indemnified for claims which exceed in the aggregate
       E 500,000 and then only to the extent of such excess.

     - Vivendi Universal has jointly granted with Vivendi Communications North
       America (VCNA) a guarantee to Versailles Acquisition Corporation, the
       vehicle which acquired Houghton Mifflin. In the event of a breach of
       representations and warranties, except in respect of tax matters or title
       to shares, no indemnification shall be made unless and until the
       aggregate amount of losses sustained by the purchaser exceeds $20 million
       in which event the seller will be required to pay only the amount of
       losses in excess of $20 million. In no event shall the aggregate
       indemnification exceed 10% of the Purchase price (i.e. $166 million),
       except with respect to due organization or title to shares. In the event
       of a claim for breach of representations and warranties other than in
       respect of title to shares, the amount of losses from such claim covered
       by the indemnification will have to be (or reasonably be expected to be)
       at least $1 million.

     - As part of the sale of the 50% stake held by Vivendi Net UK Ltd in
       Vizzavi Limited and Vizzavi Europe Holding BV to Vodafone, in August
       2002, Vivendi Universal has granted certain standard guarantees to
       Vodafone up to its 50% share.

     - In connection with the sale of Sithe 49.9% to Exelon in December 2000,
       Vivendi Universal has granted guarantees on its own representations and
       those of Sithe. The claims other than those made in relation to foreign
       subsidiaries are capped at $480 million. In addition, they can be made if
       they exceed $15 million, except if they are related to foreign
       subsidiaries and the disposal of some electrical stations to Reliant in
       February 2000. Some of these guarantees will expire December 18, 2005.
       The sale of the remaining stake, excluding Asian subsidiaries occurred in
       December 2002, to Apollo has been covered by a guarantee valid until
       December 18, 2004.

     - As part of the sale of real estate assets in June 2002 to Nexity, Vivendi
       Universal granted two autonomous first demand guarantees, one for E 40
       million and one for E 110 million for the benefit of several subsidiaries
       of Nexity (SAS Nexim 1 to 6). The guarantees are effective until June 30,
       2017. These autonomous guarantees have completed the one issued by Sig
       35, Vivendi Universal's subsidiary, to SAS Nexim 1-6 in connection with
       guarantee contracts dated June 28, 2002. It is effective during 5 years,
       from June 28, 2002, except litigations (valid until the end of
       proceedings), tax, custom, and social liabilities subject to a statute of
       limitation plus 3 months and the decennial guarantee applicable to real
       property works.

                                       F-69
- In connection with the sale of hotels to the consortium ABC in 1999,
       Vivendi Universal delivered a commercialization guarantee effective until
       December 2004, capped at 80% of the value of each hotel, and guarantees
       related to social and tax liabilities subject to a statute of limitation.

     - In connection with the sale of the La Defense to Unibail in 1999, Vivendi
       Universal granted certain guarantees related to the ownership of real
       estate assets, administrative authorizations, preemption rights and the
       validity of the share capital of companies are still effective as well as
       tax and social ones.

     The following chart summarizes information related to the specific
contingent liabilities discussed above:
TRANSACTIONS AND GUARANTEES                                AMOUNT                    EXPIRY
---------------------------                                ------                   ---------
Disposal of AOL Europe preferred shares   $812 million market risk on AOL share
                                          put price to be determined                     2003
Telecom Developpement buy/sell
  agreement with SNCF 3G UMTS license     1% revenue earned when service commences
                                          (expected to be in 2004)                       2021
Miscellaneous guarantees granted by
  Cegetel                                 E 40 million                              2003/2012
Rondor contingent purchase price          E 223 million                               Settled
Put option on Roc-a-fella record label
  joint venture                           0 to E 15 million                              2005
Put option on Murder Inc. records         0 to $20 million                               2007
Guarantee for operating shortfall of
  pressplay joint venture                 0 to $20 million                                 --
Put option on VUE
  - 1.5% of common interest in VUE to
    Barry Diller from May 7, 2003         Greater of fair market value and $275
                                          million                                          --
  - 5.4% of common interest in VUE to
    USA Interactive from May 2010         At fair value                                    --
Two guarantees in connection with VUE's
  equity investment in UCDP               Residual guarantee of $1 million                 --
Guarantee for operating shortfall of
  Universal City Florida Hotel Venture    $7.5 million                                     --
Guarantee of lease payments in
  connection with UCI/CIC equity
  investment                              0 to $154 million                                --
Capital contributions in connection with
  equity investment in MovieLink          $19.5 million                                    --
Surety bond related to ITC
  Entertainment's "Streetscenes" film
  property                                $27.8 million                                    --
Agreement with creative consultant
  - consulting services                   Fee based on gross revenues                      --
  - additional fee                        Based on gross revenues of themed
                                          attractions at certain parks                     --
  - right of termination                  Fair market value, starting in 2010              --
Executive officer option to acquire 0.2%
  of VUE's affiliate shares               Approximately $24.9 million                    2005
Guarantee provided to English Premier
  League football                         L200 million, 50% of which is
                                          counterguaranteed by the RTL Group             2004
Put option equal to 16% of Maroc Telecom  At fair market value                           2005
F-70
TRANSACTIONS AND GUARANTEES                                AMOUNT                    EXPIRY
---------------------------                                ------                   ---------
Grant of a put option of 45% of Monaco
  Telecom
  - until May 25, 2004                    0 to 29% for a proportionate of 0 to 51
                                          million euros and the residual 16%
                                          interest at fair value                         2004
  - between May 26, 2004 and December
    31, 2009                              45% interest at fair value or in
                                          increments but each exercise must be not
                                          for less than 10%                              2009
Guarantees to Afghan state re:
  performance of obligations of Telecom
  Development Company of Afghanistan and
  to the Agha Khan Fund for Economic
  Development                             Capped at $2.4 million                           --
Commitment to fund Afghan Telecom BV
  Company                                 Up to $10.5 million                              --
Bank guarantee Xfera                      Approximately E 146 million                      --
Bank guarantee provided to Spanish
  authorities related to the UMTS
  license frequent spectrum fee re:
  Xfera                                   E 48 million                                     --
"Call option" of the Xfera stake held by
  Vodafone                                Subject to arbitration proceedings               --
Shareholders' governance agreement with
  members of the Bronfman family          E 30.4 million indexed starting in the
                                          year 2002 payable from January 2005
                                          subject to legal interest rate                 2005
Disposal of Interest in Veolia
  Environnement
  - Reimbursement of replacement costs    If total amount paid by VE exceeds
                                          E 228.6 million excess would be covered
                                          by VU up to an amount of E 76.2 million          --
  - Guarantees re: Aguas Argentinas       Approximately $50 million with first $5
                                          million assumed by VE                            --
  - Other guarantees re: commitments
    made by VE subsidiaries               Approximately E 250 million                      --
  - Comfort letters issued in favor of
    VE subsidiaries                       Approximately E 20 million                       --
Indemnity to VE share call option
  holders                                 E 3 per call option (approximately E 250
                                          million)                                       2004
Sale of put options on own shares in
  2003                                    3.1 million shares at an exercise price
                                          of E 50.50                                  Settled
Put option on 19.7% of capital stake in
  UGC                                     Currently estimated at E 70 million            2007
Debt premiums potentially due to holders
  of bonds exchangeable into VE and
  Vinci shares                            E 27.6 million                                 2006
Counter-guarantee on surety bonds         $47.5 million                                    --
Pledges and guarantees related to real
  estate operations                       E 274 million                             2002/2020
Sale of Seagram's spirits and wine
  assets                                  0 to $1 billion                                2003
Sale of VUP's B2B and Health divisions    Price adjustment clause and guarantee
                                          clause related to liabilities up to
                                          E 500 million per division                     2004
F-71
TRANSACTIONS AND GUARANTEES                                AMOUNT                    EXPIRY
---------------------------                                ------                   ---------
Sale of VUP's European publishing
  activities                              Guarantees capped at E 240 million               --
Sale of Houghton Mifflin                  Losses in excess of $20 million not to
                                          exceed $166 million                              --
Sale of 50% stake in Vizzavi              Certain standard guarantees up to its
                                          50% share                                        --
Sale of Sithe                             Guarantees capped at $480 million         2004/2005
Guarantees on sale of land and buildings
  businesses                              Guarantees capped at E 150 million             2017
Sale of hotels to the consortium ABC      Commercialization guarantee kept at 80%
                                          of the value of each hotel                     2004
11.4 CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS RECEIVED

     In 2001, commitments received were E 1,618 million, principally comprised
of Veolia Environnement. Due to the deconsolidation of Veolia Environnement
which is now accounted for using the equity method, commitments received were
E 204 million in 2002.

11.5 COLLATERAL AND PLEDGES

     The principal pledges and collateral issued by the Group on its assets are
as follows:

     - collateral issued by Vivendi Universal Entertainment in favor of banking
       institutions having provided the bridging loan of $1.6 billion, maturing
       at June 30, 2003, or under certain conditions at December 30, 2003;

     - first ranking collateral issued to borrowers in connection with the E 1
       billion loan, available through December 31, 2004. The same collateral
       was issued to CDC-IXIS for the E300 million line of credit, maturing at
       March 31, 2004;

     - first ranking pledge for 20% of the residual equity interest held by
       Vivendi Universal in Veolia Environnement, in favor of the holders of
       share options allocated on December 20, 2002, and exercisable up to
       December 23, 2004 (see 3.2.3 above);

     - second ranking collateral after that issued in connection with the E 1
       billion loan and the E 300 million loan, and that issued to holders of
       call options on Veolia Environnement shares, allocated in connection with
       the syndicated lines of credit of E 3 billion and E 850 million set up,
       respectively, in March 2002 and March 1999 to Societe Generale in
       connection with two loans of E 490 million in the aggregate, and
       Bayerische Landesbank and LineInvest Limited, in connection with
       financing of the purchase of AOL Europe preferred shares or to an amount
       equal to one-third of the total amount of the transaction (i.e. about
       E 270 million) (see 11.2 above);

     - pledge on assets of Hungarian telephone companies in favor of the
       syndicate of banks participating in the financing (approximately E 300
       million).

     - collateral on the assets of Universal Music in the United Kingdom, issued
       to lenders in connection with financing up to an amount of L136 million
       set up on December 31, 2002 for a period of five years;

     - payment of deposits to an amount of E 27 million in favor of Fleet
       National Bank and Wachovia in connection with its financing of Universal
       City Development Partners (UCDP) (see 11.2 above);

                                       F-72
- pledge on Xfera shares in favor of equipment suppliers in connection with
       their financing contract (see 11.2 above);

     - other collateral issued, to an amount of approximately E 70 million.

     In addition, Vivendi Universal plans to pledge its stake in Maroc Telecom
to guarantee payment of the put option issued by the Kingdom in respect of a 16%
of the share capital of Maroc Telecom if exercised (see 11.2 above).

11.6 LITIGATION

     Vivendi Universal is subject to various litigation in the normal course of
business. Although it is not possible to predict the outcome of such litigation
with certainty, as determined by the courts of the applicable jurisdiction,
based on the facts known to us and after consultation with counsel, management
believes that such litigation will not have a material adverse effect on our
financial position or results of operations.

  INVESTIGATIONS BY THE FRENCH C.O.B., THE S.E.C. AND THE U.S. ATTORNEY

     The French Commission des Operations de Bourse ("C.O.B.") has commenced an
investigation into certain of Vivendi Universal's financial statements. The
investigation began in July 2002, and is being led by the C.O.B.'s Inspection
Services division. Vivendi Universal has provided the Inspection Services
division with documents it has requested, and has made certain employees
available for interviews. Vivendi Universal is cooperating fully with the
Inspection Services division in its investigation, which is continuing.

     The U.S. Securities and Exchange Commission ("S.E.C.") and the Office of
the US Attorney for the Southern District of NewYork have also commenced
separate investigations into the accuracy of Vivendi Universal's financial
statements and various public statements relating thereto from approximately
October 2000 to July 2002. Vivendi Universal is actively cooperating with both
investigations. It has produced documents for both the S.E.C. and the Office of
the US Attorney, and has made certain directors and employees available for
depositions and interviews. Those investigations are both continuing. Those
investigations could also result in the filing of civil claims or criminal
charges in the United States against Vivendi Universal.

     Vivendi Universal, together with Messrs. Messier and Hannezo (its former
CEO and CFO, respectively) are defendants in a consolidated securities class
action filed in the United States District Court for the Southern District of
New York, In re Vivendi Universal, S.A. Securities Litigation (Master File No.
02 CV 5571 (HB)). The consolidated class action complaint, filed January 7,
2003, alleges violations of the Securities Act of 1933 (concerning allegedly
false and materially misleading statements or omissions in the registration and
proxy statements issued in October 2000) and of the Securities Exchange Act of
1934 (concerning allegedly false and materially misleading statements or
omissions in certain public statements, including financial statements, between
October 30, 2000, and August 14, 2002). Vivendi Universal, as well as Messrs.
Messier and Hannezo, have each filed separate motions to dismiss the
consolidated class action complaint on the grounds that it is not legally
sufficient. A decision on those motions by the Court is not expected before late
June 2003.

     It is not possible at this early stage of the litigation and investigation
to predict the outcome and duration with any certainty or to quantify any
potential damages; the impact of this litigation and investigation on Vivendi
Universal could be material if Vivendi Universal were not to prevail in a final,
non-appealable determination of such litigation and investigation. In the
opinion of Vivendi Universal, the plaintiffs' claims lack merit, and Vivendi
Universal intends to defend against such claims vigorously.

  PARTNERSHIP AGREEMENT BETWEEN VIVENDI UNIVERSAL AND USA INTERACTIVE

     In connection with Vivendi Universal's acquisition of the entertainment
assets of USA Interactive, (USAi) there is a disagreement among the parties
relating to the interpretation of the provision for tax distributions set forth
in the Partnership Agreement.

                                       F-73
USAi has advised Vivendi Universal that it believes VUE is obligated,
pursuant to the Partnership Agreement, to make cash distributions after the
close of each taxable year with respect to the taxable income of VUE allocated
to USAi's preferred interests for such taxable year. Although USAi has stated
that the actual amounts of cash distributions that it believes are payable with
respect to taxable income allocated to the preferred interests would depend on
several factors, it has estimated that those cash distributions could have a
present value to USAi of up to approximately $620 million.

     Vivendi Universal believes that USAi's position is without merit and has so
advised USAi. Additionally, VUE has informed USAi that it does not intend to
make such distributions for the taxable year ended December 31, 2002. To date
the disagreement remains unresolved.

  ARBITRATION PROCEEDINGS BETWEEN ELEKTRIM S.A. AND DEUTSCHE TELEKOM

     Vivendi Universal and Elektrim S.A. ("Elektrim") created a holding company,
Elektrim Telekomunikacja Sp. zo.o ("Elektrim Telekomunikacja"), owned 30% by VU
and 70% by Elektrim. Elektrim agreed to contribute to Elektrim Telekomunikacja
its 34.1% direct interest in Polska Telefonia Cyfrowa Sp. zo.o ("PTC") plus an
additional 13.9% interest to be acquired from PTC's minority shareholders.
Before such contributions were made, Vivendi Universal and Elektrim signed a
Second Agreement in December 1999 pursuant to which Vivendi Universal increased
its ownership in Elektrim Telekomunikacja to 49% and Elektrim contributed its
48% direct interest in PTC, as well as its 100% shareholding in the Bresnan
Company, to Elektrim Telekomunikacja.

     In October 1999, Dete Mobil Deutsche Telekom Mobil Net GmbH ("DT")
commenced arbitration proceedings in Vienna ("the first arbitration") alleging
that the acquisition by Elektrim on August 26, 1999, of PTC shares from four
minority shareholders in PTC violated certain pre-emption rights held by DT in
respect of 3.126% of the PTC shares acquired by Elektrim.

     DT has sought a declaration that the acquisition of PTC shares by Elektrim
on August 26, 1999 breached DT's pre-emptive rights set forth in the PTC
shareholders' agreement and was therefore ineffective, an order requiring 3.126%
of the PTC shares acquired by Elektrim to be transferred to DT at fair market
value and an order for certain damages. The first arbitration took place in
November 2001 with subsequent hearings in March and May 2002. Although the first
arbitration proceedings have been completed, the arbitrators have not yet
announced their decision.

     In December 2000, DT commenced a second arbitration proceeding against
Elektrim and Elektrim Telekomunikacja. DT alleged that the transfer by Elektrim
of its 48% interest in PTC's share capital to Elektrim Telekomunikacja in
December 1999 breached the PTC shareholders' agreement and the governing
documents of PTC. In this arbitration proceeding, DT sought either a declaration
that the transfer of the PTC shares by Elektrim to Elektrim Telekomunikacja in
December 1999 was ineffective and that the shares remained owned by Elektrim or
an order requiring the transfer of all of the PTC shares currently held by
Elektrim Telekomunikacja to Elektrim. A declaration that Elektrim had violated
the PTC shareholders agreement would allow DT to exercise a call option under
the PTC shareholders' agreement to purchase at net book value the PTC shares
contributed by Elektrim to Elektrim Telekomunikacja. A hearing relating to this
arbitration took place in February 2003 and a further hearing is planned for
September or October 2003. No indication has been given as to when the
arbitration decision in either arbitration will be given.

     Pursuant to the Third Amended and Restated Investment Agreement dated
September 3, 2001, between Vivendi Universal and Elektrim, Vivendi Universal may
be liable for the first $100 million of damages and liable for 50% of any
damages in excess of $100 million awarded to DT against Elektrim.

  TRANSFER OF BROADCASTING RIGHTS FOR PREMIER LEAGUE FOOTBALL MATCHES TO CANAL
  PLUS AND KIOSQUE

     On December 14, 2002, the board of the French Professional Football League
agreed to grant the broadcasting rights for premier league football matches for
the 2004-2007 season, to Canal Plus and Kiosque. By order dated January 23,
2003, the French Competition Board stayed the growth of such rights until such
time as the Board is able to issue a decision on the merits of the growth. On
February 6, 2003, Canal Plus and

                                       F-74
Kiosque sought to have the Court of Appeal in Paris cancel or amend the Board's
order. On February 16, 2003, the Court of Appeal proposed that the parties enter
into a legal mediation procedure and the parties agreed to do so. The Court of
Appeal appointed two mediators on February 25, 2003. In the event that the
parties fail to reach an agreement before April 2003, the matter will be decided
by the Court of Appeal.

11.7 ENVIRONMENTAL MATTERS

     Vivendi Universal's operations are subject to evolving and increasingly
stringent environmental regulations. Vivendi Universal's operations are covered
by insurance policies. At December 31, 2002, there were no significant
environmental losses.

NOTE 12 SEGMENT INFORMATION

12.1 GEOGRAPHIC DATA

     The following table presents by geographic area revenues for 2002, 2001 and
2000 and long-lived assets for 2002 and 2001.
YEARS ENDED DECEMBER 31,
                                           ------------------------------------------------
                                                2002
                                           ILLUSTRATION VE     2002
                                            EQUITY METHOD     ACTUAL      2001     2001(1)
                                           ---------------   --------   --------   --------
                                             (UNAUDITED)
                                                        (IN MILLIONS OF EUROS)
REVENUES
  France.................................     E 11,707       E 26,391   E 24,285   E 20,933
  United Kingdom.........................        1,404          3,765      4,170      2,992
  Rest of Europe.........................        3,882         11,327     10,456      7,421
  United States of America...............        7,586         10,810     12,654      7,009
  Rest of World..........................        3,533          5,857      5,795      3,225
                                              --------       --------   --------   --------
                                              E 28,112       E 58,150   E 57,360   E 41,580
                                              ========       ========   ========   ========
DECEMBER 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
                                                              (IN MILLIONS OF EUROS)
LONG-LIVED ASSETS
  France....................................................   E 15,356     E 26,402
  United Kingdom............................................        960        2,781
  Rest of Europe............................................      3,127       10,770
  United States of America..................................     17,477       53,522
  Rest of World.............................................     11,575        5,599
                                                               --------     --------
                                                               E 48,495     E 99,074
                                                               ========     ========
---------------

(1) Reflects changes in accounting policies and financial statement presentation
    adopted in 2001.

12.2 BUSINESS SEGMENT DATA

     Each reportable segment is a business unit that offers different products
and services that are marketed through different channels. Segments are managed
separately because of their unique customers, technology, and marketing and
distribution requirements. As at December 31, 2002, main segments are the
following: Cegetel Group, Music, Vivendi Universal Entertainment, Canal+ Group,
Maroc Telecom and Vivendi Universal Games. (See each segment's scope of
consolidation in Note 13). Management evaluates the performance of its segments
and allocates resources to them based on several performance measures. There are
no significant inter-segment revenues; however, corporate headquarters allocates
a portion of its costs to each of the operating segments.

                                       F-75
INCOME STATEMENT
VTI
                                  UNIVERSAL                                     VIVENDI                   PUBLISHING   EXCLUDING
                        CEGETEL     MUSIC               CANAL+      MAROC      UNIVERSAL    HOLDING &     EXCLUDING      MAROC
                         GROUP      GROUP      VUE     GROUP(2)   TELECOM(3)     GAMES     CORPORATE(6)     GAMES       TELECOM
                        -------   ---------   ------   --------   ----------   ---------   ------------   ----------   ---------
                                                                 (IN MILLIONS OF EUROS)
DECEMBER 31, 2002
Revenues..............   7,067      6,276      6,270     4,833      1,487         794            --            663        461
Operating expenses
  exc. depreciation...  (4,738)    (5,315)    (5,073)   (4,609)      (701)       (623)         (483)          (638)      (331)
Depreciation and
  amortization........    (865)      (450)      (258)     (490)      (272)       (109)          (57)           (24)       (83)
Other.................     (15)        45       (123)      (59)       (46)          1          (125)             1         (3)
                        ------     ------     ------    ------      -----        ----          ----         ------       ----
Operating income
  (loss)..............   1,449        556        816      (325)       468          63          (665)             2         44
                        ======     ======     ======    ======      =====        ====          ====         ======       ====
DECEMBER 31, 2001
Revenues..............   6,384      6,560      4,938     4,563      1,013         657            --          3,629        242
Operating expenses
  exc. depreciation...  (4,679)    (5,402)    (4,285)   (4,379)      (473)       (525)         (261)        (2,944)      (180)
Depreciation and
  amortization........    (777)      (439)      (353)     (403)      (153)        (75)          (65)          (194)       (48)
Other.................      --         --         --      (155)        --         (39)           --            (30)         1
                        ------     ------     ------    ------      -----        ----          ----         ------       ----
Operating income
  (loss)..............     928        719        300      (374)       387          18          (326)           461         15
                        ======     ======     ======    ======      =====        ====          ====         ======       ====
DECEMBER 31, 2000(1)
Revenues..............   5,129        495        194     4,054         --         572            --          2,968        141
Operating expenses
  exc. depreciation...  (4,039)      (401)      (198)   (3,524)        --        (511)         (137)        (2,536)      (100)
Depreciation and
  amortization........    (612)        (8)        (9)     (628)        --         (64)          (58)           (84)       (33)
Other.................     (25)        --         --      (243)        --         (38)          (17)          (135)         3
                        ------     ------     ------    ------      -----        ----          ----         ------       ----
Operating income
  (loss)..............     453         86        (13)     (341)        --         (41)         (212)           213         11
                        ======     ======     ======    ======      =====        ====          ====         ======       ====
TOTAL
                                              ENVIRONMENTAL     VIVENDI
                        INTERNET   OTHER(6)   SERVICES(4)(5)   UNIVERSAL
                        --------   --------   --------------   ---------
                                     (IN MILLIONS OF EUROS)
DECEMBER 31, 2002
Revenues..............     174          87        30,038        58,150
Operating expenses
  exc. depreciation...    (301)       (134)
Depreciation and
  amortization........     (41)        (20)
Other.................     (64)       (232)
                          ----      ------
Operating income
  (loss)..............    (232)       (299)        1,911         3,788
                          ====      ======        ======        ======
DECEMBER 31, 2001
Revenues..............     129         151        29,094        57,360
Operating expenses
  exc. depreciation...    (338)       (178)
Depreciation and
  amortization........     (44)         (7)
Other.................     (37)         27
                          ----      ------
Operating income
  (loss)..............    (290)         (7)        1,964         3,795
                          ====      ======        ======        ======
DECEMBER 31, 2000(1)
Revenues..............      48       1,685        26,294        41,580
Operating expenses
  exc. depreciation...    (231)     (1,345)
Depreciation and
  amortization........     (11)        (82)
Other.................      (1)         15
                          ----      ------
Operating income
  (loss)..............    (195)        273         1,589         1,823
                          ====      ======        ======        ======
F-76
BALANCE SHEET AND CASH FLOW STATEMENT
VTI
                                 UNIVERSAL                                        VIVENDI                   PUBLISHING   EXCLUDING
                       CEGETEL     MUSIC                CANAL+        MAROC      UNIVERSAL    HOLDING &     EXCLUDING      MAROC
                        GROUP      GROUP      VUE     GROUP(2)(6)   TELECOM(3)     GAMES     CORPORATE(6)     GAMES       TELECOM
                       -------   ---------   ------   -----------   ----------   ---------   ------------   ----------   ---------
                                                                 (IN MILLIONS OF EUROS)
DECEMBER 31, 2002
Goodwill.............     919      5,479      8,637      3,957          793           74            48          104           38
Other intangible
  assets.............   1,205      4,218      5,480      2,895          333          303            64           96           91
Investments accounted
  for using the
  equity method......     316         31        859        320           --           --           382           (5)          --
Total assets.........   7,190     12,581     21,302     11,158        3,509        1,002         9,081          710        1,444
                        -----     ------     ------     ------        -----        -----        ------        -----        -----
Capital
  expenditures.......     595         92        167        443          257           15            17            9         1,15
                        =====     ======     ======     ======        =====        =====        ======        =====        =====
DECEMBER 31, 2001
Goodwill.............   1,420     12,763      7,472      8,002        1,332          104        (1,353)       2,057          291
Other intangible
  assets.............   1,123      5,926      4,602      4,035            5          418            91        2,534           97
Investments accounted
  for using the
  equity method......     311         30      7,717        271           --           --           132          (13)         588
Total assets.........   7,757     21,907     25,267     17,269        3,569        1,209         9,881        6,200        1,434
                        -----     ------     ------     ------        -----        -----        ------        -----        -----
Capital
  expenditures.......   1,202        133        217        339          223           84             6          109          109
                        =====     ======     ======     ======        =====        =====        ======        =====        =====
TOTAL
                                             ENVIRONMENTAL     VIVENDI
                       INTERNET   OTHER(6)   SERVICES(4)(5)   UNIVERSAL
                       --------   --------   --------------   ---------
                                    (IN MILLIONS OF EUROS)
DECEMBER 31, 2002
Goodwill.............       8          5             --         20,062
Other intangible
  assets.............      17          4             --         14,706
Investments accounted
  for using the
  equity method......      --         --             --          1,903
Total assets.........     138      1,218             --        69 ,333
                         ----      -----         ------        -------
Capital
  expenditures.......      13          6          2,405          4,134
                         ====      =====         ======        =======
DECEMBER 31, 2001
Goodwill.............     638          3          4,888         37,617
Other intangible
  assets.............      37          7          4,427         23,302
Investments accounted
  for using the
  equity method......    (465)        --            605          9,176
Total assets.........     825      1,792         41,892        139,002
                         ----      -----         ------        -------
Capital
  expenditures.......      20         17          2,879          5,338
                         ====      =====         ======        =======
---------------

(1) Reflects changes in accounting policies and financial statement presentation
    adopted in 2001.

(2) In the 2000 and 2001 published financial statements, Canal+ recorded the
    amortization of film costs and allowances related to debtors in depreciation
    and amortization. As of January 1, 2002, and reclassified in the comparable
    period for 2001, the amortization of film costs and allowances related to
    debtors were recorded as operating expenses before depreciation and
    amortization. This reclassification has no impact on operating income.

(3) Company consolidated since April 1, 2001.

(4) Includes Veolia Environnement accounted for by using the equity method since
    December 31, 2002.

(5) The results published by Veolia Environnement may differ from those
    presented by Vivendi Universal where non-material, inter-segment
    transactions impact the financial contribution brought by Veolia
    Environnement to the accounts of Vivendi Universal. Furthermore, the
    definition of operating profit used by Vivendi Universal differs from the
    EBIT figure published by Veolia Environnement, as the latter does not
    include restructuring charges (E 56.5 million as at December 31, 2002).

(6) For additional information on the definition of Holding & Corporate and
    Other segments, please refer to Note 17.9.

                                       F-77
NOTE 13 SIGNIFICANT SUBSIDIARIES
2002                                   2001
                                          ------------------------------------   ------------------------------------
                                           ACCOUNTING    OWNERSHIP   OWNERSHIP    ACCOUNTING    OWNERSHIP   OWNERSHIP
                                             METHOD       CONTROL    INTEREST       METHOD       CONTROL    INTEREST
                                          ------------   ---------   ---------   ------------   ---------   ---------
CEGETEL GROUP
Cegetel Group(1)........................  Consolidated   59%         44%         Consolidated   59%         44%
  Cegetel...............................  Consolidated       80%         90%     Consolidated       80%         90%
  Societe Francaise du Radiotelephone
    (S.F.R.)............................  Consolidated       80%         80%     Consolidated       80%         80%
  Telecom Developpement(TD)(2)..........  Equity             50%         50%     Equity             50%         50%
MUSIC
Centenary Holding N.V. .................  Consolidated   92%             92%     Consolidated   92%         92%
  Universal Music (UK) Holdings Ltd. ...  Consolidated      100%        100%     Consolidated      100%        100%
  Universal Entertainment GmbH..........  Consolidated      100%        100%     Consolidated      100%        100%
  Universal Music K.K. .................  Consolidated      100%        100%     Consolidated      100%        100%
  Universal Music S.A.S. ...............  Consolidated      100%        100%     Consolidated      100%        100%
Universal Studios, Inc. ................  Consolidated   92%         92%         Consolidated   92%         92%
  PolyGram Holding, Inc.................  Consolidated      100%        100%     Consolidated      100%        100%
  Interscope Records....................  Consolidated      100%        100%     Consolidated      100%        100%
  UMG Recordings, Inc. .................  Consolidated      100%        100%     Consolidated      100%        100%
VIVENDI UNIVERSAL ENTERTAINMENT
Universal Pictures International
  B.V. .................................  Consolidated   92%         92%         Consolidated   92%         92%
Universal Studios Inc. .................  Consolidated   92%         92%         Consolidated   92%         92%
  Universal City Studios LLLP(3)........            --        --          --     Consolidated      100%        100%
  USANi LLC(3)..........................            --        --          --     Equity             49%         49%
  Vivendi Universal Entertainment
    LLLP(3).............................  Consolidated       93%         86%               --        --          --
CANAL+ GROUP
Groupe Canal S.A. ......................  Consolidated      100%        100%     Consolidated      100%        100%
  Canal Plus(4).........................  Consolidated       49%         49%     Consolidated       49%         49%
  CanalSatellite........................  Consolidated       66%         66%     Consolidated       66%         66%
  StudioCanal...........................  Consolidated      100%        100%     Consolidated      100%        100%
  Multithematiques......................  Consolidated       64%         64%     Equity             27%         27%
MAROC TELECOM(5)........................  Consolidated       51%         35%     Consolidated       51%         35%
VIVENDI UNIVERSAL GAMES.................  Consolidated       99%         99%     Consolidated       99%         99%
HOLDING & CORPORATE
  Societe d'Investisement pour la
    Telephonie (SIT)(6).................  Consolidated   100%        100%                  --   --          --
  UGC(7)................................  Equity         58%         58%         Equity         39%         39%
VIVENDI TELECOM INTERNATIONAL...........  Consolidated   100%        100%        Consolidated   100%        100%
  Vivendi Telecom Hungary...............  Consolidated      100%        100%     Consolidated      100%        100%
  Kencell...............................  Consolidated       60%         60%     Consolidated       60%         60%
  Monaco Telecom........................  Consolidated       55%         55%     Consolidated       55%         55%
  Elektrim Telekomunikacja(8)...........  Equity             49%         49%     Equity             49%         49%
  Xfera.................................  Equity             26%         26%     Equity             26%         26%
F-78
2002                                   2001
                                          ------------------------------------   ------------------------------------
                                           ACCOUNTING    OWNERSHIP   OWNERSHIP    ACCOUNTING    OWNERSHIP   OWNERSHIP
                                             METHOD       CONTROL    INTEREST       METHOD       CONTROL    INTEREST
                                          ------------   ---------   ---------   ------------   ---------   ---------
PUBLISHING ACTIVITIES
  EXCL. VU GAMES
Vivendi Universal Publishing............  Consolidated      100%        100%     Consolidated      100%        100%
  Groupe Expansion......................  Consolidated      100%        100%     Consolidated      100%        100%
  Comareg...............................  Consolidated      100%        100%     Consolidated      100%        100%
  Atica.................................  Consolidated       98%         49%     Consolidated       98%         49%
  Houghton Mifflin Company(9)...........            --        --          --     Consolidated      100%        100%
  Editions Robert Laffont(9)............            --        --          --     Consolidated      100%        100%
  Promotec(9)...........................            --        --          --     Consolidated      100%        100%
  Larousse-Bordas(9)....................            --        --          --     Consolidated      100%        100%
VIVENDI UNIVERSAL NET
Vivendi Universal Net...................  Consolidated      100%        100%     Consolidated      100%        100%
  i-France..............................  Consolidated      100%        100%     Consolidated      100%        100%
  Scoot Europe..........................  Consolidated      100%        100%     Consolidated      100%        100%
  Ad-2-One..............................  Consolidated      100%        100%     Consolidated      100%        100%
  CanalNumedia..........................  Consolidated      100%        100%     Consolidated      100%        100%
  Vizzavi Europe(9).....................            --        --          --     Equity             50%         50%
Vivendi Universal Net U.S.A. Group,
  Inc. .................................  Consolidated      100%        100%     Consolidated      100%        100%
  MP3.com, Inc. ........................  Consolidated      100%        100%     Consolidated      100%        100%
  Emusic.com, Inc. .....................  Consolidated      100%        100%     Consolidated      100%        100%
  Flipside, Inc./Uproar, Inc. ..........  Consolidated      100%        100%     Consolidated       83%         83%
VEOLIA ENVIRONNEMENT(10)................  Equity             20%         20%     Consolidated       63%         63%
---------------

 (1) Vivendi Universal consolidates Cegetel because following a shareholders'
     agreement, Vivendi Universal has the management control of the company, has
     majority control over the Board of Directors and appoints the Chairman, has
     majority control over the shareholders' general assembly, and because no
     other shareholder or shareholder group is in a position to exercise
     substantive participating rights which would allow them to veto or block
     decisions taken by Vivendi Universal. Vivendi controls 59% + 1 voting right
     of Cegetel voting rights, 9% of which directly, and 50% + 1 voting right
     indirectly, via the Transtel company, in which Vivendi Universal owns a 70%
     controlling interest. Vivendi Universal and Cegetel consolidate SFR,
     because following a shareholders' agreement, Vivendi Universal has the
     management control of the company, has majority control over the Board of
     Directors and appoints the Chairman, has majority control over the
     shareholders' general assembly (Cegetel holds 80% of SFR) and because no
     other shareholder or shareholder group is in a position to exercise
     substantive participating rights which would allow them to veto or block
     decisions taken by Vivendi Universal.

 (2) Telecom Developpement's board is by majority nominated by SNCF, thus
     Cegetel Group accounted this investment for by equity method.

 (3) See Note 3 Acquisition of the entertainment assets of USA Networks.

 (4) Consolidated because, through a shareholders' agreement, Vivendi Universal
     has a majority of the shareholder voting rights and no other shareholder or
     groups of shareholders exercise substantive participating rights, which
     would allow them to veto or block decisions taken by Vivendi Universal.

 (5) Vivendi Universal owns a 35% interest in Maroc Telecom, and the Kingdom of
     Morocco holds the remaining 65%. Vivendi Universal consolidates Maroc
     Telecom because under company by-laws and shareholders' agreements, Vivendi
     Universal has majority control over its Supervisory Board and Management
     Board. Under shareholders' agreements, Vivendi Universal appoints 3 of the
     5 members of the Management Board, appoints the Chairman of the Management
     Board, exercises 51% of all voting

                                       F-79
rights at shareholders' general assemblies, and this grants it, under the
     majority rules set forth in the company's by-laws, control over the
     shareholders' general assembly, as well as over the Supervisory and
     Management Boards of Maroc Telecom. Should Vivendi Universal not acquire
     the shares that would give it the majority of Maroc Telecom's share
     capital, the 16% voting rights granted to Vivendi Universal through
     shareholders' agreements would expire on September 1, 2005, unless the
     Kingdom of Morocco exercises its put option (please refer to Note 11)
     requiring Vivendi Universal to acquire an additional 16% interest in Maroc
     Telecom's share capital prior to that date.

 (6) Special purpose vehicle which became in January 2003 the legal owner of a
     26% stake Cegetel. (See Note 15)

 (7) Due to a shareholders' agreement, Vivendi Universal does not have the
     operational control of this company. Thus, this investment is still
     accounted for using the equity method.

 (8) Since December 1999, Vivendi Universal has held a 49% interest in Elektrim
     Telekomunikacja, with Elektrim SA holding the remaining 51% until September
     3, 2001. An agreement concerning the shareholding and management of
     Elektrim Telekomunikacja was signed by Vivendi Universal and Elektrim on
     September 3, 2001. This agreement had no impact on Vivendi Universal's
     ownership or control interest in Elektrim Telekomunikacja, which is
     unchanged at 49%. Investment company Ymer has since acquired a 2% equity
     interest in Elektrim Telekomunikacja from Elektrim. Ymer is a company
     independent from Vivendi Universal, which does not own it nor control it,
     directly or indirectly. Vivendi Universal has purchased non-voting shares
     in an investment company which enabled Ymer to make its acquisition.
     Vivendi Universal is by no means committed to acquire the shares owned by
     Ymer. Similarly, Ymer has neither a right or obligation to sell those
     shares to Vivendi Universal and is free to sell them to a third-party at
     any time. The value of Vivendi Universal's original investment in the
     investment company has since varied according to the fair value of the
     assets held by Ymer. Agreements between Vivendi Universal and Elektrim
     retain Vivendi Universal's pre-existing rights. Vivendi Universal, Elektrim
     SA and Ymer have 3, 3 and 1 representatives on the Elektrim Telekomunikacja
     Supervisory Board, respectively, and 2, 2 and 2 representatives on the
     Management Board, respectively, all of whom are appointed independently by
     Vivendi Universal, Elektrim, and Ymer. Vivendi Universal consequently
     consolidates its interest in Elektrim Telekomunikacja according to the
     equity method. Finally, as announced at the close of Vivendi Universal's
     Board meeting held September 25, 2002, Vivendi Universal is currently
     negotiating the disposal of this interest.

 (9) Sold in 2002. (See Note 3)

(10) Variation due to disposals and dilution. (See Note 3)

NOTE 14 RELATED PARTY TRANSACTIONS

14.1 RELATED COMPANIES

     During 2002, main companies related to Vivendi Universal are its
subsidiaries accounted for by using the equity method, e.g. Veolia Environnement
(accounted by the equity method as at December 31, 2002), Elektrim
Telecomunikacja and Telecom Development. The main related party transactions and
amounts outstanding by these companies or Vivendi Universal are detailed below:
DECEMBER 31,
                                                                  2002
                                                              ------------
                                                              (IN MILLIONS
                                                               OF EUROS)
ASSETS
  Other investments(1)......................................     E  559
  Accounts receivable.......................................        154
  Short-term loans receivable...............................        257
LIABILITIES
  Accounts payable..........................................        116
  Short term borrowings.....................................          9
F-80
DECEMBER 31,
                                                                  2002
                                                              ------------
                                                              (IN MILLIONS
                                                               OF EUROS)
PROFIT AND LOSS ACCOUNT
  Revenues..................................................        414
  Operating expenses........................................       (919)
  Financial income..........................................         62
  Financial expenses........................................        (14)
                                                                 ------
                                                                 E (457)
                                                                 ======
---------------

(1) of which E 525 million advance granted to Elektrim Telekomunikacja and
    provisioned for E 203 million.

     IN 2002, THE MAIN RELATED COMPANY TRANSACTIONS ARE THE FOLLOWING:

VEOLIA ENVIRONNEMENT

  VIVENDI UNIVERSAL AND VEOLIA ENVIRONNEMENT

     On December 20, Vivendi Universal and Veolia Environnement entered into an
agreement in order to finalize the separation of the two companies, following
Vivendi Universal's disposal of 20.4% of Veolia Environnement's capital stock.
Pursuant to this agreement, guarantee and counter-guarantee agreements
originally established in June 2000 have been modified. This agreement is
described in Note 11.

  VINCI BONDS

     Veolia Environnement took part indirectly in the issuance of the Vivendi
Universal bonds exercisable into Vinci shares or in cash. Vivendi Universal lent
to Veolia Environnement E 120 million against 1,552,305 shares of Vinci held by
Veolia Environnement through Dalkia France. The terms of the loan are similar to
those of the bond issued by Vivendi Universal: a fixed rate of 1% per annum and
maturing on March 1, 2006 (see Note 4.4 and Note 7).

  CEGETEL GROUP

  Telecom Developpement

     Telecom Developpement (TD) owned by Cegetel Group (49.9%) and Societe
Nationale des Chemins de Fer Francais (SNCF) (50.1%), the leading French railway
company is linked by a commercial agreement with Cegetel Group. It gives TD the
exclusive right to carry Cegetel Group's long distance calls.

  Vivendi Universal Entertainment (VUE)

     VUE has equity investments in certain companies that operate theme parks
for which it provides operational management services and pay television
channels for which it licenses film product. VUE earns management fees for
operating the theme parks and license fees for the licensing of its film
product. VUE includes management and license fees in revenues and eliminates
intercompany profit. During the years ended December 31, 2002 and 2001, VUE
included approximately $68.7 million and $84.0 million of these fees in
revenues. In addition, VUE has deferred recognition of management fees earned of
$51.1 million through December 31, 2002 as collection is not reasonably assured.
When the uncertainties regarding collectibility are resolved, VUE could
recognize revenues up to the deferred amount or the portion considered
collectible.

                                       F-81
14.2 RELATED PARTIES

     IN 2002 AND 2001, THE MAIN RELATED PARTY TRANSACTIONS ARE THE FOLLOWING:

  TRANSACTIONS WITH USA INTERACTIVE

     Prior to May 7, 2002, VUE has various arrangements with USA under which VUE
earns fees and incurs costs. These arrangements are summarized below:

     VUE provides certain support services to USA under a Transition Services
agreement. These services include use of pre-production, production and
post-production facilities, information technology services, physical
distribution, contract administration, legal services and office space. VUE
earned $3.2 million and $8.5 million during the period from January 1, 2002 to
May 6, 2002 and the year ended December 31, 2001, respectively, for providing
these services.

     VUE and USA have an International Television Distribution Agreement under
which all programming owned or controlled by USA outside of the United States is
distributed by VUE. VUE earns a 10% distribution fee for these services. VUE and
USA also have a Domestic Television Distribution Agreement under which USA
distributes certain of VUE's programming in the United States. Additionally, VUE
licenses certain television programming to USA to be aired on its cable
channels. VUE earned $9.7 million and $42.9 million during the period from
January 1, 2002 to May 6, 2002 and the year ended December 31, 2001,
respectively, for providing these services. VUE incurred $.5 million and $2.9
million during the period from January 1, 2002 to May 6, 2002 and the year ended
December 31, 2001, respectively, for receiving these services.

     Under an agreement covering approximately 50 of VUE's films, USA earns a
distribution fee for the distribution of these films in the United States. USA
is responsible for the collection and remitting the net amount, after its fee,
to VUE, except for amounts applied against the advance of fees initially given
to VUE. An affiliate of VUE provides certain fulfillment services on behalf of
USA in the United States and Canadian home video markets. Beginning January 1,
2002, VUE replaced the affiliate in providing these services. VUE incurred $6.8
million and $17.0 million during the period from January 1, 2002 to May 6, 2002
and the year ended December 31, 2001, respectively, for receiving these
services.

     VUE has several other arrangements with USA for the purchase of advertising
time and the licensing of certain properties for merchandising. VUE incurred $.5
million and $3.4 million during the period from January 1, 2002 to May 6, 2002
and the year ended December 31, 2001, respectively, for receiving these
services.

     VUE had receivables of $61.5 million and payables $159.4 million at
December 31, 2001 with USA.

  EDGAR BRONFMAN, JR.'S EMPLOYMENT ARRANGEMENT

     Pursuant to an employment agreement with Vivendi Universal US Holding Co.
("Vivendi Universal US"), dated September 25, 2002 (the "Agreement"), Edgar
Bronfman, Jr. currently serves as an executive employee and an advisor to the
Chief Executive Officer of Vivendi Universal US in connection with the US
entertainment businesses of Vivendi Universal US and its US affiliates.

     Subject to the provisions of the Agreement regarding earlier termination of
Mr. Bronfman's employment, the term of his employment under the Agreement
commenced on September 25, 2002 and will continue through December 31, 2004.
During the term of his employment under the Agreement, Mr. Bronfman is required
to devote a substantial time commitment to the performance of his duties under
the Agreement, but he is not precluded or prohibited from securing one or more
additional part-time employment or consulting positions. Mr. Bronfman's annual
salary under the Agreement is $1,000,000.

     If Mr. Bronfman's employment under the Agreement is terminated by Vivendi
Universal US for "Cause" or by Mr. Bronfman without "Good Reason" (as those
terms are defined under the Agreement), or by reason of Mr. Bronfman's death or
disability, Mr. Bronfman or Mr. Bronfman's estate, as the case may be, will be
entitled to receive his accrued salary and benefits under the Agreement through
the date of termination.
                                       F-82
If Mr. Bronfman's employment under the Agreement is terminated by Vivendi
Universal US without Cause (other than by reason of death or disability) or by
Mr. Bronfman for Good Reason, Mr. Bronfman will also be entitled to receive his
accrued salary and benefits under the Agreement through the date of termination,
plus a lump-sum payment equal to the total amount of salary that Mr. Bronfman
would have received had his employment under the Agreement continued through
December 31, 2004.

     In the event that Mr. Bronfman is subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, Mr. Bronfman is
entitled to receive an additional payment such that he will receive the same net
after-tax benefit as if no excise tax were imposed. In addition, Vivendi
Universal US will reimburse Mr. Bronfman for all legal fees and related expenses
incurred in connection with, or arising out of, any dispute in respect of
severance following termination of his employment other than for Cause or for
Good Reason.

     The Agreement also provides that Vivendi Universal US will indemnify Mr.
Bronfman to the fullest extent permitted by applicable law against damages in
connection with his status or performance of duties as an officer of Vivendi
Universal US and will maintain and cover Mr. Bronfman under customary and
appropriate directors and officers liability insurance during the term of his
employment and throughout the period of any applicable statute of limitations.

  CANAL+: NEGOTIATION OF "CLUB EUROPE" MATCH TV RIGHTS VIA JEAN-CLAUDE DARMON
  GROUP

     A contract was signed with the Jean-Claude Darmon Group, which acts as
intermediary between the "Club Europe" member clubs and Canal+, in 1999. The
clubs accorded a priority option to Canal+ for acquisition of TV rights for all
matches for all seasons from 2000/2001 to 2005/2006. The amount of this option
is due to the Jean-Claude Darmon Group and represents a total of E 252 million,
plus an option on derivative rights to an initial amount of E 23 million. As at
December 31, 2002, a total of E165 million was outstanding for payment under the
terms of this contract. This amount has been accrued in full in the Canal+
financial statements. In February 2003, the priority option related to French
competition was terminated, whereas some options on derivative rights are still
underway (E 23 million recognized in reserve and allowances).

  PURCHASE OF VIVENDI UNIVERSAL SHARES FROM THE BRONFMAN FAMILY

     Vivendi Universal purchased 15,400,000 American Depositary Shares (ADS),
representing Vivendi Universal shares held by various members of the Bronfman
family, at a price equal to the average share price on the Paris stock market on
May 29, 2001, with a 3.5% discount. Additionally, Vivendi Universal also
purchased 1,500,000 ADS representing Vivendi Universal shares owned by various
entities controlled by the Bronfman family, at a price equal to the average
share price on the Paris stock market on May 29, 2001, with a 0.9% discount.

NOTE 15 MANAGEMENT'S LIQUIDITY STRATEGY

     Vivendi Universal was formed through the merger of Vivendi S.A. (Vivendi),
the Seagram Company Ltd. and Canal Plus S.A. in December 2000. From its origins
as a water company, Vivendi expanded its business rapidly in the 1990s and
transformed itself into a media, communications and environmental services
company. It continued to expand through acquisitions, notably through the
acquisition of the entertainment assets of USA Networks in May 2002.

     Following a period of significant acquisition-led growth until May 2002,
the associated increase in leverage led to heightened concerns during the first
half of 2002 over the validity of Vivendi Universal's strategy and, eventually,
to the appointment of a new management team. Concerns over Vivendi Universal's
strategy and financial flexibility led Moody's to cut Vivendi Universal's senior
debt rating on July 1, 2002 from Baa3 to Ba1, with the credit remaining on
negative credit watch, Standard & Poor's followed suit the next day, with a
one-notch downgrade to BBB- with a negative outlook. The July downgrades had an
immediate impact on Vivendi Universal's short-term liquidity. In particular
Vivendi Universal lost, to a significant extent,

                                       F-83
access to the capital markets, and most importantly to the commercial paper
market, historically its main source of funding for working capital needs.

     The new management team addressed Vivendi Universal's immediate liquidity
concerns by securing, on July 10, 2002, a E 1.0 billion multi-currency term loan
facility, which was repaid in December 2002. This was done with a view to
putting in place a longer-term solution once the new management had had the
opportunity to better assess the medium term situation. Following their review,
new management revised the previous managements' cash-flow projections for the
period from July 2002 to December 2004 and wrote-off E 11 billion in
acquisition-related goodwill while adding E 3.4 billion in financial provisions.
This resulted in a E 12.3 billion net loss in the first half of 2002, which was
publicly announced on August 14, 2002. At the same time, Vivendi Universal
announced a commitment to reduce debt by divesting assets. Corporate credit
ratings were subsequently cut to Ba2 by Moody'sand BB by Standard & Poor's.
Outstanding bonds at the Vivendi Universal level were downgraded a further two
notches to B1 by Moody's and to B+ by Standard & Poor's in anticipation of the
bonds subordination resulting from the expected creation of security and bank
lending at the group subsidiary level. On October 30, 2002, Moody's downgraded
Vivendi Universal's senior implied rating to Ba3, leaving the senior unsecured
ratings unchanged at B1, under review for possible downgrade.

     During the second half of 2002, Vivendi Universal asset sales for total
consideration of approximately E 6.7 billion, including the assumption by the
acquirors of the assets of approximately E 0.5 billion in debt. At December 31,
2002, Vivendi Universal's net debt was E 12.3 billion compared with E 37.1
billion at December 31, 2001, excluding Veolia Environnement, which was
deconsolidated from Vivendi Universal's balance sheet on December 31, 2002
following the disposal of Vivendi Universal's interest therein, net debt fell by
approximately E 9.0 billion.

     Under the terms of the current outstanding debt, Vivendi Universal and the
subsidiaries part of the cash pooling system have principal repayment
obligations totalling approximately E 4.5 billion due in 2003 (assuming that the
$1.62 billion VUE bridge facility is refinanced) and approximately E 3.5 billion
due in the first quarter of 2004 (including our E 850 million syndicated credit
facility).

     Vivendi Universal is engaged in the following financing transactions:

     - The offering of E 1.0 billion Senior Notes due 2010; and

     - The concurrent establishment of a dual currency E 2.5 billion 3-year
       Senior Secured Credit Facility (the "New Credit Facility"), consisting of
       two tranches as follows:

        - Tranche A: E 1.5 billion revolving facility; and

        - Tranche B: E 1.0 billion term loan facility.

     These refinancing transactions will increase funds available to Vivendi
Universal's by approximately E 0.9 billion upon completion and, extend scheduled
maturity of E 2.5 billion of debt through December 31, 2004.

     Concurrently, VUE is refinancing its $1.62 billion bridge facility.

     To meet its payment obligations in 2003 and the first quarter of 2004,
Vivendi Universal is substantially dependent upon the receipt of proceeds from
asset disposals or new financings. Vivendi Universal has announced a plan to
dispose of E 7 billion of assets in 2003. By March 15, 2003, it had closed
approximately E 700 million of these asset sales and has entered into agreements
to sell another E 1.2 billion of assets in the future, subject to regulatory and
other approvals. Vivendi Universal believes that the improvement in its
liquidity position following the receipt of proceeds from the Notes and the $2.5
billion credit facility will improve its ability to successfully consummate its
E 7 billion asset disposal plan in 2003.

     The current facilities contain negative covenants, which place restrictions
on, among other things, the incurrence of debt, the incurrence of financial
guarantees, the payment of distributions in respect of capital stock,
investments, mergers and acquisitions, asset disposals, intercompany loans and
liens, sale and loan bank transactions and require us to meet various financial
ratios. Pursuant to the facilities, each obligor must ensure that in any
three-month period, the aggregate amount of net cash available plus the
aggregate undrawn
                                       F-84
amount under the facilities is more than E 100 million. The facilities require
Vivendi Universal to maintain various financial ratios, including:

     - maximum ratios of net financial debt to cash EBITDA(2);

     - minimum ratios of cash EBITDA to net financing costs; and

     - maximum total gross financial debt.

     The facilities place certain limitations on the ability of Vivendi
Universal and certain of its subsidiaries other than VUE and its subsidiaries to
make loans or advances to, and to borrow or receive advances from, VUE and its
subsidiaries.

NOTE 16 SUBSEQUENT EVENTS

16.1 ACQUISITION OF AN ADDITIONAL INVESTMENT INTEREST IN CEGETEL

     Vivendi Universal's Board of Directors has unanimously decided on December
3, 2002, to exercise its pre-emptive rights on BT Group's 26% interest in
Cegetel Group, in order to obtain a 70% interest in the French
telecommunications operator. In January 2003, Vivendi Universal purchased BT
Group's 26% interest in Cegetel Group for E 4 billion.

     The acquisition of this participation from BT Group was realized through
the SIT (Societe d'Investissements pour la Telephonie), as follows:

          a.  Societe d'Investissements pour la Telephonie, owned, controlled
     and consolidated by Vivendi Universal, became the legal owner of the 26%
     shareholding at an acquisition cost of E 4 billion.

          b.  SIT was financed by E 2.7 billion paid in cash by Vivendi
     Universal and by a non-recourse loan of E 1.3 billion which matures in
     2010. Debt service of this loan, which was drawn on January 23, 2003, will
     be provided through dividends paid in respect of its 26% shareholding in
     Cegetel Group.

     As a result, Cegetel will continue to be consolidated by Vivendi Universal,
with a 70% interest (the 26% shareholding acquired from BT Group in addition to
our historical 44% interest). The goodwill recognized as a result of this
transaction is expected to amount to approximately E 3 billion and will be
amortized on a straight-line basis over 40 years.

     The non-recourse E 1.3 billion loan will be integrated in Vivendi Universal
Financial Statements from January 2003 due to the consolidation of SIT.

---------------

     2 EBITDA plus dividends from Veolia Environnement, Cegetel Group and Maroc
Telecom.
                                       F-85
Due to this transaction, the capital structure of Cegetel Group is as
follows:

                               BEFORE PREEMPTION

                                  [FLOWCHART]

16.2 DISPOSAL OF CANAL+ TECHNOLOGIES

     The sale of Vivendi Universal's 89% stake in Canal+ Technologies to Thomson
was closed on January 31, 2003 on the basis of E 190 million in cash, of which
E 90 million was collected in 2002, E 79 million was collected in 2003 and the
remainder is expected to be collected after any post-closing adjustments. (See
Note 3).

16.3 DISPOSAL OF CONSUMER PRESS DIVISION

     The sale of Consumer Press Division (Groupe Express-Expansion-Groupe
l'Etudiant) to the Socpresse Group was finalized on February 4, 2003 (see Note
3) following the authorization by The Economy and finance Ministry in January
2003. The amount collected was E 200 million. The sale of Comareg to France
Antilles is expected to take place at a later time, as approval for the
transaction has to be given by the Monopolies Commission.

                                       F-86
16.4 MR. BERTRAND MEHEUT'S APPOINTMENT

     Mr. Bertrand Meheut was nominated as Member and President of Canal+ Group's
Executive Board, in replacement of Mr. Xavier Couture, who resigned at the
Supervisory board's session of February 7, 2003.

16.5 PARTIAL DISPOSAL OF USA INTERACTIVE WARRANTS

     In February 2003, Vivendi Universal sold 32.19 million warrants of USA
Interactive to a financial institution. These warrants were initially acquired
in connection with the acquisition of the entertainment assets of USA Networks
(see Note 3). Pursuant to this transaction, Vivendi Universal received $276
million, net of fees.

16.6 CASH SETTLEMENT OF VEOLIA ENVIRONNEMENT EXCHANGEABLE NOTES

     Pursuant to the put by investors in March 2003, Vivendi Universal
reimbursed Veolia Environnement exchangeable notes issued in February 2001 for a
total consideration of E 1.8 billion.

16.7 RESTRUCTURING PROJECT OF CANAL+ GROUP

     In March 2003, Canal+ Group announced an employee reduction as part of its
overall restructuring plan. The program calls for a reduction of 305 positions,
mainly administration and technical support personnel. In addition, 138
positions in certain support functions will be outsourced.

16.8 CLOSING OF CONTRACTUAL GUARANTEES TO FORMER RONDOR SHAREHOLDERS

     Vivendi Universal Canada Inc. ("VU Canada"), a company in the Vivendi
Universal group, announced on March 11, 2003, that it had satisfied its
contractual guarantee made on August 1, 2000, to the former shareholders of the
Californian company, Rondor Music International, Inc. ("Rondor") (see Note 11).
The former Rondor shareholders received 8.844 million shares, representing 0.8%
of capital stock and the remainder in cash of US$100.3 million (E 92.6 million).

     Rondor's shareholders were paid in Seagram shares when Rondor was acquired
by The Seagram Company Ltd., which became VU Canada after the
Seagram-Vivendi-Canal+ merger. The payment was accompanied with a contractual
guarantee on the value of the shares given to the former shareholders of Rondor.
At the time of the Seagram-Vivendi-Canal+ merger, these Seagram shares were
converted into Vivendi Universal ADSs, and the contractual guarantee became
applicable to the Vivendi Universal ADSs held by the former Rondor shareholders.

     The contractual guarantee provided, among other things, that if the price
of Vivendi Universal ADSs dropped below a certain threshold ($37.5 per ADS), VU
Canada would pay the former Rondor shareholders a makeup payment for ADSs sold
by them during a specified period of time equal to the difference between
U.S.$82.7875 per ADS and their sale proceeds. In April and May 2002, all Vivendi
Universal ADSs then owned by these shareholders were sold and VU Canada became
obligated to pay the makeup payment to them in March 2003. Under the terms of
the original agreements, the difference was to be paid in full or in part in
Vivendi Universal shares.

16.9 RESIGNATION OF CHIEF EXECUTIVE OFFICER OF VUE

     On March 19, 2003, Mr. Barry Diller in full agreement with Vivendi
Universal, announced his resignation from his temporary position as chief
executive officer of VUE. Mr. Diller had been serving in such capacity since the
formation of VUE in May 2002 and was not party to an employment agreement. Mr.
Jean Rene Fourtou has assumed the role of chief executive officer of VUE and is
working with the existing management team. Mr. Diller's resignation has no
effect on the rights and obligations of Vivendi Universal, VUE, USA or Mr.
Diller under the VUE Partnership Agreement. The termination date for USA's and
Mr. Diller's noncompetition agreements with VUE is now November 7, 2003, Mr.
Dillers's put on his common stock remains exercisable beginning on May 7, 2003,
and Universal's call option on Mr. Diller's common interest in VUE is
exercisable beginning on May 7, 2004.
                                       F-87
NOTE 17 SUPPLEMENTAL DISCLOSURES REQUIRED UNDER US GAAP AND SEC REGULATIONS

     The following information has been prepared to present supplemental
disclosures required under US GAAP and Securities Exchange Commission (SEC)
regulations applicable to Vivendi Universal.

17.1 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED
     BY VIVENDI UNIVERSAL AND U.S. GAAP

     Vivendi Universal has prepared its consolidated financial statements in
accordance with French GAAP at December 31, 2002, as discussed in Note 1. French
GAAP differs in certain respects from US GAAP, the principal differences of
which, as they relate to Vivendi Universal, are as follows:

  NEW U.S. ACCOUNTING POLICIES APPLIED BY THE GROUP FROM JANUARY 1, 2002

     In July and August 2001, the FASB (Financial Accounting Standards Board)
issued Statement of Financial Accounting Standard (SFAS) No. 141, Business
Combinations (SFAS 141), SFAS No. 142 Goodwill and Other Intangible Assets (SFAS
142) and SFAS No. 144 Accounting for the Impairment or Disposal of Long-lived
Assets (SFAS 144). SFAS 141 is effective for any business combination completed
after June 30, 2001, and SFAS 142 and 144 are effective for fiscal years
beginning after December 15, 2001. These statements are described below.

  BUSINESS COMBINATIONS AND GOODWILL

     As permitted under French GAAP prior to December 31, 1999, goodwill could
be recorded as a reduction of shareholders' equity when the acquisition was paid
for with equity securities, whereas under US GAAP goodwill is always recognized
as an asset. Additionally, under French GAAP, certain acquisitions, notably
Havas and Pathe, were accounted for as mergers. Under this method, goodwill is
computed as the difference between the consideration paid and the net historical
book value acquired.

     Under US GAAP applied until June 30, 2001, the Havas and Pathe acquisitions
did not meet the criteria for pooling and, therefore, were accounted for as
purchase business combinations. Accordingly, goodwill was computed as the excess
of consideration paid over the fair value of assets acquired and liabilities
assumed. The reconciliation impact is that French GAAP potentially results in a
lower net asset value being assigned to acquisitions, which results in higher
gains on the sales of businesses as compared to US GAAP. Additionally, the
amortization of goodwill charged to earnings is lower under French GAAP than
under US GAAP.

     SFAS 141 requires the use of the purchase method of accounting for all
business combinations completed after June 30, 2001, forbidding the use of
"pooling of interests", and further clarifies the criteria to recognize
intangible assets separately from goodwill. Additionally, it is likely that more
intangible assets will be recognized under SFAS 141 than its predecessor, while
in some instances previously recognized intangibles will be included as part of
goodwill.

     Additionally, for fiscal years beginning after December 15, 2001, SFAS 142
requires that companies stop amortizing goodwill and certain other intangible
assets with indefinite useful lives, including such assets recorded in past
business combinations. Instead, goodwill and other indefinite-lived intangible
assets will be subject to a annual review for impairment (or more frequently if
impairment indicators arise). A two-step impairment test is used. The first step
is a screen for potential impairment, while the second step measures the amount
of the impairment, if any. An impairment that is required to be recognized when
adopting SFAS 142 will be reflected as the cumulative effect of a change in
accounting principle.

     Vivendi Universal adopted SFAS 142 effective January 1, 2002, and in
accordance with its provisions ceased amortizing goodwill (including goodwill
included in the carrying value of certain investments accounted for under the
equity method of accounting) and other indefinite-lived intangible assets.
Additionally, upon adoption of SFAS 142, Vivendi Universal recorded a
non-recurring, non-cash impairment charge of approximately E 17 billion to
reduce the carrying value of its goodwill to its implied fair value. The charge,
which is non operational in nature, was recorded as a cumulative effect of a
change in accounting principle.

                                       F-88
IMPAIRMENT OF OTHER LONG-LIVED ASSETS

     As required under both French and US GAAP, Vivendi Universal reviews the
carrying value of long-lived assets, including goodwill and other intangible
assets, for impairment at least annually or whenever facts, events or changes in
circumstances, both internally and externally, indicate that the carrying amount
may not be recoverable.

     Under French GAAP, the impairment is measured by comparing the net book
value with the current value of the asset where the current value depends on the
underlying nature of its market value or value in use. The value in use is
generally determined on the basis of discounted cash flows. (See Section 1.2.18)

     Under US GAAP, until December 31, 2001 measurement of any impairment was
based on the provisions of SFAS No. 121, Accounting for the Impairment of
Long-lived Assets and for Long-Lived Assets to Be Disposed Of (SFAS 121). SFAS
121 required that an impairment loss be recognized whenever the sum of the
undiscounted future cash flows estimated to be generated from the use and
ultimate disposal of an asset were less than the net carrying value of the
asset.

     From January 1, 2002, SFAS 144 replaces SFAS 121 and while it supersedes
APB Opinion 30, Reporting the Results of operations -- Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions, it retains the presentation of discontinued
operations but broadens that presentation to include a component of an entity
(rather than a segment of a business). However, under SFAS 144, discontinued
operations are recorded at the lower of their carrying amount or fair value less
cost to sell, and future operating losses are no longer recognized before they
occur. Under SFAS 144, there is no longer a requirement to allocate goodwill to
long-lived assets to be tested for impairment. It also establishes a probability
weighted cash flow estimation approach to deal with situations in which there is
a range of cash flows that may be generated by the asset being tested for
impairment. SFAS 144 also establishes criteria for determining when an asset
should be treated as held for sale.

     SFAS 144 has been applied since January 1, 2002 and the adoption of SFAS
144 had no material impact on the group's results of operations or on its
financial position.

  INTANGIBLE ASSETS

     Under French GAAP, certain types of advertising costs are capitalized and
amortized over their useful lives. Business trademarks acquired in a purchase
business combination are not required to be amortized. The costs of television
and station rights relating to theatrical movies and other long-term programming
are expensed upon first broadcast or showing of the film. Under US GAAP,
advertising costs are charged to expense in the period they are incurred.
Trademarks acquired are amortized over their estimated useful life. The costs of
television and station rights relating to theatrical movies and other long-term
programming are expensed over the estimated number of times the film or program
is broadcast.

  DERIVATIVE FINANCIAL INSTRUMENTS

     Under French GAAP, the criteria for hedge accounting for derivative
financial instruments does not require documentation of specific designation to
the hedged item, or the documentation of ongoing effectiveness of the hedge
relationship. Derivative financial instruments that meet hedge criteria under
French GAAP are not recorded on the consolidated balance sheet. The impact of
the derivative financial instruments on the statement of income is recorded upon
settlement or the payment or receipt of cash, but potential loss, if any, is
accrued against the financial income.

     Vivendi Universal adopted SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, effective January 1, 2001. Upon adoption,
all derivative instruments (including certain derivative instruments embedded in
other contracts) were recognized in the balance sheet at their fair values.
Changes in the fair value of derivative instruments are recorded each period in
current earnings or accumulated other comprehensive income, depending on whether
the derivative is used to hedge fair value or cash flow exposures. Changes in
derivative fair values that are designated as fair value hedges are recognized
in earnings as offset to the changes in fair value of related hedged assets,
liabilities or firm commitments. Changes in the derivative
                                       F-89
fair values that are designated as cash flow hedges are deferred and recorded as
a component of accumulated other comprehensive income until the hedged
transactions occur and are recognized in earnings at the same time the hedged
transaction is recognized in earnings. Instruments used as hedges must be
effective at reducing the risk associated with the exposure being hedged and
must be designated as a hedge at the inception of the contract. Accordingly,
changes in market values of hedge instruments must be highly correlated with
changes in market values of underlying hedged items both at inception of the
hedge and over the life of the hedge contract. The ineffective portion of a
hedging derivative's change in fair value is reported in earnings. Derivatives
that are executed for risk management purposes but not designated as hedges
under SFAS 133 are recorded at their fair value and the change in fair value is
recognized in current earnings.

     The financing activities of Vivendi Universal necessarily involve the
management of various market risks, including those related to changes in
interest rates or currency exchange rates. Management uses derivative financial
instruments to mitigate or eliminate certain of those risks. However,
significant part of those derivative instruments do not qualify as hedge
derivatives under the strict hedge criteria of SFAS 133. Since derivative
instruments that do not qualify for hedge accounting are marked to their fair
market value on the balance sheet, and their changes in fair value is recognized
in earnings, this may induce volatility in earnings for the effect of this new
standard.

  EMPLOYEE BENEFIT PLANS

     Under French GAAP, since January 1998 Vivendi Universal has recorded its
pension obligations, covering all eligible employees, using the projected unit
credit method. Under US GAAP, the projected unit credit method was required to
be applied beginning January 1, 1989. The transition obligation or fund excess
determined as of January 1, 1989 is amortized over the average remaining service
period of the population that was covered under the plan at that date. No
minimum liability adjustment is recognized in French GAAP, whereas under US
GAAP, a minimum pension liability is required to be recognized when the
accumulated benefit obligation exceeds the fair value of plan assets by an
amount in excess of any prepaid pension cost.

     Under French GAAP, some postretirement benefits other than pensions are
recorded as expense when amounts are paid. Under US GAAP, an obligation for
amounts to be paid under postretirement plans other than pensions must be
recognized. A postretirement transition obligation may be determined as of
January 1, 1995 and amortized over the average remaining service period of
employees covered by the plan. Current period charges are based on estimated
future payments to expected retirees.

  STOCK BASED COMPENSATION

     Under French GAAP, in case of the issuance of new shares, shareholders'
equity is credited for the cumulative strike price to reflect the issuance of
shares upon the exercise of options. In the other cases, treasury shares held to
fulfill obligations under stock options granted are recorded as marketable
securities and are carried at the lower of their historical cost or their fair
value or the strike price of the stock-options hedged. Vivendi Universal
recognizes any resulting holding gain in the period that the shares are sold to
the plan. Vivendi Universal shares sold to employees through qualified employee
stock purchase plans are reclassified from marketable securities to share
capital. In accordance with French GAAP, Vivendi Universal has not recorded
compensation expense on stock-based plans with a discounted strike price up to
20% from the average market price of Vivendi Universal shares over the last 20
business days prior to the date of authorization by the Board of Directors.

     Under US GAAP plans that sell or grant common shares or stock options to
employees are qualified as compensatory if such plans are not open to
substantially all employees and do not require the employee to make a reasonable
investment in the shares, usually defined as no less than 85% of the market
value at the grant date. If a stock purchase plan is deemed to be compensatory,
compensation arising from such plan is measured based on the intrinsic value of
the shares sold or options granted to employees. If a stock option plan is
deemed to be compensatory, the compensation expense is calculated as the
difference between the fair value of the stock at the grant date and the strike
price. Compensation expense for compensatory stock based compensation plans is
generally recognized over the vesting period.

                                       F-90
Vivendi Universal accounts for its stock compensation arrangement under the
intrinsic value method in accordance with Accounting Principles Board (APB)
opinion No 25, accounting for stock issued to employees, and FASB interpretation
No 44, Accounting for Certain Transactions Involving Stock Compensation. The
company has adopted the disclosure -- only provisions of FASB Statement No 123,
accounting for stock based compensation. If Vivendi Universal had elected to
recognize compensation expense for the granting of options under stock options
plans based on the fair value of the grant date consistent with the methodology
prescribed by Statement No 123, net income (loss) and net income (loss) per
share would have been reported at the following pro forma amounts.
YEAR ENDED DECEMBER 31,
                                                        ---------------------------------------
                                                            2002          2001          2000
                                                        ------------   -----------   ----------
                                                        (IN MILLIONS, EXCEPT PER SHARE AMOUNT)
Net income under US GAAP as reported..................   E (44,447)     E (1,172)     E 1,908
Add: Stock-based employee compensation expense
  included in reported net income, net of related tax
  effects.............................................          68            33           96
Deduct: Total stock-based employee compensation
  expense determined under fair value based method for
  all awards, net of related tax effects..............        (524)         (514)        (154)
                                                         ---------      --------      -------
Pro forma net income under US GAAP....................   E (44,903)     E (1,653)     E 1,850
                                                         =========      ========      =======
Earnings per share:
  Basic -- as reported................................   E  (40.89)     E  (1.19)     E  3.24
  Basic -- pro forma..................................   E  (41.31)     E  (1.69)     E  3.14
Earnings per share:
  Diluted -- as reported..............................   E  (40.89)     E  (1.19)     E  3.03
  Diluted -- pro forma................................   E  (41.31)     E  (1.69)     E  2.94
INVESTMENTS IN DEBT AND EQUITY SECURITIES

     Under French GAAP, investments in debt and non-consolidated equity
securities are recorded at acquisition cost and an allowance is provided if
management deems that there has been an other-than-temporary decline in fair
value. Unrealized gains and temporary unrealized losses are not recognized.
Under US GAAP, investments in debt and equity securities are classified into
three categories and accounted for as follows: debt securities that Vivendi
Universal has the intention and ability to hold to maturity are carried at cost
and classified as "held-to-maturity"; debt and equity securities that are
acquired and held principally for the purpose of sale in the near term are
classified as "trading securities" and are reported at fair value, with
unrealized gains and losses included in earnings; all other investment
securities not otherwise classified as either "held-to-maturity" or "trading"
are classified as "available-for-sale" securities and reported at fair value,
with unrealized gains and losses excluded from earnings and reported in
shareholders' equity, net of deferred income taxes.

  TREASURY SHARES

     Under French GAAP, treasury shares are recorded as a reduction of
shareholders' equity except when the shares have been acquired to stabilize the
market price or in connection with stock options granted to employees, in which
case they are recorded as marketable securities. Gains or losses on the disposal
of treasury shares recorded as marketable securities are recorded in current
period earnings. Under US GAAP, treasury shares are recorded as a reduction of
shareholders' equity. Gains or losses on the disposal of treasury shares are
recognized as an adjustment to shareholders' equity.

                                       F-91
PRINCIPLES OF CONSOLIDATION

  Use of the Proportionate Consolidation Method

     As discussed in Note 1, under French GAAP, investments in jointly
controlled companies, where Vivendi Universal and outside shareholders have
agreed to exercise joint control over significant financial and operational
policies are accounted for using the proportionate consolidation method. Under
US GAAP, these investments would be consolidated or accounted for using the
equity method depending on the percentage of voting interest held. Summarized
financial information for investments accounted for using the proportionate
consolidation method is provided in Note 4. This difference in accounting policy
has no effect on either net income or shareholders' equity.

  Special Purpose Entity

     Under French GAAP, a Special Purpose Entity (SPE) is included in the scope
of consolidation whenever one or more controlled enterprises have in substance,
by virtue of contracts, agreements or statutory clauses, control of the entity
and are its shareholders or partners. Where one or more enterprises controlled
by Vivendi Universal have, in substance, control of a SPE but do not hold any
ownership share of this entity, the SPE is not consolidated and the Notes to
Consolidated Financial Statements disclose in detail the assets, liabilities and
profits or losses of the SPE.

     Under US GAAP, a Special Purpose Entity (SPE) where one or more enterprises
controlled by Vivendi Universal have, in substance, control of a SPE but do not
hold any ownership share of this entity, could be consolidated if the
enterprises controlled by Vivendi Universal hold the majority of the risks and
rewards, even if they do not hold any ownership share of the SPE.

  Exceptional Items

     French GAAP defines exceptional items differently from the definition of
extraordinary items under US GAAP, thus items classified as exceptional for
French GAAP purposes are reclassified to the appropriate income statement
captions determined under US GAAP. With the exception of gains and losses on
sales of shares of affiliated companies, exceptional items relating to the
operations of the group have been included in the determination of operating
income. Capital gains or losses on the sale of consolidated entities or equity
affiliates are considered for French GAAP purposes as exceptional income (loss),
whereas they are classified for US GAAP purposes as other income (loss).

  NEW US ACCOUNTING PRONOUNCEMENTS TO BE APPLIED BY THE GROUP FROM JANUARY 1,
  2003

     In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations (SFAS 143). SFAS 143 requires legal obligations associated with the
retirement of long-lived assets to be recognized at their fair value at the time
that the obligations are incurred. Upon initial recognition of a liability, that
cost should be capitalized as part of the related long-lived asset and allocated
to expense over the useful life of the asset. SFAS 143 is effective for fiscal
years beginning after June 15, 2002. Vivendi Universal does not anticipate that
adoption of SFAS 143 will have a material impact on its results of operations or
its financial position.

     In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections
(SFAS 145). SFAS 145 also amends other existing authoritative pronouncements to
make various technical corrections, clarify meanings, or describe their
applicability under changed conditions. SFAS 145 is effective for fiscal years
beginning after May 15, 2002. Vivendi Universal does not anticipate that
adoption of SFAS 145 will have a material impact on its results of operations or
its financial position.

     In June 2002, the FASB issued SFAS 146, Accounting for Costs Associated
with Exit or Disposal Activities (SFAS 146) that nullifies EITF 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring), and changes the
timing of recognition for certain exit costs associated with restructuring
activities. Under
                                       F-92
SFAS 146 certain exit costs, including some employee termination benefits, would
be recognized over the period in which the restructuring activities occur.
Currently, exit costs are recognized when a company commits to a restructuring
plan. SFAS 146 is effective for exit or disposal activities that are initiated
after December 31, 2002. Vivendi Universal does not anticipate that adoption of
SFAS 146 will have a material impact on its results of operations or its
financial position.

     In December 2002, the FASB issued SFAS No. 148, Accounting for Stock Based
Compensation-Transition and Disclosure (SFAS 148). SFAS 148 addresses financial
accounting and reporting for recording expenses for the fair value of stock
options. It amends the disclosure provisions of SFAS 123 to require prominent
disclosure in the summary of significant account policies of the effects of an
entity's accounting policy with respect to stock-based employee compensation on
reported net income and earnings per share in annual financial statements. The
annual disclosure requirements of SFAS 148 are effective for fiscal years ending
after December 15, 2002. Vivendi Universal does not anticipate that adaption of
SFAS 148 will have a material impact on its results of operations or its
financial position.

     In November 2002, the FASB issued FASB interpretation No. ("FIN") 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, including
Indirect Guarantees of Indebtedness of Others." FIN 45 elaborates on the
disclosure requirements of a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has issued. It
also requires a guarantor to recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing certain
guarantees. FIN 45 also incorporates, without change, the guidance in FIN 34,
"Disclosure of Indirect Guarantees of Indebtedness of Others," which it
supersedes. The incremental disclosure requirements of FIN 45 are effective for
financial statements of interim or annual periods ending after December 15,
2002. The initial recognition and initial measurement provisions are applicable
to guarantees issued or modified after December 31, 2002. The accounting
followed by a guarantor on prior guarantees may not be changed to conform to the
guidance of FIN 45. Vivendi Universal has adopted the incremental disclosure
requirements of FIN 45. Vivendi Universal is currently in the process of
evaluating the impact of adopting FIN 45 on its consolidated balance sheet and
statements of operations.

     In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation
of Variable Interest Entities an interpretation of ARB No. 51 ("FIN 46"). FIN 46
requires certain variable interest entities to be consolidated by the primary
beneficiary of the entity if the equity investors in the entity do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. The disclosure provisions of
FIN 46 are effective for financial statements initially issued after January 31,
2003. Public entities with a variable interest in a variable interest entity
created before February 1, 2003 shall apply the consolidation requirements of
FIN 46 to that entity no later than the beginning of the first annual reporting
period beginning after June 15, 2003. FIN 46 is effective for all new variable
interest entities created or acquired after January 31, 2003. Vivendi Universal
is currently assessing what the impact of FIN 46 will be on its financial
statements.

17.2 SPECIFIC TRANSACTIONS OCCURRED IN 2002 AND 2001

17.2.1 GOODWILL IMPAIRMENT CHARGE

  French GAAP

     At December 31, 2001, following the market decline, particularly in the
Internet, media and telecommunications industries, our annual review resulted in
a non-cash, non-recurring goodwill impairment charge of E 12.9 billion (E 12.6
billion after E 0.3 billion minority interest concerning Veolia Environnement).
In light of deteriorating economic conditions since this date and the impact of
higher financing cost for the company, management has recorded a complementary
impairment charge of approximately E 18.4 billion as at December 31, 2002.

                                       F-93
US GAAP

     According to SFAS 121, no impairment was indicated as of December 31, 2001
and, accordingly, the goodwill impairment charge accounted for under French GAAP
was reversed on December 31, 2001. Upon the adoption of SFAS 142 and SFAS 144,
Vivendi Universal recorded on December 31, 2002, an impairment charge of E 38.3
billion.

17.2.2 DISPOSAL OF INVESTMENT IN BSKYB

  The Transaction

     In October 2001, Vivendi Universal sold approximately 96% (400.6 million
shares) of its investment in BSkyB to two British companies for proceeds of
approximately E 4 billion. This transaction was entered into in order to comply
with requirements imposed by the European Commission in October 2000, whereby
approval of the Merger Transactions was conditional on the disposal of the
investment in BSkyB before the end of 2002. Additionally, the sale relieved the
overhang which weighed on the BSkyB share price by allowing for the placement of
the shares on the market over an extended period of time. The sale also resulted
in the irrevocable and definitive loss of all voting rights attached to the
BSkyB shares, which cannot, under any circumstances, revert back to Vivendi
Universal. BSkyB Holding, a Vivendi Universal subsidiary, also irrevocably lost
the directorship held in its name.

     The two British companies were financed by the issuance of bonds
exchangeable into BSkyB shares. The bonds, which mature in October 2005, were
sold to a financial institution to which the BSkyB shares were pledged.
Concurrently, Vivendi Universal and the same financial institution entered into
a total return swap agreement with a nominal value of L2.5 billion or 629 pence
per share (sale price of 616 pence per share plus 13 pence per share for
financing the exchangeable bond). The total return swap agreement results in
Vivendi Universal retaining the financial risk or benefit associated with
BSkyB's market value until no later than October 2005. At inception, the swap
had a notional amount of L2.5 billion and a nil fair market value. The swap
features a resetting mechanism at the end of each calendar quarter or each
trigger date (any date on which the BSkyB share price varies by more than 10%
since the preceding quarter-end or previous trigger date). In the event the
BSkyB share price falls below 629 pence per share, Vivendi Universal will pay
the difference to the financial institution at the end of each calendar quarter
or immediately if the share price falls by more than 10%. In the event the BSkyB
share price increases above 629 pence per share, the difference is posted to a
deferred account until the swap agreement matures. Additionally, at the end of
each calendar quarter Vivendi Universal incurs interest at Libor +0.60% on the
nominal value of the swap. The European Commission designated an independent
expert to verify the legality of the transaction. Based on his findings, the
European Commission concluded that the transaction was compliant with
requirements imposed in October 2000. On behalf of the European Commission, the
independent expert has continued to monitor Vivendi Universal's commitments
related to the transaction until its conclusion.

     In December 2001, the financial institution issued share certificates
exchangeable into 150 million BSkyB shares, representing 37% of the shares held
by the British companies. At the same time, Vivendi Universal and the financial
institution agreed to reduce the nominal value of the total return swap by the
same proportion (37%). This definitively established the value of the 150
million BSkyB shares at 700 pence per share, including a block discount of 11%
(higher than a standard discount due to the characteristics of the financial
instrument placed on the market).

     In May 2002, the financial institution sold the remaining 250 million BSkyB
shares held by the QSPEs, and concurrently, Vivendi Universal and the financial
institution terminated the total rate of return swap on those shares, which were
settled at approximately 670 pence per share, before Vivendi Universal's payment
of related costs.

  French GAAP

     Under French GAAP, the disposal of the investment in BSkyB was not
recognized as a sale in 2001 because, although the beneficial interests of the
two British companies are held by the financial institution,

                                       F-94
Vivendi Universal remains a shareholder of the two companies and retains the
financial exposure relative to their assets through the total return swap
agreement. Accordingly, an asset representing the BSkyB shares held by the
British companies (E 1,547 million) and a liability representing the borrowings
(E 3,948 million) used to acquire them are recorded in Vivendi Universal's
consolidated financial statements. However, the December 2001 capital gain
before tax of E 1.1 billion was recognized as definitive due to the reduction in
the nominal value of the total return swap in connection with the issuance of
150 million exchangeable shares certificates.

     In May 2002, as a result of the termination of the total rate of return
swap on those shares, Vivendi Universal recognized a pre-tax gain of
approximately E 1.6 billion, net of expenses, and was able to reduce gross debt
by approximately E 4 billion.

  US GAAP

     Under US GAAP, the disposal of the BSkyB shares to the two British
companies was recognized as a sale as defined by SFAS No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities a
replacement of FASB Statement 125, as the British companies met all the criteria
of Qualified Special Purpose Entities (QSPE). Consequently, a E 1.3 billion
pre-tax capital gain was recognized in 2001. The total return swap was accounted
for a derivative instrument under SFAS 133, at fair value with changes in fair
value recognized in current period earnings. It was recognized as income in the
amount of E 523 million at December 31, 2001.

     As a result of the termination of the total return swap in May 2002,
Vivendi Universal recognized a pre-tax loss of E 523 million.

17.2.3 ACCOUNTING FOR VEOLIA ENVIRONNEMENT

  French GAAP

     Note 3.2.3 to the consolidated financial statements describes a series of
transactions that took place during 2002 in connection with the reduction of the
Vivendi Universal's holdings in Veolia Environnement. Under French GAAP, Vivendi
Universal consolidated its investment in Veolia Environnement until December 31,
2002, when Vivendi Universal reduced its ownership interest in Veolia
Environnement from 41% down to 20.4%. Until that date, Vivendi Universal held
more than 40% of Veolia Environnement's outstanding shares and no other
shareholder held, directly or indirectly, a greater proportion of Veolia
Environnement's voting rights than Vivendi Universal.

  US GAAP

     Under US GAAP, the equity method of accounting was applied beginning July
1, 2002, the date at which Vivendi Universal's equity and voting interest was
reduced to 48%. This difference between French GAAP and US GAAP has no impact on
the reconciliation of shareholders' equity, net income and comprehensive income
to US GAAP.

     The following special purpose condensed statement of income and statement
of cash flows have been prepared on the basis of French GAAP, with the use of
the equity method of accounting for the Vivendi Universal's investment in Veolia
Environnement applied beginning July 1, 2002. The statement of income should be
read in conjunction with the reconciliation of net income under French GAAP to
US GAAP included in Note 17.3.2 to the Financial Statements.

                                       F-95
CONDENSED SPECIAL PURPOSE INCOME STATEMENT
YEAR ENDED
                                                                DECEMBER 31, 2002
                                                                   ON THE BASIS
                                                                 DESCRIBED ABOVE
                                                              ----------------------
                                                              (IN MILLIONS OF EUROS)
REVENUES....................................................        E  43,063
Cost of revenues............................................          (28,754)
Selling, general and administrative expenses................          (10,871)
Other operating expenses, net...............................             (550)
                                                                    ---------
OPERATING INCOME............................................            2,888
Financial expenses, net.....................................             (996)
Financial provisions........................................           (2,839)
Other income (expense)......................................             (696)
                                                                    ---------
INCOME BEFORE EXCEPTIONAL ITEMS, INCOME TAXES, GOODWILL
  AMORTIZATION, EQUITY INTEREST AND MINORITY INTEREST.......           (1,643)
Exceptional items, net......................................            1,694
Income tax (expense) benefit................................           (2,416)
                                                                    ---------
INCOME BEFORE GOODWILL AMORTIZATION, EQUITY INTEREST AND
  MINORITY INTEREST.........................................           (2,365)
Equity in (losses) earnings of disposed businesses..........               17
Equity in (losses) earnings of unconsolidated companies.....             (685)
Goodwill amortization.......................................           (1,129)
Goodwill impairment.........................................          (18,442)
                                                                    ---------
INCOME (LOSS) BEFORE MINORITY INTEREST......................          (22,604)
Minority interest...........................................             (697)
                                                                    ---------
NET INCOME (LOSS)...........................................        E (23,301)
                                                                    =========
EARNINGS (LOSS) PER BASIC SHARE.............................        E  (21.43)
                                                                    =========
ADJUSTMENTS TO CONFORM TO U.S. GAAP:
  Cumulative effect of change in accounting principles,
     after tax, impairment resulting from adoption of FAS
     142....................................................        E (15,540)
  Business combination and goodwill.........................              (36)
  Goodwill impairment charge................................           (4,425)
  Impairment of long-lived assets...........................              113
  Intangible assets.........................................               (5)
  Financial instruments.....................................              854
  Disposal of investment in BSkyB...........................           (2,025)
  Employee benefit plans....................................              (70)
  Other.....................................................              (51)
Tax effect on adjustments...................................            1,509
Adjustments to conform to U.S. GAAP relative to Veolia
  Environnement.............................................           (1,470)
                                                                    ---------
     Sub-total..............................................          (21,146)
                                                                    ---------
U.S. GAAP NET INCOME (LOSS).................................        E (44,447)
                                                                    ---------
F-96
CONDENSED SPECIAL PURPOSE STATEMENT OF CASH FLOWS
YEAR ENDED
                                                                DECEMBER 31, 2002
                                                                   ON THE BASIS
                                                                 DESCRIBED ABOVE
                                                              ----------------------
                                                              (IN MILLIONS OF EUROS)
CASH FLOW FROM OPERATING ACTIVITIES:
  Net income (loss).........................................        E (23,301)
  Reversal of equity in (losses) earnings of sold
     businesses.............................................              (17)
  Adjustments to reconcile net income to net cash provided
     by operating activities:                                              --
     Depreciation and amortization..........................           23,163
     Financial provisions...................................            2,839
     Gain on sale of property and equipment and financial
      assets, net...........................................           (2,119)
     Undistributed earnings from affiliates, net............              840
     Deferred taxes.........................................            1,704
     Minority interest......................................              697
  Changes in assets and liabilities, net of effect of
     acquisitions and dispositions:                                      (517)
                                                                    ---------
       NET CASH PROVIDED BY OPERATING ACTIVITIES............            3,289
CASH FLOW FROM INVESTING ACTIVITIES:
  Purchase of property, plant, equipment and other..........           (2,837)
  Proceeds from sale of property, plant, equipment and
     other..................................................              217
  Purchase of investments...................................           (4,682)
  Sale of investments.......................................            9,714
  Sale of spirits and wine business.........................               --
  Sale (purchase) of portfolio investments..................               --
  Net decrease (increase) in financial receivables..........           (1,626)
  Purchase of treasury shares held as marketable
     securities.............................................               --
  Sales (purchases) of other marketable securities..........              312
                                                                    ---------
       NET CASH PROVIDED BY (USED FOR) INVESTING
        ACTIVITIES..........................................            1,098
CASH FLOW FROM FINANCING ACTIVITIES:
  Net increase (decrease) in short-term borrowings..........           (3,235)
  Notes mandatorily redeemable for new shares of Vivendi
     Universal..............................................              767
  Proceeds from issuance of borrowings and other long-term
     debt...................................................            2,152
  Principal payment on borrowings and other long-term
     liabilities............................................           (1,515)
  Net proceeds from issuance of common shares...............               63
  Sales (purchases) of treasury shares......................            1,973
  Cash dividends paid.......................................           (1,243)
  Cash payment to USA Interactive...........................           (1,757)
                                                                    ---------
       NET CASH (USED FOR) PROVIDED BY FINANCING
        ACTIVITIES..........................................           (2,795)
  Effect of foreign currency exchange rate changes on cash
     and cash equivalents...................................              978
                                                                    ---------
CHANGE IN CASH AND CASH EQUIVALENTS.........................        E   2,570
                                                                    =========
CASH AND CASH EQUIVALENTS:
  Beginning.................................................        E   4,725
                                                                    =========
  Ending....................................................        E   7,295
                                                                    =========
F-97
17.2.4 AMORTIZATION OF ACQUIRED FILM COST

  FRENCH GAAP

     Under French GAAP, Vivendi Universal estimated the fair value of films
acquired in the context of the Seagram Transaction in accordance with the
normalized margin method.

  US GAAP

     Under US GAAP, FAS 142, which became effective in 2002, recommends that the
fair value of films acquired in the context of a business combination should be
based on the discounted cash flow methodology rather than any other methodology.

     This difference between French GAAP and US GAAP has no impact on 2002
reconciliation of shareholders' equity, net income and comprehensive income to
US GAAP.

17.3 RECONCILIATION OF SHAREHOLDERS' EQUITY, NET INCOME AND COMPREHENSIVE INCOME
     TO US GAAP

17.3.1 RECONCILIATION OF SHAREHOLDERS' EQUITY TO US GAAP
DECEMBER 31,
                                                              ------------------------------
                                                                2002       2001       2000
                                                              --------   --------   --------
                                                                  (IN MILLIONS OF EUROS)
Shareholders' equity as reported in the Consolidated
  Statement of Shareholders' Equity.........................  E 14,020   E 36,748   E 56,675
  Adjustments to conform to US GAAP:(2)
  Business combinations and goodwill(3).....................     8,171      8,158      8,783
  Goodwill impairment charge................................    (8,861)    12,626         --
  Impairment of long-lived assets(1)........................        23        (90)       (88)
  Intangible assets(4)......................................      (462)      (427)      (329)
  Financial instruments.....................................    (1,241)    (1,492)       823
  Disposal of investment in BSkyB...........................    (1,307)       774         --
  Employee benefit plans....................................      (196)        --        (23)
  Other.....................................................      (208)      (127)       192
Tax effect on adjustments...................................     1,281       (268)    (1,304)
                                                              --------   --------   --------
                                                                11,220     55,902     64,729
                                                              --------   --------   --------
Fees associated with BSkyB swap, after tax..................        --        (37)        --
                                                              --------   --------   --------
                                                                11,220     55,865     64,729
Puts on Vivendi Universal's own shares......................      (155)    (1,597)        --
                                                              --------   --------   --------
US GAAP shareholders' equity................................  E 11,065   E 54,268   E 64,729
                                                              ========   ========   ========
---------------

(1) Those provisions relate to real estate assets.

(2) For 2002, 2001, 2000 impacts of those adjustments on French GAAP balance
    sheet are:

     - Business combinations and goodwill: "Goodwill, net"

     - Goodwill impairment charge: "Goodwill, net"

     - Impairment of long lived assets: "Property, plant and equipment, net"

     - Intangible assets: "Other intangible assets, net"

     - Financial instruments: "Other marketable securities" & "Other
       investments"

     - Disposal of investment in BSkyB: "Short-term loans receivable", "Other
       marketable securities" & "Long-term debt"

                                       F-98
- Employee benefit plans: "Reserves & allowances"

     - Tax effect on adjustments: "Deferred tax assets" & "Deferred taxes"

(3) Adjustments related to business combination and goodwill mainly impact gross
    amount of goodwill due to differences in accounting policy between French
    and US GAAP -- see note 17.1.

(4) Adjustments related to intangible assets mainly impact the accumulated
    amortization line on these assets -- see note 17.1.

17.3.2 RECONCILIATION OF NET INCOME AND EARNINGS PER SHARE TO US GAAP
YEARS ENDED DECEMBER 31,
                                                              -------------------------------
                                                                2002        2001       2000
                                                              ---------   ---------   -------
                                                                  (IN MILLIONS OF EUROS)
Net income as reported in the Consolidated Statement of
  Income....................................................  E (23,301)  E (13,597)  E 2,299
Adjustments to conform to US GAAP:
  Business combination and goodwill.........................         32        (333)     (263)
  Goodwill impairment charge................................     (4,425)     12,626        --
  Impairment of long-lived assets...........................        113          (1)      (23)
  Intangible assets.........................................        (23)        (62)     (106)
  Financial instruments.....................................        869         377       105
  Disposal of investment in BSkyB...........................     (2,025)        774        --
  Employee benefit plans....................................        (72)        (33)     (108)
  Other(2)..................................................        (83)       (290)      (46)
Tax effect on adjustments...................................      1,530        (557)       50
                                                              ---------   ---------   -------
                                                                (27,385)     (1,096)    1,908
                                                              =========   =========   =======
Fees associated with BSkyB swap, after tax..................         --         (37)       --
                                                              ---------   ---------   -------
     US GAAP net income (loss), before cumulative effect of
       change in accounting principles, after tax...........  E (27,385)  E  (1,133)  E 1,908
                                                              =========   =========   =======
Cumulative effect of change in accounting principles, after
  tax(1)....................................................    (17,062)        (39)       --
                                                              ---------   ---------   -------
US GAAP net income (loss)...................................  E (44,447)  E  (1,172)  E 1,908
---------------

(1) Adoption of FAS 142 in 2002 and FAS 133 in 2001.

(2) Other adjustments mainly relate to insignificant adjustments from French
    GAAP to US GAAP net income: lease contracts, public service contracts in
    environment business & reserves not recognized under US GAAP. For 2001 this
    line includes a negative E 262 million adjustment in US GAAP on reserves
    mainly due to decoders replacement at Canal+ level.
YEARS ENDED
                                                                    DECEMBER 31,
                                                              ------------------------
                                                                 2002          2001
                                                              -----------   ----------
                                                               (IN MILLIONS OF EUROS,
                                                              EXCEPT PER SHARE AMOUNT)
Net income -- basic.........................................   E (44,447)    E (1,172)
  Dilutive effect of
     Shares issuable on conversion of debt..................          33           27
                                                               ---------     --------
  Net income diluted........................................   E (44,414)    E (1,145)
                                                               =========     ========
  Weighted average number of shares outstanding -- basic
     (millions).............................................     1,086.9        980.9
F-99
YEARS ENDED
                                                                    DECEMBER 31,
                                                              ------------------------
                                                                 2002          2001
                                                              -----------   ----------
                                                               (IN MILLIONS OF EUROS,
                                                              EXCEPT PER SHARE AMOUNT)
Dilutive effect of
     Shares issuable on conversion of debt..................       114.2         34.6
     Shares issuable on exercise of dilution options........         3.0          4.0
     Shares attributable to stock purchase plans............         1.1          4.4
     Shares applicable to warrants..........................         0.0          1.1
     Shares applicable to put options sold..................        19.9          7.2
                                                               ---------     --------
Weighted average number of shares outstanding -- diluted
  (millions)................................................     1,225.1      1,032.2
                                                               =========     ========
Earning per share -- basic..................................   E  (40.89)    E  (1.19)
Earning per share -- diluted................................   E  (40.89)    E  (1.19)
Earning per share before cumulative effect of change in
  accounting principles, after tax-basis....................   E  (25.19)    E  (1.16)
Earnings per share before cumulative effect of change in
  accounting principles after tax and dilution..............   E  (25.19)    E  (1.16)
GOODWILL AND OTHER INTANGIBLE ASSETS: ADOPTION OF STATEMENT 142
YEARS ENDED DECEMBER 31,
                                                              ---------------------------------
                                                                 2002        2001        2000
                                                              ----------   ---------   --------
                                                              (IN MILLIONS OF EUROS, EXCEPT PER
                                                                        SHARE AMOUNT)
Reported US GAAP net income.................................  E (44,447)   E (1,172)   E 1,908
Add back Goodwill amortization..............................         --       1,706        699
                                                              ---------    --------    -------
Adjusted US GAAP net income.................................  E (44,447)   E    534    E 2,607
  Basic earnings per share..................................  E  (40.89)   E   0.54    E  4.43
  Diluted earnings per share................................  E  (40.89)   E   0.54    E  4.13
17.3.3 STATEMENT OF COMPREHENSIVE INCOME (LOSS)

     Under US GAAP, the following information would be presented within the
Consolidated Financial Statements as either a separate statement or as a
component within the Consolidated Statement of Shareholders' Equity:
YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2002        2001      2000
                                                              ---------   --------   -------
                                                                  (IN MILLIONS OF EUROS)
US GAAP net income..........................................  E (44,447)  E (1,135)  E 1,908
Other comprehensive income, net of tax:.....................         --
  Foreign currency translation adjustments..................     (3,615)     1,470      (700)
  Unrealized gains (losses) on equity securities............       (560)    (3,438)    3,158
  Unrealized gains on cash flow hedges......................         --         13        --
  Minimum pension liabilities adjustment....................        (19)      (164)       (5)
                                                              ---------   --------   -------
US GAAP comprehensive income................................  E (48,641)  E (3,254)  E 4,361
                                                              =========   ========   =======
F-100
17.3.4 CONSOLIDATED STATEMENT OF INCOME

     Under Rule S-03 of Regulation S-X, revenue and related costs would be
presented within the statement of income as follows:
YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2002       2001       2000
                                                              --------   --------   --------
                                                               (FRENCH GAAP, IN BILLIONS OF
                                                                          EUROS)
Product sales, net..........................................  E  19.3    E  20.8    E   8.8
Service revenues(1).........................................     38.8       36.5       32.7
Other revenues..............................................       --         --        0.1
                                                              -------    -------    -------
  Total revenues............................................  E  58.1    E  57.3    E  41.6
                                                              =======    =======    =======
Cost of products sold.......................................  E (12.7)   E (13.0)   E  (5.4)
Cost of service revenues....................................    (27.8)     (26.5)     (24.7)
Expenses applicable to other revenues.......................       --         --       (0.1)
                                                              -------    -------    -------
  Total costs and expenses applicable to sales and
     revenues...............................................  E (40.5)   E (39.5)   E (30.2)
                                                              =======    =======    =======
---------------

(1) Includes excise taxes and contributions collected on behalf of local
    authorities in an amount of E 1.7 billion, E 1.8 billion and E 1.7 billion
    in 2002, 2001 and 2000, respectively.

17.3.5 CONSOLIDATED STATEMENT OF CASH FLOWS

     Reconciliation of Summarized Cash Flow Statement Information to US GAAP
YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2002       2001       2000
                                                              --------   --------   --------
                                                                  (IN MILLIONS OF EUROS)
Net cash provided by operating activities as reported in the
  Consolidated Statement of Cash Flows......................  E  4,670   E  4,500   E  2,514
  Adjustments to conform to US GAAP:
     VE proportionate consolidation adjustment..............      (591)      (449)      (275)
     VE accounted for using the equity method as of July 1,
       2002.................................................      (969)        --         --
     Canal+ consolidated under the equity method until
       December 2000........................................        --         --         (4)
                                                              --------   --------   --------
Net cash provided by operating activities under US GAAP.....  E  3,110   E  4,051   E  2,235
                                                              ========   ========   ========
Net cash provided by (used for) investing activities as
  reported in the Consolidated Statement of Cash Flows......  E    405   E  4,340   E (1,481)
  Adjustments to conform to US GAAP:
     VE proportionate consolidation adjustment..............       850        678        309
     VE accounted for using the equity method as of July 1,
       2002.................................................       190         --         --
     Purchase of treasury shares reclassification...........        --        141      2,456
     Canal+ consolidated under the equity method until
       December 2000........................................        --         --        885
                                                              --------   --------   --------
Net cash provided by investing activities under US GAAP.....  E  1,445   E  5,159   E  2,169
                                                              ========   ========   ========
F-101
YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2002       2001       2000
                                                              --------   --------   --------
                                                                  (IN MILLIONS OF EUROS)
Net cash (used for) financing activities as reported in the
  Consolidated Statement of Cash Flows......................  E (3,792)  E (7,469)  E   (631)
  Adjustments to conform to US GAAP:
     VE proportionate consolidation adjustment..............      (145)      (311)      (202)
     VE accounted for using the equity method as of July 1,
       2002.................................................     1,067         --         --
     Purchase of treasury shares reclassification...........        --       (141)    (2,456)
     Canal+ consolidated under the equity method until
       December 2000........................................        --         --     (1,934)
                                                              --------   --------   --------
Net cash (used for) financing activities under US GAAP......  E (2,870)  E (7,921)  E (5,223)
                                                              ========   ========   ========
Under US GAAP, changes in assets and liabilities, net of effect of
acquisitions and dispositions would be presented within the consolidated
statement of cash flows as follows:
2002       2001
                                                              --------   --------
                                                               (FRENCH GAAP, IN
                                                              MILLIONS OF EUROS)
Inventories and work-in-progress............................   E  0.2     E  0.3
Accounts receivable.........................................     (0.4)      (1.4)
Other assets................................................     (0.8)      (0.6)
                                                               ------     ------
  CHANGE IN ASSETS..........................................   E (1.0)    E (1.7)
                                                               ------     ------
Accounts payable............................................   E (1.8)    E (0.6)
Other liabilities and accrued expenses......................      0.9       (0.8)
                                                               ------     ------
  CHANGE IN LIABILITIES.....................................   E (0.9)    E (1.4)
                                                               ------     ------
  CHANGE IN ASSETS AND LIABILITIES, NET OF EFFECT OF
     ACQUISITIONS AND DISPOSITIONS..........................   E (0.1)    E (0.3)
17.4 EMPLOYEE BENEFIT PLANS

     In accordance with the laws and practices of each country in which we
operate, Vivendi Universal participates in, or maintains, employee benefit plans
providing retirement pensions and other post-retirement benefits to eligible
employees, as discussed in Note 1. Disclosures in accordance with SFAS No. 132,
Employers Disclosures about Pensions and Other Postretirement Benefits, are
presented below.

     The following tables pertain to Vivendi Universal's defined benefit and
post-retirement plans principally in the US, the UK, Canada, France, Germany and
Japan, and provide reconciliations of the changes in benefit

                                      F-102
obligations, fair value of plan assets and funded status for the two-year period
ending December 31, 2001 and 2002:
POSTRETIREMENT
                                                            PENSION BENEFITS       BENEFITS
                                                           ------------------   ---------------
                                                             2002      2001      2002     2001
                                                           --------   -------   ------   ------
                                                                  (IN MILLIONS OF EUROS)
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year..................  E  2,712   E 2,137   E  274   E  187
Service cost.............................................        54       106        2        1
Interest cost............................................       109       146       17       16
Plan participants' contributions.........................         2         8       --       --
Business combinations....................................        19       568       --       53
Disposals................................................    (1,088)     (242)     (65)      (1)
Curtailments.............................................        (2)       (9)      --       (7)
Settlements..............................................      (118)       --       --       --
Transfers................................................        54        --       --       --
Plan modifications.......................................        64        --       --       --
Actuarial loss, net......................................       109        20       38       34
Benefits paid............................................      (139)      (80)     (16)     (12)
Special termination benefits.............................         4         2       --       --
Other (foreign currency transaction).....................      (200)       56      (31)       3
                                                           --------   -------   ------   ------
Benefit obligation at end of year........................  E  1,580   E 2,712   E  219   E  274
                                                           ========   =======   ======   ======
PROJECTED BENEFIT OBLIGATION AT END OF THE YEAR
US companies.............................................       826     1,108      201      257
French companies.........................................        79     1,017       --       --
Other....................................................       675       587       18       17
                                                           --------   -------   ------   ------
                                                           E  1,580   E 2,712   E  219   E  274
                                                           ========   =======   ======   ======
CHANGE IN FAIR VALUE OF PLAN ASSETS
Fair value of plan assets at beginning of year...........     2,049     2,036       --       --
Actual return on plan assets.............................       (85)     (265)      --       --
Employers' contributions.................................        96        44       16       12
Plan participants' contributions.........................         2         8       --       --
Business combinations....................................        14       551       --       --
Disposals................................................      (980)     (315)      --       --
Settlements..............................................      (118)       --       --       --
Transfers................................................        75        --       --       --
Benefits paid............................................      (138)      (64)     (16)     (12)
Other (foreign currency translation).....................      (107)       54       --       --
                                                           --------   -------   ------   ------
Fair value of plan assets at end of year.................  E    808   E 2,049   E   --   E   --
                                                           ========   =======   ======   ======
FAIR VALUE OF PLAN ASSETS AT END OF YEAR
US companies.............................................       369       714       --       --
French companies.........................................        25       942       --       --
Other....................................................       414       393       --       --
                                                           --------   -------   ------   ------
                                                           E    808   E 2,049   E   --   E   --
                                                           ========   =======   ======   ======
F-103
POSTRETIREMENT
                                                            PENSION BENEFITS       BENEFITS
                                                           ------------------   ---------------
                                                             2002      2001      2002     2001
                                                           --------   -------   ------   ------
                                                                  (IN MILLIONS OF EUROS)
FUNDED STATUS
Underfunded obligation...................................      (772)     (663)    (219)    (274)
Unrecognized actuarial (gain) loss.......................       424       480       54       37
Unrecognized prior service benefit.......................        39       (70)      (4)      (4)
Unrecognized net transition asset........................        --       (16)      --       --
Write-off of prepaid on multi-employer scheme
  overtime(1)............................................        --       (38)      --       --
                                                           --------   -------   ------   ------
US GAAP net accrued liability............................  E   (309)  E  (307)  E (169)  E (241)
                                                           ========   =======   ======   ======
---------------

(1) Prepaid arising from multi-employer plans overtime (activities under lease
    contract) are written off since it is unlikely that they will be recoverable
    through future contribution holidays.

     The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were E 1,462 million, E 1,383 million and E 660
million, respectively, as of December 31, 2002 and E 1,864 million, E 1,654
million and E 1,008 million, respectively, as of December 31, 2001. These
amounts are shown in detail in the table below:
2002      2001
                                                              -------   -------
                                                               (IN MILLIONS OF
                                                                   EUROS)
U.S. COMPANIES
  Accumulated benefit obligation............................  E   799   E   984
  Projected benefit obligation..............................  E   825   E 1,108
  Plan assets at fair value.................................  E   368   E   714
                                                              -------   -------
UK COMPANIES
  Accumulated benefit obligation............................  E   310   E   216
  Projected benefit obligation..............................  E   336   E   236
  Plan assets at fair value.................................  E   243   E   208
                                                              -------   -------
FRENCH COMPANIES
  Accumulated benefit obligation............................  E    56   E   262
  Projected benefit obligation..............................  E    69   E   318
  Plan assets at fair value.................................  E    10   E    67
                                                              -------   -------
OTHER COMPANIES
  Accumulated benefit obligation............................  E   218   E   192
  Projected benefit obligation..............................  E   232   E   202
  Plan assets at fair value.................................  E    39   E    19
                                                              -------   -------
TOTAL
  Accumulated benefit obligation............................  E 1,383   E 1,654
  Projected benefit obligation..............................  E 1,462   E 1,864
  Plan assets at fair value.................................  E   660   E 1,008
                                                              -------   -------
F-104
Amounts recognized in the balance sheet at December 31 consist of:
POSTRETIREMENT
                                                   PENSION BENEFITS        BENEFITS
                                                   -----------------   -----------------
                                                    2002      2001      2002       2001
                                                   -------   -------   ------     ------
                                                          (IN MILLIONS OF EUROS)
Prepaid benefit cost.............................  E   73    E  240    E   --     E   --
Accrued benefit liability........................    (778)     (810)     (169)      (241)
                                                   ------    ------    ------     ------
US GAAP net accrued liability....................  E (705)   E (570)   E (169)    E (241)
Minimum liability adjustment(1)..................     396       263        --         --
                                                   ------    ------    ------     ------
US GAAP net accrued liability recognized.........  E (309)   E (307)   E (169)    E (241)
                                                   ======    ======    ======     ======
---------------

(1) US GAAP requires the recognition of a liability when the accumulated benefit
    obligation exceeds the fair value of plan assets by an amount in excess of
    any accrued or prepaid pension cost reported. The additional liability is
    offset by an intangible asset, up to the amount of any unamortized prior
    service cost and the excess, if any, is recorded as a reduction of
    shareholder's equity, net of tax. US GAAP does not permit the recognition of
    an asset if the fair value of the plan assets exceeds the accumulated
    benefit obligation.

Net accruals in the accompanying consolidated balance sheet can be compared with
the balances determined under US GAAP as follows:
POSTRETIREMENT
                                                   PENSION BENEFITS        BENEFITS
                                                   -----------------   -----------------
                                                    2002      2001      2002       2001
                                                   -------   -------   ------     ------
                                                          (IN MILLIONS OF EUROS)
US GAAP net accrued liability....................  E (705)   E (570)   E (169)    E (241)
Excess funding of plans recognized in income only
  when paid back to Vivendi Universal............      (1)       (2)       --         --
Impacts of transition obligation, prior service
  costs and actuarial gains recognized with a
  different timing under local regulations.......      --       (74)       --         (1)
Minimum liability adjustment.....................     396       263        --         --
                                                   ------    ------    ------     ------
French GAAP net accrued liability in consolidated
  financial statements...........................  E (310)   E (383)   E (169)    E (242)
                                                   ======    ======    ======     ======
Accrued..........................................  E (383)   E (623)   E (169)    E (242)
Prepaid..........................................  E   73    E  240    E   --     E   --
F-105
Net periodic pension cost and other post-retirement benefit costs under US
GAAP for the years ended December 31 2000, 2001 and 2002 include the following
components:
POST-RETIREMENT
                                               PENSION BENEFITS            BENEFITS
                                            ----------------------   --------------------
                                            2002     2001    2000    2002   2001    2000
                                            -----   ------   -----   ----   ----   ------
                                                       (IN MILLIONS OF EUROS)
Service cost..............................  E  54   E  106   E  56   E  2   E  1   E   --
Expected interest cost....................    109      146      66     17     16        1
Expected return on plan assets............    (83)    (171)    (91)    --     --       --
Amortization of prior service costs.......      4       (8)     (9)    (1)    (1)      --
Amortization of actuarial gains...........     32        7     (12)     1     --       --
Amortization of transition asset..........     --       (5)     (2)    --     --       --
Curtailments/settlements..................     85       (3)     (1)    --     (7)      --
Write-off of prepaid on multi-employer
  scheme overtime.........................      3        7      22     --     --       --
                                            -----   ------   -----   ----   ----   ------
US GAAP net benefit cost..................  E 204   E   79   E  31   E 19   E  9   E    1
                                            =====   ======   =====   ====   ====   ======
Annual cost under French GAAP was E 198 million and E 31 million for the
years ended December 31, 2002 and 2001, respectively. The difference between
these amounts and the annual cost under US GAAP primarily results from the
amortization of the initial transition liability and of actuarial gains and
losses. In addition, certain companies do not recognize the excess funding.

     The weighted-average rates and assumptions utilized in accounting for these
plans for the years ended December 31 2001 and 2002 were:
POST-
                                                              PENSION     RETIREMENT
                                                             BENEFITS      BENEFITS
                                                            -----------   -----------
                                                            2002   2001   2002   2001
                                                            ----   ----   ----   ----
                                                             (IN MILLIONS OF EUROS)
Discount rate.............................................   5,7%   6,3%  6,0%    6,9%
Expected return on plan assets............................   7,2%   7,4%  N/A     6,0%
Rate of compensation increase.............................   3,5%   4,3%  3,7%    3,0%
Expected residual active life (in years)..................  12,5   14,5   16,1   13,0
Expected long-term rates of return for the plan assets have been determined
taking into account, for each country where Vivendi Universal has plan assets,
the structure of the asset portfolio and the expected rates of return for each
of the components. Vivendi Universal mainly has plan assets in the US, the UK
and Canada. In these three countries the expected long-term rates of return for
plan assets were respectively 9% as of December 31, 2002 and 10% as of December
31, 2001 for the US plans, 6.25% as of December 31, 2002 and 6.75% as of
December 31, 2001 for the UK plans and 5% as of December 31, 2002 and 5.75% as
of December 31, 2001 for the Canadian plans.

     For post-retirement benefit measurement purposes, Vivendi Universal assumed
growth in the per capita cost of covered health care benefits (the health care
cost trend rate) would gradually decline from 10% and 12% in the pre-age 65 and
post-age 65 categories, respectively in 2002 to 5.5% and 5.5%, pre-age 65 and
post-age 65, respectively by 2010. In 2002, a one-percentage-point increase in
the annual trend rate would have increased the post-retirement obligation by
E 12 million and the pre-tax expense by E 1 million; conversely, a
one-percentage-point decrease in the annual trend rate would have decreased the
post-retirement benefit obligation by almost E 11 million and the pre-tax
expense by E 1 million.

     Retirement costs of multi-employer plans in France consist of defined
contributions determined in accordance with the French law. Defined
contributions for the French businesses retained at the end of 2002

                                      F-106
amounted to E 73 million in 2002 compared to E 67 million in 2001 for those same
businesses and were expensed during the year in which they were incurred.

17.5 STOCK BASED COMPENSATION

17.5.1 EMPLOYEE STOCK OPTION PLANS

     Since its creation through the Merger Transactions on December 8, 2000,
Vivendi Universal has adopted several stock options plans under which options
may be granted to employees to purchase Vivendi Universal common shares at not
less than the fair market value of the shares on the date of the grant. For the
most common plans, one third of the outstanding options vest annually at the end
of each of three years from the grant date. Two-thirds of the outstanding
options become exercisable at the beginning of the third year from the grant
date, the remaining one third becomes exercisable at the beginning of the fourth
year from the grant date.

     For one exceptional performance-related plan, the "out-performance" plan
granted on December 8, 2000, outstanding options vest after six years, but can
be accelerated after three years based upon the performance of Vivendi Universal
common stock versus a composite of the MSCI and Stoxx Media Indices. Under all
plans, outstanding options expire eight years from the date of the grant. Under
both French and US GAAP, no compensation expense has been recorded in connection
with these plans.

     Prior to the Merger Transactions, both Vivendi and Canal+ Group had adopted
various stock options plans under which options were granted to employees to
purchase common shares at strike prices below the fair market value of the
shares on the dates of the grants. At Vivendi, the strike prices were discounted
12.5% to 20% below the fair market value of the shares on the dates of the
grants, at Canal+ Group, the discounts were between 0% and 10%. Under these
plans, outstanding options vest over a 3 to 5 year period from the date of the
grant, become exercisable over a 3 to 5 year period from the date of the grant
and expire 7 to 10 years from the date of the grant. On December 8, 2000,
outstanding options under the Canal+ Group options plans were converted to or
replaced by Vivendi Universal stock options plans. On this date, the plans were
modified so that the options vest in the same way than the new options of the
most common plans of Vivendi Universal, described above. Under French GAAP, no
compensation expense has been recorded in connection with these stock options
plans. Under US GAAP the compensation cost recorded in connection with these
plans was E (17.8) million and E 29.9 million for the years ended December 31,
2002 and 2001.

     At the end of June 2002, Veolia Environnement was no longer considered as a
subsidiary of Vivendi Universal under US GAAP, which implied a change of status
of its employees, who are thus no longer considered as employees of Vivendi
Universal. Some of these employees were granted stock-options of Vivendi
Universal during the past three years and part of these options were not vested
at that date. Since no specific clause was included in the rules of the stock
options plans that foresees the terms of a change of status of the grantees, the
stock options were neither cancelled nor modified and vest in the same way than
before the change of status.

     Therefore, the compensation cost for stock options plans on Vivendi
Universal shares held by Veolia Environnement employees has to be remeasured
using the fair value method, until these options are definitively vested. The
compensation cost recorded in connection with these stock options plans for the
year ended December 31, 2002 is non significant before the change in status and
E 0.7 million after the change in status.

     In 2001 and 2002, Vivendi Universal granted stock options to the employees
of companies it acquired in order to replace their existing stock-options plans.
The most important companies are USA Networks, MP3.com and StudioCanal. Under
both French and US GAAP, the fair value of the stock options was recorded in
addition to the purchase price; however some compensation cost will be
recognized under US GAAP for the unvested portion of these options until they
are vested to the grantees. The compensation cost recorded in connection with
these plans was E 20.9 million and nil for the years ended December 31, 2002 and
2001.

                                      F-107
Transactions involving the combined stock options of Vivendi Universal and
CANAL+ are summarized as follows:
EXERCISE PRICE OF
                                                           STOCK OPTIONS     STOCK OPTIONS
                                                            OUTSTANDING       OUTSTANDING
                                                           -------------   -----------------
BALANCE, DECEMBER 31, 1999...............................   25,902,867          E 46,2
Granted..................................................   15,131,761          E 85,7
Exercised................................................   (2,329,062)         E 17,3
Cancelled................................................     (126,216)         E 19,2
                                                            ----------          ------
BALANCE, DECEMBER 31, 2000...............................   38,579,350          E 67,0
Granted..................................................    8,827,226          E 48,9
Exercised................................................   (1,630,306)         E 36,8
Cancelled................................................     (180,315)         E 24,4
                                                            ----------          ------
BALANCE, DECEMBER 31, 2001...............................   45,595,955          E 61,0
Granted..................................................    3,186,392          E 19,2
Adjusted.................................................    1,435,325          E 60,8
Exercised................................................     (176,510)         E 20,2
Cancelled................................................   (1,325,335)         E 56,9
                                                            ----------          ------
BALANCE, DECEMBER 31, 2002...............................   48,715,827          E 58,5
                                                            ==========          ======
On December 8, 2000, 39,999,747 Seagram stock options were converted into
32,061,549 Vivendi Universal stock options on ADS's. Under both French and US
GAAP, no compensation expense has been recorded in connection with the Seagram
stock options plans. Transactions involving the stock options on ADSs are
summarized as follows:
WEIGHTED
                                                                               AVERAGE
                                                                            EXERCISE PRICE
                                                                                OF ADS
                                                              ADS OPTIONS      OPTIONS
                                                              OUTSTANDING    OUTSTANDING
                                                              -----------   --------------
BALANCE, DECEMBER 8, 2000...................................  32,061,549        $54,1
Granted.....................................................   6,878,697        $67,9
Exercised...................................................    (116,257)       $45,7
Cancelled...................................................     (29,941)       $56,1
                                                              ----------        -----
BALANCE, DECEMBER 31, 2000..................................  38,794,048        $56,6
Granted.....................................................   7,626,536        $55,9
Exercised...................................................  (3,520,575)       $45,4
Cancelled...................................................  (1,204,118)       $72,9
                                                              ----------        -----
BALANCE, DECEMBER 31, 2001..................................  41,695,891        $56,9
Granted.....................................................  10,096,389        $26,5
Adjusted....................................................   1,128,744        $49,6
Exercised...................................................  (1,212,832)       $34,8
Cancelled...................................................  (3,246,871)       $63,7
                                                              ----------        -----
BALANCE, DECEMBER 31, 2002..................................  48,461,321        $49,0
                                                              ==========        =====
F-108
The following table summarizes information concerning currently outstanding
and vested stock options and options on ADSs:
WEIGHTED
                                                           AVERAGE
                                           WEIGHTED       REMAINING                    WEIGHTED
                            NUMBER         AVERAGE       CONTRACTUAL     NUMBER        AVERAGE
RANGE OF EXERCISE PRICES  OUTSTANDING   EXERCISE PRICE      LIFE         VESTED     EXERCISE PRICE
------------------------  -----------   --------------   -----------   ----------   --------------
Stock options in euros
Under E 20..............   4,871,516        E 15.8          4.63        2,420,516      E 19.6
E 20 - E 30.............   1,815,018        E 25.5          1.38        1,815,018      E 25.5
E 30 - E 40.............   2,582,226        E 34.1          3.45        2,091,776      E 33.4
E 40 - E 50.............  12,358,814        E 47.5          5.41        6,788,798      E 48.0
E 50 - E 60.............     883,291        E 56.2          6.70          233,877      E 57.6
E 60 - E 70.............   5,452,883        E 62.3          4.52         5,451505      E 62.3
E 70 - E 80.............  14,918,511        E 74.3          5.32       11,829,602      E 73.8
E 80 and more...........   5,833,568        E 94.6          5.65        3,850,155      E 94.6
                          ----------        ------          ----       ----------       -----
                          48,715,827        E 58.5          5.00       34,481,247      E 60.3
                          ==========        ======          ====       ==========       =====
Stock options on ADS's
  in US dollars
Under $20...............   4,261,870         $15.8          7.79        2,418,557       $16.6
WEIGHTED
                                           WEIGHTED     AVERAGE
                                           AVERAGE     REMAINING                    WEIGHTED
                               NUMBER      EXERCISE   CONTRACTUAL     NUMBER        AVERAGE
RANGE OF EXERCISE PRICES     OUTSTANDING    PRICE        LIFE         VESTED     EXERCISE PRICE
------------------------     -----------   --------   -----------   ----------   --------------
$20 - $30..................   3,327,980     $ 23.7       7.96        2,838,375       $ 23.2
$30 - $40..................   5,147,935     $ 35.2       2.40        4,617,155       $ 35.3
$40 - $50..................  17,423,065     $ 44.1       5.43       10,428,106       $ 44.5
$50 - $60..................   3,457,511     $ 57.6       5.73        3,243,688       $ 58.0
$60 - $70..................   7,486,958     $ 65.7       5.86        5,649,250       $ 65.9
$70 - $80..................   7,125,806     $ 73.8       7.02        7,125,806       $ 73.8
Over $80...................     230,196     $268.7       6.95          230,196       $268.7
                             ----------     ------       ----       ----------       ------
                             48,461,321     $ 49.0       5.82       36,551,133       $ 51.5
                             ==========     ======       ====       ==========       ======
At December 31, 2002, 34,481,247 stock options and 36,551,133 stock options
on ADS's were exercisable at weighted average exercise prices of E 60.3 and
US$51.5, respectively. The options outstanding at December 31, 2002 expire in
various years through 2010.

     The weighted -- average grant-date fair value of options granted during the
year was E 13.49 in 2002, E 23.51 in 2001 and E 32.76 in 2000.

     The fair value of Vivendi Universal options grants is estimated on the date
of grant using the Binomial Option Pricing Model with the following assumptions
for the grants:
DECEMBER 31,
                                                              ------------------
                                                              2002   2001   2000
                                                              ----   ----   ----
Expected life (years).......................................   5.5    6.3    7.9
Interest rate...............................................   5.0%   4.9%   4.8%
Volatility..................................................  60.0%  35.0%  35.0%
Dividend yield..............................................     0%     1%     1%
F-109
In addition to the Vivendi Universal corporate plans described above,
several consolidated subsidiaries maintained stock-based plans for their
employees which are denominated in the subsidiary's stock. However, these plans
are insignificant.

     Under US GAAP, the total compensation cost recorded in connection with
employee stock options plans was E 4 million at December 31, 2002.
DECEMBER 31,
                                                              -----------------------
                                                               2002     2001    2000
                                                              ------   ------   -----
                                                              (IN MILLIONS OF EUROS)
Vivendi Universal and Canal+ Group's plan prior to the
  merger of December 8, 2000................................  (17.8)    29.9     8.6
Vivendi Environment's plan..................................    0.7      1.0     1.3
17.5.2 EMPLOYEE STOCK PURCHASE PLANS

     Vivendi Universal maintains savings plans that allow substantially all full
time non-US employees of Vivendi Universal and its subsidiaries to purchase
shares of Vivendi Universal. The shares are sold to employees at a 15% discount
from the lower of the average market price of Vivendi Universal shares over the
last 20 business days prior to the date of authorization by the Board of
Directors and the market price on the date of authorization by the Board of
Directors. Shares purchased by employees under these plans are subject to
certain restrictions over their sale or transfer. The compensation cost recorded
in connection with these plans was E 4.4 million, E 1 million and E 86 million,
respectively, for the years ended December 31, 2002, 2001 and 2000.

     Vivendi Universal maintains a leveraged stock purchase plan named Pegasus,
which is available exclusively to the employees of non-French subsidiaries. At
the end of a five-year period, the employees are given assurance that they will
receive the maximum amount of either their personal contribution plus 6 times
the performance of the Vivendi Universal share or their personal contribution
plus interest of 5% per year compounded annually. The risk carried by Vivendi
Universal is hedged through a trustee based in Jersey by Societe Generale. The
compensation cost recorded in connection with Pegasus was E 59.6 million and
E 17 million and E 10 million, respectively, for the years ended December 31,
2002, 2001 and 2000.

     Shares sold to employee stock purchase plans are as follows:
DECEMBER 31,
                                                      ---------------------------------
                                                        2002        2001        2000
                                                      ---------   ---------   ---------
Number of shares....................................  2,402,142   2,604,670   8,937,889
Proceeds on sales (in millions of euros)............         25         133         555
Average cost if treasury stock sales (in euros).....         10          51          62
Under US GAAP, the total compensation cost recorded in connection with
employee stock purchase plans was E 64 million, E 18 million and E 96 million,
respectively, for the years ended December 31, 2002, 2001 and 2000.

17.6 RESTRUCTURING COSTS

     Under US GAAP, the requirements for recording a reserve for restructuring
include the development of a formal plan, specific identification of operations
and activities to be restructured, approval and commitment of management and
notification to the employees to be terminated. Additionally, restructuring
reserves may only be recorded if the related costs are not associated with or do
not benefit continuing activities of Vivendi Universal and if the plan is
expected to be largely completed within one year of initiation and no
significant

                                      F-110
changes to the plan are likely. The reconciliation between the French and US
GAAP provision for restructuring is as follows:
DECEMBER 31,
                                                              ----------------
                                                               2002     2001
                                                              ------   -------
                                                              (IN MILLIONS OF
                                                                   EUROS)
French GAAP provision for restructuring:
  Reorganization and restructuring costs(1).................  E  57    E  314
  Accrual for exit activities related to Seagram
     acquisition(2).........................................     56       300
  Other(3)..................................................     --        18
                                                              -----    ------
                                                                113       632
  Adjustments to conform to US GAAP(4)......................     --      (157)
                                                              -----    ------
  US GAAP provision for restructuring.......................  E 113    E  475
                                                              =====    ======
---------------

(1) Recorded in provisions and allowances in the consolidated balance sheet (see
    Note 6).

(2) Recorded in other non-current liabilities and accrued expenses in the
    consolidated balance sheet (see Note 10).

(3) Relates to Vivendi Universal Publishing's interactive games operations.
    Recorded in accounts payable in the consolidated balance sheet.

(4) As of December 31, 2001 primarily relates to accruals and reorganization
    costs at Veolia Environnement, which qualify as restructuring costs under
    French GAAP but not under US GAAP (E 120 million at December 31, 2001).
    Certain of the accruals qualified as probable and estimable liabilities
    under SFAS No. 5, Accounting for Contingencies, thus the adjustment is only
    a reclassification with no impact on net income or shareholders' equity.
    Other accruals, recorded in prior years, did not comply with the provisions
    of Issues Task Force (EITF) 94-3, Liability Recognition for Certain Employee
    Termination Benefits and Other Costs to Exit an Activity (including Certain
    Costs Incurred in a Restructuring) and as such their reversal resulted in a
    net income/shareholders' equity adjustment.

     In connection with the Merger Transactions and the integration of several
other significant acquisitions, as discussed in Note 3, Vivendi Universal's
management developed and committed to a variety of formal restructuring programs
that were communicated to employees. The restructuring programs impacted several
business segments and primarily related to the consolidation of facilities and
related reductions in employee headcount. Costs incurred, include amounts
associated with employee termination and early retirement programs, asset
divestitures and costs associated with lease and other contract terminations.
These plans are generally completed within one year of initiation.

     In addition to restructuring programs initiated by Vivendi Universal,
certain of the acquired businesses had initiated and were executing their own
restructuring programs at the time of acquisition. Vivendi Universal evaluated
these programs at the time of acquisition to determine whether they were
consistent with the integration strategy. If consistent, restructuring reserves
were established through purchase accounting and

                                      F-111
are reflected as "Changes in scope of consolidation and purchase accounting
adjustments" in the following summary of reserves for restructuring:
HOLDING,                      TOTAL
                                                                                        CORPORATE       VEOLIA        VIVENDI
                                 MUSIC   PUBLISHING   TV & FILM   TELECOMS   INTERNET   & NON-CORE   ENVIRONNEMENT   UNIVERSAL
                                 -----   ----------   ---------   --------   --------   ----------   -------------   ---------
                                                                     (EN MILLIONS D'EUROS)
EMPLOYEE TERMINATION RESERVES
Balance at December 31, 1999...  E  --     E  27        E  --      E  --      E  --       E  43          E  52        E  122
  Changes in scope of
    consolidation and purchase
    accounting adjustments.....     --        (4)          --         --         --         (39)            --           (43)
  Additions charged to
    income.....................     --        64           --         --         --          --             --            64
  Utilization..................     --       (10)          --         --         --          (3)           (17)          (30)
  Reversals....................     --        (4)          --         --         --          --             --            (4)
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2000...     --        73           --         --         --           1             35           109
Acquisition of Seagram.........      5        --           --         --         --         118             --           123
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2000...      5        73           --         --         --         119             35           232
  Changes in scope of
    consolidation and purchase
    accounting adjustments.....     --        (5)          --         --         --          --             24            19
  Additions charged to
    income.....................     --        42           --         --         19          --             18            79
  Utilization..................     (5)      (65)          --         --        (12)        (49)           (35)         (166)
  Reversals....................     --        (2)          --         --         --          --             --            (2)
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2001...  E  --     E  43        E  --      E  --      E   7       E  70          E  42        E  162
                                 =====     =====        =====      =====      =====       =====          =====        ======
  Changes in scope of
    consolidation and purchase
    accounting adjustments.....     --        11           --         --         (1)         --            (28)          (18)
  Additions charged to
    income.....................     --         4           --         --         56          --             21            81
  Utilization..................     --       (44)          --         --        (33)        (70)           (35)         (182)
  Reversals....................     --       (10)          --         --         (7)         --             --           (17)
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2002...  E  --     E   4        E  --      E  --      E  22       E  --          E  --        E   26
                                 =====     =====        =====      =====      =====       =====          =====        ======
OTHER RESTRUCTURING RESERVES
Balance at December 31, 1999...  E  --     E   5        E  --      E  19      E  --       E  --          E  75        E   99
  Changes in scope of
    consolidation and purchase
    accounting adjustments.....     --        --           20          5         --          --             17            42
  Additions charged to
    income.....................     --        12           --         --         --          --             --            12
  Utilization..................     --        (3)          --        (11)        --          --            (43)          (57)
  Reversals....................     --        (1)          --         (4)        --          --             --            (5)
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2000...     --        13           20          9         --          --             49            91
Acquisition of Seagram.........    140        --           51         --         --          86             --           277
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2000...    140        13           71          9         --          86             49           368
  Changes in scope of
    consolidation..............     --        --           --         --         --          --             --            --
    and purchase accounting
      adjustments..............     --         4          (20)        --         --          --              2           (14)
  Additions charged to
    income.....................     --        33           24         --         18          --              9            84
  Utilization..................    (23)      (22)         (31)        (9)       (11)         --            (24)         (120)
  Reversals....................     --        (5)          --         --         --          --             --            (5)
                                 -----     -----        -----      -----      -----       -----          -----        ------
F-112
HOLDING,                      TOTAL
                                                                                        CORPORATE       VEOLIA        VIVENDI
                                 MUSIC   PUBLISHING   TV & FILM   TELECOMS   INTERNET   & NON-CORE   ENVIRONNEMENT   UNIVERSAL
                                 -----   ----------   ---------   --------   --------   ----------   -------------   ---------
                                                                     (EN MILLIONS D'EUROS)
Balance at December 31, 2001...    117        23           44         --          7          86             36           313
  Changes in scope of
    consolidation and purchase
    accounting adjustments.....     --        (8)          79         --          2          --            (34)           39
  Additions charged to
    income.....................     --        --           (8)        --         18          --             20            30
  Utilization..................   (117)       (9)         (54)        --         (8)        (26)           (21)         (235)
  Reversals....................     --        (3)         (48)        --         (8)         --             (1)          (60)
                                 -----     -----        -----      -----      -----       -----          -----        ------
Balance at December 31, 2002...  E  --     E   3        E  13      E  --      E  11       E  60          E  --        E   87
                                 =====     =====        =====      =====      =====       =====          =====        ======
TOTAL RESTRUCTURING RESERVES
  Balance at December 31,
    2002.......................  E  --     E   7        E  13      E  --      E  33       E  60          E  --        E  113
                                 -----     -----        -----      -----      -----       -----          -----        ------
SEAGRAM ACQUISITION

     In connection with the acquisition and integration of Seagram, Vivendi
Universal management developed a formal exit activity plan that was committed to
by management and communicated to employees at the time the merger was
consummated. The E 400 million accrual for exit activities consists principally
of relocation and severance costs, facility elimination costs, including
leasehold termination payments and incremental facility closure costs and
contract terminations, related to the acquired companies. In 2002 and 2001, cash
payments made on the settlement of exit activities approximated E 244 million.

  MUSIC

     Employee termination reserves of E 5 million and other restructuring
reserves of E 140 million were established as part of the accrual for exit
activities related to the Seagram acquisition as discussed above. At December
31, 2001, all of the employee termination reserves and E 23 million of the other
restructuring reserves had been utilized. In 2002, the remaining part of the
latter has been utilized.

  PUBLISHING

     Prior to their acquisitions in 1998 by Vivendi Universal, Havas and Grupo
Anaya had initiated and were executing their own restructuring programs,
primarily focused on headcount reduction. Vivendi Universal evaluated these
programs and determined they were consistent with their integration strategy and
thus E 48 million of employee termination reserves were established through
purchase accounting and were reflected as "Changes in scope of consolidation and
purchase accounting adjustments". Concurrent with the acquisitions, Vivendi
Universal determined that certain sales and administrative offices were
redundant. This resulted in the establishment of E 11 million in termination
reserves related to approximately 240 employees of Grupo Anaya (12 management
employees and 228 sales and administrative employees) and E 5 million in
termination reserves to reduce the administrative headcount at Havas. In
addition to the reserves for acquired companies, E 10 million of restructuring
reserves were established related to historical subsidiaries. During 1998, E 35
million of the reserves discussed above were utilized and E 1 million were
reversed, resulting in a E 38 million employee termination reserve at December
31, 1998.

     In connection with the acquisition of Medi-Media in 1999, E 15 million of
employee termination reserves and E 7 million of other restructuring reserves
related to the closure and disposal of several operating facilities were
established through purchase accounting and were reflected as "Changes in scope
of consolidation and purchase accounting adjustments". As part of the
integration, a restructuring plan was implemented to terminate approximately 40
employees. In addition to reserves established due to changes in the scope of
consolidation, E 18 million of additional employee termination reserves were
charged to income in 1999, E 1 million of employee termination reserves were
reversed and E 45 million of reserves were utilized, including E 43 million of
employee termination reserves and E 2 million of other restructuring reserves.

                                      F-113
During 2000, several divisions within the Publishing business initiated
restructuring plans. The games division implemented a down sizing plan,
reorganization of shared services and a reallocation of business. These plans
resulted in the accrual of E 24 million of employee termination reserves for
approximately 570 employees and E 6 million of other restructuring reserves. The
education division implemented several restructuring plans, including the
downsizing of the French structure, the reorganization of the supply chain in
Brazil and Spain and the closure of a site in Belgium. These plans generated
restructuring reserves totaling E 22 million, including E 18 million allocated
to the termination of approximately 210 employees. The information division
implemented a reorganization of its back office department, primarily through
mutualization and reallocation of services. Restructuring reserves for this plan
totaled E 14 million, resulting in the termination of approximately 220
employees. The services department decided to close down a logistic site,
resulting in an employee termination reserve of E 7 million for 117 employees
and other facility closure reserves of E 1 million. Headquarters also initiated
a restructuring plan that will lead to the termination of 17 employees. The
reserve for this plan totaled E 2 million.

     During 2001, changes in the scope of consolidation and purchase accounting
adjustments at VUP reduced reserves for restructuring by E 1 million, primarily
due to the disposal of France Loisirs. Additional restructuring reserves of E 8
million at Grupo Anaya were recorded due to a change in local legislation, which
increased employee termination costs. Under this plan, 37 employees were
terminated in 2001 at a cost of E 3 million. At the games division restructuring
programs related to logistic reorganization and centralization of shared
services continued throughout the year, resulting in the termination of 887
employees for E 18 million and the utilization of other restructuring reserves
for E 27 million. Additional reserves of E 33 million were recorded for the
closure and downsizing of two studios, including E 13 million for the
termination of 337 employees. At the education division, approximately 100
employees were terminated in 2001 related to the downsizing of corporate
functions and reorganization of logistics in France, Belgium, Brazil and the US
for E 12 million. Additional reserves of E 15 million were recorded in order to
complete the plan. At the information division restructuring reserves of E 6
million were utilized in connection with the centralization of Comareg's
headquarters in Lyon. Additional reserves of E 10 million were recorded for a
new plan initiated for the merger of the consumer press titles. The
restructuring program for the centralization of shared services at the B2B
division was abandoned generating a E 6 million reversal of reserves. The
services division have implemented a new plan to close a logistic site at a cost
of E 8 million, E 5 million of which relate to employee termination reserves for
63 employees. The health division completed the closure of its London
headquarters and other administrative reorganization plans, utilizing E 21
million in employee termination and other restructuring reserves.

     During 2002, most of Vivendi Universal Publishing assets were sold. The
remaining provision for restructuring are mainly related to Games (E 3 million)
and the Express-Expansion group which was sold in February 2003 (E 2 million).

  TV & FILM

     Other restructuring reserves of E 51 million were established as part of
the accrual for exit activities related to the Seagram acquisition discussed
above, of which E 22 million had been utilized by December 31, 2001. The
remaining part of the latter has been utilized in 2002. Additional other
restructuring reserves of E 24 million were established in 2001 by Canal+
Horizons, a subsidiary of Canal+ Group. Of the total, approximately E 9 million
related to their withdrawal from Maghreb and the Middle East (primarily contract
termination fees), of which E 1 million had been utilized by December 31, 2001.
The remaining E 15 million related to antenna restructuring, of which E 8
million in contract termination fees were paid to American Studios in 2001. The
E 20 million restructuring reserve related to the operations of Canal+ Group,
which was established as a result of the Merger Transactions in 2001, was
reclassified to operating liabilities. As at the beginning of 2002, following
purchase of Wizja TV platform to UPC, Canal+ Group's stake in TKP increased
which led to change the consolidation method from Equity Method to Full
integration. This change was responsible for scope entry in the restructuring
provision amounting to E 92.9 million in the consolidated balance-sheet
corresponding to the restructuring of this new platform. The decrease of the
provision during 2002 amounted to E 70.1 million. The currency translation
adjustment amounted to E 13.4 million. It reduced

                                      F-114
therefore the global provision at end of December 2002 to E 9.4 million. By the
end of the period this provision can be detailed as follows: closing of the
British subsidiary amount to E 2.6 million, change of subscribers cards and
loading new software to Wizja decoders to make them ready to work on one
encryption system (E 2.5 million), administrative issues: down-sizing of offices
(E 2.3 million), technical issues amount to E 1.7 million and correspond to
secure encryption systems and set up software for interactive services.

  TELECOMS

     In December 1997, SFR decided to discontinue mobile telephone service
operations utilizing analog technology. In connection with this decision, a
reserve of approximately E 59 million was established related to the phasing out
of the subscriber base and associated technology. The program was essentially
completed by December 31, 2000. The remaining reserves of E 9 million related to
other technological changes accrued during previous years, all of which were
utilized in 2001.

  INTERNET

     As the result of the general dotcom slowdown, Vivendi Universal's Internet
business has made significant changes to its business strategy. In 2001, this
resulted in restructuring programs involving employee reduction and other costs
associated with the reorganization and reallocation of business. In the US,
Flipside finalized a restructuring plan in connection with the acquisition of
Uproar. The total costs of the plan amount to approximately E 15 million,
comprised of E 9 million in severance and employee termination costs and E 6
million in facility exits costs, including assets writedowns, lease terminations
and other exit costs. Additionally, the consolidation of all US Web properties
into a single entity called Vivendi Universal Net USA has resulted in a
restructuring plan in 2001. Costs associated with this plan are expected to
total E 4 million, 95% of which relate to facility and other exit costs. In
Europe, restructuring of education and entertainment activities, horizontal
portals and support and services activities are expected to cost E18 million, of
which employee termination costs account for E 10 million and other
restructuring costs for E 8 million.

     Further to Group refocusing strategy implemented in the mid-2002, the
restructuring process started in 2001 has been accelerated with a comprehensive
plan to either reclassify certain units into other group divisions, or to
dispose off others or to shut down those with no foreseeable earning potential.
The Net loss for year was therefore impacted by this restructuring program
including employee termination, and other exit costs for a total amount of
E 59,2 million.

     In Europe, Scoot's was shut down and this resulted in an E 16,7 million
cost on the year including both employee termination costs and other exit costs
such as contract's termination with various suppliers. Vivendi Universal Net
holding incorporated a E 16,8 million provision as of December 31st connected
with the holding closing process and the risk or costs with other subsidiaries
foreseeable close down.

     In the US, Get Music was shut down and long term liabilities related to
lease agreements were reserved for a total amount of E 8,4 million. Vivendi
Universal Net USA holding company was downsized resulting in E 9,3 million
severance payments to employees.

  HOLDING, CORPORATE & NON-CORE

     Employee termination reserves of E 118 million and other restructuring
reserves of E 86 million were established as part of the accrual for exit
activities related to the Seagram acquisition as discussed above. At December
31, 2002, the total of the employee termination reserves and E 30 million of the
other restructuring reserves had been utilized.

     Vivendi Universal's withdrawal from its non-core businesses, primarily
construction and real estate, has been an ongoing process over the past few
years. All of the restructuring reserves related to non-core businesses consist
of severance and employee termination costs related to headcount reductions.
During 1996, 1997 and 1998, employee termination reserves totaling E 174 million
were recorded in connection with the termination of 5,611 employees in
construction operations (936 management employees and 4,675 construction
employees) and reserves of E 11 million were recorded in connection with real
estate operations. During

                                      F-115
the same period, E 132 million of the reserves for construction operations were
utilized and 4,263 employees were terminated (801 management employees and 3,462
construction employees). The remaining 1,348 employees, for whom there was a
reserve of E 42 million at December 31, 1998, were terminated in 1999.
Utilization of the real estate operations reserve was E 1 million during the
period, leaving a balance of E 10 million at December 31, 1998.

     During 1999, as a result of a general decline in the demand for
construction in markets serviced by its German subsidiaries, Vivendi Universal
established a new restructuring plan. Additionally, Vivendi Universal
implemented restructuring plans in its civil engineering entities to adapt them
to new technology, including digital technology related to electrical
contracting. These plans resulted in the accrual of a E 44 million reserve in
connection with the termination of 1,460 employees in construction operations
(277 management employees and 1,183 workers), of which E 9 million was utilized
during the year and 288 employees terminated (49 management employees and 239
construction employees). Also during 1999, additional reserves of E 6 million
were recorded for real estate operations, E 6 million were utilized and a
reduction of E 2 million was recorded due to changes in the scope of
consolidation.

     During 2000, the employee termination reserves related to non-core
construction and real estate businesses were reduced to E 1 million primarily
due to the disposal of Vinci. These were utilized in 2001.

  ENVIRONMENTAL SERVICES

     Over the past few years, our former Environmental Services business has
engaged in several plans to restructure its activities, particularly to
rationalize its regional organization. The E 13 million employee termination
reserve at December 31, 1998, primarily related to a restructuring plan,
implemented during 1997, to rationalize the energy division formed through the
merger of Compagnie Generale de Chauffe and EsysMontenay. This plan resulted in
a workforce reduction of 1,271 employees, approximately 10% of which were
executives and was completed in 2000. The E 25 million other restructuring
reserve at December 31, 1998, primarily comprised of lease termination costs and
other costs to exit facilities related to a three-year restructuring plan
associated with the water businesses in France. This plan, also implemented
during 1997, resulted in the closure of approximately 20 regional agencies and
200 local units and was completed in 2000.

     Concurrently with the acquisition of US Filter in April 1999, our
Environmental Services business designed and implemented a restructuring plan to
streamline its manufacturing and production base, redesign its distribution
network, improve its efficiency and enhance its competitiveness. The
restructuring plan focused on two primary activities: (i) the combination of
certain US Filter operating groups outside the United States with OTV and (ii)
the combination and restructuring of the remaining US Filter entities, primarily
in North America, with the operations of PSG, a subsidiary of Aqua Alliance.
These restructuring plans identified certain manufacturing facilities,
distribution sites, sales and administration offices and related assets that
became redundant or non-strategic upon consummation of the transaction. The
original costs associated with these plans totaled E 109 million. Of the total,
E 63 million related to the combination with OTV, consisting of E 45 million in
severance and employee termination costs and E 18 million in facility exit
costs. The remaining E 46 million related to the North American combination,
consisting of E 9 million in severance and employee termination costs and E 37
million in facility exit costs. Facility exit costs include lease termination
costs, relocation costs and other exit costs. These costs are reflected in
"Changes in scope of consolidation and purchase accounting adjustments' in 1999
and were included in the purchase price allocation for US Filter.

     The combination of US Filter International with OTV, to create Vivendi
Water Systems, was achieved through several restructuring plans, the most
significant of which was in Benelux. This plan involved the closure or sale of
three facilities and the significant down-sizing of a fourth and will result in
the severance of 221 employees (including 23 executive employees) for a total
amount of E 29 million. This plan is expected to extend until the beginning of
2002 due to significant legal constraints requiring long termination periods. No
employee had been terminated as of December 31, 2000. During 2001, 17 employees
(including 8 executives) were terminated for a total cost of approximately E 13
million. Facility exit costs associated with this plan originally amounted to
E 2 million, however, additional reserves of E 7 million were recorded in 2000
as adjustments to the cost of US Filter International. They are reflected in
"Changes in scope of consolidation

                                      F-116
and purchase accounting adjustments" and had no impact on net income for the
period. During 2001, E 1 million of these reserves were utilized.

     Plans related to the other locations involved severance costs of E 16
million in connection with the termination of approximately 147 employees and
E 16 million in facility exit costs. During 1999, employee termination costs of
E 10 million were utilized in the termination of 81 employees and facility exit
costs of E 10 million were utilized. During 2000, employee termination costs of
E 4 million were utilized in the termination of 36 employees and the remaining
E 6 million of facility exit costs were also utilized. The remaining employees'
termination reserve of E 2 million was utilized in 2001 with the termination of
5 senior executives included in a total of approximately 30 terminated
employees.

     In the North American restructuring plan, the E 9 million in severance and
employee termination costs related to a reduction in the combined workforce of
443 employees (66 management employees, 111 administrative employees, 234
manufacturing employees and 32 sales employees). The E 37 million of facility
exit costs, consisted of lease termination costs of E 20 million and other
related charges of E 17 million (primarily pension termination accruals). The
restructuring plan involved the closure of four manufacturing facilities in US
Filter's water and wastewater group. Within US Filter's consumer group, the plan
identified the closure of one manufacturing facility, one distribution facility
and numerous company-owned dealerships. In addition, the plan identified two
additional manufacturing sites and several distribution centers for the
remaining US Filter operating groups. During 1999, E 12 million of reserves were
utilized, including E 2 million in severance payments in connection with the
termination of approximately 141 employees. Also in 1999, E 13 million of
preexisting PSG accruals were added to the North American restructuring plan.
They are reflected in "Additions charged to income" as they were recorded by PSG
in their 1999 statement of income. To complete the North American restructuring
plan, additional reserves of E 11 million, including E 4 million of lease
termination costs and E 7 million of other related charges, were recorded in
2000 as adjustments to the cost of US Filter International. They are reflected
in "Changes in scope of consolidation and purchase accounting adjustments" and
had no impact on net income for the period. All additions through "Changes in
scope of consolidation and purchase accounting adjustments" in 2000 result from
the revision of the calculation of liabilities recorded as of December 31, 1999,
which was performed in the first quarter of 2000. No new actions were identified
that would result in additional liabilities. During 2000, E 17 million of
reserves were utilized, including E 6 million in severance payments in
connection with the termination of approximately 250 employees, leaving E 41
million unutilized at December 31, 2000. In 2001, E 23 million of reserves were
utilized, including the remaining E 1 million in severance payments in
connection with the termination of 52 employees. As of December 31, 2001, E 18
million of the original reserves remained, consisting primarily of lease
terminations with extended payment terms and pension termination benefits that
will be paid to participants upon settlement of the related plans. Additionally,
due to the continued decline in North America, US Filter initiated a new
restructuring program in 2001 to reduce headcount and consolidate its
manufacturing capacity. Under this program, restructuring reserves of E 18
million were established in connection with the termination of 696 employees,
including 264 professionals. During 2001, E 4 million of the reserves were
utilized and 142 employees were terminated. Five surface preparation regional
headquarters have been combined into two service centers and five manufactory
facilities and an after-market facility have been closed. Also in response to
the business conditions certain regeneration plants were identified for closure
and the company exited the copper etchant recovery business. At December 31,
2001, E 14 million of the new reserves remained unutilized.

     In connection with the acquisitions of Apa Nova Bucuresti and the
ex-services division of EDF in 2001, restructuring reserves were established
through purchase accounting and were reflected as "Changes in scope of
consolidation and purchase accounting adjustments". As part of the integration
of Apa Nova Bucuresti, a restructuring plan was implemented to terminate
approximately 1,700 employees, of which 85 were professionals. Employee
termination reserves of E 19 million were established, primarily related to
severance, of which E 12 million was utilized in connection with the termination
of 1,200 employees in 2001. As part of the integration of the ex-services
division of EDF with their existing operations, Dalkia implemented a
restructuring plan to terminate 80 employees, of which 42 were professionals.
Employee termination reserves of approximately E 5 million were established,
none of which was unutilized in 2001.

                                      F-117
In addition to these plans related to acquired companies, our Environmental
Services business implemented less significant restructuring measures in its
historical subsidiaries. In 2001, Onyx, as part of a program to reduce their
overhead costs, implemented a reorganization of their IT (information
technology) services. Restructuring reserves of approximately E 7 million were
established, including E 1 million in severance payments, none of which was
utilized in 2001. In 1999, an E 11 million reserve, consisting of E 6 million in
connection with the closing of Aqua Alliance's headquarters and E 5 million in
connection with the consolidation of facilities in subsidiaries of OTV was
recorded. The reserve, which was related to lease terminations and asset
disposals, was utilized in 2000.

     Following the disposals which occurred in the 2002 financial year, Vivendi
Universal is accounted for using the equity method as at December 31, 2002.
Thus, at that date, restructuring reserves recorded by this subsidiary have been
deconsolidated.

17.7 FILM AND TELEVISION COSTS
DECEMBER 31, 2002            DECEMBER 31, 2001
                                          --------------------------   --------------------------
                                            VUE     CANAL+    TOTAL      VUE     CANAL+    TOTAL
                                          -------   ------   -------   -------   ------   -------
                                                          (IN MILLIONS OF EUROS)
Theatrical film costs:
  Released, less amortization...........  E 1,085   E 350    E 1,435   E 1,376   E 624    E 2,000
  Completed, not released...............        5       8         13        31       8         39
  In production.........................      583      62        645       343       8        351
  In development........................       17      --         17        22      --         22
                                          -------   -----    -------   -------   -----    -------
                                          E 1,690   E 420    E 2,110   E 1,772   E 640    E 2,412
                                          =======   =====    =======   =======   =====    =======
Television costs:
  Released, less amortization...........      483      24        507       300      22        322
  Completed, not released...............       32      --         32         5      --          5
  In production.........................       77      26        103        33      31         64
  In development........................        2      --          2        --      --         --
                                          -------   -----    -------   -------   -----    -------
                                              594      50        644       338      53        391
                                          =======   =====    =======   =======   =====    =======
Program costs, less amortization:
  Current...............................      241      --        241        --      --         --
  Non current...........................      303      --        303        --      --         --
                                          -------   -----    -------   -------   -----    -------
                                              544      --        544        --      --         --
                                          =======   =====    =======   =======   =====    =======
Total...................................    2,828     470      3,298     2,110     693      2,803
Less current portion....................      241      --        241        --      --         --
                                          -------   -----    -------   -------   -----    -------
Film costs, net of amortization.........  E 2,587   E 470    E 3,057   E 2,110   E 693    E 2,803
                                          =======   =====    =======   =======   =====    =======
At VUE, based on management's total gross revenue estimates as of December
31, 2002, approximately 59% of completed and unamortized film and television
costs (excluding amounts allocated to acquired libraries) are expected to be
amortized during 2003, and approximately 92% by December 31, 2005. Amortization
of acquired film libraries in 2002 and 2001 was E 43 million and E 45 million,
respectively. As of December 31, 2002, the Company estimated that approximately,
E 619 million of accrued participation and residual liabilities will be payable
in 2003".

     At Canal+, based on management's total gross revenue estimates as of
December 31, 2002, approximately 41% of completed and unamortized film and
television costs (excluding amounts allocated to acquired libraries) are
expected to be amortized during 2003, and approximately 72% by December 31,
2005. An amortization level of 80% will be reached by December 2006.
Amortization of acquired film libraries in 2002

                                      F-118
and 2001 was E 31 million and E 40 million, respectively. As of December 31,
2002, the Company estimated that approximately, E 54 million of accrued
participation and residual liabilities will be payable in 2003.

17.8 SFAS 142

     Vivendi Universal adopted SFAS 142 effective January 1, 2002. The adoption
of SFAS 142 resulted in ceasing amortizing goodwill, and testing goodwill and
indefinite-lived intangible assets for potential impairment, although goodwill
on business combinations consummated after July 1, 2001 had not been amortized.
The total impairment loss resulting from the adoption in the first quarter of
2002 and the implementation in the fourth quarter of SFAS 142 was approximately
E 33.2 billion, of which E 17.1 billion was recorded as a cumulative effect of a
change in accounting principle on January 1, 2002. This loss primarily reflects
the continued deterioration of the economy since December 2001, as well as the
resulting decline in value of some media and telecom assets, which has occurred
since the Vivendi, Seagram and Canal Plus merger was announced in June 2000,
combined with the impact of the increase in the future financing cost due to the
liquidity issues of the Company in 2002. Vivendi Universal has implemented the
following goodwill impairment procedures in 2002:

     - Upon adoption of the new standard, Vivendi Universal completed its
       initial review for impairment, which required the allocation of goodwill
       and other intangible assets to various reporting units. The fair value of
       each reporting unit was compared to its carrying value to determine if
       there was potential impairment. When the fair value of the reporting unit
       was less than its carrying value, an impairment loss was recognized to
       the extent that the fair value of goodwill and other intangibles assets
       within the reporting unit was less than the carrying value. Fair value of
       goodwill and other intangible assets was determined on a discounted cash
       flow approach, supported by a market approach, reviewed by third-party
       appraisers. The total impairment loss resulting from the adoption of SFAS
       142 was approximately E 17.1 billion, which was recorded as a cumulative
       effect of a change in accounting principle in the first quarter of 2002.

     - As of October 1, 2002, Vivendi Universal performed its annual impairment
       review. The total impairment loss resulting from this annual impairment
       review of goodwill in accordance with SFAS 142 was approximately E 16.1
       billion, which was recorded as a charge in reconciliation of net income
       to U.S. GAAP, as presented in note 17.3.2 to the Financial Statements, as
       of December 31, 2002. Fair value of goodwill and other intangible assets
       was determined on a discounted cash flow approach, supported by a market
       approach, reviewed by third-party appraisers. Vivendi Universal will
       perform its annual impairment review during the fourth quarter of each
       year, having commenced in the fourth quarter of 2002.

     - Valuation procedures implemented and assumptions made to assess the fair
       value of reporting units are summarized in note 3.3 to the Financial
       Statements.

     The change in the carrying value of goodwill for the year ended December
31, 2002, is as follows:
IMPAIRMENT LOSSES(1)
                       ------------------------------------------------------------------------------
                        NET BALANCE                       AT ADOPTION     YEAR ENDED     CHANGES IN
                       AT JANUARY 1,   RECLASSIFICATION   (JANUARY 1,    DECEMBER 31,   CONSOLIDATION
                           2002            & OTHER           2002)           2002           SCOPE
                       -------------   ----------------   ------------   ------------   -------------
                                                   (IN MILLIONS OF EUROS)
Telecoms(2)..........      2,954               600             (710)          (536)             8
Music................     15,862                --           (3,900)        (5,000)            49
Vivendi Universal
  Entertainment......      9,360                --           (2,660)        (8,044)         7,866
Groupe Canal+........     16,435              (350)          (7,590)        (5,336)           750
Holding &
  Corporate..........      1,368            (1,368)              --             --             --
Internet.............        559               200             (250)          (462)            (4)
Publishing...........      3,888               (31)              --           (130)        (3,432)
IMPAIRMENT LOSSES(1)
                       -----------------------------
                        CURRENCY       NET BALANCE
                       TRANSLATION   AT DECEMBER 31,
                       ADJUSTMENT         2002
                       -----------   ---------------
                          (IN MILLIONS OF EUROS)
Telecoms(2)..........         1           2,316
Music................    (1,182)          5,830
Vivendi Universal
  Entertainment......    (1,662)          4,860
Groupe Canal+........        (1)          3,909
Holding &
  Corporate..........        --              --
Internet.............       (43)             --
Publishing...........        (4)            291
F-119
IMPAIRMENT LOSSES(1)
                       ------------------------------------------------------------------------------
                        NET BALANCE                       AT ADOPTION     YEAR ENDED     CHANGES IN
                       AT JANUARY 1,   RECLASSIFICATION   (JANUARY 1,    DECEMBER 31,   CONSOLIDATION
                           2002            & OTHER           2002)           2002           SCOPE
                       -------------   ----------------   ------------   ------------   -------------
                                                   (IN MILLIONS OF EUROS)
Environmental
  Services...........      7,499               900           (1,522)            --         (6,485)
Other................          3                --               --             (9)             2
                          ------            ------          -------        -------         ------
Total................     57,927               (49)         (16,632)       (19,517)        (1,246)
                          ======            ======          =======        =======         ======
IMPAIRMENT LOSSES(1)
                       -----------------------------
                        CURRENCY       NET BALANCE
                       TRANSLATION   AT DECEMBER 31,
                       ADJUSTMENT         2002
                       -----------   ---------------
                          (IN MILLIONS OF EUROS)
Environmental
  Services...........      (392)             --
Other................        --              (4)
                         ------          ------
Total................    (3,282)         17,202
                         ======          ======
---------------

(1) At December 31, 2002, impairment losses not only include E 16,146 million
    relative to the annual impairment review of goodwill prescribed by SFAS 142,
    but also include E 4,486 million relative to various entities held for sale
    (E 2,564 million for Canal Plus, E 462 million for Internet, E 206 million
    for Vivendi Telecom International and E 130 million for Publishing).
    Impairment losses do not include E 430 million (E 300 million for Elektrim
    Telekomunikacja SP and E 130 million for Vizzavi Europe) as of January 1,
    2002 and E 1,115 million (E 503 million for Sportfive, E 374 million for
    Sogecable, E 206 million for Telecom Developpement and E 32 million for
    Elektrim Telekomunikajca SP) at December 31, 2002.

(2) Impairment losses relate entirely to Vivendi Telecom International.

     Vivendi Universal's other intangible assets primarily consist of:
DECEMBER 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
                                                              (IN MILLIONS OF EUROS)
Other definite-lived intangible assets:
Audiovisual and music rights................................      5,558        7,840
Trademarks, market share, editorial resources...............         --          711
Film costs, net of amortization.............................      3,599        2,587
Editorial & plate costs.....................................         39          118
Telecom licenses............................................        967          680
Software....................................................         50          146
Other.......................................................        367          544
Veolia Environnement........................................         --        1,373
                                                               --------     --------
Total.......................................................   E 10,580     E 13,999
                                                               ========     ========
Other indefinite-lived intangible assets:
Brands, trademarks and other................................      2,298        3,566
Multiple service operator (MSO) agreements..................        669           --
Veolia Environnement........................................         --        2,350
                                                               --------     --------
Total.......................................................   E  2,967     E  5,916
                                                               ========     ========
In French GAAP, of the E 1,704 million of acquired intangible assets (refer
to Note 3.2.1. Acquisition of the entertainment assets of USA Networks, Inc.,
preliminary allocation of purchase price with an exchange rate euro/dollar as of
May 7, 2002), E 648 million was assigned to film costs that are amortized based
on the ratio of the current period's gross revenues to estimated total gross
revenues from all sources on an individual film forecast basis and E 880 million
was assigned to trademarks and Multiple Service Operator (MSO) agreements for
E 125 million and E 755 million respectively, that are not subject to
amortization. The remaining E 176 million of acquired intangible assets have a
weighted-average useful life of approximately 6 years. The intangible assets
that make up that amount include deferred charges for E 92 million (4-year
weighted-average useful life) and MSO agreements for E 84 million (8-year
weighted-average useful life). In US GAAP, the E 92 million deferred charges
would be classified as other non current assets instead of intangible assets.

                                      F-120
The Fiscal Year 2001 results on a historical basis do not reflect the
provisions of SFAS 142. The following table presents the impact of SFAS 142 on
net income (loss) and net income (loss) per share had the standard been in
effect for the Fiscal Year 2001:
DECEMBER 31,
                                                              ------------------------------
                                                                2002        2001      2000
                                                              ---------   --------   -------
                                                                  (IN MILLIONS OF EUROS)
Reported net loss...........................................  E (44,447)  E (1,172)  E 1,908
Cumulative effect of change in accounting principle(1)......    (17,062)       (39)       --
                                                              ---------   --------   -------
Loss before cumulative effect of change in accounting
  principle.................................................    (27,385)    (1,133)    1,908
Add back amortization of goodwill...........................         --      1,706       699
                                                              ---------   --------   -------
Adjusted US GAAP net income.................................  E (27,385)  E    573   E 2,607
Earning per share -- basic..................................     (25.20)      0.58      4.43
Earning per share -- diluted................................     (25.20)      0.56      4.07
                                                              ---------   --------   -------
---------------

(1) Adoption of SFAS 142 in 2002 and SFAS 133 in 2001.

17.9 SUPPLEMENTAL INFORMATION REQUESTED BY US REGULATORS

NOTE 1

1.2.6 REVENUES AND COSTS

     Music -- Revenues from the sale of recorded music, net of a provision for
estimated returns and allowances, are recognized on shipment to third parties
for product sales with terms FOB shipping point and on delivery for products
sold FOB destination.

  COST OF REVENUES AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Music -- Cost of revenues includes manufacturing costs, royalty expense,
copyright expenses, artist costs and recording costs. Included in selling,
general and administrative expenses are marketing and advertising expenses,
selling and distribution costs, provisions for doubtful receivables and obsolete
inventory and overheads.

     TV & Film -- For our TV & Film businesses, cost of revenues includes film
and television costs amortization, participation and residual expenses,
subscriber management and acquisition costs, television distribution expenses,
theatrical print costs, home video inventory costs and theatrical, television
and home video marketing costs. Selling, general and administrative expenses
include salaries and benefits, rent expense, consulting and auditing fees,
insurance expense, travel and entertainment expense, administrative departments
costs (e.g. Finance, Human Resources, Legal, Information Technology,
Head-quarters) and other operating expenses. For our parks, recreation and
retail businesses, included in cost of revenues are cost of food, beverage and
merchandise, inventory damage and obsolescence expenses and duty and freight
costs. Selling, general and administrative expenses include indirect warehouse
expense including receiving and inspection expense.

     Telecoms -- Cost of revenues include purchasing costs, interconnection and
access costs, network costs and equipment costs. Selling, general and
administrative expenses include commercial costs, which consist of marketing
costs, commissions to dealers, customer care, head office and administrative
costs including wages and salary costs for senior management, human resources,
finance, fees, and computer costs.

     Games -- Costs of revenues includes manufacturing costs,
warehousing/logistics costs and royalty expense in cost of revenues.

     We are not aware of any differences under US GAAP, with the exception that
for our games business, cost of revenues includes internal research and
development expense and the amortization of capitalized internal development
under French GAAP. Under US GAAP, research and development expense is not a

                                      F-121
component of cost of revenues. Research & development expense for our games
business was approximately $119 million and $90 million in 2002 and 2001,
respectively.

  SHIPPING AND HANDLING COSTS

     Actual shipping and handling costs are included in the cost of revenues
line item with the following exceptions: at UMG, actual costs for shipping and
handling are reported in selling, general and administrative expenses; at
Cegetel, shipping and handling costs are recorded as selling, general and
administrative expenses; and at VUE, shipping and handling costs, excluding
freight and duty fees are included in selling, general and administrative
expenses. The total of these costs not included in the cost of revenue line item
amounted to E 130 million, E 135 million and E 36 million in 2002, 2001 and
2000, respectively.

     Shipping and handling costs reimbursed by customers for invoice charges
such as postage, freight packing and small order surcharges are netted against
selling expense under French GAAP. Under US GAAP, these amounts were recorded as
revenue. The total of these amounts was less than E 65 million in each of the
last two years.

  SLOTTING FEES AND COOPERATIVE ADVERTISING PROGRAMS

     Slotting fees and cooperative advertising are generally recorded as a
reduction of revenues. However, cooperative advertising at our games business
and placement costs and other price support classified and administered as
cooperative marketing costs at our music business were treated as marketing
expenses under French GAAP. Under US GAAP these expenses would have been treated
as a reduction of sales. In 2002 the impact of this difference was approximately
$94 million.

1.2.10 ADVERTISING COSTS

     The cost of advertising is expensed as incurred. However, certain costs
specifically related to the change of Vivendi Universal's corporate name have
been capitalized and are amortized over five years. Advertising expense was
approximately E 1.5 billion and E 1.6 billion for the years ending December 31,
2002 and 2001, respectively. For the year ended December 31, 2000, advertising
expense was immaterial, less than E 300 million due to the effect that the
Seagram merger only occurred at the end of the year.

1.2.16 OTHER INTANGIBLE ASSETS

     Catalog -- Other intangible assets includes E 3.8 billion and E 5.4 billion
as of December 31, 2002 and 2001, respectively, for catalogs of recorded music
and music publishing rights. These amounts include acquired intangibles,
primarily those acquired with the acquisition of The Seagram Company Ltd. in
December 2000, which were recorded on the basis of third-party appraisals
obtained at that time and which were subsequently reduced as a result of an
updated appraisal in 2002. The valuations were conducted on the basis of the
discounted expected future cash flows from the entire portfolio of recordings
from artists under contract with the Company at the time of acquisition and
recordings from artists no longer under contract, but for which the Company had
continuing rights. Management believes that the catalogs are long-term assets of
indeterminate (but not indefinite) life and they are being amortized on a
straight line basis over 20 years.

     Recoupable Long-Term Artist Advances -- Other intangible assets includes
E 301 million and E 313 million as of December 31, 2002 and 2001, respectively,
for net long-term advances to artists which are recoupable against future
royalties. Advances are capitalized only in the case of "proven" artists, which
are defined as those whose past performance and current popularity supports
capitalization. Unearned balances are reviewed periodically and if future
performance is no longer assured, the balances are appropriately reserved.

                                      F-122
NOTE 3

3.2.14 MERGER OF VIVENDI, SEAGRAM AND CANAL PLUS

     The following table shows the final allocation of the purchase price of
Canal Plus:
CANAL+ GROUP
                                                              ------------
                                                              (IN MILLIONS
                                                               OF EUROS)
Fair value of net tangible/intangible assets acquired.......    E     (7)
Goodwill recorded as an asset...............................      12,544
                                                                --------
Purchase price..............................................    E 12,537
                                                                ========
3.2.15 DISPOSITION OF SITHE

     In December 2000, Vivendi Universal, along with other shareholders of Sithe
Energies, Inc. (Sithe), finalized the sale of a 49.9% stake in Sithe to Exelon
(Fossil) Holdings Inc. (Exelon) for approximately US$696 million. The net
proceeds of the transaction to Vivendi Universal were approximately US$475
million. This operation generated a pre-tax gain of E 15 million, which was the
difference between the selling price and the basis of the investment.

     Following the transaction, Exelon is the controlling shareholder of Sithe.
Vivendi Universal retains an interest of approximately 34%. For a period of
three years beginning in December 2002, Vivendi Universal can put to Exelon, or
Exelon can call from Vivendi Universal, Vivendi Universal's remaining interest.
As a result of the transaction, Vivendi Universal ceased to consolidate Sithe's
results of operations for accounting purposes effective December 31, 2000 and
accounted for its investment in Sithe, under French GAAP, under the cost method
from January 1, 2001 until December 19, 2002 when Vivendi Universal sold its
remaining interest.

     In April 2000, Sithe sold 21 independent power production plants to Reliant
Energy Power Generation for E 2.13 billion. This transaction generated a pre-tax
capital gain of E 415 million before E 58 million direct costs incurred in
connection with the disposal of these assets (accounting and other MIS systems
write-off, staff retention accrual, severance costs for terminated employees).

     As of December 31, 2000, total exceptional pre-tax gain related to the sale
of interest in Sithe and the sale of the GPU power plants amounted to E 372
million.

NOTE 4

4.5 INVESTMENTS ACCOUNTED FOR USING THE PROPORTIONATE CONSOLIDATION METHOD

     Summarized cash flow information for major subsidiaries consolidated under
the proportionate consolidation method in 2000, 2001 and 2002 is as follows:
YEARS ENDED DECEMBER 31,
                                                             ------------------------
                                                              2002     2001     2000
                                                             ------   ------   ------
                                                              (IN MILLIONS OF EUROS)
Net cash provided by operating activities..................  E  591   E  449   E  275
Net cash used for investing activities.....................  E (850)  E (678)  E (309)
Net cash provided by financing activities..................  E  145   E  311   E  202
NOTE 7

     On May 3, 2002 Moody's downgraded Vivendi Universal's (VU) long-term
unsecured debt rating to Baa3 from Baa2. This first downgrading did not trigger
any event of default under any VU financing arrangement. However, a $750 million
Barclays facility was subject to a mandatory prepayment in the event that VU did
not have a credit rating of at least BBB or Baa2. Despite the downgrading,
Barclays agreed to

                                      F-123
maintain this facility until its maturity date, on June 25, 2002. Given the
short remaining maturity of this facility, the waiver was never documented and
the facility was cancelled on June 25, 2002.

     Following the press release issued by Standard & Poors on May 15, 2002
(entitled "Identifying Ratings Triggers and Other Contingent Calls on
Liquidity -- Part 2") on which VU appeared as one of the companies presenting a
meaningful degree of liquidity risk linked to significant rating triggers in its
credit facilities, VU initiated negotiations with some of its main creditors in
order to remove such rating triggers and replace them with financial covenants
similar to those contained in the E 3 billion syndicated facility dated March
15, 2002.

     The instruments and facilities with significant rating triggers identified
by S&P had an aggregate principal amount of E 5.4 billion and included:

     - the total return swap on BSkyB shares, which was totally unwound on May
       14, 2002 (E 2.5 billion);

     - the preferred shares issued by Home Video Inc and subscribed to by
       Societe Generale for $200 million, which were redeemed, in June 2002 and
       replaced in June by a bilateral loan to VU without a rating trigger. The
       agreement to replace the preferred shares by a new facility and
       concurrently to remove the rating trigger provision was obtained from
       Societe Generale before May 30, 2002;

     - the total return swap on AOL Europe shares ($812 million), for which VU
       received a letter from Bayerische Landesbank on May 30, 2002 agreeing to
       remove the rating trigger;

     - two Bayerische Landesbank facilities (E 1 billion and E 200 million), for
       which VU received a letter agreeing to remove the rating trigger on May
       30, 2002;

     - the preferred shares issued by Universal Music Operations Ltd (L136
       million) and by McDougall Litell ($125 million), respectively subscribed
       to by Credit Lyonnais and BNP Paribas, which contained an early put event
       upon a rating downgrade. Both banks have given their agreement to remove
       the early put event based on a rating trigger before end of May 2002.

     No waivers with respect to any events of default needed to be obtained in
connection with the amendments to the facilities described above, as VU entered
into these negotiations with its creditors voluntarily. VU agreed to pay
approximately E 22 million in fees to various financial institutions in order to
amend the facilities described above to remove and replace the ratings
covenants.

     On July 1, 2002, Moody's downgraded VU's senior debt rating from Baa3 to
Ba1, under review with possible further downgrades and the next day S&P
downgraded VU to BBB- with negative outlook. The Moody's downgrade caused around
E 170 million of credit lines and financial guarantees subject to rating
triggers to be cancelled or replaced:

     - an undrawn Fortis back-up line of E 100 million which expired on October
       22, 2002. The downgrading of VU resulted in a draw stop of such facility;
       the utilization of this facility was lost thereafter;

     - two guarantees of $14 million each provided by VU to financial
       institutions in respect of Universal City Development Partners. The
       guarantees provided that in case of a downgrade of VU below investment
       grade, a cash collateral had to be put in place by VU to secure such
       guarantees. Such cash collateral in an amount of $13.5 million each was
       put in place in July 2002; and

     - a E 40 million lease-back transaction entered into for the financing of
       the movie Fierce Creatures. Joseph Seagram & Sons (JES) had granted a
       guarantee in December 1996 to the bank financing this lease-back. Upon
       the terms of this guarantee, the JES unsecured debt had to be rated at
       least BBB- or Baa3 for the first six years. As this obligation could not
       be met any longer by JES from 2001 because it had stopped preparing
       consolidated accounts due to the acquisition of its parent company by VU,
       the latter had started negotiations in December 2001 in which those
       negotiations were taking place with the lessor to replace the initial
       guarantee by a Vivendi Universal guarantee. Given the context, this
       guarantee, which would have contained a rating trigger provision, could
       not be provided any more. Therefore, this leasing transaction was
       terminated in December 2002.

                                      F-124
The guarantee granted by VU in July 1998 in connection with the financing
of an incineration plant in UK (Tyseley) contained a rating trigger provision
whereby, in the event of the loss of the investment grade status by Vivendi
Universal, the L18.5 million cash collateral initially put up would be required
to be replaced by another of L42 million or an additional letter of credit.
However, this commitment was subject to a back-to back counter-guarantee by
Veolia Environnement since its inception. This obligation, the transfer of which
was decided on previously has been handed over to Veolia Environnement in
September 2002 and assumed by the latter from then on.

     No waivers were obtained at that time under any of the facilities described
above as a result of the July 1, 2002 downgradings, and there was no
consideration paid in connection with the actions described above that were
taken.

     On August 14, 2002, VU's long term unsecured debt was downgraded to B1 from
Ba1 with possible further downgrade by Moody's and to B+ from BBB- with negative
outlook by S&P. Following this further downgrade, a financial institution,
Lehman Brothers, which entered into an ISDA master agreement with VU in December
2000, accelerated the exercise of put options on Vivendi Universal shares,
entailing the payment of E 150 million in August 2002, which obligations would
have otherwise become due between September and December, at the time of the
maturity of the options. There was no waiver needed with respect to this
agreement at that time and there was no consideration paid to Lehman Brothers.

     Lastly, a guarantee provided by VU in favour of a bank of certain
obligations of Universal Studios Inc. and UCF Hotel Venture provides that the
Consolidated Net Worth of VU must be at least $40 billion. Due to the impairment
provisions recorded by VU, this requirement could not be met any longer after
March 31, 2002. The guarantee contract, which currently amounts to $7.5 million,
is still under negotiation with the bank with a view to lowering the threshold
to E 10 billion which the bank has already agreed to in principle. In the
interim, a waiver of the Consolidated Net Worth covenant has been obtained. VU
did not pay any consideration in order to obtain this waiver.

     There were no other material debt covenants that VU was not in compliance
with other than those described above.

     Bank overdrafts and other short-term borrowings are comprised of numerous
individual items. In 2002, bank overdrafts and other short-term borrowings were
comprised of E 1,501 million in fixed interest rate debt with interest rates
ranging from 1% to 6.5% and E 7,676 million in variable interest rate debt with
interest rates of Euribor +0% and Libor $+5%. In 2001, bank overdrafts and other
short-term borrowings were comprised of E 1,003 million in fixed interest rate
debt ranging with interest rates ranging from 0% to 13.9% and E 13,000 million
in variable interest rate debt with interest rates of ranging from Euribor
-0.60% to Euribor +4%. Of the total in 2001, E 5,497 million related to Veolia
Environnement. In 2000, bank overdrafts and other short-term borrowings were
comprised of E 79 million in fixed interest rate debt with interest rates
ranging from 3.5% to 13.9% and E 14,773 million in variable interest rate debt
with interest rates ranging from Euribor +0.05% to Euribor 1.8%. Of the total in
2000, E 3,992 million related to Veolia Environnement.

     Bonds and bank loans are comprised of numerous individual items. In 2002,
bonds and bank loans were comprised of E 2,309 million in fixed interest rate
debt with interest rates ranging from 0% to 15%, maturing from 2004 to 2040 and
E 1,207 million in variable interest rate debt with interest rates ranging from
Libor L-.58% to Euribor +3%, maturing from 2004 to 2012. In 2001, bonds and bank
loans were comprised of E 6,832 million in fixed interest rate debt ranging with
interest rates ranging from 0% to 15%, maturing from 2003 to 2040 and E 8,386
million in variable interest rate debt with interest rates of ranging from
Euribor -0.27% to Euribor +8.5%, maturing from 2003 to 2018. Of the total in
2001, E 10,814 million related to Veolia Environnement. In 2000, bonds and bank
loans were comprised of E 4,654 million in fixed interest rate debt ranging with
interest rates ranging from 0.5% to 13.9%, maturing from 2002 to 2021 and
E 11,149 million in variable interest rate debt with interest rates ranging from
Euribor -0.27% to Euribor 6%, maturing from 2002 to 2018. Of the total in 2000,
E 9,409 million related to Veolia Environnement.

     Under French GAAP, proceeds from future receivables sales are accounted as
deferred income and the discounting of receivables are accounted for as a sale.
Under U.S. GAAP, the deferred income is reclassified

                                      F-125
as long-term financial debt since the discounting of receivables does not
qualify as a true sale under the provisions of SFAS 140.

     At December 31, 2001, Veolia Environnement ("VE") securitized through its
water segment accounts receivables for which it received net proceeds in the
amount of E 714 million from a Special Purpose Entity ("SPE"). VE recognized
pretax loss of E 17 million on such securitization and retained subordinate
interests of E 96 million which were recorded at their fair value. At the
closing of the securitization program in May 2002, VE received E 53 million in
cash and received receivables for E 33 million. Under US GAAP, E 322 million was
recorded as short term financial debt at December 31, 2001.

NOTE 10

10.1.3 FINANCIAL EXPENSES, PROVISIONS AND OTHER

     In 2001, financial provisions were primarily comprised of non-cash charges
required to reduce the carrying value of certain publicly traded and privately
held investments that experienced other than temporary declines. In 2000,
financial provisions related mainly to loss provisions on internet and telecom
assets.

NOTE 12

12.2 BUSINESS SEGMENT DATA

  HOLDING AND CORPORATE

     Amounts included in Holding & Corporate line items are not considered fully
allocable to individual business segments. However, certain costs that are
considered directly related to business segments are allocated on a basis
consistent with the historical practices of the Company. In the income
statement, Holding and Corporate operating expenses are primarily comprised of
occupancy costs and compensation & benefits related to corporate employees. In
the balance sheet, assets allocated to Holding & Corporate are those not
considered to be directly related to the operations of our business segments,
including:

     - Non-consolidated investments (e.g. In 2002, Dupont shares and USAi
       warrants. In 2001, Dupont shares, BSkyB remaining investment consolidated
       in French GAAP, Vinci shares, Sithe investment, VU treasury shares)

     - Non operating short-term assets such as deferred income tax

     - Subsidiaries consolidated under equity method (e.g. In 2002, Veolia
       Environnement)

     - Cash equivalents related to proceeds from disposals (In 2002, Publishing
       activities, participation in VE and EchoStar).

  OTHER

     In 2002 and 2001, Other is comprised of Vivendi Valorisation, the holder of
real estate assets that we intend to sell. In 2000, in addition to Vivendi
Valorisation, Oher also included our other real estate business, Nexity, until
its sale in July 2000 and Sithe until December 2000 when we reduced our interest
to approximately 34%.

                                      F-126
SUPPLEMENTARY FINANCIAL DATA

     At the request of the COB (French Securities and Exchange Commission), and
to enable shareholders to clearly assess the impact of the consolidation methods
used, we provide, for strictly guidance purposes, the following supplementary
financial data in condensed form, concerning the contribution of the Cegetel
Group and Maroc Telecom to the consolidated financial statements, together with
financial statements for Elektrim Telekomunikacja and Elektrim SA.

1. FULLY CONSOLIDATED COMPANIES

     The following financial data indicates the contribution of the Cegetel
Group and Maroc Telecom to the consolidated financial statements of Vivendi
Universal. Vivendi Universal fully consolidates these two companies, with
controlling interests of 59% (85% as from January 23, 2003 following acquisition
of an additional 26% interest from the BT Group) and 51% respectively, and
corresponding ownership interests of 44% (70% as from January 23, 2003) and 35%
respectively.

1.1 CONDENSED STATEMENT OF INCOME
YEAR ENDED             YEAR ENDED
                                                DECEMBER 31, 2002      DECEMBER 31, 2001
                                               -------------------     -----------------
                                               CEGETEL      MAROC      CEGETEL    MAROC
                                                GROUP      TELECOM      GROUP    TELECOM
                                               -------     -------     -------   -------
                                                        (IN MILLIONS OF EUROS)
Revenues.....................................    7,067       1,487       6,384     1,013
Operating Income.............................    1,449         468         928       387
Income before exceptional items, income
  taxes, goodwill amortization, equity
  interest and minority interest.............    1,409         479         799       365
Income before goodwill amortization, equity
  interest and minority interest.............      562(a)      306         867       265
Income (loss) before minority interest
  recorded by Vivendi Universal..............      109(b)     (109)(c)     714      (523)(c)
                                               -------     -------     -------   -------
Net income (loss)............................  E    50     E  (233)    E   319   E  (638)
                                               -------     -------     -------   -------
As at December 31, 2002, Cegetel Group income includes a corporate income
tax expense of E 846 million (a), and an impairment of goodwill for Telecom
Developpement, consolidated using the equity method, for E 206 million (b).
Income for Maroc Telecom includes goodwill impairment relating to this company,
for an amount of E 300 million at December 31, 2002, and E 700 million at
December 31, 2001 (c).

1.2 CONDENSED BALANCE SHEET
DECEMBER 31, 2002   DECEMBER 31, 2001
                                                   -----------------   -----------------
                                                   CEGETEL    MAROC    CEGETEL    MAROC
                                                    GROUP    TELECOM    GROUP    TELECOM
                                                   -------   -------   -------   -------
                                                          (IN MILLIONS OF EUROS)
Long-term assets.................................    4,565     2,352     5,582     2,736
Current assets...................................    2,625     1,157     2,175(d)     833
  including cash and cash-equivalents............      595       575        28       198
                                                   -------   -------   -------   -------
Total assets.....................................  E 7,190   E 3,509   E 7,757   E 3,569
                                                   =======   =======   =======   =======
S-1
DECEMBER 31, 2002   DECEMBER 31, 2001
                                                   -----------------   -----------------
                                                   CEGETEL    MAROC    CEGETEL    MAROC
                                                    GROUP    TELECOM    GROUP    TELECOM
                                                   -------   -------   -------   -------
                                                          (IN MILLIONS OF EUROS)
Shareholders' equity.............................    1,214     1,494     1,420     1,765
Minority interests...............................    2,005       936     1,722       804
Long-term debt...................................      692       205       709       259
Other non-current liabilities and accrued
  expenses.......................................      351        12     1,116        14
Bank overdrafts and other short-term
  borrowings.....................................      109        30       290        57
Other short-term liabilities.....................    2,819       832     2,500       670
                                                   -------   -------   -------   -------
Total liabilities and shareholders' equity.......  E 7,190   E 3,509   E 7,757   E 3,569
                                                   -------   -------   -------   -------
---------------

(d) After elimination of the loan of E 609 million by the Cegetel Group to
    Vivendi Universal at this date.

1.3 CONDENSED CASH FLOW STATEMENT
YEAR ENDED           YEAR ENDED
                                                 DECEMBER 31, 2002    DECEMBER 31, 2001
                                                 ------------------   ------------------
                                                 CEGETEL     MAROC    CEGETEL     MAROC
                                                  GROUP     TELECOM    GROUP     TELECOM
                                                 --------   -------   --------   -------
                                                         (IN MILLIONS OF EUROS)
Cash flow from operating activities............     2,120      770       1,678      410
Cash flow from investing activities............      (497)    (225)       (675)    (165)
Cash flow from financing activities............    (1,056)    (149)     (1,002)     (64)
Effect of foreign exchange rate changes........        --      (18)         --       (5)
                                                 --------   ------    --------   ------
Cash and cash-equivalents......................  E    567   E  378    E      1   E  176
                                                 --------   ------    --------   ------
2. COMPANY ACCOUNTED FOR USING THE EQUITY METHOD

     The following financial data summarize the financial statements of Elektrim
Telekomunikacja. Vivendi Universal accounts for this company using the equity
method, with a controlling and ownership interest of 49%. In 2002, Elektrim
Telekomunikacja consolidated PTC using the proportionate method, this company
having previously been accounted for using the equity method, following the
contribution by Elektrim SA of its interest in PTC to Elektrim Telekomunikacja
in September 2001.

     As indicated in note 13 to the consolidated financial statements (footnote
No. 8), Ymer acquired a 2% interest in Elektrim Telekomunikacja in September
2001, after purchasing the corresponding shares from Elektrim. Ymer is a Belgian
company independent from Vivendi Universal.

     Vivendi Universal had previously acquired non-voting shares in an
investment company, operating as a mutual fund, which enabled Ymer to make its
acquisition, for an amount of E 105 million.

     Vivendi Universal is by no means committed to acquire the shares owned by
Ymer. Similarly, Ymer has neither a right or obligation to sell those shares to
Vivendi Universal and is free to sell them to a third-party at any time. Ymer is
consequently not consolidated by Vivendi Universal. However, the economic
exposure is carried by Vivendi Universal, which consequently records valuation
allowances where appropriate, on the basis of quarterly values communicated by
the mutual fund manager.

     The value of the initial investment by Vivendi Universal in the investment
company has been written down. The net carrying value was E 103 million at
December 31, 2001 and E 38 million at December 31, 2002.

                                       S-2
2.1 CONDENSED STATEMENT OF INCOME
ELEKTRIM
                                                                  TELEKOMUNIKACJA
                                                              -----------------------
                                                                2002           2001
                                                              ---------       -------
                                                              (IN MILLIONS OF EUROS)
Revenues....................................................      749            59
Operating Income............................................      125           (26)
Income before exceptional items, income taxes, goodwill
  amortization, equity interest and minority interest.......     (132)          (55)
Income before goodwill amortization, equity interest and
  minority interest.........................................     (163)          (55)
                                                               ------           ---
Net income (loss)...........................................   (1,063)          (57)
                                                               ------           ---
2.2 CONDENSED BALANCE SHEET
ELEKTRIM
                                                                  TELEKOMUNIKACJA
                                                              -----------------------
                                                                2002          2001
                                                              ---------     ---------
                                                              (IN MILLIONS OF EUROS)
Long-term assets............................................     2,987         3,027
Current assets..............................................       176           559
  including cash and cash-equivalents.......................         8             5
                                                               -------       -------
Total assets................................................   E 3,163       E 3,586
                                                               =======       =======
Shareholders' equity........................................     1,428         2,699
Long-term debt..............................................       712           160
Other non-current liabilities and accrued expenses..........        --           192
Bank overdrafts and other short-term borrowings.............       818(a)        485(b)
Other short-term liabilities................................       205            50
                                                               -------       -------
Total liabilities and shareholders' equity..................   E 3,163       E 3,586
                                                               -------       -------
---------------

(a) Before elimination of Vivendi Universal's loan to Elektrim Telekomunikacja
    for E 525 million (E 322 million, net of provision).

(b) Before elimination of Vivendi Universal's loan to Elektrim Telekomunikacja
    for E 485 million.

2.3 CONDENSED CASH FLOW STATEMENT
ELEKTRIM
                                                                  TELEKOMUNIKACJA
                                                              -----------------------
                                                               2002           2001
                                                              -------       ---------
                                                              (IN MILLIONS OF EUROS)
Cash flow from operating activities.........................     na              71
Cash flow from investing activities.........................     na            (650)
Cash flow from financing activities.........................     na             589
                                                                ---          ------
Cash and cash-equivalents...................................     na          E   10
                                                                ---          ------
---------------

na:  Data not available.

3. UNCONSOLIDATED COMPANY

     The following financial data concerning Elektrim SA have been extracted
from the quarterly report on the financial statements for the fourth quarter of
2002 published by this company. As of December 31, 2001, Elektrim SA accounted
for Elektrim Telekomunikacja using the equity method, with a 49% controlling and

                                       S-3
ownership interest. Elektrim SA was declared insolvent in December 2001, and
discharged from receivership in October 2002.

     As indicated in note 4.2 to the consolidated financial statements (footnote
No. 2), in addition to its 10% interest in the share capital of Elektrim SA,
Vivendi Universal entered into a carrying agreement with a third party for an
additional 4.99% interest in Elektrim SA. For this purpose, as indicated in note
10.2.5 to the consolidated financial statements (footnote No. 3), Vivendi
Universal acquired non-voting shares in an investment company operating as a
mutual fund, to an amount of E 58 million. The value of the total investment by
Vivendi Universal in Elektrim SA (direct + carrying agreement) amounts to E 154
million gross, for which valuation allowances have been accrued according to
evolution of the market price of Elektrim SA shares. The net value of this
investment was E 33 million at December 31, 2001, and E 12 million at December
31, 2002. The valuation allowances so accrued have reduced the net carrying
value of the Vivendi Universal investment to an amount not exceeding its share
in the consolidated shareholders' equity of Elektrim SA at these dates. In
accordance with the terms of the carrying agreement set up, and at the request
of the third party, Vivendi Universal acquired the capital and current account
of MMD, holding a 4.99% interest in Elektrim SA at the end of February 2003 for
E 54 million. Vivendi Universal simultaneously collected reimbursement of the
mutual fund shares in which it had invested for an amount of E 58 million. Given
the valuation allowances already accrued, this operation will have no impact on
Vivendi Universal's financial statements in 2003.

3.1 CONDENSED STATEMENT OF INCOME
ELEKTRIM SA
                                                              ----------------------
                                                               2002           2001
                                                              -------        -------
                                                              (IN MILLIONS OF EUROS)
Revenues....................................................    618            993
Operating Income............................................    (47)          (131)
Income before tax...........................................   (163)          (146)
                                                               ----           ----
Net income (loss)...........................................   (178)          (126)
                                                               ----           ----
3.2 CONDENSED BALANCE SHEET
ELEKTRIM SA
                                                              ----------------------
                                                                2002         2001
                                                              ---------    ---------
                                                              (IN MILLIONS OF EUROS)
Long-term assets............................................     1,202        1,348
Current assets..............................................       535          808
  including cash and cash-equivalents.......................       148          278
                                                               -------      -------
Total assets................................................   E 1,737      E 2,156
                                                               =======      =======
Shareholders' equity........................................       288          569
Long-term debt..............................................       581          156
Short-term liabilities......................................       868        1,431
                                                               -------      -------
Total liabilities and shareholders'equity...................   E 1,737      E 2,156
                                                               -------      -------
S-4
3.3 CONDENSED CASH FLOW STATEMENT
ELEKTRIM SA
                                                              -----------------------
                                                                2002          2001
                                                              ---------     ---------
                                                              (IN MILLIONS OF EUROS)
Cash flow from operating activities.........................      (14)          214
Cash flow from investing activities.........................      (50)          196
Cash flow from financing activities.........................      (47)         (239)
                                                               ------        ------
Cash and cash-equivalents...................................   E (111)       E  171
                                                               ------        ------
S-5