ヽ ′ ョ 一Ｆ ′ - David Kronemyer

lncone Statcnert Datt
Net 5ales
lncome from Operations
Net lncome
Net lncome per Share (NLC)
% change
B.lancc ShlGt Data
Total Assets
Total GrouP Equity
6ross Cash Flows
88 a9 90 91 92
Net Sales
3a 39 90 9! 92
lncome from
Operations
33 89 90 91 92
Net lncome
pershare
ea | 3426
a91 4.145
so I 5.252
9t I fi26
ctl 6.66.Gr2
AcouiRED 5l% oF LEADINc TNDEPENDENT FILM PRoDUCER lNTERscoPE.
24 or PoLy6iaiu's ALBUMs solD ovER I IVILLIoN uNlrs EACH
AcHTEVED REcoRD sALE5,lNcolvE FRoM OPERArloNS, NET lNcoME ANo NET lNcoME PER SHARE'
PosrEo aN tMpRovED oPERATINc PERFoRMANcE fSoM lr5 NoRTH AMERIcAN AcrlvlrlE9'
PuRcHAsEo CD MANUFAcTuRING rAclLlrlEs lN KlNcs MouNTAIN (USA)
financiol Highlights.
Report of the Boord of Manogement & Finonciol Review -
Repoft ot the Supervisory Boad. ,

I t is heartening ro be able to report that'1992 was a year of continued real progress for Polycram despite the severe, and deepening,
I worldwrde recession which is now affecting most developed markets. Net profits and earnings per share rose by i30,6, to NLG 506 million
II and NLc 2.98 respectively. Net sales in local currency terms rose by 90,6, but this was obscured bythe autumn'sturmoil intheEuropean
Exchange Rate Mechanism and net sales in guilders were up 50,6 to NLG 6,617 milljon.
ln entertainment, success creates its own momentum. Artists, like everyone, want to be part of a winning team and a winning team is a
magnet for new and established talent. That so many top names - in pop, classics, film and music publishing - have chosen to sign with
Polycram this year is a testament to our standing in the entertajnment industry.
Last year, much of this statement was devoted to our vision of the future and in particular to our goal of positioninq polycram as a
fully-fledged multi-cultural global entertainment group. We are taking a measured and highly original approach to this end. The decision to
expand our embryonic film business was based on the inescapable conclusion that technological advances in visual media are swelling
demand for software at a rate that most industry sources consider will not be matched in the audio sector. Civen Polycram's strong track
record in managing the creative process, we concluded that film was a market we could tackle.
Polycram's strategy for growth balances otganic development and geographic expansion with acquisitions that enrich our catalogues
and our know-hou We believe our experience in music and video is directly relevant and transferable to the film industry. Polycram's
approach revolves around multiple autonomous creative labels, governed by central financial controls. By telieving these units of
responsibility for manufacturing, distribution and finance, PolyGram encourages artistic excellence and marketing innovation. We then set
realistic but challenginq performance targets.
ln pop, new talent is the key to position, market share and profitability. our labels are constantly on the lookout for artists with the
potential for mass-market appeal. Building a roster of act5 is an ongoing challenge for all Polycram operations, and this year's results bear
witness to our A&R skills. Few newcomers burst upon the scene as spectacularly as Billy Ray cyrus, whose Mercury debut single and album
topped the US charts for l8 weeks and went on to achieve worldwide sales of over 7 million units. Uqly Kid Joe, Extreme and CeCe peniston
are other new talents to have scored intetnational hits early in theit careers.
The acquisitions made in the USA during recent years resulted in a significant increase in local market share and profitability. The
relationship formed with i\rotown has proved excellent news for all concerned, with Boyz ll Men having an outstanding success with E d of
the Road which held the number one position in the Billboard pop singles charts for a record-breaking l3 weeks.
Several established national acts have made the transition to international status. From the UK, London Records'shakespear's Sister
broke in the US and Europe; Vanessa Paradis and PM Dawn have also had hits outside their horne bases. Andrew Lloyd Webber's Really
Useful Holdings, of which we own 300/6, has enjoyed another successful year with the rclaunch of loseph ond the Amozing Technicolot
Dreomcoot.we also look forward to the premiere of Andrew Lloyd Webber's new musical srrief I oulevod in July lgg3.ln music publishing
we were delighted that top talents such as U2 and INXS have chosen to join polycram.
For classical music, i992 was a year which saw several long relationships between classical artists and recording labels commemorated.
Decca and Sir Georg Solti celebrated a 45 year partnership with a global marketing campaign and a 25 CD edition of his recordings,
launched on 5ir Georg's 8oth birthday. Deutsche Grammophon rcleased the Abbodo Editlo, to €oincide with the 25th anniversary of the
Folycram Il l

@,ttt"'fit&,*
conductor's signing to the Yellow Label. Philips classics' new recording of The King ond twith lohn Mauceri conducting the Hollywood Bowl
Orchestra and an all'star cast was the year's best-seller, naflowing further the gap between purist and popular tastes.
Together with our factories in Hanover and Louviers, the acquisition of Philips' America n CD factory in Kings Mountain, North carolina,
secures supply of two-thirds of the CDs we sell around the world.
We have continued to make headway in realising our ambitions in the film industry to control our output from concept to video sellthrough,
utilising our existing global distribution network. Although 1992 saw comparatively few polyGram films released, the schedule for
1993 is wellJilled. 1992 successes included Wotkingri e's Bob Roberfs, which won huge critical acclaim and gained box office momentum
steadily, and Condyman, which has grossed over $25 million at North American theatres to date.
ln a joint venture with Universal we formed cramercy Pictures to market and distribute low and rnedium budget theatrical movies in
North America. Cramercy's marketing approach will be 'specialised' to build up audiences for films that do not lend themselves to 1000
screen releases and saturation television advertising but are nevertheless potential popular successes. our international distribution
capabilities have also moved on; in France, we acquired a 3 50/6 stake in Pan'Europdenne in April, and we have begun handling the theatrical
distribution of films in the UK by Manifesto.
Most notably, effective July 1 , we acquited a 510/o share in lnterscope, one of Hollywood's most highly regarded independent producers.
lnterscope has a remarkable record of commercial success with such mid-budget featwes asThrce Men and o Boby, Hond that Rocks the
Crudle and Cocktail, and plans to produce at least eight films in the next two years. ln another achievement, we sjgned a three year
agreement with Jodie Foster's Egg Pictures, giving Polycram Filmed Entertainment the first opportunity to produce projects she controls.
As in everything, there is a yardstick of quality in entertainment, and Polycram aims for all-round excellence - of product, marketing,
delivery and performance. With the opening of our factory in Amersfoort, the Netherlands, and the product finally perfected, November
1992 saw the launch of the digital compact cassette (Dcc) with a worldwide catalogue of around 500 titles from most of the major record
companies The DCC system allows consumers to play and record CD quality sound on a truly portable cassette format with the added
advantage of being able to play their existing catalogue of analogue tapes as well. This is intended to position DCC as the likely successor
to the analogue music cassette.
The prirne factor in all our successes is our people and their ability to delight audiences by the exercise of imagination. The only sure
way to create hits is to develop new material for rising generations. some of this may be contentious, yet as an organisation we have a duty
to be plovocative, even controversial - but not gratuitously so. we must encourage artists to strike out in new directions and challenge our
management to ensure that Polycram continues to move forward. To compete effectively in markets that are driven by innovation requires
special people lt is my privilege to speak for an exceptional range of talent and I am proud to thank every one of polycram,s ll,o94
employees whose creativity and hard work brought about our 1992 successes.
Pdvclan I3l

very strong new releases from
artists, some of whom
established acts and steady cataiogue promise to become major
sales. The success of PolyGram's artists
and efforts of repertoire teams more
internatiofal stars. Th s has kept our
US market share marching upwards.
than compensated for the recession- polycram maintained market leadership
induced lethargy that afflicted all malor n the UK, the other main repertoire
markets. Around the wotld 24 polycram source, and again rncreased market share.
albums sold over one million un ts each,
our best-ever performance.
Two distinctly different styles took
centre stage On the one hand, the
Every few years, music throws up new country phenomenon Billy Ray Cyrus'
sounds and new styles. They come from debut album sold over 7 mil ton copies
nowhere to capture the mood of a
around the world and triumphed in
generation.lg92 could well prove to markets normally resistant to the
"" have been just such a watershed The appeal of country nusic. Sone Gave AII
United States reasserted its dominance in broke the record for the longest stay
rock music and PolyGram's American by a new art st at number one on
labels have been well to the fore in B llboard s Top 200 albums chart and
launching new /^ and was the frrst debut album ever to hit the
country rnusic chart at
I
number one.

I^,*d)er",fu "f""-
Elton lohn signed a wo dwide
controct with Poly'rcn storting with
his next hut one albun
Adrenolize sold over 5 nillion units
Keep the fuith rcleased in Nownbet
soltl over 3 nillion units by the
ABBA6old wos one of the best selling
olbums in the inportont Xmos period
Achy Brcaky Heott was named single of
the year by the Country i\.4usic
Association and has been a hit around
the globe. Two Billy Ray Cyrus videos were
also top sellers, reaching multi-platinum
status in the U5.
On the other hand, the rebellious
attitude of Ugly Kid loe conquered the
Billboard, N4TV and radio charts in the
USA with their first EP As Ugly As They
Wonna Be.fhe band also embarked
upon a hugely successful round of live
performances, completing a sell-out
world tour as well as opening for Ozzy
Osbourne on his farewell U5 tour. Their
first full-length album, Americo's Leost
Wanted,was ceftified gold in the Us.
These overnight sensations
demonstrate, yet again, the central role
played by creative A&R in Polycram's
success. The ability to hear a potential
stadium-filler in an unknown performer
playing an unlashionable brand ol music
requires a leap of imagination, but can
ignite a trend. This highlights the role of
the record label in identifying new talent.
It is no accident that PolycIam has
numerous labels and encourages startups,
such as Atlas Records which began
life in the US this year. Experience has
shown that small teams with creative
autonomy are often highly innovative
and more responsive both to their artists
and the marketplace.
However, to highlight new and
emerging talent is not to overlook the
enduring quality of PolyGram's longer
established pop acts or the respect the
industry has for our catalogue marketing.
[his serves as a magnet lor top talent.
Elton John, whose entire catalogue has
been distributed by Polycram everywhere
outside North America for many years,
will in future release his work worldwide
through PolyGram, starting with his next
but one album. Elton's most recent
rclease,The One, has sold 2.3 million
units in PolyCram territories.
our second bestselling album of the
year was Def Leppard's Adrenolize with
over 5 million units sold to date; equally
important, the album reconfirmed the
band's popularity in the U5. Lionel Richie
also signed a worldwide deal with
Polycram this year; his last l\4otown
album, Bock to Front sold 4 million
records around the world plus a further
1 million in the US. A strong second
half-year release schedule headed by Bon
Jovi and Extreme was buoyed further by
the success of the ABBA cold album
which has been a Top 10 hit in U
territories. ln the run up to Christmas,
Bon Jovi's Keep the Faith, rcleased in
November, sold 3 million copies and
Amy Ctant's Home for Christmos album
topped the 1.4 million mark.
PolyGram's licensing relationship with
lvlotown has been a particular success in
Europe with results well above plan. The
year's highlights have included Boyz ll
Men wf'ose End of the Road single has
broken in 14 malkets after a recordbreaking
run at the top of the Billboard
chart. Shanice's / tove Your Smile was a
big hit earlier in 1992 and we have made
excellent progress in re-establishing
l\4otown's catalogue in all markets.
.... 24 albums sold more than
One mllllOll units each in l9e2
an all-time
re co rd
[6] Fbtycram

Polycram [7
.
to continue for the next decade, holds
national repertoire
continues to provjde
an abundance of talent.
With local acts from the
US or UK, who dominate the
international pop sector, PolyCram's
careful planning and creative marketing
can be the key to establish a global
following. The notable example of 1992
was London Records' Shakespear's Sister
who enjoyed their first large-scale
American success with the single sfol
from their album HornonallyYours
which reached number 4 in the US pop
charts. This followed chart success
throughout Europe.
Only rarely have non- English-speaking
acts succeeded rn breaking out of their
home markets. Vanessa Paradis, signed to
Remark France, and Polydor Germany's
U96 have achieved pan-European
success, as has Misercrc,lhe most recent
English./ltalian recording by Polydor's
Italian sta r Zucchero.
National and regional repertoire
remains a sizeable activity in which
PolyGram has considerable strength and
great opportunities. A new office based
in Miami is coordinating the marketing
of Spanish and Portuguese repertoire
throughout the world. Local artists from
Polycram's companies in Argentina, Chile,
Mexico and Brazil released albums which
enjoyed double platinum success. Three
top Spanish-speaking artists - Dyango,
Carlos Mata and Sergio Dalma signed
recently for Latin America, will be top
priorities in 1993 for Latin America
and Spain.
The Asia-Pacific region, where 750,6
of the population is under 40 years old
and rapid economic growth is forecast
exceptional promise. PolyCram is
expanding iLs presence there by investing
in new talent and new companies to build
breadth and depth in local repertoire
which accounts for some 700,6 of all pop
sales in this region. ln the past our
Chinese repertoire has largely originated
from Hong Kong, however in 1992 we
signed our first artists from mainland
China. A number of artists scored hits in
their national territories including Japan's
Kan and Zard, and two Taiwanese artists,
Ling Nung Shuen and
Yang Lin. The
outstanding
international repertoire
successes were the
l\4otown license and
Exj]eme's Three Sides
to Every Story , which
went straight to number
one in lapan upon
release. The Japanese
third party distribution deals for Island
and A&M have now terminated and will
henceforth be handled by Polycram.
During the year, we also acquired the
majority ol our former Decca licensee in
Taiwan, adding to our position there.
Our new world sales reporting system
tracks sales on the basis of units shipped
by each national operating company's
warehouse. The data feedback has
produced a wealth of strategic and
tactical marketing information. This
has been constructive in analysing the
effectiveness of publicity and promotion
in local markets. Now almost complete,
the system has proved especially valuable
in maintaining sales momentum in
smaller markets and extendinq the
shelf life of particular albums.
For example sales
of Metallica's
eponymous album, released by PolyGram
outside North America in August 1991,
continued selling strongly into 1992's final
quatlet. U2's Achtung Baby also sold
strongly around the world long after its
release in the high profile American and
European markets. Bryan Adams' 1991
number one album Waking Up The
Neighbours sold another3 million records
in 1992 to top an astounding l0 million units.
Consumer tastes and expectations are
moving targets, and while some of today's
hot acts may be stale tomorrow, others
endure far longer. Demographic issues are
important in this respect. Polycram
enjoyed solid success from its catalogue
wilh hit re-releases such as ABBA Gold,
Bob Matley's Legend, and lvlotown's
greatest hits compilations. Not only are the
original fans buying these releases; they
are finding new audiences among younger
generations. Demographics also explain
the growth of direct marketinq through
magazines and record clubs which provide
an alternative to record shops, which
are largely enjoyed by teenagers and
young adults.
lnnovative A&R, creative marketing
and adept management of current and
backcatalogue have been, and will
continue to be, the basis of Poly6ram's
5UCCe55.

Folycram [9]
After Philips Classics' record-breaking
Mozaft Edition and the exceptional
success of Decca's frrceTenors audio and
video releases during the last 2 years,
it was inevitable that the worldwide
classical music business in
'1992 would seem something
of an anti climax in comparison.
Nonetheless, Decca, Deutsche
Grammophon and Philips Classics
maintained their combined leading share
of the depressed classical audio segment,
which has now become a one-carrier CD
market. Despite the deaths in recent
years of Claudio Arrau,
Leonard Bernstein and Herbert
von Karajan, who recorded extensively
with our labels, and the recession in the
retail trade, Polycram's classical business
has achieved a tripling of sales over the
last decade.
This success highlights the strength of
our three classical labels and the wealth
of their catalogues. Each has a long'
standing tradition of recording excellence
and technical quality which attracts
artists and consumers alike. Definitive
interpretations of favourite classics and
lesser known works are equally strongly
represented in their catalogues which
feature today's leading artists alongside
those of earlier generations.
These recordings are superb assets
of lasting value; the three labels'
combined archive is a treasury of
recording history.
That many of the great artists signed
to our labels choose to work with us
throuqhout their lifetime careers is
especially gratifying and 1992 was a
vintage year for anniversaries. 5ir Georg
Solti celebrated his 45th year with Decca
and signed a further extension of his
exclusive contract with the label to
coincide with his 80th birthday. To mark
the occasion, a 25 CD set entitled fhe
Solti Edition was released together with a
CD sized biography. Other highlights of
his immensely active year were acclaimed
rccotdings of Die Zoubeildte, Otello and
Die Frau Ohne Schatfer and the release
of live audio and video recordings of
Mozaft's Requiem.
At Deutsche Grammophon there were
two anniversary releases. The year began
with the 20 CD Doningo Edition to matk
the star tenor's 25th year on the operatic
stage, and closed with the 25 CD Abbodo
Edition which celebrated a quarter
century of partnership between
conductor and label. Philips Classics
focused on 20 years of outstanding
recordings at the Bayreuth Festivalwith
the release ol the Richord Woqnet Edition
featuring the celebraled Pierrc Boulez
Ring cycle.The whole edition comprised
32 CDs,26 laser discs and l8 video
tapes and was accompanied by a
documentary film for TV broadcast. Both
Decca and Deutsche Crammophon also
commemorated the l5oth anniversary of
the Vienna Philharmonic Orchestra with
releases featuring historic recordings
made over many years. Decca's
documentary on the first-ever recording
of th e complete Rrng cycle with Si Ceory
Solti and the Vienna Philharmonic was
another major video release.
It is the continuous challenge of
Polycram's classical labels not only to
celebrate the best of yesterday and today
but to invest in the future by developing
new artists from around the world so
that stars emerge to become tomorrow's

household names. The
media fanfare focused on
opera in particular has
made it essential for us to
discover the vocalists who
will follow such esteemed
names as Jos6 Carreras,
Placido Domingo, Dame Kiri
Te Ka nawa, Jessye Norman
and Luciano Pavarotti who
have been associated with
our labels for many years
and are now at the peak of
their fame. Upcoming artists include
Cecilia Bartoli on Decca, Cheryl Studer on
Deutsche Grammophon and Dmitri
Hvorostovsky and Sylvia McNair on
Philips classics.
Talented new instrumentalists are no
less important to the continuity and
development of our classical business.
Young award winners in 1992 included
Olli I\,4ustonen and Christophe Rousset on
Decca. Other developing artists are
Patrick Callois and Jean-lvlarc Luisada at
Deutsche Crammophon and Zolt6n Kocsis
and Viktoria Mullova on Philips Classics.
Because classical music has such
universal appeal, opportunities abound
to match renowned conductors with
orchestras and artists from different
cultures and traditions. 1992 brought
exciting possibilities to record with
orchestras in Eastern Europe and the
former USSR. Deutsche Gram mophon
renewed its Iink with the Staatskappelle
Dresden as did Philips Classics which also
signed a long term commitment to the
Kirov Orchestra under the direction of
Valery Cergiev.
Other innovative orchestral relationships
at Philips Classics include their work with
Seiji Ozawa and the Saito Kinen
Orchestra, and the relaunch of
the Hollywood Bowl Orchestra under
the direction of John Mauceri. The
outstanding release of the Hollywood
Bowl Orchestra during 1992 was The King
and lwilh an all-star cast including Julie
Andrews, Ben Kingsley, Lea Salonga,
Peabo Bryson, Niarilyn Horne, and special
guest stars Roger l\,4oore and Martin
5heen. This release is planned to initiate a
series of recordings of Rodgers and
Hammerste n musicals.
Classical music has always seized on
the technological advances in the record
business first. The expertise of the audio
engineers at the recording centres of
Polycram's three labels has played a vital
part in setting standards, first for the LP,
then in the switch from mono to stereo,
and latterly in developing digital
recording which made CD the dominant
classical music format. We jook forward
to further success with DCC for which
over 100 classicaltitles have already
been released, wrth anorher 280 trties
scheduled for release in 1993. Our
objective remains to invest so that our
reputation for outstanding quality and
recording excellence continues.
the d iscovery
ta lent
lnvesting in new oftists is
vitalfot the futurc
celebrated the 25 yeot
poftnetship between the
canductor ond DeLtsthc
lt ol Pdycram

Polycram Music Publishing today owns
title to over 110,000 sonq copyrights,
a catalogue built up over the last six
years by acquisition and by signing and
developing talented songwriters From
virtually nothing, we have assembled a
superb collection which should continue
to be a sound investment for the future
1992 brought onlY a handful of
acquisitions, notably a majority holding
in Kitty Music, a laPanese comPanY
specialising in local repertoile 0ther
newsworthy events on the pop front were
our signing of the publishing rights for
l\XS, U2 and loan Armatlading. lNXs
promptly produced three chart hits with
thei 1992 album. Welcome to Wherever
You Arc,in luding the title track
CeCe Peniston, Pearl lam,
Shakespear's Sister, Vanessa Williams, Sir
N,4ix-a-Lot, k.d. lang and Billy Ray Cyrus
have been other publishing best-sellers.
Bob Marley was rediscovered by a new
generation with lron Lion Zion, a
previously unreleased single, and Freedom
5ongs, a successful boxed set. ABBA also
returned to the chartsvia lhe ABBA 6old
album and video.
Creative thinking is vital in joining
together our songrights and backcatalogue
of recordings. Following the
success of the llalo Roorts tribute to Elton
lohn and Bernie Taupin, we are now
working on similat ventures. A tribute to
ABBA has been released in Scandinavia;
a Thin Lizzy tribute is taking shape,
and several other projects are under
consideration.
We have sought out opportunities to
use our songs in film and television and
are working with Polycram Filmed
Entertainment to explore prospects for
cross-fertilisation. Altogether, we had
songs in 22 films this year ranginq from
lerome Kern's lhe 5o ng is You inWoody
Allen's Husbands and Wives,lo Gtoove
Mosterhy Arrow which was used in two
separate soundtracks.
ln the UK, we signed two top
composers of film and television music.
Barrington Pheloung is best known for
scoring Central Television's I nspecto r
Morse andTruly, Modly, Deeply; Simon
May's credits include the siqnature tunes
to several BBC series including
Eastenders, Howqtd's Woy and Eldorado.

,).' \ \' oeglnnlng . wltn tne g'owth
.-\ $\ O of demand for prog'a66ing,
,.. \\ l; ' 'solLware values are escalaLing.
I
As Polycram s qlobal mus,c and serl
Polycram's
objective of becoming
a significant presence in filmed
entertainment is a natural lateral move,
especially considering the size of the
opportunities film Wesents. Vo ety, the
trade magazine of the
entertainment industry, quotes a
widely held view that "the
estimated 200lo compound
annual qrowth rate of the
last l2 years driven by
video tape, pay TV and
the burgeoning international
broadcast markets - is just the
through video distribution network is
already in place, 1992's primary tasks
have been to build up our film production
companies and gain experience in the
theatrical distribution, promotion and
advertising skills which ultimately
determine margins. Sales are modest rn
the context of Polycram as a whole
and Filmed Entertainment made a
loss, as expected, in its first year of
expanded operations.
Considerable progress was made
in securing the sources of supply
necessary to realise our ambitions.
The acquisitions of the outstanding
shales in Propaganda and Working Title
were duly completed and Poly6ram
acquired 5l% of lnterscope, one of
Hollywood's leading independent
producers, with an excellent track record
oI maling :uccesslul mainslream mov,es
on medium-budgets and, in addition,
entered into a 3 year funding agreement
with lodie Foster's Egg Pictures.
With the formation of Gramercy
Pictures, a co venture with Universal,
PolyCram Filmed Entertainment has
begun the process of gaining direct
expeflence ol markerrng and dist,iburing
its own movies ln the US and Canada,
and Cramercy's first release, early in lg93,
will be Working Title's Posse. ln 1993,
Gramercy will distribute most films
produced by PolyGram, some from
Universal and two films from Spike Lee's
production company.

To date, Polycram Filmed Entertainmert
has demonstrated ts ability to produce
films that have achieved crirrcal acclaim.
In october 1992, we broke through to the
commerc al rnainstream and proved
ourselves capable of producing and
market ng a hr.f tlm. Condynln, a hofiot
story starring V rginia Madsen, was
produced by Propaganda for under
$10 million and opened on 1400 screens
across the United States, taking over $25
m llion at the U5 box office.
Our earlier success of 1992 was
Working Title's Bob Robetts, the saliica
spoof documentary account of American
pol tics, wr tten and directed by Tirf
Robbins. who also starred. Nominated
Best Film at the Tokyo Film Festiva and
heaped with favourable reviews, Bob
Rabets was dslt buled oy ParamoJrt
Pictures and M ramax Films in the USA.
Made forjust $4 million, it performed
weli among urban audiences in both the
US and the UK.
Other 1992 releases inc uded Rubl,
starr ng Danny A ello, which disappointed
Sidney Lumet and starring Me anie
Griffith dld modest business at the US
box office, taking close to $12 mrllion;
and so d over 180,000 units into the US Hudsucket Praxy, d rected by the Coen
video rental markets. Retitled C/ose fd
Eden, the same film is set for release in
the UK early in 1993.
PolyCrarn's amb tions in film are being slate.
achieved through strong management.
discipline, is left to fi m producers The
business strategy of PolyGram Filmed
business, step by step, with each new
step build ng on the last. Prev ously
sell ng al the rights to films produced,
At l\,4lFED in October, one of the
ind ustry's three large annual
marketplaces for f lm sales, l\,4an festo
signed 83 deals covering 21 countries
se ling distribution rights for PolyGram
Filmed Entertainrnent product ons and
Manifesto, with many studios nterested
n selling non-U5 rights in order to
recover investment faster and share risk
brothers and starrinq Paul Newman and
Tim Robbins, scheduled for release n
1993, is one such fr m on Manifesto's
The next step for Po ycram, now
As n our music businesses, the creative taking shape in France and the UK, isto
process, with n a framework of f nanc al tackle its own direct distribution of low
and med um budget films. For example,
Palace Pictures' product ons Wotetl1nd,
Entertainment is to fashion a substantia starring lererny lrons , and The Crying
6rne, Neillordan's thr ller set in
Northern Ireland, were released in the UK
dur ng the autumn. Both were well-
Polycram now retains the non-US rights reviewed and performed sattsfactorily on
for sale throLrgh our film sales company, the independent cinema circ!it. Quentin
Manifesto, thus increasing our revenue Tarantino's controversial f rst fllm
Reservoit Dogs released in the U K, in
ianuary 1993 looks set to be one of the
rnost successful independent films of
the year.
ln 1992, six Polycram films entered
production, ready for re ease in 1993.
These include Posse, a black western
now in post production at
Wotk ngTitle, A Hane of
Our Own, an A&M Ft ms

production starring Kathy Bates, and
Kqlifornia, a thr ler w th Brad Pitt and
Ju iette Lewis on which Propaganda has
completed principal photography. Other
f ms in the pipelhe arc Dream Lover,
Roneo ls Bleeding, Lights 0ut and Red
Rock West.The lnterscope acquisition w ll
not be ref ected fully in production
investments until 1994 onwards because
of ts existing th rd party production
(onr t.1pnts The liri lrterq.ope movie
with a substantial Polycram investment
sThe Air UpThere. More f ilms are
at different stages of development.
We have also taken a creat ve
approach to a field wh ch complements
both our mov e production and
music experience. PolyGram FlLmed
Enterta nment has established Po yGram
Telev s on lnternational n the UK.
Together with Po yGram Diversified
Entertainment, PolyGram Television
produces films of special live events,
particu arly concerts by top rock acts, for
sa e to broadcast or pay TV and for
subsequent video release Cenes s at
Knebworth and the GLrns'N' Roses
concert n Paris were the outstandlng
events of 1992.
Dur ng 1992, Polycram Video
lnternat onal has concentrated on
strengthening ts catalogue away from
rnusic. For example, we have acquired
internat onalv deo rights to a children's
caTtoon series cal ed X lven, as wel as
Hurricanes whtch is about a fictional
socceT tearn. Po yGram and l\,4otown
Horne V deo together ho d a video,
worldwide syndication, merchandisinq
and book rights to The Jqcksons - An
Americzn Dreom, a five hour rnini-ser es
about the lacksons produced by Suzanne
De Passe for US television broadcast. Ire
lqcksons has become one of the highest
rated minr-ser es for the ABC TV network.
Development of our v deo sel
through operat on, wh ch uses Po yGram's
exist ng mus c drstribution network, is
gathering momentum. We intend to
become one of the major forces in this
f eld. SuccessfuL US re eases have
included the Notionql footb1ll Leogue
Rocks series, which feature great
moments in American football with rock
or country music soundtracks. ln music
video, B lly Ray Cyrus and U2 were our
top sellers. ln the UK and France our
seLl through operat ons are expanding
nto the video rental market, a strategy
we expect to see cop ed in other major
terr tories.
,,,M
Due for release tn the
sunnet Kalifarnio is a
psychalogicalthri er
stafttng Etod Pitt and
HoneofOutOwn,o
heartfelt drcno obaut a
nothet af six who gives
up the big city fat life in
o.nolltawn
com plementing
our expertlse
Posse, dirccted by and
storring A4otio von
Peebles, is a tnditianal
classic western set in the
Spanish Anericon wat
Poycram [] 5

Report ofthe
Board of Management
& Financial Review
llnancial Statan.nts
Accounting Policies
Consolidated Statementr of
lncome of the Polycram Group
Consolidated Balance Sheets
of the Polycram Croup
Consolidated Statements of
Cash Flows ofthe Polycram Crcup
Notes to the Consolidated
Financial Statements of the
Polycram Croup
Financial Staternents of
Polycram NV.
Notes to the FinancialStatements
of Polycram NV
Oth.i idforn.tion rtgrrding
Pollcr.ln N.V.
Auditors'Report
Distribution of lncome according
to the Articles ofAssociation
Proposed Distribution of lncome
Report of tfte
sup..Yisory Botrd
of Polycran N.v.
Applicrtion of gcn€r.lly
sccept d accounting
Drincipbs in the USA
sunlll.ry of Fin.ncial
Statenentr of the
Pollrcrrnr GrouD in
US Doll.rg
Active management and acquisition of intellectual property rights, strict financial
controls, and low financial gearing are at the heart of PolyCram's strategy for
maximising shareholder value. ln 1992, Polycram achieved record levels for net sales,
income from operations and net income.
Net sales in 1992 were NLG 6,617 million up from NLC 6,326 million in I gg1, an
increase of 5ch. Currency fluctuations, notably the weakening of the US dollaL UK
sterling and the ltalian lira, had a negative impact on sales, which in local currency
terms were up 9%.
Polycram's core business continues to be popular music, which grew by 30lo in
1992.ln the United States, Polycram enjoyed improved chart performance throughout
1992, with success from new artists such as Billy Ray Cyrus, Shakespear's Sister, Ugly Kid
loe, PM Dawn and Mother Love Bone, and established acts including Def Leppard and
Bon Jovi. ln the United Kingdom, another important source of potential internationally
successful acts, we managed to increase market share, but in the rest of Europe
conditions were less favourable.
ln Japan, beating past performance particularly in national and classical music
proved difficult, but we did succeed with two national acts, Kan and Zard. ln the rest
of South East Asia we performed much better, with regional success from lacky
Cheung, Leon Lai and Hacken Lee. Effective October l, 1992, we were able to
increase our shareholdings in ourJapanese companies. We now have sole ownership of
Nippon Phonogram Co. Ltd, in which we have acquired the remaining 3 50/o stake, and an
89.6% shareholding in Polydor K. K., in which PolyCram formerly held a 74.6vo stake.
ln ciassical music, Decca, Deutsche Grammophon and Philips Classics maintained
their combined leading position in a depressed classical market, now dependent on CD
sa les. Following the remarkable repertoire in 1990 (The Three Tenort a nd I 991 (the
Conplete Mozaft Editior) 1992 was always going to be difficult, and this, together with
the severe recession in some markets, hurt the classical catalogue business and sales
year on year fell by I 5%.
ln August we announced the acquisition of 510/o of lnterscope, a successful
Hollywood production company whose film credits include Cockail, Thrce Men ond o
116l roycram

Baby and Hand thot Rocks the Cradle.The acquisition of Interscope, together with
Polycram's other film making companies, Propaganda and working Title, means that
PolyGram is a growing force in film production. ln I992 Polycram Filmed Entertainment
(including non music video) generated sales of N LC 549 million, up from N LC 332 million
in 1991, an increase of 65q0.
Penetration of the compact disc has continued to advance and CDs now represent
77ok of PolyGtam's recorded music sales. We believe that the outlook remains good for the
CD with most markets not yet reaching maturity. Music cassettes declined in percentage
terms to 2lq0 of sales and in the longer term, the digital compact cassette, DCC, launched
in the final quarter of 1992, is expected to be the logical successor to the analogue
cassette. At 20lo of sales, vinyl has virtually disappeared.
Gross income grew faster than sales in percentage terms, increasing our gross
margin to 4zlqo from 46.4a/o.The continuing efficiency gains from our newly acquired CD
manufacturing facilities in Kings Mountain, USA, effective January l, 1992, and our
facilities in Europe, were a tactor in this.
Despite extremely competitive trading conditions we controlled our promotional
expenditure, but the new regional management structure and start up costs in Polycram
Filmed Entertainment increased our general and administrative expenses. Overall, we
managed to improve our operating margin slightly to 11.90,6, with income from
operations of NLC 789 million up 7ol0, an improvement of NLC 54 million on 1991.
Net Sales by
Repertoire Type 1992
Net Sales by
Geographical Source 1992
Net Music Sales
by Carier 1992
ROW (4%)
U5A&
Pdycram [17]

Report of the
Board of Management
Review
Financial income and expenses turned to a net cost of NLC 9 million in 1992, after
a contribution of NLC I I million in 1991, due to smaller foreign exchange gains,
together with acquisition payments in the first half of the year which absorbed
cash resources and increasing working capital requirements for filmed entertainment.
The effective tax rate of 29% was 30/o lower than in 1991, reflecting the utilisation
of tax loss carryforwards following the improvement in operating profit in the
United states and the lower tax rate in France.
Equity in non-consolidated companies posted a loss of NLC I8 million, an
improvement of NLC l0 million on 1991, helped by the continuing strong performance
of Really Useful Holdings, of which Poly6ram holds 300/o and a reduction in the losses
from our non-consolidated companies in the United Kingdom.
Our minority interests were also reduced in I992, to a negative NLC 30 rnillion,
improved from a negative NLC 4l million in 1991, due mainly to a reduction in
minorities of our two Japanese companies.
Net income grew by t3qo to NLG 506 million, an improvement of NLG 60 million
on l99l. There were no extraordinary items in either 1991 or 1992.
Total Croup Equity, comprising Shareholders'Equity and Other Group Equity,
recorded a net increase of 130/o from NLG l,l3'i million to NLG 1,28t million.
Shareholders'Equity increased by earnings net of dividend of NLG 396 million.This was
partly offset by the goodwill write-off of NLC 147 million arising from acquisitions
includinq Interscope and Prcpaganda, |'i'anslation differences and revaluations of NLC 50
million, on balance, due mainly to sterling's weakness and the lower value of sterling
denominated assets and other movements of NLC 39 million.
.loyS"*+"".o"
lncome frcm Operations
by Ceoq raphical Source %
Net
a8 | 262
qll rrr
go 357
92 ) 5tt6
I I 8] Fblycram

Balance as ofJanuary l, 1992
Chonges:
New consolidations,/deconsolidations
Share in group income
Distributions, net
Translation differences
Other movementr
Balance as of Decenbcr 31, 1992
lncluded in Other Croup Equity are US$200 million of Subordinated Notes ("The Notes") issued by Polycram Finance By.,
a group company of PolyCram Ny. The Notes are mandatorily exchangeable into Non-voting Redeemable Preference
Shares of another group cbmpany, Polycram Luxembourg Finance 5.A. The Notes and the preference 5hares are only
redeemable at the option of Polycram and carry financing rates at December 31, 1992 ranging from 5.00,6 to lO.3%,
which are subject to periodic adjustment. Financing charges amounting to NLc 33 million (1991: NLG 33 million) and
taxes thereon amounting to NLG ll million (1991: NLc lt million) are recorded under minority interests in the 1992
Consolidated Statements of lncome.
Ptovisions fot:
Pensions
Net defered tax liabilities
Returns
Earn-outs regarding acquired companies
Other obligations and risks
Total provisions
Consistinq of:
Long-term provisions
Shod-term provisions
PolyGram has several pension plans covering its employees. Employee pension plans have been established in many
countries in accordance wilh the legal requirements, customs and the local situation in the countries involved. The
pension obligations have, in most cases, been transfened to separate pension funds or to third parties, which limit any
further obligations of the Polycram Group to the beneficiaries.
The provision for pensions covers the pension plan for the Polycram employees in Germany (1992: NLC 194 million;
l99l: NLG l82 million).The remaining amount (1992: NLC 20 million; 1991: NLc 2l million) relates to pension plans in
other countries. The provision is calculated taking into account an average discount rate of 750/6 (1991: 8.50/o).
The provision for returns covers the costs of expected returns of goods sold. Expected returns are estimated on the
basis of past experience as well as current sales.
The provision for earn-outs relates to additional amounts payable to the vendors of lsland and A&M based
on earnings before taxes of Polycram during 1990 through 1999 and is valued at the present value of the
estimated amounts payable, and earn-outs relating to Ptopaganda Films, lnc. and the participation in Really Useful
Holdings, based on earnings of those companies.
0l Polycram

Notes to the
Consolidated
Securities
Other
Trade accounts
5hareholders
Non-consolidated comPanies
Net deferred tax assets
Advances and loans to artists and repertoire owners
Other receivables
Prepaid expenses and accrued income
Balance as ofJanuary l, 1992
Changes:
Net income
Dividend
6oodwill
Translation differences
Transactions in Polycram NV. shares, on balance
Revaluation
Transfer to net deferred tax liabilities
Balance as of DGcenber 31, 1992
With effect from January l, 1993, goodwill arising from the difference between the purchase price and the net asset value
of companies acquired in 1993 and onwards will be capitalised and systematically amortised over the expected economic
life of that asset, not exceeding 40 years. As a result of the change of the amortisation method for music publishing
rights, in 1990 the related deferred tax liabilities were released and transferred to Shareholders' Equity. ln 1992 this
release is reversed.

Notes to the
Consolidated
Book value as of lanuary l, 1992
Chonges:
lnvestments
Translation differences
Book Yalre as of Deccmber 31, 1992
Acqui5ition price
Amortisation
The book value as of December 31, 1992, includes N LG 919 million for the catalogues of recorded music and
NLc 235 million forthe catalogue of music publishing rights.
6ross value as of January 1, 1992
Depreciation
Ntchiner! Othet Ass.t'
tnd depnciob,e under
equiDdant ,ttett cottsttuction
Book Yalue as ofJanuary 1,1992
Chonges:
lnve5tments
New consolidations
Depreciation
sales
Other changes
Book valrc a5 of Decembei Sl, 1992
Gross value as of December 3l,1992
Depreciation
Balances as of lanuary l, 1992
Chonges:
Net investments
Equity in net income (loss)
Dividends
Other chanqes
Balances as of Decembcr 31,1992
As of December 31, 1992 the equity inciudes catalogues of theatrical, publishing and recorded music rights valued at
NLC 131 million.

Notes to the
Consolidated Statements of lncome
Rcconciliation of income tax ratGs
Weighted average percentage, based on statutory tax rates
Tax effect of tax loss carryforuards utilised
Tax effect of cullent losses not recognised
Tax effect of changes in the valuation allowance for deferred tax assets
Tax effect of costs deductible for tax purposes but not for financial reporting
Tax effect of exempt income, and non-deductible expenses
Effect of tax incentives and other tax effects
Effectivo tax ratcs
The net deferred tax assets or liabilities are determined per fiscal entity. Offsetting of deferred tax assets and deferred tax
liabilities within the same fiscal entily is restricted to deferred tax assets and liabilities that reverse in the same period.
Current and non-current deferred taxes, net of a valuation allowance, are included in the balance sheet under
receivables in the event, and to the extent, that per fiscal entity total deferred tax assets exceed total deferred tax
liabilities. Conversely, current and non-current deferred tax liabilities are included under provisions in the event, and to
the extent, that per fiscal entity total deferred tax liabilities exceed total deferred tax assets.
Analysis of incoma tax positiors
Balance as of lanuary I
Changes:
lncome taxes accrued
lncome taxes paid
New consolidations
Transfer from equity (see Note l2)
other chanqes (includinq translation differences)
Balarcc as of Dc€elnber 3l
These bolonces include:
Net deferred tax assets
Valuation allowances
Net deferred tax assets net of valuation allowances
Defened tax liabilities
lncome taxes Payable, net
Pdycram [27

Notes to the
Consolidated Statements of lncome
ttote 2. COSTS OF SALES (continued)
Employees by geoglaphical arca
Europe
USA and Canada
Asia
Rest of World
Europe
USA and Canada
Asia
Rest of World
lnterest expense
lnterest income
Exchange gains and losses
Other f inancial expenses
lncluded in the interest expense is NLG 3 million, representing interest expense to Philips (199t:NLG 2 million interest
expense).
Note s. INCOME TAXES
lncome taxes amounted to N LG 226 million (1991: N LG 238 million) resulting in an effective tax rate of 29Vo (1991:32Vol.
lncome taxes were reduced by NLC U million (1991: NLC 2l million) resulting from the utilisation of loss carryforwards
from operating losses. At December 31, lgg2 the operatinq loss carryforwards aggregated approximately NLG 550 million
(1991: N LC 469 million) of which approximately N Lc 81 million (199'l: N LC 9 million) will expire within 5 years. The
increase of tax losses represents largely the net effect of operating tax losses transferred in 1992 from Philips (NLC 67
million, of which N LG l4 million was utilized in 1992) and utilisation of previous years tax losses.
Withholding taxes relating to income of subsidiaries to be paid as dividends in the near future are qenerally deducted
from the income in the year in which the income is generated.
Polycram's operations are subject to income taxes in various foreign jurisdictions with varying statutory tax rates. The
weiqhted average statutory tax rates reflected in the following table are computed by applying the applicable statutory
rates to Polycram's earnings in each country.
6l PoVGram

Notes to the
Consolidated Financial Statements
of the PolyCram Group
All amounts are expressed in millions of Netherlands guilders unless otherwise stated. The comparable figures are
reclassified to conform to currently adopted presentation methods where necessary
The financial data of Polycram NV. are included in the consolidated financial statements of the Croup. Therefore the
unconsolidated statement of income for Polycram N.V., reports only the net income from participations, and other income
after taxes.
Effective from January 1,1992, Polycram acquired the American CD factory in Kings Mountain, North Carolina, from
Philips for N LG 57 million.
Effective from July l, 1991, Polycram acquired the CD factories in Hanover and Louviers from Philips and withdrew
from its direct investment in CD lnteractive, selling its activities to Philips. Together with deferred payments, the net
amount payable was NLG 156 million.
Effective from July l, 1991, Polycram purchased a 3Oqo shareholding in Really Useful Holdings for a total consideration
of NLG 288 million, includinq deferred payments and earn-outs
Europe
USA and Canada
Asia
Rest of World
Direct costs of sales
Selling expenses
General and administrative expenses
Ressarsh and Developlnent
The expenditures for research and development activities amounted to NLC 5 million (1991: NLC 25 million) and have
been included in the costs of sales.
Sala?ies and wage5
lncluded in costs of sales are salaries and wages amountinq to N LG 807 million (t991: N LC 685 million). The costs for
related social security and similar benefits totalled NLc l8l million (1991: NLG 143 million). lncluded in the costs for social
security are the costs for pension plans totalling NLG 45 million (1991: NLG 30 million). ln 1992 remuneration of members
and former members of the Board of ManagementpaidbythecrouptotalledNLGt0.Smillion(1991:NLC 9.7 million),
and forthe Supervisory Board totalled NLG 0.1 million (1991:NLC 0.'l million).

Consolidated Statements of
Cash Flows of the PolyGram Croup
Cash flows flom opelatirg activitics
Net income
Adjustments to recorcile net incone to gross cash
provided by opcrating activitics
Depreciation and amortisation of tangible and intangible asset5
Provision for losses on receivables and prepaid expenses
Equity in net loss of non-consoljdated companies
Minority interests
Gross cash flows froln opcrations
Change in ariets and liabilities, nat of effectr fron acquisitions
Decrease (increase) in assets:
Receivables and prepaid expenses
Long-term receivables
lnventories
other assets
lncrease (decrease) in liabilities:
Accounts payable
other current and accrued liabilities
Provisions
other liabilities
Total adjustlllents
Net caih provided by operating activitic5
Carh flows fron investing activitiet
Payments for new consolidations, net of cash acquired
Net investments in tangible and intangible assets
Non-consolidated companjes
Net cash ured in invcsting activitics
Ca3h flows fron financing activities
Payables to banks
Long-term debts (including to Philips)
Payments to minority interests
Dividend paid
Net cash used for financing activities
Net increase (decrease) in cash
Translation differences
Cash as ofJanuary I
Cash as per thc end of period
lnterest paid
lncome taxes paid
l4l Fdycram

Consolidated Balance Sheets
of the PolyGram Group
Fixed asscts
lntangible fixed assets
Tangible fixed assets
Non-consolidated companies
Other non-current financial assets
Total fixcd assets
Curient as3el3
lnventories
Receivables and prepaid expenses
Liquid assets
Total current assets
Group Equity
12 shareholders'Equity
13 Other Croup Equity
Total Group Equity
Long-tcrn provisions
',
r{ Short-ternprovisions
ri Long-termliabilities
r6 crrrent liabilities
Pdycram [23

Consolidated Statements of
lncome of the PolyGram Group
r l{et salos
2 Direct costs of sales
Gross incone
selling expenses
Ceneral and administrative expenses
lncone fron operations
Financial income and expenses
lncolne before taxes
lncome taxes
lncotre aftor taxcs
Equity in net loss of non-consolidated companies
Groirp iltsome
Minority interests
Net income
Aver.ge nultlber of sh.res (p.r y.lllc LG O.5O)
assrrned ortst.nding during thc yerl
llet incono p€r share
Proposed dividcnd pcr shara

Balance Sheets (continuedf
non-consolidated companies reflects, in all material aspects, the accounting policies established for these consolidated
financial statements. Non-consolidated companies in which no significant influence is exetcised are valued at purchase price.
Downward value adjustments of a structural nature are taken into consideration.
Other non-cu ent financial assets
other non,current financial assets are valued based on historic cost or net realisable value, whichever is lower.
lnventories
Recording costs are valued at cost less depreciation, which is based on the average economic life
Films are valued at cost or the estirnated net realisable value, whichever is lower, generally using the individual film
forecast method. The cost of a film includes the direct costs of production, an allocation of studio production overhead and
interest capitalised during the production period.
Other inventories are valued at purchase price or cost of manufacture, based on a first-in first-out method, reduced by a
provision for the risk of obsolescence. Cost of manufacture includes direct costs and the appropriate proportion of ovelhead,
taking into account the stage of completion. Any incorne derived from intercompany transfers of goods and materials is
eliminated.
Receivables and prepaid expenses
Trade accounts and other receivables are valued at face value less an allowance for the risk of doubtful accounts.
For advances to artists and repertoire owners, each contract is appraised individually and the value of the unrecouped
portion is determined by the prospects of future recoupment taking into account current popularity and recent sales.
lncluded in receivables are net deferred tax assets recognised for temporary differences between the financial and tax
bases of assets and liabilities that result in deductible amounts in future years, and deferred tax assets recognised for
operating loss carryforwards. A valuation allowance is recognised if based on the weight of the available evidence, it is mote
likely than not that all or some portion of the deferred tax assets will not be realised.
Grcup equity
Other group equity includes minority interests in total equity of consolidated companies which are shown at net asset value,
calculated in accordance with the accounting policies established in the preparation of these consolidated financial
statement5.
Liabilities
Provisions are not associated with specific assets, but are created to cover certain business obligations and risks. Provisions
are stated at face value, with the exception of provisions for employee pension benefits and severance payments, and
provisions for earn-outs which are stated at the present value of the future obligations.
The provision for employee pension benefits is based mainly on actuarial calculations and relates to those pension
obligations that are not funded by separate pension funds or by third parties. The total pension coverage provided by this
provision toqether with the various separate pension funds is equal to at least the present value of existing pension benefits
based upon the number of prior years of employment with Polycram.
lncluded in provisions are net deferred tax liabilities recognised for temporary differences between the financial and tax
bases of assets and liabilities that result in taxable amounts in future years.
Statenerts of lncorne
Net income is determined taking into account the following accounting policies:
Net sales represent the revenues derived from products delivered to, and services performed for, third parties, net
of returns.
The calculation of costs is closely related with the valuation principles for assets and liabilities.
The costs of research and development are charged to income when incurred. Equity in net income of non-consolidated
companies in which a significant influence is exercised has been recognised, in all material aspects, in accordance with the
accounting policies followed in the preparation of these consolidated financial statements. Where no significant influence is
exercised in a non-consolidated company, dividends received are recognised as income.

Consolidat€d financirl statenents of the Polycram croup
-Ihe consolidated financial statements of the Polycram Group include the accounts of Polycram N.V. and its subsidianes
(the "Polycram Group").
The Polycram Group includes businesses around the world which are chiefly involved in the acquisition, production and
marketing of repertoire as well as the manufacture, sales and distribution of pre-recorded sound carriers, such as compact
discs, music cassettes and records. ln addition Polycram is engaged in activities with respect to music video, in the
production of films and television programming and in music publishing.
Policics of contolidation
The consolidated financial statements include all of the subsidiaries in which a controlling interest is held by Polycram N.V.,
or through any of its subsidiaries directly or indirectly. These companies are included in full in the consolidation; the
aggregate of minority interests of third parties are disclosed separately.
With regard to the financial statements of the majority of the Dutch private limited liability companies, included in the
consolidated financial statements, the exemption is applied as refened to in article 403, section l, Book 2 of the Civil Code.
Polici€s followed in valuation and incone Galculation
Historic cost convention
The valuation as well as the depreciation andlor consumption of fixed assets and inventories, is based on the historic cost
convention with the exception of entities in highly inflationary economies (hyper-inflation countries)where the valuation of
these assets and also depreciation and./or consumption are based on current value.
Foteign cuffencies
All foreign currency amounts in the balance sheets have been translated to Netherlands guilders ("NLG') at the
official exchange rates at the balance sheet date. Gains and losses resulting from foreign currency transactions are included
in the consolidated statements of income. Exchange differences due to the translation into NL0 of investments in foreign
subsidiaries, including financing considered a hedge towards those investments, have been accounted for as translation
differences in Shareholders' Equity.
ln the consolidated statements of income, the amounts stated for sales, expenses and results of foreign participations
have been translated to NLG based upon the rates of exchange for the periods involved.
Acquisition of su bsi di q ries
Newly acquired companies are valued at their net asset value. Goodwill arising from a difference between the purchase price
and net asset value is accounted for directly in 5hareholders'Equity.
Face value
Unless specifically mentioned otherwise, all items in the financial statements are valued at face value.
Balance iheets
lntongible fixed assets
Catalogues of recorded music, the catalogue of music publishing rights and the catalogue of theatrical rights are considered
intangible assets if they are purchased as part of a major acquisition and are valued based upon either the actual amounts
paid to third parties upon acquisition or the present value of expected jncome, whichever is lower. They are amortised if and
to the extent that the present value of the expected in€ome generated by the acquired catalogues falls below their book
value.
Tangible fixed ossets
Tangible fixed assets are generally valued at their acquisition cost less depreciation.
Depreciation is calculated on a straight line basis taking into account the assets'econornic lives.
No n-co nsol i doted co n po nies
The valuation of the investments in non-consolidated companies in which a significant influence is exercised over the
business and financial policies is based on net asset value. The valuation of assets, liabilities, equity and income of these

Despite the acquisitions made in 1992 and the negative effect of exchange rate
movements, PolyGram's balance sheet remains strong.
Long-term liabilities reduced from NLc 296 million in l99l to NLC 164 million in
1992, due to the payment of the lsland notes. These have been replaced with short-term
borrowings from banks and comrnercial paper, which together have increased from
NtC 68 million in 1991, to NLC 165 million in 1992.
Polycram's total number of employees increased from 10,568 at the end of I 991 to
I I ,l 62 at the end of I 992. This increase was mainly due to new consolidations.
The 1992 sales growth of 50/o has been achieved in very difficult trading conditions
and shows the benefits of having operations in 30 countries worldwide, and an extensjve
and broad-ranging portfolio of national, international and classical artists. Despite the
continuing economic difficulties in Europe, Polycram is looking foruard to further growth
in net sales and income in I 993. The improving economic climate in the United States,
continued progress in the Far East and strong growth from our expansion into filmed
entertainment are the chief reasons for our optimism.
Looking further into the future, we expect filmed entertainment and the new
digital compact cassette, DCC, to make an increasing contribution to sales and profits.
No major acquisitions or major restructurings are anticipated at this time and although
continuing economic uncertainty may require some minor adjustments, this would be
unlikely to materially affect the normal level of capital investment or the total number
of employees.
March 23,1993
The Board of l\4anaqement
Ceographical 5plit
of Employees I992
R0w (s%)
USA&
Total Croup
Equity
Polycran Il

Notes to the
Consolidated
Note rs. Lot{c"TERlti L|AB[lTtEs
Long-term bank loans
Financial leases
Other long-term debts
Total
,64
l5
55
226
During the year, notes issued as part of the consideration for the ig89 lsland acquisition, classified as other long-term
debts, were paid.
The average interest percentage as per December 31, 1992 amounts to g.6%. Long-term debts as per December 31, 1992
with a lifetime in excess of five years are NLG 49 million (1991:NL6 5l million).
Payables to banks
Commercial paper
Accounts payable to trade creditors
Accounts payable to non-consolidated cornpanies
lncome taxes payable
Dividend payable
Other debts payable
Accrued licence fees payable
Other accrued expenses
tt6
49
722
3
,02
,ro
268
944
334
68
592
48
72
r02
25r
924
347
2,6a8 2,404
0n lanuary 15, 1991, Polyoram entered into a multi-currency revolving credit facility agreement with a syndicate of banks.
This is a committed facility expiring January i996 for u5$180 million or its equivalent in other currencies. tncluded in the
amount is a swingline facility of US$40 million which would allow the facility to be used to support a Us commercial
paper programme if that is required in the future. The minimum draw down under the facility is Us$5 million. As at
December 31, 1992, no amount has been drawn down under this facility (1991: nil).
ln December 1991, Polycram reached agreement to arrange a NLG 250 million Dutch commercial paper programme
to provide both an alternative and an additional source of funds to existing uncommitted credit lines. As at December 31,
1992 Nlc 49 million (1991: nil) has been drawn down under this facility.
The Polycram croup has several uncommitted credit lines with banks in a number of countries. The unused portion of
these credit lines was NLC 1,064 million at December 31, 1992 (1991: NLG 944 million).
PdyGnrn [31]

Grla1antee5
Guarantees on behalf of non-consolidated companies and third parties
Guarantees to artists and repertoire owners
Legal Proceedings
eolcram has extensive international operations, and is subject to a number of legal proceedinqs incidental to these
operations'PolycramdoesnotexpectthattheoUtcomeofcurrentlypendinqproceedingsagainstPolycramWill,either
individually or in the aggregate, have a material adverse effect upon the financial condition of Polycram'
Earn-outs
ln addition to the purchase price of lsland and to the earn-outs provided for (see note l4), amounts are payable to
the vendor based on earnings before taxes of the acquired business for any three consecutive years during 1992
through 1999.
ln addition to the purchase price of A&M and to the earn-outs provided for (see note l4), amounts are payable to the
vendor if earnings before taxes of A&l\4 exceed specified levels during 1993 through 1994 or if certain A&M developing
artists release albums that sell at least one million LP units (long playing vinyl records, cDs or music cassettes) prior to
December 31, 1994.
Othel
During 1992, Polycram acquired 5lo/o of lnterscope communications, lnc. commencing July l, l99z an option has been
granted to the vendors of lnterscope to require Polycram to acquire the outstanding shares of lnterscope
Communications lnc. at a fair market value.

Financial Statements
of PolyGram N'V'
ASSETS
Non-cwlert finanGial as59t5
Participations (A)
Cwrent asscts
Receivables (B)
sh.reholdcrs' Equity
share capital, issued and paid (C)
Reserves (D)
Net income from particiPations
other income after taxes .
Nat incone

Notes to the
Financial Statements
or PolyGram N.V.
All amountt are expressed in millions of Netherlands quilders unless otherwise stated.
^. PARTICIPATIONS
Participations are included in the balance sheet based on the net asset value in accordance with the aforementioned
policies. Other receivables due from participations and liabilities to participations are accounted for in the respective
asset and liability accounts.
A list of participations, drawn up in accordance with the relevant legal requirements, is available at the Trade Register
office in Amersfoort, The Netherlands.
Balance as ofJanuary l, 1992
Chonges:
Equity in net income
Revaluation
Coodwill
lnve5tments
Transfer to group company
Dividend paid
Transactions in Polycram NV. shares, on balance
Translation differences
Transfer to net deferred tax liabilities (see Note 12)
Balance as of DGCembel 3l,1992
Participations
Other
c. SHARE CAPITAL, ISSUED AND PAID
At December 3 l, 1992 the share capital, issued and paid, amounted to NLG 85 million and consisted of l7O million shares
with a par value of NLC 0.50 per share. Approximately 79% of the shares are held by Philips.
As of December 31, 1992, resulting from the acquisition of A&M in 1990, the sellers of A&M Records lnc. have the
option to purchase 500,000 shares (1991: 1 ,000,000) of Polycram NV. at a price equal to the price to the public of
PolyCram's initial public offering in 1989, being US$16.00 per share.
Since August 1, 1990, the Company has implemented an executive share option plan for senior management. The
movements in the number of share options outstanding can be summarised as follows;
Outstanding as at lanuary I
Granted
Lapsed
Exercised
Outstanding as at Dccenbcr 3l
The outstanding options as of December 3'l , 1992 for 2,311,500 shares have been g ranted at a weighted average
subscription price of NLG 35.64 (ranging from NLG 30.70 to NLC 44.05) and unless previously exercised will expire at
various dates between July 3l,lgg6 and April 30, 1998.
lf all the outstanding share options as at December 3l, ig92 were exercised, this would result in an earnings dilution
of NLG 0.02 per share reducinq earnings per share to NLG 2.96.
I3al FdyGnrn

Balances as of lanuary l, 1992
Chqnges:
Distribution of income
Coodwill
Translation differences
Tran5actions in Polycram N.V shares, on balance
Revaluation
Transfer to net defe(ed tax liabilities (see Note 12)
Balances as of December 31.1992
Mainly in connection with the executive share option plan, PolyGram acquired in 1992 1,079,620 shares with a nominal
value of NLG O.50 each for an average price of NLG 46.26, and re-issued 1,103,351 shares with a nominal value of NLc
O.5O each for an average price of NLG 43.72.
As of December 31, 1992 252,671 Polycram N.V. shares are held by the 6roup, the value of which is deducted from
other reserves.
Dividend payable
Commercial paper
Other
The srpervisory Board
D.C. Fine, Chairman
L,PH. Das
LA. Rutgers

Other information
regarding
PolyGram N.V.
Auditorrs RGport
We have audited the financial statements of Polycram NV., Baarn, for the year lg92, as included on pages 20 to 35
inclusive. We conducted our audit in accordance with generally accepted auditinq standards.
ln our opinion, these financial statements present fairly the financial position of the Company at December 31, 1992,
and the results of its operations for the year then ended and also comply with the other Dutch legal requirements for
financial statements.
Amsterdam, March 23, 1993
KPMG Klynveld
Distributior of lnconre accordirg to the Afticles ofAssociatior of Polycraln N.v. as stipulated in Articles 331 35
and 36.
Upon proposal of the Board of Management, which proposal must be approved by the Supervisory Board, the Ceneral
Meeting of Shareholders of PolyGram Nv. may decide to make distributions in cash or in shares of Polycram Nv.
payable out of the distributable profit of the year, "other reserves" and./or "share premium account" as shown in the
financial statements.
Proposcd Dist.ibution of lnqome
ln view of the stipulation of Article 3 5 of the Articles of Association, it has been proposed that a dividend of N LG ll0
million (NLC 0.65 per share) be paid and the remaining amount of net income of NLG 396 million be added to "Reserves".
Report
of the $upsrvisory Board
of PolyGram N.V.
Polycram NV.'s financial statements for 1992 have been audited by independent public accountants KPMC Klynveld. We
ask you to adopt these statements in accordance with the recommendation of the Board of Management and to accept
the proposal to declare a dividend of NLC 0.65 per share in respect of lgg2.
There are no members of the Supervisory Board retiring in lgg3.
'1992 has been another satisfactory year for Polycram despite difficult trading conditions in many of the major economies.
The Supervisory Board wishes to acknowledge the efforts of PolyGram personnel worldwide whose creativity, skill,
dedication and commitment have made the achievement of these results possible. We would like in particular to express
our appreciation to the President and the other members of Polycram management who have steered the qroup so
successfully in challenging times.
We look forward to continued growth and success in lgg3.
Baarn, March 23, 1993
The 5upervisory Board
.361 FoVGram

Application of Generally
The accounting policies followed in the preparation of the consolidated financial statements differ in some respects to
those generally accepted in the United States of America (U5 GAAP).
Those differences which have a material effect on Net lncome and./or 5hareholders' Equity are as follows:
o. Goodwill arising from a difference between the purchase price including contingent consideration and net asset value
of newly acquired companies and participations is accounted for directly in Shareholders'Equity. For US GAAP
purposes, goodwill has been recorded as an asset and is being amortised over 40 years. Under US 6AAP, contingent
consideration is not recognised at the date of acquisition, but instead is recognised as additional goodwill at the date
the contingency is resolved and the additional consideration is payable.
a. lntangible assets are amortised if and to the extent that the present value of the expected income generated by each
category of asset is less than the book value. For US GAAP purposes, catalogues of recorded music are amortised
straight-line over 25 years, and the catalogue of music publishing rights and the catalogue of theatrical rights
straight-line over l5 years.
c. The functional currencies of the hyper-inflation countries are their local currencies. For US CAAP purposes, the
Netherlands guilder should be the functional currency.
d. ln 1991 Polycram purchased from Philips certain CD rnanufacturing facilities (PDO) and valued the assets and
liabilities at fair value on the acquisition date. Further Poly6ram sold its CD-l investments to Philips and recorded a
gain in the statement of income. For US GAAP purposes the purchase of PDO would be recorded using Philips'
historical cost, the difference in the purchase price being treated as an increase in capital. ln addition, under US GAAP
the gain on the sale of our CD-l investments in lggl is recorded as a capital contribution.
The calculation of Net lncome and Shareholders'Equity, substantially in accordance with US GAAP, is as follows:
Net income as per Congolidated Statcnents of lnconlG of the Polycran Glorp
Adjustnents to leported incomel
a. amortisation of goodwill
b. amortisation of intangible assets
c. remeasurement of financial statements of entities in hyper-inflation countries
d. transactions with Philips
- other
Approximate Nct lncolnc in accoldance with US GAAP
Shareholdersr Eqrity as per Consolidatcd Balance Sheets
of the Polycraltl Grorp
Adiustnents to reported €quityl
a. goodwill
b. intangible assets
d. transactions with Philips
- other
Appioxin.te Shareholders' Eql.ity in accordarre with US GAAP
F,t ycram [37]

Sumnary of Financial
Statements of the PolyGram Croup
tn US Dollars.
lltGone Statenent data
Net sales
Direct costs of sales
Gross income
Selling, general and administrative expenses
lncome from operations
Financial income and expenses
lncome before taxes
lncome taxe5
3,656
(r,935)
,,721
(t,28st
436
(s)
43t
(t2st
lncome after taxes
Net incomc
llet incone pcr share t.65
Balance sheet data (at period cnd)
Totalfixed assets
Tota I current assets
t,o93
t,834
Total assets 2,927
Shareholders'Equity
Other Group Equity
Total Glorp Eqrity
Long-term bank loans
Other long-term provisions and liabilities
Short'term bank loans
Other short-term provisions and liabilities
496
2t2
4
455
64
1,696
2,927
Total Shareholdels' Eqrity per thare
* Merely for the convenience of the reader, Netherlands guilder amounts have been converted to US Dollars at a rate of
U5$l : NLG 1.81, being the rate which was applied for the conversion of US Dollar amounts in the Consolidated Balance
Sheet as per December 31,1992.
[38] Fbtycram

PolyGram
Ma nagement
ExeGtltive ManagGment
Alain Ldvy
President and Chief Executive Officer
Jan Cook
Executive Vice President and
Chief Financial Officer
Tim Harrold
Executive Vice President, Classical Music
Maurice L. Oberstein
Executive Vice President, Pop Marketinq
Michael Kuhn
5enior Vice President, and
President, Polycram Filmed Entertainrnent
Norman Cheng
President, Far East
Allen Davis
President, Continental Europe
Eric Kronfeld
President and Chief Operating officer,
Polycram Holding, lnc. USA
Corporate officers
Peter Bouwens
5eniorVice President, lnternational
Manufacturinq and Loqistics
Richard Constant
General Counsel
Manolo Diaz
President, Latin America
David Hockman
Chief Executive, Music Publishing
David Munns
Senior Vice President, Pop Marketing
Peter Matthews
Vice President F&A,
Regional Operations
Donald Miller,Jones
Vice President, Treasury and
lnvestor Relations
Anthony Preedy
Vice President, Personnel
William Feeny
Corporate Controller
Hans Govers
Tax Director, Corporate
6eoff Lawlan
Tax Director, Regional Operations
Operational ManagGnGrt
Alain Ldvy
President and Chief Executive officer,
Polycram Holding, lnc. USA
Chris Blackwell
Chief Executive Officer, lsland Records
Jerry Moss
Chairman, A&M Records
Herb Alpert
Vice Chairman, A&M Records
Roger Ames
Chairman and Chief Executive Officer,
Polycram UK Ltd., UK
Wolf D. Gramatke
President and Chief Executive Officer,
Polycram CmbH, Germany
Dr. Johannes H. Kinzl
President, Philips Classics Productions,
The Netherlands
Roland Kommerell
President, Decca lnternational, UK
Terumi Mizuta
President, PolyGram K.K. and
Chairman, Polydor K.K., lapan
Cilles Paire
Chief Executive Officer, Polycram S.A.,
France
Gianfranco Rebulla
President, Deutsche Grammophon GmbH,
Germany
Stewart Till
President, lnternational Division,
PolyGram Filmed Entertainment
Board of Management, Polycran ll.V.
Alain L6vy, President
lan Cook, Executive Vice President
Chris Blackwell
Dr. Wolfgang Hix
Jerry Moss
Robert A.E. Stuyt
Supervisory Board, Polycraln tl,V.
David G. Fine
Cha irma n
Lourens P.H. Das
Senior Director, Corporate Office Mergers
& Acquisitions, Philips lnternational Bv.
Johan A. Rutgers
Ceneral Secretary, Philips Electronics NV.
Responsibility for the management of
PolyCram is with the Board of
Management; it is accountable to the
5upervisory Board and the shareholders.
Fblycram [3 9]

The Netherlands
Polycram NV.
PolyCram lnternational Holding BV.
Polycram lnternational Music BV
PolyCram Record Service B.V.
PolyCram Nederland Bv.
Phonogram B.V.
Polydor B.V.
Wisseloord Studio's B.V.
Manifesto Film Sales BV.
Polycram Film Productions B.V.
Europe excluding thG N€therlands
Austtio
Polycram Ges.m.b. H.
Belgiun
PolyCram Records 5.A.
Dennotk
PolyCram Records A./S
PolyCram Finland Oy
Ftonce
Polycram S.A.
Polycram Manufacturing & Distribution
Centres S.A.
lsland Entertainment 6roup S.A.
PolyCram f\4 usic S.A.R.L.
D.l.A.L. - Diffusion lnternationale d'Arts et
Loisirs S.A.
Pan Europ6enne Diffusion
Cin6matographique S.A................... 350/o
Germony
PolyGram GmbH
Deutsche Crammophon CmbH
Phonogram CrnbH
Polydor CmbH
Metronome Musik CmbH
Polycram Songs Musikverlag GmbH
Karussell l\,4usik & Video 6mbH
Polycrarn Manufacturing & Distribution
Centres 6mbH
Polycram Filmproduktion CmbH
Crcece
Polycram Records 5.A.
Polycram Records Ltd.
Itoly
Polycram ltaha 5.r.1.
Luxembourg
Polycram Luxembourg Finance S.A
Polycram Records A/S
Pottugol
PolyGram Discos 5.A.
spoin
PolyGram lberica 5.A.
sweden
Polycram AB
Sweden Music Fdrlaqs AB
Sonet Grammofon AB
Switze and
Polycram Records AG
United Kingdon
Polycram (UK) Holdings Plc
PolyCram Leisure Ltd.
Polycram UK Ltd.
PolyGram lnternational Ltd.
PolyCram lnternational Music
Publishing Ltd.
lsland Entertainment Croup Ltd.
Phonogram Ltd.
Polydor Ltd.
PolyCram Record Operations Ltd.
A&M Records Ltd.
Britannia Music Company Ltd.
FFRR Records 1td................ ................... 490/o
The Decca Record Company Ltd.
PolyCram Video lnternational Ltd.
Dick James Music Ltd.
PolyGram Video ltd.
Really Useful Holdings 1td..................... 3 00/o
Working Title Films Ltd.
l{orth Alnctica
canoda
Poly6ram Group Canada lnc.
lsland Records of Canada Ltd.
United Stotes ofAneica
Polycram Holding, lnc.
Polycram Records, lnc.
Polycram Group Distribution, lnc.
lsland Entertainment Croup, ln c.
Poly6ram lnternational Publishing, ln c.
A&M Records, lnc.
Propaganda Films, lnc.
Metropolitan Entertainment Co., lnc.... 400,6
lnterscope Communications, lnc .
5l0/o
PolyGram Manufacturing & Distribution
Centres, lnc.
PolyCram Filmed Entertainment
Distribution, lnc.
Polycram l\,4ovie Distribution, lnc.
PolyGram Filmed Entertainment
Productions, lnc.
tatin Alttcrica
Aryentinq
Polycram Discos 5.A.
Btozil
Poly6ram do Brasil Ltda.
Fonobras - Distribuidora Fonografica
Brasileira ltda .................................. 500/6
Chile
Polycram Discos Limitada
Mexico
PolyCram Discos 5.A.de Cv.
Asia
Hong Kong
Poly6ram Records Ltd.
Polycram Musi€ Publishing Hong Kong Ltd.
Jqpon
Polycram K.K.
Polydor K.K........................................... 89.60lo
Nippon Phonogram co., Ltd.
Moloysiq
Polycram Records 5dn. Bhd.
Singopote
PolyCram Records Private Ltd.
South Koteo
PolyCram Records 11d. ........................... 600/o
Toiwqn
PolyCram Records Ltd.
Decca Records Ta iwa n 1td........................600/o
Aritralia and Ncw zealand
Austtolia
PolyGram Pty. Ltd.
PolyCram Music Publishing
Australia Pty. Ltd.
New Zeqlond
Polycram Leisure Ltd.

Anru.l Meeting
The Annual General Meeting of Polyoram NV. will be held at the 6rand Hotel Krasnapolsky, Dam 9, Amsterdam, The Netherlands
on Wednesday, April 28, I993 starting at 2.30 p.m.
SharsholdGr hforn.tion
Shareholders needing inforrnation relating to their shareholdings in Polycram N.V. should contact the Shareholder lnfo.mation
Department, Poly6ram NV., Gerrit van der Veenlaan 4, 3743 DN Baarn,Ihe Netherlands. Shareholders who purchased shates
on the New York Stock Exchange may contact the Company's US Transfer Agent and Reqistrar, Citibank, N.A., Equity
Administration Department,1ll Wall Street, NewYork, NY 10043.Tel: (212) 657 7626 or (800) 422 2066.
lnYrstor lnfornation
Investors desiring further info.mation about Polycram should contact the Corporate lnvestor Relations Department at:
Polycram lnternational Ltd.
30 Berkeley Square
London WX 5HA
England
(07r)493 8800
The beginnings of Polycram can be traced back nearly a century to 1898 and the founding of Deut5che Gr.nrnoPhon
Glsellschrft, one of the world's pre-eminent classical music labels. ln the 95 years since then, thousands of renowned popular
and classical artists have recorded on the labels that today constitute the Polycram 6roup
polycram itself began operations in 1962 as a joint venture between .V. Philips'Gloeil.nP€nfabricken (now Philips
Elcctronics lt.V.) and Sisnans AG. Under the joint venture, Siemens assigned to Philips 50% of its subsidiary Dcutschc
cr.nnophon Gesellschaft, in return for 50% of Philips Pltonographiichc lndlstrie, a subsidiary of Philips founded
in 1950.
The subsidiaries were reorganised in 1972 as Polycram, and in transactions in 1985 and l98Z Philips purchased Siemens'50%
interest. ln December 1989, Polycram N.V. became a public company when Philips sold approximately l6% of its interest and
Polycram offered newly issued shares in an initial public offering.
Today, polycram is one of the three largest recorded music producers and publishers worldwide and in addition to its founding
company Deutsche Crammophon, its world famous labels include Mercury, Polydor, Vertigo, Fontana, A&M, lsland and Verve for
popular music and Dec.a/London and Philips Classics for classical music.
poly6ram's principal activity is the creation, acquisition and production of recorded music which it markets and distributes in the
form of compact discs, albums, music cassettes, digital compaqt cassettes, video tapes and laser discs through its network of
subsidiaries in 30 countries and through licensees elsewhere worldwide
fp
rnis aocument las t€en printed on envilonmentally fri€ndly papel.
Designed by stocks Austin sice; Typesetting by wordwork plc; colour separations and printiflg by chevalier - Holland.