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PROSPECTUS FILED PURSUANT TO RULE 424(b)(4)
DATED OCTOBER 1, 1997 REGISTRATION NO. 333-36571
2,752,330 Shares
MATTEL, INC.
Common Stock
Par Value $1.00 Per Share
------------------------
The 2,752,330 shares (the "Shares") of Common Stock, par value $1.00 per share
("Common Stock"), of Mattel, Inc. ("Mattel" or the "Company") are offered by the
entity or entities named herein under "Selling Stockholders" and may be resold
by the Selling Stockholders in the public market.
The Selling Stockholders may resell the Shares from time to time in transactions
on the New York Stock Exchange (the "NYSE") or the Pacific Exchange, Inc. (the
"PSE"), at prices prevailing on such exchanges, or in negotiated transactions,
among other forms of distribution. See "Plan of Distribution." Sales of the
Shares may be effected by selling such securities to or through agents
designated from time to time or through broker-dealers, and such broker-dealers
may receive compensation in the form of discounts, concessions or commissions
from the sellers thereof. Such sellers and any broker-dealer who acts in
connection with the sales of Shares may be deemed to be "underwriters" as that
term is defined in the Securities Act of 1933, as amended (the "Securities
Act"), and any commissions received by them and profit on any resale of the
Shares might be deemed to be underwriting discounts and commissions under the
Securities Act. Salomon Brothers Inc, one of the Selling Stockholders, is
offering as a principal, for its own account, 1,430,231 shares of Common Stock.
The Company has been informed that the Selling Stockholders other than Salomon
Brothers Inc may, but are not obligated, to sell securities held by them and
registered hereunder through Salomon Brothers Inc. In addition, Salomon Brothers
Inc expects to offer and sell Common Stock in the course of its business as a
broker-dealer and may act as principal or agent in such transactions. To the
extent required, the specific amount of Common Stock to be sold, the purchase
price and public offering price, the names of any resale agent, dealer or
underwriter, and the terms and amount of any applicable commission or discount
with respect to a particular offer will be set forth in a Prospectus Supplement
and/or post-effective amendment to the Registration Statement of which this
Prospectus constitutes a part.
None of the proceeds from the sale of the Shares will be received by Mattel.
Mattel has agreed to bear certain expenses in connection with the registration
and sale of the Shares being registered hereby. See "Plan of Distribution."
The Common Stock is traded on the NYSE and the PSE under the symbol "MAT." On
September 30, 1997, the reported closing price of Mattel's Common Stock on the
NYSE was $33.125 per share.
The date of this Prospectus is October 1, 1997.
_________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
_________________________
SALOMON BROTHERS INC
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
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INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR BY ANY OTHER PERSON. ALL INFORMATION CONTAINED IN THIS
PROSPECTUS IS AS OF THE DATE OF THIS PROSPECTUS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR
IN THE FACTS HEREIN SET FORTH SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY SECURITY
OTHER THAN THE SECURITIES COVERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN
OFFER TO OR SOLICITATION OF ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER
OR SOLICITATION MAY NOT LAWFULLY BE MADE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
AVAILABLE INFORMATION........................................... 3
DOCUMENTS INCORPORATED BY REFERENCE............................. 3
RISK FACTORS AND FORWARD-LOOKING STATEMENTS..................... 4
THE COMPANY..................................................... 4
USE OF PROCEEDS................................................. 5
THE SELLING STOCKHOLDERS........................................ 5
DESCRIPTION OF CAPITAL STOCK.................................... 6
General....................................................... 6
Common Stock.................................................. 6
Description of Preference Share Purchase Rights............... 7
Preferred Stock............................................... 9
Series B Voting Convertible Exchangeable Preferred Stock...... 9
Series C Mandatorily Convertible Redeemable Preferred Stock... 10
Mattel Series C Depositary Shares............................. 17
PLAN OF DISTRIBUTION............................................ 20
TRADEMARK MATTERS............................................... 22
LEGAL OPINION................................................... 22
EXPERTS......................................................... 22
</TABLE>
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AVAILABLE INFORMATION
Mattel has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (together with all amendments
and exhibits thereto, the "Registration Statement") under the Securities Act
relating to the Shares. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock, reference is
hereby made to the Registration Statement and the Exhibits and Schedules
thereto. Statements contained herein concerning the provisions of certain
documents are not necessarily complete, and in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
Mattel is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") and the rules and
regulations thereunder, and in accordance therewith files reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information filed by Mattel can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following Regional Offices of the Commission: Room 3190, Northwest Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661-2511; and 13th Floor, 7
World Trade Center, New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such
reports, proxy statements and other information concerning the Company are also
available for inspection at the offices of the NYSE at 20 Broad Street, New
York, New York 10005 and the PSE at 301 Pine Street, San Francisco, California
94104, on which exchanges certain securities of Mattel are listed.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, which Mattel has filed with the Commission pursuant
to the Exchange Act, are hereby incorporated by reference in, and shall be
deemed to be a part of, this Prospectus:
(i) Mattel's Annual Report on Form 10-K for the year ended
December 31, 1996;
(ii) The portions of Mattel's Notice of Annual Meeting of
Stockholders and Proxy Statement, dated March 24, 1997, that have been
incorporated by reference into the Form 10-K for the year ended December 31,
1996;
(iii) Mattel's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997;
(iv) Mattel's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997;
(v) Current Reports on Form 8-K filed by Mattel with the
Commission dated February 5, 1997; February 14, 1997; March 5, 1997; March 19,
1997; March 20, 1997; March 27, 1997; April 17, 1997; April 25, 1997; May 15,
1997; July 25, 1997; and July 30, 1997;
(vi) The description of the Company's Series B Voting
Convertible Exchangeable Preferred Stock, par value $1.00 per share (the "Series
B Preferred Stock") and Series C Mandatorily Convertible Redeemable Preferred
Stock, par value $1.00 per share (the "Series C Preferred Stock") and Series C
Depositary Shares set forth in Mattel's and Tyco Toys, Inc.'s joint proxy
statement and prospectus filed with the Commission on Form S-4 dated February
14, 1997; and
(vii) The description of the Company's Common Stock contained in
the Company's Current Report on Form 8-K filed with the Commission on July 22,
1996.
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All documents filed by Mattel pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part thereof from the respective
dates of filing of such documents. Any statement contained in this Prospectus or
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein (or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by reference in
this Prospectus) modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed to constitute a part of this
Prospectus except as so modified or superseded.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents which have been incorporated by
reference herein (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference therein). Requests for such copies should
be directed to: Secretary, Mattel, Inc., 333 Continental Boulevard, El Segundo,
California 90245-5012, telephone (310) 252-2000.
RISK FACTORS AND FORWARD-LOOKING STATEMENTS
Certain information incorporated by reference into this Prospectus includes
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and is subject to the safe harbor created by that
Act. Forward-looking statements can be identified by the use of forward-looking
terminology, such as "may," "will," "should," "expect," "anticipate,"
"estimate," "continue," "plans," "intends" or other similar terminology. Such
forward-looking statements, which relate to, among other things, the financial
condition, results of operations and business of the Company, are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those set forth in such statements. These include without
limitation: the Company's dependence on the timely development, introduction and
customer acceptance of new products; possible weaknesses of international
markets; the impact of competition on revenues and margins; the effect of
currency fluctuations on reportable income; and other risks and uncertainties as
may be detailed from time to time in the Company's public announcements and
filings with the Commission. Additional information on the risks and
uncertainties that could affect the Company's financial condition, results of
operations and business is included in the documents incorporated by reference
herein.
THE COMPANY
Mattel, Inc. designs, manufactures, markets and distributes a broad variety
of toy products on a worldwide basis. The Company's business is dependent in
great part on its ability each year to redesign, restyle and extend existing
core products and product lines and to design and develop innovative new toys
and product lines. New products have limited lives, ranging from one to three
years, and generally must be updated and refreshed each year.
Core brands have historically provided the Company with relatively stable
growth. Among the Company's major core brands are BARBIE fashion dolls and doll
clothing and accessories; the Company's Disney-licensed toys; FISHER-PRICE toys
and juvenile products; SESAME STREET characters; HOT WHEELS vehicles and
playsets; MATCHBOX; CABBAGE PATCH KIDS; Tyco Electric Racing and Tyco Radio
Control; the UNO and SKIP-BO card games; and the SCRABBLE game, which the
Company markets outside of the United States and Canada.
Mattel was incorporated in California in 1948 and reincorporated in Delaware
in 1968. Its executive offices are located at 333 Continental Boulevard, El
Segundo, California 90245-5012, telephone (310) 252-2000.
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USE OF PROCEEDS
The Shares are being sold by the holders thereof (the "Selling Stockholders")
and, accordingly, the Company will receive none of the proceeds therefrom. The
Selling Stockholders will receive the Shares upon conversion of 53,631 shares
of Series B Preferred Stock. See "Description of Capital Stock -- Series B
Voting Convertible Exchangeable Preferred Stock."
THE SELLING STOCKHOLDERS
All of the shares of Common Stock offered hereby are offered by the Selling
Stockholders. Any sales of such Shares will be for the account of such persons
or entities and none of the proceeds of such offering will be received by the
Company.
The following table sets forth, with respect to the Selling Stockholders,
the number of shares of Common Stock owned by each Selling Stockholder prior to
this offering, the number of shares of Common Stock offered for each Selling
Stockholder's account and the number of shares held by each Selling Stockholder
after the anticipated completion of this offering. None of the Selling
Stockholders owned prior to this offering, and none will own after this
offering, more than one percent (1%) of the Company's outstanding Common Stock
(based on the number of shares outstanding on the date of this Prospectus). The
Shares will be issued to the Selling Stockholders upon conversion of 53,631
shares of Series B Preferred Stock.
<TABLE>
<CAPTION>
Shares of
Common Stock Shares of Shares After
Owned Prior to Common Stock Completion of
Name of Selling Stockholder this Offering Offered this Offering(1)
------------------------------------------- -------------- ------------ ----------------
<S> <C> <C> <C>
Salomon Brothers Inc, and all successors and 16,831(3) 1,430,231 16,831
assigns (2)
Corporate Partners (4) 5,825 1,322,099 5,825
TOTALS: 22,656 2,752,330 22,656
</TABLE>
____________________
(1) As of September 17, 1997, on a pro forma basis after giving effect to
completion of the Offering.
(2) Salomon Brothers International Ltd., an affiliate of Salomon Brothers Inc,
intends to transfer ownership of 27,869 shares of Series B Preferred Stock
to Salomon Brothers Inc prior to or upon the effectiveness of the
Registration Statement. On September 24, 1997, Salomon Inc., the indirect
parent of Salomon Brothers Inc, announced that it would merge with Travelers
Group's Smith Barney Holdings Inc. subsidiary. In connection with this
merger, it is possible that Salomon Brothers Inc may be merged with and into
a subsidiary or affiliate of Smith Barney Holdings Inc. which would become
the Selling Stockholder, in place of Salomon Brothers Inc, hereunder. The
merger between Smith Barney Holdings Inc. and Salomon Inc. is expected to be
completed during the fourth quarter of 1997.
(3) Prior to the Offering, Salomon Brothers Inc will also own 27,869 shares of
Series B Preferred Stock, which it intends to convert into the shares of
Common Stock to be offered hereby upon effectiveness of the Registration
Statement, at a conversion price of approximately $20.46 per share. Cash
will be paid in lieu of issuing fractional shares upon conversion. As of
September 17, 1997, Salomon Brothers Inc had a net short position of
1,311,969 shares of Common Stock.
(4) The shares listed opposite Corporate Partners in the column entitled "Shares
of Common Stock Offered" represent the shares of Common Stock issuable upon
conversion of 25,762 shares of Series B Preferred Stock, which shares are
convertible at a conversion price of $20.46 per share. Of such shares of
Series B Preferred Stock, approximately 85%, 9% and 6% are owned of record
by Corporate Partners, L.P., The State Board of Administration of Florida
("SBA") and Corporate Offshore Partners, L.P., respectively. Corporate
Advisors,
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L.P. is the sole general partner of Corporate Partners, L.P. and Corporate
Offshore Partners, L.P. and as such, has sole voting and investment power as
to the shares of Series B Preferred Stock held by them (and the shares of
Common Stock issuable upon conversion thereof). Corporate Advisors, L.P.
also serves as investment manager over a certain investment management
account for SBA and has sole voting and dispositive power with respect to
the shares of Series B Preferred Stock held by SBA (and the shares of Common
Stock issuable upon conversion thereof). SBA may own additional shares of
Common Stock either directly or in accounts not managed by Corporate
Advisors, L.P., which shares are not reflected herein. Corporate Advisors,
L.P. also currently owns 5,825 shares of Common Stock for its own account
which are not being registered under the Registration Statement and which
are listed under "Shares of Common Stock Owned Prior to this Offering" and
"Shares After Completion of this Offering" in the table above. LFCP Corp. is
the sole general partner of Corporate Advisors, L.P. and is a wholly owned
subsidiary of Lazard Freres & Co. LLC. Jonathan Kagan, a Managing Director
of Lazard Freres & Co. LLC, President of LFCP Corp. and a Managing Director
of Corporate Advisors, L.P. and David Golub, Secretary of LFCP Corp. and a
Managing Director of Corporate Advisors, L.P. were directors of Tyco Toys,
Inc. ("Tyco") from May 1994 until March 27, 1997, the date Tyco was merged
into the Company. Corporate Partners, L.P., Corporate Offshore Partners,
L.P., SBA (solely with respect to securities in the investment account over
which Corporate Advisors, L.P. has sole voting and dispositive power),
Corporate Advisors, L.P. and LFCP Corp. are herein referred to as "Corporate
Partners."
Corporate Partners currently expects to convert all of the 25,762
shares of Series B Preferred Stock owned by it into shares of Common Stock to
be offered hereby from time to time during the effectiveness of the
Registration Statement, although it is not obligated to do so. In the event
some or all of such shares of Series B Preferred Stock are not converted or
if any of the shares of Common Stock issuable upon conversion thereof are not
sold, Corporate Partners would retain such shares of Series B Preferred Stock
(or Common Stock, as the case may be), after completion of the offering,
notwithstanding the amount set forth in the "Shares After Completion of this
Offering" column in the above table.
DESCRIPTION OF CAPITAL STOCK
The following statements with respect to the Company's capital stock are
subject to the detailed provisions of the Company's Restated Certificate of
Incorporation (as amended, the "Certificate of Incorporation") and Bylaws, as
amended (the "Bylaws"), the Rights Agreement (as defined below) and the Deposit
Agreement (as defined below). These statements do not purport to be complete
and are qualified in their entirety by reference to the terms of the Certificate
of Incorporation, the Bylaws, the Rights Agreement and the Deposit Agreement,
which are incorporated by reference as exhibits to the Registration Statement.
GENERAL
Mattel's authorized capital stock as of the date of this Prospectus consists
of 600,000,000 shares of Common Stock, $1.00 par value per share, 3,000,000
shares of Preferred Stock, $1.00 par value per share, and 20,000,000 shares of
Preference Stock, $.01 par value per share. Mattel does not presently have
outstanding, and Mattel's Certificate of Incorporation does not authorize, any
other classes of capital stock. The issued and outstanding shares of Common
Stock and Preferred Stock are duly authorized, validly issued, fully paid and
nonassessable.
COMMON STOCK
Holders of shares of Common Stock have no preemptive, redemption or
conversion rights. The holders of Common Stock are entitled to receive
dividends when and as declared by the Mattel Board of Directors out of funds
legally available therefor. Upon liquidation, dissolution or winding up of
Mattel, the holders of Common Stock may share ratably in the net assets of
Mattel and liquidating distributions to holders of Preferred Stock or Preference
Stock, if any. Each holder of Common Stock is entitled to one vote per share of
Common Stock held of record by such holder and may cumulate its votes in the
election of directors. As of September 15, 1997, there were 290,867,581 shares
of Common Stock outstanding. Each outstanding share of Common Stock is
accompanied by
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a right to purchase one one-hundredth (128/37,500ths as adjusted to reflect a
series of stock splits) of a share of Mattel Series E Junior Participating
Preference Stock, $.01 par value per share (the "Series E Preference Shares").
There are 1,500,000 shares of Series E Preference Shares authorized for
issuance. There are currently no Series E Preference Shares outstanding. See "--
Description of Preference Share Purchase Rights."
The registrar and transfer agent for the Common Stock is The First National
Bank of Boston.
DESCRIPTION OF PREFERENCE SHARE PURCHASE RIGHTS
On February 7, 1992, the Mattel Board of Directors declared a dividend of one
preference share purchase right (a "Right") for each outstanding share of Common
Stock. The dividend was paid on February 17, 1992 (the "Record Date") to the
stockholders of record on that date. At the date the dividend was declared and
paid, each Right entitled the registered holder to purchase from the Company one
one-hundredth of a Series E Preference Share at a price per share of $150 (the
"Purchase Price"), subject to adjustment. Subsequent to the Record Date, and
pursuant to the terms of the Rights, the number of one one-hundredths of a share
of Series E Preference Shares purchasable from the Company upon exercise of a
Right was adjusted to 128/37,500ths of a share of Series E Preference Shares,
reflecting a series of stock splits in the underlying Common Stock paid in the
form of a series of dividends on the Common Stock. The description and terms of
the Rights are set forth in a Rights Agreement dated as of February 7, 1992 (the
"Rights Agreement") between the Company and The First National Bank of Boston,
as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") have acquired beneficial ownership of 20% or more of the outstanding
Common Stock or (ii) 10 business days (or such later date as may be determined
by action of the Board of Directors prior to such time as any person or group of
affiliated persons becomes an Acquiring Person) following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 20% or more of the outstanding Common Stock (the earlier of such dates
being called the "Distribution Date"), the Rights are evidenced, with respect to
any Common Stock certificate outstanding as of the Record Date, by such Common
Stock certificate with a copy of the Summary of Rights pertaining to such Rights
(the "Summary of Rights") attached thereto.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Common Stock. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Stock certificates issued after the
Record Date upon transfer or new issuance of Common Stock will contain a
notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Stock outstanding as of
the Record Date, even without such notation or a copy of the Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on February 17, 2002 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Series E Preference Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Series E
Preference Shares, (ii) upon the grant to holders of the Series E Preference
Shares of certain rights or warrants to subscribe for or purchase Series E
Preference Shares at a price, or securities convertible into Series E Preference
Shares with a conversion price, less than the then-current market price of the
Series E Preference Shares or (iii) upon the distribution to holders of the
Series E Preference Shares of evidences of indebtedness or assets (excluding
regular periodic cash
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dividends paid out of earnings or retained earnings or dividends payable in
Series E Preference Shares) or of subscription rights or warrants (other than
those referred to above).
The number of outstanding Rights and the number of one one-hundredths of a
Preference Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in Common Stock or subdivision, consolidation or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
Series E Preference Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preference Share will be entitled to a minimum preferential
quarterly dividend payment of $1 per share but will be entitled to an aggregate
dividend of 292.969 (as adjusted) times the dividend declared per share of
Common Stock. In the event of liquidation, the holders of the Series E
Preference Shares will be entitled to a minimum preferential liquidation payment
of $100 per share but will be entitled to an aggregate payment of 292.969 (as
adjusted) times the payment made per share of Common Stock. Each Series E
Preference Share will have 292.969 (as adjusted) votes, voting together with the
Common Stock. Finally, in the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each Series E
Preference Share will be entitled to receive 292.969 (as adjusted) times the
amount received per share of Common Stock. These rights are protected by
customary antidilution provisions.
Because of the nature of the Series E Preference Shares' dividend,
liquidation and voting rights, the value of the fractional interest
(128/37,500ths as adjusted) in a Preference Share purchasable upon exercise of
each Right should approximate the value of one share of Common Stock.
In the event that, after a person or group has become an Acquiring Person,
the Company is acquired in a merger or other business combination transaction or
50% or more of its consolidated assets or earning power are sold, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right. In the event that any person or group of
affiliated or associated persons becomes an Acquiring Person, proper provisions
shall be made so that each holder of a Right, other than Rights beneficially
owned by the Acquiring Person (which will thereafter be void), will thereafter
have the right to receive upon exercise that number of shares of Common Stock
having a market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
shares of Common Stock, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such person or group which will have become
void), in whole or in part, at an exchange ratio of one share of Common Stock,
or one one-hundredth (128/37,500ths as adjusted) of a Series E Preference Share
(or of a share of a class or series of the Company's preference stock having
equivalent rights, preferences and privileges), per Right (subject to
adjustment).
With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments require an adjustment of at least 1% in such
Purchase Price. No fractional Series E Preference Shares will be issued (other
than fractions which are integral multiples of one one-hundredth of a Series E
Preference Share, which may, at the election of the Company, be evidenced by
depositary receipts) and in lieu thereof, an adjustment in cash will be made
based on the market price of the Series E Preference Shares on the last trading
date prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes such, the Board of
Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $.0034133 per Right (as adjusted) (the "Redemption Price"). The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
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The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including an amendment
to lower certain thresholds described above to not less than the greater of (i)
the sum of .001% and the largest percentage of the outstanding shares of Common
Stock then known to the Company to be beneficially owned by any person or group
of affiliated or associated persons (other than (a) the Company, (b) any
subsidiary of the Company, (c) any employee benefit plan of the Company or any
subsidiary of the Company, (d) any entity holding Common Stock for or pursuant
to the terms of any such plan or (e) E.M. Warburg, Pincus & Co., Inc., a
Delaware corporation, and its affiliates and associates) and (ii) 10%, except
that from and after such time as any person or group of affiliated or associated
persons becomes an Acquiring Person, no such amendment may adversely affect the
interests of the holders of the Rights.
For the purpose of calculating the various percentage ownership thresholds
contained in the Rights Agreement, shares issued in connection with the capital
investment approved by the Company's shareholders at the 1984 Annual Meeting and
still owned by the original owner, or owned by certain qualified transferees,
are excluded from the amount deemed to be beneficially owned by such persons.
However, if such original owner or qualified transferee becomes a member of a
group with certain other persons, such shares will be included in the amount
attributable to, and will be deemed to be beneficially owned by, such other
persons.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire Mattel on
terms not approved by Mattel's Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. The Rights should
not interfere with any merger or other business combination approved by the
Mattel Board of Directors since the Rights may be redeemed by Mattel at the
Redemption Price prior to the time that a person or group has acquired
beneficial ownership of 20% or more of the Common Stock.
PREFERRED STOCK
The Mattel Board of Directors has the power, without further vote of
shareholders, to authorize the issuance of up to 3,000,000 shares of Preferred
Stock and 20,000,000 shares of Preference Stock and to fix and determine the
terms, limitations and relative rights and preferences of any shares of
Preferred Stock or Preference Stock that it causes to be issued. This power
includes the authority to establish voting, dividend, redemption, conversion,
liquidation and other rights of any such shares. No shares of Preference Stock
are now outstanding.
SERIES B VOTING CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
Mattel is authorized to and has issued 53,631 shares of Series B Preferred
Stock, all of which are owned by the Selling Stockholders.
The Series B Preferred Stock has an annual dividend yield of 6%, payable in
cash. The Series B Preferred Stock has a liquidation value of $1,050 per share
and will be convertible, at the option of the holder, into shares of Common
Stock at a conversion price per share of approximately $20.46 subject to certain
adjustments set forth in the Certificate of Designations for the Series B
Preferred Stock. Commencing in April 1999, the shares of Series B Preferred
Stock will be convertible into Common Stock for designated periods at the then
market price, but not less than a price per share of approximately $10.23.
Holders of Series B Preferred Stock are entitled to vote (on an as-converted
basis) with the holders of Common Stock and Series C Preferred Stock as a single
class on all matters on which the holders of Common Stock may vote.
The Company has the option, at any time, to exchange Series B Preferred Stock
for 6% convertible subordinated notes of Mattel. The Company may redeem Series B
Preferred Stock at any time for an amount equal to 105.25% of its liquidation
value if the average closing price (as defined in the Certificate of
Designations relating to the Series B Preferred Stock) of Common Stock exceeds
175% of the then current conversion price of the Series B
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Preferred Stock. The 175% threshold is reduced to 150% for redemptions after
April 15, 1998 and eliminated for redemptions commencing April 15, 1999. In
addition, the redemption price is reduced over time from 105.25% of the
liquidation value to 100% in 2004. On April 15, 2004, the Company is required to
redeem all outstanding shares of Series B Preferred Stock and the redemption
price shall be paid, at the Company's option, in cash or in shares of Common
Stock.
Pursuant to the terms of a registration rights agreement among the Company
and the holders of the Series B Preferred Stock, the Company has granted the
holders thereof certain demand and incidental registration rights with respect
to the Series B Preferred Stock, any Common Stock issued upon conversion of such
preferred stock or any notes issued in exchange for such preferred stock.
Because the Selling Stockholders have demanded registration of the Shares
pursuant to such registration rights agreement, the Company has filed a
registration statement of which this Prospectus forms a part. In the event that
the Selling Stockholders do not sell all of the shares of Common Stock issuable
upon conversion of the Series B Preferred Stock hereunder, the Selling
Stockholders will retain demand and incidental registration rights under the
registration rights agreement. The Shares issued upon conversion of the Series
B Preferred Stock will be duly issued, fully paid and nonassessable.
SERIES C MANDATORILY CONVERTIBLE REDEEMABLE PREFERRED STOCK
The Company is authorized to and has issued 772,800 shares of Series C
Preferred Stock.
Dividends
Holders of Series C Preferred Stock are entitled to receive, when and as
dividends on the Series C Preferred Stock are declared by the Board of Directors
out of funds legally available therefor, cash dividends from the issue date,
accruing at the rate per share of 8.25% per annum (or $10.3125 per annum or
$2.5781 per quarter), payable quarterly in arrears on January 1, April 1, July 1
and October 1 of each year, or, if any such date is not a business day, the next
succeeding business day; provided, however that with respect to any dividend
period during which a redemption occurs, the Company may, at its option, declare
accrued dividends to, and pay such dividends on, the date fixed for redemption,
in which case such dividends would be payable in cash to the holders of Series C
Preferred Stock as of the record date for such dividend payment and would not be
included in the calculation of the Call Price (as defined herein) related to the
Series C Preferred Stock as set forth below. Dividends will cease to accrue in
respect of the Series C Preferred Stock on July 1, 2000 (the "Mandatory
Conversion Date") or on the date of their earlier conversion or redemption.
Dividends are payable to holders of record as they appear on the stock
register of the Company on such record dates, not less than 15 nor more than 60
days preceding the payment date thereof, as shall be fixed by the Board.
Dividends for any period less than a full quarterly dividend period are computed
on the basis of a 360-day year of twelve 30-day months and the actual number of
days elapsed in any period less than one month.
Dividends accrue whether or not there are funds legally available for the
payment of such dividends and whether or not such dividends are declared.
Accrued but unpaid dividends on Series C Preferred Stock will accumulate as of
the dividend payment date on which they first become payable, but no interest
will accrue on accumulated but unpaid dividends on Series C Preferred Stock.
The Series C Preferred Stock ranks on a parity, both as to payment of
dividends and distribution of assets upon liquidation, with the Series B
Preferred Stock and any future preferred stock issued by Mattel that by its
terms ranks pari passu with the Series C Preferred Stock.
As long as any shares of Series C Preferred Stock are outstanding, no
dividends (other than dividends payable in shares of, or warrants, rights or
options exercisable for or convertible into shares of Common Stock or any other
capital stock of the Company ranking junior to the Series C Preferred Stock as
to the payment of dividends and the
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distribution of assets upon liquidation ("Junior Stock") and cash in lieu of
fractional shares in connection with any such dividend) will be paid or declared
in cash or otherwise, nor will any other distribution be made (other than a
distribution payable in Junior Stock and cash in lieu of fractional shares in
connection with any such distribution), on any Junior Stock unless (i) full
dividends on preferred stock (including the Series C Preferred Stock) that do
not constitute Junior Stock ("Parity Preferred Stock") have been paid, or
declared and set aside for payment, for all dividend periods terminating at or
before the date of such Junior Stock dividend or distribution payment to the
extent such dividends are cumulative; (ii) dividends in full for the current
quarterly dividend period have been paid, or declared and set aside for payment,
on all Parity Preferred Stock to the extent such dividends are cumulative; (iii)
the Company has paid or set aside all amounts, if any, then or theretofore
required to be paid or set aside for all purchase, retirement and sinking funds,
if any, for any Parity Preferred Stock; and (iv) the Company is not in default
on any of its obligations to redeem any Parity Preferred Stock.
In addition, as long as any shares of Series C Preferred Stock are
outstanding, no shares of any Junior Stock may be purchased, redeemed, or
otherwise acquired by the Company or any of its subsidiaries (except in
connection with a reclassification or exchange of any Junior Stock through the
issuance of other Junior Stock (and cash in lieu of fractional shares in
connection therewith) or the purchase, redemption or other acquisition of any
Junior Stock with any Junior Stock (and cash in lieu of fractional shares in
connection therewith)), nor may any funds be set aside or made available for any
sinking fund for the purchase or redemption of any Junior Stock unless: (i) full
dividends on Parity Preferred Stock have been paid, or declared and set aside
for payment, for all dividend periods terminating at or before the date of such
purchase or redemption to the extent such dividends are cumulative; (ii)
dividends in full for the current quarterly dividend period have been paid, or
declared and set aside for payment, on all Parity Preferred Stock to the extent
such dividends are cumulative; (iii) the Company has paid or set aside all
amounts, if any, then or theretofore required to be paid or set aside for all
purchase, retirement and sinking funds, if any, for any Parity Preferred Stock;
and (iv) the Company is not in default on any of its obligations to redeem any
Parity Preferred Stock.
Subject to the provisions described above, such dividends or other
distributions (payable in cash, property or Junior Stock) as may be determined
by the Board may be declared and paid on the shares of any Junior Stock from
time to time and Junior Stock may be purchased, redeemed or otherwise acquired
by the Company or any of its subsidiaries from time to time. In the event of
the declaration and payment of any such dividends or other distributions, the
holders of such Junior Stock will be entitled, to the exclusion of holders of
Parity Preferred Stock, to share therein according to their respective
interests.
As long as any shares of Series C Preferred Stock are outstanding, dividends
or other distributions may not be declared or paid on any Parity Preferred Stock
(other than dividends or other distributions payable in Junior Stock and cash in
lieu of fractional shares in connection therewith), and the Company may not
purchase, redeem or otherwise acquire any Parity Preferred Stock (except with
any Junior Stock and cash in lieu of fractional shares in connection therewith),
unless either: (i)(a) full dividends on Parity Preferred Stock have been paid,
or declared and set aside for payment, for all dividend periods terminating at
or before the date of such Parity Preferred Stock dividend, distribution,
purchase, redemption or other acquisition payment to the extent such dividends
are cumulative; (b) dividends in full for the current quarterly dividend period
have been paid, or declared and set aside for payment, on all Parity Preferred
Stock to the extent such dividends are cumulative; (c) the Company has paid or
set aside all amounts, if any, then or theretofore required to be paid or set
aside for all purchase, retirement and sinking funds, if any, for any Parity
Preferred Stock; and (d) the Company is not in default on any of its obligations
to redeem any Parity Preferred Stock; or (ii) with respect to the payment of
dividends only, any such dividends will be declared and paid pro rata so that
the amounts of any dividends declared and paid per share of Series C Preferred
Stock and each other share of Parity Preferred Stock will in all cases bear to
each other the same ratio that accrued dividends (including any accumulation
with respect to unpaid dividends for prior dividend periods, if such dividends
are cumulative) per share of Series C Preferred Stock and such other shares of
Parity Preferred Stock bear to each other.
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Mandatory Conversion of the Series C Preferred Stock
On the Mandatory Conversion Date, each outstanding share of Series C
Preferred Stock will automatically convert into (i) 13.5753 shares of Common
Stock (the "Mandatory Conversion Rate"), and (ii) the right to receive cash in
an amount equal to all accrued and unpaid dividends on such Series C Preferred
Stock (other than previously declared dividends payable to a holder of record as
of a prior date) to the Mandatory Conversion Date, whether or not declared, out
of funds legally available for the payment of dividends, subject to (1) the
right of the Company to redeem the Series C Preferred Stock on or after July 1,
1999 (the "First Call Date") and before the Mandatory Conversion Date (as
described below) and (2) the conversion of the Series C Preferred Stock to
Common Stock at the option of the holder at any time before the Mandatory
Conversion Date (as described below). See "--Series C Depositary
Shares/Redemption or Conversion of Series C Depositary Shares." The Mandatory
Conversion Rate is subject to adjustment as described below. Dividends will
cease to accrue on the Mandatory Conversion Date in respect of the Series C
Preferred Stock then outstanding.
Optional Redemption of the Series C Preferred Stock
The shares of Series C Preferred Stock are not redeemable prior to the First
Call Date. At any time and from time to time on or after that date until
immediately before the Mandatory Conversion Date, the Company has the right to
redeem, in whole or in part, the outstanding Series C Preferred Stock. Upon any
such redemption, the holder of the Series C Preferred Stock shall receive in
exchange for each share of Series C Preferred Stock, unless previously redeemed
or converted, the greater of (i) the number of shares of Common Stock equal to
the quotient of (a) the applicable Call Price (as described below) in effect on
the redemption date, divided by (b) the Current Market Price (as defined herein)
of the Common Stock, determined as of the trading day immediately preceding the
Notice Date (as defined below) and (ii) 10.0159 shares of Common Stock (the
"Optional Rate"). The Optional Rate is subject to adjustment as described
below. Dividends will cease to accrue on the Series C Preferred Stock on the
date fixed for their redemption.
The "Call Price" for each share of Series C Preferred Stock is equal to the
sum of (i)(a) $127.575 (the equivalent of $5.103 per Series C Depositary Share)
on and after the First Call Date, to and including September 30, 1999; (b)
$126.925 (the equivalent of $5.077 per Series C Depositary Share) on and after
October 1, 1999, to and including December 31, 1999; (c) $126.30 (the equivalent
of $5.052 per Series C Depositary Share) on and after January 1, 2000, to and
including March 31, 2000; (d) $125.65 (the equivalent of $5.026 per Series C
Depositary Share) on and after April 1, 2000, to and including May 31, 2000; or
(e) $125.00 (the equivalent of $5.00 per Series C Depositary Share) on and after
June 1, 2000, to and including June 30, 2000; and (ii) all accrued and unpaid
dividends thereon to but not including the date fixed for redemption (other than
previously declared dividends payable to a holder of record as of a prior date).
The "Current Market Price" per share of the Common Stock on any date of
determination means the lesser of (i) the average of the closing sale prices of
the Common Stock as reported on the NYSE Composite Tape on the 15 consecutive
trading days ending on and including such date of determination or (ii) the
closing sale price of the Common Stock as reported on the NYSE Composite Tape
for such date of determination; provided, however, that with respect to any
redemption of shares of Series C Preferred Stock, if any event resulting in an
adjustment of the Mandatory Conversion Rate occurs during the period beginning
on the first day of such 15-day period and ending on the applicable redemption
date, the Current Market Price as determined pursuant to the foregoing will be
appropriately adjusted to reflect the occurrence of such event. The "Notice
Date" with respect to any notice given by the Company in connection with a
redemption of the Series C Preferred Stock means the date on which first occurs
either the public announcement of such redemption or the commencement of mailing
of such notice to the holders of Series C Preferred Stock.
If fewer than all outstanding shares of Series C Preferred Stock are to be
called for redemption, the Series C Preferred Stock to be called will be
selected by the Company, from outstanding Series C Preferred Stock not
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previously called, by lot or pro rata (as nearly as may be possible) or by any
other method determined by the Board, in its sole discretion, to be equitable.
The Company will provide notice of any redemption of Series C Preferred Stock
to holders of record of shares of Series C Preferred Stock to be called for
redemption not less than 15 nor more than 60 days before the date fixed for
redemption. Accordingly, the earliest Notice Date for any call for redemption
of Series C Preferred Stock will be July 1, 1999. Any such notice will be
provided by mail, sent to the holders of record of Series C Preferred Stock to
be called at each such holder's address as it appears on the stock register of
the Company, first class postage prepaid; provided however, that failure to give
such notice or any defect therein will not affect the validity of the proceeding
for redemption of any Series C Preferred Stock to be redeemed except as to the
holder to whom the Company has failed to give such notice or whose notice was
defective. On and after the redemption date, all rights of the holders of
Series C Preferred Stock called for redemption will terminate except the right
to receive the Call Price (unless the Company defaults on the payment of the
Call Price). A public announcement of any call for redemption will be made by
the Company before, or at the time of the mailing of such notice of redemption.
Each holder of Series C Preferred Stock called for redemption must surrender
the certificates evidencing such shares of Series C Preferred Stock to the
Company at the place designated in the notice of redemption and will thereupon
be entitled to receive certificates for shares of Common Stock equal to the Call
Price, divided by the Current Market Price of the Common Stock and cash for any
fractional share amount.
Conversion at the Option of the Holder
Shares of Series C Preferred Stock are convertible in whole or in part, at
the option of the holder thereof at any time before the Mandatory Conversion
Date, unless previously redeemed, into shares of Common Stock at the Optional
Rate (which, as previously defined, is equal to 10.0159). The Optional Rate is
subject to adjustment as described below. The right to convert shares of Series
C Preferred Stock called for redemption will terminate immediately before the
close of business on any redemption date with respect to such shares.
Conversion of Series C Preferred Stock at the option of the holder may be
effected by delivering certificates evidencing such Series C Preferred Stock
together with written notice of conversion and a proper assignment of such
certificates to the Company or in blank (and, if applicable, cash payment of an
amount equal to the dividend attributable to the current quarterly dividend
period payable on such shares), to the office of the transfer agent for the
Series C Preferred Stock or to any other office or agency maintained by the
Company for that purpose and otherwise in accordance with conversion procedures
established by the Company. Each optional conversion will be deemed to have
been effected immediately before the close of business on the date on which the
foregoing requirements have been satisfied. The conversion will be at the
Optional Rate in effect at such time and on such date.
Holders of Series C Preferred Stock at the close of business on a record date
for any payment of declared dividends will be entitled to receive the dividend
payable on such Series C Preferred Stock on the corresponding dividend payment
date notwithstanding the optional conversion of such Series C Preferred Stock
following such record date and before such dividend payment date. However,
shares of Series C Preferred Stock surrendered for conversion after the close of
business on a record date for any payment of declared dividends and before the
opening of business on the corresponding dividend payment date must be
accompanied by payment in cash of an amount equal to the dividend attributable
to the current quarterly dividend period payable on such date (unless such
shares of Series C Preferred Stock are subject to redemption on a redemption
date between such record date and such dividend payment date). A holder of
shares of Series C Preferred Stock called for redemption on the First Call Date
or any other dividend payment date will receive the dividend on such Series C
Preferred Stock payable on that date and will be able to convert such Series C
Preferred Stock after the record date for such dividend without paying an amount
equal to such dividend to the Company upon conversion. Upon any optional
conversion of shares of Series C Preferred Stock, the Company will make no
payment of or allowance for previously declared dividends or distributions on
the shares of Common Stock issued upon such conversion.
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The Series C Depositary Shares are subject to conversion and redemption upon
the same terms and conditions (including those as to notice to the owners of
Series C Depositary Shares and as to selection of depositary shares to be called
if fewer than all Series C Depositary Shares are to be called) as the Series C
Preferred Stock held by the Depositary, adjusted to reflect the fact that 25
Series C Depositary Shares are the equivalent of one share of Series C Preferred
Stock. See "--Series C Depositary Shares--Redemption or Conversion of Series C
Depositary Shares."
Conversion Adjustments
The Mandatory Conversion Rate and the Optional Rate are each subject to
adjustment as appropriate in certain circumstances, including if the Company (i)
pays a stock dividend or makes a distribution with respect to its Common Stock
in shares of Common Stock; (ii) subdivides or splits its outstanding Common
Stock; (iii) combines its outstanding Common Stock into a smaller number of
shares; (iv) issues any shares of Common Stock by reclassification of its shares
of Common Stock; (v) issues certain rights or warrants to all holders of its
Common Stock; or (vi) pays a dividend or distributes to all holders of its
Common Stock evidences of its indebtedness, cash or other assets (including
capital stock of the Company but excluding (a) any Permitted Cash Dividends (as
defined below) or (b) distributions and dividends referred to in clause (i)
above written). In addition, the Company will be entitled (but will not be
required) to make upward adjustments in the Mandatory Conversion Rate, the
Optional Rate and the Call Price as the Company, in its discretion, determines
to be advisable, in order that any stock dividend, subdivision of shares,
distribution of rights to purchase stock or securities, or distribution of
securities convertible into or exchangeable for stock (or any transaction which
could be treated as any of the foregoing transactions under Section 305 of the
Internal Revenue Code of 1986, as amended) hereafter made by the Company to its
shareholders will not be taxable. "Permitted Cash Dividends" means, with
respect to any consecutive 12-month period, all cash dividends and cash
distributions on the Common Stock (other than cash dividends and cash
distributions for which a prior adjustment to the Mandatory Conversion Rate and
the Optional Rate was previously made) not in excess of, on a per share of
outstanding Common Stock basis, 10% of the average of the closing share price of
the Common Stock as reported on the NYSE Composite Tape over such period. All
adjustments to the Mandatory Conversion Rate, the Optional Rate and the Call
Price will be calculated to the nearest 1/100th of a share of Common Stock. No
adjustment in the Mandatory Conversion Rate or the Optional Rate will be
required unless such adjustment would require an increase or decrease of at
least 1% therein; provided, however, that any adjustments which, by reason of
the foregoing, are not required to be made will be carried forward and taken
into account in any subsequent adjustment. All adjustments will be made
successively.
Whenever the Mandatory Conversion Rate, the Optional Rate and the Call Price
are adjusted as provided in the preceding paragraph, the Company will file with
the transfer agent for the Series C Preferred Stock a certificate with respect
to such adjustment, make a prompt public announcement thereof and mail notice to
holders of the Series C Preferred Stock providing specified information with
respect to such adjustment. At least 10 business days before taking any action
that would result in adjustment to the Mandatory Conversion Rate, the Optional
Rate or the Call Price, the Company will notify each record holder of Mattel
Series C Preferred Stock concerning such proposed action.
Adjustments for Certain Transactions
Unless sooner redeemed or converted, in case of any reclassification of the
Common Stock, any consolidation of the Company with, or merger of the Company
into, any other entity, any merger of any entity into the Company (other than a
merger that does not result in a reclassification, conversion, exchange or
cancellation of the outstanding shares of the Common Stock), any sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or other property (a "Transaction"), then each share of Series
C Preferred Stock will, after consummation of such Transaction, be entitled to
be converted (i) on the Mandatory Conversion Date into the kind and amount of
securities, cash or other property receivable upon consummation of such
Transaction by a holder of the number of shares of Common Stock
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into which such Series C Preferred Stock would have been converted if the
conversion on the Mandatory Conversion Date had occurred immediately before the
date of consummation of such Transaction, plus the right to receive cash in an
amount equal to all accrued and unpaid dividends on such Series C Preferred
Stock (other than previously declared dividends payable to a holder of record as
of a prior date), (ii) upon redemption by the Company on any redemption date
into the kind and amount of securities, cash or other property receivable upon
consummation of such Transaction by a holder of the number of shares of Common
Stock that would have been issuable at the Call Price in effect on such
redemption date upon a redemption of such Series C Preferred Stock immediately
before consummation of such Transaction (assuming that, if the Notice Date for
such redemption is not before such Transaction, the Notice Date had been the
date of such Transaction; and assuming in each case that such holder of shares
of Common Stock failed to exercise rights of election, if any, as to the kind or
amount of securities, cash or other property receivable upon consummation of
such Transaction (provided that, if the kind or amount of securities, cash or
other property receivable upon consummation of such transaction is not the same
for each non-electing share, then the kind and amount of securities, cash or
other property receivable upon consummation of such Transaction for each non-
electing share will be deemed to be the kind and amount so receivable per share
by a plurality of the non-electing shares)) or (iii) at the option of the
holder, into the kind and amount of securities, cash or other property
receivable upon consummation of such Transaction by a holder of the number of
shares of Common Stock into which such Series C Preferred Stock might have been
converted immediately before consummation of such Transaction. The kind and
amount of securities into or for which the Series C Preferred Stock will be
convertible or redeemed after consummation of such Transaction will be subject
to adjustment as described under "Conversion Adjustments" following the date of
consummation of such Transaction.
Fractional Shares
No fractional shares of Common Stock will be issued upon redemption or
conversion of the Series C Preferred Stock. In lieu of any fractional share
otherwise issuable in respect of the aggregate number of shares of Series C
Preferred Stock of any holder that are redeemed or converted, such holder will
be entitled to receive an amount in cash equal to the same fraction of the
Current Market Price of the Common Stock, determined as of the Notice Date, in
the case of redemption by the Company, or the trading day immediately preceding
(i) the Mandatory Conversion Date, in the case of a mandatory conversion, or
(ii) the effective date of conversion, in the case of an optional conversion by
a holder.
Rights Agreement
Shares of Common Stock issued upon conversion of the Series C Preferred Stock
will be entitled to receive Rights in accordance with the terms and conditions
of the Rights Agreement. The method of calculation of the Current Market Price
of the Common Stock does not take into account any separate value of the Rights,
except to the extent any such value may be reflected in the Current Market
Price.
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, and subject to the rights of holders of any other
series of preferred stock, the holders of outstanding Series C Preferred Stock
are entitled to receive an amount equal to $125, plus accrued and unpaid
dividends thereon, out of the assets of the Company available for distribution
to shareholders, before any distribution of assets is made to holders of Common
Stock or any other Junior Stock upon liquidation, dissolution or winding up.
If upon any voluntary or involuntary liquidation, dissolution, or winding up
of the Company, the assets of the Company are insufficient to permit the payment
of the full preferential amounts payable with respect to the Series C Preferred
Stock and all other series of Parity Preferred Stock, the holders of Series C
Preferred Stock and of all other series of Parity Preferred Stock will share
ratably in any distribution of assets of the Company in proportion
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to the full respective preferential amounts to which they are entitled. After
payment of the full amount of the liquidating distribution to which they are
entitled, the holders of Series C Preferred Stock will not be entitled to any
other participation in any distribution of assets by the Company. A Transaction
will not be deemed to be a voluntary or involuntary liquidation, dissolution or
winding up of the Company.
Voting Rights
The holders of Series C Preferred Stock have the right with the holders of
Common Stock to vote in the election of directors and upon each other matter
coming before any meeting of the holders of Common Stock. Each share of Series
C Preferred Stock is entitled to 12.219 votes. The holders of Series C
Preferred Stock, Common Stock and Series B Preferred Stock vote together as one
class on such matters except as otherwise provided by law or by the Certificate
of Incorporation of the Company.
In the event that the equivalent of six quarterly dividends payable on the
Series C Preferred Stock shall be in arrears, the number of directors of the
Company will be increased by two and the holders of the Series C Preferred Stock
shall have the exclusive right, voting separately and as a class, with each
share of Series C Preferred Stock entitled to 12.219 votes, to elect the two
additional directors (the "Series C Directors"). Such right shall continue
until all dividends in arrears and dividends in full for the current quarterly
period have been paid or declared and set apart for payment. The term of office
of any director elected by the holders of the Series C Preferred Stock will
terminate on the earlier of (i) the next annual meeting of shareholders at which
a successor has been elected and qualified, or (ii) the termination of the right
of holders of the Series C Preferred Stock to elect Series C Directors.
The Company may not, without the approval of the holders of at least 66 2/3%
of the Series C Preferred Stock then outstanding: (i) amend, alter, or repeal
any of the provisions of the Company's Certificate of Incorporation or Bylaws so
as to affect adversely the powers, preferences or rights of the holders of the
Series C Preferred Stock then outstanding or reduce the minimum time for any
required notice to which the holders of the Series C Preferred Stock then
outstanding may be entitled (an amendment of the Certificate of Incorporation to
authorize or create, or to increase the authorized amount of Common Stock or
other Junior Stock or any stock of any class ranking on a parity with the Series
C Preferred Stock being deemed not to affect adversely the powers, preferences
or rights of the holders of the Series C Preferred Stock); (ii) authorize or
create, or increase the authorized amount of, any stock of any class, or any
security convertible into capital stock of any class, ranking prior to the
Series C Preferred Stock either as to the payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up of the
Company; (iii) merge or consolidate with or into any other corporation, unless
each holder of Series C Preferred Stock immediately preceding such merger or
consolidation receives or continues to hold an equivalent number of shares in
the resulting corporation, with substantially the same rights and preferences,
as correspond to the Series C Preferred Stock so held as contemplated above
under "--Adjustments for Certain Transactions," or (iv) voluntarily dissolve,
liquidate or wind up the affairs of the Company.
The Company may not, without the approval of the holders of at least a
majority of the shares of Series C Preferred Stock then outstanding, create, or
increase the authorized number of shares of any other class or classes of Parity
Preferred Stock, other than the Series B Preferred Stock, or create any stock or
other security convertible into or exchangeable for or evidencing the right to
purchase any Parity Preferred Stock, or increase the authorized number of shares
of any such other class or amount of such other stock or security.
Notwithstanding the provisions summarized in the preceding two paragraphs, no
such approval described therein of the holders of the Series C Preferred Stock
will be required if at or before the time when such amendment, alteration or
repeal is to take effect or when the authorization, creation, increase or
issuance of any such prior or parity stock or convertible security is to be
made, or when such consolidation or merger is to take effect, as the case may
be, provision is made for the redemption of all Series C Preferred Stock at the
time outstanding in accordance with the Certificate of Designations.
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Transfer Agent and Registrar
First City Transfer Company (or a successor thereto selected by the Company)
acts as transfer agent and registrar for, and paying agent for the payment of
dividends on, the Series C Preferred Stock.
Miscellaneous
The Series C Preferred Stock is fully paid and nonassessable. Holders of
Series C Preferred Stock have no preemptive rights. The Company at all times
shall reserve and keep available out of its authorized and unissued Common
Stock, solely for issuance upon the conversion or redemption of Series C
Preferred Stock, such number of shares of Common Stock as will from time to time
be issuable upon the conversion or redemption of all the Series C Preferred
Stock then outstanding. The Series C Preferred Stock redeemed for, or converted
into Common Stock or otherwise reacquired by the Company will resume the status
of authorized and unissued shares of Preferred Stock, undesignated as to series,
and will be available for subsequent issuance.
MATTEL SERIES C DEPOSITARY SHARES
General
Each Series C Depositary Share will represent one twenty-fifth of a share of
Mattel Series C Preferred Stock to be deposited under the Deposit Agreement,
dated as of June 24, 1996 (as amended, the "Deposit Agreement"), among the
Company (as successor to Tyco), First National Bank of Boston, as successor to
Midlantic Bank, N.A., as Depositary (the "Depositary"), and all holders from
time to time of depositary receipts issued thereunder (the "Depositary
Receipts"). Subject to the terms of the Deposit Agreement, each owner of a
Series C Depositary Share will be entitled to all the rights and preferences of
the Series C Preferred Stock represented thereby (including dividend, voting,
redemption, conversion and liquidation rights) and subject, proportionately, to
all of the limitations of the Series C Preferred Stock represented thereby,
contained in the Certificate of Designations summarized under "--Series C
Mandatorily Convertible Redeemable Preferred Stock."
The Series C Depositary Shares are evidenced by Depositary Receipts
previously issued in respect of Tyco Series C Depositary Shares. The Company
has applied to the Depository Trust Company for continued acceptance of the
Depositary Receipts for its book-entry settlement system.
Dividends and Other Distributions
The Depositary distribute all cash distributions and other distributions
received in respect of the Series C Preferred Stock to the record holders of
Series C Depositary Shares in proportion to the number of such Series C
Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Series C Depositary
Shares entitled thereto, unless the Depositary determines that it is not
feasible to make such distribution, in which case the Depositary may, with the
approval of the Company, sell such property and distribute the net proceeds from
such sale to such holders.
Record Date
Whenever (i) any cash dividend or other cash distribution becomes payable,
any distribution of property other than cash is made, or any rights, preferences
or privileges are at any time offered with respect to the Series C Preferred
Stock, or (ii) the Depositary receives notice of any meeting at which holders of
Series C Preferred Stock
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are entitled to vote or of which holders of Series C Preferred Stock are
entitled to notice or any solicitation of consents in respect of the Series C
Preferred Stock, or any call or conversion of any Series C Preferred Stock, or
if at any time the Depositary and the Company otherwise deem it appropriate, the
Depositary will in each such instance fix a record date (which shall be the same
date as the record date for the Series C Preferred Stock) for the determination
of the holders of Depositary Receipts who are entitled to (a) receive such
dividend, distribution, rights, preferences or privileges, net proceeds from the
sale of such property, or, (b) receive notice of, and give instructions for the
exercise of voting or consent rights at, any such meeting or (c) receive notice
of any such call or conversion, subject to the provisions of the Deposit
Agreement.
Withdrawal of Series C Preferred Stock
Upon surrender of the Depositary Receipts at the corporate trust office of
the Depositary (unless the related Series C Depositary Shares have been
previously called for redemption), the holder of the Series C Depositary Shares
evidenced thereby is entitled to delivery at such office to or upon his order of
the number of whole shares of Series C Preferred Stock and any money or other
property represented by such Series C Depositary Shares. Holders of Series C
Depositary Shares would be entitled to receive whole shares of Series C
Preferred Stock on the basis of one share of Series C Preferred Stock for each
25 Series C Depositary Shares, but holders of such whole shares of Series C
Preferred Stock will not thereafter be entitled to receive Series C Depositary
Shares in exchange therefor. If the Depositary Receipts delivered by the holder
evidence a number of Series C Depositary Shares in excess of the number of
Series C Depositary Shares representing the number of whole shares of Series C
Preferred Stock to be withdrawn, the Depositary will deliver to such holder at
the same time a new Depositary Receipt evidencing such excess number of Series C
Depositary Shares.
Redemption or Conversion of Series C Depositary Shares
As described under "--Series C Mandatorily Convertible Redeemable Preferred
Stock--Mandatory Conversion of the Series C Preferred Stock," "--Optional
Redemption of the Series C Preferred Stock" and "--Conversion at the Option of
the Holder," the Series C Preferred Stock is subject to automatic conversion
into shares of the Common Stock on the Mandatory Conversion Date, the Company's
right to redeem the Series C Preferred Stock for Common Stock at any time on or
after the First Call Date and before the Mandatory Conversion Date and the
holder's right to convert the Series C Preferred Stock into Common Stock at its
option. The Series C Depositary Shares are subject to redemption or conversion
upon the same terms and conditions (including as to notice to the owners of
Series C Depositary Shares and as to selection of Series C Depositary Shares to
be called if fewer than all of the outstanding Series C Depositary Shares are to
be called) as the Series C Preferred Stock held by the Depositary using the
Common Stock received by the Depositary, except that the number of shares of
Common Stock received upon conversion of each Series C Depositary Share will be
equal to one twenty-fifth of the number of shares of Common Stock received upon
conversion of each share of the Series C Preferred Stock. To the extent that
Series C Depositary Shares are converted into shares of Common Stock and all
such shares of Common Stock cannot be distributed to the record holders of
Depositary Receipts without creating fractional interests in such shares, the
Company will cause the Depositary to distribute cash to holders in lieu of
fractional shares as provided under "--Series C Mandatorily Convertible
Redeemable Preferred Stock--Fractional Shares." The amount distributed in the
foregoing case will be reduced by any amount required to be withheld by the
Company or the Depositary on account of taxes or otherwise required pursuant to
a law, regulation or court process.
Voting of Series C Preferred Stock
Upon receipt of notice of any meeting at which holders of Series C Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Series C Depositary
Shares relating to Series C Preferred Stock. Each record holder of such Series
C Depositary Shares on the record date (which will be the same date as the
record date of the Series C Preferred Stock) will be entitled to
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instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of shares of Series C Preferred Stock represented by such holder's
Series C Depositary Shares. The Depositary will use its best efforts, insofar
as practicable, to vote the amount of shares of Series C Preferred Stock
represented by such Series C Depositary Shares in accordance with such
instructions and the Company will agree to take all reasonable action which may
be deemed necessary by the Depositary in order to enable the Depositary to do
so. The Depositary will abstain from voting Series C Preferred Stock to the
extent it does not receive specific instructions from the holders of Series C
Depositary Shares representing Series C Preferred Stock.
Each Series C Depositary Share shall entitle the holder to instruct the
Depositary to cast one twenty-fifth of a share of Series C Preferred Stock share
vote on each matter submitted to a vote of the stockholders of the Company. See
"--Series C Mandatorily Convertible Redeemable Preferred Stock-Voting Rights."
Amendment and Termination of the Deposit Agreement
The form of Depositary Receipt evidencing the Series C Depositary Shares and
any provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which materially
and adversely alters the rights of the holders of Series C Depositary Shares
(or, which relates to or affects rights to receive dividends or distributions,
or voting or redemption rights) will not be effective unless such amendment has
been approved by the holders of at least two-thirds of the Series C Depositary
Shares then outstanding. In no event may any amendment impair the right of any
holder of Depositary Receipts, subject to the conditions specified in the
Deposit Agreement, upon such surrender of the Depositary Receipts evidencing
such Series C Depositary Shares, to receive shares of Series C Preferred Stock
or upon conversion of the Series C Preferred Stock represented by the Depositary
Receipts, to receive shares of Common Stock, and in each case any money or other
property represented thereby, except in order to comply with mandatory
provisions of applicable law.
The Deposit Agreement may be terminated by the Company or the Depositary only
if (i) all outstanding Series C Depositary Shares have been redeemed or
converted, (ii) there has been a final distribution in respect of the Series C
Preferred Stock in connection with any liquidation, dissolution or winding up of
the Company and such distribution has been distributed to the holders of
Depositary Receipts, or (iii) upon consent of holders of Depositary Receipts
representing not less than two-thirds of the Series C Depositary Shares then
outstanding.
Whenever the Deposit Agreement is to be terminated pursuant to clause (iii)
of the preceding paragraph the Depositary will mail notice of such termination
to the record holders of all Depositary Receipts then outstanding at least 30
days prior to the date fixed in such notice for such termination. The Depositary
may likewise terminate the Deposit Agreement if at any time 90 days shall have
expired after the Depositary shall have delivered to the Company a written
notice of its election to resign and a successor depositary shall not have been
appointed and accepted its appointment. If any Depositary Receipts remain
outstanding after the date of termination, the Depositary thereafter will
discontinue the transfer of Depositary Receipts, will suspend the distribution
of dividends to the holders thereof, and will not give any further notices
(other than notices of such termination) or perform any further acts under the
Deposit Agreement except as provided below and except that the Depositary will
continue to (i) collect dividends on the Series C Preferred Stock and any other
distributions with respect thereto and (ii) deliver the Series C Preferred Stock
together with such dividends and distributions and the net proceeds of any sales
of rights, preferences, privileges or other property, without liability for
interest thereon, in exchange for Depositary Receipts surrendered. At any time
after the expiration of three years from the date of termination, the Depositary
may sell the Series C Preferred Stock then held by it at public or private
sales, at such place or places and upon such terms as it deems proper and may
thereafter hold the net proceeds of any such sale, together with any money and
other property then held by it, without liability or interest thereon, for the
pro rata benefit of the holders of Depositary Receipts which have not been
surrendered. The Company does not intend to terminate the Deposit Agreement or
to permit the resignation of the Depositary without appointing a successor
depositary. In the event the Deposit Agreement is terminated, the Company will
use all reasonable efforts to have the Series C Preferred Stock listed on the
NYSE.
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Charges of Depositary
The Company pays all transfer and other governmental charges arising solely
from the existence of the depositary arrangements. The Company will pay charges
of the Depositary in connection with any redemption of Series C Preferred Stock.
Holders of Depositary Receipts will pay transfer and other taxes and
governmental charges and such other charges as are expressly provided in the
Deposit Agreement to be for their accounts. The Depositary may refuse to effect
any transfer of a Depositary Receipt or any withdrawal of Series C Preferred
Stock evidenced thereby until all such taxes and charges with respect to such
Depositary Receipt or such Series C Preferred Stock are paid by the holder
thereof.
Miscellaneous
The Depositary will forward to holders of Series C Preferred Stock all
reports and communications from the Company which are delivered to the
Depositary and which the Company is required to furnish to the holders of Series
C Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstances beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and the Company and the Depositary will not be
obligated to prosecute or defend any legal proceeding in respect of any Series C
Depositary Shares or Series C Preferred Stock unless satisfactory indemnity is
furnished. They may rely on written advice of counsel or accountants, or
information provided by persons presenting Series C Preferred Stock for deposit,
holders of Series C Depositary Shares or other persons believed to be competent
and on documents believed to be genuine.
Resignation and Removal of Depositary
The Depositary may resign at any time by delivering to the Company notice of
its election to do so, and the Company may at any time remove the Depositary.
Any such resignation or removal of the Depositary will take effect upon the
appointment of a successor Depositary, which successor Depositary must be
appointed within 90 days after delivery of the notice of resignation or removal
and must be a bank or trust company having its principal office in the United
States and having a combined capital surplus of at least $50 million.
PLAN OF DISTRIBUTION
The Shares are being registered to permit sales of the Shares by the Selling
Stockholders from time to time for one year following the effective date of the
Registration Statement of which this Prospectus is a part, or until such time as
all Shares are sold or disposed of. The Company has agreed, among other things,
to bear certain expenses in connection with the registration and sale of the
Shares, including without limitation all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws, and fees and
disbursements of counsel for the Company, of all independent certified public
accountants and of other Persons retained by the Company. The Selling
Stockholders shall pay the fees and disbursements of their counsel, of their
accountants and other advisors, and any underwriting discounts, and commissions
and transfer taxes in respect of the Shares under state securities or blue sky
laws.
The Shares may be sold from time to time to purchasers directly by any or all
of the Selling Stockholders. Alternatively, the Selling Stockholders may from
time to time offer the Shares to or through underwriters, brokers, dealers or
agents, including through Salomon Brothers Inc, one of the Selling Stockholders,
or any of its affiliates, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling
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Stockholders or the purchasers of such securities for whom they may act as
agents. In addition, Salomon Brothers Inc expects to offer and sell Common
Stock in the course of its business as a broker-dealer and may act as principal
or agent in such transactions. The Selling Stockholders and any underwriters,
brokers, dealers or agents that participate in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act and
any profit on the sale of such securities and any discounts, commissions,
concessions or other compensation received by any such underwriter, broker,
dealer or agent may be deemed to be underwriting discounts and commissions under
the Securities Act. Underwriters, brokers, dealers and agents also may be
customers of, engage in transactions with, or perform other services for Mattel
and its affiliates in the ordinary course of business.
Any distribution hereunder of the Shares by the Selling Stockholders may be
effected from time to time in one or more of the following transactions: (a) on
the NYSE, the PSE, or through broker-dealers acting as principal or agent, in
transactions (which may involve crosses or block transactions), in special
offerings, or in the over-the-counter market, or otherwise, at market prices
obtainable at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices, (b) to underwriters who will
acquire shares of Common Stock for their own account and resell such shares in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale (any public
offering price and any discount or concessions allowed or reallowed or paid to
dealers may be changed from time to time), (c) directly or through brokers or
agents in private sales at negotiated prices (including without limitation,
pursuant to Rule 144 under the Securities Act), (d) by distributions or
dispositions to shareholders or partners or other persons affiliated or
associated with one or more of the Selling Stockholders or with Mattel or one of
its affiliates, (e) to lenders pledged as collateral to secure loans, credit or
other financing arrangements and any subsequent foreclosure, if any, thereunder,
(f) through the writing of options or other derivative instruments (whether
listed on an exchange or otherwise) and pursuant to exercise, conversion,
exchange, distribution on or similar delivery in respect of a derivative
security or instrument relating to some or all of such Common Stock, (g)
pursuant to a stock lending or repurchase or reverse repurchase transaction, or
(h) by any other legally available means. Also, offers to purchase the Common
Stock may be solicited by agents designated by the Selling Stockholders from
time to time. The Registration Statement and this Prospectus shall cover any
such sale and resale. Any of such transactions may be effected at market prices
prevailing at the time of sale, at prices prevailing at the time of sale, at
prices related to such prevailing market prices, at negotiated prices or at
fixed prices. To the extent required, the specific amount of Common Stock to be
sold, the purchase price and public offering price, the names of any resale
agent, dealer or underwriter, and the terms and amount of any applicable
commission or discount with respect to a particular offer will be set forth in a
Prospectus Supplement and/or post-effective amendment to the Registration
Statement of which this Prospectus constitutes a part.
In order to comply with the securities laws of certain states, if applicable,
the Common Stock will be sold hereunder in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Common Stock may not be sold hereunder unless the Common Stock has been
registered or qualified for sale in such state or an exemption from registration
or qualification is available and complied with.
The Company has been advised that, as of the date hereof, the Selling
Stockholders have made no arrangement with any broker for the sale of their
shares of Common Stock.
The Selling Stockholders will be indemnified by the Company, to the extent
permitted by law, against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection therewith, subject to certain limitations. The Company, at its
request, will be indemnified by the Selling Stockholders, to the extent
permitted by law, against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection therewith, subject to certain limitations.
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TRADEMARK MATTERS
The trademarks Barbie, Fisher-Price, Hot Wheels, Matchbox, Tyco, Tyco Radio
Control and Tyco Electric Racing, are all United States registered trademarks
owned by Mattel or its subsidiaries. The trademark Cabbage Patch Kids is owned
by Original Appalachian Artworks, Inc. and used under license by Mattel. The
trademark Disney is owned by The Walt Disney Company, and used under license by
Mattel. The trademark Sesame Street is owned by Children's Television Workshop,
Inc. and used under license by Mattel, as successor to Tyco.
LEGAL OPINION
Certain legal matters with respect to the legality of the Shares offered
hereby has been passed upon for the Company by Leland P. Smith, Assistant
General Counsel of the Company.
EXPERTS
The historical financial statements of the Company as of December 31, 1996
and 1995 and for each of the three years in the period ended December 31, 1996
incorporated by reference in this Prospectus to the Company's Annual Report on
Form 10-K and the audited financial statements, restated to give effect to the
merger with Tyco accounted for as a pooling of interests, for the aforementioned
periods incorporated by reference in this Prospectus to the Company's Current
Report on Form 8-K dated July 30, 1997 have been so incorporated in reliance on
the reports of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting and, with respect
to the historical financial statements of Tyco for the aforementioned periods,
in reliance on the report of Deloitte & Touche LLP, independent auditors, given
upon their authority as experts in accounting and auditing.
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