UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 33-65496
MARVEL (PARENT) HOLDINGS INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 13-3501047
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5900 NORTH ANDREWS AVENUE, FT. LAUDERDALE, FL 33309
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(Address of principal executive offices) (Zip Code)
305-772-3152
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ______
At August 5, 1996, the number of outstanding shares of the registrant's common
stock, par value $1.00 per share, was 1,000 shares, all of which were held by
Marvel III Holdings.
<PAGE>
MARVEL (PARENT) HOLDINGS INC.
INDEX TO CONTENTS OF THE SECOND QUARTER 1996 FORM 10-Q
<TABLE>
<CAPTION> Page
----
<S> <C>
Condensed Consolidated Balance Sheets as of June 30, 1996 and December 31, 1995 .......................... 3
Condensed Consolidated Statements of Operations for the quarters and six months ended June 30, 1996 & 1995 4
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 1996 & 1995 ............ 5
Notes to Condensed Consolidated Financial Statements ..................................................... 6
Management's Discussion and Analysis of Financial Condition and Results of Operations .................... 12
Other Information ........................................................................................ 18
Signatures ............................................................................................... 19
</TABLE>
2
<PAGE>
MARVEL (PARENT) HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
(UNAUDITED)
June 30, December 31,
1996 1995
----------- ------------
ASSETS
Current assets:
Cash .............................. $ 22.7 $ 37.0
Accounts receivable, net .......... 215.2 240.0
Inventories, net .................. 95.9 82.4
Deferred income taxes ............. 51.9 50.4
Income taxes receivable ........... 22.6 24.6
Prepaid expenses and other ........ 54.7 42.9
---------- ----------
Total current assets ........... 463.0 477.3
Property, plant and equipment, net .. 82.2 71.3
Goodwill and other intangibles, net . 899.4 907.7
Deferred charges and other .......... 63.1 69.4
---------- ----------
$ 1,507.7 $ 1,525.7
========== ==========
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Accounts payable ................. $ 102.0 $ 104.8
Accrued expenses and other ....... 143.0 195.8
Short term borrowings ............ 11.0 --
Current portion of long-term debt 5.4 5.2
---------- ----------
Total current liabilities ...... 261.4 305.8
Long-term debt ...................... 1,253.1 1,177.5
Other long-term liabilities ......... 63.6 63.6
---------- ----------
1,578.1 1,546.9
---------- ----------
Minority interest in Toy Biz ........ 75.6 70.4
---------- ----------
Minority interest in Marvel:
Held by affiliates ................ 4.5 2.8
---------- ----------
Held by non-affiliates ............ 36.2 41.1
---------- ----------
Stockholder's deficit:
Common stock ....................... -- --
Capital deficiency ................. (18.3) (19.4)
Accumulated deficit ................ (168.2) (116.5)
Cumulative translation adjustment .. (0.2) 0.4
---------- ----------
Total stockholder's deficit .... (186.7) (135.5)
---------- ----------
$ 1,507.7 $ 1,525.7
========== ==========
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
3
<PAGE>
MARVEL (PARENT) HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-----------------------------------------------------------------
1996 1995 1996 1995
-------------- ------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net revenues ................................................ $182.2 $169.2 $371.8 $327.1
-------------- ------------- ---------------- ----------------
Operating Expenses:
Cost of sales ............................................... 115.4 116.9 229.3 213.8
Selling, general & administrative expenses .................. 55.7 50.3 108.0 93.8
Depreciation and amortization ............................... 4.9 5.0 9.3 7.5
-------------- ------------- ---------------- ----------------
Total Operating Expenses ....................... 176.0 172.2 346.6 315.1
Amortization of goodwill, intangibles and deferred charges .. 8.4 6.9 16.9 13.1
Interest expense, net ....................................... 31.1 25.8 61.2 48.3
Foreign exchange loss/ (gain), net .......................... 0.9 0.8 1.5 (0.8)
Other income ................................................ - 0.3 -- 14.3
Equity in net income of unconsolidated subsidiaries ......... 0.4 0.6 0.5 0.8
-------------- ------------- ---------------- ----------------
Loss before (benefit) provision for income taxes, minority
interest and extraordinary item .......................... (33.8) (35.6) (53.9) (33.5)
(Benefit) provision for income taxes ........................ (5.4) (5.6) (3.8) 4.6
-------------- ------------- ---------------- ----------------
Loss before minority interest and extraordinary item ........ (28.4) (30.0) (50.1) (38.1)
Minority interest in earnings of Toy Biz .................... 2.9 2.7 4.9 4.1
Minority interest in earnings of Marvel:
Attributable to affiliates ................................ (0.2) (0.2) (0.2) (0.1)
Attributable to non-affiliates ............................ (2.2) (3.5) (3.1) (1.9)
-------------- ------------- ---------------- ----------------
Loss before extraordinary item .............................. (28.9) (29.0) (51.7) (40.2)
Extraordinary item, net of taxes ............................ - (3.3) - (3.3)
-------------- ------------- ---------------- ----------------
Net loss .................................................... ($28.9) ($32.3) ($51.7) ($43.5)
============== ============= ================ ================
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
4
<PAGE>
MARVEL (PARENT) HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
----------------
1996 1995
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net loss ....................................................................... $( 51.7) (43.5)
----- ------
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization ............................................... 26.2 20.5
Amortization of debt discount ............................................... 33.6 30.0
Provision for deferred income taxes ......................................... 1.6 15.5
Extraordinary item, net ..................................................... -- 3.3
Undistributed earnings of unconsolidated subsidiaries ....................... (0.5) (0.8)
Distributions from unconsolidated subsidiaries .............................. -- 3.0
Gain from Toy Biz IPO ....................................................... -- (14.3)
Minority interest in earnings of Toy Biz .................................... 4.9 4.1
Minority interest in earnings of Marvel ..................................... (3.3) (1.9)
Changes in assets and liabilities, net of effects in 1995 of
previously unconsolidated subsidiary and the SkyBox Acquisition ......... (46.0) (11.5)
----- ------
Total adjustments .............................................................. 16.5 47.9
----- ------
Net cash (used in) provided by operating activities ....................... (35.2) 4.4
----- ------
Cash flows from investing activities:
Capital expenditures (including product development and package design costs) (21.3) (15.0)
Acquisition of SkyBox, net of cash and cash equivalents ..................... -- (152.6)
Purchase of Marvel shares of common stock ................................... (0.7) (7.1)
Other acquisitions .......................................................... -- (6.7)
Other ....................................................................... (5.5) (4.4)
----- ------
Net cash used in investing activities ..................................... (27.5) (185.8)
----- ------
Cash flows from financing activities:
Net (repayments) borrowings under term portion of credit agreements ......... (2.6) 187.4
Net borrowings (repayments) under revolving portion of credit agreement ..... 32.5 (12.0)
Borrowings related to Adespan adhesives facility ............................. 6.3 --
Net borrowings (repayments) of other debt .................................... 11.0 (5.7)
Toy Biz IPO net proceeds ..................................................... -- 44.2
Capital contributions from parent ........................................... 0.8 7.2
Proceeds from exercise of stock options ...................................... 0.5 6.9
Debt issuance costs .......................................................... -- (8.1)
Other financing activities ................................................... (1.0) --
----- ------
Net cash provided by financing activities ................................. 47.5 219.9
----- ------
Effect of exchange rate changes on cash ........................................ 0.9 2.1
----- ------
Cash balance from previously unconsolidated subsidiary ......................... -- 7.5
----- ------
Net (decrease) increase in cash ................................................ (14.3) 48.1
Cash at beginning of period .................................................... 37.0 18.1
----- ------
Cash at end of period .......................................................... $ 22.7 $ 66.2
===== ======
Supplemental disclosures of cash flow information:
Interest paid during the period ......................................... $ 29.9 $ 17.8
Income taxes paid, net of refunds, during the period .................... $ 7.9 $ 9.2
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
5
<PAGE>
MARVEL (PARENT) HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
1. BACKGROUND AND BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying condensed consolidated financial statements of
Marvel (Parent) Holdings Inc., ("Parent Holdings", together with its
subsidiaries, the "Company"), are unaudited. Parent Holdings is a direct
wholly owned subsidiary of Marvel III Holdings Inc., an indirect wholly owned
subsidiary of Andrews Group Incorporated ("Andrews Group"), which in turn is a
wholly owned subsidiary of Mac Andrews & Forbes Holdings Inc. ("MacAndrews
Holdings"), which in turn is wholly owned through Mafco Holdings Inc. ("Mafco"
and together with MacAndrews Holdings, "MacAndrews & Forbes") by Ronald O.
Perelman. In the opinion of management, all adjustments and intercompany
eliminations necessary for a fair presentation of the results of operations,
financial position and cash flows have been made and were of a normal
recurring nature. The condensed consolidated financial statements of the
Company include the results of operations, financial position and cash flows
of Marvel Entertainment Group, Inc. and its subsidiaries ("Marvel"). The
Company's operations consist of (i) the publication and sale of comic books
and children's magazines, (ii) the marketing and distribution of sports and
entertainment trading cards and activity sticker collections, (iii) consumer
products, media and advertising-promotion licensing of the various characters
owned by the Company, (iv) the design, marketing and distribution of toys and
(v) the manufacture and distribution of adhesives and confectionery products.
These interim condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and related notes
thereto contained in the Company's 1995 Annual Report on Form 10-K. Certain
prior year amounts have been reclassified to conform with the current year
presentation.
The condensed consolidated financial statements presented herein
reflect the ownership by the Company of approximately 79% of the outstanding
shares of Marvel common stock for all periods.
2. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
</TABLE>
<TABLE>
<CAPTION>
ACCOUNTS RECEIVABLE, NET:
June 30, December 31,
1996 1995
--------------- ----------------
<S> <C> <C>
Accounts receivable........................................... $ 251.4 $ 317.9
Less: Allowances............................................. (36.2) (77.9)
---------------- ----------------
$ 215.2 $ 240.0
================ ================
INVENTORIES, NET:
Finished goods................................................ $ 74.1 $ 58.8
Work in process............................................... 21.8 22.3
Raw materials................................................. 23.0 23.7
Less: Reserve for obsolescence............................. (23.0) (22.4)
---------------- ----------------
$ 95.9 $ 82.4
================ ================
GOODWILL AND OTHER INTANGIBLES, NET:
Goodwill and other intangibles................................ $ 974.1 $ 969.5
Less: Accumulated amortization............................... (74.7) (61.8)
--------------- ----------------
$ 899.4 $ 907.7
=============== ================
</TABLE>
6
<PAGE>
MARVEL (PARENT) HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
ACCRUED EXPENSES AND OTHER:
June 30, December 31,
1996 1995
--------------- ----------------
<S> <C> <C>
Royalties and incentives...................................... $ 20.5 $ 33.5
Reserve for returns........................................... 41.0 59.0
Income taxes payable.......................................... 1.3 19.7
Other......................................................... 80.2 83.6
--------------- ----------------
$ 143.0 $ 195.8
=============== ================
</TABLE>
3. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------------- -------------------
<S> <C> <C>
U.S. Term Loan Agreement....................................... $ 350.0 $ 350.0
Term Loan Agreement............................................ 141.8 139.5
Amended and Restated Credit Agreement:
Revolving credit facility............................. 120.0 87.5
11-1/4% Series B Senior Secured Discount Notes, net of
unamortized discount of $91.8 at June 30, 1996 and $114.6 at
December 31, 1995............................................ 425.6 402.8
11-7/8% Senior Secured Discount Notes, net of unamoritized
discount of $46.9 at June 30, 1996 and $58.3 at
December 31, 1995............................................ 204.8 193.4
Capital lease obligations and other long term debt............. 16.3 9.5
----------- -----------
1,258.5 1,182.7
Less current maturities........................................ 5.4 5.2
----------- -----------
Long-term debt................................................. $ 1,253.1 $ 1,177.5
=========== ===========
</TABLE>
Long-term debt includes the outstanding balance under the U.S. Term
Loan Agreement, as defined below, the Amended and Restated Credit Agreement
effective August 30, 1994 between Marvel, a syndicate of banks, the Co-Agents
and The Chase Manhattan Bank (formerly named Chemical Bank), as administrative
agent (the "Amended and Restated Credit Agreement"), and the outstanding
balance of the Term Loan Agreement, as defined below. The U.S. Term Loan
Agreement is repayable in six semi-annual installments beginning August 31,
1999. The Term Loan Agreement is repayable in fourteen increasing semi-annual
installments, which began February 28, 1995. Portions of the revolving credit
facility under the Amended and Restated Credit Agreement mature on September
1, 1999, 2000 and 2001.
In April 1995, Marvel entered into a $350.0 term loan agreement with
a syndicate of banks, the Co-Agents and The Chase Manhattan Bank (formerly
named Chemical Bank), as administrative agent (the "U.S. Term Loan
Agreement"). Marvel borrowed $350.0 under the U.S. Term Loan Agreement to
finance the acquisition of SkyBox (See Note 6), refinance the term loan
portion of the Amended and Restated Credit Agreement, and for general
corporate purposes.
Loans under the U.S. Term Loan Agreement bear interest at a rate per
annum equal to the Eurodollar Rate (as defined in the U.S. Term Loan
Agreement), plus the Applicable Margin (as defined in this paragraph), or the
Alternate Base Rate (as defined in the U.S. Term Loan Agreement). Eurodollar
Rate Loans will, at the option of
7
<PAGE>
MARVEL (PARENT) HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Fleer Corp., have interest periods of one, two, three or six months.
Applicable Margin means (a) with respect to Eurodollar Rate loans, 2% to 2
1/2% through the first Anniversary Date (as defined in the U.S. Term Loan
Agreement) and 1 1/8% to 2 1/2% thereafter, to be determined based on Marvel's
financial performance and (b) with respect to Alternate Base Rate loans, 1% to
1 1/2% through the first Anniversary Date and 1/8 of 1% to 1 1/2% thereafter,
to be determined based on Marvel's financial performance. The interest rate on
Eurodollar Rate Loans at June 30, 1996, was approximately 7 15/16% to 8%
depending upon the length of the relevant interest period. Interest on
Alternate Base Rate Loans is payable quarterly in arrears, and interest on
Eurodollar Rate Loans is payable at the end of the applicable interest period,
except that if the interest period is six months, interest is payable ninety
days after the commencement of the interest period and at the end of the
interest period.
In connection with the U.S. Term Loan Agreement, Marvel also entered
into an amendment to the existing Amended and Restated Credit Agreement which,
among other things, permitted Marvel to incur the indebtedness under the U.S.
Term Loan Agreement. Pursuant to this amendment, the Applicable Margin under
the existing Amended and Restated Credit Agreement for Alternate Base Rate
loans will range from 0% to 1% and for Eurodollar Rate loans will range from
5/8 of 1% to 2%, in each case depending on Marvel's financial performance. The
interest rate on Eurodollar Rate Loans at June 30, 1996 was approximately
7 7/16% to 7 9/16% per annum, depending upon the length of the relevant interest
period. The proceeds of loans incurred under the revolving credit portion of
the Amended and Restated Credit Agreement may be used for general corporate
purposes of Marvel and for investments within an aggregate limit. Portions of
the loans under the Amended and Restated Credit Agreement will mature on
September 1, 1999, 2000 and 2001.
On August 30, 1994, Marvel, Marvel Italia Srl (now Panini S.p.A.) and
Instituto Bancario San Paolo Di Torino S.p.A. (the "Lender"), entered into a
term loan and guarantee agreement (the "Term Loan Agreement") providing for a
term loan credit facility of Italian Lire 244.5 billion (approximately $154.0
million based on exchange rates in effect on the date of acquisition) (the
"Term Loan Facility"). Marvel Italia borrowed Italian Lire 244.5 billion under
the Term Loan Agreement, and Marvel borrowed additional funds under its
Amended and Restated Credit Agreement to finance the purchase of Panini and to
pay certain fees and expenses related to the acquisition. Through June 30,
1996, Marvel paid Italian Lire 27.3 billion (approximately $16.9 million) due
under the Term Loan Facility. The remaining amount outstanding under the Term
Loan Facility is repayable in 11 increasing semi-annual installments, with the
next payment of Italian Lire 4.1 billion due August 31, 1996.
The Term Loan Facility bears interest at a rate per annum equal to
the Eurocurrency Rate (as defined in the Term Loan Agreement) or, in certain
limited circumstances, the Negotiated Rate (as defined in the Term Loan
Agreement), in each case plus the Applicable Margin (as defined in this
paragraph). Eurocurrency Rate Loans have, at the option of Panini, interest
periods of one, two, three or six months. Applicable Margin means (a) with
respect to Eurocurrency Loans, 5/8 of 1% to 2%, to, during 1995 be determined
based on Marvel's financial performance and (b) with respect to Negotiated
Rate Loans, 1%. The interest rate on Eurocurrency Rate Loans at June 30, 1996,
was approximately 11 3/16% Interest on Negotiated Rate Loans is payable
quarterly in arrears and interest on Eurocurrency Rate Loans is payable at the
end of the applicable interest period, except that if the interest period is
six months, interest is payable ninety days after the commencement of the
interest period and at the end of the interest period.
The U.S. Term Loan Agreement (through incorporation by reference to
the Amended and Restated Credit Agreement), the Amended and Restated Credit
Agreement and the Term Loan Agreement include various restrictive covenants
prohibiting Marvel from, among other things, incurring additional
indebtedness, with certain limited exceptions, and making dividend, redemption
and certain other payments on its capital stock. The U.S. Term Loan Agreement,
the Amended and Restated Credit Agreement and the Term Loan Agreement also
contain certain customary financial covenants and events of default for
financing of this type, including a limitation of a change of ownership
covenant of more than 25% of the voting shares of Marvel. Mandatory
prepayments are required to be made out of net proceeds from sales of assets
by Marvel, with certain exceptions, and from certain excess cash flow (as
defined in the Amended and Restated Credit Agreement).
8
<PAGE>
MARVEL (PARENT) HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
During March 1996 and August 1996, Marvel amended its credit
agreements to, among other things; 1) provide for an additional $25.0
revolving credit facility which will expire on December 31, 1996; 2) secure
the borrowings with substantially all of Marvel's domestic assets and all of
the capital stock of Marvel's domestic subsidiaries and 65% of the capital
stock of Marvel's first tier foreign subsidiaries; and 3) amend certain
financial covenants. The additional revolving credit facility is pari passu
with the loans extended by the banks pursuant to Marvel's existing loan
agreements.
In conjunction with the Toy Biz IPO, Toy Biz entered into a three
year $30 million revolving line of credit with a syndicate of banks for which
The Chase Manhattan Bank (formerly named Chemical Bank), serves as
administrative agent. Substantially all of the assets of Toy Biz have been
pledged to secure borrowings under the Toy Biz credit facility. Borrowings
under the credit facility bear interest at either The Chase Manhattan Bank's
alternate base rate or at the Eurodollar rate plus the applicable margin. The
applicable margin is 1% unless Toy Biz meets specific financial operating
levels, in which case the applicable margin decreases to 3/4 of 1%. The credit
facility requires Toy Biz to pay a commitment fee of 3/8 of 1% per annum on
the average daily unused portion of the credit facility.
The Toy Biz credit facility contains various financial covenants, as
well as restrictions, on the incurrence of new indebtedness, prepaying or
amending subordinated debt, acquisitions and similar investments, the sale or
transfer of assets, capital expenditures, limitations on restricted payments,
dividends, issuing guarantees and creating liens. The credit facility also
requires that (a) Marvel control Toy Biz and (b) that the exclusive, royalty
free perpetual worldwide license agreement between Toy Biz and Marvel remain
in effect. The Toy Biz credit facility is not guaranteed by Marvel.
4. RESTRUCTURING OF OPERATIONS
In the fourth quarter of 1995, Marvel recorded restructuring charges
of $25.0 related primarily to publishing and confections operations. As part
of the restructuring, Marvel has terminated approximately 275 employees,
covering editorial, production, distribution and administrative employee
groups and, accordingly, provided for $10.7 of termination benefits, of which
$5.7 has been paid as of June 30, 1996. Additionally, approximately $6.7
relates to facility closure and consolidation costs, of which $4.2 has been
paid as of June 30, 1996, and $7.6 relates to other costs, of which $4.6 has
been paid as of June 30, 1996. The remaining amounts, as of June 30, 1996, are
included in accrued expenses and other.
5. TOY BIZ IPO
On March 2, 1995, Toy Biz, Inc. ("Toy Biz") completed an initial
public offering (the "Toy Biz IPO") in which it issued and sold 2,750,000
shares of class A common stock at $18 per share. The net proceeds to Toy Biz,
after deducting commissions and offering expenses, of $44.1 were used to pay
outstanding amounts due under subordinated notes held by Marvel and the sole
stockholder of the predecessor to Toy Biz and for working capital and general
corporate purposes. In 1995, Marvel recorded a gain of $14.3 on the Toy Biz
IPO in recognition of the net increase in value of Marvel's investment in Toy
Biz. This amount was reflected in other income in the financial statements. In
conjunction with the Toy Biz IPO, Marvel's equity ownership was reduced to
approximately 36.6% and its voting control increased to 85.3%, and, as a
result of the increase, the condensed consolidated financial statements of
Marvel include the result of operations, financial position and cash flows of
Toy Biz. For periods prior to the Toy Biz IPO, Toy Biz was accounted for under
the equity method.
6. SKYBOX ACQUISITION
On April 27, 1995, pursuant to an Agreement and Plan of Merger dated
as of March 8, 1995 (the "SkyBox Merger Agreement"), among SkyBox, a Delaware
corporation, Marvel and an indirect wholly owned subsidiary of
9
<PAGE>
MARVEL (PARENT) HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Marvel, Marvel acquired all of the issued and outstanding shares of SkyBox
common stock for $16 per share. The purchase price, including fees, expenses and
other costs associated with the acquisition, totaled $165.0. The transaction was
accomplished through a tender offer (the "Tender Offer") and subsequent merger
(the "Merger", and collectively with the Tender Offer, the "SkyBox
Acquisition"). The purchase price includes an obligation to former SkyBox
stockholders who did not exchange their shares.
The SkyBox Acquisition was accounted for using the purchase method of
accounting. The purchase price has been allocated to assets and liabilities
based on their respective fair values at April 27, 1995. The fair values of
the assets and liabilities acquired are summarized below. The total purchase
price exceeded the fair value of the net assets of SkyBox by $158.4 and has
been assigned to goodwill, which is being amortized over forty years on the
straight-line basis.
Current assets ............................. $ 31.6
Noncurrent assets .......................... $ 5.4
Current liabilities ........................ $ 27.1
Noncurrent liabilities ..................... $ 3.3
-----------------
$ 6.6
=================
The following unaudited pro forma consolidated financial information
gives effect to the SkyBox Acquisition as if it had occurred at the beginning
of 1995. The pro forma results include certain adjustments, primarily
increased amortization and interest expense, and are not necessarily
indicative of what the results would have been had the SkyBox Acquisition
occurred at the beginning of the period. In addition, Toy Biz net revenues
were $58.3 for the six months ended June 30, 1995, of which $43.6 was included
in Marvel's consolidated net revenues.
For the Six Months Ended
June 30, 1995
-------------
Net Revenues................................... $ 351.3
Loss before extraordinary item................. $ (44.2)
Net Loss....................................... $ (47.5)
7. SUBSEQUENT EVENT
In August, 1996, Toy Biz sold in an offering .7 million shares of its
Class A common stock at a price to the public of $15 per share. As part of Toy
Biz's offering, Marvel sold 2.5 million shares of Toy Biz Class A common
stock. In the third quarter of 1996, Marvel will record a gain on the sale of
this common stock. The net proceeds to Toy Biz and Marvel were approximately
$9.0 and $35.0, respectively. The net proceeds from each of those sales, along
with additional funds provided by Toy Biz from operations and by Marvel from
operations and borrowings, are expected to be contributed from time to time to
an entity to be formed by Marvel and Toy Biz to facilitate the development of
television programming, feature films and other media and theatrical
productions based upon Marvel's characters ("Marvel Studios"). Marvel will
receive common equity interests in Marvel Studios representing 75% of the
equity and Toy Biz will receive preferred equity interests representing 25% of
the equity. Pending such use, Marvel intends to use its net proceeds from this
offering to repay debt and for working capital and general corporate purposes
and Toy Biz, pending such investment in Marvel Studios, intends to its net
proceeds for working capital and general corporate purposes.
10
<PAGE>
MARVEL (PARENT) HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
As a result of the offering by Toy Biz and the sale of Class A common
stock of Toy Biz by Marvel, Marvel's ownership percentage of Toy Biz decreased
to 26.7% and its voting control decreased to 78.4%.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Parent Holdings is a holding company with no operations or source of
income of its own. Accordingly, except as otherwise indicated, the following
discussion relates to the results of operations of Marvel.
The Company is a leading creator, publisher and distributor of youth
entertainment products for domestic and international markets based on action
adventure characters owned by the Company, licenses from professional
athletes, sports teams and leagues and popular entertainment characters and
other properties owned by third parties. The Company also licenses its
characters and properties for consumer products, television and film and
advertising promotions. The Company's products include comic book and other
publications, sports and entertainment trading cards, activity stickers, toys,
adhesives and confectionery products.
RESULTS OF OPERATIONS
Over the past five years, the Company has diversified into a broadly
based youth entertainment company. As a result, an increasing portion of the
Company's net revenues have been derived from businesses other than comic book
publishing. For the year ended December 31, 1995, net publishing revenues
represented approximately 17.8% of the Company's total net revenues. The
Company's business has been augmented by the marketing and distribution of
sports and entertainment trading cards and activity stickers and the licensing
of the Company's characters for consumer products, television and film,
advertising promotions and toys. Although the Company's consolidated net
revenues have increased as a result of diversification, certain changes in
market conditions, primarily associated with its publishing and trading card
businesses, have adversely affected the Company's net revenues and operating
results in recent periods.
As a result of a significant reduction in speculative purchases of
comic books, the Company has undertaken several strategic actions which it
believes will have the long-term effect of bolstering its publishing business.
The Company has substantially completed eliminating unprofitable and
marginally profitable titles to create a strong line-up comprising Marvel's
most popular and most profitable titles; focused its comic books more on
editorial content and less on physical product features and enhancements; and
streamlined operations through introduction of new technology and
consolidation of facilities. Combined with the reduction in titles, these
measures will reduce editorial, production, distribution, manufacturing and
administrative overhead expense. The Company believes these actions, together
with the exclusive distribution by Heroes World of the Company's comic books
to the direct market, which commenced July 1995, should improve the future
operating results of the Company's publishing business.
The Company believes that there has been a general contraction in the
sports trading card market related in part to lower speculative purchases.
This contraction was compounded by the baseball, hockey and basketball labor
situations in 1994 and 1995, which adversely affected sports trading card
sales and returns for those periods. Although Major League Baseball resumed in
April 1995, there still is no collective bargaining agreement in effect
between the owners and players, and the level of fan interest, although
showing signs of improvement, has not returned to the levels experienced prior
to the 1994 strike. Consistent with decreased fan interest, the Company
believes that the labor situations in professional sports have contributed to
decreased trading card consumer interest and, therefore, generally decreased
levels of consumer purchases of all trading cards. Accordingly, the Company
believes that the overall trading card industry has been negatively affected,
causing the Company to experience lower sales, higher returns and higher
inventory obsolescence.
Throughout 1995, the lower sales and higher returns of the Company's
trading cards primarily related to distribution channels other than trading
card specialty stores. The Company has revamped its trading card business to
concentrate its distribution of trading card products in trading card
specialty stores and in select mass market
12
<PAGE>
accounts. The Company believes that these distribution channels have a more
focused customer base and proven efficiencies, and therefore should allow
Fleer/SkyBox to realize an improvement in operating income in the future.
Also as part of the revamping of Fleer, operational overhead has been
reduced through the closure of Fleer's Philadelphia facility, which had been
used for confections and trading card manufacturing. The Company anticipates
additional reductions in future operating expenses of Fleer/SkyBox due to the
concentration of sales activities to trading card specialty stores and
selected mass market accounts.
With these actions, the Company has simplified and refocused its
publishing and trading card operations by concentrating on what it believes to
be the strongest elements of the businesses and more efficient channels of
distribution. Although the Company believes that these actions will position
the Company for an improvement in future operating performance of these
businesses, the extent and timing of improvement will be determined by, among
other things, the state of the markets in which the Company's products are
sold, the effectiveness of the Company's implementation of changes to these
businesses, and the level of reception by consumers to the Company's changes
in these businesses and to the Company's products.
THREE MONTHS ENDED JUNE 30, 1996 COMPARED WITH THE THREE MONTHS ENDED
JUNE 30, 1995
The Company's net revenues were $182.2 million and $169.2 million in
the 1996 and 1995 periods, respectively, an increase of $13.0 million or
10.8%. This increase reflects an increase of $15.2 million in toy revenues,
$11.3 million in net trading card and sticker revenues and $1.8 million in
other revenues. This increase was partially offset by a $12.0 million decrease
in net publishing revenues and a $3.3 million decrease in licensing revenues.
The increase in toy revenues was principally due to Toy Biz's expanded product
offerings and increased international distribution of products. The increase
in net sticker and trading card revenues was primarily due to increased Panini
net revenues of stickers. Panini net revenues increased due to the 1996
European Cup soccer tournament and expansion into new markets such as Brazil,
partially offset by lower net revenues in certain European markets principally
due to lower net revenues from entertainment stickers based on properties
licensed from third parties due to lower commercial success of such properties
in 1996 as compared to 1995. Net revenues from trading cards increased
slightly as compared to 1995. The Company's concentration of distribution to
trading card specialty stores and select mass market accounts generally
resulted in lower gross sales in 1996. In addition, entertainment card sales
decreased due to lower sales of cards based on properties licensed from third
parties resulting from lower commercial success of such properties in 1996 as
compared to 1995, as well as lower sales of cards based on comic book
characters due in part to market conditions in the comic book specialty store
market. However, as compared to 1995, provisions for trading card sales
returns were significantly lower, reflecting the change in distribution and
the inclusion in the second quarter of 1995 of a significant increase in sales
returns reserves related to market conditions. Such lower sales returns
provisions offset the lower sales discussed above, resulting in a slight
increase in net revenues from trading cards. The decrease in net publishing
revenues was due to the reduction of unprofitable titles, in accordance with
the Company's business strategy, and the discontinuance commencing in July
1995 of the distribution by Heroes World of comic book publications other than
the Company's titles. Licensing revenues will vary depending on the volume and
extent of licensing agreements entered into during any particular financial
period, as well as the level and commercial success of the media exposure of
the Company's characters.
Gross profit was $66.8 million and $52.3 million in the 1996 and 1995
periods, respectively, an increase of $14.5 million. As a percentage of net
revenues, gross profit was 36.7% in the 1996 period as compared to 30.9% in
the 1995 period. The increase in gross profit as a percentage of net revenues
was due primarily to lower provisions for sales returns and inventory
obsolescence in the trading card business and a reduction of unprofitable
titles in the Company's publishing business, offset by an unfavorable product
mix for trading cards, stickers and toys as compared to 1995 as well as weaker
operating results in certain of Panini's European markets.
Selling and general administrative expenses ("SG&A") were $55.7
million and $50.3 million in the 1996 and 1995 periods, respectively. The
increase of $5.4 million was mainly attributable to the increase in Toy Biz's
and Panini's advertising, promotion and selling costs, partially offset by a
general reduction in overhead expenses associated with the restructuring of
the trading card, publishing and confectionery operations.
13
<PAGE>
Amortization of goodwill, intangibles and deferred charges was $8.4
million and $6.9 million in the 1996 and 1995 periods, respectively. The
increase of $1.5 million mainly reflects the amortization related to the
SkyBox Acquisition in April, 1995.
Interest expense, net was $31.1 million and $25.8 million in the 1996
and 1995 periods, respectively. The increase in interest expense of $5.3
million primarily reflects the increased borrowings under the U.S. Term Loan
Facility in connection with the SkyBox Acquisition, increased borrowings
associated with the Amended and Restated Credit Agreement and, to a lesser
extent, the interest associated with a Panini loan for the expansion of the
Adespan adhesives facility and higher average borrowing rates. The accretion
of the discount on the 11 1/4% Series B Senior Secured Discount Notes (the
"Marvel Holdings Notes") of Marvel Holdings Inc., a wholly-owned subsidiary of
Parent Holdings and the 11 7/8% Senior Secured Discount Notes of Parent
Holdings, (the "Parent Notes") was $11.6 million and $5.9 million, respectively,
for the three months ended June 30, 1996.
Benefit for income taxes was $5.4 million and $5.6 million in the
1996 and 1995 periods, respectively. No benefit has been recorded for the
separate company losses of Parent Holdings and Marvel Holdings as they would
not be able to file a consolidated return with Marvel and they are not assured
that they will ultimately receive a benefit on a separate company basis.
In 1995, Marvel recorded a $3.3 million extraordinary loss, net of
taxes of $2.1 million, which represented a write-off of the related deferred
financing costs associated with the term loan portion of the Amended and
Restated Credit Agreement.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 1995
The Company's net revenues were $371.8 million and $327.1 million in
the 1996 and 1995 periods, respectively, an increase of $44.7 million or
13.7%. This increase reflects an increase of $40.4 million in toy revenues,
$28.0 million in trading card and sticker net revenues and $4.0 million in
other revenues, partially offset by a $23.8 million decrease in net publishing
revenues and a $3.9 million decrease in licensing revenues. The increase in
toy revenues was principally due to Toy Biz's expanded product offerings,
increased international distribution of products and the consolidation of Toy
Biz for six months in 1996 as compared to four months in 1995. The increase in
net sticker and trading card revenues was primarily due to increased net
trading card revenues and, to a lesser extent, increased net revenues from
stickers. Net revenues from trading cards increased by approximately $20
million for the six months of 1996 as compared to 1995. The Company's
concentration of distribution to trading card specialty stores and select mass
market accounts generally resulted in lower sales in 1996. In addition,
entertainment card sales decreased due to lower sales of cards based on
properties licensed from third parties resulting from lower commercial success
of such properties in 1996 as compared to 1995, as well as lower sales of
cards based on comic book characters due in part to market conditions in the
comic book specialty store market. However, as compared to 1995, provisions
for trading card sales returns were significantly lower, reflecting the change
in distribution and the inclusion in the second quarter of 1995 of a
significant increase in sales returns reserves. Such lower sales return
provisions, combined with the inclusion of net revenues from SkyBox trading
cards for six months in 1996 versus only two months in 1995 as SkyBox was
acquired on April 27, 1995, offset the lower sales discussed above, resulting
in the increase in net revenues from trading cards for the six months ended
June 30, 1996 as compared to the same period in 1995. Panini net revenues
increased due to the 1996 European Cup soccer tournament and expansion into
new markets such as Brazil, partially offset by lower net revenues in certain
European markets principally due to lower net revenues from entertainment
stickers based on properties licensed from third parties due to lower
commercial success of such properties in 1996 as compared to 1995. The
decrease in net publishing revenues was due to the reduction of unprofitable
titles, in accordance with the Company's business strategy, and the
discontinuance commencing in July 1995 of the distribution by Heroes World of
comic book publications other than the Company's titles. Licensing revenues
will vary depending on the volume and extent of licensing agreements entered
into during any particular financial period, as well as the level and
commercial success of the media exposure of the Company's characters.
14
<PAGE>
Gross profit was $142.5 million and $113.3 million in the 1996 and
1995 periods, respectively, an increase of $29.2 million. As a percentage of
net revenues, gross profit was 38.3% in the 1996 period as compared to 34.6%
in the 1995 period. The increase in gross profit as a percentage of net
revenues was due primarily to lower provisions for sales returns and inventory
obsolescence in the trading card business and a reduction of unprofitable
titles in the Company's publishing business, offset by an unfavorable product
mix for trading cards, stickers and toys as compared to 1995 as well as weaker
operating results in certain of Panini's European markets.
SG&A were $108.0 million and $93.8 million in the 1996 and 1995
periods, respectively. The increase of $14.2 million was mainly attributable
to the increase in advertising, promotion and selling expenses of Panini and
Toy Biz, the consolidation of Toy Biz's results for six months in 1996 as
compared to four months in 1995, and the inclusion of Sky Box for six months
in 1996 as compared to two months in 1995. This increase was partially offset
by a general reduction in overhead expenses associated with the restructuring
of the trading card, publishing and confectionery operations.
Depreciation and amortization was $9.3 million and $7.5 million in the
1996 and 1995 periods, respectively. The increase of $1.8 million was
primarily due to the consolidation of Toy Biz for six months in 1996 as
compared to only four months in 1995 .
Amortization of goodwill, intangibles and deferred charges was $16.9
million and $13.1 million in the 1996 and 1995 periods, respectively. The
increase of $3.8 million mainly reflects the amortization related to the
SkyBox Acquisition in April, 1995.
Interest expense, net was $61.2 million and $48.3 million in the 1996
and 1995 periods, respectively. The increase in interest expense of $12.9
million primarily reflects the increased borrowings under the U.S. Term Loan
Facility in connection with the SkyBox Acquisition, increased borrowings
associated with the Amended and Restated Credit Agreement and, to a lesser
extent, the interest associated with a Panini loan for the expansion of the
Adespan adhesives facility and higher average borrowing rates. The accretion
of the discount on the Marvel Holdings Notes and the Parent Notes was $22.8
million and $11.4 million, respectively, for the six months ended June 30, 1996.
In 1995, other income of $14.3 million represents the net increase in
value of Marvel's investment in Toy Biz as a result of the Toy Biz IPO.
For 1996, as a result of its losses, the Company recorded a net tax
benefit of $3.8 million as compared to a tax provision of $4.6 million in
1995. In 1996, the benefit was reduced as a result of taxes on income from Toy
Biz operations. In addition, no benefit has been recorded for the separate
company losses of Parent Holdings and Marvel Holdings as they would not be
able to file a consolidated return with Marvel and they are not assured that
they will ultimately receive a benefit on a separate company basis.
In 1995, Marvel recorded a $3.3 million extraordinary loss, net of
taxes of $2.1 million, which represented a write-off of the related deferred
financing costs associated with the term loan portion of the Amended and
Restated Credit Agreement.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 1996, the Company used $35.2
million of cash as a result of its operating activities. On a cash basis,
results of operations generated $10.8 million, while working capital changes
resulted in a use of funds of $46.0 million. The use of funds was principally
due to a reduction in accrued expenses and increased investments in inventory
and prepaid expenses offset partially by a reduction in accounts receivable.
Cash shown on the Consolidated Balance Sheets at June 30, 1996 and December
31, 1995, includes $7.7 million and $22.5 million, respectively, of Toy Biz
cash.
15
<PAGE>
Cash used for investing activities for the six months ended June 30,
1996, was $27.5 million. The primary use of these funds was for capital
expenditures for its Adespan adhesives facility and tooling and molds and
capitalized product development costs primarily related to Toy Biz.
Cash provided by financing activities for the six months ended June
30, 1996, was $47.5 million, primarily consisting of increased borrowings
under Marvel's credit facilities for working capital and investment
requirements, including the expansion of Marvel's Adespan adhesives facility.
In August, 1996, Toy Biz sold in an offering .7 million shares of its
Class A common stock at a price to the public of $15 per share. As part of Toy
Biz's offering, Marvel sold 2.5 million shares of Toy Biz Class A common
stock. In the third quarter of 1996, Marvel will record a gain on the sale of
this common stock. The net proceeds to Toy Biz and Marvel were approximately
$9.0 million and $35.0 million, respectively. The net proceeds from each of
those sales, along with additional funds provided by Toy Biz from operations
and by Marvel from operations and borrowings, are expected to be contributed
from time to time to Marvel Studios, an entity to be formed by Marvel and Toy
Biz to facilitate the development of television programming, feature films and
other media and theatrical productions based upon Marvel's characters. Marvel
will receive common equity interests in Marvel Studios representing 75% of the
equity and Toy Biz will receive preferred equity interests representing 25% of
the equity. Pending such use, Marvel intends to use its net proceeds from this
offering to repay debt and for working capital and general corporate purposes
and Toy Biz, pending such investment in Marvel Studios, intends to use its net
proceeds for working capital and general corporate purposes. Marvel expects to
incur approximately $4 million in net production costs for The Hulk animated
series (which costs would be offset by any sales of video cassettes or
international distribution rights to the series). The Hulk series is expected
to begin broadcasting on the United Paramount Network in September 1996. The
Hulk series is expected to be a project of Marvel Studios. Marvel announced a
project with Fox Kids Worldwide ("FKW"), which will involve the development
and production of a variety of Marvel's characters to be broadcast over the
Fox Children's Network over a period of seven years (which could be extended
to ten years in certain circumstances). Marvel will be required to reimburse
FKW a portion of its production costs. The arrangements with FKW are expected
to be a project of Marvel Studios.
As a result of the offering by Toy Biz and the sale of Class A common
stock of Toy Biz by Marvel, Marvel's ownership percentage of Toy Biz decreased
to 26.7% and its voting control decreased to 78.4%.
During the first quarter of 1996, Marvel formed Marvel Interactive
for the development of on-line services and interactive software utilizing or
based upon Marvel's characters. Marvel anticipates commencing development of
titles in the second half of 1996 with commercial release scheduled for 1997.
Marvel, along with its joint venture partner, is continuing
development of Marvel theme restaurants. Five restaurants are currently under
development, with the first restaurant expected to open in the first half of
1997. Marvel expects to invest approximately $36 million over the next three
years to fund the development of such restaurants.
During March 1996 and August 1996, Marvel amended its credit
agreements to, among other things; 1) provide for an additional $25.0 million
revolving credit facility which will expire on December 31, 1996; 2) secure
the borrowings with substantially all of Marvel's domestic assets and all of
the capital stock of Marvel's domestic subsidiaries and 65% of the capital
stock of Marvel's first tier foreign subsidiaries; and 3) amend certain
financial covenants. The additional revolving credit facility is pari passu
with the loans extended by the banks pursuant to Marvel's existing loan
agreements.
At August 13, 1996, Marvel's outstanding bank indebtedness was
approximately $643 million, of which $16.5 million relates to the borrowings
for the Adespan adhesives facility. Marvel had approximately $35 million
available under its domestic credit facilities and approximately $25 available
under its foreign credit facilities. In addition, there was $30.0 million
available under the Toy Biz line of credit at August 13, 1996.
As of August 5, 1996, 79,407,725 shares, or 78.0%, of Marvel's common
stock were pledged by subsidiaries of Mafco, including Marvel Holdings and
Parent Holdings, other than Marvel and its subsidiaries, to secure
16
<PAGE>
indebtedness or letters of credit of such subsidiaries, including the Marvel
Holdings Notes and the Parent Notes. In addition, 2,932,167 shares, or 2.9% of
Marvel's common stock, are subject to a negative pledge under the terms of the
Marvel Holdings Notes indenture. The indentures governing this indebtedness
contain various covenants relating to Marvel, including certain limitations on
Marvel's indebtedness.
Although there can be no assurance, Marvel anticipates that
internally generated funds, the net proceeds from the offering by Toy Biz and
Marvel of class A common stock of Toy Biz, borrowings under the various credit
agreements of Marvel and Toy Biz, other borrowings and refinancings of
existing indebtedness will be sufficient to enable Marvel to meet its
consolidated cash requirements, including debt service and repayment, for the
foreseeable future.
In order to meet principal payments upon the final maturity of its
various notes outstanding, which occur in 1998, Parent Holdings and
Marvel Holdings will be required to adopt one or more alternatives, such as
borrowing funds, selling its equity securities or seeking capital
contributions or loans from Mafco or affiliates.
FORWARD-LOOKING STATEMENTS
Statements in this quarterly report on Form 10-Q for the quarter
ended June 30, 1996 which are not historical are forward-looking statements
that involve risks and uncertainties. Such statements include, without
limitation, Marvel's expectation as to financial performance for the remainder
of 1996. In addition to factors that may be described in the Company's
Securities and Exchange Commission filings, including this filing, the
following factors, among others, could cause the Company's financial
performance to differ materially from that expressed in any forward-looking
statements made by, or on behalf of, the Company: (i) the failure of fan
interest in baseball to return to traditional levels prior to the 1994
baseball strike, thereby negatively impacting the Company's baseball card
business; (ii) continued weakness in the comic book market which cannot be
overcome by the Company's new editorial and production initiatives in comic
publishing; (iii) continued weakness in the trading card market; (iv) the
effectiveness of the Company's changes to its trading card and publishing
distribution; (v) a decrease in the popularity or level of media exposure of
the Company's characters resulting in declining licensing revenues; (vi) the
lack of continued commercial success of properties owned by major licensors
which have granted Marvel licenses for its sports and entertainment trading
card and sticker businesses; and (vii) unanticipated costs or delays in
completing projects associated with the Company's new ventures including
media, interactive software and on-line services and theme restaurants.
17
<PAGE>
PART II.
OTHER INFORMATION.
ITEM 1. LEGAL PROCEEDINGS.
The Company is a party to various legal proceedings as described in
previous filings. During the quarter there were no material developments in
any of such proceedings. In addition, there was no new reportable legal
proceedings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.1 Consent Number Three dated as of June 30, 1996
to the Credit and Guarantee Agreement among
Marvel, Fleer Corp., the financial institutions
from time to time parties thereto, and The
Chase Manhattan Bank (formerly Chemical Bank)
as administrative agent. Incorporated by
reference to Exhibit 10.1 to the June 30, 1996
Marvel Quarterly Report on Form 10-Q (the
"Marvel 10-Q").
10.2 Consent Number Two and Fourth Amendment, dated
as of June 30, 1996, to the Amended and
Restated Credit and Guarantee Agreement, by and
among Marvel, Fleer Corp., the financial
institutions from time to time parties thereto,
and The Chase Manhattan Bank (formerly named
Chemical Bank). Incorporated by reference to
Exhibit 10.2 to the Marvel 10-Q.
10.3 Line of Credit, dated as of March 27, 1996
between Fleer Corp. and The Chase Manhattan Bank
(formerly named Chemical Bank). Incorporated by
reference to Exhibit 10.3 to the Marvel 10-Q.
(b) Reports on Form 8-K
None.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MARVEL (PARENT) HOLDINGS INC.
(Registrant)
By: /s/ Laurence Winoker
-----------------------------
Dated: August 14, 1996 Laurence Winoker
Vice President and Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Marvel
(Parent) Holdings Inc. Condensed Consolidated Balance Sheets and Statements of
Operations.
</LEGEND>
<CIK> 0000909169
<NAME> MARVEL (PARENT) HOLDINGS INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> JUN-30-1996
<CASH> 22,700,000
<SECURITIES> 0
<RECEIVABLES> 251,400,000
<ALLOWANCES> 36,200,000
<INVENTORY> 95,900,000
<CURRENT-ASSETS> 463,000,000
<PP&E> 112,500,000
<DEPRECIATION> 30,300,000
<TOTAL-ASSETS> 1,507,700,000
<CURRENT-LIABILITIES> 261,400,000
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0
<COMMON> 0
<OTHER-SE> (186,700,000)
<TOTAL-LIABILITY-AND-EQUITY> 1,507,700,000
<SALES> 371,800,000
<TOTAL-REVENUES> 371,800,000
<CGS> 229,300,000
<TOTAL-COSTS> 229,300,000
<OTHER-EXPENSES> 117,300,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61,200,000
<INCOME-PRETAX> (53,900,000)
<INCOME-TAX> (3,800,000)
<INCOME-CONTINUING> (51,700,000)
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