===============================================================================
As filed with the Securities and Exchange Commission on November 25, 1998
Registration Statement No. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------------------------------
MARVEL ENTERPRISES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3711775
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
685 Third Avenue
New York, New York 10017
(212) 588-5100
(Address, Including Zip Code and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
Morton E. Handel
Chairman of the Board
685 Third Avenue
New York, New York 10017
(212) 588-5100
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
--------------------
copy to:
John N. Turitzin, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
(212) 856-7000
Approximate date of commencement of proposed sale to public: From time
to time or at one time after the effective date of this registration statement
as determined by market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
-------------------------------
Title of each class Amount Proposed Maximum Proposed Maximum
of securities to be to be Offering Price per Aggregate Offering Amount of
Registered Registered Share (1) Price Registration Fee
<S> <C> <C> <C> <C>
Common Stock $0.01 par value per share 36,642,683 $5.9375 $217,565,930 $60,483
8% Cumulative Convertible Exchangeable
Preferred Stock, $0.01 par value per share 15,620,234 $6.1690625 $ 96,362,200 $26,789
- ------------------------------------------- ------------- ----------------- ------------------ -------------------
TOTAL 52,262,917 $313,928,130 $87,272
- ------------------------------------------- ------------- ----------------- ------------------ -------------------
</TABLE>
(1) Estimated solely for the purpose of determining the Registration. Based
upon the average of the high and low prices of the Registrant's Common
Stock on the New York Stock Exchange on November 23, 1998.
The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
782128.1
<PAGE>
================================================================================
Prospectus
MARVEL ENTERPRISES, INC.
36,642,683 Shares of COMMON STOCK
15,620,234 Shares of 8% CUMULATIVE CONVERTIBLE
EXCHANGEABLE PREFERRED STOCK
All of the shares offered under this
Prospectus are offered by selling stockholders and not by
Marvel Enterprises, Inc.
----------------------------------------------------------
We are a leading entertainment-based marketing and licensing company
operating in the licensing, comic book publishing, toy, trading card and
children's activity sticker businesses on a worldwide basis.
This Prospectus relates to the offer and sale from time to time by the
persons listed under "Selling Stockholders" of up to 36,642,683 shares of our
Common Stock and 15,620,234 shares of our 8% Cumulative Convertible Exchangeable
Preferred Stock. In this Prospectus, our 8% Cumulative Convertible Exchangeable
Preferred Stock is often referred to as "8% Preferred Stock." Each share of 8%
Preferred Stock can be converted by its owner into 1.039 shares of Common Stock.
Shares of 8% Preferred Stock vote generally with the Common Stock as one class,
with each preferred share's vote having the same power as the vote of 1.039
common shares. The Common Stock offered through this Prospectus includes shares
that may be issued upon conversion of 8% Preferred Stock. The Common Stock is
listed for trading on the New York Stock Exchange under the symbol "MVL". The 8%
Preferred Stock is not listed for trading on any national securities exchange or
on the Nasdaq Stock Market.
The Selling Stockholders may offer the shares of Common Stock and/or 8%
Preferred Stock covered by this Prospectus from time to time. The Selling
Stockholders have not yet chosen the methods by which they will determine the
offering prices of any of those shares that they choose to sell. The Selling
Stockholders will pay any brokerage fees or commissions relating to the sales by
them. See "Plan of Distribution." The Selling Stockholders may choose to sell
all of their shares, to sell only a portion of their shares, or to sell none of
their shares.
We will not receive any of the proceeds of sales by the Selling
Stockholders. We are paying the costs of preparing and filing the Registration
Statement that includes this Prospectus.
See "Risk Factors" beginning on page 6 for certain factors relevant to
an investment in our Common Stock and/or 8% Preferred Stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is a
criminal offense.
November __, 1998
782128.1
<PAGE>
TABLE OF CONTENTS
Page
Where You Can Find More Information.........................................2
Forward-Looking Statements..................................................3
Prospectus Summary..........................................................4
Risk Factors................................................................6
Ratio of Combined Fixed Charges and
Preference Dividends to Earnings........................................12
Federal Income Tax Considerations..........................................12
Use of Proceeds............................................................16
Selling Stockholders.......................................................17
Plan of Distribution.......................................................22
Experts....................................................................23
Legal Matters..............................................................23
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document we file at the Securities and Exchange Commission's public
reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549, 7 World Trade
Center, 13th Floor, New York, New York 10048, and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 for further information on
the public reference rooms. Our Securities and Exchange Commission filings are
also available to the public from the Securities and Exchange Commission's
Website at "http://www.sec.gov."
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file later with the Securities and Exchange
Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the Securities and Exchange Commission under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
1. Our Annual Report on Form 10-K for the year ended December 31, 1997;
2. Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998;
3. Our Current Reports on Form 8-K filed with the Securities and Exchange
Commission on August 3, 1998, October 2, 1998, and October 14, 1998, our Current
Report on Form 8-K/A filed on October 16, 1998, and our Current Report on Form
8-K/A-2 filed on November 25, 1998 (which incorporates by reference the
consolidated financial statements included in Marvel Entertainment Group, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1997 and its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998 and June
30, 1998); and
4. The section entitled "THE MARVEL PROPOSALS -- Securities to be Issued
and Transferred under the Plan" on pages 82 -87 of the Company's Proxy Statement
on Schedule 14A (SEC File No. 001-13638), as filed
782128.1
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<PAGE>
with the Securities and Exchange Commission on August 13, 1998, which includes
descriptions of the Company's Common Stock and 8% Cumulative Convertible
Exchangeable Preferred Stock.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
David Fremed, Chief Financial Officer
Marvel Enterprises, Inc.
685 Third Avenue
New York, NY 10017
Telephone requests may be directed to (212) 558-5100.
This Prospectus is part of a registration statement we filed with the
Securities and Exchange Commission. You should rely only on the information or
representations provided in this Prospectus. We have authorized no one to
provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this Prospectus is accurate as of any date other than
the date on the front of the document.
FORWARD-LOOKING STATEMENTS
Certain information both included and incorporated by reference in this
Prospectus may contain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934, and as such may involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
our Company to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements.
Forward-looking statements, which are based on certain assumptions and describe
our future plans, strategies and expectations, are generally identifiable by use
of the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend" or "project" or the negative thereof or other variations
thereon or comparable terminology. Factors which could have a material adverse
effect on the operations and future prospects of our Company include, but are
not limited to, changes in general economic conditions, Marvel Enterprises'
ability to integrate Marvel Entertainment Group's business, Marvel Enterprises'
ability to refinance its bridge loan used to finance its acquisition of Marvel
Entertainment Group, the level of media exposure or the popularity of Marvel
Enterprises' characters and trademarks, consumer acceptance of Marvel
Enterprises' new product introductions, a decrease in the level of media
exposure or popularity of Marvel Enterprises characters resulting in declining
revenues based on such characters, the lack of continued commercial success of
properties owned by major licensors which have granted Marvel Enterprises
licenses for its sports and entertainment trading card and sticker businesses,
the timing and effectiveness of the Company's programs designed to make the
Company's operations Year-2000 compliant, Marvel Enterprises' dependence on
Chinese manufacturers, U.S. trade relations with China, and continued pressure
by certain of the Company's major retail customers to significantly reduce their
toy inventory levels. These risks and uncertainties should be considered in
evaluating any forward-looking statements contained or incorporated by reference
herein.
782128.1
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<PAGE>
PROSPECTUS SUMMARY
Because this is a summary, it does not contain all the details that may
be important to you. You should read the entire Prospectus carefully before you
invest.
The Company
We are a leading entertainment-based marketing and licensing company
operating in the licensing, comic book publishing, toy and trading card
businesses. In addition, we currently operate a children's activity sticker
businesses which we do not intend to continue. Our proprietary library
of intellectual property is comprised of over 3,500 characters (the "Marvel
Characters"). We believe that this library, which includes characters such as
Spider-Man, X-Men, Hulk, Fantastic Four, Captain America and Iron Man, is one of
the most recognizable libraries in the entertainment industry.
Our Company was called "Toy Biz, Inc." until October 1, 1998. On that
day, we acquired Marvel Entertainment Group, Inc., which had been in bankruptcy
since December 1996, and changed our name to Marvel Enterprises, Inc. When we
use the term "Marvel" in this Prospectus, we are referring to Marvel
Entertainment Group. The term "the Company" refers to Marvel Enterprises, Inc.
We acquired Marvel by means of a merger (between Marvel and a wholly owned
subsidiary of ours), and that is the merger that is referred to whenever this
Prospectus uses the term, "the Merger." The Merger was part of a plan of
reorganization for Marvel (referred to in this Prospectus as "the Plan") that
was proposed, and ultimately confirmed by the court, in Marvel's bankruptcy
case.
We operate through the following five business divisions:
1. Marvel Comics. We believe that Marvel Comics is one of the leading
publishers of comic books and one of the largest licensors of proprietary
characters in the world. Marvel Comics has been publishing comic books based
upon the Marvel Characters since 1939, and has consistently published some of
the world's most popular comic book titles.
2. Toy Biz. Toy Biz designs, develops, markets and distributes, on a
worldwide basis, both innovative and traditional toys in the boys', girls',
preschool, activity and electronic toy categories. Toy Biz's products are based
on popular entertainment properties, including the Marvel Characters, Sony's
Godzilla and World Championship Wrestling (WCW/NwO), and consumer brand names
like Gerber.
3. Marvel Media. We pursue our strategy of maximizing media exposure
for the Marvel Characters primarily through Marvel Media. Marvel Media seeks to
establish a broad array of licensing relationships, including licenses with
studio and network partners for television, motion picture and home video
projects.
4. Fleer/SkyBox. We believe that Fleer/SkyBox is the leading marketer
of sports and entertainment trading cards in the world.
5. Panini. We believe that Panini is the world leader in the children's
activity sticker market. Panini's sticker products focus on European, World Cup
and other soccer leagues and events as well as entertainment properties. Panini
also operates a Europe-based regional adhesive paper business. We do not intend
to continue the Panini business lines in light of Panini's deficit in net
tangible assets.
Our executive offices are located at 685 Third Avenue, New York, New
York 10017 and our telephone number is (212) 558-5100.
782128.1
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<PAGE>
Securities to be Offered
This Prospectus relates to the offer and sale of two types of stock in
Marvel Enterprises: our Common Stock and our 8% Cumulative Convertible
Exchangeable Preferred Stock. In this Prospectus, our 8% Cumulative Convertible
Exchangeable Preferred Stock is often referred to as "8% Preferred Stock." Each
share of 8% Preferred Stock can be converted by its owner into 1.039 shares of
Common Stock. Shares of 8% Preferred Stock vote generally with the Common Stock
as one class, with each preferred share's vote having the same power as the vote
of 1.039 common shares. The Common Stock is listed for trading on the New York
Stock Exchange under the symbol "MVL". The 8% Preferred Stock is not listed for
trading on any national securities exchange or on the Nasdaq Stock Market.
The shares of stock covered by this Prospectus are not owned by the
Company. Those shares are owned by stockholders listed in the section of the
Prospectus called "Selling Stockholders." Those Selling Stockholders, not the
Company, will be the sellers if and when any shares of stock are offered or sold
under this Prospectus. The Selling Stockholders may sell their shares from time
to time, rather than all at once. The Selling Stockholders may choose to sell
all of their shares, to sell only a portion of their shares, or to sell none of
their shares. The sales prices are yet to be determined. The Selling
Stockholders will pay any brokerage fees or commissions relating to their sales.
See the section of the Prospectus called "Plan of Distribution."
We will not receive any of the proceeds of sales by the Selling
Stockholders. We are paying the costs of preparing and filing the Registration
Statement that includes this Prospectus.
A total of 36,642,683 shares of Common Stock and 15,620,234 shares of
8% Preferred Stock are covered by this Prospectus.
Risk Factors
You should carefully consider the matters discussed under "Risk
Factors" before investing in the Common Stock or the 8% Preferred Stock offered
by this Prospectus.
Federal Income Tax Considerations
See "Federal Income Tax Considerations," which discusses certain U.S.
federal income tax consequences that may result from the purchase of the Common
Stock or the 8% Preferred Stock offered by this Prospectus.
782128.1
5
<PAGE>
RISK FACTORS
You should consider carefully the following risk factors together with all of
the other information included or incorporated by reference in this Prospectus
before you decide to purchase shares of our Common Stock or 8% Preferred Stock.
This section includes or refers to certain forward-looking statements. You
should refer to the explanation of the qualifications and limitations on such
forward-looking statements discussed on page 3 of the Prospectus.
Substantial Leverage; Inability to Service Debt
We are currently operating with a significant level of indebtedness.
The Company has total outstanding indebtedness of approximately $200 million
and, in addition, has guaranteed $27 million of the indebtedness of Panini, as
discussed below. Our indebtedness consists of $200 million owed to UBS AG,
Stamford Branch under a loan facility dated September 28, 1998 (the "Bridge Loan
Facility") that was used to fund a portion of the consideration required to
complete the acquisition of Marvel. In addition, we expect to utilize the
borrowing capacity under a new $50 million credit facility (the "New Credit
Facility").
The degree to which we are leveraged could have important consequences
to holders of the Common Stock and 8% Preferred Stock, including, but not
limited to, the following: (i) our ability to obtain additional financing in the
future for working capital, capital expenditures, acquisitions, general
corporate or other purposes may be limited, (ii) a substantial portion of our
cash flow from operations will be used to pay the principal of, and interest on,
our indebtedness, (iii) the agreements governing our indebtedness contain
certain restrictive financial and operating covenants that could limit our
ability to compete and expand, and (iv) our substantial leverage may make us
more vulnerable to economic downturns, limit our ability to withstand
competitive pressures and reduce our flexibility in responding to changing
business and economic conditions. Our ability to pay dividends on the 8%
Preferred Stock, to satisfy our debt obligations and to make planned
expenditures will be dependent on our future operating performance, which could
be affected by changes in economic conditions and other factors, including
factors beyond our control. A failure to comply with the covenants and other
provisions of our debt instruments could result in events of default under those
instruments, which could permit acceleration of the debt under those instruments
and in some cases acceleration of the debt under other instruments that contain
cross-default or cross-acceleration provisions. We believe that cash flow from
operations, together with borrowings under the New Credit Facility, will be
sufficient to cover our debt service and other cash requirements. However, if we
are at any time unable to generate sufficient cash flow from operations to
service our indebtedness, we may be required to seek to renegotiate the terms of
the instruments relating to that indebtedness or seek to refinance all or a
portion of that indebtedness or to obtain additional financing. It is possible
that we will be unable to renegotiate those terms, refinance that indebtedness
or obtain additional financing.
Inability to Refinance Bridge Loan Facility
We are obligated to repay the Bridge Loan Facility by September 27,
1999. This obligation is secured by a lien on virtually all of our assets,
including the assets of our subsidiaries except Panini. It is possible that we
may not be able to obtain alternate financing in order to repay the Bridge Loan
Facility.
Competition
We operate in highly competitive industries. We compete in the toy,
comic book publishing, trading card, licensing and media businesses with many
larger integrated companies that have greater financial and other resources and
more established distribution organizations. Such competition may adversely
affect our results of operations or financial condition.
782128.1
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Potential Inability to Integrate Marvel; Inability to Achieve Anticipated Cost
Savings
The success of the Merger will depend in part on our ability to
effectively integrate the businesses of Toy Biz and Marvel. The process of
integrating the businesses of Toy Biz and Marvel may involve unforeseen
difficulties and may require a disproportionate amount of time and attention of
our management and financial and other resources. Although it is anticipated
that we will have the opportunity for synergies and cost savings, there can be
no assurance as to the timing or amount of synergies or cost savings that may
ultimately be attained. Certain of the anticipated benefits of the Merger may
not be achieved if our operations are not successfully integrated in a timely
manner. The difficulties of that integration may initially be increased by the
necessity of coordinating and integrating personnel with disparate business
backgrounds and corporate cultures. There can be no assurance that we will be
able to integrate effectively Marvel's operations or, even if integrated, that
our operating performance will be successful. If Toy Biz and Marvel are not
successful in integrating their corporate strategies and operations, if such
combination takes longer than anticipated, or if their integrated operations
fail to achieve market acceptance, our business could be adversely affected. In
addition implementation of our business strategy will be subject to numerous
other contingencies beyond our control, including general and regional economic
conditions, interest rates, competition, and the ability to attract and maintain
skilled employees. As a result, no assurance can be given that the Merger will
be successful or that our business strategies will prove effective or that we
will achieve our goals.
Decline in Business of Marvel and Toy Biz, Inc.
In 1995 and 1996 there was an overall decline in Marvel's core
publishing and trading card businesses which had a material adverse effect on
Marvel. This decline, when taken in connection with indebtedness incurred by
Marvel in connection with its acquisition program, ultimately caused the filing
for reorganization under chapter 11 of the Bankruptcy Code in 1996. Marvel's
publishing revenues, along with those of the overall comic book industry,
declined primarily as a result of reduced readership, lower speculative
purchases and lower selling prices, which in turn caused a contraction in the
number of comic book specialty stores. These store closings further negatively
impacted Marvel's net publishing revenues. In addition, Fleer/SkyBox's trading
card markets contracted during 1995 through 1997 although this contraction
appears to be slowing. There can be no assurance that the reduction in the rate
of contraction will continue or that the decline in the comic book and trading
card business will be halted or reversed. Moreover, a labor dispute in any of
the professional team sports could have a material adverse effect on the trading
card industry. As of the date of this Prospectus there is such a dispute with
the National Basketball Association, with which we have licensing arrangements.
We believe that the renegotiated terms of certain of these professional team
sports licenses, including the terms of the National Basketball Association
license, will minimize the effect of any labor disputes on Fleer/SkyBox.
The bankruptcy of Marvel also caused a decline in the toy business of
the Company because a substantial portion of the Company's toy products were
based on the Marvel Characters. There can be no assurance that our Marvel
Characters toy business will return to its pre-bankruptcy levels. In addition,
during the third quarter of 1998, the Company's operations began to be
negatively impacted by the decision of certain major retailers to significantly
reduce their toy inventory levels.
Management believes the sales and the profitability of each of the
Company's businesses have been adversely affected by concerns as to the impact
of Marvel's bankruptcy proceedings among customers and others with whom we do
business. While management believes that the consummation of the Plan has
alleviated these concerns, there can be no assurance that our sales and
profitability will not continue to be adversely affected.
Company Strategy
The success of our strategy depends in large part upon consumer
acceptance of the Marvel Characters and products and licensing and promotional
programs related thereto for which there can be no assurance. Consumer
acceptance of many of these products is dependent on our being able to
successfully secure a stable
782128.1
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flow of media relating to the Marvel Characters, the popularity of these
television programs and other media events, and consumer interest in our core
product categories. There can be no assurance that any scheduled or anticipated
television program or other media event will occur at all or, if it occurs, that
it will continue to be broadcast or will otherwise result in substantial
marketing value to, or sales of, our products. Further, there can be no
assurance that the goodwill associated with the Marvel Characters or any of the
other intellectual property upon which any of our products are based will add
marketing value to our products or that our core products will maintain the
buying interest of consumers. Our new and existing products are also subject to
changing consumer preferences. Some products are successfully marketed for a
limited period, sometimes only one or two years. There can be no assurance that
any existing product lines will retain their current popularity or that new
products developed by us will meet with the same success as our current
products. While it is impossible to predict future trends in the toy, comic book
and trading card industries, management believes our product line is
sufficiently diverse to benefit from such trends. However, no assurance can be
given that we will accurately anticipate future trends or will be able to
successfully develop, produce and market products to take advantage of market
opportunities presented by such trends.
Certain Risks Associated with the Marvel's Bankruptcy Proceedings
Marvel is party to certain licensing arrangements that have been
rejected pursuant to the Plan, the loss of which, if not renegotiated, could
have a material adverse effect on the Company. Although there can be no
assurances, we believe that these licensing arrangements can be renegotiated on
terms acceptable to us.
Guaranty of Panini's Indebtedness
Panini has outstanding borrowings of Italian Lire 280.6 billion
(approximately $168.4 million based on exchange rates in effect on November 20,
1998) under renegotiated credit facilities entered into pursuant to the Plan.
Under the Plan, we have guaranteed $27 million of that indebtedness.
Raw Materials; Dependence on Foreign Manufacturers
The principal raw materials used in the production and sale of our toy
products are plastics and paper products. Raw materials are generally purchased
by the manufacturers who deliver completed products to us. Management believes
that an adequate supply of raw materials used in the manufacture of our toy
products is readily available from existing and alternative sources at
reasonable prices. However, there can be no assurance that, in the event of a
disruption in raw material supplies, alternative sources of supply could be
obtained in a timely manner.
A large number of our toy products are manufactured in China. While we
are not dependent on any single manufacturer in China to supply us with toy
products, we are subject to the risks of foreign manufacturing, including
currency exchange fluctuations, transportation delays and interruptions, and
political or economic disruptions affecting international businesses generally.
Our ability to obtain products from our Chinese manufacturers is dependent upon
the United States' trade relationship with China. The "Most Favored Nation"
status of China, which is reviewed annually by the United States government, is
a regular topic of political controversy. The loss of China's "Most Favored
Nation" status would increase the cost of importing products from China
significantly, which could have a material adverse effect on us. The imposition
of further trade sanctions on China could result in significant supply
disruptions or higher merchandise costs to us. We believe that alternate sources
of manufacturing are available outside China, although there can be no assurance
that these alternate sources will be available on acceptable terms.
782128.1
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We purchase goods from manufacturers in China mostly in Hong Kong
dollars and, accordingly, fluctuations in Hong Kong monetary rates may have an
impact on the cost of goods. However, in recent years, the value of the Hong
Kong dollar has been tied to the value of the United States dollar, eliminating
fluctuations between the two currencies. There can be no assurance that the Hong
Kong dollar will continue to be tied to the United States dollar. Furthermore,
appreciation of Chinese currency values relative to the Hong Kong dollar could
increase our cost of products manufactured in China and thereby have an adverse
impact on us.
Dependence on Comic Book Distributor
We distribute our comic book publications to specialty market retailers
and direct market comic book shops through an unaffiliated entity. The
distribution agreement with this entity is for a term of three-and-a-half years
and automatically renews for succeeding one year periods unless terminated by
either party. Either party has the right to terminate upon the happening of
certain events. This distributor is the sole-source provider for the direct
comic book market, and as a result, a termination of this agreement would
significantly disrupt our publishing operations in the short-term. Management
believes that the termination of the current distribution agreement would not
have a long-term material adverse effect on us. However, there can be no
assurance that such termination would not materially adversely affect our
consolidated financial condition or results of operations.
Advance Payments/Guaranteed Royalties Under Licensing Programs
A determination to acquire a character license must frequently be made
before the commercial introduction of the property in which a licensed character
appears. Such license arrangements often require the payment of non-refundable
advances or guaranteed minimum royalties. Accordingly, the success of a
character licensing program is dependent upon our ability to accurately assess
the future success and popularity of the character properties which are under
evaluation, to bid for such properties on a selective basis in accordance with
such evaluation and to capitalize on the properties for which it has obtained
licenses in an expeditious manner. The success of the trademark and copyright
licensing program depends in part on whether the strength of the licensed
property will produce marketing value for our products. There can be no
assurance that products produced under the licenses acquired by us will obtain
significant market acceptance.
Intellectual Property
We believe that our roster of Marvel Characters represents one of our
most valuable assets. We currently conduct an active program of maintaining and
protecting our principal trademarks and our copyrights on the Marvel Characters
and publications in the United States and in approximately 55 foreign countries.
Our principal trademarks have been registered in the United States, certain of
the countries in Western Europe and South America, Japan, Israel and South
Africa. The issuance of a patent or copyright does not carry any certainty of
successful application or commercial success. There can be no assurances that
such protection will be adequate to deter misappropriation of the Marvel
Characters or that these proprietary rights will be upheld if we seek to enforce
these rights against an infringer or that we will have sufficient resources to
prosecute its rights. Moreover, although we believe that the Marvel Characters
do not infringe upon the proprietary rights of others, there can be no assurance
that other parties will not assert infringement claims against us in the future
or that such claims will not require us to undergo protracted and costly
litigation regardless of the merits of such claims.
Control by Certain Stockholders
Holders of over 60% in voting power of the Company's stock have entered
into a stockholders' agreement with the Company (the "Stockholders' Agreement").
Those holders include Isaac Perlmutter and certain of his affiliates, Avi Arad,
Mark Dickstein and certain of his affiliates, and certain former creditors of
Marvel. Messrs. Perlmutter, Arad and Dickstein are directors of the Company. The
Stockholders' Agreement
782128.1
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provides, among other things, that its parties shall nominate and vote in favor
of each other's designated members of the Board of Directors.
Dependence on Key Personnel
Our ability to maintain our competitive position depends to some degree
on our ability to retain and attract highly qualified personnel with appropriate
industry and professional expertise. Competition for such personnel is intense.
We are also dependent on certain members of our management, the loss of whose
services could adversely affect the Company's business and results of
operations.
Seasonality
Our toy business experiences a significant seasonal pattern in sales
and net income due to the heavy demand for toys during the Christmas season.
During 1995, 1996 and 1997, 69%, 64% and 67%, respectively, of Toy Biz, Inc.'s
domestic net sales were realized during the months of July through December.
This seasonal pattern requires significant use of working capital mainly to
build inventory during the year, prior to the Christmas selling season. We
expect that our business will continue to experience a significant seasonal
pattern for the foreseeable future.
We sell sports trading cards in baseball, basketball and football
throughout the year. Sales of our sports trading cards peak at or near the
beginning and mid-point of the sports season to which a specific product
relates. Sales of entertainment-related products tend to be less seasonal,
although sales of products related to a motion picture or animated series are
generally planned to begin at the time of first release or subsequent video
release in the case of a major motion picture. Sales of Panini's sports and
entertainment stickers in Europe are generally concentrated in the first and
fourth quarters, coinciding with the related buying habits of children during
the school year.
Our licensing revenues may vary from period to period depending on the
volume and extent of licensing agreements entered into during any particular
period of time, as well as the level and commercial success of the media
exposure of the Marvel Characters.
Government Regulations
We are subject to the provisions of, among other laws, the Federal
Hazardous Substances Act and the Federal Consumer Product Safety Act. Those laws
empower the Consumer Product Safety Commission (the "CPSC") to protect children
from hazardous toys and other articles. The CPSC has the authority to exclude
from the market articles which are found to be hazardous. Similar laws exist in
some states and cities in the United States, Canada and Europe. We maintain a
quality control program (including the inspection of goods at factories and the
retention of an independent quality-inspection firm) to ensure compliance with
applicable laws. Our business exposes us to potential product liability risks
which are inherent in the design, marketing and sale of children's products. We
currently maintain product liability insurance and an umbrella liability policy.
In the event of a successful claim against us, a lack of sufficient insurance
coverage could have a material adverse effect on Toy Biz's business and
operations. Moreover, though we maintain what we consider to be adequate
insurance, any successful claim could materially and adversely affect our
reputation and prospects.
Non-comparability of Historical Financial Information
As a result of the consummation of the Plan and the Merger on October
1, 1998, we are operating the formerly separate businesses of Toy Biz, Inc. and
Marvel on a combined basis under a new corporate structure and a new capital
structure. Accordingly, the financial condition and results of operations of the
Company from and after the consummation date of the Plan will not be comparable
to the financial condition or results of
782128.1
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operations reflected in the historical financial statements of Toy Biz, Inc. and
Marvel incorporated by reference into this Prospectus.
Lack of Market for the 8% Preferred Stock
There is no public market for the 8% Preferred Stock. It is possible
that an active trading market in the 8% Preferred Stock will not develop and
that purchases of the shares of 8% Preferred Stock offered by this Prospectus
will be an illiquid investment.
Concentration of Holdings of 8% Preferred Stock
A significant portion of the outstanding shares of 8% Preferred Stock
are held by a relatively small number of stockholders. If a large number of the
outstanding shares of 8% Preferred Stock were to be sold at once, there might be
a significant negative effect on the price an investor could otherwise expect to
receive for shares of 8% Preferred Stock. The exact nature of that effect is
impossible to predict.
Risk of Tax Liability on Non-Cash Income through Dividends Paid in Kind
Dividends on the 8% Preferred Stock may be paid, at our option, either
in cash or in additional shares of 8% Preferred Stock. Dividends paid in
additional shares of 8% Preferred Stock are said to be paid "in kind." We have
promised some of our lenders that we will pay dividends only in kind for as long
as we owe money to them. Dividends paid in kind may be taxable income to holders
of 8% Preferred Stock even though those dividends provide no cash to those
holders.
Redemption of 8% Preferred Stock
If a company buys shares of its stock from the holders of that stock,
it is said to "redeem" those shares. We have the option, on thirty days' notice,
to redeem all (but not less than all) of the shares of 8% Preferred Stock at any
time after October 1, 2001 for $10 per share, plus all accrued but unpaid
dividends.
Forced Conversion of 8% Preferred Stock
If the Common Stock has been trading at prices above a certain dollar
amount (determined by a formula set forth in Section 6.8(g) of our Certificate
of Incorporation), then we will have the right, at any time on or after October
1, 2001, to force a conversion of up to $50 million worth of 8% Preferred Stock
at a time into shares of Common Stock. Purchasers of the shares of 8% Preferred
Stock offered by this Prospectus therefore risk having their shares converted,
against their will, into shares of Common Stock.
Exchange of Equity for Debt
If a majority of the holders of 8% Preferred Stock approve, we may
exchange all (but not less than all) of the shares of 8% Preferred Stock for 8%
Subordinated Notes at any time after April 1, 2000. Those notes will mature on
October 1, 2011 and will have substantially the same economic terms, voting
rights and conversion features as the 8% Preferred Stock. The 8% payments
received by holders of 8% Preferred Stock are dividends; the corresponding
payments received by holders of 8% Subordinated Notes would be interest.
Corporate holders of 8% Preferred Stock therefore risk certain adverse tax
consequences (i.e., the "dividends received" deduction will not be available) in
the event of an exchange by the Company of the shares of 8% Preferred Stock for
8% Subordinated Notes.
782128.1
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Year 2000 Compliance
We expect to incur Year 2000 conversion costs of approximately $1.0
million throughout the balance of 1998 and 1999. We are utilizing both internal
and external sources to remediate, or replace, and test our software for Year
2000 modifications. We anticipate completing the Year 2000 project by June 30,
1999.
We are in the process of completing an assessment of Year 2000
compliance for the Marvel operations. Marvel had not allocated resources to the
Year 2000 project while it was in bankruptcy. We believe that we can
successfully complete Marvel's Year 2000 compliance by converting Marvel's
financial system into the Company's financial system by August, 1999. Other
systems used by Marvel will be made Year 2000 compliant in conformance with the
Company's systems. We estimate that the costs to conform Marvel will be under
$500,000.
The cost of the project and the date on which the Company believes it
will complete the Year 2000 modifications are based on management's estimates.
The Company presently believes that the Year 2000 issue will not pose
significant operational problems for its computer systems. The Company has begun
to communicate with its customers and major suppliers in order to determine
whether the Year 2000 issue will impact the ability of those companies' computer
systems to interface with the Company's systems or will otherwise impact the
ability of those companies to transact business with the Company. The Company is
not aware of any such material issues with its customers and suppliers at this
time. The Company currently has not developed a detailed contingency plan. The
Company assesses its Year 2000 status regularly and will begin to develop
comprehensive contingency plans if the Company believes it will not complete the
Year 2000 project in a timely manner. If the Company's Year 2000 project is not
completed on a timely basis, or if its major customers or suppliers fail to
address all the Year 2000 issues, the Company believes it could have a material
adverse impact on the Company's operations.
RATIO OF COMBINED FIXED CHARGES AND PREFERENCE DIVIDENDS TO EARNINGS
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------
Pro Pro
Forma Forma
1993 1994 1995 1996 1997 1997 9/30/97 9/30/98 9/30/98
---- ---- ---- ---- ---- ---- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of Combined Fixed
Charges and Preference
Dividends to Earnings 4.08 16.16 67.63 57.64 -- -- -- -- --
===================================================================================
</TABLE>
For the purposes of the ratio of combined fixed charges and preference
dividends to earnings, earnings were calculated by adding pretax income,
interest expense and the portion of rents representative of an interest factor.
Combined fixed charges consist of interest expense and the portion of rents
representative of an interest factor. For the periods in which earnings were
insufficient to cover combined fixed charges, the dollar amount of coverage
deficiency was $49,721, $200,356, $26,754, $6,815 and $74,066 for the twelve
months ended December 31, 1997, the pro-forma twelve months ended December 31,
1997, the nine months ended September 30, 1997 and 1998 and the pro-forma nine
months ended September 30, 1998, respectively.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of material federal income tax matters
relating to our operations that may be relevant to our prospective stockholders.
It is based upon current law and is not tax advice. This discussion
782128.1
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does not address all aspects of taxation that may be relevant to particular
stockholders in light of their personal investment or tax circumstances, or to
certain types of stockholders (including, without limitation, insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
foreign corporations and persons who are not citizens or residents of the United
States) subject to special treatment under the federal income tax laws, nor does
it give a detailed discussion of any state, local or foreign tax considerations.
Each of our prospective stockholders is encouraged to consult its own
tax advisor regarding the specific tax consequences to it of the purchase,
ownership and sale of shares of Common Stock and/or 8% Preferred Stock of the
Company, including the federal, state, local, foreign and other tax consequences
of such purchase, ownership and sale and of potential changes in applicable tax
laws.
The following discussion is a summary of certain U.S. federal income
tax consequences expected to result from the implementation of the Plan. This
discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), as in effect on the date hereof and on United States Treasury
Regulations in effect (or in certain cases, proposed) on the date hereof, as
well as judicial and administrative interpretations thereof available on or
before such date. All of the foregoing are subject to change, which change could
apply retroactively and could affect the tax consequences described below. There
can be no assurance that the Internal Revenue Service (the "IRS") will not take
a contrary view with respect to one or more of the issues discussed below, and
no ruling from the IRS has been or will be sought with respect to any issues
which may arise under the Plan. This summary is for general information only and
does not purport to address all of the U.S. federal income tax consequences that
may be applicable to the Company. This discussion does not address state, local
or foreign tax considerations that may be applicable.
The Merger is expected to be characterized as a transfer of the stock
of Marvel to the Company upon which, for Federal income tax purposes, the
Company is not expected to recognize any gain or loss.
The reclassification on October 1, 1998 of the two then-existing
classes of common stock of the Company into one class of common stock is
expected to be treated as a nontaxable recapitalization of the Company in which
neither the stockholders nor the Company will recognize gain or loss.
a. Utilization of Marvel's net operating loss carryovers and
built-in losses.
Section 382 of the Code imposes an annual limitation on the amount of
taxable income of a "loss corporation" that may be offset by net operating loss
carryovers ("NOLs") and certain built-in losses (referred to collectively as
pre-change loss) that are attributable to the period preceding an "ownership
change." The NOLs of Marvel and its subsidiaries may be subject to an existing
limitation. Marvel and its subsidiaries may also have had a built-in loss at the
time of the Merger. Upon consummation of the Plan, Marvel and its subsidiaries
underwent an ownership change within the meaning of section 382 of the Code. As
a result, the NOLs of Marvel and its subsidiaries will be subject to a section
382 limitation. In addition, the Company may also undergo an ownership change
within the meaning of section 382 of the Code. Thus, to the extent that the
Company is a loss corporation, such losses will be limited. No assurance can be
provided that the Marvel NOL carryovers and built-in losses (if any) will be
available to offset income.
b. Preferred Stock Dividends.
Because the Company is required to redeem the 8% Preferred Stock on
October 1, 2011 for an amount equal to its liquidation preference plus all
accrued and unpaid dividends, whether or not declared, to the redemption date,
for federal income tax purposes, holders of the 8% Preferred Stock will be
deemed to have received, each year, an amount equal to the dividends accruing on
the 8% Preferred Stock, regardless of whether they receive cash distributions.
If and to the extent the Company has current or accumulated earnings and
profits, this deemed distribution will be treated as ordinary dividend income.
If the deemed distribution exceeds the current or accumulated earnings and
profits of the Company, the excess will be a return of capital (requiring
782128.1
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the holders of the 8% Preferred Stock to reduce their tax basis in the 8%
Preferred Stock and then recognize gain). In addition, if at any time the
Company makes a distribution to its shareholders and, pursuant to the
antidilution provisions of the 8% Preferred Stock, the conversion rate of the
8% Preferred Stock is increased, such increase may be deemed to be the payment
of a taxable dividend to the holders of the 8% Preferred Stock.
Because the 8% Preferred Stock is subject to mandatory redemption and,
subject to certain limitations, is exchangeable for 8% Convertible Subordinated
Debentures at the Company's option, there is a risk that the 8% Preferred Stock
could be treated as indebtedness for federal income tax purposes. The Company
intends to take the position (which counsel believes is reasonable) that the 8%
Preferred Stock constitutes stock for federal income tax purposes and,
therefore, the material tax consequences to holders of 8% Preferred Stock should
be as described herein. If, however, it is determined that the 8% Preferred
Stock is debt, (a) corporate holders would not be entitled to the benefit of the
dividends received deduction discussed below and (b) the yield to the holders of
the 8% Preferred Stock would be taxable as original issue discount (i.e.,
interest income), whether or not actual cash payments are received and whether
or not the Company has current or accumulated earnings and profits. The
remainder of the discussion assumes that the 8% Preferred Stock will be
classified as stock for federal income tax purposes.
Taxable dividends on the 8% Preferred Stock should qualify for the
dividends received deduction in the hands of qualifying corporate holders,
subject to the minimum holding period requirements and other applicable
requirements (including the disallowance of the dividends received deduction to
the extent a corporate shareholder incurs interest expense on debt directly
attributable to the 8% Preferred Stock). A corporate shareholder's liability for
alternative minimum tax may be affected by the portion of the dividends received
that are deducted in computing taxable income.
Section 1059 of the Code reduces the benefit of the dividends received
deduction with respect to "extraordinary dividends" by requiring a corporate
shareholder to reduce its basis in the 8% Preferred Stock (but not below zero)
by the nontaxed portion (as a result of the dividends received deduction) of any
"extraordinary dividend" if the holder has not held the 8% Preferred Stock for
more than two years before the earliest of the dates on which the corporation
declares, announces, or agrees to, the amount or payment of such dividend. In
addition, an amount treated as a dividend in the case of a redemption that is
either non-pro rata as to all shareholders, in partial liquidation, or which
would not have been treated as a dividend if any options had not been taken into
account under Section 318(a)(4) of the Code or if Section 304(a) of the Code had
not applied, would also constitute an extraordinary dividend even if the 8%
Preferred Stock were held for more than two years before the date of
announcement or agreement with respect to the redemption. If the nontaxed
portion of all extraordinary dividends exceeds the corporate holder's basis, the
excess is treated as taxable gain. The dividends on the 8% Preferred Stock may
constitute extraordinary dividends for this purpose. An "extraordinary dividend"
on the 8% Preferred Stock would generally be a dividend (including a deemed
dividend) that (a) equals or exceeds 5 percent of the holder's basis in such
stock, treating all dividends having ex-dividend dates within an eighty-five-day
period as one dividend or (b) exceeds 20 percent of the holder's basis in such
stock, treating all dividends having ex-dividend dates within a 365-day period
as one dividend. However, if the market value can be established by the holder
to the satisfaction of the Secretary of the Treasury, it may be substituted for
stock basis.
If stock (a) pays fixed dividends at least annually; (b) has no
dividends in arrears at the time it is acquired by a corporate holder; and (c)
does not have an actual rate of return exceeding 15 percent, then a fixed
dividend paid with respect to such stock will be a "qualified preferred
dividend" that may qualify for special relief under Section 1059 of the Code.
Under this relief provision, (a) a qualified preferred dividend is not treated
as "extraordinary" if the taxpayer holds such stock for more than five years or
(b) if the taxpayer disposes of such stock before it has been held for more than
five years, then the amount of the basis reduction under Section 1059 of the
Code with respect to such dividends will not be greater than the excess (if any)
of (i) the qualified preferred dividends paid with respect to such stock during
the period the taxpayer held the stock over (ii) the qualified preferred
dividends that would have been paid during such period on the basis of the
stated rate
782128.1
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of return. For purposes of determining the actual rate of return or
the stated rate of return, the average amount of actual dividends received (or
deemed received under Section 305 of the Code), or the stated dividends, as the
case may be, are compared with the lesser of the holder's adjusted tax basis in
the stock or the liquidation preference (excluding dividend arrearages) of the
stock.
c. Conversion of 8% Preferred Stock to Common Stock.
If the 8% Preferred Stock is converted to common stock of the Company,
neither the holder of the 8% Preferred Stock nor the Company should recognize
gain or loss for federal income tax purposes. Income will generally be
recognized, however, to the extent Common Stock is received in payment of
dividends in arrears. The tax basis for the 8% Preferred Stock will be
transferred to the Common Stock in the hands of a converting shareholder.
d. Redemption of 8% Preferred Stock for Cash.
A redemption of the 8% Preferred Stock will be a taxable event that
will be treated as a sale or exchange (on which capital gain or loss may be
realized) if the redemption (a) results in a "complete termination" of the
stockholder's stock interest in the Company under Section 302(b)(3) of the Code,
(b) is "substantially disproportionate" with respect to the shareholder under
Section 302(b)(2) of the Code, or (c) is "not essentially equivalent to a
dividend" with respect to the stockholder under Section 302(b)(1) of the Code.
The gain or loss recognized will be an amount equal to the difference between
the stockholder's adjusted tax basis in the 8% Preferred Stock and the amount of
cash received (less any cash received in payment of accumulated and declared but
unpaid dividends, which will be taxable as ordinary income if not previously
included in a holder's income). In determining whether any of these tests has
been met, shares considered to be owned by the stockholder by reason of certain
constructive ownership rules set forth in Section 318 of the Code, as well as
shares actually owned, must be taken into account. A holder's gain, if any, will
generally be considered a capital gain and will be long-term if the holder has
held the 8% Preferred Stock for more than one year. Capital gains realized by
corporations are generally taxed at the same rates applicable to ordinary
income, although non-corporate taxpayers who realize long-term capital gains may
be subject to a reduced tax rate of 20% on such gains, rather than the "regular"
maximum tax rate of 39.6%. Tax rates may increase prior to the time when holders
may realize gains.
Because satisfaction of either of these tests will depend on the
particular facts and circumstances of each holder of 8% Preferred Stock as they
exist at the time of the redemption, each holder is urged to consult its own tax
adviser as to whether it would be entitled to sale or exchange treatment in
connection with such a redemption.
If a redemption of the 8% Preferred Stock does not meet any of the
tests under Section 302 of the Code, it will be treated as a distribution that
is taxable as a dividend under Section 301 of the Code to the extent of the
Company's current or accumulated earnings and profits. The dividend amount
should be the amount of cash received by the stockholder. If a corporate
stockholder has dividend treatment on a redemption of the 8% Preferred Stock,
the dividend will be an extraordinary dividend under Section 1059 of the Code
irrespective of such holder's holding period.
e. Conversion of 8% Preferred Stock to 8% Convertible Subordinated
Debentures.
The Company may, under certain circumstances, exchange all of the 8%
Preferred Stock for 8% Convertible Subordinated Debentures of the Company. If
this occurs, the treatment to the holders of the 8% Preferred Stock will
generally be as described in subparagraph (d), above. If gain or loss is
recognized for federal income tax purposes, an amount equal to the difference
between the issue price of the 8% Convertible Subordinated Debentures (less any
amount attributable to accumulated and declared but unpaid dividends, which will
be taxable as ordinary income if not previously included in a holder's income)
and the holders' adjusted tax basis in the 8% Preferred Stock will be taken into
account. If issuance of the 8% Convertible Subordinated
782128.1
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Debentures is treated as a dividend, the amount of the distribution should be
the issue price of the 8% Convertible Subordinated Debentures. If the 8%
Convertible Subordinated Debentures have original issue discount upon their
issuance, a holder will be required to include in income an amount equal to the
sum of the "daily portions" of such original issue discount, even if the holder
does not receive cash payments of interest.
f. Backup Withholding.
Under Section 3406 of the Code and under applicable Treasury
regulations, a noncorporate holder of 8% Preferred Stock, 8% Convertible
Subordinated Debentures, or Common Stock may be subject to backup withholding at
the rate of 31 percent with respect to dividends or interest paid on, original
issue discount accrued with respect to, or the proceeds of a sale, exchange, or
redemption of, 8% Preferred Stock, 8% Convertible Subordinated Debentures, or
Common Stock, as the case may be. The payor will be required to deduct and
withhold the prescribed amounts if (i) the payee fails to furnish a taxpayer
identification number (TIN) to the payor, (ii) the Internal Revenue Service
notifies the payor that the TIN furnished by the payee is incorrect, (iii) there
has been a "notified payee under-reporting" described in Section 3406(c) of the
Code, or (iv) there has been a failure of the payee to certify under penalty of
perjury that the payee is not subject to withholding under Section 3406(a)(1)(C)
of the Code. If any one of the events listed above occurs, the Company will be
required to withhold an amount equal to 31 percent from any dividend payment
made with respect to 8% Preferred Stock or Common Stock, any payment of interest
or principal pursuant to the terms of the 8% Convertible Subordinated
Debentures, or any payment of proceeds of a redemption of such instruments, to a
noncorporate holder. Amounts paid as backup withholding do not constitute an
additional tax and will be credited against the holder's federal income tax
liabilities.
USE OF PROCEEDS
Any shares offered under this Prospectus will be offered by the Selling
Stockholders. See "Plan of Distribution." We will not receive any proceeds from
the sale of shares offered under this Prospectus.
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<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
amount of Common Stock and 8% Preferred Stock held by each Selling Stockholder
as of the date of this Prospectus. The table indicates the nature of any
position, office, or other material relationship which the Selling Stockholder
has had within the past three years with the Company or any of its predecessors
or affiliates. Certain of the Selling Stockholders are parties to the
Stockholders' Agreement, which is described in "RISK FACTORS--Control by Certain
Stockholders." Those parties are identified in the table. The Selling
Stockholders may offer all or part of the Common Stock or 8% Preferred Stock
covered by this Prospectus. No estimate, therefore, can be given as to the
amount of Common Stock or 8% Preferred Stock that will be held by the Selling
Stockholders upon completion of the offering. The Common Stock and 8% Preferred
Stock offered by this Prospectus may be offered from time to time by the Selling
Stockholders named below.
<TABLE>
<CAPTION>
A B C D E F
Percentage
Number of Number of Number of Number of Represented
Shares of Shares of Existing Common by Columns
8% Preferred Common Stock Shares of Shares C and D
Stock Owned Underlying the Common Covered by Combined of
Name, Address, and and Covered by Shares Listed Stock(2) this Shares
Relationship to Company this Prospectus(1) in Column B Owned Prospectus(3) Outstanding(4)
----------------------- ------------------ -------------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Dickstein & Co., L.P.(5) 2,419,609 2,513,973 1,458,029 3,972,002 7.8%
c/o Dickstein Partners Inc.
660 Madison Avenue
16th Floor
New York, NY 10021
** Signatory of Stockholders'
Agreement **
Dickstein Focus Fund L.P.(5) 232,577 241,647 195,620 437,267 0.9%
c/o Dickstein Partners Inc.
660 Madison Avenue
16th Floor
New York, NY 10021
** Signatory of Stockholders'
Agreement **
Dickstein International Limited(5) 805,876 837,305 613,967 1,451,272 2.8%
c/o Dickstein Partners Inc.
660 Madison Avenue
16th Floor
New York, NY 10021
** Signatory of Stockholders'
Agreement **
</TABLE>
782128.1
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<PAGE>
<TABLE>
<CAPTION>
A B C D E F
Percentage
Number of Number of Number of Number of Represented
Shares of Shares of Existing Common by Columns
8% Preferred Common Stock Shares of Shares C and D
Stock Owned Underlying the Common Covered by Combined of
Name, Address, and and Covered by Shares Listed Stock(2) this Shares
Relationship to Company this Prospectus(1) in Column B Owned Prospectus(3) Outstanding(4)
----------------------- ------------------ -------------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Elyssa Dickstein, Jeffrey 50,000 51,950 0 51,950 0.1%
Schwarz and Alan Cooper as
Trustees U/T/A/D 12/27/88,
Mark Dickstein, Grantor(5)
c/o Dickstein Partners Inc.
660 Madison Avenue
16th Floor
New York, NY 10021
** Signatory of Stockholders'
Agreement **
Mark Dickstein and Elyssa 10,000 10,390 0 10,390 *
Dickstein, as Trustees of the
Mark and Elyssa Dickstein
Foundation(5)
c/o Dickstein Partners Inc.
660 Madison Avenue
16th Floor
New York, NY 10021
** Signatory of Stockholders'
Agreement **
Elyssa Dickstein(5) 140,000 145,460 0 145,460 0.3%
c/o Dickstein Partners Inc.
660 Madison Avenue
16th Floor
New York, NY 10021
** Signatory of Stockholders'
Agreement **
Mark Dickstein (5) 0 0 47,500 47,500 *
c/o Dickstein Partners Inc.
660 Madison Avenue
16th Floor
New York, NY 10021
** Director and Signatory of
Stockholders' Agreement**
Object Trading Corp.(6) 3,492,852 3,629,073 33,500 3,662,573 7.2%
685 Third Avenue
New York, NY 10017
** Signatory of Stockholders'
Agreement **
</TABLE>
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<TABLE>
<CAPTION>
A B C D E F
Percentage
Number of Number of Number of Number of Represented
Shares of Shares of Existing Common by Columns
8% Preferred Common Stock Shares of Shares C and D
Stock Owned Underlying the Common Covered by Combined of
Name, Address, and and Covered by Shares Listed Stock(2) this Shares
Relationship to Company this Prospectus(1) in Column B Owned Prospectus(3) Outstanding(4)
----------------------- ------------------ -------------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Zib Inc.(6) 0 0 9,256,000 9,256,000 18.1%
1105 North Market Street
Room 1300
Wilmington, DE 19801
** Signatory of Stockholders'
Agreement **
The Laura & Isaac Perlmutter 0 0 250,000 250,000 0.5%
Foundation Inc.(6)
P.O. Box 1028
Lake Worth, FL 33460
** Signatory of Stockholders'
Agreement **
Avi Arad 0 0 4,150,000 4,150,000 8.1%
1698 Post Road East
Westport, CT 06880
** Director and Signatory of
Stockholders' Agreement **
The President and Fellows of 551,300 572,800 484,997 1,057,797 2.1%
Harvard College (7)
c/o Whippoorwill Associates,
Incorporated
11 Martine Avenue
White Plains, NY 10606
Attn: Shelley F. Greenhaus
The Rockefeller Foundation (7) 208,488 216,619 121,539 338,158 0.7%
c/o Whippoorwill Associates,
Incorporated
11 Martine Avenue
White Plains, NY 10606
Attn: Shelley F. Greenhaus
Vega Partners II, L.P. (7) 234,592 243,741 137,458 381,199 0.7%
c/o Whippoorwill Associates,
Incorporated
11 Martine Avenue
White Plains, NY 10606
Attn: Shelley F. Greenhaus
Vega Partners III, L.P. (7) 543,273 564,460 317,594 882,054 1.7%
c/o Whippoorwill Associates,
Incorporated
11 Martine Avenue
White Plains, NY 10606
Attn: Shelley F. Greenhaus
</TABLE>
782128.1
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<PAGE>
<TABLE>
<CAPTION>
A B C D E F
Percentage
Number of Number of Number of Number of Represented
Shares of Shares of Existing Common by Columns
8% Preferred Common Stock Shares of Shares C and D
Stock Owned Underlying the Common Covered by Combined of
Name, Address, and and Covered by Shares Listed Stock(2) this Shares
Relationship to Company this Prospectus(1) in Column B Owned Prospectus(3) Outstanding(4)
----------------------- ------------------ -------------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Vega Partners IV, L.P. (7) 342,656 356,019 200,814 556,833 1.1%
c/o Whippoorwill Associates,
Incorporated
11 Martine Avenue
White Plains, NY 10606
Attn: Shelley F. Greenhaus
Vega Offshore Fund Trust (7) 138,552 143,955 86,109 230,064 0.5%
c/o Whippoorwill Associates,
Incorporated
11 Martine Avenue
White Plains, NY 10606
Attn: Shelley F. Greenhaus
Whippoorwill Associates, Inc. 2,703 2,808 1,896 4,704 *
Profit Sharing Plan (7)
c/o Whippoorwill Associates,
Incorporated
11 Martine Avenue
White Plains, NY 10606
Attn: Shelley F. Greenhaus
Foothill Capital Corporation 1,611 1,673 0 1,673 *
11111 Santa Monica Blvd., Suite
1500
Los Angeles, CA 90025
Attn: Karen Sandler
Foothill Partners II, L.P. 16,286 16,921 0 16,921 *
11111 Santa Monica Blvd., Suite
1500
Los Angeles, CA 90025
Attn: Karen Sandler
Foothill Partners III, L.P. 39,835 41,388 0 41,388 *
11111 Santa Monica Blvd., Suite
1500
Los Angeles, CA 90025
Attn: Karen Sandler
Elliott Associates, L.P. 142,200 147,745 0 147,745 0.3%
712 Fifth Avenue, 35th Floor
New York, NY 10019
Attn: Michael Stephen
</TABLE>
782128.1
20
<PAGE>
<TABLE>
<CAPTION>
A B C D E F
Percentage
Number of Number of Number of Number of Represented
Shares of Shares of Existing Common by Columns
8% Preferred Common Stock Shares of Shares C and D
Stock Owned Underlying the Common Covered by Combined of
Name, Address, and and Covered by Shares Listed Stock(2) this Shares
Relationship to Company this Prospectus(1) in Column B Owned Prospectus(3) Outstanding(4)
----------------------- ------------------ -------------- --------- ------------- --------------
<S> <C> <C> <C> <C>
Morgan Stanley & Co. 2,166,908 2,251,417 1,769,375 4,020,792 7.9%
Incorporated
c/o Morgan Stanley
1585 Broadway
New York, NY 10036
Attn: Edgar Sabounghi
** Signatory of Stockholders'
Agreement **
The Chase Manhattan Bank 777,201 807,511 1,288,777 2,096,288 4.1%
380 Madison Avenue, 9th Floor
New York, NY 10071
Attn: Susan Atkins
** Signatory of Stockholders'
Agreement **
TOTAL 12,316,519 12,796,855 20,413,175 33,210,030 65.1%
</TABLE>
* = Less than 0.1%
(1) In the case of each Selling Stockholder, all the shares of 8% Preferred
Stock listed in Column B may be offered pursuant to this Prospectus. In
addition, shares of 8% Preferred Stock paid as dividends in kind on the
shares of 8% Preferred Stock listed in Column B may be offered pursuant
to this Prospectus. The total number of shares of 8% Preferred Stock
covered by this Prospectus is 15,620,234, which is equal to 12,316,519
(the total of the numbers in Column B) plus 3,303,805 (the number of
shares of 8% Preferred Stock that would be necessary to pay dividends
in kind on 12,316,519 shares of 8% Preferred Stock for three years).
See Note 3 for the total number of shares of Common Stock offered
pursuant to this Prospectus.
(2) Does not include shares of Common Stock listed in Column C.
(3) The total number of shares of Common Stock offered pursuant to this
Prospectus is 36,642,683, which is equal to 33,210,030 (the total of
the numbers in Column E) plus 3,432,653 (the number of shares of Common
Stock that underlie the shares of 8% Preferred Stock that would be
necessary to pay dividends in kind on 12,316,519 shares of 8% Preferred
Stock for three years; see Note 1). See Note 1 for the total number of
shares of 8% Preferred Stock offered pursuant to this Prospectus.
(4) Refers to the 51,011,227 shares of Common Stock that would be
outstanding if all outstanding shares of 8% Preferred Stock were
converted into shares of Common Stock. Does not include shares that
would be outstanding if warrants or rights were exercised.
(5) (a) Dickstein & Co., L.P. is a Delaware limited partnership.
(b) Dickstein Focus Fund L.P. is a Delaware limited partnership.
782128.1
21
<PAGE>
(c) Dickstein International Limited is a limited-liability, open-end
investment fund incorporated as an international business company
in the Territory of the British Virgin Islands.
(d) Elyssa Dickstein, Jeffrey Schwarz and Alan Cooper as Trustees
U/T/A/D 12/27/88, Mark Dickstein, Grantor is a New York Trust
established by Mark Dickstein, as Grantor, for the benefit of his
children. Elyssa Dickstein, Jeffrey Schwarz and Alan Cooper are the
trustees of the trust.
Mark Dickstein has no beneficial interest in the trust.
(e) The Mark and Elyssa Dickstein Foundation is a New York Trust
organized to be exempt from federal income taxes under Section
501(c)(3) of the Internal Revenue Code.
(f) Mark Dickstein, a director and principal stockholder of the
Company, is the president, sole stockholder and sole director of
Dickstein Partners Inc., a Delaware corporation that is the advisor
to Dickstein International Limited and is the general partner of
Dickstein Partners, L.P., a Delaware limited partnership which in
turn is the general partner of both Dickstein & Co., L.P. and
Dickstein Focus Fund L.P. Mr. Dickstein is a trustee and the
grantor of the Mark and Elyssa Dickstein Foundation and has the
sole and exclusive authority to invest the principal of that
foundation.
(g) Elyssa Dickstein is the wife of Mark Dickstein and is a trustee of
the Mark and Elyssa Dickstein Foundation and the trust described in
(d), above.
(6) (a) Object Trading Corp., a Delaware corporation, is wholly owned
by Isaac Perlmutter, a director and principal stockholder of the
Company.
(b) Zib Inc., a Delaware corporation, is wholly owned by the Isaac
Perlmutter T.A., a Florida trust established by Mr. Perlmutter (the
"Trust"). Mr. Perlmutter is a trustee and the sole beneficiary of
the Trust, and may revoke the Trust at any time.
(c) Mr. Perlmutter is a director and the president of The Laura & Isaac
Perlmutter Foundation Inc., a Florida not-for-profit corporation.
(7) Whippoorwill Associates, Incorporated, a Delaware corporation, as agent
of and/or general partner for these accounts, is a signatory of the
Stockholders' Agreement.
PLAN OF DISTRIBUTION
The shares of Common Stock and 8% Preferred Stock covered by this
Prospectus are now owned by the Selling Stockholders. As used in the rest of
this section of the Prospectus, "Selling Stockholders" includes the named
Selling Stockholders and any of their pledgees, donees, transferees or other
successors in interest selling shares received from a named Selling Stockholder
after the date of this Prospectus. The shares of Common Stock and 8% Preferred
Stock covered by this Prospectus are referred to in this section as the
"Shares." The Selling Stockholders may offer and sell, from time to time, some
or all of the Shares. We have registered the Shares for sale by the Selling
Stockholders so that the Shares will be freely tradeable by them. Registration
of the Shares does not mean, however, that the Shares will necessarily be
offered or sold. We will not receive any proceeds from any offering or sale by
the Selling Stockholders of the Shares. We will pay all costs, expenses and fees
in connection with the registration of the Shares. The Selling Stockholders will
pay all brokerage commissions and similar selling expenses, if any, attributable
to the sale of the Shares.
The Selling Stockholders may sell the Shares from time to time, at
market prices prevailing at the time of sale or at negotiated prices, by methods
such as the following: (a) on markets where our Common Stock or 8% Preferred
Stock is traded or in an exchange distribution in accordance with the rules of
the exchange; (b) in privately negotiated transactions; (c) through
broker-dealers, which may act as agents or principals; (d) in a block trade in
which a broker-dealer will attempt to sell a block of Shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (e) through one or more underwriters on a firm commitment or
best-efforts basis; (f) directly to one or more purchasers; (g) through agents;
(h) through put or call option transactions, forward contracts or equity swaps
relating to the Shares; (i) through short sales of the Shares by the Selling
Stockholders or counterparties to those transactions; or (j) in any combination
of the above.
782128.1
22
<PAGE>
In effecting sales, brokers or dealers engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. The
broker-dealer transactions may include (a) purchases of the Shares by a
broker-dealer as principal and resales of the Shares by the broker-dealer for
its account pursuant to this Prospectus; (b) ordinary brokerage transactions; or
(c) transactions in which the broker-dealer solicits purchasers.
If a material arrangement with any underwriter, broker, dealer or other
agent is entered into for the sale of any Shares through a secondary
distribution, or a purchase by a broker or dealer, a prospectus supplement will
be filed, if necessary, pursuant to Rule 424(b) under the Securities Act
disclosing the material terms and conditions of such arrangement. If an
underwriter or underwriters are used in the sale of Shares, the Company and the
Selling Stockholders will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached.
The underwriter or underwriters with respect to an underwritten offering of
Shares and the other material terms and conditions of the underwriting will be
set forth in a prospectus supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of such prospectus supplement. In connection with the
sale of Shares, underwriters will receive compensation in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of Shares for whom they may act as agent. Underwriters may sell to or
through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agent.
The Shares may be sold either at a fixed price or prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices.
The Selling Stockholders and any underwriters, broker-dealers or agents
participating 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 the Shares by the Selling Stockholders and any commissions received by
any such broker-dealers or agents may be deemed to be underwriting commissions
under the Securities Act. We have agreed to indemnify some of the Selling
Stockholders -- those who signed a Registration Rights Agreement with us, dated
as of October 1, 1998 --, and each person or entity which participates as or may
be deemed to be an underwriter in the offering or sale of those Selling
Stockholders' shares, against certain liabilities (and to contribute to payments
in respect thereof), including liabilities arising under the Securities Act. The
Selling Stockholders may agree to indemnify any agent or broker-dealer that
participates in transactions involving sales of the Shares against certain
liabilities, including liabilities arising under the Securities Act.
EXPERTS
The consolidated financial statements of Toy Biz, Inc. appearing in Toy
Biz, Inc.'s (now known as Marvel Enterprises, Inc.) Annual Report (Form 10-K)
for the year ended December 31, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Marvel Entertainment Group,
Inc. appearing in Marvel Entertainment Group, Inc.'s Annual Report (Form 10-K/A)
for the year ended December 31, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be
passed upon for us by Battle Fowler LLP, New York, New York.
782128.1
23
<PAGE>
======================================= ==================================
No dealer, salesperson or other
individual has been authorized to give 36,642,683 Shares of COMMON STOCK
any information or make any
representations not contained in this 15,620,234 Shares of 8% CUMULATIVE
Prospectus in connection with the CONVERTIBLE EXCHANGEABLE
offering covered by this Prospectus. If PREFERRED STOCK
given or made, such information or
representation must not be relied upon
as having been authorized by us or the
Selling Stockholders. This Prospectus
does not constitute an offer to sell, or MARVEL ENTERPRISES, INC.
a solicitation of an offer to buy,
Common Stock and or the 8% Preferred
Stock in any jurisdiction where, or to
any person to whom, it is unlawful to
make such offer or solicitation. Neither
the delivery of this Prospectus nor any
sale made hereunder shall, under any
circumstances, create an implication
that there has not been any change in
the facts set forth in this Prospectus
or in our affairs of since the date
hereof.
-------------------------- -----------------------------
TABLE OF CONTENTS PROSPECTUS
-------------------------- -----------------------------
Prospectus
Page
Where You Can Find More Information...........2
Forward-Looking Statements....................3
Prospectus Summary............................4
Risk Factors..................................6
Ratio of Combined Fixed Charges and November __, 1998
Preference Dividends to Earnings..........12
Federal Income Tax Considerations............12
Use of Proceeds..............................16
Selling Stockholders.........................17
Plan of Distribution.........................22
Experts......................................23
Legal Matters................................23
=============================================== ==========================
782128.1
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Set forth below is an estimate of the approximate amount of the fees
and expenses (other than underwriting discounts and commissions) incurred in
connection with the issuance and distribution of the shares of Common Stock and
8% Preferred Stock to be registered under this Registration Statement. The
Selling Stockholders will bear no portion of the fees and expenses estimated
below. Those fees and expenses will be borne entirely by the Company.
Securities and Exchange Commission, registration fee.................$ 87,272
Federal taxes................................................................0
State taxes and fees.........................................................0
Transfer agent's fees........................................................0
Engineering fees.............................................................0
Printing and engraving costs............................................25,000
Mailing expenses.........................................................1,000
Accounting fees and expenses............................................35,000
Legal fees and expenses................................................100,000
Miscellaneous expenses..................................................20,000
---------
Total..................................................$ 268,272
=========
Item 15. Indemnification of Directors and Officers
In accordance with Section 102(b)(7) of the Delaware General
Corporation Law, Article X of our Certificate of Incorporation eliminates, with
certain exceptions, our directors' personal liability to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Article 6 of our By-Laws provides, to the extent permitted by the
Delaware General Corporation Law, for our indemnification of present or former
directors, officers or incorporators of the Company against various costs they
may incur in connection with certain lawsuits and similar proceedings in which
they become involved by reason of their relationship to the Company. Only those
who have acted in good faith are entitled to our indemnification. In certain
cases, our indemnification payments may be made, conditionally, before the
lawsuit or similar proceeding is complete.
Item 16. Exhibits
2.1 -- Fourth Amended Plan of Reorganization filed with the United States
District Court for the District of Delaware on July 31, 1998 by
certain creditors of Marvel Entertainment Group, Inc. and the
Registrant, with attached exhibits (incorporated by reference to
Exhibit 2.1 to the Registrant's Current Report on Form 8-K, dated
as of October 13, 1998, and filed on October 14, 1998).
782128.1
II-1
<PAGE>
4.1 -- The Company's Restated Certificate of Incorporation (incorporated
by reference to Exhibit 4.1 to the Registrant's Current Report on
Form 8-K, dated as of October 13, 1998, and filed on October 14,
1998).
5.1 -- Opinion of Battle Fowler LLP (to be filed by amendment).
12.1 -- Statements re: Computation of Ratios.
23.1 -- Consents of Experts and Counsel.
23.2 -- Consents of Experts and Counsel.
24.1 -- Power of Attorney (included on signature page hereto).
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
a prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered
782128.1
II-2
<PAGE>
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referred to in Item 15 of
this Registration Statement, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer, or controlling person of the Registrant in the successful defense of
any action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act, and will be governed by the final adjudication of such
issue.
782128.1
II-3
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, New York, on the 25th day of November, 1998.
MARVEL ENTERPRISES, INC.
a Delaware corporation (Registrant)
By: /s/ MORTON E. HANDEL
-------------------------------------
Morton E. Handel
Chairman of the Board
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints William H. Hardie, III and David Fremed and each or either of them, his
true and lawful attorney-in-fact with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement (or any registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933) and to cause the same to be filed, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby granting to said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and
thing whatsoever requisite or desirable to be done in and about the premises, as
fully to all intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all acts and things that said
attorneys-in-fact and agents, or either of them, or their substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ MORTON E. HANDEL
- -------------------------------- Chairman of the Board and Director November 25, 1998
Morton E. Handel
/s/ ERIC ELLENBOGEN
- -------------------------------- Chief Executive Officer (principal November 25, 1998
Eric Ellenbogen executive officer)
/s/ DAVID J. FREMED
- -------------------------------- Chief Financial Officer and November 25, 1998
David J. Fremed Treasurer (prinicipal financial and
accounting officer)
</TABLE>
<PAGE>
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ AVI ARAD
- -------------------------------- Director November 25, 1998
Avi Arad
- -------------------------------- Director
Mark Dickstein
/s/ ERIC ELLENBOGEN
- -------------------------------- Director November 25, 1998
Eric Ellenbogen
/s/ SHELLEY F. GREENHAUS
- -------------------------------- Director November 25, 1998
Shelley F. Greenhaus
/s/ JAMES F. HALPIN
- -------------------------------- Director November 25, 1998
James F. Halpin
/s/ MICHAEL M. LYNTON
- -------------------------------- Director November 25, 1998
Michael M. Lynton
/s/ LAWRENCE MITTMAN
- -------------------------------- Director November 25, 1998
Lawrence Mittman
/s/ ISAAC PERLMUTTER
- -------------------------------- Director November 25, 1998
Isaac Perlmutter
/s/ ROD PERTH
- -------------------------------- Director November 23, 1998
Rod Perth
/s/ MICHAEL J. PETRICK
- -------------------------------- Director November 25, 1998
Michael J. Petrick
Exhibit 12.1
Statement re: Computation of Ratios
MARVEL ENTERPRISES, INC.
RATIO OF COMBINED FIXED CHARGES AND PREFERENCE DIVIDENDS TO EARNINGS
1993 - 1998
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------
Pro Pro
Forma Forma
1993 1994 1995 1996 1997 1997 9/30/97 9/30/98 9/30/98
---- ---- ---- ---- ---- ---- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Charges and Preference
Dividends:
Interest on Rent Expense 74 135 174 263 407 2,184 314 185 1,224
Interest Expense - Gross 1,231 1,862 498 123 821 46,121 559 783 38,212
Preferred Stock Dividends -- -- 42 105 71 13,591 71 -- 10,140
--------------------------------------------------------------------------------------
Total Fixed Charges and
Preference Dividends 1,305 1,997 714 491 1,299 61,896 944 968 49,576
======================================================================================
Earnings:
Pretax Income 4,017 30,275 47,574 27,811 (49,650)(186,765) (26,683) (6,815)(63,926)
Fixed Charges and Preference
Dividends 1,305 1,997 714 491 1,299 61,896 944 968 49,576
--------------------------------------------------------------------------------------
Total Earnings 5,322 32,272 48,288 28,302 (48,351)(124,869) (25,739) (5,847) (14,350)
======================================================================================
Ratio of Combined Fixed
Charges and Preference
Dividends to Earnings 4.08 16.16 67.63 57.64 -- -- -- -- --
======================================================================================
</TABLE>
For the purposes of the ratio of combined fixed charges and preference dividends
to earnings, earnings were calculated by adding pretax income, interest expense
and the portion of rents representative of an interest factor. Combined fixed
charges consist of interest expense and the portion of rents representative of
an interest factor. For the periods in which earnings were insufficient to cover
combined fixed charges, the dollar amount of coverage deficiency was $49,721,
$200,356, $26,754, $6,815 and $74,066 for the twelve months ended December 31,
1997, the pro-forma twelve months ended December 31, 1997, the nine months ended
September 30, 1997 and 1998 and the pro-forma nine months ended September 30,
1998, respectively.
781024.1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Marvel Enterprises,
Inc. (formerly Toy Biz, Inc.) for the registration of 36,642,683 shares of its
common stock and 15,620,234 shares of its 8% cumulative convertible exchangeable
preferred stock and to the incorporation by reference therein of our report
dated March 9, 1998, except as to Note 7 as to which the date is March 25, 1998,
with respect to the consolidated financial statements and schedule of Toy Biz,
Inc. included in its Annual Report (Form 10-K) for the year ended December 31,
1997, filed with the Securities and Exchange Commission.
Ernest & Young LLP
New York, New York
November 25, 1998
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Marvel Enterprises,
Inc. (formerly Toy Biz, Inc.) for the registration of 36,642,683 shares of its
common stock and 15,620,234 shares of its 8% cumulative convertible exchangeable
preferred stock and to the incorporation by reference therein of our report
dated April 14, 1998, with respect to the consolidated financial statements and
schedule of Marvel Entertainment Group, Inc. included in its Annual Report (Form
10-K/A) for the year ended December 31, 1997, filed with the Securities and
Exchange Commission.
Ernset & Young LLP
New York, New York
November 25, 1998
<PAGE>
