SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event) February 23, 2000
Marvel Enterprises, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 1-13638 13-3711775
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification
incorporation) No.)
387 Park Avenue South, New York, New York 10016
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(Address of Principal Executive Offices) (Zip Code)
(212) 696-0808
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, If Changed Since Last Report.)
927517.1
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ITEM 5. Other Events.
On February 23, 2000, the Registrant issued a press release, a copy of which is
attached hereto as Exhibit 99.1, announcing its financial results for the fourth
quarter and year-ended December 31, 1999.
ITEM 7. Financial Statements and Exhibits.
(c) Financial Statements and Exhibits.
99.1 Press release of the Registrant, dated February 23, 2000.
927517.1
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MARVEL ENTERPRISES, INC.
(Registrant)
Date: March 1, 2000
By: /s/ Allen S. Lipson
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Name: Allen S. Lipson
Title: Executive Vice President,
Business and Legal Affairs
927517.1
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News MARVEL ENTERPRISES, INC.
MARVEL ENTERPRISES REPORTS Q4 AND 1999 RESULTS
New York, New York - February 23, 2000 -- Marvel Enterprises, Inc. ("Marvel")
(NYSE:MVL) today reported financial results for the fourth quarter and
year-ended December 31, 1999.
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MARVEL ENTERPRISES, INC.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales $92,995 $75,715 $319,645 $232,076
Cost of sales 45,026 40,220 150,858 127,978
Gross Profit 47,969 35,495 168,787 104,098
Selling, general and administrative
expenses 43,255 36,210 124,596 97,135
EBITDA (1) 4,714 (715) 44,191 6,963
Depreciation and amortization 6,158 5,760 18,078 19,332
Amortization of goodwill and other
intangibles 6,496 6,505 25,857 7,091
Operating income (loss) (7,940) (12,980) 256 (19,460)
Interest expense, net (7,884) (9,105) (32,077) (9,440)
Other income, net 1,160 676 4,043 676
Loss before income taxes (14,664) (21,409) (27,778) (28,224)
Income tax provision 2,486 7,160 4,482 4,386
Loss before extraordinary expense (17,150) (28,569) (32,260) (32,610)
Extraordinary expense, net of tax -- -- 1,531 --
Net loss (17,150) (28,569) (33,791) (32,610)
Less: preferred dividend requirement 3,662 3,380 14,220 3,380
Net loss attributable to common stock (20,812) (31,949) (48,011) (35,990)
Basic and diluted loss per share from
continuing operations ($0.62) ($0.95) ($1.39) ($1.23)
Basic and diluted loss per share after
extraordinary expense ($0.62) ($0.95) ($1.43) ($1.23)
Common shares outstanding 33,557 -- 33,557 --
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(1) "EBITDA" is defined as earnings before extraordinary items, interest
expense, taxes, depreciation and amortization. EBITDA does not represent net
income or cash flow from operations as those terms are defined by generally
accepted accounting principles and does not necessarily indicate whether cash
flow will be sufficient to fund cash needs.
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Marvel Enterprises 1999 Results, 2/23/00 Page 2 of 4
Commenting on the Company's performance, Marvel President and CEO, Peter Cuneo,
said, "Marvel's strong 1999 financial performance reflects our first full year
of combined Marvel and Toy Biz operations and was highlighted by significant
achievements in a range of areas that have repositioned Marvel on firm ground.
Progress in 1999 included the formation of a senior management team with proven,
relevant industry experience, the creation and adoption of a revised business
strategy including plans for the Internet, the creation of a sound financial
platform, including the divestiture of non strategic assets, and the initiation
of proactive operating strategies in all units, supported by the commencement of
Marvel's first ever brand management discipline, aimed at linking all activities
under the Marvel banner with the goal of deriving synergistic benefits.
"As we look forward in 2000 and beyond, we have many reasons for optimism,
including the Company's strongest-ever line-up of entertainment projects,
including five major motion pictures slated for release over the next three
years. This film slate underscores the broad appeal of the Marvel character
brands and should serve to drive awareness and interest in all other areas of
our business. In addition to exposing our character and corporate brands to a
global audience, major motion pictures can also potentially generate very
significant EBITDA increases from licensing, toy sales, publishing, specialty
publications and the Internet. Leading off this year is the July 2000 release of
X-Men from 20th Century Fox, followed by Spiderman from Sony Pictures, due in
the later part of 2001. Additionally, Blade 2 from New Line Pictures, The Hulk
from Universal Pictures and Fantastic Four, also from 20th Century Fox, are in
development with releases planned by the end of 2002.
"Additionally, we are making good headway in exploiting several character brands
for television and through the Internet. We are also exploring ways in which
Marvel can, for the first time in its history, become involved in the production
and ownership of entertainment content in a variety of traditional and new
media. On the Internet we are committed to creating a world-class Internet
destination at Marvel.com. To accomplish this goal, we have undertaken
exhaustive market research and are now in the process of evaluating a range of
possible partnerships with leading Internet companies to help us realize the
Internet potential of our character brands."
Mr. Cuneo concluded, "We are also very excited by the excellent response our toy
lines received from retailers as well as licensee interest in our characters at
last week's International Toy Fair. Our licensing and toy introductions around
the X-Men movie were extremely well received and public interest in the movies
continues to rise. A preview of the film, available at the X-Men Web site
(http://www.X-men-the-movie.com), provides a glimpse of this impressive work and
its tremendous all-star cast. Expanding upon our movie-related activities, we
expect to launch a licensing partnership with Sony for the Spiderman movie in
the next several months."
Marvel's net sales increase in 1999 was largely attributable to the inclusion of
twelve months of operations from the Licensing and Publishing divisions that
were acquired as part of the Company's acquisition of Marvel Entertainment Group
("MEG") in October 1998. Only three months of operations from these divisions
were included for the full year 1998. The incremental sales in 1999 versus 1998
for the Licensing and Publishing divisions were $25.9
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Marvel Enterprises 1999 Results, 2/23/00 Page 3 of 4
million and $28.3 million, respectively.
Sales by the Company's Toy Biz division increased by approximately 16% or $33.3
million in 1999 to $245.8 million, compared to $212.5 million in 1998. The
increase was primarily due to sales of World Championship Wrestling ("WCW")
action figures, a product line introduced in 1999, and increased sales of large
and small dolls and doll accessories (specifically Kinder-Garden Babies and Miss
Party Surprise), partially offset by a decline in the sales of Marvel-related
products related to the planned implementation of Marvel's brand management
strategy.
Gross profit increased from 1999 to 1998 primarily due to the inclusion of a
full-year's activity for the Licensing and Publishing divisions as well as an
increase of $27.0 million in gross profit from the Toy Biz division. Selling,
general and administrative expenses increased in 1999 over 1998 principally
reflecting the addition of the Licensing and Publishing divisions, offset by
one-time charges incurred in 1998 resulting from the Company's restructuring in
connection with the acquisition of MEG.
EBITDA for 1999 was $44.2 million, including approximately $5 million in
one-time charges, compared to 1998 EBITDA of $7.0 million.
The increase in Marvel's 1999 fourth quarter net sales was largely attributable
to an increase of approximately $23.7 million in sales from the Toy Biz
division, primarily due to sales of WCW action figures and increased sales of
Kinder-Garden Babies and Miss Party Surprise products, as well as increased
sales of Other Boys Products (specifically My Pal 2000 and Power Rangers) which
were partially offset by a decline in the sales of Marvel-related products.
Fourth quarter gross profit increased in 1999 over 1998 primarily due to a
contribution from the Toy Biz division which was partially offset by a decrease
in Gross Profit in the Licensing and Publishing divisions. The Company's Gross
Profit overall percentage increased to 52% from 47% primarily as a result of
favorable changes to the toy product mix. Selling, general and administrative
expenses increased in the fourth quarter of 1999 compared to the prior period,
primarily due to the addition of the Corporate division's Payroll Expenses and
Professional Fees as well as production costs in the Licensing division
associated with The Avengers television series on Fox Kids.
The Company's balance sheet remains strong with approximately $64.8 million in
cash as of December 31, 1999 and working capital of $91.9 million.
Marvel Enterprises, Inc. is one of the world's most prominent character-based
entertainment companies with operations in licensing, toys - via its Toy Biz
division, comic book publishing, entertainment and the Internet. Through its
ownership of over 3,500 proprietary characters, the Company licenses the right
to use its characters in a wide range of products and services such as apparel,
snack foods, video games and collectibles, as well as for television series and
feature films. Additionally, Marvel has published comic books for over 60 years
in the United States and numerous foreign countries. For additional company
information visit the Company's corporate Web site at http://www.marvel.com.
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Marvel Enterprises 1999 Results, 2/23/00 Page 4 of 4
Except for historical information contained herein, the statements in this news
release regarding the Company's plans are forward-looking statements that are
dependent upon certain risks and uncertainties, including the Company's
potential inability to successfully implement its business strategy, a decrease
in the level of media exposure or popularity of the Company's characters
resulting in declining revenues from products based on those characters, the
lack of commercial success of properties owned by major entertainment companies
that have granted the Company toy licenses, the lack of consumer acceptance of
new product introductions, the imposition of quotas or tariffs on toys
manufactured in China as a result of a deterioration in trade relations between
the U.S. and China, changing consumer preferences, production delays or
shortfalls, continued pressure by certain of the Company's major retail
customers to significantly reduce their toy inventory levels, the impact of
competition and changes to the competitive environment on the Company's products
and services, changes in technology and changes in governmental regulation.
Those and other risks and uncertainties are described in the Company's filings
with the Securities and Exchange Commission, including the Company's Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K.
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For further information contact:
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Investor Relations Media
David Collins, Richard Land Jeffrey Klein
Jaffoni & Collins Bender/Helper Impact
(212) 835-8500 212/689-6360
[email protected] [email protected]
