================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                ----------------

                                   FORM 10-K/A

                                ----------------

                                 AMENDMENT NO. 1



[x]     AMENDMENT TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934 (No Fee Required) For the fiscal year
        ended December 31, 1996

                                                     or

[_]     AMENDMENT TO TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934 (No Fee Required) For the transition
        period from ___________ to ___________

                         Commission file number: 1-9599


                                GALOOB TOYS, INC.
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)


          DELAWARE                                      94-1716574
-------------------------------             ------------------------------------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
InCompany or Organization)


                              500 FORBES BOULEVARD
                           SO. SAN FRANCISCO, CA 94080
                                 (415) 952-1678
--------------------------------------------------------------------------------
  (Address, Including Zip Code, and Telephone Number, Including Area Code, of
                   Registrant's Principal Executive Offices)


           Securities registered pursuant to Section 12(b) of the Act:

                                                  Name of Each Exchange
Title of Each Class                               on Which Registered
--------------------------------------            -----------------------------
COMMON STOCK, PAR VALUE $.01 PER SHARE            NEW YORK STOCK EXCHANGE



           Securities registered pursuant to Section 12(g) of the Act:

                                      NONE
--------------------------------------------------------------------------------
                                (Title of Class)


Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [_]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [_].

Aggregate market value of the voting stock (which consists solely of shares of
Common Stock) held by non-affiliates of the registrant as of March 3, 1997,
computed by reference to the closing sale price of the registrant's Common Stock
New York Stock Exchange Stock Exchange on such date: $300,000,000.

On March 3, 1997, the registrant had outstanding 18,019,864 shares of Common
Stock, par value $.01 per share, which is the registrant's only class of common
stock.

                      DOCUMENTS INCORPORATED BY REFERENCE:

                                      NONE


================================================================================

<PAGE>
                                EXPLANATORY NOTE

               This Amendment No.1 on Form 10-K/A amends and restates in their
entirety the following items of Part III of the Annual Report on Form 10-K of
Galoob Toys, Inc. (the "Company") for the fiscal year ended December 31, 1996 to
add information required by Part III Item 10. Directors and Executive Officers
of the Registrant; Item 11. Executive Compensation; Item 12. Security Ownership
of Certain Beneficial Owners and Management; and Item 13. Certain Relationships
and Related Transactions; and to add an Exhibit 10.1(h) and an amended Exhibit
23.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

        The directors and executive officers and their respective positions are
as follows:

Name                   Age    Position
----                   ---    --------

Mark D. Goldman        46     President, Chief Executive Officer and Director

William G. Catron      51     Executive Vice President, General Counsel, Chief
                              Administrative Officer and Secretary

Andrew J. Cavanaugh    50     Director

Paul A. Gliebe, Jr.    62     Director

Scott R. Heldfond      51     Director

Loren H. Hildebrand    57     Executive Vice President, Sales

Ronald D. Hirschfeld   46     Executive Vice President, International Sales &
                              Marketing

S. Lee Kling           68     Director

Roger J. Kowalsky      62     Executive Vice President, Chief Financial Officer
                              and Director

Gary J. Niles          57     Executive Vice President, Marketing and Product
                              Acquisition

Louis R. Novak         49     Executive Vice President and Chief Operating
                              Officer

Jay B. Foreman         34     Senior Vice President of Galoob and Senior Vice
                              President and Managing Director of Galoob Direct,
                              Inc.

H. Alan Gaudie         56     Senior Vice President, Finance and Assistant
                              Secretary

Ronnie Soong           50     Managing Director of Galco International Toys,
                              N.V.


                                        1

<PAGE>

Terrell (Mark) Taylor  55     Senior Vice President, Product Design


       Mark D. Goldman, a Director of the Company since 1987, has served as
President and Chief Executive Officer of the Company since June 1991. From 1987
to 1991, Mr. Goldman served as Executive Vice President and Chief Operating
Officer. Prior to 1987, Mr. Goldman served in various executive capacities at
Ages Entertainment Software, Inc. (formerly Sega Enterprises, Inc.) and Mattel,
Inc. Mr. Goldman's term will expire in 1997.

       William G. Catron has served as Executive Vice President, General Counsel
and Chief Administrative Officer since May 1992 and as Corporate Secretary of
the Company since June 1995. From 1985 to 1992, Mr. Catron was Senior Vice
President, Assistant General Counsel for Paramount Pictures Corporation. Prior
to 1985, Mr. Catron served in various executive capacities at Ages Entertainment
Software, Inc. (formerly Sega Enterprises, Inc.) and Mattel, Inc.

        Andrew J. Cavanaugh, a Director of the Company since 1993, serves as a
Senior Vice President -- Corporate Human Resources of The Estee Lauder Companies
Inc. He has been affiliated with Estee Lauder in an executive capacity since
1988. Prior to undertaking his current position, Mr. Cavanaugh served as a
Senior Consultant with Coopers & Lybrand, New York City, from 1986 through 1988,
and Senior Vice President Administration of Paramount Pictures Corporation from
1984 through 1986. Mr. Cavanaugh's term will expire in 1999.

       Paul A. Gliebe, Jr., a Director of the Company since 1986, has served as
a Vice President of Smith Barney Inc. since 1974. Smith Barney Inc. has provided
investment-related services to the Company in the past and during the
current fiscal year. Mr. Gliebe's term will expire in 1997.

        Scott R. Heldfond, a Director of the Company since 1986, has served as
President and Chief Executive Officer of Frank Crystal & Co. of California Inc.,
an insurance brokerage firm since February 1997.  Prior to undertaking his
current position, Mr. Heldfond served as Managing Director of Hales Capital 
Advisors, LLC, an insurance industry merchant bank firm, since January 1995 and
he also served as a consultant to AON Risk Services (successor entity to 
Rollins Hudig Hall and DSI Insurance Services) ("AON"), an insurance broker. 
From 1992 to 1994 he was President and CEO of Rollins Real Estate/Investment
and prior thereto was President and CEO of DSI Insurance Services. The Company 
has retained AON (with which Mr. Heldfond is no longer associated) in the past 
and during the current fiscal year. Mr. Heldfond's term will expire in 1998.

        Loren H. Hildebrand has served as Executive Vice President, Sales of the
Company since April 1994. From 1992 to 1994, Mr. Hildebrand was president of
Creative Consultants and from 1991 to 1992 he was Executive Vice President of
Bandai U.S. Inc., a toy manufacturer. From 1989 to 1992, Mr. Hildebrand was
Executive Vice President and a partner in Toy Soldiers, Inc., a start-up
company. Prior to 1989, Mr. Hildebrand was a consultant for Worlds of Wonder and
Executive Vice President, Sales, Merchandising and Distribution for Mattel, Inc.

        Ronald D. Hirschfeld has served as Executive Vice President,
International Sales and Marketing of the Company since February 1994. From 1989
to 1994, Mr. Hirschfeld served as Senior Vice President, International Sales and
Marketing. Prior to 1989, Mr. Hirschfeld served as Senior Vice President,
International Operations from 1987 to 1989 and has held various positions with
the Company since 1978.

       S. Lee Kling, a Director of the Company since 1991, has served since 1991
as Chairman of the Board of Kling Rechter & Company, a merchant banking company
which operates in partnership with Barclays Bank PLC. Mr. Kling served as
Chairman of the Board of Landmark Bancshares Corporation, a bank holding company
in St. Louis, Missouri ("Landmark"), until December 1991 when Landmark merged
with Magna Group, Inc. Mr. Kling serves on the Boards of Directors of Magna
Group, Inc., Falcon Products, Co., Bernard Chaus Inc., E-Systems, Inc., Top Air
Manufacturing, Inc., National Beverage Corp. and Hanover Direct, Inc. Mr.
Kling's term will expire in 1999.

        Roger J. Kowalsky, a Director of the Company since 1994, has served as
Executive Vice President and Chief Financial Officer of the Company since June
1996 and as a Director of the Company since June 1994. From 1989 to 1996, Mr.
Kowalsky served as Director of the Vermont Studio Center, an organization
dedicated to visual artists and writers. From 1983 to 1986, Mr. Kowalsky served
as Senior Vice President, Finance & Administration for Yale Materials Handling
Corporation. Prior to such time, from 1969 to 1982, Mr.


                                        2
<PAGE>
Kowalsky worked at Pullman Inc., rising to Executive Vice President, Finance and
Administration and President of Pullman Trailmobile, a subsidiary of Pullman,
Inc. Mr. Kowalsky's term will expire in 1998.

       Gary J. Niles has served as Executive Vice President, Marketing and
Product Acquisition of the Company since February 1992. From 1989 to 1992, Mr.
Niles served as Senior Vice President, Toy Boys Division. Before joining the
Company, Mr. Niles was an executive with U.A.C., Ltd., a division of Universal
Matchbox, Revell Incorporated and Ages Entertainment Software, Inc. (formerly
Sega Enterprises, Inc.)

        Louis R. Novak has served as Executive Vice President and Chief
Operating Officer of the Company since February 1992. From 1989 to 1992, Mr.
Novak served as Senior Vice President, Operations. From 1986 to 1989 he was
Senior Vice President, Worldwide Product Operations for Coleco Industries, Inc.
Prior to 1986, Mr. Novak was an executive with All American Gourmet Company,
Inc., a manufacturer of frozen food products, and for Mattel, Inc.

       Jay B. Foreman has been Senior Vice President of Galoob Toys, Inc. and
Senior Vice President and Managing Director of Galoob Direct, Inc., since May
1996. From 1992 to 1996, Mr. Foreman served as Executive Vice President-U.S.
Operations of Play By Play Toys and Novelties, Inc. From 1990 until 1992, Mr.
Foreman served as Co-General Manager of the Toys and Novelties Division of Pizza
Management, Inc.

       H. Alan Gaudie has served as Senior Vice President, Finance of the
Company since April 1992 and Assistant Secretary since June 1995. From 1985 to
1992, Mr. Gaudie served as Corporate Controller, Vice President, Senior Vice
President and acting Chief Financial Officer.

       Ronnie Soong has served as Managing Director of Galco since May 1995.
From 1993 to 1995, Mr. Soong served as General Manager of Galco. From 1989 to
1993, Mr. Soong was General Manager of Zindart Industrial Co., Ltd. Prior to
1989, Mr. Soong was the General Manager of Buddy L (HK) Ltd. and an executive
with the Ertl Company in Taiwan from 1987 to 1989.

       Terrell (Mark) Taylor has served as Senior Vice President, Product Design
of the Company since November 1995. From 1988 to 1995, Mr. Taylor served Senior
Vice President, Product Design for Mattel, Inc. From 1987 to 1988, Mr. Taylor
served as Vice President with Entertech/LJN Toys. Prior to 1987, Mr. Taylor
served in various executive capacities at Playmates Toys, Tomy Toys, and Mattel,
Inc. In addition, Mr. Taylor was a principal partner with Taylor/Salari Design.


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and any
persons who own more than ten percent of the Company's Common Shares to file
reports of initial ownership of the Company's Common Stock and subsequent
changes in that ownership with the Securities and Exchange Commission and the
New York Stock Exchange. Officers, directors and greater than ten-percent
beneficial owners are also required to furnish the Company with copies of
all Section 16(a) forms they file. Based solely upon a review of the copies of
the forms furnished to the Company, or written representations from certain
reporting persons that no Forms 5 were required, the Company believes that
it complied with all Section 16(a) filing requirements during the 1996 fiscal
year.



                                        3

<PAGE>
ITEM 11.       Executive Compensation

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

        The following table summarizes the compensation paid by the Company
and its subsidiaries, as well as certain other compensation paid or accrued, to
the Chief Executive Officer of the Company and the other five most highly
compensated executive officers of the Company who earned in excess of
$100,000 for the Company's fiscal years ended December 31, 1994, 1995 and
1996 (each person appearing in the table is referred to as a "Named Executive"):


                          SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
                                              ANNUAL COMPENSATION 
                                  -------------------------------------
                                                                           LONG
                                                                 OTHER     TERM
                                                                ANNUAL    COMPEN-     ALL OTHER
                                           SALARY      BONUS    COMPEN-    SATION      COMPEN-
NAME AND PRINCIPAL POSITION       YEAR       ($)        ($)    SATION($) OPTIONS(#)  SATION($)(2)
---------------------------       ----     -------    ------- ---------- ---------- -------------
<S>                              <C>     <C>        <C>       <C>        <C>          <C>
Mark D. Goldman................   1996    500,000    937,500        0      36,140      4,660
   President and Chief            1995    400,000    750,000        0     200,000      3,980
   Executive Officer                         1994    400,000  600,000     229,630(3)   3,760

Gary J. Niles..................   1996    320,417    418,750        0      28,130      2,550
   Executive Vice President,      1995    300,000    360,000        0           0      1,440
   Marketing and Product          1994    261,055    316,800        0     157,870(4)   1,440
   Acquisition

Louis R. Novak.................   1996    291,169    375,000        0      28,130        870
   Executive Vice President       1995    272,803    334,567        0           0        870
   and Chief Operating Officer    1994    261,055    316,800        0     157,870(4)     870

William G. Catron..............   1996    248,289    316,031        0      24,520      1,440
   Executive Vice President,      1995    236,729    217,745        0           0        870
   General Counsel, Chief         1994    226,535    206,640        0      86,111(5)     870
   Administrative Officer
   and Secretary

Ronald D. Hirschfeld...........   1996    246,552    313,821        0      24,520        870
   Executive Vice President,      1995    235,073    216,222        0           0      1,440
   International Sales and 
   Marketing...................   1994    223,634    203,425        0      86,111(5)     510

Loren H. Hildebrand............   1996    241,297    307,131        0      24,520      2,250
   Executive Vice President,      1995    230,063    282,150        0           0      2,250
   Sales                          1994    159,375    275,000(6)     0     100,000        840

<FN>
(1)     Other than as provided in this table, there were no other transactions
        among the Named Executives and the Company which are required to be
        reported in this table.

(2)     These amounts represent premiums paid by the Company with respect 
        to term life insurance.


                                        4
<PAGE>
(3)     Represents 229,630 options granted pursuant to the 1994 Plan. Does not
        include 129,311 shares of Common Stock granted in connection with the
        termination of the 1992 Senior Management Stock Option Plan (the "1992
        Plan").

(4)     Represents 157,870 options granted pursuant to the 1994 Plan. Does not
        include 88,900 shares of Common Stock granted in connection with the
        termination of the 1992 Plan.

(5)     Represents 86,111 options granted pursuant to the 1994 Plan. Does not
        include 48,491 shares of Common Stock granted in connection with the
        termination of the 1992 Plan.

(6)     This amount includes a $50,000 bonus paid to the Named Executive in 
        connection with the Named Executive's hiring.
</FN>
</TABLE>

                                        5

<PAGE>
                                  STOCK OPTIONS

        The following table contains information concerning the grant of stock
options to the Named Executives during the Company's last fiscal year:



                        OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                            Individual Grants
                         -----------------------------------------------------
                                         % of Total
                           Shares of       Options
                          Common Stock   Granted to
                          Underlying     Employees in    Exercise                 Grant Date
                            Options      Fiscal Year      Price    Expiration    Present Value
Name                        Granted      (of 380,908)    ($/US)       Date          ($)(1)
----                        -------      ------------    ------       ----       ------------
<S>                       <C>              <C>          <C>         <C>           <C>                
Mark D. Goldman            36,140            9.5%        25.00       7/29/06       491,110

Gary J. Niles              18,050            4.7%        25.00       7/29/06       245,283
                           10,080            2.7%        21.25       4/29/06       116,431

Louis R. Novak             18,050            4.7%        25.00       7/29/06       245,283
                           10,080            2.7%        21.25       4/29/06       116,431

William G. Catron          14,440            3.8%        25.00       7/29/06       196,227
                           10,080            2.7%        21.25       4/29/06       116,431

Ronald D. Hirschfeld       14,440            3.8%        25.00       7/29/06       196,227
                           10,080            2.7%        21.25       4/29/06       116,431

Loren H. Hildebrand        14,440            3.8%        25.00       7/29/06       196,227
                           10,080            2.7%        21.25       4/29/06       116,431


<FN>
(1)      The Grant Date Present Values were determined using the Black-Scholes
         option pricing model. Assumptions used for the model are as follows: an
         option term of 4.4 years, stock volatility of 60%, dividend yield of
         0%, and a risk-free rate of return of 6.3%. Options will only have
         values to the extent the Common Stock Price exceeds the Exercise Prices
         above. To fully realize the aggregates values shown above the Common
         Stock price must exceeed $36 per share. The Grant Date Present Values
         do not take into account risk factors such as non-transferability and
         limits on exercisability. The Black-Scholes option pricing model is a
         commonly utilized model for valuing options. The model assumes that the
         possibilities of future stock returns (dividends plus share price
         appreciation) resemble a normal "bell-shaped" curve. In assessing the
         Grant Date Present Values indicated in the above table, it should be
         kept in mind that no matter what theoretical value is placed on an
         option on the date of grant, the ultimate value of the option is
         dependent on the market value of the Common Stock at a future date,
         which will depend to a large degree on the efforts of the Named
         Executives to bring future success to the Company for the benefit
         of all stockholders.
</FN>
</TABLE>

The Company does not currently grant stock appreciation rights.


                                        6
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

        The following table sets forth information with respect to the options
exercised by the Named Executives during the 1996 fiscal year and the
unexercised options held by the Named Executives as of the end of the 1996
fiscal year.

<TABLE>
<CAPTION>
                                                       NUMBER OF SECURITIES         VALUE OF UNEXERCISED
                          SHARES                      UNDERLYING UNEXERCISED        IN-THE-MONEY OPTIONS
                         ACQUIRED                  OPTIONS AT FISCAL YEAR END(#)   AT FISCAL YEAR-END($)(1)
                            ON          VALUE      ----------------------------   --------------------------
NAME                     EXERCISE(#)  REALIZED($)   EXERCISABLE  UNEXERCISABLE    EXERCISABLE  UNEXERCISABLE
----                     -----------  -----------   -----------  -------------    -----------  -------------
<S>                       <C>       <C>              <C>           <C>            <C>            <C> 
Mark D. Goldman.........       0           0          387,964       102,806        2,473,155      524,995
Gary J. Niles...........   5,000      31,900          167,950        18,050          789,350            0
Louis R. Novak..........       0           0          167,950        18,050          789,350            0
William G. Catron.......       0           0           96,191        14,440          430,555            0
Ronald D. Hirshfeld.....  30,000     270,000           66,191        14,440          280,555            0
Loren H. Hildebrand.....       0           0          110,080        14,440          825,000            0

------------------
<FN>
(1)     The closing sales price of the Common Stock on the New York Stock Exchange on December 31, 1996
        was $14.00 per share.

</FN>
</TABLE>

          EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AGREEMENTS

        On October 27, 1994, the Company entered into a severance agreement
(the "Severance Agreement") with Mark Goldman, effective as of July 13, 1994.
The Severance Agreement sets forth severance benefits which are payable if Mr.
Goldman's employment is terminated for various reasons, including termination by
him of his employment following a change in control of the Company, as
follows (the "Severance Payment"):

               (i) If Mr. Goldman is terminated without cause (as defined in the
        Severance Agreement) prior to a Change in Control (as defined in the
        Severance Agreement), or if Mr. Goldman terminates his employment for
        good reason (as defined in the Severance Agreement) prior to a Change in
        Control, the Severance Agreement provides that the Company shall pay
        to Mr. Goldman a lump sum payment equal to (a) two times Mr. Goldman's
        annualized current base compensation and (b) the greater of (1) two
        times the greater of (x) the incentive compensation bonus (excluding
        stock options or shares issued pursuant to a stock option, restricted
        stock or similar plan or long-term incentive bonuses) paid to Mr.
        Goldman for the previous year's performance or (y) the incentive
        compensation bonus (excluding stock options or shares issued pursuant to
        a stock option, restricted stock or similar plan or long-term incentive
        bonuses) that would be payable to Mr. Goldman if performance relative to
        plan for the current year was the same as performance relative to plan
        year-to-date (such performance is to be measured by the ratio of
        year-to-date actual performance divided by year-to-date plan
        performance; the index(es) of performance shall be the same as the most
        recent annual cash incentive compensation plan approved by the Board of
        Directors) (the amount equal to the greater of the amounts described in
        clauses (x) and (y) shall be hereinafter referred to as the "Annual
        Bonus"); or (2) five hundred thousand dollars ($500,000).

               (ii) If Mr. Goldman is terminated by the Company within
        twenty-four (24) months following a Change in Control (as defined in the
        Severance Agreement), or if Mr. Goldman terminates his employment for
        good reason (as defined in the Severance Agreement) within twenty-four
        (24) months following a Change in Control, the Severance Agreement
        provides that the Company shall pay to Mr. Goldman a lump sum
        payment equal to (a) three times Mr. Goldman's annualized current base
        compensation, (b) the greater of (1) three times the Annual Bonus or (2)
        five hundred thousand dollars ($500,000) and (c) three times the car
        allowance in effect for Mr. Goldman at the time of termination


                                        7
<PAGE>
        and a lump sum amount equal to three times the insurance and maintenance
        cost incurred for said vehicle during Mr. Goldman's last full year of
        employment with the Company. Furthermore, the Severance Agreement
        provides that the Company shall continue to provide Mr. Goldman with
        certain fringe benefits for a period of three years following the date
        of Mr. Goldman's termination, subject to mitigation by Mr. Goldman.

               (iii) If Mr. Goldman is terminated for cause, or if Mr. Goldman
        terminates his employment other than for good reason (as defined in the
        Severance Agreement), the Severance Agreement provides that the
        Company must pay to Mr. Goldman his unpaid compensation for services
        prior to termination and the value of any accrued unused vacation pay to
        the date of termination.

        The maximum Severance Payment that the Company would have been
required to make under the Severance Agreement if such amount became payable in
the fiscal year 1996 was approximately $4,370,856. In addition, the Severance
Agreement contains a "gross-up" provision which provides that, to the extent
that any Severance Payment is subject to certain excise taxes occurring as a
result of a Change in Control, the Company would make an additional gross-up
payment so that Mr. Goldman would retain an amount of the Severance Payment
equal to the amount he would have retained had there been no such excise taxes.
Mr. Goldman is employed by the Company as its President and Chief Executive
Officer without an employment agreement. The Company has purchased a life
insurance policy in a $2,000,000 face amount for Mr. Goldman, who designated the
beneficiary of such insurance policy.

        As of January 1, 1997, each of the Executive Vice Presidents of the
Company entered into a Severance and Change in Control Agreement ("Severance
and Change in Control Agreements") with the Company, which will provide,
among other things, that if the executive is terminated other than for Cause (as
such term is defined in the Severance and Change in Control Agreements) the
executive is entitled to continue to receive his salary and certain benefits
(excluding the continuation of any bonus) for a period of twelve (12) months.
These severance payments will be reduced in the event that the executive
commences regular full-time employment during such period. If there is a Change
in Control (as such term is defined in the Severance and Change in Control
Agreements) and the executive's employment is terminated voluntarily or
involuntarily (other than for Cause) prior to the first anniversary of a Change
in Control, the above-described severance package is replaced with a lump sum
payment equal to three (3) times such executive's annual salary and bonus (as
described in the Severance and Change in Control Agreements), plus the
continuation of certain benefits for a thirty-six (36) month period of time. If
the executive's employment is terminated involuntarily (other than for Cause)
during the next twelve (12) months following the first anniversary of the Change
in Control, the executive is entitled to continue to receive his salary and
certain benefits (excluding the continuation of any bonus) for a period of up to
twenty-four (24) months. Any payment or benefit received pursuant to the
Severance and Change in Control Agreements will be reduced to the extent that
such payment or benefit would be subject to certain excise taxes occurring as a
result of a Change in Control.

ITEM 12.       Security Ownership of Certain Beneficial Owners and Management

        The following table sets forth certain information as of March 31, 1997
with respect to the Common Stock of the Company beneficially owned by (a)
all persons known to the Company to own beneficially more than 5% of the
Common Stock of the Company, (b) all directors and nominees, (c) the Named
Executives (as defined under the caption "Executive Compensation") and (d) all
executive officers and directors of the Company as a group.

<TABLE>
<CAPTION>
                                                                AMOUNT AND      PERCENT OF
                                                                 NATURE OF        COMMON
                                                                BENEFICIAL         STOCK
NAME OF BENEFICIAL OWNER(1)                                    OWNERSHIP(2)    OWNERSHIP(2)
---------------------------                                    ------------    ------------
<S>                                                            <C>              <C>
Public Employees Retirement System of Ohio(3)...............   1,600,000            8.9%
The Prudential Insurance Company of America(4)..............   1,061,690            5.9%
William G. Catron(5)........................................     126,917             *


                                        8
<PAGE>
Andrew J. Cavanaugh(6)......................................       7,700             *
Paul A. Gliebe, Jr.(6)......................................       8,350             *
Mark D. Goldman(7)..........................................     609,041            3.3%
Scott R. Heldfond(6)........................................       9,450             *
Loren H. Hildebrand(8)......................................      10,080             *
Ronald D. Hirschfeld(9).....................................      79,044             *
S. Lee Kling(6).............................................      11,000             *
Roger Kowalsky(10)..........................................       6,550             *
Gary J. Niles(11)...........................................     193,311            1.1%
Louis R. Novak(11)..........................................     178,410            1.0%
All executive officers and directors as a
  group (consisting of 14 persons)(12)......................   1,311,304            6.9%

---------------------
* Less than 1%.

<FN>
(1)     Unless otherwise indicated, beneficial owner's address is Company's
        address at 500 Forbes Boulevard, South San Francisco, California 94080.

(2)     This table identifies persons having sole voting and/or investment power
        with respect to the shares of Common Stock set forth opposite their
        names as of March 31, 1997, according to the information furnished to
        the Company by each of them. A person is deemed to be the beneficial
        owner of shares of Common Stock that can be acquired by such person
        within 60 days from March 31, 1997 upon the exercise of options.
        Percentage of Common Stock ownership is based on a total of 18,019,864
        shares of Common Stock outstanding and assumes in each case that the
        person only, or group only, exercised his or its rights to purchase all
        shares of Common Stock underlying the options.

 (3)    Address is 277 East Town Street, Columbus, OH 43215.

 (4)    Address is 751 Broad Street, Newark, NJ 07102.

 (5)    Includes options to purchase 96,191 shares of Common Stock.

 (6)    Includes options to purchase 6,000 shares of Common Stock.

 (7)    Includes options to purchase 454,630 shares of Common Stock.

 (8)    Includes options to purchase 10,080 shares of Common Stock.

 (9)    Includes options to purchase 66,191 shares of Common Stock.

(10)    Includes options to purchase 4,000 shares of Common Stock.

(11)    Includes options to purchase 167,950 shares of Common Stock.

(12)    Includes an aggregate of options to purchase 1,023,000 shares of Common
        Stock.

</FN>
</TABLE>


ITEM 13.       Certain Relationships and Related Transactions

        On August 29, 1996, Mark D. Goldman, President, Chief Executive Officer
and Director of the Company, borrowed $950,000 from the Company in
connection with the purchase of a personal residence


                                        9
<PAGE>
and executed a note payable to the Company, which is secured by a second
mortgage on such residence. The note bears no interest unless Mr. Goldman's
employment with the Company is terminated, and, at such time, the note will
bear interest at one percent per annum in excess of the Prime Rate charged by
Citibank F.S.B. During the term of Mr. Goldman's employment with the
Company, in accordance with the Internal Revenue Code of 1986, as amended
(the "Code"), interest will be imputed at the applicable federal rate, as
determined under the Code. Commencing on September 1, 1996, principal in the
amount of $100 shall be paid on the first of each month by Mr. Goldman to the
Company. The balance of the principal shall be paid on the earlier to occur
of (i) August 29, 2006 or (ii) one year from the date Mr. Goldman's employment
with the Company is terminated.

        Louis R. Novak, Executive Vice President and Chief Operating Officer of
the Company, borrowed money from the Company on July 31, 1995 and April
15, 1996 and on each occasion executed a note payable to the Company. The
first note, dated July 31, 1995, is in the principal amount of $57,042 and bears
interest at the rate of 8.75%. The second note, dated April 15, 1996, is in the
principal amount of $60,647 and bears interest at the rate of 8.5%. Mr. Novak
repaid this indebtedness on September 4, 1996.


                              DIRECTOR COMPENSATION

        Directors, who are not full-time employees of the Company, each
received in fiscal year 1996 an annual director's fee of $15,000 plus $500 for
each meeting of the Board of Directors or any committee thereof attended by such
director. Furthermore, directors who were not full-time employees of the
Company received an option immediately exercisable into 2,000 shares of
Common Stock on July 1, 1996 and have received and will receive an option
immediately exercisable into 2,000 shares of Common Stock on January 1 of each
year thereafter until they no longer serve as directors of the Company. The
exercise price of such options shall be at the market price on the date such
options are received. All directors are reimbursed by the Company for
out-of-pocket expenses incurred by them as directors of the Company.


           COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

        The members of the Committee are set forth under "Meetings and
Committees of the Board of Directors," and their relationship to the Company
is set forth under "Election of Directors." None of the members of the Committee
has served as a member of the compensation committee of another entity so as to
create any compensation committee interlock. No members of the Committee are
employed by the Company.


                                     PART IV

ITEM 14.       Exhibits, Financial Statement Schedules, and Reports on Form 8-K

               Index to Financial Statements

               The following consolidated financial statements and schedules of
the Company and its subsidiaries are included as Part II, Item 8 of this Report:

<TABLE>
<CAPTION>

        (a)    1.     Financial Statements                                                Page
                      ---------------------                                               ----
<S>                                                                                      <C>
                      Report of Independent Accountants                                   F-1

                      Consolidated Financial Statements:

                      Consolidated Balance Sheets - December 31, 1996 and
                      December 31, 1995                                                   F-2


                                       10
<PAGE>

                      Consolidated Statements of Operations for the years
                      ended December 31, 1996, 1995 and 1994                                 F-3

                      Consolidated Statements of Changes in Shareholders'
                      Equity for the years ended December 31, 1996,
                      1995 and 1994                                                          F-4

                      Consolidated Statements of Cash Flows for the years
                      ended December 31, 1996, 1995 and 1994                                 F-5

                      Notes to Consolidated Financial Statements                             F-6
                                                                                              to
                                                                                            F-17


        (a)    2.     Financial Statement Schedules

                      Schedules VIII - Valuation and Qualifying Accounts and                 S-1
                      Reserves for the years ended December 31, 1996, 1995 and
                      1994

</TABLE>

               All other schedules have been omitted because they are
inapplicable or not required, or the information is included in the financial
statements or notes thereto.



                                       11
<PAGE>
               (a)    3.     Exhibits

3.1(a)(1)      Certificate of Incorporation.

3.1(b)(1)      Amendment to Certificate of Incorporation.

3.2(2)         Bylaws.

4.1(3)         Form of Certificate for Shares or Common Stock of the Company.

4.2(a)(4)      Warrant Agreement, dated as of December 11, 1991, by and between
               the Company and Shereff, Friedman, Hoffman and Goodman, LLP.

4.2(b)(4)      Warrant Agreement, dated as of November 17, 1993, by and between
               the Company and Gerard Klauer Mattison & Co., Inc.

4.3(5)         Form of Rights Agreement, dated as of January 17, 1990, between
               the Company and Mellon Securities Trust Company.

10.1(a)(6)*    Amended and Restated 1984 Employee Stock Option Plan.

10.1(b)(7)*    1994 Senior Management Stock Option Plan

10.1(c)(8)*    Form of Agreement between each of Mark Goldman, William Catron,
               Lou Novak, Gary Niles, Mark Shephard, Ronald Hirschfeld and H.
               Alan Gaudie and the Company.

10.1(d)(9)*    Form of Amendment No. 1 between each of Mark Goldman, William
               Catron, Lou Novak, Gary Niles, Mark Shepherd, Ronald Hirschfeld
               and H. Alan Gaudie and the Company.

10.1(e)        (10) 1995 Non-Employee Directors' Stock Option Plan.

10.1(f)*       Galoob Toys, Inc. 1996 Long Term Compensation Plan

10.1(g)*       Galoob Toys, Inc. 1996 Share Incentive Plan

10.1(h)*       Galoob Toys, Inc. Officer's Deferred Compensation Plan

10.2(10)*      Lewis Galoob Toys, Inc. Savings and Retirement Plan (Formerly the
               Lewis Galoob Toys, Inc. Profit Sharing) (Amendment and
               Restatement effective January 1, 1987).

10.3(9)*       Severance Agreement, dated October 27, 1994, between Mark Goldman
               and the Company.

10.4(a)*       Agreement, dated January 1, 1997, between William G. Catron and
               the Company.

10.4(b)*       Agreement, dated January 1, 1997, between Loren Hildebrand and
               the Company.

10.4(c)*       Agreement, dated January 1, 1997, between Ronald D. Hirschfeld
               and the Company.

10.4(d)*       Agreement, dated January 1, 1997, between Roger J. Kowalsky and
               the Company.

10.4(e)*       Agreement, dated January 1, 1997, between Gary J. Niles and the
               Company.

10.4(f)*       Agreement, dated January 1, 1997, between Louis R. Novak and the
               Company.


                                       12
<PAGE>
10.5(e)(9)     Amended and Restated Loan and Security Agreement, dated as of
               March 31, 1995, by and among the Company and Congress Financial
               Company (Central).

10.6(a)(11)    License Agreement, dated June 1, 1986, by and between Funmaker,
               as Licensor and the Company, as Licensee.

10.7(a)(12)    License Agreement, dated May 4, 1990, by and among the Company as
               Licensee, Codemasters Software Company, Ltd. and America Company,
               Limited.

10.7(b)(12)    Amendment No. 1 dated June 1991 to License Agreement dated May 4,
               1990.

10.7(c)(12)    Amendment No. 2 dated December 23, 1991 to License Agreement,
               dated May 4, 1990.

10.2(d)(12)    European License Agreement, dated December 23, 1991, by and
               between Codemasters Software Company, Ltd. and the Company.

10.2(e)(12)    Third Amendment to United States License and First Amendment to
               European License, dated November 4, 1992.

10.2(f)(9)     Fourth Amendment to United States License Agreement, dated
               October 14, 1994.

10.8(11)       Agreement of Purchase and Sale, dated October 22, 1986, by and
               between AT Building Company, as Seller, and the Company, as
               Buyer.

10.9(a)(2)     Lease Agreement, dated March 12, 1982, by and between Lincoln
               Alvarado and Patrician Associate, Inc., as Lessor, and the
               Company, as Lessee.

10.9(b)(13)    Amendment No. 1 to Lease Agreement.

10.9(c)(10)    Lease Agreement, dated December 1, 1995, by and between 200 Fifth
               Avenue Associates, as Lessor, and the Company, as Lessee.

10.9(d)        Lease Agreement, dated December 3, 1996, between Prudential
               Insurance Company of America as Lessor and the Company, as
               Lessee.

11(14)         Statement of Computation of Per Share Earnings.

21(14)         Subsidiaries of the Company

23             Consent of Independent Public Accountants (filed herewith)

27(14)         Financial Data Schedule

-------------------------------

(1)     Incorporated by reference to the Company's Amendment No. 2 to the
        Registration Statement on Form S-1, filed with the Commission on
        November 8, 1996.

(2)     Incorporated by reference to the Company's Amendment No. 1 to
        Registration Statement on Form 8-B, filed with the Securities and
        Exchange Commission (the "Commission") on January 11, 1988.

(3)     Incorporated by reference to the Company's Registration Statement on
        Form S-3, filed with the Commission on February 26, 1990.


                                       13
<PAGE>
(4)     Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended December 31, 1993, filed with the Commission on March 31, 1994.

(5)     Incorporated by reference to the Company's Registration Statement on
        Form 8-A, filed with the Commission on January 23, 1990.

(6)     Incorporated by reference to the Company's Registration Statement on
        Form S-8, Registration No. 33- 56585, filed with the Commission on
        November 23, 1994.

(7)     Incorporated by reference to the Company's Registration Statement on
        Form S-8, Registration No. 33- 56587, filed with the Commission on
        November 23, 1994.

(8)     Incorporated by reference to the Company's Registration Statement on
        Form S-8, Registration No. 33- 56587, filed with the Commission on
        November 23, 1994.

(9)     Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended December 31, 1994, filed with the Commission on March 31, 1995.

(10)    Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended December 31, 1995, filed with the Commission on March 31, 1995.

(11)    Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended December 31, 1996, filed with the Commission on March 31, 1995.

(12)    Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended December 31, 1995, filed with the Commission on March 31, 1995.

(13)    Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended December 31, 1991, filed with the Commission on March 30, 1992.

(14)    Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended December 31, 1996, filed with the Commission on March 31, 1997.


  *     Indicates exhibits relating to executive compensation.

        All other schedules are omitted because they are not applicable or the
required information is shown in the Company's consolidated financial statements
or the notes thereto.



                                       14
<PAGE>
               Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this amendment to be signed on its behalf
by the undersigned, thereunto duly authorized.



                                                   GALOOB TOYS, INC.
                                                     Registrant
 
                                           By:    /s/ Mark D. Goldman
                                               --------------------------------
                                                Mark D. Goldman
                                                President


Dated April 30, 1997




                                       15
<PAGE>
                                  EXHIBIT INDEX
EXHIBIT NO.                                                               PAGE


3.1(a)(1)      Certificate of Incorporation.

3.1(b)(1)      Amendment to Certificate of Incorporation.

3.2(2)         Bylaws.

4.1(3)         Form of Certificate for Shares or Common Stock of the Company.

4.2(a)(4)      Warrant Agreement, dated as of December 11, 1991, by and between
               the Company and Shereff, Friedman, Hoffman and Goodman, LLP.

4.2(b)(4)      Warrant Agreement, dated as of November 17, 1993, by and between
               the Company and Gerard Klauer Mattison & Co., Inc.

4.3(5)         Form of Rights Agreement, dated as of January 17, 1990, between
               the Company and Mellon Securities Trust Company.

10.1(a)(6)*    Amended and Restated 1984 Employee Stock Option Plan.

10.1(b)(7)*    1994 Senior Management Stock Option Plan

10.1(c)(8)*    Form of Agreement between each of Mark Goldman, William Catron,
               Lou Novak, Gary Niles, Mark Shephard, Ronald Hirschfeld and H.
               Alan Gaudie and the Company.

10.1(d)(9)*    Form of Amendment No. 1 between each of Mark Goldman, William
               Catron, Lou Novak, Gary Niles, Mark Shepherd, Ronald Hirschfeld
               and H. Alan Gaudie and the Company.

10.1(e)(10)    1995 Non-Employee Directors' Stock Option Plan.

10.1(f)*       Galoob Toys, Inc. 1996 Long Term Compensation Plan

10.1(g)*       Galoob Toys, Inc. 1996 Share Incentive Plan

10.1(h)*       Galoob Toys, Inc. 1996 Officer's Deferred Compensation Plan

10.2(10)*      Lewis Galoob Toys, Inc. Savings and Retirement Plan (Formerly the
               Lewis Galoob Toys, Inc. Profit Sharing) (Amendment and
               Restatement effective January 1, 1987).

10.3(9)*       Severance Agreement, dated October 27, 1994, between Mark Goldman
               and the Company.

10.4(a)*       Agreement, dated January 1, 1997, between William G. Catron and
               the Company.

10.4(b)*       Agreement, dated January 1, 1997, between Loren Hildebrand and
               the Company.

10.4(c)*       Agreement, dated January 1, 1997, between Ronald D. Hirschfeld
               and the Company.

10.4(d)*       Agreement, dated January 1, 1997, between Roger J. Kowalsky and
               the Company.


10.4(e)*       Agreement, dated January 1, 1997, between Gary J. Niles and the
               Company.


                                       16
<PAGE>
10.4(f)*       Agreement, dated January 1, 1997, between Louis R. Novak and the
               Company.

10.5(e)(9)     Amended and Restated Loan and Security Agreement, dated as of
               March 31, 1995, by and among the Company and Congress Financial
               Company (Central).

10.6(a)(11)    License Agreement, dated June 1, 1986, by and between Funmaker,
               as Licensor and the Company, as Licensee.

10.7(a)(12)    License Agreement, dated May 4, 1990, by and among the Company as
               Licensee, Codemasters Software Company, Ltd. and America Company,
               Limited.

10.7(b)(12)    Amendment No. 1 dated June 1991 to License Agreement dated May 4,
               1990.

10.7(c)(12)    Amendment No. 2 dated December 23, 1991 to License Agreement,
               dated May 4, 1990.

10.2(d)(12)    European License Agreement, dated December 23, 1991, by and
               between Codemasters Software Company, Ltd. and the Company.

10.2(e)(12)    Third Amendment to United States License and First Amendment to
               European License, dated November 4, 1992.

10.2(f)(9)     Fourth Amendment to United States License Agreement, dated
               October 14, 1994.

10.8(11)       Agreement of Purchase and Sale, dated October 22, 1986, by and
               between AT Building Company, as Seller, and the Company, as
               Buyer.

10.9(a)(2)     Lease Agreement, dated March 12, 1982, by and between Lincoln
               Alvarado and Patrician Associate, Inc., as Lessor, and the
               Company, as Lessee.

10.9(b)(13)    Amendment No. 1 to Lease Agreement.

10.9(c)(10)    Lease Agreement, dated December 1, 1995, by and between 200 Fifth
               Avenue Associates, as Lessor, and the Company, as Lessee.

10.9(d)        Lease Agreement, dated December 3, 1996, between Prudential
               Insurance Company of America as Lessor and the Company, as
               Lessee.

11(14)         Statement of Computation of Per Share Earnings.

21(14)         Subsidiaries of the Company

23             Consent of Independent Public Accountants (filed herewith)

27(14)         Financial Data Schedule

--------------------------

(1)     Incorporated by reference to the Company's Amendment No. 2 to the
        Registration Statement on Form S-1, filed with the Commission on
        November 8, 1996.

(2)   
  Incorporated by reference to the Company's Amendment No. 1 to
        Registration Statement on Form 8-B, filed with the Securities and
        Exchange Commission (the "Commission") on January 11, 1988.


                                       17
<PAGE>
(3)     Incorporated by reference to the Company's Registration Statement on
        Form S-3, filed with the Commission on February 26, 1990.

(4)     Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended December 31, 1993, filed with the Commission on March 31, 1994.

(5)     Incorporated by reference to the Company's Registration Statement on
        Form 8-A, filed with the Commission on January 23, 1990.

(6)     Incorporated by reference to the Company's Registration Statement on
        Form S-8, Registration No. 33- 56585, filed with the Commission on
        November 23, 1994.

(7)     Incorporated by reference to the Company's Registration Statement on
        Form S-8, Registration No. 33- 56587, filed with the Commission on
        November 23, 1994.

(8)     Incorporated by reference to the Company's Registration Statement on
        Form S-8, Registration No. 33- 56587, filed with the Commission on
        November 23, 1994.

(9)     Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended December 31, 1994, filed with the Commission on March 31, 1995.

(10)    Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended December 31, 1995, filed with the Commission on March 31, 1995.

(11)    Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended December 31, 1996, filed with the Commission on March 31, 1995.

(12)    Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended December 31, 1995, filed with the Commission on March 31, 1995.

(13)    Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended December 31, 1991, filed with the Commission on March 30, 1992.

(14)    Incorporated by reference to the Company's Form 10-K for the fiscal year
        ended December 31, 1996, filed with the Commission on March 31, 1997.


  *     Indicates exhibits relating to executive compensation.

        All other schedules are omitted because they are not applicable or the
required information is shown in the Company's consolidated financial statements
or the notes thereto.



                                       18