New York, New York – April 28, 2005 -- Marvel Enterprises, Inc. (NYSE: MVL), a global entertainment and licensing company, today reported operating results for the first quarter ended March 31, 2005.  Marvel’s fiscal 2005 first quarter results include a $10 million one-time charge ($0.06 per share after-tax) for the successful resolution of all past and future payments claimed by Mr. Lee to be due under an agreement with Marvel.  This charge is in addition to previously recorded accruals for this litigation.

Q1 2005 Highlights:

Excluding the one-time charge, Q1 2005 operating results would have exceeded the Company’s guidance ranges and operating margins would have been 56% compared to 47% in the prior year period.  Reported operating margins were 46% in Q1 2005.

Reflecting the $0.06 per share after-tax charge, Q1 2005 reported EPS was $0.25 as compared to $0.27 in the prior year period.

Marvel Enterprises, Inc. Segment Net Sales/Operating income (in thousands)
	Three Months Ended March 31,      2005            2004
Licensing:     Net Sales	$71,226	$46,860
Operating Income (1)	39,696	35,941
Publishing:    Net Sales	22,418	19,644
Operating Income	8,885	7,310
Toys:              Net Sales	10,500	55,822
Operating Income	4,377	18,166
Corporate Overhead:	(5,002)	(4,116)
TOTAL NET SALES	$104,144	$122,326
TOTAL OPERATING INCOME	47,956	57,301

(1) Includes the impact of a $10 million, one-time charge related to the settlement of litigation with Stan Lee.

Marvel’s Chairman, Morton Handel, commented, “Marvel's character and corporate brands are firmly established with consumers on a worldwide basis.  Our strong Q1 operating results reflect the continued high level of demand for consumer and media products based on our characters.  In order to further leverage this high level of awareness and interest in our characters, this morning we announced plans to produce our own slate of feature films.  We expect that the global promotional value of these projects will complement the extensive pipeline of film projects we already have in development with studio partners and further our transformation into a leading global entertainment company.  We plan to fund these film projects through the utilization of a non-recourse revolving credit facility, thereby maintaining strict adherence to our business model which limits capital investment.

“Our consumer products group continues to make tremendous strides in leveraging the global awareness of our media projects.  In publishing, Marvel’s direct segment market share in March 2005 exceeded 55%, which reflects the high quality of our product and increased retail support.  Finally, we are pleased with the initial demand for the Fantastic Four toy line and are optimistic regarding the performance of this brand at retail.”

Segment Review:

  Licensing Segment net sales increased 52% to $71.2 million in Q1 2005 primarily due to significantly improved contributions from, and the consolidation of, the joint venture with Sony for Spider-Man movie merchandising, as well as contributions from international licensing and studio operations.  Q1 2005 net licensing sales include approximately $11.0 million in gross sales recognized as a result of the consolidation of the JV, compared to the year ago period in which Marvel’s portion of the JV’s results were recorded as equity in net income of the joint venture of $8.1 million.  International licensing net sales, excluding JV activity, increased more than 96% year-over-year to $9.4 million as Marvel’s new international offices continued to leverage global marketing momentum.

Marvel Enterprises, Inc. Licensing Sales by Category (in thousands)
	Three Months Ended
	3/31/05	3/31/04
Apparel and accessories	$24,855	$19,697
Entertainment (including studios, themed attractions and electronic games)	24,927	5,444
Toy Royalties	5,083	6,348
Other (Domestics, food and other)	16,361	15,371
Total	71,226	46,860

Reflecting the charge related to the settlement of the Stan Lee litigation, total licensing operating expenses increased 66% to $31.5 million in Q1 2005 compared to $19.0 million in the prior-year period.  Operating margins were 56% in Q1 2005 compared to 77% in the prior-year period.  Excluding the charge, operating margins would have been 70% in Q1 2005.

Marvel’s Publishing Segment net sales rose 14% to $22.4 million due to strength in core comic and trade paperback sales.  Marvel achieved increases of approximately 14% in both the number of comic book titles shipped and in the average circulation per title in Q1 2005 compared to the prior year period.  Operating income in Q1 2005 was $8.9 million, an operating margin of 40%, compared to an operating margin of 37% in the prior-year period. 

As expected, Marvel’s Toy Segment net sales decreased 81% to $10.5 million from the prior-year period primarily due to a transition from Marvel-produced action figures and accessories based on the Lord of The Rings franchise and Spider-Man 2 movie in 2004, to lines produced by our master toy licensee in 2005.  Spider-Man 2 movie toy sales were $1.9 million in Q1 2005 compared with sales of $44.8 million in Q1 2004.  Operating margins for the toy division increased from 33% in Q1 2004 to 42% in Q1 2005 due to increased toy royalty and service fees.

Marvel Enterprises, Inc. Toy Sales Summary (in thousands)
	Three Months Ended
	3/31/05	3/31/04
Marvel Toy Net Sales	$4,107	$52,579
Master Toy License:
- Toy Royalties	3,419	2,070
- Fees for services rendered	2,974	1,173
Total Toy Segment	$10,500	$55,822

Corporate Overhead was $5.0 million in Q1 2005 compared to $4.1 million in the prior year period, resulting from increased legal fees related to active litigation.

Balance Sheet Update:

Marvel had cash and short-term investments of $243 million as of March 31, 2005.  As of March 31, 2005, Marvel continues to have $42.0 million available under its initial stock repurchase authorization.  No shares were repurchased during Q1 2005 as Marvel was precluded from any such activity due to active discussions related to developing the feature film fund.

Marvel Studios (Development and release dates are controlled by Movie Studios)
Marvel Character Feature Film Line-Up For 2005
Film/Character	Studio/Distributor	Status
Elektra	New Regency/ Fox	Released Jan. 14, 2005
Fantastic Four	Fox	July 8, 2005 release
Marvel Character Feature Film Development Pipeline (Partial List)
Character/Property	Studio/Distributor	Status
X-Men 3	Fox	Summer, 2006 release
Ghost Rider	Sony	Script, Director, Filming started, Slated for 2006
The Punisher 2	Lions Gate	Writer, Director, Targeted for 2006
Spider-Man 3	Sony/Columbia	Director, May 4, 2007 release
Namor	Universal Pictures	Script, Targeted for 2007
Iron Man	New Line Cinema	TBD (1)
Luke Cage	Sony/Columbia	TBD (1)
Deathlok	Paramount	TBD (1)
The Hulk 2	Universal Pictures	TBD (1)
Wolverine	Fox	TBD (1)
Marvel Character Feature Film Projects in Development Ant-Man, Black Panther, Captain America, Killraven (1), Nick Fury, Silver Surfer and Thor
Marvel Character Animated Direct-to-Video Projects in Development
Partnership with Lions Gate to develop, produce and distribute original animated DVD features.  Four projects in 2D/3D format are in development with the first release slated for 2006.  Titles include: The Avengers 1, The Avengers 2, Iron Man and Dr. Strange. (1)

Marvel Character Animated TV Projects in Development

Partnership with Antefilms Distribution to produce an original animated television series based on the Fantastic Four. 26, thirty-minute 2D/3D animated episodes are planned with initial TV airings in 2006.

Marvel Character Live Action TV Projects in Development

Brother Voodoo. (1)

(1)     Represents a change from the previously supplied schedule

TBD = To Be Determined

2005 Video Game Release Schedule (Release dates are controlled by Publishing partners)
Publisher	Character	Release
Activision	Spider-Man & Friends	Released Q1 2005
	Fantastic Four	Q2 2005
	Ultimate Spider-Man	Q3 2005
	X-Men Legends II	Q4 2005
Electronic Arts	Marvel versus EA	Q4 2005
THQ Inc	Punisher	Released Q1 2005
Vivendi Universal	Hulk: Ultimate Destruction	Q3 2005

Marvel Enterprises, Inc.
(in millions –  except per share amounts)	2005 Guidance (1)	2004 Actual
Net sales	$370 - $390	$513
Net income (2)	$120 - $126	$125
Diluted EPS attributable to common stock (2)	$1.07 - $1.12	$1.10

(1)   Previous 2005 guidance ranges were initially provided in the Company’s October 28, 2004 release and reiterated in the Company’s March 7, 2005 release.

(2)     2004 full year net income and EPS attributable to common stock include one-time charges of approximately $12 million associated with the early redemption in June 2004 of the Company’s 12% Senior Notes due 2012.

2005 Guidance and Drivers: Marvel is maintaining its previously provided financial guidance ranges for 2005.  Included in this updated guidance is the $10 million charge taken in Q1 2005 related to the settlement of outstanding litigation with Stan Lee for all past and future payments claimed by Mr. Lee to be due to Mr. Lee under his agreement with Marvel.  In addition, the previously anticipated $4.2 million expense for stock options under FASB Statement Number 123R has been eliminated, reflecting a recent pronouncement delaying implementation until 2006. 

The licensing division is expected to generate approximately 50% of total sales for the year with operating margins ranging between 60% - 65%.  Some planned advertising for the Fantastic Four brand is included in the licensing and toy divisions.  The following are expected to be some of the key factors in Marvel’s 2005 financial performance and are reflected in the Company’s financial guidance range.

Ongoing contributions from the Spider-Man 2 feature film.

Contributions from the syndication of the first Spider-Man feature film as well as a non-refundable option payment for the Spider-Man 3 movie expected to be released in 2007.

Approximately $20 million in license revenue to be derived from the Spider-Man joint venture, $11 million of which was recorded in Q1 2005.

The Fantastic Four movie release and related licensing, as well as licensing associated with other entertainment projects slated for 2005 or thereafter, noted in the table above.

Income related to an estimated $80 million of wholesale sales of Fantastic Four toys by our master toy licensee.

Domestic license renewals, including category consolidation efforts, which should exceed $60 million.

Domestic licensing overages and cash-basis revenues of $35 million (compared to $37 million in 2004), including $8.4 million recorded in Q1 2005.

International licensing revenues in excess of $30 million, including $9.4 million recorded in Q1 2005.

Modest top line and bottom line growth from the publishing division.

The benefit of interest income versus interest expense incurred in 2004, coupled with a lower average fully diluted share count, reflecting stock repurchases in 2004.

Marvel cautions investors that inherent variability in the timing of license opportunities and entertainment events, the timing of their revenue recognition, and their relative success may contribute to sequential and year-over-year variability in its interim financial results and could have a material impact on quarterly results as well as Marvel’s ability to achieve the financial performance included in its financial guidance.

About Marvel Enterprises

With a library of over 5,000 proprietary characters, Marvel Enterprises, Inc. is one of the world's most prominent character-based entertainment companies. Marvel's operations are focused in three areas: entertainment (Marvel Studios) and licensing, comic book publishing and toys. Marvel facilitates the creation of entertainment projects, including feature films, DVD/home video, video games and television based on its characters and also licenses its characters for use in a wide range of consumer products and services including apparel, collectibles, snack foods and promotions. Marvel's characters and plot lines are created by its publishing segment that continues to expand its leadership position in the U.S. and worldwide while also serving as an invaluable source of intellectual property.

Except for any historical information that they contain, the statements in this news release regarding Marvel's plans are forward-looking statements that are subject to certain risks and uncertainties, including a decrease in the level of media exposure or popularity of Marvel's characters, financial difficulties of Marvel's major licensees, delays and cancellations of movies and television productions based on Marvel characters, poor performance of major movies based on Marvel characters, toy-production delays or shortfalls, continued concentration of toy retailers, toy inventory risk, significant appreciation of Chinese currency against other currencies and the imposition of quotas or tariffs on products manufactured in China.  These and other risks and uncertainties are described in Marvel's filings with the Securities and Exchange Commission, including Marvel's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Marvel assumes no obligation to publicly update or revise any forward-looking statements.

For further information contact:

Matt Finick                                Richard Land, David Collins

Marvel Enterprises                               Jaffoni & Collins

212/576-4035                            212/835-8500

mfinick@marvel.com                                          mvl@jcir.com

MARVEL ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(In thousands, except per share data)

(unaudited)

Marvel Enterprises, Inc.
MARCH 31, 2005
Consolidated Balance Sheets

	March 31, 2005		December 31, 2004
	(in thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents .	$  59,403		$  50,071
Short-term investments .	184,074		154,719
Accounts receivable, net	66,614		73,576
Inventories, net .	7,453		6,587
Deferred income taxes, net	7,981		7,981
Prepaid expenses and other current assets	3,901		2,734
Total current assets	329,426		295,668
Molds, tools and equipment, net	5,242		5,553
Product and package design costs, net .	1,230		1,249
Goodwill   …	341,708		341,708
Accounts receivable, non-current portion.	32,222		37,718
Deferred  income taxes, net	28,645		32,583
Other assets	318		335
Total assets .	$  738,791		$  714,814
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$  4,143		$  6,006
Accrued royalties	79,065		57,879
Accrued expenses and other current liabilities	35,910		43,962
Minority interest to be distributed.	3,386		8,428
Income taxes payable	12,328		10,129
Deferred revenue	10,208		27,033
Total current liabilities	145,040		153,437
Accrued rent …	1,230		165
Deferred reserve, non-current portion …	17,418		14,712
Total liabilities	163,688		168,314
Stockholders' equity:
Preferred stock, $.01 par value, 25,000,000 shares authorized, none issued	--		--
Common stock, $.01 par value, 250,000,000 shares authorized, 120,676,702 issued and 105,335,502 outstanding in 2005 and 120,442,988 issued and 105,101,788 outstanding in 2004 ………………….…	1,206		1,205
Deferred stock compensation .	(9,067)		(5,164)
Additional paid-in capital .	581,887		577,169
Retained earnings	94,664		66,943
Accumulated other comprehensive loss	(2,586)		(2,652)
Treasury stock, 15,341,200 shares	(91,001)		(91,001)
Comments There are currently no comments for this story. You must sign in or register to comment.   True Believers: Follow Marvel! Get the latest news as it's happening. Follow us on Twitter or like us on Facebook! From the Bullpen Up Close with Tony Stark's Hall of Armor Apr 1, 2013 | 6:42 pm by Agent_M Read More 6 Things I Learned at the February 2013 Marvel Comics ... Feb 19, 2013 | 4:23 pm by Agent_M Read More Lil Bub Visits Marvel Comics Jan 16, 2013 | 11:54 am by Agent_M Read More See All Blogs Marvel News RSS Feeds Comics News Movies & Tv News Games News Gear News Toys News Characters News ALL THINGS MARVEL Comics Catalog Marvel Unlimited Digital Comic Shop Find a Comic Shop Comic Book Subscriptions Movies TV Characters Games News EXTRAS Download Wallpaper Get the Marvel Pulse Newsletter Create Your Own Comic Create Your Own Superhero Mobile Apps COMPANY Help/Customer Service Marvel Corporate Information Advertising Become a Marvel Intern Careers Use of this website signifies your agreement to the Terms and Conditions and Privacy Policy. ™ & © Marvel & Subs.