New York, New York - May 13, 2004 - Marvel Enterprises, Inc., (NYSE: MVL) a global entertainment licensing company, today provided historical metrics for its licensing division and reviewed current trends and expectations for the division in order to highlight the division's growth dynamics. Increased brand awareness for the Marvel Universe, which resulted from the successful exploitation of Marvel's popular characters in theatrical films, DVDs and video games, has fueled the dramatic expansion in the licensing division. The domestic consumer product licensing segment has been the dominant revenue growth driver over the past several years and is expected to remain so. The Company anticipates that the international licensing and studio segments are poised to dramatically increase from the bases achieved in 2003.
|Licensing Division Revenue Analysis|
|Domestic Consumer Product Licenses:|
|# New Deals/Renewals in Period||56||105||58||128|
|Average Guaranteed Revenue Per New Contract ^||$144,214||$203,476||$326,810||$348,000|
|New Deal/Renewal Revenue||8,076,000||21,365,000||18,955,000||44,572,000|
|Overages/Cash from Pre-existing Licenses||1,310,000||4,498,000||9,893,000||43,774,000|
|Total Domestic License Revenue||$9,386,000||$25,863,000||$28,848,000||$88,346,000|
|# Cumulative Active Domestic Contracts||121||174||226||277|
|Average Revenue Per Active Domestic Contract||$77,570||$148,640||$127,650||$318,940|
|Marvel Studios (Including Producer Fees)||2,444,000||4,704,000||24,390,000||18,018,000|
|Service Fees & Royalties Earned from Toy Biz Worldwide Limited||--||3,176,000||21,808,000||64,755,000|
|International License Revenue||3,742,000||3,131,000||3,419,000||13,903,000|
|Other License Revenue||3,587,000||3,138,000||1,097,000||4,182,000|
|Total Licensing Net Revenue (as reported in our Consolidated Financial Statements)||$19,159,000||$40,012,000||$79,562,000||$189,204,000|
|Equity in net income (loss) of joint venture||--||$(325,000)||$13,802,000||$10,869,000|
|Total||$19,159,000||$40,337,000||$93,364,000||$200,073,000||^ Revenue amounts represent minimum guaranteed payments.|
Domestic licensing: Licensing contracts recorded as revenue in a period are a function of: 1) pre-existing licenses that are renewed or awarded to new licensees and 2) contracts signed in new product categories where there was no previous Marvel licensee. License contracts typically have durations of between 2-3 years. In 2002, the reduction in the absolute number of contracts signed and recorded as revenue in licensing was largely due to the increase in Spider-Man Movie license contracts, which are not recorded in licensing revenues, but are recorded through the Equity in Joint Venture with Sony, and are represented by approximately 245 licenses with respect to Spider-Man: The Movie - released in May 2002.
The positive trends in the average revenue per new/renewed contract are the result of several factors, which Marvel believes will continue in the future. For example, the dramatic increase in the level of media and consumer product exposures for the Marvel Universe has resulted in higher retail sell-through for licensed products. This has resulted in higher overall demand and value for license contracts - principally in the size of minimum guarantees. Additionally, the number of new licenses with minimum guaranteed royalty payments above $1 million increased to 6 in 2003 compared to 3 in 2002. This trend is expected to continue as the Company executes its consumer product category consolidation initiative, which was announced in late-2003.
Marvel Studios: Marvel Studios provides the creative input for global media opportunities for Marvel characters, the consumer exposure from which fuels growth for all of Marvel's operating divisions. Marvel Studios also represents a significantly under-developed revenue stream in its own right. The major growth drivers for this division are royalty payments from studio partners for Marvel's share of box office receipts, DVDs/videos, TV license fees, producer and other fees, and other ancillary revenue streams derived from films or other entertainment projects based on Marvel characters. Major theatrical films routinely generate royalties to Marvel for several years following their initial release window, resulting in a layering effect as new theatrical events are released. Marvel believes that this segment represents a significant revenue growth driver over the next several years as the company continues to expand into large untapped market opportunities such as made-for-DVD animation features, TV animation and genre films.
Service Fees & Royalties Earned from Toy Biz Worldwide Limited: Marvel receives a 15% royalty on wholesale sales of all toys produced under its license agreement with Toy Biz Worldwide Limited. In addition to royalties, as compensation for the value-added services provided to Toy Biz Worldwide, Marvel receives a service fee based on the wholesale price of toys produced under the license agreement that equals 24.5% of wholesale toy sales in the U.S. and 10% of wholesale toy sales in international markets. In 2003, total service fees and royalties increased dramatically from 2002 levels due to the release of the Hulk theatrical film. In 2004, revenues for this category are anticipated to be lower than the level achieved in 2003, but then should expand in 2005 as major theatrical releases such as Fantastic Four and Iron Man generate related toy service fees and royalties.
International License Revenue: The Company anticipates that this segment will be a major revenue growth driver over the next several years and is expected to increase to $25 million in 2004. Based on the success of feature films in international markets, which typically account for roughly 45% of total box office receipts, management believes that this segment should account for 40% to 45% of total licensing revenue within the next 5 years.