Marvel Reports 2004 EPS of $1.10, Reflecting Strong Global Demand for

Marvel Reports 2004 EPS of $1.10, Reflecting Strong Global Demand for All Its Character Brands; Marvel Maintains 2005 EPS Guidance Range of $1.07 to $1.12

    Business Editors/Entertainment Editors

    NEW YORK--(BUSINESS WIRE)--March 7, 2005--

Marvel will host a webcast today for all investors at 9:00 a.m. EDT available at: www.marvel.com or www.fulldisclosure.com
    Marvel Enterprises, Inc. (NYSE:MVL), a global entertainment and licensing company, today reported operating results for the fourth quarter and year ended December 31, 2004.

    Q4 2004 Highlights:

--	Net sales and operating income increased primarily due to contributions from Marvel's joint venture (JV) with Sony for Spider-Man movie merchandising and to improved international licensing revenues.
--	A shift towards revenues in licensing in Q4 2004 led to company-wide operating margin of 41% compared to 31% in the prior year period.
--	A previously recorded valuation allowance associated with state and local NOL carryforwards was eliminated, resulting in a non-cash, non-recurring credit to income tax of approximately $6.2 million ($0.06 per share), reducing the Q4 2004 income tax rate to 12.7%.
--	4Q 2004 reported EPS of $0.27 as compared to $0.12 in the prior year period.

    Marvel's Chairman, Morton Handel, commented, "Our strong 2004 operating results continue to reflect the expanding global power of the Marvel brand and an increase in consumer and media products based on our characters. Our consumer product division made tremendous progress during the year in further enhancing our portfolio of licensing relationships. This continuation of our category consolidation strategy, which focuses on teaming with leading partners, improves retail support and long-term sales potential. Of note, Marvel's growing global consumer brand supported a 100% increase in international licensing revenue contributions, to $28 million in 2004.
    "Additionally, Marvel continues to make strides in extending our development pipeline for entertainment projects. In light of our success and the increased value of our brand, Marvel has been able to improve the economic terms for new media and consumer product projects. The Company is also moving aggressively into the animated television and DVD markets to increase the support for our brands on a worldwide basis.
    "In publishing, following our previously stated strategic goals, we are entering new retail channels. Marvel recently reached a distribution agreement with 7-Eleven convenience stores to introduce marvel comic books, which are specifically designed and targeted at the important children demographic. Finally, our toy division's performance was acknowledged as it was named Wal-Mart's 'Import Vendor of the Year' for 2004."
    Commencing with Q4 2004, for all periods presented, Marvel has reclassified the revenue and related costs generated from its license and agency agreements with Toy Biz Worldwide LTD (TBW) from the licensing division to the Toy division, which is reflected in the tables below. A complete table reconciling the reclassification of TBW contributions for the periods shown below is presented at the end of this release.

---------------------------------------------------------------------- Marvel Enterprises, Inc. Segment Net Sales/Operating income (dollars in thousands) ---------------------------------------------------------------------- Three Months Ended Twelve Months Ended December 31, December 30, 2004 2003 2004 2003 ---------------------------------------------------------------------- Licensing: Net Sales $56,656 $29,981 $214,734 $124,449 ---------------------------------------------------------------------- Operating Income 34,251 10,204 152,726 83,227 ---------------------------------------------------------------------- Publishing: Net Sales 22,069 18,955 85,943 73,255 ---------------------------------------------------------------------- Operating Income 11,621 7,189 37,272 25,442 ---------------------------------------------------------------------- Toys: Net Sales 21,767 36,811 212,791 149,922 ---------------------------------------------------------------------- Operating Income 2,860 14,318 58,144 77,905 ---------------------------------------------------------------------- Corporate Overhead: (7,377) (5,126) (23,729) (19,352) ---------------------------------------------------------------------- TOTAL NET SALES 100,492 85,747 513,468 347,626 ---------------------------------------------------------------------- TOTAL OPERATING INCOME 41,355 26,585 224,413 167,222 ----------------------------------------------------------------------

    Segment Review:

    -- Licensing Segment net sales increased 89% to $56.7 million in
    Q4 2004 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 operations. Q4 2004 net licensing
    sales include approximately $29.2 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 of $2.4 million were recorded as equity in
    net income of the joint venture. International licensing net
    sales, excluding JV activity, increased more than 168%
    year-over-year to $9.9 million in Q4 2004 as Marvel's new
    international offices continued to leverage global marketing
    momentum.

---------------------------------------------------------------------- Marvel Enterprises, Inc. Licensing Sales by Category (dollars in thousands) ---------------------------------------------------------------------- (in thousands) Three Months Ended Twelve Months Ended 12/31/04 12/31/03 12/31/04 12/31/03 ---------------------------------------------------------------------- Apparel and accessories $14,539 $11,693 $78,798 $39,218 ---------------------------------------------------------------------- Entertainment (including studios, themed attractions and electronic games) 26,347 8,250 62,296 50,589 ---------------------------------------------------------------------- Toy Royalties 7,433 4,230 34,217 14,946 ---------------------------------------------------------------------- Other (Domestics, food and other) 8,337 5,808 39,423 19,696 ---------------------------------------------------------------------- Total $56,656 $29,981 $214,734 $124,449 ----------------------------------------------------------------------

    Total licensing operating expenses remained flat at $22.4 million in Q4 2004 compared to $22.1 million in the prior-year period. Accounting for Sony's minority interest in the Spider-Man movie merchandising joint venture as royalty expense, licensing operating income in the quarter would have been $27.6 million and operating margins for the licensing segment would have been 49% in Q4 2004 compared to 34% in Q4 2003.

--	Marvel's Publishing Segment net sales rose 16% to $22.1 million due to strength in core comic and trade paperbacks as well as growth in new mass-market retail chains. Marvel experienced slight increases in both the number of comic book titles shipped and the average circulation per title in Q4 2004 compared to the prior year period. Excluding the benefit of reductions in reserves, operating income in Q4 2004 would have been $9.9 million, an operating margin of 44%, compared to an operating margin of 38% in the prior-year period.
--	Marvel's Toy Segment net sales decreased 41% to $21.8 million from the prior-year period primarily due to decreased sales of action figures and accessories based on the Lord of The Rings franchise and The Hulk movies. Spider-Man movie toy sales were $14.2 million in Q4 2004 compared with sales of $11.3 million in Q4 2003. As previously disclosed, a planned increase in advertising and promotion expense ahead of the 2004 holiday season, coupled with lower sales volumes, resulted in a year-over-year decline in the operating margins for the toy division from 39% in Q4 2003 to 13% in Q4 2004. Full year 2004 sales of Spider-Man movie toys were $175.3 million, slightly ahead of guidance of $160 million to $170 million. Marvel toy inventory was only $1.3 million at year-end.

---------------------------------------------------------------------- (in thousands) Three Months Ended Twelve Months Ended 12/31/04 12/31/03 12/31/04 12/31/03 ---------------------------------------------------------------------- Marvel Toy Net Sales $17,357 $25,878 $197,604 $85,167 ---------------------------------------------------------------------- Master Toy License: ---------------------------------------------------------------------- - Toy Royalties 2,450 5,140 9,298 29,579 ---------------------------------------------------------------------- - Fees for services rendered 1,960 5,793 5,889 35,176 ---------------------------------------------------------------------- Total Toy Segment $21,767 $36,811 $212,791 $149,922 ----------------------------------------------------------------------

    -- Corporate Overhead, which included a $4.0 million charge for
    the early termination of the Company's lease for its corporate
    office space and a credit for insurance collections of $5
    million, was $7.4 million in Q4 2004 compared to $5.1 million
    in the prior year period. Marvel's new lease will generate
    annual savings of approximately $1.5 million per year.

    Balance Sheet Update:

    After common stock repurchases totaling $58 million in 2004, Marvel had cash and cash equivalents of $205 million as of December 31, 2004. During the fourth quarter of 2004, Marvel repurchased approximately 1 million shares for a total consideration of $14.4 million (average price of $13.96 per share). As of March 4, 2005, Marvel continues to have $42.0 million available under its initial repurchase authorization.

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(1) ----------------------------------------------------------------------

Marvel Character Feature Film Development Pipeline (Partial List) ---------------------------------------------------------------------- Character/ Studio/Distributor Status Property ---------------------------------------------------------------------- X-Men 3 Fox Summer, 2006 release(1) ---------------------------------------------------------------------- Ghost Rider Sony Script, Director, Filming started, Slated for 2006 ---------------------------------------------------------------------- Iron Man New Line Cinema Script, Targeted for 2006 ---------------------------------------------------------------------- Luke Cage Sony/Columbia Script, Director, Targeted for 2006 ---------------------------------------------------------------------- The Punisher 2 Lions Gate Writer, Director, Targeted for 2006 ---------------------------------------------------------------------- Deathlok Paramount Script, Director, Targeted for 2006 ---------------------------------------------------------------------- Spider-Man 3 Sony/Columbia Director, May 4, 2007 release ---------------------------------------------------------------------- Namor Universal Pictures Script, Targeted for 2007 ---------------------------------------------------------------------- The Hulk 2 Universal Pictures Development, Targeted for 2007 ---------------------------------------------------------------------- Wolverine Fox Development, Targeted for 2007 ----------------------------------------------------------------------

Marvel Character Feature Film Projects in Development Ant-Man, Black Panther, Captain America, Nick Fury, Silver Surfer, 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. Characters include: The Avengers 1, The Avengers 2 and Iron Man. ----------------------------------------------------------------------

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 ---------------------------------------------------------------------- Blade and Brother Voodoo are two Marvel characters that are in development. ---------------------------------------------------------------------- (1) Represents a change from the previously supplied schedule

2005 Video Game Release Schedule (Release dates are controlled by Publishing partners) ---------------------------------------------------------------------- Publisher Character Release ---------------------------------------------------------------------- Activision Spider-Man & Friends 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 Q1 2005 ---------------------------------------------------------------------- Vivendi Universal Hulk: Ultimate Destruction Q3 2005 ----------------------------------------------------------------------

    Q1 2005 financial guidance: Q1 2005 results are expected to benefit from continued strength in Spider-Man 2 movie merchandise licensing, domestic renewals and international licensing. Net sales derived from the licensing segment for the first quarter are expected to be approximately 65% - 70% of total net sales with operating margins in this segment of roughly 65% - 70%. After this quarter, Marvel will only be providing updates on annual guidance.

Marvel Enterprises, Inc. ---------------------------------------------------------------------- Q1 2005 Q1 2004 2005 2004 (in millions - except Guidance Results Guidance(1) Results per share amounts) (Unaudited) ---------------------------------------------------------------------- Net sales $88 - $98 $122 $370 - $390 $513 ---------------------------------------------------------------------- Net income(2) $29 - $34 $31 $120 - $126 $125 ---------------------------------------------------------------------- EPS attributable to common stock(2) $0.25 - $0.29 $0.27 $1.07 - $1.12 $1.10 ---------------------------------------------------------------------- (1) Previous 2005 guidance ranges were provided in the Company's October 28, 2004 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 reiterated its previously provided 2005 financial guidance ranges even though the company has added incremental costs for the expense of options in the second half of 2005 that are required by FASB Statement Number 123R. Classifying Toy Biz Worldwide income in the toy division, the licensing division is now expected to generate roughly 50% of total sales for the year with operating margins ranging between 60% - 70%. 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 an advance for the Spider-Man movie expected to release in 2007.
--	Approximately $20 million in license revenue to be derived from the Spider-Man joint venture.
--	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.
--	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 of $35 million (compared to $37 million in 2004).
--	International licensing revenues in excess of $30 million.
--	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.
--	Additional expense of $4 million in the second half related to the new accounting required for stock options.

    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 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.

MARVEL ENTERPRISES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (In thousands, except per share data) (unaudited)

Three Months Twelve Months Ended December 31, Ended December 31,

2004 2003 2004 2003 --------- -------- --------- ---------

Net sales $100,492 $85,747 $513,468 $347,626 Cost of sales 17,888 21,832 159,589 79,466 --------- -------- --------- --------- Gross profit 82,604 63,915 353,879 268,160 --------- -------- --------- --------- Operating expenses: Selling, general and administrative 45,752 38,717 142,839 108,882 Depreciation and amortization 877 1,530 3,783 4,338 --------- -------- --------- --------- Total operating expenses 46,629 40,247 146,622 113,220 --------- -------- --------- --------- Equity in net income of joint venture 2,383 8,117 10,869 Other Income, net 5,380 535 9,039 1,413 --------- -------- --------- --------- Operating income 41,355 26,586 224,413 167,222 Interest expense 4,772 20,487 18,718 Interest income and other expenses, net 802 459 2,946 1,868 --------- -------- --------- --------- Income before income taxes 42,157 22,273 206,872 150,372 Income tax expense (benefit) 5,364 8,777 64,631 (1,276) Minority interest in consolidated joint venture 6,669 17,364 --- --------- -------- --------- --------- Net income 30,124 13,496 124,877 151,648 Less: preferred dividend requirement --- 1,163 --------- -------- --------- --------- Net income attributable to common stock 30,124 13,496 $124,877 $150,485 ========= ======== ========= =========

Basic earnings per share attributable to common stock $0.29 $0.12 $1.17 $1.50 ========= ======== ========= ========= Weighted average number of basic shares outstanding. 104,642 108,062 107,173 100,355 ========= ======== ========= =========

Diluted earnings per share attributable to common stock. $0.27 $0.12 $1.10 $1.34 ========= ======== ========= =========

Weighted average number of diluted shares outstanding 111,794 115,152 113,957 113,439 ========= ======== ========= =========

MARVEL ENTERPRISES, INC. DECEMBER 31, 2004 CONSOLIDATED BALANCE SHEETS

December 31, December 31, 2004 2003 --------------- -------------- (in thousands, except share data)

ASSETS Current assets: Cash and cash equivalents. $204,790 $32,562 Certificates of deposit and commercial paper. -- 214,457 Accounts receivable, net. 73,576 51,820 Inventories, net. 6,587 12,975 Distribution receivable from joint venture, net -- 2,056 Deferred income taxes, net 7,981 18,197 Deferred financing costs. -- 667 Prepaid expenses and other current assets. 2,734 2,273 --------------- -------------- Total current assets 295,668 335,007

Molds, tools and equipment, net. 5,553 5,811 Product and package design costs, net. 1,249 1,433 Goodwill, net 341,708 341,708 Accounts receivable, non-current portion 37,718 26,437 Deferred income taxes, net 32,583 28,246 Deferred financing costs -- 2,779 Other assets 335 436 --------------- -------------- Total assets. $714,814 $741,857 =============== ==============

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable. $6,006 $18,455 Accrued royalties. 57,879 32,936 Accrued expenses and other current liabilities 43,962 31,442 Minority interest to be distributed 8,428 -- Unsecured creditors payable -- 2,963 Income taxes payable 10,129 4,705 Deferred revenue 27,033 30,308 --------------- -------------- Total current liabilities. 153,437 120,809 Senior notes -- 150,962 Accrued rent 165 636 Deferred reserve, non-current portion 14,712 -- --------------- -------------- Total liabilities. 168,314 272,407 --------------- --------------

Stockholders' equity: Preferred stock, $.01 par value, 25,000,000 shares authorized, none issued -- - Common stock, $.01 par value, 250,000,000 shares authorized, 120,442,988 issued and 105,101,788 outstanding in 2004 and 119,706,206 issued and 108,615,206 outstanding in 2003 1,203 1,198 Deferred stock compensation. (5,164) (4,857) Additional paid-in capital. 577,171 566,908 Retained earnings (deficit). 66,943 (57,934) Accumulated other comprehensive loss. (2,652) (2,910) --------------- -------------- Total stockholders' equity before treasury stock. 637,501 502,405 Treasury stock, 15,341,200 shares in 2004 and 11,091,000 shares in 2003. (91,001) (32,955) --------------- -------------- Total stockholders' equity. 546,500 469,450 --------------- --------------

Total liabilities and stockholders' equity. $714,814 $741,857 =============== ==============

    During the fourth quarter of 2004, Marvel commenced classifying revenue from its master toy licensee, Toy Biz Worldwide Ltd. ("TBW"), and related expenses, within its Toy segment. Revenues from TBW reflect a broader set of efforts on the part of the Company than do revenues from the Company's other licensees. All TBW toys produced under license from the Company are created, designed, marketed and sold for TBW by the Company's toy segment, under an agency agreement between TBW and the Company. Because the services provided to TBW by the Company's Toy segment involve efforts that are similar in nature to the efforts associated with the Company's own toys, the Company believes this change will better aggregate the results derived from Marvel-branded toys developed by Marvel and more clearly reflect operating results used by management to measure the performance of the Toy operations. As a result of this change, prior-period segment information has been reclassified as follows:

MARVEL ENTERPRISES, INC. RECONCILIATION OF RECLASSIFIED REVENUES (In thousands, except per share data) (unaudited)

Reclassified Year End Financial Data ---------------------------------------------------------------------- 2004 2004 2004 2003 2003 2003 Amount Adjustment As Amount Adjustment As Adjusted Adjusted ---------------------------------------------------------------------- Net Sales ---------------------------------------------------------------------- Licensing 229,921 (15,187) 214,734 189,204 (64,755) 124,449 ---------------------------------------------------------------------- Toys 197,604 15,187 212,791 85,167 64,755 149,922 ---------------------------------------------------------------------- Operating 2004 2004 2004 2003 2003 2003 Income Amount Adjustment As Amount Adjustment As Adjusted Adjusted ---------------------------------------------------------------------- Licensing 165,215 (12,489) 152,726 139,409 (56,182) 83,227 ---------------------------------------------------------------------- Toys 45,655 12,489 58,144 21,723 56,182 77,905 ----------------------------------------------------------------------

Reclassified Quarterly Financial Data ---------------------------------------------------------------------- Q4 04 Q4 04 Q4 04 Q4 03 Q4 03 Q4 03 Amount Adjustment As Amount Adjustment As Adjusted Adjusted ---------------------------------------------------------------------- Net Sales ---------------------------------------------------------------------- Licensing 61,066 (4,410) 56,656 40,914 (10,933) 29,981 ---------------------------------------------------------------------- Toys 17,357 4,410 21,767 25,878 10,933 36,811 ---------------------------------------------------------------------- Operating Q4 04 Q4 04 Q4 04 Q4 03 Q4 03 Q4 03 Income Amount Adjustment As Amount Adjustment As Adjusted Adjusted ---------------------------------------------------------------------- Licensing 37,967 (3,716) 34,251 19,262 (9,058) 10,204 ---------------------------------------------------------------------- Toys (856) 3,716 2,860 5,260 9,058 14,318 ----------------------------------------------------------------------

--30--JM/ny*

CONTACT: Marvel Enterprises Matt Finick, 212-576-4035 mfinick@marvel.com or Jaffoni & Collins Richard Land, David Collins, 212-835-8500 mvl@jcir.com

KEYWORD: NEW YORK INDUSTRY KEYWORD: ELECTRONIC GAMES/MULTIMEDIA CONSUMER/HOUSEHOLD ENTERTAINMENT TELEVISION/RADIO CABLE CONFERENCE CALLS EARNINGS SOURCE: Marvel Enterprises

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