Marvel Entertainment 8-K Marvel Reports Q3 and Nine Months Eps of $0.26 and $1.20

MARVEL REPORTS Q3 AND NINE MONTHS EPS OF $0.26 AND $1.20

New York, New York – November 3, 2009 -- Marvel Entertainment, Inc. (NYSE: MVL), a global character-based entertainment and licensing company celebrating the 70th anniversary of its founding, today reported operating results for its third quarter and nine months ended September 30, 2009.

Reflecting a lower level of feature film activity and related licensing compared to the year-ago period, Marvel reported Q3 2009 net sales of $105.7 million and net income of $20.4 million, or $0.26 per diluted share, compared to net sales of $182.5 million and net income of $50.6 million, or $0.64 per diluted share, in Q3 2008.  The anticipated year-over-year decline in net sales and net income principally reflects approximately $65 million in lower film revenues in Q3 2009 compared to the prior year period, as well as lower licensing segment net sales related to last year’s Iron Man and The Incredible Hulk feature films as well as the Spider-Man merchandising joint venture.

Marvel Entertainment, Inc. Segment Net Sales and Operating Income (Unaudited) (in millions)
		Three Months Ended September 30,						Nine Months Ended September 30,
		2009			2008			2009			2008
Licensing:	Net Sales	$	48.9		$	58.1		$	181.5		$	237.5
	Operating Income		37.5			42.5			130.5			205.4
Publishing:	Net Sales		32.0			34.0			89.5			92.3
	Operating Income		10.2			12.7			28.2			34.3
Film Production:	Net Sales		24.8			90.2			147.9			119.1
	Operating (Loss) Income		(2.3	)		40.4			25.0			40.6
All Other:	Net Sales		-			0.2			-			3.0
	Operating (Loss)		(8.8	)		(7.4	)		(20.9	)		(19.4	)
TOTAL NET SALES		$	105.7		$	182.5		$	418.9		$	451.9
TOTAL OPERATING INCOME		$	36.6		$	88.2		$	162.8		$	260.9

Marvel's Chairman, Morton Handel, commented, “Despite the absence of any Marvel Studios feature film releases in 2009, Marvel continued to deliver solid operating performance across all our operating segments.  Anticipation for the high profile Iron Man 2 feature film continues to build, and we are focusing our efforts on the film’s May 2010 release and the related licensing opportunities.  At the same time, we are making solid progress on the development and pre-production of our Thor, The First Avenger: Captain America and The Avengers feature film projects.

“On August 31, 2009, The Walt Disney Company and Marvel agreed, subject to Marvel shareholder approval and other customary closing conditions, that Disney will acquire Marvel in a stock and cash transaction.  Disney is the ideal home to nurture and further develop the distinctive Marvel brands because of its ability to extend the breadth, diversity and global reach of Marvel-branded entertainment and consumer products.  We continue to expect this transaction will close by calendar year end.”

Third Quarter Segment Review:

· As anticipated, Q3 2009 Licensing Segment net sales declined versus the year ago period, primarily due to the recognition in Q3 2008 of merchandise licensing revenue related to the Iron Man and The Incredible Hulk feature films, as well as a decrease in revenue from the Spider-Man merchandising joint venture.  Q3 2009 licensing segment net sales reflect a total contribution of $6.3 million from Hasbro, ($3.8 million within domestic consumer products and $2.5 million within international consumer products) compared to a total contribution from Hasbro of $12.0 million in the year ago period ($7.2 million in domestic consumer products and $4.8 million in international consumer products).  Licensing Segment operating income also declined in Q3 2009 to $37.5 million (an operating margin of 77%) principally reflecting the lower sales level.

Marvel Entertainment Reports Q3 2009 Results, 11/3/09 page 2 of 7

Marvel Entertainment, Inc. Licensing Sales by Division (Unaudited) (in millions)
	Three Months Ended				Nine Months Ended
	9/30/09		9/30/08		9/30/09		9/30/08
Domestic Consumer Products (1)	$	25.6	$	24.8	$	95.9	$	97.8
International Consumer Products		15.8		22.0		61.8		67.0
Spider-Man L.P. (Domestic and International)		2.4		8.1		10.3		50.9
Studio Licensing		5.1		3.2		13.5		21.8
Total Licensing Segment	$	48.9	$	58.1	$	181.5	$	237.5

 (1) Domestic Consumer Products includes substantially all of Marvel’s global interactive licensing business.

· Q3 2009 Publishing Segment net sales declined 6%, or $2 million, compared to Q3 2008 and were in line with Q2 2009 net sales.  The year-over-year decline principally reflects $3.2 million in lower custom publishing and advertising revenue compared to the prior year period, partially offset by a year-over-year increase of $1.6 million in revenue from the book market.  Operating income declined by $2.5 million, or 19.7%, on a year-over-year basis, to $10.2 million and operating margin decreased to 32% in Q3 2009 versus 37% in Q3 2008, principally due to an increase in talent costs and the decrease in custom publishing which carries a higher margin.

· Film Production Segment net sales declined to $24.8 million in Q3 2009 from $90.2 million in Q3 2008.  Net sales in Q3 2009 primarily reflect the recognition of revenues associated with the international pay TV window for Iron Man and the domestic pay TV window for The Incredible Hulk as well as contributions from DVD sales for both Iron Man and The Incredible Hulk.  Against these revenues Marvel amortized capitalized film production costs of $20.5 million.  Year-ago Q3 film production segment results reflected theatrical box office revenues from Iron Man and The Incredible Hulk and the opening of the home video window in certain international pre-sold territories for Iron Man.

· In the All Other category, Marvel recorded Q3 2009 and Q3 2008 operating losses of $8.8 million and $7.4 million, respectively, reflecting respective corporate overhead expense of $9.5 million and $7.6 million.  Q3 2009 corporate overhead includes a provision of $2.9 million for transaction costs (principally legal fees) associated with Disney’s proposed acquisition of Marvel.

Balance Sheet and Cash Use Update:

As of September 30, 2009, Marvel had cash and cash equivalents of $109.6 million, restricted cash of $79.0 million and no outstanding borrowings under its $100 million line of credit.  Marvel’s outstanding film-facility borrowings increased to $21.5 million at September 30, 2009 compared to no outstanding film borrowings at June 30, 2009.  The quarterly sequential increase in film-facility borrowings reflects ongoing production funding for the Iron Man 2 feature film.

Marvel Entertainment Reports Q3 2009 Results, 11/3/09 page 3 of 7

Marvel Studios Entertainment Pipeline (scheduled release dates are subject to change)
Feature Films	Scheduled release date
Iron Man 2	May 7, 2010
Thor	May 20, 2011
The First Avenger: Captain America	July 22, 2011
The Avengers	May 4, 2012
Animated TV Series	Status
The Super Hero Squad	52, 30-minute episodes airing on Cartoon Network in the U.S. and launching on International broadcast channels in Q4 2009
The Avengers: Earth’s Mightiest Heroes	52, 30-minute episodes in production; timing and network TBD

Marvel Licensed Entertainment Pipeline (scheduled release dates are subject to change)
Feature Films	Scheduled Release Date
Spider-Man 4	May 6, 2011
Animated TV Series	Status
Black Panther	6, 30-minute episodes in production for BET; timing TBD
Fantastic Four: World’s Greatest Heroes	26, 30-minute episodes airing on Nicktoons in the U.S., various networks internationally and on Marvel.com and Marvelkids.com
Iron Man: Armored Adventures	52, 30-minute episodes.  Episodes 1-26 are airing on Nicktoons in the U.S. and are on air internationally.  Episodes 27-52 are currently in development
Spectacular Spider-Man	26, 30-minute episodes airing on Disney XD in the U.S. and on various networks internationally
Wolverine and the X-Men	52, 30-minute episodes. Episodes 1-26 are airing on Nicktoons in the U.S. and are on air internationally.  Episodes 27-52 are currently in development
Marvel Anime: Iron Man	12, 30-minute episodes in production. Scheduled to launch on Animax in Japan in Q2 2010.  Scheduled to launch in the U.S. in 2011
Marvel Anime: Wolverine	12, 30-minute episodes in production. Scheduled to launch on Animax in Japan in Q3 2010.  Scheduled to launch in the U.S. in 2011
Licensed Broadway Musical	Status
Spider-Man, Turn off the Dark, Julie Taymor director; music & lyrics by U2’s Bono and The Edge	Opening Night TBD
Animated Direct-to-DVD Projects	Status
Planet Hulk	Production complete.  Scheduled for February 2010 release
Thor: Tales of Asgard	Production complete.  Release date TBD

Marvel Licensed Video Game Pipeline (scheduled release dates are subject to change)
Game / Publisher	Status
The Punisher: No Mercy / Zen	Released July 2, 2009
Marvel vs. Capcom 2 / Capcom	Released July 29, 2009 for X-Box console and August 13, 2009 for PS3 console
Marvel Ultimate Alliance 2 / Activision	Released September 15, 2009
Marvel Super Hero Squad / THQ	Released October 20, 2009
Iron Man 2 / Sega	Scheduled for April 2010 release
Thor / Sega	Scheduled for May 2011 release
Captain America / Sega	Scheduled for July 2011 release

Marvel Entertainment Reports Q3 2009 Results, 11/3/09 page 4 of 7

About Marvel Entertainment, Inc.

Marvel Entertainment, Inc. is one of the world's most prominent character-based entertainment companies, built on a proven library of over 5,000 characters featured in a variety of media over seventy years.  Marvel utilizes its character franchises in licensing, entertainment (via Marvel Studios and Marvel Animation) and publishing (via Marvel Comics).  Marvel's strategy is to leverage its franchises in a growing array of opportunities around the world, including feature films, consumer products, toys, video games, animated television, direct-to-DVD and online.  For more information visit www.marvel.com.

Except for any historical information that they contain, the statements in this news release regarding Marvel’s plans are forward-looking statements, including statements relating to (i) the ability to further develop the Marvel brand as a result of the proposed merger with The Walt Disney Company, (ii) the closing of the Disney merger and the expected timing of that closing and (iii) Marvel’s future movie, television, theatrical and game releases.  These forward-looking statements are subject to certain risks and uncertainties, including those related to Marvel’s exposure to the current economic recession, exposure to tightening credit markets, financial difficulties of Marvel’s licensees, a decrease in the level of media exposure or popularity of Marvel’s characters, changing consumer preferences, delays and cancellations of movies and television productions based on Marvel characters, Marvel Studios’ potential inability to attract and retain creative talent, key film talent’s potentially becoming incapacitated or suffering reputational damage, the potential lack of popularity of Marvel’s films, union activity or other events which could interrupt film production, including strikes by Hollywood writers, directors and actors, piracy of films and related products, Marvel Studios’ dependence on a single distributor for each self-produced film, a possible default by the lending banks in our film facility and the risks relating to the proposed merger with The Walt Disney Company as outlined under the heading “Risk Factors” in Amendment No. 1 to the Form S-4 filed by The Walt Disney Company on October 27, 2009 (the “Disney S-4”).

These and other risks and uncertainties are described under the headings “Risk Factors” and Management’s Discussion and Analysis of Financial Condition and Results of Operations” 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.  As noted above, certain risks relating the Marvel’s proposed merger with Disney are described in the Disney S-4.  Marvel assumes no obligation to publicly update or revise any forward-looking statements.

Important Merger Information and Additional Information:

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed transaction, Disney filed a Registration Statement on Form S-4 with the SEC on September 22, 2009, as amended on October 27, 2009, that includes a preliminary proxy statement of Marvel that also constitutes a preliminary prospectus of Disney. These materials are not yet final and will be further amended. Marvel will mail the proxy statement/prospectus to its stockholders once it is final. Investors are urged to read the definitive proxy statement/prospectus regarding the proposed transaction when it becomes available, because it will contain important information. You may obtain copies of all documents filed with the SEC regarding this transaction, including the definitive proxy statement/prospectus when it becomes available, free of charge at the SEC’s website, www.sec.gov, or by directing a request when such a filing is made to The Walt Disney Company, 500 South Buena Vista Street, Burbank, CA 91521-9722, Attention: Shareholder Services or by directing a request when such a filing is made to Marvel’s proxy solicitor, MacKenzie Partners, Inc., 105 Madison Avenue, New York, New York 10016 or by calling Mackenzie Partners, Inc. at (800) 322-2885 (toll free) or (212) 929-5500 (call collect).

Disney, Marvel, their respective directors and certain of their executive officers may be considered participants in the solicitation of proxies in connection with the proposed transaction.  Information about the directors and executive officers of Marvel is set forth in the preliminary proxy statement/prospectus contained in the Registration Statement on Form S-4 (Amendment No. 1) filed by Disney on October 27, 2009.  Information about the directors and executive officers of Disney is set forth in its definitive proxy statement, which was filed with the SEC on January 16, 2009.

For further information contact:

Rob Steffens – SVP Financial Planning	David Collins, Richard Land
Marvel Entertainment, Inc.	Jaffoni & Collins
(310) 220-8932	212/835-8500
rsteffens@marvel.com	mvl@jcir.com

Marvel Entertainment Reports Q3 2009 Results, 11/3/09 page 5 of 7

MARVEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2009		2008			2009		2008
	(in thousands, except per share amounts)
Net sales	$	105,663	$	182,499		$	418,893	$	451,925
Costs and expenses:
Cost of revenues (excluding depreciation expense)		35,844		60,351			153,454		108,175
Selling, general and administrative		33,633		35,596			105,777		104,175
Depreciation and amortization		401		401			1,057		1,164
Total costs and expenses		69,878		96,348			260,288		213,514
Other income		855		2,051			4,179		22,481
Operating income		36,640		88,202			162,784		260,892
Interest expense		2,736		5,656			9,103		14,228
Interest income		155		870			481		2,812
(Loss) gain on repurchase of debt		–		(417	)		–		1,916
Income before income tax expense		34,059		82,999			154,162		251,392
Income tax expense		13,139		30,239			57,978		94,423
Net income		20,920		52,760			96,184		156,969
Noncontrolling interest in consolidated Joint Venture		504		2,134			2,265		14,441
Net income attributable to Marvel Entertainment, Inc.	$	20,416	$	50,626		$	93,919	$	142,528
Basic and diluted earnings per share:
Net income attributable to Marvel Entertainment, Inc.	$	20,416	$	50,626		$	93,919	$	142,528
Weighted average shares outstanding:
Weighted average shares for basic earnings per share		78,018		78,403			78,090		77,946
Effect of dilutive stock options and restricted stock		619		514			446		652
Weighted average shares for diluted earnings per share		78,637		78,917			78,536		78,598
Earnings per share, attributable to Marvel Entertainment, Inc.:
Basic	$	0.26	$	0.65		$	1.20	$	1.83
Diluted	$	0.26	$	0.64		$	1.20	$	1.81

Marvel Entertainment Reports Q3 2009 Results, 11/3/09 page 6 of 7

MARVEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

	September 30,			December 31,
	2009			2008
	(in thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	109,604		$	105,335
Restricted cash		37,266			12,272
Short-term investments		–			32,975
Accounts receivable, net		28,853			144,487
Inventories, net		12,356			11,362
Income tax receivable		–			2,029
Deferred income taxes, net		27,959			34,072
Prepaid expenses and other current assets		8,442			5,135
Total current assets		224,480			347,667
Fixed assets, net		4,523			3,432
Film inventory, net		217,416			181,564
Goodwill		346,152			346,152
Accounts receivable, non–current portion		5,157			1,321
Income tax receivable, non–current portion		6,264			5,906
Deferred income taxes, net – non–current portion		22,458			13,032
Deferred financing costs, net		2,075			5,810
Restricted cash, non–current portion		41,742			31,375
Other assets		5,801			455
Total assets	$	876,068		$	936,714
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,609		$	2,025
Accrued royalties		84,355			76,580
Accrued expenses and other current liabilities		40,183			40,635
Income tax payable		4,926			–
Deferred revenue		73,159			81,335
Film facility		–			204,800
Total current liabilities		204,232			405,375
Accrued royalties, non-current portion		556			10,499
Deferred revenue, non-current portion		87,438			48,939
Film facility, non-current portion		21,537			8,201
Income tax payable, non-current portion		71,597			59,267
Other liabilities		13,811			8,612
Total liabilities		399,171			540,893
Commitments and contingencies
Marvel Entertainment, Inc. stockholders’ equity:
Preferred stock, $.01 par value, 100,000,000 shares authorized, none issued					–
Common stock, $.01 par value, 250,000,000 shares authorized, 134,704,780 issued and 78,021,369 outstanding in 2009 and 134,397,258 issued and 78,408,082 outstanding in 2008		1,347			1,344
Additional paid-in capital		754,621			750,132
Retained earnings		649,044			555,125
Accumulated other comprehensive loss		(4,457	)		(4,617	)
Total Marvel Entertainment, Inc. stockholders’ equity before treasury stock		1,400,555			1,301,984
Treasury stock, at cost, 56,683,411 shares in 2009 and 55,989,176 shares in 2008		(921,700	)		(905,293	)
Total Marvel Entertainment, Inc. stockholders’ equity		478,855			396,691
Noncontrolling interest in consolidated Joint Venture		(1,958	)		(870	)
Total equity		476,897			395,821
Total liabilities and equity	$	876,068		$	936,714

Marvel Entertainment Reports Q3 2009 Results, 11/3/09 page 7 of 7

MARVEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Nine Months Ended
	September 30,
	2009			2008
	(in thousands)
Cash flows from operating activities:
Net income	$	96,184		$	156,969
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,057			1,164
Amortization of film inventory		110,422			65,599
Provision for doubtful accounts		218			–
Gain on repurchase of debt		–			(1,916	)
Amortization of deferred financing costs		3,735			3,736
Unrealized gain on interest rate cap and foreign currency forward contracts		(635	)		(253	)
Non-cash charge for stock-based compensation		6,051			4,743
Excess tax benefit from stock-based compensation		(551	)		(9,013	)
Impairment of long-term assets		3,906			1,663
Deferred income taxes		(3,325	)		(16,592	)
Changes in operating assets and liabilities:
Accounts receivable		111,580			(4,915	)
Inventories		(994	)		(852	)
Prepaid expenses and other current assets		(3,307	)		(802	)
Film inventory		(150,081	)		(48,220	)
Other assets		(3,111	)		(3,346	)
Deferred revenue		30,323			(5,085	)
Income taxes payable		19,303			58,847
Accounts payable, accrued expenses and other current liabilities		(154	)		(14,954	)
Net cash provided by operating activities		220,621			186,773
Cash flows from investing activities:
Purchases of fixed assets		(2,247	)		(441	)
Sales of short-term investments		32,983			66,055
Purchases of short-term investments		(8	)		(45,039	)
Acquisition of other intangibles		(1,600	)		–
Change in restricted cash		(35,361	)		1,270
Net cash (used in) provided by investing activities		(6,233	)		21,845
Cash flows from financing activities:
Borrowings from film facilities		33,037			75,600
Repayments of film facilities		(224,501	)		(180,509	)
Distributions to the noncontrolling interest in consolidated Joint Venture		(3,309	)		(15,135	)
Purchases of treasury stock		(16,407	)		(9,945	)
Exercise of stock options		483			8,285
Excess tax benefit from stock-based compensation		551			9,013
Net cash used in financing activities		(210,146	)		(112,691	)
Effect of exchange rates on cash		27			(275	)
Net increase in cash and cash equivalents		4,269			95,652
Cash and cash equivalents, at beginning of period		105,335			30,153
Cash and cash equivalents, at end of period	$	109,604		$	125,805

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