Exhibit 99.1
FOR IMMEDIATE RELEASE
[LOGO OMITTED] Marvel will host a webcast today for all investors at
9:00 a.m. EDT available at: www.companybaordroom.com
LICENSING PROPELS MARVEL TO STRONG Q2 PERFORMANCE;
RAISES FULL YEAR EPS GUIDANCE
New York, New York - August 12, 2003 -- Marvel Enterprises, Inc. (NYSE: MVL), a
global provider of entertainment content, today reported financial results for
its second quarter ended June 30, 2003, raised its financial guidance for the
year ending December 31, 2003 and initiated financial guidance for fiscal 2004.
SUMMARY FINANCIAL RESULTS
Three Months Ended Six Months Ended
(In thousands, except per share data) 6/30/03 6/30/02 6/30/03 6/30/02
--------------------- ----------------------
Net sales $ 89,966 $ 70,939 $ 177,342 $ 128,161
Operating income 42,844 20,482 97,559 29,758
Net income (loss) attributable to common stock (1) 32,753 4,376 73,812 ($ 3,556)
Net income (loss) attributable to common
stock per diluted share $ 0.42 $ 0.10 $ 0.99 ($ 0.09)
Weighted average shares 77,135 41,545 75,710 40,373
EBITDA (2) 43,758 21,673 99,316 31,980
(1) Results for the six month period ended June 30, 2002 include the impact of
the non-cash SFAS 142 impairment charge of $4.6 million.
(2) Marvel is transitioning its historical reporting metric to operating income
from EBITDA for Q3 2003 and beyond, as operating income is a GAAP measure
that does not require reconciliation. A reconciliation of EBITDA to
operating income, the most comparable GAAP financial measure, can be found
in this release on page 8.
Marvel President and CEO, Allen Lipson, commented, "The first half of 2003 was a
period of strong financial performance, marked by the successful release of
three feature films and an expanding licensing business. In the second quarter,
results benefited from continued momentum of licensed products based on our
library of characters, particularly products based on The Incredible Hulk and
Spider-Man characters.
"With a proven business model and growing cash flows, we are now in the process
of reviewing strategic initiatives aimed at increasing the Company's long-term
return on investment (ROI) at acceptable risk levels."
Marvel Enterprises, Inc.
Divisional Net Sales/EBITDA/Operating income
(dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
------------------- --------------------
Licensing: Net Sales $ 56,750 $ 17,156 $ 106,651 $ 26,328
EBITDA (1) 41,188 16,587 89,944 20,839
Operating Income 41,156 16,556 89,880 20,776
Publishing: Net Sales 19,535 17,942 34,747 32,501
EBITDA (1) 6,173 6,217 11,220 9,992
Operating Income 6,169 6,213 11,211 9,984
Toys: Net Sales 13,681 35,841 35,944 69,332
EBITDA (1) 3,192 2,293 9,935 7,050
Operating Income 2,314 1,137 8,251 4,899
Corporate Overhead: (6,795) (3,424) (11,783) (5,901)
TOTAL NET SALES $ 89,966 $ 70,939 $ 177,342 $ 128,161
TOTAL EBITDA (1) 43,758 21,673 99,316 31,980
TOTAL OPERATING INCOME 42,844 20,482 97,559 29,758
(1) Marvel is transitioning its historical reporting metric to operating income
from EBITDA for Q3 2003 and beyond, as operating income is a GAAP measure that
does not require reconciliation. A reconciliation of EBITDA to operating income,
the most comparable GAAP financial measure, can be found in this release on page
8.
Divisional Review:
o Marvel's Licensing Division benefited from continued strength in consumer
product licensing, with growth in both new licenses and royalty collections
above minimum guarantees associated with existing licenses. The division
benefited from growth across most license categories with consumer products
based on The Hulk movie being particularly strong. The Hulk and all other
Marvel character action figure and accessory toy lines (except for
Spider-Man: The Movie toys) are produced and sold by Marvel's licensee, Toy
Biz Worldwide, with Marvel recording related royalty income within its
licensing segment. The creative and marketing talents of Marvel's in-house
toy division are responsible for the design, marketing and sales of all
Marvel-character toys manufactured and sold by Toy Biz Worldwide. Marvel
continued to receive royalties from the Spider-Man property including
classic toy sales, a $2.2 million payment from the joint venture with Sony
for movie-related merchandise and a $5 million non-refundable advance for
the Spider-Man II movie.
o Marvel's Publishing Division net sales increased due to improvements in
custom publishing and advertising income. Extending beyond traditional
comics, the company completed four custom publishing projects, which
include tailored comics or posters targeted at consumers in special
promotions, for customers such as Kraft (Canadian division) and the New
York Post. Advertising income continued to increase as a greater number of
licensees took advantage of the targeted demographics in Marvel's
readership.
o As highlighted in previous announcements, Marvel's Toy Division sales
decreased in Q2 2003 as sales of action figures and accessories based on
Spider-Man: The Movie declined to $4.1 million from $29.6 million in Q2
2002. EBITDA margins were roughly 23% in Q2 2003 versus 6% in Q2 2002 and
30% in Q1 2003. The improvement in EBITDA margins versus the year-ago
period was fueled by a more favorable sales mix and lower royalty payments.
o Corporate Overhead rose substantially, year over year, due to higher
staffing levels, bonus accruals and costs associated with several legal
disputes.
Growing Cash Position/Declining Net Debt:
Marvel had $144.3 million in cash and certificates of deposit and $151.0 million
owed to holders of 12% Senior Notes as of June 30, 2003, or net debt of $6.7
million, compared to cash of $84.7 million and $151.0 million owed to holders of
12% Senior Notes as of March 31, 2003, or net debt of $66.3 million. Marvel's
cash and certificates of deposit balance as of July 31, 2003 had grown to
approximately $163 million.
Marvel Character Feature Film Line-Up For 2004
(Release dates and development timing are controlled by Studio partners)
- ---------------------------------------------------------------------------------------------------
Film/Character Studio/Distributor Targeted Release Date
- --------------------------------- -------------------------------- --------------------------------
The Punisher Artisan Entertainment Spring/Summer 2004
- --------------------------------- -------------------------------- --------------------------------
Spider-Man 2 Sony/Columbia July 2, 2004
- --------------------------------- -------------------------------- --------------------------------
Blade 3 New Line Cinema August 2004
- --------------------------------- -------------------------------- --------------------------------
Fantastic Four Fox December 2004
- --------------------------------- -------------------------------- --------------------------------
Marvel Character Entertainment Projects in Development
(Development timing is controlled by Studio partners)
- ---------------------------------------------------------------------------------------------------
Film/Character Studio/Distributor Format
- --------------------------------- -------------------------------- --------------------------------
X-Men 3 Fox Film
- --------------------------------- -------------------------------- --------------------------------
The Hulk 2 Universal Pictures Film
- --------------------------------- -------------------------------- --------------------------------
Namor Universal Pictures Film
- --------------------------------- -------------------------------- --------------------------------
Elektra New Regency / Fox Film
- --------------------------------- -------------------------------- --------------------------------
Iron Man New Line Cinema Film
- --------------------------------- -------------------------------- --------------------------------
Ghost Rider Sony Film
- --------------------------------- -------------------------------- --------------------------------
DeathLok Paramount Pictures Film
- --------------------------------- -------------------------------- --------------------------------
Blade Animation MTV TV
- --------------------------------- -------------------------------- --------------------------------
Financial Guidance:
Reflecting Marvel's first half performance, the Company raised its net sales and
EPS guidance for the full year 2003 as noted below, and initiated operating
income guidance for Q3 and the full year. Marvel is transitioning its guidance
to operating income from EBITDA for Q3 2003 and beyond, as operating income is a
GAAP measure that does not require reconciliation. For comparison purposes,
annual Depreciation & Amortization expenses approximate $3.5 million.
Marvel Enterprises, Inc.
Financial Guidance
Actual Q3 Updated 2003 Previous Actual
(in millions - except per share Q3 2003 2002 Guidance 2003 FY '02 2004
amounts) Guidance Results Guidance Results Guidance
- ------------------------------------ ---------------- ----------- ----------------- ---------------- ----------- -----------------
Net sales $60 - $65 $84.4 $287 - $293 $225 - $230 $299.1 $315 - $345
EBITDA --- $29.3 --- $110 - $120 $ 86.1 ---
Operating Income $27 - $32 $27.6 $132 - $137 --- $ 80.3 $137 - $157
Net income (1) $19 - $24 $ 6.7 $ 95 - $100 $ 74 - $ 82 $ 22.6 $ 74 - $ 87
EPS attributable to common stock
(1) (2) (3) (4) $0.25 - $0.30 $0.17 $1.26 - $1.31 $0.96 - $1.07 $(1.18) $0.96 - $1.14
Weighted average diluted common
shares 77.2 40.6 76.8 75.8 38.5 77.5
(1) FY 2003 net income excludes any impact that may arise from the evaluation of
NOL carryforwards. FY 2002 net income includes the impact of the non-cash SFAS
142 impairment charge of $4.2 million.
(2) FY 2002 net income per share attributable to common stock includes a $55.3
million one-time non-cash charge related to the completion of Marvel's Preferred
Share exchange offer.
(3) FY 2002 net income per share attributable to common stock includes a $9.4
million non-cash charge related to the amortization of HSBC credit facility
costs, warrants issued to Isaac Perlmutter and senior note offering costs. The
amounts also include $11.8 million in non-cash loan cost amortization that was
accelerated into FY 2002 as a result of Marvel's prepayments of its bank debt in
2002.
(4) FY 2003 net income attributable to common stock includes approximately $1.2
million in preferred stock dividends. FY 2002 net income attributable to common
stock includes approximately $4.0 million and $68.1 million (including the above
one-time, non-cash charge of $55.3 million for FY 2002) in preferred stock
dividends, respectively.
Highlights of trends for the second half of 2003 - Marvel believes that
licensing sales will account for roughly 45% of total sales in the second half
of 2003, fueled by continued momentum in toy and consumer product license
revenues. Publishing sales are expected to decrease in the third and fourth
quarters due to normal seasonal trends and the lack of the promotional support
of a major movie release in the second-half with operating income margins
anticipated slightly below 30% for the remainder of the year. Sales in Marvel's
toy division are anticipated to increase from 2Q 2003 levels due to the upcoming
Lord of the Ring film release. Marvel anticipates a 16% effective tax rate for
the remainder of the year and Corporate overhead expenses are expected to
decrease versus Q2 2003 levels as legal fees moderate somewhat. The company may
be required by GAAP to record a value for the unused Federal NOL carryforwards
at the end of 2003, which would result in a one-time non-cash gain of
approximately $30 to $33 million.
2004 Guidance - Marvel is initiating 2004 financial guidance ranges (also
included in the table above), which anticipate net sales and operating income
levels exceeding 2003 levels. 2004 Net income and EPS guidance ranges are
anticipated to be below 2003 levels due solely to the higher anticipated
effective tax rate of 37% in 2004, approximately 40% of which we anticipate will
reflect cash payments, versus an effective tax rate of 16% in 2003.
Marvel anticipates that the Licensing division will generate roughly 40% of net
sales in 2004 and that this division would be the major contributor of
incremental sales above the low end of the guidance range. The low/high
variances in Marvel's 2004 guidance relate to assumptions on timing, performance
and contributions from feature films and associated licensing revenues. Several
of the major drivers are listed below:
Spider-Man II - Movie in July with DVD release in November 2004.
Low/High: based on a range of projected contributions from movie, DVD &
consumer product licensing programs.
Punisher - Timing of release in Summer 2004.
Low: movie release in August with no movie-related income earned in 2004.
High: movie release in April with modest movie-related income earned in
late-2004 from the DVD release and minimal licensing income.
Fantastic Four - December 2004 or early-2005 release.
Low: movie release in 2005 with no income from consumer product licenses.
High: movie release in December 2004 with moderate income from consumer
product licenses.
In addition, Marvel's 2004 guidance anticipates that its 12% senior notes will
be re-paid in June. In addition to the repayment of the notes' $151 million
principal amount, Marvel would have to make cash payments for: 1) the final $9
million interest payment and 2) a $9 million payment for the 6% call premium (to
be recorded in interest expense). This would result in total cash interest
expense of approximately $18 million.
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 contributes to sequential and year-over-year
variability in its interim financial results and could have a material impact on
quarterly results.
About Marvel Enterprises
Marvel Enterprises, Inc. is leading global character-based entertainment
licensing company that has developed and owns a library of over 4,700 characters
which have entertained generations around the world for over 60 years. Marvel's
operations are focused in entertainment and consumer product licensing and comic
book publishing. Marvel's creative teams at its Marvel Studios, Marvel Comics
and Toy Biz divisions support the development of feature films (and DVD/video),
video games, TV series and toy lines based on its characters. Marvel also
licenses its characters for use in a broad and growing range of consumer
products and services including apparel, collectibles, food and promotions.
Marvel Comics is a leading global comics publisher and an invaluable source of
intellectual property; Marvel Studios works with studios to develop feature film
and entertainment projects; and Toy Biz is a recognized leader in toy design,
sales and marketing that develops and oversees both licensee and in-house toy
lines. For additional information visit http://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 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 licensees, changing consumer preferences, movie- and
television-production delays and cancellations, toy-production delays or
shortfalls, continued concentration of toy retailers, toy inventory risk, the
imposition of quotas or tariffs on products manufactured in China and a decrease
in cash flow even as Marvel remains indebted to its noteholders. 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
- tables follow -
Marvel Enterprises, Inc.
Summary Consolidated Statements Of Operations
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
---------------------- ------------------------
Net sales $ 89,966 $ 70,939 $ 177,342 $ 128,161
Cost of sales 17,142 34,259 37,426 63,063
Gross profit 72,824 36,680 139,916 65,098
Selling, general and administrative expenses 31,235 21,062 47,594 39,173
Equity in net income of joint venture 2,162 5,341 6,986 5,341
Other income 7 714 8 714
EBITDA 43,758 21,673 99,316 31,980
Depreciation and amortization 831 1,106 1,595 2,052
Amortization of goodwill and other intangibles 83 85 162 170
Operating income 42,844 20,482 97,559 29,758
Interest expense, including amortization
of debt discount (1) 4,040 7,786 8,298 15,679
Income before income taxes 38,804 12,696 89,261 14,079
Income tax provision 6,051 4,315 14,286 4,938
Income before cumulative effect of change in accounting principle 32,753 8,381 74,975 9,141
Cumulative effect of change in accounting principle, net of taxes -- -- -- 4,561
Net income $ 32,753 $ 8,381 $ 74,975 $ 4,580
Preferred dividend requirement -- 4,005 1,163 8,136
Net income (loss) attributable to common $ 32,753 $ 4,376 $ 73,812 $ (3,556)
Diluted income (loss) per common share $ 0.42 $ 0.10 $ 0.99 ($ 0.09)
Weighted average number of diluted common shares 77,135 41,545 75,710 40,373
(1) FY 2002 Q2 and six months interest expense include, respectively, $2.7
million and $5.4 million in non-cash items related to the amortization of
HSBC loan costs, warrants issued to Isaac Perlmutter and senior note
offering costs.
Marvel Enterprises, Inc.
Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2003 2002
---- ----
ASSETS
Current assets:
Cash and cash equivalents ........................... $ 26,337 $ 53,690
Certificates of deposits ............................ 118,000 --
Accounts receivable, net ............................ 36,981 43,420
Inventories, net .................................... 10,703 16,036
Distribution receivable from joint venture, net ..... 1,874 3,884
Deferred financing costs ............................ 667 667
Prepaid expenses and other current assets ........... 7,067 6,700
--------- ---------
Total current assets ............................ 201,629 124,397
Molds, tools and equipment, net ..................... 5,888 6,997
Product and package design costs, net ............... 1,193 859
Accounts receivable, non-current portion ............ 19,591 17,284
Goodwill, net ....................................... 354,437 365,604
Intangibles, net .................................... 487 649
Other assets ........................................ 53 65
Deferred financing costs ............................ 3,113 3,446
--------- ---------
Total assets .................................... $ 586,391 $ 519,301
========= =========
LIABILITIES, CUMULATIVE CONVERTIBLE EXCHANGEABLE
REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................... $ 3,775 $ 11,607
Accrued expenses and other current liabilities ...... 57,219 48,371
Administration expense claims payable ............... 768 1,303
Unsecured creditors payable ......................... 2,952 3,034
Deferred revenue and distributions in excess of
equity in joint venture .............................. 8,372 27,478
Total current liabilities ....................... 73,086 91,793
--------- ---------
Senior notes ........................................ 150,962 150,962
Accrued rent ........................................ 804 897
--------- ---------
Total liabilities ............................... 224,852 243,652
--------- ---------
Cumulative convertible exchangeable redeemable
preferred stock ...................................... -- 32,780
--------- ---------
Stockholders' equity
Common stock ........................................ 744 685
Additional paid-in capital .......................... 530,835 486,106
Accumulated deficit ................................. (134,607) (208,419)
Accumulated other comprehensive loss ................ (2,478) (2,548)
--------- ---------
Total stockholders' equity before treasury stock .... 394,494 275,824
Treasury stock ...................................... (32,955) (32,955)
--------- ---------
Total stockholders' equity ...................... 361,539 242,869
--------- ---------
Total liabilities, cumulative convertible
exchangeable redeemable preferred stock and
stockholders' equity ............................ $ 586,391 $ 519,301
========= =========
Reconciliation of U.S. GAAP operating income to EBITDA: EBITDA is defined as
operating earnings before depreciation and amortization. Although EBITDA is not
a measure of performance or liquidity calculated in accordance with generally
accepted accounting principles (GAAP), the Company believes the use of the
non-GAAP financial measure EBITDA enhances an overall understanding of the
Company's past financial performance as well as providing useful information to
the investor because of its historical use by the Company as both a performance
measure and measure of liquidity, and the use of EBITDA by virtually all
companies in the entertainment sector as a measure of both performance and
liquidity. However, investors should not consider this measure in isolation or
as a substitute for net income, operating income, cash flows from operating
activities or any other measure for determining the Company's operating
performance that is calculated in accordance with GAAP. Also, because EBITDA is
not calculated in accordance with GAAP, it may not necessarily be comparable to
similarly titled measures employed by other companies. A reconciliation of
EBITDA to the most comparable GAAP financial measure, net income, follows:
Reconciliation of U.S. GAAP operating income to EBITDA: Marvel Enterprises
For the Three Months For the Six Months
Ended June 30, Ended June 30,
(In thousands) 2003 2002 2003 2002
-------------- -------------- -------------- ----------
Operating Income $42,844 $20,482 $97,559 $29,758
Add back:
Depreciation and amortization 914 1,191 1,757 2,222
EBITDA $43,758 $21,673 $99,316 $31,980
Reconciliation of U.S. GAAP operating income to EBITDA: Licensing Division
For the Three Months For the Six Months
Ended June 30, Ended June 30,
(In thousands) 2003 2002 2003 2002
-------------- -------------- -------------- ----------
Operating Income $41,156 $16,556 $89,880 $20,776
Add back:
Depreciation and amortization 32 31 64 63
EBITDA $41,188 $16,587 $89,944 $20,839
Reconciliation of U.S. GAAP operating income to EBITDA: Publishing Division
For the Three Months For the Six Months
Ended June 30, Ended June 30,
(In thousands) 2003 2002 2003 2002
-------------- -------------- -------------- ----------
Operating Income $6,169 $6,213 $11,211 $9,984
Add back:
Depreciation and amortization 4 4 9 8
EBITDA $6,173 $6,217 $11,220 $9,992
Reconciliation of U.S. GAAP operating income to EBITDA: Toy Division
For the Three Months For the Six Months
Ended June 30, Ended June 30,
(In thousands) 2003 2002 2003 2002
-------------- -------------- -------------- ----------
Operating Income $2,314 $1,137 $8,251 $4,899
Add back:
Depreciation and amortization 878 1,156 1,684 2,151
EBITDA $3,192 $2,293 $9,935 $7,050
# # #