Exhibit 99.1
FOR IMMEDIATE RELEASE
CONSUMER DEMAND FOR MARVEL BRANDED PRODUCTS
PROPELS COMPANY TO STRONG Q3 PERFORMANCE;
RAISES 2003 GUIDANCE
New York, New York - November 4, 2003 -- Marvel Enterprises, Inc. (NYSE: MVL), a
global provider of entertainment content, today reported financial results for
its third quarter ended September 30, 2003 and raised its financial guidance for
the year ending December 31, 2003. For the three month period ended September
30, 2003, Marvel reported net income of $63.2 million, or $0.85 per diluted
share, which includes a one-time non-cash gain of $31.5 million, or $0.42 per
diluted share, as a result of recording an asset on its balance sheet for
Federal net operating loss carry-forwards.
SUMMARY FINANCIAL RESULTS (Unaudited)
Three Months Ended Nine Months Ended
(In thousands, except per share data) 9/30/03 9/30/02 9/30/03 9/30/02
------------- ------------- --------------- -------------
Net sales $84,536 $84,378 $261,878 $212,539
Operating income 43,078 27,739 141,172 57,457
Net income attributable to common stock per diluted share $0.85 $0.17 $1.84 $0.08
Marvel President and CEO, Allen Lipson, commented, "The first nine months of
2003 reflect the strength and cash generation power of our licensing driven
business model as well as the growing influence of the `Marvel' brand on
consumers and retailers. Marvel-branded consumer products continue to achieve
high levels of `sell-through' at retail, causing many of our 550+ licensees to
achieve sales results substantially in excess of their contractual minimum
guarantees. Our third quarter results benefited from a particularly strong
performance of products based on The Incredible Hulk and Spider-Man characters,
as well as growing momentum from our full library of characters. Through the
first nine months of 2003, licensing net sales derived from properties
associated with movies released in 2003 (Daredevil, X-Men and The Hulk)
accounted for roughly 48% of total licensing net sales.
Marvel Enterprises, Inc.
Divisional Net Sales/Operating income (Unaudited)
Three Months Ended Nine Months Ended
(dollars in thousands) 9/30/03 9/30/02 9/30/03 9/30/02
----------------------- ------------------------------
Licensing: Net Sales $41,638 $ 25,007 $148,289 $ 51,335
Operating Income 30,267 22,514 120,332 43,270
Publishing: Net Sales 19,553 15,345 54,300 47,846
Operating Income 7,042 4,433 18,301 14,397
Toys: Net Sales 23,345 44,026 59,289 113,358
Operating Income 8,212 4,151 16,765 9,050
Corporate Overhead: (2,443) (3,359) (14,226) (9,260)
TOTAL NET SALES $84,536 $84,378 $261,878 $212,539
TOTAL OPERATING INCOME 43,078 27,739 141,172 57,457
Divisional Review:
o Marvel's Licensing Division benefited from continued strength in consumer
product licensing, with growth in both the number of new licenses as well
as royalty collections above minimum guarantees. License revenues in excess
of minimum guarantees, or "overages," were roughly $13 million in the
quarter, demonstrating strong sales momentum from a growing base of
products. Sales of consumer products based on the feature film The Hulk
continued to sell during the quarter at levels in excess of internal
projections. 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 Ltd., 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 representation of all Marvel-character toys
manufactured and sold by Toy Biz Worldwide Ltd.
o Marvel's Publishing Division net sales increased due to re-invigorated
growth in comic sales and continued momentum in trade paperback sales and
advertising income. Comic sales benefited from new landmark projects such
as JLA/Avengers, 1602 and Supreme Power, which all had stronger than
expected retail "sell-through." 187 titles were shipped in the quarter
versus 181 in the year-ago period.
o As anticipated in previous announcements, Marvel's Toy Division sales
decreased in Q3 2003 as sales of action figures and accessories based on
Spider-Man: The Movie declined to $5.9 million from $34.5 million in Q3
2002. Operating margins were roughly 34% in Q3 2003 versus 9% in Q3 2002
and 28% in the first nine months of 2003 versus 8% in the first nine months
of 2002. The improvement in operating margins versus the year-ago periods
was fueled by a more favorable sales mix and lower royalty expense. Sales
of Spectra Star kites, which carry lower margins, were also significantly
lower quarter-to-quarter as this business is being phased out.
o Corporate Overhead decreased significantly from the June 2003 quarter,
reflecting more normalized historical levels. The Company settled certain
ongoing legal disputes during the period and other legal matters moved out
of active litigation phases, thereby reducing expenses.
Increasing Net Cash Position:
Marvel had $211.2 million in cash, certificates of deposit and commercial paper
and $151.0 million owed to holders of 12% Senior Notes as of September 30, 2003,
or net cash of $60.2 million. This cash balance includes $16 million in proceeds
received from the exercise of options and warrants during the quarter. This
compares to cash of $144.3 million and $151.0 million owed to holders of 12%
Senior Notes as of June 30, 2003, or net debt of $6.7 million. The Senior Notes
are callable at Marvel's option beginning June 15, 2004 at a price of $106 per
$100 principal amount, for a total consideration of approximately $160 million.
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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 April 16, 2004
- --------------------------------- -------------------------------- --------------------------------
Spider-Man 2 Sony/Columbia July 2, 2004
- --------------------------------- -------------------------------- --------------------------------
Blade 3 New Line Cinema August 12, 2004
- --------------------------------- -------------------------------- --------------------------------
Man-Thing Fierce/Artisan August 26, 2004
- --------------------------------- -------------------------------- --------------------------------
Fantastic Four Fox December 24, 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 Crystal Sky/Paramount Pictures Film
- --------------------------------- -------------------------------- --------------------------------
Blade Animation MTV TV
- --------------------------------- -------------------------------- --------------------------------
Financial Guidance:
Reflecting Marvel's stronger than anticipated year-to-date performance, the
Company has raised its guidance for the full year 2003, as noted below.
Following final board review and approval of divisional budgets, Marvel will
provide further financial guidance ranges for 2004 shortly before November 18th,
the date of its analyst day webcast. Preliminary indications suggest that 2004
operating income will exceed Marvel's 2003 operating income. 2004 net income and
earnings per share will likely fall below 2003 levels, primarily reflecting a
change in Marvel's tax provision to approximately 37% in 2004, compared to 17%
in 2003 - excluding the one-time non-cash income tax benefit described above.
Marvel Enterprises, Inc.
Financial Guidance
Actual Q4 Updated 2003 Previous Actual
(in millions - except per share Q4 2003 2002 Guidance 2003 FY '02
amounts) Guidance Results Guidance Results
- --------------------------------- ---------------- ----------- ----------------- ------------------ -------------
Net sales $62 - $67 $86.5 $324 - $329 $311 - $315 $299.0
Operating Income $18 - $23 $23.0 $159 - $164 $143 - $146 $80.3
Net income (1) $8 - $12 $7.2 $146 - $150 $105 - $108 $22.6
EPS attributable to common stock
(1) (2) (3) (4) $0.10 - $0.16 ($1.03) $1.94 - $2.00 $1.38 - 1.42 $(1.18)
Weighted average diluted common
shares 74.2 47.3 75.0 76.8 38.5
- ---------------------------------- ---------------- ----------- ----------------- ------------------ -------------
(1) FY 2003 net income and EPS attributable to common stock includes the $31.5
million one-time, non-cash benefit that arises from the valuation of NOL
carry-forwards. FY 2002 net income and EPS attributable to common stock include
the impact of the non-cash SFAS 142 impairment charge of $4.2 million.
(2) FY 2002 EPS 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 and EPS attributable to common stock is net of 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.
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(4) FY 2003 EPS attributable to common stock is net of approximately $1.2
million in preferred stock dividends. Q4 2002 & FY 2002 EPS attributable to
common stock reflect 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.
Q4 2003 Highlights - Marvel believes that licensing sales will account for
roughly 37% of net sales in the quarter, fueled by continued momentum in toy and
consumer product license revenues. Sales in Marvel's toy division are
anticipated to increase from Q3 2003 levels due to the release of an action
figure and accessory line based on the third installment of the Lord of the
Rings feature film trilogy and the shipment to retailers of some products based
on the upcoming Spider-Man II movie. The effective tax rate for Q4 2003 is
anticipated to be 37%, resulting from recording a value for Federal net
operating loss carry-forwards in Q3 2003. Corporate overhead is anticipated to
be slightly higher than Q3 2003 levels.
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 a 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
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Marvel Enterprises, Inc.
Summary Consolidated Statements Of Income (Unaudited)
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
- ------------------------------------------------------- ---------------------- ----------------------
Net sales $ 84,536 $ 84,378 $ 261,878 $ 212,539
Cost of sales 20,208 41,100 57,634 104,163
Gross profit 64,328 43,278 204,244 108,376
Selling, general and administrative expenses 22,569 16,015 70,163 55,188
Depreciation and amortization 1,051 1,675 2,808 3,897
Total Operating Expenses 23,620 17,690 72,971 59,085
Other income 870 366 1,413 1,040
Equity in net income of joint venture 1,500 1,785 8,486 7,126
Operating income 43,078 27,739 141,172 57,457
Interest expense, net (1) 4,239 12,086 13,072 27,725
Income before income taxes 38,839 15,653 128,100 29,732
Income tax provision (benefit) - current 3,212 941 6,331 1,651
- deferred (2) (27,551) 4,076 (16,384) 8,304
Income before cumulative effect of change in accounting
principle 63,178 10,636 138,153 19,777
Cumulative effect of change in
accounting principle, net of taxes -- 175 -- (4,386)
Net income $ 63,178 $ 10,811 $ 138,153 $ 15,391
Preferred dividend requirement -- 4,080 1,163 12,216
Net income attributable to common shares (3) $ 63,178 $ 6,731 $ 136,990 $ 3,175
Diluted net income per common share (2) $ 0.85 $ 0.17 $ 1.84 $ 0.08
Weighted average number of
diluted common shares 74,214 40,586 75,226 40,448
(1) FY 2002 nine months interest expense include $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.
(2) 2003 three and nine month results include a one-time non-cash gain of $31.5
million, or $0.42 per diluted share, as a result of the Company recording a
value for unused Federal NOL carry-forwards in the period.
(3) Results for the nine month period ended September 30, 2002 include the
impact of the non-cash SFAS 142 impairment charge of $4.4 million.
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Marvel Enterprises, Inc.
Consolidated Balance Sheets
(in thousands)
September 30, December 31,
2003 2002
---- ----
ASSETS (Unaudited)
Current assets:
Cash $ 17,733 $ 53,690
Certificates of deposits and commercial paper 193,507 --
Accounts receivable, net 42,980 43,420
Inventories, net 10,269 16,036
Distribution receivable from joint venture, net 1,413 3,884
Deferred Federal income tax 33,967 --
Deferred financing costs 667 667
Prepaid expenses and other current assets 6,639 6,700
--------- ---------
Total current assets 307,175 124,397
Goodwill, net 350,500 365,604
Other intangibles, net 414 649
Molds, tools and equipment, net 6,016 6,997
Product and package design costs, net 1,445 859
Accounts receivable, non-current portion 19,470 17,284
Deferred charges and other assets 53 65
Deferred financing costs 2,946 3,446
--------- ---------
Total assets $ 688,019 $ 519,301
========= =========
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,638 $ 11,607
Accrued expenses and other current liabilities 75,853 52,708
Deferred revenue and distributions in excess of equity in joint
venture 10,493 27,478
--------- ---------
Total current liabilities 92,984 91,793
--------- ---------
Senior notes 150,962 150,962
Other 3,237 897
--------- ---------
Total liabilities 247,183 243,652
--------- ---------
Cumulative convertible exchangeable redeemable preferred stock -- 32,780
--------- ---------
Stockholders' equity
Common stock 793 685
Additional paid-in capital 546,869 486,106
Accumulated deficit (71,429) (208,419)
Accumulated other comprehensive loss (2,442) (2,548)
--------- ---------
Total stockholders' equity before treasury stock 473,791 275,824
Treasury stock (32,955) (32,955)
--------- ---------
Total stockholders' equity 440,836 242,869
--------- ---------
Total liabilities, cumulative convertible exchangeable redeemable
preferred stock and stockholders' equity $ 688,019 $ 519,301
========= =========
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