Marvel Reviews Synergies in Toy and Toy Licensing Operations

NEW YORK--()--Dec. 1, 2003--In an effort to provide clarification to investors, analysts and the media, Marvel Enterprises, Inc. (NYSE:MVL) today reviewed the key attributes of, and synergies between, its toy and toy licensing operations and one of its licensees, Toy Biz Worldwide Ltd. In addition to this one significant licensee, Marvel has over 35 toy and toy accessory licensees, covering a wide range of categories that fuel sales and brand awareness for all Marvel-branded consumer products.

Allen Lipson, Marvel's CEO commented, "As a licensing-driven company, Marvel is continually faced with balancing the challenge of protecting its brands, competitive position, and negotiating strength with meeting the information needs of its investors. In recent weeks it has become clear that questions remain regarding our toy operations and our relationship with Toy Biz Worldwide Ltd. Accordingly, management and the Board determined that it was in Marvel's and its shareholders' best interests to provide additional detail and perspective on these items."

Toy Biz Worldwide Ltd. License

As of July 2001, Marvel entered into a 5 1/2-year exclusive Toy License for action figures, accessories and role-playing toys, based on Marvel characters other than Spider-Man: The Movie, with Toy Biz Worldwide Ltd., a company formed by a Hong Kong-based toy manufacturer controlled by Mr. Jeff Hsieh. Mr. Hsieh had built a strong track record as a high-quality vendor with Marvel's Toy Biz division since 1990.

Marvel licensed the use of the Toy Biz name and logo to Toy Biz Worldwide, Ltd. in order to best leverage the strong Toy Biz consumer brand identity and the positive retail relationships established by Marvel's Toy Biz division over its 11-year history of producing Marvel character-based toys. Toy Biz Worldwide Ltd. is an independent, privately-held entity, and neither Marvel, its officers, directors nor personnel have any loans to or interest in that company. As consideration for the license, Marvel receives a 15% royalty on wholesale sales of all toys produced under the license agreement.

As Toy Biz Worldwide Ltd. is basically an OEM toy manufacturer, it does not possess the design, development, sales or marketing expertise required to be an "end-to-end" toy company. Accordingly, Toy Biz Worldwide Ltd. entered into an agency agreement with Marvel pursuant to which Marvel's Toy Biz division was contracted to perform critical functions such as toy product design, development, marketing and acting as the worldwide sales agent for Marvel-licensed toys. Marvel also maintains an Electronic Data Interchange (EDI) system with major retailers to facilitate the real-time exchange of toy sales and re-order data.

Led by Marvel's Toy Biz CEO, Alan Fine, the division employs 22 people who carry out these value-added services, including 12 in product design & development, 3 in engineering and 7 in sales and support positions. Additionally, Avi Arad, Marvel's Chief Creative Officer and other members of Marvel's management, well experienced in the toy industry, are utilized to help achieve the success of this relationship.

In addition to royalties, as compensation for the value-added services provided to Toy Biz Worldwide Ltd., Marvel receives a service fee based on the wholesale price of toys produced under the license agreement. Through December 2002, Marvel was reimbursed for these expenses plus it received a service fee based on the amount of Toy Biz Worldwide Ltd.'s profits. Effective January 1, 2003, this arrangement was amended to alleviate Marvel's dependence on Toy Biz Worldwide Ltd.'s operating efficiency.

Marvel now receives a service fee of 24.5% of wholesale toy sales in the U.S. to compensate Marvel for toy design, sales and marketing and other services provided to Toy Biz Worldwide, Ltd. and, in part, for the utilization of senior executives from Marvel's Toy, Licensing and Studio divisions who regularly meet with major retailers to market upcoming Marvel-branded toys and merchandise. For sales in international markets, where Marvel relies principally on independent distributors, Marvel receives a service fee amounting to 10% of Toy Biz Worldwide Ltd.'s international wholesale sales for its efforts in managing the distributors.

Mr. Hsieh, Toy Biz Worldwide Ltd.'s CEO commented, "This license agreement enabled me to optimize the capacity utilization of my manufacturing facilities and purchase raw materials more efficiently while leveraging the proven toy design, development expertise and brand of Marvel's Toy Biz division. While I manufacture goods for customers other than Marvel, this license allows my company to more effectively manage my overall business, improving my net margins without much incremental overhead."

As reflected in the table below, Marvel's service fees are accounted for in two respects: first, as a credit to the overhead of the Toy Biz division, which is expected to amount to roughly $8.2 million for 2003, the same amount as in 2002. The portion of the service fees credited to overhead is based on an allocation of costs associated with the services provided under the service agreement. Secondly, the remainder is recorded as revenue within the licensing division under the toy category, reflecting Marvel's sales and marketing efforts on behalf of Toy Biz Worldwide Ltd. Sales of toys based on the Hulk property, which exceeded all expectations, plus continued strong demand for classic Spider-Man product, primarily fueled the strong growth in license income in the 2003 nine month period versus full year 2002.

Contributions Marvel from Toy Biz Worldwide
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                                                         Nine   Full
(in millions)                                            Months  Year
                                                         Ended   2002
                                                         9/30/03
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Recorded in Licensing Division Sales:
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   Royalty Fees                                          $24.4   $9.4
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   Service Fees in excess of overhead reimbursement      $29.4  $12.4
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Update of 2004 Feature Film Line-Up

Marvel also provided an updated listing of its feature film line-up for 2004, reflecting the shift, reviewed in its November 18th analyst day webcast, of the Fantastic Four feature film to summer 2005 from December 2004. The timing shift of Fantastic Four has no impact on the financial guidance for 2004 that Marvel provided on November 17th. However, the increased development time frame afforded by the Summer 2005 release is expected to substantially improve Marvel's potential to capitalize on licensing, publishing and toy opportunities related to the film. Marvel's revised 2004 feature film line-up is now as follows.

              Marvel Character Feature Film Line-Up For 2004
         (Release dates and development timing are controlled
                          by Studio partners)

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 Film/Character         Studio/Distributor       Targeted Release Date
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The Punisher           Artisan Entertainment        April 16, 2004
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Spider-Man 2             Sony/Columbia              July 2, 2004
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Blade 3                 New Line Cinema             August 12, 2004
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Man-Thing               Fierce/Artisan              August 26, 2004
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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.

Contacts

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

Contacts

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