Official Press Release
NEW YORK--(BUSINESS WIRE)--March 3, 2003--
- Global Sales of Marvel-Licensed Consumer Products Exceeded $2
Billion in 2002 -
Marvel Enterprises, Inc. (NYSE: MVL), a global provider of
entertainment content, today reported financial results for its fourth
quarter and year ended December 31, 2002 and raised its financial
guidance for 2003. Marvel's 2002 results and strong 2003 prospects
mark its successful transformation to a licensing-driven business
focused on entertainment media (film, comics, TV, video games, online,
toys, etc.) and consumer products and promotions.
The year 2002, with the launch of Spider-Man: The Movie, also
marked the debut of improved feature film economics that provide
Marvel the potential for substantial royalty income, based on the
success of films featuring its characters.
Q4 Overview:
Reflecting particularly strong contributions from licensing and
toys, Q4 net sales rose 74% to $86.5 million, EBITDA increased 136% to
$24.8 million and free cash flow increased $33.6 million to $33.1
million. Reflecting previously announced one-time, non-cash charges
principally related to the Convertible Preferred Stock exchange offer
in November and the early retirement of a bank loan, Marvel reported a
Q4 2002 net loss applicable to common stockholders of $48.7 million,
or $1.03 per share. Excluding these one-time, non-cash charges, Marvel
would have reported Q4 earnings applicable to common stockholders of
$12.4 million, or $0.19 per share.
Q4 results included approximately $4.3 million in royalty income
from DVD/video sales of Spider-Man: The Movie and approximately $6.7
million in EBITDA from Marvel's equity interest in net income from the
Spider-Man: The Movie licensing joint venture with Sony. Initial
royalties related to the DVD/video sales were recognized earlier than
the previous forecast of Q1 2003.
Marvel President and CEO, Allen Lipson, commented, "In 2002 Marvel
re-emerged as one of the leading providers of entertainment content
for global media and consumer products, demonstrating that Marvel's
reach goes well beyond our comic books and legions of fans. A telling
illustration of Marvel's reach is our estimate, based on the reported
sales of our licensees, that more than $2 billion worth of Marvel
character licensed consumer products were purchased at retail in 2002.
This figure excludes over $1.4 billion in Spider-Man: The Movie ticket
and DVD/video sales. Tens of millions of people around the world saw
Spider-Man: The Movie and many millions more read our comic book
offerings, played Marvel character video games, or purchased or
received Marvel branded toys or licensed products. We are now able to
leverage our intellectual property across multiple revenue streams and
benefit from the related consumer exposure and project synergies. With
three films, six video game titles, several TV series, untold numbers
of licensed products slated for release in 2003, and a growing
pipeline of entertainment events and products for 2004 and beyond, we
look forward to continued future success within our business model.
"The influence, power and consumer reach of the entire Marvel
character universe was again showcased by the success of the recent
release of the Fox feature film, DareDevil, which has amassed over $84
million in box office revenues just in the U.S. during its first 17
days of release. Importantly, DareDevil generated approximately $42.5
million in domestic box office revenue its first weekend, more than
doubling the previous box office record for a President's Day weekend
release, despite a bitter snowstorm in the Northeast. This performance
continues an impressive streak of Marvel character-based feature films
achieving blockbuster opening weekends and underscores Marvel's rich
history of timeless storytelling and creativity with a broad
demographic reach. We continue to prove that all of our characters,
even those less well known, are unrivaled in their power to entertain
and captivate consumers through both entertainment projects and
consumer products."
Marvel Enterprises, Inc.
Divisional Revenue/EBITDA
----------------------------------------------------------------------
Three Months Twelve Months
(in millions) Ended Ended
December 31, December 31, YTD %
2002 2001 2002 2001 Change
------------------------------- ------------- --------------- --------
Licensing: Net Sales $28.2 $17.4 $79.6 $40.0 + 99 %
------------------------------- ------ ------ ------- ------- --------
EBITDA (1) $26.1 $9.2 $69.4 $25.1 + 176 %
------------------------------- ------ ------ ------- ------- --------
Publishing: Net Sales $16.7 $15.3 $64.5 $49.5 +30 %
------------------------------- ------ ------ ------- ------- --------
EBITDA (2) $5.2 $8.5 $19.5 $17.6 + 11 %
------------------------------- ------ ------ ------- ------- --------
Toys: Net Sales $41.6 $16.9 $155.0 $91.7 + 69 %
------------------------------- ------ ------ ------- ------- --------
EBITDA (3) $1.6 $(4.7) $14.5 $0.4 + 3525 %
------------------------------- ------ ------ ------- ------- --------
Corporate: Net Sales -- -- -- --
------------------------------- ------ ------ ------- ------- --------
EBITDA (4) (5) $(8.1) $(2.5) $(17.3) $(12.5) N/A
------------------------------- ------ ------ ------- ------- --------
TOTAL NET SALES $86.5 $49.6 $299.1 $181.2 + 65 %
------------------------------- ------ ------ ------- ------- --------
TOTAL EBITDA $24.8 $10.5 $86.1 $30.6 + 181 %
------------------------------- ------ ------ ------- ------- --------
(1) Toy licensing royalties from Toy Biz Worldwide Ltd. (reported
in Licensing segment) totaled $14.8 million and $21.8 million in the
fourth quarter and twelve months of 2002, respectively, and $1.6
million and $3.2 million in the fourth quarter and twelve months of
2001, respectively.
(2) 2001 Q4 and full year Publishing EBITDA reflects an income
item of approximately $3.5 million from the reversal of administrative
claim accruals that are no longer required related to the bankruptcy
of Marvel Entertainment Group.
(3) 2002 Q4 and full year Toys EBITDA results include charges of
$2.5 million and $3.4 million, respectively, for the planned
discontinuance of the Spectra Star division and charges of $4.8
million and $7.9 million, respectively, related to the accelerated
write-off of prepaid royalty advances related to the Lord of the Rings
toy license.
(4) 2002 Q4 and full year Corporate EBITDA results include
reserves totaling approximately $4.4 million for estimated settlement
values associated with three litigation matters.
(5) Twelve months 2001 Corporate EBITDA results include a $3
million charge from a litigation settlement regarding a 1994 toy
license between the Company and The Coleman Company.
Divisional Review
- Net sales in the Licensing Division, Marvel's principal source of profit and cash flow, increased approximately 62% to $28.2 million in Q4 from $17.4 million in the prior year period. In addition to revenue associated with Spider-Man: The Movie noted above, the division benefited from strong demand for Marvel character-based consumer goods including video games, and toy lines sold by Toy Biz Worldwide, a Marvel licensee. As evidenced by the growing demand for Marvel-related merchandise, net sales in the licensing division increased 99% or $39.6 million to $79.6 million in 2002 from $40.0 million in 2001, and EBITDA increased by $44.3 million to $69.4 million for the year. This improvement reflects a combination of new licenses, improving licensing terms and new license categories as well as substantial royalties above guaranteed advance payments from existing agreements.
- Marvel's Publishing Division net sales increased 9% to $16.7 million in the fourth quarter and 30% in 2002 over 2001. The improvements are due to renewed interest in comics, supported by Marvel's creative enhancements and growing profile, as well as a full-year contribution of Marvel's re-launched graphic novel (trade paperback) offerings which amounted to $15.5 million in sales in 2002 compared to $5.3 million in 2001.
- Marvel's Toy Division sales increased 146% to $41.6 million in Q4 2002 compared to sales of $16.9 million in the year ago period. The increase is attributable to continued strong sales success of Marvel's Spider-Man: The Movie action figure line which is developed and sold by Marvel's Toy Biz Division. Full year revenues increased 69% in 2002 due principally to the contribution of Spider-Man: The Movie toys, which generated over $100 million in total revenue for Marvel in the period. In contrast, in fiscal 2003 the bulk of Marvel character-based toys will be produced and sold by Marvel's licensee, Toy Biz Worldwide, and recorded as a royalty income contribution within Marvel's licensing segment. This shift from in-house production to licensing will lead to a previously disclosed decline in toy revenue, but no anticipated decline in the Company's overall EBITDA.
Balance Sheet Improvements in 2002:
In November, Marvel exchanged approximately 85% of its 8%
convertible preferred shares for 24.5 million shares of Marvel common
stock, reducing future annualized paid in-kind dividends by
approximately $14.5 million. Additionally, utilizing growing cash
flows, Marvel prepaid the balance of a three-year $37 million term
loan which was initiated in December 2001. Marvel had approximately
$53.7 million in cash and $151.0 million in 12% Senior Notes as of
December 31, 2002, or net debt of $97.3 million. This compares to cash
of $21.6 million and debt of $188.0 million at December 31, 2001, or
net debt of $166.4 million, and reflects Marvel's improving free cash
flows.
Mr. Lipson commented on Marvel's strategy for 2003 and beyond,
"From a business standpoint, our focus continues to be on maximizing
profits and free cash flow while minimizing capital risk and
investment. Our capital expenditure budget remains a very modest $2-$3
million in 2003, allowing us to accumulate our free cash flows for the
repayment of our high yield debt, when callable, in June 2004. We
remain committed to leveraging our vast pipeline of intellectual
property across a growing array of consumer and entertainment markets,
and we will continue to minimize capital investments of any kind. This
efficient business model is built upon the teaming of our incomparable
portfolio of entertainment content and our tremendous creative talents
in comic publishing, entertainment development and toy design and
development, with a broad and diversified base of world-class partners
that are committed to our characters and to ensuring high quality
output and timely development. Though unique in the entertainment
realm, we believe our strategy is ideally suited for Marvel to
continue building on our successful transformation to yield strong
year-over-year financial performance with expected variability in
quarter-over-quarter comparisons."
Pro Forma Comparison:
The following pro forma comparison excludes a number of
non-recurring and non-cash items in order to derive a more useful
comparison of year-over-year operating results. Please review the
footnotes below which reflect assumptions and adjustments that were
made to arrive at the pro forma figures:
Marvel Enterprises, Inc.
Pro Forma Comparison
----------------------------------------------------------------------
Quarter Ended Twelve Months Ended
December 31, 2002 December 31, 2002
(in millions, except Pro Forma Reported Pro Forma Reported
per share data)
---------------------------------- ----------------- -----------------
Net sales $86.5 $86.5 $299.1 $299.1
---------------------------------- ----------------- -----------------
EBITDA $24.8 $24.8 $86.1 $86.1
---------------------------------- ----------------- -----------------
Interest expense (1) $4.8 $14.0 $20.5 $41.7
---------------------------------- ----------------- -----------------
Income before income taxes $18.2 $8.9 $59.8 $38.7
---------------------------------- ----------------- -----------------
Income tax provision (2) $1.5 $1.9 $5.0 $11.9
---------------------------------- ----------------- -----------------
Net income (2) (3) $16.7 $7.2 $54.8 $22.6
---------------------------------- ----------------- -----------------
Net income attributable to common
stock (4) $16.0 $(48.7) $41.9 $(45.5)
---------------------------------- ----------------- -----------------
Net income per share attributable
to common stock (4) $ 0.25 $ (1.03) $ 0.86 $ (1.18)
---------------------------------- ----------------- -----------------
Weighted average number of
Diluted common shares (4) 67.8 47.3 63.4 38.5
---------------------------------- ----------------- -----------------
(1) Pro forma excludes non-cash expense of $9.2 million and $21.2
million in Q4 and the full year, respectively, from amortization of
non-cash HSBC loan costs and warrants, warrants issued to Isaac
Perlmutter for his bank loan guarantee, and from senior note offering
costs.
(2) Pro forma excludes non-cash charges applicable to the
utilization of pre-acquisition NOLs for the three-months and year
ended December 31, 2002. These charges represent the estimated current
cash tax provision for state and foreign taxes.
(3) Pro forma results for Q4 2002 excludes a non-cash tax benefit
of $200,000 and also full year 2002 excludes a one-time, non-cash,
after-tax charge of $4.2 million, initially recorded in the first
quarter, related to the implementation of FAS 142.
(4) Excludes a one-time, non-cash preferred stock dividend of
$55.3 million in the fourth quarter and full year 2002 related to
Marvel's exchange offer for its 8% convertible preferred stock. The
dividend reflects the value of the issuance of 6.2 million shares of
Marvel common stock (valued at $8.95 per share), which was in excess
of the conversion terms of the convertible preferred stock.
Marvel Character Feature Film Line-Up
Release dates and development timing are not within Marvel's control
----------------------------------------------------------------------
Film/Character Studio/Distributor Targeted
Release Date
----------------------------------------------------------------------
DareDevil New Regency/Fox February 14,
2003
----------------------------------------------------------------------
X2 (X-Men Sequel) Fox May 2, 2003
----------------------------------------------------------------------
The Incredible Hulk Universal June 20, 2003
----------------------------------------------------------------------
The Punisher Artisan 2004 (1)
----------------------------------------------------------------------
Spider-Man II Sony/Columbia May 7, 2004
----------------------------------------------------------------------
Iron Fist Artisan 2004 (1)
----------------------------------------------------------------------
Ghost Rider Paramount 2004 (1)
----------------------------------------------------------------------
Deathlok Paramount 2004 (1)
----------------------------------------------------------------------
Elektra New Regency/Fox 2005 (1)
----------------------------------------------------------------------
DareDevil sequel New Regency/Fox 2005 (1)
----------------------------------------------------------------------
Dr. Strange Miramax 2005 (1)
----------------------------------------------------------------------
Namor Universal 2005 (1)
----------------------------------------------------------------------
Fantastic 4 Fox TBD (1)
----------------------------------------------------------------------
Silver Surfer Fox TBD (1)
----------------------------------------------------------------------
Iron Man New Line TBD (1)
----------------------------------------------------------------------
Blade III New Line TBD (1)
----------------------------------------------------------------------
Prime Universal TBD
----------------------------------------------------------------------
(1) Denotes new or adjusted release timing
----------------------------------------------------------------------
Marvel Character Video Game and Online Game Line-Up:
(development/release schedule timing are outside Marvel's control)
----------------------------------------------------------------------
Marvel Character/Property Publisher Release Date (2)
----------------------------------------------------------------------
Blade Activision 2000, 2002
----------------------------------------------------------------------
Spider-Man Activision 2001, 2002,
2005/2006 (1)
----------------------------------------------------------------------
X-Men Activision 2001, 2002, 2003
----------------------------------------------------------------------
Marvel vs Capcom Capcom 2002, 2003
----------------------------------------------------------------------
DareDevil Encore 2003
----------------------------------------------------------------------
Iron Man Activision 2002
----------------------------------------------------------------------
The Incredible Hulk Universal
Interactive 2003
----------------------------------------------------------------------
The Punisher THQ Inc. 2003
----------------------------------------------------------------------
Wolverine Activision 2003
----------------------------------------------------------------------
Elektra Encore 2004
----------------------------------------------------------------------
Fantastic Four Activision In development
----------------------------------------------------------------------
Captain America THQ Inc. TBD
----------------------------------------------------------------------
Nick Fury THQ Inc. TBD
----------------------------------------------------------------------
----------------------------------------------------------------------
Marvel Universe (3) Universal
Interactive 2006 (1)
----------------------------------------------------------------------
(1) Denotes new or adjusted release timing
----------------------------------------------------------------------
(2) Actual and potential timing of release
----------------------------------------------------------------------
(3) Online Massive Multi-Player Persistent Universe Game
----------------------------------------------------------------------
Updated Financial Guidance: Based on stronger than expected
performances across the company and notwithstanding the early
realization of approximately $4.3 million in Spider-Man The Movie
revenues in Q4 '02 from Q1 '03, Marvel is raising its Q1 and
full-year 2003 guidance as reflected in the table below. The
substantial increase in Q1 guidance reflects license royalties
expected to be earned associated with contracts executed well in
advance of Marvel's earlier expectations, including expected
contributions from Marvel's toy licensee for action figures and
accessories (principally from the Hulk toy line). Accordingly, Marvel
is raising its full year EBITDA guidance range by $4 million to
$92-$97 million. As previously noted, Q1 and fiscal 2003 guidance also
reflects contributions associated with Marvel's recently amended video
game agreement with Activision.
Marvel estimates that approximately 10% of EBITDA guidance for
2003 is directly attributable to royalties the Company anticipates
from the three Marvel-character feature films slated for 2003 release.
Contributions from these films, excluding The Hulk, for which there is
a gross participation cap on the first film (no cap on any sequels),
are expected to continue into 2004 and beyond. Marvel's guidance also
includes expected contributions from a growing array of consumer
product and toy licenses; a growing lineup of TV exposures from first
run series; continued growth in the Company's comic book and trade
paperback business; and an unprecedented lineup of six Marvel
character video game releases on all of the major game platforms.
Marvel's guidance is based on management's current view of
business trends and expectations for all operating divisions. Marvel
cautions investors that changes in the timing of entertainment
projects and licensing opportunities and their relative success as
well as timing of revenue recognition for entertainment and licensing
revenue streams, could have a material impact on quarterly and full
year results.
Marvel Enterprises, Inc. - Updated Q1 and Full-Year 2003 Guidance
----------------------------------------------------------------------
(in millions - except per New Previous New
share amounts) Q1 2003 Q1 2003 FY 2003
Guidance Guidance Guidance
----------------------------------------- -------------- -------------
Total revenues $80 - $85 $67 - $72 $215 -$220
----------------------------------------- -------------- -------------
EBITDA $45 - $50 $22 - $27 $92 - $97
----------------------------------------- -------------- -------------
Net income (3) $27 - $31 $10 - $14 $50 - $54
----------------------------------------- -------------- -------------
EPS attributable to common
stock (1) (2) (3) $0.36 - $0.41 $0.15 - $0.19 $0.64 -$0.69
----------------------------------------- -------------- -------------
Weighted average diluted
common shares 73.7 73.1 73.7
----------------------------------------- -------------- -------------
Free cash flow $23 - $28 $16 - $20 $69 - $74
----------------------------------------- -------------- -------------
Free cash flow per share $0.31 -$0.38 $0.22 - $0.29 $0.94 -$1.00
----------------------------------------- -------------- -------------
(in millions - except per share Previous Actual Actual
amounts) FY 2003 Q1 2002 FY 2002
Guidance
----------------------------------------------------- -------- -------
Total revenues $205 - $215 $57.2 $299.1
----------------------------------------------------- -------- -------
EBITDA $88 - $93 $10.3 $86.1
----------------------------------------------------- -------- -------
Net income (3) $42 - $45 $1.0 $26.8
----------------------------------------------------- -------- -------
EPS attributable to common stock (1)
(2) (3) $0.57 - $0.62 ($0.09) $0.32
----------------------------------------------------- -------- -------
Weighted average diluted common shares
69.7 34.4 44.0
----------------------------------------------------- -------- -------
Free cash flow $69 - $74 $3.1 $91.8
----------------------------------------------------- -------- -------
Free cash flow per share
$0.99 - $1.06 $0.09 $2.09
----------------------------------------------------- -------- -------
(see accompanying footnotes)
(1) Full-year 2002 net income per share attributable to common
stock excludes a $55.3 million non-cash charge related to the
completion of Marvel's Preferred Share exchange offer (described
above).
(2) Q1 2003 and FY 2003 net income attributable to common stock
includes approximately $700,000 and $2.7 million in preferred stock
dividends, respectively. Q1 2002 and FY 2002 net income attributable
to common stock includes approximately $4.1 million and $12.8 million
(excluding the above one-time, non-cash charge of $55.3 million) in
preferred stock dividends respectively.
(3) Q1 and FY 2002 net income excludes the impact of the non-cash
SFAS 142 impairment charge of $4.6 million and $4.2 million,
respectively.
About Marvel Enterprises
Marvel Enterprises, Inc. is leading global character-based
entertainment 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 support the development of feature films (and DVD/home
video); video games, TV series and toy lines based on its characters,
and Marvel licenses its characters for a broad and growing range of
consumer products and services including apparel, collectibles, foods
and promotions. Marvel's comic book division is a leading publisher in
the global marketplace while also serving as an invaluable source of
intellectual property. Marvel's Toy Biz division is a recognized
creative force and leader in toy design, sales and marketing,
developing and overseeing both licensee and in-house toy lines. For
additional information visit http://www.marvel.com.
Except for historical information contained herein, the statements
in this news release regarding the Company's plans are forward-looking
statements that are dependent upon certain risks and uncertainties,
including the Company's potential inability to successfully implement
its business strategy, a decrease in the level of media exposure or
popularity of the Company's characters resulting in declining revenues
from products based on those characters, the timing of releases and
the decisions to proceed with feature films and TV series based on the
Company's characters, the lack of commercial success of entertainment
projects based on the Company's characters, the lack of commercial
success of properties owned by major entertainment companies that have
granted the Company toy licenses, the lack of consumer acceptance of
new product introductions, the imposition of quotas or tariffs on toys
manufactured in China as a result of a deterioration in trade
relations between the U.S. and China, changing consumer preferences,
production delays or shortfalls, continued pressure by certain of the
Company's major retail customers to significantly reduce their toy
inventory levels, the impact of competition and changes to the
competitive environment on the Company's products and services, the
ability of the Company's licensees to successfully market and sell the
licensed products, changes in technology and changes in governmental
regulation and the continued financial stability of major licensees of
the Company. Those and other risks and uncertainties are described in
the Company's filings with the Securities and Exchange Commission,
including the Company's Annual Report 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.
Summary Consolidated Statements Of Operations
(in thousands, except per share data)
----------------------------------------------------------------------
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
------------------------------------------------ ---------------------
Net sales $86,507 $49,594 $299,046 $181,224
-------------------------------------- --------- ---------- ----------
Cost of sales 37,940 18,795 142,103 88,709
-------------------------------------- --------- ---------- ----------
Gross profit 48,567 30,799 156,943 92,515
-------------------------------------- --------- ---------- ----------
Selling, general and
administrative expenses 30,612 23,704 85,800 62,048
-------------------------------------- --------- ---------- ----------
Pre-acquisition litigation
charge (1) ---- ---- ---- 3,000
-------------------------------------- --------- ---------- ----------
Administrative claims
payable no longer required ---- (3,474) ---- (3,474)
-------------------------------------- --------- ---------- ----------
Equity in net income (loss)
of joint venture (2) 6,676 (55) 13,802 (325)
-------------------------------------- --------- ---------- ----------
Other income 203 ---- 1,170 ----
-------------------------------------- --------- ---------- ----------
EBITDA (3) 24,834 10,514 86,115 30,616
-------------------------------------- --------- ---------- ----------
Depreciation and
amortization 1,791 1,578 5,433 5,559
-------------------------------------- --------- ---------- ----------
Amortization of goodwill and
other intangibles 84 5,983 339 23,764
-------------------------------------- --------- ---------- ----------
Operating income 22,959 2,953 80,343 1,293
-------------------------------------- --------- ---------- ----------
Interest expense, including
amortization
of debt discount (4) 14,015 5,328 41,667 28,119
-------------------------------------- --------- ---------- ----------
Income (loss) before income
taxes 8,944 (2,375) 38,676 (26,826)
-------------------------------------- --------- ---------- ----------
Income tax provision
(benefit) (5) 1,947 (5,742) 11,902 647
-------------------------------------- --------- ---------- ----------
Income (loss) before
cumulative effect of change
in accounting principle and
extraordinary gain 6,997 3,367 26,774 (27,473)
-------------------------------------- --------- ---------- ----------
Cumulative effect of change
in accounting principle,
net of taxes (222) ---- 4,164 ----
-------------------------------------- --------- ---------- ----------
Extraordinary gain, net of
income tax provision ---- 19,093 ----- 32,738
-------------------------------------- --------- ---------- ----------
Net income $7,219 $22,460 $22,610 $5,265
-------------------------------------- --------- ---------- ----------
Preferred dividend
requirement (6) 55,916 4,077 68,132 16,034
-------------------------------------- --------- ---------- ----------
Net (loss) income
attributable to common
stock $(48,697) $18,383 $(45,522) $(10,769)
-------------------------------------- --------- ---------- ----------
Diluted loss per common
share from continuing
operations $(1.04) $(0.02) $(1.07) $(1.27)
-------------------------------------- --------- ---------- ----------
Diluted (loss) income per
common share after
cumulative effect of change
in accounting principle and
extraordinary gain $(1.03) $0.53 $(1.18) $(0.31)
-------------------------------------- --------- ---------- ----------
Weighted average number of
diluted common shares 47,278 34,763 38,514 34,322
-------------------------------------- --------- ---------- ----------
(1) Reflects a $3 million litigation charge related to a 1994 toy
license between Toy Biz and The Coleman Company.
(2) Marvel's share of revenues, net of expenses, from its
licensing joint venture with Sony for Spider-Man: The Movie.
(3) EBITDA is defined as earnings before cumulative effect of
change in accounting principle, extraordinary gain, interest expense,
income taxes, and depreciation and amortization. EBITDA does not
represent net income or cash flows from operations as those terms are
defined by generally accepted accounting principles. EBITDA does not
necessarily indicate whether cash flows will be sufficient to fund
cash needs.
(4) Q4 and FY 2002 interest expense include, respectively, $1.5
million and $9.4 million in non-cash items related to the amortization
of HSBC credit facility costs, warrants issued to Isaac Perlmutter and
senior note offering costs. The amounts also include $7.7 and $11.8
million in non-cash loan costs amortization that were accelerated into
Q4 and FY 2002 as a result of Marvel's prepayments, in August 2002 and
December 2002, of its bank debt.
(5) Q4 and FY 2002 estimated cash state and foreign taxes amount
to $0 and $1.0 million, respectively. The remaining provision
represents non-cash provisions relating to the use of net operating
loss carry forwards incurred in the operating period before the
bankruptcy and are available to offset current year taxable income.
(6) Q4 and FY 2002 include a one-time, non-cash preferred stock
dividend of $55.3 million related to Marvel's exchange offer for its
8% convertible preferred stock. The dividend reflected the value of
the issuance of 6.2 million shares of Marvel common stock (valued at
$8.95) in excess of conversion terms of the convertible preferred.
MARVEL ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2002 2001
-------------------------
ASSETS
Current assets:
Cash and cash equivalents $53,690 $21,591
Accounts receivable, net 43,420 35,648
Inventories, net 16,036 20,916
Income tax receivable ----- 334
Amounts due from joint venture 2,102 ----
Deferred financing costs 667 9,144
Prepaid expenses and other 6,700 12,594
-------------------------
Total current assets 122,615 100,227
Molds, tools and equipment, net 6,997 8,076
Product and package design costs, net 859 2,218
Accounts receivable, non-current portion 17,284 11,890
Goodwill, net 365,604 380,675
Other intangibles, net 649 988
Deferred charges and other assets 65 139
Deferred financing costs, net 3,446 13,357
-------------------------
Total assets $517,519 $517,570
=========================
LIABILITIES, CUMULATIVE CONVERTIBLE EXCHANGEABLE
REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $11,607 $13,052
Accrued expenses and other 48,371 35,146
Current portion of credit facility ------ 6,172
Administrative claims payable 1,303 3,500
Unsecured creditors payable 3,034 5,239
Deferred revenue 25,696 7,128
-------------------------
Total current liabilities 90,011 70,237
-------------------------
Senior Notes 150,962 150,962
Long term portion of credit facility ------ 30,828
Accrued rent 897 1,064
Deferred revenue, non-current portion ------ 14,546
-------------------------
Total liabilities 241,870 267,637
-------------------------
Cumulative convertible exchangeable
redeemable preferred stock 32,780 207,975
-------------------------
Stockholders' equity
Common stock 685 421
Additional paid-in capital 486,106 238,769
Accumulated deficit (208,419) (162,897)
Accumulated other comprehensive loss (2,548) (1,380)
-------------------------
Total stockholders' equity before
treasury stock 275,824 74,913
Treasury stock (32,955) (32,955)
-------------------------
Total stockholders' equity 242,869 41,958
-------------------------
Total liabilities, cumulative
convertible exchangeable redeemable
preferred stock and stockholders'
equity $517,519 $517,570
=========================
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