Marvel Reports Third Quarter Results; Initiates 2006 EPS Guidance of $0.37 to $0.52 and Revises 2005 EPS Guidance to $1.02 to $1.07; Board Authorizes $250 Million Share Repurchase Program

Marvel's Chairman, Morton Handel, commented, "We are pleased withthe box office success of the Fantastic Four feature film, whichlaunched this character franchise and has grossed over $329 millionworldwide to date. Marvel's business model continues to be solidlyprofitable and generates strong free cash flow.

"As reviewed in more detail below, Marvel is revising its 2005financial guidance to reflect the contribution of a landmark,long-term license agreement in the video game category which haslargely offset some weaker than expected performance in our toyoperation. However, our 2006 outlook reflects a difficult year forboth toys and licensing. Despite the near-term challenges, themanagement team and Board remain confident in the long-term power ofMarvel's business model, which will generate high levels of cash incoming years. Accordingly, the Board has approved an additional $250million share repurchase authorization. We believe repurchases will beaccretive to earnings and will provide a very attractive long-termreturn on investment as we proceed beyond 2006. Those years willinclude the release of both the Spider-Man and Fantastic Four sequelsin 2007 and the anticipated launch of Marvel's own film slate startingin 2008."

Marvel also disclosed that it has secured a $150 million line ofcredit from HSBC Bank USA, of which $125 million will be available,together with the Company's cash from operations, for repurchasingshares of Marvel's common stock.

Guidance and Drivers: Marvel is fine-tuning its 2005 guidance fornet sales, net income and EPS to reflect the company's expectationsfor the balance of 2005. Cash Flow from operations is expected toexceed $100 million in 2005 and is expected to exceed $70 million in2006 as the cash payments from licensing contracts recorded as revenuein 2005 and prior years, are received by the Company.
Marvel Entertainment, Inc. - Financial Guidance
----------------------------------------------------------------------
(in millions,
except per- Updated 2005 Previous 2005 Initial 2006 2004
share amounts) Guidance Guidance (1) Guidance (3) Actual
----------------------------------------------------------------------
Net sales $385 - $395 $370 - $390 $270 - $300 $513
----------------------------------------------------------------------
Net income $111 - $114 $111 - $120 $38 - $53 $125 (2)
----------------------------------------------------------------------
Diluted EPS $1.02 - $1.07 $1.01 - $1.06 $0.37 - $0.52 $1.10 (2)
----------------------------------------------------------------------

(1) Previous 2005 guidance ranges were updated on a conference call on
September 6th in conjunction with the Company's completion of its $525
million non-recourse film slate debt facility.

(2) Includes a one-time charge of approximately $12 million associated
with the early redemption in June 2004 of the Company's 12% Senior
Notes due 2009.

(3) 2006 Guidance includes approximately $16 million, or $0.09 per
share, in interest and non-cash amortization expenses related to
Marvel's $525 million feature film production credit facility.

The following are expected to be some of the key factors inMarvel's revised full-year 2005 financial performance and arereflected in the Company's financial guidance ranges. The licensingdivision is expected to generate approximately 60% of the Company'stotal sales for 2005 with licensing operating margins ranging between58% and 62%.

-- Includes licensing revenues of $50 million, to be recorded in the fourth quarter, for a new video game licensing agreement.

-- Over $20 million in license revenue to be derived from Spider-Man Merchandising L.P. (the limited partnership between Marvel and Sony, referred to as "Spider-Man L.P."), nearly all of which was recorded in the first nine months of 2005.

-- The Fantastic Four movie release and related licensing, as well as licensing associated with other entertainment projects slated for 2005 or thereafter.

-- Income related to an estimated $70 - $75 million (reduced from $80 million) of wholesale sales of Fantastic Four toys by our master toy licensee. Approximately $66 million of wholesale sales were recorded in the first nine months of 2005.

-- Lower-than-anticipated contributions from new toy product launches related to TNA Wrestling and the Curious George film franchise, most of which have been pushed into 2006 due to the weak retail environment. Marvel had anticipated aggregate revenues of approximately $20 million from these franchises in 2005, and now expects only $3 million in 2005.

-- Domestic licensing overages and cash-basis revenues of $19 million (compared to $37 million in 2004), including $15 million recorded in the first nine months of 2005. Marvel's earlier estimated domestic overage contribution was $35 million and was reduced principally to reflect slower-than-anticipated consumer sell-thru of the Marvel brand, as well as a less optimistic view of contract conversion to overage status than has occurred.

-- International licensing revenues to exceed $35 million, including $30 million recorded in the first nine months of 2005, versus Marvel's earlier estimate of over $30 million.

-- Modest top-line and bottom-line growth from the publishing division, which remains on track through the first nine months of 2005.

Initiation of 2006 Financial Guidance:

Today, Marvel is initiating full year financial guidance for 2006.Marvel's financial guidance reflects the following factors:

-- Nominal contributions from feature films: X-Men 3, Ghost Rider, and The Punisher 2.

-- Modest expected initial contributions from animated projects: Avengers 1 direct-to-DVD in Q2 2006 and the Fantastic Four animated television series in Europe.

-- Modest contributions from wholesale sales of Ghost Rider and X-Men 3 toys by our Master Toy Licensee plus sales from Curious George and Marvel Legends.

-- No contribution expected from the Spider-Man L.P. (compared to over $20 million in 2005).

-- Studio revenues of $10 - $12 million (compared to over $20 million in 2005).

-- Continued, modest top-line and bottom-line growth from the publishing division.

-- Approximately $16 million in interest expense and non-cash amortization expenses related to Marvel's $525 million credit facility for feature film production.

-- Roughly $5 million of incremental non-cash expenses related to the expensing of stock options.

-- Up to $5 million in incremental expenses related to the expansion of activities and infrastructure within the Marvel Studios division.

-- Marvel's guidance does not reflect the impact of any share repurchase activity under the $250 million authorization announced today.

Marvel cautions investors that inherent variability in the timingof license opportunities and entertainment events, the timing of theirrevenue recognition, and their level of success may contribute tosequential and year-over-year variability in its interim financialresults and could have a material impact on quarterly results as wellas Marvel's ability to achieve the financial performance included inits financial guidance.

Third Quarter Segment Review:
Marvel Entertainment, Inc.
Segment Net Sales/Operating income
(in Millions)
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
----------------------------------------------------------------------
Licensing: Net Sales $33.2 $64.2 $148.3 $158.1
----------------------------------------------------------------------
Operating Income (1) 20.0 49.0 88.0 118.5
----------------------------------------------------------------------
Publishing: Net Sales 25.8 22.6 69.1 63.9
----------------------------------------------------------------------
Operating Income 11.0 9.4 27.7 25.7
----------------------------------------------------------------------
Toys: Net Sales 22.1 48.4 56.0 191.0
----------------------------------------------------------------------
Operating Income 10.5 11.8 28.1 55.3
----------------------------------------------------------------------
Corporate Overhead: (6.1) (8.1) (17.4) (16.4)
----------------------------------------------------------------------
TOTAL NET SALES $81.1 $135.2 $273.4 $413.0
----------------------------------------------------------------------
TOTAL OPERATING INCOME $35.4 $62.1 $126.4 $183.1
----------------------------------------------------------------------

(1) 9-month period in 2005 includes the impact of a $10 million,
one-time charge related to the settlement of litigation with Stan Lee.

-- Licensing Segment net sales declined 48% from the year-ago period to $33.2 million in Q3 2005 primarily due to lower contributions from the Spider-Man L.P. for Spider-Man 2 movie merchandising a full year after the movie's June 30, 2004 release. The studio division also recorded a decline in sales as compared to the prior-year period, largely due to the receipt of a $5 million advance for Spider-Man 3 in Q3 2004. Domestic licensing net sales, excluding Spider-Man L.P. activity, increased 17% year-over-year to $20.5 million in Q3 2005 due to growth in new contract revenues, off-setting a decline in overages as compared to the year-ago period. While on track with the original full year 2005 guidance, international licensing net sales, excluding Spider-Man L.P. activity, decreased 11% year-over-year to $7.4 million in Q3 2005.

The two tables below highlight licensing revenues by division andcategory. The licensing forecast is done on a divisional basis.Management believes that this is a more reliable format to determinetrends in the underlying businesses and will continue to provide thisdata on a quarterly basis. Due to the lumpiness inherent in thelicensing categories in the second table, management does not believeit imparts relevant trends and will not be providing this table infuture reporting.
Marvel Entertainment, Inc.
Licensing Sales by Division
(in Millions)
----------------------------------------------------------------------
Three Months Nine Months Ended
Ended
9/30/05 9/30/04 9/30/05 9/30/04
----------------------------------------------------------------------
Domestic Consumer Products $20.5 $17.5 $76.3 $78.4
----------------------------------------------------------------------
International Consumer Products 7.5 8.4 30.1 22.3
----------------------------------------------------------------------
Spider-Man L.P. 2.3 28.4 20.4 40.0
----------------------------------------------------------------------
Studios 2.9 9.9 21.5 17.4
----------------------------------------------------------------------
Total $33.2 $64.2 $148.3 $158.1
----------------------------------------------------------------------



Marvel Entertainment, Inc.
Licensing Sales by Category
(in Millions)
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
9/30/05 9/30/04 9/30/05 9/30/04
----------------------------------------------------------------------
Apparel and accessories $9.8 $24.1 $42.7 $64.3
----------------------------------------------------------------------
Entertainment (including studios,
themed attractions and electronic
games) 4.5 19.7 46.0 35.9
----------------------------------------------------------------------
Toy Royalties 11.7 11.4 24.9 26.8
----------------------------------------------------------------------
Other (Domestics, food and other) 7.2 9.0 34.8 31.1
----------------------------------------------------------------------
Total $33.2 $64.2 $148.3 $158.1
----------------------------------------------------------------------

Operating margins in the licensing division were 60% in Q3 2005compared to 76% in the prior-year period. The reduction in marginsresulted from the combination of relatively flat costs coupled withlower revenues as compared to the prior period.

-- Marvel's Publishing Segment net sales increased 14% from the year-ago period to $25.8 million. This year-over-year gain resulted from higher sales of trade paperbacks into the bookstore and direct market channels of $3.2 million. Divisional operating income in Q3 2005 was $11.0 million, an operating margin of 43%, compared to an operating margin of 42% in the prior-year period.

-- The transition in Marvel's Toy Segment net sales from Marvel-produced action figures and accessories based on the Lord of The Rings franchise and Spider-Man 2 movie in 2004 to lines produced by our Master Toy Licensee in 2005, led to an expected decline in segment revenue of 54% to $22.1 million. Fantastic Four toy sales by Marvel's master toy licensee were $25 million in the Q3 2005, bringing year-to-date sales of this product line to approximately $66 million. Spider-Man 2 movie toy sales were $1.6 million in Q3 2005 compared with $36.6 million in Q3 2004. Operating margins in the toy division increased to 48% in Q3 2005 from 24% in Q3 2004 due to the shift in product mix toward higher-margin toy royalty and service fees.
Marvel Entertainment, Inc.
Toy Sales Summary
(in Millions)
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
9/30/05 9/30/04 9/30/05 9/30/04
----------------------------------------------------------------------
Marvel Toy Net Sales $4.9 $43.4 $12.8 $180.2
----------------------------------------------------------------------
Master Toy License:
----------------------------------------------------------------------
- Toy Royalties 8.3 3.0 21.0 6.9
----------------------------------------------------------------------
- Fees for Services Rendered 8.9 2.0 22.2 3.9
----------------------------------------------------------------------
Total Toy Segment $22.1 $48.4 $56.0 $191.0
----------------------------------------------------------------------

-- Corporate Overhead was $6.1 million in Q3 2005 compared to $8.1 million in the prior-year period, principally due to decreased salaries and legal expense.

Balance Sheet Update:

During Q3 2005, Marvel repurchased 1.6 million shares for anaggregate consideration of $32.6 million, thereby completing itsrepurchase authorization. Marvel had cash and short-term investmentsof $72.7 million as of September 30, 2005. The company believes thatit will end the year with in excess of $120 million in cash, excludingthe impact of any share repurchases.
Marvel Studios
(Development and release dates for licensed properties are controlled
by studio partners)
----------------------------------------------------------------------
Marvel Character Feature Film Line-Up For 2006
----------------------------------------------------------------------
Film/Character Studio/Distributor Status
----------------------------------------------------------------------
X-Men 3 Fox Currently filming, May 26, 2006
release (1)
----------------------------------------------------------------------
Ghost Rider Sony Filming completed, July 14, 2006
release (1)
----------------------------------------------------------------------
The Punisher 2 Lions Gate Writer, targeted for fall 2006
release (1)
----------------------------------------------------------------------

Marvel Character Feature Film Development Pipeline (Partial List)
----------------------------------------------------------------------
Film/Character Studio/Distributor Status
----------------------------------------------------------------------
Spider-Man 3 Sony Director, May 4, 2007 release
----------------------------------------------------------------------
Fantastic Four 2Fox Director, July 4, 2007 release (1)
----------------------------------------------------------------------
Silver Surfer Fox TBD
----------------------------------------------------------------------
Wolverine Fox TBD
----------------------------------------------------------------------
Deathlok Paramount TBD
----------------------------------------------------------------------
Hulk 2 Universal TBD
----------------------------------------------------------------------
Namor Universal TBD (1)
----------------------------------------------------------------------
Black Widow Lions Gate TBD (1)
----------------------------------------------------------------------
Iron Man TBD TBD (1)
----------------------------------------------------------------------
Thor TBD TBD
----------------------------------------------------------------------

Film Projects Included in the Marvel Film-Backed Credit Facility (1)

Ant-Man, The Avengers, Black Panther, Captain America, Cloak & Dagger,
Doctor Strange, Hawkeye, Nick Fury, Power Pack and Shang-Chi. The
first film is anticipated for release in 2008.
----------------------------------------------------------------------

Marvel Character Animated Direct-to-Video Projects in Development
----------------------------------------------------------------------
Partnership with Lions Gate to develop, produce and distribute
original animated DVD features. Four projects in 2D/3D format are in
development with the first releases slated for 2006. Titles include:
Ultimate Avengers (February 21, 2006 release), Ultimate Avengers 2,
Iron Man and Doctor Strange.
----------------------------------------------------------------------

Marvel Character Animated TV Projects in Development
----------------------------------------------------------------------
Partnership with Moonscoop SAS (formerly Antefilms Productions) to
produce an original animated television series based on the Fantastic
Four. Twenty-six, 30-minute 2D/3D animated episodes are planned with
initial TV airings in 2006.
----------------------------------------------------------------------

Marvel Character Live Action TV Projects in Development
----------------------------------------------------------------------
Alter Ego, Blade, Skrull Kill Krew (1).
----------------------------------------------------------------------

(1) Represents a change from the previously supplied schedule

TBD = To Be Determined



2005/2006 Video Game Release Schedule
(Release dates are controlled by Publishing partners)
----------------------------------------------------------------------
Publisher Character Release
----------------------------------------------------------------------
Activision Spider-Man & Friends Q1 2005
----------------------------------------------------------------------
Fantastic Four Q2 2005
----------------------------------------------------------------------
Ultimate Spider-Man Q3 2005
----------------------------------------------------------------------
X-Men Legends II Q4 2005
----------------------------------------------------------------------
Electronic Arts Marvel versus EA Q4 2005
----------------------------------------------------------------------
THQ Inc Punisher Q1 2005
----------------------------------------------------------------------
Vivendi Universal Hulk: Ultimate Destruction Q3 2005
----------------------------------------------------------------------
Majesco Ghost Rider 2006
----------------------------------------------------------------------

About Marvel Entertainment, Inc.

With a library of over 5,000 characters, Marvel Entertainment,Inc. - formerly known as Marvel Enterprises, Inc. - is one of theworld's most prominent character-based entertainment companies.Marvel's operations are focused on utilizing its character franchisesin licensing, entertainment, publishing and toys. Areas of emphasisinclude feature films, DVD/home video, consumer products, video games,action figures and role-playing toys, television and promotions.Rooted in the creative success of over sixty years of comic bookpublishing, Marvel's strategy is to leverage its character franchisesin a growing array of opportunities around the world.

Except for any historical information that they contain, thestatements in this news release regarding Marvel's plans areforward-looking statements that are subject to certain risks anduncertainties, including a decrease in the level of media exposure orpopularity of Marvel's characters, financial difficulties of Marvel'smajor licensees, delays and cancellations of movies and televisionproductions based on Marvel characters, poor performance of majormovies based on Marvel characters, toy-production delays orshortfalls, continued concentration of toy retailers, toy inventoryrisk, significant appreciation of Chinese currency against othercurrencies and the imposition of quotas or tariffs on productsmanufactured in China.

In addition, in connection with Marvel's studio operations,including those related to the slate of feature films Marvel plans toproduce on its own with proceeds from its $525 million film slatefacility (the "Film Facility"), the following factors, among others,could cause Marvel's or Marvel Studios' financial performance todiffer materially from that expressed in any forward-lookingstatements made by Marvel: (i) Marvel Studios' potential inability toattract and retain creative talent, (ii) the potential lack ofpopularity of Marvel's films, (iii) the expense associated withproducing films, (iv) union activity which could interrupt filmproduction, (v) that Marvel Studios has not, in the past, producedfilm projects on its own, (vi) changes or disruptions in the way filmsare distributed including a decline in the profitability of the DVDmarket, (vii) piracy of films and related products, (viii) that only alimited number of films will be released, (ix) fluctuations inreported income or loss or difficulties in implementing internalcontrols related to the accounting of film production activities, (x)Marvel Studios' dependence on a single distributor, (xi) the potentialinability of Marvel's subsidiaries to meet the conditions necessaryfor an initial funding of a film under the Film Facility, and (xii)the potential inability of Marvel's subsidiaries to obtain financingto make more than four films if certain tests related to the economicperformance of the film slate are not satisfied (specifically, aninterim asset test and a foreign pre-sales test).

These and other risks and uncertainties are described in Marvel'sfilings with the Securities and Exchange Commission, includingMarvel's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Qand Current Reports on Form 8-K. Marvel assumes no obligation topublicly update or revise any forward-looking statements.
MARVEL ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(In thousands, except per share data)
(unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2005 2004 2005 2004
-------- --------- --------- ---------

Net sales $81,128 $135,183 $273,412 $412,976
-------- --------- --------- ---------
Costs and expenses:
Costs of revenue (excluding
depreciation expense) 14,105 38,318 37,545 141,701
Selling, general and
administrative 30,686 34,940 107,597 97,087
Depreciation and amortization 1,232 1,350 3,375 2,906
-------- --------- --------- ---------
Total costs and expenses 46,023 74,608 148,517 241,694
Equity in net income of Spider-
Man L.P. -- -- -- 8,117
Other income, net 245 1,570 1,493 3,659
-------- --------- --------- ---------
Operating income 35,350 62,145 126,388 183,058
Interest income (expense), net (399) 550 2,173 (18,343)
-------- --------- --------- ---------
Income before income taxes and
minority interest 34,951 62,695 128,561 164,715
Income tax expense 11,158 21,476 47,121 59,267
Minority interest in
consolidated Spider-Man L.P. 401 6,867 4,540 10,695
-------- --------- --------- ---------
Net income $23,392 $34,352 $76,900 $94,753
======== ========= ========= =========

Basic earnings per share
attributable to common stock $0.24 $0.32 $0.76 $0.88
======== ========= ========= =========
Weighted average number of basic
shares outstanding 96,647 107,130 101,273 108,022
======== ========= ========= =========

Diluted earnings per share
attributable to common stock $0.23 $0.30 $0.71 $0.83
======== ========= ========= =========
Weighted average number of
diluted shares outstanding 103,174 113,464 107,918 114,685
======== ========= ========= =========

Comprehensive income:
Net income $23,392 $34,352 $76,900 $94,753
Other comprehensive loss (66) (43) (197) (129)
-------- --------- --------- ---------
Comprehensive income $23,326 $34,309 $76,703 $94,624
======== ========= ========= =========



MARVEL ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

September December
30, 31,
2005 2004
--------- ---------

ASSETS
Current assets:
Cash and cash equivalents $18,097 $50,071
Short-term investments 54,574 154,719
Accounts receivable, net 63,803 73,576
Inventories, net 9,086 6,587
Income tax receivable 15,300 --
Deferredincome taxes, net 7,981 7,981
Prepaid expenses and other current assets 4,098 2,734
--------- ---------
Total current assets 172,939 295,668

Molds, tools and equipment, net 5,417 5,553
Product and package design costs, net 1,039 1,249
Goodwill 341,708 341,708
Accounts receivable, non-current portion 25,199 37,718
Deferred income taxes, net 32,823 32,583
Deferred financing costs 25,302 --
Advances to Spider-Man L.P. partner 2,702 --
Other assets 309 335
--------- ---------

Total assets. $607,438 $714,814
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,406 $6,006
Accrued royalties 63,239 57,879
Accrued expenses and other current liabilities 38,538 43,962
Minority interest to be distributed -- 8,428
Income taxes payable -- 10,129
Deferred revenue 8,525 27,033
--------- ---------
Total current liabilities 114,708 153,437
Accrued rent 950 165
Deferred revenue, non-current portion 19,921 14,712
Debt facility 24,800 --
--------- ---------
Total liabilities 160,379 168,314
--------- ---------

Stockholders' equity:
Preferred stock, $.01 par value, 25,000,000 shares
authorized, none issued -- --
Common stock, $.01 par value, 250,000,000 shares
authorized, 121,740,632 issued and 97,128,822
outstanding in 2005 and 120,442,988 issued and
105,101,788 outstanding in 2004 1,217 1,205
Deferred stock compensation (6,839) (5,164)
Additional paid-in capital 594,180 577,169
Retained earnings 143,843 66,943
Accumulated other comprehensive loss (2,455) (2,652)
Treasury stock, 24,611,810 shares in 2005 and
15,341,200 shares in 2004 (282,887) (91,001)
--------- ---------
Total stockholders' equity 447,059 546,500
--------- ---------

Total liabilities and stockholders' equity $607,438 $714,814
========= =========