UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 1-13638
 MARVEL ENTERTAINMENT, INC.
  Delaware
    
    13-3711775(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer Identification No.)417 Fifth Avenue, New York, NY
    
    10016(Address of principal executive offices)
    
    (Zip Code)
 (212)-576-4000
  Title of each class
    

Name of each exchange on which registeredCommon Stock, par value $.01 per share
    
    New York Stock ExchangePreferred Share Purchase Rights
    
    New York Stock Exchange
   þ o
  o þ
  þ o
 þ
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-Accelerated filer
o
(Do not check if a smaller reporting
company)
    
    Smaller reporting company o
  o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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PagePART IItem 1 BUSINESS
    
    
    1Item 1A RISK FACTORS
    
    
    11Item 1B UNRESOLVED STAFF COMMENTS
    
    
    15Item 2 PROPERTIES
    
    
    15Item 3 LEGAL PROCEEDINGS
    
    
    15Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    15PART IIItem 5 MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
    
    
    16Item 6 SELECTED FINANCIAL DATA
    
    
    18Item 7 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    19Item 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
    
    
    46Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    46Item 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    46Item 9A CONTROLS AND PROCEDURES
    
    
    46Item 9B OTHER INFORMATION
    
    
    47PART IIIItem 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    48Item 11 EXECUTIVE COMPENSATION
    
    
    48Item 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    48Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
    
    
    48Item 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    48PART IVItem 15 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    49SIGNATURES
    
    
    54CONSOLIDATED FINANCIAL STATEMENTS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
    
    
    F-1
   i




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ITEM 1. BUSINESS
 Unless the context otherwise requires, the term we, us, our, Marvel or the Company
each refer to Marvel Entertainment, Inc., a Delaware corporation, and its subsidiaries. Some of
the characters and properties referred to in this report are subject to copyright and/or trademark
protection.
 General
      Licensing
  Consumer Products
   1




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Studio Licensing
 Feature Films.
 Television Programs. Wolverine and the X-Men
 Made-for-DVD Animated Feature Films
 Destination-Based Entertainment
  Promotions
  Publications
  Publishing
   2




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www.marvel.com
  Customers, Marketing and Distribution
     Film Production
   3




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##### 



The Incredible Hulk
  Iron Man The Incredible Hulk
 Iron Man, The Incredible Hulk Iron Man 2 Thor The First Avenger: Captain America The
Avengers
  
    
    Ant-Man
 
    
    Black Panther
 
    
    Captain America
 
    
    Cloak & Dagger
 
    
    Doctor Strange
 
    
    Hawkeye
 
    
    Iron Man
 
    
    Nick Fury
 
    
    Power Pack
 
    
    Shang-Chi
 
    
    The Avengers
 
    
    The Incredible Hulk
    4




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Terms of the Film Facility
 Financing Available; Rate of Interest; Borrowings Outstanding
     5




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##### 



6




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. Iron Man The Incredible Hulk Iron Man
 Limitations on Recourse under Film Facility
  Use of Funds
  Initial Funding Conditions
    7




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##### 



Iron Man The Incredible Hulk
 Unrestricted Proceeds of the Film Facility
 Iron Man 2 Iron Man 2
 Restricted Proceeds of the Film Facility
  Ability to Refinance or Discontinue Film Facility
  Former Toy Segment
   8




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##### 



Intellectual Property
  Competition
    The
Incredible Hulk
 Employees
   9




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##### 



Financial Information about Geographic Areas
  Revenue by Geographic Area
 2008
    
    
    2007
    
    
    2006U.S.
    
    
    Foreign
    
    
    U.S.
    
    
    Foreign
    
    
    U.S.
    
    
    ForeignLicensing (1)
    
    $
    170.3
    
    
    $
    122.5
    
    
    $
    217.0
    
    
    $
    126.6
    
    
    $
    88.3
    
    
    $
    44.1Publishing
    
    
    111.7
    
    
    
    13.7
    
    
    
    113.4
    
    
    
    12.3
    
    
    
    96.7
    
    
    
    11.8Film Production
    
    
    157.9
    
    
    
    96.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    All Other (2)
    
    
    2.6
    
    
    
    0.8
    
    
    
    14.6
    
    
    
    1.9
    
    
    
    77.8
    
    
    
    33.1Total
    
    $
    442.5
    
    
    $
    233.7
    
    
    $
    345.0
    
    
    $
    140.8
    
    
    $
    262.8
    
    
    $
    89.0
 (1)
    
    Includes U.S. revenue derived from the Joint Venture of $20.8 million, $70.8 million and $3.4
million for 2008, 2007, and 2006, respectively. Includes foreign revenue derived from the Joint
Venture of $36.5 million, $51.2 million and $0.7 million for 2008, 2007, and 2006, respectively.(2)
    
    Represents toy sales, associated with our toy manufacturing operations, which ceased during
early 2008. Available Information
 www.marvel.com
 Certification with the New York Stock Exchange
   10




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##### 



ITEM 1A. RISK FACTORS
 Forward-Looking Statements
   Risk Factors
 Exposure to economic downturn.
 Exposure to tightening of credit markets.
 Dependence on a single distributor to the direct market
 Financial difficulties of licensees
 A decrease in the level of media exposure or popularity of our characters
  11




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Changing consumer preferences
 Movie- and television-production delays and cancellations
 Concentration of toy licensing in one licensee.
 Uncertainties in the film production business.
 
    
    We might be unable to attract and retain creative talent. The success of our
film-production activities depends to a degree on our ability to hire, retain and
motivate top creative talent. Making movies is an activity that requires the
services of individuals, such as actors, directors and producers, who have unusual
creative talents. Individuals with those talents may be more difficult to identify,
hire and retain than are individuals with general business management skills. We
have to hire and retain creative talent to assist us in making our movies. If we
experience difficulty in hiring, retaining or motivating creative talent, the
production of our films could be delayed or the success of our films could be
adversely affected.
 
    
    We will be exposed to changes in fortune on the part of key talent. We may find
ourselves partially dependent on key talent (actors, writers, directors) in our
most successful movie franchises. A key actors incapacitation or damaged
reputation, for instance, could impair our ability to profit from that actors
performance in future films.
  12




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
    
    Our films might be less successful economically than we anticipate.We cannot
predict the economic success of any of our films because the revenue derived from
the distribution of a film depends primarily upon its acceptance by the public,
which cannot be accurately predicted. The economic success of a film also depends
upon the publics acceptance of competing films, critical reviews, the availability
of alternative forms of entertainment and leisure time activities, piracy and
unauthorized recording, transmission and distribution of films, general economic
conditions, weather conditions and other tangible and intangible factors, none of
which can be predicted with certainty. We expect to release a limited number of
films per year as part of the film facility. The commercial failure of just one of
those films could have a material adverse effect on our results of operations in
both the year of release and in the future.
 
    
    Our films might be more expensive to make than we anticipate. We expect that
the film facility will provide the capital required to produce our films. Expenses
associated with producing the films could increase beyond the facilitys limit,
however, because of a range of things such as an escalation in compensation rates
of talent and crews working on the films or in the number of personnel required to
work on films, or because of creative problems or difficulties with technology,
special effects and equipment. In addition, unexpected circumstances sometimes
cause film productions to exceed budget.
 
    
    Our film productions might be disrupted or delayed.Our movies productions are
subject to long and inflexible schedules. Disruptions or delays to those
schedules, by a union strike (such as the one currently threatened by the Screen
Actors Guild for the spring of 2009) or by any other event, could cause us to incur
additional costs, miss an anticipated release date or go for long periods without
releasing a movie, and could hurt our associated licensing and toy programs.
 
    
    We might be disadvantaged by changes or disruptions in the way films are
distributed.The manner in which consumers access film content has undergone rapid
and dramatic changes. Some ancillary means of distribution, such as the DVD market,
have gained importance, while others have faded. We cannot assure that new
distribution channels will be as profitable for the film industry as are todays
channels or that we will successfully exploit any new channels. We can also not
assure that current distribution channels, such as the DVD market, will maintain
their profitability. In addition, films and related products are distributed
internationally and are subject to risks inherent in international trade including
war and acts of terrorism, instability of foreign governments or economies,
fluctuating foreign exchange rates and changes in laws and policies affecting the
trade of movies and related products.
 
    
    We might lose potential sales because of piracy of films and related products.
With technological advances, the piracy of films and related products has
increased. Unauthorized and pirated copies of our films will reduce the revenue
generated by those films and related products.
 
    
    We will be primarily dependent on a single distributor for each film.If our
studio distributor (Paramount or, in the case of The Incredible Hulkand its
sequels, Universal) were to fail to perform under its distribution agreement or if
it were to experience financial difficulties, our ability to distribute our films
and to receive proceeds from our films could be impaired.
 
    
    We will depend on our studio distributors for revenue and certain expense
information related to the accounting for film-production activities.Because of
Paramounts and Universals role as distributor and paymaster of the film facility
films, we will depend on them to have internal controls over financial reporting
related to the films they distribute and to provide us with timely and accurate
financial and other information related to our films. Paramounts and Universals
internal controls might not remain sufficient to allow us to meet our internal
control obligations. We may be unable to effectively create compensating controls
to detect and prevent errors or irregularities in Paramounts and Universals
accounting to us and others.
  13




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
    
    We might fail to meet the conditions set by the lenders for the funding of
films. An initial funding of films by the film facility will be made only if the
lenders conditions are met. Those conditions include our obtaining a completion
bond and production insurance. To obtain a completion bond we will need to have in
place the main operational pieces to producing a film, including approved schedules
for production, cash flow and delivery, an approved budget, an approved screenplay
and the key members of the production crew, including the director and producer.
We might not be able to satisfy those conditions and obtain a completion bond. In
addition, there are very few companies that provide completion bonds in the amounts
that we will require, and if the one company with which we have so far made
arrangements were to exit the business, we might be unable to obtain a completion
bond under any circumstances. If the lenders conditions are not met, the film in
question will not be funded and we will be forced to absorb the up-front film
development costs, which could be material, by using our own funds.
 
    
    We might fail to meet the tests imposed by the lenders for the funding of films
beyond the first four.In order for more than four films to be funded by the film
facility, we will have to pass an interim asset test. If the interim asset test is
not passed, the film facility may be cut short and, because fewer films will be
available to repay the lenders, our risk of losing film rights to some of our
characters will increase.
 
    
    Cash flows from our films might be insufficient to pay our interest costs under
the film facility.Future interest on film facility borrowings must be paid from
the films net collections, rather than from any of our other sources of cash. If
cash flow from the films were to dip, even temporarily, below the point required to
pay interest under the facility, and below the interest and liquidity reserves that
are required to be maintained ($31.4 million at December 31, 2008), then we would
be in default and we could be barred by the film facility lenders from making any
future borrowings under the facility.
 
    
    The film facilitys lenders might default.If one or more of the banks in our
film facilitys lending consortium were to default in making a required funding and
if we were unable to arrange for a replacement bank, the amount available to us
under the film facility would drop by the amount of the defaulting banks unused
commitment and our film productions could be disrupted as a result.
  14




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ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  Facility
    
    Location
    
    Square Feet
    
    
    Owned/LeasedOffice (1)
    
    New York, New York
    
    
    65,253
    
    
    LeasedOffice (2)
    
    Beverly Hills, California
    
    
    18,418
    
    
    LeasedOffice (3)
    
    London, England
    
    
    1,700
    
    
    LeasedOffice (2)
    
    Manhattan Beach,
California
    
    
    156,537
    
    
    Leased
 (1)
    
    Used by our Publishing and corporate offices.(2)
    
    Used by our Licensing and Film Production segments.(3)
    
    Used by our Licensing segment.  
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   15




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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Market Price of and Dividends on our Common Stock
  Fiscal Year
    
    High
    
    
    Low2008First Quarter
    
    $
    28.73
    
    
    $
    23.62Second Quarter
    
    $
    36.82
    
    
    $
    26.36Third Quarter
    
    $
    36.65
    
    
    $
    30.32Fourth Quarter
    
    $
    34.34
    
    
    $
    23.702007First Quarter
    
    $
    30.91
    
    
    $
    26.44Second Quarter
    
    $
    30.00
    
    
    $
    25.48Third Quarter
    
    $
    26.81
    
    
    $
    22.03Fourth Quarter
    
    $
    29.08
    
    
    $
    22.75
   Purchases of Equity Securities by the Issuer and Affiliated Purchasers
 Total number ofshares
    
    
    Approximate dollarpurchased as
    
    
    value of shares thatAverage
    
    
    part of publicly
    
    
    may yet beTotal number of shares
    
    
    price paid
    
    
    announced plans
    
    
    purchased under thePeriod
    
    purchased(a)
    
    
    per share
    
    
    or programs(b)
    
    
    plans or programsOctober 2008
    
    
    8,299
    
    
    $
    26.25
    
    
    
    8,299November 2008
    
    
    18,500
    
    
    
    23.74
    
    
    
    12,200December 2008
    
    
    
    
    
    
    N/A
    
    
    
    Total
    
    
    26,799
    
    
    $
    24.52
    
    
    
    20,499
    
    
    $
    127.7 million
    (c)
 (a)
    
    This columns figures include 6,300 shares purchased by the Fleer/Skybox defined
benefit pension plan, as described in Note 10 to the accompanying consolidated financial
statements.(b)
    
    This column represents the number of shares repurchased through our common stock
repurchase program announced on February 19, 2008.(c)
    
    As of December 31, 2008.  16




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Performance Graph
   
 Value of $100 Invested Over Period Presented:
 12/31/03
    
    
    12/31/04
    
    
    12/31/05
    
    
    12/31/06
    
    
    12/31/07
    
    
    12/31/08Marvel Entertainment, Inc.
    
    $
    100.00
    
    
    $
    105.53
    
    
    $
    84.40
    
    
    $
    138.66
    
    
    $
    137.63
    
    
    $
    158.45NYSE Composite
    
    $
    100.00
    
    
    $
    114.97
    
    
    $
    125.73
    
    
    $
    151.46
    
    
    $
    164.89
    
    
    $
    100.16AMEX Media
(Communications)
    
    $
    100.00
    
    
    $
    83.67
    
    
    $
    89.73
    
    
    $
    95.05
    
    
    $
    66.47
    
    
    $
    13.62
  17




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ITEM 6. SELECTED FINANCIAL DATA
  Year Ended December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(in thousands, except per share amounts)Statements of Net Income Data:Net sales
    
    $
    676,177
    
    
    $
    485,807
    
    
    $
    351,798
    
    
    $
    390,507
    
    
    $
    513,468Operating income
    
    
    367,974
    
    
    
    274,429
    
    
    
    112,560
    
    
    
    171,167
    
    
    
    224,413Income before income tax expense
and minority interest
    
    
    354,498
    
    
    
    263,232
    
    
    
    98,800
    
    
    
    171,048
    
    
    
    206,872Net Income
    
    
    205,535
    
    
    
    139,823
    
    
    
    58,704
    
    
    
    102,819
    
    
    
    124,877Net Income per common share
    
    
    2.63
    
    
    
    1.75
    
    
    
    0.71
    
    
    
    1.03
    
    
    
    1.17Diluted net income per common share
    
    
    2.61
    
    
    
    1.70
    
    
    
    0.67
    
    
    
    0.97
    
    
    
    1.10
 December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(in thousands)Balance sheet data:Working capital (deficit)
    
    $
    (26,333
    )
    
    $
    (108,483
    )
    
    $
    (58,559
    )
    
    $
    2,532
    
    
    $
    142,231Total assets
    
    
    937,584
    
    
    
    817,358
    
    
    
    623,865
    
    
    
    573,546
    
    
    
    714,814Borrowings
    
    
    213,001
    
    
    
    246,862
    
    
    
    50,200
    
    
    
    25,800
    
    
    
    Other non-current debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stockholders equity
    
    
    396,691
    
    
    
    181,503
    
    
    
    254,891
    
    
    
    360,600
    
    
    
    546,500Treasury stock
    
    
    905,293
    
    
    
    894,940
    
    
    
    682,886
    
    
    
    395,536
    
    
    
    91,001
  18




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   Overview
 Management Overview of Business Trends
  Year Ended December 31, 2007
    
    
    Year Ended December 31, 2006Previously
    
    
    
    
    
    
    As
    
    
    Previously
    
    
    
    
    
    
    AsReported
    
    
    Adjustment
    
    
    Reclassified
    
    
    Reported
    
    
    Adjustment
    
    
    Reclassified(in millions)Net SalesLicensing
    
    $
    272.7
    
    
    $
    70.9
    
    
    $
    343.6
    
    
    $
    127.2
    
    
    $
    5.2
    
    
    $
    132.4Toys
    
    
    87.4
    
    
    
    (87.4
    )
    
    
    
    
    
    
    116.1
    
    
    
    (116.1
    )
    
    
    All Other
    
    
    
    
    
    
    16.5
    
    
    
    16.5
    
    
    
    
    
    
    
    110.9
    
    
    
    110.9Cost of RevenuesToys
    
    
    8.7
    
    
    
    (8.7
    )
    
    
    
    
    
    
    56.4
    
    
    
    (56.4
    )
    
    
    All Other
    
    
    
    
    
    
    8.7
    
    
    
    8.7
    
    
    
    
    
    
    
    56.4
    
    
    
    56.4Selling, General
and AdministrativeLicensing
    
    
    75.7
    
    
    
    11.6
    
    
    
    87.3
    
    
    
    49.2
    
    
    
    0.7
    
    
    
    49.9Toys
    
    
    20.8
    
    
    
    (20.8
    )
    
    
    
    
    
    
    28.0
    
    
    
    (28.0
    )
    
    
    All Other
    
    
    22.0
    
    
    
    9.2
    
    
    
    31.2
    
    
    
    22.7
    
    
    
    27.3
    
    
    
    50.0Operating
Income(Loss)Licensing
    
    
    196.1
    
    
    
    59.4
    
    
    
    255.5
    
    
    
    77.6
    
    
    
    4.5
    
    
    
    82.1Toys
    
    
    54.7
    
    
    
    (54.7
    )
    
    
    
    
    
    
    21.1
    
    
    
    (21.1
    )
    
    
    All Other
    
    
    (22.4
    )
    
    
    (4.7
    )
    
    
    (27.1
    )
    
    
    (22.7
    )
    
    
    16.6
    
    
    
    (6.1
    )
  19




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Iron Man The Incredible Hulk X-Men Origins: Wolverine Spider-Man 3 Iron Man 2 Thor
 Licensing
   Spider-Man 3. Iron Man The Incredible Hulk Spider-Man 3 X-Men Origins: Wolverine
   20




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Publishing
 Secret Invasion Civil War Secret Invasion Dark Tower The Stand the
Dark Reign Ultimatum X-Men Origins:
Wolverine The Stand the Enders Game Dark Tower
  Film Production
 Iron Man The Incredible
Hulk Iron Man 2 Thor The First Avenger: Captain America The Avengers
  21




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##### 



Film Inventory
     Iron Man The Incredible Hulk
 Film Revenue
  Iron Man The Incredible Hulk
   22




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##### 



Film Facility
  
    
    Ant-Man
 
    
    Black Panther
 
    
    Captain America
 
    
    Cloak & Dagger
 
    
    Doctor Strange
 
    
    Hawkeye
 
    
    Iron Man
 
    
    Nick Fury
 
    
    Power Pack
 
    
    Shang-Chi
 
    
    The Avengers
 
    
    The Incredible Hulk
     Iron Man The Incredible Hulk Iron Man The
Incredible Hulk
  23




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##### 



Our Results of Operations
 Year ended December 31, 2008 compared with the year ended December 31, 2007
 Net Sales
 Years ended December 31,2008
    
    
    2007
    
    
    % Change(dollars in millions)Licensing
    
    $
    292.8
    
    
    $
    343.6
    
    
    
    (15
    %)Publishing
    
    
    125.4
    
    
    
    125.7
    
    
    
    Film Production
    
    
    254.6
    
    
    
    
    
    
    
    N/AAll Other
    
    
    3.4
    
    
    
    16.5
    
    
    
    (79
    %)Total
    
    $
    676.2
    
    
    $
    485.8
    
    
    
    39
    %
 Years ended December 31,2008
    
    
    2007Sales Mix by Segment:Licensing
    
    
    43
    %
    
    
    71
    %Publishing
    
    
    19
    %
    
    
    26
    %Film Production
    
    
    38
    %
    
    
    All Other
    
    
    
    
    
    
    3
    %Net Sales
    
    
    100
    %
    
    
    100
    %
 Iron Man The Incredible Hulk
 Iron Man The Incredible Hulk
  24




---



##### 



Secret Invasion Civil War The Death of
Captain America; the Stephen King Dark Tower: The Gunslinger Born; World War Hulk
 Iron Man The Incredible Hulk.
  Cost of Revenues
 Years ended December 31,2008
    
    
    2007% of Net
    
    
    
    
    
    
    % of NetSegment
    
    
    
    
    
    
    SegmentAmount
    
    
    Sales
    
    
    Amount
    
    
    Sales(dollars in millions)Licensing
    
    $
    
    
    
    
    N/A
    
    
    $
    
    
    
    
    N/APublishing
    
    
    55.2
    
    
    
    44
    %
    
    
    52.2
    
    
    
    42
    %Film Production
    
    
    135.3
    
    
    
    53
    %
    
    
    
    
    
    
    N/AAll Other
    
    
    1.0
    
    
    
    29
    %
    
    
    8.7
    
    
    
    53
    %Total
    
    $
    191.5
    
    
    
    28
    %
    
    $
    60.9
    
    
    
    13
    %
   Iron Man The Incredible Hulk
   25




---



##### 



Selling, General and Administrative Expenses
 Years ended December 31,2008
    
    
    2007% of Net
    
    
    
    
    
    
    % of NetSegment
    
    
    
    
    
    
    SegmentAmount
    
    
    Sales
    
    
    Amount
    
    
    Sales(dollars in millions)Licensing
    
    $
    70.9
    
    
    
    24
    %
    
    $
    87.3
    
    
    
    25
    %Publishing
    
    
    22.8
    
    
    
    18
    %
    
    
    19.9
    
    
    
    16
    %Film Production
    
    
    15.7
    
    
    
    6
    %
    
    
    8.7
    
    
    
    N/AAll Other
    
    
    29.1
    
    
    
    N/A
    
    
    
    31.2
    
    
    
    N/ATotal
    
    $
    138.5
    
    
    
    20
    %
    
    $
    147.1
    
    
    
    30
    %
     26




---



##### 



Iron Man The Incredible Hulk
  Depreciation and Amortization
   Other Income
  Operating Income
 Years ended December 31,2008
    
    
    2007Amount
    
    
    Margin
    
    
    Amount
    
    
    Margin(dollars in millions)Licensing
    
    $
    242.3
    
    
    
    83
    %
    
    $
    255.5
    
    
    
    74
    %Publishing
    
    
    47.3
    
    
    
    38
    %
    
    
    53.5
    
    
    
    43
    %Film Production
    
    
    102.7
    
    
    
    40
    %
    
    
    (7.5
    )
    
    
    N/AAll Other
    
    
    (24.3
    )
    
    
    N/A
    
    
    
    (27.1
    )
    
    
    N/ATotal
    
    $
    368.0
    
    
    
    54
    %
    
    $
    274.4
    
    
    
    56
    %
 Iron Man The Incredible Hulk
  27




---



##### 



The Incredible Hulk
  Interest Expense
 Years ended December 31,2008
    
    
    2007(dollars in millions)Interest incurred, HSBC line of credit
    
    $
    
    
    
    $
    0.1Interest incurred, film facilities
    
    
    24.1
    
    
    
    22.1Total Interest incurred
    
    
    24.1
    
    
    
    22.2Less: Interest capitalized
    
    
    (5.1
    )
    
    
    (8.4
    )Total
    
    $
    19.0
    
    
    $
    13.8
 Iron Man The Incredible Hulk
 Interest Income
  Gain on Repurchase of Debt
   28




---



##### 



Income Taxes
     Minority Interest
 Spider-Man 3,
 Earnings per Share
  Year ended December 31, 2007 compared with the year ended December 31, 2006
 Net Sales
 Years ended December 31,2007
    
    
    2006
    
    
    % Change(dollars in millions)Licensing
    
    $
    343.6
    
    
    $
    132.4
    
    
    
    160
    %Publishing
    
    
    125.7
    
    
    
    108.5
    
    
    
    16
    %All Other
    
    
    16.5
    
    
    
    110.9
    
    
    
    (85
    )%Total
    
    $
    485.8
    
    
    $
    351.8
    
    
    
    38
    %
  29




---



##### 



Years ended December 31,2007
    
    
    2006Sales Mix by Segment:Licensing
    
    
    71
    %
    
    
    38
    %Publishing
    
    
    26
    %
    
    
    31
    %All Other
    
    
    3
    %
    
    
    31
    %Net Sales
    
    
    100
    %
    
    
    100
    %
 Spider-Man 3
 Spider-Man 3 Spider-Man 3 Spider-Man 3
 Civil War Dark Tower Civil War The Death of
Captain America; Dark Tower: The Gunslinger Born; World War Hulk
   30




---



##### 



Cost of Revenues
 Years ended December 31,2007
    
    
    2006% of Net
    
    
    
    
    
    
    % of NetSegment
    
    
    
    
    
    
    SegmentAmount
    
    
    Sales
    
    
    Amount
    
    
    Sales(dollars in millions)Licensing
    
    $
    
    
    
    
    N/A
    
    
    $
    
    
    
    
    N/APublishing
    
    
    52.2
    
    
    
    42
    %
    
    
    47.2
    
    
    
    44
    %All Other
    
    
    8.7
    
    
    
    53
    %
    
    
    56.4
    
    
    
    51
    %Total
    
    $
    60.9
    
    
    
    13
    %
    
    $
    103.6
    
    
    
    29
    %
    Selling, General and Administrative Expenses
 Years ended December 31,2007
    
    
    2006% of Net
    
    
    
    
    
    
    % of NetSegment
    
    
    
    
    
    
    SegmentAmount
    
    
    Sales
    
    
    Amount
    
    
    Sales(dollars in millions)Licensing
    
    $
    87.3
    
    
    
    25
    %
    
    $
    49.9
    
    
    
    38
    %Publishing
    
    
    19.9
    
    
    
    16
    %
    
    
    17.2
    
    
    
    16
    %Film Production
    
    
    8.7
    
    
    
    N/A
    
    
    
    6.0
    
    
    
    N/AAll Other
    
    
    31.2
    
    
    
    N/A
    
    
    
    50.0
    
    
    
    N/ATotal
    
    $
    147.1
    
    
    
    30
    %
    
    $
    123.1
    
    
    
    35
    %
   31




---



##### 



The Incredible Hulk Iron Man
  Depreciation and Amortization
   Other Income
 The Incredible Hulk.
   32




---



##### 



Operating Income
 Years ended December 31,2007
    
    
    2006Amount
    
    
    Margin
    
    
    Amount
    
    
    Margin(dollars in millions)Licensing
    
    $
    255.5
    
    
    
    74
    %
    
    $
    82.1
    
    
    
    62
    %Publishing
    
    
    53.5
    
    
    
    43
    %
    
    
    44.1
    
    
    
    41
    %Film Production
    
    
    (7.5
    )
    
    
    N/A
    
    
    
    (7.5
    )
    
    
    N/AAll Other
    
    
    (27.1
    )
    
    
    N/A
    
    
    
    (6.1
    )
    
    
    N/ATotal
    
    $
    274.4
    
    
    
    56
    %
    
    $
    112.6
    
    
    
    32
    %
    The Incredible Hulk
  Interest Expense
 Years ended December 31,2007
    
    
    2006(dollars in millions)Interest incurred, HSBC line of credit
    
    $
    0.1
    
    
    $
    2.4Interest incurred, film facilities
    
    
    22.1
    
    
    
    13.0Total Interest incurred
    
    
    22.2
    
    
    
    15.4Less: Interest capitalized
    
    
    (8.4
    )
    
    
    (0.2
    )Total
    
    $
    13.8
    
    
    $
    15.2
  33




---



##### 



Iron Man The Incredible Hulk
 Interest Income
  Income Taxes
   Minority Interest
 Spider-Man 3
 Earnings per Share
  Liquidity and Capital Resources
    34




---



##### 



Iron Man
      Iron Man
  35




---



##### 



Iron Man The Incredible Hulk
  36




---



##### 



Iron Man 2
        Payments Due By PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More ThanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 Years(Amounts in thousands)Animated television production obligations
    
    $
    15,870
    
    
    $
    15,359
    
    
    $
    511
    
    
    $
    
    
    
    $
    Long-term debt obligations*
    
    $
    213,001
    
    
    $
    204,800
    
    
    $
    8,201
    
    
    
    
    
    
    
    Capital lease obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    21,242
    
    
    
    7,381
    
    
    
    13,452
    
    
    
    409
    
    
    
    Licensed-in toy royalty obligations
    
    
    1,200
    
    
    
    1,200
    
    
    
    
    
    
    
    
    
    
    
    Other long-term liabilities reflected on
the registrants balance sheet under GAAP
    
    
    6,710
    
    
    
    1,000
    
    
    
    2,000
    
    
    
    1,850
    
    
    
    1,860Expected pension benefit payments
    
    
    15,303
    
    
    
    1,365
    
    
    
    2,866
    
    
    
    3,026
    
    
    
    8,046Total
    
    $
    273,326
    
    
    $
    231,105
    
    
    $
    27,030
    
    
    $
    5,285
    
    
    $
    9,906
 *
    
    Scheduled repayment based on the minimum expected term of the film facility. Such amount may
be repaid earlier depending on the success of theatrical releases under the film facility.  37




---



##### 



Critical Accounting Policies and Estimates
 General
  Revenue Recognition
 Book Sales, Sales Returns and Customer Allowances
   38




---



##### 



Comic book revenues  non-returnable and other
  License Revenues
      Allowance for Doubtful Accounts
   39




---



##### 



Excess and Obsolete Inventory
  Fixed Assets
  Film Production Operations
 Film Inventory
     40




---



##### 



Iron Man The Incredible Hulk
 Film Revenue
     Goodwill
   Long-Lived Assets
   41




---



##### 



Studio and Talent Share of Royalties
  Accounting for Joint Venture
  Pension
  Accounting for Stock-Based Compensation
   42




---



##### 



Commitments and Contingencies
 Legal Matters
    43




---



##### 



Income Taxes
       44




---



##### 



Recent Accounting Standards Adopted in 2008
   Recent Accounting Standards Not Yet Adopted
     45




---



##### 



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   46




---



##### 



Internal Control Over Financial Reporting
 Managements Annual Report on Internal Control Over Financial Reporting
  Internal Control  Integrated Framework
   Attestation Report of the Independent Registered Public Accounting Firm
  Changes in Internal Controls Over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION
   47




---



##### 



Iron Man 2 Iron Man 2
 
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
   48




---



##### 



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  EXHIBIT INDEX
 Exhibit No.3
    (i)
    
    Restated Certificate of Incorporation. (Incorporated by reference to Exhibit 3(i) of the
Companys Current Report on Form 8-K dated February 23, 2006 and filed with the Securities and
Exchange Commission on March 1, 2006.)3
    (ii)
    
    Amended and Restated Bylaws, as amended through the date hereof. (Incorporated by reference to
Exhibit 3(ii) of the Companys Current Report on Form 8-K dated October 23, 2008 and filed with
the Securities and Exchange Commission on October 29, 2008.)4.1
    
    
    Article V of the Restated Certificate of Incorporation (see Exhibit 3(i), above), defining the
rights of holders of Common Stock.4.2
    
    
    Rights Agreement, dated as of August 22, 2000, between the Company and American Stock Transfer &
Trust Company as Rights Agent, defining the rights of holders of Preferred Share Purchase Rights.
(Incorporated by reference to Exhibit 4.2 of the Companys Current Report on Form 8-K dated August
22, 2000 and filed with the Securities and Exchange Commission on September 12, 2000.)4.3
    
    
    Amendment to Rights Agreement, dated as of November 30, 2001, by and between the Company and
American Stock Transfer & Trust Company as Rights Agent. (Incorporated by reference to Exhibit
10.9 of the Companys Current Report on Form 8-K dated and filed with the Securities and Exchange
Commission on December 4, 2001.)4.4
    
    
    Amendment No. 2 to Rights Agreement, dated as of October 7, 2002, by and between the Company and
American Stock Transfer & Trust Company as Rights Agent. (Incorporated by reference to Exhibit
10.1 of the Companys Current Report on Form 8-K dated October 4, 2002 and filed with the
Securities and Exchange Commission on October 7, 2002.)10.1
    
    
    1998 Stock Incentive Plan, as amended. (Incorporated by reference to Exhibit 10.1 of the
Companys Annual Report on Form 10-K for the year ended December 31, 2006.)*10.2
    
    
    2005 Stock Incentive Plan, as amended. (Filed herewith.)*10.3
    
    
    Form of Stock Option Agreement under the 2005 Stock Incentive Plan. (Incorporated by reference to
Exhibit 10.2 of the Companys Current Report on Form 8-K dated and filed with the Securities and
Exchange Commission on May 4, 2005.)*10.4
    
    
    Form of Restricted Stock Agreement under the 2005 Stock Incentive Plan. (Incorporated by reference
to Exhibit 10.3 of the Companys Current Report on Form 8-K dated and filed with the Securities
and Exchange Commission on May 4, 2005.)*10.5
    
    
    Form of Performance-Based Restricted Stock Agreement under the 2005 Stock Incentive Plan.
(Incorporated by reference to Exhibit 10.4 of the Companys Current Report on Form 8-K dated and
filed with the Securities and Exchange Commission on May 4, 2005.)*
  49




---



##### 



Exhibit No.10.6
    
    
    Form of Performance-Based Phantom Stock Agreement under the Companys 2005 Stock Incentive Plan.
(Incorporated by reference to Exhibit 10.2 of the Companys Quarterly Report on Form 10-Q for the
quarter ended September 30, 2005 and filed with the Securities and Exchange Commission on November
9, 2005.)*10.7
    
    
    2005 Cash Incentive Compensation Plan, as amended. (Filed herewith.)*10.8
    
    
    Form of Performance-Based Award Letter under the Companys 2005 Cash Incentive Plan. (Incorporated
by reference to Exhibit 10.3 of the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2005 and filed with the Securities and Exchange Commission on November 9, 2005.)*10.9
    
    
    Nonqualified Stock Option Agreement, dated as of November 30, 2001, by and between the Company and
Isaac Perlmutter. (Incorporated by reference to Exhibit 10.7 to the Companys Current Report on
Form 8-K dated and filed with the Securities and Exchange Commission on December 4, 2001.)*10.10
    
    
    Registration Rights Agreement, dated as of October 1, 1998, by and among the Company, Dickstein &
Co., L.P., Dickstein Focus Fund L.P., Dickstein International Limited, Elyssa Dickstein,
Jeffrey Schwarz and Alan Cooper as Trustees U/T/A/D 12/27/88, Mark Dickstein, Grantor, Mark
Dickstein and Elyssa Dickstein, as Trustees of the Mark and Elyssa Dickstein Foundation,
Elyssa Dickstein, Object Trading Corp., Whippoorwill/Marvel Obligations Trust  1997, and
Whippoorwill Associates, Incorporated. (Incorporated by reference to Exhibit 99.5 to the
Companys Current Report on Form 8-K/A dated and filed with the Securities and Exchange Commission
on October 16, 1998.)*10.11
    
    
    Registration Rights Agreement, dated as of December 8, 1998, by and among the Company, Marvel
Entertainment Group, Inc., Avi Arad, Isaac Perlmutter, Isaac Perlmutter T.A., The Laura & Isaac
Perlmutter Foundation Inc., and Zib Inc. (Incorporated by reference to Exhibit 10.4 of the
Companys Annual Report on Form 10-K for the year ended December 31, 1998.)*10.12
    
    
    Warrant Shares Registration Right Agreement, dated as of November 30, 2001, by and between the
Company and Isaac Perlmutter. (Incorporated by reference to Exhibit 10.5 to the Companys Current
Report on Form 8-K dated and filed with the Securities and Exchange Commission on December 4,
2001.)*10.13
    
    
    Agreement of Sublease dated as of August 5, 2004, by and between CIBC World Markets Corp. and the
Company. (Incorporated by reference to Exhibit 10.16 of the Companys Annual Report on Form 10-K
for the fiscal year ended December 31, 2004 and filed with the Securities and Exchange Commission
on March 9, 2005.)10.14
    
    
    Amendment to Agreement of Sublease dated as of February 17, 2005, by and between CIBC World
Markets Corp. and the Company. (Incorporated by reference to Exhibit 10.17 of the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and filed with the
Securities and Exchange Commission on March 9, 2005.)10.15
    
    
    Lease Agreement, dated as of February 15, 2005, by and between 417 Fifth Avenue LLC and the Company
(Incorporated by reference to Exhibit 10.18 of the Companys Annual Report on Form 10-K for the
fiscal year ended December 31, 2004 and filed with the Securities and Exchange Commission on March
9, 2005.)10.16
    
    
    Lease, dated as of September 22, 2008, between MVL Productions LLC, as tenant, and CRP MB Studios,
L.L.C., as landlord. (Incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report
on Form 10-Q for the quarter ended September 30, 2008.)10.17
    
    
    Credit Agreement, dated as of November 9, 2005 among Marvel Entertainment, Inc. and HSBC Bank USA,
National Association. (Incorporated by reference to Exhibit 10.5 of the Companys Quarterly
Report on Form 10-Q for the quarter ended September 30, 2005 and filed with the Securities and
Exchange Commission on November 9, 2005.)
  50




---



##### 



Exhibit No.10.18
    
    
    Amendment No. 1 and Reaffirmation Agreement dated as of January 18, 2006 to Credit Agreement dated
as of November 9, 2005, among the Company and HSBC Bank USA, National Association. (Incorporated
by reference to Exhibit 10.3 of the Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 2006 and filed with the Securities and Exchange Commission on August 8, 2006.)10.19
    
    
    Amendment No. 2 and Reaffirmation Agreement dated as of June 28, 2006 to Credit Agreement dated as
of November 9, 2005, among the Company and HSBC Bank USA, National Association. (Incorporated by
reference to Exhibit 10.4 of the Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 2006 and filed with the Securities and Exchange Commission on August 8, 2006.)10.20
    
    
    Amendment No. 3 and Reaffirmation Agreement dated as of June 30, 2006 to Credit Agreement dated as
of November 9, 2005, among the Company and HSBC Bank USA, National Association. (Incorporated by
reference to Exhibit 10.5 of the Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 2006 and filed with the Securities and Exchange Commission on August 8, 2006.)10.21
    
    
    Amendment No. 4 and Reaffirmation Agreement dated as of May 7, 2007 to Credit Agreement dated as
of November 9, 2005, between Marvel Entertainment, Inc. and HSBC Bank USA, National Association.
(Incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q for the
quarter ended March 31, 2007 and filed with the Securities and Exchange Commission on May 9,
2007.)10.22
    
    
    Amendment No. 5 and Reaffirmation Agreement dated as of August 21, 2007 by and among the
Registrant, Marvel Characters, Inc. and HSBC Bank USA, National Association. (Incorporated by
reference to Exhibit 10.1 of the Companys Current Report on Form 8-K dated August 21, 2007 and
filed with the Securities and Exchange Commission on August 27, 2007.)10.23
    
    
    Pledge and Security Agreement, dated as of November 9, 2005, by Marvel Entertainment, Inc. and
Marvel Characters, Inc. in favor of HSBC Bank USA, National Association. (Incorporated by
reference to Exhibit 10.6 of the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2005 and filed with the Securities and Exchange Commission on November 9, 2005.)10.24
    
    
    Guaranty, dated as of November 9, 2005 by Marvel Characters, Inc. in favor of and for the benefit
of HSBC Bank USA, National Association. (Incorporated by reference to Exhibit 10.7 of the
Companys Quarterly Report on Form 10-Q for the quarter ended September 30, 2005 and filed with
the Securities and Exchange Commission on November 9, 2005.)10.25
    
    
    Credit and Security Agreement, dated as of August 31, 2005, by and among MVL Film Finance LLC, as
Borrower, the Financial Institutions and Conduit Lenders identified therein, as Lenders, HSBC Bank
USA, National Association, as the Collateral Agent and General Electric Capital Corporation, as
Administrative Agent. (Incorporated by reference to Exhibit 10.1 of the Companys Current Report
on Form 8-K filed with the Securities and Exchange Commission on September 6, 2005.)10.26
    
    
    Insurance and Indemnity Agreement, dated as of August 31, 2005, by and between the Company, MVL
Film Finance LLC, MVL Productions LLC, MVL Rights LLC, Marvel Studios, Inc.,the Collateral Agent
and Ambac Assurance Corporation. (Incorporated by reference to Exhibit 10.2 of the Companys
Current Report on Form 8-K filed with the Securities and Exchange Commission on September 6,
2005.)10.27
    
    
    Amendment No. 1 dated as of September 29, 2006 to Transaction Documents by and among MVL Film
Finance LLC, MVL Productions LLC, Marvel Studios, Inc., Marvel Characters, Inc., MVL Rights LLC,
Ambac Assurance Corporation and HSBC Bank USA, National Association. (Incorporated by reference to
Exhibit 10.1 of the Companys Current Report on Form 8-K dated September 29, 2006 and filed with
the Securities and Exchange Commission on October 5, 2006.)
  51




---



##### 



Exhibit No.10.28
    
    
    Amendment No. 2 dated as of February 21, 2007 to Transaction Documents by and among MVL Film
Finance LLC, MVL Productions LLC, Marvel Studios, Inc., Marvel Characters, Inc., MVL Rights LLC,
Ambac Assurance Corporation and HSBC Bank USA, National Association. (Incorporated by reference
to Exhibit 10.26 of the Companys Annual Report on Form 10-K for the year ended December 31,
2006.)10.29
    
    
    Amendment No. 3 to Transaction Documents dated as of April 13, 2007 by and among HSBC Bank USA,
National Association, in its capacity as Collateral Agent, Ambac Assurance Corporation, in its
capacity as Control Party, MVL Productions LLC, Marvel Studios, Inc. and MVL Film Finance LLC.
(Incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K dated April
16, 2007 and filed with the Securities and Exchange Commission on April 19, 2007.)10.30
    
    
    Amendment No. 4 dated as of January 15, 2008 to Transaction Documents by and among MVL Film
Finance LLC, MVL Productions LLC, Marvel Studios, Inc. and Ambac Assurance Corporation, in its
capacity as Control Party. (Incorporated by reference to Exhibit 10.30 of the Companys Annual
Report on Form 10-K for the year ended December 31, 2007.)10.31
    
    
    Amendment No. 5 dated as of May 30, 2008 to Transaction Documents by and among MVL Film Finance
LLC, MVL Productions LLC, Marvel Studios, Inc. and Ambac Assurance Corporation, in its capacity as
Control Party. (Incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on
Form 10-Q for the quarter ended June 30, 2008.)10.32
    
    
    Amendment No. 6 dated as of September 17, 2008 to Transaction Documents by and among MVL Film
Finance LLC, MVL Productions LLC, Marvel Studios, Inc. , Marvel Entertainment, Inc , Ambac
Assurance Corporation, in its capacity as Control Party and HSBC Bank USA, National Association,
in its capacities as Collateral Agent and Collection Account Bank. (Incorporated by reference to
Exhibit 10.1 of the Companys Current Report on Form 8-K dated September 25, 2008 and filed with
the Securities and Exchange Commission on September 29, 2008.)10.33
    
    
    Amendment No. 7 dated as of December 5, 2008 to Transaction Documents by and among MVL Film
Finance LLC, MVL Productions LLC, Marvel Studios, Inc. and Ambac Assurance Corporation, in its
capacity as Control Party. (Filed herewith.)10.34
    
    
    Amendment No. 8 dated as of February 17, 2009 to Transaction Documents by and among MVL Film
Finance LLC, MVL Productions LLC, the Company, Marvel Studios, Inc., HSBC Bank USA, N.A., in its
capacities as Collateral Agent and Collection Account Bank, and Ambac Assurance Corporation, in
its capacity as Control Party. (Filed herewith.)10.35
    
    
    Master Development and Distribution Agreement, dated as of August 31, 2005, by and among MVL Film
Finance LLC, MVL Productions LLC and Marvel Studios, Inc. (Incorporated by reference to Exhibit
10.3 of the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission
on September 6, 2005.)10.36
    
    
    Assignment Agreement, dated as of August 31, 2005, by and between Marvel Characters, Inc. and MVL
Rights LLC. (Incorporated by reference to Exhibit 10.4 of the Companys Current Report on Form
8-K filed with the Securities and Exchange Commission on September 6, 2005.)10.37
    
    
    Exclusive Cross License Agreement, dated as of August 31, 2005, by and between MVL Rights LLC and
MVL Film Finance LLC. (Incorporated by reference to Exhibit 10.5 of the Companys Current Report
on Form 8-K filed with the Securities and Exchange Commission on September 6, 2005.)10.38
    
    
    Hulk Exclusive Cross License Agreement dated as of September 29, 2006 by and between MVL Rights
LLC and MVL Film Finance LLC. (Incorporated by reference to Exhibit 10.2 of the Companys Current
Report on Form 8-K dated September 29, 2006 and filed with the Securities and Exchange Commission
on October 5, 2006.)
  52




---



##### 



Exhibit No.10.39
    
    
    Iron Man Exclusive Cross License Agreement dated as of September 29, 2006 by and between MVL
Rights LLC and MVL Film Finance LLC. (Incorporated by reference to Exhibit 10.3 of the Companys
Current Report on Form 8-K dated September 29, 2006 and filed with the Securities and Exchange
Commission on October 5, 2006.)10.40
    
    
    Exclusive License Agreement, dated as of August 31, 2005, by and between MVL Rights LLC and Marvel
Characters, Inc. (Incorporated by reference to Exhibit 10.6 of the Companys Current Report on
Form 8-K filed with the Securities and Exchange Commission on September 6, 2005.)10.41
    
    
    Letter Agreement, dated as of August 31, 2005, by Marvel and agreed and acknowledged by Marvel
Studios, Inc., MVL Rights LLC, MVL Productions LLC and Marvel Characters, Inc. (Incorporated by
reference to Exhibit 10.7 of the Companys Current Report on Form 8-K filed with the Securities
and Exchange Commission on September 6, 2005.)10.42
    
    
    Assignment Agreement dated as of August 30, 2005, by and between Marvel, Marvel Entertainment
Group, Inc. and Marvel Characters, Inc. (Incorporated by reference to Exhibit 10.8 of the
Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on
September 6, 2005.)10.43
    
    
    License Agreement dated January 6, 2006 by and between Marvel Characters, Inc. and Spider-Man
Merchandising L.P. on the one hand and Hasbro, Inc. on the other. (Incorporated by reference to
Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q for the quarter ended March 31, 2006
and filed with the Securities and Exchange Commission on May 8, 2006.)10.44
    
    
    Amendment dated as of February 8, 2006 to License Agreement dated January 6, 2006 by and between
Marvel Characters, Inc. and Spider-Man Merchandising L.P. on the one hand, and Hasbro, Inc. on the
other. (Incorporated by reference to Exhibit 10.2 of the Companys Quarterly Report on Form 10-Q
for the quarter ended March 31, 2006 and filed with the Securities and Exchange Commission on May
8, 2006.)10.45
    
    
    Employment Agreement, dated as of November 30, 1998, between the Company and Stan Lee.
(Incorporated by reference to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the
quarter ended September 30, 2002.)*10.46
    
    
    Employment Agreement dated May 31, 2007 between the Company and Alan Fine. (Incorporated by
reference to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 2007.)*10.47
    
    
    Amendment No. 1, dated as of August 6, 2007, to Employment Agreement between the Company and Alan
Fine. (Incorporated by reference to Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q
for the quarter ended June 30, 2007.)*10.48
    
    
    Amendment No. 2, dated March 19, 2008, to Employment Agreement between the Company and Alan Fine.
(Incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K dated March
19, 2008 and filed with the Securities and Exchange Commission on March 25, 2008.)*10.49
    
    
    Amended and Restated Employment Agreement, dated March 21, 2008, by and between the Company and
John Turitzin. (Incorporated by reference to Exhibit 10.2 of the Companys Current Report on Form
8-K dated March 19, 2008 and filed with the Securities and Exchange Commission on March 25,
2008.)*10.50
    
    
    Amended and Restated Employment Agreement, dated May 2, 2008, by and between the Company and David
Maisel. (Incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K
dated May 2, 2008 and filed with the Securities and Exchange Commission on May 8, 2008.)*10.51
    
    
    Employment Agreement dated June 20, 2007 between the Company and Kenneth P. West. (Incorporated
by reference to Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 2007.)*
  53




---



##### 



Exhibit No.10.52
    
    
    Employment Agreement, dated as of November 30, 2001, by and between the Company and Isaac
Perlmutter. (Incorporated by reference to Exhibit 10.6 to the Companys Current Report on Form
8-K dated and filed with the Securities and Exchange Commission on December 4, 2001.)*10.53
    
    
    Amendment to Employment Agreement with Isaac Perlmutter dated as of May 1, 2004. (Incorporated by
reference to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2004.)*10.54
    
    
    Second Amendment to Employment Agreement with Isaac Perlmutter dated as of October 15, 2004.
(Incorporated by reference to Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q for the
quarter ended September 30, 2004.)*10.55
    
    
    Third Amendment to Employment Agreement with Isaac Perlmutter dated as of May 8, 2006.
(Incorporated by reference to Exhibit 10.4 of the Companys Quarterly Report on Form 10-Q for the
quarter ended March 31, 2006 and filed with the Securities and Exchange Commission on May 8,
2006.)*10.56
    
    
    Share Disposition Agreement, dated as of May 20, 2007 by and between Marvel Entertainment, Inc.
and Isaac Perlmutter. (Incorporated by reference to Exhibit 10.5 of the Companys Quarterly
Report on Form 10-Q for the quarter ended June 30, 2007.)*10.57
    
    
    Share Disposition Agreement, dated as of February 13, 2008 by and between Marvel Entertainment,
Inc. and Isaac Perlmutter. (Incorporated by reference to Exhibit 10.1 of the Companys Current
Report on Form 8-K dated February 19, 2008 and filed with the Securities and Exchange Commission
on February 25, 2008.)*21
    
    
    Subsidiaries of the Registrant. (Filed herewith.)23
    
    
    Consent of PricewaterhouseCoopers LLP. (Filed herewith.)24
    
    
    Power of attorney (included below the signature hereto).31.1
    
    
    Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
(Filed herewith.)31.2
    
    
    Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
(Filed herewith.)32
    
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act. (Furnished herewith.)
 *
    
    Management contract or compensatory plan or arrangement. 
 SIGNATURES
  MARVEL ENTERTAINMENT, INC.By:
    /s/ John TuritzinJohn TuritzinExecutive Vice President   54




---



##### 



POWER OF ATTORNEY
   Signature
    
    Title
    
    Date/s/ Isaac Perlmutter

Isaac Perlmutter
    
    Chief Executive Officer and 
Vice Chairman of the Board of Directors
(principal executive officer)
    
    February 27, 2009/s/ Kenneth P. West
Kenneth P. West
    
    Chief Financial Officer

(principal financial officer)
    
    February 27, 2009/s/ Mark D. Plotkin
Mark D. Plotkin
    
    Chief Accounting Officer
(principal accounting officer)
    
    February 27, 2009/s/ Morton E. Handel
    
    Chairman of the Board of Directors
    
    February 27, 2009Morton E. Handel/s/ F. Peter Cuneo
    
    Vice Chairman of the Board of Directors
    
    February 27, 2009F. Peter Cuneo/s/ James W. Breyer
    
    Director
    
    February 27, 2009James W. Breyer/s/ Laurence N. Charney
    
    Director
    
    February 27, 2009Laurence N. Charney/s/ Sid Ganis
    
    Director
    
    February 27, 2009Sid Ganis/s/ James F. Halpin
    
    Director
    
    February 27, 2009James F. Halpin/s/ Richard Solar
    
    Director
    
    February 27, 2009Richard Solar
  55




---



##### 



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
 Marvel Entertainment, Inc.Report of Independent Registered Public Accounting Firm
    
    F-2Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    F-3Consolidated Statements of Net Income for the years ended December 31, 2008, 2007 and 2006
    
    F-4Consolidated Statements of Stockholders Equity and Comprehensive Income for the years
ended December 31, 2008, 2007 and 2006
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007, and 2006
    
    F-6Notes to Consolidated Financial Statements
    
    F-7Consolidated Financial Statement ScheduleSchedule II-Valuation and Qualifying Accounts
    
    F-39
   F-1




---



##### 



Report of Independent Registered Public Accounting Firm
      
  F-2




---



##### 



MARVEL ENTERTAINMENT, INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2008
    
    
    2007(in thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    105,335
    
    
    $
    30,153Restricted cash
    
    
    43,647
    
    
    
    20,836Short-term investments
    
    
    32,975
    
    
    
    21,016Accounts receivable, net
    
    
    144,487
    
    
    
    28,679Inventories, net
    
    
    11,362
    
    
    
    10,647Income tax receivable
    
    
    2,029
    
    
    
    10,882Deferred income taxes, net
    
    
    34,072
    
    
    
    21,256Prepaid expenses and other current assets
    
    
    5,135
    
    
    
    4,245Total current assets
    
    
    379,042
    
    
    
    147,714Fixed assets, net
    
    
    3,432
    
    
    
    2,612Film inventory
    
    
    181,564
    
    
    
    264,817Goodwill
    
    
    346,152
    
    
    
    346,152Accounts
receivable, non-current portion
    
    
    1,321
    
    
    
    1,300Income tax
receivable, non-current portion
    
    
    5,906
    
    
    
    4,998Deferred income taxes, net
    
    
    13,032
    
    
    
    37,116Deferred financing costs
    
    
    5,810
    
    
    
    11,400Advances to joint venture partner
    
    
    870
    
    
    
    Other assets
    
    
    455
    
    
    
    1,249Total assets
    
    $
    937,584
    
    
    $
    817,358LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    2,025
    
    
    $
    3,054Accrued royalties
    
    
    76,580
    
    
    
    84,694Accrued expenses and other current liabilities
    
    
    40,635
    
    
    
    37,012Deferred revenue
    
    
    81,335
    
    
    
    88,617Film facilities
    
    
    204,800
    
    
    
    42,264Minority interest to be distributed
    
    
    
    
    
    
    556Total current liabilities
    
    
    405,375
    
    
    
    256,197Accrued royalties, non-current portion
    
    
    10,499
    
    
    
    10,273Deferred revenue, non-current portion
    
    
    48,939
    
    
    
    58,166Film facilities, non-current portion
    
    
    8,201
    
    
    
    246,862Income tax payable, non-current portion
    
    
    59,267
    
    
    
    54,066Other liabilities
    
    
    8,612
    
    
    
    10,291Total liabilities
    
    
    540,893
    
    
    
    635,855Commitments and contingenciesStockholders equity:Preferred stock, $.01 par value, 100,000,000 shares authorized, none issued
    
    
    
    
    
    
    Common stock, $.01 par value, 250,000,000 shares authorized, 134,397,258 issued
and 78,408,082 outstanding in 2008 and 133,179,310 issued and 77,624,842
outstanding in 2007
    
    
    1,344
    
    
    
    1,333Additional paid-in capital
    
    
    750,132
    
    
    
    728,815Retained earnings
    
    
    555,125
    
    
    
    349,590Accumulated other comprehensive loss
    
    
    (4,617
    )
    
    
    (3,395
    )Total stockholders equity before treasury stock
    
    
    1,301,984
    
    
    
    1,076,343Treasury stock, at cost, 55,989,176 shares in 2008 and 55,554,468 shares in 2007
    
    
    (905,293
    )
    
    
    (894,840
    )Total stockholders equity
    
    
    396,691
    
    
    
    181,503Total liabilities and stockholders equity
    
    $
    937,584
    
    
    $
    817,358
   F-3




---



##### 



MARVEL ENTERTAINMENT, INC.
 
 CONSOLIDATED STATEMENTS OF NET INCOME
 Years Ended December 31,2008
    
    
    2007
    
    
    2006(in thousands, except per share data)Net sales
    
    $
    676,177
    
    
    $
    485,807
    
    
    $
    351,798Costs and expenses:Cost of revenues (excluding depreciation expense)
    
    
    191,519
    
    
    
    60,933
    
    
    
    103,584Selling, general and administrative
    
    
    138,506
    
    
    
    147,118
    
    
    
    123,130Depreciation and amortization
    
    
    1,559
    
    
    
    5,970
    
    
    
    14,322Total costs and expenses
    
    
    331,584
    
    
    
    214,021
    
    
    
    241,036Other income, net
    
    
    23,381
    
    
    
    2,643
    
    
    
    1,798Operating income
    
    
    367,974
    
    
    
    274,429
    
    
    
    112,560Interest expense
    
    
    18,984
    
    
    
    13,756
    
    
    
    15,225Interest income
    
    
    3,592
    
    
    
    2,559
    
    
    
    1,465Gain on repurchase of debt
    
    
    1,916
    
    
    
    
    
    
    
    Income before income tax expense and minority interest
    
    
    354,498
    
    
    
    263,232
    
    
    
    98,800Income tax expense
    
    
    (133,180
    )
    
    
    (98,908
    )
    
    
    (39,071
    )Minority interest in consolidated joint venture
    
    
    (15,783
    )
    
    
    (24,501
    )
    
    
    (1,025
    )Net income
    
    $
    205,535
    
    
    $
    139,823
    
    
    $
    58,704Basic and diluted net earnings per share:Weighted average shares outstanding:Weighted average shares for basic earnings per share
    
    
    78,062
    
    
    
    79,751
    
    
    
    82,161Effect of dilutive stock options, warrants and restricted stock
    
    
    602
    
    
    
    2,716
    
    
    
    5,069Weighted average shares for diluted earnings per share
    
    
    78,664
    
    
    
    82,467
    
    
    
    87,230Earnings per share:Basic
    
    $
    2.63
    
    
    $
    1.75
    
    
    $
    0.71Diluted
    
    $
    2.61
    
    
    $
    1.70
    
    
    $
    0.67
   F-4




---



##### 



MARVEL ENTERTAINMENT, INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
AND COMPREHENSIVE INCOME
 Accumulated OtherCommon
    
    
    Common
    
    
    Deferred
    
    
    Additional
    
    
    
    
    
    
    Comprehensive LossStock
    
    
    Stock
    
    
    Stock
    
    
    Paid-In
    
    
    Retained
    
    
    Foreign
    
    
    Pension
    
    
    TreasuryShares
    
    
    Amount
    
    
    Compensation
    
    
    Capital
    
    
    Earnings
    
    
    Currency
    
    
    Liability
    
    
    Stock
    
    
    Total(in thousands)Balance at December 31, 2005
    
    
    90,206
    
    
    $
    1,217
    
    
    $
    (6,242
    )
    
    $
    594,873
    
    
    $
    169,762
    
    
    $
    45
    
    
    $
    (3,519
    )
    
    $
    (395,536
    )
    
    $
    360,600Impact of adoption of SFAS 123R
    
    
    (502
    )
    
    
    (4
    )
    
    
    6,242
    
    
    
    (6,238
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employee stock options exercised
    
    
    7,075
    
    
    
    70
    
    
    
    
    
    
    
    46,812
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,882Tax benefit of stock options
exercised, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,802
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,802Restricted stock vesting
    
    
    152
    
    
    
    1
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock retired
    
    
    (46
    )
    
    
    
    
    
    
    
    
    
    
    (828
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (828
    )Treasury stock, at cost
    
    
    (15,558
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (287,350
    )
    
    
    (287,350
    )Compensatory stock expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,040
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,040Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,704
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,704Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    147
    
    
    
    894
    
    
    
    
    
    
    
    1,041Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59,745Balance at December 31, 2006
    
    
    81,327
    
    
    
    1,284
    
    
    
    
    
    
    
    710,460
    
    
    
    228,466
    
    
    
    192
    
    
    
    (2,625
    )
    
    
    (682,886
    )
    
    
    254,891Impact of adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    265
    
    
    
    (18,699
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,434
    )Employee stock options exercised
    
    
    676
    
    
    
    8
    
    
    
    
    
    
    
    12,052
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,060Tax benefit of stock options
exercised, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (604
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (604
    )Restricted stock vesting
    
    
    4,109
    
    
    
    41
    
    
    
    
    
    
    
    (41
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock retired
    
    
    (47
    )
    
    
    
    
    
    
    
    
    
    
    (1,243
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,243
    )Treasury stock, at cost
    
    
    (8,460
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (211,954
    )
    
    
    (211,954
    )Compensatory stock expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,926
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,926Warrants issued for services
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    139,823
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    139,823Other comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150
    
    
    
    (1,112
    )
    
    
    
    
    
    
    (962
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    138,861Balance at December 31, 2007
    
    
    77,625
    
    
    
    1,333
    
    
    
    
    
    
    
    728,815
    
    
    
    349,590
    
    
    
    342
    
    
    
    (3,737
    )
    
    
    (894,840
    )
    
    
    181,503Employee stock options exercised
    
    
    982
    
    
    
    8
    
    
    
    
    
    
    
    8,564
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,572Tax benefit of stock options
exercised, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,734
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,734Restricted stock vesting
    
    
    320
    
    
    
    3
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock retired
    
    
    (84
    )
    
    
    
    
    
    
    
    
    
    
    (2,170
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,170
    )Treasury stock, at cost
    
    
    (435
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,453
    )
    
    
    (10,453
    )Compensatory stock expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,192
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,192Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    205,535
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    205,535Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,154
    )
    
    
    (68
    )
    
    
    
    
    
    
    (1,222
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    204,313Balance at December 31, 2008
    
    
    78,408
    
    
    $
    1,344
    
    
    $
    
    
    
    $
    750,132
    
    
    $
    555,125
    
    
    $
    (812
    )
    
    $
    (3,805
    )
    
    $
    (905,293
    )
    
    $
    396,691
   F-5




---



##### 



MARVEL ENTERTAINMENT, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,2008
    
    
    2007
    
    
    2006(in thousands)Cash flows from operating activities:Net income
    
    $
    205,535
    
    
    $
    139,823
    
    
    $
    58,704Adjustments to reconcile net income to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    1,559
    
    
    
    5,970
    
    
    
    14,322Amortization of film inventory
    
    
    135,339
    
    
    
    
    
    
    
    Gain on repurchase of debt
    
    
    (1,916
    )
    
    
    
    
    
    
    Amortization of deferred financing costs
    
    
    4,981
    
    
    
    4,980
    
    
    
    4,980Unrealized loss on interest rate cap and foreign currency forward contracts
    
    
    1,008
    
    
    
    915
    
    
    
    1,504Non-cash charge for stock based compensation
    
    
    6,192
    
    
    
    7,926
    
    
    
    11,040Excess tax benefit from stock-based compensation
    
    
    (8,734
    )
    
    
    (2,454
    )
    
    
    (45,569
    )Gain on sales of equipment
    
    
    
    
    
    
    
    
    
    
    (133
    )Impairment of long term assets
    
    
    1,663
    
    
    
    1,301
    
    
    
    962Deferred income taxes
    
    
    11,500
    
    
    
    1,161
    
    
    
    (300
    )Minority interest of joint venture (net of distributions of $16,743 in 2008
and $14,751 in 2007)
    
    
    (960
    )
    
    
    9,750
    
    
    
    (5,046
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (115,829
    )
    
    
    42,292
    
    
    
    7,127Inventories
    
    
    (715
    )
    
    
    (423
    )
    
    
    (1,047
    )Income tax receivable
    
    
    
    
    
    
    30,963
    
    
    
    Prepaid expenses and other current assets
    
    
    (890
    )
    
    
    2,986
    
    
    
    (2,446
    )Film inventory
    
    
    (53,135
    )
    
    
    (251,045
    )
    
    
    (15,055
    )Other assets
    
    
    (214
    )
    
    
    (46
    )
    
    
    172Deferred revenue
    
    
    (16,509
    )
    
    
    (28,956
    )
    
    
    140,087Income taxes payable
    
    
    21,151
    
    
    
    17,820
    
    
    
    (1,296
    )Accounts payable, accrued expenses and other current liabilities
    
    
    (8,738
    )
    
    
    10,431
    
    
    
    (9,831
    )Net cash provided by (used in) operating activities
    
    
    181,288
    
    
    
    (6,606
    )
    
    
    158,175Cash flow (used in) provided by investing activities:Purchases of fixed assets
    
    
    (2,384
    )
    
    
    (2,169
    )
    
    
    (10,034
    )Expenditures for product and package design
    
    
    
    
    
    
    (490
    )
    
    
    (6,252
    )Proceeds from sales of equipment
    
    
    
    
    
    
    
    
    
    
    1,876Sales of
short-term investments
    
    
    66,055
    
    
    
    333,380
    
    
    
    80,671Purchases of
short-term investments
    
    
    (78,014
    )
    
    
    (354,396
    )
    
    
    (65,532
    )Change in restricted cash
    
    
    (22,811
    )
    
    
    (12,309
    )
    
    
    (144
    )Net cash (used in) provided by investing activities
    
    
    (37,154
    )
    
    
    (35,984
    )
    
    
    585Cash flow (used in) provided by financing activities:Borrowings from film facilities
    
    
    106,300
    
    
    
    255,926
    
    
    
    7,400Repayments of film facilities
    
    
    (180,509
    )
    
    
    
    
    
    
    Borrowings from line of credit
    
    
    
    
    
    
    2,000
    
    
    
    169,200Repayments of line of credit
    
    
    
    
    
    
    (19,000
    )
    
    
    (152,200
    )Deferred financing costs
    
    
    
    
    
    
    (609
    )
    
    
    Purchase of treasury stock
    
    
    (10,453
    )
    
    
    (211,954
    )
    
    
    (287,350
    )Exercise of stock options
    
    
    8,572
    
    
    
    12,060
    
    
    
    46,882Excess tax benefit from stock-based compensation
    
    
    8,734
    
    
    
    2,454
    
    
    
    64,802Net cash (used in) provided by financing activities
    
    
    (67,356
    )
    
    
    40,877
    
    
    
    (151,266
    )Effect of exchange rates on cash
    
    
    (1,596
    )
    
    
    (79
    )
    
    
    224Net increase (decrease) in cash and cash equivalents
    
    
    75,182
    
    
    
    (1,792
    )
    
    
    7,718Cash and cash equivalents, at beginning of year
    
    
    30,153
    
    
    
    31,945
    
    
    
    24,227Cash and cash equivalents, at end of year
    
    $
    105,335
    
    
    $
    30,153
    
    
    $
    31,945Supplemental disclosure of cash flow information:Interest paid
    
    $
    18,028
    
    
    $
    4,564
    
    
    $
    10,009Income taxes paid
    
    
    100,862
    
    
    
    91,476
    
    
    
    38,174Income tax refund
    
    
    
    
    
    
    42,064
    
    
    
    12,180
   F-6




---



##### 



MARVEL ENTERTAINMENT, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2008
 1. Description of Business and Basis of Presentation
      2. Summary of Significant Accounting Policies
 Principles of Consolidation
   F-7




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 2. Summary of Significant Accounting Policies (continued)
 Use of Estimates
  Cash and Cash Equivalents
  Restricted Cash
   Accounting for Joint Venture
  Inventories
   F-8




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 2. Summary of Significant Accounting Policies (continued)
 Fixed Assets
  Goodwill
   Long-Lived Assets
  Film Production Operations
 The Incredible Hulk
  F-9




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 2. Summary of Significant Accounting Policies (continued)
 Film Inventory
     Iron
Man The Incredible Hulk
 Film Revenue
    F-10




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 2. Summary of Significant Accounting Policies (continued)
  Iron Man
  Deferred Financing Costs
  Treasury Shares
  Comprehensive Income
   F-11




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 2. Summary of Significant Accounting Policies (continued)
 Revenue Recognition
 Book Sales, Sales Returns and Customer Allowances
  Comic book revenues  non-returnable and other
  License Revenues
     F-12




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 2. Summary of Significant Accounting Policies (continued)
   Advertising Costs
  Studio and Talent Share of Royalties
  Income Taxes
     F-13




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 2. Summary of Significant Accounting Policies (continued)
  Foreign Currency Translation
  Pension
  Stock-Based Compensation
    F-14




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 2. Summary of Significant Accounting Policies (continued)
   Concentration of Risk
    Earnings Per Share
   F-15




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 2. Summary of Significant Accounting Policies (continued)
 Recent Accounting Standards Adopted in 2008
   Recent Accounting Standards Not Yet Adopted
     F-16




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 3. Details of Certain Balance Sheet Accounts
 December 31,2008
    
    
    2007(in thousands)Accounts receivable, net, consists of the following:Licensing:Accounts receivable
    
    $
    9,434
    
    
    $
    13,330Less allowances for doubtful accounts
    
    
    (278
    )
    
    
    (626
    )Total licensing
    
    
    9,156
    
    
    
    12,704Publishing:Accounts receivable
    
    
    30,474
    
    
    
    29,345Less allowances for:Doubtful accounts
    
    
    (266
    )
    
    
    (175
    )Allowance for returns
    
    
    (14,460
    )
    
    
    (15,019
    )Total publishing
    
    
    15,748
    
    
    
    14,151Film ProductionAccounts receivable (See Note 2)
    
    
    119,459
    
    
    
    All Other:Accounts receivable
    
    
    124
    
    
    
    2,124Less allowances for doubtful accounts
    
    
    
    
    
    
    (300
    )Total All Other
    
    
    124
    
    
    
    1,824Total
    
    $
    144,487
    
    
    $
    28,679Inventories, net, consists of the following:Publishing:Finished goods
    
    $
    5,734
    
    
    $
    5,264Editorial and raw materials
    
    
    5,628
    
    
    
    4,904Total publishing
    
    
    11,362
    
    
    
    10,168All Other:Finished goods
    
    
    
    
    
    
    479Total
    
    $
    11,362
    
    
    $
    10,647Accounts
receivable  licensing, non-current portion are due as follows:2009
    
    $
    
    
    
    $
    1,3702010
    
    
    1,381
    
    
    
    Discounting
    
    
    (60
    )
    
    
    (70
    )Total
    
    $
    1,321
    
    
    $
    1,300Film inventory, net, consist of the following:Theatrical FilmsReleased, net of amortization
    
    $
    172,224
    
    
    $
    In Production
    
    
    
    
    
    
    261,826In development or pre-production
    
    
    7,257
    
    
    
    2,991Total
    
    
    179,481
    
    
    
    264,817Animated television productionsIn development or pre-production
    
    
    2,083
    
    
    
    Total film inventory, net
    
    $
    181,564
    
    
    $
    264,817
  F-17




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 3. Details of Certain Balance Sheet Accounts (continued)
 December 31,2008
    
    
    2007(in thousands)Accrued royalties consists of the following:Merchandise royalty obligations
    
    $
    1,556
    
    
    $
    2,796Freelance talent
    
    
    4,005
    
    
    
    4,570Studio and talent share of royalties
    
    
    71,019
    
    
    
    77,328Total
    
    $
    76,580
    
    
    $
    84,694Accrued expenses and other current liabilities consist of the following:Inventory purchases
    
    $
    2,030
    
    
    $
    2,327Bonuses
    
    
    12,860
    
    
    
    8,059Legal fees and litigation accruals
    
    
    2,111
    
    
    
    1,625Licensing common marketing fund
    
    
    9,441
    
    
    
    7,498Interest
    
    
    3,675
    
    
    
    5,639Other accrued expenses
    
    
    10,518
    
    
    
    11,864Total
    
    $
    40,635
    
    
    $
    37,012
  4. Debt Financing
  Film Facilities
 Film Facility
   F-18




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 4. Debt Financing (continued)
         F-19




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 4. Debt Financing (continued)
      F-20




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 4. Debt Financing (continued)
 Iron Man The Incredible Hulk
  Iron Man The Incredible
Hulk Iron Man
 Iron Man Facility
 Iron Man Iron Man
 Hulk Facility
 The Incredible Hulk The Incredible Hulk
  F-21




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 4. Debt Financing (continued)
 Corporate Line of Credit
  5. Stock-Based Compensation
   WeightedAverageExerciseShares
    
    
    PriceOutstanding at January 1, 2008
    
    
    2,204,539
    
    
    $
    14.83Canceled
    
    
    (88,475
    )
    
    
    16.05Exercised
    
    
    (982,046
    )
    
    
    8.73Outstanding at December 31, 2008
    
    
    1,134,018
    
    
    $
    20.01
  F-22




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 5. Stock-Based Compensation (continued)
  Outstanding and
    
    
    Weighted Average
    
    
    WeightedExercisable
    
    
    Remaining
    
    
    AverageOptions at
    
    
    Contractual Life 
    
    
    ExerciseRange of Exercise Prices
    
    December 31, 2008
    
    
    (Years)
    
    
    Price$1.67  $3.29
    
    
    33,038
    
    
    
    2.51
    
    
    $
    2.01$3.73  $6.61
    
    
    203,130
    
    
    
    3.76
    
    
    $
    5.10$11.23  $17.32
    
    
    286,100
    
    
    
    2.95
    
    
    $
    15.45$19.41
  $21.50
    
    
    111,750
    
    
    
    4.91
    
    
    $
    19.45$25.00  $35.00
    
    
    500,000
    
    
    
    0.34
    
    
    $
    30.00
    Restricted Stock
    F-23




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 5. Stock-Based Compensation (continued)
  WeightedAverageFair Value atShares
    
    

Grant DateOutstanding at January 1, 2008
    
    
    672,968
    
    
    $
    22.30Granted during 2008
    
    
    379,901
    
    
    
    24.25Vested during 2008
    
    
    (311,270
    )
    
    
    20.84Forfeited during 2008
    
    
    (35,602
    )
    
    
    21.25Outstanding at December 31, 2008
    
    
    705,997
    
    
    $
    24.34
   Stock Units
  6. Fair Value Measurements
      F-24




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 6. Fair Value Measurements (continued)
  Recurring Fair Value Measurements UsingTotal Fair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3(in thousands)Financial Assets:Investment securities
    
    $
    32,975
    
    
    $
    32,975
    
    
    $
    
    
    
    $
    Interest rate cap
    
    
    100
    
    
    
    
    
    
    
    100
    
    
    
    
    7. Sales to Major Customers
     F-25




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 8. Income Taxes
  Years ended December 31,2008
    
    
    2007
    
    
    2006(in thousands)United States
    
    $
    350,554
    
    
    $
    266,363
    
    
    $
    88,327Foreign jurisdictions
    
    
    3,944
    
    
    
    (3,131
    )
    
    
    10,473Total
    
    $
    354,498
    
    
    $
    263,232
    
    
    $
    98,800
  Years ended December 31,2008
    
    
    2007
    
    
    2006(in thousands)Current:Federal
    
    $
    100,785
    
    
    $
    76,253
    
    
    $
    33,016State and local
    
    
    14,989
    
    
    
    17,518
    
    
    
    803Foreign (1)
    
    
    5,906
    
    
    
    3,976
    
    
    
    5,552121,680
    
    
    
    97,747
    
    
    
    39,371Deferred:Federal
    
    
    4,581
    
    
    
    (3,562
    )
    
    
    (2,663
    )State and local
    
    
    6,958
    
    
    
    4,815
    
    
    
    2,381Foreign
    
    
    (39
    )
    
    
    (92
    )
    
    
    (18
    )11,500
    
    
    
    1,161
    
    
    
    (300
    )Income tax expense
    
    $
    133,180
    
    
    $
    98,908
    
    
    $
    39,071
 (1)
    
    Current foreign taxes include foreign withholding taxes in the amount of $5.4 million,
$4.4 million, and $3.1 million for 2008, 2007, and 2006, respectively.  Years ended December 31,2008
    
    
    2007
    
    
    2006Federal income tax provision computed at the statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State and local taxes, net of federal income tax benefit
    
    
    4.0
    %
    
    
    6.1
    %
    
    
    3.2
    %Joint venture minority interest
    
    
    (1.6
    )%
    
    
    (3.3
    )%
    
    
    (0.4
    )%Foreign taxes
    
    
    
    
    
    
    0.2
    %
    
    
    0.7
    %Other
    
    
    0.2
    %
    
    
    (0.4
    )%
    
    
    1.0
    %Total provision for income taxes
    
    
    37.6
    %
    
    
    37.6
    %
    
    
    39.5
    %
   F-26




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 8. Income Taxes (continued)
   December 31,2008
    
    
    2007(in thousands)Deferred tax assets:Accounts receivable
    
    $
    204
    
    
    $
    398Inventory
    
    
    1,147
    
    
    
    867Depreciation/ amortization
    
    
    180
    
    
    
    103Sales reserves
    
    
    3,504
    
    
    
    4,202Employment reserves
    
    
    4,613
    
    
    
    5,767Minimum pension liability
    
    
    1,744
    
    
    
    1,932Other reserves
    
    
    1,109
    
    
    
    1,084Loss carryforwards
    
    
    8,564
    
    
    
    12,448Deferred revenue
    
    
    26,600
    
    
    
    18,260Federal benefit of reserves
    
    
    20,258
    
    
    
    14,545Tax credits
    
    
    887
    
    
    
    Total gross deferred tax assets
    
    
    68,810
    
    
    
    59,606Less valuation allowance
    
    
    (322
    )
    
    
    (1,234
    )Net deferred tax assets
    
    
    68,488
    
    
    
    58,372Deferred tax liabilities:Unremitted foreign earnings
    
    
    (186
    )
    
    
    Film revenue
    
    
    (21,198
    )
    
    
    Total gross deferred tax liabilities
    
    
    (21,384
    )
    
    
    Net deferred tax assets
    
    $
    47,104
    
    
    $
    58,372
   F-27




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 8. Income Taxes (continued)
  December 31,2008
    
    
    2007(in thousands)Balance at January 1
    
    $
    51,900
    
    
    $
    36,000Additions based on tax positions related to the current year
    
    
    13,000
    
    
    
    14,500Reductions based on tax positions related to the current year
    
    
    
    
    
    
    Additions for tax positions of prior years
    
    
    3,300
    
    
    
    1,600Reductions for tax positions of prior years
    
    
    (9,400
    )
    
    
    Settlements with taxing authorities
    
    
    (1,100
    )
    
    
    Expirations of statutes of limitations
    
    
    (600
    )
    
    
    (200
    )Balance at December 31
    
    $
    57,100
    
    
    $
    51,900
     9. Commitments and Contingencies
     F-28




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 9. Commitments and Contingencies (continued)
  Year ending December 31:2009
    
    $
    7,3812010
    
    
    7,4252011
    
    
    6,0272012
    
    
    409Total
    
    $
    21,242
 Legal Matters
     F-29




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 9. Commitments and Contingencies (continued)
  10. Benefit Plans
      F-30




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 10. Benefit Plans (continued)
   Percentage of
    
    
    Percentage of
    
    
    Percentage ofPlan Assets
    
    
    Plan Assets
    
    
    Plan Assets
    
    
    % Targetat September 30,
    
    
    at December 31,
    
    
    at December 31,
    
    
    Allocation in2006
    
    
    2007
    
    
    2008
    
    
    2009Equity securities
    
    
    25
    %
    
    
    11
    %
    
    
    1
    %
    
    
    15
    %Debt securities
    
    
    75
    %
    
    
    89
    %
    
    
    99
    %
    
    
    85
    %
  F-31




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 10. Benefit Plans (continued)
  2008
    
    
    2007
    
    
    Remeasure
    
    
    2006(in thousands)Accumulated Benefit Obligation, End of Period
    
    $
    20,818
    
    
    $
    20,432
    
    
    $
    20,645
    
    
    $
    20,680Change in Projected Benefit ObligationProjected benefit obligation, beginning of period
    
    $
    20,432
    
    
    $
    20,645
    
    
    $
    20,680
    
    
    $
    21,711Service cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest cost
    
    
    1,162
    
    
    
    1,152
    
    
    
    285
    
    
    
    1,141Plan amendments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Assumption changes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Actuarial (gain)/loss
    
    
    580
    
    
    
    (31
    )
    
    
    
    
    
    
    (595
    )Benefits paid
    
    
    (1,356
    )
    
    
    (1,334
    )
    
    
    (320
    )
    
    
    (1,577
    )Projected benefit obligation, end of period
    
    $
    20,818
    
    
    $
    20,432
    
    
    $
    20,645
    
    
    $
    20,680Change in plan assetsPlan assets at fair value, beginning of period
    
    $
    15,840
    
    
    $
    14,891
    
    
    $
    14,777
    
    
    $
    14,414Actual return on plan assets
    
    
    1,049
    
    
    
    837
    
    
    
    212
    
    
    
    976Company contributions
    
    
    1,089
    
    
    
    1,446
    
    
    
    222
    
    
    
    964Benefits paid
    
    
    (1,356
    )
    
    
    (1,334
    )
    
    
    (320
    )
    
    
    (1,577
    )Plan assets at fair value, end of period
    
    $
    16,622
    
    
    $
    15,840
    
    
    $
    14,891
    
    
    $
    14,777Funded status
    
    $
    (4,196
    )
    
    $
    (4,592
    )
    
    $
    (5,754
    )
    
    $
    (5,903
    )Contributions between measurement date and
fiscal year-end
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    223Net pension (liability) at end of period
    
    $
    (4,196
    )
    
    $
    (4,592
    )
    
    $
    (5,754
    )
    
    $
    (5,680
    )Amounts recognized in the statement of financial
positionNon-current assets
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Current liabilities
    
    
    (105
    )
    
    
    (105
    )
    
    
    (103
    )
    
    
    (103
    )Non-current liabilities
    
    
    (4,091
    )
    
    
    (4,487
    )
    
    
    (5,651
    )
    
    
    (5,577
    )Net pension (liability) at end of period
    
    $
    (4,196
    )
    
    $
    (4,592
    )
    
    $
    (5,754
    )
    
    $
    (5,680
    )Amounts recognized in accumulated other
comprehensive incomeNet transition obligation
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Prior service cost (credit)
    
    
    (312
    )
    
    
    (365
    )
    
    
    (419
    )
    
    
    (433
    )Net actuarial loss
    
    
    6,871
    
    
    
    6,722
    
    
    
    6,833
    
    
    
    6,860$
    6,559
    
    
    $
    6,357
    
    
    $
    6,414
    
    
    $
    6,427
  F-32




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 10. Benefit Plans (continued)
  2008
    
    
    2007
    
    
    2006(dollars in thousands)Total cost for plan yearService cost
    
    $
    
    
    
    $
    
    
    
    $
    Interest cost
    
    
    1,162
    
    
    
    1,152
    
    
    
    1,141Expected return on plan assets
    
    
    (828
    )
    
    
    (972
    )
    
    
    (922
    )Amortization of:Unrecognized net loss
    
    
    210
    
    
    
    215
    
    
    
    244Unrecognized prior service cost
    
    
    (54
    )
    
    
    (54
    )
    
    
    (54
    )Unrecognized net asset obligation
    
    
    
    
    
    
    
    
    
    
    Net periodic pension cost
    
    $
    490
    
    
    $
    341
    
    
    $
    409Measurement date
    
    
    12/31/2008
    
    
    
    12/31/2007
    
    
    
    9/30/2006Assumptions used for annual expense:Discount rate
    
    
    5.88
    %
    
    
    5.70
    %
    
    
    5.40
    %Expected return on plan assets
    
    
    5.25
    %
    
    
    6.50
    %
    
    
    6.50
    %Rate of compensation increase
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AAssumptions used for year-end disclosure:Discount rate
    
    
    5.62
    %
    
    
    5.88
    %
    
    
    5.70
    %Rate of consumption increase
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
   2009
    
    $
    1,3652010
    
    
    1,4262011
    
    
    1,4402012
    
    
    1,4992013
    
    
    1,5272014-2018
    
    
    8,046
    F-33




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 11. Segment Information
  FilmLicensing
    
    
    Publishing
    
    
    Production
    
    
    All Other
    
    
    Total(in thousands)Year ended December 31, 2008Net sales
    
    $
    292,817
    
    
    $
    125,389
    
    
    $
    254,571
    
    
    $
    3,400
    
    
    $
    676,177Operating income (loss)
    
    
    242,262
    
    
    
    47,315
    
    
    
    102,656
    
    
    
    (24,259
    )
    
    
    367,974Total capital expenditures(1)
    
    
    1
    
    
    
    1,533
    
    
    
    206
    
    
    
    644
    
    
    
    2,384Total identifiable assets
    
    
    363,954
    
    
    
    74,319
    
    
    
    365,414
    
    
    
    133,897
    
    
    
    937,584Year ended December 31, 2007Net sales
    
    $
    343,655
    
    
    $
    125,657
    
    
    $
    
    
    
    $
    16,495
    
    
    $
    485,807Operating income (loss)
    
    
    255,505
    
    
    
    53,524
    
    
    
    (7,537
    )
    
    
    (27,063
    )
    
    
    274,429Total capital expenditures(1)
    
    
    142
    
    
    
    
    
    
    
    220
    
    
    
    2,297
    
    
    
    2,659Total identifiable assets
    
    
    351,788
    
    
    
    71,409
    
    
    
    278,887
    
    
    
    115,274
    
    
    
    817,358Year ended December 31, 2006Net sales
    
    $
    132,448
    
    
    $
    108,464
    
    
    $
    
    
    
    $
    110,886
    
    
    $
    351,798Operating income (loss)
    
    
    82,014
    
    
    
    44,077
    
    
    
    (7,464
    )
    
    
    (6,067
    )
    
    
    112,560Total capital expenditures(1)
    
    
    1,492
    
    
    
    
    
    
    
    
    
    
    
    14,794
    
    
    
    16,286Total identifiable assets
    
    
    366,454
    
    
    
    69,710
    
    
    
    39,006
    
    
    
    148,695
    
    
    
    623,865
 (1)
    
    Excludes film costs capitalized into film inventory  Year Ended December 31, 2007
    
    
    Year Ended December 31, 2006Previously
    
    
    
    
    
    
    As
    
    
    Previously
    
    
    
    
    
    
    AsReported
    
    
    Adjustment
    
    
    Reclassified
    
    
    Reported
    
    
    Adjustment
    
    
    Reclassified(in thousands)Net SalesLicensing
    
    $
    272,722
    
    
    $
    70,933
    
    
    $
    343,655
    
    
    $
    127,261
    
    
    $
    5,187
    
    
    $
    132,448Toys
    
    
    87,428
    
    
    
    (87,428
    )
    
    
    
    
    
    
    116,073
    
    
    
    (116,073
    )
    
    
    All Other
    
    
    
    
    
    
    16,495
    
    
    
    16,495
    
    
    
    
    
    
    
    110,886
    
    
    
    110,886Cost of RevenuesToys
    
    
    8,680
    
    
    
    (8,680
    )
    
    
    
    
    
    
    56,384
    
    
    
    (56,384
    )
    
    
    All Other
    
    
    
    
    
    
    8,680
    
    
    
    8,680
    
    
    
    
    
    
    
    56,384
    
    
    
    56,384Selling, General and
AdministrativeLicensing
    
    
    75,736
    
    
    
    11,564
    
    
    
    87,300
    
    
    
    49,288
    
    
    
    714
    
    
    
    50,002Toys
    
    
    20,806
    
    
    
    (20,806
    )
    
    
    
    
    
    
    27,979
    
    
    
    (27,979
    )
    
    
    All Other
    
    
    21,994
    
    
    
    9,242
    
    
    
    31,236
    
    
    
    22,698
    
    
    
    27,265
    
    
    
    49,963Operating Income(Loss)Licensing
    
    
    196,136
    
    
    
    59,369
    
    
    
    255,505
    
    
    
    77,541
    
    
    
    4,473
    
    
    
    82,014Toys
    
    
    54,725
    
    
    
    (54,725
    )
    
    
    
    
    
    
    21,098
    
    
    
    (21,098
    )
    
    
    All Other
    
    
    (22,419
    )
    
    
    (4,644
    )
    
    
    (27,063
    )
    
    
    (22,692
    )
    
    
    16,625
    
    
    
    (6,067
    )
  F-34




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 11. Segment Information (continued)
 Licensing Segment
  Consumer Products
  Studio Licensing
 Feature Films.
 Television Programs. Wolverine and the X-Men
 Made-for-DVD Animated Feature Films
 Destination-Based Entertainment
  Promotions
   F-35




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 11. Segment Information (continued)
 Publications
  Publishing Segment
  Film Production Segment
  Iron Man The Incredible Hulk Iron Man 2 Thor The First Avenger: Captain America The Avengers
  F-36




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 11. Segment Information (continued)
 Revenue by Geographic Area  (in thousands)
 2008
    
    
    2007
    
    
    2006U.S.
    
    
    Foreign
    
    
    U.S.
    
    
    Foreign
    
    
    U.S.
    
    
    ForeignLicensing (1)
    
    $
    170,336
    
    
    $
    122,482
    
    
    $
    217,077
    
    
    $
    126,579
    
    
    $
    88,336
    
    
    $
    44,112Publishing
    
    
    111,737
    
    
    
    13,651
    
    
    
    113,399
    
    
    
    12,258
    
    
    
    96,722
    
    
    
    11,742Film Production
    
    
    157,900
    
    
    
    96,671
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    All Other (2)
    
    
    2,562
    
    
    
    838
    
    
    
    14,557
    
    
    
    1,937
    
    
    
    77,790
    
    
    
    33,096Total
    
    $
    442,535
    
    
    $
    233,642
    
    
    $
    345,033
    
    
    $
    140,774
    
    
    $
    262,848
    
    
    $
    88,950
 (1)
    
    Includes U.S. revenue derived from the Joint Venture of $20.8 million, $70.8 million and $3.4 million for 2008, 2007, and 2006, respectively.
Includes foreign revenue derived from the Joint Venture of $36.5 million, $51.2 million and $0.7 million for 2008, 2007, and 2006, respectively.(2)
    
    Represents toy sales, associated with our toy manufacturing operations, which ceased during early 2008. 12. Other Income
  13. Subsequent Event
 Iron Man 2
   F-37




---



##### 



MARVEL ENTERTAINMENT, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 December 31, 2008
 14. Quarterly Financial Data (Unaudited)
  2008
    
    
    2007Quarter Ended
    
    March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31
    
    
    March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31(1)
    
    
    (2)
    
    
    
    
    
    
    
    
    
    
    (5)
    
    
    
    
    
    
    (4)
    
    
    (3)(in thousands, except per share data)Net sales
    
    $
    112,567
    
    
    $
    156,859
    
    
    $
    182,499
    
    
    $
    224,252
    
    
    $
    151,402
    
    
    $
    101,475
    
    
    $
    123,642
    
    
    $
    109,288Net income
    
    
    45,231
    
    
    
    46,671
    
    
    
    50,626
    
    
    
    63,007
    
    
    
    46,842
    
    
    
    29,087
    
    
    
    36,268
    
    
    
    27,626Basic net income
per common share
    
    $
    0.58
    
    
    $
    0.60
    
    
    $
    0.65
    
    
    $
    0.80
    
    
    $
    0.56
    
    
    $
    0.35
    
    
    $
    0.47
    
    
    $
    0.36Dilutive net income
per common share
    
    $
    0.58
    
    
    $
    0.59
    
    
    $
    0.64
    
    
    $
    0.80
    
    
    $
    0.54
    
    
    $
    0.34
    
    
    $
    0.45
    
    
    $
    0.35
 (1)
    
    The quarterly financial data for the quarter ended March 31, 2008 includes settlement
payments of $19.0 million, included in other income, received in connection with the early
termination of two interactive licensing agreements and are reflected in net income.(2)
    
    The quarterly financial data for the quarter ended June 30, 2008 includes a credit of $8.3
million in selling, general and administrative expense to reflect a reduction in our estimate
of royalties payable to actors starring in the Spider-Man movies for the use of their
likeness in licensed products.(3)
    
    Quarterly financial data for the quarter ended December 31, 2007 includes out-of-period
adjustments of $2.8 million in additional selling, general and administrative expense to
correct the estimated amount of royalties payable to actors for the use of their likeness in
products over the period 2004 to 2006. The quarterly financial data also includes $1.9
million in additional selling, general and administrative expense to correct the estimated
amount of royalties payable to actors for the use of their likeness in products in the first
and third quarters of 2007. We do not believe these adjustments are material to this quarter
or any previously reported periods.(4)
    
    The quarterly financial data for the quarter ended September 30, 2007 includes unusually
high amounts ($16.8 million) received in settlements of licensing audit claims that are
reflected in net sales. The quarterly financial data also includes a discrete tax benefit of
$1.7 million, primarily due to a reduction of deferred tax liabilities related to our Hong
Kong subsidiary, which we do not believe is material to this quarter or any previously
reported periods.(5)
    
    The quarterly financial data for the quarter ended March 31, 2007 includes an adjustment to
beginning of the year deferred tax assets, which resulted in a discrete income tax charge of
$2.6 million, a $3.1 million decrease to additional paid-in-capital and a $4.4 million
increase to goodwill. The adjustment to additional paid-in-capital is presented on the
accompanying statement of stockholders equity and comprehensive income within tax benefit of
stock options exercised, net. The net income for the quarter ended March 31, 2007 also
includes an adjustment to record a $1.9 million non-recurring credit to selling, general and
administrative expenses associated with pension accounting for the Fleer/Skybox Plan.
Diluted net income per common share in the first quarter of 2007 incorporates a correction to
our weighted average number of diluted shares outstanding that was announced on May 24, 2007.
We do not believe that any of these adjustments are material to this quarter or any
previously reported periods.   F-38




---



##### 



Balance At
    
    
    Charged to
    
    
    Charged to
    
    
    
    
    
    
    Balance atBeginning of
    
    
    Sales or Costs
    
    
    Other
    
    
    Deductions
    
    
    End ofDescription
    
    Period
    
    
    and Expenses
    
    
    Accounts
    
    
    (3)
    
    
    Period(in thousands)Year Ended December 31, 2008Allowances included in Accounts
Receivable, Net:Doubtful accounts-current
    
    $
    1,101
    
    
    $
    (522
    )(2)
    
    $
    
    
    
    $
    35
    
    
    $
    544Doubtful accounts-non-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Advertising, markdowns, volume
discounts and other
    
    
    15,019
    
    
    
    20,329
    (1)
    
    
    
    
    
    
    20,888
    
    
    
    14,460Valuation allowances against deferred taxes
    
    
    1,234
    
    
    
    
    
    
    
    
    
    
    
    912
    
    
    
    322Year Ended December 31, 2007Allowances included in Accounts
Receivable, Net:Doubtful accounts-current
    
    
    2,107
    
    
    
    (453
    )(2)
    
    
    
    
    
    
    553
    
    
    
    1,101Doubtful accounts-non-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Advertising, markdowns, volume
discounts and other
    
    
    18,504
    
    
    
    21,414
    (1)
    
    
    (1,981
    )
    
    
    22,918
    
    
    
    15,019Valuation allowances against deferred taxes
    
    
    1,067
    
    
    
    167
    
    
    
    
    
    
    
    
    
    
    
    1,234Year Ended December 31, 2006Allowances included in Accounts
Receivable, Net:Doubtful accounts-current
    
    
    3,993
    
    
    
    (1,877
    )(2)
    
    
    
    
    
    
    9
    
    
    
    2,107Doubtful accounts-non-current
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Advertising, markdowns, volume
discounts and other
    
    
    12,216
    
    
    
    23,366
    (1)
    
    
    
    
    
    
    17,078
    
    
    
    18,504Valuation allowances against deferred taxes
    
    
    2,610
    
    
    
    150
    
    
    
    (1,693
    )
    
    
    
    
    
    
    1,067
 (1)
    
    Charged to sales.(2)
    
    Charged to (recovery of) costs and expenses.(3)
    
    Allowances utilized and/or paid.  F-39