Marvel Enterprises reported slightly lower earnings of twenty-five cents per share for the first quarter of 2005 in comparison with twenty-seven cents per share during the same period in 2004.  The lowered earnings were due to $10 million one-time charge (about six cents per share) for the resolution of all past and future claims from Spider-Man co-creator Stan Lee, who had sued Marvel over the disposition of revenues from the highly successful Spider-Man films (see 'Stan Lee's Marvel Lawsuit Near Settlement').  The settlement of the lawsuit paved the way for Marvel to announce a new deal to self-produce films based on its characters (with Paramount Studios doing the distribution -- see 'Marvel to Make Its Own Movies').  Investors apparently liked the new movie deal and Marvel's prospects as the company's stock price rose after the release of the earnings report.


Licensing and publishing helped boost Marvel in Q1, while toy sales lagged badly from 2004 when Spider-Man 2 and the Lord of the Rings were driving revenues.  Licensing revenues in Q1 2005 rose 52% to $71.2 million, with a major boost coming from international licensing sales, which increased 96% to $9.4 million in Q1 2005.  Licensing operating margins plunged to 56% in Q1 2005 compared with 77% in Q1 2004 largely due the charge related to the settlement of the Stan Lee litigation (see 'Marvel Settles With Stan Lee').


Publishing also grew robustly with Q1 revenues up 14% year-over-year to $22.4 million due to a jump in the number of titles shipped and in the average circulation per title -- and operating margins in publishing increased to 40% in Q1 2005 from 37% in Q1 2004.


Marvel's toy segment took the big hit with net sales free falling a whopping 81% from  $55.8 million in Q1 2004 to just $10.5 million in the first quarter of this year.  Spider-Man 2 movie toy sales, which accounted for $44.8 million in Q1 2004, dropped to just $1.9 million in Q1 2005.


Marvel's corporate overhead grew by nearly a million dollars in the year-to-year quarterly comparison -- and the more than 20% increase was almost entirely due to increased legal fees related to active litigation.


Marvel's list of 2006 movie releases (see 'Marvel Posts Strong Q4 Results') has been scaled back to just X-Men 3, Ghost Rider and The Punisher 2.