Speaker: Peter Cuneo

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1 Marvel Studios Analyst Day Webcast Thursday, August 10,

2 Speaker: Peter Cuneo 2

3 Safe Harbor Disclosure Except for any historical information that they contain, the statements in this presentation regarding our plans are forward-looking statements that are subject to various risks, including that we might be unable to attract and retain creative talent; our films might be less successful economically than we anticipate; our films might be more expensive to make than we anticipate; union activity might interrupt our film production; we might be disadvantaged by changes or disruptions in the way films are distributed; we might lose potential sales because of piracy of films and related products; we will depend on our distributor for the implementation of internal controls related to the accounting of film-production activities; we might fail to meet the conditions set by the lenders for the funding of films; we might fail to meet the tests imposed by the lenders for the funding of films beyond the first four; and accounting related to the production of our films may result in significant fluctuations in our reported income or loss. These and other risks are described in our filings with the Securities and Exchange Commission, including our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q. We assume no obligation to publicly update or revise any forward-looking statements. 3

4 Participants Peter Cuneo - David Maisel - Michael Helfant - Kevin Feige - Ken West - John Turitzin - Vice Chairman, Marvel Entertainment Vice Chairman, Marvel Studios; EVP Corporate Development, Marvel Entertainment President/COO, Marvel Studios President Production, Marvel Studios EVP & CFO, Marvel Entertainment EVP, CAO and General Counsel, Marvel Entertainment 4

5 Marvel Studios Analyst Day Agenda and Goals 1. Provide analysts and investors with exposure to senior executives running our entertainment business 2. Review Marvel s s strong track record in film production 3. Discuss launch of new Marvel film slate and its advantages 4. Provide illustrative financial models 5. Address accounting, transparency, cash disbursements, recoupment and financial controls 6. Review Marvel Studios mission and operations 7. Describe the process Marvel uses to make its films 8. Discuss characters in development for film slate 9. Answer any remaining questions 5

6 David Maisel Vice Chairman, Marvel Studios Executive Vice President, Marvel Entertainment Joined Marvel in January 2004 Conceived and executed direct to DVD animated feature deal Conceived and executed film slate financing Film and entertainment Executive 13 years Endeavor Talent Agency, Head of Corporate Development Chello Media (Europe), Managing Director Livent, Inc., President The Walt Disney Company, Director of Corporate Development Creative Artists Agency, Corporate Agent Entertainment industry consultant, The Boston Consulting Group 5 years MBA, Harvard Business School 6

7 Michael Helfant President and Chief Operating Officer, Marvel Studios Joined Marvel in 2005 Film and entertainment executive 17 years Beacon Pictures, Chief Operating Officer Miramax / Dimension Films, Senior EVP Interscope Communications/Polygram Filmed Entertainment, EVP Involved in production and financing of over 75 films The Hand that Rocks the Cradle, Jumanji, Mr. Holland s Opus, Runaway Bride, Ladder 49 Spy Kids, Scream and Scary Movie franchises Entertainment lawyer 5 years JD/MBA - UCLA 7

8 Kevin Feige President of Production, Marvel Studios Joined Marvel in 2000 President of Production 1 year Executive Vice President 3 years Senior Vice President 2 years Marvel Production Accomplishments: Executive Producer - X-Men: The Last Stand, Spider-Man 2, The Hulk, The Punisher and Fantastic Four Co-Producer - X-Men 2: X-Men United and Daredevil Production executive - Spider-Man The Donners Company Associate Producer (X-Men I ) 2 years Production Team (You ve Got Mail and Volcano) 5 years Selected as one of Top 35 Executives Under 35 by Hollywood Reporter USC School of Cinema-Television 8

9 Sid Ganis Chairman of Marvel Film Slate Committee Member Marvel Entertainment Board of Directors Joined Marvel Board of Directors in 1999 Currently President of Academy of Motion Picture Arts & Sciences (OSCARS) Currently Chairman Out of the Blue Entertainment Akeelah and the Bee, Big Daddy, Mr. Deeds, Deuce Bigalow Vice Chairman of Columbia Pictures A League of Their Own, A Few Good Men, Groundhog Day President of Paramount Motion Picture Group Ghost, Fatal Attraction, Top Gun Senior Vice President, Lucasfilm The Empire Strikes Back, Raiders of the Lost Ark 9

10 Speaker: David Maisel 10

11 Historical Box Office Performance of Marvel PG-13 Films Release Date US Box Office $mm's Int'l Box Office $mm's Total $mm's Distributor PG-13-rated films: X-Men 7/14/00 Fox $ $ $ Spider-Man 5/3/02 Sony Daredevil 2/14/03 Fox X2: X-Men United 5/2/03 Fox Hulk 6/20/03 Universal Spider-Man 2 6/30/04 Sony Elektra 1/14/05 Fox Fantastic Four 7/8/05 Fox X-Men: The Last Stand (1) 5/26/06 Fox Total $ 1,796.4 $ 1,762.7 $ 3,559.1 Average $ $ $ (1) Still in release 11

12 Marvel s s Unique Film Advantages Large, established and loyal Marvel comic fan base worldwide 60-year history of the Marvel brand Marvel brand stands for high quality, family-friendly friendly entertainment, action and excitement, reaches across all demographics One of the few studio brands meaningful to film consumers Depth and breadth of the stories, characters and artwork in Marvel s s IP library Rich storylines and characters transcending comic book stereotypes Potential to create film franchises from each Marvel property Opportunity for multiple sequels and spin-offs Proven, experienced production team with a strong familiarity with the characters histories and storylines Enviable track record 12

13 Key Film Slate Benefits: Financial Strategic With minimal cash risk: Receive significant producer fee 5% of all film related revenues Receive profit upside from films Eliminates studio sharing of merchandising and toy revenues Build film library Give Marvel greater control of its future: Greenlight and schedule release of films Film development and production process Film marketing Sequels and spin-offs Enable ripple-effect deals Regaining rights to previously licensed characters like Hulk and Iron Man Recapture merchandising opportunities 13

14 Key Film Slate Elements Financial 100% debt/no equity $465 million revolving senior bank debt insured by AMBAC (LIBOR %) $60 million of junior debt (LIBOR + 7.0%) LIBOR capped at 6.0% for ~2/3 of expected borrowings Marvel paid gross participation fee 5% of all film-related revenues including DVD Marvel receives film profits Profits are crossed among films with various financial tests to determine cash dispositions from facility to Marvel Non-film revenues are not shared with the distributor or lenders All interest, fees and closing costs paid from facility or film proceeds Marvel development costs fully paid back at film greenlight Marvel receives reimbursement for actual incremental overhead Up to 2% of film budgets Film budgets from $ million 14

15 Key Film Slate Elements Legal Debt is non-recourse to Marvel Entertainment No cash collateral other than film profits - collateral is theatrical film rights to the pledged characters Duration through 2012/2013 Key greenlight requirements $65-$165 $165 million bonded budget PG or PG-13 rated Five foreign territories pre-sold: Germany, France, Spain, Japan, Australia/New Zealand Completion bond in place Post the fourth film, passage of various interim asset and pre-sale tests 15

16 Key Distribution Deal Elements Financial Extremely competitive distribution fee Hard dollar financial minimums set for spending on marketing With built in escalations as industry marketing costs increase Excludes charges for distributor s s internal charges/overhead and interest Protection on DVD margins Distributor marketing spend recoupment not crossed Other Paramount obligation to distribute 10 films from facility Marvel flexibility to go elsewhere in certain situations No distributor creative controls Key release date windows set Early Spring/Summer Fall Holiday Distribution in Germany, France, Spain, Japan and Australia/New Zealand reserved to Marvel U.S. free TV distribution reserved to Marvel Mutual approvals on marketing plan and creative material 16

17 Caution Regarding Illustrative Models The following models are not projections of the expected performance of any individual film or of Marvel s film slate as a whole. They are presented only to illustrate the possible performance of those films and to assist in an understanding of Marvel s self-produced filmmaking operations. These models are based on the following assumptions. The assumptions are mere estimates. If the assumptions turn out to be incorrect, the actual film performance will be different from the model. As with any model, actual performance will be different, perhaps significantly different, from the performance illustrated in these models. 17

18 Key Film Model Assumptions Revenue Assumptions International box office 98% of domestic box office (1) Theatrical rentals revenue (includes traditional non-theatrical) Domestic 55% of domestic box office (1) International 43% of international box office (1) Reserved territories Minimum guarantees from reserved territories and tax incentives 33% of direct negative cost (2) Percent of international Ultimate allocated to reserved territories 40% (1) (1) Based on historical actuals of Marvel PG-13 films (2) Based on industry estimates 18

19 Key Film Model Assumptions (continued) Revenue Assumptions Home video/dvd revenue Domestic 78% of domestic theatrical box office (1) International 60% of domestic home video (1) Television Revenue Domestic Pay-per-view 12.5% of dom. theatrical rentals, cap of $7.5mm (2) Pay 45% of dom. theatrical rentals, cap of $17.5mm (2) Free 18% of dom. theatrical rentals, cap of $40.0mm (2) International Pay 33% of int l theatrical rentals, cap of $30.0mm (2) Free 50% of int l theatrical rentals, cap of $30.0mm (2) (1) Based on historical actuals of Marvel PG-13 films (2) Based on industry estimates 19

20 Key Film Model Assumptions (continued) Costs Prints and advertising Assumptions Tied to distribution partner minimums with escalation assumptions (3) Home video costs Tied to distribution partner cap (3) Television costs 5% of television revenue (2) Residuals Home video 11% of first $1 million of home video royalty, 13% thereafter (3) Television 9% of television revenue (3) Participations Marvel producer fee 5% of 100% of gross receipts (3) Third parties 3.75% of 100% of gross receipts (2) Distribution fee 10%, maximum allowed by loan agreement (3) Production budget $130 million (2) Based on industry estimates (3) Derived from contractual commitments 20

21 Illustrative Single Film P&L Revenue Domestic Box Office (in millions) $ 100 $ 150 $ 200 $ 250 $ 300 Domestic Theatrical Rentals/Non-theatrical $ 55 $ 82 $ 109 $ 137 $ 164 Home Video Pay-Per-View Pay Television Free Television International, Net of Reserved Territories Theatrical Rentals Home Video Pay Television Free Television Minimum Guarantees from Reserved Territories and Tax Incentives Total Gross Film Revenue $ 292 $ 393 $ 495 $ 594 $

22 Illustrative Single Film P&L (continued) Domestic Box Office (in millions) $ 100 $ 150 $ 200 $ 250 $ 300 Total Gross Film Revenue (prior slide) $ 292 $ 393 $ 495 $ 594 $ 692 Distribution Fee Domestic Prints and Advertising Home Video Costs International Prints and Advertising Home Video Costs Television Costs Residuals Participations Total Distribution Expenses $ 174 $ 216 $ 269 $ 320 $ 371 Direct Negative Cost - including capitalized interest Total Film Operating Expenses $ 308 $ 350 $ 403 $ 454 $ 505 Total Film Profit $ (16) $ 42 $ 92 $ 140 $ 187 Marvel Producer Fee Operating Income Contribution $ (1) $ 62 $ 117 $ 170 $ 222 Possible Wholesale Toy Sales Per Film Possible Merchandising Revenue Per Film $35-150mm $10-50mm 22

23 Illustrative Film Window Assumptions* Domestic Theatrical 0 Home Video/DVD 4-66 months Pay-per per-view 7-99 months Pay TV 12 months Network TV/Cable TV months TV Syndication 48 months International Theatrical 0 Home Video/DVD 4-66 months Pay-per per-view & Pay TV 12 months Free TV 48 months * Timing of initial revenues post theatrical release 23

24 Illustrative Timing of Film P&L Single Film (in millions) Year 1 Year 2 Year 3 Years 4-7 Total Marvel Producer Fee $ 12 $ 10 $ 1 $ 1 $ 25 Film Receipts Amortization of Film Costs (31) (73) (19) (11) (134) Operating Income $ 27 $ 63 $ 18 $ 10 $ 117 Assumptions: $130 million budget Films released in May and July of each year $200 million domestic box office Note: years 1-7 are calendar years Note: illustration excludes merchandising and licensing contributions 24

25 Illustrative Timing of Film P&L Full 10 Film Slate Contribution Operating Income Impact (millions) Film Released Year 1 Year 2 Year 3 Years 4-7 Film 1 Year 1 $ 27 $ 63 $ 18 $ 10 Film 2 Year 1 $ 19 $ 70 $ 19 $ 10 Film 3 Year 2 $ 27 $ 63 $ 27 Film 4 Year 2 $ 19 $ 70 $ 29 Film 5 Year 3 $ 27 $ 90 Film 6 Year 3 $ 19 $ 97 Film 7 Year 4 $ 111 Film 8 Year 4 $ 111 Film 9 Year 5 $ 108 Film 10 Year 5 $ 108 Total Operating Income $ 46 $ 179 $ 215 $ 700 Assumptions: $130 million budget Films released in May and July of each year $200 million domestic box office Note: years 1-7 are calendar years Note: illustration excludes merchandising and licensing contributions 25

26 Speaker: Ken West 26

27 Marvel Studios Financial Concepts Reporting transparency Accounting fundamentals Net inventories Income recognition timing and method Individual film forecast method Ultimates - All forecasted revenues and costs of a film for the first 7-10 years Funding Sources Scripts and other pre-production costs Production and post-production costs Interest 27

28 Interest on Outstanding Film Facility Debt Debt characteristics $525 million credit facility consists of $60 million mezzanine LIBOR + 7%) and $465 million senior debt LIBOR + 0.7% plus 0.935% Ambac insurance premium) Unused commitment fee on mezzanine (0.5%) and senior (0.2% plus 0.4% Ambac insurance premium) Mezzanine is drawn down first (to date, approximately $30 million has been drawn down to pay closing costs and interest) Once mezzanine is fully drawn, senior is drawn down Senior debt revolves; mezzanine remains outstanding for the term of the debt Interest presentation on Marvel financial statements Interest on funds borrowed to finance film production is capitalized through delivery of the completed film. Capitalized interest is amortized as a cost of production Interest on funds borrowed to pay closing costs and interest as well as interest on funds borrowed to finance film production after delivery are expensed during the period 28

29 Illustrative Example of Marvel P&L Impact Domestic Box Office (millions) $ 100 $ 150 $ 200 $ 250 $ 300 Total Gross Film Revenue (prior slide) (A) $ 292 $ 393 $ 495 $ 594 $ 692 Distribution Fee Domestic Prints and Advertising Home Video Costs International Prints and Advertising Home Video Costs Television Costs Residuals Participations Total Distribution Expenses (B) $ 174 $ 216 $ 269 $ 320 $ 371 Direct Negative Cost (Includes Capitalized Interest) Total Film Operating Expenses $ 308 $ 350 $ 403 $ 454 $ 505 Total Film Profit $ (16) $ 42 $ 98 $ 140 $ 187 Marvel Producer Fee (C) Operating Income Contribution $ (1) $ 62 $ 117 $ 170 $ 222 As Presented on Marvel Income Statement Revenue [(A) - (B) + (C)] $ 133 $ 196 $ 251 $ 304 $ 356 Amortization of Film Costs Operating Income Contribution $ (1) $ 62 $ 117 $ 170 $

30 Five-Minute Intermission Questions for Marvel Studios management may be submitted via e at: mvlq&a@jcir.com. We will address as many questions as time permits following the end of the presentations. 30

31 Speaker: Michael Helfant 31

32 MARVEL STUDIOS Primary goals and objectives Build entertainment franchises based on Marvel characters Create content that drives, supports and enhances all of Marvel s s business activities New Strategic Plan Self-finance finance feature films in order to retain creative and strategic control of franchise properties Capture full upside of self-financed financed films Retain long term ownership of film and television library assets 32

33 Current Business Segments Live Action Licensed Third Party Studio Films New Self-Financed Film Slate Television Series Animation Direct to DVD Features Television Series 33

34 Animation Direct-to-DVD Features Status Ultimate Avengers 2 Released 8/8/06 Iron Man Doctor Strange Teen Avengers In production In production Development TV Series Fantastic Four Wolverine and the X-Men Iron Man Spider-Man In production Pre-production Development Development 34

35 Animation Marvel Studios responsible for all creative development and design Actual animation executed by third party animation houses Direct to DVD and series productions will become Marvel library assets 35

36 Studio Financed Films Production Ghost Rider Sony Feb. 07 Spider-Man 3 Sony May 07 Fantastic Four 2 Fox June 07 Development Deathlok Gargoyle Magneto Namor The Punisher 2 Wolverine Paramount Sony Fox Universal Lions Gate Fox 36

37 Studio Financed Films Business as usual Marvel Studios will have a balance of studio financed and self-financed financed films 37

38 Self-Financed Film Slate Plan to release 2 self-financed financed films per year beginning in 2008 Development 7 projects in development First film: Iron Man May 2, 2008 Incredible Hulk likely to be second film 38

39 Film Slate - Production Fully controlled by Marvel Additional staffing/infrastructure as needed Physical Production, Production Finance and Business/Legal Affairs Pre-production activities Production financing with new revolving film facility after greenlight Same quality as studio-financed films Competitive advantages 39

40 Film Slate: Production Risk Management Extensive pre-production production Experienced crews Complete production insurance package Strict budget and financial controls Completion bond Independent review/approval of budgets Guaranty of completion and delivery Guaranty of over-budget financing if needed 40

41 Film Slate - Distribution Principal distribution arrangements Paramount Universal for Incredible Hulk Major studio distribution partners in US and various international al territories Marvel s s reserved distribution rights Australia/New Zealand, Germany, France, Spain and Japan Domestic free television All ancillary rights, including merchandising, music publishing and soundtrack rights Additional staffing to manage and oversee all activities of Marvel Studios distribution partners Marketing and distribution executives 41

42 Speaker: Kevin Feige 42

43 MARVEL STUDIOS: How We Make Marvel Movies 43

44 INTRODUCTION How does a Marvel superhero go from comic books pages to a global box office phenomenon? The answer is a team of experts working in concert to make sure that every detail is imagined and executed during the painstaking film process. Here s a look at how Marvel Studios has made some of the biggest movies of all time 44

45 1 DEVELOPMENT 2 PRE-PRODUCTION 3 PRODUCTION 4 POST-PRODUCTION 5 MARKETING / RELEASE 45

46 DEVELOPMENT 46

47 MINING MARVEL S S VAST IP LIBRARY Marvel Studios draws upon its rich library of comic books and characters to create hit films. 47

48 SCRIPT DEVELOPMENT We condense decades of comic books into one screenplay. This is the most crucial - and longest - stage of the development process. 48

49 PRE-PRODUCTION PRODUCTION 49

Comic books are a valuable resource during

50 STORYBOARDS Every major sequence is carefully drawn out by storyboard artists. The filmmakers then use these boards to plan every detail of the sequence. Comic books are a valuable resource during this process since they are basically storyboards themselves. 50

51 PRE-VISUALIZATION ANIMATICS Complex action sequences are fully animated to give the filmmakers a better idea of how the sequence will look and feel 51

52 CASTING Marvel Studios works with an impressive array of talented actors to bring our characters to life. Very often, after appearing in a Marvel Studios production, these actors go on to enjoy superstar status. 52

53 PRODUCTION When all the details are in place the production is ready to go before the cameras. This process can last many months. 53

54 POST-PRODUCTION PRODUCTION 54

55 POST PRODUCTION EDITING 55

56 POST PRODUCTION VISUAL EFFECTS 56

57 POST PRODUCTION VISUAL EFFECTS 57

58 POST PRODUCTION VISUAL EFFECTS 58

59 POST PRODUCTION VISUAL EFFECTS 59

60 POST PRODUCTION VISUAL EFFECTS 60

61 POST PRODUCTION VISUAL EFFECTS 61

62 POST PRODUCTION SOUND EFFECTS, SCORING & FINAL MIX 62

63 MARKETING / RELEASE 63

64 THE MARVEL FILM SLATE IRON MAN Billionaire industrialist Tony Stark builds a high-tech suit of armor to fight injustice on a global scale. Director - JON FAVREAU (Made, Made, Elf, Zathura) Production Designer J. MICHAEL RIVA ( (Spider-Man 3, Zathura) VFX Supervisor JOHN NELSON (I I Robot, The Matrix 2, 3, Academy Award winner for Gladiator) Director of Photography MATTHEW LIBATIQUE ( (Inside Man, Requiem for A Dream) Release date - May 2 nd,

65 THE MARVEL FILM SLATE THE INCREDIBLE HULK Caught in the heart of a gamma explosion, Dr. Bruce Banner now finds himself transformed in times of stress into seven feet, one thousand pounds of unfettered fury the most powerful creature to ever walk the earth The Incredible Hulk! Director: Louis Leterrier (Unleashed, The Transporter 2) 2 Writer: Zak Penn ( (X-Men: The Last Stand, X2: X-Men X United, Last Action Hero) 65

66 THE MARVEL FILM SLATE ANT MAN Small time crook Scott Lang stumbles upon an old uniform once worn by the reclusive Dr. Hank Pym a.k.a. Ant-Man. Now, the torch is passed and an unlikely new hero is born. Director: Edgar Wright (Shaun Shaun of The Dead) 66

67 THE MARVEL FILM SLATE CAPTAIN AMERICA In 1942 Steve Rogers is picked to participate in a super-soldier soldier experiment which transforms him into Captain America. Thought lost in battle towards the end of WW2, Captain America awakens in the present day to a world he doesn't recognize. Writer: David Self (Road Road to Perdition, Thirteen Days) 67

68 THE MARVEL FILM SLATE NICK FURY Super-spy Nick Fury uses high-tech equipment and a team of agents from the most powerful spy organization in the world to fight an evil group determined to send the world into chaos. Writer: Andrew Marlowe (Air Air Force One, Hollow Man, End of Days) 68

69 THE MARVEL FILM SLATE THOR An epic tale of Norse mythology, this is the story of Thor, the god of thunder, being banished to live as a human among mortal men. Writer: Mark Protosevich (I Am Legend, The Cell) 69

70 THE MARVEL FILM SLATE THE AVENGERS The Avengers are Earth's mightiest heroes, formed to fight the foes no single hero could withstand. The Avengers are the most prestigious and powerful super-hero team in the world. Writer: Zak Penn ( (The The Incredible Hulk, X-Men: X The Last Stand, X2: X-Men X United, Last Action Hero) 70

71 Question and Answer Period Moderated by: Peter Cuneo questions now to 71

72 Thank You For Joining Us Today! Marvel Entertainment, Inc. (NYSE: MVL) 72

OVERVIEW OF THE MOVIE BUSINESS

OVERVIEW OF THE MOVIE BUSINESS p r e s e n t e d b y S t e p h e n C. S o h C O L I N N G & P A R T N E R S L L P M a y 2 0 1 6 CONTENTS 1. Introduction 2. Stages 3. Chain of Title 4. Creative Control