Quarterly reports from Marvel Comics were announced today.  The good news, net sales are up, but the bad news is net income is down.  However that isn’t stopping Marvel’s expectations of greater results for the remainder of this year, and greater things to come in 2007 (i.e. movie franchise).  Take the jump to read the ‘ahem’ exciting press information.

(Press Release) Marvel Entertainment, Inc. today initiated financial guidance for 2007 and revised its financial guidance for 2006. The financial guidance was provided in conjunction with the reporting of operating results for the third quarter and nine-month periods ended September 30, 2006.

For Q3 2006, Marvel reported net income of $13.2 million, or $0.16 per diluted share, net of a $0.7 million charge for FAS 123R share-based payments. This compares to net income of $23.4 million, or $0.23 per diluted share, in the year-ago third quarter period, which did not include any stock option expense.

Marvel’s Chairman, Morton Handel, commented, “The framework for Marvel’s strategic transformation into a global entertainment company is largely complete, and we are excited about the outlook for our business in the coming years. We have refined the 2006 guidance as a result of better than expected operating results for the remainder of 2006. We have also initiated financial guidance for 2007 that demonstrates the strong line-up of entertainment and marketing exposure that should drive consumer awareness and sales of our licensed products. 2007 should be a pivotal year for Marvel, marked by three licensed feature film releases as well as the first full year of our toy license agreement with Hasbro.

“Of particular note in 2007, our Marvel Studios subsidiary expects to commence principal photography on our first Marvel-produced feature film, Iron Man, in the first quarter of 2007, and we anticipate filming on The Hulk to begin later in the year for its newly announced June 27, 2008 release date. In addition, Marvel Studios will continue development on several films targeted for 2009 and beyond.”

Primary 2007 Financial Guidance Drivers:

Expected strong Spider-Man movie merchandise licensing, triggered by the theatrical release of the Spider-Man 3 movie.

  • Toy license contributions related to Marvel’s toy license agreement with Hasbro.
  • Initial film license revenue contributions from three feature films slated for release in 2007: Ghost Rider, Spider-Man 3, and Fantastic Four 2.
  • Contributions from domestic and international licensing revenues from “classic” brands.
  • Strong growth in interactive revenues.
  • Continued, modest top-line and bottom-line growth from the publishing division.
  • An effective tax rate of 37% in 2007 with only a marginal amount payable in cash for the year.
  • Marvel’s guidance is based on 85.0 million diluted shares outstanding for 2007 and does not reflect any share repurchase activity in 2007.

Balance Sheet Update:
As of September 30, 2006, Marvel had cash and equivalents of $34.9 million and $79.7 million in borrowings under its $125 million credit facility with HSBC Bank. During the third quarter of 2006 Marvel did not repurchase any additional shares under the repurchase program. As of September 30, 2006, the Company had $50.0 million remaining under its $100 million share repurchase authorization announced June 5, 2006.

The Author

Stephen Schleicher

Stephen Schleicher

Stephen Schleicher began his career writing for the Digital Media Online community of sites, including Digital Producer and Creative Mac covering all aspects of the digital content creation industry. He then moved on to consumer technology, and began the Coolness Roundup podcast. A writing fool, Stephen has freelanced for Sci-Fi Channel's Technology Blog, and Gizmodo. Still longing for the good ol' days, Stephen launched Major Spoilers in July 2006, because he is a glutton for punishment.

You can follow him on Twitter @MajorSpoilers and tell him your darkest secrets...

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