Marvel Earnings/Film Slate/Video Game/TV Update!

[Advanced Dark]

http://biz.yahoo.com/bw/061106/20061106005576.html?.v=1

BUSINESS WIRE)--Marvel Entertainment, Inc. (NYSE: MVL - News), a global character-based entertainment and licensing company, 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 Entertainment, Inc.
Segment Net Sales/Operating Income
(in Millions)
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
9/30/06 9/30/05 9/30/06 9/30/05
----------------------------------------------------------------------
Licensing: Net Sales 28.3 33.2 101.7 148.3
----------------------------------------------------------------------
Operating Income (1) 13.4 20.0 57.1 88.0
----------------------------------------------------------------------
Publishing: Net Sales 30.9 25.8 79.9 69.1
----------------------------------------------------------------------
Operating Income 13.1 11.0 32.5 27.7
----------------------------------------------------------------------
Toys: Net Sales 33.0 22.1 85.0 56.0
----------------------------------------------------------------------
Operating Income 7.4 10.5 14.6 28.1
----------------------------------------------------------------------
Corporate Overhead: (6.3) (6.1) (18.0) (17.4)
----------------------------------------------------------------------
TOTAL NET SALES $92.2 $81.1 $266.6 $273.4
----------------------------------------------------------------------
TOTAL OPERATING INCOME $27.6 $35.4 $86.2 $126.4
----------------------------------------------------------------------
(1) The nine-month period in 2005 includes the impact of a $10
million, one-time charge related to the settlement of litigation with
Stan Lee.

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."

Financial Guidance:

As reflected in the table below, Marvel today revised its financial guidance for 2006 and initiated financial guidance for 2007. A few key drivers behind Marvel's 2007 guidance are highlighted below.

Marvel Entertainment, Inc. - Financial Guidance
----------------------------------------------------------------------
(in millions,
except per- Updated 2006 Previous 2006 Initial 2007 2005
share amounts) Guidance Guidance (2) Guidance Actual (1)
----------------------------------------------------------------------
Net sales $330 - $340 $320 - $350 $375 - $435 $391
----------------------------------------------------------------------
Net income (3) $53 - $56 $43 - $53 $115 - $132 $103
----------------------------------------------------------------------
Diluted EPS (3) $0.61 - $0.64 $0.50 - $0.60 $1.35 - $1.55 $0.97
----------------------------------------------------------------------

(1) FY 2005 net income and diluted EPS include a one-time charge of
approximately $12.5 million associated with the early termination
of Marvel's toy licensee, Toy Biz Worldwide Ltd.
(2) Previous 2006 guidance ranges were provided on August 2, 2006.
(3) 2006 net income and diluted EPS reflect $5.9 million (pre-tax) of
non-cash expenses related to the implementation of FAS 123R.

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.
Marvel cautions investors that variations in the timing of licenses and entertainment events, the timing of their revenue recognition, and their level of success result in variations and uncertainty in forecasting the Company's financial results. These factors could have a material impact on year-over-year and sequential quarterly results comparisons as well as Marvel's ability to achieve the financial performance included in its financial guidance.

Third Quarter Segment Review:

Licensing Segment net sales declined 15% from the year-ago period to $28.3 million, primarily due to lower contributions from domestic licensing and Marvel's Spider-Man merchandising joint venture (JV) with Sony. These declines were partially offset by gains in international licensing and the Marvel Studios operations. The $6.2 million reduction in domestic merchandise licensing sales resulted from lower anticipated new and renewal contract sales in the third quarter, which was partially offset by gains in overages. The Spider-Man JV had sales of only $0.8 million in Q3 2006, which were primarily related to licensing overages associated with catalog sales of the Spider-Man 2 video game. Studio media licensing sales increased to $4.3 million in Q3 2006, with the gain from the prior year predominantly generated from animated television and Direct-to-DVD projects.
Marvel Entertainment, Inc.
Licensing Sales by Division (Unaudited)
(in millions)
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
9/30/06 9/30/05 9/30/06 9/30/05
----------------------------------------------------------------------
Domestic Consumer Products 14.3 20.5 52.9 76.3
----------------------------------------------------------------------
International Consumer Products 8.9 7.5 32.4 30.1
----------------------------------------------------------------------
Spider-Man L.P. (Domestic and
International) 0.8 2.3 3.5 20.4
----------------------------------------------------------------------
Marvel Studios 4.3 2.9 12.9 21.5
----------------------------------------------------------------------
Total Licensing Segment $28.3 $33.2 $101.7 $148.3
----------------------------------------------------------------------

Operating margins in the licensing division were 47% in Q3 2006, below margins of 60% in the prior-year period, resulting from higher compensation and related expenses, coupled with lower revenues in the Q3 2006 period.

Marvel's Publishing Segment net sales increased $5.1 million or 20% from the year-ago period to $30.9 million, due to higher sales of trade paperbacks and hard cover books sold into the direct and book market channels. Comic book sales were bolstered by strong sales associated with Civil War, a high-profile special series that has tie-ins across many established comic book series. Publishing results also benefited from strong year-over-year growth in custom publishing. Publishing segment operating income in Q3 2006 was $13.1 million with an operating margin of 42%, compared to $11.0 million in operating income and an operating margin of 43% in the prior-year period.
The transition in Marvel's Toy Segment net sales from toys produced by a master toy licensee in 2005 to toy production by Marvel in 2006 contributed to an expected year-over-year increase in segment revenues. Sales in the quarter increased 49% versus the prior year, consisting primarily of core classic Marvel character lines. The shift from sales recorded in 2005 as royalty and service fee income, with no corresponding Cost of Revenues expense, to sales recorded in 2006 as wholesale sales subject to the corresponding Cost of Revenues expense, was the principal factor in operating margins decreasing to 22% for the third quarter of 2006, as compared to 48% in last year's period.
Marvel Entertainment, Inc.
Toy Sales Summary (Unaudited)
(in millions)
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
9/30/06 9/30/05 9/30/06 9/30/05
----------------------------------------------------------------------
Marvel Toy Net Sales 33.0 4.9 85.0 12.8
----------------------------------------------------------------------
Toy License:
----------------------------------------------------------------------
- Toy Royalties -- 8.3 -- 21.0
----------------------------------------------------------------------
- Fees for Services Rendered -- 8.9 -- 22.2
----------------------------------------------------------------------
Total Toy Segment $33.0 $22.1 $85.0 $56.0
----------------------------------------------------------------------

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.

Marvel Studios Entertainment Pipeline
(Development and release dates for licensed properties are controlled
by studio partners)
----------------------------------------------------------------------
Licensed Marvel Character Feature Film Line-Up For 2007
----------------------------------------------------------------------
Film/Character Studio/Distributor Status
----------------------------------------------------------------------
Ghost Rider Sony In post-production,
February 16, 2007
release
----------------------------------------------------------------------
Spider-Man 3 Sony In production, May 4,
2007 release
----------------------------------------------------------------------
Fantastic Four 2 Fox In production, June 15,
2007 release (1)
----------------------------------------------------------------------
Film Projects Being Developed by Marvel (Partial List)
----------------------------------------------------------------------
Film/Character Studio Status
----------------------------------------------------------------------
Iron Man Marvel Writer & director
engaged, slated for May
2, 2008
----------------------------------------------------------------------
The Incredible Hulk Marvel Writer and director
engaged, slated for June
27, 2008 release (1)
----------------------------------------------------------------------
Ant-Man Marvel Writer and director
engaged
----------------------------------------------------------------------
Captain America Marvel Writer engaged
----------------------------------------------------------------------
Nick Fury Marvel Writer engaged
----------------------------------------------------------------------
Thor Marvel Writer engaged
----------------------------------------------------------------------
The Avengers Marvel Writer engaged (1)
----------------------------------------------------------------------
Black Panther, Cloak & Dagger, Doctor Strange, Hawkeye, Power Pack and
Shang-Chi are other projects that may be developed by Marvel. (1)
----------------------------------------------------------------------
Licensed Marvel Character Film Development Pipeline (Partial List)
----------------------------------------------------------------------
Film/Character Studio/Distributor Status
----------------------------------------------------------------------
Wolverine Fox TBD
----------------------------------------------------------------------
The Punisher 2 Lions Gate TBD
----------------------------------------------------------------------
Magneto Fox TBD
----------------------------------------------------------------------
Namor Universal TBD
----------------------------------------------------------------------
Marvel Character Animated TV Projects in Development
----------------------------------------------------------------------
Character Studio Status
----------------------------------------------------------------------
Fantastic Four Moonscoop SAS (France) 26, 30 minute episodes
airing in 2006; U.S.
distribution started on
Cartoon Network on
September 2, 2006.
----------------------------------------------------------------------
Wolverine First Serve Toonz 26, 30 minute episodes in
(India) development
----------------------------------------------------------------------
Iron Man Method Films (France) 26, 30 minute episodes in
development
----------------------------------------------------------------------
Marvel Character Animated Direct-to-Video Projects in Development
----------------------------------------------------------------------
Partnership with Lions Gate to develop, produce and distribute
original animated DVD features. Titles include: Ultimate Avengers
(released February 21, 2006), Ultimate Avengers 2 (released August 8,
2006), Iron Man (scheduled for release in 2007) and Doctor Strange.
(1)
----------------------------------------------------------------------
Marvel Character Live Action TV Projects (Partial List)
----------------------------------------------------------------------
Alter Ego, Moon Knight and Skrull Kill Krew in development. (1)
----------------------------------------------------------------------
2006 Video Game Releases
----------------------------------------------------------------------
Publisher Character group Release
----------------------------------------------------------------------
Activision X-Men 3 Released Q2 2006
----------------------------------------------------------------------
Activision Marvel: Ultimate Alliance Released Q4 2006
----------------------------------------------------------------------
2007 Video Game Releases
(Release dates controlled by Publishing partner)
----------------------------------------------------------------------
Take-Two Ghost Rider Q1 2007 (1)
----------------------------------------------------------------------
Konami Marvel Vs. Card Game Q1 2007 (1)
----------------------------------------------------------------------
Activision Spider-Man 3 Q2 2007 (1)
----------------------------------------------------------------------
Take-Two Fantastic Four II Q2 2007 (1)
----------------------------------------------------------------------
Electronic Arts Marvel Nemesis 2 Q4 2007 (1)
----------------------------------------------------------------------
Activision Spider-Man Trilogy Q4 2007 (1)
----------------------------------------------------------------------
(1) Represents a change from the previously supplied schedule

TBD = To Be Determined

 

[04nbod]

thats complicated but nice to see that they are actually working on Thor and The avengers

 

[Kevin Roegele]

After all this stuff has been released, Marvel would do well to cut their superhero output by atleast half. Oversaturation breeds contempt, no craze lasts forever, and I'd estimate by the time Captain America makes it to the big screen, audiences will have tired of superhero movies.

 

[PWN3R]

Truer words.

 

[Advanced Dark]

What? LOL Make sense. First off they're only releasing two studio films per year, and the more other studios make of their licenced films the more money they make. So asking Marvel to cut it's 2 film per year slate in half to one per year is idiotic. This is a business and they're in it to make money. Period. If people are buying...they'll keep selling.

 

[PWN3R]

Look at the Matrix. When that came out, bullet time was amazing. It was so cool looking, so fresh. Fast forward to 2006, and bullet time has been in hundreds of movies, cartoons, tvs, etc. It has lost it's bang.

I think what he meant is Marvel should pace themselves instead of singing the one minute man theme.

 

[Advanced Dark]

They are pacing themselves. Two per year from Marvel Studios. What other studios do like Fox & Sony is icing on the cake. Rather thick icing with characters like X-Men and Spidey. Look at the earnings report and you won't see any more that 2 per year from Marvel Studios. You have to realize Marvel has to work on these projects now even though some might not make it till 2012 or beyond. Look at Namor, Thor, etc...They've been on the list forever...but now Marvel Studios has most of the characters back. There's no pacing problem whatsoever. If they were releasing 5 films per year...then there's a problem...only if they're all superhero films. I wouldnt' mind a Punisher or dark wolverine movie filling in the gaps between the other films. Pacing's perfect.

 

[Kevin Roegele]

What? LOL Make sense. First off they're only releasing two studio films per year, and the more other studios make of their licenced films the more money they make. So asking Marvel to cut it's 2 film per year slate in half to one per year is idiotic. This is a business and they're in it to make money. Period. If people are buying...they'll keep selling.

Until people stop buying. The more superhero movies Marvel (and other studios) make, the sooner general audiences will tire of superhero movies. And Marvel's movie studio will be vacant.

 

[Advanced Dark]

Yeah ok. LOL Marvel has so many different characters that if people get tired of one then there's more to take their place. Besides after a particular character has been in 3 or 4 films the franchise usually gets recast, gets a new director, or takes a break and new franchises break through. So you keep up your negativity but that's not likely at all considering the characters have been around since the 1930's in some cases and they have more fans then ever today. As new generations of kids come about...there's a whole new group of fans born. The population is growing and interests are becoming segmented but because of the growth there will always be support for this genre as their is for horror, sci-fi, westerns, fantasy, etc...People will never stop buying...their tastes may change but then the new generation gets their turn to see these characters from a different point of view from a director that's probably 2 years old right now. It's here to stay. Batman and Spiderman and The X-Men and FF will be around in some form or another long after your grand-kids are dead.

 

[muscaremy]

i just have to laugh at marvel nemesis 2....i liked the graphics in pt 1 but game itself...woooooo

 

[chiefchirpa]

Umm.... where's Deadpool? I say Deadpool should have more potential to be a good action movie than Ant-Man.

Marvel Nemesis sequel has so much potential. EA should: 1) change the development team 2) add established villains 3) have better fight mechanics.

 

[FireandIce213]

Umm.... where's Deadpool? I say Deadpool should have more potential to be a good action movie than Ant-Man.

Marvel Nemesis sequel has so much potential. EA should: 1) change the development team 2) add established villains 3) have better fight mechanics.

Thank You!! Someone needs to tell Marvel this, Deadpool dont get the love he deserves man!

 

[Advanced Dark]

Not an easy character to make into a big budget film IMO. Might be cool looking on paper but what kind of film could they make out of it? Remember when Ryan Reynolds wanted it.

 

[chiefchirpa]

Deadpool is a much more interesting character than Ant-Man or even Wolverine. Why? Dual-wielding katana. Teleportation. Healing factor. Red and black costume. Self-loathing. Insanity.

Ergo, Deadpool should have a much better chance at the box office than a "Honey I Shrunk the Kids"-like movie.

 

[Advanced Dark]

^ Matter of opinion and if Deadpool was more interesting than both than he'd have more fans and he'd have films, tv series, video games, etc...The demand isn't nearly as high as Wolverine....and Ant-Man is something completely different visually than all the other film that really no other hero is like...or at least no other superhero film like it has been seen.

 

[chiefchirpa]

^ Matter of opinion and if Deadpool was more interesting than both than he'd have more fans and he'd have films, tv series, video games, etc...The demand isn't nearly as high as Wolverine....and Ant-Man is something completely different visually than all the other film that really no other hero is like...or at least no other superhero film like it has been seen.

Matter of opinion, yes.

My point is more people are looking forward to a Deadpool movie than Ant Man, especially if they just play Marvel Ultimate Alliance or X-Men Legends 2. Ask 10 random guys or 100 in this board (heck I might do it later), the majority will choose to see a Deadpool movie rather than an Ant Man movie. Besides when I watch a comic movie, I'd like to see action and a little comedy, not imagery. Deadpool promises a lot of action, Ant man is a question mark.

 

[Advanced Dark]

^ How do you know this? From a sample in the SHH boards? I'll bet you if you put out the plot synoposis for both films and put out a poll on a non-superhero website that the results would differ from what you think. Ant-Man would probably have broader appeal as far as the concept. How popular he is in the comics doesn't translate to the screen the same way cause generally only comic fans read comics but the movie audience is more diverse. Ant-Man would be a more attractive film for the younger kids as well you know. I agree Deadpool is more popular in the books.

 

[chiefchirpa]

Anyway, cast your vote in my poll AD

 

[hippie_hunter]

A Deadpool movie would suck. There's no way they can get it right. What makes Deadpool so awesome is the fact that he knows that he's a comic book character and isn't real.

 

[Advanced Dark]

^ That would be like a comic book version of the last action hero. LOL

 

[Kevin Roegele]

Yeah ok. LOL Marvel has so many different characters that if people get tired of one then there's more to take their place.

Doesn't work that way. Genres come into fashion and then go out of fashion. How many westerns did you see last year? Any musicals? Film noir? Disaster movies?

So you keep up your negativity

Don't overeact. Just because I'm not kissing Marvel's ass does not qualify as negativity.

I'm not being negative. I'm making a point about the popularity of movie genres. This place isn't all rampant fanboyish 'this rocks'/'this sucks' you know, some of us like to discuss things from a different point of view.

but that's not likely at all

You really believe that this will go on, two Marvel films every year?

You're kidding yourself.

 

[chiefchirpa]

A Deadpool movie would suck. There's no way they can get it right. What makes Deadpool so awesome is the fact that he knows that he's a comic book character and isn't real.

Hmm, is there any reason why Deadpool won't say that he's a made-up character in the movie? Oh, yeah it's only YOUR preconception that Deadpool won't break the fourth wall in the movie.

 

[Advanced Dark]

You really believe that this will go on, two Marvel films every year?

You're kidding yourself.

No I don't just believe this...I know this. Marvel will release 2 studio films per year over the next 5-6 years. That's pretty much a lock unless a film gets delayed in a major way. That does not include the other studio films.