Marvel Ent. Inc.reported operating results for the first quarter ended March 31, 2007. For Q1 2007, Marvel reported that net sales rose to $151.4 million and net income increased to $46.8 million, or $0.56 per diluted share, compared to net sales of $90.1 million and net income of $17.5 million, or $0.19 per diluted share, in Q1 2006.
The year-over-year increases in net income and EPS are largely based on the company's licensing operations, complemented by increased contributions from both toys and comicbook publishing. Q1 2007 results reflect the recognition of much of the minimum licensing guarantees related to Marvel's SPIDER-MAN merchandising joint venture with Sony generated by the release of the SPIDER-MAN 3 feature film last weekend.
Marvel's chairman, Morton Handel, commented, "Marvel's businesses benefited from global visibility and demand created for Marvel-branded merchandise, primarily from the recent release of major studio-licensed feature films including SPIDER-MAN 3, which achieved a record-breaking opening weekend domestic box office of $151 million. Our Q1 performance also reflects the diverse base of revenue sources that we have built across consumer product segments.
"We are very pleased with our partnership with Hasbro and their performance under our toy license agreement. With the support of our toy division personnel, Hasbro has executed a broad and compelling toy line across multiple categories, and the line is performing well in the marketplace. Of note, the release of SPIDER-MAN 3 triggered a second, non-refundable minimum guarantee payment to Marvel, amounting to $70 million, pursuant to our toy license agreement with Hasbro. That payment has already been received in the second quarter and will be recognized as revenue in future periods as royalties are 'earned out' under the agreement.
"Marvel is working on a growing array of initiatives to drive consumer exposure and provide new revenue streams in coming years. These initiatives adhere to our risk- and capital-averse business model. In support of our Marvel Studios film slate, we have partnered with Sega to produce videogames based on IRON MAN and THE INCREDIBLE HULK as well as CAPTAIN AMERICA and THOR. Additionally, in late March we executed a license agreement in connection with the development in Dubai of a major new theme park destination centered on the Marvel Universe of characters. Work has also begun on Marvel's first Broadway project, with the development, by our licensee, of a SPIDER-MAN musical led by director Julie Taymor. Music for the project is being created by Bono and The Edge of the rock band U2. Both initiatives will take several years to develop but are expected to support Marvel's core objectives.
"Lastly, work on our Marvel Studios self-produced feature film lineup for 2008 progresses on schedule. Principal photography is proceeding well and on schedule for IRON MAN, and pre-production on HULK, the filming of which is scheduled to begin this summer, is achieving important milestones. Recent progress includes the casting of Edward Norton in the lead role of Bruce Banner and Liv Tyler as his love interest, Betty Ross."
For more information, visit www.marvel.com.
Rick DeMott
Animation World Network
Creator of Rick's Flicks Picks
