Comic book and entertainment firm Marvel Entertainment has announced its second quarter 2006 financial results, noting a decline in revenue that included a 23 percent drop in net sales from the company's licensing segment, including video games featuring Marvel properties. However, the relative decline in revenues in the game space comes after massive $50 million payment made by Activision earlier this year, which extended the firm's current video game licensing agreements for the Spider-Man and X-Men franchises through 2017. The publisher has also separately signed Marvel: Ultimate Alliance, to be published by Activision in the fourth quarter, and which remains the only other Marvel-licensed game scheduled to be released in 2006. Sales of Marvel licenses dropped to $33.9 million from $43.9 million in the same period in 2005, mainly due to lower contributions from domestic licensing and Marvel's Spider-Man merchandising joint venture with Sony. Operating margins in the licensing division dropped to 59 percent in the second quarter, down from 64 percent in the prior year period due to lower domestic licensing and joint venture sales. Overall for the period, Marvel reported net income of $16.3 million, compared to net income of $25.8 million during the same period a year ago. Similarly, net sales also saw a drop from $88.1 million in the second quarter of 2005 to the most recent quarter's $84.3 million. However, despite this, the firm noted that sales of comic books and graphic novels increased 21 percent in the quarter to $25.1 million. In addition, Marvel confirmed that work continues on its “$525 million non-recourse film fund facility”, which plays a central role in the company's future release of self-financed movies based on potentially lucrative Marvel properties. The first film to be released under this new structure will be Iron Man on May 2, 2008, followed by a second release in 2008. Marvel's Chairman, Morton Handel noted that Marvel expects to release three licensed films based on Marvel characters in 2007, including two sequels. Regarding Marvel's financial performance, Handel commented: “Marvel's licensing based business model continued to generate strong net income and cash flow from operations during the second quarter of 2006, with returns to shareholders enhanced by the benefit of our share repurchase program."