It's the cornerstone of the most popular Marvel(NYSE: MVL) comic book heroes: the transformation.

Spider-Man's Peter Parker goes from shy photographer to web-slinging crime fighter. The Hulk's Dr. Robert Bruce Banner sheds his scientific smarts and repressed fur to become the powerful personification of rage. Now it's Marvel's turn for a phone-booth makeover (with apologies to Superman of DC Comics fame, of course) to emerge as a force to be reckoned with.

The comics king raised its fourth-quarter guidance and initiated a rosy outlook for 2003, as it completes the transformation into a licensing monster that would put many of its 4,700 characters to muscle-flexing shame.

Gone is the company busy running costly toy-making operations and failing to milk its dynamic content library. Gone is the company once mired in accounting kryptonite (which we, on Earth, know as debt). With a balance sheet as green as Dr. Banner at his worst and a ship as tight as a Spidey suit, Marvel has arrived.

Last month, the company cleaned out its bank debt. Even sweeter was its move a month earlier, when it converted preferred stock into common shares. Sure, that caused the outstanding shares to nearly double in the process, but now the comic giant is no longer saddled with hefty dividends (which amounted to $16.3 million last year, alone).

But the lean, mean fantasy machine's crafty financial moves would mean nothing if Marvel wasn't capitalizing on its new fiscally friendly restructuring. It is. Sony(NYSE: SNE) finally took Spider-Man to the silver screen, and it became the top-grossing movie of 2002. With Ben Affleck's Daredevil out next month, an X-Men followup in May, and The Hulk due out in June, Marvel's theatrical pipeline is rich. It even renegotiated a more lucrative video game licensing deal with Activision(Nasdaq: ATVI).

Where does that leave our superhero? Marvel hopes to produce just over $70 million in free cash flow this year. That's a 20% improvement on its projected 2002 showing, with revenue levels matching 2002's hearty $280 million performance. If the company can transform its Daredevil or The Hulk releases into blockbuster franchises of Spidey or even X-Men proportions, Marvel's performance will continue to pack a "Pow!" for years to come.