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Marvel
Entertainment, Inc., has terminated its licensing agreement
with Toy Biz Worldwide Ltd., effective as of 31 December,
2005, one year earlier than the license's scheduled termination
date.
As
a result of the termination, in 2006 Marvel-branded action
figures and other toys formerly produced by Toy Biz Worldwide
will be produced by Marvel.
Now,
with full control over Marvel-branded toys produced for sale
in 2006, Marvel will be in a better position to effect a smooth
transition to Hasbro in areas such as toy development, manufacturing,
shipping, and retail space.
As
a result of this early termination, Marvel will record a one-time
cash charge of $13 million - $16 million in the fourth quarter
of 2005 related to the early termination and reimbursed research
and development expenses. The charge is not reflected in Marvel's
financial guidance for 2005, last provided on 9 November,
2005.
Marvel
chairman Morton Handel said, "While Marvel will own any
inventory produced for 2006, our policy of predominantly manufacturing
to order should help mitigate our inventory risk. Commencing
in 2007, a wide range of toy and game categories - including
action figures, role play and preschool toys, board games
and puzzles - will be produced by our new licensee, Hasbro.
We are very excited by the business prospects we see in teaming
with an industry leader."
The
combined percentage royalty and fees to be received by Marvel
from Hasbro will be generally lower than those paid by Toy
Biz Worldwide, but Marvel believes that Hasbro's worldwide
marketing, promotion and distribution strength should enhance
the Marvel brand and Marvel-branded toy sales.
In
conjunction with the signing of the Hasbro license agreement,
Marvel will receive a non-refundable advance of $100 million.
There will be no immediate revenue recognition related to
the advance payment.
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