Note 5 – Royalty Revenue and Related Expenses

The Corporation has agreements for licensing the Care Bears and Strawberry Shortcake characters and other intellectual property. These license agreements provide for royalty revenue to the Corporation, which is recorded in “Other revenue.” These license agreements may include the receipt of upfront advances, which are recorded as deferred revenue and earned during the period of the agreement. Expenses associated with the servicing of these agreements, primarily relating to the licensing activities included in non-reportable segments, are summarized as follows:


	Three Months Ended				Six Months Ended
(In thousands)	August 24, 2012		August 26, 2011		August 24, 2012		August 26, 2011
Royalty revenue	$	7,133	$	8,964	$	10,862	$	14,383

Royalty expenses
Material, labor and other production costs	$	2,673	$	2,566	$	5,001	$	4,992
Selling, distribution and marketing expenses		2,723		3,379		3,379		4,724
Administrative and general expenses		441		472		863		861

	$	5,837	$	6,417	$	9,243	$	10,577

In addition to the expenses disclosed above, the Corporation incurred charges of $2.1 million associated with its licensing business, which is included in “Other operating (income) expense – net” on the Consolidated Statement of Operations. See Note 6 for further information.