IACI » Topics » Transactions with IACI

This excerpt taken from the IACI 10-K filed Mar 31, 2005.

Transactions with IACI

        Prior to May 7, 2002, the Partnership had various arrangements with IACI under which the Partnership earned fees and incurred costs. These arrangements are summarized below:

        The Partnership provided certain support services to IACI under a Transition Services agreement. These services included use of pre-production, production and post-production facilities, information technology services, physical distribution, contract administration, legal services and office space. The Partnership recognized $3.2 million during the period from January 1, 2002 to May 6, 2002 for these services.

        The Partnership and IACI had an International Television Distribution Agreement under which all programming owned or controlled by IACI outside of the United States was distributed by the Partnership. The Partnership earned a 10.0 percent distribution fee for these services. Additionally, the Partnership licensed certain television programming to IACI to be aired on its cable channels. The Partnership earned $9.7 million during the period from January 1, 2002 to May 6, 2002 for providing these services. The Partnership and IACI also had a Domestic Television Distribution Agreement under which IACI distributed certain of the Partnership's programming in the United States. The Partnership incurred fees of $0.5 million during the period from January 1, 2002 to May 6, 2002 for these services.

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        Under an agreement covering approximately 50 of the Partnership's films, IACI earned a distribution fee for the distribution of these films in the United States. IACI was responsible for the collection and remitting the net amount, after its fee, to the Partnership, except for amounts applied against the advance of fees initially given to the Partnership. An affiliate of the Partnership provided certain fulfillment services on behalf of IACI in the United States and Canadian home video markets. Beginning January 1, 2002, the Partnership replaced the affiliate in providing these services. The Partnership incurred fees of $6.8 million during the period from January 1, 2002 to May 6, 2002 for these services.

        The Partnership had several other arrangements with IACI for the purchase of advertising time and the licensing of certain properties for merchandising. The Partnership incurred fees of $0.5 million during the period from January 1, 2002 to May 6, 2002 for these services.

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