Question-and-Answer Session
Operator
(Operator Instructions)
Our first question comes from the line of Michael Savner from Banc of America Securities. Please proceed.
Mike Savner - Banc of America
Good morning. Thanks for taking the question. Two unrelated questions; first, I guess this is an obvious question, I think some of us would have thought that full year guidance would have gone up substantially, given the strong results in the first quarter, and I think we had been thinking a little bit more linear results for the remainder of the year -- certainly front-end loaded, but not this front-end loaded. So can you talk about, I think you did a good job of explaining the cash receipts differing from recorded revenue, but could you maybe talk a little bit more about the fall-off in revenue in the back-half of the year? I guess it’s relying on overages then to get to a bigger number, so maybe just more about timing would be helpful.
The second question, unrelated, maybe just a little bit more comment on your decision to go with Sega for these games for the next couple of movies that you are doing on your own. Obviously you have had a lot of success with some previous partners that have done very good jobs on games, and I’m guessing this was somewhat of an economic decision but I would be curious to hear your response in terms of what Sega brings to the table and your confidence that their development ability will meet your expectations and meet gamers’ expectations.
F. Peter Cuneo
Thanks, Michael. I’ll take the question first on guidance and then I think David Maisel can comment on Sega. I think that the biggest disconnect between analysts’ expectations for our first quarter and our own has to do with how we account for Spider-Man licensing, movie licensing revenues. Actually, from an internal basis, all of our businesses performed well but they essentially performed against our internal budgets. They were more or less on target for our internal budgets, which were always at this level.
But I think the biggest difference is that probably most analysts assume that since the film, Spider-Man 3, was debuting in the second quarter of the year that we would record most of those Spider-Man JV related and other revenues associated with the movie in that second quarter. In reality, we record the great bulk of those revenues in the first quarter, and this is related to the on-shelf revenue recognition rule that we use. Obviously if a licensee has their products on retail shelves prior to the movie release, and most of them of course do, then we actually record the revenue associated with those products and those licenses when those products hit retail shelves, and most of the products hit the retail shelf in the first quarter.
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