"We are delighted to extend our long-term relationship with Lucas," said Alan G. Hassenfeld, Hasbro's Chairman and Chief Executive Officer. "This extension provides us with a real economic benefit by allowing us to continue to build and expand on the success of this franchise property for many years to come."
"Lucas and Hasbro have always viewed Star Wars as a long-term proposition. This extension truly gives us the opportunity to plan far into the future for the benefit of all the fans who have followed the saga for the last 27 years," said Howard Roffman, President of Lucas Licensing. "Hasbro is unmatched in the boys action arena, and we are confident that their future work on Star Wars toys and games will continue the tradition of excellence they have established."
Under the terms of the extension, the agreement is expected to run through 2018. The minimum guarantee payable to Lucas has also been reduced by $85 million.
"Based on the restructuring of these agreements, we do not expect any current or future impairment charge related to Star Wars," said David Hargreaves, Hasbro's Chief Financial Officer. "Lucas has shown they are a true partner of Hasbro."
In a separate agreement, Hasbro extended by ten years the terms of the warrants it previously granted to Lucas Licensing Ltd. and Lucasfilm Ltd. The warrants provide for the purchase of an aggregate of 15,750,000 shares of Hasbro common stock. This agreement further provides Hasbro with an option running through October 13, 2016, to purchase these warrants from Lucas for an aggregate purchase price of either $200 million in cash, or $220 million in Hasbro common stock, such stock being valued at the time of exercise of the option. In addition, the agreement provides Lucas with an option during the next five years to sell all of these warrants to Hasbro for a price to be paid at Hasbro's election of either $100 million in cash or $110 million in Hasbro common stock, such stock being valued at the time of exercise of the option.
The agreement with Lucas Licensing Ltd., continues to give Hasbro exclusive worldwide rights to core action figures, vehicles and games, electronic hand-held games, die cast vehicles and creative play products.
Hasbro will announce its fourth quarter and full year 2002 results on Thursday, February 13, 2003 and will be hosting a webcast of the conference call at 9:00 a.m. EST.
Hasbro is a worldwide leader in children's and family leisure time entertainment products and services, including the design, manufacture and marketing of games and toys ranging from traditional to high-tech. Both internationally and in the U.S., its PLAYSKOOL, TONKA, MILTON BRADLEY, PARKER BROTHERS, TIGER and WIZARDS OF THE COAST brands and products provide the highest quality and most recognizable play experiences in the world.
Lucas Licensing Ltd. manages all the domestic and international merchandising activities of the Star Wars and Indiana Jones properties. Star Wars is the most successful film-based merchandising program in history. The Star Wars licensing program is renowned for its attention to product detail and quality in the fields of publishing, toys, games, collectibles, apparel and home furnishings.
With six weeks before the sixth and final ''Star Wars'' film saga, ''Revenge of the Sith'', hits theaters worldwide on May 19, the movie studios behind the brand have launched a massive marketing and merchandising campaign. It includes toys aimed at children, collectibles for adults active in fandom and other related merchandise such as science fiction novels based in the Star Wars universe.

The 20th Century Fox and Lucasfilm studios make millions of dollars in licensing fees from toy manufacturers and promotional deals with fast-food restaurants, candy and cereal boxes. Even telephone companies are getting into the act. Cingular Wireless will be rolling out a ''Star Wars''-themed promotion and handset downloads within the next few days, according to a company spokesman.

Sales from ''Star Wars'' tie-in merchandise have brought in a lot of money over the years. ''Star Wars'' toy sales themed with ''The Phantom Menace'' brought in $500 million. In 2002, ''Attack of the Clones'' toy sales were $225 million, according to reports.

In January 2003, toymaker Hasbro struck the biggest licensing deal for the brand when it agreed to pay Lucasfilm $200 million in cash and stock for the exclusive rights to make ''Star Wars''-themed toys until 2018. That figure does not include Lucasfilm's percentage of the profit from each toy's sale.

Wal-mart and Target, the two largest toy retailers in the U.S. have entire aisles devoted to tie-in ''Star Wars'' action figures, full-sized mock ups of light sabers and other more whimsical items. Hasbro is even marketing a "Darth Tater" special edition of its classic Mr. Potato Head.

The merchandise also has a literary side. Author Matthew Stover has a monetization of ''Revenge of the Sith'' as part of a multi-book deal between Lucasfilm and publisher Random House's science fiction specialty label, Del Rey. Stover's book has consistently been in the Top 50-most ordered books, according to Amazon.com. Other ''Sith''-themed books released within the past few weeks include coffee table picture books and behind-the-scenes documentation detailing the making of the film.