NOTE 7 – CONTRACT TERMINATION COSTS



We entered into a new 10-year license agreement for Education practice content in a foreign country, with minimum required royalties payable to us totaling $16.3 million (at current exchange rates) over the life of the arrangement.  Under a previously existing profit-sharing agreement, we would have been obligated to pay one-third of the new minimum royalty stream, or $5.4 million, plus one-third of any royalties in excess of the contractual minimums to the licensee that owns the rights for that country.  For a $1.5 million payment, we terminated the previously existing profit-sharing agreement and we will not owe any further payments to the international licensee.  Based on the guidance for contract termination costs, we expensed the $1.5 million payment during the second quarter of fiscal 2017.