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Navarre in the Red due to Music Land

posted on 2006-02-10 12:59 EST
Funimation Performing Below Expectations

Earlier this week Funimation parent company Navarre Corporation reported its 3rd quarter results. Although the company's group sales were up 17%, the group posted a net loss of $6.1 million, compared to net income of $7.2 million for the same quarter last year. Contributing significantly to the deficit was a $12.7 million charge related to the write-off of balances related to the Musicland Bankruptcy.

The company's publishing segment, which includes Funimation, achieved net sales of $35.9 million, an increase of 65.4%. This was attributed to the release of high-profile products at divisions other than Funimation. Regarding Funimation it was stated, "Funimation is currently performing below expectations."

Navarre's purchase agreement with Funimation provided for the sellers of Funimation receiving additional bonuses if Funimation achieved certain agreed-upon financial targets during that period. Subsequent to the third quarter results, the sellers of Funimation and Navarre Corporation has agreed to release $21.8 million that had been held in escrow, with 11.1 million being returned to Navarre and $10.7 million to the sellers.

Despite the losses incurred this quarter, Navarre Corporation expects to post between $19.0 million and $21.0 million in earnings before interest, taxes, depreciation and amortization (EBITDA) for the 2006 fiscal year, which ends on March 31, 2006.

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