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Navarre Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 4, 2011 02:51PM

Navarre Corp. (NAVR) filed Quarterly Report for the period ended 2011-09-30. Navarre Corp. has a market cap of $57.8 million; its shares were traded at around $1.57 with a P/E ratio of 39.3 and P/S ratio of 0.1.



Highlight of Business Operations:

Total operating expenses from continuing operations for the second quarter of fiscal 2012 were $14.2 million, or 13.3% of net sales, compared to $14.1 million, or 11.7% of net sales, in the same period for fiscal 2011. The $77,000 increase was primarily a result of a $330,000 increase in bad debt expense due to increased higher risk receivable balances, and a $119,000 increase in general and administrative expenses for the second quarter fiscal 2012 attributed to increased share-based compensation, partially offset by decreased selling and marketing expenses during the second quarter of fiscal 2012.

Total operating expenses from continuing operations for the six months ended September 30, 2011 were $28.6 million, or 13.6% of net sales, compared to $27.4 million, or 12.5% of net sales, in the same period for fiscal 2011. The increase in operating expenses of 1.1% of net sales was primarily due to CEO transition costs of $1.7 million, partially offset by reduced personnel costs.

Net sales before inter-company eliminations for the distribution segment decreased $14.7 million, or 12.4%, to $104.0 million for the second quarter of fiscal 2012 compared to $118.8 million for the second quarter of fiscal 2011. Net sales decreased $16.9 million in the software product group to $77.5 million during the second quarter of fiscal 2012 from $94.4 million for the same period last year due to reduced demand for our software products. Consumer electronics and accessories net sales increased $8.3 million to $14.8 million during the second quarter of fiscal 2012 from $6.5 million for the same period last year due to the distribution of new products to existing and new customers. Video games net sales decreased $2.3 million to $5.6 million in the second quarter of fiscal 2012 from $7.9 million for the same period last year, due to fewer video game releases. Home video net sales decreased $3.8 million to $6.2 million in the second quarter of fiscal 2012 from $10.0 million in second quarter of fiscal 2011, primarily due to two large customers no longer selling our home video products. We believe future net sales will be dependent upon our ability to continue to add new, appealing content and upon the strength of the retail environment and overall economic conditions.

Net sales before inter-company eliminations for the distribution segment decreased $8.9 million, or 4.2%, to $205.8 million for the first six months of fiscal 2012 compared to $214.7 million for the first six months of fiscal 2011. Net sales decreased $20.8 million in the software product group to $152.0 million for the first six months of fiscal 2012 from $172.8 million for the same period last year primarily due to decreased demand for our software products. Consumer electronics and accessories net sales increased $15.8 million to $27.0 million during the second quarter of fiscal 2012 from $11.2 million for the same period last year due to the distribution of new products to existing customers and obtaining new customers. Video games net sales decreased $1.2 million to $10.4 million for the first six months of fiscal 2012 from $11.6 million for the same period last year, due to fewer video game releases. Home video net sales decreased $2.7 million to $16.4 million for the first six months of fiscal 2012 from $19.1 million for the first six months of fiscal 2011, primarily due to two large customers no longer selling our home video products. We believe future net sales will be dependent upon our ability to continue to add new, appealing content and upon the strength of the retail environment and overall economic conditions.

The net cash used in operating activities for the first six months of fiscal 2012 mainly reflected our net loss, combined with various non-cash charges, including the reversal of the first anniversary Punch! contingent payment accrual of $526,000 which was unearned, depreciation and amortization of $1.9 million, amortization of debt acquisition costs of $298,000, amortization of software development costs of $442,000, share-based compensation of $424,000, an increase in deferred income taxes of $1.3 million, offset by our working capital demands. The following are changes in the operating assets and liabilities during the first six months of fiscal 2012: accounts receivable increased $1.7 million, resulting from the timing of sales, net of decreased sales during the quarter; inventories increased $9.7 million, primarily reflecting additional inventory related to our growing consumer electronics and accessories product line; prepaid expenses decreased $773,000, primarily resulting from amortization of prepaid expenses and recoupments of prepaid royalties; income taxes receivable increased $52,000, primarily due to the timing of required tax payments and tax refunds; accounts payable increased $4.5 million, primarily as a result of timing of payments and purchases; income taxes payable decreased $37,000 primarily due to the timing of required tax payments and tax refunds; and accrued expenses increased $692,000, primarily as a result of a $1.4 million severance accrual related to the departure of our former CEO, net of various accrual payments and a decrease in accrued wages due to timing of pay periods.

Read the The complete Report



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