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Navarre Corp. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: May 25, 2012 03:18PM

Navarre Corp. (NAVR) filed Annual Report for the period ended 2012-03-31. Navarre Corp has a market cap of $61.2 million; its shares were traded at around $1.58 with and P/S ratio of 0.1.



Highlight of Business Operations:

Total operating expenses from continuing operations for fiscal 2012 were $66.8 million or 13.9% of net sales, compared with $59.2 million or 12.1% of net sales for fiscal 2011. The increase in operating expenses of $7.6 million during fiscal 2012 was primarily due to the goodwill and intangible impairment charge of $6.0 million and other restructuring charges of $9.1 million. This increase was offset by reduced personnel costs and reduced professional fees of $4.9 million and $1.9 million, respectively, primarily as a result of the Restructuring Plan that commenced during the third quarter of fiscal 2012. The reduction in personnel costs during fiscal 2012 includes a benefit of $386,000 related to a change in our vacation accrual policy. During fiscal 2012, we established a vacation policy whereby vacations are scheduled for qualified employees based on the needs of the business which resulted in the reversal of accrued vacation amount related to those individuals.

Net sales before inter-company eliminations for the distribution segment were $471.5 million for fiscal 2012 compared to $481.3 million for fiscal 2011, a decrease of $9.9 million or 2.0%. Consumer electronics and accessories net sales increased $46.7 million to $77.8 million during fiscal 2012 from $31.1 million for fiscal 2011, due to the distribution of new products to existing and new customers. The increase in consumer electronics and accessories net sales more than offset the net sales decline in software, video game and home video products. Net sales decreased $35.6 million in the software product group to $345.2 million for fiscal 2012 compared to $380.8 million for fiscal 2011, primarily due to reduced demand for our software products. Video games net sales decreased $1.7 million to $25.8 million in fiscal 2012 from $27.5 million in fiscal 2011, due to fewer video game releases during fiscal 2012. Home video net sales decreased $19.3 million to $22.6 million for fiscal 2012 from $41.9 million in fiscal 2011, due primarily to two large customers no longer selling our home video products and our transition out of this product line. 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, market demands and overall economic conditions.

Total operating expenses for the distribution segment were $50.6 million, or 10.7% of net sales, for fiscal 2012 compared to $47.2 million, or 9.8% of net sales, for fiscal 2011. Overall expenses increased by $7.9 million due to Restructuring Plan related costs, or 1.7% of net sales, which were offset by reduced personnel costs and reduced professional fees of $3.1 million and $1.9 million, respectively, resulting from the Restructuring Plan. The reduction in personnel costs during fiscal 2012 includes a benefit of $345,000 related to a change in our vacation accrual policy. During fiscal 2012, we established a vacation policy whereby vacations are scheduled for qualified employees based on the needs of the business which resulted in the reversal of accrued vacation amount related to those individuals.

General and administrative expenses for the distribution segment consist principally of executive, accounting and administrative personnel and related expenses, including professional fees. General and administrative expenses for the distribution segment were $19.1 million, or 4.0% of net sales, for fiscal 2012 compared to $18.7 million, or 3.9% of net sales, for fiscal 2011. The $418,000 increase was primarily due to $3.9 million of Restructuring Plan related costs which were offset by reduced personnel and reduced professional fees of $1.8 million and $1.8 million, respectively, resulting from the Restructuring Plan. The reduction in personnel costs during fiscal 2012 includes a benefit of $209,000 related to the change in our vacation accrual policy.

Net sales before inter-company eliminations for the distribution segment were $481.3 million for fiscal 2011 compared to $487.7 million for fiscal 2010, a decrease of $6.4 million or 1.3%. Net sales decreased $27.2 million in the software product group to $380.8 million for fiscal 2011 compared to $408.0 million for fiscal 2010, primarily due to a reduction in shelf space for our products at retail locations, the proliferation of digital software downloads and the departure of two vendors (which accounted for an additional $25.1 million of sales in fiscal 2010), partially offset by $13.5 million of additional sales in Canadian markets. Home video net sales increased $3.8 million to $41.9 million for fiscal 2011 from $38.1 million in fiscal 2010, due primarily to new title releases in fiscal 2011 compared to fiscal 2010. Video games net sales increased $243,000 to $27.5 million in fiscal 2011 from $27.3 million in fiscal 2010, due to new title releases during fiscal 2011. Consumer electronics and accessories net sales increased $16.8 million to $31.1 million during fiscal 2011 from $14.3 million for fiscal 2010, due to the distribution of additional new products.

Read the The complete Report



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