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Navarre Corp. Reports Operating Results (10-Q)

February 11, 2013 | About:
10qk

10qk

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Navarre Corp. (NAVR) filed Quarterly Report for the period ended 2012-12-31.

Navarre Corporation has a market cap of $69.4 million; its shares were traded at around $1.9 with and P/S ratio of 0.1.

Highlight of Business Operations:

Consolidated net sales for the third quarter of fiscal 2013 increased 16.1% to $178.3 million compared to $153.5 million for the third quarter of fiscal 2012. The $24.8 million increase in net sales was primarily due to an increase in net sales in the consumer electronics and accessories category of $14.7 million compared to the third quarter of fiscal 2012, due to distribution of new products to existing and new customers, and due to our recent acquisition of SpeedFC, which generated $13.6 million of net sales in the third quarter of fiscal 2013. In addition, net sales increased $3.3 million in our software category due to expanded distribution to existing and new customers, partially offset by a decrease in net sales in the video game category of $8.9 million compared to the third quarter of fiscal 2012 and a decrease in net sales in the home video category of $3.5 million compared to the third quarter of fiscal 2012 due to our transition out of the home video product category.

Consolidated net sales for the nine months ended December 31, 2012 increased 2.6% to $373.7 million compared to $364.1 million for the first nine months of fiscal 2012. This $9.6 million increase in net sales was primarily due to an increase in net sales in the consumer and electronics category of $24.2 million compared to the first nine months of fiscal 2012 and our recent acquisition of SpeedFC which generated $13.6 million of net sales for the first nine months of fiscal 2013. The increase was partially offset by a decrease in net sales in the video game category of $14.4 million compared to the first nine months of fiscal 2012, a decrease in net sales in the software category of $8.6 million and a decrease in net sales in the home video category of $19.9 million compared to the first nine months of fiscal 2012 due to our transition out of the home video product category.

Net sales for the distribution segment increased $5.6 million, or 3.7%, to $156.9 million for the third quarter of fiscal 2013 compared to $151.3 million for the third quarter of fiscal 2012. Net sales in the software product group increased $3.3 million to $107.6 million during the third quarter of fiscal 2013 from $104.4 million for the same period last year due to increased demand for our software products. Consumer electronics and accessories net sales increased $14.7 million to $47.4 million during the third quarter of fiscal 2013 compared to $32.6 million for the same period last year due to distribution of new products to existing and new customers. Video games net sales decreased $8.9 million to $1.9 million in the third quarter of fiscal 2013 from $10.8 million for the same period last year, due to fewer video game releases. Home video net sales decreased to zero in the third quarter of fiscal 2013 from $3.5 million in the third quarter of fiscal 2012, due to our transition out of home video exclusive content. 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 for the distribution segment decreased $18.7 million, or 5.2%, to $340.5 million for the first nine months of fiscal 2013 compared to $359.2 million for the first nine months of fiscal 2012. Consumer electronics and accessories net sales increased $24.2 million to $83.9 million during the first nine months of fiscal 2013 from $59.7 million for the same period last year due to the distribution of new products to existing and new customers. Net sales decreased $8.6 million in the software product group to $249.8 million for the first nine months of fiscal 2013 from $258.4 million for the same period last year primarily due to decreased demand for our software products. Video games net sales decreased $14.4 million to $6.8 million for the first nine months of fiscal 2013 from $21.1 million for the same period last year, due to fewer video game releases. Home video net sales decreased to zero for the first nine months of fiscal 2013 from $19.9 million for the first nine months of fiscal 2012, due to our transition out of home video exclusive content. 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 nine 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 $2.8 million, amortization of debt acquisition costs of $448,000, amortization of software development costs of $1.9 million, share-based compensation of $933,000, goodwill and intangibles impairment of $6.0 million, a decrease in deferred income taxes of $13.4 million, offset by our working capital demands. The following are changes in the operating assets and liabilities during the first nine months of fiscal 2012: accounts receivable increased $34.4 million, resulting from the timing of sales, net of decreased sales during the quarter; inventories increased $8.0 million, primarily reflecting additional inventory related to our growing consumer electronics and accessories product line; prepaid expenses decreased $5.9 million, primarily resulting from the write-down of prepaid expenses and recoupment of prepaid royalties; income taxes receivable increased $20,000, primarily due to the timing of required tax payments and tax refunds; accounts payable increased $33.8 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 decreased $661,000, net of various accrual payments and a decrease in accrued wages due to timing of pay periods.

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