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Navarre Corp. Reports Operating Results (10-Q)

February 09, 2010 | About:

10qk

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Navarre Corp. (NAVR) filed Quarterly Report for the period ended 2009-12-31.

Navarre Corp. has a market cap of $71.1 million; its shares were traded at around $1.96 with a P/E ratio of 5.6 and P/S ratio of 0.1. Navarre Corp. had an annual average earning growth of 15.2% over the past 5 years.
This is the annual revenues and earnings per share of NAVR over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of NAVR.


Highlight of Business Operations:

Consolidated net sales for the third quarter of fiscal 2010 were $133.3 million compared to $171.6 million for the third quarter of fiscal 2009, a decrease of $38.3 million or 22.3%. The decrease in net sales was related to the inclusion of BCI in fiscal 2009 (which generated $1.2 million in net sales during the third quarter of fiscal 2009), a $7.2 million loss of sales to a large retailer that filed for bankruptcy and was liquidated during fiscal 2009, a shift to fee-based value-added services, departure of low margin vendors, a weaker new release schedule compared to third quarter fiscal 2009 and the weak retail market and poor overall economic conditions.

Total operating expenses for the third quarter of fiscal 2010 were $17.5 million or 13.1% of net sales, compared to $30.8 million or 18.0% of net sales in the same period for fiscal 2009. The $13.3 million decrease was primarily due to a non-cash goodwill and trademark impairment charge recorded during the third quarter of fiscal 2009 of $6.2 million, $2.0 million of impairment recorded during the third quarter of fiscal 2009 related to masters and severance costs of $1.1 million recorded during fiscal 2009 related to reduction in force. We experienced additional decreases in all expense categories due to the elimination of costs related to BCI in fiscal 2010, the benefit received from the implementation of company-wide expense reduction initiatives during the third quarter of fiscal 2009 (which included workforce reductions), a decrease in enterprise resource planning (“ERP”) expenses for systems that were

Consolidated net sales for the nine months ended December 31, 2009 were $390.0 million compared to $483.9 million for the first nine months of fiscal 2009, a decrease of $93.9 million or 19.4%. The decrease in net sales was due to the inclusion of BCI in fiscal 2009 (which generated $9.6 million in net sales during the nine months ended December 31, 2008), a $31.3 million loss of sales to a large retailer that filed for bankruptcy and was liquidated during fiscal 2009, a shift to fee-based value-added services, departure of low margin vendors, a decrease in distribution sales resulting from a lack of new major video game and software releases versus the prior fiscal year, and the weak retail market and poor overall economic conditions.

Total operating expenses for the nine months ended December 31, 2009 were $51.6 million or 13.2% of net sales, compared to $144.6 million or 29.9% of net sales in the same period for fiscal 2009. The $93.0 million decrease was primarily due to a non-cash goodwill and trademark impairment charges of $79.6 million, $2.0 million of impairment related to masters and severance costs of $1.1 million related to the reduction in force all of which were recorded in the third quarter of fiscal 2009. We experienced additional decreases in all expense categories due to the elimination of costs related to BCI in fiscal 2010, the benefit received from the implementation of company-wide expense reduction initiatives during the third quarter of fiscal 2009, which included workforce reductions, a reduction in ERP expenses for systems that were implemented in fiscal 2009 and operational efficiencies. These expense reductions were partially offset by a $3.2 million increase of performance based compensation for the first nine months of fiscal 2010 compared to the first nine months of fiscal 2009.

At December 31, 2009, we had $25.0 million outstanding on the Credit Facility and, based on the facility’s borrowing base and other requirements, $10.3 million was available, net of a $2.0 million minimum required availability balance. Amounts available under the credit facility are subject to a borrowing base formula. Changes in the assets within the borrowing base formula can impact the amount of availability. At March 31, 2009, we had $24.1 million outstanding on the GE Facility and, based on that facility’s borrowing base and other requirements, $16.2 million was available.

General and administrative expenses for the publishing segment consist principally of executive, accounting and administrative personnel and related expenses, including professional fees. General and administrative expenses for the publishing segment were $2.3 million or 10.8% of net sales for the third quarter of fiscal 2010 compared to $3.1 million or 12.5% of net sales for the third quarter of fiscal 2009. The $800,000 decrease was primarily due to restructuring severance costs of $330,000 recorded during the third quarter of fiscal 2009, personnel cost savings from the restructuring activities that we undertook during the third quarter of fiscal 2009 as well as a decrease in professional fees, offset by $306,000 of performance based compensation recorded during the third quarter of fiscal 2010 compared to nominal performance based compensation recorded during the prior year quarter.

Read the The complete Report

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