Navarre/FUNimation Annual Report
Published by 16 June 2009, 10:42 AM EDT

Navarre, FUNimation’s parent company, issued their annual report earlier this month. There are quite a few interesting tidbits we can pull out of this relating to Dragon Ball. Here are just a few of them:

In particular, one licensed property accounted for $32.0 million, or 46%, of FUNimation’s revenues for the fiscal year ended March 31, 2009.

Seems pretty safe to assume that this “one licensed property” was DragonBall. It is certainly interesting how the property seems to account for half the money its licensees make.

Our gross profit decreased to $67.0 million or 10.6% of net sales for fiscal 2009 compared with $101.6 million or 15.4% of net sales for fiscal 2008. The decrease in gross margin of $34.6 million was a result of:

• impairment and other charges of $16.4 million related to accounts receivable reserves, inventory and prepaid royalties associated with the BCI restructuring;

• impairment and other charges of $8.8 million related to license advances, production costs and inventory associated with the FUNimation restructuring; and

• decreased sales volume.

While the restructuring over at FUNimation certainly caused a bit of a hit, it was no surprise and most likely necessary for them to continue operations.

In connection with the FUNimation acquisition, the Company entered into an employment agreement with a key FUNimation employee providing for his employment as President and Chief Executive Officer of FUNimation Productions, Ltd. (“the FUNimation CEO”). Among other items, the agreement provides the FUNimation CEO with the ability to earn two performance-based bonuses in the event that certain financial targets are met by the FUNimation business during the fiscal years ending March 31, 2006-2010. If the total earnings before interest and tax (“EBIT”) of the FUNimation business is in excess of $60.0 million during the period consisting of the fiscal years ending March 31, 2009 and 2010, the FUNimation CEO is entitled to receive a bonus payment in an amount equal to 5% of the EBIT that exceeds $60.0 million; however, this bonus payment shall not exceed $4.0 million. No amounts have been expensed or paid under this agreement as the targets have not been achieved.

While we have noted this plenty of times before, we will continue to bring it up as we get closer to the magical money date for Gen Fukunaga. It appears that they have still not hit the threshold for the bonus payout. 2010 seems to be a de facto big ending point for a lot of organizations, with the Atari license also supposedly ending in January 2010 (but with Namco-Bandai seemingly releasing things on their own, already… who knows?).

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