Of particular note to Dragon Ball fans is the amount noted concerning Namco-Bandai. As reported earlier this month, Namco-Bandai has entered into a five-year agreement with FUNimation to be the sole distributor of Dragon Ball-related video games in North America. Navarre’s CEO Cary Deacon notes in the press release:
The quarter beat our expectations in part due to FUNimation’s stronger than anticipated sales of anime DVD’s as well as a $1.75 million agency fee resulting from a royalty advance paid for the licensing of Dragon Ball Video Game rights to Bandai.
This clearly means that more cash is on the way to FUNimation by way of Namco-Bandai; exactly how much remains to be seen.
Overall, Navarre’s “Publishing Segment” net sales appear to be down over the previous year, though their video game agreement certainly helped:
The publishing segment includes the results of the wholly-owned subsidiaries FUNimation Entertainment, Encore and BCI. For the first quarter ended June 30, 2009, the publishing segment had net sales, before inter-company eliminations, of $24.9 million, a decrease of 9.3%, as compared to net sales of $27.4 million in the first quarter of the prior fiscal year. BCI, whose operations have been winding down since the third quarter of fiscal year 2009, generated nominal sales in the first quarter as compared to $4.4 million in net sales during the first quarter of the prior fiscal year.
Operating income during the first quarter for the publishing segment was $6.1 million, as compared to operating income of $3.4 million in the first quarter of the prior year. The publishing segment’s operating income was positively impacted by FUNimation revenue from the licensing of North American video game rights to Bandai Namco in connection with the Dragon Ball Z brand.
In Navarre’s earnings conference call this morning, all of the above information was reiterated. FUNimation apparently had an “outstanding” quarter, and DVD sales far exceeded expectations at two major retailers (the names of said retailers not being divulged). It was expected that between Afro Samurai 2 being nominated for an Emmy and DBZ’s five-year license extension, FUNimation’s anime market dominance would be assured for the foreseeable future.
In the analyst Q&A segment at the end of the call (primarily with Bob Evans of Craig-Hallum), the time-frame of the DBZ five-year license extension was asked about. Deacon noted that the new agreement would run to mid-2015. It was also noted that FUNimation considers about 60 of their properties “breakthrough” (inferring a meaning of “profitable”), and about 20% of these (~16) are considered “A”-properties, with the Dragon Ball franchise being noted earlier in the call as the clear leader. It is expected that the anime release schedule will slow in Q2, picking up again in Q3 and Q4; this conveniently lines up with FUNimation’s release of “Dragon Box” sets in November of this year (among other titles, of course).
In a separate Schedule 14A filed on July 28th, it was noted that:
In FY2009, the Named Executive Officers did not receive base pay increases, except for Mr. Fukunaga whose base salary was increased 5% from $350,000 to $367,500.
There you have it — your financial analysis for the first quarter of the fiscal year!