Business Segments

6 Months Ended

Sep. 30, 2011

Business Segments [Abstract]

Business Segments

Note 23 — Business Segments

The Company identifies its segments based on its organizational structure, which is primarily by business activity. Operating profit represents earnings before interest expense, interest income, income taxes and allocations of corporate costs to the respective divisions. Inter-company sales are made at market prices. The Company’s corporate office maintains a majority of the Company’s cash and revolving line of credit under its cash management policy.

Navarre operates two business segments: distribution and publishing.

Through the distribution business, the Company distributes computer software, consumer electronics and accessories, video games and home video and also provides complete logistics solutions. The distribution business focuses on providing vendors and retailers with a range of value-added services, including vendor-managed inventory, electronic and internet-based ordering, and gift card fulfillment.

Through the publishing business the Company owns or licenses various widely-known computer software brands through Encore. In addition to retail publishing, Encore also sells directly to consumers through its websites. The publishing business packages, brands, markets and sells published software directly to retailers, third party distributors, and to the Company’s distribution business.

The Company also formerly published and sold anime content through FUNimation Productions, Ltd. (“FUNimation”). The Company sold FUNimation on March 31, 2011 and accordingly, the results of operations of FUNimation for all periods presented are classified as discontinued operations (see further disclosure in Note 2).

Financial information by reportable segment is included in the following summary for the three and six months ended September 30, 2011 and 2010 (in thousands):

	Distribution			Publishing		Eliminations			Consolidated
Three months ended September 30, 2011
Net sales	$	104,037		$	6,315	$	(3,784	)	$	106,568
(Loss) income from operations		(1,670	)		85		—			(1,585	)
(Loss) income from continuing operations, before income tax		(2,389	)		261		—			(2,128	)
Depreciation and amortization expense		763			164		—			927
Capital expenditures		273			50		—			323
Total assets		138,424			28,875		(1,897	)		165,402

	Distribution		Publishing		Eliminations			Consolidated
Three months ended September 30, 2010
Net sales (1)	$	118,761	$	8,656	$	(6,941	)	$	120,476
Income from operations		1,699		1,458		—			3,157
Income (loss) from continuing operations, before income tax (2)		1,712		1,583		(766	)		2,529
Depreciation and amortization expense		828		163		—			991
Capital expenditures		79		22		—			101
Total assets (3)		117,413		32,122		(7,733	)		141,802

	Distribution			Publishing		Eliminations			Consolidated
Six months ended September 30, 2011
Net sales	$	205,771		$	13,522	$	(8,709	)	$	210,584
(Loss) income from operations		(3,909	)		1,729		—			(2,180	)
(Loss) income from continuing operations, before income tax		(5,172	)		2,081		—			(3,091	)
Depreciation and amortization expense		1,570			329		—			1,899
Capital expenditures		514			61		—			575
Total assets		138,424			28,875		(1,897	)		165,402

	Distribution		Publishing		Eliminations			Consolidated
Six months ended September 30, 2010
Net sales (1)	$	214,714	$	15,710	$	(11,156	)	$	219,268
Income from operations		1,708		2,605		—			4,313
Income from continuing operations, before income tax (2)		1,711		2,876		(1,556	)		3,031
Depreciation and amortization expense		1,637		245		—			1,882
Capital expenditures		378		57		—			435
Total assets (3)		117,413		32,122		(7,733	)		141,802

(1)	For the three and six months ended September 30, 2010, $9.0 million and $16.7 million, respectively, net sales from discontinued operations were excluded from publishing sales above.
(2)	Eliminations represent the interest expense previously allocated to FUNimation, but which amount was not allowed to be allocated to discontinued operations at the time of the discontinued operations reclassification.
(3)	At September 30, 2010, $39.8 million in assets of discontinued operations were excluded from total publishing assets above.

Product Line Data

The following table provides net sales by product line for each business segment for the three and six months ended September 30, 2011 and 2010 (in thousands):

	Distribution		Publishing		Eliminations			Consolidated
Three months ended September 30, 2011
Software	$	77,528	$	6,315	$	(3,784	)	$	80,059
Consumer electronics and accessories		14,816		—		—			14,816
Video games		5,556		—		—			5,556
Home video		6,137		—		—			6,137
Consolidated	$	104,037	$	6,315	$	(3,784	)	$	106,568

	Distribution		Publishing		Eliminations			Consolidated
Three months ended September 30, 2010
Software	$	94,372	$	8,656	$	(6,941	)	$	96,087
Consumer electronics and accessories		6,468		—		—			6,468
Video games		7,924		—		—			7,924
Home video		9,997		—		—			9,997
Consolidated	$	118,761	$	8,656	$	(6,941	)	$	120,476

	Distribution		Publishing		Eliminations			Consolidated
Six months ended September 30, 2011
Software	$	151,956	$	13,522	$	(8,709	)	$	156,769
Consumer electronics and accessories		27,042		—		—			27,042
Video games		10,352		—		—			10,352
Home video		16,421		—		—			16,421
Consolidated	$	205,771	$	13,522	$	(8,709	)	$	210,584

	Distribution		Publishing		Eliminations			Consolidated
Six months ended September 30, 2010
Software	$	172,797	$	15,710	$	(11,156	)	$	177,351
Consumer electronics and accessories		11,257		—		—			11,257
Video games		11,594		—		—			11,594
Home video		19,066		—		—			19,066
Consolidated	$	214,714	$	15,710	$	(11,156	)	$	219,268

Geographic Data

The following table provides net sales by geographic region for the three and six months ended September 30, 2011 and 2010 and property, plant and equipment, net of accumulated depreciation by geographic region at September 30, 2011 and March 31, 2011 (in thousands):

	Three Months Ended				Six Months Ended
	September 30,				September 30,
Net Sales	2011		2010		2011		2010
United States	$	95,995	$	110,090	$	191,208	$	201,055
International		10,573		10,386		19,376		18,213
Total net sales	$	106,568	$	120,476	$	210,584	$	219,268

Property, Plant and Equipment, Net	September 30, 2011		March 31,2011
United States	$	7,869	$	8,829
International		344		470
Total property, plant and equipment, net	$	8,213	$	9,299

Sales Channel Data

The following table provides net sales by sales channel for the three and six months ended September 30, 2011 and 2010 (in thousands):

	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Retail	$	91,869	$	111,091	$	182,390	$	202,286
E-commerce		14,699		9,385		28,194		16,982
Total net sales	$	106,568	$	120,476	$	210,584	$	219,268