Navarre Corporation reported its financial results for the quarter ending Dec 31st, and in contrast to a net income of $7.2 million for the same quarter a year before, the parent corporation of FUNimation Productions and BCI reported a net loss of $6.1 million.  The loss came despite a 17.1% increase in net sales for the quarter, and was largely the result of a write-off of $12.7 million related to the Musicland bankruptcy (see 'Musicland to Close a Third of Its Stores').  Navarre also took a $4.1 million charge associated with the write-off of an independent music label.

Net sales for Navarre's publishing segment, which includes FUNimation Productions, BCI, and software publisher Encore USA, grew 66% over the same quarter a year ago. Navarre did not break out the totals for each of its publishing units, though a good portion of its publishing growth over a year ago is undoubtedly due to the presence of FUNimation, which Navarre acquired last spring (see 'Navarre Completes FUNimation Purchase'), and which did not contribute to last year's totals.  However the Navarre report singles out Encore and BCI (which released popular He-Man DVDs) for exceeding expectations, and notes that 'FUNimation is currently performing below expectations,' an indication of the current lackluster state of the anime industry (see '2005--A Rough Year for Anime'). 

Another indicator of FUNimation's subpar performance (at least in terms of expectations) is evident in the notation that Navarre will receive $11.1 million out of a fund of some $21.8 million, which was a portion of the purchase price of FUNimation held in escrow.  If FUNimation had been able to perform up to expectations, Navarre would have had to pay out the full $21.8 million.