FUNimation Acquired By Navarre

Navarre Corporation, a publisher and distributor of a broad range of home entertainment and multimedia software products has announced that it has executed a definitive agreement to acquire 100% of the general and limited partnership interests of FUNimation Productions Ltd., one of the leading home video distributors and licensors of Japanese anime including Dragon Ball, Dragon Ball Z, Dragon Ball GT, Yu Yu Hakusho, Case Closed and Full Metal Alchemist.

Navarre, which is based in New Hope, Minnesota, has agreed to a payment upon closing of $100.5 million plus an issuance of between 1,495,216 and 1,827,486 of Navarre common stock (last traded at $19.13). Additionally the sellers could receive up to $17 million in cash to be paid over five years if FUNimation achieves certain agreed upon financial targets during that time periond. Navarre anticipates that the transaction will close before May 15, 2005.

Navarre has a highly sophisticated distribution division for PC software, video games, CD audio and DVD video. Its client specific delivery systems allow its product lines to be seamlessly distributed to over 18,000 retail locations throughout North America where it has built distribution partnerships with a broad base of leading retailers across the mass merchant, music, computer and office specialty, wholesale club and military PX channels, providing its clients with inventory management, Web-based ordering, fulfillment and marketing and EDI customer and vendor interface.

Navarre has been expanding its publishing division, which currently includes Encore, a Los Angeles-based interactive publisher in the PC and CD-Rom market, and BCI Eclipse, which produces niche DVD video and audio products. With its strong library of licensed properties Funimation will greatly expand Navarre's publishing division and the distribution of FUNimation's DVDs (and those of 4Kids and the other companies FUNimation has been distributing) should benefit from Navarre's logistical expertise.

FUNimation Productions has demonstrated substantial growth and profitability over the past few years with net sales of $49.8 million in 2001, $63.7 million in 2002 and $81.6 million in 2003 and pre-tax net income of $20 million in 2001, $24.9 million in 2002 and $30.5 million in 2003.

Gen Fukunaga, president and founder of FUNimation Productions, will remain in charge of the FUNimation team. He commented: "We are extremely excited to join the Navarre family of companies. Utilizing Navarre's capital structure and distribution efficiencies will aid FUNimation in its ongoing business."