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Ethan Allen plans to consolidate Certain Retail Locations
Jan '08
Ethan Allen Interiors Inc announced a plan to consolidate the operations of about twelve of its retail design centers and two service centers. For the most part, business currently serviced by these locations will be transferred to other locations serving the same general market areas.

All customer orders will continue to be serviced in the ordinary course of business. Of the approximately 175 full and part-time positions affected by this decision, about half are expected to transfer into nearby operations.

In the second half of our fiscal year ending June 30, 2008, the Company expects to record pre-tax restructuring, impairment, and other related charges of approximately $9.5 to $10.5 million, the majority of which will be non-cash in nature representing an after-tax impact of $6.0 to $6.6 million or $0.20 to $0.22 per diluted share. The company expects about half of this charge to be booked in the quarter ending March 31, 2008 and the remainder in the quarter ending June 30, 2008.

The Company owns the real estate associated with five of the locations being consolidated and leases the others. The sale of these owned properties, which is expected over the next twelve to fifteen months, is expected to generate pre-tax gains of $4.0 to $5.0 million. Any gains from real estate dispositions will be recognized in the quarter in which the transactions occur.

From a cash perspective, the net pretax cash flow from this consolidation will be positive and is expected to net to approximately $11.0 to $12.0 million, including a reduction in inventory of about $6.0 million.

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