Note 16 - Subsequent Event
|9 Months Ended
Mar. 31, 2020
|Notes to Financial Statements
|Subsequent Events [Text Block]
March 11, 2020,the World Health Organization declared the current COVID-
19outbreak to be a global pandemic. In response to this declaration and the rapid spread of COVID-
19within the United States, federal, state and local governments throughout the country have imposed varying degrees of restrictions on social and commercial activity to promote social distancing in an effort to slow the spread of the virus. These measures have begun to have a significant adverse impact on many sectors of the economy, including non-essential retail commerce.
April 1, 2020we announced our action plan in response to the COVID-
19health crisis including, among other things, the continued temporary closure of the Company’s design centers and most of our manufacturing facilities, the furlough of approximately
70%of our global workforce, the decision by the Company’s CEO to temporarily forego his salary through
June 30, 2020,a temporary up to
40%reduction in salaries for all senior management and up to
20%for other salaried employees through
June 30, 2020,a temporary reduction of
50%in cash compensation of the Company’s directors, the elimination of all non-essential operating expenses, a delay in discretionary capital expenditures and the temporary halt of the share repurchase program. We paid our furloughed associates through
April 2, 2020and impacted employees will continue to receive enrolled benefits for up to
twomonths. Recently, at the quarterly Board of Directors meeting held on
April 28, 2020,our Board temporarily suspended the Company’s regular quarterly cash dividend.
Customers can schedule appointments with our design consultants and interact with them through Live Chat online at
www.ethanallen.com. Design consultants work remotely utilizing technology, including the Ethan Allen inHome augmented reality app, the
3Droom planner tool, Skype and FaceTime. We continue to operate our
www.ethanallen.comwebsite and distribution centers to deliver products to our customers.
We continue to assess the situation on a daily basis; however, as of the date of this filing, we are unable to predict when and how quickly we will be able to resume full retail and manufacturing operations. We began reopening design centers in a number of U.S. states since
May 1, 2020and to increase production in some of our North American manufacturing plants. We look forward to reopening all of our design centers but expect that this situation will have a significant adverse effect on our reported results for fiscal
fourthfiscal quarter, and possibly beyond.
While we expect the effects of COVID-
19to negatively impact our results of operations, cash flows and financial position, the current level of uncertainty over the economic and operational impacts of COVID-
19means the related financial impact cannot be reasonably estimated at this time. Our consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented. Such estimates and assumptions affect, among other things, long-lived asset and indefinite-lived intangible asset valuation; inventory valuation; valuation of deferred income taxes; and income tax contingencies. Events and changes in circumstances arising after
March 31, 2020,including those resulting from the impacts of COVID-
19,will be reflected in management’s estimates for future periods.