On July 27, 2023, Funko, Inc. (the “Company”) implemented a reduction in force expected to involve approximately 180-200 employees, representing approximately 12-13% of the Company’s workforce. In connection with the reduction in force, the Company expects to incur aggregate charges between approximately $2.4 million and $2.8 million, the majority of which is expected to be incurred in the third quarter of 2023. The charges are expected to be settled substantially in cash and almost entirely consist of one-time termination charges arising from severance obligations and other customary employee benefit payments in connection with a reduction in force.
The reduction in force is expected to result in approximately $20 million to $22 million of annualized run rate cash savings, excluding potential hiring of new employees or other additions to the Company’s costs and expenses. This action is part of the Company’s initiatives to re-balance its cost structure into prioritized areas that the Company believes will drive long-term growth and improve margins. As the Company focuses on these goals, it is consolidating functions and eliminating or reducing investment in areas of lower focus.
The Company may incur additional expenses not currently contemplated due to events associated with the reduction in force. The charges that the Company expects to incur in connection with the reduction in force and annualized run rate cash savings are estimates and subject to a number of assumptions, and actual results may differ materially.
Forward Looking Statements
This Current Report on Form 8-K (“Form 8-K”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Form 8-K that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding anticipated charges and future annualized run rate cash savings in connection with the reduction in force, anticipated timeline of the reduction in force, the Company’s strategic focuses, and future growth and margins. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: the risk that the reduction in force may not achieve the intended benefits; our ability to attract and retain qualified employees and maintain our corporate culture; our ability to execute our business strategy and manage growth; our ability to manage our inventories; our ability to maintain and realize the full value of our license agreements; impacts from economic downturns; changes in the retail industry and markets for our consumer products; and other important factors discussed under the caption “Risk Factors” in our Form 10-Q for the fiscal quarter ended March 31, 2023 and our other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made in this Form 8-K. Any such forward-looking statements represent management’s estimates as of the date of this Form 8-K. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this Form 8-K.
