Rosetta Stone Inc. announced that it is taking actions to right-size its operations in Japan and Korea. The company plans to shift to a partner model to continue serving the Japanese market and this will result in the closing of the Rosetta Stone office in Japan. Rosetta Stone will also be streamlining its operations in Korea with operations now focused more directly on further scaling the Proctor Assisted Learning (PAL) channel. In conjunction with the reduction in Asian-based operations, Rosetta Stone also announced that Pragnesh Shah, President of Global Consumer, will be leaving the company by March 31, 2014. During this period, Shah will lead the restructuring actions in Korea and Japan. With the decreased scope of international Consumer operations, the company does not expect to retain this role and will operate its Consumer business through its existing country managers. As part of these restructuring efforts, Rosetta Stone will reduce its workforce by approximately 66 employees. The company expects to incur a charge in the first quarter for the actions in Asia of $3.5 million to $4.0 million, predominantly for severance expenses, lease termination costs and inventory writedowns.
In addition, the company also announced that it will be taking a $2.5 million to $3.5 million one-time charge in the first quarter of 2014 for space consolidation, primarily at its Arlington, Va. headquarters location.