HAMILTON BEACH BRANDS HOLDING COMPANY Item 2.02 Results of Operations and Financial Condition OnJune 11, 2020 ,Hamilton Beach Brands Holding Company (the "Company") issued a press release regarding its first quarter 2020 unaudited financial results, a copy of which is furnished as Exhibit 99.1 hereto. Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. OnJune 11, 2020 , the Audit Review Committee of the Board of Directors (the "Audit Review Committee") of the Company, after discussion with management of the Company andErnst & Young LLP , the Company's independent registered public accounting firm, concluded that the Company's previously issued consolidated financial statements as of and for the years endedDecember 31, 2019 and 2018, each of the quarters during the years endedDecember 31, 2019 and 2018, and other financial data relating to these periods, including the financial data tables furnished to theSecurities and Exchange Commission on Form 8-K, should no longer be relied upon. The Company intends to file restated consolidated financial statements for all periods referenced above as soon as practicable. As previously disclosed onMay 11, 2020 , during the quarter endedMarch 31, 2020 , the Company discovered certain accounting irregularities with respect to the timing of recognition of selling and marketing expenses and the classification of certain expenditures within the statement of operations at its Mexican subsidiary. The Company's Audit Review Committee commenced an internal investigation, with the assistance of outside counsel and other third party experts, which has been primarily focused on the realizability of certain assets of the Mexican subsidiary in order to determine the impact these matters may have on the Company's consolidated financial results. As a result of this investigation, the Company, along with the Audit Review Committee and its third party experts, has concluded that certain employees of the Company's Mexican subsidiary engaged in unauthorized transactions with the Company's Mexican subsidiary that resulted in the recording of assets that are not realizable. As a result, the Company will record a non-cash write-off for certain amounts erroneously included in the Company's historical financial statements in trade receivables, prepaid expenses and other current assets and will restate its financial statements as of and for the years endedDecember 31, 2019 and 2018 and each of the quarters during the years endedDecember 31, 2019 and 2018. The Company estimates the impact of these adjustments to be a reduction to net income from continuing operations in the range of approximately$6 million to$9 million for the year endedDecember 31, 2019 and$4 million to$6 million for the year endedDecember 31, 2018 . These preliminary estimates are based on currently available information and are subject to change during the course of the ongoing investigation. The investigation is continuing and there is no assurance that additional items will not be identified. In addition, the Company will be correcting certain other errors previously identified as immaterial to the consolidated financial statements. The Company is working diligently to complete the restated financial statements and expects to file its amended Form 10-K, which will include the restated financial statements, and the Form 10-Q for the period endedMarch 31, 2020 as soon as practicable. In connection with the restatement, management of the Company has determined that a material weakness existed in the Company's internal control over financial reporting as ofDecember 31, 2019 . As a result, the Company's Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were not effective as ofDecember 31, 2019 , and the Company's management has concluded that its internal control over financial reporting was not effective as ofDecember 31, 2019 . The Company's management and Audit Review Committee have discussed the matters disclosed in this Item 4.02 with the Company's independent registered public accounting firm,Ernst & Young LLP . --------------------------------------------------------------------------------
Forward Looking Statements
This filing contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, including statements regarding the outcome and
impact of the Company's internal investigation and the Company's expected
financial results. These statements are based on current expectations as of the
date of this filing and involve a number of risks and uncertainties, which may
cause results to differ materially from those indicated by these forward-looking
statements. These risks include, without limitation, the uncertainty surrounding
the timing and results of the finalization of the Audit Review Committee
investigation, the potential need for restatement of the Company's financial
statements for the year ended
(d) Exhibits
99.1 Press Release, dated
(d) Exhibits
99.1 Press Release dated June 11, 2020 , issued by Hamilton Beach
Brands Holding Company , announcing the filing of a Notification
of Non-Reliance on Prior Financial Statements and providing a
business update.
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