Item 2.02 Results of Operations and Financial Condition
The information set forth under Item 4.02 is incorporated into this Item 2.02 by
reference.
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On April 21, 2021, the Audit Committee of the Board of Directors (the "Audit
Committee") of Vertiv Holdings Co (the "Company"), in response to the statement
released by the U.S. Securities and Exchange Commission (the "SEC") with respect
to the balance sheet classification of certain contracts that may be settled in
an entity's stock, such as warrants, and after discussion with its independent
registered public accounting firm, Ernst & Young LLP, its valuation firm and its
legal advisors, concluded that the Company's previously issued consolidated
financial statements as of and for the year ended December 31, 2020 included in
our Annual Report on Form 10-K and the Company's unaudited condensed
consolidated financial statements for the three months ended and year-to-date
periods ended March 31, 2020, June 30, 2020 and September 30, 2020
(collectively, the "Impacted Filings") included in our previously filed
Quarterly Reports on Form 10-Q for those periods should be restated to reflect
the impact of this guidance by the SEC and accordingly, should no longer be
relied upon. Similarly, any previously furnished or filed reports, related
earnings releases, investor presentations or similar communications of the
Company describing the Company's financial results for the Impacted Filings
should no longer be relied upon.
Background
On April 12, 2021, the SEC issued a statement (the "Statement") on the
accounting and reporting considerations for warrants issued by special purpose
acquisition companies. The Statement referenced the guidance included in U.S.
Generally Accepted Accounting Principles that entities must consider in
determining whether to classify contracts that may be settled in its own stock,
such as warrants, as equity or as an asset or liability.
After considering the Statement, the Company re-evaluated its historical
accounting for its warrants and concluded it must amend the accounting treatment
of the public warrants and private placement warrants (collectively, the
"Warrants") issued in connection with the initial public offering of GS
Acquisition Holdings Corp ("GSAH") and recorded to the Company's consolidated
financial statements as a result of the Company's merger with GSAH (the
"Merger") and the reverse recapitalization that occurred on February 7, 2020. At
that time, the Warrants were presented within equity and did not impact any
reporting periods prior to the Merger.
Because the Warrants may be settled in cash upon the occurrence of a tender
offer or exchange that involves 50% or more of the Company's Class A
shareholders, an event that is outside the control of the Company, the Company
has concluded that the Warrants do not meet the conditions to be classified
within equity under the Statement and should be presented as a liability and
marked to fair value each reporting period. The Company intends to promptly file
restated financial statements for the year ended December 31, 2020 on Form
10-K/A. The relevant unaudited interim financial information for each of the
quarters ended during the year ended December 31, 2020 will also be restated in
the Form 10-K/A.
In light of the restatement discussed above, the Company has reassessed the
effectiveness of its disclosure controls and procedures and internal controls
over financial reporting as of December 31, 2020, and has concluded that its
remediation plan of its previously disclosed material weaknesses will be
expanded to address this matter to improve the process and controls in the
determination of the appropriate accounting and classification of our financial
instruments and key agreements. As a result of the restatement, we expect to
recognize incremental non-operating expense of $140 million to $160 million. We
expect that there will be no impact to our historically reported cash and cash
equivalents, or cash flows from operating, investing or financing activities. We
anticipate that the first quarter 2021 non-operating expense will be between $10
million and $15 million. All estimates contained in this report are subject to
change as management completes the Form 10-K/A, and the Company's independent
registered public accounting firms has not audited or reviewed these estimates
or ranges. An audit of annual financial statements and/or review of quarterly
financial statements could result in material changes to these ranges and
estimates. Further details and remediation plans will be included in the
Company's Form 10-K/A.
The Company's management and the Audit Committee have discussed the matters
disclosed in this Item 4.02 with the Company's independent registered public
accounting firm, Ernst & Young LLP.
Item 7.01 Regulation FD
The information set forth under 4.02 is incorporated into this Item 7.01 by
reference.
On April 22, 2021, the Company issued a press release related to the matters
described in Item 4.02. A copy of the press release is included as Exhibit 99.1
and incorporated herein by reference.
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The information furnished pursuant to this Item 7.01 shall not be deemed to be
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, and will not be incorporated by reference into any filing under the
Securities Act, unless specifically identified therein as being incorporated
therein by reference.
Item 9.01 (d) Financial Statements and Exhibits
Exhibit No. Exhibit Description
99.1 Press release of Vertiv Holdings Co, dated April 22, 2021,
reporting restatement of previously issued financial statements
related to accounting for warrants issued by SPACs
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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