HAMILTON BEACH BRANDS HOLDING COMPANY
		(Exact name of registrant as specified in its charter)
	DELAWARE		31-1236686
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
	4421 WATERFRONT DR. GLEN ALLEN, VA		23060
	(Address of principal executive offices)		(Zip code)
		(804) 273-9777
		(Registrant's telephone number, including area code)
		N/A
		(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A Common Stock, Par Value $0.01 Per Share		HBB		New York Stock Exchange

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Part I

FINANCIAL INFORMATION

Item 1. Financial Statements

HAMILTON BEACH BRANDS HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

					As Restated				As Restated and Recast
	MARCH 31 2020				DECEMBER 31 2019				MARCH 31 2019
	(In thousands)
Assets
Current assets
Cash and cash equivalents	$	2,078			$	2,142			$	1,636
Trade receivables, net	69,569				108,381				79,102
Inventory	89,986				109,806				120,707
Prepaid expenses and other current assets	16,427				11,345				17,379
Current assets of discontinued operations	324				5,383				24,692
Total current assets	178,384				237,057				243,516
Property, plant and equipment, net	22,465				22,324				20,984
Goodwill	6,253				6,253				6,253
Other intangible assets, net	2,818				3,141				4,174
Deferred income taxes	5,128				6,248				3,166
Deferred costs	11,172				10,941				8,316
Other non-current assets	2,150				2,085				2,403
Non-current assets of discontinued operations	—				614				4,446
Total assets	$	228,370			$	288,663			$	293,258
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	61,578			$	111,348			$	73,720
Accounts payable to NACCO Industries, Inc.	496				496				2,425
Revolving credit agreements	34,547				23,497				54,812
Accrued compensation	8,126				15,027				8,398
Accrued product returns	7,536				8,697				9,314
Other current liabilities	14,097				12,534				17,705
Current liabilities of discontinued operations	1,099				29,723				21,473
Total current liabilities	127,478				201,322				187,847
Revolving credit agreements	35,000				35,000				30,000
Other long-term liabilities	12,493				16,075				18,619
Non-current liabilities of discontinued operations	—				—				3,834
Total liabilities	174,972				252,397				240,300
Stockholders' equity
Class A Common stock	99				98				95
Class B Common stock	41				41				44
Capital in excess of par value	55,062				54,509				52,520
Treasury stock	(5,960		)		(5,960		)		—
Retained earnings	23,996				3,710				17,506
Accumulated other comprehensive loss	(19,842		)		(16,132		)		(17,207		)
Total stockholders' equity	53,396				36,266				52,958
Total liabilities and stockholders' equity	$	228,370			$	288,663			$	293,258

See notes to unaudited condensed consolidated financial statements.

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HAMILTON BEACH BRANDS HOLDING COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	THREE MONTHS ENDED MARCH 31
					As Restated and Recast
	2020				2019
	(In thousands, except per share data)
Revenue	$	120,846			$	126,642
Cost of sales	95,806				99,940
Gross profit	25,040				26,702
Selling, general and administrative expenses	24,213				26,246
Amortization of intangible assets	324				345
Operating profit	503				111
Interest expense, net	603				663
Other expense (income), net	1,702				(197		)
Income (loss) from continuing operations before income taxes	(1,802		)		(355		)
Income tax expense (benefit)	(448		)		307
Net income (loss) from continuing operations	(1,354		)		(662		)
Income (loss) from discontinued operations, net of tax	22,866				(2,723		)
Net income (loss)	$	21,512			$	(3,385	)
Basic and diluted earnings (loss) per share:
Continuing operations	$	(0.10	)		$	(0.05	)
Discontinued operations	1.68				(0.20		)
Basic and diluted earnings (loss) per share	$	1.58			$	(0.25	)
Basic weighted average shares outstanding	13,625				13,786
Diluted weighted average shares outstanding	13,625				13,786

See notes to unaudited condensed consolidated financial statements.

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HAMILTON BEACH BRANDS HOLDING COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	THREE MONTHS ENDED MARCH 31
					As Restated and Recast
	2020				2019
	(In thousands)
Net income (loss)	$	21,512			$	(3,385	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	1,057				214
(Loss) gain on long-term intra-entity foreign currency transactions	(4,910		)		15
Cash flow hedging activity	(162		)		(422		)
Reclassification of hedging activities into earnings	110				2
Reclassification of pension adjustments into earnings	195				84
Total other comprehensive loss, net of tax	(3,710		)		(107		)
Comprehensive income (loss)	$	17,803			$	(3,492	)

See notes to unaudited condensed consolidated financial statements.

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HAMILTON BEACH BRANDS HOLDING COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	THREE MONTHS ENDED MARCH 31
					As Restated and Recast
	2020				2019
	(In thousands)
Operating activities
Net income (loss) from continuing operations	$	(1,354	)		$	(662	)
Adjustments to reconcile net income (loss) from continuing operations to net cash used for operating activities:
Depreciation and amortization	792				1,048
Deferred income taxes	1,182				2,311
Stock compensation expense	555				807
Other	343				(31		)
Net changes in operating assets and liabilities:
Affiliate payable	—				9
Trade receivables	34,811				19,889
Inventory	17,047				2,263
Other assets	(5,637		)		(2,698		)
Accounts payable	(49,550		)		(45,593		)
Other liabilities	(8,231		)		(17,582		)
Net cash used for operating activities from continuing operations	(10,042		)		(40,239		)
Investing activities
Expenditures for property, plant and equipment	(625		)		(854		)
Net cash used for investing activities from continuing operations	(625		)		(854		)
Financing activities
Net additions to revolving credit agreements	11,102				38,165
Cash dividends paid	(1,226		)		(1,177		)
Net cash provided by financing activities from continuing operations	9,876				36,988
Cash flows from discontinued operations
Net cash used for operating activities from discontinued operations	(4,968		)		(9,896		)
Net cash provided by investing activities from discontinued operations	6				21
Net cash provided by financing activities from discontinued operations	—				9,400
Cash used for discontinued operations	(4,962		)		(475		)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	1,376				(51		)
Cash, cash equivalents and restricted cash
Increase (decrease) for the period from continuing operations	585				(4,156		)
Decrease for the period from discontinued operations	(4,962		)		(475		)
Balance at the beginning of the period	7,164				6,352
Balance at the end of the period	$	2,787			$	1,721
Reconciliation of cash, cash equivalents and restricted cash
Continuing operations:
Cash and cash equivalents	$	2,078			$	1,636
Restricted cash included in prepaid expenses and other current assets	186				—
Restricted cash included in other non-current assets	378				—
Cash and cash equivalents of discontinued operations	145				85
Total cash, cash equivalents, and restricted cash	$	2,787			$	1,721

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See notes to unaudited condensed consolidated financial statements.

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HAMILTON BEACH BRANDS HOLDING COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

	Class A Common Stock			Class B Common Stock			Capital in Excess of Par Value			Treasury Stock			Retained Earnings (1)			Accumulated Other Comprehensive Income (Loss) (1)			Total Stockholders' Equity (1)
	(In thousands, except per share data)
As Restated Balance, January 1, 2020	$	98		$	41		$	54,509		$	(5,960	)	$	3,710		$	(16,132	)	$	36,266
Net income	—			—			—			—			21,512			—			21,512
Issuance of common stock, net of conversions	1			—			(1		)	—			—			—			—
Share-based compensation expense	—			—			554			—			—			—			554
Cash dividends on Class A Common and Class B Common $0.09 per share	—			—			—			—			(1,226		)	—			(1,226		)
Other comprehensive loss	—			—			—			—			—			(4,015		)	(4,015		)
Reclassification adjustment to net income	—			—			—			—			—			305			305
Balance, March 31, 2020	$	99		$	41		$	55,062		$	(5,960	)	$	23,996		$	(19,842	)	$	53,396
As Restated Balance, January 1, 2019	$	93		$	44		$	51,714		$	—		$	22,068		$	(17,101	)	$	56,818
Net loss	—			—			—			—			(3,385		)	—			(3,385		)
Issuance of common stock, net of conversions	2			—			(1		)	—			—			—			1
Share-based compensation expense	—			—			807			—			—			—			807
Cash dividends on Class A Common and Class B Common $0.085 per share	—			—			—			—			(1,177		)	—			(1,177		)
Other comprehensive loss	—			—			—			—			—			(192		)	(192		)
Reclassification adjustment to net loss	—			—			—			—			—			86			86
As Restated Balance, March 31, 2019	$	95		$	44		$	52,520		$	—		$	17,506		$	(17,207	)	$	52,958

See notes to unaudited condensed consolidated financial statements.

(1) As Restated

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HAMILTON BEACH BRANDS HOLDING COMPANY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

(Tabular amounts in thousands, except as noted and per share amounts)

NOTE 1—Basis of Presentation and Recently Issued Accounting Standards

Basis of Presentation

Hamilton Beach Brands Holding Company is a holding company and operates through its wholly-owned subsidiary, Hamilton Beach Brands, Inc. (“HBB”) (collectively “Hamilton Beach Holding” or the “Company”). HBB is a leading designer, marketer, and distributor of branded, small electric household and specialty housewares appliances, as well as commercial products for restaurants, fast food chains, bars, and hotels. HBB participates in the consumer, commercial and specialty small kitchen appliance markets.

The Company previously operated through its other wholly-owned subsidiary, The Kitchen Collection, LLC ("KC"), which is reported as discontinued operations in all periods presented herein. KC completed its dissolution on April 3, 2020 with a pro-rata distribution of its remaining assets to creditors, at which time the KC legal entity ceased to exist. See Note 3 for further information on discontinued operations.

The financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2019.

Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the remainder of the year due to the highly seasonal nature of our primary markets. A majority of revenue and operating profit typically occurs in the second half of the calendar year when sales of our products to retailers and consumers historically increase significantly for the fall holiday-selling season.

HBB maintains a $115.0 million senior secured floating-rate revolving credit facility (the “HBB Facility”) that expires on June 30, 2021, within one year after the issuance of these financial statements.  Given the market conditions including unfavorable pricing terms, HBB has not yet completed its refinancing of the HBB Facility prior to June 30, 2020.  HBB has approved and begun the refinancing process, which is considered customary.   Based on the current status of the refinancing and HBB’s history of successfully refinancing its debt, HBB believes that it is probable that the HBB Facility will be refinanced before its maturity.  

Accounting Standards Not Yet Adopted

The Company is an emerging growth company and has elected not to opt out of the extended transition period for complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public or nonpublic entities, the Company can adopt the new or revised standard at the time nonpublic entities adopt the new or revised standard.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)," which requires an entity to recognize assets and liabilities for the rights and obligations created by leased assets. In June 2020, the FASB issued ASU 2020-05 to defer the effective date by a year. For nonpublic entities, the amendments are currently effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, however the FASB has proposed to defer the effective date by one year. Early adoption is permitted. The Company is planning to adopt ASU 2016-02 when required and is currently evaluating to what extent ASU 2016-02 will affect the Company's financial position, results of operations, cash flows and related disclosures.

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In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326)," which requires an entity to recognize credit losses as an allowance rather than as a write-down. For nonpublic entities, the amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company is planning to adopt ASU 2016-03 for its year ending December 31, 2023 and is currently evaluating to what extent ASU 2016-13 will affect the Company's financial position, results of operations, cash flows and related disclosures.

NOTE 2— Restatement of Previously Issued Financial Statements

Restatement

During the quarter ended March 31, 2020, the Company discovered certain accounting irregularities at its Mexican subsidiaries. The Company’s Audit Review Committee commenced an internal investigation, with the assistance of outside counsel and other third party experts. As a result of this investigation, the Company, along with the Audit Review Committee and its third party experts, concluded that certain former employees of one of the Company’s Mexican subsidiaries engaged in unauthorized transactions with the Company’s Mexican subsidiaries that resulted in expenditures being deferred on the balance sheet beyond the period for which the costs pertained. As a result, the Company recorded a non-cash write-off for certain amounts included in the Company’s historical consolidated financial statements in trade receivables and prepaid expenses and other current assets, among other corrections, related to these transactions, and restated its consolidated financial statements as of December 31, 2019 and 2018, and for the years ended December 31, 2019, 2018 and 2017 and each of the quarters during the years ended December 31, 2019 and 2018 on Form 10-K/A for the year ended December 31, 2019. During the course of the investigation, certain expenses at the Company's Mexican subsidiaries were found to be incorrectly classified within the consolidated statement of operations and have also been corrected in the restatement. These misstatements are described in restatement reference (a) through (d) below.

The restatement also includes corrections for other errors previously identified as immaterial, individually and in the aggregate, to our consolidated financial statements.

Description of Misstatements

(a) Write-off of Assets: Certain former employees of one of the Company's Mexican subsidiaries engaged in unauthorized transactions with the Company’s Mexican subsidiaries and vendors in which the employees had an interest. In doing so, expenditures were deferred on the balance sheet beyond the period for which the costs pertained. The amounts were recorded as trade receivables, prepaid expenses and other current assets, and reductions in accrued liabilities. The amounts have been written off to selling, general and administrative expense. Where these write-offs caused prepaid assets and other current assets balance to become a liability, the balance has been reclassed from prepaid expenses and other assets to other current liabilities.

(b) Reversal of Revenue: Certain former employees of one of our Mexican subsidiaries engaged in sales activities to customers in which the employees had an interest. The Company concluded that these unauthorized transactions did not meet the criteria for revenue recognition at the time of sale and the revenue has been reversed.

(c) Correction of misclassification of Selling and Marketing Expenses: Certain former employees of one of the Mexican subsidiaries engaged a third-party, in which the employees had an interest, to perform selling and marketing activities on behalf of the Mexican subsidiaries. Amounts paid for the selling and marketing activities had previously been treated as variable consideration and reflected as a reduction to revenue; however, the amounts should be reflected as selling, general and administrative expenses.

(d) Correction for the timing of recognition of customer price concessions: Customer price concessions at our Mexican subsidiaries were not accrued timely in order to obscure the increased expenses due to unauthorized transactions as described above.

(e) Tax adjustments for corrections: The tax impacts of the corrections have been recorded.

(f) Correction of other immaterial errors

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Restatement Tables

The restatement tables below present a reconciliation from the previously reported to the restated values as of and for the three months ended March 31, 2019 and as of December 31, 2019. The values as previously reported were derived from our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 filed on April 25, 2019 and from our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed on February 26, 2020.

Additionally, in the fourth quarter of 2019, KC met the requirements to be reported as a discontinued operation. The following consolidated financial tables present a reconciliation to reflect KC as a discontinued operation for all periods presented and are labeled "Recast". See Note 3, Discontinued Operations for more information.

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CONDENSED CONSOLIDATED BALANCE SHEETS

	December 31, 2019
	As Previously Reported				Restatement Impacts				Restatement Reference		As Restated
Assets
Current assets
Cash and cash equivalents	$	2,142			$	—					$	2,142
Trade receivables, net	113,781				(5,400		)		a,b,d		108,381
Inventory	109,621				185				f		109,806
Prepaid expenses and other current assets	23,102				(11,757		)		a,b,f		11,345
Current assets of discontinued operations	5,383				—						5,383
Total current assets	254,029				(16,972		)				237,057
Property, plant and equipment, net	22,324				—						22,324
Goodwill	6,253				—						6,253
Other intangible assets, net	3,141				—						3,141
Deferred income taxes	3,853				2,395				e		6,248
Deferred costs	10,941				—						10,941
Other non-current assets	2,085				—						2,085
Non-current assets of discontinued operations	614				—						614
Total assets	$	303,240			$	(14,577	)				$	288,663
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	111,117			$	231			f		$	111,348
Accounts payable to NACCO Industries, Inc.	496				—						496
Revolving credit agreements	23,497				—						23,497
Accrued compensation	14,277				750				f		15,027
Accrued product returns	8,697				—						8,697
Other current liabilities	12,873				(339		)		a,e		12,534
Current liabilities of discontinued operations	29,723				—						29,723
Total current liabilities	200,680				642						201,322
Revolving credit agreements	35,000				—						35,000
Other long-term liabilities	12,501				3,574				e		16,075
Non-current liabilities of discontinued operations	—				—						—
Total liabilities	248,181				4,216						252,397
Stockholders’ equity
Preferred stock, par value $0.01 per share	—				—						—
Class A Common stock, par value $0.01 per share; 9,805 shares issued as of December 31, 2019	98				—						98
Class B Common stock, par value $0.01 per share, convertible into Class A on a one-for-one basis; 4,076 shares issued as of December 31, 2019	41				—						41
Capital in excess of par value	54,344				165				f		54,509
Treasury stock	(5,960		)		—						(5,960		)
Retained earnings	22,524				(18,814		)		a,b,d,e,f		3,710
Accumulated other comprehensive loss	(15,988		)		(144		)		a,b,d,e		(16,132		)
Total stockholders’ equity	55,059				(18,793		)				36,266
Total liabilities and stockholders' equity	$	303,240			$	(14,577	)				$	288,663

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(a) Write-off of Assets: The correction of these misstatements resulted in a decrease to trade receivables of $2.5 million, a reduction to prepaid expenses and other current assets of $12.4 million, and an increase to other current liabilities of $0.9 million

(b) Reversal of Revenue: The correction of these misstatements resulted in a decrease to trade receivables of $1.3 million and an increase to prepaid expenses and other current assets of $0.2 million

(d) Correction for the timing of recognition of customer price concessions: The correction of these misstatements resulted in a decrease to trade receivables of $1.6 million

(e) Tax adjustments for corrections: The correction of these misstatements resulted in an increase to deferred income taxes of $2.4 million, and a decrease to other current liabilities of $1.2 million, and an increase to other long-term liabilities of $3.6 million

(f) Correction of other immaterial errors: The correction of these misstatements resulted in an increase to prepaid expenses and other current assets of $0.5 million, an increase to inventory of $0.2 million, an increase to accounts payable of $0.2 million, an increase to accrued compensation of $0.7 million, and an increase to capital in excess of par of $0.2 million

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CONDENSED CONSOLIDATED BALANCE SHEETS

`	March 31, 2019
	As Previously Reported				Restatement Impacts				Restatement Reference		As Restated			Recasting Impacts			As Restated and Recast
Assets
Current assets
Cash and cash equivalents	$	1,721			$	—					$	1,721		$	(85	)	$	1,636
Trade receivables, net	92,534				(2,768		)		a,f		89,766			(10,664		)	79,102
Inventory	142,261				—						142,261			(21,554		)	120,707
Prepaid expenses and other current assets	16,373				(6,605		)		a		9,768			7,611			17,379
Current assets of discontinued operations	—				—						—			24,692			24,692
Total current assets	252,889				(9,373		)				243,516			—			243,516
Property, plant and equipment, net	22,566				—						22,566			(1,582		)	20,984
Goodwill	6,253				—						6,253			—			6,253
Other intangible assets, net	4,174				—						4,174			—			4,174
Deferred income taxes	5,493				385				e		5,878			(2,712		)	3,166
Deferred costs	8,447				—						8,447			(131		)	8,316
Other non-current assets	2,424				—						2,424			(21		)	2,403
Non-current assets of discontinued operations	—				—						—			4,446			4,446
Total assets	$	302,246			$	(8,988	)				$	293,258		$	—		$	293,258
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	80,649			$	—					$	80,649		$	(6,929	)	$	73,720
Accounts payable to NACCO Industries, Inc.	2,425				—						2,425			—			2,425
Revolving credit agreements	62,212				—						62,212			(7,400		)	54,812
Accrued compensation	8,903				370				f		9,273			(875		)	8,398
Accrued product returns	9,314				—						9,314			—			9,314
Other current liabilities	24,109				(135		)		a,d,e,f		23,974			(6,269		)	17,705
Current liabilities of discontinued operations	—				—						—			21,473			21,473
Total current liabilities	187,612				235						187,847			—			187,847
Revolving credit agreements	32,000				—						32,000			(2,000		)	30,000
Other long-term liabilities	19,555				898				e		20,453			(1,834		)	18,619
Non-current liabilities of discontinued operations	—				—						—			3,834			3,834
Total liabilities	239,167				1,133						240,300			—			240,300
Stockholders’ equity
Class A Common stock	95				—						95			—			95
Class B Common stock	44				—						44			—			44
Capital in excess of par value	52,520				—						52,520			—			52,520
Retained earnings	27,959				(10,453		)		a,d,e,f		17,506			—			17,506
Accumulated other comprehensive loss	(17,539		)		332				a,d		(17,207		)	—			(17,207		)
Total stockholders’ equity	63,079				(10,121		)				52,958			—			52,958
Total liabilities and stockholders' equity	$	302,246			$	(8,988	)				$	293,258		$	—		$	293,258

(a) Write-off of Assets: The correction of these misstatements resulted in a decrease to trade receivables of $1.6 million, a reduction to prepaid expenses and other current assets of $6.6 million, and an increase to other current liabilities of $1.4 million

(d) Correction for the timing of recognition of customer price concessions: The correction of these misstatements resulted in an increase to other current liabilities of $0.2 million

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(e) Tax adjustments for corrections: The correction of these misstatements resulted in a decrease to prepaid expenses and other current assets of $0.1 million, an increase to deferred income taxes of $0.4 million, a decrease to other current liabilities of $0.3 million, and an increase to other long-term liabilities of $0.9 million

(f) Correction of other immaterial errors: The correction of these misstatements resulted in a decrease to trade receivables of $1.1 million, an increase to accrued compensation of $0.4 million and a decrease to other current liabilities of $1.4 million

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months Ended March 31, 2019
	As Previously Reported				Restatement Impacts				Restatement References		As Restated			Recasting Impacts			As Restated and Recast
Revenue	$	145,377			$	518			c,f		$	145,895		$	(19,253	)	$	126,642
Cost of sales	110,654				(65		)		f		110,589			(10,649		)	99,940
Gross profit	34,723				583						35,306			(8,604		)	26,702
Selling, general and administrative expenses	36,507				1,972				a,c,f		38,479			(12,233		)	26,246
Amortization of intangible assets	345				—						345			—			345
Operating profit (loss)	(2,129		)		(1,389		)				(3,518		)	3,629			111
Interest expense, net	746				—						746			(83		)	663
Other expense (income), net	(332		)		144				f		(188		)	(9		)	(197		)
Income (loss) from continuing operations before income taxes	(2,543		)		(1,533		)				(4,076		)	3,721			(355		)
Income tax expense (benefit)	(782		)		91				e		(691		)	998			307
Net income (loss) from continuing operations	(1,761		)		(1,624		)				(3,385		)	2,723			(662		)
Loss from discontinued operations, net of tax	—				—						—			(2,723		)	(2,723		)
Net loss	$	(1,761	)		$	(1,624	)				$	(3,385	)	$	—		$	(3,385	)
Basic and diluted earnings (loss) per share:
Continuing operations	$	(0.13	)		$	(0.12	)				$	(0.25	)	$	0.20		$	(0.05	)
Discontinued operations	—				—						—			(0.20		)	(0.20		)
Basic and diluted earnings (loss) per share	$	(0.13	)		$	(0.12	)				$	(0.25	)	$	—		$	(0.25	)
Basic weighted average shares outstanding	13,786				—						13,786			—			13,786
Diluted weighted average shares outstanding	13,786				—						13,786			—			13,786

(a) Write-off of Assets: The correction of these misstatements resulted in an increase to selling, general and administrative ("SG&A") expense of $1.4 million

(c) Correction of misclassification of Selling and Marketing Expenses: The correction of these misstatements resulted in an increase to revenue and an increase to SG&A expense of $0.4 million

(e) Tax adjustments for corrections: The correction of these misstatements resulted in an increase to tax expense of $0.1 million

(f) Correction of other immaterial errors: The correction of these misstatements resulted in an increase to revenue of $0.1 million, a decrease to cost of sales of $0.1 million, an increase to SG&A expense of $0.2 million, and an increase in other expense of $0.1 million

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	For the Three Months Ended March 31, 2019
	As Previously Reported				Restatement Impacts				As Restated
Net income (loss)	$	(1,761	)		$	(1,624	)		$	(3,385	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	330				(116		)		214
(Loss) gain on long-term intra-entity foreign currency transactions	15				—				15
Cash flow hedging activity	(566		)		144				(422		)
Reclassification of hedging activities into earnings	2				—				2
Pension plan adjustment	—				—				—
Reclassification of pension adjustments into earnings	(10		)		94				84
Total other comprehensive loss, net of tax	(229		)		122				(107		)
Comprehensive income (loss)	$	(1,990	)		$	(1,502	)		$	(3,492	)

See description of the net income impacts in the consolidated statement of operations for the three months ended March 31, 2019 section above.

The decrease to foreign currency translation adjustments is the result of the translation impacts of restatements in the write-off of assets, reversal of revenue and timing of recognition of customer pricing concessions categories.

The increase to cash flow hedging is from the correction of other immaterial errors.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	March 31, 2019
	As Previously Reported				Restatement Impacts				As Restated				Recasting Impacts				As Restated and Recast
Operating activities
Net income from continuing operations	$	(1,761	)		$	(1,624	)		$	(3,385	)		$	2,723			$	(662	)
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:
Depreciation and amortization	1,249				—				1,249				(201		)		1,048
Deferred income taxes	2,178				110				2,288				23				2,311
Stock compensation expense	807				—				807				—				807
Other	23				(59		)		(36		)		5				(31		)
Net changes in operating assets and liabilities:
Affiliate payable	6				—				6				3				9
Trade receivables	20,323				344				20,667				(778		)		19,889
Inventory	2,593				111				2,704				(441		)		2,263
Other assets	(1,824		)		(742		)		(2,566		)		(132		)		(2,698		)
Accounts payable	(52,353		)		(15		)		(52,368		)		6,775				(45,593		)
Other liabilities	(21,376		)		1,875				(19,501		)		1,919				(17,582		)
Net cash provided by operating activities from continuing operations	(50,135		)		—				(50,135		)		9,896				(40,239		)
Investing activities
Expenditures for property, plant and equipment	(862		)		—				(862		)		8				(854		)
Other	29				—				29				(29		)		—
Net cash used for investing activities from continuing operations	(833		)		—				(833		)		(21		)		(854		)
Financing activities
Net additions (reductions) to revolving credit agreements	47,565				—				47,565				(9,400		)		38,165
Cash dividends paid	(1,177		)		—				(1,177		)		—				(1,177		)
Net cash provided by (used for) financing activities from continuing operations	46,388				—				46,388				(9,400		)		36,988
Cash flows from discontinued operations
Net cash provided by (used for) operating activities from discontinued operations	—				—				—				(9,896		)		(9,896		)
Net cash provided by (used for) investing activities from discontinued operations	—				—				—				21				21
Net cash used for financing activities from discontinued operations	—				—				—				9,400				9,400
Cash provided by (used for) discontinued operations	—				—				—				(475		)		(475		)
Effect of exchange rate changes on cash	(51		)		—				(51		)		—				(51		)
Cash and Cash Equivalents
(Decrease) increase for the year from continuing operations	(4,631		)		—				(4,631		)		475				(4,156		)
Increase (decrease) for the year from discontinued operations	—				—				—				(475		)		(475		)
Balance at the beginning of the year	6,352				—				6,352								6,352
Balance at the end of the year	$	1,721			$	—			$	1,721							$	1,721

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See description of the net income impacts in the consolidated statement of operations for the year ended March 31, 2019 section above.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	For the Three Months Ended March 31, 2019
	Class A common stock			Class B common stock			Capital in excess of par value			Retained earnings			Accumulated other comprehensive income (loss)			Total stockholders' equity
As Previously Reported
Balance, January 1, 2019	$	93		$	44		$	51,714		$	30,897		$	(17,310	)	$	65,438
Net loss	—			—			—			(1,761		)	—			(1,761		)
Issuance of common stock, net of conversions	2			—			(1		)	—			—			1
Purchase of treasury stock	—			—			—			—			—			—
Share-based compensation expense	—			—			807			—			—			807
Cash dividends, $0.085 per share	—			—			—			(1,177		)	—			(1,177		)
Other comprehensive loss	—			—			—			—			(221		)	(221		)
Reclassification adjustment to net loss	—			—			—			—			(8		)	(8		)
Balance, March 31, 2019	$	95		$	44		$	52,520		$	27,959		$	(17,539	)	$	63,079
Restatement Impacts
Balance, January 1, 2019	$	—		$	—		$	—		$	(8,829	)	$	209		$	(8,620	)
Net loss										(1,624		)	—			(1,624		)
Issuance of common stock, net of conversions	—			—			—			—			—			—
Purchase of treasury stock	—			—			—			—			—			—
Share-based compensation expense	—			—			—			—			—			—
Cash dividends, $0.085 per share	—			—			—			—			—			—
Other comprehensive loss	—			—			—			—			29			29
Reclassification adjustment to net loss	—			—			—			—			94			94
Balance, March 31, 2019	$	—		$	—		$	—		$	(10,453	)	$	332		$	(10,121	)
As Restated
Balance, January 1, 2019	$	93		$	44		$	51,714		$	22,068		$	(17,101	)	$	56,818
Net loss	—			—			—			(3,385		)	—			(3,385		)
Issuance of common stock, net of conversions	2			—			(1		)	—			—			1
Purchase of treasury stock	—			—			—			—			—			—
Share-based compensation expense	—			—			807			—			—			807
Cash dividends, $0.085 per share	—			—			—			(1,177		)	—			(1,177		)
Other comprehensive loss	—			—			—			—			(192		)	(192		)
Reclassification adjustment to net loss	—			—			—			—			86			86
Balance, March 31, 2019	$	95		$	44		$	52,520		$	17,506		$	(17,207	)	$	52,958

See description of the net income and other comprehensive income (loss) impacts in the consolidated statement of operations and consolidated statement of comprehensive income (loss) for the three months ended March 31, 2019 sections above.

The quarter ended March 31, 2019 included a change to the reclassification adjustment to net loss of $0.1 million.

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NOTE 3—Discontinued Operations

On October 10, 2019, the Board approved the wind down of KC's retail operation due to further deterioration in foot traffic which lowered the Company's outlook for the prospect of a future return to profitability. By December 31, 2019, all retail stores were closed and operations ceased. Accordingly, KC is reported as discontinued operations in all periods presented. KC completed its dissolution on April 3, 2020 with a pro-rata distribution of its remaining assets to creditors, at which time the KC legal entity ceased to exist and was no longer consolidated by the Company. Neither Hamilton Beach Brands Holding Company nor Hamilton Beach Brands, Inc. received a distribution.

KC’s operating results are reflected as discontinued operations for all periods presented. The major line items constituting the income (loss) from discontinued operations, net of tax are as follows:

	THREE MONTHS ENDED MARCH 31
	2020				2019
	(In thousands)
Revenue	$	631			$	19,253
Cost of sales	—				10,649
Gross profit	631				8,604
Selling, general and administrative expenses	1,047				12,233
Adjustment of lease termination liability(1)	(16,457		)		—
Adjustment of other current liabilities(2)	(6,608		)		—
Operating income (loss)	22,649				(3,629		)
Interest expense	—				83
Other expense, net	—				9
Income (loss) from discontinued operations before income taxes	22,649				(3,721		)
Income tax benefit	(217		)		(998		)
Income (loss) from discontinued operations, net of tax	$	22,866			$	(2,723	)

(1)	Represents an adjustment to the estimated timing and amount of estimated cash flows underlying the lease termination obligation at March 31, 2020, calculated based on the final distribution of KC's remaining assets on April 3, 2020. The lease termination obligation is measured at fair value using significant observable inputs, which is Level 2 as defined in the fair value hierarchy.

(2)	Represents an adjustment to the carrying value of substantially all of the other current liabilities at March 31, 2020, calculated based on the final distribution of KC's remaining assets on April 3, 2020.

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KC’s assets and liabilities are reflected as assets and liabilities of discontinued operations for all periods presented. The major classes of assets and liabilities included as part of discontinued operations are as follows:

	MARCH 31 2020				DECEMBER 31 2019				MARCH 31 2019
	(In thousands)
Assets