Herbalife (HLF) Delays Q1 10-Q Filing Following Resignation of KPMG
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Price: $8.23 +0.24%
Revenue Growth %: -3.1%
Financial Fact:
Selling, general & administrative expenses: 441.3M
Today's EPS Names:
CPSS, HARL, MCET, More
Revenue Growth %: -3.1%
Financial Fact:
Selling, general & administrative expenses: 441.3M
Today's EPS Names:
CPSS, HARL, MCET, More
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Herbalife (NYSE: HLF) was unable, without unreasonable effort or expense, to file a complete Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2013 (the “First Quarter 10-Q”) with the Securities and Exchange Commission (the “SEC”) because of previously disclosed events. Specifically, as previously disclosed on April 8, 2013, KPMG LLP (“KPMG”) notified the Company that KPMG was resigning, effective immediately, as the Company’s independent accountant. KPMG stated it had concluded it was not independent because of alleged insider trading in the Company’s securities by one of KPMG’s former partners who, until April 5, 2013, was the KPMG engagement partner on the Company’s audit. KPMG advised the Company it resigned as the Company’s independent accountant solely due to the impairment of KPMG’s independence resulting from its now former partner’s alleged unlawful activities and not for any reason related to the Company’s financial statements, its accounting practices, the integrity of the Company’s management or for any other reason. While the Company has not engaged a new independent accounting firm, it has begun a search process to identify KPMG’s successor.
As a result of the alleged insider trading activity by its now former partner and KPMG’s resulting resignation on April 8, 2013, KPMG notified the Company its independence has been impaired and had no option but to withdraw its audit reports on the Company’s financial statements for the fiscal years ended December 31, 2010, 2011 and 2012 and the effectiveness of internal control over financial reporting as of December 31, 2010, 2011 and 2012 and that such reports should no longer be relied upon as a result of KPMG’s lack of independence created by the circumstances described above. The Company’s Audit Committee and management continue to believe that the Company’s financial statements covering the referenced periods fairly present, in all material respects, the financial condition and results of operations of the Company as of the end of and for the referenced periods and may continue to be relied upon and that the Company’s internal control over financial reporting was effective during these periods.
Also, as a result of KPMG’s resignation, the unaudited interim financial information presented in the First Quarter 10-Q has not been reviewed by an outside independent accounting firm as required by the rules of the SEC. As a result, the First Quarter 10-Q is considered deficient and the Company is no longer considered to be timely or current in its filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). While the First Quarter 10-Q does not comply with the requirements of Regulation S-X, and should not be interpreted to be a substitute for the review that would normally occur by the Company’s independent registered public accounting firm, the Company’s Audit Committee and management believe that the interim financial information presented therein fairly presents, in all material respects, the financial condition and results of operations of the Company as of the end of and for the referenced periods and may be relied upon. Except for the absence of this review of the unaudited interim financial information discussed above, the First Quarter 10-Q fully complies with the requirements of the Exchange Act and the Company believes it is prudent to file the First Quarter 10-Q with the SEC in spite of the current circumstances to provide the financial and other information set forth therein to its shareholders and other interested parties. The Company plans to file an amendment to the First Quarter 10-Q as soon as practicable following the engagement of a successor independent registered public accounting firm and the firm’s review of the Company’s interim financial statements included therein.
The CEO and CFO believe, to the best of their knowledge, that the financial statements included in the First Quarter 10-Q accurately portray the financial condition of the Company. To that end, they have provided the certifications under Section 302 of SOX. The SOX Section 906 certification is omitted from the First Quarter 10-Q only because, as a result of KPMG’s former partner’s actions as described above, the financial statements accompanying the First Quarter 10-Q have not been reviewed by an independent public accountant under SAS 100. The Company believes that the First Quarter 10-Q otherwise meets all of the qualifications of the Exchange Act and the rules and regulations thereunder governing the preparation and filing of periodic reports as referenced in the certifications. Before the Company’s officers can make a SOX Section 906 certification, the Company’s independent public accounting firm must complete its review of the consolidated financial statements appearing in the First Quarter 10-Q under SAS 100, as required by SEC rules. Once the Company’s new auditor completes its review of the Company’s first quarter 2013 financial statements under SAS 100, the Company will file an amendment to the First Quarter 10-Q with the SOX Section 906 certification.
As a result of the alleged insider trading activity by its now former partner and KPMG’s resulting resignation on April 8, 2013, KPMG notified the Company its independence has been impaired and had no option but to withdraw its audit reports on the Company’s financial statements for the fiscal years ended December 31, 2010, 2011 and 2012 and the effectiveness of internal control over financial reporting as of December 31, 2010, 2011 and 2012 and that such reports should no longer be relied upon as a result of KPMG’s lack of independence created by the circumstances described above. The Company’s Audit Committee and management continue to believe that the Company’s financial statements covering the referenced periods fairly present, in all material respects, the financial condition and results of operations of the Company as of the end of and for the referenced periods and may continue to be relied upon and that the Company’s internal control over financial reporting was effective during these periods.
Also, as a result of KPMG’s resignation, the unaudited interim financial information presented in the First Quarter 10-Q has not been reviewed by an outside independent accounting firm as required by the rules of the SEC. As a result, the First Quarter 10-Q is considered deficient and the Company is no longer considered to be timely or current in its filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). While the First Quarter 10-Q does not comply with the requirements of Regulation S-X, and should not be interpreted to be a substitute for the review that would normally occur by the Company’s independent registered public accounting firm, the Company’s Audit Committee and management believe that the interim financial information presented therein fairly presents, in all material respects, the financial condition and results of operations of the Company as of the end of and for the referenced periods and may be relied upon. Except for the absence of this review of the unaudited interim financial information discussed above, the First Quarter 10-Q fully complies with the requirements of the Exchange Act and the Company believes it is prudent to file the First Quarter 10-Q with the SEC in spite of the current circumstances to provide the financial and other information set forth therein to its shareholders and other interested parties. The Company plans to file an amendment to the First Quarter 10-Q as soon as practicable following the engagement of a successor independent registered public accounting firm and the firm’s review of the Company’s interim financial statements included therein.
The CEO and CFO believe, to the best of their knowledge, that the financial statements included in the First Quarter 10-Q accurately portray the financial condition of the Company. To that end, they have provided the certifications under Section 302 of SOX. The SOX Section 906 certification is omitted from the First Quarter 10-Q only because, as a result of KPMG’s former partner’s actions as described above, the financial statements accompanying the First Quarter 10-Q have not been reviewed by an independent public accountant under SAS 100. The Company believes that the First Quarter 10-Q otherwise meets all of the qualifications of the Exchange Act and the rules and regulations thereunder governing the preparation and filing of periodic reports as referenced in the certifications. Before the Company’s officers can make a SOX Section 906 certification, the Company’s independent public accounting firm must complete its review of the consolidated financial statements appearing in the First Quarter 10-Q under SAS 100, as required by SEC rules. Once the Company’s new auditor completes its review of the Company’s first quarter 2013 financial statements under SAS 100, the Company will file an amendment to the First Quarter 10-Q with the SOX Section 906 certification.
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