The Hain Celestial Group, Inc., a major organic and natural foods manufacturer and marketer with operations in North America, Europe and India, announced on August 15 that it will delay the release of its fourth quarter and fiscal year 2016 financial results.
On the same day Los Angeles-based Goldberg Law PC and the law offices of Ben Salem, Pennsylvania-headquartered Howard G. Smith revealed that they are investigating the company on behalf of shareholders concerning possible violations of federal securities laws. On this news, the stock price of the company, which has a market capitalization of about $5.5 billion, fell approximately 25% during after hours trading.
Among the diversified food, beverage and personal care products company’s frozen food offerings are Earth’s Best brand breakfast items and baked chicken nuggets, Empire Kosher poultry and Free Bird chicken.
During the fourth quarter, the Lake Success, New York-headquartered firm identified concessions that were granted to certain distributors in the United States. It is currently evaluating whether the revenue associated with those concessions was accounted for in the correct period, and is also reviewing its internal control over financial reporting. The audit committee of the board of directors is conducting an independent review of these matters and has retained independent counsel to assist in the process.
Previously, Hain Celestial has recognized revenue pertaining to the sale of products to certain distributors at the time they were. The company is evaluating whether the revenue associated with the concessions granted to certain distributors should instead have been recognized at the time the products sell through its distributors to the end customers. It expects that any potential changes in the timing of the recognition of revenue with respect to these transactions should not impact the total amount of revenue ultimately recognized by the company with respect to such distributors, and does not reflect on the validity of the underlying transactions with respect to such distributors.
Hain Celestial will experience a delay in the timely filing of its annual report on Form 10-K for the fiscal year ended June 30, 2016 and expects to file a notification of late filing on Form 12b-25 with the Securities and Exchange Commission to obtain an automatic 15-day extension of the filing deadline for the Form 10-K. However, there can be no assurance that it will complete the preparation and filing of the Form 10-K within the extension period.
The company will not be in a position to release financial results until the completion of the independent review of the audit committee and of the audit process relating to the 2016 fiscal year.
