Document and Entity Information

9 Months Ended

Sep. 30, 2017

Oct. 27, 2017

Shares Outstanding Class A

Oct. 27, 2017

Shares Outstanding Class B

Entity Information [Line Items]

Entity Registrant Name

HAMILTON BEACH BRANDS HOLDING COMPANY

Entity Central Index Key

0001709164

Current Fiscal Year End Date

--12-31

Entity Filer Category

Non-accelerated Filer

Document Type

10-Q

Document Period End Date

Sep. 30, 2017

Document Fiscal Year Focus

2017

Document Fiscal Period Focus

Q3

Amendment Flag

false

Shares Outstanding (in shares)

7,015,839

6,657,593

Unaudited Condensed Consolidated Balance Sheets (USD $)

In Thousands, unless otherwise specified

Sep. 30, 2017

Dec. 31, 2016

Sep. 30, 2016

ASSETS

Cash and cash equivalents

$ 3,113

$ 11,340

$ 5,403

Accounts receivable, net of allowances of $12,860 at September 30, 2017, $15,512 at December 31, 2016 and $13,162 at September 30, 2016

93,019

104,074

83,327

Accounts receivable from NACCO

819

0

2,359

Inventories, net

162,891

128,415

171,534

Prepaid expenses and other

8,594

8,586

8,302

Total current assets

268,436

252,415

270,925

Property, plant and equipment, net

17,633

15,943

16,167

Goodwill

6,253

Other intangibles, net

6,245

7,282

7,626

Deferred income taxes

19,409

17,504

16,700

Deferred costs

8,494

7,968

8,279

Other non-current assets

2,879

3,468

2,038

Total assets

329,349

310,833

327,988

LIABILITIES AND EQUITY

Accounts payable

136,689

121,253

150,189

Accounts payable to NACCO

9,996

9,705

5,181

Revolving credit agreements

35,462

12,714

5,250

Accrued payroll

14,791

17,443

14,157

Accrued cooperative advertising

8,900

15,056

10,619

Other current liabilities

18,252

13,779

13,810

Total current liabilities

224,090

189,950

199,206

Revolving credit agreements

45,000

26,000

21,829

Other long-term liabilities

27,960

29,615

28,577

Total liabilities

297,050

245,565

249,612

Stockholders' equity

Common stock

0

Preferred stock

0

Capital in excess of par value

47,773

75,031

Retained earnings

0

6,738

19,964

Accumulated other comprehensive loss

(15,610)

(16,501)

(16,619)

Total stockholders' equity

32,299

65,268

78,376

Total liabilities and equity

329,349

310,833

327,988

Class A Common Stock

Stockholders' equity

Common stock

68

0

Class B Common Stock

Stockholders' equity

Common stock

$ 68

$ 0

Unaudited Condensed Consolidated Balance Sheets (Parenthetical) (USD $)

In Thousands, except Share data, unless otherwise specified

Sep. 30, 2017

Dec. 31, 2016

Sep. 30, 2016

Allowance for doubtful accounts receivable

$ 12,860

$ 15,512

$ 13,162

Common stock, par value (in dollars per share)

$ 1

Common stock, shares authorized (in shares)

1,000

Common stock, shares outstanding (in shares)

0

100

Preferred stock, par value (in dollars per share)

$ 0.01

Preferred stock, shares authorized (in shares)

5,000,000

Preferred stock, shares outstanding (in shares)

0

Class A Common Stock

Common stock, par value (in dollars per share)

$ 0.01

Common stock, shares authorized (in shares)

70,000,000

Common stock, shares outstanding (in shares)

6,836,716

0

Class B Common Stock

Common stock, par value (in dollars per share)

$ 0.01

Common stock, shares authorized (in shares)

30,000,000

Common stock, shares outstanding (in shares)

6,836,716

0

Unaudited Condensed Consolidated Statements of Operations (USD $)

In Thousands, except Share data, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2017

Sep. 30, 2016

Sep. 30, 2017

Sep. 30, 2016

Income Statement [Abstract]

Revenues

$ 181,713

$ 188,390

$ 474,971

$ 486,442

Cost of sales

133,586

138,329

353,436

364,052

Gross profit

48,127

50,061

121,535

122,390

Operating expenses

Selling, general and administrative expenses

40,351

36,237

113,343

109,081

Amortization of intangible assets

346

1,036

Operating expenses

40,697

36,583

114,379

110,117

Operating profit

7,430

13,478

7,156

12,273

Other expense (income)

Interest expense

423

286

1,300

1,115

Other, net, including interest income

40

457

(939)

288

Other (income) expense

463

743

361

1,403

Income before income tax provision

6,967

12,735

6,795

10,870

Income tax provision

2,708

4,003

2,655

3,323

Net income

$ 4,259

$ 8,732

$ 4,140

$ 7,547

Basic and diluted earnings per share (in dollars per share)

$ 0.31

$ 0.64

$ 0.30

$ 0.55

Basic and diluted weighted average shares outstanding (in shares)

13,673,000

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2017

Sep. 30, 2016

Sep. 30, 2017

Sep. 30, 2016

Statement of Comprehensive Income [Abstract]

Net income

$ 4,259

$ 8,732

$ 4,140

$ 7,547

Foreign currency translation adjustment

(18)

(517)

1,725

(1,335)

Current period cash flow hedging activity, net of $21 and $390 tax benefit in the three and nine months ended September 30, 2017, and $63 tax expense and $440 tax benefit in the three and nine months ended September 30, 2016, respectively.

(72)

145

(931)

(837)

Reclassification of hedging activities into earnings, net of $13 and $42 tax expense in the three and nine months ended September 30, 2017, respectively, and $69 tax benefit and $5 tax expense in the three and nine months ended September 30, 2016, respectively.

(35)

163

(116)

(42)

Reclassification of pension adjustments into earnings, net of $53 and $155 tax benefit in the three and nine months ended September 30, 2017, respectively, and $50 and $147 tax benefit in the three and nine months ended September 30, 2016, respectively.

62

88

213

219

Total other comprehensive income (loss)

(63)

(121)

891

(1,995)

Comprehensive income

$ 4,196

$ 8,611

$ 5,031

$ 5,552

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2017

Sep. 30, 2016

Sep. 30, 2017

Sep. 30, 2016

Statement of Comprehensive Income [Abstract]

Current period cash flow hedging activity, tax expense (benefit)

$ (21)

$ 63

$ (390)

$ (440)

Reclassification of hedging activities into earnings, tax expense (benefit)

13

(69)

42

5

Reclassification of pension and postretirement adjustments into earnings, tax expense (benefit)

$ (53)

$ (50)

$ (155)

$ (147)

Unaudited Condensed Consolidated Statements of Cash Flows (USD $)

In Thousands, unless otherwise specified

9 Months Ended

Sep. 30, 2017

Sep. 30, 2016

Operating activities

Net income

$ 4,140

$ 7,547

Adjustments to reconcile from net income to net cash (used for) provided by operating activities:

Depreciation and amortization

3,709

4,053

Amortization of deferred financing fees

151

170

Deferred income taxes

(1,905)

3,343

Other

(1,305)

(2,157)

Working capital changes:

Affiliates receivable/payable

(513)

(5,892)

Accounts receivable

11,053

19,000

Inventories

(34,476)

(44,925)

Other current assets

149

(54)

Accounts payable

15,421

55,825

Other current liabilities

(4,124)

(2,403)

Net cash (used for) provided by operating activities

(7,700)

34,507

Investing activities

Expenditures for property, plant and equipment

(4,366)

(4,392)

Other

21

66

Net cash used for investing activities

(4,345)

(4,326)

Financing activities

Net additions (reductions) to revolving credit agreements

41,747

(31,286)

Cash dividends paid to NACCO

(38,000)

(10,000)

Other

0

(186)

Net cash provided by (used for) financing activities

3,747

(41,472)

Effect of exchange rate changes on cash

71

(104)

Cash and cash equivalents

Decrease for the period

(8,227)

(11,395)

Balance at the beginning of the period

11,340

16,798

Balance at the end of the period

$ 3,113

$ 5,403

Unaudited Condensed Consolidated Statements of Changes in Equity (USD $)

In Thousands, unless otherwise specified

Total

Capital in Excess of Par Value

Retained Earnings

Foreign Currency Translation Adjustment

Deferred Gain (Loss) on Cash Flow Hedging

Pension Plan Adjustment

Class A Common Stock

Class B Common Stock

Balance, beginning of period at Dec. 31, 2015

$ 82,824

$ 75,031

$ 22,417

$ (6,545)

$ 343

$ (8,422)

$ 0

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Net income

7,547

Cash dividends to NACCO

(10,000)

Current period other comprehensive income (loss)

(2,172)

(1,335)

(837)

Reclassification adjustment to net income (loss)

177

(42)

219

Balance, end of period at Sep. 30, 2016

78,376

75,031

19,964

(7,880)

(536)

(8,203)

0

Balance, beginning of period at Dec. 31, 2016

65,268

75,031

6,738

(8,623)

616

(8,494)

0

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Issuance of common stock

0

(136)

68

Net income

4,140

Cash dividends to NACCO

(38,000)

(27,122)

(10,878)

Current period other comprehensive income (loss)

794

1,725

(931)

Reclassification adjustment to net income (loss)

97

(116)

213

Balance, end of period at Sep. 30, 2017

$ 32,299

$ 47,773

$ 0

$ (6,898)

$ (431)

$ (8,281)

$ 68

Basis of Presentation

Nature of Operations and Basis of Presentation

Nature of Operations

The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of Hamilton Beach Brands Holding Company ("Hamilton Beach Holding” or the “Company”). Intercompany accounts and transactions among the consolidated companies are eliminated in consolidation. The Company's subsidiaries operate in the following principal industries: consumer, commercial and specialty small appliances and specialty retail. The Company manages its subsidiaries primarily by industry.

Hamilton Beach Brands, Inc. (“HBB”) is a leading designer, marketer and distributor of small branded electric household and specialty housewares appliances as well as commercial products for restaurants, bars and hotels. The Kitchen Collection, LLC (“KC”) is a national specialty retailer of kitchenware operating under the Kitchen Collection^®store name in outlet and traditional malls throughout the United States.

Basis of Presentation

On September 29, 2017, NACCO Industries, Inc. ("NACCO"), Hamilton Beach Holding's former parent company, spun-off the Company to NACCO stockholders. In the spin-off, NACCO stockholders, in addition to retaining their shares of NACCO common stock, received one share of Hamilton Beach Holding Class A common stock and one share of Hamilton Beach Holding Class B common stock for each share of NACCO Class A or Class B common stock. In accordance with applicable authoritative accounting guidance, the Company accounted for the spin-off from NACCO based on the historical carrying value of assets and liabilities. As a result of the distribution of one share of Hamilton Beach Holding Class A common stock and one share of Hamilton Beach Holding Class B common stock for each share of NACCO Class A or NACCO Class B common stock, the earnings per share amounts for the Company have been calculated based upon the number of shares distributed in the spin-off. NACCO did not receive any proceeds from the spin-off.

These financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position of the Company at September 30, 2017 and the results of its operations, comprehensive income (loss), cash flows and changes in equity for the nine months ended September 30, 2017 and 2016 have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Registration Statement on Form S-1 (Registration No. 333-220066) (the "Registration Statement").

The balance sheet at December 31, 2016 has been derived from the audited financial statements at that date but does not include all of the information or notes required by U.S. GAAP for complete financial statements.

Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the remainder of the year ending December 31, 2017. The HBB and KC businesses are seasonal and a majority of revenues and operating profit typically occurs in the second half of the calendar year when sales of small electric household appliances to retailers and consumers increase significantly for the fall holiday selling season.

Recently Issued Accounting Standards

Accounting Standards Not Yet Adopted

The Company is an emerging growth company and has not elected 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 private companies, the Company can adopt the new or revised standard at the time private companies adopt the new or revised standard.

In May 2014, the FASB codified in ASC 606, "Revenue Recognition - Revenue from Contracts with Customers," which supersedes most current revenue recognition guidance, including industry-specific guidance, and requires an entity to recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to customers and provide additional disclosures. The effective date for nonpublic entities is annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted. The Company plans to adopt the standard on January 1, 2018.

The Company anticipates using the modified retrospective method with the cumulative effect of initially applying the standard recognized as an adjustment to equity. The Company has developed a project plan with respect to its implementation of this standard, including identification of revenue streams and review of contracts and procedures currently in place. To date, the Company has completed its initial review of the revenue streams related to its HBB and KC subsidiaries. The Company is also in the process of identifying and implementing any necessary changes to processes and controls to meet the standard's updated reporting and disclosure requirements. While the Company continues to assess the potential impact of the new standard, Hamilton Beach Holding’s revenue is primarily generated from the sale of finished product to customers. Those sales are recognized at a single point in time when ownership, risks and rewards transfer. The amount and timing of revenue recognition is not materially impacted by the new standard therefore the adoption of the standard is not expected to have a material impact to the Company’s financial position, results of operations or cash flows. The adoption of this guidance will result in increased disclosures to help users of financial statements understand the nature, amount and timing of revenue and cash flows arising from contracts.

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. For nonpublic entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating when it will adopt ASU 2016-02 and how and to what extent ASU 2016-02 will affect the Company's financial position, results of operations, cash flows and related disclosures.

Inventories

Inventories are summarized as follows:



	SEPTEMBER 30 2017		DECEMBER 31 2016		SEPTEMBER 30 2016
Sourced inventories - HBB	$	133,018	$	95,008	$	133,396
Retail inventories - KC	29,873		33,407		38,138
Total inventories	$	162,891	$	128,415	$	171,534

Fair Value Disclosure

Recurring Fair Value Measurements: The following table presents the Company's assets and liabilities accounted for at fair value on a recurring basis:



			Fair Value Measurements at Reporting Date Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
Description	Date		(Level 1)		(Level 2)		(Level 3)
	September 30, 2017
Assets:
Interest rate swap agreements	$	603	$	—	$	603	$	—
	$	603	$	—	$	603	$	—
Liabilities:
Foreign currency exchange contracts	$	694	$	—	$	694	$	—
	$	694	$	—	$	694	$	—

	December 31, 2016
Assets:
Interest rate swap agreements	$	774	$	—	$	774	$	—
Foreign currency exchange contracts	147		—		147		—
	$	921	$	—	$	921	$	—

	September 30, 2016
Assets:
Foreign currency exchange contracts	$	15	$	—	$	15	$	—
	$	15	$	—	$	15	$	—

Liabilities:
Interest rate swap agreements	$	745	$	—	$	745	$	—
	$	745	$	—	$	745	$	—

The Company uses significant other observable inputs to value derivative instruments used to hedge foreign currency and interest rate risk; therefore, they are classified within Level 2 of the valuation hierarchy. The fair value for these contracts is determined based on exchange rates and interest rates, respectively.

There were no transfers into or out of Levels 1, 2 or 3 during the three and nine months ended September 30, 2017 and 2016.

Contingencies

Various legal and regulatory proceedings and claims have been or may be asserted against Hamilton Beach Holding and certain subsidiaries relating to the conduct of their businesses, including product liability, patent infringement, asbestos-related claims, environmental and other claims. These proceedings and claims are incidental to the ordinary course of business of the Company. Management believes that it has meritorious defenses and will vigorously defend the Company in these actions. Any costs that management estimates will be paid as a result of these claims are accrued when the liability is considered probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is probable or reasonably possible and which are material, the Company discloses the nature of the contingency and, in some circumstances, an estimate of the possible loss.

These matters are subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, there exists the possibility of an adverse impact on the Company’s financial position, results of operations and cash flows of the period in which the ruling occurs, or in future periods.

Environmental matters

HBB is investigating or remediating historical environmental contamination at some current and former sites operated by HBB or by businesses it acquired. Based on the current stage of the investigation or remediation at each known site, HBB estimates the total investigation and remediation costs and the period of assessment and remediation activity required for each site. The estimate of future investigation and remediation costs is primarily based on variables associated with site clean-up, including, but not limited to, physical characteristics of the site, the nature and extent of the contamination and applicable regulatory programs and remediation standards. No assessment can fully characterize all subsurface conditions at a site. There is no assurance that additional assessment and remediation efforts will not result in adjustments to estimated remediation costs or the time frame for remediation at these sites.

HBB's estimates of investigation and remediation costs may change if it discovers contamination at additional sites or additional contamination at known sites, if the effectiveness of its current remediation efforts change, if applicable federal or state regulations change or if HBB's estimate of the time required to remediate the sites changes. HBB's revised estimates may differ materially from original estimates.

At September 30, 2017, December 31, 2016 and September 30, 2016, HBB had accrued undiscounted obligations of $9.0 million, $8.7 million and $9.0 million, respectively, for environmental investigation and remediation activities. In addition, HBB estimates that it is reasonably possible that it may incur additional expenses in the range of zero to $5.3 million related to the environmental investigation and remediation at these sites.

Business Segments

Hamilton Beach Holding is an operating holding company with HBB and KC as reportable segments. See Note 1 for a discussion of the Company's industries and product lines. Financial information for each of Hamilton Beach Holding's reportable segments is presented in the following table. The line “Eliminations” eliminates revenues from HBB sales to KC. The amounts of these revenues are based on current market prices of similar third-party transactions. No other sales transactions occur among reportable segments.



	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30						SEPTEMBER 30
	2017			2016			2017			2016
Revenues
HBB	$	153,592		$	157,264		$	395,320		$	400,058
KC	28,644			32,895			81,177			89,912
Eliminations	(523		)	(1,769		)	(1,526		)	(3,528		)
Total	$	181,713		$	188,390		$	474,971		$	486,442

Operating profit (loss)
HBB ^(a)	$	9,001		$	14,399		$	14,947		$	19,162
KC	(1,581		)	(921		)	(7,868		)	(6,822		)
Eliminations	10			—			77			(67		)
Total	$	7,430		$	13,478		$	7,156		$	12,273

(a) HBB's operating profit includes the recognition of $2.5 million of expenses related to the spin-off in the three and nine months ended September 30, 2017.

Income Taxes Income Taxes

Income Taxes

The U.S. operating results of the Company will be included in the consolidated federal income tax return filed by NACCO through the spin-off date. The Company's allocation of taxes through the spin-off date will be in accordance with the Tax Allocation Agreement. In general, the Tax Allocation Agreement between the Company and NACCO provides that federal income taxes are computed by the Company as if it had filed a tax return on a standalone basis. Subsequent to the spin-off, the Company will file a separate federal tax return in the U.S. for the period subsequent to the spin-off date.

Nature of Operations and Basis of Presentation (Policies)

Nature of Operations

The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of Hamilton Beach Brands Holding Company ("Hamilton Beach Holding” or the “Company”). Intercompany accounts and transactions among the consolidated companies are eliminated in consolidation. The Company's subsidiaries operate in the following principal industries: consumer, commercial and specialty small appliances and specialty retail. The Company manages its subsidiaries primarily by industry.

Hamilton Beach Brands, Inc. (“HBB”) is a leading designer, marketer and distributor of small branded electric household and specialty housewares appliances as well as commercial products for restaurants, bars and hotels. The Kitchen Collection, LLC (“KC”) is a national specialty retailer of kitchenware operating under the Kitchen Collection^®store name in outlet and traditional malls throughout the United States.

Basis of Presentation

On September 29, 2017, NACCO Industries, Inc. ("NACCO"), Hamilton Beach Holding's former parent company, spun-off the Company to NACCO stockholders. In the spin-off, NACCO stockholders, in addition to retaining their shares of NACCO common stock, received one share of Hamilton Beach Holding Class A common stock and one share of Hamilton Beach Holding Class B common stock for each share of NACCO Class A or Class B common stock. In accordance with applicable authoritative accounting guidance, the Company accounted for the spin-off from NACCO based on the historical carrying value of assets and liabilities. As a result of the distribution of one share of Hamilton Beach Holding Class A common stock and one share of Hamilton Beach Holding Class B common stock for each share of NACCO Class A or NACCO Class B common stock, the earnings per share amounts for the Company have been calculated based upon the number of shares distributed in the spin-off. NACCO did not receive any proceeds from the spin-off.

These financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position of the Company at September 30, 2017 and the results of its operations, comprehensive income (loss), cash flows and changes in equity for the nine months ended September 30, 2017 and 2016 have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Registration Statement on Form S-1 (Registration No. 333-220066) (the "Registration Statement").

The balance sheet at December 31, 2016 has been derived from the audited financial statements at that date but does not include all of the information or notes required by U.S. GAAP for complete financial statements.

Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the remainder of the year ending December 31, 2017. The HBB and KC businesses are seasonal and a majority of revenues and operating profit typically occurs in the second half of the calendar year when sales of small electric household appliances to retailers and consumers increase significantly for the fall holiday selling season.

Accounting Standards Not Yet Adopted

The Company is an emerging growth company and has not elected 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 private companies, the Company can adopt the new or revised standard at the time private companies adopt the new or revised standard.

In May 2014, the FASB codified in ASC 606, "Revenue Recognition - Revenue from Contracts with Customers," which supersedes most current revenue recognition guidance, including industry-specific guidance, and requires an entity to recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to customers and provide additional disclosures. The effective date for nonpublic entities is annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted. The Company plans to adopt the standard on January 1, 2018.

The Company anticipates using the modified retrospective method with the cumulative effect of initially applying the standard recognized as an adjustment to equity. The Company has developed a project plan with respect to its implementation of this standard, including identification of revenue streams and review of contracts and procedures currently in place. To date, the Company has completed its initial review of the revenue streams related to its HBB and KC subsidiaries. The Company is also in the process of identifying and implementing any necessary changes to processes and controls to meet the standard's updated reporting and disclosure requirements. While the Company continues to assess the potential impact of the new standard, Hamilton Beach Holding’s revenue is primarily generated from the sale of finished product to customers. Those sales are recognized at a single point in time when ownership, risks and rewards transfer. The amount and timing of revenue recognition is not materially impacted by the new standard therefore the adoption of the standard is not expected to have a material impact to the Company’s financial position, results of operations or cash flows. The adoption of this guidance will result in increased disclosures to help users of financial statements understand the nature, amount and timing of revenue and cash flows arising from contracts.

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. For nonpublic entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating when it will adopt ASU 2016-02 and how and to what extent ASU 2016-02 will affect the Company's financial position, results of operations, cash flows and related disclosures.

Inventories (Tables)

Schedule of Inventories

Inventories are summarized as follows:



	SEPTEMBER 30 2017		DECEMBER 31 2016		SEPTEMBER 30 2016
Sourced inventories - HBB	$	133,018	$	95,008	$	133,396
Retail inventories - KC	29,873		33,407		38,138
Total inventories	$	162,891	$	128,415	$	171,534

Fair Value Disclosure (Tables)

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table presents the Company's assets and liabilities accounted for at fair value on a recurring basis:



			Fair Value Measurements at Reporting Date Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
Description	Date		(Level 1)		(Level 2)		(Level 3)
	September 30, 2017
Assets:
Interest rate swap agreements	$	603	$	—	$	603	$	—
	$	603	$	—	$	603	$	—
Liabilities:
Foreign currency exchange contracts	$	694	$	—	$	694	$	—
	$	694	$	—	$	694	$	—

	December 31, 2016
Assets:
Interest rate swap agreements	$	774	$	—	$	774	$	—
Foreign currency exchange contracts	147		—		147		—
	$	921	$	—	$	921	$	—

	September 30, 2016
Assets:
Foreign currency exchange contracts	$	15	$	—	$	15	$	—
	$	15	$	—	$	15	$	—

Liabilities:
Interest rate swap agreements	$	745	$	—	$	745	$	—
	$	745	$	—	$	745	$	—

Business Segments (Tables)

Segment Reporting Information

Financial information for each of Hamilton Beach Holding's reportable segments is presented in the following table. The line “Eliminations” eliminates revenues from HBB sales to KC. The amounts of these revenues are based on current market prices of similar third-party transactions. No other sales transactions occur among reportable segments.



	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30						SEPTEMBER 30
	2017			2016			2017			2016
Revenues
HBB	$	153,592		$	157,264		$	395,320		$	400,058
KC	28,644			32,895			81,177			89,912
Eliminations	(523		)	(1,769		)	(1,526		)	(3,528		)
Total	$	181,713		$	188,390		$	474,971		$	486,442

Operating profit (loss)
HBB ^(a)	$	9,001		$	14,399		$	14,947		$	19,162
KC	(1,581		)	(921		)	(7,868		)	(6,822		)
Eliminations	10			—			77			(67		)
Total	$	7,430		$	13,478		$	7,156		$	12,273

(a) HBB's operating profit includes the recognition of $2.5 million of expenses related to the spin-off in the three and nine months ended September 30, 2017.

Nature of Operations and Basis of Presentation Nature of Operations and Basis of Presentation (Details)

0 Months Ended

Sep. 29, 2017

Class A Common Stock

Class of Stock [Line Items]

Shares of common stock issued in spin-off

1

Class B Common Stock

Class of Stock [Line Items]

Shares of common stock issued in spin-off

1

Inventories (Details) (USD $)

In Thousands, unless otherwise specified

Sep. 30, 2017

Dec. 31, 2016

Sep. 30, 2016

Inventory Disclosure [Abstract]

Sourced inventories - HBB

$ 133,018

$ 95,008

$ 133,396

Retail inventories - KC

29,873

33,407

38,138

Total inventories

$ 162,891

$ 128,415

$ 171,534

Fair Value Disclosure (On a Recurring Basis) (Details) (Fair value measurements, recurring, USD $)

Sep. 30, 2017

Dec. 31, 2016

Sep. 30, 2016

Assets:

Interest rate swap agreements

$ 603,000

$ 774,000

Foreign currency exchange contracts

147,000

15,000

Assets at fair value

603,000

921,000

15,000

Liabilities:

Foreign currency exchange contracts

694,000

Interest rate swap agreements

745,000

Liabilities at fair value

694,000

745,000

Level 1

Assets:

Interest rate swap agreements

0

Foreign currency exchange contracts

0

Assets at fair value

0

Liabilities:

Foreign currency exchange contracts

0

Interest rate swap agreements

0

Liabilities at fair value

0

Level 2

Assets:

Interest rate swap agreements

603,000

774,000

Foreign currency exchange contracts

147,000

15,000

Assets at fair value

603,000

921,000

15,000

Liabilities:

Foreign currency exchange contracts

694,000

Interest rate swap agreements

745,000

Liabilities at fair value

694,000

745,000

Level 3

Assets:

Interest rate swap agreements

0

Foreign currency exchange contracts

0

Assets at fair value

0

Liabilities:

Foreign currency exchange contracts

0

Interest rate swap agreements

0

Liabilities at fair value

$ 0

Contingencies (Narrative) (Details) (USD $)

Sep. 30, 2017

Dec. 31, 2016

Sep. 30, 2016

Loss Contingencies [Line Items]

Accrual for environmental investigation and remediation activities

$ 9,000,000

$ 8,700,000

$ 9,000,000

Minimum

Loss Contingencies [Line Items]

Estimate of possible loss

0

Maximum

Loss Contingencies [Line Items]

Estimate of possible loss

$ 5,300,000

Business Segments (Details) (USD $)

3 Months Ended

9 Months Ended

Sep. 30, 2017

Sep. 30, 2016

Sep. 30, 2017

Sep. 30, 2016

Segment Reporting Information [Line Items]

Revenues

$ 181,713,000

$ 188,390,000

$ 474,971,000

$ 486,442,000

Operating profit (loss)

7,430,000

13,478,000

7,156,000

12,273,000

Operating segments |
HBB

Segment Reporting Information [Line Items]

Revenues

153,592,000

157,264,000

395,320,000

400,058,000

Operating profit (loss)

9,001,000

14,399,000

14,947,000

19,162,000

Operating segments |
KC

Segment Reporting Information [Line Items]

Revenues

28,644,000

32,895,000

81,177,000

89,912,000

Operating profit (loss)

(1,581,000)

(921,000)

(7,868,000)

(6,822,000)

Eliminations

Segment Reporting Information [Line Items]

Revenues

(523,000)

(1,769,000)

(1,526,000)

(3,528,000)

Operating profit (loss)

10,000

0

77,000

(67,000)

Spin-off |
Operating segments |
HBB

Segment Reporting Information [Line Items]

Expenses related to spin-off

$ 2,500,000