Annual Report
FY2020
vistaoutdoor.com
Annual Report
FY2020
vistaoutdoor.com
Vision
To be the world’s most talented and impactful outdoor
recreation company by setting the standard and making
a positive difference in people’s lives, through innovative
products, operational excellence and advocacy.
Strategic Framework
How we improve our businesses and strengthen
our financial position:
+ Optimize Our Organizational Structure
+ Create Leading Centers of Excellence in
Operations and E-Commerce
+ Reduce Financial Leverage
+ Return to Organic Growth
+ Explore Tuck-in Acquisitions
Impact
ESG pillars reflecting framework and core values:
+ People
+ Conservation
+ Veterans
+ Community
From the Chairman of the Board and Chief Executive Officer
To Our Fellow Shareholders, FY2020 was
an outstanding year for Vista Outdoor,
and perhaps the most significant since
the Company was founded in 2015.
I hope you see as we reflect on our FY2020 key
accomplishments, Vista Outdoor has diligently addressed
its most pressing issues in a strategic manner with
determination and has successfully strengthened its
foundation to enable long term sustainable and profitable
growth for the creation of value for our stakeholders.
I am proud of our team and their ability to operate
effectively during the unprecedented challenges that
faced our brands in the fourth quarter due to COVID-19.
The result was greater than expected financial and
operational performance.
The financial and operational foundation we have built
allows us to do more for the environment, our community,
and other causes. We recently have published our first
annual Environment, Social and Governance Report. In this
report, we outline our Vista 2030 Vision in which we commit
to becoming more efficient, diverse and the most talented
and impactful company in the outdoor recreation industry.
THE GREAT OUTDOORS AND COVID-19:
WHERE VISION MEETS NEED
Our goal is to be the most impactful outdoor sports
company and our corporate social responsibility
program emphasizes action to help bring this vision to
life. The COVID-19 pandemic has led to a resurgence in
interest in outdoor activities. We believe that resurgence
provides an opportunity for our Company to further
connect our values with our product offerings.
The COVID-19 pandemic has led to a rapid increase in
demand for our bike helmets, camp grills, drinkware, golf
accessories, shooting ammunition and more. But our
response to the pandemic has not been limited to meeting
that demand. As stay at home orders were instituted, we
took swift action to ensure that we continued to further our
mission to bring the world outside and that our partners in
that mission have the resources they needed to survive in a
challenging environment. We have expanded partnerships
with nonprofits and advocacy groups whose mission
aligns with our own. For example, we have expanded our
commitment to Big City Mountaineers, which provides
under-resourced youth with opportunities to get out of
their comfort zones and into the wild, and the Outdoor
Foundation, which connects kids and families with
people and programs to inspire them to get outside.
FY2020 HIGHLIGHTS
Our enterprise wide FY2020 priorities for the
past year included:
+ Improve our capacity to innovate and grow—
create innovative new products that drive brand
loyalty and expand our market share;
+ Improve the underlying profitability of our brands—
control costs to drive efficiency and improve margins;
+ Invest in platforms for growth—expand our
e-commerce and direct to consumer capabilities; and
+ Strengthen the balance sheet—reduce financial
leverage to improve financial flexibility and
free up capital to invest in growth.
We made significant progress on these priorities, framed
through our major FY2020 achievements:
+ Reported $45 million of EBIT in fiscal year 2020,
a nearly 41% improvement over fiscal year 2019,
excluding results from divested businesses.
A 70% year over year improvement to earnings
per share, reflecting cost savings initiatives and
our focus on margin improvement.
+ Improved gross margins by more than 60 basis points
from FY19, the direct result of our focus on driving
efficiencies and long-term profitability improvements.
+ Successfully completed the divestiture of the
Firearms business.
+ Improved working capital which contributed to
better-than-expected free cash flow of $66 million,
excluding results from divested businesses.
+ Ended the fiscal year with a leverage ratio of
approximately 4.3x, the lowest since early FY18.
+ Delivered improved results in the face of major
challenges and headwinds, including a major
retailer exiting key categories, tariffs, and
COVID-19 related disruptions.
Our employees are at the very center of these
accomplishments. On behalf of the Board, we would
like to to extend a heartfelt thank you to all of our
employees for their hard work, collaboration, and
passion for our mission of Bringing the World Outside.
From the Chairman of the Board and Chief Executive Officer
To Our Fellow Shareholders, FY2020 was
an outstanding year for Vista Outdoor,
and perhaps the most significant since
the Company was founded in 2015.
INNOVATION AS THE FOUNDATION OF GROWTH
Innovation is the lifeblood of our business, and our
success in expanding profitability has allowed us to
invest in new products that will drive our success in
FY2021 and beyond. In the past fiscal year, both our
shooting sports and outdoor products teams successfully
launched an aggressive schedule of new products that
are a testament to our commitment to innovation.
In our Shooting Sports segment, our ammunition team
launched more new products in FY2020 than in the
company’s history. Highlights include Federal’s Terminal
Ascent, the flagship hunting bullet that blends match
accuracy with outstanding on-game performance,
HammerDown which is a new line of ammunition designed
for lever guns, and FireStick which is the most innovative
product introduced for the muzzleloader in decades.
Our ammunition team also capitalized on influencer
partnerships to reach new audiences and launched a new
line of MeatEater packaging and ammunition, featuring
exclusive recipes reflecting a renewed focus on sustainable
hunting, conservation and the celebration of wild foods.
At Bushnell, we introduced the new Nitro 1800 laser
rangefinder launched with built-in Bluetooth integration to
our Bushnell Ballistic App. Long range shooters rely on this
simple, digital solution for more accurate shot placements.
In our Outdoor Products segment, we are excited about
the introduction of the Bushnell Golf’s new Wingman GPS
speaker, a first to market product combining practical, on the
course features, with a high-quality sound system rivaling
top names in the speaker market. The tour V5 rangefinder
remains the industry standard and market share leader.
Camelbak recently entered the vacuum stainless-steel
drinkware market with the launch of its Horizon Drinkware
Collection, which is uniquely positioned to serve the
growing active outdoor lifestyle consumer category.
Giro’s new Manifest Spherical is without question the
most advanced mountain bike helmet available. Utilizing
Giro/Bell’s proprietary Spherical Technology, powered
by MIPS®, this helmet uses a ball-and-socket design to
redirect impact forces in a crash. It’s been recognized
by nearly 50 media outlets worldwide and received an
Editor’s Choice award from Bicycling Magazine.
Camp Chef released a Wi-Fi enabled pellet grill, enabling
consumers in an ever-increasing digital world to take control of
their grill directly from their phone—whether you are at home
or on the go. Low and slow cooking has never been easier.
We believe our portfolio of outdoor products and
shooting sports are unmatched in terms of brand loyalty,
reputation, innovation and market leadership, and we
look forward to driving industry leadership in FY2021.
FY2021 TRAJECTORY
In FY2020, we improved our financial position. We meaningfully
improved our operating fundamentals and have platforms
in place that we believe will continue to generate long term
growth opportunities. We have strengthened our businesses.
We have a strong, committed team of thought leaders
throughout the Company that navigated unprecedented
COVID-19 pandemic disruptions and headwinds, and delivered
better than expected financial and operational results.
Looking ahead, we are relentlessly focused on the following five
strategic pillars, which drive our priorities and decision making:
+ Optimize Our Organizational Structure Invest in talent
while reducing costs and building a culture of agility,
efficiency, and innovation.
+ Create Leading Centers of Excellence in Operations
and E-Commerce Leverage our shared resources,
expertise and scale to:
- Achieve operational excellence and improve margins
across each of our brands; and
- Accelerate and enhance e-commerce, direct-to-consumer
and digital marketing capabilities across all of our brands.
+ Reduce Financial Leverage Strengthen the Company’s
balance sheet, improve financial flexibility, and pay down
debt through enhanced cash-flow generation and the
divestiture of non-core businesses.
+ Return to Organic Growth Identify and capture opportunities
for organic growth and market share expansion by:
- Allocating capital to our brands to aid in the development
of new and innovative products that serve the needs and
preferences of our core consumers; and
- Leveraging and expanding our distribution channels to
expand the commercial presence of all of our brands and
efficiently deliver product to meet consumer demand and
shopping behavior.
+ Explore Tuck-in Acquisitions After reducing financial
leverage, deploy a stronger balance sheet to acquire
smaller, complimentary businesses that, through the help of
our Centers of Excellence, we can take to the next level in
terms of sales and profitability.
The outdoors has always been a source of retreat, recovery and
recreation for our employees and consumers, and recent events
have made our outdoor mission more important than ever. The
world has changed, and we believe we have taken the steps that
will allow us to adapt and thrive in this new environment. The
outdoors has a major role to play in bringing us together, and we
are ready to be part of the solution by supporting outdoor pursuits
and continuing to make Vista Outdoor a stronger, more diverse
and more resilient company. We appreciate your partnership and
look forward to the opportunities that lay ahead.
Stay healthy and well,
Christopher Metz
Chief Executive Officer
Michael Callahan
Chairman of the Board
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2020 or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period to
Commission file number 1-36597
Vista Outdoor Inc.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
47-1016855
(I.R.S. Employer
Identification No.)
1 Vista Way
Anoka, MN 55303
(Address of principal executive offices)
Registrant's telephone number, including area code: (763) 433-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of each exchange on which
registered
Common Stock, par value $.01
VSTO
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
____________________________________________________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the
Exchange Act.
Large Accelerated Filer
Accelerated Filer
Non-Accelerated Filer
(Do not check if a
smaller reporting
company)
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
No
As of September 29, 2019, the aggregate market value of the registrant's voting common stock held by non-affiliates was approximately $365 million (based
upon the closing price of the common stock on the New York Stock Exchange on September 27, 2019).
As of May 26, 2020, there were 58,012,857 shares of the registrant's voting common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant's definitive Proxy Statement for the 2020 Annual Meeting of Stockholders are incorporated by reference into Part III.
(cid:3)
TABLE OF CONTENTS
PART I
Item 1.
Item 1A.
Business
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Item 8.
Item 9.
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Item 13.
Item 14.
PART IV
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Item 15.
Exhibits and Financial Statement Schedules
Item 16.
Form 10-K Summary
SIGNATURES
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PART I
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (“Annual Report”) contains “forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Forward-looking statements give our current expectations or forecasts of future
events. Forward-looking statements can be identified by words such as “future,” “anticipates,” “believes,” “estimates,”
“expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking
statements are based on management's current expectations and assumptions regarding our business and performance, the
economy and other future conditions and forecasts of future events, circumstances and results. Consequently, no forward-
looking statements can be guaranteed. Actual results may vary materially. We undertake no obligation to update any forward-
looking statement, whether as a result of new information, future events or otherwise, except as required by law. We caution you
not to place undue reliance on any forward-looking statements. Numerous risks, uncertainties and other factors could cause our
actual results to differ materially from expectations described in such forward-looking statements, including those discussed in
Item 1A of this Annual Report as updated by any subsequent Quarterly Reports on Forms 10-Q and Current Reports on Form
8-K we file with the Securities and Exchange Commission (the “SEC”).
ITEM 1. BUSINESS
Certain business terms used in this Annual Report are defined in the “Glossary and Acronyms” found at the end of this
section, and should be read in conjunction with the consolidated financial statements and related notes included in this Annual
Report.
Our Company
Vista Outdoor is a leading global designer, manufacturer and marketer of outdoor and shooting sports products. We
conduct our operations through two operating segments, Shooting Sports and Outdoor Products. We are headquartered in
Anoka, Minnesota and have 14 manufacturing and distribution facilities in the United States, Canada, Mexico, and Puerto Rico
along with international customer service, sales and sourcing operations in Asia, Canada, and Europe. Vista Outdoor was
incorporated in Delaware in 2014.
We serve the outdoor sports and recreation markets through a diverse portfolio of nearly 40 well-recognized brands that
provide consumers with a wide range of performance-driven, high-quality and innovative products, including sporting
ammunition, golf rangefinders, hydration products, outdoor accessories, outdoor cooking solutions, and protective equipment
for certain action sports. We serve a broad range of end consumers, including outdoor enthusiasts, hunters and recreational
shooters, athletes, as well as law enforcement and military professionals. Our products are sold through a wide variety of mass,
specialty and independent retailers and distributors, such as Academy, Amazon, Bass Pro Shops/Cabela's, Big Rock Sports,
Sports South, Sportsman's Warehouse, Target, and Walmart. We also sell certain of our products directly to consumers through
the relevant brand's website. We have a scalable, integrated portfolio of brands that allows us to leverage our deep customer
knowledge, product development and innovation, supply chain and distribution, and sales and marketing functions across
product categories to better serve our retail partners and end consumers.
Our brands are renowned and market leaders in many of their categories. Many of our brands have a rich, long-standing
heritage, such as Federal Premium, founded in 1922, and Bushnell, founded in 1948. We believe this brand heritage supports
our leading market share positions in multiple categories. For example, we believe we hold the No.1 sales position in the U.S.
markets for commercial and United States law enforcement ammunition, game calls, golf rangefinders, trap throwing devices,
biking and hiking hydration packs and biking helmets and accessories. To maintain the strength of our brands and drive revenue
growth, we invest in product innovation to continuously improve the performance, quality, and affordability of our products
while providing world-class customer support to our retail partners and end consumer. We have received numerous awards for
product innovation by respected industry publications and for customer service from our retail customers. Additionally, high-
profile professional sportsmen and athletes use and endorse our products, which we believe influences the purchasing behavior
of recreational consumers.
1
Segments
Vista Outdoor operates through two segments: Shooting Sports and Outdoor Products. In the fourth quarter of fiscal
2020, we realigned our internal reporting structure in a manner that caused the composition of our two operating segments to
change. Accordingly, effective April 1, 2019 and for the twelve months ended March 31, 2020, the Company's results of
operations will be discussed in terms of its new Shooting Sports and Outdoor Products segments structure. The comparative
periods in fiscal 2019 and 2018 have been revised to conform with this new presentation. Information regarding our segments is
further discussed below and is contained in Note 19, Operating Segment Information, to our consolidated financial statements
for financial information regarding our segments.
Shooting Sports
Our Shooting Sports segment generated approximately 68% of our external sales in fiscal 2020. The product lines within
our Shooting Sports segment are focused on the following categories:
• Centerfire ammunition;
• Rimfire ammunition;
• Shotshell ammunition;
• Reloading components;
• Optics, including binoculars, riflescopes, and telescopes;
• Shooting accessories, including reloading equipment, clay targets, and premium gun care products;
• Tactical accessories, including holsters, duty gear, bags and packs; and
• Archery and hunting accessories, including hunting arrows, game calls, hunting blinds, and game cameras;
Among these categories, we derive the largest portion of our sales from ammunition, which is a consumable, repeat
purchase product. The Shooting Sports segment designs, develops, produces, and sources ammunition for the hunting and sport
shooting enthusiast markets, as well as ammunition for local law enforcement, the U.S. government and international markets.
Outdoor Products
Our Outdoor Products segment generated approximately 32% of our external sales in fiscal 2020. The product lines
within our Outdoor Products segment are focused on the following categories:
• Helmets, goggles, and accessories for cycling, snow sports, action sports, and power sports
• Golf laser rangefinders and other golf-related accessories;
• Hydration packs and water bottles; and
• Outdoor cooking equipment, including grills, cookware, and camp stoves.
2
Our Brands
The brands in our Shooting Sports and Outdoor Products segments include the following:
Shooting Sports
Outdoor Products
Alliant Powder
American Eagle
Bee Stinger
Black Cloud
BLACKHAWK!
Blazer
Bushnell
Butler Creek
CCI
Champion Target
Eagle
Estate Cartridge
Federal Premium
Force on Force
Fusion
Gold Dot
Gold Medal
Gold Tip
Hoppe's
Lawman
Prairie Storm
Primos
Simmons
Speer
Syntech
Tasco
Uncle Mike's
Valkyrie
Weaver
Bell
Blackburn
Bushnell Golf
CamelBak
Camp Chef
CoPilot
Giro
Krash
Raskullz
Market Opportunity
We participate in the global market for consumer goods geared toward outdoor recreation and shooting sports. Spending
on outdoor recreation products in the U.S., including the purchase of gear for bicycling, camping, fishing, hunting,
motorcycling, off-roading, snow sports, trail sports, and wildlife viewing, totaled $93 billion in 2016, according to the 2017
Outdoor Recreation Economy National Report issued by the Outdoor Industry Association, which publishes data every five
years.
Shooting Sports Industry
Shooting sports products currently represent the majority of our sales. Examples of the shooting sports and related
activities that we market to include target shooting, hunting, archery and wildlife watching. We also sell ammunition for local
law enforcement, the U.S. government and international markets. The shooting sports industry historically has been a cyclical
industry that may be impacted by the current political climate, the timing of national elections, and other market factors.
Outdoor Recreation Industry
The outdoor recreation industry represents a large focus area of our business. Examples of the sports and activities we
target include, camping, outdoor cooking, cycling, golf, hiking and snow skiing. Our consumers often participate in more than
one of these activities.
Competitive Strengths
Portfolio of Leading Brands Focused on Outdoor Recreation and Shooting Sports
We have a diverse portfolio of shooting sports and outdoor recreation renowned brands, which are market leaders in many
of their categories. We seek to maintain our brand strength by developing performance-enhancing innovations, introducing new
products, engaging in product and brand marketing campaigns, providing marketing support to our strategic channel partners,
and establishing and maintaining a strong e-commerce presence to capitalize on the ongoing shift by consumers to online
shopping. We target selling prices that balance our premium positioning with our focus on affordability to capture a large
consumer base. Our brand strength and product innovations allow us to drive sales growth and deliver robust profit margins.
We employ a segmented brand strategy that leverages nearly 40 brands that are leaders in their categories. This approach
provides us with competitive advantages, including the following:
3
• Strong brand recognition, with the ability to command a leading market share position across several categories. For
example, our Federal ammunition brand has the number one market share in ammunition; Bushnell Golf maintains a
leading market share position in laser rangefinders; CamelBak is a leading provider of hydration system solutions for
individuals in the hiking, cycling, and winter sports markets; Bell is a leading provider of helmets for individuals in the
cycling market, and has a number one market share in motocross helmets; Giro is a leading provider of helmets,
footwear, and apparel for individuals in the cycling markets and helmets and goggles for the winter sports markets;
Primos is the number one market share leader in game calls; and Hoppe's brand has a number one market share in gun
cleaning solutions and accessories.
• Better insight into consumer preferences and market dynamics through information sharing across our portfolio. Our
strategic relationships with key accounts combined with our world-class customer service model deliver consumer
insights into our aligned product development organization and process. This information helps us develop and
maintain a robust new product pipeline.
Leading Innovation and Product Development Competencies
We believe our product development capabilities and intellectual property portfolio provide us with a strong competitive
advantage. By applying our engineering and manufacturing expertise, we have been able to bring to market new and innovative
products that maintain product differentiation while targeting affordability for our end consumers.
We have continuously invested in R&D and made disciplined investments in new technology to deliver sustainable
growth and satisfy the evolving needs of our customers. Our current intellectual property portfolio includes approximately 915
patents, providing us with valuable proprietary trade secrets and technological know-how that we share across our platform. We
employ approximately 90 dedicated design and product development professionals across the organization. Recent examples of
our innovative, market-leading products include:
• For the outdoor and fitness enthusiast, Camelbak introduced the Horizon drinkware collection, featuring durable full
powder coat finish to keep drinks tasting great, while the double-wall vacuum insulated stainless steel keeps them hot or
cold for hours on end. Individual items in the collection include, wine bottles, camp mugs and tumblers.
• For hunters, Federal launched the all-new Terminal Ascent, which seamlessly mates a tough, bonded hunting bullet with
an accurate, match-style projectile without sacrificing any aspect of performance. Unlike other so-called long-range
hunting bullets that can fail to perform on impact at lower velocities, Terminal Ascent expands as designed at close,
moderate and long ranges.
• For muzzleloaders, Federal introduced the Premium FireStick, which is the critical component of a whole new ignition
system that uses an encapsulated propellant charge that loads from the breech, with the bullet loaded from the muzzle.
The charge is completely impervious to moisture and loaded with clean-burning Hodgdon Triple Eight powder to the
same tight tolerances as Federal Premium factory ammunition, ensuring shot-to-shot consistency and accuracy
muzzleloaders have never experienced.
• For trail riding enthusiasts, Giro’s Manifest Spherical helmet uses a ball-and-socket design powered by MIPS®, the
market-leading brain protection system that helps to reduce rotational forces. Spherical Technology allows the outer
liner to rotate around the inner liner during a crash and also eliminates contact with a hard-plastic slip-plane. In addition
to leading head protection, the Manifest offers wide-open airflow thanks to the AURA reinforcing arch, which bolsters
structural integrity while allowing air to flow into the massive Wind Tunnel vents. The helmet provides a comfortable,
secure fit with the easy fit and positioning adjustments built into the Roc Loc Trail Air fit system and plush,
antimicrobial XT2 padding for exceptional sweat absorption.
• For golfers, Bushnell Golf introduced the Wingman Featuring high quality audio combined with having the ability to
receive audible GPS distances, the Wingman offers golfers a “first of its kind” experience. Wingman also features our
integrated BITE magnetic cart mount to provide golfers the convenience of having the speaker mounted right on the
cart bar. The Wingman features outstanding sound quality so you can listen to your music, and get audible GPS
distances when connected to your music source, and the Bushnell Golf App.
• The new Tour V5 features include an integrated BITE magnetic cart mount, PinSeeker with Visual JOLT and improved
magnification and clarity. Also available in Tour V5 Shift featuring our patented Slope Technology that provides golfers
the most precise compensated distances in golf.
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• Camp Chef introduced the Woodwind WIFI collection. Equipped with our new PID and WIFI enabled controller, you
are able to change the temperature, set timers, and receive notifications when your meat reaches your set temperature
and tailor the grill’s Smoke Number on the Camp Chef Connect App.
• For our law enforcement and military customers, Eagle introduced the T-series holsters. With its streamlined thumb-
activated retention, the T-Series keeps firearms at the ready while maintaining total security. The combination of a
drawing motion that operates off of the Master Grip Principle and a combination of reinforced outer polymer and
smooth, sound-dampening, hydrophobic lining ensures the T-Series will perform no matter the elements and situation.
Proven Manufacturing, Global Sourcing, and Distribution Platform
We believe that our state-of-the-art manufacturing expertise, sourcing and distribution capabilities, and high-quality retail,
wholesale and distributor networks allow us to produce, deliver and replenish products in a more efficient and faster manner
than our competitors. We believe this speed allows us to better serve the needs of our customers and end consumers and capture
market share. We also believe the scale and scope of our manufacturing and distribution operations also allows us to be one of
the lowest-cost producers in many of our product categories.
Integrated supply chain management is a core focus of our company. We procure large quantities of raw materials for our
manufacturing operations and we leverage negotiating disciplines and production methods, with the objective of obtaining the
best price and delivery available as well as low-cost conversion of raw materials into finished product. We also source finished
product both domestically and internationally for global distribution. We continuously seek to improve our vendor base as well
as our in-country support and oversight, and, through our integrated supply chain management process, we seek to provide
year-over-year reductions in product costs. We believe the scope and scale of our sourcing network is not easily replicated.
We maintain positive relationships with our retail partners based on trust and professionalism. Our long-standing
commitment to our customers, diverse product offering and focus on profitability for both our company and our retail partners
have enabled us to gain shelf space and secure premium placement of our products at many major retailers. Our top retail and
distributor partners include Academy, Amazon, Bass Pro Shops/Cabela's, Big Rock Sports, Sports South, Sportsman's
Warehouse, Target, and Walmart. Our management team interfaces directly with the executives of many of our top retail
partners to ensure we are delivering the products our retailers need to meet the demands of the end consumer in the most
efficient and profitable manner possible. Furthermore, we believe our scale is a unique competitive advantage that allows us to
leverage our platform to efficiently and profitably service our largest retail customers. For example, we work with our key retail
customers to develop marketing and advertising campaigns, provide inventory replenishment support, and organize product
category merchandising plans. These capabilities give us an advantage as we believe few competitors offer this level of retail
support or a more comprehensive product portfolio.
Our Strategy
In fiscal year 2019, Vista Outdoor embarked on its multi-year strategic transformation plan to reposition the Company to
be the leading designer, manufacturer, and marketer of consumer products in the outdoor sports and recreation markets. The
primary goal of the transformation plan is to drive profitable growth by delivering innovative products and industry leading
customer and online customer experiences. Cost savings are re-invested into improvements needed in capabilities, systems,
innovation and growth opportunities. Vista Outdoor believes this plan will enable the Company to deliver long-term sustainable
and profitable growth and create value for shareholders.
To achieve its multi-year strategic transformation goals, the Company is relentlessly focused on the following five
strategic pillars, which define key priorities and investment focus areas:
• Optimize our Organizational Structure: Investing in talent while reducing costs and building a culture of agility,
efficiency, and innovation.
• Create Leading Centers of Excellence in Operational Excellence and E-Commerce: Leveraging our shared
resources, expertise and scale to:
achieve operational excellence and improve margins across each of our brands; and
accelerate and enhance e-commerce, direct-to-consumer and digital marketing capabilities across all of our
brands.
• Reducing Financial Leverage: Strengthening the Company’s balance sheet, improving financial flexibility, and
paying down debt though enhanced cash-flow generation and the divestiture of non-core businesses.
• Returning to Organic Growth: Identifying and capturing opportunities for organic growth and market share
expansion by:
5
Allocating capital to our brands to aid in their development of new and innovative products that serve the
needs and preferences of their core consumers; and
Leveraging and expanding our distribution channels to expand the commercial presence of all of our brands
and efficiently deliver product to meet consumer demand and shopping behavior.
• Exploring Tuck-in Acquisitions: After reducing financial leverage, deploy a stronger balance sheet to acquire smaller,
complimentary businesses that, through the help of our Centers of Excellence, we can take to the next level in terms of
sales and profitability.
The first phase of our strategic transformation plan focused on stabilizing our business and building a strong foundation
for the future by improving profitability, enhancing operational efficiency, and reducing financial leverage though enhanced
cash-flow generation and the divestiture of non-core businesses. Vista Outdoor has made significant progress to date toward
these goals by making key leadership changes, investing in digital and e-commerce platforms, addressing the Company’s cost
structure and strengthening the Company’s balance sheet. Learnings from the last two years have been incorporated into the
Company’s forward-looking plans to continue to improve both financial and operational performance and accelerate value
creation.
Beginning in fiscal year 2021, we intend to build on the capabilities developed during the first two years of our
transformation, with an additional emphasis going forward on driving long-term, profitable organic sales growth. Vista
Outdoor has plans in place under each of its five strategic pillars to deliver long-term, sustainable, profitable growth and
improved cash generation, solidifying the Company’s position as the outdoor sports and recreation market leader.
Customers and Marketing
Our primary customers are retailers and distributors who serve outdoor enthusiasts, hunters, recreational shooters and
athletes, as well as law enforcement and military professionals. Sales to our top ten customers accounted for approximately
40% of our consolidated net sales in fiscal 2020. In fiscal 2020, U.S. customers represented approximately 83% of our sales and
foreign customers represented approximately 17% of our sales. Of our fiscal 2020 sales, approximately 15% was to law
enforcement and military professionals. See Note 19, Operating Segment Information, to the consolidated financial statements
included in this Annual Report for further information regarding our customers and geographic information regarding our sales.
We believe the outdoor recreation and shooting sports industries are led by enthusiasts with a passion for reliable, high-
performance products, who rely on a wide variety of media for opinions and recommendations about available products. We use
paid, earned, shared, and owned media to enhance the perception of our brands and products and to reinforce our leadership
positions in the market. We supplement this exposure with data-driven print and digital advertising that is designed to maximize
reach and return on investment. We have an industry-leading digital media presence that includes YouTube influencers and
Range365, a Vista Outdoor branded content site. Our goal is to strengthen our existing consumers' brand loyalty while at the
same time reaching new users of our products.
E-commerce distribution channels, including our brands’ direct-to-consumer websites, represent an increasing portion of
our sales across all of our brands. Through our shared E-commerce Center of Excellence, we deploy resources and expertise to
all of our brands to help them accelerate the growth of their presence in these channels and respond to changes in consumer
shopping behavior.
Quality Assurance
We maintain a disciplined quality assurance process. We set stringent metrics to drive year-over-year quality
improvements. We also have customer call centers, which allow us to collect important customer data and feedback on our
customer service to ensure that our customers and end consumers are satisfied with our products and customer service.
Employees
We employ approximately 4,400 people. We have no union-represented employees. We have had no strikes or work
stoppages during the last five years. We believe that our employee relations generally are good.
Manufacturing and Supply
We operate 14 manufacturing and distribution facilities in the United States, Canada, Mexico, and Puerto Rico.
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We source finished product both domestically and internationally for global distribution. Our supply chain and logistics
infrastructure gives us the ability to serve a broad array of wholesale and retail customers, many of whom rely on us for
services such as category management, marketing campaigns, merchandising and inventory replenishment. Our strong
wholesale and retail relationships and diverse product offering provide a unique competitive advantage.
Competition
Competition in the markets in which we operate is based on a number of factors, including price, quality, product
innovation, performance, reliability, styling, product features, and warranties, as well as sales and marketing programs. Given
the diversity of our product portfolio, we have various significant competitors in each of our markets, including: Nikon and
Vortex in the optics market; Hydro Flask, Contigo, Yeti, Osprey and Nalgene in the hydration systems market; Traeger, Pit
Boss, Blackstone and Lodge in the outdoor cooking market; Schwinn, Bontrager, Smith, Specialized and Shoei in the bike and
snow helmet and accessories markets; Garmin and Nikon in the golf electronics market; Remington Arms, Winchester
Ammunition of Olin Corporation, and various smaller manufacturers and importers, including Black Hills Ammunition, CBC
Group, Fiocchi Ammunition, Hornady, PMC, Rio Ammunition, and Wolf in the ammunition market.
Seasonality
Our business experiences a certain level of seasonality. Sales of our spring products and summer products, such as golf
accessories, can be adversely impacted by unseasonably cold or wet weather in those periods. Our winter sport accessories sales
can be negatively impacted by unseasonably warm or dry weather. Sales of our premium hunting accessories are generally
highest during the months of August through December due to shipments around the fall hunting season and holidays.
Intellectual Property
In the highly competitive business in which we operate, our tradenames, service marks, and trademarks are important to
distinguish our products and services from our competitors. We rely on trade secrets, continuing technological innovations, and
licensing arrangements to maintain and improve our competitive position. We also have a portfolio of approximately 915 U.S.
and foreign patents, and we believe these patents, as well as unpatented research, development, and engineering skills make
important contributions to our business. We are not aware of any facts which would negatively impact our continuing use of
any of our tradenames, service marks, trademarks, or patents.
Regulatory Matters
Like many other manufacturers and distributors of consumer products, we are required to comply with numerous laws,
rules, and regulations, including those surrounding labor and employment law, environmental law, consumer product safety,
data privacy and security, workplace safety, and the export and import of our products. These laws, rules and regulations
currently impose significant compliance requirements on our business, and more restrictive laws, rules, and regulations may be
adopted in the future. We believe we are in material compliance with all applicable domestic and international laws and
regulations.
Our operations are subject to numerous international, federal, state and local laws and regulations relating to
environmental protection, including those governing the discharge, treatment, storage, transportation, remediation and disposal
of hazardous materials and wastes, and restoration of damages to the environment, as well as health and safety matters. We
believe that our operations are in material compliance with these laws and regulations and that forward-looking, proper and
cost-effective management of air, land, and water resources is vital to the long-term success of our business. Our environmental
policy identifies key objectives for implementing this commitment throughout our operations. We incur operating and capital
costs on an ongoing basis to comply with environmental requirements, and could incur significant additional costs as a result of
more stringent requirements that may be promulgated in the future.
Some environmental laws, such as the U.S. federal Superfund law and similar state laws, can impose liability, without
regard to fault, for the entire cost of the cleanup of contaminated sites on current or former site owners and operators or parties
who sent wastes to such sites. We are conducting investigation and/or remediation activities at certain of our current or former
sites where impacts from our historical operations have been identified. Certain of our former subsidiaries have been identified
as potentially responsible parties (“PRP”), along with other parties, in regulatory agency actions associated with hazardous
waste sites. While uncertainties exist with respect to the amounts and timing of the ultimate environmental liabilities at these
sites, based on currently available information, we do not currently expect that these potential liabilities, individually or in the
aggregate, will have a material adverse effect on our operating results, financial condition, or cash flows. We could, however,
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incur substantial additional costs as a result of any additional obligations imposed or conditions identified at these or other sites
in the future.
As a manufacturer and distributor of consumer products, we are subject to various domestic and international consumer
product safety laws, such as the Consumer Products Safety Act, which empowers the Consumer Products Safety Commission to
investigate and deem certain of our products as unsafe or hazardous. Under certain circumstances, the Consumer Products
Safety Commission or similar international agencies could ask a court to require us to repurchase or recall one or more of our
products. In addition, laws regulating certain consumer products exist in some cities and states, as well as in other countries in
which we sell our products.
We are also subject to the rules and regulations of the ATF and various state and international agencies that control the
manufacture, export, import, distribution, and sale of firearms, explosives, and ammunition. If we fail to comply with these
rules and regulations, these agencies may limit our growth or business activities, or, in extreme cases, revoke our licenses to do
business. Our business, as well as the business of all producers and marketers of ammunition, is also subject to numerous
federal, state, local, and foreign laws, regulations and protocols. Applicable laws:
• require the licensing of all persons manufacturing, exporting, importing, or selling ammunition as a business;
• require labeling and tracking the acquisition and disposition certain types of ammunition, and certain related products;
• regulate the use and storage of gun powder or other energetic materials;
• regulate the interstate sale of certain ammunition;
• prohibit the interstate mail-order sale of ammunition;
• regulate our employment of personnel with certain criminal convictions; and
• restrict access to ammunition manufacturing facilities for certain individuals from other countries or with criminal
convictions.
In some cases, the handling of our technical data and the international sale of our products is also regulated by the U.S.
Department of State and Department of Commerce. These agencies oversee the export of certain of our products including
ammunition and night vision devices and related technical data, amongst other products. In many instances, we must obtain
export authorizations for international shipments. To date, most of our requests for export licenses have been approved. These
agencies can impose civil and criminal penalties, including preventing us from exporting our products, for failure to comply
with applicable laws and regulations.
We are also regulated by the U.S. Department of Homeland Security, which regulates the out-bound and in-bound
movement of certain of our products, as well as components, parts, and materials used in our manufacturing processes. The
agency is authorized to detain and seize shipments, as well as penalize us for failure to comply with applicable regulations. The
agency also works closely with the Department of State and the Department of Commerce to protect of national security.
Corporate Information
Vista Outdoor was formed as a Delaware corporation on February 9, 2015, pursuant to the spin-off by Orbital ATK of its
Sporting Group business to Orbital ATK stockholders. Vista Outdoor is headquartered in Anoka, Minnesota and has 14
manufacturing and distribution facilities in the United States, Canada, Mexico, and Puerto Rico along with international
customer service, sales and sourcing operations in Asia, Canada, and Europe.
Available Information
You can find reports on our company filed with the SEC free of charge on our internet site at www.vistaoutdoor.com
under the "Investor Relations" heading. These include our annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, proxy statement and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We make these reports available as soon as
reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information found on our website is
not part of this or any other report that we file with or furnish to the SEC. Our SEC filings are also available to the public over
the Internet at the SEC’s website at www.sec.gov.
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Glossary and Acronyms
Bushnell: Refers to Bushnell Group Holdings, Inc.
ABL Revolving Credit Facility : Refers to the Vista Outdoor Inc. Asset-Based Revolving Credit Agreement, dated as of
November 19, 2018, among Vista Outdoor Inc., Wells Fargo Bank, National Association, and the Lenders party thereto, as
amended from time-to-time.
Junior Term Loan: Refers to the Term Loan Credit Agreement, dated as of November 19, 2018, among Vista Outdoor Inc. and
GACP Finance Co., LLC.
New Credit Facilities: Collectively refers to the ABL Revolving Credit Facility, the Term Loan and the Junior Term Loan.
EBIT: Earnings (loss) before interest and income taxes
Lake City: Refers to the Lake City Army Ammunition Plant operated by a subsidiary of Northrop Grumman.
Orbital ATK: Refers to Alliant Techsystems Inc. (ATK) prior to February 9, 2015, Orbital ATK for periods from February 9,
2015 to June 6, 2018, and as a division of Northrop Grumman for periods subsequent to June 6, 2018.
Merger: Refers to a subsidiary of ATK merging with and into Orbital Sciences Corporation with Orbital Sciences Corporation
surviving the Merger as a wholly owned subsidiary of ATK, immediately following the Spin-Off.
Spin-Off: Refers to Orbital ATK's completion of the spin-off of its Sporting Group into Vista Outdoor on February 9, 2015.
Term Loan: Refers to the Term Loan Credit Agreement, dated as of November 19, 2018, among Vista Outdoor Inc., Wells Fargo
Bank, National Association, and the Lenders party thereto, as amended from time-to-time.
Vista Outdoor, the Company, we, our, and us: Refers to Vista Outdoor Inc. for disclosures relating to periods subsequent to
February 9, 2015. For disclosures relating to periods prior to February 9, 2015, refers to the ATK Sporting Group.
ATF: Bureau of Alcohol, Tobacco, Firearms and Explosives
ITAR: International Traffic in Arms Regulations
PRP: Potentially responsible party
R&D: Research and development
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ITEM 1A. RISK FACTORS
We operate in a rapidly changing business environment that involves numerous risks and uncertainties. The
following discussion addresses risks and uncertainties that could cause, or contribute to causing, our actual results to
differ from our expectations in material ways. These risks and uncertainties, or other events that we do not currently
anticipate or that we currently deem immaterial also may affect our results of operations, cash flows and financial
condition. The trading price of our common stock could also decline due to any of these risks. The following information
should be read in conjunction with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and the financial statements and related notes included in Part II, Item 8, “Financial Statements
and Supplementary Data” of this Annual Report.
The COVID-19 pandemic has adversely affected, and will continue to adversely affect, our business, revenues,
financial condition and results of operations.
In December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China, and has
since spread globally. To date, this global pandemic has severely impacted levels of economic activity around the world.
In response to this pandemic, governments and public health officials of many countries, states, cities and other
geographic regions have taken preventative or protective actions to mitigate the spread and severity of COVID-19, such
as imposing restrictions on travel and business operations and advising or requiring individuals to limit or forego their
time outside of their homes by imposing shelter-in-place orders. We cannot presently predict the scope and ultimate
severity or duration of the coronavirus pandemic and related business shutdowns or disruptions to our business, but the
coronavirus pandemic and the resulting economic and commercial shutdowns to date have negatively impacted our ability
to conduct business in accordance with our plans. Disruptions to our business include restrictions on the ability of our
sales and marketing personnel to travel, disruptions of our global supply chain, disruptions in manufacturing, and reduced
demand and/or suspension of operations by our customers. A number of our retail customers have been forced to
temporarily close their businesses, which has resulted in decreased orders for many of our products, which has negatively
impacted our revenue.
Our business is particularly sensitive to reductions in discretionary consumer spending, and we cannot predict the
degree to, or the time period over, which our business will be affected by the COVID-19 pandemic. There are numerous
uncertainties associated with this outbreak, including the number of individuals who will become infected, whether a
vaccine or cure that mitigates the effect of the virus will be synthesized, and, if so, when such vaccine or cure will be
ready to be used, the extent of the protective and preventative measures that have been put in place by both governmental
entities and other businesses and those that may be put in place in the future, whether the coronavirus’ impact will be
seasonal, the duration of store closures, the impact on the U.S. and world economy, and various other uncertainties.
Further, even after containment of the virus or after some or all of our retail customers are able to resume operations, any
significant reduction in consumer willingness to visit retail stores, the levels of consumer discretionary spending, or
employee willingness to return to work would result in a further loss of revenues and cash flows.
We expect COVID-19 will continue to negatively affect customer demand in our fiscal year 2021, and the duration
of this negative impact is uncertain. While we expect some recovery in some markets in the second half of the year, the
impact of COVID-19 on our sales could still be significant. We do not yet know the full extent of the impact of
COVID-19 on our business, financial condition and results of operations. The extent to which the COVID-19 pandemic
may impact our business, operating results, financial condition, or liquidity in the future will depend on future
developments which are evolving and highly uncertain including the duration of the outbreak, travel restrictions, business
and workforce disruptions, the timing of reopening the economic regions in which we and our customers do business and
the effectiveness of actions taken to contain and treat the disease. In addition, a resurgence in the number of cases of
COVID-19 in the geographies in which we and our customers operate could further negatively impact our business.
Competition in our industry may hinder our ability to execute our business strategy, achieve profitability or maintain
relationships with existing customers.
We operate in a highly competitive industry and we compete against other manufacturers that have well-established
brand names and strong market positions. Given the diversity of our product portfolio, we have various significant
competitors in each of our markets, including: Nikon and Vortex in the optics market; Hydro Flask, Contigo, Yeti, Osprey
and Nalgene in the hydration systems market; Traeger, Pit Boss, Blackstone and Lodge in the outdoor cooking market;
Schwinn, Bontrager, Smith, Specialized and Shoei in the bike and snow helmet and accessories markets; Garmin and
Nikon in the golf electronics market; Remington Arms, Winchester Ammunition of Olin Corporation, and various smaller
manufacturers and importers, including Black Hills Ammunition, CBC Group, Fiocchi Ammunition, Hornady, PMC, Rio
Ammunition, and Wolf in the ammunition market.
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Competition in the markets in which we operate is based on a number of factors, including price, quality, product
innovation, performance, reliability, styling, product features and warranties, as well as sales and marketing programs.
Competition could cause price reductions, reduced profits or losses or loss of market share, any of which could have a
material adverse effect on our business, financial condition or results of operations. Certain of our competitors may be
more diversified than us or may have financial and marketing resources that are substantially greater than ours, which
may allow them to invest more heavily in intellectual property, product development and advertising. Since many of our
competitors also source their products from third-parties, our ability to obtain a cost advantage through sourcing is
reduced.
Certain of our competitors may be willing to reduce prices and accept lower profit margins to compete with us.
Further, retailers often demand that suppliers reduce their prices on mature products, which could lead to lower margins.
Our products typically face more competition internationally where foreign competitors manufacture and market
products in their respective countries, which allows those competitors to sell products at lower prices, which could
adversely affect our competitiveness.
In addition, our products compete with many other sporting and recreational products for the discretionary spending
of consumers. Failure to effectively compete with these competitors or alternative products could have a material adverse
effect on our performance.
Our revenues and results of operations may fluctuate unexpectedly from quarter-to-quarter, which may cause our
stock price to decline.
Our revenues and results of operations have fluctuated significantly in the past and may fluctuate significantly in the
future due to various factors, including, but not limited to:
• market acceptance of our products and services;
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general economic conditions;
the timing of large domestic and international orders;
cancellation of existing orders;
the outcome of any existing or future litigation;
adverse publicity surrounding our products, the safety of our products or the use of our products;
changes in our sales mix;
new product introduction costs;
complexity in our integrated supply chain;
increased raw material expenses;
changes in amount and/or timing of our operating expenses;
natural disasters and public health crises or other significant catastrophic events, such as the global COVID-19
pandemic, in markets in which we, our customers, suppliers and manufacturers operate; and
changes in laws and regulations that may affect the marketability of our products.
As a result of these and other factors, we believe that period-to-period comparisons of our results of operations may
not be meaningful in the short term, and our performance in a particular period may not be indicative of our performance
in any future period.
Our results of operations could be materially harmed if we are unable to forecast demand for our products accurately.
We often schedule internal production and place orders for products with third-party suppliers before receiving firm
orders from our customers. If we fail to accurately forecast customer demand, we may experience excess inventory levels
or a shortage of products to deliver to our customers. Factors that could affect our ability to accurately forecast demand
for our products include:
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an increase or decrease in consumer demand for our products or for the products of our competitors;
our failure to accurately forecast customer acceptance of new products;
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new product introductions by competitors;
changes in our relationships with customers;
changes in general market conditions or other factors, which may result in cancellations of orders or a reduction
or increase in the rate of reorders placed by retailers, including as a result of natural disasters and public health
crises or other significant catastrophic events, such as the global COVID-19 pandemic;
changes in laws and regulations governing the activities for which we sell products, such as hunting and shooting
sports;
• weak economic conditions or consumer confidence, which could reduce demand for discretionary items such as
our products; and
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the domestic political environment, including debate over the regulation of ammunition and related products.
Inventory levels in excess of customer demand may result in inventory write-downs and the sale of excess inventory
at discounted prices, which could have an adverse effect on our business, financial condition or results of operations. If
we underestimate demand for our products, our manufacturing facilities or third-party suppliers may not be able to create
products to meet customer demand, and this could result in delays in the shipment of products and lost revenues, as well
as damage to our reputation and customer relationships. We may not be able to manage inventory levels successfully to
meet future order and reorder requirements.
We may need to raise additional capital, and we cannot be sure that additional financing will be available.
We will need to fund our ongoing working capital, capital expenditures and financing requirements through cash
flows from operations and new sources of financing. Our ability to obtain future financing will depend on, among other
things, our financial condition and results of operations as well as on the condition of the capital markets or other credit
markets at the time we seek financing. Increased volatility and disruptions in the financial markets, including as a result of
natural disasters and public health crises or other significant catastrophic events, such as the global COVID-19 pandemic,
could make it more difficult and more expensive for us to obtain financing. We cannot be assured that we will have access
to the capital markets or other credit markets on terms we find acceptable or at all.
The terms of the agreements governing our debt restrict our current and future operations, particularly our ability to
incur debt that we may need to fund initiatives in response to changes in our business, the industries in which we operate,
the economy and governmental regulations.
Our sales are highly dependent on purchases by several large retail customers, and we may be adversely affected by the
loss of, or any significant decline in sales to, one or more of these customers.
The U.S. retail industry serving the outdoor recreation market has become relatively concentrated. Sales to the top
ten customers accounted for approximately 40% of our consolidated net sales in the fiscal year 2020. Further
consolidation in the U.S. retail industry could increase the concentration of our retail store customer base in the future.
Although we have long-established relationships with many of our retail customers, as is typical in the markets in
which we compete, we do not have long-term purchase agreements with our customers. As such, we are dependent on
individual purchase orders. As a result, these retail customers would be able to cancel their orders, change purchase
quantities from forecast volumes, delay purchases, change other terms of our business relationship or cease to purchase
our products entirely. Our customers’ purchasing activity may also be impacted by general economic conditions as well as
natural disasters and public health crises or other significant catastrophic events, such as the global COVID-19 pandemic.
For example, several large retail outdoor products retailers have recently closed many of their locations in response to the
COVID-19 pandemic, which has resulted in reduced orders from those customers and negatively impacted sales revenue
for several of our brands. A continuation of such store closures, or further closures after reopening because of a
resurgence of the COVID-19 pandemic, would have an adverse affect on our future sales revenue.
The loss of any one or more of our retail customers or significant or numerous cancellations, reductions, delays in
purchases or changes in business practices by our retail customers could have an adverse effect on our business, financial
condition or results of operations including but not limited to reductions in sales volumes and profits, inability to collect
receivables, and increases in inventory levels.
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We rely on an outside supplier for certain of our ammunition products.
We currently have agreements with a subsidiary of Northrop Grumman pursuant to which such subsidiary
manufactures and supplies certain ammunition products from the Lake City Army Ammunition Plant in Independence,
Missouri that have historically represented a significant portion of our ammunition sales. That agreement expires on
September 30, 2020. Beginning on October 1, 2020, management and control of the Lake City Army Ammunition Plant
will transition to Olin Corporation’s Winchester business, which is a competitor of our ammunition business. After
expiration of our current agreement with Northrop Grumman, we may not be able to purchase Lake City Army
Ammunition Plant products from Winchester on favorable terms or at all, and we may not be able to purchase ammunition
products to replace the products we currently purchase from the Lake City Army Ammunition Plant from another supplier.
If we fail to maintain an adequate supply of such ammunition products, our business, financial condition or results of
operations could be adversely affected.
Significant supplier capacity constraints, supplier production disruptions, supplier quality issues or price increases
could increase our operating costs and adversely impact the competitive positions of our products.
Our reliance on third-party suppliers for various product components and finished goods exposes us to volatility in
the availability, quality and price of these product components and finished goods. A disruption in deliveries from our
third-party suppliers, including as a result of natural disasters and public health crises or other significant catastrophic
events, such as the global COVID-19 pandemic, capacity constraints, production disruptions, price increases or decreased
availability of raw materials or commodities could have an adverse effect on our ability to meet our commitments to
customers or increase our operating costs. For example, the closure of certain of our suppliers' manufacturing operations
in Asia in response to the COVID-19 pandemic temporarily impacted the availability of new products for certain of our
brands in the fourth quarter of fiscal year 2020, which had a negative impact on our revenue. Future closures of our
suppliers' manufacturing operations in response to the COVID-19 pandemic could have an adverse affect on our revenue
in future periods.
Our inability to obtain sufficient quantities of components, parts, raw materials and other supplies from independent
sources necessary for the production of our products could also result in reduced or delayed sales or lost orders. Any delay
in or loss of sales or orders could adversely impact our results of operations. Many of the components, parts, raw
materials and other supplies used in the production of our products are available only from a limited number of suppliers.
We do not have long-term supply contracts with some of these suppliers. As a result, we could be subject to increased
costs, supply interruptions or orders and difficulties in obtaining materials. Our suppliers also may encounter difficulties
or increased costs in obtaining the materials necessary to produce their products that we use in our products. The time lost
in seeking and acquiring new sources could have an adverse effect on our business, financial condition or results of
operations.
Quality issues experienced by third-party suppliers could also adversely affect the quality and effectiveness of our
products and result in liability and reputational harm.
We face risks relating to our international business that could adversely affect our business, financial condition or
results of operations.
Our ability to maintain the current level of operations in our existing international markets and to capitalize on
growth in existing and new international markets is subject to risks associated with our doing business internationally,
including:
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issues related to managing international operations;
potentially adverse tax developments;
lack of sufficient protection for intellectual property in some countries;
currency exchange;
import and export controls;
social, political, and economic instability in the countries in which we operate;
changes in economic conditions;
the occurrence of natural disasters, public health crises or other significant catastrophic events, such as the global
COVID-19 pandemic, in countries in which we operate;
local laws and regulations, including those governing labor, product safety and environmental protection;
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changes to international treaties and regulations; and
limitations on our ability to efficiently repatriate cash from our foreign operations.
Any one or more of these risks could adversely affect our business, financial condition or results of operations.
Changes in U.S. and Global Trade Policies, Including New and Potential Tariffs on Imported Goods, Could Increase
Our Cost of Goods or Limit Our Access to Export Markets.
In recent years, protectionist trade policies have been increasing around the world, including in the United States. It
is unclear what additional tariffs, duties, border taxes or other similar assessments on imports might be implemented in
the future and what effects these changes may have on retail markets or our operating performance. Additional
protectionist trade legislation in either the United States or foreign countries, including changes in the current tariff
structures, export or import compliance laws, or other trade policies, could reduce our ability to sell our products in
foreign markets, the ability of foreign customers to purchase our products, and our ability to import components, parts,
and products from foreign suppliers. In particular, increases in tariffs on goods imported into the United States could
increase the cost to us of such merchandise (whether imported directly or indirectly) and cause increases in the prices at
which we sell such merchandise to our customers, which could materially adversely affect the financial performance of
our business.
Failure to comply with the U.S. Foreign Corrupt Practices Act or other applicable anti-corruption legislation, as well
as export controls and trade sanctions, could result in fines or criminal penalties.
The international nature of our business exposes us to trade sanctions and other restrictions imposed by the United
States and other governments. The U.S. Departments of Justice, Commerce, Treasury and other agencies and authorities
have a broad range of civil and criminal penalties they may seek to impose against companies for violations of the
Foreign Corrupt Practices Act ("FCPA"), export controls, anti-boycott provisions and other federal statutes, sanctions and
regulations and, increasingly, similar or more restrictive foreign laws, rules and regulations, which may also apply to us.
In recent years, U.S. and foreign governments have increased their oversight and enforcement activities with respect to
these laws and we expect the relevant agencies to continue to increase their enforcement efforts.
In foreign countries in which we have operations, a risk exists that our associates, contractors or agents could, in
contravention of our policies, engage in business practices prohibited by U.S. laws and regulations applicable to us, such
as the FCPA, or the laws and regulations of other countries, such as the UK Bribery Act. We maintain a policy, Code of
Business Ethics, prohibiting such business practices. Nevertheless, we remain subject to the risk that one or more of our
associates, contractors or agents, including those based in or from countries where practices that violate such U.S. laws
and regulations or the laws and regulations of other countries may be customary, will engage in business practices that are
prohibited by our policies, circumvent our compliance programs and, by doing so, violate such laws and regulations. Any
such violations, even if prohibited by our internal policies, could adversely affect our business or financial performance
and our reputation.
By virtue of these laws and regulations we may be obliged to limit our business activities, we may incur costs for
compliance programs and we may be subject to enforcement actions or penalties for noncompliance. A violation of these
laws, sanctions or regulations could result in restrictions on our exports, civil and criminal fines or penalties and could
adversely impact our business, financial condition or results of operations.
Seasonality and weather conditions may cause our results of operations to vary from quarter to quarter.
Because many of the products we sell are used for seasonal outdoor sporting activities, our results of operations may
be significantly impacted by unseasonable weather conditions. For example, our winter sport accessories sales are
dependent on cold winter weather and snowfall, and can be negatively impacted by unseasonably warm or dry weather.
Conversely, sales of our spring products and summer products, such as golf accessories, can be adversely impacted by
unseasonably cold or wet weather. Accordingly, our sales results and financial condition will typically suffer when
weather patterns do not conform to seasonal norms. We expect that sales of our spring and summer products for fiscal
2021 may also be adversely affected by the “stay at home” orders implemented by many state governments in connection
with the COVID-19 pandemic.
Sales of our hunting accessories are highest during the months of August through December due to shipments
around the fall hunting season and holidays. In addition, sales of our ammunition have historically been lower in our first
fiscal quarter. The seasonality of our sales may change in the future. Seasonal variations in our results of operations may
14
reduce our cash on hand, increase our inventory levels and extend our accounts receivable collection periods. This in turn
may cause us to increase our debt levels and interest expense to fund our working capital requirements.
Our success depends upon our ability to introduce new compelling products into the marketplace and respond to
customer preferences.
Our efforts to introduce new products into the marketplace may not be successful, and any new products that we
introduce may not result in customer or market acceptance. We both develop and source new products that we believe will
match customer preferences. The development of new products is a lengthy and costly process and may not result in the
development of a successful product. In addition, the sourcing of our products is dependent, in part, on our relationships
with our third-party suppliers. If we are unable to maintain these relationships, we may not be able to continue to source
products at competitive prices that both meet our standards and appeal to our customers. Failure to develop or source and
introduce new products that consumers want to buy could decrease our sales, operating margins and market share and
could adversely affect our business, financial condition or results of operations.
Even if we are able to develop or source new products, our efforts to introduce new products may be costly and
ineffective. When introducing a new product, we incur expenses and expend resources to market, promote and sell the
new product. New products that we introduce into the marketplace may be unsuccessful or may achieve success that does
not meet our expectations for a variety of reasons, including failure to predict market demand, delays in introduction,
unfavorable cost comparisons with alternative products and unfavorable performance. Significant expenses related to new
products that prove to be unsuccessful for any reason will adversely affect our results of operations.
Customer preferences include the choice of sales channels. We may not be able to successfully respond to shifting
preferences of the end consumer from brick and mortar retail to online retail. Our efforts to introduce new sales channels
to respond to such a shift may be costly and ineffective.
Some of our products contain licensed, third-party technology that provides important product functionality and
features. The loss or inability to obtain and maintain any such licenses could have a material adverse effect on our
business.
Our products may contain technology licensed from third-parties that provides important product functionality and
features. We cannot assure you that we will have continued access to this technology. For example, if the licensing
company ceases to exist, either from bankruptcy, dissolution or purchase by a competitor, we may lose access to
important third-party technology and may not be able to obtain replacement technology on favorable terms or at all. In
addition, legal actions, such as intellectual property actions, brought against the licensing company could impact our
future access to the technology. Any of these actions could negatively impact our technology licensing, thereby reducing
the functionality and features of our products, and adversely affect our business, financial condition or results of
operations.
We manufacture and sell products that create exposure to potential product liability, warranty liability or personal
injury claims and litigation.
Some of our products are used in applications and situations that involve risk of personal injury and death. Our
products expose us to potential product liability, warranty liability and personal injury claims and litigation relating to the
use or misuse of our products including allegations of defects in manufacturing, defects in design, a failure to warn of
dangers inherent in the product or activities associated with the product, negligence and strict liability. If successful, such
claims could have a material adverse effect on our business.
Defects in our products could reduce demand for our products and result in a decrease in sales and market
acceptance and damage to our reputation.
Complex components and assemblies used in our products may contain undetected defects that are subsequently
discovered at any point in the life of the product. In addition, we obtain many of our products and component parts from
third-party suppliers and may not be able to detect defects in such products or component parts until after they are sold.
Defects in our products may result in a loss of sales, recall expenses, delay in market acceptance and damage to our
reputation and increased warranty costs, which could have a material adverse effect on our business, financial condition or
results of operations.
Although we maintain product liability insurance in amounts that we believe are reasonable, we may not be able to
maintain such insurance on acceptable terms, if at all, in the future and product liability claims may exceed the amount of
15
our insurance coverage. In addition, our reputation may be adversely affected by such claims, whether or not successful,
including potential negative publicity about our products.
We are subject to extensive regulation and could incur fines, penalties and other costs and liabilities under such
requirements.
Like other global manufacturers and distributors of consumer products, we are required to comply with a wide
variety of federal, state and international laws, rules and regulations, including those related to consumer products and
consumer protection, advertising and marketing, labor and employment, data protection and privacy, intellectual property,
workplace safety, the environment, the import and export of products, and tax. See Item 1 “Business-Regulatory Matters”
of this Annual Report for a description of the various laws and regulations our business is subject to. Our failure to
comply with applicable federal, state and local laws and regulations may result in our being subject to claims, lawsuits,
fines and adverse publicity that could have a material adverse effect on our business, results of operations and financial
condition. These laws, rules and regulations currently impose significant compliance requirements on our business, and
more restrictive laws, rules and regulations may be adopted in the future.
Changes in government policies and firearms and ammunition legislation could adversely affect our financial results.
The sale, purchase, ownership and use of firearms and ammunition are subject to numerous and varied federal, state
and local governmental regulations. Sales of our ammunition products are heavily correlated with sales of firearms, and
legislation restricting the sale or use of firearms could negatively affect sales of our ammunition products. Federal laws
governing firearms and ammunition include the National Firearms Act, the Federal Firearms Act, the Arms Export
Control Act and the Gun Control Act of 1968. These laws generally govern the manufacture, import, export, sale and
possession of firearms and ammunition. We hold all necessary licenses to legally sell ammunition in the United States.
In recent years, federal and state legislatures have increased their attention on the regulation of firearms and
ammunition. The bills proposed to date are extremely varied. If enacted, such legislation could effectively ban or severely
limit sale of certain categories of firearms, which would negatively impact sales of our related ammunition products. We
cannot be assured that the regulation of our business activities will not become more restrictive in the future and that any
such restrictions will not have a material adverse effect on our business.
If our efforts to protect the security of personal information about our customers and consumers are unsuccessful and
unauthorized access to that personal information is obtained, or we experience a significant disruption in our
computer systems or a cybersecurity breach, we could experience an adverse effect on our operations, we could be
subject to costly government enforcement action and private litigation and our reputation could suffer.
Our operations, especially our retail operations, involve the storage and transmission of our customers’ and
consumers’ proprietary information, such as credit card and bank account numbers, and security breaches could expose us
to a risk of loss of this information, government enforcement action and litigation and possible liability. Our payment
services may be susceptible to credit card and other payment fraud schemes, including unauthorized use of credit cards,
debit cards or bank account information, identity theft or merchant fraud.
If our security measures are breached as a result of third-party action, employee error, malfeasance or otherwise, and
as a result, someone obtains unauthorized access to our customers’ and consumers’ data, our reputation may be damaged,
our business may suffer, and we could incur significant liability. Because techniques used to obtain unauthorized access or
to sabotage systems change frequently and generally are not recognized until launched against a target, we may be unable
to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of our
security occurs, the public perception of the effectiveness of our security measures could be harmed and we could lose
customers and consumers, which could adversely affect our business.
We also rely extensively on our computer systems to manage our ordering, pricing, inventory replenishment and
other processes. Our systems could be subject to damage or interruption from various sources, including power outages,
computer and telecommunications failures, computer viruses, cyber security breaches, vandalism, severe weather
conditions, catastrophic events and human error, and our disaster recovery planning cannot account for all eventualities. If
our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to
repair or replace them, and we may experience loss of critical data and interruptions or delays in our ability to perform
critical functions, which could adversely affect our business, financial condition or results of operations.
16
We are exposed to risks associated with acquisitions, which could adversely affect our future financial results.
Our business strategy includes growth through acquisitions or other transactions. The expected benefits of any future
acquisitions or other transactions may not be realized. Costs could be incurred on pursuits or proposed acquisitions that
may never close that could significantly impact our business, financial condition or results of operations.
Additionally, after any acquisition, unforeseen issues and/or costs could arise that adversely affect our anticipated
returns or that are otherwise not recoverable as an adjustment to the purchase price. Even after careful integration efforts,
actual results of operations may vary significantly from initial estimates due to a variety of factors, including general
economic conditions affecting the market for our products.
Furthermore, if, due to declining market conditions or other factors, we determine that the carrying value of the
goodwill or other intangible assets associated with an acquired business exceeds the fair value of such assets, we may be
required to record a significant impairment charge in the period during which such determination was made, which would
negatively affect our results of operations. For example, in fiscal years 2020 and 2019 we recorded impairment charges to
the goodwill and identifiable indefinite-lived intangible assets associated with the Outdoor Recreation reporting unit, and
in fiscal year 2019 we recorded impairment charges to the goodwill and identifiable indefinite-lived intangible assets
associated with the Hunting and Shooting Accessories, and Action Sports reporting units.
We may engage in other strategic business transactions. Such transactions could result in unanticipated costs and
difficulties, may not achieve intended results and may require significant time and attention from management, which
could have an adverse impact on our business, financial condition or results of operations.
Risks may also include potential delays in adopting our financial and managerial controls and reporting systems and
procedures, greater than anticipated costs and expenses related to the integration of the acquired business with our
business, potential unknown liabilities associated with the acquired company, challenges inherent in effectively managing
an increased number of employees in diverse locations and the challenge of creating uniform standards, controls,
procedures, policies, and information systems. These and other risks relating to our acquisitions could have an adverse
effect on our business, financial condition or results of operations.
Our business is highly dependent upon our brand recognition and reputation, and the failure to maintain or enhance
our brand recognition or reputation would likely have an adverse effect on our business.
Our brand recognition and reputation are critical aspects of our business. We believe that maintaining and enhancing
our brands as well as our reputation are critical to retaining existing customers and attracting new customers. We also
believe that the importance of our brand recognition and reputation will continue to increase as competition in the markets
in which we compete continues to develop.
Our future growth and profitability will depend in large part upon the effectiveness and efficiency of our advertising,
promotion, public relations and marketing programs. These brand promotion activities may not yield increased revenue
and the effectiveness of these activities will depend on a number of factors, including our ability to:
•
•
•
determine the appropriate creative message, media mix and markets for advertising, marketing and promotional
initiatives and expenditures;
identify the most effective and efficient level of spending in each market, medium and specific media vehicle;
and
effectively manage marketing costs, including creative and media expenses, in order to maintain acceptable
customer acquisition costs.
We may implement new marketing and advertising strategies with significantly higher costs than our current
channels, which could adversely affect our results of operations. Implementing new marketing and advertising strategies
could also increase the risk of devoting significant capital and other resources to endeavors that do not prove to be cost
effective. We also may incur marketing and advertising expenses significantly in advance of the time we anticipate
recognizing revenue associated with such expenses, and our marketing and advertising expenditures may not generate
sufficient levels of brand awareness or result in increased revenue. Even if our marketing and advertising expenses result
in increased revenue, the increase in revenue might not offset our related marketing and advertising expenditures. If we
are unable to maintain our marketing and advertising channels on cost-effective terms or replace or supplement existing
marketing and advertising channels with similarly or more cost-effective channels, our marketing and advertising
expenses could increase substantially, our customer base could be adversely affected and our business, financial condition
or results of operations could be adversely impacted.
In addition, certain of our products and brands benefit from endorsements and support from particular sporting
enthusiasts, athletes or other celebrities, and those products and brands may become personally associated with those
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individuals. As a result, sales of the endorsed products could be materially and adversely affected if any of those
individuals’ images, reputations or popularity were to be negatively impacted.
Use of social media to disseminate negative commentary and boycotts may adversely impact our business.
There has been a substantial increase in the use of social media platforms, including blogs, social media websites,
and other forms of internet-based communications, which allow individuals access to a broad audience of consumers and
other interested persons. Negative commentary regarding us or our brands may be posted on social media platforms at any
time and may have an adverse impact on our reputation, business, or relationships with third-parties, including suppliers,
customers, investors, and lenders. Consumers value readily available information and often act on such information
without further investigation and without regard to its accuracy or context. The harm may be immediate without affording
us an opportunity for redress or correction.
Social media platforms also provide users with access to such a broad audience that collective action, such
as boycotts, can be more easily organized. Such actions could have an adverse effect on our business, financial condition,
results of operations and or cash flows.
Further, we serve the outdoor sports and recreation markets through a diverse portfolio of nearly 40 brands that
appeal to a broad range of end consumers. The perspectives of the broad range of consumers we serve are varied and can
cause conflict across brands.
We may incur substantial litigation costs to protect our intellectual property, and if we are unable to protect our
intellectual property, we may lose our competitive advantage. We may be subject to intellectual property infringement
claims, which could cause us to incur litigation costs and divert management attention from our business.
Our future success depends in part upon our ability to protect our intellectual property. Our protective measures,
including patents, trademarks, copyrights, trade secret protection and internet identity registrations, may prove inadequate
to protect our proprietary rights and market advantage. The right to stop others from misusing our trademarks and service
marks in commerce depends, to some extent, on our ability to show evidence of enforcement of our rights against such
misuse in commerce. Our failure to stop the misuse by others of our trademarks and service marks may lead to our loss of
trademark and service mark rights, brand loyalty and notoriety among our customers and prospective customers. The
scope of any patent to which we have or may obtain rights may not prevent others from developing and selling competing
products. In addition, our patents may be held invalid upon challenge, or others may claim rights in, or ownership of, our
patents. Moreover, we may become subject to litigation with parties that claim, among other matters, that we infringed
their patents or other intellectual property rights. The defense and prosecution of patent and other intellectual property
claims are both costly and time-consuming and could result in a material adverse effect on our business and financial
position.
Also, any intellectual property infringement claims against us, with or without merit, could be costly and time-
consuming to defend and divert our management's attention from our business. If our products were found to infringe a
third-party's proprietary rights, we could be forced to enter into costly royalty or licensing agreements in order to be able
to continue to sell our products or discontinue use of the protected technology. Such royalty and licensing agreements
may not be available on terms acceptable to us or at all. Rights holders may demand payment for past infringements or
force us to accept costly license terms or discontinue use of protected technology or works of authorship.
We may become involved in litigation regarding patents and other intellectual property rights. Other companies,
including our competitors, may develop intellectual property that is similar or superior to our intellectual property,
duplicate our intellectual property or design around our patents, and may have or obtain patents or other proprietary rights
that would prevent, limit or interfere with our ability to make, use or sell our products. Effective intellectual property
protection may be unavailable or limited in some foreign countries in which we sell products or from which competing
products may be sold.
Unauthorized parties may attempt to copy or otherwise use aspects of our intellectual property and products that we
regard as proprietary. Our means of protecting our proprietary rights in the United States or abroad may prove to be
inadequate, and competitors may be able to develop similar intellectual property independently. If our intellectual
property protection is insufficient to protect our intellectual property rights, we could face increased competition in the
markets for our products.
Should any of our competitors file patent applications or obtain patents that claim inventions also claimed by us, we
may choose to participate in an interference proceeding to determine the right to a patent for these inventions because our
business would be harmed if we fail to enforce and protect our intellectual property rights. Even if the outcome is
favorable, this proceeding could result in substantial costs to us and disrupt our business.
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In the future, we also may need to file lawsuits to enforce our intellectual property rights, to protect our trade secrets
or to determine the validity and scope of the proprietary rights of others. This litigation, whether successful or
unsuccessful, could result in substantial costs and diversion of resources, which could have a material adverse effect on
our business, financial condition or results of operations.
Shortages of, and price increases for, labor, components, parts and other supplies, as well as commodities used in the
manufacture and distribution of our products, may delay or reduce our sales and increase our costs, thereby harming
our results of operations.
We manufacture a significant portion of our products at plants that we own, including ammunition products.
Shortages of, and cost increases for, labor and other inputs to the manufacturing process could delay or reduce our sales
and reduce our gross margins and thereby have an adverse effect on our financial condition and results of operations.
Although we manufacture many of the components for our products, we purchase from third-parties finished goods,
important components, and parts. The costs of these components and parts are affected by commodity prices and are,
therefore, subject to price volatility caused by weather, market conditions and other factors that are not predictable or
within our control, including natural disasters and public health crises or other significant catastrophic events, such as the
global COVID-19 pandemic. We also use numerous commodity materials in producing and testing our products,
including copper, lead, plastics, steel, wood, and zinc. Commodity prices could increase, and any such increase in
commodity prices may harm our results of operations.
Higher prices for electricity, natural gas, metals, and fuel increase our production and shipping costs. A significant
shortage, increased prices or interruptions in the availability of these commodities would increase the costs of producing
and delivering products to our customers and would be likely to negatively affect our earnings. Commodity costs have
varied significantly during recent fiscal years and remain a volatile element of our costs.
Catastrophic events may disrupt our business.
A disruption or failure of our systems or operations in the event of a major earthquake, weather event, public health
crisis (such as the global COVID-19 pandemic), cyber-attack, terrorist attack or other catastrophic event could cause
delays in completing sales, providing services or performing other mission-critical functions. A catastrophic event that
results in the destruction or disruption of any of our critical business or information technology systems could harm our
ability to conduct normal business operations and our results of operations.
In addition, damage or disruption to our manufacturing and distribution capabilities or those of our suppliers because
of a major earthquake, weather event, public health crisis, cyber-attack, terrorist attack or other catastrophic event could
impair our ability or our suppliers' ability to manufacture or sell our products. If we do not take steps to mitigate the
likelihood or potential impact of such events, or to effectively manage such events if they occur, such events could have a
material adverse effect on our business, financial condition or results of operations, as well as require additional resources
to restore our supply chain.
Some of our products involve the manufacture or handling of a variety of explosive and flammable materials. From
time to time, these activities have resulted in incidents that have temporarily shut down or otherwise disrupted some
manufacturing processes, causing production delays and resulting in liability for workplace injuries and fatalities. We
have safety and loss prevention programs that require detailed pre-construction reviews of process changes and new
operations, along with routine safety audits of operations involving explosive materials, to mitigate such incidents, as well
as a variety of insurance policies. We cannot assure you, however, that we will not experience similar incidents in the
future or that any similar incidents will not result in production delays or otherwise have a material adverse effect on our
business, financial condition or results of operations.
General economic conditions affect our results of operations.
Our revenues are affected by economic conditions and consumer confidence worldwide, but especially in the United
States. In times of economic uncertainty, consumers tend to defer expenditures for discretionary items, which affects
demand for our products. Moreover, our businesses are cyclical in nature, and their success is impacted by general
economic conditions and specific economic conditions affecting the regions and markets we serve, the overall level of
consumer confidence in the economy and discretionary income levels. Any substantial deterioration in general economic
conditions, including as a result of the COVID-19 pandemic, that diminishes consumer confidence or discretionary
income could reduce our sales and adversely affect our financial results. Moreover, declining economic conditions create
the potential for future impairments of goodwill and other intangible and long-lived assets that may negatively impact our
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financial condition or results of operations. The impact of weak consumer credit markets, corporate restructurings,
layoffs, high unemployment rates, declines in the value of investments and residential real estate, higher fuel prices and
increases in federal and state taxation can also negatively affect our results of operations.
In addition, in recent periods sluggish economies and consumer uncertainty regarding future economic prospects in
our key markets have had an adverse effect on the financial health of certain of our customers, which may in turn have a
material adverse effect on our results of operations and financial condition. We extend credit to our customers for periods
of varying duration based on an assessment of the customer’s financial condition, generally without requiring collateral,
which increases our exposure to the risk of uncollectable receivables. In addition, we face increased risk of order
reduction or cancellation when dealing with financially ailing retailers or retailers struggling with economic uncertainty.
Our risk of uncollectable receivables and order cancellations has recently been elevated as a result of retail store closures
in many locations in response to the COVID-19 pandemic, which has adversely affected many of our customers. We may
reduce our level of business with customers and distributors experiencing financial difficulties and may not be able to
replace that business with other customers, which could have a material adverse effect on our financial condition, results
of operations or cash flows. In times of uncertain market conditions there is also increased risk of inventories which
cannot be liquidated in an efficient manner and may result in excess levels of inventory remaining with the Company.
Failure to attract and retain key personnel could have an adverse effect on our results of operations.
Our future success will depend in part on the continued service of key personnel and our ability to attract, retain and
develop key managers, designers, sales and information technology professionals and others. We face intense competition
for these individuals worldwide. We may not be able to attract qualified new employees or retain existing employees,
which may have a material adverse effect on our financial condition, results of operations or cash flows.
Our results of operations could be impacted by unanticipated changes in tax provisions or exposure to additional
income tax liabilities.
Our business operates in many locations under government jurisdictions that impose income taxes. Changes in
domestic or foreign income tax laws and regulations, or their interpretation, could result in higher or lower income tax
rates assessed or changes in the taxability of certain revenues or the deductibility of certain expenses, thereby affecting
our income tax expense and profitability. In addition, audits by income tax authorities could result in unanticipated
increases in our income tax expense.
The Tax Cuts and Jobs Act (the “2017 Tax Act”) was passed into law in December 2017 which fundamentally
changed federal tax law and has had a considerable impact on our income taxes. Future guidance could alter our current
understanding of the law and could have a material adverse effect on our business, results of operations and liquidity.
Our debt covenants may limit our ability to complete acquisitions, incur debt, make investments, sell assets, merge or
complete other significant transactions.
Our New Credit Facilities contain a number of restrictive covenants that impose significant operating and financial
restrictions on us and our subsidiaries and limit our ability to engage in actions that may be in our long-term best interests,
including restrictions on our, and our subsidiaries', ability to:
•
•
incur or guarantee additional indebtedness or sell disqualified or preferred stock;
pay dividends on, make distributions in respect of, repurchase or redeem, capital stock;
• make investments or acquisitions;
•
•
•
•
•
•
•
•
sell, transfer or otherwise dispose of certain assets;
create liens;
enter into sale/leaseback transactions;
enter into agreements restricting the ability to pay dividends or make other intercompany transfers;
consolidate, merge, sell or otherwise dispose of all or substantially all of our or our subsidiaries' assets;
enter into transactions with affiliates;
prepay, repurchase or redeem certain kinds of indebtedness;
issue or sell stock of our subsidiaries; and
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•
significantly change the nature of our business.
The indenture governing our 5.875% Senior Notes due 2023 (the “5.875% Notes”) also contains many of these same
restrictions. As a result of all of these restrictions, we may be:
•
•
•
limited in how we conduct our business and pursue our strategy;
unable to raise additional debt or equity financing that we may require to operate during general economic or
business downturns; or
unable to compete effectively or to take advantage of new business opportunities.
A failure to comply with the covenants in the New Credit Facilities could result in an event of default under the New
Credit Facilities, which could allow our creditors to accelerate the related indebtedness and proceed against the collateral
that secures the indebtedness. Similarly, a failure to comply with the covenants in the indenture governing our 5.875%
Notes could result in an event of default, which could allow the holders of the 5.875% Notes to accelerate these notes.
The New Credit Facilities and the indenture governing the 5.875% Notes contain cross-default provisions so that
noncompliance with the covenants of any of our other debt agreements could cause a default under these debt agreements
as well. In the event our creditors accelerate the repayment of our borrowings, we may not have sufficient liquidity to
repay our indebtedness in such circumstances.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to
increase significantly.
A significant portion of our indebtedness consists of revolver borrowings with variable rates of interest that expose
us to interest rate risk. If interest rates increase, our debt service obligations on our variable rate indebtedness will
increase even if the amount borrowed remains the same, and our net income and cash flows will correspondingly
decrease. Assuming $67 million of variable-rate indebtedness (which was the amount of out indebtedness outstanding as
of April 1, 2020, considering our interest rate swaps), a change of 1/8 of one percent in interest rates would result in a
$0.2 million change in annual estimated interest expense. Even if we enter into additional interest rate swaps in the future
in order to further reduce future interest rate volatility, we may not fully mitigate our interest rate risk.
Fluctuations in foreign currency exchange rates may adversely affect our financial results.
During the fiscal year ended March 31, 2020, approximately 17% of our revenue was generated from sales outside
the United States. Revenues from foreign operations (and the related expense) is often transacted in foreign currencies or
valued based on a currency other than U.S. dollars. For the purposes of financial reporting, this revenue is translated into
U.S. dollars. Resulting gains and losses from foreign currency fluctuations are therefore included in our consolidated
financial statements. As a result, when the U.S. dollar strengthens against certain foreign currencies, including the Euro,
British pound sterling, Canadian dollar, and other major currencies, our reportable revenue in U.S. dollars generated from
sales made in foreign currencies may decrease substantially. As a result, we are exposed to foreign currency exchange rate
fluctuations, which could have an adverse effect on our financial condition, results of operations and cash flows.
If the Spin-Off is found to be taxable under the Internal Revenue Code we may be obligated to indemnify Orbital ATK.
Under the Tax Matters Agreement entered into by Orbital ATK and Vista Outdoor, we were prohibited from taking
actions that could reasonably be expected to cause the Spin-Off to be taxable or to jeopardize the conclusions of the
opinions of counsel received by Orbital ATK. We have not taken any such actions during the period specified in the Tax
Matters Agreement, but if the Spin-Off does not qualify as a tax-free spin-off under Section 355 of the Internal Revenue
Code (the "Code"), then we may become subject to litigation regarding whether we are obligated to indemnify Orbital
ATK under the Tax Matters Agreement.
Provisions of our Amended and Restated Certificate of Incorporation, our Amended and Restated Bylaws, and
Delaware law may prevent or delay an acquisition of our company, which could decrease the trading price of our
common stock.
Several provisions of our Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and
Delaware law may discourage, delay or prevent a merger or acquisition that stockholders may consider favorable. These
include provisions that:
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•
•
•
allow our Board of Directors to authorize for issuance, without stockholder approval, preferred stock, the rights
of which will be determined at the discretion of the Board of Directors and, if issued, could operate as a “poison
pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that our Board of
Directors does not approve;
prohibit our stockholders from taking action by written consent and require that stockholder action must take
place at a duly called annual or special meeting of our stockholders;
establish how stockholders may present proposals or nominate directors for election at meetings of our
stockholders;
• mandate that stockholders may only remove directors for cause;
•
•
grant exclusive privilege (subject to certain limited exceptions) to our directors, and not our stockholders, to fill
vacancies on our Board of Directors;
provide that only our Board of Directors, Chairman of our Board of Directors, our Chief Executive Officer or the
President (in the absence of the Chief Executive Officer) are entitled to call a special meeting of our
stockholders; and
•
limit our ability to enter into business combination transactions with certain stockholders.
In addition, although our Board of Directors is transitioning to a declassified board, the transition will not be
complete until our 2021 annual meeting of stockholders. Until such time, certain of our directors will continue to serve
terms longer than one year. This could have the effect of making the replacement of incumbent directors more time-
consuming and difficult.
These and other provisions of our Amended and Restated Certificate of Incorporation, Amended and Restated
Bylaws and Delaware law may discourage, delay or prevent certain types of transactions involving an actual or a
threatened acquisition or change in control of us, including unsolicited takeover attempts, even though the transaction
may offer our stockholders the opportunity to sell their shares of our common stock at a price above the prevailing market
price.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Facilities—As of March 31, 2020, we occupied manufacturing, assembly, warehouse, test, research, development, and
office facilities. All our facilities are leased unless noted otherwise below.
As of March 31, 2020, our segments had significant operations at the following locations, which include office,
manufacturing, and distribution facilities:
Shooting Sports
*Lewiston, ID, *Anoka, MN, Overland Park, KS; Olathe, KS; Flora, MS;
Manhattan, MT; Lares, PR; *Oroville, CA;
Outdoor Products
Petaluma, CA; San Diego, CA; Scotts Valley, CA; Rantoul, IL; Hyde Park, UT
Corporate
Anoka, MN
* denoted owned properties
Our properties are well maintained and in good operating condition and are sufficient to meet our near-term operating
requirements.
ITEM 3. LEGAL PROCEEDINGS
From time-to-time, we are subject to various legal proceedings, including lawsuits, which arise out of, and are incidental
to, the conduct of our business. We do not consider any of such proceedings that are currently pending, individually or in the
aggregate, to be material to our business or likely to result in a material adverse effect on our operating results, financial
condition, or cash flows.
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Certain of our former subsidiaries have been identified as PRPs, along with other parties, in regulatory agency actions
associated with hazardous waste sites.
As a PRP, we may be required to pay a share of the costs of the investigation and clean-up of these sites. While
uncertainties exist with respect to the amounts and timing of our ultimate environmental liabilities, based on currently available
information, we do not currently expect that these potential liabilities, individually or in the aggregate, will have a material
adverse effect on our operating results, financial condition, or cash flows.
The description of certain of these environmental matters is contained in Part II, Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations under the heading, Contingencies, and is incorporated herein by
reference.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
23
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND
ISSUER PURCHASES OF EQUITY SECURITIES
Vista Outdoor's common stock is listed and traded on the New York Stock Exchange under the symbol "VSTO".
The number of holders of record of Vista Outdoor's common stock as of May 26, 2020 was 3,304.
Equity Compensation Plan Information
See Part III, Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,
which is incorporated by reference herein for information regarding our equity compensation plans.
Recent Sales of Unregistered Securities
None
Issuer Repurchases of Equity Securities
None.
Stockholder Return Performance Graph
The following graph compares, from January 29, 2015 (the first day our common stock began "when-issued" trading on
the New York Stock Exchange) through the March 31, 2020 fiscal year end, the cumulative total return for Vista Outdoor
common stock with the comparable cumulative total return of two indexes:
• Standard & Poor's Composite 500 Index, a broad equity market index;
• Standard & Poor's Small-Cap 600 Index, an equity market index for entities with similar capitalization levels.
The Standard & Poor's Small-Cap 600 Index was chosen because there is not currently a published industry index that we
believe would offer a meaningful comparison.
Vista Outdoor common stock began “regular-way” trading in connection with the Spin-Off on February 10, 2015. “When-
issued” trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued.
“Regular-way” trading refers to trading after a security has been issued. The graph is not, and is not intended to be, indicative
of future performance of our common stock. This graph is not deemed to be “filed” with the SEC or subject to the liabilities of
Section 18 of the Exchange Act, and should not be deemed to be incorporated by reference into any of our prior or subsequent
filings under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific
reference in such filing.
24
The graph assumes that on January 29, 2015, $100 was invested in Vista Outdoor common stock (at the closing price on
that trading day) and in each of the indexes. The comparison assumes that all dividends, if any, were reinvested.
25
ITEM 6. SELECTED FINANCIAL DATA
(Amounts in thousands except per share data)
Results of Operations
Sales, net
Cost of sales
Gross profit
Operating expenses:
Research and development
Selling, general, and administrative
Acquisition claim settlement gain, net (1)
Impairment of goodwill and intangibles (2)
Impairment of held-for-sale goodwill (3)
Impairment of held-for-sale assets (4)
Earnings (loss) before interest, income taxes,
and other
Other expense
Earnings (loss) before interest and income
taxes
Interest expense, net
Earnings (loss) before income taxes
Income tax provision (benefit)
Net income (loss)
Earnings (loss) per common share:
Basic and diluted
(Amounts in thousands except per share data)
Balance Sheet Data:
Net current assets
Net property, plant, and equipment
Total assets
Total liabilities
Long-term debt (including current portion)
Total stockholders' equity
Other Data
Depreciation and amortization of intangible
assets
Capital expenditures (9)
Operating margin (10)
2020
2019
2018
2017
2016
Years ended March 31,
$ 1,755,871
1,397,105
358,766
$ 2,058,528
1,642,840
415,688
$ 2,308,463
1,787,501
520,962
$ 2,546,892
1,877,706
669,186
$ 2,270,734
1,651,289
619,445
22,998
302,554
—
155,588
—
9,429
27,742
377,049
—
456,023
80,604
84,555
29,663
423,430
—
152,444
—
—
32,769
424,269
(30,027)
449,199
—
—
(131,803)
(433)
(610,285)
(6,796)
(84,575)
—
(207,024)
—
12,512
344,175
—
—
—
—
262,758
—
(132,236)
(38,791)
(171,027)
(15,948)
(155,079) $
(617,081)
(57,191)
(674,272)
(25,829)
(648,443) $
(84,575)
(49,214)
(133,789)
(73,557)
(60,232) $
(207,024)
(43,670)
(250,694)
23,760
(274,454) $
262,758
(24,351)
238,407
91,370
147,037
(2.68) $
(11.27) $
(1.05) $
Years ended March 31,
(4.66) $
2.36
$
$
2020 (5)(6)(8)
2019(7)
2018
2017
2016
$
$
462,310
184,733
1,391,289
948,784
511,806
442,505
$
622,265
215,592
1,738,023
1,128,983
704,005
609,040
$
713,472
277,207
2,614,836
1,397,346
915,399
1,217,490
$
763,458
272,346
2,976,747
1,731,682
1,121,252
1,245,065
$
680,763
203,485
2,942,634
1,282,467
670,287
1,660,167
$
67,858
23,768
$
77,503
42,242
$
89,759
66,627
$
93,779
90,665
72,614
41,526
(7.5)%
(30.0)%
(3.7)%
(8.1)%
11.6%
_________________________________________________
(1)
(2)
(3)
(4)
In fiscal 2017, we finalized a settlement of claims that we brought against the previous owner of Bushnell Holdings and
third-party insurance providers relating to certain disputes arising under the purchase agreement with respect to the
acquisition.
In fiscal 2020, 2019, 2018, and 2017, we recorded impairment charges of $155.6 million, $456.0 million, $152.4 million,
and $449.2 million, respectively, for reporting units in our historical Outdoor Products segment See Note 11, Goodwill
and Intangible Assets, to the consolidated financial statements included in this Annual Report for further detail.
In fiscal 2019, we recognized an impairment of $80.6 million on held for sale goodwill related to our firearms reporting
unit within the historical Shooting Sports segment.
In fiscal 2020 and 2019, we recognized an impairment on held for sale assets of $9.4 million and $39.6 million related to
our firearms reporting unit. In fiscal 2019, we recognized an impairment on held for sale assets of $44.9 million related to
the loss on the sale of our Eyewear brands.
26
(5)
In fiscal 2020, we adopted ASU No. 2016-02, "Leases (Topic 842)" ("Topic 842") which requires all lessees to recognize
a right-of-use asset and a lease liability for all leases with a term greater than 12 months. As of March 31, 2020, the
consolidated balance sheet includes a right-of-use asset of $69.0 million and leases liabilities of $84.5 million. For
further discussion, see Note 3, Leases, in the consolidated financial statements included in this Annual Report.
(6) On July 5, 2019, Vista Outdoor Inc. and one of its subsidiaries, Vista Outdoor Operations LLC, sold our Firearms
business. The fiscal 2019 balance sheet included assets held for sale of $207.6 million and liabilities held for sale of $46.0
million related to this business. See Note 7, Divestitures, the consolidated financial statements included in this Annual
Report.
(7) On August 31, 2018, we completed the sale of our Eyewear brands. The fiscal 2018 balance sheet included assets held for
sale of $200.4 million and liabilities held for sale of $42.2 million related to this business. See Note 7, Divestitures, in the
consolidated financial statements included in this Annual Report.
(8) During fiscal 2020, the Term Loan and the Junior Term Loan were paid in full, using proceeds from the sale of our
Firearms business, cash generated from operations and advances from our ABL Revolving Credit Facility. The fiscal 2019
balance sheet includes $144.5 million of long-term debt that was paid during fiscal 2020. See Note 13, Long-term Debt,
in the consolidated financial statements included in this Annual Report.
(9) Capital expenditures are shown net of capital expenditures included in accounts payable and financed through operating
leases.
(10) Represents EBIT expressed as a percentage of sales.
27
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with Part II, Item 6, "Selected Financial Data" and
our Consolidated Financial Statements and related notes appearing elsewhere in this Annual Report. This section and other
sections of this Annual Report contains forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. See "Forward-Looking Statements" and Part I, Item 1A. "Risk Factors" included in this Annual Report.
(Dollar amounts in thousands except share and per share data or unless otherwise indicated)
Executive Summary
Business Overview
We serve the outdoor sports and recreation markets through a diverse portfolio of nearly 40 well-recognized brands that
provide consumers with a wide range of performance-driven, high-quality and innovative products, including sporting
ammunition, golf rangefinders, hydration products, outdoor accessories, outdoor cooking solutions, and protective equipment
for certain action sports. We serve a broad range of end consumers, including outdoor enthusiasts, hunters and recreational
shooters, athletes, as well as law enforcement and military professionals. Our products are sold through a wide variety of mass,
specialty and independent retailers and distributors, such as Academy, Amazon, Bass Pro Shops/Cabela's, Big Rock Sports,
Sports South, Sportsman's Warehouse, Target, and Walmart. We also sell certain of our products directly to consumers through
the relevant brand's website. We have a scalable, integrated portfolio of brands that allows us to leverage our deep customer
knowledge, product development and innovation, supply chain and distribution, and sales and marketing functions across
product categories to better serve our retail partners and end consumers.
Organizational Structure
We conduct our operations through two operating segments which are defined based on the reporting and review process
used by the chief operating decision maker, our Chief Executive Officer. As of March 31, 2020, Vista Outdoor's two segments
were Outdoor Products and Shooting Sports:
•
Shooting Sports generated approximately 68% of our sales in fiscal 2020. Shooting Sports is comprised of ammunition
and hunting shooting accessories product lines. Ammunition products include centerfire ammunition, rimfire
ammunition, shotshell ammunition and reloading components. Hunting accessories products include high-performance
hunting arrows, game calls, hunting blinds, game cameras, and decoys, and optics products such as binoculars,
riflescopes and telescopes. Shooting accessories products include reloading equipment, clay targets, and premium gun
care products and tactical products such as holsters, duty gear, bags and packs. Our Firearms business was divested early
in the second quarter ending September 29, 2019.
•
Outdoor Products, which generated approximately 32% of our sales in fiscal 2020. Outdoor Products is comprised of
sports protection, outdoor cooking, golf, and hydration product lines. Sports protection includes helmets, goggles, and
accessories for cycling, snow sports, action sports and powersports. Outdoor cooking includes grills and stoves. Golf
products include laser rangefinders and other golf technology products. Hydration products include hydration packs and
water bottles. Our Eyewear brands were divested during the second quarter of fiscal year 2019.
Business Strategy
In fiscal year 2019, Vista Outdoor embarked on its multi-year strategic transformation plan to reposition the Company to
be the leading designer, manufacturer, and marketer of consumer products in the outdoor sports and recreation markets. The
primary goal of the transformation plan is to drive profitable growth by delivering innovative products and industry leading
customer and online customer experiences. Cost savings are re-invested into improvements needed in capabilities, systems,
innovation and growth opportunities. Vista Outdoor believes this plan will enable the Company to deliver long-term sustainable
and profitable growth and create value for shareholders.
To achieve its multi-year strategic transformation goals, the Company is relentlessly focused on the following five
strategic pillars, which define key priorities and investment focus areas:
28
• Optimize our Organizational Structure: Investing in talent while reducing costs and building a culture of agility,
efficiency, and innovation.
• Create Leading Centers of Excellence in Operational Excellence and E-Commerce: Leveraging our shared
resources, expertise and scale to:
achieve operational excellence and improve margins across each of our brands; and
accelerate and enhance e-commerce, direct-to-consumer and digital marketing capabilities across all of our
brands.
• Reducing Financial Leverage: Strengthening the Company’s balance sheet, improving financial flexibility, and
paying down debt though enhanced cash-flow generation and the divestiture of non-core businesses.
• Returning to Organic Growth: Identifying and capturing opportunities for organic growth and market share
expansion by:
Allocating capital to our brands to aid in their development of new and innovative products that serve the
needs and preferences of their core consumers; and
Leveraging and expanding our distribution channels to expand the commercial presence of all of our brands
and efficiently deliver product to meet consumer demand and shopping behavior.
• Exploring Tuck-in Acquisitions: After reducing financial leverage, deploy a stronger balance sheet to acquire
smaller, complimentary businesses that, through the help of our Centers of Excellence, we can take to the next level in
terms of sales and profitability.
The first phase of our strategic transformation plan focused on stabilizing our business and building a strong foundation
for the future by improving profitability, enhancing operational efficiency, and reducing financial leverage though enhanced
cash-flow generation and the divestiture of non-core businesses. Vista Outdoor has made significant progress to date toward
these goals by making key leadership changes, investing in digital and e-commerce platforms, addressing the Company’s cost
structure and strengthening the Company’s balance sheet. Learnings from the last two years have been incorporated into the
Company’s forward-looking plans to continue to improve both financial and operational performance and accelerate value
creation.
Beginning in fiscal year 2021, we intend to build on the capabilities developed during the first two years of our
transformation, with an additional emphasis going forward on driving long-term, profitable organic sales growth. Vista
Outdoor has plans in place under each of its five strategic pillars to deliver long-term, sustainable, profitable growth and
improved cash generation, solidifying the Company’s position as the outdoor sports and recreation market leader.
Financial Highlights and Notable Events
Fiscal 2020
• Annual sales were $1,755,871 and $2,058,528 for the fiscal years ended March 31, 2020 and 2019, respectively. The
decrease was driven by lower Shooting Sports sales of $220,908 due to the sale of our Firearms business in July 2019,
lower demand for centerfire ammunition in the first half of the year, lower demand for hunting and shooting accessories
throughout the year and for the additional reasons described in the Results of Operations section. Outdoor Products
sales decreased $81,749 due to the sale of our Eyewear brands in September 2018, lower demand for some of our
product lines throughout the year, and for the additional reasons described in the Results of Operations section.
• Gross profit was $358,766 and $415,688 for the fiscal years ended March 31, 2020 and 2019, respectively. The
decrease in gross profit was primarily caused by the decreases in sales volumes discussed above as well as increased
promotional activity. The decreases were partially offset by increases in operating efficiencies, lower commodity prices
and the quality and mix of sales.
• EBIT totaled $(132,236) and $(617,081) for the fiscal years ended March 31, 2020 and 2019, respectively. The decrease
in loss is primarily due the reasons described above regarding sales and gross profit, and because of a decrease in
goodwill and intangibles impairment, as well as impairments of held-for-sale assets, and for the reasons described in
the Results of Operations section.
• The increase in the current year tax rate to 9.3% from 3.8% in the prior year ended March 31, 2019 is primarily due to
the release of uncertain tax positions in the current period and the impact of the Coronavirus Aid, Relief, and Economic
Security Act (CARES Act).
• During the quarter ended March 31, 2020, Vista Outdoor recorded a $155.6 million impairment of goodwill and
identifiable indefinite-lived intangible assets related to our Hunting and Shooting Accessories, Action Sports, Hydration
and historical Outdoor Recreation reporting units.
29
• On July 5, 2019, Vista Outdoor Inc. and one of its subsidiaries, Vista Outdoor Operations LLC, sold our Firearms
business, which was part of our historic Shooting Sports segment and comprised our Firearms reporting unit, for a total
purchase price of $170,000. Prior to the sale we recorded impairment on assets held for sale of $9.4 million and $39.6
million during the fiscal years ended March 31, 2020 and 2019, respectively, and $80.6 million of impairment of held-
for-sale goodwill during the fiscal year ended March 31, 2019. This divestiture was part of our transformation strategy
to right-size our portfolio to focus on brands where we are, or can be, market leaders. The net proceeds were used to
reduce our outstanding debt.
Outlook
Shooting Sports Industry
Hunting and shooting-sports related products currently represent a majority of our sales. We design, source, manufacture,
and sell ammunition and hunting and shooting related optics and accessories through our Federal, CCI, Speer, Bushnell and
Primos brands, among others. Among these categories, we derive the largest portion of our sales from ammunition, which is a
consumable, repeat purchase product.
Sales of hunting and shooting-sports related products, including ammunition, are heavily influenced by participation rates
and the political environment. The market for shooting sports products softened dramatically following the 2016 United States
presidential election, but began to recover in the fourth quarter of our fiscal year 2020. The extent and duration of this increase
in demand for hunting and shooting-sports related products is uncertain. We expect that during our fiscal year 2021 demand for
hunting and shooting-sports related products will be influenced by, among other things, the 2020 United States presidential
election cycle and the impact of the ongoing COVID-19 pandemic on general economic and retail conditions, including store
closures.
We believe that long-term trends support our expectation of increasing demand for hunting and shooting-sports related
products. Participation rates have remained strong and we expect them to increase during the global recovery from the
COVID-19 pandemic as consumers look to local outdoor activities as a substitute for travel and other competing pursuits. We
believe we are well-positioned to succeed and capitalize on this long-term demand given our scale and global operating
platform, which we believe is particularly difficult to replicate in the highly regulated and capital-intensive ammunition
manufacturing sector.
Outdoor Recreation Industry
The outdoor recreation industry represents a large and growing focus area of our business. We design, source,
manufacture, and sell outdoor recreation products through our Bell, Giro, CamelBak, Camp Chef and Bushnell Golf brands,
among others. These brands operate in highly competitive and global markets serving cycling, snow sports, hiking, camping,
outdoor cooking and golf enthusiasts.
During fiscal year 2020, our Outdoor Products brands experienced a challenging retail environment driven by a variety of
factors, including the ongoing shift in consumer preferences to utilize online platforms, as well as other market pressures. Many
of our brands have been able to respond and capitalize on the shift in consumer preferences to utilize on-line shopping
platforms, including our brands’ direct-to-consumer websites, but in some cases the shift away from traditional retail channels
has resulted in a net decrease in sales. In our fiscal year 2021, we expect that the impact of the ongoing COVID-19 pandemic
on general economic and retail conditions, including store closures, will continue to adversely affect the sales of the brands in
our Outdoor Products segment.
We believe that long-term trends support our expectation of increasing demand for the innovative outdoor recreation-
related products produced by our Outdoor Products brands. Participation rates have remained strong and we expect them to
increase during the global recovery from the COVID-19 pandemic as consumers look to local outdoor activities as a substitute
for travel and other competing pursuits. Our Outdoor Products brands hold a strong competitive position in the market-place,
and we intend to further differentiate our brands through focused R&D and marketing investments including increased use of
social media and other digital marketing. Following significant investments in our brands’ e-commerce capabilities, both
directly and through our E-Commerce Center of Excellence, our brands are also well-positioned to benefit from the ongoing
shift in consumer shopping behavior to utilize on-line channels.
30
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial
statements, which have been prepared in accordance with accounting principles generally accepted in the United States. In
preparing the consolidated financial statements, we make estimates and judgments that affect the reported amounts of assets,
liabilities, sales, expenses, and related disclosure of contingent assets and liabilities. We re-evaluate our estimates on an on-
going basis. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable
under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. We review
our estimates on an ongoing basis to ensure the estimates appropriately reflect changes in our business and the most recent
information available.
We believe the critical accounting policies discussed below affect our most significant estimates and judgments used in
the preparation of our consolidated financial statements. For a complete discussion of all our significant accounting policies,
see Note 1, Significant Accounting Policies, to the consolidated financial statements included in this Annual Report.
Revenue Recognition
The total amount of revenue we recognize for the sale of our products reflects various sales adjustments for discounts,
returns, refunds, allowances, rebates, and other customer incentives. These sales adjustments can vary based on market
conditions, customer preferences, timing of customer payments, volume of products sold, and timing of new product launches.
These adjustments require management to make reasonable estimates of the amount we expect to receive from the customer.
We estimate sales adjustments by customer or by product category on the basis of our historical experience with similar
contracts with customers, adjusted as necessary to reflect current facts and circumstances and our expectations for the future.
Sales taxes, firearms and ammunition excise tax and other similar taxes are excluded from revenue.
Allowance for Doubtful Accounts
We maintain an allowance for doubtful receivables for estimated losses resulting from the inability of our customers to
make required payments. We provide an allowance for specific customer accounts where collection is doubtful and also provide
an allowance for customer deductions based on historical collection and write-off experience. Additional allowances would be
required if the financial conditions of our customers deteriorated.
Inventories
Our inventories are valued at the lower of cost or net realizable value. We evaluate the quantities of inventory held against
past and future demand and market conditions to determine excess or slow-moving inventory. For each product category, we
estimate the market value of the inventory comprising that category based on current and projected selling prices. If the
projected market value is less than cost, we provide an allowance to reflect the lower value of the inventory. This methodology
recognizes projected inventory losses at the time such losses are evident rather than at the time goods are actually sold. The
projected market value of the inventory may decrease due to consumer preferences, legislative changes, or loss of key contracts
among other events.
Income Taxes
Provisions for federal, state and foreign income taxes are calculated based on reported pre-tax earnings and current tax
law. Such provisions differ from the amounts currently receivable or payable because certain items of income and expense are
recognized in different time periods for financial reporting purposes than for income tax purposes. Significant judgment is
required in determining income tax provisions and evaluating tax positions. We periodically assess our liabilities and
contingencies for all periods that are currently open to examination or have not been effectively settled based on the most
current available information. Where it is not more likely than not that our tax position will be sustained, we record the entire
resulting tax liability and when it is more likely than not of being sustained, we record our best estimate of the resulting tax
liability. As per our policy, any applicable interest and penalties related to these positions are also recorded in the consolidated
financial statements. To the extent our assessment of the tax outcome of these matters changes, such change in estimate will
impact the income tax provision in the period of the change.
Deferred tax assets are assessed to determine whether it is more likely than not that some portion or all of the deferred tax
assets will be realized. Significant estimates are required for this analysis. If we determine it is not more likely than not that all
of the deferred tax assets will be realized, a valuation allowance will be recorded. Changes in the amounts of valuation
allowance are recorded in the tax provision in the period when the change occurs.
31
Accounting for goodwill and indefinite-lived intangibles:
Goodwill—We test goodwill for impairment on the first day of our fourth fiscal quarter or upon the occurrence of events
or changes in circumstances that indicate that the asset might be impaired. Goodwill is assigned to our reporting units, which
are our operating segments, or components of an operating segment, that constitute a business for which discrete financial
information is available, and for which segment management regularly reviews the operating results. Based on this analysis, we
had five reporting units, as of the fiscal 2020 testing date.
During the annual impairment review process we have the option to first perform a qualitative assessment (commonly
referred to as “step zero”) over relative events and circumstances to determine whether it is more likely than not that the fair
value of a reporting unit is less than its carrying value or to perform a quantitative assessment (“step one”) where we estimate
the fair value of each reporting unit using both an income and market approach. We completed a step one assessment as of
January 1, 2020, and recognized goodwill impairment charges of $121,329. See Note 11, Goodwill and Intangible Assets, to the
consolidated financial statements included in this Annual Report for further discussion and details.
To assess the recoverability of our goodwill, we determine the estimated fair value of each reporting unit and compare it
to the carrying value of the reporting unit, including goodwill. When fair value is less than the carrying value of the net assets
and related goodwill, an impairment charge is recognized for the excess. The fair value of each reporting unit is determined
using both an income and market approach. The value estimated using a discounted cash flow model is weighted equally
against the estimated value derived from the guideline company market approach method. This market approach method
estimates the price reasonably expected to be realized from the sale of the reporting unit based on comparable companies.
In developing the discounted cash flow analysis, our assumptions about future revenues and expenses, capital
expenditures, and changes in working capital are based on our plan, as reviewed by the Board of Directors, and assume a
terminal growth rate thereafter. A separate discount rate is determined for each reporting unit and these cash flows are then
discounted to determine the fair value of the reporting unit. The discounted cash flow analysis is derived from valuation
techniques in which one or more significant inputs are not observable (Level 3 fair value measures).
Indefinite Lived Intangible Assets—Indefinite lived intangibles are not amortized and are tested for impairment annually
on the first day of the fourth fiscal quarter or upon the occurrence of events or changes in circumstances that indicate that the
assets might be impaired.
Our identifiable intangibles with indefinite lives consist of certain trademarks and tradenames. The impairment test
consists of a comparison of the estimated fair value of the specific intangible asset with its carrying value. The estimated fair
value of these assets is measured using the relief-from-royalty method which assumes that the asset has value to the extent that
the owner is relieved of the obligation to pay royalties for the benefits received from them.
This method requires that we estimate the future revenue for the related brands and technology, the appropriate royalty
rate, and the weighted average cost of capital. We base our fair values and estimates on assumptions we believe to be
reasonable, but which are unpredictable and inherently uncertain. If the carrying amount of an asset is higher than its fair value,
an impairment exists and the asset would be recorded at the estimated fair value. Due to the results of our annual step one test,
we recognized impairment charges related to our indefinite lived intangibles of $34,259. See Note 11, Goodwill and Intangible
Assets, to the consolidated financial statements included in this Annual Report for discussion and details.
Our assumptions used to develop the discounted cash flow analysis require us to make significant estimates regarding
future revenues and expenses, projected capital expenditures, changes in working capital, and the appropriate discount rate. The
projections also take into account several factors including current and estimated economic trends and outlook, costs of raw
materials and other factors that are beyond our control. If the current economic conditions were to deteriorate, or if we were to
lose significant business, causing a reduction in estimated discounted cash flows, it is possible that the estimated fair value of
certain reporting units or tradenames could fall below their carrying value resulting in the necessity to conduct additional
impairment tests in future periods. We continually monitor the reporting units and tradenames for impairment indicators and
update assumptions used in the most recent calculation of the estimated fair value of a reporting unit or tradenames as
appropriate.
32
Assets and Liabilities Held for Sale
Assets and liabilities held for sale represent components and businesses that meet accounting requirements to be
classified as held for sale and are presented as single asset and liability amounts in our consolidated balances sheets at the lower
of cost or fair value, less costs to sell. We assess all businesses and assets held for sale each reporting period it remains
classified as held for sale to determine whether the existing carrying amounts are fully recoverable in comparison to estimated
fair values. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to
future net undiscounted cash flows to be generated by the assets. The remeasurement of assets and liabilities held for sale is
classified as a Level 3 fair value assessment as described in Note 2, Fair Value of Financial Instruments. During fiscal year
2020, we recorded impairment charges on held for sale assets of $9,429 related to our Firearms business that was sold during
the second quarter of fiscal year 2020.
New Accounting Pronouncements
See Note 1, Significant Accounting Policies, to the consolidated financial statements in Item 8, Financial Statements and
Supplementary Data, of this Annual Report for discussion of new accounting pronouncements.
Results of Operations
At March 31, 2019, we had two operating and reportable segments. At the end of the fourth quarter of fiscal 2020, we
realigned our internal reporting structure and modified our operating segment structure to provide investors with improved
disclosure that is consistent with how our chief operating decision maker (CODM), our Chief Executive Officer, allocates
resources and makes decisions. Based on these changes, management concluded that we had six operating segments, which
have been aggregated into two new reportable segments, Shooting Sports and Outdoor Products.
Shooting Sports is comprised of our Ammunition and Hunting and Shooting operating segments. Outdoor Products is
comprised of our Action Sports, Outdoor Cooking, Hydration and Golf operating segments. The operating segments
comprising the Company’s respective new reportable segments share numerous commonalities, including similar core
consumers, distribution channels and supply chains.
The CODM evaluates the performance of our reportable segments based on sales, gross profit and EBIT, which is
defined as earnings (loss) before interest and income taxes. Certain corporate-related costs are not allocated to the reporting
segments, and other non-recurring costs are not allocated to the reporting segments in order to present comparable results from
period to period. These costs include impairment charges, business transformation fees and restructuring related-costs, merger
and acquisition costs, and other non-recurring items.
Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to
provide a reader of our financial statements with a narrative from the perspective of our management on our financial
condition, results of operations, liquidity, and certain other factors that may affect our future results. The following
information should be read in conjunction with our consolidated financial statements included in this Annual Report.
Fiscal 2020 Compared to Fiscal 2019
The Company’s net sales, gross profit, and EBIT by reporting segment and by corporate and other (where applicable)
are presented below (dollars in thousands):
Net Sales:
Shooting Sports
Outdoor Products
Total
$
$
2019 (1)
Years ended March 31,
2020
1,189,336
566,535
1,755,871
1,410,244
648,284
2,058,528
$
$
$ Change
% Change
$
$
(220,908)
(81,749)
(302,657)
(15.7)%
(12.6)%
(14.7)%
(1) We modified the structure of our reportable segments during the fourth quarter of fiscal 2020. Accordingly, prior
period amounts have been reclassified to conform with the current period presentation.
Shooting Sports—The decrease in sales was primarily due to the sale of our Firearms business in July 2019 and lower
demand in the market for firearms, which together accounted for approximately $160,000 of the decrease. In addition there
were significant decreases in centerfire ammunition international contracts, while the hunting and shooting business was
impacted by lower demand as well as by increased tariffs and by store closures resulting from the COVID-19 pandemic.
33
Additional decreases were due to continued weak demand in the rimfire market during the first three quarters of the year,
which were partially offset by increased sales in our tactical products.
Outdoor Products—The decrease in sales was primarily due to the sale of our Eyewear brands in September 2018,
which accounted for approximately $52,000 of the decrease. Additional decreases were caused by reduced demand for some
products in our other businesses as a result of increased tariffs, store closures and limited inventory provided by vendors
resulting from the COVID-19 pandemic.
Gross Profit:
Shooting Sports
Outdoor Products
Corporate and Other
Total
Years ended March 31,
2020
2019 (1)
$ Change
% Change
$
$
210,866
$
251,385
$
149,420
(1,520)
358,766
$
180,275
(15,972)
415,688
$
(40,519)
(30,855)
14,452
(56,922)
(16.1)%
(17.1)%
(90.5)%
(13.7)%
Shooting Sports—The decrease in gross profit was primarily due to the sale of our Firearms business and lower demand
in the market for firearms, which together accounted for approximately $42,000 of the decrease. Excluding our Firearms
business gross profit was up $1,520 as a result of increases in operating efficiencies and favorable commodity prices, the
quality and mix of sales and increased sales volume in our tactical business.
Outdoor Products—The decrease in gross profit was caused primarily by the sale of our Eyewear brands, which
accounted for approximately $22,000 of the decrease, as well as lower sales volumes as described above, and tariff cost
impacts. These decreases were partially offset with savings driven by operating efficiencies and sales mix.
Corporate and Other—The increase in corporate gross profit was due to lower business transformation consulting costs.
EBIT:
Shooting Sports
Outdoor Products
Corporate and Other
Total
Years ended March 31,
2020
2019 (1)
$ Change
% Change
$
$
80,028
$
90,654
$
29,998
(242,262)
(132,236) $
34,982
(742,717)
(617,081) $
(10,626)
(4,984)
500,455
484,845
(11.7)%
(14.2)%
(67.4)%
(78.6)%
EBIT improved by $484,845 primarily driven by lower impairments of goodwill, intangibles and held for sale assets in
the current year described in more detail below, which was partially offset by contributions in the prior year of divested
entities described in more detail above.
Shooting Sports—Operating expenses for the Shooting Sports segment decreased by $29,893 from fiscal 2019 levels.
The decrease was due primarily to the sale of our Firearms business which was approximately $21,000 and savings from
restructuring activities.
Outdoor Products—Outdoor Products operating expenses decreased by $25,871 from the prior year due primarily due to
the sale of our Eyewear brands which accounted for approximately $16,000 of the decrease. Additional decreases were due to
savings from reduced marketing costs and restructuring activities.
Corporate and Other—Corporate and other operating expenses improved by $486,003 primarily driven by lower
impairments of goodwill, intangibles and held for sale assets, reduced transformation costs, reduced transaction costs and
reduced loss on divested entities in the current year. The primary reason was a decrease in impairment charges related to
goodwill, held for sale assets and intangibles of $456,165. Goodwill and intangible impairment expense of $155,588 was
recorded in fiscal year 2020 related to the historical Outdoor Products reportable segment and $9,429 related to held for sale
asset impairment in the historical Shooting Sports segment. In the prior year $500,944 was recorded for goodwill, intangibles
and held for sale asset impairment in our historical Outdoor Products reportable segment and $120,238 related to held for sale
asset impairment in the historical Shooting Sports segment. There were also reductions related to selling, general and
administrative expense, driven by lower business transformation costs in the current year and savings from restructuring
activities of approximately $20,000. Additionally, lower transaction costs related to the sale of our Eyewear brands and
Firearms business incurred in the prior year of approximately $10,000. The decrease in other income (expense) was related to
34
a decrease in the loss on sale of our Eyewear brands and CTA related expenses in the prior year as compared to the loss on sale
of our Firearm business this fiscal year.
The Company’s net interest expense and income tax provision are presented below on a consolidated basis (dollars in
thousands):
Net Interest Expense
Interest expense, net
$
38,791
$
57,191
$
(18,400)
(32.2)%
The decrease in interest expense was due to a lower average interest rate in the current period and decrease in our
average debt balance. Additionally, debt issuance cost writeoffs decreased.
Years ended March 31,
2019
2020
$ Change
% Change
Income Tax Provision
Years ended March 31,
Effective
Rate
2019
2020
Effective
Rate
Change
Income tax provision (benefit)
$
(15,948)
9.3% $
(25,829)
3.8% $
9,881
The increase in the current period tax rate is primarily due to the release of uncertain tax positions in the current period
and the impact of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act resulted in a tax
rate benefit for the carryback of our NOLs due to the net operating loss (NOL) carryback provisions.
In assessing the realizability of our deferred tax assets, we considered whether it is more likely than not that some
portion or all of the deferred tax assets will be realized. We continue to be in a cumulative loss position for the three-year
period ending March 31, 2020. A cumulative loss position is considered significant negative evidence in assessing the
realizability of a deferred tax asset that is difficult to overcome when determining whether a valuation allowance is required.
Considering the weight of all available positive and negative evidence, we do not believe the positive evidence overcomes the
negative evidence of our cumulative loss position. Therefore, we have increased the valuation allowance by $36,162 during
the current year for a total valuation allowance of $72,065 at March 31, 2020.
Our provision for income taxes includes federal, state and foreign income taxes. The effective tax rate for fiscal 2020 of
9.3% differs from the federal statutory rate of 21% primarily due to the impact of the nondeductible goodwill impairment
charge and the increase in valuation allowance offset by the release of uncertain tax positions.
The effective tax rate for fiscal 2019 of 3.8% differs from the federal statutory rate of 21% primarily due to the impact of
nondeductible goodwill impairment charge and the change in valuation allowance.
On February 9, 2015, we entered into a Tax Matters Agreement with Orbital ATK that governs the respective rights,
responsibilities and obligations of Vista Outdoor and Orbital ATK following the distribution of all of the shares of our
common stock on a pro rata basis to the holders of Alliant Techsystems Inc. common stock (the “Spin-Off”) with respect to tax
liabilities and benefits, tax attributes, tax contests and other tax sharing regarding U.S. federal, state, local and foreign income
taxes, other tax matters and related tax returns. We have joint and several liability with Orbital ATK to the IRS for the
consolidated U.S. federal income taxes of the Orbital ATK consolidated group relating to the taxable periods in which we were
part of that group. However, the Tax Matters Agreement specifies the portion, if any, of this tax liability for which we bear
responsibility, and Orbital ATK agrees to indemnify us against any amounts for which we are not responsible. The Tax Matters
Agreement also provides special rules for allocating tax liabilities in the event that the Spin-Off is determined not to be tax-
free. Though valid between the parties, the Tax Matters Agreement is not binding on the IRS.
The allocation of tax liabilities for the period from April 1, 2014 through the date of the Spin-Off was settled on June 15,
2018. Orbital ATK paid Vista Outdoor $13,047 to settle this matter, which was reflected as an adjustment to the distribution
from Vista Outdoor to Orbital ATK at the time of the Spin-Off.
Prior to the Spin-Off, Orbital ATK or one of its subsidiaries filed income tax returns in the U.S. federal and various U.S.
state jurisdictions that included Vista Outdoor. In addition, certain of our subsidiaries file income tax returns in foreign
jurisdictions. After the Spin-Off we file income tax returns in the U.S. federal, foreign and various U.S. state jurisdictions.
35
With a few exceptions, Orbital ATK and its subsidiaries and Vista Outdoor are no longer subject to U.S. federal, state and
local, or foreign income tax examinations by tax authorities prior to 2013. The IRS has completed the audits of Orbital ATK
through fiscal 2014 and is currently auditing Orbital ATK's tax return for fiscal 2015. The IRS has also completed the audit of
our tax return that begins after the Spin-Off and ends on March 31, 2015. We believe appropriate provisions for all outstanding
issues relating to our portion of these returns have been made for all remaining open years in all jurisdictions.
As of March 31, 2020, and 2019, the total amount of unrecognized tax benefits was $30,159 and $34,118, respectively,
of which $27,503 and $30,432, respectively, would affect the effective tax rate, if recognized. The remaining balance is related
to deferred tax items which only impact the timing of tax payments. Although the timing and outcome of audit settlements are
uncertain, it is reasonably possible that an $13,875 reduction of the uncertain tax benefits will occur in the next 12 months.
The settlement of these unrecognized tax benefits could result in earnings from $0 to $12,695. See Note 15, Income Taxes, to
the consolidated financial statements included in this Annual Report for further details.
Fiscal 2019 Compared to Fiscal 2018
The Company’s net sales, gross profit and EBIT by reporting segment and by corporate and other (where applicable) are
presented below (dollars in thousands):
Net Sales:
Shooting Sports
Outdoor Products
Total
$
$
Years ended March 31,
2018(1)
2019
1,410,244
648,284
2,058,528
1,547,540
760,923
2,308,463
$
$
$ Change
% Change
$
$
(137,296)
(112,639)
(249,935)
(8.9)%
(14.8)%
(10.8)%
(1) We changed the structure of our reportable segments during the fourth quarter of fiscal 2020. Accordingly, prior
period amounts have been reclassified to conform with the current period presentation.
Shooting Sports—The decrease in net sales was driven primarily by lower demand in the market for rimfire and
centerfire ammunition and by a decrease in international sales. In addition, our hunting and shooting business had lower sales
as a result of lower demand and market softness.
Outdoor Products—The decrease in net sales was primarily due to lower sales from our Eyewear brands in the current
fiscal year. In addition, our hydration, and action sports businesses had lower sales as a result of lower demand and market
softness. These declines were partially offset by increased net sales in our outdoor cooking business.
Gross Profit:
Shooting Sports
Outdoor Products
Corporate and Other
Total
Years ended March 31,
2018(1)
2019
$ Change
% Change
$
$
251,385
180,275
(15,972)
415,688
$
$
295,721
225,769
(528)
520,962
$
$
(44,336)
(45,494)
(15,444)
(105,274)
(15.0)%
(20.2)%
2,925.0 %
(20.2)%
Shooting Sports—The decrease in gross profit was primarily due to unfavorable commodity costs, lower sales volume as
discussed above, and lower pricing.
Outdoor Products—The decrease in gross profit was primarily due to the sale of our Eyewear brands business in the
second quarter of the fiscal year and lower sales volume as discussed above.
Corporate and Other—The decrease in corporate gross profit was due to higher business transformation consulting
costs.
EBIT:
Shooting Sports
Outdoor Products
Corporate and Other
Total
Years ended March 31,
2018(1)
2019
$ Change
% Change
$
$
90,654
34,982
(742,717)
(617,081) $
$
110,300
36,272
(231,147)
(84,575) $
(19,646)
(1,290)
(511,570)
(532,506)
(17.8)%
(3.6)%
221.3 %
629.6 %
36
EBIT decreased primarily as a result of higher impairments of goodwill, intangibles and held for sale assets in the
current year described in more detail below and changes in business conditions described in more detail above.
Shooting Sports—Operating expenses for the Shooting Sports segment decreased by $24,690 from fiscal 2018 levels.
The decrease was due primarily to lower selling costs based on decreased sales as described above.
Outdoor Products—Outdoor Products operating expenses decreased by $44,204 from the prior year were due to lower
selling costs, and a decrease in operating expenses associated with our Eyewear brands which was sold in the second quarter
of fiscal 2019.
Corporate and Other—Corporate and other operating expenses increased by $496,126 primarily caused by higher
impairments of goodwill, intangibles and held for sale assets, increased transformation costs, increased transaction costs and
increased loss on divested entities in the current year. The primary reason for the increase was impairment charges related to
goodwill, held for sale assets and intangibles increased by $468,738. Impairment expenses of $500,944 were recorded for
goodwill, intangible and held for sale asset impairment in our historical Outdoor Products reportable segment and $120,238
related to held for sale asset impairment in the historical Shooting Sports segment during fiscal 2019, as compared to
impairment charges of $152,444 related to the historical Outdoor Products reportable segment during fiscal 2018. Additional
increases were driven by increased transformation fees and restructuring activities, and higher transaction costs related to the
sale of our Eyewear brands and Firearms business. The increase in other expense was related to the loss on sale of our
Eyewear brands and CTA related expenses.
Net Interest Expense
Interest expense
$
57,191
$
49,214
$
7,977
16.2%
The increase in interest expense was due to the write-off of debt issuance costs and a higher average interest rate in the
current period, partially offset by a decrease in our average debt balance.
Years ended March 31,
2018
2019
$ Change
% Change
Income Tax Provision
Years ended March 31,
Effective
Rate
2018
2019
Effective
Rate
Change
Income tax provision (benefit)
$
(25,829)
3.8% $
(73,557)
55.0% $
47,728
The decrease in the current period tax rate is primarily due to the income tax effects of Tax Legislation in the prior year
and a lower impact in the current year for the nondeductible goodwill impairment.
In assessing the realizability of our deferred tax assets, we considered whether it is more likely than not that some
portion or all of the deferred tax assets will be realized. As a result of the impairment charges in the current year, we are in a
cumulative loss position for the three year period ending March 31, 2019. A cumulative loss position is considered significant
negative evidence in assessing the realizability of a deferred tax asset that is difficult to overcome when determining whether a
valuation allowance is required. Considering the weight of all available positive and negative evidence, we do not believe the
positive evidence overcomes the negative evidence of our cumulative loss position. Therefore, we have established a valuation
allowance of $32,801 during the current year for a total valuation allowance of $35,903 at March 31, 2019.
Our provision for income taxes includes federal, state and foreign income taxes. The effective tax rate for fiscal 2019 of
3.8% differs from the federal statutory rate of 21% primarily due to the impact of the nondeductible goodwill impairment
charge and the change in valuation allowance.
The effective tax rate for fiscal 2018 of 55.0% differs from the federal statutory rate of 31.6% primarily due to the
impact of the Tax Legislation partially offset by the nondeductible goodwill impairment.
On February 9, 2015, we entered into a Tax Matters Agreement with Orbital ATK that governs the respective rights,
responsibilities and obligations of Vista Outdoor and Orbital ATK following the distribution of all of the shares of our
common stock on a pro rata basis to the holders of Alliant Techsystems Inc. common stock (the “Spin-Off”) with respect to tax
liabilities and benefits, tax attributes, tax contests and other tax sharing regarding U.S. federal, state, local and foreign income
37
taxes, other tax matters and related tax returns. We have joint and several liability with Orbital ATK to the IRS for the
consolidated U.S. federal income taxes of the Orbital ATK consolidated group relating to the taxable periods in which we were
part of that group. However, the Tax Matters Agreement specifies the portion, if any, of this tax liability for which we bear
responsibility, and Orbital ATK agrees to indemnify us against any amounts for which we are not responsible. The Tax Matters
Agreement also provides special rules for allocating tax liabilities in the event that the Spin-Off is determined not to be tax-
free. Though valid between the parties, the Tax Matters Agreement is not binding on the IRS.
The allocation of tax liabilities for the period from April 1, 2014 through the date of the Spin-Off was settled on June 15,
2018. Orbital ATK paid Vista Outdoor $13,047 to settle this matter, which was reflected as an adjustment to the distribution
from Vista Outdoor to Orbital ATK at the time of the Spin-Off.
Prior to the Spin-Off, Orbital ATK or one of its subsidiaries filed income tax returns in the U.S. federal and various U.S.
state jurisdictions that included Vista Outdoor. In addition, certain of our subsidiaries file income tax returns in foreign
jurisdictions. After the Spin-Off we file income tax returns in the U.S. federal, foreign and various U.S. state jurisdictions.
With a few exceptions, Orbital ATK and its subsidiaries and Vista Outdoor are no longer subject to U.S. federal, state and
local, or foreign income tax examinations by tax authorities prior to 2012. The IRS has completed the audits of Orbital ATK
through fiscal 2014 and is currently auditing Orbital ATK's tax return for fiscal 2015. The IRS has also completed the audit of
our tax return that begins after the Spin-Off and ends on March 31, 2015. We believe appropriate provisions for all outstanding
issues relating to our portion of these returns have been made for all remaining open years in all jurisdictions.
As of March 31, 2019, and 2018, the total amount of unrecognized tax benefits was $34,118 and $39,383, respectively,
of which $30,432 and $35,471, respectively, would affect the effective tax rate, if recognized. The remaining balance is related
to deferred tax items which only impact the timing of tax payments. Although the timing and outcome of audit settlements are
uncertain, it is reasonably possible that an $8,558 reduction of the uncertain tax benefits will occur in the next 12 months. The
settlement of these unrecognized tax benefits could result in earnings from $0 to $7,542. See Note 15, Income Taxes, to the
consolidated financial statements for further details.
Liquidity and Capital Resources
We manage our business to maximize operating cash flows as the primary source of liquidity. In addition to cash on hand
and cash generated by operations, sources of liquidity include committed credit facilities and access to the public debt and
equity markets. We use our cash primarily to fund investments in our existing businesses and for debt payments, acquisitions,
and other activities.
Cash Flow Summary
Our cash flows from operating, investing and financing activities, as reflected in the Consolidated Statement of Cash
Flows for the years ended March 31, 2020 and 2019 are summarized as follows:
Cash flows provided by operating activities
Cash flows provided by investing activities
Cash flows used for financing activities
Effect of foreign currency exchange rate fluctuations on cash
Net cash flows
Operating Activities
2020
2019
76,745
133,076
(200,058)
(323)
9,440
$
$
97,475
112,718
(211,110)
(18)
(935)
$
$
Net cash provided by operating activities decreased $20,730, primarily as a result of decreased gross profit and less
favorable changes in net working capital balances, partially offset by a decrease in selling, general administrative costs. The
change in net working capital was driven primarily by the timing of interest payments, income taxes payments and payables,
partially offset by the collection of customer receivables.
Investing Activities
Net cash provided by investing activities increased $20,358, which was driven by a decrease in capital expenditures in
the current fiscal year.
38
Financing Activities
Net cash used for financing activities decreased by $11,052. The improvements were primarily driven by reductions in
both long-term debt payments and debt issuance costs, partially offset by a reduction in net advances from our line of credit,
and a favorable settlement with our former parent in the prior year.
Liquidity
In addition to our normal operating cash requirements, our principal future cash requirements will be to fund capital
expenditures, debt repayments, employee benefit obligations, any share repurchases, and any strategic acquisitions. Our short-
term cash requirements for operations are expected to consist mainly of capital expenditures to maintain production facilities
and working capital requirements. Our debt service requirements over the next two years consist of required interest payments
due under the New Credit Facilities and our 5.875% Notes, as discussed further below.
Based on our current financial condition, management believes that our cash position, combined with anticipated
generation of cash flows and the availability of funding, if needed, under our ABL Revolving Credit Facility, access to debt and
equity markets, as well as other potential sources of funding including additional bank financing, will be adequate to fund
future growth and as to service our currently anticipated long-term debt and pension obligations and make capital expenditures
over the next 12 months.
We do not expect that our access to liquidity sources will be materially impacted in the near future. There can be no
assurance, however, that the cost or availability of future borrowings, if any, will not be materially impacted by capital market
conditions, including any disruptions to capital markets as a result of the COVID-19 pandemic, or the Company's future
financial condition and performance. Furthermore, because our ABL Revolving Credit Facility is secured in large part by
receivables from our customers, a sustained deterioration in general economic conditions as a result of the COVID-19
pandemic that adversely affects the creditworthiness of our customers could have a negative effect on our future available
liquidity under the ABL Revolving Credit Facility.
The allocation of tax liabilities for the period from April 1, 2014 through the date of the Spin-Off as required by the Tax
Matters Agreement with Orbital ATK, as discussed further in Note 15, Income Taxes, to the consolidated financial statements
included in this Annual Report, was settled on June 15, 2018. Orbital ATK paid us $13,047 to settle this matter, which was
reflected as an adjustment to the distribution from us to Orbital ATK at the time of the Spin-off.
Long-Term Debt and Credit Agreements
As of March 31, 2020, we had actual total indebtedness of $517,256, which consisted of the following:
March 31,
2020
2019
Credit Agreements:
ABL Revolving Credit Facility
Term Loan
Junior Term Loan
Total principal amount of Credit Agreements
Junior Term Loan
5.875% Senior Notes
Principal amount of long-term debt
Less: unamortized deferred financing costs
Carrying amount of long-term debt
Less: current portion
$
167,256
$
—
—
167,256
—
350,000
517,256
(5,450)
511,806
—
Carrying amount of long-term debt, excluding current portion
$
511,806
$
220,000
104,509
40,000
364,509
40,000
350,000
714,509
(10,504)
704,005
(19,335)
684,670
Our total debt (current portion of debt and long-term debt) as a percentage of total capitalization (total debt and
stockholders' equity) was 54% as of March 31, 2020.
See Note 13, Long-term Debt, to the consolidated financial statements in Part II, Item 8 of this Annual Report for a
detailed discussion of our borrowings.
39
Covenants
New Credit Facilities—Our New Credit Facilities impose restrictions on us, including limitations on our ability to pay
cash dividends, incur debt or liens, redeem or repurchase Vista Outdoor stock, enter into transactions with affiliates, make
investments, merge or consolidate with others or dispose of assets. In addition, the New Credit Facilities contain covenants that,
if Excess Availability under the ABL Revolving Credit Facility falls below $42,500, require us to (a) comply with certain
heightened reporting and other requirements, and (b) maintain a FCCR of not less than 1.00:1.00. If we do not comply with the
covenants in any of the New Credit Facilities, the lenders may, subject to customary cure rights, require the immediate payment
of all amounts outstanding under each of the New Credit Facilities.
The FCCR is Covenant EBITDA ("earnings before interest, taxes, depreciation, and amortization"), (which includes
adjustments for items such as non-recurring or extraordinary items, non-cash charges related to stock-based compensation, and
intangible asset impairment charges, as well as adjustments for acquired or divested business units on a pro forma basis) less
capital expenditures (subject to certain adjustments) for the past four fiscal quarters, divided by fixed charges (which includes
debt principal and interest payments made over the past four fiscal quarters; plus income tax payments and restricted payments
over the past four fiscal quarters).
5.875% Notes—The indenture governing the 5.875% Notes contains covenants that, among other things, limit our ability
to incur or permit to exist certain liens, sell, transfer or otherwise dispose of assets, consolidate, amalgamate, merge or sell all
or substantially all of our assets, enter into transactions with affiliates, enter into agreements restricting our subsidiaries’ ability
to pay dividends, incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem our capital
stock, prepay, redeem or repurchase certain debt and make loans and investments.
The New Credit Facilities and the indenture governing the 5.875% Notes contain cross-default provisions so that
noncompliance with the covenants within one debt agreement could also cause a default under the other debt agreements. As of
March 31, 2020, we were in compliance with the covenants of all of the debt agreements. However, we cannot provide
assurance that we will be able to comply with such financial covenants in the future because of various risks and uncertainties
some of which may be beyond our control. Any failure to comply with the restrictions in the New Credit Facilities may prevent
us from drawing under the ABL Revolving Credit Facility and may result in an event of default under the New Credit Facilities,
which default may allow the creditors to accelerate the related indebtedness and the indebtedness under our 5.875% Notes and
proceed against the collateral that secures the indebtedness. We may not have sufficient liquidity to repay the indebtedness in
such circumstances.
Contractual Obligations and Commercial Commitments
The following tables summarize our contractual obligations and commercial commitments as of March 31, 2020:
Total
Less than
1 year
Years 2 - 3
Years 4 - 5
More than
5 years
Payments due by period
Contractual obligations:
Long-term debt
Interest on debt (1)
Operating leases (2)
Purchase commitments
Pension plan contributions
Total contractual obligations
Other commercial commitments:
Letters of credit
—
—
60,703
—
$
517,256
$
— $
— $ 517,256
$
99,177
128,569
190,307
58,435
22,260
17,495
188,080
6,642
52,194
27,907
2,227
14,866
24,723
22,464
—
17,542
19,385
$
993,744
$ 234,477
$
97,194
$ 581,985
$
80,088
Commitment Expiration by period
Total
Less than
1 year
Years 2 - 3
Years 4 - 5
$
24,104
$
24,104
$
— $
—
________________________________
(1) Includes interest on variable rate debt calculated based on interest rates at March 31, 2020.
(2) Does not include future expected sublease income of $5,302.
The total liability for uncertain tax positions at March 31, 2020 was approximately $30,159 (see Note 15, Income Taxes,
to the consolidated financial statements in Part II, Item 8, of this Annual Report), $0 of which could be paid within 12 months.
40
We are unable to provide a reasonably reliable estimate of the timing of future payments relating to the non-current uncertain
tax position obligations.
Pension plan contributions are an estimate of the contributions we will make to the plans through fiscal 2027 to provide
pension benefits for employees based on expected actuarial estimated funding requirements through fiscal 2027.
Contingencies
Litigation—From time-to-time, we are subject to various legal proceedings, including lawsuits, which arise out of, and
are incidental to, the conduct of our business. We do not consider any of such proceedings that are currently pending,
individually or in the aggregate, to be material to our business or likely to result in a material adverse effect on our operating
results, financial condition, or cash flows.
Environmental Liabilities—Our operations and ownership or use of real property are subject to a number of federal, state,
and local environmental laws and regulations, as well as applicable foreign laws and regulations, including those governing the
discharge of hazardous materials, remediation of contaminated sites, and restoration of damage to the environment. We are
obligated to conduct investigation and/or remediation activities at certain sites that we own or operate or formerly owned or
operated.
Certain of our former subsidiaries have been identified as PRPs, along with other parties, in regulatory agency actions
associated with hazardous waste sites. As a PRP, those former subsidiaries may be required to pay a share of the costs of the
investigation and clean-up of these sites. In that event, we would be obligated to indemnify those subsidiaries for those costs.
While uncertainties exist with respect to the amounts and timing of the ultimate environmental liabilities, based on currently
available information, we do not currently expect that these potential liabilities, individually or in the aggregate, will have a
material adverse effect on our operating results, financial condition, or cash flows.
We could incur substantial additional costs, including cleanup costs, resource restoration, fines, and penalties or third-
party property damage or personal injury claims, as a result of violations or liabilities under environmental laws or non-
compliance with environmental permits. While environmental laws and regulations have not had a material adverse effect on
our operating results, financial condition, or cash flows in the past, and we have environmental management programs in place
to mitigate these risks, it is difficult to predict whether they will have a material impact in the future.
See Note 16, Commitments and Contingencies, to the consolidated financial statements included in this Annual Report
for additional information.
Dependence on Key Customers; Concentration of Credit
The loss of any key customer and our inability to replace revenues provided by a key customer may have a material
adverse effect on our business and financial condition. Sales to Walmart accounted for approximately 13%, 14%, and 13% of
our total fiscal 2020, 2019, and 2018 sales, respectively. The percentage of Walmart segment sales to total segment sales is
equal in both the Shooting Sports and Outdoor Products segments. No other single customer contributed 10% or more of our
sales during those periods.
If a key customer fails to meet payment obligations, our operating results and financial condition could be adversely
affected.
Inflation and Commodity Price Risk
In management’s opinion, inflation has not had a significant impact upon the results of our operations. However, we have
been impacted by changes in the prices of raw materials used in production as well as changes in oil and energy costs. In
particular, the prices of commodity metals, such as copper, zinc, and lead continue to be volatile. These prices generally impact
our Shooting Sports Segment. See Note 4, Derivative Financial Instruments, to the consolidated financial statements included
in this Annual Report for additional information.
We have a strategic sourcing, pricing and hedging strategy to mitigate risk from commodity price fluctuation. We will
continue to evaluate the need for future price changes in light of these trends, our competitive landscape, and our financial
results. If our sourcing and pricing strategy is unable to offset impacts of the commodity price fluctuations, our future results
from operations and cash flows would be materially impacted.
41
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in interest rates. A significant portion of our indebtedness consists of
revolver borrowings with variable rates of interest that expose us to interest rate risk. If interest rates increase, our debt service
obligations on our variable rate indebtedness will increase even if the amount borrowed remains the same, and our net income
and cash flows will correspondingly decrease. Assuming $67 million of variable-rate indebtedness (which was the amount of
out indebtedness outstanding as of April 1, 2020, considering our interest rate swaps), a change of 1/8 of one percent in interest
rates would result in a $0.2 million change in annual estimated interest expense. To mitigate the risks from interest rate
exposure, we may enter into hedging transactions, mainly interest rate swaps, through derivative financial instruments that have
been authorized pursuant to corporate policies. We may use derivatives to hedge certain interest rate, foreign currency exchange
rate, and commodity price risks, but do not use derivative financial instruments for trading or other speculative purposes.
Additional information regarding these financial instruments is contained in Note 2, Fair Value of Financial Instruments, to the
audited consolidated financial statements included in this Annual Report. Our objective in managing exposure to changes in
interest rates is to limit the impact of such changes on earnings and cash flow.
We measure market risk related to holdings of financial instruments based on changes in interest rates utilizing a
sensitivity analysis. The sensitivity analysis measures the potential loss in fair values, cash flows, and earnings based on a
hypothetical change (increase and decrease) in interest rates. We used current market rates on the debt portfolio to perform the
sensitivity analysis. Certain items such as lease contracts, insurance contracts, and obligations for pension and other
postretirement benefits were not included in the analysis.
We conduct business through our subsidiaries in many different countries, and fluctuations in currency exchange rates
could have a significant impact on the reported results of operations, which are presented in U.S. dollars. Cross-border
transactions, both with external parties and intercompany relationships, result in increased exposure to foreign exchange
effects. Accordingly, significant changes in currency exchange rates, particularly the Euro, the British pound, the Chinese
renminbi (yuan), and the Canadian dollar, could cause fluctuations in the reported results of our businesses’ operations that
could negatively affect our results of operations. To mitigate the risks from foreign currency exposure, we may enter into
hedging transactions, mainly foreign currency forward contracts, through derivative financial instruments that have been
authorized pursuant to corporate policies.
In addition, sales and expenses of our non-U.S. businesses are also translated into U.S. dollars for reporting purposes and
the strengthening or weakening of the U.S. dollar could result in unfavorable translation effects.
42
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Vista Outdoor Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Vista Outdoor Inc. and subsidiaries (the "Company") as of
March 31, 2020 and 2019, and the related consolidated statements of comprehensive income (loss), stockholders’ equity, and
cash flows for each of the three years in the period ended March 31, 2020, and the related notes (collectively referred to as the
"financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of
the Company as of March 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in
the period ended March 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of March 31, 2020, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated June 3, 2020, expressed an unqualified opinion on the Company’s internal control over
financial reporting.
Change in Accounting Principle
As discussed in Note 1 to the financial statements, effective April 1, 2019, the Company adopted FASB Accounting Standards
Update (“ASU”) 2016-02, “Leases” (Topic 842), using the modified retrospective approach.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Salt Lake City, Utah
June 3, 2020
We have served as the Company’s auditor since 2014.
43
VISTA OUTDOOR INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share data)
ASSETS
Current assets:
Cash and cash equivalents
Net receivables
Net inventories
Income tax receivable
Assets held for sale
Other current assets
Total current assets
Net property, plant, and equipment
Operating lease assets
Goodwill
Net intangible assets
Deferred charges and other non-current assets
Total assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt
Accounts payable
Accrued compensation
Accrued income taxes
Federal excise, use, and other taxes
Liabilities held for sale
Other current liabilities
Total current liabilities
Long-term debt
Deferred income tax liabilities
Long-term operating lease liabilities
Accrued pension and postemployment benefits
Other long-term liabilities
Total liabilities
Commitments and contingencies (Notes 13 and 16)
Common stock—$.01 par value:
March 31,
2020
2019
$
31,375
313,517
331,293
7,626
—
25,200
709,011
184,733
69,024
83,167
306,100
39,254
$ 1,391,289
$
21,935
344,249
344,491
—
207,607
21,180
939,462
215,592
—
204,496
360,520
17,953
$ 1,738,023
$
— $
89,996
38,806
—
19,702
—
98,197
246,701
511,806
12,810
73,738
60,225
43,504
948,784
19,335
99,283
36,456
436
18,482
46,030
97,175
317,197
684,670
17,757
—
46,083
63,276
1,128,983
Authorized—500,000,000 shares
Issued and outstanding—58,038,822 shares as of March 31, 2020 and 57,710,934 shares as
of March 31, 2019
Additional paid-in-capital
Accumulated deficit
Accumulated other comprehensive loss
Common stock in treasury, at cost—5,925,617 shares held as of March 31, 2020 and
6,253,505 shares held as of March 31, 2019
Total stockholders' equity
Total liabilities and stockholders' equity
580
1,744,096
(960,048)
(100,994)
577
1,752,419
(804,969)
(82,967)
(241,129)
442,505
$ 1,391,289
(256,020)
609,040
$ 1,738,023
See Notes to the Consolidated Financial Statements.
44
VISTA OUTDOOR INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Amounts in thousands except per share data)
Sales, net
Cost of sales
Gross profit
Operating expenses:
Research and development
Selling, general, and administrative
Impairment of Goodwill and intangibles (Note 11)
Impairment of held-for-sale goodwill (Note 11)
Impairment of held-for-sale assets (Notes 7)
Earnings (loss) before interest, income taxes, and other
Other expense (Note 7)
Earnings (loss) before interest and income taxes
Interest expense, net
Earnings (loss) before income taxes
Income tax provision (benefit)
Net income (loss)
Earnings (loss) per common share:
Basic and diluted
Years ended March 31,
2020
2019
2018
$ 1,755,871
$ 2,058,528
$ 2,308,463
1,397,105
1,642,840
1,787,501
358,766
415,688
520,962
22,998
302,554
155,588
—
27,742
377,049
456,023
80,604
9,429
(131,803)
(433)
(132,236)
(38,791)
(171,027)
(15,948)
(155,079) $
84,555
(610,285)
(6,796)
(617,081)
(57,191)
(674,272)
(25,829)
(648,443) $
29,663
423,430
152,444
—
—
(84,575)
—
(84,575)
(49,214)
(133,789)
(73,557)
(60,232)
(2.68) $
(11.27) $
(1.05)
$
$
Weighted-average number of common shares outstanding:
Basic and diluted
57,846
57,544
57,167
Net income (loss) (from above)
Other comprehensive income (loss), net of tax:
Pension and other postretirement benefit liabilities:
Reclassification of prior service credits for pension and postretirement
benefit plans recorded to net income, net of tax benefit of $0, $75, and
$240
Reclassification of net actuarial loss for pension and postretirement benefit
plans recorded to net income, net of tax expense of $0, $(686), and
$(1,420)
Valuation adjustment for pension and postretirement benefit plans, net of
tax benefit of $0, $3,141, and $347
Change in derivative instruments, net of tax benefit (expense) of $0, $369,
and $(772)
Reclassification of currency translation gains
Change in cumulative translation adjustment
Total other comprehensive income (loss)
Comprehensive income (loss)
$
(155,079) $
(648,443) $
(60,232)
(313)
(238)
(432)
3,247
2,172
2,661
(21,617)
(9,948)
(47)
(2,161)
3,150
(333)
(18,027)
(173,106) $
(1,169)
37,542
(7,030)
21,329
(627,114) $
$
1,734
—
16,519
20,435
(39,797)
See Notes to the Consolidated Financial Statements.
45
VISTA OUTDOOR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Operating Activities
Net income (loss)
Adjustments to net income (loss) to arrive at cash provided by operating activities:
Years ended March 31,
2019
2018
2020
$
(155,079) $
(648,443) $
(60,232)
Depreciation
Amortization of intangible assets
Amortization of deferred financing costs
Impairment of held-for-sale assets (Note 7)
Impairment of held-for-sale goodwill (Note 11)
Impairment of goodwill and intangibles (Note 11)
Deferred income taxes
(Gain) loss on disposal of property, plant, and equipment
Loss on divestiture (Note 7)
Share-based compensation
Changes in assets and liabilities:
Net receivables
Net inventories
Accounts payable
Accrued compensation
Accrued income taxes
Federal excise, use, and other taxes
Pension and other postretirement benefits
Other assets and liabilities
Cash provided by operating activities
Investing Activities
Capital expenditures
Proceeds from the sale of our Firearms and Eyewear businesses, respectively
Proceeds from the disposition of property, plant, and equipment
Cash provided by (used for) investing activities
Financing Activities
Borrowings on lines of credit
Payments made on lines of credit
Proceeds from issuance of long-term debt
Payments made on long-term debt
Settlement from former parent
Payments made for debt issue costs and prepayment premiums
Deferred payments for acquisitions
Proceeds from employee stock compensation and stock purchase plans
Shares withheld for payroll taxes
Cash used for financing activities
Effect of foreign currency exchange rate fluctuations on cash
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental Cash Flow Disclosures:
Noncash investing activity:
Capital expenditures included in accounts payable and other accrued liabilities
$
$
47,863
19,995
6,087
9,429
—
155,588
(4,521)
(1,117)
433
6,810
44,256
(7,675)
(12,543)
1,481
(12,053)
(1,227)
(4,542)
(16,440)
76,745
(23,768)
156,567
277
133,076
410,634
(463,382)
—
(144,509)
—
(1,033)
(1,348)
315
(735)
(200,058)
(323)
9,440
21,935
31,375
$
53,129
24,374
10,573
84,555
80,604
456,023
(22,718)
14,081
4,925
6,599
30,998
(7,102)
540
2,563
4,907
407
(2,657)
4,117
97,475
(42,242)
154,595
365
112,718
545,000
(325,000)
149,343
(580,834)
13,047
(10,376)
(1,348)
376
(1,318)
(211,110)
(18)
(935)
22,870
21,935
$
55,090
34,669
3,026
—
—
152,444
(78,989)
129
—
9,299
5,733
155,526
(1,633)
6,822
24,915
(7,440)
(22,850)
(24,154)
252,355
(66,627)
—
128
(66,499)
250,000
(425,000)
—
(32,000)
—
(1,879)
(1,348)
4,824
(3,147)
(208,550)
489
(22,205)
45,075
22,870
2,923
$
7,430
$
5,706
See Notes to the Consolidated Financial Statements.
46
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
VISTA OUTDOOR INC.
Common Stock $.01
Par Value
(Amounts in thousands except share data)
Shares
Amount
Additional
Paid-In
Capital
Retained
Earnings
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Equity
57,014,319
$
571
$ 1,752,903
$
(108,033) $
(112,992) $ (287,384) $ 1,245,065
(60,232)
20,435
—
(39,797)
Balance, March 31, 2017
Comprehensive loss
Exercise of stock options
Restricted stock grants net of forfeitures
Share-based compensation
Restricted stock vested and shares withheld
Employee stock purchase program
Reclassification due to U.S. Tax Reform
Other
Balance, March 31, 2018
Comprehensive loss
Share-based compensation
Restricted stock vested and shares withheld
Employee stock purchase program
Settlement from former parent
Other
Balance, March 31, 2019
Comprehensive loss
Share-based compensation
Restricted stock vested and shares withheld
Employee stock purchase program
Other
—
299,580
(53,329)
—
132,362
28,663
—
9,704
—
—
—
—
—
—
—
3
—
(7,566)
(1,503)
9,299
(5,365)
(687)
—
(899)
57,431,299
574
1,746,182
—
—
188,434
31,519
—
59,682
—
—
—
—
—
3
—
6,701
(10,927)
(922)
13,047
(1,662)
57,710,934
577
1,752,419
—
—
202,172
43,225
82,491
—
—
—
—
3
—
6,810
(12,200)
(1,451)
(1,482)
—
—
—
—
—
11,739
—
(156,526)
(648,443)
—
—
—
—
—
—
—
—
—
—
(11,739)
—
12,390
(690)
—
5,746
1,182
—
312
4,824
(2,193)
9,299
381
495
—
(584)
(104,296)
(268,444)
1,217,490
21,329
—
—
—
—
—
—
(102)
9,973
1,298
—
1,255
(627,114)
6,599
(954)
376
13,047
(404)
(256,020)
609,040
—
—
11,579
1,766
1,546
(173,106)
6,810
(621)
315
67
(804,969)
(155,079)
(82,967)
(18,027)
—
—
—
—
—
—
—
—
Balance, March 31, 2020
58,038,822
$
580
$ 1,744,096
$
(960,048) $
(100,994) $ (241,129) $
442,505
See Notes to the Consolidated Financial Statements.
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
1. Significant Accounting Policies
Nature of Operations and Basis of Presentation. Vista Outdoor Inc. (together with our subsidiaries, "Vista Outdoor",
"we", "our", and "us") is a leading global designer, manufacturer and marketer of consumer products in the outdoor sports and
recreation markets. We operate in two segments, Shooting Sports and Outdoor Products. Vista Outdoor is headquartered in
Anoka, Minnesota and has 14 manufacturing and distribution facilities in the United States, Canada, Mexico, and Puerto Rico
along with international customer service, sales and sourcing operations in Asia and Europe. Vista Outdoor was incorporated in
Delaware in 2014. The consolidated financial statements reflect our financial position, results of operations, and cash flows in
conformity with accounting principles generally accepted in the United States.
Principles of Consolidation. The consolidated financial statements include our net assets and results of operations as
described above. All intercompany transactions and accounts within the businesses have been eliminated.
Fiscal Year. References in this report to a particular fiscal year refer to the year ended March 31 of that calendar year. Our
interim quarterly periods are based on 13-week periods and end on Sundays.
Use of Estimates. The preparation of consolidated financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported
therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ from
those estimates. We review our estimates to ensure that these estimates property reflect changes in our business or as new
information becomes available.
Revenue Recognition. The total amount of revenue we recognize for the sale of our products reflects various sales
adjustments for discounts, returns, refunds, allowances, rebates, and other customer incentives. These sales adjustments can
vary based on market conditions, customer preferences, timing of customer payments, volume of products sold, and timing of
new product launches. These adjustments require management to make reasonable estimates of the amount we expect to receive
from the customer. We estimate sales adjustments by customer or by product category on the basis of our historical experience
with similar contracts with customers, adjusted as necessary to reflect current facts and circumstances and our expectations for
the future. Sales taxes, firearms and ammunition excise tax and other similar taxes are excluded from revenue. Revenue
recognition is discussed in further detail in Note 5, Revenue Recognition.
Cost of Sales. Cost of sales includes material, labor, and overhead costs associated with product manufacturing, including
depreciation, amortization, purchasing and receiving, inspection, warehousing, product liability, warranty, and inbound and
outbound shipping and handling costs.
Research and Development Costs. Research and development costs consist primarily of compensation and benefits and
experimental work materials for our employees who are responsible for the development and enhancement of new and existing
products. Research and development costs incurred to develop new products and to enhance existing products are charged to
expense as incurred.
Selling, General, and Administrative Expense. Selling, general, and administrative expense includes, among other items,
administrative salaries, benefits, commissions, advertising, insurance, and professional fees.
Advertising Costs. Advertising and promotional costs including print ads, commercials, catalogs, and brochures are
expensed in the period when the first advertisement is run. Our co-op program is structured so that certain customers are
eligible for reimbursement for certain types of advertisements on qualifying product purchases and are accrued as purchases are
made. Advertising costs totaled $37,950, $66,436, and $69,636 for the years ended March 31, 2020, 2019, and 2018,
respectively.
Cash Equivalents. Cash equivalents are all highly liquid cash investments purchased with original maturities of three
months or less.
Allowance for Doubtful Accounts. We maintain an allowance for doubtful receivables for estimated losses resulting from
the inability of our trade customers to make required payments. We provide an allowance for specific customer accounts where
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
collection is doubtful and also provide an allowance for customer deductions based on historical collection and write-off
experience. Additional allowances would be required if the financial conditions of our customers deteriorated.
Inventories. Inventories are stated at the lower of cost, determined using the first-in, first-out ("FIFO") method, or net
realizable value. Inventory costs associated with work in process inventory and finished goods include material, labor, and
manufacturing overhead, while costs associated with raw materials and purchased finished goods include material and inbound
freight costs. We provide inventory allowances for any excess and obsolete inventories and periodically write inventory
amounts down to market when costs exceed market value.
Warranty Costs. We provide consumer warranties against manufacturing defects on certain products within the Shooting
Sports and Outdoor Products segments with warranty periods typically ranging from one year to the expected lifetime of the
product. The estimated costs of such product warranties are recorded at the time the sale is recorded. Estimated future warranty
costs are accrued at the time of sale based upon actual past experience, our current production environment as well as specific
and identifiable warranties as applicable. See Note 12, Other Current and Non-current Liabilities, for additional detail.
Fair Value Measurements. Fair value is defined as the price that would be received to sell an asset or the price paid to
transfer a liability (the exit price) in the principal and most advantageous market for the asset or liability in an orderly
transaction between market participants. We measure and disclose the fair value of nonfinancial and financial assets and
liabilities utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered
to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources,
while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data
when available. The measurement of assets and liabilities at fair value are classified using the following three-tier hierarchy:
Level 1—Quoted prices for identical instruments in active markets.
Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in
markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers
are observable.
Level 3—One or more significant inputs to the valuation model are unobservable.
See Note 2, Fair Value of Financial Instruments, for additional disclosure regarding fair value of financial instruments.
Accounting for Goodwill and Indefinite Lived Intangible Assets
Goodwill—We test goodwill for impairment on the first day of our fourth fiscal quarter or upon the occurrence of events
or changes in circumstances that indicate that the asset might be impaired. Goodwill is assigned to our reporting units, which
are our operating segments, or components of an operating segment, that constitute a business for which discrete financial
information is available, and for which segment management regularly reviews the operating results. Based on this analysis, we
had five reporting units, as of the fiscal 2020 testing date. Subsequent to the annual testing date we had additional changes in
operating segments and reporting units. At the end of the fiscal year, we had six operating segments and reporting units.
During the annual impairment review process we have the option to first perform a qualitative assessment (commonly
referred to as “step zero”) over relative events and circumstances to determine whether it is more likely than not that the fair
value of a reporting unit is less than its carrying value or to perform a quantitative assessment (“step one”) where we estimate
the fair value of each reporting unit using both an income and market approach. We completed a step one assessment as of
January 1, 2020, and recognized goodwill impairment charges of $121,329. See Note 11, Goodwill and Intangible Assets, for
discussion and details.
To assess the recoverability of our goodwill, we determine the estimated fair value of each reporting unit and compare it
to the carrying value of the reporting unit, including goodwill. When fair value is less than the carrying value of the net assets
and related goodwill, an impairment charge is recognized for the excess. The fair value of each reporting unit is determined
using both an income and market approach. The value estimated using a discounted cash flow model is weighted equally
against the estimated value derived from the guideline company market approach method. This market approach method
estimates the price reasonably expected to be realized from the sale of the reporting unit based on comparable companies.
In developing the discounted cash flow analysis, our assumptions about future revenues and expenses, capital
expenditures, and changes in working capital are based on our plan, as reviewed by the Board of Directors, and assume a
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
terminal growth rate thereafter. A separate discount rate is determined for each reporting unit and these cash flows are then
discounted to determine the fair value of the reporting unit. The discounted cash flow analysis is derived from valuation
techniques in which one or more significant inputs are not observable (Level 3 fair value measures).
Indefinite Lived Intangible Assets—Indefinite lived intangibles are not amortized and are tested for impairment annually
on the first day of the fourth fiscal quarter or upon the occurrence of events or changes in circumstances that indicate that the
assets might be impaired.
Our identifiable intangibles with indefinite lives consist of certain trademarks and tradenames. The impairment test
consists of a comparison of the estimated fair value of the specific intangible asset with its carrying value. The estimated fair
value of these assets is measured using the relief-from-royalty method which assumes that the asset has value to the extent that
the owner is relieved of the obligation to pay royalties for the benefits received from them.
This method requires that we estimate the future revenue for the related brands and technology, the appropriate royalty
rate, and the weighted average cost of capital. We base our fair values and estimates on assumptions we believe to be
reasonable, but which are unpredictable and inherently uncertain. If the carrying amount of an asset is higher than its fair value,
an impairment exists and the asset would be recorded at the estimated fair value. Due to the results of our annual step one test,
we recognized impairment charges related to our indefinite lived intangibles of $34,259. See Note 11, Goodwill and Intangible
Assets, for discussion and details.
Our assumptions used to develop the discounted cash flow analysis require us to make significant estimates regarding
future revenues and expenses, projected capital expenditures, changes in working capital, and the appropriate discount rate. The
projections also take into account several factors including current and estimated economic trends and outlook, costs of raw
materials and other factors that are beyond our control. If the current economic conditions were to deteriorate, or if we were to
lose significant business, causing a reduction in estimated discounted cash flows, it is possible that the estimated fair value of
certain reporting units or tradenames could fall below their carrying value resulting in the necessity to conduct additional
impairment tests in future periods. We continually monitor the reporting units and tradenames for impairment indicators and
update assumptions used in the most recent calculation of the estimated fair value of a reporting unit or tradenames as
appropriate.
Amortizing Intangible Assets, Long-Lived Assets. Our primary identifiable intangible assets include trademarks and
tradenames, patented technology, and customer relationships. Our long-lived assets consist primarily of property, plant and
equipment, amortizing right-of-use asset related to our operating leases and amortizing costs related to cloud computing
arrangements. We periodically evaluate the recoverability of the carrying amount of our long-lived assets whenever events or
changes in circumstances indicate that the carrying amount of the asset may not be fully recoverable or exceeds its fair value.
Derivatives and Hedging. We mitigate the impact of changes in interest rates and commodity prices affecting the cost of
raw materials with interest rate swaps and commodity forward contracts that are accounted for as designated hedges pursuant to
ASC Topic 815, “Derivatives and Hedging” ("ASC Topic 815"). ASC Topic 815 requires that an entity recognize all derivatives
as either assets or liabilities on the balance sheet, measure those instruments at fair value and recognize changes in the fair
value of derivatives in earnings in the period of change unless the derivative qualifies as designated cash flow hedge that offsets
certain exposures. Certain criteria must be satisfied in order for derivative financial instruments to be classified and accounted
for as a cash flow hedge. Derivatives that are not elected for hedge accounting treatment are recorded immediately in earnings.
See Note 4, Derivative Financial Instruments, for additional information.
We would discontinue hedge accounting prospectively (i) if it is determined that the derivative is no longer effective in
offsetting changes in the cash flows of a hedged item, (ii) when the derivative expires or is sold, terminated, or exercised, (iii) if
it becomes probable that the forecasted transaction being hedged by the derivative will not occur, (iv) if a hedged firm commitment
no longer meets the definition of a firm commitment, or (v) if it is determined that designation of the derivative as a hedge instrument
is no longer appropriate. The fair value of our forward contracts based on pricing models using current market rates. These contracts
are classified under Level 2 of the fair value hierarchy (see Note 2, Fair Value of Financial Instruments).
Stock-Based Compensation. We account for our share-based compensation arrangements in accordance with ASC Topic
718, "Compensation—Stock Compensation" ("ASC Topic 718") which requires the measurement and recognition of
compensation expense for all share-based payment awards to employees and directors based on estimated fair values, and ASU
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
No. 2014-12 for stock awards that are subject to performance measures. Our stock-based compensation plans, which are
described more fully in Note 17, Stockholders' Equity, provide for the grant of various types of stock-based incentive awards,
including performance awards, total stockholder return performance awards ("TSR awards"), restricted stock/restricted stock
units, and options to purchase common stock. The types and mix of stock-based incentive awards are evaluated on an ongoing
basis and may vary based on our overall strategy regarding compensation, including consideration of the impact of expensing
stock awards on our results of operations.
Performance awards are valued at the fair value of our stock as of the grant date and expense is recognized based on the
number of shares expected to vest under the terms of the award under which they are granted. We use an integrated Monte
Carlo simulation model to determine the fair value of the TSR awards and the calculated fair value is expensed over the vesting
period. Restricted stock issued vests over periods ranging from one to three years and is valued based on the market value of
our stock on the grant date. The estimated grant date fair value of stock options is expensed on a straight-line basis over the
requisite service period, generally one to three years. The estimated fair value of each option is calculated using the Black-
Scholes option-pricing model. See Note 17, Stockholders' Equity, for further details.
Income Taxes. We account for income taxes under the asset and liability method in accordance with the accounting
standard for income taxes. The asset and liability method requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities.
Under this method, changes in tax rates and laws are recognized in income in the period such changes are enacted.
We record net deferred tax assets to the extent that we believe these assets will more likely than not be realized. In
making such determination, we consider all available positive and negative evidence, including future reversals of existing
taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations.
Significant estimates are required for this analysis. If we were to determine that the amount of deferred income tax assets we
would be able to realize in the future had changed, we would make an adjustment to the valuation allowance which would
decrease or increase the provision for income taxes.
The provision for federal, foreign, and state and local income taxes is calculated on income before income taxes based on
current tax law and includes the cumulative effect of any changes in tax rates from those used previously in determining
deferred tax assets and liabilities. Such provision differs from the amounts currently payable because certain items of income
and expense are recognized in different reporting periods for financial reporting purposes than for income tax purposes.
We periodically assess our liabilities and contingencies for all periods that are currently open to examination or have not
been effectively settled based on the most current available information. Where it is not more likely than not that our tax
position will be sustained, we record the entire resulting tax liability and when it is more likely than not of being sustained, we
record our best estimate of the resulting tax liability. To the extent our assessment of the tax outcome of these matters changes,
such change in estimate will impact the income tax provision in the period of change. It is our policy to record interest and
penalties related to income taxes as part of the income tax expense for financial reporting purposes.
Worker's Compensation. The liability for losses under our worker's compensation program has been actuarially
determined. The balance for worker's compensation liability was $5,830 and $7,401 as of March 31, 2020 and 2019,
respectively.
Translation of Foreign Currencies. Assets and liabilities of foreign subsidiaries are translated at current exchange rates
and the effects of these translation adjustments are reported as a component of accumulated other comprehensive loss
("AOCL") in stockholders' equity. Income and expenses in foreign currencies are translated at the average exchange rate during
the period.
Accumulated Other Comprehensive Loss. The components of AOCL, net of income taxes, are as follows:
Derivatives
Pension and other postretirement benefit liabilities
Cumulative translation adjustment
Total accumulated other comprehensive loss
51
March 31,
2020
2019
$
$
(1,426) $
(93,353)
(6,215)
(100,994) $
735
(74,670)
(9,032)
(82,967)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
The following table details the amounts reclassified from AOCL to earnings as well as the changes in derivatives, pension
and other postretirement benefits and foreign currency translation, net of income tax:
Years ended March 31,
2020
Pension
and other
Postretire-
ment
Benefits
Cumulative
translation
adjustment
Derivatives
2019
Pension
and other
Postretire-
ment
Benefits
Cumulative
translation
adjustment
Total
Total
Derivatives
Beginning of year AOCL
$
735
$ (74,670) $
(9,032) $ (82,967) $
1,904
$ (66,656) $ (39,544) $(104,296)
Change in fair value of derivatives
Net gains reclassified from AOCL
Net actuarial losses reclassified from AOCL (1)
Prior service costs reclassified from AOCL (1)
Valuation adjustment for pension and
postretirement benefit plans (1)
Currency translation gains reclassified from
AOCL (2)
Net change in cumulative translation
adjustment
End of year AOCL
(1,555)
(1,169)
(1,555)
(606)
—
—
—
—
—
—
—
3,247
(313)
(21,617)
—
—
—
—
—
(606)
3,247
(313)
(21,617)
—
—
3,150
3,150
(333)
(333)
—
—
2,172
(238)
(9,948)
—
—
—
—
—
—
—
(1,169)
—
2,172
(238)
(9,948)
37,542
37,542
(7,030)
(7,030)
—
—
—
—
—
—
$
(1,426) $ (93,353) $
(6,215) $ (100,994) $
735
$ (74,670) $
(9,032) $ (82,967)
(1) Amounts related to our pension and other postretirement benefits that were reclassified from AOCL were recorded as a component of net
periodic benefit cost for each period presented. See Note 14, Employee Benefit Plans.
(2) Amounts related to the foreign currency translation gains realized upon the divestiture of our Firearms business and Eyewear brands and
Firearms business in the second quarter of fiscal year 2020 and 2019, respectively.
Adoption of New Accounting Pronouncements.
In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software,
Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing (Hosting) Arrangement That Is a Service
Contract. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that
is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use
software. The amendment is effective for public business entities for fiscal years beginning after December 15, 2019, and
interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period, for all entities
and should be applied either retrospectively or prospectively. We early adopted the amendment in the fourth quarter of fiscal
2020 and applied prospectively to all implementation costs incurred after the date of adoption. With the adoption of this ASU,
we capitalized implementation costs of approximately $2,321 for the three months ended March 31, 2020. The corresponding
cash flows from capitalized implementation costs incurred in our hosting arrangements is classified as a change in other assets
in cash flows from operating activities. The capitalized implementation costs incurred in our hosting arrangements are
amortized, once ready for intended use, over the term of the associated hosting arrangements of five years. The related
amortization of capitalized implementation costs are classified as selling, general and administrative expense in the same line
item as the expense for fees for the associated hosting arrangement.
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards update ("ASU")
2016-02, “Leases" (Topic 842), which requires lessees to recognize a right-of-use asset and lease liability for all leases with
terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a
finance or operating lease. We adopted ASU 2016-02 prospectively starting on April 1, 2019. As part of the adoption, we
elected the package of practical expedients which permits us under the new standard not to reassess historical lease
classification, not to recognize short-term leases on our balance sheet, and not to separate lease and non-lease components for
all our leases. In addition, we elected the use of hindsight to determine the lease term of its leases and applied its incremental
borrowing rate based on the remaining term of its leases as of the adoption date. The impact upon adoption, on April 1, 2019,
resulted in the recognition of right-of-use assets of approximately $75,749, and lease liabilities of approximately $91,604 on
our consolidated balance sheet. See Note 3, Leases, for additional information.
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
Recent Accounting Pronouncements. In December 2019, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income
Taxes." This ASU removes specific exceptions to the general principles in Accounting Standards Codification ("ASC") Topic
740, "Accounting for Income Taxes" ("Topic 740") and simplifies certain U.S. GAAP requirements. ASU 2019-12 is effective
for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the
impact this ASU will have on its consolidated financial statements and disclosures.
In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework-Changes to the Disclosure Requirements for
Fair Value Measurement” which amends ASC 820. This update includes adding, modifying and removing various disclosure
requirements related to fair value measurements. This update is effective for fiscal years beginning after December 15, 2019,
and interim periods within those fiscal years, with earlier application permitted. This update will be applied on a prospective
basis for certain changes and retrospectively for other changes. The adoption of this update is not expected to have a material
impact on our consolidated financial statements.
In August 2018, the FASB issued ASU 2018-14, “Disclosure Framework-Changes to the Disclosure Requirements for
Defined Benefit Plans” which amends ASC 715. This update includes adding, clarifying and removing various disclosure
requirements related to defined benefit pension and other postretirement plans. This update is effective for fiscal years
beginning after December 15, 2020, with earlier application permitted. The guidance in this update is applied on a retrospective
basis to all periods presented. The adoption of this update is not expected to have a material impact on our consolidated
financial statements.
In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments." This ASU is intended to improve financial reporting by requiring timelier recording of
credit losses on loans and other financial instruments held by financial institutions and other organizations. This ASU requires
the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience,
current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use
forward-looking information to better inform their credit loss estimates. Additionally, this ASU requires enhanced disclosures to
help investors and other financial statement users better understand significant estimates and judgments used in estimating
credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include
qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial
statements. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019. We will adopt this ASU as of April 1.
2020. We completed our preliminary assessment of this new standard, and concluded that the Company's current methodology
of estimating credit losses on its trade accounts receivable closely aligns with the requirements of this new standard. Therefore,
we believe this new standard will not have a material impact on its consolidated financial statements and disclosures.
There are no other new accounting pronouncements that are expected to have a significant impact on our consolidated
financial statements.
2. Fair Value of Financial Instruments
We measure and disclose our financial assets and liabilities at fair value on a recurring and nonrecurring basis. Fair value
is defined as the price that would be received to sell an asset or the price paid to transfer a liability (the exit price) in the
principal and most advantageous market for the asset or liability in an orderly transaction between market participants. Assets
and liabilities carried at fair value are classified using the three-tier hierarchy (see Note 1, Significant Accounting Policies. for
additional information.
The following section describes the valuation methodologies we use to measure our financial instruments at fair value on
a recurring basis:
Interest Rate Swaps—We periodically enter into floating-to-fixed interest rate swap agreements in order to hedge our
forecasted interest payments on our outstanding variable-rate debt. The fair value of those swaps is determined using a pricing
model based on observable inputs for similar instruments and other market assumptions. We consider these to be Level 2
instruments. See Note 13, Long-term Debt, for additional information.
Commodity Price Hedging Instruments—We periodically enter into commodity forward contracts to hedge our exposure
to price fluctuations on certain commodities we use for raw material components in our manufacturing process. When actual
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
commodity prices exceed the fixed price provided by these contracts, we receive this difference from the counterparty, and
when actual commodity prices are below the contractually provided fixed price, we pay this difference to the counterparty. We
consider these to be Level 2 instruments. See Note 4, Derivative Financial Instruments, for additional information.
Note Receivable—In connection with the sale of our Firearms business in July 2019, we received a $12,000 interest-
free, five-year pre-payable promissory note due June 2024. Based on the general market conditions and the credit quality of the
buyer at the time of the sale, we discounted the Note Receivable at an effective interest rate of 10% and estimated fair value
using a discounted cash flow approach. We consider this to be a Level 3 instrument. See Note 8, Receivables, for additional
information, and below for fair value amounts related to the Note Receivable.
Disclosures about the Fair Value of Financial Instruments
The carrying amount of our receivables, inventory, accounts payable and accrued liabilities at March 31, 2020 and March
31, 2019, approximates fair value because of the short maturity of these instruments. The carrying values of cash and cash
equivalents at March 31, 2020 and March 31, 2019 are categorized within Level 1 of the fair value hierarchy.
The table below discloses information about carrying values and estimated fair value relating to our financial assets and
liabilities:
Fixed rate debt (1)
Variable rate debt (2)
March 31,
2020
2019
Carrying
Amount
$
$
350,000
167,256
$
$
Fair
Value
284,375
167,256
Carrying
Amount
$
$
350,000
364,509
$
$
Fair
Value
326,375
364,509
(1) Fixed rate debt—In fiscal 2016, we issued $350,000 aggregate principal amount of 5.875% Senior Notes (the
"5.875% Notes") that mature on October 1, 2023. These notes are unsecured and senior obligations. The fair value of the
variable-rate long-term debt is calculated based on current market rates for debt of the same risk and maturities. The fair value
of the fixed-rate debt is based on market quotes for each issuance. We consider these to be Level 2 instruments. See Note 13,
Long-term Debt, for information on our credit facilities, including certain risks and uncertainties.
(2) Variable rate debt— The carrying value of the amounts outstanding under our ABL Revolving Credit Facility
approximates the fair value due to the short-term nature of these obligations. The fair value of this debt is categorized within
Level 2 of the fair value hierarchy based on the observable market borrowing rates. See Note 13, Long-term Debt, for additional
information on our credit facilities, including related certain risks and uncertainties.
We measure certain nonfinancial assets at fair value on a nonrecurring basis if certain indicators are present. These assets
include long-lived assets that are written down to fair value when they are held for sale or determined to be impaired. See Note
1, Significant Accounting Policies, for further information on our accounting policies regarding long-lived assets and held for
sale assets.
3. Leases
We lease certain warehouse and distribution space, manufacturing space, office space, retail locations, equipment and
vehicles. All of these leases are classified as operating leases. Operating lease assets and liabilities are recognized at the
commencement date based on the present value of lease payments over the lease term. We use our incremental borrowing rate
based on the information available at the commencement date in determining the present value of lease payments. These rates
are assessed on a quarterly basis. The operating lease assets also include any lease payments made less lease incentives. Leases
with an initial term of twelve months or less are not recorded on the balance sheet. For operating leases, expense is recognized
on a straight-line basis over the lease term. Variable lease payments associated with the Company's leases are recognized upon
occurrence of the event, activity, or circumstance in the lease agreement on which those payments are assessed. Tenant
improvement allowances are recorded as leasehold improvements with an offsetting adjustment included in the Company’s
calculation of its right-of-use asset.
Many leases include one or more options to renew, with renewal terms that can extend the lease term for three years or
more. The exercise of lease renewal options is at our sole discretion. The depreciable life of assets and leasehold improvements
are limited by the expected lease term.
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
The amounts of assets and liabilities related to our operating leases were as follows.
Assets:
Operating lease assets
Liabilities:
Current:
Operating lease liabilities
Long-term:
Operating lease liabilities
Total lease liabilities
Balance Sheet Caption
March 31, 2020
Operating lease assets
Other current liabilities
Long-term operating lease liabilities
$
$
$
69,024
10,780
73,738
84,518
The components of lease expense are recorded to cost of sales and selling, general and administration expenses in the
consolidated statements of comprehensive income (loss). The components of lease expense were as follows:
Fixed operating lease costs (1)
Variable operating lease costs
Sublease income
Net Lease costs
(1) Includes short-term leases, which are immaterial.
The weighted average remaining lease term and weighted average discount rate is as follows:
Weighted Average Remaining Lease Term (Years):
Operating leases
Weighted Average Discount Rate:
Operating leases
The approximate future minimum lease payments under operating leases were as follows:
Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
Fiscal 2025
Thereafter
Total lease payments
Less imputed interest
Present value of lease liabilities
Supplemental cash flow information related to leases is as follows:
55
March 31, 2020
18,932
2,839
(877)
20,894
March 31, 2020
9.55
8.64%
March 31, 2020
17,495
14,791
13,116
11,746
10,718
60,703
128,569
(44,051)
84,518
$
$
$
$
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases
4. Derivative Financial Instruments
March 31, 2020
$
$
19,915
5,636
In the normal course of business we are exposed to market risks arising from adverse changes in:
• commodity prices affecting the cost of raw materials, and
• interest rates
We use designated cash flow hedges to manage our level of exposure. See Note 13, Long-term Debt, for additional
information on our interest rate swaps.
We entered into various commodity forward contracts during fiscal 2020 and 2019 in accordance with our accounting
policies in Note 1, Significant Accounting Policies. These contracts are used to hedge our exposure to price fluctuations on lead
we purchase for raw material components in our ammunition manufacturing process and are designated and qualify as effective
cash flow hedges. The effectiveness of cash flow hedge contracts is assessed quantitatively at inception and qualitatively
thereafter considering transactions critical terms and counterparty credit quality.
The gains and losses on these hedges are included in accumulated other comprehensive income (loss) and are reclassified
into earnings at the time the forecasted revenue or expense is recognized. The gains or losses on the lead forward contracts are
recorded in inventory as the commodities are purchased and in cost of sales when the related inventory is sold. As of March 31,
2020, we had outstanding lead forward contracts on 27.25 million pounds of lead. In the event the underlying forecasted
transaction does not occur, or it becomes probable that it will not occur, the related change in fair value of the derivative
instrument would be reclassified from accumulated other comprehensive income (loss) and recognized in earnings. The asset
related to the lead forward contracts is immaterial and is recorded as part of other non-current assets. The liability related to the
lead forward contracts is immaterial and is recorded as part of other current liabilities.
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
5. Revenue Recognition
The following tables disaggregate our net sales by major product category:
Ammunition
Firearms
Hunting and Shooting
Action Sports
Outdoor Recreation (2)
Eyewear
Total
Geographic Region
United States
Rest of the World
Total
Years ended March 31,
Shooting
Sports
2020
Outdoor
Products
Total
Shooting
Sports
2019 (1)
Outdoor
Products
Total
$
846,974
$
— $
846,974
$
883,103
$
— $
883,103
24,577
317,785
—
—
—
—
—
297,623
268,912
—
24,577
317,785
297,623
268,912
—
185,419
341,722
—
—
—
—
—
306,144
290,281
51,859
185,419
341,722
306,144
290,281
51,859
$ 1,189,336
$
566,535
$ 1,755,871
$ 1,410,244
$
648,284
$ 2,058,528
$ 1,057,699
$
396,524
$ 1,454,223
$ 1,204,965
$
426,972
$ 1,631,937
131,637
170,011
301,648
205,279
221,312
426,591
$ 1,189,336
$
566,535
$ 1,755,871
$ 1,410,244
$
648,284
$ 2,058,528
(1) The Company changed its operating segments during the fourth quarter of fiscal 2020 (see Note 19, Operating
Segment Information). Accordingly, prior period amounts have been reclassified to conform with the current period
presentation.
(2) Outdoor Recreation includes the operating segments; Hydration, Outdoor Cooking and Golf.
We sell our products in the United States and internationally. A majority of our sales are concentrated in the United States.
See Note 19, Operating Segment Information for information on international revenues.
Product Sales
We recognize revenue for our products at a point in time upon the transfer of control of the products to the customer,
which typically occurs upon shipment and coincides with our right to payment, the transfer of legal title, and the transfer of the
significant risks and rewards of ownership of the product.
Typically, our contracts require customers to pay within 30-60 days of product delivery with a discount available to some
customers for early payment. In some cases, we offer extended payment terms to customers. However, we do not consider these
extended payment terms to be a significant financing component of the contract because the payment terms are less than a year.
In limited circumstances, our contract with a customer may have shipping terms that indicate a transfer of control of the
products upon their arrival at the destination rather than upon shipment. In those cases, we recognize revenue only when the
product reaches the customer destination, which may require us to estimate the timing of transfer of control based on the
expected delivery date. In all cases, however, we consider our costs related to shipping and handling to be a cost of fulfilling the
contract with the customer.
The total amount of revenue we recognize for the sale of our products reflects various sales adjustments for discounts,
returns, refunds, allowances, rebates, and other customer incentives. These sales adjustments can vary based on market
conditions, customer preferences, timing of customer payments, volume of products sold, and timing of new product launches.
These adjustments require management to make reasonable estimates of the amount we expect to receive from the customer.
We estimate sales adjustments by customer or by product category on the basis of our historical experience with similar
contracts with customers, adjusted as necessary to reflect current facts and circumstances and our expectations for the future.
Sales taxes, firearms and ammunition excise tax and other similar taxes are excluded from revenue.
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
Incentives in the form of cash paid to the customer (or a reduction of a customer cash payment to us) typically are
recognized as a reduction of sales unless the incentive is for a distinct benefit that we receive from the customer (e.g.,
advertising or marketing).
We provide consumer warranties against manufacturing defects on certain products within the Shooting Sports and
Outdoor Products segments. Our warranty periods typically range from one year to the lifetime of the product. The costs of
such product warranties are recognized upon delivery of the product at the time the sale is recorded and are estimated based on
our past experience.
We pay commissions to some of our employees based on agreed-upon sales targets. We recognize the incremental costs of
obtaining a contract as an expense when incurred because our sales contracts with commissions are one year or less.
6. Earnings Per Share
The computation of basic earnings per share ("EPS") is based on the weighted average number of shares that were
outstanding during the period. The computation of diluted EPS is based on the number of basic weighted average shares
outstanding plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common
shares, such as common stock to be issued upon exercise of options, contingently issuable shares and restricted stock units,
using the treasury stock method. See Note 17, Stockholders' Equity, during each period presented, which, if exercised, earned,
or converted, would have a dilutive effect on earnings per share.
In computing EPS for the fiscal years presented, earnings, as reported for each respective period, is divided by the
number of shares below (in thousands):
Net income (loss)
Weighted-average number of common shares outstanding, basic and diluted
Earnings (loss) per common share:
$ (155,079) $ (648,443) $
57,846
57,544
Years ended March 31,
2019
2020
2018
(60,232)
57,167
Basic and diluted
$
(2.68) $
(11.27) $
(1.05)
(1) Due to the loss from continuing operations for the fiscal years ended 2020, 2019, and 2018, there are no common
shares added to calculate dilutive EPS because the effect would be antidilutive.
7. Divestitures
On July 5, 2019, Vista Outdoor Inc. and one of its subsidiaries, Vista Outdoor Operations LLC, sold our Firearms
business, which was part of our historic Shooting Sports segment and comprised our Firearms reporting unit, for a total
purchase price of $170,000. We received cash proceeds net of transactions costs of $154,123 and $12,000 in the form of a
sellers note due on July 5, 2024. See Notes 2, Fair Value of Financial Instruments, and 8, Receivables, for additional
information. The proceeds from this sale were used to pay off the balance of our Term Loan and reduce our ABL Revolving
Credit Facility. See Note 13, Long-term Debt.
During fiscal 2020, we recognized a pretax loss on this divestiture of $433, which is included in other expense.
During fiscal 2020 and fiscal 2019, we recognized an impairment of $9,429 and of $120,238, respectively, including
impairment of goodwill of $80,604 during fiscal 2019, related to the expected loss on the sale of our Firearms business when it
was held for sale.
On August 31, 2018, the Company completed the sale of its Eyewear brands. The selling price was $158,000, subject to
customary working capital adjustments. As a result of the sale, during fiscal 2019, the Company recorded a pretax loss of
$4,925, which is included in other expense, primarily due to the final allocation of goodwill and fixed assets for the Eyewear
brands.
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
During fiscal 2019, we recognized an impairment of $44,921 related to the expected loss on the sale of our held-for-sale
assets related to the Eyewear brands. The loss is primarily attributable to cumulative foreign currency translation adjustments
for these entities that was reclassified to earnings upon their sale.
8. Receivables
Net receivables are summarized as follows:
Trade receivables
Other receivables
Less: allowance for doubtful accounts
Net receivables
March 31,
2020
2019
$
$
323,436
$
4,841
(14,760)
313,517
$
356,035
7,106
(18,892)
344,249
Walmart accounted for 13% and 14% of the total trade receivables balance at March 31, 2020 and 2019, respectively. No
other customer represented more than 10% of total trade receivables balance as of March 31, 2020 and 2019.
The following is a reconciliation of the changes in our allowance for doubtful accounts, discounts, and returns during
fiscal 2020 and 2019:
Balance at March 31, 2018
Expense
Write-offs
Reversals, discounts, and other adjustments
Balance at March 31, 2019
Expense
Write-offs
Reversals, discounts, and other adjustments
Balance at March 31, 2020
$
$
36,193
7,842
(14,784)
(10,359)
18,892
2,203
(6,249)
(86)
14,760
Note Receivable, see Note 7, Divestitures, and Note 2, Fair Value of Financial Instruments, is summarized as follows:
Principal
Less: unamortized discount
Note receivable, net, included within deferred charges and other non-current assets
9. Inventories
Net inventories consist of the following:
Raw materials
Work in process
Finished goods
Net inventories
59
March 31,
2020
2019
12,000
(3,990)
8,010
$
$
—
—
—
March 31,
2020
2019
85,609
33,622
212,062
331,293
$
$
65,240
32,213
247,038
344,491
$
$
$
$
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
We consider inventories to be long-term if they are not expected to be sold within one year. Long-term inventories are
presented on the balance sheet net of reserves within deferred charges and other non-current assets and totaled $27,984 and
$16,227 as of March 31, 2020 and 2019, respectively.
10. Property, Plant, and Equipment
Property, plant, and equipment is stated at cost and depreciated over estimated useful lives using a straight-line method.
Machinery and equipment are depreciated over 2 to 20 years and buildings and improvements are depreciated over 2 to
30 years. Depreciation expense was $47,863 in fiscal 2020, $53,129 in fiscal 2019, and $55,090 in fiscal 2018.
We review property, plant, and equipment for impairment when indicators of potential impairment are present. When such
impairment is identified, it is recorded as a loss in that period. Maintenance and repairs are charged to expense as incurred.
Major improvements that extend useful lives are capitalized and depreciated. The cost and accumulated depreciation of
property, plant, and equipment retired or otherwise disposed of are removed from the related accounts, and any residual values
are charged or credited to income.
Property, plant, and equipment consists of the following:
Land
Buildings and improvements
Machinery and equipment
Property not yet in service
Gross property, plant, and equipment
Less: accumulated depreciation
Net property, plant, and equipment
11. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill by segment were as follows:
Balance at March 31, 2018
Impairment
Effect of foreign currency exchange rates
Held for sale
Divestitures
Balance at March 31, 2019
Impairment
Balance at March 31, 2020
March 31,
2020
2019
6,618
69,093
431,867
11,629
519,207
(334,474)
184,733
$
$
6,618
63,987
401,045
34,344
505,994
(290,402)
215,592
$
$
Outdoor
Products
$ 452,627
(327,772)
—
—
(3,526)
121,329
(121,329)
Shooting
Sports
$ 204,909
—
(279)
(121,463)
—
83,167
—
83,167
Total
657,536
(327,772)
(279)
(121,463)
(3,526)
204,496
(121,329)
83,167
$
$
$
— $
At the beginning of the fourth quarter of fiscal year 2020 we determined there was a change to our reporting units.
Hydration and Outdoor Cooking, which were historically components of the Outdoor Recreation reporting unit, were identified
as two separate reporting units. Accordingly, Vista was required to evaluate whether there was impairment at the historical
Outdoor Recreation reporting unit and allocate to Hydration and Outdoor Cooking a portion of the respective historical
reporting unit goodwill. Concurrent with our annual goodwill impairment testing, we performed a quantitative impairment
analysis on the historical Outdoor Recreation reporting unit and concluded there was excess carrying value over fair value. As a
result, we recorded goodwill impairment of $121,329, which left no remaining goodwill in the historical Outdoor Recreation
reporting unit, or the newly identified reporting units of Hydration and Outdoor Cooking. We also performed a quantitative
impairment analysis on the Ammunition reporting unit and concluded there was excess fair value over carrying value, therefore
no impairment was recorded on this reporting unit. To determine the fair value under the income approach, we used, based on
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
our judgment, a discount rate of 12.5% and a terminal growth rate of 3.0%. The remaining goodwill balance of $83,167 is
associated with the Ammunition reporting unit. As of March 31, 2020, the goodwill recorded within the Outdoor Products
segment is presented net of $994,207 of accumulated impairment losses, of which $545,106 was recorded prior to April 1,
2018. The goodwill recorded within the Shooting Sports segment has no accumulated impairment losses after the transfer of
goodwill to held for sale assets during the year ended March 31, 2019.
Management calculated the fair value of our reporting units based on the accounting policy's discussed in Note 1,
Significant Accounting Policies. The trading price of our common stock on the annual testing date resulted in a large difference
between the market value of Vista Outdoor equity and the book value of the assets recorded on our balance sheet, implying that
investors’ may believe that the fair value of our reporting units is lower than their book value. Our estimates of the fair values
of the reporting units was significantly influenced by higher discount rates in the income-based valuation approach as a result of
increasing market to equity risk premiums and company specific risk premiums. Our fair value estimates were also negatively
impacted by the performance of our reporting units compared to comparable companies, which required that we apply lower
valuation multiples in estimating the fair value of these reporting units using the market-based approach. In addition, as a result
of tariffs and other factors affecting the market for our products, we reduced our sales projections for fiscal year 2021 and
beyond for a number of our reporting units for purposes of our long-range financial plan, which is updated annually beginning
in our third quarter.
Our indefinite lived intangibles are not amortized and are tested for impairment annually on the first day of the fourth
fiscal quarter or upon the occurrence of events or changes in circumstances that indicate that the assets might be impaired. As a
result of our annual testing in accordance with our accounting policies described in Note 1, Significant Accounting Policies, we
recorded $34,259 of impairment in our historical Outdoor Products segment. Impairment charges of $13,100 were recorded
against our CamelBak indefinite-lived tradename. We determined the fair value of these indefinite-lived tradename using a
royalty rate of 2.0%. We also recorded impairment charges related to our Bushnell and Weaver's indefinite-lived tradenames of
$7,459. We determined the fair values of these indefinite-lived tradenames using royalty rates of 1.0%. In addition, impairment
expense of $13,700 was recorded related to our Giro, Bell Cycling and Bell Power Sports indefinite-lived tradenames. We
determined the fair value of these indefinite-lived tradenames using royalty rates ranging from 1.0% to 1.5%.
During the quarter ended December 30, 2018, we made a decision to sell the legal entities comprising our Firearms
business, which is part of our Shooting Sports segment and comprises our Firearms reporting unit. The decision to sell this
business reflects our ongoing review of our portfolio of brands to focus on assets that are core to our mission and strategy. As a
result of this decision, we recorded impairment on goodwill related to our Firearms reporting unit of $80,604, and transferred
$40,859 of goodwill to assets held for sale.
The trading price of our common stock declined significantly in the quarter ended December 30, 2018, increasing the
difference between the market value of Vista Outdoor equity and the book value of the assets recorded on our balance sheet and
implying that investors’ may believe that the fair value of our reporting units is lower than their book value. In addition, as a
result of a weaker than expected 2018 holiday shopping season and increasing uncertainty from the impact of retail
bankruptcies, tariffs and other factors affecting the market for our products, we reduced our sales projections for fiscal year
2020 and beyond for a number of our reporting units for purposes of our long-range financial plan, which is updated annually
beginning in our third quarter. As a result of these factors, we determined that a triggering event had occurred with respect to
our Hunting and Shooting Accessories, Outdoor Recreation, and Action Sports reporting units, which required that we assess
the fair value of these reporting units using the income-based and market-based approaches described above.
As a result of this assessment, during the quarter ended December 30, 2018, Vista Outdoor recorded a $429,395
impairment of goodwill and identifiable indefinite-lived intangible assets related to our Hunting and Shooting Accessories,
Outdoor Recreation, and Action Sports reporting units. In each impaired reporting unit, our estimate of fair value was
negatively impacted by the lower projected sales described above, resulting in reduced cash flows for those businesses in fiscal
year 2020 and beyond. Our estimates of the fair values of these reporting units was also significantly reduced by increases in
prevailing interest rates, which required that we apply a higher discount rate in the income-based valuation approach, and by
lower valuation multiples implied by recent trading prices for the common stock of comparable publicly traded companies,
which required that we apply lower valuation multiples in estimating the fair value of these reporting units using the market-
based approach.
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
The excess carrying amount over fair value, and resulting goodwill impairment, in our Hunting and Shooting Accessories
reporting unit was $38,386. As a result of the goodwill impairment, there is no remaining goodwill in our Hunting and Shooting
Accessories reporting unit. To determine the fair value under the income approach, we used, based on our judgment, a discount
rate of 9.0% and a terminal growth rate of 3.0%. During the quarter ended December 30, 2018, we also performed an interim
test for indefinite-lived tradename impairment and recorded a $36,223 impairment related to our Bushnell, Outers, Champion,
and Weaver's tradenames. We determined the fair values of the indefinite-lived tradenames using royalty rates ranging from
1.0% to 2.0%.
The excess carrying amount over fair value, and resulting goodwill impairment, in our Outdoor Recreation reporting unit
was $129,470. As a result of the goodwill impairment, there was $121,329 of remaining goodwill in our Outdoor Recreation
reporting unit. To determine the fair value under the income approach, we used, based on our judgment, a discount rate of 9.0%
and a terminal growth rate of 3.0%. During the quarter ended December 30, 2018, we also performed an interim test for
indefinite-lived tradename impairment and recorded a $43,400 impairment related to our CamelBak tradename. We determined
the fair value of the indefinite-lived tradename using a royalty rate of 2.0%.
The excess carrying amount over fair value, and resulting goodwill impairment, in our Action Sports reporting unit was
$159,916. As a result of the goodwill impairment, there is no remaining goodwill in our Action Sports reporting unit. To
determine the fair value under the income approach, we used, based on our judgment, a discount rate of 9.0% and a terminal
growth rate of 3.0%. During the quarter ended December 30, 2018, we also performed an interim test for indefinite-lived
tradename impairment and recorded a $22,000 impairment related to our Giro tradename. We determined the fair value of the
indefinite-lived tradenames using royalty rates ranging from 1.0% to 1.5%.
The loss of a key customer for our stand up paddle boards business during the quarter ended September 30, 2018 resulted
in a reduction of the projected cash flows for the stand up paddle boards business. Given the associated decrease in projected
cash flows for the period, we determined that a triggering event had occurred. This analysis resulted in a $23,411 impairment
charge related to customer relationship intangibles associated with the Jimmy Styks acquisition.
Net intangibles consisted of the following:
March 31,
2020
2019
Trade names
Patented technology
Customer relationships and other
Total
Non-amortizing trade names
Net intangible assets
Gross
carrying
amount
$ 48,360
16,684
238,220
303,264
111,103
$ 414,367
Accumulated
amortization
$
Total
33,932
6,194
(14,428) $
(10,490)
(83,349)
(108,267)
—
154,871
194,997
111,103
$ (108,267) $ 306,100
Gross
carrying
amount
$ 48,360
16,684
238,595
303,639
145,364
$ 449,003
$
Accumulated
amortization
$
Total
37,666
7,080
(10,694) $
(9,604)
(68,185)
(88,483)
—
170,410
215,156
145,364
(88,483) $ 360,520
The amortizable intangible assets in the table above are being amortized using a straight-line method over a weighted
average remaining period of approximately 11.4 years. Our historical Outdoor Products segment recorded impairment expenses
related to amortizing intangibles of $26,628 in fiscal 2019, and $34,259, $101,623, and $9,044 of impairment losses related to
non-amortizing trade names in fiscal 2020, fiscal 2019 and 2018, respectively. Subsequent to our annual impairment testing
date we determined there was a change in our reportable segments (see Note 19, Operating Segment Information). There have
been no impairment charges recorded since the determination of our new reportable segment structure in Shooting Sports and
Outdoor Products.
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
Amortization expense related to these assets was $19,995 in fiscal 2020, $24,374 in fiscal 2019, and $34,669 in fiscal
2018, which is included within cost of sales. We expect amortization expense related to these assets in each of the next five
fiscal years and beyond to be incurred as follows:
Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
Fiscal 2025
Thereafter
Total
12. Other Current and Non-current Liabilities
The major categories of other current and non-current accrued liabilities are as follows:
Rebates
Accrual for in-transit inventory
Other
Total other current liabilities
Non-current portion of accrued income tax liability
Other
Total other long-term liabilities
$
19,886
19,831
19,715
19,663
19,645
96,257
$ 194,997
March 31,
2020
2019
$
16,225
$
11,064
70,908
98,197
30,159
13,345
43,504
$
$
$
$
$
$
13,911
11,275
71,989
97,175
34,118
29,158
63,276
We provide consumer warranties against manufacturing defects on certain products within the Shooting Sports and
Outdoor Products segments with warranty periods ranging from one year to the expected lifetime of the product. The estimated
costs of such product warranties are recorded at the time the sale is recorded based upon actual past experience, our current
production environment as well as specific and identifiable warranties as applicable. The warranty liability recorded at each
balance sheet date reflects the estimated liability for warranty coverage for products delivered based on historical information
and current trends.
The following is a reconciliation of the changes in our product warranty liability during the periods presented:
Balance at March 31, 2018
Payments made
Warranties issued
Other adjustments
Changes related to preexisting warranties
Balance at March 31, 2019
Payments made
Warranties issued
Other adjustments
Changes related to preexisting warranties
Balance at March 31, 2020
63
$
$
10,247
(3,462)
3,962
(2,373)
(230)
8,144
(3,944)
4,983
(207)
173
9,149
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
13. Long-term Debt
Long-term debt, including the current portion, consisted of the following:
March 31,
2020
2019
Credit Agreements:
ABL Revolving Credit Facility
Term Loan
Junior Term Loan
Total principal amount of Credit Agreements
5.875% Senior Notes
Principal amount of long-term debt
Less: unamortized deferred financing costs
Carrying amount of long-term debt
Less: current portion
$
167,256
$
—
—
167,256
350,000
517,256
(5,450)
511,806
—
Carrying amount of long-term debt, excluding current portion
$
511,806
$
220,000
104,509
40,000
364,509
350,000
714,509
(10,504)
704,005
(19,335)
684,670
Credit Agreements—In fiscal 2019, we refinanced our Amended and Restated Credit Agreement dated April 1, 2016, by
entering into the New Credit Facilities, which provide for (a) a $450,000 senior secured asset-based revolving credit facility
(the “ABL Revolving Credit Facility”), comprised of $20,000 in first-in, last-out (“FILO”) revolving credit commitments and
$430,000 in non-FILO revolving credit commitments, (b) a $109,343 senior secured asset-based term loan facility (the “Term
Loan”), and (c) the $40,000 Junior Term Loan. The amount available under the ABL Revolving Credit Facility is the lesser of
the total commitment of $450,000 or a borrowing base based on percentages of eligible receivables, inventory, and cash, minus
certain reserves. As of March 31, 2020, based on the borrowing base less outstanding borrowings of $167,256 and outstanding
letters of credit of $24,104, the amount available under the ABL Revolving Credit Facility was $147,764.
The New Credit Facilities each mature on November 19, 2023 (the “Maturity Date”), subject to a customary springing
maturity in respect of the 5.875% Notes due 2023. The Term Loan was subject to quarterly principal repayments of $4,834 on
the first business day of each January, April, July, and October, with the remaining balance due on the Maturity Date. During
fiscal 2020, we used proceeds from the sale of our Firearms business to pay off the balance of the Term Loan and the Junior
Term Loan.
The FILO commitments under the ABL Revolving Credit Facility are subject to reductions of $1,667 on the first business
day of each fiscal quarter beginning on April 1, 2019. The balance of the FILO revolving credit commitment as of March 31,
2020 was $13,332. Any outstanding revolving loans under the ABL Revolving Credit Facility will be payable in full on the
Maturity Date.
The payoff of Term Loan and the Junior Term Loan reduced our interest rate on the ABL revolving Credit Facility. As of
March 31, 2020, borrowings under the ABL Revolving Credit Facility bear interest at a rate equal to, in the case of (a) non-
FILO revolving credit loans, either the sum of a base rate plus a margin ranging from 0.25% to 0.75% or the sum of a LIBO
rate plus a margin ranging from 1.25% to 1.75%, and (b) FILO revolving credit loans, a rate that is 1.00% higher than the rate
paid on the non-FILO revolving credit loans. All such rates vary based on our Average Excess Availability under the ABL
Revolving Credit Facility. As of March 31, 2020, the margin under the (1) ABL Revolving Credit Facility was, in the case of (a)
non-FILO revolving credit loans, 0.50% for base rate loans and 1.50% for LIBO rate loans and (b) FILO revolving credit loans,
1.50% for base rate loans and 2.50% for LIBO rate loans. The weighted average interest rate for our borrowings under the New
Credit Facilities as of March 31, 2020 was 2.95%, excluding the impact of the interest rate swaps that are discussed below. We
pay a commitment fee on the unused commitments under the ABL Revolving Credit Facility of 0.25% per annum.
Substantially all domestic tangible and intangible assets of Vista Outdoor and our domestic subsidiaries, as well as the
tangible and intangible assets of Advanced Arrow S. de R.L. de C.V. and Hydrosport, S. de R.L. de C.V., are pledged as
collateral under the New Credit Facilities.
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
In connection with the repayment of the Term Loan and the Junior Term Loan, unamortized debt issuance costs
of $3,428 were written off during fiscal 2020. This expense is included in interest expense in the consolidated statements of
comprehensive income (loss). The remaining debt issuance costs of approximately $6,300 are being amortized over the term of
the New Credit Facilities.
5.875% Notes—In fiscal 2016, we issued $350,000 aggregate principal amount of 5.875% Senior Notes (the "5.875%
Notes") that mature on October 1, 2023. These notes are unsecured and senior obligations. Interest on the notes is payable semi-
annually in arrears on April 1 and October 1 of each year. We have the right to redeem some or all of these notes from time-to-
time at specified redemption prices. Debt issuance costs of approximately $4,300 are being amortized to interest expense over
eight years, the term of the notes.
Rank and guarantees—The New Credit Facilities' obligations are guaranteed on a secured basis, jointly and severally and
fully and unconditionally by substantially all of our domestic subsidiaries and by Advanced Arrow S. de R.L. de C.V. and
Hydrosport, S. de R.L. de C.V. Vista Outdoor (the parent company issuer) has no independent assets or operations. We own
100% of all of these guarantor subsidiaries. The 5.875% Notes are senior unsecured obligations of Vista Outdoor and will rank
equally in right of payment with any future senior unsecured indebtedness and senior in right of payment to any future
subordinated indebtedness of Vista Outdoor. The 5.875% Notes are fully and unconditionally guaranteed, jointly and severally,
by our existing and future domestic subsidiaries that guarantee indebtedness under our New Credit Facilities or that guarantee
certain of our other indebtedness, or indebtedness of any subsidiary guarantor, in an aggregate principal amount in excess of
$50,000. These guarantees are senior unsecured obligations of the applicable subsidiary guarantors. The guarantee by any
subsidiary guarantor of our obligations in respect of the 5.875% Notes will be released in any of the following circumstances:
•
•
•
•
if, as a result of the sale of its capital stock, such subsidiary guarantor ceases to be a restricted subsidiary
if such subsidiary guarantor is designated as an “Unrestricted Subsidiary”
upon defeasance or satisfaction and discharge of the 5.875% Notes
if such subsidiary guarantor has been released from its guarantees of indebtedness under the New Credit Facilities and
all capital markets debt securities
Interest rate swaps—During fiscal 2018, we entered into a floating-to-fixed interest rate swap agreement in order to hedge
our forecasted interest payments on our outstanding variable-rate debt in accordance with our accounting policies in Note 1,
Significant Accounting Policies. and as discussed in Note 4, Derivative Financial Instruments. As of March 31, 2020, we had
the following cash flow hedge interest rate swap in place:
Non-amortizing swap
Notional
Fair
Value
Pay
Fixed
Receive
Floating Maturity Date
$ 100,000
$
(230)
1.63%
0.989%
June 2020
Gains and losses from the remeasurement of our interest rate swap contract agreement are recorded as a component of
accumulated other comprehensive income (loss) and released into earnings as a component of interest expense during the
period in which the hedged transaction takes place. See Note 1, Significant Accounting Policies, for additional information. The
liability related to the swaps is recorded as part of other current liabilities.
Scheduled Minimum Payments—The scheduled minimum payments on outstanding long-term debt were as follows as of
March 31, 2020:
Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
Fiscal 2025
Thereafter
Total
$
$
—
—
—
517,256
—
—
517,256
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
Covenants
New Credit Facilities—Our New Credit Facilities impose restrictions on us, including limitations on our ability to pay
cash dividends, incur debt or liens, redeem or repurchase Vista Outdoor stock, enter into transactions with affiliates, make
investments, merge or consolidate with others or dispose of assets. During the three months ending September 30, 2019, the
Term Loan was paid in full, and during the three months ended December 29, 2019, the Junior Term Loan was paid in full,
which triggered a loosening of the financial covenants in the ABL Revolving Credit Facility. Beginning with the quarter ending
December 29, 2019, if Excess Availability under the ABL Revolving Credit Facility falls below $42,500 we must comply with
certain heightened reporting and other covenants and maintain a Consolidated Fixed Charge Coverage Ratio ("FCCR"), as
defined below, of not less than 1.00:1.00. As noted above, the Excess Availability under the ABL Revolving Credit Facility was
$147,764 as of March 31, 2020. If we do not comply with the covenants in any of the New Credit Facilities, the lenders may,
subject to customary cure rights, require the immediate payment of all amounts outstanding under each of the New Credit
Facilities.
The FCCR is Covenant EBITDA ("earnings before interest, taxes, depreciation, and amortization"), (which includes
adjustments for items such as non-recurring or extraordinary items, non-cash charges related to stock-based compensation, and
intangible asset impairment charges, as well as adjustments for acquired or divested business units on a pro forma basis) less
capital expenditures (subject to certain adjustments) for the past four fiscal quarters, divided by fixed charges (which includes
debt principal and interest payments made over the past four fiscal quarters; plus income tax payments and restricted payments
over the past four fiscal quarters).
5.875% Notes—The indenture governing the 5.875% Notes contains covenants that, among other things, limit our ability
to incur or permit to exist certain liens, sell, transfer or otherwise dispose of assets, consolidate, amalgamate, merge or sell all or
substantially all of our assets, enter into transactions with affiliates, enter into agreements restricting our subsidiaries’ ability to
pay dividends, incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem our capital
stock, prepay, redeem or repurchase certain debt and make loans and investments.
The New Credit Facilities and the indenture governing the 5.875% Notes contain cross-default provisions so that
noncompliance with the covenants within one debt agreement could also cause a default under the other debt agreements. As of
March 31, 2020, we were in compliance with the covenants of all of the debt agreements. However, we cannot provide
assurance that we will be able to comply with such financial covenants in the future because of various risks and uncertainties
some of which may be beyond our control. Any failure to comply with the restrictions in the New Credit Facilities may prevent
us from drawing under the ABL Revolving Credit Facility and may result in an event of default under the New Credit Facilities,
which default may allow the creditors to accelerate the related indebtedness and the indebtedness under our 5.875% Notes and
proceed against the collateral that secures the indebtedness. We may not have sufficient liquidity to repay the indebtedness in
such circumstances.
Cash Paid for Interest on Debt—Cash paid for interest totaled $38,839 in fiscal 2020, $36,064 in fiscal 2019, and $56,273
in fiscal 2018.
14. Employee Benefit Plans
Defined Benefit Plan
During fiscal 2020, we recognized an aggregate net benefit for employee defined benefit plans of $406. During fiscal
2019, we recognized an aggregate net benefit for employee defined benefit plans of $973. During fiscal 2018, we recognized an
aggregate net expense for employee defined benefit plans of $1,505. The estimated income for these defined benefit plans for
fiscal 2021 is $200.
The Company recognizes the funded status of its defined benefit pension plans and other postretirement benefit plans,
measured as the difference between the fair value of the plan assets and the benefit obligation. Benefit obligation balances
reflect the projected benefit obligation ("PBO") for our pension plans and accumulated post-retirement benefit obligations
("APBO") or our other post-retirement benefit plans. The weighted average discount rate used to determine the pension benefit
obligation was 3.50% and 3.90% as of March 31, 2020 and 2019, respectively. The fair value of the plan assets was $145,828
and $160,682 as of March 31, 2020 and 2019, respectively. The benefit obligation was $205,996 and $206,369 as of March 31,
2020 and 2019, respectively, resulting in an unfunded liability of $60,168 and $45,687 as of March 31, 2020 and 2019,
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
respectively, which is primarily recorded within Accrued pension and postemployment liabilities on the consolidated balance
sheet.
In June 2017, we announced changes to our qualified and non-qualified defined benefit pension plans. The benefits under
the affected plans were determined by a cash balance formula that provides participating employees with an annual “pay credit”
as a percentage of their eligible pay based on their age and eligible service. The changes were effective July 31, 2017, with
employees receiving a pro-rated pay credit for fiscal 2017 and no future pay credits beginning in fiscal 2018. However, a
participating employee’s benefit will continue to grow based on annual interest credits applied to the employee’s cash balance
account until commencement of the employee’s benefit. As a result of the changes, we recognized a one-time curtailment gain
of $5,783 during the quarter ended July 2, 2017. The plan assets are invested in a variety of financial funds which have
investments in a variety of financial instruments including equities, fixed income, and hedge funds. Plan assets are invested in
various asset classes that are expected to produce a sufficient level of diversification and investment return over the long-term.
The investment goals are (1) to meet or exceed the assumed actuarial rate of return of 6.75% over the long-term within
reasonable and prudent levels of risk as of March 31, 2020 and 2019, and (2) to preserve the real purchasing power of assets to
meet future obligations.
Investments in financial funds are valued by multiplying the fund's net asset value ("NAV") per share with the number of
units or shares owned as of the valuation date. NAV per share is determined by the fund's administrator or the Company's
custodian by deducting from the value of the assets of the fund all its liabilities and the resulting number is divided by the
outstanding number of shares or units. Investments held by the funds are valued on the basis of valuations furnished by a
pricing service approved by the fund's investment manager, which determines valuations using methods based on market
transactions for comparable securities and various relationships between securities which are generally recognized by
institutional traders, or at fair value as determined in good faith by the fund's investment manager. For those assets that are
invested within hedge funds there are certain restrictions on redemption of those assets including a one-year lockup period from
initial investment and thereafter a 65-day notice period prior to redemption. There are no other significant restrictions on
redemption of assets within other asset categories.
Employer contributions and distributions—During fiscal 2020, we made contributions of $3,600 directly to the pension
trust, made no contributions to our other postretirement benefit plans, and distributed $1 directly to retirees under our non-
qualified supplemental executive retirement plans. During fiscal 2019, we contributed $1,200 directly to the pension trust, made
no contributions to our other postretirement benefit plans, and made distributions of $293 directly to retirees under our non-
qualified supplemental executive retirement plans. During fiscal 2018, we contributed $13,800 directly to the pension trust,
made no contributions to our other postretirement benefit plans, and made distributions of $11,110 to retirees under the non-
qualified supplemental executive retirement plan.
Substantially all contributions made to our pension trust were required by local funding requirements. We expect to make
mandatory contributions to the plans of approximately $6,642 during fiscal year 2021.
The following benefit payments, which reflect expected future service, are expected to be paid primarily out of the
pension trust:
Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal years 2026 through 2030
Defined Contribution Plan
Pension
Benefits
13,184
12,769
12,960
13,077
13,407
64,798
$
$
We sponsor a defined contribution retirement plan, a 401(k) savings plan. The plan is a tax-qualified retirement plan
subject to the Employee Retirement Income Security Act of 1974 and covers most employees in the United States.
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
Total contributions in fiscal 2020, 2019, and 2018 were $12,166, $14,607, and $19,865 respectively.
15. Income Taxes
Income (loss) before income taxes is as follows:
Current:
U.S.
Non-U.S.
Income (loss) before income taxes
Our income tax provision (benefit) consists of:
Current:
Federal
State
Non-U.S.
Deferred:
Federal
State
Non-U.S.
Income tax provision (benefit)
Years ended March 31,
2019
2018
2020
(173,255) $
2,228
(171,027) $
(686,188) $
11,916
(674,272) $
(102,153)
(31,636)
(133,789)
Years ended March 31,
2019
2018
2020
(10,210) $
(1,585)
197
(2,799)
(1,703)
152
(15,948) $
(6,208) $
(1,738)
5,144
(27,045)
4,176
(158)
(25,829) $
(1,599)
204
6,685
(76,300)
(3,024)
477
(73,557)
$
$
$
$
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
The items responsible for the differences between the federal statutory rate and our effective rate are as follows:
Statutory federal income tax rate
State income taxes, net of federal impact
Domestic manufacturing deduction
Nondeductible goodwill impairment
Nondeductible loss on divestiture
Change in tax contingency
Pre-acquisition tax attributes
Impact of law changes
Valuation allowance
Other
Income tax provision (benefit)
Years ended March 31,
2020
2019
2018
21.0 %
1.1 %
— %
(11.3)%
(1.0)%
4.5 %
0.4 %
1.8 %
(4.8)%
(2.4)%
9.3 %
21.0 %
1.0 %
— %
(12.1)%
(1.6)%
— %
— %
— %
(4.9)%
0.4 %
3.8 %
31.6 %
1.2 %
1.2 %
(21.1)%
— %
— %
4.1 %
33.9 %
(0.4)%
4.5 %
55.0 %
Deferred income taxes arise because of differences in the timing of the recognition of income and expense items for
financial statement reporting and income tax purposes. The net effect of these temporary differences between the carrying
amounts of assets and liabilities are classified in the consolidated financial statements of financial position as noncurrent assets
or liabilities. As of March 31, 2020 and 2019, the components of deferred tax assets and liabilities were as follows:
March 31,
2020
2019
Deferred tax assets:
Inventories
Retirement benefits
Accounts receivable
Accruals for employee benefits
Other reserves
Loss and credit carryforwards
Capital loss carryforward
Nondeductible interest
Operating lease liabilities
Other
Total deferred tax assets
Valuation allowance
Total net deferred assets
Deferred tax liabilities:
Intangible assets
Property, plant, and equipment
Operating lease assets
Total deferred tax liabilities
Net deferred income tax liability before amounts attributable to assets and liabilities held for
sale
Less: deferred tax liability attributable to assets and liabilities held for sale
Net deferred income tax liability
$
$
8,237
14,016
7,518
4,843
4,441
19,901
25,053
18,140
17,067
736
119,952
(72,065)
47,887
(25,197)
(20,368)
(15,132)
(60,697)
(12,810)
—
(12,810) $
$
12,110
11,003
7,829
4,211
4,767
17,081
—
15,880
—
4,188
77,069
(35,903)
41,166
(55,871)
(24,454)
—
(80,325)
(39,159)
21,402
(17,757)
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
In assessing the realizability of our deferred tax assets, we considered whether it is more likely than not that some portion
or all of the deferred tax assets will be realized. We continue to be in a cumulative loss position for the three-year period ending
March 31, 2020. A cumulative loss position is considered significant negative evidence in assessing the realizability of a
deferred tax asset that is difficult to overcome when determining whether a valuation allowance is required. Considering the
weight of all available positive and negative evidence, we do not believe the positive evidence overcomes the negative evidence
of our cumulative loss position. Therefore, we have increased the valuation allowance by $36,162 during the current year for a
total valuation allowance of $72,065 at March 31, 2020. The increase to the valuation allowance includes the capital loss
incurred on the sale of Savage.
Included in the net deferred tax liability are federal, foreign and state net operating loss and credit carryovers, of $10,910
which expire in years ending from March 31, 2021 through March 31, 2040 and $8,991 that may be carried over indefinitely.
In addition, we have a capital loss carryforward of $25,053 which is available to offset future consolidated capital gains that
will expire in years ending from March 31, 2021 through March 31, 2025, if not utilized. The carryforwards presented above
are net of any applicable uncertain tax positions.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the
COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable
income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in tax years 2018, 2019,
and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.
The CARES Act also contains modifications on the limitation of business interest for tax years beginning in 2019 and 2020.
The modifications to Section 163(j) increase the allowable interest expense deduction.
The impact of the CARES Act is estimated to be a benefit to us of approximately $7 million. The tax benefit is primarily
due to the carryback of net operating losses to prior years and increased interest expense deductions.
We have outside basis differences from foreign subsidiaries for which no deferred tax liability has been recorded, as we
intend to indefinitely reinvest these balances. Determination of the amount of any unrecognized deferred income tax liability on
the temporary difference for these indefinitely reinvested undistributed earnings is not practicable.
Income taxes paid, net of refunds, totaled $107 and ($8,435) in fiscal 2020 and 2019, respectively.
At March 31, 2020, and 2019, unrecognized tax benefits that have not been recorded in the financial statements amounted
to $30,159 and $34,118, respectively, of which $27,503 and $30,432, respectively, would affect the effective tax rate. The
remaining balance is related to deferred tax items which only impact the timing of tax payments. Although the timing and
outcome of audit settlements are uncertain, it is reasonably possible that an $13,875 reduction of the uncertain tax benefits will
occur in the next 12 months. The settlement of these unrecognized tax benefits could result in earnings from $0 to $12,695.
We have classified uncertain tax positions as non-current income tax liabilities unless expected to be paid within one year.
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as
follows:
Years ended March 31,
2020
2019
2018
Unrecognized Tax Benefits—beginning of period
$
27,252
$
32,734
$
Gross increases—tax positions in prior periods
Gross decreases—tax positions in prior periods
Gross increases—current-period tax positions
Gross decreases—current-period tax positions
Settlements
Lapse of statute of limitations
Unrecognized Tax Benefits—end of period
$
—
—
1,949
—
(171)
(5,517)
23,513
$
—
(2,499)
74
—
—
(3,057)
27,252
$
27,151
1,188
(332)
9,247
(2,873)
(332)
(1,315)
32,734
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
We report income tax-related interest income within the income tax provision. Penalties and tax-related interest expense
are also reported as a component of the income tax provision. As of March 31, 2020 and 2019, $4,750 and $4,786 of income
tax-related interest and $1,895 and $2,080 of penalties were included in accrued income taxes, respectively. As of March 31,
2020, 2019, and 2018, our current tax provision included $2,126, $1,694, and $1,053 of expense related to interest and
penalties, respectively.
On February 9, 2015, we entered into a Tax Matters Agreement with Orbital ATK that governs the respective rights,
responsibilities and obligations of Vista Outdoor and Orbital ATK following the distribution of all of the shares of our common
stock on a pro rata basis to the holders of Alliant Techsystems Inc. common stock (the “Spin-Off”) with respect to tax liabilities
and benefits, tax attributes, tax contests and other tax sharing regarding U.S. federal, state, local and foreign income taxes, other
tax matters and related tax returns. We have joint and several liability with Orbital ATK to the IRS for the consolidated U.S.
federal income taxes of the Orbital ATK consolidated group relating to the taxable periods in which we were part of that group.
However, the Tax Matters Agreement specifies the portion, if any, of this tax liability for which we bear responsibility, and
Orbital ATK agrees to indemnify us against any amounts for which we are not responsible. The Tax Matters Agreement also
provides special rules for allocating tax liabilities in the event that the Spin-Off is determined not to be tax-free. Though valid
between the parties, the Tax Matters Agreement is not binding on the IRS.
The allocation of tax liabilities for the period from April 1, 2014 through the date of the Spin-Off was settled on June 15,
2018. Orbital ATK paid Vista Outdoor $13,047 to settle this matter, which was reflected as an adjustment to the distribution
from Vista Outdoor to Orbital ATK at the time of the Spin-Off.
Prior to the Spin-Off, Orbital ATK or one of its subsidiaries filed income tax returns in the U.S. federal and various U.S.
state jurisdictions that included Vista Outdoor. In addition, certain of our subsidiaries filed income tax returns in foreign
jurisdictions. After the Spin-Off, we file income tax returns in the U.S. federal, foreign and various U.S. state jurisdictions. With
a few exceptions, Orbital ATK and its subsidiaries and Vista Outdoor are no longer subject to U.S. federal, state and local, or
foreign income tax examinations by tax authorities prior to 2013. The IRS has completed the audits of Orbital ATK through
fiscal 2014 and is currently auditing Orbital ATK's tax return for fiscal 2015. The IRS has also completed the audit of our tax
return that began after the Spin-Off and ended on March 31, 2015. We believe appropriate provisions for all outstanding issues
relating to our portion of these returns have been made for all remaining open years in all jurisdictions.
16. Commitments and Contingencies
The Company leases certain warehouse, distribution and office facilities, vehicles and office equipment under operating
leases. These operating lease liabilities represent commitments for minimum lease payments under non-cancelable operating
leases in the amount of $128,569 See Note 3. Leases.
We have known purchase commitments of $190,307, which are defined as an agreement to purchase goods or services
that is enforceable and legally binding on us and that specifies all significant terms, including: fixed or minimum quantities to
be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction.
Litigation—From time-to-time, we are subject to various legal proceedings, including lawsuits, which arise out of, and
are incidental to, the conduct of our business. We do not consider any of such proceedings that are currently pending,
individually or in the aggregate to be material to our business or likely to result in a material adverse effect on our operating
results, financial condition, or cash flows.
Environmental liabilities—Our operations and ownership or use of real property are subject to a number of federal, state,
and local environmental laws and regulations, as well as applicable foreign laws and regulations, including those governing the
discharge of hazardous materials, remediation of contaminated sites, and restoration of damage to the environment. We are
obligated to conduct investigation and/or remediation activities at certain sites that we own or operate or formerly owned or
operated.
Certain of our former subsidiaries have been identified as potentially responsible parties (“PRP”), along with other
parties, in regulatory agency actions associated with hazardous waste sites. As a PRP, those former subsidiaries may be required
to pay a share of the costs of the investigation and clean-up of these sites. In that event, we would be obligated to indemnify
those subsidiaries for those costs. While uncertainties exist with respect to the amounts and timing of the ultimate
environmental liabilities, based on currently available information, we have concluded that these matters, individually or in the
aggregate, will not have a material adverse effect on our operating results, financial condition, or cash flows. We have recorded
a liability for environmental remediation of $710 as of March 31, 2020 and $729 as of March 31, 2019.
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
We could incur substantial additional costs, including cleanup costs, resource restoration, fines, and penalties or third-
party property damage or personal injury claims, as a result of violations or liabilities under environmental laws or non-
compliance with environmental permits. While environmental laws and regulations have not had a material adverse effect on
our operating results, financial condition, or cash flows in the past, and we have environmental management programs in place
to mitigate these risks, it is difficult to predict whether they will have a material impact in the future.
17. Stockholders' Equity
We have authorized 50,000,000 shares of preferred stock, par value $1.00, none of which have been issued.
We maintain an equity incentive plan (the “Vista Outdoor Inc. 2014 Stock Incentive Plan” or the “Plan”), which became
effective on February 10, 2015, following the Spin-Off from Orbital ATK. The Plan was established to govern the awards
granted to our employees and directors and provides for awards of stock options, restricted stock and restricted stock units,
performance awards, and total stockholder return performance awards ("TSR awards") that will be granted to certain of our
employees and directors subsequent to the Spin-Off. We issue shares from the Plan upon the vesting of performance awards,
TSR awards, and restricted stock units, grant of restricted stock, or exercise of stock options and the awards are accounted for
as equity-based compensation.
As of February 10, 2015, we are authorized to issue up to 5,750,000 common shares under the Plan, plus additional
shares issuable pursuant to awards granted immediately prior to the Spin-Off in respect of equity-based awards of Orbital ATK
granted under the Orbital ATK Stock Plans that were outstanding immediately prior to the Spin-Off and converted into Vista
Outdoor awards subsequent to the Spin-Off. As of March 31, 2020, 2,391,100 common shares are available to be granted.
Performance Based Awards
Performance based awards are stock-based awards in which the number of shares ultimately received depends on our
performance against specified metrics over a three-year performance period. These performance metrics are established on the
grant date. At the end of the performance period, the number of shares of stock that could be issued is fixed based upon the
degree of achievement of the performance goals. The number of shares that could be issued can range from 0% to 200% of the
participant's target award. We have granted two types of performance based awards: performance awards and total stockholder
return performance awards under the Plan.
Performance awards are initially valued at our closing stock price on the date of grant. Stock compensation expense is
recognized on a straight-line basis over the vesting period. The expense recognized over the vesting period is adjusted up or
down based on the anticipated performance level during the performance period. If the performance metrics are not probable of
achievement during the performance period, compensation expense would be reversed. The awards are forfeited if the threshold
performance metrics are not achieved as of the end of the performance period. The performance share vest at the end of the
performance period.
Total stockholder return performance awards are awards that compare the performance of our common stock over a three-
year period to that of our peer group. The fair value of these awards is derived using the Monte Carlo simulation which utilizes
the stock volatility, dividend yield and market correlation of Vista to its peer group. The Monte Carlo fair value is expensed on
a straight-line basis over the vesting period. The awards are forfeited if the threshold performance metrics are not achieved as of
the end of the performance period. The performance awards vest at the end of the performance period.
We granted 254,805 and 78,276 performance awards at target during the fiscal years 2019 and 2018, respectively. No
performance awards were granted during fiscal 2020. The awards granted during fiscal years 2019 and 2018 are subject to a
three-year performance period provided that certain performance goals are achieved, the participant could earn from 0% up
to 200% of the three-year target award shares, subject to continued service through the vesting date. Based on our performance,
participants earned approximately 43% and 29% of the performance awards granted in fiscal 2018 and fiscal 2017, and earned
during fiscal years 2020 and 2019. The performance period for the performance based awards granted in fiscal 2019 ends
March 31, 2021.
During fiscal years 2019, and 2018, respectively we granted 109,202 and 34,743 total stockholder return performance
awards at target. No stockholder return performance awards were granted during fiscal 2020. The awards granted during fiscal
years 2019 and 2018 are subject to a three-year performance period related to the performance of our common stock over a
three-year period to that of our peer group. The participant could earn from 0% up to 200% of the three-year target award
shares, subject to continued service through the vesting date. Based on the performance of our common stock, participants
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
earned none of the target award shares granted in fiscal 2018 and fiscal 2017. The performance period for the total stockholder
return performance awards granted in fiscal 2019 ends March 31, 2021.
The weighted average grant date fair value for performance based award grants was $9.59 and $18.28 in fiscal years 2019
and 2018, respectively. There were no performance based award grants in fiscal 2020.
A summary of our performance based awards for fiscal 2020 is presented below:
Nonvested at March 31, 2019
Cancelled/forfeited
Performance-based adjustment (1)
Earned (2)
Nonvested at March 31, 2020 (3)
Weighted
Average
Grant Date
Fair Value
12.85
28.74
12.85
30.70
11.01
Shares
1,606,638
(385,359)
(803,319)
(23,970)
393,990
$
$
(1) Adjustment equals the difference between non-vested shares at 200% of target shares and the target share amount. (2)
Performance shares are earned and vest at the end of the performance period based on the performance criteria achieved,
subject to continued service through the vesting date. (3) Non-vested shares as of March 31, 2020 are equal to the target amount
of performance shares granted and not yet earned.
At March 31, 2020, the unamortized compensation expense related to these awards was $1,491, which is expected to be
recognized over a weighted-average period of 1.9 years.
Stock Option awards
Stock options may be granted periodically, with an exercise price equal to the fair value of common stock on the date of
grant, and generally vest from one to three years from the date of grant. Stock options are generally granted with ten-year terms.
We recorded compensation expense for employee stock options based on the estimated fair value of the options on the date of
grant using the Black-Scholes option-pricing model. The model uses various assumptions, including a risk-free interest rate, the
expected term of the options, the expected stock price volatility, and the expected dividend yield. The weighted average grant
date fair value for stock option grants was $4.76 and $7.78 in fiscal years 2019 and 2018, respectively. There were no stock
options granted during fiscal 2020.
A summary of our stock option activity for fiscal 2020 is presented below:
Outstanding at March 31, 2019
Forfeited/expired
Outstanding at March 31, 2020
Options exercisable at March 31, 2020
Weighted Average
Exercise Price
Weighted Average
Remaining
Contractual Life
(in years)
Aggregate Intrinsic
Value
$
$
$
16.68
19.04
16.03
18.63
8.2
7.3
6.4
$
$
$
—
76
25
Shares
704,472
(153,167)
551,305
334,062
There were no options exercised during fiscal years 2020 and 2019. The total intrinsic value of options exercised during
fiscal 2018 was $1,673. Cash received from options exercised during fiscal 2018 was $4,824.
As of March 31, 2020, the total unrecognized compensation cost related to stock option awards was $958 and is expected
to be realized over a weighted average period of 2.0 years.
Restricted Stock Units
Restricted stock units granted to certain key employees and non-employee directors totaled 681,043, 584,154 and
541,326 shares in fiscal years 2020, 2019, and 2018, respectively. The weighted average grant date fair value of restricted stock
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
units granted was $6.03, $11.41 and $17.59 in fiscal years 2020, 2019, and 2018, respectively. Restricted stock units vest over
periods generally ranging from one to three years from the date of award and are valued at the market price of common stock as
of the grant date.
A summary of our restricted stock unit award activity for fiscal 2020 is presented below.
Nonvested at March 31, 2019
Granted
Vested
Forfeited
Nonvested at March 31, 2020
Shares
948,422
681,043
(329,244)
(152,851)
1,147,370
$
$
Weighted Average
Grant Date
Fair Value
6.75
6.03
17.01
13.43
9.37
As of March 31, 2020, the total unrecognized compensation cost related to nonvested restricted stock units was $7,429
and is expected to be realized over a weighted average period of 2.3 years.
Total pre-tax stock-based compensation expense of $6,810, $6,599, and $9,299 was recognized during fiscal 2020, 2019,
and 2018, respectively. The total income tax benefit recognized in the consolidated statements of comprehensive income for
share-based compensation was $371, $28, and $2,132 during fiscal 2020, 2019, and 2018, respectively.
Share Repurchases
On August 25, 2016, our Board of Directors authorized a new share repurchase program of up to $100,000 worth of
shares of our common stock, executable through March 31, 2018. We completed that program during fiscal 2017. No additional
new share repurchase programs have been authorized, and therefore we had no repurchases of shares during fiscal 2020, 2019,
and 2018.
18. Condensed Consolidating Financial Statements
In accordance with the provisions of the 5.875% Notes, the outstanding notes are guaranteed on an unsecured
basis, jointly and severally and fully and unconditionally, by substantially all of Vista Outdoor domestic subsidiaries
and by Advanced Arrow S. de R.L. de C.V. and Hydrosport, S. de R.L. de C.V. The parent company has no
independent assets or operations. All of these guarantor subsidiaries are 100% owned by Vista Outdoor and any
subsidiaries of the parent company other than the subsidiary guarantors are minor. There are no significant
restrictions on the Company’s ability, or the ability of any guarantor, to obtain funds from its subsidiaries through
dividends or loans, and there are no material restrictions on the ability of our consolidated and unconsolidated
subsidiaries to transfer funds to the Company in the form of cash dividends, loans or advances. These guarantees
are senior or senior subordinated obligations, as applicable, of the applicable subsidiary guarantors.
19. Operating Segment Information
At March 31, 2019, we had two operating and reportable segments. During the fourth quarter of fiscal 2020, we
realigned our internal reporting structure and modified our operating segment structure to provide investors with improved
disclosure that is consistent with how our chief operating decision maker (CODM), our Chief Executive Officer, allocates
resources and makes decisions. Based on these changes, management concluded that we had six operating segments, which have
been aggregated into two reportable segments, Shooting Sports and Outdoor Products.
Shooting Sports is comprised of our Ammunition and Hunting and Shooting operating segments. Outdoor Products is
comprised of our Action Sports, Outdoor Cooking, Hydration and Golf operating segments. The operating segments comprising
the Company’s respective new reportable segments share numerous commonalities, including similar core consumers,
distribution channels and supply chains.
Our CODM relies on internal management reporting that analyzes consolidated results to the net income level and
operating segment's EBIT, which is defined as earnings (loss) before interest and income taxes. Certain corporate-related costs
and other non-recurring costs are not allocated to the segments in order to present comparable results from period to period.
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
These include impairment charges, restructuring related-costs, merger and acquisition costs, and other non-recurring items. Our
previous segment measures were net sales, and gross profit, and identifiable assets were not included in our previous segment
measures. The segment reporting for prior comparative periods have been restated to conform to the change in reportable
segments, and the segment measures.
•
•
Shooting Sports generated 68% of our external sales in fiscal 2020. Shooting Sports is comprised of ammunition and
hunting shooting accessories product lines. Ammunition products include centerfire ammunition, rimfire ammunition,
shotshell ammunition and reloading components. Hunting accessories products include high-performance hunting
arrows, game calls, hunting blinds, game cameras, and decoys, and optics products such as binoculars, riflescopes and
telescopes. Shooting accessories products include reloading equipment, clay targets, and premium gun care products and
tactical products such as holsters, duty gear, bags and packs. Our Firearms business was divested early in the second
quarter ending September 29, 2019.
Outdoor Products generated 32% of our external sales in fiscal 2020. Outdoor Products is comprised of sports
protection, outdoor cooking, golf, and hydration product lines. Sports protection includes helmets, goggles, and
accessories for cycling, snow sports, action sports and powersports. Outdoor cooking includes grills and stoves. Golf
products include laser rangefinders and other golf technology products. Hydration products include hydration packs and
water bottles. Our Eyewear brands were divested during the second quarter of fiscal year 2019.
Walmart accounted for approximately 13%, 14%, and 13% of our total fiscal 2020, 2019, and 2018 sales, respectively. No
other single customer contributed more than 10% of our sales in fiscal 2020, 2019, and 2018.
Our sales to foreign customers were $301,648, $426,594, and $535,170 in fiscal 2020, 2019, and 2018, respectively.
During fiscal 2020, approximately 44% of these sales were in Shooting Sports and 56% were in Outdoor Products. Sales to no
individual country outside the United States accounted for more than 5% of our sales in fiscal 2020, 2019, and 2018.
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
The following summarizes our results by segment:
Sales, net
Gross Profit
EBIT
Capital expenditures
Depreciation and amortization
Total assets
Sales, net
Gross Profit
EBIT
Capital expenditures
Depreciation and amortization
Total assets
Sales, net
Gross Profit
EBIT
Capital expenditures
Depreciation and amortization
Total assets
Year ended March 31, 2020
Outdoor
Products
(a) Corporate
and other
reconciling
items
Total
$
566,535
$
— $ 1,755,871
Shooting
Sports
$ 1,189,336
210,866
149,420
80,028
8,415
35,358
29,998
6,989
25,813
(1,520)
(242,262)
3,857
6,687
358,766
(132,236)
19,261
67,858
698,019
614,535
78,735
1,391,289
Year ended March 31, 2019
Outdoor
Products
(a) Corporate
and other
reconciling
items
Total
$
648,284
$
— $ 2,058,528
Shooting
Sports
$ 1,410,244
251,385
180,275
90,654
23,061
41,936
34,982
15,193
29,186
1,049,487
608,697
(15,972)
(742,717)
5,712
6,381
79,839
415,688
(617,081)
43,966
77,503
1,738,023
Year ended March 31, 2018
Outdoor
Products
(a) Corporate
and other
reconciling
items
Total
$
760,923
$
— $ 2,308,463
225,769
36,272
17,009
29,502
1,163,713
(528)
(231,147)
5,574
1,057
91,679
520,962
(84,575)
64,086
89,759
2,614,836
Shooting
Sports
$ 1,547,540
295,721
110,300
41,503
59,200
1,359,444
(a) Reconciling items in fiscal 2020 include non-cash goodwill and intangible impairment charges of $155,588 related to
the historical outdoor products segment and $9,429 of held for sale impairment charges related to the historical shooting sports
segment, restructuring charges of $9,210, contingent consideration expenses of $1,685, restructuring costs of $1,520, merger and
acquisition costs of $644 and loss on the sale of our Firearms business of $433. Fiscal 2019 reconciling items include non-cash
goodwill. intangible held for sale asset impairment charges of $500,944 related to the historical Outdoor Products segment and
$120,238 of held for sale goodwill and held for sale asset impairment charges related to the historical Shooting Sports segment,
business transformation charges of $38,551, contingent consideration expenses of $3,371, merger and acquisition costs of $9,824
and loss on the sale of our Eyewear business of $4,925. Fiscal 2018 reconciling items include non-cash goodwill and intangible
impairment and held for sale impairment charges of $152,320 related to the historical outdoor products segment, restructuring
charges of $17,958, contingent consideration benefits of ($1,515), merger and acquisition costs of $1,893 and pension
curtailment benefits of ($5,782).
Sales, net exclude all intercompany sales between Shooting Sports and Outdoor Products, which were not material for any
of the fiscal years presented. The capital expenditures above include amounts that were not paid as of March 31, 2020.
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share and per share data and unless otherwise indicated)
20. Quarterly Financial Data (unaudited)
Quarterly financial data is summarized as follows:
Sales, net
Gross profit
Net income (loss)
Earnings (loss) per common share:
Basic and diluted
Weighted-average number of common shares outstanding:
Basic
Diluted
Sales, net
Gross profit
Net income (loss)
Earnings (loss) per common share:
Basic and diluted
Fiscal 2020 Quarters Ended
June 30,
$
459,774
September 29,
445,016
$
December 29,
424,770
$
March 31,
$
426,311
95,078
(16,615)
90,264
(11,898)
88,790
14,648
84,634
(141,214)
$
(0.29) $
(0.21) $
0.25
$
(2.44)
57,722
57,722
57,768
57,768
57,878
57,978
57,944
57,944
Fiscal 2020 Quarters Ended
July 1,
$
528,836
September 30,
546,585
$
December 30,
467,771
$
March 31,
$
515,336
113,338
(52,348)
108,757
(32,818)
94,236
(514,642)
99,357
(48,635)
$
(0.91) $
(0.57) $
(8.94) $
(0.84)
Weighted-average number of common shares outstanding:
Basic and diluted
57,454
57,528
57,572
57,604
77
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
78
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of March 31,
2020, and have concluded that our disclosure controls and procedures are effective to ensure that information required to be
disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized,
and reported within the time periods specified in the SEC's rules and forms. These disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports we file or
submit is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the fourth quarter of fiscal 2020 (as defined
in Rule 13a-15(f) under the Securities Exchange Act of 1934) that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
Management's Report on Internal Control over Financial Reporting
The management of Vista Outdoor prepared and is responsible for the consolidated financial statements and all related
financial information contained in this Annual Report on Form 10-K. This responsibility includes establishing and maintaining
adequate internal control over financial reporting. Vista Outdoor's internal control over financial reporting was designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with accounting principles generally accepted in the United States of America.
To comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, Vista Outdoor designed and
implemented a structured and comprehensive assessment process to evaluate its internal control over financial reporting. The
assessment of the effectiveness of Vista Outdoor's internal control over financial reporting was based on criteria established in
Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Because of its inherent limitations, a system of internal control over financial reporting can provide only
reasonable assurance and may not prevent or detect misstatements. Management regularly monitors Vista Outdoor's internal
control over financial reporting, and actions are taken to correct any deficiencies as they are identified. Based on our
assessment, management has concluded that Vista Outdoor's internal control over financial reporting is effective as of March
31, 2020.
Our internal control over financial reporting as of March 31, 2020, has been audited by Deloitte & Touche LLP, an
independent registered public accounting firm, as stated in their report which is included herein.
/s/ Christopher T. Metz
Chief Executive Officer
/s/ Sudhanshu Priyadarshi
Chief Financial Officer
June 3, 2020
79
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Vista Outdoor Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Vista Outdoor Inc. and subsidiaries (the "Company") as of
March 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of March 31, 2020, based on criteria established in Internal
Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended March 31, 2020, of the Company and our report
dated June 3, 2020, expressed an unqualified opinion on those consolidated financial statements and included an explanatory
paragraph regarding the Company’s adoption of FASB Accounting Standards Update (“ASU”) 2016-02, “Leases” (Topic 842).
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over
financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Salt Lake City, Utah
June 3, 2020
80
ITEM 9B. OTHER INFORMATION
None.
81
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information regarding our directors is incorporated by reference from the section entitled Proposal 1—Election of
Directors and under the heading The Vista Outdoor Inc. Board of Directors in the section entitled Corporate Governance at
Vista Outdoor Inc. in our Proxy Statement for the 2020 Annual Meeting of Stockholders to be filed with the SEC not later than
120 days after the close of fiscal 2019 (the "2020 Proxy Statement"). Information regarding our executive officers is set forth
under the heading Information About Our Executive Officers in the section entitled Corporate Governance at Vista Outdoor
Inc. to be included in the 2020 Proxy Statement.
Information regarding our compliance with Section 16(a) of the Exchange Act is incorporated by reference from the
section entitled Delinquent Section 16(a) Reports to be included in the 2020 Proxy Statement.
Information regarding our code of ethics (Vista Outdoor's Code of Business Ethics), which we have adopted for all
directors, officers and employees, is incorporated by reference from the section entitled Corporate Governance at Vista
Outdoor Inc.—Code of Business Ethics to be included in the 2020 Proxy Statement. Our Code of Business Ethics is available
on our website at www.vistaoutdoor.com by selecting Investors and then Corporate Governance.
Information regarding our Audit Committee, including the Audit Committee's financial expert, is incorporated by
reference from the section entitled Corporate Governance at Vista Outdoor Inc.—Organization of the Board of Directors—
Committees of the Board of Directors—Audit Committee to be included in the 2020 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding the compensation of our named executive officers is incorporated by reference from the section
entitled Compensation Discussion and Analysis, Named Executive Officer Compensation Tables, and Compensation Committee
Report to be included in the 2020 Proxy Statement.
Information regarding the compensation of our directors is incorporated by reference from the section entitled Director
Compensation to be included in the 2020 Proxy Statement.
Information regarding the compensation committee interlocks is incorporated by reference from the section entitled
Corporate Governance—Compensation Committee Interlocks and Insider Participation to be included in the 2020 Proxy
Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Information regarding the security ownership of certain beneficial owners and management is incorporated by reference
from the section entitled Security Ownership of Certain Beneficial Owners and Security Ownership of Directors and Named
Executive Officers to be included in the 2020 Proxy Statement.
Information regarding the securities authorized for issuance under equity compensation plans is set forth the section
entitled Securities Authorized for Issuance Under Equity Compensation Plans to be included in the 2020 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information regarding transactions with related persons is incorporated by reference from the section entitled Related
Person Transactions to be included in the 2020 Proxy Statement.
Information about director independence is incorporated by reference from the section entitled Corporate Governance at
Vista Outdoor Inc.—Director Independence to be included in the 2020 Proxy Statement.
82
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information about principal accountant fees and services as well as related pre-approval policies and procedures is
incorporated by reference from the section entitled Fees Paid to Independent Registered Public Accounting Firm to be included
in the 2020 Proxy Statement.
83
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this Report
1. Financial Statements
The following is a list of all of the Consolidated Financial Statements included in Item 8 of Part II
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Comprehensive Income
Consolidated Statements of Cash Flows
Consolidated Statement of Equity
Notes to the Consolidated Financial Statements
2. Financial Statement Schedules
Page
43
44
45
46
47
48
All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange
Commission have been omitted because of the absence of the conditions under which they are required or because the
information required is shown in the financial statements or notes thereto.
3. Exhibits
The following exhibits with an exhibit number is followed by an asterisk (*) are filed electronically with this report.
All other exhibits listed below are incorporated by reference from the document listed.
Exhibit
Number
2.1
2.2 +
2.3 +
2.4 +
3.1
3.2
3.3
4.1
Description of Exhibit (and document from which incorporated by reference, if applicable)
Transaction Agreement, dated as of April 28, 2014, among Alliant Techsystems Inc., Vista SpinCo Inc.,
Vista Merger Sub Inc. and Orbital Sciences Corporation (Exhibit 2.1 to Vista Outdoor Inc.’s Registration
Statement on Form 10, filed with the Securities and Exchange Commission on August 13, 2014).
Transition Services Agreement, dated as of February 9, 2015, among Alliant Techsystems Inc. and Vista
Outdoor Inc. (Exhibit 2.2 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and
Exchange Commission on February 10, 2014).
Tax Matters Agreement, dated as of February 9, 2015, among Alliant Techsystems Inc. and Vista Outdoor
Inc. (Exhibit 2.5 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and
Exchange Commission on February 10, 2014).
Stock Purchase Agreement, dated as of July 5, 2019, by and among Vista Outdoor Operations LLC,
Caliber Company, Long Range Acquisition LLC, and Vista Outdoor Inc. (Exhibit 2.1 to Vista Outdoor
Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2019).
Amended and Restated Certificate of Incorporation of Vista Outdoor Inc. (Exhibit 3.1 to Vista Outdoor
Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 10,
2014).
Certificate of Amendment to Vista Outdoor Inc. Amended and Restated Certificate of Incorporation
(Exhibit 3.1 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange
Commission on August 10, 2018).
Vista Outdoor Inc. Amended and Restated Bylaws (Exhibit 3.2 to Vista Outdoor Inc.’s Current Report on
Form 8-K, filed with the Securities and Exchange Commission on August 10, 2018).
Specimen Common Stock Certificate of Vista Outdoor Inc. (Exhibit 4.1 to Vista Outdoor Inc.’s Current
Report on Form 8-K, filed with the Securities and Exchange Commission on February 10, 2014).
84
Exhibit
Number
4.2
4.3
4.4
4.5
4.6
4.7
10.1
10.6
10.7 #
10.8 #
10.9 #
10.10 #
10.11 #
10.12 #
10.13 #
10.14 #
Description of Exhibit (and document from which incorporated by reference, if applicable)
Indenture, dated as of August 11, 2015, among Vista Outdoor Inc., the subsidiaries of Vista Outdoor Inc.
party thereto and U.S. Bank National Association, as trustee (Exhibit 4.1 to Vista Outdoor Inc.’s Current
Report on Form 8-K, filed with the Securities and Exchange Commission on August 11, 2015).
Supplemental Indenture, dated as of August 11, 2015, among Vista Outdoor Inc., the subsidiaries of Vista
Outdoor Inc. party thereto and U.S. Bank National Association, as trustee (Exhibit 4.2 to Vista Outdoor
Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 11,
2015).
Second Supplemental Indenture, dated as of August 9, 2016, among Vista Outdoor Inc., the subsidiaries of
Vista Outdoor Inc. party thereto and U.S. Bank National Association, as trustee (Exhibit 4.3 to Vista
Outdoor Inc.’s Registration Statement on Form S-4, filed with the Securities and Exchange Commission on
August 11, 2016).
Third Supplemental Indenture, dated as of December 2, 2016, among Vista Outdoor Inc., the subsidiaries
of Vista Outdoor Inc. party thereto and U.S. Bank National Association, as trustee (Exhibit 4.6 to Vista
Outdoor Inc.’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on
February 9, 2017).
Form of 5.875% Senior Note due 2023 (included as Exhibit A to the Supplemental Indenture filed as
Exhibit 4.2 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange
Commission on August 11, 2015).
Description of Common Stock (Exhibit 4.7 to Vista Outdoor Inc.’s Annual Report on Form 10-K filed with
the Securities and Exchange Commission on May 23, 2019).
Asset-Based Revolving Credit Agreement, dated as of November 19, 2018, among Vista Outdoor Inc., the
additional borrowers from time to time party thereto, the lenders from time to time party thereto, the L/C
issuers from time to time party thereto and Wells Fargo Bank National Association, as administrative agent
(Exhibit 10.1 to Vista Outdoor Inc.'s Current Report on Form 8-K, filed with the Securities and Exchange
Commission on November 20, 2018).
Ammunition Supply Agreement, dated as of May 5, 2017, among Federal Cartridge Company and Alliant
Techsystems Operations LLC (Exhibit 10.4 to Vista Outdoor Inc.’s Quarterly Report on Form 10-Q, filed
with the Securities and Exchange Commission on August 10, 2017).
Vista Outdoor Inc. Executive Officer Incentive Plan. (Exhibit 10.1 to Vista Outdoor Inc.’s Current Report
on Form 8-K, filed with the Securities and Exchange Commission on February 10, 2015).
Vista Outdoor Inc. Executive Severance Plan, as Amended and Restated Effective August 10, 2015
(Exhibit 10.1 to Vista Outdoor Inc.’s Quarterly Report on Form 10-Q, filed with the Securities and
Exchange Commission on November 12, 2015).
Vista Outdoor Inc. Income Security Plan. (Exhibit 10.2 to Vista Outdoor Inc.’s Current Report on Form 8-
K, filed with the Securities and Exchange Commission on February 10, 2015).
Vista Outdoor Inc. Defined Benefit Supplemental Executive Retirement Plan. (Exhibit 10.4 to Vista
Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on
February 10, 2015).
Vista Outdoor Inc. Defined Contribution Supplemental Executive Retirement Plan. (Exhibit 10.5 to Vista
Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on
February 10, 2015).
Form of Non-Qualified Stock Option Award Agreement (Installment Vesting) under the Alliant
Techsystems Inc. 2005 Stock Incentive Plan, for option grants in the fiscal years ended March 31, 2012
and March 31, 2013. (Exhibit 10.6 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the
Securities and Exchange Commission on February 10, 2015).
Form of Non-Qualified Stock Option Award Agreement (Installment Vesting) under the Alliant
Techsystems Inc. 2005 Stock Incentive Plan, for option grants in the fiscal year ended March 31, 2014.
(Exhibit 10.7 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange
Commission on February 10, 2015).
Form of Amendment to ATK Non-Qualified Stock Option Award Agreement. (Exhibit 10.8 to Vista
Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on
February 10, 2015).
85
Exhibit
Number
10.15 #
10.16 #
10.17 #
10.18 #
10.19 #
10.20 #
10.21 #
10.22 #
10.23 #
10.24 #
Description of Exhibit (and document from which incorporated by reference, if applicable)
Form of Vista Outdoor Inc. Restricted Stock Unit Award Agreement. (Exhibit 10.1 to Vista Outdoor Inc.’s
Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 25, 2015).
Form of Vista Outdoor Inc. Performance Growth Award Agreement. (Exhibit 10.2 to Vista Outdoor Inc.’s
Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 25, 2015).
Form of Vista Outdoor Inc. Restricted Stock Award Agreement. (Exhibit 10.3 to Vista Outdoor Inc.’s
Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 25, 2015).
Form of Vista Outdoor Inc. Non-Qualified Stock Option Award Agreement. (Exhibit 10.4 to Vista Outdoor
Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 25,
2015).
Form of Vista Outdoor Inc. Non-Employee Director Restricted Stock Unit Award Agreement (Exhibit
10.26 to Vista Outdoor Inc.’s Annual Report on Form 10-K, filed with the Securities and Exchange
Commission on June 1, 2015).
Form of Vista Outdoor Inc. Non-Employee Director Restricted Stock Award Agreement (Exhibit 10.27 to
Vista Outdoor Inc.’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on
June 1, 2015).
Form of Vista Outdoor Inc. Non-Employee Director Deferred Stock Unit Award Agreement (Exhibit 10.28
to Vista Outdoor Inc.’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission
on June 1, 2015).
Vista Outdoor Inc. 2014 Stock Incentive Plan. (Exhibit 4.3 to Vista Outdoor Inc.’s Registration Statement
on Form S-8, filed with the Securities and Exchange Commission on February 9, 2015).
Vista Outdoor Inc. Nonqualified Deferred Compensation Plan. (Exhibit 4.4 to Vista Outdoor Inc.’s
Registration Statement on Form S-8, filed with the Securities and Exchange Commission on February 9,
2015).
Vista Outdoor Inc. Employee Stock Purchase Plan (Exhibit 4.1 to Vista Outdoor Inc.’s Registration
Statement on Form S-8, filed with the Securities and Exchange Commission on October 31, 2016).
21 *
Subsidiaries of the Registrant as of March 31, 2020.
23 *
Consent of Independent Registered Public Accounting Firm.
31.1 *
Certification of Chief Executive Officer.
31.2 *
Certification of Chief Financial Officer.
32 *
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
104
The following financial statements from the Company’s Annual Report on Form 10-K for the year ended
March 31, 2020, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Consolidated
Balance Sheets, (ii) Consolidated Statements of Comprehensive Income (Loss), (iii) Consolidated
Statements of Cash Flows, (iv) Consolidated Statements of Stockholders’ Equity, and (v) Notes to the
Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
The cover page from the Company’s Annual Report on Form 10-K for the year ended March 31, 2020
December 31, 2019, formatted in Inline Extensible Business Reporting Language (iXBRL) (included as
Exhibit 101).
+ Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Vista Outdoor agrees to
furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request; provided, however, that Vista
Outdoor may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any document so furnished.
# Indicates a management contract or compensatory plan or arrangement
ITEM 16. FORM 10-K SUMMARY
None.
86
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: June 3, 2020
VISTA OUTDOOR INC.
By:
Name:
Title:
/s/ Sudhanshu Priyadarshi
Sudhanshu Priyadarshi
Chief Financial Officer
________________________________________________________________________________________________________________________
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and indicated on June 3, 2020.
Signature
Title
/s/ Christopher T. Metz
Christopher T. Metz
/s/ Sudhanshu Priyadarshi
Sudhanshu Priyadarshi
/s/ Mark R. Kowalski
Mark R. Kowalski
/s/ Michael Callahan
Michael Callahan
/s/ April H. Foley
April H. Foley
/s/ Tig H. Krekel
Tig H. Krekel
/s/ Mark A. Gottfredson
Mark A. Gottfredson
/s/ Gary L. McArthur
Gary L. McArthur
/s/ Robert M. Tarola
Robert M. Tarola
/s/ Michael Robinson
Michael Robinson
Chief Executive Officer (principal executive officer)
Chief Financial Officer (principal financial officer)
Controller and Chief Accounting Officer (principal accounting officer)
Chairman of the Board of Directors and Director
Director
Director
Director
Director
Director
Director
87
[THIS PAGE INTENTIONALLY LEFT BLANK]
Board of Directors
Corporate Information
Michael Callahan, (2,3)
Chairman of the Board
Christopher T Metz
April H. Foley (2,3)*
Mark A. Gottfredson (1,3)
Tig H. Krekel (1,3)
Gary L. McArthur (1,2)
Michael D. Robinson (2,3)
Robert M. Tarola (1,2)
Lynn Utter (1,2)
Fran Philip (2, 3)
1 Audit Committee
Corporate Headquarters
1 Vista Way
Anoka, MN 55303
Telephone: 763-433-1000
Annual Meeting of Stockholders
The Annual Meeting of Stockholders will be via live audio webcast on the Internet
at 9:00 a.m. CDT on Tuesday, August 4, 2020
Common Stock
Vista Outdoor common stock is listed on the New York Stock Exchange under
VSTO and in stock tables under Vista Outdoor Inc. During FY20, approximately
168 million shares were traded. The closing stock price ranged from a low of $4.41
to a high of $10.18 in the fiscal year.
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
50 Sixth Street—Suite 2800
Minneapolis, MN 55402-1538
Transfer Agent and Registrar
Computershare
2 Management Development and
Compensation Committee
3 Nominating and Governance Committee
* Retiring in August, 2020
Stockholder Correspondence Should Be Mailed To:
Computershare
P.O. Box 30170
College Station, TX 77842-3170
Vista Outdoor
Leadership
Christopher T. Metz
Chief Executive Officer
Sudhanshu Priyadarshi
Senior Vice President and
Chief Financial Officer
Dylan Ramsey
Vice President, General Counsel
and Corporate Secretary
Kelly Reisdorf
Vice President, Chief Investor Relations
and Communications Officer
Jason Vanderbrink
President, Ammunition
Bradford Crandell
Vice President, Chief Human Resources Officer
Mark Kowalski
Controller and Chief Accounting Officer
Send overnight correspondence to:
Computershare
211 Quality Cr, Suite 210
College Station, TX 77845
Telephone toll free: 1-866-395-6416
Website: https://www.computershare.com/investor
Company Website
The Vista Outdoor website at www.vistaoutdoor.com includes biographies of directors and
executive officers, as well as information on the company’s corporate governance guidelines,
and the charters of the committees of the Board of Directors. News and information is also
available on Facebook at www.facebook.com/vistaoutdoor and on Twitter @VistaOutdoorInc.
Forward-Looking Statements
Certain statements made by Vista Outdoor from time to time are forward-looking statements,
including those that discuss, among other things: Vista Outdoor’s plans, objectives,
expectations, intentions, strategies, goals, outlook or other non-historical matters; projections
with respect to future revenues, income, earnings per share or other financial measures for
Vista Outdoor; and the assumptions that underlie these matters. The words ‘believe’, ‘expect’,
‘anticipate’, ‘intend’, ‘aim’, ‘should’ and similar expressions are intended to identify such
forward-looking statements. To the extent that any such information is forward-looking, it is
intended to fit within the safe harbor for forward-looking information provided by the Private
Securities Litigation Reform Act of 1995. Numerous risks, uncertainties and other factors
could cause Vista Outdoor’s actual results to differ materially from expectations described
in such forward-looking statements, including factors contained in the Risk Factors section
of Vista Outdoor’s Form 10-K as updated by any subsequent Forms 10-Q and 8-K filed with
the Securities and Exchange Commission. Vista Outdoor undertakes no obligation to update
any forward-looking statements. For further information on factors that could impact Vista
Outdoor, and statements contained herein, please refer to Vista Outdoor’s filings with the
Securities and Exchange Commission. You are cautioned not to place undue reliance on any
forward-looking statements we make. Vista Outdoor undertakes no obligation to update any
forward-looking statements except as otherwise required by law. For further information on
factors that could impact Vista Outdoor, and statements contained herein, please refer to
Vista Outdoor’s filings with the Securities and Exchange Commission.
Investor Inquiries
Kelly Reisdorf
Vice President, Investor Relations
Tel. 763-433-1028
investor.relations@vistaoutdoor.com
Media Inquiries
Fred Ferguson
Vice President, Public Affairs
and Communications
Tel. 571-457-9082
Fred.Ferguson@vistaoutdoor.com
Corporate Address
1 Vista Way
Anoka, Minnesota 55303
Tel. 763-433-1000
vistaoutdoor.com