From the Chairman of the Board
and Interim Chief Executive Officer
Dear Shareholder:
Fiscal Year 2023 was one of the most transformative years in our company’s history. We made
portfolio-shifting acquisitions, navigated challenging marketplace conditions and instituted
earnings improvement measures. Through it, we continued to operate from a position of strength
and display great resilience.
Sales for the fiscal year topped $3 billion. We had solid margins and free cash flow, even as we
navigated a market that has seen multiple inflationary pressures and higher input costs. We paid
down $260 million in debt in the back half of the year, and our leverage ratio ended the year at 1.6
times, well within our long-term target of 1-2 times. Our top capital allocation priority continues to
be debt reduction and we will continue to prioritize maintaining a strong balance sheet.
SEPARATION
Our solid Fiscal Year 2023 performance
supports our strategy to separate our two
segments into two independent, publicly
traded companies. We continue to believe
the spinoff of our Outdoor Products segment
is the best way to unlock shareholder value
and we are working hard to be ready to spin
later this year. Key to completing the spin this
calendar year will be establishing the Outdoor
Products senior leadership team, seeing a
more stable macro-economic environment
and improving Outdoor Product’s financial
performance.
Upon completion of the spin, each company
will have a dedicated strategic focus, tailored
capital allocation approaches and its own set
of competitive advantages.
The spin will unlock shareholder value that
wouldn’t be possible otherwise. Our company
currently trades at about five times Enterprise
Value to Fiscal Year 2024 EBITDA, in-line with
ammunition and sporting company peers,
while pure-play outdoor products focused
peers tend to trade at double-digit Enterprise
Value to EBITDA. We believe this value is not
reflected in our current trading price and after
the spin we expect Outdoor Products to trade
at similar multiples as its outdoor peers.
We continue to have discussions with the
SEC and are in the process of updating our
Form 10 with our Fiscal Year 2023 fourth-
quarter financials.
We will publicly file the Form 10 in advance
of the spin. We will have additional details on
timing, the new company names and more in
the coming months.
OUTLOOK
In Sporting Products, the market is
normalizing, as we have expected and
communicated, and we anticipate a more
normalized purchasing cycle throughout our
Fiscal Year 2024 based on stable market
pricing and demand. Sporting Products
EBITDA margin profile is expected to bottom
at or above the 25 percent mark, well above
pre-pandemic norms and within the target
we communicated at our May 2022 Investor
Day, driven by more rational pricing and better
structural dynamics in the market versus
previous cycles. Year-to-date NICS checks are
up over 20 percent compared to the same
period in 2019 and remain above one million
checks per month.
Outdoor Products faced a very challenging
market in Fiscal Year 2023 with expectations
this will continue at least through the first half
of Fiscal Year 2024. We see a return to organic
growth in the back half of Fiscal Year 2024
once point-of-sale and sell-in become more
closely aligned.
VISTA OUTDOOR ANNUAL REPORT | FY 2023
Future is Bright
Tactical and strategic actions we’ve taken
position us to execute our strategy in Fiscal
Year 2024. We’re positioned to achieve
meaningful margin improvement in our
Outdoor Products segment as we head into
Fiscal Year 2024, bolster our already solid
financial position and ensure a compelling
financial profile for each segment on a
standalone basis post-spin.
Longer-term, we continue to be bullish
about the future of the outdoor recreation
and shooting sports industries. Outdoor
recreation is an $862 billion industry, with
millions of new and reactivated users raising
participation levels above pre-pandemic
levels. We’ve invested in the future of outdoor
recreation through the Vista Outdoor
Foundation by supporting strategic partners
who are growing participation and expanding
access to outdoor activities.
Sincerely,
We have 41 iconic brands that span multiple
categories and markets. We have a nimble
operating model that emphasizes strong
business unit leadership teams and leverages
shared resources to drive performance that
would be out of reach for any one brand
on its own. And we’ve built a solid financial
foundation that positions us for success in
Fiscal Year 2024 and beyond.
Thank you for supporting our company,
brands and a thriving outdoor ecosystem.
We are excited for the future and continuing
to drive innovation, access and shareholder
return in all that we do.
Gary McArthur
Interim Chief
Executive Officer
Michael Callahan
Chairman of the
Board of Directors
Vista Outdoor has not reconciled EBITDA margin guidance to
GAAP net profit margin guidance because Vista Outdoor does
not provide guidance for net income, which is a reconciling item
between GAAP net profit margin and non-GAAP EBITDA margin.
Accordingly, a reconciliation to net profit margin is not available
without unreasonable effort.
VISTA OUTDOOR ANNUAL REPORT | FY 2023
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
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended March 31, 2023 or
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
☐ 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued statements. ☐
Indicated by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by
any of the registrant's executive officers during the relevant recovery period pursuant to Section 240.10D-1(b). ☐
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 25, 2022, the aggregate market value of the registrant's voting common stock held by non-affiliates was approximately $1.38 billion (based upon
the closing price of the common stock on the New York Stock Exchange on September 23, 2022).
As of May 15, 2023, there were 57,156,099 shares of the registrant's voting common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant's definitive Proxy Statement for the 2023 Annual Meeting of Stockholders are incorporated by reference into Part III.
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
Reserved
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
Directors, Executive Officers and Corporate Governance
Executive Compensation
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
Exhibits and Financial Statement Schedules
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, and summarized below, as updated by any subsequent Quarterly Reports on Form
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 recreation and shooting sports
products. We are headquartered in Anoka, Minnesota and have 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.
We have a robust global distribution network serving customers in over 100 countries. We were incorporated in Delaware in
2014.
Reportable Segments and Products
We operate through two reportable segments: Sporting Products and Outdoor Products. Information regarding our
segments is further discussed below and in Note 18, Operating Segment Information, to the consolidated financial statements in
Part II, Item 8 of this Annual Report.
Sporting Products
Our Sporting Products reportable segment designs, develops, distributes and manufactures ammunition, primers and
components and serves devoted hunters, recreational shooters, federal and local law enforcement agencies and the military. Our
Sporting Products reportable segment consists of our Ammunition operating segment, which includes our ammunition-related
businesses, including Federal, Remington, CCI, Speer, and HEVI-Shot.
Our Sporting Products segment generated approximately 57% of our external sales in fiscal year 2023. The product lines
within our Sporting Products segment are focused on the following categories:
• Centerfire pistol ammunition for use in handguns for training, target shooting and personal protection;
• Centerfire rifle ammunition for use in rifles for hunting, target shooting, training and personal protection;
• Rimfire ammunition for training and recreational target shooting in rifles and handguns;
• Shotshell ammunition for clay target shooting, waterfowl, and upland game hunting; and
• Ammunition components.
Among these categories, we derive the largest portion of our sales from ammunition, which is a consumable, repeat
purchase product.
Outdoor Products
Our Outdoor Products reportable segment designs, develops, distributes and manufactures gear and equipment to a diverse
range of outdoor enthusiasts around the world, including hikers, campers, cyclists, off-road riders, skiers, snowboarders,
backyard grillers, golfers, anglers and hunters. Our Outdoor Products reportable segment consists of:
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• Our Outdoor Accessories operating segment, which includes our Bushnell Optics, Primos, RCBS, BlackHawk!, and
Eagle businesses;
• Our Sports Protection operating segment, which includes our Bell, Blackburn, Fox Racing, and Giro businesses;
• Our Cycling operating segment, which is comprised of our QuietKat business;
• Our Outdoor Cooking operating segment, which includes our Camp Chef and Fiber Energy businesses;
• Our Hydration operating segment, which is comprised of our CamelBak business;
• Our Golf operating segment, which includes our Bushnell Golf and Foresight Sports businesses; and
• Our Fishing operating segment, which is comprised of our Simms Fishing business.
Our Outdoor Products segment generated approximately 43% of our external sales in fiscal year 2023. The product lines
within our Outdoor Products segment are focused on the following categories:
• Archery and hunting accessories, including hunting arrows, game calls, hunting blinds, and decoys;
• Reloading components for individuals who load their own ammunition;
• Optics, including binoculars, riflescopes, game cameras, and telescopes;
• Tactical accessories, including holsters, duty gear, bags and packs;
• Helmets, goggles and accessories for cycling, snow sports, motocross, power sports, and E-bikes;
• Outdoor cooking equipment, including grills, cookware, pellets, and camp stoves;
• Hydration packs, water bottles, drinkware and coolers;
• Golf launch monitors, golf laser rangefinders, golf GPS devices and other golf technology products;
• Fishing waders, sportswear, outerwear, footwear and fishing tools and accessories, and;
• Ultralightweight, performance hunting gear designed for backcountry use.
Planned Separation of Outdoor Products and Sporting Products
On May 5, 2022, we announced that our Board of Directors unanimously approved preparations for the separation of our
Outdoor Products and Sporting Products reportable segments into two independent, publicly-traded companies (the “Planned
Separation”). We anticipate that the transaction will be in the form of a distribution to our shareholders of 100% of the stock of
Outdoor Products, which will become a new, independent publicly traded company. The distribution is intended to be tax-free
to U.S. shareholders for U.S. federal income tax purposes. We currently expect the transaction will be completed in calendar
year 2023, subject to final approval by our Board of Directors, a Form 10 registration statement being declared effective by the
SEC, regulatory approvals and satisfaction of other conditions. There can be no assurance regarding the ultimate timing of the
proposed transaction or that the transaction will be completed.
We expect that the Planned Separation will create a number of benefits for Outdoor Products and Sporting Products, including:
• Enhanced strategic focus with supporting resources: Each company will have enhanced strategic focus with
resources to support its specific operational needs and growth drivers.
• Tailored capital allocation priorities: Each company will have a tailored capital allocation philosophy that is better
suited to support its distinctive business model and long-term goals.
• Strengthened ability to attract and retain top talent: Each company will benefit from enhanced ability to attract and
retain top talent that is ideally suited to execute its strategic and operational objectives.
• Compelling value for shareholders: Each company will present a differentiated and compelling investment
opportunity based on its particular business model.
• Expanded strategic opportunities: Improved focus will allow Outdoor Products to further cement its reputation as
the acquirer of choice through continued M&A in the outdoor recreation products marketplace and enable Sporting
Products to secure attractive partnerships with other manufacturers.
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Our Brands
Our brands are well known market leaders in their respective product categories. Many of our brands have a rich, long-
standing heritage, such as Remington Ammunition, founded in 1816, Federal Premium, founded in 1922 and Bushnell, founded
in 1948. Our portfolio also includes newer, high-growth brands that are capturing changing consumer preferences and leading
technological advances in their respective fields, such as our golf technology brand, Foresight Sports, our e-bike brand,
QuietKat, and our back-country hunting gear, packs and apparel brand, Stone Glacier. Our brands hold a strong competitive
position in the marketplace. For example, we believe we hold the No.1 sales position in the U.S. markets for commercial and
U.S. Law Enforcement ammunition, golf GPS and rangefinders, bike and hike hydration packs, bike bottles, motocross
protection, biking helmets and accessories, hunting and shooting accessories and fly fishing gear and apparel. 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
consumers. We have received numerous awards for product innovation by respected industry publications and for customer
service from our retail customers. Additionally, high-profile professional athletes, sportsmen and sportswomen, as well as
sponsored and organic influencers use and endorse our products, which we believe influences the purchasing behavior of
recreational consumers.
The brands in our Sporting Products and Outdoor Products segments include the following:
Sporting Products
Alliant Powder
CCI
Estate Cartridge
Federal Premium
HEVI-Shot
Remington
Speer
Market Opportunity
Bee Stinger
Bell
Blackburn
Blackhawk
Bushnell
Bushnell Golf
Butler Creek
CamelBak
Camp Chef
Outdoor Products
Hoppe's
Krash
M-Pro 7
Champion
CoPilot
Eagle
Fiber Energy Products Outers
Primos
Foresight Sports
QuietKat
Fox Racing
Raskullz
Giro
RCBS
Gold Tip
Redfield
Gunmate
Simmons
Simms
Stone Glacier
Tasco
Uncle Mike's
Venor
Weaver
We participate in the global market for consumer goods geared toward outdoor recreation and hunting and recreational
shooting related products. 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, contributed to the
economies of all 50 states, and accounted for 1.9 percent of current-dollar GDP, $862 billion in gross output (consumer
spending) and 4.5 million jobs in 2021, according to The Bureau of Economic Analysis statistics report released in November
2022. We are bullish on long-term recreation trends. Outdoor Products industry participation is baselining well above pre-
COVID 19 levels. Sporting products industry data suggests more than 17 million new users have entered the market since 2019,
and NICS checks through April are up 25 percent compared to the same period in 2019 and remain above 1 million checks per
month.
Competitive Strengths
Portfolio of Leading Brands Focused on Outdoor Recreation and Shooting Sports Related Products
We are the parent company of 41 renowned brands that design, manufacture and market sporting and outdoor products.
Together we serve a broad and diverse range of consumers around the globe, including outdoor enthusiasts, golfers, off-road
riders, cyclists, backyard grillers, campers, hunters, anglers, recreational shooters, athletes, as well as law enforcement and
military professionals. In fiscal year 2023, we expanded into the fishing category, rounding out the activities we support
through innovative product design and manufacturing.
Our operating model leverages our shared resources and Centers of Excellence (described below) across brands to
achieve levels of performance that would be out of reach for any one brand on its own. To maintain the strength of our brands
and drive revenue growth, we invest our shared resources in product innovation and seek to continuously improve the
performance, quality and affordability of our products. Our scale and expertise allow us to provide our brands with top tier
operational capabilities in digital marketing and e-commerce, supply chain management, distribution and customer support for
our retail partners and end consumers. Furthermore, our scale enables us to leverage our cumulative consumer insights to
provide a competitive advantage to our brands. We target selling prices that balance our premium positioning with our focus on
affordability to capture a large, diverse and dynamic consumer base.
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Leading Innovation and Product Development Competencies
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 over 1,700 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 employ over 100 dedicated design and product development professionals across
the organization. We are not aware of any facts which would negatively impact our continuing use of any of our material
tradenames, service marks, trademarks, or patents. 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. Recent examples of our innovative, market-leading products from our company’s brands include the following:
•
In Outdoor Products, Bell Helmets launched a partnership with Steve McQueen's estate to introduce a series of helmets
and apparel paying homage to the legendary actor and action sports icon.
• Bushnell introduced its new CelluCORE Live Cellular Trail Camera, a feature-rich trail camera with Dual SIM cellular
connectivity and live streaming video on demand.
• Bushnell Golf’s feature-rich Pro X3 offers accuracy and performance unmatched in the laser rangefinder category. A
recent report showed that 99.3 percent of the 2023 Players Championship field used a Bushnell laser rangefinder to
obtain accurate yardages during competition.
• CamelBak, the global leader in personal hydration products, launched its first cooler backpack in calendar year 2022
with the ChillBak Pack 30, which combines an integrated 6-liter reservoir system for on-the-go hydration along with a
roll-top closure which aids in cooling efficiency and provides added storage for any summer adventure.
• Camp Chef debuted its new Woodwind Pro Pellet Grill, which combines the best of wood pellet grills with the time-
tested tradition of using hard wood chunks, charcoal or wood chips. In one unit, a griller will be able to achieve the
smoke flavor of a tried-and-true stick burner smoker with the ease of using a pellet grill.
• Foresight Sports became the official launch monitor partner of Callaway Golf and Topgolf Entertainment Group. The
partnership further extends the use of Foresight Sports' launch monitor technology throughout Callaway Golf's Tour
and sales channels.
• Fox Racing, the global leader in motocross and mountain bike safety equipment and apparel, entered the performance
training category with men's and women’s lines that were designed to place athlete needs first, ensuring this apparel
exceeds demands when training at their best.
• Giro Sport Design, the cycling world’s design leader, announced the launch of the Ethos Mips and the Ethos Mips
Shield helmets, which feature integrated LED lights and turn signals, controlled via an intuitive, handlebar-mounted
remote, as well as the added protection of Mips Brain Protection System.
• Stone Glacier’s Sky Solus tent was recognized by Outdoor Life as the best tent for bad weather. And the brand
recently expanded into a new category with a line of technical gloves and mitts.
• QuietKat launched the new Lynx model, establishing a new category for our leading off-road e-bike brand, as well as
the all-new 2023 Villager E-Bike, built to transform riders’ urban and weekend adventures.
•
In Sporting Products, new products from Federal and Remington collected prestigious industry awards. American
Rifleman presented its Golden Bullseye to Remington’s Core-Lokt Tipped, and Shooting Illustrated awarded its
Ammunition of the Year to Federal’s 30 Super Carry.
Proven Manufacturing, Global Sourcing, and Distribution Platform
We believe that our advanced 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 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 have developed a methodical approach to sharing our expertise in supply chain, e-commerce and M&A, which we
refer to as our Centers of Excellence, across our operating segments. Our Centers of Excellence provide our brands with
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significant shared resources that can be leveraged to drive growth in revenue and profitability, including expertise in sourcing,
global distribution, enhanced purchasing power, sophisticated e-commerce systems, advanced analytics and a proven M&A
playbook. We believe that our Centers of Excellence enable us to manufacture and distribute products in a more efficient and
strategic manner than our competitors. Additionally, our Centers of Excellence enable our brands to dedicate a greater portion
of their time to creating new, innovative products for consumers and better experiences for customers, enabling us to better
serve their needs and capture market share. With our Centers of Excellence, we have the ability to realize the full potential of
the businesses we acquire. This has become a compelling aspect of our value proposition, which we believe has positioned us as
the acquirer of choice in the outdoor industry. As we invest in our business and acquire more brands, the power of our Centers
of Excellence will continue to grow as we scale and build on these competencies, driving further operating leverage.
Integrated supply chain management is a core focus of our company. We source finished products both domestically and
internationally for global distribution and have teams of local sourcing and quality assurance experts on the ground where our
largest suppliers are located. 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 would be difficult for many of our competitors to replicate.
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. We believe our strong wholesale and retail relationships and diverse product offering provide us with a unique
competitive advantage.
Customers and Marketing
We sell our products through big-box, specialty and independent retailers and distributors such as Academy, Amazon,
Bass Pro Shops/Cabela's, Dick's Sporting Goods, Kiesler Police Supply, Nations Best Sports, Sports Inc., Sports South,
Scheels, Sportsman's Warehouse, Target, and Walmart.
Omni-channel marketing and sales have been a major focus of our business, and we have gained meaningful traction with
our various initiatives. Direct-to-consumer channels, including our brands’ direct-to-consumer websites, owned brick and
mortar retail, mobile device applications and third-party market places, 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. We
have found that direct-to-consumers strategies not only enables us to achieve higher margins, but also benefits the customer by
providing the convenience of accessing our full portfolio of products wherever and whenever they want to shop.
We maintain strong 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 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 allows us to leverage our resources 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.
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 consumers.
Sales to our top ten customers accounted for approximately 33% of our consolidated net sales in fiscal year 2023. In fiscal
year 2023, U.S. customers represented approximately 83% of our sales and customers outside of the U.S. represented
approximately 17% of our sales. Of our fiscal year 2023 sales, approximately 11% was to law enforcement and military
professionals. See Note 18, 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 shooting sports and outdoor recreation 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 and other social
media influencers. Our goal is to strengthen our existing consumers' brand loyalty while at the same time reaching new users of
our products.
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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 feedback on our customer service, and robust
social media tracking and engagement tools that enable us to collect real-time feedback, communicate with end-users and
ensure that our customers and end consumers are satisfied with our products and customer service.
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: Winchester
Ammunition of Olin Corporation, Clarus, CBC Group, Fiocchi Ammunition, Hornady, PMC, and Rio Ammunition in our
Sporting Products categories; Hydro Flask, Contigo, Yeti, Helen of Troy and Nalgene in our Hydration categories; Callaway,
Garmin, Nikon, SkyTrak and Trackman in our Golf categories; Schwinn, Bontrager, Smith, Specialized, Canyon, Shoei and
Alpine Stars in our Action Sports categories; Traeger, Weber, Pit Boss, Blackstone, Solo Stove and Lodge in our Outdoor
Cooking categories; Nikon, Vortex, Leupold, Feradyne, American Outdoor Brands and Good Sportsman Marketing in our
Outdoor Accessories categories; and Columbia, Huk, Patagonia, Orvis and American Fishing Tackle Company in our Fishing
categories.
Seasonality
Our business experiences a certain level of seasonality. Our products are used throughout the year in a number of varying
activities. For example, during the spring and summer months, sales of our products, such as golf accessories and mountain
biking accessories, are in high demand. Similarly, sales of our winter sport accessories increase during the months of October
through December. Finally, sales of our ammunition and premium hunting accessories are generally highest during the months
of August through December due to shipments around the fall hunting season and holidays.
Regulatory Matters
Like many other manufacturers and distributors of consumer products, we are required to comply with numerous laws,
rules, and regulations, including those involving 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 PRPs, 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, 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.
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While we do not manufacture firearms, 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:
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require the licensing of all persons manufacturing, exporting, importing, or selling ammunition as a business;
require labeling and tracking the acquisition and disposition of 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;
limit the 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 national security.
Human Capital
We create products that fuel adventure and enable connection, prioritizing people at all levels of the value chain. Our
employees are the center of our success. We employ approximately 7,000 individuals in the United States and across the globe.
Our employees lead in the fields of manufacturing, brand marketing, distribution, supply chain management, engineering,
product development, e-commerce and finance, among many other talents and specialties. In total, 71 percent of our employees
are in production roles, directly building or distributing world-class outdoor recreation gear and products for our consumers.
We prioritize employee success and well-being through strong corporate infrastructure and local programming that
supports employee engagement, recruiting, professional development, safety, diversity, compensation and benefits. We have no
union-represented employees. We believe that our employee relations generally are strong.
Our value proposition for employees begins with our unique culture, which is centered on an unwavering belief that when
we do well as a business we can do good for our communities, employees and charitable partners. Support for our people drives
us at every level.
Employee Engagement
The importance of two-way communication with employees is critical in the post-pandemic environment. Hybrid work
environments, competition for talent and a heightened sense of strategic awareness across the employee population requires our
leadership to engage directly with our people, hear their ideas and answer their questions.
Our interim chief executive officer and business unit leaders hold regular employee town hall meetings to provide updates
and answer employee questions. We regularly update employees with company news, important notices, our philanthropic
efforts and employee stories through several channels, including our intranet hub, social media and our public-facing website.
Our employee engagement initiatives are especially important across our diverse network, which includes multiple
locations across the globe and a diverse set of working environments, including production, office, hybrid and remote. We
regularly review our content and cadence of communication to ensure our levels of engagement are hitting the mark and driving
continuous improvement.
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Recruiting
Recruiting and retaining talented individuals is paramount to our long-term success. We prioritize the hiring of smart,
energetic and passionate people who have the skillsets to drive value creation while also injecting diverse experiences and
perspectives into our culture and long-term goals. We are active on social media and pursue partnerships with diverse
organizations to expand the reach of our employment pool while ensuring that veterans, people of color, women and others with
unique backgrounds are introduced to our company and open positions.
Professional Development
Investing in our employees is a priority. We deploy a variety of worker training programs on our factory and production
floors, including the use of internal leaders and outside safety trainers. Programs such as tuition reimbursement, internships and
employee scholarship programs are some of the ways we invest in our people and their knowledge. We know these investments
are good not only for our people but for our business.
Safety
We operate in a highly regulated environment, in the U.S. and internationally. U.S. federal, state and local governmental
entities and foreign governments regulate many aspects of our business through product safety standards, laws and regulations.
We have a team of dedicated professionals who oversee various aspects of product safety and compliance in the company.
These teams enhance an already robust local safety ethos to help ensure compliance with product safety laws and regulations
that apply to their products.
Our product safety and compliance personnel have broad and diverse academic and experience credentials and are often
sought out by regulators, law enforcement, other industry participants and internal stakeholders to serve as expert consultants
and witnesses. This hybrid organizational structure, together with robust internal policies and procedures, creates checks and
balances across the product safety landscape to help ensure that we meet our continuing obligations to regulators and consumers
throughout the product life cycles and to keep our employees safe.
On the consumer side, as an outdoor sports and recreation company, we believe that our consumers should be safe when
engaging in the outdoor activity of their choice. We partner with a variety of organizations who promote education and safety
training, support policies that advance safety initiatives and use our brand platforms to educate and share best practices for the
safe use of our products.
Diversity and Inclusion
We continuously look for ways to be a more diverse and inclusive company, from improving our recruiting and marketing
efforts, to listening and educating our employees via local councils, to sponsoring and participation in mentoring programs, to
expanding career growth opportunities and external partnerships.
In fiscal year 2021, we began disclosing diversity and inclusion metrics to provide benchmarks for where we currently
stand, and assist in setting goals for us to strive to meet in the future. Our metrics for the last two fiscal years include:
Statistic
% of U.S. employees identifying as persons of color (non-white)
% of U.S. leadership (manager and above) identifying as persons of color
% of U.S. employees who are female
% of U.S. leadership (manager and above) who are female
% of U.S. employees who are veterans
Compensation
March 31,
2023
19%
9%
27%
26%
7%
2022
20%
10%
28%
29%
7%
We believe in equal pay for equal work. We believe pay and compensation should match the talent, experience and
skillset of a person, and nothing else. We regularly review our compensation practices and benchmark our performance with
others in the industry to ensure we are fulfilling our obligations of fair pay.
Benefits
Our benefit programs offer comprehensive coverage to help protect our employees’ health, family and future, and are an
important part of the total compensation we provide. We offer both company-provided and optional benefits, including basic
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life insurance, medical, prescription, telemedicine, emotional well-being, earned wage access, and an employee product
purchase program. We offer a 401(k) savings plan, with a higher-than-average match for participating employees. Each year we
evaluate our program offerings to ensure alignment with market practices that best meet the holistic needs of our employees and
their families.
The Vista Outdoor Employee Assistance Fund was created in fiscal year 2021 to help employees who are facing financial
hardship immediately following a natural disaster or an unforeseen personal hardship. In fiscal year 2022, the fund aided five
employees facing urgent situations. In fiscal year 2023, the fund aided an additional five employees. This fund relies primarily
on payroll deductions from employees and support from Vista Outdoor. Every contribution helps and, when combined with the
donations, can provide a tax-free grant to help fellow employees in need when they are facing an unexpected situation.
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 "Investors" heading. These include our annual report, quarterly reports on Form 10-Q, current reports on Form 8-K,
proxy statements 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.
Glossary and Acronyms
2022 ABL Revolving Credit Facility: Refers to the Vista Outdoor Inc. senior secured asset-based credit facility comprised of
$600 million revolving credit commitments under the Asset-Based Revolving Credit Agreement, dated as of August 5, 2022,
among Vista Outdoor Inc., the Additional Borrowers from time to time party thereto, the Lenders party thereto and Capital One,
National Association.
2022 Term Loan: Refers to the Term Loan Credit Agreement, dated as of August 5, 2022, among Vista Outdoor Inc. and JP
Morgan Chase Bank, N.A.
2021 ABL Revolving Credit Facility: Refers to the Vista Outdoor Inc. senior secured asset-based credit facility comprised of
$450 million revolving credit commitments under the Asset-Based Revolving Credit Agreement, dated as of March 31, 2021,
among Vista Outdoor Inc., the Additional Borrowers from time to time party thereto, the Lenders party thereto and Capital One,
National Association.
4.5% Notes: Refers to the Vista Outdoor Inc. secured senior notes due 2029 (the “4.5% Notes”)
Lake City: Refers to the Lake City Army Ammunition Plant operated by a subsidiary of Olin Winchester.
Vista Outdoor, the Company, we, our, and us: Refers to Vista Outdoor Inc.
ATF: Bureau of Alcohol, Tobacco, Firearms and Explosives
NICS: National Instant Criminal Background Check System
PRP: Potentially responsible party
Separation or Spin-Off: Refers to the previously announced tax-free spinoff of our outdoor products business into an
independent publicly-traded company.
Organic: Organic sales, organic gross-profit and organic operating income is a non-GAAP measure of sales, gross-profit and
operating income, excluding the impacts of acquisitions from year-over-year comparisons. Amounts from acquisitions are
considered inorganic for the twelve months after acquisition.
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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.
Risks Related to Our Operations
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 or another pandemic, epidemic or infectious disease outbreak, 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.
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 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 all of our suppliers. As a result, we could be subject to increased costs, supply interruptions 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.
In addition, our supply contracts are generally not exclusive. As a result, supplies we may need may be allocated to other
customers, such as where necessary to fulfill priority orders to the government or during times of elevated demand.
Additionally, our suppliers may provide similar supplies and materials to our competitors, some of which could potentially
purchase these supplies and materials in significantly greater volume than we do. Our competitors could enter into restrictive or
exclusive arrangements with these suppliers that could impair or eliminate our access to necessary supplies and materials.
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.
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 certain important
components, finished goods, and raw materials. The costs of these components, finished goods, and raw materials 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 or another pandemic, epidemic or infectious disease outbreak. We also use
numerous commodity materials in producing and testing our products, including copper, lead, plastics, tungsten, bismuth, 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, microchips metals, transportation and fuel increase our production and shipping
costs. A significant shortage, increased prices or interruptions in the availability of these commodities and components 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.
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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 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.
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 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 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;
high levels of retailer and distributor inventory;
complexity in our integrated supply chain;
increased raw material and/or other commodity 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 or another pandemic, epidemic, or infectious disease outbreak, in markets in which we, our customers,
suppliers and manufacturers operate;
changes in laws and regulations that may affect the marketability of our products;
the domestic political environment, including debate over the regulation of ammunition and related products; and
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uncertainties related to changes in macroeconomic and/or global conditions, including as a result of the war in Ukraine
and the imposition of sanctions on Russia.
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.
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
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record a significant impairment charge in the period during which such determination was made, which would negatively affect
our results of operations. For example, we have recorded impairment charges to the goodwill and identifiable indefinite-lived
intangible assets associated with the Outdoor Products reporting segment for fiscal year 2023.
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, employee retention, 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 results of operations could be materially harmed if we are unable to forecast demand for our products accurately.
We often schedule internal production, place orders, and at times pre-pay for products, components and materials with
third-party suppliers before receiving firm orders from our customers. In addition, orders from customers are generally subject
to cancellation at any time before acceptance. If we fail to accurately forecast customer demand or if orders are cancelled before
delivery, 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;
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 or another pandemic, epidemic, or
infectious disease outbreak;
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
the domestic political environment, including debate over the regulation of ammunition and related products.
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Inventory levels in excess of customer demand may result in inventory write-downs and the sale of excess inventory on
less favorable terms, including discounted prices or payment terms, 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.
A disruption in the service or a significant increase in the cost of our primary delivery and shipping services for our
products and component parts or a significant disruption at shipping ports could have a negative impact on our business.
We use various carriers including Federal Express (“FedEx”) for a significant portion of ground shipments of products to
our U.S. customers. We use air carriers and ocean shipping services for most of our international shipments of products.
Furthermore, many of our finished goods and many of the components we use to manufacture our products are shipped to us via
air carrier and shipping services. If there is any significant interruption in service by such providers or at airports or shipping
ports in the future, we may be unable to engage alternative suppliers or to receive or ship goods through alternate sites in order
to deliver our products or receive finished goods or components in a timely and cost-efficient manner. As a result, we could
experience manufacturing delays, increased manufacturing and shipping costs and lost sales as a result of missed delivery
deadlines and product demand cycles. Any significant interruption in FedEx services, other ground carriers, air carrier services,
ship services or at airports or shipping ports could have a negative impact on our business. Furthermore, if the cost of delivery
or shipping services increases significantly and the additional costs cannot be covered by product pricing, our operating results
could be materially adversely affected.
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We face risks relating to our international business operations 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;
uncertainties related to changes in macroeconomic and/or global conditions, including as a result of the war in Ukraine
and the imposition of sanctions on Russia;
the occurrence of natural disasters, public health crises or other significant catastrophic events, such as the global
COVID-19 pandemic or another pandemic, epidemic, or infectious disease outbreak, in countries in which we operate;
local laws and regulations, including those governing labor, product safety and environmental protection;
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.
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.
Some of our products 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 as a result of 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 affect our technology licenses, thereby reducing the functionality and features of our
products, and adversely affect our business, financial condition or results of operations.
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.
We have experienced recent changes in our senior management team as a result of the resignations of our Chief Financial
Officer in November 2022, our Chief Executive Officer in February 2023, and our General Counsel and Corporate Secretary in
February 2023. These changes to our executive management team may be disruptive to, or cause uncertainty in, our business,
results of operations and the price of our common stock. Leadership transitions are inherently difficult to manage and may
result in the loss of institutional knowledge and changes to business strategy or objectives. In addition, these changes have the
potential to negatively impact our operations and relationships with employees and customers due to increased or unanticipated
expenses, operational inefficiencies, uncertainty regarding changes in strategy, decreased employee morale and productivity
and increased turnover.
The inability to attract and retain a new Chief Executive Officer, Chief Financial Officer and other members of the
executive management team for the new Outdoor Products company could adversely affect our ability to operate following the
Planned Separation. If we are unable to attract and retain qualified candidates to become the permanent Chief Financial Officer
and permanent Chief Executive Officer in a timely manner, our financial performance and ability to meet operational goals and
strategic plans may be adversely impacted. The interim nature of our current Chief Financial Officer and Chief Executive
Officer may also distract our employees and management team and lead to attrition of qualified employees, increasing our
hiring and retention risks.
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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 or another pandemic, epidemic or infectious disease outbreak), cyber-attack, terrorist
attack, explosion or other catastrophic event could cause delays in producing or procuring products, 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, fire or explosion or other catastrophic event
could impair our ability, or the ability of our suppliers 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.
Risks Related to the Markets for Our Products
Our sales are highly dependent on purchases by several large 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 and distribution industry serving the outdoor sporting and recreation market has become relatively
concentrated. Sales to our top ten customers accounted for approximately 33% of our consolidated net sales in fiscal year 2023.
Further consolidation in the U.S. retail and distribution industry could increase the concentration of our customer base in the
future.
Although we have long-established relationships with many of our customers, as is typical in the markets in which we
compete, we generally do not have long-term sales agreements with our customers. As such, we are dependent on individual
purchase orders. As a result, prior to acceptance these retail customers are 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. In addition, we sell products to our customers on credit, which can expose us to financial risk in the event
customers encounter insolvency, credit problems or other financial difficulties. 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 or another pandemic, epidemic, or infectious disease outbreak.
The loss of any one or more of our large customers or significant or numerous cancellations, reductions, delays in
purchases or payments, 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.
Competition in our industry may hinder our ability to execute our business strategy, maintain 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: Winchester Ammunition of Olin Corporation, Clarus, CBC Group, Fiocchi Ammunition, Hornady,
PMC, and Rio Ammunition in our Sporting Products categories; Hydro Flask, Contigo, Yeti, Helen of Troy and Nalgene in our
Hydration categories; Callaway, Garmin, Nikon, SkyTrak and Trackman in our Golf categories; Schwinn, Bontrager, Smith,
Specialized, Canyon, Shoei and Alpine Stars in our Action Sports categories; Traeger, Weber, Pit Boss, Blackstone, Solo Stove
and Lodge in our Outdoor Cooking categories; Nikon, Vortex, Leupold, Feradyne, American Outdoor Brands and Good
Sportsman Marketing in our Outdoor Accessories categories; and Columbia, Huk, Patagonia, Orvis and American Fishing
Tackle Company in our Fishing categories.
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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 result in price reductions, reduced profits, extensions of credit, 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 or extend more credit 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, and 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 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 and components 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 and components is dependent, in part, on our
relationships with our third-party suppliers, some of whom are also our competitors. 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.
Risks Related to Our Brands and Reputation
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
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•
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.
Competitors have imitated and attempted to imitate, and will likely continue to imitate or attempt to imitate, our products
and technology, particularly in countries overseas where counterfeiting is more prevalent. If we are unable to protect or
preserve our brand image and proprietary rights, our business may be harmed. As we increase our sales overseas, we may
experience increased counterfeiting of our products.
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
individuals. As a result, our brands or 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.
Our association with the firearms industry may affect our relationships with certain third parties that are critical to our
success.
We utilize the services of numerous financial institutions, resellers, credit card issuers, insurance carriers, suppliers,
transportation providers and other service providers. Some third parties, as well as some customers and investors, have decided
or may in the future decide to cease doing or limit their business with companies associated with the firearms industry or
impose unacceptable or costly restrictions on our business due to reputational concerns, pressure from politicians or activists, or
high-profile media coverage of events. These decisions could have a material adverse impact on our business, operating results
and financial condition.
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 41 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 conflicting views
across brands.
Legal and Regulatory Risks
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, deceptive advertising, 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.
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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 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 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 U.S. 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
could be harmed if we fail to enforce and protect our intellectual property rights. Even if the outcome is favorable, an
interference proceeding could result in substantial costs to us and disrupt our business.
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. Any such 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.
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We are subject to extensive regulation and could incur fines, penalties, business disruption 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 to which our business is subject. Our failure to comply with
applicable federal, state and local laws and regulations may result in our being subject to claims, lawsuits, fines, business
disruption, and adverse publicity that could have a material adverse effect on our business, results of operations and financial
condition. For example, the Minnesota Department of Health has alleged one of our factories was in violation of the Minnesota
Lead Poisoning Act for take-home lead on employees, and ordered us to conduct certain testing. In the event we are unable to
adequately prove the lack of, or mitigate, lead migration from our factory, we could be subject to fines, corrective actions
requests and business interruption. 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 can be 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 U.S.
In recent years, federal and state courts and legislatures have increased their attention on the regulation of firearms and
ammunition. The laws passed and bills proposed to date are extremely varied and include, without limitation, laws and court
decisions increasing the age of ownership, imposing additional licensing or registration requirements for the purchase or
ownership of firearms or ammunition, curtailing or creating liability for certain types of advertising, and allowing civil causes
of action against marketers and sellers of firearms and ammunition arising out of the criminal misuse of their products. These
laws and decisions could impose liability on manufacturers of firearms or ammunition or effectively ban or severely limit the
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.
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 U.S. 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.
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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.
Risks Related to Macro-Economic Conditions
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase
significantly.
A portion of our indebtedness consists of term loans and 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 (loss) and cash flows will correspondingly decrease. Assuming
$485 million of variable-rate indebtedness (which was the amount of our indebtedness outstanding as of March 31, 2023,
considering our interest rate swaps), a change of 1/4 of one percent in interest rates would result in a $1.2 million change in
annual estimated interest expense. Even if we enter into additional interest rate swaps in the future in order to reduce future
interest rate volatility, we may not fully mitigate our future interest rate risk.
Changes in U.S. and global trade policies, including new and potential tariffs on goods we import or on products we export
to other countries, 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 U.S. 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 U.S. 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 U.S. 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.
The global economy has been negatively impacted by the war in Ukraine. Furthermore, governments in the U.S., United
Kingdom, and European Union have each imposed export controls on certain products and financial and economic sanctions on
certain industry sectors and parties in Russia. Although we have no operations in Russia or Ukraine, we may experience
shortages in materials and increased costs for transportation, energy, and raw material due in part to the negative impact of the
war in Ukraine on the global economy. Further escalation of geopolitical tensions related to the war, including increased trade
barriers or restrictions on global trade, could result in, among other things, cyberattacks, supply disruptions, lower consumer
demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and
supply chain. In addition, the effects of the ongoing conflict could heighten many of our known risks described in this Annual
Report.
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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 allowance of deduction 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.
In particular, we are affected by the impact of changes to tax laws or related authoritative interpretations. A change in
authority interpretation to the U.S. tax code, related tax accounting guidance, and regulatory guidance as well as state tax
implications or other legislation changes may cause variability in our future tax rate.
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 or another pandemic,
epidemic, or infectious disease outbreak, or geopolitical events, such as the war in Ukraine, could make it more difficult and
more expensive for us to obtain financing. In addition, the pendency of the Planned Separation may adversely affect our ability
to obtain financing. We cannot assure you 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.
Fluctuations in foreign currency exchange rates may adversely affect our financial results.
During the fiscal year ended March 31, 2023, approximately 17% of our revenue was generated from sales outside the
U.S. Revenues from foreign operations (and the related expense) are 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.
General economic conditions affect our results of operations.
Our revenues are affected by economic conditions and consumer confidence worldwide, but especially in the U.S. In
times of economic uncertainty or high inflation, 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 or another pandemic, epidemic, or infectious disease outbreak, high inflation,
or the war in Ukraine, 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 financial condition or results of operations, such as the
impairment charges we recorded in our fiscal year 2023 to the goodwill and indefinite-lived intangible assets associated with
our Outdoor Products reporting segment. 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 uncollectible receivables. In addition, we face increased risk of order reduction or cancellation when
dealing with financially ailing customers or customers struggling with economic uncertainty. Our risk of uncollectible
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receivables and order cancellations has been elevated due to retail store closures in many locations that occurred during the
height of the COVID-19 pandemic, which has adversely affected many of our customers, and may be further elevated in the
event of bank failures or credit tightening conditions affecting 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
economic conditions there is also increased risk that inventories may not be liquidated in an efficient manner and may result in
us having excess levels of inventory.
Risks Related to Our Common Stock and Indebtedness
Our debt covenants may limit our ability to complete acquisitions, incur debt, make investments, sell assets, merge or
complete other significant transactions.
Our 2022 ABL Revolving Credit Facility and 2022 Term Loan contain a number of restrictive covenants that impose
significant operating and financial restrictions on us and our subsidiaries and limits 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
significantly change the nature of our business.
The indenture governing our 4.5% 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 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 2022 ABL Revolving Credit Facility and 2022 Term Loan could result in an
event of default under the 2022 ABL Revolving Credit Facility and 2022 Term Loan, which could allow our creditors to
accelerate the related indebtedness and proceed against the collateral that secures such indebtedness. Similarly, a failure to
comply with the covenants in the indenture governing our 4.5% Notes could result in an event of default thereunder, which
could allow the holders of the 4.5% Notes to accelerate such notes. The 2022 ABL Revolving Credit Facility and 2022 Term
Loan and the indenture governing the 4.5% 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 the event that we incur additional indebtedness in connection with the Planned Separation, we expect that such
indebtedness will also include restrictive covenants similar to those described above. See “Risks Related to our Planned
Separation—We may incur additional indebtedness in connection with the Planned Separation, and such additional
indebtedness could adversely impact our business, financial condition or results of operations.”
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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:
•
•
•
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.
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.
Risks Related to our Planned Separation
The Planned Separation of our Outdoor Products and Sporting Products segments into two independent, publicly-traded
companies is subject to various risks, uncertainties and conditions and may not be completed in accordance with the
expected plan or at all.
On May 5, 2022, we announced that our Board of Directors unanimously approved a plan to separate our Outdoor
Products and Sporting Products segments into two independent, publicly-traded companies via a spin-off of our Outdoor
Products segment. The Planned Separation is subject to final approval of the terms of the transaction by our Board of Directors
and other customary conditions, including, among other things, the receipt of a tax opinion from tax advisors concerning the
tax-free nature of the transaction for U.S. federal income tax purposes, the effectiveness of a Form 10 registration statement that
Outdoor Products SpinCo will file with the SEC, approval of listing of the common stock of Outdoor Products SpinCo on the
stock exchange chosen for the listing of such common stock and no other event or development existing or having occurred that
our Board of Directors determines, in its sole and absolute discretion, makes it inadvisable to effect the Planned Separation or
related transactions. The Planned Separation is complex in nature, and unanticipated developments or changes, including
changes in the law, the macroeconomic environment, competitive conditions of our markets, approvals or consents that we may
seek, the uncertainty of the financial markets, and challenges in executing the necessary transactions, could delay or prevent the
completion of the Planned Separation, or cause the Planned Separation to occur on terms or conditions that are different or less
favorable than desired or expected.
While we are pursuing the Planned Separation, and whether or not the transaction is completed, our ongoing businesses
may be adversely affected, including as a result of one or more of the following:
•
•
•
•
the diversion of our management’s attention from operating and growing our business as a result of the significant
amount of our management’s time and effort required to execute the Planned Separation;
foreseen and unforeseen costs and expenses that will be incurred in connection with the Planned Separation, including
accounting, tax, legal and other professional services costs;
challenges in separating our businesses, including separating the assets and liabilities, infrastructure and personnel of
these businesses, potentially resulting in delays and additional costs in achieving the completion of the Planned
Separation;
disruptions to and potential adverse impacts on our relationships with our suppliers, customers and others with whom
we do business;
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•
•
•
•
challenges in establishing the desired capital structure for the two businesses, including challenges accessing the
financial markets;
uncertainty among our key employees concerning their future with us or with Outdoor Products SpinCo, leading to
potential distraction, as well as potential difficulty in attracting, retaining or motivating key employees during the
pendency of the Planned Separation and following its planned completion;
potential adverse impact on our credit ratings; and
potential negative reactions from the financial markets if we fail to complete the Planned Separation as currently
expected, within the anticipated time frame or at all.
In addition, on October 21, 2022, Sudhanshu Priyadarshi provided the Board with notice of his decision to resign from the
position of Chief Financial Officer of the Company to pursue another opportunity. Mr. Priyadarshi continued with the Company
through the release of the Company's financial results for the second quarter of fiscal year 2023 and departed in November
2022. Further, on February 2, 2023, the Board announced that Christopher T. Metz resigned, effective as of February 1, 2023,
from his position as Chief Executive Officer at the request of the Board, based on the Board's loss of confidence in his
leadership for reasons not involving financial reporting or internal controls. As a result of the departures of Mr. Priyadarshi and
Mr. Metz, we have undertaken a search to identify and hire a permanent Chief Executive Officer and a permanent Chief
Financial Officer for Outdoor Products SpinCo. If we are unable to attract and retain qualified candidates to become the
permanent Chief Financial Officer and permanent Chief Executive Officer of Outdoor Products SpinCo in a timely manner, the
Planned Separation could be delayed.
The completion of the Planned Separation may not achieve some or all of the intended benefits and may adversely affect our
business.
Even if the Planned Separation is completed, we may not realize some or all of the intended benefits from the separation
of our businesses, and the Planned Separation may adversely affect our business. A spin-off of our Outdoor Products segment
will result in us being a smaller, less diversified company, making us more vulnerable to changing market and economic
conditions. Our Sporting Products business will be more concentrated in ammunition products, and we will have greater
exposure to legal, regulatory, political and other risks relating to the ammunition industry. In addition, as a smaller company,
our ability to absorb costs may be negatively impacted, and we may be unable to obtain financing, insurance, goods or services
at prices or on terms that are as favorable as those obtained by us prior to the Planned Separation. Any of these factors could
have a material adverse effect on our business, financial condition, results of operations, cash flows, business prospects and the
trading price of our common stock. We cannot assure you that the combined value of the common stock of the two publicly
traded companies following the completion of the Planned Separation will be equal to or greater than what the value of our
common stock would have been had the Planned Separation not occurred.
The Planned Separation may have an adverse effect on the price of our common stock.
The changes in our operational and financial profile resulting from the Planned Separation may not meet some or all of
our stockholders’ investment strategies, which could cause investors to sell their shares and otherwise decrease demand for
shares of our common stock. Sales of our common stock could cause the market price of our common stock to decrease, and the
market price of our common stock may be subject to greater volatility following the completion of the Planned Separation.
The Planned Separation and related transactions may expose us to potential liabilities arising out of state and federal
fraudulent conveyance laws and legal distribution requirements.
The Planned Separation could be challenged under various state and federal fraudulent conveyance laws. An unpaid
creditor could claim that we did not receive fair consideration or reasonably equivalent value in the Planned Separation, and
that the Planned Separation left us insolvent or with unreasonably small capital or that we intended or believed we would incur
debts beyond our ability to pay such debts as they mature. If a court were to agree with such a plaintiff, then such court could
void the Planned Separation as a fraudulent transfer and could impose a number of different remedies, including returning the
assets or the shares of Outdoor Products SpinCo common stock or providing us with a claim for money damages against
Outdoor Products SpinCo in an amount equal to the difference between the consideration received by us and the fair market
value of Outdoor Products SpinCo at the time of the Planned Separation.
The Planned Separation could result in significant tax liability to the Company and its stockholders, and tax rules could
limit our ability to enter into certain transactions for a period of time following the Planned Separation.
The distribution of shares of Outdoor Products SpinCo to our stockholders in the Planned Separation is expected to
qualify as tax-free under Section 355 of the U.S. Internal Revenue Code. We intend to obtain an opinion from our tax advisors
as to the tax-free nature of the Planned Separation. This opinion will be based on, among other things, various factual
assumptions and representations by us and Outdoor Products SpinCo regarding the past and future conduct of the companies’
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respective businesses and other matters. If any of these assumptions or representations are, or become, inaccurate or incomplete,
reliance on the tax opinion may be jeopardized. The opinion will not be binding on the Internal Revenue Service (the “IRS”),
and it is possible that the IRS will take a contrary position. If the IRS determined on audit that the distribution is taxable, both
we and our stockholders could incur significant U.S. federal income tax liabilities.
In addition, following the Planned Separation, compliance with the requirements for a tax-free spin-off under Section 355
of the Internal Revenue Code may limit our ability to enter into certain transactions that would otherwise be advantageous to us.
For example, transactions such as share repurchases, certain major asset dispositions, and business combination and other
strategic transactions with other businesses involving the issuance or acquisition of our stock may in some cases cause the
Planned Separation to become taxable if undertaken within a period of time following the completion of the Planned
Separation. As a result, we may determine to limit or forgo entirely such transactions in order to maintain the tax-free status of
the Planned Separation.
We may incur additional indebtedness in connection with the Planned Separation, which could adversely impact our
liquidity and strategic flexibility.
In connection with the Planned Separation, we may incur additional indebtedness, which may include, among other
things, borrowings under credit facilities or the issuance of debt securities in one or more public or private offerings. Our target
capital structure for the Company, following the completion of the Planned Separation, includes a target leverage level of up to
approximately 2.0 times EBITDA, although we cannot assure you that additional indebtedness will be available on terms we
find acceptable or at all. Any such additional indebtedness would require a portion of our cash flow to be allocated to debt
service payments instead of other business purposes, thereby reducing the amount of cash flow available for working capital,
capital expenditures, acquisitions and other general corporate purposes. Furthermore, any such additional indebtedness could
impose operating and financial restrictions on us that limit our growth and the implementation of our business strategy. See
“Risks related to our common stock and indebtedness—Our debt covenants may limit our ability to complete acquisitions, incur
debt, make investments, sell assets, merge or complete other significant transactions.”
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Facilities—As of March 31, 2023, we occupied manufacturing, assembly, warehouse, test, research, development, and
office facilities. All our facilities are leased unless noted otherwise below.
As of March 31, 2023, our segments had significant operations at the following locations, which include office,
manufacturing, and distribution facilities:
Sporting Products
Outdoor Products
Corporate
* denotes owned properties
*Lewiston, ID; *Anoka, MN; *Lonoke, AR; *Sweet Home, OR
Petaluma, CA; Scotts Valley, CA; Rantoul, IL; Hyde Park, UT; Overland Park, KS;
Olathe, KS; Monticello, MS; Manhattan, MT; Lares, PR; *Oroville, CA; Bozeman,
MT; Eagle, CO; San Diego, CA; Mountain View, AR; Seymour, MO; Stockton, CA;
Irvine, CA; Barcelona, Spain
Anoka, MN
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.
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
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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.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND
ISSUER PURCHASES OF EQUITY SECURITIES (Amount in thousands except price per share)
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 15, 2023 was 2,826.
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
On February 3, 2022, we announced that the Board of Directors authorized a two-year share repurchase program (the
"2022 Share Repurchase Program") pursuant to which we may repurchase up to $200,000 of our common stock. The 2022
Share Repurchase Program expires on January 24, 2024. The shares can be purchased from in open market, block purchase, or
negotiated transactions, subject to compliance with applicable laws and regulations. The repurchase authorization also allows us
to make repurchases under Rule 10b5-1 of the Securities Exchange Act of 1934. The repurchase program does not require us to
acquire a specific number of shares and it will remain in effect until completed or it expires. The repurchase program is
currently well below the covenants in our 2022 ABL Revolving Credit Facility and 2022 Term Loan that limit our share
repurchases.
The following table summarizes our share repurchases during the fourth quarter of fiscal year 2023:
Period
December 26, 2022 - January 22, 2023
January 23, 2023 - February 19, 2023
February 20, 2023 - March 31, 2022
Fiscal quarter ended March 31, 2023
Total number of
shares
repurchased (1)
Average price
paid per share (1)
Total number of
shares
repurchased as
part of publicly
announced plan
or programs
Approximate
number of shares
that may yet be
repurchased
under the plan or
programs (2)
1
1
102
104
24.37
26.49
28.19
28.14
—
—
—
—
6,743
(1) The total number of shares repurchased was 104 shares withheld to pay tax withholding obligations upon vesting of
shares of restricted stock units, performance shares, or upon exercise of stock options, that were granted under our equity
incentive plans. The repurchase of these awards are in order to satisfy the payroll tax withholding obligations are not considered
as purchases of shares of common stock under any of publicly announced repurchase programs.
(2) There were no share repurchases during fiscal year 2023. As of March 31, 2023, the remaining amount to be
repurchased was $186,105. The approximate number of shares that may yet be repurchased under the 2022 Share Repurchase
program of 6,743 was calculated using the Vista Outdoor closing stock price of $27.71 per share on March 31, 2023.
Stockholder Return Performance Graph
The following graph compares, from March 31, 2018 through the March 31, 2023 fiscal year end, the cumulative total
return for our common stock with the comparable cumulative total return of two indexes: the Standard & Poor’s 500 Index
(“S&P 500”) and the Standard & Poor’s 600 Smallcap Index (“S&P 600”). The S&P 500 tracks the aggregate price
performance of equity securities of 500 large-cap companies that are actively traded in the U.S., and is considered to be a
leading indicator of U.S. equity securities. The S&P 600 is a market value-weighted index that tracks the aggregate price
performance of equity securities from a broad range of small-cap stocks traded in the U.S.
The graph assumes that on March 31, 2018, $100 was invested in our 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.
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250
225
200
175
150
125
100
75
50
25
Comparison of Total Return
219
172
141
197
141
150
170
156
126
100
100
100
100
107
49
98
73
54
03/31/18
03/31/19
03/31/20
03/31/21
03/31/22
03/31/23
Vista Outdoor Inc.
S&P 500
S&P Small Cap 600
ITEM 6. RESERVED
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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 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 unless otherwise indicated)
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 U.S. 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 in Part II, Item 8 of 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 Estimated Credit Losses
We maintain an allowance for credit losses related to accounts receivable for future expected credit losses resulting from
the inability or unwillingness of our customers to make required payments. We estimate the allowance based upon historical
bad debts, current customer receivable balances, age of customer receivable balances, and the customers' financial condition
and in relation to a representative pool of assets consisting of a large number of customers with similar risk characteristics. The
allowance is adjusted as appropriate to reflect differences in current conditions as well as changes in forecasted macroeconomic
conditions.
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
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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.
Accounting for goodwill and indefinite-lived intangibles
We performed our annual testing of goodwill in accordance with our accounting policies described in Note 1, Significant
Accounting Policies. The impairment assessment compares the fair value of each reporting unit to its carrying value.
Impairment is measured as the amount by which the carrying value of a reporting unit exceeds its fair value.
To perform the annual quantitative goodwill impairment testing, we prepared valuations of our reporting units using both
an income and market approach. The value estimated under the income approach, using a discounted cash flow model was
weighted at 75%, and the estimated value derived from the guideline company market approach method was weighted at 25%.
We developed the discounted cash flow analysis, using our assumptions about forecasted revenues and operating margins,
capital expenditures, and changes in working capital are based on our plan, as reviewed by the Board of Directors, and assumed
a terminal growth rate thereafter. The discounted cash flow analysis was derived from valuation techniques in which one or
more significant inputs are not observable (Level 3 fair value measures). A separate discount rate was determined for each
reporting unit and these cash flows were then discounted to determine the fair value of the reporting unit. The discount rate
reflected a weighted-average cost of capital, which was calculated, in part based on observable market data. Some of this data
(such as the risk free or treasury rate and the pretax cost of debt) were based on the market data at a point in time. Other data
(such as the equity risk premium) were based upon market data over time for a peer group of companies. Also factoring into the
discount rate was a market participant’s perceived risk (such as the company specific risk premium) in the valuation implied by
the sustained reduction in our stock price. There is inherent uncertainty associated with key assumptions used in our impairment
testing.
Under the market approach, we applied the Guideline Public Company Method ("GPCM"). Selected peer sets are based
on close competitors, publicly traded companies and reviews of analysts' reports, public filings, and industry research. This
market approach method estimates the price reasonably expected to be realized from the sale of the reporting unit based on
comparable companies. In order to assess the reasonableness of the calculated fair values of our reporting units, we also
compared the sum of the reporting units’ fair values to our market capitalization and calculate an implied control premium (the
excess of the sum of the reporting units’ fair values over the market capitalization). We evaluated the control premium by
comparing it to control premiums of recent comparable transactions. If the implied control premium was not reasonable in light
of this assessment, we reevaluated our fair value estimates of the reporting units by adjusting the discount rates and other
assumptions as necessary.
The decline in fair value of our reporting units was significantly impacted by a sudden decline in the demand of products
related to certain of our recent acquisitions, which resulted in lower forecasted revenues, operating margins, and operating cash
flows as compared to our valuation at acquisition date. Our estimates of the fair values of the reporting units were also
influenced by higher discount rates in the income-based valuation approach as a result of increasing market to equity risk
premiums, company specific risk premiums and higher treasury rates, since the acquisition dates. The weighted average cost of
capital used in the goodwill impairment testing ranged between 10.5% and 17.0%, which was derived from the financial
structures of comparable companies corresponding to the industry of each reporting unit.
As a result, we recognized impairment losses equal to the full carrying value of goodwill of $248,254, $68,353, and
$12,349 allocated to the reporting units of Fox Racing, Simms Fishing, and QuietKat, respectively, and partial goodwill
impairment charges of $3,799 related to our Stone Glacier reporting unit. We determined that the goodwill relating to our other
reporting units was not impaired as the fair value exceeded the carrying value. In order to assess the reasonableness of the
calculated fair values of our reporting units, we also compared the sum of the reporting units’ fair values to our market
capitalization and calculated an implied control premium (the excess of the sum of the reporting units’ fair values over the
market capitalization). We evaluated the control premium by comparing it to control premiums of recent comparable
transactions. If the implied control premium had not been reasonable in light of this assessment, we would reevaluate our fair
value estimates of the reporting units by adjusting the discount rates and other assumptions as necessary.
Our Ammunition, Golf , Stone Glacier and Outdoor Cooking reporting units comprise our remaining goodwill at
March 31, 2023. As of the fiscal year 2023 annual testing measurement date, the fair value of our Stone Glacier and Outdoor
Cooking reporting units was less than 10% higher than their carrying value. For those two reporting units, if we assumed a one
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percent increase in discount rate, we would have recorded additional goodwill impairment of approximately $11,000. If the
reporting units do not perform to expected levels or there are adverse changes in certain macroeconomic factors, the related
goodwill may be at risk for impairment in the future. We cannot predict the occurrence of certain events or changes in
circumstances that might adversely affect the carrying value of goodwill. We continue to monitor the evolving macroeconomic
landscape. Rising interest and income tax rates could impact the weighted average cost of capital used in our estimates of fair
value for our reporting units. Additionally, high inflation may continue to adversely affect the demand and profitability of our
reporting unit products.
Before completing our goodwill impairment test, we first tested our indefinite-lived intangible assets. We performed a
step zero analysis on nine of our indefinite-lived tradenames. We performed a step one analysis on our remaining indefinite-
lived tradenames, which resulted in impairment losses of $21,200 and $20,400, related to the Fox Racing and Simms Fishing
indefinite-lived tradename assets, respectively. We determined the fair value of the indefinite-lived tradenames related to our
Bell and Giro tradenames was greater or equal to the carrying value, and no impairment was recorded. The carrying value of the
indefinite lived intangible assets related to Fox Racing and Simms Fishing after the impairment was $85,000 and $30,000,
respectively at March 31, 2023. We determined the fair value of our Fox Racing, Simms Fishing, Bell Cycling, and Giro
indefinite-lived tradenames using royalty rates of 3.0%, 3.0%, 1.5%, and 1.5% respectively.
We estimate fair value to assess the recoverability of our goodwill and indefinite lived intangible assets using a discounted
cash flow model. Our assumptions used to develop the discounted cash flow analysis require us to make significant estimates
regarding forecasted revenues and operating margins, projected capital expenditures, changes in working capital, and
appropriate discount rates. 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 indefinite lived intangible assets 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 indefinite lived intangible assets for impairment indicators.
Business Combinations
We allocate the purchase price, including contingent consideration, of our acquisitions to the assets and liabilities
acquired, including identifiable intangible assets, based on their fair values at the date of acquisition. The fair values are
primarily based on third-party valuations using our management assumptions that require significant judgments and estimates.
The purchase price allocated to intangibles is based on unobservable factors, including but not limited to, projected revenues,
expenses, customer attrition rates, royalty rates, and weighted average cost of capital, among others. The weighted average cost
of capital uses a market participant’s cost of equity and after-tax cost of debt and reflects the risks inherent in the cash flows.
The unobservable factors we use are based upon assumptions believed to be reasonable, but are also uncertain and
unpredictable, as a result these estimates, and assumptions may require adjustment in the future if actual results differ from our
estimates.
Contingent Consideration
Our approach to valuing the initial contingent consideration associated with the purchase price uses unobservable factors
such as projected revenues and expenses over the term of the contingent earn-out period, discounted for the period over which
the contingent consideration is measured, and volatility rates. Based upon these assumptions, the initial contingent
consideration is then valued using a Monte Carlo simulation analysis in a risk-neutral framework. As of March 31, 2023, the
contingent consideration liability consists of the estimated amounts due for earn-out payments from fiscal year 2024 through
2026. On a recurring basis, we adjust the contingent consideration liability to fair value based on the estimated probability of
achieving the earn out targets and changes in any of the other Level 3 inputs above. To the extent our estimates change in the
future regarding the likelihood of achieving these targets, we may need to record material adjustments to our contingent
consideration liabilities.
See Note 1, Significant Accounting Policies, to the consolidated financial statements in Part II, Item 8 of this Annual
Report, for discussion of new accounting pronouncements.
Executive Summary
Financial Highlights and Notable Events of fiscal year 2023
• Net sales increased $35,186 or 1.2%, over the prior fiscal year.
• Sporting Products net sales increased $20,041, or 1.2%.
• Outdoor Products net sales increased $15,145, or 1.2%.
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• Net cash provided by operating activities increased $167,874 from the prior fiscal year to $486,185.
• Operating income (loss) decreased $538,367 to $107,855 or (83.3)% from the prior fiscal year.
•
Impairment expense on our Goodwill and indefinite-lived Tradenames of $374,355 was recorded in our fourth fiscal
quarter.
• We acquired Fox Racing and Simms Fishing during the second fiscal quarter of 2023. See Note 7, Acquisitions and
Divestitures, of the consolidated financial statements in Part II, Item 8 of this Annual Report, for a discussion of our
acquisitions during fiscal year 2023.
• On August 5, 2022, we entered into a new ABL Term Loan Facility (the “2022 ABL Revolving Credit Facility”),
which replaced the 2021 ABL Revolving Credit Facility. The 2022 ABL Revolving Credit Facility is comprised of a
$600,000 Revolving Credit Facility and an asset-backed Term Loan of $350,000 ("2022 Term Loan").
Outlook
Sporting Products Industry
Sales of hunting and shooting-sports related products, including ammunition, are heavily influenced by hunting and
recreational shooting participation rates, personal safety, and the political environment. The Sporting Products segment
continues to benefit from positive participation trends, and the markets have remained strong. Our multi-brand strategy is a
tremendous strength in this market. In fiscal year 2024, we expect a normalized purchasing cycle based on stable market pricing
and demand. We believe we have a competitive advantage as a house of brands ammunition company and are well positioned to
take market share and expand into new markets.
Outdoor Recreation Industry
We believe that long-term outdoor participation trends combined with a larger base of participants supports our
expectation of long-term demand for the innovative outdoor recreation-related products produced by our Outdoor Products
brands. We believe that the current demand for brands in our Outdoor Products segment is being temporarily impacted by
higher inflation causing lower consumer spending and higher input costs, along with increased inventory levels at retailers and
distributors causing increased promotional activity. We expect to see a return to organic growth for this segment in the back
half of fiscal year 2024 once point of sale and sell-in become more closely aligned. Our Outdoor Products brands hold a strong
competitive position in the marketplace, and we intend to further differentiate our brands through focused research and
development, omni-channel strategies and marketing investments including traditional and digital mediums. Following
significant investments in our brands’ e-commerce capabilities, both directly and through our E-Commerce Center of
Excellence, we believe our brands are well-positioned to benefit from the ongoing shift in consumer shopping behavior to
utilize online channels.
Results of Operations
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 Year 2023 Compared to Fiscal Year 2022
Our net sales, gross profit, gross profit as a percentage of net sales (gross profit margin), operating income, operating
income as a percentage of net sales (operating income margin), interest expense, and tax provision by reporting segment and by
corporate and other (where applicable) are presented below:
Net Sales:
Sporting Products
Outdoor Products
Total
Years ended March 31,
2022
2023
Change
Dollars
Percent
$
$
1,757,932 $
1,321,875
3,079,807 $
1,737,891 $
1,306,730
3,044,621 $
20,041
15,145
35,186
1.2 %
1.2 %
1.2 %
Sporting Products—The increase in net sales was driven by improved pricing in all categories and higher volume in
primer and rimfire, partially offset by termination of the Lake City contract at the beginning of the third fiscal quarter and
volume declines in pistol.
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Outdoor Products—The increase in net sales was driven by acquired businesses. Net sales of our organic business
decreased primarily due to reduced purchasing across nearly all channels, partially offset by pricing, and increased direct to
consumer sales.
Gross Profit:
Sporting Products
Outdoor Products
Corporate and other
Total
Gross profit margin
Years ended March 31,
2022
2023
Change
Dollars
Percent
$
653,516 $
712,160 $
386,914
(9,533)
399,447
(2,375)
$
1,030,897 $
1,109,232 $
33.5%
36.4%
(58,644)
(12,533)
(7,158)
(78,335)
(8.2) %
(3.1) %
(301.4) %
(7.1) %
Sporting Products—The decrease in gross profit was caused by increased commodity and freight costs and lower volume.
The decrease was partially offset by improved pricing. Gross profit margin was 37.2% compared to 41.0% in the prior year.
Outdoor Products—The decrease in gross profit was caused by organic business volume declines and increased product
and freight costs. These declines were partially offset by volume from acquired businesses and improved pricing. Gross profit
margin was 29.3% compared to 30.6% in the prior year.
Corporate and Other—Expenses included in gross profit were related to inventory step-up expense from acquisitions in
fiscal year 2023 and 2022.
Operating income (loss):
Sporting Products
Outdoor Products
Corporate and other
Total
Operating income margin
Years ended March 31,
2022
2023
Change
Dollars
Percent
$
$
552,232 $
62,423
(506,800)
107,855 $
600,415 $
164,494
(118,687)
646,222 $
(48,183)
(102,071)
(388,113)
(538,367)
(8.0) %
(62.1) %
(327.0) %
(83.3) %
3.5%
21.2%
Sporting Products—The decrease in operating income was primarily caused by the decrease in gross profit, partially
offset by decreased incentive compensation and marketing costs. Operating income margin was 31.4% compared to 34.5% in
the prior year.
Outdoor Products—The decrease in operating income was primarily caused by decreased gross profit in the organic
businesses, as well as increased selling, general and administrative costs related to the acquired businesses, partially offset by
decreases in incentive compensation, and operating income from acquired businesses. Operating income margin was 4.7%
compared to 12.6% in the prior year.
Corporate and Other—The decrease in operating income was primarily caused by goodwill and tradename impairments,
increased planned separation costs, reorganization costs, inventory step-up expense, transaction costs, and transition costs. The
decline was partially offset by a decrease in the fair value of the contingent consideration liabilities and lower incentive
compensation expense.
Other income, net
Other income, net
Total
Years ended March 31,
Change
2023
2022
Dollars
Percent
$
$
2,124 $
2,124 $
— $
— $
2,124
2,124
— %
— %
The increase in other income, net was caused by foreign exchange gains related to our businesses acquired during fiscal
year 2023.
Interest expense, net:
Corporate and other
Years ended March 31,
2022
2023
Change
Dollars
Percent
$
59,317 $
25,264 $
34,053
134.8 %
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The increase in interest expense was due to higher interest rates and an increase in our average debt balance.
Years ended March 31,
Income tax provision:
Corporate and other
2023
Effective
Rate
2022
Effective
Rate
Change
$
60,380
119.2 % $
147,732
23.8 % $
(87,352)
See Note 15, Income Taxes, to the consolidated financial statements in Part II, Item 8 of this Annual Report, for
information regarding income taxes.
The increase in the current period tax rate is primarily due to the impact of nondeductible impairment of goodwill.
Our provision for income taxes includes federal, state and foreign income taxes. The effective tax rate for fiscal year 2023
of 119.2% differs from the federal statutory rate of 21% primarily due to the impact of nondeductible impairment of goodwill
and state taxes, partially offset by the deduction for foreign derived intangible income.
The effective tax rate for fiscal year 2022 of 23.8% differs from the federal statutory rate of 21% primarily due to the
impact of state taxes and is partially offset by changes in tax contingency.
As of March 31, 2023 and 2022, the total amount of unrecognized tax benefits was $28,692 and $24,719, respectively, of
which $24,419 and $21,139, 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 a $8,703 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 $7,993. See Note 15, Income Taxes, to the
consolidated financial statements included in this Annual Report for further details.
Fiscal Year 2022 Compared to Fiscal Year 2021
Our net sales, gross profit, gross profit as a percentage of net sales (gross profit margin), operating income, operating
income as a percentage of net sales (operating income margin), interest expense, and tax provision by reporting segment and by
corporate and other (where applicable) are presented below (dollars in thousands):
Net Sales:
Sporting Products
Outdoor Products
Total
Years ended March 31,
2021
2022
Change
Dollars
Percent
$
$
1,737,891 $
1,306,730
3,044,621 $
1,119,754 $
1,105,768
2,225,522 $
618,137
200,962
819,099
55.2 %
18.2 %
36.8 %
Sporting Products—The fiscal year 2022 period includes sales from Remington and HEVI-Shot, which we acquired in the
third and fourth quarters, respectively, of the prior fiscal year. The increase also reflects improved pricing and strong demand in
the market across our Sporting Products line, and production increases over the prior year at all of our facilities. These increases
were partially offset by a reduction of sales from small rifle ammunition produced at the Lake City Army Ammunition Plant.
Outdoor Products—The increase in sales was driven by continued demand in the market for most of our categories, and
was not restricted by retail store closures that impacted the prior year. The increase also reflects sales from businesses acquired
in fiscal year 2022. This was partially offset by a decline in our Outdoor Cooking business caused primarily by declining e-
commerce sales as foot traffic returned to brick and mortar stores.
Gross Profit:
Sporting Products
Outdoor Products
Corporate and other
Total
Gross profit margin
Years ended March 31,
2021
2022
Change
Dollars
Percent
$
712,160 $
399,447
(2,375)
$
1,109,232 $
312,230 $
321,423
(693)
632,960 $
399,930
78,024
(1,682)
476,272
128.1 %
24.3 %
(242.7) %
75.2 %
36.4%
28.4%
Sporting Products—The fiscal year 2022 period gross profit includes profits from Remington and HEVI-Shot, which we
acquired in the third and fourth quarters, respectively, of the prior fiscal year. The increase also reflects improved pricing, sales
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volume and operating efficiencies. These increases were partially offset by increased commodity and input costs. Gross profit
margin was 41.0% compared to 27.9% in the prior year.
Outdoor Products—The increase in gross profit was primarily driven by sales volume and operating efficiencies, partially
offset by higher logistics costs, input costs, and sales channel mix. The increase also reflects gross profit from acquisitions that
occurred during fiscal year 2022. Gross profit margin was 30.6% compared to 29.1% in the prior year.
Corporate and Other—The decrease in corporate gross profit was due to inventory step-up expenses from acquisitions
during the current year.
Operating income (loss):
Sporting Products
Outdoor Products
Corporate and other
Total
Operating income margin
Years ended March 31,
2021
2022
Change
Dollars
Percent
$
$
600,415 $
164,494
(118,687)
646,222 $
222,713 $
137,942
(69,226)
291,429 $
21.2%
13.1%
377,702
26,552
(49,461)
354,793
169.6 %
19.2 %
(71.4) %
(121.7) %
Sporting Products—The increase in operating income was primarily driven by the gross profit increase, partially offset by
higher selling, general, and administrative expenses from the acquisitions of Remington and HEVI-Shot and higher selling and
marketing expenses to support increased sales. Operating income margin was 34.5% compared to 19.9% in the prior year.
Outdoor Products—The increase in operating income was primarily driven by the gross profit increase, partially offset by
increased selling, general, and administrative expenses from the fiscal year 2022 acquisitions and investments in selling and
marketing expenses to support increased sales and industry events, such as trade shows that returned in fiscal year 2022.
Operating income margin was 12.6% in fiscal year 2021, compared to 12.5% in the previous year.
Corporate and Other—The decrease in operating income was primarily driven by the prior fiscal year pretax gain related
to the divestiture of a non-strategic business in our Sporting Products segment. Additionally, fiscal year 2022 has higher share-
based and incentive compensation expense, higher post-acquisition compensation, and investments in human capital which
support our centers of excellence.
Interest expense, net:
Corporate and other
Years ended March 31,
2021
2022
Change
Dollars
Percent
$
25,264 $
25,574 $
(310)
(1.2) %
The decrease in interest expense was due to a decrease in debt issuance cost write-offs and a reduction in our interest rate
on the 4.5% Notes, offset by an increase in our average debt balance.
Income tax provision
Corporate and other
2022
Effective
Rate
2021
Effective
Rate
Change
$
147,732
23.8 % $
(6,628)
(2.6) % $
154,360
Years ended March 31,
See Note 15, Income Taxes, to the consolidated financial statements in Part II, Item 8 of this Annual Report, for
information regarding income taxes.
The increase in the fiscal year 2022 tax rate is primarily due to the impact of the prior year decrease in the valuation
allowance driven by earnings, the benefit of the loss carrybacks to prior profitable years as permitted under IRS regulations
under the CAREs Act which permitted us to realize previously valued assets, and the release of the reserves for uncertain tax
positions due to statute expiration in the prior year.
Our provision for income taxes includes federal, state and foreign income taxes. The effective tax rate for fiscal year 2022
of 23.8% differs from the federal statutory rate of 21% primarily due to the impact of state taxes and is partially offset by
changes in tax contingency.
The effective tax rate for fiscal year 2021 of (2.6)% differs from the federal statutory rate of 21% primarily due to the
impact of the decrease in the valuation allowance, the release of uncertain tax positions, and the impact of the CAREs Act.
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As of March 31, 2022 and 2021, the total amount of unrecognized tax benefits was $24,719 and $23,000, respectively, of
which $21,139 and $20,283, 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 a $3,419 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 $2,753. See Note 15, Income Taxes, to the
consolidated financial statements included in this Annual Report 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, our 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,
share repurchases, and other activities.
Financial Condition
Cash increased to $86,208 at March 31, 2023 from $22,584 at March 31, 2022. Increases to cash were primarily due to
cash generated by operating activities and proceeds from our ABL Revolving Credit Facility and 2022 Term Loan during the
last twelve months. These increases were partially offset primarily by cash paid for acquisitions.
Operating Activities
Net cash provided by operating activities increased $167,874 from the prior fiscal year. The increase was primarily driven
by an increase in cash collections in our fourth fiscal quarter, an income tax refund in the fourth fiscal quarter, and improvement
in our inventory management in the second half of the current fiscal year.
Investing Activities
Cash used for investing activities increased $201,831 from the prior fiscal year. The current fiscal year cash usage was
driven by the acquisition of businesses.
Financing Activities
Net cash provided by financing activities increased $318,241 from the prior fiscal year. The increase was primarily driven
by net proceeds from our 2022 Term Loan and ABL Revolving Credit Facility, and the decrease in cash used for the repurchase
of shares as compared to the prior fiscal year.
Liquidity
In addition to our normal operating cash requirements, our principal future cash requirements are to fund capital
expenditures, debt repayments, share repurchases, earn-outs related to previous acquisitions, 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 our 4.5% Notes, 2022 Term Loan and 2022 ABL Revolving Credit Facility and principal payments due
under the 2022 Term Loan.
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 2022 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, to service our currently anticipated short-term and long-term debt obligations, make capital expenditures,
pay earn-outs related to previous acquisitions, and fund the 2022 Share Repurchase Program over the next 12 months. As of
March 31, 2023, based on the borrowing base less outstanding borrowings of $355,000, outstanding letters of credit of $15,645,
less the minimum required borrowing base of $58,472, the amount available under the 2022 ABL Revolving Credit Facility was
$155,607. Our total debt as a percentage of total capitalization (total debt and stockholders' equity) was 48% as of March 31,
2023. 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 indebtedness.
There can be no assurance that the cost or availability of future borrowings, if any, will not be materially impacted by
capital and credit market conditions, including any disruptions to these markets, as a result of natural disasters and public health
crises or other significant catastrophic events, or our future financial condition and performance. Furthermore, because our
2022 ABL Revolving Credit Facility is secured in large part by receivables from our customers, a sustained deterioration in
general economic conditions that adversely affects the creditworthiness of our customers could have a negative effect on our
future available liquidity under the 2022 ABL Revolving Credit Facility.
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Share Repurchases
As of March 31, 2023, there is $186,105 remaining under our $200,000 2022 Share Repurchase Program, which we
intend to fund through the fourth fiscal quarter of 2024. Additional information regarding our share repurchases during fiscal
year 2023 is presented in Part II, Item 5 of this Annual Report.
Material Cash Requirements
The following tables summarize our material cash requirements as of March 31, 2023:
Long-term debt
Interest on debt
Operating leases
Purchase commitments and other
Material cash requirements by period
Total
Less than
1 year
Years 2 - 3
Years 4 - 5
More than
5 years
$
1,060,000 $
65,000 $
495,000 $
— $
500,000
224,637
180,908
175,902
61,195
25,479
163,125
95,942
37,365
12,742
45,000
31,854
35
22,500
86,210
—
Total
$
1,641,447 $
314,799 $
641,049 $
76,889 $
608,710
Payments for interest is based on outstanding debt as of March 31, 2023.
Pension benefit obligation has been excluded from our material cash requirements (see Note 14, Employee Benefit Plans,
to the consolidated financial statements in Part II, Item 8 of this Annual Report, for details on our required contributions to our
pension trust).
The total liability for uncertain tax positions as of March 31, 2023 was approximately $28,692 (see Note 15, Income
Taxes, to the consolidated financial statements in Part II, Item 8 of this Annual Report), none of which is expected to be paid
within 12 months. We are unable to provide a reasonably reliable estimate of the timing of future payments relating to the non-
current uncertain tax position obligations.
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 such 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.
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Dependence on Key Customers; Concentration of Credit
No customer contributed more than 10% of sales during fiscal years 2023, 2022, and 2021. If a key customer fails to meet
payment obligations, our operating results and financial condition could be adversely affected.
Inflation and Consumer Spending
We are exposed to inflationary factors such as increases in labor, supplier, logistics and overhead costs that may adversely
affect our operating results. The recent rise in inflation is causing a decline in consumer disposable income, and discretionary
spending, which has temporarily impacted the demand in our Outdoor Products brands. Inflation has also contributed to the cost
of our products and operating costs. The change in consumer discretionary spending has also had an impact on retailer
inventory levels. Our sales to retailers and distributors follows the end consumer spending patterns. During fiscal year 2023, we
experienced a decline in retailer and distributor sales due to their excess inventory levels caused by the shift in consumer
spending patterns. If these adverse conditions persist or become more severe, this may continue to have an adverse affect on our
operating results, if the selling prices of our products are not able to offset these increased costs. We cannot predict the impact
of these adverse conditions on our liquidity and financial results.
Commodity Price Risk
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 Sporting Products 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.
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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 term
loans and revolver borrowings with variable rate interest that exposes 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 (loss) and cash flows will correspondingly decrease. Assuming $485 million of variable-rate indebtedness (which was
the amount of our indebtedness outstanding as of March 31, 2023) and considering our interest rate swaps, a change of 1/4 of
one percent in interest rates would result in a $1.2 million change in annual estimated interest expense. To mitigate the risks
from interest rate exposure, we enter into hedging transactions, mainly interest rate swaps, through derivative financial
instruments that have been authorized pursuant to corporate policies. 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.
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 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 enter into hedging
transactions, mainly foreign currency forward contracts, through derivative financial instruments that have been authorized
pursuant to corporate policies. Additional information regarding these financial instruments is contained in Note 2, Fair Value
of Financial Instruments,
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.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors 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, 2023 and 2022, 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, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in
the period ended March 31, 2023, 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, 2023, 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 May 25, 2023, expressed an unqualified opinion on the Company’s internal control over
financial reporting.
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.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole,
and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or
on the accounts or disclosures to which they relate.
Business Combinations – Fox Racing – Refer to Note 7 to the financial statements
During the second quarter of fiscal year 2023, the Company acquired Fox Racing for $575 million. The Company allocated
the purchase price to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as
of the acquisition date, which resulted in the Fox Racing tradename being recorded at $106 million and customer relationships
at $149 million. The Company estimated the fair value of the tradename and customer relationship intangible assets using an
income approach which required management to make significant estimates and assumptions related to projected revenues,
royalty rate, and the weighted average cost of capital. Changes in these assumptions could have a significant impact on the fair
value.
We identified the fair value determination of acquired intangible assets, specifically the Fox Racing tradename and customer
relationships, as a critical audit matter due to the significant estimates and assumptions in determining projected revenues,
royalty rate, and the weighted average cost of capital. This required a high degree of auditor judgment and an increased extent
of effort, including the need to involve fair value specialists, when performing audit procedures to evaluate the reasonableness
of management’s estimates related to these assumptions.
40
Table of Contents
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the projected revenues, selection of the royalty rate, and selection of the weighted average cost
of capital included the following, among others:
• We tested the effectiveness of internal controls over management’s valuation analysis, including those over the projected
revenues, selection of the weighted average cost of capital and royalty rate.
• We inquired of appropriate individuals, both within and outside of finance, regarding the projected revenues.
• We evaluated the reasonableness of management’s projected revenues by comparing the projections to:
– Historical sales and growth rates of the acquired entity, as well as open sales orders as of the acquisition date.
–
–
Internal communications to management and the Board of Directors.
Forecasted information included in analyst and industry reports for the Company, applicable market data, and certain
of its peer companies.
• With the assistance of our fair value specialists, we evaluated the reasonableness of the weighted average cost of capital
by:
–
Testing the source information underlying the determination of the weighted average cost of capital and testing the
mathematical accuracy of the calculations.
– Comparing the selected weighted average cost of capital to market data.
– Developing ranges of independent estimates and comparing those to the weighted average cost of capital selected by
management.
– Comparing the estimated weighted average return on assets, internal rate of return, and the weighted average cost of
capital used in the valuation models and evaluating whether they were consistent with each other.
• With the assistance of our fair value specialists, we evaluated the reasonableness of the royalty rate by:
–
Testing the source information underlying the determination of the royalty rate and testing the mathematical accuracy
of the calculations.
– Comparing the selected royalty rate to market data.
– Developing ranges of independent estimates and comparing those to the royalty rate selected by management.
Goodwill and Indefinite-Lived Tradename Impairments– Fox Racing and Simms Fishing Reporting Units – Refer to
Note 11 to the financial statements
The Company tests goodwill for impairment on the first day of the fourth fiscal quarter or upon the occurrence of events or
changes in circumstances that indicate that the reporting unit might be impaired. Based on this assessment, the Company
recognized impairment losses of $248.3 million and $68.4 million related to the goodwill associated with the reporting units of
Fox Racing and Simms Fishing, respectively. The Company also tested indefinite-lived intangible assets, which resulted in
impairment losses of $21.2 million and $20.4 million, respectively, related to the Fox Racing and Simms Fishing indefinite-
lived tradenames. The Company estimates fair value to assess the recoverability of goodwill and indefinite-lived intangible
assets using a discounted cash flow model, which required Management to make significant estimates and assumptions related
to forecasted revenues and operating margins, weighted average cost of capital and royalty rates.
We identified the fair value determination of the Fox Racing and Simms Fishing goodwill and related indefinite-lived
tradenames as a critical audit matter due to the significant estimates and assumptions in determining forecasted revenues and
operating margins, weighted average cost of capital and royalty rates. This required a high degree of auditor judgment and an
increased extent of effort, including the need to involve fair value specialists, when performing audit procedures to evaluate
the reasonableness of management’s estimates related to these assumptions.
41
Table of Contents
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to forecasted revenues and operating margins, selection of royalty rates, and selection of the
weighted average cost of capital included the following, among others:
• We tested the effectiveness of internal controls over management’s valuation analysis, including those over the forecasted
revenues and operating margins, and selection of the weighted average cost of capital and royalty rates.
• We inquired of appropriate individuals, both within and outside of finance, regarding the forecasted revenues.
• We evaluated the reasonableness of management’s forecasted revenues and operating margins by comparing the forecasts
to:
– Historical sales and growth rates of the reporting units, as well as open sales orders as of the fourth fiscal quarter.
– Historical operating margins of the reporting units
–
–
Internal communications to management and the Board of Directors.
Forecasted information included in analyst and industry reports for the Company, applicable market data, and certain
of its peer companies.
• With the assistance of our fair value specialists, we evaluated the reasonableness of the weighted average cost of capital
by:
–
Testing the source information underlying the determination of the weighted average cost of capital and testing the
mathematical accuracy of the calculations.
– Comparing the selected weighted average cost of capital to market data.
– Developing ranges of independent estimates and comparing those to the weighted average cost of capital selected by
management.
• With the assistance of our fair value specialists, we evaluated the reasonableness of the royalty rates by:
–
Testing the source information underlying the determination of the royalty rates and testing the mathematical
accuracy of the calculations.
– Comparing the selected royalty rates to market data.
– Developing ranges of independent estimates and comparing those to the royalty rates selected by management.
/s/ Deloitte & Touche LLP
Salt Lake City, Utah
May 25, 2023
We have served as the Company’s auditor since 2014.
42
Table of Contents
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
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, net
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
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:
Authorized—500,000,000 shares
Issued and outstanding—57,085,756 shares as of March 31, 2023 and 56,093,456
shares as of March 31, 2022
Additional paid-in-capital
Accumulated deficit
Accumulated other comprehensive loss
Common stock in treasury, at cost—6,878,683 shares held as of March 31, 2023 and
7,870,983 shares held as of March 31, 2022
Total stockholders' equity
Total liabilities and stockholders' equity
March 31,
2023
2022
86,208 $
339,373
709,897
—
60,636
1,196,114
228,247
106,828
465,709
733,176
68,808
2,798,882 $
65,000 $
136,556
60,719
6,676
38,543
146,377
453,871
984,658
40,749
103,313
25,114
59,384
1,667,089
22,584
356,773
642,976
43,560
45,050
1,110,943
211,087
78,252
481,857
459,795
54,267
2,396,201
—
146,697
79,171
—
40,825
127,180
393,873
666,114
29,304
80,083
22,634
79,794
1,271,802
570
1,711,155
(230,528)
(80,802)
(268,602)
1,131,793
2,798,882 $
560
1,730,927
(220,810)
(76,679)
(309,599)
1,124,399
2,396,201
$
$
$
$
See Notes to the Consolidated Financial Statements.
43
Table of Contents
VISTA OUTDOOR INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Amounts in thousands except per share data)
Sales, net
Cost of sales
Gross profit
Operating (income) expenses:
Research and development
Selling, general, and administrative
Impairment of goodwill and intangibles (Note 11)
(Gain) on divestiture (Note 7)
Operating income
Loss on extinguishment of debt (Note 13)
Other income, net (Note 4)
Interest expense, net
Income before income taxes
Income tax (provision) benefit
Net income (loss)
Earnings per common share:
Basic
Diluted
Weighted-average number of common shares outstanding:
Basic
Diluted
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, $434, and $77
Reclassification of net actuarial loss for pension and
postretirement benefit plans recorded to net income, net of
tax expense of $(884), $(1,215), and $(950)
Valuation adjustment for pension and postretirement
benefit plans, net of tax benefit (expense) of $1,003,
$(1,434), and $(4,055)
Change in derivative instruments, net of tax benefit
(expense) of $1,707, $168, and $(515)
Change in cumulative translation adjustment, net of tax
benefit (expense) of $(317), $0, and $0
Total other comprehensive income (loss)
Comprehensive income (loss)
2023
Years ended March 31,
2022
3,079,807 $
2,048,910
1,030,897
3,044,621 $
1,935,389
1,109,232
2021
2,225,522
1,592,562
632,960
44,209
504,478
374,355
—
107,855
—
2,124
(59,317)
50,662
(60,380)
(9,718) $
28,737
434,273
—
—
646,222
—
—
(25,264)
620,958
(147,732)
473,226 $
(0.17) $
(0.17) $
8.27 $
8.00 $
22,538
337,460
—
(18,467)
291,429
(6,471)
—
(25,574)
259,384
6,628
266,012
4.57
4.44
$
$
$
$
56,600
56,600
57,190
59,137
58,241
59,905
$
(9,718) $
473,226 $
266,012
—
(1,336)
(236)
2,776
3,744
2,927
(3,150)
4,683
(3,187)
(517)
(562)
(4,123)
(13,841) $
(58)
6,516
479,742 $
$
12,496
1,587
1,025
17,799
283,811
See Notes to the Consolidated Financial Statements.
44
Table of Contents
(Amounts in thousands)
Operating Activities
Net income (loss)
VISTA OUTDOOR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended March 31,
2023
2022
2021
$
(9,718) $
473,226
$
266,012
Adjustments to net income (loss) to arrive at cash provided by operating activities:
Depreciation
Amortization of intangible assets
Amortization of deferred financing costs
Impairment of goodwill and intangibles (Note 11)
Change in fair value of contingent consideration
Gain on sale of businesses (Note 7)
Deferred income taxes
Foreign currency translation gains, net
Loss on disposal of property, plant, and equipment
Loss on extinguishment of debt
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 note receivable
Proceeds from the sale of businesses
Acquisition of businesses, net of cash received
Proceeds from the disposition of property, plant, and equipment
Cash 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
Payments made for debt issue costs and prepayment premiums
Early redemption of long-term debt
Proceeds from exercise of stock options
Payments made for contingent consideration
Purchase of treasury shares
Payment of employee taxes related to vested stock awards
Cash provided by (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
Contingent consideration in connection with business combinations
48,126
43,963
6,702
374,355
(27,510)
—
(43,177)
(1,249)
1,719
—
28,119
66,860
18,537
(33,596)
(25,803)
59,679
(3,311)
1,988
(19,499)
486,185
(38,810)
10,683
—
(761,589)
47
(789,669)
468,000
(283,000)
350,000
(145,000)
(17,209)
—
4,213
(706)
—
(9,090)
367,208
(100)
63,624
22,584
46,094
26,246
1,411
—
955
—
11,857
—
796
—
27,407
(50,631)
(172,741)
(24,350)
14,370
(3,968)
8,111
(1,561)
(38,911)
318,311
(42,782)
—
—
(545,467)
411
(587,838)
400,000
(230,000)
—
—
(1,061)
—
533
—
(113,195)
(7,310)
48,967
(121)
(220,681)
243,265
86,208
$
22,584
$
45,264
19,846
2,922
—
—
(18,467)
(10,106)
—
4,565
6,471
13,303
17,495
(84,185)
72,946
22,617
(37,397)
3,323
(6,607)
27,372
345,374
(30,166)
—
23,654
(95,605)
99
(102,018)
73,077
(240,333)
500,000
(350,000)
(6,496)
(5,141)
1,386
—
—
(4,133)
(31,640)
174
211,890
31,375
243,265
4,751
$
(11,400)
1,656
$
(35,964)
2,004
—
$
$
See Notes to the Consolidated Financial Statements.
45
Table of Contents
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
Balance, March 31, 2020
Comprehensive income
Exercise of stock options
Share-based compensation
Restricted stock vested and shares withheld
Employee stock purchase program
Other
Balance, March 31, 2021
Comprehensive income
Exercise of stock options
Share-based compensation
Restricted stock vested and shares withheld
Employee stock purchase program
Treasury shares purchased
Other
58,038,822 $
580 $ 1,744,096 $
(960,048) $
(100,994) $ (241,129) $ 442,505
—
92,604
—
304,099
15,742
109,749
—
—
—
—
—
5
—
266,012
17,799
—
283,811
(2,370)
13,303
(18,773)
(322)
(4,455)
—
—
—
—
—
—
—
—
—
—
3,756
—
1,386
13,303
14,444
(4,329)
638
4,455
316
5
58,561,016
585
1,731,479
(694,036)
(83,195)
(217,836)
736,997
—
28,921
—
406,691
12,799
(2,980,681)
64,710
—
—
—
—
—
(30)
5
—
(607)
27,407
(24,823)
(2)
—
(2,527)
473,226
6,516
—
479,742
—
—
—
—
—
—
—
—
—
—
1,140
533
—
27,407
17,206
(7,617)
504
502
—
(113,165)
(113,195)
—
2,552
30
Balance, March 31, 2022
56,093,456
560
1,730,927
(220,810)
(76,679)
(309,599)
1,124,399
Comprehensive loss
Exercise of stock options
Share-based compensation
Restricted stock vested and shares withheld
Employee stock purchase program
Other
—
321,260
—
602,574
23,556
44,910
—
—
—
—
—
10
—
(9,718)
(4,123)
—
(13,841)
(8,384)
28,119
(37,409)
(340)
(1,758)
—
—
—
—
—
—
—
—
—
—
12,597
—
4,213
28,119
25,729
(11,680)
923
1,748
583
—
Balance, March 31, 2023
57,085,756 $
570 $ 1,711,155 $
(230,528) $
(80,802) $ (268,602) $ 1,131,793
See Notes to the Consolidated Financial Statements.
46
Table of Contents
VISTA OUTDOOR INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except per share data and unless otherwise indicated)
1. Significant Accounting Policies
Nature of Operations. Vista Outdoor Inc. (together with our subsidiaries, "Vista Outdoor", "we", "our", and "us", unless
the context otherwise requires) is a leading global designer, manufacturer, and marketer of outdoor recreation and shooting
sports products. We operate through two reportable segments, Sporting Products and Outdoor Products. We are headquartered
in Anoka, Minnesota and have 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. We have a robust global
distribution network serving customers in over 100 countries. Vista Outdoor was incorporated in Delaware in 2014.
Basis of Presentation. The consolidated financial statements reflect our financial position, results of operations, and cash
flows in conformity with accounting principles generally accepted in the U.S.
Change in Presentation. In connection with our preparation of the consolidated financial statements for the year ended
March 31, 2023, we changed the presentation of "Earnings (loss) before interest, income taxes, and other" to "Operating
income", removed the subtotal "Earnings (loss) before interest and income taxes", and are now including "(Gain) on divestiture"
in the subtotal "Operating income" within the consolidated statements of comprehensive income (loss). These corrections did
not affect previously reported net income (loss) and are immaterial to the previously issued financial statements.
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 properly reflect changes in our business or as new
information becomes available.
Revenue Recognition. For the majority of our contracts with customers, 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.
For our contracts that include bundled and hardware and software sales, revenue related to delivered hardware and bundled
software is recognized when control has transferred to the customer, which typically occurs upon shipment. Revenue allocated
to unspecified software update rights is deferred and recognized on a straight-line basis over the estimated period they are
expected to be provided.
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.
For the immaterial amount of our contracts that have multiple performance obligations, which represent promises within
an arrangement that are distinct, we allocate revenue to all distinct performance obligations based on their relative stand-alone
selling prices (“SSPs”). When available, we use observable prices to determine SSPs. When observable prices are not available,
SSPs are established that reflect our best estimates of what the selling prices of the performance obligations would be if they
were sold regularly on a stand-alone basis. We allocate revenue and any related discounts to these performance obligations
based on their relative SSPs.
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.
47
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 $59,189, $58,028, and $44,600 for the fiscal years ended March 31, 2023, 2022, and 2021,
respectively.
Cash Equivalents. Cash equivalents are all highly liquid cash investments purchased with original maturities of three
months or less.
Allowance for Estimated Credit Losses. We maintain an allowance for credit losses related to accounts receivable for
future expected credit losses resulting from the inability or unwillingness of our customers to make required payments. We
estimate the allowance based upon historical bad debts, current customer receivable balances, age of customer receivable
balances, and the customers' financial condition and in relation to a representative pool of assets consisting of a large number of
customers with similar risk characteristics. The allowance is adjusted as appropriate to reflect differences in current conditions
as well as changes in forecasted macroeconomic conditions.
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 Sporting
Products 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 Liabilities and Restructuring, 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 our 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.
Goodwill. We test goodwill for impairment on the first day of the 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. 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.
48
We performed a quantitative assessment for the annual impairment test in the fourth quarter of fiscal year 2023 to
determine the recoverability of goodwill for all of our reporting units. Based on this assessment, we recognized impairment
losses of $248,254, $68,353, $12,349 and $3,799 related to the goodwill associated with the reporting units of Fox Racing,
Simms Fishing, QuietKat, and Stone Glacier, respectively. See Note 11, Goodwill and Intangible Assets, for discussion and
details.
When we perform a quantitative analysis 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 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 forecasted revenues and operating margins,
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 measurements).
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. We completed a step zero assessment on nine of our tradenames in our fiscal year 2023 annual
assessment, and concluded there were no indicators of impairment on those indefinite lived intangibles. We performed a step
one analysis on our remaining indefinite-lived tradenames, which resulted in impairment losses on two of those tradenames.
See Note 11, Goodwill and Intangible Assets, for discussion and details.
Our identifiable intangibles assets with indefinite lives consist of certain trademarks and tradenames. When we complete a
step one assessment, 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.
Our assumptions used to develop the discounted cash flow analysis require us to make significant estimates regarding
forecasted revenues and operating margins, 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 and 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 assets 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.
Business Combinations. We allocate the purchase price, including contingent consideration, of our acquisitions to the
assets and liabilities acquired, including identifiable intangible assets, based on their fair values at the date of acquisition. The
fair values are primarily based on third-party valuations using our management assumptions that require significant judgments
and estimates. The purchase price allocated to intangibles is based on unobservable factors, including but not limited to,
projected revenues, expenses, customer attrition rates, royalty rates, and weighted average cost of capital, among others. The
weighted average cost of capital uses a market participant’s cost of equity and after-tax cost of debt and reflects the risks
inherent in the cash flows. The fair value calculation of initial contingent consideration associated with the purchase price also
uses unobservable factors such as projected revenues and expenses over the term of the contingent earn-out period, discounted
49
for the period over which the contingent consideration is measured, and volatility rates. Based upon these assumptions, the
initial contingent consideration is then valued using a Monte Carlo simulation analysis in a risk-neutral framework. The inputs
used to calculate the fair value of the contingent consideration liabilities are considered to be Level 3 inputs due to the lack of
relevant market activity and significant management judgment. See Note 2, Fair Value of Financial Instruments, for additional
disclosure regarding fair value of financial instruments. During the measurement period of one year from the acquisition date,
we continue to collect information and reevaluate our estimates and assumptions, and record any adjustments to these estimates
to goodwill. See Note 7, Acquisitions and Divestitures, for additional information.
Derivatives and Hedging. We mitigate the impact of variable interest rates, foreign currency exchange rates, and
commodity prices affecting the cost of raw materials with interest rate swaps, foreign currency, 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. We may use derivatives to hedge certain variable
interest rates, foreign currency exchange rates, and commodity price risks, but do not use derivative financial instruments for
trading or other speculative purposes. We utilize counterparties for our derivative instruments that we believe are creditworthy
at the time the transactions are entered into and closely monitor the credit ratings of these counterparties. 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. 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, performance awards with a TSR modifier,
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.
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.
50
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 $8,198 and $7,354 as of March 31, 2023 and 2022,
respectively.
Translation of Foreign Currencies. Assets and liabilities of foreign subsidiaries are translated at current exchange rates.
Income and expenses in foreign currencies are translated at the average exchange rate during the period. Gains and losses from
the translation of foreign subsidiary financial statements into U.S. dollars are reported as a component of accumulated other
comprehensive loss ("AOCL") in stockholders' equity. Gains and losses from assets and liabilities denominated in a currency
other than the functional currency of the entity in which they reside are generally recognized during the current period in the
consolidated statements of comprehensive income (loss), as part of other income, net.
Other income, net. Other income, net primarily includes gains and losses on foreign currency forward contracts and
foreign currency transactions. See Note 4, Derivative Financial Instruments, for additional information.
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
March 31,
2023
2022
$
$
(3,543) $
(71,449)
(5,810)
(80,802) $
(356)
(71,075)
(5,248)
(76,679)
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,
2023
2022
Pension
and other
Postretire-
ment
Benefits
Cumulative
translation
adjustment
Derivatives
Pension
and other
Postretire-
ment
Benefits
Cumulative
translation
adjustment
Total
Total
Derivatives
Beginning of year AOCL
$
(356) $ (71,075) $
(5,248) $ (76,679) $
161 $ (78,166) $
(5,190) $ (83,195)
Change in fair value of derivatives
Net gain 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)
Net change in cumulative translation adjustment
(3,122)
(65)
—
—
—
—
—
—
2,776
—
(3,150)
—
—
—
—
—
2,776
—
(3,150)
—
(562)
(562)
(3,122)
1,224
(65)
(1,741)
—
—
3,744
(1,336)
4,683
—
—
—
—
—
—
(58)
1,224
(1,741)
3,744
(1,336)
4,683
(58)
—
—
—
—
End of year AOCL
$
(3,543) $ (71,449) $
(5,810) $ (80,802) $
(356) $ (71,075) $
(5,248) $ (76,679)
(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.
Recent Accounting Pronouncements—We considered all recent accounting pronouncements and concluded they are not
expected to have a material 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:
51
Derivative Financial Instruments
Hedging instruments are re-measured on a recurring basis using broker quotes (See Note 4, Derivative Financial
Instruments), daily market foreign currency rates (See Note 4, Derivative Financial Instruments), and interest rate curves as
applicable ( Note 13, Long-term Debt) and are therefore categorized within Level 2 of the fair value hierarchy.
Note Receivable
In connection with the sale of our Firearms business in fiscal year 2020, 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. The note was paid in full in our fourth fiscal
quarter ending March 31, 2023. See Note 8, Receivables, for additional information.
Contingent Consideration
In connection with some of our acquisitions, we recorded contingent consideration liabilities that can be earned by the
sellers upon achievement of certain milestones. The liabilities are measured on a recurring basis and recorded at fair value,
using a discounted cash flow analysis or a Monte Carlo simulation analysis in a risk-neutral framework with assumptions for
volatility, market price of risk adjustment, risk-free rate, and cost of debt, utilizing revenue projections for the respective earn-
out period, corresponding targets and approximate timing of payments as outlined in the purchase agreements. The inputs used
to calculate the fair value of the contingent consideration liabilities are considered to be Level 3 inputs due to the lack of
relevant market activity and significant management judgment. Changes in the fair value of the contingent consideration
obligation results from changes in discount periods and rates, and changes in probability assumptions with respect to the
likelihood of achieving the performance targets. The fair value adjustments are recorded in selling, general, and administrative
in the consolidated statement of comprehensive income (loss). As of March 31, 2023, the estimated fair values of contingent
consideration payable related to our acquisitions of QuietKat, Stone Glacier, Fox Racing, Fiber Energy, and HEVI-Shot are
$8,634, $5,920, $5,720, $0, and $0, respectively. See Note 7, Acquisitions and Divestitures, for additional information.
Following is a summary of our contingent consideration liability Level 3 activity during fiscal year 2023:
Balance, March 31, 2022
Acquisition of Fox Racing
Decrease in fair value
Payments made
Balance, March 31, 2023
$
$
37,090
11,400
(27,510)
(706)
20,274
Contingent consideration liabilities are reported under the following captions in the consolidated balance sheets:
Other current liabilities
Other long-term liabilities
Total
March 31,
2023
2022
$
$
8,586 $
11,688
20,274 $
96
36,994
37,090
Disclosures about the Fair Value of Financial Instruments
The carrying amount of our receivables, inventory, accounts payable, and accrued liabilities as of March 31, 2023 and
March 31, 2022 approximates fair value because of the short maturity of these instruments. The carrying values of cash and
cash equivalents as of March 31, 2023 and March 31, 2022 are categorized within Level 1 of the fair value hierarchy.
52
The table below discloses information about carrying values and estimated fair value relating to our financial assets and
liabilities:
March 31,
2023
2022
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Fixed rate debt (1)
Variable rate debt (2)
$
500,000 $
560,000
404,000 $
560,000
500,000 $
170,000
460,000
170,000
(1) Fixed rate debt—In fiscal year 2021, we issued $500,000 aggregate principal amount of 4.5% Senior Notes which will
mature on March 15, 2029. These notes are unsecured and senior obligations. 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 and
2022 Term Loan approximates the fair value because the interest rates are variable and reflective of market rates as of
March 31, 2023. 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. During the
fourth quarter of fiscal year 2023, we recognized impairment losses of $248,254, $68,353, $12,349 and $3,799 related to the
goodwill associated with the reporting units of Fox Racing, Simms Fishing, QuietKat, and Stone Glacier, respectively. During
the fourth quarter of fiscal year 2023, we recognized impairment losses of $21,200 and $20,400, related to the Fox Racing and
Simms Fishing indefinite-lived tradename assets, respectively. The fair value of goodwill and intangible assets are categorized
within Level 3 of the fair value hierarchy. See Note 11, Goodwill and Intangible Assets, for discussion and details of the
impairment losses recorded in fiscal year 2023. During the fourth quarter of fiscal year 2023, we recognized impairment losses
on ROU assets of $1,812 related to our restructuring plan. Significant assumptions were used to estimate fair value of the ROU
assets, which was categorized within Level 3 of the fair value hierarchy.
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 our 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 our 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 up to five years. 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.
53
The amounts of assets and liabilities related to our operating leases were as follows:
Balance Sheet Caption
2023
2022
March 31,
Operating lease assets
$
106,828 $
78,252
Assets:
Operating lease assets
Liabilities:
Current:
Operating lease liabilities
Other current liabilities
Long-term:
Operating lease liabilities
Total lease liabilities
Long-term operating lease liabilities
$
$
16,351 $
11,804
103,313
119,664 $
80,083
91,887
The components of lease expense are recorded to cost of sales and selling, general, and administrative 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
Operating and Sublease income
Net lease costs
Years ended March 31,
2022
2023
$
$
28,128 $
3,200
(602)
30,726 $
22,917
3,322
(483)
25,756
(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
March 31,
2023
2022
9.71
8.65
8.43 %
7.99 %
The approximate future minimum lease payments under operating leases were as follows:
Fiscal year 2024
Fiscal year 2025
Fiscal year 2026
Fiscal year 2027
Fiscal year 2028
Thereafter
Total lease payments
Less imputed interest
Present value of lease liabilities
$
$
25,479
19,559
17,806
16,489
15,365
86,210
180,908
(61,244)
119,664
54
Supplemental cash flow information related to leases is as follows:
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
Commodity Price Risk
Years ended March 31,
2023
2022
$
$
22,760 $
19,268
45,283 $
15,537
We use designated cash flow hedges to hedge our exposure to price fluctuations on lead we purchase for raw material
components in our ammunition manufacturing process that 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 the
transactions critical terms and counterparty credit quality.
The gains and losses on these hedges are included in accumulated other comprehensive 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,
2023, we had outstanding lead forward contracts on approximately 4.75 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 loss and recognized in earnings. The asset
related to the lead forward contracts is immaterial and is recorded as part of other current assets.
Foreign Exchange Risk
In the normal course of business, we are exposed to gains and losses resulting from fluctuations in foreign currency
exchange rates relating to transactions of our international subsidiaries. We use designated cash flow hedges and non-
designated hedges in the form of foreign currency forward contracts as part of our strategy to manage the level of exposure to
the risk of fluctuations in foreign currency exchange rates and to mitigate the impact of foreign currency translation on
transactions that are denominated primarily in British Pounds, Euros, and Canadian Dollars.
Cash Flow Hedging Instrument
We use foreign currency forward contracts designated as qualifying cash flow hedging instruments to help mitigate our
exposure on our foreign subsidiaries' inventory purchases and intercompany transactions, which is different than their
functional currency. Certain U.S. subsidiaries also hedge a portion of their future sales in Canadian Dollars. These contracts
generally mature within 12 months to 15 months from their inception. As of March 31, 2023, the notional amounts of our
foreign currency forward contracts designated as cash flow hedge instruments were approximately $40,615. The effectiveness
of cash flow hedge contracts is assessed quantitatively at inception and qualitatively thereafter considering the transactions
critical terms and counterparty credit quality.
As of March 31, 2023, net losses of $3,194 were recorded in accumulated other comprehensive income (loss) related to
foreign currency forward contracts. Net losses of $588, $0, and $0 were reclassified from accumulated other comprehensive
income (loss) to cost of sales for the fiscal years 2023, 2022, and 2021, respectively. All unrealized gains and losses as shown
as of March 31, 2023 will be recognized in the consolidated statements of comprehensive income (loss) in cost of sales or other
income, net within the next twelve months at their then-current value. The net liability related to the foreign forward contracts
as of March 31, 2023 and March 31, 2022 of $3,252 and $0, respectively, and is recorded as part of other current liabilities.
Foreign Currency Forward Contracts Not Designated as Hedging Instruments
We have also used non-designated hedges to hedge a portion of U.S. subsidiary sales that are recorded in Canadian
Dollars. These contracts generally mature within 12 months from inception. As of March 31, 2023, the notional amounts of our
foreign currency forward contracts not designated as cash flow hedge instruments were approximately $2,840.
We record these derivatives on the balance sheet at fair value with changes in fair value recorded in the consolidated
statements of comprehensive income (loss). Net gains of $875, $0, and $0 for the fiscal years ended 2023, 2022, and 2021,
respectively, were recognized in the consolidated statements of comprehensive income (loss), as part of other income, net. The
fair value of the foreign exchange forward contracts is $91 and is recorded as part of other current assets. In addition, during the
55
fiscal years ended 2023, 2022, and 2021, we recognized net foreign currency translation gains of $1,249, $0, and $0,
respectively.
See Note 13, Long-term Debt, for additional information on our interest rate swap contracts.
5. Revenue Recognition
The following tables disaggregate our net sales by major product category:
Sporting Products (1)
Outdoor Accessories (2)
Action Sports (3)
Outdoor Recreation (4)
Total
Geographic Region
United States
Rest of the World
Total
Years ended March 31,
2023
2022
Sporting
Products
Outdoor
Products
Total
Sporting
Products
Outdoor
Products
Total
$ 1,757,932 $
— $ 1,757,932 $ 1,737,891 $
— $ 1,737,891
—
—
—
288,672
288,672
495,862
495,862
537,341
537,341
—
—
—
442,348
442,348
401,984
401,984
462,398
462,398
$ 1,757,932 $ 1,321,875 $ 3,079,807 $ 1,737,891 $ 1,306,730 $ 3,044,621
$ 1,619,221 $
930,389 $ 2,549,610 $ 1,632,507 $
976,939 $ 2,609,446
138,711
391,486
530,197
105,384
329,791
435,175
$ 1,757,932 $ 1,321,875 $ 3,079,807 $ 1,737,891 $ 1,306,730 $ 3,044,621
(1) Sporting Products includes the Ammunition operating segment.
(2) Outdoor Accessories includes the Outdoor Accessories operating segment.
(3) Action Sports includes the operating segments: Sports Protection and Cycling.
(4) Outdoor Recreation includes the operating segments: Hydration, Outdoor Cooking, Golf, Fishing and our Stone
Glacier business.
We sell our products in the U.S. and internationally. A majority of our sales are concentrated in the U.S. See Note 18,
Operating Segment Information for information on international revenues.
Product Sales
For the majority of our contracts with customers, 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. For our
contracts that include bundled and hardware and software sales, revenue related to delivered hardware and bundled software is
recognized when control has transferred to the customer, which typically occurs upon shipment. Revenue allocated to
unspecified software update rights is deferred and recognized on a straight-line basis over the estimated period they are
expected to be provided.
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.
56
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, federal excise taxes, and other similar taxes are excluded from revenue.
For the immaterial amount of our contracts that have multiple performance obligations, which represent promises within
an arrangement that are distinct, we allocate revenue to all distinct performance obligations based on their relative stand-alone
selling prices (“SSPs”). When available, we use observable prices to determine SSPs. When observable prices are not available,
SSPs are established that reflect our best estimates of what the selling prices of the performance obligations would be if they
were sold regularly on a stand-alone basis. We allocate revenue and any related discounts to these performance obligations
based on their relative SSPs.
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 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 a 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.
In computing EPS for the fiscal years presented, earnings, as reported for each respective period, is divided by the number
of shares below:
Years ended March 31,
2022
2021
2023
Numerator:
Net income (loss)
Denominator:
Weighted-average number of common shares outstanding, basic
Dilutive effect of stock-based awards (1)
Diluted shares
Earnings per common share:
Basic
Diluted
$
(9,718) $ 473,226 $ 266,012
56,600
—
56,600
57,190
1,947
59,137
58,241
1,664
59,905
$
$
(0.17) $
(0.17) $
8.27 $
8.00 $
4.57
4.44
(1) Due to the loss from continuing operations for the fiscal year ended March 31, 2023, there are no common shares
added to calculate dilutive EPS because the effect would be anti-dilutive. Potentially dilutive securities of 1,504 were excluded
from diluted EPS in fiscal year 2023, as we had a net loss. Potentially dilutive securities, which were not included in the
computation of diluted earnings per share, because either the effect would have been anti-dilutive, or the options’ exercise
prices were greater than the average market price of the common stock, were 0, and 543 for the fiscal years ended March 31,
2022 and, 2021 and, respectively.
7. Acquisitions and Divestitures
Simms Fishing
During the second quarter of fiscal year 2023, we acquired Simms Fishing Products (Simms), a premium fishing brand
and leading manufacturer of waders, outerwear, footwear and technical apparel. The results of this business are reported within
the Outdoor Products reportable segment. We accounted for the acquisition as a business combination using the acquisition
method of accounting, and performed an allocation of the purchase price to the tangible and intangible assets acquired and
57
liabilities assumed based on their estimated fair values as of the acquisition date. We finalized the purchase price allocation
during the fourth quarter of fiscal year 2023, and no significant changes were recorded from the original estimation. The excess
of the consideration transferred over the estimated fair value of the net assets received has been recorded as goodwill. The
factors that contributed to the recognition of goodwill primarily relate to acquisition-driven anticipated cost savings and
synergies. Assembled workforce is not recognized separate and apart from goodwill as it is neither separable nor contractual in
nature. The acquisition is not significant to our consolidated financial statements and as such we have not included disclosures
of the allocation of the purchase price or any pro forma information.
Fox Racing
During the second quarter of fiscal year 2023, we acquired Fox (Parent) Holdings, Inc. (“Fox Racing”), for a base
purchase price of $540,000, subject to certain customary adjustments for cash and debt, transaction expenses, and working
capital. In connection with the acquisition, we refinanced our 2021 ABL Revolving Credit Facility by entering into the 2022
ABL Revolving Credit Facility, which provides for a $600,000 senior secured asset-based revolving credit facility, and a
$350,000 term loan facility (the “2022 Term Loan”). The proceeds of the Term Facility, together with the proceeds of a
borrowing under the ABL Credit Facility, were used to finance the acquisition and to pay related fees and expenses. See Note
13, Long-term Debt, for additional information. The agreement includes up to an additional $50,000 of contingent consideration
payable to Seller and certain individuals during the first quarter of fiscal year 2024 if Fox Racing achieves certain adjusted
Earnings Before Interest, Tax, Depreciation, and Amortization ("EBITDA") targets during the period beginning on January 1,
2022 and ending on December 31, 2022. The initial fair value of the contingent consideration was $11,400, and is included in
the total purchase consideration below. See Note 2, Fair Value of Financial Instruments, for additional information related to
the initial fair value calculation methodology and current fair value of the contingent consideration.
The results of this business are reported within the Sports Protection operating segment and the Outdoor Products
reportable segment. We accounted for the acquisition as a business combination using the acquisition method of accounting,
and performed an allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed based on
their estimated fair values as of the acquisition date. We finalized the purchase price allocation during the fourth quarter of
fiscal year 2023, and no significant changes were recorded from the original estimation. The excess of the consideration
transferred over the estimated fair value of the net assets received has been recorded as goodwill. The factors that contributed to
the recognition of goodwill primarily relate to acquisition-driven anticipated cost savings and synergies. Assembled workforce
is not recognized separate and apart from goodwill as it is neither separable nor contractual in nature.
58
Fox Racing purchase price allocation:
Cash consideration to the Seller
Fair value of contingent consideration payable
Total estimated purchase consideration
Fair value of assets acquired:
Accounts receivable
Inventories
Intangible assets
Property, plant, and equipment
Operating lease assets
Other current assets
Other long-term assets
Total assets
Fair value of liabilities assumed:
Accounts payable
Long-term operating lease liabilities
Deferred income taxes
Other liabilities
Other long-term liabilities
Total liabilities
Net assets acquired
Goodwill
Tradenames
Customer relationships
Fox Racing supplemental pro forma data:
August 5, 2022
564,134
11,400
575,534
39,174
96,142
255,200
23,570
16,078
17,145
5,347
452,656
18,584
11,971
55,488
39,292
41
125,376
327,280
248,254
$
$
$
$
Value
Useful life (years)
$
106,200
149,000
Indefinite
5 to 15
Fox's net sales of $180,320 and net loss of $18,857 since the acquisition date, August 5, 2022, were included in our
consolidated results for the fiscal year ended March 31, 2023, and are reflected in the Outdoor Products reportable segment.
The following unaudited pro forma financial information presents our results as if the Fox Racing acquisition had
occurred on April 1, 2021:
Sales, net
Net income (loss)
Years ended March 31,
2023
2022
$
3,185,662 $
(6,930)
3,344,338
433,199
The unaudited supplemental pro forma data above includes the following significant non-recurring adjustments to net
income (loss) to account for certain costs which would have been incurred if the Fox Racing acquisition had been completed on
April 1, 2021:
59
Fees for advisory, legal, and accounting services (1)
$
(6,064) $
Years ended March 31,
2023
2022
Inventory step-up, net (2)
Interest (3)
Depreciation (4)
Amortization (5)
Management Fees (6)
Income tax provision (benefit) (7)
(7,544)
10,627
969
4,245
(530)
(910)
6,064
$7,544
30,406
2,482
12,257
(1,413)
(13,260)
(1) During the fiscal year ended March 31, 2023, we incurred a total of $6,064 in acquisition related costs, including legal
and other professional fees, all of which were reported in selling, general, and administrative expense in the consolidated
statements of comprehensive income (loss). This adjustment is to show the results as if those fees were incurred during the first
quarter of fiscal year 2022.
(2) Adjustment reflects the increased cost of goods sold expense resulting from the fair value step-up in inventory, which
was expensed over inventory turns.
(3) Adjustment for the estimated interest expense and debt issuance amortization expense on $580,000 in borrowings from
Vista's 2022 ABL Revolving Credit Facility and 2022 Term Loan, used to finance the acquisition of Fox Racing. The interest
rate assumed for purposes of preparing this pro forma financial information is 5.58%. This rate is the weighted average interest
rate for our borrowings under the 2022 ABL Revolving Credit Facility and 2022 Term Loan during the quarter of the
acquisition.
(4) Adjustment for depreciation related to the revised fair-value basis of the acquired property, plant and equipment and
change in estimated useful lives.
(5) Adjustment for amortization of acquired intangible assets.
(6) Represents an adjustment for management fees historically charged by the previous owner of Fox Racing under the
terms of their management agreement.
(7) Income tax effect of the adjustments made at a blended federal, state, and international statutory rate adjusted for any
non-deductible acquisition costs.
Stone Glacier
During the fourth quarter of fiscal year 2022, we acquired Stone Glacier, a premium brand focused on ultralightweight,
performance hunting gear designed for backcountry use. The addition of Stone Glacier allows us to enter the packs, camping
equipment, and technical apparel categories with a fast-growing brand and provide a foundation for us to leverage camping
category synergies. The results of this business are reported within the Outdoor Products segment. Contingent consideration
with an initial fair value of $9,939 was included in the purchase price. See Note 2, Fair Value of Financial Instruments, for
information related to the fair value calculation. We accounted for the acquisition as a business combination using the
acquisition method of accounting, and performed an allocation of the purchase price to the tangible and intangible assets
acquired and liabilities assumed based on their estimated fair values as of the acquisition date. We finalized the purchase price
allocation during the fourth quarter of fiscal year 2023, and no significant changes were recorded from the original estimation.
The acquisition is not significant to our consolidated financial statements and as such we have not included disclosures of the
allocation of the purchase price or any pro forma information.
Fiber Energy
During the third quarter of fiscal year 2022, we acquired Fiber Energy Products, a leader in all-natural wood grilling
pellets. This strategic transaction secures a continuous supply of pellets for our Camp Chef business and expands our revenue in
a consumable category. The results of this business are reported within the Outdoor Products segment. Contingent consideration
with an initial fair value of $3,625 was included in the purchase price. See Note 2, Fair Value of Financial Instruments, for
more information related to the fair value calculation. We accounted for the acquisition as a business combination using the
acquisition method of accounting, and performed an allocation of the purchase price to the tangible and intangible assets
acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The fair values of acquired assets
and liabilities assumed represent management’s estimate of fair value. We finalized the purchase price allocation during the
60
fourth quarter of fiscal year 2022. The acquisition is not significant to our consolidated financial statements and as such we
have not included disclosures of the allocation of the purchase price or any pro forma information.
Foresight Sports
During the third quarter of fiscal year 2022, we acquired Foresight, a leading designer and manufacturer of golf
performance analysis, entertainment, and game enhancement technologies for approximately $470,772. The purchase
agreement includes $5,599 related to employee retention payments, which will be accounted for separately from the business
combination as post combination compensation expense. Contingent payments of up to $25,000 if certain net sales targets are
met will also be accounted for separately from the business combination as post combination compensation expense. We used
cash on hand and available liquidity under our 2021 ABL Revolving Credit Facility to complete the transaction. The results of
this business are reported within the Outdoor Products segment.
Foresight's net sales of $61,173 and net income (loss) of $18,423 since the acquisition date, September 28, 2021, are
included in our consolidated results for the fiscal year ended March 31, 2022, and are reflected in the Outdoor Products
segment.
We accounted for the acquisition as a business combination using the acquisition method of accounting. The purchase
price allocation below was allocated to the tangible and intangible assets acquired and liabilities assumed based on their
estimated fair values as of the acquisition date. We finalized the purchase price allocation during the third quarter of fiscal year
2023, and no significant changes were recorded from the original estimation.. The excess of the consideration transferred over
the estimated fair value of the net assets received has been recorded as goodwill. The factors that contributed to the recognition
of goodwill primarily relate to acquisition-driven anticipated cost savings and synergies. Assembled workforce is not
recognized separate and apart from goodwill as it is neither separable nor contractual in nature. The goodwill is deductible for
tax purposes.
Foresight purchase price allocation:
Total consideration transferred
Fair value of assets acquired:
Accounts receivable
Inventories
Intangible assets
Property, plant, and equipment
Operating lease assets
Other assets
Total assets
Fair value of liabilities assumed:
Accounts payable
Customer deposits
Long-term operating lease liabilities
Contract liabilities
Other liabilities
Other long-term liabilities
Total liabilities
Net assets acquired
Goodwill
Tradenames
Patented technology
Customer Relationships
September 28,
2021
$
$
$
470,772
2,806
10,780
131,500
1,870
6,506
2,006
155,468
6,177
2,084
5,961
2,992
1,729
9,182
28,125
127,343
343,429
Value
Useful life (years)
$
42,500
19,900
69,100
20
5 to 10
5 to 15
61
Foresight supplemental pro forma data:
The following unaudited pro forma financial information presents our results as if the Foresight acquisition had been
completed on April 1, 2020:
Sales, net
Net income (loss)
Years ended March 31,
2022
2021
$
3,088,220 $
2,296,413
515,345
268,547
The unaudited supplemental pro forma data above includes the following significant non-recurring adjustments to net
income (loss):
Fees for advisory, legal, and accounting services (1)
$
Inventory step-up, net (2)
Interest (3)
Depreciation & amortization (4) (5)
Income tax provision (6)
Years ended March 31,
2022
2021
(3,080) $
(1,247)
2,203
4,961
3,520
3,080
$1,247
6,565
8,122
5,520
(1) During the fiscal year ended March 31, 2022, we incurred a total of $3,080 in acquisition related costs, including legal
and other professional fees, related to the acquisition, all of which were reported in selling, general, and administrative
expense in the consolidated statements of comprehensive income (loss). This adjustment is to show the results as if those
fees were incurred during the first quarter of fiscal 2021.
(2) Adjustment reflects the increased cost of goods sold expense resulting from the fair value step-up in inventory which was
expensed in full during the third quarter of fiscal year 2022. This adjustment is to show the results as if that expense was
incurred during the first quarter of fiscal 2021.
(3) Adjustment to reflect an increase in interest expense resulting from assumed advances to complete the transaction on our
2018 New Credit Facilities prior to March 31, 2021 and our 2021 ABL Revolving Credit Facility after March 31, 2021.
(4) Adjustment for depreciation related to the revised fair-value basis of the acquired property, plant and equipment and
change in estimated useful lives.
(5) Adjustment for amortization of acquired intangible assets.
(6) Income tax effect of the adjustments made at a blended federal and state statutory rate including the impact of the
valuation allowance.
The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily
indicative of results of operations that would have been achieved had the acquisition taken place on the date indicated, or of our
future consolidated results of operations. The pro forma financial information presented above has been derived from our
historical consolidated financial statements and from the historical accounting records of Foresight.
QuietKat
During the first quarter of fiscal year 2022, we acquired QuietKat, an electric bicycle company that specializes in
designing, manufacturing, and marketing rugged, all-terrain eBikes. The results of this business are reported within the Outdoor
Products segment. We accounted for the acquisition as a business combination using the acquisition method of accounting, and
performed an allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed based on
their estimated fair values as of the acquisition date. We finalized the purchase price allocation during the first quarter of fiscal
year 2023 and no significant changes were recorded from the original estimation.. Contingent consideration with an initial fair
value of $22,400 was included in the purchase price. See Note 2, Fair Value of Financial Instruments, for information related to
the fair value calculation. In addition to the consideration we paid at closing, $13,000 was paid to key members of QuietKat
management and is considered compensation that will be expensed over approximately three years, provided the key members
continue their employment with us through the respective milestone dates. The acquisition is not significant to our consolidated
financial statements and as such we have not included disclosures of the allocation of the purchase price or any pro forma
information.
62
HEVI-Shot
During the fourth quarter of fiscal year 2021, we acquired HEVI-Shot Ammunition, which added specialized lead-free
ammunition capabilities and another iconic brand to our ammunition portfolio. Contingent consideration with an initial fair
value of $176 was included in the purchase price. See Note 2, Fair Value of Financial Instruments, for information related to
the fair value calculation. We accounted for the acquisition as a business combination using the acquisition method of
accounting, and performed an allocation of the purchase price to the tangible and intangible assets acquired and liabilities
assumed based on their estimated fair values as of the acquisition date. The fair values of acquired assets and liabilities assumed
represent management’s estimate of fair value. We finalized the purchase price allocation during the first quarter of fiscal year
2022, and no significant changes were recorded.
Remington
During the third quarter of fiscal year 2021, we acquired certain assets related to Remington Outdoor Company, Inc.’s
("Remington") ammunition and accessories businesses, including Remington's ammunition manufacturing facility in Lonoke,
Arkansas and related intellectual property. The aggregate consideration of the transaction including working capital adjustments
was $81,691 for the net assets acquired, subject to certain customary closing adjustments. We funded the acquisition using a
combination of approximately $51,691 of cash on hand and approximately $30,000 drawn from our existing asset-based
revolving credit facility. The acquisition will allow us to leverage our current manufacturing infrastructure, distribution
channels and scale to restore efficiency, profitability and sustainability to the Remington ammunition and accessories business.
We accounted for the acquisition of Remington as a business combination using the acquisition method of accounting.
The purchase price allocation below was allocated to the tangible and intangible assets acquired and liabilities assumed based
on their estimated fair values as of the acquisition date. The fair values of acquired assets and liabilities assumed represent
management’s estimate of fair value. We finalized the purchase price allocation during the fourth quarter of fiscal year 2021.
The excess of the consideration transferred over the estimated fair value of the net assets received has been recorded as
goodwill. The factors that contributed to the recognition of goodwill primarily relate to acquisition-driven anticipated cost
savings and synergies along with the assembled workforce acquired. Assembled workforce is not recognized separate and apart
from goodwill as it is neither separable nor contractual in nature. The goodwill is deductible for tax purposes. The results of this
business are reported in our Sporting Products segment.
Remington Purchase Price Allocation:
Total purchase price:
Cash paid
Cash paid for working capital
Total purchase price
Fair value of assets acquired:
Inventories
Intangible assets
Property, plant, and equipment
Other assets
Total assets
Fair value of liabilities assumed:
Accounts payable
Other liabilities
Total liabilities
Net assets acquired
Goodwill
Indefinite lived tradenames
Customer relationships
October 12, 2020
$
$
$
$
81,400
291
81,691
20,021
26,200
31,200
3,363
80,784
311
2,969
3,280
77,504
4,187
Value
Useful life (years)
$
24,500
1,700
Indefinite
20
63
Supplemental Pro Forma Data:
The following pro forma financial information presents our results as if the Remington acquisition had been completed on
April 1, 2019:
Sales, net
Net income (loss)
Years ended March 31,
2021
2020
$
2,298,396 $
1,933,699
255,022
(205,399)
The unaudited supplemental pro forma data above include the following significant non-recurring adjustments to net
income (loss):
Fees for advisory, legal, and accounting services (1)
Inventory step-up, net (2)
Interest (3)
Depreciation (4)
Amortization (5)
Income taxes (6)
Years ended March 31,
2021
2020
$
(3,429) $
(400)
835
1,902
42
2,324
3,429
400
3,538
3,804
84
—
(1) Adjustment for fees that were incurred in connection with the acquisition of Remington during fiscal year 2021 as if those
fees were incurred during the first quarter of fiscal year 2020. Costs were recorded in selling, general, and administrative
expense. We paid a total of $3,429 in transaction costs.
(2) Adjustment reflects the increased cost of goods sold expense resulting from the fair value step-up in inventory which was
expensed over the first inventory cycle.
(3) Adjustment to reflect an increase in interest expense resulting from interest on the 2018 ABL Revolving Credit Facility.
(4) Adjustment for depreciation related to the revised basis of the acquired property, plant, and equipment and change in
estimated useful lives.
(5) Adjustment for amortization of acquired intangible assets.
(6) Income tax effect of the adjustments made at a blended federal and state statutory rate including the impact of the
valuation allowance.
The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily
indicative of results of operations that would have been achieved had the acquisition taken place on the date indicated, or of our
future consolidated results of operations. The pro forma financial information presented above has been derived from our
historical consolidated financial statements and from the historical accounting records of Remington.
Divestiture of Businesses
During the third quarter of fiscal year 2021, we sold a non-strategic business in our Sporting Products segment. As part of
the agreement, we provided limited transition services during fiscal 2021. During the three months ended December 27, 2020,
we recognized a pretax gain on this divestiture of approximately $18,467, which was included in operating income on the
consolidated statement of comprehensive income (loss). This transaction did not meet the criteria for discontinued operations as
it did not represent a strategic shift that will have a major effect on our ongoing operations. The assets of this business
represented a portion of our Ammunition reporting unit.
8. Receivables
Our trade accounts receivables are recorded at net realizable value, which includes an appropriate allowance for estimated
credit losses as described in Note 1, Significant Accounting Policies. We maintain an allowance for credit losses related to
accounts receivable for future expected credit losses resulting from the inability or unwillingness of our customers to make
required payments. We estimate the allowance based upon historical bad debts, current customer receivable balances, age of
customer receivable balances and the customers' financial condition, and in relation to a representative pool of assets consisting
of a large number of customers with similar risk characteristics. The allowance is adjusted as appropriate to reflect differences
in current conditions as well as changes in forecasted macroeconomic conditions. Receivables that do not share risk
64
characteristics are evaluated on an individual basis, including those associated with customers that have a higher probability of
default.
Net receivables are summarized as follows:
Trade receivables
Other receivables
Less: allowance for estimated credit losses and discounts
Net receivables
March 31,
2023
2022
$
$
349,424 $
8,899
(18,950)
339,373 $
357,584
13,699
(14,510)
356,773
Walmart represented 10% and 14% of the total trade receivables balance as of March 31, 2023 and 2022, respectively.
The following provides a reconciliation of the activity related to the allowance for estimated credit losses and discounts
for the periods presented:
Balance, March 31, 2021
Provision for credit losses
Write-off of uncollectible amounts, net of recoveries
Balance, March 31, 2022
Provision for credit losses
Write-off of uncollectible amounts, net of recoveries
Purchase accounting (Note 7)
Balance, March 31, 2023
$
$
13,422
2,350
(1,262)
14,510
2,289
(259)
2,410
18,950
Note Receivable, see 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
$
$
— $
—
— $
12,000
(2,308)
9,692
This note receivable was originally due in full in June 2024. During fiscal year 2023, we entered into an agreement with
the debtors to provide a discount in exchange for accelerated payment. We received a payment of $10,683 in the fourth fiscal
quarter, and the note receivable was considered satisfied in full.
March 31,
2023
2022
9. Inventories
Net inventories consist of the following:
Raw materials
Work in process
Finished goods
Net inventories
March 31,
2023
2022
$
$
199,225 $
63,652
447,020
709,897 $
220,425
60,390
362,161
642,976
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 $45,929 and
$14,662 as of March 31, 2023 and 2022, 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 1 to 10 years and buildings and improvements are depreciated over 1 to
30 years. Depreciation expense was $48,126, $46,094, and $45,264 in fiscal years 2023, 2022, and 2021, respectively.
65
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 change in the carrying value of goodwill was as follows:
March 31,
2023
2022
$
$
13,276 $
108,377
498,266
22,639
642,558
(414,311)
228,247 $
12,575
84,916
461,635
19,672
578,798
(367,711)
211,087
Balance, March 31, 2021
Acquisitions
Balance, March 31, 2022
Acquisitions
Impairment
Balance, March 31, 2023
Sporting
Products
Outdoor
Products
Total
$
$
86,082 $
23
86,105
—
—
86,105 $
— $
395,752
395,752
316,607
(332,755)
379,604 $
86,082
395,775
481,857
316,607
(332,755)
465,709
The increases in goodwill in fiscal years 2023 and 2022 were due to acquisitions. See Note 7, Acquisitions and
Divestitures, for details of our acquisitions during fiscal years 2023 and 2022. The decrease in fiscal year 2023 was due to an
impairment charge of $332,755 recognized in the fourth fiscal quarter of fiscal year 2023. As of March 31, 2023 and 2022,
there were $1,326,962 and $994,207 of accumulated impairment losses, recorded within the Outdoor Products segment,
respectively. The goodwill recorded within the Sporting Products segment has no accumulated impairment losses.
Fiscal year 2023 assessment
We performed our annual testing of goodwill in accordance with our accounting policies described in Note 1, Significant
Accounting Policies. To perform the annual quantitative goodwill impairment testing, we prepared valuations of our reporting
units using both an income and market approach, which were compared with the respective carrying values of the reporting
units to determine whether any goodwill impairment existed.
The decline in fair value of our reporting units was significantly impacted by a sudden decline in the demand of products
related to certain of our recent acquisitions, which resulted in lower forecasted revenues, operating margins, and operating cash
flows as compared to our valuation at acquisition date. Our estimates of the fair values of the reporting units were also
influenced by higher discount rates in the income-based valuation approach as a result of increasing market to equity risk
premiums, company specific risk premiums and higher treasury rates, since the acquisition dates. The weighted average cost of
capital used in the goodwill impairment testing ranged between 10.5% and 17.0%, which was derived from the financial
structures of comparable companies corresponding to the industry of each reporting unit.
As a result, we recognized impairment losses equal to the full carrying value of goodwill of $248,254, $68,353, and
$12,349 allocated to the reporting units of Fox Racing, Simms Fishing, and QuietKat, respectively, and partial goodwill
impairment charges of $3,799 related to our Stone Glacier reporting unit. We determined that the goodwill relating to our other
reporting units was not impaired as the fair value exceeded the carrying value. Our Ammunition, Golf, Stone Glacier, and
Outdoor Cooking reporting units comprise our remaining goodwill at March 31, 2023. As of the fiscal year 2023, annual testing
measurement date, the fair value of our Stone Glacier and Outdoor Cooking reporting units was less than 10% higher than their
carrying values. In order to assess the reasonableness of the calculated fair values of our reporting units, we also compared the
66
sum of the reporting units’ fair values to our market capitalization and calculated an implied control premium (the excess of the
sum of the reporting units’ fair values over the market capitalization). We evaluated the control premium by comparing it to
control premiums of recent comparable transactions. If the implied control premium was not reasonable in light of this
assessment, we would have reevaluated our fair value estimates of the reporting units by adjusting the discount rates and other
assumptions as necessary.
Before completing our goodwill impairment test, we first tested our indefinite-lived intangible assets. We performed a
step zero analysis on nine of our indefinite-lived tradenames. We performed a step one analysis on our remaining indefinite-
lived tradenames, which resulted in impairment losses of $21,200 and $20,400, related to the Fox Racing and Simms Fishing
indefinite-lived tradename assets, respectively. We determined the fair value of the indefinite-lived tradenames related to our
Bell Cycling and Giro tradenames was greater or equal to the carrying value, and no impairment was recorded. The carrying
value of the indefinite lived intangible assets related to Fox Racing and Simms Fishing after the impairment was $85,000 and
$30,000, respectively at March 31, 2023. We determined the fair value of our Fox Racing, Simms Fishing, Bell Cycling, and
Giro indefinite-lived tradenames using royalty rates of 3.0%, 3.0%, 1.5%, and 1.5%, respectively.
Fiscal year 2022 annual assessment
We performed our annual testing of goodwill in accordance with our accounting policies described in Note 1, Significant
Accounting Policies. We completed a step zero assessment as of January 1, 2022 and concluded there were no indicators of
impairment.
Our indefinite lived intangibles are not amortized and are tested for impairment annually or upon the occurrence of events
or changes in circumstances that indicate that the assets might be impaired. We completed a step zero assessment as of January
1, 2022, in accordance with our accounting policies described in Note 1, Significant Accounting Policies, and concluded there
were no indicators of impairment.
Fiscal year 2021 annual assessment
We performed our annual testing of goodwill in accordance with our accounting policies described in Note 1, Significant
Accounting Policies. We completed a step zero assessment as of January 1, 2021 and concluded there were no indicators of
impairment.
Our indefinite lived intangibles are not amortized and are tested for impairment annually or upon the occurrence of events
or changes in circumstances that indicate that the assets might be impaired. We completed a step zero assessment as of January
1, 2021, in accordance with our accounting policies described in Note 1, Significant Accounting Policies, and concluded there
were no indicators of impairment for the majority of our indefinite lived intangibles. We completed a step one assessment as of
January 1, 2021, related to our CamelBak indefinite-lived tradename and concluded there was no impairment. We determined
the fair value of the CamelBak indefinite-lived tradename using a royalty rate of 2.5%.
Net intangibles consisted of the following:
2023
2022
March 31,
Gross
carrying
amount
Accumulated
amortization
Total
Gross
carrying
amount
Accumulated
amortization
Total
Trade names
Patented technology
Customer relationships and other
Total
Non-amortizing trade names
Net intangible assets
(30,848) $
(16,313)
(151,272)
(198,433)
$ 113,915 $
36,854
530,237
681,006
250,603
90,159
23,530
210,504
324,193
135,602
$ 931,609 $ (198,433) $ 733,176 $ 614,539 $ (154,744) $ 459,795
83,067 $ 113,915 $
20,541
378,965
482,573
250,603
(23,756) $
(13,324)
(117,664)
(154,744)
36,854
328,168
478,937
135,602
—
—
The net increase in intangible assets in fiscal year 2023 was due to acquisitions, less decreases related to impairment as
discussed above, and the impact of foreign exchange rates. See Note 7, Acquisitions and Divestitures, for details of our
acquisitions during fiscal years 2023 and 2022. The amortizable intangible assets in the table above are being amortized using a
straight-line method over a weighted average remaining period of approximately 12.1 years.
67
Amortization expense related to these assets was $43,963, $26,246 and $19,846 in fiscal years 2023, 2022, and 2021,
respectively, 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 year 2024
Fiscal year 2025
Fiscal year 2026
Fiscal year 2027
Fiscal year 2028
Thereafter
Total
12. Other Current Liabilities and Restructuring
The major categories over 5% of current liabilities are as follows:
Accrual for in-transit inventory
Other
Total other current liabilities
$
$
50,604
50,586
47,577
46,127
40,957
246,722
482,573
March 31,
2023
2022
$
$
9,810 $
136,567
146,377 $
11,620
115,560
127,180
We provide consumer warranties against manufacturing defects on certain products 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 as of March 31, 2021
Payments made
Warranties issued
Changes related to pre-existing warranties and other adjustments
Balance as of March 31, 2022
Payments made
Warranties issued
Changes related to pre-existing warranties and other adjustments
Balance as of March 31, 2023
Restructuring
$
$
8,696
(4,169)
4,479
67
9,073
(4,676)
4,827
328
9,552
In the fourth quarter of fiscal year 2023, we announced a restructuring plan earnings improvement program, which
includes severance and asset impairments related to product line reassessments, office closures, and headcount reductions
across our brands and corporate teams. We recorded $15,668 of restructuring charges for the fiscal year ended March 31, 2023.
The restructuring charges are included in selling, general, and administrative expenses in our consolidated statement of
comprehensive income (loss), and are as follows:
Other asset impairments
Employee severance and related expenses
ROU asset impairments
Impairment on technology assets
Total
68
For the year ended
March 31, 2023
$
$
7,628
5,225
1,812
1,003
15,668
• Other asset impairments related to non-refundable deposits on contracts and capitalized costs on projects abandoned
due to product line reassessments.
• Employee costs including severance payments and benefits were recorded for the reduction in workforce across our
brands and corporate teams. As of March 31, 2023, $5,225 of employee related costs were included in other current
liabilities on the consolidated balance sheets.
• ROU asset impairments were recorded based on the approved plan to reduce distribution space permanently, and
abandon equipment leases related to product line reassessments. Significant assumptions used to estimate fair value of
the ROU assets, were the current economic environment, real estate market conditions and general market participant
assumptions.
• Technology assets were fully impaired on the cease use date in conjunction with internal projects abandoned due to the
restructuring.
There were no other liabilities related to the restructuring plan as of March 31, 2023, except the employee costs described
above.
13. Long-term Debt
2021 ABL Revolving Credit Facility
2022 ABL Revolving Credit Facility
2022 Term Loan
Total Principal Amount of Credit Agreements
4.5% Senior Notes
Total Principal Amount of Long-Term Debt
Less: unamortized deferred financing costs
Carrying amount of long-term debt
Less: current portion
March 31,
2023
2022
$
— $
355,000
205,000
560,000
500,000
1,060,000
(10,342)
1,049,658
(65,000)
984,658 $
170,000
—
—
170,000
500,000
670,000
(3,886)
666,114
—
666,114
Carrying amount of long-term debt, excluding current portion
$
Credit Agreements—On August 5, 2022, we refinanced our 2021 ABL Revolving Credit Facility by entering into the
2022 ABL Revolving Credit Facility, which provides for a $600,000 senior secured asset-based revolving credit facility. The
amount available under the 2022 ABL Revolving Credit Facility is the lesser of the total commitment of $600,000 or a
borrowing base based on percentages of eligible receivables, inventory, and cash, minus certain reserves, but, in each case,
subject to the excess availability financial covenant under the 2022 ABL Revolving Credit Facility described below. As of
March 31, 2023, the Excess Availability, or the amount available to borrow under the 2022 ABL Revolving Credit Facility,
based on the borrowing base less outstanding borrowings of $355,000 and outstanding letters of credit of $15,645, less the
minimum required borrowing base of $58,472, was $155,607. The 2022 ABL Revolving Credit Facility matures on March 31,
2026 (the “Maturity Date”), subject to a customary springing maturity in respect of the 4.5% Notes due 2029 (described below)
and the 2022 Term Loan (described below). Any outstanding revolving loans under the 2022 ABL Revolving Credit Facility
will be payable in full on the Maturity Date.
Concurrently with the effectiveness of the 2022 ABL Revolving Credit Facility, we also obtained a $350,000 senior
secured asset-based term loan facility (the “2022 Term Loan”). The 2022 Term Loan matures on August 5, 2024 (the "Term
Maturity Date") and is subject to quarterly principal payments on the last business day of each quarter in an amount equal to (i)
12.5% of the original principal amount of the 2022 Term Loan if the aggregate outstanding principal balance of the 2022 Term
Loan exceeds the Term Loan Formula Threshold described below, or (ii) 10.0% of the original principal amount of the 2022
Term Loan if the aggregate outstanding principal balance of the 2022 Term Loan is equal to or less than the Term Loan
Formula Threshold described below. As of March 31, 2023, our quarterly principal payments are equal to 10.0% of the original
principal amount of the 2022 Term Loan. The 2022 Term Loan is also subject to certain mandatory prepayment requirements,
including with respect to the net cash proceeds from the sale of certain collateral, subject to our rights to reinvest such proceeds,
and a percentage of our excess cash flow, to be calculated annually. The Term Loan Formula Threshold is based on a
percentage of the appraisal value of eligible intellectual property, eligible machinery and equipment, and the fair market value
of eligible real property minus certain reserves. Any outstanding term loans under the 2022 Term Loan will be payable in full
on the Term Maturity Date.
69
Borrowings under the 2022 ABL Revolving Credit Facility bear interest at a rate equal to either the sum of a base rate
plus a margin ranging from 0.25% to 0.75% or the sum of a Term Secured Overnight Financing Rate ("Term SOFR") plus a
credit spread adjustment of 0.10%, plus a margin ranging from 1.25% to 1.75%. The margins vary based on our Average
Excess Availability under the 2022 ABL Revolving Credit Facility. As of March 31, 2023, the margin under the 2022 ABL
Revolving Credit Facility was 0.75% for base rate loans and 1.750% for Term SOFR loans. We pay a commitment fee on the
unused commitments under the 2022 ABL Revolving Credit Facility of 0.175% per annum.
Borrowings under the 2022 Term Loan bear interest at a rate equal to either the sum of a base rate plus a margin ranging
from 2.50% to 3.00% or the sum of Term SOFR plus a credit spread adjustment of 0.10%, plus a margin ranging from 3.50% to
4.00%. The margins vary based on our Term Loan Formula Threshold under the 2022 Term Loan. As of March 31, 2023, the
margin under the 2022 Term Loan was 2.50% for base rate loans and 3.50% for Term SOFR loans.
As of March 31, 2023, the weighted average interest rate for our borrowings under the 2022 ABL Revolving Credit
Facility and 2022 Term Loan was 7.24%.
We incurred debt issuance costs related to the 2022 ABL Revolving Credit Facility of approximately $6,794 and
unamortized debt issuance costs of $785 related to the 2021 ABL Credit Facility were written off during fiscal year 2023. This
expense is included in interest expense in the consolidated statements of comprehensive income (loss). The remaining
unamortized debt issuance costs of approximately $11,282, including remaining unamortized debt issuance costs related to the
2021 ABL Credit Facility, are being amortized over the term of the 2022 ABL Revolving Credit Facility, and are included
within other current and non-current assets.
We incurred debt issuance costs related to the 2022 Term Loan of approximately $10,432. The debt issuance costs
associated with the 2022 Term Loan are being amortized to interest expense over 2 years.
Substantially all domestic tangible and intangible assets of Vista Outdoor and our domestic subsidiaries are pledged as
collateral under the 2022 ABL Revolving Credit Facility and 2022 Term Loan.
4.5% Notes—In fiscal year 2021, we issued $500,000 aggregate principal amount of 4.5% Notes that mature on March 15,
2029. These notes are unsecured and senior obligations. Interest on the notes is payable semi-annually in arrears on March 15
and September 15 of each year. We have the right to redeem some or all of these notes on or after March 15, 2024 at specified
redemption prices. Prior to March 15, 2024, we may redeem some or all of these notes at a price equal to 100% of their
principal amount plus accrued and unpaid interest to the date of redemption and a specified make-whole premium. In addition,
prior to March 15, 2024, we may redeem up to 40% of the aggregate principal amount of these notes with the net cash proceeds
of certain equity offerings, at a price equal to 104.5% of their principal amount plus accrued and unpaid interest to the date of
redemption. Debt issuance costs of approximately $4,491 are being amortized to interest expense over eight years, the term of
the notes.
Rank and guarantees—The 2022 ABL Revolving Credit Facility and 2022 Term Loan obligations are guaranteed on a
secured basis, jointly and severally and fully and unconditionally by substantially all of our domestic subsidiaries. Vista
Outdoor (the parent company issuer) has no independent assets or operations. We own 100% of all of these guarantor
subsidiaries. The 4.5% 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 4.5% Notes are fully and unconditionally guaranteed, jointly and severally, by our existing and future domestic
subsidiaries that guarantee indebtedness under our 2022 ABL Revolving Credit Facility and 2022 Term Loan or that incur or
guarantee certain of our other indebtedness, or indebtedness of any subsidiary guarantor, in an aggregate principal amount in
excess of $75,000. These guarantees are senior unsecured obligations of the applicable subsidiary guarantors. The guarantee by
any subsidiary guarantor of our obligations in respect of the 4.5% 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 4.5% Notes, or
• if such subsidiary guarantor has been released from its guarantees of indebtedness under the 2022 ABL Revolving
Credit Facility and 2022 Term Loan and all capital markets debt securities
70
Interest Rate swaps —During fiscal year 2023, we entered into floating-to-fixed interest rate swaps in order to mitigate the
risk of changes in our interest rates on our outstanding variable-rate debt. We will receive variable interest payments from the
counterparty lenders in exchange for fixed interest rate payments made by us. As of March 31, 2023, we had the following
interest rate swaps outstanding:
Notional
Fair Value
Pay Fixed
Receive Floating Maturity Date
Non-amortizing swap
$
50,000 $
Non-amortizing swap
25,000
(1,087)
(673)
4.910%
4.650%
4.847%
4.698%
Feb 2026
Mar 2026
The amount paid or received under these swaps is recorded as an adjustment to interest expense. As of March 31, 2023
losses of $1,760 were recorded in accumulated other comprehensive income (loss) related to interest rate swaps. All unrealized
gains and losses as shown as of March 31, 2023 will be recognized in the consolidated statements of comprehensive income
(loss) in interest expense within the next two fiscal years, at their then-current value. No amounts were reclassified from
accumulated other comprehensive income (loss) to interest expense as of March 31, 2023. The liability related to the interest rate
swaps is recorded as part of other long-term liabilities.
Scheduled Minimum Payments—The scheduled minimum payments on outstanding long-term debt were as follows as of
March 31, 2023:
Fiscal year 2024
Fiscal year 2025
Fiscal year 2026
Fiscal year 2027
Fiscal year 2028
Thereafter
Total
Covenants
$
$
65,000
140,000
355,000
—
—
500,000
1,060,000
2022 ABL Revolving Credit Facility—Our 2022 ABL Revolving Credit Facility and 2022 Term Loan 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. Each of the 2022
ABL Revolving Credit Facility and 2022 Term Loan contains a financial covenant which requires that Excess Availability
under the 2022 ABL Revolving Credit Facility cannot fall below the greater of (a) 10% of the line cap or (b) $57,000. As a
result of this financial covenant, we must maintain Excess Availability of at least the greater of 10% of the line cap or $57,000
at all times in order to satisfy the financial covenant. In addition, as long as the 2022 Term Loan remains outstanding, we also
must maintain a maximum consolidated leverage ratio (as defined in the credit agreement) of 3.00:1.00 as of the end of each
fiscal quarter. As of March 31, 2023, the consolidated leverage ratio was 1.6. Each of the 2022 ABL Revolving Credit Facility
and the 2022 Term Loan includes a covenant that prohibits the spin-off of any line of business of Vista Outdoor or certain of its
subsidiaries, including the expected separation of our Outdoor Products segment (the “Planned Separation”), and amendment of
each such covenant will require the consent of all lenders under the applicable credit facility in order to permit the Planned
Separation. Vista Outdoor anticipates that each of the 2022 ABL Revolving Credit Facility and the 2022 Term Loan will be
repaid or refinanced in full prior to or upon the consummation of the Planned Separation. If we do not comply with the
covenants in the 2022 ABL Revolving Credit Facility or 2022 Term Loan, the lenders under the applicable facility may, subject
to customary cure rights, require the immediate payment of all amounts outstanding under such facility. As noted above, the
Excess Availability less the minimum required borrowing base under the 2022 ABL Revolving Credit Facility was $155,607 as
of March 31, 2023. Vista Outdoor has the option to increase the amount of the 2022 ABL Revolving Credit Facility in an
aggregate principal amount not to exceed $150,000, to the extent that any one or more lenders, whether or not currently party to
the 2022 ABL Revolving Credit Facility, commits to be a lender for such amount.
4.5% Notes—The indenture governing the 4.5% 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, make other distributions, repurchase, or redeem our capital stock,
prepay, redeem or repurchase certain debt and make loans and investments.
The 2022 ABL Revolving Credit Facility, the 2022 Term Loan, and the indenture governing the 4.5% Notes contain
cross-default provisions so that noncompliance with the covenants within one debt agreement could also cause a default under
the other debt agreement. As of March 31, 2023, we were in compliance with the covenants of all of our debt agreements.
71
However, we cannot provide assurance that we will be able to comply with such financial covenants in the future due to various
risks and uncertainties, some of which may be beyond our control. Any failure to comply with the restrictions in the 2022 ABL
Revolving Credit Facility and 2022 Term Loan may prevent us from drawing under these loans and may result in an event of
default under the 2022 ABL Revolving Credit Facility and 2022 Term Loan, which default may allow the creditors to accelerate
the related indebtedness and the indebtedness under our 4.5% Notes and proceed against the collateral that secures such
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 $49,343, $25,328, and $28,262 in fiscal years 2023, 2022,
and 2021, respectively.
14. Employee Benefit Plans
Defined Benefit Plan
During fiscal year 2023 and 2022, we recognized an aggregate net expense for employee defined benefit plans of $1,525
and $426, respectively. During fiscal year 2021, we recognized an aggregate net benefit for employee defined benefit plans of
$86.
We recognize the funded status of our 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") for
our other post-retirement benefit plans. The weighted average discount rate used to determine the PBO was 4.90% and 3.60%
as of March 31, 2023 and 2022, respectively. The increase in the discount rate decreases the PBO and takes into consideration
the actual return on the plan assets. The fair value of the plan assets was $143,658 and $171,573 as of March 31, 2023 and
2022, respectively. The benefit obligation was $167,047 and $192,945 as of March 31, 2023 and 2022, respectively. This
resulted in an unfunded liability of $23,389 and $21,372 as of March 31, 2023 and 2022, respectively, which is primarily
recorded within accrued pension and post-employment benefits liability on the consolidated balance sheets.
Since 2018, participating employee’s benefits continue to grow based on annual interest credits applied to the employee’s
cash balance account until the commencement of the employee’s benefit. Prior to the amendments, the benefits under the
affected plans were determined by a cash balance formula that provided participating employees with an annual pay credit as a
percentage of their eligible pay based on their age and eligible service.
The weighted average interest crediting rate was 4% for fiscal years 2023 and 2022, respectively. 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 6.5% and 5.5% over the long-term within reasonable and prudent levels of risk as of March 31, 2023 and 2022,
respectively, 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 our 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 year 2023, we made contributions of $0 directly to the pension trust,
made contributions of $0 to our other postretirement benefit plans, and made distributions of $0 directly to retirees under our
non-qualified supplemental executive retirement plans, respectively. During fiscal year 2022, we made contributions of $1,300
directly to our pension trust, made contributions of $0 to our other postretirement benefit plans, and made distributions of $0
directly to retirees under our non-qualified supplemental executive retirement plans, respectively. During fiscal year 2021, we
made contributions of $7,100 directly to our pension trust, made contributions of $0 to our other postretirement benefit plans,
and made distributions of $0 directly to retirees under our non-qualified supplemental executive retirement plans, respectively.
Substantially all contributions made to our pension trust were required by local funding requirements. We currently expect
to make contributions of $0 during fiscal year 2024. Required future pension contributions are estimated based upon
72
assumptions such as discount rates on future obligations, assumed rates of return on plan assets, and legislative changes. Actual
future pension costs and required funding obligations will be affected by changes to these assumptions.
The following benefit payments, which reflect expected future service, are expected to be paid primarily out of the
pension trust:
Fiscal year 2024
Fiscal year 2025
Fiscal year 2026
Fiscal year 2027
Fiscal year 2028
Fiscal years 2029 through 2033
Defined Contribution Plan
$
13,921
14,304
13,600
13,196
12,745
62,682
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 U.S.
Total contributions in fiscal years 2023, 2022, and 2021 were $22,298, $20,462, and $12,909, respectively.
15. Income Taxes
Income before income taxes is as follows:
Current:
U.S.
Non-U.S.
Income before income taxes
Our income tax (provision) benefit consists of:
Current:
Federal
State
Non-US
Deferred:
Federal
State
Non-US
Income tax (provision) benefit
2023
Years ended March 31,
2022
2021
44,494 $
6,168
50,662 $
619,464 $
1,494
620,958 $
259,009
375
259,384
2023
Years ended March 31,
2022
2021
(94,041) $
(9,263)
(324)
42,445
(253)
1,056
(60,380) $
(107,429) $
(28,119)
(739)
(10,327)
(1,483)
365
(147,732) $
15,723
(18,684)
(350)
2,668
7,271
—
6,628
$
$
$
$
73
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
Foreign derived intangible income
Nondeductible goodwill impairment
Nondeductible earnouts
Nondeductible loss on divestiture
Change in tax contingency
Impact of law changes
Valuation allowance
Other
Effective income tax rate
2023
Years ended March 31,
2022
2021
21.0 %
14.2 %
(13.1) %
110.1 %
(7.5) %
— %
(1.4) %
— %
— %
(4.1) %
119.2 %
21.0 %
3.9 %
(1.0) %
— %
0.2 %
— %
(0.7) %
— %
— %
0.4 %
23.8 %
21.0 %
4.6 %
(1.2) %
— %
— %
(0.4) %
(3.6) %
(4.1) %
(19.0) %
0.1 %
(2.6) %
The effective tax rate for the current year is reflective of the federal statutory rate of 21% increased by the nondeductible
impairment of goodwill and state taxes, partially offset by the deduction for foreign derived intangible income.
The current year increase in the effective tax rate as compared to the prior year is primarily due to the impact of
nondeductible impairment of goodwill.
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 non-current assets
or liabilities. As of March 31, 2023 and 2022, the components of deferred tax assets and liabilities were as follows:
Deferred tax assets:
Inventories
Retirement benefits
Accounts receivable
Accruals for employee benefits
Other reserves
Loss and credit carryforwards
Capital loss carryforward
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
March 31,
2023
2022
$
18,628 $
6,228
8,245
9,063
3,597
5,368
19,390
25,922
9,511
105,952
(21,382)
84,570
(86,956)
(13,970)
(24,393)
(125,319)
$
(40,749) $
7,178
5,384
6,664
7,917
3,146
3,082
19,598
18,984
4,926
76,879
(20,417)
56,462
(43,957)
(24,571)
(17,238)
(85,766)
(29,304)
As of March 31, 2023, our deferred tax assets were primarily the result of capital loss carryforwards and other deferred
tax assets. We have capital loss carryforwards totaling $19,390 as of March 31, 2023, which, if unused, will expire in fiscal
year 2025.
74
As of March 31, 2023, there are federal and state net operating loss and credit carryovers of $5,368, which, if unused, will
expire in years March 31, 2024 through March 31, 2044. The carryforwards expiring in fiscal year 2024 are not material.
We have valuation allowances on certain deferred tax assets of $21,382 and $20,417 at March 31, 2023 and 2022,
respectively. The increase in valuation allowance from year end 2022 to year end 2023 was primarily due to U.S. state tax
attributes.
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 $43,201 and $139,238 in fiscal years 2023 and 2022, respectively.
We filed amended income tax returns in fiscal year 2021 requesting total refunds of $42,193, as permitted by the CARES
Act. These refunds, plus interest, were received in fiscal year 2023.
As of March 31, 2023 and 2022, unrecognized tax benefits, including interest and penalties, that have not been recorded in
the financial statements amounted to $28,692 and $24,719, respectively. Of these amounts, inclusive of interest and penalties,
$24,419 and $21,139, for fiscal years 2023 and 2022, respectively, would affect the effective tax rate. It is expected that an
$8,703 reduction of the liability for unrecognized tax benefits will occur in the next 12 months.
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:
Unrecognized Tax Benefits—beginning of period
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
2023
Years ended March 31,
2022
2021
$
$
19,455 $
—
—
5,258
—
—
(1,994)
22,719 $
18,071 $
304
—
6,581
—
—
(5,501)
19,455 $
23,513
2,713
—
2,716
—
—
(10,871)
18,071
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, 2023 and 2022, $2,462 and $2,406 of income
tax-related interest and $3,509 and $2,856 of penalties were included in accrued income taxes, respectively. As of March 31,
2023, 2022, and 2021, our current tax provision included $2,503, $2,128, and $1,676, respectively, of expense related to interest
and penalties.
16. Commitments and Contingencies
We lease 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 $180,908. See Note 3, Leases.
As of March 31, 2023, we have known purchase commitments of $175,902 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. We also issued guarantees in the form of standby letters of credit of $15,645 as of March 31, 2023.
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
position, or cash flows.
75
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 have concluded that these matters, individually or in the aggregate, will not have a material adverse
effect on our operating results, financial position, or cash flows. We have recorded a liability for environmental remediation of
$717 as of March 31, 2023 and $697 as of March 31, 2022.
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.
As of March 31, 2023, we maintain an equity incentive plan (the “2020 Vista Outdoor Inc. Stock Incentive Plan” or the
“Plan”), which became effective on August 4, 2020. The Plan was established to govern equity awards granted to our
employees and directors and provides for awards of incentive stock options, stock appreciation rights, restricted stock and
restricted stock units, dividend equivalents, performance awards, stock awards, and other stock-based awards. We issue shares
from the Plan upon the vesting of performance awards, restricted stock units, grant of restricted stock, or exercise of stock
options and the awards are accounted for as equity-based compensation.
As of August 4, 2020, we were authorized to issue up to 3,351,200 common shares under the Plan. As of March 31, 2023,
1,426,813 common shares remain available to be granted.
Performance Based Awards
We currently grant two types of stock-based performance based awards: performance awards and performance awards
with a TSR award modifier. The number of shares that could be issued range from 0% to 200% of the participant's target award.
Performance awards are awards in which the number of shares ultimately received depends on performance against
specified metrics over a two to 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. 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.
Performance awards with a TSR modifier are stock-based awards for which the number of shares ultimately received
depends on our performance against specified metrics over a three-year performance period and the performance of our
common stock over a three-year period relative to that of our peer group. 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 based upon the degree of
achievement of the performance goals. The participants could earn from 0% up to 200% of the three-year target award shares,
subject to continued service through the vesting date. After the number of shares earned based on our performance goals is
determined, the relative TSR modifier may either increase or decrease the number of shares earned from +20% to -20%, but not
over 200% of target shares, based on the performance of our common stock over a three-year period relative to that of our peer
group. The fair value of these awards is derived using the Monte Carlo simulation which utilizes our closing stock price on the
date of grant and the stock volatility, dividend yield and market correlation of Vista to its peer group. 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.
76
The awards are forfeited if the threshold performance metrics are not achieved as of the end of the performance period. The
performance shares vest at the end of the performance period.
We granted 67,169 performance awards during fiscal year 2023. We granted no performance awards with a TSR modifier
during fiscal year 2023. There were 1,351,864 performance awards with a TSR modifier shares earned during fiscal year 2023
that were subject to a three-year performance period related to certain performance goals. Based on our performance,
participants earned 200% of the performance awards granted to them and the TSR modifier was not applicable.
The weighted average grant date fair value for performance based award grants was $29.66, $37.88, and $27.11 in fiscal
years 2023, 2022, and 2021, respectively.
A summary of our performance based awards for fiscal year 2023 is presented below:
Nonvested as of March 31, 2022
Cancelled/forfeited
Earned (1)
Adjustment for payout (2)
Awarded
Nonvested as of March 31, 2023
Shares
Weighted
average grant
date fair value
1,041,642 $
(189,975)
(1,351,864)
675,932
67,169
242,904 $
30.12
34.94
26.71
26.71
29.66
35.72
(1) 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.
(2) Adjustment equals the difference between performance shares issued at target and the 200% of target shares earned
during fiscal year 2023.
As of March 31, 2023, the unamortized compensation expense related to these awards was $3,546, which is expected to
be recognized over a weighted-average period of 1.5 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. There were no stock options
granted during fiscal years 2023, 2022, and 2021.
A summary of our stock option activity for fiscal year 2023 is presented below:
Outstanding as of March 31,2022
Forfeited/expired
Exercised
Outstanding and exercisable as of March 31,2023
Weighted
average
exercise price
13.65
16.06
13.04
17.86
Shares
368,689 $
(2,159)
(321,260)
45,270 $
Weighted
average
remaining
contractual
life (in years)
6.1
Aggregate
intrinsic value
8,128
$
4.1
$
536
There were 321,260, 28,921, and 92,604 options exercised during fiscal years 2023, 2022, and 2021, respectively. The
total intrinsic value of options exercised during fiscal years 2023, 2022, and 2021 was $4,828, $1,102, and $1,896, respectively.
Cash received from options exercised during fiscal years 2023, 2022, and 2021 was $4,213, $533, and $1,386, respectively.
As of March 31, 2023, there was no unrecognized compensation cost related to stock option awards.
77
Restricted Stock Units
Restricted stock units granted to certain key employees and non-employee directors totaled 378,938 shares in fiscal year
2023. The weighted average grant date fair value of restricted stock units granted was $27.82, $34.58, and $17.31 in fiscal years
2023, 2022, and 2021, 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 year 2023 is presented below.
Nonvested as of March 31, 2022
Granted
Vested
Forfeited
Nonvested as of March 31, 2023
Shares
Weighted
average grant
date fair value
890,573 $
378,938
(437,371)
(91,117)
741,023 $
22.56
27.82
18.01
28.74
27.43
As of March 31, 2023, the total unrecognized compensation cost related to non-vested restricted stock units was $13,878
and is expected to be realized over a weighted average period of 1.9 years.
Total pre-tax stock-based compensation expense of $28,119, $27,407, and $13,303 was recognized during fiscal years
2023, 2022, and 2021, respectively. The total income tax benefit recognized in the consolidated statements of comprehensive
income (loss) for share-based compensation was $6,020, $4,882, and $2,673 during fiscal years 2023, 2022, and 2021,
respectively.
Share Repurchases
Repurchases of shares during fiscal years 2023, 2022, and 2021 were 0, 2,981, 0, respectively. See Part II, Item 5 of this
Annual Report, for details on our share repurchase programs.
18. Operating Segment Information
As of March 31, 2023, we had eight operating segments which have been aggregated into two reportable segments,
Sporting Products and Outdoor Products. This is consistent with how our chief operating decision maker (CODM), our Chief
Executive Officer, allocates resources and makes decisions. Our Ammunition operating segment is in its own reportable
segment which has been named Sporting Products. We aggregate our Outdoor Accessories, Sports Protection, Outdoor
Cooking, Hydration, Golf, Fishing, and Cycling operating segments into the Outdoor Products reportable segment. The
operating segments aggregating into our Outdoor Products reportable segment rely primarily on international suppliers to
manufacture the products they sell, which impacts their economic characteristics in a similar manner. These operating segments
also share other commonalities or risks, such as technology or intellectual property sharing, common regulated environments,
similar input cost risks, and nature of their products. Consumers of the products in these operating segments are typically
looking to upgrade or replace their products in a similar time frame.
Our CODM relies on internal management reporting that analyzes our operating segment's operating income. 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 and are not utilized by management in determining segment profitability.
No customer contributed more than 10% of sales during fiscal years 2023, 2022, and 2021.
Our sales to foreign customers were $530,197, $435,175, and $319,568 in fiscal years 2023, 2022, and 2021, respectively.
During fiscal year 2023, approximately 26% of these sales were in Sporting Products and 74% were in Outdoor Products. Sales
to no individual country outside the U.S. accounted for more than 5% of our sales in fiscal years 2023, 2022, and 2021.
78
The following table contains information used to evaluate our operating segments for the periods presented below:
Sales, net
Gross profit
Operating income
Other income, net
Interest expense, net
Income before income taxes
Capital expenditures
Depreciation and amortization
Sales, net
Gross profit
Operating income
Interest expense, net
Income before income taxes
Capital expenditures
Depreciation and amortization
Sales, net
Gross profit
Operating income
Loss on extinguishment of debt
Interest expense, net
Income before income taxes
Capital expenditures
Depreciation and amortization
Year ended March 31, 2023
Sporting
Products
Outdoor
Products
Corporate and
other reconciling
items (a)
Total
$
1,757,932 $
1,321,875 $
653,516
386,914
— $
(9,533)
3,079,807
1,030,897
$
552,232 $
62,423 $
(506,800) $
$
107,855
2,124
(59,317)
50,662
$
$
$
$
$
$
$
25,886 $
25,087
13,207 $
62,829
2,407 $
4,173
41,500
92,089
Fiscal year ended March 31, 2022
Sporting
Products
Outdoor
Products
Corporate and
other reconciling
items (a)
Total
1,737,891 $
712,160
1,306,730 $
399,447
— $
(2,375)
3,044,621
1,109,232
600,415 $
164,494 $
(118,687) $
$
646,222
(25,264)
620,958
25,637 $
25,602
12,890 $
42,027
3,907 $
4,711
42,434
72,340
Year ended March 31, 2021
Sporting
Products
Outdoor
Products
Corporate and
other reconciling
items (a)
Total
1,119,754 $
312,230
1,105,768 $
321,423
— $
(693)
2,225,522
632,960
222,713 $
137,942 $
(69,226) $
$
291,429
(6,471)
(25,574)
259,384
14,209 $
23,292
10,942 $
37,935
4,096 $
3,883
29,247
65,110
(a) Reconciling items represent corporate general and administrative expenses and other income (expense) not included by
management in determining segment operating income.
Reconciling items in fiscal year 2023 included goodwill and intangibles impairment of $374,355, inventory fair value
step-up expenses related to the Fox Racing and Simms acquisitions of $8,079, restructuring expense of $11,620, transition
79
expense of $2,941, post-acquisition compensation expense of $11,130 allocated from the businesses acquired, and non-cash
income for the change in the estimated fair value of the contingent consideration payable of $27,510 related to acquisitions.
Reconciling items in fiscal year 2022 included fair value step-up in inventory of $2,375, and post-acquisition
compensation expense of $8,987 allocated from businesses acquired.
Reconciling items in fiscal year 2021 included an $18,467 gain on divestiture and $690 in inventory step-up expense from
businesses acquired.
Sales, net exclude all intercompany sales between Sporting Products and Outdoor Products, which were not material for
any of the fiscal years presented.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
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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,
2023, 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
During fiscal year 2023, we acquired certain assets of Fox Racing, which is being integrated into our Outdoor Products
segment. As part of our ongoing integration activities, we are continuing to incorporate our controls and procedures into our
business and to augment our company-wide controls to reflect the risks inherent in this acquisition. There were no other
changes in our internal control over financial reporting during fiscal year 2023 (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. 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.
Management has excluded from its assessment the internal control over financial reporting at Fox, which we acquired
during the second quarter of fiscal year 2023, and constitutes net loss of $18,857, 14.7% of total assets, and 5.9% of net sales of
the consolidated financial statement amounts as of and for the year ended March 31, 2023.
Based on our assessment, management has concluded that Vista Outdoor's internal control over financial reporting is
effective as of March 31, 2023.
Our internal control over financial reporting as of March 31, 2023, has been audited by Deloitte & Touche LLP, an
independent registered public accounting firm, as stated in their report which is included herein.
/s/ Gary L. McArthur
Gary L. McArthur
Interim Chief Executive Officer
May 25, 2023
/s/ Andrew Keegan
Andrew Keegan
Interim Chief Financial Officer
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors 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, 2023, 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, 2023, 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, 2023, of the Company and our report
dated May 25, 2023, expressed an unqualified opinion on those consolidated financial statements.
As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment
the internal control over financial reporting at Fox Racing, which was acquired during the second quarter of fiscal year 2023,
and whose financial statements constitute a net loss of $18.9M, 14.7% of total assets and 5.9% of net sales of the consolidated
financial statement amounts, as of and for the year ended March 31, 2023. Accordingly, our audit did not include the internal
control over financial reporting at Fox Racing.
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
May 25, 2023
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Table of Contents
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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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 Board of Directors in the section entitled Corporate Governance at Vista
Outdoor in our Proxy Statement for the 2023 Annual Meeting of Stockholders to be filed with the SEC not later than 120 days
after the close of fiscal year 2023 (the "2023 Proxy Statement"). Information regarding our executive officers incorporated by
reference from the section entitled Corporate Governance at Vista Outdoor under the heading Information About Our Executive
Officers to be included in the 2023 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—Code of Business Ethics to be included in the 2023 Proxy Statement. Our Code of Business Ethics is available on our
website at www.vistaoutdoor.com by selecting Investors and then 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—Organization of the Board of Directors—
Committees of the Board of Directors—Audit Committee to be included in the 2023 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 2023 Proxy Statement.
Information regarding compensation of our directors is incorporated by reference from the section entitled Director
Compensation to be included in the 2023 Proxy Statement.
Information regarding the compensation committee interlocks is incorporated by reference from the section entitled
Corporate Governance at Vista Outdoor—Compensation Committee Interlocks and Insider Participation to be included in the
2023 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 Executive
Officers to be included in the 2023 Proxy Statement.
Information regarding the securities authorized for issuance under equity compensation plans is incorporated by reference
from the section entitled Securities Authorized for Issuance Under Equity Compensation Plans to be included in the 2023 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 2023 Proxy Statement.
Information about director independence is incorporated by reference from the section entitled Corporate Governance at
Vista Outdoor—Director Independence to be included in the 2023 Proxy Statement.
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 2023 Proxy Statement.
Our independent registered public accounting firm is Deloitte & Touche LLP (PCAOB ID No. 34).
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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV
(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 (Loss)
Consolidated Statements of Cash Flows
Consolidated Statements of Stockholders' Equity
Notes to the Consolidated Financial Statements
2. Financial Statement Schedules
Page
40
43
44
45
46
47
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 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)
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).
Stock Purchase Agreement, dated as of September 9, 2021, by and among Vista Outdoor Inc., the Seller
Guarantors named therein, the Sellers named therein, WAWGD, Inc. (d/b/a Foresight Sports, Inc.),
WAWGD NEWCO, Inc., and Fortis Advisors LLC, as Seller Representative (Exhibit 2.1 to Vista Outdoor
Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 10,
2021).
Share Purchase Agreement, dated as of June 30, 2022, by and among Fox Parent Holdings, LLC, Fox
(Parent) Holdings, Inc., Vista Outdoor Operations LLC and Vista Outdoor Inc. (solely in its capacity as a
guarantor) (Exhibit 2.1 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and
Exchange Commission on July 6, 2022).
Agreement and Plan of Merger, dated as of July 22, 2022, by and among Vista Outdoor Operations LLC,
Trophy Merger Sub, LLC, Simms Fishing Products LLC, Shareholder Representative Services LLC, as the
Equity holder Representative and Vista Outdoor Inc. (solely in its capacity as a guarantor) (Exhibit 2.1 to
Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on
July 28, 2022).
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 Amended and Restated Bylaws (Exhibit 3.2 to Vista Outdoor's Current Report on Form 8-K,
filed with the Securities and Exchange Commission on May 3, 2023).
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).
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Exhibit
Number
4.2
4.3
4.4
4.5
10.1
10.2
10.3
10.4
#
#
#
#
10.5
# *
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)
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).
Indenture, dated as of March 3, 2021, among Vista Outdoor Inc., the subsidiaries of Vista Outdoor Inc.
party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee (Exhibit 4.1 to Vista
Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on March
3, 2021).
Supplemental Indenture, dated as of March 3, 2021, among Vista Outdoor Inc., the subsidiaries of Vista
Outdoor Inc. party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee (Exhibit
4.2 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange
Commission on March 3, 2021).
Form of 4.500% Senior Note due 2029 (included as Exhibit A to the Supplemental Indenture filed as
Exhibit 4.2) (Exhibit 4.3 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and
Exchange Commission on March 3, 2021).
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. (Amended and
Restated effective July 31, 2017 and First Amendment thereto effective November 11, 2020).
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).
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. 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 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).
87
Table of Contents
Exhibit
Number
10.15 #
10.16 #
10.17
10.18
10.19 #
10.20 #
10.21 #
10.22 #
10.23 #
10.24 #
*
*
*
*
*
21
23
31.1
31.2
32
101
104
Description of Exhibit (and document from which incorporated by reference, if applicable)
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).
Vista Outdoor Inc. 2020 Stock Incentive Plan (Exhibit 10.1 to Vista Outdoor Inc.’s Current Report on
Form 8-K, filed with the Securities and Exchange Commission on August 7, 2020).
Asset-Based Revolving Credit Agreement dated as of August 5, 2022 among Vista Outdoor Inc., the
additional borrowers from time to time party thereto, each lender from time to time party thereto, each L/C
issuer from time to time party thereto and Capital One, 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 August 8, 2022).
Term Loan Credit Agreement dated as of August 5, 2022, among Vista Outdoor Inc., the other borrowers
from time to time party thereto, the lenders from time to time party thereto and JPMorgan Chase Bank,
N.A., as administrative agent (Exhibit 10.2 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with
the Securities and Exchange Commission on August 8, 2022).
Restricted Stock Unit Retention Award Agreement, dated January 5, 2023, by and between Vista Outdoor
Inc. and Mark Kowalski (Exhibit 10.1 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the
Securities and Exchange Commission on January 6, 2023).
General Release and Resignation Agreement, dated as of February 1, 2023, between Vista Outdoor Inc.
and Christopher T. Metz (Exhibit 10.1 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the
Securities and Exchange Commission on February 2, 2023).
General Release and Separation Agreement, dated as of February 20, 2023, by and between Vista Outdoor
Inc. and Dylan S. Ramsey (Exhibit 10.1 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the
Securities and Exchange Commission on February 21, 2023).
Retirement Agreement, dated as of February 27, 2023, between Vista Outdoor Inc. and Tig H. Krekel
(Exhibit 10.1 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange
Commission on March 3, 2023).
Compensation Letter, dated March 31, 2023, by and between Vista Outdoor Inc. and Jason Vanderbrink
(Exhibit 10.1 to Vista Outdoor Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange
Commission on April 3, 2023).
Compensation Letter with Gary McArthur, dated May 1, 2023 (Exhibit 10.1 to Vista Outdoor Inc.’s
Subsidiaries of the Registrant as of March 31, 2022.
Consent of Independent Registered Public Accounting Firm.
Certification of Chief Executive Officer.
Certification of Chief Financial Officer.
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.
The following financial statements from the Company’s Annual Report on Form 10-K for the year ended
March 31, 2022, 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, 2022,
formatted in Inline Extensible Business Reporting Language (iXBRL) (included as Exhibit 101).
* Incorporated by reference.
+ 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.
88
Table of Contents
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: May 25, 2023
VISTA OUTDOOR INC.
By: /s/ Andrew Keegan
Name: Andrew Keegan
Title: Interim 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 May 25, 2023.
Signature
Title
/s/ Gary L. McArthur
Gary L. McArthur
/s/ Andrew Keegan
Andrew Keegan
/s/ Mark R. Kowalski
Mark R. Kowalski
/s/ Michael Callahan
Michael Callahan
/s/ Frances Philip
Frances Philip
/s/ Mark A. Gottfredson
Mark A. Gottfredson
/s/ Robert M. Tarola
Robert M. Tarola
/s/ Michael Robinson
Michael Robinson
/s/ Lynn Utter
Lynn Utter
/s/ Bruce Grooms
Bruce Grooms
/s/ Gerard Gibbons
Gerard Gibbons
Interim Chief Executive Officer (principal executive officer)
Interim 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
Director
89
BOARD OF DIRECTORS
BOARD OF DIRECTORS
Annual Meeting of Stockholders
Annual Meeting of Stockholders
The annual meeting will be held virtually on Tuesday, July 25, 2023, at 9:00am CT.
The annual meeting will be held virtually on Tuesday, July 25, 2023, at 9:00am CT.
Michael Callahan, (2,3)
Michael Callahan, (2,3)
Chairman of the Board
Chairman of the Board
Common Stock
Common Stock
Gary L. McArthur
Gary L. McArthur
Bruce Grooms (1,2)
Bruce Grooms (1,2)
Mark A. Gottfredson (1,3)
Mark A. Gottfredson (1,3)
Gerard Gibbons (1,3)
Gerard Gibbons (1,3)
Michael D. Robinson (2,3)
Michael D. Robinson (2,3)
Robert M. Tarola (1,2)
Robert M. Tarola (1,2)
Lynn Utter (1,2)
Lynn Utter (1,2)
Frances P. Philip (2, 3)
Frances P. Philip (2, 3)
1 Audit Committee
1 Audit Committee
2 Management Development
2 Management Development
and Compensation Committee
and Compensation Committee
3 Nominating and Governance
3 Nominating and Governance
Committee
Committee
VISTA OUTDOOR LEADERSHIP
VISTA OUTDOOR LEADERSHIP
Gary L. McArthur
Gary L. McArthur
Interim Chief Executive Officer
Interim Chief Executive Officer
Jason Vanderbrink
Jason Vanderbrink
Chief Executive Officer,
Chief Executive Officer,
Sporting Products
Sporting Products
Andy Keegan
Andy Keegan
Vice President and Interim
Vice President and Interim
Chief Financial Officer
Chief Financial Officer
Jeff Ehrich
Jeff Ehrich
Interim General Counsel
Interim General Counsel
and Corporate Secretary
and Corporate Secretary
Bradford Crandell
Bradford Crandell
Chief Human Resources Officer
Chief Human Resources Officer
Mark Kowalski
Mark Kowalski
Controller and Chief
Controller and Chief
Accounting Officer
Accounting Officer
CORPORATE INFORMATION
CORPORATE INFORMATION
Corporate Headquarters
Corporate Headquarters
1 Vista Way
1 Vista Way
Anoka, MN 55303
Anoka, MN 55303
Telephone: 763-433-1000
Telephone: 763-433-1000
Vista Outdoor common stock is listed on the New York Stock Exchange under VSTO and
Vista Outdoor common stock is listed on the New York Stock Exchange under VSTO and
in stock tables under Vista Outdoor Inc. During FY 2023, approximately 174 million shares
in stock tables under Vista Outdoor Inc. During FY 2023, approximately 174 million shares
were traded. The low was $23.22 and the high was $40.54.
were traded. The low was $23.22 and the high was $40.54.
Independent Registered
Independent Registered
Public Accounting Firm
Public Accounting Firm
Deloitte & Touche LLP
Deloitte & Touche LLP
111 South Main Street—Suite 1500
111 South Main Street
Salt Lake, UT 84111
Suite 1500
Salt Lake City, UT 84111
Transfer Agent and Registrar
Transfer Agent and Registrar
Computershare
Computershare
Stockholder Correspondence Should Be Mailed To:
Stockholder Correspondence Should Be Mailed To:
Computershare
Computershare
P.O. Box 30170
P.O. Box 30170
Send overnight correspondence to:
Send overnight correspondence to:
Computershare
Computershare
College Station, TX 77842-3170
College Station, TX 77842-3170
211 Quality Cr, Suite 210
211 Quality Cr, Suite 210
College Station, TX 77845
College Station, TX 77845
Telephone toll free: 1-866-395-6416
Telephone toll free: 1-866-395-6416
Website: https://www.computershare.com/investor
Website: https://www.computershare.com/investor
Company Website
Company Website
The Vista Outdoor website at www.vistaoutdoor.com includes biographies of directors and
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,
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
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.
available on Facebook at www.facebook.com/vistaoutdoor and on Twitter @VistaOutdoorInc.
FORWARD-LOOKING STATEMENTS
FORWARD-LOOKING STATEMENTS
Some of the statements made and information contained in this Press Release, excluding historical
Some of the statements made and information contained in this Press Release, excluding historical
information, are “forward-looking statements,” including those that discuss, among other things: our plans,
information, are “forward-looking statements,” including those that discuss, among other things: our plans,
objectives, expectations, intentions, strategies, goals, outlook or other non-historical matters; projections
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;
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,”
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
“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-
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,
looking information provided by the Private Securities Litigation Reform Act of 1995. Numerous risks,
uncertainties and other factors could cause our actual results to differ materially from the expectations
uncertainties and other factors could cause our actual results to differ materially from the expectations
described in such forward-looking statements, including the following: risks related to the separation of our
described in such forward-looking statements, including the following: risks related to the separation of our
Outdoor Products and Sporting Products segments, including that the process of exploring the transaction
Outdoor Products and Sporting Products segments, including that the process of exploring the transaction
and potentially completing the transaction could disrupt or adversely affect the consolidated or separate
and potentially completing the transaction could disrupt or adversely affect the consolidated or separate
businesses, results of operations and financial condition, that the transaction may not achieve some or all of
businesses, results of operations and financial condition, that the transaction may not achieve some or all of
any anticipated benefits with respect to either business and that the transaction may not be completed in
any anticipated benefits with respect to either business and that the transaction may not be completed in
accordance with our expected plans or anticipated timelines, or at all; impacts from the COVID-19 pandemic
accordance with our expected plans or anticipated timelines, or at all; impacts from the COVID-19 pandemic
on Vista Outdoor’s operations, the operations of our customers and suppliers and general economic
on Vista Outdoor’s operations, the operations of our customers and suppliers and general economic
conditions; supplier capacity constraints, production or shipping disruptions or quality or price issues
conditions; supplier capacity constraints, production or shipping disruptions or quality or price issues
affecting our operating costs; the supply, availability and costs of raw materials and components; increases
affecting our operating costs; the supply, availability and costs of raw materials and components; increases
in commodity, energy, and production costs; seasonality and weather conditions; our ability to complete
in commodity, energy, and production costs; seasonality and weather conditions; our ability to complete
acquisitions, realize expected benefits from acquisitions and integrate acquired businesses; reductions in
acquisitions, realize expected benefits from acquisitions and integrate acquired businesses; reductions in
or unexpected changes in or our inability to accurately forecast demand for ammunition, accessories, or
or unexpected changes in or our inability to accurately forecast demand for ammunition, accessories, or
other outdoor sports and recreation products; disruption in the service or significant increase in the cost
other outdoor sports and recreation products; disruption in the service or significant increase in the cost
of our primary delivery and shipping services for our products and components or a significant disruption
of our primary delivery and shipping services for our products and components or a significant disruption
at shipping ports; risks associated with diversification into new international and commercial markets,
at shipping ports; risks associated with diversification into new international and commercial markets,
including regulatory compliance; our ability to take advantage of growth opportunities in international and
including regulatory compliance; our ability to take advantage of growth opportunities in international and
commercial markets; our ability to obtain and maintain licenses to third-party technology; our ability to
commercial markets; our ability to obtain and maintain licenses to third-party technology; our ability to
attract and retain key personnel; disruptions caused by catastrophic events; risks associated with our sales
attract and retain key personnel; disruptions caused by catastrophic events; risks associated with our sales
to significant retail customers, including unexpected cancellations, delays, and other changes to purchase
to significant retail customers, including unexpected cancellations, delays, and other changes to purchase
orders; our competitive environment; our ability to adapt our products to changes in technology, the
orders; our competitive environment; our ability to adapt our products to changes in technology, the
marketplace and customer preferences, including our ability to respond to shifting preferences of the end
marketplace and customer preferences, including our ability to respond to shifting preferences of the end
consumer from brick and mortar retail to online retail; our ability to maintain and enhance brand recognition
consumer from brick and mortar retail to online retail; our ability to maintain and enhance brand recognition
and reputation; others’ use of social media to disseminate negative commentary about us, our products, and
and reputation; others’ use of social media to disseminate negative commentary about us, our products, and
boycotts; the outcome of contingencies, including with respect to litigation and other proceedings relating
boycotts; the outcome of contingencies, including with respect to litigation and other proceedings relating
to intellectual property, product liability, warranty liability, personal injury, and environmental remediation;
to intellectual property, product liability, warranty liability, personal injury, and environmental remediation;
our ability to comply with extensive federal, state and international laws, rules and regulations; changes in
our ability to comply with extensive federal, state and international laws, rules and regulations; changes in
laws, rules and regulations relating to our business, such as federal and state ammunition regulations; risks
laws, rules and regulations relating to our business, such as federal and state ammunition regulations; risks
associated with cybersecurity and other industrial and physical security threats; interest rate risk; changes
associated with cybersecurity and other industrial and physical security threats; interest rate risk; changes
in the current tariff structures; changes in tax rules or pronouncements; capital market volatility and the
in the current tariff structures; changes in tax rules or pronouncements; capital market volatility and the
availability of financing; foreign currency exchange rates and fluctuations in those rates; general economic
availability of financing; foreign currency exchange rates and fluctuations in those rates; general economic
and business conditions in the United States and our markets outside the United States, including as a
and business conditions in the United States and our markets outside the United States, including as a
result of the war in Ukraine and the imposition of sanctions on Russia, the COVID-19 pandemic, conditions
result of the war in Ukraine and the imposition of sanctions on Russia, the COVID-19 pandemic, conditions
affecting employment levels, consumer confidence and spending, conditions in the retail environment, and
affecting employment levels, consumer confidence and spending, conditions in the retail environment, and
other economic conditions affecting demand for our products and the financial health of our customers.
other economic conditions affecting demand for our products and the financial health of our customers.
You are cautioned not to place undue reliance on any forward-looking statements we make. A more detailed
You are cautioned not to place undue reliance on any forward-looking statements we make. A more detailed
description of risk factors that may affect our operating results can be found in Part 1, Item 1A, Risk Factors,
description of risk factors that may affect our operating results can be found in Part 1, Item 1A, Risk Factors,
of our Annual Report on Form 10-K for fiscal year 2022 and in the filings we make with Securities and
of our Annual Report on Form 10-K for fiscal year 2022 and in the filings we make with Securities and
Exchange Commission (the “SEC”) from time to time. We undertake no obligation to update any forward-
Exchange Commission (the “SEC”) from time to time. We undertake no obligation to update any forward-
looking statements, except as otherwise required by law.
looking statements, except as otherwise required by law.
VISTA OUTDOOR ANNUAL REPORT | FY 2023
VISTA OUTDOOR ANNUAL REPORT | FY 2023