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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 24, 2023
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                  
Commission file number 1-36597
vistaoutdoora15.jpg
Vista Outdoor Inc.
(Exact name of Registrant as specified in its charter)
Delaware
47-1016855
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1 Vista Way
Anoka
MN
55303
(Address of Principal Executive Offices)
(Zip Code)

Registrant's telephone number, including area code: (763) 433-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.01VSTONew York Stock Exchange
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 filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No 
As of January 29, 2024, there were 58,146,933 shares of the registrant's common stock outstanding.




TABLE OF CONTENTS
1


PART I— FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Amounts in thousands except share data)December 24, 2023March 31, 2023
ASSETS  
Current assets:  
Cash and cash equivalents$57,028 $86,208 
Net receivables374,010 339,373 
Net inventories654,839 709,897 
Income tax receivable13,692  
Other current assets36,630 60,636 
Total current assets1,136,199 1,196,114 
Net property, plant, and equipment208,277 228,247 
Operating lease assets95,906 106,828 
Goodwill303,995 465,709 
Net intangible assets638,298 733,176 
Deferred income tax assets4,973  
Deferred charges and other non-current assets, net65,953 68,808 
Total assets$2,453,601 $2,798,882 
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities:  
Current portion of long-term debt$65,000 $65,000 
Accounts payable126,507 136,556 
Accrued compensation46,438 60,719 
Accrued income taxes 6,676 
Federal excise, use, and other taxes35,323 38,543 
Other current liabilities166,764 146,377 
Total current liabilities440,032 453,871 
Long-term debt763,986 984,658 
Deferred income tax liabilities 40,749 
Long-term operating lease liabilities95,429 103,313 
Accrued pension and postemployment benefits23,990 25,114 
Other long-term liabilities47,259 59,384 
Total liabilities1,370,696 1,667,089 
Commitments and contingencies (Note 12 and 15)
Common stock — $.01 par value:
Authorized — 500,000,000 shares
Issued and outstanding — 58,122,198 shares as of December 24, 2023 and 57,085,756 shares as of March 31, 2023
580 570 
Additional paid-in capital1,655,539 1,711,155 
Accumulated deficit(276,201)(230,528)
Accumulated other comprehensive loss(75,331)(80,802)
Common stock in treasury, at cost — 5,842,241 shares held as of December 24, 2023 and 6,878,683 shares held as of March 31, 2023
(221,682)(268,602)
Total stockholders' equity1,082,905 1,131,793 
Total liabilities and stockholders' equity$2,453,601 $2,798,882 
See Notes to the Condensed Consolidated Financial Statements.
2

VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
 Three months endedNine months ended
(Amounts in thousands except per share data)December 24, 2023December 25, 2022December 24, 2023December 25, 2022
Sales, net$682,253 $754,775 $2,052,394 $2,339,065 
Cost of sales479,402 515,969 1,413,916 1,543,915 
Gross profit202,851 238,806 638,478 795,150 
Operating expenses:  
Research and development12,267 12,382 36,550 31,433 
Selling, general, and administrative151,821 129,738 395,194 363,439 
Impairment of goodwill and intangibles (Note 11)218,812  218,812  
Operating income (loss)(180,049)96,686 (12,078)400,278 
Other income (expense), net (Note 5)86 639 (1,629)1,380 
Interest expense, net(15,227)(18,953)(48,088)(39,197)
Income (loss) before income taxes(195,190)78,372 (61,795)362,461 
Income tax benefit (provision)46,995 (13,225)16,122 (77,844)
Net income (loss)$(148,195)$65,147 $(45,673)$284,617 
Earnings (loss) per common share:  
Basic$(2.55)$1.15 $(0.79)$5.03 
Diluted$(2.55)$1.13 $(0.79)$4.91 
Weighted-average number of common shares outstanding:    
Basic58,078 56,574 57,866 56,538 
Diluted58,078 57,843 57,866 58,022 
Net income (loss) (from above)$(148,195)$65,147 $(45,673)$284,617 
Other comprehensive income, net of tax:
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax (expense) of $(176) and $(528) for the three and nine months ended December 24, 2023, respectively, and $(221) and $(663) for the three and nine months ended December 25, 2022, respectively
562 694 1,686 2,082 
Change in derivatives, net of tax (expense) benefit of $254 and $(896) for the three and nine months ended December 24, 2023, respectively, and $164 and $945 for the three and nine months ended December 25, 2022, respectively
(812)(515)2,860 (793)
Change in cumulative translation adjustment, net of tax (expense) of $0 and $0 for the three and nine months ended December 24, 2023, respectively, and $(3) and $(171) for the three and nine months ended December 25, 2022, respectively
954 994 925 (877)
Total other comprehensive income704 1,173 5,471 412 
Comprehensive income (loss)$(147,491)$66,320 $(40,202)$285,029 
See Notes to the Condensed Consolidated Financial Statements.
3

VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Nine months ended
(Amounts in thousands)December 24, 2023December 25, 2022
Operating Activities:  
Net income (loss)$(45,673)$284,617 
Adjustments to net income (loss) to arrive at cash provided by operating activities:
Depreciation36,981 35,660 
Amortization of intangible assets37,826 31,431 
Amortization of deferred financing costs 6,222 4,603 
Impairment of goodwill and intangibles (Note 11)218,812  
Impairment of long-lived assets2,845  
Change in fair value of contingent consideration3,146 (16,403)
Deferred income taxes(47,139)(6,165)
Gain on foreign exchange(941)(586)
Loss on disposal of property, plant, and equipment387 699 
Share-based compensation7,917 19,590 
Changes in assets and liabilities:
Net receivables(33,761)31,127 
Net inventories58,634 (45,568)
Accounts payable(8,260)(11,254)
Accrued compensation(14,166)(39,558)
Accrued income taxes(22,683)13,538 
Federal excise, use, and other taxes(3,214)(4,643)
Pension and other postretirement benefits1,090 1,600 
Other assets and liabilities42,246 8,828 
Cash provided by operating activities240,269 307,516 
Investing Activities:
Capital expenditures(19,418)(25,157)
Acquisition of businesses, net of cash received (761,497)
Proceeds from the disposition of property, plant, and equipment137 43 
Cash used in investing activities(19,281)(786,611)
Financing Activities:
Proceeds from credit facility172,000 468,000 
Repayments of credit facility(257,000)(223,000)
Proceeds from issuance of long-term debt 350,000 
Debt issuance costs (63)(16,935)
Payments on long-term debt(140,000)(35,000)
Payments made for contingent consideration(8,585) 
Proceeds from exercise of stock options 127 205 
Payment of employee taxes related to vested stock awards(16,840)(8,946)
Cash (used in) provided by financing activities(250,361)534,324 
Effect of foreign exchange rate fluctuations on cash
193 (387)
Increase (decrease) in cash and cash equivalents(29,180)54,842 
Cash and cash equivalents at beginning of period 86,208 22,584 
Cash and cash equivalents at end of period$57,028 $77,426 
Supplemental Cash Flow Disclosures:
Non-cash investing activity:
Capital expenditures included in accounts payable and other current liabilities$2,683 $4,020 
Contingent consideration in connection with business combinations
$ $11,400 
See Notes to the Condensed Consolidated Financial Statements.
4

VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited)
(Amounts in thousands except share data)SharesAmountAdditional
Paid-In
Capital
Accumulated DeficitAccumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Equity
Balance, September 24, 202358,062,364 $579 $1,653,407 $(128,006)$(76,035)$(224,201)$1,225,744 
Comprehensive income (loss)— — — (148,195)704 — (147,491)
Exercise of stock options6,296 — (151)— — 239 88 
Share-based compensation— — 5,237 — — — 5,237 
Restricted stock vested and shares withheld49,808 — (2,930)— — 2,136 (794)
Employee stock purchase plan3,730 — (24)— — 142 118 
Other 1  — — 2 3 
Balance, December 24, 202358,122,198 $580 $1,655,539 $(276,201)$(75,331)$(221,682)$1,082,905 
Balance, September 25, 202256,566,915 $566 $1,717,750 $(1,340)$(77,440)$(290,085)$1,349,451 
Comprehensive income— — — 65,147 1,173 — 66,320 
Exercise of stock options1,257 — (25)— — 49 24 
Share-based compensation— — 4,834 — — — 4,834 
Restricted stock vested and shares withheld929 — (52)— — 40 (12)
Employee stock purchase plan6,195 — (100)— — 243 143 
Other109  (113)— — 5 (108)
Balance, December 25, 202256,575,405 $566 $1,722,294 $63,807 $(76,267)$(289,748)$1,420,652 
(Amounts in thousands except share data)SharesAmountAdditional
Paid-In
Capital
Accumulated DeficitAccumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Equity
Balance, March 31, 202357,085,756 $570 $1,711,155 $(230,528)$(80,802)$(268,602)$1,131,793 
Comprehensive income (loss)— — — (45,673)5,471 — (40,202)
Exercise of stock options8,706 — (206)— — 333 127 
Share-based compensation— — 7,917 — — — 7,917 
Restricted stock vested and shares withheld961,013 — (61,029)— — 44,049 (16,980)
Employee stock purchase plan8,759 — (83)— — 333 250 
Other57,964 10 (2,215)— — 2,205  
Balance, December 24, 202358,122,198 $580 $1,655,539 $(276,201)$(75,331)$(221,682)$1,082,905 
Balance, March 31, 202256,093,456 $560 $1,730,927 $(220,810)$(76,679)$(309,599)$1,124,399 
Comprehensive income— — — 284,617 412 — 285,029 
Exercise of stock options14,407 — (360)— — 565 205 
Share-based compensation— — 19,590 — — — 19,590 
Restricted stock vested and shares withheld415,294 — (26,016)— — 17,251 (8,765)
Employee stock purchase plan12,197 — (176)— — 478 302 
Other40,051 6 (1,671)— — 1,557 (108)
Balance, December 25, 202256,575,405 $566 $1,722,294 $63,807 $(76,267)$(289,748)$1,420,652 
See Notes to the Condensed Consolidated Financial Statements.
5

VISTA OUTDOOR INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Nine Months Ended December 24, 2023
(Amounts in thousands except per share data and unless otherwise indicated)
1. The Company and Basis of Presentation
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, The Kinetic Group (formerly Sporting Products) and Revelyst (formerly Outdoor Products), which were renamed during our third fiscal quarter. See Note 16, Operating Segment Information, for further information. 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—Our unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of the Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain disclosures and other financial information that normally are required by accounting principles generally accepted in the United States have been condensed or omitted. Management is responsible for the unaudited condensed consolidated financial statements included in this report, which in the opinion of management, include all adjustments necessary for a fair presentation of our financial position, results of operations, and cash flows for the periods and dates presented. These unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 (“fiscal year 2023”), which was filed with the SEC on May 25, 2023.
Change in Presentation—In connection with our preparation of the condensed consolidated financial statements for the three and nine months ended December 24, 2023, we changed the presentation of "Earnings (loss) before interest, income taxes, and other" to "Operating income (loss)" within the condensed consolidated statements of comprehensive income (loss). This correction did not affect previously reported net income (loss) and is immaterial to the previously issued financial statements.
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.
New Accounting Pronouncements—Our accounting policies are described in Note 1 of the audited consolidated financial statements in our Annual Report on Form 10-K for fiscal year 2023, which was filed with the SEC on May 25, 2023. Such significant accounting policies are applicable for periods prior to the following new accounting standards.
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU improves financial reporting by requiring disclosure of incremental segment information. The new guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU 2023-07 on our consolidated financial statements and disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which improves the transparency of income tax disclosures by requiring companies to (1) disclose consistent categories and greater disaggregation of information in the effective rate reconciliation and (2) provide information on income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, although early adoption is permitted. The guidance should be applied on a prospective basis with the option to apply the standard retrospectively. We are currently evaluating the impact of adopting this ASU 2023-09 on our consolidated financial statements and disclosures.
Accounting Standards Adopted During this Fiscal Year—In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which requires a buyer in a supplier finance program to disclose qualitative and quantitative information about its program to allow a user of the financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. The amendments in ASU 2022-04 are effective for fiscal years, and interim periods within those fiscal years,
6

beginning after December 15, 2022, with the exception for the amendment on roll-forward information, which is effective for fiscal years beginning after December 15, 2023. The guidance should be applied retrospectively, except for the amendment on roll-forward information, which should be applied prospectively. This ASU was effective for us in the first quarter of fiscal year 2024, with the exception of the amendment on roll-forward information, which will be effective for us in our Form 10-K for fiscal year 2025. We adopted this ASU during the first quarter of fiscal 2024 and the adoption did not have an impact on our condensed consolidated financial statement disclosures.
Goodwill—Our policy is to 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 third quarter of fiscal year 2024, as a result of an increasingly challenging economic environment for consumers due to higher interest rate expectations continuing, and other factors affecting the market for our products, we reduced our projections for fiscal year 2024 and beyond for the majority of our reporting units within the Revelyst reportable segment. As a result of a downward revision of forecasted cash flows due to lower volume and profitability expectations, combined with the decline in our stock price in the third fiscal quarter, we concluded that triggering events had occurred potentially indicating that the fair values of certain reporting units within our Revelyst reportable segment were less than their carrying values. Based on these events, we completed an interim quantitative goodwill impairment analysis and recognized goodwill impairment losses of $161,714 related to reporting units within our Revelyst reportable segment, which are included in "Impairment of goodwill and intangibles" on our condensed consolidated statements of comprehensive income (loss) for the three and nine months ended December 24, 2023. See Note 11, Goodwill and Intangible Assets, for further information.
For the third quarter fiscal year 2024 interim quantitative goodwill impairment analysis, we determined the estimated fair value of each reporting unit and compared it to their respective carrying amounts, including goodwill. The fair value of each reporting unit was determined considering both an income and market approach. We weighted the valuations of our Revelyst segment reporting units using 100% of the income approach, specifically the discounted cash flow method. The weighted average cost of capital used in the income approach ranged between 12.5% and 16.0%, which was derived from the financial structures of comparable companies corresponding to the industry of each reporting unit. We weighted the value of The Kinetic Group reporting unit using 100% of the market approach, based on the offer accepted in the Sporting Products Sale. This market approach method estimates the price reasonably expected to be realized. See Sale of Sporting Products and Planned Separation in the Executive Summary and Financial Highlights of Part I, Item 2 of this Quarterly Report on Form 10-Q for further discussion of the Sporting Products Sale.
In developing the discounted cash flow analysis, our assumptions about forecasted revenues and operating margins, capital expenditures, and changes in working capital were based on forecasts, as reviewed by the Board of Directors, and assume a terminal growth rate thereafter. A separate discount rate was determined for each Revelyst reporting unit and these cash flows were 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).
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 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.
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. In conjunction with our interim quantitative goodwill impairment analysis, we performed a fair value analysis on our indefinite-lived trademarks and trade names within the Revelyst reportable segment, which resulted in impairment losses of $50,300, related to indefinite lived intangible assets. These losses are included in "Impairment of goodwill and intangibles" on our condensed consolidated statements of comprehensive income (loss) for the three and nine months ended December 24, 2023. We performed a step zero analysis on The Kinetic Group indefinite-lived trade names. See Note 11, Goodwill and Intangible Assets, for further information.
We calculated the fair value of our indefinite lived intangibles 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. We estimated the future revenue for the related brands and technology, the appropriate royalty rate, and the weighted average cost of capital. We based our fair values and estimates on assumptions we believed to be reasonable, but which are unpredictable and inherently uncertain.
7

Our assumptions used to develop the discounted cash flow analysis and the relief-from-royalty calculation require us to make significant estimates. 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, it is possible that the estimated fair value of certain reporting units or trade names 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 trade names for impairment indicators and update assumptions used in the most recent calculation of the estimated fair value of a reporting unit or trade names as appropriate.
Long-Lived Assets—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. Our primary identifiable intangible assets include trademarks and trade names, patented technology, and customer relationships. 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.
In conjunction with our interim quantitative goodwill impairment analysis, we performed recoverability tests of our long-lived assets, including amortizing intangible assets, by comparing the net book value of our long-lived assets or asset groups, to the future undiscounted net cash flows attributable to such assets. Based on the results of the recoverability test, we determined that the fair value of certain definite lived intangibles related to trade names and customer relationship within our Outdoor Cooking reporting unit were less than their carrying value. The fair value of these intangibles was determined using the cost approach. As a result, we recorded impairment charges totaling $6,798 related to amortizing intangible assets, which are included in "Impairment of goodwill and intangibles" on our condensed consolidated statements of comprehensive income (loss) for the three and nine months ended December 24, 2023. See Note 11, Goodwill and Intangible Assets, for further information.
2. Fair Value of Financial Instruments
The following section describes the valuation methodologies we use to measure our financial instruments at fair value on a recurring basis:
Derivative Financial Instruments
Hedging instruments (See Note 5, Derivative Financial Instruments) are re-measured on a recurring basis using broker quotes, daily market foreign currency rates and interest rate curves as applicable and are therefore categorized within Level 2 of the fair value hierarchy.
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. Based on an amendment made to the QuietKat contingent consideration agreement subsequent to quarter end, the estimated fair value of the contingent consideration was increased to $8,915 as of December 24, 2023. The fair value adjustments are recorded in selling, general, and administrative in the condensed consolidated statements of comprehensive income (loss). As of December 24, 2023, the estimated fair values of contingent consideration payable related to our acquisitions of QuietKat, Stone Glacier, and Fox Racing are $8,915, $5,920 and $0, respectively. Cash payouts during fiscal year 2024 related to our Fox Racing and QuietKat liabilities.
Contingent consideration liabilities are reported under the following captions in the condensed consolidated balance sheets:
December 24, 2023March 31, 2023
Other current liabilities$11,750 $8,586 
Other long-term liabilities3,085 11,688 
Total$14,835 $20,274 
8

Following is a summary of our contingent consideration liability Level 3 activity during fiscal year 2024:
Balance, March 31, 2023$20,274 
Increase in fair value3,146 
Payments made(8,585)
Balance, December 24, 2023$14,835 
Disclosures about the Fair Value of Financial Instruments
The carrying amount of our receivables, inventory, accounts payable, and accrued liabilities as of December 24, 2023 and March 31, 2023 approximates fair value because of the short maturity of these instruments. The carrying values of cash and cash equivalents as of December 24, 2023 and March 31, 2023 are categorized within Level 1 of the fair value hierarchy. 
The table below discloses information about carrying values and estimated fair value relating to our financial assets and liabilities:
December 24, 2023March 31, 2023
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Fixed-rate debt (1)
$500,000 $488,000 $500,000 $404,000 
Variable-rate debt (2)
335,000 335,000 560,000 560,000 
(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 12, Long-term Debt, for additional information on long-term debt, including certain risks and uncertainties.
(2) Variable rate debt—The carrying value of the amounts outstanding under our 2022 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 December 24, 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 12, Long-term Debt, for additional information on our credit facilities, including certain risks and uncertainties.
During the third fiscal quarter of 2024, we recognized impairment losses related to our goodwill and indefinite-lived intangible assets. The fair value of these assets are categorized within Level 3 of the fair value hierarchy. See Note 1, The Company and Basis of Presentation, and Note 11, Goodwill and Intangible Assets, for discussion and details of the impairment losses recorded in the third fiscal quarter of 2024.
We periodically evaluate the recoverability of the carrying amount of our long-lived assets, including amortizing intangible 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. 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, The Company and Basis of Presentation, and Note 11, Goodwill and Intangible Assets, for discussion of an identified trigger event and impairment expense related to certain amortizing intangibles during third fiscal quarter of 2024. See Note 3, Leases, for discussion of right of use asset (ROU) impairments during the fiscal year. Significant assumptions were used to estimate fair value of long-lived assets, which were categorized within Level 3 of the fair value hierarchy.
9

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.
The amounts of assets and liabilities related to our operating leases were as follows:
Balance sheet captionDecember 24, 2023March 31, 2023
Assets:
Operating lease assetsOperating lease assets$95,906 $106,828 
Liabilities:
Current:
Operating lease liabilitiesOther current liabilities$14,316 $16,351 
Long-term:
Operating lease liabilitiesLong-term operating lease liabilities95,429 103,313 
Total lease liabilities$109,745 $119,664 
The components of lease expense are recorded to cost of sales and selling, general, and administrative expenses in the condensed consolidated statements of comprehensive income (loss). The components of lease expense were as follows:
Three months endedNine months ended
December 24, 2023December 25, 2022December 24, 2023December 25, 2022
Fixed operating lease costs (1)
$6,757 $7,406 $21,026 $20,300 
Variable operating lease costs1,208 522 3,453 1,980 
Operating and sub-lease income(262)(157)(692)(464)
Net lease costs$7,703 $7,771 $23,787 $21,816 
(1) Includes short-term leases, which are immaterial.
The weighted average remaining lease term and weighted average discount rate is as follows:
December 24, 2023March 31, 2023
Weighted average remaining lease term (years):
Operating leases9.349.71
Weighted average discount rate:
Operating leases8.52 %8.43 %
10

The approximate minimum lease payments under non-cancelable operating leases as of December 24, 2023 are as follows:
Remainder of fiscal year 2024$6,546 
Fiscal year 202521,412 
Fiscal year 202619,562 
Fiscal year 202717,041 
Fiscal year 202814,683 
Thereafter84,463 
Total lease payments163,707 
Less imputed interest(53,962)
Present value of lease liabilities$109,745 
Supplemental cash flow information related to leases is as follows:
Nine months ended
December 24, 2023December 25, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases$20,239 $16,623 
Operating lease assets obtained in exchange for lease liabilities:
Operating leases7,498 33,228 
ROU asset re-measurements(6,105)40 
As part of integrating our recent acquisitions, we made strategic decisions to close office locations which are actively being marketed for sublease. Accordingly, during the three months ended and nine months ended December 24, 2023, we recognized ROU asset impairment of $43 and $2,845, respectively, reducing the carrying value of the lease asset to its estimated fair value.
4. Acquisitions
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. 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 results of this business are reported within the Fishing operating segment and the Revelyst reportable segment.
During the second quarter of fiscal year 2023, we acquired Fox (Parent) Holdings, Inc. (“Fox Racing”), a leader in motocross industry and a growing brand in the mountain bike category. 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 results of this business are reported within the Sports Protection operating segment and the Revelyst reportable segment.
Fiscal year 2023 Fox Racing supplemental pro forma data:
Fox's net sales of $124,523 and net income of $2,498 since the acquisition date, August 5, 2022, were included in our consolidated results for the nine months ended December 25, 2022, are included in our consolidated results in the Revelyst reportable segment.
The following unaudited pro forma financial information presents our results as if the Fox Racing acquisition had occurred on April 1, 2021:
Three months ended December 25, 2022Nine months ended December 25, 2022
Sales, net$754,775 $2,444,920 
Net income68,075 286,732 
11

The unaudited supplemental pro forma data above includes the following significant non-recurring adjustments to net income to account for certain costs which would have been incurred if the Fox Racing acquisition had been completed on April 1, 2021:
Three months ended December 25, 2022Nine months ended December 25, 2022
Fees for advisory, legal, and accounting services (1)$(99)$(6,064)
Inventory step-up, net (2)(3,772)(6,287)
Interest (3) 10,627 
Depreciation (4) 719 
Amortization (5) 4,245 
Management Fees (6) (530)
Income tax provision (benefit) (7)943 (1,199)
(1) During the three months and nine months ended December 25, 2022, we incurred a total of $99 and $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 condensed 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.
5. Derivative Financial Instruments
Commodity Price Risk
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 December 24, 2023, we had outstanding lead forward contracts on approximately 1.3 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
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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
From time to time, 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 December 24, 2023, the notional amounts of our foreign currency forward contracts designated as cash flow hedge instruments were approximately $3,518. 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 December 24, 2023, we have no remaining foreign currency forward contracts not designated as cash flow hedge instruments.
During the three and nine months ended December 24, 2023 and December 25, 2022, we recorded net foreign currency translation and gains of $509 and $720, respectively, and $33 and $866, respectively, on the condensed consolidated statements of comprehensive income (loss) within Other income (expense), net.
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 December 24, 2023, we had the following interest rate swaps outstanding:
NotionalFair ValuePay FixedReceive FloatingMaturity Date
Non-amortizing swap$50,000 $(499)4.910%5.378%Feb 2026
Non-amortizing swap25,000 (352)4.650%5.345%Mar 2026
The amount paid or received under these swaps is recorded as an adjustment to interest expense. All unrealized gains and losses as shown as of December 24, 2023 will be recognized in the condensed consolidated statements of comprehensive income (loss) in interest expense within the next two fiscal years, at their then-current value.
The following table summarizes the fair value of our derivative instruments as well as the location of the asset and/or liability on the condensed consolidated balance sheets as of December 24, 2023 and consolidated balance sheets as of March 31, 2023:
Asset derivatives
fair value as of
Derivatives not designated as hedging instruments
Balance sheet locationDecember 24, 2023March 31, 2023
Foreign currency forward contractsOther current assets$ $91 
Total$ $91 
Liability derivatives
fair value as of
Derivatives designated as cash flow hedging instrumentsBalance sheet locationDecember 24, 2023March 31, 2023
Foreign currency forward contractsOther current liabilities$69 $3,252 
Interest rate swap contract
Other long-term liabilities
851 1,760 
Total$920 $5,012 
The following tables summarize the net effect of all cash flow hedges for each of our derivative contracts on the condensed consolidated financial statements for the three and the nine months ended December 24, 2023 and December 25, 2022, respectively:
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Gain (loss) recognized in other comprehensive income
Three months endedNine months ended
Derivatives designated as cash flow hedging instruments:December 24, 2023December 25, 2022December 24, 2023December 25, 2022
Foreign currency forward contracts$(100)$(2,920)$142 $(2,920)
Lead forward contracts(123)2,335 153 1,305 
Interest rate swap contracts(1,123) 1,269  
Total gain (loss)$(1,346)$(585)$1,564 $(1,615)
Gain (loss) reclassified from other comprehensive income into earnings
Three months endedNine months ended
Derivatives designated as cash flow hedging instruments:LocationDecember 24, 2023December 25, 2022December 24, 2023December 25, 2022
Foreign currency forward contractsCost of sales$(160)$ $(1,349)$ 
Foreign currency forward contractsOther income (expense), net(417) (1,634) 
Lead forward contractsCost of sales141 94 431 123 
Interest rate swap contractsInterest expense, net156  360  
Total gain (loss)
$(280)$94 $(2,192)$123 
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6. Revenue Recognition
The following tables disaggregate our net sales by major product category:
Three months ended
December 24, 2023December 25, 2022
The Kinetic GroupRevelystTotalThe Kinetic GroupRevelystTotal
Sporting Products (1)$364,949 $— $364,949 $401,504 $— $401,504 
Outdoor Accessories (2)— 74,648 74,648 — 79,623 79,623 
Action Sports (3)— 111,778 111,778 — 132,322 132,322 
Outdoor Recreation (4)— 130,878 130,878 — 141,326 141,326 
Total$364,949 $317,304 $682,253 $401,504 $353,271 $754,775 
Geographic Region:
United States$330,556 $248,273 $578,829 $367,056 $261,090 $628,146 
Rest of the world
34,393 69,031 103,424 34,448 92,181 126,629 
Total$364,949 $317,304 $682,253 $401,504 $353,271 $754,775 
Nine months ended
December 24, 2023December 25, 2022
The Kinetic GroupRevelystTotalThe Kinetic GroupRevelystTotal
Sporting Products (1)$1,091,041 $— $1,091,041 $1,344,620 $— $1,344,620 
Outdoor Accessories (2)— 188,700 188,700 — 221,704 221,704 
Action Sports (3)— 367,076 367,076 — 373,139 373,139 
Outdoor Recreation (4)— 405,577 405,577 — 399,602 399,602 
Total$1,091,041 $961,353 $2,052,394 $1,344,620 $994,445 $2,339,065 
Geographic Region:
United States$985,321 $719,000 $1,704,321 $1,244,437 $693,305 $1,937,742 
Rest of the world
105,720 242,353 348,073 100,183 301,140 401,323 
Total$1,091,041 $961,353 $2,052,394 $1,344,620 $994,445 $2,339,065 
(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.
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.
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Typically, our contracts require customers to pay within 30-60 days of product delivery with a discount available to some customers for early payment. In some cases, we offer extended payment terms to customers. However, we do not consider these extended payment terms to be a significant financing component of the contract because the payment terms are less than a year.
In limited circumstances, our contract with a customer may have shipping terms that indicate a transfer of control of the products upon their arrival at the destination rather than upon shipment. In those cases, we recognize revenue only when the product reaches the customer destination, which may require us to estimate the timing of transfer of control based on the expected delivery date. In all cases, however, we consider our costs related to shipping and handling to be a cost of fulfilling the contract with the customer.
The total amount of revenue we recognize for the sale of our products reflects various sales adjustments for discounts, returns, refunds, allowances, rebates, and other customer incentives. These sales adjustments can vary based on market conditions, customer preferences, timing of customer payments, volume of products sold, and timing of new product launches. These adjustments require management to make reasonable estimates of the amount we expect to receive from the customer. We estimate sales adjustments by customer or by product category on the basis of our historical experience with similar contracts with customers, adjusted as necessary to reflect current facts and circumstances and our expectations for the future. Sales taxes, 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.
7. 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 periods presented, earnings, as reported for each respective period, is divided by the number of shares below:
Three months endedNine months ended
(Amounts in thousands except per share data)December 24, 2023December 25, 2022December 24, 2023December 25, 2022
Numerator:
Net income (loss)$(148,195)$65,147 $(45,673)$284,617 
Denominator:
Weighted-average number of common shares outstanding basic:58,078 56,574 57,866 56,538 
Dilutive effect of share-based awards (1) 1,269  1,484 
Diluted shares 58,078 57,843 57,866 58,022 
Earnings (loss) per common share:  
Basic$(2.55)$1.15 $(0.79)$5.03 
Diluted$(2.55)$1.13 $(0.79)$4.91 
(1) Due to the loss from continuing operations for the three and nine months ended December 24, 2023, there are no common shares added to calculate dilutive EPS because the effect would be anti-dilutive. Potentially dilutive securities of 300
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were excluded from diluted EPS in three and nine months ended December 24, 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 23 and 316 for the three and nine months ended December 25, 2022, respectively.
8. Receivables
Our trade accounts receivables are recorded at net realizable value, which includes an appropriate 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. Receivables that do not share risk 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:
December 24, 2023March 31, 2023
Trade receivables$377,943 $349,424 
Other receivables16,095 8,899 
Less: allowance for estimated credit losses and discounts(20,028)(18,950)
Net receivables$374,010 $339,373 
Walmart represented 12% and 10% of our total trade receivables balance as of December 24, 2023 and March 31, 2023, respectively.
The following provides a reconciliation of the activity related to the allowance for estimated credit losses for the nine months ended December 24, 2023:
Balance, March 31, 2023$18,950 
Provision for credit losses2,228 
Write-off of uncollectible amounts, net of recoveries(1,150)
Balance, December 24, 2023$20,028 
9. Inventories
Current net inventories consist of the following:
December 24, 2023March 31, 2023
Raw materials$198,497 $199,225 
Work in process66,899 63,652 
Finished goods389,443 447,020 
Net inventories$654,839 $709,897 
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 $41,982 and $45,929 as of December 24, 2023 and March 31, 2023, respectively.
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10. Accumulated Other Comprehensive Loss (AOCL)
The components of AOCL, net of income taxes, are as follows:
December 24, 2023March 31, 2023
Derivatives$(683)$(3,543)
Pension and other postretirement benefits liabilities(69,763)(71,449)
Cumulative translation adjustment(4,885)(5,810)
Total AOCL
$(75,331)$(80,802)
The following tables detail the amounts reclassified from AOCL to earnings as well as the changes in derivatives, pension and other postretirement benefits, and foreign currency translation:
Three months ended December 24, 2023Nine months ended December 24, 2023
DerivativesPension and other postretirement benefits liabilitiesCumulative translation adjustmentTotalDerivativesPension and other postretirement benefits liabilitiesCumulative translation adjustmentTotal
Beginning balance in AOCL$129 $(70,325)$(5,839)$(76,035)$(3,543)$(71,449)$(5,810)$(80,802)
Change in fair value of derivatives(1,346)— — (1,346)1,564 — — 1,564 
Income tax impact on derivative instruments254 — — 254 (896)— — (896)
Net losses reclassified from AOCL280 — — 280 2,192 — — 2,192 
Net actuarial losses reclassified from AOCL (1)— 562 — 562 — 1,686 — 1,686 
Net change in cumulative translation adjustment— — 954 954 — — 925 925 
Ending balance in AOCL$(683)$(69,763)$(4,885)$(75,331)$(683)$(69,763)$(4,885)$(75,331)
(1) Amounts related to our pension and other postretirement benefits that were reclassified from AOCL were recorded as a component of net periodic benefit cost for each period presented, net of tax.
Three months ended December 25, 2022Nine months ended December 25, 2022
 DerivativesPension and other postretirement benefits liabilitiesCumulative translation adjustmentTotalDerivativesPension and other postretirement benefits liabilitiesCumulative translation adjustmentTotal
Beginning balance in AOCL$(634)$(69,687)$(7,119)$(77,440)$(356)$(71,075)$(5,248)$(76,679)
Change in fair value of derivatives(585)— — (585)(1,615)— — (1,615)
Income tax impact on derivative instruments164 — — 164 945 — — 945 
Net gains reclassified from AOCL(94)— — (94)(123)— — (123)
Net actuarial losses reclassified from AOCL (1)— 694 — 694 — 2,082 — 2,082 
Net change in cumulative translation adjustment— — 994 994 — — (877)(877)
Ending balance in AOCL$