falsedesktopVSTO2020-12-27000161631821000020{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "\t\tPage\nPART I - Financial Information\t\t\nItem 1.\tUnaudited Financial Statements\t2\nItem 2.\tManagement's Discussion and Analysis of Financial Condition and Results of Operations\t23\nItem 3.\tQuantitative and Qualitative Disclosures about Market Risk\t31\nItem 4.\tControls and Procedures\t31\nPART II - Other Information\t\t\nItem 1.\tLegal Proceedings\t32\nItem 1A.\tRisk Factors\t32\nItem 2.\tUnregistered Sales of Equity Securities and Use of Proceeds\t32\nItem 3.\tDefaults Upon Senior Securities\t32\nItem 4.\tMine Safety Disclosures\t32\nItem 5.\tOther Information\t32\nItem 6.\tExhibits\t33\nSIGNATURES\t\t34\n", "q10k_tbl_1": "(Amounts in thousands except share data)\tDecember 27 2020\tMarch 31 2020\nASSETS\t\t\nCurrent assets:\t\t\nCash and cash equivalents\t96467\t31375\nNet receivables\t315709\t313517\nNet inventories\t353816\t331293\nIncome tax receivable\t40496\t7626\nOther current assets\t20131\t25200\nTotal current assets\t826619\t709011\nNet property plant and equipment\t196624\t184733\nOperating lease assets\t73114\t69024\nGoodwill\t84539\t83167\nNet intangible assets\t317826\t306100\nDeferred charges and other non-current assets net\t30023\t39254\nTotal assets\t1528745\t1391289\nLIABILITIES AND STOCKHOLDERS' EQUITY\t\t\nCurrent liabilities:\t\t\nAccounts payable\t117204\t89996\nAccrued compensation\t44536\t38806\nFederal excise use and other taxes\t24467\t19702\nOther current liabilities\t142042\t98197\nTotal current liabilities\t328249\t246701\nLong-term debt\t345683\t511806\nDeferred income tax liabilities\t15334\t12810\nLong-term operating lease liabilities\t78429\t73738\nAccrued pension and postemployment benefits\t50873\t60225\nOther long-term liabilities\t51449\t43504\nTotal liabilities\t870017\t948784\nCommitments and contingencies (Notes 3 12 and 16)\t\t\nCommon stock - $.01 par value:\t\t\nAuthorized - 500000000 shares\t\t\nIssued and outstanding - 58320136 shares as of December 27 2020 and 58038822 shares as of March 31 2020\t583\t580\nAdditional paid-in capital\t1742543\t1744096\nAccumulated deficit\t(761048)\t(960048)\nAccumulated other comprehensive loss\t(94613)\t(100994)\nCommon stock in treasury at cost - 5644303 shares held as of December 27 2020 and 5925617 shares held as of March 31 2020\t(228737)\t(241129)\nTotal stockholders' equity\t658728\t442505\nTotal liabilities and stockholders' equity\t1528745\t1391289\n", "q10k_tbl_2": "\tThree months ended\t\tNine months ended\t\n(Amounts in thousands except per share data)\tDecember 27 2020\tDecember 29 2019\tDecember 27 2020\tDecember 29 2019\nSales net\t574679\t424770\t1628998\t1329560\nCost of sales\t411447\t335980\t1178508\t1055428\nGross profit\t163232\t88790\t450490\t274132\nOperating expenses:\t\t\t\t\nResearch and development\t5483\t5703\t15855\t17750\nSelling general and administrative\t88768\t64418\t242355\t231298\nImpairment of held-for-sale assets (Note 2)\t0\t0\t0\t9429\nEarnings before interest income taxes and other\t68981\t18669\t192280\t15655\nOther income (expense) net (Note 4)\t18467\t0\t18467\t(433)\nEarnings before interest and income taxes\t87448\t18669\t210747\t15222\nInterest expense net\t(5619)\t(8373)\t(17752)\t(31811)\nEarnings (loss) before income taxes\t81829\t10296\t192995\t(16589)\nIncome tax (provision) benefit\t(2950)\t4352\t6005\t2724\nNet income (loss)\t78879\t14648\t199000\t(13865)\nEarnings (loss) per common share:\t\t\t\t\nBasic\t1.35\t0.25\t3.42\t(0.24)\nDiluted\t1.31\t0.25\t3.34\t(0.24)\nWeighted-average number of common shares outstanding:\t\t\t\t\nBasic\t58303\t57878\t58183\t57812\nDiluted\t60101\t57978\t59594\t57812\nNet income (loss) (from above)\t78879\t14648\t199000\t(13865)\nOther comprehensive income net of tax:\t\t\t\t\nPension and other postretirement benefit liabilities:\t\t\t\t\nReclassification of prior service credits for pension and postretirement benefit plans recorded to net income net of tax of $0 for each period presented\t(78)\t(79)\t(235)\t(235)\nReclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income net of tax of $0 for each period presented\t969\t812\t2907\t2435\nChange in derivatives net of tax of $0 for each period presented\t1151\t(725)\t2825\t(1175)\nCurrency translation gains reclassified from accumulated other comprehensive loss\t0\t0\t0\t3150\nChange in cumulative translation adjustment\t375\t263\t884\t550\nTotal other comprehensive income\t2417\t271\t6381\t4725\nComprehensive income (loss)\t81296\t14919\t205381\t(9140)\n", "q10k_tbl_3": "\tNine months ended\t\n(Amounts in thousands)\tDecember 27 2020\tDecember 29 2019\nOperating Activities:\t\t\nNet income (loss)\t199000\t(13865)\nAdjustments to net income (loss) to arrive at cash provided by operating activities:\t\t\nDepreciation\t33625\t36207\nAmortization of intangible assets\t14845\t14996\nImpairment of held-for-sale assets (Note 2)\t0\t9429\nAmortization of deferred financing costs\t1133\t5569\nGain on sale of business\t(18467)\t0\nDeferred income taxes\t2449\t348\nLoss (gain) on disposal of property plant and equipment\t1850\t(48)\nLoss on divestiture\t0\t431\nShare-based compensation\t10013\t5167\nChanges in assets and liabilities:\t\t\nNet receivables\t(1786)\t38098\nNet inventories\t6966\t(7510)\nAccounts payable\t28067\t(4676)\nAccrued compensation\t4015\t(9865)\nAccrued income taxes\t(36027)\t(3744)\nFederal excise use and other taxes\t4729\t(2243)\nPension and other postretirement benefits\t(6680)\t(2521)\nOther assets and liabilities\t63587\t(2719)\nCash provided by operating activities\t307319\t63054\nInvesting Activities:\t\t\nCapital expenditures\t(17603)\t(21977)\nProceeds from sale of business\t23654\t0\nAcquisition of Remington (Note 4)\t(81691)\t0\nProceeds from sale of our Firearms Business\t0\t156567\nProceeds from the disposition of property plant and equipment\t25\t270\nCash (used for) provided by investing activities\t(75615)\t134860\nFinancing Activities:\t\t\nBorrowings on lines of credit\t73077\t272321\nPayments on lines of credit\t(240333)\t(312623)\nPayments made on long-term debt\t0\t(144509)\nPayments made for debt issuance costs\t0\t(903)\nDeferred payments for acquisitions\t0\t(1348)\nProceeds from exercise of stock options\t1100\t0\nPayment of employee taxes related to vested stock awards\t(576)\t(507)\nCash used for financing activities\t(166732)\t(187569)\nEffect of foreign exchange rate fluctuations on cash\t120\t(212)\nIncrease in cash and cash equivalents\t65092\t10133\nCash and cash equivalents at beginning of period\t31375\t21935\nCash and cash equivalents at end of period\t96467\t32068\nSupplemental Cash Flow Disclosures:\t\t\nNon-cash investing activity:\t\t\nCapital expenditures included in accounts payable\t1931\t1331\n", "q10k_tbl_4": "\tCommon Stock $.01 Par Value\t\t\t\t\t\t\n(Amounts in thousands except share data)\tShares\tAmount\tAdditional Paid-In Capital\tAccumulated Deficit\tAccumulated Other Comprehensive Loss\tTreasury Stock\tTotal Equity\nBalance September 27 2020\t58256243\t583\t1742645\t(839927)\t(97030)\t(231634)\t574637\nComprehensive income\t0\t0\t0\t78879\t2417\t0\t81296\nExercise of stock options\t27382\t0\t(594)\t0\t0\t1110\t516\nShare-based compensation\t0\t0\t2547\t0\t0\t0\t2547\nRestricted stock vested and shares withheld\t28002\t0\t(1778)\t0\t0\t1442\t(336)\nEmployee stock purchase plan\t3537\t0\t(76)\t0\t0\t144\t68\nOther\t4972\t0\t(201)\t0\t0\t201\t0\nBalance December 27 2020\t58320136\t583\t1742543\t(761048)\t(94613)\t(228737)\t658728\nBalance September 29 2019\t57787433\t578\t1752175\t(833482)\t(78513)\t(252257)\t588501\nComprehensive income\t0\t0\t0\t14648\t271\t0\t14919\nShare-based compensation\t0\t0\t1593\t0\t0\t0\t1593\nRestricted stock vested and shares withheld\t55385\t0\t(3392)\t0\t0\t3191\t(201)\nEmployee stock purchase plan\t11980\t0\t(419)\t0\t0\t489\t70\nOther\t54847\t0\t(412)\t0\t0\t480\t68\nBalance December 29 2019\t57909645\t578\t1749545\t(818834)\t(78242)\t(248097)\t604950\n\tCommon Stock $.01 Par Value\t\t\t\t\t\t\n(Amounts in thousands except share data)\tShares\tAmount\tAdditional Paid-In Capital\tAccumulated Deficit\tAccumulated Other Comprehensive Loss\tTreasury Stock\tTotal Equity\nBalance March 31 2020\t58038822\t580\t1744096\t(960048)\t(100994)\t(241129)\t442505\nComprehensive income\t0\t0\t0\t199000\t6381\t0\t205381\nExercise of stock options\t83196\t0\t(2055)\t0\t0\t3376\t1321\nShare-based compensation\t0\t0\t10013\t0\t0\t0\t10013\nRestricted stock vested and shares withheld\t79506\t0\t(4843)\t0\t0\t4201\t(642)\nEmployee stock purchase plan\t8972\t0\t(222)\t0\t0\t365\t143\nOther\t109640\t3\t(4446)\t0\t0\t4450\t7\nBalance December 27 2020\t58320136\t583\t1742543\t(761048)\t(94613)\t(228737)\t658728\nBalance March 31 2019\t57710934\t577\t1752419\t(804969)\t(82967)\t(256020)\t609040\nComprehensive income (loss)\t0\t0\t0\t(13865)\t4725\t0\t(9140)\nShare-based compensation\t0\t0\t5167\t0\t0\t0\t5167\nRestricted stock vested and shares withheld\t91110\t0\t(5785)\t0\t0\t5437\t(348)\nEmployee stock purchase plan\t23008\t0\t(777)\t0\t0\t940\t163\nOther\t84593\t1\t(1479)\t0\t0\t1546\t68\nBalance December 29 2019\t57909645\t578\t1749545\t(818834)\t(78242)\t(248097)\t604950\n", "q10k_tbl_5": "\tDecember 27 2020\t\tMarch 31 2020\t\n\tCarrying amount\tFair value\tCarrying amount\tFair value\nFixed-rate debt (1)\t350000\t354813\t350000\t284375\nVariable-rate debt (2)\t0\t0\t167256\t167256\n", "q10k_tbl_6": "\tBalance Sheet Caption\tDecember 27 2020\tMarch 31 2020\nAssets:\t\t\t\nOperating lease assets\tOperating lease assets\t73114\t69024\nLiabilities:\t\t\t\nCurrent:\t\t\t\nOperating lease liabilities\tOther current liabilities\t9983\t10780\nLong-term:\t\t\t\nOperating lease liabilities\tLong-term operating lease liabilities\t78429\t73738\nTotal lease liabilities\t\t88412\t84518\n", "q10k_tbl_7": "\tThree months ended\t\tNine months ended\t\n\tDecember 27 2020\tDecember 29 2019\tDecember 27 2020\tDecember 29 2019\nFixed operating lease costs (1)\t5593\t5733\t15704\t15349\nVariable operating lease costs\t806\t846\t2047\t2085\nSublease income\t(67)\t0\t(732)\t(386)\nNet Lease costs\t6332\t6579\t17019\t17048\n", "q10k_tbl_8": "\tDecember 27 2020\tMarch 31 2020\nWeighted Average Remaining Lease Term (Years):\t\t\nOperating leases\t9.52\t9.55\nWeighted Average Discount Rate:\t\t\nOperating leases\t8.65%\t8.64%\n", "q10k_tbl_9": "Remainder of fiscal 2021\t4429\nFiscal 2022\t16581\nFiscal 2023\t15107\nFiscal 2024\t13410\nFiscal 2025\t12246\nThereafter\t71628\nTotal lease payments\t133401\nLess imputed interest\t(44989)\nPresent value of lease liabilities\t88412\n", "q10k_tbl_10": "\tNine months ended\t\n\tDecember 27 2020\tDecember 29 2019\nCash paid for amounts included in the measurement of lease liabilities:\t\t\nOperating cash flows - operating leases\t13077\t15111\nOperating lease assets obtained in exchange for lease liabilities:\t\t\nOperating leases\t11487\t1848\n", "q10k_tbl_11": "\tOctober 12 2020\t\nTotal preliminary purchase price:\t\t\nCash paid\t\t81400\nCash paid for working capital\t\t291\nTotal purchase price\t\t81691\nPreliminary fair value of assets acquired:\t\t\nInventories\t20021\t\nIntangible assets\t26200\t\nProperty plant and equipment\t31250\t\nOther assets\t3363\t\nTotal assets\t80834\t\nPreliminary fair value of liabilities assumed:\t\t\nAccounts payable\t311\t\nOther liabilities\t2969\t\nTotal liabilities\t3280\t\nNet assets acquired\t\t77554\nGoodwill\t\t4137\n", "q10k_tbl_12": "\tThree months ended\t\tNine months ended\t\n\tDecember 27 2020\tDecember 29 2019\tDecember 27 2020\tDecember 29 2019\nSales net\t579332\t463061\t1701872\t1465492\nNet income (loss)\t79476\t3732\t187841\t(56133)\n", "q10k_tbl_13": "\tThree months ended\t\tNine months ended\t\n\tDecember 27 2020\tDecember 29 2019\tDecember 27 2020\tDecember 29 2019\nFees for advisory legal and accounting services (1)\t(1459)\t0\t(3260)\t3260\nInventory step-up net (2)\t(400)\t0\t(400)\t400\nInterest (3)\t0\t717\t835\t2936\nDepreciation (4)\t0\t951\t1902\t2853\nAmortization (5)\t0\t21\t42\t63\nIncome taxes (6)\t290\t0\t2324\t0\n", "q10k_tbl_14": "\tThree months ended\t\t\t\t\t\n\tDecember 27 2020\t\t\tDecember 29 2019(1)\t\t\n\tShooting Sports\tOutdoor Products\tTotal\tShooting Sports\tOutdoor Products\tTotal\nAmmunition\t287855\t0\t287855\t202316\t0\t202316\nHunting and Shooting\t113662\t0\t113662\t83144\t0\t83144\nAction Sports\t0\t88907\t88907\t0\t75661\t75661\nOutdoor Recreation (2)\t0\t84255\t84255\t0\t63649\t63649\nTotal\t401517\t173162\t574679\t285460\t139310\t424770\nGeographic Region:\t\t\t\t\t\t\nUnited States\t369720\t126567\t496287\t253573\t91427\t345000\nRest of the World\t31797\t46595\t78392\t31887\t47883\t79770\nTotal\t401517\t173162\t574679\t285460\t139310\t424770\n\tNine months ended\t\t\t\t\t\n\tDecember 27 2020\t\t\tDecember 29 2019(1)\t\t\n\tShooting Sports\tOutdoor Products\tTotal\tShooting Sports\tOutdoor Products\tTotal\nAmmunition\t821837\t0\t821837\t626298\t0\t626298\nFirearms\t0\t0\t0\t24577\t0\t24577\nHunting and Shooting\t293525\t0\t293525\t243705\t0\t243705\nAction Sports\t0\t259213\t259213\t0\t227531\t227531\nOutdoor Recreation (2)\t0\t254423\t254423\t0\t207449\t207449\nTotal\t1115362\t513636\t1628998\t894580\t434980\t1329560\nGeographic Region:\t\t\t\t\t\t\nUnited States\t1029848\t393367\t1423215\t793805\t304820\t1098625\nRest of the World\t85514\t120269\t205783\t100775\t130160\t230935\nTotal\t1115362\t513636\t1628998\t894580\t434980\t1329560\n", "q10k_tbl_15": "\tThree months ended\t\tNine months ended\t\n(Amounts in thousands except per share data)\tDecember 27 2020\tDecember 29 2019\tDecember 27 2020\tDecember 29 2019\nNumerator:\t\t\t\t\nNet income (loss)\t78879\t14648\t199000\t(13865)\nDenominator:\t\t\t\t\nWeighted-average number of common shares outstanding basic:\t58303\t57878\t58183\t57812\nDilutive effect of share-based awards (1)\t1798\t100\t1411\t0\nDiluted shares\t60101\t57978\t59594\t57812\nEarnings (loss) per common share:\t\t\t\t\nBasic\t1.35\t0.25\t3.42\t(0.24)\nDiluted\t1.31\t0.25\t3.34\t(0.24)\n", "q10k_tbl_16": "\tDecember 27 2020\tMarch 31 2020\nTrade receivables\t323668\t323436\nOther receivables\t7282\t4841\nLess: allowance for estimated credit losses and discounts\t(15241)\t(14760)\nNet receivables\t315709\t313517\n", "q10k_tbl_17": "Balance March 31 2020\t14760\nProvision for credit losses\t1780\nWrite-off of uncollectible amounts net of recoveries\t(863)\nDiscounts and other adjustments\t(436)\nBalance December 27 2020\t15241\n", "q10k_tbl_18": "\tDecember 27 2020\tMarch 31 2020\nPrincipal\t12000\t12000\nLess: unamortized discount\t(3394)\t(3990)\nNote receivable net included within Deferred charges and other non-current assets\t8606\t8010\n", "q10k_tbl_19": "\tDecember 27 2020\tMarch 31 2020\nRaw materials\t102671\t85609\nWork in process\t40274\t33622\nFinished goods\t210871\t212062\nNet inventories\t353816\t331293\n", "q10k_tbl_20": "\tDecember 27 2020\tMarch 31 2020\nDerivatives\t1399\t(1426)\nPension and other postretirement benefits liabilities\t(90681)\t(93353)\nCumulative translation adjustment\t(5331)\t(6215)\nTotal AOCL\t(94613)\t(100994)\n", "q10k_tbl_21": "\tThree months ended December 27 2020\t\t\t\tNine months ended December 27 2020\t\t\t\n\tDerivatives\tPension and other postretirement benefits liabilities\tCumulative translation adjustment\tTotal\tDerivatives\tPension and other postretirement benefits liabilities\tCumulative translation adjustment\tTotal\nBeginning balance in AOCL\t248\t(91572)\t(5706)\t(97030)\t(1426)\t(93353)\t(6215)\t(100994)\nChange in fair value of derivatives\t1220\t0\t0\t1220\t1813\t0\t0\t1813\nNet (gains) losses reclassified from AOCL\t(69)\t0\t0\t(69)\t1012\t0\t0\t1012\nNet actuarial losses reclassified from AOCL (1)\t0\t969\t0\t969\t0\t2907\t0\t2907\nPrior service costs reclassified from AOCL (1)\t0\t(78)\t0\t(78)\t0\t(235)\t0\t(235)\nNet change in cumulative translation adjustment\t0\t0\t375\t375\t0\t0\t884\t884\nEnding balance in AOCL\t1399\t(90681)\t(5331)\t(94613)\t1399\t(90681)\t(5331)\t(94613)\n", "q10k_tbl_22": "\tThree months ended December 29 2019\t\t\t\tNine months ended December 29 2019\t\t\t\n\tDerivatives\tPension and other postretirement benefits liabilities\tCumulative translation adjustment\tTotal\tDerivatives\tPension and other postretirement benefits liabilities\tCumulative translation adjustment\tTotal\nBeginning balance in AOCL\t285\t(73203)\t(5595)\t(78513)\t735\t(74670)\t(9032)\t(82967)\nChange in fair value of derivatives\t(725)\t0\t0\t(725)\t(1175)\t0\t0\t(1175)\nNet actuarial losses reclassified from AOCL (1)\t0\t812\t0\t812\t0\t2435\t0\t2435\nPrior service costs reclassified from AOCL (1)\t0\t(79)\t0\t(79)\t0\t(235)\t0\t(235)\nCurrency translation gains reclassified from AOCL (2)\t0\t0\t0\t0\t0\t0\t3150\t3150\nNet change in cumulative translation adjustment\t0\t0\t263\t263\t0\t0\t550\t550\nEnding balance in AOCL\t(440)\t(72470)\t(5332)\t(78242)\t(440)\t(72470)\t(5332)\t(78242)\n", "q10k_tbl_23": "\tShooting Sports\nBalance at March 31 2020\t83167\nAcquisitions\t4137\nDivestitures\t(2765)\nBalance at December 27 2020\t84539\n", "q10k_tbl_24": "\tDecember 27 2020\t\t\tMarch 31 2020\t\t\n\tGross carrying amount\tAccumulated amortization\tTotal\tGross carrying amount\tAccumulated amortization\tTotal\nTrade names\t48360\t(17228)\t31132\t48360\t(14428)\t33932\nPatented technology\t16684\t(11143)\t5541\t16684\t(10490)\t6194\nCustomer relationships and other\t240590\t(95040)\t145550\t238220\t(83349)\t154871\nTotal\t305634\t(123411)\t182223\t303264\t(108267)\t194997\nNon-amortizing trade names\t135603\t0\t135603\t111103\t0\t111103\nNet intangible assets\t441237\t(123411)\t317826\t414367\t(108267)\t306100\n", "q10k_tbl_25": "Remainder of fiscal 2021\t4986\nFiscal 2022\t19916\nFiscal 2023\t19800\nFiscal 2024\t19748\nFiscal 2025\t19730\nThereafter\t98043\nTotal\t182223\n", "q10k_tbl_26": "\tDecember 27 2020\tMarch 31 2020\nRebates\t14154\t16225\nAccrual for in-transit inventory\t37380\t11064\nOther\t90508\t70908\nTotal other current liabilities\t142042\t98197\nLong-term portion of accrued income tax liability\t26978\t30159\nOther\t24471\t13345\nTotal other long-term liabilities\t51449\t43504\n", "q10k_tbl_27": "Balance March 31 2020\t9149\nPayments made\t(2998)\nWarranties issued\t1584\nChanges related to pre-existing warranties and other adjustments\t(306)\nBalance December 27 2020\t7429\n", "q10k_tbl_28": "\tDecember 27 2020\tMarch 31 2020\nABL Revolving Credit Facility\t0\t167256\n5.875% Senior Notes\t350000\t350000\nPrincipal amount of long-term debt\t350000\t517256\nLess: unamortized deferred financing costs\t(4317)\t(5450)\nCarrying amount of long-term debt\t345683\t511806\n", "q10k_tbl_29": "\tThree months ended December 27 2020\t\t\t\tNine months ended December 27 2020\t\t\t\n\tShooting Sports\tOutdoor Products\t(a) Corporate and other reconciling items\tTotal\tShooting Sports\tOutdoor Products\t(a) Corporate and other reconciling items\tTotal\nSales net\t401517\t173162\t0\t574679\t1115362\t513636\t0\t1628998\nGross Profit\t113928\t49704\t(400)\t163232\t303412\t147478\t(400)\t450490\nEBIT\t72504\t18489\t(3545)\t87448\t197406\t56381\t(43040)\t210747\n", "q10k_tbl_30": "\tThree months ended December 29 2019 (b)\t\t\t\tNine months ended December 29 2019 (b)\t\t\t\n\tShooting Sports\tOutdoor Products\t(a) Corporate and other reconciling items\tTotal\tShooting Sports\tOutdoor Products\t(a) Corporate and other reconciling items\tTotal\nSales net\t285460\t139310\t0\t424770\t894580\t434980\t0\t1329560\nGross Profit\t51849\t36941\t0\t88790\t157312\t117543\t(723)\t274132\nEBIT\t25075\t8785\t(15191)\t18669\t57888\t25963\t(68629)\t15222\n", "q10k_tbl_31": "\tThree months ended\t\t\t\tNine months ended\t\t\t\nNet Sales:\tDecember 27 2020\tDecember 29 2019 (1)\t Change\t% Change\tDecember 27 2020\tDecember 29 2019 (1)\t Change\t% Change\nShooting Sports\t401517\t285460\t116057\t40.7%\t1115362\t894580\t220782\t24.7%\nOutdoor Products\t173162\t139310\t33852\t24.3%\t513636\t434980\t78656\t18.1%\nTotal net sales\t574679\t424770\t149909\t35.3%\t1628998\t1329560\t299438\t22.5%\n", "q10k_tbl_32": "\tThree months ended\t\t\t\tNine months ended\t\t\t\nGross Profit:\tDecember 27 2020\tDecember 29 2019 (1)\t Change\t% Change\tDecember 27 2020\tDecember 29 2019 (1)\t Change\t% Change\nShooting Sports\t113928\t51849\t62079\t119.7%\t303412\t157312\t146100\t92.9%\nOutdoor Products\t49704\t36941\t12763\t34.5%\t147478\t117543\t29935\t25.5%\nCorporate and other\t(400)\t0\t(400)\t-%\t(400)\t(723)\t323\t44.7%\nTotal gross profit\t163232\t88790\t74442\t83.8%\t450490\t274132\t176358\t64.3%\n", "q10k_tbl_33": "\tThree months ended\t\t\t\tNine months ended\t\t\t\nEBIT:\tDecember 27 2020\tDecember 29 2019 (1)\t Change\t% Change\tDecember 27 2020\tDecember 29 2019 (1)\t Change\t% Change\nShooting Sports\t72504\t25075\t47429\t189.1%\t197406\t57888\t139518\t241.0%\nOutdoor Products\t18489\t8785\t9704\t110.5%\t56381\t25963\t30418\t117.2%\nCorporate and other\t(3545)\t(15191)\t11646\t76.7%\t(43040)\t(68629)\t25589\t37.3%\nTotal EBIT\t87448\t18669\t68779\t368.4%\t210747\t15222\t195525\t(1284.5)%\n", "q10k_tbl_34": "\tThree months ended\t\t\t\tNine months ended\t\t\t\nInterest expense net:\tDecember 27 2020\tDecember 29 2019\t Change\t% Change\tDecember 27 2020\tDecember 29 2019\t Change\t% Change\nCorporate and other\t5619\t8373\t(2754)\t(32.9)%\t17752\t31811\t(14059)\t(44.2)%\n", "q10k_tbl_35": "\tThree months ended\t\t\t\t\tNine months ended\t\t\t\t\nIncome Tax Provision:\tDecember 27 2020\tEffective Rate\tDecember 29 2019\tEffective Rate\t Change\tDecember 27 2020\tEffective Rate\tDecember 29 2019\tEffective Rate\t Change\nCorporate and other\t(2950)\t3.6%\t4352\t(42.3)%\t(7302)\t6005\t(3.1)%\t2724\t16.4%\t3281\n", "q10k_tbl_36": "\tNine months ended\t\nCash Flows:\tDecember 27 2020\tDecember 29 2019\nCash provided by operating activities\t307319\t63054\nCash (used for) provided by investing activities\t(75615)\t134860\nCash used for financing activities\t(166732)\t(187569)\nEffect of foreign exchange rate fluctuations on cash\t120\t(212)\nNet cash flows\t65092\t10133\n", "q10k_tbl_37": "Exhibit Number\tDescription of Exhibit (and document from which incorporated by reference if applicable)\n2.1*\tTransaction Agreement dated as of April 28 2014 among Alliant Techsystems Inc. Vista SpinCo Inc. Vista Merger Sub Inc. and Orbital Sciences Corporation (Exhibit 2.1 to Vista Outdoor Inc.'s Registration Statement on Form 10 filed with the Securities and Exchange Commission on August 13 2014).\n2.5*+\tTax Matters Agreement dated as of February 9 2015 among Alliant Techsystems Inc. and Vista Outdoor Inc. (Exhibit 2.5 to Vista Outdoor Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 10 2014).\n2.6*+\tStock 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).\n3.1*\tAmended 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).\n3.2*\tCertificate 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).\n3.3*\tVista Outdoor Inc. Amended and Restated Bylaws (Exhibit 3.2 to Vista Outdoor Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 10 2018).\n4.1*\tSpecimen 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).\n4.2*\tIndenture dated as of August 11 2015 among Vista Outdoor Inc. the subsidiaries of Vista Outdoor Inc. party thereto and U.S. Bank National Association as trustee (Exhibit 4.1 to Vista Outdoor Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 11 2015).\n4.3*\tSupplemental Indenture dated as of August 11 2015 among Vista Outdoor Inc. the subsidiaries of Vista Outdoor Inc. party thereto and U.S. Bank National Association as trustee (Exhibit 4.2 to Vista Outdoor Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 11 2015).\n4.4*\tForm of 5.875% Senior Note due 2023 (included as Exhibit A to the Supplemental Indenture filed as Exhibit 4.2 to Vista Outdoor Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 11 2015).\n4.5*\tSecond Supplemental Indenture dated as of August 9 2016 among Vista Outdoor Inc. the subsidiaries of Vista Outdoor Inc. party thereto and U.S. Bank National Association as trustee (Exhibit 4.3 to Vista Outdoor Inc.'s Registration Statement on Form S-4 filed with the Securities and Exchange Commission on August 11 2016).\n4.6*\tThird Supplemental Indenture dated as of December 2 2016 among Vista Outdoor Inc. the subsidiaries of Vista Outdoor Inc. party thereto and U.S. Bank National Association as trustee (Exhibit 4.6 to Vista Outdoor Inc.'s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 9 2017).\n4.7*\tDescription 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).\n31.1\tCertification of Principal Executive Officer.\n31.2\tCertification of Principal Financial Officer.\n32\tCertification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.\n101\tThe following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended December 27 2020 formatted in Inline Extensible Business Reporting Language (iXBRL): (i) /Condensed Consolidated Balance Sheets (ii) Condensed Consolidated Statements of Comprehensive Income (Loss) (iii) Condensed Consolidated Statements of Cash Flows (iv) Condensed Consolidated Statements of Stockholders' Equity and (v) Notes to the Condensed Consolidated Financial Statements tagged as blocks of text and including detailed tags.\n104\tThe cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended December 27 2020 formatted in Inline Extensible Business Reporting Language (iXBRL) (included as Exhibit 101).\n"}{"bs": "q10k_tbl_1", "is": "q10k_tbl_2", "cf": "q10k_tbl_3"}None
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 27, 2020
☐
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
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 Class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $.01
VSTO
New 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 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of January 25, 2021, there were 58,323,299 shares of the registrant's common stock outstanding.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
Three months ended
Nine months ended
(Amounts in thousands except per share data)
December 27, 2020
December 29, 2019
December 27, 2020
December 29, 2019
Sales, net
$
574,679
$
424,770
$
1,628,998
$
1,329,560
Cost of sales
411,447
335,980
1,178,508
1,055,428
Gross profit
163,232
88,790
450,490
274,132
Operating expenses:
Research and development
5,483
5,703
15,855
17,750
Selling, general, and administrative
88,768
64,418
242,355
231,298
Impairment of held-for-sale assets (Note 2)
—
—
—
9,429
Earnings before interest, income taxes, and other
68,981
18,669
192,280
15,655
Other income (expense), net (Note 4)
18,467
—
18,467
(433)
Earnings before interest and income taxes
87,448
18,669
210,747
15,222
Interest expense, net
(5,619)
(8,373)
(17,752)
(31,811)
Earnings (loss) before income taxes
81,829
10,296
192,995
(16,589)
Income tax (provision) benefit
(2,950)
4,352
6,005
2,724
Net income (loss)
$
78,879
$
14,648
$
199,000
$
(13,865)
Earnings (loss) per common share:
Basic
$
1.35
$
0.25
$
3.42
$
(0.24)
Diluted
$
1.31
$
0.25
$
3.34
$
(0.24)
Weighted-average number of common shares outstanding:
Basic
58,303
57,878
58,183
57,812
Diluted
60,101
57,978
59,594
57,812
Net income (loss) (from above)
$
78,879
$
14,648
$
199,000
$
(13,865)
Other comprehensive income, 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 of $0 for each period presented
(78)
(79)
(235)
(235)
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax of $0 for each period presented
969
812
2,907
2,435
Change in derivatives, net of tax of $0 for each period presented
1,151
(725)
2,825
(1,175)
Currency translation gains reclassified from accumulated other comprehensive loss
—
—
—
3,150
Change in cumulative translation adjustment
375
263
884
550
Total other comprehensive income
2,417
271
6,381
4,725
Comprehensive income (loss)
$
81,296
$
14,919
$
205,381
$
(9,140)
See Notes to the Condensed Consolidated Financial Statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Nine Months Ended December 27, 2020
(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 and shooting sports products. We conduct our operations through two reportable segments, Shooting Sports and Outdoor Products. We are headquartered in Anoka, Minnesota and have 15 manufacturing and distribution facilities in the United States, Canada, Mexico, and Puerto Rico along with international customer service, sales and sourcing operations in Asia, Canada, and Europe. Vista Outdoor was incorporated in Delaware in 2014. The condensed consolidated financial statements reflect our financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States.
This Quarterly Report on Form 10-Q 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, 2020 (“fiscal 2020”).
Reclassifications—Changes to the mathematical sign used to denote income taxes for the three and nine months ended December 29, 2019 were made to conform to the current period presentation in the condensed consolidated statements of income. This reclassification had no impact to our key metrics including Earnings (loss) before income taxes or Net income (loss).
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. Our accounting policies are described in the notes to the consolidated financial statements in our Annual Report on Form 10-K for fiscal 2020. Management is responsible for the condensed consolidated financial statements included in this report, which are unaudited but, in the opinion of management, include all adjustments necessary for a fair presentation of our financial position as of December 27, 2020 and March 31, 2020, our results of operations for the three and nine months ended December 27, 2020 and December 29, 2019, and our cash flows for the nine months ended December 27, 2020 and December 29, 2019.
New Accounting Pronouncements
Our accounting policies are described in Note 1 of the Notes to the Consolidated Financial Statements included in our fiscal year 2020 Annual Report on Form 10-K. Such significant accounting policies are applicable for periods prior to the following new accounting standards.
Accounting Standards Adopted During this Fiscal Year
On April 1, 2020, we adopted ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("Topic 326"). This new standard is intended to improve financial reporting by requiring more timely recording of credit losses on our trade accounts receivable and requires the measurement of all expected credit losses based on historical experience, current conditions, and reasonable and supportable forecasts. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements and disclosures. For further information, see Note 8, Receivables.
On April 1, 2020, we adopted ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement." The amendments in this ASU removed, modified or added to the disclosure requirements for fair value measurements in ASC Topic 820, "Fair Value Measurement" ("Topic 820"). The adoption of this ASU did not have a material impact on our condensed consolidated financial statements and disclosures.
Accounting Standards Yet to Be Adopted
In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021, although early adoption is permitted. Most amendments within the standard are
required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We are currently evaluating the impacts of the provisions of ASU 2019-12 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 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—Significant inputs to the valuation model are unobservable.
The following section describes the valuation methodologies we use to measure our financial instruments at fair value on a recurring basis:
Interest Rate Swaps—We periodically enter into floating-to-fixed interest rate swap agreements in order to hedge our forecasted interest payments on our outstanding variable-rate debt. The fair value of those swaps is determined using a pricing model based on observable inputs for similar instruments and other market assumptions. We consider these to be Level 2 instruments. See Note 5, Derivative Financial Instruments, for additional information.
Commodity Price Hedging Instruments—We periodically enter into commodity forward contracts to hedge our exposure to price fluctuations on certain commodities we use for raw material components in our manufacturing process. When actual commodity prices exceed the fixed price provided by these contracts, we receive this difference from the counterparty, and when actual commodity prices are below the contractually provided fixed price, we pay this difference to the counterparty. We consider these to be Level 2 instruments. See Note 5, Derivative Financial Instruments, for additional information.
Note Receivable—In connection with the sale of our Firearms business in July 2019, we received a $12,000 interest-free, five-year pre-payable promissory note due June 2024. Based on the general market conditions and the credit quality of the buyer at the time of the sale, we discounted the Note Receivable at an effective interest rate of 10% and estimated fair value using a discounted cash flow approach. We consider this to be a Level 3 instrument. See Note 8, Receivables, for additional information.
Disclosures about the Fair Value of Financial Instruments
The carrying amount of our receivables, inventory, accounts payable and accrued liabilities at December 27, 2020 and March 31, 2020, approximates fair value because of the short maturity of these instruments. The carrying values of cash and cash equivalents at December 27, 2020 and March 31, 2020 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 27, 2020
March 31, 2020
Carrying amount
Fair value
Carrying amount
Fair value
Fixed-rate debt (1)
$
350,000
$
354,813
$
350,000
$
284,375
Variable-rate debt (2)
—
—
167,256
167,256
(1) In fiscal 2016, we issued $350,000 aggregate principal amount of 5.875% Senior Notes (the "5.875% Notes") that mature on October 1, 2023. These notes are unsecured and senior obligations. The fair value of the fixed-rate long-term debt is calculated based on current market rates for debt of the same risk and maturities, based on market quotes for each issuance. We consider these to be Level 2 instruments. See Note 13, Long-term Debt, for information on long-term debt, including certain risks and uncertainties.
(2) The carrying value of the amounts outstanding under our ABL Revolving Credit Facility approximates the fair value due to the short-term nature of these obligations. The fair value of this debt is categorized within Level 2 of the fair value hierarchy based on the observable market borrowing rates. See Note 13, Long-term Debt, for additional information on our credit facilities, including related certain risks and uncertainties.
We measure certain nonfinancial assets at fair value on a nonrecurring basis if certain indicators are present. These assets include long-lived assets that are written down to fair value when they are held for sale or determined to be impaired. During the three and nine months ended December 27, 2020 there were no impairments recorded related to our assets that are measured at fair value on a nonrecurring basis. During the nine months ended December 29, 2019, we recognized an impairment of $9,429 related to an expected loss on the sale of the held-for-sale assets of our Firearms business.
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 our operating lease assets.
Many leases include one or more options to renew, with renewal terms that can extend the lease term for three years or more. The exercise of lease renewal options is at our sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term.
The amounts of assets and liabilities related to our operating leases were as follows:
Balance Sheet Caption
December 27, 2020
March 31, 2020
Assets:
Operating lease assets
Operating lease assets
$
73,114
$
69,024
Liabilities:
Current:
Operating lease liabilities
Other current liabilities
$
9,983
$
10,780
Long-term:
Operating lease liabilities
Long-term operating lease liabilities
78,429
73,738
Total lease liabilities
$
88,412
$
84,518
The components of lease expense are recorded to cost of sales and selling, general and administration expenses in the unaudited condensed consolidated statements of comprehensive income (loss). The components of lease expense were as follows:
Three months ended
Nine months ended
December 27, 2020
December 29, 2019
December 27, 2020
December 29, 2019
Fixed operating lease costs (1)
$
5,593
$
5,733
$
15,704
$
15,349
Variable operating lease costs
806
846
2,047
2,085
Sublease income
(67)
—
(732)
(386)
Net Lease costs
$
6,332
$
6,579
$
17,019
$
17,048
(1) Includes short-term leases, which are immaterial.
The approximate minimum lease payments under non-cancelable operating leases as of December 27, 2020 are as follows:
Remainder of fiscal 2021
$
4,429
Fiscal 2022
16,581
Fiscal 2023
15,107
Fiscal 2024
13,410
Fiscal 2025
12,246
Thereafter
71,628
Total lease payments
133,401
Less imputed interest
(44,989)
Present value of lease liabilities
$
88,412
Supplemental cash flow information related to leases is as follows:
Nine months ended
December 27, 2020
December 29, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases
$
13,077
$
15,111
Operating lease assets obtained in exchange for lease liabilities:
Operating leases
11,487
1,848
4. Acquisitions and Divestitures
During the quarter 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.
Remington's net sales of $15,334 and a net loss of $7,874 since the acquisition date, October 12, 2020, were included in our consolidated results for the three months ended December 27, 2020, and reflected in the Shooting Sports reportable segment.
We accounted for the acquisition of Remington as a business combination using the acquisition method of accounting. The preliminary 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 preliminary fair values of acquired assets and liabilities assumed represent management’s estimate of fair value and are subject to change if additional information, such as post-close working capital adjustments becomes available. We expect to finalize the purchase price allocation as soon as practicable within the measurement period, but not later than one year following the acquisition date. 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 following pro forma financial information presents our results as if the Remington acquisition had occurred on April 1, 2019:
Three months ended
Nine months ended
December 27, 2020
December 29, 2019
December 27, 2020
December 29, 2019
Sales, net
$
579,332
$
463,061
$
1,701,872
$
1,465,492
Net income (loss)
79,476
3,732
187,841
(56,133)
The unaudited supplemental pro forma data above include the following significant non-recurring adjustments to net income (loss) to account for certain costs which would have been incurred if the Remington acquisition had been completed on April 1, 2019:
Three months ended
Nine months ended
December 27, 2020
December 29, 2019
December 27, 2020
December 29, 2019
Fees for advisory, legal, and accounting services (1)
(1) Adjustment for fees that were incurred in connection with the acquisition of Remington during fiscal 2021 as if those fees were incurred during the first quarter of fiscal 2020. Costs were recorded in Selling, general, and administrative expense. We paid a total of $3,260 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 asset-based 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 condensed consolidated financial statements and from the historical accounting records of Remington.
Divestiture of Business:
We entered into an asset purchase agreement during the quarter to sell a non-strategic business in our Shooting Sports segment. As part of the agreement we will provide limited transition services that will be complete by the end of the fiscal year. During the three months ended December 27, 2020 we recognized a pretax gain on this divestiture of approximately $18,467, which is included in other income/(expense) on the condensed consolidating statements of income. This transaction does not meet the criteria for discontinued operations as it does not represent a strategic shift that will have a major effect on the Company's ongoing operations. The assets of this business represented a portion of our Ammunition reporting unit. See Note 11, Goodwill and Intangible Assets.
5. Derivative Financial Instruments
In the normal course of business, we are exposed to market risks arising from adverse changes in:
•commodity prices affecting the cost of raw materials, and
•interest rates.
We record our interest rate swaps and commodity forward contracts that are accounted for as designated hedges pursuant to ASC Topic 815, “Derivatives and Hedging” ("ASC Topic 815"). ASC Topic 815 requires that an entity recognize all derivatives as either assets or liabilities on the balance sheet, measure those instruments at fair value and recognize changes in the fair value of derivatives in earnings in the period of change unless the derivative qualifies as designated cash flow hedge that offsets certain exposures. Certain criteria must be satisfied in order for derivative financial instruments to be classified and accounted for as a cash flow hedge. Derivatives that are not elected for hedge accounting treatment are recorded immediately in earnings.
From time to time, we have entered into floating-to-fixed interest rate swap agreements in order to hedge our forecasted interest payments on our outstanding variable-rate debt. Gains and losses from the remeasurement of our interest rate swap contract agreement are recorded as a component of accumulated other comprehensive income (loss) and released into earnings as a component of interest expense during the period in which the hedged transaction takes place. There are no cash flow hedge interest rate swaps in place as of December 27, 2020.
We entered into various commodity forward contracts during fiscal 2021 and 2020. These contracts are used to hedge our exposure to price fluctuations on lead we purchase for raw material components in our ammunition manufacturing process and are designated and qualify as effective cash flow hedges. The effectiveness of cash flow hedge contracts is assessed quantitatively at inception and qualitatively thereafter considering transactions critical terms and counterparty credit quality.
The gains and losses on these hedges are included in accumulated other comprehensive income (loss) and are reclassified into earnings at the time the forecasted revenue or expense is recognized. The gains or losses on the lead forward contracts are recorded in inventory as the commodities are purchased and in cost of sales when the related inventory is sold. As of December 27, 2020, we had outstanding lead forward contracts on approximately 16 million pounds of lead. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the related change in fair value of the derivative instrument would be reclassified from accumulated other comprehensive income (loss) and recognized in earnings. As of December 27, 2020, there is an asset balance related to the lead forward contracts. The balance is recorded within other current and non-current assets and is immaterial.