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 26, 2021

☐ 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 31, 2022, there were 56,258,763 shares of the registrant's common stock outstanding.

TABLE OF CONTENTS

		Page
PART I - Financial Information
Item 1.	Unaudited Financial Statements	2
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	32
PART II - Other Information
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
SIGNATURES		35

PART I— FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(Amounts in thousands except share data)	December 26, 2021		March 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	39,641	$	243,265
Net receivables	384,264		301,575
Net inventories	599,227		454,504
Income tax receivable	40,628		37,870
Other current assets	38,505		27,018
Total current assets	1,102,265		1,064,232
Net property, plant, and equipment	206,104		197,531
Operating lease assets	79,412		72,400
Goodwill	466,864		86,082
Net intangible assets	456,387		314,955
Deferred charges and other non-current assets, net	50,836		29,739
Total assets	$	2,361,868	$	1,764,939
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	174,517	$	163,839
Accrued compensation	50,697		63,318
Federal excise, use, and other taxes	41,279		23,092
Other current liabilities	150,924		120,568
Total current liabilities	417,417		370,817
Long-term debt	715,981		495,564
Deferred income tax liabilities	11,454		8,235
Long-term operating lease liabilities	82,085		77,375
Accrued pension and postemployment benefits	28,220		33,503
Other long-term liabilities	76,386		42,448
Total liabilities	1,331,543		1,027,942
Commitments and contingencies (Notes 3, 13, and 16)
Common stock — $.01 par value:
Authorized — 500,000,000 shares
Issued and outstanding — 56,550,784 shares as of December 26, 2021 and 58,561,016 shares as of March 31, 2021	566		585
Additional paid-in capital	1,737,650		1,731,479
Accumulated deficit	(333,634)		(694,036)
Accumulated other comprehensive loss	(81,997)		(83,195)
Common stock in treasury, at cost — 7,413,655 shares held as of December 26, 2021 and 5,403,423 shares held as of March 31, 2021	(292,260)		(217,836)
Total stockholders' equity	1,030,325		736,997
Total liabilities and stockholders' equity	$	2,361,868	$	1,764,939

See Notes to the Condensed Consolidated Financial Statements.

2

VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

	Three months ended				Nine months ended
(Amounts in thousands except per share data)	December 26, 2021		December 27, 2020		December 26, 2021		December 27, 2020
Sales, net	$	794,654	$	574,679	$	2,236,026	$	1,628,998
Cost of sales	513,184		411,447		1,414,208		1,178,508
Gross profit	281,470		163,232		821,818		450,490
Operating expenses:
Research and development	7,478		5,483		19,786		15,855
Selling, general, and administrative	115,045		88,768		308,690		242,355
Earnings before interest, income taxes, and other	158,947		68,981		493,342		192,280
Other income, net (Note 4)	—		18,467		—		18,467
Earnings before interest and income taxes	158,947		87,448		493,342		210,747
Interest expense, net	(6,695)		(5,619)		(18,302)		(17,752)
Earnings before income taxes	152,252		81,829		475,040		192,995
Income tax (provision) benefit	(34,115)		(2,950)		(114,638)		6,005
Net income	$	118,137	$	78,879	$	360,402	$	199,000
Earnings per common share:
Basic	$	2.07	$	1.35	$	6.26	$	3.42
Diluted	$	2.00	$	1.31	$	6.07	$	3.34
Weighted-average number of common shares outstanding:
Basic	57,162		58,303		57,540		58,183
Diluted	59,066		60,101		59,404		59,594
Net income (from above)	$	118,137	$	78,879	$	360,402	$	199,000
Other comprehensive income (loss), net of tax:
Pension and other postretirement benefit liabilities:
Reclassification of prior service credits for pension and postretirement benefit plans recorded to net income, net of tax benefit of $190 and $244, for the three and nine months ended December 26, 2021, respectively, and $0 and $0 for the three and nine months ended December 27, 2020, respectively	(585)		(78)		(752)		(235)
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax expense of $(348) and $(867) for the three and nine months ended December 26, 2021, respectively, and $0 and $0 for the three and nine months ended December 27, 2020, respectively	1,072		969		2,671		2,907
Change in derivatives, net of tax benefit of $33 and $154 for the three and nine months ended December 26, 2021, respectively, and $0 and $0 for the three and nine months ended December 27, 2020, respectively	(102)		1,151		(475)		2,825
Change in cumulative translation adjustment	(115)		375		(246)		884
Total other comprehensive income	270		2,417		1,198		6,381
Comprehensive income	$	118,407	$	81,296	$	361,600	$	205,381

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 26, 2021		December 27, 2020
Operating Activities:
Net income	$	360,402	$	199,000
Adjustments to net income to arrive at cash provided by operating activities:
Depreciation	33,980		33,625
Amortization of intangible assets	18,031		14,845
Amortization of deferred financing costs	1,057		1,133
Gain on sale of business	—		(18,467)
Deferred income taxes	(1,287)		2,449
Loss on disposal of property, plant, and equipment	223		1,850
Share-based compensation	20,562		10,013
Changes in assets and liabilities:
Net receivables	(78,120)		(1,786)
Net inventories	(131,994)		6,966
Accounts payable	4,367		28,067
Accrued compensation	(13,947)		4,015
Accrued income taxes	667		(36,027)
Federal excise, use, and other taxes	8,977		4,729
Pension and other postretirement benefits	(1,536)		(6,680)
Other assets and liabilities	(1,916)		63,587
Cash provided by operating activities	219,466		307,319
Investing Activities:
Capital expenditures	(24,828)		(17,603)
Proceeds from sale of business	—		23,654
Acquisition of businesses, net of cash received	(528,508)		(81,691)
Proceeds from the disposition of property, plant, and equipment	383		25
Cash used for investing activities	(552,953)		(75,615)
Financing Activities:
Borrowings on lines of credit	300,000		73,077
Payments on lines of credit	(80,000)		(240,333)
Payments made for debt issuance costs	(1,053)		—
Purchase of treasury shares	(86,121)		—
Proceeds from exercise of stock options	325		1,100
Payment of employee taxes related to vested stock awards	(3,087)		(576)
Cash provided by (used) for financing activities	130,064		(166,732)
Effect of foreign exchange rate fluctuations on cash	(201)		120
(Decrease) increase in cash and cash equivalents	(203,624)		65,092
Cash and cash equivalents at beginning of period	243,265		31,375
Cash and cash equivalents at end of period	$	39,641	$	96,467
Supplemental Cash Flow Disclosures:
Non-cash investing activity:
Capital expenditures included in accounts payable	$	1,963	$	1,931
Contingent consideration in connection with business combinations	$	26,025	$	—

 

See Notes to the Condensed Consolidated Financial Statements.

4

VISTA OUTDOOR INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited)

	Common Stock $.01 Par Value
(Amounts in thousands except share data)	Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock		Total Equity
Balance, September 26, 2021	57,288,160	$	573	$	1,731,665	$	(451,771)	$	(82,267)	$	(263,187)	$	935,013
Comprehensive income	—	—		—		118,137		270		—		118,407
Exercise of stock options	5,976	—		(139)		—		—		236		97
Share-based compensation	—	—		6,750		—		—		—		6,750
Restricted stock vested and shares withheld	8,483	—		(486)		—		—		321		(165)
Employee stock purchase plan	2,803	—		(3)		—		—		110		107
Treasury shares purchased	(758,273)	—		—		—		—		(29,882)		(29,882)
Other	3,635	(7)		(137)		—		—		142		(2)
Balance, December 26, 2021	56,550,784	$	566	$	1,737,650	$	(333,634)	$	(81,997)	$	(292,260)	$	1,030,325
Balance, September 27, 2020	58,256,243	$	583	$	1,742,645	$	(839,927)	$	(97,030)	$	(231,634)	$	574,637
Comprehensive income	—	—		—		78,879		2,417		—		81,296
Exercise of stock options	27,382	—		(594)		—		—		1,110		516
Share-based compensation	—	—		2,547		—		—		—		2,547
Restricted stock vested and shares withheld	28,002	—		(1,778)		—		—		1,442		(336)
Employee stock purchase plan	3,537	—		(76)		—		—		144		68
Other	4,972	—		(201)		—		—		201		—
Balance, December 27, 2020	58,320,136	$	583	$	1,742,543	$	(761,048)	$	(94,613)	$	(228,737)	$	658,728
	Common Stock $.01 Par Value
(Amounts in thousands except share data)	Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock		Total Equity
Balance, March 31, 2021	58,561,016	$	585	$	1,731,479	$	(694,036)	$	(83,195)	$	(217,836)	$	736,997
Comprehensive income	—	—		—		360,402		1,198		—		361,600
Exercise of stock options	15,277	—		(278)		—		—		603		325
Share-based compensation	—	—		20,562		—		—		—		20,562
Restricted stock vested and shares withheld	186,208	—		(11,590)		—		—		8,326		(3,264)
Employee stock purchase plan	5,529	—		9		—		—		218		227
Treasury shares purchased	(2,281,956)	—		—		—		—		(86,121)		(86,121)
Other	64,710	(19)		(2,532)		—		—		2,550		(1)
Balance, December 26, 2021	56,550,784	$	566	$	1,737,650	$	(333,634)	$	(81,997)	$	(292,260)	$	1,030,325
Balance, March 31, 2020	58,038,822	$	580	$	1,744,096	$	(960,048)	$	(100,994)	$	(241,129)	$	442,505
Comprehensive income	—	—		—		199,000		6,381		—		205,381
Exercise of stock options	83,196	—		(2,055)		—		—		3,376		1,321
Share-based compensation	—	—		10,013		—		—		—		10,013
Restricted stock vested and shares withheld	79,506	—		(4,843)		—		—		4,201		(642)
Employee stock purchase plan	8,972	—		(222)		—		—		365		143
Other	109,640	3		(4,446)		—		—		4,450		7
Balance, December 27, 2020	58,320,136	$	583	$	1,742,543	$	(761,048)	$	(94,613)	$	(228,737)	$	658,728

See Notes to the Condensed Consolidated Financial Statements.

5

VISTA OUTDOOR INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Nine Months Ended December 26, 2021

(Amounts in thousands except per share data and unless otherwise indicated)

1. Significant Accounting Policies

Nature of Operations—Vista Outdoor Inc. (together with our subsidiaries, "Vista Outdoor", "we", "our", and "us", unless the context otherwise requires) is a leading global designer, manufacturer, and marketer of outdoor recreation and shooting sports products. We operate through two reportable segments, Sporting Products and Outdoor Products. We are headquartered in Anoka, Minnesota and have 23 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, 2021 (“fiscal year 2021”).

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 year 2021. 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 26, 2021 and March 31, 2021, our results of operations for the three and nine months ended December 26, 2021 and December 27, 2020, and our cash flows for the nine months ended December 26, 2021 and December 27, 2020.

Our accounting policies are described in Note 1 of the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for fiscal year 2021. Such significant accounting policies are applicable for periods prior to the following new accounting standards.

Accounting Standards Adopted by us in Fiscal Year 2022

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06, "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity." This ASU simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. Also, this ASU requires the application of the if-converted method for calculating diluted earnings per share and provided that the treasury stock method will be no longer available. The new guidance is effective for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. Entities may adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. We early adopted ASU 2020-06 on April 1, 2021 with no impact on our financial statements.

On April 1, 2021, we adopted ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU removes specific exceptions to the general principles of ASC Topic 740, "Accounting for Income Taxes" and simplifies certain U.S. GAAP requirements. This update is effective for fiscal years beginning after December 15, 2020. The adoption of this standard does not have a material impact on our consolidated financial statements and related disclosures.

In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This ASU requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. This update is effective for fiscal years beginning after December 15, 2022. We early adopted ASU 2021-08 during the third quarter of fiscal year 2022, and retroactively applied it to periods beginning on April 1, 2021. The adoption of this standard did not have a material impact to our purchase accounting and our consolidated financial statements and related disclosures.

Change in Reportable Segments—during the third quarter of fiscal year 2022, we modified and renamed our reportable segments to provide investors with improved disclosures and reflect how our chief operating decision maker ("CODM"), our Chief Executive Officer, allocates resources and makes decisions. See Note 17, Operating Segment Information, for additional information. Historical amounts have been reclassified in these accompanying notes herewith to conform to the current presentation.

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2. Fair Value of Financial Instruments

We measure and disclose our financial assets and liabilities at fair value on a recurring and nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or the price paid to transfer a liability (the exit price) in the principal and most advantageous market for the asset or liability in an orderly transaction between market participants. Assets and liabilities carried at fair value are classified using the three-tier hierarchy:

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:

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.

Contingent Consideration

The acquisition-related contingent consideration liabilities of $23,134 and $3,625 represent the estimated fair values of earn-outs payable related to our acquisitions of QuietKat Inc. ("QuietKat") and Fiber Energy Products ("Fiber"), respectively. See Note 4, Acquisitions and Divestitures, for additional information. The earn-out liabilities are valued using 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. The QuietKat contingent consideration is measured to fair value at each reporting date through December 31, 2023. The Fiber contingent consideration is measured to fair value at each reporting date through November 3, 2024. The fair value calculations are based on management estimates and entity-specific assumptions, which are considered Level 3 inputs. The liabilities are included in other long-term liabilities on our balance sheet.

Disclosures about the Fair Value of Financial Instruments

The carrying amount of our receivables, inventory, accounts payable and accrued liabilities at December 26, 2021 and March 31, 2021 approximates fair value because of the short maturity of these instruments. The carrying values of cash and cash equivalents at December 26, 2021 and March 31, 2021 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 26, 2021				March 31, 2021
	Carrying amount		Fair value		Carrying amount		Fair value
Fixed-rate debt (1)	$	500,000	$	500,500	$	500,000	$	493,750
Variable-rate debt (2)	220,000		220,000		—		—

(1) In fiscal year 2021, we issued $500,000 aggregate principal amount of 4.5% Senior Notes that will mature on March 15, 2029. These notes are unsecured and senior obligations. 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.

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(2) The carrying value of the amounts outstanding under our ABL Revolving Credit Facility approximates the fair value because the interest rates are variable and reflective of market rates. 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 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.

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 Caption	December 26, 2021		March 31, 2021
Assets:
Operating lease assets	Operating lease assets	$	79,412	$	72,400
Liabilities:
Current:
Operating lease liabilities	Other current liabilities	$	12,193	$	10,044
Long-term:
Operating lease liabilities	Long-term operating lease liabilities	82,085		77,375
Total lease liabilities		$	94,278	$	87,419

The components of lease expense are recorded to cost of sales and selling, general, and administration expenses in the condensed consolidated statements of comprehensive income. The components of lease expense were as follows:

	Three months ended				Nine months ended
	December 26, 2021		December 27, 2020		December 26, 2021		December 27, 2020
Fixed operating lease costs (1)	$	5,795	$	5,593	$	16,297	$	15,704
Variable operating lease costs	701		806		2,284		2,047
Operating and sub-lease income	(180)		(67)		(331)		(732)
Net Lease costs	$	6,316	$	6,332	$	18,250	$	17,019

(1) Includes short-term leases

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	December 26, 2021		March 31, 2021
Weighted Average Remaining Lease Term (Years):
Operating leases	8.62		9.32
Weighted Average Discount Rate:
Operating leases	8.12	%	8.64	%

The approximate minimum lease payments under non-cancelable operating leases as of December 26, 2021 are as follows:

Remainder of fiscal year 2022	$	4,882
Fiscal year 2023	18,642
Fiscal year 2024	16,358
Fiscal year 2025	15,158
Fiscal year 2026	13,724
Thereafter	65,871
Total lease payments	134,635
Less imputed interest	(40,357)
Present value of lease liabilities	$	94,278

Supplemental cash flow information related to leases is as follows:

	Nine months ended
	December 26, 2021		December 27, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	14,054	$	13,077
Operating lease assets obtained in exchange for lease liabilities:
Operating leases	13,472		11,487

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4. Acquisitions and Divestitures

During the third quarter of fiscal year 2022, we acquired Fiber Energy Products, a leader in all-natural wood grilling pellets. This latest strategic transaction secures a continuous supply of pellets for our Camp Chef business and expands our revenue in a consumable category. The results of this business will be reported within the Outdoor Products reportable segment. Contingent consideration with an initial fair value of $3,625 was included in the purchase price. See Note 2, Fair Value of Financial Instruments, for information related to the fair value calculation. We performed a preliminary allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The 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 acquisition is not significant to our consolidated financial statements and as such we have not included disclosures of the allocation of the purchase price or any pro forma information.

During the third quarter of fiscal year 2022, we acquired Foresight Sports ("Foresight"), a leading designer and manufacturer of golf performance analysis, entertainment, and game enhancement technologies for approximately $470,622. The purchase agreement includes $5,599 related to employee retention payments, which will be accounted for separately from the business combination as post combination compensation expense. Contingent payments of up to $25,000 if certain net sales targets are met will also be accounted for separately from the business combination as post combination compensation expense. We used cash on hand and available liquidity under our 2021 ABL Revolving Credit Facility to complete the transaction. The results of this business will be reported within the Outdoor Products reportable segment. Due to the timing of the transaction, purchase accounting is incomplete.

Foresight's net sales of $28,586 and net income of $8,880 since the acquisition date, September 28, 2021, were included in our consolidated results for the three months ended December 26, 2021, and are reflected in the Outdoor Products reportable segment.

We accounted for the acquisition of Foresight 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. 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.

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Foresight preliminary purchase price allocation:

	September 28, 2021
Total consideration transferred			$	470,622
			470,622
Fair value of assets acquired:
Accounts receivable	$	2,806
Inventories	10,780
Intangible assets	131,500
Property, plant, and equipment	1,870
Operating lease assets	6,506
Other long-term assets	2,006
Total assets	155,468
Fair value of liabilities assumed:
Accounts payable	6,177
Customer deposits	2,084
Long-term operating lease liabilities	5,961
Contract liabilities	2,992
Other liabilities	1,646
Other long-term liabilities	9,182
Total liabilities	28,042
Net assets acquired			127,426
Goodwill			$	343,196

Foresight intangible assets above include:

	Value		Useful life (years)
Tradenames	$	42,500	20
Patented technology	19,900		5 to 10
Customer Relationships	69,100		5 to 15

Foresight supplemental pro forma data:

The following unaudited pro forma financial information presents our results as if the Foresight acquisition had occurred on April 1, 2020:

	Three months ended				Nine months ended
	December 26, 2021		December 27, 2020		December 26, 2021		December 27, 2020
Sales, net	$	794,654	$	596,973	$	2,279,625	$	1,676,361
Net income	120,415		84,065		368,725		197,854

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 Foresight acquisition had been completed on April 1, 2020:

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	Three months ended				Nine months ended
	December 26, 2021		December 27, 2020		December 26, 2021		December 27, 2020
Fees for advisory, legal, and accounting services (1)	$	(1,030)	$	—	$	(3,089)	$	3,089
Inventory step-up, net (2)	(1,247)		—		(1,247)		$1,247
Interest (3)	—		1,223		2,203		5,320
Depreciation (4)	—		165		331		469
Amortization (5)	—		2,313		4,626		6,939
Income tax provision (6)	—		2,807		3,520		3,750

(1) During the nine months ended December 26, 2021, we incurred a total of $3,089 in acquisition related costs, including legal and other professional fees, related to the acquisition, all of which were reported in selling, general, and administrative expense in the condensed consolidated statements of comprehensive income. This adjustment is to show the results as if those fees were incurred during the first quarter of fiscal 2021.

(2) Adjustment reflects the increased cost of goods sold expense resulting from the fair value step-up in inventory which was expensed in full during the quarter.

(3) Adjustment to reflect an increase in interest expense resulting from assumed advances to complete the transaction on our 2018 New Credit Facilities prior to March 31, 2021 and our 2021 ABL Revolving Credit Facility after March 31, 2021.

(4) Adjustment for depreciation related to the revised fair-value basis of the acquired property, plant and equipment and change in estimated useful lives.

(5) Adjustment for amortization of acquired intangible assets.

(6) Income tax effect of the adjustments made at a blended federal and state statutory rate including the impact of the valuation allowance.

During the first quarter of fiscal year 2022, we completed the acquisition of QuietKat, an electric bicycle company that specializes in designing, manufacturing, and marketing rugged, all-terrain eBikes. We accounted for the acquisition as a business combination using the acquisition method of accounting. The acquisition is not significant to our consolidated financial statements. The results of this business are reported within our Outdoor Products reportable segment. Contingent consideration with an initial fair value of $22,400 was included in the purchase price. See Note 2, Fair Value of Financial Instruments, for information related to the fair value calculation at December 26, 2021. In addition to the consideration we paid at closing, $13,000 was paid to key members of QuietKat management and is considered compensation that will be expensed over approximately three years provided they continue their employment with us through the respective milestone dates.

During the third quarter of fiscal year 2021, we acquired certain assets related to Remington Outdoor Company, Inc.’s ("Remington") ammunition and accessories businesses, including Remington's ammunition manufacturing facility in Lonoke, Arkansas and related intellectual property. We accounted for the acquisition of Remington as a business combination using the acquisition method of accounting. The purchase price allocation below was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The fair values of acquired assets and liabilities assumed represent management’s estimate of fair value. We finalized the purchase price allocation during the fourth quarter of fiscal year 2021.

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Remington purchase price allocation:

	October 12, 2020
Total purchase price:
Cash paid			$	81,400
Cash paid for working capital			291
Total purchase price			81,691
Fair value of assets acquired:
Inventories	$	20,021
Intangible assets	26,200
Property, plant, and equipment	31,200
Other assets	3,363
Total assets	80,784
Fair value of liabilities assumed:
Accounts payable	311
Other liabilities	2,969
Total liabilities	3,280
Net assets acquired			77,504
Goodwill			$	4,187

Remington intangible assets above include:

	Value		Useful life (years)
Indefinite lived tradenames	$	24,500	Indefinite
Customer relationships	1,700		20

Divestiture of business:

We entered into an asset purchase agreement during the third quarter of fiscal year 2021 to sell a non-strategic business in our Sporting Products segment. As part of the agreement, we provided limited transition services during fiscal year 2021. During the three months ended December 27, 2020, we recognized a pretax gain on this divestiture of approximately $18,467, which was included in other income 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 our ongoing operations. The assets of this business represented a portion of our Ammunition reporting unit.

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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 use designated cash flow hedges to manage our level of exposure.

We entered into various commodity forward contracts during fiscal years 2022 and 2021. 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 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 26, 2021, we had outstanding lead forward contracts on approximately 2.9 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. As of December 26, 2021, there is an immaterial asset balance related to the lead forward contracts that is recorded within other current assets.

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6. Revenue Recognition

Consistent with our changes in reportable segments, see Note 17, Operating Segment Information, for additional information, we changed our presentation of disaggregated revenue to align with the new segment structure and names. Prior comparative periods have been restated to conform to the change in our reportable segments. The following tables disaggregate our net sales by major product category:

	Three months ended
	December 26, 2021						December 27, 2020
	Sporting Products		Outdoor Products		Total		Sporting Products		Outdoor Products		Total
Sporting Products (1)	$	459,646	$	—	$	459,646	$	287,855	$	—	$	287,855
Outdoor Accessories (2)	—		119,345		119,345		—		113,662		113,662
Action Sports (3)	—		98,714		98,714		—		88,907		88,907
Outdoor Recreation (4)	—		116,949		116,949		—		84,255		84,255
Total	$	459,646	$	335,008	$	794,654	$	287,855	$	286,824	$	574,679
Geographic Region:
United States	$	434,326	$	250,725	$	685,051	$	267,186	$	229,101	$	496,287
Rest of the World	25,320		84,283		109,603		20,669		57,723		78,392
Total	$	459,646	$	335,008	$	794,654	$	287,855	$	286,824	$	574,679
	Nine months ended
	December 26, 2021						December 27, 2020
	Sporting Products		Outdoor Products		Total		Sporting Products		Outdoor Products		Total
Sporting Products (1)	$	1,274,127	$	—	$	1,274,127	$	821,837	$	—	$	821,837
Outdoor Accessories (2)	—		334,533		334,533		—		293,525		293,525
Action Sports (3)	—		295,501		295,501		—		259,213		259,213
Outdoor Recreation (4)	—		331,865		331,865		—