0001616318-22-000089.txt : 20220728 0001616318-22-000089.hdr.sgml : 20220728 20220728161034 ACCESSION NUMBER: 0001616318-22-000089 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 94 CONFORMED PERIOD OF REPORT: 20220626 FILED AS OF DATE: 20220728 DATE AS OF CHANGE: 20220728 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Vista Outdoor Inc. CENTRAL INDEX KEY: 0001616318 STANDARD INDUSTRIAL CLASSIFICATION: ORDNANCE & ACCESSORIES, (NO VEHICLES/GUIDED MISSILES) [3480] IRS NUMBER: 471016855 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36597 FILM NUMBER: 221115319 BUSINESS ADDRESS: STREET 1: 1 VISTA WAY CITY: ANOKA STATE: MN ZIP: 55303 BUSINESS PHONE: 763-433-1000 MAIL ADDRESS: STREET 1: 1 VISTA WAY CITY: ANOKA STATE: MN ZIP: 55303 10-Q 1 vsto-20220626.htm 10-Q vsto-20220626
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 26, 2022
 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
vsto-20220626_g1.jpg
Vista Outdoor Inc.
(Exact name of Registrant as specified in its charter)
Delaware
47-1016855
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1 Vista Way
Anoka
MN
55303
(Address of Principal Executive Offices)
(Zip Code)

Registrant's telephone number, including area code: (763) 433-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.01VSTONew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No 
As of July 25, 2022, there were 56,530,084 shares of the registrant's common stock outstanding.




TABLE OF CONTENTS



PART I— FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Amounts in thousands except share data)June 26, 2022March 31, 2022
ASSETS  
Current assets:  
Cash and cash equivalents$36,612 $22,584 
Net receivables429,729 356,773 
Net inventories662,315 642,976 
Income tax receivable6,642 43,560 
Other current assets47,757 45,050 
Total current assets1,183,055 1,110,943 
Net property, plant, and equipment204,547 211,087 
Operating lease assets75,837 78,252 
Goodwill481,857 481,857 
Net intangible assets451,654 459,795 
Deferred charges and other non-current assets, net60,119 54,267 
Total assets$2,457,069 $2,396,201 
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities:  
Accounts payable$180,121 $146,697 
Accrued compensation42,632 79,171 
Federal excise, use, and other taxes46,110 40,825 
Other current liabilities151,552 127,180 
Total current liabilities420,415 393,873 
Long-term debt586,255 666,114 
Deferred income tax liabilities29,142 29,304 
Long-term operating lease liabilities77,827 80,083 
Accrued pension and postemployment benefits22,060 22,634 
Other long-term liabilities72,058 79,794 
Total liabilities1,207,757 1,271,802 
Commitments and contingencies (Notes 3, 13, and 16)
Common stock — $.01 par value:
Authorized — 500,000,000 shares
Issued and outstanding — 56,524,082 shares as of June 26, 2022 and 56,093,456 shares as of March 31, 2022
565 560 
Additional paid-in capital1,711,759 1,730,927 
Accumulated deficit(94,795)(220,810)
Accumulated other comprehensive loss(76,449)(76,679)
Common stock in treasury, at cost — 7,440,357 shares held as of June 26, 2022 and 7,870,983 shares held as of March 31, 2022
(291,768)(309,599)
Total stockholders' equity1,249,312 1,124,399 
Total liabilities and stockholders' equity$2,457,069 $2,396,201 

See Notes to the Condensed Consolidated Financial Statements.

VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
 Three months ended
(Amounts in thousands except per share data)June 26, 2022June 27, 2021
Sales, net$802,612 $662,912 
Cost of sales509,142 421,485 
Gross profit293,470 241,427 
Operating expenses:
Research and development7,897 5,868 
Selling, general, and administrative113,148 91,903 
Earnings before interest and income taxes172,425 143,656 
Interest expense, net(6,310)(5,678)
Earnings before income taxes166,115 137,978 
Income tax provision(40,100)(35,253)
Net income $126,015 $102,725 
Earnings per common share:  
Basic$2.23 $1.77 
Diluted$2.16 $1.71 
Weighted-average number of common shares outstanding:  
Basic56,486 58,123 
Diluted58,381 59,947 
Net income (from above)$126,015 $102,725 
Other comprehensive income (loss), net of tax:
Pension and other postretirement benefit liabilities:
Reclassification of prior service credits for pension and postretirement benefit plans recorded to net income, net of tax benefit of $0 and $23, respectively.
 (72)
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax (expense) of $(221) and $(259), respectively
694 798 
Change in derivatives, net of tax benefit (expense) of $690 and $(20), respectively
9 63 
Change in cumulative translation adjustment, net of tax (expense) of $(167) and $0 , respectively
(473)206 
Total other comprehensive income230 995 
Comprehensive income $126,245 $103,720 

See Notes to the Condensed Consolidated Financial Statements.

VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Three months ended
(Amounts in thousands)June 26, 2022June 27, 2021
Operating Activities:  
Net income $126,015 $102,725 
Adjustments to net income to arrive at cash provided by operating activities:
Depreciation11,280 11,247 
Amortization of intangible assets8,036 4,998 
Amortization of deferred financing costs 353 347 
Change in fair value of contingent consideration(112) 
Deferred income taxes163 312 
Loss (gain) on disposal of property, plant, and equipment139 (3)
Share-based compensation7,257 7,038 
Changes in assets and liabilities:
Net receivables(73,105)(54,919)
Net inventories(29,504)(47,925)
Accounts payable33,468 6,188 
Accrued compensation(36,347)(22,813)
Accrued income taxes39,342 36,236 
Federal excise, use, and other taxes5,292 3,522 
Pension and other postretirement benefits341 (1,363)
Other assets and liabilities14,959 (16,818)
Cash provided by operating activities107,577 28,772 
Investing Activities:
Capital expenditures(4,910)(6,876)
Acquisition of businesses, net of cash received (8,488)
Proceeds from the disposition of property, plant, and equipment43 6 
Cash used for investing activities(4,867)(15,358)
Financing Activities:
Proceeds from credit facility15,000  
Repayments of credit facility(95,000) 
Payments made for debt issuance costs  (955)
Purchase of treasury shares (44,232)
Proceeds from exercise of stock options 147 197 
Payment of employee taxes related to vested stock awards(8,923)(3,018)
Cash used for financing activities(88,776)(48,008)
Effect of foreign exchange rate fluctuations on cash
94 (1)
Increase (decrease) in cash and cash equivalents14,028 (34,595)
Cash and cash equivalents at beginning of period 22,584 243,265 
Cash and cash equivalents at end of period$36,612 $208,670 
Supplemental Cash Flow Disclosures:
Non-cash investing activity:
Capital expenditures included in accounts payable$1,701 $1,256 
Contingent consideration in connection with business combinations
$ $22,400 
 
See Notes to the Condensed Consolidated Financial Statements.

VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited)
Common Stock $.01 Par Value
(Amounts in thousands except share data)SharesAmountAdditional
Paid-In
Capital
Accumulated Deficit Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Equity
Balance, March 31, 202256,093,456 $560 $1,730,927 $(220,810)$(76,679)$(309,599)$1,124,399 
Comprehensive income— — — 126,015 230 — 126,245 
Exercise of stock options9,150 — (212)— — 359 147 
Share-based compensation— — 7,257 — — — 7,257 
Restricted stock vested, net of shares withheld413,089 — (25,892)— — 17,156 (8,736)
Other8,387 5 (321)— — 316  
Balance, June 26, 202256,524,082 $565 $1,711,759 $(94,795)$(76,449)$(291,768)$1,249,312 
Balance, March 31, 202158,561,016 $585 $1,731,479 $(694,036)$(83,195)$(217,836)$736,997 
Comprehensive income— — — 102,725 995 — 103,720 
Exercise of stock options7,373 — (94)— — 291 197 
Share-based compensation— — 7,038 — — — 7,038 
Restricted stock vested, net of shares withheld174,885 — (10,937)— — 7,896 (3,041)
Treasury shares purchased(1,212,496)— — — — (44,232)(44,232)
Other7,380 (10)(282)— — 292  
Balance, June 27, 202157,538,158 $575 $1,727,204 $(591,311)$(82,200)$(253,589)$800,679 

See Notes to the Condensed Consolidated Financial Statements.

VISTA OUTDOOR INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Three Months Ended June 26, 2022
(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 26 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, 2022 (“fiscal year 2022”).
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 2022. 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 June 26, 2022 and March 31, 2022, our results of operations for the three months ended June 26, 2022 and June 27, 2021, and our cash flows for the three months ended June 26, 2022 and June 27, 2021.
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 2022.
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
In connection with some of our acquisitions, we recorded contingent consideration liabilities that can be earned by the sellers upon achievement of certain milestones. The liabilities are measured on a recurring basis and recorded at fair value, using a discounted cash flow analysis or a Monte Carlo simulation analysis in a risk-neutral framework with assumptions for volatility, market price of risk adjustment, risk-free rate, and cost of debt, utilizing revenue projections for the respective earn-out period, corresponding targets and approximate timing of payments as outlined in the purchase agreements. The inputs used to calculate the fair value of the contingent consideration liabilities are considered to be Level 3 inputs due to the lack of relevant market activity and significant management judgment. Changes in the fair value of the contingent consideration obligation results from changes in discount periods and rates, and changes in probability assumptions with respect to the likelihood of achieving the performance targets. The fair value adjustments are recorded in Selling, general, and administrative in the condensed consolidated statement of comprehensive income. As of June 26, 2022, the estimated fair values of earn-outs payable related to our acquisitions of QuietKat, Fiber Energy, Stone Glacier, and HEVI-Shot are $23,134, $3,625, $9,939, and $274, respectively. See Note 4, Acquisitions and Divestitures, for additional information.
Contingent consideration liabilities are reported under the following captions in the condensed consolidated balance sheets:
June 26, 2022March 31, 2022
Other current liabilities$12,694 $96 
Other long-term liabilities24,278 36,994 
Total$36,972 $37,090 
Disclosures about the Fair Value of Financial Instruments
The carrying amount of our receivables, inventory, accounts payable, and accrued liabilities as of June 26, 2022 and March 31, 2022 approximates fair value because of the short maturity of these instruments. The carrying values of cash and cash equivalents as of June 26, 2022 and March 31, 2022 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:
June 26, 2022March 31, 2022
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Fixed-rate debt (1)$500,000 $397,000 $500,000 $460,000 
Variable-rate debt (2)90,000 90,000 170,000 170,000 
(1) Fixed rate debt —In fiscal year 2021, we issued $500,000 aggregate principal amount of 4.5% Senior Notes which will mature on March 15, 2029. These notes are unsecured and senior obligations. The fair value of the fixed-rate debt is based on market quotes for each issuance. We consider these to be Level 2 instruments. See Note 13, Long-term Debt, for information on long-term debt, including certain risks and uncertainties.
(2) Variable rate debt— The carrying value of the amounts outstanding under our ABL Revolving Credit Facility approximates the fair value because the interest rates are variable and reflective of market rates as of June 26, 2022. 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 CaptionJune 26, 2022March 31, 2022
Assets:
Operating lease assetsOperating lease assets$75,837 $78,252 
Liabilities:
Current:
Operating lease liabilitiesOther current liabilities$11,582 $11,804 
Long-term:
Operating lease liabilitiesLong-term operating lease liabilities77,827 80,083 
Total lease liabilities$89,409 $91,887 
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
June 26, 2022June 27, 2021
Fixed operating lease costs (1)$5,805 $5,116 
Variable operating lease costs463 669 
Operating and sub-lease income(151)(44)
Net Lease costs$6,117 $5,741 
(1) Includes short-term leases
June 26, 2022March 31, 2022
Weighted Average Remaining Lease Term (Years):
Operating leases8.528.65
Weighted Average Discount Rate:
Operating leases8.02 %7.99 %

The approximate minimum lease payments under non-cancelable operating leases as of June 26, 2022 are as follows:
Remainder of fiscal year 2023$13,822 
Fiscal year 202416,463 
Fiscal year 202514,799 
Fiscal year 202613,301 
Fiscal year 202712,420 
Thereafter55,702 
Total lease payments126,507 
Less imputed interest(37,098)
Present value of lease liabilities$89,409 
Supplemental cash flow information related to leases is as follows:
Three months ended
June 26, 2022June 27, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases$4,782 $4,278 
Operating lease assets obtained in exchange for lease liabilities:
Operating leases432 3,303 
4. Acquisitions and Divestitures
During the fourth quarter of fiscal year 2022, we acquired Stone Glacier, a premium brand focused on ultralightweight, performance hunting gear designed for backcountry use. The addition of Stone Glacier allows us to enter the packs, camping equipment, and technical apparel categories with a fast-growing brand and provide a foundation for us to leverage camping category synergies. The results of this business are reported within the Outdoor Products segment. Contingent consideration with an initial fair value of $9,939 was included in the purchase price. See Note 2, Fair Value of Financial Instruments, for information related to the fair value calculation. We accounted for the acquisition as a business combination using the acquisition method of accounting, and performed 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, a leading designer and manufacturer of golf performance analysis, entertainment, and game enhancement technologies for approximately $470,772. The purchase agreement includes $5,599 related to employee retention payments, which will be accounted for separately from the business combination as post combination compensation expense. Contingent payments of up to $25,000 if certain net sales targets are met will also be accounted for separately from the business combination as post combination compensation expense. We used cash on hand and available liquidity under our 2021 ABL Revolving Credit Facility to complete the transaction. The results of this business are reported within the Outdoor Products segment.
We accounted for the acquisition as a business combination using the acquisition method of accounting. The purchase price allocation below was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. 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 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.


Foresight preliminary purchase price allocation:

September 28, 2021
Total consideration transferred$470,772 
Fair value of assets acquired:
Accounts receivable$2,806 
Inventories10,780 
Intangible assets131,500 
Property, plant, and equipment1,870 
Operating lease assets6,506 
Other long-term assets2,006 
Total assets155,468 
Fair value of liabilities assumed:
Accounts payable6,177 
Customer deposits2,084 
Long-term operating lease liabilities5,961 
Contract liabilities2,992 
Other liabilities1,729 
Other long-term liabilities9,182 
Total liabilities28,125 
Net assets acquired127,343 
Goodwill$343,429 

Foresight intangible assets above include:
ValueUseful life (years)
Tradenames$42,500 20
Patented technology19,900 
5 to 10
Customer Relationships69,100 
5 to 15
During the first quarter of fiscal year 2022, we acquired QuietKat, an electric bicycle company that specializes in designing, manufacturing, and marketing rugged, all-terrain eBikes. The results of this business are reported within the Outdoor Products segment. We accounted for the acquisition as a business combination using the acquisition method of accounting, and performed 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 finalized the purchase price allocation during the first quarter of fiscal year 2022, and no significant changes were recorded. Contingent consideration with an initial fair value of $22,400 was included in the purchase price. See Note 2, Fair Value of Financial Instruments, for information related to the fair value calculation. In addition to the consideration we paid at closing, $13,000 was paid to key members of QuietKat management and is considered compensation that will be expensed over approximately three years, provided the key members continue their employment with us through the respective milestone dates. The acquisition is not significant to our consolidated financial statements and as such we have not included disclosures of the allocation of the purchase price or any pro forma information.
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 2023 and 2022. 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 June 26, 2022, we had outstanding lead forward contracts on approximately 7.5 million pounds of lead. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the related change in fair value of the derivative instrument would be reclassified from accumulated other comprehensive loss and recognized in earnings. The liability related to the lead forward contracts is immaterial and is recorded as part of other current liabilities.
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
June 26, 2022June 27, 2021
Sporting ProductsOutdoor ProductsTotalSporting ProductsOutdoor ProductsTotal
Sporting Products (1)$510,626 $— $510,626 $364,287 $— $364,287 
Outdoor Accessories (2)— 71,196 71,196 — 99,031 99,031 
Action Sports (3)— 90,058 90,058 — 92,143 92,143 
Outdoor Recreation (4)— 130,732 130,732 — 107,451 107,451 
Total$510,626 $291,986 $802,612 $364,287 $298,625 $662,912 
Geographic Region:
United States$481,078 $202,456 $683,534 $330,278 $227,676 $557,954 
Rest of the World29,548 89,530 119,078 34,009 70,949 104,958 
Total$510,626 $291,986 $802,612 $364,287 $298,625 $662,912 
(1) Sporting Products includes the Ammunition operating segment.
(2) Outdoor Accessories includes the Outdoor Accessories operating segment and our Stone Glacier business.
(3) Action Sports includes the operating segments: Sports Protection and Cycling.
(4) Outdoor Recreation includes the operating segments: Hydration, Outdoor Cooking, and Golf.
Product Sales:
For the majority of our contracts with customers, we recognize revenue for our products at a point in time upon the transfer of control of the products to the customer, which typically occurs upon shipment and coincides with our right to payment, the transfer of legal title, and the transfer of the significant risks and rewards of ownership of the product. For our contracts that include bundled hardware and software sales, revenue related to delivered hardware and bundled software is recognized when control has transferred to the customer, which typically occurs upon shipment. Revenue allocated to unspecified software update rights is deferred and recognized on a straight-line basis over the estimated period they are expected to be provided.
Typically, our contracts require customers to pay within 30-60 days of product delivery with a discount available to some customers for early payment. In some cases, we offer extended payment terms to customers. However, we do not consider these extended payment terms to be a significant financing component of the contract because the payment terms are less than a year.

In limited circumstances, our contract with a customer may have shipping terms that indicate a transfer of control of the products upon their arrival at the destination rather than upon shipment. In those cases, we recognize revenue only when the product reaches the customer destination, which may require us to estimate the timing of transfer of control based on the expected delivery date. In all cases, however, we consider our costs related to shipping and handling to be a cost of fulfilling the contract with the customer.
The total amount of revenue we recognize for the sale of our products reflects various sales adjustments for discounts, returns, refunds, allowances, rebates, and other customer incentives. These sales adjustments can vary based on market conditions, customer preferences, timing of customer payments, volume of products sold, and timing of new product launches. These adjustments require management to make reasonable estimates of the amount we expect to receive from the customer. We estimate sales adjustments by customer or by product category on the basis of our historical experience with similar contracts with customers, adjusted as necessary to reflect current facts and circumstances and our expectations for the future. Sales taxes, federal excise taxes, and other similar taxes are excluded from revenue.
For the immaterial amount of our contracts that have multiple performance obligations, which represent promises within an arrangement that are distinct, we allocate revenue to all distinct performance obligations based on their relative stand-alone selling prices (“SSPs”). When available, we use observable prices to determine SSPs. When observable prices are not available, SSPs are established that reflect our best estimates of what the selling prices of the performance obligations would be if they were sold regularly on a stand-alone basis. We allocate revenue and any related discounts to these performance obligations based on their relative SSPs.
Incentives in the form of cash paid to the customer (or a reduction of a customer cash payment to us) typically are recognized as a reduction of sales unless the incentive is for a distinct benefit that we receive from the customer, e.g., advertising or marketing.
We pay commissions to some of our employees based on agreed-upon sales targets. We recognize the incremental costs of obtaining a contract as an expense when incurred because our sales contracts with commissions are a year or less.
7. Earnings Per Share
The computation of basic earnings per share ("EPS") is based on the weighted average number of shares that were outstanding during the period. The computation of diluted EPS is based on the number of basic weighted average shares outstanding plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares, such as common stock to be issued upon exercise of options, contingently issuable shares and restricted stock units, using the treasury stock method.
In computing EPS for the periods presented, earnings, as reported for each respective period, is divided by the number of shares below:
Three months ended
(Amounts in thousands except per share data)June 26, 2022June 27, 2021
Numerator:
Net income $126,015 $102,725 
Denominator:
Weighted-average number of common shares outstanding basic:56,486 58,123 
Dilutive effect of share-based awards (1)1,895 1,824 
Diluted shares 58,381 59,947 
Earnings per common share:  
Basic$2.23 $1.77 
Diluted$2.16 $1.71 
(1) Potentially dilutive securities, which were not included in the computation of diluted earnings per share, because either the effect would have been anti-dilutive, or the options’ exercise prices were greater than the average market price of the common stock, were 3 and 527 for the three months ended June 26, 2022 and June 27, 2021, respectively.

8. Receivables
Our trade account receivables are recorded at net realizable value, which includes an appropriate allowance for estimated credit losses under the expected credit loss model. We maintain an allowance for credit losses related to accounts receivable for future expected credit losses resulting from the inability or unwillingness of our customers to make required payments. We estimate the allowance based upon historical bad debts, current customer receivable balances, age of customer receivable balances and the customers' financial condition, and in relation to a representative pool of assets consisting of a large number of customers with similar risk characteristics. The allowance is adjusted as appropriate to reflect differences in current conditions as well as changes in forecasted macroeconomic conditions. Receivables that do not share risk characteristics are evaluated on an individual basis, including those associated with customers that have a higher probability of default.
Net receivables are summarized as follows:
June 26, 2022March 31, 2022
Trade receivables$436,875 $357,584 
Other receivables11,475 13,699 
Less: allowance for estimated credit losses and discounts(18,621)(14,510)
Net receivables$429,729 $356,773 
    
No customers represented more than 10% of our total trade receivables balance as of June 26, 2022. Walmart represented 14% of our total trade receivables balance as of March 31, 2022.
The following provides a reconciliation of the activity related to the allowance for estimated credit losses for the three months ended June 26, 2022:
Balance, March 31, 2022$14,510 
Provision for credit losses4,078 
Write-off of uncollectible amounts, net of recoveries33 
Balance, June 26, 2022$18,621 
Note Receivable is summarized as follows:
June 26, 2022March 31, 2022
Principal$12,000 $12,000 
Less: unamortized discount(2,083)(2,308)
Note receivable, net, included within Deferred charges and other non-current assets$9,917 $9,692 
9. Inventories
Current net inventories consist of the following:
June 26, 2022March 31, 2022
Raw materials$232,848 $220,425 
Work in process65,186 60,390 
Finished goods364,281 362,161 
Net inventories$662,315 $642,976 
We consider inventories to be long-term if they are not expected to be sold within one year. Long-term inventories are presented on the balance sheet net of reserves within deferred charges and other non-current assets and totaled $22,141 and $14,662 as of June 26, 2022 and March 31, 2022, respectively.



10. Accumulated Other Comprehensive Loss (AOCL)
The components of AOCL, net of income taxes, are as follows:
June 26, 2022March 31, 2022
Derivatives$(347)$(356)
Pension and other postretirement benefits liabilities(70,381)(71,075)
Cumulative translation adjustment(5,721)(5,248)
Total AOCL
$(76,449)$(76,679)
The following tables detail the amounts reclassified from AOCL to earnings as well as the changes in derivatives, pension and other postretirement benefits, and foreign currency translation, net of income tax:
Three months ended June 26, 2022
DerivativesPension and other postretirement benefits liabilitiesCumulative translation adjustmentTotal
Beginning balance in AOCL$(356)$(71,075)$(5,248)$(76,679)
Change in fair value of derivatives75 — — 75 
Net gains reclassified from AOCL(66)— — (66)
Net actuarial losses reclassified from AOCL (1)— 694 — 694 
Net change in cumulative translation adjustment— — (473)(473)
Ending balance in AOCL$(347)$(70,381)$(5,721)$(76,449)
(1) Amounts related to our pension and other postretirement benefits that were reclassified from AOCL were recorded as a component of net periodic benefit cost for each period presented.
Three months ended June 27, 2021
 DerivativesPension and other postretirement benefits liabilitiesCumulative translation adjustmentTotal
Beginning balance in AOCL$161 $(78,166)$(5,190)$(83,195)
Change in fair value of derivatives650 — — 650 
Net gains reclassified from AOCL(587)— — (587)
Net actuarial losses reclassified from AOCL (1)— 798 — 798 
Prior service costs reclassified from AOCL (1)— (72)— (72)
Net change in cumulative translation adjustment— — 206 206 
Ending balance in AOCL$224 $(77,440)$(4,984)$(82,200)
(1) Amounts related to our pension and other postretirement benefits that were reclassified from AOCL were recorded as a component of net periodic benefit cost for each period presented.
14

11. Goodwill and Intangible Assets
Carrying value of goodwill by reportable segment was as follows:
Sporting ProductsOutdoor ProductsTotal
Balance, March 31, 2022$86,105 $395,752 $481,857 
Balance, June 26, 2022$86,105 $395,752 $481,857 
Intangible assets by major asset class consisted of the following:
 June 26, 2022March 31, 2022
 Gross
carrying
amount
Accumulated
amortization
TotalGross
carrying
amount
Accumulated
amortization
Total
Trade names$113,915 $(25,529)$88,386 $113,915 $(23,756)$90,159 
Patented technology36,854 (14,097)22,757 36,854 (13,324)23,530 
Customer relationships and other327,921 (123,012)204,909 328,168 (117,664)210,504 
Total
478,690 (162,638)316,052 478,937 (154,744)324,193 
Non-amortizing trade names135,602 — 135,602 135,602 — 135,602 
Net intangible assets
$614,292 $(162,638)$451,654 $614,539 $(154,744)$459,795 
Amortization expense was $8,036 and $4,998 for the three months ended June 26, 2022 and June 27, 2021, respectively.
As of June 26, 2022, we expect amortization expense related to these assets to be as follows:
Remainder of fiscal year 2023$24,216 
Fiscal year 202432,271 
Fiscal year 202532,253 
Fiscal year 202629,244 
Fiscal year 202727,794 
Thereafter170,274 
Total$316,052 
12. Other Current Liabilities
The major categories over 5% of current liabilities are as follows:
June 26, 2022March 31, 2022
Accrual for in-transit inventory$19,258 $11,620 
Other132,294 115,560 
Total other current liabilities$151,552 $127,180 
We provide consumer warranties against manufacturing defects on certain products with warranty periods ranging from one year to the expected lifetime of the product. The estimated costs of such product warranties are recorded at the time the sale is recorded based upon actual past experience, our current production environment as well as specific and identifiable warranties as applicable. The warranty liability recorded at each balance sheet date reflects the estimated liability for warranty coverage for products delivered based on historical information and current trends.
15

The following is a reconciliation of the changes in our product warranty liability during the periods presented:
Balance, March 31, 2022$9,073 
Payments made(929)
Warranties issued952 
Changes related to pre-existing warranties and other adjustments(16)
Balance, June 26, 2022$9,080 
13. Long-term Debt
Long-term debt consisted of the following:June 26, 2022March 31, 2022
2021 ABL Revolving Credit Facility$90,000 $170,000 
4.5% Senior Notes500,000 500,000 
Less: unamortized deferred financing costs(3,745)(3,886)
Carrying amount of long-term debt$586,255 $666,114 
Credit Agreements—In fiscal year 2021, we refinanced our 2018 ABL Revolving Credit Facility by entering into the 2021 ABL Revolving Credit Facility, which provides for a $450,000 senior secured asset-based revolving credit facility. The amount available under the 2021 ABL Revolving Credit Facility is the lesser of the total commitment of $450,000 or a borrowing base based on percentages of eligible receivables, inventory, and cash, minus certain reserves, but, in each case, subject to the excess availability financial covenant under the 2021 ABL Revolving Credit Facility described below. As of June 26, 2022, the Excess Availability, based on the borrowing base less outstanding borrowings of $90,000 and outstanding letters of credit of $15,445, less the minimum required borrowing base of $45,000, the amount available under the 2021 ABL Revolving Credit Facility was $299,555. The 2021 ABL Revolving Credit Facility matures on March 31, 2026 (the “Maturity Date”), subject to a customary springing maturity in respect of the 4.5% Notes due 2029 (described below). Any outstanding revolving loans under the 2021 ABL Revolving Credit Facility will be payable in full on the Maturity Date.
As of March 31, 2021, borrowings under the 2021 ABL Revolving Credit Facility bear interest at a rate equal to either the sum of a base rate plus a margin ranging from 0.25% to 0.75% or the sum of a LIBO rate plus a margin ranging from 1.25% to 1.75%. The rates vary based on our Average Excess Availability under the 2021 ABL Revolving Credit Facility. As of June 26, 2022, the margin under the 2021 ABL Revolving Credit Facility was 0.5% for base rate loans and 1.5% for LIBO rate loans. The weighted average interest rate for our borrowings under the 2021 ABL Revolving Credit Facility as of June 26, 2022 was 2.56%. We pay a commitment fee on the unused commitments under the 2021 ABL Revolving Credit Facility of 0.175% per annum.
Debt issuance costs incurred with the refinancing of approximately $6,004, are being amortized over the remaining term of the 2021 ABL Revolving Credit Facility. The debt issuance costs associated with the 2021 ABL Revolving Credit Facility are included within other current and non-current assets.
Substantially all domestic tangible and intangible assets of Vista Outdoor and our domestic subsidiaries are pledged as collateral under the 2021 ABL Revolving Credit Facility.
4.5% Notes—In fiscal year 2021, we issued $500,000 aggregate principal amount of 4.5% Notes that mature on March 15, 2029. These notes are unsecured and senior obligations. Interest on the notes is payable semi-annually in arrears on March 15 and September 15 of each year. We have the right to redeem some or all of these notes on or after March 15, 2024 at specified redemption prices. Prior to March 15, 2024, we may redeem some or all of these notes at a price equal to 100% of their principal amount plus accrued and unpaid interest to the date of redemption and a specified make-whole premium. In addition, prior to March 15, 2024, we may redeem up to 40% of the aggregate principal amount of these notes with the net cash proceeds of certain equity offerings, at a price equal to 104.5% of their principal amount plus accrued and unpaid interest to the date of redemption. Debt issuance costs of approximately $4,491 are being amortized to interest expense over eight years, the term of the notes.

Rank and guarantees—The 2021 ABL Revolving Credit Facility obligations are guaranteed on a secured basis, jointly and severally and fully and unconditionally by substantially all of our domestic subsidiaries. Vista Outdoor (the parent company issuer) has no independent assets or operations. We own 100% of all of these guarantor subsidiaries. The 4.5% Notes are senior unsecured obligations of Vista Outdoor and will rank equally in right of payment with any future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of Vista Outdoor. The 4.5% Notes are fully and unconditionally guaranteed, jointly and severally, by our existing and future domestic subsidiaries that guarantee indebtedness under our 2021 ABL Revolving Credit Facility or that incur or guarantee certain of our other indebtedness, or indebtedness of any subsidiary guarantor, in an aggregate principal amount in excess of $75,000. These guarantees are senior unsecured obligations of the applicable subsidiary guarantors. The guarantee by any subsidiary guarantor of our obligations in respect of the 4.5% Notes will be released in any of the following circumstances:
if, as a result of the sale of its capital stock, such subsidiary guarantor ceases to be a restricted subsidiary
if such subsidiary guarantor is designated as an “Unrestricted Subsidiary”
upon defeasance or satisfaction and discharge of the 4.5% Notes
if such subsidiary guarantor has been released from its guarantees of indebtedness under the 2021 ABL Revolving Credit Facility and all capital markets debt securities
Covenants
2021 ABL Revolving Credit Facility—Our 2021 ABL Revolving Credit Facility imposes restrictions on us, including limitations on our ability to pay cash dividends, incur debt or liens, redeem or repurchase Vista Outdoor stock, enter into transactions with affiliates, make investments, merge or consolidate with others or dispose of assets. The 2021 ABL Revolving Credit Facility contains a financial covenant that the Excess Availability under the 2021 ABL Revolving Credit Facility cannot fall below the greater of (a) 10% of the line cap or (b) $42,500. As a result of this financial covenant, we must maintain the greater of 10% of the line cap or $42,500 of availability in order to satisfy the financial covenant. If we do not comply with the covenants in the 2021 ABL Revolving Credit Facility, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under the 2021 ABL Revolving Credit Facility. As noted above, the Excess Availability less the minimum required borrowing base under the 2021 ABL Revolving Credit Facility was $299,555 as of June 26, 2022. Vista Outdoor has the option to increase the amount of the 2021 ABL Revolving Credit Facility in an aggregate principal amount not to exceed $150,000, to the extent that any one or more lenders, whether or not currently party to the 2021 ABL Revolving Credit Facility, commits to be a lender for such amount.
4.5% Notes—The indenture governing the 4.5% Notes contains covenants that, among other things, limit our ability to incur or permit to exist certain liens, sell, transfer or otherwise dispose of assets, consolidate, amalgamate, merge or sell all or substantially all of our assets, enter into transactions with affiliates, enter into agreements restricting our subsidiaries’ ability to pay dividends, incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem our capital stock, prepay, redeem or repurchase certain debt and make loans and investments.
The 2021 ABL Revolving Credit Facility and the indenture governing the 4.5% Notes contain cross-default provisions so that noncompliance with the covenants within one debt agreement could also cause a default under the other debt agreement. As of June 26, 2022, we were in compliance with the covenants of both of our debt agreements. However, we cannot provide assurance that we will be able to comply with such financial covenants in the future due to various risks and uncertainties, some of which may be beyond our control. Any failure to comply with the restrictions in the 2021 ABL Revolving Credit Facility may prevent us from drawing under the 2021 ABL Revolving Credit Facility and may result in an event of default under the 2021 ABL Revolving Credit Facility, which default may allow the creditors to accelerate the related indebtedness and the indebtedness under our 4.5% Notes and proceed against the collateral that secures such indebtedness. We may not have sufficient liquidity to repay the indebtedness in such circumstances.
Cash paid for interest on debt, for the three months ended June 26, 2022 and June 27, 2021 totaled $1,091 and $0, respectively.