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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 25, 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-20221225_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 January 30, 2023, there were 56,582,937 shares of the registrant's common stock outstanding.




TABLE OF CONTENTS
1


PART I— FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Amounts in thousands except share data)December 25, 2022March 31, 2022
ASSETS  
Current assets:  
Cash and cash equivalents$77,426 $22,584 
Net receivables375,296 356,773 
Net inventories779,991 642,976 
Income tax receivable41,415 43,560 
Other current assets61,847 45,050 
Total current assets1,335,975 1,110,943 
Net property, plant, and equipment232,843 211,087 
Operating lease assets100,475 78,252 
Goodwill799,367 481,857 
Net intangible assets785,736 459,795 
Deferred charges and other non-current assets, net75,309 54,267 
Total assets$3,329,705 $2,396,201 
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities:  
Current portion of long-term debt$140,000 $ 
Accounts payable158,619 146,697 
Accrued compensation44,468 79,171 
Federal excise, use, and other taxes37,237 40,825 
Other current liabilities179,260 127,180 
Total current liabilities559,584 393,873 
Long-term debt1,078,318 666,114 
Deferred income tax liabilities84,183 29,304 
Long-term operating lease liabilities94,845 80,083 
Accrued pension and postemployment benefits21,489 22,634 
Other long-term liabilities70,634 79,794 
Total liabilities1,909,053 1,271,802 
Commitments and contingencies (Notes 3, 13, and 16)
Common stock — $.01 par value:
Authorized — 500,000,000 shares
Issued and outstanding — 56,575,405 shares as of December 25, 2022 and 56,093,456 shares as of March 31, 2022
566 560 
Additional paid-in capital1,722,294 1,730,927 
Retained earnings (accumulated deficit)63,807 (220,810)
Accumulated other comprehensive loss(76,267)(76,679)
Common stock in treasury, at cost — 7,389,034 shares held as of December 25, 2022 and 7,870,983 shares held as of March 31, 2022
(289,748)(309,599)
Total stockholders' equity1,420,652 1,124,399 
Total liabilities and stockholders' equity$3,329,705 $2,396,201 
See Notes to the Condensed Consolidated Financial Statements.
2

VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
 Three months endedNine months ended
(Amounts in thousands except per share data)December 25, 2022December 26, 2021December 25, 2022December 26, 2021
Sales, net$754,775 $794,654 $2,339,065 $2,236,026 
Cost of sales515,969 513,184 1,543,915 1,414,208 
Gross profit238,806 281,470 795,150 821,818 
Operating expenses:  
Research and development12,382 7,478 31,433 19,786 
Selling, general, and administrative129,738 115,045 363,439 308,690 
Earnings before interest, income taxes, and other96,686 158,947 400,278 493,342 
Other income, net (Note 5)639  1,380  
Earnings before interest and income taxes97,325 158,947 401,658 493,342 
Interest expense, net(18,953)(6,695)(39,197)(18,302)
Earnings before income taxes78,372 152,252 362,461 475,040 
Income tax provision(13,225)(34,115)(77,844)(114,638)
Net income $65,147 $118,137 $284,617 $360,402 
Earnings per common share:  
Basic$1.15 $2.07 $5.03 $6.26 
Diluted$1.13 $2.00 $4.91 $6.07 
Weighted-average number of common shares outstanding:    
Basic56,574 57,162 56,538 57,540 
Diluted57,843 59,066 58,022 59,404 
Net income (from above)$65,147 $118,137 $284,617 $360,402 
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 $0 for the three and nine months ended December 25, 2022, respectively, and $190 and $244 for the three and nine months ended December 26, 2021, respectively
 (585) (752)
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax (expense) of $(221) and $(663) for the three and nine months ended December 25, 2022, respectively, and $(348) and $(867) for the three and nine months ended December 26, 2021, respectively
694 1,072 2,082 2,671 
Change in derivatives, net of tax benefit of $164 and $945 for the three and nine months ended December 25, 2022, respectively, and $33 and $154 for the three and nine months ended December 26, 2021, respectively
(515)(102)(793)(475)
Change in cumulative translation adjustment, net of tax (expense) of $(3) and $(171) for the three and nine months ended December 25, 2022, respectively, and $0 and $0 for the three and nine months ended December 26, 2021, respectively
994 (115)(877)(246)
Total other comprehensive income1,173 270 412 1,198 
Comprehensive income $66,320 $118,407 $285,029 $361,600 
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 25, 2022December 26, 2021
Operating Activities:  
Net income $284,617 $360,402 
Adjustments to net income to arrive at cash provided by operating activities:
Depreciation35,660 33,980 
Amortization of intangible assets31,431 18,031 
Amortization of deferred financing costs 4,603 1,057 
Change in fair value of contingent consideration(16,403) 
Deferred income taxes(6,165)(1,287)
Gain on foreign exchange(586) 
Loss on disposal of property, plant, and equipment699 223 
Share-based compensation19,590 20,562 
Changes in assets and liabilities:
Net receivables31,127 (78,120)
Net inventories(45,568)(131,994)
Accounts payable(11,254)4,367 
Accrued compensation(39,558)(13,947)
Accrued income taxes13,538 667 
Federal excise, use, and other taxes(4,643)8,977 
Pension and other postretirement benefits1,600 (1,536)
Other assets and liabilities8,828 (1,916)
Cash provided by operating activities307,516 219,466 
Investing Activities:
Capital expenditures(25,157)(24,828)
Acquisition of businesses, net of cash received(761,497)(528,508)
Proceeds from the disposition of property, plant, and equipment43 383 
Cash used for investing activities(786,611)(552,953)
Financing Activities:
Proceeds from credit facility468,000 300,000 
Repayments of credit facility(223,000)(80,000)
Debt issuance costs (16,935)(1,053)
Proceeds from issuance of long-term debt350,000  
Payments on long-term debt(35,000) 
Purchase of treasury shares (86,121)
Proceeds from exercise of stock options 205 325 
Payment of employee taxes related to vested stock awards(8,946)(3,087)
Cash provided by financing activities534,324 130,064 
Effect of foreign exchange rate fluctuations on cash
(387)(201)
Increase (decrease) in cash and cash equivalents54,842 (203,624)
Cash and cash equivalents at beginning of period 22,584 243,265 
Cash and cash equivalents at end of period$77,426 $39,641 
Supplemental Cash Flow Disclosures:
Non-cash investing activity:
Capital expenditures included in accounts payable$4,020 $1,963 
Contingent consideration in connection with business combinations
$11,400 $26,025 
See Notes to the Condensed Consolidated Financial Statements.
4

VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited)
(Amounts in thousands except share data)SharesAmountAdditional
Paid-In
Capital
Retained Earnings (Accumulated Deficit)Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Equity
Balance, September 25, 202256,566,915 $566 $1,717,750 $(1,340)$(77,440)$(290,085)$1,349,451 
Comprehensive income — — — 65,147 1,173 — 66,320 
Exercise of stock options1,257 — (25)— — 49 24 
Share-based compensation— — 4,834 — — — 4,834 
Restricted stock vested and shares withheld929 — (52)— — 40 (12)
Employee stock purchase plan6,195 — (100)— — 243 143 
Other109  (113)— — 5 (108)
Balance, December 25, 202256,575,405 $566 $1,722,294 $63,807 $(76,267)$(289,748)$1,420,652 
Balance, September 26, 202157,288,160 $573 $1,731,665 $(451,771)$(82,267)$(263,187)$935,013 
Comprehensive income— — — 118,137 270 — 118,407 
Exercise of stock options5,976 — (139)— — 236 97 
Share-based compensation— — 6,750 — — — 6,750 
Restricted stock vested and shares withheld8,483 — (486)— — 321 (165)
Employee stock purchase plan2,803 — (3)— — 110 107 
Treasury shares purchased(758,273)— — — — (29,882)(29,882)
Other3,635 (7)(137)— — 142 (2)
Balance, December 26, 202156,550,784 $566 $1,737,650 $(333,634)$(81,997)$(292,260)$1,030,325 
(Amounts in thousands except share data)SharesAmountAdditional
Paid-In
Capital
Retained Earnings (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— — — 284,617 412 — 285,029 
Exercise of stock options14,407 — (360)— — 565 205 
Share-based compensation— — 19,590 — — — 19,590 
Restricted stock vested and shares withheld415,294 — (26,016)— — 17,251 (8,765)
Employee stock purchase plan12,197 — (176)— — 478 302 
Other40,051 6 (1,671)— — 1,557 (108)
Balance, December 25, 202256,575,405 $566 $1,722,294 $63,807 $(76,267)$(289,748)$1,420,652 
Balance, March 31, 202158,561,016 $585 $1,731,479 $(694,036)$(83,195)$(217,836)$736,997 
Comprehensive income— — — 360,402 1,198 — 361,600 
Exercise of stock options15,277 — (278)— — 603 325 
Share-based compensation— — 20,562 — — — 20,562 
Restricted stock vested and shares withheld186,208 — (11,590)— — 8,326 (3,264)
Employee stock purchase plan5,529 — 9 — — 218 227 
Treasury shares purchased(2,281,956)— — — — (86,121)(86,121)
Other64,710 (19)(2,532)— — 2,550 (1)
Balance, December 26, 202156,550,784 $566 $1,737,650 $(333,634)$(81,997)$(292,260)$1,030,325 
See Notes to the Condensed Consolidated Financial Statements.
5

VISTA OUTDOOR INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Nine Months Ended December 25, 2022
(Amounts in thousands except per share data and unless otherwise indicated)
1. The Company and Basis of Presentation
Nature of Operations—Vista Outdoor Inc. (together with our subsidiaries, "Vista Outdoor", "we", "our", and "us", unless the context otherwise requires) is a leading global designer, manufacturer, and marketer of outdoor recreation and shooting sports products. We operate through two reportable segments, Sporting Products and Outdoor Products. We are headquartered in Anoka, Minnesota and have manufacturing and distribution facilities in the U.S., Canada, Mexico, Spain, the Netherlands and Puerto Rico along with international customer service, sales and sourcing operations in Asia and Europe. We have a robust global distribution network serving customers in over 100 countries. Vista Outdoor was incorporated in Delaware in 2014.
Basis of Presentation—Our unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of the Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain disclosures and other financial information that normally are required by accounting principles generally accepted in the United States have been condensed or omitted. Management is responsible for the unaudited condensed consolidated financial statements included in this report, which in the opinion of management, include all adjustments necessary for a fair presentation of our financial position, results of operations, and cash flows for the periods and dates presented. These unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022 (“fiscal year 2022”), which was filed with the SEC on May 24, 2022.
Significant Accounting PoliciesOur accounting policies are described in Note 1 of the notes to the audited consolidated financial statements in our Annual Report on Form 10-K for fiscal year 2022, which was filed with the SEC on May 24, 2022.
Recent Accounting Pronouncements—No recent accounting pronouncements are expected to have a material impact on our condensed consolidated financial statements.
2. Fair Value of Financial Instruments
We measure and disclose our financial assets and liabilities at fair value on a recurring and nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or the price paid to transfer a liability (the exit price) in the principal and most advantageous market for the asset or liability in an orderly transaction between market participants. Assets and liabilities carried at fair value are classified using the three-tier hierarchy:
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:
Derivatives
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 and to reduce the variability associated with exchange rate fluctuations. When actual commodity prices or foreign exchange rates exceed the fixed price provided by these contracts, we receive this difference from the counterparty, and when actual commodity prices or foreign exchange rates 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. Subsequent to our third fiscal quarter end, this promissory note was settled in full. See Note 8, Receivables, for additional information.
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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 December 25, 2022, the estimated fair values of contingent consideration payable related to our acquisitions of QuietKat, Stone Glacier, Fox Racing, Fiber Energy, and HEVI-Shot are $11,823, $9,939, $6,400, $3,625, and $300, respectively. See Note 4, Acquisitions, for additional information.
Contingent consideration liabilities are reported under the following captions in the condensed consolidated balance sheets:
December 25, 2022March 31, 2022
Other current liabilities$16,811 $96 
Other long-term liabilities15,276 36,994 
Total$32,087 $37,090 
Following is a summary of our contingent consideration liability Level 3 activity during fiscal year 2023:
Balance, March 31, 2022$37,090 
Acquisition of Fox Racing11,400 
Decrease in fair value(16,403)
Balance, December 25, 2022$32,087 
Disclosures about the Fair Value of Financial Instruments
The carrying amount of our receivables, inventory, accounts payable, and accrued liabilities as of December 25, 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 December 25, 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:
December 25, 2022March 31, 2022
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Fixed-rate debt (1)$500,000 $365,000 $500,000 $460,000 
Variable-rate debt (2)730,000 730,000 170,000 170,000 
(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 additional information on long-term debt, including certain risks and uncertainties.
(2) Variable rate debt— The carrying value of the amounts outstanding under our 2022 ABL Revolving Credit Facility and 2022 Term Loan approximates the fair value because the interest rates are variable and reflective of market rates as of December 25, 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.
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3. Leases
We lease certain warehouse and distribution space, manufacturing space, office space, retail locations, equipment, and vehicles. All of these leases are classified as operating leases. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. These rates are assessed on a quarterly basis. The operating lease assets also include any lease payments made less lease incentives. Leases with an initial term of twelve months or less are not recorded on the balance sheet. For operating leases, expense is recognized on a straight-line basis over the lease term. Variable lease payments associated with our leases are recognized upon occurrence of the event, activity, or circumstance in the lease agreement on which those payments are assessed. Tenant improvement allowances are recorded as leasehold improvements with an offsetting adjustment included in our calculation of its right-of-use asset.
Many leases include one or more options to renew, with renewal terms that can extend the lease term up to five years. The exercise of lease renewal options is at our sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term.
The amounts of assets and liabilities related to our operating leases were as follows:
Balance Sheet CaptionDecember 25, 2022March 31, 2022
Assets:
Operating lease assetsOperating lease assets$100,475 $78,252 
Liabilities:
Current:
Operating lease liabilitiesOther current liabilities$16,612 $11,804 
Long-term:
Operating lease liabilitiesLong-term operating lease liabilities94,845 80,083 
Total lease liabilities$111,457 $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 endedNine months ended
December 25, 2022December 26, 2021December 25, 2022December 26, 2021
Fixed operating lease costs (1)$7,406 $5,795 $20,300 $16,297 
Variable operating lease costs522 701 1,980 2,284 
Operating and sub-lease income(157)(180)(464)(331)
Net Lease costs$7,771 $6,316 $21,816 $18,250 
(1) Includes short-term leases
December 25, 2022March 31, 2022
Weighted Average Remaining Lease Term (Years):
Operating leases8.448.65
Weighted Average Discount Rate:
Operating leases8.33 %7.99 %
8

The approximate minimum lease payments under non-cancelable operating leases as of December 25, 2022 are as follows:
Remainder of fiscal year 2023$6,148 
Fiscal year 202424,969 
Fiscal year 202519,183 
Fiscal year 202617,633 
Fiscal year 202716,584 
Thereafter75,961 
Total lease payments160,478 
Less imputed interest(49,021)
Present value of lease liabilities$111,457 
Supplemental cash flow information related to leases is as follows:
Nine months ended
December 25, 2022December 26, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases$16,623 $14,054 
Operating lease assets obtained in exchange for lease liabilities:
Operating leases33,268 13,472 
4. Acquisitions
Simms Fishing
During the second quarter of fiscal year 2023, we acquired Simms Fishing Products (Simms), a premium fishing brand and leading manufacturer of waders, outerwear, footwear and technical apparel. The results of this business are reported within the Outdoor Products reportable segment. We accounted for the acquisition as a business combination using the acquisition method of accounting, and performed 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 excess of the consideration transferred over the estimated fair value of the net assets received has been recorded as goodwill. The factors that contributed to the recognition of goodwill primarily relate to acquisition-driven anticipated cost savings and synergies. Assembled workforce is not recognized separate and apart from goodwill as it is neither separable nor contractual in nature. The acquisition is not significant to our consolidated financial statements and as such we have not included disclosures of the allocation of the purchase price or any pro forma information.
Fox Racing
During the second quarter of fiscal year 2023, we acquired Fox (Parent) Holdings, Inc. (“Fox Racing”), for a base purchase price of $540,000, subject to certain customary adjustments for cash and debt, transaction expenses, and working capital. In connection with the acquisition, we refinanced our 2021 ABL Revolving Credit Facility by entering into the 2022 ABL Revolving Credit Facility, which provides for a $600,000 senior secured asset-based revolving credit facility, and a $350,000 term loan facility (the “2022 Term Loan”). The proceeds of the Term Facility, together with the proceeds of a borrowing under the ABL Credit Facility, were used to finance the acquisition and to pay related fees and expenses. See Note 13, Long-term Debt, for additional information. The agreement includes up to an additional $50,000 of contingent consideration payable to Seller and certain individuals during the second quarter of fiscal year 2024 if Fox Racing achieves certain adjusted Earnings Before Interest, Tax, Depreciation, and Amortization ("EBITDA") targets during the period beginning on January 1, 2022 and ending on December 31, 2022. The initial fair value of the contingent consideration was $11,400, and is included in the total purchase consideration below. See Note 2, Fair Value of Financial Instruments, for additional information related to the initial fair value calculation methodology and current fair value of the contingent consideration.
The results of this business are reported within the Sports Protection operating segment and the Outdoor Products reportable segment. We accounted for the acquisition as a business combination using the acquisition method of accounting, and performed a preliminary allocation of the purchase price to the tangible and intangible assets acquired and liabilities
9

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.
Fox Racing preliminary purchase price allocation:
August 5, 2022
Cash consideration to the Seller$559,134 
Cash held in escrow to cover purchase price adjustments5,000 
Fair value of contingent consideration payable11,400 
Total estimated purchase consideration$575,534 
Fair value of assets acquired:
Accounts receivable$39,174 
Inventories96,142 
Intangible assets253,600 
Property, plant, and equipment29,060 
Operating lease assets16,078 
Other current assets17,145 
Other long-term assets5,347 
Total assets456,546 
Fair value of liabilities assumed:
Accounts payable18,584 
Long-term operating lease liabilities11,971 
Deferred income taxes60,512 
Other liabilities39,292 
Other long-term liabilities41 
Total liabilities130,400 
Net assets acquired326,146 
Goodwill$249,388 
Fox Racing intangible assets above include:
ValueUseful life (years)
Tradenames$106,200 Indefinite
Customer relationships147,400 
5 to 15
Fox Racing supplemental pro forma data:
Fox's net sales of $124,523 and net loss of $2,498 since the acquisition date, August 5, 2022, were included in our consolidated results for the nine months ended December 25, 2022, and are reflected in the Outdoor Products reportable segment.
10

The following unaudited pro forma financial information presents our results as if the Fox Racing acquisition had occurred on April 1, 2021:
Three months endedNine months ended
December 25, 2022December 26, 2021December 25, 2022December 26, 2021
Sales, net$754,775 $861,950 $2,444,920 $2,459,785 
Net income68,075 90,309 286,732 324,014 
The unaudited supplemental pro forma data above includes the following significant non-recurring adjustments to net income to account for certain costs which would have been incurred if the Fox Racing acquisition had been completed on April 1, 2021:
Three months endedNine months ended
December 25, 2022December 26, 2021December 25, 2022December 26, 2021
Fees for advisory, legal, and accounting services (1)$(99)$99 $(6,064)$6,064 
Inventory step-up, net (2)(3,772) (6,287)$7,544
Interest (3) 7,455 10,627 22,895
Depreciation (4) 457 719 1,156
Amortization (5) 3,065 4,245 9,191
Management Fees (6) (353)(530)(1,060)
Income tax provision (benefit) (7)943 (2,656)(1,199)(10,925)
(1) During the three months and nine months ended December 25, 2022, we incurred a total of $99 and $6,064 in acquisition related costs, including legal and other professional fees, all of which were reported in selling, general, and administrative expense in the condensed consolidated statements of comprehensive income. This adjustment is to show the results as if those fees were incurred during the first quarter of fiscal year 2022.
(2) Adjustment reflects the increased cost of goods sold expense resulting from the fair value step-up in inventory, which was expensed over inventory turns.
(3) Adjustment for the estimated interest expense and debt issuance amortization expense on $580,000 in borrowings from Vista's 2022 ABL Revolving Credit Facility and 2022 Term Loan, used to finance the acquisition of Fox Racing. The interest rate assumed for purposes of preparing this pro forma financial information is 5.58%. This rate is the weighted average interest rate for our borrowings under the 2022 ABL Revolving Credit Facility and 2022 Term Loan during the quarter of the acquisition.
(4) Adjustment for depreciation related to the revised fair-value basis of the acquired property, plant and equipment and change in estimated useful lives.
(5) Adjustment for amortization of acquired intangible assets.
(6) Represents an adjustment for management fees historically charged by the previous owner of Fox Racing under the terms of their management agreement.
(7) Income tax effect of the adjustments made at a blended federal, state, and international statutory rate adjusted for any non-deductible acquisition costs.
Stone Glacier
During the fourth quarter of fiscal year 2022, we acquired Stone Glacier, a premium brand focused on ultralightweight, performance hunting gear designed for backcountry use. The addition of Stone Glacier allows us to enter the packs, camping equipment, and technical apparel categories with a fast-growing brand and provide a foundation for us to leverage camping category synergies. The results of this business are reported within the Outdoor Products segment. Contingent consideration with an initial fair value of $9,939 was included in the purchase price. See Note 2, Fair Value of Financial Instruments, for additional 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
11

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.
Foresight Sports
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 $470,772. 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 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 finalized the purchase price allocation during the third quarter of fiscal year 2023, and no significant changes were recorded. 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 
12

Foresight intangible assets above include:
ValueUseful life (years)
Tradenames$42,500 20
Patented technology19,900 
5 to 10
Customer relationships69,100 
5 to 15
5. Derivative Financial Instruments
We account for our commodity and foreign currency forward contracts in accordance with ASC Topic 815, “Derivatives and Hedging” (“ASC Topic 815”). ASC Topic 815 requires the recognition of all derivative instruments as either assets or liabilities on the balance sheet, the measurement of those instruments at fair value and the recognition of changes in the fair value of derivatives in earnings in the period of change, unless the derivative qualifies as a 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. We may use derivatives to hedge certain interest rates, foreign currency exchange rates, and commodity price risks, but do not use derivative financial instruments for trading or other speculative purposes.
Commodity Price Risk
We use designated cash flow hedges to hedge our exposure to price fluctuations on lead we purchase for raw material components in our ammunition manufacturing process that are designated and qualify as effective cash flow hedges. The effectiveness of cash flow hedge contracts is assessed quantitatively at inception and qualitatively thereafter considering the transactions critical terms and counterparty credit quality.
The gains and losses on these hedges are included in accumulated other comprehensive loss and are reclassified into earnings at the time the forecasted revenue or expense is recognized. The gains or losses on the lead forward contracts are recorded in inventory as the commodities are purchased and in cost of sales when the related inventory is sold. As of December 25, 2022, we had outstanding lead forward contracts on approximately 9.3 million pounds of lead. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the related change in fair value of the derivative instrument would be reclassified from accumulated other comprehensive loss and recognized in earnings. Assets related to the lead forward contracts as of December 25, 2022 were $1,362 recorded in other current assets, and $43 recorded in other long-term assets.
Foreign Exchange Risk
In the normal course of business, we are exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to transactions of our international subsidiaries. We use designated cash flow hedges and non-designated hedges in the form of foreign currency forward contracts as part of our strategy to manage the level of exposure to the risk of fluctuations in foreign currency exchange rates and to mitigate the impact of foreign currency translation on transactions that are denominated primarily in British Pounds, Euros, and Canadian Dollars.
Cash Flow Hedging Instrument
We use foreign currency forward contracts designated as qualifying cash flow hedging instruments to help mitigate our exposure on our foreign subsidiaries' inventory purchases and intercompany transactions, which is different than their functional currency. These contracts generally mature within 12 months to 15 months from their inception. As of December 25, 2022, the notional amounts of our foreign currency forward contracts designated as cash flow hedge instruments were approximately $47,000.
As of December 25, 2022, net losses of $2,920 were recorded in accumulated other comprehensive income related to foreign currency forward contracts. No gains or losses were reclassified from accumulated other comprehensive income for the three and nine months ended December 25, 2022. All unrealized gains and losses as shown as of December 25, 2022 will be recognized in the consolidated statements of comprehensive income in other income, net within the next twelve months at then-current value. The liability related to the foreign forward contracts as of December 25, 2022 of $3,053 is recorded as part of other current liabilities.
Foreign Currency Forward Contracts Not Designated as Hedging Instruments
We have also used non-designated hedges to hedge a portion of U.S. subsidiary sales that are recorded in Canadian Dollars. These contracts generally mature within 12 months from inception. As of December 25, 2022, the notional amounts of our foreign currency forward contracts not designated as cash flow hedge instruments were approximately $2,800.
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We record these derivatives on the balance sheet at fair value with changes in fair value recorded in the consolidated condensed statements of operations. Net loss of $81 and net gain of $515 for the three and nine months ended December 25, 2022 were recognized in the condensed consolidated statement of comprehensive income, as part of other income. The fair value of the foreign exchange forward contracts is $187 and is recorded as part of other current assets. In addition, during the three and nine months ended December 25, 2022, we recognized net foreign currency translation gains of $720 and $866, respectively.
6. Revenue Recognition
The following tables disaggregate our net sales by major product category: