EX-99.1 17 d306371dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

PRELIMINARY AND SUBJECT TO COMPLETION, DATED SEPTEMBER 5, 2023

INFORMATION STATEMENT

Outdoor Products Spinco Inc.

[                    ]

Common Stock

(par value $0.01)

We are sending you this Information Statement in connection with Vista Outdoor Inc.’s spin-off (the “Spin-Off”) of its wholly owned subsidiary, Outdoor Products Spinco Inc., or “Outdoor Products.” To effect the Spin-Off, Vista Outdoor Inc., or “Vista Outdoor,” will distribute all shares of Outdoor Products common stock on a pro rata basis to the holders of Vista Outdoor common stock. We expect that the distribution of Outdoor Products common stock will be tax-free to Vista Outdoor stockholders for U.S. federal income tax purposes, except for cash that stockholders receive in lieu of fractional shares. You should consult your own tax advisor as to the tax consequences of the distribution to you, including potential tax consequences under state, local and non-U.S. tax laws.

If you are a record holder of Vista Outdoor common stock as of the close of business on [                    ], 202[     ], which is the record date for the distribution, for every one share of Vista Outdoor common stock you hold on that date, you will be entitled to receive one share of Outdoor Products common stock. Vista Outdoor will distribute the shares of Outdoor Products common stock in book-entry form, which means that we will not issue physical stock certificates. The distribution agent will not distribute any fractional shares of Outdoor Products common stock. Instead, the distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing market prices and distribute the aggregate cash proceeds of the sales, net of brokerage fees and other costs, pro rata to each holder (net of any required withholding for taxes applicable to such holder) who would otherwise have been entitled to receive a fractional share in the distribution. As discussed in the section entitled “The Spin-Off—Trading Prior to the Distribution Date” beginning on page 61 of this Information Statement, if you sell your shares of Vista Outdoor common stock in the “regular-way” market after the record date and before the distribution date, you also will be selling your right to receive shares of Outdoor Products common stock in connection with the distribution.

We expect that the distribution will be effective as of 12:01 a.m., New York City time, on [                    ], 202[     ]. Immediately after the distribution becomes effective, Outdoor Products will be an independent, publicly-traded company.

Vista Outdoor stockholders are not required to vote on or take any other action in connection with the Spin-Off. We are not asking you for a proxy, and request that you do not send us a proxy. Vista Outdoor stockholders will not be required to pay any consideration for the shares of Outdoor Products common stock they receive in the Spin-Off, and they will not be required to surrender or exchange their shares of Vista Outdoor common stock or take any other action in connection with the Spin-Off.

Outdoor Products is currently a wholly owned subsidiary of Vista Outdoor. Accordingly, no trading market for Outdoor Products common stock currently exists. We expect, however, that a limited trading market for Outdoor Products common stock, commonly known as a “when-issued” trading market, will develop shortly before the distribution date, and we expect “regular-way” trading of Outdoor Products common stock will begin on the distribution date. We intend to list Outdoor Products common stock on the New York Stock Exchange under the ticker symbol “[                    ].” Following the distribution, Vista Outdoor will be renamed The Kinetic Group, Inc., and its common stock will trade on the New York Stock Exchange under the ticker symbol “HUNT”.

In reviewing this Information Statement, you should carefully consider the matters described in the section entitled “Risk Factors” beginning on page 30 of this Information Statement.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this Information Statement is truthful or complete. Any representation to the contrary is a criminal offense.

This Information Statement is not an offer to sell, or a solicitation of an offer to buy, any securities.

The date of this Information Statement is [                    ], 202[     ].


Confidential Treatment Requested by Outdoor Products Spinco Inc.

Pursuant to 17 C.F.R. Section 200.83

 

TABLE OF CONTENTS

 

     Page  

INDUSTRY AND MARKET DATA

     1  

TRADEMARKS AND COPYRIGHTS

     2  

SUMMARY

     3  

RISK FACTORS

     30  

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

     52  

THE SPIN-OFF

     54  

DIVIDEND POLICY

     64  

CAPITALIZATION

     65  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     66  

BUSINESS

     76  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     88  

MANAGEMENT

     102  

EXECUTIVE COMPENSATION

     108  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     138  

CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS

     140  

DESCRIPTION OF OUR INDEBTEDNESS

     145  

DESCRIPTION OF OUR CAPITAL STOCK

     146  

WHERE YOU CAN FIND MORE INFORMATION

     150  

INDEX TO COMBINED FINANCIAL STATEMENTS

     F-1  

 


INDUSTRY AND MARKET DATA

This Information Statement includes information concerning our industry and the markets in which we operate that is based on information from public filings, internal company sources, various third-party sources and management estimates. Management estimates regarding Outdoor Products’s position, share and industry size are derived from publicly available information and our internal research, and are based on assumptions we made upon reviewing such data and our knowledge of such industry and markets, which we believe to be reasonable. While we are not aware of any misstatements regarding any industry data presented in this Information Statement and believe such data to be accurate, we have not independently verified any data obtained from third-party sources and cannot assure you of the accuracy or completeness of such data. Such data involve uncertainties and are subject to change based on various factors, including those discussed in the section entitled “Risk Factors” beginning on page 30 of this Information Statement.

 

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TRADEMARKS AND COPYRIGHTS

We own or have rights to various trademarks, logos, service marks and trade names that we use in connection with the operation of our business. We also own or have the rights to copyrights that protect the content of our products. Solely for convenience, the trademarks, logos, service marks, trade names and copyrights referred to in this Information Statement are listed without the , ® or © symbols, but such references do not constitute a waiver of any rights that might be associated with the respective trademarks, logos, service marks, trade names and copyrights included or referred to in this Information Statement.

 

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SUMMARY

This summary highlights selected information from this Information Statement and provides an overview of our company, our separation from Vista Outdoor and Vista Outdoor’s distribution of our common stock to its stockholders. For a more complete understanding of our business and the Spin-Off, you should read the entire Information Statement carefully, particularly the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on pages 30 and 88, respectively, of this Information Statement, and our combined financial statements and the notes to those financial statements appearing elsewhere in this Information Statement.

Prior to Vista Outdoor’s distribution of the shares of our common stock to its stockholders, Outdoor Products will undertake a series of internal transactions, following which Outdoor Products will hold, directly or through its subsidiaries, the businesses (collectively, the “Outdoor Products Business”) constituting Vista Outdoor’s current “Outdoor Products” reporting segment. These businesses design, develop, manufacture and distribute outdoor and lifestyle gear, equipment and apparel to enhance the outdoor experiences of hikers, campers, cyclists, off-road riders, skiers, snowboarders, backyard grillers, golfers, anglers and hunters. We refer to this series of internal transactions, which is described in more detail under “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor—Separation and Distribution Agreement,” beginning on page 140 of this Information Statement, as the “Internal Transactions.”

In this Information Statement, unless the context otherwise requires:

 

   

“Outdoor Products,” “Company,” “we,” “our” and “us” refer to Outdoor Products Spinco Inc. and its combined subsidiaries after giving effect to the Spin-Off (as defined below);

 

   

“Vista Outdoor” refers to Vista Outdoor Inc. and its consolidated subsidiaries other than, for all periods following the Spin-Off, Outdoor Products and its combined subsidiaries;

 

   

the “Distribution” refers to the distribution by Vista Outdoor to its stockholders of all shares of our common stock;

 

   

the “Distribution Date” refers to the date on which the Distribution occurs;

 

   

the “Spin-Off” refers to the Distribution and related transactions pursuant to which we will be separated from Vista Outdoor;

 

   

“Sporting Products” refers to the “Sporting Products” reporting segment of Vista Outdoor;

 

   

“audited combined financial statements” refers to our audited historical combined financial statements, which are included elsewhere in this Information Statement;

 

   

“unaudited condensed combined financial statements” refers to our unaudited historical condensed combined financial statements, which are included elsewhere in this Information Statement;

 

   

“combined financial statements” refers collectively to our audited combined financial statements and our unaudited condensed combined financial statements; and

 

   

acquisitions are considered “organic businesses” twelve months after acquisition.

Our Company

Outdoor Products is a leading platform of iconic consumer product brands that serve a diverse range of outdoor enthusiasts around the world. We design, develop, manufacture, source and distribute outdoor and lifestyle gear, equipment and apparel to enhance the experiences of hikers, campers, cyclists, off-road riders, skiers, snowboarders, backyard grillers, golfers, anglers and hunters. Given our broad product offering across our diversified portfolio of outdoor brands, we believe that our business is well-positioned to continue to capture lifestyle shifts toward outdoor recreation.

We are headquartered in [                    ] and have manufacturing and distribution facilities in the U.S., Canada, Mexico and Puerto Rico along with international customer service, sales and sourcing operations in Asia and Europe. We have a robust global distribution network serving customers in over 100 countries.

We believe that over the past eight years, we have earned a reputation in the outdoor products industry as the acquirer of choice. We believe that founders and management of companies we acquire attribute value to our ability to provide operating

 

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expertise and resources on a scale that can significantly accelerate the growth of their companies. We work closely with founders and management throughout the due diligence process to understand their culture and goals for their business and then execute on a strategy designed to achieve their vision. This has led to many proprietary acquisition opportunities (by which we mean acquisition opportunities that are not offered to a wider potential acquirer group), with over 50% of our acquisitions since 2021 being proprietary in nature. Successful acquisitions and subsequent integrations we have completed include Foresight Sports, QuietKat, Stone Glacier, Fiber Energy Products, Camp Chef, CamelBak, Bell, Giro, Simms Fishing and Fox Racing. We believe that our M&A Center of Excellence, combined with our repeatable, sophisticated due diligence and integration model, will continue to provide us with a competitive advantage as we drive growth through identification and consummation of strategic acquisition opportunities.

Our brands are well known market leaders in their respective product categories. Many of our brands have a rich, long-standing heritage and connection to their core consumer markets, such as CamelBak, Bell, Giro, Camp Chef, Bushnell, Fox Racing and Simms Fishing. Our portfolio also includes newer, high-growth brands that are capturing changing consumer preferences and leading technological advances in their respective fields, such as our golf technology brand, Foresight Sports, our e-bike brand, QuietKat, and our back-country hunting gear, packs and apparel brand, Stone Glacier.

Our Reportable Segments and Verticals

 

   

Performance Sports. Our Performance Sports reportable segment consists of our Golf vertical and our Outdoor Accessories vertical.

 

   

Golf. Our Golf vertical is comprised of the Bushnell Golf and Foresight Sports brands. The primary Golf product lines include launch monitors, laser rangefinders, GPS devices, golf simulators and other technology products. The Bushnell Golf brand is #1 in GPS and rangefinders, and the Bushnell Golf and Foresight Sports brands, on a combined basis, are #2 in launch monitors.

 

   

Outdoor Accessories. Our Outdoor Accessories vertical is comprised of 18 brands in the hunting and broader outdoor recreation space. Our market-leading brands in this vertical include Bushnell, Blackhawk, Champion, Gold Tip, Primos and RCBS. The primary Outdoor Accessories product lines include sport optics and archery and hunting accessories.

 

   

Action Sports. Our Action Sports reportable segment consists of our Action Sports vertical.

 

   

Action Sports. Our Action Sports vertical is comprised of the Bell, Blackburn, Copilot, Fox Racing, Giro, Krash!, QuietKat and Raskullz brands. The primary Action Sports product lines include e-bikes, helmets, goggles and accessories for cycling, snow sports, motocross and power sports. The Bell, Fox Racing and Giro brands, on a combined basis, are #1 in helmets, and the Giro brand is #2 in snow goggles and #2 in snow helmets.

 

   

Outdoor Recreation. Our Outdoor Recreation category consists of our Hydration vertical, our Outdoor Cooking vertical, our Fishing vertical and our Technical Gear and Apparel vertical.

 

   

Hydration. Our Hydration vertical is comprised of the CamelBak brand. The primary Hydration product lines include hydration packs, water bottles, drinkware and coolers. The CamelBak brand is #1 in bike and hike hydration packs and #1 in bike water bottles.

 

   

Outdoor Cooking. Our Outdoor Cooking vertical is comprised of the Camp Chef and Fiber Energy Products brands. The primary Outdoor Cooking product lines include pellet grills, cookware, pellets and camp stoves. The Camp Chef brand is #2 in camp stoves and #4 in pellet grills.

 

 

Fishing. Our newest vertical, Fishing, is comprised of the Simms Fishing brand. The primary Fishing product lines include waders, sportswear, outerwear, footwear and fishing tools and accessories. The Simms Fishing brand is #1 in waders for the independent retailer market and has a strong position as a premium angling brand.

 

 

Technical Gear and Apparel. Our Technical Gear and Apparel vertical is comprised of the Stone Glacier brand. The primary Technical Gear and Apparel product lines include packs, camping equipment and technical apparel.

 

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Competitive Strengths

One of the Largest Portfolios in the Outdoor Products Space, Comprised of Iconic and Highly Sought-After Brands

Our portfolio includes iconic, market-leading brands and is one of the largest collections in the industry, consisting of 34 brands that design, manufacture and market outdoor products. We serve a broad and diverse range of consumers around the globe, including hikers, campers, cyclists, off-road riders, skiers, snowboarders, backyard grillers, golfers, anglers and hunters. Many of our brands have a rich, long-standing heritage and connection to their core consumer markets, such as CamelBak, Bell, Giro, Camp Chef, Bushnell, Fox Racing and Simms Fishing. Our portfolio also includes newer, high-growth brands that are capturing changing consumer preferences and leading technological advances in their respective fields, such as our golf technology brand, Foresight Sports, our e-bike brand, QuietKat, and our back-country hunting gear, packs and apparel brand, Stone Glacier. We believe this diverse brand portfolio is a source of strength for our company and helps us maintain leading market share positions in multiple product categories, while also nimbly responding to changes in consumer preferences and technology.

Our operating model leverages our shared resources and Centers of Excellence (described below) across brands to achieve levels of performance that would be out of reach for any one brand on its own. To maintain the strength of our brands and drive revenue growth, we invest our shared resources in product innovation and seek to continuously improve the performance, quality and affordability of our products. Our scale and expertise allow us to provide our brands with top tier operational capabilities in digital marketing and e-commerce, supply chain management, distribution and customer support for our retail partners and end consumers. Furthermore, our scale enables us to leverage our cumulative consumer insights and achieve greater negotiating power with respect to vendors, suppliers and retailers to provide a competitive advantage to our brands.

Proven, Repeatable Acquisition and Integration Process

We focus on four main criteria when evaluating acquisition targets, which has allowed us to build and apply a consistent, repeatable acquisition and integration process:

 

  1.

Acquire in existing and adjacent spaces.

 

  2.

Acquire great brands that resonate with consumers.

 

  3.

Acquire businesses where we can add value and have a clear path to synergies.

 

  4.

Acquire businesses at attractive multiples that are accretive to our company valuation.

As part of Vista Outdoor, we have completed seven acquisitions since the end of calendar year 2020 to add scale, expand our addressable market and add new capabilities. Our M&A strategy follows a disciplined process in which we allocate capital to attractive markets and complementary brands to build upon our extensive portfolio and broaden our base of consumers. At the same time, we maintain a founder’s mentality in which we give brands the autonomy to continue running and growing their businesses while leveraging the shared resources of our Centers of Excellence. Focusing on companies operating in existing and adjacent spaces ensures our ability to efficiently integrate new brands into our portfolio and enables rapid scaling by leveraging common systems, pre-existing consumer insights and competitive knowledge to improve performance and achieve synergies among our businesses. Moving forward, we expect that these learned skills and capabilities will continue to be a key differentiator for Outdoor Products. Set forth below are illustrative examples of how we have applied our corporate operating expertise to several recently acquired companies.

 

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LOGO

 

 

 

LOGO

 

 

 

 

LOGO

 

 

 

Date Acquired:

 

  September 28, 2021   August 5, 2022   August 22, 2022
       
How did Outdoor Products add expertise?  

•  Invested heavily in talent (e.g., engineering, finance and procurement)

•  Leveraged Supply Chain CoE to ensure supply continuity

•  Implemented tailored operational enhancement plan

 

•  Utilized Supply Chain CoE to reduce facility footprints, build stronger strategic relationships with suppliers and consolidate contracts

•  Consolidated back office while combining teams to fuel innovation

 

•  Engaged with leadership at other Vista Outdoor brands to improve go-to-market sales process

•  Assistance from the Supply Chain CoE improved currency and other costs

       
What were the results?  

•  Well-positioned to become a sizeable golf technology business based on sales

•  Meaningful go-to-market synergies with Bushnell Golf business

 

•  Achieved economies of scale and meaningful back office and go-to-market synergies

•  Enhanced collaboration and creativity while investing to strengthen our brands for more impact

 

 

•  Enhanced clarity and desired outcomes of the go-to-market strategy

•  Meaningful reduction to cost of goods sold in fiscal year 2023 to support gross margin improvements

Culture of Innovation Drives Robust New Product Pipeline

In the highly competitive businesses in which we operate, new product innovation is critical to our brands’ success. Our scale and shared resources allow us to continue to invest in new product innovation at all points in the economic cycle. We employ approximately 125 dedicated design and product development professionals across our brands. By applying our engineering and manufacturing expertise, we have been able to bring new and innovative products to market that maintain product differentiation, deliver improved margins and meet the demanding requirements of our enthusiast consumers. Recent examples of our innovative, market-leading products include:

 

   

Stone Glacier, a leading manufacturer of premium outdoor equipment, recently announced its complete, systematic line of technical gloves and mittens. The brand’s versatile lineup includes its Chinook Merino Gloves, Mirka Gloves, Graupel Fleece Gloves, Altimeter Gloves and Altimeter Mitts – providing comfort through dexterity in varying backcountry conditions.

 

   

Bushnell, an industry leader in performance optics, released the Fusion X Rangefinding Binoculars and Prime 1800 Laser Rangefinder, both featuring ActivSync technology that automatically transitions readouts from black to red depending on lighting conditions. Last year, Bushnell also introduced the Broadhead Laser Rangefinder, the most accurate consumer grade rangefinder on the market with 0.3-yard accuracy out to 150 yards.

 

   

QuietKat, a leader in innovation within the off-road e-bike industry, introduced a brand new e-bike model, the Lynx. The Lynx represents the latest in full-suspension electric bicycles with an innovative design that pushes the envelope of style and high-performance for the brand. The Lynx establishes a new category for QuietKat, as it takes its proven off-road capabilities and blends it with a café moto style in a fun and powerful ride that is aimed at the discerning user who demands the latest technology and a premium ride. Able to tear up the road in style, then go further when the pavement ends, the Lynx is a fully capable off-road technical machine that can tackle the roughest terrain.

 

   

Fox Racing, a leader in motocross industry and a growing brand in the mountain bike category, has entered the mountain bike shoe category with the launch of the Union shoes series. With this offering, Fox Racing now provides mountain bike and motocross riders offerings for head-to-toe protection and apparel. From world champions to everyday trailblazers, the new Union shoes deliver a real connection to the bike with grip, durability and superb fit offered across all three versions to suit multiple ride styles and rider needs.

 

   

CamelBak recently launched new and redesigned hiking hydration packs as part of its Spring 2023 collection. These models include the all-new Fourteener collection, a fully redesigned Octane 22 and two new sizes in the Octane family. The new and redesigned hydration packs blend technical features with premium materials to provide hikers with a range of size options and styles suitable for any environment and length of day hike.

 

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For avid golfers, Bushnell Golf has continued to build off the success of the previous generation of products and revolutionize golf laser rangefinders with the feature rich Pro X3. The Pro X3 has taken our best-performing rangefinder and taken it to the next level, offering accuracy and performance unmatched by other laser rangefinders. The Pro X3 also features a new, patent-pending Locking Slope-Switch, significantly reducing the user’s risk of accidentally putting the unit into Slope mode during tournament play. The Pro X3 is our most advanced and best performing rangefinder to date and is the model preferred and used by many PGA Tour players.

Centers of Excellence Provide Significant Scale Advantage

We have developed a methodical approach to sharing our expertise in supply chain, e-commerce and M&A, which we refer to as our Centers of Excellence, across our verticals. Our Centers of Excellence provide our brands with significant shared resources that can be leveraged to drive growth in revenue and profitability, including expertise in sourcing, global distribution, enhanced purchasing power, sophisticated e-commerce systems, advanced analytics and a proven M&A playbook. We believe that our Centers of Excellence enable us to manufacture and distribute products in a more efficient and strategic manner than our competitors. Additionally, our Centers of Excellence enable our brands to dedicate a greater portion of their time to creating new, innovative products for consumers and better experiences for customers, enabling us to better serve their needs and capture market share. With our Centers of Excellence, we have the ability to realize the full potential of the businesses we acquire. This has become a compelling aspect of our value proposition, which has positioned us as the acquirer of choice in the outdoor industry. As we invest in our business and acquire more brands, the power of our Centers of Excellence will continue to grow as we scale and build on these competencies, driving further operating leverage.

Integrated supply chain management is a core focus of our company. We source finished product both domestically and internationally for global distribution and have teams of local sourcing and quality assurance experts on the ground where our largest suppliers are located. We continuously seek to improve our vendor base as well as our in-country support and oversight, and through our integrated supply chain management process, we seek to provide year-over-year reductions in product costs. We believe the scope and scale of our sourcing network would be difficult for many of our competitors to replicate. As a result of the COVID-19 pandemic, supply chain interruption impacted our company beginning in 2020. Our team worked to mitigate these impacts including by increasing output from our current suppliers and identifying alternatives. As of 2023, this risk has largely been abated and we do not expect supply chain issues to have a material impact in the near future.

Our supply chain and logistics infrastructure gives us the ability to serve a broad array of wholesale and retail customers, many of whom rely on us for services such as category management, marketing campaigns, merchandising and inventory replenishment. We believe our strong wholesale and retail relationships and diverse product offering provide us with a unique competitive advantage.

E-commerce has been a focus of our business, and we have gained meaningful traction with our various initiatives. We have found that e-commerce not only enables us to achieve higher margins, but also benefits the customer by providing the convenience of accessing our full portfolio of products wherever and whenever they want to shop.

We maintain strong relationships with our retail partners based on trust and professionalism. Our long-standing commitment to our customers, diverse product offering and focus on profitability for both our company and our retail partners have enabled us to gain shelf space and secure premium placement of our products at many major retailers. Our management team interfaces directly with the executives of many of our top retail partners to ensure we are delivering the products our retailers need to meet the demands of the end consumer in the most efficient and profitable manner possible. Furthermore, we believe our scale allows us to leverage our resources to efficiently and profitably service our largest retail customers. For example, we work with our key retail customers to develop marketing and advertising campaigns, provide inventory replenishment support and organize product category merchandising plans.

 

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LOGO

Visionary and Experienced Management Team

We have a highly experienced and proven management team that drives accountability and discipline throughout our organization, resulting in successful execution of the Company’s strategy.

We pride ourselves on our culture and our people. We are committed to upholding a diverse and inclusive work environment with meaningful opportunities for career development and leadership roles.

Robust Strategy for Continued Growth

Our strategy focuses on five strategic pillars that we believe will deliver sustainable and profitable growth, solidifying our position as the outdoor recreation market leader.

 

   

Talent and Culture: Invest in talent and foster our culture of agility, efficiency and innovation.

 

   

Organic Growth: Identify and capture opportunities for organic growth and market share expansion by:

 

   

allocating capital to our brands to aid in their development of new and innovative products that serve the needs and preferences of their core consumers while also expanding product offerings to new end markets and consumers;

 

   

leveraging and expanding our distribution channels to increase the commercial presence of all of our brands and efficiently deliver product to meet consumer demand;

 

   

utilizing our differentiated knowledge and expertise from our E-commerce Center of Excellence to help brands grow quickly and scale the business faster than they are able to alone; and

 

   

expanding our presence internationally by leveraging our existing footprint to capture additional geographies, markets and consumers.

 

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Centers of Excellence: Leverage our shared resources, expertise and scale to achieve a level of excellence that would be out of reach for our individual brands, with a focus on:

 

   

operational excellence to improve margins, supply chain resiliency and agility;

 

   

e-commerce, direct-to-consumer and digital marketing capabilities; and

 

   

acquisition target relationships and selection, deal execution and integration.

 

   

Acquisitions: Acquire complementary businesses in the highly fragmented outdoor recreation products market and deploy our shared resources and expertise to accelerate their growth and profitability.

 

   

Capital Allocation:

 

   

Maintain a healthy balance sheet, strong margins and robust cash flow generation to provide financial flexibility and enable us to thrive and grow at all points in the market demand cycle.

 

   

Dynamic process based on rigorous analysis that prioritizes long-term returns for our stockholders through:

 

   

organic growth opportunities;

 

   

opportunistic share repurchases when valuation is highly attractive; and

 

   

selective acquisitions at attractive multiples that are accretive to our company valuation and that have achievable and tangible synergies.

Risk Factors

Ownership of Outdoor Products common stock is subject to numerous risks, including risks relating to the Spin-Off. The following list of risk factors is not exhaustive. Please read the information in the section entitled “Risk Factors” beginning on page 30 of this Information Statement for a more thorough description of these and other risks.

Risks Relating to Our Business

 

   

We may not be able to successfully implement the acquisition component of our growth strategy, particularly if we are unable to raise the capital necessary to finance acquisitions.

 

   

General economic conditions may adversely affect our business, results of operations and financial condition, including by creating the potential for future impairments of goodwill and other intangible and long-lived assets.

 

   

Significant supplier capacity constraints, supplier production disruptions, supplier quality issues or price increases could increase our operating costs and adversely impact the competitive positions of our products.

 

   

Shortages of, and price increases for, labor, components, parts and other supplies, as well as commodities used in the manufacturing and distribution of our products, may delay or reduce our sales and increase our costs, thereby harming our results of operations.

 

   

Our business could be adversely impacted by inflation and rising interest rates.

 

   

Seasonality and weather conditions may cause our results of operations to vary from quarter to quarter.

 

   

Our revenues and results of operations may fluctuate unexpectedly from quarter-to-quarter, which may cause our stock price to decline.

 

   

Goodwill and intangible assets represent a significant portion of our total assets, and any impairment of these assets could negatively impact our results of operations and parent company equity.

 

   

Our results of operations could be materially harmed if we are unable to accurately forecast demand for our products.

 

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A disruption or a significant increase in the cost of our primary delivery and shipping services for our products and component parts or a significant disruption at shipping ports could have a negative impact on our business.

 

   

Failure to attract and retain key personnel could have an adverse effect on our results of operations.

 

   

Our sales are highly dependent on purchases by several large customers, and we may be adversely affected by the loss of, or any significant decline in sales to, one or more of these customers.

 

   

Insolvency, credit problems or other financial difficulties that could confront our retailers or distributors could expose us to financial risk.

 

   

Competition in our industry may hinder our ability to execute our business strategy, maintain profitability or maintain relationships with existing customers.

 

   

Our success depends upon our ability to introduce new compelling products into the marketplace and respond to customer preferences.

 

   

An inability to expand our e-commerce business could reduce our future growth.

 

   

Our business is highly dependent upon our brand recognition and reputation, and the failure to maintain or enhance our brand recognition or reputation would likely have an adverse effect on our business.

 

   

We manufacture, source and sell products that create exposure to potential product liability, warranty liability or personal injury claims and litigation.

Risks Relating to the Spin-Off

 

   

We may be unable to achieve some or all of the benefits that we expect to achieve from the Spin-Off, which could materially adversely affect our business, financial condition and results of operations.

 

   

If the Distribution does not qualify as a transaction that is tax-free for U.S. federal income tax purposes, Vista Outdoor or holders of Vista Outdoor common stock who receive shares of Outdoor Products common stock in connection with the Spin-Off could be subject to significant tax liability.

 

   

We could have an indemnification obligation to Vista Outdoor if the Distribution were determined not to qualify for non-recognition treatment for U.S. federal income tax purposes, which could materially adversely affect our business, financial condition and results of operations.

 

   

We intend to agree to numerous restrictions to preserve the non-recognition treatment of the Distribution, which may reduce our strategic and operating flexibility.

 

   

We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent, publicly-traded company, and we may experience increased costs after the Spin-Off.

Risks Relating to Our Common Stock

 

   

No market for our common stock currently exists, and an active trading market may not develop or be sustained after the Spin-Off. Following the Spin-Off our stock price may fluctuate significantly.

 

   

Substantial sales of our common stock may occur in connection with the Spin-Off, which could cause our stock price to decline.

 

   

We do not anticipate paying any dividends on our common stock for the foreseeable future, and as a result, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.

 

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The Spin-Off

Background

On May 5, 2022, Vista Outdoor announced that its Board of Directors, which we refer to as the “Vista Outdoor Board,” approved preparations for the separation of Vista Outdoor’s Outdoor Products and Sporting Products segments into two independent, publicly-traded companies via a spin-off of the Outdoor Products segment.

To effect the separation, first, Vista Outdoor will undertake the Internal Transactions described under the section entitled “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor—Separation and Distribution Agreement” beginning on page 140 of this Information Statement. Vista Outdoor will subsequently distribute all of Outdoor Products’s common stock to Vista Outdoor stockholders, and Outdoor Products, holding the Outdoor Products Business, will become an independent, publicly-traded company.

Prior to completion of the Spin-Off, we intend to enter into a Separation and Distribution Agreement and several other agreements with Vista Outdoor related to the Spin-Off. These agreements will govern the relationship between Vista Outdoor and us up to and after completion of the Spin-Off and allocate between Vista Outdoor and us various assets, liabilities and obligations, including those related to employees and compensation and benefits plans and programs and tax-related assets and liabilities. See the section entitled “Certain Relationships and Related-Party Transactions” beginning on page 140 of this Information Statement for more detail. No approval of Vista Outdoor stockholders is required in connection with the Spin-Off, and Vista Outdoor stockholders will not have any appraisal rights in connection with the Spin-Off.

Completion of the Spin-Off is subject to the satisfaction, or the waiver by the Vista Outdoor Board, of a number of conditions. If the Vista Outdoor Board waives any condition prior to the effectiveness of the Registration Statement on Form 10 of which this Information Statement is a part, and the result of such waiver is material to Vista Outdoor stockholders, we will file an amendment to the Registration Statement to revise the disclosure in this Information Statement accordingly. In the event that the Vista Outdoor Board waives a condition after the Registration Statement on Form 10 of which this Information Statement is a part becomes effective and such waiver is material to Vista Outdoor stockholders, we will file a Current Report on Form 8-K describing the change. In addition, Vista Outdoor has the right not to complete the Spin-Off if, at any time, the Vista Outdoor Board determines, in its sole and absolute discretion, that the Spin-Off is not in the best interests of Vista Outdoor or its stockholders, or is otherwise not advisable. See the section entitled “The Spin-Off—Conditions to the Spin-Off” beginning on page 62 of this Information Statement for more detail.

Reasons for the Spin-Off

A wide variety of factors were considered by the Vista Outdoor Board in evaluating the Spin-Off. Among other things, the Vista Outdoor Board considered a number of potential benefits of the Spin-Off, including:

 

   

Enhanced strategic focus with supporting resources. Enhanced strategic focus with resources to support each company’s specific operational needs and growth drivers.

 

   

Tailored capital allocation priorities. Tailored capital allocation philosophies that are better suited to support each company’s distinctive business model and long-term goals.

 

   

Strengthened ability to attract and retain top talent. Enhanced ability to attract and retain top talent that is ideally suited to execute each company’s strategic and operational objectives.

 

   

Compelling value for stockholders. Differentiated and compelling investment opportunity based on each company’s particular business model. Vista Outdoor anticipates that, as separate, independent companies, Outdoor Products and Sporting Products will each be better positioned to be more appropriately valued by the market.

 

   

Expanded strategic opportunities. Improved focus will allow Outdoor Products to further cement its reputation as the acquirer of choice through continued M&A in the outdoor recreation products marketplace and enable Sporting Products to secure attractive partnerships with other manufacturers.

The Vista Outdoor Board also considered potential risks associated with the Spin-Off. Following an in-depth analysis of the potential benefits and risks relating to the Spin-Off, the Vista Outdoor Board determined that the Spin-Off provided the best

 

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opportunity to enhance stockholder value. Neither Vista Outdoor nor Outdoor Products can assure you that, following the Spin-Off, any of the benefits described above or otherwise will be realized to the extent anticipated or at all. For additional information, see the sections entitled “Risk Factors” and “The Spin-Off—Reasons for the Spin-Off” beginning on pages 30 and 54, respectively, of this Information Statement.

Outdoor Products Indebtedness

In connection with the Spin-Off, Outdoor Products expects to enter into a revolving credit facility. Information regarding Outdoor Products’s indebtedness following the Spin-Off will be provided in a subsequent amendment to this Information Statement.

Other Information

We are a Delaware corporation. Our principal executive offices are located at [                    ]. Our telephone number is [                    ]. Our website address is [                    ]. Information contained on, or connected to, our website or Vista Outdoor’s website does not and will not constitute part of this Information Statement or the Registration Statement on Form 10 of which this Information Statement is a part, or any other filings with, or any information furnished or submitted to, the Securities and Exchange Commission, which we refer to as the “SEC.”

Reasons for Furnishing This Information Statement

We are furnishing this Information Statement solely to provide information to Vista Outdoor stockholders who will receive shares of our common stock in the Distribution. Vista Outdoor stockholders are not required to vote on the Distribution. Therefore, you are not being asked for a proxy and you are not required to send a proxy to Vista Outdoor. You do not need to pay any consideration, exchange or surrender your existing shares of Vista Outdoor common stock or take any other action to receive your shares of Outdoor Products common stock. You should not construe this Information Statement as an inducement or encouragement to buy, hold or sell any of our securities or any securities of Vista Outdoor. We believe that the information contained in this Information Statement is accurate as of the date set forth on the cover. Changes to the information contained in this Information Statement may occur after that date, and neither we nor Vista Outdoor undertakes any obligation to update the information except in the normal course of our and Vista Outdoor’s respective public disclosure obligations and practices.

 

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QUESTIONS AND ANSWERS ABOUT THE SPIN-OFF

The following provides only a summary of certain information regarding the Spin-Off. You should read this Information Statement in its entirety for a more detailed description of the matters described below.

 

Q:

Why am I receiving this Information Statement?

 

A:

Vista Outdoor is making this Information Statement available to you because you are a holder of shares of Vista Outdoor common stock. If you are a holder of shares of Vista Outdoor common stock as of the Record Date (as defined below), for every one share of Vista Outdoor common stock that you hold as of the Record Date, you will be entitled to receive one share of Outdoor Products common stock. This Information Statement will help you understand how the Spin-Off will affect your post-Distribution ownership in Vista Outdoor and Outdoor Products.

 

Q:

What is the Spin-Off?

 

A:

The Spin-Off is the method by which we will separate from Vista Outdoor. In the Spin-Off, Vista Outdoor will distribute to its stockholders all the outstanding shares of our common stock in a transaction, which we refer to as the “Distribution.” Following the Spin-Off, we will be an independent, publicly-traded company, and Vista Outdoor will not retain any ownership interest in us. Vista Outdoor will be renamed The Kinetic Group, Inc. and continue as an independent, publicly-traded company primarily focused on its Sporting Products business, and its common stock will trade on the New York Stock Exchange (the “NYSE”) under the ticker symbol “HUNT”.

 

Q:

Will the number of Vista Outdoor shares I own change as a result of the Spin-Off?

 

A:

No, the number of shares of Vista Outdoor common stock you own will not change as a result of the Spin-Off.

 

Q:

What are the reasons for the Spin-Off?

 

A:

A wide variety of factors were considered by the Vista Outdoor Board in evaluating the Spin-Off. Among other things, the Vista Outdoor Board considered a number of potential benefits of the Spin-Off, including:

 

   

Enhanced strategic focus with supporting resources. Enhanced strategic focus with resources to support each company’s specific operational needs and growth drivers.

 

   

Tailored capital allocation priorities. Tailored capital allocation philosophies that are better suited to support each company’s distinctive business model and long-term goals.

 

   

Strengthened ability to attract and retain top talent. Enhanced ability to attract and retain top talent that is ideally suited to execute each company’s strategic and operational objectives.

 

   

Compelling value for stockholders. Differentiated and compelling investment opportunity based on each company’s particular business model. Vista Outdoor anticipates that, as separate, independent companies, Outdoor Products and Sporting Products will each be better positioned to be more appropriately valued by the market.

 

   

Expanded strategic opportunities. Improved focus will allow Outdoor Products to further cement its reputation as the acquirer of choice through continued M&A in the outdoor recreation products marketplace and enable Sporting Products to secure attractive partnerships with other manufacturers.

The Vista Outdoor Board also considered potential risks associated with the Spin-Off. After an in-depth analysis of the potential benefits and risks relating to the Spin-Off, the Vista Outdoor Board determined that the Spin-Off provided the best opportunity to enhance stockholder value. Neither Vista Outdoor nor Outdoor Products can assure you that, following the Spin-Off, any of the benefits described above or otherwise will be realized to the extent anticipated or at all. For additional information, see the sections entitled “Risk Factors” and “The Spin-Off—Reasons for the Spin-Off” beginning on pages 30 and 54, respectively, of this Information Statement.

 

Q:

Why is the separation of Outdoor Products structured as a spin-off?

 

A:

Vista Outdoor believes that a tax-free distribution of our shares is the most efficient way to separate our business from Vista Outdoor in a manner that will achieve the benefits that the Vista Outdoor Board considered in evaluating the Spin-Off.

 

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Q:

What will I receive in the Spin-Off in respect of my shares of Vista Outdoor common stock?

 

A:

As a holder of Vista Outdoor common stock, for every one share of Vista Outdoor common stock you hold on the Record Date, you will receive a dividend of one share of Outdoor Products common stock. The distribution agent will distribute only whole shares of our common stock in the Spin-Off. See “—How will fractional shares be treated in the Distribution?” beginning on page 16 of this Information Statement for more information on the treatment of the fractional shares you may be entitled to receive in the Distribution. Your proportionate interest in Vista Outdoor will not change as a result of the Spin-Off.

 

Q:

What is being distributed in the Spin-Off?

 

A:

Vista Outdoor will distribute approximately 57,997,650 shares of our common stock in the Spin-Off, based on the approximately 57,997,650 shares of Vista Outdoor common stock outstanding as of June 25, 2023. The actual number of shares of our common stock that Vista Outdoor will distribute will depend on the total number of shares of Vista Outdoor common stock outstanding on the Record Date. The shares of our common stock that Vista Outdoor distributes will constitute all of the issued and outstanding shares of our common stock immediately prior to the Distribution. For more information on the shares being distributed in the Spin-Off, see the section entitled “Description of Our Capital Stock—Common Stock” beginning on page 146 of this Information Statement.

 

Q:

What is the record date for the Distribution?

 

A:

Vista Outdoor will determine record ownership as of the close of business on [                    ], 202[    ], which we refer to as the “Record Date.”

 

Q:

When will the Distribution occur?

 

A:

The Distribution will be effective as of 12:01 a.m., New York City time, on [                    ], 202[    ], which we refer to as the “Distribution Date.” On or shortly after the Distribution Date, the whole shares of our common stock will be credited in book-entry accounts for Vista Outdoor stockholders entitled to receive the shares in the Distribution. See “—How will Vista Outdoor distribute shares of our common stock?” beginning on page 16 of this Information Statement for more information on how to access your book-entry account or your bank, brokerage or other account holding the Outdoor Products common stock you receive in the Distribution on and following the Distribution Date.

 

Q:

What do I have to do to participate in the Distribution?

 

A:

All holders of Vista Outdoor common stock as of the Record Date will participate in the Distribution. You are not required to take any action in order to participate, but we urge you to read this Information Statement carefully. Holders of Vista Outdoor common stock on the Record Date will not need to pay any cash or deliver any other consideration, including any shares of Vista Outdoor common stock, in order to receive shares of our common stock in the Distribution. In addition, no stockholder approval of the Distribution is required. We are not asking you for a vote and request that you do not send us a proxy card.

 

Q:

If I sell my shares of Vista Outdoor common stock before the Distribution Date, will I still be entitled to receive shares of Outdoor Products common stock in the Distribution?

 

A:

If you sell your shares of Vista Outdoor common stock before the Record Date, you will not be entitled to receive shares of Outdoor Products common stock in the Distribution. If you hold shares of Vista Outdoor common stock on the Record Date and decide to sell them before the Distribution Date, you may be able to choose to sell your Vista Outdoor common stock with or without your entitlement to the Outdoor Products common stock to be distributed in the Spin-Off. You are encouraged to consult with your bank, broker or other nominee, as applicable, and your financial advisor regarding your options and the specific implications of selling your shares of Vista Outdoor common stock prior to or on the Distribution Date. See the section entitled “The Spin-Off—Trading Prior to the Distribution Date” beginning on page 61 of this Information Statement for more information.

 

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Q:

Is the completion of the Spin-Off subject to the satisfaction or waiver of any conditions?

 

A:

Yes, the completion of the Spin-Off is subject to the satisfaction, or the Vista Outdoor Board’s waiver, of the following conditions:

 

   

the Vista Outdoor Board shall have authorized and approved the Internal Transactions (as described in the section entitled “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor—Separation and Distribution Agreement” beginning on page 140 of this Information Statement) and Distribution and not withdrawn such authorization and approval, and shall have declared the dividend of our common stock to Vista Outdoor stockholders;

 

   

the ancillary agreements contemplated by the Separation and Distribution Agreement shall have been executed by each party to those agreements;

 

   

our common stock shall have been accepted for listing on the NYSE or another national securities exchange approved by Vista Outdoor, subject to official notice of issuance;

 

   

the SEC shall have declared effective our Registration Statement on Form 10 of which this Information Statement is a part under the Exchange Act, and no stop order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for that purpose shall be pending before or threatened by the SEC;

 

   

Vista Outdoor shall have received the written opinion of Cravath, Swaine & Moore LLP, which shall remain in full force and effect, that, subject to the limitations specified therein and the accuracy of and compliance with certain representations, warranties and covenants, the Distribution will qualify as a distribution to which Section 355 and Section 361 of the Internal Revenue Code apply;

 

   

the Vista Outdoor Board shall have received one or more opinions (which have not been withdrawn or adversely modified) in customary form from one or more nationally recognized valuation, appraisal or accounting firms or investment banks as to the solvency and financial viability of Vista Outdoor prior to the Spin-Off and each of Vista Outdoor and Outdoor Products after the consummation of the Spin-Off;

 

   

the Internal Transactions, including any related debt financing, shall have been completed;

 

   

no order, injunction or decree issued by any governmental authority of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution shall be in effect, and no other event outside the control of Vista Outdoor shall have occurred or failed to occur that prevents the consummation of the Distribution;

 

   

no other events or developments shall have occurred prior to the Distribution Date that, in the judgment of the Vista Outdoor Board, makes it inadvisable to effect the Spin-Off and other related transactions;

 

   

prior to the Distribution Date, notice of Internet availability of this Information Statement or this Information Statement shall have been mailed to the holders of Vista Outdoor common stock as of the Record Date;

 

   

Vista Outdoor shall have duly elected as members of our post-Distribution Board of Directors the individuals listed in this Information Statement, and such individuals shall be the members of our Board of Directors, which we refer to as the “Board,” immediately after the Distribution; and

 

   

immediately prior to the Distribution Date, our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, each in substantially the form filed as an exhibit to the Registration Statement on Form 10 of which this Information Statement is a part, shall be in effect.

Vista Outdoor and Outdoor Products cannot assure you that any or all of these conditions will be met, or that the Distribution will be consummated even if all of the conditions are met. Vista Outdoor may at any time prior to the Distribution Date decide to abandon the Distribution or modify or change the terms of the Distribution. If the Vista Outdoor Board waives any condition prior to the effectiveness of the Registration Statement on Form 10 of which this Information Statement is a part, and the result of such waiver is material to Vista Outdoor stockholders, we will file an amendment to the Registration Statement to revise the disclosure in this Information Statement accordingly. In the event that the Vista Outdoor Board waives a condition after the Registration Statement on Form 10 of which this Information

 

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Statement is a part becomes effective and such waiver is material to Vista Outdoor stockholders, we will file a Current Report on Form 8-K describing the change. For a complete discussion of all of the conditions to the Distribution, see the section entitled “The Spin-Off—Conditions to the Spin-Off” beginning on page 62 of this Information Statement.

 

Q:

Can Vista Outdoor decide to cancel the Distribution even if all the conditions have been satisfied?

 

A:

Yes. The Vista Outdoor Board may, in its sole discretion and at any time prior to the Distribution Date, decide to terminate or abandon the Distribution even if all the conditions to the Distribution have been satisfied if the Vista Outdoor Board determines that the Distribution is not in the best interests of Vista Outdoor or its stockholders or is otherwise not advisable. For a more detailed description, see the section entitled “The Spin-Off—Conditions to the Spin-Off” beginning on page 62 of this Information Statement.

 

Q:

How will Vista Outdoor distribute shares of our common stock?

 

A:

Registered stockholders: If you are a registered stockholder (meaning you own your shares of Vista Outdoor common stock directly through Vista Outdoor’s transfer agent, Computershare Trust Company, N.A., which we refer to as “Computershare”), our distribution agent will credit the whole shares of our common stock you receive in the Distribution to a new book-entry account with our transfer agent, Computershare, on or shortly after the Distribution Date. Our distribution agent will mail you a book-entry account statement that reflects the number of whole shares of our common stock you own. You will be able to access information regarding your book-entry account holding the Outdoor Products shares at www-us.computershare.com/investor or by calling 1-800-736-3001, option 1 (U.S.) 1-781-575-3100, option 1 (non-U.S.).

“Street name” or beneficial stockholders: If you own your shares of Vista Outdoor common stock beneficially through a bank, broker or other nominee, your bank, broker or other nominee will credit your account with the whole shares of our common stock you receive in the Distribution on or shortly after the Distribution Date. Please contact your bank, broker or other nominee for further information about your account.

We will not issue any physical stock certificates to any stockholders, even if requested. See the section entitled “The Spin-Off—When and How You Will Receive Outdoor Products Shares” beginning on page 56 of this Information Statement for a more detailed explanation.

 

Q:

How will fractional shares be treated in the Distribution?

 

A:

The distribution agent will not distribute any fractional shares of our common stock in connection with the Spin-Off. Instead, the distribution agent will aggregate all fractional shares into whole shares and sell the whole shares in the open market at prevailing market prices on behalf of Vista Outdoor stockholders entitled to receive a fractional share. The distribution agent will then distribute the aggregate cash proceeds of the sales, net of brokerage fees and other costs, pro rata to these holders (net of any required withholding for taxes applicable to each holder). We anticipate that the distribution agent will make these sales in the “when-issued” market, and “when-issued” trades will generally settle within two trading days following the Distribution. See “—How will Outdoor Products common stock trade?” beginning on page 17 of this Information Statement for additional information regarding “when-issued” trading and the section entitled “The Spin-Off—Treatment of Fractional Shares” beginning on page 56 of this Information Statement for a more detailed explanation of the treatment of fractional shares. The distribution agent will, in its sole discretion, without any influence by Vista Outdoor or us, determine precisely when, how, through which broker-dealer and at what price to sell the whole shares of Outdoor Products common stock. The distribution agent is not, and any broker-dealer used by the distribution agent will not be, an affiliate of either Vista Outdoor or us.

 

Q:

What are the U.S. federal income tax consequences to me of the Distribution?

 

A:

For U.S. federal income tax purposes, no gain or loss will be recognized by, or be includible in the income of, a U.S. Holder (as defined in the section entitled “The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off” beginning on page 58 of this Information Statement) as a result of the Distribution, except with respect to any cash received by Vista Outdoor stockholders in lieu of fractional shares. After the Distribution, Vista Outdoor stockholders generally will allocate their aggregate tax basis in their Vista Outdoor common stock held immediately before the Distribution between their Vista Outdoor common stock and our common stock in proportion to their relative fair market values on the date of the Distribution (subject to certain adjustments). See the section entitled “The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off” beginning on page 58 of this Information Statement for more information regarding the potential tax consequences to you of the Spin-Off.

 

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We urge you to consult your tax advisor as to the specific tax consequences of the Distribution to you, including the effect of any U.S. federal, state, local or foreign tax laws and of changes in applicable tax laws.

 

Q:

Does Outdoor Products intend to pay cash dividends?

 

A:

We intend to retain future earnings for use in the operation of our business and to fund future growth, including through acquisitions. We do not anticipate paying any dividends on our common stock for the foreseeable future. See the section entitled “Dividend Policy” beginning on page 64 of this Information Statement for more information.

 

Q:

Will Outdoor Products incur any debt prior to or at the time of the Distribution?

 

A:

In connection with the Spin-Off, Outdoor Products expects to enter into a revolving credit facility. See the section entitled “Description of Our Indebtedness” beginning on page 145 of this Information Statement for more detail. Additional information regarding Outdoor Products’s indebtedness following the Spin-Off will be provided in a subsequent amendment to this Information Statement.

 

Q:

How will Outdoor Products common stock trade?

 

A:

Currently, there is no public market for our common stock. We intend to list our common stock on the NYSE under the ticker symbol “[                    ].”

We anticipate that trading in our common stock will begin on a “when-issued” basis shortly before the Distribution Date and will continue up to but not including the Distribution Date. “When-issued” trading in the context of a spin-off refers to a sale or purchase made conditionally before the Distribution Date because the securities of the spun-off entity have not yet been distributed. “When-issued” trades generally settle within two trading days after the Distribution. On the Distribution Date, any “when-issued” trading of our common stock will end and “regular-way” trading will begin. “Regular-way” trading refers to trading after the security has been distributed and typically involves a trade that settles on the second full trading day following the date of the trade. See the section entitled “The Spin-Off—Trading Prior to the Distribution Date” beginning on page 61 of this Information Statement for more information. We cannot predict the trading prices for our common stock before, on or after the Distribution Date.

 

Q:

What will happen to the listing of Vista Outdoor common stock?

 

A:

Following the Distribution, Vista Outdoor will be renamed The Kinetic Group, Inc., and its common stock will trade on the NYSE under the ticker symbol “HUNT”.

 

Q:

Will the Spin-Off affect the trading price of my Vista Outdoor common stock?

 

A:

We expect the trading price of shares of Vista Outdoor common stock immediately following the Distribution to be lower than the trading price immediately prior to the Distribution because the trading price will no longer reflect the value of the Outdoor Products Business. Furthermore, until the market has fully analyzed the value of Vista Outdoor without the Outdoor Products Business, the trading price of shares of Vista Outdoor common stock may fluctuate and result in a higher volatility in stock price. We cannot assure you that, following the Distribution, the combined trading prices of the Vista Outdoor common stock and the Outdoor Products common stock will equal or exceed what the trading price of Vista Outdoor common stock would have been in the absence of the Spin-Off.

It is possible that after the Spin-Off, the combined equity value of Vista Outdoor and Outdoor Products will be less than Vista Outdoor’s equity value before the Spin-Off.

 

Q:

What will happen to Vista Outdoor equity-based awards in connection with the Spin-Off?

 

A:

We expect that outstanding equity awards held by Outdoor Products employees and non-employee directors immediately following the Spin-Off will be treated as follows at the time of the Spin-Off:

Restricted Stock Unit Awards Held by Outdoor Products Employees. We expect that each Vista Outdoor restricted stock unit award held on the Distribution Date by any employee of Outdoor Products immediately following the Spin-Off (an

 

17


“Outdoor Products Employee Holder”) will convert into an Outdoor Products restricted stock unit award (a “Substitute RSU Award”) in a manner that preserves the fair value of the award following the Spin-Off. After the Spin-Off, the Substitute RSU Award will be subject to substantially the same terms and conditions as the original Vista Outdoor restricted stock unit award to which it relates, except that the vesting of the award will be based on continued service with Outdoor Products.

Performance-Based Restricted Stock Unit Awards. We expect that each Vista Outdoor performance-based restricted stock unit award that is held on the Distribution Date by an Outdoor Products Employee Holder, other than each Specified Vista Outdoor PSU Award (as defined below), will convert into a Substitute RSU Award, with performance conditions deemed achieved as of the Distribution Date, as applicable, at (i) 100% of target performance, in respect of fiscal years 2022-2024 and 2024-2026 awards and (ii) 33.33% of target performance, in respect of fiscal years 2023-2025 awards. After the Spin-Off, the Substitute RSU Award will be subject to substantially the same terms and conditions as the original Vista Outdoor performance-based restricted stock unit award to which it relates, except as provided above, and the vesting of the award will be based on continued service with Outdoor Products.

We expect that each of certain Vista Outdoor performance-based restricted stock unit awards (“Specified Vista Outdoor PSU Awards”) will be converted into an Outdoor Products performance-based restricted stock unit award (a “Substitute Outdoor Products PSU Award”) in a manner that preserves the fair value of the target Specified Vista Outdoor PSU Award following the Spin-Off. After the Spin-Off, the Substitute Outdoor Products PSU Award will be subject to substantially the same terms and conditions as the Specified Vista Outdoor PSU Award to which it relates.

Stock Option Awards. We expect that each Vista Outdoor stock option award that is held on the Distribution Date by an Outdoor Products Employee Holder will convert into an Outdoor Products stock option award in a manner that preserves the fair value of the award following the Spin-Off. After the Spin-Off, the Outdoor Products stock option award will be subject to substantially the same terms and conditions as the original Vista Outdoor stock option award to which it relates, except that the vesting of the award will be based on continued service with Outdoor Products.

Deferred Stock Unit Awards and Restricted Stock Unit Awards Held by Non-Employee Directors. We expect that each Vista Outdoor deferred stock unit award held by a non-employee director of Vista Outdoor on the Distribution Date will convert into an award in respect of both shares of Vista Outdoor common stock and shares of Outdoor Products common stock. The number of shares of Vista Outdoor common stock subject to each post-Spin-Off Vista Outdoor award will continue to be the same as the number subject to the award prior to the Spin-Off. The number of shares of Outdoor Products common stock subject to the Outdoor Products deferred stock unit award or Substitute RSU Award, as applicable, will be determined based on a conversion ratio that preserves the fair value of the award following the Spin-Off. After the Spin-Off, the Outdoor Products deferred stock unit award and Substitute RSU Award will be subject to substantially the same terms and conditions as the original Vista Outdoor award to which it relates. Solely for purposes of such awards, following the Spin-Off, (i) service to Outdoor Products will be treated as service to Vista Outdoor and (ii) service to Vista Outdoor will be treated as service to Outdoor Products.

For additional information on the treatment of Vista Outdoor’s equity-based awards in the Spin-Off, see the section entitled “The Spin-Off—Treatment of Outstanding Equity-Based Awards” beginning on page 57 of this Information Statement.

 

Q:

What will Outdoor Products’s relationship be with Vista Outdoor following the Spin-Off?

 

A:

Following the Distribution, Outdoor Products and Vista Outdoor will be separate companies with separate management teams and separate boards of directors, and Vista Outdoor will not own any shares of our common stock. Outdoor Products will enter into a Separation and Distribution Agreement with Vista Outdoor to effect the separation and provide a framework for the relationship between Outdoor Products and Vista Outdoor after the Spin-Off, and will enter into certain other agreements, including a Transition Services Agreement, a Tax Matters Agreement and an Employee Matters Agreement. These agreements will allocate between Outdoor Products and Vista Outdoor the assets, employees, liabilities and obligations of Vista Outdoor and its subsidiaries attributable to periods prior to, at and after the Distribution, provide for certain services to be delivered on a transitional basis and govern the relationship between Outdoor Products and Vista Outdoor following the Spin-Off. In addition to the aforementioned agreements, we are also currently party to, or intend to enter into, various other agreements with Vista Outdoor and its subsidiaries that are intended to continue post-Distribution subject to their existing terms or terms and conditions to be negotiated and agreed to, and we do not consider these agreements to be material to Outdoor Products and its subsidiaries. For additional information regarding the Separation

 

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  and Distribution Agreement, Transition Services Agreement, Tax Matters Agreement and Employee Matters Agreement, see the sections entitled “Risk Factors—Risks Relating to the Spin-Off” and “Certain Relationships and Related-Party Transactions” beginning on pages 43 and 140, respectively, of this Information Statement.

 

Q:

Who will manage Outdoor Products following the Spin-Off?

 

A:

Outdoor Products will be led by Eric Nyman, who will be Outdoor Products’s Chief Executive Officer. For more information regarding Outdoor Products’s directors and management, see the section entitled “Management” beginning on page 96 of this Information Statement.

 

Q:

Do I have appraisal rights in connection with the Spin-Off?

 

A:

No. Holders of Vista Outdoor common stock are not entitled to appraisal rights in connection with the Spin-Off.

 

Q:

Who is the transfer agent and registrar for Outdoor Products common stock?

 

A:

Computershare Trust Company, N.A., which we also refer to as “Computershare” in this Information Statement.

 

Q:

Are there risks associated with owning shares of Outdoor Products common stock?

 

A:

Yes. Our business faces both general and specific risks and uncertainties. Our business also faces risks relating to the Spin-Off. Following the Spin-Off, we will also face risks associated with being an independent, publicly-traded company. Accordingly, you should read carefully the information set forth in the section entitled “Risk Factors” beginning on page 30 of this Information Statement.

 

Q:

Where can I get more information?

 

A:

If you have any questions relating to the mechanics of the Distribution, you should contact the distribution agent at:

Computershare, Inc.

150 Royall Street

Canton, MA 02021

Phone: 1-866-395-6416 or 1-781-575-4352 (U.S. & Canada)

   1-201-680-6578 (outside the U.S. & Canada)

Before the Spin-Off, if you have any questions relating to the Spin-Off, you should contact Vista Outdoor at:

Investor Relations,

Vista Outdoor Inc.

1 Vista Way

Anoka, MN 55303

Phone: (612) 518-5406

E-mail: investor.relations@vistaoutdoor.com

After the Spin-Off, if you have any questions relating to Outdoor Products, you should contact us at:

[                    ]

A link to our investor relations website and additional contact information will be made available at [                    ] (which we expect to be operational on or prior to the Distribution Date). Information contained on, or connected to, our website or Vista Outdoor’s website does not and will not constitute part of this Information Statement or the Registration Statement on Form 10 of which this Information Statement is a part, or any other filings with, or any information furnished or submitted to, the SEC.

 

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SUMMARY OF THE SPIN-OFF

 

Distributing Company

Vista Outdoor Inc., a Delaware corporation that holds all of the issued and outstanding common stock of Outdoor Products prior to the Distribution. After the Distribution, Vista Outdoor will not own any shares of Outdoor Products common stock.

 

Distributed Company

Outdoor Products Spinco Inc., a Delaware corporation and a wholly owned subsidiary of Vista Outdoor. At the time of the Distribution, we will hold, directly or through our subsidiaries, the assets and liabilities of the Outdoor Products Business. After the Spin-Off, we will be an independent, publicly-traded company.

 

Distributed Securities

All shares of Outdoor Products common stock owned by Vista Outdoor, which will be 100% of Outdoor Products’s issued and outstanding common stock immediately prior to the Distribution. Based on the approximately 57,997,650 shares of Vista Outdoor common stock outstanding as of June 25, 2023, and applying the distribution ratio pursuant to which, for every one share of Vista Outdoor common stock, one share of Outdoor Products common stock will be distributed, approximately 57,997,650 shares of Outdoor Products common stock will be distributed.

 

Record Date

The Record Date is the close of business on [                    ], 202[    ].

 

Distribution Date

The Distribution Date is [                    ], 202[    ].

 

Distribution Ratio

For every one share of Vista Outdoor common stock each Vista Outdoor stockholder holds on the Record Date, it will receive one share of our common stock. The distribution agent will distribute only whole shares of our common stock in the Spin-Off. See the section entitled “The Spin-Off—Treatment of Fractional Shares” beginning on page 56 of this Information Statement for more detail. Please note that if you sell your shares of Vista Outdoor common stock before the Distribution Date, the buyer of those shares may in some circumstances be entitled to receive the shares of our common stock to be distributed in respect of the Vista Outdoor shares that you sold. For more information, see the section entitled “The Spin-Off—Trading Prior to the Distribution Date” beginning on page 61 of this Information Statement.

 

The Distribution

On the Distribution Date, Vista Outdoor will release the shares of our common stock to the distribution agent to distribute to Vista Outdoor stockholders. Vista Outdoor will distribute our shares in book-entry form and thus we will not issue any physical stock certificates. You will not be required to make any payment, surrender or exchange your shares of Vista Outdoor common stock or take any other action to receive your shares of our common stock.

 

Fractional Shares

The distribution agent will not distribute any fractional shares of our common stock to Vista Outdoor stockholders. Instead, the distribution agent will first aggregate fractional shares into whole shares, then sell the whole shares in the open market at prevailing market prices on behalf of Vista Outdoor stockholders entitled to receive a fractional share, and finally distribute the aggregate cash proceeds of the sales, net of brokerage fees and other costs, pro rata to these holders (net of any required withholding for taxes applicable to each holder). If you receive cash in lieu of fractional shares, you will not be entitled to any interest on the payments. The cash you receive in lieu of fractional shares generally will, for U.S. federal income tax purposes, be taxable as described under the section entitled “The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off” beginning on page 58 of this Information Statement.

 

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Conditions to the Spin-Off

Completion of the Spin-Off is subject to the satisfaction, or the Vista Outdoor Board’s waiver, of the following conditions:

 

   

the Vista Outdoor Board shall have authorized and approved the Internal Transactions (as described in the section entitled “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor—Separation and Distribution Agreement” beginning on page 140 of this Information Statement) and Distribution and not withdrawn such authorization and approval, and shall have declared the dividend of our common stock to Vista Outdoor stockholders;

 

   

the ancillary agreements contemplated by the Separation and Distribution Agreement shall have been executed by each party to those agreements;

 

   

our common stock shall have been accepted for listing on the NYSE or another national securities exchange approved by Vista Outdoor, subject to official notice of issuance;

 

   

the SEC shall have declared effective our Registration Statement on Form 10 of which this Information Statement is a part under the Exchange Act, and no stop order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for that purpose shall be pending before or threatened by the SEC;

 

   

Vista Outdoor shall have received the written opinion of Cravath, Swaine & Moore LLP, which shall remain in full force and effect, that, subject to the limitations specified therein and the accuracy of and compliance with certain representations, warranties and covenants, the Distribution will qualify as a distribution to which Section 355 and Section 361 of the Internal Revenue Code apply;

 

   

the Vista Outdoor Board shall have received one or more opinions (which have not been withdrawn or adversely modified) in customary form from one or more nationally recognized valuation, appraisal or accounting firms or investment banks as to the solvency and financial viability of Vista Outdoor prior to the Spin-Off and each of Vista Outdoor and Outdoor Products after the consummation of the Spin-Off;

 

   

the Internal Transactions, including any related debt financing, shall have been completed;

 

   

no order, injunction or decree issued by any governmental authority of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution shall be in effect, and no other event outside the control of Vista Outdoor shall have occurred or failed to occur that prevents the consummation of the Distribution;

 

   

no other events or developments shall have occurred prior to the Distribution Date that, in the judgment of the Vista Outdoor Board, makes it inadvisable to effect the Spin-Off and other related transactions;

 

   

prior to the Distribution Date, notice of Internet availability of this Information Statement or this Information Statement shall have been mailed to the holders of Vista Outdoor common stock as of the Record Date;

 

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Vista Outdoor shall have duly elected as members of our post-Distribution Board of Directors the individuals listed in this Information Statement, and such individuals shall be the members of our Board of Directors immediately after the Distribution; and

 

   

immediately prior to the Distribution Date, our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, each in substantially the form filed as an exhibit to the Registration Statement on Form 10 of which this Information Statement is a part, shall be in effect.

 

  The fulfillment of the foregoing conditions will not create any obligation on the part of Vista Outdoor to complete the Spin-Off. We are not aware of any material U.S. federal, foreign or state regulatory requirements with which we must comply, other than SEC rules and regulations, or any material approvals that we must obtain, other than the approval for listing of our common stock and the SEC’s declaration of the effectiveness of the Registration Statement on Form 10 of which this Information Statement is a part, in connection with the Distribution. If the Vista Outdoor Board waives any condition prior to the effectiveness of the Registration Statement on Form 10 of which this Information Statement is a part, and the result of such waiver is material to Vista Outdoor stockholders, we will file an amendment to the Registration Statement to revise the disclosure in this Information Statement accordingly. In the event that the Vista Outdoor Board waives a condition after the Registration Statement on Form 10 of which this Information Statement is a part becomes effective and such waiver is material to Vista Outdoor stockholders, we will file a Current Report on Form 8-K describing the change. For a complete discussion of all of the conditions to the Distribution, see the section entitled “The Spin-Off—Conditions to the Spin-Off” beginning on page 62 of this Information Statement. In addition, Vista Outdoor has the right not to complete the Spin-Off if, at any time, the Vista Outdoor Board determines, in its sole and absolute discretion, that the Spin-Off is not in the best interests of Vista Outdoor or its stockholders, or is otherwise not advisable.

 

Trading Market and Ticker Symbol

We intend to file an application to list our common stock on the NYSE under the ticker symbol “[                    ].” We anticipate that, shortly before the Distribution Date, trading of shares of our common stock will begin on a “when-issued” basis and will continue up to but not including the Distribution Date, and we expect that “regular-way” trading of our common stock will begin on the Distribution Date.

 

  We also anticipate that, shortly before the Distribution Date, there will be two markets in Vista Outdoor common stock: (i) a “regular-way” market on which shares of Vista Outdoor common stock will trade with an entitlement for the purchaser of Vista Outdoor common stock to receive shares of our common stock to be distributed in the Distribution, and (ii) an “ex-distribution” market on which shares of Vista Outdoor common stock will trade without an entitlement for the purchaser of Vista Outdoor common stock to receive shares of our common stock. For more information, see the section entitled “The Spin-Off—Trading Prior to the Distribution Date” beginning on page 61 of this Information Statement.

 

Tax Consequences to Vista Outdoor Stockholders

For U.S. federal income tax purposes, no gain or loss will be recognized by, or be includible in the income of, a U.S. Holder (as defined in the section entitled “The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off” beginning on page 58 of this Information Statement) as a result of the Distribution, except with respect to any cash received by Vista Outdoor stockholders in lieu of fractional shares. After the Distribution, Vista Outdoor stockholders generally will

 

22


 

allocate their aggregate tax basis in their Vista Outdoor common stock held immediately before the Distribution between their Vista Outdoor common stock and our common stock in proportion to their relative fair market values on the date of the Distribution (subject to certain adjustments). See the section entitled “The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off” beginning on page 58 of this Information Statement for more information regarding the potential tax consequences to you of the Spin-Off.

 

  We urge you to consult your tax advisor as to the specific tax consequences of the Distribution to you, including the effect of any U.S. federal, state, local or foreign tax laws and of changes in applicable tax laws.

 

Relationship with Vista Outdoor After the Spin-Off

We intend to enter into several agreements with Vista Outdoor related to the Spin-Off, which will govern the relationship between Vista Outdoor and us up to and after completion of the Spin-Off and allocate between Vista Outdoor and us various assets, liabilities, rights and obligations. These agreements include:

 

   

a Separation and Distribution Agreement that will set forth Vista Outdoor’s and our agreements regarding the principal actions that both parties will take in connection with the Spin-Off and aspects of our relationship following the Spin-Off;

 

   

a Transition Services Agreement pursuant to which Vista Outdoor and we will provide each other with specified services on a transitional basis to help ensure an orderly transition following the Spin-Off;

 

   

a Tax Matters Agreement that will govern the respective rights, responsibilities and obligations of Vista Outdoor and us after the Spin-Off with respect to all tax matters and will include restrictions to preserve the tax-free status of the Distribution; and

 

   

an Employee Matters Agreement that will address employment, compensation and benefits matters, including the allocation and treatment of assets and liabilities relating to employees and compensation and benefits plans and programs in which our employees participate.

 

  In addition to the above agreements, we are also currently party to, or intend to enter into, various other agreements with Vista Outdoor and its subsidiaries that are intended to continue post-Distribution subject to their existing terms or terms and conditions to be negotiated and agreed to, and we do not consider these agreements to be material to Vista Outdoor and its subsidiaries. We describe these arrangements in greater detail under the section entitled “Certain Relationships and Related-Party Transactions” beginning on page 140 of this Information Statement and describe some of the risks of these arrangements under the section entitled “Risk Factors—Risks Relating to the Spin-Off” beginning on page 43 of this Information Statement.

 

Dividend Policy

We intend to retain future earnings for use in the operation of our business and to fund future growth, including through acquisitions. We do not anticipate paying any dividends on our common stock for the foreseeable future. See the section entitled “Dividend Policy” beginning on page 64 of this Information Statement for more information.

 

Transfer Agent

Computershare Trust Company, N.A., which we also refer to as “Computershare” in this Information Statement.

 

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Risk Factors

Our business faces both general and specific risks and uncertainties. Our business also faces risks relating to the Spin-Off. Following the Spin-Off, we will also face risks associated with being an independent, publicly-traded company. Accordingly, you should read carefully the information set forth under the section entitled “Risk Factors” beginning on page 30 of this Information Statement.

 

24


Summary of Historical and Unaudited Pro Forma Condensed Combined Financial Data

The following tables set forth summary combined financial data as of June 25, 2023, March 31, 2023 and March 31, 2022 and for the three months ended June 25, 2023 and June 26, 2022 and the years ended March 31, 2023, March 31, 2022 and March 31, 2021 that have been derived from the combined financial statements and the unaudited pro forma condensed combined financial statements, which are included elsewhere in this Information Statement.

For each of the periods presented, we were a wholly owned subsidiary of Vista Outdoor. The summary historical combined financial data does not necessarily reflect what our results of operations and financial position would have been if we had operated as an independent, publicly-traded company during the periods presented. In addition, our summary historical combined financial data does not reflect changes that we expect to experience in the future as a result of our separation from Vista Outdoor, including changes in the financing, operations, cost structure and personnel needs of our business. Further, the summary historical combined financial data includes allocations of certain Vista Outdoor corporate expenses. We believe the assumptions and methodologies underlying the allocation of these expenses are reasonable. However, such expenses may not be indicative of the actual level of expense that we would have incurred if we had operated as an independent, publicly-traded company or of the costs expected to be incurred in the future. Accordingly, the historical results should not be relied upon as an indicator of our future performance.

The summary unaudited pro forma condensed combined income statement data has been prepared to give effect to the Pro Forma Transactions (as defined in the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 66 of this Information Statement) as if the Pro Forma Transactions had occurred or became effective as of April 1, 2022, the beginning of our most recently completed fiscal year. The summary unaudited pro forma combined condensed balance sheet data has been prepared to give effect to the Pro Forma Transactions as though the Pro Forma Transactions had occurred as of June 25, 2023, our latest balance sheet date. The summary pro forma financial data does not purport to represent what our financial position and results of operations would have been had the Spin-Off occurred on the dates indicated and is not necessarily indicative of our future financial position and future results of operations. In addition, the summary pro forma financial data is provided for illustrative and informational purposes only. The pro forma adjustments are based on available information and assumptions we believe are reasonable; however, such adjustments are subject to change.

 

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The summary historical and pro forma financial data presented below should be read in conjunction with our combined financial statements, and the accompanying notes thereto, the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 88 of this Information Statement, and the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 66 of this Information Statement.

 

    Three months ended     Years ended March 31,  
     Pro Forma      Historical      Pro Forma      Historical
(Amounts in thousands)   June 25,
2023
    June 25,
2023
    June 26,
2022
          2023                  2023                 2022                2021      

Results of Operations:

             
Sales, net (a)   $ 316,598     $ 321,443     $ 296,339     $ 1,468,092     $ 1,339,378     $  1,322,497     $  1,119,615  

Cost of sales

    221,872       226,717       203,831       1,037,070       962,587       925,041       798,192  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

Gross profit

    94,726       94,726       92,508       431,022       376,791       397,456       321,423  
             

Operating expenses:

             

Research and development

    10,364       10,364       6,126       37,761       36,652       21,304       16,531  

Selling, general, and administrative

    89,659       89,659       74,676       383,429       333,923       273,731       205,450  

Impairment of goodwill and intangibles

                      374,355       374,355              
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)     (5,297     (5,297     11,706       (364,523     (368,139     102,421       99,442  

Other income (expense)

    (541     (541           1,424       2,124              

Interest income (expense)

    42       42             173       173       1       5  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes     (5,796     (5,796     11,706       (362,926     (365,842     102,422       99,447  

Income tax (provision) benefit

    438       438       (2,556     28,702       29,181       (24,045     6,943  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

  $ (5,358   $ (5,358   $ 9,150     $ (334,224   $ (336,661   $ 78,377     $ 106,390  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

 

 

             

Other Data:

             

Adjusted EBITDA (b)

    $ 18,610     $ 30,028       $ 85,008     $ 162,393     $ 137,650  

Adjusted EBITDA margin

      5.8%       10.1%         6.3%       12.3%       12.3%  
             

Sales by Segment:

             

Performance Sports

  $ 118,965     $ 123,810     $ 139,458     $ 524,497     $ 541,999     $ 641,031     $ 511,328  

Action Sports

    116,397       116,397       90,057       601,717       495,862       401,984       364,453  

Outdoor Recreation (c)

    81,236       81,236       66,824       341,878       301,517       279,482       243,834  
             

Cash Flow Data:

             
Cash provided by (used for) operating activities     $ 63,067     $ (14,393     $ 63,810     $ (30,925   $ 167,285  
Cash used for investing activities       (3,325     (2,472       (774,418     (558,535     (10,284
Cash (used for) provided by financing activities       (45,307     17,415         719,190       595,045       (157,638

Capital expenditures

      (3,445     (2,515       (12,872     (13,099     (10,363

(a) Includes related-party sales of $4,845 and $4,355 for the three months ended June 25, 2023 and June 26, 2022, respectively, and $17,502, $15,767 and $13,847 for the fiscal years ended March 31, 2023, 2022 and 2021, respectively.

(b) Adjusted EBITDA does not reflect the estimated dis-synergies arising from Outdoor Products operating as a standalone public company following the Spin-Off.

(c) Represents our All Other category of our operating segments and brands. See Note 17, Operating Segment Information, to the audited combined financial statements included elsewhere in this Information Statement for further information regarding our segments.

 

26


     As of  
     Pro Forma      Historical  
     June 25, 2023      June 25, 2023      March 31, 2023      March 31, 2022  

Balance Sheet Data:

                                   

Cash and cash equivalents

   $ 30,409      $ 30,409      $ 15,541      $ 7,280  

Net current assets

     422,275        420,547        460,029        378,909  

Net property, plant, and equipment

     69,019        69,019        71,344        53,015  

Total assets

     1,954,863        1,950,811        1,950,526        1,554,161  

Non-GAAP Operating Performance Measures

Adjusted EBITDA is defined as Net income before other income (expense), interest, taxes and depreciation and amortization, adjusted for transaction and transition costs, inventory step-up expense, contingent consideration, post-acquisition compensation, executive transition costs, planned separation costs, goodwill and intangibles impairment and restructuring. We calculated “Adjusted EBITDA margin” as Adjusted EBITDA divided by Sales, net. Adjusted EBITDA and Adjusted EBITDA margin are not measures of financial performance under accounting principles generally accepted in the United States (“GAAP”). Accordingly, these measures should not be considered as a substitute for net income or other income data prepared in accordance with GAAP. Our management uses Adjusted EBITDA and Adjusted EBITDA margin to evaluate the operating performance of our business, to aid in period-to-period comparability, for planning and forecasting purposes and to measure results against forecasts. Our management believes that Adjusted EBITDA and Adjusted EBITDA margin may provide useful information to investors regarding our results of operations for the foregoing reasons and because securities analysts, investors and other interested parties frequently use Adjusted EBITDA and Adjusted EBITDA margin as performance measures. Because Adjusted EBITDA and Adjusted EBITDA margin excludes some, but not all, items that affect net income and may vary among companies, our Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similarly titled measures of other companies. The following sets forth a net income to Adjusted EBITDA and Adjusted EBITDA margin reconciliation for the periods presented:

 

(amounts in thousands)   Three months ended June 25, 2023  
Adjusted EBITDA by segment:   Performance
Sports
    Action
Sports
    Outdoor
Recreation
(b)
    Corporate
and other
reconciling
items
    Total  

 

 

 

 

 

Net Income (loss) (a)

  $ 7,728     $ (2,033   $ 1,401     $ (12,454   $ (5,358

Other expense, net

                      541       541  

Interest income, net

                      (42     (42

Income tax benefit

                      (438     (438

Depreciation and amortization

    5,584       7,887       4,108       25       17,604  

Transition costs (1)

                      3,002       3,002  

Post-acquisition compensation (4)

                      1,405       1,405  

Executive transition costs (5)

                      488       488  

Planned separation costs (6)

                      593       593  

Restructuring (8)

                      815       815  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 13,312     $ 5,854     $ 5,509     $ (6,065   $ 18,610  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         

Sales, net

  $     123,810     $     116,397     $     81,236       $     321,443  

Adjusted EBITDA margin

    10.8%       5.0%       6.8%         5.8%  

 

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(amounts in thousands)    Three months ended June 26, 2022  
Adjusted EBITDA by segment:    Performance
Sports
     Action
Sports
    Outdoor
Recreation
(b)
     Corporate
and other
reconciling
items
    Total  

 

  

 

 

 

Net Income (loss) (a)

   $ 24,406      $ 2,657     $ 623      $ (18,536   $ 9,150  

Income tax provision

                         2,556       2,556  

Depreciation and amortization

     5,743        3,006       3,058        96       11,903  

Transaction costs (1)

                         109       109  

Post-acquisition compensation (4)

                         4,332       4,332  

Planned separation costs (6)

                         1,978       1,978  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 30,149      $ 5,663     $ 3,681      $ (9,465   $ 30,028  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
            

Sales, net

   $ 139,458      $ 90,057     $ 66,824        $ 296,339  

Adjusted EBITDA margin

     21.6%        6.3%       5.5%          10.1%  
(amounts in thousands)    Year Ended March 31, 2023  
     Performance
Sports
     Action
Sports
    Outdoor
Recreation
(b)
     Corporate
and other
reconciling
items
    Total  
  

 

 

 

Net Income (loss) (a)

   $ 59,883      $ (2,073   $ 3,268        (397,739   $ (336,661

Other income, net

                         (2,124     (2,124

Interest income, net

                         (173     (173

Income tax benefit

                         (29,181     (29,181

Depreciation and amortization

     22,766        25,205       14,857        55       62,883  

Transaction and transition costs (1)

                         13,081       13,081  

Inventory step-up expense (2)

                         9,528       9,528  

Contingent consideration (3)

                         (27,120     (27,120

Post-acquisition compensation (4)

                         6,863       6,863  

Executive transition costs (5)

                         2,540       2,540  

Planned separation costs (6)

                         1,944       1,944  

Goodwill and intangibles impairment (7)

                         374,355       374,355  

Restructuring (8)

                         9,073       9,073  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 82,649      $ 23,132     $ 18,125      $ (38,898   $ 85,008  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
            

Sales, net

   $     541,999      $     495,862     $     301,517        $ 1,339,378  

Adjusted EBITDA margin

     15.2%        4.7%       6.0%          6.3%  

 

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(amounts in thousands)   Year Ended March 31, 2022  
Adjusted EBITDA by segment:   Performance
Sports
         Action     
Sports
    Outdoor
 Recreation 
(b)
    Corporate
and other
 reconciling 
items
          Total        

 

 

 

 

 

Net Income (loss) (a)

  $ 113,042     $ 34,925     $ 16,527     $ (86,117   $ 78,377  

Interest income, net

                      (1     (1

Income tax provision

                      24,045       24,045  

Depreciation and amortization

    17,934       11,874       10,083       2,046       41,937  

Transaction and transition costs (1)

                      6,323       6,323  

Inventory step-up expense (2)

                      1,991       1,991  

Contingent consideration (3)

                      734       734  

Post-acquisition compensation (4)

                      8,987       8,987  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $     130,976     $ 46,799     $ 26,610     $ (41,992   $ 162,393  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         

Sales, net

  $ 641,031     $     401,984     $     279,482     $     $   1,322,497  

Adjusted EBITDA margin

    20.4%       11.6%       9.5%         12.3%  
(amounts in thousands)   Year Ended March 31, 2021  
Adjusted EBITDA by segment:   Performance
Sports
         Action     
Sports
    Outdoor
 Recreation 
(b)
    Corporate
and other
 reconciling 
items
          Total        

 

 

 

 

 

Net Income (loss) (a)

  $ 72,317     $ 38,099     $ 27,526     $ (31,552   $ 106,390  

Interest income, net

                      (5     (5

Income tax benefit

                      (6,943     (6,943

Depreciation and amortization

    14,193       11,917       9,479       2,214       37,803  

Transaction and transition costs (1)

                      405       405  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 86,510     $ 50,016     $ 37,005     $ (35,881   $ 137,650  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
         

Sales, net

  $     511,328     $     364,453     $     243,834     $     $   1,119,615  

Adjusted EBITDA margin

    16.9%         13.7%       15.2%         12.3%  

 

(a) We do not calculate GAAP net income (loss) at the segment level. Segment net income does not include interest expense, income tax provision or other expense, as all these expenses are recorded at corporate. We have reconciled consolidated net income (loss) to adjusted EBITDA.
(b) Represents our operating segments and brands in the All Other category. See Note 17, Operating Segment Information, to the audited combined financial statements included elsewhere in this Information Statement for further information regarding our segments.
(1) Transaction costs, including accounting, legal and advisor fees, and transition costs, in each case incurred in connection with possible and completed transactions.
(2) Cost of goods sold related to the fair value step-up in inventory allocated from the Foresight Sports, Stone Glacier, Fox Racing and Simms Fishing acquisitions.
(3) Non-cash expenses of the change in the estimated fair value of the contingent consideration payable related to our QuietKat, Fiber Energy, Stone Glacier and Fox Racing acquisitions.
(4) Post-acquisition compensation expense related to the Venor, QuietKat, Foresight Sports and Stone Glacier acquisitions.
(5) Executive transition costs for severance, executive search fees and related costs for the transition of our CEO and General Counsel, who departed the Company during the fourth quarter of fiscal year 2023.
(6) Costs associated with the Spin-Off, including restructuring, severance, retention, advisory and legal fees.
(7) Impairment of goodwill and indefinite-lived intangible assets. See Note 11, Goodwill and Intangible Assets, to the audited combined financial statements included elsewhere in this Information Statement for further information regarding our segments.
(8) Restructuring costs related to an over $50 million cost reduction and earnings improvement program, which includes severance and asset impairments related to product line reassessments, office closures and headcount reductions across our brands and corporate teams.

 

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RISK FACTORS

You should carefully consider the following risks and other information in this Information Statement in evaluating Outdoor Products and Outdoor Products common stock. Any of the following risks and uncertainties could materially adversely affect our business, financial condition and results of operations. The following risks have generally been separated into three groups: risks relating to our business, risks relating to the Spin-Off and risks relating to our common stock.

Risks Relating to Our Business

We may not be able to successfully implement the acquisition component of our growth strategy, particularly if we are unable to raise the capital necessary to finance acquisitions.

Our business strategy includes growth through acquisitions. We regularly evaluate possible acquisition candidates. We may fail to identify attractive acquisition candidates, be unable to raise sufficient capital to compete for acquisition targets or may be unable to reach acceptable terms for proposed acquisitions. If we are unable to complete acquisitions in the future, our ability to grow our business at our anticipated rate will be impaired. We may also incur costs pursuing acquisitions that do not close, which could significantly impact our financial condition or results of operations.

Historically, an important source of funds for our acquisitions has been cash generated by the Sporting Products segment of Vista Outdoor. Following the completion of the Spin-Off, our ability to fund acquisitions will depend on our ongoing ability to independently generate cash from operations and obtain additional capital on acceptable terms. Our ability to generate sufficient positive cash flows from operations to support our desired acquisition growth strategy is subject to many risks and uncertainties, including future economic trends and conditions, demand for our products and other risks and uncertainties related to our business. Moreover, potential acquisitions may require us to issue additional shares of common stock or obtain new debt financing in order to supplement cash available from our operations. Adequate financing may not be available on terms acceptable to us or at all. In addition, equity financing could result in dilution to existing stockholders, and debt financing could include terms that restrict our ability to operate our business or pursue other opportunities and could subject us to meaningful debt service obligations.

Additionally, our success depends in part on our ability to successfully integrate the business and operations of companies that we acquire. We cannot assure you that the expected benefits of any future acquisitions or other transactions will be realized. After any acquisition, unforeseen issues and/or costs could arise that adversely affect our anticipated returns or that are otherwise not recoverable as an adjustment to the purchase price. Even after careful integration efforts, actual results of operations may vary significantly from initial estimates due to a variety of factors, including general economic conditions affecting the market for our products. We may also engage in other strategic business transactions, that, likewise, could result in unanticipated costs and difficulties, may not achieve intended results and may require significant time and attention from management.

Risks may also include potential delays in adopting our financial and managerial controls and reporting systems and procedures, greater than anticipated costs and expenses related to the integration of the acquired business with our business, potential unknown liabilities associated with the acquired company, employee retention, challenges inherent in effectively managing an increased number of employees in diverse locations and the challenge of creating uniform standards, controls, procedures, policies and information systems. These and other risks relating to our acquisitions could have an adverse effect on our business, financial condition or results of operations.

General economic conditions may adversely affect our business, results of operations and financial condition, including by creating the potential for future impairments of goodwill and other intangible and long-lived assets.

Our revenues are affected by general economic conditions and consumer confidence worldwide, but especially in the U.S. In times of economic uncertainty, consumers tend to defer expenditures for discretionary items, which affects demand for our products. Macroeconomic developments such as the global or regional effects of the war in Ukraine, high rates of inflation and related economic curtailment initiatives, the global COVID-19 pandemic or another pandemic, epidemic or infectious disease outbreak, evolving trade policies between the U.S. and international trade partners, or the occurrence of similar events in other countries that lead to uncertainty or instability in economic, political or market conditions, could adversely affect our business, operating results, financial condition and outlook. Moreover, our businesses are cyclical in nature, and their success is impacted by general economic conditions and specific economic conditions affecting the regions and markets we serve, the overall level of consumer confidence in the economy and discretionary income levels. Any substantial deterioration in general economic conditions that diminishes consumer confidence or discretionary income could reduce our sales and adversely affect our financial results.

 

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Furthermore, declining economic conditions create the potential for future impairments of goodwill and other intangible and long-lived assets that may negatively impact our financial condition or results of operations, such as the impairment charges we recorded in fiscal year 2023 to our goodwill and identifiable indefinite-lived intangible assets. The impact of weak consumer credit markets, corporate restructurings, layoffs, high unemployment rates, declines in the value of investments and residential real estate, higher fuel prices and increases in federal and state taxation can also negatively affect our results of operations.

In recent periods, sluggish economies and consumer uncertainty regarding future economic prospects in our key markets have had an adverse effect on the financial health of certain of our customers, which may in turn have a material adverse effect on our results of operations and financial condition. We extend credit to our customers for periods of varying duration based on an assessment of the customer’s financial condition, generally without requiring collateral, which increases our exposure to the risk of uncollectible receivables. In addition, we face increased risk of order reduction or cancellation when dealing with financially ailing customers or customers struggling with economic uncertainty. For example, our risk of uncollectible receivables and order cancellations has been elevated due to retail store closures that occurred during the height of the global COVID-19 pandemic, which adversely affected many of our customers, and may be further elevated in the event of bank failures or credit tightening conditions affecting our customers. We may reduce our level of business with customers and distributors experiencing financial difficulties and may not be able to replace that business with other customers, which could have a material adverse effect on our financial condition, results of operations or cash flows. In times of uncertain economic conditions there is also increased risk that inventories may not be liquidated in an efficient manner and may result in us having excess levels of inventory.

Significant supplier capacity constraints, supplier production disruptions, supplier quality issues or price increases could increase our operating costs and adversely impact the competitive positions of our products.

We rely on third-party suppliers to produce a significant majority of the products we sell. Our reliance on third-party suppliers for various product components and finished goods exposes us to volatility in the availability, quality and price of these product components and finished goods. A disruption in deliveries from our third-party suppliers, including as a result of natural disasters, public health crises or other significant catastrophic events such as the global COVID-19 pandemic or another pandemic, epidemic or infectious disease outbreak, capacity constraints, production disruptions, price increases or decreased availability of raw materials or commodities could have an adverse effect on our ability to meet our commitments to customers or increase our operating costs.

Our inability to obtain sufficient quantities of components, parts, raw materials or other supplies from independent sources necessary for the production of our products could result in reduced or delayed sales or lost orders. Any delay in or loss of sales or orders could adversely impact our results of operations. Many of the components, parts, raw materials and other supplies used in the production of our products are available only from a limited number of suppliers. We do not have long-term supply contracts with all of our suppliers. As a result, we could be subject to increased costs, supply interruptions and difficulties in obtaining materials. Our suppliers also may encounter difficulties or increased costs in obtaining the materials necessary to produce their products that we use in our products. The time lost in seeking and acquiring new sources could have an adverse effect on our business, financial condition or results of operations.

In addition, our supply contracts are generally not exclusive. As a result, supplies we may need may be allocated to other customers, such as where necessary to fulfill priority orders to the government or during times of elevated demand. Additionally, our suppliers may provide similar supplies and materials to our competitors, some of whom could potentially purchase these supplies and materials in significantly greater volume than we do. Our competitors could enter into restrictive or exclusive arrangements with these suppliers that could impair or eliminate our access to necessary supplies and materials.

Quality issues experienced by third-party suppliers could also adversely affect the quality and effectiveness of our products and result in liability and reputational harm.

Shortages of, and price increases for, labor, components, parts and other supplies, as well as commodities used in the manufacturing and distribution of our products, may delay or reduce our sales and increase our costs, thereby harming our results of operations.

We manufacture a portion of our products at plants that we operate. Shortages of, or cost increases for, labor or other inputs to the manufacturing and distribution process could delay or reduce our sales or gross margins and thereby have an adverse effect on our financial condition and results of operations.

Although we manufacture many of the components for our products, we purchase from third parties certain important components, finished goods and raw materials. The costs of these components, finished goods and raw materials are affected

 

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by increases in input costs and are, therefore, subject to price volatility caused by weather, market conditions, overall inflationary pressures and other factors that are not predictable or within our control, including natural disasters and public health crises or other significant catastrophic events, such as the global COVID-19 pandemic or another pandemic, epidemic or infectious disease outbreak.

Higher prices for electricity, natural gas, microchips, metals, transportation and fuel also increase our production and shipping costs. A significant shortage, increased prices or interruptions in the availability of these commodities and components would increase the costs of producing and delivering products to our customers and would be likely to negatively affect our earnings. Commodity costs have varied significantly during recent fiscal years and remain a volatile element of our costs.

Our business could be adversely impacted by inflation and rising interest rates.

General inflation in the U.S., Europe and other geographies has risen to levels not experienced in recent decades, which could have negative impacts on our business by increasing our operating costs and our borrowing costs as well as decreasing the disposable income available for consumers to purchase our products. In addition, recent interest rate increases aimed at curbing inflation could have a dampening effect on overall economic activity and could make it difficult for us to obtain financing at attractive rates, which could impair our ability to raise sufficient capital to execute our business plans, including our growth strategy and future acquisitions. As a result, our financial condition, results of operations and cash flows could be adversely affected.

Seasonality and weather conditions may cause our results of operations to vary from quarter to quarter.

Because many of the products we sell are used for seasonal outdoor activities, our results of operations may be significantly impacted by unseasonable weather conditions. For example, our winter sport accessories sales are dependent on cold winter weather and snowfall, and can be negatively impacted by unseasonably warm or dry weather. Conversely, sales of our spring and summer products, such as golf accessories, can be adversely impacted by unseasonably cold or wet weather. In addition, sales of our hunting accessories are highest during the fall hunting season and winter holidays. Accordingly, our sales results and financial condition will typically suffer when weather patterns or seasonal spending patterns do not conform to seasonal norms.

The seasonality of our sales may change in the future. Seasonal variations in our results of operations may reduce our cash on hand, increase our inventory levels and extend our accounts receivable collection periods. This in turn may cause us to increase our debt levels and interest expense to fund our working capital requirements.

Climate change may adversely impact our business.

There is increasing concern that a gradual increase in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere will cause significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters. Physical risks presented by climate change, including increased frequency, intensity and duration of extreme weather conditions, could, among other things, disrupt the operation of our supply chain or increase our product costs. Changes in weather patterns could also impact the types and amounts of our products that consumers purchase by adversely affecting the open spaces where consumers recreate or shortening or changing the seasons in which consumers participate in their chosen outdoor activity. Additionally, efforts to transition to a lower carbon economy could also disrupt our business, such as by increasing our product costs or increasing the costs of travel, which could affect consumer spending on outdoor recreation. As a result, the effects of climate change could have short- and long-term adverse impacts on our business and results of operations.

Our revenues and results of operations may fluctuate unexpectedly from quarter-to-quarter, which may cause our stock price to decline.

Our revenues and results of operations have fluctuated significantly in the past and may fluctuate significantly in the future due to various factors, including, but not limited to:

 

   

market acceptance of our products and services;

 

   

general economic conditions, including inflation and/or recession;

 

   

the timing of large domestic and international orders;

 

   

cancellation of existing orders;

 

32


   

the outcome of litigation;

 

   

adverse publicity surrounding our products, the safety of our products or the use of our products;

 

   

changes in our sales mix;

 

   

new product introduction costs;

 

   

high levels of retailer and distributor inventory;

 

   

complexity in our integrated supply chain;

 

   

increased raw material and/or other commodity expenses;

 

   

changes in amount and/or timing of our operating expenses;

 

   

natural disasters and public health crises or other significant catastrophic events, such as the global COVID-19 pandemic or another pandemic, epidemic or infectious disease outbreak, in markets in which we, our customers, suppliers and manufacturers operate;

 

   

changes in laws and regulations that may affect the marketability of our products;

 

   

the domestic political environment;

 

   

uncertainties related to changes in macroeconomic and/or global conditions, including as a result of the war in Ukraine and the imposition of sanctions on Russia;

 

   

risks relating to foreign trade;

 

   

tariffs;

 

   

import and export controls; and

 

   

fluctuations in currency exchange rates (particularly the Euro, the British pound, the Chinese renminbi (yuan) and the Canadian dollar).

As a result of these and other factors, we believe that period-to-period comparisons of our results of operations may not be meaningful in the short term, and our performance in a particular period may not be indicative of our performance in any future period.

Goodwill and intangible assets represent a significant portion of our total assets, and any impairment of these assets could negatively impact our results of operations and parent company equity.

Our goodwill and identifiable intangible assets consist of goodwill from acquisitions, trademarks and trade names, patented technology, customer relationships and other intangible assets. Accounting rules require the evaluation of our goodwill and indefinite-lived intangible assets for impairment at least annually or upon the occurrence of events or changes in circumstances that indicate that the assets might be impaired. Such indicators include a sustained decline in our stock price or market capitalization, adverse changes in economic or market conditions or prospects and changes in our operations.

An asset is considered to be impaired when its carrying value exceeds its fair value. If, due to declining market conditions or other factors, a significant amount of our goodwill or other identifiable intangible assets were deemed to be impaired, our business, financial condition and results of operations could be negatively affected. For example, in fiscal year 2023 we recorded impairment charges to our goodwill and identifiable indefinite-lived intangible assets. In addition, Vista Outdoor has recorded impairment charges to the goodwill and identifiable indefinite-lived intangible assets of its Outdoor Products segment in recent years prior to fiscal year 2023.

Our results of operations could be materially harmed if we are unable to accurately forecast demand for our products.

We often schedule internal production, place orders and, at times, pre-pay for products, components and materials with third-party suppliers before receiving firm orders from our customers. In addition, orders from customers are generally subject to cancellation at any time before acceptance. If we fail to accurately forecast customer demand or if orders are

 

33


cancelled before delivery, we may experience excess inventory levels or a shortage of products to deliver to our customers. Factors that could affect our ability to accurately forecast demand for our products include:

 

   

an increase or decrease in consumer demand for our products or for the products of our competitors;

 

   

our failure to accurately forecast customer acceptance of new products;

 

   

new product introductions by competitors;

 

   

changes in our relationships with customers;

 

   

changes in general market conditions or other factors, which may result in cancellations of orders or a reduction or increase in the rate of reorders placed by retailers, including as a result of natural disasters and public health crises or other significant catastrophic events, such as the global COVID-19 pandemic or another pandemic, epidemic or infectious disease outbreak;

 

   

changes in laws and regulations governing the activities for which we sell products, such as hunting and shooting sports;

 

   

weak economic conditions or consumer confidence or inflation, which could reduce demand for discretionary items such as our products; and

 

   

the domestic political environment.

Inventory levels in excess of customer demand may result in inventory write-downs and the sale of excess inventory on less favorable terms, including discounted prices or payment terms, which could have an adverse effect on our business, financial condition or results of operations. If we underestimate demand for our products, our manufacturing facilities or third-party suppliers may not be able to create products to meet customer demand, and this could result in delays in the shipment of products and lost revenues, as well as damage to our reputation and customer relationships. We may not be able to manage inventory levels successfully to meet future order and reorder requirements.

A disruption or a significant increase in the cost of our primary delivery and shipping services for our products and component parts or a significant disruption at shipping ports could have a negative impact on our business.

We use various carriers including Federal Express (“FedEx”) for ground shipments of products to our U.S. customers. We use air carriers and ocean shipping services for most of our international shipments of products. Furthermore, many of our finished goods and many of the components we use to manufacture our products are shipped to us via air carrier and shipping services. If there is any continued or additional significant interruption in service by such providers or at airports or shipping ports in the future, we may be unable to engage alternative suppliers or to receive or ship goods through alternate sites in order to deliver our products or receive finished goods or components in a timely and cost-efficient manner. As a result, we could experience manufacturing delays, increased manufacturing and shipping costs and lost sales as a result of missed delivery deadlines and product demand cycles. Any significant interruption in FedEx services, other ground carriers, air carrier services, ship services or at airports or shipping ports could have a negative impact on our business. Furthermore, if the cost of delivery or shipping services increases significantly and the additional costs cannot be covered by product pricing, our operating results could be materially adversely affected.

We face risks relating to our international business operations that could adversely affect our business, financial condition or results of operations.

Our ability to maintain the current level of operations in our existing international markets and to capitalize on growth in existing and new international markets is subject to risks associated with our doing business internationally, including:

 

   

issues related to managing international operations;

 

   

potentially adverse tax developments;

 

   

lack of sufficient protection for intellectual property in some countries;

 

   

fluctuations in currency exchange rates (particularly the Euro, the British pound, the Chinese renminbi (yuan) and the Canadian dollar);

 

   

tariffs;

 

   

import and export controls;

 

34


   

social, political and economic instability in the countries in which we operate;

 

   

changes in economic conditions;

 

   

inflation and/or recession;

 

   

uncertainties related to changes in macroeconomic and/or global conditions, including as a result of the war in Ukraine and the imposition of sanctions on Russia;

 

   

the occurrence of natural disasters, public health crises or other significant catastrophic events, such as the global COVID-19 pandemic or another pandemic, epidemic or infectious disease outbreak, in countries in which we operate;

 

   

local laws and regulations, including those governing labor, product safety and environmental protection;

 

   

changes to international treaties and regulations; and

 

   

limitations on our ability to efficiently repatriate cash from our foreign operations.

Any one or more of these risks could adversely affect our business, financial condition or results of operations.

Some of our products contain licensed, third-party technology that provides important product functionality and features. The loss of or inability to obtain and maintain any such licenses could have a material adverse effect on our business.

Some of our products contain technology licensed from third parties that provides important product functionality and features. We cannot assure you that we will have continued access to this technology. For example, if the licensing company ceases to exist, either as a result of bankruptcy, dissolution or purchase by a competitor, we may lose access to important third-party technology and may not be able to obtain replacement technology on favorable terms or at all. In addition, legal actions, such as intellectual property actions, brought against the licensing company could impact our future access to the technology. Any of these actions could negatively affect our technology licenses, thereby reducing the functionality and features of our products, and adversely affect our business, financial condition or results of operations.

Failure to attract and retain key personnel could have an adverse effect on our results of operations.

Our future success will depend in part on the continued service of key personnel and our ability to attract, retain and develop key managers, designers, sales and information technology professionals and others. Competition for experienced executives and skilled employees in some areas is high, and we may experience difficulty in recruiting and retaining employees, particularly given the Spin-Off. Any inability to attract qualified new employees or retain existing employees may have a material adverse effect on our financial condition, results of operations or cash flows.

Catastrophic events may disrupt our business.

A disruption or failure of our systems or operations in the event of a major earthquake, weather event, public health crisis (such as the global COVID-19 pandemic), cyber-attack, terrorist attack or other catastrophic event could cause delays in completing sales, providing services or performing other mission-critical functions. A catastrophic event that results in the destruction or disruption of any of our critical business or information technology systems could harm our ability to conduct normal business operations and our results of operations.

In addition, damage or disruption to our manufacturing and distribution capabilities or those of our suppliers because of a major earthquake, weather event, public health crisis, cyber-attack, terrorist attack or other catastrophic event could impair our ability or our suppliers’ ability to manufacture or sell our products. If we do not take steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, such events could have a material adverse effect on our business, financial condition or results of operations, as well as require additional resources to restore our supply chain.

Our sales are highly dependent on purchases by several large customers, and we may be adversely affected by the loss of, or any significant decline in sales to, one or more of these customers.

The U.S. retail and distribution industries serving the outdoor recreation market have become relatively concentrated. Sales to our top ten customers accounted for approximately 23%, 33% and 40% of our combined net sales in fiscal years 2023, 2022 and 2021, respectively.

 

35


No one customer contributed greater than 10% of sales in fiscal year 2023. Walmart contributed 10% and 12% of sales during fiscal years 2022 and 2021, respectively. Further consolidation in the U.S. retail industry could increase the concentration of our retail store customer base in the future.

Although we have long-established relationships with many of our customers, as is typical in the markets in which we compete, we generally do not have long-term sales agreements with our customers. As such, we are dependent on individual purchase orders. As a result, prior to acceptance these customers are able to cancel their orders, change purchase quantities from forecast volumes, delay purchases, change other terms of our business relationship or cease to purchase our products entirely. Our customers’ purchasing activity may also be impacted by general economic conditions as well as natural disasters and public health crises or other significant catastrophic events, such as the global COVID-19 pandemic or another pandemic, epidemic or infectious disease outbreak.

The loss of any one or more of our large customers or significant or numerous cancellations, reductions, delays in purchases or payments, or changes in business practices by our large customers could have an adverse effect on our business, financial condition or results of operations, including but not limited to reductions in sales volumes and profits, inability to collect receivables and increases in inventory levels.

Insolvency, credit problems or other financial difficulties that could confront our retailers or distributors could expose us to financial risk.

We sell to the large majority of retail customers on open account terms and do not require collateral or a security interest in the inventory we sell them. Consequently, our accounts receivable for our retail customers are unsecured. We also rely on third-party distributors to distribute our products to our retail and direct-to-consumer customers. Insolvency, credit problems or other financial difficulties confronting our retailers or distributors could expose us to financial risk. These actions could expose us to risks if our distributors are unable to distribute our products to our customers and/or if our retail customers are unable to pay for the products that they purchase from us in a timely matter or at all. Financial difficulties of our retailers could also cause them to reduce their sales staff, use of attractive displays, number or size of stores or the amount of floor space dedicated to our products. Any reduction in sales by, or loss of, our current retailers or customer demand, or credit risks associated with our retailers or distributors, could harm our business, results of operations and financial condition.

Competition in our industry may hinder our ability to execute our business strategy, maintain profitability or maintain relationships with existing customers.

We operate in a highly competitive industry and we compete against other manufacturers that have well-established brand names and strong market positions. Given the diversity of our product portfolio, we have various significant competitors in each of our markets, including: Hydro Flask, Contigo, Yeti, Helen of Troy and Nalgene in our Hydration vertical; Callaway, Garmin, Nikon, SkyTrak and Trackman in our Golf vertical; Schwinn, Bontrager, Smith, Specialized, Canyon, Shoei and Alpine Stars in our Action Sports vertical; Traeger, Weber, Pit Boss, Blackstone, Solo Stove and Lodge in our Outdoor Cooking vertical; Nikon, Vortex, Leupold, Feradyne, American Outdoor Brands and Good Sportsman Marketing in our Outdoor Accessories vertical; Columbia, Huk, Patagonia, Orvis and American Fishing Tackle Company in our Fishing vertical; and Kuiu, Sitka, First Lite and Mystery Ranch in our Technical Gear and Apparel vertical.

Competition in the markets in which we operate is based on a number of factors, including price, quality, product innovation, performance, reliability, styling, product features and warranties, as well as sales and marketing programs. Competition could result in price reductions, reduced profits, extensions of credit or losses or loss of market share, any of which could have a material adverse effect on our business, financial condition or results of operations. Certain of our competitors may be more diversified than us or may have financial and marketing resources that are substantially greater than ours, which may allow them to invest more heavily in intellectual property, product development and advertising. Since many of our competitors also source their products from third parties, our ability to obtain a cost advantage through sourcing is limited.

Certain of our competitors may be willing to reduce prices and accept lower profit margins or extend more credit to compete with us. Further, retailers often demand that suppliers reduce their prices on mature products, which could lead to lower margins.

Our products typically face more competition internationally where foreign competitors manufacture and market products in their respective countries, which allows those competitors to sell products at lower prices, which could adversely affect our competitiveness.

In addition, our products compete with many other outdoor products for the discretionary spending of consumers. Failure to effectively compete with these competitors or alternative products could have a material adverse effect on our performance.

 

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Our success depends upon our ability to introduce new compelling products into the marketplace and respond to customer preferences.

Our efforts to introduce new products into the marketplace may not be successful, and any new products that we introduce may not result in customer or market acceptance. We both develop and source new products and components that we believe will match customer preferences. The development of new products is a lengthy and costly process and may not result in the development of a successful product. In addition, the sourcing of our products and components is dependent, in part, on our relationships with our third-party suppliers, some of whom are also our competitors. If we are unable to maintain these relationships, we may not be able to continue to source products at competitive prices that both meet our standards and appeal to our customers. Failure to develop or source and introduce new products that consumers want to buy could decrease our sales, operating margins and market share and could adversely affect our business, financial condition or results of operations.

Even if we are able to develop or source new products, our efforts to introduce new products may be costly and ineffective. When introducing a new product, we incur expenses and expend resources to market, promote and sell the new product. New products that we introduce into the marketplace may be unsuccessful or may be less successful than our expectations for a variety of reasons, including failure to predict market demand, delays in introduction, unfavorable cost comparisons with alternative products and unfavorable performance. Significant expenses related to new products that prove to be unsuccessful for any reason will adversely affect our results of operations. In addition, inflation and rising product costs may affect our ability to provide products in a cost-effective manner and hinder us from attracting new customers.

An inability to expand our e-commerce business could reduce our future growth.

Consumers are increasingly shopping online via e-commerce retailers, and we face intense pressure to make our products readily and conveniently available via e-commerce services. Our success in participating in e-commerce depends on our ability to effectively use our marketing resources to communicate with existing and potential customers. To increase our e-commerce sales, we may need to dedicate more resources to promotional activity, which could impact our gross margin and increase our marketing expenses. We continue to enhance our direct-to-consumer e-commerce platforms, but rely to an extent on third-party e-commerce websites to sell our products, which could lead to our e-commerce customers having some control over the pricing of our products. This in turn could harm our relationships with our brick and mortar customers as they may perceive themselves to be at a disadvantage based on the e-commerce pricing of our products. We may not be able to successfully expand our e-commerce business and respond to shifting consumer traffic patterns and direct-to-consumer buying trends.

In addition, e-commerce and direct-to-consumer operations are subject to numerous risks, including implementing and maintaining appropriate technology to support business strategies; reliance on third-party computer hardware/software and service providers; data breaches; violations of federal, state and international laws, including those relating to online privacy; credit card fraud, telecommunication failures, electronic break-ins and similar disruptions; and disruptions of Internet service. Our inability to adequately respond to these risks and uncertainties or to successfully maintain and expand our direct-to-consumer business may have an adverse impact on our operating results.

We plan to continue to expand our brand recognition and product loyalty through social media and our websites. These efforts are intended to yield greater traffic to our websites and increase our direct-to-consumer revenue. By doing so, we will become, to an extent, a competitor to our customers, reducing their revenue in the process. This could lead to adverse relationships with our online and brick and mortar retail customers, which could have an adverse impact on our operating results.

Our business is highly dependent upon our brand recognition and reputation, and the failure to maintain or enhance our brand recognition or reputation would likely have an adverse effect on our business.

Our brand recognition and reputation are critical aspects of our business. We believe that maintaining and enhancing our brands as well as our reputation are critical to retaining existing customers and attracting new customers. We also believe that the importance of our brand recognition and reputation will continue to increase as competition in the markets in which we compete continues to develop.

Our future growth and profitability will depend in large part upon the effectiveness and efficiency of our advertising, promotion, public relations and marketing programs. These brand promotion activities may not yield increased revenue and the effectiveness of these activities will depend on a number of factors, including our ability to:

 

   

determine the appropriate creative message, media mix and markets for advertising, marketing and promotional initiatives and expenditures;

 

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identify the most effective and efficient level of spending in each market, medium and specific media vehicle; and

 

   

effectively manage marketing costs, including creative and media expenses, in order to maintain acceptable customer acquisition costs.

We may implement new marketing and advertising strategies with significantly higher costs than our current channels, which could adversely affect our results of operations. Implementing new marketing and advertising strategies could also increase the risk of devoting significant capital and other resources to endeavors that do not prove to be cost effective. We also may incur marketing and advertising expenses significantly in advance of the time we anticipate recognizing revenue associated with such expenses, and our marketing and advertising expenditures may not generate sufficient levels of brand awareness or result in increased revenue. Even if our marketing and advertising expenses result in increased revenue, the increase in revenue might not offset our related marketing and advertising expenditures. If we are unable to maintain our marketing and advertising channels on cost-effective terms or replace or supplement existing marketing and advertising channels with similarly or more cost-effective channels, our marketing and advertising expenses could increase substantially, our customer base could be adversely affected and our business, financial condition or results of operations could be adversely impacted.

Competitors have imitated and attempted to imitate, and will likely continue to imitate or attempt to imitate, our products and technology, particularly in countries overseas where counterfeiting is more prevalent. If we are unable to protect or preserve our brand image and proprietary rights, our business may be harmed. As we increase our sales overseas, we may experience increased counterfeiting of our products.

In addition, certain of our products and brands benefit from endorsements and support from particular outdoor enthusiasts, athletes or other celebrities, and those products and brands may become personally associated with those individuals. As a result, our brands or sales of the endorsed products could be materially and adversely affected if any of those individuals’ images, reputations or popularity were to be negatively impacted.

Use of social media to disseminate negative commentary and boycotts may adversely impact our business.

There has been a substantial increase in the use of social media platforms, including blogs, social media websites and other forms of internet-based communications, which allow individuals access to a broad audience of consumers and other interested persons. Negative commentary regarding us or our brands may be posted on social media platforms at any time and may have an adverse impact on our reputation, business or relationships with third parties, including suppliers, customers, investors and lenders. Consumers value readily available information and often act on such information without further investigation and without regard to its accuracy or context. The harm may be immediate without affording us an opportunity for redress or correction.

Social media platforms also provide users with access to such a broad audience that collective action, such as boycotts, can be more easily organized. Such actions could have an adverse effect on our business, financial condition, results of operations and/or cash flows.

We manufacture, source and sell products that create exposure to potential product liability, warranty liability or personal injury claims and litigation.

Some of our products are used in applications and situations that involve risk of personal injury and death. Our products expose us to potential product liability, warranty liability and personal injury claims and litigation relating to the use or misuse of our products including allegations of defects in manufacturing, defects in design, deceptive advertising, a failure to warn of dangers inherent in the product or activities associated with the product, negligence and strict liability. If successful, such claims could have a material adverse effect on our business.

Defects in our products could reduce demand for our products and result in a decrease in sales and market acceptance and damage to our reputation.

Complex components and assemblies used in our products may contain undetected defects that are subsequently discovered at any point in the life of the product. In addition, we obtain many of our products and component parts from third-party suppliers and may not be able to detect defects in such products or component parts until after they are sold. Defects in our products may result in a loss of sales, recall expenses, delay in market acceptance, damage to our reputation and increased warranty costs, which could have a material adverse effect on our business, financial condition or results of operations.

Although we maintain product liability insurance in amounts that we believe are reasonable, we may not be able to maintain such insurance on acceptable terms, if at all, in the future and product liability claims may exceed the amount of our

 

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insurance coverage. In addition, our reputation may be adversely affected by such claims, whether or not successful, including potential negative publicity about our products.

We may incur substantial litigation costs to protect our intellectual property, and if we are unable to protect our intellectual property, we may lose our competitive advantage. We may be subject to intellectual property infringement claims, which could cause us to incur litigation costs and divert management attention from our business.

Our future success depends in part upon our ability to protect our intellectual property. Our protective measures, including patents, trademarks, copyrights, trade secret protection and internet identity registrations, may prove inadequate to protect our proprietary rights and market advantage. The right to stop others from misusing our trademarks and service marks in commerce depends, to some extent, on our ability to show evidence of enforcement of our rights against such misuse in commerce. Our failure to stop the misuse by others of our trademarks and service marks may lead to our loss of trademark and service mark rights, brand loyalty and notoriety among our customers and prospective customers. The scope of any patent to which we have or may obtain rights may not prevent others from developing and selling competing products. In addition, our patents may be held invalid upon challenge, or others may claim rights in, or ownership of, our patents. Moreover, we may become subject to litigation with parties that claim, among other matters, that we infringed their patents or other intellectual property rights. The defense and prosecution of patent and other intellectual property claims are both costly and time-consuming and could result in a material adverse effect on our business and financial position.

Also, any intellectual property infringement claims against us, with or without merit, could be costly and time-consuming to defend and divert our management’s attention from our business. If our products were found to infringe a third party’s proprietary rights, we could be forced to enter into costly royalty or licensing agreements in order to be able to continue to sell our products or discontinue use of the protected technology. Such royalty and licensing agreements may not be available on terms acceptable to us or at all. Rights holders may demand payment for past infringements or force us to accept costly license terms or discontinue use of protected technology or works of authorship.

We may become involved in litigation regarding patents and other intellectual property rights. Other companies, including our competitors, may develop intellectual property that is similar or superior to our intellectual property, duplicate our intellectual property or design around our patents, and may have or obtain patents or other proprietary rights that would prevent, limit or interfere with our ability to make, use or sell our products. Effective intellectual property protection may be unavailable or limited in some foreign countries in which we sell products or from which competing products may be sold.

Unauthorized parties may attempt to copy or otherwise use aspects of our intellectual property and products that we regard as proprietary. Our means of protecting our proprietary rights in the U.S. or abroad may prove to be inadequate, and competitors may be able to develop similar intellectual property independently. If our intellectual property protection is insufficient to protect our intellectual property rights, we could face increased competition in the markets for our products.

Should any of our competitors file patent applications or obtain patents that claim inventions also claimed by us, we may choose to participate in an interference proceeding to determine the right to a patent for these inventions because our business could be harmed if we fail to enforce and protect our intellectual property rights. Even if the outcome is favorable, an interference proceeding could result in substantial costs to us and disrupt our business.

In the future, we also may need to file lawsuits to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Any such litigation, whether successful or unsuccessful, could result in substantial costs and diversion of resources, which could have a material adverse effect on our business, financial condition or results of operations.

We are subject to extensive regulation that imposes significant compliance costs on us, and that could result in fines, penalties, business disruptions or other costs and liabilities.

Like other global manufacturers and distributors of consumer products, we are required to comply with a wide variety of federal, state and international laws, rules and regulations, including those related to consumer products and consumer protection, advertising and marketing, labor and employment, data protection and privacy, intellectual property, workplace safety, the environment, the import and export of products and tax. See the section entitled “Business—Regulatory Matters” beginning on page 85 of this Information Statement for a description of the various laws and regulations to which our business is subject. Our failure to comply with applicable federal, state and local laws and regulations may result in our being subject to claims, lawsuits, fines, business disruptions and adverse publicity that could have a material adverse effect on our business, results of operations or financial condition. These laws, rules and regulations currently impose significant compliance requirements on our business, and more restrictive laws, rules and regulations may be adopted in the future.

 

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Increased focus and expectations on climate change and other Environmental, Social and Governance (“ESG”) matters may impose additional costs on us or could have a material adverse effect on our business, financial condition and results of operations and damage our reputation.

Increased focus and expectations on ESG are emerging trends with governmental and non-governmental organizations, stockholders, retail customers, end consumers, communities and other stakeholders. These trends have led to, among other things, increased public and private social accountability reporting requirements relating to labor practices, climate change, human trafficking, diversity and inclusion, employee well-being and other ESG matters and greater demands on our packaging and products. The increased focus on ESG matters may also lead to increased regulation and customer, stockholder and consumer demands that may hinder access to or increase the cost of capital as investors reallocate capital or decide not to commit capital as a result of their assessment of companies’ ESG practices or reporting, or could require us to incur additional costs or make changes to our operations to comply with new regulations or address these demands. We expect that these trends will continue. If we are unable to adequately respond to, or we are not perceived as adequately responding to, existing or new requirements or demands, customers and consumers may choose to purchase products from another company or a competitor. Increased requirements and costs to comply with these requirements, such as climate change regulations and international accords, may also cause disruptions in or higher costs associated with manufacturing or distributing our products. ESG matters are currently reported in line with a variety of different reporting frameworks and by a number of sustainability ratings agencies, and these frameworks and ratings providers may not be the same as those evaluated by our stakeholders, may emphasize different aspects of ESG practices and performance or may not accurately reflect our ESG performance in certain respects. Any real or perceived failure to achieve our ESG goals or a perception of our failure to act responsibly or to effectively respond to new, or changes in, legal or regulatory requirements relating to ESG matters could adversely affect our business, financial condition, results of operations and reputation.

Failure to comply with the U.S. Foreign Corrupt Practices Act or other applicable anti-corruption legislation, as well as export controls and trade sanctions, could result in fines or criminal penalties.

The international nature of our business exposes us to trade sanctions and other restrictions imposed by the U.S. and other governments. The U.S. Departments of Justice, Commerce and Treasury and other agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against companies for violations of the Foreign Corrupt Practices Act (“FCPA”), export controls, anti-boycott provisions and other federal statutes, sanctions and regulations and, increasingly, similar or more restrictive foreign laws, rules and regulations, which may also apply to us. In recent years, U.S. and foreign governments have increased their oversight and enforcement activities with respect to these laws and we expect the relevant agencies to continue to increase their enforcement efforts.

In foreign countries in which we have operations, a risk exists that our associates, contractors or agents could, in contravention of our policies, engage in business practices prohibited by U.S. laws and regulations applicable to us, such as the FCPA, or the laws and regulations of other countries, such as the UK Bribery Act. Prior to the completion of the Spin-Off, we will adopt a corporate policy that will prohibit such business practices. Nevertheless, we remain subject to the risk that one or more of our associates, contractors or agents, including those based in or from countries where practices that violate such U.S. laws and regulations or the laws and regulations of other countries may be customary, will engage in business practices that are prohibited by our policies, circumvent our compliance programs and, by doing so, violate such laws and regulations. Any such violations, even if prohibited by our internal policies, could adversely affect our business or financial performance and our reputation.

By virtue of these laws and regulations we may be obliged to limit our business activities, we may incur costs for compliance programs and we may be subject to enforcement actions or penalties for noncompliance. A violation of these laws, sanctions or regulations could result in restrictions on our exports, civil and criminal fines or penalties and could adversely impact our business, financial condition or results of operations.

If our efforts to protect the security of personal information about our customers and consumers are unsuccessful and unauthorized access to that personal information is obtained, or we experience a significant disruption in our computer systems or a cybersecurity breach, such as the ransomware attack experienced by Fox Racing in April 2021 prior to being acquired by us, we could experience an adverse effect on our operations, we could be subject to costly government enforcement action and private litigation and our reputation could suffer.

Our operations, especially our retail operations, involve the storage and transmission of our customers’ and consumers’ proprietary information, such as credit card and bank account numbers, and security breaches could expose us to a risk of loss of this information, government enforcement action and litigation and possible liability. Our payment services

 

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may be susceptible to credit card and other payment fraud schemes, including unauthorized use of credit cards, debit cards or bank account information, identity theft or merchant fraud.

If our security measures are breached as a result of third-party action, employee error, malfeasance or otherwise, and as a result, someone obtains unauthorized access to our customers’ and consumers’ data, our reputation may be damaged, our business may suffer, and we could incur significant liability. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of our security occurs, the public perception of the effectiveness of our security measures could be harmed and we could lose customers and consumers, which could adversely affect our business. Prior to being acquired by us, Fox Racing experienced a ransomware attack in April 2021. The attack impacted Fox Racing’s backup systems, and Fox Racing incurred significant expense to restore access to its systems. Following the attack, Fox Racing notified the eleven individuals (located in the United Kingdom, Spain and Canada) who were affected along with regulators in the applicable jurisdictions. Although Fox Racing has taken steps to enhance its security systems in response to this incident, we cannot assure that such steps will be sufficient to prevent similar attacks in the future.

We also rely extensively on our computer systems to manage our ordering, pricing, inventory replenishment and other processes. Our systems could be subject to damage or interruption from various sources, including power outages, computer and telecommunications failures, computer viruses, cyber security breaches, vandalism, severe weather conditions, catastrophic events and human error, and our disaster recovery planning cannot account for all eventualities. If our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or replace them, and we may experience loss of critical data and interruptions or delays in our ability to perform critical functions, which could adversely affect our business, financial condition or results of operations.

Failure to comply with data privacy and security laws and regulations could adversely affect our operating results and business.

A growing number of federal, state and international data privacy and security laws and regulations have been enacted that govern the collection, use, disclosure, transfer, storage, disposal and protection of sensitive personal information, such as social security numbers, financial information and other personal information. For example, several U.S. territories and all 50 states now have data breach laws that require timely notification to individual victims, and at times regulators, if a company has experienced the unauthorized access or acquisition of sensitive personal data. Other state laws include the California Consumer Privacy Act (the “CCPA”), which gives California residents certain privacy rights in the collection and disclosure of their personal information and requires businesses to make certain disclosures and take certain other acts in furtherance of those rights. Additionally, the California Privacy Rights Act (the “CPRA”), which became effective January 1, 2023, revised and significantly expanded the scope of the CCPA. The CPRA created a new California data protection agency authorized to implement and enforce the CCPA and the CPRA, which could result in increased enforcement. Other states have considered and/or enacted similar privacy laws. For example, Virginia’s privacy laws went into effect on January 1, 2023, Colorado’s and Connecticut’s privacy laws went into effect on July 1, 2023 and Utah’s privacy law goes into effect December 31, 2023. We will continue to monitor and assess the impact of these state laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class action litigation and carry significant potential liability for our business.

Outside of the U.S., data protection laws, including the E.U. General Data Protection Regulation (the “GDPR”), which also forms part of the law of England and Wales, Scotland and Northern Ireland by virtue of section 3 of the European Union (Withdrawal) Act 2018 and as amended by the Data Protection, Privacy and Electronic Communications (Amendments etc.) (EU Exit) Regulations 2019 (SI 2019/419) (the “UK GDPR”), also apply to some of our operations. Legal requirements in many countries relating to the collection, storage, processing and transfer of personal data continue to evolve. The GDPR imposes, among other things, data protection requirements that include strict obligations and restrictions on the ability to collect, analyze and transfer EU personal data, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances and possible substantial fines for any violations. Other governmental authorities around the world are considering and, in some cases, have enacted, similar privacy and data security laws. Failure to comply with federal, state and international data protection laws and regulations could result in government enforcement actions (which could include substantial civil and/or criminal penalties), private litigation and adverse publicity and could negatively affect our operating results and business.

In addition to the risk that we fail to comply with one or more of these laws and regulations, we are likely to incur substantial costs monitoring and implementing compliance with the array of privacy and security legal regimes to which we are subject. Moreover, many of the laws and regulations in this area are relatively new and their interpretations are uncertain

 

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and subject to change. Combined with the frequency with which new privacy and security laws are introduced globally, this means that we may be required to make changes to our operations or practices in an effort to comply with them. Such changes may increase our costs and reduce our revenue. We may also face inconsistent legal requirements across the various jurisdictions in which we operate, further raising both costs of compliance and the likelihood that we will fail to satisfy all of our legal requirements.

Changes in U.S. and global trade policies, including new and potential tariffs on goods we import or on products we export to other countries, could increase our cost of goods or limit our access to export markets.

In recent years, protectionist trade policies have been increasing around the world, including in the U.S. It is unclear what additional tariffs, duties, border taxes or other similar assessments on imports might be implemented in the future and what effects these changes may have on retail markets or our operating performance. Additional protectionist trade legislation in either the U.S. or foreign countries, including changes in the current tariff structures, export or import compliance laws or other trade policies, could reduce our ability to sell our products in foreign markets, the ability of foreign customers to purchase our products and our ability to import components, parts and products from foreign suppliers. In particular, increases in tariffs on goods imported into the U.S. could increase the cost to us of such merchandise (whether imported directly or indirectly) and cause increases in the prices at which we sell such merchandise to our customers, which could materially adversely affect the financial performance of our business.

The global economy has been negatively impacted by the war in Ukraine. Furthermore, governments in the U.S., the United Kingdom and the European Union have imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia. Although we have no operations in Russia or Ukraine, we may experience shortages in materials and increased costs for transportation, energy and raw materials due in part to the negative impact of the war in Ukraine on the global economy. Further escalation of geopolitical tensions related to war, including increased trade barriers or restrictions on global trade, could result in, among other things, cyberattacks, supply disruptions, lower consumer demand and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain. In addition, the effects of the ongoing conflict could heighten many of the other risks to our business described in this Information Statement.

Our results of operations could be impacted by unanticipated changes in tax provisions or exposure to additional income tax liabilities.

Our business operates in many locations under government jurisdictions that impose income taxes. Changes in domestic or foreign income tax laws and regulations, or their interpretation, could result in higher or lower income tax rates assessed or changes in the taxability of certain revenues or the allowance of deduction of certain expenses, thereby affecting our income tax expense and profitability. In addition, audits by income tax authorities could result in unanticipated increases in our income tax expense.

In particular, we are affected by the impact of changes to tax laws or related authoritative interpretations. A change in authoritative interpretation to the U.S. tax code, related tax accounting guidance and regulatory guidance as well as state tax implications or other legislation changes may cause variability in our future tax rate.

Fluctuations in foreign currency exchange rates may adversely affect our financial results.

During the fiscal year ended March 31, 2023, approximately 29% of our revenue was generated from sales outside the United States. Revenues from foreign operations (and the related expense) are often transacted in foreign currencies or valued based on a currency other than U.S. dollars. For the fiscal year ended March 31, 2023, less than 10% of the Company’s total revenue was denominated in a foreign currency. For the purposes of financial reporting, this revenue is translated into U.S. dollars. Resulting gains and losses from foreign currency fluctuations are therefore included in our combined financial statements. As a result, when the U.S. dollar strengthens against certain foreign currencies, including the Euro, the British pound, the Chinese renminbi (yuan), the Canadian dollar and other major currencies, our reportable revenue in U.S. dollars generated from sales made in foreign currencies may decrease substantially. As a result, we are exposed to foreign currency exchange rate fluctuations, which could have an adverse effect on our financial condition, results of operations and cash flows.

We may need to raise capital to fund our ongoing working capital, capital expenditures and other financing requirements, and we cannot be sure that financing will be available on attractive terms or at all.

In addition to raising capital to finance the acquisition component of our growth strategy, we will need to fund our ongoing working capital, capital expenditures and other financing requirements through cash flows from operations and new

 

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sources of financing. Our ability to obtain future financing will depend on, among other things, our financial condition and results of operations as well as on the condition of the capital markets or other credit markets at the time we seek financing. Increased volatility and disruptions in the financial markets, including as a result of natural disasters and public health crises or other significant catastrophic events, such as the global COVID-19 pandemic or another pandemic, epidemic or infectious disease outbreak, or geopolitical events, such as the war in Ukraine, could make it more difficult and more expensive for us to obtain financing. We cannot assure you that we will have access to the capital markets or other credit markets on terms we find acceptable or at all.

Variable rate indebtedness would subject us to interest rate risk, which could cause our debt service obligations to increase significantly.

In connection with the Spin-Off, we expect to enter into a revolving credit facility with variable rates of interest that will expose us to interest rate risks. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remains the same, and our net income and cash flows will correspondingly decrease. In addition, we will be exposed to the risk of rising interest rates to the extent that we fund our operations with other short-term or variable-rate borrowings. Even if we enter into interest rate swaps in the future in order to reduce future interest rate volatility, we may not fully mitigate our future interest rate risk. As a result, our financial condition could be materially negatively affected.

If our estimates or judgments relating to our critical accounting policies prove to be incorrect or change significantly, our results of operations could be harmed.

Preparing our financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the amounts reported in our combined financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of sales and expenses that are not readily apparent from other sources. Our results of operations may be harmed if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors and could result in a decline in our stock price.

Risks Relating to the Spin-Off

We may be unable to achieve some or all of the benefits that we expect to achieve from the Spin-Off, which could materially adversely affect our business, financial condition and results of operations.

We believe that, as an independent, publicly-traded company, we will be able to, among other things:

 

   

achieve enhanced strategic focus with resources to support our specific operational needs and growth drivers;

 

   

establish tailored capital allocation philosophies that are better suited to support our distinctive business model and long-term goals;

 

   

enhance our ability to attract and retain top talent that is ideally suited to execute our strategic and operational objectives;

 

   

offer a differentiated and compelling investment opportunity based on our particular business model; and

 

   

further cement our reputation as the acquirer of choice through continued M&A in the outdoor recreation products marketplace.

However, we may not achieve these and other anticipated benefits for a variety of reasons, including, among other things:

 

   

the Spin-Off will require a significant amount of management’s time and effort, which may divert management’s attention from operating and growing our business;

 

   

following the Spin-Off, we will no longer be able to use cash flow from Vista Outdoor’s Sporting Products business to fund the growth of Outdoor Products;

 

   

following the Spin-Off, we may be more susceptible to market fluctuations, the risk of takeover by third parties and other adverse events because our business will be less diversified than Vista Outdoor’s businesses prior to the Spin-Off;

 

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the Spin-Off may require us to incur significant costs, including accounting, tax, legal and other professional services costs, costs related to retaining and attracting business and operational relationships with customers, suppliers and other counterparties, recruiting and relocation costs associated with hiring key senior management personnel who are new to our company, costs to retain key management personnel, tax costs and costs to shared systems and other dis-synergy costs; and

 

   

under the terms of the Tax Matters Agreement that we will enter into with Vista Outdoor, we will be restricted from taking certain actions that could cause the Spin-Off or other related transactions to fail to qualify as a tax-free transaction and these restrictions may limit us for a period of time from pursuing certain strategic transactions and equity issuances or engaging in other transactions that might increase the value of our business.

If we fail to achieve some or all of the benefits that we expect to achieve as an independent company, or do not achieve them in the time we expect, our business, financial condition and results of operations could be materially adversely affected.

If the Distribution does not qualify as a transaction that is tax-free for U.S. federal income tax purposes, Vista Outdoor or holders of Vista Outdoor common stock who receive shares of Outdoor Products common stock in connection with the Spin-Off could be subject to significant tax liability.

Completion of the Spin-Off is conditioned on Vista Outdoor’s receipt of a written opinion of Cravath, Swaine & Moore LLP to the effect that, subject to the limitations specified therein and the accuracy of and compliance with certain representations, warranties and covenants, the Distribution will qualify as a distribution to which Section 355 and Section 361 of the Code apply.

The opinion of counsel will not address any U.S. state or local or foreign tax consequences of the Spin-Off. The opinion will assume that the Spin-Off will be completed according to the terms of the Separation and Distribution Agreement and will rely on the facts as stated in the Separation and Distribution Agreement, the Tax Matters Agreement, the other ancillary agreements, this Information Statement and certain other documents. In addition, the opinion will be based on certain representations as to factual matters from, and certain covenants by, Vista Outdoor and us. The opinion cannot be relied on if any of the assumptions, representations or covenants is incorrect, incomplete or inaccurate or is violated in any material respect.

The opinion of counsel is not binding on the Internal Revenue Service, which we refer to as the “IRS,” or the courts, and we cannot assure you that the IRS or a court will not take a contrary position. Vista Outdoor has not requested, and does not intend to request, a ruling from the IRS regarding the U.S. federal income tax consequences of the Spin-Off.

If the Distribution were determined not to qualify as a distribution to which Section 355 and Section 361 of the Code apply, U.S. Holders (as defined in the section entitled “The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off—Consequences to U.S. Holders of Vista Outdoor Common Stock” beginning on page 58 of this Information Statement) of Vista Outdoor stock could be subject to tax liability. In this case, each U.S. Holder who receives our common stock in the Distribution would generally, for U.S. federal income tax purposes, be treated as receiving a distribution in an amount equal to the fair market value of our common stock received, which would generally result in (i) a taxable dividend to the U.S. Holder to the extent of that U.S. Holder’s pro rata share of Vista Outdoor’s current and accumulated earnings and profits; (ii) a reduction in the U.S. Holder’s basis (but not below zero) in Vista Outdoor common stock to the extent the amount received exceeds the stockholder’s share of Vista Outdoor’s earnings and profits; and (iii) a taxable gain from the exchange of Vista Outdoor common stock to the extent the amount received exceeds the sum of the U.S. Holder’s share of Vista Outdoor’s earnings and profits and the U.S. Holder’s basis in its Vista Outdoor common stock. For more information, see below and the section entitled “The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off” beginning on page 58 of this Information Statement.

We could have an indemnification obligation to Vista Outdoor if the Distribution were determined not to qualify for non-recognition treatment for U.S. federal income tax purposes, which could materially adversely affect our business, financial condition and results of operations.

If it were determined that the Distribution did not qualify as a distribution to which Section 355 and Section 361 of the Code apply, we could, under certain circumstances, be required to indemnify Vista Outdoor for the resulting taxes and related expenses. Any such indemnification obligation could materially adversely affect our business, financial condition and results of operations.

In addition, Section 355(e) of the Code generally creates a presumption that the Distribution would be taxable to Vista Outdoor, but not to stockholders, if we or our stockholders were to engage in transactions that result in a 50% or greater

 

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change by vote or value in the ownership of our stock during the four-year period beginning on the date that begins two years before the date of the Distribution, unless it were established that such transactions and the Distribution were not part of a plan or series of related transactions giving effect to such a change in ownership. If the Distribution were taxable to Vista Outdoor due to such a 50% or greater change in ownership of our stock, Vista Outdoor would recognize gain equal to the excess of the fair market value of our common stock distributed to Vista Outdoor stockholders over Vista Outdoor’s tax basis in our common stock and we generally would be required to indemnify Vista Outdoor for the tax on such gain and related expenses. Any such indemnification obligation could materially adversely affect our business, financial condition and results of operations. For more information, see the section entitled “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor—Tax Matters Agreement” beginning on page 142 of this Information Statement.

We intend to agree to numerous restrictions to preserve the non-recognition treatment of the Distribution, which may reduce our strategic and operating flexibility.

We intend to agree in the Tax Matters Agreement to covenants and indemnification obligations that address compliance with Section 355(e) of the Code. These covenants and indemnification obligations may limit our ability to pursue strategic transactions or engage in new businesses or other transactions that may otherwise maximize the value of our business, and might discourage or delay a strategic transaction that our stockholders may consider favorable. For more information, see the section entitled “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor—Tax Matters Agreement” beginning on page 142 of this Information Statement.

We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent, publicly-traded company, and we may experience increased costs after the Spin-Off.

We have historically operated as part of Vista Outdoor’s corporate organization, and Vista Outdoor has provided us with various corporate and operational functions. Following the Spin-Off, Vista Outdoor will have no obligation to provide us with assistance other than the transition services described under the section entitled “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor—Transition Services Agreement” beginning on page 142 of this Information Statement. These services do not include every service that we have received from Vista Outdoor in the past, and Vista Outdoor is only obligated to provide these services for limited periods following completion of the Spin-Off. The agreements related to such transition services and to the Spin-Off more generally will be negotiated prior to the Spin-Off at a time when our business will still be operated by Vista Outdoor. It is possible that we might have been able to achieve more favorable terms if the circumstances differed. We will rely on Vista Outdoor to satisfy its performance and payment obligations under the Transition Services Agreement and other agreements related to the Spin-Off, and if Vista Outdoor does not satisfy such obligations, we could incur operational difficulties or losses that could materially adversely affect our business, financial condition and results of operations.

Accordingly, following the Spin-Off, we will need to provide internally or obtain from unaffiliated third parties the services we currently receive from Vista Outdoor. These services include sales, marketing, procurement, information technology, e-commerce, finance, accounting, tax, human resources, legal, communications, investor relations and other general, administrative and operational functions, the effective and appropriate performance of which is critical to our operations. We may be unable to replace these services in a timely manner or on terms and conditions as favorable as those we receive from Vista Outdoor. Because our business has historically operated as part of the larger Vista Outdoor organization, we may be unable to successfully establish the infrastructure or implement the changes necessary to operate independently, or may incur additional costs. If we fail to obtain the quality of services necessary to operate effectively or incur greater costs in obtaining these services, our business, financial condition and results of operations could be materially adversely affected.

In addition, following the Spin-Off, pursuant to the Transition Services Agreement that we will enter into with Vista Outdoor, we will provide to Vista Outdoor, on a transitional basis, certain services or functions transferred to us in connection with the Spin-Off that we and Vista Outdoor have historically shared. See the section entitled “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor—Transition Services Agreement” beginning on page 142 of this Information Statement. Performing our obligations under the Transition Services Agreement may require significant time and resources, and may divert management’s attention from the operation of the Outdoor Products business. The Transition Services Agreement is generally intended to be entered into on arm’s-length terms similar to those that would be agreed with an unaffiliated third party such as a buyer in a sale transaction, but it is possible that the costs to Outdoor Products of providing the transition services will exceed the fees paid to us by Vista Outdoor. Vista Outdoor may also allege that we have failed to perform our obligations to Vista Outdoor under the Transition Services Agreement, which may subject us to claims and liability.

 

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We have no operating history as an independent, publicly-traded company, and our historical and pro forma financial data is not necessarily representative of the results we would have achieved if we had been an independent, publicly-traded company and may not be a reliable indicator of our future results.

We derived the historical and pro forma financial data included in this Information Statement from Vista Outdoor’s consolidated financial statements, and this data does not necessarily reflect the results of operations and financial position we would have achieved as an independent, publicly-traded company during the periods presented, or those that we will achieve in the future. This is primarily because of the following factors:

 

   

Our working capital requirements and capital for general corporate purposes, including capital expenditures and acquisitions, have been historically satisfied through Vista Outdoor’s corporate-wide cash management practices. Following the Spin-Off, our results of operations may be more volatile, and we may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, strategic relationships or arrangements, which may or may not be available and may be more costly.

 

   

Prior to the Spin-Off, we operated as part of Vista Outdoor’s broader corporate organization, and Vista Outdoor or one of its affiliates performed various corporate and operational functions for us, such as sales, marketing, procurement, information technology, e-commerce, finance, accounting, tax, human resources, legal, communications, investor relations and other general, administrative and operational functions. Our historical financial data reflects allocations of corporate expenses from Vista Outdoor for these and similar functions. These allocations may not reflect the costs we will incur for similar services in the future as an independent, publicly-traded company.

 

   

We will enter into transactions with Vista Outdoor that did not exist prior to the Spin-Off, such as Vista Outdoor’s and our provision of transition services to each other (which are described in more detail under the section entitled “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor—Transition Services Agreement” beginning on page 142 of this Information Statement), which will cause us to incur new costs for the transition services provided by Vista Outdoor to us and for the transition services provided by us to Vista Outdoor.

 

   

Our historical financial data does not reflect changes that we expect to experience in the future as a result of our separation from Vista Outdoor. As part of Vista Outdoor, we enjoyed certain benefits from Vista Outdoor’s operating diversity, size, purchasing power, credit rating, borrowing leverage and available capital for investments, and we will lose these benefits after the Spin-Off. As an independent entity, we may be unable to purchase goods, services and technologies, such as insurance and health care benefits, or access capital markets, on terms as favorable to us as those we obtained as part of Vista Outdoor prior to the Spin-Off.

 

   

Following the Spin-Off, the cost of capital for our business may be higher than Vista Outdoor’s cost of capital prior to the Spin-Off.

 

   

As an independent public company, we will separately become subject to the reporting requirements of the Securities Exchange Act of 1934, which we refer to as the “Exchange Act,” and the Sarbanes-Oxley Act of 2002 and will be required to prepare our standalone financial statements according to the rules and regulations established by the SEC. These reporting and other obligations will place significant demands on our management and on administrative and operational resources. Moreover, to comply with these requirements, we anticipate that we will need to migrate our systems, including information technology systems, implement additional financial and management controls, reporting systems and procedures, and hire additional accounting and finance staff. We expect to incur additional annual expenses related to these requirements, and those expenses may be significant. If we are unable to upgrade our financial and management controls, reporting systems, information technology and procedures in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that apply to reporting companies under the Exchange Act could be impaired.

Other significant changes may occur in our cost structure, management, financing and business operations as a result of operating as an independent, publicly-traded company. As such, our historical financial data may not be indicative of our future performance as an independent, publicly-traded company. For additional information about our past financial performance and the basis of presentation of our financial statements, see the sections entitled “Summary—Summary of Historical and Unaudited Pro Forma Condensed Combined Financial Data,” “Unaudited Pro Forma Condensed Combined Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on pages 25, 66 and 88, respectively, of this Information Statement and our combined financial statements and the notes thereto included elsewhere in this Information Statement.

 

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The terms of the new revolving credit facility we expect to enter into concurrently with or prior to the Spin-Off will restrict our current and future operations, particularly our ability to incur debt that we may need to fund initiatives in response to changes in our business, the industries in which we operate, the economy and governmental regulations.

We expect that the terms of the new revolving credit facility we expect to enter into concurrently with or prior to the Spin-Off will include a number of restrictive covenants that impose significant operating and financial restrictions on us and our subsidiaries and limit our ability to engage in actions that may be in our long-term best interests. These may restrict our and our subsidiaries’ ability to take some or all of the following actions:

 

   

incur or guarantee additional indebtedness or sell disqualified or preferred stock;

 

   

pay dividends on, make distributions in respect of, repurchase or redeem capital stock;

 

   

make investments or acquisitions;

 

   

sell, transfer or otherwise dispose of certain assets, including accounts receivable;

 

   

create liens;

 

   

enter into agreements restricting the ability to pay dividends or make other intercompany transfers;

 

   

consolidate, merge, sell or otherwise dispose of all or substantially all of our or our subsidiaries’ assets;

 

   

enter into transactions with affiliates;

 

   

prepay, repurchase or redeem certain kinds of indebtedness;

 

   

issue or sell stock of our subsidiaries; and/or

 

   

significantly change the nature of our business.

As a result of all of these restrictions, we may be:

 

   

limited in how we conduct our business and pursue our strategy;

 

   

unable to raise additional debt financing to operate during general economic or business downturns; or

 

   

unable to compete effectively or to take advantage of new business opportunities.

A breach of any of these covenants, if applicable, could result in an event of default under the terms of this indebtedness. If an event of default occurs, the lenders would have the right to accelerate the repayment of such debt and the event of default or acceleration may result in the acceleration of the repayment of any other of our debt to which a cross-default or cross-acceleration provision applies. Furthermore, the lenders of this indebtedness may require that we pledge our assets as collateral as security for our repayment obligations. If we were unable to repay any amount of this indebtedness when due and payable, the lenders could proceed against the collateral that secures this indebtedness. In the event our creditors accelerate the repayment of our borrowings, we may not have sufficient assets to repay such indebtedness, which could materially adversely affect our results of operations and financial condition.

The Spin-Off may expose us to potential liabilities arising out of state and U.S. federal fraudulent conveyance laws and legal dividend requirements.

If Vista Outdoor files for bankruptcy or is otherwise determined or deemed to be insolvent under U.S. federal bankruptcy laws, a court could deem the Spin-Off or certain internal restructuring transactions undertaken by Vista Outdoor in connection with the Spin-Off to be a fraudulent conveyance or transfer. Fraudulent conveyances or transfers are defined to include transfers made or obligations incurred with the actual intent to hinder, delay or defraud current or future creditors or transfers made or obligations incurred for less than reasonably equivalent value when the debtor was insolvent, or that rendered the debtor insolvent, inadequately capitalized or unable to pay its debts as they become due. A court could void the transactions or impose substantial liabilities upon us, which could materially adversely affect our business, financial condition and results of operations. Among other things, a court could require our stockholders to return to Vista Outdoor some or all of the shares of our common stock issued in the Spin-Off, or provide Vista Outdoor with a claim for money damages against Outdoor Products in an amount equal to the difference between the consideration received by Vista Outdoor and the fair market value of Outdoor Products at the time of the Spin-Off.

 

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The distribution of our common stock is also subject to review under state corporate distribution statutes. Under the Delaware General Corporation Law, which we refer to as the “DGCL,” a corporation may only pay dividends to its stockholders either (i) out of its surplus (net assets minus capital) or (ii) if there is no such surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Although the Vista Outdoor Board intends to make the distribution out of Vista Outdoor’s surplus and will receive an opinion that Vista Outdoor has adequate surplus under Delaware law to declare the dividend of Outdoor Products common stock in connection with the distribution, we cannot assure you that a court will not later determine that some or all of the distribution to Vista Outdoor stockholders was unlawful.

We may have been able to receive better terms from unaffiliated third parties than the terms we receive in our agreements with Vista Outdoor.

We will enter into agreements with Vista Outdoor related to our separation from Vista Outdoor, including the Separation and Distribution Agreement, the Transition Services Agreement, the Tax Matters Agreement and the Employee Matters Agreement, while we are still part of Vista Outdoor. Accordingly, these agreements may not reflect terms that would have resulted from arm’s-length negotiations among unaffiliated third parties. The terms of these agreements will relate to, among other things, allocations of assets, liabilities, rights, indemnifications and other obligations between Vista Outdoor and us. With respect to certain agreements, including the Transition Services Agreement, we may have received better terms from unaffiliated third parties. For more information, see the section entitled “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor” beginning on page 140 of this Information Statement.

The transfer to us by Vista Outdoor of certain contracts, permits and other assets and rights may require the consents or approvals of, or provide other rights to, third parties and governmental authorities. If such consents or approvals are not obtained, we may not be entitled to the benefit of such contracts, permits and other assets and rights, which could increase our expenses or otherwise harm our business and financial performance.

The Separation and Distribution Agreement will provide that certain contracts, permits and other assets and rights are to be transferred from Vista Outdoor or its subsidiaries to us or our subsidiaries in connection with the Spin-Off. The transfer of certain of these contracts, permits and other assets and rights may require consents or approvals of third parties or governmental authorities or provide other rights to third parties. In addition, in some circumstances, we and Vista Outdoor are joint beneficiaries of contracts, and we and Vista Outdoor may need the consents of third parties in order to split, separate, replace, novate or replicate the existing contracts or the relevant portion of the existing contracts. While we anticipate entering into new contracts in place of transferring such contracts, we may not be successful in doing so in many instances.

Some parties may use consent requirements or other rights to terminate contracts or obtain more favorable contractual terms from us, which, for example, could take the form of price increases, require us to expend additional resources in order to obtain the services or assets previously provided under the contract, or require us to make arrangements with new third parties or obtain letters of credit or other forms of credit support. If we do not obtain required consents or approvals, we may be unable to obtain the benefits, permits, assets and contractual commitments that are intended to be allocated to us as part of our separation from Vista Outdoor, and we may be required to seek alternative arrangements to obtain services and assets which may be more costly and of lower quality. The termination, modification, replacement or replication of these contracts or permits or the failure to timely complete the transfer or separation of these contracts or permits could materially adversely affect our business, financial condition and results of operations.

Until the Distribution occurs, the Vista Outdoor Board may change the terms of the Spin-Off in ways that may be unfavorable to us.

Until the Distribution occurs, we will continue to be a wholly owned subsidiary of Vista Outdoor. Accordingly, Vista Outdoor has the discretion to determine and change the terms of the Spin-Off, including the establishment of the Record Date and the Distribution Date, and these changes could be unfavorable to us. In addition, the Vista Outdoor Board may decide not to proceed with the Spin-Off at any time prior to the Distribution.

No vote of Vista Outdoor stockholders is required in connection with the Spin-Off. As a result, if the Spin-Off occurs and you do not want to receive our common stock in the Distribution, your sole recourse will be to divest yourself of your Vista Outdoor common stock prior to the Record Date or in the “regular-way” trading market during the period prior to the Distribution.

No vote of Vista Outdoor stockholders is required in connection with the Spin-Off. Accordingly, if the Distribution occurs and you do not want to receive our common stock in the Distribution, your only recourse will be to divest yourself of

 

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your Vista Outdoor common stock prior to the Record Date or in the “regular-way” trading market during the period prior to the Distribution.

Risks Relating to Our Common Stock

No market for our common stock currently exists, and an active trading market may not develop or be sustained after the Spin-Off. Following the Spin-Off our stock price may fluctuate significantly.

There is currently no public market for our common stock. We intend to apply to list our common stock on the NYSE. We anticipate that before the Distribution Date, trading of shares of our common stock will begin on a “when-issued” basis and this trading will continue up to but not including the Distribution Date. However, an active trading market for our common stock may not develop as a result of the Spin-Off or may not be sustained in the future. The lack of an active market may make it more difficult for stockholders to sell our shares and could lead to our share price being depressed or volatile.

We cannot predict the prices at which our common stock may trade after the Spin-Off. The market price of our common stock may fluctuate widely, depending on many factors, some of which may be beyond our control, including:

 

   

actual or anticipated fluctuations in our business, financial condition and results of operations due to factors related to our business;

 

   

the loss of business from one or more significant customers;

 

   

competition in the outdoor recreation industry and our ability to compete successfully;

 

   

success or failure of our business strategies;

 

   

our ability to retain and recruit qualified personnel;

 

   

our quarterly or annual earnings, or those of other companies in our industry;

 

   

our level of indebtedness, our ability to make payments on or service our indebtedness and our ability to obtain financing as needed;

 

   

announcements by us or our competitors of significant acquisitions or dispositions;

 

   

changes in accounting standards, policies, guidance, interpretations or principles;

 

   

the failure of securities analysts to cover our common stock after the Spin-Off;

 

   

changes in earnings estimates by securities analysts or our ability to meet those estimates;

 

   

the operating and stock price performance of other comparable companies;

 

   

investor perception of our company and the outdoor recreation industry;

 

   

overall market fluctuations and geopolitical conditions;

 

   

results from any material litigation or government investigation;

 

   

changes in laws and regulations (including tax laws and regulations) affecting our business; and

 

   

general economic conditions, credit and capital market conditions and other external factors.

Furthermore, our business profile and market capitalization may not fit the investment objectives of some Vista Outdoor stockholders and, as a result, these Vista Outdoor stockholders may sell their shares of our common stock after the Distribution. See “—Substantial sales of our common stock may occur in connection with the Spin-Off, which could cause our stock price to decline” beginning on page 49 of this Information Statement. Low trading volume for our stock, which may occur if an active trading market does not develop, among other reasons, would amplify the effect of the above factors on our stock price volatility.

Substantial sales of our common stock may occur in connection with the Spin-Off, which could cause our stock price to decline.

Vista Outdoor stockholders receiving shares of our common stock in the Distribution generally may sell those shares immediately in the public market. It is possible that some Vista Outdoor stockholders, including some of its larger stockholders,

 

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will sell their shares of our common stock received in the Distribution, particularly if, for reasons such as our business profile, we do not fit their investment objectives, or, in the case of index funds, if we are not a participant in the index in which they are investing. The sales of significant amounts of our common stock or the perception in the market that this will occur may decrease the market price of our common stock.

We do not anticipate paying any dividends on our common stock for the foreseeable future, and as a result, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.

We do not anticipate paying any dividends on our common stock for the foreseeable future. We intend to retain future earnings for use in the operation of our business and to fund future growth, including through acquisitions. Following the Spin-Off, the timing, declaration, amount and payment of future dividends, if any, to stockholders will fall within the discretion of our Board. Our Board’s decisions regarding the payment of future dividends, if any, will depend on many factors, including our financial condition, earnings, capital requirements of our operating subsidiaries, covenants associated with any then-existing indebtedness, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by our Board. As a result, capital appreciation, if any, of our common stock will be your sole source of potential gain for the foreseeable future.

Provisions of our Amended and Restated Certificate of Incorporation, our Amended and Restated Bylaws and Delaware law may prevent or delay an acquisition of our company, which could decrease the trading price of our common stock.

Several provisions of our Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and Delaware law may discourage, delay or prevent a merger or acquisition that stockholders may consider favorable. These include provisions that:

 

   

until the fourth annual meeting of our stockholders following the Distribution Date, classify our directors into three classes with staggered terms;

 

   

allow our Board to authorize for issuance, without stockholder approval, preferred stock, the rights of which will be determined at the discretion of the Board and, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that our Board does not approve;

 

   

prohibit our stockholders from taking action by written consent and require that stockholder action must take place at a duly called annual or special meeting of our stockholders;

 

   

establish how stockholders may present proposals or nominate directors for election at meetings of our stockholders;

 

   

grant exclusive privilege (subject to certain limited exceptions) to our directors, and not our stockholders, to fill vacancies on our Board;

 

   

provide that only our Board, the Chair of our Board, our Chief Executive Officer or (in the absence of the Chief Executive Officer) the President are entitled to call a special meeting of our stockholders; and

 

   

limit our ability to enter into business combination transactions with certain stockholders.

These and other provisions of our Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and Delaware law may discourage, delay or prevent certain types of transactions involving an actual or a threatened acquisition or change in control of us, including unsolicited takeover attempts, even though the transaction may offer our stockholders the opportunity to sell their shares of our common stock at a price above the prevailing market price. For more information, see the section entitled “Description of Our Capital Stock—Certain Provisions of Delaware Law, Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws” beginning on page 147 of this Information Statement.

Our Amended and Restated Certificate of Incorporation will designate the Court of Chancery of the State of Delaware as the exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, and the federal district courts of the United States as the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act of 1933, which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers or employees.

Our Amended and Restated Certificate of Incorporation will provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf (other than actions arising under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act), (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to

 

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any provision of the DGCL, our Amended and Restated Certificate of Incorporation or our Amended and Restated Bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine, in each case except for any claim where the Court of Chancery does not have jurisdiction over indispensable parties named as defendants, any claim that is subject to the exclusive jurisdiction of another court or forum and any claim for which the Court of Chancery does not have subject matter jurisdiction.

Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our Amended and Restated Certificate of Incorporation will provide that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder, and therefore our Amended and Restated Certificate of Incorporation will further provide that the exclusive forum provision does not apply to actions arising under the Exchange Act or the rules and regulations thereunder. Investors cannot waive compliance with federal securities laws and the rules and regulations thereunder.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to these provisions. These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees. The enforceability of similar choice of forum provisions in other companies’ charter documents has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable. For example, in December 2018, the Court of Chancery of the State of Delaware determined that a provision stating that federal district courts of the United States are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act is not enforceable. Although this decision was reversed by the Delaware Supreme Court in March 2020, courts in other states may still find these provisions to be inapplicable or unenforceable. If a court were to find the exclusive forum provisions in our Amended and Restated Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could adversely affect our results of operations.

Your percentage of ownership in Outdoor Products may be diluted in the future.

Your percentage of ownership in Outdoor Products may be diluted in the future because of the settlement or exercise of equity-based awards that we expect to grant to our directors, officers and other employees. Prior to completion of the Spin-Off, we expect to approve an equity incentive plan that will provide for the grant of equity-based awards to our directors, officers and other employees, including equity grants that are expected to be made upon completion of the Spin-Off. For more information, see the section entitled “Executive Compensation—Anticipated Compensation Programs” beginning on page 129 of this Information Statement. In addition, we may issue equity as all or part of the consideration paid for acquisitions and strategic investments that we may make in the future or as necessary to finance our ongoing operations.

In addition, our Amended and Restated Certificate of Incorporation will authorize us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over our common stock with respect to dividends and distributions, as our Board may generally determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our common stock. For example, we could grant the holders of preferred stock the right to elect some number of the members of our Board in all events or upon the happening of specified events, or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences that we could assign to holders of preferred stock could affect the residual value of our common stock. For more information, see the section entitled “Description of Our Capital Stock” beginning on page 146 of this Information Statement.

 

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This Information Statement and other materials we have filed or will file with the SEC contain or incorporate by reference statements which are “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements give our current expectations or forecasts of future events. Forward-looking statements can be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are based on management’s current expectations and assumptions regarding our business and performance, the economy and other future conditions and forecasts of future events, circumstances and results. Consequently, no forward-looking statements can be guaranteed. Actual results may vary materially. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, except in the normal course of our public disclosure obligations and practices. We caution you not to place undue reliance on any forward-looking statements. Numerous risks, uncertainties and other factors could cause our actual results to differ materially from expectations described in such forward-looking statements, including the following:

 

   

our ability to successfully implement our growth strategy, including our ability to raise capital necessary to finance acquisitions, realize expected benefits from acquisitions and integrate acquired businesses;

 

   

general economic and business conditions in the United States and our markets outside the United States, including increasing inflation rates, the war in Ukraine and the imposition of sanctions on Russia, the COVID-19 pandemic or another pandemic, conditions affecting employment levels, consumer confidence and spending, conditions in the retail environment, and other economic conditions affecting demand for our products and the financial health of our customers;

 

   

supplier capacity constraints, production or shipping disruptions or quality or price issues affecting our operating costs;

 

   

the supply, availability and costs of raw materials and components;

 

   

increases in commodity, energy and production costs;

 

   

seasonality and weather conditions;

 

   

the impacts of climate change on our supply chain, product costs and consumer behavior;

 

   

impairment of our goodwill and intangible assets;

 

   

reductions in or unexpected changes in or our inability to accurately forecast demand for outdoor recreation products;

 

   

disruptions in the service or significant increases in the cost of our primary delivery and shipping services for our products and components or a significant disruption at shipping ports;

 

   

risks associated with diversification into new international and commercial markets, including regulatory compliance;

 

   

our ability to take advantage of growth opportunities in international and commercial markets;

 

   

our ability to obtain and maintain licenses to third-party technology;

 

   

our ability to attract and retain key personnel;

 

   

disruptions caused by catastrophic events;

 

   

risks associated with our sales to large customers, including unexpected cancellations, delays and other changes to purchase orders;

 

   

risks associated with retailer or distributor insolvency, credit problems or other financial difficulties;

 

   

our competitive environment;

 

   

our ability to adapt our products to changes in technology, the marketplace and customer preferences;

 

   

our ability to expand our e-commerce business;

 

   

our ability to maintain and enhance brand recognition and reputation;

 

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others’ use of social media to disseminate negative commentary about us or our products and boycotts;

 

   

the outcome of contingencies, including with respect to litigation and other proceedings relating to intellectual property, product liability, warranty liability, personal injury and environmental remediation;

 

   

our ability to comply with extensive federal, state and international laws, rules and regulations;

 

   

the additional costs and risks associated with increased focus and expectations on ESG matters;

 

   

risks associated with cybersecurity and other industrial and physical security threats;

 

   

failure to comply with data privacy and security laws and regulations;

 

   

changes in the current tariff structures;

 

   

changes in tax rules or pronouncements;

 

   

foreign currency exchange rates and fluctuations in those rates (particularly the Euro, the British pound, the Chinese renminbi (yuan) and the Canadian dollar);

 

   

capital market volatility and the availability of financing;

 

   

interest rate risk;

 

   

risks related to incorrect estimates or judgments relating to our critical accounting policies;

 

   

our ability to achieve the benefits that we expect to achieve from the Spin-Off;

 

   

the tax-free treatment of the Distribution;

 

   

our ability to make the changes necessary to operate as an independent, publicly-traded company;

 

   

the failure of Vista Outdoor to satisfy its performance and payment obligations under the Transition Services Agreement and other agreements related to the Spin-Off; and

 

   

the other risks and uncertainties detailed in the section entitled “Risk Factors” beginning on page 30 of this Information Statement.

We cannot assure you that the Spin-Off or any other transactions described in this Information Statement will in fact be consummated in the manner described or at all. The above list of factors is not exhaustive. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see the discussion under the section entitled “Risk Factors” beginning on page 30 of this Information Statement. Any forward-looking statements made by us in this Information Statement speak only as of the date on which they are made. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether as a result of new information, subsequent events or otherwise, except in the normal course of our public disclosure obligations and practices.

 

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THE SPIN-OFF

Background

On May 5, 2022, Vista Outdoor announced that its Board of Directors, which we refer to as the “Vista Outdoor Board,” approved preparations for the separation of Vista Outdoor’s Outdoor Products and Sporting Products segments into two independent, publicly-traded companies via a spin-off of the Outdoor Products segment.

To effect the separation, first, Vista Outdoor will undertake the Internal Transactions described under the section entitled “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor—Separation and Distribution Agreement” beginning on page 140 of this Information Statement. Vista Outdoor will subsequently distribute all of Outdoor Products’s common stock to Vista Outdoor stockholders, and Outdoor Products, holding the Outdoor Products Business, will become an independent, publicly-traded company.

Prior to completion of the Spin-Off, we intend to enter into a Separation and Distribution Agreement and several other agreements with Vista Outdoor related to the Spin-Off. These agreements will govern the relationship between Vista Outdoor and us up to and after completion of the Spin-Off and allocate between Vista Outdoor and us various assets, liabilities and obligations, including those related to employees and compensation and benefits plans and programs and tax-related assets and liabilities. See the section entitled “Certain Relationships and Related-Party Transactions” beginning on page 140 of this Information Statement for more detail. No approval of Vista Outdoor stockholders is required in connection with the Spin-Off, and Vista Outdoor stockholders will not have any appraisal rights in connection with the Spin-Off.

Completion of the Spin-Off is subject to the satisfaction, or the waiver by the Vista Outdoor Board, of a number of conditions. If the Vista Outdoor Board waives any condition prior to the effectiveness of the Registration Statement on Form 10 of which this Information Statement is a part, and the result of such waiver is material to Vista Outdoor stockholders, we will file an amendment to the Registration Statement to revise the disclosure in this Information Statement accordingly. In the event that the Vista Outdoor Board waives a condition after the Registration Statement on Form 10 of which this Information Statement is a part becomes effective and such waiver is material to Vista Outdoor stockholders, we will file a Current Report on Form 8-K describing the change. In addition, Vista Outdoor has the right not to complete the Spin-Off if, at any time, the Vista Outdoor Board determines, in its sole and absolute discretion, that the Spin-Off is not in the best interests of Vista Outdoor or its stockholders, or is otherwise not advisable. See the section entitled “The Spin-Off—Conditions to the Spin-Off” beginning on page 62 of this Information Statement for more detail.

Reasons for the Spin-Off

The Vista Outdoor Board has regularly reviewed the businesses that comprise Vista Outdoor to confirm that Vista Outdoor’s assets are being put to use in a manner that is in the best interests of Vista Outdoor and its stockholders. Accordingly, the Vista Outdoor Board and management’s decision to pursue the Spin-Off is a result of a series of strategic discussions that began in 2021 which focused on a review of Vista Outdoor’s businesses, operations and value creation opportunities. Following this review, the Vista Outdoor Board and management determined that separating its Outdoor Products and Sporting Products segments into two independent, publicly-traded companies would create numerous benefits for both Vista Outdoor and Outdoor Products and would unlock significant stockholder value. In reaching the decision to pursue the Spin-Off, the Vista Outdoor Board and management considered a range of potential structural alternatives for the Outdoor Products Business, including a sale or merger of some or all of the Outdoor Products Business to or with third parties, and management recommended the Spin-Off as the most attractive alternative for enhancing stockholder value. As part of this evaluation, Vista Outdoor retained outside experts, and the Vista Outdoor Board considered a number of factors, including the strategic clarity and flexibility for Vista Outdoor and Outdoor Products after the Spin-Off, the ability of Vista Outdoor and Outdoor Products to compete and operate efficiently and effectively (including Outdoor Products’s ability to retain and attract management talent) after the Spin-Off, the financial profile of Vista Outdoor and Outdoor Products and the potential reaction of investors.

As a result of this evaluation, the Vista Outdoor Board determined that proceeding with the Spin-Off would be in the best interests of Vista Outdoor and its stockholders. The Vista Outdoor Board considered a number of potential benefits of this approach, including:

 

   

Enhanced strategic focus with supporting resources. Enhanced strategic focus with resources to support each company’s specific operational needs and growth drivers.

 

   

Tailored capital allocation priorities. Tailored capital allocation philosophies that are better suited to support each company’s distinctive business model and long-term goals.

 

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Strengthened ability to attract and retain top talent. Enhanced ability to attract and retain top talent that is ideally suited to execute each company’s strategic and operational objectives.

 

   

Compelling value for stockholders. Differentiated and compelling investment opportunity based on each company’s particular business model. Vista Outdoor anticipates that, as separate, independent companies, Outdoor Products and Sporting Products will each be better positioned to be more appropriately valued by the market.

 

   

Expanded strategic opportunities. Improved focus will allow Outdoor Products to further cement its reputation as the acquirer of choice through continued M&A in the outdoor recreation products marketplace and enable Sporting Products to secure attractive partnerships with other manufacturers.

The Vista Outdoor Board also considered a number of potential risks in evaluating the Spin-Off, including:

 

   

Risk of failure to achieve the anticipated benefits of the Spin-Off. Vista Outdoor and Outdoor Products may not achieve the anticipated benefits of the Spin-Off for a variety of reasons, including, among others, because the Spin-Off will require significant amounts of management’s time and effort, which may divert management’s attention from operating each company’s business, because there may be dis-synergy costs related to the Spin-Off, and because, following the Spin-Off, each company may be more susceptible to certain economic and market fluctuations and other adverse events than if Outdoor Products were still a part of Vista Outdoor because each company will be less diversified than Vista Outdoor prior to the separation. For more information on the specific risks to Outdoor Products of the failure to achieve the anticipated benefits of the Spin-Off, see the section entitled “Risk Factors—Risks Relating to the Spin-Off—We may be unable to achieve some or all of the benefits that we expect to achieve from the Spin-Off, which could materially adversely affect our business, financial condition and results of operations” beginning on page 43 of this Information Statement.

 

   

Loss of scale and increased costs. As part of Vista Outdoor, Outdoor Products benefits from Vista Outdoor’s operating diversity, scale, purchasing power, credit rating, borrowing leverage and available capital for investments. After the Spin-Off, Outdoor Products, as a standalone company, will be unable to take advantage of Vista Outdoor’s scale in procuring certain products and services on terms as favorable as those that Outdoor Products obtained as part of Vista Outdoor prior to the Spin-Off and will be unable to take advantage of Vista Outdoor’s credit rating, cost of capital and access to capital. In addition, as part of Vista Outdoor, Outdoor Products benefits from certain functions performed by Vista Outdoor, such as sales, marketing, procurement, information technology, e-commerce, finance, accounting, tax, human resources, legal, communications, investor relations and other general, administrative and operational functions. After the Spin-Off, Vista Outdoor will not perform these functions for Outdoor Products (other than certain functions that will be provided for a limited time pursuant to the Transition Services Agreement) and, because of Outdoor Products’s smaller scale as a standalone company, the cost of performing such functions could be higher than the amounts reflected in Outdoor Products’s combined financial statements, which would cause profitability to decrease.

 

   

Disruptions and costs related to the Spin-Off. The actions required to separate the Outdoor Products Business from Vista Outdoor could disrupt both Vista Outdoor’s and Outdoor Products’s operations. In addition, Vista Outdoor and Outdoor Products will incur substantial costs in connection with the Spin-Off and Outdoor Products becoming a standalone public company, which may include costs to separate shared systems, accounting, tax, legal and other professional services costs and recruiting and relocation costs associated with hiring directors and management who are new to Outdoor Products.

 

   

Limitations on strategic transactions. Under the terms of the Tax Matters Agreement that Outdoor Products will enter into with Vista Outdoor, Outdoor Products will be restricted from taking certain actions that could cause the Distribution or certain related transactions to fail to qualify as tax-free transactions under applicable law. These restrictions may limit for a period of time Outdoor Products’s ability to pursue certain strategic transactions and equity issuances or engage in other transactions that otherwise might increase the value of our business. For more information, see the section entitled “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor—Tax Matters Agreement” beginning on page 142 of this Information Statement.

 

   

Uncertainty regarding share prices. We cannot predict the effect of the Distribution on the trading prices of Vista Outdoor’s and Outdoor Products’s common stock or know whether the combined market value of Outdoor Products and Vista Outdoor following the Distribution will be less than, equal to or greater than the market value of Vista Outdoor prior to the Distribution. Furthermore, there is the risk of volatility in each company’s stock price following the Distribution due to sales by stockholders whose investment objectives may not be met by each company’s common stock, and it may take time for each company to attract its optimal stockholder base.

 

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After an in-depth analysis of the potential benefits and risks relating to the Spin-Off, the Vista Outdoor Board determined that the Spin-Off provides the best opportunity to enhance stockholder value. For additional information, see the section entitled “Risk Factors” beginning on page 30 of this Information Statement.

When and How You Will Receive Outdoor Products Shares

Vista Outdoor will distribute to its stockholders, as a pro rata dividend, for every one share of Vista Outdoor common stock outstanding as of the close of business on [                    ], 202[    ], which we refer to as the “Record Date,” one share of our common stock.

Prior to the Distribution, Vista Outdoor will deliver all of the issued and outstanding shares of our common stock to the distribution agent. Computershare Trust Company, N.A., which we also refer to as “Computershare,” will serve as distribution agent in connection with the Distribution. Computershare will also serve as transfer agent and registrar for our common stock.

If you own Vista Outdoor common stock as of the close of business on [                    ], 202[    ], the shares of our common stock that you are entitled to receive in the Distribution will be issued to your account as follows:

 

   

Registered stockholders. If you own your shares of Vista Outdoor common stock directly through Vista Outdoor’s transfer agent, Computershare, you are a registered stockholder. In this case, the distribution agent will credit the whole shares of our common stock you receive in the Distribution by way of direct registration in book-entry form to a new account with our transfer agent. Registration in book-entry form refers to a method of recording share ownership where no physical stock certificates are issued to stockholders, as is the case in the Distribution. You will be able to access information regarding your book-entry account holding the Outdoor Products shares at www-us.computershare.com/investor or by calling 1-800-736-3001, option 1 (U.S.) 1-781-575-3100, option 1 (non-U.S.).

Commencing on or shortly after the Distribution Date, the distribution agent will mail to you an account statement that indicates the number of whole shares of our common stock that have been registered in book-entry form in your name. We expect it will take the distribution agent up to two weeks after the Distribution Date to complete the distribution of the shares of our common stock and mail statements of holding to all registered stockholders.

 

   

Street nameor beneficial stockholders. If you own your shares of Vista Outdoor common stock beneficially through a bank, broker or other nominee, such bank, broker or other nominee holds the shares in “street name” and records your ownership on its books. If you own your shares of Vista Outdoor common stock through a bank, broker or other nominee, your bank, broker or other nominee will credit your account with the whole shares of our common stock that you receive in the Distribution on or shortly after the Distribution Date. We encourage you to contact your bank, broker or other nominee if you have any questions concerning the mechanics of having shares held in “street name.”

If you sell any of your shares of Vista Outdoor common stock before the Distribution Date, the buyer of those shares may in some circumstances be entitled to receive the shares of our common stock to be distributed in respect of the Vista Outdoor shares you sold. For more information, see the section entitled “—Trading Prior to the Distribution Date” beginning on page 61 of this Information Statement.

We are not asking Vista Outdoor stockholders to take any action in connection with the Spin-Off. No stockholder approval of the Spin-Off is required. We are not asking you for a proxy and request that you not send us a proxy. We are also not asking you to make any payment or surrender or exchange any of your shares of Vista Outdoor common stock for shares of our common stock. The number of outstanding shares of Vista Outdoor common stock will not change as a result of the Spin-Off.

Number of Shares You Will Receive

On the Distribution Date, for every one share of Vista Outdoor common stock you owned as of the Record Date, you will receive one share of our common stock.

Treatment of Fractional Shares

The distribution agent will not distribute any fractional shares of our common stock in connection with the Spin-Off. Instead, the distribution agent will aggregate all fractional shares into whole shares and sell the whole shares in the open market at prevailing market prices on behalf of Vista Outdoor stockholders entitled to receive a fractional share. The distribution agent will then distribute the aggregate cash proceeds of the sales, net of brokerage fees, transfer taxes and other

 

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costs, pro rata to these holders (net of any required withholding for taxes applicable to each holder). We anticipate that the distribution agent will make these sales in the “when-issued” market, and “when-issued” trades will generally settle within two trading days following the Distribution. For more information regarding “when-issued” trading, see the section entitled “—Trading Prior to the Distribution Date” beginning on page 61 of this Information Statement. The distribution agent will, in its sole discretion, without any influence by Vista Outdoor or us, determine precisely when, how, through which broker-dealer and at what price to sell the whole shares. The distribution agent is not, and any broker-dealer used by the distribution agent will not be, an affiliate of either Vista Outdoor or us.

The distribution agent will send to each registered holder of Vista Outdoor common stock entitled to a fractional share a check in the cash amount deliverable in lieu of that holder’s fractional share as soon as practicable following the Distribution Date. We expect the distribution agent to take about two weeks after the Distribution Date to complete the distribution of cash in lieu of fractional shares to Vista Outdoor stockholders. If you hold your shares through a bank, broker or other nominee, your bank, broker or nominee will receive, on your behalf, your pro rata share of the aggregate net cash proceeds of the sales. No interest will be paid on any cash you receive in lieu of a fractional share. The cash you receive in lieu of a fractional share will generally be taxable to you for U.S. federal income tax purposes. For more information, see the section below entitled “—Material U.S. Federal Income Tax Consequences of the Spin-Off” beginning on page 58 of this Information Statement.

Treatment of Outstanding Equity-Based Awards

The following discussion describes the expected treatment of Vista Outdoor equity awards held by Outdoor Products employees and Vista Outdoor non-employee directors immediately following the Spin-Off, in each case in connection with the Spin-Off. We expect that the treatment below would become effective as of the Distribution Date. For purposes of this disclosure, an “Outdoor Products Employee Holder” refers to an individual who is an employee of Outdoor Products immediately following the Spin-Off.

Restricted Stock Unit Awards Held by Outdoor Products Employees

We expect that each Vista Outdoor restricted stock unit award held on the Distribution Date by any Outdoor Products Employee Holder will convert into an Outdoor Products restricted stock unit award (a “Substitute RSU Award”) in a manner that preserves the fair value of the award following the Spin-Off. After the Spin-Off, the Substitute RSU Award will be subject to substantially the same terms and conditions as the original Vista Outdoor restricted stock unit award to which it relates, except that the vesting of the award will be based on continued service with Outdoor Products.

Performance-Based Restricted Stock Unit Awards

We expect that each Vista Outdoor performance-based restricted stock unit award that is held on the Distribution Date by an Outdoor Products Employee Holder, other than each Specified Vista Outdoor PSU Award (as defined below), will convert into a Substitute RSU Award, with performance conditions deemed achieved as of the Distribution Date, as applicable, at (i) 100% of target performance, in respect of fiscal years 2022-2024 and 2024-2026 awards and (ii) 33.33% of target performance, in respect of fiscal years 2023-2025 awards. After the Spin-Off, the Substitute RSU Award will be subject to substantially the same terms and conditions as the original Vista Outdoor performance-based restricted stock unit award to which it relates, except as provided above, and the vesting of the award will be based on continued service with Outdoor Products.

We expect that each of certain Vista Outdoor performance-based restricted stock unit awards (“Specified Vista Outdoor PSU Awards”) will be converted into an Outdoor Products performance-based restricted stock unit award (a “Substitute Outdoor Products PSU Award”) in a manner that preserves the fair value of the target Specified Vista Outdoor PSU Award following the Spin-Off. After the Spin-Off, the Substitute Outdoor Products PSU Award will be subject to substantially the same terms and conditions as the Specified Vista Outdoor PSU Award to which it relates.

Stock Option Awards

We expect that each Vista Outdoor stock option award that is held on the Distribution Date by an Outdoor Products Employee Holder will convert into an Outdoor Products stock option award in a manner that preserves the fair value of the award following the Spin-Off. After the Spin-Off, the Outdoor Products stock option award will be subject to substantially the same terms and conditions as the original Vista Outdoor stock option award to which it relates, except that the vesting of the award will be based on continued service with Outdoor Products.

Deferred Stock Unit Awards and Restricted Stock Unit Awards Held by Non-Employee Directors

We expect that each Vista Outdoor deferred stock unit award and restricted stock unit award held by a non-employee director of Vista Outdoor on the Distribution Date will convert into an award in respect of both shares of Vista Outdoor common stock and shares of Outdoor Products common stock. The number of shares of Vista Outdoor common stock subject

 

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to each post-Spin-Off Vista Outdoor award will continue to be the same as the number subject to the award prior to the Spin-Off. The number of shares of Outdoor Products common stock subject to the Outdoor Products deferred stock unit award or Substitute RSU Award, as applicable, will be determined based on a conversion ratio that preserves the fair value of the award following the Spin-Off. After the Spin-Off, the Outdoor Products deferred stock unit award and Substitute RSU Award will be subject to substantially the same terms and conditions as the original Vista Outdoor award to which it relates. Solely for purposes of such awards, following the Spin-Off, (i) service to Outdoor Products will be treated as service to Vista Outdoor and (ii) service to Vista Outdoor will be treated as service to Outdoor Products.

Material U.S. Federal Income Tax Consequences of the Spin-Off

Consequences to U.S. Holders of Vista Outdoor Common Stock

The following is a summary of the material U.S. federal income tax consequences to U.S. Holders (as defined below) of Vista Outdoor common stock in connection with the Distribution. This summary is based on the Internal Revenue Code, which we refer to as the “Code,” the Treasury Regulations promulgated under the Code and judicial and administrative interpretations of those laws, in each case as in effect and available as of the date of this Information Statement and all of which are subject to change at any time, possibly with retroactive effect. Any such change could affect the tax consequences described below.

This summary is limited to U.S. Holders of Vista Outdoor common stock that hold their Vista Outdoor common stock as a capital asset. For purposes of this summary, a “U.S. Holder” is a beneficial owner of Vista Outdoor common stock that is, for U.S. federal income tax purposes:

 

   

an individual who is a citizen or a resident of the U.S.;

 

   

a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the U.S. or any state thereof or the District of Columbia;

 

   

an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

 

   

a trust if (i) a court within the U.S. is able to exercise primary jurisdiction over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (ii) in the case of a trust that was treated as a domestic trust under law in effect before 1997, a valid election is in place under applicable Treasury Regulations.

This summary does not discuss all tax considerations that may be relevant to stockholders in light of their particular circumstances, nor does it address the consequences to stockholders subject to special treatment under the U.S. federal income tax laws, such as:

 

   

dealers or traders in securities or currencies;

 

   

tax-exempt entities;

 

   

banks, financial institutions or insurance companies;

 

   

real estate investment trusts, regulated investment companies or grantor trusts;

 

   

persons who acquired Vista Outdoor common stock pursuant to the exercise of employee stock options or otherwise as compensation;

 

   

stockholders who own, or are deemed to own, 10% or more, by voting power or value, of Vista Outdoor equity;

 

   

stockholders owning Vista Outdoor common stock as part of a position in a straddle or as part of a hedging, conversion or other risk reduction transaction for U.S. federal income tax purposes;

 

   

certain former citizens or long-term residents of the U.S.;

 

   

stockholders who are subject to the alternative minimum tax;

 

   

persons who own Vista Outdoor common stock through partnerships or other pass-through entities; or

 

   

persons who hold Vista Outdoor common stock through a tax-qualified retirement plan.

This summary does not address any U.S. state or local or foreign tax consequences or any estate, gift or other non-income tax consequences.

If a partnership, or any other entity treated as a partnership for U.S. federal income tax purposes, holds Vista Outdoor common stock, the tax treatment of a partner in that partnership will generally depend on the status of the partner and the activities of the partnership. Such a partner or partnership is urged to consult its own tax advisor as to its tax consequences.

 

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YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE U.S. FEDERAL, STATE AND LOCAL AND FOREIGN TAX CONSEQUENCES OF THE DISTRIBUTION.

Income Tax Consequences to U.S. Holders

Completion of the Spin-Off is conditioned upon Vista Outdoor’s receipt of a written opinion of Cravath, Swaine & Moore LLP, counsel to Vista Outdoor, to the effect that the Distribution will qualify as a distribution to which Section 355 and Section 361 of the Code apply. The opinion will be based on the assumption that, among other things, the representations made, and information submitted, in connection with it are accurate. If the Distribution qualifies for this treatment and subject to the qualifications and limitations set forth herein (including the discussion below relating to the receipt of cash in lieu of fractional shares), for U.S. federal income tax purposes:

 

   

no gain or loss will be recognized by, or be includible in the income of, a U.S. Holder as a result of the Distribution, except with respect to any cash received in lieu of fractional shares;

 

   

the aggregate tax basis of the Vista Outdoor common stock and our common stock held by each U.S. Holder immediately after the Distribution will be the same as the aggregate tax basis of the Vista Outdoor common stock held by the U.S. Holder immediately before the Distribution, allocated between the Vista Outdoor common stock and our common stock in proportion to their relative fair market values on the date of the Distribution (subject to reduction upon the deemed sale of any fractional shares, as described below); and

 

   

the holding period of our common stock received by each U.S. Holder will include the holding period of its Vista Outdoor common stock, provided that such Vista Outdoor common stock is held as a capital asset on the date of the Distribution.

U.S. Holders that have acquired different blocks of Vista Outdoor common stock at different times or at different prices are urged to consult their tax advisors regarding the allocation of their aggregate adjusted tax basis among, and the holding period of, shares of our common stock distributed with respect to such blocks of Vista Outdoor common stock.

If a U.S. Holder receives cash in lieu of a fractional share of common stock as part of the Distribution, the U.S. Holder will be treated as though it first received a distribution of the fractional share in the Distribution and then sold it for the amount of cash actually received. Provided the fractional share is considered to be held as a capital asset on the date of the Distribution, the U.S. Holder will generally recognize capital gain or loss measured by the difference between the cash received for such fractional share and the U.S. Holder’s tax basis in that fractional share, as determined above. Such capital gain or loss will be a long-term capital gain or loss if the U.S. Holder’s holding period for the Vista Outdoor common stock is more than one year on the date of the Distribution.

The opinion of counsel will not address any U.S. state or local or foreign tax consequences of the Spin-Off. The opinion will assume that the Spin-Off will be completed according to the terms of the Separation and Distribution Agreement and will rely on the facts as stated in the Separation and Distribution Agreement, the Tax Matters Agreement, the other ancillary agreements, this Information Statement and a number of other documents. In addition, the opinion will be based on certain representations as to factual matters from, and certain covenants by, Vista Outdoor and us. The opinion cannot be relied on if any of the assumptions, representations or covenants is incorrect, incomplete or inaccurate or are violated in any material respect.

The opinion of counsel will not be binding on the IRS or the courts, and we cannot assure you that the IRS or a court will not take a contrary position. Vista Outdoor has not requested, and does not intend to request, a ruling from the IRS regarding the U.S. federal income tax consequences of the Spin-Off.

If the Distribution were determined not to qualify as a distribution to which Section 355 and Section 361 of the Code apply, the above consequences would not apply, and U.S. Holders could be subject to tax. In this case, each U.S. Holder who receives our common stock in the Distribution would generally be treated as receiving a distribution in an amount equal to the fair market value of our common stock received, which would generally result in:

 

   

a taxable dividend to the U.S. Holder to the extent of that U.S. Holder’s pro rata share of Vista Outdoor’s current and accumulated earnings and profits;

 

   

a reduction in the U.S. Holder’s basis (but not below zero) in Vista Outdoor common stock to the extent the amount received exceeds the stockholder’s share of Vista Outdoor’s earnings and profits; and

 

   

a taxable gain from the exchange of Vista Outdoor common stock to the extent the amount received exceeds the sum of the U.S. Holder’s share of Vista Outdoor’s earnings and profits and the U.S. Holder’s basis in its Vista Outdoor common stock.

 

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Backup Withholding and Information Statement

Payments of cash in lieu of a fractional share of our common stock may, under certain circumstances, be subject to “backup withholding,” unless a U.S. Holder provides proof of an applicable exemption or a correct taxpayer identification number, and otherwise complies with the requirements of the backup withholding rules. Corporations will generally be exempt from backup withholding, but may be required to provide a certification to establish their entitlement to the exemption. Backup withholding is not an additional tax, and it may be refunded or credited against a holder’s U.S. federal income tax liability if the required information is timely supplied to the IRS.

Treasury Regulations require each Vista Outdoor stockholder that, immediately before the Distribution, owned 5% or more (by vote or value) of the total outstanding stock of Vista Outdoor, to attach to such stockholder’s U.S. federal income tax return for the year in which the Distribution occurs a statement setting forth certain information related to the Distribution.

Consequences to Vista Outdoor

The following is a summary of the material U.S. federal income tax consequences to Vista Outdoor in connection with the Spin-Off that may be relevant to holders of Vista Outdoor common stock.

As discussed above, completion of the Spin-Off is conditioned upon Vista Outdoor’s receipt of a written opinion of Cravath, Swaine & Moore LLP, counsel to Vista Outdoor, to the effect that the Distribution will qualify as a distribution to which Section 355 and Section 361 of the Code apply. If the Distribution qualifies as a distribution to which Section 355 and Section 361 of the Code apply, no gain or loss will be recognized by Vista Outdoor as a result of the Distribution. The opinion of counsel is subject to the qualifications and limitations as are set forth above under the section above entitled “—Consequences to U.S. Holders of Vista Outdoor Common Stock” beginning on page 58 of this Information Statement.

If the Distribution were determined not to qualify as a distribution to which Section 355 and Section 361 of the Code apply, then Vista Outdoor would recognize gain equal to the excess of the fair market value of our common stock distributed to Vista Outdoor stockholders over Vista Outdoor’s tax basis in our common stock. In addition, in certain circumstances, Vista Outdoor could be liable for failure to withhold taxes imposed on the distribution of our common stock to beneficial holders of Vista Outdoor stock that are not U.S. Holders or U.S. partnerships for U.S. federal income tax purposes.

Indemnification Obligation

If it were determined that the Distribution did not qualify as a distribution to which Section 355 and Section 361 of the Code apply, we could, under certain circumstances, be required to indemnify Vista Outdoor for taxes resulting from the recognition of gain described above and related expenses. In addition, current tax law generally creates a presumption that the Distribution would be taxable to Vista Outdoor, but not to holders, if we or our stockholders were to engage in transactions that result in a 50% or greater change by vote or value in the ownership of our stock during the four-year period beginning on the date that begins two years before the date of the Distribution, unless it were established that such transactions and the Distribution were not part of a plan or series of related transactions giving effect to such a change in ownership. If the Distribution were taxable to Vista Outdoor due to such a 50% or greater change in ownership of our stock, Vista Outdoor would recognize gain equal to the excess of the fair market value of our common stock distributed to Vista Outdoor stockholders over Vista Outdoor’s tax basis in our common stock and we generally would be required to indemnify Vista Outdoor for the tax on such gain and related expenses.

Results of the Spin-Off

After the Spin-Off, we will be an independent, publicly-traded company. Immediately following the Spin-Off, we expect to have approximately [                    ] beneficial holders of shares of our common stock and approximately 57,997,650 shares of our common stock outstanding, based on the number of Vista Outdoor stockholders and shares of Vista Outdoor common stock outstanding as of June 25, 2023. The actual number of shares of our common stock Vista Outdoor will distribute in the Spin-Off will depend on the actual number of shares of Vista Outdoor common stock outstanding on the Record Date, which will reflect any issuance of new shares in respect of settlements or exercises of outstanding equity-based awards pursuant to Vista Outdoor’s equity plans on or prior to the Record Date. The Spin-Off will not affect the number of outstanding shares of Vista Outdoor common stock or any rights of Vista Outdoor stockholders, although we expect the trading price of shares of Vista Outdoor common stock immediately following the Distribution to be lower than immediately prior to the Distribution because the trading price of Vista Outdoor common stock will no longer reflect the value of the Outdoor Products Business. Furthermore, until the market has fully analyzed the value of Vista Outdoor without the Outdoor Products Business, the trading price of shares of Vista Outdoor common stock may fluctuate and result in a higher volatility in stock price.

 

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Before our separation from Vista Outdoor, we intend to enter into a Separation and Distribution Agreement and several other agreements with Vista Outdoor related to the Spin-Off. These agreements will govern the relationship between Vista Outdoor and Outdoor Products up to and after completion of the Spin-Off and allocate between Vista Outdoor and us various assets, liabilities, rights and obligations, including those related to employees and compensation and benefits plans and programs and tax-related assets and liabilities. We describe these arrangements in greater detail under the section entitled “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor” beginning on page 140 of this Information Statement.

Listing and Trading of our Common Stock

As of the date of this Information Statement, we are a wholly owned subsidiary of Vista Outdoor. Accordingly, no public market for our common stock currently exists, although a “when-issued” market in our common stock may develop prior to the Distribution. For an explanation of a “when-issued market,” see the section below entitled “—Trading Prior to the Distribution Date” beginning on page 61 of this Information Statement. We intend to list our shares of common stock on the NYSE under the ticker symbol “[                    ].” Following the Spin-Off, Vista Outdoor will be renamed The Kinetic Group, Inc., and its common stock will trade on the NYSE under the ticker symbol “HUNT”.

Neither we nor Vista Outdoor can assure you as to the trading price of Vista Outdoor common stock or our common stock after the Spin-Off, or as to whether the combined trading prices of our common stock and the Vista Outdoor common stock after the Spin-Off will be less than, equal to or greater than the trading prices of Vista Outdoor common stock prior to the Spin-Off. The trading price of our common stock may fluctuate significantly following the Spin-Off and result in a higher volatility in stock price. For more detail, see the section entitled “Risk Factors—Risks Relating to Our Common Stock” beginning on page 49 of this Information Statement.

The shares of our common stock distributed to Vista Outdoor stockholders will be freely transferable, except for shares received by individuals who are our affiliates. Individuals who may be considered our affiliates after the Spin-Off include individuals who control, are controlled by or are under common control with us, as those terms generally are interpreted for U.S. federal securities law purposes. These individuals may include some or all of our directors and executives. Individuals who are our affiliates will be permitted to sell their shares of our common stock only pursuant to an effective registration statement under the Securities Act of 1933, which we refer to as the “Securities Act,” or an exemption from the registration requirements of the Securities Act, such as those afforded by Section 4(a)(1) of the Securities Act or Rule 144 thereunder.

Trading Prior to the Distribution Date

We expect a “when-issued” market in our common stock to develop shortly before the Distribution Date and continue up to but not including the Distribution Date. “When-issued” trading refers to a sale or purchase made conditionally before the Distribution Date because the securities of the spun-off entity have not yet been distributed. If you own shares of Vista Outdoor common stock at the close of business on the Record Date, you will be entitled to receive shares of our common stock in the Distribution. You may trade this entitlement to receive shares of our common stock, without the shares of Vista Outdoor common stock you own, on the “when-issued” market. We expect “when-issued” trades of our common stock to settle within two trading days after the Distribution. On the Distribution Date, we expect that “when-issued” trading of our common stock will end and “regular-way” trading will begin.

We also anticipate that, shortly before the Distribution Date and continuing up to but not including the Distribution Date, there will be two markets in Vista Outdoor common stock: a “regular-way” market and an “ex-distribution” market. Shares of Vista Outdoor common stock that trade on the “regular-way” market will trade with an entitlement to receive shares of our common stock in the Distribution. Shares that trade on the “ex-distribution” market will trade without an entitlement to receive shares of our common stock in the Distribution. Therefore, if you sell shares of Vista Outdoor common stock in the “regular-way” market up to but not including the Distribution Date, you will be selling your right to receive shares of our common stock in the Distribution. However, if you own shares of Vista Outdoor common stock at the close of business on the Record Date and sell those shares on the “ex-distribution” market up to but not including the Distribution Date, you will still receive the shares of our common stock that you would otherwise be entitled to receive in the Distribution.

Commencing on the Distribution Date, we expect shares of our common stock to be listed on the NYSE under the ticker symbol “[                    ].” If “when-issued” trading occurs, the listing for our common stock is expected to be under a ticker symbol different from our “regular-way” ticker symbol. We will announce our “when-issued” ticker symbol when and if it becomes available. If the Spin-Off does not occur, all “when-issued” trading will be null and void.

 

61


Conditions to the Spin-Off

We expect that the separation will be effective on the Distribution Date, provided that the following conditions shall have been satisfied or waived by Vista Outdoor:

 

   

the Vista Outdoor Board shall have authorized and approved the Internal Transactions (as described in the section entitled “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor—Separation and Distribution Agreement” beginning on page 140 of this Information Statement) and Distribution and not withdrawn such authorization and approval, and shall have declared the dividend of our common stock to Vista Outdoor stockholders;

 

   

the ancillary agreements contemplated by the Separation and Distribution Agreement shall have been executed by each party to those agreements;

 

   

our common stock shall have been accepted for listing on the NYSE or another national securities exchange approved by Vista Outdoor, subject to official notice of issuance;

 

   

the SEC shall have declared effective our Registration Statement on Form 10 of which this Information Statement is a part under the Securities Exchange Act of 1934, and no stop order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for that purpose shall be pending before or threatened by the SEC;

 

   

Vista Outdoor shall have received the written opinion of Cravath, Swaine & Moore LLP, which shall remain in full force and effect, that, subject to the limitations specified therein and the accuracy of and compliance with certain representations, warranties and covenants, the Distribution will qualify as a distribution to which Section 355 and Section 361 of the Code apply;

 

   

the Vista Outdoor Board shall have received one or more opinions (which have not been withdrawn or adversely modified) in customary form from one or more nationally recognized valuation, appraisal or accounting firms or investment banks as to the solvency and financial viability of Vista Outdoor prior to the Spin-Off and each of Vista Outdoor and Outdoor Products after the consummation of the Spin-Off;

 

   

the Internal Transactions, including any related debt financing, shall have been completed;

 

   

no order, injunction or decree issued by any governmental authority of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution shall be in effect, and no other event outside the control of Vista Outdoor shall have occurred or failed to occur that prevents the consummation of the Distribution;

 

   

no other events or developments shall have occurred prior to the Distribution Date that, in the judgment of the Vista Outdoor Board, makes it inadvisable to effect the Spin-Off and other related transactions;

 

   

prior to the Distribution Date, notice of Internet availability of this Information Statement or this Information Statement shall have been mailed to the holders of Vista Outdoor common stock as of the Record Date;

 

   

Vista Outdoor shall have duly elected the individuals to be listed as members of our post-Distribution Board of Directors in this Information Statement, and such individuals shall be the members of our Board of Directors, which we refer to as the “Board,” immediately after the Distribution; and

 

   

immediately prior to the Distribution Date, our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, each in substantially the form filed as an exhibit to the Registration Statement on Form 10 of which this Information Statement is a part, shall be in effect.

The fulfillment of the above conditions will not create any obligation on Vista Outdoor’s part to complete the Spin-Off. We are not aware of any material U.S. federal, foreign or state regulatory requirements with which we must comply, other than SEC rules and regulations, or any material approvals that we must obtain, other than the approval for listing of our common stock and the SEC’s declaration of the effectiveness of the Registration Statement on Form 10 of which this Information Statement is a part, in connection with the Distribution. If the Vista Outdoor Board waives any condition prior to the effectiveness of the Registration Statement on Form 10 of which this Information Statement is a part, and the result of such waiver is material to Vista Outdoor stockholders, we will file an amendment to the Registration Statement to revise the disclosure in this Information Statement accordingly. In the event that the Vista Outdoor Board waives a condition after the Registration Statement on Form 10 of which this Information Statement is a part becomes effective and such waiver is material to Vista Outdoor stockholders, we will file a Current Report on Form 8-K describing

 

62


the change. For a complete discussion of all of the conditions to the Distribution, see the section entitled “The Spin-Off—Conditions to the Spin-Off” beginning on page 62 of this Information Statement. In addition, Vista Outdoor has the right not to complete the Spin-Off if, at any time, the Vista Outdoor Board determines, in its sole and absolute discretion, that the Spin-Off is not in the best interests of Vista Outdoor or its stockholders, or is otherwise not advisable.

Reasons for Furnishing This Information Statement

We are furnishing this Information Statement solely to provide information to Vista Outdoor stockholders who will receive shares of our common stock in the Distribution. You should not construe this Information Statement as an inducement or encouragement to buy, hold or sell any of our securities or any securities of Vista Outdoor. We believe that the information contained in this Information Statement is accurate as of the date set forth on its cover. Changes to the information contained in this Information Statement may occur after that date, and neither we nor Vista Outdoor undertakes any obligation to update the information except in the normal course of our and Vista Outdoor’s public disclosure obligations and practices.

 

63


DIVIDEND POLICY

We intend to retain future earnings for use in the operation of our business and to fund future growth, including through acquisitions. We do not anticipate paying any dividends on our common stock for the foreseeable future. Our Board will make all decisions regarding the payment of future dividends, and such decisions will depend on many factors, including our financial condition, earnings, capital requirements of our operating subsidiaries, covenants associated with certain of our debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by our Board. We cannot assure you that we will pay a dividend in the future or continue to pay any dividend if we do commence paying dividends. See also “Risk Factors— Risks Relating to Our Common Stock—We do not anticipate paying any dividends on our common stock for the foreseeable future, and as a result, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates” beginning on page 49 of this Information Statement.

 

64


CAPITALIZATION

The following table sets forth the cash and cash equivalents and capitalization of Outdoor Products as of June 25, 2023, on a historical basis and pro forma basis to give effect to the Spin-Off and related transactions, as if they occurred on June 25, 2023, our latest balance sheet date. The information below is not necessarily indicative of what our capitalization would have been had the Spin-Off been completed as of June 25, 2023. In addition, it is not indicative of our future capitalization and may not reflect the capitalization that would have resulted had we operated as an independent, publicly-traded company as of the dates presented. You should review the following table in conjunction with the sections entitled “Unaudited Pro Forma Condensed Combined Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on pages 66 and 88, respectively, of this Information Statement and the combined financial statements and accompanying notes included elsewhere in this Information Statement.

 

     As of June 25, 2023  
 (amounts in thousands)    Historical     Pro Forma  

 Cash and cash equivalents

   $ 30,409     $ 30,409  

 Parent company equity

    

 Common stock, $0.01 par value

   $ —       $ 579  

 Additional paid-in capital

     —         1,563,694  

 Parent company investment

     1,553,469       —    

 Accumulated other comprehensive loss

     (6,800     (6,800
  

 

 

   

 

 

 

 Total parent company equity

     1,546,669       1,557,473  
  

 

 

   

 

 

 

 Total capitalization

   $         1,577,078     $         1,587,882  
  

 

 

   

 

 

 

 

65


UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On May 5, 2022, Vista Outdoor announced that the Vista Outdoor Board approved preparations for the separation of Vista Outdoor’s Outdoor Products and Sporting Products segments into two independent, publicly-traded companies via a spin-off of the Outdoor Products segment. To effect the separation, first, Vista Outdoor will undertake the Internal Transactions described under the section entitled “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor—Separation and Distribution Agreement” beginning on page 140 of this Information Statement. Vista Outdoor will subsequently distribute all of Outdoor Products’s common stock to Vista Outdoor stockholders, and Outdoor Products will become an independent, publicly-traded company.

The unaudited pro forma condensed combined financial statements consist of unaudited pro forma condensed combined income statements for the three months ended June 25, 2023 and the fiscal year ended March 31, 2023, and an unaudited pro forma condensed combined balance sheet as of June 25, 2023. The unaudited pro forma condensed combined financial statements should be read in conjunction with our combined financial statements and the related notes thereto included elsewhere in this Information Statement and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 88 of this Information Statement. The unaudited pro forma condensed combined income statements have been prepared to give effect to the Pro Forma Transactions (as defined below) as if the Pro Forma Transactions had occurred on, or became effective as of, April 1, 2022. The unaudited pro forma condensed combined balance sheet has been prepared to give effect to the Pro Forma Transactions as though the Pro Forma Transactions had occurred on, or become effective as of, June 25, 2023.

The unaudited pro forma condensed combined financial statements were prepared in accordance with Article 11 of Regulation S-X, as amended. The unaudited pro forma condensed combined financial statements presented below have been derived from the combined financial statements included elsewhere in this Information Statement and do not purport to represent what our financial position and results of operations would have been had the Spin-Off occurred on the dates indicated and are not necessarily indicative of our future financial position and future results of operations. In addition, the unaudited pro forma condensed combined financial statements are provided for illustrative and informational purposes only. The pro forma adjustments are based on available information and assumptions we believe are reasonable; however, such adjustments are subject to change.

Vista Outdoor did not account for us as, and we were not operated as, an independent, publicly-traded company for the periods presented. The pro forma adjustments are based on currently available information and assumptions that our management believes, given the information available at this time, are reasonable and reflect changes necessary to reflect Outdoor Products’s financial condition and results of operations as if we were a stand-alone company. The unaudited pro forma condensed combined financial statements have been adjusted to give effect to the following (the “Pro Forma Transactions”):

 

   

the unaudited pro forma condensed combined income statements have been adjusted to give the effect to the acquisitions of Fox Racing and Simms Fishing under the provision of the Financial Accounting Standards Board (FASB) Accounting Standards Codification, ASC 805, Business Combinations, as if such acquisitions occurred on April 1, 2022, using the fair values of the assets and liabilities of Fox Racing and Simms Fishing as of the date the applicable acquisition was completed. The unaudited pro forma condensed combined income statements include adjustments that are directly attributable to the business combinations, factually supportable and expected to have a continuing impact on the combined results of Outdoor Products following the business combination;

 

   

the contribution by Vista Outdoor to us of all the assets and liabilities that comprise the Outdoor Products Business pursuant to the Separation and Distribution Agreement;

 

   

the anticipated post-separation capital structure of Outdoor Products, including the distribution of our common stock to holders of Vista Outdoor common stock in connection with the Spin-Off;

 

   

the resulting elimination of Vista Outdoor’s net investment in us;

 

   

the impact of, and transactions contemplated by, the Separation and Distribution Agreement, the Transition Services Agreement, the Tax Matters Agreement, the Employee Matters Agreement and other agreements related to the Spin-Off between us and Vista Outdoor and the provisions contained therein; and

 

   

autonomous entity adjustments of incremental expense or other charges necessary to reflect the operations and financial position of Outdoor Products as an independent and separate publicly-traded company.

 

66


The operating expenses reported in our historical combined statements of comprehensive income (loss) include allocations of certain Vista Outdoor costs, such as corporate costs, shared services and other related costs that benefit us. Our historical combined financial statements have been prepared on a “carve-out” basis and are derived from the consolidated financial statements and accounting records of Vista Outdoor. Accordingly, such financial information reflects an allocation of general corporate costs, such as information technology, finance and accounting, human resources, legal, and other expenses that are either specifically identifiable or clearly applicable to Outdoor Products.

As an independent, publicly-traded company, we expect to incur certain incremental costs resulting from the Spin-Off that were not included in our historical combined financial statements. These costs include information technology fees that are reflected as autonomous entity adjustments in the unaudited pro forma condensed combined financial statements presented below. In addition, we have provided a presentation of management adjustments that management believes are necessary to enhance an understanding of the pro forma effects of the Spin-Off. Actual future costs incurred may differ from these estimates.

Subject to the terms of the Separation and Distribution Agreement, Vista Outdoor will pay all nonrecurring third-party costs and expenses related to the Spin-Off and incurred prior to the completion of the Spin-Off. Such nonrecurring amounts are expected to include costs to separate and/or duplicate information technology systems, external advisory fees (other than fees and expenses in connection with any debt financing of Outdoor Products), third-party legal and accounting fees and similar costs. After the completion of the Spin-Off, subject to the terms of the Separation and Distribution Agreement, all costs and expenses related to the Spin-Off incurred by either Vista Outdoor or us will be borne by the party incurring the costs and expenses.

 

67


UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF JUNE 25, 2023

 

(amounts in thousands)   

Historical

   

Transaction
Accounting
Adjustments

       

Autonomous
Entity
Adjustments

        

Pro Forma

 
ASSETS              
Current assets:              

Cash and cash equivalents

   $ 30,409     $     (f) (h)   $        $ 30,409  

Net receivables

     221,315                        221,315  

Net inventories

     383,335                        383,335  

Prepaid expenses

     29,320                        29,320  

Other current assets

     6,150       3,228     (f) (i)              9,378  
  

 

 

   

 

 

     

 

 

      

 

 

 

Total current assets

     670,529       3,228                  673,757  
Net property, plant and equipment      69,019                        69,019  
Operating lease assets      100,230               424     (s)      100,654  
Goodwill      379,603                        379,603  
Net intangible assets      662,027                        662,027  
Other non-current assets, net      69,403       400     (i)              69,803  
  

 

 

   

 

 

     

 

 

      

 

 

 

Total assets

   $ 1,950,811     $ 3,628       $ 424        $ 1,954,863  
  

 

 

   

 

 

     

 

 

      

 

 

 
LIABILITIES AND EQUITY                  
Current liabilities:                  

Accounts payable

   $ 98,369     $ 485     (i)   $        $ 98,854  

Accrued compensation

     23,807       3,238     (j)              27,045  

Accrued income taxes

     2,109       (1,341   (k)              768  

Sales and other taxes payable

     12,785                        12,785  

Other current liabilities

     112,912       (1,086   (i) (j)     204     (s)      112,030  
  

 

 

   

 

 

     

 

 

      

 

 

 

Total current liabilities

     249,982       1,296         204          251,482  
Deferred income tax liabilities      28,193       6,028     (k)              34,221  
Long-term operating lease liabilities      97,986               220     (s)      98,206  
Other long-term liabilities      27,981       (14,500   (j) (k)              13,481  
  

 

 

   

 

 

     

 

 

      

 

 

 

Total liabilities

     404,142       (7,176       424          397,390  
EQUITY              

Common stock, $0.01 par value, 500,000,000 authorized and 57,997,650 shares issued and outstanding

           579     (p)              579  

Additional paid-in capital

           1,563,694     (n) (p)              1,563,694  

Parent company investment

     1,553,469       (1,553,469   (n)               

Accumulated other comprehensive loss

     (6,800                      (6,800
  

 

 

   

 

 

     

 

 

      

 

 

 

Total parent company equity

     1,546,669       10,804                  1,557,473  
  

 

 

   

 

 

     

 

 

      

 

 

 

Total liabilities and parent company equity

   $     1,950,811     $ 3,628       $     424        $     1,954,863  
  

 

 

   

 

 

     

 

 

      

 

 

 

See Notes to Unaudited Pro Forma Condensed Combined Financial Statements

 

68


UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT

THREE MONTHS ENDED JUNE 25, 2023

 

(amounts in thousands, except per share data)    Historical     Transaction
Accounting
Adjustments
        Autonomous
Entity
Adjustments
     Pro Forma      

Sales, net

   $         321,443       $        (4,845   (l)   $         —      $         316,598    

Cost of sales

     226,717       (4,845   (l)            221,872    
  

 

 

   

 

 

     

 

 

      

Gross profit

     94,726                      94,726    

Operating expenses:

             

 Research and development

     10,364                      10,364    

 Selling, general and administrative

     89,659                      89,659    
  

 

 

   

 

 

     

 

 

      

Operating income (loss)

     (5,297                    (5,297  

 Other expense, net

     (541                    (541  

 Interest (expense) income, net

     42                      42    
  

 

 

   

 

 

     

 

 

      

Loss before income taxes

     (5,796                    (5,796  

 Income tax benefit (provision)

     438           (m)            438    
  

 

 

   

 

 

     

 

 

      

Net loss

   $ (5,358   $       $      $ (5,358  
  

 

 

   

 

 

     

 

 

      

Pro forma earnings per share

             

 Pro forma basic and diluted

            $ (0.09   (q)

Pro forma weighted-average shares outstanding

             

 Pro forma basic and diluted

              57,455     (q)

See Notes to Unaudited Pro Forma Condensed Combined Financial Statements

 

69


UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT

YEAR ENDED MARCH 31, 2023

 

(amounts in thousands, except
per share data)
   Historical     Acquisition
Adjustments
(1)
    Transaction
Accounting
Adjustments
         Autonomous
Entity
Adjustments
        Pro Forma      

Sales, net

   $     1,339,378     $     146,216     $     (17,502   (l)    $       $     1,468,092    

Cost of sales

     962,587       91,985       (17,502   (l)              1,037,070    
  

 

 

   

 

 

   

 

 

      

 

 

     

 

 

   

Gross profit

     376,791       54,231                        431,022    

Operating expenses:

                 

 Research and development

     36,652       1,109                        37,761    

 Selling, general and administrative

     333,923       48,831                675     (r)     383,429    

 Impairment of goodwill and intangibles

     374,355                              374,355    
  

 

 

   

 

 

   

 

 

      

 

 

     

 

 

   

Operating income (loss)

     (368,139     4,291                (675       (364,523  

 Other income

     2,124       (700                      1,424    

 Interest (expense) income, net

     173                              173    
  

 

 

   

 

 

   

 

 

      

 

 

     

 

 

   

Income (loss) before income taxes

     (365,842     3,591                (675       (362,926  

 Income tax (provision) benefit

     29,181       (641         (m)      162     (t)     28,702    
  

 

 

   

 

 

   

 

 

      

 

 

     

 

 

   

Net income (loss)

   $ (336,661   $ 2,950     $        $     (513     $ (334,224  
  

 

 

   

 

 

   

 

 

      

 

 

     

 

 

   

Pro forma earnings per share

                 

 Pro forma basic and diluted

                  (5.84   (q)

Pro forma weighted-average shares outstanding

                 

 Pro forma basic and diluted

                  57,190     (q)

 

(1)

- See Note 1 for details of acquisition adjustments

See Notes to Unaudited Pro Forma Condensed Combined Financial Statements

 

70


NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

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

Note 1: Acquisition Adjustments

The following depicts the historical financial information of the acquired entities during the fiscal year ending March 31, 2023 before the acquisition date as noted below:

 

    

Fox Racing
(4/1/2022 –
8/4/2022)

   

Simms

Fishing

(4/1/2022 –
8/23/2022)

   

Purchase Price

Allocation

Adjustments

         

Total

 

Sales, net

   $     105,855     $     40,361     $        $     146,216  

Cost of sales

     59,895       25,590       6,500     (a) (c)      91,985  
  

 

 

   

 

 

   

 

 

      

 

 

 

Gross profit

     45,960       14,771           (6,500        54,231  

Operating expenses:

           

 Research and development

           1,109                1,109  

 Selling, general and administrative

     38,274       10,776       (219   (a) (c) (d)      48,831  
  

 

 

   

 

 

   

 

 

      

 

 

 

Operating income

     7,686       2,886       (6,281        4,291  

Other income (expense)

     (847     147                (700

 Interest expense

     (2,418     (9     2,427     (b)       
  

 

 

   

 

 

   

 

 

      

 

 

 

Income (loss) before income taxes

     4,421       3,024       (3,854        3,591  

 Income tax (provision) benefit

     (247           (394   (e)      (641
  

 

 

   

 

 

   

 

 

      

 

 

 

Net income (loss)

   $ 4,174     $ 3,024     $ (4,248      $ 2,950  
  

 

 

   

 

 

   

 

 

      

 

 

 

The unaudited pro forma condensed combined income statement for the fiscal year ended March 31, 2023, includes the following adjustments:

 

  a.

Adjustment for amortization related to the allocated fair-value basis of the intangible assets allocated in the purchase price. The customer relationship intangibles will be amortized over an average of 14 years.

 

Cost of sales:

  

Estimated amortization related to customer relationships

   $         6,463  
  

 

 

 

SG&A:

  

Remove historical amortization expense related to intangibles

   $ (622
  

 

 

 

 

  b.

Adjustment was made to eliminate interest and amortization of deferred issuance costs on Fox Racing’s revolving credit facility, and elimination of interest and discount amortization on Fox Racing’s long-term debt which were both extinguished at the acquisition date.

 

Elimination of historical interest expense

    $        (2,427
 

 

 

 

 

  c.

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

 

Cost of sales:

  

Estimated adjustment related to the revised fair-value basis

   $ 770  

Remove historical depreciation expense

     (733
  

 

 

 

Total pro forma adjustment to cost of sales for depreciation

   $ 37  
  

 

 

 

SG&A:

  

Estimated adjustment related to the revised fair-value basis

   $         1,585  

Remove historical depreciation expense

     (652
  

 

 

 

Total pro forma adjustment to SG&A for depreciation

   $ 933  
  

 

 

 

 

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  d.

Represents a reduction to selling, general and administrative of $530 for the fiscal year ended March 31, 2023, for management fees historically charged by the previous owner of Fox Racing under the terms of their management agreement.

 

  e.

Income tax effect of the adjustments made at a blended statutory federal, state, and international statutory rate of 24% including treating Simms Fishing as a corporation for the entire year.

Note 2: Transaction Accounting Adjustments

 

  f.

This adjustment reflects our expected entry into a revolving credit facility in connection with the Spin-Off. However, the facility is not expected to be utilized at the completion of the Spin-Off. The associated issuance costs of $[                    ] will be paid in cash, recorded in Other current assets and amortized to Interest expense over the term of the credit facility.

 

  g.

The adjustment of $[                    ] and $[                    ] for the three months ended June 25, 2023 and the fiscal year ended March 31, 2023, respectively, represents approximately $[                    ] in amortization of debt issuance costs and $[                    ] related to annual commitment fees, and $[                    ] in amortization of debt issuance costs and $[                    ] related to annual commitment fees, respectively, in each case for the revolving credit facility as described in note (f) above. We expect to pay a commitment fee on the unused commitments under the revolving credit facility of [                    ]% per annum.

 

  h.

We expect that, as of the date of completion of the Spin-Off, cash and cash equivalents will be approximately $[                    ], due in part to additional cash contributions from Vista Outdoor.

 

  i.

Reflects information technology assets, and liabilities related to corporate overhead transferred to Outdoor Products from Vista Outdoor in connection with the Spin-Off, per the Separation and Distribution Agreement. These assets and liabilities are incremental to the assets and liabilities in the combined financial statements as Outdoor Products did not manage these assets and liabilities. The expenses associated with these assets and liabilities have been allocated to Outdoor Products and are included within the combined financial statements. The following represents assets and liabilities transferred to Vista Outdoor upon completion of the Spin-Off per the Separation and Distribution Agreement:

 

Other current assets

   $         3,228  

Other non-current assets, net

     400  

Accounts payable

     485  

Other current liabilities

     471  

 

  j.

Reflects employee-related obligations of active and former employees transferred to Outdoor Products from Vista Outdoor in connection with the Spin-Off or retained by Vista Outdoor in connection with the Spin-Off per the Employee Matters Agreement. The assets and liabilities that are to be transferred to Outdoor Products are incremental to the amounts in the combined financial statements as Outdoor Products did not manage these liabilities. The expenses associated with these liabilities have been allocated to Outdoor Products and are included within the combined financial statements.The assets and liabilities that are to be retained by Vista Outdoor were included in the combined financial statements as Outdoor Products did manage these assets and liabilities but they will not be transferred to Outdoor Products per the Employee Matters Agreement. The following represents liabilities transferred to Vista Outdoor or retained () by Vista Outdoor upon completion of the Spin-Off per the Employee Matters Agreement:

 

Accrued payroll and benefits

   $         2,660  

Accrued transaction bonuses

     578  

Other current liabilities

     (1,557

Other long-term liabilities

     (942

 

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  k.

Reflects related net liabilities transferred to Outdoor Products from Vista Outdoor in connection with the Spin-Off or retained by Vista Outdoor in connection with the Spin-Off per the Tax Matters Agreement. The net liabilities that are to be transferred to Outdoor Products are incremental to the amounts in the combined financial statements as Outdoor Products did not manage these net liabilities. The net liabilities that are to be retained by Vista Outdoor were included in the combined financial statements as Outdoor Products did manage these net liabilities but they will not be transferred to Outdoor Products per the Tax Matters Agreement. The following represents net liabilities transferred to Vista Outdoor or retained () by Vista Outdoor upon completion of the Spin-Off per the Tax Matters Agreement:

 

Accrued income taxes

   $ (1,341

Uncertain tax positions liability

     (13,558

Deferred tax liability

               6,028  

 

  l.

Reflects the effect of the termination of the supply agreement between Outdoor Products and Vista Outdoor after the Spin-Off. The historical combined statement of comprehensive income (loss) reflects certain net sales and cost of goods sold pursuant to pre-existing intercompany arrangements between Outdoor Products and Vista Outdoor. Sales of product from Outdoor Products to Vista Outdoor are expected to cease shortly following the Spin-Off. Accordingly, net sales and cost of goods sold has been adjusted for the three months ended June 25, 2023, and the fiscal year ended March 31, 2023 related to these product sales. See Note 16, Related-Party Transactions, to our audited combined financial statements included elsewhere in this Information Statement, for information regarding these related-party sales.

 

  m.

The pro forma income tax expense adjustments arising from adjustments to transaction accounting and adjustments to income before income taxes reflect a blended statutory tax rate of 24% based on statutory rates by jurisdiction. Management believes the blended statutory tax rate provides a reasonable basis for the pro forma adjustments.

 

  n.

Represents the reclassification of Vista Outdoor’s net investment in Outdoor Products to Additional paid-in capital.

 

  o.

The Additional paid-in capital adjustments are summarized below:

 

Net parent investment (n)

   $         1,553,469  

Net assets being transferred to Outdoor Products

     3,628  

Net liabilities being retained by Vista Outdoor

     7,176  

Common stock issuance

     (579
  

 

 

 

Total pro forma adjustments to Additional paid-in capital

   $ 1,563,694  
  

 

 

 

 

  p.

Reflects the distribution of 57,997,650 shares of our common stock with a par value of $0.01 per share in connection with the Spin-Off. We have assumed the number of outstanding shares of our common stock based on 57,997,650 shares of Vista Outdoor common stock outstanding on June 25, 2023 and a distribution ratio of one share of our common stock for every one share of Vista Outdoor common stock. The actual number of shares issued will not be known until the Record Date for the Distribution.

 

  q.

Pro forma basic and diluted earnings per share and pro forma weighted-average basic shares outstanding for the three months ended June 25, 2023 and the fiscal year ended March 31, 2023 is based on the number of weighted average Vista Outdoor common shares outstanding during the three months ended June 25, 2023 and the fiscal year ended March 31, 2023, respectively, assuming a distribution ratio of one share of our common stock for every one share of Vista Outdoor common stock. Due to the net loss for the three months ended June 25, 2023 and the fiscal year ended March 31, 2023, there are no common shares added to calculate dilutive earnings per share because the effect would be anti-dilutive.

Note 3: Autonomous Entity Adjustments

The unaudited pro forma condensed combined balance sheet as of June 25, 2023, and the unaudited pro forma condensed combined income statement for the three months ended June 25, 2023, include the following autonomous entity adjustments:

 

  r.

Reflects additional one-time expenses primarily related to the separation and the stand-up of Outdoor Products as a standalone public company, which are expected to be incurred within 12 months following the completion of the Spin-Off. These charges primarily consist of incurred but not recorded and estimable costs covered by executed contracts related to system implementation, business separation and other costs. These costs are necessary to facilitate the separation and establish Outdoor Products as an autonomous entity. These adjustments are comprised of non-recurring expenses of $675 in Selling, general and administrative expenses for the fiscal year ended March 31, 2023. Actual charges that will be incurred could be different from these estimates.

 

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  s.

Reflects the net impact of sub-lease arrangements with Vista Outdoor for corporate offices that are expected to be entered into in connection with the Spin-Off. These adjustments record the operating right-of-use assets and related operating lease liabilities based on the estimated present value of the lease payments over the lease term. There is no income statement impact as lease expense is expected to be consistent with facilities charges included in the historical combined statements of operations.

 

  t.

The pro forma income tax expense adjustments arising from autonomous entity adjustments reflect a blended statutory tax rate of 24% based on statutory rates by jurisdiction. Management believes the blended statutory tax rate provides a reasonable basis for the pro forma adjustments.

Note 4: Management Adjustments

Management has elected to present management adjustments to the pro forma financial information and included all adjustments necessary for a fair statement of such information. As part of Vista Outdoor, our historical combined financial statements include allocations for certain costs of support functions that are provided on a centralized basis, which include finance, human resources, information technology, legal, strategy, and other support functions.

Following the separation, as a standalone company we expect to incur incremental one-time and recurring costs in certain corporate support functions based on our design efforts to develop an operating model aligned with the requirements of a standalone company such as system implementation costs, business and facilities separation, applicable employee-related costs, development of our brand and other matters.

We also expect to incur recurring and ongoing costs required to operate new functions for a public company such as external reporting, internal audit, treasury, investor relations, board of directors and officers, stock administration, and expanding the services of existing functions such as information technology, finance, supply chain, human resources, legal, tax, facilities, and branding and insurance.

Management expects to incur these costs beginning at separation through a period of approximately six to twelve months post separation.

Primarily as a result of the above items, Outdoor Products expects to incur higher expenses than the historical allocated costs due to dis-synergies in order to operate as a standalone public company. The adjustments below reflect these dis-synergies, which are represented by higher costs of $8,627 for the three months ended June 25, 2023 and $25,108 for the fiscal year ended March 31, 2023.

Management estimated these dis-synergies by using Vista Outdoor’s fiscal year 2024 corporate budget as a baseline and conducting an incremental assessment for each corporate functional area (financial reporting, tax, legal, risk management, human resources, information technology and other general and administrative functions) and an employee-level census to identify all incremental resources and associated costs, including systems and third-party contracts as noted above, required for Outdoor Products to operate as a standalone public company. This assessment was performed consistently across all departments and consisted of department leads identifying the frequency, length, and sourcing model (in-source, third-party, etc.) needed for the business on an ongoing basis. The employee-level census involved the analysis of employee compensation, benefits and other non-salary related costs based on the number of employees that would be needed to provide corporate services at Outdoor Products after the separation. As a result of this assessment, management identified both incremental needs to those which are included in the historical financial statements and covered by the Transition Services Agreement as well as new needs not previously incurred. Any shortfall of required resource needs will be filled through external hiring or will be supported by Vista Outdoor through transition arrangements.

Additional dis-synergies have been estimated based on assumptions that management believes are reasonable. However, actual additional costs that will be incurred and cost savings could be different from the estimates and would depend on several factors, including the economic environment, results of contractual negotiations with third-party vendors, ability to execute on proposed separation plans, and strategic decisions made in areas such as human resources, insurance and information technology. In addition, adverse effects and limitations including those discussed in the section entitled “Risk Factors” beginning on page 30 of this Information Statement may impact actual costs incurred. If Outdoor Products decides to increase or reduce resources or invest more heavily in certain areas in the future, that will be part of its future decisions and have not been included in the management adjustments below.

 

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These management adjustments include forward-looking information that is subject to the safe harbor protections of the Exchange Act. The tax effect has been determined by applying the statutory federal and state income tax rate to the aforementioned adjustments.

 

     For the three months ended June 25, 2023        
     Net loss      Basic and diluted
loss per share
     Basic and diluted
weighted average
shares
       

*Unaudited pro forma combined net loss

   $ (5,358    $ (0.09      57,455       (q

Management adjustments:

          

Dis-Synergies

     (8,627        

Tax effect

     2,071          
  

 

 

         

Unaudited pro forma combined net loss after management adjustments

   $ (11,914    $         (0.21)        57,455       (q
  

 

 

         
     For the year ended March 31, 2023        
     Net loss      Basic and diluted
loss per share
     Basic and diluted
weighted average
shares
       

*Unaudited pro forma combined net loss

   $ (334,224    $ (5.84      57,190       (q

Management adjustments:

          

Dis-Synergies

     (25,108        

Tax effect

               6,026          
  

 

 

         

Unaudited pro forma combined net loss after management adjustments

   $ (353,306    $ (6.18      57,190       (q
  

 

 

         

 

*

As shown in the Unaudited Pro Forma Condensed Combined Income Statement

 

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BUSINESS

Our Purpose, Vision and Commitment

Our purpose is to be a passionate outdoor company with the brands, products and culture that unite people around a shared love and responsibility for the outdoors.

Our vision is to build powerhouse brands that empower individuals to achieve their goals and live their best outdoor lives.

Our commitment is to invest in people and communities, create safe environments, lead through innovation and promote responsible stewardship of the outdoors in everything we do.

Leader in the Outdoor Industry

Outdoor Products is a leading platform of iconic consumer product brands that serve a diverse range of outdoor enthusiasts around the world. We design, develop, manufacture, source and distribute outdoor and lifestyle gear, equipment and apparel to enhance the experiences of hikers, campers, cyclists, off-road riders, skiers, snowboarders, backyard grillers, golfers, anglers and hunters. Given our broad product offering across our diversified portfolio of outdoor brands, we believe that our business is well-positioned to continue to capture lifestyle shifts toward outdoor recreation. As we continue to grow and build our brand portfolio, we expect to further strengthen our market footprint and connection with our consumers through innovative product offerings and competitive pricing. Our industry-leading verticals – Hydration, Golf, Action Sports, Outdoor Cooking, Outdoor Accessories, Fishing and Technical Gear and Apparel – together with our Centers of Excellence, have enabled us to drive strong financial performance, as evidenced by a compound annual revenue growth of 14.3% (or 3.8%, excluding the impact of acquisitions) from fiscal year 2020 to fiscal year 2023.

We are headquartered in [            ] and have manufacturing and distribution facilities in the U.S., Canada, Mexico and Puerto Rico along with international customer service, sales and sourcing operations in Asia and Europe. We have a robust global distribution network serving customers in over 100 countries. We have a world class supply chain and operations team that includes over 70 employees based in Asia. This team has extensive experience that we use to navigate difficult supply chain issues by utilizing both scale and expertise. Additionally, we continue to invest in operational and supply chain improvements and optimize our distribution system, including by combining existing distribution centers to achieve cost improvements and rerouting distribution pathways based on customer concentrations to reduce delivery times.

We believe that over the past eight years, we have earned a reputation in the outdoor products industry as the acquirer of choice. We believe that founders and management of companies we acquire attribute value to our ability to provide operating expertise and resources on a scale that can significantly accelerate the growth of their companies. We work closely with founders and management throughout the due diligence process to understand their culture and goals for their business and then execute on a strategy designed to achieve their vision. This has led to many proprietary acquisition opportunities (by which we mean acquisition opportunities that are not offered to a wider potential acquirer group), with over 50% of our acquisitions since 2021 being proprietary in nature. Successful acquisitions and subsequent integrations we have completed include Foresight Sports, QuietKat, Stone Glacier, Fiber Energy Products, Camp Chef, CamelBak, Bell, Giro, Simms Fishing and Fox Racing. We believe that our M&A Center of Excellence, combined with our repeatable, sophisticated due diligence and integration model, will continue to provide us with a competitive advantage as we drive growth through identification and consummation of strategic acquisition opportunities.

We believe that the Vista Outdoor Board’s decision to separate the Outdoor Products business from Sporting Products creates a number of compelling benefits. Outdoor Products will have an enhanced strategic focus with resources to support its specific operational needs and growth drivers along with a strengthened ability to attract and retain top talent.

Diversified Portfolio of Iconic Outdoor Brands

Our brands are well known market leaders in their respective product categories. Many of our brands have a rich, long-standing heritage and connection to their core consumer markets, such as CamelBak, Bell, Giro, Camp Chef, Bushnell, Fox Racing and Simms Fishing. Our portfolio also includes newer, high-growth brands that are capturing changing consumer preferences and leading technological advances in their respective fields, such as our golf technology brand, Foresight Sports, our e-bike brand, QuietKat, and our back-country hunting gear, packs and apparel brand, Stone Glacier.

Our Reportable Segments and Verticals

 

   

Performance Sports. Our Performance Sports reportable segment consists of our Golf vertical and our Outdoor Accessories vertical.

 

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Golf. Our Golf vertical is comprised of the Bushnell Golf and Foresight Sports brands. The primary Golf product lines include launch monitors, laser rangefinders, GPS devices, golf simulators and other technology products. The Bushnell Golf brand is #1 in GPS and rangefinders, and the Bushnell Golf and Foresight Sports brands, on a combined basis, are #2 in launch monitors.

 

     

Outdoor Accessories. Our Outdoor Accessories vertical is comprised of 18 brands in the hunting and broader outdoor recreation space. Our market-leading brands in this vertical include Bushnell, Blackhawk, Champion, Gold Tip, Primos and RCBS. The primary Outdoor Accessories product lines include sport optics and archery and hunting accessories.

 

   

Action Sports. Our Action Sports reportable segment consists of our Action Sports vertical.

 

     

Action Sports. Our Action Sports vertical is comprised of the Bell, Blackburn, Copilot, Fox Racing, Giro, Krash!, QuietKat and Raskullz brands. The primary Action Sports product lines include e-bikes, helmets, goggles and accessories for cycling, snow sports, motocross and power sports. The Bell, Fox Racing and Giro brands, on a combined basis, are #1 in helmets, and the Giro brand is #2 in snow goggles and #2 in snow helmets.

 

   

Outdoor Recreation. Our Outdoor Recreation category consists of our Hydration vertical, our Outdoor Cooking vertical, our Fishing vertical and our Technical Gear and Apparel vertical.

 

     

Hydration. Our Hydration vertical is comprised of the CamelBak brand. The primary Hydration product lines include hydration packs, water bottles, drinkware and coolers. The CamelBak brand is #1 in bike and hike hydration packs and #1 in bike water bottles.

 

     

Outdoor Cooking. Our Outdoor Cooking vertical is comprised of the Camp Chef and Fiber Energy Products brands. The primary Outdoor Cooking product lines include pellet grills, cookware, pellets and camp stoves. The Camp Chef brand is #2 in camp stoves and #4 in pellet grills.

 

     

Fishing. Our newest vertical, Fishing, is comprised of the Simms Fishing brand. The primary Fishing product lines include waders, sportswear, outerwear, footwear and fishing tools and accessories. The Simms Fishing brand is #1 in waders for the independent retailer market and has a strong position as a premium angling brand.

 

     

Technical Gear and Apparel. Our Technical Gear and Apparel vertical is comprised of the Stone Glacier brand. The primary Technical Gear and Apparel product lines include packs, camping equipment and technical apparel.

 

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Notes:

1. Action Sports also includes Copilot and Krash!

2. Outdoor Accessories also includes Beestinger, Butler Creek, Eagle, Gunmate, Hoppe’s, M-Pro 7, Outers, Redfield, Simmons, Tasco, Uncle Mike’s, Venor and Weaver

Customers & Marketing

We serve the outdoor recreation market through a diverse portfolio of well-recognized brands that provide consumers with a wide range of performance-driven, high-quality and innovative products. We sell our products through big-box, specialty and independent retailers and distributors such as Academy, Amazon, Bass Pro Shops/Cabela’s, Dick’s Sporting Goods, Nations Best Sports, Recreational Equipment, Inc., Sports Inc., Sports South, Scheels, Sportsman’s Warehouse, Target and Walmart. Some of our products are also sold directly to consumers through our brands’ websites and retail locations. We have a scalable, integrated portfolio of brands that allows us to leverage our deep customer knowledge, product

 

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development and innovation, supply chain and distribution and sales and marketing functions across product categories to better serve our retail partners and consumers.

Sales to our top ten customers accounted for approximately 23% of our combined net sales in fiscal year 2023. In fiscal year 2023, U.S. customers represented approximately 71% of our sales, and customers outside of the U.S. represented approximately 29% of our sales. See Note 17, Operating Segment Information, to the audited combined financial statements included elsewhere in this Information Statement for further information regarding our customers and geographic information regarding our sales.

Omni-channel marketing and sales have been a major focus of our business, and we have gained meaningful traction with our various initiatives. Direct-to-consumer channels, including our brands’ direct-to-consumer websites, owned brick and mortar retail, mobile device applications and third-party market places, represent an increasing portion of our sales across all of our brands. Through our shared E-commerce Center of Excellence, we deploy resources and expertise to all of our brands to help them accelerate the growth of their presence in these channels and respond to changes in consumer shopping behavior. We have found that direct-to-consumer strategies not only enable us to achieve higher margins, but also benefit the customer by providing the convenience of accessing our full portfolio of products wherever and whenever they want to shop.

We believe the outdoor recreation industry is led by enthusiasts with a passion for reliable, high-performance products, who rely on a wide variety of media for opinions and recommendations about available products. We use paid, earned, shared and owned media to enhance the perception of our brands and products and to reinforce our leadership positions in the market. We supplement this exposure with data-driven print and digital advertising that is designed to maximize reach and return on investment. We have an industry-leading digital media presence that includes YouTube and other social media influencers. Our goal is to strengthen our existing consumers’ brand loyalty while at the same time reaching new users of our products.

Compelling Industry Dynamics

Significant Market Opportunity

Our penetration of the total addressable market (“TAM”) for outdoor products continues to expand with each new product innovation and adjacent market entered. We define TAM as the sum of the entire potential market revenue in the categories in which we have a presence, independent of our ability to reach and serve that market. TAM is calculated using data from third-party research, publicly available information and the Company’s internal research. Our core outdoor products TAM in the U.S., which includes product categories where our brands have leadership or meaningful positions, exceeded an estimated $15 billion as of 2022. Our global TAM exceeded an estimated $100 billion as of 2022, with a strong outlook as participation in outdoor activities continues to grow, reaching a record 168.1 million participants, or over 50% of the U.S. population over the age of six, as of 2022. The surge of participation brought on by the COVID-19 pandemic has persisted, as the new participants continue to be engaged despite the return of pre-pandemic activities and routines. Given our estimated TAM and our revenue of approximately $1.3 billion for the fiscal year ended March 31, 2023, we believe we have significant opportunity for future growth.

Fragmented Market

The outdoor recreation industry is highly fragmented, with a large number of companies operating in specialized areas, many of which are adjacent to the areas in which Outdoor Products currently operates. Given the scale and diversity of our brand portfolio, we believe we are well-positioned to execute tuck-in acquisitions to expand our footprint in this space. There were over 1,000 athletic and sporting goods manufacturers in the U.S. as of December 2022, with new companies emerging at a rapid pace. We believe that as an acquirer of choice, we will have many opportunities to continue to expand our strong portfolio of brands.

Secular Tailwinds

The outdoor recreation industry has benefited from strong outdoor participation trends across multiple outdoor activities, including camping, cycling, hunting and golf. For example, participation in outdoor recreation in the U.S. has been steadily growing since 2014 and hit an all-time high in 2022 as measured by number of participants. Furthermore, according to the National Golf Foundation, on-course participation in golf has risen five years in a row, reaching 25.6 million golfers in 2022, the highest level in more than a decade. While COVID-19 contributed to this increased participation in outdoor recreation, we continue to observe elevated participation rates as we emerge from the pandemic and expect these trends to continue going forward.

 

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Sources:

1. Outdoor Products revenue for FY 2023 as set forth in the combined financial statements, included elsewhere in this Information Statement.

2. Represents all categories that Outdoor Products currently operates in within the U.S. market.

3. Includes adjacent outdoor categories, Golf, outdoor apparel, hiking, camping, and hunting / fishing equipment. International geographies include EU, Australia, Japan, China and Korea.

Competitive Strengths

One of the Largest Portfolios in the Outdoor Products Space, Comprised of Iconic and Highly Sought-After Brands

Our portfolio includes iconic, market-leading brands and is one of the largest collections in the industry, consisting of 34 brands that design, manufacture and market outdoor products. We serve a broad and diverse range of consumers around the globe, including hikers, campers, cyclists, off-road riders, skiers, snowboarders, backyard grillers, golfers, anglers and hunters. Many of our brands have a rich, long-standing heritage and connection to their core consumer markets, such as CamelBak, Bell, Giro, Camp Chef, Bushnell, Fox Racing and Simms Fishing. Our portfolio also includes newer, high-growth brands that are capturing changing consumer preferences and leading technological advances in their respective fields, such as our golf technology brand, Foresight Sports, our e-bike brand, QuietKat, and our back-country hunting gear, packs and apparel brand, Stone Glacier. We believe this diverse brand portfolio is a source of strength for our company and helps us maintain leading market share positions in multiple product categories, while also nimbly responding to changes in consumer preferences and technology.

Our operating model leverages our shared resources and Centers of Excellence (described below) across brands to achieve levels of performance that would be out of reach for any one brand on its own. To maintain the strength of our brands and drive revenue growth, we invest our shared resources in product innovation and seek to continuously improve the performance, quality and affordability of our products. Our scale and expertise allow us to provide our brands with top tier operational capabilities in digital marketing and e-commerce, supply chain management, distribution and customer support for our retail partners and end consumers. Furthermore, our scale enables us to leverage our cumulative consumer insights and achieve greater negotiating power with respect to vendors, suppliers and retailers to provide a competitive advantage to our brands.

Proven, Repeatable Acquisition and Integration Process

We focus on four main criteria when evaluating acquisition targets, which has allowed us to build and apply a consistent, repeatable acquisition and integration process:

 

  1.

Acquire in existing and adjacent spaces.

 

  2.

Acquire great brands that resonate with consumers.

 

  3.

Acquire businesses where we can add value and have a clear path to synergies.

 

  4.

Acquire businesses at attractive multiples that are accretive to our company valuation.

 

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As part of Vista Outdoor, we have completed seven acquisitions since the end of calendar year 2020 to add scale, expand our addressable market and add new capabilities. Our M&A strategy follows a disciplined process in which we allocate capital to attractive markets and complementary brands to build upon our extensive portfolio and broaden our base of consumers. At the same time, we maintain a founder’s mentality in which we give brands the autonomy to continue running and growing their businesses while leveraging the shared resources of our Centers of Excellence. Focusing on companies operating in existing and adjacent spaces ensures our ability to efficiently integrate new brands into our portfolio and enables rapid scaling by leveraging common systems, pre-existing consumer insights and competitive knowledge to improve performance and achieve synergies among our businesses. Moving forward, we expect that these learned skills and capabilities will continue to be a key differentiator for Outdoor Products. Set forth below are illustrative examples of how we have applied our corporate operating expertise to several recently acquired companies.

 

   

 

LOGO

 

 

LOGO

 

 

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Date Acquired:

  September 28, 2021   August 5, 2022   August 22, 2022
       
How did Outdoor Products add expertise?  

•  Invested heavily in talent (e.g., engineering, finance and procurement)

•  Leveraged Supply Chain CoE to ensure supply continuity

•  Implemented tailored operational enhancement plan

 

•  Utilized Supply Chain CoE to reduce facility footprints, build stronger strategic relationships with suppliers and consolidate contracts

•  Consolidated back office while combining teams to fuel innovation

 

•  Engaged with leadership at other Vista Outdoor brands to improve go-to-market sales process

•  Assistance from the Supply Chain CoE improved currency and other costs

What were the results?

 

•  Well-positioned to become a sizeable golf technology business based on sales

•  Meaningful go-to-market synergies with Bushnell Golf business

 

•  Achieved economies of scale and meaningful back office and go-to-market synergies

•  Enhanced collaboration and creativity while investing to strengthen our brands for more impact

 

•  Enhanced clarity and desired outcomes of the go-to-market strategy

•  Meaningful reduction to cost of goods sold in fiscal year 2023 to support gross margin improvements

Culture of Innovation Drives Robust New Product Pipeline

In the highly competitive businesses in which we operate, new product innovation is critical to our brands’ success. Our scale and shared resources allow us to continue to invest in new product innovation at all points in the economic cycle. We employ approximately 125 dedicated design and product development professionals across our brands. By applying our engineering and manufacturing expertise, we have been able to bring new and innovative products to market that maintain product differentiation, deliver improved margins and meet the demanding requirements of our enthusiast consumers. Recent examples of our innovative, market-leading products include:

 

   

Stone Glacier, a leading manufacturer of premium outdoor equipment, recently announced its complete, systematic line of technical gloves and mittens. The brand’s versatile lineup includes its Chinook Merino Gloves, Mirka Gloves, Graupel Fleece Gloves, Altimeter Gloves and Altimeter Mitts – providing comfort through dexterity in varying backcountry conditions.

 

   

Bushnell, an industry leader in performance optics, released the Fusion X Rangefinding Binoculars and Prime 1800 Laser Rangefinder, both featuring ActivSync technology that automatically transitions readouts from black to red depending on lighting conditions. Last year, Bushnell also introduced the Broadhead Laser Rangefinder, the most accurate consumer grade rangefinder on the market with 0.3-yard accuracy out to 150 yards.

 

   

QuietKat, a leader in innovation within the off-road e-bike industry, introduced a brand new e-bike model, the Lynx. The Lynx represents the latest in full-suspension electric bicycles with an innovative design that pushes the envelope of style and high-performance for the brand. The Lynx establishes a new category for QuietKat, as it takes its proven off-road capabilities and blends it with a café moto style in a fun and powerful ride that is aimed at the discerning user who demands the latest technology and a premium ride. Able to tear up the road in style, then go further when the pavement ends, the Lynx is a fully capable off-road technical machine that can tackle the roughest terrain.

 

   

Fox Racing, a leader in motocross industry and a growing brand in the mountain bike category, has entered the mountain bike shoe category with the launch of the Union shoes series. With this offering, Fox Racing now provides mountain bike and motocross riders offerings for head-to-toe protection and apparel. From world champions to

 

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everyday trailblazers, the new Union shoes deliver a real connection to the bike with grip, durability and superb fit offered across all three versions to suit multiple ride styles and rider needs.

 

   

CamelBak recently launched new and redesigned hiking hydration packs as part of its Spring 2023 collection. These models include the all-new Fourteener collection, a fully redesigned Octane 22 and two new sizes in the Octane family. The new and redesigned hydration packs blend technical features with premium materials to provide hikers with a range of size options and styles suitable for any environment and length of day hike.

 

   

For avid golfers, Bushnell Golf has continued to build off the success of the previous generation of products and revolutionize golf laser rangefinders with the feature rich Pro X3. The Pro X3 has taken our best-performing rangefinder and taken it to the next level, offering accuracy and performance unmatched by other laser rangefinders. The Pro X3 also features a new, patent-pending Locking Slope-Switch, significantly reducing the user’s risk of accidentally putting the unit into Slope mode during tournament play. The Pro X3 is our most advanced and best performing rangefinder to date and is the model preferred and used by many PGA Tour players.

Centers of Excellence Provide Significant Scale Advantage

We have developed a methodical approach to sharing our expertise in supply chain, e-commerce and M&A, which we refer to as our Centers of Excellence, across our verticals. Our Centers of Excellence provide our brands with significant shared resources that can be leveraged to drive growth in revenue and profitability, including expertise in sourcing, global distribution, enhanced purchasing power, sophisticated e-commerce systems, advanced analytics and a proven M&A playbook. We believe that our Centers of Excellence enable us to manufacture and distribute products in a more efficient and strategic manner than our competitors. Additionally, our Centers of Excellence enable our brands to dedicate a greater portion of their time to creating new, innovative products for consumers and better experiences for customers, enabling us to better serve their needs and capture market share. With our Centers of Excellence, we have the ability to realize the full potential of the businesses we acquire. This has become a compelling aspect of our value proposition, which has positioned us as the acquirer of choice in the outdoor industry. As we invest in our business and acquire more brands, the power of our Centers of Excellence will continue to grow as we scale and build on these competencies, driving further operating leverage.

Integrated supply chain management is a core focus of our company. We source finished product both domestically and internationally for global distribution and have teams of local sourcing and quality assurance experts on the ground where our largest suppliers are located. We continuously seek to improve our vendor base as well as our in-country support and oversight, and through our integrated supply chain management process, we seek to provide year-over-year reductions in product costs. We believe the scope and scale of our sourcing network would be difficult for many of our competitors to replicate. As a result of the COVID-19 pandemic, supply chain interruption impacted our company beginning in 2020. Our team worked to mitigate these impacts including by increasing output from our current suppliers and identifying alternatives. As of 2023, this risk has largely been abated and we do not expect supply chain issues to have a material impact in the near future.

Our supply chain and logistics infrastructure gives us the ability to serve a broad array of wholesale and retail customers, many of whom rely on us for services such as category management, marketing campaigns, merchandising and inventory replenishment. We believe our strong wholesale and retail relationships and diverse product offering provide us with a unique competitive advantage.

E-commerce has been a focus of our business, and we have gained meaningful traction with our various initiatives. We have found that e-commerce not only enables us to achieve higher margins, but also benefits the customer by providing the convenience of accessing our full portfolio of products wherever and whenever they want to shop.

We maintain strong relationships with our retail partners based on trust and professionalism. Our long-standing commitment to our customers, diverse product offering and focus on profitability for both our company and our retail partners have enabled us to gain shelf space and secure premium placement of our products at many major retailers. Our management team interfaces directly with the executives of many of our top retail partners to ensure we are delivering the products our retailers need to meet the demands of the end consumer in the most efficient and profitable manner possible. Furthermore, we believe our scale allows us to leverage our resources to efficiently and profitably service our largest retail customers. For example, we work with our key retail customers to develop marketing and advertising campaigns, provide inventory replenishment support and organize product category merchandising plans.

 

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LOGO

Visionary and Experienced Management Team

We have a highly experienced and proven management team that drives accountability and discipline throughout our organization, resulting in successful execution of the Company’s strategy.

We pride ourselves on our culture and our people. We are committed to upholding a diverse and inclusive work environment with meaningful opportunities for career development and leadership roles.

Robust Strategy for Continued Growth

Our strategy focuses on five strategic pillars that we believe will deliver sustainable and profitable growth, solidifying our position as the outdoor recreation market leader.

 

   

Talent and Culture: Invest in talent and foster our culture of agility, efficiency and innovation.

 

   

Organic Growth: Identify and capture opportunities for organic growth and market share expansion by:

 

     

allocating capital to our brands to aid in their development of new and innovative products that serve the needs and preferences of their core consumers while also expanding product offerings to new end markets and consumers;

 

     

leveraging and expanding our distribution channels to increase the commercial presence of all of our brands and efficiently deliver product to meet consumer demand;

 

     

utilizing our differentiated knowledge and expertise from our E-commerce Center of Excellence to help brands grow quickly and scale the business faster than they are able to alone; and

 

     

expanding our presence internationally by leveraging our existing footprint to capture additional geographies, markets and consumers.

 

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Centers of Excellence: Leverage our shared resources, expertise and scale to achieve a level of excellence that would be out of reach for our individual brands, with a focus on:

 

     

operational excellence to improve margins, supply chain resiliency and agility;

 

     

e-commerce, direct-to-consumer and digital marketing capabilities; and

 

     

acquisition target relationships and selection, deal execution and integration.

 

   

Acquisitions: Acquire complementary businesses in the highly fragmented outdoor recreation products market and deploy our shared resources and expertise to accelerate their growth and profitability.

 

   

Capital Allocation:

 

     

Maintain a healthy balance sheet, strong margins and robust cash flow generation to provide financial flexibility and enable us to thrive and grow at all points in the market demand cycle.

 

     

Dynamic process based on rigorous analysis that prioritizes long-term returns for our stockholders through:

 

   

organic growth opportunities;

 

   

opportunistic share repurchases when valuation is highly attractive; and

 

   

selective acquisitions at attractive multiples that are accretive to our company valuation and that have achievable and tangible synergies.

Intellectual Property

Our brand portfolio and new product innovation is supported by strategic investment in the acquisition, maintenance and enforcement of our intellectual property. Our trade names, service marks and trademarks are important to distinguish our products and services from those of our competitors. We rely on trade secrets, continuing technological innovations and licensing arrangements to maintain and improve our competitive position. We also have a portfolio of approximately 1,936 U.S. and foreign patents, and we believe these patents, as well as unpatented research, development and engineering skills, make important contributions to our business. We are not aware of any facts that would negatively impact our continuing use of any of our trade names, service marks, trademarks or patents. Our patents are generally in effect for up to 20 years from the date of the filing of the applicable patent application. Our trademarks are generally valid as long as they are in use and their registrations are properly maintained and have not been found to have become generic.

Quality Assurance

We maintain a disciplined quality assurance process. We set stringent metrics to drive year-over-year quality improvements. We also have customer call centers, which allow us to collect feedback on our customer service to ensure that our customers and end consumers are satisfied with our products and customer service.

Competition

Competition in the markets in which we operate is based on a number of factors, including price, quality, product innovation, performance, reliability, styling, product features and warranties, as well as sales and marketing programs. Given the diversity of our product portfolio, we have various significant competitors in each of our markets, including: Hydro Flask, Contigo, Yeti, Helen of Troy and Nalgene in our Hydration vertical; Callaway, Garmin, Nikon, SkyTrak and Trackman in our Golf vertical; Schwinn, Bontrager, Smith, Specialized, Canyon, Shoei and Alpine Stars in our Action Sports vertical; Traeger, Weber, Pit Boss, Blackstone, Solo Stove and Lodge in our Outdoor Cooking vertical; Nikon, Vortex, Leupold, Feradyne, American Outdoor Brands and Good Sportsman Marketing in our Outdoor Accessories vertical; Columbia, Huk, Patagonia, Orvis and American Fishing Tackle Company in our Fishing vertical; and Kuiu, Sitka, First Lite and Mystery Ranch in our Technical Gear and Apparel vertical.

Seasonality

Our business experiences a certain level of seasonality. Our products are used throughout the year in a number of varying activities. For example, during the spring and summer months, sales of products such as golf and mountain biking

 

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accessories are in high demand. Similarly, sales of our winter sport accessories increase during the months of October through December. Finally, sales of our premium hunting accessories are generally highest during the months of August through December due to shipments around the fall hunting season and holidays. Each fiscal quarter during the past four fiscal years has accounted for approximately 20% or more of our revenue for the related fiscal year.

Regulatory Matters

Like many other manufacturers and distributors of consumer products, we are required to comply with numerous laws, rules and regulations, including those involving labor and employment law, environmental law, consumer product safety, data privacy and security, workplace safety and the export and import of our products. These laws, rules and regulations currently impose significant compliance requirements on our business, and more restrictive laws, rules and regulations may be adopted in the future. We believe we are in material compliance with all applicable domestic and international laws and regulations.

Our operations are subject to numerous international, federal, state and local laws and regulations relating to environmental protection, including those governing the discharge, treatment, storage, transportation, remediation and disposal of hazardous materials and wastes and restoration of damages to the environment, as well as health and safety matters. We believe that our operations are in material compliance with these laws and regulations and that forward-looking, proper and cost-effective management of air, land and water resources is vital to the long-term success of our business. Our environmental policy identifies key objectives for implementing this commitment throughout our operations. We incur operating and capital costs on an ongoing basis to comply with environmental requirements and could incur significant additional costs as a result of more stringent requirements that may be promulgated in the future.

As a manufacturer and distributor of consumer products, we are subject to various domestic and international consumer product safety laws, such as the Consumer Products Safety Act, which empowers the Consumer Products Safety Commission to investigate and deem certain of our products as unsafe or hazardous. Under certain circumstances, the Consumer Products Safety Commission or similar international agencies could ask a court to require us to repurchase or recall one or more of our products. In addition, laws regulating certain consumer products exist in some cities and states, as well as in other countries in which we sell our products.

In some cases, the handling of our technical data and the international sale of our products is also regulated by the U.S. Department of State and Department of Commerce. These agencies oversee the export of certain of our products including night vision devices and related technical data, amongst other products. In many instances, we must obtain export authorizations for international shipments. To date, most of our requests for export licenses have been approved. These agencies can impose civil and criminal penalties, including preventing us from exporting our products, for failure to comply with applicable laws and regulations.

We are also regulated by governmental agencies such as the U.S. Department of Transportation, the U.S. Environmental Protection Agency and the U.S. Food and Drug Administration, which regulate the out-bound and in-bound movement of certain of our products, as well as components, parts and materials used in our manufacturing processes. The agencies are authorized to detain and seize shipments, as well as penalize us for failure to comply with applicable regulations. The agencies also work closely with the U.S. Department of State and the U.S. Department of Commerce to protect national security.

Human Capital

People are at the center of our success. As of August 2023, we employ approximately 2,900 people spread across multiple states, Puerto Rico and numerous countries. Our employees lead in the fields of product development, sales, distribution, supply chain management, finance and marketing, among many other talents and specialties. In total, as of August 2023, approximately 52% of our employees are in hourly production and distribution roles, directly building or distributing world-class outdoor recreation and lifestyle gear and products for our consumers. We have no union-represented employees, other than those outside of the United States where required by law. We believe that our employee relations are generally good.

Support for our people drives us at every level. We prioritize employee success and well-being through a strong corporate infrastructure that supports employee engagement, recruiting, professional development, safety, diversity, compensation and benefits. Our overall commitment and value proposition for our employees begins with our culture and is rooted in the success of our business. When we do well, it enables us to do good for our communities, employees and charitable partners.

 

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Employee Engagement

We are committed to two-way conversations with employees. Vista Outdoor’s Chief Executive Officer and business unit leaders hold regular employee town hall meetings where they provide updates and take employee questions. Following the Spin-Off, we expect to also regularly hold such meetings. We regularly update employees with company news, important notices, our philanthropic efforts and employee stories through many channels, including our internal digital hub (InSite), social media and our public-facing website. These employee engagement initiatives are especially important across our diverse network which includes multiple locations across the globe and a diverse set of working environments, including production, office, hybrid and remote.

Recruiting

We place a large emphasis on recruiting talented people to join our company. We prioritize the hiring of smart, energetic and passionate people who not only have the skills we need to thrive in the marketplace, but who also have diverse experiences and perspectives. We have partnered with a variety of organizations to expand our recruiting base so that we can better attract talented veterans, people of color, women and others with backgrounds who would strengthen our business and underlying culture.

Professional Development

We take career development seriously. We go to great lengths to make learning and knowledge available to our employees. We deploy a variety of worker training programs on our factory and production floors, including the use of internal leaders and outside safety trainers. Programs such as tuition reimbursement, internships and employee scholarship programs are some of the ways we are investing in our people and their knowledge. We know that these investments are not only good for people, but they are also good for our business. We have seen an increase in internal promotions from all levels of the organization.

Safety

We operate in a highly regulated environment in the U.S. and international markets. U.S. federal, state and local governmental entities and foreign governments regulate many aspects of our business through product safety standards, laws and regulations.

While employees across our locations work to ensure compliance with the product safety laws and regulations that apply to their products, we have a team of dedicated professionals within the corporate Compliance Department who oversee all aspects of product safety and compliance across the company. Our product safety and compliance personnel have broad and diverse academic and experience credentials and are often sought out by regulators, law enforcement, other industry participants and internal stakeholders to serve as expert consultants and witnesses. This organizational structure, together with robust internal policies and procedures, helps ensure that we meet our continuing obligations to regulators and consumers throughout the product life cycles and to keep our employees safe.

On the consumer side, as an outdoor recreation company, we believe that our consumers should be safe when engaging in the outdoor activity of their choice. We partner with a variety of organizations who share these same goals, support policies that advance safety initiatives and use our brand verticals to educate and share best practices for the safe use of our products.

Diversity and Inclusion

We continuously look for ways to be a more diverse and inclusive company, from improving our recruiting and marketing efforts to expanding career growth opportunities and external partnerships. Our diversity and inclusion metrics as of August 2023 include:

 

% of US employees identifying as persons of color (non-white)

     21

% of US Leadership (manager & above) identifying as persons of color*

     13

% of US employees who identify as female

     36

% of US Leadership (manager & above) who identify as female

     31

% of US employees who are veterans

     3

 

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Compensation

We believe in equal pay for equal work. We believe pay and compensation should match the talent, experience and skill set of a person, and nothing else. We expect to regularly review our compensation practices and benchmark our performance to others in the industry to ensure we are fulfilling our obligation of fair pay.

Benefits

We expect that our benefits programs will offer comprehensive coverage to help protect our employees’ health, family and future, and will be an important part of the total compensation we provide. We expect to offer both company-provided and optional benefits, including basic life insurance, medical, prescription, telemedicine and an employee product purchase program. We expect to offer a 401(k) savings plan, with a higher-than-average match for participating employees.

Properties

Facilities - We occupy manufacturing, assembly, distribution, warehouse, test, research, development and office facilities. All our facilities are leased unless noted otherwise below.

As of August 2023, we had significant operations in the following locations, which include office, manufacturing and distribution facilities:

 

 Performance Sports

  

Overland Park, KS; Olathe, KS, Brookhaven, MS; Manhattan, MT; *Oroville, CA; San Diego, CA; *Richmond, IN; Lares, PR; Tijuana, MX

 Action Sports

   Irvine, CA; Stockton, CA; Rantoul, IL; Eagle, CO; Barcelona, Spain

 Outdoor Recreation

   Petaluma, CA; Rantoul, IL; Hyde Park, UT; Bozeman, MT; Mountain View, AR; Seymour, MO; Tijuana, MX

 Corporate

   Anoka, MN

 * denotes owned properties

Our properties are well maintained and in good operating condition and are sufficient to meet our near-term operating requirements.

Legal Proceedings

From time to time, we are subject to various legal proceedings, including lawsuits, which arise out of, and are incidental to, the conduct of our business. We do not consider any of such proceedings that are currently pending, individually or in the aggregate, to be material to our business or likely to result in a material adverse effect on our operating results, financial condition or cash flows.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations for the three years ended March 31, 2023, 2022 and 2021 and for the three months ended June 25, 2023 and June 26, 2022 together with the combined financial statements and the notes thereto included elsewhere in this Information Statement, as well as the information presented in the sections entitled “Unaudited Pro Forma Condensed Combined Financial Statements” and “Business” beginning on pages 66 and 76, respectively, of this Information Statement. This discussion contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Cautionary Statement Concerning Forward-Looking Statements” beginning on pages 30 and 52, respectively, of this Information Statement. All dollar amounts in this section are presented in thousands.

Our discussion within Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is organized as follows:

 

   

Overview This section contains background information on our company, a summary of significant themes and events during the fiscal periods covered hereby as well as strategic initiatives, and an outlook along with current trends in order to provide context for management’s discussion and analysis of our financial condition and results of operations.

 

   

Results of operations This section contains an analysis of our results of operations presented in the accompanying combined statements of operations by comparing the results for the three months ended June 25, 2023 to the results for the three months ended June 26, 2022, the results for the fiscal year ended March 31, 2023 to the results for the fiscal year ended March 31, 2022, and the results for the fiscal year ended March 31, 2022 to the results for fiscal year ended March 31, 2021.

 

   

Financial condition, liquidity and capital resources This section provides an analysis of our cash flows by comparing the results for the three months ended June 25, 2023 to the results for the three months ended June 26, 2022, and the results for the fiscal year ended March 31, 2023 to the results for the fiscal year ended March 31, 2022, and by setting forth a discussion of our contractual obligations at March 31, 2023.

 

   

Critical accounting estimates This section contains a discussion of the critical accounting estimates that we believe are important to our financial condition and results of operations and that require judgment and estimates on the part of management in their application. In addition, all of our significant accounting policies, including critical accounting policies, are summarized in Note 2, Significant Accounting Policies, to our audited combined financial statements included elsewhere in this Information Statement.

OVERVIEW

Basis of Presentation and Separation from Vista Outdoor Inc.

On May 5, 2022, Vista Outdoor announced that the Vista Board of Directors approved preparations for the separation of Vista Outdoor’s Outdoor Products and Sporting Products segments into two independent, publicly-traded companies via a spin-off of the Outdoor Products segment. To effect the separation, first, Vista Outdoor will undertake the Internal Transactions described under the section entitled “Certain Relationships and Related-Party Transactions—Agreements with Vista Outdoor—Separation and Distribution Agreement” beginning on page 140 of this Information Statement. Vista Outdoor will subsequently distribute all of Outdoor Products’s common stock to Vista Outdoor stockholders, and Outdoor Products, holding the businesses constituting Vista Outdoor’s current “Outdoor Products” reporting segment, will become an independent, publicly-traded company. In connection with the Spin-Off, Vista Outdoor is being treated as the accounting “spinnor”, consistent with the legal form of the transaction.

The combined financial statements included elsewhere in this Information Statement reflect the historical financial position, results of operations and cash flows of the Company for the periods presented as the Company was historically managed within Vista Outdoor. The combined financial statements have been prepared on a “carve-out” basis and are derived from the consolidated financial statements and accounting records of Vista Outdoor. The combined financial statements have been prepared in U.S. dollars and in conformity with accounting principles generally accepted in the United States (“GAAP”). The combined financial statements may not be indicative of the Company’s future performance and do not necessarily reflect what the results of operations, financial position and cash flows would have been had we operated as an independent company during the periods presented.

 

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The combined financial statements include expense allocations for certain functions provided by Vista Outdoor, including but not limited to general corporate expenses related to finance, legal, information technology, human resources, communications and insurance. These expenses have been allocated to the Company on the basis of direct usage when identifiable, with the remainder principally allocated on the basis of percent of revenue, headcount or other measures. During the three months ended June 25, 2023 and June 26, 2022, the Company was allocated $12,262 and $15,402, respectively, of such general corporate expenses, which were included within selling, general and administrative expenses in the combined statements of comprehensive income (loss). During the fiscal years ended March 31, 2023, 2022 and 2021, the Company was allocated $44,880, $59,724 and $38,150, respectively, of such general corporate expenses, which were included within selling, general and administrative expenses in the combined statements of comprehensive income (loss). Management considers the basis on which the expenses have been allocated to reasonably reflect the utilization of services provided to or the benefit received by the Company during the periods presented. The allocations may not, however, reflect the expenses the Company would have incurred if the Company had been an independent company for the periods presented. Actual costs that may have been incurred if the Company had been an independent company would depend on several factors, including the organizational structure, whether functions were outsourced or performed by employees and strategic decisions made in areas such as information technology, supply chain, sales and marketing, operations and infrastructure. The Company is unable to determine what such costs would have been had the Company been independent. Following the planned separation from Vista Outdoor, the Company may perform these functions using its own resources or purchased services.

Business Overview

Outdoor Products is a leading platform of iconic consumer product brands that serve a diverse range of outdoor enthusiasts around the world. We design, develop, manufacture, source and distribute outdoor and lifestyle gear, equipment and apparel to enhance the experiences of hikers, campers, cyclists, off-road riders, skiers, snowboarders, backyard grillers, golfers and hunters. Our brands include CamelBak, Bell, Giro, Fox Racing, Camp Chef, Bushnell, QuietKat, Foresight Sports, Simms Fishing and Stone Glacier, among others. We are headquartered in [                    ] and have manufacturing and distribution facilities in the U.S., Canada, Mexico and Puerto Rico along with international customer service, sales and sourcing operations in Asia and Europe.

Our products are sold through a wide variety of big-box, specialty and independent retailers and distributors such as Academy, Amazon, Bass Pro Shops/Cabela’s, Dick’s Sporting Goods, Nations Best Sports, Recreational Equipment, Inc., Sports Inc., Sports South, Scheels, Sportsman’s Warehouse, Target and Walmart. Some of our products are also sold directly to consumers through our brands’ websites and retail locations. We have a scalable, integrated platform that allows us to leverage our deep customer knowledge, product development and innovation, supply chain and distribution and sales and marketing functions across product categories to better serve our retail partners and end consumers.

Organizational Structure

We operate our business through two reportable operating segments, Performance Sports and Action Sports, based on how our chief operating decision maker (“CODM”), our Chief Executive Officer, allocates resources and makes decisions. In addition, two of our operating segments are included in the all other category identified as Outdoor Recreation. See information on our operating segments, included elsewhere in this Information Statement. Below is the composition of our segments during the periods covered by this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

   

Performance Sports. Our Performance Sports reportable operating segment consists of our Golf vertical and our Outdoor Accessories vertical.

 

     

Golf. Our Golf vertical is comprised of the Bushnell Golf and Foresight Sports brands. The primary Golf product lines include launch monitors, laser rangefinders, GPS devices, golf simulators and other technology products.

 

     

Outdoor Accessories. Our Outdoor Accessories vertical is comprised of 18 brands in the hunting and broader outdoor recreation space. Some of our market-leading brands include Bushnell, Blackhawk, Champion, Gold Tip, Primos and RCBS. The primary Outdoor Accessories product lines include sport optics and archery and hunting accessories.

 

   

Action Sports. Our Action Sports reportable operating segment consists of our Action Sports vertical.

 

     

Action Sports. Our Action Sports vertical is comprised of the Bell, Blackburn, Copilot, Fox Racing, Giro, Krash!, QuietKat and Raskullz brands. The primary Action Sports product lines include e-bikes, helmets, goggles and accessories for cycling, snow sports, motocross and power sports.

 

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Outdoor Recreation. Our Outdoor Recreation category consists of our Hydration vertical, our Outdoor Cooking vertical, our Fishing vertical and our Technical Gear and Apparel vertical. Outdoor Recreation represents our All Other category operating segments and brands. See Note 17, Operating Segment Information, to the audited combined financial statements included elsewhere in this Information Statement for further information.

 

     

Hydration. Our Hydration vertical is comprised of the CamelBak brand. The primary Hydration product lines include hydration packs, water bottles, drinkware and coolers.

 

     

Outdoor Cooking. Our Outdoor Cooking vertical is comprised of the Camp Chef and Fiber Energy Products brands. The primary Outdoor Cooking product lines include pellet grills, cookware, pellets and camp stoves.