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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 2020
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                  
Commission file number 1-36597
Vista Outdoor Inc.
(Exact name of Registrant as specified in its charter)
Delaware
 
47-1016855
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
1 Vista Way
Anoka
MN
55303
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant's telephone number, including area code: (763) 433-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, par value $.01
 
VSTO
 
New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No 
As of July 27, 2020, there were 58,062,203 shares of the registrant's common stock outstanding.
 




TABLE OF CONTENTS
 
 
Page
PART I - Financial Information
 
PART II - Other Information
 


Table of Contents


PART I— FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Amounts in thousands except share data)
 
June 28, 2020
 
March 31, 2020
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
36,059

 
$
31,375

Net receivables
 
324,619

 
313,517

Net inventories
 
332,210

 
331,293

Income tax receivable
 
7,649

 
7,626

Other current assets
 
21,605

 
25,200

Total current assets
 
722,142

 
709,011

Net property, plant, and equipment
 
175,569

 
184,733

Operating lease assets
 
67,237

 
69,024

Goodwill
 
83,167

 
83,167

Net intangible assets
 
301,300

 
306,100

Deferred charges and other non-current assets, net
 
39,031

 
39,254

Total assets
 
$
1,388,446

 
$
1,391,289

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
115,043

 
89,996

Accrued compensation
 
26,990

 
38,806

Federal excise, use, and other taxes
 
20,892

 
19,702

Other current liabilities
 
106,202

 
98,197

Total current liabilities
 
269,127

 
246,701

Long-term debt
 
443,927

 
511,806

Deferred income tax liabilities
 
12,744

 
12,810

Long-term operating lease liabilities
 
71,686

 
73,738

Accrued pension and postemployment benefits
 
52,440

 
60,225

Other long-term liabilities
 
49,017

 
43,504

Total liabilities
 
898,941

 
948,784

Commitments and contingencies (Notes 3, 12, and 15)
 

 

Common stock — $.01 par value:
 
 
 
 
Authorized — 500,000,000 shares
 
 
 
 
Issued and outstanding — 58,066,959 shares as of June 28, 2020 and 58,038,822 shares as of March 31, 2020
 
581

 
580

Additional paid-in capital
 
1,746,919

 
1,744,096

Accumulated deficit
 
(919,572
)
 
(960,048
)
Accumulated other comprehensive loss
 
(98,774
)
 
(100,994
)
Common stock in treasury, at cost — 5,897,480 shares held as of June 28, 2020 and 5,925,617 shares held as of March 31, 2020
 
(239,649
)
 
(241,129
)
Total stockholders' equity
 
489,505

 
442,505

Total liabilities and stockholders' equity
 
$
1,388,446

 
$
1,391,289


See Notes to the Condensed Consolidated Financial Statements.

2

Table of Contents

VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
 
 
Three months ended
(Amounts in thousands except per share data)
 
June 28, 2020
 
June 30, 2019
Sales, net
 
$
479,140

 
$
459,774

Cost of sales
 
353,772

 
364,696

Gross profit
 
125,368

 
95,078

Operating expenses:
 
 
 
 
Research and development
 
5,010

 
6,494

Selling, general, and administrative
 
72,315

 
83,909

Impairment of held-for-sale assets (Note 2)
 

 
9,429

Earnings (loss) before interest and income taxes
 
48,043

 
(4,754
)
Interest expense, net
 
(6,418
)
 
(11,124
)
Earnings (loss) before income taxes
 
41,625

 
(15,878
)
Income tax provision
 
1,149

 
737

Net income (loss)
 
$
40,476

 
$
(16,615
)
Earnings (loss) per common share:
 
 
 
 
Basic
 
$
0.70

 
$
(0.29
)
Diluted
 
$
0.69

 
$
(0.29
)
Weighted-average number of common shares outstanding:
 
 
 
 
Basic
 
58,057

 
57,722

Diluted
 
58,957

 
57,722

 
 


 


Net income (loss) (from above)
 
$
40,476

 
$
(16,615
)
Other comprehensive income, net of tax:
 
 
 
 
Pension and other postretirement benefit liabilities:
 
 
 
 
Reclassification of prior service credits for pension and postretirement benefit plans recorded to net income, net of tax benefit of $0 and $0
 
(78
)
 
(78
)
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax expense of $0 and $0
 
968

 
811

Change in derivatives, net of tax benefit (expense) of $0 and $0
 
981

 
(1,150
)
Change in cumulative translation adjustment.
 
349

 
764

Total other comprehensive income
 
2,220

 
347

Comprehensive income (loss)
 
$
42,696

 
$
(16,268
)

See Notes to the Condensed Consolidated Financial Statements.

3

Table of Contents

VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 
 
Three months ended
(Amounts in thousands)
 
June 28, 2020
 
June 30, 2019
Operating Activities:
 
 
 
 
Net income (loss)
 
$
40,476

 
$
(16,615
)
Adjustments to net income (loss) to arrive at cash provided by (used for) operating activities:
 
 
 
 
Depreciation
 
11,533

 
11,290

Amortization of intangible assets
 
4,953

 
5,097

Impairment of held-for-sale assets (Note 2)
 

 
9,429

Amortization of deferred financing costs
 
377

 
580

Deferred income taxes
 
(94
)
 
(168
)
Loss on disposal of property, plant, and equipment
 
195

 

Share-based compensation
 
4,404

 
2,190

Changes in assets and liabilities:
 
 
 
 
Net receivables
 
(10,986
)
 
(4,749
)
Net inventories
 
(761
)
 
(53,811
)
Accounts payable
 
26,526

 
29,098

Accrued compensation
 
(11,820
)
 
(11,026
)
Accrued income taxes
 
982

 
992

Federal excise, use, and other taxes
 
1,180

 
(881
)
Pension and other postretirement benefits
 
(6,894
)
 
101

Other assets and liabilities
 
17,292

 
(7,695
)
Cash provided by (used for) operating activities
 
77,363

 
(36,168
)
Investing Activities:
 
 
 
 
Capital expenditures
 
(4,472
)
 
(9,212
)
Proceeds from the disposition of property, plant, and equipment
 
20

 
85

Cash used for investing activities
 
(4,452
)
 
(9,127
)
Financing Activities:
 
 
 
 
Borrowings on lines of credit
 
9,076

 
120,239

Payments on lines of credit
 
(77,332
)
 
(60,240
)
Payments made on long-term debt
 

 
(4,834
)
Payments made for debt issuance costs
 

 
(103
)
Payment of employee taxes related to vested stock awards
 
(100
)
 
(297
)
Cash (used for) provided by financing activities
 
(68,356
)
 
54,765

Effect of foreign exchange rate fluctuations on cash
 
129

 
190

Increase in cash and cash equivalents
 
4,684

 
9,660

Cash and cash equivalents at beginning of period
 
31,375

 
21,935

Cash and cash equivalents at end of period
 
$
36,059

 
$
31,595

Supplemental Cash Flow Disclosures:
 
 
 
 
Non-cash investing activity:
 
 
 
 
Capital expenditures included in accounts payable
 
$
1,034

 
$
2,531

 
See Notes to the Condensed Consolidated Financial Statements.

4

Table of Contents

VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited)
 
 
Common Stock $.01 Par Value
 
 
 
 
 
 
 
 
 
 
(Amounts in thousands except share data)
 
Shares
 
Amount
 
Additional
Paid-In
Capital
 
Accumulated Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Treasury
Stock
 
Total
Equity
Balance, March 31, 2020
 
58,038,822

 
$
580

 
$
1,744,096

 
$
(960,048
)
 
$
(100,994
)
 
$
(241,129
)
 
$
442,505

Comprehensive income
 

 

 

 
40,476

 
2,220

 

 
42,696

Exercise of stock options
 
5,000

 

 
(203
)
 

 

 
203

 

Share-based compensation
 

 

 
4,404

 

 

 

 
4,404

Restricted stock vested and shares withheld
 
21,824

 

 
(1,324
)
 

 

 
1,224

 
(100
)
Employee stock purchase plan
 

 

 

 

 

 

 

Other
 
1,313

 
1

 
(54
)
 

 

 
53

 

Balance, June 28, 2020
 
58,066,959

 
$
581

 
$
1,746,919

 
$
(919,572
)
 
$
(98,774
)
 
$
(239,649
)
 
$
489,505

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, March 31, 2019
 
57,710,934

 
$
577

 
$
1,752,419

 
$
(804,969
)
 
$
(82,967
)
 
$
(256,020
)
 
$
609,040

Comprehensive loss
 

 

 

 
(16,615
)
 
347

 

 
(16,268
)
Share-based compensation
 

 

 
2,190

 

 

 

 
2,190

Restricted stock vested and shares withheld
 
23,059

 

 
(1,534
)
 

 

 
1,428

 
(106
)
Employee stock purchase plan
 
11,028

 

 
(358
)
 

 

 
451

 
93

Other
 
724

 

 
43

 

 

 
(43
)
 

Balance, June 30, 2019
 
57,745,745

 
$
577

 
$
1,752,760

 
$
(821,584
)
 
$
(82,620
)
 
$
(254,184
)
 
$
594,949

See Notes to the Condensed Consolidated Financial Statements.

5

Table of Contents

VISTA OUTDOOR INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Three Months Ended June 28, 2020
(Amounts in thousands except share and per share data unless otherwise indicated)
1. Significant Accounting Policies
Nature of Operations—Vista Outdoor Inc. (together with our subsidiaries, "Vista Outdoor", "we", "our", and "us", unless the context otherwise requires) is a leading global designer, manufacturer and marketer of outdoor and shooting sports products. We conduct our operations through two reportable segments, Shooting Sports and Outdoor Products. We are headquartered in Anoka, Minnesota and have 14 manufacturing and distribution facilities in the United States, Canada, Mexico, and Puerto Rico along with international customer service, sales and sourcing operations in Asia, Canada, and Europe. Vista Outdoor was incorporated in Delaware in 2014. The condensed consolidated financial statements reflect our financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States.

This Quarterly Report on Form 10-Q should be read in conjunction with our consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2020 (“fiscal 2020”).

Basis of Presentation—Our unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of the Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain disclosures and other financial information that normally are required by accounting principles generally accepted in the United States have been condensed or omitted. Our accounting policies are described in the notes to the consolidated financial statements in our Annual Report on Form 10-K for fiscal 2020. Management is responsible for the condensed consolidated financial statements included in this report, which are unaudited but, in the opinion of management, include all adjustments necessary for a fair presentation of our financial position as of June 28, 2020 and March 31, 2020, our results of operations for the three months ended June 28, 2020 and June 30, 2019, and our cash flows for the three months ended June 28, 2020 and June 30, 2019.

New Accounting Pronouncements

Our accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements included in our fiscal year 2020 Annual Report on Form 10-K. Such significant accounting policies are applicable for periods prior to the following new accounting standards.

Accounting Standards Adopted During this Fiscal Year

On April 1, 2020, we adopted ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("Topic 326"). This new standard is intended to improve financial reporting by requiring more timely recording of credit losses on our trade account receivable and requires the measurement of all expected credit losses based on historical experience, current conditions, and reasonable and supportable forecasts. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements and disclosures. For further information, see Note 7, Receivables.

On April 1, 2020, we adopted ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement." The amendments in this ASU removed, modified or added to the disclosure requirements for fair value measurements in ASC Topic 820, "Fair Value Measurement" ("Topic 820"). The adoption of this ASU did not have a material impact on our condensed consolidated financial statements and disclosures.

Accounting Standards Yet to Be Adopted

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021, although early adoption is permitted. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We are currently evaluating the impacts of the provisions of ASU 2019-12 on our consolidated financial statements.


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2. Fair Value of Financial Instruments
We measure and disclose our financial assets and liabilities at fair value on a recurring and nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or the price paid to transfer a liability (the exit price) in the principal and most advantageous market for the asset or liability in an orderly transaction between market participants. Assets and liabilities carried at fair value are classified using the following three-tier hierarchy:
Level 1—Quoted prices for identical instruments in active markets.
Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3—Significant inputs to the valuation model are unobservable.
The following section describes the valuation methodologies we use to measure our financial instruments at fair value on a recurring basis:
Interest Rate Swaps—We periodically enter into floating-to-fixed interest rate swap agreements in order to hedge our forecasted interest payments on our outstanding variable-rate debt. The fair value of those swaps is determined using a pricing model based on observable inputs for similar instruments and other market assumptions. We consider these to be Level 2 instruments. See Note 4, Derivative Financial Instruments, for additional information.
Commodity Price Hedging Instruments—We periodically enter into commodity forward contracts to hedge our exposure to price fluctuations on certain commodities we use for raw material components in our manufacturing process. When actual commodity prices exceed the fixed price provided by these contracts, we receive this difference from the counterparty, and when actual commodity prices are below the contractually provided fixed price, we pay this difference to the counterparty. We consider these to be Level 2 instruments. See Note 4, Derivative Financial Instruments, for additional information.
Note Receivable—In connection with the sale of our Firearms business in July 2019, we received a $12,000 interest-free, five-year pre-payable promissory note due June 2024. Based on the general market conditions and the credit quality of the buyer at the time of the sale, we discounted the Note Receivable at an effective interest rate of 10% and estimated fair value using a discounted cash flow approach. We consider this to be a Level 3 instrument. See Note 7, Receivables, for additional information.
Disclosures about the Fair Value of Financial Instruments
The carrying amount of our receivables, inventory, accounts payable and accrued liabilities at June 28, 2020 and March 31, 2020, approximates fair value because of the short maturity of these instruments. The carrying values of cash and cash equivalents at June 28, 2020 and March 31, 2020 are categorized within Level 1 of the fair value hierarchy. 
The table below discloses information about carrying values and estimated fair value relating to our financial assets and liabilities:
 
 
June 28, 2020
 
March 31, 2020
 
 
Carrying
amount
 
Fair
value
 
Carrying
amount
 
Fair
value
Fixed-rate debt (1)
 
$
350,000

 
$
344,750

 
$
350,000

 
$
284,375

Variable-rate debt (2)
 
99,000

 
99,000

 
167,256

 
167,256


(1) In fiscal 2016, we issued $350,000 aggregate principal amount of 5.875% Senior Notes (the "5.875% Notes") that mature on October 1, 2023. These notes are unsecured and senior obligations. The fair value of the fixed-rate long-term debt is calculated based on current market rates for debt of the same risk and maturities, based on market quotes for each issuance. We consider these to be Level 2 instruments. See Note 12, Long-term Debt, for information on long-term debt, including certain risks and uncertainties.
(2) The carrying value of the amounts outstanding under our ABL Revolving Credit Facility approximates the fair value due to the short-term nature of these obligations. The fair value of this debt is categorized within Level 2 of the fair value hierarchy based on the observable market borrowing rates. See Note 12, Long-term Debt, for additional information on our credit facilities, including related certain risks and uncertainties.

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We measure certain nonfinancial assets at fair value on a nonrecurring basis if certain indicators are present. These assets include long-lived assets that are written down to fair value when they are held for sale or determined to be impaired. During the three months ended June 28, 2020 there were no impairments recorded related to our assets that are measured at fair value on a nonrecurring basis. During the three months ended June 30, 2019, we recognized an impairment of $9,429 related to an expected loss on the sale of the held-for-sale assets of our Firearms business.
3. Leases
We lease certain warehouse and distribution space, manufacturing space, office space, retail locations, equipment and vehicles. All of these leases are classified as operating leases. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. These rates are assessed on a quarterly basis. The operating lease assets also include any lease payments made less lease incentives. Leases with an initial term of twelve months or less are not recorded on the balance sheet. For operating leases, expense is recognized on a straight-line basis over the lease term. Variable lease payments associated with our leases are recognized upon occurrence of the event, activity, or circumstance in the lease agreement on which those payments are assessed. Tenant improvement allowances are recorded as leasehold improvements with an offsetting adjustment included in our calculation of our operating lease assets.
Many leases include one or more options to renew, with renewal terms that can extend the lease term for three years or more. The exercise of lease renewal options is at our sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term.
The amounts of assets and liabilities related to our operating leases were as follows:
 
 
Balance Sheet Caption
 
June 28, 2020
 
March 31, 2020
Assets:
 
 
 
 
 
 
Operating lease assets
 
Operating lease assets
 
$
67,237

 
$
69,024

 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
Current:
 
 
 
 
 
 
Operating lease liabilities
 
Other current liabilities
 
$
10,758

 
$
10,780

Long-term:
 
 
 
 
 
 
Operating lease liabilities
 
Long-term operating lease liabilities
 
71,686

 
73,738

Total lease liabilities
 
 
 
$
82,444

 
$
84,518


The components of lease expense are recorded to cost of sales and selling, general and administration expenses in the unaudited condensed consolidated statements of comprehensive income (loss). The components of lease expense were as follows:
 
 
Three months ended
 
 
June 28, 2020
 
June 30, 2019
Fixed operating lease costs (1)
 
$
5,059

 
$
5,017

Variable operating lease costs
 
582

 
535

Sublease income
 
(388
)
 
(281
)
Net Lease costs
 
$
5,253

 
$
5,271

(1) Includes short-term leases, which are immaterial.
 
 
June 28, 2020
 
March 31, 2020
Weighted Average Remaining Lease Term (Years):
 
 
 
 
Operating leases
 
9.44

 
9.55

 
 
 
 
 
Weighted Average Discount Rate:
 
 
 
 
Operating leases
 
8.66
%
 
8.64
%


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The approximate minimum lease payments under non-cancelable operating leases as of June 28, 2020 are as follows:
Remainder of fiscal 2021
 
$
13,151

Fiscal 2022
 
15,105

Fiscal 2023
 
13,379

Fiscal 2024
 
11,748

Fiscal 2025
 
10,718

Thereafter
 
60,714

Total lease payments
 
124,815

Less imputed interest
 
(42,371
)
Present value of lease liabilities
 
$
82,444


Supplemental cash flow information related to leases is as follows:
 
 
Three months ended
 
 
June 28, 2020
 
June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
 
Operating cash flows - operating leases
 
$
4,652

 
$
5,205

Operating lease assets obtained in exchange for lease liabilities:
 
 
 
 
Operating leases
 
815

 
701


4. Derivative Financial Instruments
In the normal course of business, we are exposed to market risks arising from adverse changes in:
commodity prices affecting the cost of raw materials, and
interest rates
We record our interest rate swaps and commodity forward contracts that are accounted for as designated hedges pursuant to ASC Topic 815, “Derivatives and Hedging” ("ASC Topic 815"). ASC Topic 815 requires that an entity recognize all derivatives as either assets or liabilities on the balance sheet, measure those instruments at fair value and recognize changes in the fair value of derivatives in earnings in the period of change unless the derivative qualifies as designated cash flow hedge that offsets certain exposures. Certain criteria must be satisfied in order for derivative financial instruments to be classified and accounted for as a cash flow hedge. Derivatives that are not elected for hedge accounting treatment are recorded immediately in earnings.
From time to time, we have entered into floating-to-fixed interest rate swap agreements in order to hedge our forecasted interest payments on our outstanding variable-rate debt. Gains and losses from the remeasurement of our interest rate swap contract agreement are recorded as a component of accumulated other comprehensive income (loss) and released into earnings as a component of interest expense during the period in which the hedged transaction takes place. There are no cash flow hedge interest rate swaps in place as of June 28, 2020.
We entered into various commodity forward contracts during fiscal 2021 and 2020. These contracts are used to hedge our exposure to price fluctuations on lead we purchase for raw material components in our ammunition manufacturing process and are designated and qualify as effective cash flow hedges. The effectiveness of cash flow hedge contracts is assessed quantitatively at inception and qualitatively thereafter considering transactions critical terms and counterparty credit quality.
The gains and losses on these hedges are included in accumulated other comprehensive income (loss) and are reclassified into earnings at the time the forecasted revenue or expense is recognized. The gains or losses on the lead forward contracts are recorded in inventory as the commodities are purchased and in cost of sales when the related inventory is sold. As of June 28, 2020, we had outstanding lead forward contracts on 25.25 million pounds of lead. In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the related change in fair value of the derivative instrument would be reclassified from accumulated other comprehensive income (loss) and recognized in earnings. The asset related to the lead forward contracts is immaterial and is recorded as part of other non-current assets. The liability related to the lead forward contracts is immaterial and is recorded as part of other current liabilities.

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5. Revenue Recognition

The following tables disaggregate our net sales by major category:
 
 
Three months ended
 
 
June 28, 2020
 
June 30, 2019(1)
 
 
Shooting Sports
 
Outdoor Products
 
Total
 
Shooting Sports
 
Outdoor Products
 
Total
Ammunition
 
$
261,762

 
$

 
$
261,762

 
$
213,810

 
$

 
$
213,810

Firearms
 

 

 

 
24,017

 

 
24,017

Hunting and Shooting
 
72,396

 

 
72,396

 
70,970

 

 
70,970

Action Sports
 

 
72,859

 
72,859

 

 
67,909

 
67,909

Outdoor Recreation (2)
 

 
72,123

 
72,123

 

 
83,068

 
83,068

Total
 
$
334,158

 
$
144,982

 
$
479,140

 
$
308,797

 
$
150,977

 
$
459,774

 
 
 
 
 
 
 
 
 
 
 
 
 
Geographic Region:
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
307,388

 
$
115,017

 
$
422,405

 
$
267,823

 
$
113,333

 
$
381,156

Rest of the World
 
26,770

 
29,965

 
56,735

 
40,974

 
37,644

 
78,618

Total
 
$
334,158

 
$
144,982

 
$
479,140

 
$
308,797

 
$
150,977

 
$
459,774


(1) We changed our operating segments during the fourth quarter of fiscal 2020 (see Note 17, Operating Segment Information). Accordingly, prior period amounts have been reclassified to conform with the current period presentation.
(2) Outdoor Recreation includes the operating segments: Hydration, Outdoor Cooking, and Golf.
Product Sales
We recognize revenue for our products at a point in time upon the transfer of control of the products to the customer, which typically occurs upon shipment and coincides with our right to payment, the transfer of legal title, and the transfer of the significant risks and rewards of ownership of the product.
Typically, our contracts require customers to pay within 30-60 days of product delivery with a discount available to some customers for early payment. In some cases, we offer extended payment terms to customers. However, we do not consider these extended payment terms to be a significant financing component of the contract because the payment terms are less than a year.
In limited circumstances, our contract with a customer may have shipping terms that indicate a transfer of control of the products upon their arrival at the destination rather than upon shipment. In those cases, we recognize revenue only when the product reaches the customer destination, which may require us to estimate the timing of transfer of control based on the expected delivery date. In all cases, however, we consider our costs related to shipping and handling to be a cost of fulfilling the contract with the customer.
The total amount of revenue we recognize for the sale of our products reflects various sales adjustments for discounts, returns, refunds, allowances, rebates, and other customer incentives. These sales adjustments can vary based on market conditions, customer preferences, timing of customer payments, volume of products sold, and timing of new product launches. These adjustments require management to make reasonable estimates of the amount we expect to receive from the customer. We estimate sales adjustments by customer or by product category on the basis of our historical experience with similar contracts with customers, adjusted as necessary to reflect current facts and circumstances and our expectations for the future. Sales taxes, firearms and ammunition excise tax and other similar taxes are excluded from revenue.
Incentives in the form of cash paid to the customer (or a reduction of a customer cash payment to us) typically are recognized as a reduction of sales unless the incentive is for a distinct benefit that we receive from the customer (e.g., advertising or marketing).
We pay commissions to some of our employees based on agreed-upon sales targets. We recognize the incremental costs of obtaining a contract as an expense when incurred because our sales contracts with commissions are a year or less.

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6. Earnings Per Share
The computation of basic earnings per share ("EPS") is based on the weighted average number of shares that were outstanding during the period. The computation of diluted EPS is based on the number of basic weighted average shares outstanding plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares, such as common stock to be issued upon exercise of options, contingently issuable shares and restricted stock units, using the treasury stock method.
The following tables set forth the computation of basic and diluted earnings per share:
 
 
Three months ended
(Amounts in thousands except per share data unless otherwise indicated)
 
June 28, 2020
 
June 30, 2019
Numerator:
 
 
 
 
Net income (loss)
 
$
40,476

 
$
(16,615
)
Denominator:
 
 
 
 
Weighted-average number of common shares outstanding basic:
 
58,057

 
57,722

Dilutive effect of share-based awards (1)
 
900

 

Diluted shares
 
58,957

 
57,722

Earnings (loss) per common share:
 
 

 
 

Basic
 
$
0.70

 
$
(0.29
)
Diluted
 
$
0.69

 
$
(0.29
)

(1) Potentially dilutive securities, which were not included in the computation of diluted earnings per share, because either the effect would have been anti-dilutive, or the options’ exercise prices were greater than the average market price of the common stock, were 528 for the three months ended June 28, 2020. Due to the loss from continuing operations for the three months ended June 30, 2019, there are no common shares added to calculate dilutive EPS because the effect would be antidilutive.
7. Receivables
Our trade accounts receivable are recorded at net realizable value, which includes an appropriate allowance for estimated credit losses as described in Note 1, Significant Accounting Policies. Under ASC Topic 326, the “expected credit loss” model replaces the “incurred loss” model and will require consideration of a broader range of information to estimate expected credit losses over the life of the asset. Our prior methodology for estimating credit losses on trade accounts receivable did not differ significantly from the new requirements of ASC 326. 
We maintain an allowance for credit losses related to accounts receivable for future expected credit losses resulting from the inability or unwillingness of our customers to make required payments. We estimate the allowance based upon historical bad debts, current customer receivable balances, age of customer receivable balances and the customers' financial condition and in relation to a representative pool of assets consisting of a large number of customers with similar risk characteristics. The allowance is adjusted as appropriate to reflect differences in current conditions as well as changes in forecasted macroeconomic conditions. Receivables that do not share risk characteristics are evaluated on an individual basis, including those associated with customers that have a higher probability of default. Our estimate of credit losses includes expected current and future economic and market conditions surrounding the COVID-19 pandemic which did not significantly impact our allowance.
Net receivables are summarized as follows:
 
 
June 28, 2020
 
March 31, 2020
Trade receivables
 
$
335,484

 
$
323,436

Other receivables
 
4,286

 
4,841

Less: allowance for estimated credit losses and discounts
 
(15,151
)
 
(14,760
)
Net receivables
 
$
324,619

 
$
313,517


Walmart represented 15% and 13% of the total trade receivables balance as of June 28, 2020 and March 31, 2020, respectively. No other customer represented more than 10% of our total trade receivables balance as of June 28, 2020 or March 31, 2020.

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The following provides a reconciliation of the activity related to the allowance for estimated credit losses and discounts during the three months ended June 28, 2020:
Balance, March 31, 2020
 
$
14,760

Provision for credit losses
 
707

Write-off of uncollectible amounts, net of recoveries
 
(261
)
Discounts and other adjustments
 
(55
)
Balance, June 28, 2020
 
$
15,151


Note Receivable is summarized as follows:
 
 
June 28, 2020
 
March 31, 2020
Principal
 
$
12,000

 
$
12,000

Less: unamortized discount
 
(3,804
)
 
(3,990
)
Note receivable, net, included within Deferred charges and other non-current assets
 
$
8,196

 
$
8,010


8. Inventories
Current net inventories consist of the following:
 
 
June 28, 2020
 
March 31, 2020
Raw materials
 
$
92,636

 
$
85,609

Work in process
 
35,514

 
33,622

Finished goods
 
204,060

 
212,062

Net inventories
 
$
332,210

 
$
331,293


We consider inventories to be long-term if they are not expected to be sold within one year. Long-term inventories are presented on the balance sheet net of reserves within deferred charges and other non-current assets and totaled $27,925 and $27,984 as of June 28, 2020 and March 31, 2020, respectively.
9. Accumulated Other Comprehensive Loss (AOCL)
The components of AOCL, net of income taxes, are as follows:
 
 
June 28, 2020
 
March 31, 2020
Derivatives
 
$
(445
)
 
$
(1,426
)
Pension and other postretirement benefits liabilities
 
(92,463
)
 
(93,353
)
Cumulative translation adjustment
 
(5,866
)
 
(6,215
)
Total AOCL
 
$
(98,774
)
 
$
(100,994
)


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The following tables detail the amounts reclassified from AOCL to earnings as well as the changes in derivatives, pension and other postretirement benefits and foreign currency translation, net of income tax:
 
 
Three months ended June 28, 2020
 
 
Derivatives
 
Pension and other postretirement benefits liabilities
 
Cumulative translation adjustment
 
Total
Beginning balance in AOCL
 
$
(1,426
)
 
$
(93,353
)
 
$
(6,215
)
 
$
(100,994
)
Change in fair value of derivatives
 
(5
)
 

 

 
(5
)
Net losses reclassified from AOCL
 
986

 

 

 
986

Net actuarial losses reclassified from AOCL (1)
 

 
968

 

 
968

Prior service costs reclassified from AOCL (1)
 

 
(78
)
 

 
(78
)
Net change in cumulative translation adjustment
 

 

 
349

 
349

Ending balance in AOCL
 
$
(445
)
 
$
(92,463
)
 
$
(5,866
)
 
$
(98,774
)
(1) Amounts related to our pension and other postretirement benefits that were reclassified from AOCL were recorded as a component of net periodic benefit cost for each period presented.
 
 
Three months ended June 30, 2019
 
 
Derivatives
 
Pension and other postretirement benefits liabilities
 
Cumulative translation adjustment
 
Total
Beginning balance in AOCL
 
$
735

 
$
(74,670
)
 
$
(9,032
)
 
$
(82,967
)
Change in fair value of derivatives

 
(1,150
)
 

 

 
(1,150
)
Net actuarial losses reclassified from AOCL (1)
 

 
811

 

 
811

Prior service costs reclassified from AOCL (1)
 

 
(78
)
 

 
(78
)
Net change in cumulative translation adjustment
 

 
 
 
764

 
764

Ending balance in AOCL
 
$
(415
)
 
$
(73,937
)
 
$
(8,268
)
 
$
(82,620
)

(1) Amounts related to our pension and other postretirement benefits that were reclassified from AOCL were recorded as a component of net periodic benefit cost for each period presented.
10. Goodwill and Intangible Assets
There were no changes in the carrying amount of goodwill during the three months ended June 28, 2020. The entire goodwill balance of $83,167 as of June 28, 2020 and March 31, 2020 is allocated to our Shooting Sports segment.

Intangible assets by major asset class consisted of the following:
 
 
June 28, 2020
 
March 31, 2020
 
 
Gross
carrying
amount
 
Accumulated
amortization
 
Total
 
Gross
carrying
amount
 
Accumulated
amortization
 
Total
Trade names
 
$
48,360

 
$
(15,361
)
 
$
32,999

 
$
48,360

 
$
(14,428
)
 
$
33,932

Patented technology
 
16,684

 
(10,708
)
 
5,976

 
16,684

 
(10,490
)
 
6,194

Customer relationships and other
 
238,483

 
(87,261
)
 
151,222

 
238,220

 
(83,349
)
 
154,871

Total
 
303,527

 
(113,330
)
 
190,197

 
303,264

 
(108,267
)
 
194,997

Non-amortizing trade names
 
111,103

 

 
111,103

 
111,103

 

 
111,103

Net intangible assets
 
$
414,630

 
$
(113,330
)
 
$
301,300

 
$
414,367

 
$
(108,267
)
 
$
306,100



Amortization expense for the three months ended June 28, 2020 and June 30, 2019 was $4,953 and $5,097, respectively.

As of June 28, 2020, we expect amortization expense related to these assets to be as follows:
Remainder of fiscal 2021
 
$
14,912

Fiscal 2022
 
19,831

Fiscal 2023
 
19,715

Fiscal 2024
 
19,663

Fiscal 2025
 
19,645

Thereafter
 
96,431

Total
 
$
190,197




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11. Other Current and Non-Current Liabilities
Other current and non-current liabilities consisted of the following:
 
 
June 28, 2020
 
March 31, 2020
Other current liabilities:
 
 
 
 
Rebates
 
$
11,927

 
$
16,225

Accrual for in-transit inventory
 
18,557

 
11,064

Other
 
75,718

 
70,908

Total other current liabilities
 
$
106,202

 
$
98,197

 
 
 
 
 
Other non-current liabilities:
 
 
 
 
Non-current portion of accrued income tax liability
 
$
31,158

 
$
30,159

Other
 
17,859

 
13,345

Total other non-current liabilities
 
$
49,017

 
$
43,504


We provide consumer warranties against manufacturing defects on certain products with warranty periods ranging from one year to the expected lifetime of the product. The estimated costs of such product warranties are recorded at the time the sale is recorded based upon actual past experience, our current production environment as well as specific and identifiable warranties as applicable. The warranty liability recorded at each balance sheet date reflects the estimated liability for warranty coverage for products delivered based on historical information and current trends.
The following is a reconciliation of the changes in our product warranty liability during the periods presented:
Balance, March 31, 2020
 
 
 
$
9,149

Payments made
 
 
 
(858
)
Warranties issued
 
 
 
771

Changes related to pre-existing warranties and other adjustments
 
 
 
(82
)
Balance, June 28, 2020
 
 
 
$
8,980


12. Long-term Debt
Long-term debt consisted of the following:
 
 
June 28, 2020
 
March 31, 2020
ABL Revolving Credit Facility
 
$
99,000

 
$
167,256

5.875% Senior Notes
 
350,000

 
350,000

Principal amount of long-term debt
 
449,000

 
517,256

Less: unamortized deferred financing costs
 
(5,073
)
 
(5,450
)
Carrying amount of long-term debt
 
$
443,927

 
$
511,806



Credit Agreements—In fiscal 2019, we refinanced our Amended and Restated Credit Agreement dated April 1, 2016, by entering into the New Credit Facilities, which provide for (a) a $450,000 senior secured asset-based revolving credit facility (the “ABL Revolving Credit Facility”), comprised of $20,000 in first-in, last-out (“FILO”) revolving credit commitments and $430,000 in non-FILO revolving credit commitments, (b) a $109,343 senior secured asset-based term loan facility (the “Term Loan”) and (c) the $40,000 Junior Term Loan. The amount available under the ABL Revolving Credit Facility is the lesser of the total commitment of $450,000 or a borrowing base based on percentages of eligible receivables, inventory, and cash, minus certain reserves. As of June 28, 2020, based on the borrowing base less outstanding borrowings of $99,000 and outstanding letters of credit of $21,692, the amount available to us under the ABL Revolving Credit Facility was $289,705.
The New Credit Facilities each mature on November 19, 2023 (the “Maturity Date”), subject to a customary springing maturity in respect of the 5.875% Notes due 2023. The Term Loan was subject to quarterly principal repayments of $4,834 on the first business day of each January, April, July, and October, with the remaining balance due on the Maturity Date. The Term Loan and the Junior Term Loan have been paid in full, and have no future required principal payments. Debt issuance costs of

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approximately $6,300 are being amortized over the term of the New Credit Facilities. This expense is included in interest expense in the condensed consolidated statements of comprehensive income (loss).
The FILO commitments under the ABL Revolving Credit Facility are subject to reductions of $1,667 on the first business day of each fiscal quarter beginning on April 1, 2019. The balance of the FILO revolving credit commitment as of June 28, 2020 was $11,667. Any outstanding revolving loans under the ABL Revolving Credit Facility will be payable in full on the Maturity Date.
As of June 28, 2020, borrowings under the ABL Revolving Credit Facility bear interest at a rate equal to, in the case of (a) non-FILO revolving credit loans, either the sum of a base rate plus a margin ranging from 0.25% to 0.75% or the sum of a LIBO rate plus a margin ranging from 1.25% to 1.75%, and (b) FILO revolving credit loans, a rate that is 1.00% higher than the rate paid on the non-FILO revolving credit loans. All such rates vary based on our Average Excess Availability under the ABL Revolving Credit Facility. As of June 28, 2020, the margin under the (1) ABL Revolving Credit Facility was, in the case of (a) non-FILO revolving credit loans, 0.50% for base rate loans and 1.50% for LIBO rate loans and (b) FILO revolving credit loans, 1.50% for base rate loans and 2.50% for LIBO rate loans. The weighted average interest rate for our borrowings under the New Credit Facilities as of June 28, 2020 was 1.99%, excluding the impact of the interest rate swap that was in place during the quarter. See Note 4, Derivative Financial Instruments, for additional information. We pay a commitment fee on the unused commitments under the ABL Revolving Credit Facility of 0.25% per annum.
Substantially all domestic tangible and intangible assets of Vista Outdoor and our domestic subsidiaries, as well as the tangible and intangible assets of Advanced Arrow S. de R.L. de C.V. and Hydrosport, S. de R.L. de C.V., are pledged as collateral under the New Credit Facilities.
5.875% Notes—In fiscal 2016, we issued $350,000 aggregate principal amount of 5.875% Senior Notes (the "5.875% Notes") that mature on October 1, 2023. These notes are unsecured and senior obligations. Interest on the notes is payable semi-annually in arrears on April 1 and October 1 of each year. We have the right to redeem some or all of these notes from time to time at specified redemption prices. Debt issuance costs of approximately $4,300 are being amortized to interest expense over eight years, the term of the notes.
Rank and guarantees—The New Credit Facilities' obligations are guaranteed on a secured basis, jointly and severally and fully and unconditionally by substantially all of our domestic subsidiaries and by Advanced Arrow S. de R.L. de C.V. and Hydrosport, S. de R.L. de C.V. Vista Outdoor (the parent company issuer) has no independent assets or operations. We own 100% of all of these guarantor subsidiaries. The 5.875% Notes are senior unsecured obligations of Vista Outdoor and will rank equally in right of payment with any future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of Vista Outdoor. The 5.875% Notes are fully and unconditionally guaranteed, jointly and severally, by our existing and future domestic subsidiaries that guarantee indebtedness under our New Credit Facilities or that guarantee certain of our other indebtedness, or indebtedness of any subsidiary guarantor, in an aggregate principal amount in excess of $50,000. These guarantees are senior unsecured obligations of the applicable subsidiary guarantors. The guarantee by any subsidiary guarantor of our obligations in respect of the 5.875% Notes will be released in any of the following circumstances:
if, as a result of the sale of its capital stock, such subsidiary guarantor ceases to be a restricted subsidiary
if such subsidiary guarantor is designated as an “Unrestricted Subsidiary”
upon defeasance or satisfaction and discharge of the 5.875% Notes
if such subsidiary guarantor has been released from its guarantees of indebtedness under the New Credit Facilities and all capital markets debt securities
Covenants
New Credit Facilities— Our New Credit Facilities impose restrictions on us, including limitations on our ability to pay cash dividends, incur debt or liens, redeem or repurchase Vista Outdoor stock, enter into transactions with affiliates, make investments, merge or consolidate with others or dispose of assets. The financial covenants of the New Credit Facilities are to maintain Excess Availability under the ABL Revolving Credit Facility of $42,500 at all times. If Excess Availability falls below $42,500 we must maintain a Consolidated Fixed Charge Coverage Ratio ("FCCR"), as defined below, of not less than 1.00:1.00. As noted above, the Excess Availability under the ABL Revolving Credit Facility was $289,705 as of June 28, 2020. If we do not comply with the covenants in any of the New Credit Facilities, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under each of the New Credit Facilities.
The FCCR is Covenant EBITDA ("earnings before interest, taxes, depreciation, and amortization"), (which includes adjustments for items such as non-recurring or extraordinary items, non-cash charges related to stock-based compensation, and intangible asset impairment charges, as well as adjustments for acquired or divested business units on a pro forma basis) less

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capital expenditures (subject to certain adjustments) for the past four fiscal quarters, divided by fixed charges (which includes debt principal and interest payments made over the past four fiscal quarters; plus income tax payments and restricted payments over the past four fiscal quarters).
5.875% Notes—The indenture governing the 5.875% Notes contains covenants that, among other things, limit our ability to incur or permit to exist certain liens, sell, transfer or otherwise dispose of assets, consolidate, amalgamate, merge or sell all or substantially all of our assets, enter into transactions with affiliates, enter into agreements restricting our subsidiaries’ ability to pay dividends, incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem our capital stock, prepay, redeem or repurchase certain debt and make loans and investments.
The New Credit Facilities and the indenture governing the 5.875% Notes contain cross-default provisions so that noncompliance with the covenants within one debt agreement could also cause a default under the other debt agreements. As of June 28, 2020, we were in compliance with the covenants of all of the debt agreements. However, we cannot provide assurance that we will be able to comply with such covenants in the future due to various risks and uncertainties, some of which may be beyond our control. Any failure to comply with the restrictions in the New Credit Facilities may prevent us from drawing under the ABL Revolving Credit Facility and may result in an event of default under the New Credit Facilities, which default may allow the creditors to accelerate the related indebtedness and the indebtedness under our 5.875% Notes and proceed against the collateral that secures the indebtedness. We may not have sufficient liquidity to repay the indebtedness in such circumstances.
Cash paid for interest on debt—Cash paid for interest on debt, including commitment fees and prepayment premium fees, for the three months ended June 28, 2020 and June 30, 2019 totaled $7,302 and $15,654, respectively.
13. Employee Benefit Plans

During the three months ended June 28, 2020, we recognized an aggregate net benefit for employee defined benefit plans of $21 compared to $101 during the three months ended June 30, 2019. The decrease in income was primarily due to the lower than expected return on plan assets and increased loss amortization, partially offset by decreased interest rates.

Employer contributions and distributions—We made the entire fiscal 2021 required contributions to the pension trust during the three months ended June 28, 2020 of $7,100, and $0 in contributions were required for the three months ended June 30, 2019. For those same periods, we made no contributions to our other postretirement benefit plans, and we made no distributions to retirees under the non-qualified supplemental executive retirement plan.

No additional contributions are required to be made to the pension trust for the remainder of fiscal 2021. No additional contributions are required, and we are not expecting to make any contributions to our other postretirement benefit plans, or directly to retirees under our non-qualified supplemental executive retirement plans for the remainder of fiscal 2021.

14. Income Taxes
Our provision for income taxes includes federal, foreign, and state income taxes. Income tax provisions for interim periods are based on the year-to-date effective tax rate for both the current and prior year.
The income tax provisions for the three months ended June 28, 2020 and June 30, 2019 represent effective tax rates of 2.8% and (4.6)%, respectively. The increase in the rate from the prior year quarter is primarily caused by impairment of held-for-sale assets in the prior year quarter, offset by a decrease in the valuation allowance due to operating income in the current quarter.
The effective tax rate for the three months ended June 28, 2020 was lower than the statutory rate primarily because of the decreased valuation allowance. The effective tax rate for the three months ended June 30, 2019 was lower than the statutory rate primarily because of increased valuation allowance and interest expense on uncertain tax positions. The operating loss in the prior year quarter caused the unfavorable tax adjustments to decrease the rate.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in tax years 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The CARES Act also contains modifications on the limitation of business interest for tax years beginning in 2019 and 2020. The modifications to Section 163(j) increase the allowable interest expense deduction. We anticipate that the CARES Act will impact our tax provision for the tax year ended March 31, 2021 due to the increased allowable interest expense deduction.
On February 9, 2015, we entered into a Tax Matters Agreement with Orbital ATK that governs the respective rights, responsibilities and obligations of Vista Outdoor and Orbital ATK following the distribution of all of the shares of our common stock on a pro rata basis to the holders of Alliant Techsystems Inc. common stock (the “Spin-Off”) with respect to tax liabilities and benefits, tax attributes, tax contests and other tax sharing regarding U.S. federal, state, local and foreign income taxes, other tax matters and related tax returns. We have joint and several liability with Orbital ATK to the IRS for the consolidated U.S.

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federal income taxes of the Orbital ATK consolidated group relating to the taxable periods in which we were part of that group. However, the Tax Matters Agreement specifies the portion, if any, of this tax liability for which we bear responsibility, and Orbital ATK agrees to indemnify us against any amounts for which we are not responsible. The Tax Matters Agreement also provides special rules for allocating tax liabilities in the event that the Spin-Off is determined not to be tax-free. Though valid between the parties, the Tax Matters Agreement is not binding on the IRS.
The allocation of tax liabilities for the period from April 1, 2014 through the date of the Spin-Off was settled on June 15, 2018. Orbital ATK paid Vista Outdoor $13,047 to settle this matter, which was reflected as an adjustment to the distribution from Vista Outdoor to Orbital ATK at the time of the Spin-Off.
Prior to the Spin-Off, Orbital ATK or one of its subsidiaries filed income tax returns in the U.S. federal and various U.S. state jurisdictions that included Vista Outdoor. In addition, certain of our subsidiaries filed income tax returns in foreign jurisdictions. Since the Spin-Off, we file income tax returns in the U.S. federal, foreign and various U.S. state jurisdictions. With a few exceptions, Orbital ATK and its subsidiaries and Vista are no longer subject to U.S. federal, state and local, or foreign income tax examinations by tax authorities prior to 2013. The IRS has completed the audits of Orbital ATK through fiscal 2014 and is currently auditing Orbital ATK's tax return for fiscal 2015. The IRS has also completed the audit of our tax return for the period that began after the Spin-Off (February 9, 2015) and ended on March 31, 2015. We believe appropriate provisions for all outstanding issues relating to our portion of these returns have been made for all remaining open years in all jurisdictions.
Income taxes paid, net of refunds, totaled $265 and $(253) for the three months ended June 28, 2020 and June 30, 2019, respectively.
Although the timing and outcome of income tax audit settlements are uncertain, it is reasonably possible that a $14,072 reduction of the uncertain tax benefits will occur in the next 12 months. The settlement of these unrecognized tax benefits could result in earnings from $0 to $13,086.
15. Contingencies
Litigation—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.
Environmental liabilities—Our operations and ownership or use of real property are subject to a number of federal, state, and local environmental laws and regulations, as well as applicable foreign laws and regulations, including those governing the discharge of hazardous materials, remediation of contaminated sites, and restoration of damage to the environment. We are obligated to conduct investigation and/or remediation activities at certain sites that we own or operate or formerly owned or operated.
Certain of our former subsidiaries have been identified as potentially responsible parties (“PRP”), along with other parties, in regulatory agency actions associated with hazardous waste sites. As a PRP, those former subsidiaries may be required to pay a share of the costs of the investigation and clean-up of these sites. In that event, we would be obligated to indemnify those subsidiaries for those costs. While uncertainties exist with respect to the amounts and timing of the ultimate

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environmental liabilities, based on currently available information, we have concluded that these matters, individually or in the aggregate, will not have a material adverse effect on our operating results, financial condition, or cash flows. We have recorded a liability for environmental remediation of $708 and $710 as of June 28, 2020 and March 31, 2020, respectively.
We could incur substantial additional costs, including cleanup costs, resource restoration, fines, and penalties or third-party property damage or personal injury claims, as a result of violations or liabilities under environmental laws or non-compliance with environmental permits. While environmental laws and regulations have not had a material adverse effect on our operating results, financial condition, or cash flows in the past, and we have environmental management programs in place to mitigate these risks, it is difficult to predict whether they will have a material impact in the future.
16. Condensed Consolidating Financial Statements
In accordance with the provisions of the 5.875% Notes, the outstanding notes are guaranteed on an unsecured basis, jointly and severally and fully and unconditionally, by substantially all of Vista Outdoor domestic subsidiaries and by Advanced Arrow S. de R.L. de C.V. and Hydrosport, S. de R.L. de C.V. The parent company has no independent assets or operations. All of these guarantor subsidiaries are 100% owned by Vista Outdoor and any subsidiaries of the parent company other than the subsidiary guarantors are minor. There are no significant restrictions on the Company’s ability, or the ability of any guarantor, to obtain funds from its subsidiaries through dividends or loans, and there are no material restrictions on the ability of our consolidated and unconsolidated subsidiaries to transfer funds to the Company in the form of cash dividends, loans or advances.  These guarantees are senior or senior subordinated obligations, as applicable, of the applicable subsidiary guarantors.
17. Operating Segment Information
During the fourth quarter of fiscal 2020, we realigned our internal reporting structure and modified our operating segment structure to provide investors with improved disclosure that is consistent with how our chief operating decision maker (CODM), our Chief Executive Officer, allocates resources and makes decisions. Based on these changes, management concluded that we had six operating segments, which have been aggregated into two reportable segments, Shooting Sports and Outdoor Products.
Shooting Sports is comprised of our Ammunition and Hunting and Shooting operating segments.  Outdoor Products is comprised of our Action Sports, Outdoor Cooking, Hydration, and Golf operating segments. The operating segments comprising the Company’s respective reportable segments share numerous commonalities, including similar core consumers, distribution channels and supply chains.
Our CODM relies on internal management reporting that analyzes consolidated results to the net income level and operating segment's EBIT, which is defined as earnings (loss) before interest and income taxes. Certain corporate-related costs and other non-recurring costs are not allocated to the segments in order to present comparable results from period to period. These include impairment charges, restructuring related-costs, merger and acquisition costs, and other non-recurring items.
Shooting Sports generated approximately 70% of our sales in three months ended June 28, 2020. Shooting Sports is comprised of ammunition and hunting shooting accessories product lines. Ammunition products include centerfire ammunition, rimfire ammunition, shotshell ammunition and reloading components. Hunting accessories products include high-performance hunting arrows, game calls, hunting blinds, game cameras, decoys, and optics products such as binoculars, riflescopes and telescopes. Shooting accessories products include reloading equipment, clay targets, premium gun care products and tactical products such as holsters, duty gear, bags and packs. Our Firearms business was divested early in the second quarter of fiscal 2020.
Outdoor Products generated approximately 30% of our external sales in the three months ended June 28, 2020. Outdoor Products is comprised of sports protection, outdoor cooking, golf, and hydration product lines. Sports protection includes helmets, goggles, and accessories for cycling, snow sports, action sports and powersports. Outdoor cooking includes grills and stoves. Golf products include laser rangefinders and other golf technology products. Hydration products include hydration packs and water bottles.
Sales to Walmart represented 10% and 14% of our sales in the three months ended June 28, 2020 and June 30, 2019, respectively. No other single customer contributed 10% or more of our sales in the three months ended June 28, 2020 and June 30, 2019.

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The following tables contain information utilized by management to evaluate our operating segments for the interim periods presented:
 
 
Three months ended June 28, 2020
 
 
Shooting Sports
 
Outdoor Products
 
(a) Corporate and other reconciling items
 
Total
Sales, net
 
$
334,158

 
$
144,982

 
$

 
$
479,140

Gross Profit
 
84,502

 
40,866

 

 
125,368

EBIT
 
54,565

 
11,506

 
(18,028
)
 
48,043

 
 
Three months ended June 30, 2019 (b)
 
 
Shooting Sports
 
Outdoor Products
 
(a) Corporate and other reconciling items
 
Total
Sales, net
 
$
308,797

 
$
150,977

 
$

 
$
459,774

Gross Profit
 
55,393

 
39,685

 

 
$
95,078

EBIT
 
16,819

 
6,852

 
(28,425
)
 
$
(4,754
)

(a) There were no reconciling items for the three months ended June 28, 2020. Reconciling items for the three months ended June 30, 2019 include $9,429 of held for sale impairment charges related to the historical shooting sports segment, contingent consideration expenses of $843 and transaction costs of $401.
(b) We modified the structure of our reportable segments during the fourth quarter of fiscal 2020. Accordingly, prior period amounts have been reclassified to conform with the current period presentation.
There were