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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 27, 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
vsto-20201227_g1.jpg
Vista Outdoor Inc.
(Exact name of Registrant as specified in its charter)
Delaware
47-1016855
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1 Vista Way
Anoka
MN
55303
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code: (763) 433-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.01VSTONew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No 
As of January 25, 2021, there were 58,323,299 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)December 27, 2020March 31, 2020
ASSETS  
Current assets:  
Cash and cash equivalents$96,467 $31,375 
Net receivables315,709 313,517 
Net inventories353,816 331,293 
Income tax receivable40,496 7,626 
Other current assets20,131 25,200 
Total current assets826,619 709,011 
Net property, plant, and equipment196,624 184,733 
Operating lease assets73,114 69,024 
Goodwill84,539 83,167 
Net intangible assets317,826 306,100 
Deferred charges and other non-current assets, net30,023 39,254 
Total assets$1,528,745 $1,391,289 
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities:  
Accounts payable$117,204 $89,996 
Accrued compensation44,536 38,806 
Federal excise, use, and other taxes24,467 19,702 
Other current liabilities142,042 98,197 
Total current liabilities328,249 246,701 
Long-term debt345,683 511,806 
Deferred income tax liabilities15,334 12,810 
Long-term operating lease liabilities78,429 73,738 
Accrued pension and postemployment benefits50,873 60,225 
Other long-term liabilities51,449 43,504 
Total liabilities870,017 948,784 
Commitments and contingencies (Notes 3, 12, and 16)
Common stock — $.01 par value:
Authorized — 500,000,000 shares
Issued and outstanding — 58,320,136 shares as of December 27, 2020 and 58,038,822 shares as of March 31, 2020
583 580 
Additional paid-in capital1,742,543 1,744,096 
Accumulated deficit(761,048)(960,048)
Accumulated other comprehensive loss(94,613)(100,994)
Common stock in treasury, at cost — 5,644,303 shares held as of December 27, 2020 and 5,925,617 shares held as of March 31, 2020
(228,737)(241,129)
Total stockholders' equity658,728 442,505 
Total liabilities and stockholders' equity$1,528,745 $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 endedNine months ended
(Amounts in thousands except per share data)December 27, 2020December 29, 2019December 27, 2020December 29, 2019
Sales, net$574,679 $424,770 $1,628,998 $1,329,560 
Cost of sales411,447 335,980 1,178,508 1,055,428 
Gross profit163,232 88,790 450,490 274,132 
Operating expenses:  
Research and development5,483 5,703 15,855 17,750 
Selling, general, and administrative88,768 64,418 242,355 231,298 
Impairment of held-for-sale assets (Note 2)   9,429 
Earnings before interest, income taxes, and other68,981 18,669 192,280 15,655 
Other income (expense), net (Note 4)18,467  18,467 (433)
Earnings before interest and income taxes87,448 18,669 210,747 15,222 
Interest expense, net(5,619)(8,373)(17,752)(31,811)
Earnings (loss) before income taxes81,829 10,296 192,995 (16,589)
Income tax (provision) benefit(2,950)4,352 6,005 2,724 
Net income (loss)$78,879 $14,648 $199,000 $(13,865)
Earnings (loss) per common share:  
Basic$1.35 $0.25 $3.42 $(0.24)
Diluted$1.31 $0.25 $3.34 $(0.24)
Weighted-average number of common shares outstanding:    
Basic58,303 57,878 58,183 57,812 
Diluted60,101 57,978 59,594 57,812 
Net income (loss) (from above)$78,879 $14,648 $199,000 $(13,865)
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 of $0 for each period presented
(78)(79)(235)(235)
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax of $0 for each period presented
969 812 2,907 2,435 
Change in derivatives, net of tax of $0 for each period presented
1,151 (725)2,825 (1,175)
Currency translation gains reclassified from accumulated other comprehensive loss
   3,150 
Change in cumulative translation adjustment
375 263 884 550 
Total other comprehensive income2,417 271 6,381 4,725 
Comprehensive income (loss)$81,296 $14,919 $205,381 $(9,140)

See Notes to the Condensed Consolidated Financial Statements.
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VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Nine months ended
(Amounts in thousands)December 27, 2020December 29, 2019
Operating Activities:  
Net income (loss)$199,000 $(13,865)
Adjustments to net income (loss) to arrive at cash provided by operating activities:
Depreciation33,625 36,207 
Amortization of intangible assets14,845 14,996 
Impairment of held-for-sale assets (Note 2) 9,429 
Amortization of deferred financing costs 1,133 5,569 
Gain on sale of business(18,467)— 
Deferred income taxes2,449 348 
Loss (gain) on disposal of property, plant, and equipment1,850 (48)
Loss on divestiture— 431 
Share-based compensation10,013 5,167 
Changes in assets and liabilities:
Net receivables(1,786)38,098 
Net inventories6,966 (7,510)
Accounts payable28,067 (4,676)
Accrued compensation4,015 (9,865)
Accrued income taxes(36,027)(3,744)
Federal excise, use, and other taxes4,729 (2,243)
Pension and other postretirement benefits(6,680)(2,521)
Other assets and liabilities63,587 (2,719)
Cash provided by operating activities307,319 63,054 
Investing Activities:
Capital expenditures(17,603)(21,977)
Proceeds from sale of business23,654 — 
Acquisition of Remington (Note 4)(81,691) 
Proceeds from sale of our Firearms Business — 156,567 
Proceeds from the disposition of property, plant, and equipment25 270 
Cash (used for) provided by investing activities(75,615)134,860 
Financing Activities:
Borrowings on lines of credit73,077 272,321 
Payments on lines of credit(240,333)(312,623)
Payments made on long-term debt (144,509)
Payments made for debt issuance costs  (903)
Deferred payments for acquisitions (1,348)
Proceeds from exercise of stock options 1,100  
Payment of employee taxes related to vested stock awards(576)(507)
Cash used for financing activities(166,732)(187,569)
Effect of foreign exchange rate fluctuations on cash
120 (212)
Increase in cash and cash equivalents65,092 10,133 
Cash and cash equivalents at beginning of period 31,375 21,935 
Cash and cash equivalents at end of period$96,467 $32,068 
Supplemental Cash Flow Disclosures:
Non-cash investing activity:
Capital expenditures included in accounts payable$1,931 $1,331 
See Notes to the Condensed Consolidated Financial Statements.
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VISTA OUTDOOR INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited)
 
Common Stock $.01 Par Value
(Amounts in thousands except share data)SharesAmountAdditional
Paid-In
Capital
Accumulated Deficit Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Equity
Balance, September 27, 202058,256,243 $583 $1,742,645 $(839,927)$(97,030)$(231,634)$574,637 
Comprehensive income— — — 78,879 2,417 — 81,296 
Exercise of stock options27,382 — (594)— — 1,110 516 
Share-based compensation— — 2,547 — — — 2,547 
Restricted stock vested and shares withheld28,002 — (1,778)— — 1,442 (336)
Employee stock purchase plan3,537 — (76)— — 144 68 
Other4,972 — (201)— — 201  
Balance, December 27, 202058,320,136 $583 $1,742,543 $(761,048)$(94,613)$(228,737)$658,728 
Balance, September 29, 201957,787,433 $578 $1,752,175 $(833,482)$(78,513)$(252,257)$588,501 
Comprehensive income— — — 14,648 271 — 14,919 
Share-based compensation— — 1,593 — — — 1,593 
Restricted stock vested and shares withheld55,385 — (3,392)— — 3,191 (201)
Employee stock purchase plan11,980 — (419)— — 489 70 
Other54,847 — (412)— — 480 68 
Balance, December 29, 201957,909,645 $578 $1,749,545 $(818,834)$(78,242)$(248,097)$604,950 
Common Stock $.01 Par Value
(Amounts in thousands except share data)SharesAmountAdditional
Paid-In
Capital
Accumulated Deficit Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Equity
Balance, March 31, 202058,038,822 $580 $1,744,096 $(960,048)$(100,994)$(241,129)$442,505 
Comprehensive income— — — 199,000 6,381 — 205,381 
Exercise of stock options83,196 — (2,055)— — 3,376 1,321 
Share-based compensation— — 10,013 — — — 10,013 
Restricted stock vested and shares withheld79,506 — (4,843)— — 4,201 (642)
Employee stock purchase plan8,972 — (222)— — 365 143 
Other109,640 3 (4,446)— — 4,450 7 
Balance, December 27, 202058,320,136 $583 $1,742,543 $(761,048)$(94,613)$(228,737)$658,728 
Balance, March 31, 201957,710,934 $577 $1,752,419 $(804,969)$(82,967)$(256,020)$609,040 
Comprehensive income (loss)— — — (13,865)4,725 — (9,140)
Share-based compensation— — 5,167 — — — 5,167 
Restricted stock vested and shares withheld91,110 — (5,785)— — 5,437 (348)
Employee stock purchase plan23,008 — (777)— — 940 163 
Other84,593 1 (1,479)— — 1,546 68 
Balance, December 29, 201957,909,645 $578 $1,749,545 $(818,834)$(78,242)$(248,097)$604,950 
See Notes to the Condensed Consolidated Financial Statements.
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VISTA OUTDOOR INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Nine Months Ended December 27, 2020
(Amounts in thousands except per share data and unless otherwise indicated)
1. Significant Accounting Policies
Nature of Operations—Vista Outdoor Inc. (together with our subsidiaries, "Vista Outdoor", "we", "our", and "us", unless the context otherwise requires) is a leading global designer, manufacturer and marketer of outdoor 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 15 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”).

Reclassifications—Changes to the mathematical sign used to denote income taxes for the three and nine months ended December 29, 2019 were made to conform to the current period presentation in the condensed consolidated statements of income. This reclassification had no impact to our key metrics including Earnings (loss) before income taxes or Net income (loss).

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 December 27, 2020 and March 31, 2020, our results of operations for the three and nine months ended December 27, 2020 and December 29, 2019, and our cash flows for the nine months ended December 27, 2020 and December 29, 2019.

New Accounting Pronouncements

Our accounting policies are described in Note 1 of the Notes to the 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 accounts 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 8, 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
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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.

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 5, 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 5, Derivative Financial Instruments, for additional information.
Note Receivable—In connection with the sale of our Firearms business in July 2019, we received a $12,000 interest-free, five-year pre-payable promissory note due June 2024. Based on the general market conditions and the credit quality of the buyer at the time of the sale, we discounted the Note Receivable at an effective interest rate of 10% and estimated fair value using a discounted cash flow approach. We consider this to be a Level 3 instrument. See Note 8, Receivables, for additional information.
Disclosures about the Fair Value of Financial Instruments
The carrying amount of our receivables, inventory, accounts payable and accrued liabilities at December 27, 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 December 27, 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:
December 27, 2020March 31, 2020
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Fixed-rate debt (1)$350,000 $354,813 $350,000 $284,375 
Variable-rate debt (2)  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 13, Long-term Debt, for information on long-term debt, including certain risks and uncertainties.
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(2) The carrying value of the amounts outstanding under our ABL Revolving Credit Facility approximates the fair value 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 13, Long-term Debt, for additional information on our credit facilities, including related certain risks and uncertainties.
We measure certain nonfinancial assets at fair value on a nonrecurring basis if certain indicators are present. These assets include long-lived assets that are written down to fair value when they are held for sale or determined to be impaired. During the three and nine months ended December 27, 2020 there were no impairments recorded related to our assets that are measured at fair value on a nonrecurring basis. During the nine months ended December 29, 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 CaptionDecember 27, 2020March 31, 2020
Assets:
Operating lease assetsOperating lease assets$73,114 $69,024 
Liabilities:
Current:
Operating lease liabilitiesOther current liabilities$9,983 $10,780 
Long-term:
Operating lease liabilitiesLong-term operating lease liabilities78,429 73,738 
Total lease liabilities$88,412 $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 endedNine months ended
December 27, 2020December 29, 2019December 27, 2020December 29, 2019
Fixed operating lease costs (1)$5,593 $5,733 $15,704 $15,349 
Variable operating lease costs806 846 2,047 2,085 
Sublease income(67) (732)(386)
Net Lease costs$6,332 $6,579 $17,019 $17,048 
(1) Includes short-term leases, which are immaterial.
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December 27, 2020March 31, 2020
Weighted Average Remaining Lease Term (Years):
Operating leases9.529.55
Weighted Average Discount Rate:
Operating leases8.65 %8.64 %
The approximate minimum lease payments under non-cancelable operating leases as of December 27, 2020 are as follows:
Remainder of fiscal 2021$4,429 
Fiscal 202216,581 
Fiscal 202315,107 
Fiscal 202413,410 
Fiscal 202512,246 
Thereafter71,628 
Total lease payments133,401 
Less imputed interest(44,989)
Present value of lease liabilities$88,412 
Supplemental cash flow information related to leases is as follows:
Nine months ended
December 27, 2020December 29, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases$13,077 $15,111 
Operating lease assets obtained in exchange for lease liabilities:
Operating leases11,487 1,848 
4. Acquisitions and Divestitures

During the quarter we acquired certain assets related to Remington Outdoor Company, Inc.’s ("Remington") ammunition and accessories businesses, including Remington's ammunition manufacturing facility in Lonoke, Arkansas and related intellectual property. The aggregate consideration of the transaction including working capital adjustments was $81,691 for the net assets acquired, subject to certain customary closing adjustments. We funded the acquisition using a combination of approximately $51,691 of cash on hand and approximately $30,000 drawn from our existing asset-based revolving credit facility. The acquisition will allow us to leverage our current manufacturing infrastructure, distribution channels and scale to restore efficiency, profitability and sustainability to the Remington ammunition and accessories business.

Remington's net sales of $15,334 and a net loss of $7,874 since the acquisition date, October 12, 2020, were included in our consolidated results for the three months ended December 27, 2020, and reflected in the Shooting Sports reportable segment.

We accounted for the acquisition of Remington as a business combination using the acquisition method of accounting. The preliminary purchase price allocation below was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The preliminary fair values of acquired assets and liabilities assumed represent management’s estimate of fair value and are subject to change if additional information, such as post-close working capital adjustments becomes available. We expect to finalize the purchase price allocation as soon as practicable within the measurement period, but not later than one year following the acquisition date. The excess of the consideration transferred over the estimated fair value of the net assets received has been recorded as goodwill. The factors that contributed to the recognition of goodwill primarily relate to acquisition-driven anticipated cost savings and synergies along with the assembled workforce acquired. Assembled workforce is not recognized separate and apart from goodwill as it is neither separable nor contractual in nature. The goodwill is deductible for tax purposes.
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Remington Preliminary Purchase Price Allocation:
October 12, 2020
Total preliminary purchase price:
Cash paid$81,400 
Cash paid for working capital291 
Total purchase price81,691 
Preliminary fair value of assets acquired:
Inventories$20,021 
Intangible assets26,200 
Property, plant, and equipment31,250 
Other assets3,363 
Total assets80,834 
Preliminary fair value of liabilities assumed:
Accounts payable311 
Other liabilities2,969 
Total liabilities3,280 
Net assets acquired77,554 
Goodwill$4,137 

Intangible assets above include:
ValueUseful life (years)
Indefinite lived tradenames$24,500 Indefinite
Customer relationships1,700 20

Supplemental Pro Forma Data:

The following pro forma financial information presents our results as if the Remington acquisition had occurred on April 1, 2019:
Three months endedNine months ended
December 27, 2020December 29, 2019December 27, 2020December 29, 2019
Sales, net$579,332 $463,061 $1,701,872 $1,465,492 
Net income (loss)79,476 3,732 187,841 (56,133)

The unaudited supplemental pro forma data above include the following significant non-recurring adjustments to net income (loss) to account for certain costs which would have been incurred if the Remington acquisition had been completed on April 1, 2019:

Three months endedNine months ended
December 27, 2020December 29, 2019December 27, 2020December 29, 2019
Fees for advisory, legal, and accounting services (1)$(1,459)$ $(3,260)$3,260 
Inventory step-up, net (2)(400) (400)400 
Interest (3) 717 835 2,936 
Depreciation (4) 951 1,902 2,853 
Amortization (5) 21 42 63 
Income taxes (6)290  2,324  

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(1) Adjustment for fees that were incurred in connection with the acquisition of Remington during fiscal 2021 as if those fees were incurred during the first quarter of fiscal 2020. Costs were recorded in Selling, general, and administrative expense. We paid a total of $3,260 in transaction costs.
(2) Adjustment reflects the increased cost of goods sold expense resulting from the fair value step-up in inventory which was expensed over the first inventory cycle.
(3) Adjustment to reflect an increase in interest expense resulting from interest on the asset-based revolving credit facility.
(4) Adjustment for depreciation related to the revised basis of the acquired property, plant and equipment and change in estimated useful lives.
(5) Adjustment for amortization of acquired intangible assets.
(6) Income tax effect of the adjustments made at a blended federal and state statutory rate including the impact of the valuation allowance.

The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the acquisition taken place on the date indicated, or of our future consolidated results of operations. The pro forma financial information presented above has been derived from our historical condensed consolidated financial statements and from the historical accounting records of Remington.

Divestiture of Business:

We entered into an asset purchase agreement during the quarter to sell a non-strategic business in our Shooting Sports segment. As part of the agreement we will provide limited transition services that will be complete by the end of the fiscal year. During the three months ended December 27, 2020 we recognized a pretax gain on this divestiture of approximately $18,467, which is included in other income/(expense) on the condensed consolidating statements of income. This transaction does not meet the criteria for discontinued operations as it does not represent a strategic shift that will have a major effect on the Company's ongoing operations. The assets of this business represented a portion of our Ammunition reporting unit. See Note 11, Goodwill and Intangible Assets.

5. Derivative Financial Instruments
In the normal course of business, we are exposed to market risks arising from adverse changes in:
commodity prices affecting the cost of raw materials, and
interest rates.
We 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 December 27, 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 December 27, 2020, we had outstanding lead forward contracts on approximately 16 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. As of December 27, 2020, there is an asset balance related to the lead forward contracts. The balance is recorded within other current and non-current assets and is immaterial.
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6. Revenue Recognition

The following tables disaggregate our net sales by major category:
Three months ended
December 27, 2020December 29, 2019(1)
Shooting SportsOutdoor ProductsTotalShooting SportsOutdoor ProductsTotal
Ammunition$287,855 $— $287,855 $202,316 $— $202,316 
Hunting and Shooting113,662 — 113,662 83,144 — 83,144 
Action Sports— 88,907 88,907 — 75,661 75,661 
Outdoor Recreation (2)— 84,255 84,255 — 63,649 63,649 
Total$401,517 $173,162 $574,679 $285,460 $139,310 $424,770 
Geographic Region:
United States$369,720 $126,567 $496,287 $253,573 $91,427 $345,000 
Rest of the World31,797 46,595 78,392 31,887 47,883 79,770 
Total$401,517 $173,162 $574,679 $285,460 $139,310 $424,770 
Nine months ended
December 27, 2020December 29, 2019(1)
Shooting SportsOutdoor ProductsTotalShooting SportsOutdoor ProductsTotal
Ammunition$821,837 $— $821,837 $626,298 $— $626,298 
Firearms —  24,577 — 24,577 
Hunting and Shooting293,525 — 293,525 243,705 — 243,705 
Action Sports— 259,213 259,213 — 227,531 227,531 
Outdoor Recreation (2)— 254,423 254,423 — 207,449 207,449 
Total$1,115,362 $513,636 $1,628,998 $894,580 $434,980 $1,329,560 
Geographic Region:
United States$1,029,848 $393,367 $1,423,215 $793,805 $304,820 $1,098,625 
Rest of the World85,514 120,269 205,783 100,775 130,160 230,935 
Total$1,115,362 $513,636 $1,628,998 $894,580 $434,980 $1,329,560 
(1) We changed our operating segments during the fourth quarter of fiscal 2020 (see Note 18, 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.
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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.
7. Earnings Per Share
The computation of basic earnings per share ("EPS") is based on the weighted average number of shares that were outstanding during the period. The computation of diluted EPS is based on the number of basic weighted average shares outstanding plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares, such as common stock to be issued upon exercise of options, contingently issuable shares and restricted stock units, using the treasury stock method.
The following tables set forth the computation of basic and diluted earnings per share:
Three months endedNine months ended
(Amounts in thousands except per share data)December 27, 2020December 29, 2019December 27, 2020December 29, 2019
Numerator:
Net income (loss)$