Exhibit 99.1
Vista Outdoor, Inc.
Unaudited Pro Forma Condensed Consolidated Financial Information
On July 5, 2019, Vista Outdoor Inc. ("Vista") and one of its subsidiaries, Vista Outdoor Operations LLC, completed the sale of all of the issued and outstanding equity interests of Caliber Company, the legal entity operating Vista’s Savage Arms and Stevens Firearms brands ("Firearms Business"), to a financial buyer, Long Range Acquisition LLC. The total purchase price of $170 million, comprised of $158 million paid at closing and $12 million to be paid upon maturity of a five-year seller note issued by the buyer to Vista Outdoor in connection with the transaction.
The sale of the Firearms Business is considered a significant disposition for purposes of Item 2.01 of Form 8-K. As a result, the Company prepared the accompanying unaudited pro forma condensed consolidated financial statements in accordance with Article 11 of Regulation S-X. The Company determined that the sale of the Firearms Business did not qualify for discontinued operations accounting under financial statement presentation authoritative guidance. The accompanying unaudited pro forma condensed consolidated balance sheet as of June 30, 2019 assumes the sale of the Firearms Business occurred on June 30, 2019. The accompanying unaudited condensed consolidated statements of income for the three months ended June 30, 2019, and for the fiscal year ended March 31, 2019, assumes the sale had occurred on April 1, 2018. The pro forma adjustments are described in the accompanying notes and are based upon information and assumptions available at the time of the filing of this amended current report on Form 8-K.
The unaudited pro forma condensed consolidated financial information is subject to the assumptions and adjustments described in the accompanying notes. The unaudited pro forma consolidated financial statements are presented based on certain estimates and assumptions are intended for informational purposes only, which are not necessarily indicative of what our financial position or results of operations actually would have been had the sale of the Firearms Business been completed as of the dates indicated, nor are they necessarily indicative of future results.
The unaudited pro forma consolidated financial statements and accompanying notes should be read together with our historical consolidated financial statements as of and for the fiscal year ended March 31, 2019 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 23, 2019.
On September 4, 2018 we completed the divestiture of the legal entities operating our Bollé, Cébé and Serengeti brands ("Eyewear Business"). The sale of this business did not qualify for discontinued operations accounting under financial statement presentation authoritative guidance. In addition, the sale was not considered a significant disposition for purposes of Item 2.01 of Form 8-K. For additional information, we voluntarily provided an additional column in the unaudited pro forma consolidated statements of income for the fiscal year ended March 31, 2019, assuming the sale of the Eyewear Business had occurred on April 1, 2018.
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| | | | | | | | | | | | |
| VISTA OUTDOOR INC. |
| UNAUDITED PRO FORMA |
| CONSOLIDATED BALANCE SHEET |
| AS OF JUNE 30, 2019 |
| (Amounts in thousands except share data) |
| | | | | | | |
| | | Historical | | Pro Forma Adjustments | | Pro Forma |
| ASSETS | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 31,595 |
| | $ | — |
| | $ | 31,595 |
|
| Net receivables | | 363,364 |
| | — |
| | 363,364 |
|
| Net inventories | | 387,676 |
| | — |
| | 387,676 |
|
| Assets held for sale | | 195,938 |
| | (195,938 | ) | (a) | — |
|
| Other current assets | | 23,678 |
| | — |
| | 23,678 |
|
| Total current assets | | 1,002,251 |
| | (195,938 | ) | | 806,313 |
|
| Net property, plant, and equipment | | 207,416 |
| | — |
| | 207,416 |
|
| Operating lease assets | | 72,349 |
| | — |
| | 72,349 |
|
| Goodwill | | 204,496 |
| | — |
| | 204,496 |
|
| Net intangible assets | | 355,699 |
| | — |
| | 355,699 |
|
| Deferred charges and other non-current assets | | 19,090 |
| | 7,451 |
| (b) | 26,541 |
|
| Total assets | | $ | 1,861,301 |
| | $ | (188,487 | ) | | $ | 1,672,814 |
|
| LIABILITIES AND EQUITY | | | | | | |
| Current liabilities: | | | | | | |
| Current portion of long-term debt | | 19,335 |
| | (19,335 | ) | (c)
| — |
|
| Accounts payable | | 128,670 |
| | — |
| | 128,670 |
|
| Accrued compensation | | 25,421 |
| | — |
| | 25,421 |
|
| Accrued income taxes | | 845 |
| | — |
| | 845 |
|
| Federal excise tax | | 20,128 |
| | — |
| | 20,128 |
|
| Liabilities held for sale | | 38,733 |
| | (38,733 | ) | (a) | — |
|
| Other current liabilities | | 105,061 |
| | — |
| | 105,061 |
|
| Total current liabilities | | 338,193 |
| | (58,068 | ) | | 280,125 |
|
| Long-term debt | | 740,312 |
| | (133,463 | ) | (c) | 606,849 |
|
| Deferred income tax liabilities | | 17,214 |
| | — |
| | 17,214 |
|
| Long-term operating lease liabilities | | 75,799 |
| | — |
| | 75,799 |
|
| Accrued pension and postemployment benefits | | 45,423 |
| | — |
| | 45,423 |
|
| Other long-term liabilities | | 49,411 |
| | — |
| | 49,411 |
|
| Total liabilities | | 1,266,352 |
| | (191,531 | ) | | 1,074,821 |
|
| Common stock — $.01 par value: | | | | | | |
| Authorized — 500,000,000 shares | | | | | | |
| Issued and outstanding — 57,745,745 shares as of June 30, 2019 | | 577 |
| | — |
| | 577 |
|
| Additional paid-in capital | | 1,752,760 |
| | — |
| | 1,752,760 |
|
| Accumulated deficit | | (821,584 | ) | | — |
| | (821,584 | ) |
| Accumulated other comprehensive loss | | (82,620 | ) | | 3,044 |
| (a) | (79,576 | ) |
| Common stock in treasury, at cost — 6,218,694 shares held as of June 30, 2019 | | (254,184 | ) | | — |
| | (254,184 | ) |
| Total stockholders' equity | | 594,949 |
| | 3,044 |
| | 597,993 |
|
| Total liabilities and stockholders' equity | | $ | 1,861,301 |
| | $ | (188,487 | ) | | $ | 1,672,814 |
|
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
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| | | | | | | | | | | | | | | | |
| VISTA OUTDOOR INC. |
| UNAUDITED PRO FORMA |
| CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS) |
| FOR THE THREE MONTHS ENDED JUNE 30, 2019 |
| (Amounts in thousands except per share data) |
| | | | | | | | | |
| | | Historical | | Firearms (d) | | Other | | Pro Forma |
| Sales, net | | $ | 459,774 |
| | $ | (24,017 | ) | | $ | — |
| | $ | 435,757 |
|
| Cost of sales | | 364,696 |
| | (17,964 | ) | | — |
| | 346,732 |
|
| Gross profit | | 95,078 |
| | (6,053 | ) | | — |
| | 89,025 |
|
| Operating expenses: | | | | | | | | |
| Research and development | | 6,494 |
| | (502 | ) | | — |
| | 5,992 |
|
| Selling, general, and administrative | | 83,909 |
| | (4,320 | ) | | (402 | ) | (e) | 79,187 |
|
| Impairment of held-for-sale assets | | 9,429 |
| | — |
| | (9,429 | ) | (f) | — |
|
| Income (loss) before interest and income taxes | | (4,754 | ) | | (1,231 | ) | | 9,831 |
| | 3,846 |
|
| Interest expense, net | | (11,124 | ) | | 2,321 |
| (g) | — |
| | (8,803 | ) |
| Income (loss) before income taxes | | (15,878 | ) | | 1,090 |
| | 9,831 |
| | (4,957 | ) |
| Income tax provision (benefit) | | 737 |
| | 261 |
| (h) | 96 |
| (h) | 1,094 |
|
| Net income (loss) | | $ | (16,615 | ) | | $ | 829 |
| | $ | 9,735 |
| | $ | (6,051 | ) |
| Earnings (loss) per common share: | | | | | | | | |
| Basic | | $ | (0.29 | ) | | $ | 0.01 |
| | $ | 0.17 |
| | $ | (0.10 | ) |
| Diluted | | $ | (0.29 | ) | | $ | 0.01 |
| | $ | 0.17 |
| | $ | (0.10 | ) |
| Weighted-average number of common shares outstanding: | | | | | | | | |
| Basic | | 57,722 |
| | 57,722 |
| | 57,722 |
| | 57,722 |
|
| Diluted | | 57,722 |
| | 57,722 |
| | 57,722 |
| | 57,722 |
|
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
|
| | | | | | | | | | | | | | | | | | | | |
| VISTA OUTDOOR INC. |
| UNAUDITED PRO FORMA |
| CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS) |
| FOR THE YEAR ENDED MARCH 31, 2019 |
| (Amounts in thousands except per share data) |
| | | | | | | | | | | |
| | | Historical | | Firearms (d) | | Eyewear (1) | | Other | | Pro Forma |
| Sales, net | | $ | 2,058,528 |
| | $ | (185,419 | ) | | $ | (51,859 | ) | | $ | — |
| | $ | 1,821,250 |
|
| Cost of sales | | 1,642,840 |
| | (137,416 | ) | | (29,651 | ) | | (437 | ) | (i) | 1,475,336 |
|
| Gross profit | | 415,688 |
| | (48,003 | ) | | (22,208 | ) | | 437 |
| | 345,914 |
|
| Operating expenses: | | | | | | | | | | |
| Research and development | | 27,742 |
| | (1,928 | ) | | (57 | ) | | — |
| | 25,757 |
|
| Selling, general, and administrative | | 377,049 |
| | (23,313 | ) | | (15,971 | ) | | (9,804 | ) | (j) | 327,961 |
|
| Impairment of goodwill and intangibles | | 456,023 |
| | — |
| | — |
| | — |
| | 456,023 |
|
| Impairment of held-for-sale goodwill | | 80,604 |
| | — |
| | — |
| | (80,604 | ) | (k) | — |
|
| Impairment of held-for-sale assets | | 84,555 |
| | — |
| | — |
| | (84,555 | ) | (l) | — |
|
| Income (loss) before other expense, interest, and income taxes | | (610,285 | ) | | (22,762 | ) | | (6,180 | ) | | 175,400 |
| | (463,827 | ) |
| Other expense | | (6,796 | ) | | — |
| | — |
| | 4,925 |
| (m) | (1,871 | ) |
| Income (loss) before interest and income taxes | | (617,081 | ) | | (22,762 | ) | | (6,180 | ) | | 180,325 |
| | (465,698 | ) |
| Interest expense, net | | (57,191 | ) | | 10,626 |
| (h) | 4,069 |
| (g) | — |
| | (42,496 | ) |
| Income (loss) before income taxes | | (674,272 | ) | | (12,136 | ) | | (2,111 | ) | | 180,325 |
| | (508,194 | ) |
| Income tax provision (benefit) | | (25,829 | ) | | (2,913 | ) | (i) | (507 | ) | (h) | 861 |
| (h) | (28,388 | ) |
| Net income (loss) | | $ | (648,443 | ) | | $ | (9,223 | ) | | $ | (1,604 | ) | | $ | 179,464 |
| | $ | (479,806 | ) |
| Earnings (loss) per common share: | | | | | | | | | | |
| Basic | | $ | (11.27 | ) | | $ | (0.16 | ) | | $ | (0.03 | ) | | $ | 3.12 |
| | $ | (8.34 | ) |
| Diluted | | $ | (11.27 | ) | | $ | (0.16 | ) | | $ | (0.03 | ) | | $ | 3.12 |
| | $ | (8.34 | ) |
| Weighted-average number of common shares outstanding: | | | | | | | | | | |
| Basic | | 57,544 |
| | 57,544 |
| | 57,544 |
| | 57,544 |
| | 57,544 |
|
| Diluted | | 57,544 |
| | 57,544 |
| | 57,544 |
| | 57,544 |
| | 57,544 |
|
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
The unaudited pro forma condensed consolidated financial statements represent the following adjustments:
(a) Represents the Company’s divestiture of assets, liabilities and currency translation adjustments related to the Firearms Business as of June 30, 2019, which was previously classified as held for sale.
(b) Reflects the current value of the $12,000 note payable due on July 5, 2024, which was part of the net proceeds received for the sale of the Firearms Business.
(c) Reflects the use of a portion of the $152,798 of net cash proceeds from the sale of the Firearms Business used to pay off the balance of our Term Loan Credit Agreement and to reduce our ABL Revolving Credit Facility.
(d) Reflects the elimination of the results of operations attributable to the Firearms Business for the three months ended June 30, 2019 and the fiscal year ended March 31, 2019, respectively.
(e) Reflects the elimination of transaction costs attributable to the sale of the Firearms Business.
(f) Reflects the elimination of $9,429 of impairment charges related to held-for-sale assets of the Firearms Business.
(g) Represents the estimated interest expense savings resulting from applying the net sales proceeds from the disposition of the Eyewear Business and the Firearms Business to reduce debt on April 1, 2018 through the period that we owned them. The estimated interest expense savings were derived using an average quarterly indebtedness of the Company during fiscal 2019 and for the 3 months ended June 30, 2019, compared to total quarterly interest expense for the same periods. The average interest rate applied was approximately 6.4% for fiscal 2019 and 6.1% for the three months ended June 30, 2019. Also included in the net interest expense is the estimated interest income that would have been recognized if we received the note described above in (b) on April 1, 2018.
(h) The tax affects of the pro-forma adjustments for the Firearms Business and Eyewear Business were calculated using the estimated blended federal and state statutory tax rate of 24%, which is the historical statutory rate in effect for the periods presented. The impairments, which are included in the other adjustments, were not tax-affected as they are not deductible for tax purposes; the remaining other adjustments were tax-affected at the statutory rate.
(i) Reflects the elimination of $437 in contract termination fees related to the sale of the Eyewear Business.
(j) Reflects the elimination of $8,826 in transaction costs attributable to the sale of both the Firearms Business and Eyewear Business and $978 in contract termination fees related to the sale of the Eyewear Business.
(k) Reflects the elimination of goodwill impairment related to the Firearms Business of $80,604.
(l) Reflects the elimination of $44,921 of impairment charges on held-for-sale assets for the Eyewear Business and $39,634 for the Firearms Business.
(m) Reflects the elimination of $4,925 related to the loss on sale of the Eyewear Business.
Additional Information
(1)On September 4, 2018 we completed the divestiture of the legal entities operating our Bollé, Cébé and Serengeti brands ("Eyewear Business"). The sale of this business did not qualify for discontinued operations accounting under financial statement presentation authoritative guidance. In addition, the sale was not considered a significant disposition for purposes of Item 2.01 of Form 8-K. For additional information, we voluntarily provided an additional column in the unaudited pro forma consolidated statements of income for the fiscal year ended March 31, 2019, assuming the sale of the Eyewear Business had occurred on April 1, 2018.
