Attached files
| file | filename |
|---|---|
| EX-99.2 - EX-99.2 - SMITH & WESSON BRANDS, INC. | d14369dex992.htm |
| EX-99.1 - EX-99.1 - SMITH & WESSON BRANDS, INC. | d14369dex991.htm |
| EX-10.128 - EX-10.128 - SMITH & WESSON BRANDS, INC. | d14369dex10128.htm |
| EX-10.127 - EX-10.127 - SMITH & WESSON BRANDS, INC. | d14369dex10127.htm |
| EX-10.126 - EX-10.126 - SMITH & WESSON BRANDS, INC. | d14369dex10126.htm |
| EX-10.125 - EX-10.125 - SMITH & WESSON BRANDS, INC. | d14369dex10125.htm |
| EX-10.124 - EX-10.124 - SMITH & WESSON BRANDS, INC. | d14369dex10124.htm |
| EX-10.123 - EX-10.123 - SMITH & WESSON BRANDS, INC. | d14369dex10123.htm |
| EX-10.122 - EX-10.122 - SMITH & WESSON BRANDS, INC. | d14369dex10122.htm |
| EX-10.121 - EX-10.121 - SMITH & WESSON BRANDS, INC. | d14369dex10121.htm |
| EX-2.13 - EX-2.13 - SMITH & WESSON BRANDS, INC. | d14369dex213.htm |
| 8-K - 8-K - SMITH & WESSON BRANDS, INC. | d14369d8k.htm |
Exhibit 99.3
Smith & Wesson Brands, Inc.
Unaudited Pro Forma Condensed Consolidated Financial Statements
On August 24, 2020, or the Distribution Date, at 12:01 a.m. Eastern Time, the previously announced separation, or the Separation, of our wholly owned subsidiary, American Outdoor Brands, Inc., a Delaware corporation, or AOUT, from our company was completed. The Separation was achieved through the transfer of all the assets and legal entities, subject to any related liabilities, associated with our outdoor products and accessories business to AOUT, which we refer to as the Transfer, and the distribution of 100% of the AOUT outstanding capital stock to holders of our common stock as of the close of business on August 10, 2020, or the Record Date, which we refer to as the Distribution. In connection with the Distribution, our stockholders received one share of AOUT common stock for every four shares of our common stock held as of the close of business on the Record Date. Following the Distribution, AOUT became an independent, publicly traded company, and we retain no ownership interest in AOUT. Our common stock will continue to trade on the Nasdaq Global Select Market under the ticker symbol “SWBI.” AOUT common stock will trade on the Nasdaq Global Select Market under the ticker symbol “AOUT.” We have received an opinion from counsel to the effect that, among other things, the transfer of the assets and legal entities, subject to any related liabilities, associated with the outdoor products and accessories business, to AOUT, will qualify as a transaction that is tax-free for U.S. federal income tax purposes, except to the extent of any cash received in lieu of fractional shares.
The following unaudited pro forma condensed consolidated statements of income for the years ended April 30, 2020, 2019, and 2018 reflect the results of operations as if the Distribution had occurred on May 1, 2017. The unaudited pro forma condensed consolidated balance sheet as of April 30, 2020 assumes that the Distribution occurred as of April 30, 2020. The unaudited pro forma condensed consolidated financial information should be read together with our historical consolidated financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our annual report on Form 10-K for the fiscal year ended April 30, 2020.
The unaudited pro forma condensed consolidated financial statements are presented based on information currently available, are intended for informational purposes, are not intended to represent what our consolidated statements of income and balance sheet actually would have been had the separation occurred on the dates indicated above, and do not reflect all actions that may be undertaken by us after the Distribution and disposition of AOUT. In addition, the unaudited pro forma condensed consolidated financial statements are not necessarily indicative of our results of operations and financial position for any future period.
The “Historical SWBI (as reported)” column in the unaudited pro forma condensed consolidated financial statements reflects our historical condensed consolidated financial statements for the periods presented and does not reflect any adjustments related to the Separation and related transactions.
The information in the “Discontinued Operations” column in the unaudited pro forma condensed consolidated statements of income was derived from our consolidated financial statements and related accounting records for the years ended April 30, 2020, 2019, and 2018 and reflects the results of the outdoor products and accessories business, adjusted to include costs directly attributed to that business and to exclude corporate overhead costs that were previously allocated to the outdoor products and accessories businesses for each period. The information in the “Discontinued Operations” column in the unaudited pro forma condensed consolidated balance sheet was derived from our consolidated financial statements and the related accounting records as of April 30, 2020, adjusted to include certain assets and liabilities that were transferred to AOUT pursuant to the Separation and Distribution Agreement. Beginning in the second quarter of fiscal 2021, the outdoor products and accessories business historical financial results for periods prior to the Distribution Date will be reflected in our consolidated financial statements as a discontinued operation.
The information in the “Pro Forma Adjustments” column in the unaudited pro forma condensed consolidated financial statements was based on available information and assumptions that we believe are reasonable, that reflect the impacts of events directly attributable to the Separation and related transactions that are factually supportable, and for purposes of the condensed consolidated statements of income, are expected to have a continuing impact on our company. The pro forma adjustments may differ from those that have been or will be calculated to report the outdoor products and accessories business as a discontinued operation in our historical and future filings, and do not reflect future events that may occur after the Separation, including potential selling, general, and administrative dis-synergies and the expected charges or the expected realization of any cost savings or other synergies.
SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| For the Year Ended April 30, 2018 | ||||||||||||||||
| Historical SWBI (as reported) |
Discontinued Operations (A) |
Pro Forma Adjustments |
Pro Forma SWBI |
|||||||||||||
| Net sales |
$ | 606,850 | $ | (154,058 | ) | $ | — | $ | 452,792 | |||||||
| Cost of sales |
411,098 | (78,209 | ) | — | 332,889 | |||||||||||
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|||||||||
| Gross profit |
195,752 | (75,849 | ) | — | 119,903 | |||||||||||
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|||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
11,361 | (3,801 | ) | — | 7,560 | |||||||||||
| Selling, marketing, and distribution |
55,805 | (25,466 | ) | — | 30,339 | |||||||||||
| General and administrative |
101,538 | (41,904 | ) | — | 59,634 | |||||||||||
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|||||||||
| Total operating expenses |
168,704 | (71,171 | ) | — | 97,533 | |||||||||||
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|||||||||
| Operating income |
27,048 | (4,678 | ) | — | 22,370 | |||||||||||
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| Other (expense)/income, net: |
||||||||||||||||
| Other income/(expense), net |
1,737 | (71 | ) | — | 1,666 | |||||||||||
| Interest expense, net |
(11,168 | ) | — | — | (11,168 | ) | ||||||||||
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| Total other (expense)/income, net |
(9,431 | ) | (71 | ) | — | (9,502 | ) | |||||||||
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|||||||||
| Income/(loss) from operations before income taxes |
17,617 | (4,749 | ) | — | 12,868 | |||||||||||
| Income tax (benefit)/expense |
(2,511 | ) | (1,649 | ) | — | (4,160 | ) | |||||||||
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| Net income/(benefit) |
$ | 20,128 | $ | (3,100 | ) | — | $ | 17,028 | ||||||||
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| Net income per share: |
||||||||||||||||
| Basic - net income |
$ | 0.37 | $ | 0.31 | ||||||||||||
| Diluted - net income |
$ | 0.37 | $ | 0.31 | ||||||||||||
| Weighted average number of common shares outstanding: |
||||||||||||||||
| Basic |
54,061 | 54,061 | ||||||||||||||
| Diluted |
54,834 | 54,834 | ||||||||||||||
SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| For the Year Ended April 30, 2019 | ||||||||||||||||
| Historical SWBI (as reported) |
Discontinued Operations (A) |
Pro Forma Adjustments |
Pro Forma SWBI |
|||||||||||||
| Net sales |
$ | 638,277 | $ | (156,942 | ) | $ | — | $ | 481,335 | |||||||
| Cost of sales |
412,046 | (76,994 | ) | — | 335,052 | |||||||||||
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| Gross profit |
226,231 | (79,948 | ) | — | 146,283 | |||||||||||
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| Operating expenses: |
||||||||||||||||
| Research and development |
12,866 | (4,858 | ) | — | 8,008 | |||||||||||
| Selling, marketing, and distribution |
57,263 | (29,570 | ) | — | 27,693 | |||||||||||
| General and administrative |
107,650 | (40,586 | ) | — | 67,064 | |||||||||||
| Goodwill impairment |
10,396 | (10,396 | ) | — | — | |||||||||||
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| Total operating expenses |
188,175 | (85,410 | ) | — | 102,765 | |||||||||||
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| Operating income/(loss) |
38,056 | 5,462 | — | 43,518 | ||||||||||||
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| Other (expense)/income, net: |
||||||||||||||||
| Other income/(expense), net |
33 | 6 | 1,020 | (B) | 1,059 | |||||||||||
| Interest expense, net |
(9,351 | ) | — | — | (9,351 | ) | ||||||||||
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| Total other (expense)/income, net |
(9,318 | ) | 6 | 1,020 | (8,292 | ) | ||||||||||
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| Income/(loss) from operations before income taxes |
28,738 | 5,468 | 1,020 | 35,226 | ||||||||||||
| Income tax expense |
10,328 | (1,044 | ) | 266 | 9,550 | |||||||||||
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| Net income |
$ | 18,410 | $ | 6,512 | $ | 754 | $ | 25,676 | ||||||||
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| Net income per share: |
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| Basic - net income |
$ | 0.34 | $ | 0.47 | ||||||||||||
| Diluted - net income |
$ | 0.33 | $ | 0.47 | ||||||||||||
| Weighted average number of common shares outstanding: |
||||||||||||||||
| Basic |
54,483 | 54,483 | ||||||||||||||
| Diluted |
55,216 | 55,216 | ||||||||||||||
SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| For the Year Ended April 30, 2020 | ||||||||||||||||
| Historical SWBI (as reported) |
Discontinued Operations (A) |
Pro Forma Adjustments |
Pro Forma SWBI |
|||||||||||||
| Net sales |
$ | 678,390 | $ | (148,776 | ) | $ | — | $ | 529,614 | |||||||
| Cost of sales |
443,685 | (79,761 | ) | — | 363,924 | |||||||||||
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| Gross profit |
234,705 | (69,015 | ) | — | 165,690 | |||||||||||
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| Operating expenses: |
||||||||||||||||
| Research and development |
12,362 | (4,998 | ) | — | 7,364 | |||||||||||
| Selling, marketing, and distribution |
74,515 | (32,538 | ) | — | 41,977 | |||||||||||
| General and administrative |
97,985 | (31,952 | ) | — | 66,033 | |||||||||||
| Goodwill impairment |
98,662 | (98,662 | ) | — | — | |||||||||||
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| Total operating expenses |
283,524 | (168,150 | ) | — | 115,374 | |||||||||||
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| Operating (loss)/income |
(48,819 | ) | 99,135 | — | 50,316 | |||||||||||
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| Other (expense)/income, net: |
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| Other income/(expense), net |
83 | 21 | 2,428 | (B) | 2,532 | |||||||||||
| Interest expense, net |
(11,213 | ) | — | — | (11,213 | ) | ||||||||||
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| Total other (expense)/income, net |
(11,130 | ) | 21 | 2,428 | (8,681 | ) | ||||||||||
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| (Loss)/income from operations before income taxes |
(59,949 | ) | 99,156 | 2,428 | 41,635 | |||||||||||
| Income tax expense |
1,281 | 10,241 | 611 | 12,133 | ||||||||||||
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| Net (loss)/income per share: |
$ | (61,230 | ) | $ | 88,915 | $ | 1,817 | $ | 29,502 | |||||||
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| Net (loss)/income per share: |
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| Basic - net (loss)/income |
$ | (1.11 | ) | $ | 0.54 | |||||||||||
| Diluted - net (loss)/income |
$ | (1.11 | ) | $ | 0.53 | |||||||||||
| Weighted average number of common shares outstanding: |
||||||||||||||||
| Basic |
54,983 | 54,983 | ||||||||||||||
| Diluted |
54,983 | 55,665 | ||||||||||||||
SMITH & WESSON BRANDS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
April 30, 2020
(Unaudited)
| Historical SWBI (as reported) |
Discontinued Operations (A) |
Pro Forma Adjustments |
Pro Forma SWBI |
|||||||||||||
| ASSETS | ||||||||||||||||
| Current assets: |
||||||||||||||||
| Cash and cash equivalents |
$ | 125,398 | $ | (387 | ) | $ | (25,000 | )(C) | $ | 100,011 | ||||||
| Accounts receivable, net |
93,433 | (32,554 | ) | — | 60,879 | |||||||||||
| Inventories |
164,191 | (60,450 | ) | — | 103,741 | |||||||||||
| Other currents assets |
10,433 | (1,333 | ) | — | 9,100 | |||||||||||
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| Total current assets |
393,455 | (94,724 | ) | (25,000 | ) | 273,731 | ||||||||||
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| Property, plant, and equipment, net |
157,417 | (9,677 | ) | — | 147,740 | |||||||||||
| Intangibles, net |
73,754 | (68,715 | ) | — | 5,039 | |||||||||||
| Goodwill |
83,605 | (64,582 | ) | — | 19,023 | |||||||||||
| Other assets |
20,730 | (4,847 | ) | 554 | (D) | 16,437 | ||||||||||
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| $728,961 | $(242,545) | $(24,446) | $461,970 | |||||||||||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
| Current liabilities: |
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| Accounts payable |
$ | 39,196 | $ | (7,720 | ) | $ | — | $ | 31,476 | |||||||
| Accrued expenses and deferred revenue |
64,602 | (6,924 | ) | — | 57,678 | |||||||||||
| Other current liabilities |
26,173 | (2,728 | ) | — | 23,445 | |||||||||||
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| Total current liabilities |
129,971 | (17,372 | ) | — | 112,599 | |||||||||||
| Notes and loans payable, net of current portion |
159,171 | — | — | 159,171 | ||||||||||||
| Finance lease payable, net of current portion |
39,873 | — | — | 39,873 | ||||||||||||
| Other non-current liabilities |
12,828 | (2,202 | ) | 554 | (D) | 11,180 | ||||||||||
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| Total liabilities |
341,843 | (19,574 | ) | 554 | 322,823 | |||||||||||
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| Commitments and contingencies |
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| Stockholders’ equity: |
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| Stockholders’ equity: |
387,118 | (222,971 | ) | (25,000 | )(E) | 139,147 | ||||||||||
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| Total stockholders’ equity |
387,118 | (222,971 | ) | (25,000 | ) | 139,147 | ||||||||||
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| $728,961 | $(242,545) | $(24,446) | $461,970 | |||||||||||||
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Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
| (A) | Reflects the discontinued operations, including associated assets, liabilities, and equity and results of operations. Certain corporate overhead expenses that were not specifically related to the outdoor products and accessories business were excluded, as they did not meet the discontinued operations criteria. |
| (B) | Represents income generated from the sublease for occupying and utilizing approximately 59.0% of our distribution center in Boone, County Missouri, entered into with AOUT in connection with the Separation. |
| (C) | Represents the cash distribution to AOUT in connection with the Separation. |
| (D) | Represents pro forma adjustment for deferred income taxes after discontinued operations were removed. |
| (E) | Reflects the impact to our total stockholder’s equity from pro forma adjustments described in notes (C) above. |