Vista Outdoor announces expected non-cash intangible asset impairment charge
Vista Outdoor announced that it expects to record a material, non-cash intangible asset impairment charge in its Hunting and Shooting Accessories reporting unit in Q3 of FY17. The company does not expect the impairment charge to have any impact on future operations, affect its liquidity, affect cash flows from operating activities, or affect compliance with the financial covenants set forth in its debt instruments. In accordance with Accounting Standards Codification, or ASC, 350 "Intangibles Goodwill and Other," the company is required to test its goodwill and other indefinite-lived intangible assets for impairment annually or when a triggering event has occurred that would indicate that it is more likely than not that the fair value of the reporting unit is less than the book value, including goodwill and intangibles. In Vista Outdoor's assessment, a triggering event for the company's Outdoor Products segment occurred during Q3 of FY17 due to an acceleration of the trends seen during the first and second quarters, which included a softening retail environment and increased promotional activity. These factors required the company to begin the impairment assessment for that segment's reporting units at that time, rather than waiting for the normal process that would ordinarily be completed in conjunction with the preparation of the company's FY17 annual financial statements. Vista Outdoor's Shooting Sports segment will be tested during the normal process, and management is confident there will not be an impairment in the segment's Ammunition and Firearms reporting units.