What changed in this filing

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Item 1. Financial Statements

2021-08-02 compared with 2021-05-10 · 281 added, 131 removed, 413 unchanged (50% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

March 31, 2021

June 30, 2021

December 31, 2020

34 unchanged sentences

CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

Three Months Ended

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

Domestic sales

5 unchanged sentences

Total operating expenses

Operating income

Operating income (loss)

Other (expense) income

Interest expense, net

Total other (expense) income, net

Income (loss) before income tax

Income tax expense (benefit)

Net income (loss)

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment

Unrealized gain (loss) on hedging activities

Other comprehensive income (loss)

Comprehensive income (loss)

Net income (loss) per share:

Weighted average shares outstanding:

See accompanying notes to condensed consolidated financial statements.

CLARUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

Six Months Ended

June 30, 2021

June 30, 2020

Domestic sales

International sales

Cost of goods sold

Operating expenses

Selling, general and administrative

Transaction costs

Total operating expenses

Operating income (loss)

Other expense

1 unchanged sentence

Total other expense, net

Income before income tax

Income tax (benefit) expense

Other comprehensive (loss) income, net of tax:

Income (loss) before income tax

Income tax benefit

Net income (loss)

Other comprehensive income, net of tax:

Foreign currency translation adjustment

Unrealized gain on hedging activities

Other comprehensive (loss) income

Comprehensive income

Net income per share:

Other comprehensive income

Comprehensive income (loss)

Net income (loss) per share:

Weighted average shares outstanding:

3 unchanged sentences

(In thousands)

Three Months Ended

March 31, 2021

March 31, 2020

Six Months Ended

June 30, 2021

June 30, 2020

Cash Flows From Operating Activities:

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation of property and equipment

1 unchanged sentence

Amortization of debt issuance costs

Loss on disposition of property and equipment

Gain on disposition of property and equipment

Noncash lease expense

5 unchanged sentences

Accounts payable and accrued liabilities

Net cash (used in) provided by operating activities

Net cash provided by operating activities

Cash Flows From Investing Activities:

Proceeds from disposition of property and equipment

Purchase of property and equipment

Purchases of property and equipment

Net cash used in investing activities

2 unchanged sentences

Repayments on revolving credit facilities

Repayments of term note

Repayments on term note

Proceeds from issuance of term note

Payment of debt issuance costs

Purchase of treasury stock

12 unchanged sentences

Lease liabilities arising from obtaining right of use assets

Unpaid debt issuance costs

Stock dividends

See accompanying notes to condensed consolidated financial statements.

11 unchanged sentences

Balance, March 31, 2020

Other comprehensive loss

Stock dividends ($ 0.025 per share)

Purchase of treasury stock

Stock-based compensation expense

Proceeds from exercise of options

Balance, June 30, 2020

Treasury Stock

9 unchanged sentences

Balance, March 31, 2021

Other comprehensive income

Cash dividends ($ 0.025 per share)

Stock-based compensation expense

Proceeds from exercise of options

Balance, June 30, 2021

See accompanying notes to condensed consolidated financial statements.

3 unchanged sentences

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements of Clarus Corporation and subsidiaries (which may be referred to as the “Company,” “Clarus,” “we,” “us” or “our”) as of March 31, 2021 and December 31, 2020 and for the three months ended March 31, 2021 and 2020, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X.

The accompanying unaudited condensed consolidated financial statements of Clarus Corporation and subsidiaries (which may be referred to as the “Company,” “Clarus,” “we,” “us” or “our”) as of June 30, 2021 and December 31, 2020 and for the three and six months ended June 30, 2021 and 2020, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.

In the opinion of management, all adjustments (consisting only of normal recurring adjustments, except otherwise disclosed) necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included.

The results for the three months ended March 31, 2021 are not necessarily indicative of the results to be obtained for the year ending December 31, 2021.

The results for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be obtained for the year ending December 31, 2021.

These interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the Securities and Exchange Commission (the “SEC”) on March 8, 2021.

9 unchanged sentences

On October 2, 2020, the Company completed the acquisition of certain assets and liabilities constituting the Barnes business (“Barnes”).

On July 1, 2021, the Company completed the acquisition of Australia-based Rhino-Rack Holdings Pty Ltd (“Rhino-Rack”).

See Note 16 for a more detailed explanation of the acquisition.

Nature of Business

20 unchanged sentences

Actual results could differ from these estimates.

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Significant Accounting Policies

2 unchanged sentences

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

This ASU provides temporary optional expedients and exceptions to existing guidance on contract modifications and hedge accounting to facilitate the market transition from existing reference rates, such as the London Inter-Bank Offered Rate (“LIBOR”) which is being phased out in 2021, to

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

alternate reference rates, such as the Secured Overnight Financing Rate (“SOFR”).

The standard is currently effective and upon adoption may be applied prospectively to contract modifications made on or before December 31, 2022.

9 unchanged sentences

The Company believes the acquisition of Barnes is expected to provide the Company with a greater combined global revenue base, increased gross margins, profitability and free cash flows, and access to increased liquidity to further acquire and grow businesses.

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The following table is a reconciliation to the fair value of the purchase consideration and how the purchase consideration is allocated to assets acquired and liabilities assumed which have been estimated at their fair values.

14 unchanged sentences

The estimated fair value of inventory was recorded at expected sales price less cost to sell plus a reasonable profit margin for selling efforts.

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

In connection with the acquisition, the Company acquired exclusive rights to Barnes’ trademarks, customer relationships, and product technologies.

10 unchanged sentences

Barnes revenue and operating income were included in the Sierra segment.

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The following unaudited pro forma results are based on the individual historical results of the Company and Barnes, with adjustments to give effect as if the acquisition and borrowings used to finance the acquisition had occurred on January 1, 2019, after giving effect to certain adjustments including the amortization of intangible assets, depreciation of fixed assets, interest expense and taxes and assumes the purchase price was allocated to the assets purchased and liabilities assumed based on their fair market values at the date of purchase.

Three Months Ended

March 31, 2020

Net income per share - basic

Net income per share - diluted

Six Months Ended

June 30, 2020

Net loss per share - basic

Net loss per share - diluted

The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred had the transaction been consummated as of January 1, 2019.

Furthermore, such pro forma information is not necessarily indicative of future operating results of the combined companies and should not be construed as representative of the operating results of the combined companies for any future dates or periods.

Inventories, as of March 31, 2021 and December 31, 2020, were as follows:

March 31, 2021

Inventories, as of June 30, 2021 and December 31, 2020, were as follows:

June 30, 2021

December 31, 2020

2 unchanged sentences

Raw materials and supplies

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

PROPERTY AND EQUIPMENT

Property and equipment, net, as of March 31, 2021 and December 31, 2020, were as follows:

March 31, 2021

Property and equipment, net, as of June 30, 2021 and December 31, 2020, were as follows:

June 30, 2021

December 31, 2020

5 unchanged sentences

Less accumulated depreciation

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

GOODWILL AND INTANGIBLE ASSETS

2 unchanged sentences

Balance at December 31, 2020

Balance at March 31, 2021

Balance at June 30, 2021

Indefinite Lived Intangible Assets

2 unchanged sentences

Impact of foreign currency exchange rates

Balance at March 31, 2021

Balance at June 30, 2021

Other Intangible Assets, net

2 unchanged sentences

Impact of foreign currency exchange rates

Gross balance at March 31, 2021

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Other intangible assets, net of amortization as of March 31, 2021 and December 31, 2020, were as follows:

March 31, 2021

Gross balance at June 30, 2021

Other intangible assets, net of amortization as of June 30, 2021 and December 31, 2020, were as follows:

June 30, 2021

December 31, 2020

4 unchanged sentences

Less accumulated amortization

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

LONG-TERM DEBT

Long-term debt as of March 31, 2021 and December 31, 2020, was as follows:

March 31, 2021

Long-term debt as of June 30, 2021 and December 31, 2020, was as follows:

June 30, 2021

December 31, 2020

3 unchanged sentences

Less current portion

(a) As of March 31, 2021, the Company had drawn $ 10,651 on the $ 60,000 revolving commitment that was available under the credit agreement with JPMorgan Chase Bank, N.A., with a maturity date of May 3, 2024.

(a) As of June 30, 2021, the Company had drawn $ 10,112 on the $ 60,000 revolving commitment that was available under the credit agreement with JPMorgan Chase Bank, N.A., with a maturity date of May 3, 2024.

The Company pays interest monthly on any borrowings on the Credit Agreement.

As of March 31, 2021 and December 31, 2020, the rate was 1.6250 % and 2.0625 %, respectively.

As of June 30, 2021 and December 31, 2020, the rate was 1.6250 % and 2.0625 %, respectively.

All obligations under the Credit Agreement are secured by 100 % of our domestic, and 65 % of our foreign, subsidiary equity interests, as well as accounts receivable, inventory, intellectual property and certain other assets owned by the Company.

1 unchanged sentence

The Credit Agreement also includes other customary affirmative and negative covenants, including financial covenants relating to the Company’s consolidated total leverage ratio and fixed charge coverage ratio.

The Company was in compliance with the debt covenants set forth in the Credit Agreement as of March 31, 2021.

The Company was in compliance with the debt covenants set forth in the Credit Agreement as of June 30, 2021.

(b) A foreign subsidiary of the Company has a revolving credit facility with a financial institution which matures on March 31, 2022.

The foreign subsidiary pays interest monthly on any borrowings on the credit facility.

As of March 31, 2021 and December 31, 2020, the rate was 1.3387 % and 1.3387 %, respectively.

As of June 30, 2021 and December 31, 2020, the rate was 1.3387 % and 1.3387 %, respectively.

(c) Under the Credit Agreement, the Company had access to a term loan facility that was available for drawdown until May 3, 2020.

2 unchanged sentences

The Company pays interest monthly on any borrowings on the Credit Agreement.

As of March 31, 2021 and December 31, 2020, the rate was 1.6250 % and 2.0625 %, respectively.

As of June 30, 2021 and December 31, 2020, the rate was 1.6250 % and 2.0625 %, respectively.

DERIVATIVE FINANCIAL INSTRUMENTS

3 unchanged sentences

If the anticipated transactions are deemed probable, the resulting relationships are formally designated as cash flow hedges.

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The Company accounts for these contracts as cash flow hedges and tests effectiveness by determining whether changes in the expected cash flow of the derivative offset, within a range, changes in the expected cash flow of the hedged item.

At March 31, 2021, the Company’s derivative contracts had remaining maturities of less than one year.

As of June 30, 2021, the Company held currency forward contracts to mitigate currency fluctuations related to the cash purchase price of Rhino-Rack totaling AUD 193,650 with a maturity date of July 1, 2021.

These contracts are not designated as accounting hedges and the changes in fair value of the instruments are recognized in earnings.

During the three and six months ended June 30, 2021, losses of $( 4,513 ) were recorded in other, net expense.

At June 30, 2021, the Company’s derivative contracts had remaining maturities of less than one year.

The counterparties to these transactions had both long-term and short-term investment grade credit ratings.

The maximum net exposure of the Company’s credit risk to the counterparties is generally limited to the aggregate unrealized loss of all contracts with that counterparty, which is $ 379 as of March 31, 2021.

The Company’s exposure of counterparty credit risk is limited to the aggregate unrealized gain on all contracts, which is $ 106 as of March 31, 2021.

The Company’s exposure of counterparty credit risk is limited to the aggregate unrealized gain on all contracts.

At June 30, 2021, there was no such exposure to the counterparties.

The Company’s derivative counterparties have strong credit ratings and as a result, the Company does not require collateral to facilitate transactions.

The Company held the following contracts designated as hedging instruments as of March 31, 2021 and December 31, 2020:

March 31, 2021

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The Company held the following contracts designated as hedging instruments as of June 30, 2021 and December 31, 2020:

June 30, 2021

Foreign exchange contracts - Canadian Dollars

8 unchanged sentences

For contracts that qualify as effective hedge instruments, the effective portion of gains and losses resulting from changes in fair value of the instruments are included in accumulated other comprehensive income and reclassified to sales in the period the underlying hedged transaction is recognized in earnings.

Gains (losses) of $( 321 ) and $ 288 were reclassified to sales during the three months ended March 31, 2021 and 2020, respectively.

The following table presents the balance sheet classification and fair value of derivative instruments as of March 31, 2021 and December 31, 2020:

Gains (losses) of $( 422 ) and $ 294 were reclassified to sales during the three months ended June 30, 2021 and 2020, respectively, and $( 743 ) and $ 582 were reclassified to sales during the six months ended June 30, 2021 and 2020, respectively.

The following table presents the balance sheet classification and fair value of derivative instruments as of June 30, 2021 and December 31, 2020:

Classification

March 31, 2021

June 30, 2021

December 31, 2020

Derivative instruments in asset positions:

Forward exchange contracts

Designated forward exchange contracts

Prepaid and other current assets

Derivative instruments in liability positions:

Forward exchange contracts

Designated forward exchange contracts

Accounts payable and accrued liabilities

Forward exchange contracts

Undesignated forward exchange contracts

Accounts payable and accrued liabilities

Designated forward exchange contracts

Other long-term liabilities

ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income (“AOCI”) primarily consists of foreign currency translation adjustments and changes in our forward foreign exchange contracts.

The following table sets forth the changes in AOCI, net of tax, for the three months ended June 30, 2021:

Foreign Currency Translation Adjustments

Unrealized Gains (Losses) on Cash Flow Hedges

Balance as of March 31, 2021

Other comprehensive income (loss) before reclassifications

Amounts reclassified from other comprehensive income

Net current period other comprehensive income

Balance as of June 30, 2021

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income (“AOCI”) primarily consists of foreign currency translation adjustments and changes in our forward foreign exchange contracts.

The following table sets forth the changes in AOCI, net of tax, for the three months ended March 31, 2021:

The following table sets forth the changes in AOCI, net of tax, for the three months ended June 30, 2020:

Foreign Currency Translation Adjustments

Unrealized Gains (Losses) on Cash Flow Hedges

Balance as of December 31, 2020

Balance as of March 31, 2020

Other comprehensive income (loss) before reclassifications

Amounts reclassified from other comprehensive income (loss)

Amounts reclassified from other comprehensive income

Net current period other comprehensive income (loss)

Balance as of March 31, 2021

The following table sets forth the changes in AOCI, net of tax, for the three months ended March 31, 2020:

Balance as of June 30, 2020

The following table sets forth the changes in AOCI, net of tax, for the six months ended June 30, 2021:

Foreign Currency Translation Adjustments

1 unchanged sentence

Balance as of December 31, 2020

Other comprehensive income (loss) before reclassifications

Amounts reclassified from other comprehensive income (loss)

Net current period other comprehensive loss

Balance as of March 31, 2020

The effects on net income of amounts reclassified from unrealized gains on cash flow hedges for foreign exchange contracts for the three months ended March 31, 2021 and 2020, were as follows:

Gains (losses) reclassified from AOCI to the Consolidated Statements of Comprehensive Income

Other comprehensive (loss) income before reclassifications

Amounts reclassified from other comprehensive income

Net current period other comprehensive (loss) income

Balance as of June 30, 2021

The following table sets forth the changes in AOCI, net of tax, for the six months ended June 30, 2020:

Foreign Currency Translation Adjustments

Unrealized Gains (Losses) on Cash Flow Hedges

Balance as of December 31, 2019

Other comprehensive (loss) income before reclassifications

Amounts reclassified from other comprehensive loss

Net current period other comprehensive (loss) income

Balance as of June 30, 2020

The effects on net income of amounts reclassified from unrealized gains on cash flow hedges for foreign exchange contracts for the three and six months ended June 30, 2021 and 2020, were as follows:

Gains (losses) reclassified from AOCI to the Consolidated Statements of Comprehensive Income (Loss)

Affected line item in the Consolidated

Three Months Ended

Statements of Comprehensive Income

March 31, 2021

March 31, 2020

Six Months Ended

Statements of Comprehensive Income (Loss)

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Foreign exchange contracts:

2 unchanged sentences

Total reclassifications from AOCI

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

FAIR VALUE MEASUREMENTS

5 unchanged sentences

Level 3 - inputs to the valuation methodology are based on prices or valuation techniques that are unobservable.

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Assets and liabilities measured at fair value on a recurring basis at March 31, 2021 and December 31, 2020 were as follows:

March 31, 2021

Forward exchange contracts

Assets and liabilities measured at fair value on a recurring basis at June 30, 2021 and December 31, 2020 were as follows:

June 30, 2021

Designated forward exchange contracts

Undesignated forward exchange contracts

December 31, 2020

Forward exchange contracts

Designated forward exchange contracts

Derivative financial instruments are recorded at fair value based on current market pricing models.

No nonrecurring fair value measurements existed at March 31, 2021 and December 31, 2020.

No nonrecurring fair value measurements existed at June 30, 2021 and December 31, 2020.

STOCKHOLDERS’ EQUITY

3 unchanged sentences

On October 19, 2020, the Company announced that its Board of Directors approved the reinstatement of its Quarterly Cash Dividend.

On April 30, 2021 , the Company announced that its Board of Directors approved the payment on May 21, 2021 of the Quarterly Cash Dividend of $ 0.025 to the record holders of shares of the Company’s common stock as of the close of business on May 10, 2021 .

EARNINGS PER SHARE

Basic earnings per share is computed by dividing earnings by the weighted average number of common shares outstanding during each period.

Diluted earnings per share is computed by dividing earnings by the total of the weighted average number of shares of common stock outstanding during each period, plus the effect of dilutive outstanding stock options and unvested restricted stock grants.

Potentially dilutive securities are excluded from the computation of diluted earnings per share if their effect is anti-dilutive to the loss from continuing operations.

On July 30, 2021 , the Company announced that its Board of Directors approved the payment on August 20, 2021 of the Quarterly Cash Dividend of $ 0.025 to the record holders of shares of the Company’s common stock as of the close of business on August 9, 2021 .

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

The following table is a reconciliation of basic and diluted shares of common stock outstanding used in the calculation of earnings per share:

EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing earnings (loss) by the weighted average number of common shares outstanding during each period.

Diluted earnings (loss) per share is computed by dividing earnings (loss) by the total of the weighted average number of shares of common stock outstanding during each period, plus the effect of dilutive outstanding stock options and unvested restricted stock grants.

Potentially dilutive securities are excluded from the computation of diluted earnings (loss) per share if their effect is anti-dilutive to the loss from continuing operations.

The following table is a reconciliation of basic and diluted shares of common stock outstanding used in the calculation of earnings (loss) per share:

Three Months Ended

March 31, 2021

March 31, 2020

Six Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Weighted average shares outstanding - basic

1 unchanged sentence

Weighted average shares outstanding - diluted

Net income per share:

For the three months ended March 31, 2021 and 2020, equity awards of 500 and 798 , respectively, were anti-dilutive and therefore not included in the calculation of earnings per share for these periods.

Net income (loss) per share:

For the three months ended June 30, 2021 and 2020, equity awards of 1,034 and 4,633 , respectively, and for the six months ended June 30, 2021 and 2020, equity awards of 1,017 and 4,590 , respectively, were anti-dilutive and therefore not included in the calculation of earnings (loss) per share for these periods.

STOCK-BASED COMPENSATION PLAN

4 unchanged sentences

Options Granted:

During the three months ended March 31, 2021, the Company issued stock options for an aggregate of 400 shares under the 2015 Plan to an employee of the Company.

The options issued during the three months ended March 31, 2021 generally vest and become exercisable over a period of three years and expire ten years from the date of the grant.

During the six months ended June 30, 2021, the Company issued stock options for an aggregate of 500 shares under the 2015 Plan to directors and employees of the Company.

The options issued during the six months ended June 30, 2021 generally vest and become exercisable over a period of one to three years and expire ten years from the date of the grant.

For computing the fair value of the stock-based awards, the fair value of each option grant has been estimated as of the date of grant using the Black-Scholes option-pricing model with the following assumptions:

2 unchanged sentences

Grant price (per share)

$ 15.15 - $ 24.43

Dividend yield

0.41 % - 0.66 %

Expected volatility (a)

39.1 % - 43.6 %

Risk-free interest rate

0.50 % - 1.02 %

Expected life (years) (b)

Weighted average fair value (per share)

$ 5.88 - $ 9.23

(a) Expected volatility is based upon the Company’s historical volatility.

(b) The expected term was determined based upon the underlying terms of the awards and the category and employment history of employee award recipient.

The grant date fair value of the stock options granted during the three months ended March 31, 2021 was $ 2,352 , which will be recognized over the vesting period of the options.

The total non-cash stock compensation expense related to restricted stock, stock options and stock awards recorded by the Company for the three months ended March 31, 2021 and 2020 was $ 1,524 and $ 613 , respectively.

For the three months ended March 31, 2021 and 2020, the majority of stock-based compensation costs were classified as selling, general and administrative expenses.

(b) The expected term was determined based upon the underlying terms of the awards and the category and employment

CLARUS CORPORATION

1 unchanged sentence

(in thousands, except per share amounts)

As of March 31, 2021, there were 2,166 unvested stock options and unrecognized compensation cost of $ 8,619 related to unvested stock options, as well as 500 unvested restricted stock awards and unrecognized compensation costs of $ 1,898 related to unvested restricted stock awards.

history of employee award recipient.

The grant date fair value of the stock options granted during the six months ended June 30, 2021 was $ 3,239 , which will be recognized over the vesting period of the options.

Market Condition Restricted Shares Granted:

On May 28, 2021, the Company issued and granted to the Executive Chairman a restricted stock award of 500 restricted shares under the 2015 Plan, of which 500 restricted shares will vest if, on or before May 28, 2024, the Fair Market Value (as defined in the Plan) of the Company’s common stock shall have equaled or exceeded $35.00 per share for twenty consecutive trading days.

For computing the fair value of the restricted shares with a market condition, the fair value of the restricted stock award grant has been estimated as of the date of grant using the Monte-Carlo pricing model with the following assumptions:

Number issued

Vesting period

$ 35.00 stock price target

Grant price (per share)

Dividend yield

Expected volatility

Risk-free interest rate

Expected term (years)

Weighted average fair value (per share)

Using these assumptions, the fair value of the market condition restricted stock awards granted on May 28, 2021 was approximately $ 7,230 .

The total non-cash stock compensation expense related to restricted stock, stock options and stock awards recorded by the Company for the three months ended June 30, 2021 and 2020 was $ 1,826 and $ 616 , respectively, and for the six months ended June 30, 2021 and 2020 was $ 3,350 and $ 1,229 , respectively.

For the three and six months ended June 30, 2021 and 2020, the majority of stock-based compensation costs were classified as selling, general and administrative expenses.

As of June 30, 2021, there were 2,143 unvested stock options and unrecognized compensation cost of $ 8,508 related to unvested stock options, as well as 1,000 unvested restricted stock awards and unrecognized compensation costs of $ 8,300 related to unvested restricted stock awards.

COMMITMENTS AND CONTINGENCIES

8 unchanged sentences

federal statutory tax rate of 21 % and its foreign operations that are considered to be permanently reinvested have statutory tax rates of approximately 25 %.

The difference between the Company’s estimated effective tax rate and the U.S.

federal statutory tax rate of 21 % for the three months ended March 31, 2021, was due to a release of valuation allowance for the current year utilization of net operating loss carryforwards (“NOLs”) and a stock compensation tax windfall, which were partially offset by permanent book to tax differences related to incentive stock options and officer compensation limitations.

The differences between the Company’s estimated effective tax rates of 7.8 % and ( 2.9 )% for the three and six months ended June 30, 2021 and the U.S.

federal statutory tax rate of 21 % were due to a release of valuation allowance for the current year expected utilization

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

of net operating loss carryforwards (“NOLs”) and a stock compensation tax windfall, which were partially offset by permanent book to tax differences related to incentive stock options and officer compensation limitations.

As of December 31, 2020, the Company’s gross deferred tax asset was $ 40,538 .

The Company has recorded a valuation allowance of $ 22,348 , resulting in a net deferred tax asset of $ 18,190 , before deferred tax liabilities of $ 8,304 .

The Company has provided a valuation allowance against a portion of the deferred tax assets as of March 31, 2021 and December 31, 2020, because the ultimate realization of those assets did not meet the more-likely-than-not criteria.

The Company has provided a valuation allowance against a portion of the deferred tax assets as of June 30, 2021 and December 31, 2020, because the ultimate realization of those assets did not meet the more-likely-than-not criteria.

The majority of the Company’s deferred tax assets consist of NOLs for federal tax purposes.

11 unchanged sentences

as Subpart F income and will be offset with the NOLs.

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

NOLs available to offset taxable income, subject to compliance with Section 382 of the Code, begin to expire based upon the following schedule:

21 unchanged sentences

These bullets are used for precision target shooting, hunting and military and law enforcement purposes .

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

As noted above, the Company has a wide variety of technical outdoor equipment and lifestyle products focused on the climb, ski, mountain and sport product categories that are sold to a variety of customers in multiple end markets.

4 unchanged sentences

Three Months Ended

March 31, 2021

March 31, 2020

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Six Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Financial information for our segments is as follows:

Three Months Ended

March 31, 2021

March 31, 2020

Six Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Sales to external customers:

6 unchanged sentences

Total sales to external customers

Segment operating income:

Segment operating income (loss):

Black Diamond

Total segment operating income

Total segment operating income (loss)

Transaction costs

1 unchanged sentence

Interest expense, net

Income before income tax

Income (loss) before income tax

There were no intercompany sales between the Black Diamond and Sierra segments for the periods presented.

Total assets by segment, as of March 31, 2021 and December 31, 2020, were as follows:

March 31, 2021

Total assets by segment, as of June 30, 2021 and December 31, 2020, were as follows:

June 30, 2021

December 31, 2020

Black Diamond

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

Capital expenditures, depreciation and amortization by segment is as follows.

Three Months Ended

March 31, 2021

March 31, 2020

Six Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Capital expenditures:

7 unchanged sentences

Total amortization

SUBSEQUENT EVENTS

Rhino-Rack Acquisition

On May 30, 2021, Oscar Aluminium Pty Ltd (the “Buyer”), an indirect wholly-owned Australian subsidiary of the Company, entered into a Share Sale and Purchase Agreement (the “Purchase Agreement”) to acquire Rhino-Rack, a leading manufacturer of highly-engineered automotive roof racks, trays, mounting systems, luggage boxes, carriers, and accessories.

On July 1, 2021, the transactions contemplated by the Purchase Agreement were consummated.

All United States dollar amounts contained herein are based on the exchange rates in effect for Australian dollars ($AUD) and the market value of the Company’s common stock at the time of closing of the acquisition of Rhino-Rack (the “Rhino-Rack Acquisition”).

Pursuant to the terms of the Purchase Agreement, by and among the Buyer, the Company, Cropley Nominees Pty Ltd (the “Seller”), Richard Cropley, Hugh Cropley and Oliver Cropley, the Buyer acquired Rhino-Rack for an aggregate purchase price of approximately $AUD 273,000 (approximately $ 205,000 ), subject to post-closing adjustment.

The purchase price consideration was comprised of approximately $AUD 194,000 (approximately $ 145,000 ) cash and 2,315,121 shares of the Company’s common stock.

The Purchase Agreement also provides for the payment to the Seller of additional consideration of approximately $AUD 10,000 (approximately $ 8,000 ) if certain future net sales thresholds are met.

The shares of the Company’s common stock issued to the Seller are subject to a lock-up agreement restricting sales for 180 days from the closing of the Rhino-Rack Acquisition.

Based upon the timing of the Rhino-Rack Acquisition, the initial accounting is not yet complete as the Company gathers additional information related to the assets acquired and liabilities assumed.

The Company is in the process of obtaining third-party valuations of certain intangible assets.

The preliminary application of acquisition accounting to the assets acquired and liabilities assumed, as well as the results of operations of Rhino-Rack, will first be reflected in the Company's consolidated financial results as of and for the three and nine months ending September 30, 2021.

The operating results of Rhino-Rack are expected to be included within a new segment called Rhino-Rack.

Acquisition-related costs for the Rhino-Rack Acquisition, which were included in transaction costs during the three and six months ended June 30, 2021 were $ 777 .

Additionally, on July 1, 2021, the Company recorded a liability in the amount of $ 1,750 owed to Kanders & Company, Inc.

(“Kanders & Company”) in consideration of the significant support received by the Company from Kanders & Company in sourcing, structuring, performing due diligence and negotiating the Rhino-Rack Acquisition.

Kanders, the Company’s Executive Chairman of the Board of Directors, is a member of the Board of Directors and sole stockholder of Kanders & Company.

Credit Agreement

In connection with, among other things, partially funding the Rhino-Rack Acquisition, on July 1, 2021, the Company and certain of its direct and indirect subsidiaries (each, a “Loan Party” and, collectively, the “Loan Parties”) entered into Amendment No.

3 (“Amendment No.

3”) to that certain Credit Agreement, dated May 3, 2019, as amended by Amendment No.

1 dated May 28, 2019 and Amendment No.

2 dated November 12, 2020, with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto (collectively, the “Credit Agreement”).

CLARUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(in thousands, except per share amounts)

The Credit Agreement as amended by Amendment No.

3 increased the aggregate amount of the term loan facility thereunder to $ 125,000 and increased the maximum amount of the revolving loan facility thereunder to $ 100,000 .

The term loan facility was fully borrowed at the closing of Amendment No.

3 on July 1, 2021 in connection with the Rhino-Rack Acquisition.

The Credit Agreement continues to permit the Loan Parties, subject to certain requirements, to arrange with lenders for an aggregate of up to $ 50,000 of additional revolving and/or term loan commitments (both of which are currently uncommitted), for potential aggregate revolving and term loan commitments under the Credit Agreement of up to $ 275,000 .

Amendment No.

3 provides for additional subsidiaries of the Company to guarantee and provide collateral for the loans under the Credit Agreement, including certain of its newly formed or newly acquired Australian subsidiaries in connection with the Rhino-Rack Acquisition.

Amendment No.

3 also removed the previously agreed upon ability of the Company to issue debt securities that may be convertible into equity interests of the Company in an aggregate principal amount of up to $ 125,000 and also increased the maximum consolidated total leverage ratio permitted under the Credit Agreement to 4.25 :1.00.

Amendment No.

3 did not change the maturity date which remains May 3, 2024 .

Additionally, on July 1, 2021, the Company recorded a liability in the amount of $ 250 owed to Kanders & Company in consideration of the significant support received by the Company from Kanders & Company in sourcing, structuring, and negotiating Amendment No.

CLARUS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements