−Removed: Investors should carefully consider the following risk factors, together with all the other information included in the Form 10-K, in evaluating our company, our business, and our prospects.
−Removed: The most significant risks that could materially and adversely affect our business operations, financial condition, and cash flows include the risk factors described below.
−Removed: We are dependent on the proper functioning of our critical facilities, our supply chain, and distribution networks as well as the financial stability of our customers, all of which could be negatively impacted by the coronavirus, or COVID-19, in a manner that could materially adversely affect our business, financial condition, or results of operations.
−Removed: COVID-19 is impacting worldwide economic activity.
−Removed: Estimates for economic growth have been reduced as a result of COVID-19, which may have a corresponding effect on our sales activity.
−Removed: The virus continues to spread globally and has been declared a pandemic by the World Health Organization.
−Removed: The impact of this pandemic has been, and will likely continue to be, extensive in many aspects of society, which has resulted in, and will likely continue to result in, significant disruptions to the global economy, as well as businesses and capital markets around the world.
−Removed: With the spread of COVID-19 to the United States and other countries, it is unclear how economic activity and work flows might be impacted on a worldwide basis.
−Removed: Many employers in the United States have curtailed or ceased their
−Removed: operations and others are requiring their employees to work from home or not come into their offices or facilities.
−Removed: In addition , the facilities of certain of our contract manufacturers and other suppliers are subject to the same and additional risks, especially since some of them are located in parts of Asia.
−Removed: For example, most of our third-party contract manufacturers and suppliers in our OP&A division are located in Asia, primarily China, the place of origin of COVID-19, and, to a lesser extent, Taiwan and Japan, and, at this point, the extent to which COVID-19 may impact our results is uncertain, but it could negatively impact our business.
+Added: Risk Factors:
+Added: The following summarizes material risks of purchasing or owning our common stock.
+Added: Additional unknown risks may also impair our financial performance and business operations.
+Added: Our business, financial condition, and operating results may be materially and adversely affected by the nature and impact of these risks.
+Added: In such case, the market value of our common stock could be detrimentally affected, and investors may lose part or all of the value of their investment.
+Added: You should carefully consider the risks and uncertainties described below.
+Added: We have grouped these risk factors into the following general categories:
+Added: Risks relating to health, economic, social, political, legislative, and regulatory factors.
+Added: Risks relating to manufacturing, raw materials and component supply, product development and performance, customer demand, and brand recognition.
+Added: Risks related to legal proceedings, product recalls, and other product liabilities.
+Added: Risks relating to intellectual property, information systems, and cybersecurity.
+Added: Risks relating to certain business matters and securities markets.
+Added: Risks relating to the spin-off of our outdoor products and accessories business.
+Added: Risks Relating to Health, Economic, Social, Political, Legislative, and Regulatory Factors
+Added: We are dependent on the proper functioning of our critical facilities, our supply chain, and distribution networks as well as the financial stability of our customers, all of which could be negatively impacted by the coronavirus, or COVID-19, in a manner that could materially adversely affect our business, financial condition, or operating results.
+Added: COVID-19 continues to impact worldwide economic activity.
+Added: The virus was declared a pandemic by the World Health Organization in 2020.
+Added: The impact of this pandemic has been, and will likely continue to be, extensive in many aspects of society, which has resulted in, and could continue to result in, significant disruptions to the global economy, as well as businesses and capital markets around the world.
+Added: The facilities of certain of our contract manufacturers and other suppliers are subject to the same and additional risks, especially since some of them are located in Europe and India, where the pandemic remains a significant concern.
+Added: At this point, the extent to which COVID-19 may impact our results is uncertain, but it could negatively impact our business.
A reduction or interruption in any of our manufacturing processes could have a material adverse effect on our business, results of operations, financial condition, and cash flows.
−Removed: We may also experience significant and unpredictable reductions in demand for certain products as our customers and vendors may experience financial difficulties or be unable to borrow money to fund their operations, which may adversely impact their ability to purchase our products or pay for our products on a timely basis, if at all.
−Removed: The impact of COVID-19 on economic activity, and its effect on our manufacturing facility, supply chain, distribution networks, and our customers is uncertain at this time and could have a material adverse effect on our results, especially to the extent these effects continue and/or increase in severity over an extended period of time.
−Removed: A significant portion of our OP&A division assets consists of goodwill, intangible assets, and fixed assets, the carrying value of which may be reduced if we determine that those assets are impaired.
−Removed: Most of our intangible and fixed assets have finite useful lives and are amortized or depreciated over their useful lives on either a straight-line basis or over the expected period of benefit or as revenues are earned from the sales of the related products.
−Removed: The underlying assumptions regarding the estimated useful lives of these intangible assets are reviewed annually and more often if an event or circumstance occurs making it likely that the carrying value of the assets may not be recoverable and are adjusted through accelerated amortization, if necessary.
−Removed: Whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable, and at least annually, we test intangible assets for impairment based on estimates of future cash flows.
−Removed: During our fourth fiscal quarter ended April 30, 2020, we recognized an impairment of $ 98.7 million, which included certain impacts associated with COVID-19 that we were aware of at the time of the impairment.
−Removed: Based upon the ultimate scope and scale of the COVID-19 global pandemic, there may be additional materially negative impacts to the assumptions made with respect to our goodwill and other long-lived intangible assets that could result in an additional impairment of such assets.
+Added: The impact of COVID-19 on economic activity, and its effect on our manufacturing facility, supply chain, distribution networks, and our customers remains uncertain at this time and could have a material adverse effect on our results, especially to the extent these effects continue and/or increase in severity over an extended period of time.
Our performance is influenced by a variety of economic, social, political, legislative, and regulatory factors.
4 unchanged sentences
As a result, economic conditions also can have an effect on the sale of our products to law enforcement, government, and military customers.
+Added: The impact of weak consumer credit markets, corporate restructurings, layoffs, high unemployment rates, declines in the value of investments and residential real estate, higher fuel prices, and increases in federal and state taxation can also negatively affect our results of operations.
Social, political, and other factors also can affect our performance.
10 unchanged sentences
If such restrictive changes to legislation develop, we could find it difficult, expensive, or even impossible to comply with them, impeding new product development and distribution of existing products.
−Removed: In addition, gun-control activists may succeed in imposing restrictions or an outright ban on private gun ownership.
+Added: In addition, gun-control activists may succeed in imposing restrictions or an outright ban on private firearm ownership.
Such restrictions or bans could have a material adverse effect on our business, operating results, and financial condition.
−Removed: Our operating results depend upon the level of consumer spending, which is sensitive to global economic conditions and other factors.
−Removed: The success of many aspects of our business depends on consumer spending, and there are a number of factors that influence consumer spending, including actual and perceived economic conditions;
−Removed: disposable consumer income;
−Removed: interest rates;
−Removed: consumer credit availability;
−Removed: employment levels;
−Removed: stock market performance;
−Removed: weather conditions;
−Removed: energy prices;
−Removed: consumer discretionary spending patterns;
−Removed: and tax rates in the international, national, regional, and local markets where our products are produced or sold.
−Removed: The current global economic environment is unpredictable, and adverse economic trends or other factors could negatively impact the level of consumer spending, which could have a material adverse impact on us.
−Removed: We expect to become even more dependent on the sale of our firearm products.
−Removed: We manufacture a wide array of handguns, modern sporting rifles, hunting rifles, black powder firearms, handcuffs, and firearm-related products and accessories for sale to a wide variety of customers, including gun enthusiasts, collectors, hunters, sportsmen, competitive shooters, individuals desiring home and personal protection, law enforcement and security agencies and officers, and military agencies in the United States and throughout the world.
−Removed: Since fiscal 2015, we have completed numerous acquisitions and grown our revenue in the adjacent outdoor products and accessories market.
−Removed: As a result, in the current fiscal year, firearm product sales represented approximately 78% of our consolidated net sales.
−Removed: Once the Separation occurs, however, nearly 100% of our revenue will be generated from firearm product sales.
−Removed: As noted above, sales of firearms are influenced by a variety of economic, social, political, legislative, and regulatory factors.
−Removed: Therefore, having nearly 100% of our revenue from firearm product sales may result in volatile revenue patterns.
−Removed: We must continue to introduce new products that are successful in the marketplace.
−Removed: Our success depends on our ability to continue to conceive, design, produce or source, and market in a timely manner a continuing stream of innovative new products that appeal to consumers and achieve market acceptance and drive customer satisfaction and loyalty.
−Removed: The development of new products is a lengthy and costly process.
−Removed: Any new products that we develop and introduce to the marketplace may be unsuccessful in achieving customer or market acceptance or may achieve success that does not meet our expectations for a variety of reasons, including delays in introduction, unfavorable cost comparisons with alternative products, unfavorable customer or consumer acceptance, and unfavorable performance.
−Removed: Our business, operating results, and financial condition could be adversely affected if we fail to introduce new products that consumers want to buy or we incur significant expenses related to proposed new products that prove to be unsuccessful for any reason.
−Removed: Certain of our businesses are subject to extensive regulation.
−Removed: Our firearm business, as well as the business of all producers and marketers of firearms and firearm parts, is subject to numerous federal, state, local, and foreign laws, regulations, and protocols, including the rules and regulations of the ATF.
+Added: Our business is subject to extensive regulation.
+Added: Our business, as well as the business of all producers and marketers of firearms and firearm parts, is subject to numerous federal, state, local, and foreign laws, regulations, and protocols, including the rules and regulations of the ATF.
If we fail to comply with ATF rules and regulations, the ATF may limit our activities or growth, fine us, or ultimately put us out of business.
3 unchanged sentences
The GCA places certain restrictions on the interstate sales of firearms, among other things.
−Removed: The export of our products is controlled by the International Traffic in Arms Regulations, or ITAR.
−Removed: ITAR implements the provisions of the AECA as described in the Code of Federal Regulations and is enforced by the U.S.
−Removed: Department of State.
−Removed: In order for us to sell some of our products in accordance with ITAR, including firearms and firearm suppressors to foreign customers, we must obtain export licenses from the U.S.
−Removed: government, primarily the U.S.
−Removed: Department of State.
−Removed: Department of State has discretion as to whether to grant a license, and approval depends on the foreign policies and national security interests of the United States.
−Removed: In addition, Congress may take action to block a proposed sale of firearms for export valued at $1 million or higher.
−Removed: Consequently, we may not be able to obtain export licenses, or to complete profitable
−Removed: contracts as a result of political or other reasons that are outside our control.
+Added: Most of our products are governed by U.S.
+Added: Department of Commerce, and are regulated by Department of Commerce’s Bureau of Industry and Security, or BIS, under the Export Administration Regulations, or EAR.
+Added: A limited amount of our products are governed by the U.S.
+Added: Department of State and are subject to the International Traffic in Arms Regulations, or ITAR.
+Added: We are required to obtain U.S.
+Added: government authorization for exports, including licensure or other similar authorization prior to engaging in international transactions.
+Added: Government has discretion as to whether to grant a license.
+Added: In addition, Congress may take action to block a proposed sale of firearms that are export controlled by the Department of State valued at $1 million or higher.
+Added: Consequently, we may not be able to obtain export licenses, or to complete profitable contracts as a result of political or other reasons that are outside our control.
Failure to receive required licenses or authorizations or the termination or suspension of our export privileges could have an adverse effect on our business.
+Added: Export control laws also impact who is allowed to work in our facilities in most positions.
Further, because our manufacturing process includes certain toxic, flammable, and explosive chemicals, we are subject to the Chemical Facility Anti-Terrorism Standards, as administered by the Department of Homeland Security, which requires that we take additional reporting and security measures related to our manufacturing process.
In addition, like many other manufacturers, we are subject to compliance with the Fair Labor Standards Act, the Occupational Safety and Health Act, the data privacy laws of Massachusetts and other jurisdictions, and many other regulations surrounding employment law, environmental law, taxation, and consumer protection.
−Removed: In addition to federal requirements, state and local laws and regulations may place additional restrictions or prohibitions on gun ownership and transfer.
+Added: In addition to federal requirements, state and local laws and regulations may place additional restrictions or prohibitions on firearm ownership and transfer.
These laws and regulations vary significantly from jurisdiction to jurisdiction.
7 unchanged sentences
The PLCAA (or the state law equivalent of the PLCAA) may also be affected by future judicial rulings and interpretations.
−Removed: Bushmaster Firearms International, LLC, a case arising from the mass shooting in Sandy Hook Elementary School in Newtown, Connecticut, the Connecticut Court of Appeals allowed claimants to pursue state claims for unfair trade practices and potentially other theories of liability notwithstanding the immunity granted to firearms manufacturers under the PLCAA.
+Added: Bushmaster Firearms International, LLC, a case arising from the mass shooting in Sandy Hook Elementary School in Newtown, Connecticut, the Connecticut Court of Appeals allowed claimants to pursue state claims for unfair trade practices and potentially other theories of liability notwithstanding the immunity granted to firearm manufacturers under the PLCAA.
If the PLCAA (or the state law equivalent of the PLCAA) were repealed, amended, or reinterpreted, firearms manufacturers could face a significant increase in litigation, which could have a material adverse effect on our business, operating results, and financial condition.
Compliance with all of these laws, regulations, and protocols is costly and time consuming.
−Removed: Although we make substantial efforts to ensure compliance with the many regulations to which we are subject, inadvertent violation of any of these laws, regulations, and protocols could cause us to incur fines and penalties and could also lead to restrictions on our ability to manufacture and sell our products and services and to import or export the products that we sell.
+Added: Although we make substantial efforts to ensure compliance with the many regulations to which we are subject, inadvertent violation of any of these laws, regulations, and protocols could cause us to incur fines and penalties and could also
+Added: lead to restrictions on our ability to manufacture and sell our products and services and to import or export the products that we sell.
In addition, these laws, regulations, and protocols, as well as their interpretation by courts and regulatory authorities, may change at any time.
There can be no assurance that such changes to the laws, regulations, and protocols or to their interpretations will not adversely affect our business.
−Removed: Actions of social activists could cause us to incur substantial costs, divert management’s attention and resources, and have an adverse effect on our business.
−Removed: From time to time, we may be subject to informal private or public inquiries and/or formal proxy proposals by activists urging us to take certain corporate actions, many of which may not be aligned with the best financial or operational interests of our company.
−Removed: Such activities may adversely affect our business in a number of ways, since responding to such inquiries or proposals can be costly, time consuming, disruptive to our operations, and could meaningfully divert the attention of our resources, including those of our management team and our employees.
−Removed: For example, such activities could require us to retain the services of various professionals to advise us on such matters, including legal, financial, and communications advisors, which could be costly.
−Removed: In addition, certain stockholder inquiries and proposals could create perceived uncertainties or concerns as to our future operating environment, legislative environment, strategy direction, or leadership, and such uncertainties or concerns could result in the loss of potential business opportunities;
−Removed: could harm our ability to attract new investors, customers, and employees;
−Removed: could harm or disrupt our business and financial relationships;
−Removed: could result in consumer boycotts of our
−Removed: and could cause our stock price to experience periods of decline, volatility, or stagnation.
−Removed: For example, gun-control activists could pressure our financial institutions, our insurance carriers, our customers, our vendors, or other businesses and institutions with whom we maintain relationships to cease doing business with us or adopt actions that are not in the best interests of our company, inconsistent with the legal operations of our business, or contrary to the beliefs of our core consumers.
−Removed: In addition, our reputation could be irreparably damaged if our core consumers believe that we have adopted the gun control agenda of certain activists.
−Removed: Such activities could have a negative impact on our business, operating results, and financial condition.
−Removed: We produce or source and sell products that create exposure to potential product liability, warranty liability, or personal injury claims and litigation.
−Removed: Some of our products involve or are used in applications and situations that involve risk of personal injury and death.
−Removed: Our products expose us to potential product liability, warranty liability, personal injury claims, and litigation relating to the use or misuse of our products, including allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product or activities associated with the product, negligence, and strict liability.
−Removed: If successful, such claims could have a material adverse effect on our business.
−Removed: In addition, defects in our products could reduce demand for our products and result in a decrease in sales and market acceptance and damage to our reputation.
−Removed: Components used in our products may contain undetected defects that are subsequently discovered at any point in the life of the product.
−Removed: In addition, we obtain many of our finished products and product components from third-party suppliers and may not be able to detect defects in such products or components until after they are sold.
−Removed: Defects in our products may result in a loss of sales, recall expenses, delay in market acceptance, damage to our reputation, and increased warranty costs, which could have a material adverse effect on our business, operating results, and financial condition.
−Removed: We are subject to lawsuits and governmental investigations and inquiries.
−Removed: We are currently involved in several lawsuits, including a lawsuit involving a municipality and several product liability lawsuits.
−Removed: We are vigorously defending ourselves in the lawsuits to which we are subject.
−Removed: There can be no assurance, however, that we will not have to pay significant damages or amounts in settlement above insurance coverage.
−Removed: An unfavorable outcome or prolonged litigation could harm our business.
−Removed: Litigation of this nature is also expensive and time consuming and may divert the time and attention of our management.
−Removed: Our products expose us to potential product liability, warranty liability, and personal injury claims, as well as litigation relating to the use or misuse of our products.
−Removed: These include allegations of defects in manufacturing and design, failure to warn of inherent dangers in the product itself or activities associated with the product, and negligence and strict liability.
−Removed: In addition, as described earlier, we could be subject to future litigation arising out of the criminal misuse of our firearms.
−Removed: If successful, such claims could have a material adverse effect on our business, operating results, and financial condition.
−Removed: Although we maintain product liability insurance in amounts that we believe are reasonable, we may not be able to maintain such insurance on acceptable terms, if at all, in the future, and product liability claims may exceed the amount of insurance coverage available to us.
−Removed: Because we manufacture and sell firearms, insurance carriers may decide not to insure our products or our company in the future.
−Removed: In addition, our reputation may be adversely affected by such claims, whether or not successful, including potential negative publicity about our products.
−Removed: Due to the nature of our products, we anticipate that we will continue to be involved in litigation, including product liability cases and claims in the future.
−Removed: Defects in our products could reduce demand and result in a decrease in sales or damage to our reputation.
−Removed: Our products can contain latent defects that are not detected until after the product is introduced to the market.
−Removed: In addition, we obtain many of our products and component parts from third-party suppliers and may not be able to detect defects until after they are sold.
−Removed: Defects in our products may result in a loss of sales, recall or corrective action expenses, damage to our reputation, and increased warranty costs, which could have a material adverse effect on our business, operating results, and financial condition.
−Removed: We have been and may continue to be subject to governmental investigations and inquiries.
−Removed: Such investigations and inquiries could subject us to various sanctions, including significant civil and criminal penalties, the indictment of our company or various of our officers and employees, our being prevented from bidding on domestic military and government contracts, our disbarment by the U.S.
−Removed: Department of State, private civil litigation arising out of the outcome of the investigations or inquiries, the diversion of time and attention of our management from normal business operations, and a negative impact on the perception of our company by investors, customers, and others.
−Removed: Our business involves the potential for product recalls, product liability, and other claims against us, which could affect our earnings and financial condition.
−Removed: As a distributor of non-firearm consumer products, we are subject to the U.S.
−Removed: Consumer Products Safety Act of 1972, as amended by the Consumer Product Safety Improvement Act of 2008, which empowers the Consumer Products Safety Commission to exclude from the market products that are found to be unsafe or hazardous, and similar laws under foreign jurisdictions.
−Removed: Under certain circumstances, the Consumer Products Safety Commission or comparable foreign agency could require us to repurchase or recall one or more of our products.
−Removed: Additionally, other laws and agencies regulate certain consumer products sold by us and more restrictive laws and regulations may be adopted in the future.
−Removed: Any repurchase or recall of our products could be costly and damage our reputation.
−Removed: If we were required to remove, or we voluntarily remove, our products from the market, our reputation could be tarnished, and we might have large quantities of finished products that we could not sell.
−Removed: We also face exposure to product liability claims in the event that one of our products is alleged to have resulted in property damage, bodily injury, or other adverse effects.
−Removed: In addition to the risk of substantial monetary judgments, fines, or penalties that may result from any governmental investigations, product liability claims, or regulatory actions, such events could result in negative publicity that could harm our reputation in the marketplace, adversely impact the value of our brands, and result in an increase in the cost of producing our products.
−Removed: Similar to product liability claims, we face exposure to class action lawsuits related to the performance, safety, or advertising of our products.
−Removed: Such class action lawsuits could result in substantial monetary judgments, injunctions related to the sale of products, and potentially tarnish our reputation.
−Removed: In fiscal 2020, we formed a wholly owned captive insurance company, which provides firearm product liability insurance to us and our subsidiaries.
−Removed: This captive insurance company was included in our consolidated financial statements for the fiscal year end April 30, 2020.
−Removed: Although we maintain product liability insurance in amounts that we believe are reasonable, that insurance is, in most cases, subject to large self-insured retentions for which we are responsible, and we cannot assure you that we will be able to maintain such insurance on acceptable terms, if at all, in the future or that product liability claims will not exceed the amount of insurance coverage.
−Removed: As a result, product recalls or product liability claims could have a material adverse effect on our business, operating results, and financial condition.
−Removed: In addition, we face potential other types of litigation arising out of alleged defects in our products or otherwise, such as class action lawsuits.
−Removed: We do not maintain insurance against many types of claims involving alleged defects in our products that do not involve personal injury or property damage.
−Removed: We spend substantial resources ensuring compliance with governmental and other applicable standards.
−Removed: Our product liability insurance program is an occurrence-based program based on our current and historical claims experience and the availability and cost of insurance.
−Removed: We cannot assure you, however, that our future product liability experience will be consistent with our past experience or that claims and awards will not substantially impact the costs of our insurance programs in the future.
−Removed: It is difficult to align our capacity with our demand.
−Removed: From time to time, we have been capacity constrained and have been unable to satisfy on a timely basis the demand for some of our products.
−Removed: During the last several fiscal years, we have improved our manufacturing productivity by adding capacity, increasing daily production quantities, increasing operational availability of equipment, reducing machinery down time, extending machinery useful life, and increasing manufacturing efficiency.
−Removed: Future significant increases in consumer demand for our products or increased business from law enforcement or military agencies may require us to expand further our manufacturing capacity, particularly through the purchase of additional manufacturing equipment and the addition of manufacturing space.
−Removed: We may not be able to increase our capacity in time to satisfy increases in demand that may occur from time-to-time, and we may not have
−Removed: adequate financial resources to increase capacity to meet demand.
−Removed: Capacity constraints may prevent us from satisfying customer orders and result in a loss of market share to competitors that are not capacity constrained.
−Removed: At other times, such as recently, we may suffer excess capacity and increased overhead costs, particularly if we increase our capacity to meet actual or anticipated demand and that demand decreases or does not materialize.
−Removed: Various actions that we have taken in the past, such as outsourcing a portion of our production and reducing our expenses, enable us to mitigate the effect of reduced product demand, but such actions cannot totally mitigate the effect of reduced product demand.
+Added: Environmental laws and regulations may impact our business.
+Added: We are subject to numerous federal, state, and local laws that regulate or otherwise relate to the protection of the environment, including the Clean Air Act, the Clean Water Act, CERCLA, and the Solid Waste Disposal Act, as amended by RCRA.
+Added: CERCLA, RCRA, and related state laws subject us to the potential obligation to remove or mitigate the environmental effects of the disposal or release of certain pollutants at our manufacturing facilities and at third-party or formerly owned sites at which contaminants generated by us may be located.
+Added: This requires us to make expenditures of both a capital and expense nature.
+Added: In our efforts to satisfy our environmental, health, and safety responsibilities and to comply with all applicable laws and regulations, we maintain policies relating to the environmental, health, and safety standards for our operations and conduct programs to monitor compliance with various environmental regulations.
+Added: However, in the normal course of our manufacturing operations, we may become subject to governmental proceedings and orders pertaining to waste disposal, air emissions, and water discharges into the environment.
+Added: We believe, based on the information available to us, that we are in substantial compliance with applicable environmental regulations.
+Added: From a remediation perspective, we may not have identified all existing contamination on our properties, and we cannot predict whether our operations will cause contamination in the future.
+Added: As a result, we could incur additional costs to clean up contamination that exceed the amount of our reserves.
+Added: We will periodically review the probable and reasonably estimable environmental costs in order to update the environmental reserves.
+Added: Furthermore, it is not possible to predict with certainty the impact on us of future environmental, health, and safety compliance requirements or of the cost of resolution of future regulatory proceedings and claims, in part because the scope of the remedies that may be required is not certain, liability under federal environmental laws is joint and several in nature, and environmental health and safety laws and regulations are subject to modification and changes in interpretation.
+Added: Additional or changing environmental health and safety regulation may become burdensome in the future, and any such development could have an adverse effect on us.
+Added: We face risks associated with international activities, including related to compliance with the Foreign Corrupt Practices Act or other applicable anti-corruption legislation.
+Added: Political and economic conditions abroad may result in a reduction of or inhibition of our growth in our sales in numerous foreign countries and our purchase of certain accessories and components from certain countries in Asia and Europe, including China, Taiwan, and Italy.
+Added: Protectionist trade legislation in either the United States or foreign countries, such as a change in the current tariff structures, export or import compliance laws, or other trade policies, could reduce our ability to sell our products in foreign markets, the ability of foreign customers to purchase our products, and our ability to import components, parts, and products from foreign suppliers.
+Added: Our efforts to comply with the Foreign Corrupt Practices Act, or other applicable anti-corruption laws and regulations may limit our international business activities, necessitate the implementation of certain processes and compliance programs, and subject us to enforcement actions or penalties for noncompliance.
+Added: Both the U.S.
+Added: and foreign governments have increased their oversight and enforcement activities in this area in recent years, and we expect applicable agencies to continue to increase such activities in the future.
+Added: Our foreign sales and purchases of certain components also create a number of logistical and communication challenges.
+Added: These activities also expose us to various economic, political, and other risks, including the following:
+Added: compliance with U.S.
+Added: and local laws and regulatory requirements, including adverse changes in those laws and requirements;
+Added: transportation delays or interruptions and other effects of less developed infrastructures;
+Added: foreign exchange rate fluctuations;
+Added: limitations on imports and exports;
+Added: imposition of restrictions on currency conversion or the transfer of funds;
+Added: the possibility of appropriation of our assets without just compensation;
+Added: taxes, tariffs, and duties;
+Added: the burdens and costs of compliance with a variety of foreign laws;
+Added: political or economic instability in countries in which we conduct business, including possible terrorist acts.
+Added: We currently maintain an operation in Belgium.
+Added: As a result, we are exposed to risks in the countries in which we operate, including political and economic changes or volatility, geopolitical regional conflicts, terrorist activity, and political unrest, which could negatively affect our international operations.
+Added: Protectionist tariffs and trade wars could harm our business.
+Added: The federal government has, at times, put into place tariffs and other trade restrictions with other countries, including limiting trade and/or imposing tariffs on imports from such countries.
+Added: In addition, other countries have, at times, either threatened or put into place retaliatory tariffs of their own.
+Added: We are currently subject to tariffs on certain of our products.
+Added: Increases in protectionist trade legislation in either the United States or foreign countries, such as a change in the current tariff structures, export or import compliance laws, or other trade policies, could reduce our ability to sell our products in foreign markets, the ability of foreign customers to purchase our products, and our ability to import products, components, and raw materials from foreign suppliers.
+Added: The United States has imposed and threatened to impose further tariffs on a variety of products and materials imported from various foreign countries, including firearm components.
+Added: Tariff policies of the United States may result in retaliatory actions by affected countries, potentially resulting in trade wars and increased costs for goods imported into the United States.
+Added: Any tariffs that result in increased costs or unavailability of imported products or components that we obtain for resale from foreign suppliers or raw materials used in the production of our products could require us to increase the prices of the products we sell or result in lower gross margins on such products if we are unable to increase the price of such products to our customers.
+Added: Furthermore, increased pricing on these products could lead to lower consumer demand.
+Added: These tariffs have the potential to significantly increase the cost of our products.
+Added: In such a case, there can be no assurance that we will be able to shift manufacturing and supply agreements to non-impacted countries, including the United States, to reduce the effects of the tariffs.
+Added: As a result, we may suffer margin erosion or be required to raise our prices, which may result in the loss of customers, negatively impact our operating results, or otherwise harm our business.
+Added: In addition, the imposition of tariffs on products that we export to international markets could make such products more expensive compared to those of our competitors if we pass related additional costs on to our customers, which may also result in the loss of customers, negatively impact our operating results, or otherwise harm our business.
+Added: Risks Relating to Manufacturing, Raw Materials and Component Supply, Product Development and Performance, Customer Demand, and Brand Recognition
+Added: We must continue to introduce new products that are successful in the marketplace.
+Added: Our success depends on our ability to continue to conceive, design, produce or source, and market in a timely manner a continuing stream of innovative new products that appeal to consumers and achieve market acceptance and drive customer satisfaction and loyalty.
+Added: The development of new products is a lengthy and costly process.
+Added: Any new products that we develop and introduce to the marketplace may be unsuccessful in achieving customer or market acceptance or may achieve success that does not meet our expectations for a variety of reasons, including delays in introduction, unfavorable cost comparisons with alternative products, unfavorable customer or consumer acceptance, and unfavorable performance.
+Added: Our business, operating results, and financial condition could be adversely affected if we fail to introduce new products that consumers want to buy or we incur significant expenses related to proposed new products that prove to be unsuccessful for any reason.
Our manufacturing facilities are critical to our success.
−Removed: Our Springfield, Massachusetts facility is critical to our success, as we currently produce most of our firearm products at this facility.
+Added: Our Springfield, Massachusetts facility is critical to our success, as we currently produce most of our products at this facility.
The Springfield facility also houses our principal research, development, engineering, design, shipping, sales, marketing, finance, and management functions.
−Removed: Any event that causes a disruption of the operation of this facility for even a relatively short period of time would adversely affect our ability to produce and ship many of our firearm products and to provide service to our firearm customers.
+Added: Any event that causes a disruption of the operation of this facility for even a relatively short period of time would adversely affect our ability to produce and ship many of our products and to provide service to our customers.
We frequently make certain changes in our manufacturing operations to modernize the facility and associated equipment and systems as a result of the age of the facility and the need to introduce certain efficiencies in manufacturing and other processes in order to produce our anticipated volume of products in a more efficient and cost-effective manner.
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A disruption in the activities of these facilities could adversely affect our firearm manufacturing operations.
−Removed: We depend on our new distribution facility, which may not produce the benefits expected.
−Removed: We are extremely dependent on our new distribution facility in Columbia, Missouri, which just recently became fully operational.
−Removed: The facility houses our warehouse for firearms products as well as the principal executive, administrative, financial, sales, marketing, research and development, assembly, and quality inspection operations for our OP&A division .
+Added: We depend on our new distribution center.
+Added: We are extremely dependent on our new distribution center in Columbia, Missouri.
The facility includes computer controlled and automated equipment.
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Our ability to meet customer expectations, manage inventory, complete sales, and achieve objectives for operating profits will depend on our proper operation of the facility.
−Removed: We rely on outsourcing for a portion of our production, and any interruptions in these arrangements could disrupt our ability to fill our customers’ orders.
−Removed: We utilize contract manufacturers for a portion of our firearm production requirements, particularly during periods of very high customer demand, in order to increase our manufacturing capacity and reduce our capital expenditures for facilities that may not always operate at peak capacity.
+Added: We rely on our supply chain for our production and any interruptions in these arrangements could disrupt our ability to fill our customers’ orders.
+Added: We utilize contract manufacturers for a portion of our production requirements, particularly during periods of very high customer demand, in order to increase our manufacturing capacity and reduce our capital expenditures for facilities that may not always operate at peak capacity.
Qualifying new contract manufacturers is time consuming and may result in unforeseen disruptions in our manufacturing and operations.
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If this were to occur, the resulting decline in revenue could harm our business.
−Removed: We source a significant portion of our made-to-order finished products and product components in our OP&A division from third-party contract manufacturers and other suppliers located primarily in Asia.
−Removed: We depend on our contract manufacturers and other suppliers to maintain high levels of productivity and satisfactory delivery schedules.
−Removed: Our ability to secure qualified suppliers that meet our quality and other standards and to receive from them these products and components in a timely and efficient manner represents a challenge, especially with suppliers located and products and product components sourced outside of the United States.
The ability of our suppliers to effectively satisfy our production requirements could also be impacted by their financial difficulty or damage to their operations caused by fire, pandemic, such as the current coronavirus pandemic, terrorist attack, natural disaster, or other events.
2 unchanged sentences
For certain of our products, it may take a significant amount of time to identify and qualify a supplier that has the capability and resources to meet our product specifications in sufficient volume and satisfy our service and quality control standards.
−Removed: Political and economic instability in countries in which foreign suppliers are located, the financial and managerial instability of suppliers, the failure by suppliers to meet our standards, failure to meet production deadlines, insufficient quality control, problems with production capacity, labor problems experienced by our suppliers, the availability of raw materials to our suppliers, product quality issues, currency exchange rates, transport availability and cost, inflation, and other factors relating to suppliers and the countries in which they are located are beyond our control.
−Removed: We often rely on third parties, including product sourcing intermediaries, independent sales representatives, and agents, that act on our behalf.
−Removed: We often rely on third parties, including product sourcing intermediaries, independent sales representatives, and agents.
−Removed: These intermediaries, representatives, and agents sometimes have the actual or apparent authority to enter into agreements on our behalf.
−Removed: The actions of these third parties could adversely affect our business if they agree to low margin contracts or conduct themselves in a manner that damages our reputation in the marketplace.
−Removed: We also face a risk that these third parties could violate domestic or foreign laws, which could put us at risk for prosecution in the United States or internationally.
−Removed: foreign trade policies, tariffs, and other impositions on imported goods, trade sanctions imposed on certain countries, the limitation on the importation of certain types of goods or of goods containing certain types of materials from other countries, and other factors relating to foreign trade also are beyond our control.
−Removed: These and a majority of other factors affecting our suppliers and our access to products could adversely affect our business.
−Removed: We do not have long-term agreements with any of our contract manufacturers or other suppliers that guarantee production capacity, prices, lead times , or delivery schedules.
−Removed: Our contract manufacturers and other suppliers serve other customers, a number of which may have greater production requirements than we do.
−Removed: As a result, our contract manufacturers and other suppliers could determine to prioritize production capacity for other customers or reduce or eliminate deliveries to us on short notice.
−Removed: Lower than expected manufacturing efficiencies could increase our cost and disrupt or delay our supplies.
−Removed: Any of these problems could result in our inability to deliver our products in a timely manner or adversely affect our business, operating results, and financial condition.
+Added: Political and economic instability in countries in which foreign suppliers are located, the
+Added: financial and managerial instability of suppliers, the failure by suppliers to meet our standards, failure to meet production deadlines, insufficient quality control, problems with production capacity, labor problems experienced by our suppliers, the availability of raw materials to our suppliers, product quality issues, currency exchange rates, transport availability and cost, inflation, and other factors relating to suppliers and the countries in which they are located are beyond our control.
+Added: Although we have insurance to cover potential loss from most of our suppliers for these events, we could experience losses in excess of our insured limits and any claims for various losses could be denied.
+Added: In addition, failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, could have a material adverse effect on us, as well as require additional resources to restore our supply chain.
The capacity of our contract manufacturers to produce our products also depends upon the cost and availability of raw materials.
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As a result, we could experience cancellations of orders, refusals to accept deliveries, or reductions in our prices and margins, any of which could harm our financial performance, reputation, and operating results.
−Removed: We may receive product deliveries from suppliers that fail to conform to our quality control standards.
+Added: We have occasionally received, and may receive in the future, product deliveries from suppliers that fail to conform to our quality control standards.
In such circumstances, our inability to sell those products could have a negative effect on our net sales and increase our administrative and shipping costs if we are unable to obtain replacement products in a timely manner.
−Removed: Damage or disruption to manufacturing and distribution capabilities of, or the disruption of deliveries from, our suppliers because of severe or catastrophic events, including weather, natural disaster, fire or explosion, terrorism, pandemics, or labor disruptions, including at ports or at our suppliers, could impair our product sales.
−Removed: Although we have insurance to cover potential loss from most of our suppliers for these events, we could experience losses in excess of our insured limits and any claims for various losses could be denied.
−Removed: In addition, failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, could have a material adverse effect on us, as well as require additional resources to restore our supply chain.
−Removed: Protectionist tariffs and trade wars could harm our business.
−Removed: The federal government has recently put into place tariffs and other trade restrictions and signaled that it may additionally alter trade agreements and terms between the United States and China, the European Union, Canada, and Mexico, among others, including limiting trade and/or imposing tariffs on imports from such countries.
−Removed: In addition, China, the European Union, Canada, and Mexico, among others, have either threatened or put into place retaliatory tariffs of their own.
−Removed: We are currently subject to tariffs on a significant number of our products.
−Removed: Increases in protectionist trade legislation in either the United States or foreign countries, such as a change in the current tariff structures, export or import compliance laws, or other trade policies, could reduce our ability to sell our products in foreign markets, the ability of foreign customers to purchase our products, and our ability to import products, components, and raw materials from foreign suppliers.
−Removed: The United States has imposed and threatened to impose further tariffs on a variety of products and materials imported from various foreign countries.
−Removed: Tariff policies of the United States may result in retaliatory actions by affected countries, potentially resulting in trade wars and increased costs for goods imported into the United States.
−Removed: Any tariffs that result in increased costs or unavailability of imported products or components that we obtain for resale from foreign suppliers or raw materials used in the production of our products could require us to increase the prices of the products we sell or result in lower gross margins on such products if we are unable to increase the price of such products to our customers.
−Removed: Furthermore, increased pricing on these products could lead to lower consumer demand.
−Removed: These tariffs have the potential to significantly increase the cost of our products.
−Removed: In such a case, there can be no assurance that we will be able to shift manufacturing and supply agreements to non-impacted countries, including the United States, to reduce the effects of the tariffs.
−Removed: As a result, we may suffer margin erosion or be required to raise our prices, which may result in the loss of customers, negatively impact our operating results, or otherwise harm our business.
−Removed: In addition, the imposition of tariffs on products that we export to international markets could make such products more expensive compared to those of our competitors if we pass related additional costs on to our customers, which may also result in the loss of customers, negatively impact our operating results, or otherwise harm our business.
−Removed: An increase in the offering of “private label” products by our customers could negatively impact demand for our products.
−Removed: Some of our large retail customers have started to directly source non-firearm products similar to ours under their own private label brands.
−Removed: By doing so, they effectively become a competitor to our brand by eliminating our products from their supply chain, causing declines in our product demand.
−Removed: Furthermore, they are able to offer their private label products at a significantly reduced price and still retain profitability, therefore putting a greater amount of pricing pressure for our products to compete.
−Removed: If we choose to source these private label goods on behalf of our customers, our profitability on those sales is significantly reduced.
−Removed: As such, any additional private label activity within our customer base could have a negative impact on our business, operating results, and financial condition.
−Removed: Poor product quality or performance could adversely affect our operating results and reputation.
−Removed: Poor product quality or performance could adversely affect our operating results and reputation.
−Removed: We generally provide a limited one-year, three-year, limited-lifetime, or full-lifetime warranty and a lifetime-service policy to the original purchaser of our new firearm products and a limited one-year warranty to the original purchaser of our new outdoor products and accessories.
−Removed: We offer a one-year or limited lifetime warranty program to the original purchaser of our outdoor products and accessories, depending on the product purchased.
−Removed: While we believe we have a strong track record of developing, manufacturing, and selling high-quality products, from time to time, we have experienced manufacturing and design issues with respect to some of our firearms and have initiated product recalls and safety alerts in the past.
−Removed: Based on the volume of products we have shipped into the market, any future recall, safety alerts, or product liability claims could harm our reputation, cause us to lose business, and cause us to incur significant warranty, support, and repair costs.
−Removed: We may incur higher medical benefit costs in the future.
−Removed: We are self-insured for our employee medical plan.
−Removed: While our medical costs in recent years have generally increased at the same level as the regional average, our aging workforce and other employee demographics could result in an increase in our medical costs beyond what we have experienced or expect.
−Removed: We have stop-loss coverage in place for catastrophic events, but the aggregate impact of a high number of claims up to our stop-loss limit may have an adverse impact on our profitability.
−Removed: We cannot assess the effect that legislation will have on our healthcare costs and structure or our ability to provide healthcare benefits to our employees.
−Removed: The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or ACA, became effective in calendar 2015 with other provisions to become effective over succeeding years.
−Removed: The Trump Administration and the Republican Congress are pursuing legislative and regulatory efforts to repeal and replace ACA.
−Removed: The Tax Cuts and Jobs Act of 2017, which was adopted in December 2017, effectively eliminated certain provisions of the ACA, including the individual mandate starting in 2019 requiring consumers to buy insurance or pay a penalty subject to a limited number of exceptions.
−Removed: It is generally anticipated that the Trump Administration and the Republican Congress will continue their efforts to repeal and replace the ACA, possibly in its entirety, and that many states, including states in which we conduct operations, will adopt their own health care legislation.
−Removed: Changes to the healthcare requirements in the future may have an adverse effect on our business, operating results, and financial condition.
−Removed: Liability insurance is expensive and may be difficult to obtain.
−Removed: Liability insurance coverage is expensive and from time to time may be difficult or impossible to obtain.
−Removed: Our insurance policies are subject to periodic review by our insurers and may not be renewed at all or on similar or favorable terms.
−Removed: Because we manufacture and sell firearms, insurance carriers may decide not to insure us in the future.
−Removed: In addition, if we or other firearms manufacturers sustain significant losses or make significant insurance claims, our ability to obtain future insurance coverage at commercially reasonable rates could be materially adversely affected.
−Removed: Our liability insurance costs were $4.4 million in fiscal 2020 and $3.8 million in fiscal 2019.
−Removed: An inability to obtain liability insurance, significant increases in the cost of insurance we obtain, or losses in excess of
−Removed: our liability insurance coverage, could have a material adverse effect on us.
−Removed: For the reasons described herein, in fiscal 2020, we established a wholly owned captive insurance company to help mitigate these risks , but the funding by us of such insurance company may not be enough to adequately cover the cost of claims against us, if any.
+Added: Our operating results could be materially harmed if we are unable to forecast demand for our products accurately.
+Added: We often schedule internal production and place orders for product components and raw materials with third-party suppliers before receiving firm orders from our customers.
+Added: If we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortage of products to deliver to our customers.
+Added: Factors that could affect our ability to accurately forecast demand for our products include the following:
+Added: our failure to accurately forecast customer acceptance of new products;
+Added: an increase or decrease in consumer demand for our products or for the products of our competitors;
+Added: new product introductions by competitors;
+Added: our relationships with customers;
+Added: general market conditions and other factors, which may result in cancellations of orders or a reduction or increase in the rate of reorders placed by customers;
+Added: general market conditions, economic conditions, and consumer confidence levels, which could reduce demand for discretionary items, such as our products;
+Added: the domestic political environment, including debates over the regulation of various consumer products, such as firearms.
+Added: Inventory levels in excess of customer demand may result in inventory write-downs and the sale of excess inventory at discounted prices, which could have an adverse effect on our business, operating results, and financial condition.
+Added: If we underestimate demand for our products, we and our third-party suppliers may not be able to produce products to meet customer demand, and this could result in delays in the shipment of products and lost revenues, as well as damage to our reputation and customer relationships.
+Added: We may not be able to manage inventory levels successfully to meet future order and reorder requirements.
+Added: It is difficult to align our capacity with our demand.
+Added: From time to time, we have been capacity constrained and have been unable to satisfy on a timely basis the demand for some of our products.
+Added: During the last several fiscal years, we have improved our manufacturing
+Added: productivity by adding capacity, increasing daily production quantities, increasing operational availability of equipment, reducing machinery down time, extending machinery useful life, and increasing manufacturing efficiency.
+Added: Future significant increases in consumer demand for our products or increased business from law enforcement or military agencies may require us to expand further our manufacturing capacity, particularly through the purchase of additional manufacturing equipment and the addition of manufacturing space.
+Added: We may not be able to increase our capacity in time to satisfy increases in demand that may occur from time-to-time, and we may not have adequate financial resources to increase capacity to meet demand.
+Added: Capacity constraints may prevent us from satisfying customer orders and result in a loss of market share to competitors that are not capacity constrained.
+Added: At other times we may suffer excess capacity and increased overhead costs, particularly if we increase our capacity to meet actual or anticipated demand and that demand decreases or does not materialize.
+Added: Various actions that we have taken in the past, such as outsourcing a portion of our production and reducing our expenses, enable us to mitigate the effect of reduced product demand, but such actions cannot totally mitigate the effect of reduced product demand.
Shortages of and price increases for components, parts, raw materials, and other supplies may delay or reduce our sales and increase our costs.
Although we manufacture most of the components for our firearms, we purchase certain components and parts from third parties, including bolt carriers, rifle receivers, magazines, slides, small parts, barrels, and rifle stocks.
−Removed: We rely on third-party suppliers and manufacturers for substantially all of our outdoor products and accessories’ finished products and components, and we have limited control over these suppliers and manufacturers.
We also purchase ammunition for product testing.
−Removed: Most of our major suppliers for our firearm products are U.S.-based and provide materials, components, and parts, such as raw steel, polymer components, and metal-injected-molded components.
−Removed: The costs of these materials, components, and parts are at competitive rates.
+Added: Most of our major suppliers for our products are U.S.-based and provide materials, components, and parts, such as raw steel, polymer components, and metal-injected-molded components.
We have become increasingly dependent on a small number of key vendors that supply components and parts for our firearms as a result of our decision to increase our manufacturing flexibility by using third parties that can supplement our internal capacity to better react to changes in market conditions.
−Removed: Most of our major suppliers for our outdoor products and accessories components and products are based in Asia.
−Removed: Our major suppliers for electro-optics components are based in Asia and North America.
We also use numerous raw materials that we purchase from third-party suppliers in producing and testing our products, including steel, wood, lead, brass, and plastics.
−Removed: Uncertainties related to governmental fiscal policies, including increased duties, tariffs, or other trade restrictions, could increase the prices of finished products, components, and raw materials we purchase from third-party suppliers.
−Removed: Our contract manufacturers for our outdoor products and accessories are also subject to price volatility and labor cost and other inflationary pressures, which may, in turn, result in an increase in the amount we pay for sourced products, components, and raw materials.
−Removed: During periods of rising prices, there can be no assurance that we will be able to pass any portion of such increases on to customers.
−Removed: Conversely, when prices decline, customer demands for lower prices could result in lower sale prices and, to the extent that we have existing inventory, lower margins.
−Removed: As a result, fluctuations in finished products, components, or raw material prices could have a material adverse effect on our business, operating results, and financial condition.
+Added: Inflationary pressures, such as the U.S.
+Added: is currently experiencing, could result in increases in the cost of the components, parts, raw materials, and other supplies necessary for the production of our products.
+Added: The costs of these components, parts, raw materials, and other supplies are at competitive rates, and we typically have short-term commitments from our suppliers.
+Added: In addition, uncertainties related to governmental fiscal policies, including increased duties, tariffs, or other trade restrictions, could increase the prices of components, parts, raw materials, and other supplies we purchase from third-party suppliers.
+Added: As a result, if we are unable to respond to cost increases for these supplies with selling price increases, our earnings could be adversely impacted.
Our inability to obtain sufficient quantities of components, parts, raw materials, and other supplies from independent sources necessary for the production of our products could result in reduced or delayed sales or lost orders.
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Shortages of ammunition also can adversely affect the demand for our products.
−Removed: We have occasionally received, and may receive in the future, product deliveries from suppliers that fail to conform to our quality control standards.
−Removed: In such circumstances, our inability to sell those products could have a negative effect on our net sales and increase our administrative and shipping costs if we are unable to obtain replacement products in a timely manner.
−Removed: Damage or disruption to manufacturing and distribution capabilities of, or the disruption of deliveries from, our suppliers because of severe or catastrophic events, including weather, natural disaster, fire or explosion, terrorism, pandemics, or labor disruptions, including at ports or at our suppliers, could impair our ability to manufacture or sell our products.
−Removed: Although we have insurance to cover potential loss from most of our suppliers for these events, we could experience losses in excess of our insured limits.
−Removed: In addition, failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, could have a material adverse effect on us, as well as require additional resources to restore our supply chain.
−Removed: Our business is subject to the risk of earthquakes, fire, power outages, floods, and other catastrophic events and to interruption by problems such as terrorism, cyberattacks, or failure of key information technology systems.
−Removed: Our business is vulnerable to damage or interruption from earthquakes, fires, floods, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, criminal acts, public health crises, such as pandemics and epidemics, and other similar events.
−Removed: These risks are particularly substantial because we conduct substantially all of our operations from one location.
−Removed: We maintain casualty and business interruption insurance, but it may not adequately protect us from the types and amounts of losses we may incur or from the adverse effect that may be caused by significant disruptions in our product distribution, such as the long-term loss of customers or an erosion of our brand image.
−Removed: In addition, the facilities of certain of our contract manufacturers and other suppliers are subject to the same and additional risks, especially since some of them are located in parts of Asia that experience typhoons, earthquakes, other natural disasters, and public health crises.
−Removed: For example, most of our third-party contract manufacturers and suppliers related to our outdoor and accessory products are located in Asia, primarily China, and, to a lesser extent, Taiwan and Japan, and, at this point, the extent to which COVID-19 may impact our results is uncertain, but it could negatively impact our business.
−Removed: Our computer systems may also be vulnerable to computer viruses, criminal acts, denial-of-service attacks, ransomware, and similar disruptions from unauthorized tampering with our computer systems, which could lead to interruptions, delays, or loss of critical data.
−Removed: As we rely heavily on our information technology and communications systems and the Internet to conduct our business and provide high-quality customer service, these disruptions could harm our ability to run our business and either directly or indirectly disrupt our suppliers’ or manufacturers’ businesses, which could harm our business, operating results, and financial condition
−Removed: Interruptions in the proper functioning of our information systems or other issues with our ERP systems could cause disruption to our operations.
−Removed: We rely extensively on our information systems to manage our business, data, communications, supply chain, ordering, pricing, billing, inventory replenishment, accounting functions, and other processes.
−Removed: Our systems are subject to damage or interruption from various sources, including power outages, computer and telecommunications failures, computer viruses, cyber security breaches, vandalism, severe weather conditions, catastrophic events, terrorism, and human error, and our disaster recovery planning cannot account for all eventualities.
−Removed: If our systems are damaged, fail to function properly, or otherwise become compromised or unavailable, we may incur substantial costs to repair or replace them, and we may experience loss of critical data and interruptions or delays in our ability to perform critical functions, which could adversely affect our business, operating results, and financial condition.
−Removed: Our information technology systems require periodic modifications, upgrades, and replacement that subject us to costs and risks, including potential disruption to our internal control structure, substantial capital expenditures, additional administration and operating expenses, retention of sufficiently skilled personnel or outside firms to implement and operate existing or new systems, and other risks and costs of delays or difficulties in transitioning to new or modified systems or of integrating new or modified systems into our current systems.
−Removed: In addition, challenges implementing new or modified technology systems may cause disruptions in our business operations and have an adverse effect on our business operations if not anticipated and appropriately mitigated.
−Removed: All businesses in our Firearm division and most businesses in our OP&A division operate under SAP, which is a fully integrated ERP system.
−Removed: We continue to implement various modules and additional usages of SAP.
−Removed: Any of those implementations could result in a major disruption to our business, and any disruption could have a negative effect on our business, operating results, and financial condition.
−Removed: In addition, utilizing SAP has required and will continue to require significant resources and refinement to fully realize the expected benefits of the system.
−Removed: Breaches of our information systems could adversely affect our reputation, disrupt our operations, and result in increased costs and loss of revenue.
−Removed: There have been an increasing number of cyber security incidents affecting companies around the world, which have caused operational failures or compromised sensitive or confidential corporate data.
−Removed: Although we do not believe our systems are at a greater risk of cyber security incidents than other similar organizations, such cyber security incidents may result in the loss or compromise of customer, financial, or operational data;
−Removed: loss of assets;
−Removed: disruption of billing, collections, or normal operating activities;
−Removed: disruption of electronic monitoring and control of operational systems;
−Removed: and delays in financial reporting and other management functions.
−Removed: In addition, acquisitions of smaller, closely held companies could increase our risk as they often lack the systems, policies, procedures, and controls of larger companies.
−Removed: Possible impacts associated with cyber security incidents (which generally are increasing in both frequency and sophistication) may include, among others, remediation costs related to lost, stolen, or compromised data;
−Removed: repairs to data processing systems;
−Removed: increased cyber security protection costs;
−Removed: reputational damage;
−Removed: lawsuits seeking damages;
−Removed: regulatory actions;
−Removed: and adverse effects on our compliance with applicable privacy and other laws and regulations.
−Removed: Such occurrences could have an adverse effect on our business, operating results, and financial condition.
+Added: Our business is highly dependent upon our brand recognition and reputation, and the failure to maintain or strengthen our brand recognition or reputation would likely have a material adverse effect on our business.
+Added: Our brand recognition and reputation are critical aspects of our business.
+Added: We believe that maintaining and further enhancing our brands is critical to retaining existing customers and attracting new customers.
+Added: We also believe that the importance of our brand recognition and reputation will continue to increase as competition in our markets continues to develop.
+Added: We anticipate that our advertising, marketing, and promotional efforts will increase in the foreseeable future as we continue to seek to enhance our brand recognition and the consumer demand for our products.
+Added: Historically, we have relied on print and electronic media advertising to increase consumer awareness of our brands to increase
+Added: purchasing intent and conversation.
+Added: We anticipate that we will increasingly rely on other forms of media advertising, including social media and digital marketing.
+Added: Our future growth and profitability will depend in large part upon the effectiveness and efficiency of our advertising, promotion, public relations, and marketing programs.
+Added: These brand promotion activities may not yield increased revenue and the efficacy of these activities will depend on a number of factors, including our ability to do the following:
+Added: determine the appropriate creative message and media mix and markets for advertising, marketing, and promotional expenditures;
+Added: select the right markets, media, and specific media vehicles in which to advertise;
+Added: identify the most effective and efficient level of spending in each market, media, and specific media vehicle;
+Added: effectively manage marketing costs, including creative and media expenses, in order to maintain acceptable customer acquisition costs.
+Added: Increases in the pricing of one or more of our marketing and advertising channels could increase our marketing and advertising expenses or cause us to choose less expensive but possibly less effective marketing and advertising channels.
+Added: If we implement new marketing and advertising strategies, we may incur significantly higher costs than our current costs, which in turn could adversely affect our operating results.
+Added: Implementing new marketing and advertising strategies also could increase the risk of devoting significant capital and other resources to endeavors that do not prove to be cost effective.
+Added: We also may incur marketing and advertising expenses significantly in advance of the time we anticipate recognizing revenue associated with such expenses, and our marketing and advertising expenditures may not generate sufficient levels of brand awareness and conversation or result in increased revenue.
+Added: Even if our marketing and advertising expenses result in increased revenue, the increase might not offset our related expenditures.
+Added: If we are unable to maintain our marketing and advertising channels on cost-effective terms or replace or supplement existing marketing and advertising channels with similarly or more effective channels, our marketing and advertising expenses could increase substantially, our customer base could be adversely affected, and our business, operating results, financial condition, and reputation could suffer.
+Added: In addition, we may determine that certain of our products and brands benefit from endorsements and support from particular sporting enthusiasts, athletes, or other celebrities, and those products and brands may become personally associated with those individuals.
+Added: As a result, sales of the endorsed products could be materially and adversely affected if any of those individuals’ images, reputations, or popularity were to be negatively impacted.
+Added: Poor product quality or performance could adversely affect our operating results and reputation.
+Added: Poor product quality or performance could adversely affect our operating results and reputation.
+Added: We generally provide a limited one-year, three-year, limited-lifetime, or full-lifetime warranty and a lifetime-service policy to the original purchaser of our new firearm products
+Added: While we believe we have a strong track record of developing, manufacturing, and selling high-quality products, from time to time, we have experienced manufacturing and design issues with respect to some of our firearms and have initiated product recalls and safety alerts in the past.
+Added: Based on the volume of products we have shipped into the market, any future recall, safety alerts, or product liability claims could harm our reputation, cause us to lose business, and cause us to incur significant warranty, support, and repair costs.
+Added: The failure to manage our growth could adversely affect our operations.
+Added: To continue to expand our business and strengthen our competitive position, we must make significant investments in systems, equipment, facilities, and personnel.
+Added: In addition, we may commit significant funds to increase our sales, marketing, information technology, and research and development efforts in order to expand our business.
+Added: As a result of the increase in fixed costs and operating expenses, our failure to increase sufficiently our net sales to offset these increased costs could adversely affect our operating results.
+Added: The failure to manage our growth effectively could adversely affect our operations.
+Added: Managing our planned growth effectively may require us to:
+Added: enhance our operational, financial, and management systems;
+Added: enhance our facilities and purchase additional equipment, which will include ongoing modernization and expansion of our Springfield, Massachusetts, Deep River, Connecticut, and Houlton, Maine facilities;
+Added: successfully hire, train, and motivate additional employees, including additional personnel for our technological, sales, and marketing efforts.
+Added: The expansion of our products and customer base may result in increases in our overhead and selling expenses.
+Added: We also may be required to increase staffing and other expenses as well as our expenditures on capital equipment and leasehold improvements in order to meet the demand for our products.
+Added: Any increase in expenditures in anticipation of future sales that do not materialize would adversely affect our profitability.
We face intense competition that could result in our losing or failing to gain market share and suffering reduced sales.
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Our inability to compete in one or more of these areas could have a negative impact on our business, operating results, and financial condition.
+Added: Our operating results depend upon the level of consumer spending, which is sensitive to global economic conditions and other factors.
+Added: The success of many aspects of our business depends on consumer spending, and there are a number of factors that influence consumer spending, including actual and perceived economic conditions;
+Added: disposable consumer income;
+Added: interest rates;
+Added: consumer credit availability;
+Added: employment levels;
+Added: stock market performance;
+Added: weather conditions;
+Added: energy prices;
+Added: consumer discretionary spending patterns;
+Added: and tax rates in the international, national, regional, and local markets where our products are produced or sold.
+Added: The current global economic environment is unpredictable, and adverse economic trends or other factors could negatively impact the level of consumer spending, which could have a material adverse impact on us.
Acquisitions involve significant risks, and any acquisitions that we undertake in the future could be difficult to integrate, disrupt our business, dilute stockholder value, and harm our operating results.
−Removed: We may expand our operations through acquisitions in order to enhance our existing products and offer new products, enter new markets and businesses, strengthen and avoid interruption from our supply chain, and improve our position in current markets and businesses.
+Added: Although it is not our current strategy, we may, at some point, decide to expand our operations through acquisitions in order to enhance our existing products and offer new products, enter new markets and businesses, strengthen and avoid interruption from our supply chain, and improve our position in current markets and businesses.
Acquisitions involve significant risks and uncertainties.
3 unchanged sentences
Acquisitions also may become more difficult in the future as we or others acquire the most attractive candidates.
−Removed: Unforeseen expenses, difficulties, and delays frequently encountered in connection with expansion through acquisitions could inhibit our growth and negatively impact our business, operating results, and financial condition.
−Removed: Our ability to complete acquisitions that we desire to make in the future will depend upon various factors, including the following:
−Removed: the availability of suitable acquisition candidates at attractive purchase prices;
−Removed: the ability to compete effectively for available acquisition opportunities;
−Removed: the availability of cash resources, borrowing capacity, or other forms of consideration at favorable pricing that would enable us to offer the required acquisition purchase prices;
−Removed: the ability of management to devote sufficient attention to acquisition efforts;
−Removed: the ability to obtain any requisite governmental or other approvals.
−Removed: In our OP&A division, we plan to pursue acquisitions of companies involved in what we consider the rugged outdoor market (which may include shooting, hunting, fishing, camping, hiking, personal security and defense, and a variety of other outdoor recreational and leisure activities), companies that perform manufacturing services for us or supply us with components or materials, and other businesses that we regard as complementary to our business.
+Added: Unforeseen expenses,
+Added: difficulties, and delays frequently encountered in connection with expansion through acquisitions could inhibit our growth and negatively impact our business, operating results, and financial condition.
We may have little or no experience with certain acquired businesses, which could involve significantly different supply chains, production techniques, customers, and competitive factors than our current business.
5 unchanged sentences
As a part of any potential acquisition, we may engage in discussions with various acquisition candidates.
−Removed: In connection with these discussions, we and each potential acquisition candidate may exchange confidential operational and financial information, conduct due diligence inquiries, and consider the structure, terms, and conditions of the potential acquisition.
+Added: In connection with these discussions, the parties may exchange confidential operational and financial information, conduct due diligence inquiries, and consider the structure, terms, and conditions of the potential acquisition.
In certain cases, the prospective acquisition candidate may agree not to discuss a potential acquisition with any other party for a specific period of time and agree to take other actions designed to enhance the possibility of the acquisition, such as preparing audited financial information.
8 unchanged sentences
Our inability to use our common stock as consideration, to generate cash from operations, or to obtain additional funding through debt or equity financings in order to pursue an acquisition could limit our growth.
−Removed: Potential strategic alliances may not achieve their potential.
−Removed: We have entered into strategic alliances in the past and anticipate that we will enter into new strategic alliances in the future.
−Removed: We continue to explore strategic alliances designed to expand our product offerings, enter new markets, and improve our distribution channels.
−Removed: Our existing strategic alliances and any new strategic alliances may not achieve their intended objectives, and parties to our strategic alliances may not perform as contemplated.
−Removed: The failure of these alliances may impede our ability to introduce new products and enter new markets.
−Removed: Our recent acquisitions and any acquisitions that we undertake in the future could be difficult to integrate, disrupt our business, and harm our operations.
−Removed: We have a history of acquiring businesses, having spent approximately $400.0 million on acquisitions in the last five fiscal years.
−Removed: In order to pursue successful acquisitions, we may need to integrate the operations of acquired businesses into our operations, including centralizing certain functions to achieve cost savings and pursuing programs and processes that leverage our sales and growth opportunities.
−Removed: In fiscal 2017, we acquired Crimson Trace Corporation and the assets of Taylor Brands, LLC and Ultimate Survival Technologies, Inc.
−Removed: In fiscal 2018, we acquired the assets of Gemini Technologies, Incorporated and Fish Tales, LLC.
−Removed: In fiscal 2019, we acquired LaserLyte branded products from P&L Industries Inc.
−Removed: The integration of the management, operations, and facilities of acquired businesses with our own could involve difficulties, which could adversely affect our growth rate and operating results.
−Removed: We may be unable to effectively complete an integration of the management, operations, facilities, accounting, and information systems of acquired businesses with our own;
−Removed: to implement effective controls to mitigate legal and business risks with which we have no prior experience;
−Removed: to manage efficiently the combined operations of the acquired businesses with our operations;
−Removed: to achieve our operating, growth, and performance goals for acquired businesses;
−Removed: to achieve additional sales as a result of our expanded operations;
−Removed: or to achieve operating efficiencies or otherwise realize cost savings as a result of anticipated acquisition synergies.
−Removed: The integration of acquired businesses involves numerous risks and uncertainties, including the following:
−Removed: the failure of acquired businesses to achieve expected results;
−Removed: the potential disruption of our core businesses;
−Removed: risks associated with entering markets and businesses in which we have little or no prior experience;
−Removed: diversion of management’s attention from our core businesses;
−Removed: adverse effects on existing business relationships with suppliers and customers;
−Removed: risks associated with increased regulatory or compliance matters;
−Removed: failure to retain key customers, suppliers, or personnel of acquired businesses;
−Removed: the potential strain on our financial and managerial controls and reporting systems and procedures;
−Removed: greater than anticipated costs and expenses related to the integration of the acquired businesses with our business;
−Removed: potential unknown liabilities associated with the acquired businesses;
−Removed: risks associated with weak internal controls over information technology systems and associated cyber security risks;
−Removed: meeting the challenges inherent in effectively managing an increased number of employees in diverse locations;
−Removed: the risk of impairment charges related to potential write-downs of acquired assets;
−Removed: the challenge of creating uniform standards, controls, procedures, policies, and information systems.
−Removed: If our goodwill, intangible assets, or long-lived assets become impaired, we may be required to record a significant charge to earnings.
−Removed: We review our goodwill, intangible assets, and long-lived assets (collectively, “tested assets”) for impairment annually or when events or changes in circumstances indicate the carrying value may not be recoverable.
−Removed: After such review, we may be required to record a significant charge to our financial statements during the period in which such impairment of our tested assets is determined, negatively impacting our results of operations.
−Removed: As of our valuation date, February 1, 2020, our Firearms operating unit had $19.0 million of goodwill and its fair value significantly exceeded its carrying value.
−Removed: Our Outdoor Products & Accessories operating unit had $163.2 million of goodwill and its fair value exceeded its carrying value by approximately 1.5%.
−Removed: On March 23, 2020, we determined
−Removed: that business in our Outdoor Products & Accessories segment was expected to be negatively impacted by several factors related to the COVID-19 pandemic , including a major online retail customer’s decision to halt or delay most non-essential product orders, COVID-19-related supply chain issues, as well as COVID-19-related “stay at home” orders and sporting goods store closures, which reduced retail foot traffic in many states.
−Removed: Given the extreme market volatility, we relied solely on the income approach to derive the current value of the Outdoor Products & Accessories segment.
−Removed: Based on these factors, we expect reduced cash flows in our Outdoor Products & Accessories segment, and we believe this constituted a triggering event under generally accepted accounting principles.
−Removed: Based on the results of this evaluation, we recorded a non-cash impairment charge of $ 98.7 million of goodwill in our Outdoor Products & Accessories segment.
−Removed: Although we concluded that there was no additional impairment of the goodwill associated with our operating units as of April 30, 2020, we will continue to closely monitor their performance and related market conditions for future indicators of potential impairment and reassess accordingly.
−Removed: Our assumptions related to the development of fair value could deviate materially from actual results and forecasts used to support asset carrying values may change in the future, which could result in non-cash charges that would adversely affect our financial results of operations.
−Removed: During the third quarter of fiscal 2019, we assessed and recorded a $10.4 million impairment charge related to the goodwill of our Electro Optics operating unit, which was subsequently restructured and combined into our Outdoor Product & Accessories operating unit.
−Removed: As of April 30, 2020, our Firearms and Outdoor Products & Accessories operating units had tested assets of $19.0 million and $64.6 million, respectively.
−Removed: For further discussion of the valuation of tested assets, see Note 3 — Significant Accounting Policies to our consolidated financial statements.
−Removed: Factors that may be considered a change in circumstances, indicating that the carrying value of our tested assets may be reduced or otherwise not be recoverable, include, but are not limited to, general economic conditions, changes in regulations, reduced future cash flow estimates, slower growth rates, changes in the competitive environment for our products, and the success of new products.
−Removed: We have identified a material weakness in our Internal control over financial reporting that may, if not remediated, result in material misstatements in our financial statements.
−Removed: We are responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934.
−Removed: As disclosed in Item 9A, “Controls and Procedures,” we identified a material weakness in our control over financial reporting related to the income tax treatment associated with goodwill impairment.
−Removed: A material weakness is defined as a deficiency, or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
−Removed: As a result of the material weakness, we concluded that our internal control over financial reporting and related disclosure controls and procedures were not effective based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission.
−Removed: The material weakness did not result in any identified misstatements to the financial statements, and there were no changes to previously issued financial results.
−Removed: We are actively engaged in developing a remediation plan designed to address this material weakness;
−Removed: however, we cannot guarantee that these steps have been sufficient or that we will not have a material weakness in the future.
−Removed: If our remedial measures are insufficient to address the material weakness, or if additional material weaknesses in our internal control are discovered or occur in the future, our financial statements may contain material misstatements and we could be required to restate our financial statements.
−Removed: Our growth strategy may require significant additional funds, the amount of which will depend upon our working capital and general corporate needs.
−Removed: Any substantial borrowings made to finance operations or future acquisitions could make us more vulnerable to a downturn in our operating results, a downturn in economic conditions, or increases in interest rates on borrowings.
−Removed: If our cash flow from operations is insufficient to meet our debt service requirements, we could be required to sell additional equity securities, refinance our obligations, or dispose of assets in order to meet our debt service requirements.
−Removed: Adequate financing may not be available if and when we need it or may not be available on terms acceptable to us.
−Removed: In addition, certain banks may refuse to do business with us even if we are a creditworthy customer.
−Removed: The failure to obtain sufficient financing on favorable terms and conditions could have a material adverse effect on us.
−Removed: From time to time, we may seek additional equity or debt financing to provide funds for the expansion of our business.
−Removed: We cannot predict the timing or amount of any such financing requirements at this time.
−Removed: If such financing is not available on satisfactory terms, we may be unable to expand our business or to develop new business at the rate desired, and our operating results may suffer.
−Removed: Debt financing increases expenses and must be repaid regardless of operating results.
−Removed: Equity financing could result in additional dilution to existing stockholders.
−Removed: As of April 30, 2020, we had $160.0 million of long-term borrowings outstanding on our revolving line of credit.
−Removed: The degree to which we are leveraged could adversely affect our ability to obtain further financing for working capital, acquisitions, or other purposes and could make us more vulnerable to industry downturns and competitive pressures.
−Removed: Our ability to meet our debt service obligations will depend upon our future performance, which will be subject to the financial condition, business environment, and other factors affecting our operations, many of which are beyond our control.
−Removed: The failure to manage our growth could adversely affect our operations.
−Removed: To continue to expand our business and strengthen our competitive position, we must make significant investments in systems, equipment, facilities, and personnel.
−Removed: In addition, we may commit significant funds to increase our sales, marketing, information technology, and research and development efforts in order to expand our business.
−Removed: As a result of the increase in fixed costs and operating expenses, our failure to increase sufficiently our net sales to offset these increased costs could adversely affect our operating results.
−Removed: The failure to manage our growth effectively could adversely affect our operations.
−Removed: We have substantially increased the number of our manufacturing and design programs and plan to further expand the number and diversity of our programs in the future.
−Removed: Managing our planned growth effectively will require us to:
−Removed: enhance our operational, financial, and management systems;
−Removed: enhance our facilities and purchase additional equipment, which will include ongoing modernization and expansion of our Springfield, Massachusetts, Deep River, Connecticut, and Houlton, Maine facilities;
−Removed: achieve the anticipated benefits of our new national logistics facility;
−Removed: successfully hire, train, and motivate additional employees, including additional personnel for our technological, sales, and marketing efforts.
−Removed: The expansion of our products and customer base may result in increases in our overhead and selling expenses.
−Removed: We also may be required to increase staffing and other expenses as well as our expenditures on capital equipment and leasehold improvements in order to meet the demand for our products.
−Removed: Any increase in expenditures in anticipation of future sales that do not materialize would adversely affect our profitability.
−Removed: Our business is highly dependent upon our brand recognition and reputation, and the failure to maintain or strengthen our brand recognition or reputation would likely have a material adverse effect on our business.
−Removed: Our brand recognition and reputation are critical aspects of our business.
−Removed: We believe that maintaining and further enhancing all of our brands is critical to retaining existing customers and attracting new customers.
−Removed: We also believe that the importance of our brand recognition and reputation will continue to increase as competition in our markets continues to develop.
−Removed: We anticipate that our advertising, marketing, and promotional efforts will increase in the foreseeable future as we continue to seek to enhance our brand recognition and the consumer demand for our products.
−Removed: Historically, we have relied on print and electronic media advertising to increase consumer awareness of our brands to increase purchasing intent and conversation.
−Removed: We anticipate that we will increasingly rely on other forms of media advertising, including social media and digital marketing.
−Removed: Our future growth and profitability will depend in large part upon the effectiveness and efficiency of our advertising, promotion, public relations, and marketing programs.
−Removed: These brand promotion activities may not yield increased revenue and the efficacy of these activities will depend on a number of factors, including our ability to do the following:
−Removed: determine the appropriate creative message and media mix and markets for advertising, marketing, and promotional expenditures;
−Removed: select the right markets, media, and specific media vehicles in which to advertise;
−Removed: identify the most effective and efficient level of spending in each market, media, and specific media vehicle;
−Removed: effectively manage marketing costs, including creative and media expenses, in order to maintain acceptable customer acquisition costs.
−Removed: Increases in the pricing of one or more of our marketing and advertising channels could increase our marketing and advertising expenses or cause us to choose less expensive but possibly less effective marketing and advertising channels.
−Removed: If we implement new marketing and advertising strategies, we may incur significantly higher costs than our current costs, which in turn could adversely affect our operating results.
−Removed: Implementing new marketing and advertising strategies also could increase the risk of devoting significant capital and other resources to endeavors that do not prove to be cost effective.
−Removed: We also may incur marketing and advertising expenses significantly in advance of the time we anticipate recognizing revenue associated with such expenses, and our marketing and advertising expenditures may not generate sufficient levels of brand awareness and conversation or result in increased revenue.
−Removed: Even if our marketing and advertising expenses result in increased revenue, the increase might not offset our related expenditures.
−Removed: If we are unable to maintain our marketing and advertising channels on cost-effective terms or replace or supplement existing marketing and advertising channels with similarly or more effective channels, our marketing and advertising expenses could increase substantially, our customer base could be adversely affected, and our business, operating results, financial condition, and reputation could suffer.
−Removed: In addition, we may determine that certain of our products and brands benefit from endorsements and support from particular sporting enthusiasts, athletes, or other celebrities, and those products and brands may become personally associated with those individuals.
−Removed: As a result, sales of the endorsed products could be materially and adversely affected if any of those individuals’ images, reputations, or popularity were to be negatively impacted.
−Removed: Our operating results could be materially harmed if we are unable to forecast demand for our products accurately.
−Removed: We often schedule internal production and place orders for finished products, product components, and raw materials with third-party suppliers before receiving firm orders from our customers.
−Removed: If we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortage of products to deliver to our customers.
−Removed: Factors that could affect our ability to accurately forecast demand for our products include the following:
−Removed: our failure to accurately forecast customer acceptance of new products;
−Removed: an increase or decrease in consumer demand for our products or for the products of our competitors;
−Removed: new product introductions by competitors;
−Removed: our relationships with customers;
−Removed: general market conditions and other factors, which may result in cancellations of orders or a reduction or increase in the rate of reorders placed by customers;
−Removed: general market conditions, economic conditions, and consumer confidence levels, which could reduce demand for discretionary items, such as our products;
−Removed: the domestic political environment, including debates over the regulation of various consumer products, such as firearms.
−Removed: Inventory levels in excess of customer demand may result in inventory write-downs and the sale of excess inventory at discounted prices, which could have an adverse effect on our business, operating results, and financial condition.
−Removed: If we underestimate demand for our products, we and our third-party suppliers may not be able to produce products to meet customer demand, and this could result in delays in the shipment of products and lost revenues, as
−Removed: well as damage to our reputation and customer relationships.
−Removed: We may not be able to manage inventory levels successfully to meet future order and reorder requirements.
−Removed: An inability to expand our e-commerce business could reduce our future growth.
−Removed: Consumers are increasingly shopping online via e-commerce retailers, and we face intense pressure to make our non-firearm products readily and conveniently available via e-commerce services.
−Removed: Our success in participating in e-commerce depends on our ability to effectively use our marketing resources to communicate with existing and potential customers.
−Removed: To increase our e-commerce sales, we may have to be more promotional to compete, which could impact our gross margin and increase our marketing expenses.
−Removed: We recently developed and continue to enhance our direct-to-consumer e-commerce platform, but rely to an extent on third party e-commerce websites to sell our products, which could lead to our e-commerce customers being able to have control over the pricing of our products.
−Removed: This in turn could lead to adverse relationship consequences with our customers that operate brick and mortar locations as they may perceive themselves to be at a disadvantage based on the e-commerce pricing to end consumers.
−Removed: There is no assurance that we will be able to successfully expand our e-commerce business and respond to shifting consumer traffic patterns and direct-to-consumer buying trends.
−Removed: In addition, e-commerce and direct-to-consumer operations are subject to numerous risks, including implementing and maintaining appropriate technology to support business strategies;
−Removed: reliance on third-party computer hardware/software and service providers;
−Removed: data breaches;
−Removed: violations of federal, state, and international laws, including those relating to online privacy, credit card fraud, telecommunication failures, electronic break-ins, and similar disruptions;
−Removed: and disruptions of Internet service.
−Removed: Our inability to adequately respond to these risks and uncertainties or to successfully maintain and expand our direct-to-consumer business may have an adverse impact on our operating results.
−Removed: We plan to continue to expand our brand recognition and product loyalty through social media and our websites, with generation of original content.
−Removed: These efforts are intended to yield greater traffic to our websites and increase our direct-to-consumer revenue.
−Removed: By doing so, we will become to an extent a competitor to our customers, reducing their revenue in the process.
−Removed: This could lead to adverse relationships with our online and brick and mortar retail customers, which could have an adverse impact on our operating results.
−Removed: A substantial portion of our outdoor products revenue depends on a small number of large customers .
−Removed: We sell our outdoor products and accessories through online retailers, sport specialty stores, sporting goods stores, dealers and distributors, and mass market home and auto retailers.
−Removed: Our two largest customers in our OP&A segment accounted for an aggregate of 36.4% of our OP&A revenue for fiscal 2020.
−Removed: Of these customers, the world’s largest e-commerce retailer accounted for 24.9% of our revenue in the OP&A segment through its very extensive customer base of end consumers;
−Removed: and a very large national sport specialty chain accounted for 11.5% of our revenue in that segment through its retail locations.
−Removed: Although we have long-established relationships with many of our customers, we generally do not have any long-term supply or binding contracts or guarantees of minimum purchases with our customers.
−Removed: Purchases by our customers are generally made through individual purchase orders.
−Removed: As a result, these customers may cancel their orders, change purchase quantities from forecast volumes, delay purchases for a number of reasons beyond our control, or change other terms of the business relationship.
−Removed: Significant or numerous cancellations, reductions, or delays in purchases or changes in business practices by our customers could have a material adverse effect on our business, operating results, and financial condition.
−Removed: In addition, because many of our costs are fixed, a reduction in customer demand could have an adverse effect on our gross profit margins and operating income.
−Removed: A significant deterioration in the financial condition of our major customers could have a material adverse effect on our sales and profitability.
−Removed: We regularly monitor and evaluate the credit status of our customers and attempt to adjust sales terms as appropriate.
−Removed: Despite these efforts, substantial financial issues or a bankruptcy filing by a key customer could have a material adverse effect on our business, operating results, and financial condition.
−Removed: Retail pricing decisions made by certain of our customers could negatively impact pricing for our products in certain online marketplaces.
−Removed: Many of our non-firearms customers have manual or automated processes to match retail prices in the marketplace.
−Removed: We have a policy that requires our customers to maintain minimum advertised pricing on certain of our products, unless we allow otherwise.
−Removed: This policy serves to help stabilize the pricing for our products at retail.
−Removed: If a customer decreases its retail prices below our minimum threshold, other retailers could also reduce pricing on the same product, thus devaluing that product in the marketplace.
−Removed: This practice could cause us to lower our prices to customers or to compensate them financially for the loss in their inventory value, and, therefore, this could yield an adverse effect on our business, operating results, and financial condition.
−Removed: Changes in the retail industry and the markets for consumer products could negatively impact existing customer relationships and our operating results.
−Removed: In recent years, the retail industry has experienced consolidation and other ownership changes.
−Removed: In the future, retailers may further consolidate, undergo restructurings or reorganizations, realign their affiliations, or reposition the target markets for their stores.
−Removed: These developments could result in a reduction in the number of retailers that carry our products, increased ownership concentration within the retail industry, increased credit exposure, and increased retailer leverage over their suppliers, such as us.
−Removed: These changes could impact our opportunities in the market and increase our reliance on a smaller number of large customers.
−Removed: We depend on a continuous flow of new orders from large, high-volume retail customers, but we may be unable to continually meet the needs of these customers.
−Removed: Retailers are increasing their demands on suppliers to take various actions, including the following:
−Removed: reduce lead times for product delivery, which may require us to increase inventories and could impact the timing of reported sales;
−Removed: require us to fulfill their direct-to-consumer website orders, or drop shipping, which could increase our cost per unit, lead to higher inventory levels, and increase freight costs;
−Removed: improve customer service in which products are supplied directly to retailers from third-party suppliers;
−Removed: adopt technologies related to inventory management that may have substantial implementation costs.
−Removed: We cannot provide any assurance that we can continue to successfully meet the needs of our customers.
−Removed: A substantial decrease in sales to any of our major customers could have a material adverse effect on our business, operating results, and financial condition.
−Removed: As a result of the desire of retailers to more closely manage inventory levels, there is a growing trend among retailers to make purchases on a “just-in-time” basis.
−Removed: This requires us to shorten our lead times for production in certain cases and more closely anticipate demand, which could, in the future, require us to carry additional inventories.
−Removed: We also may be negatively affected by changes in the policies of our retail customers, such as inventory destocking, limitations on access to and time on shelf space, use of private label brands, price demands, payment terms, and other conditions, which could negatively impact our business, operating results, and financial condition.
−Removed: These foregoing factors could result in a shift of bargaining power to the retail industry and in fewer outlets for our products.
−Removed: Further consolidations could result in price and other competition that could reduce our margins and our net sales.
We may have difficulty collecting amounts owed to us.
4 unchanged sentences
Should more customers than we anticipate experience liquidity issues, or if payment is not received on a timely basis, we may have difficulty collecting amounts owed to us by such customers and our business, operating results, and financial condition could be adversely impacted.
−Removed: For the year ended April 30, 2020, one of our customers accounted for approximately 10.5% of our net sales but did not exceed 10% of our accounts receivable.
−Removed: Three other customers each had greater than 10% of our accounts receivable and combined for a total of 37.
−Removed: For the fiscal year ended April 30, 2019, none of our customers exceeded 10% of our net sales and one of our customers accounted for approximately 19.8% of our accounts receivable.
−Removed: For the fiscal year ended April 30, 2018, one of our customers accounted for 11.9% of our net sales and none of our customers accounted for 10% or more of our accounts receivable.
−Removed: Through our growth strategy, our sales could become increasingly dependent on purchases by several large retail customers.
−Removed: Consolidation in the retail industry could also adversely affect our business.
−Removed: If our sales were to become increasingly dependent on business with several large retailers, we could experience more concentrated credit-related risks and be adversely affected by the loss or a significant decline in sales to one or more of these customers.
−Removed: In addition, our dependence on a smaller group of retailers could result in their increased bargaining position and pressures on the prices we charge.
−Removed: We are subject to payment-related risks .
−Removed: We accept a variety of payment methods, including credit cards, debit cards, electronic funds transfers, electronic payment systems, and gift cards.
−Removed: Accordingly, we are subject to significant and evolving regulations and compliance requirements, including obligations to implement enhanced authentication processes that could result in increased costs and liability and reduce the ease of use of certain payment methods.
−Removed: For certain payment methods, including credit and debit cards, as well as electronic payment systems, we pay interchange and other fees, which may increase over time.
−Removed: We rely on independent service providers for payment processing, including credit and debit cards.
−Removed: If these independent service providers become unwilling or unable to provide these services to us or if the cost of using these providers increases, our business could be harmed.
−Removed: We are also subject to payment card association operating rules and agreements, including data security rules and agreements, certification requirements, and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply.
−Removed: If we fail to comply with these rules or requirements, or if there is a breach or compromise of our data security systems, we may be liable for losses incurred by card issuing banks or customers, subject to fines and higher transaction fees, or the loss of our ability to accept credit or debit card payments from our customers or process electronic fund transfers or facilitate other types of payments.
−Removed: Any failure to comply could significantly harm our brand, reputation, business, operating results, and financial condition.
+Added: For the year ended April 30, 2021, sales to four of our customers exceeded 10% of our net sales from continuing operations and two of our customers accounted for approximately 28.4% of our accounts receivable.
+Added: For the fiscal year ended April 30, 2020, four of our customers exceeded 10% of our net sales from continuing operations and accounted for approximately 42.2% of our accounts receivable.
+Added: For the fiscal year ended April 30, 2019, one of our customers accounted for 10.4% of our net sales from continuing operations and one of our customers accounted for approximately 23.1% our accounts receivable.
+Added: Liability insurance is expensive and may be difficult to obtain.
+Added: Liability insurance coverage is expensive and from time to time may be difficult or impossible to obtain.
+Added: Our insurance policies are subject to periodic review by our insurers and may not be renewed at all or on similar or favorable terms.
+Added: Because we manufacture and sell firearms, insurance carriers may decide not to insure us in the future.
+Added: In addition, if we or other firearms manufacturers sustain significant losses or make significant insurance claims, our ability to obtain future insurance coverage at commercially reasonable rates could be materially adversely affected.
+Added: Our liability insurance costs were $5.9 million in fiscal 2021 and $3.9 million in fiscal 2020.
+Added: An inability to obtain liability insurance, significant increases in the cost of insurance we obtain, or losses in excess of our liability insurance coverage, could have a material adverse effect on us.
+Added: For the reasons described herein, in fiscal 2020, we established a wholly owned captive insurance company to help mitigate these risks, but the funding by us of such insurance company may not be enough to adequately cover the cost of claims against us, if any.
+Added: An inability to reach customers through social platforms could reduce our future growth.
+Added: Consumers are increasingly leveraging online platforms, and we face intense pressure to reach our customers through social media platforms.
+Added: We plan to continue to expand our brand recognition and product loyalty through social media and our websites, with generation of original content.
+Added: These efforts are intended to yield greater traffic to our websites and increase our consumer demand.
+Added: We are subject to deplatforming, whereby our ability to share information on social platforms or websites could be blocked, limiting our ability to reach our customers through such avenues.
+Added: Our business is subject to the risk of earthquakes, fire, power outages, floods, and other catastrophic events and to interruption by problems such as terrorism, cyberattacks, or failure of key information technology systems.
+Added: Our business is vulnerable to damage or interruption from earthquakes, fires, floods, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, criminal acts, public health crises, such as pandemics and epidemics, and other similar events.
+Added: These risks are particularly substantial because we conduct substantially all of our operations from one location.
+Added: We maintain casualty and business interruption insurance, but it may not adequately protect us from the types and amounts of losses we may incur or from the adverse effect that may be caused by significant disruptions in our product distribution, such as the long-term loss of customers or an erosion of our brand image.
+Added: In addition, the facilities of certain of our suppliers are subject to the same and additional risks.
+Added: Our computer systems may also be vulnerable to computer viruses, criminal acts, denial-of-service attacks, ransomware, and similar disruptions from unauthorized tampering with our computer systems, which could lead to interruptions, delays, or loss of critical data.
+Added: As we rely heavily on our information technology and communications systems and the Internet to conduct our business and provide high-quality customer service, these disruptions could harm our ability to run our business and either directly or indirectly disrupt our suppliers’ or manufacturers’ businesses, which could harm our business, operating results, and financial condition.
+Added: Risks Related to Legal Proceedings, Product Recalls, and Other Product Liabilities
+Added: Our business involves the potential for product recalls, product liability, and other claims against us, which could affect our earnings and financial condition.
+Added: As a distributor of non-firearm consumer products, such as handcuffs, we are subject to the U.S.
+Added: Consumer Products Safety Act of 1972, as amended by the Consumer Product Safety Improvement Act of 2008, which empowers the Consumer Products Safety Commission to exclude from the market products that are found to be unsafe or hazardous, and similar laws under foreign jurisdictions.
+Added: Under certain circumstances, the Consumer Products Safety Commission or comparable foreign agency could require us to repurchase or recall one or more of our products.
+Added: Additionally, other laws and agencies regulate certain consumer products sold by us and more restrictive laws and regulations may be adopted in the future.
+Added: Any repurchase or recall of our products could be costly and damage our reputation.
+Added: If we were required to remove, or we voluntarily remove, our products from the market, our reputation could be tarnished, and we might have large quantities of finished products that we could not sell.
+Added: We also face exposure to product liability claims in the event that one of our products is alleged to have resulted in property damage, bodily injury, or other adverse effects.
+Added: In addition to the risk of substantial monetary
+Added: judgments, fines, or penalties that may result from any governmental investigations, product liability claims, or regulatory actions, such events could result in negative publicity that could harm our reputation in the marketplace, adversely impact the value of our brands, and result in an increase in the cost of producing our products.
+Added: Similar to product liability claims, we face exposure to class action lawsuits related to the performance, safety, or advertising of our products.
+Added: Such class action lawsuits could result in substantial monetary judgments, injunctions related to the sale of products, and potentially tarnish our reputation.
+Added: In fiscal 2020, we formed a wholly owned captive insurance company, which provides product liability insurance to us and our subsidiaries.
+Added: This captive insurance company was included in our consolidated financial statements for the fiscal year end April 30, 2021 and 2020.
+Added: Although we maintain product liability insurance in amounts that we believe are reasonable, that insurance is, in most cases, subject to large self-insured retentions for which we are responsible, and we cannot assure you that we will be able to maintain such insurance on acceptable terms, if at all, in the future or that product liability claims will not exceed the amount of insurance coverage.
+Added: As a result, product recalls or product liability claims could have a material adverse effect on our business, operating results, and financial condition.
+Added: In addition, we face potential other types of litigation arising out of alleged defects in our products or otherwise, such as class action lawsuits.
+Added: We do not maintain insurance against many types of claims involving alleged defects in our products that do not involve personal injury or property damage.
+Added: We spend substantial resources ensuring compliance with governmental and other applicable standards.
+Added: Our product liability insurance program is an occurrence-based program based on our current and historical claims experience and the availability and cost of insurance.
+Added: We cannot assure you, however, that our future product liability experience will be consistent with our past experience or that claims and awards will not substantially impact the costs of our insurance programs in the future.
+Added: We are subject to lawsuits and governmental investigations and inquiries.
+Added: We are currently involved in several lawsuits, including a lawsuit involving a municipality and several product liability lawsuits.
+Added: We are vigorously defending ourselves in the lawsuits to which we are subject.
+Added: There can be no assurance, however, that we will not have to pay significant damages or amounts in settlement above insurance coverage.
+Added: An unfavorable outcome or prolonged litigation could harm our business.
+Added: Litigation of this nature is also expensive and time consuming and may divert the time and attention of our management.
+Added: Our products expose us to potential product liability, warranty liability, and personal injury claims, as well as litigation relating to the use or misuse of our products.
+Added: These include allegations of defects in manufacturing and design, failure to warn of inherent dangers in the product itself or activities associated with the product, and negligence and strict liability.
+Added: In addition, as described earlier, we could be subject to future litigation arising out of the criminal misuse of our firearms.
+Added: If successful, such claims could have a material adverse effect on our business, operating results, and financial condition.
+Added: Although we maintain product liability insurance in amounts that we believe are reasonable, we may not be able to maintain such insurance on acceptable terms, if at all, in the future, and product liability claims may exceed the amount of insurance coverage available to us.
+Added: Because we manufacture and sell firearms, insurance carriers may decide not to insure our products or our company in the future.
+Added: In addition, our reputation may be adversely affected by such claims, whether or not successful, including potential negative publicity about our products.
+Added: Due to the nature of our products, we anticipate that we will continue to be involved in litigation, including product liability cases and claims in the future.
+Added: Defects in our products could reduce demand and result in a decrease in sales or damage to our reputation.
+Added: Our products can contain latent defects that are not detected until after the product is introduced to the market.
+Added: In addition, we obtain many of our products and component parts from third-party suppliers and may not be able to detect defects until after they are sold.
+Added: Defects in our products may result in a loss of sales, recall or corrective action expenses, damage to our reputation, and increased warranty costs, which could have a material adverse effect on our business, operating results, and financial condition.
+Added: We have been and may continue to be subject to governmental investigations and inquiries.
+Added: Such investigations and inquiries could subject us to various sanctions, including significant civil and criminal penalties, the indictment of our company or various of our officers and employees, our being prevented from bidding on domestic military and government contracts, restriction by the U.S.
+Added: Government, including by the U.S.
+Added: Department of State or U.S.
+Added: Department of Commerce on exporting our products , private civil litigation arising out of the outcome of the investigations or inquiries, the diversion of time and attention of our management from normal business operations, and a negative impact on the perception of our company by investors, customers, and others.
+Added: We produce or source and sell products that create exposure to potential product liability, warranty liability, or personal injury claims and litigation.
+Added: Some of our products involve or are used in applications and situations that involve risk of personal injury and death.
+Added: Our products expose us to potential product liability, warranty liability, personal injury claims, and litigation relating to the use or misuse of our products, including allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product or activities associated with the product, negligence, and strict liability.
+Added: If successful, such claims could have a material adverse effect on our business.
+Added: In addition, defects in our products could reduce demand for our products and result in a decrease in sales and market acceptance and damage to our reputation.
+Added: Components used in our products may contain undetected defects that are subsequently discovered at any point in the life of the product.
+Added: In addition, we obtain many of our finished products and product components from third-party suppliers and may not be able to detect defects in such products or components until after they are sold.
+Added: Defects in our products may result in a loss of sales, recall expenses, delay in market acceptance, damage to our reputation, and increased warranty costs, which could have a material adverse effect on our business, operating results, and financial condition.
+Added: Risks Relating to Intellectual Property, Information Systems, and Cybersecurity
Our inability to protect our intellectual property or obtain the right to use intellectual property from third parties could impair our competitive advantage, reduce our sales, and increase our costs.
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however, such agreements are now required.
−Removed: Therefore, our former employees and consultants may try to claim some ownership interest in our intellectual property and may use our intellectual property competitively and without appropriate limitations.
+Added: Therefore, our former employees and consultants may try to claim some ownership
+Added: interest in our intellectual property and may use our intellectual property competitively and without appropriate limitations.
In addition, our acquired businesses may not have consistently required their employees and consultants to enter into confidentiality agreements, employment agreements, or proprietary information and invention agreements.
11 unchanged sentences
This litigation, whether successful or unsuccessful, could result in substantial costs and diversion of resources, which could have a material adverse effect on us.
+Added: Interruptions in the proper functioning of our information systems or other issues with our ERP systems could cause disruption to our operations.
+Added: We rely extensively on our information systems to manage our business, data, communications, supply chain, ordering, pricing, billing, inventory replenishment, accounting functions, and other processes.
+Added: Our systems are subject to damage or interruption from various sources, including computer and telecommunications failures, computer viruses, cyber security breaches, attacks by hackers and other breaches, introduction of malware or ransomware, phishing attacks, denial of service attacks, blocking of authorized service attacks, vandalism, severe weather conditions, power outages, catastrophic events, terrorism, and human error, and our disaster recovery planning cannot account for all eventualities.
+Added: If our systems are damaged, fail to function properly, or otherwise become compromised or unavailable, we may incur substantial costs to repair or replace them, and we may experience loss of critical data and interruptions or delays in our ability to perform critical functions, which could adversely affect our business, operating results, and financial condition.
+Added: Our information technology systems require periodic modifications, upgrades, and replacement that subject us to costs and risks, including potential disruption to our internal control structure, substantial capital expenditures, additional administration and operating expenses, retention of sufficiently skilled personnel or outside firms to implement and operate existing or new systems, and other risks and costs of delays or difficulties in transitioning to new or modified systems or of integrating new or modified systems into our current systems.
+Added: In addition, challenges implementing new or modified technology systems may cause disruptions in our business operations and have an adverse effect on our business operations if not anticipated and appropriately mitigated.
+Added: We operate our business utilizing SAP, which is a fully integrated ERP system.
+Added: We continue to implement various modules and additional usages of SAP.
+Added: Any of those implementations could result in a major disruption to our business, and any disruption could have a negative effect on our business, operating results, and financial condition.
+Added: In addition, utilizing SAP has required and will continue to require significant resources and refinement to fully realize the expected benefits of the system.
+Added: Breaches of our information systems could adversely affect our reputation, disrupt our operations, and result in increased costs and loss of revenue.
+Added: There have been an increasing number of cyber security incidents affecting companies around the world, which have caused operational failures or compromised sensitive or confidential corporate data.
+Added: Although we do not believe our systems are at a greater risk of cyber security incidents than other similar organizations, such cyber security incidents may result in system disruptions or shutdowns;
+Added: the loss or compromise of customer, financial, or operational data;
+Added: loss of assets;
+Added: disruption of billing, collections, or normal operating activities;
+Added: disruption of electronic monitoring and control of operational systems;
+Added: delays in financial reporting and other management functions;
+Added: and the inability to access or rely upon critical business systems or records or other operational delays or issues.
+Added: Possible impacts associated with cyber security incidents (which generally are increasing in both frequency and sophistication) may include, among others, remediation costs related to lost, stolen, or compromised data;
+Added: repairs to data processing systems;
+Added: increased cyber security protection costs;
+Added: reputational damage;
+Added: lawsuits seeking damages;
+Added: regulatory actions;
+Added: and adverse effects on our compliance with applicable privacy and other laws and regulations.
+Added: In the past we have experienced cyber security attacks and breaches, which, to date, have not had a material impact on our operations, but there can be no assurances that any further breach or disruption will not have a material adverse effect on our business, operating results, or financial condition.
If our efforts to protect the security of personal information related to any of our customers, consumers, vendors, or employees are unsuccessful and unauthorized access to that personal information is obtained, or we experience a significant disruption in our computer systems or a cyber security breach, we could experience an adverse effect on our operations, we could be subject to costly government enforcement action and private litigation, and our reputation could suffer.
14 unchanged sentences
Depending on the nature of the information compromised, we may also have obligations to notify users, law enforcement, or payment companies about the incident and may need to provide some form of remedy, such as refunds, for the individuals affected by the incident.
−Removed: We face risks associated with international activities, including related to compliance with the Foreign Corrupt Practices Act or other applicable anti-corruption legislation.
−Removed: Political and economic conditions abroad may result in a reduction of or inhibition of our growth in our sales in numerous foreign countries and our purchase of certain accessories and components from certain countries in Asia and Europe, including China, Taiwan, and Italy.
−Removed: Protectionist trade legislation in either the United States or foreign countries, such as a change in the current tariff structures, export or import compliance laws, or other trade policies, could reduce our ability to sell our products in foreign markets, the ability of foreign customers to purchase our products, and our ability to import components, parts, and products from foreign suppliers.
−Removed: Our efforts to comply with the Foreign Corrupt Practices Act, or other applicable anti-corruption laws and regulations may limit our international business activities, necessitate the implementation of certain processes and compliance programs, and subject us to enforcement actions or penalties for noncompliance.
−Removed: Both the U.S.
−Removed: and foreign governments have increased their oversight and enforcement activities in this area in recent years, and we expect applicable agencies to continue to increase such activities in the future.
−Removed: Our foreign sales and purchases of certain accessories and components also create a number of logistical and communication challenges.
−Removed: These activities also expose us to various economic, political, and other risks, including the following:
−Removed: compliance with U.S.
−Removed: and local laws and regulatory requirements, including adverse changes in those laws and requirements;
−Removed: transportation delays or interruptions and other effects of less developed infrastructures;
−Removed: foreign exchange rate fluctuations;
−Removed: limitations on imports and exports;
−Removed: imposition of restrictions on currency conversion or the transfer of funds;
−Removed: the possibility of appropriation of our assets without just compensation;
−Removed: taxes, tariffs, and duties;
−Removed: the burdens and costs of compliance with a variety of foreign laws;
−Removed: political or economic instability in countries in which we conduct business, including possible terrorist acts.
−Removed: We currently maintain operations in Belgium and the People’s Republic of China and have plans to expand our international operations.
−Removed: As a result, we are exposed to risks in the countries in which we operate or will operate in the future, including political and economic changes or volatility, geopolitical regional conflicts, terrorist activity, and political unrest, which could negatively affect our international operations.
−Removed: Environmental laws and regulations may impact our business.
−Removed: We are subject to numerous federal, state, and local laws that regulate or otherwise relate to the protection of the environment, including the Clean Air Act, the Clean Water Act, CERCLA, and the Solid Waste Disposal Act, as amended by RCRA.
−Removed: CERCLA, RCRA, and related state laws subject us to the potential obligation to remove or mitigate the environmental effects of the disposal or release of certain pollutants at our manufacturing facilities and at third-party or formerly owned sites at which contaminants generated by us may be located.
−Removed: This requires us to make expenditures of both a capital and expense nature.
−Removed: In our efforts to satisfy our environmental, health, and safety responsibilities and to comply with all applicable laws and regulations, we maintain policies relating to the environmental, health, and safety standards for our operations and conduct programs to monitor compliance with various environmental regulations.
−Removed: However, in the normal course of our manufacturing operations, we may become subject to governmental proceedings and orders pertaining to waste disposal, air emissions, and water discharges into the environment.
−Removed: We believe, based on the information available to us, that we are in substantial compliance with applicable environmental regulations.
−Removed: From a remediation perspective, we may not have identified all existing contamination on our properties, and we cannot predict whether our operations will cause contamination in the future.
−Removed: As a result, we could incur additional costs to clean up contamination that exceed the amount of our reserves.
−Removed: We will periodically review the probable and reasonably estimable environmental costs in order to update the environmental reserves.
−Removed: Furthermore, it is not possible to predict with certainty the impact on us of future environmental, health, and safety compliance requirements or of the cost of resolution of future regulatory proceedings and claims, in part because the scope of the remedies that may be required is not certain, liability under federal environmental laws is joint and several in nature, and environmental health and safety laws and regulations are subject to modification and changes in interpretation.
−Removed: Additional or changing environmental health and safety regulation may become burdensome in the future, and any such development could have an adverse effect on us.
−Removed: Our indebtedness could adversely affect our business and limit our ability to plan for or respond to changes in our business, and we may be unable to generate sufficient cash flow to satisfy significant debt service obligations.
−Removed: As of April 30, 2020, we had consolidated indebtedness of $160.0 million, of which none is payable in the next 12 months.
−Removed: This indebtedness relates to our unsecured credit facility, dated June 15, 2015, or the Credit Agreement, with TD Bank, N.A.
−Removed: and other lenders, or the Lenders, which originally included a $175.0 million revolving line of credit, or the Revolving Line, and a $105.0 million term loan, or the Term Loan.
−Removed: T he Revolving Line provides for availability for general corporate purposes, with borrowings to bear interest at a variable rate equal to LIBOR or prime plus an applicable margin based on our consolidated leverage ratio, at our election, or 2.95% as of April 30, 2020.
−Removed: On October 27, 2016, we entered into a second amendment to our Credit Agreement, or the Second Amendment, which, among other things, increased the Revolving Line to $350.0 million, increased the option to expand the credit commitment to an additional $150.0 million, and extended the maturity of the Revolving Line from June 15, 2020 to October 27, 2021.
−Removed: On November 22, 2019, we repaid the full Term Loan and entered into a fifth amendment to our Credit Agreement, or the Fifth Amendment, which, among other things, provides the Lenders’ consent to the spin-off of the outdoor products and accessories business, provided that certain financial conditions are satisfied, including (x) granting the Lenders security interest in the assets of the remaining business, (y) reducing the Revolving Line to $250.0 million at the time of the spin-off, and (z) reducing the option to expand the credit agreement to $50.0 million at the time of the spin-off.
−Removed: Other than the changes described in the Second and Fifth Amendments, we otherwise remain subject to the terms of the Credit Agreement, as described below.
−Removed: Our ability to incur significant future indebtedness, whether to finance potential acquisitions or for general corporate purposes, will depend on our ability to generate cash.
−Removed: To a certain extent, our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control.
−Removed: If our business does not generate sufficient cash flow from operations or if future borrowings are not available to us under our credit facility in amounts sufficient to enable us to fund our liquidity needs, our financial condition and operating results may be adversely affected.
−Removed: If we cannot make scheduled principal and interest payments on our debt obligations in the future, we may need to refinance all or a portion of our indebtedness on or before maturity, sell assets, delay capital expenditures, or seek additional equity.
−Removed: Our governing documents and Nevada law could make it more difficult for a third party to acquire us and discourage a takeover.
−Removed: Certain provisions of our articles of incorporation and bylaws and Nevada law make it more difficult for a third party to acquire us and make a takeover more difficult to complete, even if such a transaction were in our stockholders’ interest or might result in a premium over the market price for the shares held by our stockholders.
−Removed: The issuance of additional common stock in the future, including shares that we may issue pursuant to option grants, may result in dilution in the net tangible book value per share of our common stock.
−Removed: Our board of directors has the legal power and authority to determine the terms of an offering of shares of our capital stock, or securities convertible into or exchangeable for these shares, to the extent of our shares of authorized and unissued capital stock.
−Removed: The sale of a substantial number of shares that are eligible for sale could adversely affect the price of our common stock.
−Removed: As of April 30, 2020, there were 55,359,928 shares of our common stock outstanding.
−Removed: Substantially all of these shares are freely tradable without restriction or further registration under the securities laws, unless held by an “affiliate” of our company, as that term is defined in Rule 144 under the securities laws.
−Removed: Shares held by affiliates of our company, which generally include our directors, executive officers, and certain principal stockholders, are subject to the resale limitations of Rule 144 described below.
−Removed: In general, under Rule 144 as currently in effect, any person or persons whose shares are aggregated for purposes of Rule 144, who is deemed an affiliate of our company and beneficially owns restricted securities with respect to which at least six months has elapsed since the later of the date the shares were acquired from us, or from an affiliate of ours, is entitled to sell within any three-month period a number of shares that does not exceed the greater of 1% of the then outstanding shares of our common stock and the average weekly trading volume in common stock during the four calendar weeks preceding such sale.
−Removed: Sales by affiliates under Rule 144 also are subject to certain manner-of-sale provisions and notice requirements and to the availability of current public information about us.
−Removed: Rule 701, as currently in effect, permits our employees, officers, directors, and consultants who purchase shares pursuant to a written compensatory plan or contract to resell these shares in reliance upon Rule 144, but without compliance with specific restrictions.
−Removed: Rule 701 provides that affiliates may sell their Rule 701 shares under Rule 144 without complying with the holding period requirement and that non-affiliates may sell their shares in reliance on Rule 144 without complying with the holding period, public information, volume limitation, or notice provisions of Rule 144.
−Removed: Subject to the availability of current public information about us, a person who is not an affiliate, who has not been an affiliate within three months prior to sale, and who beneficially owns restricted securities with respect to which at least six months has elapsed since the later of the date the shares were acquired from us, or from an affiliate of ours, is entitled to sell such shares under Rule 144 without regard to any of the volume limitations or other requirements described above.
−Removed: Sales of substantial amounts of our common stock in the public market could adversely affect the market price for our common stock.
−Removed: As of April 30, 2020, we had outstanding nonqualified stock options to purchase 200,667 shares of common stock under our incentive stock plans and other option agreements, 947,245 undelivered time-based restricted stock units, or RSUs, and 366,917 unearned performance stock units, or PSUs, under our incentive stock plans.
−Removed: We issued 380,209 of the 6,000,000 shares of common stock reserved for issuance under our 2011 Employee Stock Purchase Plan, or the ESPP, during fiscal 2020.
−Removed: We have registered for offer and sale the shares of common stock that are reserved for issuance pursuant to our incentive stock plans and available for issuance pursuant to the ESPP.
−Removed: Shares covered by such registration statements upon the exercise of stock options, the vesting of RSUs and PSUs or pursuant to the ESPP generally will be eligible for sale in the public market, except that affiliates will continue to be subject to volume limitations and other requirements of Rule 144.
−Removed: The issuance or sale of such shares could depress the market price of our common stock.
−Removed: We may issue securities that could dilute stockholder ownership and the net tangible book value per share of our common stock.
−Removed: We may decide to raise additional funds through public or private debt or equity financing to fund our operations.
−Removed: If we raise funds by issuing equity securities, the percentage ownership of our current stockholders will be reduced and the new equity securities may have rights superior to those of our common stock.
−Removed: We may not obtain sufficient financing on terms that are favorable to us.
−Removed: We may delay, limit, or eliminate some or all of our proposed operations if adequate funds are not available.
−Removed: We may also issue equity securities as consideration for acquisitions we may make.
−Removed: The issuance of additional common stock in the future, including shares that we may issue pursuant to our incentive stock plans and ESPP, may result in dilution in the net tangible book value per share of our common stock.
+Added: Actions of social activists could cause us to incur substantial costs, divert management’s attention and resources, and have an adverse effect on our business.
+Added: From time to time, we may be subject to informal private or public inquiries and/or formal proxy proposals by activists urging us to take certain corporate actions, many of which may not be aligned with the best financial or operational interests of our company.
+Added: Such activities may adversely affect our business in a number of ways, since responding to such inquiries or proposals can be costly, time consuming, disruptive to our operations, and could
+Added: meaningfully divert the attention of our resources, including those of our management team and our employees.
+Added: For example, such activities could require us to retain the services of various professionals to advise us on such matters, including legal, financial, and communications advisors, which could be costly.
+Added: In addition, certain stockholder inquiries and proposals could create perceived uncertainties or concerns as to our future operating environment, legislative environment, strategy direction, or leadership, and such uncertainties or concerns could result in the loss of potential business opportunities;
+Added: could harm our ability to attract new investors, customers, and employees;
+Added: could harm or disrupt our business and financial relationships;
+Added: could result in consumer boycotts of our products;
+Added: and could cause our stock price to experience periods of decline, volatility, or stagnation.
+Added: For example, gun-control activists could pressure our financial institutions, our insurance carriers, our customers, our vendors, or other businesses and institutions with whom we maintain relationships to cease doing business with us or adopt actions that are not in the best interests of our company, inconsistent with the legal operations of our business, or contrary to the beliefs of our core consumers.
+Added: In addition, our reputation could be irreparably damaged if our core consumers believe that we have adopted the gun control agenda of certain activists.
+Added: Such activities could have a negative impact on our business, operating results, and financial condition.
+Added: Risks Relating to Certain Business Matters and Securities Markets
Our operating results may involve significant fluctuations.
15 unchanged sentences
changes or anticipated changes in economic, social, political, legislative, and regulatory factors;
+Added: a material change in federal or state income tax regulations;
the outcome of any litigation;
20 unchanged sentences
Our success depends to a significant extent upon the continued services of our current management team, including Mark P.
−Removed: Smith and Brian D.
−Removed: Murphy, our Co-Presidents and Co-Chief Executive Officers.
−Removed: The loss of either of them, or one or more of our other key executives or employees, could have a material adverse effect on our business.
+Added: Smith, our President and Chief Executive Officer.
+Added: The loss of Mr.
+Added: Smith, or one or more of our other key executives or employees, could have a material adverse effect on our business.
Generally, we do not maintain “key person” insurance policies on the lives of any of our executive officers or any of our other employees.
8 unchanged sentences
Some of these characteristics may be more appealing to high-quality candidates than those which we have to offer.
−Removed: If we are not able to retain our current key personnel, or attract the necessary qualified key personnel to accomplish our business objectives, we may experience constraints that will impede significantly the achievement of our business objectives and our ability to pursue our business strategy.
+Added: If we are not able to retain our current key personnel, or attract the necessary qualified key personnel to accomplish our business objectives, we may experience constraints that will impede significantly the achievement of our business objectives
+Added: and our ability to pursue our business strategy.
New hires require significant training and, in most cases, take significant time before they achieve full productivity.
1 unchanged sentence
If our recruiting, training, and retention efforts are not successful or do not generate a corresponding increase in revenue, our business will be harmed.
+Added: Our governing documents and Nevada law could make it more difficult for a third party to acquire us and discourage a takeover.
+Added: Certain provisions of our articles of incorporation and bylaws and Nevada law make it more difficult for a third party to acquire us and make a takeover more difficult to complete, even if such a transaction were in our stockholders’ interest or might result in a premium over the market price for the shares held by our stockholders.
+Added: A material weakness in our internal control over financial reporting could result in material misstatements in our financial statements.
+Added: We are responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934.
+Added: As disclosed in Item 9A, “Controls and Procedures,” in fiscal 2020, we identified a material weakness in our control over financial reporting that was remediated in fiscal 2021.
+Added: A material weakness is defined as a deficiency, or combination of deficiencies in internal control over financial reporting, such that there was a reasonable possibility that a material misstatement of our annual or interim financial statements might not be prevented or detected on a timely basis.
+Added: If our remedial measures are insufficient to address the material weakness, or if additional material weaknesses in our internal control are discovered or occur in the future, our financial statements may contain material misstatements and we could be required to restate our financial statements.
+Added: Risks Relating to the Spin-off of our Outdoor Products and Accessories Business
+Added: We may be unable to achieve some or all of the benefits we expect to achieve from the spin-off.
+Added: On August 24, 2020, we completed the spin-off of our outdoor products and accessories business, American Outdoor Brands, Inc., or AOUT.
+Added: Although we believe that the spin-off will enhance our long-term value, we may not be able to achieve some or all of the anticipated benefits from the separation of our businesses and the spin-off may adversely affect our business.
+Added: Separating the businesses resulted in two independent, publicly traded companies, each of which is now a smaller, less diversified and more narrowly focused business than before the spin-off, which makes us more vulnerable to changing market and economic conditions.
+Added: Additionally, a potential loss of synergies from separating the businesses could negatively impact the balance sheet, profit margins, or earnings of both businesses and the combined value of the common stock of the two publicly traded companies may not be equal to or greater than the value of our common stock had the spin-off not occurred.
+Added: If we fail to achieve some or all of the benefits that we expect to achieve as a result of the spin-off, or do not achieve them in the time we expect, our results of operations and financial condition could be materially adversely affected.
+Added: The AOUT spin-off could result in substantial tax liability to us and our stockholders.
+Added: We received opinions of tax advisors substantially to the effect that, for U.S.
+Added: Federal income tax purposes, the spin-off and certain related transactions qualify for tax-free treatment under certain sections of the Internal Revenue Code.
+Added: However, if the factual assumptions or representations made by us in connection with the delivery of the opinions are inaccurate or incomplete in any material respect, including those relating to the past and future conduct of our business, we will not be able to rely on the opinions.
+Added: Furthermore, the opinions are not binding on the IRS or the courts.
+Added: If, notwithstanding receipt of the opinions, the spin-off transaction and certain related transactions are determined to be taxable, we would be subject to a substantial tax liability.
+Added: In addition, if the spin-off transaction is taxable, each holder of our common stock who received shares of AOUT in connection with the spin-off would generally be treated as receiving a taxable distribution of property in an amount equal to the fair market value of the shares received.
+Added: Even if the spin-off otherwise qualifies as a tax-free transaction, the distribution would be taxable to us (but not to our stockholders) in certain circumstances if future significant acquisitions of our stock or the stock of AOUT
+Added: are deemed to be part of a plan or series of related transactions that included the spin-off.
+Added: In this event, the resulting tax liability could be substantial.
+Added: In connection with the spin-off, we entered into a tax matters agreement with AOUT, pursuant to which AOUT agreed to not enter into any transaction that could cause any portion of the spin-off to be taxable to us without our consent and to indemnify us for any tax liability resulting from any such transaction.
+Added: In addition, these potential tax liabilities may discourage, delay, or prevent a change of control of us.
Unresolved Staff Comments
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.