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United States securities and exchange commission logo
May 12, 2020
Brian D. Murphy
President and Chief Executive Officer
American Outdoor Brands Spin Co.
18000 North Route Z
Columbia, MO 65202
Re: American Outdoor
Brands Spin Co.
Draft Registration
Statement on Form 10
Submitted April 15,
2020
CIK 0001808997
Dear Mr. Murphy:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments we may ask you to provide us information so that we
may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe that our comments apply to your facts and
circumstances or do
not believe that an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form 10 submitted April 15, 2020
Exhibit 99.1 - Information Statement
Our Amended and Restated Bylaws designate Delaware as the exclusive
forum for certain
litigation..., page 48
1. Disclosure here and on
page 128 indicates that your bylaws' exclusive forum
provision identifies
the chancery court of Delaware as the sole and exclusive forum for
some litigation,
including any derivative action or proceeding. Revise the disclosure to
make clear whether that
provision applies to actions arising under the Securities Act or the
Exchange Act. We note
that Section 27 of the Exchange Act creates exclusive federal
jurisdiction over all
suits brought to enforce any duty or liability created by the Exchange
Act or its rules and
regulations and that Section 22 of the Securities Act creates concurrent
Brian D. Murphy
FirstNameOutdoor Brands Spin Co.
American LastNameBrian D. Murphy
Comapany NameAmerican Outdoor Brands Spin Co.
May 12, 2020
Page 2
May 12, 2020 Page 2
FirstName LastName
jurisdiction for federal and state courts over all suits brought to
enforce any duty or
liability created by the Securities Act or its rules and regulations.
If the provision applies
to Securities Act claims, revise the disclosure to state that there is
uncertainty whether a
court would enforce the provision and that investors cannot waive
compliance with the
federal securities laws and their rules and regulations. If the
provision does not apply to
actions arising under the Securities Act or the Exchange Act, ensure
that the exclusive
forum provision in your governing documents states this clearly, or
tell us how you will
inform investors in future filings, including any amendment to this
information statement,
that the provision does not apply to any action arising under the
Securities Act or the
Exchange Act.
Treatment of Outstanding Equity Compensation Awards, page 51
2. Please revise your disclosure to further explain the basis for
adjusting the SWBI awards
by either the stockholder method or the employer method. Please
explain in more detail
the differences in the intrinsic value of the SWBI awards such that
different adjustment
methods are necessary. Please also clarify if anyone other than the
persons identified in
the table will be impacted by this system.
Selected Historical Combined Financial Data
Non-GAAP Financial Measures, page 69
3. Refer to your discussion paragraph of Adjusted EBITDAS on page 69 and
Item
10(e)(1)(i)(C) of Regulation S-K. Please expand to explain how this
measure will
improve an investor's understanding of underlying performance trends.
Also, explain how
management uses this non-GAAP measure in an understanding of operating
results and
ongoing performance of the underlying performance trends, what is
meant by your
underlying performance trends, and better explain why you make
material adjustments
other than interest, taxes, or depreciation and amortization. Further,
in the last sentence of
the introductory paragraph, please revise to provide a distinction
between your use of both
the GAAP and non-GAAP financial measures in evaluating your financial
performance.
In this regard, the primary financial measure used should be GAAP net
income/(loss),
with Adjusted EBITDAS as a supplemental non-GAAP performance measure.
Overview and Highlights, page 71
4. We note you focus on your brands and the establishment of product
categories in which
you believe your brands will resonate strongly with the activities and
passions of
consumers. Further, in focusing on your brands and the operations of
your business, you
organize your creative, product development, sourcing, and e-commerce
teams into four
brand lanes, each of which focuses on one of four distinct consumer
segments, Marksman,
Defender, Harvester, and Adventurer, with each of your brands included
in one of the
brand lanes. Also, on page 93 you disclose that you have dedicated
management teams
assigned to each brand lane. We note that the SWBI operations to be
transferred to you in
the separation were considered a separate business segment of SWBI.
However, in light
Brian D. Murphy
FirstNameOutdoor Brands Spin Co.
American LastNameBrian D. Murphy
Comapany NameAmerican Outdoor Brands Spin Co.
May 12, 2020
Page 3
May 12, 2020 Page 3
FirstName LastName
of the planned spin off, tell us any reconsideration given to
reflecting your four brand
lanes into four separate operating and reportable business segments.
Your response
should address ASC 280-10-50-1 and ASC 280-10-50-10 through 12.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 74
5. In your analysis of results of operations, you often attribute changes
in line items to a
combination of several different factors. For example, you disclose
that fiscal 2019 net
sales compared with fiscal 2018 increased "primarily because of higher
related party sales
for electro-optics products; market acceptance of newly introduced
shooting, hunting, and
cutlery products over the past several years; increased revenue from
strategic retailers,
including large online retailers that had large bulk orders with
discounted pricing in fiscal
2019; and inorganic revenue from the BUBBA acquisition; partially
offset by lower third-
party OEM and commercial electro-optics product revenue as a result of
a general decline
in firearm market conditions mentioned above." When you list multiple
factors that
contributed to line item changes, please revise your disclosure to
quantify, if possible, the
impact of each material factor that you discuss. Refer to Item
303(a)(3) of Regulation S-
K and Section III.D of Release No. 33-6835.
Election of Directors, page 124
6. Disclose whether holders of shares of common stock are entitled to
cumulative voting
rights in the election of directors.
Where You Can Find More Information, page 129
7. We note the "not necessarily complete" language relating to statements
in the information
statement concerning any contracts or other documents filed as
exhibits. Revise the
disclosure to clarify that statements in the information statement
concerning any contracts
or other documents filed as exhibits include the material provisions
of the contracts or
other documents.
Index to Combined Financial Statements, page F-1
8. We note that the draft registration statement on Form 10 omits the
required auditors'
report of independent registered public accounting firm pursuant to
Rule 2-02 of
Regulation S-X. In the next submission, please provide an auditors'
report covering the
financial statements that are included in the Form 10. Please revise
or advise.
9. We note from your disclosure in Note 14 that sales to related parties
to SWBI totaled
$17.5 million, which represented 10% of total net sales for fiscal
2019. Revise to disclose
amounts of material related party transactions on the face of the
balance sheet, statement
of comprehensive income, or statement of cash flows pursuant to Rule
4-08(k) of
Regulation S-X.
Brian D. Murphy
American Outdoor Brands Spin Co.
May 12, 2020
Page 4
Note 1. Background, Basis of Presentation, and Summary of Significant
Accounting Policies
Significant Accounting Policies, Revenue Recognition, page F-6
10. Refer to your discussion of revenue recognition on page F-11. Please
expand to provide a
disaggregation of your revenues by the four brand lanes, Marksman,
Defender, Harvester,
and Adventurer. Also, provide your revenues by geographic region and
classes of trade,
that is, online retailers, specialty retailers, dealers, distributors,
and direct to consumer.
Refer to ASC 606-10-50-5 and also to ASC 606-10-55-91 where categories of
disaggregation for your revenues may include by type of good or service,
that is, major
product lines, timing of transfer of goods or services, and by sales
channels.
You may contact Beverly A. Singleton, Staff Accountant, at (202)
551-3328 or Melissa
Raminpour, Accounting Branch Chief, at (202) 551-3379 if you have questions
regarding
comments on the financial statements and related matters. Please contact Edward
M. Kelly,
Senior Counsel, at (202) 551-3728 or Erin M. Purnell, Senior Counsel, at (202)
551-3454 with
any other questions.
Sincerely,
FirstName LastNameBrian D. Murphy
Division of
Corporation Finance
Comapany NameAmerican Outdoor Brands Spin Co.
Office of
Manufacturing
May 12, 2020 Page 4
cc: Robert S. Kant, Esq.
FirstName LastName