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Sturm, Ruger & Company, Inc. Reports Second Quarter 2012 Fully Diluted Earnings Of 91¢ Per Share

The Quarterly Report on Form 10-Q is available on the SEC website at www.sec.gov and the Ruger website at www.ruger.com/corporate. Investors are urged to read the complete Form 10-Q to ensure that they have adequate information to make informed investment judgments.

About Sturm, Ruger

Sturm, Ruger was founded in 1949 and is one of the nation’s leading manufacturers of high-quality firearms for the commercial sporting market. Sturm, Ruger is headquartered in Southport, CT, with manufacturing facilities located in Newport, NH and Prescott, AZ.

The Company may, from time to time, make forward-looking statements and projections concerning future expectations. Such statements are based on current expectations and are subject to certain qualifying risks and uncertainties, such as market demand, sales levels of firearms, anticipated castings sales and earnings, the need for external financing for operations or capital expenditures, the results of pending litigation against the Company, the impact of future firearms control and environmental legislation, and accounting estimates, any one or more of which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to publish revised forward-looking statements to reflect events or circumstances after the date such forward-looking statements are made or to reflect the occurrence of subsequent unanticipated events.

STURM, RUGER & COMPANY, INC.
   

Condensed Balance Sheets (Unaudited)

(Dollars in thousands, except share data)
 
   

June 30,2012
 

December 31,2011
 
 
Assets
 
Current Assets
Cash and cash equivalents $ 75,960 $ 81,056
Short-term investments 19,994 -
Trade receivables, net 47,332 42,225

Gross inventories

47,796

49,004
Less LIFO reserve (37,384 ) (37,476 )
Less excess and obsolescence reserve     (1,202 )     (1,311 )
Net inventories     9,210       10,217  
 
Deferred income taxes 6,753 5,776
Prepaid expenses and other current assets     859       6,968  
Total Current Assets 160,108 146,242
 
Property, plant and equipment 181,161 169,142
Less allowances for depreciation     (122,629 )     (116,195 )
Net property, plant and equipment     58,532       52,947  

Deferred income taxes

405

32
Other assets     11,364       7,289  
Total Assets   $ 230,409     $ 206,510  

STURM, RUGER & COMPANY, INC.
 

Condensed Balance Sheets (Unaudited) (Continued)

(Dollars in thousands, except share data)
 
   

June 30,2012
 

December 31,2011
   
 
Liabilities and Stockholders’ Equity
 
Current Liabilities
Trade accounts payable and accrued expenses $ 26,946 $ 28,592
Product liability 1,010 1,305
Employee compensation and benefits 14,212 14,882
Workers’ compensation 4,846 4,600
Income taxes payable     1,194       217  
Total Current Liabilities 48,208 49,596
 
Accrued pension liability 19,122 19,082
Product liability accrual 370 441
 
Contingent liabilities -- --

 

Stockholders’ Equity
Common Stock, non-voting, par value $1:
Authorized shares 50,000; none issued -- --
Common Stock, par value $1:
Authorized shares – 40,000,000
2012 – 23,459,506 issued,

19,160,072 outstanding
2011 – 23,382,566 issued,
19,083,132 outstanding 23,460 23,383
Additional paid-in capital 12,473 10,454
Retained earnings 192,203 168,981
Less: Treasury stock – at cost
2012 – 4,299,434 shares
2011 – 4,299,434 shares (37,884 )

(37,884

)
Accumulated other comprehensive loss     (27,543 )     (27,543 )
Total Stockholders’ Equity     162,709       137,391  
Total Liabilities and Stockholders’ Equity   $ 230,409     $ 206,510  

STURM, RUGER & COMPANY, INC.
   

Condensed Statements of Income and Comprehensive Income (Unaudited)

(Dollars in thousands, except per share data)
 
    Three Months Ended   Six Months Ended

June 30,
  July 2,

June 30,
  July 2,

2012
  2011  

2012
  2011
 
 
Net firearms sales $ 118,147 $ 78,471 $ 228,934 $ 152,912
Net castings sales     1,422       1,151       2,972       2,151  
Total net sales 119,569 79,622 231,906 155,063
 
Cost of products sold 74,435 51,157 144,979 102,604
                 
Gross profit     45,134       28,465       86,927       52,459  
 
Operating expenses:
Selling 9,107 6,468 20,107 13,380
General and administrative     7,728       4,935       14,106       9,560  
Total operating expenses     16,835       11,403       34,213       22,940  
 
Operating income     28,299       17,062       52,714       29,519  
 
Other income:
Interest expense, net (21 ) (13 ) (44 ) (33 )
Other income, net     316       114       495       290  
Total other income, net     295       101       451       257  
 
Income before income taxes 28,594 17,163 53,165 29,776
 
Income taxes     10,580       6,350       19,671       11,017  
 
Net income and comprehensive income   $ 18,014     $ 10,813     $ 33,494     $ 18,759  
 
Basic earnings per share   $ 0.94     $ 0.57     $ 1.75     $ 1.00  
 
Fully diluted earnings per share   $ 0.91     $ 0.56     $ 1.71     $ 0.99  
 
Cash dividends per share   $ 0.324     $ 0.097     $ 0.536     $ 0.147  

STURM, RUGER & COMPANY, INC.
 

Condensed Statements of Cash Flows (Unaudited)

(Dollars in thousands)
 
    Six Months Ended
  June 30,

2012
  July 2,

2011
 
Operating Activities
Net income $ 33,494 $ 18,759
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation 6,774 5,860
Slow moving inventory valuation adjustment (64 ) (176)
Stock-based compensation 2,104 1,247
Gain on sale of assets (13 ) (7)
Deferred income taxes (1,350 ) 1,111
Changes in operating assets and liabilities:
Trade receivables (5,107 ) (292)
Inventories 1,071 5,954
Trade accounts payable and accrued expenses (1,400 ) 2,298
Employee compensation and benefits (670 ) (580)
Product liability (366 ) 135
Prepaid expenses, other assets and other liabilities 2,054 (3,434)
Income taxes payable     977       1,499
Cash provided by operating activities     37,504       32,374
 
Investing Activities
Property, plant and equipment additions (12,339 ) (7,719)
Proceeds from sale of assets 13 16
Purchases of short-term investments (29,993 ) (47,496)
Proceeds from maturities of short-term investments     9,999       35,496
Cash used for investing activities     (32,320 )     (19,703)
 
Financing Activities
Tax benefit from exercise of stock options 1,037 1,441
Repurchase of common stock

-

(1,999)

Payment of employee withholding tax related to share-based compensation

(1,045
)

(2,432)
Dividends paid     (10,272 )     (2,775)
Cash used for financing activities     (10,280 )     (5,765)
 
(Decrease) Increase in cash and cash equivalents (5,096 ) 6,906
 
Cash and cash equivalents at beginning of period 81,056 5,132
         
Cash and cash equivalents at end of period   $ 75,960     $ 12,038

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