<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) June 8, 1995
------------------------------
STURM, RUGER & COMPANY, INC.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-4776 IRS# 06-0633559
- -------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
Lacey Place, Southport, Connecticut 0649
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (203) 259-7843
----------------------------
Index to Exhibits on P. 4
Page 1 of 13
<PAGE> 2
ITEM 5. OTHER EVENTS.
On June 8, 1995, Sturm Ruger & Company announced that it will
collaborate with Callaway Golf Company in the construction of a new foundry for
the production of Great Big Bertha (TM) golf club heads. The new foundry will
be a "50-50" investment venture to increase the production capacity of Great
Big Bertha (TM) titanium golf club heads. While Callaway and Ruger will share
joint ownership, Ruger will have managerial and operational responsibility for
the foundry.
ITEM 7. EXHIBITS.
Page 2 of 13
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
STURM, RUGER & COMPANY, INC.
Date: June 19, 1995 By: /s/ John M. Kingsley, Jr.
---------------------------
Name: John M. Kingsley, Jr.
Title: Principal Financial and
Accounting Officer,
Executive Vice President
Page 3 of 13
<PAGE> 4
EXHIBIT INDEX
10.5 Formation Agreement of June 7, 1995 by and between Callaway Golf
Company and Sturm, Ruger & Company, Inc.
99.26 Press Release of June 8, 1995 of Callaway Golf Company and Sturm,
Ruger & Company, Inc.
Page 4 of 13
<PAGE> 1
Exhibit 10.5
FORMATION AGREEMENT
This Formation Agreement ("Agreement") is made and entered
into as of June 7, 1995 by and between Callaway Golf Company ("Callaway Golf"),
a California corporation, and Sturm, Ruger & Company, Inc. ("Ruger"), A
Delaware corporation. This Agreement covers the concepts and goals of the
parties with respect to the undertaking described herein, and contemplates that
the parties will cooperate and use their best efforts to implement the intent
of the parties, as expressed herein, through the execution of such additional
agreements and documents as are necessary.
RECITALS
A. Callaway Golf develops, designs, manufactures,
promotes and sells golf clubs and related products using Callaway Golf's trade
secrets, patents and other proprietary information.
B. Ruger has substantial expertise as a manufacturer of
cast titanium golf club heads, and has developed many processes and
formulations which it regards as proprietary and confidential (which will not
be disclosed by Ruger to Callaway Golf); and Ruger has agreed to expend
substantial sums to enlarge its existing foundry and to enter into a joint
venture with Callaway Golf to meet Callaway Golf's titanium club head
requirements on an exclusive basis.
C. Pursuant to an Exclusive Product Manufacturing
Agreement effective September 1, 1994 (the "Existing Manufacturing Agreement"),
Ruger is currently manufacturing exclusively for Callaway Golf titanium golf
club heads.
D. Callaway Golf and Ruger now desire to form a new
jointly owned entity to plan, finance, build and operate an additional foundry
capable of producing a minimum of 800,000 units annually of titanium golf club
heads (the "New Foundry"), such entity to be formed in accordance with the
terms and conditions of this Agreement.
NOW THEREFORE, the parties hereby agree as follows;
1. Formation. Ruger and Callaway Golf will take such
steps and execute and file such documents as are reasonably necessary to form a
new limited liability corporation under the laws of the state of Delaware (the
"Venture"), and to otherwise carry out the intents and purposes of this
Agreement. The Venture will be formed consistent with the following terms:
(a) Ruger and Callaway Golf, or their respective
wholly-owned subsidiaries, shall each have a 50% economic interest in the
Venture.
(b) Ruger and Callaway Golf shall each make contributions
to the Venture of up to $7,000,000. Callaway Golf shall make its contribution
in one or more installments paid within three (3) business days after Ruger
makes a call therefor. These funds will be used by the Venture directly for
the developing, designing, equipping and operating of the New Foundry. To the
extent that either party uses its own funds to procure equipment for the
Venture, or makes other out-of-
<PAGE> 2
pocket expenditures on behalf of the Venture, it will be entitled to receive
credit for such amounts in its Venture capital account, subject to
documentation and proof reasonably satisfactory to the other party.
(c) The profits, losses and distributable cash of the
Venture shall be allocated in accordance with the parties' ownership interest
(i.e., 50/50).
(d) As between Ruger and Callaway Golf, Ruger will have
managerial and operational responsibility for all activities of the Venture,
including without limitation the design, build-out and operation of the New
Foundry, as well as compliance with all applicable laws and regulations
applicable thereto. In performing these duties, Ruger will be held to the
standard of a general partner.
(e) Extraordinary transactions of a material nature will
require the consents of both Ruger and Callaway Golf (or their respective
wholly-owned subsidiaries), which contents will not be unreasonably withheld.
(f) No transfers of Venture interests will be permitted,
except that the parties will agree upon a buy-out provision that permits Ruger
to buy Callaway Golf's interest in the Venture at Ruger's sole option at such
time as determined by Ruger, for a price equal to Callaway Golf's capital
contribution plus a rate of return to be agreed upon, and otherwise on such
terms and conditions as shall be mutually agreeable to Ruger and Callaway Golf.
Ruger and Callaway Golf agree to use good faith efforts to negotiate such a
buy-out clause in connection with the preparation of the definitive agreements
relating to the formation of the Venture.
(g) Such other terms and conditions are as mutually
agreed upon by the parties.
(h) With the exception of Paragraphs 2.02, 2.04, 2.05, 3,
5, 6, 7, 8, 9, 11, 12, 13, 14 and 15, the Existing Manufacturing Agreement will
be canceled as of January 1, 1996.
2. Real Property. The New Foundry will be located on an
approximately ten acre site currently owned by Ruger and adjacent to the
existing Ruger Investment Casting foundry near Prescott, Arizona. This site
will be made available to the Venture by lease, sale or other transfer, the
terms of which will be negotiated in good faith by the parties as promptly as
reasonably practicable. If the property is contributed to the Venture, Ruger
will receive a credit to its capital account equal to its acquisition cost for
such property, which is understood to be approximately $500,000. The lease,
sale or other transfer documentation shall adequately protect the Venture and
Callaway Golf, including a full indemnity from Ruger in favor of the Venture
and Callaway Golf with respect to environmental and similar liabilities
attributable to acts or omissions occurring prior to the Venture taking over
such real property.
3. Manufacturing Agreement. Ruger and Callaway Golf will
enter into a Product Manufacturing Agreement that will run for a term
commencing July 1, 1995, and ending on December 31, 1998, unless renewed by
mutual agreement, pursuant to which:
2
<PAGE> 3
(a) During the term commencing January 1, 1996, Callaway
Golf will agree to order and accept a minimum of (i) 500,000 cast titanium golf
club heads annually or (ii) 2,000,000 cast titanium golf club heads in the
aggregate over the entire term, at Callaway Golf's choice, exclusively from
Ruger and the Venture cumulatively, and Ruger and the Venture will agree to
manufacture exclusively for Callaway Golf, all of Callaway Golf's requirements
for titanium golf club metal wood heads, whether drivers or fairway woods,
provided that Callaway Golf shall be free to seek and establish other sources
of titanium metal wood golf club heads in the event and to the extent that
Ruger and/or the Venture are unable for any reason to meet Callaway Golf's
requirements. Callaway Golf will provide Ruger and the Venture a production
schedule covering six months looking forward, and will provide Ruger and the
Venture a production schedule covering six months looking forward, and will
provide purchase orders 90 days before requested delivery. The Venture shall
be free to make non-golf club titanium products for other customers if orders
from Callaway Golf do not require the total capacity of the New Foundry for
titanium. So long as Callaway Golf places total orders, as between Ruger and
the Venture in the aggregate, for at least 900,000 pieces during each of the
three years 1996,1997, and 1998, neither Ruger nor the Venture shall design,
prototype, sample or manufacture any titanium golf club head or component part
thereof for anyone other than Callaway Golf without Callaway Golf's written
consent. Should Callaway Golf fail to place sufficient orders to maintain its
exclusivity (i.e., 900,000 units annually as between Ruger and the Venture in
the aggregate), and should Ruger and/or the Venture wish to undertake to
manufacture titanium golf club heads or components for others, then Ruger shall
so advise Callaway Golf, and Callaway Golf shall be permitted to maintain its
exclusivity upon payment of a reasonable amount reflecting the profit from the
other business, had it been accepted, to Ruger. The manufacturer of titanium
golf club heads or components by Ruger or the Venture for customers other than
Callaway Golf, if otherwise permitted, shall always be conditioned upon an
express agreement by such customer or customers that they shall not promote,
advertise or otherwise market their products based upon the fact that they are
manufactured by Ruger and/or the Venture.
(b) During the term, pricing for titanium metal wood golf
club heads supplied to Callaway Golf by Ruger and the Venture shall be the same
as, or consistent with, the existing pricing for titanium driver golf club
heads currently being supplied by Ruger to Callaway Golf (i.e., $81 per head
with cast sole plates and $73 per head with stamped sole plates), adjusted for
any manufacturing and/or material changes resulting from changes in
specification (e.g., the manufacturing of fairway woods instead of drivers) and
changes in manufacturing and/or material costs which Ruger and the Venture
cannot control. Both parties will have access to all cost data pertaining to
the manufacture of the metal wood golf club heads. It is understood that the
parties expect that once the Venture has achieved operational efficiency, the
selling price of golf club heads made and sold by the Venture should be
targeted to achieve a pre-tax profit of 25%, but in no event shall the price of
the metal wood club heads sold from the Venture to Callaway Golf be less than
$73.00 per head. It is also agreed between the parties that if the price
quoted to Callaway Golf is unacceptable, Callaway Golf shall be free to
purchase titanium golf club heads from any other source it chooses, and any
resulting unused capacity in the Venture may be used by the Venture to produce
titanium products for other customers, provided that to the extent any such
other titanium products made for other customers are golf club heads, the
Venture shall not sell them at a lower price than was quoted to Callaway Golf.
3
<PAGE> 4
(c) It will be within Ruger's discretion to determine in
what volume the productionrequirements for Callaway Golf's orders will be
allocated as between Ruger's existing Ruger Investment Casting operation and
the New Foundry, provided that Ruger and the Venture will make available to
Callaway Golf up to 100% of their total golf club head casting production
capacity if Callaway Golf's order level is sufficient to absorb that capacity.
(d) The Product Manufacturing Agreement will include
trade secret covenants substantially similar to the trade secret provisions of
the Existing Manufacturing Agreement, but such covenants shall be reciprocal.
Other terms and conditions of such Manufacturing Agreement
will, to the extent reasonably applicable, be based on the Existing
Manufacturing Agreement.
4. Commencement of New Foundry Development. Ruger
agrees that it will proceed as expeditiously as reasonably practicable with the
development of the New Foundry, including the prompt ordering of furnace
equipment. Upon request by Ruger, Callaway Golf agrees to advance to Ruger,
prior to formation of the Venture, that portion of its $7,00,000 maximum
contribution commitment to the Venture which is reasonably necessary to enable
Ruger to ensure that the development of the New Foundry proceeds as
expeditiously as possible. All such amounts advanced shall be credited toward
Callaway Golf's capital account in the Venture upon its formation.
5. Certain Accounting Matters. Ruger and Callaway Golf
agree that, in connection with Ruger's activities in the discharge of its
duties as manager of the Venture, only direct operating costs associated with
the operations of the New Foundry (including a reasonable allocation of
overhead and other expenses fairly attributable to the Venture) will be
allocated to the Venture, without any mark-up, management fee or similar
charge. Ruger agrees to maintain adequate books and records, and to provide
Callaway Golf (or its wholly-owned subsidiary) with access to such books and
records, in sufficient detail and format to enable Callaway Golf and its
auditors to audit the same.
6. Miscellaneous.
(a) Amendment; Waiver. This Agreement may be amended
only by a written instrument signed by the parties hereto. No failure to
exercise and no delay in exercising, on the part of either party, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law. The failure of any party to
insist upon a strict performance of any of the terms or provisions of this
Agreement, or to exercise any option, right or remedy herein contained, shall
not be construed as a waiver or as a relinquishment for the future of such
term, provision, option, right or remedy, but the same shall continue and
remain in full force and effect. No waiver by any party of any term or
provision of this Agreement shall be deemed to have been made unless expressed
in writing and signed by such party.
4
<PAGE> 5
(b) Assignment. No party shall assign or transfer or
permit the assignment ortransfer of this Agreement. This Agreement shall be
binding upon each party's successors and permitted assigns.
(c) Notices. All notices, reports, invoices and other
communications required or permitted hereunder to be given to or made upon any
party in writing, shall be addressed as provided below and shall be considered
as properly dispatched (i) if delivered in person; (ii) if sent by an express
courier delivery service which provides signed acknowledgments of receipt;
(iii) if deposited in the U.S. mail, certified or registered first class mail,
postage prepaid, return receipt requested; or (iv) if transmitted by facsimile
(upon receipt by sender thereof) and, if sent by facsimile, confirmed by
telephone contemporaneously to the person entitled to receive such notice or to
the person's office, or by dispatching a hard copy of such notice by the
methods set forth in (i), (ii) or (iii) above. All notices shall be effective
upon receipt. For the purposes of notice, addresses of the parties shall be as
set forth below, provided that either shall have the right to change its
address for notice to any other location by giving at least thirty (30) days
prior written notice to the other in the manner set forth above.
CALLAWAY GOLF: RUGER:
Callaway Golf Company Sturm, Ruger & Company, Inc.
2285 Rutherford Road Lacey Place
Carlsbad, California 92008 Southport, Connecticut 06490
Attn: Donald H. Dye Attn: William B. Ruger, Jr.
Fax: (619) 929-8120 Fax: (203) 254-2195
(d) Counterparts. This Agreement may be executed by the
parties hereto on separate counterparts and such counterparts, taken together,
shall be deemed to constitute one and the same instrument.
(e) Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be governed by and construed in
accordance with the laws of the State of California, without regard to choice
of law principles.
(f) Further Assurances. Each party agrees to execute any
and all documents and perform such other acts as may be necessary or expedient
to further the purposes of this Agreement.
(g) Time of Formation. The execution and delivery of
this Agreement represents a binding contractual commitment by the parties.
However, until such time as the Venture has actually been formed in accordance
with the requirements of Delaware law, no partnership, corporation or other
joint venture entity shall be considered to exist between Ruger and Callaway
Golf.
(h) Timing. Time is of the essence in this matter.
5
<PAGE> 6
IN WITNESS WHEREOF the parties have executed this Agreement as
of the day and year first above written.
CALLAWAY GOLF COMPANY, a California corporation
By: s/ Donald H. Dye
Title: President
STURM, RUGER & COMPANY, INC., a Delaware corporation
By: s/ William B. Ruger
Title: Chairman
6
<PAGE> 1
Exhibit 99.26
STURM, RUGER & COMPANY, INC.
SOUTHPORT, CONNECTICUT 06490 U.S.A.
TELEPHONE: (203) 259-7843 TWX: 710 459-3029
FOR IMMEDIATE RELEASE
For further information contact:
William B. Ruger, Jr. (603) 863-3300
John M. Kingsley, Jr. (203) 259-7843
Stephen L. Sanetti (203) 259-7843
SOUTHPORT, CT, June 9, 1995--Attached herewith is a joint press
release for Callaway Golf Company and Sturm, Ruger & Company, Inc., issued
yesterday.
<PAGE> 2
CALLAWAY GOLF AND STURM, RUGER & COMPANY ANNOUNCE FOUNDRY JOINT VENTURE
CARLSBAD, Calif., June 8/ PRNewswire/--Callaway Golf Company (NYSE:
ELY) and Sturm, Ruger & Company will collaborate in the construction of a new
foundry for the production of Great Big Bertha (TM) golf club heads, it was
announced today. The joint announcement was made by Ely Callaway, chairman,
Donald H. Dye, president of Callaway Golf and William R. Ruger. Sr., Chairman
of Sturm, Ruger & Company.
According to Callaway and Ruger, the new foundry represents a "50-50"
investment venture by the two pioneering companies, and will accommodate a
significant increase in the production capacity of Great Big Bertha (TM)
titanium golf club heads. Sturm, Ruger & Co. is currently the sole supplier of
the enlarged titanium heads used primarily for Callaway Golf Company's new
Great Big Bertha (TM) Driver.
Under this joint venture, Callaway Golf Company has committed to
purchase, and Sturm, Ruger & Company has committed to produce, a minimum
quantity of Great Big Bertha (TM) club heads costing Callaway a minimum of
approximately $150,000,000 over the years 1996 through 1998;
"As we anticipated nine months ago, the leading golf shops' and the
players' reception to the Great Big Bertha (TM) Driver has been unusually
strong even though this is probably the highest priced single golf club ever
sold in substantial quantities. Golfers at all skill levels, including a
substantial number of professionals, quickly see and appreciate the benefits of
the Great Big Bertha (TM) Driver's enlarged size, and other unique design
features," said Callaway.
Said Ruger, "We're very pleased to take this bold step with Callaway
Golf Company. The technologies developed in the manufacturing of our
high-quality firearms have been effectively applied to the Great Big Bertha
(TM) Driver. The extraordinary integrated effort represents to us a bold but
prudent step to substantially increase availability of this remarkable new golf
club."
Callaway Golf Company and Sturm, Ruger & Company will share joint
ownership while Ruger will have managerial and operational responsibility for
the foundry. It will be built on a 10-acre site owned by Ruger adjacent to its
existing Ruger Investment Casting Foundry near Prescott, Ariz.
-more-
2285 Rutherford Road * Carlsbad, CA 92008-8815
Telephone: (619) 931-1771 * Executive Fax: (619) 929-8120
<PAGE> 3
"It's exciting that our two innovative companies have come together
for a common goal," said Don Dye, president and COO of Callaway Golf Company.
"Both are very large in our respective fields. And both have the financial
resources and internal drive and dedication to produce the finest, highest
quality products possible. With the completion of this foundry next year, our
production capacity for Great Big Bertha (TM) golf club heads will
significantly increase. This move enables us to take even greater advantage of
Ruger's unparalleled expertise in precision titanium investment casting."
The Ruger (R) Titanium club head for the Great Big Bertha (TM) Driver
displaces a full 250cc. This is 25% larger than the Big Bertha (R) War Bird
(R), but is virtually equal in weight. Because of its unique design and larger
hitting surface, the Great Big Bertha (TM) Driver is more forgiving with
off-center shots.
This unique golf club features a new proprietary ultra lightweight
graphite shaft developed just for the Great Big Bertha (TM) golf club. In
addition, Callaway's patented War Bird (R) soleplate, S2H2(R) design concept --
"Bore through shaft combined with No-Neck (TM)" -- provides the golfer with a
greater degree of "feel", directional control, and ease of getting the ball
successfully airborne.
"We wanted to design, perfect and produce the most useful and
forgiving golf club, regardless of cost," said Callaway, discussing the
conception and development of the Great Big Bertha (TM) Driver. He explained
that titanium is much lighter than stainless steel, and was suited perfectly to
fit the new head design.
Callaway approached Sturm, Ruger & Company. which for 46 years has
manufactured a wide range of sporting firearms and has no equal in titanium
investment casting technology. Ruger(R) Titanium is amazingly free of defects,
extremely lightweight in nature, yet strong enough to perform successfully
under the tremendous force of impact between ball and club.
Callaway Golf Company is the world's largest manufacturer of high
quality, innovative golf clubs with sales of $448 million in 1994. Callaway's
primary products, in addition to the Great Big Bertha (TM) Driver, include the
Big Bertha (R) War Bird(R) Metal Woods, Big Bertha(R) Irons and the new Big
Bertha(R) Blade Putter. Sturm, Ruger & Company was founded in 1949 and today
is the largest manufacturer of firearms in the country, offering a full line of
sporting and hunting shotguns, bolt-action and auto-loading pistols and single
and double-action revolvers.
-0- 6/8/95
/NOTE TO EDITORS: Callaway Golf press releases are available at no
charge through PR Newswire's Company News On-Call fax service. For a menu of
available Callaway Golf press releases or to retrieve a specific release, call
800-758-5804, ext. 124825./
/CONTACT: Krista Mallory of Callaway Golf, 619-931-1771/
(ELY)
- 0 -
