<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number 0-4776
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STURM, RUGER & COMPANY, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 06-0633559
- --------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Lacey Place, Southport,
Connecticut 06490
- --------------------------------- ------------------------
(Address of principal executive (Zip code)
offices)
(203) 259-7843
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
requirements for the past 90 days. Yes |X| No |_|
The number of shares outstanding of the issuer's common stock as of April
30, 1998: Common Stock, $1 par value - 26,910,800.
Page 1 of 18
<PAGE> 2
INDEX
STURM, RUGER & COMPANY, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets--March 31, 1998 and
December 31, 1997 3
Condensed consolidated statements of income--Three months ended
March 31, 1998 and 1997 5
Condensed consolidated statements of cash flows--Three months
ended March 31, 1998 and 1997 6
Notes to condensed consolidated financial statements--March 31, 1998 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
STURM, RUGER & COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- -------------
(unaudited) (Note)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,078 $ 4,488
Short-term investments 51,455 45,484
Trade receivables, less allowances
for doubtful accounts ($1,111 and
$1,001) and discounts ($546 and $2,842) 21,075 21,118
Inventories:
Finished products 12,108 12,708
Materials and products in process 31,134 32,841
--------- ---------
43,242 45,549
Deferred income taxes 7,690 7,224
Prepaid expenses and other assets 772 1,344
--------- ---------
TOTAL CURRENT ASSETS 130,312 125,207
PROPERTY, PLANT AND EQUIPMENT 140,772 139,201
Less allowances for depreciation (85,933) (83,538)
--------- ---------
54,839 55,663
DEFERRED INCOME TAXES 4,488 4,701
OTHER ASSETS 14,257 14,223
--------- ---------
$ 203,896 $ 199,794
========= =========
</TABLE>
3
<PAGE> 4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
STURM, RUGER & COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
(unaudited) (Note)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable and accrued expenses $ 3,903 $ 4,628
Product safety modifications 823 870
Product liability 3,000 3,000
Employee compensation 12,042 10,303
Workers' compensation 4,774 5,063
Income taxes 6,274 3,792
--------- ---------
TOTAL CURRENT LIABILITIES 30,816 27,656
PRODUCT LIABILITY ACCRUAL 18,591 19,218
CONTINGENT LIABILITIES --Note 7 -- --
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; issued and
outstanding 26,910,800 and 26,922,800 26,911 26,923
Additional paid-in capital 2,434 2,632
Retained earnings 125,289 123,510
Additional minimum pension liability (145) (145)
--------- ---------
154,489 152,920
--------- ---------
$ 203,896 $ 199,794
========= =========
</TABLE>
Note:
The balance sheet at December 31, 1997 has been derived from the audited
financial statements at that date but does not include all the information
and footnotes required by generally accepted accounting principles for
complete financial statements.
See notes to condensed consolidated financial statements.
4
<PAGE> 5
STURM, RUGER & COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
----------------------------
<S> <C> <C>
Firearms sales $ 37,013 $ 42,152
Castings sales 21,508 12,936
--------- ---------
Net sales 58,521 55,088
Cost of products sold 42,197 38,352
--------- ---------
16,324 16,736
Expenses:
Selling 3,306 3,159
General and administrative 1,737 876
--------- ---------
5,043 4,035
--------- ---------
11,281 12,701
Other income-net 756 169
--------- ---------
INCOME BEFORE INCOME TAXES 12,037 12,870
Income taxes 4,875 5,122
--------- ---------
NET INCOME $ 7,162 $ 7,748
========= =========
Basic and diluted earnings per share $ 0.27 $ 0.29
--------- ---------
Cash dividends per share $ 0.20 $ 0.20
--------- ---------
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
STURM, RUGER & COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
----------------------------
<S> <C> <C>
CASH PROVIDED BY OPERATING ACTIVITIES $ 14,725 $ 23,722
INVESTING ACTIVITIES
Property, plant and equipment additions (1,571) (1,065)
Purchases of short-term investments (35,904) (43,313)
Proceeds from sales or maturities of
short-term investments 29,933 31,369
Investment in joint venture -- (54)
--------- ---------
Cash used in investing activities (7,542) (13,063)
--------- ---------
FINANCING ACTIVITIES
Dividends paid (5,383) (5,383)
Repurchase of Common Stock (210) --
--------- ---------
Cash used by financing activities (5,593) (5,383)
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 1,590 5,276
Cash and cash equivalents at beginning
of period 4,488 2,729
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 6,078 $ 8,005
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE> 7
STURM RUGER & COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1998
NOTE 1--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all adjustments, consisting of normal
recurring accruals, considered necessary for a fair presentation of the results
of the interim periods. Operating results for the three months ended March 31,
1998 are not necessarily indicative of the results to be expected for the full
year ending December 31, 1998. For further information refer to the consolidated
financial statements and footnotes thereto included in the Sturm, Ruger &
Company, Inc. Annual Report on Form 10-K for the year ended December 31, 1997.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
Organization: Sturm, Ruger & Company, Inc. ("Company") is principally
engaged in the design, manufacture, and sale of firearms and investment
castings. The Company's design and manufacturing operations are located in the
United States. Substantially all sales are domestic. The Company's firearms are
sold through a select number of distributors to the sporting and law enforcement
markets. Investment castings are sold either directly to or through
manufacturers' representatives to companies in a wide variety of industries.
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Principles of Consolidation: The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
NOTE 3--INVENTORIES
An actual valuation of inventory under the LIFO method can be made only at
the end of each year based on the inventory levels and costs at that time.
Accordingly, interim LIFO calculations must necessarily be based on management's
estimates of expected year-end inventory levels and costs. Because these are
subject to many forces beyond management's control, interim results are subject
to the final year-end LIFO inventory valuation.
7
<PAGE> 8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)--CONTINUED
NOTE 4--INCOME TAXES
The Company's effective tax rate differs from the statutory tax rate
principally as a result of state income taxes. Total income tax payments during
the three months ended March 31, 1998 and 1997 were $2.6 million and $0.4
million, respectively.
NOTE 5--BASIC AND DILUTED EARNINGS PER SHARE
Basic and diluted earnings per share is based upon the weighted average
number of common shares outstanding during the period.
NOTE 6--COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income". SFAS 130 establishes new
rules for the reporting and display of comprehensive income and its components;
however, the adoption of SFAS 130 had no impact on the Company's net income or
shareholders' equity. SFAS 130 requires that all non-owner changes in equity,
such as additional minimum pension liability, which are not included in net
income, be included in other comprehensive income. As there were no non-owner
changes in equity during the first quarter of 1998 and 1997, total comprehensive
income equals net income, or $7.2 million and $7.7 million, respectively.
NOTE 7--CONTINGENT LIABILITIES
The Company is a defendant in approximately 15 lawsuits involving product
liability claims which allege defective product design and is aware of other
product liability claims. These lawsuits and claims are based principally on the
theory of "strict liability" but also may be based on negligence, breach of
warranty and other legal theories. In many of the lawsuits, punitive damages, as
well as compensatory damages, are demanded. Aggregate claimed amounts presently
exceed product liability accruals and, if applicable, insurance coverage.
Management believes that, in every case, the allegations of defective product
design are unfounded, and that the shooting and any results therefrom were due
to negligence or misuse of the firearm by the claimant or a third party and that
there should be no recovery against the Company.
The Company's management monitors the status of known claims and the
product liability accrual, which includes amounts for asserted and unasserted
claims. While it is difficult to forecast the outcome of these claims, in the
opinion of management, after consultation with special and corporate counsel,
the outcome of these claims will not have a material adverse effect on the
results of operations or financial condition of the Company.
The Company has reported all lawsuits instituted against it through
December 31, 1997 and the results of those lawsuits, where terminated, to the
S.E.C. on its Form 10-K and Form 10-Q reports, to which reference is hereby
made.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Consolidated net sales of $58.5 million were achieved by the Company in
the first quarter of 1998. This represents an increase of $3.4 million or 6.2%
from the first quarter of 1997 consolidated net sales of $55.1 million.
Firearms segment net sales were $37.0 million in the first quarter of 1998
compared to $42.2 million in the corresponding 1997 period, a decrease of $5.2
million or 12.2%. Firearms unit shipments decreased 16.7% reflecting continuing
reduced overall market demand, particularly in the industry product categories
of rifles and revolvers, which are manufactured in the Newport, New Hampshire
facility and certain long guns which are manufactured in the Company's Prescott,
Arizona facility. Shipments of certain models, including the Ruger 77/50
Muzzleloading Rifle and the Ruger 77/44 Bolt Action Rifle, new models introduced
in the latter half of 1997, continue to experience a heightened level of demand.
The Company continues to employ three sales incentive programs which were in
effect in 1997. Two of these programs provide discounts of up to 10% of the
sales price of selected pistol and revolver models, while another provides a 1%
overall discount for customers meeting specific annual sales targets. In 1998
one new program was introduced offering an additional 1% for distributors
qualifying for the aforementioned three programs.
Casting segment net sales increased by 66.3% from $12.9 million in the
first quarter of 1997 to $21.5 million in the first quarter of 1998. This was
primarily due to increased shipments of titanium golf club heads to Callaway
Golf Company, Inc. ("Callaway Golf"). The Company anticipates that its shipments
to Callaway Golf may not continue at the current level for the remainder of
1998. However, the Company has begun shipping limited quantities to other golf
club manufacturers in the first quarter of 1998. Increased shipments to these
other golf club manufacturers may offset the anticipated decline in sales to
Callaway Golf.
Consolidated cost of products sold for the first quarter of 1998 was $42.2
million compared to $38.4 million for the first quarter of 1997, an increase of
$3.8 million or 10.0%. This was primarily attributable to increased sales
activity by the investment casting segment, partially offset by lower firearms
segment sales, as discussed above.
Gross profit as a percentage of net sales decreased to 27.9% in the first
quarter of 1998 from 30.4% in the comparable 1997 period. The decrease is due to
the reduced overall volume of business in the firearms segment and pricing
pressures in both the firearms and the castings segments. Although variable
costs were reduced during the first quarter of 1998 in response to the reduction
in firearms sales, the fixed costs associated with operating the Company's
firearms facilities negatively impacted gross profit.
Selling, general & administrative expenses increased by 25.0% to $5.0
million in the first quarter of 1998 from $4.0 million in the first quarter of
1997. Selling, general & administrative expense as a percentage of sales in the
first three months of 1998 of 8.6% is consistent with the 8.5% ratio for the
year ended December 31, 1997. The increase in expense from the first quarter of
1997 reflects higher employee benefit plan expenses and increased professional
service fees during the first three months of 1998.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--CONTINUED
Other income increased $0.6 million in the first quarter of 1998 compared
to the corresponding 1997 period due to increased interest income resulting from
greater Treasury bill investments and the absence of losses related to Antelope
Hills, a former joint venture of the Company, which were recorded in the first
quarter of 1997.
The effective income tax rate increased to 40.5% in the first quarter of
1998 from 39.8% in the comparable 1997 quarter due to higher state income taxes.
As a result of the foregoing factors, consolidated net income for the
first quarter of 1998 decreased to $7.2 million from $7.7 million for the first
quarter of 1997 representing a decrease of $0.5 million or 7.6%.
Financial Condition
At March 31, 1998, the Company had cash, cash equivalents and short-term
investments of $57.5 million, working capital of $99.5 million and a current
ratio of 4.2 to 1.
Cash provided by operating activities was $14.7 million and $23.7 million
for the three months ended March 31, 1998 and 1997, respectively. This change in
cash flows is principally a result of significantly greater reductions in
inventories and trade receivables in 1997 than in 1998.
The Company follows an industry-wide practice of offering a "dating plan"
to its firearms customers on selected products, which allows the purchasing
distributor to buy the products commencing in December, the start of the
Company's dating plan year, and pay for them on extended terms. Discounts are
offered for early payment. The dating plan provides a revolving payment plan
under which payments for all shipments made during the period December through
February have to be made by April 30. Generally, shipments made in subsequent
months have to be paid for within approximately 90 days. Dating plan receivable
balances were $6.1 million at March 31, 1998 as compared to $5.8 million at
March 31, 1997. The Company has reserved the right to discontinue the dating
plan at any time and has been able to finance this dating plan from internally
generated funds provided by operating activities.
Capital expenditures during the three months ended March 31, 1998 totaled
$1.6 million. For the past two years capital expenditures averaged approximately
$1.5 million per quarter. In 1998, the Company expects to spend approximately $9
million on capital expenditures to upgrade and modernize equipment at all of its
divisions. The Company finances, and intends to continue to finance, all of
these activities with funds provided by operations.
For the three months ended March 31, 1998 dividends paid totaled $5.4
million. This amount reflects the regular quarterly dividend of $.20 per share
paid on March 15, 1998. Future dividends depend on many factors, including
internal estimates of future performance and the Company's need for funds.
10
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--CONTINUED
Historically, the Company has not required external financing. Based on
its cash flow and unencumbered assets, the Company believes it has the ability
to raise substantial amounts of short-term or long-term debt. The Company does
not anticipate any need for external financing through 1998.
The purchase of firearms is subject to federal, state and local
governmental regulations. The basic federal laws are the National Firearms Act
and the Federal Firearms Act. These laws generally prohibit the private
ownership of fully automatic weapons and place certain restrictions on the
interstate sale of firearms unless certain licenses are obtained. The Company
does not manufacture fully automatic weapons, other than for the law enforcement
market, and holds all necessary licenses under these federal laws. From time to
time, congressional committees review proposed bills relating to the regulation
of firearms. These proposed bills generally seek either to restrict or ban the
sale and, in some cases, the ownership of various types of firearms, or to
impose a mandatory waiting period prior to their purchase. Several states
currently have laws in effect similar to the aforementioned legislation.
The "Brady Law" mandates a nationwide 5-day waiting period prior to the
purchase of a handgun. The Company believes that, because its customers are
sportsmen, hunters, gun collectors and law enforcement agencies and since 26
states had previously enacted some form of a waiting period prior to purchase,
the "Brady Law" has not had a significant effect on the Company's sales of
firearms. The Crime Bill took effect on September 13, 1994, but none of the
Company's products were banned as so-called "assault weapons." To the contrary,
all the Company's then-manufactured long guns were exempted by name as
"legitimate sporting firearms." A separate provision of the Crime Bill
prohibited production or sale of detachable magazines of over 10-round capacity
manufactured after September 13, 1994, other than to law enforcement. Only two
such magazines (9mm and .40 caliber) were commercially sold by the Company, and
production of substitute 10-round magazines in these calibers (approved by the
BATF) began immediately. The Company remains strongly opposed to laws which
would unduly restrict the rights of law-abiding citizens to acquire firearms for
legitimate purposes. The Company believes that the private ownership of firearms
is guaranteed by the Second Amendment to the United States Constitution and that
the widespread private ownership of firearms in the United States will continue.
However, there can be no assurance that the regulation of firearms will not
become more restrictive in the future and that any such restriction would not
have a material adverse effect on the business of the Company.
The Company has expended significant amounts of financial resources and
management time in connection with product liability litigation. While it is
difficult to forecast the outcome of litigation or the timing of costs,
management believes, after consultation with counsel, that this litigation will
not have a material adverse effect on the financial condition of the Company.
The Company is not aware of any adverse trends in its litigation as a whole.
In the normal course of its manufacturing operations, the Company is
subject to occasional governmental proceedings and orders pertaining to waste
disposal, air emissions and water discharges into the environment. The Company
believes that it is generally in compliance with applicable environmental
regulations and the outcome of such proceedings and orders will not have a
material adverse effect on its business.
11
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--CONTINUED
The Company expects to realize its deferred tax assets through tax
deductions against future taxable income or carry back against taxes previously
paid.
Inflation's effect on the Company's operations is most immediately felt in
cost of products sold because the Company values inventory on the LIFO basis.
Generally under this method, the cost of products sold reported in the financial
statements approximates current costs, and thus, reduces distortion in reported
income which would result from the slower recognition of increased costs when
other methods are used. The use of historical cost depreciation has a beneficial
effect on cost of products sold. The Company has been affected by inflation in
line with the general economy.
Some of the Company's computer programs were written using two digits
rather than four to define the applicable year. As a result, those computer
programs have time-sensitive software that recognizes a date using "00" as the
year 1900 rather than the year 2000. This could cause a system failure or
miscalculation causing disruptions of operations, including a temporary
inability to process transactions, send invoices, or engage in similar normal
business activities. The Company is in the process of assessing the need to
modify or replace portions of its software or hardware so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter. Current results of this assessment continue to indicate that the
impact of this replacement or modification will be immaterial to the Company's
future operating results and cash flows.
As of January 1, 1998, the Company adopted Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income". SFAS 130 establishes new
rules for the reporting and display of comprehensive income and its components;
however, the adoption of SFAS 130 had no impact on the Company's net income or
shareholders' equity. SFAS 130 requires that all non-owner changes in equity,
which are not included in net income, be included in other comprehensive income.
As there were no non-owner changes in equity during either the first quarter of
1998 and 1997, total comprehensive income equals net income, or $7.2 million and
$7.7 million, respectively.
In June 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" which establishes standards for the way that public business
enterprises report information about operating segments. SFAS 131 is effective
for financial statements for fiscal years beginning after December 15, 1997, and
therefore the Company will adopt the new requirements before the end of 1998.
SFAS 131 does not need to be applied to interim financial information in the
year of adoption. Management has not completed its review of SFAS 131, but does
not anticipate that the adoption of this statement will result in the
identification of additional segments.
In October 1997, the FASB issued SFAS No. 132, "Employer's Disclosures
about Pensions and Other Post Retirement Benefits" which changes financial
statement disclosure requirements for pension and other post retirement
benefits. While the Company is studying the application of these disclosure
provisions, it does not expect SFAS 132 to affect its financial position or
results of operations.
12
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--CONTINUED
Forward-Looking Statements and Projections
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 (including those from titanium golf club components), the need for
external financing for operations or capital expenditures, the results of
pending litigation against the Company, and the impact of future firearms
control, environmental legislation, and computer systems replacement and
modification, 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 and the Company undertakes no obligation to republish revised
forward-looking statements to reflect events or circumstances after the date
such forward-looking statements are made or to reflect the occurrence of
unanticipated events.
13
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
"Note 7--Contingent Liabilities" presented in Part I is incorporated herein by
reference.
The following two cases were instituted against the Company during the
three months ended March 31, 1998, which involved significant demands for
compensatory and/or punitive damages:
Terry Tate v. Sturm, Ruger & Company, Inc., in the 281st Judicial District
Court of Harris County, Texas. The complaint, which was served on January 9,
1998, alleges that on or around November 17, 1996, a revolver manufactured by
the Company accidentally discharged, resulting in injuries to his arm. Amount in
demand is not stated.
Daniel L. Hutchinson v. Sturm, Ruger & Company, Inc., in the Commonwealth
of Massachusetts, Malden District Court. The complaint, which was filed on
January 19, 1998, alleges that on or around October 23, 1994, a pistol
manufactured by the Company discharged, resulting in injuries to his right
thigh. General damages not exceeding $25,000 are in demand.
During the three months ending March 31, 1998, the previously reported
case of Siblerud v. Company (MT), involving an accidental death claim arising
from an allegedly dropped "old model" Ruger single action revolver, was tried to
a defense verdict on January 13, 1998. The jury found that the firearm was not
defective in design. The case was settled at the conclusion of the trial, both
sides waiving appeal.
The previously reported case of Southward v. Company (IL) was dismissed by
the trial court on January 6, 1998. No appeal was filed.
The dismissal of the previously reported case of Cummins v. Company (IA)
on October 15, 1997 was made final on February 3, 1998, when plaintiff's time to
appeal expired.
The previously reported case of Alston v. Company (NJ) was voluntarily
withdrawn with prejudice by plaintiffs on February 9, 1998, without payment by
the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -
Exhibit 27 - Financial Data Schedule
(b) The Company filed a report on Form 8-K dated February 6, 1998
announcing the resignation of its President and Chief Operating
Officer, Gerald Bersett, effective March 1, 1998.
14
<PAGE> 15
STURM, RUGER & COMPANY, INC.
FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1998
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 thereunto duly authorized.
STURM, RUGER & COMPANY, INC.
Date: May 12, 1998 /s/ Erle G. Blanchard
----------------------------------
Erle G. Blanchard
Principal Financial and
Accounting Officer,
Vice President, Controller
15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 6,078
<SECURITIES> 51,455
<RECEIVABLES> 22,732
<ALLOWANCES> 1,657
<INVENTORY> 43,242
<CURRENT-ASSETS> 130,312
<PP&E> 140,772
<DEPRECIATION> 85,933
<TOTAL-ASSETS> 203,896
<CURRENT-LIABILITIES> 30,816
<BONDS> 0
0
0
<COMMON> 26,911
<OTHER-SE> 127,578
<TOTAL-LIABILITY-AND-EQUITY> 203,896
<SALES> 58,521
<TOTAL-REVENUES> 58,521
<CGS> 42,197
<TOTAL-COSTS> 42,197
<OTHER-EXPENSES> 5,043
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 12,037
<INCOME-TAX> 4,875
<INCOME-CONTINUING> 7,162
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,162
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.27
</TABLE>
