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Press release from Business Wire

Sturm, Ruger & Company, Inc. Reports Third Quarter Earnings of 32¢ Per Share

Wednesday, October 27, 2010

Sturm, Ruger & Company, Inc. Reports Third Quarter Earnings of 32¢ Per Share17:05 EDT Wednesday, October 27, 2010 SOUTHPORT, Conn. (Business Wire) -- Sturm, Ruger & Company, Inc. (NYSE:RGR), announced today that for the third quarter of 2010, the Company reported net sales of $58.4 million and earnings per share of 32¢, compared with sales of $71.2 million and earnings per share of 37¢ in the third quarter of 2009. For the nine months ended October 2, 2010, net sales were $191.1 million and earnings were $1.18 per share. For the corresponding period in 2009, net sales were $207.1 million and earnings were $1.13 per share. Chief Executive Officer Michael O. Fifer made the following comments related to the Company's results: The Company launched the new SR-40 striker-fired pistol late in the third quarter of 2010. New product introductions, including the new SR-40 pistol, remain a strong driver of demand and represented $50.0 million or 27% of sales in the first nine months of 2010. Estimated unit sell-through of the Company's products from distributors to retailers in the third quarter of 2010 decreased by approximately 7% from both the third quarter of 2009 and the second quarter of 2010. NICS checks increased 6% from the third quarter of 2009 and 2% from the second quarter of 2010, indicating that the Company's share of total firearms retail transactions (new and used firearms) may have declined during the quarter. The incoming order rate in the third quarter of 2010 increased significantly from the second quarter of 2010 and the third quarter of 2009. Cash generated from operations during the first nine months of 2010 was $23.5 million. At the end of the third quarter of 2010, our cash and equivalents and short-term investments totaled $53.0 million. Our current ratio is 3.7 to 1 and we have no debt. During the first nine months of 2010, capital expenditures totaled $16.4 million, much of it related to tooling and equipment for new products. We expect to invest approximately $20 million for capital expenditures during 2010. During the third quarter of 2010, the Company repurchased 412,000 shares of its common stock for $5.7 million in the open market. The average price per share repurchased was $13.83. These repurchased shares represented 2.1% of the outstanding shares as of the beginning of the third quarter of 2010 and were funded with cash on hand. As of the end of the third quarter of 2010, $4.3 million remains available for future stock repurchases. At the end of the third quarter of 2010, stockholders' equity was $109 million, which equates to a book value of $5.77 per share, of which $2.82 per share was cash and equivalents and short-term investments. Today, the Company filed its Quarterly Report on Form 10-Q for the third quarter of 2010. The financial statements included in this Quarterly Report on Form 10-Q are attached to this press release. 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 Quarterly Report on Form 10-Q to ensure that they have adequate information to make informed investment judgments. Today, the Company also filed an amendment to its Annual Report on Form 10-K for the year ended December 31, 2009, as a result of a review of some of the Company's recent financial filings by the U.S. Securities and Exchange Commission. The only changes from the original filing are administrative and are as follows: 1. The addition of a second signature of the Chief Financial Officer to the signature page, 2. The re-dating of the officer certifications, and 3. An explanatory paragraph explaining items 1 and 2 above. Otherwise, the content is unchanged. 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 including lawsuits filed by mayors, attorneys general and other governmental entities and membership organizations, 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)                     October 2, 2010     December 31, 2009     Assets   Current Assets Cash and cash equivalents $ 5,492 $ 5,008 Short-term investments 47,492 50,741 Trade receivables, net 25,934 25,049   Gross inventories 51,205 51,048 Less LIFO reserve (38,711 ) (38,663 ) Less excess and obsolescence reserve       (1,979 )       (2,727 ) Net inventories       10,515         9,658     Deferred income taxes 4,431 5,893 Prepaid expenses and other current assets       2,268         2,062   Total Current Assets 96,132 98,411   Property, plant and equipment 149,151 134,057 Less allowances for depreciation       (106,866 )       (101,324 ) Net property, plant and equipment       42,285         32,733     Deferred income taxes 5,636 6,190 Other assets       3,167         4,345   Total Assets     $ 147,220       $ 141,679           STURM, RUGER & COMPANY, INC.   Condensed Balance Sheets (Continued) (Dollars in thousands, except share data)                     October 2, 2010     December 31, 2009     Liabilities and Stockholders' Equity   Current Liabilities Trade accounts payable and accrued expenses $ 11,127 $ 12,011 Product liability 424 1,147 Employee compensation and benefits 8,985 12,890 Workers' compensation 4,849 5,443 Income taxes payable       459         1,543   Total Current Liabilities 25,844 33,034   Accrued pension liability 12,179 12,194 Product liability accrual 663 935   Contingent liabilities – Note 12 -- --   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 2010 – 22,988,318 issued, 18,822,284 outstanding 2009 – 22,826,601 issued, 19,072,780 outstanding 22,988 22,827 Additional paid-in capital 8,913 8,031 Retained earnings 132,879 115,187 Less: Treasury stock – at cost 2010 – 4,166,034 shares 2009 – 3,753,821 shares (35,884 ) (30,167 ) Accumulated other comprehensive loss       (20,362 )       (20,362 ) Total Stockholders' Equity       108,534         95,516   Total Liabilities and Stockholders' Equity     $ 147,220       $ 141,679       STURM, RUGER & COMPANY, INC.   Condensed Statements of Income (Unaudited)(Dollars in thousands, except per share data)               Three Months Ended   Nine Months Ended October 2, 2010   October 3, 2009   October 2, 2010   October 3, 2009       Net firearms sales $ 57,505 $ 70,011 $ 188,396 $ 203,611 Net castings sales     896       1,175     2,671       3,495   Total net sales 58,401 71,186 191,067 207,106   Cost of products sold 39,818 49,404 127,613 140,766                   Gross profit     18,583       21,782     63,454       66,340     Operating expenses: Selling 5,194 5,145 16,211 15,909 General and administrative 4,080 5,031 11,999 14,740 Other operating expenses, net     -       275     398       950   Total operating expenses     9,274       10,451     28,608       31,599     Operating income     9,309       11,331     34,846       34,741     Other income: Interest (expense) income, net (18 ) 8 (75 ) (12 ) Other income, net     148       125     449       101   Total other income, net     130       133     374       89     Income before income taxes 9,439 11,464 35,220 34,830   Income taxes     3,398       4,356     12,679       13,235     Net income   $ 6,041     $ 7,108   $ 22,541     $ 21,595     Basic earnings per share   $ 0.32     $ 0.37   $ 1.18     $ 1.13     Fully diluted earnings per share   $ 0.31     $ 0.37   $ 1.17     $ 1.12     Cash dividends per share   $ 0.10     $ 0.12   $ 0.25     $ 0.21       STURM, RUGER & COMPANY, INC.   Condensed Statements of Cash Flows (Unaudited)(Dollars in thousands)               Nine Months Ended October 2, 2010     October 3, 2009     Operating Activities Net income $ 22,541 $ 21,595 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 6,863 4,987 Slow moving inventory valuation adjustment (692 ) (256 ) Stock-based compensation 1,711 3,505 Loss (Gain) on sale of assets 5 (39 ) Deferred income taxes 649 (868 ) Changes in operating assets and liabilities: Trade receivables (885 ) (935 ) Inventories (165 ) 5,147 Trade accounts payable and accrued expenses (1,477 ) 823 Employee compensation and benefits (3,905 ) 4,610 Product liability (995 ) 483 Prepaid expenses, other assets and other liabilities 933 (106 ) Income taxes payable       (1,085 )       (229 ) Cash provided by operating activities       23,498         38,717     Investing Activities Property, plant and equipment additions (16,416 ) (10,301 ) Proceeds from sale of assets 21 44 Purchases of short-term investments (112,473 ) (78,217 ) Proceeds from maturities of short-term investments       115,722         49,538   Cash used for investing activities       (13,146 )       (38,936 )   Financing Activities Tax benefit from exercise of stock options 698 1,411 Repayment of line of credit balance - (1,000 ) Repurchase of common stock (5,717 ) (14 ) Dividends paid       (4,849 )       (3,985 ) Cash used for financing activities       (9,868 )       (3,588 )   Increase (decrease) in cash and cash equivalents 484 (3,807 )   Cash and cash equivalents at beginning of period 5,008 9,688               Cash and cash equivalents at end of period     $ 5,492       $ 5,881   Sturm, Ruger & Company, Inc.One Lacey PlaceSouthport, CT 06890www.ruger.com203-259-7843