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Press release from Business Wire

Sturm, Ruger & Company, Inc. Reports Second Quarter 2011 Earnings of 57¢ Per Share and Declares Dividend of 14.2¢ Per Share

Wednesday, July 27, 2011

Sturm, Ruger & Company, Inc. Reports Second Quarter 2011 Earnings of 57¢ Per Share and Declares Dividend of 14.2¢ Per Share17:05 EDT Wednesday, July 27, 2011 SOUTHPORT, Conn. (Business Wire) -- Sturm, Ruger & Company, Inc. (NYSE: RGR), announced today that for the second quarter 2011, the Company reported net sales of $79.6 million and earnings of 57¢ per share, compared with net sales of $64.4 million and earnings of 43¢ per share in 2010. For the six months ended July 2, 2011, net sales were $155.1 million and earnings were $1.00 per share. For the corresponding period in 2010, net sales were $132.7 million and earnings were 86¢ per share. The Company also announced today that its Board of Directors voted to declare a quarterly dividend of 14.2¢ per share on the Company's issued and outstanding shares of common stock. This cash dividend will be paid on August 26, 2011 to stockholders of record as of August 12, 2011. Chief Executive Officer Michael O. Fifer made the following comments related to the Company's results: The Company launched the new SR1911 pistol, the new Single-Ten revolver, and the new SR40c pistol in the second quarter of 2011. New product introductions are a strong driver of demand and represented $26.7 million or 34% of sales in the second quarter of 2011. Demand for our products remained strong in the second quarter of 2011. The estimated sell-through of the Company's products from the independent distributors to retailers in the second quarter of 2011 increased by approximately 24% from the second quarter of 2010. National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) increased 13% during this period. The incoming order rate in the second quarter of 2011 increased 90% from the second quarter of 2010. Cash provided by operating activities was $32.4 million for the six months ended July 2, 2011. At July 2, 2011, our cash and equivalents and short-term investments totaled $76.5 million. Our current ratio is 3.2 to 1 and we have no debt. During the first half of 2011, capital expenditures totaled $7.7 million, much of it related to tooling and equipment for new products. We expect to invest approximately $15 million for capital expenditures during 2011. At July 2, 2011, stockholders' equity was $128.7 million, which equates to a book value of $6.81 per share, of which $4.05 per share was cash and equivalents and short-term investments. During the first half of 2011, we returned $4.8 million to our shareholders through: 1. The payment of $2.8 million of dividends, and 2. The repurchase of 133,400 shares of our common stock in the open market at an average price of $14.94 per share, for a total of $2.0 million. As of the end of the second quarter of 2011, $8.0 million remains available for future stock repurchases. In May, the Company announced the Ruger Million Gun Challenge to benefit the National Rifle Association. Ruger will donate $1 to the NRA for every Ruger firearm sold from April 2011 through March 2012, with the goal of selling one million Ruger firearms and donating $1 million to the NRA. Ruger made its first Million Gun Challenge donation of $279,600 in July. Today, the Company filed its Quarterly Report on Form 10-Q for the second quarter of 2011. 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 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)         July 2,2011     December 31,2010           Assets   Current Assets Cash and cash equivalents $ 12,038 $ 5,132 Short-term investments 64,493 52,493 Trade receivables, net 31,857 31,565   Gross inventories 42,291 48,820 Less LIFO reserve (37,101 ) (37,448 ) Less excess and obsolescence reserve       (1,141 )       (1,545 ) Net inventories       4,049         9,827     Deferred income taxes 5,013 4,780 Prepaid expenses and other current assets       801         1,427   Total Current Assets 118,251 105,224   Property, plant and equipment 156,896 150,379 Less allowances for depreciation       (112,118 )       (107,458 ) Net property, plant and equipment       44,778         42,921     Deferred income taxes 4,099 5,443 Other assets       8,209         4,173   Total Assets     $ 175,337       $ 157,761     STURM, RUGER & COMPANY, INC.Condensed Balance Sheets (Unaudited) (Continued)(Dollars in thousands, except share data)         July 2,2011     December 31,2010           Liabilities and Stockholders' Equity   Current Liabilities Trade accounts payable and accrued expenses $ 18,966 $ 16,492 Product liability 741 449 Employee compensation and benefits 10,343 10,923 Workers' compensation 4,716 4,893 Income taxes payable       2,081         582   Total Current Liabilities 36,847 33,339   Accrued pension liability 9,355 9,369 Product liability accrual 415 573   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 2011 – 23,209,472 issued, 18,910,038 outstanding 2010 – 23,003,285 issued, 18,837,251 outstanding 23,209 23,003 Additional paid-in capital 9,934 9,885 Retained earnings 153,109 137,125 Less: Treasury stock – at cost 2011 – 4,299,434 shares 2010 – 4,166,034 shares (37,884 ) (35,885 ) Accumulated other comprehensive loss       (19,648 )       (19,648 ) Total Stockholders' Equity       128,720         114,480   Total Liabilities and Stockholders' Equity     $ 175,337       $ 157,761     STURM, RUGER & COMPANY, INC.Condensed Statements of Income (Unaudited)(Dollars in thousands, except per share data)         Three MonthsEnded     Six MonthsEnded     July 2, 2011     July 3, 2010     July 2, 2011     July 3, 2010               Net firearms sales $ 78,471 $ 63,621 $ 152,912 $ 130,891 Net castings sales       1,151         768         2,151         1,775   Total net sales 79,622 64,389 155,063 132,666   Cost of products sold 51,157 42,649 102,604 87,794                           Gross profit       28,465         21,740         52,459         44,872     Operating expenses: Selling 6,468 5,118 13,380 11,017 General and administrative 4,935 3,984 9,560 7,919 Other operating expenses, net       -         -         -         398   Total operating expenses       11,403         9,102         22,940         19,334     Operating income       17,062         12,638         29,519         25,538     Other income: Interest (expense) income, net (13 ) (24 ) (33 ) (57 ) Other income, net       114         174         290         301   Total other income, net       101         150         257         244     Income before income taxes 17,163 12,788 29,776 25,782   Income taxes       6,350         4,604         11,017         9,281     Net income     $ 10,813       $ 8,184       $ 18,759       $ 16,501     Basic earnings per share     $ 0.57       $ 0.43       $ 1.00       $ 0.86     Fully diluted earnings per share     $ 0.56       $ 0.42       $ 0.99       $ 0.85     Cash dividends per share     $ 0.097       $ 0.093       $ 0.147       $ 0.153     STURM, RUGER & COMPANY, INC.Condensed Statements of Cash Flows (Unaudited)(Dollars in thousands)         Six Months Ended     July 2, 2011     July 3, 2010     Operating Activities Net income $ 18,759 $ 16,501 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 5,860 4,419 Slow moving inventory valuation adjustment (176 ) (314 ) Stock-based compensation 1,247 908 Loss (Gain) on sale of assets (7 ) 10 Deferred income taxes 1,111 1,920 Changes in operating assets and liabilities: Trade receivables (292 ) 2,666 Inventories 5,954 1,061 Trade accounts payable and accrued expenses 2,298 (2,946 ) Employee compensation and benefits (580 ) (4,334 ) Product liability 135 (896 ) Prepaid expenses, other assets and other liabilities (3,434 ) 1,296 Income taxes payable       1,499         (1,160 ) Cash provided by operating activities       32,374         19,131     Investing Activities Property, plant and equipment additions (7,719 ) (12,598 ) Proceeds from sale of assets 16 16 Purchases of short-term investments (47,496 ) (76,977 ) Proceeds from maturities of short-term investments       35,496         74,736   Cash used for investing activities       (19,703 )       (14,823 )   Financing Activities Tax benefit from exercise of stock options 1,441 698 Repurchase of common stock (1,999 ) - Payment of employee withholding tax related to share-based compensation (2,432 ) (1,367 ) Dividends paid       (2,775 )       (2,940 ) Cash used for financing activities       (5,765 )       (3,609 )   Increase in cash and cash equivalents 6,906 699   Cash and cash equivalents at beginning of period 5,132 5,008               Cash and cash equivalents at end of period     $ 12,038       $ 5,707   Sturm, Ruger & Company, Inc.One Lacey PlaceSouthport, CT 06890www.ruger.com203-259-7843