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Press release from Business Wire

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

Wednesday, August 01, 2012

Sturm, Ruger & Company, Inc. Reports Second Quarter 2012 Fully Diluted Earnings of 91¢ Per Share17:05 EDT Wednesday, August 01, 2012 SOUTHPORT, Conn. (Business Wire) -- Sturm, Ruger & Company, Inc. (NYSE: RGR), announced today that for the second quarter 2012, the Company reported net sales of $119.6 million and fully diluted earnings of 91¢ per share, compared with net sales of $79.6 million and fully diluted earnings of 56¢ per share in the second quarter of 2011. For the six months ended June 30, 2012, net sales were $231.9 million and fully diluted earnings were $1.71 per share. For the corresponding period in 2011, net sales were $155.1 million and fully diluted earnings were 99¢ per share. The Company also announced today that its Board of Directors declared a dividend of 37.7¢ per share for the second quarter, for shareholders of record as of August 13, 2012, payable on August 27, 2012. This dividend varies every quarter because the Company pays a percent of earnings rather than a fixed amount per share. Effective with the dividend paid in March 2012, the Company increased the percent of quarterly earnings paid out as dividends by 67%. This dividend is approximately 40% of net income. Chief Executive Officer Michael O. Fifer made the following comments related to the Company's results: Our earnings increased 63% from the second quarter of 2011, driven by the 50% growth in sales and our ongoing focus on continuous improvement in our operations. New product introductions were a significant component of our sales growth as new product sales represented $87.8 million or 38% of sales in the first half of 2012. New product introductions in the first half of 2012 included: Ruger American Rifle SR22 pistol 10/22 Take Down rifle 22/45 Lite pistol Demand for our products outpaced the growth in overall industry demand as measured by the National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) for both the second quarter and six months ended June 30, 2012 as illustrated below:     Period ended June 30, 2012 Q2   Six months Increase in estimated Ruger Units Sold from Distributors to Retailers 55 %   59 %   Increase in total adjusted NICS Background Checks (thousands) 18 % 21 % Cash generated from operations during the six months ended June 30, 2012 was $37.5 million. At June 30, 2012, our cash, cash equivalents, and short-term investments totaled $96.0 million, an increase of $14.9 million from December 2011. Our current ratio is 3.3 to 1 and we have no debt. In the first half of 2012, capital expenditures totaled $12.3 million, much of it related to new products and the expansion of production capacity. We expect to invest approximately $20 million for capital expenditures during 2012. In the first half of 2012, the Company returned $10.3 million to its shareholders through the payment of dividends. An additional $7.2 million in dividends will be paid to shareholders on August 27, 2012. At June 30, 2012, stockholders' equity was $162.7 million, which equates to a book value of $8.49 per share, of which $5.01 per share was cash and equivalents. Today, the Company filed its Quarterly Report on Form 10-Q for the second quarter of 2012. 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)       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 Sturm, Ruger & Company, Inc.One Lacey PlaceSouthport, CT 06890www.ruger.com203-259-7843