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Press release from Business Wire

Sturm, Ruger & Company, Inc. Reports 2012 Fully Diluted Earnings of $3.60 Per Share and Declares Dividend of 40.4¢ Per Share

Wednesday, February 27, 2013

Sturm, Ruger & Company, Inc. Reports 2012 Fully Diluted Earnings of $3.60 Per Share and Declares Dividend of 40.4¢ Per Share17:05 EST Wednesday, February 27, 2013 SOUTHPORT, Conn. (Business Wire) -- Sturm, Ruger & Company, Inc. (NYSE-RGR), announced today that for 2012, the Company reported net sales of $491.8 million and fully diluted earnings of $3.60 per share, compared with net sales of $328.8 million and fully diluted earnings of $2.09 per share in 2011. For the fourth quarter of 2012, net sales were $141.8 million and fully diluted earnings were $1.00 per share. For the corresponding period in 2011, net sales were $93.2 million and fully diluted earnings were 54¢ per share. The Company also announced today that its Board of Directors declared a dividend of 40.4¢ per share for the fourth quarter, for shareholders of record as of March 8, 2013, payable on March 22, 2013. This dividend varies every quarter because the Company pays a percent of earnings rather than a fixed amount per share. This dividend is approximately 40% of net income. Chief Executive Officer Michael O. Fifer made the following observations related to the Company's results: Our earnings increased 77% in 2012, 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 $182.0 million or 38% of firearm sales in 2012. New product introductions in 2012 included: the Ruger American rifle, the 10/22 TakeDown rifle, the SR22 pistol, the 22/45 Lite pistol, and the Single-Nine revolver. 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 fourth quarter and twelve months ended December 31, 2012 as illustrated below:                 Period ended December 31, 2012 Q4   Twelve months Increase in estimated Ruger Units Sold from Distributors to Retailers 73%   63%   Increase in total adjusted NICS Background Checks 41% 28% Cash generated from operations during 2012 was $87.2 million. At December 31, 2012, our cash and cash equivalents totaled $31 million, a decrease of $50 million from December 2011 due to the $87 million special dividend paid in December. Our current ratio is 1.6 to 1 and we have no debt. In 2012, capital expenditures totaled $27.3 million, much of it related to new products and the expansion of production capacity. We expect to invest approximately $30 million for capital expenditures during 2013. In 2012, the Company returned $111.5 million to its shareholders through the payment of dividends. At December 31, 2012, stockholders' equity was $95.0 million, which equates to a book value of $4.93 per share, of which $1.61 per share was cash and equivalents. Today, the Company filed its Annual Report on Form 10-K for 2012. The financial statements included in this Annual Report on Form 10-K are attached to this press release. The Annual Report on Form 10-K 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 Annual Report on Form 10-K 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.   Balance Sheets (Dollars in thousands, except per share data)   December 31,   2012     2011     Assets   Current Assets Cash and cash equivalents $ 30,978 $ 81,056 Trade receivables, net 43,018 42,225   Gross inventories 55,827 49,004 Less LIFO reserve (38,089 ) (37,476 ) Less excess and obsolescence reserve   (1,729 )   (1,311 ) Net inventories   16,009     10,217     Deferred income taxes 5,284 5,776 Prepaid expenses and other current assets   1,632     6,968   Total Current Assets 96,921 146,242   Property, Plant, and Equipment 195,713 169,142 Less allowances for depreciation   (129,720 )   (116,195 ) Net property, plant and equipment   65,993     52,947     Deferred income taxes 2,004 32 Other assets   9,568     7,289   Total Assets $ 174,486   $ 206,510   STURM, RUGER & COMPANY, INC.   Balance Sheets (Continued) (Dollars in thousands, except per share data)   December 31,   2012     2011     Liabilities and Stockholders' Equity   Current Liabilities Trade accounts payable and accrued expenses $ 38,500 $ 28,592 Product liability 720 1,305 Employee compensation and benefits 15,182 14,882 Workers' compensation 4,600 4,600 Income taxes payable   489     217   Total Current Liabilities 59,491 49,596   Accrued pension liability 19,626 19,082 Product liability 337 441   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 – 23,562,422 issued, 19,262,988 outstanding 2011 – 23,382,566 issued, 19,083,132 outstanding 23,563 23,383 Additional paid-in capital 15,531 10,454 Retained earnings 123,442 168,981 Less: Treasury stock – at cost 2012 and 2011 – 4,299,434 shares (37,884 ) (37,884 ) Accumulated other comprehensive loss   (29,620 )   (27,543 ) Total Stockholders' Equity   95,032     137,391   Total Liabilities and Stockholders' Equity $ 174,486   $ 206,510   STURM, RUGER & COMPANY, INC.   Statements of Income and Comprehensive Income (Dollars in thousands, except per share data)   Year ended December 31,   2012     2011     2010     Net firearms sales $ 484,933 $ 324,200 $ 251,680 Net castings sales   6,891     4,616     3,526   Total net sales 491,824 328,816 255,206   Cost of products sold 312,871 217,058 171,224                     Gross profit   178,953     111,758     83,982     Operating Expenses: Selling 38,363 28,691 23,517 General and administrative 29,231 20,970 16,652 Other operating expenses (income), net   293     (319 )   420   Total operating expenses 67,887 49,342 40,589                     Operating income   111,066     62,416     43,393     Other income: Royalty income 824 873 429 Interest income 34 29 48 Interest expense (95 ) (110 ) (143 ) Other income, net   280     308     422   Total other income, net 1,043 1,100 756                     Income before income taxes   112,109     63,516     44,149     Income taxes 41,480 23,501 15,894                     Net income 70,629 40,015 28,255   Other comprehensive (loss) income, net of tax: Defined benefit pension plans (2,077 ) (7,895 ) 714                     Comprehensive income $ 68,552   $ 32,120   $ 28,969     Basic Earnings Per Share $ 3.69   $ 2.12   $ 1.48     Fully Diluted Earnings Per Share $ 3.60   $ 2.09   $ 1.46     Cash Dividends Per Share $ 5.80   $ 0.43   $ 0.33   STURM, RUGER & COMPANY, INC.   Statements of Cash Flows (Dollars in thousands)   Year ended December 31,   2012     2011     2010     Operating Activities Net income $ 70,629 $ 40,015 $ 28,255 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 14,888 12,148 9,207 Stock-based compensation 4,718 2,953 2,589 Excess and obsolescence inventory reserve 761 (234 ) (1,057 ) Loss (gain) on sale of assets (944 ) (26 ) 22 Deferred income taxes (1,480 ) 8,205 493 Impairment charge (1,134 ) - - Changes in operating assets and liabilities: Trade receivables (793 ) (10,660 ) (6,516 ) Inventories (6,553 ) (156 ) 888 Trade accounts payable and accrued expenses 9,908 11,807 3,932 Employee compensation and benefits (4,345 ) 3,959 (1,967 ) Product liability (689 ) 724 (1,060 ) Prepaid expenses, other assets and other liabilities 1,947 (10,961 ) (1,333 ) Income taxes payable   272     (365 )   (962 ) Cash provided by operating activities 87,185 57,409 32,491   Investing Activities Property, plant, and equipment additions (27,282 ) (22,135 ) (19,409 ) Purchases of short-term investments (59,966 ) (122,978 ) (164,966 ) Proceeds from sales or maturities of short-term investments 59,966 175,471 163,214 Net proceeds from sale of assets   1,003     319     21   Cash (used for) provided by investing activities (26,279 ) 30,677 (21,140 )   Financing Activities Dividends paid (111,523 ) (8,159 ) (6,317 ) Tax benefit from exercise of stock options 3,474 3,855 1,923 Repurchase of common stock - (1,999 ) (5,718 ) Payment of employee withholding tax related to share-based compensation (3,083 ) (5,859 ) (1,115 ) Proceeds from exercise of stock options   148     -     -   Cash used for financing activities   (110,984 )   (12,162 )   (11,227 )   (Decrease) increase in cash and cash equivalents (50,078 ) 75,924 124 Cash and cash equivalents at beginning of year   81,056     5,132     5,008   Cash and cash equivalents at end of year $ 30,978   $ 81,056   $ 5,132   Sturm, Ruger & Company, Inc.One Lacey PlaceSouthport, CT 06890www.ruger.com203-259-7843