Sturm, Ruger & Company, Inc. Reports 2010 Earnings of $1.48 Per Share and Declares Dividend of 5¢ Per Share

SOUTHPORT, Conn.--(BUSINESS WIRE)--Sturm, Ruger & Company, Inc. (NYSE: RGR), announced today that for 2010, the Company reported net sales of $255.2 million and earnings of $1.48 per share, compared with sales of $271.0 million and earnings of $1.44 per share in 2009.

For the fourth quarter of 2010, net sales were $64.1 million and earnings were 30¢ per share. For the corresponding period in 2009, net sales were $63.9 million and earnings were 31¢ per share.

The Company also announced today that its Board of Directors declared a dividend of 5¢ per share for the fourth quarter, for shareholders of record as of March 11, 2011, payable on March 25, 2011.

Chief Executive Officer Michael O. Fifer made the following comments related to the Company’s results:

• In 2010, the Company launched several new products including the SR9c compact pistol, the LCR-357 revolver, and the SR40 striker-fired pistol. New product introductions remain a strong driver of demand and represented $62.3 million or 24.8% of sales in 2010.
• The estimated sell-through of the Company’s products from distributors to retailers in 2010 increased 2% from 2009. During this period, National Instant Criminal Background Check System (“NICS”) background checks (as adjusted by the National Shooting Sports Foundation) decreased 1%.
• Cash generated from operations during 2010 was $32.5 million. At December 31, 2010, our cash and equivalents and short-term investments totaled $57.6 million. Our current ratio is 3.2 to 1 and we have no debt.
• In 2010, capital expenditures totaled $19.4 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 December 31, 2010, stockholders’ equity was $114.5 million, which equates to a book value of $6.08 per share, of which $3.06 per share was cash and equivalents and short-term investments.
• In 2010, we returned $12.0 million to our shareholders through the following:

1. Paying $6.3 million of dividends, and

2. Repurchasing 412,000 shares of our common stock in the open market at an average price of $13.83 per share, for a total of $5.7 million.

• In January 2011, we repurchased an additional 133,400 shares of our common stock in the open market at an average price of $14.98 per share.

Today, the Company filed its Annual Report on Form 10-K for 2010. 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. Condensed Balance Sheets (Dollars in thousands, except share data)
December 31,	2010			2009
Assets
Current Assets
Cash and cash equivalents	$	5,132		$	5,008
Short-term investments		52,493			50,741
Trade receivables, net		31,565			25,049
Gross inventories		48,820			51,048
Less LIFO reserve		(37,448	)		(38,663	)
Less excess and obsolescence reserve		(1,545	)		(2,727	)
Net inventories		9,827			9,658
Deferred income taxes		4,780			5,893
Prepaid expenses and other current assets		1,427			2,062
Total Current Assets		105,224			98,411
Property, Plant, and Equipment		150,379			134,057
Less allowances for depreciation		(107,458	)		(101,324	)
Net property, plant and equipment		42,921			32,733
Deferred income taxes		5,443			6,190
Other assets		4,173			4,345
Total Assets	$	157,761		$	141,679

STURM, RUGER & COMPANY, INC. Condensed Balance Sheets (Continued) (Dollars in thousands, except share data)
December 31,	2010			2009
Liabilities and Stockholders’ Equity
Current Liabilities
Trade accounts payable and accrued expenses	$	16,492		$	12,011
Product liability		449			1,147
Employee compensation and benefits		10,923			12,890
Workers’ compensation		4,893			5,443
Income taxes payable		582			1,543
Total Current Liabilities		33,339			33,034
Accrued pension liability		9,369			12,194
Product liability		573			935
Contingent liabilities (Note 17)		-			-
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 – 23,003,285 issued,
18,837,251 outstanding
2009 – 22,826,601 issued,
19,072,780 outstanding		23,003			22,827
Additional paid-in capital		9,885			8,031
Retained earnings		137,125			115,187
Less: Treasury stock – at cost
2010 – 4,166,034 shares
2009 – 3,753,821 shares		(35,885	)		(30,167	)
Accumulated other comprehensive loss		(19,648	)		(20,362	)
Total Stockholders’ Equity		114,480			95,516
Total Liabilities and Stockholders’ Equity	$	157,761		$	141,679

STURM, RUGER & COMPANY, INC. Condensed Statements of Income (Dollars in thousands, except per share data)
Year ended December 31,	2010			2009			2008
Net firearms sales	$	251,680		$	266,566		$	174,416
Net castings sales		3,526			4,419			7,067
Total net sales		255,206			270,985			181,483
Cost of products sold		171,224			183,380			138,730
Gross profit		83,982			87,605			42,753
Operating Expenses:
Selling		23,517			21,822			17,189
General and administrative		16,652			20,387			12,867
Other operating expenses (income), net		420			1,492			(840	)
Total operating expenses		40,589			43,701			29,216
Operating income		43,393			43,904			13,537
Other income:
Royalty income		429			490			141
Interest income		48			118			405
Interest expense		(143	)		(158	)		(63	)
Other income (expense), net		422			6			(42	)
Total other income, net		756			456			441
Income before income taxes		44,149			44,360			13,978
Income taxes		15,894			16,857			5,312
Net income	$	28,255		$	27,503		$	8,666
Basic Earnings Per Share	$	1.48		$	1.44		$	0.43
Fully Diluted Earnings Per Share	$	1.46		$	1.42		$	0.43
Cash Dividends Per Share	$	0.33		$	0.31		$	0.00

STURM, RUGER & COMPANY, INC. Condensed Statements of Cash Flows (Dollars in thousands)
Year ended December 31,	2010			2009			2008
Operating Activities
Net income	$	28,255		$	27,503		$	8,666
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation		9,207			7,300			5,365
Stock-based compensation		2,589			4,205			467
Slow moving inventory valuation adjustment		(1,057	)		239			495
Loss (gain) on sale of assets		22			(45	)		(95	)
Deferred income taxes		493			2,060			(4,639	)
Changes in operating assets and liabilities:
Trade receivables		(6,516	)		760			(10,173	)
Inventories		888			2,042			863
Trade accounts payable and other liabilities		3,932			2,150			1,533
Employee compensation and benefits		(1,967	)		4,896			3,134
Product liability		(1,060	)		339			(189	)
Prepaid expenses, other assets and other liabilities		(1,333	)		(2,132	)		1,995
Income taxes payable		(962	)		(2,628	)		3,760
Cash provided by operating activities		32,491			46,689			11,182
Investing Activities
Property, plant, and equipment additions		(19,409	)		(13,819	)		(9,488	)
Purchases of short-term investments		(164,966	)		(77,281	)		(45,363	)
Proceeds from sales or maturities of short-term investments		163,214			45,098			57,309
Net proceeds from sale of assets		21			51			95
Cash (used for) provided by investing activities		(21,140	)		(45,951	)		2,553
Financing Activities
Dividends paid		(6,317	)		(5,816	)		-
Tax benefit from exercise of stock options		808			1,412			-
Repurchase of common stock		(5,718	)		(14	)		(10,153	)
(Repayment of) increase in line of credit		-			(1,000	)		1,000
Cash used for financing activities		(11,227	)		(5,418	)		(9,153	)
Increase (decrease) in cash and cash equivalents		124			(4,680	)		4,582
Cash and cash equivalents at beginning of year		5,008			9,688			5,106
Cash and cash equivalents at end of year	$	5,132		$	5,008		$	9,688