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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ___________
COMMISSION FILE NUMBER 0-4776
STURM, RUGER & COMPANY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 06-0633559
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
LACEY PLACE, SOUTHPORT, CONNECTICUT 06890
(Address of principal executive offices) (Zip Code)
(203) 259-7843
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
COMMON STOCK, $1 PAR VALUE NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X].
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). YES [X] NO [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of June 27, 2003:
Common Stock, $1 par value - $210,208,600
The number of shares outstanding of the issuer's common stock as of March 1,
2004:
Common Stock, $1 par value - 26,910,720 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Stockholders for the fiscal year
ended December 31, 2003 are incorporated by reference into Parts I, II and IV of
this Report.
Portions of the registrant's Proxy Statement relating to the Annual Meeting of
Stockholders to be held May 4, 2004 are incorporated by reference into Part III
of this Report.
1
TABLE OF CONTENTS
PART I
Item 1. Business ........................................................ 3
Item 2. Properties ...................................................... 10
Item 3. Legal Proceedings ............................................... 10
Item 4. Submission of Matters to a Vote of Security Holders ............. 14
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder
Matters ....................................................... 15
Item 6. Selected Financial Data ......................................... 15
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations ......................................... 15
Item 7A. Quantitative and Qualitative Disclosures About Market Risk ...... 16
Item 8. Financial Statements and Supplementary Data ..................... 16
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure .......................................... 16
Item 9A. Controls and Procedures.......................................... 17
PART III
Item 10. Directors and Executive Officers of the Registrant .............. 17
Item 11. Executive Compensation .......................................... 17
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters ............................... 18
Item 13. Certain Relationships and Related Transactions .................. 18
Item 14. Principal Accountant Fees and Services .......................... 18
PART IV
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K . 19
Signatures................................................................. 23
Exhibit Index.............................................................. 24
Financial Statement Schedule............................................... 27
2
PART I
ITEM 1 -- BUSINESS
COMPANY OVERVIEW
Sturm, Ruger & Company, Inc. (the "Company") is principally engaged in the
design, manufacture, and sale of firearms and precision investment castings. The
Company's design and manufacturing operations are located in the United States.
Substantially all sales are domestic and export sales are insignificant.
The Company is the only U.S. firearms manufacturer which offers products in all
four industry product categories: rifles, shotguns, pistols, and revolvers. The
Company's firearms are sold through a select number of independent wholesale
distributors principally to the commercial sporting market. Investment castings
manufactured are of titanium and steel alloys. Investment castings are sold
either directly to or through manufacturers' representatives to companies in a
wide variety of industries.
The Company believes that it is the largest U.S. firearms manufacturer, based on
data reported in the Bureau of Alcohol, Tobacco and Firearms' 2000 Annual
Firearms Manufacturing and Exportation Report ("BATF Data"). The Company, which
has been profitable every year since 1950, believes it has a preeminent
reputation among sportsmen, hunters, and gun collectors for technical innovation
and quality construction, based on reports in industry and business
publications. The Company has been in business since 1949 and was incorporated
in its present form under the laws of Delaware in 1969.
For the years ended December 31, 2003, 2002, and 2001, net sales attributable to
the Company's firearms operations were approximately 88%, 86%, and 85%,
respectively, of total net sales. The balance of the Company's net sales for the
aforementioned periods was attributable to its investment castings operations.
Further information regarding industry segment data is incorporated by reference
to pages 21 and 22 of the Company's 2003 Annual Report to Stockholders.
FIREARMS PRODUCTS
The Company's firearms, which are sold under the "Ruger" name and trademark,
consist of single-shot, autoloading, bolt-action, lever action, and
muzzleloading rifles in a broad range of hunting calibers; shotguns in three
gauges; .22 caliber rimfire autoloading pistols and centerfire autoloading
pistols in various calibers; and single-action, double-action, and muzzleloading
revolvers in various calibers. The Company manufactures a wide range of high
quality products and does not manufacture inexpensive concealable firearms,
sometimes known as "Saturday Night Specials," nor does it commercially-sell any
firearm included on the list of "assault weapons" which was part of anti-crime
legislation enacted by Congress in 1994.
Many of the firearms introduced by the Company over the years have become
"classics" which have retained their popularity for decades and are sought by
collectors. These firearms include the single-action Single-Six, Blackhawk, and
Bearcat revolvers; the double-action Redhawk revolvers; the 10/22 and Mini-14
autoloading, M-77 bolt-action, and Number One Single-Shot rifles; and the Red
Label over-and-under shotguns. The Company has supplemented these "classics"
with the introduction of new models and variations of existing models, including
a line of centerfire autoloading pistols introduced in
3
ITEM 1 -- BUSINESS (CONTINUED)
1987, three lines of double action revolvers, the SP101, GP100, and Super
Redhawk models, as well as a line of lever action rifles introduced in 1997.
The Company's ongoing commitment to the development and introduction of new
models of firearms in appropriate product categories continues to generate new
offerings. In 2004, the Company plans to introduce several new offerings,
including the Ruger 40th Anniversary 10/22 Carbine, the Ruger 10/22 Rifle, the
Ruger 10/17 Rifle, and the Ruger New Model Single Six Hunter revolvers. Two new
rifles in the new .204 Ruger cartridges are also planned by the Company for
2004: a Number 1 Single Shot and a M77MKII bolt action rifle. In addition, a
Gold Label side-by-side shotgun is in production.
The Company presently manufactures 34 different types of firearm products in
four industry categories: rifles, shotguns, pistols, and revolvers. Most are
available in several models based upon caliber, finish, barrel length, and other
features.
RIFLES -- A rifle is a long gun with spiral grooves cut into the interior of the
barrel to give the bullet a stabilizing spin after it leaves the barrel. The
Company presently manufactures fifteen different types of rifles: the M77 Mark
II, the M77 Mark II Magnum, the 77/17, the 77/22, the 77/44, the 10/22, the
Model 96/22, the Model 96/44, the Model 96/17, the Mini-14, the Mini Thirty, the
Ruger Carbine, the Deerfield Carbine (99/44), the No. 1 Single-Shot, and the
77/50 Muzzle Loader. Sales of rifles by the Company accounted for approximately
$61.3 million, $69.1 million, and $72.8 million, of revenues for the years 2003,
2002 and 2001, respectively.
SHOTGUNS -- A shotgun is a long gun with a smooth barrel interior which fires
lead or steel pellets. The Company presently manufactures two different types of
over-and-under shotguns: the Red Label available in 12, 20, and 28 gauge and the
Woodside available in 12 gauge. Most of the Red Label models are available in
special Sporting Clays, English Field, All-Weather and engraved versions. The
Company is manufacturing a Gold Label side-by-side shotgun in 12 gauge. Sales of
shotguns by the Company accounted for approximately $5.1 million, $6.0 million,
and $6.1 million of revenues for the years 2003, 2002 and 2001, respectively.
PISTOLS -- A pistol is a handgun in which the ammunition chamber is an integral
part of the barrel and which is fed ammunition from a magazine contained in the
grip. The Company presently manufactures three different types of pistols: the
Ruger Mark II .22 caliber in Standard, Competition, and Target models, the Ruger
22/45, and the P-Series centerfire autoloading pistols in various calibers,
configurations, and finishes. Sales of pistols by the Company accounted for
approximately $26.4 million, $25.8 million, and $26.6 million of revenues for
the years 2003, 2002 and 2001, respectively.
REVOLVERS -- A revolver is a handgun which has a cylinder that holds the
ammunition in a series of chambers which are successively aligned with the
barrel of the gun during each firing cycle. There are two general types of
revolvers, single-action and double-action. To fire a single-action revolver,
the hammer is pulled back to cock the gun and align the cylinder before the
trigger is pulled. To fire a double-action revolver, a single trigger pull
advances the cylinder and cocks and releases the hammer. The Company presently
manufactures ten different types of single-action revolvers in a variety of
calibers, configurations, and finishes: the New Model Single-Six, the New Model
..32 Magnum Super Single-Six, the New Model Blackhawk, the New Model Super
Blackhawk, the Vaquero, the Ruger Bisley, the Old Army Cap & Ball, the New
Bearcat, the Bisley Vaquero, Single-Six, Super Blackhawk, and Bisley Hunter
revolvers. The Company presently manufactures four different types of
double-action revolvers: the SP101, the GP100, the Redhawk, and the Super
Redhawk. Sales of revolvers by the Company accounted for approximately $33.8
million, $34.3 million, and $37.9 million of revenues for the years 2003, 2002,
and 2001, respectively.
4
ITEM 1 -- BUSINESS (CONTINUED)
The Company also manufactures and sells accessories and replacement parts for
its firearms. These sales accounted for approximately $4.0 million, $4.6
million, and $4.2 million of revenues for the years 2003, 2002 and 2001,
respectively.
INVESTMENT CASTING PRODUCTS
The Company is also engaged in the manufacture of titanium and ferrous
investment castings for a wide variety of markets including sporting goods and
commercial and military use. The investment castings products currently
manufactured by the Company consist of titanium, chrome-molybdenum, stainless
steel, nickel, and cobalt alloys. The Company produces steel marine propellers,
titanium hand tools, and various titanium and steel castings for a number of
customers. The Company continues to evaluate the viability and profitability of
the commercial castings market.
The Ruger Investment Casting Division of the Company located in Prescott,
Arizona ("RIC-Prescott Division") engineers and produces titanium and ferrous
castings. The Ruger Investment Casting Division of the Company located in
Newport, New Hampshire ("RIC-Newport Division") (formerly known as Pine Tree
Castings) engineers and produces ferrous castings for a wide range of commercial
customers.
Net sales attributable to the Company's investment casting operations (excluding
intercompany transactions) accounted for approximately $17.4 million, $21.8
million, and $26.7 million, or 12%, 14%, and 15% of the Company's total net
sales for 2003, 2002, and 2001, respectively.
MANUFACTURING
FIREARMS -- The Company produces most rifles, and all shotguns and revolvers at
the Newport, New Hampshire facility. Some rifles and all pistols are produced at
the Prescott, Arizona facility.
Many of the basic metal component parts of the firearms manufactured by the
Company are produced by the Company's castings facilities through a process
known as precision investment casting. See "Manufacturing-Investment Castings"
for a description of the investment casting process. The Company initiated the
use of this process in the production of component parts for firearms in 1953
and believes that its widespread use of investment castings in the firearms
manufacturing process is unique among firearms manufacturers. The Company
believes that the investment casting process provides greater design flexibility
and results in component parts which are generally close to their ultimate shape
and, therefore, require less machining. Through the use of investment castings,
the Company is able to produce durable and less costly component parts for its
firearms.
Third parties supply the Company with various raw materials for its firearms,
such as fabricated steel components, walnut, birch, beech, maple and laminated
lumber for rifle and shotgun stocks, various synthetic products and other
component parts. These raw materials and component parts are readily available
from multiple sources at competitive prices. One component part, an aluminum
casting used in the manufacture of certain models of pistols, is purchased from
only one third party and may not be readily available from other sources
immediately.
All assembly, inspection, and testing of firearms manufactured by the Company is
performed at the Company's manufacturing facilities. Every firearm, including
every chamber of every revolver manufactured by the Company, is test-fired prior
to shipment.
5
ITEM 1 -- BUSINESS (CONTINUED)
INVESTMENT CASTINGS -- The Company manufactures all of its precision investment
castings products at one of its two investment casting foundries. To produce a
product by the investment casting method, a wax model of the part is created and
coated ("invested") with several layers of ceramic material. The shell is then
heated to melt the interior wax which is poured off, leaving a hollow mold. To
cast the desired part, molten metal is poured into the mold and allowed to cool
and solidify. The mold is then broken off to reveal a near net shape cast metal
part.
All of the titanium investment castings and some of the ferrous investment
castings products are manufactured by the Company's RIC-Prescott Division. This
facility is one of the largest investment castings facilities in the Southwest.
After a review of the castings business in the fourth quarter of 2002, it was
determined that a portion of the casting production capacity at the RIC-Prescott
Division will not be utilized in the short-term. Therefore, in 2002 a $3.3
million pre-tax charge to earnings was recorded to recognize an impairment loss
on certain of the investment castings segment assets. A similar evaluation was
undertaken by the Company in the fourth quarter of 2003 and no pre-tax charge to
earnings was recorded for any impairment loss at that time. The Company is
committed to this business and believes it can ultimately benefit the Company.
The Company's RIC-Newport Division manufactures ferrous investment castings.
Raw materials including wax, ceramic material, and metal alloys necessary for
the production of investment cast products are supplied to the Company through
third parties. The Company believes that these raw materials are readily
available from multiple sources at competitive prices.
MARKETING AND DISTRIBUTION
FIREARMS -- The Company's firearms are primarily marketed through a network of
selected licensed independent wholesale distributors who purchase the products
directly from the Company. They resell to Federally-licensed retail firearms
dealers who in turn resell to legally authorized end-users. All retail
purchasers are subject to a point-of-sale background check by law enforcement.
These end-users include sportsmen, hunters, law enforcement and other
governmental organizations, and gun collectors. Each distributor carries the
entire line of firearms manufactured by the Company for the commercial market.
Currently, 16 distributors service the domestic commercial market, with an
additional 12 distributors servicing the domestic law enforcement market and two
distributors servicing the Canadian market. Four of the Company's distributors
service both the domestic commercial market and the domestic law enforcement
market. AcuSport Corporation accounted for approximately 19%, 17%, and 21% of
net firearms sales and 17%, 15%, and 17% of consolidated net sales in 2003,
2002, and 2001, respectively. Jerry's Sport Center accounted for approximately
12% of the Company's net sales of firearms and 11% of consolidated net sales in
2003. Davidson's Supply Company accounted for approximately 14% of net firearms
sales in 2001 and 12% of consolidated net sales in 2001. The Company employs
five employees and one independent contractor who service these distributors and
call on dealers and law enforcement agencies. Because the ultimate demand for
the Company's firearms comes from end-users, rather than from the Company's
distributors, the Company believes that the loss of any distributor would not
have a material long-term adverse effect on the Company, but may have a material
impact on the Company's financial results for a particular period. The Company
considers its relationships with its distributors to be satisfactory.
6
ITEM 1 -- BUSINESS (CONTINUED)
The Company also exports its firearms through a few select commercial
distributors and directly to certain foreign customers, consisting primarily of
law enforcement agencies and foreign governments. Foreign sales were less than
10% of the Company's consolidated net sales for each of the past three fiscal
years. No material portion of the Company's business is subject to renegotiation
of profits or termination of contracts at the election of a government
purchaser.
In the fourth quarter of 2003, the Company received annual orders from its
distributors for the 2004 marketing year. As of March 1, 2004, unfilled firearms
orders were approximately $104 million as compared to approximately $98 million
at March 1, 2003.
Most of the firearms manufactured by the Company are sold on terms requiring
payment in full within 30 days. However, certain products which are generally
used during the Fall hunting season are sold pursuant to a "dating plan" which,
in general, allows the purchasing distributor to buy the products commencing in
December, the usual start of the Company's dating plan year, and pay for them on
extended terms. Discounts are offered for early payment. Management believes
that this dating plan serves to level out the demand for these seasonal products
throughout the entire year and facilitates an efficient manufacturing schedule.
The Company does not consider its overall firearms business to be predictably
seasonal; however, sales of certain models of firearms are usually lower in the
third quarter of the fiscal year.
INVESTMENT CASTINGS -- The investment casting segment's principal markets are
commercial, sporting goods, and military. Sales are made directly to customers
or through manufacturers' representatives. The Company produces steel marine
propellers, steel and titanium hand tools, and various other products for a
number of customers. Sales of titanium golf club heads to Karsten Manufacturing
Corporation (the makers of "Ping" products) were $1.2 million, $8.2 million, and
$11.9 million in 2003, 2002, and 2001, respectively. There are no future
shipments expected to Karsten Manufacturing Corporation. The Company continues
to pursue other titanium and steel castings markets.
COMPETITION
FIREARMS -- Competition in the firearms industry is intense and comes from both
foreign and domestic manufacturers. While some of these competitors concentrate
on a single industry product category, such as rifles or pistols, several
foreign competitors manufacture products in all four industry categories
(rifles, shotguns, pistols, and revolvers). Some of these competitors are
subsidiaries of larger corporations than the Company with substantially greater
financial resources than the Company, which could affect the Company's ability
to compete with these competitors. The Company is the only domestic manufacturer
which produces firearms in all four industry product categories and believes
that it is the largest U.S. firearms manufacturer, according to BATF Data. The
principal methods of competition in the industry are product innovation,
quality, and price. The Company believes that it can compete effectively with
all of its present competitors based upon the high quality, reliability, and
performance of its products, and the competitiveness of its pricing.
INVESTMENT CASTINGS -- There are a large number of investment castings
manufacturers, both domestic and foreign, with which the Company competes.
Competition varies based on the type of investment castings products (titanium
or steel) and the end-use of the product (commercial, sporting goods, or
military). Many of these competitors are larger corporations than the Company
with substantially greater financial resources than the Company, which could
affect the Company's ability to compete with these competitors. The principal
methods of competition in the industry are quality, price, and production lead
time. The Company believes that it can compete effectively with its present
domestic competitors. However, it is unknown at this time if the Company can
compete with foreign competitors in the long-term.
7
ITEM 1 -- BUSINESS (CONTINUED)
After a review of the castings business the Company recorded a $3.3 million
pre-tax charge to earnings in the fourth quarter of 2002 to recognize an
impairment loss on certain of the investment castings segment assets due to
anticipated underutilization of casting production capacity. A similar
evaluation was undertaken by the Company in the fourth quarter of 2003 and no
pre-tax charge to earnings was recorded for any impairment loss at that time.
EMPLOYEES
As of March 1, 2004, the Company employed 1,242 full-time employees of which
approximately 60% had at least ten years of service with the Company.
None of the Company's employees are subject to a collective bargaining
agreement. The Company has never experienced a strike during its entire 54-year
history and believes its employee relations are satisfactory.
RESEARCH AND DEVELOPMENT
In 2003, 2002, and 2001, the Company spent approximately $0.9 million, $0.7
million, and $0.8 million, respectively, on research activities relating to the
development of new products and the improvement of existing products. As of
February 29, 2004, the Company had approximately 32 employees engaged in
research and development activities as part of their responsibilities.
PATENTS AND TRADEMARKS
The Company owns various United States and foreign patents and trademarks which
have been secured over a period of years and which expire at various times. It
is the policy of the Company to apply for patents and trademarks whenever new
products or processes deemed commercially valuable are developed or marketed by
the Company. However, none of these patents and trademarks are considered to be
basic to any important product or manufacturing process of the Company and,
although the Company deems its patents and trademarks to be of value, it does
not consider its business materially dependent on patent or trademark
protection.
ENVIRONMENTAL MATTERS
The Company is committed to achieving high standards of environmental quality
and product safety, and strives to provide a safe and healthy workplace for its
employees and others in the communities in which it operates. The Company has
programs in place that monitor compliance with various environmental
regulations. However, in the normal course of its manufacturing operations the
Company is subject to occasional governmental proceedings and orders pertaining
to waste disposal, air emissions, and water discharges into the environment.
These regulations are integrated into the Company's manufacturing and assembly
and testing processes. The Company believes that it is generally in compliance
with applicable environmental regulations and the outcome of any environmental
proceedings and orders will not have a material effect on its business.
8
ITEM 1 -- BUSINESS (CONTINUED)
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below are the names, ages, and positions of the executive officers of
the Company. Officers serve at the pleasure of the Board of Directors of the
Company.
Name Age Position With Company
---- --- ---------------------
William B. Ruger, Jr. 64 Chairman of the Board of Directors and Chief Executive Officer
Stephen L. Sanetti 54 Vice Chairman of the Board of Directors, President, Chief
Operating Officer and General Counsel
Leslie M. Gasper 50 Corporate Secretary
Thomas A. Dineen 35 Treasurer and Chief Financial Officer
William B. Ruger, Jr. became Chairman of the Board and Chief Executive Officer
on October 24, 2000. Mr. Ruger had served as President and Chief Operating
Officer since March 1, 1998, Vice Chairman and Senior Executive Officer of the
Company since 1995 and Director of the Company since 1970. Previously, he served
as President of the Company from 1991 to 1995 and as Senior Vice President of
the Company from 1970 to 1990.
Stephen L. Sanetti became President and Chief Operating Officer on May 6, 2003.
Mr. Sanetti has served as General Counsel since 1980. Prior to May 6, 2003, Mr.
Sanetti had been Vice Chairman and Senior Executive Vice President since October
24, 2000. Mr. Sanetti has been a Director since March 1, 1998. Prior to October
24, 2000, he had been Vice President, General Counsel of the Company since 1993.
Leslie M. Gasper has been Secretary of the Company since 1994. Prior to this,
she was the Administrator of the Company's pension plans, a position she held
for more than five years prior thereto.
Thomas A. Dineen became Treasurer and Chief Financial Officer on May 6, 2003.
Mr. Dineen had been Assistant Controller since 2001. Prior to that, Mr. Dineen
had served as Manager, Corporate Accounting since 1997.
WHERE YOU CAN FIND MORE INFORMATION
The Company is a reporting company and is therefore subject to the informational
requirements of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), and accordingly files its Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Definitive Proxy Statements, Current Reports on Form 8-K,
and other information with the Securities and Exchange Commission (the "SEC").
The public may read and copy any materials filed with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. Please call
the SEC at (800) SEC-0330 for further information on the Public Reference Room.
As an electronic filer, the Company's public filings are maintained on the SEC's
Internet site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC. The address
of that website is http://www.sec.gov.
9
ITEM 1 -- BUSINESS (CONTINUED)
The Company makes its Annual Report on Form 10-K, Quarterly Reports on Form
10-Q, Definitive Proxy Statements, Current Reports on Form 8-K and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Exchange Act accessible free of charge through the Company's Internet site after
the Company has electronically filed such material with, or furnished it to, the
SEC. The address of that website is http://www.ruger.com. However, such reports
will not be accessible through the Company's website as promptly as they are
accessible on the SEC's website until later technical improvements are made to
the Company's website.
Additionally, the Company's corporate governance materials, including its Board
Governance Guidelines; the charters of the Audit, Compensation and Nominating
and Corporate Governance committees, and the Code of Business Conduct and Ethics
may also be found under the "Stockholder Relations" section of the Company's
Internet site at www.ruger.com. A copy of the foregoing corporate governance
materials are available upon written request.
ITEM 2 -- PROPERTIES
The Company's manufacturing operations are carried out at two facilities. The
following table sets forth certain information regarding each of these
facilities:
Approximate
Aggregate Usable
Square Feet Status Segment
----------- ------ -------
Newport, New Hampshire 350,000 Owned Firearms/Castings
Prescott, Arizona 230,000 Leased Firearms/Castings
Each facility contains enclosed ranges for testing firearms and also contain
modern tool room facilities. The lease of the Prescott facility provides for
rental payments which approximate real property taxes. In addition, the
Company's headquarters and related operations are in Southport, Connecticut. The
Company also has other real estate holdings that are not used in its
manufacturing operations and are not materially important to the business of the
Company. There are no mortgages on any of the real estate owned by the Company.
ITEM 3 -- LEGAL PROCEEDINGS
As of December 31, 2003, the Company is a defendant in approximately 21 lawsuits
involving its products and is aware of certain other such claims. These lawsuits
and claims fall into two categories:
a) those that claim damages from the Company related to allegedly
defective product design which stem from a specific incident. These
lawsuits and claims are based principally on the theory of "strict
liability" but also may be based on negligence, breach of warranty, and
other legal theories, and
10
b) those brought by cities, municipalities, counties, associations, and
individuals against firearms manufacturers, distributors and dealers
seeking to recover damages allegedly arising out of the misuse of
firearms by third parties in the commission of homicides, suicides and
other shootings
ITEM 3 -- LEGAL PROCEEDINGS (CONTINUED)
involving juveniles and adults. The complaints by municipalities seek
damages, among other things, for the costs of medical care, police and
emergency services, public health services, and the maintenance of
courts, prisons, and other services. In certain instances, the
plaintiffs seek to recover for decreases in property values and loss of
business within the city due to criminal violence. In addition,
nuisance abatement and/or injunctive relief is sought to change the
design, manufacture, marketing and distribution practices of the
various defendants. These suits allege, among other claims, strict
liability or negligence in the design of products, public nuisance,
negligent entrustment, negligent distribution, deceptive or fraudulent
advertising, violation of consumer protection statutes and conspiracy
or concert of action theories. Most of these cases do not allege a
specific injury to a specific individual as a result of the misuse or
use of any of the Company's products.
Management believes that, in every case, the allegations are unfounded, and that
the shootings and any results therefrom were due to negligence or misuse of the
firearms by third-parties or the claimant, and that there should be no recovery
against the Company. Defenses further exist to the suits brought by cities,
municipalities, and counties based, among other reasons, on established state
law precluding recovery by municipalities for essential government services, the
remoteness of the claims, the types of damages sought to be recovered, and
limitations on the extraterritorial authority which may be exerted by a city,
municipality, county or state under state and federal law, including State and
Federal Constitutions.
The only case against the Company alleging liability for criminal shootings by
third-parties to ever be permitted to go before a constitutional jury, Hamilton,
et al. v. Accu-tek, et al., resulted in a defense verdict in favor of the
Company on February 11, 1999. In that case, numerous firearms manufacturers and
distributors had been sued, alleging damages as a result of alleged negligent
sales practices and "industry-wide" liability. The Company and its marketing and
distribution practices were exonerated from any claims of negligence in each of
the seven cases decided by the jury. In subsequent proceedings involving other
defendants, the New York Court of Appeals as a matter of law confirmed that 1)
no legal duty existed under the circumstances to prevent or investigate criminal
misuses of a manufacturer's lawfully made products; and 2) liability of firearms
manufacturers could not be apportioned under a market share theory. More
recently, the New York Court of Appeals on October 21, 2003 declined to hear the
appeal from the decision of the New York Supreme Court, Appellate Division,
affirming the dismissal of New York Attorney General Eliot Spitzer's public
nuisance suit against the Company and other manufacturers and distributors of
firearms. In its decision, the Appellate Division relied heavily on the Hamilton
decision in concluding that it was "legally inappropriate," "impractical,"
"unrealistic" and "unfair" to attempt to hold firearms manufacturers responsible
under theories of public nuisance for the criminal acts of others.
Of the lawsuits brought by municipalities or a state Attorney General, fifteen
have been dismissed with no appeal pending. Twelve of those cases are concluded:
Atlanta - dismissal by intermediate appellate court, no further appeal;
Bridgeport - dismissal affirmed by Connecticut Supreme Court; County of Camden -
dismissal affirmed by U.S. Third Circuit Court of Appeals; Miami - dismissal
affirmed by intermediate appellate court, Florida Supreme Court declined review;
New Orleans - dismissed by
11
ITEM 3 -- LEGAL PROCEEDINGS (CONTINUED)
Louisiana Supreme Court, United States Supreme Court declined review;
Philadelphia - U.S. Third Circuit Court of Appeals affirmed dismissal, no
further appeal; Wilmington - dismissed by trial court, no appeal; Boston -
voluntary dismissal with prejudice by the City at the close of fact discovery;
Cincinnati - voluntarily withdrawn after a unanimous vote of the city council;
Detroit - dismissed by Michigan Court of Appeals, no appeal; Wayne County -
dismissed by Michigan Court of Appeals, no appeal; and New York State - Court of
Appeals denied plaintiff's petition for leave to appeal the Intermediate
Appellate Court's dismissal, no further appeal.
Camden City was dismissed on July 7, 2003 due to the bankruptcy of one of the
parties. No further action has been taken by the city. On November 13, 2003,
plaintiffs in the Jersey City case voluntarily dismissed the matter. It is
unknown whether plaintiffs will re-file. On December 5, 2003, plaintiffs in the
Newark case also voluntarily dismissed the matter. It is unknown whether
plaintiffs will re-file.
Washington, D.C. is on appeal from its complete dismissal. On March 7, 2003, the
consolidated California Cities case involving nine cities and three counties was
dismissed as to all manufacturer defendants, and plaintiffs appealed on June 9,
2003. The Chicago dismissal was reversed in part on appeal, and an appeal to the
Illinois Supreme Court is pending. On October 20, 2003, the St. Louis Circuit
Court dismissed the St. Louis case, and the city has filed a notice of appeal.
The Indiana Court of Appeals affirmed the dismissal of the Gary case by the
trial court, but the Indiana Supreme Court reversed this dismissal and remanded
the case for discovery proceedings on December 23, 2003. Cleveland and New York
City are open cases and could proceed to trial. In the NAACP case, on May 14,
2003, an advisory jury returned a verdict rejecting the NAACP's claims. On July
21, 2003, Judge Jack B. Weinstein entered an order dismissing the NAACP lawsuit,
but this order contained lengthy dicta which defendants believe are contrary to
law and fact. An appeal by defendants is pending.
Legislation has been passed in approximately 34 states precluding suits of the
type brought by the municipalities mentioned above, and similar federal
legislation has been introduced in the U.S. Congress. It passed the House by a
2-to-1 bipartisan majority and had over 54 co-sponsors in the Senate. It was
considered by the Senate in March 2004 and failed to pass.
The Company management monitors the status of known claims and the product
liability accrual, which includes amounts for asserted and unasserted claims.
While it is not possible to forecast the outcome of litigation or the timing of
costs, in the opinion of management, after consultation with special and
corporate counsel, it is not probable and is unlikely that litigation, including
punitive damage claims, will have a material adverse effect on the financial
position of the Company, but may have a material impact on the Company's
financial results for a particular period.
Punitive damages, as well as compensatory damages, are demanded in many of the
lawsuits and claims. Aggregate claimed amounts presently exceed product
liability accruals and applicable insurance coverage. For claims made after July
10, 1994, compensatory and punitive damage insurance coverage is provided, in
states where permitted, for losses exceeding $2.0 million per claim, or an
aggregate
12
ITEM 3 -- LEGAL PROCEEDINGS (CONTINUED)
maximum loss of $6.0 million. For claims made after July 10, 1997, coverage is
provided for annual losses exceeding $2.0 million per claim, or an aggregate
maximum loss of $5.5 million annually. For claims made after July 10, 2000,
coverage is provided for annual losses exceeding $5 million per claim, or an
aggregate maximum loss of $10 million annually, except for certain new claims
which might be brought by governments or municipalities after July 10, 2000,
which are excluded from coverage.
On March 17, 2000, Smith & Wesson announced that it had reached a settlement to
conclude some of the municipal lawsuits with various governmental entities. On
March 30, 2000, the Office of the Connecticut Attorney General began an
investigation of certain alleged "anticompetitive practices in the firearms
industry." On April 17, the State of Maryland's Attorney General also made
similar inquiries as to the Company. On August 9, 2000, the U.S. Federal Trade
Commission also filed such a civil investigative demand regarding the Smith &
Wesson settlement. During April 2002, after the city of Boston voluntarily
withdrew its case with prejudice as to all remaining defendants, Boston moved
jointly with Smith & Wesson to dissolve their consent decree settlement, which
motion the court accepted. The Company has not engaged in any improper conduct
and has cooperated with these investigations. The U.S. Federal Trade Commission
announced that it was terminating this investigation without further action on
August 22, 2003.
The Company has reported all cases instituted against it through September 30,
2003 and the results of those cases, where terminated, to the SEC on its
previous Form 10-K and 10-Q reports, to which reference is hereby made.
For a description of all pending lawsuits against the Company through September
30, 2003, reference is made to the discussion under the caption "Item 3. LEGAL
PROCEEDINGS" of the Company's Annual Reports on Form 10-K for the years ended
December 31, 1998, 1999, and 2002, and to the discussion under caption "Item 1.
LEGAL PROCEEDINGS" of the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1995, June 30, 1996, March 31, June 30, and September
30, 1999, March 31 and September 30, 2000, and March 31, 2002.
The nature of the legal proceedings against the Company is discussed at Note 5
to this Form 10-K report, which is incorporated herein by reference.
Two cases were formally instituted against the Company during the three months
ended December 31, 2003, which involved significant demands for compensatory
and/or punitive damages and in which the Company has been served with process.
Jonathan Diamond v. Company (FL) in the Circuit Court for Monroe County. The
complaint was served on October 7, 2003 and alleges that the plaintiff was
injured when he dropped his "old model" single action revolver and it
discharged. Plaintiff seeks compensatory damages.
Glenn Raymond Snyder v. Company (TX) in the District Court in Dallas County. The
complaint was served on October 24, 2003 and alleges that the plaintiff was
injured when he placed his "old model" single action revolver on the ground and
it discharged. Plaintiff seeks compensatory damages.
13
ITEM 3 -- LEGAL PROCEEDINGS (CONTINUED)
During the three months ending December 31, 2003, no previously reported cases
were settled.
On March 27, 2003, in the previously reported Henry (FL) case, an order of
dismissal was entered. Plaintiff's time to appeal has expired.
On August 7, 2003, the Michigan Court of Appeals unanimously reversed the trial
court's decision in both the Detroit (MI) and Wayne County (MI) lawsuits and
dismissed these cases. The trial court had denied the defendants' motion for
summary disposition based on Michigan law, which prohibits cities from bringing
civil actions against manufacturers of firearms or ammunition unless the product
is defective, or its sale breaches a warranty or contract with a city. The trial
court found the statute to be invalid, but the appellate court found it to be
both constitutional and controlling. Plaintiffs' appeal period expired on
October 3, 2003.
On September 30, 2003, in the previously reported Lawn (Canada) lawsuit, an
order of dismissal was entered, dismissing the Company from the original claim
by the plaintiffs and a cross-claim that was filed by the ammunition
manufacturer. The Company was aware of a potential third-party claim, but the
period in which the third-party had to effect service has expired.
On October 6, 2003, after a two-week trial, the jury in the previously reported
Whaley (AK) case returned with a unanimous defense verdict. The case involved a
claimed accidental discharge of a Ruger M77 rifle. Plaintiffs filed a post-trial
motion seeking a new trial, which was denied on February 23, 2004.
On October 20, 2003, the previously reported St. Louis (MO) case was dismissed
in its entirety by the St. Louis Circuit Court. The court held that plaintiff's
arguments were too remote to support a claim on either a public nuisance or
negligence theory. Notice of appeal has been filed.
On October 21, 2003, in the previously reported New York State (NY) lawsuit, the
New York State Court of Appeals denied plaintiff Attorney General Elliot
Spitzer's petition for leave to appeal the Intermediate Appellate Court's June
24, 2203 dismissal of his lawsuit against firearms manufacturers. No further
appeal is possible.
On November 13, 2003, the plaintiff in the previously reported Jersey City (NJ)
case voluntarily dismissed the matter without prejudice to re-file. It is
presently unknown whether plaintiff will re-file.
On December 5, 2003, the plaintiff in the previously reported Newark (NJ) case
voluntarily dismissed the matter without prejudice to re-file. It is presently
unknown whether plaintiff will re-file.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
14
PART II
ITEM 5 -- MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The information required for this Item is incorporated by reference from pages 3
and 24 of the Company's 2003 Annual Report to Stockholders.
ITEM 6 -- SELECTED FINANCIAL DATA
The information required for this Item is incorporated by reference from page 3
of the Company's 2003 Annual Report to Stockholders.
ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information required for this Item is incorporated by reference from pages 4
through 8 of the Company's 2003 Annual Report to Stockholders.
CONTRACTUAL OBLIGATIONS
The following table summarizes the Company's significant contractual obligations
at December 31, 2003, and the effect such obligations are expected to have on
our liquidity and cash flows in future periods. This table excludes amounts
already recorded on the Company's balance sheet as current liabilities at
December 31, 2003.
PAYMENT DUE BY PERIOD (IN THOUSANDS)
----------------------------------------------------------
LESS THAN 1 1-3 3-5 MORE THAN 5
CONTRACTUAL OBLIGATIONS TOTAL YEAR YEARS YEARS YEARS
----------------------- ----- ---- ----- ----- -----
Long-Term Debt Obligations -- -- -- -- --
Capital Lease Obligations -- -- -- -- --
Operating Lease Obligations -- -- -- -- --
Purchase Obligations $14,215 $13,982 $ 233 -- --
Other Long-Term Liabilities Reflected on
the Registrant's Balance Sheet under GAAP -- -- -- -- --
Total $14,215 $13,982 $ 233 -- --
"Purchase Obligations" as used in the above table includes all agreements to
purchase goods or services that are enforceable and legally binding on the
Company and that specify all significant terms, including: fixed or minimum
quantities to be purchased; fixed, minimum or variable price provisions; and the
approximate timing of the transaction. Certain of the Company's purchase orders
or contracts for the purchase of raw materials and other goods and services that
may not necessarily be enforceable or
15
ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
legally binding on the Company, are also included in "Purchase Obligations" in
the above table. Certain of the Company's purchase orders or contracts therefore
included in the table may represent authorizations to purchase rather than
legally binding agreements. The Company expects to fund all of these commitments
with cash flows from operations and current cash and short-term investments.
The expected timing of payment of the obligations discussed above is estimated
based on current information. Timing of payments and actual amounts paid may be
different depending on the time of receipt of goods or services or changes to
agreed-upon amounts for some obligations.
ITEM 7A -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to changing interest rates on its investments, which
consists primarily of United States Treasury instruments with short-term (less
than one year) maturities and cash. The interest rate market risk implicit in
the Company's investments at any given time is low, as the investments mature
within short periods and the Company does not have significant exposure to
changing interest rates on invested cash.
The Company has not undertaken any actions to cover interest rate market risk
and is not a party to any interest rate market risk management activities.
A hypothetical ten percent change in market interest rates over the next year
would not materially impact the Company's earnings or cash flow. A hypothetical
ten percent change in market interest rates would not have a material effect on
the fair value of the Company's investments.
ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(A) FINANCIAL STATEMENTS
The consolidated balance sheets of Sturm, Ruger & Company, Inc. and
Subsidiaries as of December 31, 2003 and 2002, and the related
consolidated statements of income, stockholders' equity and cash flows
for each of the years in the three year period ended December 31, 2003,
and the notes to the consolidated financial statements and the report
dated February 6, 2004 of KPMG LLP, independent auditors, are
incorporated by reference from pages 12 through 23 of the Company's 2003
Annual Report to Stockholders.
(B) SUPPLEMENTARY DATA
Quarterly results of operations for 2003 and 2002 are incorporated by
reference from page 22 of the Company's 2003 Annual Report to
Stockholders.
ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
16
ITEM 9A -- CONTROLS AND PROCEDURES
EVALUATION
The Company's management, with the participation of the Company's Chief
Executive Officer and Treasurer and Chief Financial Officer, has evaluated the
effectiveness of the Company's disclosure controls and procedures (as such term
is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) as of the end of the period covered by
this report.
CONCLUSIONS
Based on that evaluation, the Company's Chief Executive Officer and Treasurer
and Chief Financial Officer have concluded that, as of the end of such period,
the Company's disclosure controls and procedures are effective.
There have not been any changes in the Company's internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the Company's most recent quarter that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
PART III
ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the Company's executive officers is set forth in Item 1
of this Form 10-K under the caption "Executive Officers of the Company."
Information required by this Item is also incorporated by reference from those
sections of the Company's Proxy Statement relating to the Annual Meeting of
Stockholders to be held May 4, 2004 under the captions "PROPOSAL NO. 1: ELECTION
OF DIRECTORS," "THE BOARD OF DIRECTORS AND ITS COMMITTEES," and "SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" on pages 2 through 10 and 24.
ITEM 11 -- EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference from those
sections of the Company's Proxy Statement relating to the Annual Meeting of
Stockholders to be held May 4, 2004 under the captions "THE BOARD OF DIRECTORS
AND ITS COMMITTEES", "COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION,"
"COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION," "EXECUTIVE
COMPENSATION SUMMARY COMPENSATION TABLE," "OPTION/SAR GRANTS IN LAST FISCAL
YEAR," "AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES," "PENSION PLAN TABLE," "SUPPLEMENTAL EXECUTIVE RETIREMENT
PLAN TABLE," and "COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN on pages 5
through 20.
17
ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS (CONTINUED)
Information required by this Item is incorporated by reference from those
sections of the Company's Proxy Statement relating to the Annual Meeting of
Stockholders to be held May 4, 2004 under the captions "PROPOSAL NO. 1: ELECTION
OF DIRECTORS," "PRINCIPAL STOCKHOLDERS," and "SECURITY OWNERSHIP OF MANAGEMENT"
on pages 2 through 4 and 21 through 23.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table provides information regarding compensation plans under
which equity securities of the Company are authorized for issuance as of
December 31, 2003:
EQUITY COMPENSATION PLAN INFORMATION
---------------------------------------------------------------------------
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
FUTURE ISSUANCE UNDER
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE EQUITY COMPENSATION
BE ISSUED UPON EXERCISE EXERCISE PRICE OF PLANS (EXCLUDING
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, SECURITIES REFLECTED IN
WARRANTS AND RIGHTS WARRANTS AND RIGHTS COLUMN (A))
PLAN CATEGORY (A) (B) (C)
----------------------- -------------------- -----------------------
EQUITY COMPENSATION PLANS
APPROVED BY SECURITY
HOLDERS
1998 Stock Incentive Plan 923,000 $11.9375 per share 1,005,000
2001 Stock Option Plan
for Non-Employee Directors 100,000 $9.875 per share 100,000
EQUITY COMPENSATION PLANS
NOT APPROVED BY SECURITY
HOLDERS
None.
TOTAL 1,023,000 1,105,000
ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference from those
sections of the Company's Proxy Statement relating to the Annual Meeting of
Stockholders to be held May 4, 2004 under the captions "THE BOARD OF DIRECTORS
AND ITS COMMITTEES" and "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" on
pages 5 through 10 and 24.
ITEM 14 -- PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is incorporated by reference from the
section of the Company's Proxy Statement relating to the Annual Meeting of the
Stockholders to be held May 4, 2004 under the caption "PROPOSAL NO. 2: APPROVAL
OF INDEPENDENT AUDITORS" on pages 26 and 27.
18
PART IV
ITEM 15 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) Documents filed as part of this Form 10-K.
(1) Financial Statements:
Consolidated Balance Sheets -- December 31, 2003 and 2002
Consolidated Statements of Income -- Years ended December 31,
2003, 2002, and 2001
Consolidated Statements of Stockholders' Equity -- Years ended
December 31, 2003, 2002, and 2001
Consolidated Statements of Cash Flows -- Years ended December
31, 2003, 2002, and 2001
Notes to Consolidated Financial Statements
Report of KPMG LLP
This information is incorporated by reference from the Company's 2003
Annual Report to Stockholders as noted in Item 8.
(2) Financial Statement Schedules:
Schedule II-Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions, or are inapplicable, or the
required information is disclosed elsewhere, and therefore, have been
omitted.
(3) Listing of Exhibits:
Exhibit 3.1 Certificate of Incorporation of the Company,
as amended (Incorporated by reference to
Exhibits 4.1 and 4.2 to the Form S-3
Registration Statement previously filed by the
Company File No. 33-62702).
Exhibit 3.2 Bylaws of the Company, as amended
(Incorporated by reference to Exhibit 3.2 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1995, SEC File No.
0-4776).
Exhibit 3.3 Amendment to Article 2, Sections 4 and 5 of
the Bylaws of the Company (Incorporated by
reference to Exhibit 3.3 to the Company's Annual
Report on Form 10-K for the year ended December
31, 1996, SEC File No. 0-4776).
19
ITEM 15 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K (CONTINUED)
Exhibit 10.1 Sturm, Ruger & Company, Inc. 1986 Stock Bonus Plan
(Incorporated by reference to Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1988, as amended by Form 8 filed March 27, 1990, SEC File No.
0-4776).
Exhibit 10.2 Amendment to Sturm, Ruger & Company, Inc. 1986 Stock
Bonus Plan (Incorporated by reference to Exhibit 10.3 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1991, SEC File No. 0-4776).
Exhibit 10.3 Sturm, Ruger & Company, Inc. Supplemental Executive
Profit Sharing Retirement Plan (Incorporated by reference to
Exhibit 10.4 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1991, SEC File No. 0-4776).
Exhibit 10.4 Agreement and Assignment of Lease dated September 30,
1987 by and between Emerson Electric Co. and Sturm, Ruger &
Company, Inc. (Incorporated by reference to Exhibit 10.2 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1991, SEC File No. 0-4776).
Exhibit 10.5 Sturm, Ruger & Company, Inc. Supplemental Executive
Retirement Plan (Incorporated by reference to Exhibit 10.5 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, SEC File No. 0-4776).
Exhibit 10.6 Operating Agreement of Antelope Hills, LLC, a Delaware
Limited Liability Company, dated as of October 5, 1995
(Incorporated by reference to Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1995, SEC File No. 0-4776).
Exhibit 10.7 Sturm, Ruger & Company, Inc. 1998 Stock Incentive Plan.
(Incorporated by reference to Exhibit 10.7 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1998, SEC File No. 0-4776).
Exhibit 10.8 Sturm, Ruger & Company, Inc. 2001 Stock Option Plan for
Non-Employee Directors. (Incorporated by reference to Exhibit
10.8 to the Company's Annual Report on Form 10-K for the year
ended December 31, 2001, SEC File No. 0-4776).
Exhibit 13.1 Annual Report to Stockholders of the Company for the year
ended December 31, 2003. Except for those portions of such
Annual Report to Stockholders expressly incorporated by
reference into the Report, such Annual Report to Stockholders
is furnished solely for the information of the Securities and
Exchange Commission and shall not be deemed a "filed"
document.
20
ITEM 15 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K (CONTINUED)
Exhibit 23.1 Consent and Report on Schedule of Independent Auditors.
Exhibit 31.1 Certification of Chief Executive Officer Pursuant to Rule
13a-14(a) of the Exchange Act.
Exhibit 31.2 Certification of Treasurer and Chief Financial Officer
Pursuant to Rule 13a-14(a) of the Exchange Act.
Exhibit 32.1 Certification of the Chief Executive Officer Pursuant to
Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
Exhibit 32.2 Certification of the Treasurer and Chief Financial
Officer Pursuant to Rule 13a-14(b) of the Exchange Act and 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
Exhibit 99.1 Item 1 LEGAL PROCEEDINGS from the Quarterly Report on
Form 10-Q of the Company for the quarter ended March 31, 1995,
SEC File No. 1-10435, incorporated by reference in Item 3
LEGAL PROCEEDINGS.
Exhibit 99.2 Item 1 LEGAL PROCEEDINGS from the Quarterly Report on
Form 10-Q of the Company for the quarter ended June 30, 1996,
SEC File No. 1-10435, incorporated by reference in Item 3
LEGAL PROCEEDINGS.
Exhibit 99.3 Item 3 LEGAL PROCEEDINGS from the Annual Report on Form
10-K of the Company for the year ended December 31, 1998, SEC
File No. 1-10435, incorporated by reference in Item 3 LEGAL
PROCEEDINGS.
Exhibit 99.4 Item 1 LEGAL PROCEEDINGS from the Quarterly Reports on
Form 10-Q of the Company for the quarters ended March 31, June
30, and September 30, 1999 SEC File No. 1-10435, incorporated
by reference in Item 3 LEGAL PROCEEDINGS.
Exhibit 99.5 Item 3 LEGAL PROCEEDINGS from the Annual Report on Form
10-K of the Company for the year ended December 31, 1999, SEC
File No. 1-10435, incorporated by reference in Item 3 LEGAL
PROCEEDINGS.
Exhibit 99.6 Item 1 LEGAL PROCEEDINGS from the Quarterly Reports on
Form 10-Q of the Company for the quarters ended March 31, and
September 30, 2000, SEC File No. 1-10435, incorporated by
reference in Item 3 LEGAL PROCEEDINGS.
21
ITEM 15 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K (CONTINUED)
Exhibit 99.7 Item 1 LEGAL PROCEEDINGS from the Quarterly Report on
Form 10-Q of the Company for the quarter ended March 31, 2002,
SEC File No. 1-10435, incorporated by reference in Item 3
LEGAL PROCEEDINGS.
Exhibit 99.8 Item 3 LEGAL PROCEEDINGS from the Annual Report on Form
10-K of the Company for the year ended December 31, 2002, SEC
File No. 1-10435, incorporated by reference in Item 3 LEGAL
PROCEEDINGS.
(b) Report on Form 8-K filed in the fourth quarter of 2003:
On October 20, 2003 the Company filed a Current Report on Form 8-K regarding an
update to stockholders and other interested parties on financial results for the
third quarter and nine months ended September 30, 2003.
22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
STURM, RUGER & COMPANY, INC.
----------------------------------------
(Registrant)
S/THOMAS A. DINEEN
----------------------------------------
Thomas A. Dineen
Treasurer and Chief Financial Officer
(Principal Financial Officer)
March 11, 2004
----------------------------------------
Date
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
S/WILLIAM B. RUGER, JR. 3/11/04 S/STEPHEN L. SANETTI 3/11/04
- --------------------------------------- ---------------------------------------
William B. Ruger, Jr. Stephen L. Sanetti
Chairman of the Board, Chief Executive Vice Chairman of the Board,
Officer President and Chief Operating Officer
(Principal Executive Officer)
S/JOHN M. KINGSLEY, JR. 3/11/04 S/RICHARD T. CUNNIFF 3/11/04
- --------------------------------------- ---------------------------------------
John M. Kingsley, Jr. Richard T. Cunniff
Director Director
S/TOWNSEND HORNOR 3/11/04 S/PAUL X. KELLEY 3/11/04
- --------------------------------------- ---------------------------------------
Townsend Hornor Paul X. Kelley
Director Director
S/JAMES E. SERVICE 3/11/04
- ---------------------------------------
James E. Service
Director
23
EXHIBIT INDEX
Page No.
--------
Exhibit 3.1 Certificate of Incorporation of the Company, as amended
(Incorporated by reference to Exhibits 4.1 and 4.2 to the Form
S-3 Registration Statement previously filed by the Company
File No. 33-62702).
Exhibit 3.2 Bylaws of the Company, as amended (Incorporated by
reference to Exhibit 3.2 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, SEC File No.
0-4776).
Exhibit 3.3 Amendment to Article 2, Sections 4 and 5 of the Bylaws of
the Company (Incorporated by reference to Exhibit 3.3 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1996, SEC File No. 0-4776).
Exhibit 10.1 Sturm, Ruger & Company, Inc. 1986 Stock Bonus Plan
(Incorporated by reference to Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1988, as amended by Form 8 filed March 27, 1990, SEC File No.
0-4776).
Exhibit 10.2 Amendment to Sturm, Ruger & Company, Inc. 1986 Stock
Bonus Plan (Incorporated by reference to Exhibit 10.3 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1991, SEC File No. 0-4776).
Exhibit 10.3 Sturm, Ruger & Company, Inc. Supplemental Executive
Profit Sharing Retirement Plan (Incorporated by reference to
Exhibit 10.4 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1991, SEC File No. 0-4776).
Exhibit 10.4 Agreement and Assignment of Lease dated September 30,
1987 by and between Emerson Electric Co. and Sturm, Ruger &
Company, Inc. (Incorporated by reference to Exhibit 10.2 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1991, SEC File No. 0-4776).
Exhibit 10.5 Sturm, Ruger & Company, Inc. Supplemental Executive
Retirement Plan (Incorporated by reference to Exhibit 10.5 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, SEC File No. 0-4776).
Exhibit 10.6 Operating Agreement of Antelope Hills, LLC, a Delaware
Limited Liability Company, dated as of October 5, 1995
(Incorporated by reference to Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1995, SEC File No. 0-4776).
Exhibit 10.7 Sturm, Ruger & Company, Inc. 1998 Stock Incentive Plan.
(Incorporated by reference to Exhibit 10.7 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1998, SEC File No. 0-4776).
24
EXHIBIT INDEX (continued)
Page No.
--------
Exhibit 10.8 Sturm, Ruger & Company, Inc. 2001 Stock Option Plan for
Non-Employee Directors. (Incorporated by reference to Exhibit
10.8 to the Company's Annual Report on Form 10-K for the year
ended December 31, 2001, SEC File No. 0-4776).
Exhibit 13.1 Annual Report to Stockholders of the Company for the year 29
ended December 31, 2003. Except for those portions of such
Annual Report to Stockholders expressly incorporated by
reference into the Report, such Annual Report to Stockholders
is furnished solely for the information of the Securities and
Exchange Commission and shall not be deemed a "filed"
document.
Exhibit 23.1 Consent and Report on Schedule of Independent Auditors. 47
Exhibit 31.1 Certification of Chief Executive Officer Pursuant to Rule
13a-14(a) of the Exchange Act. 48
Exhibit 31.2 Certification of Treasurer and Chief Financial Officer
Pursuant to Rule 13a-14(a) of the Exchange Act. 50
Exhibit 32.1 Certification of the Chief Executive Officer Pursuant to
Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. 52
Exhibit 32.2 Certification of the Treasurer and Chief Financial
Officer Pursuant to Rule 13a-14(b) of the Exchange Act and 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. 53
Exhibit 99.1 Item 1 LEGAL PROCEEDINGS from the Quarterly Report on
Form 10-Q of the Company for the quarter ended March 31, 1995,
SEC File No. 1-10435, incorporated by reference in Item 3
LEGAL PROCEEDINGS.
Exhibit 99.2 Item 1 LEGAL PROCEEDINGS from the Quarterly Report on
Form 10-Q of the Company for the quarter ended June 30, 1996,
SEC File No. 1-10435, incorporated by reference in Item 3
LEGAL PROCEEDINGS.
Exhibit 99.3 Item 1 LEGAL PROCEEDINGS from the Annual Report on Form
10-K of the Company for the year ended December 31, 1998, SEC
File No. 1-10435, incorporated by reference in Item 3 LEGAL
PROCEEDINGS.
Exhibit 99.4 Item 1 LEGAL PROCEEDINGS from the Quarterly Reports on
Form 10-Q of the Company for the quarters ended March 31, June
30, and September 30, 1999, SEC File No. 1-10435, incorporated
by reference in Item 3 LEGAL PROCEEDINGS.
25
EXHIBIT INDEX (continued)
Page No.
--------
Exhibit 99.5 Item 3 LEGAL PROCEEDINGS from the Annual Report on Form
10-K of the Company for the year ended December 31, 1999, SEC
File No. 1-10435, incorporated by reference in Item 3 LEGAL
PROCEEDINGS.
Exhibit 99.6 Item 1 LEGAL PROCEEDINGS from the Quarterly Reports on
Form 10-Q of the Company for the quarters ended March 31, and
September 30, 2000, SEC File No. 1-10435, incorporated by
reference in Item 3 LEGAL PROCEEDINGS.
Exhibit 99.7 Item 1 LEGAL PROCEEDINGS from the Quarterly Report on
Form 10-Q of the Company for the quarter ended March 31, 2002,
SEC File No. 1-10435, incorporated by reference in Item 3
LEGAL PROCEEDINGS.
Exhibit 99.8 Item 3 LEGAL PROCEEDINGS from the Annual Report on Form
10-K of the Company for the year ended December 31, 2002, SEC
File No. 1-10435, incorporated by reference in Item 3 LEGAL
PROCEEDINGS.
26
YEAR ENDED DECEMBER 31, 2003
STURM, RUGER & COMPANY, INC. AND SUBSIDIARIES
ITEMS 15(a)(2) AND 15(d)
FINANCIAL STATEMENT SCHEDULE
27
Sturm, Ruger & Company, Inc. and Subsidiaries
Item 15(a)(2) and Item 15(d)--Financial Statement Schedule
Schedule II -- Valuation and Qualifying Accounts
(In Thousands)
COL. A COL. B COL. C COL. D COL. E
------ ------ ------ ------ ------
ADDITIONS
---------
(1) (2)
Charged to
Balance at Charged to Other Balance
Beginning Costs and Accounts at End
Description of Period Expenses - Describe Deductions of Period
----------- --------- -------- ---------- ---------- ---------
Deductions from asset accounts:
Allowance for doubtful accounts:
Year ended December 31, 2003 $ 449 $ 8(a) $ 441
------ ------ ------
Year ended December 31, 2002 $1,061 $ 83 $ 695(a) $ 449
------ ------ ------ ------
Year ended December 31, 2001 $1,252 $ 191(a) $1,061
------ ------ ------
Allowance for discounts:
Year ended December 31, 2003 $ 783 $3,965 $3,976(b) $ 772
------ ------ ------ ------
Year ended December 31, 2002 $1,145 $4,111 $4,473(b) $ 783
------ ------ ------ ------
Year ended December 31, 2001 $1,130 $4,346 $4,331(b) $1,145
------ ------ ------ ------
(a) Accounts written off
(b) Discounts taken
28