SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTION 13 OR 15(d) THE SECURITIES EXCHANGE ACT OF 1934
(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, 2004
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 and non-voting common equity held by
non-affiliates of the registrant computed by reference to the price at which the
common equity was last sold, or the average bid and asked price of such common
equity, as of June 30, 2004:
Common Stock, $1 par value - $254,465,700
The number of shares outstanding of the registrant's common stock as of March 1,
2005:
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, 2004 are incorporated by reference into Parts I and II (Items
1 through 9A) of this Report.
1
Portions of the registrant's Proxy Statement relating to the Annual Meeting of
Stockholders to be held May 3, 2005 are incorporated by reference into Part III
(Items 10 through 14) of this Report.
2
TABLE OF CONTENTS
PART I
Item 1. Business ...................................................... 4
Item 2. Properties .................................................... 11
Item 3. Legal Proceedings ............................................. 12
Item 4. Submission of Matters to a Vote of Security Holders ........... 16
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities .......... 16
Item 6. Selected Financial Data ....................................... 16
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations .................................. 16
Item 7A. Quantitative and Qualitative Disclosures About Market Risk .... 16
Item 8. Financial Statements and Supplementary Data ................... 17
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure ................................... 17
Item 9A. Controls and Procedures ....................................... 17
Item 9B. Other Information ............................................. 18
PART III
Item 10. Directors and Executive Officers of the Registrant ............ 18
Item 11. Executive Compensation ........................................ 19
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters ................. 20
Item 13. Certain Relationships and Related Transactions ................ 20
Item 14. Principal Accountant Fees and Services ........................ 21
PART IV
Item 15. Exhibits and Financial Statement Schedules..................... 21
Signatures................................................................ 24
Exhibit Index............................................................. 25
Financial Statement Schedule.............................................. 27
Exhibits.................................................................. 29
3
In this Annual Report on Form 10-K, Sturm, Ruger & Company (the "Company") makes
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 including lawsuits filed by mayors, attorneys
general and other governmental entities and membership organizations, and the
impact of future firearms control and environmental legislation, 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.
PART I
ITEM 1--BUSINESS
COMPANY OVERVIEW
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' 2001 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, 2004, 2003, and 2002, net sales attributable to
the Company's firearms operations were approximately 86%, 88%, and 86%,
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 23 and 24 of the Company's 2004 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, and lever action 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 and since expired.
4
ITEM 1--BUSINESS (CONTINUED)
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 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 2005, the Company plans to introduce several new offerings,
including the Ruger 50th Anniversary Blackhawk single action revolver, a new
smaller-framed Ruger Vaquero single action revolver, a new Mark III Hunter
pistol, a new Ruger Ranch Rifle, new Ruger Frontier bolt-action rifles, and a
new Ruger Super Redhawk Alaskan.
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 Ranch Rifle, the Mini
Thirty Ranch Rifle, the Ruger Carbine, the Deerfield Carbine (99/44), and the
No. 1 Single-Shot. Sales of rifles by the Company accounted for approximately
$61.1 million, $61.3 million, and $69.1 million, of revenues for the years 2004,
2003 and 2002, 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
shotguns: the Red Label over and under shotgun available in 12, 20, and 28 gauge
and the Gold Label side-by-side shotgun in 12 gauge. Most of the Red Label
models are available in special Sporting Clays, English Field, All-Weather and
engraved versions. Sales of shotguns by the Company accounted for approximately
$6.8 million, $5.1 million, and $6.0 million of revenues for the years 2004,
2003 and 2002, 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 III .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 $24.8 million, $26.4 million, and $25.8 million of
revenues for the years 2004, 2003 and 2002, 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
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ITEM 1--BUSINESS (CONTINUED)
revolvers: the SP101, the GP100, the Redhawk, and the Super Redhawk. Sales of
revolvers by the Company accounted for approximately $27.2 million, $33.8
million, and $34.3 million of revenues for the years 2004, 2003, and 2002,
respectively.
The Company also manufactures and sells accessories and replacement parts for
its firearms. These sales accounted for approximately $4.3 million, $4.0
million, and $4.6 million of revenues for the years 2004, 2003 and 2002,
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 other 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 $20.7 million, $17.4
million, and $21.8 million, or 14%, 12%, and 14% of the Company's total net
sales for 2004, 2003, and 2002, 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. However, if market conditions
result in a significant and prolonged increase of certain prices, the Company
believes that it could have a material long-term adverse effect on the Company
and may have a material impact on the Company's financial results for a
particular period. 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.
6
ITEM 1--BUSINESS (CONTINUED)
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.
INVESTMENT CASTINGS--The Company manufactures all of its precision investment
castings products at one of its two operating 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 2003 and in 2004, but no pre-tax charge to earnings
was recorded in either 2003 or 2004 for any additional impairment loss. The
Company continues to evaluate the viability and profitability of the commercial
castings market.
The Company's RIC-Newport Division manufactures ferrous investment castings.
In 2004, the Company relocated two titanium furnaces from RIC-Prescott Division
to a currently non-manufacturing facility in New Hampshire, with the plan of
establishing an additional foundry in 2005.
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. However, if market
conditions result in a significant and prolonged increase of certain prices, the
Company believes that it could have a material long-term adverse effect on the
Company and may have a material impact on the Company's financial results for a
particular period.
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, 15 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 12%, 19%, and 17% of
net firearms sales and 10%, 17%, and 15% of consolidated net sales in 2004,
2003, and 2002, respectively. Jerry's Sport Center accounted for approximately
13% and 12% of the Company's net sales of firearms and 11% and 11% of
consolidated net sales in 2004 and 2003, respectively. Sports South Corporation
accounted for approximately 13% of net firearms sales and 11% of consolidated
net sales in 2004.
7
ITEM 1--BUSINESS (CONTINUED)
The Company employs four 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.
The Company also exports its firearms through a network of selected 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 2004, the Company received annual orders from its
distributors for the 2005 marketing year. As of March 1, 2005, unfilled firearms
orders were approximately $102 million as compared to approximately $104 million
at March 1, 2004.
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 were sold pursuant to a "dating plan" which,
in general, allowed 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 were offered for early payment. In December, 2004, the
Company modified the payment terms on these selected products whereby payment is
now due 45 days after shipment. Discounts were offered for early payment. 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 and $8.2 in 2003
and 2002, respectively. There were no shipments to Karsten Manufacturing
Corporation in 2004 and no future shipments expected to Karsten Manufacturing
Corporation. The Company continues to evaluate the viability and profitability
of the commercial castings market.
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.
8
ITEM 1--BUSINESS (CONTINUED)
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.
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 2003 and in 2004, but and no pre-tax
charge to earnings was recorded in either 2003 and 2004 for any additional
impairment loss.
EMPLOYEES
As of March 1, 2005, the Company employed 1,274 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 55-year
history and believes its employee relations are satisfactory.
RESEARCH AND DEVELOPMENT
In 2004, 2003, and 2002, the Company spent approximately $0.9 million, $0.9
million, and $0.7 million, respectively, on research activities relating to the
development of new products and the improvement of existing products. As of
February 28, 2005, the Company had approximately 33 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, 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.
9
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. 65 Chairman of the Board of Directors and Chief Executive Officer
Stephen L. Sanetti 55 Vice Chairman of the Board of Directors, President, Chief
Operating Officer and General Counsel
Leslie M. Gasper 51 Corporate Secretary
Thomas A. Dineen 36 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.
10
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
may not be accessible through the Company's website as promptly as they are
accessible on the SEC'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 of the Corporate Secretary at
Sturm, Ruger & Company, Inc., Lacey Place, Southport, Connecticut 06890.
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 contains
modern tool room facilities. The lease of the Prescott facility provides for
rental payments which approximate real property taxes.
The Company has other materially important facilities that were not used in its
manufacturing operations in 2004:
Approximate
Aggregate Usable
Square Feet Status Segment
---------------- ------ ---------
Southport, Connecticut 25,000 Owned Corporate
Newport, New Hampshire 300,000 Owned Unused
In 2004 the Company relocated two titanium furnaces from RIC-Prescott Division
to the currently non-manufacturing facility in New Hampshire, with the plan of
establishing an additional foundry in 2005.
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 or any other major encumbrance on any of the
real estate owned by the Company.
11
ITEM 3--LEGAL PROCEEDINGS
As of December 31, 2004, the Company is a defendant in approximately 9 lawsuits
involving its products and is aware of certain other such claims. These lawsuits
and claims fall into two categories:
(i) 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
(ii) those brought by cities, municipalities, counties, 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 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
12
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 Hamilton 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, nineteen
have been dismissed. Sixteen 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 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; New York State - Court of
Appeals denied plaintiff's petition for leave to appeal the Intermediate
Appellate Court's dismissal, no further appeal; Newark - Superior Court of New
Jersey Law Division for Essex County dismissed the case with prejudice; City of
Camden - dismissed on July 7, 2003, not reopened; Jersey City - voluntarily
dismissed and not re-filed; and St. Louis - Missouri Supreme Court denied
plaintiffs' motion to appeal Missouri Appellate Court's affirmance of dismissal.
The dismissal of the Washington, D.C. lawsuit was sustained on appeal, but
individual plaintiffs were permitted to proceed to discovery and attempt to
identify the manufacturers of the firearms used in their shootings as "machine
guns" under the city's "strict liability" law. On October 19, 2004, the D.C.
Court of Appeals vacated the court's judgment, which dismissed the city's claim
against firearms manufacturers but let stand certain individuals' claims against
the manufacturers of firearms allegedly used in criminal assaults against
plaintiffs under the Washington, D.C. "Strict Liability Act," subject to proof
of causation. A rehearing of the matter en banc by the full Court of Appeals was
heard in early 2005, and a decision is pending.
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 dismissal was affirmed by the
California Appeals Court on February 10, 2005.
On November 18, 2004, in the Chicago case, the Illinois Supreme Court affirmed
the trial court's dismissal. The court held that plaintiffs failed to state a
claim for public nuisance. At the same time the Chicago lawsuit was dismissed,
the court also dismissed the previously reported Young lawsuit, in which
plaintiffs sued under the same "public nuisance" theory. Plaintiffs in the
Chicago lawsuit filed a motion for reconsideration on December 9, 2004, which
was denied on January 24, 2005.
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 the New York City case is presently scheduled to begin
trial in September, 2005.
13
ITEM 3--LEGAL PROCEEDINGS (CONTINUED)
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. Appeals by both sides
were filed, but plaintiffs withdrew their appeal. On August 3, 2004, the United
States Court of Appeals for the Second Circuit granted the NAACP's motion to
dismiss the defendants' appeal of Judge Weinstein's order denying defendants'
motion to strike his dicta made in his order dismissing the NAACP's case, and
the defendants' motion for summary disposition was denied as moot. The ruling of
the Second Circuit effectively confirmed the decision in favor of defendants and
brought this matter to a conclusion.
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 February 2004, but failed to gain final passage
after it was encumbered with numerous non-germane amendments. It is uncertain
when it may be reconsidered by the new session of Congress.
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, 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.
The Company has reported all cases instituted against it through September 30,
2004 and the results of those cases, where terminated, to the S.E.C. on its
previous Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, to
which reference is hereby made.
For a description of all pending lawsuits against the Company through September
30, 2004, 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 year ended
December 31, 1998, 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, and September 30, 1999, March 31 and September
30, 2000.
14
ITEM 3--LEGAL PROCEEDINGS (CONTINUED)
The nature of the legal proceedings against the Company is discussed at [Note 5]
to this Annual Report on Form 10-K, which is incorporated herein by reference.
One case was formally instituted against the Company during the three months
ended December 31, 2004, which involved significant demands for compensatory
and/or punitive damages and in which the Company has been served with process.
Farwick v. Company, et al. (OR) in the Circuit Court of Oregon for the County of
Clackamas. Plaintiff alleges that his Ruger No.1 rifle, which was loaded with
ammunition manufactured by Weatherby, Inc., "exploded" upon firing. Plaintiff
has filed a claim against Weatherby, Inc. and the claim against the Company is
contingent upon a finding of no defect in the ammunition. Plaintiff seeks
compensatory damages.
During the three months ending December 31, 2004, one previously reported case
was settled.
Case Name Jurisdiction
--------- ------------
Snyder Texas
The settlement amount was within the limits of its self-insurance coverage or
self-insurance retention.
On October 19, 2004, in the previously reported Washington, D.C. lawsuit, the
D.C. Court of Appeals vacated the court's judgment of April 29, 2004, which
dismissed the city's claim against firearms manufacturers but let stand certain
individuals' claims against the manufacturers of firearms allegedly used in
criminal assaults against plaintiffs under the Washington, D.C. "Strict
Liability Act," subject to proof of causation. A rehearing of the matter en banc
by the full Court of Appeals was heard on January 11, 2005, and a decision is
pending.
On November 18, 2004, in the previously reported Chicago (IL) case, the Illinois
Supreme Court affirmed the trial court's dismissal. The court held that
plaintiffs failed to state a claim for public nuisance. On December 9, 2004,
plaintiffs filed a motion for reconsideration, which was denied on January 24,
2005.
On November 18, 2004, the Illinois Supreme Court dismissed the previously
reported Ceriale (IL), Smith (IL), and Young (IL) cases. Plaintiffs have not
filed a petition for rehearing.
In the previously reported Jersey City case, plaintiffs voluntarily dismissed
the case in 2003 because they were unable to comply with discovery deadlines.
More than one year has elapsed and plaintiffs have not re-filed their lawsuit.
In the previously reported Lemongello (WV) case, no appeal of summary judgment
granted in defendants' favor was filed.
15
ITEM 3--LEGAL PROCEEDINGS (CONTINUED)
In the previously reported St. Louis (MO) case, the Missouri Court of Appeals
had affirmed the trial court's dismissal and plaintiffs filed a motion to appeal
the affirmed dismissal directly to the Missouri Supreme Court. On October 26,
2004, the Missouri Supreme Court denied the motion.
On December 30, 2004, plaintiffs in the previously reported Knight (IL) case
voluntarily dismissed the lawsuit.
ITEM 4--SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5--MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
The information on the Company's common stock market prices, dividends,
principal exchange on which the stock is traded and the number of stockholders
of record required for this Item is incorporated by reference from page 27 of
the Company's 2004 Annual Report to Stockholders.
ITEM 6--SELECTED FINANCIAL DATA
The selected financial data for fiscal years 2000 through 2004 required for this
Item is incorporated by reference from page 8 of the Company's 2004 Annual
Report to Stockholders.
ITEM 7--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's discussion and analysis of financial condition and results of
operations required for this Item is incorporated by reference from pages 9
through 14 of the Company's 2004 Annual Report to Stockholders.
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.
16
ITEM 7A--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (CONTINUED)
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 balance sheets of Sturm, Ruger & Company, Inc. as of December 31, 2004
and 2003, and the related statements of income, stockholders' equity and
cash flows for each of the years in the three year period ended December
31, 2004, and the notes to the financial statements and the report dated
March 8, 2005 of KPMG LLP, independent registered public accounting firm,
are incorporated by reference from pages 15 through 25 of the Company's
2004 Annual Report to Stockholders.
(B) SUPPLEMENTARY DATA
Quarterly results of operations for fiscal years 2004 and 2003 are
incorporated by reference from page 24 of the Company's 2004 Annual Report
to Stockholders.
ITEM 9--CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A--CONTROLS AND PROCEDURES
(A) DISCLOSURE CONTROLS AND PROCEDURES
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.
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.
(B) MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management's report on internal control over financial reporting required
for this Item is incorporated by reference from page 26 of the Company's
2004 Annual Report to Stockholders.
17
ITEM 9A--CONTROLS AND PROCEDURES (CONTINUED)
(C) ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM
The Company's registered public accounting firm's attestation report on
management's assessment of the Company's internal control over financial
reporting is incorporated by reference from page 25 of the Company's 2004
Annual Report to Stockholders.
(D) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
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.
ITEM 9B--OTHER INFORMATION
None.
PART III
ITEM 10--DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the Company's directors, including the Company's
separately designated standing audit committee, and on the Company's code of
business conduct and ethics 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 3, 2005 under the captions "PROPOSAL NO.
1: ELECTION OF DIRECTORS" and "THE BOARD OF DIRECTORS AND ITS COMMITTEES" on
pages 2 through 10 thereof.
Information concerning the Company's executive officers required by this Item is
set forth in Item 1 of this Annual Report on Form 10-K under the caption
"Executive Officers of the Company."
Information concerning beneficial ownership reporting compliance required by
this Item is incorporated by reference from the section of the Company's Proxy
Statement relating to the Annual Meeting of Stockholders to be held May 3, 2005
under the caption "SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" on
page 23 thereof.
18
ITEM 11--EXECUTIVE COMPENSATION
Information concerning director and executive compensation 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 3, 2005
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 19 thereof.
19
ITEM 12--SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Information concerning the security ownership of certain beneficial owners and
management and related stockholder matters 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 3, 2005 under the captions
"PROPOSAL NO. 1: ELECTION OF DIRECTORS," "PRINCIPAL STOCKHOLDERS," and "SECURITY
OWNERSHIP OF MANAGEMENT" on pages 2 through 4 and 20 through 22 thereof.
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, 2004:
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 995,000 $11.7160 per share 1,005,000
2001 Stock Option Plan
for Non-Employee Directors 80,000 $ 9.875 per share 120,000
EQUITY COMPENSATION PLANS
NOT APPROVED BY SECURITY
HOLDERS
None.
TOTAL 1,075,000 1,125,000
ITEM 13--CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerting certain relationships and related transactions 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 3,
2005 under the captions "THE BOARD OF DIRECTORS AND ITS COMMITTEES" and "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS" on pages 5 through 10 and 23 thereof.
20
ITEM 14--PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information concerning the Company's principal accountant fees and services and
the pre-approval policies and procedures of the audit committee of the board of
directors 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 3, 2005 under the caption "PROPOSAL NO. 2: APPROVAL OF
INDEPENDENT AUDITORS" on pages 25 and 26 thereof.
PART IV
ITEM 15--EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this Annual Report on Form
10-K:
(1) Financial Statements:
Balance Sheets--December 31, 2004 and 2003
Statements of Income--Years ended December 31, 2004, 2003, and 2002
Statements of Stockholders' Equity--Years ended December 31, 2004,
2003, and 2002
Statements of Cash Flows--Years ended December 31, 2004, 2003, and
2002
Notes to Financial Statements
Independent Registered Public Accounting Firm's Report -- KPMG LLP
This information is incorporated by reference from the Company's 2004
Annual Report to Stockholders as noted in Item 8.
(2) Financial Statement Schedules:
Schedule II-Valuation and Qualifying Accounts
(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.
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. 1-10435).
21
ITEM 15--EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (CONTINUED)
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. 1-10435).
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. 1-10435).
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. 1-10435).
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. 1-10435).
Exhibit 10.6 [Intentionally omitted.]
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. 1-10435).
Exhibit 10.8 Sturm, Ruger & Company, Inc. 2001 Stock Option Plan for
Non-Employee Directors (Incorporated by reference to Exhibit 4 to
the Form S-8 Registration Statement filed by the Company File No.
33-53234).
Exhibit 13.1 Annual Report to Stockholders of the Company for the year ended
December 31, 2004. 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 with the
SEC.
Exhibit 23.1 Consent and Report on Schedule of Independent Registered Public
Accounting Firm.
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.
22
ITEM 15--EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (CONTINUED)
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 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.
23
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, 2005
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. 3/11/05
----------------------------------------
William B. Ruger, Jr.
Chairman of the Board, Chief Executive
Officer
(Principal Executive Officer)
/S/ JOHN M. KINGSLEY, JR. 3/11/05
----------------------------------------
John M. Kingsley, Jr.
Director
/S/ TOWNSEND HORNOR 3/11/05
----------------------------------------
Townsend Hornor
Director
/S/ STEPHEN L. SANETTI 3/11/05
----------------------------------------
Stephen L. Sanetti
Vice Chairman of the Board,
President and Chief Operating Officer
/S/ RICHARD T. CUNNIFF 3/11/05
----------------------------------------
Richard T. Cunniff
Director
/S/ JAMES E. SERVICE 3/11/05
----------------------------------------
James E. Service
Director
24
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. 29
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. 1-10435).
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. 1-10435).
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. 1-10435).
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.
1-10435).
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. 1-10435).
Exhibit 10.6 [Intentionally omitted.]
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. 1-10435).
Exhibit 10.8 Sturm, Ruger & Company, Inc. 2001 Stock Option Plan for
Non-Employee Directors (Incorporated by reference to
Exhibit 4 to the Form S-8 Registration Statement filed
by the Company File No. 33-53234).
25
EXHIBIT INDEX (continued)
Page No.
--------
Exhibit 13.1 Annual Report to Stockholders of the Company for the 51
year ended December 31, 2004. 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 Registered 75
Public Accounting Firm.
Exhibit 31.1 Certification of Chief Executive Officer Pursuant to 76
Rule 13a-14(a) of the Exchange Act.
Exhibit 31.2 Certification of Treasurer and Chief Financial Officer 78
Pursuant to Rule 13a-14(a) of the Exchange Act.
Exhibit 32.1 Certification of the Chief Executive Officer Pursuant to 80
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 81
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 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.
26
YEAR ENDED DECEMBER 31, 2004
STURM, RUGER & COMPANY, INC. AND SUBSIDIARIES
ITEMS 15(a)(2) AND 15(d)
FINANCIAL STATEMENT SCHEDULE
27
Sturm, Ruger & Company, Inc.
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, 2004 $ 441 $ 68(a) $373
------ ------ ----
Year ended December 31, 2003 $ 449 $ 8(a) $441
------ ------ ------ ----
Year ended December 31, 2002 $1,061 $ 83 $ 695(a) $449
------ ------ ------ ----
Allowance for discounts:
Year ended December 31, 2004 $ 772 $3,957 $4,174(b) $555
------ ------ ------ ----
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
------ ------ ------ ----
(a) Accounts written off
(b) Discounts taken
28