STURM RUGER & CO INC 10-K

ITEM 9A—CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures The Company conducted an evaluation, with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of December 31, 2022. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2022, the Company’s disclosure controls and procedures over financial reporting were effective. Management’s Report on Internal Control over Financial Reporting The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The Company conducted an evaluation, with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its internal control over financial reporting as of December 31, 2022. This evaluation was performed based on the criteria established in “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in 2013. Management has concluded that the Company maintained effective internal control over financial reporting as of December 31, 2022, based on criteria established in “Internal Control — Integrated Framework” issued by the COSO in 2013. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 has been audited by RSM US LLP, an independent registered public accounting firm, as stated in their report which is included in this Form 10-K. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 77 Table of Contents New York Stock Exchange Certification Pursuant to Section 303A.12(a) of the New York Stock Exchange Listed Company Manual, the Company submitted an unqualified certification of our Chief Executive Officer to the New York Stock Exchange in 2022. The Company has also filed, as exhibits to this Annual Report on Form 10-K, the Chief Executive Officer and Chief Financial Officer Certifications required under the Sarbanes-Oxley Act of 2002. ITEM 9B—OTHER INFORMATION None. ITEM 9C—DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. PART III ITEM 10—DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 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 the Company’s Proxy Statement relating to the 2023 Annual Meeting of Stockholders scheduled to be held June 1, 2023, which will be filed with the SEC in April 2023. 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 Company’s Proxy Statement relating to the 2023 Annual Meeting of Stockholders scheduled to be held June 1, 2023, which will be filed with the SEC in April 2023. ITEM 11—EXECUTIVE COMPENSATION Information concerning director and executive compensation required by this Item is incorporated by reference from the Company’s Proxy Statement relating to the 2023 Annual Meeting of Stockholders scheduled to be held June 1, 2023, which will be filed with the SEC in April 2023. 78 Table of Contents 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 the Company’s Proxy Statement relating to the 2023 Annual Meeting of Stockholders scheduled to be held June 1, 2023, which will be filed with the SEC in April 2023. 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, 2022: Equity Compensation Plan Information Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights (b) * Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Equity compensation plans approved by security holders - 2017 Stock Incentive Plan 288,586 - 121,034 Equity compensation plans not approved by security holders None. Total 288,586 - 121,034 * Restricted stock units are settled in shares of common stock or the cash equivalent. Accordingly, the weighted-average exercise price is not applicable. ITEM 13—CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Information concerning certain relationships and related transactions required by this Item is incorporated by reference from the Company’s Proxy Statement relating to the 2023 Annual Meeting of Stockholders scheduled to be held June 1, 2023. 79 Table of Contents 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 Company’s Proxy Statement relating to the 2023 Annual Meeting of Stockholders scheduled to be held June 1, 2023, which will be filed with the SEC in April 2023. 80 Table of Contents PART IV ITEM 15—EXHIBITS AND FINANCIAL STATEMENT SCHEDULE (a) Exhibits and Financial Statement Schedule (1) Financial Statements can be found under Item 8 of Part II of this Form 10-K (2) Schedule can be found on Page 94 of this Form 10-K (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 through November 12, 2019 . Exhibit 4.1 Description of the Company’s Securities. Exhibit 10.1 Severance Agreement, dated as of April 10, 2008, by and between the Company and Thomas A. Dineen (Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on April 11, 2008). Exhibit 10.2 Severance Agreement, dated as of April 10, 2008, by and between the Company and Thomas P. Sullivan (Incorporated by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K filed with the SEC on April 11, 2008). Exhibit 10.3 Severance Agreement, dated as of May 2, 2008 by and between the Company and Kevin B. Reid, Sr. (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on May 5, 2008). Exhibit 10.4 Transition Services and Consulting Agreement, dated August 1, 2016, by and between the Company and Michael O. Fifer (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on August 2, 2016). Exhibit 10.5 Amended and Restated Agreement, dated November 10, 2020, by and between the Company and Christopher J. Killoy (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K/A filed with the SEC on November 12, 2020). 81 Table of Contents Exhibit 10.6 Executive Severance Agreement, dated August 1, 2016, by and between the Company and Shawn C. Leska (Incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the SEC on August 2, 2016). Exhibit 10.7 Loan Agreement, dated January 7, 2022 between Sturm, Ruger & Company, Inc. and Regions Bank . (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on January 11, 2022), as amended by that certain Amendment to Credit Agreement, dated November 3, 2022, between Sturm, Ruger & Company, Inc. and Regions Bank (Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 4, 2022). Exhibit 10.8 The Sturm, Ruger & Company, Inc. 2017 Stock Incentive Plan (incorporated by reference to Annex A of the Company’s Definitive Proxy Statement of Schedule 14A, filed with the SEC on March 27, 2017) Exhibit 23.1 Consent of RSM US LLP 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 101.INS* XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. Exhibit 101.SCH* Inline XBRL Taxonomy Extension Schema Document Exhibit 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document Exhibit 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document Exhibit 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 82 Table of Contents Exhibit 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document Exhibit 104* Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. *Filed herewith 83 Table of Contents 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 Principal Financial Officer Principal Accounting Officer, Senior Vice President, Treasurer, and Chief Financial Officer February 22, 2023 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/CHRISTOPHER J. KILLOY 2/22/23 S/RONALD C. WHITAKER 2/22/23 Christopher J. Killoy Chief Executive Officer, Director (Principal Executive Officer) Ronald C. Whitaker Director S/JOHN A. COSENTINO, JR. 2/22/23 S/PHILLIP C. WIDMAN 2/22/23 John A. Cosentino, Jr. Director Phillip C. Widman Director S/AMIR P. ROSENTHAL 2/22/23 S/SANDRA S. FROMAN 2/22/23 Amir P. Rosenthal Director Sandra S. Froman Director S/TERRENCE G. O’CONNOR 2/22/23 S/REBECCA S. HALSTEAD 2/22/23 Terrence G. O’Connor Director Rebecca S. Halstead Director S/MICHAEL O. FIFER 2/22/23 S/THOMAS A. DINEEN 2/22/23 Michael O. Fifer Director Thomas A. Dineen Principal Financial Officer Principal Accounting Officer, Senior Vice President, Treasurer, and Chief Financial Officer 84 Table of Contents 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 through November 12, 2019 . Exhibit 4.1 Description of the Company’s Securities. Exhibit 10.1 Severance Agreement, dated as of April 10, 2008, by and between the Company and Thomas A. Dineen (Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on April 11, 2008). Exhibit 10.2 Severance Agreement, dated as of April 10, 2008, by and between the Company and Thomas P. Sullivan (Incorporated by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K filed with the SEC on April 11, 2008). Exhibit 10.3 Severance Agreement, dated as of May 2, 2008 by and between the Company and Kevin B. Reid, Sr. (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on May 2, 2008). Exhibit 10.4 Transition Services and Consulting Agreement, dated August 1, 2016, by and between the Company and Michael O. Fifer (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on August 2, 2016). Exhibit 10.5 Amended and Restated Agreement, dated November 10, 2020, by and between the Company and Christopher J. Killoy (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K/A filed with the SEC on November 12, 2020). Exhibit 10.6 Executive Severance Agreement, dated August 1, 2016, by and between the Company and Shawn C. Leska (Incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the SEC on August 2, 2016). Exhibit 10.7 Loan Agreement, dated January 7, 2022 between Sturm, Ruger & Company, Inc. and Regions Bank . (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on January 11, 2022) , as amended by that certain Amendment to Credit Agreement, dated November 3, 2022, between Sturm, Ruger & Company, Inc. and Regions Bank (Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 4, 2022). 85 Table of Contents EXHIBIT INDEX (continued) Exhibit 10.8 The Sturm, Ruger & Company, Inc. 2017 Stock Incentive Plan (incorporated by reference to Annex A of the Company’s Definitive Proxy Statement of Schedule 14A, filed with the SEC on March 27, 2017) Exhibit 23.1 Consent of RSM US LLP 89 Exhibit 31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act. 90 Exhibit 31.2 Certification of Treasurer and Chief Financial Officer Pursuant to Rule 13a-14(a) of the Exchange Act. 92 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. 94 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. 95 Exhibit 101.INS* Inline XBRL Instance Document– the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. Exhibit 101.SCH* Inline XBRL Taxonomy Extension Schema Document Exhibit 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document Exhibit 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document Exhibit 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document Exhibit 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document Exhibit 104* Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. *Filed herewith 86 Table of Contents YEAR ENDED DECEMBER 31, 2022 STURM, RUGER & COMPANY, INC. ITEMS 15(a) FINANCIAL STATEMENT SCHEDULE 87 Table of Contents Sturm, Ruger & Company, Inc. Item 15(a)--Financial Statement Schedule Schedule II—Valuation and Qualifying Accounts (In Thousands) COL. A COL. B COL. C COL. D COL. E ADDITIONS Description Balance at Beginning of Period (1) Charged (Credited) to Costs and Expenses (2) Charged to Other Accounts –Describe Deductions Balance at End of Period Deductions from asset accounts: Allowance for doubtful accounts: Year ended December 31, 2022 $ 400 $ — $ — $ 400 Year ended December 31, 2021 $ 400 $ — $ — $ 400 Year ended December 31, 2020 $ 400 $ — $ — $ 400 Allowance for discounts: Year ended December 31, 2022 $ 1,169 $ 13,849 $ 13,684 (a) $ 1,334 Year ended December 31, 2021 $ 1,166 $ 16,116 $ 16,113 (a) $ 1,169 Year ended December 31, 2020 $ 1,070 $ 12,482 $ 12,386 (a) $ 1,166 Excess and obsolete inventory reserve: Year ended December 31, 2022 $ 4,347 $ 465 $ — (b) $ 4,812 Year ended December 31, 2021 $ 3,394 $ 953 $ — (b) $ 4,347 Year ended December 31, 2020 $ 3,573 $ (179 ) $ — (b) $ 3,394 (a) Discounts taken (b) Inventory written off 88