What changed in this filing

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Item 1. Financial Statements

2023-08-02 compared with 2023-05-03 · 117 added, 108 removed, 452 unchanged (33% of the section changed)

3 unchanged sentences

(Dollars in thousands)

April 1, 2023

December 31, 2022

17 unchanged sentences

STURM, RUGER & COMPANY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

(Dollars in thousands, except per share data )

April 1, 2023

December 31, 2022

37 unchanged sentences

Three Months Ended

April 1, 2023

April 2, 2022

Six Months Ended

Net firearms sales

20 unchanged sentences

STURM, RUGER & COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’

EQUITY (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(Dollars in thousands)

7 unchanged sentences

Recognition of stock-based compensation expense

Balance at April 1, 2023

Balance at July 1, 2023

$ ( 145,812 )

3 unchanged sentences

( Dollars in thousands)

Three Months Ended

April 1, 2023

April 2, 2022

Six Months Ended

Operating Activities

37 unchanged sentences

financial statements.

In the opinion of management,

the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals,

considered necessary for a fair presentation of the results of the interim periods.

Operating results for the three months ended April

1, 2023 may not be indicative of the results to be expected for the full year ending December 31, 2023.

These financial statements have

been prepared on a basis that is substantially consistent with the accounting principles applied in the Company’s Annual Report

on Form 10-K for the year ended December 31, 2022.

In the opinion of management, the accompanying unaudited condensed consolidated

financial statements include all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of

the results of the interim periods.

Operating results for the three and six months ended July 1, 2023 may not be indicative of the results

to be expected for the full year ending December 31, 2023.

These financial statements have been prepared on a basis that is substantially

consistent with the accounting principles applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

4 unchanged sentences

99 % of sales are from firearms.

Export sales typically represent no more than 5 % of total sales, although they accounted for 7 % of total

sales for the three month period ended April 1, 2023.

Export sales accounted for 5 % of total sales for the three month period ended April

The Company’s design and manufacturing operations are located in the United States and almost all product content is domestic.

The Company’s firearms are sold through a select number of independent wholesale distributors, principally to the commercial sporting

Export sales accounted for approximately 7 % of total sales for the six month periods ended July 1, 2023

and July 2, 2022.

The Company’s design and manufacturing operations are located in the United States and almost all product content

The Company’s firearms are sold through a select number of independent wholesale distributors, principally to the commercial

sporting market.

The Company also manufactures

43 unchanged sentences

The impact of ASC 606 on revenue

recognized during the three months ended April 1, 2023 and April 2, 2022 is as follows:

recognized during the three and six months ended July 1, 2023 and July 2, 2022 is as follows:

Three Months Ended

April 1, 2023

April 2, 2022

Six Months Ended

Contract liabilities with customers at beginning of period

5 unchanged sentences

sales promotion programs that include the future shipment of free products.

The Company expects the deferred revenue from this contract

liability with customers to be recognized in the second quarter of 2023.

The Company expects the remaining deferred revenue from this

contract liability with customers to be recognized in the third quarter of 2023.

Practical Expedients and Exemptions

11 unchanged sentences

results are subject to the final year-end LIFO inventory valuation.

During the three month period ended

April 1, 2023, inventory quantities were reduced.

If this reduction remains through year-end, it will result in a liquidation of

LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the current cost of purchases.

the effect of such a liquidation cannot be precisely quantified at the present time, management believes that if a LIFO liquidation occurs

in 2023, the impact may be material to the Company’s results of operations for the period but will not have a material impact on

the financial position of the Company.

Inventories consist of the following:

April 1, 2023

December 31, 2022

15 unchanged sentences

The table below

presents the right-of-use assets and related lease liabilities recognized on the Condensed Consolidated Balance Sheet as of April 1, 2023:

presents the right-of-use assets and related lease liabilities recognized on the Condensed Consolidated Balance Sheet as of July 1, 2023:

Balance Sheet Line Item

April 1, 2023

Right-of-use assets

11 unchanged sentences

The following table reconciles the undiscounted future minimum lease payments to the total operating

lease liabilities recognized on the Condensed Consolidated Balance Sheet as of April 1, 2023:

lease liabilities recognized on the Condensed Consolidated Balance Sheet as of July 1, 2023:

Remainder of 2023

8 unchanged sentences

The Company’s weighted average remaining lease term for

operating leases as of April 1, 2023 is 8.6 years.

operating leases as of July 1, 2023 is 8.4 years.

NOTE 6 - LINE OF CREDIT

5 unchanged sentences

is also charged one-quarter of a percent ( 0.25 %) per year on the unused portion.

At April 1, 2023, the Company was in compliance with

the terms and covenants of the credit facility and the line of credit was unused.

At July 1, 2023, the Company was in compliance with the

terms and covenants of the credit facility and the line of credit was unused.

NOTE 7 - EMPLOYEE BENEFIT PLANS

4 unchanged sentences

Expenses related to these matching contributions totaled $ 1.0 million and $ 2.7 million for the

three months ended April 1, 2023 and April 2, 2022, respectively.

The Company plans to contribute approximately $ 4.0 million to the plan

in matching employee contributions during the remainder of 2023.

three and six months ended July 1, 2023, respectively, and $ 0.9 million and $ 2.3 million for the three and six months ended July 2, 2022,

respectively.

The Company plans to contribute approximately $ 2.0 million to the plan in matching employee contributions during the remainder

In addition, the Company provided

supplemental discretionary contributions to the 401(k) plan totaling $ 2.2 million and $ 2.4 million for the three months ended April 1,

2023 and April 2, 2022, respectively.

The Company plans to contribute approximately $ 5.0 million in supplemental contributions to the

plan during the remainder of 2023.

supplemental discretionary contributions to the 401(k) plan totaling $ 1.6 million and $ 3.7 million for the three and six months ended

July 1, 2023, respectively, and $ 1.5 million and $ 3.9 million for the three and six months ended July 2, 2022, respectively.

plans to contribute approximately $ 3.0 million in supplemental contributions to the plan during the remainder of 2023.

NOTE 8 - INCOME TAXES

3 unchanged sentences

The Company’s effective income tax rate was 20.0 % and

23.5 % for the three months ended April 1, 2023 and April 1, 2022, respectively.

21.1 % for the three and six months ended July 1, 2023, respectively.

The Company’s effective income tax rate was 20.5 % and 22.3 %

for the three and six months ended July 2, 2022, respectively.

Income tax payments for the three

months ended April 1, 2023 and April 2, 2022 totaled $ 3.0 million and $ 3.1 million, respectively.

and six months ended July 1, 2023 totaled $ 13.5 million and $ 16.5 million, respectively.

Income tax payments for the three and six months

ended July 2, 2022 totaled $ 17.6 million and $ 20.7 million, respectively.

The Company files income tax returns

12 unchanged sentences

Three Months Ended

April 1, 2023

April 2, 2022

Six Months Ended

Weighted average number of common shares outstanding – Basic

12 unchanged sentences

of Directors .

The Company reserved 750,000 shares for issuance under the 2017 SIP, of which approximately 100,000 shares remain

available for future grants as of April 1, 2023.

The Company reserved 750,000 shares for issuance under the 2017 SIP.

In June 2023, the Company’s shareholders approved the Company’s

2023 Stock Incentive Plan (the “2023 SIP”) under which employees, independent contractors, and non-employee directors may

be granted stock options, restricted stock, deferred stock awards, and stock appreciation rights, any of which may or may not require

the satisfaction of performance objectives.

Subject to the terms of the 2023 SIP, vesting requirements are determined by the Compensation

Committee of the Board of Directors .

The Company reserved 1,000,000 new shares for issuance under the 2023 SIP and, further, any

unused shares remaining from the 2017 SIP will also be available for future grants under the terms of the 2023 SIP.

As of June 30, 2023,

121,034 shares remained unawarded from the 2017 SIP.

Since the 2023 SIP was approved by the Company’s shareholders, no additional

awards have been or will be granted under the 2017 SIP.

Previously granted and outstanding awards under the 2017 SIP will remain

subject to the terms of the 2017 SIP.

Restricted Stock Units

4 unchanged sentences

The retention-based

awards are subject only to the three-year vesting period.

There were no restricted stock units issued during the three months ended April

awards are subject only to a three-year vesting period.

There were 113,862 restricted stock units issued during the six months ended July

Total compensation costs related to these restricted stock units are $ 6.0 million.

Compensation costs related to

all outstanding restricted stock units recognized in the statements of income aggregated $ 1.1 million and $ 1.7 million for the three months

ended April 1, 2023 and April 2, 2022, respectively.

all outstanding restricted stock units recognized in the statements of income aggregated $ 1.1 million and $ 3.4 million for the three and

six months ended July 1, 2023, respectively, and $ 1.7 million and $ 3.4 million for the three and six months ended July 2, 2022, respectively.

NOTE 11 - OPERATING SEGMENT INFORMATION

8 unchanged sentences

Three Months Ended

Six Months Ended

Income (Loss) Before Income Taxes

Capital Expenditures

April 1, 2023

December 31, 2022

Identifiable Assets

2 unchanged sentences

National Rifle Association (“NRA”) for some of its promotional and advertising activities.

Payments made to the NRA totaled

$ 0.1 million in each of the three months ended April 1, 2023 and April 1, 2022.

One of the Company’s Directors also serves as a

Director on the Board of the NRA.

The Company is a member of the

National Shooting Sports Foundation (“NSSF”), the firearm industry trade association.

Payments made to the NRA in the

three and six months ended July 1, 2023 totaled $ 0.2 million and $ 0.3 million, respectively.

Payments made to the NRA in the three and

six months ended July 2, 2022 totaled $ 0.1 million and $ 0.2 million, respectively.

One of the Company’s Directors also serves as

a Director on the Board of the NRA.

The Company is a member of

the National Shooting Sports Foundation (“NSSF”), the firearm industry trade association.

Payments made to the

NSSF totaled $ 0.1 million in both the three and six month periods ended July 1, 2023.

Payments made to the NSSF totaled $ 0.1

$ 0.1 million in each of the three months ended April 1, 2023 and April 2, 2022.

One of the Company’s Directors also serves

on the Board of the NSSF.

million in both the three and six month periods ended July 2, 2022.

One of the Company’s Directors also serves on the Board of

NOTE 13 - CONTINGENT LIABILITIES

As of April 1, 2023, the Company

As of July 1, 2023, the Company

was a defendant in eight (8) lawsuits and is aware of certain other such claims.

11 unchanged sentences

Smith & Wesson, et al.

, filed in August 2021;

The City of Buffalo , filed in the Supreme Court of the State of New York for Erie County on December 20, 2022;

of Rochester , filed in the Supreme Court for the State of New York for Monroe County on December 21, 2022, each of which is described

in more detail below.

, filed in the U.S.

Court for the District of Massachusetts in August 2021;

The City of Buffalo , filed in the Supreme Court of the State of New York

for Erie County on December 20, 2022;

and The City of Rochester , filed in the Supreme Court for the State of New York for Monroe

County on December 21, 2022, each of which is described in more detail below.

The City of Gary Complaint

7 unchanged sentences

to a specific individual as a result of the misuse or use of any of the Company's products.

procedural history , during the quarter ended April 3, 2021, the City initiated discovery and

the manufacturer defendants reciprocated.

After a long procedural history, during the

quarter ended April 3, 2021, the City initiated discovery and the manufacturer defendants reciprocated.

Discovery is ongoing.

11 unchanged sentences

On September 30, 2022, the court entered an order granting defendants’ motion.

On October 26, 2022, plaintiff filed a Notice of Appeal and the matter is being briefed.

On October 26, 2022, plaintiff filed a Notice of Appeal and the matter is being briefed before the First Circuit Court of Appeals.

argument was held on July 24, 2023.

On December 20, 2022, the City

23 unchanged sentences

matter was consolidated with The City of Buffalo .

Defendants moved to stay the consolidated

Buffalo/Rochester case pending a decision by the Second Circuit Court of Appeals in National Shooting Sports Foundation, Inc.

James , which challenges the constitutionality of the recently enacted N.Y.

Defendants moved to stay the consolidated Buffalo/Rochester

case pending a decision by the Second Circuit Court of Appeals in National Shooting Sports Foundation, Inc.

James , which

challenges the constitutionality of the recently enacted N.Y.

Law §§ 898-a–e.

The motion is pending.

On June 8, 2023, the court granted defendants’ motion and the matter is currently stayed.

Sturm, Ruger, et

22 unchanged sentences

warranties, and unjust enrichment.

The Company filed a Motion to Dismiss on a variety of grounds, and a briefing schedule was entered

by the court.

The Company filed a Motion to Dismiss on a variety of grounds.

And the matter has been fully briefed.

Unfair Trade Practices

Estate of Suzanne Fountain

Sturm, Ruger & Co., Inc., arises out of the criminal shootings at the King Soopers supermarket in Boulder, Colorado on March

On that date, plaintiff’s decedent, Suzanne Fountain, was murdered by 21-year-old Ahmad

Al Aliwi Al-Issa.

The Complaint alleges that the Company’s advertising and marketing of the Ruger AR-556 pistol involved in the

criminal shootings violate the Connecticut Unfair Trade Practices Act and were a substantial factor in bringing about the wrongful death

of Suzanne Fountain.

On April 24, 2023, the Connecticut Superior Court in Stamford sua sponte transferred the case to the Connecticut

Superior Court in Bridgeport.

Estate of Neven Stanisic et

Sturm, Ruger & Co., Inc., was filed on behalf of five plaintiffs.

Like Estate of Suzanne Fountain , the claims arise

from the criminal shootings at the King Soopers supermarket in Boulder, Colorado on March 22, 2021.

Plaintiffs’ decedents were

murdered by Ahmad Al Aliwi Al-Issa and plaintiffs allege that the Company’s

advertising and marketing of the Ruger AR-556 pistol involved in the criminal shootings violate the Connecticut Unfair Trade Practices

Act and were a substantial factor in causing the wrongful death of plaintiffs’ decedents.

Sturm, Ruger & Co., Inc., was filed in the Connecticut Superior Court in Stamford and arises out of the criminal shootings

at the King Soopers supermarket in Boulder, Colorado on March 22, 2021.

On that date, plaintiff’s decedent, Suzanne Fountain, was

murdered by 21-year-old Ahmad Al Aliwi Al-Issa.

The Complaint alleges that the Company’s advertising

and marketing of the Ruger AR-556 pistol involved in the criminal shootings violate the Connecticut Unfair Trade Practices Act and were

a substantial factor in bringing about the wrongful death of Suzanne Fountain.

On April 24, 2023, the Connecticut Superior Court in Stamford

sua sponte transferred the case to the Connecticut Superior Court in Bridgeport.

Estate of Neven Stanisic

Sturm, Ruger & Co., Inc., was filed in the Connecticut Superior Court in Stamford on behalf of five plaintiffs.

Like Estate of Suzanne Fountain , the claims arise from the criminal shootings at the King Soopers supermarket in Boulder,

Colorado on March 22, 2021.

Plaintiffs’ decedents were murdered by Ahmad Al Aliwi

Al-Issa and plaintiffs allege that the Company’s advertising and marketing of the Ruger AR-556 pistol involved in the criminal

shootings violate the Connecticut Unfair Trade Practices Act and were a substantial factor in causing the wrongful death of

plaintiffs’ decedents.

and Stanisic cases have been consolidated for discovery purposes only.

The Company recently filed its Answer and Special Defenses

to each of the Complaints.

Summary of Claimed Damages and Explanation of Product Liability Accruals

29 unchanged sentences

in the Company's product liability accrual on the same basis as actual claims;

i.e., an accrual is made for reasonably anticipated possible

liability and claims handling expenses on an ongoing basis.

, an accrual is made for reasonably anticipated

possible liability and claims handling expenses on an ongoing basis.

A range of reasonably possible

4 unchanged sentences

being awarded to claimants) as a result of adverse judgments that are sustained on appeal.

At December 31, 2022, the

total amount claimed specifically in these cases was de minimis .

At December 31, 2022, the total amount claimed

specifically in these cases was de minimis .

NOTE 14 - SUBSEQUENT EVENTS

On April 28, 2023,

the Board of Directors authorized a dividend of 32 ¢ per share, for shareholders of record as of May 15, 2023, payable on May 31,

On August 1, 2023,

the Board of Directors authorized a dividend of 36 ¢ per share, for shareholders of record as of August 15, 2023, payable on August

The Company has evaluated

events and transactions occurring subsequent to April 1, 2023 and determined that there were no other unreported events or transactions

events and transactions occurring subsequent to July 1, 2023 and determined that there were no other unreported events or transactions

that would have a material impact on the Company’s results of operations or financial position.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements