What changed in this filing

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Item 1. Financial Statements

2024-05-07 compared with 2023-11-01 · 236 added, 179 removed, 421 unchanged (50% of the section changed)

3 unchanged sentences

(Dollars in thousands)

September 30, 2023

March 30, 2024

December 31, 2023

17 unchanged sentences

STURM, RUGER & COMPANY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands, except per share data )

September 30, 2023

March 30, 2024

December 31, 2023

2 unchanged sentences

Trade accounts payable and accrued expenses

Dividends payable

Contract liabilities with customers (Note 3)

2 unchanged sentences

Workers’ compensation

Income taxes payable

Total Current Liabilities

27 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

March 30, 2024

Net firearms sales

31 unchanged sentences

Recognition of stock-based compensation expense

Balance at September 30, 2023

Repurchase of 75,024 shares of common stock

Balance at March 30, 2024

$ ( 160,842 )

3 unchanged sentences

( Dollars in thousands)

Nine Months Ended

September 30,

Three Months Ended

March 30, 2024

April 1, 2023

Operating Activities

2 unchanged sentences

Stock-based compensation

(Gain) loss on sale of assets

Gain on sale of assets

Deferred income taxes

15 unchanged sentences

Financing Activities

Remittance of taxes withheld from employees related to

share-based compensation

Remittance of taxes withheld from employees related to share-based compensation

Repurchase of common stock

1 unchanged sentence

Cash used for financing activities

(Decrease) increase in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

See notes to condensed consolidated financial statements.

See notes to condensed consolidated financial

STURM, RUGER & COMPANY, INC.

4 unchanged sentences

consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States

for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include

all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete

financial statements.

of America for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do

not include all of the information and disclosures required by accounting principles generally accepted in the United States of America

for complete financial statements.

In the opinion of management,

1 unchanged sentence

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

Operating results for the three and nine months ended

September 30, 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

Operating results for the three months ended March

30, 2024 may not be indicative of the results to be expected for the full year ending December 31, 2024.

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, 2023.

5 unchanged sentences

99 % of sales are from firearms.

Export sales accounted for approximately 7 % of total sales for the nine month periods ended September

30, 2023 and October 1, 2022.

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 market.

Export sales accounted for approximately 5 % and 7 % of total sales for the three month periods ended March

30, 2024 and April 1, 2023, respectively.

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 market.

The Company also manufactures

7 unchanged sentences

Revenue Recognition:

The Company recognizes

revenue in accordance with the provisions of Accounting Standards Codification Topic 606, Revenue from Contracts with

Customers (“ASC 606”).

The Company recognizes revenue

in accordance with the provisions of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC

Substantially all product sales are sold FOB (free on board) shipping point.

payment terms are 2% 30 days, net 40 days .

Generally, all performance obligations are satisfied when product is shipped and the

customer takes ownership and assumes the risk of loss.

Customary payment terms are 2% 30 days, net

Generally, all performance obligations are satisfied when product is shipped and the customer takes ownership and assumes the

risk of loss.

In some instances, sales include multiple performance obligations.

common of these instances relates to sales promotion programs under which downstream customers are entitled to receive no charge

products based on their purchases of certain of the Company’s products from the independent distributors.

The fulfillment of

these no charge products is the Company’s responsibility.

In such instances, the Company allocates the revenue of the

promotional sales based on the estimated level of participation in the sales promotional program and the timing of the shipment of

all of the firearms included in the promotional program, including the no charge firearms.

Revenue is recognized proportionally as

each performance obligation is satisfied, based on the relative customary price of each product.

Customary prices are generally

determined based on the prices charged to the independent distributors.

The net change in contract liabilities for a given period is

reported as an increase or decrease to sales.

The most common of these instances relates to sales promotion

programs under which downstream customers are entitled to receive no charge products based on their purchases of certain of the Company’s

products from the independent distributors.

The fulfillment of these no charge products is the Company’s responsibility.

instances, the Company allocates the revenue of the promotional sales based on the estimated level of participation in the sales promotional

program and the timing of the shipment of all of the firearms included in the promotional program, including the no charge firearms.

is recognized proportionally as each performance obligation is satisfied, based on the relative customary price of each product.

prices are generally determined based on the prices charged to the independent distributors.

The net change in contract liabilities for

a given period is reported as an increase or decrease to sales.

Fair Value of Financial Instruments:

15 unchanged sentences

Actual results could differ from those estimates.

Recent Accounting Pronouncements:

In March 2024, the Securities

and Exchange Commission (“SEC”) issued the final rule under SEC Release No.

33-11275 and 34-99678, The Enhancement and Standardization

of Climate-Related Disclosures for Investors, requiring public companies to provide certain climate-related information in their registration

statements and annual reports.

The final rules will require information about a company’s climate-related risks that have materially

impacted or are reasonably likely to have a material impact on its business strategy, results of operations, or financial condition, and

the actual and potential material impacts of any identified climate-related risks on the company’s strategy, business model and

outlook, as well as relating to assessment, management, oversight and mitigation of such material risks, material climate-related targets

and goals, and material greenhouse gas emissions.

Additionally, certain disclosures related to severe weather events and other natural

conditions will be required in the audited financial statements.

The first phase of the final rule is effective for fiscal years beginning

Disclosure for prior periods is only required if it was previously disclosed in an SEC filing.

On April 4, 2024, the SEC voluntarily

stayed implementation of the final rule to facilitate the orderly judicial resolution of pending legal challenges to the rule.

currently evaluating the impact on our disclosures of adopting this new pronouncement.

In November of 2023, the Financial

Accounting Standards Board (“FASB”) issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment

Disclosures.” The updated accounting guidance requires enhanced reportable segment disclosures, primarily related to significant

segment expenses which are regularly provided to the chief operating decision maker.

The guidance is effective for fiscal years beginning

after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Retrospective application is required

and early adoption is permitted.

The Company is currently evaluating the effect the updated guidance will have on its financial statement

In December of 2023, the FASB

issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” The updated accounting guidance requires

expanded income tax disclosures, including the disaggregation of existing disclosures related to the effective tax rate reconciliation

and income taxes paid.

The guidance is effective for fiscal years beginning after December 15, 2024.

Prospective application is required,

with retrospective application permitted.

The Company is currently evaluating the effect the updated guidance will have on its financial

statement disclosures.

NOTE 3 - REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS

The impact of ASC 606 on revenue

recognized during the three and nine months ended September 30, 2023 and October 1, 2022 is as follows:

recognized during the three months ended March 30, 2024 and April 1, 2023 is as follows:

Three Months Ended

Nine Months Ended

September 30,

March 30, 2024

April 1, 2023

Contract liabilities with customers at beginning of period

2 unchanged sentences

Contract liabilities with customers at end of period

As more fully described in

the Revenue Recognition section of Note 2, the deferral of revenue and subsequent recognition thereof relates to certain of the

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

The Company expects the remaining

deferred revenue from this contract liability with customers to be recognized in the fourth quarter of 2023.

As more fully described in the

Revenue Recognition section of Note 2, the deferral of revenue and subsequent recognition thereof relates to certain of the Company’s

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

The Company expects the remaining deferred revenue from this

contract liability with customers to be recognized in the second quarter of 2024.

Practical Expedients and Exemptions

12 unchanged sentences

Inventories consist of the following:

September 30, 2023

March 30, 2024

December 31, 2023

14 unchanged sentences

the Company records right-of-use assets equal to the present value of the contractual liability for future lease payments.

The table below presents the right-of- use assets and related lease liabilities recognized on the Condensed Consolidated Balance

Sheet as of September 30, 2023:

The table below

presents the right-of-use assets and related lease liabilities recognized on the Condensed Consolidated Balance Sheet as of March 30,

Balance Sheet Line Item

September 30, 2023

March 30, 2024

Right-of-use assets

10 unchanged sentences

value of its operating lease liabilities.

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 September 30, 2023:

Remainder of 2023

Total undiscounted future minimum lease payments

Difference between undiscounted lease payments & the present value of future lease payments

Total operating lease liabilities

Certain of the Company’s

3 unchanged sentences

option at the inception of the lease or when a triggering event occurs.

The Company’s weighted average remaining lease term for

operating leases as of September 30, 2023 is 8.1 years.

The table below includes cash

paid for our operating lease liabilities, other non-cash information, our weighted average remaining lease term and weighted average discount

Three Months Ended

March 30, 2024

April 1, 2023

Cash paid for amounts included in the measurement of lease liabilities

Cash amounts paid for short-term leases

Right-of-use assets obtained in exchange for lease liabilities

Weighted average remaining lease term (years)

Weighted average discount rate

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 March 30, 2024:

Remainder of 2024

Total undiscounted future minimum lease payments

Difference between undiscounted lease payments & the present value of future lease payments

Total operating lease liabilities

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 September 30, 2023, the Company was in compliance

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

At March 30, 2024, 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 $ 1.2 million and $ 1.7 million for the

three and nine months ended September 30, 2023, respectively, and $ 0.9 million and $ 3.1 million for the three and nine months ended October

1, 2022, respectively.

The Company plans to contribute approximately $ 1.0 million to the plan in matching employee contributions during

the remainder of 2023.

three months ended March 30, 2024 and April 1, 2023, respectively.

The Company plans to contribute approximately $ 3.0 million to the plan

in matching employee contributions during the remainder of 2024.

In addition, the Company provided

supplemental discretionary contributions to the 401(k) plan totaling $ 1.6 million and $ 5.3 million for the three and nine months ended

September 30, 2023, respectively, and $ 1.5 million and $ 5.4 million for the three and nine months ended October 1, 2022, respectively.

The Company plans to contribute approximately $ 1.6 million in supplemental contributions to the plan during the remainder of 2023.

supplemental discretionary contributions to the 401(k) plan totaling $ 2.0 million and $ 2.2 million for the three months ended March 30,

2024 and April 1, 2023, respectively.

The Company plans to contribute approximately $ 4.5 million in supplemental contributions to the

plan during the remainder of 2024.

NOTE 8 - INCOME TAXES

3 unchanged sentences

The Company’s effective income tax rate was 21.7 % and

for the three and nine months ended September 30, 2023, respectively.

The Company’s effective income tax rate was 12.4 % and 19.9 %

for the three and nine months October 1, 2022, respectively.

The lower effective income tax rates for the three and nine months ended

September 30, 2023 resulted from the recognition of higher than anticipated tax credits that were noted when the Company filed its 2022

Federal and state income tax returns.

22.4 % for the three months ended March 30, 2024 and April 1, 2023, respectively.

Income tax payments for the three

and nine months ended September 30, 2023 totaled $ 7.3 million and $ 23.8 million, respectively.

Income tax payments for the three and nine

months ended October 1, 2022 totaled $ 6.0 million and $ 26.6 million, respectively.

months ended March 30, 2024 and April 1, 2023 totaled $ 0.1 million and $ 3.0 million, respectively.

The Company files income tax returns

12 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

March 30, 2024

April 1, 2023

Weighted average number of common shares outstanding – Basic

20 unchanged sentences

The Company reserved 1,000,000 shares for issuance under the 2023 SIP, of which 731,000 shares remain available for

future grants as of September 30, 2023.

Any shares remaining from the 2017 SIP will be available for future grants under the terms of

the 2023 SIP.

As of September 30, 2023, 121,034 shares remained unawarded from the 2017 SIP.

future grants as of March 30, 2024.

Any shares remaining from the 2017 SIP will be available for future grants under the terms of the

As of March 30, 2024, approximately 120,000 shares remained unawarded from the 2017 SIP.

Since the shareholder approval of the

2023 SIP, 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.

Previously granted and outstanding awards under the 2017

SIP will remain subject to the terms of the 2017 SIP.

Restricted Stock Units

The Company grants

performance-based and retention-based restricted stock units to senior employees.

The vesting of the performance-based awards is

dependent on the achievement of corporate objectives established by the Compensation Committee of the Board of Directors and a

three-year vesting period.

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

There were 113,862 restricted

stock units issued during the nine months ended September 30, 2023.

Total compensation costs related to these restricted stock units

are $ 6.1 million.

The Company grants performance-based

and retention-based restricted stock units to senior employees.

The vesting of the performance-based awards is dependent on the achievement

of corporate objectives established by the Compensation Committee of the Board of Directors and a three-year vesting period.

The retention-based

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

There were 137,516 restricted stock units issued during the three months ended

March 30, 2024.

Total compensation costs related to these restricted stock units are $ 5.9 million.

Compensation costs related to

all outstanding restricted stock units recognized in the statements of income aggregated $ 1.6 million and $ 5.0 million for the three and

nine months ended September 30, 2023, respectively, and $ 1.7 million and $ 5.1 million for the three and nine months ended October 1, 2022,

respectively.

all outstanding restricted stock units recognized in the statements of income aggregated $ 1.1 million for the three month periods ended

March 30, 2024 and April 1, 2023.

NOTE 11 - OPERATING SEGMENT INFORMATION

8 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

March 30, 2024

April 1, 2023

Income (Loss) Before Income Taxes

Capital Expenditures

September 30,

March 30, 2024

December 31,2023

Identifiable Assets

3 unchanged sentences

Payments made to the NRA in the

three and nine months ended September 30, 2023 totaled $ 0.1 million and $ 0.4 million, respectively.

Payments made to the NRA in the three

and nine months ended October 1, 2022 totaled $ 0.2 million and $ 0.4 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 in the

three and nine month periods ended September 30, 2023 totaled $ 0.1 million and $ 0.3 million, respectively.

Payments made to the

NSSF in the three and nine months ended October 1, 2022 totaled $ 0.1 million and $ 0.2 million, respectively.

One of the Company’s

Directors also serves on the Board of the NSSF.

three months ended March 30, 2024 and April 1, 2023 totaled $ 0.2 million and $ 0.1 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 in the three months ended March 30, 2024 and April 1, 2023 totaled

$ 0.2 million and $ 0.1 million, respectively.

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

NOTE 13 - CONTINGENT LIABILITIES

As of September 30, 2023, the

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

The lawsuits fall into three categories:

litigation, negligence, and unfair trade practices.

Each is discussed in turn below.

As of March 30, 2024, the Company

was a defendant in ten (10) lawsuits and is aware of certain other such claims.

The lawsuits fall into five (5) categories:

product liability litigation, municipal litigation, negligence, unfair trade practices, and trademark litigation.

Each is discussed in

Traditional Product Liability Litigation

One lawsuit mentioned above involves

a claim for damages related to an allegedly defective product due to its design and/or manufacture.

The lawsuit stems from a specific

incident of personal injury and is based on traditional product liability theories such as strict liability, negligence, and/or breach

Company management believes that

the allegations in this case are unfounded, that the incident is unrelated to the design or manufacture of the firearm involved, and that

there should be no recovery against the Company.

Municipal Litigation

12 unchanged sentences

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

The City of Gary Complaint

seeks damages, among other things, for the costs of medical care, police and emergency services, public health services, and other services

The City of Gary seeks

damages, among other things, for the costs of medical care, police and emergency services, public health services, and other services

as well as punitive damages.

1 unchanged sentence

and distribution practices of the various Defendants.

The suit alleges, among other claims, negligence in the design of products, public

nuisance, negligent distribution and marketing, negligence per se and deceptive advertising.

The case does not allege a specific injury

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.

Discovery is ongoing.

The Complaint alleges, among other claims, negligence in the design of products,

public nuisance, negligent distribution and marketing, negligence per se and deceptive advertising.

The case does not allege a specific

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

After a long procedural history, during

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

On March 15, 2024, Indiana Governor

Eric Holcomb signed into law HB 1235, which reserves to the State of Indiana the right to bring an action on behalf of a political subdivision

against a firearm or ammunition manufacturer, trade association, seller, or dealer, concerning certain matters.

The new law also prohibits

a political subdivision from bringing or maintaining such an action.

With the passage of this new law, the Company and other defendants

filed a Motion for Judgment on the Pleadings on March 18, 2024.

The matter is being briefed.

Estados Unidos Mexicanos v.

7 unchanged sentences

Plaintiff seeks injunctive relief and monetary damages.

On November 22, 2021, defendants filed a joint Rule 12(b)(6) motion

to dismiss the Mexican Government’s complaint.

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 before the First Circuit Court of Appeals.

argument was held on July 24, 2023.

On November 22, 2021, Defendants

filed a motion to dismiss the Complaint, which was granted on September 30, 2022.

Plaintiffs appealed to the First Circuit Court of Appeals

and, on January 22, 2024, the Court of Appeals reversed the District Court’s dismissal and remanded the case for further proceedings.

The Defendants sought a Stay of Proceedings Pending Review of a Petition for Writ of Certiorari to the United States Supreme Court.

District Court recently denied the stay and held that the defendants should request that the First Circuit recall its mandate or petition

for a stay from the Supreme Court.

On December 20, 2022, the City

8 unchanged sentences

the result of the manufacturing, sales, marketing, and distribution practices of the Defendants.

Defendants timely removed the matter

The Defendants timely removed the matter

District Court for the Western District of New York.

4 unchanged sentences

State Supreme Court for Monroe County, New York.

The allegations essentially mirror those in The City of Buffalo , discussed in

the preceding paragraph.

The suit names a number of firearm manufacturers, distributors, and retailers as Defendants,

including the Company, and purports to state causes of action for violations of Sections 898, 349 and 350 of the New York General Business

Law, as well as common law public nuisance.

The allegations essentially mirror those in The City of Buffalo , discussed in the preceding

Defendants timely removed the matter to the U.S.

15 unchanged sentences

The Company was named in two purported

class action lawsuits arising out of a data breach at Freestyle Solutions, Inc., the vendor who hosted the Company’s ShopRuger.com

class action lawsuits arising out of a data breach at Freestyle Solutions, Inc., the vendor who was hosting the Company’s ShopRuger.com

website at the time of the breach.

10 unchanged sentences

On January 20, 2023, five plaintiffs filed an Amended Complaint

naming the Company and Freestyle Software, Inc.

naming the Company and Freestyle Solutions, Inc.

as Defendants.

1 unchanged sentence

warranties, and unjust enrichment.

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

The matter has been briefed fully, and

a decision is pending.

The Company moved to dismiss the

Amended Complaint.

On March 27, 2024, the Court dismissed Plaintiffs’ negligence and unjust enrichment claims against the Company.

The Court denied the motion with respect to Plaintiffs’ breach of contract claim, concluding that development of additional information

is required to assess the applicability of the limitation of liability clause contained in the Company’s terms and conditions of

The case is proceeding accordingly.

Unfair Trade Practices

4 unchanged sentences

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 violate the Connecticut Unfair Trade Practices Act and were a substantial factor

in bringing about the wrongful death of Suzanne Fountain.

The Complaint alleges that the Company’s advertising

and marketing of the Ruger AR-556 pistol violate the Connecticut Unfair Trade Practices Act and were a substantial factor in bringing

about the wrongful death of Suzanne Fountain.

Estate of Neven Stanisic et

1 unchanged sentence

of Suzanne Fountain , the claims arise from the criminal shootings at the King Soopers supermarket in Boulder, Colorado on March 22,

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 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 and transferred by the court to the Complex Litigation Docket.

Plaintiffs sought leave to file an amended complaint, essentially abandoning their negligent marketing allegations and advancing a new

theory predicated upon alleged violations of the Gun Control Act and National Firearms Act.

Over the Company’s objections, plaintiffs

were permitted to file the amended complaint.

The matter was timely removed to the U.S.

District Court for the District of Connecticut

based upon federal question jurisdiction.

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 violate the Connecticut Unfair Trade Practices Act and were

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

and Stanisic cases were consolidated for discovery purposes only and transferred by the court to the Complex Litigation Docket.

Plaintiffs then sought leave to file an Amended Complaint, essentially abandoning their negligent marketing allegations and advancing

a new theory predicated upon alleged violations of the Gun Control Act and National Firearms Act.

Over the Company’s objections,

Plaintiffs were permitted to file the Amended Complaint.

matter was timely removed to the U.S.

District Court for the District of Connecticut based upon the new allegations and federal question

jurisdiction.

Plaintiffs moved to remand the case to state court, the matter has been briefed fully, and oral argument on the motion

was held on April 16, 2024.

The parties are awaiting a ruling.

March 12, 2024, the Company was named as a defendant in FN Herstal, et al.

Sturm, Ruger & Company, Inc.

pending in the U.S.

District Court for the Middle District of North Carolina.

T he Complaint alleges

that the Company’s use of the initialism “SFAR” in connection with the marketing of its Small Frame Autoloading Rifle

infringes the Plaintiffs’ SCAR trademark.

The Complaint alleges violations of the Lanham Act and the North Carolina Unfair and Deceptive

Trade Practices Act, as well as trademark infringement under North Carolina common law.

The Company believes that the allegations are

meritless and is defending the action accordingly.

Summary of Claimed Damages and Explanation of Product Liability Accruals

31 unchanged sentences

possible liability and claims handling expenses on an ongoing basis.

A range of reasonably possible

losses relating to unfavorable outcomes cannot be made.

However, in product liability cases in which a dollar amount of damages is claimed,

the amount of damages claimed, which totaled $ 1.1 million at December 31, 2021, is set forth as an indication of possible maximum liability

the Company might be required to incur in these cases (regardless of the likelihood or reasonable probability of any or all of this amount

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 .

A range of reasonably possible losses relating to

unfavorable outcomes cannot be made.

The dollar amount of damages claimed at December 31, 2023 and December 31, 2022 was de minimis .

The amount claimed at December 31, 2021 was $ 1.1 million and is set forth as an indication of possible maximum liability the Company might

be required to incur in these cases (regardless of the likelihood or reasonable probability of any or all of this amount being awarded

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

NOTE 14 - SUBSEQUENT EVENTS

On October 27, 2023,

the Board of Directors authorized a dividend of 17 ¢ per share, for shareholders of record as of November 15, 2023, payable on November

On April 26, 2024,

the Board of Directors authorized a dividend of 16 ¢ per share, for shareholders of record as of May 20, 2024, payable on June 7,

The Company has evaluated

events and transactions occurring subsequent to September 30, 2023 and determined that there were no other unreported events or transactions

events and transactions occurring subsequent to March 30, 2024 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