0001193125-12-493680.txt : 20121206 0001193125-12-493680.hdr.sgml : 20121206 20121206160555 ACCESSION NUMBER: 0001193125-12-493680 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20121206 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20121206 DATE AS OF CHANGE: 20121206 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMITH & WESSON HOLDING CORP CENTRAL INDEX KEY: 0001092796 STANDARD INDUSTRIAL CLASSIFICATION: ORDNANCE & ACCESSORIES, (NO VEHICLES/GUIDED MISSILES) [3480] IRS NUMBER: 870543688 STATE OF INCORPORATION: NV FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31552 FILM NUMBER: 121246750 BUSINESS ADDRESS: STREET 1: 2100 ROOSEVELT AVENUE CITY: SPRINGFIELD STATE: MA ZIP: 01104 BUSINESS PHONE: 4137473573 MAIL ADDRESS: STREET 1: 2100 ROOSEVELT AVENUE CITY: SPRINGFIELD STATE: MA ZIP: 01104 FORMER COMPANY: FORMER CONFORMED NAME: SAF T HAMMER CORP/NV DATE OF NAME CHANGE: 20000404 FORMER COMPANY: FORMER CONFORMED NAME: LOST COAST VENTURES INC DATE OF NAME CHANGE: 19990809 8-K 1 d449948d8k.htm FORM 8-K Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

December 6, 2012

Date of Report (Date of earliest event reported)

 

 

Smith & Wesson Holding Corporation

(Exact Name of Registrant as Specified in Charter)

 

 

 

Nevada   001-31552   87-0543688

(State or Other Jurisdiction of

Incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification No.)

2100 Roosevelt Avenue Springfield,

Massachusetts

   01104
(Address of Principal Executive Offices)   (Zip Code)

(800) 331-0852

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 2.02. Results of Operations and Financial Condition.

We are furnishing this Report on Form 8-K in connection with the disclosure of information, in the form of the textual information from a press release released on December 6, 2012.

The information in this Report on Form 8-K (including the exhibit) is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

We do not have, and expressly disclaim, any obligation to release publicly any updates or any changes in our expectations or any change in events, conditions, or circumstances on which any forward-looking statement is based.

The text included with this Report on Form 8-K is available on our website located at www.smith-wesson.com, although we reserve the right to discontinue that availability at any time.

 

Item 8.01. Other Events.

On December 6, 2012, we announced that our board of directors has approved a program to repurchase up to $20.0 million of our outstanding shares of common stock from time to time until June 30, 2013. The amount and timing of any repurchases will depend on a number of factors, including price, trading volume, general market conditions, legal requirements, and other factors. The repurchases may be made on the open market, in block trades, or in privately negotiated transactions. Any shares of common stock repurchased under the program will be considered issued but not outstanding shares of our common stock.

 

Item 9.01. Financial Statements and Exhibits.

 

  (a) Financial Statements of Business Acquired.

Not applicable.

 

  (b) Pro Forma Financial Information.

Not applicable.

 

  (c) Shell Company Transactions.

Not applicable.

 

  (d) Exhibits.

Exhibit Number

   

Exhibits

99.1    Press release from Smith & Wesson Holding Corporation, dated December 6, 2012, entitled “Smith & Wesson Holding Corporation Reports Record Second Quarter Fiscal 2013 Financial Results”

 

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    SMITH & WESSON HOLDING CORPORATION
Date: December 6, 2012     By:   /s/ Jeffrey D. Buchanan
      Jeffrey D. Buchanan
     

Executive Vice President, Chief Financial Officer,

and Treasurer

EXHIBIT INDEX

 

99.1    Press release from Smith & Wesson Holding Corporation, dated December 6, 2012, entitled “Smith & Wesson Holding Corporation Reports Record Second Quarter Fiscal 2013 Financial Results”
 EX-99.1 2 d449948dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Contacts:

Liz Sharp, VP Investor Relations

Smith & Wesson Holding Corp.

(413) 747-3304

lsharp@smith-wesson.com

Smith & Wesson Holding Corporation Reports Record

Second Quarter Fiscal 2013 Financial Results

 

  •  

Record Fiscal Second Quarter 2013 Net Sales from Continuing Operations of $136.6 Million, Up 48.0% Year-Over-Year

 

  •  

Fiscal Second Quarter 2013 Net Income from Continuing Operations of $16.4 Million, or $0.24 Per Diluted Share

 

  •  

Company Raising Full Year Fiscal 2013 Financial Guidance

 

  •  

Board of Directors Approves Plan to Repurchase Up to $20.0 Million in Common Stock

SPRINGFIELD, Mass., December 6, 2012 — Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC), a leader in firearm manufacturing and design, today announced financial results for the fiscal 2013 second quarter ended October 31, 2012.

Second Quarter Fiscal 2013 Financial Highlights

 

•  

Net sales from continuing operations for the second quarter were a record $136.6 million, up 48.0% from the second quarter last year. The increase was led by continued strong sales across all of the company’s firearm product lines, including M&P™ branded products, such as pistols, modern sporting rifles, and the recently launched Shield™ pistol designed for concealed carry and personal protection.

 

•  

Gross profit for the second quarter was $48.5 million, or 35.5% of net sales, compared with gross profit of $24.6 million, or 26.7% of net sales, for the comparable quarter last year. Increased sales volume of polymer pistols and modern sporting rifles positively impacted gross profit. In addition, gross margin last year reflected costs related to the consolidation of our Thompson/Center Arms business to Springfield, Massachusetts.

 

•  

Operating expenses for the second quarter were $21.9 million, or 16.0% of net sales, compared with operating expense of $21.2 million, or 22.9% of net sales, for the second quarter last year. Increased profit sharing and incentive compensation expenses were almost entirely offset by savings resulting from an ongoing company-wide focus on cost reduction activities and the favorable impact in the current year of the Thompson/Center Arms consolidation that occurred in the prior year.

 

•  

Operating income from continuing operations for the second quarter was $26.6 million, or 19.5% percent of net sales, compared with operating income from continuing operations of $3.4 million, or 3.7% percent of net sales for the comparable quarter last year.

 

Page 1 of 9

•  

Net income from continuing operations for the second quarter was $16.4 million, or $0.24 per diluted share, compared with net income from continuing operations of $948,000, or $0.01 per diluted share, for the second quarter last year.

 

•  

Non-GAAP Adjusted EBITDAS from continuing operations for the second quarter increased to $32.0 million compared with $10.2 million for the second quarter last year.

 

•  

At October 31, 2012, firearm backlog was $332.7 million, an increase of $182.8 million, or 122.0%, compared with the end of the second quarter last year, and a decrease of $59.7 million, or 15.2%, from the most recent sequential quarter.

 

•  

Operating cash flow of $4.5 million and net capital spending of $9.6 million for the second quarter resulted in free cash outflow of $5.1 million. The sequentially lower operating cash flow reflected hunting seasonality, in which some receivables are extended until after the hunting season, as well as $8.0 million in early employee profit sharing payments. Profit sharing payments historically occurred in the company’s third quarter. Despite the free cash outflow, cash and cash equivalents increased to $61.3 million at the end of the second quarter, primarily as a result of proceeds from the exercise of options.

The company also today announced that its Board of Directors has approved a program to repurchase up to $20.0 million of the company’s outstanding shares of common stock from time to time until June 30, 2013. The amount and timing of any repurchases will depend on a number of factors, including price, trading volume, general market conditions, legal requirements, and other factors. The repurchases may be made on the open market, in block trades, or in privately negotiated transactions. Any shares of common stock repurchased under the program will be considered issued but not outstanding shares of the company’s common stock.

James Debney, Smith & Wesson Holding Corporation President and Chief Executive Officer, stated, “Our strong fiscal second quarter financial performance reflects the ongoing successful execution of our strategic plan, and accordingly today we are increasing our full year fiscal 2013 financial guidance. During the second quarter, consumers continued to demonstrate their desire for our products, driving strong demand for our M&P modern sporting rifles and polymer pistols, including our M&P Shield pistol designed for concealed carry and personal protection. Increases in internal production capacity combined with improvements in our supply chain integration allowed us to offset the impact of the annual two-week shutdown as well as exceed our revenue and earnings guidance. As always, we engaged in product innovation and marketing activities designed to support and expand our user base. We unveiled several high-end pistols for our competitive and professional customers, including our M&P™ Pro Series C.O.R.E. pistols. We also announced our presenting sponsorship of the NRA Women’s Network, a meaningful resource for the growing number of female gun enthusiasts of all ages and skill levels.”

Jeffrey D. Buchanan, Executive Vice President and Chief Financial Officer, stated, “By continuing to focus on our core firearm business, we delivered a second consecutive quarter of record sales combined with strong net income growth and earnings per share performance. In addition, our Board of Directors has approved a program authorizing the repurchase of up to $20.0 million of our common stock. We believe that this program demonstrates the confidence that our Board and management team have in the future of the company and our ongoing commitment to enhancing stockholder value.”

 

Page 2 of 9

Financial Outlook for Continuing Operations

The company expects net sales from continuing operations for the third quarter of fiscal 2013 to be between $126.0 million and $131.0 million, which would represent year-over-year growth from continuing operations in excess of 30.0%. The company anticipates GAAP earnings per diluted share from continuing operations of between $0.19 and $0.21 for the third quarter of fiscal 2013.

The company is raising its full year fiscal 2013 financial guidance. The company now anticipates net sales from continuing operations for fiscal 2013 of between $550.0 million and $560.0 million, which would represent year-over-year growth from continuing operations of approximately 35.0% at the midpoint. The company anticipates fiscal 2013 GAAP earnings per diluted share from continuing operations of between $1.00 and $1.05.

Conference Call and Webcast

The company will host a conference call and webcast today, December 6, 2012, to discuss its second quarter fiscal 2013 financial and operational results. Speakers on the conference call will include James Debney, President and CEO, and Jeffrey D. Buchanan, Executive Vice President and CFO. The conference call may include forward-looking statements. The conference call and webcast will begin at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Those interested in listening to the call via telephone may call directly at 866-770-7129 and reference conference code 97402682. No RSVP is necessary. The conference call audio webcast can also be accessed live and for replay on the company’s website at www.smith-wesson.com, under the Investor Relations section. The company will maintain an audio replay of this conference call on its website for a period of time after the call. No other audio replay will be available.

Reconciliation of U.S. GAAP to Non-GAAP Adjusted EBITDAS

In this press release, a non-GAAP financial measure known as “Adjusted EBITDAS” is presented. From time-to-time, the company considers and uses Adjusted EBITDAS as a supplemental measure of operating performance in order to provide the reader with an improved understanding of underlying performance trends. Adjusted EBITDAS excludes the effects of interest expense, income taxes, depreciation of tangible fixed assets, amortization of intangible assets, stock-based employee compensation expense, loss on the sale of discontinued operations, DOJ and SEC investigation costs, and certain other transactions. See the attached “Reconciliation of GAAP Net Income/(Loss) to Non-GAAP Adjusted EBITDAS” for a detailed explanation of the amounts excluded from and included in net income to arrive at Adjusted EBITDAS for the three-month and six-month periods ended October 31, 2012 and October 31, 2011. Adjusted or non-GAAP financial measures provide investors and the company with supplemental measures of operating performance and trends that facilitate comparisons between periods before, during, and after certain items that would not otherwise be apparent on a GAAP basis. Adjusted financial measures are not, and should not be viewed as, a substitute for GAAP results. The company’s definition of these adjusted financial measures may differ from similarly named measures used by others.

 

Page 3 of 9

About Smith & Wesson

Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC) is a U.S.-based leader in firearm manufacturing and design, delivering a broad portfolio of quality firearms, related products, and training to the global military, law enforcement, and consumer markets. The company’s brands include Smith & Wesson®, M&P™ and Thompson/Center Arms. Smith & Wesson facilities are located in Massachusetts and Maine. For more information on Smith & Wesson, call (800) 331-0852 or log on to
www.smith-wesson.com.

Safe Harbor Statement

Certain statements contained in this press release may be deemed to be forward-looking statements under federal securities laws, and we intend that such forward-looking statements be subject to the safe-harbor created thereby. Such forward-looking statements include the success of our ongoing company-wide focus on cost reduction activities; our expectation that some hunting receivables will be extended until after the hunting season; future repurchases of our common stock under our stock repurchase program, including the amount, time, and manner of repurchases, if any; the success of our strategic plan; increasing our full year fiscal 2013 financial guidance; our belief regarding our Board’s and management team’s confidence in our future and our ongoing commitment to enhancing stockholder value; and our outlook for net sales from continuing operations, year-over-year growth from continuing operations, and GAAP earnings per diluted share from continuing operations for the third quarter of fiscal 2013 and the full 2013 fiscal year. We caution that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by such forward-looking statements. Such factors include the demand for our products; the costs and ultimate conclusion of certain legal matters, including the DOJ and SEC matters; the state of the U.S. economy; general economic conditions, and consumer spending patterns; the potential for increased gun control; speculation surrounding fears of terrorism and crime; our growth opportunities; our anticipated growth; our ability to increase demand for our products in various markets, including consumer, law enforcement, and military channels, domestically and internationally; the position of our hunting products in the consumer discretionary marketplace and distribution channel; our penetration rates in new and existing markets; our strategies; our ability to introduce new products; the success of new products; our ability to expand our markets; the potential for cancellation of orders from our backlog; the effects of the divestiture of our security solutions business on our core firearm business; and other risks detailed from time to time in our reports filed with the SEC, including our Form 10-K Report for the fiscal year ended April 30, 2012.

 

Page 4 of 9

SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME/(LOSS) AND COMPREHENSIVE INCOME/(LOSS)

(Unaudited)

 

    For the Three Months Ended:     For the Six Months Ended:  
    October 31, 2012     October 31, 2011     October 31, 2012     October 31, 2011  
    (In thousands, except per share data)  

Net sales

   $ 136,560      $ 92,299      $ 272,555      $ 184,029   

Cost of sales

     88,037        67,693        172,739        132,907   
 

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

     48,523        24,606        99,816        51,122   
 

 

 

    

 

 

    

 

 

    

 

 

  

Operating expenses:

        

Research and development

     1,278        1,241        2,420        2,579   

Selling and marketing

     8,042        8,636        14,870        16,761   

General and administrative

     12,579        11,295        24,604        22,817   
 

 

 

    

 

 

    

 

 

    

 

 

  

Total operating expenses

     21,899        21,172        41,894        42,157   
 

 

 

    

 

 

    

 

 

    

 

 

  

Operating income from continuing operations

     26,624        3,434        57,922        8,965   
 

 

 

    

 

 

    

 

 

    

 

 

  

Other income/(expense):

        

Other income/(expense), net

     39       20        39        54   

Interest income

     335        399        703        802   

Interest expense

     (1,344 )      (2,477 )      (3,331 )      (4,416 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Total other income/(expense), net

     (970 )      (2,058 )      (2,589 )      (3,560 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Income from continuing operations before income taxes

     25,654        1,376        55,333        5,405   

Income tax expense

     9,253        428        20,061        2,182   
 

 

 

    

 

 

    

 

 

    

 

 

  

Income from continuing operations

     16,401        948        35,272        3,223   

Discontinued operations:

        

Loss from operations of discontinued security solutions division

     (867 )      (4,004 )      (2,550 )      (6,706 ) 

Income tax benefit

     (5,651 )      (1,465 )      (6,249 )      (2,681 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Income/(loss) from discontinued operations

     4,784        (2,539 )      3,699        (4,025 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Net income/(loss)/comprehensive income/(loss)

   $ 21,185      $ (1,591 )    $ 38,971      $ (802 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Net income/(loss) per share:

        

Basic - continuing operations

   $ 0.25      $ 0.01      $ 0.54      $ 0.05   
 

 

 

    

 

 

    

 

 

    

 

 

  

Basic - net income/(loss)

   $ 0.32      $ (0.02 )    $ 0.59      $ (0.01 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Diluted - continuing operations

   $ 0.24      $ 0.01      $ 0.53      $ 0.05   
 

 

 

    

 

 

    

 

 

    

 

 

  

Diluted - net income/(loss)

   $ 0.31      $ (0.02 )    $ 0.58      $ (0.01 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Weighted average number of common shares outstanding:

        

Basic

     65,871        64,697        65,611        64,613   

Diluted

     67,274        65,110        66,914        65,130   

 

Page 5 of 9

SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

    As of:  
    October 31, 2012     April 30, 2012  
    (In thousands, except par value and share data)  
ASSETS   

Current assets:

    

Cash and cash equivalents, including restricted cash of $3,340 on October 31, 2012 and $3,334 on April 30, 2012

   $ 61,295      $ 56,717   

Accounts receivable, net of allowance for doubtful accounts of $1,096 on October 31, 2012 and $1,058 on April 30, 2012

     54,474        48,313   

Inventories

     65,335        55,296   

Prepaid expenses and other current assets

     6,176        4,139   

Assets held for sale

     1,150        13,490   

Deferred income taxes

     12,759        12,759   

Income tax receivable

     8,771        —     
 

 

 

    

 

 

  

Total current assets

     209,960        190,714   
 

 

 

    

 

 

  

Property, plant and equipment, net

     68,954        60,528   

Intangibles, net

     4,225        4,532   

Other assets

     5,470        5,900   
 

 

 

    

 

 

  
  $ 288,609      $ 261,674   
 

 

 

    

 

 

  
LIABILITIES AND STOCKHOLDERS’ EQUITY   

Current liabilities:

    

Accounts payable

   $ 24,654      $ 28,618   

Accrued expenses

     20,310        20,685   

Accrued payroll

     9,016        9,002   

Accrued income taxes

     —          291   

Accrued taxes other than income

     4,767        4,270   

Accrued profit sharing

     4,754        8,040   

Accrued product/municipal liability

     1,365        1,397   

Accrued warranty

     5,047        5,349   

Liabilities held for sale

     —          5,693   

Current portion of notes payable

     789        —     
 

 

 

    

 

 

  

Total current liabilities

     70,702        83,345   
 

 

 

    

 

 

  

Deferred income taxes

     4,537        4,537   
 

 

 

    

 

 

  

Notes payable, net of current portion

     43,559        50,000   
 

 

 

    

 

 

  

Other non-current liabilities

     10,977        10,948   
 

 

 

    

 

 

  

Total liabilities

     129,775        148,830   
 

 

 

    

 

 

  

Commitments and contingencies

    

Stockholders’ equity:

    

Preferred stock, $.001 par value, 20,000,000 shares authorized, no shares issued or outstanding

     —          —     

Common stock, $.001 par value, 100,000,000 shares authorized, 67,447,748 shares issued and 66,247,748 shares outstanding on October 31, 2012 and 66,512,097 shares issued and 65,312,097 shares outstanding on April 30, 2012

     67        67   

Additional paid-in capital

     196,398        189,379   

Accumulated deficit

     (31,308 )      (70,279 ) 

Accumulated other comprehensive income

     73        73   

Treasury stock, at cost (1,200,000 common shares)

     (6,396 )      (6,396 ) 
 

 

 

    

 

 

  

Total stockholders’ equity

     158,834        112,844   
 

 

 

    

 

 

  
  $ 288,609      $ 261,674   
 

 

 

    

 

 

  

 

Page 6 of 9

SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     For the Six Months Ended  
     October 31, 2012     October 31, 2011  
     (In thousands)  

Cash flows from operating activities:

     

Net income/(loss)

    $ 38,971      $ (802 ) 

Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:

     

Amortization and depreciation

      8,074        7,881   

Loss on sale of discontinued operations, including $45 of stock-based compensation expense

      798        —     

Loss on sale/disposition of assets

      292        320   

Provision for/(recoveries of) losses on accounts receivable

      380        (636 ) 

Change in disposal group assets and liabilities

      (1,232 )      5,005   

Stock-based compensation expense

      1,906        1,124   

Excess book deduction of stock-based compensation

      —          (240 ) 

Changes in operating assets and liabilities:

     

Accounts receivable

      (6,541 )      7,828   

Inventories

      (10,039 )      (8,346 ) 

Other current assets

      (1,213 )      (1,460 ) 

Income tax receivable/payable

      (9,062 )      (1,417 ) 

Accounts payable

      (3,964 )      (7,803 ) 

Accrued payroll

      (591 )      1,297   

Accrued taxes other than income

      497        (8,181 ) 

Accrued profit sharing

      (3,286 )      1,974   

Accrued other expenses

      (1,175 )      (1,349 ) 

Accrued product/municipal liability

      (32 )      (309 ) 

Accrued warranty

      (302 )      2,351   

Other assets

      (39 )      (79 ) 

Other non-current liabilities

      329        306   
  

 

 

    

 

 

  

Net cash provided by/(used in) operating activities

      13,771        (2,536 ) 
  

 

 

    

 

 

  

Cash flows from investing activities:

     

Proceeds from sale of discontinued operations

      7,500        —     

Receipts from note receivable

      36        —     

Payments to acquire patents and software

      (22 )      (64 ) 

Proceeds from sale of property and equipment

      13        —     

Payments to acquire property and equipment

      (15,836 )      (6,086 ) 
  

 

 

    

 

 

  

Net cash used in investing activities

      (8,309 )      (6,150 ) 
  

 

 

    

 

 

  

Cash flows from financing activities:

     

Proceeds from loans and notes payable

      1,753        1,532   

Cash paid for debt issue costs

      —          (1,887 ) 

Proceeds from energy efficiency incentive programs

      —          225   

Payments on capital lease obligation

      (300 )      —     

Payments on loans and notes payable

      (7,405 )      (990 ) 

Proceeds from exercise of options to acquire common stock, including employee stock purchase plan

      4,084        704   

Excess tax benefit of stock-based compensation

      984        —     
  

 

 

    

 

 

  

Net cash used in financing activities

      (884 )      (416 ) 
  

 

 

    

 

 

  

Net increase/(decrease) in cash and cash equivalents

      4,578        (9,102 ) 

Cash and cash equivalents, beginning of period

      56,717        58,292   
  

 

 

    

 

 

  

Cash and cash equivalents, end of period

    $ 61,295      $ 49,190   
  

 

 

    

 

 

  

Supplemental disclosure of cash flow information

     

Cash paid for:

     

Interest

    $ 3,013      $ 2,649   

Income taxes

      22,204        1,129   

 

Page 7 of 9

SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME/(LOSS) TO ADJUSTED EBITDAS (Unaudited)

 

    For the Three Months Ended October 31, 2012:     For the Three Months Ended October 31, 2011:  
    GAAP     Adjustments     Adjusted     GAAP     Adjustments     Adjusted  

Net sales

   $ 136,560        —        $ 136,560      $ 92,299        —        $ 92,299   

Cost of sales

     88,037      $ (3,428 )(9)      84,609        67,693      $ (3,659 )(1)      64,034   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

     48,523        3,428        51,951        24,606        3,659        28,265   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating expenses:

            

Research and development

     1,278        (29 )(9)      1,249        1,241        (45 )(1)      1,196   

Selling and marketing

     8,042        (63 )(9)      7,979        8,636        (90 )(1)      8,546   

General and administrative

     12,579        (1,797 )(2)      10,782        11,295        (2,871 )(3)      8,424   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total operating expenses

     21,899        (1,889 )      20,010        21,172        (3,006 )      18,166   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating income from continuing operations

     26,624        5,317        31,941        3,434        6,665        10,099   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Other income/(expense):

            

Other income/(expense), net

     39        —   (4)      39        20        —   (4)      20   

Interest income

     335        (291 )(7)      44        399        (361 )(7)      38   

Interest expense

     (1,344 )      1,344 (5)      —          (2,477 )      2,477 (5)      —     
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total other income/(expense), net

     (970 )      1,053        83        (2,058 )      2,116        58   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income from continuing operations before income taxes

     25,654        6,370        32,024        1,376        8,781        10,157   

Income tax expense

     9,253        (9,253 )(6)      —          428        (428 )(6)      —     
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income from continuing operations

     16,401        15,623        32,024        948        9,209        10,157   

Discontinued operations:

            

Loss from operations of discontinued security solutions division

     (867 )      1,020 (8)      153        (4,004 )      779 (8)      (3,225 ) 

Income tax benefit

     (5,651 )      5,651 (6)      —          (1,465 )      1,465 (6)      —     
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income/(loss) from discontinued operations

     4,784        (4,631 )      153        (2,539 )      (686 )      (3,225 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income/(loss)/comprehensive income/(loss)

   $ 21,185      $ 10,992      $ 32,177      $ (1,591 )    $ 8,523      $ 6,932   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

Page 8 of 9

SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME/(LOSS) TO NON-GAAP ADJUSTED EBITDAS (Unaudited)

 

     For the Six Months Ended October 31, 2012:     For the Six Months Ended October 31, 2011:  
     GAAP     Adjustments     Adjusted     GAAP     Adjustments     Adjusted  

Net sales

    $ 272,555        —        $ 272,555      $ 184,029        —        $ 184,029   

Cost of sales

      172,739      $ (6,796 )(9)      165,943        132,907      $ (7,630 )(1)      125,277   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

      99,816        6,796        106,612        51,122        7,630        58,752   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating expenses:

             

Research and development

      2,420        (57 )(9)      2,363        2,579        (103 )(1)      2,476   

Selling and marketing

      14,870        (125 )(9)      14,745        16,761        (174 )(1)      16,587   

General and administrative

      24,604        (3,135 )(2)      21,469        22,817        (5,350 )(3)      17,467   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total operating expenses

      41,894        (3,317 )      38,577        42,157        (5,627 )      36,530   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating income from continuing operations

      57,922        10,113        68,035        8,965        13,257        22,222   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Other income/(expense):

             

Other income/(expense), net

      39        —   (4)      39        54        —   (4)      54   

Interest income

      703        (608 )(7)      95        802        (681 )(7)      121   

Interest expense

      (3,331 )      3,331 (5)      —          (4,416 )      4,416 (5)      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total other income/(expense), net

      (2,589 )      2,723        134        (3,560 )      3,735        175   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income from continuing operations before income taxes

      55,333        12,836        68,169        5,405        16,992        22,397   

Income tax expense

      20,061        (20,061 )(6)      —          2,182        (2,182 )(6)      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income from continuing operations

      35,272        32,897        68,169        3,223        19,174        22,397   

Discontinued operations:

             

Loss from operations of discontinued security solutions division

      (2,550 )      1,383 (8)      (1,167 )      (6,706 )      1,501 (8)      (5,205 ) 

Income tax benefit

      (6,249 )      6,249 (6)      —          (2,681 )      2,681 (6)      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income/(loss) from discontinued operations

      3,699        (4,866 )      (1,167 )      (4,025 )      (1,180 )      (5,205 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income/(loss)/comprehensive income/(loss)

    $ 38,971      $ 28,031      $ 67,002      $ (802 )    $ 17,994      $ 17,192   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) To eliminate depreciation, amortization, and plant consolidation costs.
(2) To eliminate depreciation, amortization, stock-based compensation expense, and DOJ/SEC costs and related profit sharing impacts of DOJ/SEC.
(3) To eliminate depreciation, amortization, stock-based compensation expense, plant consolidation costs, severance benefits for our former President and CEO, and DOJ/SEC costs and related profit sharing impacts of DOJ/SEC.
(4) To eliminate unrealized mark-to-market adjustments on foreign exchange contracts. We did not have any foreign exchange contracts that required mark-to-market adjustments for all periods presented.
(5) To eliminate interest expense.
(6) To eliminate income tax expense.
(7) To eliminate intercompany interest income.
(8) To eliminate depreciation, amortization, interest expense, and stock-based compensation expense.
(9) To eliminate depreciation and amortization.

 

Page 9 of 9

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