swhc-10k_20150430.htm

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The aggregate market value of Common Stock held by non-affiliates of the registrant (41,672,768 shares) based on the last reported sale price of the registrant’s Common Stock on the Nasdaq Global Select Market on October 31, 2014, which was the last business day of the registrant’s most recently completed second fiscal quarter, was $423,395,323. For purposes of this computation, all officers, directors, and 10% beneficial owners of the registrant are deemed to be affiliates. Such determination should not be deemed to be an admission that such officers, directors, or 10% beneficial owners are, in fact, affiliates of the registrant.

As of June 16, 2015, there were outstanding 54,169,521 shares of the registrant’s Common Stock, par value $.001 per share.

Portions of the registrant’s definitive proxy statement for the 2015 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.

Smith & Wesson^®, M&P^®, S&W^®, Performance Center^®, Bodyguard^®, Caldwell^® Shooting Supplies, Wheeler^® Engineering, Tipton^®Gun Cleaning Supplies, Frankford Arsenal^® Reloading Tools, Lockdown^® Vault Accessories, BOG-POD^®, and Golden Rod^® Moisture Control are registered U.S. trademarks of our company or one of our subsidiaries. Thompson/Center Arms^TM, M&P Shield^TM, Combat Magnum^®, Thompson/Center Arms Venture^TM, Smith & Wesson CONNECT^TM, and Hooyman^TMPremium Tree Saws are unregistered trademarks of our company or one of our subsidiaries. This report also contains trademarks and trade names of other companies.

This report includes market and industry data that we obtained from periodic industry publications, third-party studies and surveys, government agency sources, filings of public companies in our industry, and internal company surveys. Industry publications and surveys generally state that the information contained therein has been obtained from sources believed to be reliable. Although we believe the foregoing industry and market data to be reliable at the date of the report, this information could prove to be inaccurate as a result of a variety of matters.

The statements contained in this annual report on Form 10-K that are not purely historical are forward-looking statements within the meaning of applicable securities laws. Forward-looking statements include statements regarding our “expectations,” “anticipations,” “intentions,” “beliefs,” or “strategies” regarding the future. Forward-looking statements also include statements regarding net sales, margins, expenses, earnings, royalties, and capital expenditures for fiscal 2016 and thereafter; the amount of environmental and other reserves; estimates of fair value; goodwill and intangible assets; the effect of a variety of economic, social, and political factors on our business; the outcome of the lawsuits to which we are subject and their effect on us; future investments for capital expenditures; future products and product developments; the features and performance of our products; the success of particular product or marketing programs; any manufacturing partnerships, strategic alliances, or acquisitions we may enter into or make; future enterprise resource planning implementations and system improvements; future enhancements to our manufacturing capabilities; and liquidity and anticipated cash needs and availability. All forward-looking statements included in this report are based on information available to us as of the filing date of this report, and we assume no obligation to update any such forward-looking statements. Our actual results could differ materially from the forward-looking statements. Among the factors that could cause actual results to differ materially are the factors discussed under Item 1A, “Risk Factors.”

We are one of the world’s leading manufacturers of firearms. We manufacture a wide array of handguns (including revolvers and pistols), long guns (including modern sporting rifles, bolt action rifles, and single shot rifles), handcuffs, and firearm-related products and accessories for sale to a wide variety of customers, including gun enthusiasts, collectors, hunters, sportsmen, competitive shooters, individuals desiring home and personal protection, law enforcement and security agencies and officers, and military agencies in the United States and throughout the world. We are one of the largest manufacturers of handguns, modern sporting rifles, and handcuffs in the United States and an active participant in the hunting rifle market. Beginning in fiscal 2015, we are now also a leading provider of shooting, reloading, gunsmithing, and gun cleaning supplies. We sell our products under the Smith & Wesson, M&P, Thompson/Center Arms, Caldwell Shooting Supplies, Wheeler Engineering, Tipton Gun Cleaning Supplies, Frankford Arsenal Reloading Tools, Lockdown Vault Accessories, Hooyman Premium Tree Saws, BOG-POD, and Golden Rod Moisture Control brands.

We manufacture our firearm products at our facilities in Springfield, Massachusetts; Houlton, Maine; and Deep River, Connecticut; and we develop and market our accessories products at our facility in Columbia, Missouri. We plan to continue to capitalize on the goodwill developed through our historic 163 year old “Smith & Wesson” brand as well as our other well-known brands by expanding consumer awareness of the products we produce.

Our objective is to continue to enhance our position as one of the world’s leading firearms manufacturers by designing, producing, and marketing high-quality, innovative firearms and related products that meet the needs and desires of consumers and professionals. Key elements of our strategy to achieve this objective are as follows:

We estimate that the domestic non-military firearm market based on industry shipments is approximately $1.9 billion for handguns and $1.4 billion for long guns, excluding shotguns, with our market share in calendar 2014 being approximately 20% and 6%, respectively. According to 2013 reports by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, or ATF, the U.S. firearm manufacturing industry has grown at a compound annual growth rate in units of 20% from 2008 through 2013.

We estimate that the domestic firearm accessories and equipment market based on hunting-related expenditures is approximately $1.5 billion.

Our wholly owned subsidiary, Smith & Wesson Corp., was founded in 1852 by Horace Smith and Daniel B. Wesson. Mr. Wesson purchased Mr. Smith’s interest in 1873. The Wesson family sold Smith & Wesson Corp. to Bangor Punta Corp. in 1965. Lear Siegler Corporation purchased Bangor Punta in 1984, thereby acquiring ownership of Smith & Wesson Corp. Forstmann Little & Co. purchased Lear Siegler in 1986 and sold Smith & Wesson Corp. shortly thereafter to Tomkins Corporation, an affiliate of U.K.-based Tomkins PLC. We purchased Smith & Wesson Corp. from Tomkins in May 2001 and changed our name to Smith & Wesson Holding Corporation in February 2002.

On January 3, 2007, we acquired all of the outstanding capital stock of Thompson Center Holding Corporation and its subsidiaries, including Thompson/Center Arms Company, Inc. (now Thompson/Center Arms Company, LLC), or collectively TCA, which is a brand name recognized by hunting enthusiasts and which holds a leading position in the black powder segment of the long gun market. In addition, TCA possesses expertise in long gun barrel manufacturing, which is important to our manufacture of long guns. TCA entered the bolt-action rifle market in June 2007 by launching internally developed new products with key differentiating features and benefits, such as certified accuracy, integral sight bases, and a three position safety.

On July 20, 2009, we acquired all of the outstanding capital stock of Universal Safety Response, Inc. (since renamed SWSS LLC, formerly Smith & Wesson Security Solutions, Inc. and referred to herein as SWSS). Based on a combination of factors occurring after the acquisition, including federal and corporate budgetary constraints, increased price competition, and a fundamental change in strategic direction, we completed the disposition of SWSS on July 26, 2012. The operating results of SWSS are classified as

discontinued operations and are presented in a separate line in the consolidated statements of income for all periods presented. Reference is made to Note 4 to our consolidated financial statements for a discussion of discontinued operations. Prior to the decision to divest the business, we had reported this business as a separate division under the heading of security solutions. Unless otherwise indicated, amounts reported throughout this Form 10-K represent only our continuing operations.

Effective as of April 30, 2014, our manufacturing agreement with Carl Walther GmbH under which we produced the Walther PPK and PPK/S pistols in the United States at our Houlton, Maine facility expired. In addition, as of April 30, 2013, we did not extend our distribution agreement to serve as the exclusive U.S. importer and distributor of Walther firearms. Walther manufactures our full size M&P22 pistols and will continue to do so through the end of fiscal 2017.

On May 5, 2014, we acquired substantially all of the net assets of Tri-Town Precision Plastics, Inc., or TTPP, a provider of custom injection molding services, rapid prototyping, and tooling, which we refer to as the DRP Acquisition. TTPP was a long-standing supplier of polymer frames and related components for a large number of our firearms, including nearly all of our popular M&P models. The DRP Acquisition was designed to vertically integrate a key component of our manufacturing operations and provide us with increased flexibility within our supply chain.

On December 11, 2014, we acquired all of the issued and outstanding stock of Battenfeld Acquisition Company Inc., including its wholly owned subsidiary, Battenfeld Technologies, Inc., or BTI, a leading provider of hunting and shooting accessories, which we refer to as the BTI Acquisition. The BTI Acquisition was designed to allow us to expand our presence in the firearm accessories market and leverage BTI’s broad portfolio of hunting and shooting accessories brands that are popular with consumers.

We maintain our principal executive offices at 2100 Roosevelt Avenue, Springfield, Massachusetts 01104. Our telephone number is (800) 331-0852. Our website is located at www.smith-wesson.com. Through our website, we make available free of charge our annual reports on Form 10-K, our proxy statements, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and amendments to any of them filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These documents are available as soon as reasonably practicable after we electronically file them with the Securities and Exchange Commission, or the SEC. We also post on our website the charters of our Audit, Compensation, and Nominations and Corporate Governance Committees; our Corporate Governance Guidelines, our Code of Conduct, and any amendments or waivers thereto; and any other corporate governance materials contemplated by the regulations of the SEC and the Nasdaq Global Select Market. The documents are also available in print by contacting our corporate secretary at our executive offices.

Our objective is to continue to enhance our position as one of the world’s leading firearm manufacturers by designing, producing, and marketing high-quality, innovative firearms and related products that meet the needs and desires of consumers and professionals. Key elements of our strategy to achieve this objective are as follows:

We plan, protect, and grow our core firearm business by continuing to enhance our presence in our existing domestic and international markets, capitalizing on our brands such as Smith & Wesson, M&P, and Thompson/Center Arms, introducing innovative new products, and entering new markets. We continually seek to introduce new products to increase our current market share, especially in the polymer handgun market as represented by our M&P brand. In addition, the largest portion of our business historically resulted from the sale of handguns in the domestic sporting goods market. With the acquisition of Thompson/Center Arms in fiscal 2007 and the introduction of our modern sporting rifles, we expanded our business into multiple segments of the long gun market. During the last two fiscal years, we have introduced numerous new handgun and long gun models, including our M&P22 Compact pistol; product extensions for our M&P9, M&P40, and M&P45 pistols; M&P10; non-laser M&P Bodyguard .380; Model 66 Combat Magnum revolver; and the Model 69 Magnum revolver. We plan to continue to introduce new firearm products in fiscal 2016.

We are focused on growth, but only in those areas that provide an acceptable return on invested capital. In order to meet those profitability goals, we are primarily focused on leveraging existing products and introducing new products when appropriate. In addition, we are continuing our focus on capacity utilization, strategic pricing and marketing initiatives, flexible manufacturing, standardized process, and vertical integration for efficiency and scalability. The DRP Acquisition in early fiscal 2015 was designed to vertically integrate a key component of our manufacturing operations and provide us with increased flexibility within our supply chain. In fiscal 2015, we also acquired BTI, which has a track record of delivering strong financial and operating performance by providing a broad portfolio of hunting and shooting related products.

We are continuing our efforts to enhance our manufacturing productivity in terms of increased daily production quantities, increased operational availability of equipment, reduced machinery down time, extended machinery useful life, reduced overtime, increased efficiency, enhanced product quality, and expanded outsourcing. We plan to continue to seek gains in manufacturing efficiency and capacity to assure that we can meet customer demand for our most popular products. We also plan to continue to streamline and standardize our business, which includes investing in an integrated and configurable technology infrastructure in areas such as enterprise resource planning, or ERP, and compliance. During fiscal 2015, we continued to improve and enhance our ERP systems, and we intend to continue investing in improving our systems in order to enhance our efficiency, improve information reporting, and strengthen internal controls. These system improvements may include implementing SAP at our additional facilities if we believe such an implementation would help us achieve these objectives. We intend to convert our Deep River facility to SAP in fiscal 2016.

We plan to continue to emphasize customer satisfaction and loyalty by offering high-quality products and services on a timely and cost-effective basis and by offering customer service, training, and support.

Pursue Strategic Relationships and Acquisitions that are Synergistic with Our Current Business

We intend to develop and expand strategic relationships and review and pursue strategic acquisitions that complement, enhance, or are additive to our business. For example, in fiscal 2015, the DRP Acquisition was designed for vertical integration and the BTI Acquisition was designed to allow us to expand our presence in the firearm accessories market and leverage BTI’s broad portfolio of hunting and shooting accessories brands. In addition, our strategic alliance with General Dynamics Ordnance and Tactical Systems is primarily designed to assist us in the pursuit of the U.S. Army’s Modular Handgun System solicitation.

Our firearm products combine our legacy of 163 years of American manufacturing and engineering expertise with modern technological advances. We strive to leverage our tradition of innovation in materials, performance, and engineering, along with our proven history of reliability, to produce feature-rich, safe, durable, accurate, and high-performing firearms that satisfy the needs of our broad range of customers. Our introduction of new firearm products is intended to enhance our competitive position and broaden our participation in the overall firearm market.

We have substantially enhanced the breadth and quality of our portfolio of firearm products over the years. We have always been a leader in the revolver market. The introduction of our popular M&P branded pistol in January 2005 resulted in our company becoming one of the leaders in the polymer pistol market serving both law enforcement agencies and the consumer sporting goods market. The launch of our M&P branded modern sporting rifle in January 2006 has enabled us to capture what we estimate is the leading share of the modern sporting rifle market. The addition of our Thompson/Center Arms brand of hunting firearms and interchangeable firearm systems into our product portfolio in January 2007 also enhanced our long gun barrel manufacturing capabilities for our modern sporting rifles. We currently participate in three categories of the long gun market: bolt action rifles, muzzleloaders, and modern sporting rifles; and both core categories of the handgun market, namely semi-automatic pistols and revolvers.

All of our firearms are currently sold under our Smith & Wesson, M&P, and Thompson/Center Arms brands. In addition, our Performance Center offers specialized and enhanced models sold under the Smith & Wesson and M&P brands. Depending upon the product or service, our customers include distributors; federal, state, and municipal law enforcement agencies and officers; government and military agencies; businesses; retailers; and consumers.

Our product development strategy is to understand our customers’ needs and then design and develop products to uniquely meet those needs. Throughout the process, we test multiple concepts with firearm owners and potential purchasers. We compare these test results against a growing database of prior concepts to identify those with the greatest market potential. Additional market research is completed to optimize the desired features and benefits. While this development process is ongoing, our launch timing for new products depends on market conditions to maximize sales across the entire product portfolio. In fiscal 2015, we launched several new products and product line extensions under our Smith & Wesson, M&P, and Thompson/Center Arms brands as well as several new products from our Performance Center.

We introduced a number of M&P pistol products in fiscal 2015. Capitalizing on the growing consumer demand for concealed carry firearms, we introduced our M&P Bodyguard 380 lightweight, sub-compact pistol without a laser. This firearm features M&P slide serrations for increased grip and M&P sights and is suited for users who prefer a smaller profile firearm without a laser. We expanded the highly popular, concealed carry M&P Shield line with additional no-thumb safety models in 9mm and .40S&W. We also introduced the new M&P22 Compact pistol. This reduced-scale version of a full size M&P pistol is chambered in the popular .22LR caliber. Featuring the comfortable to shoot M&P ergonomics, the M&P22 Compact is well suited for recreational shooting and training. Other new models added to the M&P line include the M&P9 and M&P40 pistols featuring a flat, dark earth color frame, and the M&P9 and M&P45 pistols with an extra threaded barrel kit.

In fiscal 2015, we expanded our Smith & Wesson brand with the introduction of a new model of the popular Smith & Wesson J-Frame Revolver that incorporates a factory installed LaserMax CenterFire laser sighting system. This model enhanced the versatility of our line of small frame revolvers and extended the Smith & Wesson line of self-defense firearms. The Model 69 .44 Magnum revolver, introduced last fiscal year, received the NRA Golden Bullseye award for Handgun of the Year from Shooting Illustrated magazine at the 2015 NRA Show.

Our customers continue to demand premium models of our firearms that provide a competitive edge in sport shooting and handgun hunting. To meet this need, we introduced several new Smith & Wesson Performance Center models for hunting, competitive shooting, and personal protection. The newest Performance Center Model 460XVR Bone Collector limited edition features our largest X-frame revolver in .460 S&W Magnum caliber enhanced with a Performance Center tuned action and additional, desirable Performance Center features. We also introduced a complete line of Performance Center ported M&P pistols featuring enhanced triggers, ported barrels, and competition optics ready slides in 9mm or .40S&W calibers, and 4.25-inch or 5-inch long slides and barrel configurations and the Performance Center Model 929 9mm revolver, which was introduced last fiscal year and was named the “Most Significant Handgun of 2014” by the Shooting Gallery magazine. Built to the specifications of Smith & Wesson Champion shooter Jerry Miculek, this signature model that bears his name was selected for the award based on its uniqueness and its impact on revolver-based competitions.

Within our Thompson/Center Arms brand, we continued to focus on growing our bolt action rifle business while maintaining our leadership in muzzleloaders and interchangeable systems.

Our firearm business is seasonal with revenue peaking in our fourth fiscal quarter ending April 30 as a result of most industry events and distributor shows being scheduled during the early spring months. In addition, because of our operating schedule, which includes a summer and a winter shutdown of our firearm facilities, we have increased operating days during our fourth fiscal quarter, which allows our shipping and production volumes to exceed other quarters.

Our firearm net sales for the years ended April 30, 2015, 2014, and 2013 were $531.2 million, $626.6 million, and $587.5 million, respectively. Firearms gross profit for the years ended April 30, 2015, 2014, and 2013 totaled $188.6 million, $259.1 million, and $218.1 million, respectively. Total assets for our firearm business totaled $345.3 million and $381.5 million as of April 30, 2015 and 2014, respectively. Reference is made to our consolidated financial statements, commencing on page F-1 of this report, for more information regarding our firearm business.

Sales of our handguns accounted for $395.5 million in net sales, or 71.7% of our net sales, for the fiscal year ended April 30, 2015, $423.0 million in net sales, or 67.5% of our net sales, for the fiscal year ended April 30, 2014, and $324.6 million in net sales, or 55.3% of our net sales, for the fiscal year ended April 30, 2013. Sales of long guns accounted for $90.2 million in net sales, or 16.3% of our net sales, for the fiscal year ended April 30, 2015, $155.3 million in net sales, or 24.8% of our net sales, for the fiscal year ended April 30, 2014, and $179.2 million in net sales, or 30.5% of our net sales, for the fiscal year ended April 30, 2013. Sales of other products and services accounted for $45.0 million in net sales, or 8.2% of our net sales, for the fiscal year ended April 30, 2015, $42.7 million in net sales, or 6.8% of our net sales, for the fiscal year ended April 30, 2014, and $42.1 million in net sales, or 7.2% of our net sales, for the fiscal year ended April 30, 2013.

We currently manufacture an extensive variety of handgun models that include revolvers and pistols. A revolver is a handgun with a cylinder that holds the ammunition in a series of rotating chambers that are successively aligned with the barrel of the firearm during each firing cycle. There are two general types of revolvers: single-action and double-action. To fire a single-action revolver, the hammer is pulled back to cock the firearm and align the cylinder before the trigger is pulled. To fire a double-action revolver, a single trigger pull advances the cylinder as it cocks and releases the hammer. A pistol is a handgun in which the ammunition chamber is an integral part of the barrel and which is fed ammunition from a magazine contained in the grip. The firing cycle ejects the spent casings and loads a new round into the chamber.

We have long been known as an innovator and a leader in the revolver market and most of our revolvers are currently marketed under the Smith & Wesson brand. We sell a wide range of sizes from small-frame, concealed carry revolvers used primarily for personal protection to large-frame revolvers used primarily for recreational and competitive sport shooting. Our extra-large frame revolvers are designed primarily to address the handgun-hunting market.

Our small-frame revolvers have been carried by law enforcement personnel and personal defense-minded citizens for 163 years. We hold a number of patents on various firearm applications, including the use of scandium, a material that possesses many of the same attributes as titanium but at a more reasonable cost. Our revolvers are available in a variety of models and calibers, with applications in virtually all professional and consumer markets.

We offer pistols under both our Smith & Wesson brand and our M&P brand. Our full size and compact M&P pistol products have been engineered with input from the professional users and are designed to offer performance, safety, and durability that meet the standards of global law enforcement and military personnel, as well as to contain features attractive to consumers. We believe that our M&P branded pistol products are the most ergonomic, feature-rich, and innovative products on the market today. Our range of full size and compact M&P pistol products are made with a polymer frame, a rigid stainless steel chassis, and a black, through-hardened corrosion resistant finished stainless steel barrel and slide for durability. Our M&P pistol products feature patented and easily changed palmswell grips in three sizes, allowing the user to customize grips in a matter of seconds; a passive trigger safety to prevent the pistol from firing if dropped; an enlarged trigger guard to accommodate gloved hands; a sear lever release that eliminates the need to press the trigger in order to disassemble the firearm; an ambidextrous slide stop and reversible magazine release to accommodate right- and left-handed shooters; an optional internal locking system and magazine safety; and a universal equipment rail to allow the addition of accessories, including lights and lasers.

In fiscal 2012, we launched the M&P Shield pistol to address the growing personal protection and concealed carry market. The M&P Shield features a slim concealable profile, 9mm and .40S&W calibers, and M&P ergonomics. We introduced additional M&P Shield models during fiscal 2015. We consider the M&P Shield pistol to be one of the most popular firearms in the market.

Our Performance Center has been providing specialized products and services for the most demanding firearm enthusiasts since 1990. To meet the requirements of law enforcement professionals, competitive shooters, collectors, and discriminating sport enthusiasts who demand superior firearm products, our Performance Center personnel conceptualize, engineer, and craft firearm products from the ground up. Our craftsmen, many of whom are actively involved in competitive shooting, are highly skilled and experienced gunsmiths. Performance Center products are offered under both the Smith & Wesson brand and the M&P brand and are typically made in limited production quantities, although we offer a number of catalog variations in order to enhance product availability.

Our “Classics” department makes it possible to own historic firearms that are manufactured today but modeled after original favorites, such as the Model 29, the firearm made famous by the movie character Dirty Harry. These firearms are newly crafted with designs that take advantage of some of the most famous and collectible guns that we have ever made. Our Classics department also makes commemorative firearms and employs master engravers to craft one-of-a-kind custom firearms. These custom-made applications reflect the skill and vision of the master engraver and the artistic expression of the owner. We offer a number of catalog variations of Classics and engraved Classics to our customers.

Our M&P branded modern sporting rifles are specifically designed to satisfy the functionality and reliability needs of global military, law enforcement, and security personnel. These long guns are also popular as hunting and sporting target rifles and are sold to consumers through our sporting good distributors, retailers, and dealers. We offer M&P modern sporting rifles in four different calibers (.22LR, 5.56mm NATO (.223), .300 Whisper, and .308 Winchester (7.62x51mm)) for multiple recreational and professional uses. We also offer upper assemblies so gun owners can easily modify their M&P to suit the needs and tasks of the various forms of sport shooting and hunting. Our broad product portfolio of modern sporting rifles includes a .22 caliber model, an opening price-point sport model, a hunting caliber for longer range effectiveness, and several models designed for the exclusive use of military and law enforcement agencies throughout the world.

We manufacture two lines of bolt-action rifles under our Thompson/Center Arms brand consisting of several models in each line. These long guns are offered in up to 15 different calibers. Bolt-action rifles operate by the cycling of a bolt handle that allows for both the loading and unloading of rounds via a magazine fed system. This design allows for multi-round capacity and a level of strength that permits larger calibers. Bolt action rifles are the most popular firearm among hunters because of their reputation for accuracy, reliability, and relatively light-weight design.

Under our Thompson/Center Arms brand, we also offer four lines of high-quality American-made single shot “black powder,” or “muzzleloader,” firearms. Ammunition for our black powder firearms are loaded through the muzzle rather than the breech, as is the case with conventional firearms. Our black powder firearms are highly accurate, dependable rifles configured with muzzleloading barrels for hunting. Black powder firearms are purchased by hunting enthusiasts, primarily for use during exclusive black powder hunting seasons for hunting big game, such as deer and elk.

We offer two models of interchangeable, single shot firearm systems that deliver numerous gun, barrel, caliber configurations, and finishes. These firearm systems can be purchased fully assembled or as frame assemblies that can be configured by the owner as a center-fire rifle, rim-fire rifle, shotgun, black powder firearm, or single-shot handgun for use across the entire range of big- and small-game hunting. As a result, a firearm owner can easily change barrels, stocks, and forends, resulting in “one gun for all seasons” that can be continuously modified to suit the needs and tasks of the owner for various forms of sport shooting and hunting.

Parts: We sell parts to support our firearm business. The major products include barrels and magazines that are manufactured at our facilities or purchased through third parties.

Handcuffs: We are one of the largest manufacturers of handcuffs and restraints in the United States. We fabricate these products from the highest grade carbon or stainless steel. Our patented Lever Lock cuffs offer a new, double-locking system for added security and comfort, with no extra tools or keys. Double heat-treated internal locks help prevent tampering and smooth ratchets allow for swift cuffing and an extra measure of safety. We have the ability to customize handcuffs to fit customer specifications.

Smith & Wesson Academy: Established in 1969, the Smith & Wesson Academy is the nation’s oldest private law enforcement training facility. The Smith & Wesson Academy has trained law enforcement personnel from all 50 states and more than 50 foreign countries. Classes are conducted at our facility in Springfield, Massachusetts or on location around the world. Through the Smith & Wesson Academy, we offer state-of-the-art-instruction designed to meet the training needs of law enforcement and security customers worldwide.

Specialty Services: We utilize our substantial capabilities in metal processing and finishing to provide services to third-party customers. Our services include forging, heat treating, finishing, plating, and plastic injection molding.

Licensing: Several of our registered trademarks, including the “S&W” logo, the script “Smith & Wesson”, the “M&P” logo, the script “Thompson/Center Arms”, and the script “Performance Center” are well known and have a reputation for quality, value, and trustworthiness. As a result, we license our trademarks to third parties for use in connection with their products and services. Products of our licensees are distributed throughout the world. As of April 30, 2015, we licensed our trademarks to 14 different companies that market and sell products complementing our products, one more than in fiscal 2014.

We are a leading provider of shooting, reloading, gunsmithing, and gun cleaning supplies. We develop, produce, and deliver innovative, high-quality products under several brands. We offer an extensive array of products, including shooting and field rests, gunsmithing tools, gun vises, hearing protection, ammo tumblers, and vault accessories. Since 2011, we have introduced more than 215 variations of accessories products and we currently hold over 40 patents. Our accessories business has grown primarily through organic initiatives focusing on new product introductions each year as well as through strategic acquisitions. Our brand portfolio includes the highly regarded Caldwell line of shooting supplies, which has provided shooting accessories for more than 14 years. We also sell products under other brand names, including Wheeler Engineering, Tipton Gun Cleaning Supplies, Frankford Arsenal Reloading Tools, Lockdown Vault Accessories, Hooyman Premium Tree Saws, BOG-POD, and Golden Rod Moisture Control.

For the period from December 11, 2014, the date of the BTI Acquisition, to April 30, 2015, net sales of our accessories products were $20.6 million, and accessories gross profit for the year ended April 30, 2015 totaled $6.4 million.

We go to market in three primary ways in our firearm division: two-step distribution, strategic retailers, and two buying groups consisting of certain large, regional retailers utilizing a direct sales force to service these customers. We also sell firearms directly to law enforcement agencies. In our accessories division, we go to market through two-step distribution, strategic retailers, and direct-to-dealer sales utilizing a combination of direct sales and sales representatives. We make our overseas sales primarily through distributors, which in turn sell to retail stores and government agencies. Our top five commercial distributors in the United States accounted for a total of 34.3% and 42.9%, respectively, of our net sales for the fiscal years ended April 30, 2015 and 2014. Those commercial distributors are not regional and have many of the same dealer customers. Therefore, we believe that the loss of one or more of the distributors would not materially impact sales, as the remaining distributors would be allocated additional sales.

We market our products to consumers primarily through independent dealers, large retailers, in-store retail channels, and range operations utilizing consumer-focused product marketing and promotional campaigns, which include print, broadcast, and digital advertising campaigns; social and electronic media; and in-store retail merchandising systems and strategies. We are also an industry leader in vertical print media as gauged by our regular tracking of editorial coverage in numerous outdoor magazines, including such leaders as Guns & Ammo, American Rifleman, Shooting Times, American Handgunner, Shooting Illustrated, Outdoor Life, American Hunter, and Field & Stream. We also sponsor numerous outdoor television and radio programs that generate significant editorial exposure. During fiscal 2015, we enhanced our Smith & Wesson CONNECT awards program, which allows sales associates at certain retailers to earn points that are redeemable for prizes from the sale of our products.

We sponsor a significant number of firearm safety, shooting, and hunting events and organizations. We print various product catalogs that are distributed to our dealers and mailed directly, on a limited basis, to consumers. We also attend various trade shows, such as the Shooting, Hunting, Outdoor Trade (SHOT) Show, the NRA Annual Meeting & Exhibits, the National Association of Sporting Goods Wholesalers Show, the International Association of Chiefs of Police Show, the AUSA Show, the IWA Show in Europe, and various distributor, buying group, and consumer shows.

For the fiscal years ended April 30, 2015, 2014, and 2013, advertising and promotion expenses amounted to $20.2 million, $19.5 million, and $15.1 million, respectively, excluding the cost of rebates and promotions reflected in gross profit.

We sell our products worldwide. International sales accounted for 4%, 3%, and 3% of our net sales for the fiscal years ended April 30, 2015, 2014, and 2013, respectively. Our firearm business had no assets located outside the United States during any of the periods presented; our accessories business owns tooling that is located at various suppliers in Asia.

We utilize our www.smith-wesson.com, www.tcarms.com, and www.btibrands.com websites to market our products and services and to provide a wide range of information regarding our company to customers, consumers, dealers, distributors, investors, and government and law enforcement agencies worldwide. We utilize e-marketing, including social and digital marketing such as Facebook, Twitter, YouTube, and e-blasts to our consumer and trade customers to provide additional product and service information to such customers.

We operate online retail stores from which we sell hunting and shooting accessories under the Smith & Wesson, M&P, Thompson/Center Arms, Caldwell, Wheeler, Tipton, Frankford Arsenal, Lockdown, Hooyman, BOG-POD, and Golden Rod branded products, apparel, and related hunting and shooting supplies. Firearms are not sold through the online retail stores.

Our firearm division operates a toll free customer service number from 8:00 a.m. to 8:00 p.m. Eastern Time, Monday through Friday, and offers a customer service e-mail option to answer questions and resolve issues regarding our firearm products. In addition, we offer a limited one year warranty program and a lifetime service policy under which we repair defects in material or workmanship in our firearm products without charge for as long as the original purchaser owns the firearm. We also maintain a number of authorized warranty centers throughout the world and provide both warranty and charge repair services at our facilities.

Our accessories division operates a toll free customer service number from 8:00 a.m. to 5:00 p.m. Central Time, Monday through Friday to answer questions and resolve issues regarding our accessories products. We offer a limited one year or a limited lifetime warranty program to the original purchaser of our accessories products, depending on the product purchased.

We have three manufacturing facilities for our firearm products: a 575,000 square-foot facility located in Springfield, Massachusetts; a 38,000 square-foot facility located in Houlton, Maine; and a 150,000 square-foot facility located in Deep River, Connecticut. We conduct our handgun and long gun manufacturing and most of our specialty service activities at our Springfield facility. We historically utilized our Houlton facility for the production of metal pistols, handcuffs, and other restraint devices, but in fiscal 2015, our Houlton facility was converted into a machining center and all assembly, finishing, and small parts operations were transferred to our Springfield facility. We continue to produce handcuffs and other restraint devices at our Houlton facility. Our Deep River facility is utilized for custom plastic injection molding services, rapid prototyping, and tooling. We have a 145,000 square-foot warehousing and assembly facility for our accessories products located in Columbia, Missouri. All of our facilities are ISO 9001 certified.

We perform most of the machining and all of the assembly, inspection, and testing of the firearms manufactured at our facilities. Every firearm is test fired before shipment. Our major firearm components are cut by computer-assisted machines, and we employ sophisticated automated testing equipment to assist our skilled employees to ensure the proper functioning of our firearms. Our Springfield and Houlton facilities are currently operating on two shift patterns; a four shift, 168 hour per week schedule and a three shift, 120 hour per week schedule. We seek to minimize inventory costs through an integrated planning and production system. During fiscal 2014, we transitioned our ERP system in our Springfield and Houlton facilities to SAP, and we intend to continue investing in improving our systems in order to enhance efficiency, improve information reporting, and strengthen internal controls. We also intend to convert our Deep River facility to SAP in fiscal 2016.

Although we manufacture most of the components for our firearms, we purchase certain components and parts, including bolt carriers, rifle receivers, magazines, slides, small parts, barrels, and rifle stocks, from third parties. We also purchase ammunition for product testing. Most of our major suppliers for our firearm-division products are U.S.-based and provide materials, components, and parts, such as raw steel, polymer components, and metal-injected-molded components. The costs of these materials, components, and parts are at competitive rates. We have become increasingly dependent on a small number of key vendors that supply components and parts for our firearms as a result of our decision to enhance our manufacturing flexibility by using third parties that can supplement our internal capacity to better react to changes in market conditions. We also use numerous raw materials, such as steel, wood, lead, brass, and plastics, in producing and testing our products. We have alternative sources for these raw materials. Most of our major suppliers for our accessories-division products are based in Asia.

Through our advanced products engineering departments, we enhance existing products and develop new firearm and accessories products. In fiscal 2015, 2014, and 2013, our gross spending on research activities relating to the development of new products was $6.9 million, $5.6 million, and $4.8 million, respectively. As of April 30, 2015, we had 47 employees at our Springfield, Massachusetts and Columbia, Missouri facilities engaged in ongoing research and development activities for both our firearm and accessories products as part of their responsibilities.

We recognize the importance of innovation and the importance of protecting our intellectual property. Accordingly, we own numerous patents related to our firearm, handcuff, and accessories products. We apply for patents whenever we develop new products or processes deemed commercially viable. We do not believe that our business is materially dependent on any single patent.

Because of the significance of our brand names, trademarks and copyrights also are important to our business. We have an active global program of trademark registration, monitoring, and enforcement. We believe that our SMITH & WESSON trademark and our S&W monogram, as well as our M&P and Thompson/Center Arms brands are known and recognized by the public worldwide and are important to our business. In addition, we market our accessories products under several brand names, including Caldwell Shooting Supplies, Wheeler Engineering, Tipton Gun Cleaning Supplies, Frankford Arsenal Reloading Tools, Lockdown Vault Accessories, HooymanPremium Tree Saws, BOG-POD, and Golden Rod Moisture Control, among others.

We intend to vigorously pursue and challenge infringements of our patents, trademarks, copyrights, and service marks, as we believe the goodwill associated with them is a cornerstone of our branding and licensing strategy.

The firearm industry is dominated by a small number of well-known companies. We encounter competition from both domestic and foreign manufacturers. Some competitors manufacture a wide variety of firearms as we do, while the majority of our competitors manufacture only certain types of firearms. We are one of the largest manufacturers of handguns, modern sporting rifles, and handcuffs in the United States and an active participant in the hunting rifle market. We compete primarily based upon innovation, quality, reliability, durability, price, performance, consumer brand awareness, and customer service and support. Our customer service organization is proactive in offering timely responses to customer inquiries. We believe we can effectively compete with all our present competitors.

Our primary competitors are Ruger and Taurus in the revolver market and Glock, Ruger, Sig Sauer, and Springfield Armory in the pistol market. We compete primarily with Colt, Sig Sauer, Bushmaster, Rock River, and DPMS in the modern sporting rifle market and Browning, Marlin, Remington, Ruger, Savage, Weatherby, CVA, Traditions, and Winchester in the hunting rifle market.

Peerless Handcuff Company is the only major handcuff manufacturer with significant market share in the United States that directly competes with us. As a result of competitive foreign pricing, we sell nearly 90% of our handcuffs and restraints in the United States.

Our competitors in the accessories market are not as clearly defined as the firearms market because of the broad range of brand names and products. Our primary competitor in the accessories market is Vista Outdoors, formerly known as Alliant Techsystems Inc. (ATK). Other notable competitors to our accessories brands include Hyskore, Hornady, Laserlyte, Lyman, Birchwood Casey, and MTM Case-Gard.

We sell our firearm products and services through a variety of federally licensed distribution channels. Depending upon the product or service, our firearm customers include distributors; federal, state, and municipal law enforcement agencies and officers; government and military agencies; businesses; retailers; and consumers. Our accessories customers are generally businesses, retailers, and consumers. The ultimate users of our firearm and accessories products include gun enthusiasts, collectors, sportsmen, competitive shooters, hunters, individuals desiring home and personal protection, law enforcement and military personnel and agencies, and other government organizations.

During fiscal 2015, 8.2% of our firearm net sales were to state and local law enforcement agencies and the federal government, 4.0% of our firearm net sales were to international customers; and the remaining 87.8% of our firearm net sales were through federal firearm licensees to domestic consumers. Our domestic firearm net sales are primarily made to distributors that sell to licensed dealers that in turn sell to the end users. In some cases, we sell directly to large retailers and dealers.

Net sales of our accessories products during fiscal 2015 were 9.0% to international customers and 91.0% to domestic customers.

We grant payment terms to most commercial customers ranging from 30 to 90 days. However, in some instances, we provide longer payment terms, particularly as it relates to our hunting dating programs.

Our firearm business is primarily regulated by the ATF, which licenses the manufacture, sale, and import of firearms in the United States. The ATF conducts periodic audits of our firearm facilities. The U.S. Department of State currently oversees the export of firearms, and we must obtain an export permit for all international shipments.

There are also various state and local regulations relating to firearm characteristics, features, and sales, as well as firearm magazine capacities. Local firearm dealers must comply with state and local laws and regulations pertaining to firearms and magazine sales within their jurisdictions. We manufacture several firearm models and magazines with various capacities that comply with those laws and regulations for sales in those states and localities. In Massachusetts, for example, there are regulations related to the weight of the trigger pull, barrel length, material strength, and independent testing of handguns. California and New York, as well as other states, also have similar laws and restrictions. In addition, California requires new pistols to contain a microstamping mechanism, which must be able to etch or imprint a microstamp array of characters that identify the make, model, and serial number of the pistols onto each cartridge case when the pistol is fired. No commercially produced firearm has utilized the microstamping process, which is considered by many to be unfeasible, and we have no plans to utilize any microstamping feature in our firearms. Therefore, we will not sell into the state of California any pistol that is subject to the microstamping feature requirement.

Warnings and instructions concerning the safe operation of our firearms are contained in Safety & Instruction Manuals included in all boxes in which firearms are shipped and are also available for download from our Smith & Wesson and Thompson/Center Arms websites.

Our accessories business is subject to various standard business regulations that apply to all companies whose products are used by consumers.

We are subject to numerous federal, state, and local laws that regulate both the health and safety of our workforce as well as our environmental liability, including, but not limited to, those regulations monitored by the Occupational Health and Safety Administration (OSHA), the National Fire Protection Association, and the Department of Public Health. Though not exhaustive, examples of applicable regulations include confined space safety, walking and working surfaces, machine guarding, and life safety.

We are required to comply with regulations that mitigate any release into the environment. These laws have required, and are expected to continue to require, us to make significant expenditures of both a capital and expense nature. Several of the more significant federal laws applicable to our operations include the Clean Air Act; the Clean Water Act; the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA; and the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, or RCRA.

We are required to remediate hazardous waste at our facilities. Currently, we own a designated site in Springfield, Massachusetts that contains two release areas, which are the focus of remediation projects as part of the Massachusetts Contingency Plan, or MCP. The MCP provides a structured environment for the voluntary remediation of regulated releases. We may be required to remove hazardous waste or remediate the alleged effects of hazardous substances on the environment associated with past disposal practices at sites not owned by us. We have received notice that we are a potentially responsible party from the Environmental Protection Agency and/or individual states under CERCLA or a state equivalent at two sites.

In our efforts to satisfy our environmental responsibilities and to comply with environmental laws and regulations, we have established, and periodically update, policies relating to the environmental standards of performance for our operations. We maintain programs that monitor compliance with various environmental regulations. However, in the normal course of our manufacturing operations, we may be subject to governmental proceedings and orders pertaining to waste disposal, air emissions, and water discharges from our operations into the environment. We regularly incur substantial capital and operating costs to comply with environmental laws, including remediation of known environmental conditions at our main facility in Springfield, Massachusetts. We spent $652,000 in fiscal 2015 on environmental compliance, consisting of $411,000 for disposal fees and containers, $110,000 for remediation, $43,000 for DEP analysis and fees, and $88,000 for air filtration maintenance. Although we have potential liability with respect to the future remediation of certain pre-existing sites, we believe that we are in substantial compliance with applicable material environmental laws, regulations, and permits.

In the normal course of our business, we may become involved in various proceedings relating to environmental health and safety matters, and we are currently engaged in an environmental investigation and remediation. Our manufacturing facilities are located on properties with a long history of industrial use, including the use of hazardous substances. We have identified soil and groundwater contamination at our Springfield, Massachusetts plant that we are investigating, monitoring, or remediating, as appropriate.

As of April 30, 2015, we had recorded $675,000 of environmental reserve in non-current liabilities. Our estimate of these costs is based upon currently enacted laws and regulations, currently available facts, experience in remediation efforts, existing technology, and the ability of other potentially responsible parties or contractually liable parties to pay the allocated portions of any environmental obligations.

When the available information is sufficient to estimate the amount of liability, that estimate has been used; when the information is only sufficient to establish a range of probable liability and no point within the range is more likely than any other, the lower end of the range has been used. We may not have insurance coverage for our environmental remediation costs. We have not recognized any gains from probable recoveries or other gain contingencies. The environmental reserve was calculated using undiscounted amounts based on independent environmental remediation reports obtained.

On May 5, 2014, we acquired substantially all of the net assets of TTPP for $22.8 million, plus a $1.0 million working capital adjustment, for a total purchase price of $23.8 million, utilizing cash on hand. Under the asset purchase agreement, the former stockholder of TTPP indemnified us for losses arising from, among other things, environmental conditions related to its manufacturing activities. Of the purchase price, $3.0 million was placed in an escrow account, of which $2.8 million remains available. A portion of

this escrow account will be applied to environmental remediation at the manufacturing site in Deep River, Connecticut. It is not presently possible to estimate the ultimate amount of all remediation costs and potential uses of the escrow. We believe the likelihood of environmental remediation costs exceeding the amount available in escrow to be remote.

Based on information known to us, we do not expect current environmental regulations or environmental proceedings and claims to have a material adverse effect on our consolidated financial position, results of operations, or cash flows. However, it is not possible to predict with certainty the impact on us of future environmental compliance requirements or of the cost of resolution of future environmental health and safety proceedings and claims, in part because the scope of the remedies that may be required is not certain, liability under federal environmental laws is joint and several in nature, and environmental laws and regulations are subject to modification and changes in interpretation. There can be no assurance that additional or changing environmental regulation will not become more burdensome in the future and that any such development would not have a material adverse effect on our company.

As of May 31, 2015, we had 1,749 employees, including 30 part-time employees. Of these employees, 1,375 were engaged in manufacturing, 80 in sales and marketing, 33 in finance and accounting, 47 in research and development, 34 in information services, and 180 in various executive or other administrative functions. None of our employees are represented by a union in collective bargaining with us. Of our employees, 24.0% have 10 or more years of service with our company and 14.7% have greater than 25 years of service with our company. We believe that our employee relations are good and that the high quality of our employee base is instrumental to our success.

As of April 30, 2015 and 2014, we had a backlog of orders for our firearm business of $169.4 million and $230.4 million, respectively. Our accessories business had a backlog of orders of $9.8 million as of April 30, 2015. Our backlog consists of orders for which purchase orders have been received and which are generally scheduled for shipment within six months and subject to capacity constraints. We allow orders received that have not yet shipped to be cancelled, with cancellations being more likely in periods following surges in demand. Therefore, our backlog may not be indicative of future sales.

The following table sets forth certain information regarding our executive officers:

P. James Debney has served as President and Chief Executive Officer of our company and as a member of our board of directors since September 2011. He was Vice President of our company from April 2010 until September 2011, and President of our firearm division from November 2009 until September 2011. Mr. Debney was President of Presto Products Company, a $500 million business unit of Alcoa Consumer Products, a manufacturer of plastic products, from December 2006 until February 2009. He was Managing Director of Baco Consumer Products, a business unit of Alcoa Consumer Products, a manufacturer of U.K.-branded and private label foil, film, storage, food, and trash bag consumer products, from January 2006 until December 2006; Manufacturing and Supply Chain Director from August 2003 until December 2005; and Manufacturing Director from April 1998 until July 2003. Mr. Debney joined Baco Consumer Products in 1989 and held various management positions in operations, production, conversion, and materials.

Jeffrey D. Buchanan has served as Executive Vice President, Chief Financial Officer, and Treasurer of our company since January 2011. Mr. Buchanan served as Secretary of our company from January 2011 until April 2012. Mr. Buchanan served as a director of our company from November 2004 until December 2010. He was of counsel to the law firm of Ballard Spahr LLP from May 2010 until December 2010. Mr. Buchanan served as a Senior Managing Director of CKS Securities, LLC, a registered broker-dealer, from August 2009 until May 2010 and as a Senior Managing Director of Alare Capital Securities, L.L.C., a registered broker-dealer, from November 2006 until July 2009. From 2005 to 2006, Mr. Buchanan was principal of Echo Advisors, Inc., a corporate consulting and advisory firm focusing on mergers, acquisitions, and strategic planning. Mr. Buchanan served in various positions for Three-Five Systems, Inc., a publicly traded electronic manufacturing services company, including Executive Vice President, Chief Financial Officer, and Treasurer, from May 1996 until February 2005. In September 2005, Three-Five Systems, Inc. filed a voluntary

petition for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. Mr. Buchanan was a business attorney from 1986 until 1996 for the law firm of O’Connor, Cavanagh, Anderson, Killingsworth & Beshears and for the law firm of Davis Wright Tremaine LLP from 1984 until 1986. He was a senior staff person at Deloitte & Touche LLP from 1982 to 1984. Mr. Buchanan is a director of Synaptics Incorporated, a publicly traded company that develops custom user interface solutions.

Robert J. Cicero has served as Vice President and General Counsel of our company since October 2011 and Chief Compliance Officer and Secretary of our company since April 2012. Mr. Cicero was Associate General Counsel, Compliance Officer and Assistant Secretary of Chemtura Corporation, a global specialty chemicals company, from March 2009 until October 2011; Assistant General Counsel from July 2005 until March 2009; and Chief Counsel from September 2003 until July 2005. He was an Associate in the Executive Compensation and Employee Benefits Group for the law firm of Shearman & Sterling LLP from May 2000 until September 2003; an Associate in the Labor and Employment Section for the law firm of Morgan, Lewis & Bockius, LLP, from May 1998 until May 2000; and an Associate in the Labor and Employment Section for the law firm of Akin Gump Strauss Hauer & Feld, LLP from June 1996 until May 1998. Mr. Cicero was an Assistant Corporation Counsel in the New York City Office of the Corporation Counsel from September 1993 until June 1996.

Mark P. Smith has served as Vice President of Manufacturing and Supply Chain Management of our company since May 2011. Mr. Smith was Vice President of Supply Chain Management of our company from May 2010 until May 2011. He was Director- Supply Chain Solutions for Alvarez & Marsal Business Consulting, LLC from April 2007 until April 2010. Mr. Smith held various positions for Ecolab, Inc., a developer and marketer of programs, products, and services for the hospitality, foodservice, healthcare, industrial, and energy markets, from March 2001 until April 2007, including Program Manager, Acquisition Integration Manager, Senior Manufacturing Planner, Plant Engineer, and Senior Production / Quality Supervisor. Mr. Smith was a Production Supervisor for Bell Aromatics, a manufacturer of flavors and fragrances, from August 1999 until March 2001.

Investors should carefully consider the following risk factors, together with all the other information included in the Form 10-K, in evaluating our company, our business, and our prospects.

Our performance is influenced by a variety of economic, social, and political factors.

Our performance is influenced by a variety of economic, social, and political factors. General economic conditions and consumer spending patterns can negatively impact our operating results. Economic uncertainty, unfavorable employment levels, declines in consumer confidence, increases in consumer debt levels, increased commodity prices, and other economic factors may affect consumer spending on discretionary items and adversely affect the demand for our products. Economic conditions also affect governmental political and budgetary policies. As a result, economic conditions also can have an effect on the sale of our products to law enforcement, government, and military customers.

Political and other factors also can affect our performance. Concerns about presidential, congressional, and state elections and legislature and policy shifts resulting from those elections can affect the demand for our products. For example, we experienced strong consumer demand for our firearm products following a new administration taking office in Washington, D.C. in 2009. In addition, speculation surrounding increased gun control at the federal, state, and local level and heightened fears of terrorism and crime can affect consumer demand for our products. Often, such concerns result in an increase in near-term consumer demand and subsequent softening of demand when such concerns subside.

Federal and state legislatures frequently consider legislation relating to the regulation of firearms. These proposed bills are often varied, but may seek to restrict the makeup of a firearm, including limitations on magazine capacity; mandate the use of certain technologies in a firearm; or ban the sale and, in some cases, the ownership of various types of firearms. If such restrictive legislation is enacted, we could find it difficult, expensive, or even impossible to comply with them, impeding new product development and distribution of existing products.

We remain dependent on the sale of our firearm products in the sporting goods distribution channel.

We manufacture a wide array of handguns, modern sporting rifles, hunting rifles, black powder firearms, handcuffs, and firearm-related products and accessories for sale to a wide variety of customers, including gun enthusiasts, collectors, hunters, sportsmen, competitive shooters, individuals desiring home and personal protection, law enforcement and security agencies and officers, and military agencies in the United States and throughout the world. We have made substantial efforts during the last several years to increase our sales to law enforcement and military agencies in the United States and throughout the world. Our efforts to increase firearms sales to law enforcement agencies has been successful to date with a number of agencies in the United States and agencies abroad selecting or approving for carry our firearms. We have not, however, yet secured any major contracts to supply

firearms to any large domestic military agencies. Although we believe that we now are able to offer a broad array of competitive products to the military, we cannot predict whether or when we will be able to secure any major military supply contracts. As a result, approximately 87.4% of our net firearm sales in fiscal 2015 remained in the sporting goods distribution channel.

From time to time, we have been capacity constrained and have been unable to satisfy on a timely basis the demand for some of our products. Overall, capacity constraints were factors in fiscal 2014 and 2013, despite our achieving significant improvements in our production throughput as a result of enhanced production methods, the purchase of additional equipment, and the expansion of our supply base for capacity relief on targeted constrained processes. In fiscal 2015, we continued to be capacity constrained with respect to certain of our popular products. During the last several fiscal years, we also have enhanced our manufacturing productivity by adding capacity, increasing daily production quantities, increasing operational availability of equipment, reducing machinery down time, extending machinery useful life, and increasing manufacturing efficiency. Future significant increases in consumer demand for our products or increased business from law enforcement or military agencies may require us to expand further our manufacturing capacity, particularly through the purchase of additional manufacturing equipment and the addition of manufacturing space. We may not be able to increase our capacity in time to satisfy increases in demand that may occur from time-to-time, and we may not have adequate financial resources to increase capacity to meet demand. Capacity constraints may prevent us from satisfying customer orders and result in a loss of market share to competitors that are not capacity constrained. In addition, we may suffer excess capacity and increased overhead costs if we increase our capacity to meet actual or anticipated demand and that demand decreases or does not materialize.

Our Springfield, Massachusetts facility is critical to our success, as we currently produce the majority of our firearm products at this facility.

The facility also houses our principal research, development, engineering, design, shipping, sales, marketing, finance, and management functions. Any event that causes a disruption of the operation of this facility for even a relatively short period of time would adversely affect our ability to produce and ship many of our firearm products and to provide service to our firearm customers. In addition, business disruptions at our facility in Deep River, Connecticut, where polymer frames and related components for many of our firearms are produced, could adversely affect our operating results. We frequently make certain changes in our manufacturing operations to modernize the facility and associated equipment and systems as a result of the age of the facility and the need to introduce certain efficiencies in manufacturing and other processes in order to produce our anticipated volume of products in a more efficient and cost-effective manner. We anticipate that we will continue to incur significant capital and other expenditures with respect to the facility, but we may not be successful in continuing to improve efficiencies.

Our efforts to develop new products may not be successful, and any new product that we develop may not result in customer or market acceptance. The development of new products is a lengthy and costly process. Any new products that we develop and introduce to the marketplace may be unsuccessful or achieve success that does not meet our expectations for a variety of reasons, including delays in introduction, unfavorable cost comparisons with alternative products, and unfavorable performance. Significant expenses related to proposed new products that prove to be unsuccessful for any reason will adversely affect our operating results.

We often rely on third parties, including independent sales representatives and agents that act on our behalf.

We are often represented by third parties, including independent sales representatives and agents. These representatives and agents sometimes have the ability to enter into agreements on our behalf. The actions of these third parties could adversely affect our business if they enter into low margin contracts or conduct themselves in a manner that damages our reputation in the marketplace. We also face a risk that these third parties could violate domestic or foreign laws, which could put us at risk for prosecution in the United States or internationally.

Poor product quality or performance could adversely affect our operating results and reputation.

Poor product quality or performance could adversely affect our operating results and reputation. We generally provide a limited one year warranty and a lifetime service policy to the original purchaser of our new firearm products and a limited one year warranty to the original purchaser of our new accessories products. Product liability claims could harm our reputation; cause us to lose business; and cause us to incur significant warranty, support, and repair costs.

While we believe we have a strong track record of developing, manufacturing, and selling high-quality products, from time to time, we have experienced manufacturing issues with respect to some of our firearms and have initiated product recalls and safety alerts. We issued a safety alert in August 2013 related to all M&P Shield products manufactured prior to August 19, 2013. We issued a recall that occurred in June 2013 with respect to our Thompson/Center Arms bolt action. In November 2011, we issued a recall with respect to our Thompson/Center Arms Venture rifles. Since fiscal 2010, the aggregate expense recognized relating to these recalls was $5.5 million.

We are self-insured for our employee medical plan. While our medical costs in recent years have generally increased at the same level as the regional average, our aging workforce and other employee demographics could result in an increase in our medical costs beyond what we have experienced or expect. We have stop-loss coverage in place for catastrophic events, but the aggregate impact of a high number of claims up to our stop-loss limit may have an effect on our profitability.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, will potentially impact our healthcare cost structure and may, over time, increase our employee healthcare related expenses. Provisions of this law have become and will become effective in calendar 2015 and at various dates over the next several years. Many of the regulations and guidance for this law still not have been implemented and some face legal challenges. Because of the breadth and complexity of this law, the uncertainty surrounding this law, the lack of regulations and guidance for implementation, and the phased-in nature of the new requirements, we cannot predict with certainty the future effect of this law on us. The new healthcare legislation may increase the costs of providing medical insurance to our employees, which could have an adverse effect on our operations.

Liability insurance coverage is expensive and from time to time may be difficult to obtain. Our liability insurance costs were $5.1 million in fiscal 2015 and $4.7 million in fiscal 2014. An inability to obtain liability insurance, significant increases in the cost of insurance we obtain, or losses in excess of our liability insurance coverage would have a material adverse effect on us.

Historically, our fourth fiscal quarter ending April 30 has been our strongest quarter with industry events and distributor shows heavily scheduled during the early spring months. In addition, because of our operating schedule, which includes a summer and a winter shutdown of our firearm facilities, we have increased operating days during our fourth fiscal quarter, which allows our shipping and production volumes to exceed other quarters.

Shortages of, and price increases for, components, parts, raw materials, and other supplies may delay or reduce our sales and increase our costs.

Although we manufacture most of the components for our firearms, we purchase certain components and parts, including bolt carriers, rifle receivers, magazines, slides, small parts, barrels, and rifle stocks, from third parties. We rely on third-party suppliers and manufacturers for substantially all of our accessories’ components and products, and we have limited control over these suppliers and manufacturers. We also purchase ammunition for product testing.

Most of our major suppliers for our firearm-division products are U.S.-based and provide materials, components, and parts, such as raw steel, polymer components, and metal-injected-molded components. The costs of these materials, components, and parts are at competitive rates. We have become increasingly dependent on a small number of key vendors that supply components and parts for our firearms as a result of our decision to enhance our manufacturing flexibility by using third parties that can supplement our internal capacity to better react to changes in market conditions. Most of our major suppliers for our accessories components and products are based in Asia. We also use numerous raw materials in producing and testing our products, including steel, wood, lead, brass, and plastics.

Our inability to obtain sufficient quantities of components, parts, raw materials, and other supplies from independent sources necessary for the production of our products could result in reduced or delayed sales or lost orders. Any delay in or loss of sales could adversely impact our operating results. Many of the components, parts, raw materials, and other supplies used in the production of our products are available only from a limited number of suppliers. In most cases, we do not have long-term supply contracts with these suppliers. As a result, we could be subject to increased costs, supply interruptions, and difficulties in obtaining materials and finished products. Our suppliers also may encounter difficulties or increased costs in obtaining the materials necessary to produce the components and parts that we use in our products. The time lost in seeking and acquiring new sources or the inability to locate alternative sources of comparable quality at an acceptable price, or at all, could negatively impact our net sales and profitability. Shortages of ammunition also can adversely affect the demand for our products.

We have occasionally received, and may receive in the future, product deliveries from suppliers that fail to conform to our quality control standards. In such circumstances, our ability to sell those products could have a negative effect on our net sales and increase our administrative and shipping costs if we are unable to obtain replacement products in a timely manner.

Damage or disruption to manufacturing and distribution capabilities of, or the disruption of deliveries from, our suppliers because of severe or catastrophic events, including weather, natural disaster, fire or explosion, terrorism, pandemics, or labor disruptions, including at ports or at our suppliers, could impair our ability to manufacture or sell our products. Although we have insurance to cover potential loss from most of our suppliers for these events, we could experience losses in excess of our insured limits. In addition, failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, could have a material adverse effect on us, as well as require additional resources to restore our supply chain.

Interruptions or other issues with our ERP systems, including upon implementation of additional functionality, could cause disruption to our operations.

We transitioned to a new ERP system in our Springfield and Houlton facilities during fiscal 2014 utilizing SAP. We experienced some disruption in August 2013 as we introduced our SAP system. SAP is an all-inclusive ERP system. Therefore, disruptions in that system could impede our ability to manufacture products, order materials, generate management reports, invoice customers, or comply with laws and regulations. We intend to add additional functionality to SAP, and we have planned a conversion of our Deep River facility to SAP in fiscal 2016. We may implement SAP at our additional facilities. Those additions and new implementations could result in a major disruption to our business, and any disruption could have a negative effect on our net sales and profitability. In addition, implementing our ERP system has required and will continue to require significant resources and refinement to fully realize the expected benefits of the system.

A significant disruption in our computer systems or a cyber-security breach could adversely affect our operations.

We rely extensively on our computer systems to manage our ordering, pricing, inventory replenishment, and other processes. Our systems are subject to damage or interruption from various sources, including power outages, computer and telecommunications failures, computer viruses, cyber security breaches, vandalism, severe weather conditions, catastrophic events, and human error, and our disaster recovery planning cannot account for all eventualities. If our systems are damaged, fail to function properly, or otherwise become compromised or unavailable, we may incur substantial costs to repair or replace them, and we may experience loss of critical data and interruptions or delays in our ability to perform critical functions, which could adversely affect our business and operating results. Any compromise of our data security could also result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, loss or misuse of the information, and a loss of confidence in our data security measures, which could harm our business.

We face intense competition that could result in our losing or failing to gain market share and suffering reduced sales.

We operate in intensely competitive markets that are characterized by competition from major domestic and international companies. This intense competition could result in pricing pressures, lower sales, reduced margins, and lower market share. Any movement away from high-quality, domestic firearms to lower priced or comparable foreign alternatives would adversely affect our business. Some of our competitors have greater financial, technical, marketing, distribution, and other resources and, in certain cases, may have lower cost structures than we possess and that may afford them competitive advantages. As a result, they may be able to devote greater resources to the promotion and sale of products, to negotiate lower prices on raw materials and components, to deliver competitive products at lower prices, and to introduce new products and respond to customer requirements more effectively and quickly than we can.

Competition in the firearm industry is primarily based on innovation, quality, reliability, durability, price, performance, consumer brand awareness, and customer service and support. Our ability to compete in one or more of these areas could have a negative impact on our business.

Potential strategic alliances may not achieve their objectives, which could impede our growth.

We have entered into strategic alliances in the past and anticipate that we will enter into new strategic alliances in the future. We continually explore strategic alliances designed to expand our product offerings, enter new markets, and improve our distribution channels. For example, in fiscal 2015, we announced our strategic alliance with General Dynamics Ordnance and Tactical Systems to pursue the U.S. Army’s modular handgun system solicitation to replace the M9 standard Army sidearm. Our existing strategic alliances and any new strategic alliances may not achieve their intended objectives, and parties to our strategic alliances may not perform as contemplated. The failure of these alliances may impede our ability to introduce new products and enter new markets.

Acquisitions involve significant risks, and any acquisitions that we undertake in the future could be difficult to integrate, disrupt our business, dilute stockholder value, and harm our operating results.

We may in the future expand our operations through strategic acquisitions in order to enhance existing products and offer new products, enter new markets and businesses, strengthen and avoid interruption from our supply chain, and enhance our position in current markets and business. Acquisitions involve significant risks. We cannot accurately predict the timing, size, and success of any future acquisitions. We may be unable to identify suitable acquisition candidates or to complete the acquisitions of candidates that we identify. Increased competition for acquisition candidates or increased asking prices by acquisition candidates may increase purchase prices for acquisitions to levels beyond our financial capability or to levels that would not result in the returns required by our acquisition criteria. Acquisitions also may become more difficult in the future as we or others acquire the most attractive candidates. Unforeseen expenses, difficulties, and delays frequently encountered in connection with expansion through acquisitions could inhibit our growth and negatively impact our operating results.

Our ability to complete acquisitions that we desire to make in the future will depend upon various factors, including the following:

As a part of any potential acquisition, we may engage in discussions with various acquisition candidates. In connection with these discussions, we and each potential acquisition candidate may exchange confidential operational and financial information, conduct due diligence inquiries, and consider the structure, terms, and conditions of the potential acquisition. In certain cases, the prospective acquisition candidate agrees not to discuss a potential acquisition with any other party for a specific period of time and agrees to take other actions designed to enhance the possibility of the acquisition, such as preparing audited financial information. Potential acquisition discussions frequently take place over a long period of time and involve difficult business integration and other issues. As a result of these and other factors, a number of potential acquisitions that from time-to-time appear likely to occur do not result in binding legal agreements and are not consummated, but may result in increased legal, consulting, and other costs.

Unforeseen expenses, difficulties, and delays frequently encountered in connection with future acquisitions could inhibit our growth and negatively impact our profitability. Any future acquisitions may not meet our strategic objectives or perform as anticipated. In addition, the size, timing, and success of any future acquisitions may cause substantial fluctuations in our operating results from quarter to quarter. For example, our acquisition of Thompson/Center Arms in January 2007 and SWSS in July 2009 resulted in substantial write-offs. Consequently, our operating results for any quarter may not be indicative of the results that may be achieved for any subsequent quarter or for a full fiscal year. These interim fluctuations could adversely affect the market price of our common stock.

If we finance any future acquisitions in whole or in part through the issuance of common stock or securities convertible into or exercisable for common stock, existing stockholders will experience dilution in the voting power of their common stock and earnings per share could be negatively impacted. The extent to which we will be able or willing to use our common stock for acquisitions will depend on the market price of our common stock from time-to-time and the willingness of potential acquisition candidates to accept our common stock as full or partial consideration for the sale of their businesses. Our inability to use our common stock as consideration, to generate cash from operations, or to obtain additional funding through debt or equity financings in order to pursue an acquisition could limit our growth.

Our recent acquisitions and any acquisitions that we undertake in the future could be difficult to integrate, disrupt our business, and harm our operations.

In order to pursue a successful acquisition, we may need to integrate the operations of acquired businesses into our operations, including centralizing certain functions to achieve cost savings and pursuing programs and processes that leverage our sales and growth opportunities. In fiscal 2015, we acquired the businesses of TTPP and BTI, and we are in the process of integrating those businesses. The integration of the management, operations, and facilities of acquired businesses with our own could involve difficulties, which could adversely affect our growth rate and operating results.

We may be unable to complete effectively an integration of the management, operations, facilities, and accounting and information systems of acquired businesses with our own; to manage efficiently the combined operations of the acquired businesses with our operations; to achieve our operating, growth, and performance goals for acquired businesses; to achieve additional sales as a result of our expanded operations; or to achieve operating efficiencies or otherwise realize cost savings as a result of anticipated acquisition synergies. The integration of acquired businesses involves numerous risks, including the following:

Our growth strategy may require significant additional funds, the amount of which will depend upon our working capital and general corporate needs.

Any borrowings made to finance operations or future acquisitions could make us more vulnerable to a downturn in our operating results, a downturn in economic conditions, or increases in interest rates on borrowings. If our cash flow from operations is insufficient to meet our debt service requirements, we could be required to sell additional equity securities, refinance our obligations, or dispose of assets in order to meet our debt service requirements. Adequate financing may not be available if and when we need it or may not be available on terms acceptable to us. The failure to obtain sufficient financing on favorable terms and conditions could have a material adverse effect on us.

From time to time, we may seek additional equity or debt financing to provide funds for the expansion of our business. We cannot predict the timing or amount of any such financing requirements at this time. If such financing is not available on satisfactory terms, we may be unable to expand our business or to develop new business at the rate desired and our operating results may suffer. Debt financing increases expenses and must be repaid regardless of operating results. Equity financing could result in additional dilution to existing stockholders.

As of April 30, 2015, we had $175.0 million of long-term debt outstanding. The degree to which we are leveraged could adversely affect our ability to obtain further financing for working capital, acquisitions, or other purposes and could make us more vulnerable to industry downturns and competitive pressures. Our ability to meet our debt service obligations will depend upon our future performance, which will be subject to the financial condition, business environment, and other factors affecting our operations, many of which are beyond our control.

To continue to expand our business and enhance our competitive position, we must make significant investments in systems, equipment, facilities, and personnel. In addition, we may commit significant funds to enhance our sales, marketing, information technology, research and development, and licensing efforts in order to expand our business. As a result of the increase in fixed costs and operating expenses, our failure to increase sufficiently our net sales to offset these increased costs would adversely affect our operating results.

The failure to manage our growth effectively could adversely affect our operations. We have substantially increased the number of our manufacturing and design programs and plan to expand further the number and diversity of our programs in the future. Managing our planned growth effectively will require us to

The expansion of our products and customer base may result in increases in our overhead and selling expenses. We also may be required to increase staffing and other expenses as well as our expenditures on capital equipment and leasehold improvements in order to meet the demand for our products. Any increase in expenditures in anticipation of future sales that do not materialize would adversely affect our profitability.

In fiscal 2011, we were awarded a $6.0 million refundable tax credit from the Massachusetts Economic Assistance Coordinating Council under the Economic Development Incentive Program, or EDIP. This credit was granted by the Commonwealth of Massachusetts in consideration of our restructuring plan to move the production of our hunting products from New Hampshire to Massachusetts and is subject to our compliance with a written EDIP Investment Analysis Plan, including the requirement to hire 225 employees during calendar year 2011 and to invest $62.9 million over five years on qualified depreciable assets. If significant external factors prevent us from maintaining the required level of employment or investment in the future, we may be required to repay part or all of the tax credit received. Through the end of fiscal 2015, we recorded all of the tax credits allowed to us because of our compliance with the written EDIP Investment Analysis Plan. However, we are still required to maintain employment and capital spending levels throughout the remaining term of the EDIP in order to ensure that we do not have to repay any of the credit received.

Our business is highly dependent upon our brand recognition and reputation, and the failure to maintain or enhance our brand recognition or reputation would likely have a material adverse effect on our business.

Our brand recognition and reputation are critical aspects of our business. We believe that maintaining and further enhancing our brands, particularly our Smith & Wesson, M&P, and Thompson/Center Arms brands and the various brands sold by our accessories division, as well as our reputation are critical to retaining existing customers and attracting new customers. We also believe that the importance of our brand recognition and reputation will continue to increase as competition in our markets continues to develop.

We anticipate that our advertising, marketing, and promotional efforts will increase in the foreseeable future as we continue to seek to enhance our brands and consumer demand for our products. Historically, we have relied on print and electronic media advertising to increase consumer awareness of our brands to increase purchasing intent and conversation. We anticipate that we will increasingly rely on other forms of media advertising, including social media and e-marketing. Our future growth and profitability will depend in large part upon the effectiveness and efficiency of our advertising, promotion, public relations, and marketing programs. These brand promotion activities may not yield increased revenue and the efficacy of these activities will depend on a number of factors, including our ability to do the following:

Increases in the pricing of one or more of our marketing and advertising channels could increase our marketing and advertising expenses or cause us to choose less expensive but possibly less effective marketing and advertising channels. If we implement new marketing and advertising strategies, we may utilize marketing and advertising channels with significantly higher costs than our current channels, which in turn could adversely affect our operating results. Implementing new marketing and advertising strategies also would increase the risk of devoting significant capital and other resources to endeavors that do not prove to be cost effective. We also may incur marketing and advertising expenses significantly in advance of the time we anticipate recognizing revenue associated with such expenses, and our marketing and advertising expenditures may not generate sufficient levels of brand awareness and conversation or result in increased revenue. Even if our marketing and advertising expenses result in increased revenue, the increase might not offset our related expenditures. If we are unable to maintain our marketing and advertising channels on cost-effective terms or replace or supplement existing marketing and advertising channels with similarly or more effective channels, our marketing and

advertising expenses could increase substantially, our customer base could be adversely affected, and our business, operating results, financial condition, and reputation could suffer.

Certain of our customers have experienced, and may in the future experience, credit-related issues. We perform ongoing credit evaluations of customers, but these evaluations may not be completely effective. We grant payment terms to most customers ranging from 30 to 90 days and do not generally require collateral. However, in some instances we provide longer payment terms, particularly as it relates to our hunting products. Should more customers than we anticipate experience liquidity issues, or if payment is not received on a timely basis, we may have difficulty collecting amounts owed to us by such customers and our business, operating results, and financial condition could be adversely impacted.

For our fiscal year ended April 30, 2015, we did not have any customers that exceeded 10% of net sales or 10% of accounts receivable as of April 30, 2015. However, one of our customers accounted for approximately 13.4% and 11.6% of our net sales for the fiscal years ended April 30, 2014 and 2013, respectively, as well as $11.7 million, or 20.1%, of accounts receivable as of April 30, 2014.

Our inability to protect our intellectual property or obtain the right to use intellectual property from third parties could impair our competitive advantage, reduce our sales, and increase our costs.

Our success and ability to compete depend in part on our ability to protect our intellectual property. We rely on a combination of patents, copyrights, trade secrets, trademarks, confidentiality agreements, and other contractual provisions to protect our intellectual property, but these measures may provide only limited protection. Our failure to enforce and protect our intellectual property rights or obtain the right to use necessary intellectual property from third parties could reduce our sales and increase our costs. In addition, the laws of some foreign countries do not protect proprietary rights as fully as do the laws of the United States.

Patents may not be issued for the patent applications that we have filed or may file in the future. Our issued patents may be challenged, invalidated, or circumvented, and claims of our patents may not be of sufficient scope or strength, or issued in the proper geographic regions, to provide meaningful protection or any commercial advantage. We have registered certain of our trademarks in the United States and other countries. We may be unable to enforce existing or obtain new registrations of principle or other trademarks in key markets. Failure to obtain or enforce such registrations could compromise our ability to protect fully our trademarks and brands and could increase the risk of challenges from third parties to our use of our trademarks and brands.

In the past, we did not consistently require our employees and consultants to enter into confidentiality agreements, employment agreements, or proprietary information and invention agreements; however, such agreements are now required. Therefore, our former employees and consultants may try to claim some ownership interest in our intellectual property and may use our intellectual property competitively and without appropriate limitations.

We may incur substantial expenses and devote significant resources in prosecuting others for their unauthorized use of our intellectual property rights.

We may become involved in litigation regarding patents and other intellectual property rights. Other companies, including our competitors, may develop intellectual property that is similar or superior to our intellectual property, duplicate our intellectual property, or design around our patents and may have or obtain patents or other proprietary rights that would prevent, limit, or interfere with our ability to make, use, or sell our products. Effective intellectual property protection may be unavailable or limited in some foreign countries in which we sell products or from which competing products may be sold. Unauthorized parties may attempt to copy or otherwise use aspects of our intellectual property and products that we regard as proprietary. Our means of protecting our proprietary rights in the United States or abroad may prove to be inadequate and competitors may be able to independently develop similar intellectual property. If our intellectual property protection is insufficient to protect our intellectual property rights, we could face increased competition in the markets for our products.

Should any of our competitors file patent applications or obtain patents that claim inventions also claimed by us, we may choose to participate in an interference proceeding to determine the right to a patent for these inventions because our business would be harmed if we fail to enforce and protect our intellectual property rights. Even if the outcome is favorable, this proceeding could result in substantial cost to us and disrupt our business.

In the future, we also may need to file lawsuits to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others. This litigation, whether successful or unsuccessful, could result in substantial costs and diversion of resources, which could have a material adverse effect on us.

We face risks associated with international activities, including related to compliance with the Foreign Corrupt Practices Act or other applicable anti-corruption legislation.

Political and economic conditions abroad may result in a reduction of or inhibition of our growth in our sales in numerous foreign countries and our purchase of certain accessories and components from certain countries in Asia and Europe, including China, Taiwan, and Italy. Protectionist trade legislation in either the United States or foreign countries, such as a change in the current tariff structures, export or import compliance laws, or other trade policies, could reduce our ability to sell our products in foreign markets, the ability of foreign customers to purchase our products, and our ability to import components, parts, and products from foreign suppliers. Our efforts to comply with the Foreign Corrupt Practices Act, or FCPA, or other applicable anti-corruption laws and regulations may limit our international business activities, necessitate the implementation of certain processes and compliance programs, and subject us to enforcement actions or penalties for noncompliance. Both the U.S. and foreign governments have increased their oversight and enforcement activities in this area in recent years, and we expect applicable agencies to continue to increase such activities in the future.

Our foreign sales and purchases of certain accessories and components also create a number of logistical and communication challenges. These activities also expose us to various economic, political, and other risks, including the following:

Our firearm business, as well as the business of all products and marketers of firearms and firearm parts, is subject to numerous federal, state, local, and foreign laws, regulations, and protocols, including the rules and regulations of the ATF. If we fail to comply with ATF rules and regulations, the ATF may limit our activities or growth, fine us, or ultimately put us out of business.

Also, the export of our products is controlled by the International Traffic in Arms Regulations, or ITAR. ITAR implements the provisions of the Arms Export Control Act as described in the Code of Federal Regulations and is enforced by the U.S. Department of State. In order for us to sell some of our products in accordance with ITAR, including firearms to foreign customers, we must obtain export licenses from the U.S. government, primarily the U.S. Department of State. The U.S. Department of State has discretion as to whether to grant a license, and approval depends on the foreign policies and national security interests of the United States. In addition, Congress may take action to block a proposed sale of firearms for export valued at $1 million or higher. Consequently, we may not be able to obtain export licenses, or to complete profitable contracts as a result of political or other reasons that are outside our control. Failure to receive required licenses or authorizations or the termination or suspension of our export privileges could have an adverse effect on our business. Further, because our manufacturing process includes certain toxic, flammable, and explosive chemicals, we are subject to the Chemical Facility Anti-Terrorism Standards, or CFATS, as administered by the Department of Homeland Security, which requires that we take additional reporting and security measures related to our manufacturing process.

In addition, like many other manufacturers, we are subject to compliance with the Fair Labor Standards Act, the Occupational Safety and Health Act, Massachusetts data privacy laws, and many other regulations surrounding employment law, environmental law, taxation, and consumer protection.

Compliance with all of these laws, regulations, and protocols is costly and time consuming. Although we take every measure to ensure compliance with the many regulations we are subject to, inadvertent violation of any of these regulations could cause us to incur fines and penalties and may also lead to restrictions on our ability to manufacture and sell our products and services and to import or export the products that we sell. In addition, these laws, regulations, and protocols, as well as their interpretation by

regulatory authorities, may change at any time. There can be no assurance that such changes to the laws, regulations, and protocols or to their interpretations will not adversely affect our business.

We are currently involved in numerous lawsuits, including a lawsuit involving a municipality and several product liability lawsuits.

We are vigorously defending ourselves in the lawsuits to which we are subject. There can be no assurance, however, that we will not have to pay significant damages or amounts in settlement above insurance coverage. An unfavorable outcome or prolonged litigation could harm our business. Litigation of this nature also is expensive and time consuming and diverts the time and attention of our management.

Reference is made to Note 17 to our consolidated financial statements for a discussion of these and other lawsuits to which we are subject.

We have been and may continue to be subject to governmental investigations and inquiries. Such investigations and inquiries could subject us to various sanctions, including significant civil and criminal penalties, the indictment of our company or various of our officers and employees, our being prevented from bidding on domestic military and government contracts, our disbarment by the U.S. Department of State, private civil litigation arising out of the outcome of the investigations or inquiries, the diversion of time and attention of our management from normal business operations, and a negative impact on the perception of our company by investors, customers, and others. For example, we remain subject to a settlement agreement with the SEC under which we have the obligation to report to the SEC on our FCPA compliance efforts. If the SEC determines that we have not met our obligations under the terms of the settlement agreement, it can reopen its investigation, which could adversely affect our business.

We are subject to numerous federal, state, and local laws that regulate or otherwise relate to the protection of the environment, including the Clean Air Act, the Clean Water Act, CERCLA, and the Solid Waste Disposal Act, as amended by RCRA. CERCLA, RCRA, and related state laws subject us to the potential obligation to remove or mitigate the environmental effects of the disposal or release of certain pollutants at our manufacturing facilities and at third-party or formerly owned sites at which contaminants generated by us may be located. This requires us to make expenditures of both a capital and expense nature.

In our efforts to satisfy our environmental health and safety responsibilities and to comply with all applicable laws and regulations, we maintain policies relating to the environmental health and safety standards for our operations and conduct programs to monitor compliance with various environmental regulations. However, in the normal course of our manufacturing operations, we may become subject to governmental proceedings and orders pertaining to waste disposal, air emissions, and water discharges into the environment. We believe based on the information available to us that we are in substantial compliance with applicable environmental regulations.

From a remediation perspective, we may not have identified all existing contamination on our properties and we cannot predict whether our operations will cause contamination in the future. As a result, we could incur additional costs to clean up contamination that exceed the amount of our reserves. We will periodically review the probable and reasonably estimable environmental costs in order to update the environmental reserves. Furthermore, it is not possible to predict with certainty the impact on us of future environmental health and safety compliance requirements or of the cost of resolution of future regulatory proceedings and claims, in part because the scope of the remedies that may be required is not certain, liability under federal environmental laws is joint and several in nature, and environmental health and safety laws and regulations are subject to modification and changes in interpretation. Additional or changing environmental health and safety regulation may become burdensome in the future, and any such development could have an adverse effect on us.

Our indebtedness could adversely affect our business and limit our ability to plan for or respond to changes in our business, and we may be unable to generate sufficient cash flow to satisfy significant debt service obligations.

As of April 30, 2015, our consolidated long-term indebtedness was $175.0 million and we did not have any short-term indebtedness. On June 15, 2015, we entered into a new credit agreement, which consists of a $175.0 million revolving line of credit and a $105.0 million term loan, which both mature on June 15, 2020, or the Credit Agreement. We used the proceeds from the term loan to redeem the entire $100.0 million outstanding principal balance of our 5.875% Senior Notes due 2017, or the 5.875% Senior Notes, plus accrued and unpaid interest to the redemption date, in June 2015. We also have $75.0 million of 5.000% Senior Notes due 2018, or the 5.000% Senior Notes, outstanding. The Credit Agreement and the indenture governing the 5.000% Senior Notes, or the

5.000% Senior Notes Indenture, each contain certain affirmative and negative financial and other restrictive covenants. Reference is made to Note 5 to our consolidated financial statements for further discussion of our indebtedness. We may also incur additional indebtedness in the future, including borrowings under our credit facility. Our indebtedness, after taking into account additional borrowings under our credit facility, and the fact that a substantial portion of our cash flow from operations must be used to make principal and interest payments on our indebtedness, could have important consequences, including the following:

Our ability to incur significant future indebtedness, whether to finance potential acquisitions or for general corporate purposes, will depend on our ability to generate cash. To a certain extent, our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control. If our business does not generate sufficient cash flow from operations or if future borrowings are not available to us under our credit facility in amounts sufficient to enable us to fund our liquidity needs, our financial condition and operating results may be adversely affected. If we cannot make scheduled principal and interest payments on our debt obligations in the future, we may need to refinance all or a portion of our indebtedness on or before maturity, sell assets, delay capital expenditures, or seek additional equity.

Our governing documents and Nevada law could make it more difficult for a third party to acquire us and discourage a takeover.

Certain provisions of our articles of incorporation and bylaws and Nevada law make it more difficult for a third party to acquire us and make a takeover more difficult to complete, even if such a transaction were in our stockholders’ interest or might result in a premium over the market price for the shares held by our stockholders.

The issuance of additional common stock in the future, including shares that we may issue pursuant to option grants, may result in dilution in the net tangible book value per share of our common stock.

Our board of directors has the legal power and authority to determine the terms of an offering of shares of our capital stock, or securities convertible into or exchangeable for these shares, to the extent of our shares of authorized and unissued capital stock.

The sale of a substantial number of shares that are eligible for sale could adversely affect the price of our common stock.

As of April 30, 2015, there were 54,062,459 shares of our common stock outstanding. Substantially all of these shares are freely tradable without restriction or further registration under the securities laws, unless held by an “affiliate” of our company, as that term is defined in Rule 144 under the securities laws. Shares held by affiliates of our company, which generally include our directors, officers, and certain principal stockholders, are subject to the resale limitations of Rule 144 described below.

In general, under Rule 144 as currently in effect, any person or persons whose shares are aggregated for purposes of Rule 144, who is deemed an affiliate of our company and beneficially owns restricted securities with respect to which at least six months has elapsed since the later of the date the shares were acquired from us, or from an affiliate of ours, is entitled to sell within any three-month period a number of shares that does not exceed the greater of 1% of the then outstanding shares of our common stock and the average weekly trading volume in common stock during the four calendar weeks preceding such sale. Sales by affiliates under Rule 144 also are subject to certain manner-of-sale provisions and notice requirements and to the availability of current public information about us. Rule 701, as currently in effect, permits our employees, officers, directors, and consultants who purchase shares pursuant to a written compensatory plan or contract to resell these shares in reliance upon Rule 144, but without compliance with specific restrictions.

Rule 701 provides that affiliates may sell their Rule 701 shares under Rule 144 without complying with the holding period requirement and that non-affiliates may sell their shares in reliance on Rule 144 without complying with the holding period, public information, volume limitation, or notice provisions of Rule 144. A person who is not an affiliate, who has not been an affiliate within

three months prior to sale, and who beneficially owns restricted securities with respect to which at least one year has elapsed since the later of the date the shares were acquired from us, or from an affiliate of ours, is entitled to sell such shares under Rule 144 without regard to any of the volume limitations or other requirements described above. Sales of substantial amounts of our common stock in the public market could adversely affect the market price for our common stock.

As of April 30, 2015, we had outstanding nonqualified stock options to purchase 1,879,630 shares of common stock under our incentive stock plans and other option agreements, 731,629 undelivered time-based restricted stock units, or RSUs, and 459,250 unearned performance-based restricted stock units, or PSUs, under our incentive stock plans. We issued 161,456 of the 6,000,000 shares of common stock reserved for issuance under our 2011 Employee Stock Purchase Plan, or the ESPP, during fiscal 2015. We have registered for offer and sale the shares of common stock that are reserved for issuance pursuant to our incentive stock plans and available for issuance pursuant to the ESPP. Shares covered by such registration statements upon the exercise of stock options or pursuant to the ESPP generally will be eligible for sale in the public market, except that affiliates will continue to be subject to volume limitations and other requirements of Rule 144. The issuance or sale of such shares could depress the market price of our common stock.

We may issue securities that could dilute stockholder ownership and the net tangible book value per share of our common stock.

We may decide to raise additional funds through public or private debt or equity financing to fund our operations. If we raise funds by issuing equity securities, the percentage ownership of our current stockholders will be reduced and the new equity securities may have rights superior to those of our common stock. We may not obtain sufficient financing on terms that are favorable to us. We may delay, limit, or eliminate some or all of our proposed operations if adequate funds are not available. We may also issue equity securities as consideration for acquisitions we may make. The issuance of additional common stock in the future, including shares that we may issue pursuant to option grants, may result in dilution in the net tangible book value per share of our common stock.

Various factors contribute to significant periodic and seasonal fluctuations in our operating results. These factors include the following:

Accordingly, you should not rely on the results of any period as an indication of our future performance. If our operating results fall below expectations of securities analysts or investors, our stock price may decline.

The market price of our common stock could be subject to wide fluctuations as a result of many factors.

Many factors could affect the market price of our common stock, including the following:

In addition, market demand for small-capitalization stocks, and price and volume fluctuations in the stock market unrelated to our performance, could result in significant fluctuations in the market price of our common stock. The performance of our common stock could adversely affect our ability to raise equity in the public markets and adversely affect the growth of our business.

We depend on key personnel, our business may be harmed, if we fail to retain and attract skilled management and other key personnel.

Our success depends to a significant extent upon the continued services of our current management team, including P. James Debney, our President and Chief Executive Officer. The loss of Mr. Debney or one or more of our other key executives or employees could have a material adverse effect on our business. Except for Mr. Debney, we do not maintain “key person” insurance policies on the lives of any of our executive officers or any of our other employees. We employ all of our executive officers and key employees on an at-will basis, and their employment can be terminated by us or them at any time, for any reason and without advance notice, subject, to certain severance obligations upon termination. In order to retain valuable employees, in addition to salary and cash incentives, we regard our ability as a public company to grant stock-based compensation as an important component of our ability to attract and retain key personnel. The value to employees of stock-based compensation over time will be significantly affected by movements in our stock price that are beyond our control and may at any time be insufficient to counteract offers from other companies.

Our success also depends on our ability to attract, retain, and motivate additional skilled management personnel. We plan to continue to expand our work force to continue to enhance our business and operating results. We believe that there is significant competition for qualified personnel with the skills and knowledge that we require, particularly as a result of ongoing firearm industry consolidation and other industry developments. Many of the other companies with which we compete for qualified personnel have greater financial and other resources than we do. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high-quality candidates than those which we have to offer. If we are not able to retain our current key personnel, or attract the necessary qualified key personnel to accomplish our business objectives, we may experience constraints that will impede significantly the achievement of our business objectives and our ability to pursue our business strategy. New hires require significant training and, in most cases, take significant time before they achieve full productivity. New employees may not become as productive as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals. If our recruiting, training, and retention efforts are not successful or do not generate a corresponding increase in revenue, our business will be harmed.

We own or lease three manufacturing facilities for our firearms products. We own our principal facility, which is a 575,000 square-foot facility located in Springfield, Massachusetts. We also own a 38,000 square-foot facility located in Houlton, Maine and we lease a 150,000 square-foot facility located in Deep River, Connecticut. The Springfield facility is primarily used to manufacture our handguns, modern sporting rifles, and hunting rifles; and the Houlton facility was primarily used to manufacture handguns, handcuffs, and restraints. In fiscal 2015, our Houlton facility was converted into a machining center and all assembly, finishing, and small parts operations were transferred to our Springfield facility. Our Deep River facility is primarily used for custom plastic injection molding services, rapid prototyping, tooling, and supports our firearms platform. Our accessories products are warehoused and assembled in a leased 145,000 square-foot facility located in Columbia, Missouri. We believe that each facility is in good condition and capable of producing products at current and levels of production capacity. In addition, we own a 57,000 square-foot facility in Springfield, Massachusetts that we use for the Smith & Wesson Academy, a state-accredited firearm training institution and a private shooting facility. The leases for our Deep River and Columbia facilities are set to expire on May 4, 2024 and April 30, 2023, respectively.

We lease 3,000 square feet of office space in Scottsdale, Arizona, which has offices for certain senior personnel in our investor relations, legal, and finance departments as well as office space for our board of directors. The lease expires on February 28, 2018.

We lease 4,500 square feet of a facility located in Rochester, New Hampshire, which is used primarily for research and development activities. The lease expires on September 30, 2015.

We believe that all of our facilities are adequate for present requirements and that our current equipment is in good condition and suitable for the operations involved.

The nature of the legal proceedings against us is discussed in Note 17 to our consolidated financial statements, which is incorporated herein by reference.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock has been traded on the Nasdaq Global Select Market under the symbol “SWHC” since July 20, 2006. The following table sets forth the high and low sale prices of our common stock for each quarter in our fiscal years ended on April 30 indicated as reported on the Nasdaq Global Select Market.

On June 16, 2015, the last reported sale price of our common stock was $15.98 per share. On June 16, 2015, there were 735 record holders of our common stock.

We have never declared or paid cash dividends on our preferred stock or our common stock. We currently plan to retain any earnings to finance the growth of our business rather than to pay cash dividends. Payment of any cash dividends in the future will depend on our financial condition, operating results, and capital requirements as well as other factors deemed relevant by our board of directors. In addition, our credit facility and the indenture governing our 5.000% Senior Notes restrict our ability to pay dividends.

For equity compensation plan information, refer to Item 12 in Part III of this Annual Report on Form 10-K.

The following line graph compares cumulative total stockholder returns for the five years ended April 30, 2015 for (i) our common stock; (ii) the Russell 2000 Index; (iii) Sturm, Ruger & Company, Inc., which is the most direct comparable company (Peer Group (2) on the graph below); (iv) a peer group consisting of Sturm, Ruger & Company, Inc. TASER International, Inc., Arctic Cat Inc., and National Presto Industries, Inc. (Peer Group (1) on the graph below). The graph assumes an investment of $100 on April 30, 2010. The calculation of cumulative stockholder return on the Russell 2000 Index and the peer groups include reinvestment of dividends, but the calculation of cumulative stockholder return on our common stock does not include reinvestment of dividends because we did not pay any dividends during the measurement period. The performance shown is not necessarily indicative of future performance.

The performance graph above shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. The performance graph above will not be deemed incorporated by reference into any filing of our company under the Securities Act of 1933, as amended, or the Exchange Act.

The consolidated statements of income and cash flows data for the fiscal years ended April 30, 2015, 2014, and 2013 and the consolidated balance sheet data as of April 30, 2015 and 2014 have been derived from our audited consolidated financial statements included elsewhere in this report. The consolidated statements of income/(loss) and cash flows data for the fiscal years ended April 30, 2012 and 2011 and the consolidated balance sheet data as of April 30, 2013, 2012, and 2011 have been derived from our audited consolidated financial statements not included herein. You should read this information in conjunction with our consolidated financial statements, including the related notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this report.

	Fiscal Year Ended April 30,
	2015				2014				2013				2012				2011
	(In thousands, except share, per share, and ratio data)
Net sales	$		551,862		$		626,620		$		587,514		$		411,997		$	342,233
Cost of sales			356,936				367,515				369,442				284,091			237,545
Gross profit			194,926				259,105				218,072				127,906			104,688
Operating expenses			105,298				108,117				85,238				82,990			86,897
Operating income			89,628				150,988				132,834				44,916			17,791
Total other income/(expense), net			(10,896	)			(14,266	)			(4,928	)			(5,901	)		(4,257	)
Income from continuing operations before income taxes			78,732				136,722				127,906				39,015			13,534
Income tax expense			28,905				48,095				46,500				12,582			5,454
Income from continuing operations			49,827				88,627				81,406				26,433			8,080
Discontinued operations:
Loss from operation of discontinued security solutions division			(297	)			(456	)			(3,605	)			(15,945	)		(96,055	)
Income tax benefit			(83	)			(1,134	)			(912	)			(5,617	)		(5,206	)
Income/(loss) from operation of discontinued security solutions division			(214	)			678				(2,693	)			(10,328	)		(90,849	)
Net income/(loss)	$		49,613		$		89,305		$		78,713		$		16,105		$	(82,769	)
Net income/(loss) per share:
Basic - continuing operations	$		0.92		$		1.51		$		1.25		$		0.41		$	0.13
Basic - total	$		0.92		$		1.52		$		1.21		$		0.25		$	(1.37	)
Diluted - continuing operations	$		0.90		$		1.47		$		1.22		$		0.40		$	0.13
Diluted - total	$		0.90		$		1.49		$		1.18		$		0.25		$	(1.30	)
Weighted average number of shares outstanding:
Basic			53,988				58,668				65,155				64,788			60,622
Diluted			55,228				60,114				66,642				67,277			63,621
Depreciation and amortization	$		30,893		$		21,704		$		16,730		$		15,487		$	13,230
Capital expenditures	$		28,199		$		53,282		$		41,421		$		13,770		$	19,837
Year-end financial position:
Working capital	$		116,065		$		146,628		$		146,973		$		107,369		$	87,727
Current ratio			2.4				2.6				2.8				2.3			1.7
Total assets	$		494,992		$		381,503		$		326,989		$		261,674		$	280,028
Current portion of notes payable	$	—			$	—			$	—			$	—			$	30,000
Notes payable, net of current portion	$		175,000		$		100,000		$		43,559		$		50,000		$	50,000

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following management’s discussion and analysis in conjunction with our consolidated financial statements and the related notes thereto contained elsewhere in this report. This discussion contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those set forth under Item 1A, “Risk Factors” and elsewhere in this report.

The results of SWSS, our former security solutions division, are being presented as discontinued operations in the consolidated statements of income for all periods presented. See Note 4 — Discontinued Operations in the notes to consolidated financial statements for additional information regarding these discontinued operations. Unless otherwise indicated, any reference to income statement items in this Management’s Discussion and Analysis of Financial Condition and Results of Operations refers to results from continuing operations.

On May 5, 2014, we completed the DRP Acquisition, which expanded our capabilities to include custom injection molding services, rapid prototyping, and tooling. On December 11, 2014, we completed the BTI Acquisition. BTI, based in Columbia, Missouri, is a leading provider of hunting and shooting accessories and offers innovative, high-quality products under several brands. Results of operations for the fiscal year ended April 30, 2015 include activity for the period subsequent to the respective DRP and BTI Acquisitions. Subsequent to the BTI Acquisition, we began reporting our results of operations in two segments: (1) accessories, representing BTI, and (2) firearms, representing all other operations.

Our fiscal 2015 net sales of $551.9 million represented a decrease of 11.9% from our fiscal 2014 net sales. Net sales for our firearm division decreased by 15.2% to $531.2 million from the prior fiscal year. Our accessories division generated $20.6 million of net sales, or 3.7% of total net sales, following the BTI Acquisition on December 11, 2014. Income from continuing operations for fiscal 2015 was $49.8 million, or $0.90 per fully diluted share, compared with income from continuing operations of $88.6 million, or $1.47 per fully diluted share, for fiscal 2014. Our operating results for fiscal 2015 were affected by numerous factors, including the following:

in the United States and throughout the world. We are one of the largest manufacturers of handguns, modern sporting rifles, and handcuffs in the United States and an active participant in the hunting rifle market. Beginning in fiscal 2015, we are now also a leading provider of shooting, reloading, gunsmithing, and gun cleaning supplies. We sell our products under the Smith & Wesson, M&P, Thompson/Center Arms, Caldwell Shooting Supplies, Wheeler Engineering, Tipton Gun Cleaning Supplies, Frankford Arsenal Reloading Tools, Lockdown Vault Accessories, Hooyman Premium Tree Saws, BOG-POD, and Golden Rod Moisture Control brands.

We evaluate the performance of our business based upon operating profit, which includes net sales, cost of sales, selling and administrative expenses, and certain components of other income and expense. We also track our return on invested capital, and we use adjusted EBITDAS (earnings before interest, taxes, depreciation, amortization, and stock-based compensation expense, excluding certain non-operational items), which is a non-GAAP financial metric, as a supplemental measure of our performance in order to provide investors with an improved understanding of underlying performance trends. We evaluate our various firearm products by such measurements as gross margin per unit produced, units produced per day, revenue by trade channel, and incoming orders per day. We evaluate our various accessories products by such measurements as incoming orders per day, sales by customer, and gross margin by product line.

Firearms have been subject to legislative actions in the past, and the market has reacted to these actions. There was a substantial increase in sales in the early 1990s during the period leading up to and shortly after the enactment of the Brady Bill. In the period from 1992 through 1994, U.S. handgun sales increased by over 50%, as consumers purchased handguns because of the fear of prohibition of handgun ownership. Sales levels then returned to pre-1992 levels and grew at normal industry growth rates until late in calendar 2008, when sales increased in what appears to be fears surrounding crime and terrorism, an economic downturn, and a change in the White House administration. Similar to the increase in 1992, this increase in sales was temporary in nature and sales returned to more normal levels in fiscal 2010. In late calendar 2012 and early calendar 2013, orders again increased rapidly in what appeared to be in response to fears of renewed legislative activity surrounding restrictions on the sale or makeup of firearms. Although we believe the fear of additional legislation around firearm restrictions still exists, the demand for firearms returned to more normal levels during fiscal 2015. We believe that an expanding base of consumers, the variety of products we offer, and the attractive price points we maintain will be important factors to achieve our goal to increase our market share. Based on data from calendar 2014, we estimate that we have a 20% share of the U.S. consumer market for handguns. This compares with approximately 10% in the period just before we acquired Smith & Wesson Corp. in 2001.

The following table sets forth certain information regarding net sales for the fiscal years ended April 30, 2015, 2014, and 2013 (dollars in thousands):

Net sales in our firearm division for fiscal 2015 decreased 15.2% from the prior fiscal year. Although consumer demand for handguns, as reflected in NICS background checks, increased over fiscal 2014, we believe that a portion of the consumer demand was satisfied with excess channel inventory. Thus, our handgun sales decreased $27.5 million, or 6.5%, from the prior fiscal year because

of the decrease in sales of our larger frame M&P branded polymer pistol products, partially offset by increased sales of our small concealed carry polymer pistols and revolvers. Net sales for our long guns decreased $65.1 million, or 41.9%, from the prior fiscal year, primarily because of reduced sales of our modern sporting rifles as a result of lower demand, partially offset by increased lower price point sport rifle sales as well as bolt action and single-shot hunting rifle sales. Other products and services net sales increased by 5.6% from the prior fiscal year, primarily as a result of sales of our injection molding products following the DRP Acquisition in early fiscal 2015, which represented 2.0% of firearm net sales, as well as increased handcuff sales. Firearm net sales were positively impacted by a price increase in January 2014 on a selected number of our products. In total, price increases favorably impacted firearm net sales for fiscal 2015 compared with the prior fiscal year by 0.3% while decreases in the number of units sold impacted firearm net sales by 16.6%. New products, defined as any new SKU not shipped in the prior year, represented 17.4% of firearm net sales for fiscal 2015. Net sales in our accessories division following the BTI Acquisition in December 2014 represented 3.7% of total net sales for fiscal 2015.

Our firearm segment order backlog as of April 30, 2015 was $169.4 million, which was $61.0 million lower than at the end of fiscal 2014. Our accessories segment order backlog as of April 30, 2015 was $9.8 million. We allow orders received that have not yet shipped to be cancelled, with cancellations being more likely in periods following surges in demand. Therefore, our backlog may not be indicative of future sales.

Net sales into our sporting goods distribution channel, excluding Walther products, for fiscal 2015 were $485.1 million, a $70.8 million, or a 12.7%, decrease from sales of $555.9 million for fiscal 2014, primarily as a result of reduced sales of our M&P branded polymer pistols and hunting and modern sporting rifles, partially offset by increased revolver sales and $18.7 million of sales into our sporting goods distribution channel from our accessories division. Excluding our accessories division, net sales into our sporting goods distribution channel were $466.3 million for fiscal 2015, a decrease of 16.1%. Firearm net sales into our professional channels, which exclude Walther products and include international and law enforcement sales, were $64.4 million, a $598,000, or 0.9%, decrease from fiscal 2014 net sales of $65.0 million. Our accessories division generated $1.9 million of international sales into our professional channels during fiscal 2015.

Net sales for fiscal 2014 increased 6.7% over fiscal 2013 as we were able to address increased consumer demand, particularly for our handgun products, which saw a net sales increase of 30.3% over fiscal 2013. Handgun net sales for fiscal 2014 were driven primarily by increased production volumes of our M&P branded polymer pistol products and smaller sized pistols and revolvers. Net sales for our long guns for fiscal 2014 decreased $23.9 million, or 13.3%, from fiscal 2013, primarily because of reduced bolt action rifle sales as we serviced the Thompson/Center Arms bolt action rifle recall and reduced sales of our rimfire M&P rifles caused primarily by ammunition constraints. Those lower rifle sales were offset by increased sales of our centerfire M&P rifles, including an M&P rifle newly introduced in 2013. In addition, during fiscal 2013, we implemented a new pricing and discount structure that improved net sales. Walther net sales in fiscal 2014 were $36.0 million, or 86.4%, less than fiscal 2013, primarily because we ended our exclusive U.S. importer and distributor agreement with Walther at the end of fiscal 2013. Walther net sales for fiscal 2014 related to those products we manufactured on behalf of Walther at our Houlton, Maine facility through an agreement that expired on April 30, 2013. Fiscal 2014 net sales were positively impacted by a price increase in January 2014 on a selected number of our products. In total, increases in pricing favorably impacted fiscal 2014 net sales compared with fiscal 2013 by 1.2% while increases in the number of units sold favorably impacted net sales by 6.6%. New products, defined as any new SKU not shipped in the prior fiscal year, represented 2.2% of total net sales for fiscal 2014.

Net sales into our sporting goods distribution channel for fiscal 2014, excluding Walther products, were $555.9 million, a $73.9 million, or 15.3%, increase over sales of $482.0 million for fiscal 2013, primarily driven by increased handgun sales because of increased production capacity to satisfy demand. Net sales into our professional channels for fiscal 2014, which exclude Walther products and include federal, international, and law enforcement sales, were $65.0 million, a $1.2 million, or 1.9%, increase over fiscal 2013 net sales of $63.8 million. Increased sales into our professional channels were primarily a result of increased handgun sales to law enforcement customers.

The following table sets forth certain information regarding cost of sales and gross profit for the fiscal years ended April 30, 2015, 2014, and 2013 (dollars in thousands):

Gross margin for fiscal 2015 decreased by 6.0 percentage points from the prior fiscal year, primarily as a result of a combination of reduced sales volumes for our higher-margin products, higher spending relative to sales volumes, additional promotional product discounts, and unfavorable manufacturing fixed-cost absorption during fiscal 2015. That additional spending relative to sales volume and unfavorable manufacturing fixed-cost absorption negatively impacted gross margin by 5.4 percentage points, or $67.4 million, and the additional promotional product discounts resulted in a 1.1 percentage point, or $5.9 million, reduction to gross margin. Our price increases made in early calendar 2014 on selected firearm products increased gross margin by 0.2 percentage points, or $1.9 million, and the DRP Acquisition resulted in a favorable impact of 0.3 percentage points on gross margin for fiscal 2015. As a result of the BTI Acquisition, we were required to record $4.2 million of increased cost of goods sold related to the step-up of inventory, which negatively impacted gross margin for that division by 20.1 percentage points and the total company by 0.8 percentage points.

Gross profit for fiscal 2014 increased over fiscal 2013, primarily because of an increase in sales volume, a strategic change in production mix to higher margin polymer pistol products, and capacity increases that more than offset spending increases during fiscal 2014. Overall gross margin increased 4.2 percentage points over fiscal 2013 with improved mix contributing 0.7 percentage points, or $3.7 million, to gross margin because of an increase in the volume of polymer pistols produced, offset by lower margin products, such as Walther products. Improved manufacturing efficiency and absorption because of increased production benefitted gross margin by 3.1 percentage points, or $31.7 million, while reduced spending on promotions improved gross margin by 0.7 percentage points, or $4.6 million. The 2013 change to our pricing and discount structure, combined with the January 2014 price increase on selected products, increased gross margin by 0.6 percentage points, or $6.9 million. Increased manufacturing and volume-related spending negatively impacted gross margin by 1.8 percentage point, or $11.6 million. During fiscal 2013, we incurred $3.0 million of warranty costs associated with the Thompson/Center Arms bolt action rifle recall, which negatively impacted gross margin by 0.5% in that year.

The following table sets forth certain information regarding operating expenses for the fiscal years ended April 30, 2015, 2014, and 2013 (dollars in thousands):

In our firearm division, research and development expenses increased $753,000 from the prior fiscal year, primarily because of increased expenses related to new product development testing materials. Selling and marketing expenses were relatively flat from the prior fiscal year with decreases in salary and benefit costs offset by additional co-op advertising and other advertising and promotional expenses. General and administrative costs decreased $13.0 million from the prior fiscal year and reflected a $7.5 million reduction from eliminating management incentive compensation expense, a $4.8 million reduction in profit sharing expense, a $3.7 million reduction in stock-based compensation expense, and a $3.2 million reduction in professional fees, primarily relating to consulting services for training and post-implementation support of our ERP system, all of which were partially offset by $2.1 million of acquisition-related costs and $1.7 million of additional depreciation expense. General and administrative expenses for our accessories division of $6.3 million included $3.6 million of intangible amortization expense as a result of the BTI Acquisition.

Research and development expenses for fiscal 2014 increased $858,000 compared with fiscal 2013, primarily because of $466,000 additional salary and benefit costs and $209,000 of additional depreciation expense. Selling and marketing expenses increased $3.4 million for fiscal 2014, which was primarily as a result of $2.5 million of additional advertising expense on marketing programs for dealers and $599,000 of additional trade show expenses due to timing. General and administrative costs for fiscal 2014 increased $18.6 million over fiscal 2013, primarily because of $4.2 million of increased salary and benefits expense from additional headcount to support our business growth and management incentive accruals; $4.1 million of additional stock-based compensation expense primarily related to options, RSUs, and PSUs granted to our employees late in fiscal 2013 and early fiscal 2014; $1.5 million of additional profit sharing expense as a result of increased eligible compensation; $1.3 million of additional depreciation expense; and $7.2 million of additional consulting fees primarily associated with the support and employee training for our ERP system.

Operating expenses as a percentage of net sales increased by 2.8%, predominately because of the increased spending for our new dealer incentive program, servicing our ERP system, and additional stock-based compensation expense mentioned above.

The following table sets forth certain information regarding operating income from continuing operations for the fiscal years ended April 30, 2015, 2014, and 2013 (dollars in thousands):

Fiscal 2015 Operating Income from Continuing Operations Compared with Fiscal 2014

For fiscal 2015, operating income from continuing operations declined $61.4 million compared with the prior fiscal year, primarily because of lower sales of our modern sporting rifles and large frame M&P branded polymer pistols and the related operating profit impacts from higher spending, unfavorable manufacturing fixed-cost absorption from reduced net sales, increased advertising and promotional spending, additional depreciation expense from increased capital expenditures, and acquisition-related costs. The loss from operations related to our accessories division was primarily due to the fair value inventory step-up that was expensed during fiscal 2015 as well as the amortization of intangibles recorded as a result of the BTI Acquisition.

Fiscal 2014 Operating Income from Continuing Operations Compared with Fiscal 2013

For fiscal 2014, operating income from continuing operations increased by $18.2 million over fiscal 2013, primarily because of increased sales volume as a result of increased production capacity and the related gross profit, the corresponding impact of improved favorable fixed-cost absorption, increased manufacturing efficiencies, and price increases on selected products, partially offset by a 26.8% increase in operating expenses primarily because of expenses associated with our marketing programs for dealers and trade show expenses, administrative costs relating to the support and employee training for our ERP system, additional stock-based compensation expense primarily from RSUs and PSUs granted to our employees late in fiscal 2013 and early fiscal 2014, salary and benefit costs, and additional depreciation expense from increased capital expenditures.

The following table sets forth certain information regarding other (expense)/income for the fiscal years ended April 30, 2015, 2014, and 2013 (dollars in thousands):

Other expense for fiscal 2014 included a $2.0 million expense related to the resolution of an SEC investigation.

The following table sets forth certain information regarding interest expense for the fiscal years ended April 30, 2015, 2014, and 2013 (dollars in thousands):

Interest expense decreased for fiscal 2015 compared with the prior fiscal year primarily as a result of $4.3 million of bond premium and $795,000 of debt issuance write off costs incurred to retire the then-outstanding 9.5% Senior Notes due 2016, or the 9.5% Senior Notes, during fiscal 2014. Interest expense for fiscal 2015 also included the additional interest expense to service our $75.0 million of 5.000% Senior Notes that were not outstanding during fiscal 2014 as well as amortization of debt issuance costs.

Interest expense increased for fiscal 2014 over fiscal 2013, primarily as a result of servicing our $100.0 million of 5.875% Senior Notes compared with the exchanged $43.6 million of 9.5% Senior Notes in fiscal 2013 as well as the additional bond premium and debt issuance write-off costs we recorded to retire the outstanding 9.5% Senior Notes as described above.

The following table sets forth certain information regarding income tax expense for the fiscal years ended April 30, 2015, 2014, and 2013 (dollars in thousands):

Our income tax expense for fiscal 2015 decreased $19.2 million from the prior fiscal year because of lower operating profit and the effect of changes in temporary differences between book value and tax bases of assets and liabilities. These amounts are reflected in the balance of our net deferred tax liabilities, which totaled $17.5 million, after valuation allowance, as of April 30, 2015. In addition, our effective tax rate for the fiscal year ended April 30, 2015 was 36.71%, which was an increase of 1.53% from the effective tax rate of 35.18% for the fiscal year ended April 30, 2014.

We had federal net operating loss carryforwards amounting to $541,000, $649,000, and $757,000 as of April 30, 2015, 2014, and 2013, respectively. The net operating loss carryforwards as of April 30, 2015 expire in fiscal 2020. Internal Revenue Code Section 382 limits our utilization of these losses to approximately $108,000 for fiscal 2015 and each subsequent year. It is possible that future substantial changes in our ownership could occur that could result in a reduction in some or all of our loss carryforwards pursuant to Internal Revenue Code Section 382. If such an ownership change were to occur, there would be an annual limitation on the remaining tax loss carryforwards that could be utilized. Net deferred taxes decreased from a net asset of $5.7 million as of April 30, 2014 to a net liability of $17.5 million as of April 30, 2015, primarily from the difference between the book versus tax basis of intangible assets recorded as a result of the DRP and BTI Acquisitions during fiscal 2015 as well as the difference between book versus tax depreciation.

There were $16.8 million and $16.2 million of state net operating loss carryforwards as of April 30, 2015 and 2014, respectively. The state net operating loss carryforwards will expire between April 30, 2016 and April 30, 2033. There were $3.0 million and $2.6 million of state tax credit carryforwards as of April 30, 2015 and 2014, respectively. The state tax credit carryforwards will expire between April 30, 2018 and April 30, 2025, or have no expiration date.

As of April 30, 2015, valuation allowances of $700,000 and $1.9 million were provided on our deferred tax assets for state net operating losses, and state tax credits, respectively, that we do not anticipate using prior to their expiration. As of April 30, 2014, valuation allowances of $686,000, and $1.7 million were provided on our deferred tax assets for same state net operating loss carryforwards and state tax credits, respectively, that we do not anticipate using prior to their expiration. No other material valuation allowances were provided on our deferred federal income tax assets as of April 30, 2015 or 2014, as we believe that it is more likely than not that all such assets will be realized.

The following table sets forth certain information regarding income from continuing operations and the related per share data for the fiscal years ended April 30, 2015, 2014, and 2013 (dollars in thousands, except per share data):

Income from continuing operations of $49.8 million for fiscal 2015 was $38.8 million lower than the $88.6 million for the prior fiscal year, primarily because of lower sales volumes, a corresponding decrease in gross profit, unfavorable manufacturing spending, additional advertising and promotional expense, additional depreciation expense from increased capital expenditures, and acquisition-related costs. Income per share from continuing operations for fiscal 2015 was favorably impacted by $0.02 from our open market purchases of our common stock that occurred during fiscal 2015 under our stock repurchase program. There was also a favorable impact to income per share from continuing operations of $0.04 per share as a result of the DRP Acquisition. Income per share from continuing operations for fiscal 2015 was negatively impacted by $0.12 per share as a result of increased cost of goods sold from the fair value inventory step-up, acquisition-related costs, and additional intangible amortization expense as a result of the DRP and BTI Acquisitions completed during fiscal 2015. Excluding the expenses for inventory step-up and amortization of intangible assets, the fiscal 2015 acquisitions had a favorable impact on income per share from continuing operations.

Income from continuing operations of $88.6 million for fiscal 2014 was $7.2 million higher than the $81.4 million recorded for fiscal 2013, primarily because of increased sales volumes and corresponding gross profit, as well as our pricing and discount structure in fiscal 2014 that resulted in improved profitability. Net income per basic and diluted share from continuing operations for fiscal 2014 was favorably impacted as a result of our completed tender offer and open market purchases of our common stock that occurred in December 2012 and August through January 2014 totaling $135.0 million at an average price of $11.01 per share, or 12.3 million shares.

Our principal cash requirements are to finance the growth of our operations, including capital expenditures and any potential acquisitions, and to service our existing debt. Capital expenditures for enhancements to manufacturing flexibility, tooling for new product offerings, and various information technology projects represent important cash needs.

The following table sets forth certain cash flow information for the fiscal years ended April 30, 2015, 2014, and 2013 (dollars in thousands):

Cash flows from operating activities in fiscal 2015 were $114.8 million, or $24.6 million higher than for the prior fiscal year, primarily as a result of the following: a $25.7 million decrease in inventory levels as a result of an initiative to reduce finished parts inventory as well as reduced manufacturing volumes; a decrease in accounts receivable of $11.0 million due to the timing of customer payments and lower sales volumes; a $9.2 million increase in amortization and depreciation expense from increased capital spending and as a result of our acquisitions; and lower income tax payments from lower taxable income. Cash from operating activities was negatively impacted by $7.3 million of reduced accounts payable as a result of reduced manufacturing purchases; a $9.5 million reduction in payroll accruals due to lower profit-related compensation accruals; and a $4.9 million reduction in profit sharing accruals as a result of lower operating profits compared with the prior fiscal year.

Cash flows from operating activities in fiscal 2014 were $90.2 million, or $7.9 million lower than in fiscal 2013, primarily as a result of a $23.7 million increase in inventory levels to accommodate customer demand for our polymer pistol products and increased long gun finished goods inventory due to the bolt action rifle recall and ammunition constraints. Adjustments to book versus tax difference on inventory and deferred compensation increased the overall net deferred tax asset by $1.5 million in fiscal 2014. In addition, accounts receivable increased $9.6 million as a result of increased net sales volume and timing of customer payments. Cash provided by operating activities for fiscal 2014 was favorably impacted by a $10.6 million increase in net income; a $5.0 million increase in amortization and depreciation expense from increased capital spending, particularly spending related to our ERP system; a $4.1 million increase in stock-based compensation expense relating to awards issued to our employees at the end of fiscal 2013 and beginning of fiscal 2014; and a $6.5 million increase in accounts payable due to timing of inventory purchases.

Cash used in investing activities was $186.1 million, or $123.4 million higher for fiscal 2015 compared with the prior fiscal year, primarily as a result of $135.4 million of payments for the BTI Acquisition and to acquire substantially all of the net assets of Hooyman LLC, as discussed in Note 2 to our consolidated financial statements, and a $23.8 million payment for the DRP Acquisition, partially offset by $3.5 million of refunds of deposits for machinery and equipment. We also recorded capital spending of $28.2 million, a reduction of $25.1 million compared with the prior fiscal year. Major capital expenditures in fiscal 2015 primarily related to enhancements to manufacturing flexibility, tooling for new product offerings, and various information technology projects.

Cash used for investing activities increased by $29.7 million for fiscal 2014 compared with fiscal 2013 as a result of increased capital spending of $11.9 million during fiscal 2014 and $9.3 million of deposits for machinery and equipment. Also impacting the increase in cash used in investing activities over fiscal 2013 was $7.5 million of proceeds received for the sale of our discontinued operations and $1.0 million of proceeds from the sale of our land and building located in Rochester, New Hampshire in fiscal 2013.

Cash provided by financing activities was $44.6 million for fiscal 2015 compared with cash used in financing activities of $59.2 million for fiscal 2014. Cash provided by financing activities was primarily a result of $75.0 million of proceeds related to the issuance of our 5.000% Senior Notes, partially offset by our completed $30.0 million stock repurchase program. We also paid $2.4 million of debt issuance costs related to the 5.000% Senior Notes issuance as discussed in Note 5 to our consolidated financial statements.

Cash used in financing activities was $59.2 million for fiscal 2014 compared with $21.4 million for fiscal 2013, primarily as a result of our completed tender offer and stock repurchases as described below. The cash used in financing activities was offset by $56.4 million of net proceeds related to the issuance of new 5.875% Senior Notes in exchange for our 9.5% Senior Notes. We paid $4.3 million of interest and $3.8 million of debt issuance costs relating to this exchange.

During the past three fiscal years, our board of directors authorized the repurchase of $165.0 million of our common stock through multiple stock repurchase programs, all of which were completed as of April 30, 2015. Since fiscal 2013, we repurchased 12.9 million shares of our common stock in the open market for $149.4 million and 1.4 million shares of our common stock pursuant to a tender offer for $15.6 million utilizing cash on hand.

On November 25, 2014, we partially exercised an accordion feature on our line of credit to increase it by $50.0 million to $125.0 million, and on December 11, 2014, we borrowed $100.0 million on our expanded line of credit to fund the BTI Acquisition. We repaid the entire $100.0 million of borrowings under our line of credit during the fourth quarter of fiscal 2015. On April 13, 2015, we exercised the remaining $50.0 million expansion under the accordion feature of our credit agreement to increase the line of credit available to us to $175.0 million. As of April 30, 2015, we had a $175.0 million revolving line of credit, of which we had no borrowings, and open letters of credit aggregating $1.1 million. As discussed below, in June 2015, we entered into a new credit agreement, which consists of a revolving line of credit and term loan that replaced the existing $175.0 million credit facility.

During fiscal 2014, we sold an aggregate of $47.1 million of 5.875% Senior Notes to various qualified institutional buyers in exchange for approximately $42.8 million of our then-outstanding 9.5% Senior Notes held by existing holders of such notes. We also issued an additional $52.9 million of new 5.875% Senior Notes for cash. The remaining $712,000 of 9.5% Senior Notes outstanding after the exchange noted above were extinguished via legal defeasance during fiscal 2014. As a result of this transaction, our indebtedness increased by $56.4 million and our debt service requirements increased by $1.8 million per annum. The 5.875% Senior Notes were sold pursuant to the terms and conditions of an indenture and exchange and purchase agreements. The 5.875% Senior Notes bore interest at a rate of 5.875% per annum payable on June 15 and December 15 of each year, beginning on December 15, 2013. We recorded $4.3 million of interest expense relating to the exchange and defeasance of our 9.5% Senior Notes and amortized $795,000 of debt issue costs related to the exchange and defeasance during fiscal 2014. As discussed below, the 5.875% Senior Notes were redeemed on June 15, 2015 with proceeds from a term loan we entered into as part of our new credit facility.

During fiscal 2015, we issued an aggregate of $75.0 million of 5.000% Senior Notes due 2018, or the 5.000% Senior Notes, to various institutional investors pursuant to the terms and conditions of an indenture, or the 5.000% Senior Notes Indenture, and collectively with the indenture governing the 5.875% Senior Notes, the Senior Notes Indentures, and purchase agreements. The 5.000% Senior Notes bear interest at a rate of 5.000% per annum payable on January 15 and July 15 of each year, beginning on January 15, 2015.

At any time prior to July 15, 2016, we may, at our option (a) upon not less than 30 nor more than 60 days’ prior notice, redeem all or a portion of the 5.000% Senior Notes at the redemption price of 100% of the principal amount of the 5.000% Senior Notes, plus an applicable premium, plus accrued and unpaid interest as of the redemption date; or (b) redeem up to 35% of the aggregate principal amount of the 5.000% Senior Notes with the net cash proceeds of one or more equity offerings at a redemption price of 105.000% of the principal amount of the 5.000% Senior Notes, plus accrued and unpaid interest as of the redemption date; provided, that in the case of the foregoing clause, at least 65% of the aggregate original principal amount of the 5.000% Senior Notes remains outstanding, and the redemption occurs within 60 days after the closing of the equity offering. On and after July 15, 2016, we may, at our option, upon not less than 30 nor more than 60 days’ prior notice, redeem all or a portion of the 5.000% Senior Notes at the redemption price of (a) 102.500% of the principal amount of the 5.000% Senior Notes to be redeemed, if redeemed during the 12-month period beginning on July 15, 2016; or (b) 100% of the principal amount of the 5.000% Senior Notes to be redeemed, if redeemed during the 12-month period beginning on July 15, 2017, plus, in either case, accrued and unpaid interest on the 5.000% Senior Notes as of the applicable redemption date. Subject to certain restrictions and conditions, we may be required to make an offer to repurchase the 5.000% Senior Notes from the holders of the 5.000% Senior Notes in connection with a change of control or disposition of assets. If not redeemed by us or repaid pursuant to the holders’ right to require repurchase, the 5.000% Senior Notes mature on July 15, 2018.

The 5.000% Senior Notes are general, unsecured obligations of our company. The 5.000% Senior Notes Indenture contains certain affirmative and negative covenants, including limitations on restricted payments (such as share repurchases, dividends, and early payment of indebtedness), limitations on indebtedness, limitations on the sale of assets, and limitations on liens. Payments that would otherwise be characterized as restricted payments are permitted under the 5.000% Senior Notes Indenture in an amount not to exceed 50% of our consolidated net income for the period from the issue date to the date of the restricted payment, provided that at the time of making such payments, (a) no default has occurred or would result from the making of such payments, and (b) we are able to satisfy the debt incurrence test under the 5.000% Senior Notes Indenture, or the 5.000% Senior Notes Lifetime Aggregate Limit. In addition, the 5.000% Senior Notes Indenture provides for other exceptions to the restricted payments covenant, each of which are independent of the 5.000% Senior Notes Lifetime Aggregate Limit. Among such exceptions are (i) the ability to make share repurchases each fiscal year in an amount not to exceed the lesser of (A) $50.0 million in any fiscal year or (B) 75.0% of our consolidated net income for the previous four consecutive published fiscal quarters prior to the date of the determination of such consolidated net income, and (ii) share repurchases over the life of the 5.000% Senior Notes in an aggregate amount not to exceed $75.0 million.

The limitation on indebtedness in the 5.000% Senior Notes Indenture is only applicable at such time that the consolidated coverage ratio (as set forth in the 5.000% Senior Notes Indenture) for us and our restricted subsidiaries is less than 3.00 to 1.00. In general, as set forth in the 5.000% Senior Notes Indenture, the consolidated coverage ratio is determined by comparing our prior four quarters’ consolidated EBITDA (earnings before interest, taxes, depreciation, and amortization) to our consolidated interest expense.

On June 15, 2015, we entered into a new credit agreement, or the Credit Agreement, which consists of a $175.0 million revolving line of credit and a $105.0 million term loan, which both mature on June 15, 2020. We used the proceeds from the term loan to redeem the entire $100.0 million outstanding principal balance of our 5.875% Senior Notes, plus accrued and unpaid interest to the redemption date, in June 2015. See Note 5 – Notes Payable in the notes to the consolidated financial statements for additional information regarding the new credit facility.

The Credit Agreement contains financial covenants relating to maintaining maximum leverage and minimum debt service coverage. The Senior Notes Indentures contain a financial covenant relating to times interest earned. We were in compliance with all debt covenants as of April 30, 2015. Proceeds under the new revolving line of credit will be used for general corporate purposes.

Based upon our current working capital position, current operating plans, the repurchase of $100.0 million of our 5.875% Senior Notes, and expected business conditions, we believe that our existing capital resources and credit facilities will be adequate to fund our operations, including our outstanding debt and other commitments, for the next 12 months, apart from any major acquisitions.

Our future capital requirements will depend on many factors, including net sales, the timing and extent of spending to support product development efforts, the expansion of sales and marketing activities, the timing of introductions of new products and enhancements to existing products, the costs to ensure access to adequate manufacturing capacity, and any acquisitions or strategic investments that we may determine to make. Further equity or debt financing may not be available to us on acceptable terms or at all. If sufficient funds are not available or are not available on acceptable terms, our ability to take advantage of unexpected business opportunities or to respond to competitive pressures could be limited or severely constrained.

We do not believe that inflation had a material impact on us during fiscal 2015, 2014, or 2013.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the financial statement dates and the reported amounts of revenue and expenses during the reporting periods. Our significant estimates include accruals for warranty, product liability, workers’ compensation expense, excess and obsolete inventory, allowance for doubtful accounts, income tax expense, including deferred tax asset valuation, and forfeiture rates on stock-based awards. Actual results could differ from those estimates.

For our firearm and accessories products, we recognize revenue when the following four basic criteria have been met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been provided; (3) the fee is fixed or determinable; and (4) collection is reasonably assured.

Product sales account for most of our revenue. We recognize revenue from product sales when the earnings process is complete and the risks and rewards of ownership have transferred to the customer, which is generally upon shipment but could be delayed until the receipt of customer acceptance. We also provide tooling, forging, heat treating, finishing, plating, and engineering support services to customers; we recognize this revenue when accepted by the customer, if applicable, when no further contingencies or material performance obligations exist, and when collectability is reasonably assured, thereby earning us the right to receive and retain payments for services performed and billed.

We evaluate the recoverability of long-lived assets, or asset groups, whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. When such evaluations indicate that the related future undiscounted cash flows are not sufficient to recover the carrying values of the assets, such carrying values are reduced to fair value and this adjusted carrying value becomes the asset’s new cost basis. We determine fair value primarily using future anticipated cash flows that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset, or asset group, discounted using an interest rate commensurate with the risk involved.

We have significant long-lived tangible and intangible assets, which are susceptible to valuation adjustments as a result of changes in various factors or conditions. The most significant long-lived tangible and intangible assets are property, plant, and equipment, patents, trademarks, and trade names. We amortize all finite-lived intangible assets either on a straight-line basis or based upon patterns in which we expect to utilize the economic benefits of such assets. We initially determine the values of intangible assets by a risk-adjusted, discounted cash flow approach. We assess the potential impairment of identifiable intangible assets and fixed assets whenever events or changes in circumstances indicate that the carrying values may not be recoverable and at least annually. Factors we consider important, which could trigger an impairment of such assets, include the following:

Future adverse changes in these or other unforeseeable factors could result in an impairment charge that could materially impact future results of operations and financial position in the reporting period identified. No impairment charges were taken for continuing operations in fiscal 2015, 2014, or 2013 based on the review of long-lived assets.

In accordance with Accounting Standards Codification, or ASC, 350, Intangibles-Goodwill and Other, we test intangible assets with indefinite lives for impairment on an annual basis on February 1 and between annual tests if indicators of potential impairment exist. The impairment test compares the fair value of the reporting unit to its carrying amount, including intangible assets with indefinite lives, to assess whether impairment is present. We have reviewed the provisions of ASC 280-10, Segment Reporting Topic, with respect to the criteria necessary to evaluate the number of reporting units that exist. Based on our review of ASC 280-10-50, we have determined that we operate our continuing operations in two reporting units: one for our Springfield, Massachusetts; Houlton, Maine; and Deep River, Connecticut facilities and a second for our Columbia, Missouri facility. As of April 30, 2015, we recorded

$75.4 million of goodwill, of which, $13.8 million was recorded at the time of our DRP Acquisition and $61.6 million was recorded at the time of our BTI Acquisition.

We periodically review long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of those assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted cash flows to the recorded carrying value for the asset. If impairment is indicated, the asset is written down to its estimated fair value based on a discounted cash flow analysis. No impairment charges were taken for continuing operations in fiscal 2015, 2014, or 2013 based on the review of long-lived assets.

We utilize an income approach, with discounted cash flows, to estimate the fair value of each reporting unit. We selected this method because we believe that it most appropriately measures our income producing assets. We considered using the market approach and the cost approach, but concluded that they were not appropriate in valuing our reporting units given the lack of relevant and available market comparisons. The income approach is based on the projected cash flows that are discounted to their present value using discount rates that consider the timing and risk of the forecasted cash flows. We believe that this approach is appropriate because it provides a fair value estimate based upon the reporting unit’s expected long-term operating cash performance. This approach also mitigates the impact of the cyclical trends that occur in our industry. Fair value is estimated using internally-developed forecasts and assumptions. The discount rate used is the average estimated value of a market participant’s cost of capital and debt, derived using customary market metrics. Other significant assumptions include terminal value margin rates, future capital expenditures, and changes in future working capital requirements. We also compare and reconcile our overall fair value to our market capitalization. While there are inherent uncertainties related to the assumptions used and to our application of these assumptions to this analysis, we believe that the income approach provides a reasonable estimate of the fair value of our reporting units. The foregoing assumptions were consistent with our long-term performance, with limited exceptions. We believe that our future investments for capital expenditures as a percent of revenue will decline in future years because of our improved utilization resulting from lean initiatives, and we believe that days sales outstanding will decline with any increase in revenues. We also have assumed that our markets have not contracted for the long term through the current economic downturn; however, it may be a number of years before they fully recover. These assumptions could deviate materially from actual results.

Significant judgments and estimates are involved in determining the useful lives of our long-lived assets, determining what reporting units exist, and assessing when events or circumstances would require an interim impairment analysis of goodwill or other long-lived assets to be performed. Changes in our organization or our management reporting structure, as well as other events and circumstances, including technological advances, increased competition, and changing economic or market conditions, could result in (a) shorter estimated useful lives, (b) additional reporting units, which may require alternative methods of estimating fair values or greater disaggregation or aggregation in our analysis by reporting unit, and (c) other changes in previous assumptions or estimates. A change in the weighted average cost of capital, for example, could materially change the valuation and, if increased, could cause an impairment. In turn, this could have an additional impact on our consolidated financial statements through accelerated amortization and impairment charges.

We value firearm inventories, consisting primarily of finished firearms, firearm components, and related products, as well as our accessories inventories, at the lower of cost, using the first-in, first-out, or FIFO, method, or market. An allowance for potential non-saleable inventory due to excess stock or obsolescence is based upon a detailed review of inventory components, past history, and expected future usage.

We generally provide a limited one year warranty and a lifetime service policy to the original purchaser of our new firearm products. We provide for estimated warranty obligations in the period in which we recognize the related revenue. We quantify and record an estimate for warranty-related costs based on our actual historical claims experience and current repair costs. We make adjustments to accruals as warranty claims data and historical experience warrant. Should we experience actual claims and repair costs that are higher than the estimated claims and repair costs used to calculate the provision, our operating results for the period or periods in which such returns or additional costs materialize would be adversely impacted.

We extend credit to our domestic customers and some foreign distributors based on their financial condition. We sometimes offer discounts for early payment on invoices. When we believe the extension of credit is not advisable, we rely on either a prepayment or a letter of credit. We write off balances deemed uncollectible by us against our allowance for doubtful accounts. We

estimate our allowance for doubtful accounts through current past due balances, knowledge of our customers’ financial situations, and past payment history.

The provision for income taxes is based upon income reported in the accompanying consolidated financial statements. As required by ASC 740-10, Accounting for Income Taxes, we record tax assets or liabilities for the temporary differences between the book value and tax bases in assets and liabilities. In assessing the realization of our deferred income tax assets, we consider whether it is more likely than not that the deferred income tax assets will be realized. The ultimate realization of our deferred income tax assets depends upon generating future taxable income during the periods in which our temporary differences become deductible and before our net operating loss carryforwards expire. We evaluate the recoverability of our deferred income tax assets by assessing the need for a valuation allowance on a quarterly basis. If we determine that it is more likely than not that our deferred income tax assets will not be recovered, we establish a valuation allowance against some or all of our deferred income tax assets. Recording a valuation allowance or reversing a valuation allowance could have a significant effect on our future results of operations and financial position. We are unaware of any recent or expected future changes in tax laws that would have a material impact on our financial statements. We measure these deferred taxes by applying tax rates expected to be in place when the deferred items become subject to income tax or deductible for income tax purposes.

We account for stock-based employee compensation arrangements in accordance with the provisions of ASC 718 by calculating compensation cost on the date of the grant using the Black-Scholes method for stock options and purchases under the ESPP, grant date fair value for RSUs, and the Monte-Carlo method for market-condition PSUs. We then amortize compensation expense over the vesting period. We estimate the fair value of each stock option or purchase under the ESPP on the date of the grant using the Black-Scholes option pricing model discounted by an estimated forfeiture rate (using the risk-free interest rate, expected term, expected volatility, and dividend yield variables). We estimate the fair value of each RSU award on the date of the grant using grant date fair value discounted by an estimated forfeiture rate and, when applicable, a factor related to any holding period. We estimate the fair value of each PSU award on the date of the grant using the Monte-Carlo model (using the grant date market value of our common stock and the Russell 2000 Index, or RUT, Expected volatilities of our common stock and the RUT, correlation coefficient between our common stock and the RUT, risk-free interest rate, and dividend yield).

The nature and impact of recent accounting pronouncements is discussed in Note 3 to our consolidated financial statements, which is incorporated herein by reference.

The following table sets forth a summary of our material contractual obligations and commercial commitments as of April 30, 2015 (in thousands):

			Less Than								More Than
	Total		1 Year		1-3 Years			3-5 Years			5 Years

Long-term debt obligations	$	193,657	$	9,625	$		108,251	$		75,781	$	—
Capital lease obligation		2,089		596			1,493		—			—
Operating lease obligations		15,794		2,446			3,894			3,544			5,910
Purchase obligations		69,860		69,860		—			—			—
Unrecognized tax benefits		91		91		—			—			—

Total obligations	$	281,491	$	82,618	$		113,638	$		79,325	$		5,910

During fiscal 2015, we issued an aggregate of $75.0 million of 5.000% Senior Notes to various institutional investors. Included in the above long-term debt obligation is $12.0 million of contractually obligated interest payments pertaining to the $75.0 million remaining balance of our 5.000% Senior Notes, which represents interest payments through July 15, 2018.

During fiscal 2014, we sold an aggregate of $100.0 million of 5.875% Senior Notes to various qualified institutional buyers in exchange for approximately $42.8 million of our 9.5% Senior Notes held by the holders of such notes and the purchase by certain of such holders of additional 5.875% Senior Notes for cash. Included in the above long-term debt obligation is $6.6 million of contractually obligated interest payments pertaining to the $100.0 million balance of our 5.875% Senior Notes, which represents interest payments through June 15, 2017. On June 15, 2015, we entered into a new credit facility, which consists of a $175.0 million revolving line of credit and a $105.0 million term loan, which both mature on June 15, 2020. We used the proceeds from the term loan

to redeem the entire $100.0 million outstanding principal balance of our 5.875% Senior Notes, plus accrued interest and unpaid interest to the redemption date, in June 2015.

We do not have any transactions, arrangements, or other relationships with unconsolidated entities that are reasonably likely to affect our liquidity or capital resources. We have no special purpose or limited purpose entities that provide off-balance sheet financing, liquidity, or market or credit risk support or that engage in leasing, hedging, research and development services, or other relationships that expose us to liability that is not reflected on the face of the financial statements.

We do not enter into any market risk sensitive instruments for trading purposes. Our principal market risk relates to the variable interest rate associated with our credit facility, which bore interest at a variable rate equal to LIBOR or prime, at our election, plus an applicable margin based on our consolidated leverage ratio. As of April 30, 2015, there were no borrowings outstanding. Had there been borrowings, they would have borne an interest rate of 4.25% per annum if we had selected the prime rate option and a range of 2.18% to 2.28% per annum if we had selected the LIBOR rate option. Additionally, we incur market risk related to changes in the value of the euro relative to the U.S. dollar. We had annual inventory purchases of $950,000 from a European supplier. A portion of our gross sales during the three months and fiscal year ended April 30, 2015 ($460,000 and $2.2 million, respectively, representing approximately 0.25% and 0.40%, respectively, of aggregate gross sales) came from sales of goods that were purchased, in whole or in part, from a European manufacturer, in euros. This exposes us to risk from foreign exchange rate fluctuations. At the end of fiscal 2013, we ended our exclusive U.S. importer and distributor agreement with this European supplier; however, we will continue to purchase limited products from such supplier through the end of fiscal 2017. Because of the minimal purchases planned to this European supplier in fiscal 2016, a 10% drop in the value of the U.S. dollar in relation to the euro would not be material to our business.

Reference is made to the financial statements, the notes thereto, and the report thereon, commencing on page F-1 of this report, which financial statements, notes, and report are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer, as of April 30, 2015, concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There was no change in our internal control over financial reporting that occurred during our fourth fiscal quarter of 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered

relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, misstatements, errors, and instances of fraud, if any, within our company have been or will be prevented or detected. Further, internal controls may become inadequate as a result of changes in conditions, or through the deterioration of the degree of compliance with policies or procedures.

Management of Smith & Wesson Holding Corporation (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. With the participation of the Chief Executive Officer and the Chief Financial Officer, management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of April 30, 2015 as required by Rule 13a-15(c) under the Securities Exchange Act of 1934. The Company utilized the criteria and framework established by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in Internal Control — Integrated Framework (2013) in performing this assessment. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of April 30, 2015. Our evaluation of the effectiveness of the design and operation of our disclosure controls and procedures excluded our subsidiary, BTI, which was acquired on December 11, 2014. For the year ended April 30, 2015, BTI had 3.7% of net sales, 3.6% of total assets (excluding BTI goodwill and intangible assets, which was integrated into our systems and control environment), and 0.7% of net operating income (excluding BTI amortization of intangible assets, which was integrated into our systems and control environment) that were included in our consolidated financial statements. In accordance with guidance issued by the SEC, we are allowed to exclude acquisitions from our assessment of internal controls over financial reporting during the first year subsequent to the acquisition while integrating the acquired operations.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

The Company’s independent registered public accounting firm, Deloitte & Touche LLP, has audited the effectiveness of the Company’s internal control over financial reporting as of April 30, 2015 as stated in their report dated June 22, 2015, on page F-2 of this Annual Report on Form 10-K.

The information required by this Item relating to our directors and corporate governance is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation 14A of the Exchange Act for our 2015 Annual Meeting of Stockholders. The information required by this Item relating to our executive officers is included in Item 1, “Business — Executive Officers” of this report.

The information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation 14A of the Exchange Act for our 2015 Annual Meeting of Stockholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

(1) Consolidated Financial Statements are listed in the Index to Consolidated Financial Statements on page F-1 of this report.

(2) Financial Statement Schedules: Schedule II — Valuation and Qualifying Accounts for the years ended April 30, 2015, 2014, and 2013 is set forth on page F-32 of this report.

Exhibit Number		Exhibit

2.9		Stock Purchase and Sale Agreement, dated November 25, 2014, by and among the Registrant, Clearview Battenfeld Acquisition Company LLC, and the Members named therein(1)

3.1		Amended and Restated Articles of Incorporation(2)

3.3(b)		Amended and Restated Bylaws(3)

3.9(a)		Certificate of Withdrawal of Certificate of Designation(4)

4.1		Form of Common Stock Certificate(5)

4.30		Indenture, dated as of June 17, 2014, among the Registrant and The Bank of New York Mellon Trust Company, N.A., as Trustee(6)

4.30(a)		First Supplemental Indenture, dated as of June 26, 2014, among the Registrant and The Bank of New York Mellon Trust Company, N.A., as Trustee(7)

10.24(a)*		Amended and Restated 2004 Incentive Stock Plan(8)


10.28*		Amendments to 2004 Incentive Stock Plan(9)

10.51**		Agreement with Respect to Defense of Smith & Wesson: Firearms Litigation, dated as of November 11, 2004(10)


10.56*		Form of Restricted Stock Unit Award Agreement to the 2004 Incentive Stock Plan(11)

10.72*		Form of Indemnity Agreement entered into with the following directors and executive officers: As of June 29, 2009 with Barry M. Monheit, Michael F. Golden, Robert L. Scott, John B. Furman, Mitch A. Saltz, I. Marie Wadecki, and Jeffrey D. Buchanan; as of November 2009 with P. James Debney; as of July 2011 with Robert H. Brust; as of December 14, 2011 with Mark P. Smith; and as of April 24, 2013 with Robert J. Cicero(12)

10.83(a)*		Amended and Restated Severance and Change in Control Agreement, executed December 8, 2011 as of January 3, 2011, by and between the Registrant and Jeffrey D. Buchanan(13)

10.91(a)*		Amended and Restated Employment Agreement, executed December 8, 2011 as of September 26, 2011, between P. James Debney and Smith & Wesson Holding Corporation(13)

10.95*		Letter of Amendment, dated September 9, 2011, between Jeffrey D. Buchanan and the Registrant(13)

10.96*		Letter of Amendment, dated September 9, 2011, between P. James Debney and Smith & Wesson Holding Corporation(13)


10.98*		Form of Non-Qualified Stock Option Award Grant Notice and Agreement to the 2004 Incentive Stock Plan(13)

10.99*		Form of Restricted Stock Unit Award Grant Notice and Agreement to the 2004 Incentive Stock Plan(13)

10.100*		Amended and Restated 2011 Employee Stock Purchase Plan(14)

10.101*		Form of Performance-Based Restricted Stock Unit Award Grant Notice and Agreement to the 2004 Incentive Stock Plan for awards made beginning in April 2012(14)

Exhibit Number		Exhibit

10.102*		Form of Time-Based Restricted Stock Unit Award Grant Notice and Agreement to the 2004 Incentive Stock Plan for awards made beginning in April 2012(14)

10.104		Credit Agreement, dated as of August 15, 2014, among the Registrant and Smith & Wesson Corp., as Borrowers, the Subsidiaries of the Borrowers party thereto, as the Guarantors, TD Bank, N.A., as the Administrative Agent, the other lenders party thereto from time to time, and TD Securities (USA) LLC, as Sole Lead Arranger and Sole Bookrunner, including all exhibits thereto(15)

10.104(a)		First Amendment to Credit Agreement, dated as of November 25, 2014, by and among the Registrant, Smith & Wesson Corp., the guarantors, the lenders, and TD Bank, N.A. as Administrative Agent amd Swingline Lender(1)

10.104(b)		Second Amendment to Credit Agreement, dated as of April 13, 2015, by and among the Registrant, Smith & Wesson Corp., the guarantors, the lenders, and TD Bank, N.A. as Administrative Agent and Swingline Lender(16)


10.106		Master Letter of Credit Agreement, dated as of August 15, 2014, between TD Bank, N.A. and the Registrant and Smith & Wesson Corp., as modified by the letter agreement, dated as of August 15, 2014, addressed to the Registrant and its Subsidiaries from T.D. Bank, N.A.(15)

10.106(a)		First Amendment to Master Letter of Credit Agreement, dated as of June 15, 2015, between TD Bank, N.A. and the Registrant and Smith & Wesson Corp.

10.107*		Smith & Wesson Holding Corporation Executive Severance Pay Plan(17)

10.108*		Adoption Agreement to the Smith & Wesson Nonqualified Supplemental Deferred Compensation Plan(18)

10.109*		Smith & Wesson Nonqualified Supplemental Deferred Compensation Plan Document(18)

10.110*		2013 Incentive Stock Plan(19)

10.111*		Form of Restricted Stock Unit Award Grant Notice and Agreement to the 2014 Incentive Stock Plan for awards made beginning in April 2014(20)

10.111(a)*		Form of Restricted Stock Unit Grant Notice and Agreement to the 2013 Incentive Stock Plan for awards made beginning in September 2014

10.111(b)*		Form of Restricted Stock Unit Award Grant Notice and Agreement to the 2013 Incentive Stock Plan for awards made beginning in April 2015

10.112*		Form of Performance Stock Unit Award Grant Notice and Agreement to the 2013 Incentive Stock Plan for awards made beginning in April 2014(20)

10.112(a)*		Form of Performance Stock Unit Award Grant Notice and Agreement to the 2013 Incentive Stock Plan for awards made beginning in April 2015

10.113		Credit Agreement, dated as of June 15, 2015, among the Registrant and Smith & Wesson Corp., as Borrowers, the Subsidiaries of the Borrowers party thereto, as the guarantors, TD Bank, N.A., as the Administrative Agent, the other lenders party thereto from time to time, TD Securities (USA) LLC, Branch Banking and Trust Company, Regions Business Capital, and Wells Fargo Securities, LLC, as Joint Lead Arrangers and Joint Bookrunners, and Branch Banking and Trust Company, Regions Bank, and Wells Fargo Securities, LLC, as Co-Syndication Agents, including all exhibits thereto

16		Letter of BDO USA, LLP to the Securities and Exchange Commission dated June 25, 2014(21)

21.1		Subsidiaries of the Registrant

23.1		Consent of Deloitte & Touche LLP, an Independent Registered Public Accounting Firm

23.2		Consent of BDO USA, LLP, an Independent Registered Public Accounting Firm

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.

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 date indicated.

We have audited the accompanying consolidated balance sheet of Smith & Wesson Holding Corporation and subsidiaries (the "Company") as of April 30, 2015, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for the year then ended. Our audit also included the financial statement schedule listed in the accompanying index at Item 15. We also have audited the Company's internal control over financial reporting as of April 30, 2015, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment, a portion of the internal control over financial reporting at Battenfeld Technology, Inc. (“BTI”), which was acquired on December 11, 2014, and whose financial statements constitute approximately 3.7% of consolidated revenue, 3.6% of total assets (excluding BTI goodwill and intangible assets which were integrated into the Company’s systems and control environment) and 0.7% of net operating income (excluding BTI amortization of intangible assets which was integrated into the Company’s systems and control environment) of the consolidated financial statements amounts as of and for the year ended April 30, 2015. Accordingly, our audit did not include the portion of internal control over financial reporting at BTI that is excluded from management’s assessment. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audit of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of April 30, 2015, and the results of their operations and their cash flows for the year ended April 30, 2015, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of April 30, 2015, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have audited the accompanying consolidated balance sheet of Smith & Wesson Holding Corporation and subsidiaries (the “Company”) as of April 30, 2014 and the related consolidated statements of income and comprehensive income, changes in stockholders’ equity, and cash flows for each of the two years in the period ended April 30, 2014. In connection with our audits of the consolidated financial statements, we have also audited the financial statement schedule listed in the accompanying index. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedule. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Smith & Wesson Holding Corporation and subsidiaries at April 30, 2014, and the results of their operations and their cash flows for each of the two years in the period ended April 30, 2014, in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

	As of:
	April 30, 2015			April 30, 2014
	(In thousands, except par value and share data)
ASSETS
Current assets:
Cash and cash equivalents	$	42,222		$	68,860
Accounts receivable, net of allowance for doubtful accounts of $722 on April 30, 2015 and $844 on April 30, 2014		55,280			55,890
Inventories		76,895			86,742
Prepaid expenses and other current assets		6,306			5,958
Deferred income taxes		16,373			17,094
Income tax receivable		—			4,627
Total current assets		197,076			239,171
Property, plant, and equipment, net		133,844			120,440
Intangibles, net		73,768			3,425
Goodwill		75,426			—
Other assets		14,878			18,467
	$	494,992		$	381,503
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	32,360		$	37,688
Accrued expenses		19,021			17,107
Accrued payroll		7,556			15,816
Accrued income taxes		4,224			—
Accrued taxes other than income		5,281			5,359
Accrued profit sharing		6,165			11,060
Accrued warranty		6,404			5,513
Total current liabilities		81,011			92,543
Deferred income taxes		33,905			11,418
Notes payable		175,000			100,000
Other non-current liabilities		10,706			10,719
Total liabilities		300,622			214,680
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, 69,625,081 shares issued and 54,062,459 shares outstanding on April 30, 2015 and 68,809,986 shares issued and 55,352,679 shares outstanding on April 30, 2014		70			69
Additional paid-in capital		219,198			211,225
Retained earnings		147,352			97,739
Accumulated other comprehensive income		73			73
Treasury stock, at cost (15,562,622 shares on April 30, 2015 and 13,457,307 shares on April 30, 2014)		(172,323	)		(142,283	)
Total stockholders’ equity		194,370			166,823
	$	494,992		$	381,503

The accompanying notes are an integral part of these consolidated financial statements.

	For the Years Ended April 30,
	2015			2014			2013
	(In thousands, except per share data)
Net sales	$	551,862		$	626,620		$	587,514
Cost of sales		356,936			367,515			369,442
Gross profit		194,926			259,105			218,072
Operating expenses:
Research and development		6,943			5,648			4,790
Selling and marketing		36,033			33,515			30,112
General and administrative		62,322			68,954			50,336
Total operating expenses		105,298			108,117			85,238
Operating income		89,628			150,988			132,834
Other (expense)/income:
Other (expense)/income, net		39			(2,154	)		39
Interest income		395			149			814
Interest expense		(11,330	)		(12,261	)		(5,781	)
Total other (expense)/income, net		(10,896	)		(14,266	)		(4,928	)
Income from continuing operations before income taxes		78,732			136,722			127,906
Income tax expense		28,905			48,095			46,500
Income from continuing operations		49,827			88,627			81,406
Discontinued operations:
Loss from operations of discontinued security solutions division		(297	)		(456	)		(3,605	)
Income tax benefit		(83	)		(1,134	)		(912	)
(Loss)/income from discontinued operations		(214	)		678			(2,693	)
Net income	$	49,613		$	89,305		$	78,713
Net income per share:
Basic - continuing operations	$	0.92		$	1.51			1.25
Basic - total	$	0.92		$	1.52			1.21
Diluted - continuing operations	$	0.90		$	1.47			1.22
Diluted - total	$	0.90		$	1.49			1.18
Weighted average number of common shares outstanding:
Basic		53,988			58,668			65,155
Diluted		55,228			60,114			66,642

The accompanying notes are an integral part of these consolidated financial statements.

								Retained			Accumulated
	Common				Additional			Earnings			Other							Total
	Stock				Paid-In			(Accumulated			Comprehensive		Treasury Stock					Stockholders’
(In thousands)	Shares		Amount		Capital			Deficit)			Income		Shares		Amount			Equity
Balance at April 30, 2012		66,512	$	67	$	189,379		$	(70,279	)	$	73		1,200	$	(6,396	)	$	112,844
Exercise of employee stock options		847		1		3,472		—			—		—		—				3,473
Repurchase of treasury stock	—		—		—			—			—			2,100		(20,000	)		(20,000	)
Stock-based compensation	—		—			4,118		—			—		—		—				4,118
Excess tax benefit for stock-based compensation	—		—			1,025		—			—		—		—				1,025
Shares issued under employee stock purchase plan	185		—			1,335		—			—		—		—				1,335
Issuance of common stock under restricted stock unit awards, net of shares surrendered		53	—			(209	)	—			—		—		—				(209	)
Net income	—		—		—				78,713		—		—		—				78,713
Balance at April 30, 2013		67,597		68		199,120			8,434			73		3,300		(26,396	)		181,299
Exercise of employee stock options	732			1		1,998		—			—		—		—				1,999
Repurchase of treasury stock	—		—		—			—			—			10,158		(115,887	)		(115,887	)
Stock-based compensation	—		—			8,212		—			—		—		—				8,212
Excess tax benefit for stock-based compensation	—		—			2,647		—			—		—		—				2,647
Shares issued under employee stock purchase plan	176		—			1,316		—			—		—		—				1,316
Issuance of common stock under restricted stock unit awards, net of shares surrendered		305	—			(2,068	)	—			—		—		—				(2,068	)
Net income	—		—		—				89,305		—		—		—				89,305
Balance at April 30, 2014		68,810		69		211,225			97,739			73		13,458		(142,283	)		166,823
Exercise of employee stock options	366			1		1,813			—			—		—		—			1,814
Repurchase of common stock		—		—		—			—			—		2,105		(30,040	)		(30,040	)
Stock-based compensation		—		—		5,808			—			—		—		—			5,808
Excess tax benefit for stock-based compensation		—		—		771			—			—		—		—			771
Shares issued under employee stock purchase plan	163			—		1,289			—			—		—		—			1,289
Issuance of common stock under restricted stock unit awards, net of shares surrendered	286			—		(1,708	)		—			—		—		—			(1,708	)
Net income		—		—	—				49,613			—		—		—			49,613
Balance at April 30, 2015		69,625	$	70	$	219,198		$	147,352		$	73		15,563	$	(172,323	)	$	194,370

The accompanying notes are an integral part of these consolidated financial statements.

	For the Years Ended April 30,
	2015			2014			2013
	(In thousands)
Cash flows from operating activities:
Net income	$	49,613		$	89,305		$	78,713
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		30,893			21,704			16,730
Loss on sale of discontinued operations	—			—				1,222
Loss on sale/disposition of assets		267			150			315
Provision for/(recoveries of) losses on accounts receivable		122			(214	)		720
Change in disposal group assets and liabilities	—			—				(1,215	)
Deferred income taxes		2,341			(1,463	)		4,009
Stock-based compensation expense		5,808			8,212			4,073
Changes in operating assets and liabilities (net effect of acquisitions):
Accounts receivable		10,983			(9,588	)		1,505
Inventories		25,662			(23,744	)		(7,702	)
Prepaid expenses and other current assets		(569	)		(1,856	)		(285	)
Income tax receivable/(payable)		8,965			(1,534	)		(3,384	)
Accounts payable		(7,345	)		6,468			2,602
Accrued payroll		(9,525	)		2,720			3,489
Accrued taxes other than income		(86	)		10			1,079
Accrued profit sharing		(4,895	)		1,473			1,547
Accrued expenses		1,447			(477	)		(5,125	)
Accrued warranty		891			(244	)		408
Other assets		(348	)		(356	)		(1,930	)
Other non-current liabilities		583			(360	)		1,327
Net cash provided by operating activities		114,807			90,206			98,098
Cash flows from investing activities:
Payments for the net assets of Tri-Town Precision Plastics, Inc.		(23,805	)		—			—
Payments to acquire Battenfeld Technologies, Inc., net of cash acquired		(135,437	)		—			—
Proceeds from sale of the net assets of SWSS LLC	—			—				7,500
Refunds of/(payments for) deposits on machinery and equipment		1,431			(9,269	)	—
Receipts from note receivable		81			77			73
Payments to acquire patents and software		(392	)		(243	)		(102	)
Proceeds from sale of property and equipment		264			101			1,040
Payments to acquire property and equipment		(28,199	)		(53,282	)		(41,421	)
Net cash used in investing activities		(186,057	)		(62,616	)		(32,910	)
Cash flows from financing activities:
Proceeds from loans and notes payable		175,000			101,584			1,753
Cash paid for debt issue costs		(2,558	)		(3,791	)		—
Payments on capital lease obligation		(596	)		(596	)		(600	)
Payments on notes payable		(100,000	)		(45,143	)		(8,195	)
Proceeds from Economic Development Incentive Program		640			722		—
Payments to acquire treasury stock		(30,040	)		(115,887	)		(20,000	)
Proceeds from exercise of options to acquire common stock, including employee stock purchase plan		3,103			3,315			4,808
Payroll taxes paid as a result of restricted stock unit withholdings		(1,708	)		(2,068	)		(209	)
Excess tax benefit of stock-based compensation		771			2,647			1,025
Net cash provided by/(used in) financing activities		44,612			(59,217	)		(21,418	)
Net (decrease)/increase in cash and cash equivalents		(26,638	)		(31,627	)		43,770
Cash and cash equivalents, beginning of period		68,860			100,487			56,717
Cash and cash equivalents, end of period	$	42,222		$	68,860		$	100,487
Supplemental disclosure of cash flow information
Cash paid for:
Interest	$	8,617		$	7,688		$	5,295
Income taxes		16,926			48,778			44,087

The accompanying notes are an integral part of these consolidated financial statements.

Organization — We are one of the world’s leading manufacturers of firearms. We manufacture a wide array of handguns (including revolvers and pistols), long guns (including modern sporting rifles, bolt action rifles, and single shot rifles), handcuffs, and firearm-related products and accessories for sale to a wide variety of customers, including gun enthusiasts, collectors, hunters, sportsmen, competitive shooters, individuals desiring home and personal protection, law enforcement and security agencies and officers, and military agencies in the United States and throughout the world. We are one of the largest manufacturers of handguns, modern sporting rifles, and handcuffs in the United States and an active participant in the hunting rifle market. Beginning in 2015, we are now also a leading provider of shooting, reloading, gunsmithing, and gun cleaning supplies. We sell our products under the Smith & Wesson, M&P, Thompson/Center Arms, Caldwell Shooting Supplies, Wheeler Engineering, Tipton Gun Cleaning Supplies, Frankford Arsenal Reloading Tools, Lockdown Vault Accessories, Hooyman Premium Tree Saws, BOG-POD, and Golden Rod Moisture Control brands.

On May 5, 2014, we acquired substantially all of the net assets of Tri-Town Precision Plastics, Inc., or TTPP, which we refer to as the DRP Acquisition. See Note 2 – Acquisitions below for more information regarding this transaction.

These acquisitions have been accounted for in accordance with ASC 805-20, Business Combinations, and accordingly, the results of operations from the acquired businesses have been included in our consolidated financial statements following the acquisition dates.

On May 5, 2014, we acquired substantially all of the net assets of TTPP for $22.8 million, plus a $1.0 million working capital adjustment, for a total purchase price of $23.8 million, utilizing cash on hand. TTPP was a provider of custom injection molding services, rapid prototyping, and tooling, and was a long-standing supplier of polymer frames and related components for a large number of our firearms, including nearly all of our M&P models. The DRP Acquisition of TTPP’s custom polymer injection molding capabilities was designed to vertically integrate a key component of our manufacturing operations and provide us with increased flexibility within our supply chain.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date, as well as measurement period adjustments (in thousands):

	May 5, 2014		Measurement
	(As Initially		Period			May 5, 2014
	Reported)		Adjustments			(As Adjusted)
Accounts receivable	$	2,614	$	5		$	2,619
Inventories		2,430		460			2,890
Total current assets		5,044		465			5,509
Property, plant, and equipment		4,243		155			4,398
Goodwill		15,183		(1,413	)		13,770
Intangibles assets:
Customer relationships	—			840			840
Order backlog	—			150			150
Other assets		8	—				8
Total assets acquired		24,478		197			24,675
Accounts payable		358		12			370
Accrued expenses		25		114			139
Accrued payroll	—			361			361
Total liabilities assumed		383		487			870
	$	24,095	$	(290	)	$	23,805

General and administrative costs include $440,000 and $471,000 of acquisition-related costs incurred during the years ended April 30, 2015 and 2014, respectively, related to the DRP Acquisition.

The goodwill that was recorded relating to the DRP Acquisition results from expected synergies related to vertically integrating a key component of our manufacturing operations as well as increased flexibility within our supply chain. This goodwill will be deductible for tax purposes and amortized over 15 years and is included in our firearm segment.

We amortize customer relationships in proportion to expected yearly revenue generated from the customer lists acquired or products to be sold. We amortize order backlog over the contract lives as they are executed. The following are the identifiable intangible assets acquired (in thousands) and their respective weighted average lives:

Pro forma results of operations assuming that this acquisition had occurred on May 1, 2013 are not required because of the immaterial impact on our consolidated financial statements for all periods presented.

On December 11, 2014, we acquired all of the issued and outstanding stock of BTI for $130.5 million, plus a $3.1 million working capital adjustment, for a total purchase price of $133.6 million, pursuant to a Stock Purchase and Sale Agreement. The BTI Acquisition was financed using a combination of existing cash balances and cash from a $100.0 million draw on our line of credit, which was expanded to $125.0 million as a result of our partial exercise of the accordion feature on that line of credit.

BTI, based in Columbia, Missouri, is a leading provider of hunting and shooting accessories, which develops, produces, and delivers innovative, high-quality products under several brands.

On January 9, 2015, we acquired substantially all of the net assets of Hooyman LLC, a manufacturer of extendable tree saws designed for the hunting and outdoor industry, for $1.9 million utilizing cash on hand. We have relocated its operations to our Columbia, Missouri facility.

The aggregate purchase price of these acquisitions, including the working capital adjustments, was $135.5 million.

We are finalizing the valuation of the assets acquired and liabilities assumed. Therefore, the fair values set forth below are subject to further adjustments as we obtain additional information during the measurement period, which will not exceed 12 months from the acquisition date. Adjustments in the purchase price allocation may require a recasting of the amounts allocated to goodwill retroactive to the period in which the acquisition occurred.

The following table summarizes the estimated allocation of the purchase price for BTI at the acquisition date, which includes the net assets from the Hooyman acquisition, as well as measurement period adjustments to date (in thousands):

	December 11, 2014		Measurement
	(As Initially		Period				December 11, 2014
	Reported)		Adjustments				(As Adjusted)

Cash	$	24	$	—			$	24
Accounts receivable		7,873			3			7,876
Inventories		12,819			107			12,926
Income tax receivable		393			(279	)		114
Other current assets		563		—				563
Property, plant, and equipment		2,826			(318	)		2,508
Intangibles		73,550		—				73,550
Goodwill		62,142			(486	)		61,656
Total assets acquired		160,190			(973	)		159,217
Accounts payable		1,647			2			1,649
Accrued expenses		326			1			327
Accrued payroll		904		—				904
Accrued taxes other than income		9		—				9
Deferred income taxes		21,128			(261	)		20,867
Total liabilities assumed		24,014			(258	)		23,756
	$	136,176	$		(715	)	$	135,461

General and administrative costs include $1.7 million of acquisition-related costs incurred during the year ended April 30, 2015 related to the BTI Acquisition.

The goodwill that was recorded relating to the BTI Acquisition results from our ability to expand our prescence in the firearm accessories market and leverage BTI’s broad portfolio of hunting and shooting accessories brands. Previously acquired goodwill of $12.0 million will be deductible for tax purposes over its remaining useful life. The remaining goodwill recorded as a result of the BTI Acquisition is not expected to be deductible for tax purposes. All of the goodwill recorded as result of the BTI Acquisition is allocated to our accessories segment.

We amortize intangible assets in proportion to expected yearly revenue generated from the intangibles that were acquired. We amortize order backlog over the contract lives as they are executed. The following are the identifiable intangible assets acquired (in thousands) and their respective weighted average lives:

Additionally, the following table reflects the unaudited pro forma results of operations assuming that the BTI Acquisition had occurred on May 1, 2013 (in thousands, except per share data):

The unaudited pro forma income from continuing operations for the years ended April 30, 2015 and 2014 have been adjusted to reflect increased cost of goods sold from the fair value step-up in inventory, which is expensed over the first inventory cycle, and the amortization of intangibles and order backlog incurred as if the acquisition had occurred on May 1, 2013. The unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the actual results that would have been achieved had the BTI Acquisition occurred as of May 1, 2013 or the results that may be achieved in future periods.

Use of Estimates — The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the financial statement dates and the reported amounts of revenue and expenses during the reporting periods. Our significant estimates include accruals for warranty, excess and obsolete inventory, allowance for doubtful accounts, and intangible asset valuation. Actual results could differ from those estimates.

Principles of Consolidation — The accompanying consolidated financial statements include the accounts of Smith & Wesson Holding Corporation and its wholly owned subsidiaries, including Smith & Wesson Corp., Thompson/Center Arms Company, LLC, Deep River Plastics, LLC, BTI, currently reported as our newly formed accessories division, and SWSS LLC, formerly Smith & Wesson Security Solutions, Inc., or SWSS, our former security solutions division. There was no variance in the fiscal year-end of our wholly owned subsidiary, Smith & Wesson Corp., and our reported fiscal year-end of April 30, 2015 and 2014. We had a two-day variance for our fiscal year-end of Smith & Wesson Corp. to our reported fiscal year-end in April 2013. The variance in fiscal 2013 did not create any material difference in the consolidated financial statements as presented. In our opinion, all adjustments, which include only normal recurring adjustments necessary to fairly present the financial position, results of operations, changes in stockholders’ equity, and cash flows at April 30, 2015 and 2014 and for the periods presented, have been included. All significant intercompany accounts and transactions have been eliminated in consolidation.

SWSS is being presented as discontinued operations in the consolidated statements of income for all periods presented. See Note 4 for additional information regarding these discontinued operations. Unless stated otherwise, any reference to the consolidated statements of income items in the notes to the consolidated financial statements refers to results from continuing operations.

Fair Value of Financial Instruments — Unless otherwise indicated, the fair values of all reported assets and liabilities, which represent financial instruments not held for trading purposes, approximate the carrying values of such amounts because of their short-term nature or market rates of interest.

Cash and Cash Equivalents — We consider all highly liquid investments purchased with original maturities of three months or less at the date of acquisition to be cash equivalents. We maintain our cash in bank deposit accounts that, at times, may exceed federally insured limits. We have not experienced any losses in such accounts. As of April 30, 2015, our accounts exceeded federally insured limits by $42.6 million.

Trade Receivables — We extend credit to our domestic customers and some foreign distributors based on their financial condition. We sometimes offer discounts for early payment on invoices. When we believe the extension of credit is not advisable, we rely on either a prepayment or a letter of credit. We write off balances deemed uncollectible by us against our allowance for doubtful accounts. We estimate our allowance for doubtful accounts through current past due balances, knowledge of our customers’ financial situations, and past payment history.

Concentrations of Credit Risk — Financial instruments that potentially subject us to concentration of credit risk consist principally of cash, cash equivalents, and trade receivables. We place our cash and cash equivalents in overnight U.S. government securities. Concentrations of credit risk with respect to trade receivables are limited by the large number of customers comprising our

customer base and their geographic and business dispersion. We perform ongoing credit evaluations of our customers’ financial condition and generally do not require collateral.

For our fiscal year ended April 30, 2015, we did not have any customers that accounted for more than 10% of net sales or 10% of accounts receivable as of April 30, 2015. However, one of our customers accounted for approximately 13.4% and 11.6% of our net sales for the fiscal years ended April 30, 2014 and 2013, respectively, as well as $11.7 million, or 20.1%, of accounts receivable as of April 30, 2014.

Inventories — We value firearm inventories, consisting primarily of finished firearms, finished firearm components, as well as related products, as well as our accessories inventories, at the lower of cost, using the first-in, first-out, or FIFO method, or market. An allowance for potential non-saleable inventory due to excess stock or obsolescence is based upon a detailed review of inventory components, past history, and expected future usage.

Property, Plant, and Equipment — We record property, plant, and equipment, consisting of land, building, building improvements, machinery, equipment, software, hardware, furniture, and fixtures, at cost and depreciate them using the straight-line method over their estimated useful lives. We charge expenditures for maintenance and repairs to earnings as incurred, and we capitalize additions, renewals, and betterments. Upon the retirement or other disposition of property and equipment, we remove the related cost and accumulated depreciation from the respective accounts and include any gain or loss in operations. A summary of the estimated useful lives is as follows:

We include tooling, dies, and fixtures as part of machinery and equipment and depreciate them over a period not exceeding five years.

Intangible Assets — We record intangible assets at cost or based on the fair value of assets acquired. Intangible assets consist of developed technology, customer relationships, trademarks, trade names, and patents. We amortize intangible assets over their estimated useful lives or in proportion to expected yearly revenue generated from the intangibles that were acquired.

Revenue Recognition — We recognize revenue when the following four basic criteria have been met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been provided; (3) the fee is fixed or determinable; and (4) collection is reasonably assured.

Segment Information — We have two reportable segments: one for our firearm division and a second for our accessories division. See Note 19 – Segment Reporting for more information regarding our segments.

Research and Development — We engage in both internal and external research and development, or R&D, in order to remain competitive and to exploit possible untapped market opportunities. We approve prospective R&D projects after analysis of the cost and benefits associated with the potential product. Costs in R&D expense include, among other items, salaries, materials, utilities, and administrative costs.

Earnings/(Loss) per Share — We calculate basic and diluted earnings/(loss) per common share in accordance with the provisions of ASC 260-10, Earnings Per Share. Basic earnings/(loss) per common share equals net income/(loss) divided by the weighted average number of common shares outstanding during the period. Diluted earnings/(loss) per common share equals net income/(loss) divided by the weighted average number of common shares outstanding during the period, including the effect of outstanding stock options and other stock-based instruments if their effect is dilutive.

The following table provides a reconciliation of the net income/(loss) amounts and weighted average number of common and common equivalent shares used to determine basic and diluted earnings/(loss) per common share (in thousands, except per share data):

	For the Year Ended April 30,
	2015			2014		2013
Net income/(loss)
Income from continuing operations	$	49,827		$	88,627	$	81,406
(Loss)/income from discontinued operations		(214	)		678		(2,693	)
Net income	$	49,613		$	89,305	$	78,713
Weighted average shares outstanding - Basic		53,988			58,668		65,155
Dilutive effect of stock option and award plans		1,240			1,446		1,487
Diluted shares outstanding		55,228			60,114		66,642
Earnings per share - Basic
Income from continuing operations	$	0.92		$	1.51	$	1.25
(Loss)/income from discontinued operations	$	(0.00	)	$	0.01	$	(0.04	)
Net income	$	0.92		$	1.52	$	1.21
Earnings per share - Diluted
Income from continuing operations	$	0.90		$	1.47	$	1.22
(Loss)/income from discontinued operations	$	(0.00	)	$	0.01	$	(0.04	)
Net income	$	0.90		$	1.49	$	1.18

For fiscal 2015, 2014, and 2013, 73,546, 77,622, and 246,635 shares of common stock, respectively, issuable upon the exercise of stock options were excluded from the computation of diluted income per share because the effect would be antidilutive.

Valuation of Long-lived Tangible and Intangible Assets — We evaluate the recoverability of long-lived assets, or asset groups, whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. When such evaluations indicate that the related future undiscounted cash flows are not sufficient to recover the carrying values of the assets, such carrying values are reduced to fair value and this adjusted carrying value becomes the asset’s new cost basis. We determine fair value primarily using future anticipated cash flows that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset, or asset group, discounted using an interest rate commensurate with the risk involved.

We have significant long-lived tangible and intangible assets, which are susceptible to valuation adjustments as a result of changes in various factors or conditions. The most significant long-lived tangible and intangible assets, other than goodwill, are property, plant, and equipment, developed technology, customer relationships, patents, trademarks, and trade names. We amortize all finite-lived intangible assets either on a straight-line basis or based upon patterns in which we expect to utilize the economic benefits of such assets. We initially determine the values of intangible assets by a risk-adjusted, discounted cash flow approach. We assess the potential impairment of identifiable intangible assets and fixed assets whenever events or changes in circumstances indicate that the carrying values may not be recoverable and at least annually. Factors we consider important, which could trigger an impairment of such assets, include the following:

Future adverse changes in these or other unforeseeable factors could result in an impairment charge that could materially impact future results of operations and financial position in the reporting period identified. No impairment charges were recorded for continuing operations in fiscal 2015, 2014, or 2013 based on the review of long-lived assets.

In accordance with ASC 350, Intangibles-Goodwill and Other, we test intangible assets with indefinite lives for impairment on an annual basis on February 1 and between annual tests if indicators of potential impairment exist. The impairment test compares the fair value of the reporting unit to its carrying amount, including intangible assets with indefinite lives, to assess whether impairment is present. We have reviewed the provisions of ASC 280-10, Segment Reporting Topic, with respect to the criteria necessary to evaluate

the number of reporting units that exist. Based on our review of ASC 280-10-50, we have determined that we operate our continuing operations in two reporting units: one for our Springfield, Massachusetts; Houlton, Maine; and Deep River, Connecticut facilities and a second for our Columbia, Missouri facility. As of April 30, 2015, we had $75.4 million of goodwill, of which $13.8 million related to our DRP Acquisition and $61.6 million related to our BTI Acquisition.

We periodically review long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of those assets are no longer appropriate. We base each impairment test on a comparison of the undiscounted cash flows to the recorded carrying value for the asset. If impairment is indicated, the asset is written down to its estimated fair value based on a discounted cash flow analysis. No impairment charges were taken for continuing operations in fiscal 2015, 2014, or 2013 based on the review of long-lived assets.

Income Taxes — The provision for income taxes is based upon income reported in the accompanying consolidated financial statements. As required by ASC 740-10, Accounting for Income Taxes, we record tax assets or liabilities for the temporary differences between the book value and tax bases in assets and liabilities. In assessing the realization of our deferred income tax assets, we consider whether it is more likely than not that the deferred income tax assets will be realized. The ultimate realization of our deferred income tax assets depends upon generating future taxable income during the periods in which our temporary differences become deductible and before our net operating loss carryforwards expire. We evaluate the recoverability of our deferred income tax assets by assessing the need for a valuation allowance on a quarterly basis. If we determine that it is more likely than not that our deferred income tax assets will not be recovered, we establish a valuation allowance against some or all of our deferred income tax assets. Recording a valuation allowance or reversing a valuation allowance could have a significant effect on our future results of operations and financial position. We measure these deferred taxes by applying tax rates expected to be in place when the deferred items become subject to income tax or deductible for income tax purposes.

Warranty — We generally provide a limited one-year warranty and a lifetime service policy to the original purchaser of our new firearm products. We provide for estimated warranty obligations in the period in which we recognize the related revenue. We quantify and record an estimate for warranty-related costs based on our actual historical claims experience and current repair costs. We make adjustments to accruals as warranty claims data and historical experience warrant. Should we experience actual claims and repair costs that are higher than the estimated claims and repair costs used to calculate the provision, our operating results for the period or periods in which such returns or additional costs materialize would be adversely impacted.

On August 22, 2013, we issued a safety alert related to all M&P Shield products manufactured prior to August 19, 2013. On June 13, 2013, we initiated a recall of all Thompson/Center Arms bolt action rifles manufactured since the products’ introduction in 2007. As of April 30, 2015, we had incurred $5.5 million in recall and safety alert costs, and we estimated the remaining cost to be $3.2 million, which is recorded in the accrued warranty balance. Warranty expense for the fiscal years ended April 30, 2015, 2014, and 2013 amounted to $4.3 million, $3.6 million, and $7.1 million, respectively.

The following table sets forth the change in accrued warranties, a portion of which is recorded as a non-current liability, in the fiscal years ended April 30, 2015, 2014, and 2013 (in thousands):

Sales and Promotional Related Expenses — We present product sales in our consolidated financial statements, net of customer promotional program costs that depend upon the volume of sales, which amounted to $6.9 million, $1.6 million, and $5.1 million for the fiscal years ended April 30, 2015, 2014, and 2013, respectively. We have a co-op advertising program at the retail level. We expensed costs amounting to $2.8 million, $1.9 million, and $1.5 million for fiscal 2015, 2014, and 2013, respectively, as selling and marketing expenses.

Shipping and Handling — In the accompanying consolidated financial statements, we included amounts billed to customers for shipping and handling in net sales. We included our costs relating to shipping and handling charges, including inbound freight charges, internal transfer costs, and the other costs of our distribution network, in cost of goods sold.

Insurance Reserves — We are self-insured through retentions or deductibles for the majority of our workers’ compensation, automobile, general liability, product liability, and group health insurance programs. Self-insurance amounts vary up to $3.0 million per occurrence. We record our liability for estimated premiums and incurred losses in the accompanying consolidated financial statements on an undiscounted basis.

Recently Issued Accounting Standard — In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), or ASU 2014-09. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for interim reporting periods beginning October 1, 2017. Early adoption is not permitted. We are currently evaluating the impact, if any, that ASU 2014-09 will have on our consolidated financial statements.

During fiscal 2010, we acquired all of the outstanding capital stock of SWSS. During fiscal 2013, we committed to a plan to divest the assets, liabilities, and ongoing operations of our security solutions division. The operating results of SWSS relate primarily to legal fees associated with retained liabilities and are classified as discontinued operations. We present discontinued operations as a separate line in the consolidated statements of income for all periods presented.

Credit Facilities — On July 15, 2014, we entered into a $75.0 million unsecured credit facility. On November 25, 2014, we partially exercised the accordion feature of the credit facility to increase it by $50.0 million to $125.0 million in connection with the BTI Acquisition. On April 13, 2015, we exercised the remaining $50.0 million expansion under the accordion feature to increase the line of credit available to us to $175.0 million. The credit facility was scheduled to mature on December 15, 2016 and bore interest at a variable rate equal to LIBOR or prime, at our election, plus an applicable margin based on our consolidated leverage ratio. As of April 30, 2015, there were no borrowings outstanding. Had there been borrowings, they would have borne an interest rate of 4.00% per annum if we had selected the prime rate option and a range of 2.18% to 2.28% per annum if we had selected the LIBOR rate option. As discussed below, we entered into a new credit agreement, which consists of a revolving line of credit and term loan that replaced the $175.0 million credit facility.

New Credit Facility – On June 15, 2015, we entered into a new unsecured credit facility with TD Bank, N.A. and other lenders, or the Lenders, which included a $175.0 million revolving line of credit, or the Revolving Line, and a $105.0 million term loan, or the

Term Loan. The Revolving Line provides for availability until June 15, 2020 for general corporate purposes and borrowings bear interest at a variable rate equal to LIBOR or prime plus an applicable margin based on our consolidated leverage ratio, at our election. The Term Loan, which bears interest at a variable rate, was entered into for the purpose of redeeming the 5.875% Senior Notes due 2017, or the 5.875% Senior Notes. We are required to obtain interest rate protection through a swap contract covering not less than 75% of the aggregate outstanding principal balance. The Term Loan requires principal payments of 6.000% per annum paid quarterly. Any remaining outstanding amount on the maturity date of June 15, 2020 will be due in full. Concurrent with closing the Term Loan, the 5.875% Senior Notes were redeemed for a 2.9375% call premium, plus accrued and unpaid interest at the redemption date. As part of the redemption, in fiscal 2016, we wrote off $1.7 million of debt-issue costs related to the 5.875% Senior Notes.

9.5% Senior Notes — During fiscal 2011, we issued an aggregate of $50.0 million of 9.5% senior notes due 2016, or the 9.5% Senior Notes. During fiscal 2013, we repurchased a total of $6.4 million of these notes and, during the fiscal year ended April 30, 2014, retired the remaining notes, as described below.

5.875% Senior Notes — During fiscal 2014, we sold an aggregate of $47.1 million of 5.875% Senior Notes to various qualified institutional buyers in exchange for approximately $42.8 million of our then-outstanding 9.5% Senior Notes held by existing holders of such notes. We also issued an additional $52.9 million of new 5.875% Senior Notes for cash. The remaining $712,000 of 9.5% Senior Notes outstanding after the exchange noted above were extinguished via legal defeasance during fiscal 2014. The 5.875% Senior Notes were sold pursuant to the terms and conditions of an indenture, or the 5.875% Senior Notes Indenture, and exchange and purchase agreements. The 5.875% Senior Notes bore interest at a rate of 5.875% per annum payable on June 15 and December 15 of each year, beginning on December 15, 2013. We recorded $4.3 million of interest expense related to bond premium and $795,000 of debt issuance write-off costs relating to the exchange and defeasance of the 9.5% Senior notes during fiscal 2014. As discussed below, the 5.875% Senior Notes were redeemed on June 15, 2015 with proceeds from a term loan we entered into as part of our new credit facility.

5.000% Senior Notes – During fiscal 2015, we issued an aggregate of $75.0 million of 5.000% Senior Notes due 2018, or the 5.000% Senior Notes, to various institutional investors pursuant to the terms and conditions of an indenture, or the 5.000% Senior Notes Indenture, and collectively with the 5.875% Senior Notes Indenture, the Senior Notes Indentures, and purchase agreements. The 5.000% Senior Notes bear interest at a rate of 5.000% per annum payable on January 15 and July 15 of each year, beginning on January 15, 2015. We incurred $2.3 million of debt issuance costs related to the issuance of the 5.000% Senior Notes.

At any time prior to July 15, 2016, we may, at our option (a) upon not less than 30 nor more than 60 days’ prior notice, redeem all or a portion of the 5.000% Senior Notes at the redemption price of 100% of the principal amount of the 5.000% Senior Notes, plus an applicable premium, plus accrued and unpaid interest as of the redemption date; or (b) redeem up to 35% of the aggregate principal amount of the 5.000% Senior Notes with the net cash proceeds of one or more equity offerings at a redemption price of 105.000% of the principal amount of the 5.000% Senior Notes, plus accrued and unpaid interest as of the redemption date; provided, that in the case of the foregoing clause, at least 65% of the aggregate original principal amount of the 5.000% Senior Notes remains outstanding, and the redemption occurs within 60 days after the closing of the equity offering. On and after July 15, 2016, we may, at our option, upon not less than 30 nor more than 60 days’ prior notice, redeem all or a portion of the 5.000% Senior Notes at a redemption price of (a) 102.500% of the principal amount of the 5.000% Senior Notes to be redeemed, if redeemed during the 12-month period beginning on July 15, 2016; or (b) 100% of the principal amount of the 5.000% Senior Notes to be redeemed, if redeemed during the 12-month period beginning on July 15, 2017, plus, in either case, accrued and unpaid interest on the 5.000% Senior Notes as of the applicable redemption date. Subject to certain restrictions and conditions, we may be required to make an offer to repurchase the 5.000% Senior Notes from the holders of the 5.000% Senior Notes in connection with a change of control or disposition of assets. If not redeemed by us or repaid pursuant to the holders’ right to require repurchase, the 5.000% Senior Notes mature on July 15, 2018.

consolidated net income, and (ii) share repurchases over the life of the 5.000% Senior Notes in an aggregate amount not to exceed $75.0 million.

The limitation on indebtedness in the Senior Notes Indentures is only applicable at such time that the consolidated coverage ratio (as set forth in the Senior Notes Indentures) for us and our restricted subsidiaries is less than 3.00 to 1.00. In general, as set forth in the Senior Notes Indentures, the consolidated coverage ratio is determined by comparing our prior four quarters’ consolidated EBITDA (earnings before interest, taxes, depreciation, and amortization) to our consolidated interest expense. The carrying value of our 5.875% Senior Notes and 5.000% Senior Notes as of April 30, 2015 approximates fair value in considering Level 2 inputs within the hierarchy.

Debt Issuance Costs — We recorded, in other assets, $2.6 million and $3.8 million of debt issuance costs for the fiscal years ended April 30, 2015 and 2014, respectively. These costs are being amortized to expense over the life of the credit facility or the Senior Notes Indentures. In total, we amortized $1.5 million, $1.9 million, and $680,000 to interest expense for all debt issuance costs in fiscal 2015, 2014, and 2013, respectively, including write-offs related to extinguishment.

As of April 30, 2015, our revolving credit facility contained financial covenants relating to maintaining maximum leverage and minimum debt service coverage. The Senior Notes Indentures contain a financial covenant relating to times interest earned.

Letters of Credit — At April 30, 2015, we had outstanding letters of credit aggregating $1.0 million.

The following table sets forth the breakdown of net sales for the fiscal years ended April 30, 2015, 2014, and 2013, respectively (in thousands):

All of our firearms are currently sold under our Smith & Wesson, M&P, and Thompson/Center Arms brands. In addition, through our Performance Center, we offer small, specialized, and enhanced models sold under the Smith & Wesson and M&P brands. Depending upon the product or service, our firearm customers include distributors; federal, state, and municipal law enforcement agencies and officers; government and military agencies; businesses; retailers; and consumers. We sell accessories under our Caldwell Shooting Supplies, Wheeler Engineering, Tipton Gun Cleaning Supplies, Frankford Arsenal Reloading Tools, Lockdown Vault Accessories, Hooyman Premium Tree Saws, BOG-POD, and Golden Rod Moisture Control brands. Our accessories customers are generally businesses, retailers, and consumers.

We sell our products worldwide. The following table sets forth the breakdown of export net sales included in the above table. Our export net sales accounted for 4%, 3%, and 3% of total net sales for the fiscal years ended April 30, 2015, 2014, and 2013, respectively (in thousands):

We had no assets relating to our firearm business located outside the United States during any of the periods presented; we own tooling relating to our accessories business that is located at various suppliers in Asia.

We expense advertising costs, primarily consisting of magazine advertisements, printed materials, television advertisements, and our new retail sales associate rewards program, either as incurred or upon the first occurrence of the advertising. Advertising expense, included in selling and marketing expenses, for continuing operations for the fiscal years ended April 30, 2015, 2014, and 2013, amounted to $20.2 million, $19.5 million, and $15.1 million, respectively.

The following table summarizes property, plant, and equipment as of April 30, 2015 and 2014 (in thousands):

Depreciation of tangible assets and amortization of software expense from continuing operations amounted to $24.8 million, $19.1 million, and $15.4 million for the fiscal years ended April 30, 2015, 2014, and 2013, respectively.

The following table summarizes depreciation and amortization expense for continuing operations, which includes amortization of intangibles and debt financing costs, by line item for the fiscal years ended April 30, 2015, 2014, and 2013 (in thousands):

The following table sets forth a summary of inventories, net of reserves, stated at lower of cost or market, as of April 30, 2015 and 2014 (in thousands):

The following table presents a summary of intangible assets for the year ended April 30, 2015 and 2014 (in thousands):

				Weighted Average						Weighted Average
				Life						Life
	April 30, 2015 (a)			(in years)		April 30, 2014				(in years)
Developed technology	$	16,630			5.2	$	—			—
Customer relationships		28,260			6.1			1,740			9.1
Patents, trademarks, and tradenames		36,378			5.3			4,986			5.5
		81,268						6,726
Less: Accumulated amortization		(7,950	)					(3,603	)
		73,318						3,123
Patents in progress		450						302
Total intangible assets, net	$	73,768				$		3,425

(a) The primary increase in intangible assets over the prior year is as a result of the BTI Acquisition.

Amortization expense, excluding amortization of deferred financing costs, amounted to $4.6 million, $645,000, and $639,000 for the fiscal years ended April 30, 2015, 2014, and 2013, respectively.

The following table sets forth other accrued expenses as of April 30, 2015 and 2014 (in thousands):

We follow the provisions of ASC 820-10, Fair Value Measurements and Disclosures Topic, for our financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value under GAAP and requires expanded disclosures regarding fair value measurements. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.

Financial assets and liabilities recorded on the accompanying consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1 — Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that we have the ability to access at the measurement date (examples include active exchange-traded equity securities, listed derivatives, and most U.S. Government and agency securities).

Our cash equivalents, which are measured at fair value on a recurring basis, totaled $42.1 million and $68.8 million as of April 30, 2015 and 2014, respectively. We utilized Level 1 of the value hierarchy to determine the fair values of these assets.

Level 2 — Financial assets and liabilities whose values are based on quoted prices in markets in which trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets. Level 2 inputs include the following:

We currently do not have any Level 2 financial assets or liabilities other than our 5.875% Senior Notes and 5.000% Senior Notes as referenced in Note 5.

Level 3 — Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect our assumptions about the assumptions a market participant would use in pricing the asset or liability.

As of April 30, 2015 and 2014, we had reserves for workers’ compensation, product liability, municipal liability, and medical/dental costs totaling $9.6 million and $9.2 million, respectively, of which $6.2 million and $5.8 million, respectively, have been classified as non-current and have been included in other non-current liabilities. As of both April 30, 2015 and 2014, $3.4 million has been included in accrued expenses on the accompanying consolidated balance sheets. In addition, as of April 30, 2015 and 2014, $587,000 and $361,000 of workers’ compensation recoverable has been classified as an other asset. While we believe these reserves to be adequate, it is possible that the ultimate liabilities will exceed such estimates. Amounts charged to expense were $12.9 million, $10.7 million, and $12.2 million for the fiscal years ended April 30, 2015, 2014, and 2013, respectively.

The following table is a summary of the activity in the workers’ compensation, product liability, municipal liability, and medical/dental reserves in the fiscal years ended April 30, 2015, 2014, and 2013 (in thousands):

It is our policy to provide an estimate for loss as a result of expected adverse findings or legal settlements on product liability, municipal liability, workers’ compensation, and other matters when such losses are probable and are reasonably estimable. It is also our policy to accrue for reasonable estimable legal costs associated with defending such litigation. While such estimates involve a range of possible costs, we determine, in consultation with litigation counsel, the most likely cost within such range on a case-by-case basis. We also record receivables from insurance carriers relating to these matters when their collection is probable. As of April 30, 2015 and 2014, we had accrued reserves for product and municipal litigation liabilities of $3.8 million and $3.9 million, respectively (of which $3.1 million and $2.8 million, respectively, were non-current), consisting entirely of expected legal defense costs. In addition, as of April 30, 2015 and 2014, we had recorded receivables from insurance carriers related to these liabilities of $1.9 million, nearly all of which has been classified as other assets with $25,000 classified as other current assets.

During fiscal 2014, our board of directors authorized the repurchase of up to $115.0 million of our common stock, of which up to $75.0 million was authorized for purchase in a tender offer and the remainder of which could be repurchased in the open market or in privately negotiated transactions. During fiscal 2014, we repurchased 1,417,233 shares of our common stock pursuant to the tender offer that expired on July 23, 2013 for $15.6 million and 8,740,471 shares of our common stock in the open market for $99.4 million, in each case, utilizing cash on hand, completing our $115.0 million stock repurchase program. Fees and expenses incurred related to the tender offer and open market purchases in fiscal 2014 were $887,000 and were recorded in treasury stock.

At the end of fiscal 2014, our board of directors authorized the repurchase of up to $30.0 million of our common stock, subject to certain conditions, in the open market or privately negotiated transactions, commencing no earlier than May 1, 2014. During fiscal 2015, we completed this stock repurchase program by repurchasing 2,105,315 shares of our common stock for $30.0 million, utilizing cash on hand. Fees and expenses incurred related to open market purchases in fiscal 2015 were $40,000 and were recorded in treasury stock.

We have two stock plans, or SPs: the 2004 Incentive Stock Plan and the 2013 Incentive Stock Plan. New grants under the 2004 Incentive Stock Plan have not been made since the approval of the 2013 Incentive Stock Plan at our September 23, 2013 annual meeting of stockholders. All new grants covering all participants are issued under the 2013 Incentive Stock Plan.

The 2013 Incentive Stock Plan authorizes the issuance of 3,000,000 shares, plus any shares that were reserved and remained available for grant and delivery under the 2004 Incentive Stock Plan as of September 23, 2013, the effective date of the 2013 Incentive Stock Plan. The plan permits the grant of options to acquire common stock, restricted stock awards, RSUs, stock appreciation rights, bonus stock and awards in lieu of obligations, performance awards, and dividend equivalents. Our board of directors, or a committee established by our board, administers the SPs, selects recipients to whom awards are granted, and determines the grants to be awarded. Options granted under the SPs are exercisable at a price determined by our board or committee at the time of grant, but in no event, less than fair market value of our common stock on the date granted. Grants of options may be made to employees and directors without regard to any performance measures. All options issued pursuant to the SPs are generally nontransferable and subject to forfeiture.

Unless terminated earlier by our board of directors, the 2013 Incentive Stock Plan will terminate at the earliest of (1) the tenth anniversary of the effective date of the 2013 Stock Plan, or (2) such time as no shares of common stock remain available for issuance under the plan and we have no further rights or obligations with respect to outstanding awards under the plan. The date of grant of an award is deemed to be the date upon which our board of directors or board committee authorizes the granting of such award.

Except in specific circumstances, grants vest over a period of three or four years and are exercisable for a period of 10 years. The plan also permits the grant of awards to non-employees, which our board of directors has authorized in the past.

The number of shares and weighted average exercise prices of options for the fiscal years ended April 30, 2015, 2014, and 2013 are as follows:

	For the Year Ended April 30,
	2015					2014					2013
				Weighted-					Weighted-					Weighted-
				Average					Average					Average
	Shares			Exercise Price		Shares			Exercise Price		Shares				Exercise Price
Options outstanding, beginning of year		2,258,349		$	6.15		3,019,127		$	5.31		3,988,164		$		4.67
Granted during the period	—			—		—			—			3,500				11.02
Exercised during the period		(365,719	)		4.96		(732,778	)		2.73		(847,042	)			4.10
Canceled/forfeited during period		(13,000	)		7.98		(28,000	)		5.59		(125,495	)			3.87
Options outstanding, end of period		1,879,630		$	6.37		2,258,349		$	6.15		3,019,127		$		5.31
Weighted average remaining contractual life	5.02 years					6.04 years					6.02 years
Options exercisable, end of period		1,878,464		$	6.36		1,873,494		$	6.29		2,087,675		$		5.38
Weighted average remaining contractual life	5.02 years					5.75 years					5.00 years

As of April 30, 2015, there were 5,738,521 shares available for grant under the 2013 Incentive Stock Plan. We use our unissued share pool for all shares issued for options, restricted share awards, RSUs, PSUs, and Employee Stock Purchase Plan, or ESPP, issuances.

The aggregate intrinsic value of outstanding options as of April 30, 2015, 2014, and 2013 was $16.1 million, $20.8 million, and $12.1 million, respectively. The aggregate intrinsic value of outstanding options that were exercisable as of April 30, 2015, 2014, and 2013 was $16.0 million, $17.0 million, and $8.7 million, respectively. The aggregate intrinsic value of the options exercised for the years ended April 30, 2015, 2014, and 2013 was $2.9 million, $7.3 million, and $5.1, respectively. At April 30, 2015, the total of unrecognized compensation cost of outstanding options was $1,000, which will be recognized over the remaining weighted average vesting period of 0.41 years.

On September 26, 2011, our stockholders approved our 2011 ESPP, to replace our expired 2001 ESPP, which authorized the sale of up to 6,000,000 shares of our common stock to employees. All option and rights to participate in our ESPP are nontransferable and subject to forfeiture in accordance with our ESPP guidelines. Our current ESPP will be implemented in a series of successive offering periods, each with a maximum duration of 12 months. If the fair market value, or FMV, per share of our common stock on any purchase date is less than the FMV per share on the start date of a 12-month offering period, then that offering period will automatically terminate, and a new 12-month offering period will begin on the next business day. Each offering period will begin on April 1 or October 1, as applicable, immediately following the end of the previous offering period. Payroll deductions will be on an after-tax basis, in an amount of not less than 1% and not more than 20% (or such greater percentage as the committee appointed to administer our ESPP may establish from time to time before the first day of an offering period) of a participant’s compensation on each payroll date. The option exercise price per share will equal 85% of the lower of the FMV on the first day of the offering period or the FMV on the exercise date. The maximum number of shares that a participant may purchase during any purchase period is 12,500 shares, or a total of $25,000 in shares, based on the FMV on the first day of the offering period. Our ESPP will remain in effect until the earliest of (a) the exercise date that participants become entitled to purchase a number of shares greater than the number of reserved shares available for purchase under our ESPP, (b) such date as is determined by our Board of Directors in its discretion, or (c) March 31, 2022. In the event of certain corporate transactions, each option outstanding under our ESPP will be assumed or an equivalent option will be substituted by the successor corporation or a parent or subsidiary of such successor corporation. During fiscal 2015, 2014, and 2013, 161,456, 176,204, and 185,218 shares, respectively, were purchased under our ESPP.

We measure the cost of employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. We calculate the fair value of our stock options issued to employees using the Black-Scholes model at the time the options were granted. That amount is then amortized over the vesting period of the option. With our ESPP, fair value is determined at the beginning of the purchase period and amortized over the term of each exercise period.

The following assumptions were used in valuing our options and ESPP purchases during the years ended April 30, 2015, 2014, and 2013:

We estimate expected volatility using historical volatility for the expected term. The fair value of each stock option or ESPP purchase was estimated on the date of the grant using the Black-Scholes option pricing model (using the risk-free interest rate, expected term, expected volatility, and dividend yield variables, as noted in the above table). The total stock-based compensation expense, including stock options, purchases under our ESPP, and RSU and PSU awards, was $5.8 million, $8.2 million, and $4.1 million, for fiscal years 2015, 2014, and 2013, respectively.

The following table summarizes stock compensation expense for continuing operations by line item for the fiscal years ended April 30, 2015, 2014, and 2013 (in thousands):

We grant service-based RSUs to employees, consultants, and directors. The awards are made at no cost to the recipient. An RSU represents the right to acquire one share of our common stock and does not carry voting or dividend rights. Except in specific circumstances, RSU grants to employees generally vest over a period of three or four years with one-third or one-fourth of the units vesting, respectively, on each anniversary date of the grant date. The aggregate fair value of our RSU grants is amortized to compensation expense over the vesting period.

We grant PSUs with market conditions to our executive officers, and we grant PSUs without market-conditions to our employees who are not executive officers. At the time of grant, we calculate the fair value of our market-condition PSUs using the Monte-Carlo simulation. We incorporate the following variables into the valuation model:

The market-condition PSUs vest, and the fair value of such PSUs will be recognized, over the corresponding three-year performance period. Our market-condition PSUs have a maximum aggregate award equal to 200% of the target amount granted. The number of market-condition PSUs that may be earned depends upon the total stockholder return, or TSR, of our common stock compared with the TSR of the Russell 2000 Index, or RUT, over the three-year performance period. For our fiscal 2014 and 2013 PSUs, our stock must outperform the RUT by 10% in order for the target award to vest. For our fiscal 2015 PSUs, our stock must outperform the RUT by 5% in order for the target award to vest. In addition, there is a cap on the number of shares that can be earned under the fiscal 2015 PSUs equal to six times the grant-date value of each award.

In certain circumstances beginning with the fiscal 2015 RSUs and PSUs, the vested awards will be delivered on the first anniversary of the applicable vesting date. We have applied a discount to the grant date fair value when determining the amount of compensation expense to be recorded for these RSUs and PSUs.

During the year ended April 30, 2015, we granted 112,000 market-condition PSUs to certain of our executive officers. We also granted 554,933 service-based RSUs during the year ended April 30, 2015, including 125,000 RSUs to certain of our executive officers, 46,639 RSUs to our directors, and 379,433 RSUs to non-executive officer employees. In addition, in connection with a 2011 grant, we vested 46,600 market-condition PSUs (i.e., the target amount granted), which achieved the maximum aggregate award possible resulting in awards totaling 93,200 shares to certain of our executive officers and a former executive officer. Compensation expense recognized related to grants of RSUs and PSUs was $5.1 million for the fiscal year ended April 30, 2015.

During the fiscal year ended April 30, 2015, we canceled 57,752 service-based RSUs and 41,250 PSUs without market-conditions as a result of the service period condition not being met and delivered 433,266 shares of common stock to current employees under vested RSUs and PSUs with a total market value of $5.4 million.

During the fiscal year ended April 30, 2014, we granted 117,500 market-condition PSUs to certain of our executive officers. We also granted 565,556 service-based RSUs during the year ended April 30, 2014, including 351,400 RSUs to certain of our executive officers, 42,238 RSUs to our directors, 164,918 RSUs to non-executive officer employees, and 7,000 RSUs to consultants. In addition, we granted and vested 30,000 market-condition PSUs to an executive officer and a former executive officer in connection with a 2010 award that achieved the maximum aggregate award. Compensation expense recognized related to grants of RSUs and PSUs was $6.4 million for the fiscal year ended April 30, 2014.

During the fiscal year ended April 30, 2014, we cancelled 17,316 service-based RSUs and 9,000 PSUs without market-conditions as a result of the service period condition not being met and delivered 457,851 shares of common stock to current employees under vested RSUs and PSUs with a total market value of $5.7 million.

During the fiscal year ended April 30, 2013, we granted 152,000 market-condition PSUs to certain of our executive officers and 63,050 PSUs without market conditions to other employees. We also granted 320,279 service-based RSUs during the fiscal year ended April 30, 2013, including 250,250 RSUs to certain of our executive officers, 35,000 RSUs to our directors, 28,029 RSUs to non-executive officer employees, and 7,000 RSUs to consultants. Compensation expense recognized related to grants of RSUs and PSUs was $1.8 million for the fiscal year ended April 30, 2013.

During the fiscal year ended April 30, 2013, we delivered 14,250 PSUs without market-conditions to employees with a total market value of $131,000 and we also delivered 69,637 shares of common stock to certain of our executive officers, employees, and consultants under vested RSUs with a total market value of $595,000.

During the fiscal year ended April 30, 2013, we cancelled 16,996 service-based RSUs and 35,000 market-condition PSUs as a result of the service period condition not being met and 2,000 PSUs without a market-condition as a result of the performance condition not being met.

The grant date fair value of RSUs and PSUs that vested in fiscal 2015, 2014, and 2013 was $4.0 million, $4.0 million, and $726,000, respectively.

A summary of activity in unvested RSUs and PSUs for fiscal years 2015, 2014 and 2013 is as follows:

	For the Year Ended April 30,
	2015					2014					2013
				Weighted					Weighted					Weighted
	Total # of			Average		Total # of			Average		Total # of			Average
	Restricted			Grant Date		Restricted			Grant Date		Restricted			Grant Date
	Stock Units			Fair Value		Stock Units			Fair Value		Stock Units			Fair Value
RSUs and PSUs outstanding, beginning of year		1,015,475		$	10.56		781,586		$	8.42		384,140		$	7.91
Awarded		709,672			11.82		718,056			11.87		535,329			9.43
Vested		(433,266	)		9.18		(457,851	)		8.75		(83,887	)		8.71
Forfeited		(101,002	)		11.93		(26,316	)		8.88		(53,996	)		6.14
RSUs and PSUs outstanding, end of year		1,190,879		$	12.45		1,015,475		$	10.56		781,586		$	8.42

As of April 30, 2015, there was $7.0 million of unrecognized compensation cost related to unvested RSUs and PSUs. This cost is expected to be recognized over a weighted average remaining contractual term of 1.8 years. The aggregate intrinsic value of outstanding RSUs and PSUs as of April 30, 2015, 2014, and 2013 was $3.3 million, $7.1 million, and $491,000, respectively.

Contributory Defined Investment Plan — We offer two contributory defined investment plans covering substantially all employees, subject to service requirements. Employees may contribute up to 100% of their annual pay, depending on the plan. We generally make discretionary matching contributions of up to 50% of the first 6% of employee contributions to the plan. We contributed $2.3 million, $1.9 million, and $1.7 million for the fiscal years ended April 30, 2015, 2014, and 2013, respectively.

Non-Contributory Profit Sharing Plan — We have a non-contributory profit sharing plan covering substantially all of our Springfield, Massachusetts and Houlton, Maine employees. Employees become eligible on May 1 following the completion of a full fiscal year of continuous service. Our contributions to the plan are discretionary. For fiscal 2015, we plan to contribute approximately $6.2 million, which has been recorded in general and administrative costs. We contributed $11.1 million and $9.6 million for the fiscal years ended April 30, 2014 and 2013, respectively. Contributions are funded after the fiscal year-end.

We use an asset and liability approach for financial accounting and reporting of income taxes. Deferred tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities and are measured by applying enacted tax rates and laws to the taxable years in which differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Income tax expense from continuing operations consists of the following (in thousands):

The following table presents a reconciliation of the provision for income taxes from continuing operations at statutory rates to the provision in the consolidated financial statements (in thousands):

Deferred tax assets (deferred tax liabilities) related to temporary differences are the following (in thousands):

	For the Years Ended April 30,
	2015				2014
Current tax assets (liabilities):	$				$
Inventories			9,587			8,088
Product liability			276			391
Accrued expenses, including compensation			2,934			5,991
Warranty reserve			2,449			2,114
Property taxes			(122	)		(78	)
Promotions			1,497			925
Less valuation allowance			(510	)		(508	)
Other			262			171
Net deferred tax asset — current	$		16,373		$	17,094

Non-current tax assets (liabilities):
Net operating loss carryforwards and tax credits	$		2,809		$	2,633
Environmental reserves			258			238
Product liability			461			371
Workers' compensation			991			975
Warranty reserve			860			785
Stock-based compensation			4,429			4,280
State bonus depreciation			1,002			828
Property, plant, and equipment			(25,612	)		(19,947	)
Intangible assets			(17,083	)		224
Transaction costs		—				57
Pension			91			48
Less valuation allowance			(2,111	)		(1,910	)
Net deferred tax liability — non-current	$		(33,905	)	$	(11,418	)
Net deferred tax asset/(liability) — total	$		(17,532	)	$	5,676

We had federal net operating loss carryforwards amounting to $541,000 as of April 30, 2015, which expire in fiscal 2020. We obtained $8.2 million in additional loss carryforwards through our acquisition of SWSS on July 20, 2009, the majority of which was utilized in fiscal 2010. Utilization of the remaining losses is limited by Section 382 of the Internal Revenue Code to $108,000 in fiscal 2015 and for each taxable year thereafter. It is possible that future substantial changes in our ownership could occur that could result in additional ownership changes pursuant to Section 382 of the Internal Revenue Code. If such an ownership change were to occur, there could be an annual limitation on the remaining tax loss carryforward.

There were $16.8 million and $16.2 million in state net operating loss carryforwards as of April 30, 2015 and 2014, respectively. The state net operating loss carryforwards will expire between April 30, 2016 and April 30, 2033. There were $3.0 million and $2.6 million of state tax credit carryforwards as of April 30, 2015 and 2014, respectively. The state tax credit carryforwards will expire between April 30, 2018 and April 30, 2025, or have no expiration date.

As of April 30, 2015, valuation allowances of $700,000 and $1.9 million were provided on our deferred tax assets for those state net operating loss carryforward, and state tax credits, respectively, that we do not anticipate using prior to their expiration. As of April 30, 2014, valuation allowances of $686,000 and $1.7 million were provided on our deferred tax assets for those state net operating loss carryforwards and state tax credits, respectively, that we do not anticipate using prior to their expiration. The increase in the valuation allowance on our deferred tax assets for state net operating losses and credits and other state deferred tax assets related mainly to Massachusetts Investment Tax Credits. No valuation allowances were provided on our deferred federal income tax assets as of April 30, 2015 or 2014, as we believe that it is more likely than not that all such assets will be realized. Recording a valuation allowance or reversing a valuation allowance could have a significant effect on our future results of operations and financial position. Management is unaware of any recent or expected future changes in tax laws that would have a material impact on our financial statements.

At April 30, 2015 and 2014, we had gross tax-effected unrecognized tax benefits of $91,000 and $84,000, respectively, of which the entire amounts, if recognized, would favorably impact the effective tax rate. Included in the unrecognized tax benefits at April 30, 2015 and 2014, we have $23,000 and $15,000, respectively, of accrued interest and penalties related to uncertain tax positions, which have been recorded in non-current liabilities.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

All of our unrecognized tax benefits has been classified as current income tax liabilities and are recorded in other current liabilities because a payment of cash is anticipated within one year of the balance sheet date or the statute will expire within one year of the balance sheet date.

With limited exception, we are subject to U.S. federal, state, and local, or non-U.S. income tax audits by tax authorities for fiscal years subsequent to April 30, 2011.

We are a defendant in eight product liability cases and are aware of approximately nine other product liability claims, primarily alleging defective product design, defective manufacturing, or failure to provide adequate warnings. In addition, we are a co-defendant in a case filed on August 27, 1999 by the city of Gary, Indiana against numerous firearm manufacturers, distributors, and dealers seeking to recover damages allegedly arising out of the misuse of firearms by third parties. We believe that the various allegations as described above are unfounded, and, in addition, that any accident and any results from them were due to negligence or misuse of the firearm by the claimant or a third party.

In addition, we are involved in lawsuits, claims, investigations, and proceedings, including commercial, environmental, and employment matters, which arise in the ordinary course of business.

The relief sought in individual cases primarily includes compensatory and, sometimes, punitive damages. Certain of the cases and claims seek unspecified compensatory or punitive damages. In others, compensatory damages sought may range from less than $75,000 to approximately $1.5 million. In our experience, initial demands do not generally bear a reasonable relationship to the facts and circumstances of a particular matter. We believe that our accruals for product liability cases and claims, as described below, are a reasonable quantitative measure of the cost to us of product liability cases and claims.

We are vigorously defending ourselves in the lawsuits to which we are subject. An unfavorable outcome or prolonged litigation could harm our business. Litigation of this nature also is expensive and time consuming and diverts the time and attention of our management.

We monitor the status of known claims and the related product liability accrual, which includes amounts for defense costs for asserted and unasserted claims. After consultation with litigation counsel and the review of the merit of each claim, we have concluded that we are unable to reasonably estimate the probability or the estimated range of reasonably possible losses related to material adverse judgments related to such claims and, therefore, we have not accrued for any such judgments. In the future, should we determine that a loss (or an additional loss in excess of our accrual) is at least reasonably possible and material, we would then disclose an estimate of the possible loss or range of loss, if such estimate could be made, or disclose that an estimate could not be made. We believe that we have provided adequate reserves for defense costs.

For the fiscal years ended April 30, 2015, 2014, and 2013, we paid $252,000, $1.0 million, and $758,000, respectively, in defense and administrative costs relative to product liability and municipal litigation. In addition, we spent an aggregate of $177,000, $460,000, and $42,000, respectively, in those fiscal years in settlement fees related to product liability cases.

We have recorded our liability for defense costs before consideration for reimbursement from insurance carriers. We have also recorded the amount due as reimbursement under existing policies from the insurance carriers as a receivable shown in other current assets and other assets.

In fiscal 2015, 2014, and 2013 we recorded expense of $183,000, $533,000, and $805,000 respectively, to recognize changes in our product liability and municipal litigation liability.

At this time, an estimated range of reasonably possible additional losses relating to unfavorable outcomes cannot be made.

We are subject to numerous federal, state, and local laws that regulate both the health and safety of our workforce as well as our environmental liability, including, but not limited to, those regulations monitored by the Occupational Health and Safety Administration, (OSHA), the National Fire Protection Association, and the Department of Public Health. Though not exhaustive, examples of applicable regulations include confined space safety, walking and working surfaces, machine guarding, and life safety.

We are required to comply with regulations that mitigate any release into the environment. These laws have required, and are expected to continue to require, us to make significant expenditures of both a capital and expense nature. Several of the more significant federal laws applicable to our operations include the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, and the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act.

We have in place programs and personnel to monitor compliance with various federal, state, and local environmental regulations. In the normal course of our manufacturing operations, we are subject to governmental proceedings and orders pertaining to waste disposal, air emissions, and water discharges into the environment. We fund our environmental costs through cash flows from operations. We believe that we are in compliance with applicable environmental regulations in all material respects.

As of April 30, 2015 and 2014, respectively, we had recorded $675,000 and $623,000 of the environmental reserve in non-current liabilities. We have calculated the net present value of the environmental reserve to be equal to the carrying value of the liability recorded on our books. Our estimate of these costs is based upon currently enacted laws and regulations, currently available facts, experience in remediation efforts, existing technology, and the ability of other potentially responsible parties or contractually liable parties to pay the allocated portions of any environmental obligations.

When the available information is sufficient to estimate the amount of liability, that estimate has been used, when the information is only sufficient to establish a range of probable liability and no point within the range is more likely than any other, the lower end of the range has been used. We may not have insurance coverage for our environmental remediation costs. We have not recognized any gains from probable recoveries or other gain contingencies. The environmental reserve was calculated using undiscounted amounts based on independent environmental remediation reports obtained.

On May 5, 2014, we acquired substantially all of the net assets of TTPP. Under the asset purchase agreement, the former stockholder of TTPP indemnified us for losses arising from, among other things, environmental conditions related to its manufacturing activities. Of the purchase price, $3.0 million was placed in an escrow account, of which $2.8 million remains available. A portion of this escrow account will be applied to environmental remediation at the manufacturing site in Deep River, Connecticut. It is not presently possible to estimate the ultimate amount of all remediation costs and potential uses of the escrow. We believe the likelihood of environmental remediation costs exceeding the amount available in escrow to be remote.

Employment Agreements — We have employment, severance, and change of control agreements with certain officers and managers.

Other Agreements — We have distribution agreements with various third parties in the ordinary course of business.

In fiscal 2011, we were awarded a $6.0 million refundable tax credit from the Massachusetts Economic Assistance Coordinating Council under the Economic Development Incentive Program, or EDIP. This credit was granted by the Commonwealth of Massachusetts in consideration of our restructuring plan to move the production of our hunting products from New Hampshire to Massachusetts. Through the end of fiscal 2015, we recorded a total of $6.0 million in tax credits, including recording a receivable of $117,000 in fiscal 2015, because of our compliance with the written EDIP Investment Analysis Plan. We will be required to file an EDIP Annual Report through 2017 to demonstrate that all conditions related to the award have been met. We believe the likelihood that we will not comply with the EDIP Investment Analysis Plan to be remote.

We lease office and/or manufacturing space in Scottsdale, Arizona; Rochester, New Hampshire; Deep River, Connecticut; and Columbia, Missouri under operating leases which expire on February 28, 2018; September 30, 2015; May 4, 2024; and April 30, 2023, respectively. We also lease machinery, photocopiers, and vehicles for our national sales force with various expiration dates.

Rent expense in the fiscal years ended April 30, 2015, 2014, and 2013 was $3.3 million, $2.2 million, and $2.2 million, respectively.

The following table summarizes quarterly financial results in fiscal 2015 and 2014. In our opinion, all adjustments necessary to present fairly the information for such quarters have been reflected (in thousands, except per share data):

	For the Year Ended April 30, 2015
	First				Second				Third				Fourth				Full
	Quarter				Quarter				Quarter				Quarter				Year
Net sales	$		131,869		$		108,446		$		130,550		$		180,997		$		551,862
Gross profit			49,118				34,840				43,824				67,144				194,926
Income from continuing operations, net of tax			14,618				5,091				8,178				21,940				49,827
Loss from discontinued operations, net of tax			(62	)			(41	)			(57	)			(54	)			(214	)
Net income	$		14,556		$		5,050		$		8,121		$		21,886		$		49,613
Per common share
Basic - continuing operations	$		0.27		$		0.10		$		0.15		$		0.41		$		0.92
Diluted - continuing operations	$		0.26		$		0.09		$		0.15		$		0.40		$		0.90
Basic - total	$		0.27		$		0.09		$		0.15		$		0.41		$		0.92
Diluted - total	$		0.26		$		0.09		$		0.15		$		0.40		$		0.90
Market price (low-high)	$	12.32-17.28			$	9.03-13.43			$	9.22-12.68			$	12.16-15.30			$	9.03-17.28

	For the Year Ended April 30, 2014
	First				Second				Third			Fourth			Full
	Quarter				Quarter				Quarter			Quarter			Year
Net sales	$		171,020		$		139,294		$		145,881	$		170,425	$		626,620
Gross profit			72,773				57,937				58,651			69,744			259,105
Income from continuing operations, net of tax			26,526				17,145				20,057			24,899			88,627
Income/(loss) from discontinued operations, net of tax			(49	)			(158	)			728			157			678
Net income	$		26,477		$		16,987		$		20,785	$		25,056	$		89,305
Per common share
Basic - continuing operations	$		0.41		$		0.29		$		0.36	$		0.45	$		1.51
Diluted - continuing operations	$		0.40		$		0.28		$		0.35	$		0.44	$		1.47
Basic - total	$		0.41		$		0.28		$		0.37	$		0.45	$		1.52
Diluted - total	$		0.40		$		0.28		$		0.36	$		0.44	$		1.49
Market price (low-high)	$	8.53-11.96			$	10.25-13.38			$	10.76-15.56		$	11.31-15.70		$	8.53-15.70

Subsequent to the BTI Acquisition, we began reporting our results of operations in two segments: firearms and accessories. The firearm segment has been determined to be a single operating segment and reporting segment based on management’s reliance on production metrics such as gross margin per unit produced, units produced per day, incoming orders per day, and revenue produced by trade channel, all of which are particular to the firearm segment. We evaluate our accessories products by a measurement of incoming orders per day, sales by customers, and gross margin by product line.

The firearm segment consists of products and services manufactured and sold from our Springfield, Massachusetts; Houlton, Maine; and Deep River, Connecticut facilities, which includes firearms, handcuffs, and other related products sold through a distribution chain and direct sales to consumers and international, state, and federal governments. The accessories segment consists of hunting and shooting accessories developed and marketed from our Columbia, Missouri facility. Operating costs are reported based on the activities performed within each segment.

Segment assets are those directly used in or clearly allocable to an operating segment’s operations. Total assets for our firearm segment as of April 30, 2015 were $345.3 million. Included in the assets of our firearm segment are intangible assets totaling $3.7 million; property, plant, and equipment totaling $131.3 million; and goodwill totaling $13.8 million. Total assets for our accessories segment as of April 30, 2015 were $149.7 million. Included in the assets of our accessories segment are intangible assets totaling $70.1 million; property, plant, and equipment totaling $2.5 million; and goodwill totaling $61.7 million.

Results by business segment are presented in the following table for the year ended April 30, 2015 (in thousands):

(a) Results of operations for the year ended April 30, 2015 include activity for the period subsequent to the BTI Acquisition. We operated under one segment in the prior year, thus no comparative segment information is being presented. Due to the timing of the BTI Acquisition, the segment data above includes all corporate overhead expenses in our firearm segment until we determine our allocation methodology for corporate overhead expenses.

(b) Amount includes $4.2 million of additional cost of sales from the fair value step-up in inventory at the date of the BTI Acquisition and $3.6 million related to amortization of intangible assets recorded in general and administrative expenses as a result of the BTI Acquisition.

As discussed in Note 5, on June 15, 2015, we entered into a new unsecured credit facility, which consists of a $175.0 million revolving line of credit and a $105.0 million term loan, which both mature on June 15, 2020. We used the proceeds from the term loan to redeem the entire $100.0 million outstanding principal balance of our 5.875% Senior Notes, plus accrued and unpaid interest to the redemption date.

			Additions
			Charged to			Charged to
	Balance at		Costs and			Other								Balance at
	May 1,		Expenses			Accounts				Deductions				April 30,
2015
Allowance for doubtful accounts	$	844	$	(122	)	$		127	(1)	$		(127	)	$	722
Inventory reserve		12,383		4,493				702	(1)			(1,139	)		16,439
Deferred tax valuation allowance		2,418		203			—				—				2,621
2014
Allowance for doubtful accounts	$	1,128	$	(214	)	$	—			$		(70	)	$	844
Inventory reserve		9,121		4,102			—					(840	)		12,383
Deferred tax valuation allowance		2,458		(40	)		—				—				2,418
2013
Allowance for doubtful accounts	$	1,058	$	720		$	—			$		(650	)	$	1,128
Inventory reserve		6,965		2,603			—					(447	)		9,121
Deferred tax valuation allowance		2,127		331			—				—				2,458

(1) Increase in 2015 valuation accounts represents acquired balances related to the DRP and BTI Acquisitions in fiscal 2015.

(Title of Class)		(Name of Each Exchange on Which Registered)
Common Stock, Par Value $.001 per Share		Nasdaq Global Select Market

Large accelerated filer		¨			Accelerated filer		x
Non-accelerated filer		¨	(Do not check if a smaller reporting company)		Smaller reporting company		¨

		Page
	PART I
ITEM 1.	BUSINESS	1
ITEM 1A.	RISK FACTORS	12
ITEM 1B.	UNRESOLVED STAFF COMMENTS	24
ITEM 2.	PROPERTIES	24
ITEM 3.	LEGAL PROCEEDINGS	25
ITEM 4.	MINE SAFETY DISCLOSURES	25

	PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	26
ITEM 6.	SELECTED FINANCIAL DATA	28
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	29
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	42
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	42
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	42
ITEM 9A.	CONTROLS AND PROCEDURES	42
ITEM 9B.	OTHER INFORMATION	45

	PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	45
ITEM 11.	EXECUTIVE COMPENSATION	45
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	45
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	45
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	45

	PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	46
SIGNATURES		49
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		F-1
EX-10.106(a)
EX-10.111(a)
EX-10.111(b)
EX-10.112(a)
EX-10.113
EX-21.1
EX-23.1
EX-23.2
EX-31.1
EX-31.2
EX-32.1
EX-32.2

	2015		2014		$ Change			% Change			2013
Handguns	$	395,500	$	422,992	$	(27,492	)		-6.5	%	$	324,627
Long Guns		90,178		155,311		(65,133	)		-41.9	%		179,187
Walther		506		5,651		(5,145	)		-91.0	%		41,646
Other Products & Services		45,038		42,666		2,372			5.6	%		42,054
Firearm Division		531,222		626,620		(95,398	)		-15.2	%		587,514
Accessories Division		20,640	—			20,640		N/A			N/A
Total Net Sales	$	551,862	$	626,620	$	(74,758	)		-11.9	%	$	587,514

Firearm Division	2015			2014			$ Change			% Change			2013
Income from operations	$	92,531		$	150,988		$	(58,457	)		-38.7	%	$	132,834
% of net sales		17.4	%		24.1	%								22.6	%

Name	Age	Position
P. James Debney	47	President and Chief Executive Officer
Jeffrey D. Buchanan	59	Executive Vice President, Chief Financial Officer, and Treasurer
Robert J. Cicero	48	Vice President, General Counsel, Chief Compliance Officer, and Secretary
Mark P. Smith	39	Vice President, Manufacturing and Supply Chain Management

	High		Low
2015
First quarter	$	17.28	$	12.32
Second quarter	$	13.43	$	9.03
Third quarter	$	12.68	$	9.22
Fourth quarter	$	15.30	$	12.16
2014
First quarter	$	11.96	$	8.53
Second quarter	$	13.38	$	10.25
Third quarter	$	15.56	$	10.76
Fourth quarter	$	15.70	$	11.31

Total Company	2015			2014			$ Change			% Change			2013
Cost of sales	$	356,936		$	367,515		$	(10,579	)		-2.9	%	$	369,442
% of net sales		64.7	%		58.7	%								62.9	%
Gross profit	$	194,926		$	259,105		$	(64,179	)		-24.8	%	$	218,072
% of net sales		35.3	%		41.3	%								37.1	%

Exhibit Number		Exhibit

31.1		Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

31.2		Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

32.1		Section 1350 Certification of Principal Executive Officer

32.2		Section 1350 Certification of Principal Financial Officer

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

Signature	Capacity	Date

/s/ P. James Debney	President, Chief Executive Officer, and Director (Principal Executive Officer)	June 22, 2015
P. James Debney		June 22, 2015

/s/ Jeffrey D. Buchanan	Executive Vice President, Chief Financial Officer, and Treasurer (Principal Accounting and Financial Officer)	June 22, 2015
Jeffrey D. Buchanan		June 22, 2015

/s/ Barry M. Monheit	Chairman of the Board	June 22, 2015
Barry M. Monheit	Chairman of the Board	June 22, 2015


/s/ Robert L. Scott	Vice Chairman of the Board	June 22, 2015
Robert L. Scott	Vice Chairman of the Board	June 22, 2015

/s/ Robert H. Brust	Director	June 22, 2015
Robert H. Brust

/s/ John B. Furman	Director	June 22, 2015
John B. Furman	Director	June 22, 2015

/s/ Michael F. Golden	Director	June 22, 2015
Michael F. Golden	Director	June 22, 2015

/s/ Mitchell A. Saltz	Director	June 22, 2015
Mitchell A. Saltz	Director	June 22, 2015

/s/ I. Marie Wadecki	Director	June 22, 2015
I. Marie Wadecki	Director	June 22, 2015

		Page
Reports of Independent Registered Public Accounting Firms		F-2
Consolidated Balance Sheets as of April 30, 2015 and 2014		F-4
Consolidated Statements of Income for the years ended April 30, 2015, 2014, and 2013		F-5
Consolidated Statements of Changes in Stockholders’ Equity for the years ended April 30, 2015, 2014, and 2013		F-6
Consolidated Statements of Cash Flows for the years ended April 30, 2015, 2014, and 2013		F-7
Notes to Consolidated Financial Statements		F-8
Schedule II — Valuation and Qualifying Accounts for the years ended April 30, 2015, 2014, and 2013		F-32

	For the Year			For the Year
	Ended			Ended
	April 30, 2015			April 30, 2014
Net sales	$	582,875	$		670,163
Income from continuing operations		53,388			85,460
Income per share - diluted		0.97			1.42

Description	Useful Life
Building and improvements		10 to 40 years
Software and hardware		3 to 7 years
Machinery and equipment		2 to 10 years

		April 30, 2015			April 30, 2014			April 30, 2013
Beginning Balance		$	7,565		$	8,423		$	6,412
	Warranties issued and adjustments to provisions		4,292			3,620			7,093
	Warranty claims		(3,204	)		(4,478	)		(5,082	)
Ending Balance		$	8,653		$	7,565		$	8,423

	For the Year Ended April 30,
Region	2015		2014		2013

Europe	$	8,164	$	6,279	$	2,979
Asia		1,463		1,766		6,319
Latin America		1,643		200		1,693
All others international		11,570		9,605		8,003

Total net international sales	$	22,840	$	17,850	$	18,994

	April 30, 2015		April 30, 2014
Finished goods	$	28,240	$	26,523
Finished parts		34,269		47,109
Work in process		7,492		7,643
Raw material		6,894		5,467
Total inventories	$	76,895	$	86,742

		Expected
For the Year Ended April 30,		Amortization
2016	$		11,341
2017			10,552
2018			9,798
2019			8,606
2020			7,448
Thereafter			25,573
Total expected amortization	$		73,318

	April 30, 2015		April 30, 2014
Accrued rebates and promotions	$	4,126	$	2,633
Interest payable		3,362		2,194
Accrued employee benefits		3,065		2,148
Accrued professional fees		2,335		2,374
Accrued workers' compensation		833		916
Accrued distributor incentives		761		590
Accrued other		4,539		6,252
Total accrued expenses	$	19,021	$	17,107

	For the Year Ended April 30, 2015
	Firearm		Accessories (a)				Total
Net sales	$	531,222	$	20,640			$	551,862
Cost of sales		342,663		14,273		(b)		356,936
Gross margin		188,559		6,367				194,926
Operating income/(loss)		92,532		(2,904	)	(b)		89,628
Income tax expense/(benefit)		30,038		(1,133	)			28,905