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8-K - FORM 8-K - SMITH & WESSON BRANDS, INC. | c19450e8vk.htm |
Exhibit 99.1
Contacts: Liz Sharp, VP Investor Relations Smith & Wesson Holding Corp. (413) 747-3304 lsharp@smith-wesson.com |
Smith & Wesson Holding Corporation Reports
Fourth Quarter and Full Year Fiscal 2011 Financial Results
Fourth Quarter and Full Year Fiscal 2011 Financial Results
| Total Sales in Q4 Increase 7.7% Year-Over-Year to $112 Million |
||
| Record Firearm Sales in Q4 Rise 12.7% Year-Over-Year to $102 Million |
||
| Firearm Backlog Grows to $187 Million in Q4, a 153% Sequential Increase |
SPRINGFIELD, Mass., June 30, 2011 Smith & Wesson Holding Corporation (NASDAQ Global Select:
SWHC), a leader in the business of safety, security, protection, and sport, today announced
financial results for the fourth quarter and fiscal year ended April 30, 2011.
Michael F. Golden, Smith & Wesson Holding Corporation President and Chief Executive Officer, said,
We completed fiscal 2011 with strong manufacturing performance in our core firearm business,
highlighted by record quarterly sales, record units shipped, and a 153% sequential quarterly
increase in our backlog. These achievements for the quarter were driven by significant growth in
demand across nearly all firearm product lines, with particular strength exhibited by our recently
launched products and our repositioned products, including the BODYGUARD® line as well as the
polymer framed pistol and modern sporting rifle lines. With our firearm business running at record
production levels at year-end and the consolidation of our Thomson/Center Arms operations underway,
we intend to remain focused on adding highly flexible manufacturing capacity and implementing lean
initiatives. These actions are directly aimed at increasing shippable product to meet demand as
well as improving margins in fiscal 2012.
While the recent strategic rebranding of our security solutions division under the globally
recognized Smith & Wesson brand has been well received, the environment in which this business
operates remains challenging. Lower levels of government and corporate capital funding, as well as
the presence of price-focused competition, remain near-term factors. Accordingly, our efforts have
centered on reducing costs as well as developing and deploying new products to address broader
customer requirements. We believe we are taking the necessary actions to get this business aligned
with current market conditions, and we remain committed to this business as a platform for
expansion beyond firearms into the security market, concluded Mr. Golden.
Fourth Quarter Fiscal 2011 Financial Highlights
| Net sales for the fourth quarter were a record $111.8 million compared with $103.8
million in the year-ago quarter, an increase of 7.7%. |
| Gross profit margin for the fourth quarter was 30.2% compared with 31.3% for the prior
year quarter, including the impact of costs associated with the consolidation of the
Thompson/Center Arms operations. Excluding those costs, fourth quarter gross profit margin
would have slightly exceeded the prior year quarter. |
| Operating expense for the fourth quarter totaled $28.4 million, or 25.4% of sales,
compared with operating expense of $23.7 million, or 22.8% of sales, for the fourth quarter
of last year. The increased operating expense included increased legal costs in the
firearm division and downsizing costs in the security solutions division. |
| Net income for the fourth quarter was $1.1 million, or $0.02 per diluted share, compared
with net income of $2.7 million, or $0.04 per diluted share, for the comparable quarter
last year. Current fourth quarter results include the negative impact of $0.08 per diluted
share related to our security solutions division and the negative impact of $0.05 per
diluted share related to unusual expenses during the quarter, including costs associated
with the Thompson/Center Arms consolidation and the previously announced DOJ and SEC
investigations. Net income for the fourth quarter last year included a non-cash, fair-value
adjustment to the contingent consideration liability related to the companys acquisition
of Universal Safety Response (since renamed Smith & Wesson Security Solutions) that
decreased fully diluted earnings by $0.04 per share. |
| Non-GAAP adjusted EBITDAS for the fourth quarter totaled $12.9 million compared with
$15.1 million for the year-ago quarter. |
Full Year Fiscal 2011 Financial Highlights
| Total company net sales were $392.3 million compared with $406.2 million for the prior
year, down 3.4%. The prior year included a period of heightened consumer demand in
firearms, which began in fiscal 2009. |
| Gross profit margin was 29.5% compared with 32.4% for the prior year. |
| As previously announced, the company determined that the goodwill and certain long-lived
intangible assets related to its acquisition of Universal Safety Response were impaired
because of changing market conditions. Therefore, the company recorded noncash impairment
charges totaling $90.5 million related to its security solutions division. |
| Operating expenses were $196.3 million, or 50.0% of sales, compared with operating
expenses of $89.1 million, or 21.9% of sales, in fiscal 2010. Excluding the impairment
charges described above, operating expenses for fiscal 2011 would have been $105.8 million,
or 27.0% of sales. The increase in operating expenses included $9.2 million in sales and
administrative costs to stabilize and enhance the security solutions division and increased
legal costs of $6.7 million associated with the DOJ and SEC investigations. |
| Net loss was $82.8 million, or $1.37 per diluted share, compared with net income of
$32.5 million, or $0.53 per diluted share, a year ago. The net loss for fiscal 2011
included a $1.44 per diluted share negative impact of the impairment charges described
above. |
| Non-GAAP Adjusted EBITDAS
for fiscal 2011 totaled $36.7 million compared with $61.3
million last year. |
Page 2 of 10
Firearm Division
Net sales for the fourth quarter of fiscal 2011 were a record $101.7 million, a 12.7% increase over
the fourth quarter last year. Higher sales were evident across nearly all product lines, with
BODYGUARD products, price repositioned polymer framed pistols, and modern sporting rifles as
primary drivers. Pistol sales grew 29.9% in the quarter as the consumer trend toward smaller
firearms designed for concealed carry and personal protection appeared to continue, benefiting the
company, which is well positioned with a wide portfolio of products. Firearm net sales for fiscal
2011 were $342.2 million compared with $357.9 million a year ago, a decline of 4.4%. Fourth quarter
fiscal 2011 gross profit totaled $31.2 million, or 30.7% of sales, compared with gross profit of
$29.8 million, or 33.0% of sales, for the year ago quarter. Fiscal 2011 gross profit was $104.7
million, or 30.6% of sales, compared with gross profit of $119.5 million, or 33.4% of sales, for
the prior fiscal year.
In line with record sales for the fourth quarter, the company also experienced record production
levels. In the fourth quarter, sales into the consumer channel were $90.2 million, accounting for
nearly 90% of total firearm revenue and an increase of 17% over the
comparable period last year.
Firearm backlog grew to $186.7 million at year end, an increase of $112.9 million from the end of
the third quarter and $78.7 million higher than at the end of the previous fiscal year. The
increase reflected strong orders for Smith & Wesson products that were strategically price
repositioned as well as several recently launched new products. Backlog in the firearm division is
typically cancellable until shipped and reflects orders that are shippable throughout the entire
fiscal year.
The consolidation of the Thompson/Center Arms operations into the companys Springfield,
Massachusetts facility remains scheduled for completion by November 2011.
Security Solutions Division
Net sales for the fourth quarter of fiscal 2011 were $10.1 million compared with net sales of $13.6
million for the fourth quarter last year, a decline of 25.6%. Security solutions division net sales
for fiscal 2011 were $50.1 million compared with net sales of $48.3 million for the prior year, a
period that reflected the approximate nine-month period in fiscal 2010 beginning with the companys
acquisition of the division in July 2009. Gross profit for the fourth quarter was $2.5 million, or
24.8% of sales, compared with gross profit of $2.7 million, or 20.2% of sales, for the comparable
quarter last year. Gross profit for fiscal 2011 was $11.2 million, or 22.4% of sales, compared
with gross profit of $11.9 million, or 24.7% of sales, reflecting the approximate nine-month,
post-acquisition period in fiscal 2010. Backlog was $20.6 million at year end, a sequential
increase of $1.6 million from the end of the third quarter, but a decrease of $14.5 million from
the end of the prior fiscal year.
The decision to rebrand the division to Smith & Wesson Security Solutions (SWSS) has proven to be a
positive move as the company has seen a measurable improvement in customer awareness,
interest level, and inquiries. The company has recently taken steps to right-size the organization
to match the current market conditions through a range of cost reduction measures as well as the
consolidation of personnel into a single facility. These actions are aimed at improving the
companys ability to capture new business and increasing market share while facilitating longer
term margin improvement in order to establish a more competitive posture for the business.
Page 3 of 10
Business Outlook
The company currently anticipates total net sales for fiscal 2012 of between $420.0 million and
$440.0 million, which would represent growth of between 7% and 12%. Full year firearm division
sales are anticipated to increase between 11% and 13% year-over-year, with security solutions
division sales anticipated to be flat to down versus fiscal 2011. The company expects total gross
profit margin for fiscal 2012 to be approximately 30%, including expenses related to the
Thompson/Center Arms consolidation and anticipated gross margin pressure in the security solutions
division.
The company expects total net sales for the first quarter of fiscal 2012 to be between $92.0
million and $95.0 million. Firearm division net sales are anticipated to be between $86.0 million
and $89.0 million, with the security solutions division contributing the balance. Total company
gross profit margin is anticipated to be between 28.0% and 29.0%, inclusive of expenses relating to
the Thompson/Center Arms consolidation, which are expected to cause about a one percent reduction
in gross margin for the quarter. Total company operating expense is expected to be approximately
28.0% of sales, reflecting ongoing DOJ and SEC matters, and including severance and other costs
relating to the Thompson/Center Arms consolidation.
Jeffrey D. Buchanan, Executive Vice President and Chief Financial Officer, said, We had $58.3
million in cash as of April 30, 2011, no borrowings under our $120.0 million credit facility, and
working capital of $81.3 million. Given our strong balance sheet, we expect to have ample cash and
funding sources to address the $30.0 million of convertible notes that can be put to us for
repurchase in December of this year. As we proceed through fiscal 2012, our financial focus will
center on optimizing cost-efficiencies across the organization and translating our planned revenue
growth into increased profitability.
Conference Call and Webcast
The company will host a conference call and webcast today, June 30, 2011, to discuss its fourth
quarter and full year fiscal 2011 financial and operational results. Speakers on the conference
call will include Michael Golden, President and CEO; Jeffrey Buchanan, Executive Vice President and
CFO; James Debney, President of the Firearm Division; and Barry Willingham, President of Smith &
Wesson Security Solutions. The conference call may include forward-looking statements. The
conference call and webcast will begin at 5:00 pm Eastern Time (2:00 pm Pacific Time). Those
interested in listening to the call via telephone may call directly at 617-614-6207 and reference
conference code 33276310. No RSVP is necessary. The conference call audio webcast can also be
accessed live and for replay on the companys website at www.smith-wesson.com, under the Investor
Relations section. The company will maintain an audio replay of this conference call on its website
for a period of time after the call. No other audio replay will be available.
Page 4 of 10
Accounting for Contingent Consideration Related to the SWSS Acquisition
The purchase of SWSS included a provision whereby the former stockholders of SWSS could earn up to
4,080,000 shares of Smith & Wesson common stock in the event SWSS achieved established EBITDAS
performance targets by December 2010. Accounting pronouncements require that the value of the
entire earn-out amount be recorded as a liability as of the transaction date. This earn-out
consideration was recorded as a liability on the July 20, 2009 transaction closing date of
approximately $27.8 million based on a stock price on that date of $6.86. On August 19, 2010, the
company entered into a waiver and amendment to the merger agreement to waive the achievement of the
EBITDAS target for the 2010 calendar year as a condition to the issuance of the 4,080,000 earn-out
shares, and instead agreed to issue the 4,080,000 shares to the former stockholders of SWSS on
March 18, 2011. Therefore, effective August 19, 2010, this liability was adjusted to the current
market price ($3.72 per share, or $15.2 million) and reclassified to equity.
Reconciliation of U.S. GAAP to Non-GAAP Adjusted EBITDAS
In this press release, a non-GAAP financial measure known as Adjusted EBITDAS is presented. From
time-to-time, the company considers and uses Adjusted EBITDAS as a supplemental measure of
operating performance in order to provide the reader with an improved understanding of underlying
performance trends. Adjusted EBITDAS excludes the effects of interest expense, income taxes,
depreciation of tangible fixed assets, amortization of intangible assets, stock-based employee
compensation expense, impairment charge to goodwill and indefinite lived long-lived intangible
assets related to the acquisition of SWSS, DOJ and SEC investigation costs, and certain other
transactions. See the attached Reconciliation of GAAP Net Income/(Loss) to Adjusted EBITDAS for
a detailed explanation of the amounts excluded and included from net income to arrive at Adjusted
EBITDAS for the three-month and twelve-month periods ended April 30, 2011. Adjusted or non-GAAP
financial measures provide investors and the company with supplemental measures of operating
performance and trends that facilitate comparisons between periods before, during, and after
certain items that would not otherwise be apparent on a GAAP basis. Adjusted financial measures are
not, and should not be viewed as, a substitute for GAAP results. The companys definition of these
adjusted financial measures may differ from similarly named measures used by others.
About Smith & Wesson
Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC) is a U.S.-based, global provider of
products and services for safety, security, protection, and sport. The company delivers a broad
portfolio of firearms and related training to the military, law enforcement, and sports markets,
and designs and constructs facility perimeter security solutions for military and commercial
applications. Smith & Wesson Holding Corporation companies include Smith & Wesson Corp., the
globally recognized manufacturer of quality firearms; Smith & Wesson Security Solutions, Inc., a
full-service perimeter security integrator, barrier manufacturer, and installer; and
Thompson/Center Arms Company, Inc., a premier designer and manufacturer of premium hunting
firearms. Smith & Wesson facilities are located in Massachusetts, Maine, and Tennessee. For more
information on Smith & Wesson and its companies, call (800) 331-0852 or log on to
www.smith-wesson.com.
Page 5 of 10
Safe Harbor Statement
Certain statements contained in this press release may be deemed to be forward-looking statements
under federal securities laws, and we intend that such forward-looking statements be subject to the
safe-harbor created thereby. Such forward-looking statements include our focus on meeting demand
and improving margins in fiscal 2012; our efforts to reduce costs and develop and deploy new
products in our security solutions division; the potential for our strategic rebranding of our
security solutions business to better leverage our globally recognized Smith & Wesson name and
reputation as a leader in security and protection; our belief that we are taking the right actions
to align the security solutions division with current business conditions; our belief that we
continue to see unit share gains and remain the leader in both the handgun and modern sporting
rifle categories; our expectations that the consolidation of the Thompson/Center Arms operations
into our Springfield, Massachusetts facility is on track for completion by November 2011; our
ability to capture new business and increase market share in our security solutions division; our
assessment of the strong consumer demand for our new products; our assessment of consumer trends
toward small firearms; our belief that we are well positioned with a wide portfolio of products;
our outlook for company-wide sales, firearm division sales, and security solution division sales
for the first quarter of fiscal 2012 and full year fiscal 2012; our outlook for gross profit margin
and operating expenses as a percentage of sales for the first quarter of fiscal 2012 and full year
fiscal 2012; anticipated expenses during the first fiscal quarter related to the Thompson/Center
consolidation and the ongoing DOJ and SEC matters; our belief that we have ample liquidity,
through cash and available lines of credit, to repay the remaining $30 million of convertible notes
that may be put to us in December 2011; and our financial focus on optimizing cost-efficiencies
across our company and translating our planned revenue growth into increased profitability. We
caution that these statements are qualified by important factors that could cause actual results to
differ materially from those reflected by such forward-looking statements. Such factors include
the demand for our products; the costs and ultimate conclusion of certain legal matters, including
the DOJ and SEC matters; the state of the U.S. economy; general economic conditions, and consumer
spending patterns; speculation surrounding increased gun control and fears of terrorism and crime;
our growth opportunities; our anticipated growth; our ability to increase demand for our
products in various markets, including consumer, law enforcement, and military channels,
domestically and internationally; the position of our hunting products in the consumer
discretionary marketplace and distribution channel; our penetration rates in new and existing
markets; our strategies; our ability to introduce new products; the success of new products; the
success of our diversification strategy, including the expansion of our markets; the potential
for cancellation of orders from our backlog; and other risks detailed from time to time in our
reports filed with the SEC, including our Form 10-K Report for the fiscal year ended April 30,
2011.
Page 6 of 10
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)
For the Three Months Ended April 30, | For the Year Ended April 30, | |||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2009 | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
Net product and services sales: |
||||||||||||||||||||
Firearm division |
$ | 101,667 | $ | 90,236 | $ | 342,233 | $ | 357,926 | $ | 334,955 | ||||||||||
Security solutions division |
10,090 | 13,563 | 50,067 | 48,250 | | |||||||||||||||
Total net product and services sales |
111,757 | 103,799 | 392,300 | 406,176 | 334,955 | |||||||||||||||
Cost of products and services sold: |
||||||||||||||||||||
Firearm division |
70,427 | 60,481 | 237,545 | 238,463 | 237,812 | |||||||||||||||
Security solutions division |
7,589 | 10,823 | 38,849 | 36,314 | | |||||||||||||||
Total cost of products and services sold |
78,016 | 71,304 | 276,394 | 274,777 | 237,812 | |||||||||||||||
Gross profit |
33,741 | 32,495 | 115,906 | 131,399 | 97,143 | |||||||||||||||
Operating expenses: |
||||||||||||||||||||
Research and development |
1,545 | 1,211 | 5,275 | 4,299 | 2,906 | |||||||||||||||
Selling and marketing |
9,083 | 6,849 | 37,259 | 31,057 | 28,378 | |||||||||||||||
General and administrative |
17,764 | 15,614 | 63,297 | 53,771 | 40,983 | |||||||||||||||
Impairment of long-lived assets |
| | 90,503 | | 98,243 | |||||||||||||||
Total operating expenses |
28,392 | 23,674 | 196,334 | 89,127 | 170,510 | |||||||||||||||
Income/(loss) from operations |
5,349 | 8,821 | (80,428 | ) | 42,272 | (73,367 | ) | |||||||||||||
Other income/(expense): |
||||||||||||||||||||
Other income/(expense), net |
(503 | ) | (1,997 | ) | 3,275 | 9,467 | (161 | ) | ||||||||||||
Interest income |
119 | 104 | 315 | 436 | 295 | |||||||||||||||
Interest expense |
(2,024 | ) | (1,067 | ) | (5,683 | ) | (4,824 | ) | (5,892 | ) | ||||||||||
Total other income/(expense), net |
(2,408 | ) | (2,960 | ) | (2,093 | ) | 5,079 | (5,758 | ) | |||||||||||
Income/(loss) before income taxes |
2,941 | 5,861 | (82,521 | ) | 47,351 | (79,125 | ) | |||||||||||||
Income tax (benefit)/expense |
1,801 | 3,195 | 248 | 14,841 | (14,918 | ) | ||||||||||||||
Net income/(loss)/comprehensive income/(loss) |
$ | 1,140 | $ | 2,666 | $ | (82,769 | ) | $ | 32,510 | $ | (64,207 | ) | ||||||||
Weighted average number of common shares outstanding, basic |
62,285 | 59,809 | 60,622 | 58,195 | 46,802 | |||||||||||||||
Net income/(loss) per share, basic |
$ | 0.02 | $ | 0.04 | $ | (1.37 | ) | $ | 0.56 | $ | (1.37 | ) | ||||||||
Weighted average number of common and common equivalent shares
outstanding, diluted |
64,894 | 60,510 | 60,622 | 65,456 | 46,802 | |||||||||||||||
Net income/(loss) per share, diluted |
$ | 0.02 | $ | 0.04 | $ | (1.37 | ) | $ | 0.53 | $ | (1.37 | ) | ||||||||
Page 7 of 10
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of:
CONSOLIDATED BALANCE SHEETS
As of:
April 30, 2011 | April 30, 2010 | |||||||
(In thousands, except par value and share data) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents, including restricted
cash of $5,821 on April 30, 2011 and $0 on April
30, 2010 |
$ | 58,292 | $ | 39,855 | ||||
Accounts receivable, net of allowance for
doubtful accounts of $2,147 on April 30, 2011 and
$811 on April 30, 2010 |
64,753 | 73,459 | ||||||
Inventories |
51,720 | 50,725 | ||||||
Other current assets |
10,212 | 4,095 | ||||||
Deferred income taxes |
14,073 | 11,249 | ||||||
Income tax receivable |
4,513 | 5,170 | ||||||
Total current assets |
203,563 | 184,553 | ||||||
Property, plant and equipment, net |
62,390 | 58,718 | ||||||
Intangibles, net |
8,692 | 16,219 | ||||||
Goodwill |
| 83,865 | ||||||
Other assets |
6,804 | 5,696 | ||||||
$ | 281,449 | $ | 349,051 | |||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 40,119 | $ | 29,258 | ||||
Accrued expenses |
25,356 | 42,084 | ||||||
Accrued payroll |
5,309 | 9,340 | ||||||
Accrued taxes other than income |
11,421 | 2,529 | ||||||
Accrued profit sharing |
4,081 | 7,199 | ||||||
Accrued product/municipal liability |
2,584 | 2,777 | ||||||
Accrued warranty |
3,424 | 3,765 | ||||||
Current portion of notes payable |
30,000 | | ||||||
Total current liabilities |
122,294 | 96,952 | ||||||
Deferred income taxes |
5,309 | 2,965 | ||||||
Notes payable, net of current portion |
50,000 | 80,000 | ||||||
Other non-current liabilities |
8,763 | 8,557 | ||||||
Commitments and contingencies |
| | ||||||
Total Liabilities |
186,366 | 188,474 | ||||||
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, 65,710,531
shares issued and 64,510,531 shares outstanding on April 30, 2011 and
61,122,031 shares issued and 59,922,031 shares outstanding on April 30,
2010 |
66 | 61 | ||||||
Additional paid-in capital |
185,802 | 168,532 | ||||||
Accumulated deficit |
(84,462 | ) | (1,693 | ) | ||||
Accumulated other comprehensive income |
73 | 73 | ||||||
Treasury stock, at cost (1,200,000 common shares) |
(6,396 | ) | (6,396 | ) | ||||
Total stockholders equity |
95,083 | 160,577 | ||||||
$ | 281,449 | $ | 349,051 | |||||
Page 8 of 10
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year Ended April 30, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
(In thousands) | ||||||||||||
Cash flows from operating activities: |
||||||||||||
Net income/(loss) |
$ | (82,769 | ) | $ | 32,510 | $ | (64,207 | ) | ||||
Adjustments to reconcile net income/(loss) to net cash provided by operating activities (net of acquisitions): |
||||||||||||
Amortization and depreciation |
14,935 | 13,623 | 12,670 | |||||||||
Loss on sale of assets |
234 | 516 | 247 | |||||||||
Provision for/(recoveries of) losses on accounts receivable |
1,379 | (278 | ) | 2,312 | ||||||||
Impairment of long-lived assets |
90,503 | | 98,243 | |||||||||
Deferred income taxes |
(480 | ) | 6,927 | (23,917 | ) | |||||||
Stock-based compensation expense |
1,680 | 3,284 | 3,307 | |||||||||
Change in contingent consideration |
(3,060 | ) | (9,587 | ) | | |||||||
Excess book deduction of stock-based compensation |
(739 | ) | (148 | ) | | |||||||
Changes in operating assets and liabilities: |
||||||||||||
Accounts receivable |
7,327 | (14,872 | ) | 3,619 | ||||||||
Inventories |
(995 | ) | (5,024 | ) | 5,431 | |||||||
Other current assets |
(1,717 | ) | (298 | ) | 1,632 | |||||||
Income tax receivable/payable |
657 | (7,986 | ) | 4,608 | ||||||||
Accounts payable |
10,861 | 3,703 | (987 | ) | ||||||||
Accrued payroll |
(4,031 | ) | 1,357 | 2,416 | ||||||||
Accrued taxes other than income |
8,892 | (169 | ) | 461 | ||||||||
Accrued profit sharing |
(3,118 | ) | 991 | 2,173 | ||||||||
Accrued other expenses |
1,510 | 1,369 | 360 | |||||||||
Accrued product/municipal liability |
(193 | ) | (641 | ) | 651 | |||||||
Accrued warranty |
(341 | ) | (580 | ) | 2,595 | |||||||
Other assets |
(1,453 | ) | (72 | ) | 2,277 | |||||||
Other non-current liabilities |
206 | (1,533 | ) | (828 | ) | |||||||
Net cash provided by operating activities |
39,288 | 23,092 | 53,063 | |||||||||
Cash flows from investing activities: |
||||||||||||
Payments for the purchase of Smith & Wesson Security Solutions, Inc. |
| (21,074 | ) | | ||||||||
Payments to acquire patents and software |
(562 | ) | (889 | ) | (46 | ) | ||||||
Proceeds from sale of property and equipment |
53 | 23 | 30 | |||||||||
Payments to acquire property and equipment |
(20,353 | ) | (16,831 | ) | (9,436 | ) | ||||||
Net cash used in investing activities |
(20,862 | ) | (38,771 | ) | (9,452 | ) | ||||||
Cash flows from financing activities: |
||||||||||||
Proceeds from loans and notes payable |
51,365 | 2,950 | 22,698 | |||||||||
Cash paid for debt issue costs |
(1,145 | ) | (81 | ) | (113 | ) | ||||||
Proceeds from issuance of common stock, net of issuance costs |
| 35,017 | 32,046 | |||||||||
Proceeds from disgorgement profit |
| | 3 | |||||||||
Proceeds from exercise of options to acquire common stock including employee stock purchase plan |
1,206 | 1,232 | 1,311 | |||||||||
Taxes paid related to restricted stock issuance |
(50 | ) | (123 | ) | | |||||||
Excess tax benefit of stock-based compensation |
| | 315 | |||||||||
Payments on loans and notes payable |
(51,365 | ) | (23,283 | ) | (64,408 | ) | ||||||
Net cash (used in)/provided by financing activities |
11 | 15,712 | (8,148 | ) | ||||||||
Net increase in cash and cash equivalents |
18,437 | 33 | 35,463 | |||||||||
Cash and cash equivalents, beginning of period |
39,855 | 39,822 | 4,359 | |||||||||
Cash and cash equivalents, end of period |
$ | 58,292 | $ | 39,855 | $ | 39,822 | ||||||
Supplemental disclosure of cash flow information |
||||||||||||
Cash paid for: |
||||||||||||
Interest |
$ | 3,820 | $ | 3,614 | $ | 4,710 | ||||||
Income taxes |
2,146 | 16,729 | 5,459 |
Page 9 of 10
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME/(LOSS) TO ADJUSTED EBITDAS (Unaudited)
RECONCILIATION OF GAAP NET INCOME/(LOSS) TO ADJUSTED EBITDAS (Unaudited)
For the Three Months Ended April 30, 2011: | For the Three Months Ended April 30, 2010: | |||||||||||||||||||||||
GAAP | Adjustments | Adjusted | GAAP | Adjustments | Adjusted | |||||||||||||||||||
Net product and services sales |
$ | 111,757 | $ | 111,757 | $ | 103,799 | $ | 103,799 | ||||||||||||||||
Cost of products and services sold |
78,016 | $ | (4,217) | (8) | 73,799 | 71,304 | $ | (2,127) | (1) | 69,177 | ||||||||||||||
Gross profit |
33,741 | 4,217 | 37,958 | 32,495 | 2,127 | 34,622 | ||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Research and development |
1,545 | (107) | (8) | 1,438 | 1,211 | (21) | (1) | 1,190 | ||||||||||||||||
Selling and marketing |
9,083 | (87) | (8) | 8,996 | 6,849 | (45) | (1) | 6,804 | ||||||||||||||||
General and administrative |
17,764 | (3,065) | (2) | 14,699 | 15,614 | (3,983) | (3) | 11,631 | ||||||||||||||||
Total operating expenses |
28,392 | (3,259 | ) | 25,133 | 23,674 | (4,049 | ) | 19,625 | ||||||||||||||||
Income/(loss) from operations |
5,349 | 7,476 | 12,825 | 8,821 | 6,176 | 14,997 | ||||||||||||||||||
Other income/(expense): |
||||||||||||||||||||||||
Other income/(expense), net |
(503 | ) | 433 | (4) | (70 | ) | (1,997 | ) | 1,993 | (4) | (4 | ) | ||||||||||||
Interest income |
119 | | 119 | 104 | | 104 | ||||||||||||||||||
Interest expense |
(2,024 | ) | 2,024 | (5) | | (1,067 | ) | 1,067 | (5) | | ||||||||||||||
Total other
income/(expense), net |
(2,408 | ) | 2,457 | 49 | (2,960 | ) | 3,060 | 100 | ||||||||||||||||
Income before income taxes |
2,941 | 9,933 | 12,874 | 5,861 | 9,236 | 15,097 | ||||||||||||||||||
Income tax expense |
1,801 | (1,801) | (6) | | 3,195 | (3,195) | (6) | | ||||||||||||||||
Net income/(loss)/comprehensive income/(loss) |
$ | 1,140 | $ | 11,734 | $ | 12,874 | $ | 2,666 | $ | 12,431 | $ | 15,097 | ||||||||||||
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME/(LOSS) TO ADJUSTED EBITDAS (Unaudited)
RECONCILIATION OF GAAP NET INCOME/(LOSS) TO ADJUSTED EBITDAS (Unaudited)
For the Year Ended April 30, 2011: | For the Year Ended April 30, 2010: | |||||||||||||||||||||||
GAAP | Adjustments | Adjusted | GAAP | Adjustments | Adjusted | |||||||||||||||||||
Net product and services sales |
$ | 392,300 | $ | 392,300 | $ | 406,176 | $ | 406,176 | ||||||||||||||||
Cost of products and services sold |
276,394 | $ | (12,303) | (8) | 264,091 | 274,777 | $ | (8,160) | (1) | 266,617 | ||||||||||||||
Gross profit |
115,906 | 12,303 | 128,209 | 131,399 | 8,160 | 139,559 | ||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Research and development |
5,275 | (213) | (8) | 5,062 | 4,299 | (81) | (1) | 4,218 | ||||||||||||||||
Selling and marketing |
37,259 | (271) | (8) | 36,988 | 31,057 | (172) | (1) | 30,885 | ||||||||||||||||
General and administrative |
63,297 | (13,445) | (2) | 49,852 | 53,771 | (10,136) | (3) | 43,635 | ||||||||||||||||
Impairment of long-lived assets |
90,503 | (90,503) | (7) | | | | | |||||||||||||||||
Total operating expenses |
196,334 | (104,432 | ) | 91,902 | 89,127 | (10,389 | ) | 78,738 | ||||||||||||||||
Income/(loss) from operations |
(80,428 | ) | 116,735 | 36,307 | 42,272 | 18,549 | 60,821 | |||||||||||||||||
Other income/(expense): |
||||||||||||||||||||||||
Other income/(expense), net |
3,275 | (3,246) | (4) | 29 | 9,467 | (9,401) | (4) | 66 | ||||||||||||||||
Interest income |
315 | | 315 | 436 | | 436 | ||||||||||||||||||
Interest expense |
(5,683 | ) | 5,683 | (5) | | (4,824 | ) | 4,824 | (5) | | ||||||||||||||
Total other expense, net |
(2,093 | ) | 2,437 | 344 | 5,079 | (4,577 | ) | 502 | ||||||||||||||||
Income/(loss) before income taxes |
(82,521 | ) | 119,172 | 36,651 | 47,351 | 13,972 | 61,323 | |||||||||||||||||
Income tax expense/(benefit) |
248 | (248) | (6) | | 14,841 | (14,841) | (6) | | ||||||||||||||||
Net income/(loss)/comprehensive income/(loss) |
$ | (82,769 | ) | $ | 119,420 | $ | 36,651 | $ | 32,510 | $ | 28,813 | $ | 61,323 | |||||||||||
(1) | To eliminate depreciation and amortization expense. |
|
(2) | To eliminate depreciation,
amortization, stock-based compensation expense, plant consolidation costs, DOJ/SEC costs and related profit sharing impacts of DOJ/SEC. |
|
(3) | To eliminate depreciation, amortization, and stock-based compensation expense, DOJ/SEC costs and related profit sharing impacts of DOJ/SEC. |
|
(4) | To eliminate unrealized mark-to-market adjustments on foreign exchange contracts and fair value of contingent consideration liability. |
|
(5) | To eliminate interest expense. |
|
(6) | To eliminate income tax expense. |
|
(7) | To eliminate impairment of long-lived assets. |
|
(8) | To eliminate depreciation,
amortization, and plant consolidation costs. |
Page 10 of 10