UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
March 5, 2013
Date of Report (Date of earliest event reported)
Smith & Wesson Holding Corporation
(Exact Name of Registrant as Specified in Charter)
| Nevada | 001-31552 | 87-0543688 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
2100 Roosevelt Avenue
Springfield, Massachusetts
01104
(Address of Principal Executive Offices) (Zip Code)
(800) 331-0852
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
We are furnishing this Report on Form 8-K in connection with the disclosure of information, in the form of the textual information from a press release released on March 5, 2013.
The information in this Report on Form 8-K (including the exhibit) is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
We do not have, and expressly disclaim, any obligation to release publicly any updates or any changes in our expectations or any change in events, conditions, or circumstances on which any forward-looking statement is based.
The text included with this Report on Form 8-K is available on our website located at www.smith-wesson.com, although we reserve the right to discontinue that availability at any time.
Item 9.01. Financial Statements and Exhibits.
| (a) | Financial Statements of Business Acquired. |
Not applicable.
| (b) | Pro Forma Financial Information. |
Not applicable.
| (c) | Shell Company Transactions. |
Not applicable.
| (d) | Exhibits. |
| Exhibit |
Exhibits | |||
| 99.1 | Press release from Smith & Wesson Holding Corporation, dated March 5, 2013, entitled “Smith & Wesson Holding Corporation Reports Third Quarter Fiscal 2013 Financial Results” | |||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SMITH & WESSON HOLDING CORPORATION | ||||||
| Date: March 5, 2013 | By: | /s/ Jeffrey D. Buchanan | ||||
| Jeffrey D. Buchanan | ||||||
| Executive Vice President, Chief Financial Officer, and Treasurer | ||||||
EXHIBIT INDEX
| 99.1 | Press release from Smith & Wesson Holding Corporation, dated March 5, 2013, entitled “Smith & Wesson Holding Corporation Reports Third Quarter Fiscal 2013 Financial Results” | |
Exhibit 99.1
Contact: Liz Sharp, VP Investor Relations
Smith & Wesson Holding Corp.
(413) 747-3304
lsharp@smith-wesson.com
Smith & Wesson Holding Corporation Reports
Third Quarter Fiscal 2013 Financial Results
| • | Fiscal Third Quarter 2013 Net Sales from Continuing Operations of $136.2 Million, Up 38.8% Year-Over-Year |
| • | Fiscal Third Quarter 2013 Net Income from Continuing Operations of $17.5 Million, or $0.26 Per Diluted Share |
| • | Increasing Guidance for Fiscal 2013 Full Year Net Sales from Continuing Operations to Between $575.0 Million and $580.0 Million |
SPRINGFIELD, Mass., March 5, 2013 — Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC), a leader in firearm manufacturing and design, today announced financial results for the fiscal 2013 third quarter ended January 31, 2013.
Third Quarter Fiscal 2013 Financial Highlights
| • | Net sales from continuing operations for the third quarter were $136.2 million, up 38.8% from the third quarter last year. The company continued to increase its production capacity during the third quarter and has operated its plant at essentially full capacity for the last four quarters. Despite these capacity increases, the company was unable to meet the ongoing demand across all of its firearm product lines. |
| • | Gross profit for the third quarter was $50.1 million, or 36.8% of net sales, compared with gross profit of $30.0 million, or 30.6% of net sales, for the comparable quarter last year. Gross profit improved as a result of increased sales volume, leveraging of fixed costs, and a favorable product mix. |
| • | Operating expenses for the third quarter were $22.1 million, or 16.2% of net sales, compared with operating expenses of $19.7 million, or 20.1% of net sales, for the third quarter last year. The increase in operating expenses was primarily related to higher general and administrative costs associated with the ongoing implementation of the company’s new ERP system and incentive compensation. The decline in operating expenses as a percentage of net sales was primarily driven by increased sales volume and controlled spending in sales and marketing. |
| • | Operating income from continuing operations for the third quarter was $28.0 million, or 20.6% percent of net sales, compared with operating income from continuing operations of $10.3 million, or 10.5% percent of net sales, for the comparable quarter last year. |
Page 1 of 10
| • | Income from continuing operations for the third quarter was $17.5 million, or $0.26 per diluted share, more than triple the net income from continuing operations of $5.4 million, or $0.08 per diluted share, for the third quarter last year. |
| • | Non-GAAP Adjusted EBITDAS from continuing operations for the third quarter increased to $33.3 million compared with $14.8 million for the third quarter last year. Fiscal year-to-date non-GAAP Adjusted EBITDAS was $101.5 million compared with $37.2 million for the comparable prior year period. |
| • | Operating cash flow of $33.0 million and net capital spending of $12.6 million for the third quarter resulted in free cash flow of $20.4 million. |
| • | During the third quarter of fiscal 2013, the company’s Board of Directors approved a program to repurchase up to $35.0 million of Smith & Wesson’s common stock, subject to certain conditions, in the open market or privately negotiated transactions on or prior to June 30, 2013. The company repurchased 2.1 million shares of its common stock for $20.0 million through this program during the third quarter of fiscal 2013 utilizing cash on hand. |
James Debney, Smith & Wesson Holding Corporation President and Chief Executive Officer, stated, “Our success in the third quarter was highlighted by significant year-over-year improvements in net sales, margin expansion, and bottom line profitability as we successfully executed our growth strategy, which is underpinned with a focus on firearms. Performance gains were driven by continued robust consumer demand for firearms as well as increased sales of our M&P® polymer pistols and modern sporting rifles. Based on incremental improvements in expanding our production capacity, which will be further deployed in the fourth quarter, we are increasing our financial guidance for the full fiscal year 2013.”
Jeffrey D. Buchanan, Executive Vice President and Chief Financial Officer, stated, “The strength of our balance sheet continues to provide us enhanced flexibility to invest in our core firearm business and fuel our growth initiatives. At the end of the quarter, we had no borrowings under our credit facility and a cash balance of $62.0 million. Robust free cash flow also allowed us to return value to our stockholders by buying back shares of our common stock in the fiscal third quarter for a total of $20.0 million.”
Financial Outlook for Continuing Operations
The company expects net sales from continuing operations for the fourth quarter of fiscal 2013 to be between $165.0 million and $170.0 million, which would represent year-over-year growth from continuing operations of 29.0% at the midpoint. The company anticipates GAAP earnings per diluted share from continuing operations of between $0.38 and $0.40 for the fourth quarter of fiscal 2013.
Page 2 of 10
The company is raising its full year fiscal 2013 financial guidance. The company currently anticipates net sales from continuing operations for fiscal 2013 of between $575.0 million and $580.0 million, which would represent year-over-year growth from continuing operations of approximately 40.0% at the midpoint. The company anticipates fiscal 2013 GAAP earnings per diluted share from continuing operations of between $1.17 and $1.19, income from continuing operations of between $78.0 million and $79.5 million, and non-GAAP Adjusted EBITDAS from continuing operations of between $148.4 million and $150.7 million.
Conference Call and Webcast
The company will host a conference call and webcast today, March 5, 2013, to discuss its third quarter fiscal 2013 financial and operational results. Speakers on the conference call will include James Debney, President and CEO, and Jeffrey D. Buchanan, Executive Vice President and CFO. The conference call may include forward-looking statements. The conference call and webcast will begin at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Those interested in listening to the call via telephone may call directly at (866) 804-6928 and reference conference code 35129271. No RSVP is necessary. The conference call audio webcast can also be accessed live and for replay on the company’s website at www.smith-wesson.com, under the Investor Relations section. The company will maintain an audio replay of this conference call on its website for a period of time after the call. No other audio replay will be available.
Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
In this press release, certain non-GAAP financial measures, including “Adjusted EBITDAS” and “free cash flow” are presented. From time-to-time, the company considers and uses Adjusted EBITDAS and free cash flow as supplemental measures 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 compensation expense, plant consolidation costs, DOJ and SEC investigation costs, and certain other transactions. See the attached “Reconciliation of GAAP Net Income to Adjusted EBITDAS” for a detailed explanation of the amounts excluded from and included in net income to arrive at Adjusted EBITDAS for the three-month and nine-month periods ended January 31, 2013 and January 31, 2012 and the attached “Reconciliation of Estimated GAAP Income from Continuing Operations to Estimated Adjusted EBITDAS” for a full detailed explanation of the amounts excluded from and included in income from continuing operations to arrive at estimated Adjusted EBITDAS for full year fiscal 2013. Free cash flow is defined as cash flow provided by operating activities less capital expenditures, which include purchases of property, equipment, and software.
Adjusted or non-GAAP financial measures provide investors and the company with supplemental measures of operating performance and trends that facilitate comparisons between periods before, during, and after certain items that would not otherwise be apparent on a GAAP basis. Adjusted financial measures are not, and should not be viewed as, a substitute for GAAP results. The company’s definition of these adjusted financial measures may differ from similarly named measures used by others.
Page 3 of 10
About Smith & Wesson
Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC) is a U.S.-based leader in firearm manufacturing and design, delivering a broad portfolio of quality firearms, related products, and training to the global military, law enforcement, and consumer markets. The company’s brands include Smith & Wesson®, M&P® and Thompson/Center Arms™. Smith & Wesson facilities are located in Massachusetts and Maine. For more information on Smith & Wesson, call (800) 331-0852 or log on to
www.smith-wesson.com.
Safe Harbor Statement
Certain statements contained in this press release may be deemed to be forward-looking statements under federal securities laws, and we intend that such forward-looking statements be subject to the safe-harbor created thereby. Such forward-looking statements include our outlook for fiscal 2013 full year net sales from continuing operations; the outcome of the ongoing implementation of our new ERP system; potential future repurchases of our common stock under our stock repurchase program; our belief regarding robust consumer demand for firearms; our belief that our expanded production capacity will be further deployed in the fourth quarter of fiscal 2013; increasing our full year fiscal 2013 financial guidance; our belief regarding our enhanced flexibility to invest in our core firearm business and fuel our growth initiatives; our outlook for net sales from continuing operations, year-over-year growth from continuing operations, and GAAP earnings per diluted share from continuing operations for the fourth quarter of fiscal 2013 and the full 2013 fiscal year; and our outlook for income from continuing operations and non-GAAP Adjusted EBITDAS from continuing operations for the full 2013 fiscal year, including the amounts excluded from and included in net income to arrive at Adjusted EBITDAS for our guidance for full year fiscal 2013. We caution that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by such forward-looking statements. Such factors include the demand for our products; the costs and ultimate conclusion of certain legal matters, including the DOJ and SEC matters; the state of the U.S. economy; general economic conditions, and consumer spending patterns; the potential for increased regulation of firearms and firearm-related products; speculation surrounding fears of terrorism and crime; our growth opportunities; our anticipated growth; our ability to increase demand for our products in various markets, including consumer, law enforcement, and military channels, domestically and internationally; the position of our hunting products in the consumer discretionary marketplace and distribution channel; our penetration rates in new and existing markets; our strategies; our ability to introduce new products; the success of new products; our ability to expand our markets; the potential for cancellation of orders from our backlog; and other risks detailed from time to time in our reports filed with the SEC, including our Form 10-K Report for the fiscal year ended April 30, 2012.
Page 4 of 10
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
| For the Three Months Ended: | For the Nine Months Ended: | |||||||||||||||
| January 31, 2013 | January 31, 2012 | January 31, 2013 | January 31, 2012 | |||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| Net sales |
$ | 136,242 | $ | 98,125 | $ | 408,797 | $ | 282,154 | ||||||||
| Cost of sales |
86,143 | 68,121 | 258,882 | 201,028 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit |
50,099 | 30,004 | 149,915 | 81,126 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
942 | 992 | 3,363 | 3,571 | ||||||||||||
| Selling and marketing |
8,333 | 8,062 | 23,203 | 24,823 | ||||||||||||
| General and administrative |
12,776 | 10,666 | 37,381 | 33,483 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating expenses |
22,051 | 19,720 | 63,947 | 61,877 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating income from continuing operations |
28,048 | 10,284 | 85,968 | 19,249 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other income/(expense): |
||||||||||||||||
| Other income/(expense), net |
— | 8 | 39 | 62 | ||||||||||||
| Interest income |
48 | 394 | 750 | 1,196 | ||||||||||||
| Interest expense |
(1,240 | ) | (1,629 | ) | (4,571 | ) | (6,044 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total other income/(expense), net |
(1,192 | ) | (1,227 | ) | (3,782 | ) | (4,786 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations before income taxes |
26,856 | 9,057 | 82,186 | 14,463 | ||||||||||||
| Income tax expense |
9,350 | 3,664 | 29,410 | 5,845 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations |
17,506 | 5,393 | 52,776 | 8,618 | ||||||||||||
| Discontinued operations: |
||||||||||||||||
| Loss from operations of discontinued security solutions division |
(601 | ) | (1,600 | ) | (3,150 | ) | (8,306 | ) | ||||||||
| Income tax expense/(benefit) |
2,329 | (645 | ) | (3,921 | ) | (3,326 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income/(loss) from discontinued operations |
(2,930 | ) | (955 | ) | 771 | (4,980 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income/comprehensive income |
$ | 14,576 | $ | 4,438 | $ | 53,547 | $ | 3,638 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income per share: |
||||||||||||||||
| Basic—continuing operations |
$ | 0.27 | $ | 0.08 | $ | 0.81 | $ | 0.13 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Basic—net income |
$ | 0.22 | $ | 0.07 | $ | 0.82 | $ | 0.06 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted—continuing operations |
$ | 0.26 | $ | 0.08 | $ | 0.79 | $ | 0.13 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted—net income |
$ | 0.22 | $ | 0.07 | $ | 0.80 | $ | 0.06 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average number of common shares outstanding: |
||||||||||||||||
| Basic |
65,149 | 64,874 | 65,457 | 64,700 | ||||||||||||
| Diluted |
66,421 | 66,582 | 66,909 | 65,154 | ||||||||||||
Page 5 of 10
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| As of: | ||||||||
| January 31, 2013 | April 30, 2012 | |||||||
| (In thousands, except par value and share data) | ||||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents, including restricted cash of $3,342 on January 31, 2013 and $3,334 on April 30, 2012 |
$ | 61,999 | $ | 56,717 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $785 on January 31, 2013 and $1,058 on April 30, 2012 |
38,871 | 48,313 | ||||||
| Inventories |
69,208 | 55,296 | ||||||
| Prepaid expenses and other current assets |
5,689 | 4,139 | ||||||
| Assets held for sale |
— | 13,490 | ||||||
| Deferred income taxes |
12,759 | 12,759 | ||||||
| Income tax receivable |
5,800 | — | ||||||
|
|
|
|
|
|||||
| Total current assets |
194,326 | 190,714 | ||||||
|
|
|
|
|
|||||
| Property, plant, and equipment, net |
77,807 | 60,528 | ||||||
| Intangibles, net |
4,075 | 4,532 | ||||||
| Other assets |
5,333 | 5,900 | ||||||
|
|
|
|
|
|||||
| $ | 281,541 | $ | 261,674 | |||||
|
|
|
|
|
|||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 24,377 | $ | 28,618 | ||||
| Accrued expenses |
13,677 | 20,685 | ||||||
| Accrued payroll |
11,474 | 9,002 | ||||||
| Accrued income taxes |
— | 291 | ||||||
| Accrued taxes other than income |
4,859 | 4,270 | ||||||
| Accrued profit sharing |
7,131 | 8,040 | ||||||
| Accrued product/municipal liability |
1,517 | 1,397 | ||||||
| Accrued warranty |
5,014 | 5,349 | ||||||
| Liabilities held for sale |
— | 5,693 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
68,049 | 83,345 | ||||||
|
|
|
|
|
|||||
| Deferred income taxes |
4,537 | 4,537 | ||||||
|
|
|
|
|
|||||
| Notes payable, net of current portion |
43,559 | 50,000 | ||||||
|
|
|
|
|
|||||
| Other non-current liabilities |
10,782 | 10,948 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
126,927 | 148,830 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $.001 par value, 20,000,000 shares authorized, no shares issued or outstanding |
— | — | ||||||
| Common stock, $.001 par value, 100,000,000 shares authorized, 67,459,468 shares issued and 64,159,865 shares outstanding on January 31, 2013 and 66,512,097 shares issued and 65,312,097 shares outstanding on April 30, 2012 |
67 | 67 | ||||||
| Additional paid-in capital |
197,602 | 189,379 | ||||||
| Accumulated deficit |
(16,732 | ) | (70,279 | ) | ||||
| Accumulated other comprehensive income |
73 | 73 | ||||||
| Treasury stock, at cost (3,299,603 common shares on January 31, 2013 and 1,200,000 on April 30, 2012) |
(26,396 | ) | (6,396 | ) | ||||
|
|
|
|
|
|||||
| Total stockholders’ equity |
154,614 | 112,844 | ||||||
|
|
|
|
|
|||||
| $ | 281,541 | $ | 261,674 | |||||
|
|
|
|
|
|||||
Page 6 of 10
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Nine Months Ended: | ||||||||
| January 31, 2013 | January 31, 2012 | |||||||
| (In thousands) | ||||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 53,547 | $ | 3,638 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Amortization and depreciation |
12,023 | 11,286 | ||||||
| Loss on sale of business including loss on sale of discontinued operations, including $45 of stock-based compensation expense |
1,222 | 241 | ||||||
| Loss on sale/disposition of assets |
277 | 251 | ||||||
| Provisions for/(recoveries of) losses on accounts receivable |
378 | (326 | ) | |||||
| Change in disposal group assets and liabilities |
(1,215 | ) | 5,241 | |||||
| Stock-based compensation expense |
3,086 | 1,797 | ||||||
| Excess book deduction of stock-based compensation |
— | (266 | ) | |||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
9,064 | 15,555 | ||||||
| Inventories |
(13,912 | ) | (9,988 | ) | ||||
| Other current assets |
(1,150 | ) | 1,578 | |||||
| Income tax receivable/payable |
(6,091 | ) | 1,239 | |||||
| Accounts payable |
(4,241 | ) | (13,519 | ) | ||||
| Accrued payroll |
1,867 | 2,785 | ||||||
| Accrued taxes other than income |
589 | (8,000 | ) | |||||
| Accrued profit sharing |
(909 | ) | (459 | ) | ||||
| Accrued other expenses |
(7,795 | ) | (5,348 | ) | ||||
| Accrued product/municipal liability |
120 | (149 | ) | |||||
| Accrued warranty |
(335 | ) | 1,687 | |||||
| Other assets |
(45 | ) | (64 | ) | ||||
| Other non-current liabilities |
284 | 599 | ||||||
|
|
|
|
|
|||||
| Net cash provided by operating activities |
46,764 | 7,778 | ||||||
|
|
|
|
|
|||||
| Cash flows from investing activities: |
||||||||
| Proceeds from sale of business including discontinued operations |
7,500 | 500 | ||||||
| Receipts from note receivable |
55 | — | ||||||
| Payments to acquire patents and software |
(36 | ) | (124 | ) | ||||
| Proceeds from sale of property and equipment |
1,037 | 15 | ||||||
| Payments to acquire property and equipment |
(28,399 | ) | (10,067 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(19,843 | ) | (9,676 | ) | ||||
|
|
|
|
|
|||||
| Cash flows from financing activities: |
||||||||
| Proceeds from loans and notes payable |
1,753 | 1,532 | ||||||
| Cash paid for debt issue costs |
— | (1,859 | ) | |||||
| Proceeds from energy efficiency incentive programs |
— | 225 | ||||||
| Payments on capital lease obligation |
(450 | ) | — | |||||
| Cash paid for redemption of convertible notes |
— | (30,000 | ) | |||||
| Payments on loans and notes payable |
(8,034 | ) | (1,264 | ) | ||||
| Payments to acquire treasury stock |
(20,000 | ) | — | |||||
| Proceeds from exercise of options to acquire common stock, including employee stock purchase plan |
4,095 | 717 | ||||||
| Excess tax benefit of stock-based compensation |
997 | — | ||||||
|
|
|
|
|
|||||
| Net cash used in financing activities |
(21,639 | ) | (30,649 | ) | ||||
|
|
|
|
|
|||||
| Net increase/(decrease) in cash and cash equivalents |
5,282 | (32,547 | ) | |||||
| Cash and cash equivalents, beginning of period |
56,717 | 58,292 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents, end of period |
$ | 61,999 | $ | 25,745 | ||||
|
|
|
|
|
|||||
| Supplemental disclosure of cash flow information |
||||||||
| Cash paid for: |
||||||||
| Interest |
$ | 5,252 | $ | 5,745 | ||||
| Income taxes |
30,976 | 1,524 | ||||||
Page 7 of 10
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDAS (Unaudited)
| For the Three Months Ended January 31, 2013: | For the Three Months Ended January 31, 2012: | |||||||||||||||||||||||
| GAAP | Adjustments | Adjusted | GAAP | Adjustments | Adjusted | |||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| Net sales |
$ | 136,242 | $ | — | $ | 136,242 | $ | 98,125 | $ | — | $ | 98,125 | ||||||||||||
| Cost of sales |
86,143 | (3,414 | )(8) | 82,729 | 68,121 | (3,185 | )(1) | 64,936 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Gross profit |
50,099 | 3,414 | 53,513 | 30,004 | 3,185 | 33,189 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Operating expenses: |
||||||||||||||||||||||||
| Research and development |
942 | (29 | )(8) | 913 | 992 | (42 | )(1) | 950 | ||||||||||||||||
| Selling and marketing |
8,333 | (44 | )(8) | 8,289 | 8,062 | (51 | )(1) | 8,011 | ||||||||||||||||
| General and administrative |
12,776 | (1,739 | )(2) | 11,037 | 10,666 | (1,228 | )(2) | 9,438 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total operating expenses |
22,051 | (1,812 | ) | 20,239 | 19,720 | (1,321 | ) | 18,399 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Operating income from continuing operations |
28,048 | 5,226 | 33,274 | 10,284 | 4,506 | 14,790 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Other income/(expense): |
||||||||||||||||||||||||
| Other income/(expense), net |
— | — | — | 8 | — | 8 | ||||||||||||||||||
| Interest income |
48 | — | (6) | 48 | 394 | (361 | )(6) | 33 | ||||||||||||||||
| Interest expense |
(1,240 | ) | 1,240 | (4) | — | (1,629 | ) | 1,629 | (4) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total other income/(expense), net |
(1,192 | ) | 1,240 | 48 | (1,227 | ) | 1,268 | 41 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from continuing operations before income taxes |
26,856 | 6,466 | 33,322 | 9,057 | 5,774 | 14,831 | ||||||||||||||||||
| Income tax expense |
9,350 | (9,350 | )(5) | — | 3,664 | (3,664 | )(5) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from continuing operations |
17,506 | 15,816 | 33,322 | 5,393 | 9,438 | 14,831 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Discontinued operations: |
||||||||||||||||||||||||
| Loss from operations of discontinued security solutions division |
(601 | ) | 424 | (10) | (177 | ) | (1,600 | ) | 759 | (7) | (841 | ) | ||||||||||||
| Income tax expense/(benefit) |
2,329 | (2,329 | )(5) | — | (645 | ) | 645 | (5) | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Loss on discontinued operations |
(2,930 | ) | 2,753 | (177 | ) | (955 | ) | 114 | (841 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income/comprehensive income |
$ | 14,576 | $ | 18,569 | $ | 33,145 | $ | 4,438 | $ | 9,552 | $ | 13,990 | ||||||||||||
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Page 8 of 10
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDAS (Unaudited)
| For the Nine Months Ended January 31, 2013: | For the Nine Months Ended January 31, 2012: | |||||||||||||||||||||||
| GAAP | Adjustments | Adjusted | GAAP | Adjustments | Adjusted | |||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| Net sales |
$ | 408,797 | $ | — | $ | 408,797 | $ | 282,154 | $ | — | $ | 282,154 | ||||||||||||
| Cost of sales |
258,882 | (10,211 | )(8) | 248,671 | 201,028 | (10,815 | )(1) | 190,213 | ||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Gross profit |
149,915 | 10,211 | 160,126 | 81,126 | 10,815 | 91,941 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Operating expenses: |
||||||||||||||||||||||||
| Research and development |
3,363 | (87 | )(8) | 3,276 | 3,571 | (145 | )(1) | 3,426 | ||||||||||||||||
| Selling and marketing |
23,203 | (168 | )(8) | 23,035 | 24,823 | (225 | )(1) | 24,598 | ||||||||||||||||
| General and administrative |
37,381 | (4,874 | )(2) | 32,507 | 33,483 | (6,578 | )(3) | 26,905 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total operating expenses |
63,947 | (5,129 | ) | 58,818 | 61,877 | (6,948 | ) | 54,929 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Operating income from continuing operations |
85,968 | 15,340 | 101,308 | 19,249 | 17,763 | 37,012 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Other income/(expense): |
||||||||||||||||||||||||
| Other income/(expense), net |
39 | — | 39 | 62 | — | 62 | ||||||||||||||||||
| Interest income |
750 | (608 | )(6) | 142 | 1,196 | (1,043 | )(6) | 153 | ||||||||||||||||
| Interest expense |
(4,571 | ) | 4,571 | (4) | — | (6,044 | ) | 6,044 | (4) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total other income/(expense), net |
(3,782 | ) | 3,963 | 181 | (4,786 | ) | 5,001 | 215 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from continuing operations before income taxes |
82,186 | 19,303 | 101,489 | 14,463 | 22,764 | 37,227 | ||||||||||||||||||
| Income tax expense |
29,410 | (29,410 | )(5) | — | 5,845 | (5,845 | )(5) | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income from continuing operations |
52,776 | 48,713 | 101,489 | 8,618 | 28,609 | 37,227 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Discontinued operations: |
||||||||||||||||||||||||
| Loss from operations of discontinued security solutions division |
(3,150 | ) | 1,808 | (9) | (1,342 | ) | (8,306 | ) | 2,261 | (7) | (6,045 | ) | ||||||||||||
| Income tax benefit |
(3,921 | ) | 3,921 | (5) | — | (3,326 | ) | 3,326 | (5) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Income/(loss) on discontinued operations |
771 | (2,113 | ) | (1,342 | ) | (4,980 | ) | (1,065 | ) | (6,045 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net income/comprehensive income |
$ | 53,547 | $ | 46,600 | $ | 100,147 | $ | 3,638 | $ | 27,544 | $ | 31,182 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (1) | To exclude depreciation, amortization, and plant consolidation costs. |
| (2) | To exclude depreciation, amortization, stock-based compensation expense, and DOJ/SEC costs and related profit sharing impacts of DOJ/SEC. |
| (3) | To exclude depreciation, amortization, stock-based compensation expense, plant consolidation costs, severance benefits for our former President and CEO, and DOJ/SEC costs and related profit sharing impacts of DOJ/SEC. |
| (4) | To exclude interest expense. |
| (5) | To exclude income tax expense. |
| (6) | To exclude intercompany interest income. |
| (7) | To exclude depreciation, amortization, interest expense, and stock-based compensation expense. |
| (8) | To exclude depreciation and amortization. |
| (9) | To exclude loss on sale of discontinued operations, depreciation, amortization, interest expense, stock-based compensation expense. |
| (10) | To exclude loss on sale of discontinued operations. |
Page 9 of 10
SMITH & WESSON HOLDING CORPORATION AND SUBSIDIARIES
RECONCILIATION OF ESTIMATED GAAP INCOME FROM CONTINUING OPERATIONS TO ESTIMATED ADJUSTED EBITDAS
| For the Year Ended April 30, 2013: | ||||||||
| Low Range | High Range | |||||||
| (In thousands) | ||||||||
| Income from continuing operations |
$ | 78,000 | $ | 79,500 | ||||
| Interest expense |
5,800 | 5,800 | ||||||
| Income tax expense |
43,900 | 44,700 | ||||||
| Depreciation and amortization |
15,500 | 15,500 | ||||||
| Stock-based compensation expense |
4,200 | 4,200 | ||||||
| DOJ/SEC costs, net of profit sharing impact |
1,000 | 1,000 | ||||||
|
|
|
|
|
|||||
| Adjusted EBITDAS |
$ | 148,400 | $ | 150,700 | ||||
|
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Page 10 of 10