Smith & Wesson Holding Corp (SWHC, Financial) filed Quarterly Report for the period ended 2009-07-31.
Smith & Wesson Holding Corporation is one of the world's leading producers of quality handguns law enforcement products and firearm safety and security products. Law enforcement personnel military personnel target shooters hunters collectors and firearms enthusiasts throughout the world have used the company's products with confidence for 150 years. Smith & Wesson Corp. also manufactures and markets Smith & Wesson branded handcuffs and other products utilizing its metal working expertise and providing products and services to many external customers. Smith & Wesson Holding Corp has a market cap of $302.4 million; its shares were traded at around $5.61 with a P/E ratio of 13.1 and P/S ratio of 0.9. Smith & Wesson Holding Corp had an annual average earning growth of 31.8% over the past 5 years.
Net income for the three months ended July 31, 2009 was $12,572,000, or $0.21 per fully diluted share, compared with $2,254,000, or $0.05 per fully diluted share, for the three months ended July 31, 2008.
Interest expense decreased for the three months ended July 31, 2009 as a result of an improved cash position and a corresponding reduction of the revolving loan. In addition, the prior year included a one time write-off of debt acquisition costs totaling $485,000, an event that did not recur in the current quarter. Total debt outstanding at July 31, 2009 was $87,551,000 compared with $85,984,000 at April 30, 2009 and $108,411,000 at July 31, 2008.
In the first three months of fiscal 2010, we used $2,389,000 in cash from operating activities, a decrease of $12,135,000 from the amount we required for the first three months of fiscal 2009. The impact of the current quarters increased volume, improved manufacturing efficiencies and absorption, reduced spending, and effective working capital management were significant contributors to the improved operating cash results. Excluding the impact of the USR acquisition, inventory levels increased by $1,506,000 during the first quarter of fiscal 2010 compared with an increase of $5,483,000 in the first quarter of fiscal 2009 as a result of the ongoing consumer demand that has caused us to ship nearly all of what we were able to produce in the quarter. Excluding the impact of the USR acquisition, accounts receivable grew $7,848,000 during the first fiscal quarter of 2010 compared with growth of $7,084,000 in the prior year quarter. Excluding the impact of the USR acquisition, sales during the first quarter of fiscal 2010 were $21,093,000 higher than during the comparable quarter last year, but this was not entirely reflected in higher receivables primarily because we did not offer as many extended payment terms to our customers during the current quarter.
Excluding the impact of the $20,687,000 in cash used to purchase USR, cash used for investing activities increased by $3,757,000 for the three months ended July 31, 2009 over the three months ended July 31, 2008 as a result of increased capital spending. Capital spending for the three months ended July 31, 2009 was $3,682,000 compared with $1,110,000 for the three months ended July 31, 2008, an increase of $2,572,000. We currently expect to spend approximately $12.0 million on capital expenditures in fiscal 2010, an increase of $2.6 million over the $9.4 million spent in fiscal 2009. Major capital expenditures will focus on improving production efficiencies, tooling for new product offerings, and various projects designed to increase capacity and upgrade manufacturing technology.
Cash provided by financing activities was $22,184,000 for the three months ended July 31, 2009. In May 2009, we completed a stock offering of 6,000,000 shares of common stock, which yielded net proceeds of $35,076,000. Partially offsetting these proceeds was the payment of $14,350,000 of outstanding debt that had been on USRs books at the time of the acquisition. We had no short-term bank borrowings at July 31, 2009 compared with $17.8 million in borrowings at July 31, 2008, due to favorable cash generated from operations over the past several quarters. We repaid $580,000 of the long-term notes payable to TD Bank, our primary bank, during the three months ended July 31, 2009. As of July 31, 2009, we had $35,173,000 in cash and cash equivalents on hand.
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Smith & Wesson Holding Corporation is one of the world's leading producers of quality handguns law enforcement products and firearm safety and security products. Law enforcement personnel military personnel target shooters hunters collectors and firearms enthusiasts throughout the world have used the company's products with confidence for 150 years. Smith & Wesson Corp. also manufactures and markets Smith & Wesson branded handcuffs and other products utilizing its metal working expertise and providing products and services to many external customers. Smith & Wesson Holding Corp has a market cap of $302.4 million; its shares were traded at around $5.61 with a P/E ratio of 13.1 and P/S ratio of 0.9. Smith & Wesson Holding Corp had an annual average earning growth of 31.8% over the past 5 years.
Highlight of Business Operations:
We acquired USR for 5,492,286 shares of common stock and cash of approximately $20,657,000. In addition, the shareholders of USR are entitled to receive up to an additional 4,001,522 shares of common stock if USR achieves certain established EBITDAS targets in calendar years 2009 and 2010. These shares were recorded as a liability as of the acquisition date and recorded at our closing stock price of $6.86 per share on July 20, 2009, or $27,450,000. As of each future balance sheet date, we are required to revalue this liability to the then-current fair value. As of July 31, 2009, our stock price had declined by $0.80, causing us to write down the liability value to $24,249,000 and record a gain of $3,201,000. This gain has been reported in our income statement as other income. In future periods, our income statement may favorably or unfavorably be affected by adjustment of this liability to then fair value by recording it at our stock price at future balance sheet dates. As a result, increases and decreases in the trading price of our common stock may have a significant effect on our net income and earnings per share totally apart from our operating results. In addition, any earnings guidance that we may give and any projections of our earnings by analysts will be subject to changes in our stock price.Net income for the three months ended July 31, 2009 was $12,572,000, or $0.21 per fully diluted share, compared with $2,254,000, or $0.05 per fully diluted share, for the three months ended July 31, 2008.
Interest expense decreased for the three months ended July 31, 2009 as a result of an improved cash position and a corresponding reduction of the revolving loan. In addition, the prior year included a one time write-off of debt acquisition costs totaling $485,000, an event that did not recur in the current quarter. Total debt outstanding at July 31, 2009 was $87,551,000 compared with $85,984,000 at April 30, 2009 and $108,411,000 at July 31, 2008.
In the first three months of fiscal 2010, we used $2,389,000 in cash from operating activities, a decrease of $12,135,000 from the amount we required for the first three months of fiscal 2009. The impact of the current quarters increased volume, improved manufacturing efficiencies and absorption, reduced spending, and effective working capital management were significant contributors to the improved operating cash results. Excluding the impact of the USR acquisition, inventory levels increased by $1,506,000 during the first quarter of fiscal 2010 compared with an increase of $5,483,000 in the first quarter of fiscal 2009 as a result of the ongoing consumer demand that has caused us to ship nearly all of what we were able to produce in the quarter. Excluding the impact of the USR acquisition, accounts receivable grew $7,848,000 during the first fiscal quarter of 2010 compared with growth of $7,084,000 in the prior year quarter. Excluding the impact of the USR acquisition, sales during the first quarter of fiscal 2010 were $21,093,000 higher than during the comparable quarter last year, but this was not entirely reflected in higher receivables primarily because we did not offer as many extended payment terms to our customers during the current quarter.
Excluding the impact of the $20,687,000 in cash used to purchase USR, cash used for investing activities increased by $3,757,000 for the three months ended July 31, 2009 over the three months ended July 31, 2008 as a result of increased capital spending. Capital spending for the three months ended July 31, 2009 was $3,682,000 compared with $1,110,000 for the three months ended July 31, 2008, an increase of $2,572,000. We currently expect to spend approximately $12.0 million on capital expenditures in fiscal 2010, an increase of $2.6 million over the $9.4 million spent in fiscal 2009. Major capital expenditures will focus on improving production efficiencies, tooling for new product offerings, and various projects designed to increase capacity and upgrade manufacturing technology.
Cash provided by financing activities was $22,184,000 for the three months ended July 31, 2009. In May 2009, we completed a stock offering of 6,000,000 shares of common stock, which yielded net proceeds of $35,076,000. Partially offsetting these proceeds was the payment of $14,350,000 of outstanding debt that had been on USRs books at the time of the acquisition. We had no short-term bank borrowings at July 31, 2009 compared with $17.8 million in borrowings at July 31, 2008, due to favorable cash generated from operations over the past several quarters. We repaid $580,000 of the long-term notes payable to TD Bank, our primary bank, during the three months ended July 31, 2009. As of July 31, 2009, we had $35,173,000 in cash and cash equivalents on hand.
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