Randy wont like this
NOTES FROM CONFERENCE CALL
Now let me turn to our sales in the firearms market. Sales into our consumer or sporting-goods channel were down by about 18% overall in the quarter.
Our Rochester, New Hampshire facility again deliver improved performance in the quarter. Sales of Thompson/Center products increased approximately 5%. We can attribute most of this to the success of two relatively new products at Thompson/Center, the Venture bolt-action rifle and the Bone Collector muzzleloader. These new products helped to drive growth in our Thompson/Center business. Moreover, improved performance at the factory level, including cost containment and process improvements, helped translate that growth into profitability.
You have heard me say before that Smith & Wesson and Thompson/Center are innovators in the industry. Nowhere is that more evident than when we appear at the SHOT show each year and unveil our new product offerings.
SHOT occurred in January of this year and we maintained the tradition of introducing our customers to some innovative and exciting new products. At this year’s show we launched a total of four major platforms and 43 product line extensions. Highlights included Thompson/Center’s new HotShot youth rifle, and the new Impact muzzleloader, which delivers high accuracy and a competitive price point.
These exciting products are helping to expand our Thompson/Center product portfolio into new categories, and continue the transition of Thompson/Center from a niche muzzleloading company to a full line of hunting rifles and accessories.
Thompson/Center Arms revenue increased year-over-year by 4.5%. Third-quarter results reflect growth in our black powder sales, which achieved a 6.4% increase over the prior year. In addition, sales of Thompson/Center branded bolt action rifles help to offset sales of the discontinued Smith & Wesson branded hunting rifles that occurred during Q3 of last year.
During fiscal 2009, we determined that the goodwill and long-lived assets related to our acquisition of Thompson/Center Arms were impaired due to severe economic and market conditions that appeared to be continuing and other factors. Based on this determination under applicable accounting standards, we recorded an impairment charge of $98,243,000, less related deferred tax liabilities of $21,766,000, yielding a $76,477,000 adverse impact to after-tax profits.
LAW SUITS
Jeremy McCutchen v. Thompson/Center Arms Company, Inc., et al., in the District Court of Harris County, Texas. The complaint, filed on December 21, 2009, asserts claims based on theories of strict liability, breach of warranty, negligence, and failure to warn. The plaintiff seeks unspecified money damages. The plaintiff claims to have been using a Thompson/Center Arms rifle on December 22, 2007 when the firearm allegedly malfunctioned causing injury to the plaintiff. Thompson/Center Arms filed an answer to plaintiff’s complaint on January 29, 2010 denying all allegations of liability. Discovery is ongoing. Trial has not yet been scheduled.
Steve and Michelle Santoyo v. Bear Lake Holdings, Inc., d/b/a Thompson/Center Arms, et al., in the Circuit Court of Boone County, Missouri. The complaint, filed on or about February 11, 2010, asserts claims based on theories of strict liability, negligence, failure to warn, negligently supplying a dangerous instrumentality, loss of consortium, and punitive damages. The plaintiffs seek unspecified money damages. Plaintiff Steve Santoyo claims to have been using a Thompson/Center Arms Black Diamond muzzleloader on November 28, 2008, when the firearm allegedly malfunctioned causing injury to him. Our response to the complaint is due on April 1, 2010. Trial has not yet been scheduled.
Jesse James and Kay James v. Thompson/Center Arms Company, Inc., et. al., in the 151st Judicial District for Harris County, Texas. On October 28, 2009, this case was settled within the limits of our self-insured retention.
Brian Ward v. Thompson/Center Arms Company, Inc., et. al., in the Forty-Sixth Circuit Court for Otsego County, Michigan. The complaint was filed on October 16, 2006 and alleges that plaintiff sustained eye injuries using a Thompson/Center Arms rifle. Plaintiff asserts product liability claims against both Thompson/Center Arms and the retailer based on negligence and warranty principles.