We are one of the world’s leading manufacturers of firearms. We manufacture a wide array of pistols, revolvers, tactical 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, protection focused individuals, law enforcement and security agencies and officers, and military agencies in the United States and throughout the world. We are the largest manufacturer of handguns and handcuffs in the United States, the largest U.S. exporter of handguns, and a growing participant in the tactical and hunting rifle markets that we recently entered. We manufacture these products at our facilities in Springfield, Massachusetts; Houlton, Maine; and Rochester, New Hampshire. We are also a supplier of OEM firearm components. In addition, we pursue opportunities to license our name and trademarks to third parties for use in association with their products and services. We plan to substantially increase our product offerings to leverage the 150-plus year old “Smith & Wesson” brand and capitalize on the goodwill developed through our historic American tradition by expanding consumer awareness of products we produce or license in the safety, security, protection, and sport markets.
Our objective is to be a global leader in the business of safety, security, protection, and sport. Key elements of our strategy to achieve this objective are as follows:
enhancing existing and introducing innovative new products;
entering new markets and expanding our presence in existing markets;
enhancing our manufacturing productivity and capacity;
capitalizing on our widely known brand name;
emphasizing customer satisfaction and loyalty; and
pursuing strategic relationships and acquisitions.
We estimate that the domestic non-military firearm market is approximately $175 million for revolvers and $791 million for pistols, with our market share being approximately 46% and 14%, respectively, and approximately $554 million for hunting rifles, $313 million for shotguns, $277 million for tactical rifles, and $60 million for black powder rifles, with our market share being approximately 9% in the tactical rifle market and approximately 37% in the black powder rifle market. We entered the hunting firearm market with our acquisition of Thompson/Center Arms in January 2007. According to 2007 reports by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”), the U.S. firearms manufacturing industry has grown at a compound annual growth rate in units of 2.8% from 2002 through 2007.
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 gaining 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 UK-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. We strive to build upon Smith & Wesson’s legacy as an authentic American brand known for innovation and new product designs and embodying our customers’ sense of heritage and independence.
On January 3, 2007, we completed the acquisition of all of the outstanding capital stock of Bear Lake Acquisition Corp., now known as Thompson Center Holding Corporation, and its subsidiaries, including Thompson/Center Arms Company, Inc. Thompson/Center Arms is a brand recognized by hunting enthusiasts with a leading position in the black powder segment of the long gun market. In addition to a leadership position in the long gun market, Thompson/Center Arms also brings expertise in long gun barrel manufacturing, which will assist us in our plans to expand further into the long gun market. Thompson/Center Arms recently entered the bolt-action rifle market.
Products and Services
Our firearm products combine our legacy of more than 150 years of American know-how with modern technological advances. We strive to utilize our tradition of reliability and innovation in materials, performance, and engineering to produce feature-rich, durable, reliable, accurate, safe, and high-performing firearms that satisfy the needs of our broad range of customers.
Our introduction of new firearm products is designed to enhance our competitive position and broaden our participation in the overall firearm market. We offer more handgun models, in more calibers, for more applications than any other handgun manufacturer. We introduced 13 new revolver models, 11 new pistol models, and one new Walther pistol model in fiscal 2009 and nine new revolver models, five new pistol models, and two new Walther pistol models in fiscal 2008. We currently offer 117 different standard models of handguns with a wide variety of calibers, finishes, sizes, compositions, ammunition capacities, barrel lengths, grips, sights, actions, and other features. As little as five years ago, we were known primarily for our revolvers, with revolvers accounting for approximately 40% of our fiscal 2004 revenue. Starting in fiscal 2005, our management team determined to increase our business by solidifying our position in the revolver market and significantly increasing our business in other categories of the overall firearm business. The introduction of our 460 XVR revolver and our Model 500 revolver enhanced our position in the revolver market. The introduction of our M&P Series of pistols in January 2006 resulted in us becoming a leader in the pistol market with sales of pistols in fiscal 2009 showing a 246% increase over fiscal 2004 levels. Our January 2006 launch of our M&P15 Series of tactical rifles has enabled us to capture what we estimate to be approximately 9% of the tactical rifle market. Our January 2007 acquisition of Thompson/Center Arms added black powder firearms, interchangeable firearm systems, and the ICON bolt-action rifle to our product portfolio. As a result, we are now participating in three categories of the long gun market as well as both categories of the handgun market.
The sale of firearms accounted for approximately $313.0 million in net sales, or approximately 93.4% of our net sales, for the fiscal year ended April 30, 2009 and approximately $274.1 million in net sales, or approximately 92.6% of our net sales, for the fiscal year ended April 30, 2008. With the exception of Walther firearms, all of our firearms are sold under our Smith & Wesson and Thompson/Center Arms brands, several with associated sub-brands.
We currently manufacture 43 different models of pistols. The suggested retail prices of our pistols range between $308 and $1,439. 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.
The following sets forth information regarding some of our most popular pistols:
Polymer frame pistols designed for law enforcement and military professionals, available in full-sized and compact versions in 9mm, .40 caliber, .357 Sig, and .45 caliber. These pistols have been selected or approved for carry by over 500 law enforcement agencies.
Polymer frame pistols available in 9mm and .40 caliber. The 9mm version is used by the Afghanistan National Police and Border Patrol.
A .40 caliber premium pistol designed for law enforcement, which is the standard duty firearm for the California Highway Patrol.
A .45 ACP competition-ready pistol based on the 1911 pistol, which was the standard issue for the U.S. military for decades and which is available in a variety of materials and features.
Our M&P Series of pistols, which was engineered with input from more than a dozen law enforcement agencies, is designed to offer performance, safety, and durability features that meet the standards of global law enforcement and military personnel as well as consumers desiring personal protection. The M&P comes in 9mm, .45, .40, and .357 Sig calibers and is available in both compact and full-sized models and with an optional frame-mounted ambidextrous thumb safety.
We believe that our M&P Series of pistols is the most feature rich, innovative polymer pistol on the market today. The M&P Series of pistols is made with a polymer frame with a rigid stainless steel chassis and a through-hardened black melonite stainless steel barrel and slide for durability. The M&P Series features 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; a loaded chamber indicator located on the top of the slide; 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.
Our Sigma Series consists of double-action pistols constructed with a durable polymer frame and a through-hardened stainless steel slide and barrel. The Sigma Series features an ergonomic design and simple operating procedures. The Sigma Series comes in 9mm and .40 caliber models. Sigma model pistols have been purchased by the U.S. Army Security Assistance Command for use by the Afghanistan National Police and Border Patrol as a result of performance features required in wartime and extreme environmental conditions.
Our Smith & Wesson pistol sales accounted for approximately $93.1 million in net sales, or approximately 27.8% of our net sales, for the fiscal year ended April 30, 2009 and approximately $69.6 million in net sales, or approximately 23.5% of our net sales, for the fiscal year ended April 30, 2008.
We are the exclusive U.S. importer and North American marketer of Walther firearms and hold the production rights for the popular Walther PPK pistol in the United States, which we manufacture at our Houlton, Maine facility. The Walther PPK was made famous by the movie character James Bond. The Walther P22 has become one of the top selling .22 caliber pistols in the United States. Walther sales accounted for approximately $34.3 million in net sales, or approximately 10.2% of our net sales, for the fiscal year ended April 30, 2009 and approximately $27.1 million in net sales, or approximately 9.2% of our net sales, for the fiscal year ended April 30, 2008.
We currently manufacture 74 different models of revolvers. The suggested retail prices of our revolvers range between $600 and $1,446. A revolver is a handgun with a cylinder that holds the ammunition in a series of chambers that are successively aligned with the barrel of the gun 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 gun 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.
We offer our revolvers in a variety of frame sizes. In 2004, we introduced extra large frame revolvers. Our initial offering was the Model 500, a .500 caliber S&W magnum revolver, which is the world’s most powerful revolver in production. In 2005, we introduced the Model 460 XVR (X-treme Velocity Revolver), an extra large frame .460 caliber S&W magnum revolver, which has the highest muzzle velocity of any production revolver in the world. The extra large frame revolvers are designed to address the handgun hunting and sport shooting markets.
We have long been known for our small frame revolvers, which have been carried by law enforcement personnel and personal defense-minded citizens for decades. These “J Frames” come in a variety of models, many of which are available in lightweight alloys. We hold a patent on firearm applications that incorporate scandium, a material that possesses many of the same attributes as titanium but at a more reasonable cost. Scandium is featured on our M&P line of small frame revolvers as well as many of our other revolvers and pistols.
We also manufacture many mid- and large-sized revolvers in a variety of models and calibers, including .38 caliber, .357 magnum, and the powerful .44 magnum. These mid- and large-sized revolvers have applications in virtually all professional and personal markets. The revolvers include the Model 10, which has been in continuous production since 1899. Other models include the Model 686 .357 magnum and the Model 629 .44 magnum, which also are available in several barrel lengths.
The sale of revolvers accounted for approximately $77.1 million in net sales, or approximately 23.0% of our net sales, for the fiscal year ended April 30, 2009 and approximately $70.2 million in net sales, or approximately 23.7% of our net sales, for the fiscal year ended April 30, 2008.
Our M&P15, M&P15A, and M&P15T are tactical rifles, commonly known as “black rifles,” specifically designed to satisfy the functionality and reliability needs of global military and law enforcement personnel. These rifles are also popular as sporting target rifles and are sold through sporting good distributors, retailers, and dealers. The M&P15, M&P15A, and M&P15T are rugged, lightweight, semi-automatic rifles with 16-inch barrels that are designed to perform under a diverse range of conditions and fire 5.56mm and .223 caliber ammunition. The rifles feature a single-stage trigger with a seven pound trigger pull. These rifles are gas operated and include a chrome-lined gas tray, bolt carrier, and barrel with a six-position adjustable stock to accommodate a variety of shooting positions. In fiscal 2009, we introduced a fully automatic version for military and law enforcement agencies.
The M&P15, introduced in January 2006, incorporates a traditional AR-15 design, featuring a removable carry-handle and adjustable rear and front post sights, allowing for quick target acquisition and convenient handling. The M&P15A has a folding rear sight and does not have a carry handle. The upper and lower receivers on the rifles are constructed with tough 707/T6 aluminum and are furnished with A2 military flash suppressors. The M&P15T, with its high-end accessory package, features folding front and rear battle sights and a four-sided equipment rail system that allows the addition of accessories, such as lights, laser-aiming devices, and vertical grips. The tactical rifle line has been expanded to included 12 models, with various features and multiple calibers.
The sale of tactical rifles accounted for approximately $39.8 million in net sales, or approximately 11.9% of our net sales, for the fiscal year ended April 30, 2009 and approximately $16.6 million in net sales, or approximately 5.6% of our net sales, for the fiscal year ended April 30, 2008. Tactical rifles remain the fastest growing segment of the long gun market.
Our ICON® bolt-action, center fire rifle is a premium hunting rifle designed to be a new breed of bolt-action rifle in terms of ruggedness, reliability, and accuracy. The ICON features a 24-inch polished blue metal barrel with several features designed to enhance accuracy, including a flat bottom receiver with an interlock bedding system, 5R rifling, a match grade crown, and an integrated scope base. The ICON rifle also features a Sims recoil pad, a detachable box magazine, a specially designed and located bolt release, and a two-position safety. Each rifle is fired prior to leaving the factory, and the rifle is certified to shoot one inch groups at 100 yards. A target reflecting the actual test shots from the factory is included in the box.
The ICON adds innovations to the inherent reliability and accuracy advantages of bolt-action rifles, which are rifles in which the opening and closing of the breach is controlled manually by a bolt, resulting from their relatively few moving parts compared with other rifles.
Our T/C® Venturetm is a bolt action rifle that features a match grade barrel and 5R rifling and carries a one inch accuracy guarantee and Thompson/Center Arms quality at an economic price. The launch of the T/C Venture positions Thompson/Center Arms in a higher volume price segment. T/C Venture is positioned as the most finely crafted and most accurate bolt-action rifle retailing for less than $500.
Our Omegatm, Black Diamondtm, Fire Stormtm, Hawkentm, and Triumph® models are leading fixed-barrel black powder, or “muzzle loader,” firearms. Black powder firearms are firearms in which the ammunition is loaded through the muzzle rather than the breech as is the case of conventional firearms. Our black powder firearms are highly accurate, dependable rifles configured with muzzle loading 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. They are also used by participants in Civil War re-enactments and gun collectors.
Our interchangeable firearm systems include the Encore®, Pro Hunter®, Contender®, and Endeavor® product lines. These products offer over 360 different gun, barrel, caliber configurations, and finishes and can be configured 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.
The sale of hunting firearms accounted for approximately $38.5 million in net sales, or approximately 11.5% of our net sales, for the fiscal year ended April 30, 2009 and approximately $57.6 million in net sales, or approximately 19.5% of our net sales, for the fiscal year ended April 30, 2008.
Premium and Limited Edition Handguns and Classics
Our Smith & Wesson Performance Center® personnel have 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, 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. While Performance Center products are typically made in limited production quantities, we offer 22 catalog Performance Center model variations in order to enhance product availability.
Our “Classics” department makes it possible for customers to own historic firearms that are manufactured today but modeled after original favorites, such as the Model 29, which is the gun 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 who 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.
Our premium and limited edition handguns and classics and engraving services generated approximately $16.2 million in net sales, or approximately 4.8% of our net sales, for the fiscal year ended April 30, 2009 and approximately $16.1 million in net sales, or approximately 5.5% of our net sales, for the fiscal year ended April 30, 2008.
Parts and Black Powder Accessories
We sell parts and accessories, including black powder accessories for black powder rifles. The sale of these products accounted for approximately $13.9 million in net sales, or approximately 4.2% of our net sales, for the fiscal year ended April 30, 2009 and approximately $16.8 million in net sales, or approximately 5.7% of our net sales, for the fiscal year ended April 30, 2008.
We are the largest manufacturer of handcuffs and restraints in the United States. We fabricate these products from the highest grade carbon or stainless steel. Double heat-treated internal locks help prevent tampering and smooth ratchets allow for swift cuffing and an extra measure of safety. We can customize handcuffs to fit customer specifications. The sale of handcuffs accounted for approximately $7.1 million in net sales, or approximately 2.1% of our net sales, for the fiscal year ended April 30, 2009 and approximately $6.2 million in net sales, or approximately 2.1% of our net sales, for the fiscal year ended April 30, 2008. In 2008, we launched our innovative new Lever Locktm handcuff, which eliminates the need to use the cuff key to initiate the double-lock feature.
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 a modern 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.
We utilize our substantial capabilities in metal processing and finishing to provide services to third-party customers. Our services include forging, heat treating, finishing, and plating. The acquisition of Thompson/Center Arms included a foundry operation, which expanded our specialty services offerings to include castings. Specialty services accounted for approximately $6.8 million in net sales, or approximately 2.0% of our net sales, for the fiscal year ended April 30, 2009 and approximately $7.6 million in net sales, or approximately 2.6% of our net sales, for the fiscal year ended April 30, 2008.