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Smith & Wesson Holding Corporation to Acquire Thompson/Center Arms, Inc.

Deal Expected to Add $70 Million of Net Sales Provides Immediate Entry into Hunting Rifle Market
Springfield, Massachusetts, December 18, 2006 -- Smith & Wesson Holding Corporation (Nasdaq: SWHC), parent company of Smith & Wesson Corp., the legendary 154-year old company in the global business of safety, security, protection and sport, today announced that it has entered into a definitive agreement to acquire Thompson/Center Arms, Inc., a 40-year old, privately held, New Hampshire-based designer, manufacturer and marketer of premium hunting firearms, for $102 million in cash. The transaction is expected to close in the beginning of January 2007.

Thompson/Center Arms, headquartered in Rochester, New Hampshire, manufactures and distributes innovative firearms recognized by hunting enthusiasts for their precision, performance, craftsmanship, and reliability. Thompson/Center Arms occupies a leadership position within each of its core product categories of black powder firearms (or "muzzleloaders"), black powder accessories, and interchangeable firearm systems, as well as a presence in precision rimfire rifles. The transaction will combine two leading firearms companies with complementary products, to yield a single provider of high- quality pistol, revolver, shotgun and rifle products.

Michael F. Golden, President and CEO of Smith & Wesson Holding Corporation, said, "The acquisition of Thompson/Center Arms is an important step in our diversification strategy. Thompson/Center Arms has consistently delivered both profits and strong gross margins while building its position in the hunting rifle market. This move will expand our presence in the $1.1 billion long gun market by providing immediate entry into the hunting rifle and black powder segments, which represents approximately $600 million in domestic sales. In addition to carving out a leadership role in black powder and single shot hunting rifles, Thompson/Center Arms has developed tremendous expertise in manufacturing long-gun barrels, a competency that will be important to Smith & Wesson as we expand our capabilities even further into the long gun market."

The purchase price for Thompson/Center Arms includes the company's Rochester, New Hampshire facility, which produces all of the company's products and is situated geographically between Smith & Wesson's manufacturing operations in Springfield, Massachusetts and Houlton, Maine. The transaction will be financed with the proceeds from the sale of convertible senior notes and an acquisition line of credit.

In conjunction with the acquisition, Gregg Ritz, President and CEO of Thompson/Center Arms, will be named President of Smith & Wesson - Hunting. He will continue to lead the Thompson/Center Arms operation and will head Smith & Wesson's efforts to develop its hunting business. Ritz said, "In addition to bringing together two well-established and highly respected brands in the firearms industry, this acquisition increases opportunities for both Smith & Wesson and Thompson/Center Arms. Smith & Wesson's ability to provide capital for growth and expertise in lean manufacturing processes will provide critical support for our new product pipeline and our need for increased capacity based on strong customer demand. In turn, Thompson/Center Arms' array of barrel manufacturing expertise, hunting rifle products, and accessories fits nicely into the Smith & Wesson portfolio of pistols, revolvers, shotguns and future hunting rifles. There is absolutely no overlap in our product lines, while there is tremendous similarity in our dealer and distribution channels and our marketing vehicles."

Outlook for Fiscal 2007

Following the closing of the acquisition in early January 2007, the Company will include the results of operations for Thompson/Center Arms from that date forward. The Company currently believes that the revenue contribution from Thompson/Center Arms for the period from the closing date to the end of the Company's 2007 full fiscal year, which is April 30, 2007, will be approximately $18.6 million. Therefore, the Company now expects net product sales for the full 2007 fiscal year to be approximately $218.6 million.

It should be noted that excluding the impact of certain non-cash purchase accounting charges, the acquisition will be $0.01 accretive to the Company's anticipated earnings per diluted share in fiscal 2007. It should also be noted that the results for the January through April 2007 period are not reflective of the results expected for Thompson/Center Arms on an annual basis due to the seasonality of the hunting business, which is stronger in the May through December timeframe.

In accordance with acquisition purchase accounting, the Company expects to record non-cash charges of approximately $7.0 million on a pre-tax basis or about $0.10 per share on an after-tax basis. Therefore, net income for fiscal 2007 is now anticipated to be approximately $11.5 million, or $0.27 per diluted share, versus prior guidance of $15.0 million, or $0.36 per share. It should be noted that the impact of purchase accounting will not be fully known until after the transaction closes.

Outlook for Fiscal 2008
 

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I was just thinking the same thing.
 

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Just out of curiosity, why do you think customer service would suffer? S&W service on their pistols is first rate and has been at least since Mr Scott bought S&W. On the M1911.org site, S&W owners are quite outspoken on the high level of service they have received. I am not trying to "flame" anyone, but am genuinely interested in why you expect the downturn.

Thanks
 

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Corporate America strikes again:(
S&W might do alright on their service but TC has ben GREATservicing my abuse of their Encore design.
It sure could have ben worse I guess,a foreign buyer for example:eek:
 
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