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Sturm Ruger Will Be Late With 10-K Due To 2004 Restatement
MARCH 15, 2006 --
Sturm, Ruger & Co. (RGR) will not file its annual report on Form 10-K for FY05 on or before March 16, as required by the SEC. The delay in filing is due to the company’s need to restate its financial statements as of and for FY04.
The restatement was caused by an error in the calculation of RGR's LIFO index as of December 31, 2004. The LIFO index is used to reduce the carrying value of inventory on the company’s balance sheet by eliminating the impact of inflation. As a result of this restatement, previously reported 2004 net income is expected to increase by approximately 2¢ per share.
An amended Form 10-K/A for FY04 will be filed when the restatement is completed. Accordingly, the Form 10-K for the year ended December 31, 2004 should no longer be relied upon.
The inadequate review of the data used in the calculation of the LIFO index has been identified by RGR as an internal control deficiency that constitutes a "material weakness," as defined by the Public Company Accounting Oversight Board. A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
RGR has undergone a comprehensive effort to comply with Section 404 of the Sarbanes-Oxley Act of 2002 and plans to issue the results of these efforts upon filing its 10-K for FY05. The RGR said it has taken measures to remediate the material weakness in its internal controls through a more extensive manual review of data used in the LIFO index calculation.
As a result of this material weakness, management has concluded that the company’s internal control over financial reporting was not effective as of December 31, 2005, and RGR expects that its independent registered public accounting firm will issue an adverse opinion on the company’s internal control over financial reporting as of December 31, 2005. Management’s assessment of internal controls will be included in upcoming 10-K.
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