SMITH & WESSON HOLDING CORPORATION (OTCBB: SMWS)

Editors Note:

It appears that no company is immune from today's market volatility. But Smith & Wesson, the legendary 150 year-old handgun maker, which has given back some of its gains since our last e-mail blast, appears to be particularly resilient. Smith & Wesson continues to be one of our perennial favorites and we thought this would be an appropriate time to bring you an update. 

Overview - Saf-T-Hammer Corp. acquired the legendary Smith & Wesson Corp. in May of 2001, positioning the company uniquely as a manufacturer of firearms and of gun safety and security products. Shareholders at a shareholder meeting on February 14, 2002 ratified a corporate name change from Saf-T-Hammer Corporation to Smith & Wesson Holding Corporation. On March 12, 2002, the company changed its trading symbol from SAFH to SMWS as part of the company’s overall strategy to bring its products, services and marketing under one umbrella.  Smith & Wesson Holding Corporation is the parent company of Smith & Wesson Corp., the legendary gun manufacturer.

History - Smith & Wesson was founded by two men 150 years ago who shared a dream of developing a new type of firearm, one capable of being fired repeatedly without the annoyance of having to reload with loose powder, ball and primer. The newly integrated company supplies Saf-T-Hammer & Smith & Wesson branded products to consumers, law enforcement, and military, through a well-established distribution network both in the United States and worldwide. 

Operations - The newly combined operations are focused on optimizing production capability and promoting the Smith & Wesson brand name throughout the world. In addition to the core business of firearm manufacturing, the company continues to research and develop firearm, safety and security products and maintains an aggressive product development schedule.  The Smith & Wesson Performance Center, established in 1989 and separate from standard factory production, produces limited quantities of exceptionally high quality, high performance handcrafted firearms designed for competitive shooters, collectors and those individuals desiring the finest that Smith & Wesson has to offer. Smith & Wesson also operates a state-of-the-art National Firearms Training Center, where training is provided on a wide variety of firearms related to law enforcement personnel and civilians from all over the world. 

Apparel, Personal, and Travel - Smith & Wesson currently offers more than 100 items on a 32 page section of the main corporate Web site that features a full line of bicycles, apparel, dozens of personal items like wallets, knives, key chains, and brief cases, and travel accessories like luggage, timepieces, and blankets, all with the famous Smith & Wesson logo and name. The online store also has a physical catalogue counterpart that is available on request. Four company-operated retail stores carry the full line of Smith & Wesson branded products and Smith & Wesson handguns.

Manufacturing - Specialty Services - Smith & Wesson maintains over 650,000 square feet of manufacturing space at its Springfield Mass. facility. In addition to manufacturing firearms and being the world’s largest producer of handcuffs and restraint devices to police and military personnel worldwide, Smith & Wesson has provided a wide variety of metal parts and services to over 350 companies through its Specialty Services Division. The company has the unique capability to provide design, CNC machining, heat treating, plating and metal finishing, assembly, forging and pressing and cutting tool manufacturing and regrinding in one facility that sets it apart as one of the premiere metal working facilities in the country. 

Safety & Security Products - Smith & Wesson is an industry leader in firearm safety and security. The company recently introduced its new built-in safety trigger key lock to prevent unauthorized gun use, accidents and unintentional firearm discharge. Smith & Wesson is at the leading edge of ‘Smart Gun’ technology and has an exclusive partnership with the New Jersey Institute of Technology to work towards integrating a biometric identification system into electronically fired Authorized-User-Only prototype handguns. The company offers firearm safety locks on its complete firearm product line. With every firearm sold, a new safety device will either be built in or included separately. Other safety and security products include:

1. The Saf-T-Trigger™: A mechanical trigger block, which is permanently installed in the trigger guard of firearms. 
2. The Maximum Security Cable™: A “shockproof” cable that has been proven to be up to 10 times stronger than a variety of conventional cable locks currently available. 
3. The Versa Vault™: A handgun vault that provides an owner-programmable and user-friendly lighted keypad that has over 10,000 available combinations. The vault also has a tamper alert and low battery alert.

Sales, Marketing and Distribution - Smith & Wesson has a strong sales and marketing organization that spearheads a worldwide distribution network for the 150 year-old brand name. The company’s business continues to show significant increases in year-over-year comparables. The company added 3 major U.S. domestic distributors in the fall of 2001. 

Financials – Considered one of “The best turnaround stories of 2001”, Smith & Wesson has established an impressive quarter-to-quarter trend line with growing revenues and a steady increase in profits. Monthly sales and earnings figures have trended up consistently since the acquisition. The increases are attributable to significant cost cutting measures implemented by new management, a renewed patriotism and positive public sentiment, and the general resurgence of the Smith & Wesson brand due to its return to U.S. ownership.

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