Industry News: April 2000

By Robert M. Hausman

With the onset of the technological advances promises of the dawn of the new millennium, Laser Devices, Inc., a technological leader in the optics field for the past several years, has developed some new products very worthy of note.

Two new laser boresighting systems, the MBS1-A and the MBS-1 WE allow the alignment of an arm’s sights in the field without the need to fire any rounds. This capability allows the user to take a new gun out-of-the-box and mount a scope with confidence, knowing it is properly aligned with the gun’s bore.

The boresight systems may also be used to check the sight alignment of an arm that has been dropped. The manufacturer believes the MBS system will appeal to special weapons teams, firearms dealers, and gunsmiths who need to check or confirm sight alignment. As mentioned, two models are offered.

The MBS1-A boresight is pre-aligned by Laser Devices and sealed in place so ordinary handling will not affect the alignment of the boresight. This unit is ideal for making a quick check of the arm’s sight alignment. This unit is also available with a shorter bore rod that can be used to align pistols and submachine guns.

The MBS-1 WE boresight can be adjusted for windage and elevation. This additional capability allows the user to fine tune the boresight for a variety of arms up to .50 caliber. In addition, if the boresight is ever knocked out of alignment, the user can quickly true or realign the laser without returning the system to the manufacturer.

Another new product from Laser Devices is the ARTAC-2 Tactical Light for the AR-15 family of rifles. This new product replaces the venerable TL-8 light with a more robust unit designed for the law enforcement and military markets. This new 6-volt flashlight offers a bright white (95 lumen) focusable light. Moreover, the unit is waterproof and shock resistant.

The ARTAC-2 mounts on the Laser Devices, Inc. AR-2 mount that fits inside the front sight cage of the AR-15. This keeps the unit off the barrel and does not require the user to purchase an expensive rail system for the rifle. Likewise, the mount does not interfere with the open sight and can be used with a top rail-mounted reflex sight or scope. The light also works with the AR-2 aiming laser that has proven popular with law enforcement and home defense markets.

Laser Devices has also developed a Las/Tac system for the new Glock pistols with built-in accessory rail. This new laser and tactical flashlight system allows the user to clip the laser or the flashlight onto the pistol as needed. Emitting a bright white light, the unit is available in either a 3-volt or a more powerful 6-volt configuration.

There is also a new clip-on Las/Tac design for the HK Mark 23 (SOCOM) pistol from Laser Devices. It allows the user to interchange a powerful 6- or 3-volt flashlight for the laser sight. Like the new Las/Tac for Glock, the HK system allows the user to carry the pistol with the laser and flashlight detached.

Finally, Laser Devices has started production of its new ITAL/OTAL system. The ITAL is a military-style In-line Tactical Aiming Laser in a very small package. The unit offers maximum versatility in mounting locations and can be mounted on any Weaver base or Picatinney Arsenal rail system. The ITAL sister unit known as the OTAL (Offset Tactical Aiming Light) can be mounted behind the front sight of an M-16 or M-4 type rifle. OTAL is waterproof to 30 meters, will not be degraded by salt water and is suitable for marine and special operations. A precision glass lens offers the best quality beam and a very small laser point (7.5cm) at 100 meters. The OTAL system is activated using a positive on/off lever switch or a momentary on/off pressure pad switch. OTAL is available with either a visible Super Power PointTM (635nM) diode, infrared(835nM) diode, or eye-safe infrared (1500nM) laser diode offering unmatched versatility for a variety of tactical and covert operations. Infrared and high infrared laser diodes are available to military and law enforcement customers only.

The OTAL system is powered by a single 1.5 volt AA battery. Tactile click windage elevation adjustment knobs allow precise (within 2cm at 100 meters) repeatable adjustments in the field. The defiladed adjustment knobs are protected from impact from the front and rear and can be adjusted without tools.

Sturm, Ruger’s Sales Up

Sturm, Ruger & Co. Inc., the nation’s largest overall producer of firearms, reports 1999 third quarter net sales of $55.4 million, compared to $43.4 million in the third quarter of 1998. Net income for the quarter ended September 30, 1999 totaled $7 million or 26 cents per share versus $2.5 million or nine cents per share in the comparable quarter of 1998.

For the nine months ended September 30, 1999, net sales were $181.4 million and net income was $22.9 million, or 85 cents per share. For the corresponding period in 1998, net sales were $161.9 million and net income was $18 million, or 67 cents per share.

Commenting on the quarter, chairman William B. Ruger noted, “This marks the sixth consecutive quarter of firearms sales growth. The 48% increase in the quarter and the 30% increase year-to-date reflect strong demand for our broad product line. These results, achieved in our fiftieth year, are a testament to our longevity and our leadership in this oldest American industry.”

On October 7, 1999, a lawsuit brought against the company by the mayor of Cincinnati was dismissed. This was the first dismissal of the over two dozen lawsuits filed by certain mayors alleging firearms manufacturers should be held legally responsible for the intentional criminal misuse of their products.

Stephen L. Sanetti, the company’s vice president and general counsel, remarked, “This was the correct decision. Courts have uniformly held on many prior occasions that manufacturers of lawful, non-defective products which are sold legally cannot be held liable for subsequent misuse of these products. To hold otherwise would have serious implications for all sorts of products which can be criminally misused. As the judge in the Cincinnati case correctly observed, complex social and constitutional issues such as firearms regulation should be decided by legislatures, not by individual juries.” Motions to dismiss other such lawsuits are pending.

Regarding the castings business, Ruger expressed guarded optimism. “While I am disappointed in the decline in outside castings sales, I am pleased that our success in addressing the challenges that emerged a year ago have resulted in significant improvement of this business segment’s margins in the third quarter.” Sturm, Ruger casts golf club heads and other products for a variety of clients.

During the three months ended September 30, firearms sales came to $42,651,000 or 76.9% of sales. During the same period in 1998, firearms sales totalled $28,812,000 or 66.4% of sales. Casting sales during the third quarter of 1999 came to $12,793,000 or 23.1% of the sales total. During the same period the year before, casting sales amounted to $14,561,000 or 33.6% of total sales. After making a deduction for cost of goods sold, the gross profit of combined firearms and castings sales during 1999’s third quarter was $15,618,000 or 28.2%, versus $7,933,000 or 18.3% in 1998.

For the nine months ended September 30, Ruger’s firearms sales amounted to $139,518,000 or 76.9% of the sales total, compared to the same period in 1998 when gun sales totalled $107,598,000 or 66.5% of all sales. Casting sales for the first nine months were $41,835,000 or 23.1% versus $54,293,000 or 33.5% during the same period in 1998.

News Briefs

Firearms Training Systems, Inc., (FATS) of Suwanee, GA, is awarded contracts with a total approximate value of $9,650,000 in backlog, plus options for about $6,400,000. The British Ministry of Defence awarded FATS a support contract with an estimated value of $3,800,000 to provide for two years of repair and maintenance of the 163 systems used to train the UK armed forces throughout the world.

FATS was also awarded two support contracts by the Singapore government to operate, train and maintain that country’s army and police coast guard systems with a total value of about $5,300,000 over three years and options for a three to nine year extension. Additionally, the company advised that the Bahrain Defence Force has purchased small arms simulators valued at $550,000 with options to procure an equal amount in the future.

The Venezuelan Army has selected FATS to provide small arms simulators to train their forces by awarding a contract value at about $1,400,000 with opportunity for additional systems and components. FATS was recently selected after a demanding competitive process to provide small arms simulators to support the Greek Army training program with an initial contract value in excess of $500,000 and options to expand the program.

FATS reports revenue for its second quarter fiscal year 2000 ended September 30, 1999 was $8,328,000 versus $12,111,000 for the same period of the previous year. Second quarter net loss was $3,812,000 or 18 cents per diluted share, compared with a net loss of $826,000 or four cents per diluted share for the same period of fiscal year 1999. Revenue for the six months ended September 30, 1999 was $23,524,000 versus $24,376,000 for the same period of the previous year. Net loss for the six months ended September 30, 1999 was $4,007,000 or 19 cents per diluted share compared with a net loss of $2,844,000 or 14 cents per diluted share for the same period of fiscal 1999.

In response to the second quarter financial results, management consolidated several senior level management positions. The organization as a whole was streamlined to optimize operations and to focus on core competencies. While the marketing and engineering operations were given additional resources, the company’s overall operating cost was reduced substantially, according to management. The company has also unveiled a lower cost, portable system for law enforcement customers which includes the latest information system technologies. This new product is expected to contribute to increased revenue in the near future.

The year of 1998 was a good one for firearms sales, according to government excise tax figures supplied by American Firearms Industry Newsletter, a trade publication. The excise tax figure for 1998 is $15 million from the 10% tax on handguns and 11% on long guns. The comparable total for 1997 was $144 million, representing a significant increase the following year.

The newsletter further notes some gun industry insurance companies are trying to get out of their policies with the industry. Beretta is reportedly suing their insurance company, Chubb Corp. over a coverage disagreement. A judge has reportedly ruled American Financial Group did not have to pay a $19,000 Hamilton case expense for Brazas Sporting Arms, but a New Orleans judge ruled National Mutual Insurance did have to cover the National Shooting Sports Foundation.

Paul Rochelle has been named as the new sales manager for firearm importers, KBI, Inc. Rochelle’s past experience includes stints at Stoeger, Nationwide Sports and RSR Wholesale. Steve Cohen, who formerly held the same position at KBI, resigned to pursue a new career as a stock broker.

Armalite, a producer of AR-15 style rifles, has implemented price increases, with the most significant being on the AR-10(T) carbine models. Accessories and parts prices are also being increased.

Numrich Gun Parts Corp. of West Hurley, New York, recently purchased all the remaining inventory of parts from Lorcin Engineering formerly of Mira Loma, California which has ceased operations. Included in this large purchase are factory original replacement parts and magazines for the Models L22, L25, LT25, L32, L380, L9mm, and LH380.

In early December, Gary, Indiana mayor Scott King announced that a retailer, Fetlas Trading Co., named in the City of Gary’s lawsuit against the small arms industry, has agreed to settle with the city, according to the Firearms Litigation Clearinghouse, an anti-gun group.

In particular, Fetlas has agreed to: stop purchasing any more guns for resale; stop selling handguns when its present inventory is exhausted; continue to provide each handgun purchaser with a trigger lock, free-of-charge; and, contribute $10,000 to the City of Gary to be used by the City “to help minimize handgun violence in Gary and its negative impacts on its citizens.”