SEC Comment Letter for SMITH & WESSON BRANDS, INC. (SWBI) (CIK 0001092796) (SWBI) — Mar 16, 2016
SMITH & WESSON BRANDS, INC. (SWBI) (CIK 0001092796)
Date: March 16, 2016 · CIK: 0001092796 · Accession: 0000000000-16-068577
AI Filing Summary & Sentiment
Reasoning
Referenced dates: February 24, 2016, March 8, 2016
Letter
Mail Stop 4631 March 16 , 2016 Via E -mail Mr. Jeffrey D. Buchanan Chief Financial Officer Smith & Wesson Holding Corporation 2100 Roosevelt Avenue Springfield, Massachusetts 01104
RE: Smith & Wesson Holding Corporation Form 10 -K for the Year E nded April 30 , 2015 Filed June 22 , 2015 Form 10 -Q for the Period Ended January 31, 2016 Filed March 3, 2016 Response Letter dated March 8, 2016 File No. 1 -31552
Dear Mr. Buchanan :
We have reviewed your response letter dated March 8, 2016 and have the following comments . In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to these comments within ten bu siness days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments , we may have additional comments.
Form 10 -Q for the Period Ended January 31, 2016
Note 10. Commitments and Contingencies, page 17
1. We note your response to comment 2 of our letter dated February 24, 2016. We note that while you have considerable experience in assessing product liability cases and claims since they are a routine aspect of your business , such assessment is subject to the normal difficulties encountered in assessing litigation. Because of these normal difficulties, it appears that disclosures related to the number of product liability cases and claims would provide better insight in regard to your current exposure to these matters as well as trends related to these matters. This information can be couched with your be lief that th e number of cases and claims has not had a historical correlation to merit or exposure.
Mr. Jeffrey D. Buchanan Smith & Wesson Holding Corporation March 16 , 2016 Page 2
Management Discussion and Analysis
Results of Operations, page 22
2. We note your response to comment 1 of our letter dated February 24, 2016. We remind you that Item 303 (a)(3)(ii) of Regulation S -X requires a discussion of any known trends or uncertainties that you reasonably expect will have a material favorable or unfavorable impact on sales or income from continuing operations. In addition, Instruction 3 to Item 303(a) of Regulation S -X states that your discussion and a nalysis shall focus specifically on material events and uncertainties known to management that would cause reported financial information not to be necessarily indicative of future operat ing results or of future financial condition. We note that there are multiple factors that can affect your future revenue and income. However, we continue to believe that any factors that are known and could materially impact your future revenue or incom e should be disclosed. We note that during your earnings call held for the quarter ended January 31, 2016 , you discussed the amount of units held at the end of the quarter by your distributors. In this regard, we continue to believe that you should addres s the expected impacted of inventory levels held by distributors and retailers at the end of a period in your discussion if the levels indicate that there could be a material impact to future revenues or income from continuing operations.
3. Item 303(a)(3) (ii) of Regulation S -X also requests disclosures when events are known that will cause a material change in relationship between costs and revenues. As discussed in your earnings call held for the quarter ended January 31, 2016 as well in your Form 10 -Q for the period ended January 31, 2016, the recent increase in consumer demand has led to increased outsourcing of the production of certain components of your firearms. Please address the impact of the increased outsourcing on your cost of sales and gross profit, if material.
You may contact Frank Pigott , Staff Attorney , at (202) 551 - 3570 or, in his absence, Asia Timmons -Pierce , Staff Attorney, at (202) 551 -3754 if you have any questions regarding legal matters. Please contact Nudrat Salik , Staff Accountant, at (202) 551 -3692 or, in her absence, Jeanne Baker, Assistant Chief Accountant, at (202) 551 -3691 if you have questions regarding comments on the financial statements and related matters .
Sincerely,
/s/ Terence O ’Brien
Show Raw Text
Mail Stop 4631
March 16 , 2016
Via E -mail
Mr. Jeffrey D. Buchanan
Chief Financial Officer
Smith & Wesson Holding Corporation
2100 Roosevelt Avenue
Springfield, Massachusetts 01104
RE: Smith & Wesson Holding Corporation
Form 10 -K for the Year E nded April 30 , 2015
Filed June 22 , 2015
Form 10 -Q for the Period Ended January 31, 2016
Filed March 3, 2016
Response Letter dated March 8, 2016
File No. 1 -31552
Dear Mr. Buchanan :
We have reviewed your response letter dated March 8, 2016 and have the following
comments . In some of our comments, we may ask you to provide us with information so we
may better understand your disclosure.
Please respond to these comments within ten bu siness days by providing the requested
information or advis e us as soon as possible when you will respond. If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments , we may have additional comments.
Form 10 -Q for the Period Ended January 31, 2016
Note 10. Commitments and Contingencies, page 17
1. We note your response to comment 2 of our letter dated February 24, 2016. We note that
while you have considerable experience in assessing product liability cases and claims
since they are a routine aspect of your business , such assessment is subject to the normal
difficulties encountered in assessing litigation. Because of these normal difficulties, it
appears that disclosures related to the number of product liability cases and claims would
provide better insight in regard to your current exposure to these matters as well as trends
related to these matters. This information can be couched with your be lief that th e
number of cases and claims has not had a historical correlation to merit or exposure.
Mr. Jeffrey D. Buchanan
Smith & Wesson Holding Corporation
March 16 , 2016
Page 2
Management Discussion and Analysis
Results of Operations, page 22
2. We note your response to comment 1 of our letter dated February 24, 2016. We remind
you that Item 303 (a)(3)(ii) of Regulation S -X requires a discussion of any known trends
or uncertainties that you reasonably expect will have a material favorable or unfavorable
impact on sales or income from continuing operations. In addition, Instruction 3 to Item
303(a) of Regulation S -X states that your discussion and a nalysis shall focus specifically
on material events and uncertainties known to management that would cause reported
financial information not to be necessarily indicative of future operat ing results or of
future financial condition. We note that there are multiple factors that can affect your
future revenue and income. However, we continue to believe that any factors that are
known and could materially impact your future revenue or incom e should be disclosed.
We note that during your earnings call held for the quarter ended January 31, 2016 , you
discussed the amount of units held at the end of the quarter by your distributors. In this
regard, we continue to believe that you should addres s the expected impacted of
inventory levels held by distributors and retailers at the end of a period in your discussion
if the levels indicate that there could be a material impact to future revenues or income
from continuing operations.
3. Item 303(a)(3) (ii) of Regulation S -X also requests disclosures when events are known
that will cause a material change in relationship between costs and revenues. As
discussed in your earnings call held for the quarter ended January 31, 2016 as well in
your Form 10 -Q for the period ended January 31, 2016, the recent increase in consumer
demand has led to increased outsourcing of the production of certain components of your
firearms. Please address the impact of the increased outsourcing on your cost of sales
and gross profit, if material.
You may contact Frank Pigott , Staff Attorney , at (202) 551 - 3570 or, in his absence, Asia
Timmons -Pierce , Staff Attorney, at (202) 551 -3754 if you have any questions regarding legal
matters. Please contact Nudrat Salik , Staff Accountant, at (202) 551 -3692 or, in her absence,
Jeanne Baker, Assistant Chief Accountant, at (202) 551 -3691 if you have questions regarding
comments on the financial statements and related matters .
Sincerely,
/s/ Terence O ’Brien
Terence O’Brien
Accounting Branch Chief
Office of Manufacturing and Construction