1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   ----------

                                    FORM 10-Q


(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the quarterly period ended March 31, 2001

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the transition period from_______________  to  _______________

                         Commission file number 0-4776

                          STURM, RUGER & COMPANY, INC.
             (Exact name of registrant as specified in its charter)




                                                                             
                    Delaware                                                        06-0633559
        (State or other jurisdiction of                                          (I.R.S. employer
         incorporation or organization)                                         identification no.)


      Lacey Place, Southport, Connecticut                                              06490
    (Address of principal executive offices)                                        (Zip code)



                                 (203) 259-7843
              (Registrant's telephone number, including area code)

                  Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such requirements for the past 90 days. Yes X   No

                  The number of shares outstanding of the issuer's common stock
as of March 31, 2001: Common Stock, $1 par value - 26,910,720.


                                  Page 1 of 18
   2
                                      INDEX

                  STURM, RUGER & COMPANY, INC. AND SUBSIDIARIES




                                                                                             
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

    Condensed consolidated balance sheets--March 31, 2001 and
    December 31, 2000                                                                              3

    Condensed consolidated statements of income--Three months ended
    March 31, 2001 and 2000                                                                        5

    Condensed consolidated statements of cash flows--Three months
    ended March 31, 2001 and 2000                                                                  6

    Notes to condensed consolidated financial statements--March 31, 2001                           7

Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations                                                       12

Item 3.  Quantitative and Qualitative Disclosures about Market Risk                               16

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                                        17

Item 6.  Exhibits and Reports on Form 8-K                                                         17

SIGNATURES                                                                                        18



                                       2
   3
PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)
         STURM, RUGER & COMPANY, INC. AND SUBSIDIARIES

         CONDENSED CONSOLIDATED BALANCE SHEETS
     (Dollars in thousands, except per share data)





                                                              March 31,       December 31,
                                                                 2001            2000
                                                              ---------       ------------
                                                             (unaudited)         (Note)
                                                                        
ASSETS

  Current Assets
     Cash and cash equivalents                                $   3,272        $   4,073
     Short-term investments                                      59,215           65,875
     Trade receivables, less allowances for
         doubtful accounts ($1,245 and $1,252) and
         discounts ($642 and $1,130)                             17,035           14,354
     Inventories:
         Finished products                                       15,737           13,779
         Materials and products in process                       43,021           37,585
                                                              ---------        ---------
                                                                 58,758           51,364
     Deferred income taxes                                        7,085            7,061
     Prepaid expenses and other assets                            3,022            5,728
                                                              ---------        ---------
                                   Total Current Assets         148,387          148,455

Property, Plant and Equipment                                   152,746          151,531
     Less allowances for depreciation                          (110,128)        (108,206)
                                                              ---------        ---------
                                                                 42,618           43,325
Deferred income taxes                                               562            1,076
Other assets                                                     18,208           18,245
                                                              ---------        ---------
                                                                209,775        $ 211,101
                                                              =========        =========



                                       3
   4
PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)
         STURM, RUGER & COMPANY, INC. AND SUBSIDIARIES

         CONDENSED CONSOLIDATED BALANCE SHEETS
     (Dollars in thousands, except per share data)





                                                             March 31,       December 31,
                                                               2001             2000
                                                             ---------       -----------
                                                            (unaudited)        (Note)
                                                                       
LIABILITIES AND STOCKHOLDERS' EQUITY

  Current Liabilities
     Trade accounts payable and accrued expenses             $   5,877        $   5,431
     Product safety modifications                                  467              486
     Product liability                                           3,000            3,000
     Employee compensation                                      11,347           10,170
     Workers' compensation                                       4,895            4,836
     Income taxes                                                1,125            1,512
                                                             ---------        ---------
                            Total Current Liabilities           26,711           25,435

Product liability accrual                                       11,954           13,308
Contingent liabilities -- Note 7                                    --               --

Stockholders' Equity
     Common Stock, non-voting, par value $1:
         Authorized shares 50,000; none issued                      --               --
     Common Stock, par value $1: Authorized shares -
         40,000,000; issued and outstanding 26,910,700          26,911           26,911
     Additional paid-in capital                                  2,434            2,434
     Retained earnings                                         141,877          143,125
     Accumulated other comprehensive income                       (112)            (112)
                                                             ---------        ---------
                                                               171,110          172,358
                                                             ---------        ---------
                                                               209,775        $ 211,101
                                                             =========        =========



Note:

         The balance sheet at December 31, 2000 has been derived from the
         audited financial statements at that date but does not include all the
         information and footnotes required by generally accepted accounting
         principles for complete financial statements.

See notes to condensed consolidated financial statements.


                                       4
   5
STURM, RUGER & COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)




                                        Three Months Ended March 31,
                                            2001          2000
                                           -------       -------

                                                   
Net firearms sales                         $35,837       $51,095
Net castings sales                           8,027         8,794
                                           -------       -------

Total net sales                             43,864        59,889

Cost of products sold                       31,897        41,437
                                           -------       -------
                                            11,967        18,452

Expenses:
     Selling                                 4,266         3,648
     General and administrative              1,969         1,418
                                           -------       -------
                                             6,235         5,066
                                           -------       -------
                                             5,732        13,386

Other income-net                             1,067         1,459
                                           -------       -------

        Income before income taxes           6,799        14,845

Income taxes                                 2,665         5,819
                                           -------       -------

                   Net income              $ 4,134       $ 9,026
                                           =======       =======


Basic and diluted earnings per share       $  0.15       $  0.34
                                           =======       =======

Cash dividends per share                   $  0.20       $  0.20
                                           =======       =======


See notes to condensed consolidated financial statements.


                                       5
   6
STURM, RUGER & COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)





                                                                      Three Months Ended March 31,
                                                                          2001            2000
                                                                        --------        --------


                                                                                  
Cash Provided by (Used by) Operating Activities                         $   (864)       $ 14,309

Investing Activities
  Property, plant and equipment additions                                 (1,215)         (1,353)
  Purchases of short-term investments                                    (39,020)        (41,355)
  Proceeds from sales or maturities of
      short-term investments                                              45,680          30,770
                                                                        --------        --------
                   Cash provided by (used by) investing activities         5,445         (11,938)
                                                                        --------        --------


Financing Activities
  Dividends paid                                                          (5,382)         (5,382)
                                                                        --------        --------
                   Cash used by financing activities                      (5,382)         (5,382)
                                                                        --------        --------

Decrease in cash and cash equivalents                                       (801)         (3,011)

              Cash and cash equivalents at beginning of period             4,073           8,164
                                                                        --------        --------

                   Cash and cash equivalents at end of period           $  3,272        $  5,153
                                                                        ========        ========



See notes to condensed consolidated financial statements.


                                       6
   7
STURM RUGER & COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2001


NOTE 1--BASIS OF PRESENTATION

         The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.

         In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all adjustments, consisting of normal
recurring accruals, considered necessary for a fair presentation of the results
of the interim periods. Operating results for the three months ended March 31,
2001 are not necessarily indicative of the results to be expected for the full
year ending December 31, 2001. For further information refer to the consolidated
financial statements and footnotes thereto included in the Sturm, Ruger &
Company, Inc. Annual Report on Form 10-K for the year ended December 31, 2000.

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES

         Organization: Sturm, Ruger & Company, Inc. ("Company") is principally
engaged in the design, manufacture, and sale of firearms and investment
castings. The Company's design and manufacturing operations are located in the
United States. Substantially all sales are domestic. The Company's firearms are
sold through a select number of distributors to the sporting and law enforcement
markets. Investment castings are sold either directly to or through
manufacturers' representatives to companies in a wide variety of industries.

         Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

         Principles of Consolidation: The consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated.

NOTE 3--INVENTORIES

         Inventories are valued using the last-in, first-out (LIFO) method. An
actual valuation of inventory under the LIFO method can be made only at the end
of each year based on the inventory levels and costs existing at that time.
Accordingly, interim LIFO calculations must necessarily be based on management's
estimates of expected year-end inventory levels and costs. Because these are
subject to many forces beyond management's control, interim results are subject
to the final year-end LIFO inventory valuation.


                                       7
   8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--CONTINUED


NOTE 4--INCOME TAXES

         The Company's effective tax rate differs from the statutory tax rate
principally as a result of state income taxes. Total income tax payments during
the three months ended March 31, 2001 and 2000 were $0.1 million and $2.0
million, respectively.

NOTE 5--BASIC AND DILUTED EARNINGS PER SHARE

         Basic earnings per share is based upon the weighted average number of
common shares outstanding during the period. Diluted earnings per share reflect
the impact of options outstanding using the treasury stock method, when
applicable.

NOTE 6--COMPREHENSIVE INCOME

         As there were no non-owner changes in equity during the first quarter
of 2001 and 2000, total comprehensive income equals net income, or $4.1 million
and $9.0 million, respectively.

NOTE 7--CONTINGENT LIABILITIES

       As of March 31, 2001, the Company is a defendant in approximately 40
lawsuits involving its products and is aware of certain other such claims. These
lawsuits and claims fall within two categories:

          (i)       those that claim damages from the Company related to
                    allegedly defective product design which stem from a
                    specific incident. These lawsuits and claims are based
                    principally on the theory of "strict liability" but also may
                    be based on negligence, breach of warranty, and other legal
                    theories, and

          (ii)      those brought by cities, municipalities, counties,
                    individuals (including certain putative class actions) and
                    one state Attorney General against numerous firearms
                    manufacturers, distributors and dealers seeking to recover
                    damages allegedly arising out of the misuse of firearms by
                    third parties in the commission of homicides, suicides and
                    other shootings involving juveniles and adults. The
                    complaints by municipalities seek damages, among other
                    things, for the costs of medical care, police and emergency
                    services, public health services, and the maintenance of
                    courts, prisons, and other services. In certain instances,
                    the plaintiffs seek to recover for decreases in property
                    values and loss of business within the city due to criminal
                    violence. In addition, nuisance abatement and/or injunctive
                    relief is sought to change the design, manufacture,
                    marketing and distribution practices of the various
                    defendants. These suits allege, among other claims, strict
                    liability or negligence in the design of products, public
                    nuisance, negligent entrustment, negligent distribution,
                    deceptive or fraudulent advertising, violation of consumer
                    protection statutes and conspiracy or concert of action
                    theories. None of these cases allege a specific injury to a
                    specific individual as a result of the misuse or use of any
                    of the Company's products.


                                       8
   9
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--CONTINUED


       Management believes that, in every case, the allegations are unfounded,
and that the shootings and any results therefrom were due to negligence or
misuse of the firearms by third-parties or the claimant, and that there should
be no recovery against the Company. Defenses further exist to the suits brought
by cities, municipalities, counties, and the Attorney General based, among other
reasons, on established state law precluding recovery by municipalities for
essential government services, the remoteness of the claims, the types of
damages sought to be recovered, and limitations on the extraterritorial
authority which may be exerted by a city, municipality, county or state under
state and federal law, including State and Federal Constitutions.

       The only case against the Company alleging liability for criminal
shootings by third-parties to ever be permitted to go before a jury, Hamilton,
et. al. v. Accu-tek, et. al., resulted in a defense verdict in favor of the
Company on February 11, 1999. In that case, numerous firearms manufacturers and
distributors had been sued, alleging damages as a result of alleged negligent
sales practices and "industry-wide" liability. The Company and its marketing and
distribution practices were exonerated from any claims of negligence in each of
the seven cases decided by the jury. The Court upheld the verdict of the jury
and dismissed each case as to the Company in its later opinion. The three
defendants found liable have filed a notice of appeal from the Court's decision.
On August 16, 2000, the U.S. 2nd Circuit Court of Appeals certified certain
questions involving the appeal to the Appellate Division of the New York State
Supreme Court for resolution. Oral argument on those certified questions was
heard in the New York Appellate Division on February 8, 2001.

       On October 7, 1999 a lawsuit brought against the Company and numerous
firearms manufacturers and distributors by the mayor of Cincinnati, City of
Cincinnati v. Beretta U.S.A. Corp., et. al., was dismissed. This was the first
dismissal of one of the lawsuits which have been filed by certain cities,
municipalities and counties. The Ohio Court of Appeals affirmed this decision on
August 11, 2000. Such lawsuits filed by the cities of Bridgeport, Miami,
Chicago, Camden County, Philadelphia, and Gary have been completely dismissed
and those filed by the cities of Atlanta and Wilmington have been partially
dismissed. The Cleveland suit has withstood an initial motion to dismiss in the
trial court, and in New Orleans the Court declared legislation passed to
prohibit such suits unconstitutional. However, on April 3, 2001, the Louisiana
Supreme Court reversed this decision, finding the statute to be constitutional,
and it dismissed the case. The Detroit/Wayne County case was also partially
dismissed, and the Michigan legislature has also passed legislation precluding
such suits, as have about twenty other states. The Boston case and the
California city claims (consolidated into one case) have been permitted to
proceed into the discovery phase. Appeals of all trial court decisions are
pending or will be filed when appropriate. Motions to dismiss other such
lawsuits are pending or will be filed when timely.

       The Company's management monitors the status of known claims and the
product liability accrual, which includes amounts for asserted and unasserted
claims. While it is not possible to forecast the outcome of litigation or the
timing of costs, in the opinion of management, after consultation with special
and corporate counsel, it is not probable and is unlikely that litigation,
including punitive damage claims, will have a material adverse effect on the
financial position of the Company, but may have a material impact on the
Company's financial results for a particular period.


                                       9
   10
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--CONTINUED


       Punitive damages, as well as compensatory damages, are demanded in many
of the lawsuits and claims. Aggregate claimed amounts presently exceed product
liability accruals and applicable insurance coverage. As of March 18, 1982,
compensatory and punitive damage insurance coverage is provided, in States where
permitted, for losses exceeding $1.0 million of loss per occurrence or an
aggregate maximum loss of $4.0 million. For claims which the Company has been
notified in writing between July 10, 1988, through July 10, 1989, coverage is
provided for losses exceeding $2.5 million per claim or an aggregate maximum
loss of $9.0 million. For claims made between July 10, 1989, and July 10, 1991,
the aggregate maximum loss is $7.5 million. For claims made after July 10, 1992,
coverage is provided for losses exceeding $2.25 million per claim, or an
aggregate maximum loss of $6.5 million. For claims made after July 10, 1994,
coverage is provided for losses exceeding $2.0 million per claim, or an
aggregate maximum loss of $6.0 million. For claims made after July 10, 1997,
coverage is provided for annual losses exceeding $2.0 million per claim, or an
aggregate maximum loss of $5.5 million annually. For claims made after July 10,
2000, coverage is provided for annual losses exceeding $5 million per claim, or
an aggregate maximum loss of $10 million annually, except for certain new claims
which might be brought by governments or municipalities after July 10, 2000,
which are excluded from coverage.

       On March 17, 2000, Smith & Wesson announced that it had reached a
settlement to conclude some of the municipal lawsuits with various governmental
entities. On March 30, 2000, the Office of the Connecticut Attorney General
began an investigation of certain alleged "anticompetitive practices in the
firearms industry." On April 17, the State of Maryland's Attorney General also
made similar inquiries as to the Company. On August 9, 2000, the U.S. Federal
Trade Commission also filed such a civil investigative demand regarding the
Smith & Wesson settlement. The Company has not engaged in any improper conduct
and has cooperated with these investigations.

       The Company has reported all cases instituted against it through December
31, 2000 and the results of those cases, where terminated, to the S.E.C. on its
previous Form 10-K and 10-Q reports, to which reference is hereby made.

NOTE 8--OPERATING SEGMENT INFORMATION

         The Company has two reportable segments: firearms and investment
castings. The firearms segment manufactures and sells rifles, pistols,
revolvers, and shotguns principally to a select number of independent wholesale
distributors primarily located in the United States. The investment castings
segment consists of two operating divisions which manufacture and sell titanium
and steel investment castings.


                                       10
   11
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--CONTINUED


         Selected operating segment financial information follows (in
thousands):



Quarter ended March 31,                                                 2001                    2000
-------------------------------------------------------------------------------------------------------
                                                                                        
Net Sales
     Firearms                                                         $ 35,837                $ 51,095
     Castings
          Unaffiliated                                                   8,027                   8,794
          Intersegment                                                  11,142                   7,829
-------------------------------------------------------------------------------------------------------
                                                                        19,169                  16,623
     Eliminations                                                     (11,142)                 (7,829)
-------------------------------------------------------------------------------------------------------
                                                                      $ 43,864                $ 59,889
=======================================================================================================
Income Before Income Taxes
     Firearms                                                          $ 5,090                $ 13,183
     Castings  (a)                                                         735                     570
     Corporate                                                             974                   1,092
-------------------------------------------------------------------------------------------------------
                                                                       $ 6,799                $ 14,845
=======================================================================================================




                                                                       March 31,            December 31,
Identifiable Assets                                                      2001                    2000
-------------------------------------------------------------------------------------------------------
                                                                                      
     Firearms                                                         $ 88,680                $ 79,230
     Castings                                                           33,898                  33,043
     Corporate                                                          87,197                  98,828
-------------------------------------------------------------------------------------------------------
                                                                      $209,775                $211,101
=======================================================================================================



(a)  Income before income taxes for the quarter ended March 31, 2000 was
     favorably impacted by an inventory adjustment of $1.3 million.


                                       11
   12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Results of Operations

         Consolidated net sales of $43.9 million were achieved by the Company in
the first quarter of 2001. This represents a decrease of $16.0 million or 26.8%
from the first quarter of 2000 consolidated net sales of $59.9 million.

         Firearms segment net sales were $35.8 million in the first quarter of
2001 compared to $51.1 million in the corresponding 2000 period, a decrease of
$15.3 million or 29.9%. Firearms unit shipments decreased 38.0%. In 2001, the
Company instituted a sales incentive program for its distributors which allows
them to earn rebates of up to 3% if certain annual overall sales targets are
achieved. This program replaces a sales incentive program in 2000 which allowed
rebates of up to 15% if certain annual overall sales targets were achieved.

         Castings segment net sales decreased 8.7% from $8.8 million in the
first quarter of 2000 to $8.0 million in the first quarter of 2001. This decline
is primarily attributable to the absence of aluminum casting sales as the
Company sold its Uni-Cast Division during the second quarter of 2000.

         Consolidated cost of products sold for the first quarter of 2001 was
$31.9 million compared to $41.4 million for the first quarter of 2000, a
decrease of $9.5 million or 23.0%. This was primarily attributable to lower
firearms and castings sales, as discussed above.

         Gross profit as a percentage of net sales decreased to 27.3% in the
first quarter of 2001 from 30.8% in the comparable 2000 period. This
deterioration is primarily attributable to the reduced sales levels in both
segments.

         Selling, general & administrative expenses increased to $6.2 million in
the first quarter of 2001 from $5.1 million in the first quarter of 2000 due in
part to start-up costs related to a voluntary firearms lock exchange program.

         Other income-net decreased by $0.4 million or 26.9% to $1.1 million in
2001 from $1.5 million in 2000 due to decreased earnings on short-term
investments resulting from reduced principal and lower yields on these
investments.

         The effective income tax rate was 39.2% in the first quarter of 2001
and 2000.

         As a result of the foregoing factors, consolidated net income for the
first quarter of 2001 decreased to $4.1 million from $9.0 million for the first
quarter of 2000 representing a decrease of $4.9 million or 54.2%.

Financial Condition

         At March 31, 2001, the Company had cash, cash equivalents and
short-term investments of $62.5 million, working capital of $121.7 million and a
current ratio of 5.6 to 1, compared to $69.9 million, $123.0 million, and 5.8 to
1, respectively, at December 31, 2000.


                                       12
   13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--CONTINUED


         Operating activities used $0.9 million in the first quarter of 2001 and
provided $14.3 million for the first quarter of 2000. This change in cash flows
is principally a result of reduced earnings in 2001 and an increase in
inventories in 2001.

         The Company follows an industry-wide practice of offering a "dating
plan" to its firearms customers on selected products, which allows the
purchasing distributor to buy the products commencing in December, the start of
the Company's dating plan year, and pay for them on extended terms. Discounts
are offered for early payment. The dating plan provides a revolving payment plan
under which payments for all shipments made during the period December through
February have to be made by April 30. Generally, shipments made in subsequent
months have to be paid for within approximately 90 days. Dating plan receivable
balances were $8.4 million at March 31, 2001 and $11.2 million at March 31,
2000. The Company has reserved the right to discontinue the dating plan at any
time and has been able to finance this dating plan from internally generated
funds provided by operating activities.

         Capital expenditures during the three months ended March 31, 2001
totaled $1.2 million. For the past two years capital expenditures averaged
approximately $1.5 million per quarter. In 2001, the Company expects to spend
approximately $9.5 million on capital expenditures in its ongoing effort to
upgrade and modernize all of its divisions. The Company finances, and intends to
continue to finance, all of these activities with funds provided by operations.

         For the three months ended March 31, 2001 dividends paid totaled $5.4
million. This amount reflects the regular quarterly dividend of $.20 per share
paid on March 15, 2001. Future dividends will depend on many factors, including
internal estimates of future performance and the Company's need for funds.

         Historically, the Company has not required external financing. Based on
its cash flow and unencumbered assets, the Company believes it has the ability
to raise substantial amounts of short-term or long-term debt. The Company does
not anticipate any need for external financing through 2001.

         The purchase of firearms is subject to federal, state and local
governmental regulations. The basic federal laws are the National Firearms Act,
the Federal Firearms Act, and the Gun Control Act of 1968. These laws generally
prohibit the private ownership of fully automatic weapons and place certain
restrictions on the interstate sale of firearms unless certain licenses are
obtained. The Company does not manufacture fully automatic weapons, other than
for the law enforcement market, and holds all necessary licenses under these
federal laws. From time to time, congressional committees review proposed bills
relating to the regulation of firearms. These proposed bills generally seek
either to restrict or ban the sale and, in some cases, the ownership of various
types of firearms. Several states currently have laws in effect similar to the
aforementioned legislation.

         Until November 30, 1998, the "Brady Law" mandated a nationwide five-day
waiting period and background check prior to the purchase of a handgun. As of
November 30, 1998, the National Instant Check System, which applies to both
handguns and long guns, replaced the five-day waiting period. The Company
believes that the "Brady Law" has not had a significant effect on the Company's
sales of firearms, nor does it anticipate any impact on sales in the future. The
"Crime Bill" took effect on September 13, 1994, but none of the Company's
products were banned as so-called "assault weapons."


                                       13
   14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--CONTINUED


To the contrary, all the Company's then-manufactured long guns were exempted by
name as "legitimate sporting firearms." The Company remains strongly opposed to
laws which would restrict the rights of law-abiding citizens to lawfully acquire
firearms. The Company believes that the private ownership of firearms is
guaranteed by the Second Amendment to the United States Constitution and that
the widespread private ownership of firearms in the United States will continue.
However, there can be no assurance that the regulation of firearms will not
become more restrictive in the future and that any such restriction would not
have a material adverse effect on the business of the Company.

         The Company is a defendant in numerous lawsuits involving its products
and is aware of certain other such claims. The Company has expended significant
amounts of financial resources and management time in connection with product
liability litigation. Management believes that, in every case, the allegations
are unfounded, and that the shootings and any results therefrom were due to
negligence or misuse of the firearm by third parties or the claimant, and that
there should be no recovery against the Company. Defenses further exist to the
suits brought by cities, municipalities, counties, and State Attorneys General
based, among other reasons, on established state law precluding recovery by
municipalities for essential government services, the remoteness of the claims,
the types of damages sought to be recovered, and limitations on the
extraterritorial authority which may be exerted by a city, municipality, county
or state under state and federal law, including State and Federal Constitutions.

       The only case against the Company alleging liability for criminal
shootings by third-parties to ever be permitted to go before a jury, Hamilton,
et. al. v. Accu-tek, et. al., resulted in a defense verdict in favor of the
Company on February 11, 1999. In that case, numerous firearms manufacturers and
distributors had been sued, alleging damages as a result of alleged negligent
sales practices and "industry-wide" liability. The Company and its marketing and
distribution practices were exonerated from any claims of negligence in each of
the seven cases decided by the jury. The Court upheld the verdict of the jury
and dismissed each case as to the Company in its later opinion. The three
defendants found liable have filed a notice of appeal from the Court's decision.
On August 16, 2000, the U.S. 2nd Circuit Court of Appeals certified certain
questions involving the appeal to the Appellate Division of the New York State
Supreme Court for resolution. Oral argument on those certified questions was
heard in the New York Appellate Division on February 8, 2001.

       On October 7, 1999 a lawsuit brought against the Company and numerous
firearms manufacturers and distributors by the mayor of Cincinnati, City of
Cincinnati v. Beretta U.S.A. Corp., et. al., was dismissed. This was the first
dismissal of one of the lawsuits which have been filed by certain cities,
municipalities and counties. The Ohio Court of Appeals affirmed this decision on
August 11, 2000. Such lawsuits filed by the cities of Bridgeport, Miami,
Chicago, Camden County, Philadelphia, and Gary have been completely dismissed
and those filed by the cities of Atlanta and Wilmington have been partially
dismissed. The Cleveland suit has withstood an initial motion to dismiss in the
trial court, and in New Orleans the Court declared legislation passed to
prohibit such suits unconstitutional. However, on April 3, 2001, the Louisiana
Supreme Court reversed this decision, finding the statute to be constitutional,
and it dismissed the case. The Detroit/Wayne County case was also partially
dismissed, and the Michigan legislature has also passed legislation precluding
such suits, as have about twenty other states. The Boston case and the
California city claims (consolidated into one case) have been permitted to
proceed into the discovery phase. Appeals of all trial court decisions are
pending or will be filed when appropriate. Motions to dismiss other such
lawsuits are pending or will be filed when timely.


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   15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--CONTINUED


       The Company's management monitors the status of known claims and the
product liability accrual, which includes amounts for asserted and unasserted
claims. While it is not possible to forecast the outcome of litigation or the
timing of costs, in the opinion of management, after consultation with special
and corporate counsel, it is not probable and is unlikely that litigation,
including punitive damage claims, will have a material adverse effect on the
financial position of the Company, but may have a material impact on the
Company's financial results for a particular period.

         In the normal course of its manufacturing operations, the Company is
subject to occasional governmental proceedings and orders pertaining to waste
disposal, air emissions and water discharges into the environment. The Company
believes that it is generally in compliance with applicable environmental
regulations and the outcome of such proceedings and orders will not have a
material adverse effect on its business.

         The Company expects to realize its deferred tax assets through tax
deductions against future taxable income or carry back against taxes previously
paid.

         Inflation's effect on the Company's operations is most immediately felt
in cost of products sold because the Company values inventory on the LIFO basis.
Generally under this method, the cost of products sold reported in the financial
statements approximates current costs, and thus, reduces distortion in reported
income which would result from the slower recognition of increased costs when
other methods are used. The use of historical cost depreciation has a beneficial
effect on cost of products sold. The Company has been affected by inflation in
line with the general economy.

Forward-Looking Statements and Projections

         The Company may, from time to time, make forward-looking statements and
projections concerning future expectations. Such statements are based on current
expectations and are subject to certain qualifying risks and uncertainties, such
as market demand, sales levels of firearms, anticipated castings sales and
earnings, the need for external financing for operations or capital
expenditures, the results of pending litigation against the Company including
lawsuits filed by mayors, attorneys general and other governmental entities and
membership organizations, and the impact of future firearms control and
environmental legislation, any one or more of which could cause actual results
to differ materially from those projected. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date made. The Company undertakes no obligation to publish revised
forward-looking statements to reflect events or circumstances after the date
such forward-looking statements are made or to reflect the occurrence of
subsequent unanticipated events.


                                       15
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--CONTINUED




ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is exposed to changes in prevailing market interest rates
affecting the return on its investments but does not consider this interest rate
market risk exposure to be material to its financial condition or results of
operations. The Company invests primarily in United States Treasury instruments
with short-term (less than one year) maturities. The carrying amount of these
investments approximates fair value due to the short-term maturities. Under its
current policies, the Company does not use derivative financial instruments,
derivative commodity instruments or other financial instruments to manage its
exposure to changes in interest rates or commodity prices.


                                       16
   17
PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

       The nature of the legal proceedings against the Company is discussed at
Note 7 to the condensed consolidated financial statements included in this Form
10-Q report, which is incorporated herein by reference.

       The Company has reported all cases instituted against it through December
31, 2000, and the results of those cases, where terminated, to the S.E.C. on its
previous Form 10-K and 10-Q reports, to which reference is hereby made.

         The following cases were instituted against the Company during the
three months ended March 31, 2001, which involved significant demands for
compensatory and/or punitive damages:

         Larkins v. Company (MO) in the U.S. District Court for the Eastern
District of Missouri. The complaint, which was served on February 7, 2001,
alleges that the plaintiff's Ruger revolver accidentally discharged when it was
dropped from a rig, resulting in fatal injury to him. Plaintiffs' estate seeks
compensatory and punitive damages, plus other fees to be determined by the
court.

         During the three months ending March 31, 2001, two previously-reported
cases were settled:



                           Case Name        Jurisdiction
                           ---------        ------------
                                         
                             Martin            Florida
                             Dibble            Alaska


         The settlement amounts were within the Company's limits of its
self-insurance coverage.

         On January 9, 2001, in the previously-reported Mahoney (DC) case, the
Company was voluntarily dismissed without prejudice by the plaintiff.

         On January 12, 2001, in the previously-reported City of Gary (IN) case,
the trial court dismissed the complaint in its entirety. Plaintiffs filed an
amended complaint that was also dismissed by the court on March 13, 2001.
Plaintiffs will most likely appeal.

         On February 14, 2001, in the previously-reported Miami-Dade County (FL)
case, the Florida appellate court affirmed the trial court's dismissal of all
claims. Plaintiffs will most likely appeal.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits - None

         (b)      The Company did not file any reports on Form 8-K during the
                  three months ended March 31, 2001.


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   18
                          STURM, RUGER & COMPANY, INC.

               FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 2001

                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                       STURM, RUGER & COMPANY, INC.





Date:  May 7, 2001                     S/ERLE G. BLANCHARD
                                       -----------------------------------------
                                       Erle G. Blanchard
                                       Principal Financial Officer,
                                       Vice Chairman, President, Chief Operating
                                       Officer, Treasurer and Director


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