Smith & Wesson Holding Corporation announced that the company made the decision to divest its perimeter security business in order to focus on its core firearm business, also pointing out “significantly reduced government spending” and a “deteriorated” environment in the space as contributing factors. The company is currently exploring strategic alternatives to accomplish the divestiture.

Smith & Wesson president and chief executive officer James Debney said, “The decision to divest the security solutions division and focus our financial, managerial, and operational resources toward expanding our presence across our firearm market channels is intended to support our long-term growth opportunities and enhance stockholder value.”

Smith & Wesson’s core firearm business accounted for 92.5 percent of its revenue in the first quarter of its 2012 fiscal year. Smith & Wesson’s firearm customers include retail consumers in the U.S. market, as well as professionals from law enforcement, government, international and military markets. In its most recent quarter, Smith & Wesson reported year-over-year firearm revenue growth of 18.0 percent and firearm unit growth of over 44.4 percent.

Debney concluded, “Since our acquisition of Nashville-based Universal Safety Response (later renamed Smith & Wesson Security Solutions), the environment for the perimeter security business has deteriorated substantially as a result of significantly reduced government spending. However, Security Solutions has a strong management team and employee base, as well as a number of positive assets and opportunities. Its current product portfolio contains a number of highly regarded proprietary technologies, including the GRAB®300, GRAB®400, and XMB™ active barriers. In addition, Smith & Wesson Security Solutions has developed a track record of customer support and system expertise across a diverse corporate and government customer base. We believe its strengths could be better maximized as an independent company, or as part of a group of companies, focused entirely on the security solutions market.”

Jeffrey Buchanan, executive vice president and chief financial officer of Smith & Wesson Holding Corporation, said, “While we explore divestiture options, we will continue to operate Smith & Wesson Security Solutions and offer our high level of support to our customers. Beginning with the second quarter of fiscal 2012, ending Oct. 31, 2011, the division will be reported under generally accepted accounting principles as a discontinued operation in our financial reports. As such, the financial results of Smith & Wesson Security Solutions will not be included in the financial results of continuing operations of Smith & Wesson Holding Corporation. Prior results will be restated to reflect this change.”