UPDATE 1-Smith & Wesson sees sales almost doubling in 3-5 years

* Sees rev of $650 mln in 3-5 yrs

* Expects gross margins to go up

* Sees USR bringing in $90 mln sales in 2010

Nov 9 (Reuters) -Smith & Wesson Holding Corp SWHC.O, known for its 157-year-old handguns business, expects to nearly double its annual sales in the next three to five years, the company said in a filing.

The Springfield, Massachusetts-based company which forecast $650 million in yearly sales also expects gross margins of 35 to 36 percent by that time, boosted by its acquisition of privately held Universal Safety Response Inc (USR).

It posted gross margins of 29.2 percent on sales of $335 million in 2009.

Smith & Wesson bought perimeter security provider USR late June, to diversify its firearms product category and enter professional and non-consumer businesses, which will help reduce its heavy reliance on the retail channel.

The company, which competes with Sturm Ruger & Co Inc RGR.N, Glock Inc and Taurus in the firearms industry, expects the USR division to bring in sales of $90 million in 2010.

Smith & Wesson shares rose 3 percent to $4.40 in morning trade Monday on Nasdaq. (Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Pradeep Kurup)