EX-99.1 2 p13423exv99w1.htm EX-99.1 EX-99.1
EXHIBIT 99.1
FOR RELEASE ON OCTOBER 28, 2008 at 7:30 a.m. EDT
         
 
  CONTACT:   Dan Behrendt
 
      Chief Financial Officer
 
      TASER International, Inc.
 
      (480) 905-2000
TASER International, Inc. Reports Results
For Third Quarter 2008
Company reports sequential revenue growth with $22.9 million in revenue, generates $4.9 million in cash
from operations and $0.01 EPS
SCOTTSDALE, Ariz., October 28, 2008 — TASER International, Inc. (NASDAQ: TASR) (“TASER” or “the Company”) a market leader in advanced electronic control devices (ECD) today reported financial results for the fiscal third quarter ended September 30, 2008.
For the third quarter of 2008, revenues were $22.9 million, a $5.7 million, or 20% decrease over the same quarter of the prior year. On a sequential basis, sales increased $1.8 million, driven primarily by a strong presence of international orders. The decline in sales versus the prior year reflects a continuing trend of lower municipal spending in the U.S., as law enforcement and correctional agencies reassign budget dollars due to economic constraints. Operations continued to demonstrate improvement, as gross margin increased to 60.8% in the third quarter of 2008, compared to 56.1% in the third quarter of 2007, reflecting the Company’s continued focus on production efficiency and cost controls. Research and development expenses increased by $2.4 million, or 240%, in the third quarter of 2008 compared to the same period in 2007. The increase in research and development spending was consistent with the Company’s initiatives towards extending its technological leadership to drive future growth and promote product diversification. As a result of the decrease in sales, combined with increased research and development spending, net operating income for the third quarter was $1.5 million compared to $6.9 million for the same period a year ago. The net income and diluted earnings per share for the third quarter of 2008 were $0.6 million and $0.01, respectively.
The Company generated $4.9 million from operating activities during the third quarter and ended the quarter with cash and cash equivalents of $42.5 million and zero debt.
Significant events in the third quarter of 2008 include the following:
  1.   International sales represented 16% of total net sales for the quarter, compared to 12% in the second quarter of 2008. Significant shipments included the first order for 1,246 TASER® X26™ ECDs from the Queensland Police Services in Australia, which has more than 9,000 law enforcement officers and is adopting TASER® technology after conducting extensive studies and trials. A follow-on order for 1,000 TASER X26 devices was also received from the Korean National Police Agency, which expanded its existing program.
 
  2.   French Prime Minister Mr. François Fillon and French Interior Minister Michéle Alliot-Marie issued an official decree in September which will permit local French law enforcement agencies to deploy TASER® ECDs. There currently are more than 20,000 police officers at more than 4,000 local agencies in France.
 
  3.   One of the more significant domestic orders announced during the quarter was for 400 TASER X26 ECDs and 400 TASER®CAM™ audio/visual recording systems from Palm Beach County Sheriff’s Office in West Palm Beach, FL.
 
  4.   In August, the Company named Jas Dhillon as Chief Strategy Officer and General Manager of the newly formed TASER Virtual Systems Division. Prior to joining TASER International, Mr. Dhillon was a Senior Executive at Microsoft, leading the team responsible for Business Development, Strategy, Product Innovation, and Mergers/Acquisitions for Microsoft® Office Live. At TASER, Mr. Dhillon will be leading the development of sophisticated software architectures and a fully integrated product roadmap as part of the Company’s imperative strategic initiatives.
 
  5.   Abstracts of four (4) human studies examining the safety of TASER devices, including the eXtended Range Electronic Projectile (XREP), were presented during the quarter at the Australasian College for Emergency Medicine Winter Symposium. The studies’ conclusive results found that TASER ECDs do not significantly impair breathing nor affect the human heart adding to the significant body of scientific and medical research on the general safety of TASER technology.
 
  6.   Three (3) more product liability suits were dismissed during the quarter, representing at the end of the quarter a total of seventy-four (74) wrongful death or injury suits that have been dismissed or judgment entered in favor of the Company.
 
  7.   After the close of the quarter, the Company learned on Friday, October 24 that the United States District Court for the Northern District of California eliminated the $5.2 million in punitive damages awarded by the jury in Betty Lou Heston, et al. v. City of Salinas, TASER International, Inc., et al., TASER’s first product liability courtroom loss in June 2008. This is a significant legal finding in the Company’s favor and will reduce the estimated total damages from the case by over 97% to only

 


 

      $153,150 in compensatory damages. It is anticipated the judgment will be entered during the fourth quarter.
“I am proud of the hard work of our entire team that turned in sequential revenue growth, profitability, solid margins, and almost $5 million in cash from operations, despite the current economic environment,” said Rick Smith, Chief Executive Officer of TASER International, Inc. “Difficult economic times like these create opportunities for market leaders like TASER International to extend our technological and market leadership. During a period when many companies were eliminating their future growth initiatives, we were able to remain profitable and maintain positive cash flows, while also making significant investments towards the Company’s future. I believe that these investments will further extend our leadership position well into the future, and our strong balance sheet gives us the operational flexibility to capitalize on opportunities unavailable to many other companies.”
The Company will host its third quarter 2008 earnings conference call on Tuesday, October 28, 2008 at 10:00 a.m. ET. The conference call is available via web cast and can be accessed on the “Investor Relations” page at www.TASER.com. To access the teleconference, please dial: 1-866-510-0707 or 1-617-597-5376. The pass code is 69153328 for both numbers.
About TASER International, Inc. (TASR):
TASER International’s products protect life, providing advanced Electronic Control Devices for use in the law enforcement, medical, military, corrections, professional security, and personal protection markets. TASER® devices use proprietary technology to incapacitate dangerous, combative, or high-risk subjects who pose a risk to law enforcement officers, innocent citizens, or themselves in a manner that is generally recognized as a safer alternative to other uses of force. TASER technology protects life, and the use of TASER devices dramatically reduces injury rates for police officers and suspects. For more information about TASER technology, please call (800) 978-2737 or visit our website at www.TASER.com.
Note to Investors
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements, without limitation, regarding our expectations, beliefs, intentions or strategies regarding the future. We intend that such forward-looking statements be subject to the safe-harbor provided by the Private Securities Litigation Reform Act of 1995. The forward-looking information is based upon current information and expectations regarding TASER International, Inc. These estimates and statements speak only as of the date on which they are made, are not guarantees of future performance, and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results could materially differ from what is expressed, implied, or forecasted in such forward-looking statements.
TASER International assumes no obligation to update the information contained in this press release. These statements are qualified by important factors that could cause our actual results to differ materially from those reflected by the forward-looking statements. Such factors include but are not limited to: (1) market acceptance of our products; (2) our ability to establish and expand direct and indirect distribution channels; (3) our ability to attract and retain the endorsement of key opinion-leaders in the law enforcement community; (4) the level of product technology and price competition for our products; (5) the degree and rate of growth of the markets in which we compete and the accompanying demand for our products; (6) risks associated with rapid technological change and new product introductions; (7) competition; (8) litigation including lawsuits resulting from alleged product related injuries and death; (9) media publicity concerning allegations of deaths and injuries occurring after use of the TASER device and the negative effect this publicity could have on our sales; (10) TASER device tests and reports; (11) product quality; (12) implementation of manufacturing automation; (13) potential fluctuations in our quarterly operating results; (14) financial and budgetary constraints of prospects and customers; (15) order delays; (16) dependence upon sole and limited source suppliers; (17) negative reports concerning the TASER device; (18) fluctuations in component pricing; (19) government regulations and inquiries; (20) dependence upon key employees and our ability to retain employees; (21) execution and implementation risks of new technology; (22) ramping manufacturing production to meet demand; (23) medical and safety studies; (24) field test results; and (25) other factors detailed in our filings with the Securities and Exchange Commission, including, without limitation, those factors detailed in the Company’s Annual Report on Form 10-K and its Form 10-Qs.
The statements made herein are independent statements of TASER International, Inc. The inclusion of any third parties does not represent an endorsement of any TASER International products or services by any such third parties.
For further information contact Marcy Rigoni, Manager of Investor Relations at Marcy@TASER.com or call 800-978-2737 ext. 2011, or Dan Behrendt, Chief Financial Officer of TASER International, Inc., 480-905-2002.
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TASER International, Inc.
Statements of Income
(Unaudited)
                 
    For the Three Months Ended  
    September 30, 2008     September 30, 2007  
Net Sales
  $ 22,859,459     $ 28,533,419  
 
           
 
               
Cost of Products Sold:
               
Direct manufacturing expense
    6,286,067       8,897,407  
Indirect manufacturing expense
    2,677,850       3,629,240  
 
           
 
               
Total Cost of Products Sold
    8,963,917       12,526,647  
 
           
 
               
Gross Margin
    13,895,542       16,006,772  
 
               
Sales, general and administrative expenses
    9,055,060       8,145,117  
Research and development expenses
    3,331,697       978,011  
 
           
 
               
Income from Operations
    1,508,785       6,883,644  
 
               
Interest and other income, net
    269,718       519,671  
 
           
 
               
Income before income taxes
    1,778,503       7,403,315  
Provision for income taxes
    1,160,730       1,249,277  
 
           
 
               
Net income
  $ 617,773     $ 6,154,038  
 
           
 
               
Income per common and common equivalent shares
               
Basic
  $ 0.01     $ 0.10  
Diluted
  $ 0.01     $ 0.09  
 
               
Weighted average number of common and common equivalent shares outstanding
               
Basic
    61,714,889       62,950,482  
Diluted
    63,313,702       66,186,297  

 


 

TASER International, Inc.
Statements of Income
(Unaudited)
                 
    For the Nine Months Ended  
    September 30, 2008     September 30, 2007  
Net Sales
  $ 66,447,272     $ 69,698,610  
 
           
 
               
Cost of Products Sold:
               
Direct manufacturing expense
    19,877,521       20,844,866  
Indirect manufacturing expense
    6,306,617       8,426,684  
 
           
 
               
Total Cost of Products Sold
    26,184,138       29,271,550  
 
           
 
               
Gross Margin
    40,263,134       40,427,060  
 
               
Sales, general and administrative expenses
    27,925,704       24,071,952  
Research and development expenses
    8,463,231       3,211,646  
Litigation judgment expense
    5,200,000        
 
           
 
               
Income (loss) from Operations
    (1,325,801 )     13,143,462  
 
               
Interest and other income, net
    1,492,448       1,453,073  
 
           
 
               
Income before income taxes
    166,647       14,596,535  
Provision for income taxes
    348,023       4,248,735  
 
           
 
               
Net Income (loss)
  $ (181,376 )   $ 10,347,800  
 
           
 
               
Income (loss) per common and common equivalent shares
               
Basic
  $ (0.00 )   $ 0.17  
Diluted
  $ (0.00 )   $ 0.16  
 
               
Weighted average number of common and common equivalent shares outstanding
               
Basic
    62,568,846       62,441,170  
Diluted
    64,419,832       65,434,448  


 

TASER International, Inc.
Balance Sheets
(Unaudited)
                 
    September 30, 2008     December 31, 2007  
ASSETS
               
Current Assets
               
Cash and cash equivalents
  $ 42,499,289     $ 42,801,461  
Short-term investments
          8,499,978  
Accounts receivable, net
    11,600,310       11,691,553  
Inventory
    17,475,342       13,506,804  
Prepaids and other assets
    1,852,565       4,318,661  
Current deferred income tax asset
    7,037,158       15,608,325  
 
           
 
               
Total Current Assets
    80,464,664       96,426,782  
Long-term investments
    5,002,858       9,006,493  
Property and equipment, net
    26,454,698       23,599,680  
Deferred income tax asset
    12,908,482       6,724,104  
Intangible assets, net
    2,253,026       1,925,139  
Other long-term assets
    29,828       81,203  
 
           
 
               
Total Assets
  $ 127,113,556     $ 137,763,401  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
 
               
Current Liabilities
               
Accounts payable and accrued liabilities
  $ 11,966,847     $ 10,088,139  
Current deferred revenue
    2,168,629       1,694,644  
Customer deposits
    292,308       266,728  
Deferred insurance settlement proceeds
          404,848  
Current portion of capital lease obligations
          19,257  
 
 
           
Total Current Liabilities
    14,427,784       12,473,616  
Capital lease obligations, net of current portion
          11,695  
Deferred revenue, net of current portion
    3,971,877       3,541,267  
Liability for unrecorded tax benefits
    1,056,619       1,100,073  
 
           
 
               
Total Liabilities
    19,456,280       17,126,651  
 
           
 
               
Commitments and Contingencies
           
 
Stockholders’ Equity
               
Common stock
    638       635  
Additional paid-in capital
    86,612,560       86,911,381  
Treasury stock
    (14,708,237 )     (2,208,957 )
Retained earnings
    35,752,315       35,933,691  
 
           
 
               
Total Stockholders’ Equity
    107,657,276       120,636,750  
 
           
 
               
Total Liabilities and Stockholders’ Equity
  $ 127,113,556     $ 137,763,401  
 
           

 


 

TASER International, Inc.
Selected Statement of Cash Flows Information
(Unaudited)
                 
    For the Nine Months Ended
    September 30, 2008   September 30, 2007
Net income (loss)
  $ (181,376 )   $ 10,347,800  
Depreciation and amortization
    1,945,526       1,843,272  
Stock-based compensation expense
    1,396,113       1,007,814  
Net cash provided by operating activities
    4,611,061       6,681,548  
Net cash provided (used) by investing activities
    7,266,023       (1,005,470 )
Net cash provided (used) by financing activities
    (12,179,256 )     2,536,642  
Cash and Cash Equivalents, end of period
  $ 42,499,289     $ 26,986,405  
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