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8-K - FORM 8-K - AXON ENTERPRISE, INC. | c23901e8vk.htm |
EXHIBIT 99.1
FOR RELEASE ON: October 31, 2011 at 7:30 a.m. ET
CONTACT: | Dan Behrendt Chief Financial Officer TASER International, Inc. (480) 905-2000 |
TASER International Reports Third Quarter Results
Company
Generates $5.3 Million in Cash on $24.4 Million in Revenue
SCOTTSDALE, Ariz., October 31, 2011 TASER International, Inc. (NASDAQ: TASR), today announced
financial results for the third quarter of 2011 ended September 30, 2011.
Q3 2011 Financial Summary:
| Net sales were $24.4 million in the quarter, an increase of $3.3 million or 16%
compared to third quarter 2010 sales of $21.1 million. The increase in net sales was
driven by the introduction of the TASER® X2 electronic control device (ECD), a
compelling upgrade opportunity for customers, which generated $3.7 million of sales during
the quarter. International sales also increased driven by significant follow on orders. |
||
| Gross margin improved to 53.7% in the third quarter of 2011, compared to 49.4% in the
same period last year. The improvement in gross margin was driven by a reduction in
Evidence.Com operating costs, a more favorable sales segment mix and overall increased
leverage on higher sales. |
||
| Sales, general and administrative (SG&A) expenses of $9.5 million in the third quarter
of 2011 increased slightly compared to the third quarter of 2010, as ongoing cost reduction
efforts were offset by an increase in legal costs. |
||
| Research and development (R&D) expenses increased $0.7 million to $2.4 million in the
third quarter of 2011. The increase was primarily attributable to the continued reduction
in the allocation of Evidence.Com service and maintenance costs to cost of sales in the
third quarter of 2011. The costs allocated in the third quarter of 2010 were elevated
immediately following the launch of the service. |
||
| Adjusted operating income, which excludes the impact of stock-based compensation
charges, depreciation and amortization and loss on write down /
disposal of property and
equipment was $4.0 million for the third quarter of 2011, a
$1.7 million, or 72% increase
from an adjusted operating income of $2.3 million in the third quarter of 2010. GAAP
income from operations was $1.2 million for the quarter, compared to a loss from operations
of $0.7 million for the third quarter of 2010. |
||
| Net income for the third quarter of 2011 was $1.1 million or $0.02 per share on a basic
and diluted basis. |
||
| The Company generated $5.3 million in cash from operating activities in the third
quarter of 2011, approximately 22% of net sales. |
||
| The Company repurchased a further $12.4 million or approximately 3.0 million shares of
its common stock during the third quarter. This brings the total amount stock repurchased
in 2011 to $24.9 million or approximately 5.9 million shares. Cash, cash equivalents and
investments were $30.8 million at the end of the third quarter of 2011 and the Company has
no debt recorded on its balance sheet. |
Other significant events:
| New Jersey, the last previously remaining state that prohibited law enforcement from
using ECDs has approved the X26 ECD and the X2 ECD for use by law enforcement officers in
New Jersey. These models are the only ECDs to meet the criteria set forth the Attorney
Generals revised policy governing the use of stun guns in New Jersey. |
||
| The Company announced a number of new orders for the new X2 product during the third
quarter, including: |
| The Charlotte-Mecklenburg Police Department upgraded their existing
deployment of X26 ECDS by ordering 1,600 X2 ECDs equipped with the new Auto
Shut-Down Performance Power Magazine (APPM), extended warranties, 7,400 cartridges
and related accessories. |
||
| The University of Texas at Houston Police Department ordered 88 TASER X2
ECDs, 528 cartridges and extended warranties |
||
| The Plymouth Police Department ordered 85 TASER X2 ECDs and 1,000
cartridges |
| The Company received three significant international follow-on orders from foreign law
enforcement agencies during the third quarter of 2011. |
| The first order received provided an international law enforcement agency
with 377 TASER X26 ECDs with extended warranties, and 377 TASERCam recorders. |
||
| The second order received included 60,000 TASER cartridges. |
||
| The third order received provided an international law enforcement agency
with cartridges and various related accessories. |
| The Company continued to generate traction for the TASER AXONTM on-officer
camera and Evidence.com management service with a number of new agencies adopting the
platform in the third quarter including orders from Polk County Sheriffs Office (IA), the
Burlington Police Department (VT), Coronado Police Department (CA), Sea Girt Police
Department (NJ), Socorro County Sheriffs Department (NM), and Windsor Police Department
(VA). |
We are encouraged by the continued traction we are seeing for the new TASER X2, a product line
which grew to 15% of total revenues in its first full quarter of production, commented Rick Smith,
CEO of TASER International, Inc. Customers have reacted very positively to the product line, as
well as to an upgrade program which provides a $300 trade-in credit for any existing ECD through
the end of the year. We believe this upgrade program will help drive fourth quarter revenues while
assisting our customers in making the transition.
The Company will host its third quarter 2011 earnings conference call on Monday, October 31, 2011
at 11:00 a.m. ET. To join the live audio presentation, please dial toll free at 866-730-5769 or
857-350-1593 for international callers. The pass code is 71978860.
Non-GAAP Measures
To supplement the Companys Statements of Operations presented in accordance with GAAP, we are
presenting non-GAAP measures of certain components of financial performance. We have presented
these measures for our investors to be better able to compare our current results with those of
previous periods and have shown a reconciliation of GAAP to the non-GAAP financial measures in the
tables at the end of this release. These non-GAAP measures include the impact of non-cash
stock-based compensation expense, depreciation and amortization, litigation judgment expense, asset impairment charges and loss on
write down of Property and Equipment. We use these non-GAAP financial measures for financial and
operational decision making and as a means to evaluate period-to-period comparisons. Our
management believes that these non-GAAP financial measures provide meaningful supplemental
information regarding our performance by excluding certain expenses and expenditures that may not
be indicative of our recurring core business operating results, meaning our operating performance
excluding non-cash charges, such as stock-based compensation, depreciation and amortization and
other discrete non-cash charges that are infrequent in nature. We believe that both management and
investors benefit from referring to these non-GAAP financial measures in assessing our performance
and when planning, forecasting and analyzing future periods. These non-GAAP financial measures
also facilitate managements internal comparisons to our historical performance and liquidity.
Caution on Use of Non-GAAP Measures
As noted previously, these non-GAAP financial measures are not consistent with GAAP because they do
not reflect the impact of other non-cash charges. Management believes investors will benefit from
greater transparency in referring to these non-GAAP financial measures when assessing the Companys
operating results, as well as when forecasting and analyzing future periods. However, management
recognizes that:
| these non-GAAP financial measures are limited in their usefulness and
should be considered only as a supplement to the Companys GAAP
financial measures; |
|
| these non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, the Companys GAAP financial
measures; |
|
| these non-GAAP financial measures should not be considered to be
superior to the Companys GAAP financial measures; and |
|
| these non-GAAP financial measures were not prepared in accordance with
GAAP and investors should not assume that the non-GAAP financial
measures presented in this earnings release were prepared under a
comprehensive set of rules or principles. |
Further, these non-GAAP financial measures may be unique to the Company, as they may be different
from non-GAAP financial measures used by other companies. As such, this presentation of non-GAAP
financial measures may not enhance the comparability of the Companys results to the results of
other companies.
A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial
measure or measures appears at the end of this press release.
About TASER International, Inc.
TASER International, Inc. (NASDAQ:TASR) is a global provider of safety technologies that prevent
conflict and protect life. More than 16,200 public safety agencies in 107 countries rely on
TASER® electronic control devices (ECDs) and AXON on-officer camera systems to help
protect and serve. TASER innovations benefit individuals and families too, providing personal
protection and accountability while maintaining regard for life. Since 1994, more than 236,000
individuals have relied on TASER technology as a means for effective personal safety. Learn more
about TASER International and its solutions at www.TASER.com and www.Evidence.com or by calling
(800) 978-2737. Be a part of the TASER community by joining us on Facebook, Twitter and YouTube.
TASER® is a registered trademarks of TASER International, Inc., registered in the U.S.
All rights reserved. TASER logo, AXON, X26, X2, X3, and Evidence.com are trademarks of TASER
International, Inc. Other Company and product names may be trademarks of their respective owners.
Note to Investors
To review the TASER International Safe Harbor Statement, please visit our Investor Relations Safe
Harbor Statement at http://investor.taser.com/phoenix.zhtml?c=129937&p=irol-safeharbor.
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. Such forward-looking
statements relate to: expected revenue and earnings growth; estimations regarding the size of our
target markets; successful penetration of the law enforcement market; expansion of product sales to
the private security, military and consumer self-defense markets; growth expectations for new and
existing accounts; expansion of production capability; new product introductions; product safety
and our business model. We caution that these statements are qualified by important factors that
could cause actual results to differ materially from those reflected by the forward-looking
statements herein.
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)
potential delays in international and domestics orders; (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 Companys Annual Report on
Form 10-K and its Quarterly Reports on Form 10-Q.
For investor relations information please contact Katie Pyra by phone at 480-515-6330 or via email
at IR@TASER.com, or Dan Behrendt, Chief Financial Officer of TASER International, Inc.,
480-905-2002.
- more -
TASER International, Inc.
Consolidated Statements of Operations
(Unaudited)
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended | ||||||||
September 30, 2011 | September 30, 2010 | |||||||
Net sales |
$ | 24,383,110 | 21,084,081 | |||||
Cost of products sold |
11,282,855 | 10,668,399 | ||||||
Gross margin |
13,100,255 | 10,415,682 | ||||||
Sales, general and administrative expenses |
9,477,548 | 9,416,371 | ||||||
Research and development expenses |
2,362,721 | 1,686,062 | ||||||
Loss on write down / disposal of property and equipment, net |
47,894 | 37,981 | ||||||
Income (loss) from operations |
1,212,092 | (724,733 | ) | |||||
Interest and other income, net |
15,265 | 10,364 | ||||||
Income (loss) before provision for income taxes |
1,227,357 | (714,369 | ) | |||||
Provision for income taxes |
91,072 | 1,621,109 | ||||||
Net income (loss) |
$ | 1,136,285 | (2,335,478 | ) | ||||
Income (loss) per common and common equivalent shares |
||||||||
Basic |
$ | 0.02 | $ | (0.04 | ) | |||
Diluted |
$ | 0.02 | $ | (0.04 | ) | |||
Weighted average number of common and common equivalent
shares outstanding |
||||||||
Basic |
58,787,274 | 62,342,775 | ||||||
Diluted |
60,037,328 | 62,342,775 |
TASER International, Inc.
Consolidated Statements of Operations
(Unaudited)
Consolidated Statements of Operations
(Unaudited)
For the Nine Months Ended | ||||||||
September 30, 2011 | September 30, 2010 | |||||||
Net sales |
$ | 68,698,114 | $ | 64,048,507 | ||||
Total cost of products sold |
31,145,151 | 30,519,891 | ||||||
Gross margin |
37,552,963 | 33,528,616 | ||||||
Sales, general and administrative expenses |
27,887,357 | 29,718,724 | ||||||
Research and development expenses |
7,908,420 | 8,881,027 | ||||||
Litigation judgment expense |
3,301,243 | | ||||||
Asset impairment |
1,353,857 | | ||||||
Loss on write down / disposal of property and equipment, net |
796,353 | 37,981 | ||||||
Loss from operations |
(3,694,267 | ) | (5,109,116 | ) | ||||
Interest and other income, net |
1,303,471 | 24,466 | ||||||
Loss before benefit for income taxes |
(2,390,796 | ) | (5,084,650 | ) | ||||
Benefit for income taxes |
(1,251,981 | ) | (897,178 | ) | ||||
Net loss |
$ | (1,138,815 | ) | $ | (4,187,472 | ) | ||
Loss per common and common equivalent shares |
||||||||
Basic |
$ | (0.02 | ) | $ | (0.07 | ) | ||
Diluted |
$ | (0.02 | ) | $ | (0.07 | ) | ||
Weighted average number of common and common equivalent
shares outstanding |
||||||||
Basic |
60,617,787 | 62,495,957 | ||||||
Diluted |
60,617,787 | 62,495,957 |
TASER International, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, 2011 | September 30, 2010 | September 30, 2011 | September 30, 2010 | |||||||||||||
GAAP income (loss) from operations |
$ | 1,212,092 | $ | (724,733 | ) | $ | (3,694,267 | ) | $ | (5,109,116 | ) | |||||
Stock-based compensation expense (a) |
693,520 | 912,778 | 2,533,444 | 2,838,998 | ||||||||||||
Depreciation and amortization |
1,995,434 | 2,076,912 | 6,112,613 | 5,243,225 | ||||||||||||
Litigation judgment expense |
| | 3,301,243 | | ||||||||||||
Asset impairment |
3,353 | | 1,353,857 | | ||||||||||||
Loss on write down / disposal of property and equipment, net |
47,894 | 37,981 | 796,353 | 37,981 | ||||||||||||
Adjusted operating income |
$ | 3,952,293 | $ | 2,302,938 | $ | 10,403,243 | $ | 3,011,088 | ||||||||
a) | Results include stock-based compensation as follows: |
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, 2011 | September 30, 2010 | September 30, 2011 | September 30, 2010 | |||||||||||||
Cost of products sold |
$ | 30,238 | 107,947 | $ | 135,217 | $ | 259,932 | |||||||||
Sales, general and administrative expenses |
518,513 | 692,420 | 1,891,258 | 2,215,010 | ||||||||||||
Research and development expenses |
144,769 | 112,411 | 506,969 | 364,056 | ||||||||||||
$ | 693,520 | 912,778 | $ | 2,533,444 | $ | 2,838,998 | ||||||||||
TASER International, Inc.
Consolidated Balance Sheets
(Unaudited)
Consolidated Balance Sheets
(Unaudited)
September 30, 2011 | December 31, 2010 | |||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | 24,574,858 | $ | 42,684,241 | ||||
Short term investments |
6,175,147 | | ||||||
Accounts receivable, net of allowance of $200,000 at September 30, 2011 and December 31, 2010,
respectively |
12,525,734 | 13,542,535 | ||||||
Inventory |
15,469,128 | 17,815,405 | ||||||
Prepaid expenses and other current assets |
1,969,884 | 1,999,525 | ||||||
Deferred income tax assets, net |
8,864,276 | 6,284,489 | ||||||
Total current assets |
69,579,027 | 82,326,195 | ||||||
Property and equipment, net |
29,821,661 | 35,905,765 | ||||||
Deferred income tax assets, net |
13,819,753 | 13,919,753 | ||||||
Intangible assets, net |
3,183,944 | 3,090,876 | ||||||
Other long-term assets |
753,716 | 944,346 | ||||||
Total assets |
$ | 117,158,101 | $ | 136,186,935 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current Liabilities: |
||||||||
Accounts payable |
$ | 5,147,800 | $ | 4,550,789 | ||||
Accrued liabilities |
7,703,524 | 3,759,800 | ||||||
Current portion of deferred revenue |
3,154,183 | 3,265,260 | ||||||
Customer deposits |
207,974 | 372,145 | ||||||
Total current liabilities |
16,213,481 | 11,947,994 | ||||||
Deferred revenue, net of current portion |
4,219,021 | 4,392,860 | ||||||
Liability for unrecorded tax benefits |
2,639,346 | 2,281,840 | ||||||
Total liabilities |
23,071,848 | 18,622,694 | ||||||
Stockholders Equity |
||||||||
Preferred stock, $0.00001 par value per share; 25 million shares authorized; no shares issued and
outstanding at September 30, 2011 and December 31, 2010, respectively |
| |||||||
Common stock, $0.00001 par value per share; 200 million shares authorized; 56,767,754 and 62,621,268
shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively |
647 | 647 | ||||||
Additional paid-in capital |
99,699,075 | 97,122,085 | ||||||
Treasury stock, 7,969,683 and 2,091,600 shares at September 30, 2011 and December 31, 2010, respectively |
(39,597,054 | ) | (14,708,237 | ) | ||||
Retained earnings |
34,046,376 | 35,185,191 | ||||||
Accumulated other comprehensive loss |
(62,791 | ) | (35,445 | ) | ||||
Total stockholders equity |
94,086,253 | 117,564,241 | ||||||
Total liabilities and stockholders equity |
$ | 117,158,101 | $ | 136,186,935 | ||||
TASER International, Inc.
Selected Consolidated Statement of Cash Flows Information
(Unaudited)
Selected Consolidated Statement of Cash Flows Information
(Unaudited)
For the Nine Months Ended | ||||||||
September 30, 2011 | September 30, 2010 | |||||||
Net loss |
$ | (1,138,815 | ) | $ | (4,187,472 | ) | ||
Depreciation and amortization |
6,112,613 | 5,243,225 | ||||||
Stock-based compensation expense |
2,533,444 | 2,838,998 | ||||||
Net cash provided (used) by operating activities |
14,637,384 | (2,413,143 | ) | |||||
Net cash used by investing activities |
(7,813,187 | ) | (3,851,469 | ) | ||||
Net cash (used) provided by financing activities |
(24,845,271 | ) | 1,066,186 | |||||
Cash and cash equivalents, end of period |
$ | 24,574,858 | $ | 40,281,074 |