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8-K - FORM 8-K - AXON ENTERPRISE, INC. | c07320e8vk.htm |
EXHIBIT 99.1
FOR RELEASE ON: October 27, 2010 at 7:30 a.m. ET
CONTACT: Dan Behrendt
Chief Financial Officer
Chief Financial Officer
TASER International, Inc.
(480) 905-2000
(480) 905-2000
TASER International Reports Third Quarter Results
SCOTTSDALE, Ariz., October 27, 2010 TASER International, Inc. (NASDAQ: TASR), today
announced financial results for the third quarter of 2010.
Q3 2010 Financial Summary:
| Net sales were $21.1 million in the quarter, a decrease of $2.2 million or 10% compared
to the third quarter of 2009. The decrease was driven primarily by customer delay of
several large international orders, which were originally expected to be completed during
the third quarter. Prior year third quarter sales were reduced by $3.5 million of deferred
revenue related to the
TASER®
X26
Electronic Control Device (ECO) trade-in program introduced with the launch of the TASER®
X3 product. |
||
| Gross margin declined to 49.4% in the third quarter of 2010, compared to 56.9% in the
same period last year. The decline was attributed to a combination of reduced leverage on
indirect manufacturing expenses due to the decrease in sales, as well as some inventory
obsolescence and restructuring charges. Following the official launch of Evidence.com, data
center operating and software maintenance costs are included in cost of sales, which
reduced gross margin as a percent of sales by 8.7% (from 58.1% before data center
operations and software maintenance to 49.4% net). The prior year gross margin was
impacted by the deferral of X26 revenue relating to the X26 trade-in program associated
with the launch of the X3. |
||
| Sales, general and administrative (SG&A) expenses of $9.5 million in the third quarter
of 2010 decreased 17.2%, or $2.0 million, compared to the third quarter of 2009, as the
Company engaged in tighter cost-control measures. |
||
| Research and development (R&D) expenses decreased $5.0 million to $1.7 million in the
third quarter of 2010, a 75% decrease from the same period last year. The reduction is
partially attributed to launch costs in the prior year for X3 and prototype costs for the
Axon product. Additionally, the launch of Evidence.com resulted in the Company including
$1.8 million of expenses in cost of products sold for ongoing delivery and maintenance of
the product, which were previously included in R&D. |
||
| Adjusted operating income, which excludes the impact of stock-based compensation
charges and depreciation and amortization, was $2.3 million for the third quarter of 2010,
a $1.7 million increase from adjusted operating income of $0.6 million in the third quarter
of 2009. GAAP loss from operations was $0.7 million for the quarter, compared to a loss
from operations of $4.8 million for the third quarter of 2009. |
||
| Net loss for the third quarter of 2010 was $2.3 million, while net loss per share on a
basic and diluted basis was $0.04. The net loss was impacted by a reduction in the
effective tax rate which reduced the income tax benefit. The pre-tax loss from operations
was $0.01, and the adjustment in income tax benefit generated a per share loss of $0.03. |
Significant events in the third quarter of 2010 included the following:
| The Company recorded a significant order to ship 2,748 X26 ECDs to the Texas Department
of Public Safety following the decision by the agency to issue TASER X26 ECDs to all of its
state troopers. |
||
| The Company recorded its first Axon/Evidence.Com platform sale in Minnesota with
Burnsville, MN electing to outfit its officers with the new product offering from TASER. |
||
| The Company won a final injunction in its patent infringement case against Stinger
Systems in its claim for literal infringement of the Companys shaped pulse waveform
patent. The Court also entered an order for a final injunction that states, Stinger,
together with its officers, agents, servants, employees, and attorneys, and those persons
in active concert or participation with them who receive actual notice of this Final
Injunction, are hereby restrained and enjoined, pursuant to 35 U.S.C. Section 283 and Fed.
R. Civ. P. 65, from making, using, offering to sell, or selling in or from the United
States, or importing into the United States, the S-200 ECDs, either alone or in combination
with any other product, and all other products that are only colorably different from the
S-200 ECDs in the context of claims 2 or 40 of the 295 patent, whether individually or in
combination with other products or as part of another product, and from otherwise
infringing, contributing to the infringement of, or inducing others to infringe claims 2 or
40 of the 295 patent. This final injunction runs until the expiration of the 295 patent
(February 11, 2023) and also applies to a substantial portion of the components for the
S-200 ECD. Copies of the Courts orders are publically available at www.pacer.gov. |
In light of the challenging economic environment, we are encouraged by our teams continued
reduction in the fixed costs needed to run the business and the improvements in our cash earnings,
commented Rick Smith, CEO of TASER International, Inc. Cost control measures have yielded
significant reductions in operating expenses and solid gross margins in our core business. While
the investment we have made in Evidence.com will adversely impact total gross margins for the next
few quarters as we recognize additional costs of operating our data centers while we begin to scale
revenues, we believe these investments will yield significant long term shareholder value. It is a
very exciting time for us as we begin to ramp revenue in our AXON and Evidence.com products.
Feedback from our early customers reinforces our belief that these new products fill a vital
customer need and will create a significant new market for TASER International.
The Company will host its third quarter 2010 earnings conference call on Wednesday, October 27,
2010 at 11:00 a.m. ET. To access the audio teleconference, please dial: 1-866-700-5192 or
1-617-213-8833 for international callers. The pass code is 32212612 for both numbers.
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. 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 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., is the global leader in the development of technologies that
Protect Life. More than 15,000 public safety agencies protect and serve in more than 40 countries
with TASER technology. TASER innovations benefit individuals and families too; providing personal
protection and accountability while maintaining regard for life. TASER is committed to bringing
advanced solutions to market, like TASER AXON and EVIDENCE.COM powerful evidence capturing and
management platforms. Learn more about TASER International and its products at www.TASER.com or by
calling (800) 978-2737.
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. 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, 2010 | September 30, 2009 | |||||||
Net Sales |
$ | 21,084,081 | 23,310,457 | |||||
Cost of Products Sold |
10,668,399 | 10,044,645 | ||||||
Gross Margin |
10,415,682 | 13,265,812 | ||||||
Sales, general and administrative expenses |
9,454,353 | 11,419,527 | ||||||
Research and development expenses |
1,686,062 | 6,656,536 | ||||||
Loss from operations |
(724,733 | ) | (4,810,251 | ) | ||||
Interest and other income, net |
10,364 | 19,994 | ||||||
Loss before provision (benefit) for income taxes |
(714,369 | ) | (4,790,257 | ) | ||||
Provision (benefit) for income taxes |
1,621,109 | (1,614,241 | ) | |||||
Net loss |
$ | (2,335,478 | ) | (3,176,016 | ) | |||
Loss per common and common equivalent shares |
||||||||
Basic |
$ | (0.04 | ) | $ | (0.05 | ) | ||
Diluted |
$ | (0.04 | ) | $ | (0.05 | ) | ||
Weighted average number of common and common
equivalent shares outstanding |
||||||||
Basic |
62,342,775 | 61,937,769 | ||||||
Diluted |
62,342,775 | 61,937,769 |
TASER International, Inc.
Consolidated Statements of Operations
(Unaudited)
Consolidated Statements of Operations
(Unaudited)
For the Nine Months Ended | ||||||||
September 30, 2010 | September 30, 2009 | |||||||
Net Sales |
$ | 64,048,507 | $ | 69,748,635 | ||||
Cost of Products Sold |
30,519,891 | 28,114,844 | ||||||
Gross Margin |
33,528,616 | 41,633,791 | ||||||
Sales, general and administrative expenses |
29,756,705 | 33,689,688 | ||||||
Research and development expenses |
8,881,027 | 15,246,764 | ||||||
Loss from operations |
(5,109,116 | ) | (7,302,661 | ) | ||||
Interest and other income, net |
24,466 | 162,044 | ||||||
Loss before benefit for income taxes |
(5,084,650 | ) | (7,140,617 | ) | ||||
Provision (Benefit) for income taxes |
(897,178 | ) | (2,773,438 | ) | ||||
Net Loss |
$ | (4,187,472 | ) | $ | (4,367,179 | ) | ||
Loss per common and common equivalent shares |
||||||||
Basic |
$ | (0.07 | ) | $ | (0.07 | ) | ||
Diluted |
$ | (0.07 | ) | $ | (0.07 | ) | ||
Weighted average number of common and
common equivalent shares outstanding |
||||||||
Basic |
62,495,957 | 61,891,638 | ||||||
Diluted |
62,495,957 | 61,891,638 |
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, 2010 | September 30, 2009 | September 30, 2010 | September 30, 2009 | |||||||||||||
GAAP net sales |
$ | 21,084,081 | $ | 23,310,457 | $ | 64,048,507 | $ | 69,748,635 | ||||||||
Trade-in program revenue deferral |
| 3,465,650 | | 3,465,650 | ||||||||||||
Adjusted revenues |
$ | 21,084,081 | $ | 26,776,107 | $ | 64,048,507 | $ | 73,214,285 | ||||||||
GAAP gross margin |
$ | 10,415,682 | $ | 13,265,812 | $ | 33,528,616 | $ | 41,633,791 | ||||||||
Trade-in program revenue deferral |
| 3,465,650 | | 3,465,650 | ||||||||||||
Adjusted gross margin |
$ | 10,415,682 | $ | 16,731,462 | $ | 33,528,616 | $ | 45,099,441 | ||||||||
GAAP loss from operations |
$ | (724,733 | ) | $ | (4,810,251 | ) | $ | (5,109,116 | ) | $ | (7,302,661 | ) | ||||
Trade-in program revenue deferral |
| 3,465,650 | | 3,465,650 | ||||||||||||
Stock-based compensation expense (a) |
912,778 | 1,022,863 | 2,838,998 | 3,782,181 | ||||||||||||
Depreciation and amortization |
2,076,912 | 923,722 | 5,243,225 | 2,408,269 | ||||||||||||
Adjusted operating income |
$ | 2,264,957 | $ | 601,984 | $ | 2,973,107 | $ | 2,353,439 | ||||||||
a) | Results include stock-based compensation as follows: |
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, 2010 | September 30, 2009 | September 30, 2010 | September 30, 2009 | |||||||||||||
Cost of Products Sold |
$ | 107,947 | $ | 62,154 | $ | 259,932 | $ | 260,517 | ||||||||
Sales, general and administrative expenses |
692,420 | 814,159 | 2,215,010 | 2,441,178 | ||||||||||||
Research and development expenses |
112,411 | 146,550 | 364,056 | 1,080,486 | ||||||||||||
$ | 912,778 | $ | 1,022,863 | $ | 2,838,998 | $ | 3,782,181 | |||||||||
TASER International, Inc.
Consolidated Balance Sheets
(Unaudited)
Consolidated Balance Sheets
(Unaudited)
September 30, 2010 | December 31, 2009 | |||||||
ASSETS |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 40,281,074 | $ | 45,505,049 | ||||
Accounts receivable, net |
12,956,799 | 15,384,993 | ||||||
Inventory |
18,025,815 | 15,085,750 | ||||||
Prepaids and other assets |
2,168,354 | 1,461,539 | ||||||
Current deferred income tax assets, net |
9,872,613 | 8,447,915 | ||||||
Total current assets |
83,304,655 | 85,885,246 | ||||||
Property and equipment, net |
33,315,614 | 36,323,341 | ||||||
Capitalized software, net |
4,004,971 | 2,349,724 | ||||||
Deferred income tax assets, net |
10,997,093 | 10,997,093 | ||||||
Intangible assets, net |
2,920,576 | 2,765,701 | ||||||
Other long-term assets |
814,834 | 104,812 | ||||||
Total Assets |
$ | 135,357,743 | $ | 138,425,917 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current Liabilities |
||||||||
Accounts payable |
$ | 4,001,265 | $ | 6,357,195 | ||||
Accrued liabilities |
3,544,053 | 4,252,577 | ||||||
Current deferred revenue |
3,303,590 | 2,819,155 | ||||||
Customer deposits |
231,303 | 355,926 | ||||||
Total Current Liabilities |
11,080,211 | 13,784,853 | ||||||
Deferred revenue, net of current portion |
4,602,484 | 4,675,089 | ||||||
Liability for unrecorded tax benefits |
2,261,631 | 2,264,779 | ||||||
Total Liabilities |
17,944,326 | 20,724,721 | ||||||
Commitments and Contingencies |
||||||||
Stockholders Equity |
||||||||
Common stock |
647 | 642 | ||||||
Additional paid-in capital |
96,744,344 | 92,839,165 | ||||||
Treasury stock |
(14,708,237 | ) | (14,708,237 | ) | ||||
Retained earnings |
35,382,154 | 39,569,626 | ||||||
Accumulated other comprehensive income |
(5,491 | ) | | |||||
Total Stockholders Equity |
117,413,417 | 117,701,196 | ||||||
Total Liabilities and Stockholders Equity |
$ | 135,357,743 | $ | 138,425,917 | ||||
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, 2010 | September 30, 2009 | |||||||
Net loss |
$ | (4,187,472 | ) | $ | (4,367,179 | ) | ||
Depreciation and amortization |
5,243,225 | 2,408,269 | ||||||
Stock-based compensation expense |
2,838,998 | 3,782,181 | ||||||
Net cash (used) provided by operating activities |
(2,586,073 | ) | 5,460,093 | |||||
Net cash used by investing activities |
(3,678,538 | ) | (7,033,790 | ) | ||||
Net cash provided by financing activities |
1,066,186 | 107,831 | ||||||
Cash and cash equivalents, end of period |
$ | 40,281,074 | $ | 45,414,569 |