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8-K - FORM 8-K - AXON ENTERPRISE, INC. | c20548e8vk.htm |
Exhibit 99.1
FOR RELEASE ON: July 28, 2011 at 7:30 a.m. ET
CONTACT: | Dan Behrendt Chief Financial Officer TASER International, Inc. (480) 905-2000 |
TASER International Reports Second Quarter Results
Company Generates $4.9 Million in Cash on $21.2 Million in Revenue
Announces Stock Buy-Back Program for up to $20.0 Million of Company Stock
Announces Stock Buy-Back Program for up to $20.0 Million of Company Stock
SCOTTSDALE, Ariz., July 28, 2011 TASER International, Inc. (NASDAQ: TASR), today announced
financial results for the second quarter of 2011 ended June 30, 2011.
Q2 2011 Financial Summary:
| Net sales were $21.2 million
in the quarter, an increase of $2.1 million or 11%
compared to second quarter 2010 sales of $19.1 million. The increase in net sales was
driven by stronger international sales and the launch of the
TASER®X2
electronic control device (ECD), which
generated $1.4 million of sales during the quarter. |
| Gross margin improved to 57.7% in the second quarter of 2011, compared to 50.4% in the
same period last year. 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 6.0%
(from 63.8% before data center operations and software maintenance to 57.7% net).
Excluding these costs, the improvement in gross margin on the base business was driven by a
more favorable higher margin product and sales segment mix, more efficient operations with
reductions in rework and scrap expense, elimination of restructuring charges incurred in
the prior year and an overall increased leverage on higher sales. |
| Sales, general and administrative (SG&A) expenses of $9.1 million in the second quarter
of 2011 decreased 9.2%, or $0.9 million, compared to the second quarter of 2010, driven by
one-time restructuring charges and a litigation settlement expense in the prior year. |
| Research and development (R&D) expenses decreased $0.3 million to $2.8 million in the
second quarter of 2011, an 8.6% decrease from the same period last year. This reduction
was partially attributable to costs in the prior year for the AXON product, as well as the
impact of cost-reduction measures. Additionally, the launch of Evidence.com resulted in
the Company including $1.2 million of expenses in cost of products sold for ongoing
delivery and maintenance of the product, some of which were previously included in R&D in
the second quarter of 2010. |
| The Company recorded a $3.3 million charge in the second quarter of 2011 for an adverse
jury verdict received in the case of Turner v. TASER International, Inc., et al. The court
has not yet entered an order of judgment and, based on the court excluding and
failing to instruct the jury to consider significant evidence that the Company believes
demonstrates contributory negligence on the part of the plaintiff, the Company has moved for
judgment in its favor notwithstanding the verdict and will pursue all appropriate legal
channels including filing an appeal in this matter at the appropriate time should an adverse
judgment be subsequently entered. For more information please go to www.taser.com/rule50. |
| The Company recorded a $1.4 million asset impairment charge in the second quarter
following a decision to abandon operations of its Protector product offering. Additionally,
a loss of $0.8 million from the write down of Property and Equipment was incurred following
the decision to dispose of surplus equipment for Evidence.com operations. |
| Adjusted operating income, which excludes the impact of stock-based compensation
charges, depreciation and amortization, litigation judgment expense, asset impairment
charges and loss on write down / disposal of Property and Equipment was $3.3 million for
the second quarter of 2011, a $4.2 million, or 453% increase from an adjusted operating
loss of $0.9 million in the second quarter of 2010. GAAP loss from operations was $5.1
million for the quarter, compared to a loss from operations of $3.4 million for the second
quarter of 2010. |
| Net loss for the second quarter of 2011 was $2.3 million or $0.04 per share on a basic
and diluted basis. |
| The Company generated $4.9 million in cash from operating activities in the second
quarter of 2011 and also completed a $12.5 million repurchase of approximately 2.9 million
shares of its common stock. Cash, cash equivalents and investments were $38.5 million at
the end of the second quarter of 2011 and the Company has no debt recorded on its balance
sheet. |
| On July 27, 2011 the Board of Directors of TASER International, Inc. adopted a
resolution approving a stock buy-back program authorizing the Company to purchase up to
$20.0 million of the Companys common stock subject to stock market conditions and
corporate considerations. The new $20 million buy-back is in addition to the $12.5
million buy-back executed in 2008 and the $12.5 million buy-back already executed in 2011. |
Other significant events:
| The Company began shipping the new X2 for revenue
in June. The X2 is the
newest upgrade in the Companys line of ECDs, and serves as a
more cost effective alternative to the
TASER®X3
ECD, featuring a dual-shot semi-automatic
capability. The Company announced a number of new orders for this new product during the
second quarter, including: |
| The Newport
News Sheriffs Office in Virginia ordered 77 TASER X2 ECDs
with 77 TASER®
Cam HD units and related accessories. |
| The Montana Highway Patrol ordered 125 TASER X2 ECDs and related
accessories. This was the first of two expected orders which will enable the
deployment of the X2 ECDs to all patrol officers. A follow-on order to complete full
deployment is expected in the second half of 2011. |
| The South Dakota Highway Patrol ordered 165 TASER X2 ECDs, 535 TASER
cartridges and related accessories. |
| The Company received four significant international follow-on orders from law
enforcement agencies during the second quarter of 2011. |
| The first order provided an unnamed international agency with 1,080
TASER X26 ECDs, 59,000 TASER cartridges and 100 TASER Cam units. |
| The second order provided an international law enforcement agency with
295 TASER X26 ECDs, 295 TASER Cam units and 10,951 TASER cartridges. |
| The third order provided an international law enforcement agency with
7,500 TASER cartridges. |
| The fourth order provided an international law enforcement agency with
900 TASER X26 ECDs, 10 TASER Cam units and 3,000 TASER cartridges. |
| The Company announced on May 20, 2011 that it had prevailed in vacating three of the
four monetary awards that were appealed to the Ninth Circuit Court of Appeals in the case
of Heston v. TASER International, Inc., City of Salinas, et al. |
| The National Institute of Justice (NIJ) the research, development and evaluation
agency of the U.S. Department of Justice (DOJ) released two key new reports from multi-year
studies of ECDs also known as Conducted Energy Devices (CEDs), Police Use of Force, Tasers
and Other Less-Lethal Weapons, and Study of Deaths Following Electro Muscular
Disruption. |
According to the NIJ, these findings from two new research studies will help law enforcement
make decisions about using ECDs. In one study, researchers surveyed agencies across the
country about a range of use of force issues. They found that these devices can reduce
injuries. The other study was conducted by a panel of medical experts who examined why
individuals died after exposure to an ECD during encounters with law enforcement. It found
that that ECDs do not pose a significant risk for induced cardiac dysrhythmia in humans when
deployed reasonably and that these devices are as safe, or safer, than other means of
subdual.
DOJ Report Links:
Police Use of Force, Tasers and Other Less-Lethal Weapons at:
http://www.ncjrs.gov/pdffiles1/nij/232215.pdf
http://www.ncjrs.gov/pdffiles1/nij/232215.pdf
Study of Deaths Following Electro Muscular Disruption at:
http://www.ncjrs.gov/pdffiles1/nij/233432.pdf
http://www.ncjrs.gov/pdffiles1/nij/233432.pdf
The second quarter marked another important milestone for the Company, as we began shipping our
newest ECD product, the TASER X2, for revenue, commented Rick Smith, CEO of TASER International, Inc. We are encouraged
by the early customer feedback
provided for this product, which was supported by the new orders we received from domestic law
enforcement agencies during the second quarter. We believe that our ongoing
investments in innovation and new technology will continue to bring additional value to our
customers while further driving sales and profitability for our business. During the second quarter, we also received several significant
follow-on orders from international agencies, as our products continue to gain traction abroad.
Looking ahead to the second half of the year, we are committed to driving profitable growth for
our business by deploying our new products in new markets by promoting a generous trade-in program
for agencies to help accelerate the upgrade cycle for our new X2 product. While municipal spending
is expected to remain under pressure given stressed state budgets, we remain focused on executing
lean operations and closely managing our cost structure. Our continued strong cash flow generation
and zero debt on our balance sheet allow us the financial flexibility to pursue and achieve our
growth goals as well as being able to efficiently return capital to our stockholders with a further
stock buy-back, concluded Smith.
The Company will host its second quarter 2011 earnings conference call on Thursday, July 28, 2011
at 11:00 a.m. ET. To access the audio teleconference, please dial: 1-866-730-5764 or 1-
857-350-1588 for international callers. The pass code is 88571215.
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 16,000 public safety agencies in 40 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 230,000 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, www.Evidence.com and
www.Protector.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 trademark 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 www.TASER.com/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 | ||||||||
June 30, 2011 | June 30, 2010 | |||||||
Net sales |
$ | 21,198,055 | 19,120,525 | |||||
Cost of products sold |
8,956,362 | 9,489,815 | ||||||
Gross margin |
12,241,693 | 9,630,710 | ||||||
Sales, general and administrative expenses |
9,065,847 | 9,988,885 | ||||||
Research and development expenses |
2,793,235 | 3,055,049 | ||||||
Litigation judgment expense |
3,301,243 | | ||||||
Asset impairment |
1,350,504 | | ||||||
Loss on write down / disposal of property and equipment, net |
747,409 | 22,510 | ||||||
Loss from operations |
(5,016,545 | ) | (3,435,734 | ) | ||||
Interest and other income, net |
1,261,885 | 6,203 | ||||||
Loss before benefit for income taxes |
(3,754,660 | ) | (3,429,531 | ) | ||||
Benefit for income taxes |
(1,459,828 | ) | (2,070,142 | ) | ||||
Net loss |
$ | (2,294,832 | ) | (1,359,389 | ) | |||
Loss per common and common equivalent shares |
||||||||
Basic |
$ | (0.04 | ) | $ | (0.02 | ) | ||
Diluted |
$ | (0.04 | ) | $ | (0.02 | ) | ||
Weighted average number of common and common equivalent
shares outstanding |
||||||||
Basic |
60,605,140 | 62,333,929 | ||||||
Diluted |
60,605,140 | 62,333,929 |
TASER International, Inc.
Consolidated Statements of Operations
(Unaudited)
Consolidated Statements of Operations
(Unaudited)
For the Six Months Ended | ||||||||
June 30, 2011 | June 30, 2010 | |||||||
Net sales |
$ | 44,315,004 | $ | 42,964,426 | ||||
Total cost of products sold |
19,865,649 | 19,843,295 | ||||||
Gross margin |
24,449,355 | 23,121,131 | ||||||
Sales, general and administrative expenses |
18,409,809 | 20,276,107 | ||||||
Research and development expenses |
5,545,699 | 7,194,965 | ||||||
Litigation judgment expense |
3,301,243 | | ||||||
Asset impairment |
1,350,504 | | ||||||
Loss on write down / disposal of property and equipment, net |
748,459 | 34,442 | ||||||
Loss from operations |
(4,906,359 | ) | (4,384,383 | ) | ||||
Interest and other income, net |
1,288,206 | 14,102 | ||||||
Loss before benefit for income taxes |
(3,618,153 | ) | (4,370,281 | ) | ||||
Benefit for income taxes |
(1,343,053 | ) | (2,518,287 | ) | ||||
Net loss |
$ | (2,275,100 | ) | $ | (1,851,994 | ) | ||
Loss per common and common equivalent shares |
||||||||
Basic |
$ | (0.04 | ) | $ | (0.03 | ) | ||
Diluted |
$ | (0.04 | ) | $ | (0.03 | ) | ||
Weighted average number of common and common equivalent
shares outstanding |
||||||||
Basic |
61,515,979 | 62,450,722 | ||||||
Diluted |
61,515,979 | 62,450,722 |
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 Six Months Ended | |||||||||||||||
June 30, 2010 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |||||||||||||
GAAP loss from operations |
$ | (5,016,545 | ) | $ | (3,435,734 | ) | $ | (4,906,359 | ) | $ | (4,384,383 | ) | ||||
Stock-based compensation expense (a) |
877,007 | 916,626 | 1,839,924 | 1,926,220 | ||||||||||||
Depreciation and amortization |
2,049,877 | 1,588,171 | 4,117,580 | 3,128,328 | ||||||||||||
Litigation judgment expense |
3,301,243 | | 3,301,243 | | ||||||||||||
Asset impairment |
1,350,504 | | 1,350,504 | | ||||||||||||
Loss on write down / disposal of property and equipment, net |
747,409 | 22,510 | 748,459 | 34,442 | ||||||||||||
Adjusted operating income (loss) |
$ | 3,309,495 | $ | (908,427 | ) | $ | 6,451,351 | $ | 704,607 | |||||||
a) | Results include stock-based compensation as follows: |
For the Three Months Ended | For the Six Months Ended | |||||||||||||||
June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |||||||||||||
Cost of products sold |
$ | 51,976 | 80,476 | $ | 104,980 | $ | 151,985 | |||||||||
Sales, general and administrative expenses |
649,566 | 724,464 | 1,372,745 | 1,522,591 | ||||||||||||
Research and development expenses |
175,465 | 111,686 | 362,199 | 251,644 | ||||||||||||
$ | 877,007 | 916,626 | $ | 1,839,924 | $ | 1,926,220 | ||||||||||
TASER International, Inc.
Consolidated Balance Sheets
(Unaudited)
Consolidated Balance Sheets
(Unaudited)
June 30 , 2011 | December 31, 2010 | |||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | 27,719,405 | $ | 42,684,241 | ||||
Short term investments |
10,775,112 | | ||||||
Accounts receivable, net of allowance of $200,000 at June 30, 2011 and December 31, 2010, respectively |
9,978,838 | 13,542,535 | ||||||
Inventory |
16,049,209 | 17,815,405 | ||||||
Prepaid expenses and other current assets |
3,449,974 | 1,999,525 | ||||||
Deferred income tax assets, net |
8,129,195 | 6,284,489 | ||||||
Total current assets |
76,101,733 | 82,326,195 | ||||||
Property and equipment, net |
31,768,928 | 35,905,765 | ||||||
Deferred income tax assets, net |
13,819,753 | 13,919,753 | ||||||
Intangible assets, net |
3,145,911 | 3,090,876 | ||||||
Other long-term assets |
716,493 | 944,346 | ||||||
Total assets |
$ | 125,552,818 | $ | 136,186,935 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current Liabilities: |
||||||||
Accounts payable |
$ | 4,995,678 | $ | 4,550,789 | ||||
Accrued liabilities |
6,603,305 | 3,759,800 | ||||||
Current portion of deferred revenue |
3,023,251 | 3,265,260 | ||||||
Customer deposits |
276,417 | 372,145 | ||||||
Total current liabilities |
14,898,651 | 11,947,994 | ||||||
Deferred revenue, net of current portion |
3,719,053 | 4,392,860 | ||||||
Liability for unrecorded tax benefits |
2,279,851 | 2,281,840 | ||||||
Total liabilities |
20,897,555 | 18,622,694 | ||||||
Stockholders Equity |
||||||||
Preferred stock, $0.00001 par value per share; 25 million shares authorized; no shares issued and
outstanding at June 30, 2011 and December 31, 2010, respectively |
| |||||||
Common stock, $0.00001 par value per share; 200 million shares authorized; 59,704,086 and 62,621,268
shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively |
647 | 647 | ||||||
Additional paid-in capital |
98,965,932 | 97,122,085 | ||||||
Treasury stock, 5,013,450
and 2,091,600 shares at June 30, 2011 and December 31, 2010, respectively |
(27,208,053 | ) | (14,708,237 | ) | ||||
Retained earnings |
32,910,091 | 35,185,191 | ||||||
Accumulated other comprehensive loss |
(13,353 | ) | (35,445 | ) | ||||
Total stockholders equity |
104,655,263 | 117,564,241 | ||||||
Total liabilities and stockholders equity |
$ | 125,552,818 | $ | 136,186,935 | ||||
TASER International, Inc.
Selected Consolidated Statement of Cash Flows Information
(Unaudited)
Selected Consolidated Statement of Cash Flows Information
(Unaudited)
For the Six Months Ended | ||||||||
June 30, 2011 | June 30, 2010 | |||||||
Net loss |
$ | (2,275,100 | ) | $ | (1,851,994 | ) | ||
Depreciation and amortization |
4,117,580 | 3,128,328 | ||||||
Stock-based compensation expense |
1,839,924 | 1,926,220 | ||||||
Net cash provided (used) by operating activities |
9,155,093 | (2,453,789 | ) | |||||
Net cash used by investing activities |
(11,648,260 | ) | (3,413,043 | ) | ||||
Net cash (used) provided by financing activities |
(12,495,893 | ) | 961,037 | |||||
Cash and cash equivalents, end of period |
$ | 27,719,405 | $ | 40,599,254 |