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TASER International, Inc. Reports Results For Second Quarter 2008 SCOTTSDALE, Ariz, July 24, 2008 (PRIME NEWSWIRE) -- TASER
International, Inc. (NasdaqGS:TASR - News) (``TASER'' or ``the Company'')
a market leader in advanced electronic control devices (ECD)
today reported financial results for the second quarter
of 2008. For the second quarter of 2008 revenues were $21.1 million, a $4.8 million or 18% decrease over the same quarter of the prior year. The decline in sales versus the prior year was the result of lower municipal spending in the U.S. as agencies reassigned budget dollars due to economic constraints, including significantly higher fuel costs than agencies had budgeted previously. In addition, the Company reported several large non-recurring international orders in the second quarter of 2007. Despite decreased revenues, Company operations showed significant improvement as gross margin improved to 64.5% in the second quarter of 2008 compared to 60.1% in the second quarter of 2007 as the Company continued to focus on cost controls. As expected, research and development expenses increased by $1.8 million, or 139%, in the second quarter of 2008 over the same prior year period as TASER continues to focus on extending its technological leadership and product diversification. As a result of the decrease in sales, combined with increased research and development spending and a $5.2 million charge in the second quarter for an adverse litigation judgment, the net operating loss for the second quarter was $4.3 million compared to net income from operations of $5.9 million for the same period a year ago. The net loss and basic and diluted loss per share for the second quarter of 2008 were $1.6 million and $0.02, respectively. During the quarter, the Company repurchased approximately 1.8 million shares of its common stock for $12.5 million pursuant to the $12.5 million stock repurchase plan announced in April. TASER ended the quarter with cash and cash equivalents of $33.0 million. Significant events in the second quarter of 2008 include the following:
1. Orders were received and shipped to both new law enforcement
agencies deploying TASER(r) technology following extensive
test and evaluation periods and from agencies continuing to
expand the use of TASER devices to their first responders.
Some of our more significant orders announced during the
quarter include New South Wales Police Department in
Australia; Harris County Sheriff's Department in Tomball, TX;
Kentucky State Patrol in Frankfort, KY; Lexington Division
of Police in Lexington, KY; Honolulu Police Department in
Honolulu, HI; Tulare County Sheriff's Department in Tulare
County, CA; Corpus Christi Police Department in Corpus
Christi, TX and St. Paul Police Department in St. Paul, MN.
2. TASER announced in April that it partnered with Sports
Authority to begin carrying TASER(r) C2(tm) Personal Protectors
as the Company continues to expand retail distribution channels.
3. TASER was granted a multi-year Science and Technology Award
from the Joint Non-Lethal Weapons Department (JNLWD) of the
Department of Defense (DoD) to develop and demonstrate
specific TASER technologies to meet DoD requirements for
Human Electro Muscular Incapacitation (HEMI). The contract
was awarded for $1.15 million for an initial eight month
base effort with two options to extend the program duration
to a total of 24 months for a total contract value of $2.59
million.
4. TASER unveiled three new innovative products:
* The TASER(r) AXON(tm) (Autonomous eXtended on-Officer
Network) is a tactical audio-video recording and
networking device designed to be worn by first
responders which enhances incident recording and
evidence collection. TASER AXON units are expected
to begin field trials in late 2008 with commercial
shipments beginning in the first half of 2009.
* The TASER(r) CDPM(r) (Controlled Digital Power Magazine)
is a lanyard controlled device which digitally interfaces
with the TASER(r) X26(r) ECD and incorporates an
innovative disconnect feature to disable the ECD in
the event of an officer being disarmed. The TASER CDPM
can be used with any TASER X26 device and is expected
to be available for sale in the third quarter of 2008.
* The TASER(r) Shield Conversion Kit incorporates TASER(r)
REPEL(tm) Laminate Film Technology featuring a peel and
stick laminate and power supply which can convert
standard existing officer shield equipment into an
electrified shield providing a powerful deterrent to
protect officers and keep suspects or rioters at bay.
This system is anticipated to be available for sale
in the first half of 2009.
5. Abstracts of five abstracts human studies examining the
safety of TASER devices were presented during the quarter,
three at Heart Rhythm Society's 29th Annual Scientific
Sessions and two presented at Cardiostim 2008 in France.
All five studies found that TASER ECD's have no effect
on the human heart or on pacemakers.
6. Five (5) more product liability suits were dismissed during
the quarter representing at the end of the quarter a total
of seventy-one (71) wrongful death or injury suits that
have been dismissed or judgment entered in favor of the
Company.
7. TASER recorded a $5.2 million charge in the second quarter
of 2008 for an adverse jury verdict received in the case
of Betty Lou Heston, et al. v. City of Salinas, TASER
International, Inc., et al. which found that extended TASER
device application contributed 15 percent to the death of
Robert C. Heston. While the jury attributed 85 percent of
the cause of death to the actions of Mr. Heston, the jury
awarded a total of $1.0 million in compensatory damages,
(for which damages will be covered by liability insurance),
and $5.2 million in punitive damages against TASER
International based on alleged negligent failure to warn.
The court has not yet entered an order of judgment,
instead setting a schedule for post trial motions. The
Company is pursuing all appropriate legal channels
including filing an appeal in this matter at the
appropriate time once a judgment is entered.
``Despite a challenging quarter that saw customer budget constraints, we continue to focus on our strategy to be the world's foremost leader in electronic controlled device defense solutions,'' said Rick Smith, Chief Executive Officer of TASER International, Inc. ``We are extremely excited about the new products we unveiled during this past quarter and have received strong positive feedback from attendees at our annual user's conference held in June. We are particularly excited about the upcoming launch of the TASER AXON, which expands our mission to provide end-to-end solutions for safer and more accountable conflict management, which we believe provides greatly enhanced capabilities in incident recording and evidence collection.'' Smith continued, ``While current economic conditions have had an impact on domestic sales during the quarter, we continue to hear positive feedback for our products and are aggressively pursuing a domestic and international sales strategy to increase awareness of our products. Looking forward, we will continue to focus on key operating priorities such as improving efficiencies to drive margin expansion and investing in new product development to drive growth and diversification. Additionally, we remain fully committed to vigorously defending our life-saving products against litigation and steadfastly believe the weight of scientific and medical evidence supports our resolve.'' The Company will host its second quarter 2008 earnings conference call on Thursday, July 24, 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 http://www.TASER.com. To access the teleconference, please dial: 1-800-510-0178 or 1-617-614-3450 for international callers. The pass code is 80449622 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(r) 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 http://www.TASER.com. The TASER International logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=2931 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.
TASER International, Inc.
Statements of Income
(Unaudited)
For the Three Months Ended
--------------------------
June 30, 2008 June 30, 2007
------------- -------------
Net Sales $ 21,101,309 $ 25,863,376
------------- ------------
Cost of Products Sold:
Direct manufacturing
expense 6,019,957 7,338,890
Indirect manufacturing
expense 1,476,329 2,993,227
------------- ------------
Total Cost of
Products Sold 7,496,286 10,332,117
------------- ------------
Gross Margin 13,605,023 15,531,259
Sales, general
and administrative
expenses 9,710,804 8,344,927
Research and
development
expenses 3,019,886 1,262,849
Litigation judgment
expense 5,200,000 --
------------- ------------
Income (loss)
from Operations (4,325,667) 5,923,483
Interest and
other income, net 721,366 427,033
------------- ------------
Income (loss)
before income taxes (3,604,301) 6,350,516
Provision
(benefit) for
income taxes (2,050,386) 2,651,308
------------- ------------
Net income (loss) $ (1,553,915) $ 3,699,208
============= ============
Income (loss) per
common and common
equivalent shares
Basic $ (0.02) $ 0.06
Diluted $ (0.02) $ 0.06
Weighted average number
of common and common
equivalent shares
outstanding
Basic 62,642,618 62,374,946
Diluted 62,642,618 65,214,726
TASER International, Inc.
Statements of Income
(Unaudited)
For the Six Months Ended
------------------------
June 30, 2008 June 30, 2007
------------- -------------
Net Sales $ 43,587,813 $ 41,165,191
------------- -------------
Cost of Products Sold:
Direct manufacturing
expense 13,591,454 11,947,459
Indirect manufacturing
expense 3,628,767 4,797,444
------------- -------------
Total Cost of
Products Sold 17,220,221 16,744,903
------------- -------------
Gross Margin 26,367,592 24,420,288
Sales, general
and administrative
expenses 18,870,644 15,926,835
Research and
development expenses 5,131,534 2,233,635
Litigation
judgment expense 5,200,000 --
------------- -------------
Income (loss)
from Operations (2,834,586) 6,259,818
Interest and
other income, net 1,222,730 933,402
------------- -------------
Income (loss)
before income taxes (1,611,856) 7,193,220
Provision (benefit)
for income taxes (1,274,528) 2,999,458
------------- -------------
Net Income (loss) $ (337,328) $ 4,193,762
============= =============
Income (loss) per
common and common
equivalent shares
Basic $ (0.01) $ 0.07
Diluted $ (0.01) $ 0.06
Weighted average
number of common
and common equivalent
shares outstanding
Basic 62,983,446 62,192,193
Diluted 62,983,446 64,928,190
TASER International, Inc.
Balance Sheets
(Unaudited)
June 30, 2008 Dec. 31, 2007
------------- -------------
ASSETS
Current Assets
Cash and cash equivalents $ 33,026,135 $ 42,801,461
Short-term investments -- 8,499,978
Accounts receivable, net 10,750,184 11,691,553
Inventory 20,554,202 13,506,804
Prepaids and other assets 1,479,015 4,318,661
Current deferred income tax asset 15,620,492 15,608,325
------------- ------------
Total Current Assets 81,430,028 96,426,782
Long-term investments 10,503,668 9,006,493
Property and equipment, net 26,238,383 23,599,680
Deferred income tax asset 8,042,170 6,724,104
Intangible assets, net 2,112,752 1,925,139
Other long-term assets 62,135 81,203
------------- ------------
Total Assets $ 128,389,136 $137,763,401
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of capital lease
obligations $ -- $ 19,257
Accounts payable and accrued
liabilities 12,294,830 10,088,139
Current deferred revenue 2,014,217 1,694,644
Deferred insurance settlement
proceeds -- 404,848
Customer deposits 259,353 266,728
Litigation settlement liabilities -- --
------------- ------------
Total Current Liabilities 14,568,400 12,473,616
Capital lease obligations, net of
current portion -- 11,695
Deferred revenue, net of current
portion 3,821,466 3,541,267
Liability for unrecorded tax benefits 1,208,811 1,100,073
------------- ------------
Total Liabilities 19,598,677 17,126,651
------------- ------------
Commitments and Contingencies -- --
Stockholders Equity
Common stock 620 635
Additional paid-in capital 87,901,695 86,911,381
Treasury stock (14,708,219) (2,208,957)
Retained earnings 35,596,363 35,933,691
------------- ------------
Total Stockholders Equity 108,790,459 120,636,750
------------- ------------
Total Liabilities and Stockholders
Equity $ 128,389,136 $137,763,401
============= ============
TASER International, Inc.
Selected Statement of Cash Flows Information
(Unaudited)
For the Six Months Ended
June 30, 2008 June 30, 2007
------------- -------------
Net income (loss) $ (337,328) $ 4,193,762
Depreciation and amortization 1,298,750 1,171,102
Stock-based compensation expense 730,857 591,307
Net cash used by operating
activities (320,501) (2,917,875)
Net cash provided by investing
activities 2,784,995 3,241,124
Net cash provided (used) by
financing activities (12,239,820) 1,436,262
Cash and Cash Equivalents, end
of period $ 33,026,135 $ 20,533,196
Contact: TASER International, Inc.
Dan Behrendt, Chief Financial Officer
(480) 905-2000
Source: TASER International, Inc.
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