| CONTACT: | Dan Behrendt | |||
| Chief Financial Officer | ||||
| TASER International, Inc. | ||||
| (480) 905-2000 |
| 1. | A number of significant sales orders were received and shipped to law enforcement agencies in the United States. The orders were from both new agencies deploying TASER® technology following extensive test and evaluation periods and from agencies continuing to expand the use of TASER electronic control devices (ECDs) to their first responders. Some of our significant orders announced during the quarter include the California Highway Patrol (CHP), Miami-Dade County Police Department (FL), Kern County Sheriffs Department (CA), San Diego County Sheriffs Department (CA), Brevard County Sheriffs Office (FL), and Onondaga County Sheriffs Office in Syracuse (NY). | ||
| 2. | International sales continue to be a significant part of our business and accounted for approximately $4.3 million or 15% of our total sales in the third quarter. This included partial fulfillment of a follow-on order from the French Ministry of the Interior to provide the French Gendarmerie and the French National Police with TASER X26 ECDs and TASER CAM units. | ||
| 3. | In addition to the above law enforcement orders and international sales, we received purchase orders to provide Federal Agencies with TASER X26 ECDs and accessories. This included orders from the United States Forest Service, the U.S. Marshals Service, and an unnamed Federal Law Enforcement Agency. | ||
| 4. | We commenced shipment of the TASER C2 Personal Protector in July and shipped approximately 7,000 units in the third quarter to our retail partners and online web store customers. | ||
| 5. | Two new product lines were unveiled at the annual TASER Tactical Conference in Chicago, Illinois. The TASER Shockwave is a command activated area denial system consisting of a modular 6-shot TASER ECD that covers a 22-degree arc area and a range of 25 feet. The modular design allows the end user flexibility to configure the units in limitless combinations to facilitate an optimized response for every deployment. The eXtended Range Electronic Projectile (XREP) incorporates wireless Neuro Muscular Incapacitation (NMI) technology and is designed to be launched from a 12-gauge shotgun. Both products are expected to begin field testing in the first half of 2008. | ||
| 6. | Six more product liability suits were dismissed during the quarter representing a total of fifty-eight (58) wrongful death or injury suits that have been dismissed or judgment entered in favor of the Company since 2004. Overall we have seen a reduction in the rate of new litigation in 2007. | ||
| 7. | Ten new medical and scientific study posters, abstract and papers were published that document recent medical and scientific studies of TASER technology, all of which affirmed the general safety of TASER ECDs. Six of these studies were presented at the Fourth Mediterranean Emergency Medicine Congress (MEMC IV), in Sorrento, Italy during September 15-18, 2007. | ||
| 8. | We completed a Research and Development Tax Credit Study which resulted in a $1.8 million reduction in our income tax expense for the third quarter and positively impacted earnings per diluted share by $0.03. |
| For the Three Months Ended | ||||||||
| September 30, 2007 | September 30, 2006 | |||||||
Net Sales |
$ | 28,533,419 | $ | 18,311,543 | ||||
Cost of Products Sold: |
||||||||
Direct manufacturing expense |
8,897,407 | 5,099,381 | ||||||
Indirect manufacturing expense |
3,629,240 | 1,580,182 | ||||||
Total Cost of Products Sold |
12,526,647 | 6,679,563 | ||||||
Gross Margin |
16,006,772 | 11,631,980 | ||||||
Sales, general and administrative expenses |
8,145,117 | 7,125,408 | ||||||
Research and development expenses |
978,011 | 772,976 | ||||||
Shareholder litigation settlement expense |
| | ||||||
Income from Operations |
6,883,644 | 3,733,596 | ||||||
Interest and other income, net |
519,671 | 481,611 | ||||||
Income before income taxes |
7,403,315 | 4,215,207 | ||||||
Provision for income taxes |
1,249,277 | 1,819,309 | ||||||
Net Income |
$ | 6,154,038 | $ | 2,395,898 | ||||
Income per common and common equivalent shares |
||||||||
Basic |
$ | 0.10 | $ | 0.04 | ||||
Diluted |
$ | 0.09 | $ | 0.04 | ||||
Weighted average number of common and common
equivalent shares outstanding |
||||||||
Basic |
62,950,482 | 62,031,850 | ||||||
Diluted |
66,186,297 | 64,717,904 | ||||||
| For the Nine Months Ended | ||||||||
| September 30, 2007 | September 30, 2006 | |||||||
Net Sales |
$ | 69,698,610 | $ | 48,430,303 | ||||
Cost of Products Sold: |
||||||||
Direct manufacturing expense |
20,844,866 | 12,858,166 | ||||||
Indirect manufacturing expense |
8,426,684 | 4,594,840 | ||||||
Total Cost of Products Sold |
29,271,550 | 17,453,006 | ||||||
Gross Margin |
40,427,060 | 30,977,297 | ||||||
Sales, general and administrative expenses |
24,071,952 | 21,982,755 | ||||||
Research and development expenses |
3,211,646 | 1,999,777 | ||||||
Shareholder litigation settlement expense |
| 17,650,000 | ||||||
Income (loss) from Operations |
13,143,462 | (10,655,235 | ) | |||||
Interest and other income, net |
1,453,073 | 1,275,521 | ||||||
Income (loss) before income taxes |
14,596,535 | (9,379,714 | ) | |||||
Provision (credit) for income taxes |
4,248,735 | (2,975,007 | ) | |||||
Net Income (loss) |
$ | 10,347,800 | $ | (6,404,707 | ) | |||
Income (loss) per common and common equivalent shares |
||||||||
Basic |
$ | 0.17 | $ | (0.10 | ) | |||
Diluted |
$ | 0.16 | $ | (0.10 | ) | |||
Weighted average number of common and common
equivalent shares outstanding |
||||||||
Basic |
62,441,170 | 62,003,727 | ||||||
Diluted |
65,434,448 | 62,003,727 | ||||||
| September 30, 2007 | December 31, 2006 | |||||||
| ASSETS |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 26,986,405 | $ | 18,773,685 | ||||
Short-term investments |
| 3,557,289 | ||||||
Accounts receivable, net |
13,005,969 | 10,068,049 | ||||||
Inventory |
10,956,792 | 9,257,746 | ||||||
Prepaids and other assets |
2,305,332 | 2,164,002 | ||||||
Current deferred income tax asset |
8,827,796 | 12,295,493 | ||||||
Total Current Assets |
62,082,294 | 56,116,264 | ||||||
Long-term investments |
25,990,004 | 25,477,574 | ||||||
Property and equipment, net |
22,760,414 | 20,842,632 | ||||||
Deferred income tax asset |
16,054,312 | 15,868,719 | ||||||
Intangible assets, net |
1,816,845 | 1,532,500 | ||||||
Total Assets |
$ | 128,703,869 | $ | 119,837,689 | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current Liabilities |
||||||||
Current portion of capital lease obligations |
$ | 29,330 | $ | 45,214 | ||||
Accounts payable and accrued liabilities |
7,522,736 | 6,789,474 | ||||||
Current deferred revenue |
1,457,509 | 1,037,441 | ||||||
Deferred insurance settlement proceeds |
485,143 | 509,067 | ||||||
Customer deposits |
397,761 | 171,492 | ||||||
Litigation settlement liabilities |
| 9,750,000 | ||||||
Total Current Liabilities |
9,892,479 | 18,302,688 | ||||||
Capital lease obligations, net of current portion |
13,155 | 30,974 | ||||||
Deferred revenue, net of current portion |
3,039,227 | 1,975,489 | ||||||
Other liabilities |
754,510 | 199,999 | ||||||
Total Liabilities |
13,699,371 | 20,509,150 | ||||||
Commitments and Contingencies |
| | ||||||
Stockholders Equity |
||||||||
Common stock |
633 | 622 | ||||||
Additional paid-in capital |
85,957,807 | 80,629,659 | ||||||
Treasury stock |
(2,208,957 | ) | (2,208,957 | ) | ||||
Retained earnings |
31,255,015 | 20,907,215 | ||||||
Total Stockholders Equity |
115,004,498 | 99,328,539 | ||||||
Total Liabilities and Stockholders Equity |
$ | 128,703,869 | $ | 119,837,689 | ||||
| For the Nine Months Ended | ||||||||
| September 30, 2007 | September 30, 2006 | |||||||
Net
income (loss) |
$ | 10,347,800 | $ | (6,404,707 | ) | |||
Depreciation and amortization |
1,843,272 | 1,548,115 | ||||||
Stock-based compensation expense |
1,007,814 | 948,340 | ||||||
Net cash provided by operating activities |
6,681,548 | 9,539,435 | ||||||
Net cash used by investing activities |
(1,005,470 | ) | (8,552,685 | ) | ||||
Net cash provided (used) by financing activities |
2,536,642 | (1,504,839 | ) | |||||
Cash and Cash Equivalents, end of period |
$ | 26,986,405 | $ | 15,833,820 | ||||