TASER International, Inc. (Nasdaq: TASR) a market leader in advanced electronic control devices reported today that revenues for 2005 were $47.7 million, with operating income of $1.5 million , net income of $1.0 million and basic and diluted earnings per share of $0.02.
For the fourth quarter of 2005 revenues were $12.6 million, with income from operations of $0.4 million, and net income of $0.1 million. Compared to the fourth quarter of 2004, sales in the fourth quarter of 2005 decreased by $6.6 million and net income decreased by $4.6 million. However, business improved sequentially as revenues in the fourth quarter of 2005 increased by $0.9 million over the third quarter of 2005. The Company generated $1.4 million of cash from operations in fourth quarter of 2005 which increased the Cash and Investment balance to $43.9 million.
Significant events in the fourth quarter of 2005 include:
1. Eleven months after the initial U.S. Securities and Exchange
Commission (SEC) inquiry was announced, and after the Company had
submitted approximately 100,000 pages of support documentation, the
SEC notified the Company that it has concluded the investigation into
Company statements regarding product safety and accounting issues
with a recommendation of no enforcement action. The SEC investigation
remains open on the area of examining the possible unauthorized
acquisition of material non-public information by individuals outside
of the Company in an effort to manipulate the Company's stock price.
2. The Company received a defense verdict in the Samuel Powers v. TASER
International personal injury case. As part of its legal strategy to
aggressively defend these cases, the Company entered into a
settlement agreement with its own insurance provider in order to
prevent its insurance provider from settling the case with the
plaintiff. Under the terms of the settlement, the Company received
$575,000 from its liability insurance provider associated with a
settlement and release agreement, under the terms of the agreement
the Company assumed all future potential liability and costs. After
offsetting approximately $100,000 in legal expenses to win the trial,
the Company has recorded the remaining balance of approximately
$475,000 as deferred income on its balance sheet. This deferred
income will be used to cover any costs through all appeals and the
remaining balance if any will be recorded as "other income" when
final resolution is completed.
3. The Company had three wrongful death suits dismissed during the
quarter, bringing the total wrongful death suits dismissed to seven.
The Company also had two personal injury suits dismissed bringing the
total amount dismissed to five. In aggregate, the Company has had
twelve wrongful death and personal injury suits dismissed.
4. San Diego County Sheriff's Department ordered over 830 TASER(R)
X26 Electronic Control Devices in November following a long period of
evaluation and thorough research and review. The order represents
deployment of non-lethal force technology to one of the largest
metropolitan areas in the United States. There are now over 550 law
enforcement agencies utilizing TASER devices in California including
the four largest agencies in the state.
5. International sales increased over 120% to approximately
$6.0 million in 2005 from $2.7 million in 2004.
"At the end of a very challenging 2005, the fourth quarter saw several key milestones that we believe will provide a turning point in our business," commented Rick Smith, Chief Executive Officer of TASER International, Inc. "The conclusion of the safety aspect of the SEC investigation was clearly an important event. Our continued record of successful litigation defense is also a key factor for our long term growth."
"We would also like to point out to our shareholders that our strategy of aggressive litigation defense is clearly working," said Doug Klint, Chief Counsel for TASER International, Inc. "We have sent a strong message to plaintiff litigators across the country: if you intend to litigate with TASER International, understand that we will fight all the way. We will bring dozens of world class experts that understand and can clearly articulate the safety of our technology and debunk false claims. And we will go so far as to settle with our own insurance provider rather than allow a plaintiff settlement if we believe the claims are without merit. In fact, in the Powers case, the Company will receive $575,000 in cash from this strategy -- money which we believe will be booked as earnings upon final resolution of any appeal issues in our favor. We are firmly committed to a strategy of defending our company and our products -- a strategy which, coupled with our growing litigation capabilities and winning defense record, will make TASER International a very un-attractive target for trial lawyers long term."
"The challenges of 2005 have only made us stronger as a company," said Rick Smith, Chief Executive Officer of TASER International, Inc. "We faced these challenges, improved our core business operations, furthered our industry leading research and development programs, and remained profitable. Qualitatively, we are feeling a shift in momentum in our favor. Additionally, new products such as the TASER Cam (from which we expect significant revenue contribution starting in the second quarter of 2006) and the newly announced wireless eXtended Range Electronic Projectile (expected to enter production in 2007) provide significant new upside to our business going forward," concluded Smith.
The Company will be hosting its fourth quarter 2005 earnings conference call on Wednesday, February 22, 2006 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: 800-573-4752 or 617-224-4324 for international callers. The passcode is 22982528 for both numbers.
About TASER International, Inc.
TASER International, Inc. provides advanced non-lethal devices for use in the law enforcement, military, private security and personal defense markets. TASER devices use proprietary technology to safely incapacitate dangerous, combative, or high-risk subjects who pose a risk to law enforcement officers, innocent citizens or themselves. TASER technology saves lives every day, and the use of TASER devices dramatically reduces injury rates for police officers, and suspects. For more information on TASER life-saving technology, please call TASER International at (480) 444-4000 or visit our website at http://www.TASER.com.
Note to Investors
This press release contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor created by those sections. The forward-looking information is based upon current information and expectations regarding TASER International. 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. TASER International's future results may be impacted by risks associated with rapid technological change, new product introductions, new technological developments and implementations, execution issues associated with new technology, ramping manufacturing production to meet demand, litigation resulting from alleged product related injuries, media publicity concerning allegations of deaths occurring after use of the TASER device and the negative impact this could have on sales, product quality, implementation of manufacturing automation, potential fluctuations in quarterly operating results, competition, financial and budgetary constraints of prospects and customers, order delays, dependence upon sole and limited source suppliers, fluctuations in component pricing, government regulations and investigations, dependence upon key employees, and its ability to retain employees. TASER International's future results may also be impacted by other risk factors listed from time to time in its SEC filings, including, but not limited to, the Company's Form 10-Qs and its Annual Report on Form 10-KSB/A.
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., +1-480-905-2000. Visit the company's web-site at http://www.TASER.com for facts and video.
TASER International, Inc.
Statements of Income
(Unaudited)
For the Three Months Ended
December 31, December 31,
2005 2004
Net Sales $12,607,750 $19,233,770
Cost of Products Sold:
Direct manufacturing expense 3,275,149 5,147,759
Indirect manufacturing expense 1,135,810 1,625,181
Total Cost of Products Sold 4,410,959 6,772,940
Gross Margin 8,196,791 12,460,830
Sales, general and administrative
expenses 7,349,791 4,897,528
Research and development expenses 470,455 160,170
Income from Operations 376,545 7,403,132
Interest income 375,571 255,718
Interest expense (4,105) (229)
Other income (expense), net (37) 3,621
Income before income taxes 747,974 7,662,242
Provision for income tax 655,277 2,948,000
Net Income $92,697 $4,714,242
Income per common and common
equivalent shares
Basic $0.00 $0.08
Diluted $0.00 $0.07
Weighted average number of common and
common equivalent shares outstanding
Basic 61,419,984 59,998,892
Diluted 63,222,162 63,453,274
TASER International, Inc.
Statements of Income
(Unaudited)
For the Year Ended
December 31, December 31,
2005 2004
Net Sales $47,694,181 $67,639,879
Cost of Products Sold:
Direct manufacturing expense 12,843,816 16,898,559
Indirect manufacturing expense 4,667,421 5,556,937
Total Cost of Products Sold 17,511,237 22,455,496
Gross Margin 30,182,944 45,184,383
Sales, general and administrative
expenses 27,089,903 13,880,322
Research and development expenses 1,574,048 823,593
Income from Operations 1,518,993 30,480,468
Interest income 1,229,044 439,450
Interest expense (4,208) (1,485)
Other income (expense), net (59,772) 2,309
Income before income taxes 2,684,057 30,920,742
Provision for income tax 1,637,277 12,039,000
Net Income $1,046,780 $18,881,742
Income per common and common
equivalent shares
Basic $0.02 $0.33
Diluted $0.02 $0.30
Weighted average number of common and
common equivalent shares outstanding
Basic 61,303,939 57,232,329
Diluted 63,556,246 62,319,590
TASER International, Inc.
Balance Sheets
(Unaudited)
December 31, 2005 December 31, 2004
Assets
Current Assets
Cash and cash equivalents $16,351,909 $14,757,159
Short-term investments -- 17,201,477
Accounts receivable, net 5,422,027 8,460,112
Inventory 10,283,390 6,840,051
Prepaids and other assets 2,748,046 1,639,734
Insurance settlement proceeds
receivable 575,000 --
Income tax receivable 44,454 52,973
Current deferred income tax asset 5,641,708 11,083,422
Total Current Assets 41,066,534 60,034,928
Long-term investments 27,548,120 18,071,815
Property and Equipment, net 21,061,754 14,756,512
Deferred income tax asset 21,289,057 15,310,207
Intangible assets, net 1,340,783 1,279,116
Total Assets $112,306,248 $109,452,578
Liabilities and Stockholders' Equity
Current Liabilities
Current portion of capital lease
obligations $43,111 $4,642
Accounts payable and accrued
liabilities 6,830,570 8,827,132
Deferred insurance settlement
proceeds 476,515 --
Customer deposits 190,256 102,165
Total Current Liabilities 7,540,452 8,933,939
Capital lease obligations, net of
current portion 76,188 --
Deferred Revenue 839,983 607,856
Total Liabilities 8,456,623 9,541,795
Stockholders' Equity
Common Stock 619 609
Additional Paid-in Capital 78,742,862 75,850,810
Retained Earnings 25,106,144 24,059,364
Total Stockholders' Equity 103,849,625 99,910,783
Total Liabilities and Stockholders'
Equity $112,306,248 $109,452,578
TASER International, Inc.
Selected Cash Flows Information
(Unaudited)
For the Year Ended
December 31, December 31,
2005 2004
Net income $1,046,780 $18,881,742
Depreciation and amortization 1,709,464 551,793
Net cash provided by operating
activities 1,064,430 30,304,180
Net cash used by investing activities (187,840) (46,790,988)
Net cash provided by financing
activities 718,160 15,365,641
Cash and Cash Equivalents, end of
period 16,351,909 14,757,159