SCOTTSDALE, Ariz., Aug. 9, 2006 (PRIMEZONE) -- TASER International, Inc. (Nasdaq:TASR), a market leader in advanced electronic control devices announced today that it has reached agreements to settle the shareholder class action lawsuit pending in U.S. District Court for the District of Arizona; the derivative lawsuits pending in the U.S. District Court for the District of Arizona, the Arizona Superior Court, and the Delaware Chancery Court; and the Section 220 lawsuit for production of documents pending in Delaware Chancery Court. Under these agreements, all claims against the Company and individuals named as defendants will be dismissed without presumption or admission of any liability or wrongdoing.
Pursuant to the terms of the agreement to dismiss the shareholder class action litigation, TASER International will pay to the plaintiffs, for the benefit of the class, the total of $20 million payable by approximately $4.1 million from insurance proceeds, $7.9 million in Company cash, and $8 million in Company stock or cash at the Company's election. Pursuant to the terms of the agreement to dismiss the derivative lawsuit pending in the U.S. District Court for the District of Arizona, TASER International will pay the amount of $1.75 million in Company stock for plaintiffs' attorney fees and adopt certain corporate governance provisions consisting of the designation of a lead independent director who will be chosen from one of three independent directors now serving on the board. As part of the settlement of the derivative action pending in the District Court of Arizona, the two other derivative actions and the Section 220 action will be dismissed as well.
In conjunction with the agreements to settle, the Company will take a charge of approximately $18 million for litigation and related charges to the June 30, 2006 results. As such, the agreements to settle will be reflected in the Company's Form 10-Q to be filed today.
"After a review of the evidence, it does not appear that the Company oversold the safety of the TASER(R) device nor that there was any evidence of wrongdoing. This is consistent with the termination of the Securities and Exchange Commission investigation into this same general subject matter with a recommendation of no enforcement action," commented Robert B. Weiser, Plaintiff's Lead Counsel in the derivative litigation. "As a result, we accepted company stock as payment for our legal fees because we believe in the future of the company," concluded Weiser.
Rick Smith, CEO of TASER International, commented on this announcement: "Our commitment to our shareholders and our customers was the driving force behind this settlement, and we look forward to putting these issues behind us and moving ahead with the next phase of TASER's business strategy. We have generated significant momentum in our operating results as of late. As a result, we believe it is imperative that we maintain our focus on the execution of these strategic initiatives. It is important for our Company that we resolve the outstanding shareholder and derivative litigation, in part to protect our Company and our customers from potentially disruptive, time-consuming and expensive class action legal inquiries."
"From a risk management standpoint, we felt that the settlement was in the best interests of the Company and our shareholders," commented Dan Behrendt, Chief Financial Officer of TASER International. "The cash part of the settlement is roughly twice the amount of cash generated from operations in the 2nd Quarter of 2006 and with $49.1 million of cash and investments at June 30, 2006; this is an amount we could adequately manage. The stock component of the settlement represents an approximate 2 percent dilution at the current stock price and given the inherent costs, distraction and uncertainty that come with this type of litigation, we felt that settling these lawsuits now under the current terms was the best choice."
These agreements to settle these actions are conditioned upon the appropriate settlement documents, approval by the respective Courts and other factors. There is no assurance that the settlements will be completed. If the settlements are not completed, then the parties may attempt to reach agreement on another settlement or resume the litigation.
Further, the Board of Directors of TASER International, Inc. approved, in connection with the approval of the settlement agreements, a resolution authorizing the Company to purchase up to $10 million of the Company's common stock between the current date and the date of final payment of the shareholder class action settlement subject to stock market conditions and corporate considerations. The final payment of the settlement will take place after final court approval of the formal shareholder class action settlement agreement, a process expected to take several months.
About TASER International, Inc.
TASER International provides advanced electronic control devices for use in the law enforcement, military, private security and personal defense markets. TASER 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 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 (800) 978-2737 or visit our website at www.TASER.com.
The statements made herein are independent statements of TASER International. The inclusion of any third parties does not represent an endorsement of any TASER International products or services by any such third parties.
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. 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) execution and court approval of litigation settlement agreements; 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.