Rick Smith - CEO Dan Behrendt - CFO Luke Larson - Chief Marketing Officer

Steve Dyer - Craig Hallum Mark Strouse - JPMorgan Glenn Mattson - Ladenburg Thalmann Greg McKinley - Dougherty and Company

Welcome to TASER International, Inc. Q4 2014 Earnings Conference Call. [Operator Instructions]. I would now like to introduce your host for today's conference Chief Executive Officer, Mr. Rick Smith. You may begin, sir.

Thank you. Good morning to everyone. Welcome to TASER International's fourth quarter 2014 earnings conference call. Before we get started I'm going to turn the call over to Dan Behrendt, our CFO to read the Safe Harbor Statement.

Thank you. Statements made on today’s call will include forward-looking statements including statements regarding our expectations, beliefs, intentions or strategies regarding the future, including statements around projected spending. 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 Incorporated. These estimates and statements speak only as to the date which they are made, are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. All forward-looking statements that are made on today’s call are subject to risks and uncertainties that could cause our actual results to differ materially. These risks are discussed in our press release we issued today and in greater detail in our Annual Report on Form 10-K for the year ended December 31, 2013 under the caption Risk Factors. You may find both of these filings as well as our other SEC filings on our website at www.taser.com. And with that, I will turn it back over to Rick.

Thanks, Dan. As a reminder to everyone on the call we’re going to be accepting some questions via Twitter during the Q&A portion of the call. To follow our updates on twitter during the call follow the account @taser_ir. For those of you without Twitter I will update some graphics streamed directly to our investor relations website at investor.taser.com. The conclusion to 2014 was yet another record company [ph] for the quarter solidifying a record year that we’re excited to discuss with you today. We also have a lot of exciting developments and new data points to share with investors on today's call. First consolidated revenues grew 17% year-over-year to 46.8 million continuing the streak of record course. This marks the 12th straight consecutive quarter of year-over-year top line double digit growth. We continue to work hard to aggressively grow the top line and are eager to continue to show our progress and successes throughout 2015. Bookings related to our AXON and evidence.com products saw tremendous growth this quarter reaching 24.6 million which is growth of 372% over the fourth quarter of 2013. For the past several quarters we have talked about continuing momentum and new milestones and the fourth quarter is no different. Consolidating the top tier of the market to be on the AXON system continues to be our number one priority in this segment. The Los Angeles police Department was our first customer to purchase the new Officer Safety Plan which was actually something we developed in close collaboration with them. LAPD was very proactive in their valuation and procurement of on officer cameras and we’re thrilled to be partners with such a large agency who is considered to be a thought leader within the law enforcement community. They are taking the first steps to ensure their officers are fully equipped on the job, not only with on officer cameras but also with our new TASER smart weapons which historically have not been standard issued equipment to LAPD. LAPD has announced their intent to outfit 7000 officers in the next year with on-officer cameras and an additional 3000 officers with X26P smart weapons moving them towards the day when TASER devices and cameras are standard issue for every new officer coming out of the academy. We have confidence in their full commitment, however investors should note that during the public procurement practices there may be delay factor such as the involvement of foundation, political entities and/or bid processes. Another major city win for us this quarter came from San Francisco, a phenomenal example of how the network effects of evidence.com and information sharing can influence purchasing decisions. As you all should know the Bay Area Rapid Transit Police was one of our early adopters. Therefore it made sense for its colleagues at the San Francisco PD to follow suit when they were ready to move. Another notable fact about this deployment in the heart of Silicon Valley is the fact that they do not have TASER weapons meaning that San Francisco is a completely new customer for the company. We often credit our relationship with the agencies from the TASER weapons business where we are a trusted partner with creating a competitive advantage for us in the AXON business. Net new customer wins like San Francisco solidify our superiority in comparison to other vendors in the on-officer camera and cloud space because of our simple, robust end to end solution. The AXON and evidence.com business exceeded our best expectations in 2014. At the beginning of the year our internal target was $30 million in bookings. The market grew faster than our expectations as we nearly doubled our target. We set out to win every major account with AXON and evidence.com and we succeeded in that endeavor. Every major city that made a new purchasing decision in 2014 selected our solution. We exceeded our targets in 2014 through a combination of market dynamics and peer execution. But we have had to hire rapidly to support the business that is at least double the size we anticipated in total dollars despite our moving to cut prices significantly in 2013. However despite - and speaking to the long term view of this opportunity we have innovated to ensure that we continue to walk customers up the value scale over time thereby increasing the average revenue per seat through new programs such as the Office Safety Plan and the new Unlimited Plan. If we can continue this market momentum through 2015 we believe we can consolidate the market on our platform. We have 15 of the major cities on evidence.com today and another 28 in serious discussions in or field tests. Our number one focus is to ensure we win every one of these agencies on evidence.com and we believe this is possible to achieve. As we saw with the San Francisco PD [embark] [ph] there are significant network effects where there will be significant advantages for agencies to all be on the same system. We’re determined to be that system. Given the significant increase in attention to body cameras following the Ferguson incident 2015 is our super bowl. We’re showing that we can win consistently but we need to make sure we are actively engaged with every account across North America and engaging globally as well. To this end we will continue to accelerate our investments in sales functions and R&D. Specifically SG&A, we anticipate will increase roughly $500,000 in the first quarter from fourth quarter levels. R&D, we anticipate increasing over a $1 million from the fourth quarter levels. On the SG&A side we’re building out a robust professional sales channel and are intent on owning the customer experience from sales through support. Fundamentally the reason to hire more sales staff is because we suspect that there is a greater demand for our products than we are realizing with our current staff who can only handle so many accounts. Our [indiscernible] at hiring new staff and support will soon lead to a proportional increase in revenue bookings. To support our customers in addition to sales reps we’re adding incremental product managers, account managers, customer service reps and order processing staff, each of these functions ensure that the customers are having a world class experiencing when choosing TASER products and services thereby gaining loyalty and future business. On the research and development side, we’re focused on creating software and hardware that transforms agencies’ critical work flows to help them do their job better gaining massive efficiencies in day to day operations. Some examples of these are automated uploads through a docking station, automated grid action features and the ability to have smart evidence retention schedules essentially removing the need to have police officers spend time dealing with these processes. In the fourth quarter a new file was uploaded to evidence.com every four seconds and as you will see in the curve that we just tweeted out system utilization measured by file uploads continues to grow on an exponentially increasing curve. TASER increasingly views the business of the technology for public safety as a very large market in which we’re the defacto leader. However we cannot maintain or grow that leadership position unless we’re hiring more of the best and brightest software engineers. We’re competing for engineering talent with companies like Facebook, Amazon, Google and Dropbox. This does increase our cost but it also means that the caliber of the products and services we can deliver in public safety have the opportunity to grow from our leadership in the market for years to come. This fact has already proven itself in the bookings growth for AXON and evidence.com last year. We’re hopeful to innovate further in these platforms and create new ones as well for continued market success. We have also shown the new programs and features are creating more value for our customers resulting in increasing per seat revenues. By continuing to scale our engineering resources we ensure our systems continue to scale reliably and then we continue to streamline the customer experience. We ensure that we’re offering key additional capabilities that will not only differentiate us from many follow-on competitors trying to imitate our offering but to create more value for our customers and create additional revenue opportunities. One of the great challenges where we focus a significant amount of our attention as a management team is balancing the financial rigor of running a profitable enterprise with ensuring that we’re making sufficient investments in the long term business. If we’ve established the clearly dominant mobile wearables and cloud enabled technology eco-system 5 to 7 years from now we will have a massively valuable enterprise on our hands. If we fail to achieve a dominant position because we failed to invest the resources required today it would be a tremendous loss of potential future shareholder value, and as such and based on in-depth discussion with our technology advisors on our Board of Directors we’re continuing to make the significant investments we feel prudent to enable us to own the space. There are two metrics I’d like to share with you today to help me understand if our level of spending is appropriate to the task at hand. First we compare the customer acquisition cost or CAC to the long term value per customer or LTV. This is a standard ratio used to evaluate the level of investment spend in software as a service company. We’re tweeting out a link to a great article from the venture capital firm Andreessen Horowitz that gives a nice overview of the CAC versus LTV that we believe you may find helpful. Typically if the customer acquisition cost compared to the long term value is a ratio over 3.0 meaning that each customer is worth at least 3 times what you spend to acquire them then your investments are probably pretty well placed. If the number climbs too high it could be an indication you’re underinvesting relative to the opportunity to gain profitable customers and market share. In Q4 our ratio of customer acquisition cost to long term value was over four which is a great indicator that our investments in customer acquisition are well placed even raising the question if we were investing enough. A second metric I use to personally gauge how well we were doing I’d call our steady state earnings. So one of the challenges with a SaaS business is that GAAP accounting revenues are spread out over a very long time horizon which makes GAAP revenues and earnings a very much lagging indicator. So as a management team you really can't use GAAP revenue and earnings to assess the relative levels of investment especially in a business that’s growing at greater than a 100% year-over-year growth rate. So to help me calibrate I play a hypothetical game, what if the business was in a steady state just like last quarter and we repeated last quarter's performance into the indefinite future. Under this scenario GAAP revenues would eventually equalize to the same level as bookings. Sure there would be quarter to quarter timing differences etcetera but those will likely cancel out over time. Hence in this future steady state we would have revenues of 24.6 million instead of the 6.4 million of GAAP revenue. If we assume a 65% gross margin on this revenue then the additional 18.2 million of revenue would generate an additional 11.8 million of operating income. This would take the operating margin from an actual loss of 5.9 million today to an operating income of 5.9 million. So maybe this feels like a very reasonable business, earning 5.9 million on 24.6 million of revenue, a theoretical operating margin of 24%. Now I want to emphasize this is a purely theoretical exercise that I used to help me mentally calibrate if our level of expenditure is reasonable for the size of the business we’re building. None of the assumptions are going to hold true. We’re going to continue to ramp up our investments because we believe that we’re in the very steep part of the growth curve. We also expect the bookings number to climb significantly over time. But the steady state earnings is a thought exercise I found helpful to me in thinking about how we’re doing in balancing our investments versus the business as it exists in an snapshot today. So I wanted to share it with our investors. This is about as non-GAAP a thought exercise as you could imagine so please pause now, re-read all the language from our safe harbor statement and multiply by two. Hopefully we made it clear to you that we’re out to win super bowl this year in law enforcement. When you’re going for the world championship you need to continually optimize your team. Sometimes you trade out some of your starting players, you know, like trade out your starting half back to refine your team’s performance even if he just had a great season. In December we went through a restructuring process to optimize our team and to plan the origination at the top. We eliminated the position of Chief Operating Officer which means that Jeff Kukowski is no longer with the company. He had a great impact at TASER during his time here. But elevating the position of VP of International with Ron Brandt and then domestically promoting the VP of the Video Sales Organization, Josh Isner to oversee all of domestic. We as an executive team have greater visibility into the sales organization. We also announced that Luke Larson will be promoted to President in the beginning of April as part of our long term succession planning. Doug Klint will remain on as General Counsel for the company. One of the reasons for this restructuring was to give me more time to focus on where I believe I can add the most value in customer facing roles. In particular I felt our business has not met our growth goals for international. We’re not meeting the potential that we see, and as our U.S. business is really hitting on all cylinders I see the greatest value I can add will be spending a lot more time overseas helping to grow our global business. As such starting in June I will be spending roughly 2/3rds of my time on the ground in international markets helping to build out our teams to drive meetings with high level public safety leaders. I have already begun significant time investment in the UK where I will be back again next week. Starting in June of this year I will be spending intensive eight week surges in key markets to drive momentum. Target markets included the UK, France, Italy, with the largest police force in Europe which also recently authorized the use of Taser. Australia and broader Asia. In order for me to be able to spend this much time out with customers I had to ensure we had the right team in place to continue ramping the business and overseeing day to day operations. December restructuring put the team on the field that I believe will help us win the market this year. Before I introduce Luke Larson to join us on the call I want to give investors a little background on why I selected Luke for this role. When Luke first joined the company in 2009 he came to me with an idea. Rick you know leading companies like GE and Google have leadership development programs where they recruit a top tier schools, rotate fresh talent across different parts of the organization and use the program to build a ball pen of internal talent that you can grow up over time within the organization, was an idea that he brought to me. Well this idea became our Leadership Development Program and has been one of the transformative programs in our company's history. The leaders of our engineering and our North American sales organizations both came up through the LDP program as have many of our product managers, our UK country manager, our Asia sales manager and many others. In fact Bret Taylor, our Board member who was previously the Chief Technology Officer at Facebook after he had earlier created Google Maps in his career, well Bret came up through the similar program at Google, called the APM program. The Google APM program has yielded many of Google's top leadership and many CEOs of Silicon Valley like Bret. And I can't tell you how proud I was when I asked Bret his impression of our LDP candidates versus the APMs at Google. Bret’s opinion is that our people could go toe to toe with the team at Google largely considered the best in the world. That’s the type of company we want to be compared to. After starting our LDP program Luke took over as Product Manager of the AXON product when it was a program in crisis. You may recall our first AXON pro camera, big, expensive, complicated. The program was failing, it was way over budget. As product manager, Luke set the strategy and negotiated partnerships with [indiscernible] and Oakley that created the AXON Flex product that is dominating the market today. Now there are many people here at TASER who worked on this program and contributed greatly but I would point out that Luke played a pivotal leadership role for sure. After his run on AXON I promoted Luke to run marketing and since then we have seen huge increase in both the quality of our programs and the sales pipeline generated. Luke has been a true change agent a driving force in helping us transition the company from a weapon company into an integrated technology company with extensive hardware and software offerings. So as part of our concession planning process Doug, Flint and I together with the Board of the Directors felt that now was the time to promote Luke to even larger role as President of the Company. With that I would like to introduce you to all Luke Larson and ask him to provide his perspective on our marketing efforts Q4, and the road ahead.

One of the things that TASER has benefited from its having a Founder as CEO because they usually take a long term approach to running the business. TASER has always had that in our DNA but as the company has grown we have made a concerted effort to formalize that as a philosophy and ensure we communicated to all of our stakeholders, investors, customers and our employees. We believe that using a longer time horizon to make business decisions will directly result in increasing shareholder value as well as increase the total market value of the company. We believe that by investing to obtain, extend and solidify a market leadership position we will create a public safety platform that we can leverage to create a powerful economic model. Our emphasis on the long term directly influences decisions that we make and it's guided by few principles that we feel are best suited for us to create the preeminent technology company in the worldwide public safety market. During last quarter's call we spoke about the runway success that TASER enjoyed at the IACP conference with our Don’t be a Dinosaur theme, over the last couple of months we have had the opportunity to quantify that bit, over 2500 customers went through our booth experience and we added 21% to our pipeline opportunity from this single event. Further we have seen a 43% increase in pending trial and the evaluation programs at the end of the fourth quarter sequentially from the third quarter ending the fourth quarter with over 200 open T&E programs. We continue to hear over and over from our customers that no one at IACP had the proven scalable end to end system that we have spent the last six years developing with AXON and EVIDENCE.com. Others will try to follow but those starting to make investments now will have an enormous mountain to climb to catch us because we have invested the time, capital and talent years ago to establish a wide first mover advantage upon which we will build aggressively. As of the fourth quarter we now have over 30,000 AXON units in the field and in the fourth quarter nearly 80% of the camera sold also purchased at EVIDENCE.com further out of those with EVIDENCE.com 87.5% of new EVIDENCE.com contracts were for five year terms. We’re clearly set to be the long term partner for law enforcement with on officer camera programs. In the last year we talked extensively about the success and future trajectory of the AXON segment but in the fourth quarter our TASER weapons business also showed great execution strength and our corporate strategy of international expansion. There were very large international deployments in Australia, France, Poland and the UK. We also received a first smart weapon order and subsequent deployments in Canada with the Ontario Provincial Police. In aggregate revenue in the TASER weapons business was 45.5 million, growth of 8% over the prior year while adding three additional major city deployments for a total of 43 major cities utilizing smart weapons. We introduced the officer safety plan in December in conjunction with LAPD. LAPDs deployment of 3000 weapons, not only it's a fantastic avenue for consistently owning the budget line items for law enforcement, it is a tool that we’re introducing to close the white space gap domestically. We have TASER's on one out of every two officers in the United States, the penetration rate at the largest agencies is much less than that. TASER weapons are a vital law enforcement tools for their safety and proven ability to reduce officer and suspect injury rates, reduce litigation, workers compensation cost, and ultimately save lives. When combined with AXON on-officer cameras the synergistic results are astounding. We’re setting our sights high. Our vision is a TASER weapon on every officer in the world and in the U.S. we want this to be standard issue equipment at every agency. To achieve this vision we’re continuing to add more headcount in both our telesales function, domestic weapon sales staff, video sales staff and international sales staff to ensure that we’re consistently at the top of mind for agencies around the world. We wanted to take some time on this call to go through the new programs that we have introduced in the past couple of months to ensure investors understand the tremendous opportunity they present and the collaboration and relationship with law enforcement they embody. These new license tiers are not only meant to own the budget line items at law enforcement but also to increase the average monthly revenue per seat which as of December 31 was approximately $26. The first program we have mentioned a couple of times on this call is the Officer Safety Program or the OSP. This is introduced as a mean to simplifying the capital expenditure process for agencies. The programs allow agencies to pay $99 per officer per month and know that their entire TASER weapon, cameras and digital evidence programs are covered for the next five years. The programs include one weapon upgrade every five years, a camera upgrade every 2.5 years, full warranty coverage and unlimited storage for their AXON cameras. In short we take the risk off the table of any unforeseen expenses for maintenance breakage or data overruns. Early indications are that customers absolutely love it. Past experiences with agencies indicate that once operating expenses are incorporated into a municipality's budget, it becomes much easier to rebudget for such predictable expenses on a go forward basis versus the need to periodically request inconsistent material funds for ongoing irregular capital expenditures. The Officer Safety Program aims to position TASER's products and services into municipality's budgets as a consistent and predictable prices as a mean to preserving future revenue streams. Providing such a bundle also helps solidify TASER as a one stop shop for an agencies technology needs while TASER may make slightly less per weapons hand on the OSP transaction we anticipate that it will be made up in volume. Admittedly the revenue recognition for this program is complicated and we’re still finalizing how this will be accomplished. We anticipate hosting a webinar to go through the specifics in the relatively near future for those investors who are interested. It's important to note that in terms of bookings, approximately 20% of the contract value of an OSP deal is backed out of bookings as it relates to the CW upgrade. The second new license tier introduced is known as the Unlimited Plan. Maricopa County Sheriff's Office and Pasco County Sheriff's Office were our flagship customers to purchase this tier with their purchase of 700 AXON Flex cameras and 415 AXON flex cameras respectively. The unlimited plan offers unlimited storage for the data uploaded from AXON cameras and the EVIDENCE Mobile as well as the added benefit of an agency being able to upgrade their AXON cameras every 2.5 years. The unlimited plan cost $79 user per month and it's offered with a 3 to 5 year contract. Just to be clear the only difference between the two plans is that the officer safety plan adds the TASER weapon warranty and upgrades to the unlimited plan for an additional cost of $20 per month. Maricopa County was also our flagship customer with the launch of RMS integrations with EVIDENCE.com. This program takes information exported from the agencies record management system and correlates it with videos on EVIDENCE.com and agency's AXON videos are then automatically tagged with the correct metadata including Incident ID, category and location. Officers are no longer required to spend valuable time entering this data after each incident and supervisors no longer have to search extensively for untagged or incorrectly tagged videos. The RMS integration is priced at $15 per user per month thereby increasing the average revenue per seat further. You probably notice in the press release we’re doing a rebrand of our previously called EVIDENCE.com & Video Segment now to be named the AXON segment. This will serve as the umbrella brand for all of the non-weapon technologies, we felt that AXON a name familiar to us, our investors and our customers would give us the flexibility to grow and expand while eliminating the confusion of multiple naming structures. As investors you will see the AXON segment in our SEC filings and press releases as well as in the upcoming brand launches. Our Seattle office will also be named under the AXON brand as it primarily houses our software R&D and product management teams. We think we have got the same opportunity that we had with the TASER brand to turn the AXON brand into a household name. I spoke earlier about some of our investments in SG&A but I also wanted to discuss some of our investment philosophy around R&D. We believe that technology shifts are inevitable. In order to maintain a leadership position we will make bold technology investments in emerging technologies such as wearables, mobile and cloud. Some of these investments will succeed and quite frankly some of them will fail. We believe that the investments we make with both our successes and our failures will be critical to maintaining a learning organization that can evolve and adapt to future technologies and market challenges. Today we’re investing heavily in mobile, around communication and collaboration features for public safety. We see the trend from desktop to mobile as something that will certainly come to public safety market as it has to so many other markets and we’re intent on being the leader in this space. We could easily make our earnings number in any given quarter by cutting SG&A or R&D investments but then we wouldn't be capturing the market share that we need to create a consolidated platform or developing the future innovations that we need We believe this market is significantly larger than what we’re selling to today, we're seeing the tip of the iceberg and we aren't satisfied with monetizing the business we have when we see a significantly larger opportunity. I would like to reiterate our commitment to the long term and set the expectation, this is a consistent message, you will be hearing from me and our leadership team. We're playing to win a much larger market over the long run and look forward to generating long term shareholder value as a result. Dan will now go over financials in greater detail

Thanks, Luke. So in the fourth quarter, consolidated sales were $46.8 million, a 17% increase from the fourth quarter of 2013. The increase in sales was primarily driven by total law enforcement smart weapon sales of 20.4 million partially offset by the lower legacy X26 sales which fell by 4.4 million versus the prior year. As a reminder we have ended the life of X26 e-legacy product but will still support warranty at handles we will be focusing solely on the smart weapons platform this year. Cartridge sales also had a strong quarter increasing 2 million over the prior year. Overall the weapons segment sales increased 2.9 million or 7.7% over the prior year's fourth quarter with fourth quarter total sales of 40.5 million. In the AXON segment AXON camera revenue increased 3.1 million compared to the prior year and service revenues for the AXON segment increased 0.8 million to 1.5 million in the fourth quarter compared to prior year. Overall the AXON segment sales increased 3.9 million or a 159.4% over the prior year fourth quarter with fourth quarter 2014 sales of 6.4 million. On an annual basis the weapon segment grew 18.1 million or 14.2% over the total 2013 sales of a 127.5 million finishing the year with a 145.6 million of sales for 2014 and the AXON segment grew 8.6 million or 82.6% over the total 2013 sales of 10.4 million finishing the year with 18.9 million of sales in 2014. Overall sales grew by 26.7 million or 19.4% finishing the year with 164.5 million of sales which is a new record. A significant contributor to the overall growth in 2014 was the strong performance in the international part of the business. The company has been investing heavily to grow the international business and in 2014 w started to see the impact of those investments. International sales grew $10.2 million or 45.9% over 2013 to 22.2 million finishing the year with 32.3 million of sales. As we look towards the first quarter revenues, investors should note that historically the first and third quarters are seasonally weaker than the fourth and second quarters and normally we see stepped on revenues from Q4 to Q1 as a result of this seasonality. Gross margins in the fourth quarter were 27.4 million or 58.6% as a percent of sales compared to 25.6 million or 63.8% of sales in the prior year. The decrease as a percentage of sales versus the prior year was driven primarily by the 2.1 million of excess inventory reserves and loss contingencies on open purchase orders of inventory. The gross margins without the reserves for the X26 and AXON cameras would have been 29.2 million or 63.8% which is in-line with the prior year. We are also beginning to see a product mix shift with greater percentage of sales being represented by AXON cameras which we’re selling at low gross margin in order to help drive camera adoption. In the fourth quarter of 2014 7.6% of our total sales were made off of AXON Flex and Body cameras as well as the docks compared to the fourth quarter of 2013 were only 1.8% of the total sales were made up of AXON cameras and docks. We expect this mix shift to continue into 2015 as AXON, flex and body cameras and the continue to represent an ever increasing percentage of total sales. Conversely we do expect that the high margin license revenue will also increase as a percentage over total sales overtime but because the camera sales are typically recognized at the time of delivery it will take longer for the license revenue to be a greater percentage of sales than what we’re seeing with the cameras. Overall gross margins in the AXON video segment were 9.7% in Q4 of 2014, we expect these to improve as the business scales because of the profitability of license revenue as high in a variable basis is currently depressed because of the high fixed cost. The weapon segment had gross margins of 66.2% for Q4. Obviously we have room to improve on the supply chain part of the business, we took expenses at 2.1 million in the fourth quarter due to excess inventory reserves and loss contingencies on open purchase orders. We had two major issues in the fourth quarter, the first was the end of life of the X26 legacy products. We had forecast a stronger demand for X26 in Q4 of 2014 and what materialize as customers who we expected to make some final buys of the X26 legacy products, instead started upgrading to new X26P. As a result we wrote off roughly $700,000 inventory related to X26.The second issue relates that AXON cameras, we have supply chain issue which affects a key component on broad use in both AXON Flex and AXON Body. We have plenty parts to satisfy the current camera forecast for 2015 but we have additional inventory of open purchase orders of ancillary parts that are no longer useful due to shortage of this component. As result, we’ve recognized 1.1 million of expense in Q4. Now we’re actively working to rectify the issue by trying to find the components in the open market, as well as trying to get the manufacture of this component to make a final production run for us. Thus far we have been unsuccessful in either of those endeavors. If we’re able to find the components on the open market, we’re convinced the manufacture due to financial production run we will be able to reverse all or part of expense taken in Q4 2014. We’re actively working to improve our forecasting and supply processes to prevent issues like this from recurring in the future. Also I want to reiterate that we have enough cameras and supply to satisfy our forecast for 2015. SG&A expenses saw an increase of 2.8 million or 23.7% to 14.4 million for the three months ended December 31, 2014. As percentage of sales SG&A expenses increased to 30.8% in the fourth quarter of 2014 compared to 29.1% in the fourth quarter of 2013. Compared to the prior year personnel expenses increased 1.4 million mostly due to increased headcount investment in sales and other customer facing positions. Personnel expense in the fourth quarter of 2014 also included approximately 0.4 million related to restructuring expenses, travel expenses also increased compared to the prior year due to both the ICAP Convention as well Additional International Travel and there is increased spend in the sales and marketing area of 0.6 million due to the ICAP conference that was held in fourth quarter of 2014 compared to the third quarter of 2013. These increases were partially offset by decreased liability expenses and lower legal and accounting fees. We expect to continue to see elevated SG&A spend over the fourth quarter amounts in the first quarter of 2015 by $500,000 as initiatives to grow the top line internationally and in the AXON segment are executed and further infrastructure is put in place. Research and development expenses of 3.9 million in the fourth quarter were an increase of about 0.5 million over the fourth quarter of 2013. The increase continues to be primarily due to additional personnel expenses related to the AXON segment development initiatives, but the current planned hires and another research investments in AXON segment we continues to expect R&D expenses to increase from the fourth quarter levels in the first quarter by over a $1 million. We’re finding that larger customers such as the I met in Los Angeles Police Department required advanced features and additional functionality that are EVIDENCE.com solution and as a result is delayed the launch of some of the new products, but we do believe that ensuring the major cities, utilizing our solution has the best experience possible will continue to solidify our position in the market and the new advance feature set should allow us to continue to drive up our average monthly recurring revenue per seats. We like to also share future billings as of 12/31/14 with investors. We define this metric as cumulative bookings to-date net of the cumulative recognized revenue for AXON and EVIDENCE.com revenue and also backing out AXON E.com deferred revenue balances. So as of 12/31 we have 39.3 million in future billings solely related to the AXON EVIDENCE.com business that are not reflected in the financial statements but will be invoiced and recognized over the next five years. It's important to note that however the future billings are subject to the same non-appropriation clauses as bookings therefore if an agency does not appropriate funds in the future years these amounts would be reversed in that period. We expect the amount of future billings will change from quarter-to-quarter for several reasons including the specific timing, duration of large customer subscription agreements, new bookings, varied billing cycles and subscription agreements in a specific time a customer knowns. For multi-year subscription agreements billed annually the associated future billings is typically high at the begin of the contract moves to zero in last year contract and then increases again when the contract is renewed. Similarly we can look at future contracted revenue which is to find as cumulative AXON bookings minus the cumulative recognized revenue related to the AXON products. This figure like future billings is subject to appropriation clauses and we recognize over the next five years but as of 12/31 future contracted revenue is $53.6 million. Adjusted EBITDA for the fourth quarter was 13.8 million compared to 13.3 million in the fourth quarter of 2013. Moving onto income from operations that was 8.9 million for the fourth quarter of 2014 compared to 9 million of fourth quarter 2013 and as a percentage of sales operating income was 19.1% in 2014 compared to 22.5% in the fourth quarter of 2013. If we excluded employee severance expenses, the inventory reserves, income from operations actually would have been 11.4 million or 24.4% of sales. Net income for the fourth quarter was 5.5 million or $0.09 per diluted share compared to 5.4 million or $0.10 per diluted share in the fourth quarter of last year. Now deferred revenue on the balance sheet at year-end was $35.7 million, that’s actually increased 15.5 million from the prior year balance due to increased sales of extended warranties of EVIDENCE.com services and the TASER insurance program. The preferred revenue of balance related to warranties increased $6.1 million to $22 million, the deferred revenue associated with EVIDENCE.com future services yet still to be delivered and recognized in future is actually 9.3 million at year-end which is up 5.3 million from the prior year-end and deferred revenue associated with the hardware upgrades increased 3.9 million to 4.3 million during 2014. So as of December 31, our cash and investment balance was $90.4 million which is a growth of $27 million over the previous year-end balances of $63.4 million despite the fact that we bought back $22.4 million of company stock during 2014. To wrap things up we’re continuing to invest in the business because we’re serious about executing our strategy and providing top line double digit growth consistently and we’re driving even more significant growth in the AXON segment for as long as feasible. We feel that these investments are necessary to continue to solidify market position in the AXON business, investigate and develop adjacent revenue producing opportunities and continue to growth internationally so we can provide long term value for all our shareholders and with that we will take questions from the queue.

[Operator Instructions]. I'm showing our first question or comment coming from the line of Steve Dyer with Craig Hallum. Your line is now open.

Luke, I think you said your average monthly revenue pool per software seat was $26 which seemed low, given, what you appear to have been booking lately - how has that trended - maybe if you us - what was that a year ago, for example?

Actually that has trended up, I think part of it is just as we - certainly we’re seeing the larger agencies grab a day towards more advance offerings which drives that up. But there are certain amount of the bookings especially that P&L get by the levels of service include future camera upgrades, that doesn’t count in that sort of monthly recurring revenue. We’re counting that at sort of getting deferred on the balance sheet. So there is about $15 and a lot of those contracts is getting deferred which may be the reason why the booking numbers seems high compared to what you’re seeing in the monthly recurring revenue.

Okay, and I think you had said 80% again, I'm looking more for trends here, 80% of the deals signed or the camera sold in Q4 had the E.com subscription and I think 87% or 88% of those had five year, how has that trended, I guess anecdotally seems like when this first started the attach rate was much, much lower 40% or 50%, is that consistent with what you're seeing?

Yes that’s definitely trended up both in the amount of the - attachment rate is certainly up over time, and then the number of five year deals continues to the increase. So I think we’re seeing customers - I think we’re doing a better job of convincing customers across all sort of strata of the market. I think we have always had really good attached at sort of large customers, the trouble we had is sort of the smaller customer service through telesales. We’re having a harder time getting attach rate; we have put a number of programs in place in order to get a higher attach rate across all the market. In Q3 we had about 75% attach rate so that’s gone up to 80% and then almost 90% of the customers taking five year deals is certainly up as well.

Like to dig into the investment spend a little bit, is that primarily sales, is it software? It seems like maybe on the bigger deals with the enormous agencies, there is more customization required there. Maybe it's not quite as much of an off the shelf solution. Can you give a little bit more color of what you're spending on? And then secondly a couple of years ago you guys did a big kind of an investment spend and then that number came down pretty considerably. Is this sort of a shorter term year or two type surge to sort out land grab this thing or is this sort of the new level that we grow off from?

So on the SG&A side, we feel that there is the market is happening now for body cameras and we are winning 90% of the deals that we’re in. We feel by adding additional channel resources we can capture additional market share, and we believe this is the time to invest, so we can consolidate the market and really our core belief is we want to get this people on the platform so we can capture that reoccurring revenue stream, walk them up to the pricing tier and then also have the potential to add on additional applications as we develop them. So that’s why we’re increasing the spend on the SG&A side. On the R&D side, we really feel that we have got an opportunity to build and become the preeminent technology in law enforcement and these features that we’re creating by having the same talent, that we said, Google or Dropbox, we’re able to create transformational value for our customers where it's not iterative but they are capturing real efficiency gains and getting police officers out on the street and this is something that philosophically we’re getting advice from Bret Taylor, the Former CTO of Facebook and Hadi Partovi, are saying we have never seen a company that has enough good engineers and you should be strategically building up a world-class engineering department and they will continue to create additional features that we can upsell to and also position us in a competitive advantage where it's going to be very difficult for our competition especially in the law enforcement space to catch up and I will maybe turn it to Dan on terms of--

I think that’s exactly right. I think it captures the R&D side, I think on the SG&A side I think it's just, we want to make sure that we continue to have as many people in customer facing roles that we can make sure that we’re in front of every opportunity that post-sale we have good account management and people are helping make sure we have the great experiences and every customer is referenceable. We want to capture this entire market, as a result we don’t want to concede any sales due to lack of cover. So we’re going to make sure we’re investing not only to make sure we’re gaining the sales but also to make sure that once people have bought the product they have great experiences and expanded programs over time.

I want to chime in last time, there is a fundamental difference between bubble in R&D back in 2008ish time frame versus what you’re seeing today. I would say back then we were moving into a new space and we invested very heavily early on. And frankly some of that was learning curve for us and we cut back because I think partially we were early to the market and frankly we made some hiring and other mistakes. I think we tried to grow the team to fast, this is very different from the position that we’re in today. If you just do the math on the last quarter, we are at a bookings run-rate of a $100 million in this business and it's growing in the 100s of percent year-over-year. So the business is scaling. The team that we’re hiring now is very dialed in. Again we have - this is not new to us anymore. We have been through the learning curve, so I wouldn’t expect though that this is a bubble in R&D that’s going to like sort of come up and then absolute levels of R&D come down, that’s not likely to happen. What I think you’re going to see happen is that team is going to continue to not only build out the revenue stream that’s existing today but we see - virtually the biggest problem we have got right now is picking which adjacent software opportunities we go after because there are still many that we could build out in this platform. So having that team I think it is going to enable us not only to meet the needs of our big customers today and we’re not doing one-off customizations of any major significant, what we’re learning from these big agencies is there is just a lot of additional workflow but they are pretty similar across the different agencies. So don’t take it if they were doing one-off customizations, that’s not what's going on. We’re building out the product to be more robust as we have gotten to better understand our customers. So, I think the R&D spend is here to stay for the long term but that’s what building the business at the levels that we’re seeing and we think in addition to the business we have built right now there is a couple of adjacent ones that this same team could continue to go after in the future.

Could you give maybe some examples of those adjacencies, are those things that the departments and law enforcement is asking you for or maybe how do we think about the progression of those?

Yes. I would say at this point for competitive reasons, we don’t want to telegraph, what we see the next expansions to be. But I just don’t think we want to comment exactly where we go you yet other than we will just say if you look at the spend our customers make technology, we estimate it's in the $15 billion a year sort of range and that’s far larger the size of our company today but we’re the disruptive force that’s coming into these industry, these cloud hosted business models have ripped through industry after industry and when you think about, mobile, cloud, wearables these tech trends that are massively disrupting other spaces, we’re the disruptors with the best tech platform.

Yes. I would say one investment that we have made in R&D that’s paying off now would be integrations. So the capability for the agency and we talk a little bit about that earlier to pay for an integration with our RMS system. What this does this is it deeply seats our software product into their workflows. The other features that we have been investing in our network features where they can do external sharing would DAs or other agencies. We believe that this is integral to our platform strategy. This software platform play, if you want to look to a comparison company Salesforce did a phenomenal job capturing a seat with their CRM system, and then it allowed them to introduce new revenue streams, 1 to 2 to 3 years later as they kind of captured that consolidated platform and that’s a company that we emulate in terms of creating kind of the public safety cloud platform.

Last question for me and then I will hop back in the queue as it relates, I think you said you’re winning 90% of the deals including virtually all the major departments. Has anything changed on the competitive landscape, is it getting more crowded, less crowded and when you don't win a deal is there a typically common denominator as to why you wouldn't win it? And I will hop back in the queue. Thanks.

When we don’t win a deal I say that it's typically because there is either - like it's an agency that has some pre-existing they have got an in-car system that they have heavily invested and they just decide maybe we want to keep this stuff on premise. So if we lose I would say that in terms of the competitive landscape, one thing that’s shifted pretty dramatically is two years ago everybody in the digital admin space, basically our competitors are all hardware vendors for the most part, they give away software or sell it at very low cost, they get very small software teams. So two years ago the competitive landscape was - those TASER guys were kind of crazy with this cloud thing, you’re a law enforcement agency, you can't put your data in the cloud you need to keep it on premise. We have seen that flip a 180 degrees where our customers are now realizing information security is a specialized field that the part that we and the partners we put together are bringing information, security practices and technology that individual agencies can't do on their own. So I would say our competition has given the fight against the cloud and so everyone of our competitors are now saying, well we’re going to have a cloud platform too. I would just point out, we know what it's like to transform from a hardware company to a software company, it's not easy. The level of talent and time and investment it takes is significant. So we’re delighted to see all of our competitors following suit, we just thing it has validated our business model but we feel very well-positioned to win. But that’s another reason to make the big investments. Luke, had a comment at one of our business meetings, it's a whole lot easier to take the hill when there is no one on the hill rather than if the market fragments defragmenting it later it would be far more expensive and difficult. So that’s why we need to take advantage of our unique position now to consolidate the market.

And our next question or comment comes from the line of Paul Coster with JPMorgan. Your line is now open.

This is Mark Strouse on for Paul. So a follow-up to Steve's question on it. You said you're winning about 90% of deals that you go after. But if we think just sticking with the U.S. to start, if we think about the total units that are out there - I guess just trying to see what you peg your market share, I mean you guys are obviously having great success with the larger agencies but some your competitors quite have thousands of agencies that are using their our solution. So I think from the percentage of agencies is interesting but if you have anything from a percentage of units that would be really helpful.

Yes, so we probably won't talk specifics, although I would say we understand our market very well in terms of the distribution of officers in the agencies and if you look at where the majority of the officers sit, 65% of the officers sit in agencies that have more than a 100 police officers and that’s where the majority of our focus has been. So it's a little bit misrepresentative if you were to look at number of agency count. There is probably 10,000 agencies that have less than 50 officers and out of those majority of them might even have less than 10 officers. So we’re focusing the majority of our time on the top kind of 1200 accounts where the majority of the officers sit. That’s not to say we’re not also focused on the bottom end. We have a teller team that focuses there as well. So we feel that in the deals that we’re in we’re very successful and that’s part of the reason that we’re increasing the spend in SG&A to get additional channel coverage.

Yes I would pipe in as well, one of our competitors, some of them have tried to do a pretty good job sort of saying well we sold a bunch of cameras historically and we’re in 1000s of agencies, off these are non-public companies there is nowhere to verify those claims. We haven't seen them win any deals of significance in recent history, so if we were looking at like that market that’s happening today, we’re very confident. We have a very dominant market share and we just have 5000 agencies using EVIDENCE.com platform, that’s over a quarter of U.S. law enforcement. We don’t think there is anyone else approaching anywhere near that scale. And if you add in the TASER cams, historically we now have over a 100,000 cameras in the field. So we’re very confident, we’re winning the big agencies and we’re doing well in those small agencies but that’s - we have some agencies that have gone out and bought cameras on Sky Mall, they have bought them in consumer outlets, they bought some either from some competitors, if they have an in-car system they have bought one maybe from their in-car vendor. That is an area we’re looking to tune up as well to make sure that we’re working more deals in the lower end of the market. We don’t want to leave any part of this market untouched, but the big ones are going to be the leaders.

And then maybe since you gave us and ask for a mile here, thanks for the guidance on the OpEx and 1Q but if we look at the year now, I mean how should we think about that, I think your OpEx in 2014 was up in the high teens percentage growth should we be thinking similar magnitude year-over-year in 2015?

I would say that we’re going to continue, obviously we want to give some sort of directional information here at least for Q1, I think we will continue to build for those levels. I think part of the gaining factor for us will be the high bar we have for hiring but I think as we continue to find top quality engineers and top quality sales people and other folks that will help create a great customer experience for our customers, we’re going to continue to hire throughout 2015. So I do expect that those expenses will continue to rise throughout the year.

And then last one for me, I appreciate Rick's comments about the hypothetical operating margins for AXON in the quarter, but on a GAAP accounting basis it kind of apply to your last two or three quarters, I'm just kind of curious in 2015 is that revenue scales up obviously with the investments so if we should expect that to stay at these levels or if we can from a GAAP perspective anyway if that should continue getting better?

That’s a tough question to answer, I would say that as you model out, certainly we’re seeing the revenues go up and that the problem in our business is that the GAAP revenues, I know obviously we’re going to continue to focus on that it's sort of a lagging indicator. So we’re sort of focused on the leading indicators which are bookings and I think as long as we continue to see the strengthen in bookings that gives us the confidence to make those investments even though on a GAAP basis it may not look great in the near term, we think we’re building a really very strong, very profitable business for the long term.

And our next question or comment comes from the line of Glenn Mattson with Ladenburg Thalmann. Your line is now open.

Just two quick ones, I know it's late, the camera supply issue you said you had enough supply to satisfy your forecast but what about if there was any upside to that forecast like if you get big wins like large agencies that are out there, is there any concern should demand exceed, what you’re currently forecasting?

We’re obviously managing that very closely, that is something that we’re keeping eye on. We do feel like we have got enough cameras to satisfy the forecasted sales for this year. We’re working hard from a supply chain perspective to make sure that we have enough cameras to satisfy demand even if we get some of those upside orders but it is something we’re addressing and feel like we have got a good team in place working hard to make sure we continue to satisfy the demand as it comes.

Okay. And then I guess secondly just conceptually I think you guys have been doing such a great job especially in the U.S. gaining market share that you know it's interesting to see the increased spend because I think a lot of people are kind of already assuming that you’re going to win large majority of the U.S. maybe the wild card out there is international and grabbing a large chunk of the share there. I mean the U.S. is kind of a market that’s ripe and it's growing rapidly, that level of acceptance might be different countries. How can you be confident that the demand is there to justify the spend to say in the international market?

International you’re right, it's been a challenge. I think if we looked at the 2013 results it was a little frustrating because we had started ramping expenses at the end of 2002 and spent significantly higher amounts in 2013 and really didn’t see any impact on sales because the sales cycle of international was so long but in this year we went up close to over 45% year-over-year internationally that was a big part of our growth for the overall business within international. We think there is tremendous white space opportunity, Rick talked about one out of every two officers carrying TASER in the U.S., internationally that’s one in 50 and then we have a camera business because of the way we have engineered the product with to be a cloud solution allows us to sell that that product around the world and have a localized product and different markets. So we think we have got not only a big white space opportunity in the weapons business around the world, we think we have a tremendous camera opportunity as well and we’re confident that the investments we’re making will pay off. Again longer term pay offs but I think the growth we saw in 2014 is giving us confidence that there is a pay-off for those incremental investments.

And our next question or comment comes from the line of Greg McKinley with Dougherty and Company. Your line is now open.

I'm wondering if you can talk about I guess the breadth of the opportunity of the marker, the concentration risk in it when you think about your potential big customer relationships from a booking standpoint, it's obviously something investors are monitoring very closely around your bookings levels, those numbers have grown dramatically in recent quarters. Is there enough volume of potential customers out there that bookings can continue to grow consistently quarter-to-quarter or where are we in the maturation of the business such that visibility on bookings level becomes easier for investors.

So the way we think about the market is once we’re able to put an officer on our platform we got additional opportunities to walk them up the pricing tier with features that provide value for the agency, so we think the first phase is we need to grab the market share and the second phase which we’re investing in now is developing additional features that provide value so we can walk that customer up the pricing tier and we think there is a lot of opportunity and that’s what we’re assessing now is how do we develop those features where we can get more price per seat per customer.

I think the other thing too is that a lot of this - at these big agencies there a lot of the initial bookings are not fully deployments, they are sort of the initial deployment for an agency that still has a lots of room to grow. LA is a good example it's great, they are now in our list of customers but there is a lot, there is a tremendous opportunity on top of the booking we have already recognized in LA for future camera sales as they go to full deployment. So I think it's not only a matter of getting new customers but also getting the customers on a system going to where every patrol officer has the camera that’s still a lot of upsides to the numbers we reported.

Yes. I would just jump in I think what you’re getting at is can we expect a relatively smooth upward trajectory of bookings and the answer there is probably not because we do have these bookings are coming in relatively large chunks. If one or two of those slide out of quarter you could see a sequential dip. We think we’re going to continue to see solid year-over-year growth but I just wouldn’t want to miss that expectation that we’re into this highly predictable phase, we’re not dealing with millions of consumers large numbers, lots of small transactions, the big transactions are driving a lot of our bookings. So there is going to be some lumpiness quarter-to-quarter.

And then as you’re moving after some of these big markets, you talked about I think in your officer safety plan, the notion of bundling a weapon with the camera and the software, does that help crack the code on some of these major municipalities that historically haven't used weapons and how significant of change is that to the way you can work with them to get weapons in their hands?

Well I need to contain my enthusiasm here because we’re talking about the future but I would tell you it made a big difference in LAPD. LAPD we have been working on for 15 years and this opportunity of putting the cameras and the TASER's together I think it's what gave them sort of the emphasis and the opportunity to expand our TASER's to every officer together with the cameras, because the cameras answered the major concern you would have about TASER's in a large city which is maybe a more political environment. What's the push back from various non-government organizations, they might have concerns about at least potentially misuse the taser, while if they have got the camera, they have police agencies simultaneously introducing a higher level of oversight. So we’re great at LA, I would say qualitatively we’re hearing a lot of interest from other large agencies but it's early in the game we’re 45 days into this. I'm excited and enthusiastic about it but we need to see how the market actually develops, I would just tell you reactions have been real positive early.

And then Dan, you had given us some metric I think of 53.6 million of future revenues, 39.3 million of future bookings. Is it essentially true that the difference between those two is just differed revenue and then secondly on that 53.6, any visibility you can provide to us how that splits out between software and hardware.

On the first question yes it's exactly right, so the only difference between the numbers sort of the differed revenue if you take the future billings plus the deferred revenue that is going to be sort of future recognized revenue so that’s exactly right. As far as the mix, that’s probably one we’re not ready to talk through. I would say that as you model out the business, I think as you sort up the license count and look at sort of the monthly recurring revenue proceed I think there is a way to model that but we’re probably not in a position to sort of give that split between hardware and software at this point.

Again focusing a little bit more on software and also you’ve a $26 monthly revenue proceed, was that in Q4 bookings or is that where the business stands at cumulatively today? And can you comment if it wasn’t for Q4 bookings, how that changes as people are opting for the OSP and the ultimate plans?

So what I can say is that is the cumulative so that’s actually December's revenue was at that $26 proceeds so that’s sort of the cumulative of all deals before that we have already sort of invoiced and recognized a revenue for and that did go up and it's been going up. So I would say that the most recent deals that were recognized started to be recognized in fourth quarter helped drive that rate up over that same number say for this month of September. So we’re seeing that head in that right direction. You know the one thing just to be clear is that things like officer safety plan and the ultimate plan we’re going to take roughly 20% of the bookings on officer safety plans and strip that out, that’s the weapons part of business so that won't be included in the monthly recurring and the part that represents sort of future camera upgrades will also be stripped out and put on the balance sheet. So you’re going to have about $15 a month on those plans that include future cameras, they are not going to be that monthly recurring that’s going to be on the hardware side so that won't be in the monthly recurring. Even though we’re seeing we’re collecting the money every month that’s getting differed, so the monthly recurring is actually the revenue we’re recognizing each month.

So just to be super clear, so on the $99 a month, take 20 bucks a month off for the weapon and another 15 bucks a month off for future camera hardware?

That’s correct.

So taking $35 out there and then as you take - go down in the unlimited plan which is DOSP [ph] but without the weapon and unlimited and ultimate in both of those you take $15 roughly out for the future camera hardware.

Yes, roughly that would be a good approximation.

And then lastly can you comment on how many, so 80% of your cameras booked seats in Q4 up from 75% in Q3, how many seats are you at cumulatively today is it something you’re willing to disclose?

We said last quarter we are about 10,000, we’re about 15,000 at this point so we’re continuing to grow that seat count. The other thing too is that seat count, we wait for sort of the implementation everything else before we start recognizing the revenue on the seats so sometimes there is a little bit of a lag in that seat count from when the booking is just because we’re we need to implementation services.

And I'm showing no further questions at this time. So with that I would like to turn the call back over to the Chief Executive Officer, Mr. Rick Smith with any further comments.

Well in view of the time we’re not going to take the Twitter questions here. I think Eric will deal with those offline. It's been a long call. Everybody thank you for tuning in today. Again couldn’t be a more exciting time at the business. Feel very excited about the team we have got, the products resonating, this year you’re going to see us really starting to tune up some of the international performance, continuing to consolidate the market. So thanks everybody for your time and we look forward to seeing you all at our shareholder meeting coming up in May which will be held at our new Seattle office. So look forward to seeing you - any of you can make it up in Seattle in May. Thanks and have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program and you may now disconnect.