SS BODY ARMOR I INC 
By For the quarter ended
Gross profit for the 2008 fourth quarter was
Total operating costs were
The Company reported an operating loss of
As of
Ellis continued, "Cost reduction programs began in the second half of last year and are progressing according to plan. Our overhead is down and we continue to take out costs in our effort to operate more efficiently. We fully expect to see a rise in our gross margins given the contract mix moving forward and with the expected contributions from LifeStone Materials. We are also working very closely with our key suppliers to improve our competitive and financial position."
For the twelve month periods ended
-- Net sales were $164.9 million compared to net sales of $320.8 million in
2007. This decline was primarily related to lower sales to the U.S.
Military and Federal Government due to numerous contract award delays,
as well as lower sales to the Domestic/Distributor market as a result of
deteriorating economic conditions and the impact to statewide budgets,
and the delayed transition to new NIJ standards. This decline was
partially offset by higher sales to the international markets, resulting
in 2008 net sales of $25.0 million as compared to $0.7 million in the
comparable prior year.
-- Gross profit was $5.8 million or 3.5% of net sales, compared to $61.5
million or 19.2% of net sales in 2007. Gross profit margin in 2008 was
impacted by numerous delays in contract awards, constraints on price
increases due to the competitive market, higher raw material costs and
under-absorbed overhead costs. Additionally, included in our 2008 gross
profit was an $8.2 million inventory impairment charge. Cost of goods
sold and gross profit reported in 2007 were also positively impacted by
an adjustment to reduce our vest replacement program obligation,
resulting in an adjustment of $3.5 million, or a $3.5 million reduction
of cost of sales.
-- Total operating costs were $13.5 million or 8.2% of net sales versus
$49.8 million or 15.5% of net sales in 2007. The decrease of $36.3
million was related to several factors:
-- General and administrative expenses in 2008 were $4.5 million lower
than 2007, primarily as a result of lower legal and professional
fees. Additionally, there was a decrease in salaries of $2.5
million in 2008 compared to 2007 principally due to reductions in
incentive compensation and personnel and litigation and cost of
investigations were down $2.4 million year over year.
-- During 2008, the statute of limitations for the major portion of the
2004 employment tax withholding obligations expired and the charge
and related liability originally recorded during 2004, totaling
$26.0 million, was reversed during the second quarter of 2008.
Operating costs for the year ended December 31, 2007 include a
credit to earnings of approximately $0.7 million for the employment
tax withholding obligation related to that period.
-- The decrease in 2008 operating costs was partially offset by an
increase in equity-based compensation of $2.9 million due to a
change in the majority of the Board of Directors.
-- Operating loss was $7.7 million in 2008 as compared to operating income
of $11.7 million in 2007.
-- Net loss was $5.4 million or a loss of $0.11 per basic and diluted share
versus net income of $6.2 million or earnings per share of $0.12, both
basic and diluted in 2007.
Conference Call Information
The Company will be hosting a teleconference and webcast to discuss its 2008 fourth quarter and year end financial results on
ABOUT POINT BLANK SOLUTIONS, INC.
Point Blank Solutions, Inc. is a leader in the design and production of technologically advanced body armor systems for the U.S. Military, Government and law enforcement agencies, as well as select international markets. The Company is also recognized as the largest producer of soft body armor in the U.S. With state-of-the-art manufacturing and laboratory testing facilities, strategic technology and marketing alliances, and an ongoing commitment to drive innovation, Point Blank Solutions believes that it can deliver the most advanced body armor solutions, quicker and better than anyone in the industry. The Company maintains facilities in
NON-GAAP FINANCIAL DISCLOSURE
This press release contains information regarding Adjusted EBITDA. Adjusted EBITDA is computed as net income, plus the sum of interest expense, depreciation and amortization, income taxes, equity based compensation, litigation and cost of investigations and employment tax withholding charge (credit). This measure is a non-GAAP financial measure, defined as numerical measures of financial performance that exclude or include amounts so as to be different than the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles, or GAAP, in our statements of operations, balance sheets or statements of cash flows. Pursuant to the requirements of Regulation G, we have provided a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure.
Although Adjusted EBITDA represents a non-GAAP financial measure, we consider this measure to be a key operating metric of our business. We use this measure in our planning and budgeting processes and to monitor and evaluate our financial and operating results. We also believe that Adjusted EBITDA is useful to investors because it provides an analysis of financial and operating results using the same measures that we use in evaluating the Company. We expect that such measure provides investors and other stakeholders with the means to evaluate our financial and operating results against other companies within our industry. Our calculation of Adjusted EBITDA may not be consistent with the calculation of this measure by other companies in our industry. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to net earnings (loss) as an indicator of our operating performance or cash flows from operating activities, as a measure of liquidity or any other measure of performance derived in accordance with GAAP.
SAFE HARBOR STATEMENT
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: THE STATEMENTS WHICH ARE NOT HISTORICAL FACTS CONTAINED IN THIS PRESS RELEASE ARE FORWARD-LOOKING STATEMENTS, WHICH ARE BASED LARGELY ON THE COMPANY'S EXPECTATIONS AND ARE SUBJECT TO VARIOUS BUSINESS RISKS AND UNCERTAINTIES, CERTAIN OF WHICH ARE BEYOND THE COMPANY'S CONTROL. WORDS SUCH AS "EXPECTS," "ANTICIPATES," "TARGETS," "GOALS," "PROJECTS," "INTENDS," "PLANS," "BELIEVES," "SEEKS," "ESTIMATES," VARIATIONS OF SUCH WORDS, AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE ONLY PREDICTIONS THAT SPEAK AS OF THE DATE HEREOF AND ARE SUBJECT TO RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT. THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY AND ADVERSELY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, (1) CHANGES IN THE COMPANY'S INTERNAL CONTROL STRUCTURE OVER FINANCIAL REPORTING, (2) UNCERTAINTY OF FUTURE FINANCIAL RESULTS, (3) ADDITIONAL FINANCING REQUIREMENTS, (4) DEVELOPMENT OF NEW PRODUCTS, (5) GOVERNMENT APPROVAL AND CONTRACTING PROCESSES, (6) THE IMPACT OF COMPETITIVE PRODUCTS OR PRICING, (7) TECHNOLOGICAL CHANGES, (8) THE EFFECT OF POLITICAL AND ECONOMIC CONDITIONS, (9) THE OUTCOME AND IMPACT OF LITIGATION TO WHICH THE COMPANY IS A PARTY AND THE SECURITIES AND EXCHANGE COMMISSION AND OTHER INVESTIGATIONS REGARDING THE COMPANY, (10) TURNOVER IN THE COMPANY'S SENIOR MANAGEMENT AND (11) OTHER UNCERTAINTIES DETAILED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING, WITHOUT LIMITATION, THOSE UNCERTAINTIES AND RISKS DISCUSSED IN DETAIL IN "RISK FACTORS," IN THE COMPANY'S PERIODIC REPORTS ON FORMS 10-K AND 10-Q. THE COMPANY UNDERTAKES NO OBLIGATION TO REVISE OR UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS TO REFLECT ANY CHANGE IN THE EXPECTATIONS OF OUR MANAGEMENT WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS, OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS ARE BASED.
POINT BLANK SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31,
(In thousands, except share data)
ASSETS 2008 2007
Current assets:
Cash $1,707 $213
Restricted cash - 35,200
Accounts receivable, less allowance
for doubtful accounts of $279 and
$296, respectively 33,620 25,144
Inventories, net 38,700 43,550
Income tax receivables 11,951 20,285
Deferred income taxes 14,829 21,468
Prepaid expenses and other current assets 2,782 3,150
-------- --------
Total current assets 103,589 149,010
-------- --------
Property and equipment, net 10,742 5,967
-------- --------
Other assets:
Deferred income taxes 10,931 1,312
Deposits and other assets 113 78
-------- --------
Total other assets 11,044 1,390
Total assets $125,375 $156,367
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving line of credit $39,207 $16,254
Note payable - related party 2,950 -
Income taxes payable 285 -
Accounts payable 23,310 15,416
Accrued expenses and
other current liabilities 4,927 8,384
Reserve for class action settlement 4,172 39,372
Vest replacement program obligation 410 527
Employment tax withholding obligation 8,154 34,176
-------- --------
Total current liabilities 83,415 114,129
-------- --------
Long term liabilities:
Unrecognized tax benefits 11,239 11,134
Other liabilities 418 525
-------- --------
Total long term liabilities 11,657 11,659
-------- --------
Total liabilities 95,072 125,788
-------- --------
Commitments and contingencies
Minority and non-controlling interests
in consolidated subsidiaries 411 406
Contingently redeemable common stock
(related party) 19,326 19,326
Stockholders' equity:
Common stock, $0.001 par value,
100,000,000 shares authorized,
51,446,585 and 51,044,609 million
shares issued and outstanding,
respectively 48 48
Additional paid in capital 89,673 84,552
Accumulated deficit (79,155) (73,753)
-------- --------
Total stockholders' equity 10,566 10,847
-------- --------
Total liabilities and
stockholders' Equity $125,375 $156,367
======== ========
POINT BLANK SOLUTIONS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31,
(In thousands, except per share data)
2008 2007 2006
Net sales $164,922 $320,796 $254,105
Cost of goods sold 159,103 259,289 196,154
-------- -------- --------
Gross profit 5,819 61,507 57,951
-------- -------- --------
Selling, general and
administrative expenses 32,359 40,921 42,539
Litigation and costs of investigations 7,199 9,647 13,886
Employment tax withholding
charge (credit) (26,034) (737) 4,407
-------- -------- --------
Total operating costs 13,524 49,831 60,832
-------- -------- --------
Operating income ( loss) (7,705) 11,676 (2,881)
-------- -------- --------Interest expense 1,255 791 1,946
Other (income) expense (411) (110) 127
-------- -------- --------
Total other expense 844 681 2,073
-------- -------- --------
Income (loss) before income tax
expense (benefit) (8,549) 10,995 (4,954)
-------- -------- --------
Income tax expense (benefit):
Current 658 (10,865) (772)
Deferred (3,051) 15,501 1,058
-------- -------- --------
Total income tax expense (benefit) (2,393) 4,636 286
-------- -------- --------
Income (loss) before minority and
non-controlling interests of
subsidiaries (6,156) 6,359 (5,240)
Less minority and non-controlling
interests of subsidiaries (754) 153 82
-------- -------- --------
Net income (loss) $(5,402) $6,206 $(5,322)
-------- -------- --------
Basic and diluted earnings (loss) per
common share $(0.11) $0.12 $(0.12)
-------- -------- --------
POINT BLANK SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31,
(In thousands)
2008 2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) $(5,402) $6,206 $(5,322)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 1,482 637 643
Amortization of deferred
financing costs 118 88 41
Deferred income tax expense
(benefit) (3,051) 15,501 1,058
Gain on sale of fixed assets (3) - (94)
Minority and non-controlling
interests in consolidated
subsidiaries (245) 153 82
Equity-based compensation 5,156 3,649 1,615
Changes in assets and liabilities:
Increase in restricted cash - - (35,200)
Accounts receivable (8,476) 12,943 2,957
Accounts receivable from
insurers - - 12,875
Inventories 4,850 (11,340) (5,385)
Income tax receivable 8,334 (20,285) -
Prepaid expenses and other
current assets 250 (912) (784)
Deposits and other assets (35) 16 7
Accounts payable 7,526 814 2,229
Accrued expenses and other
current liabilities (3,457) (4,528) 4,178
Vest replacement obligation (117) (5,527) (3,658)
Income taxes payable 356 (5,905) (636)
Unrecognized tax benefits 105 11,134 -
Employment tax withholding
obligation (26,022) (2,307) 4,407
Other liabilities (107) (327) (632)
------- ------- -------
Net cash provided by (used in)
operating activities (18,738) 10 (21,619)
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property
and equipment 4 38 572
Purchases of property and
equipment (3,758) (4,817) (458)
------- ------- -------
Net cash provided by (used in)
investing activities (3,754) (4,779) 114
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Bank overdraft 368 (3,024) 5,531
Contribution from minority owners 250 - -
Loan from minority owners 450 - -
Net proceeds from revolving
line of credit 22,953 7,829 8,425
Repayment of notes payable - bank - - (15,000)
Issuance of contingently redeemable
common stock (related party) - - 19,326
Repurchase of common stock - - (3,133)
Payment of payroll taxes from
option exchange for employees (120)
Proceeds from exercise of stock
warrants 85 - 5,250
------- ------- -------
Net cash provided by (used in)
financing activities 23,986 4,805 20,399
------- ------- -------
Net increase (decrease) in cash
and cash equivalents 1,494 36 (1,106)
Cash and cash equivalents at
beginning of year 213 177 1,283
------- ------- -------
Cash and cash equivalents at end of year $1,707 $213 $177
======= ======= =======
Supplemental cash flow information:
Cash payments for interest $966 $703 $1,905
------- ------- -------
Cash payments for income taxes $983 $4,224 $-
------- ------- -------
Property and equipment acquired by issuing
a notes payable $2,500 $- $-
======= ======= =======
POINT BLANK SOLUTIONS, INC. AND SUBSIDIARIES
ADJUSTED EBITDA FOR THE YEARS ENDED DECEMBER 31,
(In thousands)
2008 2007
Net Income $(5,402) $6,206
Add back:
Depreciation 1,482 637
Interest 1,255 791
Income Taxes (2,393) 4,636
Equity based compensation 5,156 3,649
Litigation and cost of investigations 7,199 9,647
Payroll Tax Withholding Credit (26,034) (737)
-------- -------
Adjusted EBITDA $(18,737) $24,829
======== =======
POINT BLANK SOLUTIONS, INC. AND SUBSIDIARIES
ADJUSTED EBITDA FOR THE THREE MONTHS ENDED DECEMBER 31,
(In thousands)
2008 2007
Net Loss $(9,278) $(156)
Add back:
Depreciation 539 170
Interest 581 326
Income Taxes (5,527) 319
Equity based compensation 100 733
Litigation and cost of investigations 979 2,283
Payroll Tax Withholding Credit - -
-------- -------
Adjusted EBITDA $(12,606) $3,675
======== =======
Company Contact: Media Relations/Investor Relations
Glenn Wiener
212-786-6013 / ir@pbsinc.com
SOURCE Point Blank Solutions, Inc.
