Pacific Safety Products Inc.
TSX VENTURE : PSP

Pacific Safety Products Inc.

February 25, 2010 16:05 ET

Pacific Safety Products Inc. Announces Fiscal Year 2010 Second Quarter Results

KANATA, ONTARIO--(Marketwire - Feb. 25, 2010) - Pacific Safety Products Inc. (TSX VENTURE:PSP) ("PSP" or "the Company"), today announced consolidated financial results for the three and six month period ended December 31, 2009.

Recent Developments:

  • Decreased Operating expenses by more than $0.5 million or 23% as compared to the prior year.
  • Received additional U.S. National Institute of Justice standard 06 certification of U.S. law enforcement products.
  • Appointed Lieutenant General (ret.) Robert Fischer to the Board of Directors.

Mr. David Scott, Chief Executive Officer commented, "The decrease in revenue for the quarter is a reflection of reduced buying activity as our customers continue to face significant budget pressures. The Company also reduced operating expenses by more than $0.5 million over the prior year, which is a reflection of management's ongoing commitment to reduce costs in-line with current revenue projections.

Management believes that the Company remains in a good position to weather the current industry downturn with products that are essential to our customers' operations in security, law enforcement and defence. The Company also continues to make progress on its research and development initiatives, both for Head Mounted Systems as well as NIJ 06 product certifications."

For complete consolidated financial statements with notes and management discussion and analysis please refer to PSP's annual report to shareholders. This report is posted on SEDAR (www.sedar.com) and on the Company's web site. Summary consolidated financial results for the three and six month period ended December 31, 2009 are as follows:

SUMMARY CONSOLIDATED BALANCE SHEETS (unaudited)
$Thousands

AS AT  DECEMBER 31, 2009 JUNE 30, 2009
     
ASSETS    
CURRENT ASSETS $8,267 $8,799
PROPERTY, PLANT AND EQUIPMENT 1,724 1,711
OTHER ASSETS 2,434 1,912
INTANGIBLE ASSETS 2,904 3,078
     
TOTAL ASSETS $15,329 $15,500
     
LIABILITIES    
CURRENT LIABILITIES $ 7,106 $ 6,628
FUTURE INCOME TAX LIABILITY - 60
LONG-TERM DEBT 1,054 1,160
     
TOTAL LIABILITIES 8,160 7,848
SHAREHOLDERS' EQUITY 7,169 7,652
     
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $15,329 $15,500

SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
$Thousands

  THREE
MONTHS ENDED
DECEMBER 31, 2009
THREE
MONTHS ENDED
DECEMBER 31, 2008
SIX
MONTHS ENDED
DECEMBER 31, 2009
SIX
MONTHS ENDED
DECEMBER 31, 2008

SALES
COST OF SALES

7,437
5,773

9,593
7,183

15,067
12,255

17,299
13,016
         
GROSS MARGIN 1,664 2,410 2,812 4,283
   22.1% 25.1% 18.7%  24.8%
         
OPERATING EXPENSES 1,519 1,989 3,061 3,781

OPERATING INCOME/(LOSS)
AMORTIZATION
FOREIGN EXCHANGE
INTEREST

145
186
52
57

421
196
134
45

(249)
367
25
124

502
377
150
115

INCOME /(LOSS) BEFORE  RESTRUCTURING COSTS
RESTRUCTURING COSTS

(150)
87

46
152

(765)
87

(140)
152

LOSS BEFORE INCOME TAX RECOVERY
INCOME TAX RECOVERY

(237)
(78)

(106)
(148)

(852)
(329)

(292)
(342)

NET AND COMPREHENSIVE INCOME / (LOSS)

(159)

42

(523)

50

SUPPLEMENTARY DISCLOSURE (unaudited)
$Thousands

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
Adjusted EBITDA is not a recognized performance measure under Generally Accepted Accounting Principles ("GAAP") and does not have a standardized meaning prescribed by GAAP. The term EBITDA consists of net and comprehensive income (loss) and excludes interest, income tax recovery, depreciation and amortization. Adjusted EBITDA excludes stock based compensation and one-time costs. Adjusted EBITDA is included as a supplemental disclosure because management believes that such a measurement provides a better assessment of the Company's operations on a continuing basis by eliminating certain non-cash charges and charges that are nonrecurring. The most directly comparable measure to Adjusted EBITDA calculated in accordance with GAAP is net and comprehensive income (loss). The following is a reconciliation of the Company's Adjusted EBITDA to net and comprehensive income (loss):

  THREE
MONTHS ENDED
DECEMBER 31, 2009
THREE
MONTHS ENDED
DECEMBER 31, 2008
SIX
MONTHS ENDED
DECEMBER 31, 2009
SIX
MONTHS ENDED
DECEMBER 31, 2008
NET AND COMPREHENSIVE INCOME /(LOSS)   (159)  42  (523)  50
INTEREST   57  45  124  115
INCOME TAX RECOVERY  (78) (148) (329) (342)
STOCK BASED COMPENSATION   8  47  16  92
AMORTIZATION   243  251  486  482
RESTRUCTURING COSTS   87 152  87  152

ADJUSTED EBITDA

158

389

(139)

549

About PSP

The mission statement of Pacific Safety Products Inc. is ...we bring everyday heroes home safely™. PSP is an established industry leader in the production, distribution and sale of high-performance and high-quality safety products for the defence and security market. These products include body armour to protect against ballistic, stab and fragmentation threats, ballistic blankets to reduce blast effects, and protective products against chemical and biological hazards. PSP is the largest armour manufacturer in Canada, directly supplying the Canadian Department of Defence, Federal Government Agencies and major Canadian law enforcement organizations. The Company also provides specialized law enforcement and safety products through APS Distributors, a division of PSP that services law enforcement and public safety agencies across the country. The Company, through its U.S. subsidiary Sentry Armor Systems Inc., provides body armour products to U.S. based law enforcement and private security firms. The Company also produces tactical clothing and emergency medical kits. Pacific Safety Products is a reporting issuer in British Columbia, Alberta and Ontario, Canada and publicly trades under the symbol PSP on the TSX Venture Exchange.

Forward Looking Statements: This news release may contain forward looking statements based on management's expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the Company's strategy for growth, product development, market position, expected expenditures, results of cost reduction initiatives and financial results are forward looking statements. Some of the forward looking statements may be identified by words like "expects", "anticipates", "plans", "intends", "projects", "indicates", and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents filed with the British Columbia Securities Commission, the Alberta Securities Commission, the Ontario Securities Commission, the TSX Venture Exchange, as well as others, could cause results to differ materially from those anticipated. These factors include, but are not limited to the potential impact of the current economic downturn on the Company's business, the unpredictability of purchasing patterns by governmental agencies, the possibility of a deterioration in the Company's working capital position, the impact on the Company's liquidity if it were to go offside of the covenants in its debt facilities, the impact that changes in supplier payment terms or slow payment of accounts receivable could have on the Company's liquidity, the unavailability of or increase in price of external capital to finance the Company's research, development and growth initiatives, changes in the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates fluctuations of countries in which the Company does business; competitive pressures; successful integration of structural changes or downsizing initiatives, including restructuring plans, acquisitions, divestitures and alliances; cost of raw material, the uncertainty associated with the outcome of research and development of new products, including regulatory approval and market acceptance; and seasonality of sales in some products.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Pacific Safety Products Inc.
    David Scott
    Chief Executive Officer
    (613) 254-9488 ext. 322
    www.pacsafety.com