Pacific Safety Products Inc.
TSX VENTURE : PSP

Pacific Safety Products Inc.

May 16, 2006 06:00 ET

Pacific Safety Products Inc. Posts Record Sales and a Profitable Quarter

KELOWNA, BRITISH COLUMBIA--(CCNMatthews - May 16, 2006) - Pacific Safety Products Inc. (TSX VENTURE:PSP) ("PSP" or "the Company") today announced its financial results for the third quarter of Fiscal Year 2006. Highlights of the report included record sales of $9,195,213 and a net income of $742,182 or $0.039 a share. EBITDA for Q3 was $1,107,485. This compares to Fiscal Year 2005 results for the corresponding period of sales at $5.4M and net income of $.031 million. During Q3, FY06 the company generated $1.982 million of cash flow. Year to date for Fiscal Year 2006 PSP has recorded $22.8 million of sales and net income of $.235 million. EBITDA for this period is $1.8 million.

"Our third Quarters are traditionally robust as a result of customer budget cycles," states David Scott, CEO. "This Q3 was particularly strong in new orders and the associated financial results exceeded our plan. Revenue, gross margin, net income and cash generation from operations are at or near historical highs. We continue to focus on broadening our product lines and expanding our markets to sustain our growth. We are confident that this strategy will deliver its expected result."

For complete unaudited interim consolidated financial statements with notes and management discussion and analysis please refer to PSP's report to shareholders. This report is posted on SEDAR and on our web site or one can be requested by contacting PSP using one of the methods listed at the end of this release. Summary unaudited consolidated financial results for the quarter ended March 31, 2006 and March 31, 2005, are as follows:

OVERVIEW OF THE BUSINESS

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. These products primarily include body armor to protect against ballistic, stab and fragmentation threats. PSP is the largest armor manufacturer in Canada and has significant international customers. 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 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 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 which may be 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 stated. These factors include, but are not limited to changes in the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates, of countries in which the Company does business; competitive pressures; successful integration of structural changes, including restructuring plans, acquisitions, divestitures and alliances; cost of raw material, research and development of new products, including regulatory approval and market acceptance; and seasonality of sales in some products.



BALANCE SHEET (unaudited) MARCH 31, JUNE 30, MARCH 31,
AS AT 2006 2005 2005
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ASSETS
CURRENT ASSETS $ 12,728,829 $ 10,108,639 $ 11,036,338
PROPERTY, PLANT AND
EQUIPMENT 3,032,244 3,332,417 3,070,875
OTHER ASSETS 364,064 397,105 282,602
INTANGIBLE ASSETS 297,784 471,278 674,364
GOODWILL 2,834,353 2,834,353 2,834,353
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TOTAL ASSETS $ 19,257,274 $ 17,143,792 $ 17,898,532
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LIABILITIES
CURRENT LIABILITIES $ 6,721,055 $ 4,728,368 $ 4,161,933
LONG-TERM DEBT 3,524,013 3,841,429 3,815,000
FUTURE INCOME TAXES PAYABLE - - 247,842
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TOTAL LIABILITIES 10,245,068 8,569,797 8,224,775
SHAREHOLDERS' EQUITY 9,012,206 8,573,995 9,673,757
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TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 19,257,274 $ 17,143,792 $ 17,898,532
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STATEMENT OF OPERATIONS
(unaudited)

FOR THE NINE MONTHS ENDED MARCH 31, 2006 MARCH 31, 2005
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SALES $ 22,817,487 $ 10,694,084
COST OF SALES 17,186,083 7,952,785
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GROSS MARGIN 5,631,404 2,741,299
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EXPENSES 4,260,187 3,753,051
INTEREST ON LONG-TERM DEBT 425,490 440,568
RESTRUCTURING COSTS 673,515 -
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LOSS BEFORE INCOME TAXES 272,212 (1,452,320)
INCOME TAXES (RECOVERY) 36,467 (518,634)
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NET INCOME (LOSS) 235,745 (933,686)
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BASIC EARNINGS (LOSS) PER SHARE $ 0.012 $ (0.058)
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WEIGHTED AVERAGE COMMON SHARES
ISSUED AND OUTSTANDING 19,010,683 16,045,391
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