Pacific Safety Products Inc.
TSX VENTURE : PSP

Pacific Safety Products Inc.

February 22, 2008 06:00 ET

Pacific Safety Products Inc. Fiscal 2008 Second Quarter Results

KELOWNA, BRITISH COLUMBIA--(Marketwire - Feb. 22, 2008) - Pacific Safety Products Inc. (TSX VENTURE:PSP) ("PSP" or "the Company") today announced financial results for its second quarter ended December 31, 2007. For the quarter ended December 31, 2007, the Company reported, on a consolidated basis, a net loss after taxes of $1.4 million on revenue of $7.3 million. Included in this loss was a one-time expense of $1.0 million related to the relocation of the Company's head office from Kelowna, BC to the Ottawa, ON area and the closure of the remaining manufacturing facilities in Kelowna.

Quarter Highlights

- Completed the acquisition and successful integration of APS Distributors Ltd. of Bedford, Nova Scotia

- Secured $20 million in law enforcement and defence business orders which will provide dependable future multiyear revenue

- Achieved the first cash flow positive quarterly result for the Company's US operation in Dover, TN

- Announced the relocation of the Company's head office from Kelowna to the Ottawa area

Mr. David Scott, CEO, commented, "Having adjusted for lower revenue than initially anticipated at the beginning of FY2008, based on the existing order backlog and the addition of APS, the Canadian operation is expected to increase sales by 75% over the first half of the year, with a corresponding improvement in gross margins.

In the United States, our operation in Dover TN has made marked improvement in manufacturing efficiency over the past few quarters and is now generating positive cash flow. Quarter over quarter sales continue to strengthen as a result of increased distribution channels and a broader product line. Monthly revenue from our US operations is now equal to the previous year's quarterly output. In our core business of soft body armour, the US market now accounts for 35% of total sales.

The announced relocation of our head office to the Ottawa area and closure of our Kelowna manufacturing location has resulted in a one time expense this quarter. Management believes that this initiative will deliver a more competitive and efficient operation with the initial expense being offset within 24 months.

Finally, our newly formed Defense Group is actively pursuing opportunities in the US. In response to the announced requirement by the United States Army for improved soldier protection, the Company is developing a unique offering that will provide significant improvement over existing field products. Early indications suggest an interest that could result in initial sales during the first half of FY2009."

Mr. Scott added, "This past quarter was challenging as we are undergoing many changes; however we believe we now have developed a platform with the right strategy and the right people to pursue continued expansion in both the United States and Canada in the coming years."

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 our web site or one can be requested by contacting PSP using the methods listed at the end of this release. Summary interim consolidated financial results for the quarter ended December 31, 2007 and December 31, 2006, are as follows:



SUMMARY BALANCE SHEETS (unaudited)

AS AT DECEMBER 31, 2007 2006
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ASSETS
CURRENT ASSETS $ 13,922,540 $ 12,701,112
PROPERTY, PLANT AND EQUIPMENT 1,832,895 3,253,980
OTHER ASSETS 690,061 503,832
INTANGIBLE ASSETS 3,671,802 2,221,403
GOODWILL 8,437,724 5,742,037
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TOTAL ASSETS $ 28,555,022 $ 24,422,364
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LIABILITIES
CURRENT LIABILITIES $ 11,877,917 $ 6,887,064
LONG-TERM DEBT 982,380 1,892,000
FUTURE INCOME TAXES PAYABLE 77,971 13,196
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TOTAL LIABILITIES 12,938,268 8,792,260
SHAREHOLDERS' EQUITY 15,616,754 15,630,104
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 28,555,022 $ 24,422,364
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SUMMARY STATEMENTS OF OPERATIONS (unaudited)

THREE THREE SIX SIX
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2007 2006 2007 2006
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SALES $ 7,282,922 $ 8,512,038 $ 13,948,082 $ 17,430,984
COST OF SALES 5,954,997 6,398,288 11,113,827 13,180,789
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GROSS MARGIN 1,327,925 2,113,750 2,834,255 4,250,195
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EXPENSES 2,466,564 1,638,526 4,189,850 3,221,966
RELOCATION EXPENSES 980,000 - 980,000 -
GAIN ON SALE OF
BUILDING (235,327) - (474,698) 549,000
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INCOME (LOSS) BEFORE
INCOME TAXES (1,883,312) 475,224 (1,860,897) 1,028,229
INCOME TAXES
(RECOVERY) (518,829) 297,306 (615,370) 607,814
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NET INCOME (LOSS) (1,364,483) 177,918 (1,245,527) 420,415
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BASIC EARNINGS
(LOSS) PER SHARE $ (0.054) $ 0.009 $ (0.050) $ 0.022
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WEIGHTED AVERAGE
COMMON SHARES
ISSUED AND
OUTSTANDING 25,091,728 19,180,397 24,677,351 19,174,420
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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 armor 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 armor 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 wholly-owned subsidiary that services law enforcement and public safety agencies across the country. The Company, through its U.S. subsidiary Sentry Armor Systems Inc., provides body armor 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 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.

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
    (250) 491-0911 or Toll Free: 1-888-PSP-ARMR (1-888-777-2767)
    (250) 491-0930 (FAX)
    Email: dscott@pacsafety.com
    Website: www.pacsafety.com