Pacific Safety Products Inc.

Pacific Safety Products Inc.

November 28, 2007 17:00 ET

Pacific Safety Products Inc. Provides Fiscal 2008 Guidance

KELOWNA, BRITISH COLUMBIA--(Marketwire - Nov. 28, 2007) - Pacific Safety Products Inc. ("PSP" or "the Company") (TSX VENTURE:PSP) is in the midst of transforming itself from a limited product line manufacturer with economic dependence on the Canadian government to a diverse systems solutions provider, including value added technology to an array of international customers.

PSP management believes this strategy is the most rapid way to accelerate growth while assuring sustained recurring revenue. To enable this strategy, the Company will make significant investments in new product development and sales and marketing efforts in the U.S. and International markets. PSP will aggressively pursue opportunities in these sectors while continuing to grow its existing North American Law Enforcement market. PSP also plans to substantially increase the level of sales outside of Canada. As a result of these initiatives, management anticipates that revenue dependency on any one customer will again be reduced; from 60% in FY06 and 53% in FY07 to 40% in FY08.

In addition to these strategies, the Company will transition all Corporate head office functions to a new location in the Ottawa area. This positions the management team closer to our U.S. and Maritimes operations and our suppliers and customers.

The Company is mostly sheltered from the cost impacts of an appreciating Canadian dollar vs. the U.S. dollar as the majority of U.S. orders are fulfilled by its Dover TN. operations. However revenue from the U.S. when consolidated into Canadian dollars will be reduced based on current exchange rates.

Management anticipates the first half of FY2008 will be challenging as production start up on certain product lines has been delayed by supplier schedules and contract award dates. The Company will also recognize the majority of the costs associated with its Corporate Head Office transfer in the first half of the fiscal year. Accordingly, management expects the second half of FY2008 will see greater revenue and earnings compared to the first half. At this time there are a number of Company bids outstanding that could have a positive impact on FY08 results. As the timing and competitive nature of this business is unknown our outlook is based without taking these opportunities into account. Excluding these opportunities management believes revenues for FY08 will be in the range of $41M to $44M. Earnings before taxes and extraordinary expenses associated with PSP's move to Ottawa will be between $1.0M and $1.6M. The costs for moving PSP's Corporate offices to Ottawa is estimated to be between $0.5M and $ 0.7M.

Management will update or confirm this view at the end of each quarter or as significant events occur that may change this forecast.

PSP's guidance for fiscal 2008 is based on management's plan and makes assumptions as to certain events and the timing of these events. The reader should be aware of the risks associated with this plan. These include the normal set of business risks ranging from natural disasters to foreign exchange fluctuation to material supply chain delivery constraints. Wherever possible management has risk mitigation strategies to address these issues. There are also specific risks associated with the nature of our business. These include government funding for new business opportunities, competitive tendering processes, changes in government legislation or policy as it pertains to trade, taxes and credits, uncertainties with respect to technology development timing and success in product qualification.

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 and supplies its products to the Canadian Department of Defence, Federal Government Agencies and major law enforcement organizations 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
    Pacific Safety Products Inc.
    Jacques Bonaventure
    VP Corporate Development
    (613) 623-6001 x. 226