EXHIBIT 99.1
DHB INDUSTRIES ANNOUNCES THIRD QUARTER RESULTS
- RECORD THIRD QUARTER REVENUES REACH $90.26 MILLION -
- $26.6 MILLION IN POSITIVE CASH FLOW FOR THE NINE MONTHS -
- DHB ANNOUNCES $9 MILLION STOCK REPURCHASE PROGRAM -
- BACKLOG STANDS AT APPROXIMATELY$226 MILLION -
WESTBURY, NY - November 3, 2005 - DHB Industries Inc. (AMEX: DHB), which
principally operates in the field of body armor, announced today record revenues
for the third quarter ended September 30, 2005, posting its 23rd consecutive
year-over-year increase in quarterly revenues. The current backlog of contract
values and delivery orders is approximately $226 million.
For the third quarter ended September 30, 2005, DHB achieved its highest
quarterly revenue in its history, $90,263,000 as compared to revenues of
$89,410,000 for the third quarter of 2004. Gross margins for the third quarter
of 2005 were 27.3% versus 27.8% in the third quarter of 2004.
Included in selling, general and administrative expenses was a non-cash
compensation expense of $11,295,000 associated with the vested warrants issued
to the Company's Chief Executive Officer (CEO)/Chairman pursuant to the
extension of his 2000 employment agreement. Also, increasing selling, general
and administrative expenses was an $800,000 increase in professional and
consulting fees as a result of the Zylon(R) replacement program and a $547,000
increase in research and development expenses, as a result of the opening of a
new state of the art ballistic lab in our Pompano Beach, Florida facility. The
cost of the vest replacement program is a separate line item under selling,
general and administrative expenses, for a total pre-tax charge of $60,000,000,
or ($0.76) per diluted share after tax charge, as a result of the Company's
voluntary Zylon(R) vest replacement program announced in August 2005. The
composition of this charge is as follows: a $36,700,000 reserve for vests
containing Zylon(R), the write-off of approximately $19,200,000 in Zylon(R)
inventory, and a $4,000,000 increase in the accounts receivable allowance.
Third quarter 2005 loss available to common stockholders was $41,741,000 or
($0.92) per diluted share, as compared to income available to common
stockholders of $0.18 per diluted share, or $8,058,000, in the third quarter of
2004. Weighted shares outstanding on a diluted basis for the third quarter 2005
were 45,312,536 as compared to 45,962,109 for the third quarter of 2004. For the
nine months ended September 30, 2005, DHB reported record revenues of
$263,924,000, an increase of 5.6% as compared to revenues of $249,879,000 for
the first nine months of 2004. Gross margins for the first nine months of 2005
were 27.3% versus 27.8% in the first nine months of 2004.
Driven primarily by the increase in selling, general and administrative
expenses, (non-cash stock compensation, professional fees and research and
development costs) and by the $60 million Zylon(R) charge operating income for
the nine months ended September 30,2 005 decreased to a loss of approximately
$35.6 million versus income of approximately $37.1 million for the nine months
ended September 30, 2004.
DHB REPORTS RECORD THIRD QUARTER RESULTS
PAGE 2 OF 5
Loss available to common stockholders for the nine months ended September 30,
2005 was $26,254,000 or ($0.59) per diluted share as compared to income
available to common stockholders of $21,897,000 or $0.49 per diluted share in
comparable period last year. Weighted shares outstanding on a diluted basis for
the first nine months of 2005 were 45,302,437 as compared to 45,614,473 for the
first nine months of 2004.
For the nine months ended September 30, 2005 DHB generated $26,616,000 of cash
from operations versus cash used in operations of $10,804,000 for the comparable
nine month period of 2004. Utilizing the positive cashflow, the Company was able
to eliminate the revolving credit loan balance as of September 2005. In
addition, the Company had excess cash in the bank of $5,488,000 at September 30,
2005. On November 1, 2005, the Company amended its Credit Agreement which allows
the Company to purchase in the open market up to three million shares of the
Company's common stock so long as the treasury shares buyback shall not exceed
nine million dollars funded through the revolving credit facility. The interest
rate on the term loan was reduced from LIBOR plus 2.25%, to LIBOR plus 1.75%.
The bank also authorized the repurchase of the Company's convertible preferred
shares on December 15, 2005.
Commenting on the third quarter financials, Dawn Schlegel, CFO, stated, "I
believe the Company has achieved some important financial milestones during
2005, as we have been able to generate cash, eliminate the majority of our debt
and have excess cash in the bank for the first time in the Company's history."
She continued, "The Company's financial standing is strong. As of September 30,
2005, our debt-to-equity stood at .25 compared to .47 at December 31, 2004. Our
long term liabilities have dropped from approximately $33.2 million at December
31, 2004 to only approximately $8.15 million at September 30, 2005. Also during
this quarter we have been able to reduce the accounts receivable days
outstanding to 32 days from 58 days at the end of 2004. Our strong financial
position, and was reiterated by our bank, LaSalle, who recently agreed to lower
the interest rate on our term loan and allow the Company to repurchase up to $9
million of its stock in the open market."
CONFERENCE CALL:
DHB will discuss its results during a conference call today to
be broadcast live over the Internet starting at 4:30 p.m. eastern standard time.
Conference call particulars are as follows:
o Date: Thursday, November 3, 2005
o Time: 4:30 p.m. eastern standard time / 1:30 p.m. pacific standard
time
o Dial-in Number: Toll Free - (866) 362-4666 International - (617)
213-8894
o Participant Passcode 66045581
o Live Internet broadcast and replay can be accessed at
http//www.dhbindustries.com
DHB REPORTS RECORD THIRD QUARTER RESULTS
PAGE 3 OF 5
Those choosing to listen via the telephone are encouraged to call in at least
ten minutes prior to the start of the call to allow time to register with the
operator. The Question and Answer section of the conference call will be limited
to analysts and institutional investors who called the Company by 4:00 by
eastern standard time on Tuesday, November 1, 2005 to receive an access code.
ABOUT DHB INDUSTRIES INC.
DHB Industries Inc.'s Armor Group is in the growing protective body armor
industry. Its highly recognized subsidiaries, Point Blank Body Armor Inc.
(HTTP://WWW.POINTBLANKARMOR.COM) and Protective Apparel Corporation of America
(PACA) (HTTP://WWW.PACABODYARMOR.COM) are focused on the design, manufacture,
and distribution of bullet resistant and protective body armor for military, law
enforcement, and corrections in the U.S. and worldwide. DHB Armor Group's
customers include the U.S. Army, Air Force, Navy, Marines, Coast Guard, Secret
Service, FBI, DEA, INS, ATF, NATO, U.S. Marshals, the NYC Police Department, the
LA Police Department and the California Highway Patrol.
DHB Sports Group produces and markets a comprehensive line of athletic supports
and braces which are merchandised through national superstore chains including
Wal-Mart, Walgreen's and Kerr Drugs as well as private label distributors such
as Meijer, Amerisource, Cardinal Health, and Chain Drug Marketing Association
(CDMA).
DHB maintains facilities in Westbury, NY, Deerfield Beach, FL, Pompano Beach,
FL, Oakland Park, FL, Jacksboro, TN and Arlington, VA. To learn more about DHB
Industries Inc., visit the website at HTTP://WWW.DHBINDUSTRIES.COM.
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, THOSE DISCUSSED
IN OUR REPORTS ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION. YOU ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS THAT
SPEAK ONLY AS OF THE DATE HEREOF. WE UNDERTAKE 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.
*** STATEMENT OF OPERATIONS AND BALANCE SHEET TO FOLLOW ***
PAGE 4 OF 5
DHB INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except share and per share data)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
------- ------- -------- --------
Net sales $90,263 $89,410 $263,924 $249,879
Cost of goods sold (includes related party purchases of
$1,999, $6,290, $13,873, and $20,799, respectively) 65, 615 64,537 191,859 180,361
------- ------- -------- --------
(i)
Gross profit 24,648 24,873 72,065 69,518
Selling, general and administrative expenses 25,445 11,591 47,649 32,353
Cost of vest replacement program 60,000 -- 60,000 --
------- ------- -------- --------
Income (loss) before other income (expense) (60,797) 13,282 (35,584) 37,165
------- ------- -------- --------
Other income (expense)
Interest expense (525) (389) (1,714) (1,047)
Other income (loss) 6 41 33 55
------- ------- -------- --------
Total other income (expense) (519) (348) (1,681) (992)
------- ------- -------- --------
Income(loss) before income taxes and minority interest (61,316) 12,934 (37,265) 36,173
Income taxes (benefit) expense (19,407) 4,728 (10,877) 13,850
------- ------- -------- --------
Income (loss) before minority interest of subsidiary (41,909) 8,206 (26,388) 22,323
Minority interest of subsidiary 258 (58) 134 (156)
------- ------- -------- --------
Net (loss) income (41,651) 8,148 (26,254) 22,167
Dividend - convertible preferred stock (90) (90) (270) (270)
------- ------- -------- --------
Income (loss) available to common stockholders $(41,741) $8,058 $(26,524) $21,897
========= ====== ========= =======
Earnings per common share:
Basic $(0.92) $0.20 $(0.59) $0.54
======= ===== ======= =====
Diluted $(0.92) $0.18 $(0.59) $0.49
======= ===== ======= =====
Weighted average shares outstanding:
Basic shares 45,312,536 40,891,896 45,302,437 40,814,675
Effect of convertible preferred stock -- 500,000 -- 500,000
Warrants 4,570,213 4,299,798
---------- ---------- ---------- ----------
-- --
Diluted shares 45,312,536 45,962,109 45,302,437 45,614,473
========== ========== ========== ==========
*** Balance Sheet to Follow ***
PAGE 5 OF 5
DHB INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
Sept 30,
2005 December 31,
----
ASSETS (UNAUDITED) 2004
----------- ----
Current assets
Cash and cash equivalents $5,488 $447
Accounts receivable, less allowance for doubtful accounts of
$762 and $702, respectively 30,953 47,560
Accounts receivable - related party 6,583
Inventories 75,944 85,973
Deferred income tax assets 23,231 483
Prepaid expenses and other current assets 2,453 1,220
------- -------
Total current assets 138,069 142,266
------- -------
Property and equipment, net 2,370 2,632
------- -------
Other assets
Deferred income tax assets 1,092 593
Deposits and other assets 638 366
------- -------
Total other assets 1,730 959
------- -------
Total assets $142,169 $145,857
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of term loan payable $8,000 $4,000
Warranty Payable 36,730 --
Obligation to repurchase convertible preferred stock 3,000 --
Accounts payable 7,462 8,014
Accrued expenses and other current liabilities 10,395 8,350
Income taxes payable 8,783 14,816
------- -------
Total current liabilities 74,370 35,180
------- -------
Long-term liabilities
Notes payable-bank -- 25,634
Term loan payable 7,000 6,500
Other liabilities 1,149 1,086
------- -------
Total liabilities 82,519 68,400
------ ------
Commitments and contingencies
Minority interest in consolidated subsidiary 297 431
Stockholders' equity
Convertible preferred stock, $0.001 par value, 5,000,000 shares - 1
authorized, 500,000 shares of Series A, 12% convertible preferred
stock issued and outstanding; liquidation preference $3,000
Common stock, $0.001 par value, 100,000,000 shares 45 45
authorized, 45,337,575 and 45,282,536 issued and outstanding
Additional paid in capital 72,629 35,540
Deferred compensation (28,237) --
Retained earnings 14,916 41,440
------- -------
Total stockholders' equity 59,353 77,026
------- -------
Total liabilities and stockholders' equity $142,169 $145,857
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