Force Protection reports 54 percent drop in profit

Sep 16, 2008 (The State - McClatchy-Tribune News Service via COMTEX) -- FRPT | Quote | Chart | News | PowerRating -- Sep. 16--Force Protection reported a $7.7 million profit for 2007, a 54 percent drop from 2006, according to its long overdue annual report, released Monday.

The Ladson-based company said its profits dropped as it geared up to make more armored vehicles for the U.S. military.

Force Protection said its 2007 sales were $890.7 million, a 354 percent increase over 2006.

The company's stock fell 39 cents a share Monday, a drop of 10.6 percent on a day when stock markets were down.

The company filed its 2007 annual report Monday afternoon, barely meeting a deadline imposed by the Nasdaq stock exchange. The company faced being delisted if it did not file its report, originally due last spring.

"We're just happy to have it filed," said company spokesman Tommy Pruitt. "We want to move ahead."

The company delayed filing its annual report with the Securities and Exchange Commission after accounting problems surfaced. The company also had to restate its earnings for the first, second and third quarters of 2007.

Force Protection still has not filed its first two quarterly reports for 2008. But company officials say those will be completed by Sept. 30. Chief executive officer Michael Moody plans to hold a conference call Sept. 30 to discuss his company's finances with investors.

The company is trying to rebound from a string of bad news in recent months. It went from being the state's fastest-growing publicly traded company to one struggling with increased competition, a management shake-up, lawsuits and accounting issues.

Force Protection blamed its smaller 2007 profits on several factors, including having to pay income taxes for the first time -- after it recorded its first profit in 2006 -- and investing more in research and development.

The company also saw a $56.8 million increase in its expenses as it expanded to put out more vehicles and keep up with new competitors in the armored-vehicle market.

"It was everything that went into running the business on a day-to-day standpoint," Pruitt said. "We spent a lot more to run the business and to do the ramp-up we went through in 2007."

For example, the company invested $31 million to buy a building in Roxboro, N.C., that went unused. The building was intended as a manufacturing site for Cheetah vehicles, but the company has not sold any of those trucks to the military.

During 2007, the company also surpassed the 1,000-employee benchmark that pushes it into a "large business" classification by the federal government. That means the company must adhere to new Defense Department accounting rules, the annual report said.

Force Protection said it made 1,657 vehicles in 2007, up from 285 in 2006.

The company has a backlog of 763 vehicle orders, which should carry it through early 2009, Pruitt said.

The Pentagon recently asked the company to build five test vehicles. The test vehicles would be lighter and more mobile than the trucks Force Protection currently makes.

The military is looking for a vehicle that is capable of driving through rugged terrain in Afghanistan while surviving ambushes and roadside bomb attacks.

"The Cheetah fits that category, but we also have a lighter version of the Cougar," Pruitt said.

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