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Armor Holdings, Inc.: Settlement on Suit over Zylon

Discussion in 'General Gun Discussions' started by Chipperman, Aug 24, 2004.

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  1. Chipperman

    Chipperman Member

    Dec 25, 2002
    Essex Co, MA
    Armor Holdings, Inc. Reaches Settlement Agreement on Class Action Suit

    American Body Armor Announces Warranty Revision and Product Exchange Program

    One Bullet Resistant Vest Model Using Zylon(R) to Be Affected
    Company Reiterates Full-Year Guidance of $2.05 to $2.15

    JACKSONVILLE, Fla., Aug. 12 /PRNewswire-FirstCall/ -- Armor Holdings,
    Inc. (NYSE: AH), a leading manufacturer and distributor of security products and vehicle armor systems, today announced that following extensive testing and analysis, it is revising its warranty and offering product replacement to its customers for one of its models of bullet resistant vests that uses Zylon(R). The company has reduced the warranty period from 60 months to 30 months for its ABA Xtreme ZX(R) vest (Level II and Level IIIA), effective immediately. In addition, an exchange program has been implemented that, among other things, enables ZX vest owners to select either a new vest of the same model, or any other vest in the American Body Armor(TM), PROTECH(TM), or Safariland(R) product lines at no cost to the owner. ZX vests that have been in service more than 30 months will be replaced first; other exchanges will be made on a rolling basis from the earliest shipped date to the most recent. Based on current testing, vests that incorporate Zylon(R), other than the ABA Xtreme ZX(R) model, will retain their original warranty.

    The Company also announced today that it has reached a settlement agreement with respect to a class action lawsuit filed against it by the Southern States Police Benevolent Association (Southern States PBA) in April 2004 because of concerns regarding the performance of Zylon(R) vests. All of the potential class members in the only other Zylon(R)-related class action lawsuit filed against the Company by National Association of Police Organizations, Inc. (NAPO), in Lee County, Florida, are also among the class members in the Southern States PBA case and are therefore covered by the terms of the settlement. Accordingly, the Company believes that the NAPO lawsuit should be dismissed and will take action to seek dismissal of that action.

    The Company currently believes that its share of the total costs associated with the above settlement and product exchange program will be non- recurring and not meaningful in the context of the Company's balance sheet or its business operations as a whole. Further, the Company continues to be comfortable with its guidance for full-year earnings per share of $2.05 to $2.15, now inclusive of these costs.

    Robert Schiller, President and Chief Operating Officer of Armor
    Holdings, Inc. said, "Along with our suppliers, we have an overarching
    commitment to provide the best safety products possible to the
    law-enforcement community. In keeping with that mission, although we
    have not seen any failures in the field, we are immediately reducing the
    warranty period of one of our models of bullet-resistant vests. Testing
    of these vests began in 2003 and was conducted both by the Company and
    by a leading independent product-testing laboratory. More than 40
    law-enforcement agencies participated in and witnessed the tests of the
    vests they submitted for evaluation. In our opinion, the results
    indicate that the ZX model of vests should include a warranty shorter
    than the previous 60-month period. In addition to being the most
    responsible course of action we can take, we are pleased that our
    warranty revision and product replacement plan are also satisfactory to
    the Southern States PBA and other plaintiffs who have agreed to settle
    their lawsuit. We share and respect the commitment to the safety of the
    law- enforcement community that prompted their actions and their
    willingness to work with us to come to a timely and reasonable

    Mr. Schiller continued, "It is important to note that our testing
    program for all of the bullet-resistant vests that we manufacture,
    VestCheck(TM), will be an ongoing focus for Armor Holdings. We are
    committed to working with the National Institute of Justice (NIJ), the
    law enforcement community, and other important industry participants to
    reach a better understanding of, and standards for, the performance of
    used vests. While all of the vests we manufacture meet the rigorous
    testing standards set by the NIJ before being put into service, the lack
    of similar standardized performance standards for used vests is an issue
    that we are committed to addressing."

    Mr. Schiller concluded, "We understand the responsibilities that come
    with our leadership position in this industry. As leaders, we believe
    that the actions we have announced today demonstrate the intense loyalty
    and commitment we have to the law-enforcement community. In addition, it
    is our hope and intention that these recent issues and our response to
    them will act both as an example for other companies that serve this
    market and as a catalyst for innovation. We believe it's imperative that
    our customers in the law- enforcement community have a high degree of
    confidence in the safety of this life saving piece of equipment."
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