Earnings dip significant

'07 financial reports will be restated

Force Protection Inc. has expanded its re-evaluation of its past financial reports and now believes that when it eventually reports its earnings for 2007, the figure will be "significantly lower" than the profit it reported in 2006. In addition, the company said its accounting problems have not yet been solved.

The Ladson-based maker of armored military vehicles said late Thursday it has determined that it must restate its previous financial statements for the first and second quarters of 2007 and that the reports it previously issued for those periods "should not be relied upon."

In written remarks, the company said those statements contained accounting errors, "including errors associated with recognizing the value of revenue, certain accrued liabilities, inventory and deferred taxes in the proper quarterly periods."

Force Protection faces delisting of its shares from the Nasdaq unless it meets a Sept. 15 deadline to file its delayed financial report for the full 2007 fiscal year. The company said it intends to file that report "on or before" that date, and that it will include a figure of about $890 million in net sales, well above the $196 million it reported in 2006.

However, "the company expects that 2007 net income will be significantly lower than the $16.6 million" it reported the previous year. Force Protection first disclosed in March that its internal accounting controls were "ineffective."

This week the company said that "management does not think that the material weaknesses" in its accounting "will be remediated by Sept. 30" and that when it files its financial reports for the first three quarters of this year, they also will contain "material weaknesses."

Force Protection's stock closed Friday at $3.98, down 26 cents, or 6.1 percent. The shares hit a closing high of $30.27 in May 2007 and then declined as competitors overtook it in winning orders from the Pentagon.

Following that disclosure, at least 10 lawsuits were filed by Force Protection investors in U.S. District Court in Charleston against the company and some of its current and former executives, claiming they misled shareholders and breached their duty to them by not maintaining adequate accounting controls. The plaintiffs in those lawsuits are seeking class-action status.

The company and executives have denied the plaintiffs' allegations and the cases are still in litigation.