Armor Holdings, Inc.

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Armor Holdings, Inc.

13386 International Parkway
Jacksonville, Florida 32218
(904) 741-5400
(800) 654-9943
Fax: (904) 741-5403
Web site:

Public Company
Incorporated: 1969 as American Body Armor and Equipment, Inc.
Employees: 1,830
Sales: $97.2 million (1998)
Stock Exchanges: American
Ticker Symbol: ABE
SICs: 3999 Manufacturing Industries, Not Elsewhere Classified; 7381 Detective, Guard, & Armored Car Services

Prior to 1997 Armor Holdings, Inc. operated in one business segment, manufactured products, which included the development, manufacture, and distribution of ballistic protective equipment, less-than-lethal products, and narcotic identification and evidence equipment. Its customers included law enforcement agencies, local police departments, state police agencies, state correctional facilities, highway patrols, and sheriffs departments. The companys products were sold primarily through a network of independent distributors who served law enforcement communities.

With the acquisition of DSL Group Ltd., based in the United Kingdom, Armor Holdings entered the security services market and established its Integrated Security Services Division to complement its Manufactured Products Division. With operations in more than 20 countries, the Integrated Security Services Division became the worlds leading provider of specialized security services in high risk and hostile environments around the world. The core of the companys security services business is to create and implement solutions to complex security problems. It conducts detailed and targeted analyses of potential threats to security and assists in the secure design of facilities. It also provides highly qualified personnel with extensive international experience and conducts on-going training of security personnel. These experienced security personnel act as planners, trainers, managers, advisors, instructors, and liaison personnel. Other security services provided by the company include humanitarian mine clearance and ordnance disposal, maintenance of secure lines of communication, and high risk insurance services.

Armor Holdings is also a leading systems engineer for sophisticated electronic and computer-driven security and fire alarm systems. Its specialty is high-speed analog and digital transmission designs for life safety, communication, alarm, access control, television, and security systems. These systems have been installed in airports, banks, government buildings, hospitals, prisons, universities, and other locations.

1969 Origins

Armor Holdings was founded in 1969 as American Body Armor and Equipment, Inc. It was primarily a manufacturer of armored products such as ballistic resistant vests and tactical armor. In August 1985 the company was acquired by Unifast Industries, Inc., for $1.7 million. In March 1989 Unifast and American Body Armor and Equipment completed a public offering of common stock which reduced Unifasts ownership interest from 100 percent to 55.6 percent. Proceeds were used to reduce bank debt.

Bankruptcy and New Owners in the 1990s

In May 1992 the company filed for relief from its creditors under Chapter 11 of the U.S. Bankruptcy Code following a general decline in operations. The company had reported significant operating losses in 1989 and 1991. It also was unable to collect $1.5 million related to a shipment of vests to a customer in the Middle East in April 1991. In September 1993 the company emerged from Chapter 11 with a new reorganization plan. For the fourth quarter of 1993 the company reported revenue of $3 million and net income of $138,000. In 1994, its first full year of operations following bankruptcy protection, the company reported net income of $423,000 on revenue of $11.4 million. Results for 1995 were about the same, with net income improving to $520,000 on slightly higher revenue of $11.7 million.

In January 1996 the company underwent a change in control following the purchase by Kanders Florida Holdings, Inc. and other investors of all of the companys capital stock that was owned by Clark Schwebel, Inc. and Hexcel Corporation, who were both suppliers of raw material to the company. As a result of acquiring the stock of the companys two largest shareholders, Kanders owned approximately 66 percent of the company. A new name, Armor Holdings, Inc., was adopted on August 21, 1996.

With new ownership, Armor Holdings began pursuing a strategy of growth through acquisition of other businesses in the security industry. Its goal was to become the preeminent global provider of security products and services. It made six major acquisitions between January 1996 and March 1998, and in 1997 adopted a holding company structure and completed a public offering of four million shares of common stock. Two additional acquisitions were completed in 1998, and two more were pending.

NIK Public Safety Product Line was acquired in July 1996 for $2.4 million worth of stock. NIK assembled and distributed portable narcotic identification kits, which were used by law enforcement agencies to identify narcotic substances. NIK also distributed specimen collection kits, evidence collection kits, and tamper guard evidence tape.

Defense Technology Corporation of America was acquired in September 1996 for approximately $5.5 million in cash and stock and the assumption of certain liabilities. DTC manufactured less-than-lethal and anti-riot products, including pepper sprays, tear gas, distraction devices, flameless expulsion grenades, and specialty impact munitions. As a result of these acquisitions, Armor Holdings reported significantly higher revenue of $31 million in 1996, with net income of $689,000.

In April 1997 Armor Holdings moved to a new corporate headquarters in Jacksonville, Florida. In June a holding company structure was adopted. Operating assets were transferred to a subsidiary, and the company became a holding company. It owned directly or indirectly all of the outstanding capital stock of its subsidiary corporations and no longer conducted any manufacturing operations directly. In July Armor Holdings issued four million new shares of common stock and netted $38.1 million, which was used to repay the companys outstanding debt on its credit facility.

Acquisitions in the Mid-1990s

Supercraft (Europe) Ltd. was acquired in April 1997 for an initial purchase price of $2.6 million, less some $410,000 of future consideration that Armor Holdings was not required to pay. Supercraft was a European manufacturer of military apparel, high visibility garments, and ballistic resistant vests. Its clients were law enforcement and military agencies throughout Europe, the Middle East, and Asia.

DSL Group Ltd. was acquired in April 1997. Based in the United Kingdom, DSL was a leading provider of specialized security services in high risk and volatile environments. To finance the acquisition, Armor Holdings issued common stock valued at $10.9 million to be traded for the common stock of DSL, paid $7.5 million for DSLs preferred stock, and subsequently paid $6.9 million plus interest on DSLs outstanding credit facility.

The acquisition of DSL marked the companys entry into the security services market and resulted in the establishment of the companys Integrated Security Services Division to complement its Manufactured Products Division. DSL was originally established in 1981, and by 1997 it was operating in 20 countries. In 1997 it contributed $48 million in revenue to Armor Holdings.

Part of the DSL acquisition included a 50 percent interest in Gorandel Trading Ltd. In June 1997 Armor Holdings acquired the remaining 50 percent interest in Gorandel for $2.4 million in cash and stock. Gorandel provided specialized security services throughout Russia and Central Asia. For 1997 Armor Holdings reported significantly higher net revenues of $78.3 million. Net income jumped to $3.2 million.

Low Voltage Systems Technology, Inc. was acquired in January 1998 for about $750,000 in cash and stock and $200,000 in assumed debt. It was a leading systems engineer specializing in sophisticated electronic and computer-driven security and fire alarm systems.

Asmara Ltd. of London, England, was also acquired in early 1998. The company specialized in business intelligence services, including commercial due diligence and intelligence, asset tracing, litigation support, and other investigative work.

Armor Holdings completed its acquisition of Federal Laboratories, a division of Mace Security International, Inc., in July 1998 for a purchase price of $4.6 million in cash and an additional $600,000 held in escrow. The acquisition included the law enforcement division of Mace Security International, Inc., including the Federal Laboratories Division, and the right to use the MACE trademark in the law enforcement market.

Company Perspectives:

Armor is a leading provider of effective security solutions to the increasing level of security threats encountered by domestic and foreign law enforcement personnel, governmental agencies and multi-national corporations. These solutions include a broad range of high quality branded manufactured products such as ballistic resistant vests and tactical armor, bomb disposal equipment, less-than-lethal munitions and anti-riot products and sophisticated security planning, advisory and management services, including the provision of highly trained, multi-lingual and experienced security personnel in violent and unstable areas of the world.

In May 1998 Armor Holdings announced that it intended to acquire Pro-tech Armored Products for $1.6 million. Pro-tech specialized in manufacturing hard armor products and added substantial engineering talent to Armor Holdings hard armor production.

CDR International Ltd. was acquired in June 1998. CDRs specialty was intangible asset protection, including intellectual property management and protection. It had offices in London, Los Angeles, Charlotte (North Carolina), and Moscow.

Alarm Protection Services, Inc., located in Kampala, Uganda, was acquired in July 1998. Armor Holdings had managed APS through DSL Group Ltd. since 1996. APS had about 900 employees and annual revenues of approximately $2.5 million.

In December 1998 Armor Holdings signed a letter of intent to acquire The Parvus Company, a consulting firm based in Washington, D.C., that specialized in international investigations, corporate intelligence, and security services. The Parvus Company was founded in 1984 by Gerard P. Burke, who had held several senior positions in the National Security Agency and had served as President Nixons executive director of the Presidents Foreign Intelligence Advisory Board.

As Armor Holdings acquired companies, they became business units in one of the companys two divisions, the Manufactured Products Division or the Integrated Security Services Division. Business units in the Manufactured Products Division included American Body Armor, NIK Public Safety, Defense Technology, Supercraft, Pro-Tech Armored Products, and Federal Laboratories.

Armor products manufactured under the brand name American Body Armor included ballistic resistant vests, sharp instrument penetration armor, and bomb protective gear. The company also marketed a broad range of other personal armor products.

Under the trademark First Defense the company manufactured pepper sprays and a wide range of specialty impact munitions that could be used against either individuals or in crowd control situations. These manufactured products were generally available for use only by authorized public safety agencies.

Armor Holdings also assembled and marketed portable narcotic identification kits under the NIK brand name as well as evidence collection kits and evidence tape. It was also the exclusive distributor of Flex-Cut and Key-Cuff disposable restraints.

The Manufactured Products Division contributed net revenues of $30 million during 1997, a 66 percent increase over 1996. Approximately three-fourths of the companys manufactured products were sold in the United States during 1997.

The companys second division, its Integrated Security Services Division, was a provider of specialized security services in high risk and hostile environments around the world. It was established in the second quarter of 1997 following the acquisition of DSL Group Ltd. The division also included Low Voltage Systems, Asmara Ltd., and the pending acquisition of CDR International.

Approximately 38 percent of Armor Holdings security business in 1997 involved multinational petrochemical companies, and 11 percent was accounted for by mining and construction companies. The companys security clients typically had significant investments in remote and hostile areas of the world. Other significant clients included the United Nations, governmental embassies, projects funded by the World Bank and the European Commission, and a variety of other organizations and companies engaged in international trade and commerce.

Future Expectations

Armor Holdings planned to continue to identify acquisition targets in areas that complemented its existing businesses in the security market. Its strategy was to expand its product line and increase its geographical diversity. It was hoped that growth through acquisitions would result in better gross margins and more efficiencies from consolidating administrative overhead. These measures would also improve the companys access to capital in the coming years.

Principal Subsidiaries

Armor Holdings Properties, Inc.; American Body Armor and Equipment, Inc.; Armor Holdings Ltd. (U.K.); Defense Technology Corporation of America; NIK Public Safety, Inc.; Defense Technology Europe Ltd. (U.K.); Supercraft (Europe) Ltd. (U.K.); Pro-Tech Armored Products; DSL Holdings Ltd. (U.K.); Defense Systems Colombia S.A.; U.S. Defense Systems, Inc.; USDS Congo SPRL (Democratic Republic of Congo); Gorandel Trading Ltd. (Russia); Defense Systems Eurasia Ltd. (Kazakhstan); Defensetse Systems Ecuador USDSE SA; Defence Systems Eurasia Ltd. (Ukraine); Low Voltage Systems Technology, Inc.; Asmara Ltd. (U.K.); Armor Holdings Venezuela S.A.; Defence Systems (South Africa) Pty Ltd.; Defence Systems France SA; Defence Systems (Jersey) Ltd.; DSL Security (PNG) Pty Ltd. (Papua New Guinea); DSL Security (Asia) Pte Ltd. (Singapore); Jardine Securicor Gurkha Services Ltd. (Hong Kong); Maximum Security Indochina Ltd. (Hong Kong).

Principal Divisions

Integrated Security Services; Manufactured Products Division.

Further Reading

Armor Holdings, Inc. Signs Letter of Intent to Acquire the Parvus Company, PR Newswire, December 2, 1998.

Armor Increases Corporate Holdings, Florida (Jacksonville) Times-Union, February 25, 1999.

Barker-Benfield, Simon, Armor Holdings Executive Has Plenty to Worry About, Florida (Jacksonville) Times-Union, October 20, 1997.

Snite, Eleanor, Armor Grows with Purchase of Mace, Pro-Tech, Jacksonville Business Journal, April 10, 1998.

Thompson, Brian L., Armor Holdings Acquires Two Companies for $4 Million, Jacksonville Business Journal, January 30, 1998.

David Bianco