Safety Products Holdings, Inc. and Norcross Safety Products L.L.C. Announce Third Quarter 2006 Results.

OAK BROOK, Ill. -- Safety Products Holdings, Inc. ("Holdings") and Norcross Safety Products L.L.C. ("NSP" and collectively with Holdings, the "Company"), today announced results for the third quarter ended September 30, 2006. The following discussion presents results for both NSP and the Company where the results between the two differ.

For the third quarter 2006, net sales of the Company were $141.9 million compared to $118.6 million in the third quarter 2005. Income (loss) from operations was $13.8 million and $(8.2) million for NSP and $13.6 million and $(11.1) million for the Company for the three months ended September 30, 2006 and October 1, 2005, respectively. Adjusted earnings before interest, taxes, depreciation, and amortization ("Adjusted EBITDA") increased to $21.1 million from $16.9 million in the third quarter of 2005 for NSP, and increased to $20.9 million from $16.9 million in the third quarter of 2005 for the Company, which represented an increase of 24.8% and 23.9%, respectively.

The Company's net sales increase of $23.3 million, or 19.6%, was attributable to increased net sales in each of our three operating segments. In our general safety and preparedness segment, the net sales increase of $17.1 million, or 21.0%, reflects a combination of incremental net sales resulting from the acquisition of The Fibre-Metal Products Company ("Fibre-Metal"), overall organic growth in our domestic and international operations and favorable exchange rates. In our fire service segment, net sales increased $0.5 million, or 2.0%, as incremental net sales resulting from the acquisition of American Firewear, Inc. ("American Firewear") were partially offset by postponed customer orders due in part to the combined impact of government grant holdups and a delay in the issuance of the new NFPA standard. In our electrical safety segment, net sales increased $5.7 million, or 36.5%, primarily driven by strong overall market demand, new product penetration and incremental net sales resulting from the acquisition of The White Rubber Corporation ("White Rubber").

The Company's gross profit increased by $13.0 million, or 34.5%, in the third quarter of 2006, primarily due to the increase in net sales. Excluding the impact of $3.0 million of lower purchase accounting adjustments, gross profit increased $10.0 million, or 24.6%. Excluding these same adjustments, the Company's gross profit margin of 36.0% in the third quarter of 2006 compared favorably to the 34.6% gross profit margin in the prior-year quarter.

In the third quarter 2006, income from operations increased $22.0 million for NSP and $24.7 million for the Company. Key variances for the Company and NSP for the third quarter 2006 relative to the third quarter 2005 include: (1) lower inventory purchase accounting adjustments of $3.0 million, (2) lower amortization expense related to purchase accounting of $1.7 million and (3) lower management incentive compensation of $13.3 million and $16.1 million, respectively. Excluding these charges from both periods, income from operations increased $4.0 million, or 29.9% for NSP and $3.9 million, or 28.7% for the Company. In our general safety and preparedness segment (after adjusting for lower charges related to purchase accounting of $2.8 million), income from operations increased by $4.0 million, or 50.2%, primarily due to higher net sales volume and favorable margin realization. In our fire service segment (after adjusting for lower charges related to purchase accounting of $1.8 million), income from operations decreased by $1.2 million, or 31.6%, primarily due to lower margin realization. In our electrical safety segment (after adjusting for lower charges related to purchase accounting of $0.1 million), income from operations increased by $1.4 million, or 40.4%, primarily due to higher net sales. Excluding the impact of the management incentive compensation expense, our corporate expenses increased by $0.2 million for NSP and $0.3 million for the Company, primarily due to higher payroll and administrative expenses during the three months ended September 30, 2006.

For the first nine months of 2006, net sales of the Company were $420.0 million compared to $356.7 million in the first nine months of 2005. Income from operations was $46.2 million and $23.4 million for NSP and $46.0 million and $20.4 million for the Company for the nine months ended September 30, 2006 and October 1, 2005, respectively. Adjusted EBITDA increased to $67.8 million from $53.2 million for the first nine months of 2005 for NSP, and increased to $67.5 million from $52.9 million for the first nine months of 2005 for the Company, which represented an increase of 27.3% and 27.5%, respectively.

The Company's net sales increase of $63.3 million, or 17.8%, was attributable to increased net sales in each of our three operating segments. In our general safety and preparedness segment, the net sales increase of $47.6 million, or 19.4%, reflects a combination of incremental Fibre-Metal net sales, overall organic growth in our domestic and international operations and favorable exchange rates. In our fire service segment, net sales increased $1.6 million, or 2.4%, as incremental American Firewear net sales were partially offset by postponed customer orders due in part to the combined impact of government grant holdups and a delay in the issuance of the new NFPA standard. In our electrical safety segment, net sales increased $14.1 million, or 31.4%, primarily driven by strong overall market demand, new product penetration and incremental White Rubber net sales.

The Company's gross profit increased by $30.6 million, or 24.2%, primarily due to the increase in net sales. Excluding the impact of $2.2 million of lower inventory purchase accounting adjustments, gross profit increased by $28.4 million, or 21.9%. Excluding these same adjustments, the Company's gross profit margin of 37.7% for the first nine months of 2006 compared favorably to the 36.5% gross profit margin in the prior-year period.

In the first nine months of 2006, income from operations increased by $22.8 million, or 97.6% for NSP and $25.6 million, or 126.5% for the Company. Key variances for the Company and NSP for the first nine months of 2006 relative to the first nine months of 2005 include: (1) lower inventory purchase accounting charges of $2.2 million; (2) higher amortization expense of $3.5 million related to purchase accounting; and (3) lower management incentive compensation charges of $12.3 million, and $15.1 million for NSP and the Company, respectively. Excluding these charges from both periods, income from operations increased by $11.8 million, or 26.3% for NSP and $11.8 million, or 26.5% for the Company. In our general safety and preparedness segment (after adjusting for incremental charges related to purchase accounting of $0.5 million), income from operations increased by $11.8 million, or 44.9%, primarily due to higher net sales volume and favorable margin realization. In our fire service segment (after adjusting for incremental charges related to purchase accounting of $0.2 million), income from operations decreased by $2.6 million, or 22.0%, as higher net sales were offset by lower margin realization and higher general and administrative expenses. In our electrical safety segment (after adjusting for incremental charges related to purchase accounting of $0.6 million), income from operations increased by $3.4 million, or 30.5%, primarily due to higher net sales. Excluding the impact of the management incentive compensation expense, our corporate expenses increased $0.8 million for NSP and the Company, primarily due to higher payroll and administrative expenses during the nine months ended September 30, 2006.

In September 2006, the Company completed the acquisition of all of the issued and outstanding capital stock of The New England Overshoe Company, Inc. ("NEOS"). The purchase price of $4.4 million (including acquisition costs of $0.1 million and net of cash acquired) was financed through cash on the balance sheet and the issuance of a $0.8 million subordinated seller note.

As of September 30, 2006, NSP and the Company had working capital of $145.2 million and $153.2 million and cash of $11.9 million and $12.5 million, respectively. The Company's capital expenditures were $7.7 million in the first nine months of 2006 and $5.7 million in the first nine months of 2005.

The following table reconciles net (loss) income to EBITDA and Adjusted EBITDA for NSP:

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The following table reconciles net (loss) income to EBITDA and Adjusted EBITDA for the Company:

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We are a leading designer, manufacturer and marketer of branded products in the fragmented personal protection equipment industry. We manufacture and market a full line of personal protection equipment for workers in the general safety and preparedness, fire service and electrical safety industries. We sell our products under trusted, long-standing and well-recognized brand names, including North, KCL, Fibre-Metal, NEOS, Morning Pride, Ranger, Servus, Pro-Warrington, American Firewear, Salisbury and Safety Line. Our broad product offering includes, among other things, respiratory protection, protective footwear, hand protection, bunker gear and linemen equipment.

We have scheduled a conference call to discuss our financial results on Tuesday , November 14th at 10:00 a.m. EST. The call in number is [phone]. A recording of the conference call will be available for 72 hours after the completion of the call. The recording can be accessed by dialing [phone] and entering reservation number 21309459.

This press release contains forward-looking information. These statements reflect management's expectations, estimates, and assumptions based on information available at the time of the statement. Forward-looking statements include, but are not limited to, statements regarding future events, plans, goals, objectives, and expectations. The words ''anticipate,'' ''believe,'' ''estimate,'' ''expect,'' ''plan,'' ''intent,'' ''likely,'' ''will,'' ''should,'' and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and other factors, including those set forth below, which may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by those statements. Important factors that could cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by those statements include, but are not limited to: (i) our high degree of leverage and significant debt service obligations; (ii) the impact of current and future laws and governmental regulations affecting us or our product offerings; (iii) the impact of governmental spending; (iv) our ability to retain existing customers, maintain key supplier status with those customers with which we have achieved such status, and obtain new customers; (v) the highly competitive nature of the personal protection equipment industry; (vi) any future changes in management; (vii) acceptance by consumers of new products we develop or acquire; (viii) the importance and costs of product innovation; (ix) unforeseen problems associated with international sales, including gains and losses from foreign currency exchange and restrictions on the efficient repatriation of earnings; (x) the unpredictability of patent protection and other intellectual property issues; (xi) cancellation of current orders; (xii) the outcome of pending product liability claims and the availability of indemnification for those claims; (xiii) general risks associated with the personal protection equipment industry; and (xiv) the successful integration of acquired companies on economically acceptable terms. We undertake no obligation to publicly update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, or changes to future results over time.

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