Aug 24 2004
Ceradyne, Inc. announced the receipt of a new 36-month Indefinite Delivery/Indefinite Quantity (ID/IQ) government contract for lightweight ceramic body armour with a maximum value of approximately $461 million. The Company also received an initial delivery order under this contract for over $28 million to be shipped during the first two months of 2005. The contract was awarded to Ceradyne by the U.S. Army Unique Missions Division, Aberdeen Proving Ground, Maryland.
Joel Moskowitz, Ceradyne chief executive officer, commented: "We expect to receive additional delivery orders on this contract later this year for delivery in 2005, and at the projected monthly shipment rate, we are forecasting shipments of more than $168 million from this contract in 2005. Should our expectations be met, we would have revenue visibility for body armour for the next few years, and this new multi-year contract would then become the largest of any kind received by Ceradyne to date.
"We believe that the Company's capital investments to increase its hot press armour capacity earlier this year in Costa Mesa, California and its new Lexington, Kentucky factory will allow us to meet and exceed the government's requirements.
"Furthermore, Ceradyne's pending closure of the acquisition of the German ceramic company, ESK, assures us a supply of the finest boron carbide powders, which are the starting materials for Ceradyne's armour system technology. The Company has been producing similar ceramic body armour components that are generally described as Small Arms Protective Inserts (SAPI) for the past three years. We continue to believe that Ceradyne's SAPI, which uses the lightweight/hard boron carbide ceramic strike face, can defeat bullets that exceed the current specification."
Moskowitz also noted: "Under an ID/IQ government type contract, the government is obligated to purchase only certain minimum quantities. Each delivery order, such as the initial Ceradyne $28 million order, is issued as a release against a maximum amount, which for this contract is $461 million total. Therefore, our projections of follow-on business under this contract anticipate receipt of additional releases, or delivery orders."
Moskowitz further added: "Ceradyne is proud to have been awarded this contract and is confident that the Ceradyne armour systems that will be fielded in large quantities will save American lives."
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