Greetings, ladies and gentlemen, and welcome to the Force Protection Investor Conference Call. (Operator Instructions) It is now my pleasure to introduce your host, Mr. Tommy Pruitt, Force Protection’s Senior Communications Director.

Thank you. Certain statements in this presentation, including without limitation, statements relating to the company’s business expectations for the remainder of 2008, statements relating to the beliefs of management, expectations, or opinions, and all other statements in this presentation other than historical facts are forward-looking statements as such term is defined in the Securities and Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Forward-looking statements are subject to risks and uncertainties, are subject to change at any time, and may be affected by various factors that may cause actual results to differ materially from expected or planned results. In addition to the statements discussed above, certain other statements are forward-looking, including, without limitation, our expectations regarding profitability, the numbers presented for the year ended December 31, 2007, and the three months ended March 31, 2008, our ability to address or identify material weaknesses, and the progress made with respect to our internal controls, the number of vehicles the company expects to deliver in 2008, the value of the sustainment and remanufacture orders that the company may received during 2008, our ability to secure foreign military sales for our products, our relationships with the United States Department of Defense, Field Dynamics Land Systems, GRS sustainment systems, our ability to develop and diversify our new product offerings, the desirability of The Cheetah vehicle as an interim solution for our customers, and our expectations about levels of production for the Buffalo vehicle. These statements are subject to numerous risks and uncertainties, including but not limited to the risks detailed in our annual report on Form 10-K for the year ended December 31, 2006, and our Form 10-Q for the three months ended September 30, 2007, and other reports filed by the company with the Securities and Exchange Commission. During this call we will be referring to certain non-GAAP figures which are non-GAAP financial measures as defined under SEC rules, such as adjusted net sales for the three months ended March 31, 2008. These amounts have been adjusted from GAAP measures to exclude amounts related to the Force-Dynamics joint venture agreement between General Dynamics Land Systems and Force Protection. A reconciliation of the non-GAAP financial measure to the most directly comparable GAAP measure is available and posted in the Investor Relation section of our website at www.forceprotection.net/investors/events_presentations. I would now like to turn the conference call over to Michael Moody, our Chief Executive Officer.

Thank you. Good afternoon, and thank you for joining us for our First Quarter Review Call. With me today is Frank Scheuerell, our Interim Chief Financial Officer, and Damon Walsh, our Executive Vice President for Customer Operations. As we said on our last call, we are committed to giving you these regular updates on our business to help you understand our position in the marketplace and our opportunities. The amount of financial we can disclose continues to be limited, however I will comment later on the progress we are making to meet our filing requirements. I would like to start by sharing some of the numbers that we can report. Our first quarter 2008 revenues were approximately $400 million. Bear in mind that the MRAP program is conducted in conjunction with General Dynamics. Because of the way the relationship is currently set up, all of the General Dynamics revenue for MRAP Cougars shows in our income statement but is essentially a pass-through. We recognize the revenue allocated to General Dynamics and record the same amount as a cost of goods sold. The first quarter revenue for Force Protection, after adjustment to remove revenues associated with General Dynamics, was approximately $200 million. Our backlog continues to be significant and at the first quarter’s end it stood at approximately $410 million for vehicles, service, and support. This backlog does not include any General Dynamics delivered vehicles, or service and support. We are beginning to have visibility into 2009, particularly with the recent orders from the United Kingdom Ministry of Defense, which I will speak about in a moment. During the first quarter we received approximately $195 million of new orders, including both new vehicles and service and support orders. These orders do not include any vehicles or service and support orders for…

(Operator Instructions) Your first question comes from Chris Donaghey with Suntrust Robinson Humphrey.

You have kind of given us some good data points on what to expect on the services side of the revenue, service and support for fiscal 2008. As we think about 2009 should we use a similar type of run rate for the services business in 2009? Obviously the fleet will be a little bit larger by then but [inaudible] to quantify what we should expect in 2009 for services revenue.

Certainly taking the whole area of sustained revenue of service and spares such as ours has been a significant contributor in 2009, as it will be in 2008. Obviously some of that is going to depend on how actively used our vehicles are, but certainly we expect that it’s going to be a very significant revenue strength for us next year.

Okay. And as we think about that $250 million, in terms of visibility, that seems to be the highest visibility revenue right now. What should we be thinking about in terms of the margins on that $250 million in revenue?

Where is the $250 million, Chris? I’m just not quite sure.

Oh, I’m just using the $150 million in services revenue and $100 million in Buffalo revenue. Just the highest visibility portion of the revenue right now.

I’m sorry, I was focused on the number. What was the question again?

What kind of margin expectation should we have around that, just the Buffalo and the services part of the revenue?

I’m not sure I can really quote on that at the moment. It’s pretty difficult for me to give forward-looking statements when we haven’t put our historical financials out. I think I’m going to be in a much better position once we’ve got our tag filed to start talking about those things.

That’s fine. But can you maybe bracket for us what your expectations are based on either the remanufacture of the existing fleet or other foreign military sales? Can you put a range around what the Cougar production numbers could look like in 2009 and/or the revenue associated with that? Now that you’re already kind of building the production book for Cougar in 2009 with the British order?

Let’s talk about that a little bit. We are obviously actively looking towards putting in place foreign military sales for Cougar. We have the sale to the British where we are actively talking to a number of other foreign counties as well, and then, as you said, the remanufactures are likely to be a significant part. I don’t know, in terms of the actual production of new Cougars at this stage, I can quote a number to you. But what I can say is that we see this facility as having a capability of 80-100 vehicles left. That’s what we see the capability of these Cougars. And we’re certainly going to seek to fill that. Just in terms of the remanufacture, the customer has said to us that this is a program that they are very interested in, they see that there would be substantial remanufacture activities and if that does come to pass, that could represent a significant percentage of that 80-100 vehicles per month.

And do you believe that your aggregate demand picture supports that type of production rate for some time period? Again, not specific numbers, but as you look at the total market opportunity over the next few years, you know, win or lose, the number of vehicles over the next few years could support 80-100 Cougars per month.

There are a couple of things I should say. One is that our facility here, in terms of manufacture of the Cougars, we’re spending a small amount of capital on that to ensure that it’s practical enough for us to manufacture Cougar or The Cheetah off the line, so there will be some degree of flexibility in terms of their production. But secondly, our expectation, if you look at the very substantial number of Cougars that are already filled and will be filled by the end of this year and our activity related to foreign orders, that the 80-100 number doesn’t seem unreasonable to us.

And one last question. Just on the R&D effort. Are we thinking more armor research and development or, I know we’ve talked about blast-protected wheels in the past, or are we talking about new vehicles as well?

We see ourselves as a company that’s in the business of survivability solutions. Vehicles are important to us, they are a central part of what we do now. That is where our revenue comes from. But certainly as far as our research and development is concerned, it will be somewhat more broadly based that that. We are going to work a lot in the invention and innovation area, around the chemistry and chemistry to prevent concepts. And then actively developing that into manufacture of marketable products. So I think that you will see that there will be some broader activities beyond what we’ve necessarily done today.

Your next question comes from Jim McIlree with Collins Steward.

The $410 million backlog that you referred to, how much of that is deliverable over the rest this year?

Most of it.

And that is just your portion of the backlog? It doesn’t include the pass-through from GD, is that correct?

That is correct.

And also, I just wanted to make sure. On this service business, you talked about $150 million. That’s just your share?

Again, that’s correct.

I’m going to round off to 1,500 employees as of now. Is that what you think the number is going to be, more or less, through the rest of this year, or is there likely to be further downward movement on that?

I think I would be better answering that question more broadly. Obviously, the new management team has been in place for a short period of time and we have seen where there are opportunities to have the operation generally more efficient and ways in which we can operate more effectively and save money. That’s an ongoing process. So I don’t want you to think that in the first 60-90 days that our work is done. So we will continue to work with like results in stock reductions or [inaudible] I wouldn’t directly say, but that work is not complete.

And back to the backlog. That $410 million is mostly for vehicles, I am assuming.

Correct. The predominant part of that is vehicles.

In terms of the remanufacturing, is it likely that that would come out of the existing MRAP contract and program office or are you thinking that there would have to be a different bucket of money found to do that?

This is Damon. They already have funds allocated and in the amount of around $250 million in both FY2008 and FY2009 money for Cougar remanufacturing. They already have our proposals. It will be done against our MRAP contract.

And, Damon, when you said the $250 million for both fiscal 2008 and fiscal 2009, you were referring to the total Cougar remanufacturing, not just your share, is that correct?

That is correct. You need to recognize that includes General Dynamic shares.

And I was thinking more broadly, to include the Navistar and the BAE shares.

Oh, no, that is just for Cougar.

Okay, just specifically Cougars, not MRAPs broadly speaking.

Correct. Just Cougars. So you just need to look at that in terms of Force Protection and General Dynamics.

I know I’m being dim, but the $250 million does include GD in this case?

Yes, it does.

It’s the remanufacture of Cougars under the MRAP program, which is part of our joint venture.

It’s always worth asking the question because I think we need to be really clear on these numbers.

When was the last time that you had 1,500 employees? It must have been sometime in 2007.

Correct.

Would that have been in the middle of 2007?

It would have been in the second or third quarter, maybe in August or September. This company ramped up very quickly toward the end of last year.

The Roxboro facility is, I think Michael, you said it’s still going to be capable of production, correct?

Correct.

But it won’t be producing until there’s something to produce?

That’s true, but I also made the point that we are putting the work into some flexibility with our production capability there for both Cougar and The Cheetah down the same line.

Right, and that was my next question. It sounds like Ladson can be a tri-use facility, you could do the entire menagerie down there.

That’s correct. The Buffalo is part of a separate line and operation but we see having a production line which is flexible to handle the variance of the Cougar and The Cheetah as well.

Your next question comes from Joe Maxa with Dougherty & Company.

I want to make sure I’m clear on the backlog and the service revenue. Is the $150 million service revenue included in the $410 million backlog? Or is that a separate line?

No, it’s not a separate line.

There’s a separate definition is the right way of putting it. What we talked about in terms of the $150 million, that is what our expectation is in terms of service and sustainment of the vehicles. What we talked about in terms of the backlog if specifically what we have on contract and on order. So in terms of the spares and sustainment, some significant part of that we have not yet had orders placed. That’s not unusual because the orders tend to get placed during the year and in fact, we’ve found towards the federal government’s financial year, a lot of the orders get placed. So they are actually different measures, if you understand the term.

I do understand. But a portion of that $410 million includes your services?

Correct.

How does this compare with what you gave last quarter? Because when I look at this I see $410 million plus the $200 million that you did in Q1 gives you $610 million and if I recall right, last quarter you gave a backlog for the year of $580 million plus about $100 million in service. And so a portion of that was already in the $580 million so it looks like you’re just up maybe $30 million?

The number is slightly less than what we reported before, because the number we quoted in the previous quarter was $450 million. And what we quoted that for was purely for vehicles. So I think the vehicle backlog now, if you wanted to have a like-for-like, the vehicle backlog now is more like $370 million.

Versus $450 million.

Correct. That’s the like-for-like.

There’s been some talk of doing the complete production in-house, including the automotive integration. Is that something we should expect to start seeing from you guys, or will you still sub that part out?

Including the auto integration?

Yes, for Cougar.

We still have a good relationship with Spartan and Spartan does a significant amount of work for us. Although now we do have the capability to do auto integration here. What we see, as far as auto integration is concerned, but also generally, is that we have capacity here, in our facility for 80-100 Cougars, but we see working with partners like Spartan for surges in that or opportunities where there are particular requirements our for short term. So, yes, we do have a large part of the capability of doing that production here. But it doesn’t mean that our relationship with Spartan is going away.

But do you expect to start, have you been doing a number of those vehicles in-house, and what are your expectations?

Yes, we have been doing a number of vehicles in-house and we expect over the coming months for that number to increase significantly.

You gave us a ballpark net income for 2007 and you gave us some good revenue numbers, expectations, for us to think about for 2008. Can you give us a net income range of what we should look for in 2008 compared to 2007?

No, I can’t do that. Once we get the financials filed I’ll be more prepared to talk about that.

Your next question comes from Marc Robins with Robins Consulting Group.

When you went through the reorientation of the facilities, could you go through that again, because that kind of helps us get a better orientation of what’s really going on with manufacturing.

I will go through it exactly as I did before. We are going to relocate our sustainment team, which includes the training center and the spares management, to Roxboro, North Carolina.

So does that mean the new warehouse that went in, as I think of it, off to the left, does that go out to Roxboro?

No, it doesn’t. What we’re talking about is, we do an enormous amount of work here in terms of training military personnel to go into theater, in terms of the whole lock stock around the management of our sustainment and spares. We still have a substantial warehouse here. That is becoming more for our manufacturing. We’re putting our spares into a different location. But a lot of what’s going to Roxboro will be the training of the people to go into theater, both military personnel and our own personnel, and some other management functions, as well. So that’s the first component. The second component is in regards to our design engineering folks. We are moving those from this location to a facility at Demingway and Summerville. Now, if you know the area at all, that is the next city to Ladson. But what we want to do is we want to put them with the R&D folks and have them really in one area as part of their whole development activities. The third thing, which I mentioned briefly a minute ago, is that we are separating our parts for manufacturing from our spares warehouse. Now, at this stage, we are using the services of a third-party provider in the Charleston area to locate those spares, and we are looking at some other alternatives as to exactly how we can handle that. But the initial steps to place our spares for the service and sustainment activities are already underway to separate those from the manufacturing warehouse, which is the warehouse you referred to here. And then the fourth point is that we’re focusing our Cougar and The Cheetah production, if you know the facility here, in Building 2. The Buffalo is in Building 3 at the back of our campus here. The Building 2 has been used for part of the Cougar activity, principally the integration. It’s also where our new auto integration line is. We have been successful in making our operations much more efficient and I mentioned some numbers in terms of employees before. We are now satisfied that we can house the Cougar and the flexible Cheetah operation, the fabrication, the integration, including auto integration, in Building 2. And then the final part I mentioned is that we’ve got a substantial corporate headquarters presence here in the product Building 1 in Ladson. We are looking to a much more efficient operation, another taken pretty close by here, which will I think be better from an operational point of view and is also going to be good from an exchange point of view.

Where was fabrication? Where was the mono-cog fabrication?

That was in Building 1. That is in the back of Building 1 presently.

And I remember correctly, in the front of Building 1, you were having automotive integration and that’s going to Building 2. So will you have more fabrication in Building 1 or will you have less space involved in Building 1?

No, Marc. Where the auto integration is, is in Building 2.

That’s where you’re moving it to. Yes.

The Building 1 is the office facility in the Proctor building. The back of the building of the fabrication. What we’re looking at is moving that fabrication into Building 2 to be with the auto integration and the final integration. So all that is moving out of Building 1.

We haven’t heard about ILAV in a long time and I was wondering if there’s any life to that program. I know it is a BAE program but you were involved in its initiation and the original design. Is there anything on the horizon there or is that just kind of ended?

We believe there’s still life in it.

So, that could raise its head and be an opportunity for the company in the not-to-distant future, and if I remember the way the contract was written, there could be some good volume there.

Yes. The original requirement was in the couple of thousand vehicles and we’ve delivered less than 500 of those. Actually, there are a significant number of vehicles to be delivered there so, yes, there certainly could be an additional opportunity on that. We certainly don’t think that’s dead.

Someone asked the question about R&D and you did a fairly decent explanation of bringing us up to date. I guess I would like to ask, are we looking out six months or 18 months or something like that before we could see something significant announced? I remember August almost two years ago when the first patent announcement was released on the wheel technology. And I know Vernon can’t be just sitting on hands, he’s got to be going crazy creating stuff. Give us a little color on timing, if you would, please.

I’m not really ready to give a six month or 18 month time frame. The only thing I can say to you is this. Last year, particularly, this company was focused on producing vehicles. The whole company was focused on producing vehicles. What we now see is that there is a real opportunity for us to get back to the core competency and core value of this business. Not only in terms of people like Dr. Joynt, as you mentioned, but with more scientists, with more research, and getting back to the fundamentals of survivability solutions. So one would expect that we are going to start producing results there. We have some good results already discerned or we wouldn’t be putting all this effort into it. But I don’t know that I’m prepared to say that’s going to be six, nine, or 12 months. Because a lot of it is going into the market, it’s an important part of the fundamental value in this business and we really think that there are some substantial opportunities to do some really good work here.

Nobody is giving you much credit for your technology. I have one more question. Partnership expansion, do you want to say a few more things about that and give us some color on what’s been happening, or what could happen?

Well, I talked a little bit about General Dynamics and DRS. It has been a significant value to this company, to have partnerships with strong capable organizations that help us bring out forces as we have or to respond to JLTV. There have really been some outstanding relationships and, as you mentioned before, I wouldn’t want to forget BAE. I mean, that was one of the original partnerships. But Force Protection sees that there is continued value in terms of partnerships. Whether we would continue to partner with different people in terms of industrial production, or there is more value or additional value in terms of working in partnerships, in terms of that whole R&D effort we just talked about, are all questions that we are considering at the moment. These partnerships bring a great value to Force Protection and we are very open to looking at additional partnerships.

Your next question comes from Kirk Ludtke with CRT Capital Group.

I was wondering if we could talk about the year end markets a little bit. I am curious, is there a rule of thumb, with respects to your parts sales, for how much you generate in parts and service revenue for a vehicle in the field? I know you mentioned earlier on how much they are actually used, but is there a range there that you can give us?

We believe that vehicles will have a very long life in service. One of the wonderful things about these vehicles is not only the survivability record, and we’re very proud of that and we’re delighted with the number of lives the things save, but we don’t talk often enough about the serviceability, about easy these vehicles are to repair and maintain, and the fact that we have an extraordinary limited number of losses from all of the activity that takes place around these vehicles. We expect that these vehicles will have a long service life in the U.S. military. Now, the UK customer told us yesterday that the vehicles they purchased from us were initially for a one-year urgent operational requirement and the vehicles have been so successful operationally, but also in terms of service and sustainment and ability to repair, that the use [inaudible] is now 20/20 and likely to be beyond that. So just putting that background here, the outview is that the dollars that are spent on the procurement of the vehicle is only 20% of the total life cost of the vehicle.

So, let’s just put some numbers on it. Say an MRAP costs $500,000. You’re suggesting that there would be another $2 million spent on its life?

That’s what I’m saying. Exactly.

And it would last 20 years?

It could last up to 20 years.

So that $2 million would be spread over 20 years.

Maybe 20 years. Our view is these are 12, 16, maybe up to 20 years. But I think it’s not unreasonable to look at that sort of life span and that sort of expenditure.

I know there are at least a couple of different types of armoring systems in the field. I know one is a welded system and one is a bolt-on system. Do you have any feed back from the field as to how those two types of systems are performing, if one’s performing better than the other?

The threat to our vehicles and to everyone’s vehicles is always evolving. We believe that, we have customers that have been extremely successful in responding to those threats. And I’m not in a position, or prepared to talk about the individual solutions. But the solutions that are being provided are extremely capable.

And you’re using more of a welded configuration?

Normally we try not to talk any specifics about the construction packages on any of the vehicles. I think we can say that the vehicle is made of steel and armor. Predominantly the capital is welded together. The portion that goes into the armor recipe uses a variety of attachment and manufacturing methods to achieve what we believe are, and what’s proven in combat, is that that solution on the battlefield for the best way to arrange that armor recipe.

Do you expect any more MRAP awards, industry wide, for this year?

That’s quite possible.

The government still has funding available. There is still requirement that remains under the JROC approved amount. There is, however, a lot of question about what kind of vehicle they buy going forward into the future because the tactical-wheel vehicle market is pretty fluid and pretty dynamic and there’s still some question about whether they buy heavier vehicles or lighter vehicles.

Do you have a sense of how many JLPVs would be needed. How many Humvees are in the fleet and how many would have to be replaced with JLPVs?

To answer your question backwards, the number of Humvees in the fleet is around, north of 150,000 in the Army. And I may be a little off on the Marine Corp, but it’s about 40,000 in the Marine Corp, and less than half of that in the Navy and the Air Force. For planning purposes I would say a number of around, using an initial number of around 50,000-60,000 would be the Humvees they would replace with one of the JLPV variance.

And timing-wise you think that is 2010 or 2011?

I don’t know. Currently the plan is that they will make a decision sometime in 2012, maybe 2013. If history holds true, the JLPV will likely flip a year or two to the right as a result of funding and testing. But, as early as 2012 or 2013 would probably be the earliest we would see any JLPV production of consequence.

Your have a follow-up question comes from Jim McIlree with Collins Stewart.

The $150 million of sustainment that you spoke of, can you split that out in broad terms between what is sustainment of work for the Buffalo versus the Cougar?

In general terms I would say, of the $150 million, and I’m spit-balling the number a little bit here, maybe $20 million-$30 million for Buffalo, the rest for the Cougar fleet.

Bear in mind that we also have FSRs mixed in there and that complicates it a little bit, because many of our FSRs at wherever location they’re on will work on both Buffalos and Cougars. And hopefully Cheetahs at some point in the not too distant future.

And when I think of that sustainment business, I kind of think of it in terms of a base business and then a business that’s driven by the tempo or the amount of work that the vehicles and how much damage the vehicles have sustained. Is there any way to spit-ball that one?

There’s a few things we can say to you. One is that, and we might have given you this indication before, the customers told us, if you look at it in terms of the automotive component as opposed to battle damage, these vehicles have been so actively and in such a hostile different environment, that they are receiving five-year automobile services every six months. So all of the components that go around normal automobile wear and tear are enormously accelerated in these vehicles. As far as battle damage is concerned, I mean the costs there are the costs and the slides in that area, are reasonable extensive. Obviously we supply lots of axles, suspensions, those sorts of things. But the vehicles are rather actively used, they’re in a hostile environment.

I guess the unasked question that I’m dancing around is, if the activities in Iraq wind down or if the continued success that the forces are having there maintain themselves, would that five-year automotive service happen every 12 months instead of ever 6, or happen every 18 months? That’s still a high tempo, but in terms of what you guys are doing, a lesser tempo.

We would expect that if the level of hostility reduces or our involvement significantly reduces, that the use of these vehicles will be significantly reduced. And that would impact not only the spares and field activity but also the field service representatives. We have lots of folks in the field in Afghanistan and Iraq and they’re enormously invaluable to the customer but it’s also an important part of the revenue stream for Force Protection.

And another thing to consider, Jim, and to be perfectly honest I think for all of us we hope it happens tomorrow, but if the war were to end tomorrow, what would happen then is there would be an opportunity for the fleet to be remanufactured, much like what happened with the Abram’s fleet after Desert Storm. There was a spike in Abram’s work to upgrade the Abram’s fleet.

Thanks for that reminder. And then, Damon, I you mentioned that there are budget dollars for MRAP still out there. Do you have a feel for whether or not that is going to the Army or to the Marines or both?

The best deal I could say, Jim, is that we know roughly what the split of the vehicle deliveries are between the services. That’s public information out of JROC. I would say that’s a good indicator for the split of the dollars going forward. If 80% of the fleet’s in the Army, 80% of dollars will go to the Army.

Our next follow-up question comes from the line of Chris Donaghey with Suntrust Robinson Humphrey.

On the remanufacture program, is that $250 million each year in fiscal 2008 and fiscal 2009?

It’s $173 million in FY2008, $180 million in FY2009.

At this time there are no further questions. I would like to turn it back to management for any closing comments.

I would just like to thank you all for participating in today’s call. We had indicated at the start of this call that we will have regular quarterly calls and we hope that you will join us again for our next conference call. Thank you very much.

This concludes today’s teleconference. Thank you for joining us. You may now disconnect.