Greetings and welcome to the Force Protection, Inc. Fourth Quarter and Fiscal Year-End 2008 Conference Call. At this time all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. James Palczynski of ICR. Thank you Mr. Palczynski you may begin.

Good afternoon and thank you for joining us. Before we get started with this afternoon's conference call, I would just like to read the company’s Safe Harbor language. Certain statements in today's call contain forward-looking statements that are not historical facts, including statements about beliefs and expectations. These statements are based on beliefs and assumptions of Force Protection's management, that information currently available to management. These forward looking statements include, among other things: the growth and demand for our vehicles, including the Tactical Support Vehicle, the ForceArmor kits, M-ATV Cheetahs, the plans and expectations regarding Force Dynamics, our ability to develop new technologies and products and the effectiveness of these technologies and products. The execution of our business strategy and strategic transformation including ability to right size our manufacturing based diversified range of product offering and utilize world-class partners. The timing to file the 2008 Annual Report on Form 10-K that are expected financial and operating results, including revenues and cash flow for future period. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update any of them publicly in the light of new information or future events. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Examples of these factors include, but are not limited to, the ability to effectively manage the risks in our business; the ability to develop new technologies and products and the acceptance of these technologies and products; the ability to obtain new orders for its vehicles and products; the impact of the rate of operations in Iraq timing and nature of the financial resolution of our previously disclosed accounting issues; our ability to identify and remedy its internal control weaknesses and deficiencies, and other risks and factors and cautionary statements listed in the our periodic reports filed with the SEC, including the risks set forth in our Annual Report on Form 10-K for the year ended December 31, 2007 and the Quarterly Report for the period ended September 30, 2008. Thank you and I would now like to turn the call over to Michael Moody, Force Protection’s Chief Executive Officer.

Thank you, James, welcome everyone good afternoon and thank you for joining us to review our fourth quarter and fiscal year end 2008 results. With me on the call today are Charlie Mathis, our Chief Financial Officer, and Damon Walsh, Force Dynamics Program Director. Today I would like to make some introductory remarks and then Charles Mathis to discuss the financial results for the fourth quarter and the whole of 2008. Following that Damon Walsh will discuss our Force Dynamics M-ATV submission with General Dynamics Land System. I will conclude this part of the call with comments about strategic direction of Force Protection as we move to a broader range of product and broad range of customers. And of course we will open up the call to your questions. 2008 was a year of transformation and year of treatment for Force Protection; we build a solid foundation to enable us to move forward. The transformation is top order in the financial picture, that Charlie will discuss. There were many achievements in 2008, which will be reflected in a stronger, more capable Force Protection and will translate into financial results going forward. I'll briefly cover those after Charlie's comments. Before I ask Charlie to speak, I would just like to quickly address the fact that we have not released our 2008 10-K. We have released unaudited numbers and filed an extension of the 2008 10-K. As I believe you know, in the last few days of 2008, the SEC advised us of a requirement to reorder our fiscal 2006 financials. These financials must be included as part of our fiscal 2008, 10-K. This requirement aroused from the issues with Jaspers and Hall who were our auditors in 2006. We actively sort to waiver from this reordered requirement, however we did not prevail and we are now having the reorders done. While we believe our 2008 numbers are accurate, we will not receive a noted opinion until we are done with the 2006 process, because we expect that will be completed before the end of this month. I would now like to turn the call over to Charlie to discuss the financials.

Thank you, Michael and good afternoon to everyone. For the fiscal year ended December 31, 2008 net sales grew 49% to $1.3 billion versus $891 million in fiscal 2007. Gross profit margins for the year increased by 1.6 percentage points for 2008 versus 2007 is related to higher profit margins from sales of spare parts and logistics, productivity efficiencies, over write-downs of inventory and purchase commitments, partially offset by increased GDLS subcontract activity in, which we recognized minimal gross profit in 2008 and zero gross profit in 2007. For the full year ended December 31, 2008, operating income was $68.5 million versus the fiscal 2007 level of $5.8 million. Earnings per diluted share for fiscal 2008 were $0.69 on net income of $46.9 million versus the $0.11 per diluted share on net income of $7.7 million in fiscal 2007. For that fourth quarter sales decreased 46% to $239.1 million from $440.4 million in the same period in 2007. The decline in revenues was primarily a result of lower shipments associated with the MRAP program. We delivered 259 Cougar and Buffalo vehicles in the fourth quarter of 2008, versus 855 Cougar and Buffalo vehicles in fourth quarter of 2007. Buffalo sales were down from 29 units in the fourth quarter of 2007 to 10 in the same period in 2008. As we continue to transition to the new A2 model, which has caused a temporary interruption in the pace of new vehicle shipment. This will cut Buffalo volume again in the first quarter of 2009. However, revenues related to spare parts and logistics increased to $97.7 million in the fourth quarter of 2008 compared to $27.5 million in the fourth quarter of 2007. As we have previously discussed spare parts and logistics includes spare parts, field service and support, training sales…

Thank you, Charlie. Financially we had a good 2009. We do not expect this time in revenue levels in 2009 and we do have a number of challenges in the first quarter of 2009. We are moving beyond the surge of revenues around MRAP and the business is challenging. We certainly see revenues in 2009 from Buffalo, Cougar Terrain and the Cheetah and (inaudible) offering for M-ATV solicitation. However, revenues will be more broadly based on upgrades and enhancements and service and support. I should also point out, as move through the transformation on Force Protection we expect that revenues and results will be somewhat uneven. However, we are very focused on ensuring our cost structure is appropriate for the revenues that we generate. I think we saw that in 2008. Just to review further comment on 2008, besides from the financial results, I believe that the business has materially improved across all aspects. Force Protection made significant progress in meeting our supply obligation in 2008 with new orders we filed the 2007 10-K and met our obligations to NASDAQ. We are also a long way along the path of meeting our US government, financial capability and systems requirements. We still need to complete the reorders of 2006 as I mentioned earlier, remediate the remaining material weaknesses and made all of that US customer requirements, but great progress has been made. From an organizational point of view, we were successful in transforming management in this organization without disrupting our regular business activities. For those I would like to talk about the improvement in the business our operations and business efficiencies. In 2008 and continuing this year we are successfully realizing significant manufacturing improvements at a time of general reductions in the headcount. For example we have reduced Cougar fabrication hours…

Thanks, Michael, and welcome everyone. Just to establish a common baseline of understanding, Force Dynamics is our joint-venture, venture with General Dynamics. We formed the organization in late 2006. And while it has performed very well for the MRAP program, in many ways it behaved more in a prime subcontractor fashion than as a true joint-venture. We now want to reenergize our efforts to do all we can to ensure Force Dynamics is a value-added organization for all of our stakeholders, including customers, our employees and our shareholders. Through Force Dynamics, we are competing for the MRAP all-terrain vehicle, or M-ATV program. This represents a substantial opportunity for us. And I believe, although there is strong competition that we are well-positioned to be a contender in this critical program. We submitted our proposal on January, 12, delivered two production representative vehicles, or PRVs on February 23rd and received a $1 million contract award for those two vehicles on March, 11th. The customer plan is to select of the five contractors to be awarded IDIQ contracts on or about March, 23rd and we expect to be one of those five. We will then be required to deliver three more PRVs no later than three days after the award, so it should be on or about March, 26. This will be followed by an opportunity to update all aspects of our proposal. In other words, our production plan, technical proposal and our price, no later than the 30th of April. The customer will finish evaluating vehicles and proposals and then plan to select at least one offer to receive production contracts in the latter part of May. Force Dynamics has developed and is executing a campaign plan focused on highlighting the benefits of Force Dynamics as an entity that bring the best…

Thank you very much, Damon. As we strengthen this relationship between Force Protection and General Dynamics, we are very focused on bringing the best of both companies together. In this light, we deliver to our customer as the highest quality and most suitable vehicles and aggressive but lower risk production schedule, value for money and strong Total Life Cycle Support. And startly we have delivered separately now we are together focused on the customer and focused on achieving the best results for both Force Protection and General Dynamic shareholders. I mentioned that vision for Force Protection earlier, our company with a broad range of customers and a broad range of products. We are executing our intuiting plan which is moving us down this path. We are intent on leading the development of survivability solutions. Force Protection's primary competitive advantage is in the stability to anticipate emerging threats and innovate the survivability products and technologies that will address those threats. Our plan is design to diversify and intensify our research and development efforts improve especially to market with new products, create a wider product portfolio and enhance our ability to offer service and support and consistent enhancements for the product we design and deliver. At the same time we intend to maintain our direct manufacturing capability at a level which is sustainable and that does not require large capital investment. We have strong partners in relationships that allows to surge production providing lower to aggressive production when required by our customers. In this way we will be in a position to deliver value to our customers, to our partners and to our shareholders. Opportunities to broaden our business are coming from our own research and development activities. ForceArmor is a good example of the product diversification we can achieve. Further substantial…

Thank you. (Operator Instructions) Our first question comes from the line of Chris Donaghey with SunTrust Robinson Humphrey. Please proceed with your question.

Hi good evening guys. Good quarter. Actually may be Charlie. First of all on the quarter itself, can you talk, tell us what the impact of the General Dynamics partnership was on gross revenue and gross profit?

Well the General Dynamics in the fourth quarter as you know was related mainly to the MRAP program and this is certainly decreasing. I think there was a number of about 44 vehicles in the fourth quarter of '08. So it was not a significant impact on GD.

So would that be less than $20 million of revenue?

Yes, around that range there.

Okay. And just as we think about Buffalo going into next year obviously transitioned the ATV version impacting the fourth quarter. How should we think about the Buffalo rent next year? I know in the past you had mentioned getting to 10 to 15 Buffalos per month, do you anticipate hitting that number on a run rate basis, second quarter, third quarter, or fourth quarter of next year?

That we said in 2009 or 2010. We see really getting to those numbers in the second quarter. There is a significant transition that's taking place as we talked about, but certainly we are seeing with the demands not only from the US army but we have significant interest from other customers. But that range we talked about before is really what we are seeing maybe to the higher end of that range on a monthly basis.

Okay, great. And then just kind of finishing up along those lines, that gives us pretty decent visibility into the Buffalo revenue stream for next year and obviously we are coming off a very strong support sustainment services revenue were for 2008. How should we be thinking about those the services revenue for 2009?

Charlie, will obviously comment on that, but I think that Charlie had made the point that we do not really see that significantly different to 2008.

Right, we are not seeing a decrease in the demand so far. As we mentioned there is a drawdown in activity in Iraq. It could affect us but currently we are not seeing a decrease in that activity.

Okay, great. And then just one last question, on the Cougar remanufacture program we have seen some notices come through the federal business opportunities website about suspension kit upgrades and now we are hearing about this, the CAM program the Cougar Accelerated Modernization, how do those two work together? If they work together and what should we expect from a monthly volume perspective any time line into better visibility into those programs?

I think the best way to think about this is, at least at this stage, to put them into two separate compartments, and I think the closest visibility is around the suspension upgrades. We certainly believe that there is likely to be significant activity around suspension upgrades relatively quickly. Its within weeks or month or so, we could see some significant activity there. In terms of the CAM program, that's still being discussed and it's more likely, like 2009 into 2010 event. But we believe that both of those activities have the prospect of developing significant revenues for us. Just the suspension upgrades, many hundreds of vehicles, might be up until thousand could be impacted by that.

Okay, great. And if I can, one more on the Cheetah itself, as it becomes a more mature product as working through the M-ATV evaluation, are you getting interest or firm potential international or foreign sales activities for that particular vehicle?

We are. Certainly, there has been interest in the Cheetah over a long period of time. I think that what we have, I have to say, a much clear definition of what the Cheetah is, we are in lower level production of the vehicle, and that in itself and its participation in MRAP and the M-ATV MRAP is certainly creating international interest.

Okay, great. Thanks Michael.

Thank you.

Our next question comes from the line of Jim McIlree with Collins Stewart. Please proceed with your question.

Thanks. Good evening.

Good evening, Jim. How are you?

I am terrific, thank you. Could you share with us the backlog by category and units at the end of Q4, '08 please?

The total number of backlog there was 209 in the vehicle backlog 12/31/08. Related to Buffalo, I think there were 69. On the Cougar side, there was UK, Ridgback, Canadian, there was UK Mastiff and it was a small portion of the MRAP 13 backlog for vehicles that totaled 209.

Okay. And so are all of the MWRAP deliveries complete now?

Yes, they were substantially complete as of 12/31/08 the MRAP.

Okay. And then subsequent to quarter end, you completed the rest?

Correct.

Okay. And the TSV, it doesn't sound like it's in backlog, but I just want to make sure that's not?

It is not in the backlog.

And you still needed definitized contract on that?

Correct.

We still make a contract on that.

Okay.

We are in active discussions with the UK MoD, but we do not have a contract?

I think to the prior question, you said that if we get to 15 Buffalo, or at the high end of that 10 to 15 range. Did you put a timeframe on that? Did you say by Q2, '09 or did you?

(Inaudible) whether we would get to the 10 to 15 range in the second quarter; and certainly believe that's the case. And maybe towards the end of the second quarter, we can get to the high-end of that range.

Okay, great. And the 44, Charlie you mentioned 44 units related to GD was that the MRAP deliveries or GD share of MRAP deliveries?

That was GD share of MRAP deliveries. Those were final deliveries that made in the quarter.

Okay. And then the last one is actually different. One question, but different parts. Headcount at the end of the quarter and then are you done with the cost cutting and this is kind of the go-forward OpEx level or is there more to come?

The first part of the question, the headcount at the end of 2008 was probably less than 1,200. I think the actual numbers are 1,183. And in regards to the second question, I think I have said to our shareholders before. And certainly I have said it within this company as well, it's very important that our expenses are appropriate to the revenues that we have. It is one of key auxiliary expenses obviously labor expenses. We take the view with our labor expense. Do we need to that we have the appropriate labor for the contracts we have and we are delivering on them and the contracts we reasonably expect to win. So, what we are doing here is, we are saying that there is a core competency and core skill here that we want to ensure that we don't [introduce] and we will always recognize that. But we are also very clearly focused, I am saying if the business volume is not there, or the production is not there then we would need to review the numbers again.

And when you are looking at how to structure the business to the appropriate, as you call it appropriate level, is that driven by a margin goal, or something else?

We have a view that we need to say our profitability and we look at what our competitors' margins are and we certainly want to be at competitive levels with them. And so we look at that. But the other aspect that is happening here, and I mentioned early in my comments, is that we have made some significant enhancements in productivity. So to one hand, we are looking at what are the margin, what are we trying to get to in terms of headcount, we are also achieving a lot of our result by doing a lot of the things we do at this company on a more efficient basis, so it's a combination of those things, Jim.

Okay, great. Thank you.

Thank you.

(Operator Instructions). Our next question comes from the line of Joe Maxa with Dougherty & Company. Please proceed with your question.

Thank you, can you give us an idea what your backlog and your parts and services going into '09?

Absolutely. The backlog is not significantly different than the backlog going into 2008 from the 12/31/07 backlog. That's why we again haven't seen a decrease in the demand for the backlog. We don't actually publish the backlog number. One of the reasons is we have an enormous amount of not to exceed contracts that we didn't negotiate. And given a backlog number would maybe a bit misleading there. But the level of activity again in the spares and logistics is what we see is similar to the full year 2008, is what we are seeing.

Is that based on your current, what we will call backlog or activity that you are expecting to come?

You know it’s a combination but there is a significant amount of backlog that we have dug into 2009, so, there is already a reasonably significant backlog there we have as a 200 Field Service representatives in place, there are orders for ForceArmor which are being delivered on in 2009 such combinations of all of those. There is a recently significant part of the revenues we expect to generate in this area we are already in backlog at the beginning of the year.

Right. So new orders for ForceArmor and it’s kind of suspension could be upside of where you are talking about?

Yes.

Yes, we do have at the end of '08 we have $40 million of backlog for ForceArmor.

Right.

The remaining of '07.

When are you expecting that Wolfhound order to come we were looking forward at the end of December and it seems like it's dragging on here? What is your current thoughts?

It’s taking a little bit longer than we expected. We are negotiating this contract a little bit differently in that we are looking at a direct commercial sale here and not a [MFA] missile but it has taken a little bit longer than we expected but we think it’s going to move ahead pretty quickly now. (inaudible).

You know on the Buffalo side and the Buffalo when you are at to 10 to 15 for month what do you foresee or how long you can produce at that level as an indication that is interest for the Buffalo? Two year's, three year's.

We are taking a view that that’s a three to five year timeframe.

Okay and what is your outlook for your effective tax rate for 2009?

I would say we are looking at effective tax rate not substantially different from where we are now.

The 32%.

Right.

Okay. And just a couple of other items. Gross margins, can you give us what your thinking would be for fiscal year '09?

Well, we make slightly higher margins on the spares and sustainment logistics portion than we do in just pure vehicle sale. So we are looking to increase the gross margins in 2009, although some of these are sole-source contracts in which we have the same costing and pricing criteria for the vehicles. So we do see a slightly increased gross margin, but it won't be substantial, at this point in time.

And last thing on your operating expense, what should we be looking for in Q1 and then rest of the year?

Well Q1, we’re going to have the effects of this 2006 reaudit, which there has been an extreme amount of effort gone into this. And so we look for those expenses to be higher related to that, I think ongoing though we are trying to control these expenses, the professional services. And I think those were trending down for the fourth quarter but unfortunately for first quarter it looks like it’s going to be higher.

So you think the Q1 total operating expenses will be above Q4 level, is that what I understood.

Yes

And will you get down to, can you get down to the $20 million range, what would do you think would be the bottom?

Well we are continuing to drive costs and control the costs in those areas there. So we believe it can be below $20 million, there is lot of effort required there. But certainly we targeting below $20 million.

By the end of the year.

Yes

Okay. Thank you very much.

Thank you.

There are no other questions in the queue at this time. I would like to hand it back over to management for closing comments.

Thank you very much. Thank you everyone for joining us on the call today. We really appreciate you participating and having opportunity to ask questions and we look forward to talking to you again next quarter. Thank you very much.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time.