**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

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**FORM 10-Q**

**QUARTERLY REPORT UNDERSECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934**

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| **x**      | ** ** | **QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**          |
|------------|------------|-----------------------------------------------------------------------------------------------------------------|
| ** ** | ** ** | ** **                                                                                                      |
|       | ** ** | **For the quarterly period ended  September 30, 2006**                                                     |
|       | ** ** | ** **                                                                                                      |
| **OR**     |       |                                                                                                            |
| ** ** |       |                                                                                                            |
| **o**      | ** ** | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**         |
| ** ** | ** ** | ** **                                                                                                      |
| ** ** | ** ** | **For the transition period from               to** |

 

**CommissionFile Number: 333-127781**

**SAFETY PRODUCTS HOLDINGS, INC.**

(Exact name of registrant as specified in its charter)
| **Delaware**                                                    | ** ** | **34-2051198**                        |
|-----------------------------------------------------------------|------------|---------------------------------------|
| (State  or other jurisdiction of incorporation or organization) |       | (I.R.S.  Employer Identification No.) |
|                                                            |       |                                  |
| **2001 Spring Road, Suite 425 Oak Brook,  Illinois**       | ** ** | **60523**                             |
| (Address  of Principal Executive Offices)                       |       | (Zip  Code)                           |
|                                                            |       |                                  |
| Registrant’s  telephone number, including area code:       |
| **(630) 572-5715**                                              |

 

Indicate by check mark whether the Registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. Yes x   No o

Indicate by check mark whether the Registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer. Seedefinition of “accelerated filer and large accelerated filer” in Rule 12b-2of the Exchange Act.

Large accelerated filer  o  Accelerated filer  o  Non-accelerated filer  x

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No x

On November 14, 2006Safety Products Holdings, Inc. had 11,030,884 common shares outstanding.

 

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**SAFETY PRODUCTS HOLDINGS, INC.**

**FORM 10-Q QUARTERLY REPORT**

**Forthe Quarterly Period Ended September 30, 2006**

** **

**TABLEOF CONTENTS**
| **PART I Financial Information**   |
|------------------------------------|
|                               |   |   |
|                               | Item 1. Financial Statements (Unaudited) | 1 |
|                               |   |   |
|                               |   | Consolidated  Balance Sheets | 1 |
|                               |   |   |   |
|                               |   | Consolidated Statements of Operations | 2 |
|                               |   |   |   |
|                               |   | Consolidated Statements of Cash Flows | 3 |
|                               |   |   |
|                               | Item 2. Management’s Discussion and Analysis of  Financial Condition and Results of Operations | 15 |
|                               |   |   |
|                               | Item 3. Quantitative and Qualitative Disclosures About  Market Risk | 24 |
|                               |   |   |
|                               | Item 4. Controls and Procedures | 25 |
|                               |   |   |
| **PART  II Other Information**     | 26 |
|                               |   |   |
|                               | Item  1. Legal Proceedings | 26 |
|                               |   |   |
|                               | Item 1A. Risk Factors | 29 |
|                               |   |   |
|                               | Item 2. Unregistered Sales of Equity Securities and  Use of Proceeds | 33 |
|                               |   |   |
|                               | Item 6. Exhibits | 33 |
|                               |   |   |
| **Signatures**                     | 34 |
|                               |   |   |
| **Form  10-Q Listing of Exhibits** | 35 |

 

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**PART IFINANCIAL INFORMATION**

**Item 1. Financial Statements(Unaudited)**

**SAFETYPRODUCTS HOLDINGS, INC.**

**CONSOLIDATED BALANCE SHEETS**

**(Amountsin Thousands) (Unaudited)**
| ** **                                                                                | ** ** | **Successor**         | ** ** |
|-------------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                                | ** ** | **December 31,** | ** ** | **September 30,** | ** ** |
| ** **                                                                                | ** ** | **2005 (1)**     | ** ** | **2006** | ** ** |
| **Assets**                                                                                | ** ** | ** **            | ** ** | ** ** | ** ** |
| Current assets:                                                                           |       |                  |       |   |   |
| Cash and cash  equivalents                                                                |       | $                     | 20,819     |   | $ | 12,474 |   |
| Accounts  receivable, less allowance of $2,317 and $2,364 in 2005 and 2006,  respectively |       | 68,286                |       | 81,533 |   |
| Inventories                                                                               |       | 93,462                |       | 113,668 |   |
| Deferred income  taxes                                                                    |       | 3,230                 |       | 3,230 |   |
| Prepaid expenses  and other current assets                                                |       | 3,206                 |       | 3,140 |   |
| Total current assets                                                                      |       | 189,003               |       | 214,045 |   |
| Property, plant and  equipment, net                                                       |       | 67,315                |       | 69,443 |   |
| Deferred financing  costs, net                                                            |       | 19,669                |       | 17,357 |   |
| Goodwill                                                                                  |       | 135,718               |       | 150,231 |   |
| Other intangible  assets, net                                                             |       | 276,842               |       | 288,218 |   |
| Other noncurrent assets                                                                   |       | 5,109                 |       | 5,311 |   |
| Total assets                                                                              |       | $                     | 693,656    |   | $ | 744,605 |   |
|                                                                                      |       |                  |       |   |   |
| **Liabilities and shareholders’  equity**                                            | ** ** | ** **            | ** ** | ** ** | ** ** |
| Current liabilities:                                                                      |       |                  |       |   |   |
| Accounts payable                                                                          |       | $                     | 21,229     |   | $ | 25,617 |   |
| Accrued expenses                                                                          |       | 34,137                |       | 32,771 |   |
| Current  maturities of long-term obligations                                              |       | 1,846                 |       | 2,453 |   |
| Total current  liabilities                                                                |       | 57,212                |       | 60,841 |   |
| Pension,  post-retirement and deferred compensation                                       |       | 32,340                |       | 30,900 |   |
| Long-term obligations                                                                     |       | 441,393               |       | 470,459 |   |
| Other noncurrent  liabilities                                                             |       | 5,376                 |       | 7,150 |   |
| Deferred income taxes                                                                     |       | 50,268                |       | 52,161 |   |
| Minority interest                                                                         |       | 176                   |       | 199 |   |
|                                                                                      |       | 529,553               |       | 560,869 |   |
| Shareholders’ equity:                                                                |       |                  |       |   |   |
| Common shares                                                                             |       | 110                   |       | 110 |   |
| Contributed  capital                                                                      |       | 109,560               |       | 111,468 |   |
| (Accumulated  deficit) retained earnings                                                  |       | (4,766                | )          | 3,279 |   |
| Accumulated  other comprehensive income                                                   |       | 1,987                 |       | 8,038 |   |
| Total shareholders’  equity                                                          |       | 106,891               |       | 122,895 |   |
| Total liabilities and shareholders’ equity                                           |       | $                     | 693,656    |   | $ | 744,605 |   |

 

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(1)          December 31, 2005balances were obtained from audited financial statements.

*See notes to unaudited consolidated financialstatements.*

1

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**SAFETY PRODUCTS HOLDINGS, INC.**

**CONSOLIDATEDSTATEMENTS OF OPERATIONS**

**(Amountsin Thousands) (Unaudited)**
| ** **                                                                                                                                                                                                                                                                                                                                                                     | ** ** | **Predecessor**                                      | ** ** | **Successor**                                           | ** ** | **Predecessor**                                    | ** ** | **Successor**                                           | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|---------------------------------------------------------|------------|----------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                                                                                                                                                                                                                                                                                                                                     | ** ** | **July 3,  2005  through  July 19,  2005** | ** ** | **July 20,  2005  through  October 1,  2005** | ** ** | **Three  months  ended  September 30,  2006** | ** ** | **January 1,  2005  through  July 19,  2005** | ** ** | **July 20,  2005  through  October 1,  2005** | ** ** | **Nine  months  ended  September 30,  2006** | ** ** |
| Net sales                                                                                                                                                                                                                                                                                                                                                                      |       | $                                                    | 33,624     |                                                    | $          | 84,989                                             |       | $                                                       | 141,878    |   | $ | 271,694 |   | $ | 84,989 |   | $ | 420,000 |   |
| Cost of goods  sold                                                                                                                                                                                                                                                                                                                                                            |       | 22,586                                               |       | 58,271                                                  |       | 91,084                                             |       | 171,645                                                 |       | 58,271 |   | 262,563 |   |
| Gross profit                                                                                                                                                                                                                                                                                                                                                                   |       | 11,038                                               |       | 26,718                                                  |       | 50,794                                             |       | 100,049                                                 |       | 26,718 |   | 157,437 |   |
| Operating  expenses:                                                                                                                                                                                                                                                                                                                                                           |       |                                                 |       |                                                    |       |                                               |       |                                                    |       |   |   |   |   |
| Selling                                                                                                                                                                                                                                                                                                                                                                        |       | 3,156                                                |       | 7,664                                                   |       | 12,824                                             |       | 25,512                                                  |       | 7,664 |   | 38,938 |   |
| Distribution                                                                                                                                                                                                                                                                                                                                                                   |       | 2,014                                                |       | 4,427                                                   |       | 8,289                                              |       | 14,634                                                  |       | 4,427 |   | 24,276 |   |
| General and administrative, excludes amortization of  intangibles and includes $16,388 of management incentive compensation for the  period from January 1, 2005 through July 19, 2005 and the period from July 3,  2005 through July 19, 2005 and $265 and $1,345 of management incentive  compensation for the three and nine months ended September 30, 2006,  respectively |       | 18,916                                               |       | 7,834                                                   |       | 13,025                                             |       | 41,344                                                  |       | 7,834 |   | 39,724 |   |
| Amortization of intangibles                                                                                                                                                                                                                                                                                                                                                    |       | 46                                                   |       | 4,732                                                   |       | 3,073                                              |       | 329                                                     |       | 4,732 |   | 8,540 |   |
| Total operating  expenses                                                                                                                                                                                                                                                                                                                                                      |       | 24,132                                               |       | 24,657                                                  |       | 37,211                                             |       | 81,819                                                  |       | 24,657 |   | 111,478 |   |
| (Loss) income  from operations                                                                                                                                                                                                                                                                                                                                                 |       | (13,094                                              | )          | 2,061                                                   |       | 13,583                                             |       | 18,230                                                  |       | 2,061 |   | 45,959 |   |
| Other expense  (income):                                                                                                                                                                                                                                                                                                                                                       |       |                                                 |       |                                                    |       |                                               |       |                                                    |       |   |   |   |   |
| Interest expense                                                                                                                                                                                                                                                                                                                                                               |       | 2,927                                                |       | 7,151                                                   |       | 12,051                                             |       | 24,584                                                  |       | 7,151 |   | 34,701 |   |
| Interest income                                                                                                                                                                                                                                                                                                                                                                |       | (85                                                  | )          | (39                                                     | )          | (105                                               | )          | (914                                                    | )          | (39 | ) | (435 | ) |
| Seller transaction expenses                                                                                                                                                                                                                                                                                                                                                    |       | 4,646                                                |       | —                                                  |       | —                                             |       | 4,646                                                   |       | — |   | — |   |
| Other, net                                                                                                                                                                                                                                                                                                                                                                     |       | (77                                                  | )          | (110                                                    | )          | (19                                                | )          | 745                                                     |       | (110 | ) | (559 | ) |
| (Loss) income  before income taxes and minority interest                                                                                                                                                                                                                                                                                                                       |       | (20,505                                              | )          | (4,941                                                  | )          | 1,656                                              |       | (10,831                                                 | )          | (4,941 | ) | 12,252 |   |
| Income tax  (benefit) expense                                                                                                                                                                                                                                                                                                                                                  |       | (138                                                 | )          | 84                                                      |       | 759                                                |       | 3,619                                                   |       | 84 |   | 4,184 |   |
| Minority  interest                                                                                                                                                                                                                                                                                                                                                             |       | 2                                                    |       | (2                                                      | )          | 8                                                  |       | 13                                                      |       | (2 | ) | 23 |   |
| Net (loss) income                                                                                                                                                                                                                                                                                                                                                              |       | $                                                    | (20,369    | )                                                       | $          | (5,023                                             | )          | $                                                       | 889        |   | $ | (14,463 | ) | $ | (5,023 | ) | $ | 8,045 |   |

 

*Seenotes to unaudited consolidated financial statements.*

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**SAFETY PRODUCTSHOLDINGS, INC.**

**CONSOLIDATED STATEMENTS OFCASH FLOWS**

**(Amountsin Thousands) (Unaudited)**

 
| ** **                                                                                | ** ** | **Predecessor**                                         | ** ** | **Successor**                                           | ** ** |
|-------------------------------------------------------------------------------------------|------------|---------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                                                | ** ** | **January 1,  2005  Through  July 19,  2005** | ** ** | **July 20,  2005  through  October 1,  2005** | ** ** | **Nine  months  ended  September 30,  2006** | ** ** |
| **Operating  activities**                                                                 | ** ** | ** **                                              | ** ** | ** **                                              | ** ** | ** ** | ** ** |
| Net (loss)  income                                                                        |       | $                                                       | (14,463    | )                                                       | $          | (5,023 | ) | $ | 8,045 |   |
| Adjustments to  reconcile net (loss) income to net cash provided by operating activities: |       |                                                    |       |                                                    |       |   |   |
| Depreciation                                                                              |       | 6,177                                                   |       | 2,417                                                   |       | 10,008 |   |
| Amortization of intangibles                                                               |       | 329                                                     |       | 4,732                                                   |       | 8,540 |   |
| Amortization of deferred financing costs                                                  |       | 1,311                                                   |       | 623                                                     |       | 2,513 |   |
| Amortization of original issue discount (premium)                                         |       | 58                                                      |       | (32                                                     | )          | (109 | ) |
| Loss on sale of property, plant and equipment                                             |       | —                                                  |       | —                                                  |       | 54 |   |
| Deferred income taxes                                                                     |       | (86                                                     | )          | (651                                                    | )          | (246 | ) |
| Minority interest                                                                         |       | 13                                                      |       | (2                                                      | )          | 23 |   |
| Noncash interest                                                                          |       | 11,167                                                  |       | 3,075                                                   |       | 12,431 |   |
| Management incentive compensation                                                         |       | —                                                  |       | —                                                  |       | 1,345 |   |
| Changes in operating assets and liabilities:                                              |       |                                                    |       |                                                    |       |   |   |
| Accounts receivable                                                                       |       | (2,607                                                  | )          | (10,145                                                 | )          | (10,433 | ) |
| Inventories                                                                               |       | (1,515                                                  | )          | 3,024                                                   |       | (16,055 | ) |
| Prepaid expenses and other current assets                                                 |       | 467                                                     |       | 312                                                     |       | 408 |   |
| Other noncurrent assets                                                                   |       | (477                                                    | )          | 115                                                     |       | (265 | ) |
| Accounts payable                                                                          |       | (492                                                    | )          | 3,288                                                   |       | 2,409 |   |
| Accrued expenses                                                                          |       | 20,902                                                  |       | (1,329                                                  | )          | (3,119 | ) |
| Pension, postretirement, and deferred compensation                                        |       | (1,210                                                  | )          | 135                                                     |       | (1,466 | ) |
| Other noncurrent liabilities                                                              |       | (30                                                     | )          | (3                                                      | )          | (225 | ) |
| Other                                                                                     |       | 20                                                      |       | 4                                                       |       | (2 | ) |
| Net cash  provided by operating activities                                                |       | 19,564                                                  |       | 540                                                     |       | 13,856 |   |
|                                                                                      |       |                                                    |       |                                                    |       |   |   |
| **Investing  activities**                                                                 | ** ** | ** **                                              | ** ** | ** **                                              | ** ** | ** ** | ** ** |
| Purchase of  businesses, net of cash acquired                                             |       | (653                                                    | )          | (204,707                                                | )          | (30,952 | ) |
| Purchases of  property, plant, and equipment                                              |       | (4,250                                                  | )          | (1,471                                                  | )          | (7,681 | ) |
| Proceeds from  sale of property, plant and equipment                                      |       | —                                                  |       | —                                                  |       | 113 |   |
| Net cash used in  investing activities                                                    |       | (4,903                                                  | )          | (206,178                                                | )          | (38,520 | ) |
|                                                                                      |       |                                                    |       |                                                    |       |   |   |
| **Financing  activities**                                                                 | ** ** | ** **                                              | ** ** | ** **                                              | ** ** | ** ** | ** ** |
| Payment of  deferred financing costs                                                      |       | (3,246                                                  | )          | (19,835                                                 | )          | (201 | ) |
| Proceeds from  borrowings                                                                 |       | 100,000                                                 |       | 111,646                                                 |       | 15,000 |   |
| Payments of debt                                                                          |       | (13,623                                                 | )          | (293                                                    | )          | (1,399 | ) |
| Net borrowings  under revolving credit facility                                           |       | —                                                  |       | —                                                  |       | 2,000 |   |
| Proceeds from  the issuance of shares                                                     |       | —                                                  |       | 109,670                                                 |       | 563 |   |
| Distributions on  preferred units                                                         |       | (60,000                                                 | )          | —                                                  |       | — |   |
| Distributions on  common units                                                            |       | (2,509                                                  | )          | —                                                  |       | — |   |
| Net cash  provided by financing activities                                                |       | 20,622                                                  |       | 201,188                                                 |       | 15,963 |   |
| Effect of  exchange rate changes on cash                                                  |       | (2,725                                                  | )          | 1,547                                                   |       | 356 |   |
| Net increase  (decrease) in cash and cash equivalents                                     |       | 32,558                                                  |       | (2,903                                                  | )          | (8,345 | ) |
| Cash and cash  equivalents at beginning of period                                         |       | 35,731                                                  |       | 7,144                                                   |       | 20,819 |   |
| Cash and cash  equivalents at end of period                                               |       | $                                                       | 68,289     |                                                    | $          | 4,241 |   | $ | 12,474 |   |

 

*Seenotes to unaudited consolidated financial statements.*

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**SAFETY PRODUCTS HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Amounts in Thousands) (Unaudited)**

**1.****                 Transactions**

On July 19,2005, Norcross Safety Products L.L.C. (“Norcross”) announced the closing of thetransaction under which it was acquired by Safety Products Holdings, Inc.(the “Company” or “Safety Products”), a new holding company formed by OdysseyInvestment Partners, LLC (“Odyssey”) for the purpose of completing theacquisition. Pursuant to the terms of the purchase agreement, Safety Productspurchased all of the outstanding membership units of Norcross and all of theoutstanding common stock of NSP Holdings Capital Corp. (“NSP Capital”), awholly-owned subsidiary of NSP Holdings L.L.C. (“NSP Holdings”), and pursuantto which Safety Products assumed all of the outstanding indebtedness ofNorcross and NSP Holdings, in exchange for a base purchase price to NSPHoldings of $472,000, plus the cash in Norcross as of April 2, 2005 in theamount of approximately $16,900, less (1) the indebtedness of Norcross andits subsidiaries as of April 2, 2005 and (2) certain transaction feesand expenses. The cash purchase price was $204,488 including direct costs ofacquisition of $2,346, and excluding assumed debt of $260,523.

On November 1,2005, the Company completed the acquisition of all of the issued andoutstanding capital stock of The Fibre-Metal Products Company (“Fibre-Metal”).The purchase price was $68,723, including acquisition costs of $723. TheCompany financed the acquisition through additional term borrowings under thesenior credit facility and cash on the balance sheet. The Company believes the acquisition of Fibre-Metal will broaden itseye, head and face product portfolio.  Theresults of operations of Fibre-Metal are included in the Company’s consolidatedstatement of operations from the date of acquisition.

OnFebruary 2, 2006, the Company completed the acquisition of all of the issuedand outstanding capital stock of American Firewear, Inc. (“American Firewear”).The purchase price consisted of $4,453 in cash (including acquisition costs of$203 and net of cash acquired of $183) and a $1,000 subordinated seller note.In addition, the purchase price may be increased by $750 over the next fouryears based on American Firewear achieving certain financial and operatingobjectives. The Company financed the acquisition through cash on the balancesheet and the issuance of the $1,000 subordinated seller note. The Company believes the acquisition of AmericanFirewear will stenghten its hand protection product line.  The results of operations of AmericanFirewear are included in the Company’s consolidated statement of operationsfrom the date of acquisition.

OnJune 9, 2006, the Company completed the acquisition of all of the issued andoutstanding capital stock of The White Rubber Corporation (“White Rubber”). Thepurchase price was $22,182 (including acquisition costs of $636 and gross ofoutstanding checks of $773). The Company financed the acquisition throughadditional term borrowings under the senior credit facility and cash on thebalance sheet.  The Company believes the acquisition of White Rubber will stenghten itshand protection product line. The results of operations of White Rubberare included in the Company’s consolidated statement of operations from thedate of acquisition.  The Company has notfinalized the allocation of purchase price as of September 30, 2006.

OnSeptember 19, 2006, the Company completed the acquisition of all of the issuedand outstanding capital stock of The New England Overshoe Company, Inc. (“NEOS”).  The purchase price consisted of $3,639 incash (including acquisition costs of $139 and net of cash acquired of $6) and a$750 subordinated seller note.  Inaddition, the purchase price may be increased over the next five years based onNEOS achieving certain net sales targets. The Company financed the acquisition through cash on the balance sheetand the issuance of the $750 subordinated seller note.  TheCompany believes the acquisition of NEOS will broaden its footwear productportfolio.  The results of NEOSare included in the Company’s consolidated statement of operations from thedate of acquisition.  The Company has notfinalized the allocation of purchase price as of September 30, 2006.

Theacquisition of Norcross is referred to as the “Norcross Transaction”, theacquisition of Fibre-Metal is referred to as the “Fibre-Metal Transaction”, theacquisition of American Firewear is referred to as the “American FirewearTransaction”, the acquisition of White Rubber is referred to as the “WhiteRubber Transaction” and the

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acquisition ofNEOS is referred to as the “NEOS Transaction.” Collectively, the Norcross Transaction, the Fibre-Metal Transaction, theAmerican Firewear Transaction, the White Rubber Transaction and the NEOSTransaction are referred to as the “Transactions.”

**2.****                 Basis of Presentation**

The accompanying unaudited consolidated financialstatements of the Company have been prepared in accordance with accountingprinciples generally accepted in the United States for interim financialinformation. Accordingly, they do not include all of the information and notesrequired by accounting principles generally accepted in the United States forcomplete financial statements.

In the opinion of management, all adjustments(consisting only of adjustments of a normal and recurring nature) considerednecessary for a fair presentation of the financial position and results ofoperations have been included. Interim results are not necessarily indicativeof the results that might be expected for any other interim period or for thefiscal year ending December 31, 2006. The financial statements presented shouldbe read in conjunction with the consolidated financial statements and footnotesthereto included in our 2005 consolidated financial statements, included in theCompany’s annual report on Form 10-K.

Predecessor — Theconsolidated financial statements of the Predecessor represent the consolidatedresults of operations of NSP Holdings L.L.C. prior to the Norcross Transaction.

Successor — Theconsolidated financial statements of the Successor represent the consolidatedresults of operations of Safety Products Holdings, Inc. subsequent to theNorcross Transaction.

The consolidatedfinancial statements of the Successor reflect the Transactions under thepurchase method of accounting, in accordance with the Financial AccountingStandards Board (“FASB”) Statement of Accounting Standards (“SFAS”) No. 141, *Business Combinations*.

The followingtable presents the pro forma net sales, income from operations, and net incomeof the Company assuming the Transactions had occurred on January 1, 2005:
| ** **              | ** ** | **Predecessor**                                | ** ** | **Successor**                                     | ** ** |
|-------------------------|------------|------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **              | ** ** | **Nine  months  ended  October 1,  2005** | ** ** | **Nine  months  ended  September 30,  2006** | ** ** |
| Net sales               |       | $                                              | 402,767    |                                              | $          | 429,866 |   |
| Income from  operations |       | 22,588                                         |       | 49,187                                            |       |
| Net (loss) income       |       | (22,026                                        | )          | 9,699                                             |       |
|                         |            |                                                |            |                                                   |            |  |  |

 

**3.****                 Reclassifications**

Certain accountbalances have been reclassified from the prior year to conform with currentyear presentation. Specifically, discounts and rebate expenses werereclassified from selling expenses to net sales. The impact of thisreclassification resulted in a reduction of selling expenses and net sales of$1,380, $182 and $749 for the period from January 1, 2005 through July 19,2005, the period from July 3, 2005 through July 19, 2005 and the period fromJuly 20, 2005 through October 1, 2005, respectively.

**4.****                 Recent AccountingPronouncements**

In July 2006, theFASB issued FASB Interpretation No. 48, *Accountingfor Uncertainty in Income Taxes* (“FIN 48”), which clarifies theaccounting for uncertainty in tax positions. This Interpretation requires that the Company recognize in the financialstatements, the impact of a tax position, if that position is more likely thannot of being sustained on audit, based on the technical merits of theposition.  In addition, FIN 48 providesguidance on the derecognition, classification, accounting in interim periodsand disclosure requirements for uncertain tax

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positions.  The accounting provision of FIN 48 will beeffective as of the beginning of the 2007 fiscal year, with the cumulativeeffect of the change in accounting principle recorded as an adjustment to thebeginning retained earnings.  The Companyis currently evaluating the impact, if any, of adopting FIN 48 on its financialstatements.

InSeptember 2006, the FASB issued SFAS No. 157, *FairValue Measurements*, which defines fair value, establishes aframework for measuring fair value, and expands disclosures about fair valuemeasurements. The provisions of SFAS No. 157 are effective for the Company asof the beginning of its fiscal year ended December 31, 2008. The Company is inthe process of determining the effects, if any, that adoption of SFAS No. 157will have on its financial statements.

InSeptember 2006, the FASB issued SFAS No. 158, *Employers’Accounting for Defined Benefit Pension and Other Postretirement Plans – anamendment of FASB Statements No. 87, 88, 106 and 132(R*). SFAS No.158 requires an employer to recognize in its statement of financial position anasset for a plan’s overfunded status or a liability for a plan’s underfundedstatus, measure a plan’s assets and its obligations that determine its fundedstatus as of the end of the employer’s fiscal year, and recognize changes inthe funded status of a defined benefit postretirement plan in the year in whichthe changes occur. Those changes will be reported in comprehensive income andas a separate component of shareholders’ equity. SFAS No. 158 does not changethe amount of net periodic benefit cost included in net earnings. Therequirement to recognize the funded status of defined benefit postretirementplans is effective for the Company as of December 31, 2007. The requirement tomeasure plan assets and benefit obligations as of the end of the fiscal year iseffective for the Company no later than December 31, 2008. Retrospectiveapplication of both the recognition and measurement date provisions of SFAS No.158 is not permitted. The Company is in the process of determining the effects,if any, that adoption of SFAS No. 158 will have on its financial statements.

InSeptember 2006, the Securities and Exchange Commission (SEC) issued StaffAccounting Bulletin No. 108 (SAB 108), *Consideringthe Effects of Prior Year Misstatements when Quantifying Misstatements in CurrentYear Financial Statements*, to address diversity in practice inquantifying financial statement misstatements. SAB 108 provides interpretiveguidance on the consideration of the effects of prior year misstatements inquantifying current year misstatements for the purpose of a materialityassessment. SAB 108 is effective for the Company in its year ended December 31,2006, and allows a one-time transitional cumulative effect adjustment toretained earnings as of January 1, 2006 for errors that were notpreviously deemed material, but are material under the guidance in SAB 108. TheCompany is in the process of determining the effects, if any, that SAB 108 willhave on its financial statements.

**5.****                 Management Incentive Compensation**

The Company’sOption Plan (as amended, the “Plan”) was adopted and approved by the Board ofDirectors in December 2005, and provides for the issuance of up to 1,436,631shares of common stock of the Company in connection with the granting ofnon-qualified or incentive stock options. The principal purposes of the Planare: 1) to further the growth, development and financial success of the Companyand its subsidiaries, by providing additional incentives to employees,consultants and independent directors (as defined) of the Company and itssubsidiaries and 2) to enable the Company and its subsidiaries to obtain andretain the services of the type of professional, technical and managerialemployees, consultants and independent directors considered essential to thelong-range success of the Company.

Prior to December31, 2005, the Company accounted for stock-based compensation programs accordingto the provisions of Accounting Principles Board Opinion (“ABP”) No. 25, *Accounting for Stock Issued to Employees*(“APBNo. 25”), as permitted by SFAS No. 123, *Accountingfor Stock-Based Compensation*. Effective January 1, 2006, the Companyadopted the fair value recognition provisions of SFAS 123 (R), *Share-Based Payments*(“SFAS No. 123(R)”).As a result of adopting SFAS No. 123(R) on January 1, 2006, income beforeincome taxes and net income for the nine months ended September 30, 2006, are$1,345 and $822 lower, respectively, than if the Company had continued toaccount for share-based compensation under APB No. 25. The application of thefair value provisions of SFAS No. 123(R) would not have had an impact on theCompany’s results for the nine months

6

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ended October 1, 2005.

In January 2006,the Company granted a total of 1,213,559 non-qualified options in connectionwith the Plan. Outstanding non-qualified stock options have an expiration dateten years from the date of grant and have an exercise price of $10 per share.All non-qualified stock options were granted with an exercise price equal tothe fair market value on the date of grant. During the nine months endedSeptember 30, 2006, no options were forfeited or exercised.

The non-qualifiedstock options are scheduled to vest over an approximate eight year period. Inaddition, a portion of the non-qualified stock options are subject to acceleratedvesting provisions when certain performance targets are met. The firstperformance target was met, and therefore the first installment was vested asof September 30, 2006. If certain additional performance targets are met, theremaining four installments will vest on, or within 120 days following,December 31 of each calendar year 2006 through 2009. The non-qualified stockoptions are subject to further acceleration clauses based on change in controlprovisions. As of September 30, 2006, 340,156 shares of non-qualified stockoptions were vested. As of September 30, 2006, there was approximately $3,454of unrecognized management incentive compensation related to nonvestednon-qualified stock options.  The Companyexpects to recognize this management incentive compensation over a weightedaverage period of 4.0 years.

The Company usedthe Black-Scholes option-pricing model to estimate the fair value of eachoption grant as of the date of grant. Expected volatilities are based onhistorical volatility of the common stock of comparable public companies. TheCompany estimated the expected life of the options based on the likelihood ofthe achievement of performance targets, change in control provisions, andhistoric employee termination data. The risk-free interest rate is based onU.S. Treasury yields in effect at the time of grant. The estimatedweighted-average fair values of and related assumptions for options grantedwere as follows:

Weighted-averagefair value of options granted:
| At fair value                    |   | $      | 3.95   |   |
|----------------------------------|--------|--------|--------|--------|
|                             |   |   |   |
| Assumptions:                     |   |   |   |
| Dividend yield                   |   | 0.0    | %      |
| Expected volatility              |   | 40.0   | %      |
| Risk-free interest rate          |   | 5.0    | %      |
| Expected life of  option (years) |   | 5.0    |   |

 

As a result of the Norcross Transaction, thePredecessor recognized $16,388 in management incentive compensation expenseduring the July 3, 2005 through July 19, 2005 predecessorperiod.  The expenses were funded by thePredecessor from proceeds realized upon the consummation of the NorcrossTransaction.

**6.****                 Inventories**

Inventories consist of the following:
| ** **              | ** ** | **Successor**               | ** ** |
|-------------------------|------------|-----------------------------|------------|
| ** **              | ** ** | **December 31,  2005** | ** ** | **September 30,  2006** | ** ** |
| At FIFO cost:           |       |                        |       |   |   |
| Raw materials           |       | $                           | 23,755     |   | $ | 28,244 |   |
| Work in process         |       | 12,745                      |       | 13,988 |   |
| Finished goods          |       | 57,126                      |       | 71,600 |   |
|                    |       | 93,626                      |       | 113,832 |   |
| Adjustment to LIFO cost |       | (164                        | )          | (164 | ) |
|                    |       | $                           | 93,462     |   | $ | 113,668 |   |

 

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# **7.****                 Long-Term Obligations**

The Company’s long-term obligations consist of thefollowing:
| ** **                                         | ** ** | **Successor**               | ** ** |
|----------------------------------------------------|------------|-----------------------------|------------|
| ** **                                         | ** ** | **December 31,  2005** | ** ** | **September 30,  2006** | ** ** |
| Revolving credit  facilities                       |       | $                           | —     |   | $ | 2,000 |   |
| Term loan                                          |       | 152,390                     |       | 166,147 |   |
| Senior pay in  kind notes                          |       | 138,357                     |       | 150,788 |   |
| Senior  subordinated notes                         |       | 152,500                     |       | 152,500 |   |
| European term  loans                               |       | 248                         |       | 167 |   |
| Subordinated  seller notes                         |       | —                      |       | 1,750 |   |
| Capital lease  obligations                         |       | 75                          |       | — |   |
| Unamortized  discount on senior pay in kind notes  |       | (7,517                      | )          | (6,856 | ) |
| Unamortized  premium on senior subordinated notes  |       | 7,186                       |       | 6,416 |   |
|                                               |       | 443,239                     |       | 472,912 |   |
| Less: Current  maturities of long-term obligations |       | 1,846                       |       | 2,453 |   |
|                                               |       | $                           | 441,393    |   | $ | 470,459 |   |

 

Aggregate maturities of long-term obligations as ofSeptember 30, 2006, are as follows:
| 2007       |   | $       | 2,453   |   |
|------------|--------|---------|---------|--------|
| 2008       |   | 2,417   |    |
| 2009       |   | 2,375   |    |
| 2010       |   | 29,527  |    |
| 2011       |   | 153,968 |    |
| Thereafter |   | 282,172 |    |
|       |   | $       | 472,912 |   |

 

**8.****                 Income Taxes**

The income taxexpense (benefit) for the Predecessor differs from the amount of income taxexpense (benefit) computed by applying the U.S. federal income tax rate to lossbefore income taxes and minority interest primarily due to: 1) the taxstructure of certain U.S. subsidiaries which requires income taxes to bedistributed to and paid by the unitholders, 2) net operating losscarryforwards in the United States and 3) the settlement of income taxaudits in the Company’s foreign subsidiaries.

The income taxexpense for the Successor differs from the amount of income tax expensecomputed by applying the U.S. federal income tax rate to income (loss) beforeincome taxes and minority interest primarily due to: 1) net operating losscarryforwards in the United States, 2) the impact of purchase accountingadjustments related to the Transactions and 3) the impact of foreign statutoryrate changes on the Company’s deferred taxes.

**9.****                 Employee BenefitPlans**

The following table sets forth the components of netperiodic benefit cost for the Company’s penion benefits:
| ** **                          | ** ** | **Predecessor**                                      | ** ** | **Successor**                                           | ** ** | **Predecessor**                                    | ** ** | **Successor**                                           | ** ** |
|-------------------------------------|------------|------------------------------------------------------|------------|---------------------------------------------------------|------------|----------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                          | ** ** | **July 3,  2005  through  July 19,  2005** | ** ** | **July 20,  2005  through  October 1,  2005** | ** ** | **Three  months  ended  September 30,  2006** | ** ** | **January 1,  2005  through  July 19,  2005** | ** ** | **July 20,  2005  through  October 1,  2005** | ** ** | **Nine  months  ended  September 30,  2006** | ** ** |
|                                |       |                                                 |       |                                                    |       |                                               |       |                                                    |       |   |   |   |   |
| Service cost                        |       | $                                                    | 69         |                                                    | $          | 384                                                |       | $                                                       | 594        |   | $ | 903 |   | $ | 384 |   | $ | 1,576 |   |
| Interest cost                       |       | 150                                                  |       | 756                                                     |       | 998                                                |       | 1,960                                                   |       | 756 |   | 2,886 |   |
| Expected return  on plan assets     |       | (226                                                 | )          | (724                                                    | )          | (755                                               | )          | (1,780                                                  | )          | (724 | ) | (2,567 | ) |
| Amortization of  prior service cost |       | 1                                                    |       | —                                                  |       | —                                             |       | 3                                                       |       | — |   | — |   |
| Amortization of  actuarial loss     |       | (41                                                  | )          | —                                                  |       | —                                             |       | 527                                                     |       | — |   | — |   |
|                                |       | $                                                    | (47        | )                                                       | $          | 416                                                |       | $                                                       | 837        |   | $ | 1,613 |   | $ | 416 |   | $ | 1,895 |   |

 

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The following table sets forth the components of netperiodic benefit cost for the Company’s post-retirement benefits:
| ** **                          | ** ** | **Predecessor**                                      | ** ** | **Successor**                                           | ** ** | **Predecessor**                                    | ** ** | **Successor**                                           | ** ** |
|-------------------------------------|------------|------------------------------------------------------|------------|---------------------------------------------------------|------------|----------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                          | ** ** | **July 3,  2005  through  July 19,  2005** | ** ** | **July 20,  2005  through  October 1,  2005** | ** ** | **Three  months  ended  September 30,  2006** | ** ** | **January 1,  2005  through  July 19,  2005** | ** ** | **July 20,  2005  through  October 1,  2005** | ** ** | **Nine  months  ended  September 30,  2006** | ** ** |
|                                |       |                                                 |       |                                                    |       |                                               |       |                                                    |       |   |   |   |   |
| Service cost                        |       | $                                                    | 2          |                                                    | $          | 5                                                  |       | $                                                       | 7          |   | $ | 14 |   | $ | 5 |   | $ | 19 |   |
| Interest cost                       |       | 3                                                    |       | 15                                                      |       | 18                                                 |       | 43                                                      |       | 15 |   | 54 |   |
| Amortization of  prior service cost |       | 2                                                    |       | —                                                  |       | —                                             |       | 10                                                      |       | — |   | — |   |
| Amortization of  actuarial loss     |       | 4                                                    |       | —                                                  |       | —                                             |       | 48                                                      |       | — |   | — |   |
|                                |       | $                                                    | 11         |                                                    | $          | 20                                                 |       | $                                                       | 25         |   | $ | 115 |   | $ | 20 |   | $ | 73 |   |

 

**10.****          Restructuring and Merger-Related Charges**

In conjunctionwith the Fibre-Metal Transaction, the Company initiated a restructuring plan toclose the Fibre-Metal manufacturing facility located in Concordville,Pennsylvania and move production to its Cranston, Rhode Island and Mexicali,Mexico facilities. In addition, the Company plans to close certain Fibre-Metaldistribution centers and integrate Fibre-Metal distribution into its existingdistribution facilities. The Company initiated this plan in order to increaseprofitability by utilizing excess capacity at its existing plants and movingmanufacturing to locations with favorable labor costs. As of the date of theFibre-Metal Transaction, the Company recorded an accrual for costs associatedwith the plan of $1,716, comprised of $1,383 in severance costs and $333 infacility closure and other exit costs. Since the Fibre-Metal Transaction therehave been $131 of payments recorded against the liability.

In conjunctionwith the White Rubber Transaction, the Company initiated a restructuring planto move certain production and distribution functions located in Ohio andWashington to its Charleston, South Carolina, Skokie, Illinois and Chicago,Illinois facilities.  The Companyinitiated this plan in order to increase profitability by utilizing excesscapacity and consolidating distribution functions.  As of the date of the White RubberTransaction, the Company recorded an accrual for costs associated with the planof $1,018, comprised of severance costs.  Since the White Rubber Transaction there have been $98 of paymentsrecorded against the liability.

**11.****          Legal Proceedings**

The Company issubject to various claims arising in the ordinary course of business. Most ofthese lawsuits and claims are product liability matters that arise out of theuse of respiratory product lines manufactured by the Company’s North SafetyProducts subsidiary. As of September 30, 2006, the Company’s North SafetyProducts subsidiary, along with its predecessors and/or the former owners ofsuch business were named as defendants in

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approximately 657lawsuits involving respirators allegedly manufactured and sold by it or itspredecessors. The Company is also monitoring an additional 12 lawsuits in whichit feels that North Safety Products, its predecessors and/or the former ownersof such businesses may be named as defendants. Collectively, these 669 lawsuitsrepresent a total of approximately 8,769 plaintiffs. Approximately 91% of theselawsuits involve plaintiffs alleging injury resulting from exposure to silicadust, with the remainder alleging injury resulting from exposure to other dustparticles, including asbestos. These lawsuits typically allege that thepurposed injuries resulted in part from respirators that were negligentlydesigned or manufactured. Invensys plc (“Invensys”), formerly Siebe plc, iscontractually obligated to indemnify the Company for any losses, includingcosts of defending claims, resulting from respiratory products manufactured orsold prior to the acquisition of North Safety Products in October 1998.

In addition, theCompany’s North Safety Products subsidiary is contractually entitled toindemnification from Norton Company, an affiliate of Saint-Gobain, which ownedthe North Safety Products business prior to Invensys. Pursuant to a December14, 1982 asset purchase agreement, Siebe Norton, Inc., a newly formedwholly-owned subsidiary of Norton Company, acquired the assets of Norton’sSafety Products Division and the stock of this company was in turn acquired bySiebe Gorman Holdings PLC. Under the terms of the agreement, Siebe Norton, Inc.did not assume any liability for claims relating to products shipped by NortonCompany prior to the closing date. Moreover, Norton Company covenanted in theagreement to indemnify Siebe Norton, Inc. and its successors and assignsagainst any liability resulting from or arising out of any state of facts,omissions or events existing or occurring on or before the closing date,including, without limitation, any claims arising from products shipped byNorton Company or any of its affiliates prior to the closing date. SiebeNorton, Inc., whose name was subsequently changed to Siebe North Inc., wassubsequently acquired by the Company as part of the 1998 acquisition of theNorth Safety Products business from Invensys.

Despite theseindemnification arrangements, the Company could potentially be liable forlosses or claims relating to products manufactured prior to the October 1998acquisition date if Invensys fails to meet its obligations to indemnify theCompany and the Company could potentially be liable for losses and claimsrelating to products sold prior to January 10, 1983 if both Invensys and Nortonfail to meet their obligations to indemnify the Company. The Company could alsobe liable if the alleged exposure involved the use of a product manufactured bythe Company after the October 1998 acquisition of the North Safety Productsbusiness.  The Company believes thatInvensys has the ability to pay these claims based on its current financialposition, as publicly disclosed by Invensys.

Effective July 1,2006, the Company entered into a joint defense agreement through December 31,2008 with the former owners of the North Safety Products business (the “JointDefense Agreement”).  Under the terms ofthe Joint Defense Agreement, the Company agreed to pay a weighted averagepercentage of defense costs associated with defending the Company and the priorowners of the North Safety Products business subject to a cap of $525, $960 and$1,000 for the period from July 1, 2006 through December 31, 2006, the yearended December 31, 2007 and the year ended December 31, 2008,respectively.  The cap excludessettlement costs and other costs incurred exclusively by the Company, includingtrial costs and special requests of counsel. Separately, the Company agreed to pay Invensys $200 related to settledcases through June 30, 2006 in which Invensys claimed that the period ofalleged exposure included periods after October 1998.

Based uponinformation provided to the Company by Invensys, the Company believes activityrelated to these lawsuits was as follows for the nine months ended September30, 2006:
| ** **                                | ** ** | **Plaintiffs** | ** ** | **Cases** | ** ** |
|-------------------------------------------|------------|----------------|------------|-----------|------------|
| Beginning  lawsuits as of January 1, 2006 |       | 18,459         |       | 1,148     |       |
| New lawsuits                              |       | 626            |       | 473       |       |
| Settlements                               |       | (5             | )          | (5        | )          |
| Dismissals and  other                     |       | (10,311        | )          | (947      | )          |
| Ending lawsuits as of  September 30, 2006 |       | 8,769          |       | 669       |       |

 

Plaintiffs haveasserted specific dollar claims in approximately 28% of the approximately 657cases pending as of September 30, 2006 in which North Safety Products, itspredecessors and/or the former owners of such businesses have been named asdefendants. A majority of jurisdictions prohibit specifying damages in tort

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cases such as these, andmost of the remaining jurisdictions do not require such specification. In thosecases in which plaintiffs choose to assert specific dollar amounts in theircomplaints, brought in states that permit such pleading, the amounts claimedare typically not meaningful as an indicator of a company’s potentialliability. This is because (1) the amounts claimed typically bear no relation tothe level of the plaintiff’s injury, (2) the complaints typically assert claimsagainst numerous defendants, and (3) many cases are brought on behalf ofplaintiffs who have not suffered any medical injury, and ultimately areresolved without any payment or payment of a small fraction of the damagesinitially claimed. Of the 657 complaints maintained in the Company’s records,472 do not specify the amount of damages sought, 25 generally allege damages inexcess of $50, one alleges compensatory damages in excess of $50 and anunspecified amount of punitive damages, 81 allege compensatory damages andpunitive damages, each in excess of $25, two generally allege damages in excessof $100, nine allege compensatory damages and punitive damages, each in excess of$50, 20 generally allege damages in excess of $15,000, one generally allegesdamages of $23,000, one alleges compensatory damages and punitive damages, eachin excess of $10, four allege general damages of $18,000 and punitive damagesof $10,000, two allege general damages of $13,000 and punitive damages of$10,000, one alleges compensatory and punitive damages, each in excess of $15,two allege punitive damages in excess of $25, one alleges punitive damages inexcess of $50, nine generally allege damages in excess of $15, 12 generallyallege damages in excess of $25, one alleges compensatory damages of $18,000and punitive damages of $10,000, one alleges punitive damages of $13,500 andcompensatory damages of $10,000, one alleges punitive damages of $13,000 andcompensatory damages of $10,000, eight allege compensatory damages of $13,000and punitive damages of $10,000, one alleges compensatory and punitive damages,each of $15 and two allege compensatory and punitive damages, each in excess of$15,000. The Company currently does not have access to the complaints withrespect to the previously mentioned additional 12 monitored cases, andtherefore it does not know whether these cases allege specific damages, or ifso, the amount of such damages, but is in the process of seeking to obtain suchinformation. Due to the reasons noted above and to the indemnificationarrangements benefiting the Company, it does not believe that the damageamounts specified in these complaints are a meaningful factor in any assessmentof the Company’s potential liability.

The Predecessorrecorded a $1,250 reserve for respiratory claims. The Company increased thisreserve to $7,000 and recorded the increase as part of the purchase priceallocation process associated with the Norcross Transaction. The increaserepresents a decision by new ownership to enter into the Joint DefenseAgreement with the prior owners of North Safety Products. This reserverepresents a reasonable estimate of the Company’s probable and estimableliabilities for claims alleging injury resulting from exposure to silica dustand other dust particles, including asbestos as determined by the Company inconsultation with an independent consultant. The Company has determined that afive-year projection of claims and related defense costs is the most reasonableapproach. However, it is possible that the Company may incur liabilities inexcess of the amounts currently reserved. This reserve will be re-evaluatedperiodically and additional charges or credits will be recorded to operatingexpenses as additional information becomes available.

It is possiblethat the Company may incur liabilities in an amount in excess of amountscurrently reserved. However, taking into account currently availableinformation, historical experience, and the Company’s indemnification fromInvensys, but recognizing the inherent uncertainties in the projection of anyfuture events, the Company believes that these suits or claims should notresult in final judgments or settlements in excess of its reserve.

In connection withan ongoing dispute, one of the Company’s competitors has filed a complaintagainst it alleging that the Company has made a series of misrepresentationsconcerning this competitor and its products. The complaint seeks a retractionof all statements alleged to have been made by the Company and unspecifieddamages, including legal fees. A bench trial on the issue of liability was heldin February 2006 and the matter is now awaiting ruling by the court. TheCompany intends to vigorously defend against these claims.

The Company is nototherwise involved in any material lawsuits. The Company historically has notbeen required to pay any material liability claims. The Company maintainsinsurance against product liability claims (with the exception of asbestosisand silicosis cases, for which coverage is not commercially available), but itis possible that its insurance coverage will not continue to be available onterms acceptable to the Company or that

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such coverage will not beadequate for liabilities actually incurred.

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**12.**                               Segment Data

The following table presents information about theCompany by segment:
| ** **                                 | ** ** | **General  Safety &  Preparedness** | ** ** | **Fire  Service** | ** ** | **Electrical  Safety** | ** ** | **Corporate** | ** ** | **Eliminations** | ** ** | **Total**  | ** ** |
|--------------------------------------------|------------|----------------------------------------------|------------|-------------------|------------|------------------------|------------|---------------|------------|------------------|------------|------------|------------|
| **Predecessor**                            | ** ** | ** **                                   | ** ** | ** **        | ** ** | ** **             | ** ** | ** **    | ** ** | ** **       | ** ** | ** ** | ** ** |
| **July 3, 2005 through July 19,  2005**    | ** ** | ** **                                   | ** ** | ** **        | ** ** | ** **             | ** ** | ** **    | ** ** | ** **       | ** ** | ** ** | ** ** |
| Net sales—third parties               |       | $                                            | 22,553     |              | 6,616      |                   | 4,455      |          | —     |             | $          | —     |       | $ | 33,624 |   |
| Net sales—intersegment                |       | 693                                          |       | —            |       | —                 |       | —        |       | (693             | )          | —     |       |
| Income (loss) from  operations             |       | 1,834                                        |       | 1,188             |       | 615                    |       | (16,731       | )          | —           |       | (13,094    | )          |
|                                       |       |                                         |       |              |       |                   |       |          |       |             |       |       |       |
| **Successor**                              | ** ** | ** **                                   | ** ** | ** **        | ** ** | ** **             | ** ** | ** **    | ** ** | ** **       | ** ** | ** ** | ** ** |
| **July 20, 2005 through October  1, 2005** | ** ** | ** **                                   | ** ** | ** **        | ** ** | ** **             | ** ** | ** **    | ** ** | ** **       | ** ** | ** ** | ** ** |
| Net sales—third parties               |       | 59,039                                       |       | 14,770            |       | 11,180                 |       | —        |       | —           |       | 84,989     |       |
| Net sales—intersegment                |       | 1,571                                        |       | —            |       | —                 |       | —        |       | (1,571           | )          | —     |       |
| Income (loss) from  operations             |       | 2,029                                        |       | (400              | )          | 1,576                  |       | (1,144        | )          | —           |       | 2,061      |       |
|                                       |       |                                         |       |              |       |                   |       |          |       |             |       |       |       |
| **Successor**                              | ** ** | ** **                                   | ** ** | ** **        | ** ** | ** **             | ** ** | ** **    | ** ** | ** **       | ** ** | ** ** | ** ** |
| **Three Months Ended September  30, 2006** | ** ** | ** **                                   | ** ** | ** **        | ** ** | ** **             | ** ** | ** **    | ** ** | ** **       | ** ** | ** ** | ** ** |
| Net sales—third parties               |       | 98,725                                       |       | 21,817            |       | 21,336                 |       | —        |       | —           |       | 141,878    |       |
| Net sales—intersegment                |       | 2,243                                        |       | —            |       | —                 |       | —        |       | (2,243           | )          | —     |       |
| Income (loss) from  operations             |       | 10,624                                       |       | 1,430             |       | 3,597                  |       | (2,068        | )          | —           |       | 13,583     |       |
|                                       |       |                                         |       |              |       |                   |       |          |       |             |       |       |       |
| **Predecessor**                            |       |                                         |       |              |       |                   |       |          |       |             |       |       |       |
| **January 1, 2005 through July  19, 2005** | ** ** | ** **                                   | ** ** | ** **        | ** ** | ** **             | ** ** | ** **    | ** ** | ** **       | ** ** | ** ** | ** ** |
| Net sales—third parties               |       | 186,434                                      |       | 51,702            |       | 33,558                 |       | —        |       | —           |       | 271,694    |       |
| Net sales—intersegment                |       | 5,548                                        |       | —            |       | —                 |       | —        |       | (5,548           | )          | —     |       |
| Income (loss) from  operations             |       | 19,937                                       |       | 9,332             |       | 8,442                  |       | (19,481       | )          | —           |       | 18,230     |       |
|                                       |       |                                         |       |              |       |                   |       |          |       |             |       |       |       |
| **Successor**                              | ** ** | ** **                                   | ** ** | ** **        | ** ** | ** **             | ** ** | ** **    | ** ** | ** **       | ** ** | ** ** | ** ** |
| **July 20, 2005 through October  1, 2005** | ** ** | ** **                                   | ** ** | ** **        | ** ** | ** **             | ** ** | ** **    | ** ** | ** **       | ** ** | ** ** | ** ** |
| Net sales—third parties               |       | 59,039                                       |       | 14,770            |       | 11,180                 |       | —        |       | —           |       | 84,989     |       |
| Net sales—intersegment                |       | 1,571                                        |       | —            |       | —                 |       | —        |       | (1,571           | )          | —     |       |
| Income (loss) from  operations             |       | 2,029                                        |       | (400              | )          | 1,576                  |       | (1,144        | )          | —           |       | 2,061      |       |
|                                       |       |                                         |       |              |       |                   |       |          |       |             |       |       |       |
| **Successor**                              | ** ** | ** **                                   | ** ** | ** **        | ** ** | ** **             | ** ** | ** **    | ** ** | ** **       | ** ** | ** ** | ** ** |
| **Nine Months Ended September 30,  2006**  | ** ** | ** **                                   | ** ** | ** **        | ** ** | ** **             | ** ** | ** **    | ** ** | ** **       | ** ** | ** ** | ** ** |
| Net sales—third parties               |       | 293,120                                      |       | 68,073            |       | 58,807                 |       | —        |       | —           |       | 420,000    |       |
| Net sales—intersegment                |       | 7,146                                        |       | —            |       | —                 |       | —        |       | (7,146           | )          | —     |       |
| Income (loss) from operations              |       | 33,383                                       |       | 6,118             |       | 12,745                 |       | (6,287        | )          | —           |       | 45,959     |       |
|                                            |            |                                              |            |                   |            |                        |            |               |            |                  |            |            |            |  |  |  |

 

13

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**13.**                               Subsidiary Guarantors

NSPCapital is a 100% owned finance subsidiary of the Company with no assets oroperations. None of the Company’s other subsidiaries guarantee the 113¤4% senior pay in kind notes due2012. The terms of the credit facility significantly restrict Norcross frompaying dividends and otherwise transferring assets to the Company. Further, theterms of the indenture governing Norcross’ 97/8% senior subordinated notes due 2011significantly restrict Norcross and the Company’s other subsidiaries frompaying dividends and otherwise transferring assets to the Company, except forordinary course operating expenses.

**14.****                               ComprehensiveIncome (Loss)**

Total Predecessor comprehensive loss (which includesthe impact of foreign currency translation) amounted to $(20,114), and$(18,956) for the period from January 1, 2005 through July 19, 2005 and theperiod from July 3, 2005 through July 19, 2005, respectively.  Total Successor comprehensive income amountedto $(2,262), $0, and $14,096 for the period from July 20, 2005 through October1, 2005 and the three and nine month periods ended September 30, 2006,respectively.  

**15.****                               SellerTransaction Expenses**

NSP Holdings incurred $4,646 in transaction expensesrelated to professional services during the July 3, 2005 through July 19, 2005predecessor period.  These expenses werefunded by the Predecessor from the proceeds realized upon the consummation ofthe Norcross Transaction.  These costsare reflected below operating expenses as seller transaction expenses.

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**Item 2.Management’s Discussion and Analysis of Financial Condition and Results ofOperations**

**Overview**

We are a leading designer, manufacturer and marketerof branded products in the fragmented personal protection equipment industry.We manufacture and market a full line of personal protection equipment forworkers in the general safety and preparedness, fire service and electricalsafety industries. We sell our products under trusted, long-standing andwell-recognized brand names, including *North*, *KCL**, Fibre-Metal, NEOS, *Morning Pride**, *Ranger*, *Servus*, *Pro-Warrington, American Firewear, Salisburyand Safety Line*. Our broad product offering includes, among otherthings, respiratory protection, protective footwear, hand protection, bunkergear and linemen equipment.

We classify our diverse product offerings into threeoperating segments:

*General Safety andPreparedness*. We offer a diverse portfolio of leadingproducts for a wide variety of industries, including manufacturing,agriculture, automotive, construction, food processing and pharmaceuticalindustries and the military, under the *North*, *KCL, Fibre-Metal, NEOS, Ranger and Servus* brand names. Ourproduct offering is one of the broadest in the personal protection equipmentindustry and includes respiratory protection, protective footwear, handprotection, eye, head and face protection, first aid, hearing protection andfall protection. We sell our general safety and preparedness products primarilythrough industrial distributors.

*Fire Service*.We manufacture and market one of the broadest lines of personal protectionequipment for the fire service market, offering firefighters head-to-toeprotection. Our products include bunker gear, fireboots, helmets, gloves andother accessories. We market our products under our Total Fire Group umbrella,using the brand names of *MorningPride*, *Ranger*, *Servus*,*Pro-Warrington and American Firewear*. Weare the vendor of choice for many of the largest fire departments in NorthAmerica. We sell our fire service products primarily through specialized fireservice distributors.

*Electrical Safety*.We manufacture and market a broad line of personal protection equipment for theutility market under the *Salisbury, Safety Line*and*Servus* brands. Our products, includinglinemen equipment, gloves, sleeves and footwear, are designed to protectworkers from up to 36,000 volts of electricity. All of our products either meetor exceed the applicable standards of the American National Standards Institute(“ANSI”) and the American Society for Testing of Materials (“ASTM”). Wedistribute our electrical safety products through specialized distributors,test labs, utilities and electrical contractors.

**Predecessorand Successor**

In May 2005, Safety Products entered into a purchaseand sale agreement with NSP Holdings and Norcross to purchase from NSP Holdingsall of the outstanding equity interests of Norcross and NSP Capital for anaggregate purchase price of approximately $481.0 million, which included theassumption or repayment of indebtedness but excluded payment of fees andexpenses. The acquisition closed on July 19, 2005 and was funded with proceedsto Safety Products from the issuance and sale of senior pay in kind notes aswell as an equity investment from affiliates of Odyssey and General ElectricPension Trust (“GEPT”) and certain members of management of Norcross.Concurrently with the acquisition, Norcross entered into a new senior creditfacility, consisting of a revolving credit facility that provides for up to$50.0 million of borrowings and an $88.0 million term loan. As a result of theacquisition, Safety Products became the sole unit holder of Norcross. SafetyProducts, following the Norcross Transaction, is referred to as the“Successor.” NSP Holdings, prior to the Norcross Transaction, is referred to asthe “Predecessor.”

In accordance with GAAP, our historical financialresults for the Predecessor and the Successor are presented separately. Theseparate presentation is required under GAAP in situations when there is achange in accounting basis, which occurred when purchase accounting was appliedto the Norcross Transaction. Purchase accounting requires that the historicalcarrying value of assets acquired and liabilities assumed be adjusted to fairvalue, which may yield results that are not comparable on a period-to-periodbasis due to the different, and

15

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sometimeshigher, cost basis associated with the allocation of the purchase price. Therehave been no material changes to the operations or customer relationships ofour business as a result of the Norcross Transaction.

**Acquisitions**

InNovember 2005, we completed the acquisition of all of the issued andoutstanding capital stock of Fibre-Metal. The purchase price of $68.7 million(including $0.7 million of acquisition costs) was financed through $65.0million of additional term borrowings under the senior credit facility and cashon the balance sheet.

InFebruary 2006, we completed the acquisition of all of the issued andoutstanding capital stock of American Firewear. The purchase price consisted of $4.5 million in cash (includingacquisition costs of $0.2 million and net of cash acquired of $0.2 million) anda $1.0 million subordinated seller note. In addition, the purchase price may be increased by $0.8 million overthe next four years based on American Firewear achieving certain financial andoperating objectives.  We financed theacquisition through cash on the balance sheet and the issuance of the $1.0million subordinated seller note.

InJune 2006, we completed the acquisition of all of the issued and outstandingcapital stock of White Rubber. The purchase price of $22.2 million (including$0.6 million of acquisition costs and gross of outstanding checks of $0.8million) was financed through $15.0 million of additional term borrowings underthe senior credit facility and cash on the balance sheet.

InSeptember 2006, we completed the acquisition of all of the issued andoutstanding capital stock of NEOS.  Thepurchase price consisted of $3.6 million in cash (including acquisition costsof $0.1 million and net of cash acquired) and a $0.8 million subordinatedseller note.  In addition, the purchaseprice may be increased over the next five years based on NEOS achieving certainnet sales targets.  We financed theacquisition through cash on the balance sheet and the issuance of the $0.8million subordinated seller note.

**Results ofOperations**

The followingtables set forth our results of operations in dollars and as a percentage ofnet sales for the three and nine months ended October 1, 2005 andSeptember 30, 2006 and have been derived from the unaudited statements ofoperations. Although the Predecessor and Successor results are not comparableby definition in certain respects due to the Norcross Transaction and theresulting revaluations, the 2005 information is presented on a combined basisfor comparative purposes.  For the three months ended October 1,2005, the Predecessor (July 3, 2005 through July 19, 2005) andSuccessor (July 20, 2005 through October 1, 2005) results ofoperations are combined.  For the nine months ended October 1, 2005,the Predecessor (January 1, 2005 through July 19, 2005) and Successor(July 20, 2005 through October 1, 2005) results of operations arecombined.
| ** **                                               | ** ** | **Predecessor**                                      | ** ** | **Successor**                                           | ** ** | **Combined**                                    | ** ** | **Successor**                                      | ** ** | **Predecessor**                                         | ** ** | **Successor**                                           | ** ** | **Combined**                                   | ** ** | **Successor**                                     | ** ** |
|----------------------------------------------------------|------------|------------------------------------------------------|------------|---------------------------------------------------------|------------|-------------------------------------------------|------------|----------------------------------------------------|------------|---------------------------------------------------------|------------|---------------------------------------------------------|------------|------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                               | ** ** | **July 3,  2005  through  July 19,  2005** | ** ** | **July 20,  2005  through  October 1,  2005** | ** ** | **Three  months  ended  October 1,  2005** | ** ** | **Three  months  ended  September 30,  2006** | ** ** | **January 1,  2005  through  July 19,  2005** | ** ** | **July 20,  2005  through  October 1,  2005** | ** ** | **Nine  months  ended  October 1,  2005** | ** ** | **Nine  months  ended  September 30,  2006** | ** ** |
| Net sales:                                               |       |                                                 |       |                                                    |       |                                            |       |                                               |       |                                                    |       |                                                    |       |                                           |       |                                              |       |
| General Safety & Preparedness                        |       | $                                                    | 22,553     |                                                    | $          | 59,039                                          |       | $                                                  | 81,592     |                                                    | $          | 98,725                                                  |       | $                                              | 186,434    |                                              | $          | 59,039 |   | $ | 245,473 |   | $ | 293,120 |   |
| Fire Service                                             |       | 6,616                                                |       | 14,770                                                  |       | 21,386                                          |       | 21,817                                             |       | 51,702                                                  |       | 14,770                                                  |       | 66,472                                         |       | 68,073                                            |       |
| Electrical Safety                                        |       | 4,455                                                |       | 11,180                                                  |       | 15,635                                          |       | 21,336                                             |       | 33,558                                                  |       | 11,180                                                  |       | 44,738                                         |       | 58,807                                            |       |
| Total net sales                                          |       | 33,624                                               |       | 84,989                                                  |       | 118,613                                         |       | 141,878                                            |       | 271,694                                                 |       | 84,989                                                  |       | 356,683                                        |       | 420,000                                           |       |
| Cost of goods  sold                                      |       | 22,586                                               |       | 58,271                                                  |       | 80,857                                          |       | 91,084                                             |       | 171,645                                                 |       | 58,271                                                  |       | 229,916                                        |       | 262,563                                           |       |
| Gross profit                                             |       | 11,038                                               |       | 26,718                                                  |       | 37,756                                          |       | 50,794                                             |       | 100,049                                                 |       | 26,718                                                  |       | 126,767                                        |       | 157,437                                           |       |
| Operating  expenses                                      |       | 24,132                                               |       | 24,657                                                  |       | 48,789                                          |       | 37,211                                             |       | 81,819                                                  |       | 24,657                                                  |       | 106,476                                        |       | 111,478                                           |       |
| (Loss) income  from operations:                          |       |                                                 |       |                                                    |       |                                            |       |                                               |       |                                                    |       |                                                    |       |                                           |       |                                              |       |
| General Safety & Preparedness                        |       | 1,834                                                |       | 2,029                                                   |       | 3,863                                           |       | 10,624                                             |       | 19,937                                                  |       | 2,029                                                   |       | 21,966                                         |       | 33,383                                            |       |
| Fire Service                                             |       | 1,188                                                |       | (400                                                    | )          | 788                                             |       | 1,430                                              |       | 9,332                                                   |       | (400                                                    | )          | 8,932                                          |       | 6,118                                             |       |
| Electrical Safety                                        |       | 615                                                  |       | 1,576                                                   |       | 2,191                                           |       | 3,597                                              |       | 8,442                                                   |       | 1,576                                                   |       | 10,018                                         |       | 12,745                                            |       |
| Corporate                                                |       | (16,731                                              | )          | (1,144                                                  | )          | (17,875                                         | )          | (2,068                                             | )          | (19,481                                                 | )          | (1,144                                                  | )          | (20,625                                        | )          | (6,287                                            | )          |
| Total (loss) income from operations                      |       | (13,094                                              | )          | 2,061                                                   |       | (11,033                                         | )          | 13,583                                             |       | 18,230                                                  |       | 2,061                                                   |       | 20,291                                         |       | 45,959                                            |       |
| Other expense  (income):                                 |       |                                                 |       |                                                    |       |                                            |       |                                               |       |                                                    |       |                                                    |       |                                           |       |                                              |       |
| Interest expense                                         |       | 2,927                                                |       | 7,151                                                   |       | 10,078                                          |       | 12,051                                             |       | 24,584                                                  |       | 7,151                                                   |       | 31,735                                         |       | 34,701                                            |       |
| Interest income                                          |       | (85                                                  | )          | (39                                                     | )          | (124                                            | )          | (105                                               | )          | (914                                                    | )          | (39                                                     | )          | (953                                           | )          | (435                                              | )          |
| Seller transaction expense                               |       | 4,646                                                |       | —                                                  |       | 4,646                                           |       | —                                             |       | 4,646                                                   |       | —                                                  |       | 4,646                                          |       | —                                            |       |
| Other, net                                               |       | (77                                                  | )          | (110                                                    | )          | (187                                            | )          | (19                                                | )          | 745                                                     |       | (110                                                    | )          | 635                                            |       | (559                                              | )          |
| (Loss) income  before income taxes and minority interest |       | (20,505                                              | )          | (4,941                                                  | )          | (25,446                                         | )          | 1,656                                              |       | (10,831                                                 | )          | (4,941                                                  | )          | (15,772                                        | )          | 12,252                                            |       |
| Income tax  (benefit) expense                            |       | (138                                                 | )          | 84                                                      |       | (54                                             | )          | 759                                                |       | 3,619                                                   |       | 84                                                      |       | 3,703                                          |       | 4,184                                             |       |
| Minority interest                                        |       | 2                                                    |       | (2                                                      | )          | —                                          |       | 8                                                  |       | 13                                                      |       | (2                                                      | )          | 11                                             |       | 23                                                |       |
| Net (loss) income                                        |       | $                                                    | (20,369    | )                                                       | $          | (5,023                                          | )          | $                                                  | (25,392    | )                                                       | $          | 889                                                     |       | $                                              | (14,463    | )                                                 | $          | (5,023 | ) | $ | (19,486 | ) | $ | 8,045 |   |

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| ** **                                               | ** ** | **Predecessor**                                      | ** ** | **Successor**                                           | ** ** | **Combined**                                    | ** ** | **Successor**                                      | ** ** | **Predecessor**                                         | ** ** | **Successor**                                           | ** ** | **Combined**                                   | ** ** | **Successor**                                     | ** ** |
|----------------------------------------------------------|------------|------------------------------------------------------|------------|---------------------------------------------------------|------------|-------------------------------------------------|------------|----------------------------------------------------|------------|---------------------------------------------------------|------------|---------------------------------------------------------|------------|------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                               | ** ** | **July 3,  2005  through  July 19,  2005** | ** ** | **July 20,  2005  through  October 1,  2005** | ** ** | **Three  months  ended  October 1,  2005** | ** ** | **Three  months  ended  September 30,  2006** | ** ** | **January 1,  2005  through  July 19,  2005** | ** ** | **July 20,  2005  through  October 1,  2005** | ** ** | **Nine  months  ended  October 1,  2005** | ** ** | **Nine  months  ended  September 30,  2006** | ** ** |
| ** **                                               | ** ** | ** **                                           | ** ** | ** **                                              | ** ** | ** **                                      | ** ** | ** **                                         | ** ** | ** **                                              | ** ** | ** **                                              | ** ** | ** **                                     | ** ** | ** **                                        | ** ** |
| Net sales:                                               |       |                                                 |       |                                                    |       |                                            |       |                                               |       |                                                    |       |                                                    |       |                                           |       |                                              |       |
| General Safety  & Preparedness                       |       | 67.1                                                 | %          | 69.4                                                    | %          | 68.8                                            | %          | 69.6                                               | %          | 68.6                                                    | %          | 69.4                                                    | %          | 68.9                                           | %          | 69.8                                              | %          |
| Fire Service                                             |       | 19.7                                                 | %          | 17.4                                                    | %          | 18.0                                            | %          | 15.4                                               | %          | 19.0                                                    | %          | 17.4                                                    | %          | 18.6                                           | %          | 16.2                                              | %          |
| Electrical Safety                                        |       | 13.2                                                 | %          | 13.2                                                    | %          | 13.2                                            | %          | 15.0                                               | %          | 12.4                                                    | %          | 13.2                                                    | %          | 12.5                                           | %          | 14.0                                              | %          |
| Total net sales                                          |       | 100.0                                                | %          | 100.0                                                   | %          | 100.0                                           | %          | 100.0                                              | %          | 100.0                                                   | %          | 100.0                                                   | %          | 100.0                                          | %          | 100.0                                             | %          |
| Cost of goods sold                                       |       | 67.2                                                 | %          | 68.6                                                    | %          | 68.2                                            | %          | 64.2                                               | %          | 63.2                                                    | %          | 68.6                                                    | %          | 64.5                                           | %          | 62.5                                              | %          |
| Gross profit                                             |       | 32.8                                                 | %          | 31.4                                                    | %          | 31.8                                            | %          | 35.8                                               | %          | 36.8                                                    | %          | 31.4                                                    | %          | 35.5                                           | %          | 37.5                                              | %          |
| Operating expenses                                       |       | 71.8                                                 | %          | 29.0                                                    | %          | 41.1                                            | %          | 26.2                                               | %          | 30.1                                                    | %          | 29.0                                                    | %          | 29.9                                           | %          | 26.5                                              | %          |
| (Loss) income from  operations:                          |       |                                                 |       |                                                    |       |                                            |       |                                               |       |                                                    |       |                                                    |       |                                           |       |                                              |       |
| General Safety  & Preparedness                       |       | 5.5                                                  | %          | 2.4                                                     | %          | 3.3                                             | %          | 7.5                                                | %          | 7.3                                                     | %          | 2.4                                                     | %          | 6.2                                            | %          | 8.0                                               | %          |
| Fire Service                                             |       | 3.5                                                  | %          | (0.5                                                    | )%         | 0.7                                             | %          | 1.0                                                | %          | 3.4                                                     | %          | (0.5                                                    | )%         | 2.5                                            | %          | 1.5                                               | %          |
| Electrical Safety                                        |       | 1.8                                                  | %          | 1.8                                                     | %          | 1.8                                             | %          | 2.5                                                | %          | 3.1                                                     | %          | 1.8                                                     | %          | 2.8                                            | %          | 3.0                                               | %          |
| Corporate                                                |       | (49.8                                                | )%         | (1.3                                                    | )%         | (15.1                                           | )%         | (1.4                                               | )%         | (7.1                                                    | )%         | (1.3                                                    | )%         | (5.9                                           | )%         | (1.5                                              | )%         |
| Total (loss)  income from operations                     |       | (39.0                                                | )%         | 2.4                                                     | %          | (9.3                                            | )%         | 9.6                                                | %          | 6.7                                                     | %          | 2.4                                                     | %          | 5.6                                            | %          | 11.0                                              | %          |
| Other expense (income):                                  |       |                                                 |       |                                                    |       |                                            |       |                                               |       |                                                    |       |                                                    |       |                                           |       |                                              |       |
| Interest expense                                         |       | 8.7                                                  | %          | 8.4                                                     | %          | 8.5                                             | %          | 8.5                                                | %          | 9.0                                                     | %          | 8.4                                                     | %          | 8.9                                            | %          | 8.3                                               | %          |
| Interest income                                          |       | (0.3                                                 | )%         | (0.0                                                    | )%         | (0.1                                            | )%         | (0.1                                               | )%         | (0.3                                                    | )%         | (0.0                                                    | )%         | (0.3                                           | )%         | (0.1                                              | )%         |
| Seller  transaction expense                              |       | 13.8                                                 | %          | 0.0                                                     | %          | 3.9                                             | %          | 0.0                                                | %          | 1.7                                                     | %          | 0.0                                                     | %          | 1.3                                            | %          | 0.0                                               | %          |
| Other, net                                               |       | (0.2                                                 | )%         | (0.2                                                    | )%         | (0.2                                            | )%         | (0.0                                               | )%         | 0.3                                                     | %          | (0.2                                                    | )%         | 0.2                                            | %          | (0.1                                              | )%         |
| (Loss) income before  income taxes and minority interest |       | (61.0                                                | )%         | (5.8                                                    | )%         | (21.4                                           | )%         | 1.2                                                | %          | (4.0                                                    | )%         | (5.8                                                    | )%         | (4.5                                           | )%         | 2.9                                               | %          |
| Income tax (benefit)  expense                            |       | (0.4                                                 | )%         | 0.1                                                     | %          | (0.0                                            | )%         | 0.6                                                | %          | 1.3                                                     | %          | 0.1                                                     | %          | 1.0                                            | %          | 1.0                                               | %          |
| Minority interest                                        |       | 0.0                                                  | %          | (0.0                                                    | )%         | 0.0                                             | %          | 0.0                                                | %          | 0.0                                                     | %          | (0.0                                                    | )%         | 0.0                                            | %          | 0.0                                               | %          |
| Net (loss) income                                        |       | (60.6                                                | )%         | (5.9                                                    | )%         | (21.4                                           | )%         | 0.6                                                | %          | (5.3                                                    | )%         | (5.9                                                    | )%         | (5.5                                           | )%         | 1.9                                               | %          |

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***Three Months Ended September 30, 2006 as Compared to CombinedThree Months Ended October 1, 2005***

*Net sales.*Net sales increased by $23.3 million, or 19.6%,from $118.6 million for the three months ended October 1, 2005 to $141.9million for the three months ended September 30, 2006. In our general safetyand preparedness segment, net sales increased by $17.1 million, or 21.0%, from$81.6 million for the three months ended October 1, 2005 to $98.7 million forthe three months ended September 30, 2006. The increase reflects a combinationof the following: incremental Fibre-Metal net sales of $10.4 million, combinedorganic growth in our European and South African operations of $3.2 million,favorable exchange rates, which had an impact of $1.9 million, overall organicgrowth in our North American non-government business of $2.2 million and adecrease in government contract shipments of $0.6 million. In our fire servicesegment, net sales increased by $0.5 million, or 2.0%, from $21.3 million forthe three months ended October 1, 2005 to $21.8 million for the three monthsended September 30, 2006 as incremental American Firewear net sales of $1.8 millionwere offset by postponed customer orders due in part to the combined impact ofgovernment grant holdups and the delayed issuance of the new NFPAstandard.  In our electrical safetysegment, net sales increased by $5.7 million, or 36.5%, from $15.6 million forthe three months ended October 1, 2005 to $21.3 million for the three monthsended September 30, 2006, primarily driven by strong market demand, new productpenetration and incremental White Rubber net sales of $4.3 million.

*Gross profit.*Gross profit increased by $13.0 million,or 34.5%, from $37.8 million for the three months ended October 1, 2005 to $50.8million for the three months ended September 30, 2006, primarily due to the $23.3million, or 19.6%, increase in net sales. Excluding the impact of inventory purchase accounting adjustments of$3.3 million for the three months ended October 1, 2005 and $0.3 million forthe three months ended September 30, 2006, gross profit increased $10.0million, or 24.6%.  After adjusting forthe inventory purchase accounting adjustments, our gross profit margin of 36.0%for the three months ended September 30, 2006 was favorable to the 34.6% grossprofit margin for the three months ended October 1, 2005. In our general safetyand preparedness segment (after adjusting for charges related to purchaseaccounting of $2.0 million for the three months ended October 1, 2005), grossprofit increased by $8.7 million, or 30.7%, from $28.5 million for the threemonths ended October 1, 2005 to $37.2 million for the three months endedSeptember 30, 2006. This increase was primarily due to the overall net salesincrease of $17.1 million, or 21.0%, and improved margin realization in our Europeanand North American operations (in part due to the favorable contribution ofFibre-Metal).  In our fire servicesegment (after adjusting for charges related to purchase accounting of $1.3million for the three months ended October 1, 2005), gross profit decreased by$1.1 million, or 16.6%, from $6.8 million for the three months ended October 1,2005 to $5.7 million for the three months ended September 30, 2006 as the increasein net sales of $0.5 million, or 2.0%, was offset by lower margin realization(in part due to the inherent lower margin of American Firewear products andproduct line integration costs). In our electrical safety segment (afteradjusting for charges related to purchase accounting of $0.3 million for thethree month period ended September 30, 2006), gross profit increased by $2.4million, or 43.2%, from $5.8 million for the three months ended October 1, 2005to $8.2 million for the three months ended September 30, 2006, primarily due tothe $5.7 million, or 36.5%, increase in net sales.

*Operating expenses. *Operating expenses decreased by $11.6 million, or 23.7%,from $48.8 million for the three months ended October 1, 2005 to $37.2 millionfor the three months ended September 30, 2006. In our general safety andpreparedness segment, operating expenses increased $4.0 million, or 17.4%, from$22.6 million for the three months ended October 1, 2005 to $26.6 million forthe three months ended September 30, 2006 as incremental Fibre-Metal operatingexpenses of $2.0 million and increased variable selling and distributionexpenses associated with the $17.1 million, or 21.0%, increase in net saleswere partially offset by lower amortization expense of $0.8 million associatedwith intangible assets recorded as part of purchase accounting.  In our fire service segment, operatingexpenses decreased $0.5 million, or 9.9%, from $4.7 million for the threemonths ended October 1, 2005 to $4.2 million for the three months endedSeptember 30, 2006, primarily due to lower amortization expense of $0.5 millionassociated with intangible assets recorded as part of purchase accounting. Inour electrical safety segment, operating expenses increased by $0.7 million, or21.4%, from $3.6 million for the three months ended October 1, 2005 to $4.3million for the three months ended September 30, 2006 as incremental WhiteRubber operating expenses of $0.9 million and increased variable selling anddistribution expenses related to the $5.7 million, or 36.5%, increase in netsales were partially offset by lower amortization expense of $0.4 millionassociated with intangible assets recorded as part of purchase accounting. Corporateexpenses for the three months ended October 1,

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2005 consisted of $1.5 million of general and administrative expensesand $16.4 million of management incentive compensation expense related to the NorcrossTransaction.  Corporate expenses for the threemonths ended September 30, 2006 consisted of $1.8 million of general andadministrative expenses and $0.3 million of management incentive compensationexpense.  The increase in corporategeneral and administrative expenses of $0.3 million was primarily due tohigher payroll and administrative expenses.

*Income from operations.*Income from operations increased by $24.7million, from $(11.1) million for the three months ended October 1, 2005 to $13.6million for the three months ended September 30, 2006. Key variances for thethree months ended September 30, 2006 relative to the three months endedOctober 1, 2005 include: (1) lower inventory purchase accounting charges of$3.0 million, (2) lower amortization expense of $1.7 million related topurchase accounting and (3) lower management incentive compensation charges of$16.1 million. Excluding these charges from both periods, income fromoperations increased by $3.9 million, or 28.7%. Excluding these same charges,as a percentage of net sales, income from operations increased from 11.3% forthe three months ended October 1, 2005 to 12.2% for the three months endedSeptember 30, 2006.Inour general safety and preparedness segment (after adjusting for lower chargesrelated to purchase accounting of $2.8 million), income from operationsincreased by $4.0 million, or 50.2%, from $8.0 million for the three monthsended October 1, 2005 to $12.0 million for the three months ended September 30,2006, primarily due to higher net sales of $17.1million, or 21.0%, andfavorable margin realization. In our fire service segment (after adjusting forlower charges related to purchase accounting of $1.8 million), income fromoperations decreased by $1.2 million, or 31.6%,from $3.7 million for the three months endedOctober 1, 2005 to $2.5 million for the three months ended September 30, 2006,primarily as a result of lowermargin realization. Inour electrical safety segment (after adjusting for lower charges related topurchase accounting of $0.1 million), income from operations increased by $1.4 million,or 40.4%, from $3.2 million for the three months ended October 1, 2005 to $4.6million for the three months ended September 30, 2006, primarily due to highernet sales of $5.7 million, or 36.5%. Corporate expenses for the three monthsended October 1, 2005 consisted of $1.5 million of general andadministrative expenses and $16.4 million of management incentive compensationexpense related to the Norcross Transaction. Corporate expenses for the three months ended September 30, 2006consisted of $1.8 million of general and administrative expenses and $0.3million of management incentive compensation expense.  The increase in corporate general andadministrative expenses of $0.3 million was primarily due to higherpayroll and administrative expenses.

Included in income from operations for the threemonths ended September 30, 2006 and October 1, 2005 were depreciation andamortization expenses of $6.6 million and $8.1 million, respectively. Of theseamounts, $4.0 million, $1.2 million, and $1.4 million were attributable to thegeneral safety and preparedness, fire service, and electrical safety segments,respectively, for the three months ended September 30, 2006 and $4.7 million, $1.7million, and $1.7 million were attributable to these segments for the threemonths ended October 1, 2005.

*Interest expense.*Interest expense increased by $2.0million, or 19.6%, from $10.1 million for the three months ended October 1,2005 to $12.1 million for the three months ended September 30, 2006, primarilydue to higher outstanding debt balances related to the Fibre-Metal and WhiteRubber Transactions offset by a decrease in preferred unit dividends includedin interest expense.   Included ininterest expense were non-cash interest charges associated with the senior payin kind notes and preferred unit dividends of $4.1 million for the three monthsended October 1, 2005 and non-cash interest charges associated with the seniorpay in kind notes of $4.3 million for the three months ended September 30, 2006.

*Other, net.*Other, net increased by $0.2 million from$(0.2) million for the three months ended October 1, 2005 to $0.0 million forthe three months ended September 30, 2006. 

*Income tax expense (benefit).*Income tax expense (benefit) increased by$0.9 million, from $(0.1) million for the three months ended October 1, 2005 to$0.8 million for the three months ended September 30, 2006, primarily as aresult of higher domestic income tax expense.

*Net income (loss).*Net income (loss) increased by $26.3million, from $(25.4) million for the three months ended October 1, 2005 to $0.9million for the three months ended September 30, 2006. This was the result ofthe

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reasons discussed above.

***Nine Months Ended September 30, 2006 as Compared to CombinedNine Months Ended October 1, 2005***

*Net sales.*Net sales increased by $63.3 million, or 17.8%,from $356.7 million for the nine months ended October 1, 2005 to $420.0 millionfor the nine months ended September 30, 2006. In our general safety andpreparedness segment, net sales increased by $47.6 million, or 19.4%, from $245.5million for the nine months ended October 1, 2005 to $293.1 million for thenine months ended September 30, 2006. The increase reflects a combination ofthe following: incremental Fibre-Metal net sales of $31.5 million, combinedorganic growth in our European and South African operations of $10.2 million,favorable exchange rates, which had an impact of $2.9 million, overall organicgrowth in our North American non-government business of $6.6 million, and adecrease in government contract shipments of $3.6 million.  In our fire service segment, net salesincreased by $1.6 million, or 2.4%, from $66.5 million for the nine monthsended October 1, 2005 to $68.1 million for the nine months ended September 30,2006 as incremental American Firewear net sales of $4.8 million were partiallyoffset by postponed customer orders due in part to the combined impact ofgovernment grant holdups and the delayed issuance of the new NFPAstandard.  In our electrical safetysegment, net sales increased by $14.1 million, or 31.4%, from $44.7 million forthe nine months ended October 1, 2005 to $58.8 million for the nine monthsended September 30, 2006 primarily driven by strong market demand, new productpenetration, and incremental White Rubber net sales of $5.9 million.

*Gross profit.*Gross profit increased by $30.6 million,or 24.2%, from $126.8 million for the nine months ended October 1, 2005 to$157.4 million for the nine months ended September 30, 2006, primarily due tothe $63.3 million, or 17.8%, increase in net sales. Excluding the impact ofinventory purchase accounting adjustments of $3.3 million for the nine monthsended October 1, 2005 and $1.1 million for the nine months ended September 30,2006, gross profit increased by $28.4 million, or 21.9%. After adjusting forthe inventory purchase accounting adjustments, our gross profit margin of 37.7%for the nine months ended September 30, 2006 was favorable to the 36.5% grossprofit margin for the nine months ended October 1, 2005. In our general safetyand preparedness segment (after adjusting for charges related to purchaseaccounting of $2.0 million for the nine months ended October 1, 2005 and $0.8million for the nine months ended September 30, 2006), gross profit increasedby $23.6 million, or 26.2%, from $90.9 million for nine months ended October 1,2005 to $114.5 million for the nine months ended September 30, 2006. Thisincrease was primarily due to the overall net sales increase of $47.6 million,or 19.4%, and improved margin realization in our North American operations (inpart due to the favorable contribution of Fibre-Metal).  In our fire service segment (after adjustingfor charges related to purchase accounting of $1.3 million for the nine monthsended October 1, 2005), gross profit decreased $1.1 million, or 5.4%, from$21.0 million for the nine months ended October 1, 2005 to $19.9 million forthe nine months ended September 30, 2006 as the increase in net sales of$1.6 million, or 2.4%, was offset by lower margin realization (in part dueto the inherent lower margin of American Firewear products and product lineintegration costs). In our electrical safety segment (after adjusting forcharges related to purchase accounting of $0.3 million for the nine monthsended September 30, 2006), gross profit increased by $5.9 million, or 32.1%,from $18.2 million for the nine months ended October 1, 2005 to$24.1 million for the nine months ended September 30, 2006, primarily dueto the $14.1 million, or 31.4%, increase in net sales.

*Operating expenses.*Operating expenses increased by $5.0 million,or 4.7%, from $106.5 million for the nine months ended October 1, 2005 to$111.5 million for the nine months ended September 30, 2006. In ourgeneral safety and preparedness segment, operating expenses increased by $13.5 million,or 20.3%, from $66.9 million for the nine months ended October 1, 2005 to$80.4 million for the nine months ended September 30, 2006, primarily dueto higher amortization expense of $1.7 million associated with the intangibleassets recorded as part of purchase accounting, incremental Fibre-Metaloperating expenses of $6.4 million, and increased variable distribution andselling expenses associated with the $47.6 million, or 19.4%, increase in netsales. In our fire service segment, operating expenses increased $3.0 million,or 27.6%, from $10.8 million for the nine months ended October 1, 2005 to$13.8 million for the nine months ended September 30, 2006, primarily dueto higher amortization expense of $1.5 million associated with intangibleassets recorded as part of purchase accounting, incremental American Firewearoperating expenses of $0.5 million, and additional general and administrativeexpenses, including legal costs related to litigation with a competitor. In ourelectrical safety segment, operating expenses increased by

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$2.8 million, or 34.3%, from $8.2 million for the nine monthsended October 1, 2005 to $11.0 million for the nine months ended September30, 2006, primarily due to higher amortization expense of $0.3 million associatedwith intangible assets recorded as part of purchase accounting, incrementalWhite Rubber operating expenses of $1.2 million, and increased variable sellingand distribution expenses related to the $14.1 million, or 31.4%, increase innet sales. Corporate expenses for the nine months ended October 1, 2005consisted of $4.1 million of general and administrative expenses and $16.4million of management incentive compensation expense related to the NorcrossTransaction.  Corporate expenses for thenine months ended September 30, 2006 consisted of $4.9 million of general andadministrative expenses and $1.3 million of management incentive compensationexpense.  The increase in corporategeneral and administrative expenses of $0.8 million was primarily due tohigher payroll and administrative expenses.

*Income from operations.*Income from operations increased by $25.6 million,or 126.5%, from $20.4 million for the nine months ended October 1, 2005 to$46.0 million for the nine months ended September 30, 2006.  Key variances for the nine months endedSeptember 30, 2006 relative to the nine months end October 1, 2005 include: (1)lower inventory purchase accounting charges of $2.2 million, (2) higheramortization expense of $3.5 million related to purchase accounting and (3) lowermanagement incentive compensation charges of $15.1 million. Excluding thesecharges from both periods, income from operations increased by $11.8 million,or 26.5%. Excluding these same charges, as a percentage of net sales, incomefrom operations increased from 12.6% for the nine months ended October 1, 2005to 13.5% for the nine months ended September 30, 2006. In our general safetyand preparedness segment (after adjusting for incremental charges related topurchase accounting of $0.5 million), income from operations increased by $11.8million, or 44.9%, from $26.4 million for the nine months ended October 1, 2005to $38.2 million for the nine months ended September 30, 2006, primarily due tohigher net sales of $47.6 million, or 19.4%, and favorable margin realization.In our fire service segment (after adjusting for incremental charges related topurchase accounting of $0.2 million), income from operations decreased by $2.6million, or 22.0%, from $11.8 million for the nine months ended October 1, 2005to $9.2 million for the nine months ended September 30, 2006, as higher netsales of $1.6 million, or 2.4%, were offset by lower margin realization andhigher general and administrative expenses, including legal costs related tolitigation with a competitor. In our electrical safety segment (after adjustingfor incremental charges related to purchase accounting of $0.6 million), incomefrom operations increased by $3.4 million, or 30.5%, from $11.0 million for thenine months ended October 1, 2005 to $14.4 million for the nine months endedSeptember 30, 2006, primarily due to higher net sales of $14.1 million, or 31.4%.Corporate expenses for the nine months ended October 1, 2005 consisted of$4.1 million of general and administrative expenses and $16.4 million ofmanagement incentive compensation expense related to the Norcross Transaction.  Corporate expenses for the nine months ended September30, 2006 consisted of $4.9 million of general and administrative expenses and $1.3million of management incentive compensation expense.  The increase in corporate general andadministrative expenses of $0.8 million was primarily due to higherpayroll and administrative expenses.

Included in income from operations for the nine monthsended September 30, 2006 and October 1, 2005 were depreciation and amortizationexpenses of $18.5 million and $13.7 million, respectively. Of these amounts, $12.0million, $3.4 million, and $3.1 million were attributable to the general safetyand preparedness, fire service, and electrical safety segments, respectively,for the nine months ended September 30, 2006 and $9.3 million, $1.9 million,and $2.5 million were attributable to these segments for the nine months ended October1, 2005.

*Interest expense.*Interest expense increased by $3.0million, or 9.3%, from $31.7 million for the nine months ended October 1, 2005to $34.7 million for the nine months ended September 30, 2006 due to higheroutstanding debt balances related to the Fibre-Metal and White RubberTransactions offset by a decrease in preferred unit dividends included ininterest expense.   Included in interestexpense were non-cash interest charges associated with the senior pay in kindnotes and preferred unit dividends of $14.2 million for the nine months ended October1, 2005 and non-cash interest charges associated with the senior pay in kindnotes of $12.4 million for the nine months ended September 30, 2006.

*Other, net.*Other, net decreased by $1.2 million from$0.6 million for the nine months ended October 1, 2005 to $(0.6) million forthe nine months ended September 30, 2006, primarily due to unrealized foreignexchange

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rate gains.

*Income tax expense.*Income tax expense increased by $0.5 million,from $3.7 million for the nine months ended October 1, 2005 to$4.2 million for the nine months ended September 30, 2006, primarily as aresult of higher domestic income tax expense.

*Net income (loss).*Net income (loss) increased by $27.5 millionfrom $(19.5) million for the nine months ended October 1, 2005 to $8.0 millionfor the nine months ended September 30, 2006. This was the result of thereasons discussed above.

**Liquidityand Capital Resources**

We have historically used internal cash flow fromoperations, commercial borrowings on our lines of credit, seller notes,investments from our equityholders and capital markets transactions to fund ouroperations, acquisitions, capital expenditures and working capitalrequirements. For the nine months ended September 30, 2006 and October 1, 2005,net cash provided by operating activities was $13.9 million and $20.1 million,respectively. The $6.2 million decrease was primarily attributable to higherincome from operations of $11.8 million (after adjusting for expenses relatedto purchase accounting and management incentive compensation), which was offsetby increased inventory and accounts receivable balances due in part to the $63.3million, or 17.8%, increase in net sales.

Historically, our principal uses of cash have beencapital expenditures, acquisitions and working capital. Our capital expenditureswere $7.7 million for the nine months ended September 30, 2006 and $5.7 millionfor the nine months ended October 1, 2005. Investing activities for the ninemonths ended September 30, 2006 included $22.2 million for the acquisition ofWhite Rubber, $4.5 million for the acquisition of American Firewear, $3.6million for the acquisition of NEOS and $0.7 million of royalty payments madeto the sellers of Muck Boot and Arbin. During the nine months ended September30, 2006, we received cash proceeds of $0.1 million related to the sale ofproperty, plant, and equipment. For the predecessor period from January 1, 2005through July 19, 2005, investing activities included $0.7 million of royaltypayments.  The successor period investingactivities from July 20, 2005 through October 1, 2005 included $204.5million of cash purchase price related to the Norcross Transaction recorded aspart of purchase accounting and $0.2 of royalty payments.  

As of September 30, 2006, we had working capital of $153.2million and cash of $12.5 million. We maintain inventory levels sufficient tosatisfy customer orders on demand, with generally a three month supply on hand.Bunker gear is an exception and is generally made to order. Our accounts receivableterms are generally 30 days, net.

For the nine months ended September 30, 2006, net cashprovided by financing activities was $16.0 million, consisting of thefollowing: proceeds from additional term borrowings of $15.0 million under thesenior credit facility related to the White Rubber Transaction, proceeds fromborrowings under the revolving credit facility of $2.0 million, $1.4 million ofpayments on long-term obligations, $0.6 million of proceeds for the issuance ofshares, and $0.2 million of payments for deferred financing costs. For thepredecessor period from January 1, 2005 through July 19, 2005, netcash provided by financing activities was $20.6 million, includingpayments for deferred financing fees of $3.2 million, proceeds from the issuanceof 113⁄4% senior pay in kind notes of $100.0 million, payments on long-termobligations of $13.6 million, including an excess cash flow sweep payment underthe terms of our former senior credit facility of $12.2 million, payment inrespect of preferred units of $60.0 million, and distributions in respect ofthe common units to certain members of NSP Holdings of $2.5 million.  Forthe successor period from July 20, 2005 through October 1, 2005, netcash provided by financing activities was $201.2 million, including $88.0million of borrowings under the new senior credit facility, $23.6 million ofproceeds from the issuance of senior pay in kind notes, and $109.7 million ofproceeds from the issuance of shares.  Additionally, we paid $19.8 millionin deferred financing costs consisting of expenses associated with the newsenior credit facility, the $152.5 million senior subordinated notes, and thesenior pay in kind notes.    

As of September 30, 2006, borrowings under the new seniorcredit facility bore interest at a weighted

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averagerate of 7.6%. As of September 30, 2006, there was approximately $168.1 millionof outstanding indebtedness under the senior credit facility and approximately$44.8 million of available borrowings under the revolving credit facility.

We believe that our internal cash flows and borrowingsunder our new senior credit facility will provide us with sufficient liquidityand capital resources to meet our current and future financial obligations forthe foreseeable future, including funding our operations, debt service andcapital expenditures. Our future operating performance will be subject tofuture economic conditions and to financial, business and other factors, manyof which are beyond our control. If our future cash flow from operations andother capital resources are insufficient to pay our obligations as they matureor to fund our liquidity needs, we may be forced to reduce or delay ourbusiness activities and capital expenditures, sell assets, obtain additionaldebt or equity capital or restructure or refinance all or a portion of ourdebt, including the notes, on or before maturity. We cannot assure you that wewould be able to accomplish any of these alternatives on a timely basis or onsatisfactory terms, if at all. In addition, the terms of our existing andfuture indebtedness, including our senior pay in kind notes, our seniorsubordinated notes and our senior credit facility, may limit our ability topursue any of these alternatives.

**Forward-Looking Statements**

This Management’s Discussion and Analysis of FinancialCondition and Results of Operations contains forward-looking information. Thesestatements reflect management’s expectations, estimates, and assumptions basedon information available at the time of the statement. Forward-lookingstatements 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 identifyforward-looking statements. Forward-looking statements are not guarantees offuture 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 futureresults, performance, or achievements expressed or implied by those statements.Important factors that could cause our actual results, performance, orachievements to be materially different from any future results, performance,or achievements expressed or implied by those statements include, but are notlimited to: (i) our high degree of leverage and significant debt serviceobligations; (ii) the impact of current and future laws and governmentalregulations affecting us or our product offerings; (iii) the impact ofgovernmental spending; (iv) our ability to retain existing customers, maintainkey supplier status with those customers with which we have achieved such status,and obtain new customers; (v) the highly competitive nature of the personalprotection equipment industry; (vi) any future changes in management; (vii)acceptance by consumers of new products we develop or acquire; (viii) theimportance and costs of product innovation; (ix) unforeseen problems associatedwith international sales, including gains and losses from foreign currencyexchange and restrictions on the efficient repatriation of earnings; (x) theunpredictability of patent protection and other intellectual property issues;(xi) cancellation of current orders; (xii) the outcome of pending productliability 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 economicallyacceptable terms. We undertake no obligation to publicly update or revise anyforward-looking statements to reflect changed assumptions, the occurrence ofanticipated or unanticipated events, or changes to future results over time.

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**Item 3. Quantitative and Qualitative DisclosuresAbout Market Risk**

There have been nomaterial changes to our exposure to market risk since December 31, 2005.

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**Item 4. Controls and Procedures**

Based on theirevaluation as of the end of the period covered by this quarterly report on Form 10-Q,our Chief Executive Officer and Chief Financial Officer have concluded that ourdisclosure controls and procedures (as defined in Rules 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, as amended (the “ExchangeAct”)) are effective. There was no change in our internal control overfinancial reporting (as defined in Rules 13a-15(f) and 15d-15(f) underthe Exchange Act) identified in connection with the evaluation required by Rule 13a-15(d) ofthe Exchange Act that occurred during the period covered by this quarterlyreport on Form 10-Q that has materially affected, or is reasonably likelyto materially affect, our internal control over financial reporting.

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**PART IIOTHER INFORMATION**

**Item 1. LegalProceedings**

As of September 30, 2006, our North SafetyProducts subsidiary, along with its predecessors and/or the former owners ofsuch business were named as defendants in approximately 657 lawsuits involvingrespirators allegedly manufactured and sold by it or its predecessors. We arealso monitoring an additional 12 lawsuits in which we feel that North SafetyProducts, its predecessors and /or the former owners of such businesses may benamed as defendants. Collectively, these 669 lawsuits represent approximately8,769 (excluding spousal claims) plaintiffs. Approximately 91% of theselawsuits involve plaintiffs alleging injury resulting from exposure to silicadust, with the remainder alleging injury from exposure to other particles,including asbestos. These lawsuits typically allege that the purported injuriesresulted in part from respirators that were negligently designed and/ormanufactured. The defendants in these lawsuits are often numerous, and include,in addition to respirator manufacturers, employers of the plaintiffs andmanufacturers of sand (used in sand blasting) and asbestos. We acquired ourNorth Safety Products subsidiary on October 2, 1998 from Siebe plc. Inconnection with the acquisition, Siebe, which was subsequently merged with BTRplc (now known as “Invensys plc”), contractually agreed to indemnify us for anylosses, including costs of defending claims, resulting from respiratoryproducts manufactured or sold prior to our acquisition of North Safety Productsin October 1998.

In addition, our North Safety Products subsidiary iscontractually entitled to indemnification from Norton Company, an affiliate ofSaint-Gobain, which owned the North Safety Products business prior to Invensys.Pursuant to a December 14, 1982 asset purchase agreement, Siebe Norton, Inc.,a newly formed wholly-owned subsidiary of Norton Company, acquired the assetsof Norton’s Safety Products Division and the stock of this company was in turnacquired by Siebe Gorman Holdings PLC. Under the terms of the agreement, SiebeNorton, Inc. did not assume any liability for claims relating to productsshipped by Norton Company prior to the closing date. Moreover, Norton Companycovenanted in the agreement to indemnify Siebe Norton, Inc. and itssuccessors and assigns against any liability resulting from or arising out ofany state of facts, omissions or events existing or occurring on or before theclosing date, including, without limitation, any claims arising from productsshipped by Norton Company or any of its affiliates prior to the closing date.Siebe Norton, Inc., whose name was subsequently changed to Siebe NorthInc., was subsequently acquired by us as part of the 1998 acquisition ofthe North Safety Products business from Invensys.

Despite these indemnification arrangements, we couldpotentially be liable for losses or claims relating to products manufacturedprior to the October 1998 acquisition date if Invensys fails to meet itsobligations to indemnify us and we could potentially be liable for losses andclaims relating to products sold prior to January 10, 1983 if bothInvensys and Norton fail to meet their obligations to indemnify us. We couldalso be liable if the alleged exposure involved the use of a productmanufactured by us after our October 1998 acquisition of the North SafetyProducts business.

Effective July 1,2006, we entered into a joint defense agreement through December 31, 2008with the former owners of the North Safety Products business (the “JointDefense Agreement”). Under the terms of the Joint Defense Agreement, we agreedto pay a weighted average percentage of defense costs associated with defendingourselves and the prior owners of the North Safety Products business subject toa cap of $525,000, $960,000 and $1.0 million for the period from July 1,2006 through December 31, 2006, the year ended December 31, 2007 andthe year ended December 31, 2008, respectively. The cap excludessettlement costs and other costs incurred exclusively by us, including trialcosts and special requests of counsel. Separately, we agreed to pay Invensys$200,000 related to settled cases through June 30, 2006 in which Invensysclaims that the period of alleged exposure included periods after October 1998.

Based upon information provided to us by Invensys, webelieve activity related to these lawsuits was as follows for the nine monthsended September 30, 2006:

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| ** **                                     | ** ** | **Plaintiffs** | ** ** | **Cases** | ** ** |
|------------------------------------------------|------------|----------------|------------|-----------|------------|
| Beginning  lawsuits as of January 1, 2006 |       | 18,459         |       | 1,148     |       |
| New lawsuits                                   |       | 626            |       | 473       |       |
| Settlements                                    |       | (5             | )          | (5        | )          |
| Dismissals and  other                          |       | (10,311        | )          | (947      | )          |
| Ending lawsuits as of  September 30, 2006 |       | 8,769          |       | 669       |       |

 

Plaintiffs have asserted specific dollar claims inapproximately 28% of the approximately 657 cases pending as of September 30,2006, in which North Safety Products, its predecessors and/or the former ownersof such businesses have been named as defendants. A majority of jurisdictionsprohibit specifying damages in tort cases such as these, and most of theremaining jurisdictions do not require such specification. In those cases inwhich plaintiffs choose to assert specific dollar amounts in their complaints,brought in states that permit such pleading, the amounts claimed are typicallynot meaningful as an indicator of a company’s potential liability. This isbecause (1) the amounts claimed typically bear no relation to the level ofthe plaintiff’s injury, (2) the complaints typically assert claims againstnumerous defendants, and (3) many cases are brought on behalf ofplaintiffs who have not suffered any medical injury, and, ultimately, areresolved without any payment or payment of a small fraction of the damagesinitially claimed. Of the 657 complaints maintained in our records, 472 do notspecify the amount of damages sought, 25 generally allege damages in excess of$50,000, one alleges compensatory damages in excess of $50,000 and anunspecified amount of punitive damages, 81 allege compensatory damages andpunitive damages, each in excess of $25,000, two generally allege damages inexcess of $100,000, nine allege compensatory damages and punitive damages, eachin excess of $50,000, 20 generally allege damages of $15.0 million, onegenerally alleges damages of $23.0 million, one alleges compensatory damagesand punitive damages, each in excess of $10,000, four allege general damages of$18.0 million and punitive damages of $10.0 million, two allege general damagesof $13.0 million and punitive damages $10.0 million, one alleges compensatoryand punitive damages, each in excess of $15,000, two allege punitive damages inexcess of $25,000, one alleges punitive damages in excess of $50,000, ninegenerally allege damages in excess of $15,000, 12 generally allege damages inexcess of $25,000, one alleges compensatory damages of $18.0 million andpunitive damages of $10.0 million, one alleges punitive damages of $13.5million and compensatory damages of $10.0 million, one alleges punitive damagesof $13.0 million and compensatory damages of $10.0 million, eight allegecompensatory damages of $13.0 million and punitive damages of $10.0 million,one alleges compensatory and punitive damages, each of $15,000, and two allegecompensatory and punitive damages, each in excess of $15.0 million. Wecurrently do not have access to the complaints with respect to the previouslymentioned additional 12 monitored cases, and therefore do not know whetherthese cases allege specific damages, and if so, the amount of such damages, butare in the process of seeking to obtain such information. Due to the reasonsnoted above and to the indemnification arrangements benefiting us, we do notbelieve that the damage amounts specified in these complaints are a meaningfulfactor in any assessment of our potential liability.

Bankruptcy filings of companies with asbestos andsilica-related litigation could increase our cost over time. If we were foundliable in these cases and either Invensys or Norton Company failed to meet itsindemnification obligations to us or the suit involved products manufactured byus after our October 1998 acquisition of North Safety Products, it wouldhave a material adverse effect on our business.

The Predecessor recorded a $1.25 million reserve forrespiratory claims. We increased this reserve to $7.0 million and recorded theincrease as part of our purchase price allocation process associated withthe Norcross Transaction. The increase represents a decision by new ownershipto enter into the Joint Defense Agreement with the prior owners of North SafetyProducts. We believe that this reserve represents a reasonable estimate of ourprobable and estimable liabilities for product claims alleging injury resultingfrom exposure to silica dust and other particles, including asbestos, asdetermined by us in consultation with an independent consultant. We believethat a five-year projection of claims and related defense costs is the mostreasonable approach. However, it is possible that we may incur liabilitiesin excess of the amounts currently reserved. This reserve will be re-evaluatedperiodically and additional charges or credits will be recorded to operatingexpenses as additional information becomes available.

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It is possible that we may incur liabilities inan amount in excess of amounts currently reserved. However, taking into accountcurrently available information, historical experience, and our indemnificationfrom Invensys, but recognizing the inherent uncertainties in the projection ofany future events, we believe that these suits or claims should not result infinal judgments or settlements in excess of our reserve.

In connection with an ongoing dispute, one of ourcompetitors has filed a complaint against us alleging that we have made a series ofmisrepresentations concerning this competitor and its products. The complaintseeks a retraction of all statements alleged to have been made by us andunspecified damages, including legal fees. A bench trial on the issue ofliability was held in February 2006 and the matter is now awaiting rulingby the court. We intend to vigorously defend against these claims.

We are not otherwise involved in any material lawsuits.We historically have not been required to pay any material liability claims. Wemaintain insurance against product liability claims (with the exception ofasbestosis and silicosis cases, for which coverage is not commerciallyavailable), but it is possible that insurance coverage will not continue to beavailable on terms acceptable to us or that such coverage will not be adequatefor liabilities actually incurred.

We are subject to legal proceedings and claims thatarise in the ordinary course of our business. In our opinion, the outcome ofthese actions will not have a material adverse effect on our financial positionor results of operations.

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**Item 1A. Risk Factors**

In addition to thefactors discussed elsewhere in this Form 10-Q, the following are importantfactors which could cause actual results or events to differ materially fromthose contained in any forward-looking statements made by or on behalf of theCompany.

***If we are unableto retain senior executives and other qualified professionals our growth may behindered.***

Our successdepends in part on our ability to attract, hire, train and retainqualified managerial, sales and marketing personnel. Competition for thesetypes of personnel is intense. We may be unsuccessful in attracting andretaining the personnel we require to conduct and expand our operationssuccessfully. Our results of operations could be materially and adverselyaffected if we are unable to attract, hire, train and retain qualifiedpersonnel. Our success also depends to a significant extent on the continuedservice of our management team. The loss of any member of the management teamcould have a material adverse effect on our business, results of operations andfinancial condition.

***The markets inwhich we compete are highly competitive, and some of our competitors havegreater financial and other resources than we do. The competitive pressuresfaced by us could materially and adversely affect our business, results ofoperations and financial condition.***

The personalprotection equipment market is highly competitive, with participants ranging insize from small companies which focus on single types of safety products, tolarge multinational corporations which manufacture and supply many types ofsafety products. Our main competitors vary by region and product. We believethat participants in this industry compete primarily on the basis of productcharacteristics (such as functional performance, design and style), price,brand name recognition and service. Some of our competitors have greaterfinancial and other resources than we do and our cash flows from operationscould be adversely affected by competitors’ new product innovations and pricingchanges made by us in response to competition from existing or new competitors.Individual competitors have advantages and strengths in different segments ofthe industry, in different products and in different areas, includingmanufacturing and distribution systems, geographic market presence, customerservice and support, breadth of product, delivery time, costs of labor andprice. We may not be able to compete successfully against current andfuture competitors and the competitive pressures faced by us could materiallyand adversely affect our business, results of operations and financial condition.

***Many of ourproducts are subject to existing regulations and standards, changes in whichcould materially and adversely affect our results of operations.***

Our net sales may bematerially and adversely affected by changes in safety regulations and standardscovering industrial workers, firefighters and utility workers in the U.S. andCanada, including safety regulations of OSHA and standards of the NFPA, ANSIand ASTM. Our net sales could also be adversely affected by a reduction in thelevel of enforcement of such regulations. Changes in regulations could reducethe demand for our products or require us to reengineer our products, therebycreating opportunities for our competitors.

***A reduction in thespending patterns of government agencies could materially and adversely affectour net sales.***

We sell asignificant portion of our products in the U.S. and Canada to variousgovernmental agencies. In addition, a portion of our products are sold togovernment agencies through fixed price contracts awarded by competitive bidssubmitted to state and local agencies. Many of these governmental agencycontracts are awarded on an annual basis. Accordingly, notwithstanding ourlong-standing relationship with various governmental agencies, we may loseour contracts with such agencies to lower bidders in the competitive bidprocess. Moreover, the terms and conditions of such sales and the governmentcontract process are subject to extensive regulation by various 

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federal,state and local authorities in the U.S. and Canada.

***In most markets inwhich we compete, there are frequent introductions of new products and productline extensions. If we fail to introduce successful new products, we may losemarket position and our financial performance may be negatively impacted.***

If we are unableto identify emerging consumer and technological trends, maintain and improvethe competitiveness of our products and introduce these products on a globalbasis, we may lose market position, which could have a material adverseeffect on our business, financial condition and results of operations.Continued product development and marketing efforts have all the risks inherentin the development of new products and line extensions, including developmentdelays, the failure of new products and line extensions to achieve anticipatedlevels of market acceptance and the cost of failed product introductions.

***Our internationaloperations are subject to various uncertainties and a significant reduction ininternational sales of our products could have a material adverse effect on ourresults of operations.***

Our internationaloperations are subject to various political, economic and other uncertaintieswhich could adversely effect our business. A significant reduction of ourinternational business due to any of these risks would adversely affect ourrevenues. In 2005, approximately 35.0% of our net sales were outside the U.S.These risks include:

•                  unexpected changes in regulatory requirements;

•                  currency exchange rate fluctuations;

•                  changes in trade policy or tariff regulations;

•                  customs matters;

•                  longer payment cycles;

•                  higher tax rates and potentially adverse taxconsequences, including restrictions on repatriating earnings and the threat of“double taxation”;

•                  additional tax withholding requirements;

•                  intellectual property protection difficulties;

•                  difficulty in collecting accounts receivable;

•                  complications in complying with a variety of foreignlaws and regulations, many of which conflict with U.S. laws;

•                  costs and difficulties in integrating, staffing andmanaging international operations; and

•                  strains on financial and other systems to properlyadminister VAT and other taxes.

In addition,foreign operations involve uncertainties arising from local business practices,cultural considerations and international political and trade tensions. Forexample, in 2002, we recorded a non-cash impairment charge with regard to ourformer Zimbabwe subsidiary due to adverse economic and political conditions. Inaddition, a portion of our manufacturing and outsourcing relationships involveChina. If we are unable to successfully manage the risks associated withexpanding our global business or to adequately manage operational fluctuationsinternationally, it could have a material adverse effect on our business,financial condition or results of 

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operations.

***We may incurrestructuring or impairment charges that would reduce our earnings.***

We have in thepast and may in the future restructure some of our operations, includingour recently acquired subsidiaries. In such circumstances, we may takeactions that would result in a charge related to discontinued operations,thereby reducing our earnings. These restructurings have or may beundertaken to realign our subsidiaries, eliminate duplicative functions,rationalize our operating facilities and products, and reduce our staff. Forexample, in conjunction with the Fibre-Metal Transaction, we recorded anaccrual of $1.7 million, comprised of $1.4 million in severance costs and $0.3million in facility closure and other exit costs. On January 1, 2002 weadopted Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwilland Other Intangible Assets,” which requires that goodwill and intangibleassets that have an indefinite useful life be tested at least annually forimpairment. We carry a very significant amount of goodwill and intangibleassets and SFAS No. 142 requires us to perform an annual assessmentfor possible impairment. As of September 30, 2006, we had goodwill andother intangible assets of approximately $438.4 million.

***We may beunable to successfully execute or effectively integrate acquisitions, which may adverselyaffect our results of operations.***

One of our keyoperating strategies is to selectively pursue acquisitions. Acquisitionsinvolve a number of risks including:

•                  failure of the acquired businesses to achieve theresults we expect;

•                  diversion of our management’s attention fromoperational matters;

•                  our inability to retain key personnel of the acquiredbusinesses;

•                  risks associated with unanticipated events orliabilities;

•                  the potential disruption of our existing business; and

•                  customer dissatisfaction or performance problems atthe acquired businesses.

If we are unableto integrate or successfully manage any business that we may acquire inthe future, we may not realize anticipated cost savings, improvedmanufacturing efficiencies and revenue growth, which may result in reducedprofitability or operating losses. In addition, we expect to face competitionfor acquisition candidates, which may limit the number of our acquisitionopportunities and may lead to higher acquisition prices. Moreover,acquisitions of businesses may require additional debt financing,resulting in additional leverage. The covenants in the senior credit facility,the indenture governing our senior pay in kind notes and the indenturegoverning the Norcross senior subordinated notes may further limit ourability to complete acquisitions. The realization of all or any of the risksdescribed above could materially and adversely affect our reputation and ourresults of operations.

***Our continuedsuccess depends on our ability to protect our intellectual property. If we areunable to protect our intellectual property, our sales could be materially andaversely affected.***

Our successdepends, in part, on our ability to obtain and enforce patents, maintain tradesecret protection and operate without infringing on the proprietary rights ofthird parties. We have been issued patents and have registered trademarks withrespect to many of our products, but our competitors could independentlydevelop similar or superior products or technologies, duplicate any of ourdesigns, trademarks, processes or other intellectual property or design aroundany processes or designs on which we have or may obtain patents ortrademark protection. In addition, it is possible that third parties may haveor acquire licenses for other technology or designs that we may use ordesire to use, so that we may need to acquire licenses to, or to contestthe validity of, such patents or trademarks of third parties. Such licenses may notbe made available to us on acceptable terms, if at all, and we may

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notprevail in contesting the validity of third-party rights.

In addition topatent and trademark protection, we also protect trade secrets, know-how andother confidential information against unauthorized use by others or disclosureby persons who have access to them, such as our employees, through contractualarrangements. These agreements may not provide meaningful protection forour trade secrets, know-how or other proprietary information in the event ofany unauthorized use, misappropriation or disclosure of such trade secrets,know-how or other proprietary information. If we are unable to maintain theproprietary nature of our technologies, our sales could be materially adverselyaffected.

***We do not havelong-term contracts with many of our customers and they may terminatetheir relationship with us at any time, which could have a material adverseeffect on our operating results.***

A significantportion of our contracts are not long-term contacts and are terminable at willby either party. If a significant number of our customers choose to terminatetheir contracts or to not renew their contracts with us upon expiration, itwould have a material adverse effect on our business, financial condition andresults of operations.

***We face aninherent business risk of exposure to product liability claims which could havea material adverse effect on our operating results.***

We face aninherent business risk of exposure to product liability claims arising from theclaimed failure of our products to prevent the types of personal injury ordeath against which they are designed to protect. We have not experienced anymaterial uninsured losses due to product liability claims, but it is possiblethat we could experience material losses in the future. For more information,see “Item 1. Legal Proceedings.”

***We are subject to various environmental lawsand any violation of these laws could adversely affect our results ofoperations.***

We are subject tofederal, state and local laws, regulations and ordinances relating to theprotection of the environment, including those governing discharges to air andwater, handling and disposal practices for solid and hazardous wastes,hazardous substance contamination and the maintenance of a safe workplace.These laws impose penalties for noncompliance and liability for response costsand certain damages resulting from past and current spills, disposals or otherreleases of hazardous materials. We could incur substantial costs as a resultof noncompliance with or liability pursuant to these environmental laws and toattain and maintain compliance with evolving regulatory requirements underenvironmental laws. Environmental laws continue to evolve and we may besubject to more stringent environmental laws in the future. If more stringentenvironmental laws are enacted, these future laws could have a material adverseeffect on our results of operations.

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**Item 2.Unregistered Sales of Equity Securities and Use of Proceeds**

Since January 1, 2006, we have issued thefollowing securities that were not registered under the Securities Act:

In January 2006 we sold 41,258.408 shares of ourcommon stock for an aggregate purchase price of $412,584.08 to Safety ProductsCoinvestment, LLC. The securities described in this paragraph were issued inreliance upon the exemption from the registration requirements of theSecurities Act, as set forth in Section 4(2) under the Securities Actand Rule 506 of Regulation D promulgated thereunder relative to sales byan issuer not involving any public offering. All recipients either receivedadequate information about us or had access, through employment or otherrelationships, to such information.

In February 2006, in connection with the AmericanFirewear Transaction, we sold 15,000 shares of our common stock for anaggregate purchase price of $150,000 to two members of management. Thesecurities described in this paragraph were issued in reliance upon theexemption from the registration requirements of the Securities Act, as setforth in Section 4(2) under the Securities Act and Rule 701promulgated thereunder relative to sales by an issuer not involving any publicoffering. All recipients either received adequate information about us or hadaccess, through employment or other relationships, to such information.

No underwriters were involved in the foregoing salesof securities. The purchasers in each case represented their intention toacquire the securities for investment only and not with a view to thedistribution thereof. Appropriate legends were affixed to the stockcertificates issued in such transactions. All of the foregoing securities aredeemed restricted securities for the purposes of the Securities Act.

**Item 6. Exhibits**
| Exhibit No. | ** ** | **Description**                                                                                                             |
|------------------|------------|-----------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                        |
| 10.1             |       | Employment Letter Agreement by and between William  Hayes and Norcross Safety Products L.L.C., dated September 8, 2006 |
|             |       |                                                                                                                        |
| 10.2             |       | Amendment No. 1 to the 2005 Option Plan of  Safety Products Holdings, Inc.                                        |
|             |       |                                                                                                                        |
| 31.1             |       | Certification of Chief Executive Officer Pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002                    |
|             |       |                                                                                                                        |
| 31.2             |       | Certification of Chief Financial Officer Pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002                    |
|             |       |                                                                                                                        |
| 32.1             |       | Certification of Chief Executive Officer Pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002                    |
|             |       |                                                                                                                        |
| 32.2             |       | Certification of Chief Financial Officer Pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002                    |

 

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**SIGNATURES**

Pursuant to the requirements of the SecuritiesExchange Act of 1934, Safety Products Holdings, Inc. has duly caused thisreport to be signed on its behalf by the undersigned thereunto duly authorized.
|                        | SAFETY PRODUCTS HOLDINGS, INC. |
|------------------------|-------------------------------------|
|                   |                                |   |
|                   |                                |   |
| November 14, 2006 | By:                                 | /s/ ROBERT A. PETERSON |   |
|                   |                                | Robert A. Peterson |
|                   |                                | President, Chief Executive Officer and Director |
|                   |                                | (Principal Executive Officer) |
|                   |                                |   |
|                   |                                |   |
| November 14, 2006 | By:                                 | /s/ DAVID F. MYERS, JR. |   |
|                   |                                | David F. Myers, Jr. |
|                   |                                | Executive Vice President, Chief Financial Officer, |
|                   |                                | Secretary and Director |
|                   |                                | (Principal Financial and Accounting Officer) |

 

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**SAFETY PRODUCTSHOLDINGS, INC.**

**FORM 10-Q LISTING OF EXHIBITS**
| Exhibit No. | ** ** | **Description**                                                                                                             |
|------------------|------------|-----------------------------------------------------------------------------------------------------------------------------|
|             |       |                                                                                                                        |
| 10.1             |       | Employment Letter Agreement by and between William  Hayes and Norcross Safety Products L.L.C., dated September 8, 2006 |
|             |       |                                                                                                                        |
| 10.2             |       | Amendment No. 1 to the 2005 Option Plan of  Safety Products Holdings, Inc.                                        |
|             |       |                                                                                                                        |
| 31.1             |       | Certification of Chief Executive Officer Pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002                    |
|             |       |                                                                                                                        |
| 31.2             |       | Certification of Chief Financial Officer Pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002                    |
|             |       |                                                                                                                        |
| 32.1             |       | Certification of Chief Executive Officer Pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002                    |
|             |       |                                                                                                                        |
| 32.2             |       | Certification of Chief Financial Officer Pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002                    |

 

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