SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

             -------------------------------------------------------

                                    FORM 10-Q

             -------------------------------------------------------

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005, or

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

                   FOR THE TRANSITION PERIOD FROM      TO     .
                                                  ----    ----

                         COMMISSION FILE NUMBER 0-18863


                              ARMOR HOLDINGS, INC.

             -------------------------------------------------------

             (Exact name of registrant as specified in its charter)

            DELAWARE                                          59-3392443
(State or other jurisdiction of                              (IRS Employer
 incorporation or organization)                           Identification No.)

      13386 INTERNATIONAL PARKWAY
         JACKSONVILLE, FLORIDA                                   32218
(Address of principal executive offices)                       (Zip Code)

       Registrant's telephone number, including area code: (904) 741-5400

             -------------------------------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  X  No
                                       ---    ---

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes  X  No
                                                ---    ---

The number of shares outstanding of the registrant's Common Stock as of July 25,
2005 is 34,562,910.



                              ARMOR HOLDINGS, INC.

                                    FORM 10-Q

                                      INDEX


                                                                            Page
PART I  - FINANCIAL INFORMATION

         ITEM 1.    FINANCIAL STATEMENTS ....................................  3

         ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                      FINANCIAL CONDITION AND RESULTS OF OPERATIONS.......... 33

         ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES
                      ABOUT MARKET RISK...................................... 53

         ITEM 4.    CONTROLS AND PROCEDURES.................................. 55

PART II - OTHER INFORMATION

         ITEM 1.    LEGAL PROCEEDINGS........................................ 56

         ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITIES
                      HOLDERS................................................ 57

         ITEM 6.    EXHIBITS ................................................ 58

SIGNATURES .................................................................. 60


                                       2


                         PART I - FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS

     The accompanying unaudited condensed consolidated financial statements of
Armor Holdings, Inc. and its wholly-owned subsidiaries include all adjustments
which management considers necessary for a fair presentation of operating
results and financial position as of June 30, 2005 and for the three month and
six month periods ended June 30, 2005 and June 30, 2004.

     These unaudited condensed consolidated financial statements should be read
in conjunction with the financial statements included in our Annual Report on
Form 10-K and amendments thereto for the fiscal year ended December 31, 2004.




                                       3


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>

                                                                  JUNE 30, 2005        DECEMBER 31, 2004
                                                                   (UNAUDITED)                *
                                                                  -------------        -----------------
                                                                                  
ASSETS

CURRENT ASSETS:
    Cash and cash equivalents                                    $       92,317        $       421,209
    Short-term investment securities                                    376,525                      -
    Accounts receivable (net of allowance for
      doubtful accounts of $3,325 and $3,077)                           177,870                175,452
    Inventories                                                         208,746                176,208
    Prepaid expenses and other current assets                            49,618                 46,935
                                                                 --------------        ---------------
        Total current assets                                            905,076                819,804

PROPERTY AND EQUIPMENT (net of
  accumulated depreciation of $32,016 and
  $27,917)                                                               77,475                 77,307

GOODWILL (net of accumulated amortization
  of $4,024 and $4,024)                                                 265,018                262,013

PATENTS, LICENSES AND TRADEMARKS
  (net of accumulated amortization of $10,904 and $6,830)               108,483                112,459


OTHER ASSETS                                                             19,272                 20,768
                                                                 --------------        ---------------
TOTAL ASSETS                                                     $    1,375,324        $     1,292,351
                                                                 ==============        ===============
</TABLE>

                 * Condensed from audited financial statements.
            See notes to condensed consolidated financial statements.

                                       4


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
(IN THOUSANDS, EXCEPT FOR SHARE DATA)

<TABLE>

                                                                   JUNE 30, 2005              DECEMBER 31, 2004
                                                                    (UNAUDITED)                       *
                                                                   -------------              -----------------
                                                                                           
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Current portion of long-term debt                                 $        424               $         621
    Short-term debt                                                        346,678                     343,756
    Accounts payable                                                        86,659                      69,601
    Accrued expenses and other current liabilities                         100,675                     107,247
    Income taxes payable                                                     7,711                       9,001
                                                                      ------------               -------------
        Total current liabilities                                          542,147                     530,226

LONG-TERM LIABILITIES:
    Long-term debt, less current portion                                   157,639                     156,751
    Other long-term liabilities                                              1,997                       1,951
    Deferred income taxes                                                   41,210                      38,227
                                                                      ------------               -------------
         Total liabilities                                                 742,993                     727,155

COMMITMENTS AND CONTINGENCIES
   (NOTE 12)

STOCKHOLDERS' EQUITY:
   Preferred stock, $.01 par value, 5,000,000 shares
      authorized; no shares issued and outstanding                               -                           -
   Common stock, $.01 par value; 75,000,000 and
      75,000,000 shares authorized; 40,616,192 and
      40,133,870 issued and 34,555,970 and
      34,073,648 outstanding at June 30, 2005
      and December 31, 2004, respectively                                      407                         402
    Additional paid-in capital                                             507,559                     504,809
    Retained earnings                                                      193,925                     125,481
    Accumulated other comprehensive income                                   2,757                       6,821
    Treasury stock                                                         (72,317)                    (72,317)
                                                                      ------------               -------------
          Total stockholders' equity                                       632,331                     565,196
                                                                      ------------               -------------

TOTAL LIABILITIES AND STOCKHOLDERS'
   EQUITY                                                             $  1,375,324               $   1,292,351
                                                                      ============               =============
</TABLE>

                 * Condensed from audited financial statements.
            See notes to condensed consolidated financial statements.

                                       5


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>

                                                            THREE MONTHS ENDED                          SIX MONTHS ENDED
                                                     JUNE 30, 2005        JUNE 30, 2004         JUNE 30, 2005      JUNE 30, 2004
                                                     -------------        -------------         -------------      -------------
                                                                                                         
REVENUES:

  Aerospace & Defense                                   $ 256,688           $ 129,773             $ 517,158          $ 210,781
  Products                                                 76,805              65,743               145,363            119,583
  Mobile Security                                          38,149              28,188                74,086             54,968
                                                        ---------           ---------             ---------          ---------
  Total revenues                                          371,642             223,704               736,607            385,332

COSTS AND EXPENSES:
  Cost of revenues                                        275,840             157,246               549,495            271,314
  Selling, general and administrative expenses             35,534              23,386                69,350             46,637
  Amortization                                              2,038                 973                 4,076              1,953
  Integration                                                 834                 802                 1,634              1,483
  Other charges                                                 -               7,321                     -              7,321
                                                        ---------           ---------             ---------          ---------

OPERATING INCOME                                           57,396              33,976               112,052             56,624

  Interest expense, net                                     1,514               2,057                 3,759              3,785
  Other income, net                                       (3,093)               (390)               (1,970)              (275)
                                                        ---------           ---------             ---------          ---------

INCOME FROM CONTINUING
   OPERATIONS BEFORE PROVISION
   FOR INCOME TAXES                                        58,975              32,309               110,263             53,114
PROVISION FOR INCOME TAXES                                 21,560              14,588                41,819             22,765
                                                        ---------           ---------             ---------          ---------
INCOME FROM CONTINUING                                     37,415              17,721                68,444             30,349
   OPERATIONS
INCOME (LOSS) FROM DISCONTINUED
  OPERATIONS (NOTE 2), NET OF TAX                               -                 100                     -               (38)
                                                        ---------           ---------             ---------          ---------
NET INCOME                                              $  37,415           $  17,821             $  68,444          $  30,311
                                                        =========           =========             =========          =========

NET INCOME PER COMMON SHARE -
   BASIC
INCOME FROM CONTINUING
   OPERATIONS                                           $    1.09           $    0.60             $     1.99         $    1.04
INCOME FROM DISCONTINUED
   OPERATIONS                                                0.00                0.00                   0.00              0.00
                                                        ---------           ---------             ----------         ---------
BASIC EARNINGS PER SHARE                                $    1.09           $    0.60             $     1.99         $    1.04
                                                        =========           =========             =========          =========
</TABLE>

            See notes to condensed consolidated financial statements.

                                       6


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>

                                                        THREE MONTHS ENDED                          SIX MONTHS ENDED
                                                JUNE 30, 2005        JUNE 30, 2004        JUNE 30, 2005         JUNE 30, 2004
                                                -------------        -------------        -------------         -------------
                                                                                                       
NET INCOME PER COMMON SHARE
   - DILUTED
INCOME FROM CONTINUING
   OPERATIONS                                       $  1.05             $  0.57               $   1.93             $  0.99
INCOME FROM DISCONTINUED
   OPERATIONS                                          0.00                0.00                   0.00                0.00
                                                    -------             -------               --------             -------

DILUTED EARNINGS PER SHARE                          $  1.05             $  0.57               $   1.93             $  0.99
                                                    =======             =======               ========             =======
WEIGHTED AVERAGE SHARES -
   BASIC                                             34,480              29,670                 34,321              29,236
                                                    =======             =======               ========             =======
WEIGHTED AVERAGE SHARES -
   DILUTED                                           35,562              31,008                 35,536              30,469
                                                    =======             =======               ========             =======
</TABLE>





            See notes to condensed consolidated financial statements.

                                       7


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(IN THOUSANDS)

<TABLE>

                                                                                           SIX MONTHS ENDED
                                                                                  ----------------------------------
                                                                                  JUNE 30, 2005        JUNE 30, 2004
                                                                                  -------------        -------------
                                                                                                   
CASH FLOW FROM OPERATING ACTIVITIES:
  Income from continuing operations                                                 $  68,444            $  30,349
  Adjustments to reconcile income from continuing operations to cash provided
     by operating activities:
     Depreciation and amortization                                                     10,588                6,603
     Loss on disposal of fixed assets                                                     503                  115
     Deferred income taxes                                                              3,640                 (197)
     Fair value gain for put options                                                   (3,793)                --
     Non-cash charge for acceleration of performance-based
         restricted stock awards                                                         --                  5,913
     Non-cash impairment charge                                                          --                  1,408
  Changes in operating assets and liabilities, net of acquisitions:
      Increase in accounts receivable                                                  (2,648)             (38,772)
      Increase in inventories                                                         (32,538)             (31,997)
      Increase in prepaid expenses and other assets                                    (1,255)              (8,881)
      Increase in accounts payable, accrued expenses
          and other current liabilities                                                14,592               27,649
      Increase in income taxes payable                                                    498               17,475
                                                                                    ---------            ---------
      Net cash provided by operating activities                                        58,031                9,665
                                                                                    ---------            ---------
CASH FLOW FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                                                  (8,146)              (7,104)
   Purchase of patents and trademarks                                                    (100)                 (77)
   Purchases of short-term investment securities                                     (562,750)            (225,125)
   Proceeds from sales of short-term investment securities                            186,225               16,175
   Sale of put options                                                                  4,790                 --
   Purchase of equity investment                                                         --                 (5,275)
   Proceeds from sale of equity investment                                               --                  5,823
   Collection of note receivable                                                         --                    375
   Decrease in restricted cash                                                           --                  2,600
   Additional cash received from sale of business                                         300                 --
   Additional consideration for purchased businesses                                   (4,604)              (1,855)
   Purchase of businesses, net of cash acquired                                        (1,362)              (2,729)
                                                                                    ---------            ---------
   Net cash used in investing activities                                             (385,647)            (217,192)
                                                                                    ---------            ---------
CASH FLOW FROM FINANCING ACTIVITIES:
   Proceeds from the exercise of stock options                                          4,304                8,310
   Proceeds from the issuance of common stock                                            --                142,500
   Cash paid for common stock offering costs                                             --                 (1,057)
   Taxes paid for withheld shares on restricted stock issuances                        (5,794)                --
   Repayments of long-term debt                                                          (314)             (34,052)
   Borrowings under lines of credit                                                     9,634                8,885
   Repayments under lines of credit                                                    (6,985)              (8,122)
                                                                                    ---------            ---------
   Net cash provided by financing activities                                              845              116,464
                                                                                    ---------            ---------
   Effect of exchange rate changes on cash and cash equivalents                        (2,121)                  63
   Net cash used in discontinued operations                                              --                   (717)
                                                                                    ---------            ---------
   NET DECREASE IN CASH AND CASH EQUIVALENTS                                         (328,892)             (91,717)
   CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                     421,209              111,850
                                                                                    ---------            ---------
   CASH AND CASH EQUIVALENTS, END OF PERIOD                                         $  92,317            $  20,133
                                                                                    =========            =========
   CASH AND CASH EQUIVALENTS, END OF PERIOD:
       CONTINUING OPERATIONS                                                        $  92,317            $  20,133
       DISCONTINUED OPERATIONS                                                           --                    157
                                                                                    ---------            ---------
                                                                                    $  92,317            $  20,290
                                                                                    =========            =========
</TABLE>

            See notes to condensed consolidated financial statements.

                                       8


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements of
Armor Holdings, Inc. and its wholly-owned subsidiaries (the "Company", "we",
"our", "us") have been prepared in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP") for interim
information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X,
and do not include all of the information and footnotes required by U.S. GAAP
for complete financial statements. In the opinion of management, all adjustments
considered necessary by management to present a fair presentation have been
included. The results of operations for the three month and six month periods
are not necessarily indicative of the results to be expected for the full year
and should be read in conjunction with the consolidated financial statements and
notes thereto included in our Annual Report on Form 10-K and amendments thereto
for the year ended December 31, 2004. The amounts disclosed in the footnotes are
related to continuing operations unless otherwise indicated. Certain prior year
amounts have been reclassified to conform to the current year presentation.

NOTE 2 - DISCONTINUED OPERATIONS

     On July 2, 2004, we sold the security consulting division of our litigation
support services subsidiary, New Technologies Armor, Inc. ("NTI"), which was the
last remaining business in discontinued operations. The remaining division in
NTI, consisting primarily of training services, has been included as part of the
Products Division segment, where management now resides. This business
represented the last remaining business in our ArmorGroup Services Division (the
"Services Division"). We had no discontinued operations at June 30, 2005.

     A summary of the operating results of the discontinued operations for the
three and six month periods ended June 30, 2005 and 2004, is as follows:

<TABLE>

                                                     THREE MONTHS ENDED                           SIX MONTHS ENDED
                                            -----------------------------------          ----------------------------------
                                            JUNE 30, 2005         JUNE 30, 2004          JUNE 30, 2005        JUNE 30, 2004
                                            -------------         -------------          -------------        -------------
                                                       (IN THOUSANDS)                              (IN THOUSANDS)
                                                                                                    
Revenues                                       $    --              $ 1,013                  $  --              $ 1,733
Cost of revenues                                    --                  461                     --                  697
Selling, general and administrative
   expenses                                         --                  385                                         821
                                               -------              -------                  ------             -------
Operating income                                    --                  167                     --                  215
Interest expense, net                               --                 --                       --                    2
Other expense, net                                  --                   10                     --                  273
                                               -------              -------                  ------             -------
Income (loss) from discontinued
   operations before provision
   (benefit) for income taxes                       --                  157                     --                  (60)
Provision (benefit) for income
   taxes                                            --                   57                     --                  (22)
                                               -------              -------                  ------             -------
Income (loss) from discontinued
   operations                                  $    --              $   100                  $  --              $   (38)
                                               =======              =======                  ======             =======
</TABLE>

                                       9


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

NOTE 3 - COMPREHENSIVE INCOME

     The components of comprehensive income, net of tax benefit of $298,000 and
tax provision of zero for the three months ended June 30, 2005 and 2004,
respectively, and net of tax benefit of $412,000 and tax provision of zero for
the six months ended June 30, 2005 and 2004, respectively, are listed below:

<TABLE>

                                                       THREE MONTHS ENDED                            SIX MONTHS ENDED
                                               ----------------------------------           ----------------------------------
                                               JUNE 30, 2005        JUNE 30, 2004           JUNE 30, 2005        JUNE 30, 2004
                                               -------------        -------------           -------------        -------------
                                                         (IN THOUSANDS)                               (IN THOUSANDS)
                                                                                                       
Net income                                       $  37,415            $  17,821              $  68,444             $  30,311
Other comprehensive loss:
   Foreign currency translations, net
     of tax                                         (2,021)                (230)                (4,064)                 (558)
                                                 ---------            ---------              ---------             ---------
Comprehensive income:                            $  35,394            $  17,591              $  64,380             $  29,753
                                                 =========            =========              =========             =========
</TABLE>

NOTE 4 - INVENTORIES

     The components of inventory as of June 30, 2005 and December 31, 2004, are
summarized as follows:

                                        JUNE 30, 2005          DECEMBER 31, 2004
                                        -------------          -----------------
                                                       (IN THOUSANDS)
Raw material                               $ 135,035                $ 97,528
Work-in-process                               39,508                  51,137
Finished goods                                34,203                  27,543
                                           ---------                --------
    Total inventories                      $ 208,746                $176,208
                                           =========                ========


NOTE 5 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

     Accrued expenses and other current liabilities as of June 30, 2005 and
December 31, 2004, are summarized as follows:

<TABLE>

                                                            JUNE 30, 2005         DECEMBER 31, 2004
                                                            -------------         -----------------
                                                                       (IN THOUSANDS)
                                                                                
Accrued expenses and other current liabilities                $  67,415               $  70,869
Customer deposits                                                31,129                  32,317
Deferred consideration for acquisitions                           2,131                   4,061
                                                              ---------               ---------
   Total accrued expenses and other current liabilities       $ 100,675               $ 107,247
                                                              =========               =========
</TABLE>

                                       10


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS

     We account for derivative instruments in accordance with Statement of
Financial Accounting Standards No. 133, " Accounting for Derivative Instruments
and Hedging Activities," as amended by Statement of Financial Accounting
Standards No. 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities - an Amendment of SFAS 133", and Statement of Financial
Accounting Standards No. 149 "Amendment of SFAS 133 on Derivative Instruments
and Hedging Activities" (collectively "SFAS 133"). SFAS 133 requires all
freestanding and embedded derivative instruments to be measured at fair value
and recognized on the balance sheet as either assets or liabilities. In
addition, all derivative instruments used in hedging relationships must be
designated, reassessed and accounted for as either fair value hedges or cash
flow hedges pursuant to the provisions of SFAS 133.

     We hedge the fair value of our 8.25% $150 million Senior Subordinated Notes
due 2013 (the "8.25% Notes") using interest rate swaps. We enter into these
derivative contracts to manage fair value changes which could be caused by our
exposure to interest rate changes. On September 2, 2003, we entered into
interest rate swap agreements, designated as fair value hedges as defined under
SFAS 133 with an aggregate notional amount totaling $150 million. The agreements
were entered into to exchange the fixed interest rate on the 8.25% Notes for a
variable interest rate equal to six-month LIBOR (3.71% at June 30, 2005), set in
arrears, plus a spread ranging from 2.735% to 2.75% fixed semi-annually on the
fifteenth of February and August each year through maturity. The agreements are
subject to other terms and conditions common to transactions of this type. These
fair value hedges qualify for hedge accounting using the short-cut method since
the swap terms match the critical terms of the 8.25% Notes. Accordingly, changes
in the fair value of the interest rate swap agreements offset changes in the
fair value of the 8.25% Notes due to changes in the market interest rate. As a
result, no ineffectiveness is expected to be recognized in our earnings
associated with the interest rate swap agreements on the 8.25% Notes. The fair
value of the interest rate swap agreements was approximately $7.0 million and
$6.0 million at June 30, 2005 and December 31, 2004, respectively, and is
included in other assets and long-term debt on the accompanying condensed
consolidated balance sheets.

     The fair values of our interest rate swap agreements are obtained from our
counter-parties and represent the estimated amount we would receive or pay to
terminate the agreement, taking into consideration the difference between the
contract rate of interest and rates currently quoted for agreements of similar
terms and maturities.

     On October 29, 2004, we completed the placement of $300 million aggregate
principal amount of the 2% Senior Subordinated Convertible Notes due November 1,
2024 (the "2% Convertible Notes"). On November 5, 2004, Goldman, Sachs & Co.
exercised its option to purchase an additional $45 million principal amount of
the 2% Convertible Notes. The 2% Convertible Notes will bear interest at a rate
of 2.00% per year, payable on November 1 and May 1 of each year beginning on May
1, 2005 and ending on November 1, 2011. The 2% Convertible Notes will be subject
to accretion of the principal amount beginning on November 1, 2011, at a rate
that provides holders with an aggregate annual yield to maturity of 2.00%, as
defined in the agreement. The 2% Convertible Notes will bear contingent interest
during any six-month period beginning November 1, 2011, of 15 basis points paid
in cash if the average trading price of the notes is above certain levels. As
defined in SFAS 133, "Accounting for Derivative Instruments and Hedge
Activities" the contingent interest feature of the 2% Convertible Notes is an
embedded derivative that is not considered clearly and closely related to the
host contract. The fair value

                                       11


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

of this bifurcated derivative is immaterial to our financial position based on
documentation we received from our investment bank.

NOTE 7 - GOODWILL AND IDENTIFIED INTANGIBLE ASSETS

     Under Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" ("SFAS 142"), goodwill and intangible assets with
indefinite lives are no longer amortized, but are tested for impairment at least
annually or more often if indicators of impairment arise. The changes in the
carrying amount of goodwill for the six months ended June 30, 2005 are as
follows:

<TABLE>

                                   AEROSPACE &                       MOBILE
                                     DEFENSE       PRODUCTS         SECURITY        CORPORATE         TOTAL
                                     -------       --------         --------        ---------         -----
                                                                 (IN THOUSANDS)
                                                                                     
Balance at                           $154,313      $101,292          $ 6,408         $     -        $262,013
  December 31, 2004
Goodwill acquired
  during period                           850             -              150           1,728           2,728
Foreign currency
  translation and
  other adjustments                      (70)           406             (59)               -             277
                                     --------      --------          -------         ------         --------
Balance at
  June 30, 2005                      $155,093      $101,698          $ 6,499         $ 1,728        $265,018
                                     ========      ========          =======         =======        ========
</TABLE>

     Included in patents, licenses and trademarks in the accompanying
consolidated balance sheets are the following intangible assets as of June 30,
2005:

<TABLE>

                                        CUSTOMER
                                     RELATIONSHIPS     TECHNOLOGY     MARKETING        TOTAL
                                     -------------     ----------     ---------        -----
                                                                        
Gross amount                             $ 58,454       $ 14,806      $ 46,127      $ 119,387
Accumulated amortization                   (5,768)        (2,412)       (2,724)       (10,904)
                                         --------       --------      --------      ---------
Net amount                               $ 52,686       $ 12,394      $ 43,403      $ 108,483
                                         ========       ========      ========      =========
</TABLE>

     Included in Marketing are approximately $41.2 million of marketing-related
intangible assets that have indefinite lives.


                                       12


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

NOTE 8 - INFORMATION CONCERNING BUSINESS SEGMENTS AND GEOGRAPHICAL REVENUES

     We are a leading manufacturer and provider of specialized security
products; training and support services related to these products; vehicle armor
systems; military helicopter seating systems, aircraft and land vehicle safety
systems; protective equipment for military personnel; and other technologies
used to protect humans in a variety of life-threatening or catastrophic
situations. Our products and systems are used domestically and internationally
by military, law enforcement, security and corrections personnel, as well as
governmental agencies, multinational corporations and individuals. Effective in
the first quarter 2004, we instituted a new segment reporting format to include
three reportable business divisions: Aerospace & Defense Group, the Products
Division and the Mobile Security Division. Our Services Division has been
classified as discontinued operations and is no longer included in this
presentation (See Note 2).

     Aerospace & Defense Group. The Aerospace & Defense Group supplies human
safety and survival systems to the U.S. military and major aerospace and defense
prime contractors. Our core markets are land, marine and aviation safety and
military personnel protection. The most significant business within the
Aerospace & Defense Group is armoring a variety of light, medium and heavy
wheeled vehicles for the military. We are the sole-source provider to the U.S.
military of the armor and blast protection systems (up-armoring) for their High
Mobility Multi-purpose Wheeled Vehicles (Up-Armored HMMWV, commonly known as the
Humvee). We also provide spare parts and logistical and field support services
for Up-Armored HMMWVs previously shipped by us. We also provide blast and
ballistic protection kits for the standard HMMWV which are installed in the
field. Additionally, we develop ballistic and blast protected armored and sealed
truck cabs for other military tactical wheeled vehicles. For example, we provide
land vehicle armor kits for the Heavy Expanded Mobility Tactical Truck
("HEMTT"), Palletized Load System ("PLS"), Heavy Equipment Transporter ("HET"),
M915 and Armored Security Vehicle ("ASV").

     The Aerospace & Defense Group develops and supplies personnel equipment,
including small arms protection inserts ("SAPI") and other engineered ceramic
body armor, helmets, and other protective and duty equipment. Our products
include, among others, Modular Lightweight Load-Carrying Equipment ("MOLLE")
systems, Outer Tactical Vests ("OTVs") and Warrior Helmets. We are currently the
largest supplier of MOLLE systems for the U.S. Army which is a modular rucksack
that can be configured in a number of ways depending on the needs of the
military mission. We also manufacture OTVs which, when used with SAPI plates,
provide enhanced protection against bullets, mines, grenades and mortar and
artillery shells. SAPI plates have been adopted by the U.S. military as a key
element of the protective equipment worn by U.S. troops.

     The Aerospace & Defense Group develops and sells military helicopter
seating systems, helicopter cockpit airbag systems, aircraft armor kits,
emergency bailout parachutes and survival equipment worn by military aircrew.
The primary customers for these products are the U.S. Army, U.S. Marine Corps,
Boeing and Sikorsky Aircraft.

     Armor Holdings Products. Our Armor Holdings Products Division manufactures
and sells a broad range of high quality equipment marketed under brand names
that are known in the military and law enforcement communities. Products
manufactured by this division include concealable and tactical body armor, hard
armor, duty gear, less-lethal munitions, anti-riot products, police batons,
emergency

                                       13


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

lighting products, forensic products, firearms accessories, weapon maintenance
products, foldable ladders, backpacks and specialty gloves.

     Armor Mobile Security. Our Armor Mobile Security Division manufactures and
installs armoring systems for commercial vehicles to protect against varying
degrees of ballistic and blast threats. We armor a variety of commercial
vehicles, including limousines, sedans, sport utility vehicles, commercial
trucks and cash-in-transit vehicles. Our customers in this business include U.S.
federal law enforcement and intelligence agencies, foreign heads of state,
multinational corporations, as well as high net worth individuals and
cash-in-transit operators.

     We have invested substantial resources outside of the United States and
plan to continue to do so in the future. The Armor Mobile Security Division has
invested substantial resources in Europe and South America. These operations are
subject to the risk of new and different legal and regulatory requirements in
local jurisdictions, tariffs and trade barriers, potential difficulties in
staffing and managing local operations, currency risks, potential imposition of
restrictions on investments, potentially adverse tax consequences, including
imposition or increase of withholding and other taxes on remittances and other
payments by subsidiaries, and local economic, political and social conditions.
Governments of many developing countries have exercised and continue to exercise
substantial influence over many aspects of the private sector. Government
actions in the future could have a significant adverse effect on economic
conditions in a developing country or may otherwise have a material adverse
effect on us and our operating companies. We do not have political risk
insurance in the countries in which we currently conduct business. Moreover,
applicable agreements relating to our interests in our operating companies are
frequently governed by foreign law. As a result, in the event of a dispute, it
may be difficult for us to enforce our rights. Accordingly, we may have little
or no recourse upon the occurrence of any of these developments.

     Corporate. Our Corporate Division includes the corporate management and
expenses associated with managing the overall company. These expenses include
compensation and benefits of corporate management and staff, legal and
professional fees, and administrative and general expenses, which are not
allocated to the business units.



                                       14


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

     Revenues, operating income and total assets for each of our continuing
operating segments are as follows (net of intercompany eliminations):

<TABLE>

                                       THREE MONTHS ENDED                  SIX MONTHS ENDED
                                JUNE 30, 2005     JUNE 30, 2004    JUNE 30, 2005    JUNE 30, 2004
                                -------------     -------------    -------------    -------------
                                         (IN THOUSANDS)                      (IN THOUSANDS)

Revenues:
                                                                          
   Aerospace & Defense            $  256,688       $  129,773        $  517,158       $  210,781
   Products                           76,805           65,743           145,363          119,583
   Mobile Security                    38,149           28,188            74,086           54,968
                                  ----------       ----------        ----------       ----------
      Total revenues              $  371,642       $  223,704        $  736,607       $  385,332
                                  ==========       ==========        ==========       ==========

Operating income (loss):
   Aerospace & Defense            $   48,429       $   31,552        $   95,928       $   51,031
   Products                           13,296           11,259            22,336           16,944
   Mobile Security                     5,312            3,847            10,918            4,920
   Corporate                          (9,641)         (12,682)          (17,130)         (16,271)
                                  ----------       ----------        ----------       ----------
      Total operating income      $   57,396       $   33,976        $  112,052       $   56,624
                                  ==========       ==========        ==========       ==========

                                                                   JUNE 30, 2005   DECEMBER 31, 2004
                                                                   -------------   -----------------
                                                                            (IN THOUSANDS)
Total assets:
Aerospace & Defense                                                  $  522,599       $  490,754
Products                                                                287,916          278,912
Mobile Security                                                         104,132          103,799
Corporate                                                               460,677          418,886
                                                                     ----------       ----------
   Total assets                                                      $1,375,324       $1,292,351
                                                                     ==========       ==========
</TABLE>

                                       15


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

     The following unaudited information with respect to revenues and total
fixed assets, net from continuing operations to principal geographic areas are
as follows:

<TABLE>

                                          THREE MONTHS ENDED              SIX MONTHS ENDED
                                    JUNE 30, 2005   JUNE 30, 2004   JUNE 30, 2005   JUNE 30, 2004
                                    -------------   -------------   -------------   -------------
                                            (IN THOUSANDS)                 (IN THOUSANDS)
                                                                          
Revenues:
United States of America               $324,465       $184,985         $643,725       $309,015
North America (excluding the
  United States of America)               2,344          3,669            4,533         10,990
South America                             5,934          4,185           10,327          7,661
Africa                                    5,256            475           10,000          1,681
Europe/Asia                              33,643         30,390           68,022         55,985
                                       --------       --------         --------       --------
   Total revenues                      $371,642       $223,704         $736,607       $385,332
                                       ========       ========         ========       ========


                                                                   JUNE 30, 2005  DECEMBER 31, 2004
                                                                   -------------  -----------------
                                                                             (IN THOUSANDS)
Total fixed assets, net:
North America                                                          $ 57,251       $ 54,332
South America                                                             1,485          1,461
Africa                                                                     --             --
Europe/Asia                                                              18,739         21,514
                                                                       --------       --------
    Total fixed assets, net                                            $ 77,475       $ 77,307
                                                                       ========       ========
</TABLE>

                                       16


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

NOTE 9 - EARNINGS PER SHARE

     The following details the numerators and denominators of the basic and
diluted earnings per share computations for net income from continuing
operations:

<TABLE>

                                               THREE MONTHS ENDED              SIX MONTHS ENDED
                                         JUNE 30, 2005   JUNE 30, 2004   JUNE 30, 2005   JUNE 30, 2004
                                         -------------   -------------   -------------   -------------
                                                    (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                                
Numerator for basic and diluted
   earnings per share:

Income from continuing
   operations                               $37,415         $17,721         $68,444         $30,349
                                            -------         -------         -------         -------

Denominator for basic earnings per
   share - weighted average shares
   outstanding                               34,480          29,670          34,321          29,236

Effect of shares issuable under stock
   option and stock grant plans, based
   on the treasury stock method               1,082           1,338           1,215           1,233
                                            -------         -------         -------         -------

Denominator for diluted earnings per
   share - adjusted weighted average
   shares outstanding                        35,562          31,008          35,536          30,469
                                            =======         =======         =======         =======

Basic earnings per share from
   continuing operations                    $  1.09         $  0.60         $  1.99         $  1.04
                                            =======         =======         =======         =======

Diluted earnings per share from
   continuing operations                    $  1.05         $  0.57         $  1.93         $  0.99
                                            =======         =======         =======         =======
</TABLE>

     Our 2.00% Convertible Notes include net share settlement of the conversion
option and cash settlement of the par amount. As a result, this requires us to
use the treasury stock method to calculate the dilutive effect of our 2.00%
Convertible Notes. There was no effect on our diluted share count during the six
months ended June 30, 2005.

                                       17


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

NOTE 10 - STOCKHOLDERS' EQUITY

     Statement of Financial Accounting Standard No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), as amended by Statement of Financial
Accounting Standard No. 148, "Accounting for Stock-Based Compensation -
Transition and Disclosure" ("SFAS 148"), establishes a fair value based method
of accounting for stock-based employee compensation plans; however, it also
allows an entity to continue to measure compensation cost for those plans using
the intrinsic value based method of accounting prescribed by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25"). Under the fair value based method, compensation cost is measured at
the grant date based on the value of the award and is recognized over the
service period, which is usually the vesting period. Under the intrinsic value
based method, compensation cost is the excess, if any, of the quoted market
price of the stock at the grant date or other measurement date over the amount
an employee must pay to acquire the stock. We have elected to continue to
account for our employee stock compensation plans under APB 25 with pro forma
disclosures of net earnings and earnings per share, as if the fair value based
method of accounting defined in SFAS 123 had been applied. If compensation cost
for stock option grants had been determined based on the fair value on the grant
dates for the three month and six month periods ended June 30, 2005 and 2004,
consistent with the method prescribed by SFAS 123, our net earnings and earnings
per share would have been adjusted to the pro forma amounts indicated below:

<TABLE>

                                                    THREE MONTHS ENDED               SIX MONTHS ENDED
                                              JUNE 30, 2005    JUNE 30, 2004   JUNE 30, 2005    JUNE 30, 2004
                                              -------------    -------------   -------------    -------------
                                                           (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                                                      
Net income as reported                         $   37,415       $   17,821       $   68,444       $   30,311

Deduct:  Total stock-based employee
   compensation expense determined
   under fair value based method for
   all awards, net of related tax effects          (2,714)          (1,290)         (36,650)          (2,533)

Add:  Employee compensation
   expense for modification of stock
   option awards included in reported
   net income, net of income taxes                   --                 57              118               57
                                               ----------       ----------       ----------       ----------
Pro-forma net income                           $   34,701       $   16,588       $   31,912       $   27,835
                                               ==========       ==========       ==========       ==========
Earnings per share:
         Basic - as reported                   $     1.09       $     0.60       $     1.99       $     1.04
                                               ==========       ==========       ==========       ==========
         Basic - pro-forma                     $     1.01       $     0.56       $     0.93       $     0.95
                                               ==========       ==========       ==========       ==========
         Diluted - as reported                 $     1.05       $     0.57       $     1.93       $     0.99
                                               ==========       ==========       ==========       ==========
         Diluted - pro-forma                   $     0.98       $     0.53       $     0.90       $     0.91
                                               ==========       ==========       ==========       ==========
</TABLE>

                                       18


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

     $15.3 million of the stock-based employee compensation expense for the six
months ended June 30, 2005 is related to accelerated vesting of certain existing
stock options and $21.3 million is related to certain stock options issued in
the six months ended June 30, 2005.

     On June 22, 2005, our stockholders approved the 2005 Stock Incentive Plan
(the "2005 Plan"). An aggregate of 2,500,000 shares of common stock is reserved
for issuance and available for awards under the 2005 Plan. In addition to the
limits described further in the 2005 Plan, the 2005 Plan provides that awards
other than stock options and stock appreciation rights will be counted against
the availability under the 2005 Plan in a 1.8 to 1 ratio. For example, if we
issue 100 shares of restricted common stock under the 2005 Plan, we would reduce
the availability under the 2005 Plan by 180 shares. Shares of common stock not
actually issued (as a result, for example, of the lapse of an option) are
available for additional grants. Shares to be issued or purchased under the 2005
Plan may be either authorized but unissued common stock or treasury shares.
Shares issued with respect to awards assumed by us in connection with
acquisitions do not count against the total number of shares available under the
2005 Plan.

     On June 22, 2004, our stockholders approved an amendment to our Certificate
of Incorporation, as amended, that increased the number of shares of our
authorized capital stock to 80,000,000, of which 75,000,000 shares are
designated as common stock and 5,000,000 shares are designated as preferred
stock.

     In March 2002, our Board of Directors approved a stock repurchase program
authorizing the repurchase of up to a maximum 3.2 million shares of our common
stock. In February 2003, the Board of Directors increased this stock repurchase
program to authorize the repurchase, from time to time depending upon market
conditions and other factors, of up to an additional 4.4 million shares. On
March 25, 2005, our Board of Directors increased our existing stock repurchase
program to enable us to repurchase, from time to time depending upon market
conditions and other factors, up to an additional 3.5 million shares of its
outstanding common stock. Through June 30, 2005, we repurchased 3.8 million
shares of our common stock under the stock repurchase program at an average
price of $12.49 per share, leaving us with the ability to repurchase up to an
additional 7.3 million shares of our common stock. We have not repurchased any
shares in 2004 or in the six months ended June 30, 2005. Repurchases may be made
in the open market, in privately negotiated transactions utilizing various
hedging mechanisms including, among others, the sale to third parties of put
options our common stock, or otherwise. At June 30, 2005, we had 34.6 million
shares of common stock outstanding.

                                       19


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

NOTE 11 - RECENT ACCOUNTING PRONOUNCEMENTS

     On December 16, 2004, the Financial Accounting Standards Board ("FASB")
issued FASB Statement No. 123, "Share Based Payment (revised 2004)" ("FAS
123R"). FAS 123R revises SFAS 123 and requires companies to expense the fair
value of employee stock options and other forms of stock-based compensation. In
addition to revising SFAS 123, FAS 123R supersedes APB 25, and amends FASB
Statement No. 95, "Statement of Cash Flows." On April 14, 2005, the Securities
and Exchange Commission announced the amendment of the adoption compliance date
of FAS 123R from the first interim period to the first annual period beginning
after June 15, 2005. We will be required to apply the expense recognition
provisions of FAS 123R beginning in the first quarter of 2006.

     On March 31, 2005, we announced that we accelerated the vesting of certain
unvested stock options previously awarded to employees, officers and directors
of the Company under various stock option plans effective March 25, 2005,
subject to such employees, officers and directors entering into lock-up,
confidentiality and non-competition agreements. As a result of this action,
options to purchase approximately 1.6 million shares of our common stock that
would otherwise have vested over the next one to five years became fully vested.
Outstanding unvested options that were not accelerated will continue to vest on
their normal schedule.

     The decision to accelerate the vesting of these options, which we believe
to be in the best interest of our stockholders, was made primarily to reduce
non-cash compensation expense that would have been recorded in future periods
following our application of FAS 123R. Because we accelerated these options, we
expect to reduce our non-cash compensation expense related to these options by
approximately $12.3 million (pre-tax) between the first quarter of 2006 and
2009, based on estimated value calculations using the Black-Scholes methodology.

     In October 2004, the American Jobs Creation Act of 2004 ("AJCA") was signed
into law. In December 2004, the FASB issued Staff Position No. 109-1 ("FSP
109-1"), Application of FASB Statement No. 109, "Accounting for Income Taxes"
("SFAS 109"), to the Tax Deduction on Qualified Production Activities Provided
by the AJCA and Staff Position No. 109-2 ("FSP 109-2"), Accounting and
Disclosure Guidance for the Foreign Earnings Repatriation Provision within the
AJCA. FSP 109-1 clarifies that the manufacturer's tax deduction provided for
under the AJCA should be accounted for as a special deduction in accordance with
SFAS 109 and not as a tax rate reduction. FSP 109-2 provides accounting and
disclosure guidance for the repatriation of certain foreign earnings to a U.S.
taxpayer as provided for in the AJCA. Currently, uncertainty remains as to how
to interpret numerous provisions of the AJCA. As such, we are not yet in a
position to decide on whether, and to what extent, we might repatriate foreign
earnings that have not yet been remitted to the U.S. We expect to be in a
position to make a decision on implementation, if any, later in 2005.

                                       20


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

NOTE 12 - LEGAL PROCEEDINGS

     In the normal course of business, we are subjected to various types of
claims and currently have on-going litigations in the areas of products
liability, general liability and intellectual property. Our products are used in
a wide variety of law enforcement situations and environments. Some of our
products can cause serious personal or property injury or death if not carefully
and properly used by adequately trained personnel. We believe that we have
adequate insurance coverage for most claims that are incurred in the normal
course of business. In such cases, the effect on our financial statements is
generally limited to the amount of our insurance deductible or self-insured
retention. Our annual insurance premiums and self insurance retention amounts
have risen significantly over the past several years and may continue to do so
to the extent we are able to purchase insurance coverage. At this time, we do
not believe any such claims or pending litigation will have a material impact on
our financial position, operations or liquidity.






                                       21


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

NOTE 13 - GUARANTOR AND NONGUARANTOR FINANCIAL STATEMENTS

     On August 12, 2003, we sold $150 million of the 8.25% Notes in private
placements pursuant to Rule 144A and Regulation S. The 8.25% Notes are
uncollateralized obligations and rank junior in right of payment to our existing
and future senior debt. On October 29, 2004, we completed the placement of $300
million aggregate principal amount of the 2% Convertible Notes. On November 5,
2004, Goldman, Sachs & Co. exercised its option to purchase an additional $45
million principal amount of the 2% Convertible Notes. The 8.25% Notes and 2%
Convertible Notes are fully and unconditionally guaranteed, jointly and
severally on a senior subordinated and uncollateralized basis, by most of our
domestic subsidiaries. Each of the subsidiary guarantors is a direct or indirect
100% owned subsidiary of the parent.

     The following consolidating financial information presents the
consolidating balance sheets as of June 30, 2005 and December 31, 2004, the
related condensed consolidating statements of operations for each of the three
and six month periods ended June 30, 2005 and June 30, 2004, and the related
condensed consolidating statements of cash flows for the six month periods ended
June 30, 2005 and June 30, 2004 for:

o    Armor Holdings, Inc., the parent,

o    the guarantor subsidiaries,

o    the nonguarantor subsidiaries, and

o    Armor Holdings, Inc. on a consolidated basis

     The information includes elimination entries necessary to consolidate Armor
Holdings, Inc., the parent, with the guarantor and nonguarantor subsidiaries.

     Investments in subsidiaries are accounted for by the parent using the
equity method of accounting. The guarantor and nonguarantor subsidiaries are
presented on a combined basis. The principal elimination entries eliminate
investments in subsidiaries and intercompany balances and transactions. Separate
financial statements for the guarantor and nonguarantor subsidiaries are not
presented because management believes such financial statements would not be
meaningful to investors.

                                       22


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

<TABLE>

                                                ARMOR HOLDINGS, INC. AND SUBSIDIARIES
                                               CONDENSED CONSOLIDATING BALANCE SHEETS

                                                                                  JUNE 30, 2005
                                                ----------------------------------------------------------------------------------
                                                                   GUARANTOR      NONGUARANTOR                        CONSOLIDATED
                                                   PARENT         SUBSIDIARIES    SUBSIDIARIES       ELIMINATIONS        TOTAL
                                                ------------      ------------    ------------       ------------     ------------
                                                                                 (IN THOUSANDS)
                                                                                                        
                  ASSETS
Current assets:
   Cash and cash equivalents                    $    55,216       $    25,155      $    11,946       $      --         $    92,317
   Short-term investment securities                 376,525              --               --                --             376,525
   Accounts receivable, net                            --             155,115           22,755              --             177,870
   Intercompany receivables                         128,234           106,592           38,400          (273,226)             --
   Inventories                                         --             176,141           32,605              --             208,746
   Prepaid expenses and other current
     assets                                           2,743            42,408            4,467              --              49,618
                                                -----------       -----------      -----------       -------           -----------
      Total current assets                          562,718           505,411          110,173          (273,226)          905,076

Property and equipment, net                           2,286            53,742           21,447              --              77,475
Goodwill, net                                          --             262,946            2,072              --             265,018
Patents, licenses and trademarks, net                  --             108,313              170              --             108,483
Other assets                                         17,030             2,091              151              --              19,272
Investment in subsidiaries                          675,121            25,370             --            (700,491)             --
                                                -----------       -----------      -----------       -------           -----------
Total assets                                    $ 1,257,155       $   957,873      $   134,013       $  (973,717)      $ 1,375,324
                                                ===========       ===========      ===========       ===========       ===========

   LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Current portion of long-term debt            $      --         $       277      $       147       $      --         $       424
   Short-term debt                                  341,665              --              5,013              --             346,678
   Accounts payable                                     344            76,610            9,705              --              86,659
   Accrued expenses and other current
     liabilities                                     18,058            61,174           21,443              --             100,675
   Income taxes payable                              (7,252)           11,930            3,033              --               7,711
   Intercompany payable                             113,594            79,495           80,137          (273,226)             --
                                                -----------       -----------      -----------       -----------       -----------
      Total current liabilities                     466,409           229,486          119,478          (273,226)          542,147

Long-term debt, less current portion                154,973             2,319              347              --             157,639
Other long-term liabilities                            --               1,997             --                --               1,997
Deferred income taxes                                 3,442            36,779              989              --              41,210
                                                -----------       -----------      -----------       -----------       -----------
Total liabilities                                   624,824           270,581          120,814          (273,226)          742,993

Stockholders' equity:
   Preferred stock                                     --               1,450             --              (1,450)             --
   Common stock                                         407             3,192            7,853           (11,045)              407
   Additional paid in capital                       507,559           396,575           14,778          (411,353)          507,559
   Retained earnings (accumulated deficit)          193,925           286,075           (9,432)         (276,643)          193,925
   Accumulated other comprehensive income             2,757              --               --                --               2,757
   Treasury stock                                   (72,317)             --               --                --             (72,317)
                                                -----------       -----------      -----------       -----------       -----------
Total stockholders' equity                          632,331           687,292           13,199          (700,491)          632,331
                                                -----------       -----------      -----------       -----------       -----------
Total liabilities and stockholders' equity      $ 1,257,155       $   957,873      $   134,013       $  (973,717)      $ 1,375,324
                                                ===========       ===========      ===========       ===========       ===========
</TABLE>

                                       23


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

<TABLE>

                                                ARMOR HOLDINGS, INC. AND SUBSIDIARIES
                                               CONDENSED CONSOLIDATING BALANCE SHEETS

                                                                                DECEMBER 31, 2004
                                                 -------------------------------------------------------------------------------
                                                                   GUARANTOR      NONGUARANTOR                      CONSOLIDATED
                                                    PARENT        SUBSIDIARIES    SUBSIDIARIES      ELIMINATIONS        TOTAL
                                                 ------------     ------------    ------------      ------------    ------------
                                                                                 (IN THOUSANDS)
                                                                                                     
                   ASSETS
Current assets:
   Cash and cash equivalents                     $   388,727      $    21,173     $    11,309      $      --        $   421,209
   Short-term investment securities                     --               --              --               --               --
   Accounts receivable, net                             --            156,122          19,330             --            175,452
   Intercompany receivables                          173,735          108,313           7,045         (289,093)            --
   Inventories                                          --            142,362          33,846             --            176,208
   Prepaid expenses and other current assets           1,611           42,023           3,301             --             46,935
                                                 -----------      -----------     -----------      -----------      -----------
   Total current assets                              564,073          469,993          74,831         (289,093)         819,804

Property and equipment, net                            5,144           47,968          24,195             --             77,307
Goodwill, net                                           --            259,773           2,240             --            262,013
Patents, licenses and trademarks, net                   --            112,288             171             --            112,459
Other assets                                          18,410            2,209             149             --             20,768
Investment in subsidiaries                           592,437           12,730            --           (605,167)            --
                                                 -----------      -----------     -----------      -----------      -----------
Total assets                                     $ 1,180,064      $   904,961     $   101,586      $  (894,260)     $ 1,292,351
                                                 ===========      ===========     ===========      ===========      ===========

    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current portion of long-term debt             $      --        $       457     $       164      $      --        $       621
   Short-term debt                                   341,579             --             2,177             --            343,756
   Accounts payable                                      640           58,422          10,539             --             69,601
   Accrued expenses and other current
     liabilities                                      11,216           73,314          22,717             --            107,247
   Income taxes payable                               (6,454)          11,513           3,942             --              9,001
   Intercompany payables                             112,741          123,466          52,886         (289,093)            --
                                                 -----------      -----------     -----------      -----------      -----------
      Total current liabilities                      459,722          267,172          92,425         (289,093)         530,226

Long-term debt, less current portion                 153,897            2,377             477             --            156,751
Other long-term liabilities                             --              1,951            --               --              1,951
Deferred income taxes                                  1,249           36,077             901             --             38,227
                                                 -----------      -----------     -----------      -----------      -----------
Total liabilities                                    614,868          307,577          93,803         (289,093)         727,155

Stockholders' equity:
   Preferred stock                                      --              1,450            --             (1,450)            --
   Common stock                                          402            3,792           7,854          (11,646)             402
   Additional paid in capital                        504,809          387,229          14,771         (402,000)         504,809
   Retained earnings (accumulated deficit)           125,481          204,913         (14,842)        (190,071)         125,481
   Accumulated other comprehensive income              6,821             --              --               --              6,821
   Treasury stock                                    (72,317)            --              --               --            (72,317)
                                                 -----------      -----------     -----------      -----------      -----------
Total stockholders' equity                           565,196          597,384           7,783         (605,167)         565,196
                                                 -----------      -----------     -----------      -----------      -----------

Total liabilities and stockholders' equity       $ 1,180,064      $   904,961     $   101,586      $  (894,260)     $ 1,292,351
                                                 ===========      ===========     ===========      ===========      ===========
</TABLE>

                                       24


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

<TABLE>

                                                ARMOR HOLDINGS INC. AND SUBSIDIARIES
                                          CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

                                                                     THREE MONTHS ENDED JUNE 30, 2005
                                                --------------------------------------------------------------------------
                                                               GUARANTOR       NONGUARANTOR                   CONSOLIDATED
                                                 PARENT      SUBSIDIARIES      SUBSIDIARIES   ELIMINATIONS       TOTAL
                                                ---------    ------------      ------------   ------------    ------------
                                                                              (IN THOUSANDS)
                                                                                                
REVENUES:
   Aerospace & Defense                          $    --         $ 257,564       $    --        $    (876)      $ 256,688
   Products                                          --            61,438          15,367           --            76,805
   Mobile Security                                   --            13,366          26,119         (1,336)         38,149
                                                ---------       ---------       ---------      ---------       ---------
   Total revenues                                    --           332,368          41,486         (2,212)        371,642

COSTS AND EXPENSES:
   Cost of revenues                                  --           244,885          33,167         (2,212)        275,840
   Selling, general and administrative
     expenses                                       9,236          22,672           3,626           --            35,534
   Amortization                                      --             2,037               1           --             2,038
   Integration                                        247             587            --             --               834
   Other charges                                     --              --              --             --              --
   Related party management fees (income)            --                (1)              1           --              --
                                                ---------       ---------       ---------      ---------       ---------
OPERATING (LOSS) INCOME:                           (9,483)         62,188           4,691           --            57,396
   Interest expense (income), net                   1,494            (105)            125           --             1,514
   Other (income) expense, net                     (3,024)           (139)             70           --            (3,093)
   Equity in earnings of subsidiaries             (42,846)         (2,119)           --           44,965            --
                                                ---------       ---------       ---------      ---------       ---------
INCOME BEFORE (BENEFIT) PROVISION FOR
   INCOME TAXES                                    34,893          64,551           4,496        (44,965)         58,975
(BENEFIT) PROVISION FOR INCOME TAXES               (2,522)         22,363           1,719           --            21,560
                                                ---------       ---------       ---------      ---------       ---------
NET INCOME                                      $  37,415       $  42,188       $   2,777      $ (44,965)      $  37,415
                                                =========       =========       =========      =========       =========
</TABLE>


                                       25


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

<TABLE>

                                           ARMOR HOLDINGS INC. AND SUBSIDIARIES
                                     CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

                                                                   THREE MONTHS ENDED JUNE 30, 2004
                                               ----------------------------------------------------------------------------
                                                              GUARANTOR      NONGUARANTOR                      CONSOLIDATED
                                                PARENT       SUBSIDIARIES    SUBSIDIARIES      ELIMINATIONS        TOTAL
                                               --------      ------------    ------------      ------------    ------------
                                                                             IN THOUSANDS)
                                                                                                
REVENUES:
   Aerospace & Defense                         $    --         $ 129,773       $    --         $    --         $ 129,773
   Products                                         --            53,367          12,376            --            65,743
   Mobile Security                                  --             6,216          22,604            (632)         28,188
                                               ---------       ---------       ---------       ---------       ---------
   Total revenues                                   --           189,356          34,980            (632)        223,704

COSTS AND EXPENSES:
   Cost of revenues                                 --           130,793          27,085            (632)        157,246
   Selling, general and administrative
expenses                                           5,246          15,252           2,888            --            23,386
   Amortization                                     --               970               3            --               973
   Integration                                       110             692            --              --               802
   Other charges                                   7,321            --              --              --             7,321
   Related party management fees (income)           --                (1)              1            --              --
                                               ---------       ---------       ---------       ---------       ---------
OPERATING (LOSS) INCOME                          (12,677)         41,650           5,003            --            33,976
   Interest expense, net                           1,890             144              23            --             2,057
   Other income, net                                 (23)           (338)            (29)           --              (390)
   Equity in (earnings) losses of
   subsidiaries                                  (29,840)           (812)           --            30,652            --
                                               ---------       ---------       ---------       ---------       ---------
INCOME FROM CONTINUING OPERATIONS BEFORE
   (BENEFIT) PROVISION FOR INCOME TAXES           15,296          42,656           5,009         (30,652)         32,309
(BENEFIT) PROVISION FOR INCOME TAXES              (2,525)         15,246           1,867            --            14,588
                                               ---------       ---------       ---------       ---------       ---------
INCOME FROM CONTINUING OPERATIONS                 17,821          27,410           3,142         (30,652)         17,721

DISCONTINUED OPERATIONS:
   Income from discontinued operations              --               100            --              --               100
                                               ---------       ---------       ---------       ---------       ---------
NET INCOME                                     $  17,821       $  27,510       $   3,142       $ (30,652)      $  17,821
                                               =========       =========       =========       =========       =========
</TABLE>

                                       26


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

<TABLE>

                                                                         SIX MONTHS ENDED JUNE 30, 2005
                                                -------------------------------------------------------------------------------
                                                                GUARANTOR       NONGUARANTOR                       CONSOLIDATED
                                                 PARENT        SUBSIDIARIES     SUBSIDIARIES      ELIMINATIONS        TOTAL
                                                --------       ------------     ------------      ------------     ------------
                                                                               (IN THOUSANDS)
                                                                                                    
REVENUES:
   Aerospace & Defense                          $    --          $ 525,143        $    --         $  (7,985)       $ 517,158
   Products                                          --            118,623           26,740            --            145,363
   Mobile Security                                   --             25,570           50,022          (1,506)          74,086
                                                ---------        ---------        ---------       ---------        ---------
   Total revenues                                    --            669,336           76,762          (9,491)         736,607

COSTS AND EXPENSES:
   Cost of revenues                                  --            498,347           60,639          (9,491)         549,495
   Selling, general and administrative
     expenses                                      16,709           45,626            7,015            --             69,350
   Amortization                                      --              4,075                1            --              4,076
   Integration                                        394            1,240             --              --              1,634
   Other charges                                     --               --               --              --               --
   Related party management fees (income)              16              (18)               2            --               --
                                                ---------        ---------        ---------       ---------        ---------
OPERATING (LOSS) INCOME                           (17,119)         120,066            9,105            --            112,052
   Interest expense, net                            3,687             (154)             226            --              3,759
   Other (income) expense, net                     (1,902)            (155)              87            --             (1,970)
   Equity in (earnings) losses of
     subsidiaries                                 (82,684)          (3,888)            --            86,572             --
                                                ---------        ---------        ---------       ---------        ---------
INCOME FROM CONTINUING OPERATIONS BEFORE
   (BENEFIT) PROVISION FOR INCOME TAXES            63,780          124,263            8,792         (86,572)         110,263
(BENEFIT) PROVISION FOR INCOME TAXES               (4,664)          43,101            3,382            --             41,819
                                                ---------        ---------        ---------       ---------        ---------
NET INCOME                                      $  68,444        $  81,162        $   5,410       $ (86,572)       $  68,444
                                                =========        =========        =========       =========        =========
</TABLE>

                                       27


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

<TABLE>

                                                                    SIX MONTHS ENDED JUNE 30, 2004
                                               --------------------------------------------------------------------------
                                                              GUARANTOR       NONGUARANTOR                   CONSOLIDATED
                                                 PARENT      SUBSIDIARIES     SUBSIDIARIES   ELIMINATIONS        TOTAL
                                               ---------     ------------     ------------   ------------    ------------
                                                                             (IN THOUSANDS)
                                                                                               
REVENUES:
   Aerospace & Defense                         $    --         $ 210,781       $    --        $    --         $ 210,781
   Products                                         --            97,616          21,967           --           119,583
   Mobile Security                                  --            11,583          44,536         (1,151)         54,968
                                               ---------       ---------       ---------      ---------       ---------
   Total revenues                                   --           319,980          66,503         (1,151)        385,332
                                               ---------       ---------       ---------      ---------       ---------
COSTS AND EXPENSES:
   Cost of revenues                                 --           219,143          53,322         (1,151)        271,314
   Selling, general and administrative
     expenses                                      8,748          31,639           6,250           --            46,637
   Amortization                                     --             1,947               6           --             1,953
   Integration                                       200           1,283            --             --             1,483
   Other charges                                   7,321            --              --             --             7,321
   Related party management fees (income)             16             (18)              2           --              --
                                               ---------       ---------       ---------      ---------       ---------
OPERATING (LOSS) INCOME                          (16,285)         65,986           6,923           --            56,624
   Interest expense, net                           3,546             176              63           --             3,785
   Other expense (income), net                        27            (322)             20           --              (275)
   Equity in (earnings) losses of
     subsidiaries                                (46,161)           (630)           --           46,791            --
                                               ---------       ---------       ---------      ---------       ---------
INCOME FROM CONTINUING OPERATIONS BEFORE
   (BENEFIT) PROVISION FOR INCOME TAXES           26,303          66,762           6,840        (46,791)         53,114
(BENEFIT) PROVISION FOR INCOME TAXES              (4,008)         24,255           2,518           --            22,765
                                               ---------       ---------       ---------      ---------       ---------
INCOME FROM CONTINUING OPERATIONS                 30,311          42,507           4,322        (46,791)         30,349

DISCONTINUED OPERATIONS:
   Loss from discontinued operations                --               (38)           --             --               (38)
                                               ---------       ---------       ---------      ---------       ---------
NET INCOME                                     $  30,311       $  42,469       $   4,322      $ (46,791)      $  30,311
                                               =========       =========       =========      =========       =========
</TABLE>

                                       28


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

<TABLE>

                                                ARMOR HOLDINGS, INC. AND SUBSIDIARIES
                                           CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW

                                                                                SIX MONTHS ENDED JUNE 30, 2005
                                                              --------------------------------------------------------------------
                                                                           GUARANTOR     NONGUARANTOR                 CONSOLIDATED
                                                               PARENT     SUBSIDIARIES   SUBSIDIARIES   ELIMINATIONS     TOTAL
                                                              ---------   ------------   ------------   ------------  ------------
                                                                                        (IN THOUSANDS)
                                                                                                       
CASH FLOW FROM OPERATING ACTIVITIES:
   Income from continuing operations                          $  68,444    $  81,162      $   5,410      $ (86,572)   $  68,444
   Adjustments to reconcile income from
      continuing operations to cash provided by
      (used in) operating activities:
     Depreciation and amortization                                1,366        7,839          1,383           --         10,588
     Loss on disposal of fixed assets                              --            153            350           --            503
     Deferred income taxes                                        2,491        1,075             74           --          3,640
     Fair value gain for put options                             (3,793)        --             --             --         (3,793)
   Changes in operating assets & liabilities,
      net of acquisitions:
     Decrease (increase) in accounts receivable                    --            777         (3,425)          --         (2,648)
     Decrease (increase) in intercompany
       receivables & payables                                    47,749      (48,127)           378           --           --
     (Increase) decrease in inventory                              --        (33,779)         1,241           --        (32,538)
     Decrease (increase) in prepaid expenses &
       other assets                                                 523         (624)        (1,154)          --         (1,255)
     Increase (decrease) in accounts payable,
       accrued expenses and other current
       liabilities                                                7,823        8,877         (2,108)          --         14,592
     Increase (decrease) in income taxes payable                    990          417           (909)          --            498
                                                              ---------    ---------      ---------      ---------    ---------
   Net cash provided by operating activities                    125,593       17,770          1,240        (86,572)      58,031
                                                              ---------    ---------      ---------      ---------    ---------
CASH FLOW FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                            (1,516)      (5,575)        (1,055)          --         (8,146)
   Purchase of patents and trademarks                              --           (100)          --             --           (100)
   Purchases of short-term investment securities               (562,750)        --             --             --       (562,750)
   Proceeds from sales of short-term investment
     securities                                                 186,225         --             --             --        186,225
   Sale of put options                                            4,790         --             --             --          4,790
   Investment in subsidiaries                                   (82,684)      (3,888)          --           86,572         --
   Additional cash received from sale of
     business                                                      --            300           --             --            300
   Additional consideration for purchased
     businesses                                                    (317)      (4,287)          --             --         (4,604)
   Purchase of businesses net of cash acquired                   (1,362)        --             --             --         (1,362)
                                                              ---------    ---------      ---------      ---------    ---------
   Net cash (used in) investing activities                     (457,614)     (13,550)        (1,055)        86,572     (385,647)
                                                              ---------    ---------      ---------      ---------    ---------
CASH FLOW FROM FINANCING ACTIVITIES:
   Proceeds from exercise of stock options                        4,304         --             --             --          4,304
   Taxes paid for withheld shares on restricted
     stock issuances                                             (5,794)        --             --             --         (5,794)
   Repayments of long-term debt                                    --           (238)           (76)          --           (314)
   Borrowings under lines of credit                               5,485         --            4,149           --          9,634    
   Repayments under lines of credit                              (5,485)        --           (1,500)          --         (6,985)
                                                              ---------    ---------      ---------      ---------    ---------
   Net cash (used in) provided by financing
     activities                                                  (1,490)        (238)         2,573           --            845
                                                              ---------    ---------      ---------      ---------    ---------
   Effect of exchange rate on cash and cash
     equivalents                                                   --           --           (2,121)          --         (2,121)
                                                              ---------    ---------      ---------      ---------    ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS           (333,511)       3,982            637           --       (328,892)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                  388,727       21,173         11,309           --        421,209
                                                              ---------    ---------      ---------      ---------    ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD                      $  55,216    $  25,155      $  11,946      $    --      $  92,317
                                                              =========    =========      =========      =========    =========
</TABLE>

                                       29


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

<TABLE>

                                           ARMOR HOLDINGS, INC. AND SUBSIDIARIES
                                      CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW

                                                                       SIX MONTHS ENDED JUNE 30, 2004
                                                  ---------------------------------------------------------------------------
                                                                 GUARANTOR       NONGUARANTOR                    CONSOLIDATED
                                                   PARENT       SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS       TOTAL
                                                  --------      ------------     ------------    ------------    ------------
                                                                                (IN THOUSANDS)
                                                                                                   
CASH FLOW FROM OPERATING ACTIVITIES:

   Income from continuing operations              $  30,311       $  42,507       $   4,322       $ (46,791)      $  30,349
   Adjustments to reconcile income from
     continuing operations to cash
     provided by operating activities
   Depreciation and amortization                        556           4,735           1,312            --             6,603
   Loss on disposal of fixed assets                    --               106               9            --               115
   Deferred income taxes                                492            (665)            (24)           --              (197)
   Non-cash charge for acceleration of
     performance- based restricted stock
     awards                                           5,913            --              --              --             5,913
   Non-cash impairment charge                         1,408            --              --              --             1,408
  Changes in operating assets & liabilities,
    net of acquisitions:
    (Increase) decrease in accounts
        receivable                                    1,201         (37,412)         (2,561)           --           (38,772)
    Decrease (increase) in intercompany
        receivables & payables                       38,134         (41,229)          3,095            --              --
    Increase in inventory                              --           (27,759)         (4,238)           --           (31,997)
    (Increase) decrease in prepaid expenses
        & other assets                               (3,678)         (4,491)           (712)           --            (8,881)
  (Decrease) increase in accounts payable,
    accrued expenses and other current
    liabilities                                      (1,153)         28,440             362            --            27,649
    Increase (decrease) in income taxes
      payable                                        17,515          (1,609)          1,569            --            17,475
                                                  ---------       ---------       ---------       ---------       ---------
    Net cash provided by (used in) operating
      activities                                     90,699         (37,377)          3,134         (46,791)          9,665
                                                  ---------       ---------       ---------       ---------       ---------
CASH FLOW FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                  (902)         (5,570)           (632)           --            (7,104)
   Purchase of patents and trademarks                  --               (77)           --              --               (77)
   Purchases of short-term investment
      securities                                   (225,125)           --              --              --          (225,125)
   Proceeds from sales of short-term
      investment securities                          16,175            --              --              --            16,175
   Purchase of equity investment                       --            (5,275)           --              --            (5,275)
   Proceeds from sale of equity investment             --             5,823            --              --             5,823
   Collection of note receivable                        375            --              --              --               375
   Decrease in restricted cash                        2,600            --              --              --             2,600
   Investment in subsidiaries                      (120,224)         73,433            --            46,791            --
   Additional consideration for purchased
      businesses                                       --            (1,855)           --              --            (1,855)
   Purchase of businesses, net of cash
      acquired                                         --            (2,729)           --              --            (2,729)
                                                  ---------       ---------       ---------       ---------       ---------
   Net cash used in (provided by) investing
      activities                                   (327,101)         63,750            (632)         46,791        (217,192)
                                                  ---------       ---------       ---------       ---------       ---------
CASH FLOW FROM FINANCING ACTIVITIES:
   Proceeds from exercise of stock options            8,310            --              --              --             8,310
   Proceeds from the issuance of common
      stock                                         142,500            --              --              --           142,500
   Cash paid for common stock offering costs         (1,057)           --              --              --            (1,057)
   Repayments of long-term debt                        --           (33,981)            (71)           --           (34,052)
   Borrowings under lines of credit                   8,083            --               802            --             8,885
   Repayments under lines of credit                  (8,083)           --               (39)           --            (8,122)
                                                  ---------       ---------       ---------       ---------       ---------
   Net cash provided by (used in) financing
      activities                                    149,753         (33,981)            692            --           116,464
                                                  ---------       ---------       ---------       ---------       ---------

   Effect of exchange rate on cash and cash
      equivalents                                      --              (651)            714            --                63
   Net cash used in discontinued operations            --              (717)           --              --              (717)
                                                  ---------       ---------       ---------       ---------       ---------

NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS                                         (86,649)         (8,976)          3,908            --           (91,717)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD                                               90,764          11,084          10,002            --           111,850
                                                  ---------       ---------       ---------       ---------       ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD          $   4,115       $   2,108       $  13,910       $    --         $  20,133
                                                  =========       =========       =========       =========       =========
</TABLE>

                                       30


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

NOTE 14 - PUT OPTION TRANSACTIONS

     We account for put option transactions in accordance with Statement of
Financial Accounting Standards No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity," ("SFAS 150").
SFAS 150 requires put options to be measured at fair value and recognized on the
balance sheet as liabilities.

     During the six months ended June 30, 2005, we sold put options in various
private transactions covering 2.5 million shares of Company stock for $4.7
million in premiums. On June 30, 2005, put options covering 1 million shares
expired unexercised leaving outstanding put options covering 1.5 million shares
outstanding (4.3% of outstanding shares at June 30, 2005) at a weighted average
strike price of $35.00 per share, all of which expire on or before September 30,
2005. If the purchasers exercise the remaining put options, we will be required
to repurchase our shares or enter into alternative cash settlement arrangements
at the negotiated strike price. As of June 30, 2005, based on the existing put
option strike prices, it would cost us $52.5 million ($52.5 million fair value),
if we were required to repurchase our shares under these put options. If put
options for all 1.5 million shares of Company stock are exercised, we would have
5.8 million shares remaining under our repurchase programs.

     If the remaining put options expire unexercised, we will record an
additional $1 million in other income in the third quarter of 2005. If our stock
price were to decline below $35.00 on the settlement date of the remaining put
options, we would be required to record a loss on the put options that may be
material depending on the final closing price of the Company's stock on the
expiration dates.

     The fair values of the put options are obtained from our counter-parties
and represent the estimated amount we would receive or pay to terminate the put
options, taking into account the consideration we received for the sale of the
put options. As our stock price fluctuates the value of these contracts also
fluctuates. For the three and six month periods ending June 30, 2005, we
recognized fair value gains of $4.9 million and $3.8 million, respectively,
recorded in other income, net.

     Under the terms of our put options, if our stock price were to fall to 50%
of the strike price we could be required to settle the contracts prior to the
expiration of the contracts. We have the ability to terminate the contracts
prior to expiration by paying an early unwind amount to the counterparty. This
amount is equal to the current market value of the option contract provided by
the counterparty at the time of unwind.

                                       31


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
CONTINUED

NOTE 15 - INTEREST EXPENSE, NET

     Interest expense, net is comprised of the following:


<TABLE>

                              THREE MONTHS ENDED             SIX MONTHS ENDED
                         JUNE 30, 2005  JUNE 30, 2004  JUNE 30, 2005  JUNE 30, 2004
                         -------------  -------------  -------------  -------------
                                                (IN THOUSANDS)
                                                             
Interest expense            $ 5,049        $ 2,314        $ 9,907        $ 4,381
Interest income              (3,535)          (257)        (6,148)          (596)
                            -------        -------        -------        -------
Interest expense, net       $ 1,514        $ 2,057        $ 3,759        $ 3,785
                            =======        =======        =======        =======
</TABLE>

NOTE 16 - SUBSEQUENT EVENTS

     On July 26, 2005, we amended our secured revolving credit facility (the
"Credit Facility") with Bank of America, N.A., Wachovia Bank, National
Association and a syndicate of other financial institutions arranged by Bank of
America Securities, LLC. The amendment allows for advances, loans, extensions of
credit to or any other investments in key suppliers of the Company in an
aggregate amount not to exceed $15 million at any time outstanding for the
purpose of facilitating the sale and purchase of goods and services to the
Company. In addition, the amendment allows for leases or other dispositions of
assets of not more than 10% of the consolidated earnings before interest, taxes,
depreciation and amortization ("EBITDA"), as defined in the Credit Facility.

     On July 27, 2005, we announced that we were the successful bidder at an
auction to acquire substantially all of the assets of Second Chance Body Armor,
Inc., a manufacturer of body armor serving the law enforcement and military
markets. The total purchase price is $45 million in cash and includes the
assumption of certain liabilities. The transaction is subject to final approval
by the United States Bankruptcy Court, Western District of Michigan and is
expected to close July 29, 2005.













                                       32


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     The following is a discussion of the results of operations and analysis of
financial condition for the three and six month periods ended June 30, 2005 and
June 30, 2004. The results of operations for purchase business combinations are
included since their effective acquisition dates. The following discussion may
be understood more fully by reference to the consolidated financial statements,
notes to the consolidated financial statements, and management's discussion and
analysis contained in our Annual Report on Form 10-K and amendments thereto for
the year ended December 31, 2004, as filed with the Securities and Exchange
Commission.

CRITICAL ACCOUNTING POLICIES (INCLUDING RECENT ACCOUNTING PRONOUNCEMENTS):

     Revenue recognition. We record products revenue at the time of shipment.
Returns are minimal and do not materially affect the financial statements.

     We record Aerospace & Defense Group revenue related to government contracts
which results principally from fixed price contracts and is recognized when
persuasive evidence of an arrangement exists, delivery has occurred, the fee is
fixed and determinable and collectibility is probable. Generally, all of these
conditions are met when the Company ships products to its customers. Up-Armored
HMMWV units sold to the U.S. Government are considered sold when the onsite
Department of Defense officer finishes the inspection of the Up-Armored HMMWV,
approves it for delivery and shipment occurs.

     We record revenue of the Aerospace & Defense Group and Mobile Security
Division when a vehicle is shipped, except for larger commercial contracts
typically longer than four months in length. Revenue from large commercial
contracts is recognized on the percentage of completion, units-of-work performed
method. Should large commercial contracts be in a loss position, the entire
estimated loss would be recognized for the balance of the contract at such time.
Current contracts are profitable.

     We record service revenue as services are provided on a
contract-by-contract basis. Revenues from service contracts are recognized over
the term of the contract.

     Allowance for Doubtful Accounts. We encounter risks associated with sales
and the collection of the associated accounts receivable. As such, we review our
accounts receivable aging on a monthly basis and determine a provision for
accounts receivable that is considered to be uncollectible. In order to
calculate the appropriate monthly provision, we review accounts on a monthly
basis and estimate the amount that is uncollectible.

                                       33


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

     Periodically, we compare the identified credit risks with the allowance
that has been established using historical experience and adjust the allowance
accordingly.

     Derivative Instruments and Hedging Activities. We account for derivative
instruments and hedging activities in accordance with Statement of Financial
Accounting Standard No. 133, "Accounting for Derivative Instruments and Hedge
Activities" ("SFAS 133") as amended. All derivative instruments are recorded on
the balance sheet at fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, depending on the type of hedge transaction. For fair-value hedge
transactions in which we hedge changes in an asset's, liability's, or firm
commitment's fair value, changes in the fair value of the derivative instrument
will generally be offset in the income statement by changes in the hedged item's
fair value. Put options on Company stock are marked to market through the income
statement at the end of each period.

     Changes in the fair value of the interest rate swap agreements offset
changes in the fair value of the fixed rate debt due to changes in the market
interest rate. Accordingly, the other assets on the Condensed Consolidated
Balance Sheet as of June 30, 2005, increased by $1.0 million, which reflected an
increase in the fair value of the interest rate swap agreements to $7.0 million.
The corresponding increase in the hedge liability was recorded in long-term
debt. The agreements are deemed to be a perfectly effective fair value hedge and
therefore qualify for the short-cut method of accounting under SFAS 133. As a
result, no ineffectiveness is expected to be recognized in our earnings
associated with the interest rate swap agreements.

     Goodwill. Goodwill represents the excess of the purchase price over the
fair value of the net assets acquired in a purchase business combination.
Goodwill and other intangible assets are stated on the basis of cost. The $212.0
million in goodwill resulting from acquisitions made by us subsequent to June
30, 2001 was immediately subjected to the non-amortization provisions of
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"). See also Impairment below. The purchase method
of accounting for business combinations requires us to make use of estimates and
judgments to allocate the purchase price paid for acquisitions to the fair value
of the net tangible and identifiable intangible assets. Goodwill is tested for
impairment annually, or when a possible impairment is indicated, using the fair
value based test prescribed by SFAS 142. We performed our annual assessment of
goodwill and determined that no impairment existed as of June 30, 2005.

     Patents, licenses and trademarks. Patents, licenses and trademarks were
primarily acquired through acquisitions accounted for by the purchase method of
accounting. Such assets are amortized on a straight-line basis over their useful
lives. Certain of these assets with indefinite lives are not amortized.

     Estimates. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America ("U.S.
GAAP") requires management to make estimates and assumptions that affect the
reported amounts in the financial statements and accompanying notes. Significant
estimates inherent in the preparation of the accompanying consolidated financial
statements include the carrying value of long-lived assets, valuation allowances
for receivables, inventories and deferred income tax assets, liabilities for
potential litigation claims and settlements, potential liabilities related to
tax filings in the ordinary course of business, and contract contingencies and
obligations. Actual results could differ from those estimates.

                                       34


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

     Income taxes. We account for income taxes pursuant to Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"). Under the asset and liability method specified thereunder, deferred taxes
are determined based on the difference between the financial reporting and tax
bases of assets and liabilities. Deferred tax liabilities are offset by deferred
tax assets relating to net operating loss carryforwards, tax credit
carryforwards and deductible temporary differences. Recognition of deferred tax
assets is based on management's belief that it is more likely than not that the
tax benefit associated with temporary differences and operating and capital loss
carryforwards will be utilized. A valuation allowance is recorded for those
deferred tax assets for which it is more likely than not that the realization
will not occur.

     Impairment. Long-lived assets including certain identifiable intangibles,
and the goodwill related to those assets, are reviewed annually for impairment
or whenever events or changes in circumstances indicate that the carrying amount
of the asset in question may not be recoverable including, but not limited to, a
deterioration of profits for a business segment that has long-lived assets, and
when other changes occur which might impair recovery of long-lived assets. The
method used to determine the existence of an impairment would be discounted
operating cash flows estimated over the remaining useful lives of the related
long-lived assets for continuing operations in accordance with SFAS 142.
Impairment is measured as the difference between fair value and unamortized cost
at the date impairment is determined.

     Discontinued Operations. In accordance with Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" ("SFAS 144"), a component classified as held for sale is
reported in discontinued operations when the following conditions are met: (a)
the operations and cash flows of the component have been (or will be) eliminated
from the ongoing operations of the entity as a result of the disposal
transaction and (b) the entity will not have any significant continuing
involvement in the operations of the component after the disposal transaction.
In a period in which a component of an entity either has been disposed of or is
classified as held for sale, the income statement for current and prior periods
reports the results of operations of the component, including any estimated
impairment gain or loss recognized in accordance with SFAS 144 paragraph 37, in
discontinued operations. The results of discontinued operations, less applicable
income tax expense (benefit), is reported as a separate component of income
before extraordinary items and the cumulative effect of accounting changes (if
applicable). The assets and liabilities of a disposal group classified as held
for sale are presented separately in the asset and liability sections,
respectively, of the statement of financial position. We had no discontinued
operations at June 30, 2005.

     Comprehensive income and foreign currency translation. In accordance with
Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive
Income" ("SFAS 130"), assets and liabilities denominated in a foreign currency
are translated into U.S. dollars at the current rate of exchange existing at
period-end and revenues and expenses are translated at the average monthly
exchange rates. The cumulative translation adjustment, net of tax, which
represents the effect of translating assets and liabilities of our foreign
operations is $2.8 million and $6.8 million as of June 30, 2005 and December 31,
2004, respectively, and is classified as accumulated other comprehensive income.
The current year change in the accumulated amount, net of tax, is included as a
component of comprehensive income.

                                       35


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

     Stock options and grants. Statement of Financial Accounting Standard No.
123, "Accounting for Stock-Based Compensation" ("SFAS 123"), as amended by
Statement of Financial Accounting Standard Number 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure," ("SFAS 148") establishes
a fair value based method of accounting for stock-based employee compensation
plans; however, it also allows an entity to continue to measure compensation
cost for those plans using the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB 25"). Under the fair value based method, compensation
cost is measured at the grant date based on the value of the award and is
recognized over the service period, which is usually the vesting period. Under
the intrinsic value based method, compensation cost is the excess, if any, of
the quoted market price of the stock at the grant date or other measurement date
over the amount an employee must pay to acquire the stock. We have elected to
continue to account for our employee stock compensation plans under APB 25 with
pro forma disclosures of net earnings and earnings per share, as if the fair
value based method of accounting defined in SFAS 123 had been applied. If
compensation cost for stock option grants had been determined based on the fair
value on the grant dates for the three month and six months ended June 30, 2005
and 2004, consistent with the method prescribed by SFAS 123, our net earnings
and earnings per share would have been adjusted to the pro-forma amounts
indicated below:

<TABLE>

                                                    THREE MONTHS ENDED                SIX MONTHS ENDED
                                             JUNE 30, 2005     JUNE 30, 2004    JUNE 30, 2005    JUNE 30, 2004
                                             -------------     -------------    -------------    -------------
                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                                      
Net income as reported                         $   37,415       $   17,821       $   68,444       $   30,311

Deduct:  Total stock-based employee
   compensation expense determined
   under fair value based method for
   all awards, net of related tax effects          (2,714)          (1,290)         (36,650)          (2,533)

Add:  Employee compensation
   expense for modification of stock
   option awards included in reported
   net income, net of income taxes                   --                 57              118               57
                                               ----------       ----------       ----------       ----------
Pro-forma net income                           $   34,701       $   16,588       $   31,912       $   27,835
                                               ==========       ==========       ==========       ==========

Earnings per share:
         Basic - as reported                   $     1.09       $     0.60       $     1.99       $     1.04
                                               ==========       ==========       ==========       ==========
         Basic - pro-forma                     $     1.01       $     0.56       $     0.93       $     0.95
                                               ==========       ==========       ==========       ==========
         Diluted - as reported                 $     1.05       $     0.57       $     1.93       $     0.99
                                               ==========       ==========       ==========       ==========
         Diluted - pro-forma                   $     0.98       $     0.53       $     0.90       $     0.91
                                               ==========       ==========       ==========       ==========
</TABLE>

                                       36


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

     $15.3 million of the stock-based employee compensation expense for the six
months ended June 30, 2005 is related to accelerated vesting of certain existing
stock options and $21.3 million is related to certain stock options issued in
the six months ended June 30, 2005.

     Restricted stock awards are generally recorded as compensation expense
using fixed accounting over the vesting periods based on the market value on the
date of grant except in situations where provisions of the agreements allow for
acceleration of vesting upon a certain event. If the event occurs, this may
result in an acceleration of vesting and recognition of associated expense.

RECENT ACCOUNTING PRONOUNCEMENTS:

     On December 16, 2004, the Financial Accounting Standards Board ("FASB")
issued FASB Statement No. 123, "Share Based Payment (revised 2004)" ("FAS
123R"). FAS 123R revises SFAS 123 and requires companies to expense the fair
value of employee stock options and other forms of stock-based compensation. In
addition to revising SFAS 123, FAS 123R supersedes APB 25, and amends FASB
Statement No. 95, "Statement of Cash Flows." On April 14, 2005, the Securities
and Exchange Commission announced the amendment of the adoption compliance date
of FAS 123R from the first interim period to the first annual period beginning
after June 15, 2005. We will be required to apply the expense recognition
provisions of FAS 123R beginning in the first quarter of 2006.

     On March 31, 2005, we announced that we accelerated the vesting of certain
unvested stock options previously awarded to employees, officers and directors
of the Company under various stock option plans effective March 25, 2005,
subject to such employees, officers and directors entering into lock-up,
confidentiality and non-competition agreements. As a result of this action,
options to purchase approximately 1.6 million shares of our common stock that
would otherwise have vested over the next one to five years became fully vested.
Outstanding unvested options that were not accelerated will continue to vest on
their normal schedule.

     The decision to accelerate the vesting of these options, which we believe
to be in the best interest of our stockholders, was made primarily to reduce
non-cash compensation expense that would have been recorded in future periods
following our application of FAS 123R. Because we accelerated these options, we
expect to reduce our non-cash compensation expense related to these options by
approximately $12.3 million (pre-tax) between the first quarter of 2006 and
2009, based on estimated value calculations using the Black-Scholes methodology.

     In October 2004, the American Jobs Creation Act of 2004 ("AJCA") was signed
into law. In December 2004, the FASB issued Staff Position No. 109-1 ("FSP
109-1"), Application of SFAS 109 to the Tax Deduction on Qualified Production
Activities Provided by the AJCA and Staff Position No. 109-2 ("FSP 109-2"),
Accounting and Disclosure Guidance for the Foreign Earnings Repatriation
Provision within the AJCA. FSP 109-1 clarifies that the manufacturer's tax
deduction provided for under the AJCA should be accounted for as a special
deduction in accordance with SFAS 109 and not as a tax rate reduction. FSP 109-2
provides accounting and disclosure guidance for the repatriation of certain
foreign earnings to a U.S. taxpayer as provided for in the AJCA. Currently,
uncertainty remains as to how to interpret numerous provisions of the AJCA. As
such, we are not yet in a position to decide on whether, and to what extent, we
might repatriate foreign earnings that have not yet been remitted to the U.S. We
expect to be in a position to make a decision on implementation, if any, later
in 2005.

SUBSEQUENT EVENT:

     On July 27, 2005, we announced that we were the successful bidder at an
auction to acquire substantially all of the assets of Second Chance Body Armor,
Inc., a manufacturer of body armor serving the law enforcement and military
markets. The total purchase price is $45 million in cash and includes the
assumption of certain liabilities. The transaction is subject to final approval
by the United States Bankruptcy Court, Western District of Michigan and is
expected to close July 29, 2005.


                                       37


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2005 COMPARED TO THREE MONTHS ENDED JUNE 30, 2004.

     Net income. Net income increased $19.6 million, or 109.9%, to $37.4 million
for the three months ended June 30, 2005, compared to $17.8 million for the
three months ended June 30, 2004. Net income for the three months ended June 30,
2004, includes income from continuing operations of $17.7 million and income
from discontinued operations of $100,000.

CONTINUING OPERATIONS

     Total revenues. Total revenues increased $147.9 million, or 66.1%, to
$371.6 million in the three months ended June 30, 2005, compared to $223.7
million in the three months ended June 30, 2004. For the three months ended June
30, 2005, total revenue increased 47.2% internally, including period-over-period
changes in acquired businesses. Internal revenue growth represents
period-over-period increases in revenue from businesses that were either owned
or acquired by us during the periods presented. The calculation of internal
revenue growth takes into consideration pro forma revenue for relevant periods
of acquired entities in determining period-over-period revenue growth.

     Aerospace & Defense Group revenues. Aerospace & Defense Group revenues
increased $126.9 million, or 97.8%, to $256.7 million in the three months ended
June 30, 2005, compared to $129.8 million in the three months ended June 30,
2004. For the three months ended June 30, 2005, Aerospace & Defense Group
revenue increased $109.3 million, or 74.1%, internally, including
period-over-period changes in acquired businesses. Internal growth was primarily
due to:

     (1) We experienced strong demand for the Up-Armored High Mobility
     Multi-purpose Wheeled Vehicles (Up-Armored HMMWV, commonly known as the
     Humvee), including spare part revenues, as we shipped 1,672 Up-Armored
     HMMWVs in the three months ended June 30, 2005, compared to 894 in the
     three months ended June 30, 2004, an 87.0% increase. While there continues
     to be new orders under our current Up-Armored HMMWV contract, currently,
     several military transport vehicles are in the development stage and are
     being evaluated by the U.S. military as possible next-generation
     replacements for the HMMWV. Although we believe that the HMMWV will
     continue for some time to be one of the primary transport vehicles in the
     U.S. military, there is no assurance as to when a replacement for the HMMWV
     may be selected. In the event the HMMWV is replaced, we anticipate that any
     armoring for a replacement vehicle would be part of the vehicle's original
     design and that eventually, our HMMWV up-armoring content on a per unit
     basis would likely decline. Although we anticipate making significant
     efforts to obtain armoring contracts for any HMMWV replacement vehicles
     selected by the U.S. military, at this time, we cannot determine to what
     degree, if any, we would be able to obtain such military contracts. See
     risk factor "A Replacement of the HMMWV in the U.S. Military May Affect Our
     Results of Operations" in Part I of our 10-K for the year ended December
     31, 2004.

                                       38


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

     (2) During the three months ended June 30, 2005, add-on armor components
     for fielded vehicles including add-on armor kits for the light, medium and
     heavy truck fleet operating in Iraq increased 41.7%, compared to the three
     months ended June 30, 2004. We believe that vehicle armoring will play a
     significant role in the remainder of 2005 and is likely to play a
     significant role in 2006 and beyond.

     (3) Small arms protection inserts ("SAPI") plate volume decreased by 45.5%
     in the three months ended June 30, 2005 compared to the three months ended
     June 30, 2004. The reduction in volume was a result of short term,
     inability to procure certain raw materials, mainly ballistic fiber and
     ceramic supply, which are instrumental components to the SAPI plate.

     Continued growth in the SAPI plate business is dependent upon the continued
     level of hostilities in Iraq and Afghanistan as well as the U.S.
     Government's requirements for improved technology and performance of the
     SAPI plate. Future revenues may be constrained by our ability to procure
     certain raw materials necessary for the manufacture of the SAPI plate. See
     risk factor "There are Limited Sources for Some of Our Raw Materials, Which
     May Significantly Curtail our Manufacturing Operations" in Part I of our
     10-K for the year ended December 31, 2004.

     (4) Outer Tactical Vest ("OTV") units increased by 42.3% in the three
     months ended June 30, 2005, over the three months ended June 30, 2004. We
     also experienced 73.1% unit growth in helmets. Our Modular Lightweight
     Load-Carrying Equipment ("MOLLE") revenue increased 28.9% due to sales of
     higher value MOLLE accessories.

     Acquired growth, which is the amount of current year revenue equal to the
prior year revenue before our acquisition of the acquired company, was a
function of the acquisition of Specialty Defense in November 2004, which
accounted for $17.6 million of the acquired growth.

     Products Division revenues. Products Division revenues increased $11.1
million, or 16.8%, to $76.8 million in the three months ended June 30, 2005,
compared to $65.7 million in the three months ended June 30, 2004. For the three
months ended June 30, 2005, Products Division revenue decreased $67,000, or
0.1%, internally. Internal growth was flat primarily due to large,
non-recurring, one time sales in the 2nd quarter of 2004 related to ballistic
reinforced enclosures and a large government sale of body armor. Also the timing
of large international shipments and government shipments negatively impacted
the quarter over quarter comparison.

     Acquired growth of $11.1 million was a function of the acquisitions of
Bianchi International, which was completed during the fourth quarter 2004, and
Kleen Bore, Inc., which was completed during the third quarter of 2004.

     Mobile Security revenues. Mobile Security Division revenues increased $10.0
million, or 35.3%, to $38.1 million in the three months ended June 30, 2005,
compared to $28.2 million in the three months ended June 30, 2004, primarily due
to the increasing threat of terrorism. During the three months ended June 30,
2005, commercial vehicle shipments increased 42.8%, to 434 vehicles compared to
304 vehicles in the three months ended June 30, 2004. All of Mobile Security
Division's revenue growth was internal.

                                       39


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

     Cost of revenues. Cost of revenues increased $118.6 million, or 75.4%, to
$275.8 million for the three months ended June 30, 2005, compared to $157.2
million for the three months ended June 30, 2004. As a percentage of total
revenues, cost of revenues increased to 74.2% of total revenues for the three
months ended June 30, 2005, from 70.3% for the three months ended June 30, 2004.

     Gross margins in the Aerospace & Defense Group were 22.8% for the three
months ended June 30, 2005, compared to 29.0% for the three months ended June
30, 2004, primarily due to reduced selling prices for the Up-Armored HMMWV
beginning in the third quarter of 2004, and significant changes in our product
mix as we have diversified beyond Up-Armored HMMWVs.

     Gross margins in the Products Division were 36.8% for the three months
ended June 30, 2005, compared to 33.5% for the three months ended June 30, 2004.
The increase was primarily due to improved product mix, improved body armor
margins, and, a shift in production to lower cost manufacturing facilities.

     Gross margins in the Mobile Security Division were 23.7% in the three
months ended June 30, 2005, compared to 24.2% for the three months ended June
30, 2004.

     Selling, general and administrative expenses. Selling, general and
administrative expenses increased $12.1 million, or 51.9%, to $35.5 million
(9.6% of total revenues) for the three months ended June 30, 2005, compared to
$23.4 million (10.5% of total revenues) for the three months ended June 30,
2004. The decrease as a percentage of revenues was largely a function of our
ability to achieve scale as revenues have increased, and the fourth quarter of
2004 acquisition of Specialty Defense, which operates with lower selling,
general and administrative expenses as a percentage of revenues than the
Products Division and the Mobile Security Division.

     Aerospace & Defense Group selling, general and administrative expenses
increased $3.7 million, or 78.3%, to $8.4 million (3.3% of Aerospace & Defense
Group revenues) for the three months ended June 30, 2005, compared to $4.7
million (3.6% of Aerospace & Defense Group revenues) for the three months ended
June 30, 2004. The increase in selling, general and administrative expenses is
due primarily to additional selling, general and administrative expenses
associated with the acquisition of Specialty Defense in November 2004, increased
research and development expense, and an increase in administrative expenses as
a result of increased production of the Up-Armored HMMWV and supplemental armor
for other military vehicles. The decrease in selling, general and administrative
expenses as a percentage of revenue was due to leveraging of the selling,
general and administrative expenses over a much larger revenue base and the 2004
acquisition of Specialty Defense, which operates with lower selling, general and
administrative expenses as a percentage of revenues than the pre-existing
Aerospace & Defense businesses.

     Products Division selling, general and administrative expenses increased
$3.6 million, or 34.0%, to $14.0 million (18.3% of Products Division revenues)
for the three months ended June 30, 2005, compared to $10.5 million (15.9% of
Products Division revenues) for the three months ended June 30, 2004. This
increase is due primarily to acquisitions of $2.4 million, the inclusion of
selling, general and administrative expenses related to NTI training services
which were part of discontinued operations in 2004, increased research and
development expenses, increased legal related to patent protection, and
management severance expenses.

                                       40


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

     Mobile Security Division selling, general and administrative expenses
increased $0.8 million, or 25.5%, to $3.7 million (9.7% of Mobile Security
Division revenues) for the three months ended June 30, 2005, compared to $3.0
million (10.5% of Mobile Security Division revenues) for the three months ended
June 30, 2004. The increase in selling, general and administrative expense was
primarily due to increased insurance costs, increased selling and marketing
costs, increased warranty provisions, and the negative impact of a weaker U.S.
dollar when converting foreign based expenses to U.S. dollars. The decrease in
selling, general and administrative expenses as a percentage of revenues was due
to the leveraging of the selling, general and administrative expenses over a
much larger revenue base.

     Corporate general and administrative expenses increased $4.1 million, or
78.9%, to $9.4 million (2.5% of total revenues) for the three months ended June
30, 2005, compared to $5.3 million (2.3% of total revenues) for the three months
ended June 30, 2004. This increase in administrative expenses is associated with
the overall growth of the Company, including increased travel expenses, bonus
provision, executive compensation planning and insurance expenses.

     Amortization. Amortization expense increased $1.1 million, or 109.5% to
$2.0 million for the three months ended June 30, 2005, compared to $973,000 for
the three months ended June 30, 2004, primarily due to the acquisitions of
Specialty Defense in November 2004 and Bianchi in December 2004. SFAS 142, which
we adopted on January 1, 2002, eliminated amortization of intangible assets with
indefinite lives and goodwill for all acquisitions completed after July 1, 2001,
as well as for all fiscal years ending after January 1, 2002. Remaining
amortization expense is related to patents and trademarks with finite lives, and
acquired amortizable intangible assets that meet the criteria for recognition as
an asset apart from goodwill under SFAS 141.

     Integration. Integration expense increased $32,000, or 4.0%, to $834,000
for the three months ended June 30, 2005, compared to $802,000 for the three
months ended June 30, 2004. Integration expense in the second quarter of 2005
primarily included charges for the integration of Specialty Defense and Bianchi,
which were acquired in the fourth quarter of 2004. Integration expense in the
second quarter of 2004 primarily included charges for integration related to the
acquisitions of Simula and Hatch Imports, which were acquired in the fourth
quarter of 2003.

     Other charges. There were no other charges in the three months ended June
30, 2005. Other charges for the three months ended June 30, 2004, were $7.3
million. Other charges in the second quarter of 2004 included a non-cash charge
of $5.9 million for the acceleration of performance based, long-term restricted
stock awards granted to certain executives in 2002, and a $1.4 million charge to
reduce the carrying value of the remaining portion of NTI to its estimated fair
value.

     Operating income. Operating income increased $23.4 million, or 68.9%, to
$57.4 million for the three months ended June 30, 2005, compared to $34.0
million in the three months ended June 30, 2004, due to the factors discussed
above.

     Interest expense, net. Interest expense, net, decreased $543,000, or 26.4%,
to $1.5 million for the three months ended June 30, 2005, compared to $2.1
million for the three months ended June 30, 2004. This decrease is primarily due
to an increase in interest income generated from the increase in investment
yield from higher interest rates and the increase in investment balances
primarily from our 2% Convertible Notes offering in the fourth quarter of 2004.
This is partially offset by an increase in interest expense as a result of the
issuance of the 2% Convertible Notes and the increase in the six-month

                                       41


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

LIBOR. On September 2, 2003, we entered into interest rate swap agreements that
effectively exchanged the 8.25% fixed rate on the 8.25% Notes for a variable
rate of six-month LIBOR (3.71% at June 30, 2005 and 1.94% at June 30, 2004), set
in arrears, plus a spread of 2.735% to 2.75%.

     Other income, net. Other income, net, which was $3.1 million for the three
months ended June 30, 2005, relates primarily to an increase in the fair market
value of our previously announced put option contracts, net of a non-operating
asset write-off. Other income, net, of $390,000 for the three months ended June
30, 2004, relates primarily to the realization of a gain on the sale of a
certain equity investment.

     Income from continuing operations before provision for income taxes. Income
from continuing operations before provision for income taxes increased $26.7
million, or 82.5%, to $59.0 million for the three months ended June 30, 2005,
compared to $32.3 million for the three months ended June 30, 2004, due to the
reasons discussed above.

     Provision for income taxes. Provision for income taxes was $21.6 million
for the three months ended June 30, 2005, compared to $14.6 million for the
three months ended June 30, 2004. The effective tax rate was 36.6% for the three
months ended June 30, 2005, compared to 45.2% for the three months ended June
30, 2004. The decreased tax rate relates primarily to the non-taxable fair
market gain on put options in the three months ended June 30, 2005, and the
non-tax deductible charge due to the accelerated vesting of performance based,
long-term restricted stock awards during the three months ended June 30, 2004.

     Income from continuing operations. Income from continuing operations
increased $19.7 million, or 111.1%, to $37.4 million for the three months ended
June 30, 2005, compared to $17.7 million for the three months ended June 30,
2004, due to the factors discussed above.

DISCONTINUED OPERATIONS

     On July 2, 2004, we sold the security consulting division of our litigation
support services subsidiary, NTI, which was the last remaining business in
discontinued operations. The remaining division in NTI, consisting primarily of
training services, has been included as part of the Products Division segment,
where management now resides. This business represented the last remaining
business in our ArmorGroup Services Division (the "Services Division").

     We had no discontinued operations in the three months ended June 30, 2005.
Please see Note 2, Discontinued Operations, in Part I, Item 1 for a summary of
the operating results of the discontinued operations for three months ended June
30, 2004.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

SIX MONTHS ENDED JUNE 30, 2005 COMPARED TO SIX MONTHS ENDED JUNE 30, 2004.

     Net income. Net income increased $38.1 million, or 125.8%, to $68.4 million
for the six months ended June 30, 2005, compared to $30.3 million for the six
months ended June 30, 2004. Net income for the six months ended June 30, 2004,
includes income from continuing operations of $30.3 million and a loss from
discontinued operations of $38,000.

CONTINUING OPERATIONS

     Total revenues. Total revenues increased $351.3 million, or 91.2%, to
$736.6 million in the six months ended June 30, 2005, compared to $385.3 million
in the six months ended June 30, 2004. For the six months ended June 30, 2005,
total revenue increased $298.0 million, or 67.9%, internally, including
period-over-period changes in acquired businesses.

     Aerospace & Defense Group revenues. Aerospace & Defense Group revenues
increased $306.4 million, or 145.4%, to $517.2 million in the six months ended
June 30, 2005, compared to $210.8 million in the six months ended June 30, 2004.
For the six months ended June 30, 2005, Aerospace & Defense Group revenue
increased $275.8 million, or 114.3%, internally, including period-over-period
changes in acquired businesses. Internal growth was primarily due to:

     (1) We experienced strong demand for the Up-Armored HMMWV, including spare
     part revenues, as we shipped 3,167 Up-Armored HMMWVs in the six months
     ended June 30, 2005, compared to 1,412 in the six months ended June 30,
     2004, a 124.3% increase. While we continue to receive new orders under our
     current contract for the Up-Armored HMMWV, there are currently, several
     military transport vehicles that are in the development stage and are being
     evaluated by the U.S. military as possible next-generation replacements for
     the HMMWV. Although we believe that the HMMWV will continue for some time
     to be one of the primary transport vehicles in the U.S. military, there is
     no assurance as to when a replacement for the HMMWV may be selected. In the
     event the HMMWV is replaced, we anticipate that any armoring for a
     replacement vehicle would be part of the vehicle's original design and that
     eventually, our HMMWV up-armoring content per vehicle would likely decline.
     Although we anticipate making significant efforts to obtain armoring
     contracts for any HMMWV replacement vehicles selected by the U.S. military,
     at this time, we cannot determine to what degree, if any, we would be able
     to obtain such military contracts. See risk factor "A Replacement of the
     HWWMV in the U.S. Military May Affect Our Results of Operations" in Part I
     of our 10-K for the year ended December 31, 2004.

     (2) During the six months ended June 30, 2005, add-on armor components for
     fielded vehicles including add-on armor kits for medium and heavy truck
     fleet operating in Iraq increased 412.5%, compared to the six months ended
     June 30, 2004. We believe that vehicle armoring will play a significant
     role in the remainder of 2005 and is likely to play a significant role in
     2006 and beyond.

     (3) SAPI plate volume decreased by 25.8% in the six months ended June 30,
     2005, compared to the six months ended June 30, 2004. The reduction in
     volume was a result of our inability to

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ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

     procure certain raw materials, mainly ballistic fiber and ceramic supply,
     which are an instrumental component to the SAPI plate.

     Continued growth in the SAPI plate business is dependent upon the continued
     level of hostilities in Iraq and Afghanistan as well as the U.S.
     Government's requirements for improved technology and performance of the
     SAPI plate. Future revenues may be constrained by our ability to procure
     certain raw materials necessary for the manufacture of the SAPI plate. See
     risk factor "There are Limited Sources for Some of Our Raw Materials, Which
     May Significantly Curtail our Manufacturing Operations" in Part I of our
     10-K for the year ended December 31, 2004.

     (4) OTV units increased by 163.0% in the six months ended June 30, 2005,
     over the six months ended June 30, 2004. We also experienced 10.7% in unit
     growth in helmets. Our MOLLE revenue increased 50.1% due to sales of higher
     value MOLLE accessories.

     Acquired growth, which is the amount of current year revenue equal to the
prior year revenue before our acquisition of the acquired company, was a
function of the acquisition of Specialty Defense in November 2004, which
accounted for $30.5 million of the acquired growth.

     Products Division revenues. Products Division revenues increased $25.8
million, or 21.6%, to $145.4 million in the six months ended June 30, 2005,
compared to $119.6 million in the six months ended June 30, 2004. For the six
months ended June 30, 2005, Products Division revenue increased $3.0 million, or
2.1%, internally. Internal growth was primarily due to strong sales of
international body armor, and strong domestic and international sales within
duty gear. Acquired growth of $22.8 million was a function of the acquisitions
of Bianchi International, which was completed during the fourth quarter 2004,
and Kleen Bore, Inc., which was completed during the third quarter of 2004.

     Mobile Security revenues. Mobile Security Division revenues increased $19.1
million, or 34.8%, to $74.1 million in the six months ended June 30, 2005,
compared to $55.0 million in the six months ended June 30, 2004, primarily due
to the increasing threat of terrorism. During the six months ended June 30,
2005, commercial vehicle shipments increased 35.5%, to 847 vehicles compared to
625 vehicles in the six months ended June 30, 2004. All of Mobile Security
Division's revenue growth was internal.

     Cost of revenues. Cost of revenues increased $278.2 million, or 102.5%, to
$549.5 million for the six months ended June 30, 2005, compared to $271.3
million for the six months ended June 30, 2004. As a percentage of total
revenues, cost of revenues increased to 74.6% of total revenues for the six
months ended June 30, 2005, from 70.4% for the six months ended June 30, 2004.

     Gross margins in the Aerospace & Defense Group were 22.5% for the six
months ended June 30, 2005, compared to 30.2% for the six months ended June 30,
2004, primarily due to reduced selling prices for the Up-Armored HMMWV beginning
in the third quarter of 2004, and significant changes in our product mix as we
have diversified beyond Up-Armored HMMWVs.

     Gross margins in the Products Division were 36.3% for the six months ended
June 30, 2005, compared to 32.6% for the six months ended June 30, 2004. The
increase was primarily due to improved product mix, improved body armor margins
and a shift in production to lower cost manufacturing facilities.

                                       44


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

     Gross margins in the Mobile Security Division were 24.6% in the six months
ended June 30, 2005, compared to 20.8% for the six months ended June 30, 2004.
The margin improvement was primarily due to improved fixed cost absorption
associated with increased manufacturing volumes, and a richer sales mix of
high-end, higher margin vehicles.

     Selling, general and administrative expenses. Selling, general and
administrative expenses increased $22.7 million, or 48.7%, to $69.4 million
(9.4% of total revenues) for the six months ended June 30, 2005, compared to
$46.6 million (12.1% of total revenues) for the six months ended June 30, 2004.
The decrease as a percentage of revenues was largely a function of our ability
to achieve scale as revenues have increased, and the fourth quarter of 2004
acquisition of Specialty Defense, which operates with lower selling, general and
administrative expenses as a percentage of revenues than the Products Division
and the Mobile Security Division.

     Aerospace & Defense Group selling, general and administrative expenses
increased $7.0 million, or 69.6%, to $16.9 million (3.3% of Aerospace & Defense
Group revenues) for the six months ended June 30, 2005, compared to $10.0
million (4.7% of Aerospace & Defense Group revenues) for the six months ended
June 30, 2004. The increase in selling, general and administrative expenses is
due primarily to additional selling, general and administrative expenses
associated with the acquisition of Specialty Defense in November 2004, increased
research and development expense, and increase in administrative expenses as a
result of increased production of the Up-Armored HMMWV and supplemental armor
for other military vehicles. The decrease in selling, general and administrative
expense as a percentage of revenue was due to leveraging of the selling, general
and administrative expenses over a much larger revenue base.

     Products Division selling, general and administrative expenses increased
$7.0 million, or 32.7%, to $28.4 million (19.5% of Products Division revenues)
for the six months ended June 30, 2005, compared to $21.4 million (17.9% of
Products Division revenues) for the six months ended June 30, 2004. This
increase is due primarily to acquisitions of $4.9 million, the inclusion of
selling, general and administrative expenses related to NTI training services
which were part of discontinued operations in 2004, increased research and
development expenses, increased legal related to patent protection, and
management severance expenses.

     Mobile Security Division selling, general and administrative expenses
increased $0.8 million, or 12.2% (9.9% of Mobile Security Division revenues) for
the six months ended June 30, 2005, compared to $6.5 million (11.9% of Mobile
Security Division revenues) for the six months ended June 30, 2004. The increase
in selling, general and administrative expense was primarily due to increased
insurance costs, increased selling and marketing costs, increased warranty
provisions, and the negative impact of a weaker U.S. dollar when converting
foreign based expenses to U.S. dollars. The decrease in selling, general and
administrative expenses as a percentage of revenues was due to the leveraging of
the selling, general and administrative expenses over a much larger revenue
base.

     Corporate general and administrative expenses increased $8.0 million, or
91.2%, to $16.7 million (2.3% of total revenues) for the six months ended June
30, 2005, compared to $8.8 million (2.3% of total revenues) for the six months
ended June 30, 2004. This increase in administrative expenses is associated with
the overall growth of the Company, including increased travel expenses, bonus
provision, executive compensation planning and insurance expenses.

                                       45


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

     Amortization. Amortization expense increased $2.1 million, or 108.7% to
$4.1 million for the six months ended June 30, 2005, compared to $2.0 million
for the six months ended June 30, 2004, primarily due to the acquisitions of
Specialty Defense in November 2004 and Bianchi in December 2004. SFAS 142, which
we adopted on January 1, 2002, eliminated amortization of intangible assets with
indefinite lives and goodwill for all acquisitions completed after July 1, 2001,
as well as for all fiscal years ending after January 1, 2002. Remaining
amortization expense is related to patents and trademarks with finite lives, and
acquired amortizable intangible assets that meet the criteria for recognition as
an asset apart from goodwill under SFAS 141.

     Integration. Integration expense increased $151,000, or 10.2%, to $1.6
million for the six months ended June 30, 2005, compared to $1.5 million for the
six months ended June 30, 2004. Included in integration expenses in the six
months ended June 30, 2005, were charges for the integration of Specialty
Defense and Bianchi, which were acquired in the fourth quarter of 2004. Included
in integration expenses in the six months ended June 30, 2004, were charges for
integration related to the acquisitions of Simula and Hatch Imports, which were
acquired in the fourth quarter of 2003.

     Other charges. There were no other charges in the six months ended June 30,
2005. Other charges for the six months ended June 30, 2004, were $7.3 million.
Other charges in the second quarter of 2004 included a non-cash charge of $5.9
million for the acceleration of performance based, long-term restricted stock
awards granted to certain executives in 2002, and a $1.4 million charge to
reduce the carrying value of the remaining portion of NTI to its estimated fair
value.

     Operating income. Operating income increased $55.4 million, or 97.9%, to
$112.1 million for the six months ended June 30, 2005, compared to $56.6 million
in the six months ended June 30, 2004, due to the factors discussed above.

     Interest expense, net. Interest expense, net decreased $26,000, or 0.7%, to
$3.8 million for the six months ended June 30, 2005, compared to $3.8 million
for the six months ended June 30, 2004. This decrease is primarily due to an
increase in interest income generated from the increase in investment yield from
higher interest rates and the increase in investment balances primarily from our
2% Convertible Notes offering in the fourth quarter of 2004. This is partially
offset by an increase in interest expense as a result of the issuance of the 2%
Convertible Notes and the increase in the six-month LIBOR. On September 2, 2003,
we entered into interest rate swap agreements that effectively exchanged the
8.25% fixed rate on the 8.25% Notes for a variable rate of six-month LIBOR
(3.71% at June 30, 2005 and 1.94% at June 30, 2004), set in arrears, plus a
spread of 2.735% to 2.75%.

     Other income, net. Other income, net, was income of $2.0 million for the
six months ended June 30, 2005, and related primarily due to an increase in the
fair market value of our previously announced put option contracts, net of a
non-operating asset write-off. Other income, net, of $275,000 for the six months
ended June 30, 2004, relates primarily to the realization of a gain on the sale
of a certain equity investment.

     Income from continuing operations before provision for income taxes. Income
from continuing operations before provision for income taxes increased $57.1
million, or 107.6%, to $110.3 million for the six months ended June 30, 2005,
compared to $53.1 million for the six months ended June 30, 2004, due to the
reasons discussed above.

                                       46


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

     Provision for income taxes. Provision for income taxes was $41.8 million
for the six months ended June 30, 2005, compared to $22.8 million for the six
months ended June 30, 2004. The effective tax rate was 37.9% for the six months
ended June 30, 2005, compared to 42.9% for the six months ended June 30, 2004.
The decreased tax rate relates primarily to the non-taxable fair market gain on
put options in the six months ended June 30, 2005, and the non-tax deductible
charge due to the accelerated vesting of performance based, long-term restricted
stock awards during the six months ended June 30, 2004.

     Income from continuing operations. Income from continuing operations
increased $38.1 million, or 125.5%, to $68.4 million for the six months ended
June 30, 2005, compared to $30.3 million for the six months ended June 30, 2004,
due to the factors discussed above.

DISCONTINUED OPERATIONS

     On July 2, 2004, we sold the security consulting division of our litigation
support services subsidiary, NTI, which was the last remaining business in
discontinued operations. The remaining division in NTI, consisting primarily of
training services, has been included as part of the Products Division segment,
where management now resides. This business represented the last remaining
business in our ArmorGroup Services Division (the "Services Division").

     We had no discontinued operations in the six months ended June 30, 2005.
Please see Note 2, Discontinued Operations, in Part I, Item 1 for a summary of
the operating results of the discontinued operations for six months ended June
30, 2004.




                                       47


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

LIQUIDITY AND CAPITAL RESOURCES

     In March 2002, our Board of Directors approved a stock repurchase program
authorizing the repurchase of up to a maximum 3.2 million shares of our common
stock. In February 2003, the Board of Directors increased this stock repurchase
program to authorize the repurchase, from time to time depending upon market
conditions and other factors, of up to an additional 4.4 million shares. On
March 25, 2005, our Board of Directors increased our existing stock repurchase
program to enable us to repurchase, from time to time depending upon market
conditions and other factors, up to an additional 3.5 million shares of its
outstanding common stock. Through July 25, 2005, we repurchased 3.8 million
shares of our common stock under the stock repurchase program at an average
price of $12.49 per share, leaving us with the ability to repurchase up to an
additional 7.3 million shares of our common stock. We have not repurchased any
shares in 2004 or in the six months ended June 30, 2005. Repurchases may be made
in the open market, in privately negotiated transactions utilizing various
hedging mechanisms including, among others, the sale to third parties of put
options our common stock, or otherwise. At June 30, 2005, we had 34.6 million
shares of common stock outstanding.

     During the six months ended June 30, 2005, we sold put options in various
private transactions covering 2.5 million shares of Company stock for $4.7
million in premiums. On June 30, 2005, put options covering 1 million shares
expired unexercised leaving outstanding put options covering 1.5 million shares
outstanding (4.3% of outstanding shares at June 30, 2005) at a weighted average
strike price of $35.00 per share, all of which expire on or before September 30,
2005. If the purchasers exercise the remaining put options, we will be required
to repurchase our shares or enter into alternative cash settlement arrangements
at the negotiated strike price. As of June 30, 2005, based on the existing put
option strike prices, it would cost us $52.5 million ($52.5 million fair value),
if we were required to repurchase our shares under these put options. If all 1.5
million put options are exercised, we would have 5.8 million shares remaining
under our repurchase programs.

     If the remaining put options expire unexercised, we will record an
additional $1 million in other income in the third quarter of 2005. If our stock
price were to decline below $35.00 on the settlement date of the remaining put
options we potentially may incur a loss on the put options depending on the
final closing price on the expiration dates.

     Under the terms of our put options, if our stock price were to fall to 50%
of the strike price we could be required to settle the contracts prior to the
expiration of the contracts. We have the ability to terminate the contracts
prior to expiration by paying an early unwind amount to the counterparty. This
amount is equal to the current market value of the option contract provided by
the counterparty at the time of unwind.

     The fair values of the put options are obtained from our counter-parties
and represent the estimated amount we would receive or pay to terminate the put
options, taking into account the consideration we received for the sale of the
put options. As our stock price fluctuates the value of these contracts also
fluctuates. For the three and six month periods ending June 30, 2005, we
incurred fair value gains of $4.9 million and $3.8 million, respectively,
recorded in other income, net.

     We expect to continue our policy of repurchasing our common stock from time
to time, subject to the restrictions contained in our Credit Facility, the
indenture governing the 8.25% Notes and the indenture governing the 2%
Convertible Notes. Our Credit Facility permits us to repurchase shares of

                                       48


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

our common stock with no limitation if our ratio of Consolidated Senior
Indebtedness to Consolidated EBITDA (as such terms are defined in the Credit
Facility) for any rolling twelve-month period is less than 1.00 to 1. When such
ratio is greater than 1.00 to 1, our Credit Facility limits our ability to
repurchase shares at $15.0 million. This basket resets to $0 each time the ratio
is less than 1.00 to 1. As of June 30, 2005, such ratio was 0.06 to 1. Our
indentures governing the 8.25% Notes and the 2% Convertible Notes also permit us
to repurchase shares of our common stock, subject to certain limitations, as
long as we satisfy the conditions to such repurchase contained therein.

     On October 29, 2004, we completed the placement of $300 million aggregate
principal amount of the 2.00% Senior Subordinated Convertible Notes due November
1, 2024 (the "2% Convertible Notes"). On November 5, 2004, Goldman, Sachs & Co.
exercised its option to purchase an additional $45 million principal amount of
the 2% Convertible Notes. The 2% Convertible Notes provide the holders with a
seven year put option and are guaranteed by most of our domestic subsidiaries on
a senior subordinated basis. The 2% Convertible Notes were initially rated B1/B+
by Moody's Investors' Service and Standard & Poor's Rating Services,
respectively. The 2% Convertible Notes will bear interest at a rate of 2.00% per
year, payable on November 1 and May 1 of each year beginning on May 1, 2005 and
ending on November 1, 2011. The 2% Convertible Notes will be subject to
accretion of the principal amount beginning on November 1, 2011, at a rate that
provides holders with an aggregate annual yield to maturity of 2.00%, as defined
in the agreement. The 2% Convertible Notes will bear contingent interest during
any six-month period beginning November 1, 2011, of 15 basis points paid in cash
if the average trading price of the notes is above certain levels. The 2%
Convertible Notes will be convertible, at the bond holder's option at any time,
initially at a conversion rate of 18.5151 shares of our common stock per $1,000
principal amount of notes, which is the equivalent conversion price of
approximately $54.01 per share, subject to adjustment. Upon conversion, we will
satisfy our conversion obligation with respect to the accreted principal amount
of the notes to be converted in cash, with any remaining amount to be satisfied
in shares of our common stock. The conversion rate will be subject to
adjustment, without duplication, upon the occurrence of any of the following
events: (1) Stock dividends in common stock, (2) Issuance of rights and
warrants, (3) Stock splits and combinations, (4) Distribution of indebtedness,
securities or assets, (5) Cash distributions, (6) Tender or exchange offers, and
(7) Repurchases of common stock. In accordance with generally accepted
accounting principles, the 2% Convertible Notes are classified as short term
debt. We used the proceeds of the offering to fund the acquisitions of Specialty
Defense in November 2004 and Bianchi International in December 2004, and for
general corporate and working capital purposes, including the funding of capital
expenditures. Funds that are not immediately used are invested in money market
funds and other investment grade securities until needed.

     On June 22, 2004, our stockholders approved an amendment to our Certificate
of Incorporation, as amended, that increased the number of shares of our
authorized capital stock to 80,000,000, of which 75,000,000 shares are
designated as common stock and 5,000,000 shares are designated as preferred
stock.

     On June 15, 2004, we sold 4,000,000 primary shares of common stock at a
price of $37.50 per share, raising $142.5 million of net proceeds after
deducting the underwriter discounts and commissions. In addition, certain of our
directors and officers granted the underwriters a 30-day option to purchase up
to 600,000 shares. The 30-day option expired unexercised on July 15, 2004. We
used the net proceeds from the offering to primarily to fund the acquisitions of
Specialty Defense and Bianchi International in the fourth quarter of 2004.

                                       49


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

     On September 2, 2003, we entered into interest rate swap agreements, which
have been designated as fair value hedges as defined under SFAS 133 with a
notional amount totaling $150 million. The agreements were entered into to
exchange the fixed interest rate on our 8.25% Notes for a variable interest rate
equal to six-month LIBOR, set in arrears, plus a spread ranging from 2.735% to
2.75% fixed semi-annually on the fifteenth day of February and August. The
agreements are subject to other terms and conditions common to transactions of
this type. In accordance with SFAS 133, changes in the fair value of the
interest rate swap agreements offset changes in the fair value of the fixed rate
debt due to changes in the market interest rate. Accordingly, other assets on
the Consolidated Balance Sheet increased by $1.0 million to $7.0 million at June
30, 2005, from $6.0 million at December 31, 2004, which reflected an increase in
the fair value of the interest rate swap agreements. The corresponding increase
in the hedge liability was recorded in long-term debt. The agreements are deemed
to be a perfectly effective fair value hedge, and, therefore, qualify for the
short-cut method of accounting under SFAS 133. As a result, no ineffectiveness
is expected to be recognized in our earnings associated with the interest rate
swap agreements.

     On August 12, 2003, we completed a private placement of $150 million
aggregate principal amount of the 8.25% Notes. The 8.25% Notes are guaranteed by
almost all of our domestic subsidiaries, on a senior subordinated basis. The
8.25% Notes have been sold to qualified institutional investors in reliance on
Rule 144A of the Securities Act of 1933, as amended, and to non-U.S. persons in
reliance on Regulation S under the Securities Act of 1933, as amended. The 8.25%
Notes were initially rated B1/B+ by Moody's Investors' Service and Standard &
Poor's Rating Services, respectively. We used a portion of the funds to repay
debt, acquire Simula, Inc., Hatch Imports, Inc., ODV, Inc., and Kleen-Bore,
Inc., and we intend to use the remaining proceeds of the offering to fund
acquisitions and for general corporate and working capital purposes, including
the funding of capital expenditures. On March 29, 2004, we completed a
registered exchange offer for the 8.25% Notes and exchanged the 8.25% Notes for
new 8.25% Notes that were registered under the Securities Act of 1933, as
amended.

     On August 12, 2003, in concert with our 8.25% Note offering, we entered
into a new secured revolving credit facility (the "Credit Facility") with Bank
of America, N.A., Wachovia Bank, National Association and a syndicate of other
financial institutions arranged by Bank of America Securities, LLC. The Credit
Facility consists of a five-year revolving credit facility, and, among other
things, provides for (i) total maximum borrowings of $60 million, (ii) a $25
million sub-limit for the issuances of standby and commercial letters of credit,
(iii) a $5 million sub-limit for swing-line loans, and (iv) a $5 million
sub-limit for multi-currency borrowings. All borrowings under the Credit
Facility will bear interest at either (i) a rate equal to LIBOR, plus an
applicable margin ranging from 1.125% to 1.625%, (ii) an alternate base rate
which will be the higher of (a) the Bank of America prime rate and (b) the
Federal Funds rate plus 0.50%, or (iii) with respect to foreign currency loans,
a fronted offshore currency rate, plus an applicable margin ranging from 1.125%
to 1.625%, depending on certain conditions. The Credit Facility is guaranteed by
certain of our direct and indirect domestic subsidiaries and is collateralized
by, among other things, (i) a pledge of all of the issued and outstanding shares
of stock or other equity interests of certain of our domestic subsidiaries, (ii)
a pledge of 65% of the issued and outstanding voting shares of stock or other
voting equity interests of certain of our direct and indirect foreign
subsidiaries, (iii) a pledge of 100% of the issued and outstanding nonvoting
shares of stock or other nonvoting equity interests of certain of our direct and
indirect foreign subsidiaries, and (iv) a first priority perfected security
interest on certain of our domestic assets and certain domestic assets of
certain of our direct and indirect subsidiaries that will become guarantors of
our obligations under the Credit

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ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

Facility, including, among other things, accounts receivable, inventory,
machinery, equipment, certain contract rights, intellectual property rights and
general intangibles. On January 9, 2004, we amended our Credit Facility to
broaden our ability to make additional open-market purchases of publicly-traded
securities subject to certain limitations. On March 29, 2004, we amended our
Credit Facility to allow us to pay dividends subject to certain limitations. On
October 19, 2004, we amended our Credit Facility to allow us to subtract cash
equivalents from total indebtedness in calculation of our compliance covenants.
On April 14, 2005, we amended our credit agreement to amend the definition of
cash equivalents to include auction rate securities held by our existing bank
group.

     On July 26, 2005, we amended our secured revolving credit facility (the
"Credit Facility") with Bank of America, N.A., Wachovia Bank, National
Association and a syndicate of other financial institutions arranged by Bank of
America Securities, LLC. The amendment allows for advances, loans, extensions of
credit to or any other investments in key suppliers of the Company in an
aggregate amount not to exceed $15 million at any time outstanding for the
purpose of facilitating the sale and purchase of goods and services to the
Company. In addition, the amendment allows for leases or other dispositions of
assets of not more than 10% of the consolidated earnings before interest, taxes,
depreciation and amortization ("EBITDA"), as defined in the Credit Facility.

     As of June 30, 2005, we were in compliance with all of our negative and
affirmative covenants contained in the Credit Facility and the indentures
governing the 8.25% Notes and the 2% Convertible Notes.

     Working capital was $362.9 million and $289.6 million as of June 30, 2005,
and December 31, 2004, respectively. The increase in working capital is largely
a function of increases in accounts receivable of $2.4 million and inventory of
$32.5 million to support the growth in revenues from demand for the Up-Armored
HMMWV, supplemental armor for other military vehicles, and SAPI plates.

     Net cash provided by operating activities was $58.0 million for the six
months ended June 30, 2005, compared to $9.7 million for the six months ended
June 30, 2004. Net cash provided by operating activities improved due to
increased net income for the six months ended June 30, 2005, and was negatively
impacted due to increases in working capital in both periods. Net cash used in
investing activities was $385.6 million for the six months ended June 30, 2005,
compared to $217.2 million for the six months ended June 30, 2004 primarily due
to an increase in the purchase of short-term investment securities in the six
months ended June 30, 2005. Net cash provided by financing activities was
$845,000 for the six months ended June 30, 2005, compared to $116.5 million for
the six months ended June 30, 2004. The decrease in the six months ended June
30, 2005 is primarily due to net cash provided by financing activities in the
six months ended June 30, 2004 including the sale of 4,000,000 shares of Company
stock, partially offset by the long-term repayment of long-term debt.

     Our fiscal 2005 capital expenditures are expected to be $16.7 million, of
which we have spent $8.1 million through the six months ended June 30, 2005.
Such expenditures included additional manufacturing, office space, manufacturing
machinery and equipment, leasehold improvements, information technology and
communications infrastructure equipment.

     We anticipate that the cash on hand, cash generated from operations, and
available borrowings under the Credit Facility will enable us to meet liquidity,
working capital and capital expenditure requirements during the next 12 months.
We may, however, require additional financing to pursue our strategy of growth
through acquisitions and we are continuously exploring alternatives. If such
financing is required, there are no assurances that it will be available, or if
available, that it can be obtained on terms favorable to us or on a basis that
is not dilutive to our stockholders.

     See Part II Item 1 Legal Proceedings regarding outstanding legal matters.

                                       51


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED

FORWARD LOOKING AND CAUTIONARY STATEMENTS

     Except for the historical information and discussions contained herein,
statements contained in this Form 10-Q may constitute "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements involve a number of risks, uncertainties and other
factors that could cause actual results to differ materially, including, but not
limited to, our failure to continue to develop and market new and innovative
products and services and to keep pace with technological change; competitive
pressures; failure to obtain or protect intellectual property rights; the
ultimate effect of various domestic and foreign political and economic issues on
our business, financial condition or results of operations; quarterly
fluctuations in revenues and volatility of stock prices; contract delays; cost
overruns; our ability to attract and retain key personnel; currency and customer
financing risks; dependence on certain suppliers, customers and availability of
raw materials; changes in the financial or business condition of our
distributors or resellers; our ability to successfully manage acquisitions,
alliances and integrate past and future business combinations; regulatory,
legal, political and economic changes; an adverse determination in connection
with the Zylon(R) investigation being conducted by the U.S. Department of
Justice and certain state agencies and/or other Zylon(R)-related litigation; and
other risks, uncertainties and factors inherent in our business and otherwise
discussed elsewhere in this Form 10-Q and in our other filings with the
Securities and Exchange Commission or in materials incorporated therein by
reference.




                                       52


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As a result of our global operating and financial activities, we are
exposed to changes in raw material prices, interest rates, foreign currency
exchange rates and our stock price, which may adversely affect our results of
operations and financial position. In seeking to minimize the risks and/or costs
associated with such activities, we manage exposure to changes in raw material
prices, interest rates, and foreign currency exchange rates through our regular
operating and financing activities. We have entered into interest rate swap
agreements to reduce our overall interest expense.

MARKET RATE RISK

     The following discussion about our market rate risk involves
forward-looking statements. Actual results could differ materially from those
projected in the forward-looking statements. We are exposed to market risk
related to changes in interest rates, foreign currency exchange rates, and
equity security price risk.

     Interest Rate Risk. Our exposure to market rate risk for changes in
interest rates relates primarily to borrowings under our $150 million senior
subordinated notes, our credit facilities and our short-term monetary
investments. To the extent that, from time to time, we hold short-term money
market instruments, there is a market rate risk for changes in interest rates on
such instruments. To that extent, there is inherent rollover risk in the
short-term money market instruments as they mature and are renewed at current
market rates. The extent of this risk is not quantifiable or predictable,
because of the variability of future interest rates and business financing
requirements. However, there is only a remote risk of loss of principal in the
short-term money market instruments. The main risk is related to a potential
reduction in future interest income.

     On September 2, 2003, we entered into interest rate swap agreements in
which we effectively exchanged the $150 million fixed rate 8.25% interest on the
senior subordinated notes for variable rates in the notional amount of $80
million, $50 million, and $20 million at six-month LIBOR, set in arrears, plus
2.75%, 2.75%, and 2.735%, respectively. The agreements involve receipt of fixed
rate amounts in exchange for floating rate interest payments over the life of
the agreement without an exchange of the underlying principal amount. The
variable interest rates are fixed semi-annually on the fifteenth day of February
and August each year through maturity. The six-month LIBOR rate was 3.86% on
July 20, 2005. The maturity dates of the interest rate swap agreements match
those of the underlying debt. Our objective for entering into these interest
rate swaps was to reduce our exposure to changes in the fair value of senior
subordinated notes and to obtain variable rate financing at an attractive cost.
Changes in the six-month LIBOR would affect our earnings either positively or
negatively. An assumed 100 basis point increase in the six-month LIBOR would
increase our interest obligations under the interest rate swaps by approximately
$750,000 for a six month period.

     In accordance with SFAS 133, we designated the interest rate swap
agreements as perfectly effective fair value hedges and, accordingly, use the
short-cut method of evaluating effectiveness. As permitted by the short-cut
method, the change in fair value of the interest rate swaps will be reflected in
earnings and an equivalent amount will be reflected as a change in the carrying
value of the swaps, with an offset to earnings. There is no ineffectiveness to
be recorded. On June 30, 2005, we recorded the fair value of the interest rate
swap agreements of $7.0 million and recorded the corresponding fair value

                                       53


ARMOR HOLDINGS, INC. AND SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - CONTINUED

adjustment to the 8.25% senior subordinated notes in other assets and long-term
debt sections of the Condensed Consolidated Balance Sheets, respectively.

     We are exposed to credit-related losses in the event of nonperformance by
counterparties to these financial instruments. However, counterparties to these
agreements are major financial institutions and the risk of loss due to
nonperformance is considered by management to be minimal. We do not hold or
issue interest rate swap agreements or other derivative instruments for trading
purposes.

     Foreign Currency Exchange Rate Risk. The majority of our business is
denominated in U.S. dollars. There are costs associated with our operations in
foreign countries that require payments in the local currency. Where appropriate
and to partially manage our foreign currency risk related to those payments we
receive payment from customers in local currencies in amounts sufficient to meet
our local currency obligations. We do not use derivatives or other financial
instruments to hedge foreign currency risk.

     Stock Price Risk. The fair values of the put options are obtained from our
counter-parties and represent the estimated amount we would receive or pay to
terminate the put options, taking into account the consideration we received for
the sale of the put options. As our stock price fluctuates the value of these
contracts also fluctuates. For the three and six month periods ending June 30,
2005, we incurred fair value gains of $4.9 million and $3.8 million,
respectively, recorded in other income, net.

     Our exposure to our stock price risk is a result of the remaining
unexercised put option contracts covering 1.5 million shares of our common
stock. Under the terms of our put options, if our stock price were to fall to
50% of the strike price we could be required to settle the contracts prior to
the expiration of the contracts. We have the ability to terminate the contracts
prior to expiration by paying an early unwind amount to the counterparty. This
amount is equal to the current market value of the option contract provided by
the counterparty at the time of unwind.

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

     We do business in numerous countries, including emerging markets in South
America. We have invested resources outside of the United States and plan to
continue to do so in the future. Our international operations are subject to the
risk of new and different legal and regulatory requirements in local
jurisdictions, tariffs and trade barriers, potential difficulties in staffing
and managing local operations, potential imposition of restrictions on
investments, potentially adverse tax consequences, including imposition or
increase of withholding and other taxes on remittances and other payments by
subsidiaries, and local economic, political and social conditions. Governments
of many developing countries have exercised and continue to exercise substantial
influence over many aspects of the private sector. Government actions in the
future could have a significant adverse effect on economic conditions in a
developing country or may otherwise have a material adverse effect on us and our
operating companies. We do not have political risk insurance in the countries in
which we currently conduct business, but periodically analyze the need for and
cost associated with this type of policy. Moreover, applicable agreements
relating to our interests in our operating companies are frequently governed by
foreign law. As a result, in the event of a dispute, it may be difficult for us
to enforce our rights. Accordingly, we may have little or no recourse upon the
occurrence of any of these developments.


                                       54


ARMOR HOLDINGS, INC. AND SUBSIDIARIES

ITEM 4. CONTROLS AND PROCEDURES

     Our management, including Warren B. Kanders, Chairman and Chief Executive
Officer, and Glenn J. Heiar, Chief Financial Officer, has evaluated the
effectiveness of our disclosure controls and procedures as of the end of the
period covered by this quarterly report. Based on that evaluation, the Chairman
and Chief Executive Officer and Chief Financial Officer have concluded that as
of the end of the period covered by this quarterly report, our disclosure
controls and procedures, which are designed to ensure that information required
to be disclosed by us in reports that we file or submit under the Exchange Act
is recorded, processed, summarized and reported within the time periods
specified in applicable Securities and Exchange Commission rules and forms, were
effective. Furthermore, our management including our Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and procedures
are also effective to ensure that information required to be disclosed in the
reports that we file and submit under the Exchange Act is accumulated and
communicated to allow timely decisions regarding required disclosure.

     Our management, including our Chairman and Chief Executive Officer and
Chief Financial Officer, has also evaluated our internal control over financial
reporting to determine whether any changes occurred during the fiscal quarter
covered by this quarterly report that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting. Based on that evaluation, there has been no such change during the
fiscal quarter covered by this quarterly report.




                                       55


                                     PART II

ITEM 1. LEGAL PROCEEDINGS

     In the normal course of business, we are subjected to various types of
claims and currently have on-going litigations in the areas of products
liability, general liability and intellectual property. Our products are used in
a wide variety of law enforcement situations and environments. Some of our
products can cause serious personal or property injury or death if not carefully
and properly used by adequately trained personnel. We believe that we have
adequate insurance coverage for most claims that are incurred in the normal
course of business. In such cases, the effect on our financial statements is
generally limited to the amount of our insurance deductible or self-insured
retention. Our annual insurance premiums and self insurance retention amounts
have risen significantly over the past several years and may continue to do so
to the extent we are able to purchase insurance coverage. At this time, we do
not believe any such claims or pending litigation will have a material impact on
our financial position, operations or liquidity.

     Reference is made to Part I, Item 3, Legal Proceedings, in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2004, for a
description of other previously disclosed legal proceedings.







                                       56


ARMOR HOLDINGS, INC. AND SUBSIDIARIES

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     We held our annual meeting of stockholders on June 22, 2005 for the purpose
of (i) electing directors, (ii) ratifying the appointment of
PricewaterhouseCoopers LLP as Armor Holdings, Inc.'s independent auditors for
the fiscal year ending December 31, 2005, (iii) approving the Armor Holdings,
Inc. 2005 Stock Incentive Plan, and (iv) approving the Armor Holdings, Inc. 2005
Annual Incentive Plan.

     Each of our nominees for directors, as listed in the proxy statement, was
elected with the number of votes set forth below.

                                  FOR                    AGAINST
                                  ---                    -------

Warren B. Kanders                 28,730,882            2,146,361
Burtt R. Ehrlich                  28,345,893            2,531,350
David R. Haas                     29,583,236            1,294,007
Robert R. Schiller                29,584,298            1,292,945
Nicholas Sokolow                  27,894,459            2,982,784
Thomas W. Strauss                 29,583,883            1,293,360
Deborah A. Zoullas                29,581,685            1,295,558

     The ratification of the appointment of PricewaterhouseCoopers LLP as Armor
Holdings, Inc.'s independent auditors for the fiscal year ending December 31,
2005 was approved with the number of votes set forth below:

For                    Against               Abstentions
---                    -------               -----------
30,472,429             387,733               17,081

     The proposal to adopt the Armor Holdings, Inc. 2005 Stock Incentive Plan
was approved with the number of votes set forth below:

For                    Against               Abstentions
---                    -------               -----------
20,225,111             4,567,928             123,490

     The proposal to adopt the Armor Holdings, Inc. 2005 Annual Incentive Plan
was approved with the number of votes set forth below:

For                    Against               Abstentions
---                    -------               -----------
23,550,774             1,341,629             124,126

                                       57


ARMOR HOLDINGS, INC. AND SUBSIDIARIES

ITEM 6. EXHIBITS

     The following exhibits are filed as part of this quarterly report on Form
10-Q:

Exhibit No.  Description
-----------  -----------

4.1          Third Supplemental Indenture, dated as of May 25, 2005, among Armor
             Holdings, Inc., the subsidiary guarantors listed as signatories
             thereto and Wachovia Bank, National Association, as trustee.

4.2          Eighth Supplemental Indenture, dated as of May 25, 2005, among
             Armor Holdings, Inc., the subsidiary guarantors listed as
             signatories thereto and Wachovia Bank, National Association, as
             trustee.

10.1         Amended and Restated Employment Agreement, dated as of January 1,
             2005, between Armor Holdings, Inc. and Warren B. Kanders.

10.2         Employment Agreement, dated as of January 1, 2005, between Armor
             Holdings, Inc. and Robert R. Schiller.

10.3         Employment Agreement, dated as of May 20, 2005, between Armor
             Holdings, Inc. and Glenn J. Heiar.

10.4         Employment Agreement, dated as of May 20, 2005, between Armor
             Holdings, Inc. and Robert F. Mecredy.

10.5         Employment Agreement, dated as of May 20, 2005, between Armor
             Holdings, Inc. and Scott T. O'Brien.

10.6         Non-competition Agreement, dated as of May 20, 2005, between Armor
             Holdings, Inc. and Scott T. O'Brien.

10.7         Form of Stock Option Agreement under the 2005 Stock Incentive Plan.

10.8         Form of Stock Bonus Award Agreement under the 2005 Stock Incentive
             Plan.

10.9         Fourth Amendment to Credit Agreement, dated as of Apri 14, 2005, by
             and among Armor Holdings, Inc., as Borrower, the lenders from time
             to time party to the Credit Agreement, Bank of America, N.A., as
             Administrative Agent, Wachovia Bank, National Association, as
             Syndication Agent, and KeyBank National Association, as
             Documentation Agent.

10.10        Fifth Amendment to Credit Agreement, dated as of July 26, 2005, by
             and among Armor Holdings, Inc., as Borrower, the lenders from time
             to time party to the Credit Agreement, Bank of America, N.A., as
             Administrative Agent, Wachovia Bank, National Association, as
             Syndication Agent, and KeyBank National Association, as
             Documentation Agent.

31.1         Certification of Principal Executive Officer Pursuant to Rule
             13a-14(a) (17 CFR 240.13a-14(a)).

31.2         Certification of Principal Financial Officer Pursuant to Rule
             13a-14(a) (17 CFR 240.13a-14(a)).

32.1         Certification of Principal Executive Officer Pursuant to Rule
             13a-14(b) (17 CFR 240.13a-14(b)) and Section 1350 of Chapter 63 of
             Title 18 of the United States Code (18 U.S.C. 1350).

                                       58


ARMOR HOLDINGS, INC. AND SUBSIDIARIES


32.2         Certification of Principal Financial Officer Pursuant to Rule
             13a-14(b) (17 CFR 240.13a-14(b)) and Section 1350 of Chapter 63 of
             Title 18 of the United States Code (18 U.S.C. 1350).



                                       59


ARMOR HOLDINGS, INC. AND SUBSIDIARIES


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                  ARMOR HOLDINGS, INC.

                  /s/ Warren B. Kanders
                  ----------------------------------
                  Warren B. Kanders
                  Chairman and Chief Executive Officer
                  Dated:  July 27, 2005

                  /s/ Glenn J. Heiar
                  ----------------------------------
                  Glenn J. Heiar
                  Chief Financial Officer
                  (Principal Financial Officer and Principal Accounting Officer)
                  Dated: July 27, 2005





                                       60