Calculate M score variable model and explain findings

DHB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, (In thousands, except share and per share data) 2004 2003 2002 Net sales (including related party sales of $6,559, $15,109 and $5,242 respectively) $340,075 $230,011 $130,347 245,940 94,135 44,564 49,571 166,670 63,341 37,325 26,016 92,621 37,726 23,903 13,823 -1,374 -1,645 Cost of goods sold (including related party purchases of $17,627, $29,243, and $8,387, respectively) Gross profit Selling, general and administrative expenses Income before other income (expense) Other income (expense) Interest expense Write down of other investment Gain on sale of subsidiary stock Other income (including insurance settlement of $1,009 in 2003) Total other income (expense) Income before income tax (benefit) expense Income taxes (benefit) expense: Current taxes Deferred tax expense (benefit) Total income tax (benefit) expense Income before minority interest of subsidiary Less minority interest of subsidiary Net income Dividend - preferred stock (related party) Income available to common stockholders Basic earnings per common share Diluted earnings per common share -1,344 -904 1,450 1,059 261 26,277 35 -1,339 48,232 130 -1,515 12,308 77 3,749 3,672 15,980 17,840 -267 17,573 30,659 -224 30,435 -360 $30,075 $0.73 $0.67 7,186 3,912 11,098 15,179 -7- 15,172 -360 $14,812 $0.36 $0.34 15,980 -345 $15,635 $0.42 $0.37 DHB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS FOR THE YEARS ENDED DECEMBER 31, (In thousands, except share and per share data) 2004 2003 2002 $447 $441 $393 ASSETS Current assets Cash and cash equivalents Accounts receivable, less allowance for doubtful accounts of $702 and 5852, respectively Accounts receivable-related party Inventories Deferred income tax assets Prepaid expenses and other current assets Total current assets 33,707 22904 47,560 6,583 85,973 483 1,220 142,266 54,753 372 1,518 90,791 33,360 3,319 971 60,947 2,632 1,819 1,620 Property and equipment, net Other assets: Other investment Deferred income tax assets Deposits and other assets Total other assets 437 593 366 942 1,402 460 2,804 381 818 959 Total assets $145,857 $93,428 65,371 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable Accrued expenses and other current liabilities Note payable - bank Income taxes payable Total current liabilities $5,368 2.454 $8,014 8,350 6,000 14,816 37,180 $9,465 5,635 2.000 6.869 23.969 7,322 25,634 22,012 Long Term Liabilities Notes payable-bank Notes payable-stockholder Term loan payable Other liabilities 24,354 1,500 4,500 1,086 502 350 Total liabilities 68,400 46,483 34 026 Stockholders equity 77.457 46.945 Total liabilities and stockholders' equity $145.857 $93,428 65,371 DHB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, (In thousands, except share and per share data) 2004 2003 2002 Net sales (including related party sales of $6,559, $15,109 and $5,242 respectively) $340,075 $230,011 $130,347 245,940 94,135 44,564 49,571 166,670 63,341 37,325 26,016 92,621 37,726 23,903 13,823 -1,374 -1,645 Cost of goods sold (including related party purchases of $17,627, $29,243, and $8,387, respectively) Gross profit Selling, general and administrative expenses Income before other income (expense) Other income (expense) Interest expense Write down of other investment Gain on sale of subsidiary stock Other income (including insurance settlement of $1,009 in 2003) Total other income (expense) Income before income tax (benefit) expense Income taxes (benefit) expense: Current taxes Deferred tax expense (benefit) Total income tax (benefit) expense Income before minority interest of subsidiary Less minority interest of subsidiary Net income Dividend - preferred stock (related party) Income available to common stockholders Basic earnings per common share Diluted earnings per common share -1,344 -904 1,450 1,059 261 26,277 35 -1,339 48,232 130 -1,515 12,308 77 3,749 3,672 15,980 17,840 -267 17,573 30,659 -224 30,435 -360 $30,075 $0.73 $0.67 7,186 3,912 11,098 15,179 -7- 15,172 -360 $14,812 $0.36 $0.34 15,980 -345 $15,635 $0.42 $0.37 DHB INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS FOR THE YEARS ENDED DECEMBER 31, (In thousands, except share and per share data) 2004 2003 2002 $447 $441 $393 ASSETS Current assets Cash and cash equivalents Accounts receivable, less allowance for doubtful accounts of $702 and 5852, respectively Accounts receivable-related party Inventories Deferred income tax assets Prepaid expenses and other current assets Total current assets 33,707 22904 47,560 6,583 85,973 483 1,220 142,266 54,753 372 1,518 90,791 33,360 3,319 971 60,947 2,632 1,819 1,620 Property and equipment, net Other assets: Other investment Deferred income tax assets Deposits and other assets Total other assets 437 593 366 942 1,402 460 2,804 381 818 959 Total assets $145,857 $93,428 65,371 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable Accrued expenses and other current liabilities Note payable - bank Income taxes payable Total current liabilities $5,368 2.454 $8,014 8,350 6,000 14,816 37,180 $9,465 5,635 2.000 6.869 23.969 7,322 25,634 22,012 Long Term Liabilities Notes payable-bank Notes payable-stockholder Term loan payable Other liabilities 24,354 1,500 4,500 1,086 502 350 Total liabilities 68,400 46,483 34 026 Stockholders equity 77.457 46.945 Total liabilities and stockholders' equity $145.857 $93,428 65,371