Yesterday's headlines carried bad news for a few folks in the bulletproof vest business. Zylon, a lightweight ballistic fiber used in the vests, has lost its National Institute of Justice (NIJ) certification. Exiting the Zylon-containing vest marketplace yesterday was Armor Holdings (NYSE:AH) and DHB Industries (AMEX:DHB).

In NIJ testing, 58% of the 103 used Zylon-containing vests tested (as opposed to brand new ones) failed to stop at least one bullet in a six-shot test. These tests appear to support the theory that Zylon fibers degrade faster than previously thought, which may cut the usable life of vests containing Zylon by as much as 50%.

Armor Holdings announced an exchange program for its Zylon-containing vests. The company expects to take a $19.4 million ($0.33 per share) charge in the third quarter for this program. Since Armor Holdings was expected to earn $0.94 a share, the impact of this one-time charge is not devastating.

Armor Holdings stock fell 2.8% between the NIJ news Monday morning and midday trading today. One reason for that muted response is the company's proactive testing of its own products. More than 600 used Zylon vests were tested, and passed, using NIJ protocol. The company allowed law enforcement agencies to participate in and witness the tests, implying that the company's products were as safe as vests containing Zylon could be. (The company does not offer details on what percentage of their vests' content comprises Zylon.)

Down 25.7% since Friday's close, former Motley Fool Hidden Gems Watch List stock DHB Industries has been on an eight-month decline, including its disappointing second-quarter results.

"Ballistic-resistant equipment" (which includes the Zylon vests) composes nearly 98% of DHB's sales and 98% of adjusted operating profit for the last period for which annual data is available. The key question now: How much of that "ballistic-resistant equipment" is comprised of Zylon-based vests?

According to DHB, the replacement program for its vests is expected to cost "no more than" $60 million. Since the company's trailing annual earnings before interest, taxes, depreciation and amortizations (EBITDA) is $51.9 million, the charge could get ugly for DHB's bottom line.

In addition, the loss of the NIJ certification could put police departments in violation of their own policies (to wear only certified armor) and at risk with their insurance carriers. Though this will more than likely prove short-lived and carry little cost to departments, it may contribute to potential lawsuits against manufacturers who used Zylon.

There are still plenty of options for vest manufacturers when it comes to bulletproof material. Two examples are DuPont's (NYSE:DD) bulky but reliable Kevlar and Honeywell's (NYSE:HON) lightweight SpectraShield. Investors should be pondering two questions here: How quickly will manufacturers bounce back from one-time charges, and how much turf will a vertically integrated non-Zylon vest manufacturer capture as the others scramble to mend fences?

Fool contributor W.D. Crotty does not own shares in any of the companies mentioned. Click here to see The Motley Fool's disclosure policy.