Defense contractor Force Protection Inc said it plans to reduce about 10 percent of its workforce of 1200 employees and contractors, and expects a related charge of about $2 million in the third quarter.

The company expects to cut expenses by at least $40 million annually through a program of operational realignment and overhead reductions, and plans to complete the program in the first half of 2010.

Force Protection is also streamlining its spares logistics functions to reduce lead times, it said.

Shares of the company were down about 2 percent at $5.51 in afternoon trade on the Nasdaq. (Reporting by Bijoy Koyitty in Bangalore; Editing by Ratul Ray Chaudhuri)