Arotech Corporation Posts Record Results for the Fourth Quarter and Full Year, 2004; 2004 Revenues Reach $50 Million - Close to Triple Year Ago.AUBURN Auburn (ô`bərn).1 City (1990 pop. 33,830), Lee co., E Ala.; inc. 1839. The city's economy centers around Auburn Univ.; there is some manufacturing. 2 City (1990 pop. 24,309), seat of Androscoggin co. , Ala ALA aminolevulinic acid. Ala alanine. ala (a´lah) pl. a´lae [L.] a winglike process. . -- Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become for Full Year Reaches $1.8 Million Company Continues to Generate Positive Cash Flow from Operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses in the Fourth Quarter Arotech Corporation (NasdaqNM:ARTX), a provider of quality defense and security products for the military, law enforcement and security markets, today reported record results for the quarter and full year ending December 31, 2004. Revenues for the fourth quarter reached $16.6 million, an increase of more than 304% over the corresponding period in 2003, and 2% more than the previous quarter. For the full year of 2004, revenues increased to $50 million, 188% more than last year. Adjusted EBITDA for the fourth quarter was $1.4 million, compared to a negative adjusted EBITDA of ($1.1) million for the corresponding period in 2003. For the full year of 2004, adjusted EBITDA was $1.8 million compared to negative adjusted EBITDA of ($2.2) million for 2003. Arotech believes that information concerning EBITDA enhances overall understanding of its current financial performance. Arotech computes EBITDA, which is a non-GAAP financial measure, as reflected in the table below. Net loss for the fourth quarter from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the was $3.3 million, or $0.04 per share, compared to a net loss of $5.5 million, or $0.13 per share, in the corresponding period last year. For the full year, net loss from continuing operations before deemed dividend to certain stockholders was $9.0 million, or $0.13 per share, compared to a net loss of $9.3 million, or $0.24 per share in 2003. "2004 was a very productive and successful year for us, in which we transformed the Company into a major vendor in the security and defense sector. We accomplished the goals that we set out for ourselves at the beginning of the year, becoming cash flow positive and growing both organically and through strategic acquisitions," said Robert S Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. . Ehrlich Ehr·lich , Paul 1854-1915. German bacteriologist who conducted pioneering research in chemotherapy and developed the chemical Salvarsan as a treatment of syphilis. , Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Arotech. "We finished the year with new record-high revenues and EBITDA profitability. The subsidiaries that we acquired in 2004 are now fully integrated into the Company and we have begun to benefit from the synergies of our entire portfolio of companies. Focused on three key product areas - simulation and security, armor, and battery and power systems - in which we have vast experience and expertise, we are well-positioned to continue to increase our market share in the rapidly growing defense and security sector," continued Ehrlich. "In 2005, in addition to growing the Company internally, we will continue to focus on growth opportunities through strategic acquisitions that will significantly contribute to our operating results. "I am proud of our achievements in 2004 and look forward to another year of substantial growth in 2005," concluded Ehrlich. Guidance for 2005 For the full year 2005, Arotech expects revenues from existing operations to increase by at least 25% compared to the previous year. Adjusted EBITDA from existing operations is projected to triple in 2005, compared to 2004. For the first quarter 2005, revenues are expected to increase by approximately 40% compared to the first quarter of 2004. While strong EBITDA growth is expected for the full year, the first quarter is normally a seasonally weaker quarter and therefore, adjusted EBITDA is expected to be less than breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations for the first quarter of 2005. Conference Call Arotech Corporation will hold a conference call to discuss its fourth quarter and full year 2004 results, today, Thursday, March 31, 2005, at 10:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . Those wishing to take part in the conference call should call 1-800-289-0518 (US) or +1-913-981-5532 (international) a few minutes before the 10:00 a.m. EST start time. In addition, a replay option will be available Thursday, March 31, 2005 at 1:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. until Wednesday, April 6, 2005 at 11:59 p.m. EST. The replay telephone number is 1-888-203-1112 (US); +1-719-457-0820 (international). The replay passcode is: 6564193. Results for the Full Year Revenues for the full year ended December 31, 2004 increased to $50.0 million as compared with $17.3 million for 2003. This increase is largely attributed to strong sales in the Company's Armored Vehicle Division, as well as the addition of the results of the Company's new acquisitions in 2004. Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. described below and in the table below, for the full year 2004 increased to adjusted EBITDA of $1.8 million as compared with a negative adjusted EBITDA of ($2.2) million for 2003. Arotech believes that information concerning adjusted EBITDA enhances overall understanding of its current financial performance and its progress towards cash-flow break even and toward GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). profitability. Arotech computes adjusted EBITDA, which is a non-GAAP financial measure, as reflected in the table below. Net loss from continuing operations before deemed dividend to certain shareholders for the full year, 2004, was $9.0 million as compared with $9.3 million for the full year, 2003. Basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net loss per share before deemed dividend to certain stockholders for the full year, 2004 was $0.13 as compared with $0.24 for the full year, 2003. Results for the Fourth Quarter Revenues for the quarter ended December 31, 2004 increased to $16.6 million as compared with $4.1 million for the corresponding period of 2003. This increase is largely attributed to strong sales in the Company's Armored Vehicle Division, as well as the addition of the results of the Company's new acquisitions in 2004. Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA), adjusted to eliminate certain non-cash charges described below and in the table below, for the quarter ended December 31, 2004 increased to $1.4 million as compared with a negative adjusted EBITDA of ($1.1) million for the corresponding period of 2003. Arotech believes that information concerning adjusted EBITDA enhances overall understanding of its current financial performance and its progress towards cash-flow break even and toward GAAP profitability. Arotech computes adjusted EBITDA, which is a non-GAAP financial measure, as reflected in the table below. Net loss from continuing operations for the quarter ended December 31, 2004 was $3.3 million as compared with a net loss of $5.5 million for the corresponding quarter of 2003. Basic and diluted net earnings (loss) per share for the quarter ended December 31, 2004 was a net loss per share of $0.04 as compared with net loss per share of $0.13 for the corresponding period of 2003. Cash Position at Year End Cash-on-hand and cash equivalents, restricted collateral deposits and other restricted cash, and available-for-sale marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has at the end of the year stood at $6.7 million in cash, $7.0 million in restricted collateral securities COLLATERAL SECURITY, contracts. A separate obligation attached to another contract, to guaranty its performance. By this term is also meant the transfer of property or of other contracts to insure the performance of a principal engagement. and cash deposits due within one year (reserved for payment in connection with the earnout Earnout A contractual provision stating that the seller of a business is to obtain additional future compensation based on the business achieving certain future financial goals. Notes: The financial goals are usually stated as a percentage of gross sales or earnings. contracted in Arotech's acquisition of FAAC FAAC Freeware Advanced Audio Coder FAAC Ford Amateur Astronomy Club FAAC Family Allergy and Asthma Care FAAC Functional Area Agreement Coordinator (USAF) FAAC Fatal Accident Assessment Committee ) , $4.0 million in long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. restricted securities and deposits, and $136,000 in available-for-sale marketable securities, as compared with $13.7 million in cash and $706,000 in restricted cash deposits due within one year at the end of 2003. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. at the end of the quarter was approximately $65 million. About Arotech Corporation Arotech Corporation is a leading provider of quality defense and security products for the military, law enforcement and homeland security Noun 1. Homeland Security - the federal department that administers all matters relating to homeland security Department of Homeland Security executive department - a federal department in the executive branch of the government of the United States markets, including multimedia interactive simulators/trainers, lightweight armoring armoring (ärˑ·m  ·ring),n and advanced zinc-air and lithium batteries Lithium batteries are primary batteries that have lithium metal or lithium compounds as an anode. Depending on the design and chemical compounds used lithium cells can produce voltages from 1.5V to about 3V, twice the voltage of an ordinary zinc-carbon battery or alkaline cell. and chargers. Arotech operates through three major business divisions: Armor, Simulation and Security and Battery and Power Systems. Arotech is incorporated in Delaware Delaware, state, United States Delaware (dĕl`əwâr, –wər), one of the Middle Atlantic states of the United States, the country's second smallest state (after Rhode Island). , with corporate offices in Auburn, Alabama Auburn is a city in Lee County, Alabama. It is the largest city in eastern Alabama with a 2006 population of 51,906 (according to the U.S. Census estimates).[1] , and research, development and production subsidiaries in Alabama Alabama, indigenous people of North America Alabama (ăləbăm`ə), indigenous people of North America whose language belongs to the Muskogean branch of the Hokan-Siouan linguistic stock (see Native American languages). , Colorado, Michigan, California and Israel. Except for the historical information herein, the matters discussed in this news release include forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements, as they are subject to various risks and uncertainties that may cause actual results to vary significantly. These risks and uncertainties include, but are not limited to, risks relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc : product and technology development; the uncertainty of the market for Arotech's products; changing economic conditions; delay, cancellation or non-renewal, in whole or in part, of contracts or of purchase orders; and other risk factors detailed in Arotech's most recent Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and other filings with the Securities and Exchange Commission. Arotech assumes no obligation to update the information in this release. Reference to the Company's website above does not constitute incorporation of any of the information thereon there·on adv. 1. On or upon this, that, or it. 2. Archaic Following that immediately; thereupon. Adv. 1. thereon - on that; "text and commentary thereon" on it, on that into this press release.
AROTECH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended
Year ended December 31, December 31,
-------------------------- -------------------------
2004 2003(a) 2004 2003(a)
------------- ------------ ------------ ------------
Revenues $49,953,846 $17,326,641 $16,570,823 $4,094,155
Cost of revenues 34,011,094 11,087,840 11,330,173 2,722,628
------------- ------------ ------------ ------------
Gross profit 15,942,752 6,238,801 5,240,650 1,371,527
Research and
development 1,731,379 1,053,408 428,605 290,779
Selling and
marketing
expenses 4,922,217 3,532,636 1,487,034 1,137,446
General and
administrative
expenses 10,656,866 5,857,876 3,084,941 2,401,590
Amortization of
intangible assets
and impairment
loss 2,814,835 864,910 1,083,410 137,783
------------- ------------ ------------ ------------
Total operating
costs and
expenses 20,125,297 11,308,830 6,083,990 3,967,598
------------- ------------ ------------ ------------
Operating loss (4,182,545) (5,070,029) (843,340) (2,596,071)
Financial
expenses, net (4,228,965) (4,038,709) (2,102,889) (2,825,127)
------------- ------------ ------------ ------------
Loss before
minorities
interests in loss
(earnings) of
subsidiaries and
tax expenses (8,411,510) (9,108,738) (2,946,229) (5,421,198)
Income taxes (586,109) (396,193) (299,584) (88,057)
Minorities
interests in loss
(earnings) of
subsidiaries (44,694) 156,900 (9,333) 22,088
------------- ------------ ------------ ------------
Loss from
continuing
operations $(9,042,313) $(9,348,031) $(3,255,146) $(5,487,167)
Income from
discontinued
operations - 110,410 - 29,529
------------- ------------ ------------ ------------
Net loss $(9,042,313) $(9,237,621) $(3,255,146) $(5,457,638)
Deemed dividend to
certain
stockholders $(3,328,952) $(350,000) $- $(82,974)
------------- ------------ ------------ ------------
Net loss
attributable to
common
stockholders $(12,371,265) $(9,587,621) $(3,255,146) $(5,540,612)
============= ============ ============ ============
Basic and diluted
net loss per
share from
continuing
operations $(0.13) $(0.24) $(0.04) $(0.13)
============= ============ ============ ============
Basic and diluted
net earnings
(loss) per share
from discontinued
operations $0.00 $0.00 $0.00 $0.00
============= ============ ============ ============
Combined basic and
diluted net loss
per share $(0.18) $(0.25) $(0.04) $(0.13)
============= ============ ============ ============
Weighted average
number of shares
outstanding 69,933,057 38,890,174 79,075,181 43,604,830
============= ============ ============ ============
(a) Restated.
Reconciliation of Non-GAAP Financial Measure To supplement Arotech's consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP, Arotech uses a non-GAAP measure, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), as adjusted to eliminate certain non-cash charges (Adjusted EBITDA). This non-GAAP measure is provided to enhance overall understanding of Arotech's current financial performance and its progress towards cash-flow break even and toward GAAP profitability. Reconciliation of Adjusted EBITDA to the nearest GAAP measure follows:
ADJUSTED EBITDA
----------------------------------------------------------------------
Three months ended
Year ended December 31, December 31,
------------------------- -------------------------
2004 2003(a) 2004 2003(a)
------------ ------------ ------------ ------------
Net loss from
continuing
operations (GAAP
measure) $(9,042,313) $(9,348,031) $(3,255,146) $(5,487,167)
Add back:
Interest expense
(income), net
(after deduction
of minority
interest) 4,226,312 4,039,950 2,101,076 2,833,675
Taxes (after
deduction of
minority interest) 555,507 240,039 268,982 73,864
Depreciation of
fixed assets 1,199,465 730,159 364,828 201,004
Amortization of
inventory
adjustment to
market values with
the acquisition of
one of our
subsidiaries 920,544 - 334,219 -
Amortization of
intangible assets
and capitalized
research and
development
expenses 2,888,226 879,312 1,156,801 146,948
------------ ------------ ------------ ------------
EBITDA (non-GAAP
measure) $747,741 $(3,458,571) $970,760 $(2,231,676)
------------ ------------ ------------ ------------
Add back certain
non-cash charges:
Expenses attributed
on issuance of
shares to
consultants and as
a donation 89,078 333,627 51,878 179,296
Expenses attributed
on issuance of
warrants and
options to
employees,
directors and
consultants 662,392 276,045 194,398 246,286
Expenses attributed
on issuance of
shares to
employees 212,424 - 103,770 -
Markdown of loans
to shareholders 45,253 - 39,656 -
Non-cash portion of
settlement
agreement - 688,642 - 688,642
------------ ------------ ------------ ------------
ADJUSTED EBITDA
(non-GAAP measure) $1,756,888 $(2,160,257) $1,360,462 $(1,117,452)
=========== ============= =========== =============
(a) Restated.
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