Arotech Corporation Reports 23% Revenue Increase for the Second Quarter 2005; Company Continues to Project Growth in Revenues and Non-GAAP Margins for 2005.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. . -- Arotech Corporation (NasdaqNM: ARTX), a provider of quality defense and security products for the military, law enforcement and security markets, today reported results for the quarter ending June 30, 2005. Second Quarter Results On a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Basis: Revenues for the quarter reached $12.2 million, an increase of 23.3%, compared to $9.9 million for the corresponding period in 2004. Gross Profit for the quarter was $3.6 million or 30% of revenues, compared to $3.4 million or 34% of revenues for the corresponding period in 2004. The decline results from a lower margin mix of products in some of Arotech's subsidiaries. The Company recorded an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the quarter of $4.5 million, compared to an operating loss of $2.0 million in the corresponding period in 2004. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the quarter included a write down of $2.4 million for impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of goodwill and other intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. in relation to Arotech's Armour armour or body armour Protective clothing that can shield the wearer from weapons and projectiles. By extension, armour is also protective covering for animals, vehicles, and so on. Prehistoric warriors used leather hides and helmets. of America subsidiary. The Net Loss 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 for the quarter was $5.4 million or ($0.07) per share, compared to a net loss of $4.4 million or ($0.07) per share for the corresponding period in 2004. On a non-GAAP Basis: On a non-GAAP basis, 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 , (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.
In response to SEC guidance, Arotech will no longer provide EBITDA adjusted for recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. non-cash charges Non-Cash Charge 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. . Until now, the Company has been recording Adjusted EBITDA, as it believes that this measure enhances understanding of its current financial performance and its progress towards cash-flow break even and towards GAAP profitability. "During the quarter, we continued to make progress towards achieving our goals for 2005," 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, Arotech 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. . The quarter was highlighted by the strong demand for our simulation training solutions and vehicle-armoring products, which we anticipate will continue throughout the year. In fact a few days ago, we announced new orders for almost $3 million in our vehicle armoring armoring (ärˑ·m  ·ring),n units. "This strong demand was somewhat offset by the performance of our Armour of America, AoA, subsidiary which was below our expectations. As a result, we wrote down approximately $2.4 million in impairment charges. While we are disappointed with AoA's progress, we believe that there are significant opportunities to be achieved under the right focus. We therefore recently hired a President of our Armor Division, who will focus special attention on improving AoA. "Although overall revenues were slightly lower than expected, we were able to increase our revenues by over 23% this quarter compared to the second quarter of 2004 and by over 32% in the first half of this year compared to the corresponding period last year. With long sales cycles and lead times, the nature of our business is such that it is sometimes difficult to project operational results on a quarterly basis. Nevertheless, we continue to maintain our outlook for substantial growth from existing operations for the full year of 2005 and remain confident that the second half of the year will be stronger in comparison to both the first half of 2005 and the corresponding period in 2004. "The organic growth of the Company has become our key focus and we are working diligently dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d towards achieving net profitability through our existing operations. With our current portfolio of high-quality leading edge products, our well-established customer base and the increasing opportunities in the rapidly growing sectors in which we operate, we are hopeful that we can achieve net GAAP profitability at the end of 2006," concluded Ehrlich. Backlog The Company's backlog currently stands at $22 million. Conference Call Arotech Corporation will hold a conference call to discuss its second quarter 2005 results, today, Monday August 15, 2005, at 10:00 a.m. ET. Those wishing to take part in the conference call should call 1-800-946-0785 (U.S.) or +1-719-457-2661 (international) a few minutes before the 10:00 a.m. ET start time. In addition, a replay option will be available from Monday, August 15, 2005 at 2:00 p.m. ET until Wednesday, August 17, 2005 at 11:00 p.m. ET. The replay telephone number is 1-888-203-1112 (US); +1-719-457-0820 (international). The replay passcode is 8799664. Results for the First Half, 2005 On a GAAP Basis: Revenues for the first six months, 2005 reached $22.6 million, compared to $17.1 million for the corresponding period in 2004. Gross Profit for the first six months, 2005, was $7.6 million or 34% of revenues, compared to $6.0 million or 35% of revenues for the corresponding period in 2004. The Operating Loss for the first six months, 2005, was $6.2 million, compared to an operating loss of $3.5 million in the corresponding period in 2004. The Net Loss (including a loss of $200,000 from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. ) for the six month period was $8.1 million or ($0.10) per share, compared to a net loss of $8.1 million or ($0.13) per share for the corresponding period in 2004. The Net Loss for the first half of 2004 included a $1.2 million deemed dividend to certain stockholders of common stock. On a non-GAAP Basis: On a non-GAAP basis, EBITDA, (Earnings Before Interest, Taxes, Depreciation and Amortization) for the first six months ending June 30, 2005, was a negative $1.6 million, compared to a negative $2.0 million for corresponding period in 2004. EBITDA includes several non cash items such as expenses in the amount of $518,000 due to options and shares. As mentioned above, in response to SEC guidance, Arotech will no longer provide EBITDA adjusted for recurring non-cash charges. Cash Position as at June 30, 2005 Cash-on-hand and cash equivalents, restricted securities and deposits due within one year 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 stood at the end of the quarter at $4.2 million in cash and $1.0 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, as compared with $6.7 million in cash and cash equivalents and $7.0 in restricted securities and deposits due within one year and $135,568 in marketable securities as at December 31, 2004. 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. stood at the end of the quarter at approximately $58.5 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 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, 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, 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. , as amended, 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.
Six months ended Three months ended
June 30, June 30,
------------------------- -------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Revenues $22,624,355 $17,110,502 $12,236,910 $9,928,248
Cost of revenues 14,981,150 11,131,967 8,609,276 6,574,747
------------ ------------ ------------ ------------
Gross profit 7,643,205 5,978,535 3,627,634 3,353,501
Operating expenses:
Research and
development 898,504 871,627 483,826 408,121
Selling and
marketing 2,222,692 2,140,696 1,063,873 1,119,611
General and
administrative 6,720,816 5,460,070 3,364,406 3,371,934
Amortization of
intangible assets 1,646,241 992,025 823,153 496,013
Impairment of
goodwill and other
intangible assets 2,389,129 - 2,389,129 -
------------ ------------ ------------ ------------
Total operating
costs and expenses 13,877,382 9,464,418 8,124,387 5,395,679
------------ ------------ ------------ ------------
Operating loss (6,234,177) (3,485,883) (4,496,753) (2,042,178)
Financial expenses,
net (1,306,466) (3,231,356) (837,608) (2,152,811)
------------ ------------ ------------ ------------
Loss before income
taxes (7,540,643) (6,717,239) (5,334,361) (4,194,989)
Income tax expenses (267,218) (170,065) (49,954) (174,972)
------------ ------------ ------------ ------------
Loss before
minority interest
in earnings of a
subsidiary (7,807,861) (6,887,304) (5,384,315) (4,369,961)
Minority interest
in earnings of a
subsidiary (71,153) (26,708) (38,199) (26,162)
------------ ------------ ------------ ------------
Loss from
continuing
operations (7,879,014) (6,914,012) (5,422,514) (4,396,123)
Loss from
discontinued
operations (200,000) - (200,000) -
------------ ------------ ------------ ------------
Net loss (8,079,014) (6,914,012) (5,622,514) (4,396,123)
Deemed dividend to
certain
stockholders - (1,163,000) - -
------------ ------------ ------------ ------------
Net loss
attributable to
common
stockholders $(8,079,014) $(8,077,012) $(5,622,514) $(4,396,123)
============ ============ ============ ============
Basic and diluted
net loss per share
from continuing
operations $ (0.10) $ (0.11) $ (0.07) $ (0.07)
============ ============ ============ ============
Basic and diluted
net loss per share
from discontinued
operation $ (0.00) $ - $ (0.00) $ -
============ ============ ============ ============
Basic and diluted
net loss per share$ (0.10)$ (0.13)$ (0.07)$ (0.07)
============ ============ ============ ============
Weighted average
number of shares
used in computing
basic and diluted
net loss per share 80,441,575 62,035,532 80,780,149 64,499,090
============ ============ ============ ============
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 (Loss) Before Interest, Taxes, Depreciation and Amortization (EBITDA) to enhance overall understanding of Arotech's current financial performance and its progress towards GAAP profitability.
EBITDA
----------------------------------------------------------------------
Six months ended Three months ended
June 30, June 30,
------------------------- -------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net loss from
continuing
operations before
deemed dividend to
certain
shareholders (GAAP
measure) $(7,879,014) $(6,914,012) $(5,422,514) $(4,396,123)
Add back:
Interest expense
(income), net
(after deduction
of minority
interest) 1,308,092 3,232,944 839,115 2,152,231
Taxes (after
deduction of
minority interest) 243,884 154,290 42,857 159,196
Depreciation of
fixed assets
(after deduction
of minority
interest) 606,589 518,332 308,479 281,924
Amortization of
intangible assets 1,710,325 1,010,351 856,529 505,175
Impairment of
goodwill and other
intangible assets 2,389,129 - 2,389,129 -
------------ ------------ ------------ ------------
EBITDA (LBITDA)
(non-GAAP measure) $(1,620,995) $(1,998,095) $(986,405) $(1,297,597)
============ ============ ============ ============
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion