Arotech Corporation Reports Record First Quarter Revenues and Gross Profit.Business Editors NEW YORK--(BUSINESS WIRE)--May 12, 2003 Loss Dramatically Reduced - Strategic Shift to Defense 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 "Beginning to Pay Off" Arotech Corporation (NasdaqNM: ARTX), a provider of quality advanced zinc-air batteries Zinc-air batteries, also called “zinc-air fuel cells,“ are non-rechargeable electro-chemical batteries powered by the oxidation of zinc with oxygen from the air. These batteries have very high energy densities and are relatively inexpensive to produce. , multimedia interactive simulators/trainers and lightweight armoring armoring (ärˑ·m  ·ring),n for the military, law enforcement and homeland security markets, today reported first quarter 2003 results. Revenues for the quarter ended March 31, 2003 increased to $4.0 million as compared with $571,000, excluding 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 corresponding period of 2002. Gross profit for the quarter ended March 31, 2003 increased to $1.4 million as compared with $187,000 for the corresponding period of 2002. The respective increases are largely attributed to strong sales in the Defense and Security Products Division (IES and MDT MDT abbr. Mountain Daylight Time MDT (in the US and Canada) Mountain Daylight Time MDT n abbr (US) (= mountain daylight time) → ) and initial sales of military batteries in the Battery Division. Loss Before Interest, Taxes, Depreciation and Amortization (LBITDA), excluding discontinued operations, for the quarter ended March 31, 2003 decreased to $538,000 as compared with $1.1 million for the corresponding period of 2002. Arotech believes that information concerning LBITDA 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 LBIDTA, which is a non-GAAP financial measure, as reflected in the table below. Net loss for the quarter ended March 31, 2003 decreased to $1.4 million as compared with $3.3 million for the corresponding quarter of 2002. Combined 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 for the quarter ended March 31, 2003 narrowed to $0.04 as compared with $0.11 for the corresponding period of 2002. Cash-on-hand and cash equivalents and certificate of deposit due within one year stood at the end of the quarter at approximately $2.5 million with backlog of orders in excess of $6.5 million. 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. 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 commented, "We have begun to see positive results from our turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. program. Our IES and MDT subsidiaries are performing well, and our military battery business is starting to come on stream. We are pleased that our strategy to shift to defense and homeland security is beginning to pay off," concluded Ehrlich. Conference Call Arotech Corporation will hold it first quarter 2003 conference call on Tuesday, May 13, 2003 at 10:00 AM EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . To take part in the conference call, please call 1-800-500-0177 (US) or +1-719-457-2679 (International) a few minutes before the 10:00 AM EDT start time. For your convenience, an instant replay will be available Tuesday May 13, 2003 at 1:00 PM EDT until Thursday, May 15, 2003 at 8:00 PM EDT. The replay telephone number is 1-888-203-1112 (US); +1-719-457-0820 (International). The confirmation number is 364841. About Arotech Corporation Arotech's corporate mission is to provide quality defense and security products for the military, law enforcement and homeland security markets, including advanced zinc-air batteries, multimedia interactive simulators/trainers and lightweight armoring. Arotech Corporation (www.arotech.com) operates two business divisions: Electric Fuel Batteries - developing and manufacturing zinc-air batteries for military and homeland security applications and developing electric vehicle batteries for zero emission Zero emission refers to an engine, motor, or other energy source, that emits no waste products that pollutes the environment or disrupts the climate. Zero emission engines public transportation; and Arotech Defense - consisting of IES Interactive, which provides advanced high-tech multimedia training systems for law enforcement and paramilitary organizations Noun 1. paramilitary organization - a group of civilians organized in a military fashion (especially to operate in place of or to assist regular army troops) paramilitary, paramilitary force, paramilitary organisation, paramilitary unit , and MDT Armor, which provides vehicle armoring for the military, industrial and private sectors. Arotech is incorporated in Delaware under the name "Electric Fuel Corporation" and has corporate and sales offices in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and Denver with research, development and production subsidiaries in Alabama, Colorado 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; significant future capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. ; 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. for the fiscal year ended December 31, 2002 and other filings (under the name Electric Fuel Corporation) 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. ELECTRIC FUEL CORPORATION (DOING BUSINESS AS AROTECH CORPORATION) CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended March 31,
2003 2002
------------- -------------
Revenues $ 4,033,453 $ 570,545
Cost of revenues 2,633,719 383,628
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Gross profit 1,399,734 186,917
Research and development 358,039 100,500
Selling and marketing expenses 703,987 56,940
General and administrative expenses 1,012,755 1,248,452
Amortization of intangible assets and
in-process 311,771 -
------------- -------------
2,386,552 1,405,892
------------- -------------
Operating loss (986,818) (1,218,975)
Financial (expenses) income, net (261,075) 64,164
------------- -------------
Loss before minority interest in profit
of a subsidiary (1,247,893) (1,154,811)
Minority interest in profit of a
subsidiary (43,228) -
------------- -------------
Net loss from continuing operations (1,291,121) (1,154,811)
Net loss from discontinued operations (95,962) (2,159,398)
------------- -------------
Net loss for the period $ (1,387,083) $ (3,314,209)
============= =============
Basic and diluted net loss per share
from continuing operations $ (0.04) $ (0.04)
============= =============
Basic and diluted net loss per share
from discontinued operations $ (0.00) $ (0.07)
============= =============
Combined basic and diluted net loss per
share $ (0.04) $ (0.11)
============= =============
Weighted average number of shares
outstanding 34,758,960 30,149,210
============= =============
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, Loss Before Interest, Taxes, Depreciation and Amortization (LBITDA). 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 LBITDA to the nearest GAAP measure follows:
LBITDA
Three months ended March 31,
2003 2002
------------- -------------
Net loss from continuing operations
(GAAP measure) $ (1,291,122) $ (1,154,811)
Add back:
Interest expense (income), net 261,075 (64,164)
Taxes - -
Depreciation of fixed assets 180,591 139,500
Amortization of intangible assets 311,771 -
------------- -------------
LBITDA (non-GAAP measure) $ (537,685) $ (1,079,475)
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