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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 12, 2004
AROTECH CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-23336 95-4302784
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
250 WEST 57TH STREET, SUITE 310, NEW YORK, NEW YORK 10107
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 258-3222
632 BROADWAY, SUITE 1200, NEW YORK, NEW YORK 10012
(Former name or former address, if changed since last report)
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits. A list of exhibits required is given in the Exhibit Index
that precedes the exhibits filed with this report.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On May 12, 2004, we publicly disseminated an earnings release (the
"Release") announcing our financial results for the quarter ended March 31,
2004. A copy of the Release is attached as Exhibit 99.1 hereto.
The information included in the attached Exhibit 99.1 is being
furnished and shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that Section, or incorporated by reference in any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except as shall be expressly set forth by specific reference in such
a filing.
To supplement the consolidated financial results as determined in
accordance with generally accepted accounting principles ("GAAP"), the Release
presents a non-GAAP financial measure, "Adjusted LBITDA" (Loss Before Interest,
Taxes, Depreciation and Amortization, adjusted to eliminate certain non-cash
charges). We believe that the use of Adjusted LBITDA enhances overall
understanding of our current financial performance. As required by the
Securities and Exchange Commission, Adjusted LBITDA is reconciled to Net Profit
(Loss) in the Release.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AROTECH CORPORATION
(REGISTRANT)
By: /s/ Robert S. Ehrlich
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Name: Robert S. Ehrlich
Title: President, Chairman of the Board
and Chief Executive Officer
Dated: May 12, 2004
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EXHIBIT INDEX
The following exhibits are filed with the Current Report on Form 8-K.
EXHIBIT
NUMBER DESCRIPTION
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99.1 Earnings press release dated May 12, 2004
3
[AROTECH LOGO]
EARNINGS NEWS
250 West 57th Street, Suite 310, New York, NY 10107
Tel: (212) 258-3222 o Fax: (212) 258-3281
www.arotech.com
FOR IMMEDIATE RELEASE
AROTECH REPORTS RECORD FIRST QUARTER REVENUES
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Revenues up 78% over last year; backlog stands at $27 million
NEW YORK, NEW YORK, MAY 12, 2004 - AROTECH CORPORATION (NASDAQNM:
ARTX), a provider of quality defense and security products for the military, law
enforcement and homeland security markets, today reported its first quarter 2004
results.
The Company reported that revenues for the quarter were $7.2 million,
an increase of 78% over the corresponding period in 2003. The Company also
reported that backlog as of the end of April 2004 stood at $26.9 million, which
amount does not include the $2.1 million in orders shipped in April and not
reflected in the first quarter's financial results. Loss increased over the same
period last year, primarily due to non-cash charges associated with acquisitions
and financings.
Commenting on the results, Arotech Chairman and CEO Robert S. Ehrlich
said, "The sustained quarter-to-quarter increase in our revenues and backlog
continues to validate the change in our business model. We are on plan, we stand
by the guidance we gave earlier in 2004, and we continue to look forward to
moving to being cash-flow positive in the second half," concluded Ehrlich.
CONFERENCE CALL
Arotech Corporation will hold its first quarter 2004 conference call on
Thursday, May 13, 2004 at 10:00 a.m. EDT. Those wishing to take part in the
conference call should call 1-800-310-1961(US) or +1-719-457-2692
(international) a few minutes before the 10:00 a.m. EDT start time. In addition,
an instant replay will be available Thursday, May 13, 2004 at 1:00 p.m. EDT
until Friday, May 14, 2004 at 11:59 p.m. EDT. The replay telephone number is
1-888-203-1112 (US); +1-719-457-0820 (international). The confirmation number is
130143.
RESULTS FOR THE FIRST QUARTER
REVENUES FOR THE QUARTER ended March 31, 2004 increased to $7.2
million, as compared with $4.0 million for the corresponding period of 2003, an
increase of $3.1 million, or 78%. This increase is largely attributed to strong
sales in the Company's Armored Vehicle Division and in its Battery and Power
Systems Division, as well as the addition of the results of the Company's new
acquisitions, FAAC and Epsilor, to its results.
GROSS PROFIT for the quarter ended March 31, 2004 increased to $2.6
million, as compared with $1.4 million for the corresponding period of 2003, an
increase of $1.2 million, or 88%, with a gross margin of 37%. This increase is
largely attributed to strong sales in the Company's Armored Vehicle Division and
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in its Battery and Power Systems Division, as well as the addition of the
results of the Company's new acquisitions, FAAC and Epsilor, to its results.
ADJUSTED LOSS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
(ADJUSTED LBITDA), excluding discontinued operations and adjusted to eliminate
certain non-cash charges described below and in the table below, for the quarter
ended March 31, 2004 was $(681,000), as compared with Adjusted LBITDA of
$(553,000) for the corresponding period of 2003. Arotech believes that
information concerning Adjusted LBITDA enhances overall understanding of its
current financial performance. Arotech computes Adjusted LBIDTA, which is a
non-GAAP financial measure, as reflected in the table below.
NON-CASH ITEMS in this quarter included a charge $1.6 million,
primarily related to the repricing and issuance of warrants to investors.
NET LOSS for the quarter ended March 31, 2004, as a result of the
factors described above and in the table below, increased to $(4.3) million, as
compared with a net loss of $(1.4) million for the corresponding quarter of
2003.
BASIC AND DILUTED NET LOSS PER SHARE for the quarter ended March 31,
2004 was $(0.07), as compared with a loss of $(0.04) for the corresponding
period of 2003.
CASH POSITION AT QUARTER END
CASH-ON-HAND AND CASH EQUIVALENTS, RESTRICTED COLLATERAL DEPOSITS AND
OTHER RESTRICTED CASH, AND AVAILABLE-FOR-SALE MARKETABLE SECURITIES stood at the
end of the quarter at $4.9 million in cash, $5.7 million in restricted
collateral securities and cash deposits due within one year, $3.8 million in
long-term restricted securities and deposits, and $124,000 in marketable
securities, as compared to at the end of 2003, when the Company had $13.7
million in cash and $706,000 in restricted cash deposits due within one year.
STOCKHOLDERS' EQUITY stood at the end of the quarter at approximately
$44.0 million.
ABOUT AROTECH CORPORATION
Arotech Corporation provides quality defense and security products for
the military, law enforcement and homeland security markets, including advanced
zinc-air and lithium batteries and chargers, multimedia interactive
simulators/trainers and lightweight vehicle armoring.
The Battery and Power Systems Division includes Electric Fuel Battery
Corporation and Epsilor Electronic Industries. The Simulation, Training and
Consulting Division includes IES Interactive Training, FAAC Incorporated and
Arocon Security Consulting. The Armored Vehicle Division includes MDT Armor
Corp. and MDT Protective Industries Ltd.
Arotech is incorporated in Delaware, with corporate offices in New
York, and research, development and production subsidiaries in Alabama,
Colorado, Michigan and Israel.
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COMPANY CONTACT:
Jonathan Whartman
Senior VP, Communications
1-866-325-6963
whartman@arotech.com
NY Office 1-212-258-3222
EXCEPT FOR THE HISTORICAL INFORMATION HEREIN, THE MATTERS DISCUSSED IN THIS NEWS
RELEASE INCLUDE FORWARD-LOOKING STATEMENTS, AS DEFINED IN THE PRIVATE SECURITIES
LITIGATION REFORM ACT 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: 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 FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2003 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 INTO THIS PRESS RELEASE.
TABLES TO FOLLOW
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AROTECH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED MARCH 31,
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2004 2003
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Revenues ........................................................ $ 7,182,254 $ 4,033,453
Cost of revenues ................................................ 4,557,220 2,633,719
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Gross profit .................................................... 2,625,034 1,399,734
Research and development ........................................ 463,506 358,039
Selling and marketing expenses .................................. 1,021,084 703,987
General and administrative expenses ............................. 3,680,993 1,012,755
Amortization of intangible assets ............................... 496,013 311,771
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5,661,596 2,386,552
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Operating loss .................................................. (3,036,562) (986,818)
Financial expenses, net ......................................... (1,273,954) (261,075)
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Net loss before taxes ........................................... (4,310,516) (1,247,893)
Tax income, net ................................................. 4,907 --
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Net loss before minority interest in profit of a subsidiary ..... (4,305,609) (1,247,893)
Profit to minority .............................................. (546) (43,228)
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Net loss from continuing operations ............................. (4,306,155) (1,291,121)
Net loss from discontinued operations ........................... -- (95,962)
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Net loss for the period ......................................... (4,306,155) $ (1,387,083)
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Basic and diluted net loss per share from continuing operations . $ (0.07) $ (0.04)
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Basic and diluted net earnings (loss) per share from discontinued
operations ................................................... $ -- $ (0.00)
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Combined basic and diluted net loss per share ................... $ (0.07) $ (0.04)
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Weighted average number of shares outstanding ................... 59,406,466 34,758,960
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
To supplement Arotech's consolidated financial statements presented in
accordance with GAAP, Arotech uses a non-GAAP measure, Loss Before Interest,
Taxes, Depreciation and Amortization (LBITDA), as adjusted to eliminate certain
non-cash charges (Adjusted 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 Adjusted LBITDA to the nearest GAAP measure follows:
ADJUSTED LBITDA
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THREE MONTHS ENDED MARCH 31,
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2004 2003
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Net loss from continuing operations (GAAP measure) ..................... $(4,306,155) $(1,291,121)
Add back:
Interest expense (income), net (after deduction of minority interest) 1,276,122 245,466
Tax (income) expenses (after deduction of minority interest) ......... (4,907) --
Depreciation of fixed assets ......................................... 236,408 180,591
Amortization of intangible assets and capitalized research and
development expenses .............................................. 505,176 311,771
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LBITDA (non-GAAP measure) .............................................. (2,293,356) (553,293)
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Add back certain non-cash charges:
Expenses attributed on issuance of shares and options to consultants
and employees ..................................................... 19,780 --
Expenses attributed on repricing and issuance of warrants to investors 1,592,857 --
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ADJUSTED LBITDA (non-GAAP measure) ..................................... $ (680,719) $ (553,293)
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