Arotech Corporation Reports Results for the Fourth Quarter and Full Year, 2008

Full Year Revenues up by 20% Over 2007 -- 4th Quarter Operating Profit at $927,000

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Symbol	Price	Change
ARTX	1.57	-0.01

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ANN ARBOR, MI--(MARKET WIRE)--Mar 30, 2009 -- Arotech Corporation (NasdaqGM:ARTX - News), a provider of quality defense and security products for the military, law enforcement and security markets, today reported results for the quarter and full year ended December 31, 2008.

Fourth Quarter Results

Revenues for the fourth quarter reached $23.9 million, compared to $17.7 million for the corresponding period in 2007, an increase of 35%.

Gross profit for the fourth quarter was $7.0 million, or 29% of revenues, compared to $5.8 million, or 33% of revenues, for the corresponding period in 2007, a 4 point decrease in the gross margin percentage.

The Company reported an operating profit for the fourth quarter of $927,000 compared to an operating profit of $368,000 for the corresponding period in 2007.

The Company's net loss for the fourth quarter of 2008 was $(624,000), or $(0.05) per share, compared to a net profit of $465,000, or $0.04 per share, for the corresponding period in 2007.

"In the most difficult economic environment in recent memory, Arotech managed to stay essentially flat compared to last year," said Arotech Chairman and CEO Robert S. Ehrlich. "We regard this as a significant accomplishment, and hope that when the economy improves our results will as well," concluded Ehrlich.

Full Year Results

Revenues for 2008 were $68.9 million, compared to $57.7 million for 2007, an increase of 20%.

Gross profit for 2008 was $18.8 million, or 27% of revenues, compared to $18.1 million, or 31% of revenues, for 2007, a 4 point decrease in the gross margin percentage.

The Company reported an operating loss for 2008 of $(1.7) million, compared to an operating loss of $(2.5) million in 2007.

The Company's net loss for 2008 was $(3.6) million, or $(0.28) per share, compared to a net loss of $(3.5) million, or $(0.31) per share, for 2007.

Backlog

Backlog of orders totaled approximately $36.6 million as of December 31, 2008.

Cash Position at Year End

The Company had trade receivables of $19.3 million as of December 31, 2008, compared to $14.6 million as of December 31, 2007. The Company had a current ratio (current assets/current liabilities) of 1.70, down from the December 31, 2007 current ratio of 1.93.

As of December 31, 2008, the Company had $4.3 million in cash, $382,000 in restricted collateral securities and restricted held-to-maturity securities due within one year, and $49,000 in available-for-sale marketable securities, as compared to December 31, 2007, when the Company had $3.4 million in cash, $320,000 in restricted collateral securities and restricted held-to-maturity securities due within one year, $1.5 million in an escrow receivable, and $47,000 in available-for-sale marketable securities.

The Company ended 2008 with $5.1 million in short- and long-term notes and $3.6 million in bank debt. The Company also had $3.1 million available in unused bank lines of credit at year end in its primary bank.

Stockholders' equity at the end of the year was approximately $53.5 million.

Conference Call

The Company will host a conference call tomorrow, Tuesday, March 31, 2009 at 9:00 am EDT. Those wishing to access the conference call should dial 1-877-407-9210 (U.S.) or 1-201-689-8049 (international) a few minutes before the 9:00 a.m. EDT start time. The confirmation code is 317763. A replay of the conference call will be available starting Tuesday, March 31, 2009 at 10:30 am EDT until Monday, April 6, 2009 at 11:59 p.m. The replay telephone number is 1-877-660-6853 (U.S) and 1-201-612-7415 (international). The replay pass code is: 317763.

About Arotech Corporation

Arotech Corporation is a leading provider of quality defense and security products for the military, law enforcement and homeland security markets. Arotech provides multimedia interactive simulators/trainers, lightweight armoring and advanced zinc-air and lithium batteries and chargers. Arotech operates through three major business divisions: Armor, Training and Simulation, and Batteries and Power Systems.

Arotech is incorporated in Delaware, with corporate offices in Ann Arbor, Michigan and research, development and production subsidiaries in Alabama, Michigan and Israel.

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, including the effect of any share repurchases by Arotech. Forward-looking statements reflect management's current knowledge, assumptions, judgment and expectations regarding future performance or events. Although management believes that the expectations reflected in such statements are reasonable, 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 materially. 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; dilution resulting from issuances of Arotech's common stock upon conversion or payment of its outstanding convertible debt, which would be increasingly dilutive if and to the extent that the market price of Arotech's stock decreases; and other risk factors detailed in Arotech's most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2007, 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 into this press release.

 
                          AROTECH CORPORATION
           CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

                          Year ended               Three months ended
                         December 31,                  December 31,
                    --------------------------  --------------------------
                        2008          2007          2008          2007
                    ------------  ------------  ------------  ------------
Revenues            $ 68,948,969  $ 57,719,561  $ 23,874,878  $ 17,708,547
Cost of revenues,
 exclusive of
 amortization of
 intangibles          50,177,909    39,639,812    16,921,095    11,875,303
Research and
 development           1,657,668     1,877,163       426,138       463,311
Selling and
 marketing expenses    4,699,870     4,164,464     1,409,371     1,165,238
General and
 administrative
 expenses             13,843,764    13,158,297     3,818,106     3,351,329
Amortization of
 intangible assets     1,735,548     1,381,882       373,297       485,776
Escrow adjustment -
 credit               (1,448,074)            -             -             -
                    ------------  ------------  ------------  ------------
Total operating
 costs and expenses   70,666,685    60,221,618    22,948,007    17,340,957
                    ------------  ------------  ------------  ------------
Operating profit
 (loss)               (1,717,716)   (2,502,057)      926,871       367,590
Other income
 (expenses)              422,883       617,952      (247,600)      542,500
Financial expenses,
 net                    (814,089)     (905,888)     (472,457)     (198,663)
                    ------------  ------------  ------------  ------------
Profit (loss)
 before minority
 interest in
 earnings of
 subsidiaries,
 earnings from
 affiliated
 company, and
 income tax
 expenses             (2,108,922)   (2,789,993)      206,814       711,427
Income taxes          (1,026,868)     (608,916)     (640,178)     (310,723)
Minority interests
 in earnings of
 subsidiaries                  -       (62,296)            -       (34,894)
Gain (loss) from
 affiliated company     (452,166)      (40,230)     (190,959)       99,495
                    ------------  ------------  ------------  ------------
Net profit (loss)   $ (3,587,956) $ (3,501,435) $   (624,323) $    465,305
                    ============  ============  ============  ============
Basic and diluted
 net profit (loss)
 per share          $      (0.28) $      (0.31) $      (0.05) $       0.04
                    ============  ============  ============  ============
Weighted average
 number of shares
 outstanding          12,605,786    11,274,387    12,634,971    12,299,756
                    ============  ============  ============  ============

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     TTC Group
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