ALLIED DEFENSE GROUP 
By Reports Strong Full-Year Revenue and Backlog Growth
Highlights
-- Revenue of $144.4 million, an increase of 274% over 2007
-- EBITDA* from continuing operations of $6.4 million, compared to negative
$18.6 million in 2007
-- Funded, committed backlog of $185.9 million at year-end 2008, a 71%
increase over 2007
-- The repayment of all convertible bonds and bank debt
-- The closed sales of Global Microwave Systems for $26.0 million and Titan
Dynamics Systems for $4.8 million
"2008 was a year of transformation and delivering on commitments for The Allied Defense Group," said Major General (Ret)
"As we focus our strategy, we are also significantly improving our financial profile, building a large, funded, and committed backlog, fully paying down our convertible debt, and establishing the financing facilities that we require for working capital purposes. We no longer face the significant interest payments from our debt, we have increased financing flexibility required to convert our backlog into revenues going forward, and we will generate cash."
*EBITDA is a non-GAAP measure. See reconciliation of EBITDA in the attached financial table.
2008 Segment Highlights:
* Mecar SA
-- Year-end backlog of $136.4 million, an increase of 44% over 2007
-- Received $68.0 million in funding for the second tranche of its
$167.0 million ammunition contract
-- Received orders totaling approximately $43.5 million from a new
client in the Middle East, for Mecar SA's 105mm tank ammunition
-- Received a $15.0 million contract from a new North African customer
-- Awarded and committed to an ammunition manufacturing and assembly
joint venture in Jordan with King Abdullah II Design and Development
Bureau
* Mecar USA
-- Year-end backlog of $49.5 million, an increase of 255% over 2007
-- Awarded first direct fire ammunition contract worth $7.4 million,
teamed with a major U.S. defense contractor
-- Awarded approximately $42.0 million portion of an $87.0 million non-
standard ammunition contract for Afghanistan, teamed with a major
U.S. defense contractor
-- Received $11.5 million contract from a former Soviet republic for
the supply of NATO-approved ammunition
Fourth Quarter Summary
Revenue was
Gross profit as a percentage of revenues was 5% in the fourth quarter of 2008, compared to 27% for the same period in 2007. The decline in gross profit was the result of the aforementioned charge to revenues, which impacted gross profit margin in the fourth quarter of 2008. Gross profit margin in the fourth quarter of 2007 was unusually high due to the mix of revenue as well.
Net loss from continuing operations was
Full Year 2008 Summary
Revenue was
Gross profit as a percentage of revenues was 14% for the full year 2008, up significantly from negative 7% in 2007. The improvement in gross margins was driven by higher revenue levels and improved efficiencies, offset slightly by the aforementioned
Net loss from continuing operations for the full year 2008 was
The net loss from continuing operations in 2008 includes three significant non-cash items: losses relating to changes in fair value of the Company's participating forward European currency contracts of
Diluted loss per share from continuing operations was
EBITDA for the full year 2008 was
The decrease in cash used from continuing operations resulted from a significantly lower net loss of
Conference Call
The Company will host a conference call to discuss these results on
The Allied Defense Group, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars, except per share and share data)
Three months Ended Years Ended
December 31, December 31,
2008 2007 2008 2007
Revenues $28,060 $21,859 $144,424 $38,603
Cost and expenses
Cost of sales 26,646 15,947 123,969 41,245
Selling and administrative 4,327 4,685 19,452 21,495
Research and development 610 502 2,277 1,617
Impairment of long-lived
assets - - 462 -
Operating (loss) income (3,523) 725 (1,736) (25,754)
Other income (expenses)
Interest income 223 325 734 703
Interest expense (933) (1,529) (6,403) (10,878)
Net (loss) gain on fair value
of senior convertible notes
and warrants (422) 23 (1,104) (6,663)
Other-net 57 (382) (2,253) (562)
(1,075) (1,563) (9,026) (17,400)
Loss from continuing
operations before income
taxes (4,598) (838) (10,762) (43,154)
Income tax (benefit) expense (281) - 214 -
Loss from continuing
operations (4,317) (838) (10,976) (43,154)
Income (loss) from discontinued
operations, net of tax
Gain (loss) on sale of
subsidiaries 2,637 (460) 2,750 29,314
Loss from discontinued
operations (153) (254) (2,216) (7,438)
2,484 (714) 534 21,876
NET LOSS $(1,833) $(1,552) $(10,442) $(21,278)
Earnings (Loss) per share -
basic and diluted:
Net loss from continuing
operations $(0.53) $(0.10) $(1.36) $(5.96)
Net earnings (loss) from
discontinued operations 0.31 (0.09) 0.07 3.02
Total loss per share -
basic and diluted $(0.22) $(0.19) $(1.29) $(2.94)
Weighted average number of
common shares:
Basic and Diluted 8,079,020 8,014,514 8,045,239 7,244,983
The operating income (loss) adjusted for non-recurring charges and Electronic Security (ES) segment results have been provided to attempt to show what the Company's operating results would have looked like after the intended disposition of the remaining subsidiary in the Company's ES segment and excluding impairments recorded in the current period for ES goodwill and the impairment of the Company's ERP system. In the fourth quarter of 2008, the Company committed to a formal plan to sell NSM, the last remaining business in the ES segment. The operating income (loss) adjusted for non-recurring charges and the ES segment results is not intended to present a measure of performance in accordance with accounting principles generally accepted in
The Allied Defense Group, Inc.
Calculation of EBITDA from continuing operations
(All amounts in thousands of U.S. Dollars)
Three months ended Year ended
December 31, December 31,
2008 2007 2008 2007
Consolidated Net Loss from
continuing operations $(4,317) $(838) $(10,976) $(43,154)
Any extraordinary or non
recurring gains or losses
Write-down of Goodwill and
long-lived assets - - 462 -
Loss (gain) from fair value
of notes and warrants 422 (23) 1,104 6,663
Loss from Sale of Fixed
Assets - 3 231 3
Non-cash expenses
associated with stock
compensation expense 154 194 590 918
Tax refunds, use of net
operating losses to offset
taxes or other net tax
benefits - - - 45
Adjusted Net Loss from
continuing operations $(3,741) $(664) $(8,589) $(35,525)
Interest Income (223) (325) (734) (703)
Interest Expense 933 1,529 6,403 10,878
Income tax (benefit)
expense (281) - 214 -
Depreciation and
Amortization Expense 1,107 1,425 5,147 4,928
Any non-cash transactions:
Foreign currency (gains)
losses (111) 148 2,366 252
Adjustments related to
Inventory 874 246 1,159 1,331
Other non-cash charges 294 42 452 226
Consolidated EBITDA from
continuing operations $(1,148) $2,401 $6,418 $(18,613)
Earnings before interest, taxes, depreciation and amortization, non-cash stock compensation and payments, non-cash charges that do not result in future cash obligations, any extraordinary or non recurring gains (losses) and any non-cash transactions (EBITDA) is not intended to present a measure of performance in accordance with accounting principles generally accepted in
The Allied Defense Group, Inc.
Condensed Consolidated Balance Sheet
(All amounts in thousands of U.S. Dollars)
December 31,
ASSETS 2008 2007
Current Assets
Cash and cash equivalents $8,816 $21,651
Restricted cash 9,666 13,052
Accounts receivable, net 12,646 6,064
Costs and accrued earnings on uncompleted
contracts 21,999 37,764
Inventories, net 21,508 20,950
Fair value of foreign exchange contracts
Prepaid and other current assets 4,606 3,947
Assets held for sale 4,474 32,525
Total current assets 83,715 135,953
Property, Plant and Equipment, net 19,525 24,047
Other Assets 459 251
Intangible assets, net
Long-term inventory 3,072 2,412
Other assets 459 251
Total other assets 3,531 2,663
TOTAL ASSETS $103,699 $160,251
CURRENT LIABILITIES
Current maturities of senior secured
convertible notes $933 $13,610
Bank overdraft facility 381 7,239
Current maturities of foreign exchange
contract 405 -
Current maturities of long-term debt 2,659 823
Accounts payable 14,536 15,555
Accrued liabilities 16,099 15,264
Customer deposits 16,731 26,666
Belgium social security 3,522 8,307
Income taxes 3,913 3,664
Liabilities held for sale 1,316 7,404
Total current liabilities 60,495 98,532
LONG TERM OBLIGATIONS
Long-term debt, less current maturities
and unamortized discount 6,681 9,439
Senior secured convertible notes, less
current maturities - 5,782
Long-term foreign exchange contract, less
current maturities 1,072 -
Derivative instrument 318 183
Other long-term liabilities 682 660
Total long-term obligations 8,753 16,064
TOTAL LIABILITIES 69,248 114,596
CONTINGENCIES AND COMMITMENTS
STOCKHOLDERS' EQUITY
Preferred stock, no par value; authorized
1,000,000 shares; none issued - -
Common stock, par value, $.10 per share;
authorized 30,000,000 shares; issued and
outstanding, 8,079,509 in 2008 and
8,013,161 in 2007 808 801
Capital in excess of par value 55,912 55,355
Accumulated deficit (38,351) (27,909)
Accumulated other comprehensive income 16,082 17,408
Total stockholders' equity 34,451 45,655
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $103,699 $160,251
About The Allied Defense Group, Inc.
The Allied Defense Group, Inc. is a multinational defense company focused on the manufacture, sale and distribution of ammunition and ammunition related products for use by the U.S. and foreign governments.
For more information, please visit the Company web site: www.allieddefensegroup.com.
Certain statements contained herein are "forward looking" statements as such term is defined in the Private Securities Litigation Reform Act of 1995. Because statements include risks and uncertainties, actual results may differ materially from those expressed or implied and include, but are not limited to, those discussed in filings by the Company with the Securities and Exchange Commission.
For More Information, Contact:
Geoff Grande, CFA
FD
617-747-1721
SOURCE The Allied Defense Group, Inc.
