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

ANN ARBOR, MI, Mar 30 (MARKET WIRE) --
Arotech Corporation (NASDAQ: ARTX), 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
============ ============ ============ ============

CONTACT:
Victor Allgeier
TTC Group
(646) 290-6400
Email Contact

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