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Q4 2007 Arotech Corporation Earnings Conference Call - Final.

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Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good day, everyone, and welcome to the Arotech fourth quarter and year end teleconference. As a reminder, today's conference will be recorded. At this time, I would like to turn the conference over to your host, Mr. Victor Allgeier. Please go ahead.

VICTOR ALLGEIER, PRESIDENT, TTC GROUP: Thank you, and good morning, everyone. My name is Vic Allgeier with the TTC Group, Arotech's Investor Relations Firm. Yesterday, Arotech released its fiscal 2007 fourth quarter and year end results. By now, you should have received a copy of the press release. If you have not received the release, please call our office at 646-290-6400. The release is also available on Arotech's website at www.arotech.com. Representing the company today are Robert S Ehrlich, Chairman and Chief Executive Officer, and Tom Paup, Vice President--Finance and Chief Financial Officer. Bob and Tom will deliver prepared remarks first, and then we will open the call up to your questions.

I would like to remind you that in order to help you understand the company and its results, management may make some forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 during the course of this call. Forward-looking statements that can be identified by words such as expect, predict, anticipate and others, reflect management's current knowledge, assumptions, judgment and expectations regarding future performance or events. Although management believes that 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 are detailed in Arotech's filings with the Securities and Exchange Commission, Arotech assumes no obligation to update this information in the call. Reference to Arotech's website does not constitute incorporation of any of the information thereon into this conference call.

I would now like to introduce Arotech's Chairman and CEO, Mr. Robert Ehrlich. Bob?

ROBERT EHRLICH, CHAIRMAN, CEO, AROTECH CORPORATION: Thank Vic, and good morning, everyone. Thank you for joining us. We're delighted to report that 2007 turned out to be Arotech's best year ever. Revenues reached $57 million, and the company achieved positive earnings per share for the first time ever during the fourth quarter. Company fundamentals improved greatly during 2007 with all of our outstanding long-term financial debt being retired. Overhead and other expenses showing continued improvement throughout the year.

We expect to see growing demand across many of our product lines in 2008, as worldwide hostile conflicts continue and more training and supplies are required. With continued improvement in expense control systems and a need for Arotech products, we are optimistic that 2008 revenue will surpass 2007, although the worsening economic environment will pose some challenges for us. Divisionally, revenues were the strongest in the company's history, reaching $9.9 million in the fourth quarter, for the year, $27.8 million. Simulation revenues continued to represent the largest percentage of the company's sales, ranging from 56% for...