Simulator Companies To Combine Efforts

Arotech Corporation says it's entered into a definitive agreement to acquire FAAC, a privately-owned corporation with headquarters located in Ann Arbor (MI). For more than 30 years, FAAC has provided simulators, systems engineering and software products to the United States military, government and private industry. This acquisition will significantly expand Arotech's simulation business into the military arena. The closing of this transaction is expected to take place next week.

FAAC management will stay with the company and will continue to manage FAAC as a wholly-owned subsidiary of Arotech.

FAAC is a leading provider of driving simulators. FAAC's fully interactive driver-training systems feature state-of-the-art vehicle simulator technology enabling training in situation awareness, risk analysis and decision making, emergency reaction and avoidance procedures, and conscientious equipment operation. FAAC has an installed base of 169 simulators that have successfully trained over 78,000 drivers. FAAC's customer base includes all branches of the Department of Defense, state and local governments, and commercial entities.

FAAC is the premier developer of validated, high fidelity analytical models and simulations of tactical air and land warfare for all branches of the Department of Defense and its related industrial contractors. Simulations developed by FAAC are found in systems ranging from instrumented air combat and maneuver ranges (such as Top Gun) to full task training devices such as the F-18 Weapon Tactics Trainer.

FAAC supplies on-board software to support weapon launch decisions for the F-15, F-18, and Joint Strike Fighter (JSF) fighter aircraft. Pilots benefit by having highly accurate presentations of their weapon's capabilities, including susceptibility to target defensive reactions.

FAAC designed and developed an Instructor Operator Station (IOS), Mission Operator Station (MOS) and real-time, database driven Electronic Combat Environment (ECE) for the Special Operational Forces Aircrew Training System (SOF ATS). The SOF ATS provides a full range of aircrew training, including initial qualification, mission qualification, continuation, and upgrade training, as well as combat mission rehearsal.

"This acquisition will significantly increase our revenues and lead us to consistent EBITDA profitability in 2004," said Robert S. Ehrlich, Arotech's Chairman, President and CEO. "Furthermore, combining the strengths of FAAC, a leader in the military markets, and IES Interactive, a leader in simulators for the law enforcement market, clearly presents significant synergy advantages for Aerotech."

Arotech also reported that it has not yet reached a satisfactory agreement with the lithium battery company with which it signed a letter of intent a few months ago. Arotech is continuing negotiations, which it hopes will result in a definitive agreement early in 2004.

FMI: www.arotech.com, www.faac.com