EX-99.1

VIENNA, Va., August 13, 2009 — The Allied Defense Group, Inc. (NYSE Amex: ADG), 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, today announced results for the quarter ended June 30, 2009.

•

Revenue of $47.4 million, an increase of 18% over the second quarter of 2008

•

Net income of $1.2 million compared to net income of $0.9 million during the second quarter of 2008

“We have achieved two significant milestones; divesting our last non-core business this month and achieving profitability in the second quarter,” said Major General (Ret) John J. Marcello, President and Chief Executive Officer of The Allied Defense Group. “Our decisions to focus on our core competency in ammunition, rid ourselves of expensive debt, take action to improve the efficiency of our operations and manage our working capital have delivered a transformed business poised to capitalize on the tremendous opportunities ahead of us.”

•

Revenue of $23.0 million, a decrease of 28.2% from the second quarter of 2008

•

Revenue of $24.4 million, an increase of $16.1 million over the second quarter of 2008

Revenue was $47.4 million in the second quarter of 2009, up 18% over the same period of 2008. Gross margin was 15% in the second quarter of 2009, compared to 17% for the same period in 2008. Lower gross margins in the current quarter resulted from higher sales activities at Mecar USA, a business that, in
general, has lower margins than Mecar SA.

Net income from continuing operations was $2.0 million in the second quarter of 2009, compared to a net loss of $0.7 million during the same period of 2008. Diluted earnings per share from continuing operations were $0.24 in the second quarter of 2009, compared to a loss of $0.09 during the same period of 2008. EBITDA from continuing operations was $3.4 million in the second quarter of 2009, compared to $2.8 million during the same period of 2008.

Results from continuing operations in the current period were positively impacted by a $1.2 million gain associated with Mecar SA’s forward exchange contracts. As compared to the year-ago period, selling and administrative expenses declined by 14%, or $0.7 million and interest expense declined by 56%, or $1.3 million. The reduced operating expense reflects the transition of the Company to an ammunition-focused business. The reduced interest expense resulted from the full repayment of the Company’s senior secured convertible notes in January 2009.

Revenue was $78.9 million for the six months ended June 30, 2009, up 18% over the same period of 2008. Gross margin was 15% for the six months ended June 30, 2009, compared to 19% for the same period in 2008.

Net income from continuing operations was $0.6 million for the six months ended June 30, 2009, compared to a net loss of $3.4 million during the same period of 2008. Diluted earnings per share from continuing operations were $0.07 for the six months ended June 30, 2009, compared to a loss of $0.42 during the same period of 2008. EBITDA from continuing operations was $5.0 million for the six months ended June 30, 2009, compared to $4.9 million during the same period of 2008.

As of June 30, 2009, the Company’s firm committed backlog was $117.9 million, compared to $149.4 million as of June 30, 2008.

At June 30, 2009, the Company had $1.7 million of cash on hand. This is down $178,000 from March 31, 2009.

The Company used $8.9 million of cash in operating activities during the six months ended June 30, 2009 as compared to $20.0 million of cash used during the same period of 2008. Despite an 18% increase in revenue, the cash used from operations during the current period was reduced mainly as a result of lower working capital requirements associated with Mecar USA.

Cash used in investing activities was $0.3 million during the six months ended June 30, 2009 as compared to $1.4 million generated during the same period of 2008. Cash provided by financing activities was $2.2 million during the six months ended June 30, 2009 as compared to $9.1 million generated during the same period of 2008. The reduction in cash provided by financing activities stemmed from lower revolving credit borrowings in the current period at Mecar SA.

“We have carefully managed our cash during the first six months of 2009, including discounting letters of credit and obtaining bank overdraft loans,” said Debbie Ricci, Chief Financial Officer of The Allied Defense Group. “We will continue to take these steps until we secure appropriate working capital solutions.”

The Company will host a conference call to discuss these results today, August 13, 2009, at 4:30
p.m. (ET). To access the conference call, interested parties may call (888) 245-0962 within the
United States or (913) 312-1463 outside the United States. A replay of the call will be available
from approximately 7:30 p.m. (ET) today, August 13, 2009, through 11:59 p.m. (ET) on August 20,
2009. To access the replay, please call (888) 203-1112 in the United States, or (719) 457-0820
outside the United States, and enter the following code: 4105359.The Allied Defense Group,
Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Thousands of Dollars, except per share and share data)


						Three Months Ended						Six Months Ended
						June 30,						June 30,
						2009			2008			2009			2008
Revenue						$	47,380		$	40,322		$	78,928		$	67,117
Cost and expenses
	Cost of sales						40,158			33,484			66,876			54,472
	Selling and administrative						4,539			5,275			8,751			10,248
	Research and development						580			580			1,072			1,132

					Operating income		2,103			983			2,229			1,265

Other income (expenses)
	Interest income						28			251			63			409
	Interest expense						(1,040	)		(2,351	)		(1,904	)		(4,041	)
	Net gain (loss) on fair value of senior convertible notes and warrants						8			706			247			(527	)
	Gain (loss) from foreign exchange contracts						1,231			(144	)		569			(144	)
	Other-net						(556	)		76			(803	)		9

							(329	)		(1,462	)		(1,828	)		(4,294	)

			Income (loss) from continuing operations before income taxes				1,774			(479	)		401			(3,029	)
Income tax (benefit) expense							(195	)		194			(195	)		322

Income (loss) from continuing operations							1,969			(673	)		596			(3,351	)

Income (loss) from discontinued operations, net of tax
				Gain on sale of subsidiaries			865			-			1,811			113
				Income (loss) from discontinued operations			(1,675	)		1,579			(1,565	)		849

				Net income (loss) from discontinued operations			(810	)		1,579			246			962

		NET INCOME (LOSS)				$	1,159		$	906		$	842		$	(2,389	)

Earnings (Loss) per share — basic:
		Net earnings (loss) from continuing operations				$	0.24		$	(0.09	)	$	0.07		$	(0.42	)
		Net earnings (loss) from discontinued operations					(0.10	)		0.20			0.03			0.12
					Total earnings (loss) per share - basic	$	0.14		$	0.11		$	0.10		$	(0.30	)

Earnings (Loss) per share — diluted:
		Net earnings (loss) from continuing operations				$	0.24		$	(0.09	)	$	0.07		$	(0.42	)
		Net earnings (loss) from discontinued operations					(0.10	)		0.20			0.03			0.12
					Total earnings (loss) per share - diluted	$	0.14		$	0.11		$	0.10		$	(0.30	)

Weighted average number of common shares:
		Basic					8,085,207			8,021,755			8,082,402			8,017,418
		Diluted					8,101,875			8,021,755			8,107,595			8,017,418

The Allied Defense Group, Inc
Calculation of EBITDA from continuing operations
(Unaudited)
(All amounts are in thousands of U.S. Dollars)


				Three months ended June 30,						Six months ended June 30,
				2009			2008			2009			2008
Consolidated Net Income (Loss) from continuing operations				$	1,969		$		(673)	$	596		$	(3,351	)
	Any extraordinary or non recurring gains or losses
		(Gain) loss from fair value of notes and warrants			(8	)		(706	)		(247	)		527
		Loss from Sale of Fixed Assets			—			—			—			231
		Non-cash expenses associated with stock compensation expense			145			122			286			304


			Adjusted Net Income (Loss) from continuing operations	$	2,106		$	(1,257	)	$	635		$	(2,289	)
		Interest Income			(28	)		(251	)		(63	)		(409	)
		Interest Expense			1,040			2,351			1,904			4,041
		Income tax (benefit) expense			(195	)		194			(195	)		322
		Depreciation and Amortization Expense			1,046			1,392			2,069			2,702
		Any non-cash transactions:
			Foreign currency (gain) loss		(436	)		128			527			197
			Adjustments related to Inventory		(290	)		57			(97	)		171
			Other non-cash charges		178			153			207			153


			Consolidated EBITDA	$	3,421		$	2,767		$	4,987		$	4,888

*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 United States (GAAP). Nor should Consolidated EBITDA from continuing operations be considered as an alternative to statements of cash flows as a measure of liquidity. Consolidated EBITDA from continuing operations is included herein as means to measure operating performance that financial analysts, lenders, investors and other interested parties find to be a useful tool for analyzing companies. The measurement of EBITDA from continuing operations, as provided above, is defined in the terms of the Company’s senior secured convertible notes that were repaid in January 2009 and may not reflect EBITDA from continuing operations as calculated by other parties. The above table reconciles GAAP Net Income (Loss) from continuing operations to EBITDA from continuing operations for the reported periods.

The Allied Defense Group, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars, except per share and share data)


				June 30,				December 31,
ASSETS				2009				2008 (a)
Current Assets
	Cash and cash equivalents				$	1,710			$	8,816
	Restricted cash					14,272				9,666
	Accounts receivable, net					14,403				12,646
	Costs and accrued earnings on uncompleted contracts					31,104				21,999
	Inventories, net					23,732				21,508
	Contracts in progress					6,072				1,469
	Prepaid and other current assets					5,516				3,137
	Assets held for sale					2,712				4,474
		Total current assets				99,521				83,715

Property, Plant and Equipment, net						18,031				19,525

Other Assets						502				459

TOTAL ASSETS			$			118,054	$	103,699

CURRENT LIABILITIES
	Current maturities of senior secured convertible notes				$	-			$	933
	Bank overdraft facility					221				381
	Current maturities of long-term debt					7,079				2,659
	Current maturities of foreign exchange contracts					293				405
	Accounts payable					14,841				14,536
	Accrued liabilities					18,324				16,099
	Customer deposits					27,350				16,731
	Belgium social security					2,075				3,522
	Income taxes					3,709				3,913
	Liabilities held for sale					987				1,316
		Total current liabilities				74,879				60,495

LONG TERM OBLIGATIONS
	Long-term debt, less current maturities					5,625				6,681
	Long-term foreign exchange contracts, less current maturities					581				1,072
	Derivative instrument					76				318
	Other long-term liabilities					1,310				682
		Total long-term obligations				7,592				8,753

TOTAL LIABILITIES						82,471				69,248

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, 8,090,055 at June 30, 2009 and 8,079,509 at
	December 31, 2008					809				808
	Capital in excess of par value					56,234				55,912
	Accumulated deficit			(37,509)				(38,351)
	Accumulated other comprehensive income					16,049				16,082
		Total stockholders' equity				35,583				34,451

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$			118,054	$	103,699

The Allied Defense Group, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Thousands of Dollars)


					Six Months Ended June 30,
					2009			2008
Cash flows from operating activities
	Net Income (loss)				$	842		$	(2,389	)
	Less: Gain on sale of subsidiaries					(1,811	)		(113	)
		Discontinued operations, net of tax				1,565			(849	)
									—

	Income (Loss) from continuing operations					596			(3,351	)
	Adjustments to reconcile net income (loss) from continuing operations to net cash used in operating activities, net of divestitures:
		Depreciation and amortization				2,069			2,702
		Unrealized (gain) loss on forward contracts				(569	)		144
		Loss on sale of fixed assets				—			231
		Net (gain) loss related to fair value of notes and warrants				(247	)		527
		Provision for estimated losses on contracts				17			43
		Provision for warranty reserves, uncollectible accounts and inventory obsolescence				(194	)		383
		Common stock and stock option awards				226			178
		Deferred director stock awards				60			36
		(Increase) decrease in operating assets and increase (decrease) in liabilities, net
		of effects from discontinued businesses
			Restricted cash			(4,409	)		5,132
			Accounts receivable			(1,708	)		(7,126	)
			Costs and accrued earnings on uncompleted contracts			(8,726	)		(25,071	)
			Inventories			(2,155	)		(5,559	)
			Contracts in progress			(4,603	)		(2,575	)
			Prepaid and other current assets			(1,537	)		(1,852	)
			Accounts payable and accrued liabilities			1,829			5,281
			Customer deposits			10,260			8,736
			Deferred compensation			598			26
			Income taxes			(278	)		321

				Net cash used in operating activities - continuing operations		(8,771	)		(21,794	)
				Net cash (used in) provided by operating activities - discontinued operations		(152	)		1,822


				Net cash used in operating activities		(8,923	)		(19,972	)

Cash flows from investing activities
	Capital expenditures					(680	)		(946	)
	Net proceeds from sale of subsidiaries					422			2,433
				Net cash (used in) provided by investing activities - continuing operations		(258	)		1,487
				Net cash used in investing activities - discontinued operations		—			(59	)


				Net cash (used in) provided by investing activities		(258	)		1,428

Cash flows from financing activities
	Principal payments on senior convertible notes				$	(928	)	$	(481	)
	Net borrowings (repayments) of debt and capital lease obligations					3,057			9,547
	Net cash transferred to discontinued operations					(132	)		1,581
	Proceeds from employee stock purchases					37			65
	Retirement of stock					—			(9	)


				Net cash provided by financing activities - continuing operations		2,034			10,703
				Net cash provided by financing activities - discontinued operations		131			(1,621	)
				Net cash provided by financing activities		2,165			9,082

	Net change in cash of discontinued operations					22			(142	)
	Effects of exchange rate on cash					(112	)		735

				NET DECREASE IN CASH AND CASH EQUIVALENTS		(7,106	)		(8,869	)
Cash and cash equivalents at beginning of period						8,816			21,651
Cash and cash equivalents at end of period					$	1,710		$	12,782

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.

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.