##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q/A
 QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the period ended March 31, 2005
 Commission File Number: 1-11376
 
 The Allied Defense Group, Inc.
 (Exact name of Registrant as specified in its charter)
 Delaware
    
    04-2281015(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer Number)
 8000 Towers Crescent Drive, Suite 260
Vienna, Virginia 22182  (Address of principal executive offices, including zip code)
 (703) 847-5268  (Registrants telephone number, including area code)
 
  þ o
  þ o
  o þ




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##### 



EXPLANATORY NOTE
   
    
    Part I  Item 1  Financial Statements
    
    Part I  Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    Part I  Item 3  Quantitative and Qualitative Market Risk Disclosure
    
    Part I  Item 4  Disclosure Controls and Procedures; and
    
    Part II  Item 6  Exhibits and Reports on Form 8-K




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##### 



THE ALLIED DEFENSE GROUP, INC.
INDEX
 PAGENUMBERPART I. FINANCIAL INFORMATION  UNAUDITEDItem 1. Financial StatementsCondensed Consolidated Balance Sheets
March 31, 2005 and December 31, 2004
    
    
    2Condensed Consolidated Statements of Operations
Three months ended March 31, 2005 and 2004
    
    
    3Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 2005 and 2004
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Market Risk Disclosure
    
    
    22Item 4. Disclosure Controls and Procedures
    
    
    22PART II. OTHER INFORMATIONItem 6. Exhibits
    
    
    23Signatures
    
    
    25




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##### 



The Allied Defense Group, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
 (Thousands of Dollars, except per share data)
 March 31, 2005
    
    
    December 31, 2004UnauditedASSETCURRENT ASSETSCash and cash equivalents
    
    $
    26,947
    
    
    $
    27,940Restricted cash
    
    
    11,042
    
    
    
    9,757Accounts receivable
    
    
    17,877
    
    
    
    28,241Costs and accrued earnings on uncompleted contracts
    
    
    32,328
    
    
    
    54,877Inventories
    
    
    14,513
    
    
    
    17,161Deferred tax asset
    
    
    2,263
    
    
    
    1,058Fair value of foreign exchange contracts
    
    
    
    
    
    
    1,195Prepaid and other current assets
    
    
    4,235
    
    
    
    4,123Total current assets
    
    
    109,205
    
    
    
    144,352PROPERTY,
PLANT AND EQUIPMENT net of accumulated depreciation
    
    
    28,637
    
    
    
    30,294OTHER ASSETSRestricted Cash
    
    
    2,000
    
    
    
    2,000Intangibles, net of accumulated amortization
    
    
    3,627
    
    
    
    3,723Goodwill
    
    
    14,156
    
    
    
    14,401Deferred tax asset, non-current
    
    
    1,044
    
    
    
    1,020Other assets
    
    
    1,555
    
    
    
    52822,382
    
    
    
    21,672$
    160,224
    
    
    $
    196,318LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESNotes payable
    
    $
    50
    
    
    $
    54Current maturities of long-term debt
    
    
    2,387
    
    
    
    2,733Convertible subordinated debenture, current, less unamortized discount
    
    
    
    
    
    
    2,231Accounts payable
    
    
    10,150
    
    
    
    34,933Accrued liabilities
    
    
    8,576
    
    
    
    9,374Customer deposits
    
    
    10,140
    
    
    
    8,708Deferred compensation
    
    
    
    
    
    
    1,612Foreign exchange contracts
    
    
    393
    
    
    
    Income taxes
    
    
    91
    
    
    
    811Total current liabilities
    
    
    31,787
    
    
    
    60,456LONG-TERM OBLIGATIONSLong-term debt, less current maturities and unamortized discount
    
    
    5,766
    
    
    
    6,440Deferred compensation
    
    
    397
    
    
    
    3776,163
    
    
    
    6,817STOCKHOLDERS EQUITYPreferred 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 5,623,030 in 2005 and 5,601,101 in 2004
    
    
    562
    
    
    
    560Additional paid-in capital
    
    
    26,975
    
    
    
    26,669Retained earnings
    
    
    75,698
    
    
    
    77,605Accumulated other comprehensive income
    
    
    19,039
    
    
    
    24,211122,274
    
    
    
    129,045$
    160,224
    
    
    $
    196,318
 The accompanying notes are an integral part of these consolidated financial statements.
 2




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##### 



The Allied Defense Group, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Thousands of Dollars, except per share data)
 (Unaudited)
 Three months endedMarch 31,2005
    
    
    2004Restated
    
    
    RestatedRevenue
    
    $
    21,056
    
    
    $
    33,090Cost and expensesCost of sales
    
    
    14,998
    
    
    
    24,068Selling and administrative
    
    
    7,472
    
    
    
    6,646Research and development
    
    
    1,527
    
    
    
    1,561Operating income (loss)
    
    
    (2,941
    )
    
    
    815Other income (expense)Interest income
    
    
    189
    
    
    
    101Interest expense
    
    
    (537
    )
    
    
    (479
    )Other-net
    
    
    189
    
    
    
    (349
    )(159
    )
    
    
    (727
    )Income (loss) before income taxes
    
    
    (3,100
    )
    
    
    88Income tax expense ( benefit)
    
    
    (1,193
    )
    
    
    94NET LOSS
    
    $
    (1,907
    )
    
    $
    (6
    )Loss per shareBasic
    
    $
    (0.34
    )
    
    $
    (0.01
    )Diluted
    
    $
    (0.34
    )
    
    $
    (0.01
    )Weighted average number of common shares:Basic
    
    
    5,609,351
    
    
    
    5,551,399Diluted
    
    
    5,609,351
    
    
    
    5,551,399
 The accompanying notes are an integral part of these consolidated financial statements.
 3




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##### 



The Allied Defense Group, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Thousands of Dollars)
 (Unaudited)
 Three months ended March 312005
    
    
    2004Restated
    
    RestatedCash flows from operating activitiesNet loss
    
    $
    (1,907
    )
    
    $
    (6
    )Adjustments to reconcile net earnings to net cash provided by (used in) operating activitiesDepreciation and amortization
    
    
    1,265
    
    
    
    1,141Unrealized losses on forward contracts
    
    
    1,448
    
    
    
    3,826Debt issue costs
    
    
    63
    
    
    
    19Provision for estimated losses on contracts
    
    
    67
    
    
    
    45Deferred taxes
    
    
    (1,039
    )
    
    
    2,201Common stock award
    
    
    33
    
    
    
    Changes in assets and liabilitiesRestricted cash and restricted deposits
    
    
    (1,834
    )
    
    
    10,843Accounts receivable
    
    
    9,271
    
    
    
    (782
    )Costs and accrued earnings on uncompleted contracts
    
    
    20,082
    
    
    
    (7,150
    )Inventories
    
    
    2,043
    
    
    
    (1,351
    )Prepaid and other assets
    
    
    (1,369
    )
    
    
    (954
    )Accounts payable, accrued liabilities and customer deposits
    
    
    (23,591
    )
    
    
    (9,655
    )Deferred compensation
    
    
    20
    
    
    
    451Income taxes
    
    
    (479
    )
    
    
    882Net cash provided by (used in) operating activities
    
    
    4,073
    
    
    
    (490
    )Cash flows from investing activitiesCapital expenditures
    
    
    (1,003
    )
    
    
    (888
    )Net cash used in investing activities
    
    
    (1,003
    )
    
    
    (888
    )Cash flows from financing activitiesPrincipal payments on long-term borrowing
    
    
    (2,968
    )
    
    
    (570
    )Repayment on capital lease obligations
    
    
    (659
    )
    
    
    (530
    )Proceeds from issuance of long-term debt
    
    
    728
    
    
    
    Net decrease in short-term borrowings
    
    
    (4
    )
    
    
    (14,046
    )Proceeds from employee stock purchases
    
    
    21
    
    
    
    39Option exercises
    
    
    154
    
    
    
    Net cash used in financing activities
    
    
    (2,728
    )
    
    
    (15,107
    )Net increase (decrease) in cash and cash equivalents
    
    
    342
    
    
    
    (16,485
    )Effects of exchange rate changes on cash and cash equivalents
    
    
    (1,335
    )
    
    
    (455
    )NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (993
    )
    
    
    (16,940
    )Cash and cash equivalents at beginning of year
    
    
    27,940
    
    
    
    43,377Cash and cash equivalents at end of period
    
    $
    26,947
    
    
    $
    26,437Supplemental Disclosures of Cash Flow InformationCash paid during the period forInterest
    
    $
    183
    
    
    $
    148Taxes
    
    
    561
    
    
    
    1Supplemental Non-Cash Investing and Financing Activities:Capital Leases
    
    
    
    
    
    
    51
 The accompanying notes are an integral part of these consolidated financial statements.
 4




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##### 



The Allied Defense Group, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
 NOTE 1  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   Restatements
    5




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##### 



The Allied Defense Group, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
  Selected Consolidated Statements of Earnings Data:
 Impact from usingIncorrect Rate
    
    
    As PreviouslyPeriod Ended March 31, 2005
    
    As Restated
    
    
    (1)
    
    
    ReportedRevenues
    
    $
    21,056
    
    
    $
    (3,157
    )
    
    $
    17,899Cost of sales
    
    
    14,998
    
    
    
    (577
    )
    
    
    14,421Operating loss
    
    
    (2,941
    )
    
    
    (2,580
    )
    
    
    (5,521
    )Loss before taxes
    
    
    (3,100
    )
    
    
    (2,580
    )
    
    
    (5,680
    )Income tax benefit
    
    
    (1,193
    )
    
    
    (1,094
    )
    
    
    (2,287
    )Net Loss
    
    $
    (1,907
    )
    
    $
    (1,486
    )
    
    $
    (3,393
    )Loss per shareBasic
    
    $
    (0.34
    )
    
    $
    (0.26
    )
    
    $
    (0.60
    )Diluted
    
    $
    (0.34
    )
    
    $
    (0.26
    )
    
    $
    (0.60
    )
 Impact from usingIncorrect Rate
    
    
    As PreviouslyPeriod Ended March 31, 2004
    
    As Restated
    
    
    (1)
    
    
    ReportedRevenues
    
    $
    33,090
    
    
    $
    (6,226
    )
    
    $
    26,864Cost of sales
    
    
    24,068
    
    
    
    (1,893
    )
    
    
    22,175Operating income (loss)
    
    
    815
    
    
    
    (4,333
    )
    
    
    (3,518
    )Income (loss) before taxes
    
    
    88
    
    
    
    (4,333
    )
    
    
    (4,245
    )Income tax expense (benefit)
    
    
    94
    
    
    
    (1,474
    )
    
    
    (1,380
    )Net Loss
    
    $
    (6
    )
    
    $
    (2,859
    )
    
    $
    (2,865
    )Loss per shareBasic
    
    $
    (0.01
    )
    
    $
    (0.51
    )
    
    $
    (0.52
    )Diluted
    
    $
    (0.01
    )
    
    $
    (0.51
    )
    
    $
    (0.52
    )
 Consolidated Balance Sheet Data: March 31, 2005
 AsAs Restated
    
    
    Previously ReportedAccounts receivable
    
    $
    17,877
    
    
    $
    13,482Costs and accrued earnings on uncompleted
contracts
    
    
    32,328
    
    
    
    35,919Total current assets
    
    
    109,205
    
    
    
    110,372Total assets
    
    
    160,224
    
    
    
    159,766Accrued liabilities
    
    
    8,576
    
    
    
    8,576Foreign exchange contracts
    
    
    393
    
    
    
    538Total current liabilities
    
    
    31,787
    
    
    
    32,066Total liabilities
    
    
    37,950
    
    
    
    38,229Accumulated other comprehensive income
    
    
    19,039
    
    
    
    19,480Total liabilities and stockholders equity
    
    $
    160,224
    
    
    $
    159,766
  6




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##### 



The Allied Defense Group, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
  TABLE #1: Selected Consolidated Statements of Cash Flows Data (Reclassification of Restricted
Cash):
 As previouslyAs restated
    
    
    Adjustment
    
    
    reportedPeriod Ended March 31, 2005Cash flows from operating activitiesRestricted cash and restricted deposits
    
    
    (1,834
    )
    
    
    1,834
    
    
    
    Cash flows used in financing activitiesRestricted cash and restricted deposits
    
    
    
    
    
    
    (1,834
    )
    
    
    (1,834
    )Net Impact on Cash
    
    
    (1,834
    )
    
    
    
    
    
    
    (1,834
    )Period Ended March 31, 2004Cash flows from operating activitiesRestricted cash and restricted deposits
    
    
    10,843
    
    
    
    (10,843
    )
    
    
    Cash flows used in financing activitiesRestricted cash and restricted deposits
    
    
    
    
    
    
    10,843
    
    
    
    10,843Net Impact on Cash
    
    
    10,843
    
    
    
    
    
    
    
    10,843
 TABLE #2: Selected Consolidated Statements of Cash Flows Data (Reclassification of Capital
Leases):
 As previouslyAs restated
    
    
    Adjustment
    
    
    reportedPeriod Ended March 31, 2005Cash flows from investing activitiesCapital expenditures
    
    
    (1,003
    )
    
    
    
    
    
    
    (1,003
    )Cash flows used in financing activitiesRepayment on capital lease obligations
    
    
    (659
    )
    
    
    659
    
    
    
    Principal payments on long term debt and debenture
    
    
    (2,968
    )
    
    
    (659
    )
    
    
    (3,627
    )Proceeds from issuance of long term debt
    
    
    728
    
    
    
    
    
    
    
    728Net Impact on Cash
    
    
    (3,902
    )
    
    
    
    
    
    
    (3,902
    )Period Ended March 31, 2004Cash flows from investing activitiesCapital expenditures
    
    
    (888
    )
    
    
    
    
    
    
    (888
    )Cash flows used in financing activitiesRepayment on capital lease obligations
    
    
    (530
    )
    
    
    530
    
    
    
    Principal payments on long term debt and debenture
    
    
    (570
    )
    
    
    (530
    )
    
    
    (1,100
    )Proceeds from issuance of long term debt
    
    
    
    
    
    
    
    
    
    
    Net Impact on Cash
    
    
    (1,988
    )
    
    
    
    
    
    
    (1,988
    )
 NOTE 2  PRINCIPLES OF CONSOLIDATION
  
    
    ARC Europe, S.A. (ARC Europe), a Belgian company,
 
    
    Allied Research Corporation Limited (Limited), an inactive United Kingdom company,
 
    
    News/Sports Microwave Rental, Inc. (NS Microwave), a California corporation,
 
    
    Titan Dynamics Systems, Inc. (Titan Dynamics), a Texas corporation,
 7




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##### 



The Allied Defense Group, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
 
    
    SeaSpace Corporation (SeaSpace), a California corporation,
    
    MECAR USA, Inc. (MECAR USA), a Delaware corporation, and
    
    Allied Technology, LLC (Allied Technology), a Maryland corporation
   
    
    Ordnance & Manufacturingsegment
consists of MECAR and MECAR USA. MECAR
develops and produces medium caliber
tank, mortar and other ammunition.
MECAR USA will initially pursue
contracts from the U.S. government and
others for ammunition and pyrotechnics
devices. MECAR USA is expected to be
operational in the third quarter of
2005.
    
    Electronic Securitysegment consists of
The VSK Group and NS Microwave. VSK
Electronics N.V. manufactures access
control, intrusion protection, fire
detection and video systems; Télé
Technique Générale S.A. installs
security systems; Intelligent Data
Capturing Systems N.V. manufactures
integrated video systems; VIGITEC S.A.
installs networked video surveillance
systems; and Control Monitor Systems
manufactures access control systems.
NS Microwave designs, manufactures,
distributes and services industrial and
law enforcement security products and
systems.
    
    Environmental Safety & Securitysegment
consists of SeaSpace, which designs,
manufactures, distributes and services
weather and environmental satellite
ground reception systems, as well as a
line of antennas.
    
    Software, Training & Simulationsegment
consists of Titan Dynamics, which
designs, manufactures and sells
battlefield effects simulators, minor
pyrotechnics, and other training
devices. Allied Technology was formed
in anticipation of the Battlefield
Effects Simulator (BES) proposal and
will subcontract the work to Titan
Dynamics.
  NOTE 3  DERIVATIVE FINANCIAL INSTRUMENTS
  Fair value hedges
  Cash flow hedges
  8




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##### 



The Allied Defense Group, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
 Derivatives not designated as hedges
  NOTE 4  RESTRICTED CASH
  2005
    
    
    2004Collateralized performance bonds and advance payment guarantees
    
    $
    11,024
    
    
    $
    9,745Senior secured facility deposit
    
    
    2,000
    
    
    
    2,000Other
    
    
    18
    
    
    
    12$
    13,042
    
    
    $
    11,757Less non-current portion
    
    
    2,000
    
    
    
    2,000$
    11,042
    
    
    $
    9,757
   NOTE 5  ACCOUNTS RECEIVABLE
  2005
    
    
    2004RestatedDirect and indirect receivables from foreign governments
    
    $
    4,729
    
    
    $
    15,585Commercial and other receivables, less allowance for doubtful
receivables of $154 in 2005 and $143 in 2004
    
    
    13,148
    
    
    
    12,656$
    17,877
    
    
    $
    28,241
  9




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##### 



The Allied Defense Group, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
 NOTE 6  COSTS AND ACCRUED EARNINGS ON UNCOMPLETED CONTRACTS
  NOTE 7  INVENTORIES
  2005
    
    
    2004RestatedRaw materials
    
    $
    8,905
    
    
    $
    15,701Work in process
    
    
    4,485
    
    
    
    686Finished goods, less reserve for obsolescence of
$641 in 2005 and $668 in 2004
    
    
    1,123
    
    
    
    774$
    14,513
    
    
    $
    17,161
 NOTE 8  INTANGIBLE ASSETS AND GOODWILL
 March 31, 2005
    
    
    December 31, 2004Intangible assets
    
    Gross
    
    
    Accumulated
    
    
    
    
    
    
    Gross
    
    
    Accumulatedsubject to amortization:
    
    Amount
    
    
    Amortization
    
    
    Net
    
    
    Amount
    
    
    Amortization
    
    
    NetCapitalized Software
    
    $
    1,184
    
    
    $
    499
    
    
    $
    685
    
    
    $
    1,184
    
    
    $
    477
    
    
    $
    707Customer Lists
    
    
    2,297
    
    
    
    590
    
    
    
    1,707
    
    
    
    2,297
    
    
    
    540
    
    
    
    1,757Patents
    
    
    1,494
    
    
    
    259
    
    
    
    1,235
    
    
    
    1,494
    
    
    
    235
    
    
    
    1,259Total
    
    $
    4,975
    
    
    $
    1,348
    
    
    $
    3,627
    
    
    $
    4,975
    
    
    $
    1,252
    
    
    $
    3,723
  Period
    
    AmountNine months ended December 31, 2005
    
    $
    405Year ended December 31, 2006
    
    
    379Year ended December 31, 2007
    
    
    297Year ended December 31, 2008
    
    
    225Year ended December 31, 2009
    
    
    225
   10




---



##### 



The Allied Defense Group, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
 NOTE 9  NOTES PAYABLE AND CREDIT FACILITY
 Notes Payable 
 Credit Facility 
  NOTE 10  LONG-TERM DEBT
  2005
    
    
    2004Notes payable, less unamortized discount and debt issue costs
    
    $
    1,220
    
    
    $
    1,176Mortgage loan agreements
    
    
    255
    
    
    
    284Loan for Control Monitor Systems acquisition
    
    
    300
    
    
    
    300Capital leases and other
    
    
    6,378
    
    
    
    7,413Total Long-Term Debt
    
    $
    8,153
    
    
    $
    9,173Less current maturities
    
    
    2,387
    
    
    
    2,733Long-Term Debt, less current maturities and unamortized
discount
    
    $
    5,766
    
    
    $
    6,440
 Notes payable.
 Mortgage loan agreements.
 11




---



##### 



The Allied Defense Group, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
 Loan for Control Monitor Systems acquisition.
 Capital leases and other.
  Year
    
    Amount2006
    
    $
    2,3872007
    
    
    3,0092008
    
    
    1,0672009
    
    
    3342010
    
    
    1,356
 NOTE 11  CONVERTIBLE SUBORDINATED DEBENTURE
  NOTE 12  EARNINGS (LOSS) PER SHARE
  Three months endedMarch 31,2005
    
    
    2004Restated
    
    
    RestatedNet loss
    
    $
    (1,907
    )
    
    $
    (6
    )Weighted average number of basic shares
    
    
    5,609,351
    
    
    
    5,551,399Common stock equivalents
    
    
    
    
    
    
    Weighted average number of diluted shares
    
    
    5,609,351
    
    
    
    5,551,399Basic loss per share
    
    $
    (0.34
    )
    
    $
    (0.01
    )Diluted loss per share
    
    $
    (0.34
    )
    
    $
    (0.01
    )
  12




---



##### 



The Allied Defense Group, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
 NOTE 13  COMPREHENSIVE LOSS
  Accumulated othercomprehensive incomeCurrencytranslation
    
    
    Cash flowRetained Earnings
    
    
    adjustment
    
    
    hedges
    
    
    TotalThree months endedMarch 31, 2005 and 2004December 31, 2003
    
    $
    73,671
    
    
    $
    15,636
    
    
    $
    
    
    
    $
    89,307Comprehensive lossNet loss
    
    
    (6
    )
    
    
    
    
    
    
    Currency translation adjustment
    
    
    
    
    
    
    (2,161
    )
    
    
    Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,167
    )Three months endedMarch 31, 2004, restated
    
    $
    73,665
    
    
    $
    13,475
    
    
    $
    
    
    
    $
    87,140December 31, 2004
    
    $
    77,605
    
    
    $
    24,211
    
    
    $
    
    
    
    $
    101,816Comprehensive lossNet income
    
    
    (1,907
    )
    
    
    
    
    
    
    Currency translation adjustment
    
    
    
    
    
    
    (4,913
    )
    
    
    Change in fair value of FX
contracts
    
    
    
    
    
    
    
    
    
    
    (259
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,079
    )Three months endedMarch 31, 2005, (restated)
    
    $
    75,698
    
    
    $
    19,298
    
    
    $
    (259
    )
    
    $
    94,737
  NOTE 14  STOCK BASED COMPENSATION
 Accounting for Stock Issued to Employees.
 13




---



##### 



The Allied Defense Group, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
  Three Months EndedMarch 31,(Dollars in thousands, except per share amounts)
    
    2005
    
    
    2004Restated
    
    
    RestatedReported net loss
    
    $
    (1,907
    )
    
    $
    (6
    )Stock-based compensation costs that would have
been included in the determination of reported
net earnings, if the fair value method was
applied to all awards, net of tax
    
    
    (72
    )
    
    
    (154
    )Pro forma net loss
    
    $
    (1,979
    )
    
    $
    (160
    )Basic loss per share:Reported loss per share
    
    $
    (0.34
    )
    
    $
    (0.01
    )Compensation costs, net of tax
    
    
    (0.01
    )
    
    
    (0.03
    )Pro forma basic loss per share
    
    $
    (0.35
    )
    
    $
    (0.04
    )Diluted loss per share:Reported loss per share
    
    $
    (0.34
    )
    
    $
    (0.01
    )Compensation costs, net of tax
    
    
    (0.01
    )
    
    
    (0.03
    )Pro forma diluted loss per share
    
    $
    (0.35
    )
    
    $
    (0.04
    )
  Three Months Ended March 312005
    
    2004Risk free interest rate
    
    
    3.63
    %
    
    
    2.86
    %Expected volatility rate
    
    
    33.90
    %
    
    
    47.00
    %Expected lives  years
    
    
    3
    
    
    
    3Divided yield
    
    
    
    
    
    
    
  14




---



##### 



The Allied Defense Group, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
 NOTE 15  INDUSTRY SEGMENTS
 Three months endedMarch 31,2005
    
    
    2004Restated
    
    
    RestatedRevenues from external customersOrdnance & Manufacturing
    
    $
    8,931
    
    
    
    21,700Electronic Security
    
    
    10,328
    
    
    
    9,330Environmental Safety & Security
    
    
    1,519
    
    
    
    2,024Software, Training & Simulation
    
    
    278
    
    
    
    36$
    21,056
    
    
    $
    33,090Segment profit (loss) before taxesOrdnance & Manufacturing
    
    $
    (2,670
    )
    
    $
    143Electronic Security
    
    
    663
    
    
    
    820Environmental Safety & Security
    
    
    (511
    )
    
    
    (136
    )Software, Training & Simulation
    
    
    (86
    )
    
    
    (179
    )Corporate and Other
    
    
    (496
    )
    
    
    (560
    )$
    (3,100
    )
    
    $
    88
 NOTE
16  COMMITMENTS AND CONTINGENCIES
   NOTE
17  SUBSEQUENT EVENT
  
 15




---



##### 



The Allied Defense Group, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
  Overview
  
    
    Ordnance & Manufacturingsegment consists of MECAR, located in
Belgium, and MECAR USA, located in Marshall, TX. MECAR develops
and produces medium caliber tank, mortar and other ammunition.
MECAR USA will pursue contracts from U.S. and foreign governments
for ammunition and pyrotechnics devices. MECAR USA is expected to
be operational in the third quarter of 2005.
    
    Electronic Securitysegment consists of The VSK Group, located in
Belgium and California, and NS Microwave, located in San Diego,
CA. The VSK Group consists of VSK Electronics N.V. which
manufactures access control, intrusion protection, fire detection
and video systems; Télé Technique Générale S.A. which installs
security systems; Intelligent Data Capturing Systems N.V. which
manufactures integrated video systems; VIGITEC S.A. which installs
networked video surveillance systems; and Control Monitor Systems
which manufactures access control systems. NS Microwave designs,
manufactures, distributes and services industrial and law
enforcement surveillance products and systems.
    
    Environmental Safety & Securitysegment consists of SeaSpace,
located in San Diego, CA, which designs, manufactures, distributes
and services weather and environmental satellite ground reception
systems.
    
    Software, Training & Simulationsegment consists of Titan
Dynamics, located in Marshall, TX, which designs, manufactures and
sells battlefield effects simulators, minor pyrotechnics and other
training devices. Allied Technology, a wholly owned subsidiary
was formed in anticipation of the Battlefield Effects Simulator
(BES) proposal and will subcontract the work to Titan Dynamics.
See additional discussion of BES contract award in Note 17.
   Restatements
   16




---



##### 



The Allied Defense Group, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
  A
   Net LossPeriod Ended
    
    As Restated
    
    As Previously Reported(in the 2ndRestatement)
    
    (in the 1st restatement)March 31, 2005
    
    $
    (1,907
    )
    
    $
    (3,393
    )March 31, 2004
    
    
    (6
    )
    
    
    (2,865
    )
  Selected Consolidated Statement of Earnings Data:
 Impact From
    
    
    Impact from Euro
    
    
    Pro-FormaActual
    
    
    Derivative Gains (1)
    
    
    Fluctuations (2)
    
    
    (Unaudited)Period Ended March 31, 2005Revenues
    
    $
    21,056
    
    
    $
    1,330
    
    
    $
    (1,572
    )
    
    $
    20,814Cost of Sales
    
    
    14,998
    
    
    
    
    
    
    
    (210
    )
    
    
    14,788Operating loss
    
    
    (2,941
    )
    
    
    1,330
    
    
    
    (1,362
    )
    
    
    (2,973
    )Loss before income taxes
    
    
    (3,100
    )
    
    
    1,330
    
    
    
    (1,362
    )
    
    
    (3,132
    )Income taxes (benefit)
    
    
    (1,193
    )
    
    
    452
    
    
    
    (463
    )
    
    
    (1,204
    )Net Loss
    
    $
    (1,907
    )
    
    $
    878
    
    
    $
    (899
    )
    
    $
    (1,928
    )
 17




---



##### 



The Allied Defense Group, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
 Impact From
    
    
    Impact from Euro
    
    
    As InitiallyActual
    
    
    Derivative Gains (1)
    
    
    Fluctuations (2)
    
    
    ReportedPeriod Ended March 31, 2004Revenues
    
    $
    33,090
    
    
    $
    745
    
    
    $
    633
    
    
    $
    34,468Cost of Sales
    
    
    24,068
    
    
    
    
    
    
    
    242
    
    
    
    24,310Operating income
    
    
    815
    
    
    
    745
    
    
    
    391
    
    
    
    1,951Earnings before income taxes
    
    
    88
    
    
    
    745
    
    
    
    391
    
    
    
    1,224Income taxes
    
    
    94
    
    
    
    253
    
    
    
    133
    
    
    
    480Net Earnings (loss)
    
    $
    (6
    )
    
    $
    492
    
    
    $
    258
    
    
    $
    744
 
 (1)
    
    Unrealized gains on FX contracts and related tax effects.(2)
    
    Impact of revising the euro-based based revenues at the spot rates and related tax effects.  
    
    The first item is to reclassify a portion of the changes in
restricted cash (related to MECARs performance guarantees and
other operating activities) to cash from operating activities.
    
    The second item is the classification of capital leases as a
non-cash item. The capital lease acquisitions and payments were
previously included in investing activities (as capital
expenditures) and financing activities (as principal payments on
long term debt).
      18




---



##### 



The Allied Defense Group, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
 Results
of Operations for the Three Months Ended March 31, 2005 and
2004
  Three months ended March 31,2005
    
    
    2004Restated
    
    
    RestatedRevenue
    
    $
    21,056
    
    
    
    100.0
    %
    
    $
    33,090
    
    
    
    100.0
    %Cost and expensesCost of sales
    
    
    14,998
    
    
    
    71.2
    
    
    
    24,068
    
    
    
    72.7Selling and administrative
    
    
    7,472
    
    
    
    35.5
    
    
    
    6,646
    
    
    
    20.1Research and development
    
    
    1,527
    
    
    
    7.3
    
    
    
    1,561
    
    
    
    4.7Operating income (loss)
    
    
    (2,941
    )
    
    
    (14.0
    )
    
    
    815
    
    
    
    2.5Other income (expense)Interest income
    
    
    189
    
    
    
    0.9
    
    
    
    101
    
    
    
    0.3Interest expense
    
    
    (537
    )
    
    
    (2.6
    )
    
    
    (479
    )
    
    
    (1.4
    )Other  net
    
    
    189
    
    
    
    0.9
    
    
    
    (349
    )
    
    
    (1.1
    )Earnings (Loss) before
income taxes
    
    
    (3,100
    )
    
    
    (14.8
    )
    
    
    88
    
    
    
    0.3Income tax (benefit)
    
    
    (1,193
    )
    
    
    (5.7
    )
    
    
    94
    
    
    
    0.3Net loss
    
    $
    (1,907
    )
    
    
    (9.1
    )%
    
    $
    (6
    )
    
    
    
    %
 Revenue.
 Revenue by SegmentThree Months Ended
    
    
    Three Months EndedMarch 31, 2005
    
    
    March 31, 2004Restated
    
    
    RestatedPercentage
    
    
    
    
    
    
    PercentageAmount
    
    
    of total
    
    
    Amount
    
    
    of totalOrdnance & Manufacturing
    
    $
    8,931
    
    
    
    42
    %
    
    $
    21,700
    
    
    
    66
    %Electronic Security
    
    
    10,328
    
    
    
    50
    %
    
    
    9,330
    
    
    
    28
    %Environmental Safety & Security
    
    
    1,519
    
    
    
    7
    %
    
    
    2,024
    
    
    
    6
    %Software, Training & Simulation
    
    
    278
    
    
    
    1
    %
    
    
    36
    
    
    
    
    %$
    21,056
    
    
    
    100
    %
    
    $
    33,090
    
    
    
    100
    %
   19




---



##### 



The Allied Defense Group, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
   Cost of Sales.
 Cost of Sales as Percentage of Sales by Segment
 Three months endedMarch 312005
    
    
    2004Restated
    
    
    RestatedOrdnance & Manufacturing
    
    
    92
    %
    
    
    80
    %Electronic Security
    
    
    56
    %
    
    
    58
    %Environmental Safety & Security
    
    
    57
    %
    
    
    57
    %Software, Training & Simulation
    
    
    60
    %
    
    
    66
    %Total
    
    
    71
    %
    
    
    73
    %
     20




---



##### 



The Allied Defense Group, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
 Selling and Administrative Expenses.
 Research and Development.
 Interest Income.
 Interest Expense.
 Other-Net.
 Pre-Tax Profit (Loss)
 Pre-Tax Profit (Loss) by Segment
 Three months endedMarch 31,2005
    
    
    2004Restated
    
    
    RestatedOrdnance & Manufacturing
    
    $
    (2,670
    )
    
    $
    143Electronic Security
    
    
    663
    
    
    
    820Environmental Safety & Security
    
    
    (511
    )
    
    
    (136
    )Software, Training & Simulation
    
    
    (86
    )
    
    
    (179
    )Corporate and other
    
    
    (496
    )
    
    
    (560
    )$
    (3,100
    )
    
    $
    88
    21




---



##### 



The Allied Defense Group, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
   Income Taxes.
 Net Earnings.
 Backlog.
 Backlog by SegmentMarch 31, 2005
    
    
    March 31, 2004Percentage
    
    
    
    
    
    
    PercentageAmount
    
    
    of total
    
    
    Amount
    
    
    Of totalOrdnance & Manufacturing
    
    $
    49,856
    
    
    
    68
    %
    
    $
    80,641
    
    
    
    76
    %Electronic Security
    
    
    22,324
    
    
    
    31
    %
    
    
    23,971
    
    
    
    22
    %Environmental Safety & Security
    
    
    755
    
    
    
    1
    %
    
    
    1,644
    
    
    
    2
    %Software, Training & Simulation
    
    
    74
    
    
    
    
    
    
    
    519
    
    
    
    
    %$
    73,009
    
    
    
    100
    %
    
    $
    106,775
    
    
    
    100
    %
  Liquidity and Capital Resources
 Balance Sheet
    22




---



##### 



The Allied Defense Group, Inc.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
      Cash Flows
  Three months ended March 312005
    
    
    2004Restated
    
    
    RestatedNet cash provided by (used in) operating activities
    
    $
    4,073
    
    
    $
    (490
    )Net cash used in investing activities
    
    
    (1,003
    )
    
    
    (888
    )Net cash used in financing activities
    
    
    (2,728
    )
    
    
    (15,107
    )
 Operating Activities.
 Investing Activities.
 23




---



##### 



The Allied Defense Group, Inc.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
 Financing Activities.
 Allied.
 MECAR.
 VSK Group.
 Other Subsidiaries.
 Stock Repurchases.
 Future Liquidity.
   Off-Balance Sheet Arrangements.
 24




---



##### 



The Allied Defense Group, Inc.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
  Critical Accounting Policies
  
    
    Revenue recognition via the percentage of completion
method.The percentage of completion method is used
by MECAR, NS Microwave and SeaSpace for their fixed
price sales contracts. Approximately 60% and 77% of
condensed consolidated revenue was recognized under
the percentage of completion method during the three
months ended March 31, 2005 and 2004, respectively.
    
    Goodwill and intangible asset valuation.The Company
completed a goodwill impairment analysis in the
fourth quarter of 2004 and determined that an
impairment charge to earnings was not required. The
2004 goodwill analysis for the Environmental Safety &
Security segment included a multi-year discounted
cash flow projection for SeaSpace. The projection
included both SeaSpaces traditional groundstation
business as well as its newly initiated antenna
business. The projection called for a break-even
year in 2005, but substantial profits in 2006-2009,
largely as a result of the newly-added antenna
product line. As a result of the substantial losses
incurred by SeaSpace in the first six months of 2005,
in early August, 2005, management and the Audit
Committee revisited the 2004 goodwill analysis and
reconsidered the projections which formed the basis
of this analysis. In the course of this review, it
was noted that (i) several projects initially
forecast for the first half of 2005 had slipped into
the second half of the year; (ii) SeaSpace reported
positive results for July and August and several new
contract awards and (iii) since year-end, SeaSpace
has acquired additional antenna technology which adds
to the product line which formed the basis of the
year-end projections. As a result, management and
the Audit Committee concluded SeaSpace was on track
to achieve its original forecast to break-even in
2005. Further, management and the Audit Committee
concluded that SeaSpace is poised to earn meaningful
profits in the upcoming years sufficient to support
the reported goodwill attributable to the
Environmental Safety & Security segment.
Accordingly, management and the Audit Committee
determined in early August that there has been no
impairment to the goodwill attributable to the
Environmental Safety & Security segment.
    
    Inventory reserves and allowance for doubtful
accounts.The Company reviews its recorded inventory
and estimates a write-down for obsolete or
slow-moving items to their net realizable value.
Allowances for doubtful accounts are evaluated based
upon detailed analysis and assessment of receivables
that may not be collected in the normal course of
operations. The inventory reserves and allowance for
doubtful accounts are deemed reasonable.
    
    Derivative instruments.The Company designates its
derivatives based upon the criteria established by
Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging
Activities (SFAS 133), which establishes accounting
and reporting standards for derivative instruments,
including certain derivative instruments embedded in
other contracts, and for hedging activities. SFAS
133, as amended by SFAS 138 and SFAS 149, requires
that an entity recognize all derivatives as either
assets or liabilities in the statement of financial
position and measure those instruments at fair value.
The accounting for the changes in the fair value of
the derivative depends on the intended use of the
derivative and the resulting designation. For a
derivative designated as a fair value hedge, the gain
or loss is recognized in earnings in the period of
change together with the offsetting loss or gain on
the risk being hedged. For a derivative designated
as a cash flow hedge, the effective portion of the
derivatives gain or loss is initially reported as a
component of accumulated
 25




---



##### 



The Allied Defense Group, Inc.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
 other comprehensive income
(loss) and is subsequently reclassified to earnings
when the hedge exposure effects earnings. The
ineffective portion of the hedge is reported in
earnings immediately. For a derivative that
does not qualify as a fair value hedge or cash flow hedge, the change in fair
value is recognized currently in net income.
    
    Valuation of deferred income taxes and income tax
reserves.The Company is subject to taxation by
federal, state and international jurisdictions. The
Company reviews the balances on a quarterly basis and
believes the balances are adequate.
 Recent Accounting Pronouncements
 Accounting for Conditional Asset
Retirement Obligations  an interpretation of FASB Statement No. 143 Accounting for Asset Retirement
Obligations,
 Share-Based Payment
 Inventory Costs  An Amendment of ARB No. 43, Chapter
4.
 Exchanges of Non-monetary AssetsAn Amendment
of APB Opinion No. 29
 26




---



##### 



The Allied Defense Group, Inc.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2005
(Thousands of Dollars)
(Unaudited)
 Forward-Looking Statements
   
    
    substantial reliance on MECARs principal customers to continue to acquire products on a regular basis;
    
    the cyclical nature of the Companys military business;
    
    rapid technological developments and changes and the Companys ability to continue to introduce competitive
new products and services on a timely, cost effective basis;
    
    the ability of the Company to successfully continue to expand its business base;
    
    the ability of the Companys acquired businesses to mature and meet performance expectations;
    
    the mix of products/services;
    
    domestic and foreign governmental fiscal affairs and public policy changes which may affect the level of
purchases made by customers;
    
    changes in environmental and other domestic and foreign governmental regulations;
    
    general risks associated with doing business outside the United States, including, without limitation,
import duties, tariffs, quotas and political and economic instability;
    
    the effects of terrorist actions on business activities, customer orders and cancellations, and the United
States and international governments responses to these terrorist actions;
    
    changes in government regulations;
    
    liability and other claims asserted against us;
    
    the ability to attract and retain qualified personnel; and
    
    continued availability of financing, financial instruments and financial resources in the amounts, at the
times, and on the terms required to support the Companys future business.
  27




---



##### 



The Allied Defense Group, Inc.
 March 31, 2005
 QUANTITATIVE AND QUALITATIVE MARKET RISK DISCLOSURE
    DISCLOSURE CONTROLS AND PROCEDURES
 1.
    
    Evaluation of disclosure controls and proceduresThe Company maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed in the reports filed or submitted under the Securities
Exchange Act of 1934, as amended (Exchange Act), is recorded, processed, summarized and
reported within the time periods specified in the Commissions rules and forms. Disclosure
controls and procedures are designed to ensure that information required to be disclosed by the
Company in its Exchange Act reports is accumulated and communicated to the Companys management
including its principal executive and financial officers, as appropriate to allow timely
decisions regarding required disclosure. Under the direction and with the participation of the
Companys management, including the Companys Chief Executive Officer and Chief Financial
Officer, the Company carried out an evaluation of the effectiveness of the design and operation
of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-15 as of the end of
the period covered by the report. Subsequent to March 31, 2005, the Company identified two
material weaknesses in its internal control over financial reporting as outlined below. As a
result, the Chief Executive Officer and the Chief Financial Officer concluded that the
disclosure controls and procedures were not effective as of March 31, 2005. As set forth below,
we have taken the steps necessary to remediate the material weaknesses.2.
    
    Changes in internal controlsSubsequent to March 31, 2005 we became aware of two additional material weaknesses in our
internal control over financial reporting. The Public Company Accounting Oversight Boards
Auditing Standard No. 2 defines a material weakness as a significant deficiency, or a
combination of significant deficiencies, that results in there being a more than remote
likelihood that a material misstatement of the annual or interim financial statements will not
be prevented or detected. The first additional material weakness concerned the accounting for
the Companys U.S. Dollar denominated receivables at MECAR which historically have been valued
at the hedged rate rather than at the period end spot rate. This resulted in an error upon the
translation of the amounts from MECARs functional currency (the Euro) into U.S. Dollars which
is Allieds reporting currency. The correct accounting for our U.S. Dollar denominated
receivables at MECAR was subsequently determined and corrected prior to the public release of
our financial information for the second quarter of 2005 and, in accordance with the corrected
accounting the related account balances were restated. The second additional material weakness
concerned the proper classification of certain matters for proper presentation purposes in the
Consolidated Statements of Cash Flows. This included reclassifying repayments of capital leases
to financing activities from investing activities and reclassifying a portion of the changes in
restricted cash (related to MECARs performance guarantees and other operating activities) to
operating activities from financing activities.
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The Allied Defense Group, Inc.
 March 31, 2005
 Prior to the filing of this March 10-Q/A, we took the steps necessary to remediate the material
weaknesses
which led to the restatement of our consolidated financial statements included in this Form
10-Q/A. We have modified our procedures to ensure that we properly value the U.S. Dollar
receivables at our foreign subsidiaries at the proper period-end currency rate. We have also
modified our procedures to ensure that we properly prepare our Consolidated Statements of Cash
Flows. We have included more stringent review procedures on transactions that affect our
Consolidated Statements of Cash Flows in accordance with FAS 95. Specifically, we have taken
the steps necessary to ensure that capital leases are accounted for as financing activities and
to ensure that restricted cash attributed to MECARs performance guarantees and other operating
activities are accounted for as operating activities.Except as set forth above, there have been no significant changes in our internal controls over
financial reporting or, to our knowledge, in other factors that occurred during the last quarter
that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
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The Allied Defense Group, Inc.
 PART II  OTHER INFORMATION
March 31, 2005
 Item 6 Exhibits and Reports on Form 8-K
 (a) Reports on Form 8-K
  (b) Exhibit No.
    
    Description of Exhibits10.1
    
    
    Employment Agreement between Allied and John J. Marcello (Incorporated by reference
from Form 8-K filed in August 2005).31.1
    
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.31.2
    
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.32
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
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The Allied Defense Group, Inc.
 SIGNATURE
  THE ALLIED DEFENSE GROUP, INC./s/ Robert P. DowskiDate:  October 21, 2005
    Robert P. Dowski,Chief Financial Officer and
Treasurer 31