EX-99.1

THE ALLIED DEFENSE GROUP ANNOUNCES FOURTH QUARTER AND FULL YEAR 2008 FINANCIAL RESULTS

VIENNA, Virginia, March 31, 2009 – The Allied Defense Group, Inc. (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 fourth quarter and full year 2008 results.

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EBITDA* from continuing operations of $6.4 million, compared to negative $18.6 million in 2007

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Funded, committed backlog of $185.9 million at year-end 2008, a 71% increase over 2007

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The closed sales of Global Microwave Systems for $26.0 million and Titan Dynamics Systems for $4.8 million

“2008 was a year of transformation and delivering on commitments for The Allied Defense Group,” said Major General (Ret) John J. Marcello, President and Chief Executive Officer. “Our transformation is not quite complete, but we have come a long way and should divest our last non-core asset shortly. It is important to note that we are not simply realigning The Allied Defense Group, but rather we are focusing on our core competency in ammunition and positioning the Company in geographical markets and specific types of ammunition that are growing. And we are delivering strong results even as we transform the Company.”

“As we focus our strategy, we are also significantly improving our financial profile, building a large, funded, and committed backlog, fully paying down our convertible debt, and establishing the financing facilities that we require for working capital purposes. We no longer face the significant interest payments from our debt, we have increased financing flexibility required to convert our backlog into revenues going forward, and we will generate cash.”

*EBITDA is a non-GAAP measure. See reconciliation of EBITDA in the attached financial table.

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Received $68.0 million in funding for the second tranche of its $167.0 million ammunition contract

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Received orders totaling approximately $43.5 million from a new client in the Middle East, for Mecar SA’s 105mm tank ammunition

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Awarded and committed to an ammunition manufacturing and assembly joint venture in Jordan with King Abdullah II Design and Development Bureau

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Awarded first direct fire ammunition contract worth $7.4 million, teamed with a major U.S. defense contractor

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Awarded approximately $42.0 million portion of an $87.0 million non-standard ammunition contract for Afghanistan, teamed with a major U.S. defense contractor

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Received $11.5 million contract from a former Soviet republic for the supply of NATO-approved ammunition

Revenue was $28.1 million in the fourth quarter of 2008, up 28.4% over the same period of 2007. As was previously disclosed by the company, results for the period were negatively impacted by a technical issue with a specific third-party component that delayed the shipment of a single lot of a new product. This particular lot failed to meet strict customer specifications, an issue that has been subsequently resolved to the satisfaction of the customer. Prior to the issue in question, the customer had received a number of other lots that performed well and the Company fully expects to fulfill the complete order. However, the delay in the particular lot resulted in an adjustment to fourth quarter revenues of approximately $3.8 million which negatively impacted the operating results by approximately $3.0 million in the quarter.

Gross profit as a percentage of revenues was 5% in the fourth quarter of 2008, compared to 27% for the same period in 2007. The decline in gross profit was the result of the aforementioned charge to revenues, which impacted gross profit margin in the fourth quarter of 2008. Gross profit margin in the fourth quarter of 2007 was unusually high due to the mix of revenue as well.

Net loss from continuing operations was $4.3 million in the fourth quarter of 2008, compared to a net loss of $0.8 million during the same period of 2007. Diluted loss per share from continuing operations was $0.53 in the fourth quarter of 2008, compared to a loss of $0.10 during the same period of 2007. EBITDA was negative $1.2 million in the fourth quarter of 2008, compared to positive $2.4 million during the same period of 2007.

Revenue was $144.4 million for the full year 2008, up more than 274% over 2007. The significant increase in revenue was driven by higher sales volumes by Mecar SA and Mecar USA. Revenues from Mecar SA increased significantly to $112.2 million for the full year of 2008 from $37.8 million in 2007, or 197% year-over-year, based on higher volume of delivery on contracts from several large orders received since July 2007. Revenues from Mecar USA increased significantly to $32.2 million for the full year of 2008 from less than $1 million in 2007. This was due to the establishment and expansion of the ammunition services business and the receipt of several new procurement contracts.

Gross profit as a percentage of revenues was 14% for the full year 2008, up significantly from negative 7% in 2007. The improvement in gross margins was driven by higher revenue levels and improved efficiencies, offset slightly by the aforementioned $3 million charge associated with a technical issue that delayed shipment of a single lot of a new product. Gross profit for Mecar SA was $18.5 million in 2008, or 16% of revenues, compared to a gross loss of $2.6 million in 2007, or negative 7% of revenues. Gross profit for Mecar USA was $2.0 million in 2008, or 6% of revenues, compared to a gross loss of $0.1 million in 2007, or negative 10% of revenues. In 2008, Mecar USA operated on lower than usual gross margins in order to obtain its initial procurement contracts. This enabled Mecar USA to compete in more contract bids and grow its revenue base. The company anticipates an increase in Mecar USA gross margins in 2009.

Net loss from continuing operations for the full year 2008 was $11.0 million, compared to a net loss from continuing operations of $43.2 million for 2007. The decline in net loss for 2008 versus 2007 resulted from a substantial increase in sales volume at Mecar SA and Mecar USA, reduced restructuring, legal and interest expenses at the corporate level, and a smaller loss incurred from the change in the fair value of convertible notes and warrants in 2008.

The net loss from continuing operations in 2008 includes three significant non-cash items: losses relating to changes in fair value of the Company’s participating forward European currency contracts of $1.5 million, a loss relating to a change in the fair value of convertible notes and warrants of $1.1 million, and a charge for impairment of long-lived assets of $0.5 million.

Diluted loss per share from continuing operations was $1.36 for 2008, compared to a diluted loss per share from continuing operations of $5.96 for 2007.

EBITDA for the full year 2008 was $6.4 million, compared to a negative EBITDA of $18.6 million in 2007.

The decrease in cash used from continuing operations resulted from a significantly lower net loss of $11.0 million from continuing operations in 2008 as compared to a net loss from continuing operations of $43.2 million in 2007. Continuing operations used cash of $7.8 million in 2008, compared to $21.8 million in 2007. The use of cash in 2008 stemmed from an increase in working capital necessary to support the significant increase in revenue growth.

The Company will host a conference call to discuss these results on Wednesday, April 1, 2009, at 10:00 a.m. EST. To access the call, please dial (888) 737-3708 within the United States and (913) 312-1272 outside the United States. A replay of the call will be available from 1:00 p.m. ET on Wednesday, April 1, 2009, through 11:59 p.m. ET Tuesday, April 7, 2009. To access the replay, please call (888) 203-1112 in the United States, or (719) 457-0820 outside the United States, and utilize the following passcode: 5364543.

The Allied Defense Group, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars, except per share and share data)


			Three months Ended December 31,						Years Ended December 31,
			2008			2007			2008			2007
Revenues			$	28,060		$	21,859		$	144,424		$	38,603

Cost and expenses
	Cost of sales			26,646			15,947			123,969			41,245
	Selling and administrative			4,327			4,685			19,452			21,495
	Research and development			610			502			2,277			1,617
	Impairment of long-lived assets			—			—			462			—

		Operating (loss) income		(3,523	)		725			(1,736	)		(25,754	)

Other income (expenses)
	Interest income			223			325			734			703
	Interest expense			(933	)		(1,529	)		(6,403	)		(10,878	)
	Net (loss) gain on fair value of senior convertible notes and warrants			(422	)		23			(1,104	)		(6,663	)
	Other-net			57			(382	)		(2,253	)		(562	)
				(1,075	)		(1,563	)		(9,026	)		(17,400	)

		Loss from continuing operations before income taxes		(4,598	)		(838	)		(10,762	)		(43,154	)
Income tax (benefit) expense				(281	)		-			214			-

Loss from continuing operations				(4,317	)		(838	)		(10,976	)		(43,154	)

Income (loss) from discontinued operations, net of tax
		Gain (loss) on sale of subsidiaries		2,637			(460	)		2,750			29,314
		Loss from discontinued operations		(153	)		(254	)		(2,216	)		(7,438	)

				2,484			(714	)		534			21,876

	NET LOSS		$	(1,833	)	$	(1,552	)	$	(10,442	)	$	(21,278	)

Earnings (Loss) per share — basic and diluted:
	Net loss from continuing operations		$	(0.53	)	$	(0.10	)	$	(1.36	)	$	(5.96	)
	Net earnings (loss) from discontinued operations			0.31			(0.09	)		0.07			3.02
		Total loss per share - basic and diluted	$	(0.22	)	$	(0.19	)	$	(1.29	)	$	(2.94	)

Weighted average number of common shares:
	Basic and Diluted			8,079,020			8,014,514			8,045,239			7,244,983

The operating income (loss) adjusted for non-recurring charges and Electronic Security (ES) segment results have been provided to attempt to show what the Company’s operating results would have looked like after the intended disposition of the remaining subsidiary in the Company’s ES segment and excluding impairments recorded in the current period for ES goodwill and the impairment of the Company’s ERP system. In the fourth quarter of 2008, the Company committed to a formal plan to sell NSM, the last remaining business in the ES segment. The operating income (loss) adjusted for non-recurring charges and the ES segment results is not intended to present a measure of performance in accordance with accounting principles generally accepted in the United States (GAAP).

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


				Three months ended December 31,						Year ended December 31,
				2008			2007			2008			2007
Consolidated Net Loss from continuing operations				$	(4,317	)	$		(838)	$	(10,976	)	$	(43,154	)
	Any extraordinary or non recurring gains or losses
		Write-down of Goodwill and long-lived assets			-			-			462			-
		Loss (gain) from fair value of notes and warrants			422			(23	)		1,104			6,663
		Loss from Sale of Fixed Assets			—			3			231			3
		Non-cash expenses associated with stock compensation expense			154			194			590			918
		Tax refunds, use of net operating losses to offset taxes or other net tax
		benefits			—			—			—			45


			Adjusted Net Loss from continuing operations	$	(3,741	)	$		(664)	$	(8,589	)	$	(35,525	)
		Interest Income			(223	)		(325	)		(734	)		(703	)
		Interest Expense			933			1,529			6,403			10,878
		Income tax (benefit) expense			(281	)		—			214			—
		Depreciation and Amortization Expense			1,107			1,425			5,147			4,928
		Any non-cash transactions:
			Foreign currency (gains) losses		(111	)		148			2,366			252
			Adjustments related to Inventory		874			246			1,159			1,331
			Other non-cash charges		294			42			452			226


			Consolidated EBITDA from continuing operations	$	(1,148	)	$	2,401		$	6,418		$	(18,613	)

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 and may not reflect EBITDA from continuing operations as calculated by other parties. The above table reconciles GAAP Net Loss from continuing operations to EBITDA from continuing operations for the reported periods.

The Allied Defense Group, Inc.
Condensed Consolidated Balance Sheet
(All amounts in thousands of U.S. Dollars)


			December 31,
ASSETS			2008			2007
Current Assets
	Cash and cash equivalents		$	8,816		$	21,651
	Restricted cash			9,666			13,052
	Accounts receivable, net			12,646			6,064
	Costs and accrued earnings on uncompleted contracts			21,999			37,764
	Inventories, net			21,508			20,950
	Fair value of foreign exchange contracts
	Prepaid and other current assets			4,606			3,947
	Assets held for sale			4,474			32,525
		Total current assets		83,715			135,953

Property, Plant and Equipment, net				19,525			24,047

Other Assets				459			251

	Intangible assets, net
	Long-term inventory			3,072			2,412
	Other assets			459			251
		Total other assets		3,531			2,663

TOTAL ASSETS			$	103,699		$	160,251

CURRENT LIABILITIES
	Current maturities of senior secured convertible notes		$	933		$	13,610
	Bank overdraft facility			381			7,239
	Current maturities of foreign exchange contract			405			-
	Current maturities of long-term debt			2,659			823
	Accounts payable			14,536			15,555
	Accrued liabilities			16,099			15,264
	Customer deposits			16,731			26,666
	Belgium social security			3,522			8,307
	Income taxes			3,913			3,664
	Liabilities held for sale			1,316			7,404
		Total current liabilities		60,495			98,532

LONG TERM OBLIGATIONS
	Long-term debt, less current maturities and unamortized discount			6,681			9,439
	Senior secured convertible notes, less current maturities			-			5,782
	Long-term foreign exchange contract, less current maturities			1,072			-
	Derivative instrument			318			183
	Other long-term liabilities			682			660

		Total long-term obligations		8,753			16,064

TOTAL LIABILITIES				69,248			114,596

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, 8,079,509 in 2008 and 8,013,161 in 2007			808			801
	Capital in excess of par value			55,912			55,355
	Accumulated deficit			(38,351	)		(27,909	)
	Accumulated other comprehensive income			16,082			17,408
		Total stockholders' equity		34,451			45,655

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	103,699		$	160,251

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.
For more Information, please visit the Company web site: www.allieddefensegroup.com.

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.


FOR IMMEDIATE RELEASE		For More Information, Contact:
March 31, 2009		Geoff Grande, CFA