Magal Security Systems Ltd. Announces Second Quarter 2005 Results
Second Quarter 2005 Revenues Increased 19% YoY and 25% Sequentially
With Net Income Showing 63% Sequential Growth YAHUD, Israel, July
28 /PRNewswire-FirstCall/ -- Magal Security Systems Ltd. (Nasdaq
NM:MAGS; TASE:MAGS) today announced its consolidated financial
results for the second quarter and six-month period ended June 30,
2005. Revenues for the second quarter of 2005 reached US$17.3
million, an increase of 19 percent compared with the second quarter
of 2004 and an increase of 24.7 percent over the first quarter of
2005. Gross profit for the second quarter of 2005 reached US$7.4
million (43.1 percent of revenues), an increase of 14.2 percent
over the second quarter of 2004 and an increase of 18.6 percent
compared with first quarter of 2005. Operating and net income in
the second quarter of 2005, reached US$809,000 and US$481,000,
respectively, compared with operating and net loss of US$(345,000)
and US$(739,000) respectively, for the second quarter of 2004. In
the second quarter of 2004, the Company recorded an expense of
US$1.2 million relating to an award granted by the Company's two
principal shareholders out of their personal funds to all of the
Company's employees. According to generally accepted accounting
principles in the United States (US GAAP), this grant was recorded
as an expense in the second quarter of 2004, although it did not
affect the Company's shareholders' equity nor its statement of cash
flow. Diluted earnings per share for the second quarter was
US$0.05, compared with diluted loss per share of US$(0.09) in the
same period last year. Revenues for the first six months of 2005
reached US$31.1 million, an increase of 8.3 percent compared with
the same period in 2004. Operating income and net income for the
six-month period, reached US$1.7 million and US$ 776,000,
respectively, compared with operating income and net loss of US$
872,000 and US$ (52,000) respectively, for the first six months of
2004. Diluted earnings per share for the six-month period was
US$0.08, compared with diluted loss per share of US$(0.01) in the
same period of last year. Commenting on the results, Mr. Jacob
Even-Ezra, Chairman of Magal and CEO, said: "As expected, the
second quarter of 2005 showed improvement over the first quarter of
2005 and the second quarter of 2004. Management expects the
increase in revenues, as well as in operating and net income to
continue into the second half of the year as well, due to the
increase in the Company's backlog of orders." Mr. Even-Ezra added:
"Our net income grew sequentially by 63%. However, due to the
increased share count of 1,700,000 shares issued in to the
secondary offering completed in April, our earnings per share grew
sequentially by 40%. With that, I would like to welcome the many
top institutional investment funds that invested in the secondary,
as well as all our other new shareholders, and hope that you stay
with us for the long-term." The Company also announced that at the
Annual General Meeting of Shareholders that took place today, the
following directors were re-elected to the board: Jacob Even-Ezra,
Izhar Dekel, Nathan Kirsh, Jacob Nuss, Jacob Perry and Zeev Livne.
The Company also announced that all other matters on the agenda on
the notice of annual general meeting of shareholders were approved.
The Company will be hosting its quarterly conference call at
11:00am EST. On the call, Mr. Jacob Even-Ezra, Chairman of the
Board & CEO, and Ms. Raya Asher, V.P. Finance & CFO, will
review and discuss the second quarter 2005 results. They will then
be available to answer questions. To participate, you may listen to
the webcast by accessing the link from Magal's web-site at:
http://www.magal-ssl.com/. Alternatively, you may call one of the
teleconferencing numbers that follows. Please place your calls 5-10
minutes before the conference call commences. If you are unable to
connect using one of the toll-free numbers, please try the
international dial-in number or the webcast. US Dial-in Number:
1-866-860-9642 Canada Dial-in Number: 1-866-485-2399 ISRAEL Dial-in
Number: 03-918-0610 INTERNATIONAL Dial-in Number: +972-3-918-0610
At: 11:00am Eastern Time 8:00am Pacific Time 6:00pm Israel Time
About Magal Security Systems, Ltd.: Magal Security Systems Ltd.
(Magal) is engaged in the development, manufacturing and marketing
of computerized security systems, which automatically detect,
locate and identify the nature of unauthorized intrusions. Magal
also supplies video monitoring services through Smart Interactive
Systems, Inc., a subsidiary established in the U.S. in June 2001.
The Company's products are currently used in more than 70 countries
worldwide to protect national borders, airports, correctional
facilities, nuclear power stations and other sensitive facilities
from terrorism, theft and other threats. Israeli-based Magal has
subsidiaries in the U.S., Canada, the U.K., Germany, Romania,
Mexico and an office in China. Magal trades under the symbol MAGS
in the U.S. on the Nasdaq National Market since 1993 and in Israel
on the Tel-Aviv Stock Exchange (TASE) since July 2001. This press
release contains forward-looking statements, which are subject to
risks and uncertainties. Such statements are based on assumptions
and expectations which may not be realized and are inherently
subject to risks and uncertainties, many of which cannot be
predicted with accuracy and some of which might not even be
anticipated. Future events and actual results, financial and
otherwise, may differ from the results discussed in the
forward-looking statements. A number of these risks and other
factors that might cause differences, some of which could be
material, along with additional discussion of forward-looking
statements, are set forth in the Company's Annual Report on Form
20-F filed with the Securities and Exchange Commission. Contacts:
Magal Security Systems, Ltd Gelbart Kahana Investor Relations Raya
Asher, CFO Ehud Helft, Investor Relations Tel: +972-3-5391444 Tel:
+1-866-704-6710 Fax: +972-3-5366245 Tel (Intl): +972-3-6074717
E-mail: E-mail: , -FINANCIAL TABLES FOLLOW- MAGAL SECURITY SYSTEMS
LTD. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (All numbers
except EPS expressed in thousands of US$) Six Months Ended June 30,
Quarter Ended June 30, 2005 % change 2004 2005 % change 2004
Revenues $ 31,099 8.3 $ 28,715 $ 17,260 19.0 $ 14,500 Cost of
17,393 9.1 15,935 9,823 22.9 7,990 revenues Gross Profit 13,706 7.2
12,780 7,437 14.2 6,510 Operating expenses: Research and 2,432 6.1
2,293 1,276 9.8 1,162 development, net Selling and 6,681 17.3 5,697
3,915 27.3 3,076 marketing, net General and 2,850 4.9 2,718 1,437
1.4 1,417 administrative Award granted - 1,200 - 1,200 by principal
shareholders 11,963 0.5 11,908 6,628 (3.3) 6,855 Operating 1,743
99.9 872 809 (345) income (loss) Financial 369 5.1 351 40 (84.5)
258 expenses, net Income (loss) before taxes on income 1,374 163.7
521 769 (603) Taxes on income 598 4.4 573 288 111.8 136 Net income
$ 776 $ (52) $ 481 $ (739) (loss) Basic net earnings (loss) per
share $ 0.08 $(0.01) $ 0.05 $ (0.09) Diluted net $ 0.08 $(0.01) $
0.05 $ (0.09) earnings (loss) per share Weighted average ordinary
shares outstanding (in thousands) 9,382 8,132 10,092 8,199 Weighted
average ordinary shares outstanding assuming dilution (in
thousands) 9,525 8,244 10,374 8,301 FINANCIAL RATIOS Six months
Ended June Quarter Ended June 30, 30, 2005 2004 2005 2004 Gross
Margin (%) 44.1% 44.5% 43.1% 44.9% R&D as a % of Revenues 7.8%
8.0% 7.4% 8.0% Selling & Marketing as 21.5% 19.8% 22.7% 21.2% a
% of Revenues G&A Expenses as a % of 9.2% 9.5% 8.3% 9.8%
Revenues Operating Margin (%) 5.6% 3.0% 4.7% Loss Net Income Margin
(%) 2.5% Loss 2.8% Loss Total Debt to Total *0.37 **0.48 *0.37
**0.48 Capitalization Current Ratio *2.17 **1.77 *2.17 **1.77 * As
of June 30, 2005 ** As of December 31, 2004 MAGAL SECURITY SYSTEMS
LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (All numbers expressed
in thousands of US$) June 30, December 31, 2005 2004 CURRENT
ASSETS: Cash and cash equivalents $29,802 $11,964 Trade receivables
9,182 13,232 Unbilled accounts receivable 14,625 7,465 Other
accounts receivable 3,182 3,858 Deferred income taxes 375 488
Inventories 11,777 12,702 Total current assets 68,943 49,709 Long
term investments and trade receivables: Long-term trade receivables
414 344 Long-term bank deposits and structure notes 6,074 5,994
Severance pay fund 1,990 2,142 Total long term investments and
trade 8,478 8,480 receivables PROPERTY AND EQUIPMENT, NET 14,912
14,659 OTHER ASSETS, NET 5,073 5,128 Total assets $97,406 $77,976
CURRENT LIABILITIES: Short-term bank credit $17,196 $15,618 Current
maturities of long-term bank loans 1,796 1,849 Trade payables 4,373
3,189 Other accounts payable and accrued expenses 8,421 7,450 Total
current liabilities 31,786 28,106 LONG-TERM LIABILITIES: Long-term
bank loans 3,500 3,500 Accrued severance pay 2,048 2,172 Long-term
liability in respect of forward 64 650 contracts Total long terms
liabilities 5,612 6,322 SHAREHOLDERS' EQUITY $60,008 $43,548 TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY $97,406 $77,976 DATASOURCE:
Magal Security Systems Ltd. CONTACT: Contacts: Magal Security
Systems, Ltd, Raya Asher, CFO, Tel: +972-3-5391444, Fax:
+972-3-5366245, E-mail: ; Gelbart Kahana Investor Relations, Ehud
Helft, Investor Relations , Tel: +1-866-704-6710, Tel (Intl):
+972-3-6074717, E-mail: ,
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