Revenues Increase 17% Compared With the Third Quarter of 2004
YAHUD, Israel, November 7 /PRNewswire-FirstCall/ -- Magal Security
Systems Ltd. (Nasdaq NM:MAGS; TASE:MAGS) today announced its
consolidated financial results for the three and nine-month periods
ended September 30, 2005. Revenues for the third quarter of 2005
reached US$17.8 million, an increase of 16.7 percent compared with
the third quarter of 2004 and an increase of 3.3 percent over the
second quarter of 2005. Gross profit for the third quarter of 2005
reached US$7.5 million (42 percent of revenues), an increase of 9.7
percent over the third quarter of 2004 and an increase of 0.8
percent compared with the second quarter of 2005. The fluctuation
in the gross margin was within expected parameters and is due to
the revenues mix between turnkey projects and products. Operating
and net income in the third quarter of 2005, reached US$974,000 and
US$602,000, respectively, compared with operating and net income of
US$1.2 million and US$663,000 respectively, for the third quarter
of 2004. Diluted earnings per share for the third quarter were
US$0.06, compared with diluted earnings per share of US$0.08 in the
same period last year. The decrease was due to a 19% increase in
the number of shares as a result of 1,700,000 share secondary
offering completed in April 2005 and the 9% decrease in net income.
Revenues for the first nine months of 2005 reached US$48.9 million,
an increase of 11.2 percent compared with the same period in 2004.
Operating and net income for the nine-month period, reached US$2.7
million and US$ 1.4 million, respectively, compared with US$ 2.1
million and US$611,000 respectively, for the first nine months of
2004. Diluted earnings per share for the nine-month period were
US$0.14, compared with diluted earnings per share of US$0.07 in the
same period of last year. In the second quarter of 2004, the
Company recorded an expense of US$1.2 million relating to an award
granted to all of the Company's employees by the Company's two
principal shareholders out of their own personal funds. 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 shareholders' equity
nor the Company's cash flow. Commenting on the results, Mr. Jacob
Even-Ezra, Chairman of Magal and CEO, said: "I am pleased to
present good results for the third quarter. Our work on the seam
line project is proceeding at full-steam and according to schedule.
The Israeli Government recently stated that the completion of the
seam-line fence is its top priority and we believe we are very well
placed to win the remaining tenders on the seam-line fence." The
Company will be hosting its quarterly conference call at 11:00am
EST today. Mr. Jacob Even-Ezra, Chairman of the Board & CEO,
and Mrs. Raya Asher, V.P. Finance & CFO, will review and
discuss the third quarter 2005 results. They will then be available
to answer questions. To participate, 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. 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. 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
on the Nasdaq National Market since 1993 and 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: Company Investor Relations Magal Security
Systems, Ltd Gelbart Kahana Investor Relations Raya Asher, CFO Ehud
Helft/Kenny Green Tel: +972-3-5391444 Tel: +1-866-704-6710 Fax:
+972-3-5366245 E-mail: E-mail: MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (All numbers except EPS
expressed in thousands of US$) Nine Months Ended Sep. 30 Quarter
Ended Sep. 30 2005 % change 2004 2005 % change 2004 REVENUES $
48,924 11 $43,986 $ 17,825 17 $15,271 Cost of revenues 27,725 14
24,378 10,332 22 8,443 Gross Profit 21,199 8 19,608 7,493 10 6,828
OPERATING EXPENSES: Research and 3,769 8 3,486 1,337 12 1,193
development, net Selling and marketing, 10,495 20 8,728 3,814 26
3,031 net General and 4,218 2 4,133 1,368 -3 1,415 administrative
Award granted by principal shareholders - 1,200 - - TOTAL OPERATING
18,482 5 17,547 6,519 16 5,639 EXPENSES OPERATING INCOME 2,717 32
2,061 974 -18 1,189 FINANCIAL EXPENSES, NET 485 -16 574 116 -48 223
INCOME BEFORE TAXES ON INCOME 2,232 50 1,487 858 -11 966 TAXES ON
INCOME 854 -3 876 256 -16 303 NET INCOME $ 1,378 126 $ 611 $ 602 -9
$ 663 BASIC NET EARNINGS PER SHARE $ 0.14 $ 0.07 $ 0.06 $ 0.08
SHARES USED IN COMPUTING BASIC NET EARNINGS PER SHARE (IN
THOUSANDS) 9,712 8,565 10,372 8,617 DILUTED NET EARNINGS $ 0.14 $
0.07 $ 0.06 $ 0.08 PER SHARE SHARES USED IN COMPUTING DILUTED NET
EARNINGS PER SHARE (IN THOUSANDS) 9,811 8,673 10,383 8,706
FINANCIAL RATIOS Nine months Ended Sep. 30, Quarter Ended Sep. 30,
2005 2004 2005 2004 Gross Margin 43.3% 44.6% 42.0% 44.7% R&D as
a % of Revenues 7.7% 7.9% 7.5% 7.8% Selling & Marketing as
21.5% 19.8% 21.4% 19.8% a % of Revenues G&A Expenses as a % of
8.6% 9.4% 7.7% 9.3% Revenues Operating Margin 5.6% 4.7% 5.5% 7.8%
Net Income Margin 2.8% 1.4% 3.4% 4.3% Total Debt to Total *0.42
**0.48 *0.42 **0.48 Capitalization Current Ratio *2.16 **1.77 *2.16
**1.77 * As of September 30, 2005 ** As of December 31, 2004 MAGAL
SECURITY SYSTEMS LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (All
numbers expressed in thousands of US$) September 30, December 31,
2005 2004 CURRENT ASSETS: Cash and cash equivalents $25,400 $11,964
Trade receivables 17,179 13,232 Unbilled accounts receivable 13,185
7,465 Other accounts receivable 3,365 3,858 Deferred income taxes
377 488 Inventories 11,020 12,702 Total current assets 70,526
49,709 LONG TERM INVESTMENTS AND TRADE RECEIVABLES: Long-term trade
receivables 391 344 Long-term bank deposits and structure notes
6,028 5,994 Severance pay fund 1,980 2,142 Total long term
investments and trade 8,399 8,480 receivables PROPERTY AND
EQUIPMENT, NET 15,242 14,659 OTHER ASSETS, NET 5,119 5,128 Total
assets $99,286 $77,976 CURRENT LIABILITIES: Short-term bank credit
$20,263 $15,618 Current maturities of long-term bank loans 1,769
1,849 Trade payables 5,192 3,189 Other accounts payable and accrued
expenses 5,420 7,450 Total current liabilities 32,644 28,106
LONG-TERM LIABILITIES: Long-term bank loans 3,500 3,500 Accrued
severance pay 2,038 2,172 Long-term liability in respect of forward
26 650 contracts Total long terms liabilities 5,564 6,322
SHAREHOLDERS' EQUITY 61,078 43,548 TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $99,286 $77,976 DATASOURCE: Magal Security
Systems Ltd. CONTACT: Contacts: Company, Magal Security Systems,
Ltd, Raya Asher, CFO, Tel: +972-3-5391444, Fax: +972-3-5366245,
E-mail: ; Investor Relations, Gelbart Kahana Investor Relations,
Ehud Helft/Kenny Green, +1-866-704-6710, E-mail: ,
Copyright