Revenues for the Third Quarter Increased by 35.4% YOY YAHUD,
Israel, November 5 /PRNewswire-FirstCall/ -- Magal Security Systems
Ltd. (Nasdaq GM: MAGS; TASE: MAGS) today announced its consolidated
financial results for the three and nine-month periods ended
September 30, 2007. The results include the consolidation as of
September 1, 2007, of its recently acquired European subsidiary,
that is engaged in the installation and integration of security
systems. Third Quarter Results Revenues for the third quarter of
2007 were US$21.9 million, an increase of 35.4% compared with the
third quarter of 2006 and an increase of 46.4% compared with second
quarter of 2007. Gross profit for the third quarter of 2007 reached
US$7.9 million, an increase of 14.8% over the third quarter of 2006
and an increase of 19.9 % compared with second quarter of 2007.
Gross margin for the third quarter was 36.1%, compared with 42.6%
in the third quarter of 2006 and 44.1% in the second quarter 2007.
The lower gross margin was the result of a special and prestigious
project for the Israeli government which bears a low margin.
Operating income for the third quarter of 2007, including a
one-time charge of $960,000, totaled US$95,000, compared with
US$1.2 million for the third quarter of 2006, and compared with
US$761,000 in the second quarter 2007. The one-time charge relates
to contractual post employment benefits for the Company's chairman
who will retire at the end of the fourth quarter of 2007. Financial
expenses for the third quarter of 2007 totaled US$981,000 and
included approximately US$700,000 of foreign exchange losses
resulting from the devaluation of the US dollar aginst both the new
Israeli Shekel and the Canadian dollar. Income taxes for the third
quarter of 2007 reached US$749,000, which include a tax provision
for final tax assessments in the amount of US$500,000 relating to
the years 2001-2004. Net loss for the third quarter of 2007,
including the one-time charge relating to post-employment benefits
and the tax provision for final tax assessment relating to prior
years, totaled US$1.6 million, compared to net income of US$623,000
in the third quarter of 2006 and US$342,000 in the second quarter
of 2007. Diluted loss per share was US$0.16, compared to diluted
earnings per share of US$0.06 in the third quarter of 2006.
Operating income, on a non-GAAP basis for the third quarter of
2007, which excludes the impact of the one-time post employment
benefits charge of $960,000, reached US$1.1 million, a decrease of
14.1% over the third quarter of 2006, and a sequential increase of
38.6% over the second quarter of 2007. Operating margin for the
quarter, excluding the one-time charge reached 4.8%, compared to
7.6% in the third quarter of 2006. Net loss on a non-GAAP basis for
the third quarter of 2007 was US$367,000, or $0.04 per fully
diluted share. Nine Month Results Revenues for the first nine
months of 2007 reached US$51.9 million, an increase of 16.6%
compared with the same period in 2006. Gross profit for the first
nine months of 2007 reached US$21.0 million, an increase of 11.7%
compared with the same period in 2006. Operating income for the
first nine months of 2007 reached US$1.6 million, a decrease of
31.9% compared to US$2.4 million in the same period in 2006.
Excluding the one-time charge recorded in relation to the special
post employment benefit, operating income on a non-GAAP basis for
the first nine months of 2007 increased to US$2.6 million,
representing a 4.9% operating margin. Net loss for the first nine
months period of 2007 reached US$1.0 million, compared to net
income of US$1.0 million in the same period in 2006. Diluted loss
per share for the first nine months ended September 30, 2007 was
US$0.10, compared with diluted earnings per share of US$0.10 in the
same period of last year. "We are very pleased to report another
good quarter for the company in terms of generating strong revenues
and signing new orders for our full basket of products, further
expanding our global presence," commented Mr. Izhar Dekel, CEO of
Magal. "We continue to generate strong demand for our products and
expect to surpass 2006 in terms of revenues and excluding the
one-time charges of this quarter, we expect that our operating
profit will also surpass 2006." Mr. Dekel continued, "This quarter
we took another substantial step in our strategy of expanding our
global presence and range of solutions offerings. During the
quarter we completed the acquisition of a European company involved
in the installation and integration of security systems that is
active in geographic areas where Magal has historically had limited
activity. This is a very important milestone for our company in
terms of our expansion in the integration field, particularly in
countries with strong growth potential. Furthermore, we continue to
see increased demand for Magal's solutions from both the military
and civilian space, worldwide." Use of Non-GAAP Financial
Information In addition to disclosing financial results calculated
in accordance with United States generally accepted accounting
principles (GAAP), this release of operating results also contains
non-GAAP financial measures, which Magal believes are the principal
indicators of the operating and financial performance of its
business. The non-GAAP financial measures exclude the effects of
one time post-employment benefit charges and a provision for final
tax assessments for prior years. Management believes the non-GAAP
financial measures provided are useful to investors' understanding
and assessment of Magal's on-going core operations and prospects
for the future, as the charges eliminated are not part of the
day-to-day business or reflective of the core operational
activities of the company. Management uses these non-GAAP financial
measures as a basis for strategic decisions, forecasting future
results and evaluating the company's current performance. However,
such measures should not be considered in isolation or as
substitutes for results prepared in accordance with GAAP.
Reconciliation of the non-GAAP measures to the most comparable GAAP
measures are provided in the schedules attached to this release.
Conference Call The Company will be hosting a conference call later
today at 10:00 am EST. On the call, Mr. Izhar Dekel, CEO and Mrs.
Raya Asher, V.P. Finance & CFO, will review and discuss the
results and will be available to answer investor questions. To
participate, please call one of the following teleconferencing
numbers. Please begin placing your calls at least 10 minutes before
the conference call commences. If you are unable to connect using
the toll-free numbers, please try the international dial-in number.
US Dial-in Number: 1-888-668-9141 UK Dial-in Number: 0-800-917-5108
Israel Dial-in Number: 03-918-0688 International Dial-in Number:
+972-3-918-0688 at: 10:00 am Eastern Time; 7:00 am Pacific Time;
5:00 pm Israel Time A replay of the call will be available from the
day after the call. The link to the replay will be accessible from
Magal's website at: http://magal-ssl.com/. 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 in the U.S. 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. Magal
trades under the symbol MAGS in the U.S. on the Nasdaq Global
Market and in Israel on the Tel-Aviv Stock Exchange (TASE). 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. UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (All numbers except EPS
expressed in thousands of US$) Nine Months Ended Quarter Ended
September September 30, 30, 2007 2006 % change 2007 2006 % change
Revenues 51,886 44,506 16.6 21,884 16,160 35.4 Cost of revenues
30,881 25,700 20.2 13,981 9,276 50.7 Gross profit 21,005 18,806
11.7 7,903 6,884 14.8 Operating expenses: Research and development,
net 3,885 3,802 2.2 1,283 1,152 11.4 Selling and marketing 9,734
8,115 20.0 3,858 2,830 36.3 General and administrative 4,825 4,537
6.3 1,707 1,674 2.0 Special post employment benefit 960 - - 960 - -
Total operating expenses 19,404 16,454 17.9 7,808 5,656 38.0
Operating income 1,601 2,352 (31.9) 95 1,228 (92.3) Financial
expense, net 1,419 640 121.7 981 260 277.3 Income (loss) from
continuing operations before income taxes 182 1,712 (89.4) (886)
968 - Income taxes 1,177 616 91.1 749 345 117.1 Net income (loss)
from continuing operations (995) 1,096 - (1,635) 623 - Loss on
discontinued operations, net - 55 - - - - Net income (loss) (995)
1,041 - (1,635) 623 - Net income (loss) per share: Basic $ (0.10) $
0.10 - $ (0.16) $ 0.06 - Diluted $ (0.10) $ 0.10 - $ (0.16) $ 0.06
- Weighted average number of shares Outstanding: Basic 10,394
10,382 10,395 10,390 Diluted 10,442 10,447 10,429 10,435 FINANCIAL
RATIOS Nine Months Ended Quarter Ended September 30, September 30,
2007 2006 2007 2006 Gross margin 40.5 42.3 36.1 42.6 Research and
development, net as a % of revenues 7.5 8.5 5.9 7.1 Selling and
Marketing as a % of revenues 18.8 18.2 17.6 17.5 General and
administrative as a % of revenues 9.3 10.2 7.8 10.4 Operating
margin 3.1 5.3 0.4 7.6 Net income margin (after discontinued
operation) (1.9) 2.3 (7.5) 3.9 Total bank debt to total
capitalization * 0.55 **0.43 * 0.55 **0.43 Current ratio * 1.75
**2.12 * 1.75 **2.12 * As of September 30, 2007 ** As of December
31, 2006 MAGAL SECURITY SYSTEMS LTD. Reconciliation of GAAP to
NonGAAP Measures (Unaudited) (All numbers except EPS expressed in
thousands of US$) Quarter Ended September 30,2007 GAAP Non-GAAP
Revenues $ 21,884 $ 21,884 Cost of revenues 13,981 13,981 Gross
profit 7,903 7,903 Operating expenses: Research and development,
net 1,283 1,283 Selling and marketing 3,858 3,858 General and
administrative 1,707 1,707 Special post employment benefit 960 -
Total operating expenses 7,808 6,848 Operating income 95 1,055
Financial expense, net 981 981 Income (loss) from continuing
operations before income taxes (886) 74 Income taxes 749 441 Net
income (loss) from continuing operations (1,635) (367) Loss on
discontinued operations, net - - Net income (loss) $ (1,635) $
(367) Net income (loss) per share: Basic $ (0.16) $ (0.04) Diluted
$ (0.16) $ (0.04) Weighted average number of shares outstanding:
Basic 10,395 10,395 Diluted 10,429 10,429 Non-GAAP net income
(loss) $ (367) Reconciliation items: Special post employment
benefit (960) Income taxes with respect to 192 Special post
employment benefit Income taxes * (500) GAAP net loss $ (1,635) *)
final tax assessments relating to the years 2001-2004. FINANCIAL
RATIOS GAAP Non-GAAP Gross margin 36.1 36.1 Research and
development, net as a % of revenues 5.9 5.9 Selling and Marketing
as a % of revenues 17.6 17.6 General and administrative as a % of
revenues 7.8 7.8 Operating margin 0.4 4.8 Net income margin (after
discontinued operation) (7.5) (1.7) MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (All numbers
expressed in thousands of US$) September December 30, 31, 2007 2006
CURRENT ASSETS: Cash and cash equivalents $ 6,447 $ 4,908
Marketable securities 4,105 3,067 Short term bank deposits 14,841
14,186 Trade receivables 28,624 28,027 Unbilled accounts receivable
7,475 5,389 Other accounts receivable and prepaid expenses 4,887
3,995 Deferred income taxes 2,120 1,604 Inventories 16,395 13,971
Total current assets 84,894 75,147 Long term investments and
receivables: Long-term trade receivables 281 224 Long-term loans
715 622 Long-term bank deposits 1,800 4,800 Severance pay fund
2,592 2,401 Total long term investments and receivables 5,388 8,047
PROPERTY AND EQUIPMENT, NET 14,148 14,366 OTHER ASSETS, NET 16,494
6,121 Total assets $ 120,924 $103,681 CURRENT LIABILITIES:
Short-term bank credit $ 25,013 $ 17,026 Current maturities of
long-term bank debt 795 795 Trade payables 10,295 6,001 Other
accounts payable, accrued expenses and customer advances 12,517
11,608 Total current liabilities 48,620 35,430 LONG-TERM
LIABILITIES: Long-term bank debt 7,937 7,399 Long-term accounts
payable - 178 Accrued severance pay 3,346 2,524 Total long-term
liabilities 11,283 10,101 SHAREHOLDERS' EQUITY 61,021 58,150 TOTAL
LIABILITIES AND $ 120,924 $103,681 SHAREHOLDERS' EQUITY 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 E-mail: E-mail:
DATASOURCE: Magal Security Systems Ltd CONTACT: Contacts: Company:
Magal Security Systems, Ltd, Raya Asher, CFO, Tel: +972-3-5391444,
E-mail: ; Investor Relations, Gelbart Kahana Investor Relations,
Ehud Helft/Kenny Green, Tel: +1-866-704-6710, E-mail:
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