Magal Security Systems Ltd. Announces Second Quarter and Six Months
Financial Results -Revenues Increases 7% Compared With the Second
Quarter of 2003 and 9% for the First Six Months Ended June 30, 2004
Compared to the Same Period in 2003- YAHUD, Israel, August 2
/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,
2004. Revenues for the second quarter of 2004 reached US$14.5
million, an increase of 7.1 percent compared with the second
quarter of 2003 and an increase of 2.0 percent over the first
quarter of 2004. Gross profit for the second quarter of 2004
reached US$6.5 million (44.9% of revenues), an increase of 2.8%
over the second quarter of 2003 and an increase of 3.8% compared
with first quarter of 2004. Operating and net income in the second
quarter of 2004, excluding a US$1.2 million award granted to
employees by the Company's two principal shareholders out of their
personal funds, reached US$855,000 and US$461,000, respectively, a
decrease of 37.6 percent and 45.1 percent respectively compared
with the second quarter of 2003. For financial reporting purposes,
according to the generally accepted accounting principles in the
United States, such a grant was recorded in Magal's second quarter
statement of income as an expense, although it has not effected the
total shareholders' equity nor the statement of cash- flows.
Operating and net loss in the second quarter of 2004, including the
award, reached US$(345,000) and US$(739,000), respectively,
compared with operating and net income of US$1.4 million, and
US$840,000, respectively, for the second quarter of 2003. The
increase in operating expenses in the second quarter of 2004 is
principally attributable to higher selling and marketing expenses,
which increased by 25.8 percent compared with the second quarter of
2003 and by 17.4 percent compared with the first quarter of 2004.
The increase in selling and marketing expenses reflects the
company's considerable investment in the release of its two new
products, DreamBox and PipeGuard. Revenues for these new products
are not expected until the fourth quarter of 2004 and in 2005.
Diluted loss per share, including the award expenses, for the
second quarter was US$(0.09), compared with diluted earnings per
share of US$0.11 in the same period last year. Revenues for the
first six months of 2004 reached US$28.7 million, an increase of
9.0 percent compared with the same period in 2003. Operating income
and net income for the six-months period, excluding the US$1.2
million award granted to employees by the Company's two principal
shareholders out of their personal funds, reached US$2.1 million
and US$1.1 million, respectively, a decrease of 15.0 percent and
16.3 percent, respectively compared with the first six months of
2003. Operating income and net loss for the six-month period,
including the award, reached US$872,000 and US$(52,000),
respectively. Diluted loss per share, including the award expenses,
for the six-month period was US$(0.01), compared with US$0.17 in
the same period of last year. Commenting on the results, Mr. Jacob
Even-Ezra, Chairman of Magal, said: "Even though there was a slow
down in one of our major projects - the seam line project in
Israel, the growth in the rest of our business more than
compensated for this and we were still able to show a small
increase in revenues." Mr. Jacob Even-Ezra concluded, "Based on the
traction and interest for both our existing and new products that
we are seeing, we have every reason to believe that the second half
of the year will be better than the first half on both the top and
bottom lines." The Company will be hosting its quarterly conference
call at 11:00am EST. today. Mr. Jacob Even-Ezra, Chairman of the
Board & CEO, and Ms. Raya Asher, V.P. Finance & CFO, will
review and discuss the second quarter 2004 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. 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: -FINANCIAL TABLES FOLLOW- MAGAL
SECURITY SYSTEMS LTD. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(All numbers except EPS expressed in thousands of US$) Six Months
Ended Quarter Ended June June 30 30 2004 % change 2003 2004 %
change 2003 Revenues $28,715 9 $26,343 $14,500 7 $13,542 Cost of
revenues 15,935 9 14,609 7,990 11 7,209 Gross Profit 12,780 9
11,734 6,510 3 6,333 Operating Expenses: Research and 2,293 5 2,190
1,162 5 1,106 development, net Selling and 5,697 30 4,375 3,076 26
2,445 marketing, net General and 2,718 (1) 2,731 1,417 0 1,411
administrative Award granted by 1,200 --- - 1,200 --- - principal
shareholders Total operating 11,908 28 9,296 6,855 38 4,962
expenses Operating Income 872 (64) 2,438 (345) (125) 1,371 (LOSS)
Financial 351 (45) 641 258 (17) 310 expenses, net Income (LOSS)
before taxes on income 521 (71) 1,797 (603) (157) 1,061 Taxes on
income 573 35 425 136 (38) 221 Net income (loss) $ (52) (104) $
1,372 $ (739) (188) $ 840 BASIC net Earnings $ (0.01) $ 0.17 $
(0.09) $ 0.11 (loss) per share 8,132 7,911 8,199 7,927 SHARES USED
IN COMPUTING BASIC net earnings (loss) PER SHARE (IN THOUSANDS)
DILUTED net $ (0.01) $ 0.17 $ (0.09) $ 0.11 EARNINGS (loss) PER
SHARE SHARES USED IN 8,244 7,987 8,301 7,989 COMPUTING DILUTED net
EARNINGS (loss) PER SHARE (IN THOUSANDS) FINANCIAL RATIOS Six
months Ended Quarter Ended June 30, June 30, 2004 2003 2004 2003
Gross Margin 44.5% 44.5% 44.9% 46.8% R&D as a % of Revenues
8.0% 8.3% 8.0% 8.2% Selling & Marketing as 19.8% 16.6% 21.2%
18.1% a % of Revenues G&A Expenses as a % of 9.5% 10.4% 9.8%
10.4% Revenues Operating Margin 3.0% 9.3% Loss 10.1% Net Income
Margin Loss 5.2% Loss 6.2% Total Debt to Total *0.50 **0.42 *0.50
**0.42 Capitalization Current Ratio *1.79 **1.78 *1.79 **1.78 * As
of June 30, 2004 ** As of December 31, 2003 MAGAL SECURITY SYSTEMS
LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (All numbers expressed
in thousands of US$) June 30, December 31, 2004 2003 Unaudited
CURRENT ASSETS: Cash and cash equivalents 5,304 4,389 Short-term
bank deposits 6,107 9,000 Trade receivables 12,951 14,885 Unbilled
accounts receivable 6,483 5,072 Other accounts receivable 3,448
3,332 Deferred income taxes 986 979 Inventories 11,639 11,777 Total
current assets 46,918 49,434 Long term investments and trade
receivables: Long-term trade receivables 50 300 Long-term bank
deposits 5,984 3,051 Severance pay fund 1,845 1,960 Total long term
investments and trade 7,879 5,311 receivables PROPERTY AND
EQUIPMENT, NET 13,409 11,505 OTHER ASSETS, NET 5,344 5,193 Total
assets 73,550 71,443 CURRENT LIABILITIES: Short-term bank credit
15,020 12,597 Current maturities of long-term 1,098 3,841 bank
loans Trade payables 4,128 5,077 Other accounts payable and 5,942
6,518 accrued expenses Total current liabilities 26,188 28,033
LONG-TERM LIABILITIES: Long-term bank loans 4,317 1,873 Accrued
severance pay 1,969 1,992 Long-term liability in respect 298 561 of
forward contracts Total long terms liabilities 6,584 4,426
SHAREHOLDERS' EQUITY: Share capital 2,721 2,683 Additional paid-in
capital 26,108 24,098 Accumulated other comprehensive 277 497
income Retained earnings 11,672 11,724 Total shareholders' equity
40,778 38,984 TOTAL LIABILITIES AND SHAREHOLDERS' 73,550 71,443
EQUITY 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, Tel:
+1-866-704-6710, E-mail: ,
Copyright