Net Income More Than Doubled Compared With the Second Quarter of 2006 YAHUD, Israel, October 30 /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, 2006. Revenues for the third quarter of 2006 reached US$16.2 million, an increase of 2.5 percent compared with the third quarter of 2005 and an increase of 8.6 percent over the second quarter of 2006. Gross profit for the third quarter of 2006 reached US$6.9 million (42.6 percent of revenues), an increase of 15.8 percent over the third quarter of 2005 and an increase of 10.8 percent compared with the second quarter of 2006. Our cost of revenues for the third quarter of 2006 includes a reduction of a previously recorded provision of US$0.7 million that we made in connection with the cancellation of a turnkey project in Eastern Europe. We reduced the provision based on a result of a recent favourable ruling by the District Court in Haifa, Israel and the opinion of our legal counsel. Operating and net income in the third quarter of 2006, reached US$1.2 million and US$623,000, respectively, compared with an operating and net loss of US$263,000 and US$376,000, respectively, for the third quarter of 2005. Diluted earnings per share for the third quarter were US$0.06, compared with diluted loss per share of US$0.04 in the same period last year. Revenues for the first nine months of 2006 reached US$44.5 million, an increase of 4.2 percent compared with the same period in 2005. Operating and net income for the nine-month period, reached US$2.4 million and US$1 million, respectively, compared with an operating and net loss of US$972,000 and US$1.7 million, respectively, for the first nine months of 2005. Diluted earnings per share for the nine-month period were US$0.10, compared with diluted loss per share of US$0.17 in the same period of last year. Our 2005 financial information includes the reversal of revenues and a corresponding increase in expenses as a result of the cancellation of the Eastern European turnkey project subsequent to the 2005 year end. Commenting on the results, Mr. Izhar Dekel, CEO of Magal, said: "Based on our current backlog, including the previously announced major contract for the Northern border of Israel, and on new orders that we expect to receive during the fourth quarter, management believes that our year-end results will be better than those of last year." The Company will be hosting its quarterly conference call at 10:00am EST today. Mr. Jacob Even-Ezra, Chairman of the Board, Mr. Izhar Dekel, CEO, and Mrs. Raya Asher, V.P. Finance & CFO, will review and discuss the third quarter 2006 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: 10:00am Eastern Time 7:00am Pacific Time 5:00pm 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. Condensed Consolidated Statements of Income (All numbers except EPS expressed in thousands of US$) Nine Months Ended Sep. 30, Quarter Ended Sep. 30, 2006 2005 % 2006 2005 % change change Revenues 44,506 42,725 4.2 16,160 15,761 2.5 Cost of revenues 25,700 26,141 -1.7 9,276 9,817 -5.5 Gross profit 18,806 16,584 13.4 6,884 5,944 15.8 Operating expenses: Research and 3,802 3,769 0.9 1,152 1,337 -13.8 development, net Selling and 8,115 9,569 -15.2 2,830 3,503 -19.2 marketing General and 4,537 4,218 7.6 1,674 1,367 22.5 administrative Total 16,454 17,556 -6.3 5,656 6,207 -8.9 Operating expenses Operating income 2,352 (972) 1,228 (263) Financial 640 485 31.9 260 119 118.4 expense, net Income (loss) 1,712 (1,457) 968 (382) from continuing operations before income taxes Income tax 616 121 409.1 345 (27) (tax benefit) Net Income 1,096 (1,578) 623 (355) (loss) from continuing operations Loss on 55 76 -27.6 - 21 discontinued operations, net Net income (loss) 1,041 (1,654) 623 (376) Basic net $ 0.10 ($0.17) $ 0.06 ($0.04) earnings (losses) per share Weighted average number of shares outstanding used in computing basic net earnings per share 10,382 9,712 10,390 10,372 Diluted net $ 0.10 ($0.17) $ 0.06 ($0.04) earnings (losses) per share Weighted average number of shares outstanding used in computing diluted net earnings per share 10,447 9,811 10,435 10,383 Financial Ratios Nine Months Ended Sep. 30, Quarter Ended Sep. 30, 2006 2005 2006 2005 Gross margin 42.3 38.8 42.6 37.7 Research and 8.5 8.8 7.1 8.5 development, net as a % of revenues Selling and 18.2 22.4 17.5 22.2 Marketing as a % of revenues General and 10.2 9.9 10.4 8.7 administrative as a % of revenues Operating 5.3 (2.3) 7.6 (1.7) margin Net income 2.3 (3.9) 3.9 (2.4) margin (after discontinued operation) Total bank *0.45 **0.41 *0.45 **0.41 debt to total capitalization Current ratio *2.33 **1.86 *2.33 **1.86 * As of September 30, 2006 ** As of December 31, 2005 Condensed Consolidated Statements of Income (All numbers except EPS expressed in thousands of US$) Three months ended Sep. 30, 2005 As As previously adjusted reported Consolidated Statement of Income Data: Revenues $17,721 $15,761 Cost of revenues 10,239 9,817 Gross profit 7,482 5,944 Operating expenses: Research and development, net 1,337 1,337 Selling and marketing, net 3,775 3,503 General and administrative 1,367 1,367 Total operating expenses 6,479 6,207 Operating income (loss) 1,003 (263) Financial expenses, net 119 119 Income (loss) before income taxes 884 (382) Income taxes (tax benefit) 260 (27) Income (loss) from continuing operations 624 (355) Loss from discontinued operations, net 21 21 Net income 603 (376) Magal Security Systems Ltd. Condensed Consolidated Balance Sheets (All numbers expressed in thousands of US$) September 30, December 31, 2006 2005 Current assets: Cash and cash equivalents 4,643 10,099 Short term bank deposits 16,753 17,053 Trade receivables 22,058 24,012 Unbilled accounts receivable 9,027 8,596 Other accounts receivable and prepaid expenses 3,993 4,455 Deferred income taxes 1,237 1,187 Inventories 13,729 11,110 Total current assets 71,440 76,512 Long term investments and receivables: Long-term trade receivables 265 290 Long-term bank deposits 4,800 1,800 Severance pay fund 2,323 2,070 Total long term investments and receivables 7,388 4,160 Property and Equipment, Net 15,517 15,587 Other Assets, Net 5,871 5,583 Total assets 100,216 101,842 Current liabilities: Short-term bank credit 17,958 18,068 Current maturities of long-term bank debt 147 3,647 Trade payables 5,012 6,360 Other accounts payable, accrued expenses and 7,483 12,983 customer advances Total current liabilities 30,600 41,058 Long-term liabilities: Long-term bank debt 8,244 1,653 Accrued severance pay 2,444 2,131 Long-term liability in respect of forward - 50 contracts Total long-term liabilities 10,688 3,834 Shareholders' Equity 58,928 56,950 Total Liabilities and Shareholders' Equity 100,216 101,842 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: 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