Magal Security Systems Ltd. Announces 2004 Fourth Quarter and Full
Year Results YAHUD, Israel, February 14 /PRNewswire-FirstCall/ --
Magal Security Systems Ltd. (NASDAQ NM:MAGS ; TASE:MAGS) today
announced its consolidated financial results for the three and
twelve month periods ended December 31, 2004. Revenues for the
fourth quarter of 2004 reached US$17.0 million, a decrease of 3.9
percent from US$17.7 million reported for the fourth quarter of
2003 and a sequential increase of 11.3 percent over US$15.3 million
achieved for the third quarter of 2004. Gross profit for the fourth
quarter of 2004 reached US$7.6 million (or 45.0 percent of
revenues), compared with US$7.9 million (or 44.5 percent of
revenues) for the fourth quarter of 2003 and US$6.8 million (or
44.7 percent of revenues) for the third quarter of 2004. Operating
income for the fourth quarter of 2004 reached US$855,000 compared
with $1.1 million for the fourth quarter of 2003 and US$1.2 million
for the third quarter of 2004. Net income for the fourth quarter of
2004 reached US$442,000, compared with net income of US$529,000 for
the fourth quarter of 2003 and net income of US$663,000 in the
third quarter of 2004. Diluted earnings per share for the fourth
quarter was US$0.05, compared with diluted earnings per share of
US$0.06 in the same period last year. Total revenues for the year
ended December 31, 2004 reached US$61.0 million, an increase of 2.7
percent compared with US$59.4 million reported for the year ended
December 31, 2003. Operating and net income for 2004, reached
US$2.9 million and US$1.1 million, respectively, compared with
US$4.3 million and US$2.4 million achieved for 2003, respectively.
This represents a decrease of 32.5 percent and 56.2 percent,
respectively, over 2003. In 2004, the Company recorded an expense
of US$1.2 million relating to an award granted in the second
quarter of 2004 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), such a grant was recorded as an expense in the second
quarter, although it did not affect the Company's shareholders'
equity nor its statement of cash-flows. Diluted earnings per share
for the year ended December 31, 2004 was US$0.12, compared with
US$0.29 in year ended December 31, 2003. Commenting on the results,
Mr. Jacob Even-Ezra, Chairman of Magal, said: "Magal's revenues
that were generated from markets outside of Israel increased as
planned in 2004 and offset the decrease in income from the seamline
project in Israel. The seamline project, which made a major
contribution to the Company's revenues in 2003, was stalled due to
litigation in Israel. Management is satisfied with the fact that
the Company was once again able to show its strength in the
different markets in the world and that the Company's revenues
increased in 2004 despite the weakness in the Israeli market. We
believe that in 2005, Magal will receive new orders for the
seamline project." "If we compare the Company's income before tax
in 2004 with 2003, our income before tax increased slightly in 2004
if we exclude the expenses associated with the award to employees
granted by our two principal shareholders out of their personal
funds." Mr. Even-Ezra concluded: "Based on our current backlog and
forecasts, management believes that the Company's results in 2005
will show significant improvement over 2004." 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 fourth
quarter and full year 2004 results. They will then be available to
answer questions. To participate, you may call one of the
teleconferencing numbers that follows: 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 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. For those unable to participate in the conference call,
there will be a replay available from two hours after the call ends
until Wednesday, February 16th, 11:00am EST. To listen to the
replay please dial: +1-888-269-0005 (US) or +972-3-9255-939
(international). 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: CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (All numbers except EPS expressed in thousands of US$) Year
Ended Dec. 31, Quarter Ended Dec. 31, Unaudited 2004 2003 % 2004
2003 % growth growth Revenues 60,974 59,361 2.7 16,988 17,686 (3.9)
Cost of revenues 33,725 33,378 1.0 9,347 9,815 (4.8) Gross profit
27,249 25,983 4.9 7,641 7,871 (2.9) Operating expenses: Research
and 4,683 4,773 (1.9) 1,197 1,303 (8.1) development, net Selling
and marketing 12,679 11,585 9.4 3,951 4,223 (6.4) General and 5,771
5,305 8.8 1,638 1,259 30.1 administrative Award granted by 1,200 -
- - principal shareholders Total operating 24,333 21,663 12.3 6,786
6,785 - expenses Operating income 2,916 4,320 (32.5) 855 1,086
(21.3) Financial expenses, net 762 1,003 (24.0) 188 281 (33.1)
Income before taxes 2,154 3,317 (35.1) 667 805 (17.1) Taxes on
income 1,101 913 20.6 225 276 (18.5) Net income 1,053 2,404 (56.2)
442 529 (16.4) Basic net earnings per 0.12 0.29 0.05 0.06 share
Weighted average number of shares Outstanding used in Computing
basic net earnings per 8,581 8,345 8,636 8,404 share (in thousands)
Diluted net earnings 0.12 0.29 0.05 0.06 per share Weighted average
number of shares Outstanding used in Computing Diluted net earnings
8,636 8,431 8,659 8,483 per share (in thousands) FINANCIAL RATIOS
Year Ended Quarter Ended December 31, December 31, 2004 2003 2004
2003 Gross Margin 44.7% 43.8% 45.0% 44.5% Research and development,
7.7% 8.0% 7.0% 7.4% net as a % of Revenues Selling and Marketing as
a % 20.8% 19.5% 23.3% 23.9% of Revenues General and administrative
9.5% 8.9% 9.6% 7.1% as a % of Revenues Operating Margin 4.8% 7.3%
5.0% 6.1% Net income Margin 1.7% 4.1% 2.6% 3.0% Total Bank Debt to
Total 0.48 0.47 0.48 0.47 Capitalization Current Ratio 1.77 1.76
1.77 1.76 MAGAL SECURITY SYSTEMS LTD. CONDENSED CONSOLIDATED
BALANCE SHEETS (All numbers expressed in thousands of US$) December
December 31, 31, 2004 2003 CURRENT ASSETS: Cash and cash
equivalents 5,824 4,389 Short-term bank deposits 6,140 9,000 Trade
receivables 13,232 14,885 Unbilled accounts receivable 7,465 5,072
Other accounts receivable 3,858 (*3,857 Deferred income taxes 488
(*454 Inventories 12,702 11,777 Total current assets 49,709 49,434
Long term investments and trade receivables: Long-term trade
receivables 344 300 Long-term bank deposits 5,994 3,051 Severance
pay fund 2,142 1,960 Total long term investments and trad 8,480
5,311 receivables PROPERTY AND EQUIPMENT, NET 14,659 11,505 OTHER
ASSETS, NET 5,128 5,193 Total assets 77,976 71,443 CURRENT
LIABILITIES: Short-term bank credit 15,618 12,597 Current
maturities of long-term bank loans 1,849 3,841 Trade payables 3,189
5,077 Other accounts payable and accrued expenses 7,450 6,518 Total
current liabilities 28,106 28,033 LONG-TERM LIABILITIES: Long-term
bank loans 3,500 1,873 Accrued severance pay 2,172 1,992 Long-term
liability in respect of forward 650 561 contracts Total long terms
liabilities 6,322 4,426 SHAREHOLDERS' EQUITY: Share capital 2,825
2,683 Additional paid-in capital 31,865 24,098 Accumulated other
comprehensive income 1,823 479 Retained earnings 7,035 11,724 Total
shareholders' equity 43,548 38,984 TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 77,976 71,443 (* Reclassified DATASOURCE:
Magal Security Systems Ltd. CONTACT: Company, Magal Security
Systems, Ltd, Raya Asher, CFO, Tel: +972-3-5391444, Fax:
+972-3-5366245, E-mail: or Investor Relations, Gelbart Kahana
Investor Relations, Ehud Helft/Kenny Green, Tel: +1-866-704-6710,
E-mail: ,
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