Magal Security Systems Ltd. Announces 2003 Fourth Quarter and
Year-End Results - 2003 Revenues Increases 38% to a Record of $59.4
Million - YAHUD, Israel, Feb. 10 /PRNewswire-FirstCall/ -- Magal
Security Systems Ltd. (Nasdaq; TASE: MAGS) today announced its
consolidated financial results for the three- and twelve-month
periods ended December 31, 2003. The year 2003 was a record year
for Magal both in revenues and operating income. Total revenues for
the fourth quarter of 2003 reached US$17.7 million, operating
income reached US$1.1 million and net income reached US$529,000, an
increase of 32 percent, 142 percent and 47 percent respectively,
compared to the fourth quarter of 2002. The increase in revenues,
operating income and net income, in the fourth quarter, compared
with the third quarter of 2003, was 15 percent, 37 percent and 5
percent respectively. Total revenues for the year 2003 reached
US$59.4 million, operating income was US$4.3 million and net income
reached US$2.4 million, an increase of 38 percent, 85 percent and
27 percent respectively, compared to the year 2002. Excluding the
impact of Smart Interactive Systems, Inc (SIS), the revenues for
the year 2003 were US$58.9 million, operating income was US$6.2
million and net income was US$4.3 million. Research &
Development expenses for the year 2003 increased by 53 percent, an
increase that was caused mainly due to expediting the R&D of
three new products Magal has developed, out of which two were
already announced at the beginning of 2004. These were the Fortis
Integrated Command and Control System and PipeGuard Pipeline
Security System. The third one will be announced shortly. Selling
and G&A expenses for the year 2003 reached US$16.9 million, an
increase of 24% comparedto the year 2002. A major increase of
US$1.2 million was in the financial expenses, compared to the year
2002. This was due to the devaluation of the US dollar against the
Canadian Dollar and the Israeli New Shekel, as in both Canada and
Israel we have our major operations. Earnings per share for the
fourth quarter reached US$0.07 per fully diluted share, an increase
of 40 percent compared with the same period of last year. For the
total year 2003, earnings per share reached US$0.30 per fully
diluted share, an increase of 30 percent compared with the year
2002. Commenting on the results, Mr. Jacob Even-Ezra, Chairman of
Magal, said: "Based on the backlog of orders we have in hand, as
well as the advanced negotiations for new contracts and the new
products we have launched, we believe that the growth in revenues
and operating income will continue in 2004 as well". Mr. Even-Ezra
added: "Management has decided to cut the expenses of Smart
Interactive Systems in order to reach the breakeven pointas soon as
possible, and not later than the end of 2004". 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 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
in the U.S. on the Nasdaq National Market since 1993 and in Israel
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$) Year Ended Dec. 31, Quarter Ended Dec. 31,
Audited Unaudited 2003 2002 % growth 2003 2002 % growth Revenues
59,361 42,966 38 % 17,686 13,362 32 % Cost of revenues 33,378
23,924 40 % 9,815 7,788 26 % Gross profit 25,983 19,042 36 % 7,871
5,574 41 % Operating expenses: Research and development, net 4,773
3,128 53 % 1,303 852 53 % Selling and marketing 11,585 8,642 34 %
4,223 2,619 61 % General and administrative 5,305 4,938 7 % 1,259
1,655 -24 % Total operating expenses 21,663 16,708 30 % 6,785 5,126
32 % Operating income 4,320 2,334 85 % 1,086 448 142 % Financial
income (expenses), net (1,003) 199 (281) (81) Income before taxes
3,317 2,533 31 % 805 367 119 % Taxes on income 913 645 276 8 Net
income 2,404 1,888 27 % 529 359 47 % Basic net earnings per share
0.30 0.24 25 % 0.07 0.05 40 % Weighted average number of shares
outstanding used in Computing basic net earnings per share (in
thousands) 7,948 7,866 8,004 7,889 Diluted net earnings per share
0.30 0.23 30 % 0.07 0.05 40 % Weighted average number of shares
outstanding used in Computing diluted net earnings per share (in
thousands) 8,029 8,069 8,079 7,996 FINANCIAL RATIOS Year Ended
Quarter Ended December 31, December 31, 2003 2002 2003 2002 Gross
Margin 43.8 % 44.3 % 44.5 % 41.7 % Research and development, net as
a % of Revenues 8.0 % 7.3 % 7.4 % 6.4 % Selling and Marketing as a
% of Revenues 19.5 % 20.1 % 23.9 % 19.6 % General and
administrative as a % of Revenues 8.9 % 11.5 % 7.1 % 12.4 %
Operating Margin 7.3 % 5.4 % 6.1 % 3.4 % Net income Margin 4.1 %
4.4 % 3.0 % 2.7 % Total Bank Debt to Total Capitalization 0.47 0.43
0.47 0.43 Current Ratio 1.76 1.86 1.76 1.86 MAGAL SECURITY SYSTEMS
LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (All numbers expressed
in thousands of US$) December 31, December 31, 2003 2002 Audited
Audited CURRENT ASSETS: Cash and cash equivalents 4,389 2,519
Short-term bank deposits 9,000 3,708 Trade receivables: Related
parties 29 57 Other 14,856 9,076 Unbilled accounts receivable 5,072
7,691 Other accounts receivable 3,332 2,256 Inventories 11,777
8,251 Deferred income taxes 979 602 Total current assets 49,434
34,160 LONG TERM INVESTMENTS AND TRADE RECEIVABLES: Long-term trade
receivables 300 1,510 Long-term bank deposits 3,051 8,649 Severance
pay fund 1,960 1,724 Total long term investments and trade
receivables 5,311 11,883 PROPERTY AND EQUIPMENT, NET 11,505 8,989
OTHER ASSETS, NET 5,193 4,709 Total assets 71,443 59,741 CURRENT
LIABILITIES: Short-term bank credit 12,597 9,266 Current maturities
of long-term bank loans 3,841 1,091 Trade payables 5,077 4,192
Other payables and accrued expenses 6,518 3,784 Total current
liabilities 28,033 18,333 LONG-TERM LOANS 1,873 4,698 ACCRUED
SEVERANCE PAY 1,992 1,679 UNREALIZED LOSSES ON FORWARD CONTRACTS
561 -- SHAREHOLDERS' EQUITY: Share capital 2,683 2,600 Additional
paid-in capital 24,098 21,791 Unrealized losses on forward
contracts, net (807) -- Deferred stock compensation -- (3)
Accumulated other comprehensive loss 1,286 (1,006) Retained
earnings 11,724 11,649 Total shareholders' equity 38,984 35,031
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 71,443 59,741
Contacts: Magal Security Systems, Ltd Gal Investor Relations Raya
Asher, CFO Ehud Helft, Investor Relations Tel: +972-3-5391444 Tel:
+1-866-704-6710 Fax: +972-3-5366245 +972-3-6074717 E-mail:
DATASOURCE: Magal Security Systems Ltd. CONTACT: Raya Asher, CFO of
Magal Security Systems, +972-3-539-1444, fax, +972-3-536-6245; or
Investor, Ehud Helft of Gal Investor Relations, +1-866-704-6710,
+972-3-6074717, , , forMagal Security Systems
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