Magal Security Systems Ltd. Announces Third Quarter and Nine Months
Financial Results Operating Income Increases 49% and Net Income
Increases 32% Compared With the Third Quarter of 2003 YAHUD,
Israel, November 1 /PRNewswire-FirstCall/ -- Magal Security Systems
Ltd. (Nasdaq NM:MAGS; TASE:MAGS) today announced its consolidated
financial results for the third quarter and nine-month period ended
September 30, 2004. Revenues for the third quarter of 2004 reached
US$15.3 million, a slight decrease of 0.4 percent compared with the
third quarter of 2003 and an increase of 5 percent over the second
quarter of 2004. Gross profit for the third quarter of 2004 reached
US$6.8 million (44.7 percent of revenues), an increase of 7 percent
over the third quarter of 2003 and an increase of 5 percent
compared with second quarter of 2004. Operating income in the third
quarter of 2004 reached US$1.2 million compared with operating
income of US$796,000 for the third quarter of 2003. Second quarter
operating loss was US$345,000, which included US$1.2 million of
award expenses paid to all of the Company's employees by the
Company's two principal shareholders out of their personal funds.
According to the generally accepted accounting principles in the
United States, such grant was recorded in Magal's second quarter
statement of income as an expense, although it did not effect the
Company's shareholders' equity nor its statement of cash- flows.
Excluding the grant, operating income for the second quarter would
have been US$855,000, representing a third quarter sequential
growth of 39 percent. Net income in the third quarter of 2004
reached US$663,000, compared with net income of US$503,000, for the
third quarter of 2003 and a net loss of US$739,000 in the second
quarter of 2004. Excluding the above-mentioned award paid to
employees, net income in the second quarter was US$461,000,
representing a third quarter sequential growth of 44 percent.
Diluted earnings per share for the third quarter was US$0.08,
compared with diluted earnings per share of US$0.06 in the same
period last year. Revenues for the first nine months of 2004
reached US$44 million, an increase of 6 percent compared with the
same period in 2003. Operating and net income for the first nine
months of 2004, excluding the above-mentioned US$1.2 million award
expenses granted to employees by the Company's two principal
shareholders out of their personal funds, reached US$3.3 million
and US$1.8 million, respectively, similar to the figures achieved
in the first nine months of 2003. As a result of the award expense,
operating income and net income for the nine-month period, reached
US$2.1 million and US$611,000, respectively, a decrease of 36
percent and 67 percent, respectively, compared with the first nine
months of 2003. Diluted earnings per share for the nine-month
period, including the award expenses, was US$0.07, compared with
US$0.22 in the same period of last year. Commenting on the results,
Mr. Jacob Even-Ezra, Chairman of Magal, said: "We are pleased with
our revenue growth in the first nine months of 2004 compared to the
same period of 2003. The growth in the rest of our business more
than compensated for the delays caused by the Israeli Ministry of
Defense in the Seam Line project in Israel during 2004. In
particular, we are especially pleased this year with the
contribution from new project wins, as well as our beginning to
record revenue from our new products. The Seam Line project had
significantly contributed to our 2003 revenues and management
estimates that Magal will receive more orders for this project in
the year 2005." 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 third quarter 2004 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: +972-3-918-0610 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: MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (All numbers except EPS
expressed in thousands of US$) Nine Months Ended Sep. 30 2004 %
change 2003 REVENUES $ 43,986 6 $ 41,675 Cost of revenues 24,378 4
23,563 Gross Profit 19,608 8 18,112 OPERATING EXPENSES: Research
and 3,486 0.5 3,470 development, net Selling and 8,728 19 7,362
marketing, net General and 4,133 2 4,046 administrative Award
granted by 1,200 -- - principal shareholders TOTAL OPERATING 17,547
18 14,878 EXPENSES OPERATING INCOME 2,061 (36) 3,234 FINANCIAL
INCOME 574 (21) 722 (EXPENSES), NET INCOME BEFORE 1,487 (41) 2,512
TAXES ON INCOME TAXES ON INCOME 876 38 637 NET INCOME $ 611 (67) $
1,875 BASIC NET EARNINGS $ 0.07 (70) $ 0.23 PER SHARE SHARES USED
IN 8,565 8,325 COMPUTING BASIC NET EARNINGS PER SHARE (IN
THOUSANDS) DILUTED NET $ 0.07 (68) $ 0.22 EARNINGS PER SHARE SHARES
USED IN 8,673 8,413 COMPUTING DILUTED NET EARNINGS PER SHARE (IN
THOUSANDS) Quarter Ended Sep. 30 2004 % change 2003 REVENUES $
15,271 (0.4) $ 15,332 Cost of revenues 8,443 (6) 8,954 Gross Profit
6,828 7 6,378 OPERATING EXPENSES: Research and 1,193 (7) 1,280
development, net Selling and 3,031 2 2,987 marketing, net General
and 1,415 8 1,315 administrative Award granted by - -- - principal
shareholders TOTAL OPERATING 5,639 1 5,582 EXPENSES OPERATING
INCOME 1,189 49 796 FINANCIAL INCOME 223 175 81 (EXPENSES), NET
INCOME BEFORE 966 35 715 TAXES ON INCOME TAXES ON INCOME 303 43 212
NET INCOME $ 663 32 $ 503 BASIC NET EARNINGS $ 0.08 33 $ 0.06 PER
SHARE 8,617 8,361 SHARES USED IN COMPUTING BASIC net earnings PER
SHARE (IN THOUSANDS) DILUTED NET $ 0.08 33 $ 0.06 EARNINGS PER
SHARE SHARES USED IN 8,706 8,466 COMPUTING DILUTED NET EARNINGS PER
SHARE (IN THOUSANDS) FINANCIAL RATIOS Nine months Ended Sep. 30
Quarter Ended Sep. 30 2004 2003 2004 2003 Gross Margin 44.60%
43.50% 44.70% 41.60% R&D as a % of 7.90% 8.30% 7.80% 8.30%
Revenues Selling & 19.80% 17.70% 19.80% 19.50% Marketing as a %
of Revenues G&A Expenses 9.40% 9.70% 9.30% 8.60% as a % of
Revenues Operating 4.70% 7.80% 7.80% 5.20% Margin Net Income 1.40%
4.50% 4.30% 3.30% Margin Total Debt to *0.55 **0.47 *0.55 **0.47
Total Capitalization Current Ratio *1.75 **1.76 *1.75 **1.76 * As
of September 30, 2004 ** As of December 31, 2003 MAGAL SECURITY
SYSTEMS LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (All numbers
expressed in thousands of US$) September 30, December 31, 2004 2003
Unaudited CURRENT ASSETS: Cash and cash 6,192 4,389 equivalents
Short-term bank 6,122 9,000 deposits Trade 12,384 14,885
receivables Unbilled 9,435 5,072 accounts receivable Other accounts
3,579 3,332 receivable Deferred income 1,082 979 taxes Inventories
12,428 11,777 Total current 51,222 49,434 assets LONG TERM
INVESTMENTS AND TRADE RECEIVABLES: Long-term trade 50 300
receivables Long-term bank 6,101 3,051 deposits Severance pay 1,909
1,960 fund Total long term 8,060 5,311 investments and trade
receivables PROPERTY AND 14,200 11,505 EQUIPMENT, NET OTHER ASSETS,
5,503 5,193 NET TOTAL ASSETS 78,985 71,443 CURRENT LIABILITIES:
Short-term bank 17,628 12,597 credit Current 105 3,841 maturities
of long-term bank loans Trade payables 3,574 5,077 Other accounts
7,951 6,518 payable and accrued expenses Total current 29,258
28,033 liabilities LONG-TERM LIABILITIES: Long-term bank 5,286
1,873 loans Accrued 2,021 1,992 severance pay Long-term 231 561
liability in respect of forward contracts Total long terms 7,538
4,426 liabilities SHAREHOLDERS' EQUITY: Share capital 2,812 2,683
Additional 31,759 24,098 paid-in capital Accumulated 1,025 479
other comprehensive income Retained 6,593 11,724 earnings Total
42,189 38,984 shareholders' equity TOTAL 78,985 71,443 LIABILITIES
AND SHAREHOLDERS' 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: @galir.com
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