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: ,
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