YAHUD, Israel, November 30 /PRNewswire-FirstCall/ -- Magal Security
Systems Ltd. (NASDAQ GMS: MAGS, TASE: MAGS) today announced its
consolidated financial results for the three and nine month periods
ended September 30, 2009. In September 2009, Magal's Board of
Directors resolved to discontinue the operations of the European
integration subsidiary, acquired in September 2007. The results for
the quarter and the nine months ended September 30, 2009 and 2008
were reclassified to disclose the results of that subsidiary as
discontinued operations. The net assets of the subsidiary for the
nine months ended September 30, 2009 and the year ended December
31, 2008 were reclassified accordingly. RESULTS FOR THE NINE MONTH
PERIOD ENDED SEPTEMBER 30, 2009 Revenues for the nine months ended
September 30, 2009 were US$39.5 million, a 2.2% decrease compared
with the comparable period last year. Gross profit for the nine
months ended September 30, 2009 increased by 10.2% to US$15.9
million, or 40.1% of revenue, compared with US$14.4 million, or
35.6% of revenue, in the comparable period last year. The increase
is attributable to the low gross margin generated by certain
strategic, but low margin projects in 2008 and to more favorable
currency exchange rates in 2009 compared with 2008. Operating
expenses for the nine months ended September 30, 2009 decreased by
14.5% from US$20.5 million in 2008 to US$17.6 million in 2009. The
decrease is attributable to a decrease in operating expenses in
North America following Magal's integration of its US operations
into its Canadian subsidiary, a decrease in headcount and payroll
expenses, as well as more favorable currency exchange rates in 2009
compared with 2008. Operating loss in the nine months period ended
September 30, 2009 was US$1.7 million, compared with an operating
loss of US$6.1 million in the same period last year. The operating
loss decreased as a result of the improvement in gross margins and
the decrease in operating expenses. Net loss for the nine months
period ended September 30, 2009 was US$2.8 million compared with a
net loss of US$8.6 million in the same period last year. Net loss
per share for the nine month period ended September 30, 2009 was
US$(0.27), compared with net loss per share of US$(0.82) in the
comparable period last year. RESULTS FOR THE THREE MONTH PERIOD
ENDED SEPTEMBER 30, 2009 Revenues for the third quarter of 2009
totaled US$17.7 million, an increase of 14.8% over the third
quarter of 2008. The revenue increase is mostly attributable to
revenue generated in Israel during the period. Gross profit for the
third quarter of 2009 increased to US$6.8 million, or 38.2% of
revenues, representing a 54.8% increase over US$4.4 million, or
28.3% of revenues for the third quarter of 2008. Gross margin for
the quarter increased due to the higher revenue volume, a more
favorable mix of products and projects, as well as more favorable
currency exchange rates in 2009 compared with 2008. Operating
income for the third quarter of 2009 was US$0.5 million, compared
with an operating loss of US$2.4 million for the third quarter of
2008. During the third quarter of 2009, the US Dollar decreased by
4.1% against the Israeli Shekel compared with an increase of 2.1%
during the comparable period last year. Financing expenses in the
three months ended September 30, 2009 increased from US$0.3 million
to US$0.8 million as a result of the devaluation of the Company's
US Dollar denominated assets. Net loss for the third quarter of
2009, was US$0.7 million, compared with a net loss of US$3.4
million for the third quarter of 2008. Net loss per share for the
third quarter of 2009 was US$(0.07), compared with a net loss per
share of US$(0.33) in the same period last year. MANAGEMENT COMMENT
Commenting on the results, Mr. Eitan Livneh, President and CEO of
Magal, said, "We have gone through many changes in 2009 that have
provided a foundation for better results in the future. The
improvement in the results of our core business in the past nine
months, and especially our operating profitability in the third
quarter, is testimony to that. We rationalized costs across the
board and consolidated our North American business into one unit,
realizing significant cost savings." Continued Mr. Livneh, "Our
European subsidiary required us to invest extensive time and
effort, which management felt were not justified in light of its
overall performance. We therefore took the decision to cease the
operations of this subsidiary. This will enable us to increase our
focus on our core business and on what we do best." "Our current
results represent the beginning of an improvement in performance
which I expect will continue into the future. We intend to cement
our lead in the sensor space by marketing new advanced security
sensors, build and advance on our success with Fortis in the
Municipal Control and Command field, and improve our capabilities
in the Intelligent Video Analytics space. Our achievements in 2009
and goals for 2010, make me and the rest of management enthusiastic
about Magal's future," concluded Mr. Livneh. INVESTORS' CONFERENCE
CALL INFORMATION: The Company will host a conference call today,
November 30, 2009, at 9:00am EST. To participate, please call one
of the following teleconferencing numbers. Please begin placing
your calls at least 10 minutes before the conference call
commences. If you are unable to connect using the toll-free
numbers, please try the international dial-in number. US:
1-888-407-2553 Israel: 03-918-0664 UK: 0-800-917-9141
International: +972-3-918-0664 A replay of the call will be
available from the day after the call. The link to the replay will
be accessible from Magal's website at: http://www.magal-ssl.com/.
ABOUT MAGAL S3 Magal S3 is a leading international solution
provider, in the business of Security, Safety and Site Management.
Based on 35 years of experience and interaction with customers, the
company has developed a unique set of solutions and products,
optimized for perimeter, outdoor and general security applications.
Magal S3's turnkey solutions are typically integrated and managed
by a single sophisticated modular command and control software,
supported by expert systems for real-time decision support. Magal
S3's broad portfolio of critical infrastructure and site protection
management technologies includes a variety of smart barriers and
fences, fence mounted detectors, virtual gates, buried and
concealed detection systems as well as a sophisticated protection
package for sub-surface intrusion. A world innovator in the
development of CCTV, IVA and motion detection technology for
outdoor operation, Magal S3 has successfully installed customized
solutions and products in more than 75 countries worldwide. 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. MAGAL
SECURITY SYSTEMS LTD. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF INCOME (All numbers except EPS expressed in thousands of US$)
Nine Months Ended Three months Sept. 30, Ended Sept. 30, 2009 2008
% change 2009 2008 % change Revenue 39,552 40,460 (2.2) 17,682
15,406 14.8 Cost of revenue 23,677 26,048 (9.1) 10,924 11,039 (1.0)
Gross profit 15,875 14,412 10.2 6,758 4,367 54.8 Operating
expenses: Research and development, net 3,199 3,992 (19.9) 1,163
1,359 (14.4) Selling and marketing 7,992 9,757 (18.1) 2,891 3,448
(16.2) General and 6,379 6,353 0.4 2,182 1,976 10.4 administrative
Special 438 - - post-employment benefit Total operating expenses
17,570 20,540 (14.5) 6,236 6,783 (8.1) Operating income (1,695)
(6,128) 522 (2,416) (loss) Financial expense, net 1,065 1,542
(30.9) 839 297 Loss from continuing operations before income taxes
(2,760) (7,670) (317) (2,713) Income tax 10 778 (98.7) 244 257
(5.1) Net loss from continuing operations (2,750) (6,892) (561)
(2,970) Loss on discontinued operations, net (97) (1,683) (160)
(461) Net loss (2,847) (8,575) (66.8) (721) (3,431) (79.0) Basic
and diluted loss per share from continuing operations (0.26)$
(0.66)$ (0.05)$ (0.29)$ Basic and diluted loss per share from
discontinued operations, net (0.01)$ (0.16)$ (0.02)$ (0.04)$ Basic
and diluted net loss per share (0.27)$ (0.82)$ (0.07)$ (0.33)$
MAGAL SECURITY SYSTEMS LTD. FINANCIAL RATIOS Nine Months Three
months Ended Sep. 30, Ended Sep. 30, 2009 2008 2009 2008 % % % %
Gross margin 40.1 35.6 38.2 28.3 Research and development, net as a
% of revenues 8.1 9.9 6.6 8.8 Selling and marketing as a % of
revenues 20.2 24.1 16.3 22.4 General and administrative as a % of
revenues 16.1 15.7 12.3 12.8 Special post employment benefit - 1.1
- - Operating margin (4.3) (15.1) 3.0 (15.7) Net margin before
discontinued operation (7.0) (17.0) (3.2) (19.3) Loss on
discontinued operation as a % of revenues (0.2) (4.2) (0.9) (3.0)
Net margin after discontinued operation (7.2) (21.2) (4.1) (22.3)
MAGAL SECURITY SYSTEMS LTD. UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS (All numbers expressed in thousands of US$) Sept.
30, December 31, 2009 2008 CURRENT ASSETS: Cash and cash
equivalents 17,128 14,185 Marketable securities - 1,000 Short term
bank deposits - 1,228 Trade receivables 13,931 15,800 Unbilled
accounts receivable 2,862 5,055 Other accounts receivable and
prepaid 3,866 4,145 expenses Deferred income taxes 377 362
Inventories 12,358 14,031 Total current assets 50,522 55,806 Long
term investments and receivables: Long-term trade receivables 1,784
1,839 Long-term loans 200 519 Long-term bank deposits 1,838 1,826
Escrow deposit 905 860 Severance pay fund 2,346 2,763 Total
long-term investments and 7,073 7,807 receivables PROPERTY AND
EQUIPMENT, NET 9,066 8,061 DEFERRED INCOME TAXES 42 37 OTHER
INTANGIABLE ASSETS, NET 369 404 GOODWILL 2,047 1,874 ASSETS
ATTRIBUTED TO DISCONTINUED 1,454 2,276 OPERATION Total assets
70,573 76,265 CURRENT LIABILITIES: Short-term bank credit 21,611
23,182 Current maturities of long-term bank 813 813 debt Trade
payables 4,692 4,759 Other accounts payable, accrued expenses 7,916
10,751 and customer advances Total current liabilities 35,032
39,505 LONG-TERM LIABILITIES: Long-term bank debt 1,747 2,282
Deferred income taxes 157 138 Accrued severance pay 3,088 3,451
Total long-term liabilities 4,992 5,871 LIABILITIES ATTRIBUTED TO
DISCONTINUED 100 171 OPERATION SHAREHOLDERS' EQUITY 30,449 30,718
TOTAL LIABILITIES AND SHAREHOLDERS' 70,573 76,265 EQUITY Total bank
debt to total capitalization 0.79 0.86 Current ratio 1.44 1.41 For
more information: Magal Security Systems Ltd. Zev Morgenstern, CFO
Tel: +972(3)539-1444 E-mail: Web: http://www.magal-ssl.com/ GK
Investor Relations Ehud Helft/Kenny Green Tel: (US) +1-646-201-9246
Int'l dial: +972-3-607-4717 E-mail: DATASOURCE: Magal Security
Systems Ltd CONTACT: For more information: Magal Security Systems
Ltd., Zev Morgenstern, CFO, Tel: +972(3)539-1444, E-mail: . GK
Investor Relations, Ehud Helft/Kenny Green, Tel: (US)
+1-646-201-9246, Int'l dial: +972-3-607-4717, E-mail: .
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