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Magal Security Systems Reports 17% Sequential Revenue Growth in the Second Quarter of 2010 Over the First Quarter of 2010


News provided by

Magal Security Systems Ltd

Sep 01, 2010, 02:59 ET

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YAHUD, Israel, September 1, 2010 /PRNewswire-FirstCall/ -- Magal Security Systems Ltd. (NASDAQ GMS: MAGS, TASE: MAGS) today announced that revenues for the three month period ended June 30, 2010 grew 17% as compared to the first quarter of 2010.

Revenues for the second quarter of 2010 totaled US$11.4 million as compared with $9.8 million for the first quarter of 2010. The net loss for the second quarter of 2010 totaled $1.5 million, or $0.15 per share, a decline of 35.0% from US$2.4 million, or $0.23 per share, in the first quarter.

Gross margins for the quarter were 31.7%, down from 37.4% in the first quarter. The decline in gross margins is due primarily to changes in the mixture between product and project sales.

Commenting on the results, Mr. Eitan Livneh, President and CEO of Magal, said, "We were pleased with the revenue growth and reduction in the net loss for the quarter. We recently announced the receipt $5.5 million in new orders which included $4.3 million of orders in Israel, indicating that our strategic plan is starting to show early success. We also recently announced our second win to provide security solutions for airports in China, solidifying our position as the leader in this important market. In addition, we are seeing positive signs from the important markets in Western Europe and the UK. We believe that based on these positive signs, Magal expects to continue revenue growth for the balance of 2010.

"With the new cash infusion which was approved at the recent extraordinary shareholders meeting, I believe that Magal is now well-positioned to expand its sales efforts as well as seek acquisitions which will solidify our leadership in the perimeter security market," concluded Mr. Livneh.

Revenues for the six months ended June 30, 2010 were US$21.2 million, a 3.0% decrease compared with the comparable period last year. Net loss for the six months period ended June 30, 2010 was US$3.9 million, or $0.38 per share, compared with a net loss of US$2.1 million, or $0.20 per share, in the same period last year.

The Company will host a conference call today at 10:00 am ET, 5:00 pm Israel time. On the call, management will review and discuss the results and will be available to answer investor questions.

    To access the conference call, please dial one of the following numbers:

    US: 1-888-668-9141
    International: +972-3-9180609
    Israel: 03-9180609

A replay of the conference call will be available from the day after the call. The replay can be accessed on the Magal website at: http://www.magal-s3.com.

About Magal S3

Magal S3 is a leading international provider of security, safety and site management solutions and products (NASDAQ: MAGS).

Over the past 40 years, Magal S3 has delivered tailor-made solutions to hundreds of satisfied customers in over 80 countries.

Magal S3 offers a broad portfolio of unique products used to protect sensitive installations in some of the world's most demanding locations and harshest climates. This portfolio covers the following three categories:

    - Perimeter Intrusion Detection Systems (PIDS) - a variety of smart
      barriers and fences, fence mounted detectors, virtual gates, buried and
      concealed detection systems

    - Close Circuit TV (CCTV) - a comprehensive management platform with a
      leading Intelligent Video Analysis (IVA) and Video Motion Detection
      (VMD) engine

    - Physical Security Information Management (PSIM) - a proprietary site
      management system that enhances command, control and decision making
      during both routine operations and crisis situations

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$)


                                                           Three months ended
                                                              June 30, 2010

    Revenues                                                      11,430

    Cost of revenues                                               7,802

    Gross profit                                                   3,628
    Operating expenses:
    Research and development, net                                  1,059
    Selling and marketing                                          2,156
    General and administrative                                     2,105

    Total operating expenses                                       5,320

    Operating loss                                                (1,692)
    Financial expenses (income), net                                (110)


    Loss before income taxes                                      (1,582)
    Income tax                                                        20

    Net loss                                                      (1,562)

    Net income (loss) attributable to non-controlling interest       (15)
    Net income (loss) attributable to Magal Ltd. shareholders     (1,547)
    Basic net loss per share                                      $(0.15)


                                                           Three months ended
                                                              June 30, 2010

                                                                      %

    Gross margin                                                    31.7
    Research and development,net as a % of revenues                  9.3
    Selling and marketing as a % of revenues                        18.9

    General and administrative as a % of revenues                   18.4
    Operating margin                                               (14.8)
    Net margin before tax                                          (13.8)
    Net margin                                                     (13.5)



                           MAGAL SECURITY SYSTEMS LTD.
              UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

             (All numbers except EPS expressed in thousands of US$)


                                                     Six Months Ended
                                                          June 30,

                                               2010          2009    % change

    Revenue                                  21,204        21,870       (3.0)

    Cost of revenue                          13,916        13,231        5.2

    Gross profit                              7,288         8,639      (15.6)
    Operating expenses:
    Research and development, net             2,155         2,305       (6.5)
    Selling and marketing                     4,545         4,801       (5.3)
    General and administrative                3,875         3,840        0.9
    Total operating expenses                 10,575        10,946       (3.4)

    Operating loss                           (3,287)       (2,307)
    Financial expense, net                      659           226

    Loss from continuing operations
    before income taxes                      (3,946)       (2,533)
    Income tax                                   20           344

    Net loss from continuing operations      (3,926)       (2,189)
    Discontinued operations, net                  -            63
    Net loss                                 (3,926)       (2,126)
    Basic and diluted net loss per share      (0.38)$       (0.20)$


                                                Six Months Ended
                                                    June 30,
                                               2010          2009

                                                 %             %

    Gross margin                               34.4          39.5
    Research and development, net as a
    % of revenues                              10.2          10.5
    Selling and marketing as a % of revenues   21.4          22.0
    General and administrative as a
    % of revenues                              18.3          17.6
    Operating margin                          (15.5)        (10.5)
    Net margin after discontinued operation   (18.5)         (9.7)



                           MAGAL SECURITY SYSTEMS LTD.
                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                   (All numbers expressed in thousands of US$)



                                                      June 30,   December 31,
                                                         2010           2009
    CURRENT ASSETS:
    Cash and cash equivalents                         $ 4,768       $ 11,869
    Short term bank deposits                                -          1,807
    Restricted deposit                                  2,965
    Trade receivables                                  12,608         12,328
    Unbilled accounts receivable                        4,795          5,892
    Other accounts receivable and prepaid expenses      4,079          1,573
    Deferred income taxes                                 307            272
    Inventories                                        10,175         10,912
    Total current assets                               39,697         44,653

    Long term investments and receivables:
    Long-term trade receivables                         1,565          1,753
    Long-term loans                                       200            200
    Long-term deposits                                     50             40
    Severance pay fund                                  2,105          2,476
    Total long-term investments and receivables         3,920          4,469

    PROPERTY AND EQUIPMENT, NET                         8,747          9,178

    OTHER ASSETS, NET                                     279            269

    GOODWILL                                            1,895          2,053

    ASSETS ATTRIBUTED TO DISCONTINUED OPERATION             -             28

    Total assets                                      $54,538        $60,650

    CURRENT LIABILITIES:
    Short-term bank credit                            $ 7,534        $ 8,234
    Current maturities of long-term bank debt             661          1,824
    Trade payables                                      2,490          4,018
    Other accounts payable and accrued expenses        12,111         10,110
    Total current liabilities                          22,796         24,186

    LONG-TERM LIABILITIES:
    Long-term bank debt                                   216            548
    Accrued severance pay                               3,171          3,562
    Total long-term liabilities                         3,387          4,110

    LIABILITIES ATTRIBUTED TO DISCONTINUED                  -             45
    OPERATION

    SHAREHOLDERS' EQUITY                               28,355         32,309

    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        $54,538        $60,650
           Total bank debt to total capitalization       0.30           0.33
           Current ratio                                 1.74           1.85



    Financial Communication Public & Investor Relations
    Hadas Friedman
    Tel: +972-3-695-4333 Ext. 6
    E-mail: [email protected]
    Web: http://www.fincom.co.il

    For more information:

    Magal Security Systems Ltd.
    Ilan Ovadia, CFO
    Tel: +972(3)539-1444
    E-mail: [email protected]
    Web: http://www.magal-s3.com

SOURCE Magal Security Systems Ltd

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