Magal Security Systems Reports First Quarter 2010 Results

Jun 09, 2010, 06:58 ET from Magal Security Systems Ltd

YAHUD, Israel, June 9, 2010 /PRNewswire-FirstCall/ -- Magal Security Systems Ltd. (NASDAQ GMS: MAGS, TASE: MAGS) today announced its consolidated financial results for the three month period ended March 31, 2010.

Revenues for the first quarter of 2010 totaled US$9.8 million and gross profit for the first quarter of 2010 was US$3.7 million, or 37.4% of revenues. Operating loss for the first quarter of 2010 was US$1.6 million. Financing expenses in the three months ended March 31, 2010 amounted to US$0.8 million. As a result, the net loss for the first quarter of 2010 was US$2.4 million, or $0.23 per share.

Commenting on the results, Mr. Eitan Livneh, President and CEO of Magal, said, "Two weeks ago we announced the implementation of the second phase of our restructuring plan, which is designed to enable our company to execute on its new strategic plan and cope with global trends, specifically the European economic slowdown. Our strategic intent is to expand the international sensor sales and refocus on projects in preferred regions. As part of this plan, we announced internal organizational changes, as well as a workforce reduction in Israel. We anticipate that these changes will be reflected in Magal's financial results in the second half of 2010.

"Looking ahead, we intend to introduce an advanced fence mounted security sensor with the capability to pin-point intruders in the second half of 2010 and to continue to build on our success with the Fortis in the Safe City and other home land security applications. We also intend to improve our capabilities in the Intelligent Video Analytics space and introduce a new IP (Internet Protocol) version of our Dream Box. I and the rest of the management team at Magal remain enthusiastic about the company's future," concluded Mr. Livneh.

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

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 Dial-in Number: 1-888-668-9141
    Israel Dial-in Number: 03-918-0609
    UK Dial-in Number: 0-800-917-5108
    International Dial-in Number: +972-3-918-0609

at 10:00 am Eastern Time; 7:00 am Pacific Time; 3:00pm UK Time; 5:00 pm Israel Time

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-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.

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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



                                        Three months
                                       ended March 31,
                                            2010

     Revenues                               9,774

     Cost of revenues                       6,114

     Gross profit                           3,660
     Operating expenses:
     Research and
     development, net                       1,096
     Selling and marketing                  2,389
     General and
     administrative                         1,770

     Total operating expenses               5,255

     Operating loss                        (1,595)
     Financial expenses, net                  769

     Loss before income taxes              (2,364)
     Income tax                                 -

     Net loss                              (2,364)

     Less: net income
     attributable to
     non-controlling interest                  16
     Net income (loss)
     attributable to Magal
     Ltd. shareholders                     (2,380)
     Basic net loss per share
     from                                  $(0.23)



                                        Three
                                       months
                                     ended March
                                      31, 2010
                                          %

    Gross margin                        37.4
    Research and development,
    net as a % of revenues              11.2

    Selling and marketing as a %
    of revenues                         24.4
    General and administrative
    as a % of revenues                  18.1

    Operating margin                   (16.3)
    Net margin before tax              (24.2)
    Net margin                         (24.4)




                      CONDENSED CONSOLIDATED BALANCE SHEETS
                   (All numbers expressed in thousands of US$)

                                                                  December
                                                  March 31,       31,
                                                    2010          2009
    CURRENT ASSETS:
    Cash and cash equivalents                     $ 7,486         $ 11,869
    Short term bank deposits                        1,804            1,807
    Restricted deposit                              3,027
    Trade receivables                              10,682           12,328
    Unbilled accounts receivable                    6,830            5,892
    Other accounts receivable and prepaid           3,984            1,573
    expenses
    Deferred income taxes                             280              272
    Inventories                                    10,954           10,912
    Total current assets                           45,047           44,653

    Long term investments and receivables:
    Long-term trade receivables                     1,690            1,753
    Long-term loan                                    200              200
    Long-term deposits                                 24               40
    Severance pay fund                              2,356            2,476
    Total long-term investments and                 4,270            4,469
    receivables

    PROPERTY AND EQUIPMENT, NET                     9,196            9,178

    OTHER ASSETS, NET                                 257              269

    GOODWILL                                        2,012            2,053

    ASSETS ATTRIBUTABLE TO DISCONTINUED                 -               28
    OPERATIONS

    Total assets                                  $60,782          $60,650

    CURRENT LIABILITIES:
    Short-term bank credit                        $ 7,955          $ 8,234
    Current maturities of long-term bank debt         661            1,824
    Trade payables                                  2,593            4,018
    Other accounts payable and accrued             14,984           10,110
    expenses
    Total current liabilities                      26,193           24,186

    LONG-TERM LIABILITIES:
    Long-term bank debt                               384              548
    Accrued severance pay                           3,479            3,562
    Total long-term liabilities                     3,863            4,110

    LIABILITIES ATTRIBUTABLE TO DISCONTINUED            -               45
    OPERATIONS

    SHAREHOLDERS' EQUITY                           30,726           32,309

    TOTAL LIABILITIES AND SHAREHOLDERS'           $60,782          $60,650
    EQUITY
         Total bank debt to total                    0.29             0.33
         capitalization
         Current ratio                               1.72             1.85


    For more information:

    Magal Security Systems Ltd.
    Ilan Ovadia, CFO
    Tel: +972-3-539-1444
    E-mail: ilano@magal-s3.com

    Web: http://www.magal-s3.com

    Financial Communication Public & Investor Relations
    Hadas Friedman
    Tel: +972-3-695-4333 Ext. 6
    E-mail: hadas@fincom.co.il

    Web: http://www.fincom.co.il


SOURCE Magal Security Systems Ltd