SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2007
MAGAL SECURITY SYSTEMS LTD.
(Name of Registrant)
P.O. Box 70, Industrial Zone, Yahud 56100 Israel
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Indicate by check mark whether by furnishing the information contained
in this Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-_________
This Report on Form 6-K is incorporated by reference into the Registrant's Form
F-3 Registration Statements File Nos. 333-9050 and 333-123265 and Form S-8
Registration Statement File No. 333-06246.
Magal Security Systems Ltd.
6-K Items
1. Press Release re Magal Security Systems Ltd. Announces Third Quarter
2007 Results dated November 5, 2007.
ITEM 1
Press Release Source: Magal Security Systems Ltd
Magal Security Systems Ltd. Announces Third Quarter 2007 Results
Monday November 5, 7:30 am ET
Revenues for the Third Quarter Increased by 35.4% YOY
YAHUD, Israel, November 5 /PRNewswire-FirstCall/ -- Magal Security Systems Ltd.
(Nasdaq GM: MAGS; TASE: MAGS) today announced its consolidated financial results
for the three and nine-month periods ended September 30, 2007. The results
include the consolidation as of September 1, 2007, of its recently acquired
European subsidiary, that is engaged in the installation and integration of
security systems.
Third Quarter Results
Revenues for the third quarter of 2007 were US$21.9 million, an increase of
35.4% compared with the third quarter of 2006 and an increase of 46.4% compared
with second quarter of 2007.
Gross profit for the third quarter of 2007 reached US$7.9 million, an increase
of 14.8% over the third quarter of 2006 and an increase of 19.9 % compared with
second quarter of 2007. Gross margin for the third quarter was 36.1%, compared
with 42.6% in the third quarter of 2006 and 44.1% in the second quarter 2007.
The lower gross margin was the result of a special and prestigious project for
the Israeli government which bears a low margin.
Operating income for the third quarter of 2007, including a one-time charge of
$960,000, totaled US$95,000, compared with US$1.2 million for the third quarter
of 2006, and compared with US$761,000 in the second quarter 2007. The one-time
charge relates to contractual post employment benefits for the Company's
chairman who will retire at the end of the fourth quarter of 2007.
Financial expenses for the third quarter of 2007 totaled US$981,000 and included
approximately US$700,000 of foreign exchange losses resulting from the
devaluation of the US dollar aginst both the new Israeli Shekel and the Canadian
dollar.
Income taxes for the third quarter of 2007 reached US$749,000, which include a
tax provision for final tax assessments in the amount of US$500,000 relating to
the years 2001-2004.
Net loss for the third quarter of 2007, including the one-time charge relating
to post-employment benefits and the tax provision for final tax assessment
relating to prior years, totaled US$1.6 million, compared to net income of
US$623,000 in the third quarter of 2006 and US$342,000 in the second quarter of
2007. Diluted loss per share was US$0.16, compared to diluted earnings per share
of US$0.06 in the third quarter of 2006.
Operating income, on a non-GAAP basis for the third quarter of 2007, which
excludes the impact of the one-time post employment benefits charge of $960,000,
reached US$1.1 million, a decrease of 14.1% over the third quarter of 2006, and
a sequential increase of 38.6% over the second quarter of 2007. Operating margin
for the quarter, excluding the one-time charge reached 4.8%, compared to 7.6% in
the third quarter of 2006.
Net loss on a non-GAAP basis for the third quarter of 2007 was US$367,000, or
$0.04 per fully diluted share.
Nine Month Results
Revenues for the first nine months of 2007 reached US$51.9 million, an increase
of 16.6% compared with the same period in 2006.
Gross profit for the first nine months of 2007 reached US$21.0 million, an
increase of 11.7% compared with the same period in 2006.
Operating income for the first nine months of 2007 reached US$1.6 million, a
decrease of 31.9% compared to US$2.4 million in the same period in 2006.
Excluding the one-time charge recorded in relation to the special post
employment benefit, operating income on a non-GAAP basis for the first nine
months of 2007 increased to US$2.6 million, representing a 4.9% operating
margin.
Net loss for the first nine months period of 2007 reached US$1.0 million,
compared to net income of US$1.0 million in the same period in 2006. Diluted
loss per share for the first nine months ended September 30, 2007 was US$0.10,
compared with diluted earnings per share of US$0.10 in the same period of last
year.
"We are very pleased to report another good quarter for the company in terms of
generating strong revenues and signing new orders for our full basket of
products, further expanding our global presence," commented Mr. Izhar Dekel, CEO
of Magal. "We continue to generate strong demand for our products and expect to
surpass 2006 in terms of revenues and excluding the one-time charges of this
quarter, we expect that our operating profit will also surpass 2006."
Mr. Dekel continued, "This quarter we took another substantial step in our
strategy of expanding our global presence and range of solutions offerings.
During the quarter we completed the acquisition of a European company involved
in the installation and integration of security systems that is active in
geographic areas where Magal has historically had limited activity. This is a
very important milestone for our company in terms of our expansion in the
integration field, particularly in countries with strong growth potential.
Furthermore, we continue to see increased demand for Magal's solutions from both
the military and civilian space, worldwide."
Use of Non-GAAP Financial Information
In addition to disclosing financial results calculated in accordance with United
States generally accepted accounting principles (GAAP), this release of
operating results also contains non-GAAP financial measures, which Magal
believes are the principal indicators of the operating and financial performance
of its business. The non-GAAP financial measures exclude the effects of one time
post-employment benefit charges and a provision for final tax assessments for
prior years. Management believes the non-GAAP financial measures provided are
useful to investors' understanding and assessment of Magal's on-going core
operations and prospects for the future, as the charges eliminated are not part
of the day-to-day business or reflective of the core operational activities of
the company. Management uses these non-GAAP financial measures as a basis for
strategic decisions, forecasting future results and evaluating the company's
current performance. However, such measures should not be considered in
isolation or as substitutes for results prepared in accordance with GAAP.
Reconciliation of the non-GAAP measures to the most comparable GAAP measures are
provided in the schedules attached to this release.
Conference Call
The Company will be hosting a conference call later today at 10:00 am EST. On
the call, Mr. Izhar Dekel, CEO and Mrs. Raya Asher, V.P. Finance & CFO, 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
UK Dial-in Number: 0-800-917-5108
Israel Dial-in Number: 03-918-0688
International Dial-in Number: +972-3-918-0688
at: 10:00 am Eastern Time; 7:00 am Pacific 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://magal-ssl.com.
About Magal Security Systems, Ltd.:
Magal Security Systems Ltd. (Magal) 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
in the U.S. 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.
Magal trades under the symbol MAGS in the U.S. on the Nasdaq Global Market and
in Israel on the Tel-Aviv Stock Exchange (TASE).
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.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF INCOME
(All numbers except EPS expressed in
thousands of US$)
Nine Months Ended Quarter Ended
September 30, September 30,
2007 2006 % change 2007 2006 % change
Revenues 51,886 44,506 16.6 21,884 16,160 35.4
Cost of revenues 30,881 25,700 20.2 13,981 9,276 50.7
Gross profit 21,005 18,806 11.7 7,903 6,884 14.8
Operating
expenses:
Research and
development, net 3,885 3,802 2.2 1,283 1,152 11.4
Selling and
marketing 9,734 8,115 20.0 3,858 2,830 36.3
General and
administrative 4,825 4,537 6.3 1,707 1,674 2.0
Special post
employment
benefit 960 - - 960 - -
Total operating
expenses 19,404 16,454 17.9 7,808 5,656 38.0
Operating income 1,601 2,352 (31.9) 95 1,228 (92.3)
Financial
expense, net 1,419 640 121.7 981 260 277.3
Income (loss)
from continuing
operations
before income
taxes 182 1,712 (89.4) (886) 968 -
Income taxes 1,177 616 91.1 749 345 117.1
Net income
(loss) from
continuing
operations (995) 1,096 - (1,635) 623 -
Loss on
discontinued
operations, net - 55 - - - -
Net income
(loss) (995) 1,041 - (1,635) 623 -
Net income
(loss) per share:
Basic $ (0.10) $ 0.10 - $ (0.16) $ 0.06 -
Diluted $ (0.10) $ 0.10 - $ (0.16) $ 0.06 -
Weighted average number
of shares
Outstanding:
Basic 10,394 10,382 10,395 10,390
Diluted 10,442 10,447 10,429 10,435
FINANCIAL RATIOS
Nine Months Ended Quarter Ended
September 30, September 30,
2007 2006 2007 2006
Gross margin 40.5 42.3 36.1 42.6
Research and development,
net as a % of revenues 7.5 8.5 5.9 7.1
Selling and Marketing as a %
of revenues 18.8 18.2 17.6 17.5
General and administrative
as a % of revenues 9.3 10.2 7.8 10.4
Operating margin 3.1 5.3 0.4 7.6
Net income margin (after
discontinued operation) (1.9) 2.3 (7.5) 3.9
Total bank debt to total
capitalization * 0.55 **0.43 * 0.55 **0.43
Current ratio * 1.75 **2.12 * 1.75 **2.12
* As of September 30, 2007
** As of December 31, 2006
MAGAL SECURITY SYSTEMS LTD.
Reconciliation of GAAP to NonGAAP Measures
(Unaudited)
(All numbers except EPS expressed in
thousands of US$)
Quarter Ended September 30, 2007
GAAP Non-GAAP
Revenues $ 21,884 $ 21,884
Cost of revenues 13,981 13,981
Gross profit 7,903 7,903
Operating expenses:
Research and development, net 1,283 1,283
Selling and marketing 3,858 3,858
General and administrative 1,707 1,707
Special post employment
benefit 960 -
Total operating expenses 7,808 6,848
Operating income 95 1,055
Financial expense, net 981 981
Income (loss) from continuing
operations before income
taxes (886) 74
Income taxes 749 441
Net income (loss) from
continuing operations (1,635) (367)
Loss on discontinued
operations, net - -
Net income (loss) $ (1,635) $ (367)
Net income (loss) per share:
Basic $ (0.16) $ (0.04)
Diluted $ (0.16) $ (0.04)
Weighted average number
of shares outstanding:
Basic 10,395 10,395
Diluted 10,429 10,429
Non-GAAP net income (loss) $ (367)
Reconciliation items:
Special post employment
benefit (960)
Income taxes with respect to 192
Special post employment
benefit
Income taxes * (500)
GAAP net loss $ (1,635)
*) final tax assessments relating to the years 2001-2004.
FINANCIAL RATIOS GAAP Non-GAAP
Gross margin 36.1 36.1
Research and development, net
as a % of revenues 5.9 5.9
Selling and Marketing as a %
of revenues 17.6 17.6
General and administrative as
a % of revenues 7.8 7.8
Operating margin 0.4 4.8
Net income margin (after
discontinued operation) (7.5) (1.7)
MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All numbers expressed in thousands of US$)
September December
30, 31,
2007 2006
CURRENT ASSETS:
Cash and cash equivalents $ 6,447 $ 4,908
Marketable securities 4,105 3,067
Short term bank deposits 14,841 14,186
Trade receivables 28,624 28,027
Unbilled accounts receivable 7,475 5,389
Other accounts receivable
and prepaid expenses 4,887 3,995
Deferred income taxes 2,120 1,604
Inventories 16,395 13,971
Total current assets 84,894 75,147
Long term investments and
receivables:
Long-term trade receivables 281 224
Long-term loans 715 622
Long-term bank deposits 1,800 4,800
Severance pay fund 2,592 2,401
Total long term investments
and receivables 5,388 8,047
PROPERTY AND EQUIPMENT, NET 14,148 14,366
OTHER ASSETS, NET 16,494 6,121
Total assets $ 120,924 $103,681
CURRENT LIABILITIES:
Short-term bank credit $ 25,013 $ 17,026
Current maturities of
long-term bank debt 795 795
Trade payables 10,295 6,001
Other accounts payable,
accrued expenses and
customer advances 12,517 11,608
Total current liabilities 48,620 35,430
LONG-TERM LIABILITIES:
Long-term bank debt 7,937 7,399
Long-term accounts payable - 178
Accrued severance pay 3,346 2,524
Total long-term liabilities 11,283 10,101
SHAREHOLDERS' EQUITY 61,021 58,150
TOTAL LIABILITIES AND $ 120,924 $103,681
SHAREHOLDERS' EQUITY
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
E-mail: magalssl@trendline.co.il E-mail: info@gkir.com
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MAGAL SECURITY SYSTEMS LTD.
(Registrant)
By: /s/ Izhar Dekel
---------------
Izhar Dekel
Chief Executive Officer
Date: November 5, 2007