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 July 2008
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 Reports Second Quarter 2008 Revenues of $25
Million Representing a 78% Year-Over-Year Increase dated July 30,
2008.
ITEM 1
Press Release Source: Magal Security Systems Ltd
Magal Reports Second Quarter 2008 Revenues of $25 Million Representing a
78% Year-Over-Year Increase
Wednesday July 30, 6:30 am ET
Net Income on a Non-GAAP Basis for the Second Quarter Increases 108%
Year-Over-Year to $0.9 Million
YAHUD, Israel, July 30 /PRNewswire-FirstCall/ -- Magal Security Systems Ltd.
(Nasdaq GM: MAGS; TASE: MAGS) today announced its consolidated financial results
for the three and six month periods ended June 30, 2008.
Second Quarter 2008 Results
Revenues for the second quarter of 2008 increased 77.6% reaching US$25.0
million, compared to US$14.1 million in the second quarter of 2007. Effective
September 1, 2007, Magal's financial statements consolidate the results of a
European integration company acquired in August 2007. Following the sale in
December 2007 of Magal's U.S. based video monitoring business operated by Smart
Interactive Systems Inc., the results of this business were reclassified as
discontinued operations.
Gross profit for the second quarter of 2008 increased by 47.6%, reaching US$9.5
million (38.0% of revenues) compared with $6.4 million (45.7% of revenues) in
the second quarter of 2007. Gross margin for the quarter was adversely affected
by the ongoing weakening of the US dollar against the Israeli Shekel as well as
the shift in revenue mix towards larger scale integration projects.
Operating expenses on a GAAP basis in the second quarter of 2008 were US$8.7
million or 34.7% of sales, compared to US$5.6 million or 39.6% of revenues on a
non-GAAP and GAAP basis in the second quarter 2007. Operating expenses on a
non-GAAP basis, for the second quarter of 2008, totalled US$7.6 million or 30.2%
of revenues.
The operating expenses for the quarter, on a GAAP basis, included a US$1.1
million amortization of intangible assets relating to a recently acquired
European subsidiary. Operating expenses for the quarter were also adversely
affected by the devaluation of the US dollar against the Israeli Shekel and the
Canadian Dollar, increasing operating expenses by approximately US$0.7 million
for the quarter compared with the second quarter of 2007.
Operating income on a GAAP basis for the second quarter of 2008 decreased 4.4%
reaching US$0.8 million (3.3% of revenues) compared to US$0.9 million (6.1% of
revenues) in the second quarter of 2007 on a GAAP and non-GAAP basis. Operating
income on a non-GAAP basis for the second quarter of 2008 increased 125.4%
reaching US$1.9 million (7.7% of revenues).
Net income on a GAAP basis for the second quarter of 2008 reached US$0.1 million
compared with net income of $0.3 million in the second quarter 2007. Diluted
earnings per share on a GAAP basis in the second quarter of 2008 was $0.01
compared to $0.03 in the second quarter of 2007.
Net income on a non-GAAP basis, totalled US$0.9 million, compared with non-GAAP
net income of US$0.4 million in the second quarter of 2007. Diluted non-GAAP
earnings per share for the second quarter totalled US$0.09 compared to non-GAAP
diluted earnings per share of US$0.04 in the same quarter of last year.
"We are particularly encouraged by our strong revenue growth over last year and
our improved non-GAAP operating profitability this quarter," commented Izhar
Dekel, CEO of Magal. "This year is shaping up as an exceptionally strong year in
terms of revenue growth, which increases our confidence in realizing our target
of doubling revenues within the next four to five years. We are also encouraged
by our operating margin improvement which represents the initial fruits of our
efforts to focus on increasing profitability. At the same time, we are
successfully executing on our strategy of becoming a more project focused
company, winning a number of high profile projects."
Continued Mr. Dekel, "Over the past year, we have won a number of orders for
municipal security systems based on our Fortis system, which is becoming a
growth engine and strong revenue generator for Magal. While the majority of our
project wins have to date been for municipalities in Israel and there still
remains significant potential within Israel, we see far greater prospects for
this system outside of Israel. We have already won some international orders
based on our local success and we are competing in a number of other
international tenders at magnitudes greater than what we have seen so far."
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 the Company
believes are the principal indicators of the operating and financial performance
of its business. The non-GAAP financial measures exclude the effects of
stock-based compensation charges recorded in accordance with SFAS 123R as well
as amortization of customer related intangible assets and a loss associated with
a discontinued operation. Management believes the non-GAAP financial measures
provided are useful to investors' understanding and assessment of the Company'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.
Results Conference Call
The Company will be hosting its quarterly conference call later today at 9:00am
ET. On the call, management will review and discuss the second quarter 2008
results. They will then be available to answer questions.
To participate, please call one of the following teleconferencing numbers.
Please begin placing your calls 5 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: +1-866-345-5855
Israel Dial-in Number: 03-918-0688
International Dial-in Number: +972-3-918-0688
at: 9:00 am Eastern Time; 6:00 am Pacific
Daylight Time; 4:00 pm Israel Time
A replay of the call will be available for three months from the day after the
call. The webcast and the replay will both be accessible from Magal's website
at: http://www.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. 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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(All numbers except EPS expressed in
thousands of US$)
Six Months Ended Three months Ended
June 30, June 30,
2008 2007 % change 2008 2007 % change
Revenues 51,311 28,204 81.9 25,021 14,091 77.6
Cost of 32,122 15,382 108.8 15,514 7,650 102.8
revenues
Gross profit 19,189 12,822 49.7 9,507 6,441 47.6
Operating
expenses:
Research and 3,154 2,602 21.2 1,529 1,148 33.0
development,
net
Selling and 8,927 5,737 55.6 4,691 3,028 54.9
marketing
General and 4,562 2,723 67.5 2,467 1,407 75.3
administrative
Special Post 438
employment
benefit
Total 17,081 11,062 54.4 8,687 5,583 55.6
operating
expenses
Operating 2,108 1,760 19.8 820 858 (4.4)
income
Financial 1,399 444 215.1 415 140 196.4
expense, net
Income from 709 1,316 (46.1) 405 718 (43.6)
continuing
operations
before income
taxes
Income tax 571 428 279 280
Net Income 138 888 (84.5) 126 438 (71.2)
from
continuing
operations
Loss on 309 248 61 96
discontinued
operations,
net
Net income (171) 640 65 342 (81.0)
(loss)
Basic and 0.01 0.08 0.01 0.04
diluted net
earnings per
share from
continuing
operations
Basic and (0.03) (0.02) (0.005) (0.01)
diluted loss
per share from
discontinued
operations,
net
Basic and (0.02) 0.06 0.005 0.03
diluted net
earnings
(loss) per share
FINANCIAL RATIOS
Six Months Ended Three months Ended
June 30, June 30,
2008 2007 2008 2007
Gross margin 37.4 45.5 38.0 45.7
Research and 6.1 9.2 6.1 8.1
development,
net as a % of
revenues
Selling and 17.4 20.3 18.7 21.5
marketing as a
% of revenues
General and 8.9 9.7 9.9 10
administrative
as a % of
revenues
Special post 0.9 - - -
employment
benefit
Operating 4.1 6.2 3.3 6.1
margin
Net income (0.3) 2.3 0.3 2.4
margin (after
discontinued
operation)
MAGAL SECURITY SYSTEMS LTD.
Reconciliation of GAAP to Non-GAAP Measures
(All numbers expressed in thousands of US$)
Six Months Ended Three months
June 30, Ended June 30,
2008 2007 2008 2007
GAAP operating income 2,108 1,760 820 858
Amortization of customer 2,101 - 1,056 -
related intangible assets
Special post employment 438 - -
benefit
Amortization of deferred 114 - 57 -
stock based compensation
Non-GAAP operating income 4,761 1,760 1,933 858
GAAP operating income as a 4.1% 6.2% 3.3% 6.1%
percentage of revenues
Non-GAAP operating income as 9.3% 6.2% 7.7% 6.1%
a percentage of revenues
Six Months Three months
Ended June 30, Ended June 30,
2008 2007 2008 2007
GAAP net income (loss) (171) 640 65 342
Amortization of customer 2,101 1,056
related intangible assets
Special post employment 438
benefit
Loss on discontinued 309 248 61 96
operation, net
Amortization of deferred 114 57
stock based compensation
Income taxes with respect to (768) (332)
the above items
Non-GAAP net income 2,023 888 907 438
GAAP net income (loss) as a (0.3) 2.3 0.3 2.4
percentage of revenues
Non GAAP net income as a 3.9 3.1 3.6 3.1
percentage of revenues
GAAP basic and diluted net (0.02) 0.06 0.005 0.03
earnings (loss) per share
Non-GAAP basic and diluted 0.19 0.08 0.09 0.04
net earnings per share
MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All numbers expressed in thousands of US$)
June 30, December 31,
2008 2007
CURRENT ASSETS:
Cash and cash equivalents 12,220 9,205
Marketable securities 9,732 9,464
Short term bank deposits 4,496 11,220
Trade receivables 24,282 26,775
Unbilled accounts receivable 5,204 4,053
Other accounts receivable and prepaid 6,935 5,753
expenses
Deferred income taxes 2,479 1,936
Inventories 16,884 23,785
Total current assets 82,232 92,191
Long term investments and receivables:
Long-term trade receivables 2,076 2,019
Long-term loans 919 808
Long-term bank deposits 1,834 1,846
Escrow deposit 992 4,442
Severance pay fund 2,853 2,765
Total long-term investments and 8,674 11,880
receivables
PROPERTY AND EQUIPMENT, NET 8,987 8,429
DEFERRED INCOME TAXES 2,220 763
OTHER INTANGIBLE ASSETS, NET 5,277 7,040
GOODWILL 12,847 5,610
ASSETS ATTRIBUTED TO DISCONTINUED 60 244
OPERATION
Total assets 120,297 126,157
CURRENT LIABILITIES:
Short-term bank credit 15,183 16,434
Current maturities of long-term bank 4,303 4,303
debt
Trade payables 4,192 7,344
Other accounts payable, accrued 16,966 22,584
expenses and customer advances
Total current liabilities 40,644 50,665
LONG-TERM LIABILITIES:
Long-term bank debt 2,695 3,095
Deferred income taxes 4,029 2,097
Accrued severance pay 4,135 3,873
Total long-term liabilities 10,859 9,065
LIABILITIES ATTRIBUTED TO DISCONTINUED 246 849
OPERATION
SHAREHOLDERS' EQUITY 68,548 65,578
TOTAL LIABILITIES AND SHAREHOLDERS' 120,297 126,157
EQUITY
Total bank debt to total 0.32 0.36
capitalization
Current ratio 2.02 1.82
Contacts:
Company Investor Relations
Magal Security Systems, Ltd GK Investor Relations
Lian Goldstein, CFO Ehud Helft/Kenny Green
Tel: +972-3-5391444 Tel: +1-646-201-9246
Fax: +972-3-5366245 E-mail: info@gkir.com
E-mail: lian@magal-ssl.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: July 30, 2008