Magal Reports Second Quarter 2008 Revenues of $25 Million Representing a 78% Year-Over-Year Increase

Name	Symbol	Market	Type
Roundhill Magnificent Seven ETF	AMEX:MAGS	AMEX	Exchange Traded Fund

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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 INTANGIABLE ASSETS, NET 5,277 7,040 GOODWILL 12,847 5,610 ASSETS ATRIBUTED 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 ATRIBUTED 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: E-mail: DATASOURCE: Magal Security Systems Ltd CONTACT: Contacts: Company Investor Relations, Magal Security Systems, Ltd, Lian Goldstein, CFO, Tel: +972-3-5391444, Fax: +972-3-5366245, E-mail: GK Investor Relations, Ehud Helft/Kenny Green, Tel: +1-646-201-9246, E-mail:

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MAGS Roundhill Magnificent Seven ETF