Magal Security Systems Ltd. Announces 2004 Fourth Quarter and Full Year Results

Magal Security Systems Ltd. Announces 2004 Fourth Quarter and
Full Year Results 


YAHUD, Israel, February 14  /PRNewswire-FirstCall/ -- Magal Security Systems
Ltd. (NASDAQ NM:MAGS ; TASE:MAGS) today announced its consolidated financial
results for the three and twelve month periods ended December 31, 2004.

Revenues for the fourth quarter of 2004 reached US$17.0 million, a decrease of
3.9 percent from US$17.7 million reported for the fourth quarter of 2003 and a
sequential increase of 11.3 percent over US$15.3 million achieved for the third
quarter of 2004.

Gross profit for the fourth quarter of 2004 reached US$7.6 million (or 45.0
percent of revenues), compared with US$7.9 million (or 44.5 percent of
revenues) for the fourth quarter of 2003 and US$6.8 million (or 44.7 percent of
revenues) for the third quarter of 2004.

Operating income for the fourth quarter of 2004 reached US$855,000 compared
with $1.1 million for the fourth quarter of 2003 and US$1.2 million for the
third quarter of 2004.

Net income for the fourth quarter of 2004 reached US$442,000, compared with net
income of US$529,000 for the fourth quarter of 2003 and net income of
US$663,000 in the third quarter of 2004.

Diluted earnings per share for the fourth quarter was US$0.05, compared with
diluted earnings per share of US$0.06 in the same period last year.

Total revenues for the year ended December 31, 2004 reached US$61.0 million, an
increase of 2.7 percent compared with US$59.4 million reported for the year
ended December 31, 2003.

Operating and net income for 2004, reached US$2.9 million and US$1.1 million,
respectively, compared with US$4.3 million and US$2.4 million achieved for
2003, respectively. This represents a decrease of 32.5 percent and 56.2
percent, respectively, over 2003.

In 2004, the Company recorded an expense of US$1.2 million relating to an award
granted in the second quarter of 2004 by the Company's two principal
shareholders out of their personal funds to all of the Company's employees.
According to generally accepted accounting principles in the United States (US
GAAP), such a grant was recorded as an expense in the second quarter, although
it did not affect the Company's shareholders' equity nor its statement of
cash-flows.

Diluted earnings per share for the year ended December 31, 2004 was US$0.12,
compared with US$0.29 in year ended December 31, 2003.

Commenting on the results, Mr. Jacob Even-Ezra, Chairman of Magal, said:
"Magal's revenues that were generated from markets outside of Israel increased
as planned in 2004 and offset the decrease in income from the seamline project
in Israel. The seamline project, which made a major contribution to the
Company's revenues in 2003, was stalled due to litigation in Israel. Management
is satisfied with the fact that the Company was once again able to show its
strength in the different markets in the world and that the Company's revenues
increased in 2004 despite the weakness in the Israeli market. We believe that
in 2005, Magal will receive new orders for the seamline project."

"If we compare the Company's income before tax in 2004 with 2003, our income
before tax increased slightly in 2004 if we exclude the expenses associated
with the award to employees granted by our two principal shareholders out of
their personal funds."

Mr. Even-Ezra concluded: "Based on our current backlog and forecasts,
management believes that the Company's results in 2005 will show significant
improvement over 2004."

The Company will be hosting its quarterly conference call at 11:00am EST today.
Mr. Jacob Even-Ezra, Chairman of the Board & CEO, and Ms. Raya Asher, V.P.
Finance & CFO, will review and discuss the fourth quarter and full year 2004
results. They will then be available to answer questions.

To participate, you may call one of the teleconferencing numbers that follows:

  US Dial-in Number: [phone]
  Canada Dial-in Number: [phone]
  ISRAEL Dial-in Number: 03-918-0610
  INTERNATIONAL Dial-in Number: [phone]

  At:

  11:00am Eastern Time
  8:00am Pacific Time
  6:00pm Israel Time




Please place your calls 5-10 minutes before the conference call commences. If
you are unable to connect using one of the toll-free numbers, please try the
international dial-in number.

For those unable to participate in the conference call, there will be a replay
available from two hours after the call ends until Wednesday, February 16th,
11:00am EST. To listen to the replay please dial: [phone] (US) or
[phone] (international).

About Magal Security Systems, Ltd.:

Magal Security Systems Ltd. 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
established in the U.S. in June 2001. 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. Israeli-based Magal has subsidiaries
in the U.S., Canada, the U.K., Germany, Romania, Mexico and an office in China.

Magal trades under the symbol MAGS on the Nasdaq National Market since 1993 and
on the Tel-Aviv Stock Exchange (TASE) since July 2001.

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.

  Contacts:

  Company                            Investor Relations
  Magal Security Systems, Ltd        Gelbart Kahana Investor Relations
  Raya Asher, CFO                    Ehud Helft/Kenny Green
  Tel: [phone]                Tel: [phone]
  Fax: [phone]                E-mail: 
  E-mail:            



                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

                       Year Ended Dec. 31,       Quarter Ended Dec.
                                                 31,
                                                 Unaudited
                        2004      2003         %   2004      2003       %
                                          growth                    growth

  Revenues              60,974    59,361    2.7    16,988    17,686  (3.9)

  Cost of revenues      33,725    33,378    1.0     9,347     9,815  (4.8)

  Gross profit          27,249    25,983    4.9     7,641     7,871  (2.9)
  Operating expenses:
  Research and           4,683     4,773  (1.9)     1,197     1,303  (8.1)
  development, net
  Selling and marketing 12,679    11,585    9.4     3,951     4,223  (6.4)
  General and            5,771     5,305    8.8     1,638     1,259   30.1
  administrative
  Award granted by       1,200         -                -         -
  principal shareholders
  Total operating       24,333    21,663   12.3     6,786     6,785      -
  expenses

  Operating income       2,916     4,320 (32.5)       855     1,086 (21.3)
  Financial expenses, net  762     1,003 (24.0)       188       281 (33.1)

  Income before taxes    2,154     3,317 (35.1)       667       805 (17.1)
  Taxes on income        1,101       913   20.6       225       276 (18.5)

  Net income             1,053     2,404 (56.2)       442       529 (16.4)

  Basic net earnings per  0.12      0.29             0.05      0.06
  share

  Weighted average number of shares

  Outstanding used in Computing
  basic net earnings per 8,581     8,345            8,636     8,404
  share (in thousands)

  Diluted net earnings    0.12      0.29             0.05      0.06
  per share

  Weighted average number of shares

  Outstanding used in Computing
  Diluted net earnings   8,636     8,431            8,659     8,483
  per share (in
  thousands)



  FINANCIAL RATIOS

                                    Year Ended              Quarter Ended
                                   December 31,              December 31,
                                2004          2003         2004       2003

  Gross Margin                 44.7%       43.8%          45.0%       44.5%
  Research and development,     7.7%        8.0%           7.0%       7.4%
  net as a % of Revenues
  Selling and Marketing as a % 20.8%       19.5%          23.3%       23.9%
  of Revenues
  General and administrative    9.5%        8.9%           9.6%       7.1%
  as a % of Revenues
  Operating Margin              4.8%        7.3%           5.0%       6.1%
  Net income Margin             1.7%        4.1%           2.6%       3.0%
  Total Bank Debt to Total      0.48        0.47           0.48       0.47
  Capitalization
  Current Ratio                 1.77        1.76           1.77       1.76



                         MAGAL SECURITY SYSTEMS LTD.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                (All numbers expressed in thousands of US$)

                                              December        December 31,
                                                 31,
                                                2004              2003
  CURRENT ASSETS:
  Cash and cash equivalents                        5,824             4,389
  Short-term bank deposits                         6,140             9,000
  Trade receivables                               13,232            14,885
  Unbilled accounts receivable                     7,465             5,072
  Other accounts receivable                        3,858           (*3,857
  Deferred income taxes                              488             (*454
  Inventories                                     12,702            11,777
  Total current assets                            49,709            49,434

  Long term investments and trade receivables:
  Long-term trade receivables                        344               300
  Long-term bank deposits                          5,994             3,051
  Severance pay fund                               2,142             1,960
  Total long term investments and trad             8,480             5,311
  receivables

  PROPERTY AND EQUIPMENT, NET                     14,659            11,505

  OTHER ASSETS, NET                                5,128             5,193

  Total assets                                    77,976            71,443

  CURRENT LIABILITIES:
  Short-term bank credit                          15,618            12,597
  Current maturities of long-term bank loans       1,849             3,841
  Trade payables                                   3,189             5,077
  Other accounts payable and accrued expenses      7,450             6,518
  Total current liabilities                       28,106            28,033

  LONG-TERM LIABILITIES:
  Long-term bank loans                             3,500             1,873
  Accrued severance pay                            2,172             1,992
  Long-term liability in respect of forward          650               561
  contracts
  Total long terms liabilities                     6,322             4,426

  SHAREHOLDERS' EQUITY:
  Share capital                                    2,825             2,683
  Additional paid-in capital                      31,865            24,098
  Accumulated other comprehensive income           1,823               479
  Retained earnings                                7,035            11,724
  Total shareholders' equity                      43,548            38,984

  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      77,976            71,443


  (* Reclassified


DATASOURCE: Magal Security Systems Ltd.



CONTACT:  Company, Magal Security Systems, Ltd, Raya Asher, CFO, Tel:

[phone], Fax: [phone], E-mail:

 or Investor Relations, Gelbart Kahana

Investor Relations, Ehud Helft/Kenny Green, Tel:

[phone], E-mail: , 

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