Magal Security Systems Ltd. Announces Fourth Quarter and Full Year 2007 Financial Results

Record Annual Revenues, Up 14% Over 2006 


YAHUD, Israel, March 6  /PRNewswire-FirstCall/ -- Magal Security Systems Ltd. (NASDAQ:MAGS) (TASE:MAGS) today announced its consolidated financial results for the three and twelve month periods ended December 31, 2007.

Effective September 1, 2007, Magal's financial statements include the consolidation of its recently acquired European integration subsidiary. Furthermore, following the sale of Magal's U.S. based video monitoring business operated by Smart Interactive Systems Inc., the results of this business, for the fourth quarter and the years ended December 31, 2006 and 2007, were reclassified as discontinued operations.

Fourth Quarter Results

Revenues for the fourth quarter of 2007 increased 7.0 percent over the fourth quarter 2006, reaching US$23.2 million.

Gross profit for the fourth quarter of 2007 increased 4.1 percent over the fourth quarter of 2006, reaching US$8.3 million, or 35.9 percent of revenues. Gross margin for the quarter was negatively affected by a strategic and prestigious project performed for the Israeli government. The majority of this project was completed by the end of 2007.

Operating income in the fourth quarter of 2007, reached US$826,000 compared with US$877,000 for the fourth quarter of 2006.

Net income from continuing operations in the fourth quarter of 2007 increased 157 percent over the fourth quarter of 2006, reaching US$857,000.

Net income in the fourth quarter of 2007, reached US$2.9 million, compared with a net loss of US$231,000 in the fourth quarter of 2006.

Net income for the quarter includes the discontinued operations of Magal's U.S. based video monitoring business operated by Smart Interactive Systems Inc., which business was sold in the fourth quarter 2007 to iVerify US, Inc. for $8.5 million. The sale follows Magal's strategy to focus on its core business of perimeter security projects and products.

Diluted earnings per share from continuing operations for the fourth quarter of 2007 was US$0.08, compared with US$0.03 in the same period last year. Diluted net earnings per share for the fourth quarter of 2007 was US$0.28, compared with diluted loss per share of US$0.02 in the same period last year.

Full Year Results

Revenues for the year ended December 31, 2007 increased 13.8 percent compared with 2006, reaching US$72.4 million.

Gross profit for the year ended December 31, 2007 increased 9.5 percent, reaching US$28.9 million, or 39.9 percent of revenues, compared with US$26.4 million for 2006, or 41.5 percent of revenue.

Operating income for the year ended December 31, 2007, including a one-time charge of $904,000, totalled US$2.8 million, compared with US$3.8 million for 2006. The one-time charge relates to contractual post employment benefits for the Company's founder and former chairman who retired at the end of the fourth quarter of 2007.

Financial expenses for the full year of 2007 totalled US$2.3 million and includes approximately US$1.5 million of foreign exchange losses resulting from the devaluation of the US dollar against both the new Israeli Shekel and the Canadian dollar.

Net income from continuing operations for 2007 totalled US$196,000 compared with $2 million in 2006. Net income for the year totalled US$1.9 million, compared to US$0.8 million for full year 2006.

Diluted earnings per share from continuing operations for the year ended December 31, 2007 was US$0.02, compared with diluted earnings per share of US$0.20 in the year 2006.

Diluted net earnings per share for the year ended December 31, 2007 was US$0.18, compared with diluted earnings per share of US$0.08 in the year 2006.

Commenting on the results, Mr. Izhar Dekel, CEO of Magal, said, "2007 was very much a year of meeting strategic milestones. This included targeting larger scale integration projects, expanding our global presence and acquiring complementary businesses. During the year we acquired a European integrator, offering us access to new markets, while expanding our capabilities to target larger projects."

Mr. Dekel added, "We are pleased that we had another year of revenue growth in 2007. During the fourth quarter we continued to focus our efforts and resources to maximize our synergies and the integration of the capabilities of our recent and accretive European acquisition. Furthermore, we continued to focus on our core competencies, and, as such, sold our US-based video monitoring systems' business. Looking ahead, and based on the significant new orders that we received in recent months, we believe that Magal will generate increased revenues and improved results in 2008."

The Company will be hosting its quarterly conference call at 10:00am EST today. Management will review and discuss the fourth quarter 2007 results. They will then be available to answer questions.

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

  US Dial-in Number: 1-888-668-9141
  Canada Dial-in Number: 1-800-917-9141
  ISRAEL Dial-in Number: 03-918-0609
  INTERNATIONAL Dial-in Number: [phone]


  At: 10:00am Eastern Time; 7:00am Pacific Time; 5:00pm Israel Time
  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. 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 on the Nasdaq 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.

                 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                 (All numbers except EPS expressed in thousands of US$)

                  Year Ended December 31,        Quarter Ended December 31,
                       2007      2006 (*     %       2007    2006 (*    %
                                          change                     change

  Revenues           72,375    63,600      13.8    23,155  21,635      7.0

  Cost of revenues   43,510    37,236      16.8    14,837  13,648      8.7

  Gross profit       28,865    26,364       9.5     8,318   7,987      4.1
  Operating expenses:
  Research and
  development, net    5,764     5,378       7.2     1,879   1,576     19.2
  Selling and
  marketing          13,029    11,603      12.3     3,498   3,861     (9.4)

  General and
  administrative      6,399     5,547      15.4     2,171   1,673     29.8
  Special post
  employment benefit    904         -                 (56)      -
  Total operating
  Expenses           26,096    22,528      15.8     7,492   7,110      5.4

  Operating income    2,769     3,836     (27.8)      826     877     (5.8)
  Financial expenses,
  net                 2,259       864     161.5       832     216    285.2

  Income (loss) from
  continuing
  operations before
  income taxes          510     2,972     (82.8)       (6)    661
  Income tax (tax
  benefit)              314       943     (66.7)     (863)    327

  Net Income from
  continuing
  operations            196     2,029     (90.3)      857     334    156.6
  Net Income (loss)
  from discontinued
  operations          1,686    (1,219)              2,022    (565)
  Net income (loss)   1,882       810     132.3     2,879    (231)

  Basic net earnings
  per share from
  continuing
  operations          $0.02     $0.20               $0.08   $0.03
  Basic net earnings
  (loss) per share
  from discontinued
  operations          $0.16    $(0.12)              $0.20  $(0.05)
  Basic net earnings
  (loss) per share    $0.18    $ 0.08               $0.28  ($0.02)

  Weighted average
  number of shares
  outstanding used
  in computing
  basic net earnings
  per share (in
  thousands)         10,395    10,384              10,397  10,392

  Diluted net earnings
  per share from
  continuing
  operations          $0.02     $0.20               $0.08   $0.03
  Diluted net loss per
  share from
  discontinued
  operations          $0.16    $(0.12)              $0.20  $(0.05)
  Diluted net earnings
  (loss) per share    $0.18     $0.08               $0.28  $(0.02)
  Weighted average
  number of shares
  outstanding used
  in computing
  diluted net
  earnings
  per share (in
  thousands)         10,431    10,442              10,398  10,427


  (*Reclassified

                               FINANCIAL RATIOS
                                 Year ended                Quarter ended
                                 December 31                December 31
                             2007        2006 (*          2007      2006 (*

  Gross margin               39.9%        41.5%           35.9%     36.9%
  Research and development,
  net as a % of revenues      8.0%         8.5%            8.1%      7.3%
  Selling and Marketing as
  a % of revenues            18.0%        18.2%           15.1%     17.8%
  General and
  administrative as a % of
  revenues                    8.8%         8.7%            9.4%      7.7%
  Operating income margin     3.8%         6.0%            3.6%      4.1%
  Net income margin (before
  discontinued operation)     0.3%         3.2%            3.7%      1.5%
  Net income (loss) margin
  (after discontinued
  operation)                  2.6%         1.3%           12.4%     (1.1)%

  Total bank debt to total
  Capitalization           * 0.36       ** 0.43         * 0.36   ** 0.43

  Current ratio             *1.75        **2.15          *1.75    **2.15


  * As of December 31, 2007
  ** As of December 31, 2006
  (* Reclassified

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


                                                  December 31, December 31,
                                                     2007         2006 (*
  CURRENT ASSETS:
  Cash and cash equivalents                       $ 9,814      $ 4,908
  Marketable securities                             9,464        3,067
  Short term bank deposits                         11,220       14,186
  Trade receivables                                26,623       27,754
  Unbilled accounts receivable                      4,003        5,389
  Other accounts receivable and prepaid expenses    6,976        3,821
  Deferred income taxes                             1,847        1,604
  Inventories                                      23,816       13,971
  Total current assets                             93,763       74,700

  Long term investments and receivables:
  Long-term trade receivables                       2,019           40
  Long-term loans                                     808          622
  Long-term bank deposits                           1,846        4,800
  Escrow deposit                                    4,442            -
  Severance pay fund                                2,765        2,401
  Total long-term investments and receivables      11,880        7,863

  PROPERTY AND EQUIPMENT, NET                       8,429        7,707

  OTHER ASSETS, NET                                13,755        6,002

  ASSETS ATTRIBUTED TO DISCONTINUED OPERATION         244        7,409

  Total assets                                   $128,071     $103,681

  CURRENT LIABILITIES:
  Short-term bank credit                         $ 16,434     $ 17,026
  Current maturities of long-term bank debt         4,303          795
  Trade payables                                    7,344        5,954
  Deferred income taxes                               687            -
  Other accounts payable, accrued expenses and
  customer advances                                24,791       11,041
  Total current liabilities                        53,559       34,816

  LONG-TERM LIABILITIES:
  Long-term bank debt                               3,095        7,399
  Long-term accounts payable                            -          178
  Deferred income taxes                             1,218            -
  Accrued severance pay                             3,873        2,524
  Total long-term liabilities                       8,186       10,101

  LIABILITIES ATTRIBUTED TO DISCONTINUED OPERATION    849          614

  SHAREHOLDERS' EQUITY                             65,477       58,150

  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY     $128,071     $103,681


  (* Reclassified

  Contacts:
  Company
  Magal Security Systems, Ltd
  Lian Goldstein, CFO
  Tel: [phone]
  Fax: [phone]
  E-mail: 

  Investor Relations
  GK Investor Relations
  Ehud Helft/Kenny Green
  Tel: [phone]
  E-mail: 

DATASOURCE: Magal Security Systems Ltd



CONTACT:  Contacts: Company, Magal Security Systems, Ltd, Lian

Goldstein, CFO, Tel: [phone], Fax: [phone], E-mail:

. Investor Relations, GK Investor Relations, Ehud

Helft/Kenny Green, Tel: [phone], E-mail: 

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