Magal Security Systems Reports its Financial Results for the Third Quarter 2009 and Nine Month Period Ended September 30, 2009

YAHUD, Israel, November 30  /PRNewswire-FirstCall/ -- Magal Security Systems Ltd. (NASDAQ GMS: MAGS, TASE: MAGS) today announced its consolidated financial results for the three and nine month periods ended September 30, 2009.

In September 2009, Magal's Board of Directors resolved to discontinue the operations of the European integration subsidiary, acquired in September 2007. The results for the quarter and the nine months ended September 30, 2009 and 2008 were reclassified to disclose the results of that subsidiary as discontinued operations. The net assets of the subsidiary for the nine months ended September 30, 2009 and the year ended December 31, 2008 were reclassified accordingly.

RESULTS FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2009

Revenues for the nine months ended September 30, 2009 were US$39.5 million, a 2.2% decrease compared with the comparable period last year.

Gross profit for the nine months ended September 30, 2009 increased by 10.2% to US$15.9 million, or 40.1% of revenue, compared with US$14.4 million, or 35.6% of revenue, in the comparable period last year. The increase is attributable to the low gross margin generated by certain strategic, but low margin projects in 2008 and to more favorable currency exchange rates in 2009 compared with 2008.

Operating expenses for the nine months ended September 30, 2009 decreased by 14.5% from US$20.5 million in 2008 to US$17.6 million in 2009. The decrease is attributable to a decrease in operating expenses in North America following Magal's integration of its US operations into its Canadian subsidiary, a decrease in headcount and payroll expenses, as well as more favorable currency exchange rates in 2009 compared with 2008.

Operating loss in the nine months period ended September 30, 2009 was US$1.7 million, compared with an operating loss of US$6.1 million in the same period last year. The operating loss decreased as a result of the improvement in gross margins and the decrease in operating expenses.

Net loss for the nine months period ended September 30, 2009 was US$2.8 million compared with a net loss of US$8.6 million in the same period last year. Net loss per share for the nine month period ended September 30, 2009 was US$(0.27), compared with net loss per share of US$(0.82) in the comparable period last year.

RESULTS FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 2009

Revenues for the third quarter of 2009 totaled US$17.7 million, an increase of 14.8% over the third quarter of 2008. The revenue increase is mostly attributable to revenue generated in Israel during the period.

Gross profit for the third quarter of 2009 increased to US$6.8 million, or 38.2% of revenues, representing a 54.8% increase over US$4.4 million, or 28.3% of revenues for the third quarter of 2008. Gross margin for the quarter increased due to the higher revenue volume, a more favorable mix of products and projects, as well as more favorable currency exchange rates in 2009 compared with 2008.

Operating income for the third quarter of 2009 was US$0.5 million, compared with an operating loss of US$2.4 million for the third quarter of 2008.

During the third quarter of 2009, the US Dollar decreased by 4.1% against the Israeli Shekel compared with an increase of 2.1% during the comparable period last year. Financing expenses in the three months ended September 30, 2009 increased from US$0.3 million to US$0.8 million as a result of the devaluation of the Company's US Dollar denominated assets.

Net loss for the third quarter of 2009, was US$0.7 million, compared with a net loss of US$3.4 million for the third quarter of 2008. Net loss per share for the third quarter of 2009 was US$(0.07), compared with a net loss per share of US$(0.33) in the same period last year.

MANAGEMENT COMMENT

Commenting on the results, Mr. Eitan Livneh, President and CEO of Magal, said, "We have gone through many changes in 2009 that have provided a foundation for better results in the future. The improvement in the results of our core business in the past nine months, and especially our operating profitability in the third quarter, is testimony to that. We rationalized costs across the board and consolidated our North American business into one unit, realizing significant cost savings."

Continued Mr. Livneh, "Our European subsidiary required us to invest extensive time and effort, which management felt were not justified in light of its overall performance. We therefore took the decision to cease the operations of this subsidiary. This will enable us to increase our focus on our core business and on what we do best."

"Our current results represent the beginning of an improvement in performance which I expect will continue into the future. We intend to cement our lead in the sensor space by marketing new advanced security sensors, build and advance on our success with Fortis in the Municipal Control and Command field, and improve our capabilities in the Intelligent Video Analytics space. Our achievements in 2009 and goals for 2010, make me and the rest of management enthusiastic about Magal's future," concluded Mr. Livneh.

INVESTORS' CONFERENCE CALL INFORMATION:

The Company will host a conference call today, November 30, 2009, at 9:00am EST.

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: 1-888-407-2553
  Israel: 03-918-0664
  UK: 0-800-917-9141
  International: [phone]




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://www.magal-ssl.com/.

ABOUT MAGAL S3

Magal S3 is a leading international solution provider, in the business of Security, Safety and Site Management. Based on 35 years of experience and interaction with customers, the company has developed a unique set of solutions and products, optimized for perimeter, outdoor and general security applications. Magal S3's turnkey solutions are typically integrated and managed by a single sophisticated modular command and control software, supported by expert systems for real-time decision support. Magal S3's broad portfolio of critical infrastructure and site protection management technologies includes a variety of smart barriers and fences, fence mounted detectors, virtual gates, buried and concealed detection systems as well as a sophisticated protection package for sub-surface intrusion. A world innovator in the development of CCTV, IVA and motion detection technology for outdoor operation, Magal S3 has successfully installed customized solutions and products in more than 75 countries worldwide.

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.

                         MAGAL SECURITY SYSTEMS LTD.
                 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
                                OF INCOME
                    (All numbers except EPS expressed in
                            thousands of US$)

                   Nine Months Ended                      Three months
                       Sept. 30,                         Ended Sept. 30,
                       2009     2008   % change    2009     2008   % change


  Revenue            39,552   40,460    (2.2)    17,682   15,406     14.8

  Cost of revenue    23,677   26,048    (9.1)    10,924   11,039     (1.0)

  Gross profit       15,875   14,412    10.2      6,758    4,367     54.8
  Operating
   expenses:
  Research and
   development, net   3,199    3,992   (19.9)     1,163    1,359    (14.4)
  Selling and
   marketing          7,992    9,757   (18.1)     2,891    3,448    (16.2)
  General and         6,379    6,353     0.4      2,182    1,976     10.4
   administrative
  Special                        438                  -        -
   post-employment
   benefit
  Total operating
   expenses          17,570   20,540   (14.5)     6,236    6,783     (8.1)

  Operating income  (1,695)   (6,128)               522   (2,416)
   (loss)
  Financial
   expense, net      1,065     1,542   (30.9)       839      297

  Loss from
   continuing
   operations
   before income
   taxes            (2,760)   (7,670)              (317)  (2,713)
  Income tax            10       778   (98.7)       244      257     (5.1)

  Net loss from
   continuing
   operations       (2,750)   (6,892)              (561)  (2,970)
  Loss on
   discontinued
   operations, net     (97)   (1,683)              (160)    (461)
  Net loss          (2,847)   (8,575)  (66.8)      (721)  (3,431)   (79.0)

 Basic and
  diluted loss per
  share from
  continuing
  operations         (0.26)$   (0.66)$            (0.05)$  (0.29)$

 Basic and
  diluted loss per
  share from
  discontinued
  operations, net    (0.01)$   (0.16)$            (0.02)$  (0.04)$

 Basic and
  diluted net loss
  per share          (0.27)$   (0.82)$            (0.07)$  (0.33)$


  MAGAL SECURITY SYSTEMS LTD.
  FINANCIAL RATIOS

                         Nine Months        Three months
                        Ended Sep. 30,      Ended Sep. 30,
                      2009        2008    2009         2008
                        %           %       %            %

  Gross margin       40.1        35.6    38.2         28.3
  Research and
   development,
   net as a % of
   revenues           8.1         9.9     6.6          8.8
  Selling and
   marketing as a
   % of revenues     20.2        24.1    16.3         22.4
  General and
   administrative
   as a % of
   revenues          16.1        15.7    12.3         12.8
  Special post
   employment
   benefit              -         1.1       -            -
  Operating
   margin            (4.3)      (15.1)    3.0        (15.7)
  Net margin
   before
   discontinued
   operation         (7.0)      (17.0)   (3.2)       (19.3)
  Loss on
   discontinued
   operation as a
   % of revenues     (0.2)       (4.2)   (0.9)        (3.0)
  Net margin
   after
   discontinued
   operation         (7.2)      (21.2)   (4.1)       (22.3)



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


                                               Sept. 30,       December 31,
                                                 2009              2008
  CURRENT ASSETS:
  Cash and cash equivalents                    17,128             14,185
  Marketable securities                             -              1,000
  Short term bank deposits                          -              1,228
  Trade receivables                            13,931             15,800
  Unbilled accounts receivable                  2,862              5,055
  Other accounts receivable and prepaid         3,866              4,145
  expenses
  Deferred income taxes                           377                362
  Inventories                                  12,358             14,031
  Total current assets                         50,522             55,806

  Long term investments and receivables:
  Long-term trade receivables                   1,784              1,839
  Long-term loans                                 200                519
  Long-term bank deposits                       1,838              1,826
  Escrow deposit                                  905                860
  Severance pay fund                            2,346              2,763
  Total long-term investments and               7,073              7,807
  receivables

  PROPERTY AND EQUIPMENT, NET                   9,066              8,061

  DEFERRED INCOME TAXES                            42                 37

  OTHER INTANGIABLE ASSETS, NET                   369                404

  GOODWILL                                      2,047              1,874

  ASSETS ATTRIBUTED TO DISCONTINUED             1,454              2,276
  OPERATION

  Total assets                                 70,573             76,265

  CURRENT LIABILITIES:
  Short-term bank credit                       21,611             23,182
  Current maturities of long-term bank            813                813
  debt
  Trade payables                                4,692              4,759
  Other accounts payable, accrued expenses      7,916             10,751
  and customer advances
  Total current liabilities                    35,032             39,505

  LONG-TERM LIABILITIES:
  Long-term bank debt                           1,747              2,282
  Deferred income taxes                           157                138
  Accrued severance pay                         3,088              3,451
  Total long-term liabilities                   4,992              5,871

  LIABILITIES ATTRIBUTED TO DISCONTINUED          100                171
  OPERATION

  SHAREHOLDERS' EQUITY                         30,449             30,718

  TOTAL LIABILITIES AND SHAREHOLDERS'          70,573             76,265
  EQUITY
       Total bank debt to
        total capitalization                     0.79               0.86
       Current ratio                             1.44               1.41



  For more information:

  Magal Security Systems Ltd.
  Zev Morgenstern, CFO
  Tel: [phone]
  E-mail: 

  Web: http://www.magal-ssl.com/

  GK Investor Relations
  Ehud Helft/Kenny Green
  Tel: (US) [phone]
  Int'l dial: [phone]
  E-mail: 

DATASOURCE: Magal Security Systems Ltd



CONTACT:  For more information: Magal Security Systems Ltd., Zev

Morgenstern, CFO, Tel: [phone], E-mail:  . GK

Investor Relations, Ehud Helft/Kenny Green, Tel: (US) [phone], Int'l

dial: [phone], E-mail:  .

Copyright