Magal Presents 86% YoY Revenue Increase in First Quarter 2008

YAHUD, Israel, May 5, 2008 /PRNewswire-FirstCall via COMTEX News Network/ ----Magal Security Systems Ltd. (Nasdaq GM: MAGS; TASE:MAGS) today announced its consolidated financial results for the three month period ended March 31, 2008.

Revenues for the first quarter of 2008 increased 86% reaching US$26.3 million, compared to US$14.1 million in the first quarter of 2007. Effective September 1, 2007, Magal's financial statements consolidate the results of the European integration company acquired in August 2007. Following the sale of Magal's U.S. based video monitoring business operated by Smart Interactive Systems Inc. in December 2007, the results of this business for the first quarter of 2007, were reclassified as discontinued operations.

Gross profit for the first quarter of 2008 increased by 52% over the first quarter of 2007, reaching US$9.7 million, or 36.8% of revenues. 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 for the first quarter of 2008 totalled US$8.4 million, compared to US$5.5 million in the first quarter 2007. Operating expenses, as a percent of revenues, decreased to 31.9%, from 38.8% last year.

The operating expenses for the quarter included a US$1.0 million amortization of intangible assets relating to the 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$0.6 million for the quarter.

Operating income for the first quarter of 2008 increased 43% reaching US$1.3 million, compared to US$0.9 million in the first quarter of 2007.

Financial expenses for the first quarter of 2008 totalled US$1.0 million, compared to $0.3 million for the first quarter of 2007. Financial expenses for the quarter included $0.6 million resulting from the ongoing weakening of the US dollar.

Net income from continued operation for the first quarter of 2008 was flat, compared to net income from continued operation of US$0.5 million at the first quarter of 2007. Net loss, including discontinued operations, totalled US$0.2 million, compared with net income of US$0.3 million in the first quarter of 2007. Diluted loss per share for the first quarter totalled US$0.02 per share compared to diluted earnings of US$0.03 per share in the same quarter of last year.

"Once again we presented strong revenue growth this quarter. This is in line with our long term strategic plan of acquiring new complimentary companies and activities; penetrating new territories; and targeting larger scale projects. We expect this trend to continue in the quarters to come," commented Mr. Izhar Dekel, CEO of Magal. "Despite our strong revenue growth, our results this quarter were adversely affected by several items including the weakening of the US dollar, several one-time expenses and change in our revenue mix. Looking ahead we expect to continue generating growth in line with our long term plan and believe our results will better reflect this growth in quarters to come."

The Company will be hosting its quarterly conference call later today at 9:00am ET. On the call, management will review and discuss the first 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:
   1-866-229-7198 UK Dial-in Number: 0-800-032-3367 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.

 -FINANCIAL TABLES FOLLOW- UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (All numbers
   except EPS expressed in thousands of US$) Quarter Ended March 31, 2008 % 2007 (* % % change Of Of revenues revenues Revenues
   26,290 100% 14,113 100% 86.3% Cost of revenues 16,608 63.2% 7,732 54.8% 114.8% Gross profit 9,682 36.8% 6,381 45.2% 51.7%
   Operating expenses: Research and development, net 1,625 6.2% 1,454 10.3% 11.8% Selling and marketing 4,236 16.1% 2,709 19.2%
   56.4% General and administrative 2,095 8.0% 1,316 9.3% 59.2% Special post employment 438 1.7% - benefit Total operating expenses
   8,394 31.9% 5,479 38.8% 53.2% Operating income 1,288 4.9% 902 6.4% 42.8% Financial expenses, net 984 3.7% 303 2.1% 224.8%
   Income from continuing 304 1.2% 599 4.2% (49.2%) operations before income taxes Income tax net 292 1.1% 148 1.0% 97.3% Net
   Income from continuing 12 0.0% 451 3.2% 62.1% operations Net loss from discontinued 248 0.9% 153 1.1% 62.0% operations Net
   income (loss) (236) (0.9%) 298 2.1% Basic and diluted net earnings per share from continuing operations 0.00 0.05 Basic and
   diluted loss per share from discontinued operations (0.02) (0.02) Basic and diluted net earnings (loss) per share (0.02) 0.03
   (*Reclassified MAGAL SECURITY SYSTEMS LTD. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (All numbers expressed in thousands
   of US$) December March 31, 31, 2008 2007 CURRENT ASSETS: Cash and cash equivalents 15,559 9,814 Marketable securities 9,452
   9,464 Short term bank deposits 11,243 11,220 Trade receivables 15,394 26,623 Unbilled accounts receivable 13,856 4,003 Other
   accounts receivable and prepaid 5,371 6,976 expenses Deferred income taxes 2,043 1,847 Inventories 19,633 23,816 Total current
   assets 92,551 93,763 Long term investments and receivables: Long-term trade receivables 2,012 2,019 Long-term loans 868 808
   Long-term bank deposits 1,832 1,846 Escrow deposit 2,071 4,442 Severance pay fund 2,777 2,765 Total long-term investments
   and 9,560 11,880 receivables PROPERTY AND EQUIPMENT, NET 8,640 8,429 OTHER ASSETS, NET 19,191 13,755 ASSETS ATRIBUTED TO DISCONTINUED
   120 244 OPERATION Total assets 130,062 128,071 CURRENT LIABILITIES: Short-term bank credit 19,419 16,434 Current maturities
   of long-term bank 4,303 4,303 debt Trade payables 7,154 7,344 Deferred income taxes 778 687 Other accounts payable, accrued
   22,499 24,791 expenses and customer advances Total current liabilities 54,153 53,559 LONG-TERM LIABILITIES: Long-term bank
   debt 2,895 3,095 Deferred income taxes 1,503 - 1,218 Accrued severance pay 4,005 3,873 Total long-term liabilities 8,403 8,186
   LIABILITIES ATRIBUTED TO DISCONTINUED 400 849 OPERATION SHAREHOLDERS' EQUITY 67,106 65,477 TOTAL LIABILITIES AND SHAREHOLDERS'
   130,062 128,071 EQUITY Total bank debt to total 0.40 0.36 capitalization Current ratio 1.71 1.75 <end_table> 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 

SOURCE Magal Security Systems Ltd

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