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Magal Security Systems Reports Record Fourth Quarter and Full Year 2011 Financial Results

April 4, 2012

YAHUD, Israel, April 4, 2012 /PRNewswire/ –

Magal S3 Ltd. (NASDAQ GMS: MAGS) today announced its financial results for the three
and twelve month period ended December 31, 2011. Management will hold an investors’
conference call later today, at 10:00 a.m. Eastern Time and 5:00 p.m. Israel time, to
discuss the results.

FOURTH QUARTER 2011 RESULTS SUMMARY

Revenues in the fourth quarter of 2011 increased year-over-year by 122.9% to a record
$33.7 million, compared with $15.1 million in the fourth quarter of 2010.

Gross profit in the quarter was $15.4 million, or 45.8% of revenues, an increase of
174.8% compared to gross profit of $5.6 million, or 37.1% of revenues, in the fourth
quarter of 2010.

Operating profit in the quarter was $5.0 million, or 14.8% of revenues, compared to an
operating loss of $0.6 million in the fourth quarter of 2010.

Financial expenses in the quarter amounted to $73,000 compared to financial expenses
of $405,000 in the fourth quarter of 2010.

Tax expenses in the quarter were $668,000, compared with $556,000 in the fourth
quarter of 2010.

Net income in the quarter was $4.3 million, compared with a net loss of $1.5 million
in the fourth quarter of 2010.

Earnings per share in the fourth quarter of 2011 were $0.27, compared with a net loss
per share of $0.14 in the same period last year.

FULL YEAR 2011 RESULTS

Revenues for the year ended December 31, 2011 were $88.6 million, a 78.3% increase
compared $49.7 million in 2010.

Gross profit for the year was $39.5 million, representing 44.6% of revenues, compared
with $18.3 million, representing 36.8% of revenues in 2010.

Operating profit for 2011 was $9.8 million, representing 11.1% of revenues, compared
with an operating loss of $4.7 million in 2010.

Financial income in 2011 amounted to $756,000 compared to financial expenses of
$967,000 in 2010.

Tax expenses in 2011 were $723,000 compared with $602,000 in 2010.

Net income for 2011 was $9.8 million, compared with a net loss of $6.2 million in
2010.

Earnings per share for the year ended December 31, 2011 was $0.78, compared with a net
loss per share of $0.60 in 2010.

Cash and short term deposits net of current bank debt, as of December 31, 2011, were
$32.5 million, or $2.06 per share, compared with net cash and equivalents of $9.5 million,
or $0.91 per share, on December 31, 2010.

As of December 31, 2011, the Company’s backlog was $50.1 million, compared with $50.2
million on December 31, 2010.

MANAGEMENT COMMENT

Commenting on the results, Mr. Eitan Livneh, President and CEO of Magal, said, “I am
very proud of our 2011 results, which reflect strong improvement across all financial
parameters. We achieved an all-time record in revenues and net income, generating
significant positive operating cash flow of $20.4 million.”

Continued Mr. Livneh, “Our success is the result of the strenuous efforts we have made
over the past two years in transitioning Magal into a leader in delivering full-scale
homeland security projects. Our two-pronged strategy is to strengthen and build on our
market leadership in PIDS products, while at the same time establishing a strong local
presence in various key geographic areas. A recent example of this strategy can be found
in our announcement concerning our new joint venture in India. Our now exceptionally
strong balance sheet, with $32.5 million in net cash, opens many new growth avenues for us
enabling both organic investments and synergistic acquisitions.”

Mr. Jacob Perry, Chairman of the Board of Magal added, “I would like to congratulate
the management team as well as all the employees at Magal on a highly successful and
profitable year. Magal has built a strong brand and reputation in the developing regions
of Africa, Latin America and Asia. The successful conclusion of projects in those regions
places Magal in a strong position to compete for large projects and opportunities, and we
look forward to continued success in the future.”

INVESTORS’ CONFERENCE CALL INFORMATION

The Company will host a conference call later today, April 4, 2012, at 10:00 a.m.
Eastern Time and 5:00 p.m. Israel time.

To participate, please call one of the following teleconferencing numbers:

US: 1 888 668 9141 ; Israel: 03 918 0609 ; UK: 0 800 917 5108 ; Intl.: +972 3 918 0609

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.

A replay of the call will be available from the day after the call for three months.
The link to the replay will be accessible from Magal’s website at:

http://www.magal-s3.com.

ABOUT MAGAL S3

Magal S3 is a leading international provider of security, safety and site management
solutions and products. Over the past 42 years, Magal S3 has delivered tailor-made
solutions and turnkey projects to hundreds of satisfied customers in over 80 countries in
some of the world’s most demanding locations.

Magal S3 offers the broadest portfolio of unique homegrown Perimeter Intrusion
Detection Systems (PIDS) as well as Fortis4G – a new generation of cutting edge Physical
Security Information Management system (PSIM) with comprehensive CCTV solutions and
leading Intelligent Video Analytics (IVA).

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 to Follow **

MAGAL S3 LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

                                    AUDITED                          UNAUDITED
                                   Year Ended                    Three months Ended
                                  December 31,                      December 31,
                                                       %                                 %
                              2011           2010 change        2011           2010 change
        Revenues           $88,591        $49,699   78.3     $33,731        $15,133  122.9
        Cost of
        revenues            49,089         31,400   56.3      18,284          9,512   92.2
        Gross profit        39,502         18,299  115.9      15,447          5,621  174.8
        Operating
        expenses:
        Research and
        development,
        net                  3,898          4,105    (5)         980          1,041  (5.9)
        Selling and
        marketing           19,415         11,261   72.4       7,033          3,413  106.1
        General and
        administrative       8,682          7,593   14.3       2,431          1,729   40.6
        Other income
        (expense)          (2,304)              -                  6              -
        Total operating
        expenses            29,691         22,959   29.3      10,450          6,183     69
        Operating
        income (loss)        9,811        (4,660)              4,997          (562)
        Financial
        income
        (expense), net         756          (967)               (73)          (405)
        Income (loss)
        before income
        taxes               10,567        (5,627)              4,924          (967)
        Income tax
        expense                723            602                668            556
        Net income
        (loss)               9,844        (6,229)              4,256        (1,523)
        Less: net loss
        attributable to
        non-controlling
        interest                 -             24                  -             43
        Net income
        (loss)
        attributable to
        Magal
        shareholders'       $9,844       $(6,205)             $4,256       $(1,480)
        Basic and
        diluted income
        (loss) per
        share from
        continuing
        operations           $0.78        $(0.60)              $0.27        $(0.14)
        Number of basic
        and diluted
        shares          12,645,283     10,396,548         15,819,822     10,396,548
                                 AUDITED
                                                                  UNAUDITED
                           Twelve Months Ended
                                                             Three months ended
                              December 31,                      December 31,
                              2011           2010               2011           2010
                                 %              %                  %              %
        Gross margin          44.6           36.8               45.8           37.1
        Research and
        development,
        net as a % of
        revenues               4.4            8.3                2.9            6.9
        Selling and
        marketing as a
        % of revenues         21.9           22.7               20.9           22.6
        General and
        administrative
        as a % of
        revenues               9.8           15.3                7.2           11.4
        Operating
        margin                11.1          (9.4)               14.8          (3.7)
        Net margin            11.1         (12.5)               12.6          (9.8)

MAGAL S3 LTD.

AUDITED CONSOLIDATED BALANCE SHEETS

(All numbers expressed in thousands of US$)

                                                                        December
                                                         December 31,   31,
                                                             2011          2010
        CURRENT ASSETS:
        Cash and cash equivalents                        $32,622        $16,596
        Short-term bank deposit                            3,005              -
        Restricted deposit                                 2,299          2,692
        Trade receivables, net                            13,230         15,106
        Unbilled accounts receivable                       4,855          2,927
        Other accounts receivable and prepaid expenses     5,438          2,630
        Deferred income taxes                                508            474
        Inventories                                        9,664         10,340
        Total current assets                              71,621         50,765
        Long term investments and receivables:
        Long-term trade receivables                        1,423          1,568
        Long-term deposits and restricted bank deposits    2,202          2,196
        Severance pay fund                                 2,121          2,148
        Total long-term investments and receivables        5,746          5,912
        PROPERTY AND EQUIPMENT, NET                        6,460          6,794
        OTHER INTANGIABLE ASSETS, NET                        190            213
        GOODWILL                                           1,970          2,026
        Total assets                                     $85,987        $65,710
        CURRENT LIABILITIES:
        Short-term bank credit                            $5,357         $9,327
        Current maturities of long-term bank debt             33            503
        Trade payables                                     6,724          3,937
        Customer advances                                  5,877          2,428
        Other accounts payable and accrued expenses       13,137          7,958
        Total current liabilities                         31,128         24,153
        LONG-TERM LIABILITIES:
        Long-term bank debt                                   38             50
                                                               -          9,907
        Loan from related party                              205            190
        Deferred income taxes
        Accrued severance pay                              3,605          3,394
        Total long-term liabilities                        3,848         13,541
        SHAREHOLDERS' EQUITY
        Ordinary shares of NIS 1 par value -
        Authorized: 39,748,000 shares at
        December 31, 2011 and 19,748,000 shares at
        December 31, 2010;
        Issued and outstanding: 15,819,822 shares at
        December 31, 2011
        and 10,396,548 shares at December 31, 2010         4,813          3,225
        Additional paid-in capital                        64,920         49,971
        Accumulated other comprehensive income             4,486          5,075
        Foreign currency translation adjustments
        (Company's stand alone
        financial statements)                                603          3,400
        Accumulated deficit                              (23,811)       (33,655)
        TOTAL SHAREHOLDERS' EQUITY                        51,011         28,016
        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $85,987        $65,710

For more information:

           Magal S3 Ltd.
           Eitan Livneh, CEO
           Tel: +972-3-539-1421
           Assistant: Ms. Elisheva Almog
           E-mail: elishevaa@magal-s3.com
           Web: http://www.magal-s3.com

           CCG Investor Relations
           Ehud Helft/Kenny Green
           Tel: (US) +1-646-201-9246
           E-mail: magal@ccgisrael.com

SOURCE Magal Security Systems Ltd


Source: PR Newswire