Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Ordinary Shares, NIS 1.0 Par Value | MAGS | Nasdaq Global Market |
Large accelerated filer ☐ | Accelerated filer ☐ | ||||
Non-accelerated filer ☒ | Emerging growth company ☐ |
U.S. GAAP ☒ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ | Other ☐ |
H. | Documents on Display. | ||
I. | Subsidiary Information. |
Mine Safety Disclosure | |||
2016 | 2017 | 2018 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | ||||||||||||||||||||||||||||||||||||
Revenues | $ | 77,543 | $ | 63,736 | $ | 67,825 | $ | 64,292 | $ | 92,602 | $ | 67,825 | $ | 64,292 | $ | 92,602 | $ | 86,831 | $ | 81,464 | ||||||||||||||||||||
Cost of revenues | 43,049 | 32,722 | 34,570 | 32,967 | 52,299 | 34,570 | 32,967 | 52,299 | 48,070 | 47,027 | ||||||||||||||||||||||||||||||
Gross profit | 34,494 | 31,014 | 33,255 | 31,325 | 40,303 | 33,255 | 31,325 | 40,303 | 38,761 | 34,437 | ||||||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||||||||||
Research and development, net | 4,604 | 4,814 | 6,779 | 6,558 | 6,852 | 6,779 | 6,558 | 6,852 | 6,373 | 5,658 | ||||||||||||||||||||||||||||||
Selling and marketing | 17,130 | 14,785 | 17,536 | 18,158 | 18,557 | 17,536 | 18,158 | 18,557 | 16,902 | 13,883 | ||||||||||||||||||||||||||||||
General and administrative | 8,898 | 7,026 | 7,445 | 7,853 | 10,160 | 7,445 | 7,853 | 11,139 | 9,447 | 9,713 | ||||||||||||||||||||||||||||||
Impairment of goodwill and other intangible assets | 2,439 | - | - | - | 979 | |||||||||||||||||||||||||||||||||||
Total operating expenses | 33,071 | 26,625 | 31,760 | 32,569 | 36,548 | 31,760 | 32,569 | 36,548 | 32,722 | 29,254 | ||||||||||||||||||||||||||||||
Operating income (loss) | 1,423 | 4,389 | 1,495 | (1,244 | ) | 3,755 | 1,495 | (1,244 | ) | 3,755 | 6,039 | 5,183 | ||||||||||||||||||||||||||||
Financial income (expenses), net | 1,979 | 642 | (591 | ) | (3,961 | ) | 1,361 | (591 | ) | (3,961 | ) | 1,361 | (1,667 | ) | (1,480 | ) | ||||||||||||||||||||||||
Income (loss) before income taxes | 3,402 | 5,031 | 904 | (5,205 | ) | 5,116 | 904 | (5,205 | ) | 5,116 | 4,372 | 3,703 | ||||||||||||||||||||||||||||
Taxes on income (tax benefit) | 82 | 1,923 | (122 | ) | 1,695 | 2,072 | (122 | ) | 1,695 | 2,072 | 1,553 | 3,001 | ||||||||||||||||||||||||||||
Net income (loss) | $ | 3,320 | $ | 3,108 | $ | 1,026 | $ | (6,900 | ) | $ | 3,044 | $ | 1,026 | $ | (6,900 | ) | $ | 3,044 | $ | 2,819 | $ | 702 | ||||||||||||||||||
Less: net income (loss) attributable to non-controlling interest | (90 | ) | (33 | ) | (3 | ) | 14 | 95 | ||||||||||||||||||||||||||||||||
Less: net income (loss) attributable to redeemable non-controlling interests and non-controlling interest | (3 | ) | 14 | 95 | 526 | 342 | ||||||||||||||||||||||||||||||||||
Net income (loss) attributable to Magal’s shareholders | $ | 3,410 | $ | 3,141 | $ | 1,029 | $ | (6,914 | ) | $ | 2,949 | $ | 1,029 | $ | (6,914 | ) | $ | 2,949 | $ | 2,293 | $ | 360 | ||||||||||||||||||
Basic and diluted net earnings (loss) per share | $ | 0.21 | $ | 0.19 | $ | 0.06 | $ | (0.30 | ) | $ | 0.12 | $ | 0.06 | $ | (0.30 | ) | $ | 0.12 | $ | 0.07 | $ | 0.01 |
Weighted average number of ordinary shares used in computing basic net earnings per share | 16,186,148 | 16,347,948 | 17,999,779 | 22,989,009 | 23,040,436 | |||||||||||||||
Weighted average number of ordinary shares used in computing diluted net earnings per share | 16,338,056 | 16,410,711 | 18,031,433 | 22,989,009 | 23,287,751 |
2014 | 2015 | 2016 | 2017 | 2018 | ||||||||||||||||
Consolidated Balance Sheets Data: | ||||||||||||||||||||
Cash and cash equivalents | $ | 21,602 | $ | 27,319 | $ | 19,692 | $ | 22,463 | $ | 38,665 | ||||||||||
Short and long-term deposits and restricted deposits | 10,979 | 3,977 | 32,971 | 30,022 | 16,431 | |||||||||||||||
Working capital | 45,805 | 43,996 | 58,752 | 59,401 | 61,023 | |||||||||||||||
Total assets | 83,759 | 74,996 | 105,993 | 112,545 | 119,171 | |||||||||||||||
Short‑term bank credit (including current maturities of long-term loans) | 3,071 | - | - | - | - | |||||||||||||||
Long‑term bank loans | 1,406 | - | - | - | - | |||||||||||||||
Total shareholders’ equity | 55,957 | 55,695 | 81,918 | 82,949 | 81,216 |
2016 | 2017 | 2018 | 2019 | 2020 | ||||||||||||||||
Weighted average number of ordinary shares used in computing basic net earnings per share | 17,999,779 | 22,989,009 | 23,040,436 | 23,129,394 | 23,154,422 | |||||||||||||||
Weighted average number of ordinary shares used in computing diluted net earnings per share | 18,031,433 | 22,989,009 | 23,287,751 | 23,144,740 | 23,154,422 |
2016 | 2017 | 2018 | 2019 | 2020 | ||||||||||||||||
Consolidated Balance Sheets Data: | ||||||||||||||||||||
Cash and cash equivalents | $ | 19,692 | $ | 22,463 | $ | 38,665 | $ | 34,531 | $ | 27,093 | ||||||||||
Short and long-term deposits and restricted deposits | 32,971 | 30,022 | 16,431 | 17,207 | 379 | |||||||||||||||
Working capital | 58,752 | 59,401 | 61,023 | 67,202 | 44,798 | |||||||||||||||
Total assets | 105,993 | 112,545 | 119,171 | 127,049 | 108,057 | |||||||||||||||
Total shareholders’ equity | $ | 81,918 | $ | 82,949 | $ | 81,216 | $ | 87,806 | $ | 67,098 |
Difficulties in integrating the operations, systems, technologies, products, and personnel of the acquired businesses or enterprises; |
ITEM 4. | Information on the Company |
Strengthen our presence in existing markets. We intend to increase our marketing efforts in our existing markets mainly in North America, the European Union, and Latin America region and to acquire or invest in complementary businesses and joint ventures. |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2016 | 2017 | 2018 | 2018 | 2019 | 2020 | |||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||
Products | $ | 32,372 | $ | 22,301 | $ | 27,626 | $ | 35,169 | $ | 36,633 | $ | 35,038 | ||||||||||||
Turnkey projects | 31,823 | 34,742 | 57,072 | |||||||||||||||||||||
Video & Cyber security | 5,626 | 8,350 | 9,461 | |||||||||||||||||||||
Projects | 61,119 | 52,426 | 48,803 | |||||||||||||||||||||
Eliminations | (1,996 | ) | (1,101 | ) | (1,557 | ) | (3,686 | ) | (2,228 | ) | (2,377 | ) | ||||||||||||
Total | $ | 67,825 | $ | 64,292 | $ | 92,602 | $ | 92,602 | $ | 86,831 | $ | 81,464 |
Fortis X – our high-end comprehensive command and control system; |
Fortis X |
Year Ended December 31,___ | Year ended in December 31, | |||||||||||||||||||||||
2016 | 2017 | 2018 | 2018 | 2019 | 2020 | |||||||||||||||||||
(In thousands) | (in thousands) | |||||||||||||||||||||||
Israel | $ | 8,727 | $ | 9,599 | $ | 13,577 | $ | 13,577 | $ | 18,975 | $ | 20,860 | ||||||||||||
North America | 23,467 | 15,547 | 24,324 | 24,324 | 19,713 | 18,316 | ||||||||||||||||||
Europe | 8,330 | 11,232 | 14,021 | 14,021 | 18,896 | 15,490 | ||||||||||||||||||
South and Latin America | 10,364 | 13,152 | 25,471 | 25,471 | 8,077 | 4,485 | ||||||||||||||||||
Africa | 7,585 | 9,370 | 7,126 | 7,126 | 11,144 | 13,970 | ||||||||||||||||||
Others | 9,352 | 5,392 | 8,083 | 8,083 | 10,026 | 8,343 | ||||||||||||||||||
Total | $ | 67,825 | $ | 64,292 | $ | 92,602 | $ | 92,602 | $ | 86,831 | $ | 81,464 |
Subsidiary Name | Country of Incorporation/Organization | Ownership Percentage | ||||
Senstar Corporation | Canada | 100 | % | |||
Senstar Inc. | United States (Delaware) | 100 | % | |||
Senstar | Germany | 100 | % | |||
Magal Soluciones Integrales, S.A. | Mexico | 100 | % | |||
MAGAL-S3 CANADA INC.* | Canada | 100 | % | |||
ESC BAZ LTD.* | Israel | 100 | % | |||
Magal Security Limited (Kenya)* | Kenya | 51 | % | |||
Magal S3 Spain* | Spain | 100 | % |
Year Ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2016 | 2017 | 2018 | 2018 | 2019 | 2020 | |||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||
Products | $ | 32,372 | $ | 22,301 | $ | 27,626 | $ | 35,169 | $ | 36,633 | $ | 35,038 | ||||||||||||
Turnkey projects | 31,823 | 34,742 | 57,072 | |||||||||||||||||||||
Video and Cyber-Security | 5,626 | 8,350 | 9,461 | |||||||||||||||||||||
Projects | 61,119 | 52,426 | 48,803 | |||||||||||||||||||||
Eliminations | (1,996 | ) | (1,101 | ) | (1,557 | ) | (3,686 | ) | (2,228 | ) | (2,377 | ) | ||||||||||||
Total | $ | 67,825 | $ | 64,292 | $ | 92,602 | $ | 92,602 | $ | 86,831 | $ | 81,464 |
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2017 | 2018 | 2018 | 2019 | 2020 | |||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||
Products | $ | 5,799 | $ | 242 | $ | 2,863 | $ | 1,425 | $ | 3,880 | $ | 6,387 | ||||||||||||
Turnkey projects | (163 | ) | 1,762 | 2,782 | ||||||||||||||||||||
Video and Cyber Security | (3,383 | ) | (2,830 | ) | (1,298 | ) | ||||||||||||||||||
Projects | 4,356 | 3,536 | 65 | |||||||||||||||||||||
Eliminations | (758 | ) | (418 | ) | (592 | ) | (2,026 | ) | (1,377 | ) | (1,269 | ) | ||||||||||||
Total | $ | 1,495 | $ | (1,244 | ) | $ | 3,755 | $ | 3,755 | $ | 6,039 | $ | 5,183 |
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2017 | 2018 | 2018 | 2019 | 2020 | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||
Products | $ | 632 | $ | 614 | $ | 586 | $ | 2,273 | $ | 1,260 | $ | 1,172 | ||||||||||||
Turnkey projects | 512 | 498 | 879 | |||||||||||||||||||||
Video and Cyber-security | 596 | 764 | 1,759 | |||||||||||||||||||||
Projects | 951 | 840 | 784 | |||||||||||||||||||||
Total | $ | 1,740 | $ | 1,876 | $ | 3,224 | $ | 3,224 | $ | 2,100 | $ | 1,956 |
Raw materials, parts and supplies – using the “first-in, first-out” method. |
Work-in-progress and finished products – on the basis of direct manufacturing costs with the addition of allocable indirect manufacturing costs. |
Year Ended December 31 | Year Ended December 31 | |||||||||||||||||||||||
2016 | 2017 | 2018 | 2018 | 2019 | 2020 | |||||||||||||||||||
Revenues | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||
Cost of revenues | 51.0 | 51.3 | 56.5 | 56.5 | 55.4 | 57.7 | ||||||||||||||||||
Gross profit | 49.0 | 48.7 | 43.5 | 43.5 | 44.6 | 42.3 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Research and development, net | 10.0 | 10.2 | 7.4 | 7.4 | 7.3 | 6.9 | ||||||||||||||||||
Selling and marketing, net | 25.9 | 28.2 | 20.0 | 20.0 | 19.5 | 17.0 | ||||||||||||||||||
General and administrative | 11.0 | 12.2 | 11.0 | 12.0 | 10.9 | 11.9 | ||||||||||||||||||
Impairment of goodwill | - | - | 1.1 | |||||||||||||||||||||
Operating income (loss) | 2.2 | (1.9 | ) | 4.1 | ||||||||||||||||||||
Operating income | 4.1 | 7.0 | 6.4 | |||||||||||||||||||||
Financial income (expenses), net | (0.9 | ) | (6.2 | ) | 1.5 | 1.5 | (1.9 | ) | (1.8 | ) | ||||||||||||||
Income before income taxes | 1.3 | (8.1 | ) | 5.5 | 5.5 | 5.0 | 4.5 | |||||||||||||||||
Taxes on income (tax benefit) | 0.2 | (2.6 | ) | (2.2 | ) | |||||||||||||||||||
Taxes on income | 2.2 | 1.8 | 3.7 | |||||||||||||||||||||
Net income | 1.5 | (10.8 | ) | 3.3 | 3.3 | 3.2 | 0.9 |
Year Ended December 31 | ||||||||
2017 | 2018 | |||||||
(In thousands) | ||||||||
Perimeter products | $ | 242 | $ | 2,863 | ||||
Turnkey projects | 1,762 | 2,782 | ||||||
Video and Cyber Security | (2,830 | ) | (1,298 | ) | ||||
Eliminations | (418 | ) | (592 | ) | ||||
Total | $ | (1,244 | ) | $ | 3,755 |
Year Ended December 31 | ||||||||
2016 | 2017 | |||||||
(In thousands) | ||||||||
Perimeter products | $ | 5,799 | $ | 242 | ||||
Turnkey projects | (163 | ) | 1,762 | |||||
Video and Cyber Security | (3,383 | ) | (2,830 | ) | ||||
Eliminations | (758 | ) | (418 | ) | ||||
Total | $ | 1,495 | $ | (1,244 | ) |
Year Ended December 31 | ||||||||
2019 | 2020 | |||||||
(In thousands) | ||||||||
Products | $ | 3,880 | $ | 6,387 | ||||
Projects | 3,536 | 65 | ||||||
Eliminations | (1,377 | ) | (1,269 | ) | ||||
Total | $ | 6,039 | $ | 5,183 |
Year ended December 31, | Israeli inflation rate % | NIS devaluation (appreciation) rate % | Israeli inflation adjusted for devaluation (appreciation) % | Israeli inflation rate % | NIS devaluation (appreciation) rate % | Israeli inflation adjusted for devaluation (appreciation) % | ||||||||||||||||||
2014 | (0.2 | ) | 12.0 | (12.2 | ) | |||||||||||||||||||
2015 | (1.0 | ) | (0.3 | ) | (0.7 | ) | ||||||||||||||||||
2016 | (0.2 | ) | (1.5 | ) | 1.3 | (0.2 | ) | (1.5 | ) | 1.3 | ||||||||||||||
2017 | 0.4 | (9.8 | ) | 10.2 | 0.4 | (9.8 | ) | 10.2 | ||||||||||||||||
2018 | 1.3 | 8.1 | (6.8 | ) | 1.3 | 8.1 | (6.8 | ) | ||||||||||||||||
2019 | 0.6 | (7.8 | ) | 8.4 | ||||||||||||||||||||
2020 | (0.7 | ) | (7.0 | ) | 6.3 |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2016 | 2017 | 2018 | 2018 | 2019 | 2020 | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||
Net cash provided by (used in) operating activities | 8,933 | (1,952 | ) | 7,326 | 7,326 | (4,523 | ) | 2,317 | ||||||||||||||||
Net cash provided by (used in) investing activities | (40,703 | ) | 3,176 | 10,121 | 10,121 | (4,779 | ) | 16,220 | ||||||||||||||||
Net cash provided by (used in) financing activities | 25,006 | 504 | 77 | 77 | 178 | (28,785 | ) | |||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | 160 | 2,076 | (1,029 | ) | (1,029 | ) | 2,089 | 2,828 | ||||||||||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | (6,604 | ) | 3,804 | 16,495 | 16,495 | (7,035 | ) | (7,420 | ) | |||||||||||||||
Cash, cash equivalents and restricted cash at the beginning of the year | 28,105 | 21,501 | 25,305 | 25,305 | 41,800 | 34,765 | ||||||||||||||||||
Cash, cash equivalents and restricted cash at the end of the year | $ | 21,501 | $ | 25,305 | $ | 41,800 | 41,800 | 34,765 | 27,345 |
Payments due by period | Payments due by period | |||||||||||||||||||||||||||||||||||||||
Contractual Obligations | Total | Less than 1 year | 1-2 years | 3-5 years | More than 5 years | Total | Less than 1 year | 1-2 years | 3-4 years | More than 4 years | ||||||||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||||||||||
Operating lease obligations | 4,893 | 1,119 | 720 | 1,581 | 1,473 | |||||||||||||||||||||||||||||||||||
Operating lease obligations (nominal) | 3,768 | 1,074 | 1,110 | 709 | 875 | |||||||||||||||||||||||||||||||||||
Other long-term liabilities reflected on our balance sheet under U.S. GAAP | 2,181 | - | - | - | 2,181 | 2,689 | - | - | - | 2,689 | ||||||||||||||||||||||||||||||
Total | 7,074 | 1,119 | 720 | 1,581 | 3,654 | 6,457 | 1,074 | 1,110 | 709 | 3,564 |
ITEM 6. | Directors, Senior Management and Employees |
Name | Age | Position | ||
Gillon Beck | Chairman of the Board of Directors | |||
Ron Ben-Haim | Director | |||
Jacob Berman | Director | |||
Avraham Bigger (1)(2) | Director | |||
External Director | ||||
Moshe Tsabari (1)(2) | External Director | |||
Dror Sharon | Chief Executive Officer | |||
Yaacov (Kobi) Vinokur | Chief Financial Officer | |||
Brian Rich | ||||
Doron Kerbel | Vice President – General Counsel and Company Secretary | |||
Fabien Haubert | Vice President | |||
Information Regarding the Covered Executive(1) (in thousands) | ||||||
Name and Principal Position(2) | Base Salary | Benefits and Perquisites(3) | Variable Compensation(4) | Equity-Based Compensation(5) | Total | |
Dror Sharon – Chief Executive Officer | 148 | 73 | 134 | 116 | 471 | |
Saar Koursh – Former Chief Executive Officer | 102 | 219 | 146 | (63) | 404 | |
Yaniv Shachar - Senior Vice President & General Manager Magal Israel | 167 | 74 | 58 | 31 | 330 | |
Fabien Haubert - Vice President EMEA Sales | 161 | 76 | 51 | 15 | 303 | |
Yaacov Vinokur - Chief Financial Officer | 141 | 60 | 63 | 11 | 275 | |
(1) | All amounts reported in the table are in terms of cost to our company, as recorded in our financial statements. | |||||
(2) | All current Covered Executives listed in the table are full-time employees. Cash compensation amounts denominated in currencies other than the U.S. dollar were converted into U.S. dollars at the average conversion rate for the year ended December 31, 2018. | |||||
(3) | Amounts reported in this column include benefits and perquisites or on account of such benefits and perquisites, including those mandated by applicable law. Such benefits and perquisites may include, to the extent applicable to each executive, payments, contributions and/or allocations for savings funds, pension, severance, vacation, car or car allowance, medical insurances and benefits, risk insurances (e.g., life, disability, accident), convalescence pay, payments for social security, tax gross-up payments and other benefits and perquisites consistent with our guidelines. | |||||
(4) | Amounts reported in this column refer to Variable Compensation such as commission, incentive and bonus payments as recorded in our financial statements for the year ended December 31, 2018. | |||||
(5) | Amounts reported in this column represent the expense recorded in our financial statements for the year ended December 31, 2018. |
Information Regarding the Covered Executive(1) (dollars in thousands) | |||||
Name and Principal Position(2) | Base Salary | Benefits and Perquisites(3) | Variable Compensation(4) | Equity-Based Compensation(5) | Total |
Dror Sharon – Chief Executive Officer | 316 | 148 | 186 | 176 | 826 |
Fabien Haubert – Vice President Managing Director Senstar Corp. & head of the Senstar Products Division | 175 | 113 | 81 | 10 | 379 |
Yaacov (Kobi) Vinokur - Chief Financial Officer | 185 | 70 | 62 | 37 | 354 |
Arnon Bram - Vice President & General Manager Magal Israel and Head of the Integrated Solutions Division | 168 | 63 | - | 18 | 249 |
Doron Kerbel - Vice President General Counsel and Company Secretary | 143 | 61 | 36 | 6 | 246 |
(1) | All amounts reported in the table are in terms of cost to our company, as recorded in our financial statements. | ||||
(2) | All current Covered Executives listed in the table are full-time employees. Cash compensation amounts denominated in currencies other than the U.S. dollar were converted into U.S. dollars at the average conversion rate for the year ended December 31, 2020. | ||||
(3) | Amounts reported in this column include benefits and perquisites or on account of such benefits and perquisites, including those mandated by applicable law. Such benefits and perquisites may include, to the extent applicable to each executive, payments, contributions and/or allocations for savings funds, pension, severance, vacation, car or car allowance, medical insurances and benefits, risk insurances (e.g., life, disability, accident), convalescence pay, payments for social security, tax gross-up payments and other benefits and perquisites consistent with our guidelines. | ||||
(4) | Amounts reported in this column refer to Variable Compensation such as commission, incentive and bonus payments as recorded in our financial statements for the year ended December 31, 2020. | ||||
(5) | Amounts reported in this column represent the expense recorded in our financial statements for the year ended December 31, 2020. |
Name | Number of Ordinary Shares Owned (1) | Percentage of Outstanding Ordinary Shares (2) | ||||||
Gillon Beck (3) | - | - | ||||||
Ron Ben-Haim (3) | - | - | ||||||
Jacob Berman | 13,750 | * | ||||||
Avraham Bigger | - | - | ||||||
Limor Steklov | - | |||||||
- | ||||||||
Moshe Tsabari | - | - | ||||||
Dror Sharon (4) | 120,000 | * | ||||||
Yaacov Vinokur (5) | 32,667 | * | ||||||
Brian Rich (6) | 8,334 | * | ||||||
Doron Kerbel (7) | 16,000 | * | ||||||
Arnon Bram | - | - | ||||||
Fabien Haubert (8) | 16,000 | * | ||||||
All directors and executive officers as a group | 206,751 | * |
(1) | Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Ordinary shares relating to options or convertible debenture notes currently exercisable or exercisable within 60 days of the date of this table are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote, the persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by them. |
(2) | The percentages shown are based on |
(3) | Does not include any ordinary shares held by the FIMI Funds. |
(4) | Includes |
(5) | Includes |
(6) | Includes |
(7) | Includes |
(8) | Includes |
(9) | Includes 193,001 ordinary shares issuable upon the exercise of currently exercisable options. |
Name | Number of Ordinary Shares Beneficially Owned (1) | Percentage of Outstanding Ordinary Shares (2) | Number of Ordinary Shares Beneficially Owned (1) | Percentage of Outstanding Ordinary Shares (2) | ||||||||||||
FIMI Opportunity Five (Delaware), Limited Partnership (3) | 4,646,924 | 20.1 | % | 4,646,924 | 20.1 | % | ||||||||||
FIMI Israel Opportunity Five, Limited Partnership (3) | 5,207,235 | 22.5 | % | 5,207,235 | 22.5 | % | ||||||||||
Grace & White, Inc. (4) | 1,409,399 | 6.1 | % | |||||||||||||
Grace & White, Inc. (4). | 1,141,243 | 4.9 | % |
(1) | Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Ordinary shares relating to options or convertible notes currently exercisable or exercisable within 60 days of the date of this table are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote, the persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by them. |
(2) | The percentages shown are based on |
(3) | Based on Schedule 13D/A filed with the SEC on October 11, 2016 and other information available to us. The address of FIMI Opportunity Five (Delaware), Limited Partnership and FIMI Israel Opportunity Five, Limited Partnership is c/o FIMI FIVE 2012 Ltd., Electra Tower, 98 Yigal Alon St., Tel-Aviv 6789141, Israel. |
(4) | Based upon a Schedule 13G/A filed with the SEC on |
C. | Material Contracts. |
D. |
E. | Taxation. |
Similar to the currently available alternative route, exemption from corporate tax on undistributed income for a period of two to ten years, depending on the geographic location of the Benefited Enterprise within Israel, and a reduced corporate tax rate of 10% to 25% for the remainder of the benefits period, depending on the level of foreign investment in each year. Benefits may be granted for a term of seven to ten years, depending on the level of foreign investment in the company. If the company pays a dividend out of income derived from the Benefited Enterprise during the tax exemption period, such income will be subject to corporate tax at the applicable rate (10%-25%) with respect to the gross amount of dividend distributed. The company is required to withhold tax at the source at a rate of 15% from any dividends distributed from income derived from the Benefited Enterprise; and |
broker-dealers; |
financial institutions; |
certain insurance companies; |
investors liable for alternative minimum tax; |
regulated investment companies, real estate investment trusts, or grantor trusts; |
tax-exempt organizations; |
non-resident aliens of the United States or taxpayers whose functional currency is not the U.S. dollar; |
persons who hold the ordinary shares through partnerships or other pass-through entities; |
persons who acquire their ordinary shares through the exercise or cancellation of employee stock options or otherwise as compensation for services; |
persons (or their direct, indirect or constructive owners) that actually or constructively own 10% or more of our shares by vote or value; or |
ITEM 15. | Controls and Procedures |
Year Ended December 31, | Year Ended December 31, | |||||||||||||||
Services Rendered | 2017 | 2018 | 2019 | 2020 | ||||||||||||
Audit (1) | 262,000 | 243,000 | 265,000 | 315,000 | ||||||||||||
Tax (2) | 86,000 | 99,000 | 40,000 | 55,000 | ||||||||||||
Other (3) | 12,000 | 12,000 | 4,000 | 26,000 | ||||||||||||
Total | 360,000 | 354,000 | 299,000 | 396,000 |
(1) | Audit fees are for audit services for each of the years shown in the table, including fees associated with the annual audit (including audit of our internal control over financial reporting), consultations on various accounting issues and audit services provided in connection with other statutory or regulatory filings. |
(2) | Tax fees are for professional services rendered by our auditors for tax compliance, tax planning and tax advice on actual or contemplated transactions, tax consulting associated to international taxation, tax assessment deliberation, transfer pricing and withholding tax assessments. |
(3) | Other fees primarily relate to out of pocket reimbursement of expenses and primarily traveling expenses of our auditors. These fees also relate to fees associated with the conflict Minerals work plan, due diligence, and the Risk Assessment Service. |
* | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
(1) | Filed as an exhibit to our Registration Statement on Form F-1 (File No. 33‑57438), filed with the Securities and Exchange Commission on January 26, 1993, as amended, and incorporated herein by reference. |
(2) | Filed as an exhibit to our Registration Statement on Form F-1 (No. 33‑57438), filed with the Securities and Exchange Commission on January 26, 1993, as amended, and incorporated herein by reference, as amended by an amendment filed as an exhibit to our Registration Statement on Form S-8 (File No. 333-6246), filed with the Commission on January 7, 1997 and incorporated herein by reference, as further amended by an amendment filed as an exhibit to our Annual Report on Form 20-F for the fiscal year ended December 31, 2000, filed with the Securities and Exchange Commission on June 29, 2001 and incorporated herein by reference, as further amended by the company’s shareholders on July 17, 2002, as described under Form 6-K furnished to the SEC on June 19, 2002, as further amended by the company’s shareholders on August 20, 2008, as described under Form 6-K furnished to the SEC on July 17, 2008, and as further amended by the company’s shareholders on August 31, 2011, as described under Form 6-K furnished to the SEC on July 27, 2011. |
(3) | Filed as |
(4) | Filed as Exhibit 2.3 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2010, and incorporated herein by reference. |
(5) | Filed as Exhibit 2.4 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2013, and incorporated herein by reference. |
(6) | Filed as Exhibit |
(7) | Filed as Exhibit A to Exhibit 99.1 to the Registrant’s Proxy Statement on Form |
Filed as Exhibit A to Exhibit 99.1 to the Registrant’s Proxy Statement on Form 6-K furnished with the Securities and Exchange Commission on |
(9) | Filed as Exhibit 99.2 to the Registrant’s Report on Form 6-K furnished with the Securities and Exchange Commission on February 8, 2021 and incorporated herein by reference. |
Page | |
F-2 - F-4 | |
F-5 – F-6 | |
F-7 | |
F-8 | |
F-9 – F-10 | |
Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel | Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com |
Title | Revenue Recognition |
Description of the Matter | As described in note 2 to the consolidated financial statements, the Company generated part of its revenues from long-term contracts with its customers for which the related performance obligations are satisfied over time. The Company recognizes revenues on such contracts using the percentage-of-completion cost-to-cost measure of progress. Under this method, the Company measures progress towards completion based on the ratio of costs incurred to date to the estimated total costs to complete the performance obligation(s) (referred to as the estimate-at-completion, or “EAC”). The determination of contract EACs requires management to make estimates and assumptions to estimate costs and profit associated with its contracts with customers. At the outset of a long-term contract, the Company identifies risks to the achievement of the technical, schedule and cost aspects of the contract and monitors and assesses the effects of those risks on its estimates throughout the contract’s life cycle. Significant changes in EAC estimates could have a material effect on the Company’s estimated revenue and gross profit recorded during the period under audit. Auditing revenue recognition based on the percentage-of-completion cost-to-cost measure of progress method was complex due to the judgment involved in evaluating management’s estimates and assumptions about project economics and schedule, both at contract inception and throughout the contract’s life cycle. |
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of relevant internal controls over management’s preparation and periodic reviews of the EAC analyses and the related significant assumptions. To test the Company’s EAC analyses, our audit procedures included, among others, for a sample of contracts, obtaining an understanding of the contract and the contractual terms, evaluating the Company’s historical ability to accurately estimate expected costs by comparing management’s estimates of labor hours, subcontractor costs and materials required to complete the contract to actual results and performed analytical procedures throughout the contract’s life cycle. We also assessed costs incurred by comparing them to supporting documents and agreed key terms to contract documentation, including contract value. In addition, we assessed whether the variances in costs incurred from projected costs were properly reflected in the EAC analyses. |
KOST FORER GABBAY & KASIERER |
A Member of Ernst & Young Global |
Tel-Aviv, Israel |
April |
Salles, Sainz – Grant Thornton, S.C. Periférico Sur 4348 Col. Jardines del Pedregal 04500, México, D.F. T +52 55 5424 6500 F +52 55 5424 6501 www.ssgt.com.mx |
Contadores y Consultores de Negocios Miembro de Grant Thornton International Ltd |
December 31, | ||||||||
2018 | 2017 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 38,665 | $ | 22,463 | ||||
Short-term bank deposits | 13,150 | 27,025 | ||||||
Restricted deposits | 3,135 | 2,842 | ||||||
Trade receivables (net of allowance for doubtful accounts of $ 2,751 and $ 1,557 at December 31, 2018 and 2017, respectively) | 14,176 | 14,489 | ||||||
Unbilled accounts receivable | 6,050 | 6,309 | ||||||
Other accounts receivable and prepaid expenses (Note 3) | 4,126 | 2,850 | ||||||
Inventories (Note 4) | 13,863 | 9,596 | ||||||
Total current assets | 93,165 | 85,574 | ||||||
LONG-TERM INVESTMENTS AND RECEIVABLES: | ||||||||
Long-term deposits and restricted bank deposits | 146 | 155 | ||||||
Severance pay fund | 1,289 | 1,524 | ||||||
Deferred tax assets (Note 12) | 3,459 | 2,579 | ||||||
Total long-term investments and receivables | 4,894 | 4,258 | ||||||
PROPERTY AND EQUIPMENT, NET (Note 5) | 6,347 | 5,718 | ||||||
INTANGIBLE ASSETS, NET (Note 6) | 3,645 | 4,303 | ||||||
GOODWILL (Note 7) | 11,120 | 12,692 | ||||||
Total assets | $ | 119,171 | $ | 112,545 |
December 31, | ||||||||
2018 | 2017 | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | $ | 6,359 | $ | 5,198 | ||||
Customer advances | 10,170 | 7,191 | ||||||
Deferred revenues | 2,387 | 2,163 | ||||||
Other accounts payable and accrued expenses (Note 8) | 13,226 | 11,621 | ||||||
Total current liabilities | 32,142 | 26,173 | ||||||
LONG-TERM LIABILITIES: | ||||||||
Deferred revenues | 1,344 | 891 | ||||||
Deferred tax liabilities | 182 | 190 | ||||||
Accrued severance pay | 2,181 | 2,328 | ||||||
Other long-term liabilities | 351 | 14 | ||||||
Total long-term liabilities | 4,058 | 3,423 | ||||||
COMMITMENTS AND CONTINGENT LIABILITIES (Note 9) | ||||||||
REDEEMABLE NON-CONTROLLING INTEREST | 1,755 | - | ||||||
SHAREHOLDERS' EQUITY: | ||||||||
Share capital - | ||||||||
Ordinary shares of NIS 1 par value - | ||||||||
Authorized: 39,748,000 shares at December 31, 2018 and December 31, 2017; Issued and outstanding: 23,049,639 shares at December 31, 2018 and 23,032,448 shares at December 31, 2017 | 6,721 | 6,716 | ||||||
Additional paid-in capital | 94,205 | 93,975 | ||||||
Accumulated other comprehensive loss | (1,827 | ) | (87 | ) | ||||
Foreign currency translation adjustments (Company's standalone financial statements) | 2,795 | 5,859 | ||||||
Accumulated deficit | (20,678 | ) | (23,514 | ) | ||||
Total shareholders' equity (Note 10) | 81,216 | 82,949 | ||||||
Total liabilities and shareholders' equity | $ | 119,171 | $ | 112,545 |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Revenues | $ | 92,602 | $ | 64,292 | $ | 67,825 | ||||||
Cost of revenues | 52,299 | 32,967 | 34,570 | |||||||||
Gross profit | 40,303 | 31,325 | 33,255 | |||||||||
Operating expenses: | ||||||||||||
Research and development, net | 6,852 | 6,558 | 6,779 | |||||||||
Selling and marketing | 18,557 | 18,158 | 17,536 | |||||||||
General and administrative | 11,139 | 7,853 | 7,445 | |||||||||
Total operating expenses | 36,548 | 32,569 | 31,760 | |||||||||
Operating income (loss) | 3,755 | (1,244 | ) | 1,495 | ||||||||
Financial income (expenses), net (Note 15) | 1,361 | (3,961 | ) | (591 | ) | |||||||
Income (loss) before income taxes | 5,116 | (5,205 | ) | 904 | ||||||||
Taxes on income (tax benefit) (Note 12) | 2,072 | 1,695 | (122 | ) | ||||||||
Net income (loss) | 3,044 | (6,900 | ) | 1,026 | ||||||||
Less - loss (income) attributable to non-controlling interests | (95 | ) | (14 | ) | 3 | |||||||
Net income (loss) attributable to Magal shareholders' | $ | 2,949 | $ | (6,914 | ) | $ | 1,029 | |||||
Basic income (loss) per share | $ | 0.12 | $ | (0.30 | ) | $ | 0.06 |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Net income (loss) | $ | 3,044 | $ | (6,900 | ) | $ | 1,026 | |||||
Realized foreign currency translation adjustments | - | 64 | - | |||||||||
Foreign currency translation adjustments | (1,740 | ) | 1,772 | (73 | ) | |||||||
Total comprehensive income (loss) | $ | 1,304 | $ | (5,064 | ) | $ | 953 | |||||
Net income (loss) attributable to: | ||||||||||||
Non-controlling interests | $ | - | $ | 14 | $ | (3 | ) | |||||
Redeemable non-controlling interests | 95 | - | - | |||||||||
Magal shareholders' | 2,949 | (6,914 | ) | 1,029 | ||||||||
Net income (loss) | $ | 3,044 | $ | (6,900 | ) | $ | 1,026 | |||||
Total comprehensive income (loss) attributable to: | ||||||||||||
Non-controlling interests | $ | - | $ | 14 | $ | (3 | ) | |||||
Redeemable non-controlling interests | (5 | ) | - | - | ||||||||
Magal shareholders' | 1,309 | (5,078 | ) | 956 | ||||||||
Total comprehensive income (loss) | $ | 1,304 | $ | (5,064 | ) | $ | 953 |
Number of shares | Ordinary shares | Additional paid-in capital | Accumulated other comprehensive income (loss) | Foreign currency translation adjustment - the Company | Retained earnings (accumulated deficit) | Non- controlling interests | Total shareholders' equity | |||||||||||||||||||||||||
Balance as of January 1, 2016 | 16,398,872 | $ | 4,968 | $ | 69,888 | $ | (1,850 | ) | $ | 406 | $ | (17,629 | ) | $ | (88 | ) | $ | 55,695 | ||||||||||||||
Issuance of share capital, net (Note 10b) | 6,170,386 | 1,626 | 21,991 | - | - | - | - | 23,617 | ||||||||||||||||||||||||
Issuance of shares upon exercise of employee stock options | 325,090 | 85 | 1,304 | - | - | - | - | 1,389 | ||||||||||||||||||||||||
Stock-based compensation | - | - | 258 | - | - | - | - | 258 | ||||||||||||||||||||||||
Foreign currency translation adjustments- the Company | - | - | - | - | 6 | - | - | 6 | ||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
Net income (loss) | - | - | - | - | - | 1,029 | (3 | ) | 1,026 | |||||||||||||||||||||||
Foreign currency translation adjustments | - | - | - | (73 | ) | - | - | - | (73 | ) | ||||||||||||||||||||||
Balance as of December 31, 2016 | 22,894,348 | 6,679 | 93,441 | (1,923 | ) | 412 | (16,600 | ) | (91 | ) | 81,918 | |||||||||||||||||||||
Issuance of shares upon exercise of warrants | 60,000 | 16 | 238 | - | - | - | - | 254 | ||||||||||||||||||||||||
Issuance of shares upon exercise of employee stock options | 78,100 | 21 | 306 | - | - | - | - | 327 | ||||||||||||||||||||||||
Stock-based compensation | - | - | 144 | - | - | - | - | 144 | ||||||||||||||||||||||||
Foreign currency translation adjustments- the Company | - | - | - | - | 5,447 | - | - | 5,447 | ||||||||||||||||||||||||
Purchase of non-controlling interests | - | - | (154 | ) | - | - | - | 77 | (77 | ) | ||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
Loss | - | - | - | - | - | (6,914 | ) | 14 | (6,900 | ) | ||||||||||||||||||||||
Realized foreign currency translation adjustments | - | - | - | 64 | - | - | - | 64 | ||||||||||||||||||||||||
Foreign currency translation adjustments | - | - | - | 1,772 | - | - | - | 1,772 | ||||||||||||||||||||||||
Balance as of December 31, 2017 | 23,032,448 | 6,716 | 93,975 | (87 | ) | 5,859 | (23,514 | ) | - | 82,949 | ||||||||||||||||||||||
Cumulative effect adjustment resulting from adoption of ASC606 | - | - | - | - | - | 114 | - | 114 | ||||||||||||||||||||||||
Issuance of shares upon exercise of employee stock options | 17,191 | 5 | 72 | - | - | - | - | 77 | ||||||||||||||||||||||||
Stock-based compensation | - | - | 158 | - | - | - | - | 158 | ||||||||||||||||||||||||
Foreign currency translation adjustments- the Company | - | - | - | - | (3,064 | ) | - | - | (3,064 | ) | ||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | 2,949 | - | 2,949 | ||||||||||||||||||||||||
Adjustment to the redemption value of redeemable non-controlling interests | - | - | - | - | - | (227 | ) | - | (227 | ) | ||||||||||||||||||||||
Foreign currency translation adjustments | - | - | - | (1,740 | ) | - | - | - | (1,740 | ) | ||||||||||||||||||||||
Balance as of December 31, 2018 | 23,049,639 | 6,721 | 94,205 | (1,827 | ) | 2,795 | (20,678 | ) | - | 81,216 |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | 3,044 | $ | (6,900 | ) | $ | 1,026 | |||||
Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||
Depreciation and amortization | 2,245 | 1,876 | 1,740 | |||||||||
Impairment of goodwill | 979 | - | - | |||||||||
Loss (gain) on sale of property and equipment | (47 | ) | (4 | ) | 5 | |||||||
Increase (decrease) in accrued interest and exchange differences on short-term and other long-term liabilities | (520 | ) | 2,996 | (57 | ) | |||||||
Stock based compensation | 158 | 144 | 258 | |||||||||
Decrease in trade receivables, net | 555 | 153 | 1,487 | |||||||||
Decrease (increase) in unbilled accounts receivable | (227 | ) | (1,593 | ) | 1,395 | |||||||
Decrease (increase) in other accounts receivable and prepaid expenses | (1,333 | ) | 119 | 221 | ||||||||
Decrease (increase) in inventories | (3,981 | ) | (2,079 | ) | 1,200 | |||||||
Increase in deferred income taxes | (968 | ) | (467 | ) | (1,722 | ) | ||||||
Decrease in long-term trade receivables | - | 329 | 319 | |||||||||
Increase in trade payables | 1,071 | 787 | 857 | |||||||||
Increase (decrease) in other accounts payable and accrued expenses and deferred revenues | 3,114 | 1,521 | (1,010 | ) | ||||||||
Increase in customer advances | 3,214 | 1,207 | 3,351 | |||||||||
Accrued severance pay, net | 22 | (41 | ) | (137 | ) | |||||||
Net cash provided by (used in) operating activities | $ | 7,326 | $ | (1,952 | ) | $ | 8,933 |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Cash flows from investing activities: | ||||||||||||
Investment in short-term deposits | $ | - | $ | - | $ | (27,868 | ) | |||||
Proceeds from sale of short-term bank deposits | 12,873 | 4,103 | - | |||||||||
Release of long-term bank deposits | - | (15 | ) | 13 | ||||||||
Proceeds from sale of property and equipment | 57 | 35 | 93 | |||||||||
Purchase of property and equipment | (2,128 | ) | (934 | ) | (797 | ) | ||||||
Investment in technology, know-how and patents | (296 | ) | (13 | ) | (31 | ) | ||||||
Payments for acquisition of ESC BAZ, net of cash acquired (1) | (385 | ) | - | - | ||||||||
Payments for acquisition of Aimetis, net of cash acquired (2) | - | - | (12,113 | ) | ||||||||
Net cash provided by (used in) investing activities | 10,121 | 3,176 | (40,703 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from issuance of shares, net of issuance costs of $ 201 | - | - | 23,617 | |||||||||
Proceeds from issuance of shares upon exercise of options to employees | 77 | 327 | 1,389 | |||||||||
Proceeds from issuance of shares upon exercise of warrants | - | 254 | - | |||||||||
Purchase of shares from non-controlling interests, net | - | (77 | ) | - | ||||||||
Net cash provided by financing activities | 77 | 504 | 25,006 | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (1,029 | ) | 2,076 | 160 | ||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | 16,495 | 3,804 | (6,604 | ) | ||||||||
Cash, cash equivalents and restricted cash at the beginning of the year | 25,305 | 21,501 | 28,105 | |||||||||
Cash, cash equivalents and restricted cash at the end of the year | $ | 41,800 | $ | 25,305 | $ | 21,501 | ||||||
Supplemental disclosures of cash flows activities: | ||||||||||||
Cash paid during the year for: | ||||||||||||
Interest | $ | 20 | $ | 148 | $ | 27 | ||||||
Income taxes | $ | 2,926 | $ | 1,855 | $ | 1,677 |
December 31, | ||||||||
2020 | 2019 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 27,093 | $ | 34,531 | ||||
Short-term bank deposits | - | 16,749 | ||||||
Restricted cash and deposits | 265 | 324 | ||||||
Trade receivables (net of allowance for credit losses of $2,117 and $2,119 as of December 31, 2020 and 2019, respectively) | 21,310 | 18,697 | ||||||
Unbilled accounts receivable | 11,808 | 8,897 | ||||||
Other accounts receivable and prepaid expenses (Note 3) | 5,199 | 4,510 | ||||||
Inventories (Note 4) | 12,360 | 12,605 | ||||||
Total current assets | 78,035 | 96,313 | ||||||
LONG-TERM INVESTMENTS AND RECEIVABLES: | ||||||||
Long-term deposits and restricted deposits and long-term other accounts receivables | 114 | 134 | ||||||
Severance pay fund | 1,864 | 1,363 | ||||||
Deferred tax assets (Note 13) | 3,734 | 4,215 | ||||||
Operating lease right-of-use assets (Note 5) | 3,352 | 3,492 | ||||||
Total long-term investments and receivables | 9,064 | 9,204 | ||||||
PROPERTY AND EQUIPMENT, NET (Note 6) | 6,137 | 6,256 | ||||||
INTANGIBLE ASSETS, NET (Note 7) | 3,035 | 3,772 | ||||||
GOODWILL (Note 8) | 11,786 | 11,504 | ||||||
Total assets | $ | 108,057 | $ | 127,049 |
December 31, | ||||||||
2020 | 2019 | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | $ | 7,741 | $ | 5,438 | ||||
Customer advances | 4,398 | 5,587 | ||||||
Deferred revenues | 2,833 | 2,558 | ||||||
Other accounts payable and accrued expenses (Note 9) | 17,313 | 14,609 | ||||||
Short-term operating lease liabilities (Note 5) | 952 | 919 | ||||||
Total current liabilities | 33,237 | 29,111 | ||||||
LONG-TERM LIABILITIES: | ||||||||
Deferred revenues | 1,674 | 1,769 | ||||||
Deferred tax liabilities | 676 | 178 | ||||||
Accrued severance pay | 2,689 | 2,251 | ||||||
Long-term operating lease liabilities (Note 5) | 2,398 | 2,515 | ||||||
Other long-term liabilities | 285 | 371 | ||||||
Total long-term liabilities | 7,722 | 7,084 | ||||||
COMMITMENTS AND CONTINGENT LIABILITIES (Note 10) | ||||||||
REDEEMABLE NON-CONTROLLING INTEREST | - | 3,048 | ||||||
SHAREHOLDERS' EQUITY: | ||||||||
Share capital - | ||||||||
Ordinary shares of NIS 1 par value - | ||||||||
Authorized: 39,748,000 shares at December 31, 2020 and December 31, 2019; Issued and outstanding: 23,163,985 shares at December 31, 2020 and 23,153,985 shares at December 31, 2019 | 6,753 | 6,750 | ||||||
Additional paid-in capital | 69,965 | 94,696 | ||||||
Accumulated other comprehensive income (loss) | 34 | (627 | ) | |||||
Foreign currency translation adjustments (Company's standalone financial statements) | 9,104 | 5,924 | ||||||
Accumulated deficit | (18,759 | ) | (18,961 | ) | ||||
Total Magal shareholders' equity | 67,097 | 87,782 | ||||||
Non-controlling interest | 1 | 24 | ||||||
Total shareholders' equity (Note 11) | 67,098 | 87,806 | ||||||
Total liabilities and shareholders' equity | $ | 108,057 | $ | 127,049 |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Revenues | $ | 81,464 | $ | 86,831 | $ | 92,602 | ||||||
Cost of revenues | 47,027 | 48,070 | 52,299 | |||||||||
Gross profit | 34,437 | 38,761 | 40,303 | |||||||||
Operating expenses: | ||||||||||||
Research and development, net | 5,658 | 6,373 | 6,852 | |||||||||
Selling and marketing | 13,883 | 16,902 | 18,557 | |||||||||
General and administrative | 9,713 | 9,447 | 11,139 | |||||||||
Total operating expenses | 29,254 | 32,722 | 36,548 | |||||||||
Operating income | 5,183 | 6,039 | 3,755 | |||||||||
Financial income (expenses), net (Note 16) | (1,480 | ) | (1,667 | ) | 1,361 | |||||||
Income before income taxes | 3,703 | 4,372 | 5,116 | |||||||||
Taxes on income (Note 13) | 3,001 | 1,553 | 2,072 | |||||||||
Net income | 702 | 2,819 | 3,044 | |||||||||
Less – net income attributable to redeemable non-controlling interests and non-controlling interests | (342 | ) | (526 | ) | (95 | ) | ||||||
Net income attributable to Magal shareholders | $ | 360 | $ | 2,293 | $ | 2,949 | ||||||
Basic income per share | $ | 0.01 | $ | 0.07 | $ | 0.12 | ||||||
Diluted income per share | $ | 0.01 | $ | 0.07 | $ | 0.12 |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Net income | $ | 702 | $ | 2,819 | $ | 3,044 | ||||||
Foreign currency translation adjustments | 661 | 1,200 | (1,740 | ) | ||||||||
Total comprehensive income | $ | 1,363 | $ | 4,019 | $ | 1,304 | ||||||
Net income (loss) attributable to: | ||||||||||||
Non-controlling interests | $ | (23 | ) | $ | (26 | ) | $ | - | ||||
Redeemable non-controlling interests | 365 | 552 | 95 | |||||||||
Magal shareholders | 360 | 2,293 | 2,949 | |||||||||
Net income | $ | 702 | $ | 2,819 | $ | 3,044 | ||||||
Total comprehensive income (loss) attributable to: | ||||||||||||
Non-controlling interests | $ | (23 | ) | $ | (26 | ) | $ | - | ||||
Redeemable non-controlling interests | 619 | 717 | (5 | ) | ||||||||
Magal shareholders | 767 | 3,328 | 1,309 | |||||||||
Total comprehensive income | $ | 1,363 | $ | 4,019 | $ | 1,304 |
Number of shares | Ordinary shares | Additional paid-in capital | Accumulated other comprehensive income (loss) | Foreign currency translation adjustment - the Company | Retained earnings (accumulated deficit) | Non- controlling interests | Total shareholders' equity | |||||||||||||||||||||||||
Balance as of January 1, 2018 | 23,032,448 | $ | 6,716 | $ | 93,975 | $ | (87 | ) | $ | 5,859 | $ | (23,514 | ) | $ | - | $ | 82,949 | |||||||||||||||
Cumulative effect adjustment resulting from adoption of ASC606 | - | - | - | - | - | 114 | - | 114 | ||||||||||||||||||||||||
Issuance of shares upon exercise of employee stock options | 17,191 | 5 | 72 | - | - | - | - | 77 | ||||||||||||||||||||||||
Stock-based compensation | - | - | 158 | - | - | - | - | 158 | ||||||||||||||||||||||||
Foreign currency translation adjustments- the Company | - | - | - | - | (3,064 | ) | - | - | (3,064 | ) | ||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | 2,949 | - | 2,949 | ||||||||||||||||||||||||
Adjustment to the redemption value of redeemable non-controlling interests | - | - | - | - | - | (227 | ) | - | (227 | ) | ||||||||||||||||||||||
Foreign currency translation adjustments | - | - | - | (1,740 | ) | - | - | - | (1,740 | ) | ||||||||||||||||||||||
Balance as of December 31, 2018 | 23,049,639 | 6,721 | 94,205 | (1,827 | ) | 2,795 | (20,678 | ) | - | 81,216 | ||||||||||||||||||||||
Issuance of shares upon exercise of employee stock options | 104,346 | 29 | 474 | - | - | - | - | 503 | ||||||||||||||||||||||||
Stock-based compensation | - | - | 392 | - | - | - | - | 392 | ||||||||||||||||||||||||
Purchase of warrants previously granted by the Company | - | - | (375 | ) | - | - | - | - | (375 | ) | ||||||||||||||||||||||
Foreign currency translation adjustments- the Company | - | - | - | - | 3,129 | - | - | 3,129 | ||||||||||||||||||||||||
Issue of shares to non-controlling interests | - | - | - | - | - | - | 50 | 50 | ||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
Net income (loss) | - | - | - | - | - | 2,293 | (26 | ) | 2,267 | |||||||||||||||||||||||
Adjustment to the redemption value of redeemable non-controlling interests | - | - | - | - | - | (576 | ) | - | (576 | ) | ||||||||||||||||||||||
Foreign currency translation adjustments | - | - | - | 1,200 | - | - | - | 1,200 | ||||||||||||||||||||||||
Balance as of December 31, 2019 | 23,153,985 | 6,750 | 94,696 | (627 | ) | 5,924 | (18,961 | ) | 24 | 87,806 |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
(1) Payments for acquisition of ESC BAZ, net of cash acquired: | ||||||||||||
Net fair value of assets acquired and liabilities assumed of ESC BAZ at the date of acquisition (see also Note 1a): | ||||||||||||
Net assets (excluding cash and cash equivalents) | $ | 1,222 | $ | - | $ | - | ||||||
Technology | 190 | - | - | |||||||||
Customer relationship | 164 | - | - | |||||||||
Backlog | 147 | - | - | |||||||||
Adjustment to deferred revenue | 20 | - | - | |||||||||
Deferred tax liability, net | (80 | ) | - | - | ||||||||
Goodwill | 255 | |||||||||||
Redeemable non-controlling interest | (1,533 | ) | - | - | ||||||||
Total payments for acquisition of ESC BAZ, net of cash acquired | $ | 385 | $ | - | $ | - | ||||||
(2) Payments for acquisition of Aimetis, net of cash acquired: | ||||||||||||
Net fair value of assets acquired and liabilities assumed of Aimetis at the date of acquisition (see also Note 1b): | ||||||||||||
Net assets (liabilities) (excluding cash and cash equivalents) | $ | - | $ | - | $ | (293 | ) | |||||
Technology | - | - | 3,759 | |||||||||
Customer relationship | - | - | 761 | |||||||||
Adjustment to deferred revenue | - | - | 671 | |||||||||
Contingent consideration | (82 | ) | ||||||||||
Deferred tax liability, net | - | - | (562 | ) | ||||||||
Goodwill | - | - | 7,859 | |||||||||
Total payments for acquisition of Aimetis, net of cash acquired | $ | - | $ | - | $ | 12,113 |
Number of shares | Ordinary shares | Additional paid-in capital | Accumulated other comprehensive income (loss) | Foreign currency translation adjustment - the Company | Retained earnings (accumulated deficit) | Non- controlling interests | Total shareholders' equity | |||||||||||||||||||||||||
Balance as of December 31, 2019 | 23,153,985 | $ | 6,750 | $ | 94,696 | $ | (627 | ) | $ | 5,924 | $ | (18,961 | ) | $ | 24 | $ | 87,806 | |||||||||||||||
Issuance of shares upon exercise of employee stock options | 10,000 | 3 | 38 | - | - | - | - | 41 | ||||||||||||||||||||||||
Stock-based compensation | - | - | 231 | - | - | - | - | 231 | ||||||||||||||||||||||||
Cash distribution paid to Company’s shareholders | - | - | (25,000 | ) | - | - | - | - | (25,000 | ) | ||||||||||||||||||||||
Foreign currency translation adjustments- the Company | - | - | - | - | 3,180 | - | - | 3,180 | ||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
Net income (loss) | - | - | - | - | - | 360 | (23 | ) | 337 | |||||||||||||||||||||||
Adjustment to the redemption value of redeemable non-controlling interests | - | - | - | - | - | (158 | ) | - | (158 | ) | ||||||||||||||||||||||
Foreign currency translation adjustments | - | - | - | 661 | - | - | - | 661 | ||||||||||||||||||||||||
Balance as of December 31, 2020 | 23,163,985 | $ | 6,753 | $ | 69,965 | $ | 34 | $ | 9,104 | $ | (18,759 | ) | $ | 1 | $ | 67,098 |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 702 | $ | 2,819 | $ | 3,044 | ||||||
Adjustments required to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||
Depreciation and amortization | 1,956 | 2,100 | 2,245 | |||||||||
Impairment of goodwill | - | - | 979 | |||||||||
Loss (gain) on sale of property and equipment | 17 | 11 | (47 | ) | ||||||||
Increase (decrease) in accrued interest and exchange differences on short-term and other long-term liabilities | (155 | ) | 693 | (520 | ) | |||||||
Stock based compensation | 231 | 392 | 158 | |||||||||
Decrease (increase) in trade receivables, net | (1,626 | ) | (3,962 | ) | 555 | |||||||
Increase in unbilled accounts receivable | (2,135 | ) | (2,325 | ) | (227 | ) | ||||||
Increase in other accounts receivable and prepaid expenses | (555 | ) | (190 | ) | (1,333 | ) | ||||||
Decrease (increase) in inventories | 845 | 2,068 | (3,981 | ) | ||||||||
Increase (decrease) in long-term trade receivables | 13 | (52 | ) | - | ||||||||
Decrease (increase) in deferred income taxes | 879 | (631 | ) | (968 | ) | |||||||
Decrease (increase) in operating lease right-of-use assets | 1,542 | 957 | - | |||||||||
Increase (decrease) in operating lease liabilities | (1,486 | ) | (963 | ) | - | |||||||
Increase (decrease) in trade payables | 1,855 | (1,312 | ) | 1,071 | ||||||||
Increase in other accounts payable and accrued expenses and deferred revenues | 1,803 | 1,016 | 3,114 | |||||||||
Increase (decrease) in customer advances | (1,462 | ) | (5,071 | ) | 3,214 | |||||||
Accrued severance pay, net | (107 | ) | (73 | ) | 22 | |||||||
Net cash provided by (used in) operating activities | 2,317 | (4,523 | ) | 7,326 |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Cash flows from investing activities: | ||||||||||||
Investment in short-term deposits | - | (3,092 | ) | - | ||||||||
Investment in restricted deposits | 77 | (90 | ) | - | ||||||||
Release of short-term bank deposits | 16,978 | - | 12,873 | |||||||||
Proceeds from sale of property and equipment | 40 | 70 | 57 | |||||||||
Purchase of property and equipment | (816 | ) | (770 | ) | (2,128 | ) | ||||||
Investment in technology, know-how and patents | (59 | ) | (897 | ) | (296 | ) | ||||||
Payments for acquisition of ESC BAZ, net of cash acquired (1) | - | - | (385 | ) | ||||||||
Net cash provided by (used in) investing activities | 16,220 | (4,779 | ) | 10,121 | ||||||||
Cash flows from financing activities: | ||||||||||||
Cash distribution to Company’s shareholders | (25,000 | ) | - | - | ||||||||
Dividend to redeemable non-controlling interests | (1,935 | ) | - | - | ||||||||
Purchase of redeemable non-controlling interest | (1,891 | ) | - | - | ||||||||
Proceeds from issuance of shares upon exercise of options to employees | 41 | 503 | 77 | |||||||||
Issue of shares to non-controlling interests | - | 50 | - | |||||||||
Purchase of warrants granted | - | (375 | ) | - | ||||||||
Net cash provided by (used in) financing activities | (28,785 | ) | 178 | 77 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 2,828 | 2,089 | (1,029 | ) | ||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | (7,420 | ) | (7,035 | ) | 16,495 | |||||||
Cash, cash equivalents and restricted cash at the beginning of the year | 34,765 | 41,800 | 25,305 | |||||||||
Cash, cash equivalents and restricted cash at the end of the year | $ | 27,345 | $ | 34,765 | $ | 41,800 | ||||||
Supplemental disclosures of cash flows activities: | ||||||||||||
Cash and cash equivalents | $ | 27,093 | $ | 34,531 | $ | 38,665 | ||||||
Restricted cash | 252 | 234 | 3,135 | |||||||||
Total Cash, cash equivalents and restricted cash | $ | 27,345 | $ | 34,765 | $ | 41,800 |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Supplemental disclosures of cash flows activities: | ||||||||||||
Cash paid during the year for: | ||||||||||||
Interest | $ | 167 | $ | 15 | $ | 20 | ||||||
Income taxes | $ | 2,454 | $ | 660 | $ | 2,926 | ||||||
Significant non-cash transactions: | ||||||||||||
Right-of-use asset recognized with corresponding lease liability | $ | 1,167 | $ | 620 | $ | - |
(1) Payments for acquisition of ESC BAZ, net of cash acquired: | ||||||||||||
Net fair value of assets acquired and liabilities assumed of ESC BAZ at the date of acquisition (see also Note 1c): | ||||||||||||
Net assets (excluding cash and cash equivalents) | $ | - | $ | - | $ | 1,222 | ||||||
Technology | - | - | 190 | |||||||||
Customer relationship | - | - | 164 | |||||||||
Backlog | - | - | 147 | |||||||||
Adjustment to deferred revenue | - | - | 20 | |||||||||
Deferred tax liability, net | - | - | (80 | ) | ||||||||
Goodwill | 255 | |||||||||||
Redeemable non-controlling interest | - | - | (1,533 | ) | ||||||||
Total payments for acquisition of ESC BAZ, net of cash acquired | $ | - | $ | - | $ | 385 |
NOTE 1:- | GENERAL |
a. | General: |
b. | The Coronavirus disease (COVID-19) was declared a pandemic by the World Health Organization in March 2020. COVID-19 has had significant negative impacts on the worldwide economy, resulting in disruptions to supply chains and financial markets, significant travel restrictions, facility closures and shelter-in-place orders in various locations. The Company closely monitored the evolution of the COVID-19 pandemic and its impacts on the Company’s employees, customers and suppliers, as well as on the global economy. The Company took a number of actions to protect the safety of its employees as well as maintain business continuity and secure its global sales infrastructure, technological capacity and its supply chain. During 2020 the Company's sales were not materially impacted by the pandemic, recording a 6.2% reduction in revenue year over year. However, throughout the year, some of the businesses experienced certain disruptions due to government directed safety measures, travel restrictions and supply chain delays. A series of cost control measures were implemented to help limit the financial impact of the pandemic on the Company’s revenues, in parallel to the measures taken to maintain business continuity and deliveries to customers. The Company also worked on efficiency initiatives with a number of its suppliers. |
c. | On December 7, 2020, the Company announced a cash distribution of $1.079 per share. The cash distribution, in the aggregate amount of $25 million, was paid on December 28, 2020 on all of the Company's shares of record on December 17, 2020. |
d. | On December 31, 2020, the Company’s Israeli subsidiary paid a dividend of $1,935 to the redeemable non-controlling interest. |
e. | On December 31, 2020, the Company acquired the remaining 45% redeemable non-controlling interest in ESC BAZ for total consideration of $1,891 (see Note 2m). |
NOTE 1:- | GENERAL (Cont.) |
f. | On February 7, 2021 the Company signed a share and asset purchase agreement with Aeronautics Ltd. to sell the Company’s Integrated Solutions (Projects) Division in consideration of $35 million in cash, on a cash-free debt-free basis subject to post-closing working capital and other customary adjustments. The agreement is subject to regulatory approvals and the satisfaction of customary closing conditions. As part of the acquisition, Aeronautics is also acquiring the Company’s facility in Yehud, Israel. |
g. | 2018 Acquisition: |
Net assets (including cash of $2,461) | $ | 3,683 | ||
Intangible assets | 501 | |||
Adjustment to deferred revenue | 20 | |||
Deferred tax liabilities | (80 | ) | ||
Goodwill | 255 | |||
Redeemable non-controlling interests | (1,533 | ) | ||
Total purchase price | $ | 2,846 |
Net assets (including cash of $ 2,461) | $ | 3,683 | ||
Intangible assets | 501 | |||
Adjustment to deferred revenue | 20 | |||
Deferred tax liabilities | (80 | ) | ||
Goodwill | 255 | |||
Redeemable non-controlling interests | (1,533 | ) | ||
Total purchase price | $ | 2,846 |
NOTE 1:- | GENERAL (Cont.) |
Fair value | ||||
Technology | $ | 190 | ||
Customer relationships | 164 | |||
Backlog | 147 | |||
Total intangible assets | $ | 501 |
Year ended December 31, 2018 | ||||
Revenues | $ | 3,969 | ||
Net income | $ | 210 |
Year ended December 31, | ||||
2018 | ||||
Revenues | $ | 3,969 | ||
Net income | $ | 210 |
NOTE 1:- | GENERAL (Cont.) |
Year ended December 31, | ||||||||
2018 | 2017 | |||||||
Unaudited | ||||||||
Revenues | $ | 94,216 | $ | 69,851 | ||||
Net income (loss) attributable to Magal shareholders' | $ | 3,198 | $ | (6,802 | ) | |||
Basic and diluted net income (loss) per share | $ | 0.14 | $ | (0.30 | ) |
Year ended December 31, | ||||||||
2018 | 2017 | |||||||
Unaudited | ||||||||
Revenues | $ | 94,216 | $ | 69,851 | ||||
Net income (loss) attributable to Magal shareholders' | $ | 3,198 | $ | (6,802 | ) | |||
Basic and diluted net income (loss) per share | $ | 0.14 | $ | (0.30 | ) |
Net assets (including cash of $ 2,274) | $ | 1,981 | ||
Intangible assets | 4,520 | |||
Adjustment to deferred revenue | 671 | |||
Deferred tax liabilities, net | (562 | ) | ||
Goodwill | 7,859 | |||
Total purchase price | $ | 14,469 |
Fair value | ||||
Technology | $ | 3,759 | ||
Customer relationships | 761 | |||
Total intangible assets | $ | 4,520 |
Year ended December 31, | ||||
2016 | ||||
Revenues | $ | 5,047 | ||
Net loss | $ | (2,667 | ) |
Year ended December 31, | ||||||||
2016 | 2015 | |||||||
Unaudited | ||||||||
Revenues | $ | 69,956 | $ | 71,709 | ||||
Net income (loss) attributable to Magal shareholders' | $ | (73 | ) | $ | 2,134 | |||
Basic and diluted income (loss) per share | $ | 0.00 | $ | 0.13 |
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"), followed on a consistent basis, unless otherwise stated. |
a. | Use of estimates: |
b. | Financial statements in U.S. dollars: |
c. | Principles of consolidation: |
December 31, | ||||||||||||
Balance as of January 1, 2018 | $ | - | ||||||||||
2020 | 2019 | |||||||||||
Redeemable non-controlling interests at the acquisition of ESC BAZ | 1,533 | |||||||||||
Balance at the beginning of the year | $ | 3,048 | $ | 1,755 | ||||||||
Adjustment to the redemption value of redeemable non-controlling interests | 227 | 158 | 576 | |||||||||
Net income attributable to redeemable non-controlling interests | 95 | 365 | 552 | |||||||||
Foreign currency translation adjustments | (100 | ) | 255 | 165 | ||||||||
Dividend to redeemable non-controlling interests | (1,935 | ) | - | |||||||||
Purchase of redeemable non-controlling interests | (1,891 | ) | - | |||||||||
Balance as of December 31, 2018 | $ | 1,755 | ||||||||||
$ | - | $ | 3,048 |
d. | Cash equivalents: |
e. | Short-term and long-term restricted cash and deposits: |
Short-term and long-term bank deposits: |
g. | Inventories: |
h. | Long-term trade receivables: |
i. | Property and equipment: |
% | |||
Buildings | 3 - 4 | ||
Machinery and equipment | 10 - 33 (mainly 10%) | ||
Motor vehicles | 15 | ||
Promotional displays | 15 - 50 | ||
Office furniture and equipment | 6 - 33 | ||
Leasehold improvements | By the shorter of the term of the lease or the useful life of the assets |
j. | Intangible assets: |
% | |||
Patents | 10 | ||
Technology | 12.5 - 26.7 | ||
Customer relationships | 10.3 - 36.4 | ||
Backlog | 50 - 100 |
k. | Impairment of long-lived assets: |
Goodwill: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Business combinations: |
Revenue recognition: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
o. | Accounting for stock-based compensation: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
2020 | 2019 | 2018 | |||||||
Dividend yield | 0% | 0% | 0 | ||||||
Expected volatility | 33.56%-36.45% | 33.76%-38.31% | 37.11%-43.98% | ||||||
Risk-free interest | 0.32%-1.51% | 1.42%-2.68% | 2.5%-2.86% | ||||||
Contractual term | 5-7 years | 5-7 years | 5-7 years | ||||||
Forfeiture rate | 10% | 10%-12% | 10% | ||||||
Suboptimal exercise multiple | 1.29 | 1.32 | 1.32-1.33 |
2018 | 2016 | |||
Dividend yield | 0% | 0% | ||
Expected volatility | 37.11%-43.98% | 27.72%-46.02% | ||
Risk-free interest | 2.5%-2.86% | 0.61%-1.59% | ||
Contractual term | 5-7 years | 5-7 years | ||
Forfeiture rate | 10% | 10% | ||
Suboptimal exercise multiple | 1.32-1.33 | 1.41 |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
p. | Research and development costs: |
q. | Warranty costs: |
December 31, | ||||||||
2020 | 2019 | |||||||
Warranty provision, beginning of year | $ | 1,571 | $ | 1,360 | ||||
Charged to costs and expenses relating to new sales | 415 | 374 | ||||||
Costs of warranties granted | (615 | ) | (278 | ) | ||||
Foreign currency translation adjustments | 129 | 115 | ||||||
Warranty provision, end of year | $ | 1,500 | $ | 1,571 |
December 31, | ||||||||
2018 | 2017 | |||||||
Warranty provision, beginning of year | $ | 1,281 | $ | 1,197 | ||||
Charged to costs and expenses relating to new sales | 569 | 230 | ||||||
Costs of warranties granted | (365 | ) | (251 | ) | ||||
Foreign currency translation adjustments | (125 | ) | 105 | |||||
Warranty provision, end of year | $ | 1,360 | $ | 1,281 |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
r. | Net earnings per share: |
s. | Concentrations of credit risk: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2018 | 2017 | 2016 | 2020 | 2019 | 2018 | |||||||||||||||||||
Balance at the beginning of the year | $ | 1,557 | $ | 2,064 | $ | 2,331 | $ | 2,119 | $ | 2,751 | $ | 1,557 | ||||||||||||
Doubtful debt expenses during the year | 1,453 | 299 | 429 | |||||||||||||||||||||
Customers write-offs/collection during the year, net | (204 | ) | (957 | ) | (706 | ) | ||||||||||||||||||
Credit losses expenses during the year | 378 | 141 | 1,453 | |||||||||||||||||||||
Customer write-offs/collections during the year, net | (416 | ) | (790 | ) | (204 | ) | ||||||||||||||||||
Exchange rate | (55 | ) | 151 | 10 | 36 | 17 | (55 | ) | ||||||||||||||||
$ | 2,751 | $ | 1,557 | $ | 2,064 | $ | 2,117 | $ | 2,119 | $ | 2,751 |
t. | Income taxes: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Severance pay: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Fair value of financial instruments: |
(i) | The carrying amounts of cash and cash equivalents, short-term bank deposits, long-term bank deposits, trade receivables, unbilled accounts receivable, short-term bank credit and trade payables approximate their fair value due to the short-term maturity of such instruments. |
(ii) | The carrying amount of the Company's long-term trade receivables approximate their fair value. The fair value was estimated using discounted cash flows analysis, based on the Company's investment rates for similar type of investment arrangements. |
(iii) | The carrying amounts of the Company's long-term debt are estimated by discounting the future cash flows using current interest rates for loans of similar terms and maturities. As of December 31, |
w. | Advertising expenses: |
Fair value measurements: |
Level 1 | - | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
Level 2 | - | Significant other observable inputs based on market data obtained from sources independent of the reporting entity. |
Level 3 | - | Unobservable inputs which are supported by little or no market activity. |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Comprehensive income (loss): |
December 31, | Year ended December 31, | |||||||||||||||||||||||
2018 | 2017 | 2016 | 2020 | 2019 | 2018 | |||||||||||||||||||
Foreign currency translation adjustments | $ | (1,827 | ) | $ | (87 | ) | $ | (1,923 | ) | $ | 34 | $ | (627 | ) | $ | (1,827 | ) | |||||||
Total accumulated other comprehensive loss | $ | (1,827 | ) | $ | (87 | ) | $ | (1,923 | ) | |||||||||||||||
Total accumulated other comprehensive income (loss) | $ | 34 | $ | (627 | ) | $ | (1,827 | ) |
Non-controlling interest: |
aa. |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
bb. | Reclassification: |
cc. | Impact of recently issued and adopted accounting standards: |
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
dd. | New accounting pronouncements not yet effective: |
NOTE 3:- | OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES |
December 31, | ||||||||
2020 | 2019 | |||||||
Prepaid expenses | $ | 2,114 | $ | 1,717 | ||||
Government authorities | 2,320 | 1,914 | ||||||
Advances to suppliers | 303 | 454 | ||||||
Employees | 20 | 36 | ||||||
Others | 442 | 389 | ||||||
$ | 5,199 | $ | 4,510 |
NOTE 4:- | INVENTORIES |
December 31, | ||||||||
2020 | 2019 | |||||||
Raw materials | $ | 3,949 | $ | 5,232 | ||||
Work in progress | 1,730 | 1,271 | ||||||
Finished products | 6,681 | 6,102 | ||||||
$ | 12,360 | $ | 12,605 |
NOTE 5:- | LEASES |
December 31, | ||||||||
2018 | 2017 | |||||||
Prepaid expenses | $ | 2,188 | $ | 1,495 | ||||
Government authorities | 1,222 | 730 | ||||||
Advances to suppliers | 445 | 359 | ||||||
Employees | 62 | 63 | ||||||
Others | 209 | 203 | ||||||
$ | 4,126 | $ | 2,850 |
a. | Supplemental balance sheet information related to operating leases is as follows: |
December 31, | ||||||||
2020 | 2019 | |||||||
Operating lease ROU assets | $ | 3,352 | $ | 3,492 | ||||
Operating lease liabilities, current | $ | 952 | $ | 919 | ||||
Operating lease liabilities, long-term | $ | 2,398 | $ | 2,515 | ||||
Weighted average remaining lease term (in years) | 2.41 | 2.92 | ||||||
Weighted average discount rate | 3.18 | % | 3.64 | % |
b. | Future lease payments under operating leases as of December 31, 2020, are as follows: |
December 31, | ||||
2021 | $ | 1,074 | ||
2022 | 692 | |||
2023 | 418 | |||
2024 | 354 | |||
2025 | 355 | |||
2026 and thereafter | 875 | |||
Total future lease payments | $ | 3,768 | ||
Less - imputed interest | (418 | ) | ||
Total lease liability balance | $ | 3,350 |
c. | Operating lease expenses amounted to $1,264 and $1,095 for the years ended December 31, 2020 and 2019, respectively. Operating lease expenses with a term of twelve months or less amounted to $215 and $201 for the years ended December 31, 2020 and 2019, respectively. |
NOTE 6:- | PROPERTY AND EQUIPMENT, NET |
December 31, | ||||||||
2020 | 2019 | |||||||
Cost: | ||||||||
Land and buildings | $ | 8,283 | $ | 7,839 | ||||
Machinery and equipment | 3,892 | 3,606 | ||||||
Motor vehicles | 2,722 | 2,620 | ||||||
Promotional displays | 779 | 815 | ||||||
Office furniture and equipment | 4,836 | 4,543 | ||||||
Leasehold improvements | 840 | 790 | ||||||
21,352 | 20,213 | |||||||
Accumulated depreciation: | ||||||||
Buildings | 5,130 | 4,641 | ||||||
Machinery and equipment | 2,972 | 2,982 | ||||||
Motor vehicles | 1,762 | 1,513 | ||||||
Promotional displays | 727 | 571 | ||||||
Office furniture and equipment | 4,032 | 3,749 | ||||||
Leasehold improvements | 592 | 501 | ||||||
15,215 | 13,957 | |||||||
Property and equipment, net | $ | 6,137 | $ | 6,256 |
b. | Depreciation expenses amounted to $1,113, $1,179 and $1,070 for the years ended December 31, 2020, 2019 and 2018, respectively. |
NOTE 7:- | INTANGIBLE ASSETS, NET |
December 31, | ||||||||
2020 | 2019 | |||||||
Cost: | ||||||||
Know-how and patents | $ | 4,947 | $ | 4,780 | ||||
Technology | 7,225 | 7,017 | ||||||
Customer relationships | 1,721 | 1,661 | ||||||
Backlog | 934 | 898 | ||||||
14,827 | 14,356 | |||||||
Accumulated amortization: | ||||||||
Know-how and patents | 4,930 | 4,755 | ||||||
Technology | 4,455 | 3,632 | ||||||
Customer relationships | 1,473 | 1,300 | ||||||
Backlog | 934 | 897 | ||||||
11,792 | 10,584 | |||||||
Intangible assets, net | $ | 3,035 | $ | 3,772 |
December 31, | ||||||||
2018 | 2017 | |||||||
Raw materials | $ | 4,762 | $ | 2,346 | ||||
Work in progress | 1,952 | 1,378 | ||||||
Finished products | 7,149 | 5,872 | ||||||
$ | 13,863 | $ | 9,596 |
December 31, | ||||||||
2018 | 2017 | |||||||
Cost: | ||||||||
Land and buildings | $ | 7,559 | $ | 7,311 | ||||
Machinery and equipment | 3,392 | 3,129 | ||||||
Motor vehicles | 2,440 | 1,958 | ||||||
Promotional displays | 644 | 600 | ||||||
Office furniture and equipment | 4,198 | 4,619 | ||||||
Leasehold improvements | 739 | 906 | ||||||
18,972 | 18,523 | |||||||
Accumulated depreciation: | ||||||||
Buildings | 4,375 | 4,283 | ||||||
Machinery and equipment | 2,689 | 2,446 | ||||||
Motor vehicles | 1,244 | 1,165 | ||||||
Promotional displays | 477 | 453 | ||||||
Office furniture and equipment | 3,426 | 3,861 | ||||||
Leasehold improvements | 414 | 597 | ||||||
12,625 | 12,805 | |||||||
Property and equipment, net | $ | 6,347 | $ | 5,718 |
b. | Amortization expenses related to intangible assets amounted to |
c. | Estimated amortization of intangible assets for the years ended: |
December 31, | ||||
2021 | $ | 1,039 | ||
2022 | 916 | |||
2023 | 442 | |||
2024 | 291 | |||
2025 | 282 | |||
2026 | 65 | |||
$ | 3,035 |
NOTE 8:- | GOODWILL |
1. | Products reporting unit which comprises the Products segment and; |
2. | BAZ reporting unit within the Projects segment. |
a. | Goodwill annual impairment test for the year ended December 31, 2020: |
b. | Goodwill annual impairment test for the year ended December 31, 2018: |
NOTE |
c. |
December 31, | ||||||||
2018 | 2017 | |||||||
Cost: | ||||||||
Know-how and patents | $ | 4,194 | $ | 4,525 | ||||
Technology | 5,873 | 5,766 | ||||||
Customer relationships | 1,582 | 1,521 | ||||||
Backlog | 858 | 746 | ||||||
12,507 | 12,558 | |||||||
Accumulated amortization: | ||||||||
Know-how and patents | 4,162 | 4,478 | ||||||
Technology | 2,774 | 2,154 | ||||||
Customer relationships | 1,093 | 877 | ||||||
Backlog | 833 | 746 | ||||||
8,862 | 8,255 | |||||||
Intangible assets , net | $ | 3,645 | $ | 4,303 |
December 31, | ||||
2019 | $ | 897 | ||
2020 | 888 | |||
2021 | 850 | |||
2022 | 673 | |||
2023 | 227 | |||
2024 and thereafter | 110 | |||
$ | 3,645 |
Products | Projects | Total | ||||||||||
As of January 1, 2019 | $ | 10,881 | $ | 239 | $ | 11,120 | ||||||
Foreign currency translation adjustments | 363 | 21 | 384 | |||||||||
As of December 31, 2019 | 11,244 | 260 | 11,504 | |||||||||
Foreign currency translation adjustments | 263 | 19 | 282 | |||||||||
As of December 31, 2020 | $ | 11,507 | $ | 279 | $ | 11,786 |
NOTE |
Products | Video and Cyber security | Projects | Total | |||||||||||||
As of January 1, 2017 | $ | 3,305 | $ | 8,545 | $ | - | $ | 11,850 | ||||||||
Foreign currency translation adjustments | 165 | 677 | - | 842 | ||||||||||||
As of December 31, 2017 | 3,470 | 9,222 | - | 12,692 | ||||||||||||
Acquisition of ESC BAZ | - | - | 255 | 255 | ||||||||||||
Impairment of goodwill (See Note 2k.) | - | (979 | ) | - | (979 | ) | ||||||||||
Foreign currency translation adjustments | (105 | ) | (727 | ) | (16 | ) | (848 | ) | ||||||||
As of December 31, 2018 | $ | 3,365 | $ | 7,516 | $ | 239 | $ | 11,120 |
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES |
December 31, | December 31, | |||||||||||||||
2018 | 2017 | 2020 | 2019 | |||||||||||||
Employees and payroll accruals | $ | 4,250 | $ | 3,082 | $ | 4,550 | $ | 4,658 | ||||||||
Accrued expenses | 7,190 | 6,100 | 7,774 | 6,181 | ||||||||||||
Government authorities | 156 | 1,427 | 2,021 | 917 | ||||||||||||
Income tax payable and tax provision | 1,457 | 951 | 2,758 | 2,286 | ||||||||||||
Others | 173 | 61 | 210 | 567 | ||||||||||||
$ | 13,226 | $ | 11,621 | $ | 17,313 | $ | 14,609 |
NOTE | COMMITMENTS AND CONTINGENT LIABILITIES |
a. | Royalty commitments to the Innovation Authority (formerly the Office of the Chief Scientist) of the Israeli Ministry of Economy, |
b. | Royalty commitments to a third party: |
c. | Guarantees: |
2019 | $ | 1,119 | ||
2020 | 720 | |||
2021 | 599 | |||
2022 | 517 | |||
2023 | 465 | |||
2024 and there after | 1,473 | |||
$ | 4,893 |
NOTE 10:- |
e. | Legal proceedings: |
a. | Pertinent rights and privileges conferred by Ordinary shares: |
b. | Issued and outstanding share capital: |
c. | Stock Option Plan: |
NOTE 11:- | SHAREHOLDERS' EQUITY (Cont.) |
Number of options | Weighted-average exercise price | Weighted- average remaining contractual life (in months) | Aggregate intrinsic value (in thousands) | |||||||||||||
Outstanding at January 1, 2020 | 860,546 | 4.794 | 49.43 | - | ||||||||||||
Granted | 95,000 | 3.675 | ||||||||||||||
Exercised | (10,000 | ) | 4.150 | |||||||||||||
Forfeited | (184,879 | ) | 4.713 | |||||||||||||
Outstanding as of December 31, 2020 | 760,667 | 3.749 | 44.01 | 202.28 | ||||||||||||
Exercisable as of December 31, 2020 | 245,002 | 3.859 | 33.40 | 39.60 |
Number of options | Weighted-average exercise price | Weighted- average remaining contractual life (in months) | Aggregate intrinsic value (in thousands) | |||||||||||||
Outstanding at January 1, 2018 | 412,976 | 4.616 | 44.21 | 183 | ||||||||||||
Granted | 555,000 | 5.032 | ||||||||||||||
Exercised | (17,191 | ) | 4.507 | |||||||||||||
Forfeited | (61,667 | ) | 4.807 | |||||||||||||
Outstanding at December 31, 2018 | 889,118 | 4.865 | 51.25 | - | ||||||||||||
Exercisable at December 31, 2018 | 223,620 | 4.57 | 0.003 | - |
NOTE 11:- | SHAREHOLDERS' EQUITY (Cont.) |
Number of options outstanding as of December 31, 2018 | Exercise price | Weighted average remaining contractual life | Number of options exercisable as of December 31, 2018 | |||||||||||
(In months) | ||||||||||||||
54,000 | 5.01 | 38.89 | 18,000 | |||||||||||
81,906 | 4.96 | 3.25 | 81,906 | |||||||||||
24,000 | 4.40 | 29.23 | 16,000 | |||||||||||
135,212 | 4.15 | 28.33 | 94,713 | |||||||||||
39,000 | 4.86 | 43.94 | 13,001 | |||||||||||
24,000 | 5.61 | 61.23 | - | |||||||||||
440,000 | 5.15 | 65.78 | - | |||||||||||
91,000 | 4.31 | 71.92 | - | |||||||||||
889,118 | 51.25 | 223,620 |
Number of options outstanding as of December 31, 2020 | Exercise price | Weighted average remaining contractual life | Number of options exercisable as of December 31, 2020 | |||||||||||
(In months) | ||||||||||||||
47,667 | 3.32 | 13.60 | 47,667 | |||||||||||
91,000 | 3.45 | 47.89 | 30,335 | |||||||||||
39,000 | 3.89 | 19.91 | 39,000 | |||||||||||
360,000 | 4.12 | 41.74 | 120,000 | |||||||||||
24,000 | 4.49 | 37.19 | 8,000 | |||||||||||
45,000 | 2.78 | 67.43 | - | |||||||||||
50,000 | 3.09 | 61.58 | - | |||||||||||
74,000 | 3.35 | 57.06 | - | |||||||||||
30,000 | 3.61 | 48.09 | - | |||||||||||
760,667 | 44.01 | 245,002 |
d. | Warrants: |
e. | Dividends: |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Numerator: | ||||||||||||
Income (loss) attributable to Magal shareholders' | $ | 2,722 | $ | (6,914 | ) | $ | 1,029 | |||||
Denominator: | ||||||||||||
Denominator for basic net earnings (loss) per share weighted-average number of shares outstanding | 23,040,436 | 22,989,009 | 17,999,779 | |||||||||
Effect of diluting securities: | ||||||||||||
Employee stock options | 247,315 | - | 31,654 | |||||||||
Denominator for diluted net earnings (loss) per share - adjusted weighted average shares and assumed exercises | 23,287,751 | 22,989,009 | 18,031,433 |
NOTE 12:- | BASIC AND DILUTED NET EARNINGS PER SHARE |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Numerator: | ||||||||||||
Income attributable to Magal shareholders' | $ | 202 | $ | 1,717 | $ | 2,722 | ||||||
Denominator: | ||||||||||||
Denominator for basic net earnings per share weighted-average number of shares outstanding | 23,154,422 | 23,129,394 | 23,040,436 | |||||||||
Effect of diluting securities: | ||||||||||||
Employee stock options | - | 15,346 | 247,315 | |||||||||
Denominator for diluted net earnings per share - adjusted weighted average shares and assumed exercises | 23,154,422 | 23,144,740 | 23,287,751 |
NOTE 13:- | TAXES ON INCOME |
a. | Tax laws and tax rates applicable to the Group companies: |
NOTE | TAXES ON INCOME (Cont.) |
NOTE 13:- |
Tax assessments: |
Reconciliation between the theoretical tax expense, assuming all income is taxed at the Israeli statutory rate, and the actual tax expense, is as follows: |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Income (loss) before taxes as reported in the statements of operations | $ | 5,116 | $ | (5,205 | ) | $ | 904 | |||||
Tax rate | 23 | % | 24 | % | 25 | % | ||||||
Theoretical tax | $ | 1,177 | $ | (1,249 | ) | $ | 226 | |||||
Increase (decrease) in taxes: | ||||||||||||
Non-deductible items | 32 | 185 | 249 | |||||||||
Losses and other items for which a valuation allowance was provided | 972 | 1,769 | 977 | |||||||||
Realization of carryforward tax losses for which valuation allowance was provided | (1,293 | ) | (28 | ) | (541 | ) | ||||||
Changes in valuation allowance | (377 | ) | - | (1,602 | ) | |||||||
Tax rate differences in subsidiaries | 223 | (71 | ) | 236 | ||||||||
Adjustment of deferred tax balances following a changes in tax rates | - | 410 | ||||||||||
Provision for uncertain tax positions | 717 | 245 | (230 | ) | ||||||||
Taxes in respect of prior years | (2 | ) | 21 | 79 | ||||||||
Tax withheld against which valuation allowance was provided this year | 755 | 638 | 602 | |||||||||
Investment tax credit | (180 | ) | (178 | ) | (220 | ) | ||||||
Other | 48 | (47 | ) | 102 | ||||||||
Taxes on income (tax benefit) in the statements of operations | $ | 2,072 | $ | 1,695 | $ | (122 | ) |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Income before taxes as reported in the statements of operations | $ | 3,703 | $ | 4,372 | $ | 5,116 | ||||||
Tax rate | 23 | % | 23 | % | 23 | % | ||||||
Theoretical tax | $ | 852 | $ | 1,006 | $ | 1,177 | ||||||
Increase (decrease) in taxes: | ||||||||||||
Non-deductible items | 246 | 264 | 32 | |||||||||
Losses and other items for which a valuation allowance was provided | 620 | 369 | 972 | |||||||||
Repatriation of undistributed earnings | 144 | - | - | |||||||||
Realization of carryforward tax losses for which valuation allowance was provided | (67 | ) | (386 | ) | (1,293 | ) | ||||||
Changes in valuation allowance | (42 | ) | (862 | ) | (377 | ) | ||||||
Tax rate differences in subsidiaries and benefit from reduced tax rates | 139 | (26 | ) | 223 | ||||||||
Provision for uncertain tax positions | 456 | 654 | 717 | |||||||||
Taxes in respect of prior years | 26 | (1 | ) | (2 | ) | |||||||
Tax withheld against which valuation allowance was provided | 678 | 694 | 755 | |||||||||
Investment tax credit | (132 | ) | (163 | ) | (180 | ) | ||||||
Other | 81 | 4 | 48 | |||||||||
Taxes on income in the statements of operations | $ | 3,001 | $ | 1,553 | $ | 2,072 |
NOTE | TAXES ON INCOME (Cont.) |
Taxes on income (tax benefit) included in the statements of operations: |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Current | $ | 2,177 | $ | 2,184 | $ | 3,003 | ||||||
Deferred | 824 | (631 | ) | (931 | ) | |||||||
$ | 3,001 | $ | 1,553 | $ | 2,072 | |||||||
Domestic | $ | 1,515 | $ | 820 | $ | 1,460 | ||||||
Foreign | 1,486 | 733 | 612 | |||||||||
$ | 3,001 | $ | 1,553 | $ | 2,072 |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Current | $ | 3,003 | $ | 2,162 | $ | 1,485 | ||||||
Deferred | (931 | ) | (467 | ) | (1,607 | ) | ||||||
$ | 2,072 | $ | 1,695 | $ | (122 | ) | ||||||
Domestic | $ | 1,460 | $ | 893 | $ | 407 | ||||||
Foreign | 612 | 802 | (529 | ) | ||||||||
$ | 2,072 | $ | 1,695 | $ | (122 | ) |
Deferred income taxes: |
December 31, | ||||||||
2020 | 2019 | |||||||
Deferred tax assets: | ||||||||
Operating losses carry forwards | $ | 6,033 | $ | 5,319 | ||||
Reserves, tax allowances, capital losses carry forwards, operating lease and others | 5,763 | 6,128 | ||||||
Total deferred taxes before valuation allowance | 11,796 | 11,447 | ||||||
Valuation allowance | (6,137 | ) | (5,049 | ) | ||||
Deferred tax assets, net: | 5,659 | 6,398 | ||||||
Deferred tax liabilities: | ||||||||
Property and equipment, intangible assets, operating lease and others | (2,447 | ) | (2,361 | ) | ||||
Undistributed earnings of subsidiaries | (154 | ) | - | |||||
Deferred tax liabilities: | (2,601 | ) | (2,361 | ) | ||||
Net deferred tax assets | $ | 3,058 | $ | 4,037 | ||||
Domestic | $ | 794 | $ | 886 | ||||
Foreign | $ | 2,264 | $ | 3,151 |
December 31, | ||||||||
2018 | 2017 | |||||||
Deferred tax assets: | ||||||||
Operating loss carry forwards | $ | 4,123 | $ | 5,158 | ||||
Reserves and tax allowances | 3,875 | 4,052 | ||||||
Total deferred taxes before valuation allowance | 7,998 | 9,210 | ||||||
Valuation allowance | (4,539 | ) | (6,631 | ) | ||||
Deferred tax assets, net: | 3,459 | 2,579 | ||||||
Deferred tax liabilities: | 182 | 190 | ||||||
Net deferred tax assets | $ | 3,277 | $ | 2,389 | ||||
Foreign | $ | 3,277 | $ | 2,389 |
NOTE | TAXES ON INCOME (Cont.) |
The domestic and foreign components of income (loss) before taxes are as follows: |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Domestic | $ | (612 | ) | $ | 1,730 | $ | 1,705 | |||||
Foreign | 4,315 | 2,642 | 3,411 | |||||||||
$ | 3,703 | $ | 4,372 | $ | 5,116 |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Domestic | $ | 1,705 | $ | (1,605 | ) | $ | (1,482 | ) | ||||
Foreign | 3,411 | (3,600 | ) | 2,386 | ||||||||
$ | 5,116 | $ | (5,205 | ) | $ | 904 |
NOTE 13:- |
h. | Uncertain tax positions: |
December 31, | ||||||||
2018 | 2017 | |||||||
Balance at the beginning of the year | $ | 908 | $ | 663 | ||||
Additions based on tax positions taken related to the current year | 717 | 245 | ||||||
Foreign currency translation adjustments | (14 | ) | - | |||||
Balance at the end of the year | $ | 1,611 | $ | 908 |
December 31, | ||||||||
2020 | 2019 | |||||||
Balance at the beginning of the year | $ | 2,286 | $ | 1,611 | ||||
Additions based on tax positions taken related to the current year | 632 | 654 | ||||||
Additions based on tax positions taken related to prior years | 91 | - | ||||||
Reduction related to tax positions taken during a prior period and expirations of statute of limitations | (267 | ) | - | |||||
Foreign currency translation adjustments | 15 | 21 | ||||||
Balance at the end of the year | $ | 2,757 | $ | 2,286 |
NOTE | BALANCES AND TRANSACTIONS WITH RELATED PARTIES |
NOTE | SEGMENT INFORMATION |
Perimeter Products segment (Products) - sales of perimeter products, including services and maintenance that are performed either on a fixed-price basis or pursuant to time-and-materials based contracts, software and hardware products, in the field of Video management, for monitoring, securing, and the active management of network video systems, video analytics, as well as wired, wireless, and fiber optic communication networks and |
2. |
a. | The following data present the revenues, expenditures, assets and other operating data of the Company's operating segments: |
Year ended December 31, 2018 | Year ended December 31, 2020 | |||||||||||||||||||||||||||||||||||
Products | Projects | Video and Cyber security | Eliminations | Total | Products | Projects | Eliminations | Total | ||||||||||||||||||||||||||||
Revenues | $ | 27,626 | $ | 57,072 | $ | 9,461 | $ | (1,557 | ) | $ | 92,602 | $ | 35,038 | $ | 48,803 | $ | (2,377 | ) | $ | 81,464 | ||||||||||||||||
Depreciation, amortization and impairment of goodwill | $ | 586 | $ | 879 | $ | 1,759 | $ | - | $ | 3,224 | ||||||||||||||||||||||||||
Depreciation and amortization | $ | 1,172 | $ | 784 | $ | - | $ | 1,956 | ||||||||||||||||||||||||||||
Operating income (loss), before financial expenses and taxes on income | $ | 2,863 | $ | 2,782 | $ | (1,298 | ) | $ | (592 | ) | $ | 3,755 | $ | 6,387 | $ | 65 | $ | (1,269 | ) | $ | 5,183 | |||||||||||||||
Financial income, net | 1,361 | |||||||||||||||||||||||||||||||||||
Financial expenses, net | (1,480 | ) | ||||||||||||||||||||||||||||||||||
Taxes on income | (2,072 | ) | (3,001 | ) | ||||||||||||||||||||||||||||||||
Net income | $ | 3,044 | $ | 702 |
NOTE 15:- SEGMENT INFORMATION (Cont.) |
Year ended December 31, 2019 | ||||||||||||||||
Products | Projects | Eliminations | Total | |||||||||||||
Revenues | $ | 36,633 | $ | 52,426 | $ | (2,228 | ) | $ | 86,831 | |||||||
Depreciation and amortization | $ | 1,260 | $ | 840 | $ | - | $ | 2,100 | ||||||||
Operating income (loss), before financial expenses and taxes on income | $ | 3,880 | $ | 3,536 | $ | (1,377 | ) | $ | 6,039 | |||||||
Financial expenses, net | (1,667 | ) | ||||||||||||||
Taxes on income | (1,553 | ) | ||||||||||||||
Net income | $ | 2,819 |
Year ended December 31, 2018 | ||||||||||||||||
Products | Projects | Eliminations | Total | |||||||||||||
Revenues | $ | 35,169 | $ | 61,119 | $ | (3,686 | ) | $ | 92,602 | |||||||
Depreciation and amortization | $ | 2,273 | $ | 951 | $ | - | $ | 3,224 | ||||||||
Operating income (loss), before financial expenses and taxes on income | $ | 1,425 | $ | 4,356 | $ | (2,026 | ) | $ | 3,755 | |||||||
Financial expenses, net | 1,361 | |||||||||||||||
Taxes on income | (2,072 | ) | ||||||||||||||
Net income | $ | 3,044 |
Year ended December 31, 2017 | ||||||||||||||||||||
Products | Projects | Video and Cyber security | Eliminations | Total | ||||||||||||||||
Revenues | $ | 22,301 | $ | 34,742 | $ | 8,350 | $ | (1,101 | ) | $ | 64,292 | |||||||||
Depreciation and amortization | $ | 614 | $ | 498 | $ | 764 | $ | - | $ | 1,876 | ||||||||||
Operating income (loss), before financial expenses and taxes on income | $ | 242 | $ | 1,762 | $ | (2,830 | ) | $ | (418 | ) | $ | (1,244 | ) | |||||||
Financial expenses, net | (3,961 | ) | ||||||||||||||||||
Taxes on income | (1,695 | ) | ||||||||||||||||||
Net loss | $ | (6,900 | ) |
Year ended December 31, 2016 | ||||||||||||||||||||
Products | Projects | Video and Cyber security | Eliminations | Total | ||||||||||||||||
Revenues | $ | 32,372 | $ | 31,823 | $ | 5,626 | $ | (1,996 | ) | $ | 67,825 | |||||||||
Depreciation and amortization | $ | 632 | $ | 512 | $ | 596 | $ | - | $ | 1,740 | ||||||||||
Operating income (loss), before financial expenses and taxes on income | $ | 5,799 | $ | (163 | ) | $ | (3,383 | ) | $ | (758 | ) | $ | 1,495 | |||||||
Financial expenses, net | (591 | ) | ||||||||||||||||||
Tax benefits, net | 122 | |||||||||||||||||||
Net income | $ | 1,026 |
Year ended December 31, 2018 | ||||||||||||||||
Products | Projects | Video and Cyber security | Total | |||||||||||||
Total long-lived assets | $ | 5,847 | $ | 4,267 | $ | 10,998 | $ | 21,112 |
December 31, 2020 | ||||||||||||
Products | Projects | Total | ||||||||||
Total long-lived assets | $ | 16,489 | $ | 4,469 | $ | 20,958 |
Year ended December 31, 2017 | ||||||||||||||||
Products | Projects | Video and Cyber security | Total | |||||||||||||
Total long-lived assets | $ | 6,374 | $ | 3,460 | $ | 12,879 | $ | 22,713 |
December 31, 2019 | ||||||||||||
Products | Projects | Total | ||||||||||
Total long-lived assets | $ | 16,925 | $ | 4,607 | $ | 21,532 |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Customer A | 25.3 | % | 14.6 | % | 11.9 | % | ||||||
Customer B | 10.9 | % | 10.2 | % | 8.6 | % |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Customer A | - | 5.4 | % | 25.3 | % | |||||||
Customer B | 20.6 | % | 17.2 | % | 10.9 | % |
Year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Israel | $ | 20,860 | $ | 18,975 | $ | 13,577 | ||||||
Europe | 15,490 | 18,896 | 14,021 | |||||||||
North America | 18,316 | 19,713 | 24,324 | |||||||||
South and Latin America | 4,485 | 8,077 | 25,471 | |||||||||
Africa | 13,970 | 11,144 | 7,126 | |||||||||
Others | 8,343 | 10,026 | 8,083 | |||||||||
$ | 81,464 | $ | 86,831 | $ | 92,602 |
Year ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Israel | $ | 13,577 | $ | 9,599 | $ | 8,727 | ||||||
Europe | 14,021 | 11,232 | 8,330 | |||||||||
North America | 24,324 | 15,547 | 23,467 | |||||||||
South and Latin America | 25,471 | 13,152 | 10,364 | |||||||||
Africa | 7,126 | 9,370 | 7,585 | |||||||||
Others | 8,083 | 5,392 | 9,352 | |||||||||
$ | 92,602 | $ | 64,292 | $ | 67,825 |
NOTE 15:- | SEGMENT INFORMATION (Cont.) |
December 31, | December 31, | |||||||||||||||
2018 | 2017 | 2020 | 2019 | |||||||||||||
Israel | $ | 3,720 | $ | 3,996 | $ | 3,701 | $ | 3,641 | ||||||||
Europe | 970 | 1,030 | 1,067 | 914 | ||||||||||||
USA | 2,377 | 2,612 | 1,980 | 2,177 | ||||||||||||
Canada | 13,337 | 14,404 | 13,547 | 13,999 | ||||||||||||
Others | 708 | 671 | 663 | 801 | ||||||||||||
$ | 21,112 | $ | 22,713 | $ | 20,958 | $ | 21,532 |
NOTE | SELECTED STATEMENTS OF INCOME DATA |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2018 | 2017 | 2016 | 2020 | 2019 | 2018 | |||||||||||||||||||
Financial expenses: | ||||||||||||||||||||||||
Interest on short-term and long-term bank credit and bank charges and long-term debt | $ | (412 | ) | $ | (349 | ) | $ | (299 | ) | $ | (310 | ) | $ | (360 | ) | $ | (412 | ) | ||||||
Realization of foreign currency translation adjustments | - | (64 | ) | - | ||||||||||||||||||||
Foreign exchange loss, net | - | (4,010 | ) | (595 | ) | (1,328 | ) | (1,971 | ) | - | ||||||||||||||
(412 | ) | (4,423 | ) | (894 | ) | (1,638 | ) | (2,331 | ) | (412 | ) | |||||||||||||
Financial income: | ||||||||||||||||||||||||
Interest on short-term and long-term bank deposits | 670 | 462 | 303 | 158 | 664 | 670 | ||||||||||||||||||
Foreign exchange gains, net | 1,103 | - | - | - | - | 1,103 | ||||||||||||||||||
1,773 | 462 | 303 | 158 | 664 | 1,773 | |||||||||||||||||||
Financial income (expenses), net | $ | 1,361 | $ | (3,961 | ) | $ | (591 | ) | $ | (1,480 | ) | $ | (1,667 | ) | $ | 1,361 |
MAGAL SECURITY SYSTEMS LTD. | |||
By: | /s/ Dror Sharon | ||
Name: Dror Sharon | |||
Title: Chief Executive Officer |