Document and Entity Information
Document and Entity Information - shares | 12 Months Ended | |
Dec. 31, 2016 | Mar. 21, 2017 | |
Document and Entity Information [Abstract] | ||
Document Type | 20-F | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2016 | |
Entity Registrant Name | MAGAL SECURITY SYSTEMS LTD | |
Entity Central Index Key | 896,494 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | FY | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 0 | |
Entity Well-known Seasoned Issuer | No | |
Entity Current Reporting Status | Yes |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 19,692 | $ 27,319 |
Short-term bank deposits | 31,036 | 3,055 |
Restricted deposits | 1,809 | 786 |
Trade receivables (net of allowance for doubtful accounts of $ 2,331 and $ 2,064 at December 31, 2015 and 2016, respectively) | 13,702 | 13,706 |
Unbilled accounts receivable | 4,232 | 5,597 |
Other accounts receivable and prepaid expenses (Note 3) | 2,751 | 2,107 |
Inventories (Note 4) | 6,818 | 7,879 |
Total current assets | 80,040 | 60,449 |
LONG-TERM INVESTMENTS AND RECEIVABLES: | ||
Long-term trade receivables | 308 | 617 |
Long-term deposits and restricted bank deposits | 126 | 136 |
Severance pay fund | 1,321 | 1,761 |
Deferred income taxes (Note 12) | 2,114 | 1,055 |
Total long-term investments and receivables | 3,869 | 3,569 |
PROPERTY AND EQUIPMENT, NET (Note 5) | 5,301 | 5,415 |
INTANGIBLE ASSETS, NET (Note 6) | 4,933 | 1,313 |
GOODWILL (Note 7) | 11,850 | 4,250 |
Total assets | 105,993 | 74,996 |
CURRENT LIABILITIES: | ||
Trade payables | 4,040 | 3,185 |
Customer advances | 5,602 | 2,520 |
Other accounts payable and accrued expenses (Note 8) | 11,646 | 10,748 |
Total current liabilities | 21,288 | 16,453 |
LONG-TERM LIABILITIES: | ||
Deferred revenues | 472 | |
Deferred income taxes | 167 | 173 |
Accrued severance pay | 2,089 | 2,660 |
Other long-term liabilities | 59 | 15 |
Total long-term liabilities | 2,787 | 2,848 |
COMMITMENTS AND CONTINGENT LIABILITIES (Note 9) | ||
SHAREHOLDERS' EQUITY: | ||
Share capital - Ordinary shares of NIS 1 par value - Authorized: 39,748,000 shares at December 31, 2015 and December 31, 2016; Issued and outstanding: 16,398,872 shares at December 31, 2015 and 22,894,348 shares at December 31, 2016 | 6,679 | 4,968 |
Additional paid-in capital | 93,441 | 69,888 |
Accumulated other comprehensive income (loss) | (1,923) | (1,850) |
Foreign currency translation adjustments (Company's standalone financial statements) | 412 | 406 |
Accumulated deficit | (16,600) | (17,629) |
Total Magal shareholders' equity | 82,009 | 55,783 |
Non-controlling interest | (91) | (88) |
Total shareholders' equity (Note 10) | 81,918 | 55,695 |
Total liabilities and shareholders' equity | $ 105,993 | $ 74,996 |
CONSOLIDATED BALANCE SHEETS (PA
CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) $ in Thousands | Dec. 31, 2016USD ($)shares | Dec. 31, 2016₪ / shares | Dec. 31, 2015USD ($)shares | Dec. 31, 2015₪ / shares |
Statement of Financial Position [Abstract] | ||||
Trade receivables, allowance for doubtful accounts | $ | $ 2,064 | $ 2,331 | ||
Ordinary shares, par value per share | ₪ / shares | ₪ 1 | ₪ 1 | ||
Ordinary shares, shares authorized | 39,748,000 | 39,748,000 | ||
Ordinary shares, shares issued | 22,894,348 | 16,398,872 | ||
Ordinary shares, shares outstanding | 22,894,348 | 16,398,872 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | |||
Revenues | $ 67,825 | $ 63,736 | $ 77,543 |
Cost of revenues | 34,570 | 32,722 | 43,049 |
Gross profit | 33,255 | 31,014 | 34,494 |
Operating expenses: | |||
Research and development, net | 6,779 | 4,814 | 4,604 |
Selling and marketing | 17,536 | 14,785 | 17,130 |
General and administrative | 7,445 | 7,026 | 8,898 |
Impairment of goodwill and intangible assets | 2,439 | ||
Total operating expenses | 31,760 | 26,625 | 33,071 |
Operating income | 1,495 | 4,389 | 1,423 |
Financial income (expenses), net (Note 15) | (591) | 642 | 1,979 |
Income before income taxes | 904 | 5,031 | 3,402 |
Taxes on income (tax benefit) (Note 12) | (122) | 1,923 | 82 |
Net income | 1,026 | 3,108 | 3,320 |
Less - loss attributable to non-controlling interests | 3 | 33 | 90 |
Net income attributable to Magal shareholders' | $ 1,029 | $ 3,141 | $ 3,410 |
Basic income per share | $ 0.06 | $ 0.19 | $ 0.21 |
Diluted income per share | $ 0.06 | $ 0.19 | $ 0.21 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 1,026 | $ 3,108 | $ 3,320 |
Foreign currency translation adjustments | (73) | (3,891) | (1,833) |
Total comprehensive income (loss) | 953 | (783) | 1,487 |
Total comprehensive loss attributable to non-controlling interests | (3) | (33) | (90) |
Total comprehensive income (loss) attributable to Magal shareholders' | $ 956 | $ (750) | $ 1,577 |
STATEMENTS OF CHANGES IN SHAREH
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Ordinary Shares [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income (loss) [Member] | Foreign Currency Translation Adjustment - the Company [Member] | Retained Earnings (accumulated deficit) [Member] | Non-controlling interest [Member] | Total |
Balance at Dec. 31, 2013 | $ 4,901 | $ 68,371 | $ 3,874 | $ 4,589 | $ (24,180) | $ (15) | $ 57,540 |
Balance, shares at Dec. 31, 2013 | 16,147,522 | ||||||
Issuance of shares upon exercise of employee stock options | $ 34 | 430 | 464 | ||||
Issuance of shares upon exercise of employee stock options, shares | 121,500 | ||||||
Stock-based compensation | 373 | 373 | |||||
Foreign currency translation adjustments - the Company | (3,957) | (3,957) | |||||
Issue of shares to non-controlling interests | 50 | 50 | |||||
Comprehensive income (loss): | |||||||
Net income (loss) | 3,410 | (90) | 3,320 | ||||
Foreign currency translation adjustments | (1,833) | (1,833) | |||||
Balance at Dec. 31, 2014 | $ 4,935 | 69,174 | 2,041 | 632 | (20,770) | (55) | $ 55,957 |
Balance, shares at Dec. 31, 2014 | 16,269,022 | 16,269,022 | |||||
Issuance of shares upon exercise of employee stock options | $ 33 | 471 | $ 504 | ||||
Issuance of shares upon exercise of employee stock options, shares | 129,850 | ||||||
Stock-based compensation | 243 | 243 | |||||
Foreign currency translation adjustments - the Company | (226) | (226) | |||||
Comprehensive income (loss): | |||||||
Net income (loss) | 3,141 | (33) | 3,108 | ||||
Foreign currency translation adjustments | (3,891) | (3,891) | |||||
Balance at Dec. 31, 2015 | $ 4,968 | 69,888 | (1,850) | 406 | (17,629) | (88) | $ 55,695 |
Balance, shares at Dec. 31, 2015 | 16,398,872 | 16,398,872 | |||||
Issuance of share capital, net (Note 10b) | $ 1,626 | 21,991 | $ 23,617 | ||||
Issuance of share capital, net, shares (Note 10b) | 6,170,386 | ||||||
Issuance of shares upon exercise of employee stock options | $ 85 | 1,304 | 1,389 | ||||
Issuance of shares upon exercise of employee stock options, shares | 325,090 | ||||||
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 at Dec. 31, 2016 | $ 6,679 | $ 93,441 | $ (1,923) | $ 412 | $ (16,600) | $ (91) | $ 81,918 |
Balance, shares at Dec. 31, 2016 | 22,894,348 | 22,894,348 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||
Net income | $ 1,026 | $ 3,108 | $ 3,320 |
Adjustments required to reconcile net income to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 1,740 | 1,503 | 1,967 |
Impairment of goodwill and intangible assets | 2,439 | ||
Loss (gain) on sale of property and equipment | 5 | 18 | (28) |
Increase in accrued interest and exchange differences on short-term and other long-term liabilities | (57) | (218) | (673) |
Stock based compensation | 258 | 243 | 373 |
Decrease (increase) in trade receivables, net | 1,487 | 6,261 | (9,936) |
Decrease (increase) in unbilled accounts receivable | 1,395 | (1,570) | (1,928) |
Decrease (increase) in other accounts receivable and prepaid expenses | 221 | (151) | 235 |
Decrease (increase) in inventories | 1,200 | (635) | (88) |
Increase in deferred income taxes | (1,722) | (51) | (943) |
Decrease (increase) in long-term trade receivables | 319 | (387) | 416 |
Increase (decrease) in trade payables | 857 | (2,934) | 2,666 |
Increase (decrease) in other accounts payable and accrued expenses and deferred revenues | (1,010) | (483) | 3,065 |
Increase (decrease) in customer advances | 3,351 | 1,385 | (2,740) |
Accrued severance pay, net | (137) | (631) | 145 |
Net cash provided by (used in) operating activities | 8,933 | 5,458 | (1,710) |
Cash flows from investing activities: | |||
Investment in short-term deposits | (27,868) | (592) | (27,291) |
Proceeds from sale of short-term bank deposits | 5,777 | 25,371 | |
Release of long-term bank deposits and restricted deposit | 13 | 1,985 | 2,822 |
Investment in restricted deposit | (1,031) | ||
Proceeds from sale of property and equipment | 93 | 104 | 81 |
Purchase of property and equipment | (797) | (876) | (737) |
Investment in know-how and patents | (31) | (1) | (14) |
Payments for acquisition of Aimetis, net of cash acquired (1) | (12,113) | ||
Payments for acquisition of a fiber company, net of cash acquired (2) | (3,875) | ||
Net cash provided by (used in) investing activities | (41,734) | 6,397 | (3,643) |
Cash flows from financing activities: | |||
Proceeds from issuance of shares, net of issuance costs of $ 201 | 23,617 | ||
Short-term bank credit, net | (2,573) | (2,795) | |
Principal payment of long-term bank loans | (1,899) | (502) | |
Proceeds from issuance of shares upon exercise of options to employees | 1,389 | 504 | 464 |
Issue of shares to non-controlling interests | 50 | ||
Net cash provided by (used in) financing activities | 25,006 | (3,968) | (2,783) |
Effect of exchange rate changes on cash and cash equivalents | 168 | (2,170) | (2,497) |
Increase (decrease) in cash and cash equivalents | (7,627) | 5,717 | (10,633) |
Cash and cash equivalents at the beginning of the year | 27,319 | 21,602 | 32,235 |
Cash and cash equivalents at the end of the year | 19,692 | 27,319 | 21,602 |
Cash paid during the year for: | |||
Interest | 27 | 116 | 166 |
Income taxes | $ 1,677 | $ 753 | $ 516 |
CONSOLIDATED STATEMENTS OF CAS8
CONSOLIDATED STATEMENTS OF CASH FLOWS (PARENTHETICAL) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net fair value of assets acquired and liabilities assumed of the company at the date of acquisition: | |||
Total payments for business acquisitions of Aimetis, net of cash acquired | $ 12,113 | ||
Total payments for acquisition of a fiber company, net of cash acquired | 3,875 | ||
Aimetis [Member] | |||
Net fair value of assets acquired and liabilities assumed of the company at the date of acquisition: | |||
Net assets (liabilities) (excluding cash and cash equivalents) | (293) | ||
Intangible assets | 4,520 | ||
Adjustment to deferred revenue | 671 | ||
Contingent consideration | (82) | ||
Deferred tax liability, net | (562) | ||
Deferred tax assets | |||
Goodwill | 7,859 | ||
Total payments for business acquisitions of Aimetis, net of cash acquired | 12,113 | ||
Aimetis [Member] | Technology [Member] | |||
Net fair value of assets acquired and liabilities assumed of the company at the date of acquisition: | |||
Intangible assets | 3,759 | ||
Aimetis [Member] | Customer Relationships [Member] | |||
Net fair value of assets acquired and liabilities assumed of the company at the date of acquisition: | |||
Intangible assets | 761 | ||
Fiber Company [Member] | |||
Net fair value of assets acquired and liabilities assumed of the company at the date of acquisition: | |||
Net assets (liabilities) (excluding cash and cash equivalents) | 410 | ||
Intangible assets | 2,050 | ||
Deferred tax liability, net | (819) | ||
Deferred tax assets | 474 | ||
Goodwill | 1,760 | ||
Total payments for acquisition of a fiber company, net of cash acquired | 3,875 | ||
Fiber Company [Member] | Technology [Member] | |||
Net fair value of assets acquired and liabilities assumed of the company at the date of acquisition: | |||
Intangible assets | 1,337 | ||
Fiber Company [Member] | Customer Relationships [Member] | |||
Net fair value of assets acquired and liabilities assumed of the company at the date of acquisition: | |||
Intangible assets | 315 | ||
Fiber Company [Member] | Backlog [Member] | |||
Net fair value of assets acquired and liabilities assumed of the company at the date of acquisition: | |||
Intangible assets | $ 398 |
GENERAL
GENERAL | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GENERAL | NOTE 1:- GENERAL a. General: Magal Security Systems Ltd. ("the Parent Company" or "Magal") and its subsidiaries (together - "the Company") is a leading international provider of solutions and products for physical and video security solutions, as well as site management. Over the past 45 years, the Company has delivered its products as well as tailor-made security solutions and turnkey projects to customers in over 80 countries under some of the most challenging conditions. The Company offers comprehensive integrated solutions for critical sites, which leverage its broad portfolio of homegrown PIDS (Perimeter Intrusion Detection Systems), advanced VMS (Video Management Software) with native IVA (Intelligent Video Analytics) security solutions. On September 30, 2016, the Parent Company completed rights offering according to which it distributed to all holders of its ordinary shares at no charge, subscription rights to purchase up to an aggregate of 6,170,386 Ordinary shares. The rights offering was fully subscribed for and the Parent Company received net proceeds of approximately $23,617 after deducting issuance expenses related to the rights offering of approximately $201. On October 1, 2014, FIMI Opportunity Fund ("FIMI"), completed the purchase of approximately 40% of Magal's outstanding shares from Ki Corporation Limited, a Company beneficially owned by Mr. Nathan Kirsh. Following the closing of the transaction, FIMI is the largest shareholder of Magal. b. 2016 Acquisition: On April 1, 2016 (the “Closing Date”), a wholly-owned subsidiary of the Parent Company, completed the acquisition of all of the outstanding ordinary shares of Aimetis Corp. (“Aimetis”), a corporation incorporated under the laws of Canada for total consideration of $ 14,469 consisting of $14,387 in cash and performance-based contingent payments ("Earn-out") in a total of up to $ 844. The Earn-out payments were measured, by using the Monte Carlo Simulation of the triangular model, at fair value at the Closing Date in the amount of $82. Since the performance conditions have not been met, the liability of $82 was eliminated, and the respective amount was included as a reduction of general and administrative expenses in the statement of operations. In addition, a retention in amount of $844 will be paid subject to continuous employment with Aimetis during the period of 13 months following the closing date, of two of its executive employees. The expense is recognized on a linear basis. Aimetis specializes in advanced video analytics software and intelligent IP video management software (VMS). The acquisition adds product portfolio complementary to the Group's large portfolio of perimeter intrusion detection systems (PIDS), adding a video surveillance offering with unmatched solutions for outdoor and critical sites, and also strengthening the Company's position in the market. The value of goodwill is attributed to synergies between the Company's portfolio and the acquired company's products and services. The acquisition was accounted for by the acquisition method and accordingly, the purchase price has been allocated according to the estimated fair value of the assets acquired and liabilities assumed of the acquired company. The entire goodwill was assigned to the Video reporting unit within the Video and Cyber security segment. The results of the acquired company's operations have been included in the consolidated financial statements since April 1, 2016. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed: 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 In performing the purchase price allocation, management considered, among other factors, analyses of historical financial performance, highest and best use of the acquired assets and estimates of future performance of the acquired company's business. The fair value of intangible assets was based on market participant approach using an income approach. Intangible assets that are subject to amortization are amortized over their estimated useful lives. For technology, the Company is using the straight-line method and for customer relationships, the Company is using the acceleration method. The following table sets forth the components of intangible assets associated with the acquisition: Fair value Technology $ 3,759 Customer relationships 761 Total intangible assets $ 4,520 Acquisition related costs for the year ended December 31, 2016 amounted to approximately $270 and were included in general and administrative expenses in the statement of operations. The amounts of revenue and net earnings of the acquired company since the acquisition date included in the consolidated income statement for the reporting period are: Year ended December 31, 2016 Revenues $ 5,047 Net loss $ (2,667 ) Unaudited pro forma condensed results of operations: The following represents the unaudited pro forma condensed results of operations for the years ended December 31, 2015 and 2016, assuming that the acquisitions of Aimetis occurred on January 1, 2015. The pro forma information is not necessarily indicative of the results of operations that would have actually occurred had the acquisitions been consummated on those dates, nor does it purport to represent the results of operations for future periods. Year ended December 31, 2015 2016 Unaudited Revenues $ 71,709 $ 69,956 Net income (loss) attributable to Magal shareholders' $ 2,134 $ (73 ) Basic and diluted income (loss) per share $ 0.13 $ 0.00 c. 2014 Acquisition: On April 8, 2014, the Company completed the acquisition of all of the outstanding common stock of a U.S.-based fiber optic sensing technology company for $ 4,286 in cash. The acquired company is a provider of advanced solutions for sensing, security and communication. The company provides advanced and cost effective security solutions for military bases, airports, power plants, water treatment facilities, pipelines, secure data networks, and other critical infrastructures and high-value assets. The acquisition was accounted for by the acquisition method and accordingly, the purchase price has been allocated according to the estimated fair value of the assets acquired and liabilities assumed of the acquired company. The entire goodwill was assigned to the Products segment. The results of the acquired company's operations have been included in the consolidated financial statements since April 8, 2014. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed: Net assets (including cash of $ 411) $ 821 Intangible assets 2,050 Deferred tax assets 474 Deferred tax liabilities (819 ) Goodwill 1,760 Total purchase price $ 4,286 In performing the purchase price allocation, management considered, among other factors, analyses of historical financial performance, highest and best use of the acquired assets and estimates of future performance of the acquired company's business. The fair value of intangible assets was based on market participant approach using an income approach. Intangible assets that are subject to amortization are amortized over their estimated useful lives. For technology and backlog the Company is using the straight-line method and for customer relationships the Company is using the acceleration method. The following table sets forth the components of intangible assets associated with the acquisition and their annual rates of amortization: Fair value Technology $ 1,337 Customer relationships 315 Backlog 398 Total intangible assets $ 2,050 Acquisition related costs for the year ended December 31, 2014 amounted to $ 135 and were included in general and administrative expenses. The amounts of revenue and net earnings of the acquired company since the acquisition date included in the consolidated income statement for the reporting period are: Year ended December 31, 2014 Revenues $ 3,763 Net income $ 733 Unaudited pro forma condensed results of operations: The following represents the unaudited pro forma condensed results of operations for the year ended December 31, 2014, assuming that the acquisitions of the Fiber Company occurred on January 1, 2013. The pro forma information is not necessarily indicative of the results of operations that would have actually occurred had the acquisitions been consummated on those dates, nor does it purport to represent the results of operations for future periods. Year ended December 31, 2014 Unaudited Revenues $ 77,999 Net income attributable to Magal shareholders' $ 3,156 Basic and diluted income per share $ 0.19 d. During 2014, the Company faced a significant decrease in its legacy Cyber activities. Therefore, the Company concluded that an impairment test for the goodwill and intangible assets attributable to this activity was required during the fourth quarter of 2014. As a result, in the fourth quarter of 2014, the Company recorded a non-cash impairment charge with respect to goodwill and intangible assets as follows: Goodwill – $ 2,114 (see also Note 2k and 7) and Intangible assets – $ 325 (see also Note 2i and 6). |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES 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. a. Use of estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The most significant assumptions are employed in estimates used in determining values of goodwill and identifiable intangible assets, revenue recognition, allowances for doubtful debts, inventory write-offs, warranty provision, tax assets and tax positions, legal contingencies, and stock-based compensation costs. Actual results could differ from those estimates. b. Financial statements in U.S. dollars: The Company's revenues are generated mainly in NIS, U.S. dollars, Mexican Pesos and Euros. In addition, most of the Parent Company's costs are incurred in NIS. The Company's management believes that the NIS is the primary currency of the economic environment in which the Company operates. In accordance with U.S. Securities and Exchange Commission Regulation S-X, Rule 3-20, the Company has determined its reporting currency to be the U. S. dollar. The measurement process of Rule 3-20 is conceptually consistent with that of ASC 830. Therefore, the functional currency of the Company is the NIS and its reporting currency is the U.S. dollar. The functional currency of the Company's foreign subsidiaries is the local currency in which each subsidiary operates. ASC 830, "Foreign Currency Matters" sets the standards for translating foreign currency financial statements of consolidated subsidiaries. The first step in the translation process is to identify the functional currency for each entity included in the financial statements. The accounts of each entity are then measured in its functional currency. All transaction gains and losses from the measurement of monetary balance sheet items are reflected in the statement of operations as financial income or expenses, as appropriate. After the measurement process is complete the financial statements are translated into the reporting currency, which is the U.S. dollar, using the current rate method. Equity accounts are translated using historical exchange rates. All other balance sheet accounts are translated using the exchange rates in effect at the balance sheet date. Statement of operations amounts have been translated using the average exchange rate for the year. The resulting translation adjustments are reported as a component of shareholders' equity in accumulated other comprehensive income (loss). c. Principles of consolidation: The consolidated financial statements include the accounts of the Parent Company and its subsidiaries. Intercompany transactions and balances including profits from intercompany sales not yet realized outside the Company, have been eliminated upon consolidation. Changes in the Parent Company's ownership interest with no change of control are treated as equity transactions, rather than step acquisitions or dilution gains or losses. Non-controlling interests in subsidiaries represent the equity in subsidiaries not attributable, directly or indirectly, to a parent. Non-controlling interests are presented in equity separately from the equity attributable to the equity holders of the Company. Profit or loss and components of other comprehensive income are attributed to the Company and to non-controlling interests. Losses are attributed to non-controlling interests even if they result in a negative balance of non-controlling interests in the consolidated statement of financial position. d. Cash equivalents: Cash equivalents are short-term highly liquid investments that are readily convertible into cash with original maturities of three months or less at the date acquired. e. Short-term and long-term bank deposits: Short-term bank deposits are deposits with maturities of more than three months and less than one year, and are presented at their cost. A bank deposit with a maturity of more than one year is included in long-term bank deposits, and presented at cost. f. Inventories: Inventories are stated at the lower of cost or market value. The Company periodically evaluates the inventory quantities on hand relative to historical and projected sales volumes, current and historical selling prices and contractual obligations to maintain certain levels of parts. Based on these evaluations, inventory write-offs are provided to cover risks arising from slow-moving items, discontinued products, excess inventories, market prices lower than cost and adjusted revenue forecasts. Cost is determined as follows: 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 cost, representing allocable operating overhead expenses and manufacturing costs. During the years ended December 31, 2014, 2015 and 2016, the Company recorded inventory write-offs in the amounts of $ 379, $ 465 and $ 226, respectively. Such write-offs were included in cost of revenues. g. Long-term trade receivables: Long-term trade and other receivables with long term payment terms are recorded at their estimated present values. h. Property and equipment: Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets at the following annual rates: % 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 i. Intangible assets: Intangible assets are comprised of patents, acquired technology, customer relations and backlog. Intangible assets are amortized over their useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up, in accordance with ASC 350, "Intangibles - Goodwill and Other." Intangible assets were amortized based on the straight-line method or acceleration method, at the following weighted average annual rates: % Patents 10 Technology 12.5-20 Customer relationships 10.3-25 Backlog 100 During 2014, the Company recorded an impairment charge for intangible assets allocated to the reporting unit within the Cyber security segment in the amount of $ 325, which was recorded as part of the impairment of goodwill and intangible assets in the statements of operations (see Note 6). During the years ended December 31, 2015 and 2016, the Company did not record any impairment charges relate to its intangible assets. j. Impairment of long-lived assets: The Company's long-lived assets and certain identifiable intangibles are reviewed for impairment in accordance with ASC 360, "Property, Plant, and Equipment" whenever events or changes in circumstances indicate that the carrying amount of a group of assets may not be recoverable. Recoverability of a group of assets to be held and used is measured by a comparison of the carrying amount of the group to the future undiscounted cash flows expected to be generated by the group. If such group of assets is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. In 2014, 2015 and 2016, the Company did not record any impairment charges attributable to property and equipment. During 2014, the Company recorded an impairment charge for intangible assets allocated to the reporting unit within the Cyber security segment in the amount of $ 325 (see Note 2i). k. Goodwill: Goodwill has been recorded as a result of acquisitions and represents excess of the costs over the net fair value of the assets of the businesses acquired. Goodwill is allocated to three reporting units: one unit within the Products segment and the Cyber security reporting unit and Video reporting unit, both within the Video and Cyber security segment. The Company follows ASC 350, "Intangibles - Goodwill and Other." ASC 350 requires goodwill to be tested for impairment, at the reporting unit level. ASC 350 allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. If the qualitative assessment does not result in a more likely than not indication of impairment, no further impairment testing is required. If it does result in a more likely than not indication of impairment, the two-step impairment test is performed. Alternatively, ASC 350 permits an entity to bypass the qualitative assessment for any reporting unit and proceed directly to performing the first step of the goodwill impairment test. The Company elects to perform an annual impairment test of goodwill as of December 31 of each year, or more frequently if impairment indicators are present. ASC 350 prescribes a two phase process for impairment testing of goodwill. The first phase screens for impairment, while the second phase (if necessary) measures impairment. In the first phase of impairment testing, goodwill attributable to each of the reporting units is tested for impairment by comparing the fair value of each reporting unit with its carrying value. If the carrying value of the reporting unit exceeds its fair value, the second phase is then performed. The second phase of the goodwill impairment test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. Fair value is determined using discounted cash flows, based on the income approach, as the Company believes that this approach best approximates the reporting unit's fair value at this time. Significant estimates used in the methodologies include estimates of future cash flows, future short-term and long-term growth rates and weighted average cost of capital for each of the reporting units. Goodwill annual impairment test for the Products segment: The material assumptions used for the goodwill annual impairment test for the Products segment, according to the income approach for 2016 were five years of projected net cash flows, a weighted average cost of capital rate of 14% and a long-term growth rate of 3%. The Company considered historical rates and current market conditions when determining the discount and growth rates to use in its analyses. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for its goodwill. As required by ASC 820, "Fair Value Measurements and Disclosures," the Company applies assumptions that marketplace participants would consider in determining the fair value of its reporting unit. During the years ended December 31, 2014, 2015 and 2016, the Company did not record any impairment charges relates to the goodwill allocated to the reporting units within the Products segment. Goodwill annual impairment test for the Cyber security reporting unit within the Video and Cyber security segment: The material assumptions used for the goodwill annual impairment test for the Cyber security segment, according to the income approach for 2016 were five years of projected net cash flows, a weighted average cost of capital rate of 17% and a long-term growth rate of 3%. The Company considered current market conditions when determining the discount and growth rates to use in its analyses. As required by ASC 820, "Fair Value Measurements and Disclosures," the Company applies assumptions that marketplace participants would consider in determining the fair value of its reporting unit. In 2014, the first step which used the DCF approach to measure the fair value of the reporting unit within the Cyber security segment indicated that the carrying amount of such reporting unit, including goodwill, exceeded its fair value. The second step was then conducted in order to measure the amount of impairment loss, by means of a comparison between the implied fair value of the goodwill and the carrying amount of the goodwill. In the second step, the Company assigned the fair value of the reporting unit within the Cyber security segment, as determined in the first step, to the reporting unit's individual assets and liabilities, including intangible assets. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities represented the amount of the implied fair value of goodwill. The carrying amount of the goodwill over its implied fair value represented an impairment loss of goodwill in the amount of $ 2,114 which was recorded as part of the impairment of goodwill and intangible assets in the statements of operations. During the years ended December 31, 2015 and 2016, the Company did not record any impairment charges relates to the goodwill allocated to the Cyber security reporting unit within the Video and Cyber security segment. Goodwill annual impairment test for the Video reporting unit within the Video and Cyber security segment: The material assumptions used for the goodwill annual impairment test for the Video reporting unit, according to the income approach for 2016 were five years of projected net cash flows, a weighted average cost of capital rate of 16% and a long-term growth rate of 3%. The Company considered historical rates and current market conditions when determining the discount and growth rates to use in its analyses. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for its goodwill. As required by ASC 820, "Fair Value Measurements and Disclosures," the Company applies assumptions that marketplace participants would consider in determining the fair value of its reporting unit. During the year ended December 31, 2016, the Company did not record any impairment charges relates to the goodwill allocated to the Video reporting unit within the Video and Cyber security segment. l. Business combinations: The Company accounts for business combinations in accordance with ASC No. 805, "Business Combinations". ASC No. 805 requires recognition of assets acquired, liabilities assumed, and any non-controlling interest at the acquisition date, measured at their fair values as of that date. Any excess of the fair value of net assets acquired over purchase price and any subsequent changes in estimated contingencies are to be recorded in consolidated statements of operations. Acquisition related costs are expensed in the statement of operations in the period incurred. m. Revenue recognition: The Company generates its revenues mainly from (1) installation of comprehensive security systems for which revenues are generated from long-term fixed price contracts; (2) sales of security products; (3) services and maintenance, which are performed either on a fixed-price basis or as time-and-materials based contracts; and (4) software license fees. Revenues from installation of comprehensive security systems are generated from fixed-price contracts according to which the time between the signing of the contract and the final customer acceptance is usually over one year. Such contracts require significant customization for each customer's specific needs and, as such, revenues from this type of contract are recognized in accordance with ASC 605-35, "Revenue Recognition -Construction-Type and Production-Type Projects," using contract accounting on a percentage of completion method. Accounting for long-term contracts using the percentage-of-completion method stipulates that revenue and expense are recognized throughout the life of the contract, even though the project is not completed and the purchaser does not have possession of the project. Percentage of completion is calculated based on the "Input Method." Project costs include materials purchased to produce the system, related labor and overhead expenses and subcontractor's costs. The percentage to completion is measured by monitoring costs and efforts devoted using records of actual costs incurred to date in the project compared to the total estimated project requirement, which corresponds to the costs related to earned revenues. The amounts of revenues recognized are based on the total fees under the agreements and the percentage to completion achieved. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are first determined, in the amount of the estimated loss on the entire contract. Estimated gross profit or loss from long-term contracts may change due to changes in estimates resulting from differences between actual performance and original forecasts. Such changes in estimated gross profit are recorded in results of operations when they are reasonably determinable by management, on a cumulative catch-up basis. The Company believes that the use of the percentage of completion method is appropriate as the Company has the ability to make reasonably dependable estimates of the extent of progress towards completion, contract revenues and contract costs. In addition, contracts executed include provisions that clearly specify the enforceable rights regarding services to be provided and received by the parties to the contracts, the consideration to be exchanged and the manner and the terms of settlement, including in cases of termination for convenience. In all cases the Company expects to perform its contractual obligations and its customers are expected to satisfy their obligations under the contract. Fees are payable upon completion of agreed upon milestones and subject to customer acceptance. Amounts of revenues recognized in advance of contractual billing are recorded as unbilled accounts receivable. The period between most instances of advanced recognition of revenues and the customers' billing generally ranges between one to six months. The Company sells security products to customers according to customer orders without installation work. The customers do not have a right to return the products. Revenues from security product sales are recognized in accordance with Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition in Financial Statements," when delivery has occurred, persuasive evidence of an agreement exists, the vendor's fee is fixed or determinable, no further obligation exists and collectability is probable. Services and maintenance are performed under either fixed-price or time-and-materials based contracts. Under fixed-price contracts, the Company agrees to perform certain work for a fixed price. Under time-and-materials contracts, the Company is reimbursed for labor hours at negotiated hourly billing rates and for materials. Such service contracts are not in the scope of ASC 605-35 and, accordingly, related revenues are recognized in accordance with SAB No. 104, as those services are performed or over the term of the related agreements provided that, an evidence of an arrangement has been obtained, fees are fixed or determinable and collectability is reasonably assured. The Company generates revenues from the sales of its software products user licenses as well as from maintenance, support, consulting and training services. The Company grants its products licenses primarily through its distributors, resellers and value added resellers ("VARs"), through its sales representatives and indirectly through original equipment manufacturers ("OEMs"). The end customers, OEMs, distributors, resellers or VARs, as the case may be, are considered to be end users for the purposes of revenue recognition. The Company accounts for software sales in accordance with ASC 985-605, "Software Revenue Recognition" ("ASC 985-605"). Revenue from license fees and services are recognized when persuasive evidence of an arrangement exists, delivery of the product has occurred or the services have been rendered, the fee is fixed or determinable and collectability is probable. The Company usually does not grant a right of return to its customers. As required by ASC 985-605, the Company determines the value of the software component of its multiple-element arrangements using the residual method when vendor specific objective evidence ("VSOE") of fair value exists for all the undelivered elements of the arrangement. VSOE is based on the price charged when an element is sold separately or renewed. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is allocated to the delivered elements and is recognized as revenue. Maintenance and support agreements provide customers with rights to unspecified software product updates, if and when available. These services grant the customers on line and telephone access to technical support personnel during the term of the service. The Company recognizes maintenance and support services revenues ratably over the term of the agreement, usually one year. Arrangements for the sale of software products that include consulting and training services are evaluated to determine whether those services are essential to the functionality of other delivered elements of the arrangement. The Company determined that these services are not considered essential to the functionality of other elements of the arrangement. Therefore, the respective revenues from these services are recognized as a separate element of the arrangement. Service revenues are recognized as the services are performed. Deferred revenue includes unearned amounts under installation services, service contracts and maintenance agreements. n. Accounting for stock-based compensation: The Company accounts for stock-based compensation in accordance with ASC 718, "Compensation-Stock Compensation". ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company's consolidated income statement. The Company recognizes compensation expenses for the value of its awards, which have graded vesting, based on the accelerated attribution method over the vesting period, net of estimated forfeitures. Estimated forfeitures are based on actual historical pre-vesting forfeitures. During the years ended December 31, 2014, 2015 and 2016, the Company recognized stock-based compensation expenses related to employee stock options in the amounts of $ 373, $ 243 and $ 258, respectively . The Company estimates the fair value of stock options granted under ASC 718 using the Binomial model. The Binomial model for option pricing requires a number of assumptions, of which the most significant are the suboptimal exercise factor and expected stock price volatility. The suboptimal exercise factor is estimated using historical option exercise information. The suboptimal exercise factor is the ratio by which the stock price must increase over the exercise price before employees are expected to exercise their stock options. Expected volatility is based upon actual historical stock price movements and was calculated as of the grant dates for different periods, since the Binomial model can be used for different expected volatilities for different periods. The risk-free interest rate is based on the yield from U.S. Treasury zero-coupon bonds with an equivalent term to the contractual term of the options. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. Estimated forfeitures are based on actual historical pre-vesting forfeitures. The following assumptions were used in the Binomial option pricing model for the years ended December 31, 2014, 2015 and 2016: 2014 2015 2016 Dividend yield 0% 0% 0% Expected volatility 39.34%-44.91% 36.86%-50.05% 27.72%-46.02% Risk-free interest 0.10%-1.90% 0.24%-2.16% 0.61%-1.59% Contractual term 4-6 years 4-7 years 5-7 years Forfeiture rate 10% 10% 10% Suboptimal exercise multiple 1.5 1.41 1.41 o. Research and development costs: Research and development costs incurred in the process of developing product improvements or new products, are charged to expenses as incurred. p. Warranty costs: The Company provides a warranty for up to 24 months at no extra charge. The Company estimates the costs that may be incurred under its warranty and records a liability in the amount of such costs at the time product revenue is recognized in accordance with ASC 450, "Contingencies." Factors that affect the Company's warranty liability include the number of units, historical and anticipated rates of warranty claims and cost per claim. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. The following table provides the detail of the change in the Company's warranty accrual, which is a component of other accrued liabilities on the consolidated balance sheets for the years ended December 31, 2015 and 2016: December 31, 2015 2016 Warranty provision, beginning of year $ 1,319 $ 1,213 Charged to costs and expenses relating to new sales 709 452 Costs of warranties granted (723 ) (456 ) Foreign currency translation adjustments (92 ) (12 ) Warranty provision, end of year $ 1,213 $ 1,197 q. Net earnings per share: Basic net earnings per share are computed based on the weighted average number of ordinary shares outstanding during each year. Diluted net earnings per share is computed based on the weighted average number of ordinary shares outstanding during each year, plus dilutive potential ordinary shares considered outstanding during the year, in accordance with ASC 260, "Earnings Per Share." Certain of the Company's outstanding stock options have been excluded from the calculation of the diluted earnings per share because such securities are anti-dilutive. The total weighted average number of the Company's ordinary shares related to the outstanding options excluded from the calculations of diluted earnings per share was 871,304 shares, 712,391 shares and 559,250 shares for the years ended December 31, 2014, 2015 and 2016, respectively. r. Concentrations of credit risk: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, short-term and long-term bank deposits, trade receivables, unbilled accounts receivable, long-term trade receivables and long-term loans. Of the Company's cash and cash equivalents and short-term and restricted bank deposits at December 31, 2016, $ 43,430 was invested in major Israeli and U.S. banks, and approximately $ 9,107 was invested in other banks, mainly with the Royal Bank of Canada, BBVA Bankcomer, Deutsche Bank and La Caixa. Cash and cash equivalents in the U.S. may be in excess of insured limits and are not insured in other jurisdictions. Generally these deposits may be redeemed upon demand and therefore, bear low risk. The short-term and long-term trade receivables of the Company, as well as the unbilled accounts receivable, are primarily derived from sales to large and solid organizations and governmental authorities located mainly in Israel, the U.S., Canada, Mexico and Europe. The Company performs ongoing credit evaluations of its customers and to date has not experienced any material losses. An allowance for doubtful accounts is determined with respect to those amounts that the Company has determined to be doubtful of collection and in accordance with an aging policy. In certain circumstances, the Company may require letters of credit, other collateral or additional guarantees. Changes in the Company's allowance for doubtful accounts during the three years period ended December 31, 2016 are as follows: Year ended December 31, 2014 2015 2016 Balance at the beginning of the year $ 809 $ 1,802 $ 2,331 Doubtful debt expenses during the year 1,159 749 429 Customers write-offs/collection during the year, net (17 ) (185 ) (706 ) Exchange rate (149 ) (35 ) 10 $ 1,802 $ 2,331 $ 2,064 As of December 31, 2016, the Company has no significant off-balance sheet concentrations of credit risk, such as foreign exchange contracts or foreign hedging arrangements. s. Income taxes: The Company accounts for income taxes in accordance with ASC 740, "Income Taxes." This ASC prescribes the use of the liability method whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. The Company adopted an amendment to ASC 740, "Income Taxes". The amendment clarifies the accounting for uncertainties in income taxes by establishing minimum standards for the recognition and measurement of tax positions taken or expected to be taken in a tax return. Under the requirements of ASC 740, the Company must review all of its tax positions and make a determination as to whether its position is more-likely-than-not to be sustained upon examination by regulatory authorities. If a tax position meets the more-likely-than-not standard, then the related tax benefit is measured based on a cumulative probability analysis of the amount that is more-likely-than-not to be realized upon ultimate settlement or disposition of the underlying issue. In the years ended December 31, 2014, 2015 and 2016, the Company recorded tax expenses (income) in connection to uncertainties in income taxes of $ 55, $ 147 and $ (230) respectively. t. Severance pay: The Company's liability for its Israeli employees severance pay is calculated pursuant to Israel's Severance Pay Law based on the most recent salary of the employees multiplied by the number of years of employment, as of the balance sheet date (the "Shut Down Method"). Employees are entitled to one month's salary for each year of employment or a portion thereof. The Company's liability for its employees in Israel is fully provided by monthly deposits with insurance policies and by an accrual. The value of these policies is recorded as an asset in the Company's balance sheet. The deposited funds include profits accumulated up to balance sheet date. The deposited funds may be withdrawn only upon the fulfillment of the obligation pursuant to Israel's Severance Pay Law or labor agreements. The value of the deposited funds is based on the cash surrender value of these policies and includes immaterial profits. On December 31, 2007, the then Chairman of the Company's Board of Directors, retired from his position. Pursuant to his retirement agreement, the retired Chairman is entitled to receive certain perquisites from the Company for the rest of his life. As of December 31, 2016, the actuarial value of these perquisites is estimated at approximately $ 632. This provision was included as part of accrued severance pay. Severance expenses for the years ended December 31, 2014, 2015 and 2016, amounted to approximately $ 1,009, $ 245 and $ 1,126, respectively. The Company has entered into an agreement with some of its employees implementing Section 14 of the Severance Pay Law and the General Approval of the Labor Minister dated June 30, 1998, issued in accordance with the said Section 14, mandating that upon termination of such employees' employment, all the amounts accrued in their insurance policies will be released to them. The severance pay liabilities and deposits covered by these plans are not reflected in the balance sheet as the severance pay risks have been irrevocably transferred to the severance funds. u. Fair value of financial instruments: The following methods and assumptions were used by the Company in estimating its fair value disclosures for 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 app |
OTHER ACCOUNTS RECEIVABLE AND P
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES | 12 Months Ended |
Dec. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES | NOTE 3:- OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES December 31, 2015 2016 Government authorities $ 443 $ 325 Employees 13 25 Prepaid expenses 852 1,087 Advances to suppliers 533 1,050 Others 266 264 $ 2,107 $ 2,751 |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 4:- INVENTORIES December 31, 2015 2016 Raw materials $ 1,498 $ 983 Work in progress 1,607 772 Finished products 4,774 5,063 $ 7,879 $ 6,818 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | NOTE 5:- PROPERTY AND EQUIPMENT, NET a. Composition: December 31, 2015 2016 Cost: Land and buildings $ 6,574 $ 6,629 Machinery and equipment 2,566 2,725 Motor vehicles 1,734 1,664 Promotional displays 419 526 Office furniture and equipment 3,455 4,166 Leasehold improvements 521 722 15,269 16,432 Accumulated depreciation: Buildings 3,490 3,742 Machinery and equipment 2,045 2,745 Motor vehicles 852 959 Promotional displays 355 382 Office furniture and equipment 2,791 2,784 Leasehold improvements 321 519 9,854 11,131 Property and equipment, net $ 5,415 $ 5,301 b. Depreciation expenses amounted to $ 1,184, $ 983 and $ 954 for the years ended December 31, 2014, 2015 and 2016, respectively. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
INTANGIBLE ASSETS, NET | NOTE 6:- INTANGIBLE ASSETS, NET a. Composition: December 31, 2015 2016 Cost: Know-how and patents $ 4,076 $ 4,175 Technology 1,789 5,444 Customer relationships 686 1,425 Backlog 708 712 7,259 11,756 Accumulated amortization: Know-how and patents 4,002 4,125 Technology 762 1,337 Customer relationships 475 649 Backlog 707 712 5,946 6,823 Intangible assets , net $ 1,313 $ 4,933 b. Amortization expenses related to intangible assets, not including the impairment of technology and customer relationships amounted to $ 783, $ 520 and $ 786 for the years ended December 31, 2014, 2015 and 2016, respectively. c. Estimated amortization of intangible assets for the years ended: December 31, 2017 $ 890 2018 864 2019 808 2020 775 2021 and thereafter 1,596 $ 4,933 |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2016 | |
GOODWILL [Abstract] | |
GOODWILL | NOTE 7:- GOODWILL Goodwill relates to Products segment and Video and Cyber security segment. Changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2016 are as follows: Products Video and Cyber security Total As of January 1, 2015 $ 3,552 $ 944 $ 4,496 Foreign currency translation adjustments (242 ) (4 ) (246 ) As of December 31, 2015 3,310 940 4,250 Acquisition of Aimetis - 7,859 7,859 Foreign currency translation adjustments (5 ) (254 ) (259 ) As of December 31, 2016 $ 3,305 $ 8,545 $ 11,850 |
OTHER ACCOUNTS PAYABLE AND ACCR
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 8:- OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES December 31, 2015 2016 Employees and payroll accruals $ 3,212 $ 3,167 Accrued expenses 4,949 5,691 Deferred revenues 487 1,273 Government authorities 51 103 Income tax payable and tax provision 1,822 1,150 Others 227 262 $ 10,748 $ 11,646 |
COMMITMENTS AND CONTINGENT LIAB
COMMITMENTS AND CONTINGENT LIABILITIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENT LIABILITIES | NOTE 9:- COMMITMENTS AND CONTINGENT LIABILITIES a. Royalty commitments to the Innovation Authority (formerly the Office of the Chief Scientist) of the Israeli Ministry of Economy , or Innovation Authority Under the research and development agreements between the Company and the Innovation Authority and the Company's Israeli subsidiary and the Innovation Authority and pursuant to applicable laws, the Company and its Israeli subsidiary are required to pay royalties at the rate of 3.5% of revenues derived from sales of products developed with funds provided by the Innovation Authority and ancillary services, up to an amount equal to 100% of the Innovation Authority research and development grants received, linked to the U.S. dollars plus interest on the unpaid amount received based on the 12-month LIBOR rate applicable to U.S. dollar deposits. The obligation to pay these royalties is contingent on actual sales of the products and in the absence of such sales no payment is required. During 2014 and 2015, the Company's Israeli subsidiary received grants amounted to $ 118 and $ 134, respectively, from the Innovation Authority. Following the cancelation of 2015 project, the Company's Israeli subsidiary returned the $ 134 advance grant received in 2015. The Company did not receive any grants from the Innovation Authority in 2016. Royalties paid to the Innovation Authority amounted to $ 83, $ 42 and $ 17 for the years ended December 31, 2014, 2015 and 2016, respectively, which were recorded in cost of revenues. As of December 31, 2016, the Company and its Israeli subsidiary had remaining contingent obligations to pay royalties in the amount of approximately $ 1,764. b. Royalty commitments to a third party: During 2002, the Company entered into a development agreement for planning, developing and manufacturing a security system with a third party. Under the agreement, the Company agreed to pay the third party royalty fees based on a defined formula. As of December 31, 2016, royalty commitments under the agreement amounted to $ 55. c. Lease commitments: The Company rents certain of its facilities and some of its motor vehicles under various operating lease agreements, which expire on various dates, the latest of which is in 2029. Future minimum lease payments under non-cancelable operating lease agreements are as follows: 2017 $ 867 2018 483 2019 323 2020 206 2021 180 2022 and there after 1,080 $ 3,139 Total rent expenses for the years ended December 31, were approximately $ 1,135, $ 1,176 and $ , respectively. d. Guarantees: As of December 31, 2016 and 2015, the Company had credit lines of approximately $ 17,744 and $ 22,829, out of which $ 3,333 and $ 5,744 were utilized for bank performance guarantees and advance payment guarantees and bid bond guarantees from several banks, mainly in Israel and Canada. e. The Company's Canadian subsidiary has undertaken to maintain a general covenant and the following financial ratio and term in respect of its outstanding credit lines: a ratio of total liabilities to tangible net worth of not greater than 0.75:1. As of December 31, 2016, the Company's Canadian subsidiary was in compliance with the ratio and term. f. Restricted deposits: As of December 31, 2016 the Company’s restricted deposits relate mainly to the acquisition of Aimetis and to several projects in order to guarantee the Company's performance under those projects. g. Legal proceedings: 1. On January 11, 2017, the Company was requested by one of its foreign customer's revenue authority The and revenue authority's preliminary review by the internal 2. The Company is subject to legal proceedings arising in the normal course of business. Based on the advice of legal counsel, management believes that these proceedings will not have a material adverse effect on the Company's financial position or results of operations. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | NOTE 10:- SHAREHOLDERS' EQUITY a. Pertinent rights and privileges conferred by Ordinary shares: The Ordinary shares of the Company are listed on the NASDAQ Global Market. The Ordinary shares confer upon their holders the right to receive notice to participate and vote in the general meetings of the Company and the right to receive dividends, if declared. b. Issued and outstanding share capital: 16,398,872 Ordinary shares at December 31, 2015 and 22,894,348 Ordinary shares at December 31, 2016. On September 30, 2016, the Parent Company completed a rights offering of 6,170,386 of the Company's Ordinary shares at a price per share of $ 3.86 and received approximately $ 23,617, net in consideration of the sale. Total expenses related to the rights offering were approximately $201. c. Stock Option Plan: On October 27, 2003, the Company's Board of Directors approved the Company's 2003 Israeli Share Option Plan ("the 2003 Plan"). Under the 2003 Plan, stock options may be periodically granted to employees, directors, officers and consultants of the Company or its subsidiaries in accordance with the decision of the Board of Directors of the Company (or a committee appointed by it). The Board of Directors also has the authority to determine the vesting schedule and exercise price of options granted under the 2003 Plan. In May 2008, the Board of Directors approved an amendment to the 2003 Plan, which was approved by the shareholders in August 2008, which increased On June 23, 2010, the Company's Annual General Meeting approved the Company's 2010 Israeli Share Option Plan, or the 2010 Plan, which authorizes the grant of options to employees, officers, directors and consultants of the Company and its subsidiaries. The ordinary shares that remain available for futures option grants under the 2003 Plan as of the date of the adoption of the 2010 Plan and any ordinary shares that become available in the future under the 2003 Plan as a result of expiration, cancellation or relinquishment of any option currently outstanding under the 2003 Plan will be rolled over to the 2010 Plan. No additional options will be granted under the 2003 Plan. In June 2013, the Company's shareholders approved an increase to the number of ordinary shares available for issuance under the 2010 Plan by an additional 500,000 shares. The 2010 Plan has a term of ten years. As of December 31, 2016, 621,859 Ordinary shares were available for future option grants. A summary of employee option activity under the Company's stock option plans as of December 31, 2016 and changes during the year ended December 31, 2016 are as follows: Number of options Weighted- average exercise price Weighted- average remaining contractual life (in months) Aggregate intrinsic value (in thousands) Outstanding at January 1, 2016 875,250 4.45 40 59 Granted 201,000 4.97 63.9 19 Exercised (325,090 ) 4.27 Forfeited (158,584 ) 4.92 Outstanding at December 31, 2016 592,576 4.6 52.1 277 Vested and expected to vest at December 31, 2016 546,576 4.58 51.4 239 Exercisable at December 31, 2016 58,576 4.05 9.83 60 The weighted-average grant-date fair value of options granted during the years ended December 31, 2014, 2015 and 2016 were $ 0.65, $ 1.56 and $ 1.53, respectively. The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company's closing stock price on the last trading day of the fourth quarter of fiscal 2016 and the exercise price, multiplied by the number of in-the-money options). This amount changes, based on the fair market value of the Company's stock. The total intrinsic value of options exercised for the years ended December 31, 2014, 2015 and 2016 were approximately $198, $162 and $ 300. As of December 31, 2016, there was approximately $ 460 of unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Company's stock option plans. This cost is expected to be recognized over a period of up to 3.75 years. The options outstanding as of December 31, 2016 are follows: Number of options outstanding as of December 31, 2016 Exercise price Weighted average remaining contractual life Number of options exercisable as of December 31, 2016 (In months) 27,500 4.35 1. 94 27,500 20,000 3.53 11.01 20,000 20,076 4.25 37.07 11,076 150,000 4.96 50.47 - 24,000 4.40 53.23 - 174,000 4.15 55.87 - 138,000 5.00 62.89 - 39,000 4.86 67.94 - 592,576 52.1 58,576 e. Warrants: On January 2013, as part of the acquisition of CyberSeal, the Company issued to CyberSeal's former owners warrants to purchase 898,203 of the Company's Ordinary shares at an exercise price of $ 4.16 per share. 50% of the warrants became exercisable on December 31, 2013 and will expire on December 30, 2018. The remaining 50% became exercisable on December 31, 2014 and will expire on December 30, 2019. The $ 1,500 fair value of the warrants was calculated using the Binominal model. The Company recognized the $ 1,500 as part of its additional paid-in capital. The Company granted registration rights to the recipients of the warrants. e. Dividends: Dividends, if any, will be declared and paid in U.S. dollars. Dividends paid to shareholders in Israel will be converted into NIS on the basis of the exchange rate prevailing at the date of payment. The Company has determined that it will not distribute dividends out of tax-exempt profits. |
BASIC AND DILUTED NET EARNINGS
BASIC AND DILUTED NET EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
BASIC AND DILUTED NET EARNINGS PER SHARE | NOTE 11:- BASIC AND DILUTED NET EARNINGS PER SHARE Year ended December 31, 2014 2015 2016 Numerator: Income (loss) attributable to Magal shareholders' $ 3,410 $ 3,141 $ 1,029 Denominator: Denominator for basic net earnings (loss) per share weighted-average number of shares outstanding 16,186,148 16,347,948 17,999,779 Effect of diluting securities: Employee stock options 151,908 62,763 31,654 Denominator for diluted net earnings (loss) per share - adjusted weighted average shares and assumed exercises 16,338,056 16, 410,711 18,031,433 |
TAXES ON INCOME
TAXES ON INCOME | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
TAXES ON INCOME | NOTE 12:- TAXES ON INCOME a. Tax laws applicable to the Group companies: Income Tax (Inflationary Adjustments) Law, 1985: According to the law, until 2007, the results for tax purposes were adjusted for the changes in the Israeli CPI. In February 2008, the "Knesset" (Israeli parliament) passed an amendment to the Income Tax (Inflationary Adjustments) Law, 1985, which limits the scope of the law starting 2008 and thereafter. Since 2008, the results for tax purposes are measured in nominal values, excluding certain adjustments for changes in the Israeli CPI carried out in the period up to December 31, 2007. Adjustments relating to capital gains such as for sale of property (betterment) and securities continue to apply until disposal. Since 2008, the amendment to the law includes, among others, the cancellation of the inflationary additions and deductions and the additional deduction for depreciation (in respect of depreciable assets purchased after the 2007 tax year). The Law for the Encouragement of Capital Investments, 1959: According to the Law, the companies are entitled to various tax benefits by virtue of the "approved enterprise" and/or "beneficiary enterprise" status granted to part of their enterprises, as implied by this Law. The principal benefits by virtue of the Law are: Tax benefits and reduced tax rates: Following the enactment of Amendment No. 60 to the Law, subsequent to April 1, 2005, the income qualifying for tax benefits under the tax benefits track is the taxable income of a company that has met certain conditions as determined by the Law ("a beneficiary company"), and which is derived from an industrial enterprise. In respect of plant expansions executed following Amendment No. 60 to the Law, the benefit period starts at the later of the year elected and the first year the Company earns taxable income provided that 12 years have not passed since the beginning of the year of election. In March 2007, the Company received a pre-ruling from the Israeli Tax Authority for its request for a Beneficiary Enterprise for the elected tax year 2005 ("the 2005 program"), regarding eligibility for benefits under the Amendment. The Company did not obtained any tax benefits from this program. The benefit period of this program terminated on December 31, 2016. Amendment to the Law for the Encouragement of Capital Investments, 1959 (Amendment 68): In December 2010, the "Knesset" (Israeli Parliament) passed the Law for Economic Policy for 2011 and 2012 (Amended Legislation), 2011 ("the Amendment"), which prescribes, among others, amendments in the Law for the Encouragement of Capital Investments, 1959 ("the Law"). The Amendment became effective as of January 1, 2011. According to the Amendment, the benefit tracks in the Law were modified and a flat tax rate applies to the Company's entire preferred income under its status as a privileged company with a preferred enterprise. Commencing from the 2011 tax year, the Company can elect (without possibility of reversal) to apply the Amendment in a certain tax year and from that year and thereafter, it will be subject to the amended tax rates. The tax rates under the Amendment are: 2011 and 2012 - 15% (in development area A - 10%) and in 2013 - 12.5% (in development area A - 7%). After the termination of the benefit period of the 2005 program, the Company will apply the Amendment effective from the 2017 tax year. The Company's Israeli subsidiary applied the Amendment effective from the 2011 tax year. Amendment to the Law for the Encouragement of Capital Investments, 1959 (Amendment 71): On August 5, 2013, the "Knesset" issued the Law for Changing National Priorities (Legislative Amendments for Achieving Budget Targets for 2013 and 2014), 2013 which consists of Amendment 71 to the Law for the Encouragement of Capital Investments ("the Amendment"). According to the Amendment, the tax rate on preferred income form a preferred enterprise in 2014 and thereafter will be 16% (in development area A - 9%). As for changes in tax rates resulting from the enactment of Amendment 73 to the Law, see below. The Amendment also prescribes that any dividends distributed to individuals or foreign residents from the preferred enterprise's earnings as above will be subject to tax at a rate of 20%. Amendment to the Law for the Encouragement of Capital Investments, 1959 (Amendment 73): In December 2016, the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), 2016 which includes Amendment 73 to the Law for the Encouragement of Capital Investments ("the Amendment") was published. According to the Amendment, a preferred enterprise located in development area A will be subject to a tax rate of 7.5% instead of 9% effective from January 1, 2017 and thereafter (the tax rate applicable to preferred enterprises located in other areas remains at 16%). The Amendment also prescribes special tax tracks for technological enterprises, which are subject to rules that are to be issued by the Minister of Finance by March 31, 2017. The new tax tracks under the Amendment are as follows: Technological preferred enterprise - an enterprise for which total consolidated revenues of its parent company and all subsidiaries are less than NIS 10 billion. A technological preferred enterprise, as defined in the Law, which is located in the center of Israel will be subject to tax at a rate of 12% on profits deriving from intellectual property (in development area A - a tax rate of 7.5%). Any dividends distributed to "foreign companies", as defined in the Law, deriving from income from the technological enterprises will be subject to tax at a rate of 4%. Since as of December 31, 2016 definitive criteria to determine the tax benefits had not yet been established, it cannot be concluded that the legislation in respect of technological enterprises had been enacted or substantively enacted as of that date. Accordingly, the above changes in the tax rates relating to technological enterprises were not taken into account in the computation of deferred taxes as of December 31, 2016 Accelerated depreciation: By virtue of the Law, the Company is eligible for deduction of accelerated depreciation on equipment used by the approved enterprise / beneficiary enterprise from the first year of the asset's operation. The Law for the Encouragement of Industry (Taxation), 1969: The Company has the status of an "industrial company", as defined by this law. According to this status and by virtue of regulations published thereunder, the Company is entitled to claim a deduction of accelerated depreciation on equipment used in industrial activities, as determined in the regulations issued under the Inflationary Law. The Company is also entitled to amortize a patent or rights to use a patent or intellectual property that are used in the enterprise's development or advancement, to deduct issuance expenses for shares listed for trading, and to file consolidated financial statements under certain conditions. b. Tax rates applicable to the Group: 1. The Israeli regular corporate tax rate for Israeli companies was 26.5% in 2014 and 2015 and 25% in 2016. In January 2016, the Law for Amending the Income Tax Ordinance (No. 216) (Reduction of Corporate Tax Rate), 2016 was approved, which includes a reduction of the corporate tax rate from 26.5% to 25%, effective from January 1, 2016. In December 2016, the Israeli Parliament approved the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), 2016 which reduces the corporate income tax rate to 24% (instead of 25%) effective from January 1, 2017 and to 23% effective from January 1, 2018. In August 2013, the Law for Changing National Priorities (Legislative Amendments for Achieving Budget Targets for 2013 and 2014), 2013 ("the Budget Law") was enacted. The Law includes, among others, provisions for the taxation of revaluation gains effective from August 1, 2013. The provisions regarding revaluation gains will become effective only after the publication of regulations defining what should be considered as "retained earnings not subject to corporate tax" and regulations that set forth provisions for avoiding double taxation of foreign assets. As of the date of approval of these financial statements, these regulations have not been published. These changes include, among others, increasing the corporate tax rate from 25% to 26.5%, cancelling the reduction in the tax rates applicable to privileged enterprises (9% in development area A and 16% elsewhere) and, in certain cases, increasing the rate of dividend withholding tax within the scope of the Law for the Encouragement of Capital Investments to 20% effective from January 1, 2014. 2. The tax rates of the Company's non-Israeli subsidiaries range between 16%-40%. c. Income taxes on non-Israeli subsidiaries: Non-Israeli subsidiaries are taxed according to the tax laws in their respective country of domicile. Israeli income taxes and foreign withholding taxes were not provided for undistributed earnings of the Company's foreign subsidiaries. The Company's board of directors has determined that the Company will not distribute any amounts of its undistributed earnings as dividends. The Company intends to reinvest these earnings indefinitely in its foreign subsidiaries. Accordingly, no deferred income taxes have been provided. If these earnings were distributed to Israel in the form of dividends or otherwise, the Company would be subject to additional Israeli income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. d. Tax assessments: Final tax assessments: The Company received final tax assessments through the 2014 tax year. The Company's Israeli subsidiary received final tax assessments through the 2012 tax year. The subsidiary in Latin America received final tax assessments for 2010 and 2011 tax years. The remaining subsidiaries have not received final tax assessments since their incorporation, however, the assessments of these subsidiaries are deemed final through the range between 2007-2011 tax years. e. 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, 2014 2015 2016 Income before taxes as reported in the statements of operations $ 3,402 $ 5,031 $ 904 Tax rate 26.5 % 26.5 % 25 % Theoretical tax $ 902 $ 1,333 $ 226 Increase (decrease) in taxes: Non-deductible items 746 211 249 Losses and other items for which a valuation allowance was provided 939 579 977 Realization of carryforward tax losses for which valuation allowance was provided (2,382 ) (587 ) (541 ) Changes in valuation allowance (1,034 ) (567 ) (1,602 ) Tax rate differences in subsidiaries 571 276 236 Provision for uncertain tax positions 55 147 (230 ) Taxes in respect of prior years - 7 79 Tax withheld against which valuation allowance was provided this year 391 671 602 Investment tax credit (160 ) (158 ) (220 ) Other 54 11 102 Taxes on income (tax benefit) in the statements of operations $ 82 $ 1,923 $ (122 ) f. Taxes on income (tax benefit) included in the statements of operations: Year ended December 31, 2014 2015 2016 Current $ 1,024 $ 1,979 $ 1,485 Deferred (942 ) (56 ) (1,607 ) $ 82 $ 1,923 $ (122 ) Domestic $ 295 $ 966 $ 407 Foreign (213 ) 957 (529 ) $ 82 $ 1,923 $ (122 ) g. Deferred income taxes: Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets are as follows: December 31, 2015 2016 Deferred tax assets: Operating loss carry forwards $ 6,178 $ 4,781 Reserves and tax allowances 2,646 2,936 Total deferred taxes before valuation allowance 8,824 7,717 Valuation allowance (7,276 ) (5,603 ) Deferred tax assets, net: 1,548 2,114 Deferred tax liabilities: 666 167 Net deferred tax assets $ 882 $ 1,947 Foreign $ 882 $ 1,947 h. The domestic and foreign components of income (loss) before taxes are as follows: Year ended December 31, 2014 2015 2016 Domestic $ (923 ) $ (1,484 ) $ (1,482 ) Foreign 4,325 6,515 2,386 $ 3,402 $ 5,031 $ 904 i. Net operating carry forward tax losses: The Company has estimated total available carry forward tax losses of $ 3,603 to offset against future taxable income. As of December 31, 2016, the Company recorded a full valuation allowance on these carry forward tax losses due to the uncertainty of their future realization. There is no time limitation for the realization of such tax losses. The Parent Company's subsidiaries have estimated total available carry forward tax losses of $ 14,330, which may be used to offset against future taxable income, for periods ranging between 1 to 20 years. As of December 31, 2016, the Parent Company recorded a partial valuation allowance for its subsidiaries' carry forward tax losses due to the uncertainty of their future realization. Utilization of U.S. net operating losses may be subject to a substantial annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization. j. Uncertain tax positions: As of December 31, 2015 and 2016 balances in respect to ASC 740, "Income Taxes" amounted to $ 893 and $ 663, respectively. A reconciliation of the beginning and ending amount of unrecognized tax positions is as follows: December 31, 2015 2016 Balance at the beginning of the year $ 758 $ 893 Additions based on tax positions taken related to the current year 293 45 Reductions related to settlement of tax matters and limitation (146 ) (275 ) Foreign currency translation adjustments (12 ) - Balance at the end of the year $ 893 $ 663 Substantially all the balance of unrecognized tax benefits, if recognized, would reduce the Company's annual effective tax rate |
BALANCES AND TRANSACTIONS WITH
BALANCES AND TRANSACTIONS WITH RELATED PARTIES | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
BALANCES AND TRANSACTIONS WITH RELATED PARTIES | NOTE 13:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES The Company compensates its Executive Chairman of the Board for services provided to the Company commencing October 1, 2014. The Company pays for his services in addition to the directors' fees paid by the Company to all of its directors: (i) a monthly payment of approximately $4 for time devoted to such position; and (ii) an annual cash bonus of $30 that will be paid only if the Company’s net profit pursuant to its annual audited and consolidated financial statement exceeds $5,000. The annual cash bonus is payable commencing as of the fiscal year 2015 and will be paid, if earned, as set forth in the Compensation Policy. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | NOTE 14:- SEGMENT INFORMATION The Company adopted ASC 280, " " · 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, and · Turnkey Projects segment (Projects) - installation of comprehensive turnkey solutions for which revenues are generated from long-term fixed price contracts, and · Video and Cyber security segment - provides software and hardware products, in the field of Video management and Cyber security, for monitoring, securing, and the active management of network video systems, video analytics, as well as wired, wireless, and fiber optic communication networks. Prior to 2016 this segment consisted of one reporting unit, the Cyber security unit. a. The following data present the revenues, expenditures, assets and other operating data of the Company's operating segments: Year ended December 31, 2014 Products Projects Cyber security Eliminations Total Revenues $ 37,554 $ 39,198 $ 1,329 $ (538 ) $ 77,543 Depreciation and amortization $ 1,006 $ 641 $ 320 $ - $ 1,967 Impairment of goodwill and intangible assets $ - $ - $ 2,439 $ - $ 2,439 Operating income (loss), before financial expenses and taxes on income $ 6,770 $ (148 ) $ (4,995 ) $ (204 ) $ 1,423 Financial income, net (1,979 ) Taxes on income 82 Net income $ 3,320 Year ended December 31, 2015 Products Projects Cyber security Eliminations Total Revenues $ 30,761 $ 34,128 $ 1,596 $ (2,749 ) $ 63,736 Depreciation and amortization $ 787 $ 602 $ 114 $ - $ 1,503 Operating income (loss), before financial expenses and taxes on income $ 6,023 $ 1,095 $ (1,684 ) $ (1,045 ) $ 4,389 Financial income, net (642 ) Taxes on income 1,923 Net income $ 3,108 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, 2015 Products Projects Cyber security Total Total long-lived assets $ 6,641 $ 3,360 $ 977 $ 10,978 Year ended December 31, 2016 Products Projects Video and Cyber security Total Total long-lived assets $ 6,346 $ 3,198 $ 12,540 $ 22,084 Long-live assets includes property and equipment, net, intangible assets, net and goodwill. b. Major customer data (percentage of total revenues): Year ended December 31, 2014 2015 2016 Customer A 14.8 % 13.3 % 8.6 Customer B 6.4 % 18.1 % 11.9 % c. Geographical information: The following is a summary of revenues within geographic areas based on end customer's location and long-lived assets: 1. Revenues: Year ended December 31, 2014 2015 2016 Israel $ 16,525 $ 12,406 $ 8,727 Europe 9,591 7,891 8,330 North America 21,165 17,749 23,467 South and Latin America 8,813 13,443 10,364 Africa 12,393 6,611 7,585 Others 9,056 5,636 9,352 $ 77,543 $ 63,736 $ 67,825 2. Long-lived assets: December 31, 2015 2016 Israel $ 3,889 $ 3,554 Europe 900 923 USA 3,073 2,860 Canada 2,387 14,081 Others 729 666 $ 10,978 $ 22,084 Long-live assets includes property and equipment, net, intangible assets, net and goodwill. |
SELECTED STATEMENTS OF INCOME D
SELECTED STATEMENTS OF INCOME DATA | 12 Months Ended |
Dec. 31, 2016 | |
Other Income and Expenses [Abstract] | |
SELECTED STATEMENTS OF INCOME DATA | NOTE 15:- SELECTED STATEMENTS OF INCOME DATA Financial expenses: Year ended December 31, 2014 2015 2016 Financial expenses: Interest on short-term and long-term bank credit and bank charges and $ ( 493 ) $ ( 381 ) $ (299 ) Foreign exchange loss, net - - (595 ) (493 ) (381 ) (894 ) Financial income: Interest on short-term and long-term bank deposits 141 54 303 Foreign exchange gains, net 2,331 969 - 2,472 1,023 303 Financial income (expenses ), $ 1,979 $ 642 $ (591 ) |
SIGNIFICANT ACCOUNTING POLICI24
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Use of estimates | a. Use of estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The most significant assumptions are employed in estimates used in determining values of goodwill and identifiable intangible assets, revenue recognition, allowances for doubtful debts, inventory write-offs, warranty provision, tax assets and tax positions, legal contingencies, and stock-based compensation costs. Actual results could differ from those estimates. |
Financial statements in U.S. dollars | b. Financial statements in U.S. dollars: The Company's revenues are generated mainly in NIS, U.S. dollars, Mexican Pesos and Euros. In addition, most of the Parent Company's costs are incurred in NIS. The Company's management believes that the NIS is the primary currency of the economic environment in which the Company operates. In accordance with U.S. Securities and Exchange Commission Regulation S-X, Rule 3-20, the Company has determined its reporting currency to be the U. S. dollar. The measurement process of Rule 3-20 is conceptually consistent with that of ASC 830. Therefore, the functional currency of the Company is the NIS and its reporting currency is the U.S. dollar. The functional currency of the Company's foreign subsidiaries is the local currency in which each subsidiary operates. ASC 830, "Foreign Currency Matters" sets the standards for translating foreign currency financial statements of consolidated subsidiaries. The first step in the translation process is to identify the functional currency for each entity included in the financial statements. The accounts of each entity are then measured in its functional currency. All transaction gains and losses from the measurement of monetary balance sheet items are reflected in the statement of operations as financial income or expenses, as appropriate. After the measurement process is complete the financial statements are translated into the reporting currency, which is the U.S. dollar, using the current rate method. Equity accounts are translated using historical exchange rates. All other balance sheet accounts are translated using the exchange rates in effect at the balance sheet date. Statement of operations amounts have been translated using the average exchange rate for the year. The resulting translation adjustments are reported as a component of shareholders' equity in accumulated other comprehensive income (loss). |
Principles of consolidation | c. Principles of consolidation: The consolidated financial statements include the accounts of the Parent Company and its subsidiaries. Intercompany transactions and balances including profits from intercompany sales not yet realized outside the Company, have been eliminated upon consolidation. Changes in the Parent Company's ownership interest with no change of control are treated as equity transactions, rather than step acquisitions or dilution gains or losses. Non-controlling interests in subsidiaries represent the equity in subsidiaries not attributable, directly or indirectly, to a parent. Non-controlling interests are presented in equity separately from the equity attributable to the equity holders of the Company. Profit or loss and components of other comprehensive income are attributed to the Company and to non-controlling interests. Losses are attributed to non-controlling interests even if they result in a negative balance of non-controlling interests in the consolidated statement of financial position. |
Cash equivalents | d. Cash equivalents: Cash equivalents are short-term highly liquid investments that are readily convertible into cash with original maturities of three months or less at the date acquired. |
Short-term and long-term bank deposits | e. Short-term and long-term bank deposits: Short-term bank deposits are deposits with maturities of more than three months and less than one year, and are presented at their cost. A bank deposit with a maturity of more than one year is included in long-term bank deposits, and presented at cost. |
Inventories | f. Inventories: Inventories are stated at the lower of cost or market value. The Company periodically evaluates the inventory quantities on hand relative to historical and projected sales volumes, current and historical selling prices and contractual obligations to maintain certain levels of parts. Based on these evaluations, inventory write-offs are provided to cover risks arising from slow-moving items, discontinued products, excess inventories, market prices lower than cost and adjusted revenue forecasts. Cost is determined as follows: 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 cost, representing allocable operating overhead expenses and manufacturing costs. During the years ended December 31, 2014, 2015 and 2016, the Company recorded inventory write-offs in the amounts of $ 379, $ 465 and $ 226, respectively. Such write-offs were included in cost of revenues. |
Long-term trade receivables | g. Long-term trade receivables: Long-term trade and other receivables with long term payment terms are recorded at their estimated present values. |
Property and equipment | h. Property and equipment: Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets at the following annual rates: % 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 |
Intangible assets | i. Intangible assets: Intangible assets are comprised of patents, acquired technology, customer relations and backlog. Intangible assets are amortized over their useful lives using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up, in accordance with ASC 350, "Intangibles - Goodwill and Other." Intangible assets were amortized based on the straight-line method or acceleration method, at the following weighted average annual rates: % Patents 10 Technology 12.5-20 Customer relationships 10.3-25 Backlog 100 During 2014, the Company recorded an impairment charge for intangible assets allocated to the reporting unit within the Cyber security segment in the amount of $ 325, which was recorded as part of the impairment of goodwill and intangible assets in the statements of operations (see Note 6). During the years ended December 31, 2015 and 2016, the Company did not record any impairment charges relate to its intangible assets. |
Impairment of long-lived assets | j. Impairment of long-lived assets: The Company's long-lived assets and certain identifiable intangibles are reviewed for impairment in accordance with ASC 360, "Property, Plant, and Equipment" whenever events or changes in circumstances indicate that the carrying amount of a group of assets may not be recoverable. Recoverability of a group of assets to be held and used is measured by a comparison of the carrying amount of the group to the future undiscounted cash flows expected to be generated by the group. If such group of assets is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. In 2014, 2015 and 2016, the Company did not record any impairment charges attributable to property and equipment. During 2014, the Company recorded an impairment charge for intangible assets allocated to the reporting unit within the Cyber security segment in the amount of $ 325 (see Note 2i). |
Goodwill | k. Goodwill: Goodwill has been recorded as a result of acquisitions and represents excess of the costs over the net fair value of the assets of the businesses acquired. Goodwill is allocated to three reporting units: one unit within the Products segment and the Cyber security reporting unit and Video reporting unit, both within the Video and Cyber security segment. The Company follows ASC 350, "Intangibles - Goodwill and Other." ASC 350 requires goodwill to be tested for impairment, at the reporting unit level. ASC 350 allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. If the qualitative assessment does not result in a more likely than not indication of impairment, no further impairment testing is required. If it does result in a more likely than not indication of impairment, the two-step impairment test is performed. Alternatively, ASC 350 permits an entity to bypass the qualitative assessment for any reporting unit and proceed directly to performing the first step of the goodwill impairment test. The Company elects to perform an annual impairment test of goodwill as of December 31 of each year, or more frequently if impairment indicators are present. ASC 350 prescribes a two phase process for impairment testing of goodwill. The first phase screens for impairment, while the second phase (if necessary) measures impairment. In the first phase of impairment testing, goodwill attributable to each of the reporting units is tested for impairment by comparing the fair value of each reporting unit with its carrying value. If the carrying value of the reporting unit exceeds its fair value, the second phase is then performed. The second phase of the goodwill impairment test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. Fair value is determined using discounted cash flows, based on the income approach, as the Company believes that this approach best approximates the reporting unit's fair value at this time. Significant estimates used in the methodologies include estimates of future cash flows, future short-term and long-term growth rates and weighted average cost of capital for each of the reporting units. Goodwill annual impairment test for the Products segment: The material assumptions used for the goodwill annual impairment test for the Products segment, according to the income approach for 2016 were five years of projected net cash flows, a weighted average cost of capital rate of 14% and a long-term growth rate of 3%. The Company considered historical rates and current market conditions when determining the discount and growth rates to use in its analyses. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for its goodwill. As required by ASC 820, "Fair Value Measurements and Disclosures," the Company applies assumptions that marketplace participants would consider in determining the fair value of its reporting unit. During the years ended December 31, 2014, 2015 and 2016, the Company did not record any impairment charges relates to the goodwill allocated to the reporting units within the Products segment. Goodwill annual impairment test for the Cyber security reporting unit within the Video and Cyber security segment: The material assumptions used for the goodwill annual impairment test for the Cyber security segment, according to the income approach for 2016 were five years of projected net cash flows, a weighted average cost of capital rate of 17% and a long-term growth rate of 3%. The Company considered current market conditions when determining the discount and growth rates to use in its analyses. As required by ASC 820, "Fair Value Measurements and Disclosures," the Company applies assumptions that marketplace participants would consider in determining the fair value of its reporting unit. In 2014, the first step which used the DCF approach to measure the fair value of the reporting unit within the Cyber security segment indicated that the carrying amount of such reporting unit, including goodwill, exceeded its fair value. The second step was then conducted in order to measure the amount of impairment loss, by means of a comparison between the implied fair value of the goodwill and the carrying amount of the goodwill. In the second step, the Company assigned the fair value of the reporting unit within the Cyber security segment, as determined in the first step, to the reporting unit's individual assets and liabilities, including intangible assets. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities represented the amount of the implied fair value of goodwill. The carrying amount of the goodwill over its implied fair value represented an impairment loss of goodwill in the amount of $ 2,114 which was recorded as part of the impairment of goodwill and intangible assets in the statements of operations. During the years ended December 31, 2015 and 2016, the Company did not record any impairment charges relates to the goodwill allocated to the Cyber security reporting unit within the Video and Cyber security segment. Goodwill annual impairment test for the Video reporting unit within the Video and Cyber security segment: The material assumptions used for the goodwill annual impairment test for the Video reporting unit, according to the income approach for 2016 were five years of projected net cash flows, a weighted average cost of capital rate of 16% and a long-term growth rate of 3%. The Company considered historical rates and current market conditions when determining the discount and growth rates to use in its analyses. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for its goodwill. As required by ASC 820, "Fair Value Measurements and Disclosures," the Company applies assumptions that marketplace participants would consider in determining the fair value of its reporting unit. During the year ended December 31, 2016, the Company did not record any impairment charges relates to the goodwill allocated to the Video reporting unit within the Video and Cyber security segment. |
Business combinations | l. Business combinations: The Company accounts for business combinations in accordance with ASC No. 805, "Business Combinations". ASC No. 805 requires recognition of assets acquired, liabilities assumed, and any non-controlling interest at the acquisition date, measured at their fair values as of that date. Any excess of the fair value of net assets acquired over purchase price and any subsequent changes in estimated contingencies are to be recorded in consolidated statements of operations. Acquisition related costs are expensed in the statement of operations in the period incurred. |
Revenue recognition | m. Revenue recognition: The Company generates its revenues mainly from (1) installation of comprehensive security systems for which revenues are generated from long-term fixed price contracts; (2) sales of security products; (3) services and maintenance, which are performed either on a fixed-price basis or as time-and-materials based contracts; and (4) software license fees. Revenues from installation of comprehensive security systems are generated from fixed-price contracts according to which the time between the signing of the contract and the final customer acceptance is usually over one year. Such contracts require significant customization for each customer's specific needs and, as such, revenues from this type of contract are recognized in accordance with ASC 605-35, "Revenue Recognition -Construction-Type and Production-Type Projects," using contract accounting on a percentage of completion method. Accounting for long-term contracts using the percentage-of-completion method stipulates that revenue and expense are recognized throughout the life of the contract, even though the project is not completed and the purchaser does not have possession of the project. Percentage of completion is calculated based on the "Input Method." Project costs include materials purchased to produce the system, related labor and overhead expenses and subcontractor's costs. The percentage to completion is measured by monitoring costs and efforts devoted using records of actual costs incurred to date in the project compared to the total estimated project requirement, which corresponds to the costs related to earned revenues. The amounts of revenues recognized are based on the total fees under the agreements and the percentage to completion achieved. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are first determined, in the amount of the estimated loss on the entire contract. Estimated gross profit or loss from long-term contracts may change due to changes in estimates resulting from differences between actual performance and original forecasts. Such changes in estimated gross profit are recorded in results of operations when they are reasonably determinable by management, on a cumulative catch-up basis. The Company believes that the use of the percentage of completion method is appropriate as the Company has the ability to make reasonably dependable estimates of the extent of progress towards completion, contract revenues and contract costs. In addition, contracts executed include provisions that clearly specify the enforceable rights regarding services to be provided and received by the parties to the contracts, the consideration to be exchanged and the manner and the terms of settlement, including in cases of termination for convenience. In all cases the Company expects to perform its contractual obligations and its customers are expected to satisfy their obligations under the contract. Fees are payable upon completion of agreed upon milestones and subject to customer acceptance. Amounts of revenues recognized in advance of contractual billing are recorded as unbilled accounts receivable. The period between most instances of advanced recognition of revenues and the customers' billing generally ranges between one to six months. The Company sells security products to customers according to customer orders without installation work. The customers do not have a right to return the products. Revenues from security product sales are recognized in accordance with Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition in Financial Statements," when delivery has occurred, persuasive evidence of an agreement exists, the vendor's fee is fixed or determinable, no further obligation exists and collectability is probable. Services and maintenance are performed under either fixed-price or time-and-materials based contracts. Under fixed-price contracts, the Company agrees to perform certain work for a fixed price. Under time-and-materials contracts, the Company is reimbursed for labor hours at negotiated hourly billing rates and for materials. Such service contracts are not in the scope of ASC 605-35 and, accordingly, related revenues are recognized in accordance with SAB No. 104, as those services are performed or over the term of the related agreements provided that, an evidence of an arrangement has been obtained, fees are fixed or determinable and collectability is reasonably assured. The Company generates revenues from the sales of its software products user licenses as well as from maintenance, support, consulting and training services. The Company grants its products licenses primarily through its distributors, resellers and value added resellers ("VARs"), through its sales representatives and indirectly through original equipment manufacturers ("OEMs"). The end customers, OEMs, distributors, resellers or VARs, as the case may be, are considered to be end users for the purposes of revenue recognition. The Company accounts for software sales in accordance with ASC 985-605, "Software Revenue Recognition" ("ASC 985-605"). Revenue from license fees and services are recognized when persuasive evidence of an arrangement exists, delivery of the product has occurred or the services have been rendered, the fee is fixed or determinable and collectability is probable. The Company usually does not grant a right of return to its customers. As required by ASC 985-605, the Company determines the value of the software component of its multiple-element arrangements using the residual method when vendor specific objective evidence ("VSOE") of fair value exists for all the undelivered elements of the arrangement. VSOE is based on the price charged when an element is sold separately or renewed. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is allocated to the delivered elements and is recognized as revenue. Maintenance and support agreements provide customers with rights to unspecified software product updates, if and when available. These services grant the customers on line and telephone access to technical support personnel during the term of the service. The Company recognizes maintenance and support services revenues ratably over the term of the agreement, usually one year. Arrangements for the sale of software products that include consulting and training services are evaluated to determine whether those services are essential to the functionality of other delivered elements of the arrangement. The Company determined that these services are not considered essential to the functionality of other elements of the arrangement. Therefore, the respective revenues from these services are recognized as a separate element of the arrangement. Service revenues are recognized as the services are performed. Deferred revenue includes unearned amounts under installation services, service contracts and maintenance agreements. |
Accounting for stock-based compensation | n. Accounting for stock-based compensation: The Company accounts for stock-based compensation in accordance with ASC 718, "Compensation-Stock Compensation". ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company's consolidated income statement. The Company recognizes compensation expenses for the value of its awards, which have graded vesting, based on the accelerated attribution method over the vesting period, net of estimated forfeitures. Estimated forfeitures are based on actual historical pre-vesting forfeitures. During the years ended December 31, 2014, 2015 and 2016, the Company recognized stock-based compensation expenses related to employee stock options in the amounts of $ 373, $ 243 and $ 258, respectively . The Company estimates the fair value of stock options granted under ASC 718 using the Binomial model. The Binomial model for option pricing requires a number of assumptions, of which the most significant are the suboptimal exercise factor and expected stock price volatility. The suboptimal exercise factor is estimated using historical option exercise information. The suboptimal exercise factor is the ratio by which the stock price must increase over the exercise price before employees are expected to exercise their stock options. Expected volatility is based upon actual historical stock price movements and was calculated as of the grant dates for different periods, since the Binomial model can be used for different expected volatilities for different periods. The risk-free interest rate is based on the yield from U.S. Treasury zero-coupon bonds with an equivalent term to the contractual term of the options. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. Estimated forfeitures are based on actual historical pre-vesting forfeitures. The following assumptions were used in the Binomial option pricing model for the years ended December 31, 2014, 2015 and 2016: 2014 2015 2016 Dividend yield 0% 0% 0% Expected volatility 39.34%-44.91% 36.86%-50.05% 27.72%-46.02% Risk-free interest 0.10%-1.90% 0.24%-2.16% 0.61%-1.59% Contractual term 4-6 years 4-7 years 5-7 years Forfeiture rate 10% 10% 10% Suboptimal exercise multiple 1.5 1.41 1.41 |
Research and development costs | o. Research and development costs: Research and development costs incurred in the process of developing product improvements or new products, are charged to expenses as incurred. |
Warranty costs | p. Warranty costs: The Company provides a warranty for up to 24 months at no extra charge. The Company estimates the costs that may be incurred under its warranty and records a liability in the amount of such costs at the time product revenue is recognized in accordance with ASC 450, "Contingencies." Factors that affect the Company's warranty liability include the number of units, historical and anticipated rates of warranty claims and cost per claim. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. The following table provides the detail of the change in the Company's warranty accrual, which is a component of other accrued liabilities on the consolidated balance sheets for the years ended December 31, 2015 and 2016: December 31, 2015 2016 Warranty provision, beginning of year $ 1,319 $ 1,213 Charged to costs and expenses relating to new sales 709 452 Costs of warranties granted (723 ) (456 ) Foreign currency translation adjustments (92 ) (12 ) Warranty provision, end of year $ 1,213 $ 1,197 |
Net earnings per share | q. Net earnings per share: Basic net earnings per share are computed based on the weighted average number of ordinary shares outstanding during each year. Diluted net earnings per share is computed based on the weighted average number of ordinary shares outstanding during each year, plus dilutive potential ordinary shares considered outstanding during the year, in accordance with ASC 260, "Earnings Per Share." Certain of the Company's outstanding stock options have been excluded from the calculation of the diluted earnings per share because such securities are anti-dilutive. The total weighted average number of the Company's ordinary shares related to the outstanding options excluded from the calculations of diluted earnings per share was 871,304 shares, 712,391 shares and 559,250 shares for the years ended December 31, 2014, 2015 and 2016, respectively. |
Concentrations of credit risk | r. Concentrations of credit risk: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, short-term and long-term bank deposits, trade receivables, unbilled accounts receivable, long-term trade receivables and long-term loans. Of the Company's cash and cash equivalents and short-term and restricted bank deposits at December 31, 2016, $ 43,430 was invested in major Israeli and U.S. banks, and approximately $ 9,107 was invested in other banks, mainly with the Royal Bank of Canada, BBVA Bankcomer, Deutsche Bank and La Caixa. Cash and cash equivalents in the U.S. may be in excess of insured limits and are not insured in other jurisdictions. Generally these deposits may be redeemed upon demand and therefore, bear low risk. The short-term and long-term trade receivables of the Company, as well as the unbilled accounts receivable, are primarily derived from sales to large and solid organizations and governmental authorities located mainly in Israel, the U.S., Canada, Mexico and Europe. The Company performs ongoing credit evaluations of its customers and to date has not experienced any material losses. An allowance for doubtful accounts is determined with respect to those amounts that the Company has determined to be doubtful of collection and in accordance with an aging policy. In certain circumstances, the Company may require letters of credit, other collateral or additional guarantees. Changes in the Company's allowance for doubtful accounts during the three years period ended December 31, 2016 are as follows: Year ended December 31, 2014 2015 2016 Balance at the beginning of the year $ 809 $ 1,802 $ 2,331 Doubtful debt expenses during the year 1,159 749 429 Customers write-offs/collection during the year, net (17 ) (185 ) (706 ) Exchange rate (149 ) (35 ) 10 $ 1,802 $ 2,331 $ 2,064 As of December 31, 2016, the Company has no significant off-balance sheet concentrations of credit risk, such as foreign exchange contracts or foreign hedging arrangements. |
Income taxes | s. Income taxes: The Company accounts for income taxes in accordance with ASC 740, "Income Taxes." This ASC prescribes the use of the liability method whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. The Company adopted an amendment to ASC 740, "Income Taxes". The amendment clarifies the accounting for uncertainties in income taxes by establishing minimum standards for the recognition and measurement of tax positions taken or expected to be taken in a tax return. Under the requirements of ASC 740, the Company must review all of its tax positions and make a determination as to whether its position is more-likely-than-not to be sustained upon examination by regulatory authorities. If a tax position meets the more-likely-than-not standard, then the related tax benefit is measured based on a cumulative probability analysis of the amount that is more-likely-than-not to be realized upon ultimate settlement or disposition of the underlying issue. In the years ended December 31, 2014, 2015 and 2016, the Company recorded tax expenses (income) in connection to uncertainties in income taxes of $ 55, $ 147 and $ (230) respectively. |
Severance pay | t. Severance pay: The Company's liability for its Israeli employees severance pay is calculated pursuant to Israel's Severance Pay Law based on the most recent salary of the employees multiplied by the number of years of employment, as of the balance sheet date (the "Shut Down Method"). Employees are entitled to one month's salary for each year of employment or a portion thereof. The Company's liability for its employees in Israel is fully provided by monthly deposits with insurance policies and by an accrual. The value of these policies is recorded as an asset in the Company's balance sheet. The deposited funds include profits accumulated up to balance sheet date. The deposited funds may be withdrawn only upon the fulfillment of the obligation pursuant to Israel's Severance Pay Law or labor agreements. The value of the deposited funds is based on the cash surrender value of these policies and includes immaterial profits. On December 31, 2007, the then Chairman of the Company's Board of Directors, retired from his position. Pursuant to his retirement agreement, the retired Chairman is entitled to receive certain perquisites from the Company for the rest of his life. As of December 31, 2016, the actuarial value of these perquisites is estimated at approximately $ 632. This provision was included as part of accrued severance pay. Severance expenses for the years ended December 31, 2014, 2015 and 2016, amounted to approximately $ 1,009, $ 245 and $ 1,126, respectively. The Company has entered into an agreement with some of its employees implementing Section 14 of the Severance Pay Law and the General Approval of the Labor Minister dated June 30, 1998, issued in accordance with the said Section 14, mandating that upon termination of such employees' employment, all the amounts accrued in their insurance policies will be released to them. The severance pay liabilities and deposits covered by these plans are not reflected in the balance sheet as the severance pay risks have been irrevocably transferred to the severance funds. |
Fair value of financial instruments | u. Fair value of financial instruments: The following methods and assumptions were used by the Company in estimating its fair value disclosures for 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, 2016, there was no material difference in the fair value of the Company's long-term borrowing compared to their carrying amount. |
Advertising expenses | v. Advertising expenses: Advertising costs are expensed as incurred. Advertising expenses for the years ended December 31, 2014, 2015 and 2016 |
Fair value measurements | w. Fair value measurements: ASC 820, "Fair Value Measurement and Disclosure" clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: 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. As of December 31, 2014, 2015 and 2016, the Company did not have any derivative instruments, measured at fair value on a recurring or nonrecurring basis. |
Comprehensive income (loss) | y. Comprehensive income (loss): The Company accounts for comprehensive income (loss) in accordance with ASC 220, "Comprehensive Income". ASC 220 establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. Comprehensive income generally represents all changes in shareholders' equity (deficiency) during the period except those resulting from investments by, or distributions to, shareholders. The Company has determined that its items of comprehensive income (loss) relate to unrealized gain from foreign currency translation adjustments. The total accumulated other comprehensive income (loss), net was comprised as follows: Year ended December 31, 2014 2015 2016 Foreign currency translation adjustments $ 2,041 $ (1,850 ) $ (1,923 ) Total accumulated other comprehensive income (loss) $ 2,041 $ (1,850 ) $ (1,923 ) |
Impact of recently issued accounting standards | z. Impact of recently issued accounting standards: In May 2014, the Financial Accounting Standards Board ("FASB") issued an ASU No. 2014-09 on revenue from contracts with customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The core principle is that an entity should recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The guidance determines a five-step model for recognizing revenue from contracts with customers: 1. Identifying the contract 2. Identifying performance obligations 3. Determining the transaction price 4. Allocating the transaction price to separate performance obligations 5. Recognizing revenue The new standard will be effective for the Company beginning January 1, 2018, and adoption as of the original effective date of January 1, 2017 is permitted. The Company will adopt the new standard as of January 1, 2018. The Company has made progress toward completing its evaluation of the potential changes from adopting this new standard on its financial reporting and disclosures. The Company has evaluated the impact of the standard on majority of its revenue streams and associated contracts. The Company expects to complete the evaluation of the impact of the accounting and disclosure changes on its business processes, controls and systems throughout 2017, design any changes to such business processes, controls and systems, and implement the changes before the end of 2017. Currently, the Company identified issues related to variable consideration, contract accounting, incremental costs of obtaining a contract that relate to sales commission and allocating contract consideration to performance obligation for which the adoption of the standard may have an effect on the Company's accounting policy. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company currently anticipates adopting the standard using the modified retrospective method rather than full retrospective method. The FASB has issued, and may issue in the future, interpretive guidance which may cause our evaluation to change. The Company believes they are following an appropriate timeline to allow for proper recognition, presentation and disclosure upon adoption effective the beginning of fiscal year 2018. The Company continues to assess all potential impacts under the new revenues standard. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which will replace the existing guidance in ASC 840, "Leases." The updated standard aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and requiring disclosure of key information about leasing arrangements. This ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods; early adoption is permitted and modified retrospective application is required. The Company is in the process of evaluating this guidance to determine the impact it will have on its financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, “Compensation-Stock Compensation,” which simplifies several aspects of the accounting for share-based payments, including immediate recognition of all excess tax benefits and deficiencies in the income statement, changing the threshold to qualify for equity classification up to the employees’ maximum statutory tax rates, allowing an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur, and clarifying the classification on the statement of cash flows for the excess tax benefit and employee taxes paid when an employer withholds shares for tax-withholding purposes. The amendments in this update became effective on January 1, 2017. The Company's adoption of ASU 2016-09 will not have a material impact on its consolidated financial statements. Effective as of January 1, 2017, the Company adopted a change in accounting policy in accordance with ASU 2016-09 to account for forfeitures as they occur. Upon the adoption in the first quarter of 2017, the effect of the adoption on the Company's retained earnings is expected to be immaterial. The FASB issued ASU 2016-13 “Measurement of Credit Losses on Financial Instruments” requiring an allowance to be recorded for all expected credit losses for financial assets. The allowance for credit losses is based on historical information, current conditions and reasonable and supportable forecasts. Disclosures of credit quality indicators in relation to the amortized cost of financing receivables are further disaggregated by year of origination. The new accounting guidance is effective for interim and annual periods beginning after December 15, 2019 with early adoption permitted for interim and annual periods beginning after December 15, 2018. The amendments will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is analyzing the impact of this new standard and, at this time, cannot estimate the impact of adoption on its net income. The Company plans to adopt ASU 2016-13 effective January 1, 2020. In August 2016, FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This update will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The update is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. The Company is currently evaluating the effect of this update on its consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-04, Intangibles: Goodwill and Other: Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, the income tax effects of tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the qualitative impairment test is necessary. The amendments should be applied on a prospective basis. The nature of and reason for the change in accounting principle should be disclosed upon transition. The amendments in this update should be adopted for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted on testing dates after January 1, 2017. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements, but it is not expected to have a material impact. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments in this update provide a more robust framework to use in determining when a set of assets and activities is a business. Because the current definition of a business is interpreted broadly and can be difficult to apply, stakeholders indicated that analyzing transactions is inefficient and costly and that the definition does not permit the use of reasonable judgment. The amendments provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements, but it is not expected to have a material impact. |
GENERAL (Tables)
GENERAL (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fiber Company [Member] | |
Business Acquisition [Line Items] | |
Schedule of Assets Acquired and Liabilities Assumed | Net assets (including cash of $ 411) $ 821 Intangible assets 2,050 Deferred tax assets 474 Deferred tax liabilities (819 ) Goodwill 1,760 Total purchase price $ 4,286 |
Schedule of Intangible Assets | Fair value Technology $ 1,337 Customer relationships 315 Backlog 398 Total intangible assets $ 2,050 |
Schedule of Revenue and Net Earnings | Year ended December 31, 2014 Revenues $ 3,763 Net income $ 733 |
Schedule of Unaudited Pro Forma Results | Year ended December 31, 2014 Unaudited Revenues $ 77,999 Net income attributable to Magal shareholders' $ 3,156 Basic and diluted income per share $ 0.19 |
Aimetis [Member] | |
Business Acquisition [Line Items] | |
Schedule of Assets Acquired and Liabilities Assumed | 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 |
Schedule of Intangible Assets | Fair value Technology $ 3,759 Customer relationships 761 Total intangible assets $ 4,520 |
Schedule of Revenue and Net Earnings | Year ended December 31, 2016 Revenues $ 5,047 Net loss $ (2,667 ) |
Schedule of Unaudited Pro Forma Results | Year ended December 31, 2015 2016 Unaudited Revenues $ 71,709 $ 69,956 Net income (loss) attributable to Magal shareholders' $ 2,134 $ (73) Basic and diluted income (loss) per share $ 0.13 $ 0.00 |
SIGNIFICANT ACCOUNTING POLICI26
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Annual Depreciation Rates | % 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 |
Schedule of Intangible Assets Amortization Rates | % Patents 10 Technology 12.5-20 Customer relationships 10.3-25 Backlog 100 |
Schedule of Fair Value Assumptions for Stock Options | 2014 2015 2016 Dividend yield 0% 0% 0% Expected volatility 39.34%-44.91% 36.86%-50.05% 27.72%-46.02% Risk-free interest 0.10%-1.90% 0.24%-2.16% 0.61%-1.59% Contractual term 4-6 years 4-7 years 5-7 years Forfeiture rate 10% 10% 10% Suboptimal exercise multiple 1.5 1.41 1.41 |
Schedule of Product Warranty Accrual | December 31, 2015 2016 Warranty provision, beginning of year $ 1,319 $ 1,213 Charged to costs and expenses relating to new sales 709 452 Costs of warranties granted (723 ) (456 ) Foreign currency translation adjustments (92 ) (12 ) Warranty provision, end of year $ 1,213 $ 1,197 |
Schedule of Changes in Allowance for Doubtful Accounts | Year ended December 31, 2014 2015 2016 Balance at the beginning of the year $ 809 $ 1,802 $ 2,331 Doubtful debt expenses during the year 1,159 749 429 Customers write-offs/collection during the year, net (17 ) (185 ) (706 ) Exchange rate (149 ) (35 ) 10 $ 1,802 $ 2,331 $ 2,064 |
Schedule of Accumulated Other Comprehensive Income | Year ended December 31, 2014 2015 2016 Foreign currency translation adjustments $ 2,041 $ (1,850 ) $ (1,923 ) Total accumulated other comprehensive income (loss) $ 2,041 $ (1,850 ) $ (1,923 ) |
OTHER ACCOUNTS RECEIVABLE AND27
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Accounts Receivable and Prepaid Expenses | December 31, 2015 2016 Government authorities $ 443 $ 325 Employees 13 25 Prepaid expenses 852 1,087 Advances to suppliers 533 1,050 Others 266 264 $ 2,107 $ 2,751 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | December 31, 2015 2016 Raw materials $ 1,498 $ 983 Work in progress 1,607 772 Finished products 4,774 5,063 $ 7,879 $ 6,818 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | December 31, 2015 2016 Cost: Land and buildings $ 6,574 $ 6,629 Machinery and equipment 2,566 2,725 Motor vehicles 1,734 1,664 Promotional displays 419 526 Office furniture and equipment 3,455 4,166 Leasehold improvements 521 722 15,269 16,432 Accumulated depreciation: Buildings 3,490 3,742 Machinery and equipment 2,045 2,745 Motor vehicles 852 959 Promotional displays 355 382 Office furniture and equipment 2,791 2,784 Leasehold improvements 321 519 9,854 11,131 Property and equipment, net $ 5,415 $ 5,301 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Schedule of Intangible Assets | December 31, 2015 2016 Cost: Know-how and patents $ 4,076 $ 4,175 Technology 1,789 5,444 Customer relationships 686 1,425 Backlog 708 712 7,259 11,756 Accumulated amortization: Know-how and patents 4,002 4,125 Technology 762 1,337 Customer relationships 475 649 Backlog 707 712 5,946 6,823 Intangible assets , net $ 1,313 $ 4,933 |
Schedule of Amortization of Intangible Assets | December 31, 2017 $ 890 2018 864 2019 808 2020 775 2021 and thereafter 1,596 $ 4,933 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
GOODWILL [Abstract] | |
Schedule of Goodwill | Products Video and Cyber security Total As of January 1, 2015 $ 3,552 $ 944 $ 4,496 Foreign currency translation adjustments (242 ) (4 ) (246 ) As of December 31, 2015 3,310 940 4,250 Acquisition of Aimetis - 7,859 7,859 Foreign currency translation adjustments (5 ) (254 ) (259 ) As of December 31, 2016 $ 3,305 $ 8,545 $ 11,850 |
OTHER ACCOUNTS PAYABLE AND AC32
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of Other Accounts Payable and Accrued Expenses | December 31, 2015 2016 Employees and payroll accruals $ 3,212 $ 3,167 Accrued expenses 4,949 5,691 Deferred revenues 487 1,273 Government authorities 51 103 Income tax payable and tax provision 1,822 1,150 Others 227 262 $ 10,748 $ 11,646 |
COMMITMENTS AND CONTINGENT LI33
COMMITMENTS AND CONTINGENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Lease Commitments | 2017 $ 867 2018 483 2019 323 2020 206 2021 180 2022 and there after 1,080 $ 3,139 |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Summary of Changes in Stock Option Activity | Number of options Weighted- average exercise price Weighted- average remaining contractual life (in months) Aggregate intrinsic value (in thousands) Outstanding at January 1, 2016 875,250 4.45 40 59 Granted 201,000 4.97 63.9 19 Exercised (325,090 ) 4.27 Forfeited (158,584 ) 4.92 Outstanding at December 31, 2016 592,576 4.6 52.1 277 Vested and expected to vest at December 31, 2016 546,576 4.58 51.4 239 Exercisable at December 31, 2016 58,576 4.05 9.83 60 |
Schedule of Stock Options Outstanding | Number of options outstanding as of December 31, 2016 Exercise price Weighted average remaining contractual life Number of options exercisable as of December 31, 2016 (In months) 27,500 4.35 1. 94 27,500 20,000 3.53 11.01 20,000 20,076 4.25 37.07 11,076 150,000 4.96 50.47 - 24,000 4.40 53.23 - 174,000 4.15 55.87 - 138,000 5.00 62.89 - 39,000 4.86 67.94 - 592,576 52.1 58,576 |
BASIC AND DILUTED NET EARNING35
BASIC AND DILUTED NET EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Earnings Per Share | Year ended December 31, 2014 2015 2016 Numerator: Income (loss) attributable to Magal shareholders' $ 3,410 $ 3,141 $ 1,029 Denominator: Denominator for basic net earnings (loss) per share weighted-average number of shares outstanding 16,186,148 16,347,948 17,999,779 Effect of diluting securities: Employee stock options 151,908 62,763 31,654 Denominator for diluted net earnings (loss) per share - adjusted weighted average shares and assumed exercises 16,338,056 16, 410,711 18,031,433 |
TAXES ON INCOME (Tables)
TAXES ON INCOME (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Reconciliation of Income Tax Rate | Year ended December 31, 2014 2015 2016 Income before taxes as reported in the statements of operations $ 3,402 $ 5,031 $ 904 Tax rate 26.5 % 26.5 % 25 % Theoretical tax $ 902 $ 1,333 $ 226 Increase (decrease) in taxes: Non-deductible items 746 211 249 Losses and other items for which a valuation allowance was provided 939 579 977 Realization of carryforward tax losses for which valuation allowance was provided (2,382 ) (587 ) (541 ) Changes in valuation allowance (1,034 ) (567 ) (1,602 ) Tax rate differences in subsidiaries 571 276 236 Provision for uncertain tax positions 55 147 (230 ) Taxes in respect of prior years - 7 79 Tax withheld against which valuation allowance was provided this year 391 671 602 Investment tax credit (160 ) (158 ) (220 ) Other 54 11 102 Taxes on income (tax benefit) in the statements of operations $ 82 $ 1,923 $ (122 ) |
Schedule of Income Taxes | Year ended December 31, 2014 2015 2016 Current $ 1,024 $ 1,979 $ 1,485 Deferred (942 ) (56 ) (1,607 ) $ 82 $ 1,923 $ (122 ) Domestic $ 295 $ 966 $ 407 Foreign (213 ) 957 (529 ) $ 82 $ 1,923 $ (122 ) |
Schedule of Deferred Tax Assets and Liabilities | December 31, 2015 2016 Deferred tax assets: Operating loss carry forwards $ 6,178 $ 4,781 Reserves and tax allowances 2,646 2,936 Total deferred taxes before valuation allowance 8,824 7,717 Valuation allowance (7,276 ) (5,603 ) Deferred tax assets, net: 1,548 2,114 Deferred tax liabilities: 666 167 Net deferred tax assets $ 882 $ 1,947 Foreign $ 882 $ 1,947 |
Schedule of Domestic and Foreign Components of Income (Loss) Before Income Taxes | Year ended December 31, 2014 2015 2016 Domestic $ (923 ) $ (1,484 ) $ (1,482 ) Foreign 4,325 6,515 2,386 $ 3,402 $ 5,031 $ 904 |
Schedule of Reconciliation of Unrecognized Tax Benefits | December 31, 2015 2016 Balance at the beginning of the year $ 758 $ 893 Additions based on tax positions taken related to the current year 293 45 Reductions related to settlement of tax matters and limitation (146 ) (275 ) Foreign currency translation adjustments (12 ) - Balance at the end of the year $ 893 $ 663 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Operating Segment Information | Year ended December 31, 2014 Products Projects Cyber security Eliminations Total Revenues $ 37,554 $ 39,198 $ 1,329 $ (538 ) $ 77,543 Depreciation and amortization $ 1,006 $ 641 $ 320 $ - $ 1,967 Impairment of goodwill and intangible assets $ - $ - $ 2,439 $ - $ 2,439 Operating income (loss), before financial expenses and taxes on income $ 6,770 $ (148 ) $ (4,995 ) $ (204 ) $ 1,423 Financial income, net (1,979 ) Taxes on income 82 Net income $ 3,320 Year ended December 31, 2015 Products Projects Cyber security Eliminations Total Revenues $ 30,761 $ 34,128 $ 1,596 $ (2,749 ) $ 63,736 Depreciation and amortization $ 787 $ 602 $ 114 $ - $ 1,503 Operating income (loss), before financial expenses and taxes on income $ 6,023 $ 1,095 $ (1,684 ) $ (1,045 ) $ 4,389 Financial income, net (642 ) Taxes on income 1,923 Net income $ 3,108 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, 2015 Products Projects Cyber security Total Total long-lived assets $ 6,641 $ 3,360 $ 977 $ 10,978 Year ended December 31, 2016 Products Projects Video and Cyber security Total Total long-lived assets $ 6,346 $ 3,198 $ 12,540 $ 22,084 |
Schedule of Major Customer Data | Year ended December 31, 2014 2015 2016 Customer A 14.8 % 13.3 % 8.6 Customer B 6.4 % 18.1 % 11.9 % |
Schedule of Revenues and Long-Lived Assets Within Geographic Areas | 1. Revenues: Year ended December 31, 2014 2015 2016 Israel $ 16,525 $ 12,406 $ 8,727 Europe 9,591 7,891 8,330 North America 21,165 17,749 23,467 South and Latin America 8,813 13,443 10,364 Africa 12,393 6,611 7,585 Others 9,056 5,636 9,352 $ 77,543 $ 63,736 $ 67,825 2. Long-lived assets: December 31, 2015 2016 Israel $ 3,889 $ 3,554 Europe 900 923 USA 3,073 2,860 Canada 2,387 14,081 Others 729 666 $ 10,978 $ 22,084 |
SELECTED STATEMENTS OF INCOME38
SELECTED STATEMENTS OF INCOME DATA (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Other Income and Expenses [Abstract] | |
Schedule of Selected Statements of Income Data | Financial expenses: Year ended December 31, 2014 2015 2016 Financial expenses: Interest on short-term and long-term bank credit and bank charges and $ ( 493 ) $ ( 381 ) $ (299 ) Foreign exchange loss, net - - (595 ) (493 ) (381 ) (894 ) Financial income: Interest on short-term and long-term bank deposits 141 54 303 Foreign exchange gains, net 2,331 969 - 2,472 1,023 303 Financial income (expenses ), $ 1,979 $ 642 $ (591 ) |
GENERAL (Narrative) (Details)
GENERAL (Narrative) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Apr. 01, 2016 | Apr. 08, 2014 | Dec. 31, 2014 | Sep. 30, 2016 | Dec. 31, 2014 | Dec. 31, 2016 | Oct. 01, 2014 | |
Business Acquisition [Line Items] | |||||||
Subscription rights to purchase up to an aggregate Ordinary, Shares | 6,170,386 | ||||||
Net Proceeds from right offering | $ 23,617 | ||||||
Expense related to right offering | $ 201 | ||||||
Purchase of interest (as a percent) | 40.00% | ||||||
Goodwill, Impairment Loss | $ 2,114 | ||||||
Impairment of Intangible Assets, Finite-lived | 325 | $ 325 | |||||
Aimetis [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Total purchase price | $ 14,469 | ||||||
Cash Consideration | 14,387 | ||||||
Fair value performance contingent payments | 82 | ||||||
Acquisition costs | 270 | ||||||
Performance-based contingent payments | 844 | $ 82 | |||||
Retention amount | $ 844 | ||||||
Fiber Company [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Total purchase price | $ 4,286 | ||||||
Acquisition costs | $ 135 | $ 135 |
GENERAL (Schedule of Assets Acq
GENERAL (Schedule of Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Apr. 01, 2016 | Apr. 08, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Aimetis [Member] | |||||
Business Acquisition [Line Items] | |||||
Net assets (liabilities) (including cash) | $ 1,981 | ||||
Intangible assets | 4,520 | $ 4,520 | |||
Adjustment to deferred revenue | 671 | 671 | |||
Deferred tax assets | |||||
Deferred tax liabilities, net | (562) | (562) | |||
Goodwill | 7,859 | 7,859 | |||
Total purchase price | 14,469 | ||||
Cash | $ 2,274 | ||||
Fiber Company [Member] | |||||
Business Acquisition [Line Items] | |||||
Net assets (liabilities) (including cash) | $ 821 | ||||
Intangible assets | 2,050 | 2,050 | |||
Deferred tax assets | 474 | 474 | |||
Deferred tax liabilities, net | (819) | (819) | |||
Goodwill | 1,760 | $ 1,760 | |||
Total purchase price | 4,286 | ||||
Cash | $ 411 |
GENERAL (Schedule of Intangible
GENERAL (Schedule of Intangible Assets) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Apr. 01, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Apr. 08, 2014 |
Aimetis [Member] | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | $ 4,520 | $ 4,520 | |||
Aimetis [Member] | Technology [Member] | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | 3,759 | 3,759 | |||
Aimetis [Member] | Customer Relationships [Member] | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | 761 | $ 761 | |||
Fiber Company [Member] | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | 2,050 | $ 2,050 | |||
Fiber Company [Member] | Technology [Member] | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | 1,337 | 1,337 | |||
Fiber Company [Member] | Customer Relationships [Member] | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | 315 | 315 | |||
Fiber Company [Member] | Backlog [Member] | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets | $ 398 | $ 398 |
GENERAL (Schedule of Revenue an
GENERAL (Schedule of Revenue and Net Earnings) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2014 | |
Aimetis [Member] | ||
Business Acquisition [Line Items] | ||
Revenues | $ 5,047 | |
Net income (loss) | $ (2,667) | |
Fiber Company [Member] | ||
Business Acquisition [Line Items] | ||
Revenues | $ 3,763 | |
Net income (loss) | $ 733 |
GENERAL (Schedule of Unaudited
GENERAL (Schedule of Unaudited Pro Forma Results) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Aimetis [Member] | |||
Business Acquisition [Line Items] | |||
Revenues | $ 69,956 | $ 71,709 | |
Net income (loss) | $ (73) | $ 2,134 | |
Basic and diluted income (loss) per share | $ 0 | $ 0.13 | |
Fiber Company [Member] | |||
Business Acquisition [Line Items] | |||
Revenues | $ 77,999 | ||
Net income (loss) | $ 3,156 | ||
Basic and diluted income (loss) per share | $ 0.19 |
SIGNIFICANT ACCOUNTING POLICI44
SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Business Acquisition [Line Items] | ||||
Impairment of intangible assets | $ 325 | $ 325 | ||
Write-off of inventory | $ 226 | $ 465 | $ 379 | |
Number of shares excluded from calculation of diluted earnings (loss) per share | 559,250 | 712,391 | 871,304 | |
Impairment loss of goodwill | $ 2,114 | |||
Stock-based compensation | $ 258 | $ 243 | $ 373 | |
Tax expenses (benefits) related to uncertainties in income taxes | (230) | 147 | 55 | |
Accrued severance pay | 632 | |||
Severance expenses | 1,126 | 245 | 1,009 | |
Advertising expense | $ 219 | $ 122 | 321 | |
Cyber [Member] | ||||
Business Acquisition [Line Items] | ||||
Impairment of intangible assets | $ 325 | |||
Projected net cash flows, period | 5 years | |||
Weighted average cost of capital rate | 17.00% | |||
Long-term growth rate | 3.00% | |||
Perimeter [Member] | ||||
Business Acquisition [Line Items] | ||||
Projected net cash flows, period | 5 years | |||
Weighted average cost of capital rate | 14.00% | |||
Long-term growth rate | 3.00% | |||
Video segment [Member] | ||||
Business Acquisition [Line Items] | ||||
Projected net cash flows, period | 5 years | |||
Weighted average cost of capital rate | 16.00% | |||
Long-term growth rate | 3.00% | |||
Major Israeli And U.S. Banks [Member] | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents, short-term, restricted and long-term bank deposits | $ 43,430 | |||
Other Banks [Member] | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents, short-term, restricted and long-term bank deposits | $ 9,107 |
SIGNIFICANT ACCOUNTING POLICI45
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Annual Depreciation Rates) (Details) | Dec. 31, 2016 |
Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Annual depreciation rate, minimum | 3.00% |
Annual depreciation rate, maximum | 4.00% |
Machinery and Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Annual depreciation rate, minimum | 10.00% |
Annual depreciation rate, maximum | 33.00% |
Annual depreciation rate, mainly | 10.00% |
Motor Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Annual depreciation rate, mainly | 15.00% |
Promotional Displays [Member] | |
Property, Plant and Equipment [Line Items] | |
Annual depreciation rate, minimum | 15.00% |
Annual depreciation rate, maximum | 50.00% |
Office Furniture and Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Annual depreciation rate, minimum | 6.00% |
Annual depreciation rate, maximum | 33.00% |
SIGNIFICANT ACCOUNTING POLICI46
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Intangible Assets Amortization Rates) (Details) | Dec. 31, 2016 |
Patents [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Annual amortization rate | 10.00% |
Technology [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Annual amortization rate | 12.50% |
Technology [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Annual amortization rate | 20.00% |
Customer Relationships [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Annual amortization rate | 10.30% |
Customer Relationships [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Annual amortization rate | 25.00% |
Backlog [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Annual amortization rate | 100.00% |
SIGNIFICANT ACCOUNTING POLICI47
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Fair Value Assumptions for Stock Options) (Details) - Employee Stock Option [Member] | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividend yield | 0.00% | 0.00% | 0.00% |
Forfeiture rate | 10.00% | 10.00% | 10.00% |
Suboptimal exercise multiple | 1.41 | 1.41 | 1.5 |
Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 27.72% | 36.86% | 39.34% |
Risk-free interest | 0.61% | 0.24% | 0.10% |
Contractual term | 5 years | 4 years | 4 years |
Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 46.02% | 50.05% | 44.91% |
Risk-free interest | 1.59% | 2.16% | 1.90% |
Contractual term | 7 years | 7 years | 6 years |
SIGNIFICANT ACCOUNTING POLICI48
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Product Warranty Accrual) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | ||
Warranty provision, beginning of year | $ 1,213 | $ 1,319 |
Charged to costs and expenses relating to new sales | 452 | 709 |
Costs of warranties granted | (456) | (723) |
Foreign currency translation adjustments | (12) | (92) |
Warranty provision, end of year | $ 1,197 | $ 1,213 |
SIGNIFICANT ACCOUNTING POLICI49
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Changes in Allowance for Doubtful Accounts) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accounting Policies [Abstract] | |||
Balance at the beginning of the year | $ 2,331 | $ 1,802 | $ 809 |
Doubtful debt expenses during the year | 429 | 749 | 1,159 |
Customers write-offs/collection during the year, net | (706) | (185) | (17) |
Exchange rate | 10 | (35) | (149) |
Balance at the end of the year | $ 2,064 | $ 2,331 | $ 1,802 |
SIGNIFICANT ACCOUNTING POLICI50
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Accounting Policies [Abstract] | |||
Foreign currency translation adjustments | $ (1,923) | $ (1,850) | $ 2,041 |
Total accumulated other comprehensive income (loss) | $ (1,923) | $ (1,850) | $ 2,041 |
OTHER ACCOUNTS RECEIVABLE AND51
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Government authorities | $ 325 | $ 443 |
Employees | 25 | 13 |
Prepaid expenses | 1,087 | 852 |
Advances to suppliers | 1,050 | 533 |
Others | 264 | 266 |
Total other accounts receivable and prepaid expenses | $ 2,751 | $ 2,107 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 983 | $ 1,498 |
Work in progress | 772 | 1,607 |
Finished products | 5,063 | 4,774 |
Total inventory | $ 6,818 | $ 7,879 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 16,432 | $ 15,269 | |
Property and equipment, accumulated depreciation | 11,131 | 9,854 | |
Property and equipment, net | 5,301 | 5,415 | |
Depreciation expense | 954 | 983 | $ 1,184 |
Land and Buildings [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 6,629 | 6,574 | |
Property and equipment, accumulated depreciation | 3,742 | 3,490 | |
Machinery and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 2,725 | 2,566 | |
Property and equipment, accumulated depreciation | 2,745 | 2,045 | |
Motor Vehicles [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 1,664 | 1,734 | |
Property and equipment, accumulated depreciation | 959 | 852 | |
Promotional Displays [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 526 | 419 | |
Property and equipment, accumulated depreciation | 382 | 355 | |
Office Furniture and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 4,166 | 3,455 | |
Property and equipment, accumulated depreciation | 2,784 | 2,791 | |
Leasehold Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 722 | 521 | |
Property and equipment, accumulated depreciation | $ 519 | $ 321 |
INTANGIBLE ASSETS, NET (Schedul
INTANGIBLE ASSETS, NET (Schedule of Intangible Assets) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Cost | $ 11,756 | $ 7,259 | ||
Accumulated amortization | 6,823 | 5,946 | ||
Impairment of intangible assets | $ 325 | $ 325 | ||
Intangible assets, net | 4,933 | 1,313 | ||
Know-How and patents [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Cost | 4,175 | 4,076 | ||
Accumulated amortization | 4,125 | 4,002 | ||
Technology [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Cost | 5,444 | 1,789 | ||
Accumulated amortization | 1,337 | 762 | ||
Customer Relationships [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Cost | 1,425 | 686 | ||
Accumulated amortization | 649 | 475 | ||
Backlog [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Cost | 712 | 708 | ||
Accumulated amortization | $ 712 | $ 707 |
INTANGIBLE ASSETS, NET (Sched55
INTANGIBLE ASSETS, NET (Schedule of Amortization of Intangible Assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Amortization expense | $ 786 | $ 520 | $ 783 |
2,017 | 890 | ||
2,018 | 864 | ||
2,019 | 808 | ||
2,020 | 775 | ||
2021 and thereafter | 1,596 | ||
Intangible assets, net | $ 4,933 | $ 1,313 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill [Line Items] | ||
Goodwill, beginning balance | $ 4,250 | $ 4,496 |
Acquisition of Aimetis | 7,859 | |
Foreign currency translation adjustments | (259) | (246) |
Goodwill, ending balance | 11,850 | 4,250 |
Video and Cyber segment [Member] | ||
Goodwill [Line Items] | ||
Goodwill, beginning balance | 940 | 944 |
Acquisition of Aimetis | 7,859 | |
Foreign currency translation adjustments | (254) | (4) |
Goodwill, ending balance | 8,545 | 940 |
Perimeter [Member] | ||
Goodwill [Line Items] | ||
Goodwill, beginning balance | 3,310 | 3,552 |
Acquisition of Aimetis | ||
Foreign currency translation adjustments | (5) | (242) |
Goodwill, ending balance | $ 3,305 | $ 3,310 |
OTHER ACCOUNTS PAYABLE AND AC57
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Employees and payroll accruals | $ 3,167 | $ 3,212 |
Accrued expenses | 5,691 | 4,949 |
Deferred revenues | 1,273 | 487 |
Government authorities | 103 | 51 |
Income tax payable and tax provision | 1,150 | 1,822 |
Others | 262 | 227 |
Other accounts payable and accrued expenses | $ 11,646 | $ 10,748 |
COMMITMENTS AND CONTINGENT LI58
COMMITMENTS AND CONTINGENT LIABILITIES (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Royalty rate | 3.50% | ||
Royalties, maximum percentage of grants received | 100.00% | ||
Payment received from OCS | $ 134 | $ 118 | |
Payment returned to OCS | 134 | ||
Royalty expense | $ 17 | 42 | $ 83 |
Remaining contingent obligations | 1,764 | ||
Accrued royalties to a third party | 55 | ||
Line of Credit | 17,744 | 22,829 | |
Performance guarantees | $ 3,333 | $ 5,744 | |
Ratio of total liabilities to tangible net worth | 0.75 |
COMMITMENTS AND CONTINGENT LI59
COMMITMENTS AND CONTINGENT LIABILITIES (Schedule of Lease Commitments) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |||
2,017 | $ 867 | ||
2,018 | 483 | ||
2,019 | 323 | ||
2,020 | 206 | ||
2,021 | 180 | ||
2022 and thereafter | 1,080 | ||
Total future minimum lease payments due | 3,139 | ||
Rent expense | $ 1,121 | $ 1,176 | $ 1,135 |
SHAREHOLDERS' EQUITY (Narrative
SHAREHOLDERS' EQUITY (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Jun. 30, 2013 | Jan. 21, 2013 | Jun. 23, 2010 | May 31, 2008 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Ordinary shares, shares outstanding | 22,894,348 | 16,398,872 | 16,269,022 | |||||
Sale of Stock | 6,170,386 | |||||||
Net Proceeds from right offering | $ 23,617 | |||||||
Sale of Stock per share price | $ 3.86 | |||||||
Expense related to right offering | $ 201 | |||||||
Weighted-average grant date fair value | $ 1.53 | $ 1.56 | $ 0.65 | |||||
Total intrinsic value of options exercised | $ 300 | $ 162 | $ 198 | |||||
Non-vested share-based compensation arrangements, unrecognized compensation costs | $ 460 | |||||||
Unrecognized compensation cost, weighted-average recognition period | 3 years 9 months | |||||||
Issuance of common stock, shares, warrants | 898,203 | |||||||
Warrants issued upon the acquisition of CyberSeal | $ 1,500 | |||||||
Warrants, exercise price | $ 4.16 | |||||||
Share-based Compensation Award, Tranche One [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage | 50.00% | |||||||
Share-based Compensation Award, Tranche Two [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Vesting percentage | 50.00% | |||||||
2010 Plan [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Plan term | 10 years | |||||||
Number of additional shares authorized | 500,000 | |||||||
Number of shares available for grant | 621,859 | |||||||
2003 Plan [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of additional shares authorized | 1,000,000 |
SHAREHOLDERS' EQUITY (Summary o
SHAREHOLDERS' EQUITY (Summary of Changes in Stock Option Activity) (Details) - Employee Stock Option [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Number of options | ||
Outstanding at January 1, 2016 | 875,250 | |
Granted | 201,000 | |
Exercised | (325,090) | |
Forfeited | (158,584) | |
Outstanding at December 31, 2016 | 592,576 | 875,250 |
Vested and expected to vest at December 31, 2016 | 546,576 | |
Exercisable at December 31, 2016 | 58,576 | |
Weighted-average exercise price | ||
Outstanding at January 1, 2016 | $ 4.45 | |
Granted | 4.97 | |
Exercised | 4.27 | |
Forfeited | 4.92 | |
Outstanding at December 31, 2016 | 4.6 | $ 4.45 |
Vested and expected to vest at December 31, 2016 | 4.58 | |
Exercisable at December 31, 2016 | $ 4.05 | |
Weighted-average remaining contractual life | ||
Outstanding | 52 months 3 days | 40 months |
Granted | 63 months 27 days | |
Vested and expected to vest at December 31, 2015 | 51 months 12 days | |
Exercisable at December 31, 2016 | 9 months 25 days | |
Aggregate intrinsic value (in thousands) | ||
Outstanding at January 1, 2016 | $ 59 | |
Granted | 19 | |
Outstanding at December 31, 2016 | 277 | $ 59 |
Vested and expected to vest at December 31, 2016 | 239 | |
Exercisable at December 31, 2016 | $ 60 |
SHAREHOLDERS' EQUITY (Schedule
SHAREHOLDERS' EQUITY (Schedule of Stock Options Outstanding) (Details) | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2016 | 592,576 |
Weighted average remaining contractual life | 52 months 3 days |
Number of options exercisable as of December 31, 2016 | 58,576 |
$4.35 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2016 | 27,500 |
Exercise price | $ / shares | $ 4.35 |
Weighted average remaining contractual life | 1 month 29 days |
Number of options exercisable as of December 31, 2016 | 27,500 |
$3.53 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2016 | 20,000 |
Exercise price | $ / shares | $ 3.53 |
Weighted average remaining contractual life | 11 months |
Number of options exercisable as of December 31, 2016 | 20,000 |
$4.25 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2016 | 20,076 |
Exercise price | $ / shares | $ 4.25 |
Weighted average remaining contractual life | 37 months 2 days |
Number of options exercisable as of December 31, 2016 | 11,076 |
$4.96 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2016 | 150,000 |
Exercise price | $ / shares | $ 4.96 |
Weighted average remaining contractual life | 50 months 14 days |
Number of options exercisable as of December 31, 2016 | |
$4.40 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2016 | 24,000 |
Exercise price | $ / shares | $ 4.40 |
Weighted average remaining contractual life | 53 months 7 days |
Number of options exercisable as of December 31, 2016 | |
$4.15 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2016 | 174,000 |
Exercise price | $ / shares | $ 4.15 |
Weighted average remaining contractual life | 55 months 26 days |
Number of options exercisable as of December 31, 2016 | |
$5.00 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2016 | 138,000 |
Exercise price | $ / shares | $ 5 |
Weighted average remaining contractual life | 62 months 27 days |
Number of options exercisable as of December 31, 2016 | |
$4.86 [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2016 | 39,000 |
Exercise price | $ / shares | $ 4.86 |
Weighted average remaining contractual life | 67 months 29 days |
Number of options exercisable as of December 31, 2016 |
BASIC AND DILUTED NET EARNING63
BASIC AND DILUTED NET EARNINGS PER SHARE (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share [Abstract] | |||
Numerator - Income (loss) attributable to Magal shareholders' | $ 1,029 | $ 3,141 | $ 3,410 |
Denominator for basic net earnings (loss) per share weighted-average number of shares outstanding | 17,999,779 | 16,347,948 | 16,186,148 |
Employee stock options | 31,654 | 62,763 | 151,908 |
Denominator for diluted net earnings (loss) per share - adjusted weighted average shares and assumed exercises | 18,031,433 | 16,410,711 | 16,338,056 |
TAXES ON INCOME (Narrative) (De
TAXES ON INCOME (Narrative) (Details) ₪ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Jan. 31, 2017 | Jan. 31, 2014 | Dec. 31, 2016USD ($) | Dec. 31, 2016ILS (₪) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Carry forward tax losses | $ 3,603 | |||||
Tax rate | 20.00% | 25.00% | 25.00% | 26.50% | 26.50% | |
Unrecognized tax benefits | $ 663 | $ 893 | $ 758 | |||
Revenues | $ 67,825 | $ 63,736 | $ 77,543 | |||
Parent Company [Member] | ||||||
Revenues | ₪ | ₪ 10,000,000 | |||||
Minimum [Member] | ||||||
Carry forward tax losses for subsidiaries, term | 1 year | 1 year | ||||
Maximum [Member] | ||||||
Carry forward tax losses for subsidiaries, term | 20 years | 20 years | ||||
2017 [Member] | ||||||
Tax rate | 24.00% | 24.00% | ||||
2018 [Member] | ||||||
Tax rate | 23.00% | 23.00% | ||||
Subsidiary of Common Parent [Member] | ||||||
Carry forward tax losses | $ 14,330 | |||||
Development area A [Member] | ||||||
Tax rate | 9.00% | 9.00% | ||||
Development area A [Member] | Subsequent Event [Member] | ||||||
Tax rate | 7.50% | |||||
Other area [Member] | ||||||
Tax rate | 16.00% | 16.00% | ||||
Technological preferred enterprise [Member] | ||||||
Tax rate | 12.00% | 12.00% | ||||
Technological preferred enterprise development area A [Member] | ||||||
Tax rate | 7.50% | 7.50% | ||||
Foreign Tax Authority [Member] | ||||||
Tax rate | 4.00% | 4.00% |
TAXES ON INCOME (Schedule of Re
TAXES ON INCOME (Schedule of Reconciliation of Income Tax Rate) (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||||
Income before taxes as reported in the statements of operations | $ 904 | $ 5,031 | $ 3,402 | |
Tax rate | 20.00% | 25.00% | 26.50% | 26.50% |
Theoretical tax | $ 226 | $ 1,333 | $ 902 | |
Increase (decrease) in taxes: | ||||
Non-deductible items | 249 | 211 | 746 | |
Losses and other items for which a valuation allowance was provided | 977 | 579 | 939 | |
Realization of carryforward tax losses for which valuation allowance was provided | (541) | (587) | (2,382) | |
Changes in valuation allowance | (1,602) | (567) | (1,034) | |
Tax rate differences in subsidiaries | 236 | 276 | 571 | |
Provision for uncertain tax positions | (230) | 147 | 55 | |
Taxes in respect of prior years | 79 | 7 | ||
Tax withheld against which valuation allowance was provided this year | 602 | 671 | 391 | |
Investment tax credit | (220) | (158) | (160) | |
Other | 102 | 11 | 54 | |
Total taxes on income | $ (122) | $ 1,923 | $ 82 |
TAXES ON INCOME (Schedule of In
TAXES ON INCOME (Schedule of Income Taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Taxes on income (tax benefit): | |||
Current | $ 1,485 | $ 1,979 | $ 1,024 |
Deferred | (1,607) | (56) | (942) |
Total taxes on income | (122) | 1,923 | 82 |
Taxes on income (tax benefit): | |||
Domestic | 407 | 966 | 295 |
Foreign | (529) | 957 | (213) |
Total taxes on income | $ (122) | $ 1,923 | $ 82 |
TAXES ON INCOME (Schedule of De
TAXES ON INCOME (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||
Operating loss carry forwards | $ 4,781 | $ 6,178 |
Reserves and tax allowances | 2,936 | 2,646 |
Total deferred taxes before valuation allowance | 7,717 | 8,824 |
Valuation allowance | (5,603) | (7,276) |
Deferred tax assets, net | 2,114 | 1,548 |
Deferred tax liabilities: | 167 | 666 |
Net deferred tax assets | 1,947 | 882 |
Foreign [Member] | ||
Deferred tax assets: | ||
Net deferred tax assets | $ 1,947 | $ 882 |
TAXES ON INCOME (Schedule of Do
TAXES ON INCOME (Schedule of Domestic and Foreign Components of Income (Loss) Before Income Taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ (1,482) | $ (1,484) | $ (923) |
Foreign | 2,386 | 6,515 | 4,325 |
Income before income taxes | $ 904 | $ 5,031 | $ 3,402 |
TAXES ON INCOME (Schedule of 69
TAXES ON INCOME (Schedule of Reconciliation of Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Balance at the beginning of the year | $ 893 | $ 758 |
Additions based on tax positions taken related to the current year | 45 | 293 |
Reductions related to settlement of tax matters and limitation | (275) | (146) |
Foreign currency translation adjustments | (12) | |
Balance at the end of the year | $ 663 | $ 893 |
BALANCES AND TRANSACTIONS WIT70
BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Details) - Board of Directors Chairman [Member] $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Related Party Transaction [Line Items] | |
Minimum profit for bonus payment | $ 5,000 |
Cash Bonus [Member] | |
Related Party Transaction [Line Items] | |
Compensation | 30 |
Monthly Payment [Member] | |
Related Party Transaction [Line Items] | |
Compensation | $ 4 |
SEGMENT INFORMATION (Schedule o
SEGMENT INFORMATION (Schedule of Operating Segment Information) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues | $ 67,825 | $ 63,736 | $ 77,543 |
Depreciation and amortization | 1,740 | 1,503 | 1,967 |
Impairment of goodwill and intangible assets | 2,439 | ||
Operating income (loss), before financial expenses and taxes on income | 1,495 | 4,389 | 1,423 |
Financial income, net | (591) | 642 | 1,979 |
Tax benefits, net | (122) | 1,923 | 82 |
Net income | 1,026 | 3,108 | 3,320 |
Total long-lived assets | 22,084 | 10,978 | |
Perimeter [Member] | |||
Revenues | 32,372 | 30,761 | 37,554 |
Depreciation and amortization | 632 | 787 | 1,006 |
Impairment of goodwill and intangible assets | |||
Operating income (loss), before financial expenses and taxes on income | 5,799 | 6,023 | 6,770 |
Total long-lived assets | 6,346 | 6,641 | |
Projects [Member] | |||
Revenues | 31,823 | 34,128 | 39,198 |
Depreciation and amortization | 512 | 602 | 641 |
Impairment of goodwill and intangible assets | |||
Operating income (loss), before financial expenses and taxes on income | (163) | 1,095 | (148) |
Total long-lived assets | 3,198 | 3,360 | |
Video and Cyber segment [Member] | |||
Revenues | 5,626 | ||
Depreciation and amortization | 596 | ||
Operating income (loss), before financial expenses and taxes on income | (3,383) | ||
Total long-lived assets | 12,540 | ||
Cyber [Member] | |||
Revenues | 1,596 | 1,329 | |
Depreciation and amortization | 114 | 320 | |
Impairment of goodwill and intangible assets | 2,439 | ||
Operating income (loss), before financial expenses and taxes on income | (1,684) | (4,995) | |
Total long-lived assets | 977 | ||
Eliminations [Member] | |||
Revenues | (1,996) | (2,749) | (538) |
Depreciation and amortization | |||
Impairment of goodwill and intangible assets | |||
Operating income (loss), before financial expenses and taxes on income | $ (758) | $ (1,045) | $ (204) |
SEGMENT INFORMATION (Schedule72
SEGMENT INFORMATION (Schedule of Major Customer Data) (Details) - Revenues [Member] | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 8.60% | 13.30% | 14.80% |
Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 11.90% | 18.10% | 6.40% |
SEGMENT INFORMATION (Schedule73
SEGMENT INFORMATION (Schedule of Revenues and Long-Lived Assets Within Geographic Areas) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues | $ 67,825 | $ 63,736 | $ 77,543 |
Long-lived assets | 22,084 | 10,978 | |
Israel [Member] | |||
Revenues | 8,727 | 12,406 | 16,525 |
Long-lived assets | 3,554 | 3,889 | |
Europe [Member] | |||
Revenues | 8,330 | 7,891 | 9,591 |
Long-lived assets | 923 | 900 | |
North America [Member] | |||
Revenues | 23,467 | 17,749 | 21,165 |
South And Latin America [Member] | |||
Revenues | 10,364 | 13,443 | 8,813 |
Africa [Member] | |||
Revenues | 7,585 | 6,611 | 12,393 |
Other [Member] | |||
Revenues | 9,352 | 5,636 | $ 9,056 |
Long-lived assets | 666 | 729 | |
USA [Member] | |||
Long-lived assets | 2,860 | 3,073 | |
Canada [Member] | |||
Long-lived assets | $ 14,081 | $ 2,387 |
SELECTED STATEMENTS OF INCOME74
SELECTED STATEMENTS OF INCOME DATA (Schedule of Selected Statements of Income Data) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Financial expenses: | |||
Interest on long-term debt | $ (299) | $ (381) | $ (493) |
Foreign exchange loss, net | (595) | ||
Total financial expenses | (894) | (381) | (493) |
Financial income: | |||
Interest on short-term and long-term bank deposits | 303 | 54 | 141 |
Foreign exchange gains, net | 969 | 2,331 | |
Total financial income | 303 | 1,023 | 2,472 |
Financial expenses (income), net | $ (591) | $ 642 | $ 1,979 |