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Magal Security Systems Ltd. Message Board

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  • bengrahamvalueinvestor bengrahamvalueinvestor Nov 6, 2007 12:49 PM Flag

    Conference Call

    Mark Diker - Diker Management - Analyst
    Less than 20%. Okay. Thanks. That's helpful. And then, in terms of strategy going forward, we've seen you working with a lot of
    system integrators and oftentimes, when they are taking multiple bids, customer [differentiators] and what not is taking multiple
    bids from different system integrators. You are kind of a -- the [perimeter front team] or the technology of choice for your
    category, and you are part of every bit. Now you are making an acquisition where you are actually essentially owning one of
    the integrators.
    The first question, I guess, is that -- could that potentially create a conflict when you are trying to supply to maybe other
    competing bids and bidders in a situation? And what is the strategy of the Company going forward, to make more of these
    types of acquisitions or was this just a one-off?
    Izhar Dekel - Magal Security Systems - CEO
    I will start with the second question. In general, yes, one of our strategies is to acquire more companies in our business. Regarding
    the third question, the point you make, the risk of conflict between (inaudible) producer and a competitors' company, it might
    exist but not in that case. In that case, the client company -- integration company which is still in an area which you don't see
    such a conflict like that can be expected. And because of that, I don't see that risk of conflict between the integration and the
    product activity.
    Mark Diker - Diker Management - Analyst
    Okay. So you say acquire more companies in our business. I wouldn't say your business is a technology provider, not necessarily
    a system integrator, you acquired a system. It seems, from my understanding, you acquired a system integrator. That helps you
    deploy your products. Do you expect to acquire more integrator types like this?
    Izhar Dekel - Magal Security Systems - CEO
    We are looking for companies, also products and also some integration companies, and prepared in which area and what exactly
    type of integration company. With that acquisition, we also can increase our products to be sold to certain integration companies.
    Mark Diker - Diker Management - Analyst
    Okay. And did you - and maybe I missed it - did you state what you paid for the company and whether it was cash or stock?
    Izhar Dekel - Magal Security Systems - CEO
    We paid $6.8m in cash.
    Mark Diker - Diker Management - Analyst
    And is there an earn out?
    Izhar Dekel - Magal Security Systems - CEO
    Yes. There is an earn out, yes.
    Mark Diker - Diker Management - Analyst
    How big is the earn out?
    Izhar Dekel - Magal Security Systems - CEO
    15%.
    Mark Diker - Diker Management - Analyst
    15% of future revenues?
    Izhar Dekel - Magal Security Systems - CEO
    Yes. (Inaudible).
    Mark Diker - Diker Management - Analyst
    Profits, not in revenues?
    Izhar Dekel - Magal Security Systems - CEO
    Yes.
    Mark Diker - Diker Management - Analyst
    For two years?
    Izhar Dekel - Magal Security Systems - CEO
    Five.
    Mark Diker - Diker Management - Analyst
    Okay. And then, in terms of we talked about the pipeline, can you talk specifically about the U.S.? And for the past couple of
    years we've been talking about the low amount of penetration in perimeter security around airports and other types of
    installations, but specifically airports and we've talked about ports as well. And then we've been waiting for funds to be released
    from the government to either local governments or national governments to fund those. Are we starting to see more RFPs
    and more activity in that front or is it still not happening?

 
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