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Magal Security Systems Ltd. Message Board

  • shortsqueeze101 shortsqueeze101 Jun 30, 2009 5:02 PM Flag

    Earning write downs were announced on March 13th

    The year end numbers will have numerous write downs.

    YAHUD, ISRAEL, March 13, 2009 -- Magal Security Systems Ltd. (NASDAQ
    GMS: MAGS, TASE: MAGS) today announced that it expects to incur up to
    approximately $21.5 million in non-cash charges and reserves in its fourth quarter 2008
    results, which will primarily reduce the value of certain non-tangible assets on its balance
    Among the expected charges is an approximate $4 million reduction in a deferred tax
    asset. Taking into account developments in global markets over the past few months and
    the shrinkage of budgets manifested by reduced product demand, management believes
    that a write-down will be necessary. As the market situation improves, the company may
    be able to use this deferred tax asset based on expected profit levels.
    The Company believes that it will be required to record a goodwill impairment charge
    with respect to a goodwill asset of $12.5 million established in connection with the
    acquisition of a company in Europe. The recorded backlog for the European company is
    lower than expected and it is not clear if its operations will be able to recover to a level
    where its value will justify the goodwill figure. These factors triggered the need for an
    impairment analysis of the goodwill, which is expected to be completed in the next few
    In addition to the above non-tangible asset charges is an approximate $2.5 million reserve
    to be recorded on the Company’s balance sheet for future termination costs associated
    with the departure of the Company's former CEO as well as other executives.
    Management believes that an approximate $1.5 million provision for slow moving
    inventory will be required, resulting from the consolidation of inventory from different
    subsidiaries as well as identifying slow moving products that may not be sellable due to
    the global economic contraction, including in the markets in which the Company
    operates. Management also believes that as a result of the effects of the global economic
    slowdown on some of its customers and business partners, it will need to increase its
    reserves for doubtful accounts by approximately $1 million.
    The Company expects to publish its fourth quarter 2008 financial results as well as its
    2008 audited annual results, together with the filing of its annual report on Form 20-F
    with the Securities and Exchange Commission, in June 2009. The publication and filing
    will be followed by a conference call with investors. The timing of the conference call
    will be announced separately.

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