Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2019shares | |
Document and Entity Information [Abstract] | |
Document Type | 20-F |
Amendment Flag | false |
Document Period End Date | Dec. 31, 2019 |
Entity Registrant Name | MAGAL SECURITY SYSTEMS LTD |
Entity Central Index Key | 0000896494 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | FY |
Entity Filer Category | Non-accelerated Filer |
Entity Shell Company | false |
Entity Emerging Growth Company | false |
Entity Voluntary Filers | No |
Entity Common Stock, Shares Outstanding | 23,153,985 |
Entity Well-known Seasoned Issuer | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Incorporation State Country Code | IL |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 34,531 | $ 38,665 |
Short-term bank deposits | 16,749 | 13,150 |
Restricted cash and deposits | 324 | 3,135 |
Trade receivables (net of allowance for doubtful accounts of $ 2,119 and $ 2,751 at December 31, 2019 and 2018, respectively) | 18,697 | 14,176 |
Unbilled accounts receivable | 8,897 | 6,050 |
Other accounts receivable and prepaid expenses (Note 3) | 4,510 | 4,126 |
Inventories (Note 4) | 12,605 | 13,863 |
Total current assets | 96,313 | 93,165 |
LONG-TERM INVESTMENTS AND RECEIVABLES: | ||
Long-term deposits and restricted deposits and long-term other accounts receivables | 134 | 146 |
Severance pay fund | 1,363 | 1,289 |
Deferred tax assets (Note 13) | 4,215 | 3,459 |
Operating lease right-of-use assets (Note 5) | 3,492 | |
Total long-term investments and receivables | 9,204 | 4,894 |
PROPERTY AND EQUIPMENT, NET (Note 6) | 6,256 | 6,347 |
INTANGIBLE ASSETS, NET (Note 7) | 3,772 | 3,645 |
GOODWILL (Note 8) | 11,504 | 11,120 |
Total assets | 127,049 | 119,171 |
CURRENT LIABILITIES: | ||
Trade payables | 5,438 | 6,359 |
Customer advances | 5,587 | 10,170 |
Deferred revenues | 2,558 | 2,387 |
Other accounts payable and accrued expenses (Note 9) | 14,609 | 13,226 |
Short-term operating lease liabilities (Note 5) | 919 | |
Total current liabilities | 29,111 | 32,142 |
LONG-TERM LIABILITIES: | ||
Deferred revenues | 1,769 | 1,344 |
Deferred tax liabilities | 178 | 182 |
Accrued severance pay | 2,251 | 2,181 |
Long-term operating lease liabilities (Note 5) | 2,515 | |
Other long-term liabilities | 371 | 351 |
Total long-term liabilities | 7,084 | 4,058 |
COMMITMENTS AND CONTINGENT LIABILITIES (Note 10) | ||
REDEEMABLE NON-CONTROLLING INTEREST | 3,048 | 1,755 |
SHAREHOLDERS' EQUITY: | ||
Share capital - Ordinary shares of NIS 1 par value - Authorized: 39,748,000 shares at December 31, 2019 and December 31, 2018; Issued and outstanding: 23,153,985 shares at December 31, 2019 and 23,049,639 shares at December 31, 2018 | 6,750 | 6,721 |
Additional paid-in capital | 94,696 | 94,205 |
Accumulated other comprehensive loss | (627) | (1,827) |
Foreign currency translation adjustments (Company's standalone financial statements) | 5,924 | 2,795 |
Accumulated deficit | (18,961) | (20,678) |
Total Magal shareholders' equity | 87,782 | 81,216 |
Non-controlling interest | 24 | |
Total shareholders' equity (Note 11) | 87,806 | 81,216 |
Total liabilities and shareholders' equity | $ 127,049 | $ 119,171 |
CONSOLIDATED BALANCE SHEETS (PA
CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) $ in Thousands | Dec. 31, 2019USD ($)shares | Dec. 31, 2019₪ / shares | Dec. 31, 2018USD ($)shares | Dec. 31, 2018₪ / shares |
Statement of Financial Position [Abstract] | ||||
Trade receivables, allowance for doubtful accounts | $ | $ 2,119 | $ 2,751 | ||
Ordinary shares, par value per share | ₪ / shares | ₪ 1 | ₪ 1 | ||
Ordinary shares, shares authorized | 39,748,000 | 39,748,000 | ||
Ordinary shares, shares issued | 23,153,985 | 23,049,639 | ||
Ordinary shares, shares outstanding | 23,153,985 | 23,049,639 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | |||
Revenues | $ 86,831 | $ 92,602 | $ 64,292 |
Cost of revenues | 48,070 | 52,299 | 32,967 |
Gross profit | 38,761 | 40,303 | 31,325 |
Operating expenses: | |||
Research and development, net | 6,373 | 6,852 | 6,558 |
Selling and marketing | 16,902 | 18,557 | 18,158 |
General and administrative | 9,447 | 11,139 | 7,853 |
Total operating expenses | 32,722 | 36,548 | 32,569 |
Operating income (loss) | 6,039 | 3,755 | (1,244) |
Financial income (expenses), net | (1,667) | 1,361 | (3,961) |
Income (loss) before income taxes | 4,372 | 5,116 | (5,205) |
Taxes on income | 1,553 | 2,072 | 1,695 |
Net income (loss) | 2,819 | 3,044 | (6,900) |
Less - net income attributable to redeemable non-controlling interests and non-controlling interests | (526) | (95) | (14) |
Net income (loss) attributable to Magal shareholders | $ 2,293 | $ 2,949 | $ (6,914) |
Basic income (loss) per share | $ 0.07 | $ 0.12 | $ (0.30) |
Diluted income (loss) per share | $ 0.07 | $ 0.12 | $ (0.30) |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 2,819 | $ 3,044 | $ (6,900) |
Realized foreign currency translation adjustments | 64 | ||
Foreign currency translation adjustments | 1,200 | (1,740) | 1,772 |
Total comprehensive income (loss) | 4,019 | 1,304 | (5,064) |
Net income (loss) attributable to: | |||
Non-controlling interests | (26) | 14 | |
Redeemable non-controlling interests | 552 | 95 | |
Magal shareholders | 2,293 | 2,949 | (6,914) |
Net income (loss) | 2,819 | 3,044 | (6,900) |
Total comprehensive income (loss) attributable to: | |||
Non-controlling interests | (26) | 14 | |
Redeemable non-controlling interests | 717 | (5) | |
Magal shareholders | 3,328 | 1,309 | (5,078) |
Total comprehensive income (loss) | $ 4,019 | $ 1,304 | $ (5,064) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF 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, 2016 | $ 6,679 | $ 93,441 | $ (1,923) | $ 412 | $ (16,600) | $ (91) | $ 81,918 |
Balance, shares at Dec. 31, 2016 | 22,894,348 | ||||||
Issuance of shares upon exercise of warrants | $ 16 | 238 | 254 | ||||
Issuance of shares upon exercise of warrants, shares | 60,000 | ||||||
Issuance of shares upon exercise of employee stock options | $ 21 | 306 | 327 | ||||
Issuance of shares upon exercise of employee stock options, shares | 78,100 | ||||||
Stock-based compensation | 144 | 144 | |||||
Foreign currency translation adjustments - the Company | 5,447 | 5,447 | |||||
Purchase of non-controlling interests | (154) | 77 | (77) | ||||
Comprehensive income (loss): | |||||||
Net income (loss) | (6,914) | 14 | (6,900) | ||||
Realized foreign currency translation adjustments | 64 | 64 | |||||
Foreign currency translation adjustments | 1,772 | 1,772 | |||||
Balance at Dec. 31, 2017 | $ 6,716 | 93,975 | (87) | 5,859 | (23,514) | 82,949 | |
Balance, shares at Dec. 31, 2017 | 23,032,448 | ||||||
Cumulative effect adjustment resulting from adoption of new accounting standard | 114 | 114 | |||||
Issuance of shares upon exercise of employee stock options | $ 5 | 72 | 77 | ||||
Issuance of shares upon exercise of employee stock options, shares | 17,191 | ||||||
Stock-based compensation | 158 | 158 | |||||
Foreign currency translation adjustments - the Company | (3,064) | (3,064) | |||||
Comprehensive income (loss): | |||||||
Net income (loss) | 2,949 | 2,949 | |||||
Realized foreign currency translation adjustments | |||||||
Adjustment to the redemption value of redeemable non-controlling interests | (227) | (227) | |||||
Foreign currency translation adjustments | (1,740) | (1,740) | |||||
Balance at Dec. 31, 2018 | $ 6,721 | 94,205 | (1,827) | 2,795 | (20,678) | $ 81,216 | |
Balance, shares at Dec. 31, 2018 | 23,049,639 | 23,049,639 | |||||
Issuance of shares upon exercise of employee stock options | $ 29 | 474 | $ 503 | ||||
Issuance of shares upon exercise of employee stock options, shares | 104,346 | ||||||
Stock-based compensation | 392 | 392 | |||||
Repurchase of warrants previously issued by the Company | (375) | (375) | |||||
Foreign currency translation adjustments - the Company | 3,129 | 3,129 | |||||
Issue of shares to non-controlling interests | 50 | 50 | |||||
Comprehensive income (loss): | |||||||
Net income (loss) | 2,293 | (26) | 2,267 | ||||
Realized foreign currency translation adjustments | |||||||
Adjustment to the redemption value of redeemable non-controlling interests | (576) | (576) | |||||
Foreign currency translation adjustments | 1,200 | 1,200 | |||||
Balance at Dec. 31, 2019 | $ 6,750 | $ 94,696 | $ (627) | $ 5,924 | $ (18,961) | $ 24 | $ 87,806 |
Balance, shares at Dec. 31, 2019 | 23,153,985 | 23,153,985 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net income (loss) | $ 2,819 | $ 3,044 | $ (6,900) |
Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 2,100 | 2,245 | 1,876 |
Impairment of goodwill | 979 | ||
Loss (gain) on sale of property and equipment | 11 | (47) | (4) |
Increase (decrease) in accrued interest and exchange differences on short-term and other long-term liabilities | 693 | (520) | 2,996 |
Stock based compensation | 392 | 158 | 144 |
Decrease (increase) in trade receivables, net | (3,962) | 555 | 153 |
Increase in unbilled accounts receivable | (2,325) | (227) | (1,593) |
Decrease (increase) in other accounts receivable and prepaid expenses | (190) | (1,333) | 119 |
Decrease (increase) in inventories | 2,068 | (3,981) | (2,079) |
Decrease in long-term trade receivables | (52) | 329 | |
Increase in deferred income taxes | (631) | (968) | (467) |
Decrease in operating lease right-of-use assets | 957 | ||
Decrease in operating lease liabilities | (963) | ||
Increase (decrease) in trade payables | (1,312) | 1,071 | 787 |
Increase in other accounts payable and accrued expenses and deferred revenues | 1,016 | 3,114 | 1,521 |
Increase (decrease) in customer advances | (5,071) | 3,214 | 1,207 |
Accrued severance pay, net | (73) | 22 | (41) |
Net cash provided by (used in) operating activities | (4,523) | 7,326 | (1,952) |
Cash flows from investing activities: | |||
Investment in short-term deposits | (3,092) | ||
Investment in restricted deposits | (90) | ||
Release of short-term bank deposits | 12,873 | 4,103 | |
Investment in long-term bank deposits | (15) | ||
Proceeds from sale of property and equipment | 70 | 57 | 35 |
Purchase of property and equipment | (770) | (2,128) | (934) |
Investment in technology, know-how and patents | (897) | (296) | (13) |
Payments for acquisition of ESC BAZ, net of cash acquired (1) | (385) | ||
Net cash provided by (used in) investing activities | (4,779) | 10,121 | 3,176 |
Cash flows from financing activities: | |||
Proceeds from issuance of shares upon exercise of options to employees | 503 | 77 | 327 |
Issue of shares to non-controlling interests | 50 | ||
Repurchase of warrants previously issued by the Company | (375) | ||
Proceeds from issuance of shares upon exercise of warrants | 254 | ||
Purchase of shares from non-controlling interests, net | (77) | ||
Net cash provided by financing activities | 178 | 77 | 504 |
Effect of exchange rate changes on cash and cash equivalents | 2,089 | (1,029) | 2,076 |
Increase (decrease) in cash, cash equivalents and restricted cash | (7,035) | 16,495 | 3,804 |
Cash, cash equivalents and restricted cash at the beginning of the year | 41,800 | 25,305 | 21,501 |
Cash, cash equivalents and restricted cash at the end of the year | 34,765 | 41,800 | 25,305 |
Supplemental disclosures of cash flows activities: | |||
Cash and cash equivalents | 34,531 | 38,665 | 22,463 |
Restricted cash | 234 | 3,135 | 2,842 |
Cash, cash equivalents and restricted cash at the end of the year | 34,765 | 41,800 | 25,305 |
Cash paid during the year for: | |||
Interest | 15 | 20 | 148 |
Income taxes | 660 | 2,926 | 1,855 |
Significant non-cash transactions: | |||
Right-of-use asset recognized with corresponding lease liability | $ 620 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (PARENTHETICAL) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Net fair value of assets acquired and liabilities assumed: | |||
Redeemable non-controlling interest | $ (1,533) | ||
Total payments for acquisition, net of cash acquired | 385 | ||
ESC BAZ Ltd. [Member] | |||
Net fair value of assets acquired and liabilities assumed: | |||
Net assets (excluding cash and cash equivalents) | 1,222 | ||
Adjustment to deferred revenue | 20 | ||
Deferred tax liability, net | (80) | ||
Goodwill | 255 | ||
Redeemable non-controlling interest | (1,533) | ||
Total payments for acquisition, net of cash acquired | 385 | ||
ESC BAZ Ltd. [Member] | Customer Relationships [Member] | |||
Net fair value of assets acquired and liabilities assumed: | |||
Intangible assets | 164 | ||
ESC BAZ Ltd. [Member] | Technology [Member] | |||
Net fair value of assets acquired and liabilities assumed: | |||
Intangible assets | 190 | ||
ESC BAZ Ltd. [Member] | Backlog [Member] | |||
Net fair value of assets acquired and liabilities assumed: | |||
Intangible assets | $ 147 |
GENERAL
GENERAL | 12 Months Ended |
Dec. 31, 2019 | |
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. 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, as well as a proprietary command and control platform. Through December 31, 2018, the Company’s business was managed and reported in three business segments: Perimeter Products segment (Products), Turnkey Projects segment (Projects) and Video and Cyber security segment. Commencing January 1, 2019, the Company re-organized its structure into two divisions: Magal Integrated Solutions (“Projects” segment) and Senstar Product division (“Products” segment). Each division is reported as a separate business segment. See Note 15 for additional information. b. The ongoing Coronavirus pandemic that first surfaced in China and is spreading throughout the world has had an adverse effect on the Company's industry and the markets in which it operates (see Note 17 "Subsequent events" for additional information). c. 2018 Acquisition: On April 2, 2018 (the "Closing Date"), the Company completed the acquisition of a 55% controlling interest in ESC BAZ Ltd. ("ESC BAZ" or "BAZ") by means of a capital investment in ESC BAZ against the issuance of shares. As a part of the transaction, the Company invested $ 2,846 in ESC BAZ and granted a put option to the non-controlling interest for the remaining 45% of the shares of ESC BAZ, exercisable starting 2021. Starting 2019, the Company has an exercisable call option, which enables it to acquire the non-controlling interest in ESC BAZ. The exercise price of the put and call options is based on a formula calculation, driven by an adjusted multiple on the average operating income of ESC BAZ. ESC BAZ is an Israeli-based company, focused on the development and manufacture of military-grade smart security video observation and surveillance systems. The acquisition broadens the Company’s offerings, adding a wide range of modular and customizable medium and long range surveillance systems for distances from 500m up to 25km. ESC BAZ systems, which have been used successfully for over twenty years, are operational and field proven with customers including the Israeli Defense Forces, police and security services, as well as numerous other government and civilian customers worldwide. 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. The entire goodwill was assigned to the BAZ reporting unit within the Company’s Project segment. The results of ESC BAZ's operations have been included in the consolidated financial statements since April 2, 2018. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed: Net assets (including cash of $ 2,461) $ 3,683 Intangible assets 501 Adjustment to deferred revenue 20 Deferred tax liabilities (80 ) Goodwill 255 Redeemable non-controlling interests (1,533 ) Total purchase price $ 2,846 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 the market participant approach using an income approach. Intangible assets that are subject to amortization are amortized over their estimated useful lives. For technology, Magal is using the straight-line method and for customer relationships and backlog, Magal is using the acceleration method. The following table sets forth the components of intangible assets associated with the acquisition: Fair value Technology $ 190 Customer relationships 164 Backlog 147 Total intangible assets $ 501 Redeemable non-controlling interests in the amount of $ 1,533 were recorded at acquisition date and classified as temporary equity (mezzanine account), separate from permanent equity, on the consolidated balance sheets. The redeemable non-controlling interests are measured at each reporting period at the higher of their redemption amount or the non-controlling interest book value, in accordance with the requirements of ASC 810 “Consolidation” and ASC 480-10-S99-3A, “Distinguishing Liabilities from Equity” (See Note 2c). Acquisition related costs for the year ended December 31, 2018 amounted to approximately $ 67 and were included in general and administrative expenses in the statement of operations. The amounts of revenue and net earnings of ESC BAZ since the acquisition date were included in the consolidated income statement for the reporting period in which the acquisition was made are: Year ended December 31, 2018 Revenues $ 3,969 Net income $ 210 Unaudited pro forma condensed results of operations: The following represents the unaudited pro forma condensed results of operations for the years ended December 31, 2018 and 2017, assuming that the acquisition of ESC BAZ occurred on January 1, 2017. 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, 2018 2017 Unaudited Revenues $ 94,216 $ 69,851 Net income (loss) attributable to Magal shareholders' $ 3,198 $ (6,802 ) Basic and diluted net income (loss) per share $ 0.14 $ (0.30 ) |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
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, unless otherwise stated. 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, Canadian 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 Parent Company operates. In accordance with ASC 830, the Company has determined its reporting currency to be the U. S. dollar. The functional currency of the Parent Company is the NIS. The functional currency of the Parent 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. When the purchase price of a non-controlling interest exceeds the book value at the time of purchase, any excess or shortfall is recognized as an adjustment to additional paid-in capital. 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. Redeemable non-controlling interests are classified as temporary equity, separate from permanent equity, on the consolidated balance sheets and measured at each reporting period at the higher of their redemption amount or the non-controlling interest book value, in accordance with the requirements of ASC 810 “Consolidation” and ASC 480-10-S99-3A, “Distinguishing Liabilities from Equity”. The following table provides a reconciliation of the beginning and ending amount of the redeemable non-controlling interests for the years ended December 31, 2019 and 2018: December 31, 2019 2018 Balance at the beginning of the year $ 1,755 $ - Redeemable non-controlling interests at the acquisition of ESC BAZ - 1,533 Adjustment to the redemption value of redeemable non-controlling interests 576 227 Net income attributable to redeemable non-controlling interests 552 95 Foreign currency translation adjustments 165 (100 ) $ 3,048 $ 1,755 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 restricted cash and deposits: Short-term restricted cash and deposits is primarily invested in certificates of deposit that are restricted to withdrawals or use up to one year. Such certificates of deposit are used primarily as collateral for performance and advance payment guarantees to customers. Long-term restricted cash and deposits is primarily invested in certificates of deposit that are restricted to withdrawals or use for a period for more than one year. Such certificates of deposit are used primarily as collateral for performance guarantees to customers. f. 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. g. Inventories: Inventories are stated at the lower of cost or net realizable 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, 2019, 2018 and 2017, the Company recorded inventory write-offs in the amounts of $ 258, $ 118 and $ 128, respectively. Such write-offs were included in cost of revenues. h. Long-term other accounts receivables: Long-term other accounts receivables with long term payment terms are recorded at their estimated present values. i. 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 j. Intangible assets: Intangible assets are comprised of patents, capitalized and 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 - 26.7 Customer relationships 10.3 - 36.4 Backlog 50 - 100 During the years ended December 31, 2019, 2018 and 2017, the Company did not record any impairment charges relating to its intangible assets. k. Impairment of long-lived assets: The Company's long-lived assets (assets group) to be held or used, including right of use assets and intangible assets that are subject to amortization, 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. During the years ended December 2019, 2018 and 2017, the Company did not record any impairment charges attributable to long-lived assets. l. Goodwill: 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 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 quantitative 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. In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): - Simplifying the Test for Goodwill Impairment”, which eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of the goodwill impairment test) for the purpose of measuring a goodwill impairment charge. Instead, an impairment charge will be recognized based on the excess of a reporting unit’s carrying amount over its fair value. The standard will be applied prospectively and is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019, for public entities. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company early adopted the new guidance on January 1, 2018 (refer also to Note 8). m. 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. n. 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 and related services. Revenues from the Company's contracts are recognized using the five-step model in ASC 606 - "Revenue from Contracts with Customers" ("ASC 606"). At first, the Company determines if an agreement with a customer is considered to be a contract to the extent it has a commercial substance, it is approved in writing by both parties, all rights and obligations including payment terms are identifiable, the agreement between the parties creates enforceable rights and obligations, and collectability in exchange for goods and services that will be transferred to the customer is considered as probable. The Company then assesses the transaction price for a contract in order to determine the consideration the Company expects to receive for satisfying the performance obligations called for in the contract. To the extent, the transaction price includes variable consideration (e.g., contract penalties, unpriced change orders or like measures), the Company usually estimates the most likely amount that should be included in the transaction price subject to constraints based on the specific facts and circumstances. At the inception of a contract, the Company also evaluates and determines if a contract should be separated into more than one performance obligation. The Company's installation of comprehensive security systems contracts usually includes one-performance obligations due to a significant customization for each customer's specific needs and integrated system or solution. For most of the Company's comprehensive security systems installation contracts, where the Company's performance does not create an asset with an alternative use, the Company recognizes revenue over performance time because of continuous transfer of control to the customer. For these performance obligations that are satisfied over time, the Company generally recognizes revenue using an input method with revenue amounts being recognized proportionately as costs are incurred relative to the total expected costs to satisfy the performance obligation. The Company believes that costs incurred as a portion of total estimated costs is an appropriate measure of progress towards satisfaction of the performance obligation since this measure reasonably depicts the progress of the work effort and 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, the manner, and the terms of settlement, including in cases of termination for convenience. Project costs include materials purchased to produce the system, related labor, overhead expenses and subcontractor's costs. The performance costs are measured by monitoring costs and efforts devoted using records of actual costs incurred to date in the project compared to the total estimated project requirements, which corresponds to the costs related to earned revenues. The Company estimates the profit on a contract as the difference between the total estimated transaction price and the total expected performance costs of the contract and recognizes revenue and costs over the life of the 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. For contracts that are deemed to be loss contracts, the Company establishes forward loss reserves for total estimated costs that are in excess of total estimated consideration under a contract in the period in which they become probable. 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. In most instances, the period between the advanced recognition of revenues and the customers' billing generally ranges between one to six months. Revenues for performance obligations that are not recognized over time are recognized at the point in time when control is transferred to the customer (which is generally upon delivery) and include mainly revenues from the sales of security products and software license fees without significant installation work. The Company generally does not provide a right of return to its customers. For performance obligations that are satisfied at a point in time, the Company evaluates the point in time when the customer can direct the use of, and obtain the benefits from, the products. Shipping and handling costs are not considered performance obligations and are included in cost of sales as incurred. 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. The Company's service contracts include contracts in which the customer simultaneously receives and consumes the benefits provided as the performance obligations are satisfied, accordingly, related revenues are recognized, as those services are performed or over the term of the related agreements. 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. The Company generates revenues from the sales of its software products user licenses as well as from maintenance, support, consulting and training services. As required by ASC 606, following the determination of the performance obligations in the contract, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised license fees or services underlying each performance obligation. Standalone selling price is the price at which the Company would sell a promised license or service separately to a customer. The Company capitalizes sales commission as costs of obtaining a contract when they are incremental and if they are expected to be recovered. Amortization of sales commission expense is included in selling and marketing expenses in the accompanying consolidated statements of income. For costs that the Company would have capitalized and amortized over one year or less, the Company has elected to apply the practical expedient and expense these contract costs as incurred. Remaining performance obligations: Remaining performance obligations represents the future revenues expected to be recognized on firm orders received by the Company and is equivalent to the Company’s remaining performance obligations at the end of each period for a remaining period of more than a year. The Company's remaining performance obligations as of December 31, 2019 was $ 29.1 million, out of which the Company expects to recognize approximately 43% as revenue in 2020, with the remainder to be recognized thereafter. Unbilled accounts receivables: Unbilled accounts receivables increased by $2.8 million compared to the beginning balance of $6.1 million as of January 1, 2019. The increase was primarily due to $8.9 million of recognized revenues in advance of contractual billing during the year and $0.5 million of exchange rate impact. This was offset by a decrease of $6.6 million as a result of billings. The above resulted in an ending balance of $8.9 million as of December 31, 2019. Customer advances and deferred revenues: Customer advances and deferred revenues decreased by $4 million compared to the beginning balance of $13.9 million as of January 1, 2019. The decrease was primarily as a result of $12.8 million of recognized revenues from customer advances and deferred revenues. This was offset by $8.2 million of new unearned amounts under project contracts, as well as $0.6 million of exchange rate impact. The above resulted in an ending balance of $9.9 million as of December 31, 2019. o. 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 awards that ultimately vests 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. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an accounting policy election for forfeitures and classification on the statement of cash flows. For public companies, ASU 2016-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company adopted ASU 2016-09 during the first quarter of 2017, at which time it changed its accounting policy to account for forfeitures as they occur. There was no material impact of the adoption of this standard on the Company's financial statements. During the years ended December 31, 2019, 2018 and 2017, the Company recognized stock-based compensation expenses related to employee stock options in the amounts of $ 392, $ 158 and $ 144, 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. The following assumptions were used in the Binomial option pricing model for the years ended December 31, 2019 and 2018 (no options were granted in 2017): 2019 2018 Dividend yield 0% 0% Expected volatility 33.76%-38.31% 37.11%-43.98% Risk-free interest 1.42%-2.68% 2.5%-2.86% Contractual term 5-7 years 5-7 years Forfeiture rate 10%-12% 10% Suboptimal exercise multiple 1.32 1.32-1.33 p. 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. ASC 985, "Software", requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. Based on the Company's product development process, technological feasibility is established upon completion of a working model. Costs incurred by the Company between completion of the working models and the point at which the products are ready for general release are capitalized. Capitalized technology is included in intangible assets on the balance sheet and is amortized on a straight-line basis over its estimated useful life, which is generally five years. Amortization expenses are recognized under cost of revenues. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. q. Warranty costs: The Company provides various warranty periods 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 in the consolidated balance sheets for the years ended December 31, 2019 and 2018: December 31, 2019 2018 Warranty provision, beginning of year $ 1,360 $ 1,281 Charged to costs and expenses relating to new sales 374 569 Costs of warranties granted (278 ) (365 ) Foreign currency translation adjustments 115 (125 ) Warranty provision, end of year $ 1,571 $ 1,360 r. 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 options 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 684,887 shares, 400,000 shares and 137,988 shares for the years ended December 31, 2019, 2018 and 2017, respectively. s. 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, 2019, $ 40,607 was invested in major Israeli and U.S. banks, and approximately $ 10,997 was invested in other banks, mainly with the Royal Bank of Canada, BBVA Bancomer, Natwest Bank and Deutsche Bank. 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. 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, 2019 are as follows: Year ended December 31, 2019 2018 2017 Balance at the beginning of the year $ 2,751 $ 1,557 $ 2,064 Doubtful debt expenses during the year 141 1,453 299 Customers write-offs/collection during the year, net (790 ) (204 ) (957 ) Exchange rate 17 (55 ) 151 $ 2,119 $ 2,751 $ 1,557 As of December 31, 2019, the Company has no significant off-balance sheet concentrations of credit risk, such as foreign exchange contracts or foreign hedging arrangements. t. 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 establishes reserves for uncertain tax positions based on an evaluation of whether the tax position is “more likely than not” to be sustained upon examination. The Company records interest and penalties pertaining to its uncertain tax positions in the financial statements as income tax expense. In the years ended December 31, 2019, 2018 and 2017, the Company recorded tax expenses in connection to uncertainties in income taxes of $ 664, $ 717 and $ 245, respectively. u. 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, 2019, the actuarial value of these perquisites is estimated at approximately $ 616. This provision was included as part of accrued severance pay. Severance expenses for the years ended December 31, 2019, 2018 and 2017 amounted to approximately $ 846, $ 804 and $ 1,095, 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. v. 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, 2019, there was no material difference in the fair value of |
OTHER ACCOUNTS RECEIVABLE AND P
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019 2018 Prepaid expenses $ 1,717 $ 2,188 Government authorities 1,914 1,222 Advances to suppliers 454 445 Employees 36 62 Others 389 209 $ 4,510 $ 4,126 |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 4:- I NVENTORIES December 31, 2019 2018 Raw materials $ 5,232 $ 4,762 Work in progress 1,271 1,952 Finished products 6,102 7,149 $ 12,605 $ 13,863 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2019 | |
Lessee Disclosure [Abstract] | |
LEASES | NOTE 5:- LEASES The Company entered into operating leases primarily for offices and cars. The leases have remaining lease terms of up to 8.1 years, some of which may include options to extend the leases for up to an additional 9 years. The Company also elected the practical expedient (by class of underlying asset) to not separate lease and non-lease components and instead to account for each separate lease component and the non-lease components associated with that lease component as a single lease component for its leased cars. a. Supplemental balance sheet information related to operating leases is as follows: As of December 31, 2019 Operating lease ROU assets $ 3,492 Operating lease liabilities, current $ 919 Operating lease liabilities, long-term $ 2,515 Weighted average remaining lease term (in years) 2.92 Weighted average discount rate 3.64 % b. Future lease payments under operating leases as of December 31, 2019, are as follows: December 31, 2020 $ 1,052 2021 709 2022 467 2023 337 2024 307 2025 and thereafter 1,073 Total future lease payments $ 3,945 Less: imputed interest (511 ) Total lease liability balance $ 3,434 c. Operating lease expenses amounted to $ 1,095 for the year ended December 31, 2019. Operating lease expenses with a term of twelve months or less amounted to $ 201 for the year ended December 31, 2019. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | NOTE 6:- PROPERTY AND EQUIPMENT, NET a. Composition: December 31, 2019 2018 Cost: Land and buildings $ 7,839 $ 7,559 Machinery and equipment 3,606 3,392 Motor vehicles 2,620 2,440 Promotional displays 815 644 Office furniture and equipment 4,543 4,198 Leasehold improvements 790 739 20,213 18,972 Accumulated depreciation: Buildings 4,641 4,375 Machinery and equipment 2,982 2,689 Motor vehicles 1,513 1,244 Promotional displays 571 477 Office furniture and equipment 3,749 3,426 Leasehold improvements 501 414 13,957 12,625 Property and equipment, net $ 6,256 $ 6,347 b. Depreciation expenses amounted to $ 1,179, $ 1,070 and $ 960 for the years ended December 31, 2019, 2018 and 2017, respectively. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
INTANGIBLE ASSETS, NET | NOTE 7:- INTANGIBLE ASSETS, NET a. Composition: December 31, 2019 2018 Cost: Know-how and patents $ 4,780 $ 4,194 Technology 7,017 5,873 Customer relationships 1,661 1,582 Backlog 898 858 14,356 12,507 Accumulated amortization: Know-how and patents 4,755 4,162 Technology 3,632 2,774 Customer relationships 1,300 1,093 Backlog 897 833 10,584 8,862 Intangible assets, net $ 3,772 $ 3,645 b. Amortization expenses related to intangible assets amounted to $ 921, $ 1,175 and $ 916 for the years ended December 31, 2019, 2018 and 2017, respectively. c. Estimated amortization of intangible assets for the years ended: December 31, 2020 $ 866 2021 1,068 2022 884 2023 416 2024 274 2025 and thereafter 264 $ 3,772 |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2019 | |
GOODWILL [Abstract] | |
GOODWILL | NOTE 8:- GOODWILL With effect from January 1, 2019, as a result of the reorganization of the Company’s reporting structure into two business segments, the Company identifies two reporting units to which goodwill relates: 1. Products reporting unit which comprises the Products segment and; 2. BAZ reporting unit within the Project segment. a. Goodwill annual impairment test for the year ended December 31, 2019: During the year ended December 31, 2019 the Company did not record any goodwill impairment charges. 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 2019 were five years of projected net cash flows, a weighted average cost of capital rate of 13% 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. Goodwill annual impairment test for the BAZ reporting unit within the Project segment: The material assumptions used for the goodwill annual impairment test for the BAZ reporting unit within the Project segment, according to the income approach for 2019 were five years of projected net cash flows, a weighted average cost of capital rate of 15% and a long-term growth rate of 1.5%. 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. b. Goodwill annual impairment test for the years ended December 31, 2018 and 2017: In 2018 and 2017, for the purposes of impairment testing of goodwill, the Company identified four reporting units: (1) PIDS reporting unit within the Products segment, (2) BAZ reporting unit within the Project segment, (3) Cyber security and (4) Video reporting units, both the Cyber security and the Video reporting units were included within the former Video and Cyber security segment. In 2018, the excess of the reporting unit’s carrying amount over its fair value, for the Cyber security reporting unit within the former Video and Cyber security segment (currently included whiting the products segment), represented an impairment loss of goodwill in the amount of $979 which was recorded as part of the general and administrative expenses in the statements of operations. During the year ended December 31, 2017, the Company did not record any goodwill impairment charges. c. Changes in the carrying amount of goodwill for the years ended December 31, 2019 and 2018 are as follows: Products Projects Total As of January 1, 2018 $ 12,692 $ - $ 12,692 Acquisition of ESC BAZ - 255 255 Impairment of goodwill (979 ) - (979 ) Foreign currency translation adjustments (832 ) (16 ) (848 ) As of December 31, 2018 10,881 239 11,120 Foreign currency translation adjustments 363 21 384 As of December 31, 2019 11,244 260 11,504 |
OTHER ACCOUNTS PAYABLE AND ACCR
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 9:- OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES December 31, 2019 2018 Employees and payroll accruals $ 4,658 $ 4,250 Accrued expenses 6,181 7,190 Government authorities 917 156 Income tax payable and tax provision 2,286 1,457 Others 567 173 $ 14,609 $ 13,226 |
COMMITMENTS AND CONTINGENT LIAB
COMMITMENTS AND CONTINGENT LIABILITIES | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENT LIABILITIES | NOTE 10:- 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 Under the research and development agreements between the Parent Company and the Innovation Authority and the Company's Israeli subsidiary and the Innovation Authority and pursuant to applicable laws, the Parent 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 amounting to $ 118 and $ 134, respectively, from the Innovation Authority. Following the cancelation of the 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 2018 and 2017. During 2019, the Company was notified of the approval of a grant of $ 113, which was received in 2020. Royalties paid to the Innovation Authority amounted to $ 23, $ 6 and $ 33 for the years ended December 31, 2019, 2018 and 2017, respectively, which were recorded in cost of revenues. As of December 31, 2019, the Company and its Israeli subsidiary had remaining contingent obligations to pay royalties in the amount of approximately $ 1,702. b. Royalty commitments to a third party: During 2002, the Parent Company entered into a development agreement for planning, developing and manufacturing a security system with a third party. Under the agreement, the Parent Company agreed to pay the third party royalty fees based on a defined formula. As of December 31, 2019, royalty commitments under the agreement amounted to $ 55. c. Guarantees: As of December 31, 2019 and 2018, the Company had credit lines of approximately $ 16,152 and $ 16,468, out of which $ 9,098 and $ 9,345 were utilized for bank performance guarantees, advance payment guarantees and bid bond guarantees from several banks, mainly in Israel and Canada. d. Restricted cash and deposits: As of December 31, 2019 the Company's restricted cash and deposits relate mainly to ongoing operation. e. Legal proceedings: 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. On February 2019, The Parent Company’s Mexican subsidiary initiated a dispute procedure with the Mexican tax authorities requesting the recognition of deduction of certain expenses as claimed by the Mexican subsidiary in its annual tax filings. On July 2019, the tax authorities denied the Mexican subsidiary position. On September 2019, the Mexican subsidiary filed an annulment claim before the Mexican tax court appealing the tax authority denial. The case is currently being reviewed by the court and pending of resolution. According to the Company’s out-side legal counsel the possibility of the Mexican tax court or Judiciary ruling against the Mexican subsidiary is remote. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | NOTE 11:- 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: 23,153,985 Ordinary shares at December 31, 2019 and 23,049,639 Ordinary shares at December 31, 2018. 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 the number of Ordinary shares available for issuance under the 2003 Plan by an additional 1,000,000 shares and the termination of the 2003 Plan was extended from October 2013 to October 2018. Any options that are cancelled or forfeited before expiration become available for future grant. 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 remained available for future option grants under the 2003 Plan as of the date of the adoption of the 2010 Plan and any ordinary shares that became available in the future under the 2003 Plan as a result of expiration, cancellation or relinquishment of any option outstanding under the 2003 Plan were 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, 2019, 154,252 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, 2019 and changes during the year ended December 31, 2019 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, 2019 889,118 4.865 51.25 - Granted 124,000 4.400 Exercised (104,346 ) 4.841 Forfeited (48,226 ) 4.984 Outstanding at December 31, 2019 860,546 4.794 49.43 - Exercisable at December 31, 2019 168,547 4.295 21.3 - The weighted-average grant-date fair value of options granted during the years ended December 31, 2019 and 2018 were $ 1.33 and $ 1.73, respectively. No options were granted in 2017. 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 2019 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, 2019, 2018 and 2017 were approximately $37, $17 and $ 174. As of December 31, 2019, there was approximately $ 616 of unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Company's stock option plan. This cost is expected to be recognized over a period of up to 4 years. The options outstanding as of December 31, 2019 are follows: Number of options outstanding as of December 31, 2019 Exercise price Weighted average remaining contractual life Number of options exercisable as of December 31, 2019 (In months) 118,546 4.15 19.79 118,546 24,000 4.40 17.23 24,000 39,000 4.86 31.95 26,001 74,000 4.18 69.09 0 91,000 4.31 59.92 0 30,000 4.51 60.12 0 20,000 5.05 66.05 0 440,000 5.15 53.78 0 24,000 5.61 49.23 0 860,546 49.43 168,547 d. 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 expired on December 30, 2018. The remaining 50% became exercisable on December 31, 2014 and were scheduled to 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. During 2017, 60,000 warrants were exercised. No warrants were exercised during 2018. In October 2018, the Company agreed to purchase the remaining 838,203 warrants from the warrant holders for an aggregate consideration of $ 375. Under Israeli law, the consummation of such transaction was subject to court approval, which was granted on January 16, 2019. The closing of the purchase of the warrants occurred in the first quarter of 2019. 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, 2019 | |
Earnings Per Share [Abstract] | |
BASIC AND DILUTED NET EARNINGS PER SHARE | NOTE 12:- BASIC AND DILUTED NET EARNINGS PER SHARE Year ended December 31, 2019 2018 2017 Numerator: Income (loss) attributable to Magal shareholders' $ 1,717 $ 2,722 $ (6,914 ) Denominator: Denominator for basic net earnings (loss) per share weighted-average number of shares outstanding 23,129,394 23,040,436 22,989,009 Effect of diluting securities: Employee stock options 15,346 247,315 - Denominator for diluted net earnings (loss) per share - adjusted weighted average shares and assumed exercises 23,144,740 23,287,751 22,989,009 |
TAXES ON INCOME
TAXES ON INCOME | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
TAXES ON INCOME | NOTE 13:- 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, companies are entitled to various tax benefits by virtue of the "preferred 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: 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%). The Company has applied the Amendment effective from the 2017 tax year. The Company's Israeli subsidiaries 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%). 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 23% in 2019 and 2018 and 24% in 2017. 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%-30%. 3. Tax Reform in U.S.: On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the "Act"), which among other provisions, reduced the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018. At December 31, 2017, the Company made reasonable estimates of the effects on the existing deferred tax balances for which provisional amounts were recorded in 2017 and finalized in 2018. The Company re-measured certain of its U.S. deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future. The estimated tax expense recorded related to the re-measurement of the deferred tax balance was $ 377, mainly due to reduction in the U.S. corporate tax rate. 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 Parent 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 the 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 2008-2012 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, 2019 2018 2017 Income (loss) before taxes as reported in the statements of operations $ 4,372 $ 5,116 $ (5,205 ) Tax rate 23 % 23 % 24 % Theoretical tax $ 1,006 $ 1,177 $ (1,249 ) Increase (decrease) in taxes: Non-deductible items 264 32 185 Losses and other items for which a valuation allowance was provided 369 972 1,769 Realization of carryforward tax losses for which valuation allowance was provided (386 ) (1,293 ) (28 ) Changes in valuation allowance (862 ) (377 ) - Tax rate differences in subsidiaries and benefit from reduced tax rates (26 ) 223 (71 ) Adjustment of deferred tax balances following changes in tax rate for "preferred enterprise" - - 410 Provision for uncertain tax positions 654 717 245 Taxes in respect of prior years (1 ) (2 ) 21 Tax withheld against which valuation allowance was provided this year 694 755 638 Investment tax credit (163 ) (180 ) (178 ) Other 4 48 (47 ) Taxes on income (tax benefit) in the statements of operations $ 1,553 $ 2,072 $ 1,695 f. Taxes on income (tax benefit) included in the statements of operations: Year ended December 31, 2019 2018 2017 Current $ 2,184 $ 3,003 $ 2,162 Deferred (631 ) (931 ) (467 ) $ 1,553 $ 2,072 $ 1,695 Domestic $ 820 $ 1,460 $ 893 Foreign 733 612 802 $ 1,553 $ 2,072 $ 1,695 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, 2019 2018 Deferred tax assets: Operating losses carry forwards $ 4,730 $ 3,313 Reserves, tax allowances, capital losses carry forwards, operating lease and others 6,128 7,207 Total deferred taxes before valuation allowance 10,858 10,520 Valuation allowance (4,460 ) (5,207 ) Deferred tax assets, net: 6,398 5,313 Deferred tax liabilities: Property and equipment, intangible assets, operating lease and others (2,361 ) (2,036 ) Deferred tax liabilities: (2,361 ) (2,036 ) Net deferred tax assets $ 4,037 $ 3,277 Domestic $ 886 $ - Foreign $ 3,151 $ 3,277 h. The domestic and foreign components of income (loss) before taxes are as follows: Year ended December 31, 2019 2018 2017 Domestic $ 1,730 $ 1,705 $ (1,605 ) Foreign 2,642 3,411 (3,600 ) $ 4,372 $ 5,116 $ (5,205 ) i. Net operating carry forward tax losses: The Parent Company has estimated total available carry forward operating tax losses of $ 3,419 to offset against future taxable income. As of December 31, 2019, the Company recorded a deferred tax asset with respect to those carry forward tax losses in the amount of $ 547. There is no time limitation for the realization of such tax losses. The Parent Company's subsidiaries have estimated total available carry forward operating tax losses of $ 21,199, which may be used to offset against future taxable income, for periods ranging between 1 to 20 years. As of December 31, 2019, the Company recorded a net deferred tax asset after valuation allowance in the amount of $ 2,434 for its subsidiaries' carry forward tax losses. Utilization of U.S. net operating losses (federal and state 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, 2019 and 2018, balances in respect to ASC 740, "Income Taxes" amounted to $ 2,286 and $ 1,611, respectively. A reconciliation of the beginning and ending amount of unrecognized tax positions is as follows: December 31, 2019 2018 Balance at the beginning of the year $ 1,611 $ 908 Additions based on tax positions taken related to the current year 654 717 Foreign currency translation adjustments 21 (14 ) Balance at the end of the year $ 2,286 $ 1,611 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, 2019 | |
Related Party Transactions [Abstract] | |
BALANCES AND TRANSACTIONS WITH RELATED PARTIES | NOTE 14:- 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, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | NOTE 15:- SEGMENT INFORMATION The Company applies ASC 280, " Through December 31, 2018, the Company’s business was managed and reported in three business segments: Perimeter Products segment (Products), Turnkey Projects segment (Projects) and Video and Cyber security segment. Commencing on January 1, 2019, in order to more accurately reflect management’s focus, organizational alignment, the Company’s customer base and end markets, the Company reorganized its structure into two divisions: Magal Integrated Solutions (“Projects” segment) and Senstar Product division (“Products” segment). Each division represents a separate business segment. 1. Perimeter Products segment (Products) - sales of perimeter products, including services and maintenance that are performed either on a fixed-price basis or pursuant to time-and-materials based contracts, software and hardware products, in the field of Video management, for monitoring, securing, and the active management of network video systems, video analytics, as well as wired, wireless, and fiber optic communication networks and 2. Integrated Solutions (“Projects”) - installation of comprehensive turnkey solutions for which revenues are generated from long-term fixed price contracts and modular and customizable medium and long range surveillance systems. The Company restated its financial results to reflect the new segments for the years ended December 31, 2018 and December 31, 2017. The measurement of the reportable operating segments is based on the same accounting principles applied in these financial statements which includes certain corporate overhead allocations. a. The following data present the revenues, expenditures, assets and other operating data of the Company's operating segments: Year ended December 31, 2019 Products Projects Eliminations Total Revenues $ 36,633 $ 52,426 $ (2,228 ) $ 86,831 Depreciation and amortization $ 1,260 $ 840 $ - $ 2,100 Operating income (loss), before financial expenses and taxes on income $ 3,880 $ 3,536 $ (1,377 ) $ 6,039 Financial expenses, net (1,667 ) Taxes on income (1,553 ) Net income $ 2,819 Year ended December 31, 2018 Products Projects Eliminations Total Revenues $ 35,169 $ 61,119 $ (3,686 ) $ 92,602 Depreciation, amortization and impairment of goodwill $ 2,273 $ 951 $ - $ 3,224 Operating income (loss), before financial expenses and taxes on income $ 1,425 $ 4,356 $ (2,026 ) $ 3,755 Financial income, net 1,361 Taxes on income (2,072 ) Net income $ 3,044 Year ended December 31, 2017 Products Projects Eliminations Total Revenues $ 28,471 $ 38,247 $ (2,426 ) $ 64,292 Depreciation, amortization $ 1,369 $ 507 $ - $ 1,876 Operating income (loss), before financial expenses and taxes on income $ (2,483 ) $ 2,576 $ (1,337 ) $ (1,244 ) Financial expenses, net (3,961 ) Taxes on income (1,695 ) Loss $ (6,900 ) Year ended December 31, 2019 Products Projects Total Total long-lived assets $ 16,925 $ 4,607 $ 21,532 Year ended December 31, 2018 Products Projects Total Total long-lived assets $ 16,845 $ 4,267 $ 21,112 Long-lived assets include property and equipment, net, intangible assets, net and goodwill. b. Major customer data (percentage of total revenues): Year ended December 31, 2019 2018 2017 Customer A 5.4 % 25.3 % 14.6 % Customer B 17.2 % 10.9 % 10.2 % c. Geographical information: The following is a summary of revenues within geographic areas based on end customers’ location and long-lived assets: 1. Revenues: Year ended December 31, 2019 2018 2017 Israel $ 18,975 $ 13,577 $ 9,599 Europe 18,896 14,021 11,232 North America 19,713 24,324 15,547 South and Latin America 8,077 25,471 13,152 Africa 11,144 7,126 9,370 Others 10,026 8,083 5,392 $ 86,831 $ 92,602 $ 64,292 2. Long-lived assets: December 31, 2019 2018 Israel $ 3,641 $ 3,720 Europe 914 970 USA 2,177 2,377 Canada 13,999 13,337 Others 801 708 $ 21,532 $ 21,112 Long-lived assets include property and equipment, net, intangible assets, net and goodwill. |
SELECTED STATEMENTS OF INCOME D
SELECTED STATEMENTS OF INCOME DATA | 12 Months Ended |
Dec. 31, 2019 | |
Other Income and Expenses [Abstract] | |
SELECTED STATEMENTS OF INCOME DATA | NOTE 16:- SELECTED STATEMENTS OF INCOME DATA Financial expenses: Year ended December 31, 2019 2018 2017 Financial expenses: Interest on short-term and long-term bank credit and bank charges and long-term debt $ (360 ) $ (412 ) $ (349 ) Realization of foreign currency translation adjustments - - (64 ) Foreign exchange loss, net (1,971 ) - (4,010 ) (2,331 ) (412 ) (4,423 ) Financial income: Interest on short-term and long-term bank deposits 664 670 462 Foreign exchange gains, net - 1,103 - 664 1,773 462 Financial income (expenses), net $ (1,667 ) $ 1,361 $ (3,961 ) |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 17:- SUBSEQUENT EVENTS The ongoing Coronavirus pandemic that first surfaced in China and is spreading throughout the world has had an adverse effect on the Company's industry and the markets in which it operates. The Coronavirus outbreak has impacted the verticals in which the Company’s customers operate and has resulted in a slowdown of the Company's business with some of its customers. The Company has experienced postponed orders and suspended decision making in other markets that are likely to be negatively affected by the Coronavirus. Further, the guidance of social distancing and the requirements to work from home in key territories such as Israel, USA, Canada, Germany, Spain, Mexico and other countries, in addition to greatly reduced travel globally, has resulted in a substantial curtailment of business activities, which has affected and is likely to continue to affect the Company's ability to conduct fieldwork as well as deliver products and services. The Company is unable at this time to estimate the extent of the effect of the Coronavirus on its business. However, in order to mitigate the impact on the business, the Company adopted a plan to reduce expenses and enacted cost savings measures. Because the outbreak may also result in uncertainties in relation to the assumptions and estimations associated with the measurement of various assets and liabilities in the financial statements that the Company may not have previously recognized or considered, the occurrence of the outbreak may add additional risks that the carrying amounts of assets and liabilities may require certain adjustments within the next financial year which financial effect cannot be reasonably estimated at this stage. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
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, Canadian 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 Parent Company operates. In accordance with ASC 830, the Company has determined its reporting currency to be the U. S. dollar. The functional currency of the Parent Company is the NIS. The functional currency of the Parent 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. When the purchase price of a non-controlling interest exceeds the book value at the time of purchase, any excess or shortfall is recognized as an adjustment to additional paid-in capital. 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. Redeemable non-controlling interests are classified as temporary equity, separate from permanent equity, on the consolidated balance sheets and measured at each reporting period at the higher of their redemption amount or the non-controlling interest book value, in accordance with the requirements of ASC 810 “Consolidation” and ASC 480-10-S99-3A, “Distinguishing Liabilities from Equity”. The following table provides a reconciliation of the beginning and ending amount of the redeemable non-controlling interests for the years ended December 31, 2019 and 2018: December 31, 2019 2018 Balance at the beginning of the year $ 1,755 $ - Redeemable non-controlling interests at the acquisition of ESC BAZ - 1,533 Adjustment to the redemption value of redeemable non-controlling interests 576 227 Net income attributable to redeemable non-controlling interests 552 95 Foreign currency translation adjustments 165 (100 ) $ 3,048 $ 1,755 |
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 restricted cash and deposits | e. Short-term and long-term restricted cash and deposits: Short-term restricted cash and deposits is primarily invested in certificates of deposit that are restricted to withdrawals or use up to one year. Such certificates of deposit are used primarily as collateral for performance and advance payment guarantees to customers. Long-term restricted cash and deposits is primarily invested in certificates of deposit that are restricted to withdrawals or use for a period for more than one year. Such certificates of deposit are used primarily as collateral for performance guarantees to customers. |
Short-term and long-term bank deposits | f. 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 | g. Inventories: Inventories are stated at the lower of cost or net realizable 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, 2019, 2018 and 2017, the Company recorded inventory write-offs in the amounts of $ 258, $ 118 and $ 128, respectively. Such write-offs were included in cost of revenues. |
Long-term other accounts receivables | h. Long-term other accounts receivables: Long-term other accounts receivables with long term payment terms are recorded at their estimated present values. |
Property and equipment | i. 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 | j. Intangible assets: Intangible assets are comprised of patents, capitalized and 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 - 26.7 Customer relationships 10.3 - 36.4 Backlog 50 - 100 During the years ended December 31, 2019, 2018 and 2017, the Company did not record any impairment charges relating to its intangible assets. |
Impairment of long-lived assets | k. Impairment of long-lived assets: The Company's long-lived assets (assets group) to be held or used, including right of use assets and intangible assets that are subject to amortization, 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. During the years ended December 2019, 2018 and 2017, the Company did not record any impairment charges attributable to long-lived assets. |
Goodwill | l. Goodwill: 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 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 quantitative 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. In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): - Simplifying the Test for Goodwill Impairment”, which eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of the goodwill impairment test) for the purpose of measuring a goodwill impairment charge. Instead, an impairment charge will be recognized based on the excess of a reporting unit’s carrying amount over its fair value. The standard will be applied prospectively and is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019, for public entities. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company early adopted the new guidance on January 1, 2018 (refer also to Note 8). |
Business combinations | m. 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 | n. 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 and related services. Revenues from the Company's contracts are recognized using the five-step model in ASC 606 - "Revenue from Contracts with Customers" ("ASC 606"). At first, the Company determines if an agreement with a customer is considered to be a contract to the extent it has a commercial substance, it is approved in writing by both parties, all rights and obligations including payment terms are identifiable, the agreement between the parties creates enforceable rights and obligations, and collectability in exchange for goods and services that will be transferred to the customer is considered as probable. The Company then assesses the transaction price for a contract in order to determine the consideration the Company expects to receive for satisfying the performance obligations called for in the contract. To the extent, the transaction price includes variable consideration (e.g., contract penalties, unpriced change orders or like measures), the Company usually estimates the most likely amount that should be included in the transaction price subject to constraints based on the specific facts and circumstances. At the inception of a contract, the Company also evaluates and determines if a contract should be separated into more than one performance obligation. The Company's installation of comprehensive security systems contracts usually includes one-performance obligations due to a significant customization for each customer's specific needs and integrated system or solution. For most of the Company's comprehensive security systems installation contracts, where the Company's performance does not create an asset with an alternative use, the Company recognizes revenue over performance time because of continuous transfer of control to the customer. For these performance obligations that are satisfied over time, the Company generally recognizes revenue using an input method with revenue amounts being recognized proportionately as costs are incurred relative to the total expected costs to satisfy the performance obligation. The Company believes that costs incurred as a portion of total estimated costs is an appropriate measure of progress towards satisfaction of the performance obligation since this measure reasonably depicts the progress of the work effort and 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, the manner, and the terms of settlement, including in cases of termination for convenience. Project costs include materials purchased to produce the system, related labor, overhead expenses and subcontractor's costs. The performance costs are measured by monitoring costs and efforts devoted using records of actual costs incurred to date in the project compared to the total estimated project requirements, which corresponds to the costs related to earned revenues. The Company estimates the profit on a contract as the difference between the total estimated transaction price and the total expected performance costs of the contract and recognizes revenue and costs over the life of the 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. For contracts that are deemed to be loss contracts, the Company establishes forward loss reserves for total estimated costs that are in excess of total estimated consideration under a contract in the period in which they become probable. 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. In most instances, the period between the advanced recognition of revenues and the customers' billing generally ranges between one to six months. Revenues for performance obligations that are not recognized over time are recognized at the point in time when control is transferred to the customer (which is generally upon delivery) and include mainly revenues from the sales of security products and software license fees without significant installation work. The Company generally does not provide a right of return to its customers. For performance obligations that are satisfied at a point in time, the Company evaluates the point in time when the customer can direct the use of, and obtain the benefits from, the products. Shipping and handling costs are not considered performance obligations and are included in cost of sales as incurred. 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. The Company's service contracts include contracts in which the customer simultaneously receives and consumes the benefits provided as the performance obligations are satisfied, accordingly, related revenues are recognized, as those services are performed or over the term of the related agreements. 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. The Company generates revenues from the sales of its software products user licenses as well as from maintenance, support, consulting and training services. As required by ASC 606, following the determination of the performance obligations in the contract, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised license fees or services underlying each performance obligation. Standalone selling price is the price at which the Company would sell a promised license or service separately to a customer. The Company capitalizes sales commission as costs of obtaining a contract when they are incremental and if they are expected to be recovered. Amortization of sales commission expense is included in selling and marketing expenses in the accompanying consolidated statements of income. For costs that the Company would have capitalized and amortized over one year or less, the Company has elected to apply the practical expedient and expense these contract costs as incurred. Remaining performance obligations: Remaining performance obligations represents the future revenues expected to be recognized on firm orders received by the Company and is equivalent to the Company’s remaining performance obligations at the end of each period for a remaining period of more than a year. The Company's remaining performance obligations as of December 31, 2019 was $ 29.1 million, out of which the Company expects to recognize approximately 43% as revenue in 2020, with the remainder to be recognized thereafter. Unbilled accounts receivables: Unbilled accounts receivables increased by $2.8 million compared to the beginning balance of $6.1 million as of January 1, 2019. The increase was primarily due to $8.9 million of recognized revenues in advance of contractual billing during the year and $0.5 million of exchange rate impact. This was offset by a decrease of $6.6 million as a result of billings. The above resulted in an ending balance of $8.9 million as of December 31, 2019. Customer advances and deferred revenues: Customer advances and deferred revenues decreased by $4 million compared to the beginning balance of $13.9 million as of January 1, 2019. The decrease was primarily as a result of $12.8 million of recognized revenues from customer advances and deferred revenues. This was offset by $8.2 million of new unearned amounts under project contracts, as well as $0.6 million of exchange rate impact. The above resulted in an ending balance of $9.9 million as of December 31, 2019. |
Accounting for stock-based compensation | o. 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 awards that ultimately vests 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. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an accounting policy election for forfeitures and classification on the statement of cash flows. For public companies, ASU 2016-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company adopted ASU 2016-09 during the first quarter of 2017, at which time it changed its accounting policy to account for forfeitures as they occur. There was no material impact of the adoption of this standard on the Company's financial statements. During the years ended December 31, 2019, 2018 and 2017, the Company recognized stock-based compensation expenses related to employee stock options in the amounts of $ 392, $ 158 and $ 144, 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. The following assumptions were used in the Binomial option pricing model for the years ended December 31, 2019 and 2018 (no options were granted in 2017): 2019 2018 Dividend yield 0% 0% Expected volatility 33.76%-38.31% 37.11%-43.98% Risk-free interest 1.42%-2.68% 2.5%-2.86% Contractual term 5-7 years 5-7 years Forfeiture rate 10%-12% 10% Suboptimal exercise multiple 1.32 1.32-1.33 |
Research and development costs | p. 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. ASC 985, "Software", requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. Based on the Company's product development process, technological feasibility is established upon completion of a working model. Costs incurred by the Company between completion of the working models and the point at which the products are ready for general release are capitalized. Capitalized technology is included in intangible assets on the balance sheet and is amortized on a straight-line basis over its estimated useful life, which is generally five years. Amortization expenses are recognized under cost of revenues. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. |
Warranty costs | q. Warranty costs: The Company provides various warranty periods 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 in the consolidated balance sheets for the years ended December 31, 2019 and 2018: December 31, 2019 2018 Warranty provision, beginning of year $ 1,360 $ 1,281 Charged to costs and expenses relating to new sales 374 569 Costs of warranties granted (278 ) (365 ) Foreign currency translation adjustments 115 (125 ) Warranty provision, end of year $ 1,571 $ 1,360 |
Net earnings per share | r. 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 options 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 684,887 shares, 400,000 shares and 137,988 shares for the years ended December 31, 2019, 2018 and 2017, respectively. |
Concentrations of credit risk | s. 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, 2019, $ 40,607 was invested in major Israeli and U.S. banks, and approximately $ 10,997 was invested in other banks, mainly with the Royal Bank of Canada, BBVA Bancomer, Natwest Bank and Deutsche Bank. 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. 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, 2019 are as follows: Year ended December 31, 2019 2018 2017 Balance at the beginning of the year $ 2,751 $ 1,557 $ 2,064 Doubtful debt expenses during the year 141 1,453 299 Customers write-offs/collection during the year, net (790 ) (204 ) (957 ) Exchange rate 17 (55 ) 151 $ 2,119 $ 2,751 $ 1,557 As of December 31, 2019, the Company has no significant off-balance sheet concentrations of credit risk, such as foreign exchange contracts or foreign hedging arrangements. |
Income taxes | t. 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 establishes reserves for uncertain tax positions based on an evaluation of whether the tax position is “more likely than not” to be sustained upon examination. The Company records interest and penalties pertaining to its uncertain tax positions in the financial statements as income tax expense. In the years ended December 31, 2019, 2018 and 2017, the Company recorded tax expenses in connection to uncertainties in income taxes of $ 664, $ 717 and $ 245, respectively. |
Severance pay | u. 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, 2019, the actuarial value of these perquisites is estimated at approximately $ 616. This provision was included as part of accrued severance pay. Severance expenses for the years ended December 31, 2019, 2018 and 2017 amounted to approximately $ 846, $ 804 and $ 1,095, 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 | v. 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, 2019, there was no material difference in the fair value of the Company's long-term borrowing compared to their carrying amount. |
Advertising expenses | w. Advertising expenses: Advertising costs are expensed as incurred. Advertising expenses for the years ended December 31, 2019, 2018 and 2017 were $ 224, $ 151 and $ 194, respectively. |
Fair value measurements | x. 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, 2019, 2018 and 2017, 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 (loss) from foreign currency translation adjustments. The total accumulated other comprehensive loss, net was comprised as follows: Year ended December 31, 2019 2018 2017 Foreign currency translation adjustments $ (627 ) $ (1,827 ) $ (87 ) Total accumulated other comprehensive loss $ (627 ) $ (1,827 ) $ (87 ) |
Non-controlling interest | z. Non-controlling interest: The Company established a subsidiary in India, which at the outset was 51% owned by the Company and 49% owned by a local partner. The non-controlling interest relating to the India subsidiary was not material in 2017. During 2017, the Company entered to a share purchase agreement with the local partner, according to which, the Company acquired the 49% interest from the local partner for total consideration of approximately $ 100. The Company owns 100% of the India subsidiary. The Company established a Company in Kenya, which is 51% owned by the Company and 49% owned by a local partner. The non-controlling interest relating to the subsidiary was not material in 2019. |
Leases | aa. Leases: In accordance with ASU No. 2016-02, Leases (ASC 842) the Company determines if an arrangement is a lease and the classification of that lease at inception based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefits from the use of the asset throughout the period, and (3) whether the Company has a right to direct the use of the asset. The Company elected to not recognize a lease liability and a right-of-use (“ROU”) asset for leases with a term of twelve months or less. ROU assets and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. ROU assets are initially measured at amounts, which represents the discounted present value of the lease payments over the lease, plus any initial direct costs incurred. The lease liability is initially measured based on the discounted present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. The implicit rate within the operating leases is generally not determinable, therefore the Company uses the Incremental Borrowing Rate (“IBR”) based on the information available at commencement date in determining the present value of lease payments. The Company’s IBR is estimated to approximate the interest rate for collateralized borrowing with similar terms and payments and in economic environments where the leased asset is located. Certain leases include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset and lease liability when it is reasonably certain that the Company will exercise that option. An option to terminate is considered unless it is reasonably certain that the Company will not exercise the option. |
Reclassification | bb. Reclassification: Certain amounts in the notes to prior years consolidated financial statements have been reclassified to conform with current year presentation. The reclassification had no effect on previously reported consolidated balance sheets, consolidated statements of operations and comprehensive income (loss) and consolidated statements of cash flows. |
Impact of recently issued and adopted accounting standards | cc. Impact of recently issued and adopted accounting standards: In February 2016, the FASB issued ASU No. 2016-02, Leases (ASC 842). The standard requires the recognition of ROU assets and lease liabilities for all leases. The standard requires a modified retrospective transition approach to recognize and measure leases at the initial application. The Company adopted the standard as of January 1, 2019, using a modified retrospective transition approach and elected to use the effective date as the date of initial application. The Company adopted the ”package of practical expedients”, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. As a result, the consolidated balance sheets as of December 31, 2018 were not restated, continue to be reported under ASC 840, which did not require recognition of operating lease assets and liabilities on the balance sheets, and are not comparative. As a result of the adoption of Topic 842 on January 1, 2019, the Company recorded operating lease right of use (“ROU”) assets of $3.6 million and operating lease liabilities of $3.5 million. The ROU assets include adjustments for prepayments and accrued lease payments. The adoption did not impact the Company’s beginning retained earnings, or its prior year consolidated statements of income and statements of cash flows. |
New accounting pronouncements not yet effective | dd. New accounting pronouncements not yet effective: In June 2016, the FASB issued ASU 2016-13, "Financial Instruments – Credit Losses (Topic 326)". ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 will become effective for annual and interim periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company does not expect this standard to have a material effect on its consolidated financial statements. |
GENERAL (Tables)
GENERAL (Tables) - Aimetis [Member] | 12 Months Ended |
Dec. 31, 2019 | |
Business Acquisition [Line Items] | |
Schedule of Assets Acquired and Liabilities Assumed | The following table summarizes the estimated fair values of the assets acquired and liabilities assumed: Net assets (including cash of $ 2,461) $ 3,683 Intangible assets 501 Adjustment to deferred revenue 20 Deferred tax liabilities (80 ) Goodwill 255 Redeemable non-controlling interests (1,533 ) Total purchase price $ 2,846 |
Schedule of Intangible Assets | The following table sets forth the components of intangible assets associated with the acquisition: Fair value Technology $ 190 Customer relationships 164 Backlog 147 Total intangible assets $ 501 |
Schedule of Revenue and Net Earnings | The amounts of revenue and net earnings of ESC BAZ since the acquisition date were included in the consolidated income statement for the reporting period in which the acquisition was made are: Year ended December 31, 2018 Revenues $ 3,969 Net income $ 210 |
Schedule of Unaudited Pro Forma Results | Year ended December 31, 2018 2017 Unaudited Revenues $ 94,216 $ 69,851 Net income (loss) attributable to Magal shareholders' $ 3,198 $ (6,802 ) Basic and diluted net income (loss) per share $ 0.14 $ (0.30 ) |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Redeemable Non-Controlling Interests | The following table provides a reconciliation of the beginning and ending amount of the redeemable non-controlling interests for the years ended December 31, 2019 and 2018: December 31, 2019 2018 Balance at the beginning of the year $ 1,755 $ - Redeemable non-controlling interests at the acquisition of ESC BAZ - 1,533 Adjustment to the redemption value of redeemable non-controlling interests 576 227 Net income attributable to redeemable non-controlling interests 552 95 Foreign currency translation adjustments 165 (100 ) $ 3,048 $ 1,755 |
Schedule of Annual Depreciation Rates | 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 |
Schedule of Intangible Assets Amortization Rates | 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 - 26.7 Customer relationships 10.3 - 36.4 Backlog 50 - 100 |
Schedule of Fair Value Assumptions for Stock Options | The following assumptions were used in the Binomial option pricing model for the years ended December 31, 2019 and 2018 (no options were granted in 2017): 2019 2018 Dividend yield 0% 0% Expected volatility 33.76%-38.31% 37.11%-43.98% Risk-free interest 1.42%-2.68% 2.5%-2.86% Contractual term 5-7 years 5-7 years Forfeiture rate 10%-12% 10% Suboptimal exercise multiple 1.32 1.32-1.33 |
Schedule of Product Warranty Accrual | The following table provides the detail of the change in the Company's warranty accrual, which is a component of other accrued liabilities in the consolidated balance sheets for the years ended December 31, 2019 and 2018: December 31, 2019 2018 Warranty provision, beginning of year $ 1,360 $ 1,281 Charged to costs and expenses relating to new sales 374 569 Costs of warranties granted (278 ) (365 ) Foreign currency translation adjustments 115 (125 ) Warranty provision, end of year $ 1,571 $ 1,360 |
Schedule of Changes in Allowance for Doubtful Accounts | Changes in the Company's allowance for doubtful accounts during the three years period ended December 31, 2019 are as follows: Year ended December 31, 2019 2018 2017 Balance at the beginning of the year $ 2,751 $ 1,557 $ 2,064 Doubtful debt expenses during the year 141 1,453 299 Customers write-offs/collection during the year, net (790 ) (204 ) (957 ) Exchange rate 17 (55 ) 151 $ 2,119 $ 2,751 $ 1,557 |
Schedule of Accumulated Other Comprehensive Income | The total accumulated other comprehensive loss, net was comprised as follows: Year ended December 31, 2019 2018 2017 Foreign currency translation adjustments $ (627 ) $ (1,827 ) $ (87 ) Total accumulated other comprehensive loss $ (627 ) $ (1,827 ) $ (87 ) |
OTHER ACCOUNTS RECEIVABLE AND_2
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Accounts Receivable and Prepaid Expenses | December 31, 2019 2018 Prepaid expenses $ 1,717 $ 2,188 Government authorities 1,914 1,222 Advances to suppliers 454 445 Employees 36 62 Others 389 209 $ 4,510 $ 4,126 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | December 31, 2019 2018 Raw materials $ 5,232 $ 4,762 Work in progress 1,271 1,952 Finished products 6,102 7,149 $ 12,605 $ 13,863 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Lessee Disclosure [Abstract] | |
Schedule of Supplemental Balance Sheet Information Related Operating Leases | Supplemental balance sheet information related to operating leases is as follows: As of December 31, 2019 Operating lease ROU assets $ 3,492 Operating lease liabilities, current $ 919 Operating lease liabilities, long-term $ 2,515 Weighted average remaining lease term (in years) 2.92 Weighted average discount rate 3.64 % |
Schedule of Maturities of Operating Lease Liabilities | Future lease payments under operating leases as of December 31, 2019, are as follows: December 31, 2020 $ 1,052 2021 709 2022 467 2023 337 2024 307 2025 and thereafter 1,073 Total future lease payments $ 3,945 Less: imputed interest (511 ) Total lease liability balance $ 3,434 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | December 31, 2019 2018 Cost: Land and buildings $ 7,839 $ 7,559 Machinery and equipment 3,606 3,392 Motor vehicles 2,620 2,440 Promotional displays 815 644 Office furniture and equipment 4,543 4,198 Leasehold improvements 790 739 20,213 18,972 Accumulated depreciation: Buildings 4,641 4,375 Machinery and equipment 2,982 2,689 Motor vehicles 1,513 1,244 Promotional displays 571 477 Office furniture and equipment 3,749 3,426 Leasehold improvements 501 414 13,957 12,625 Property and equipment, net $ 6,256 $ 6,347 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Schedule of Intangible Assets | December 31, 2019 2018 Cost: Know-how and patents $ 4,780 $ 4,194 Technology 7,017 5,873 Customer relationships 1,661 1,582 Backlog 898 858 14,356 12,507 Accumulated amortization: Know-how and patents 4,755 4,162 Technology 3,632 2,774 Customer relationships 1,300 1,093 Backlog 897 833 10,584 8,862 Intangible assets, net $ 3,772 $ 3,645 |
Schedule of Amortization of Intangible Assets | December 31, 2020 $ 866 2021 1,068 2022 884 2023 416 2024 274 2025 and thereafter 264 $ 3,772 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
GOODWILL [Abstract] | |
Schedule of Goodwill | Changes in the carrying amount of goodwill for the years ended December 31, 2019 and 2018 are as follows: Products Projects Total As of January 1, 2018 $ 12,692 $ - $ 12,692 Acquisition of ESC BAZ - 255 255 Impairment of goodwill (979 ) - (979 ) Foreign currency translation adjustments (832 ) (16 ) (848 ) As of December 31, 2018 10,881 239 11,120 Foreign currency translation adjustments 363 21 384 As of December 31, 2019 11,244 260 11,504 |
OTHER ACCOUNTS PAYABLE AND AC_2
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Other Accounts Payable and Accrued Expenses | December 31, 2019 2018 Employees and payroll accruals $ 4,658 $ 4,250 Accrued expenses 6,181 7,190 Government authorities 917 156 Income tax payable and tax provision 2,286 1,457 Others 567 173 $ 14,609 $ 13,226 |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Summary of Changes in Stock Option Activity | A summary of employee option activity under the Company's stock option plans as of December 31, 2019 and changes during the year ended December 31, 2019 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, 2019 889,118 4.865 51.25 - Granted 124,000 4.400 Exercised (104,346 ) 4.841 Forfeited (48,226 ) 4.984 Outstanding at December 31, 2019 860,546 4.794 49.43 - Exercisable at December 31, 2019 168,547 4.295 21.3 - |
Schedule of Stock Options Outstanding | The options outstanding as of December 31, 2019 are follows: Number of options outstanding as of December 31, 2019 Exercise price Weighted average remaining contractual life Number of options exercisable as of December 31, 2019 (In months) 118,546 4.15 19.79 118,546 24,000 4.40 17.23 24,000 39,000 4.86 31.95 26,001 74,000 4.18 69.09 0 91,000 4.31 59.92 0 30,000 4.51 60.12 0 20,000 5.05 66.05 0 440,000 5.15 53.78 0 24,000 5.61 49.23 0 860,546 49.43 168,547 |
BASIC AND DILUTED NET EARNING_2
BASIC AND DILUTED NET EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Earnings Per Share | Year ended December 31, 2019 2018 2017 Numerator: Income (loss) attributable to Magal shareholders' $ 1,717 $ 2,722 $ (6,914 ) Denominator: Denominator for basic net earnings (loss) per share weighted-average number of shares outstanding 23,129,394 23,040,436 22,989,009 Effect of diluting securities: Employee stock options 15,346 247,315 - Denominator for diluted net earnings (loss) per share - adjusted weighted average shares and assumed exercises 23,144,740 23,287,751 22,989,009 |
TAXES ON INCOME (Tables)
TAXES ON INCOME (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Reconciliation of Income Tax Rate | 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, 2019 2018 2017 Income (loss) before taxes as reported in the statements of operations $ 4,372 $ 5,116 $ (5,205 ) Tax rate 23 % 23 % 24 % Theoretical tax $ 1,006 $ 1,177 $ (1,249 ) Increase (decrease) in taxes: Non-deductible items 264 32 185 Losses and other items for which a valuation allowance was provided 369 972 1,769 Realization of carryforward tax losses for which valuation allowance was provided (386 ) (1,293 ) (28 ) Changes in valuation allowance (862 ) (377 ) - Tax rate differences in subsidiaries and benefit from reduced tax rates (26 ) 223 (71 ) Adjustment of deferred tax balances following changes in tax rate for "preferred enterprise" - - 410 Provision for uncertain tax positions 654 717 245 Taxes in respect of prior years (1 ) (2 ) 21 Tax withheld against which valuation allowance was provided this year 694 755 638 Investment tax credit (163 ) (180 ) (178 ) Other 4 48 (47 ) Taxes on income (tax benefit) in the statements of operations $ 1,553 $ 2,072 $ 1,695 |
Schedule of Income Taxes | Year ended December 31, 2019 2018 2017 Current $ 2,184 $ 3,003 $ 2,162 Deferred (631 ) (931 ) (467 ) $ 1,553 $ 2,072 $ 1,695 Domestic $ 820 $ 1,460 $ 893 Foreign 733 612 802 $ 1,553 $ 2,072 $ 1,695 |
Schedule of Deferred Tax Assets and Liabilities | 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, 2019 2018 Deferred tax assets: Operating losses carry forwards $ 4,730 $ 3,313 Reserves, tax allowances, capital losses carry forwards, operating lease and others 6,128 7,207 Total deferred taxes before valuation allowance 10,858 10,520 Valuation allowance (4,460 ) (5,207 ) Deferred tax assets, net: 6,398 5,313 Deferred tax liabilities: Property and equipment, intangible assets, operating lease and others (2,361 ) (2,036 ) Deferred tax liabilities: (2,361 ) (2,036 ) Net deferred tax assets $ 4,037 $ 3,277 Domestic $ 886 $ - Foreign $ 3,151 $ 3,277 |
Schedule of Domestic and Foreign Components of Income (Loss) Before Income Taxes | The domestic and foreign components of income (loss) before taxes are as follows: Year ended December 31, 2019 2018 2017 Domestic $ 1,730 $ 1,705 $ (1,605 ) Foreign 2,642 3,411 (3,600 ) $ 4,372 $ 5,116 $ (5,205 ) |
Schedule of Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax positions is as follows: December 31, 2019 2018 Balance at the beginning of the year $ 1,611 $ 908 Additions based on tax positions taken related to the current year 654 717 Foreign currency translation adjustments 21 (14 ) Balance at the end of the year $ 2,286 $ 1,611 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Operating Segment Information | The following data present the revenues, expenditures, assets and other operating data of the Company's operating segments: Year ended December 31, 2019 Products Projects Eliminations Total Revenues $ 36,633 $ 52,426 $ (2,228 ) $ 86,831 Depreciation and amortization $ 1,260 $ 840 $ - $ 2,100 Operating income (loss), before financial expenses and taxes on income $ 3,880 $ 3,536 $ (1,377 ) $ 6,039 Financial expenses, net (1,667 ) Taxes on income (1,553 ) Net income $ 2,819 Year ended December 31, 2018 Products Projects Eliminations Total Revenues $ 35,169 $ 61,119 $ (3,686 ) $ 92,602 Depreciation, amortization and impairment of goodwill $ 2,273 $ 951 $ - $ 3,224 Operating income (loss), before financial expenses and taxes on income $ 1,425 $ 4,356 $ (2,026 ) $ 3,755 Financial income, net 1,361 Taxes on income (2,072 ) Net income $ 3,044 Year ended December 31, 2017 Products Projects Eliminations Total Revenues $ 28,471 $ 38,247 $ (2,426 ) $ 64,292 Depreciation, amortization $ 1,369 $ 507 $ - $ 1,876 Operating income (loss), before financial expenses and taxes on income $ (2,483 ) $ 2,576 $ (1,337 ) $ (1,244 ) Financial expenses, net (3,961 ) Taxes on income (1,695 ) Loss $ (6,900 ) Year ended December 31, 2019 Products Projects Total Total long-lived assets $ 16,925 $ 4,607 $ 21,532 Year ended December 31, 2018 Products Projects Total Total long-lived assets $ 16,845 $ 4,267 $ 21,112 |
Schedule of Major Customer Data | Year ended December 31, 2019 2018 2017 Customer A 5.4 % 25.3 % 14.6 % Customer B 17.2 % 10.9 % 10.2 % |
Schedule of Revenues and Long-Lived Assets Within Geographic Areas | The following is a summary of revenues within geographic areas based on end customers’ location and long-lived assets: 1. Revenues: Year ended December 31, 2019 2018 2017 Israel $ 18,975 $ 13,577 $ 9,599 Europe 18,896 14,021 11,232 North America 19,713 24,324 15,547 South and Latin America 8,077 25,471 13,152 Africa 11,144 7,126 9,370 Others 10,026 8,083 5,392 $ 86,831 $ 92,602 $ 64,292 2. Long-lived assets: December 31, 2019 2018 Israel $ 3,641 $ 3,720 Europe 914 970 USA 2,177 2,377 Canada 13,999 13,337 Others 801 708 $ 21,532 $ 21,112 |
SELECTED STATEMENTS OF INCOME_2
SELECTED STATEMENTS OF INCOME DATA (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Income and Expenses [Abstract] | |
Schedule of Selected Statements of Income Data | Financial expenses: Year ended December 31, 2019 2018 2017 Financial expenses: Interest on short-term and long-term bank credit and bank charges and long-term debt $ (360 ) $ (412 ) $ (349 ) Realization of foreign currency translation adjustments - - (64 ) Foreign exchange loss, net (1,971 ) - (4,010 ) (2,331 ) (412 ) (4,423 ) Financial income: Interest on short-term and long-term bank deposits 664 670 462 Foreign exchange gains, net - 1,103 - 664 1,773 462 Financial income (expenses), net $ (1,667 ) $ 1,361 $ (3,961 ) |
GENERAL (Narrative) (Details)
GENERAL (Narrative) (Details) - USD ($) $ in Thousands | Apr. 02, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | ||||
Redeemable non-controlling interests at acquisition date | $ 1,533 | |||
ESC BAZ Ltd. [Member] | ||||
Business Acquisition [Line Items] | ||||
Total purchase price | $ 2,846 | |||
Purchase of interest (as a percent) | 55.00% | |||
Acquisition costs | 67 | |||
Percentage of minority shareholder in put option | 45.00% | |||
Redeemable non-controlling interests at acquisition date | $ 1,533 | $ 1,533 |
GENERAL (Schedule of Assets Acq
GENERAL (Schedule of Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Thousands | Apr. 02, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | ||||
Redeemable non-controlling interests | $ (1,533) | |||
ESC BAZ Ltd. [Member] | ||||
Business Acquisition [Line Items] | ||||
Net assets (liabilities) (including cash) | $ 3,683 | |||
Intangible assets | 501 | |||
Adjustment to deferred revenue | 20 | 20 | ||
Deferred tax liabilities | (80) | (80) | ||
Goodwill | 255 | 255 | ||
Redeemable non-controlling interests | (1,533) | $ (1,533) | ||
Total purchase price | 2,846 | |||
Cash | $ 2,461 |
GENERAL (Schedule of Intangible
GENERAL (Schedule of Intangible Assets) (Details) - ESC BAZ Ltd. [Member] - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Apr. 02, 2018 | Dec. 31, 2017 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | $ 501 | |||
Technology [Member] | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | $ 190 | 190 | ||
Customer Relationships [Member] | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | 164 | 164 | ||
Backlog [Member] | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | $ 147 | $ 147 |
GENERAL (Schedule of Revenue an
GENERAL (Schedule of Revenue and Net Earnings) (Details) - ESC BAZ Ltd. [Member] $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Business Acquisition [Line Items] | |
Revenues | $ 3,969 |
Net income | $ 210 |
GENERAL (Schedule of Unaudited
GENERAL (Schedule of Unaudited Pro Forma Results) (Details) - ESC BAZ Ltd. [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Business Acquisition [Line Items] | ||
Revenues | $ 94,216 | $ 69,851 |
Net income (loss) attributable to Magal shareholders' | $ 3,198 | $ (6,802) |
Basic and diluted net income (loss) per share | $ 0.14 | $ (0.30) |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 02, 2019 | |
Business Acquisition [Line Items] | ||||
Write-off of inventory | $ 258 | $ 118 | $ 128 | |
Number of shares excluded from calculation of diluted earnings (loss) per share | 684,887 | 400,000 | 137,988 | |
Stock-based compensation | $ 392 | $ 158 | $ 144 | |
Tax expenses related to uncertainties in income taxes | 664 | 717 | 245 | |
Accrued severance pay for former Chairman of Board | 616 | |||
Severance expenses | 846 | 804 | 1,095 | |
Advertising expense | 224 | 151 | $ 194 | |
Ownership percentage | 100.00% | |||
Right-of-use assets | 3,492 | |||
Operating lease liabilities | 3,434 | |||
Remaining performance obligations | $ 29,100 | |||
Recognizing Remaining performance obligations in 2020, percentage | 43.00% | |||
Increase decrease in unbilled accounts receivables | $ 2,800 | |||
Unbilled accounts receivable | 8,897 | 6,050 | ||
Increase decrease in unbilled accounts receivable billings | 6,600 | |||
Increase decrease in unbilled accounts receivable exchange rate | 500 | |||
Amount of recognized revenues in advance of contractual billing | 8,900 | |||
Unbilled accounts receivables | 8,900 | |||
Increase decrease in customer advances and deferred revenues | 4,000 | |||
Customer advances and deferred revenue | 9,900 | $ 13,900 | ||
Increase decrease in unearned amounts | 8,200 | |||
Amount of recognized revenues from customer advances and deferred revenues | 12,800 | |||
Amount of exchange rate in customer advances and deferred revenues | $ 600 | |||
Kenyan Company [Member] | ||||
Business Acquisition [Line Items] | ||||
Ownership percentage | 51.00% | |||
Major Israeli And U.S. Banks [Member] | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents, short-term and restricted deposits | $ 40,607 | |||
Other Banks [Member] | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents, short-term and restricted deposits | $ 10,997 | |||
India Subsidiary Tranche One [Member] | ||||
Business Acquisition [Line Items] | ||||
Ownership percentage | 51.00% | |||
Local partner [Member] | ||||
Business Acquisition [Line Items] | ||||
Total consideration | $ 100 | |||
Ownership percentage acquired | 49.00% | |||
Local partner [Member] | Kenyan Company [Member] | ||||
Business Acquisition [Line Items] | ||||
Ownership percentage | 49.00% | |||
Local Partner Tranche One [Member] | ||||
Business Acquisition [Line Items] | ||||
Ownership percentage | 49.00% | |||
Accounting Standards Update 2016-02 [Member] | ||||
Business Acquisition [Line Items] | ||||
Right-of-use assets | $ 3,600 | |||
Operating lease liabilities | $ 3,500 | |||
Capitalized Technology [Member] | ||||
Business Acquisition [Line Items] | ||||
Useful life of intangible assets | 5 years |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Redeemable Non-Controlling Interests) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | |||
Balance as of January 1, 2019 | $ 1,755 | ||
Redeemable non-controlling interests at the acquisition of ESC BAZ | 1,533 | ||
Adjustment to the redemption value of redeemable non-controlling interests | 576 | 227 | |
Net income attributable to redeemable non-controlling interests | 552 | 95 | |
Foreign currency translation adjustments | 165 | (100) | |
Balance as of December 31, 2019 | $ 3,048 | $ 1,755 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Annual Depreciation Rates) (Details) | Dec. 31, 2019 |
Buildings [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 POLICI_7
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Intangible Assets Amortization Rates) (Details) | Dec. 31, 2019 |
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 | 26.70% |
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 | 36.40% |
Backlog [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Annual amortization rate | 50.00% |
Backlog [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Annual amortization rate | 100.00% |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Fair Value Assumptions for Stock Options) (Details) - Employee Stock Option [Member] | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividend yield | 0.00% | 0.00% |
Forfeiture rate | 10.00% | |
Suboptimal exercise multiple | 1.32 | |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 33.76% | 37.11% |
Risk-free interest | 1.42% | 2.50% |
Contractual term | 5 years | 5 years |
Forfeiture rate | 10.00% | |
Suboptimal exercise multiple | 1.32 | |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 38.31% | 43.98% |
Risk-free interest | 2.68% | 2.86% |
Contractual term | 7 years | 7 years |
Forfeiture rate | 12.00% | |
Suboptimal exercise multiple | 1.33 |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Product Warranty Accrual) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Warranty provision, beginning of year | $ 1,360 | $ 1,281 |
Charged to costs and expenses relating to new sales | 374 | 569 |
Costs of warranties granted | (278) | (365) |
Foreign currency translation adjustments | 115 | (125) |
Warranty provision, end of year | $ 1,571 | $ 1,360 |
SIGNIFICANT ACCOUNTING POLIC_10
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Changes in Allowance for Doubtful Accounts) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | |||
Balance at the beginning of the year | $ 2,751 | $ 1,557 | $ 2,064 |
Doubtful debt expenses during the year | 141 | 1,453 | 299 |
Customers write-offs/collection during the year, net | (790) | (204) | (957) |
Exchange rate | 17 | (55) | 151 |
Balance at the end of the year | $ 2,119 | $ 2,751 | $ 1,557 |
SIGNIFICANT ACCOUNTING POLIC_11
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | |||
Foreign currency translation adjustments | $ (627) | $ (1,827) | $ (87) |
Total accumulated other comprehensive loss | $ (627) | $ (1,827) | $ (87) |
OTHER ACCOUNTS RECEIVABLE AND_3
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 1,717 | $ 2,188 |
Government authorities | 1,914 | 1,222 |
Advances to suppliers | 454 | 445 |
Employees | 36 | 62 |
Others | 389 | 209 |
Total other accounts receivable and prepaid expenses | $ 4,510 | $ 4,126 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 5,232 | $ 4,762 |
Work in progress | 1,271 | 1,952 |
Finished products | 6,102 | 7,149 |
Total inventory | $ 12,605 | $ 13,863 |
LEASES (Narrative) (Details)
LEASES (Narrative) (Details) - Offices and Cars [Member] $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 8 years 1 month 6 days |
Extended period of lease term | 9 years |
Operating lease expenses | $ 1,095 |
Operating lease expenses within 12 months or less | $ 201 |
LEASES (Schedule of Supplementa
LEASES (Schedule of Supplemental Balance Sheet Information Related Operating Leases) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||
Operating lease ROU assets | $ 3,492 | |
Operating lease liabilities, current | 919 | |
Operating lease liabilities, long-term | $ 2,515 | |
Weighted average remaining lease term (in years) | 2 years 11 months 1 day | |
Weighted average discount rate | 3.64% |
LEASES (Schedule of Maturities
LEASES (Schedule of Maturities of Operating Lease Liabilities) (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Accounting Policies [Abstract] | |
Year one | $ 1,052 |
Year two | 709 |
Year three | 467 |
Year four | 337 |
Year five | 307 |
Year five and thereafter | 1,073 |
Total future lease payments | 3,945 |
Less: imputed interest | (511) |
Total lease liability balance | $ 3,434 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 20,213 | $ 18,972 | |
Property and equipment, accumulated depreciation | 13,957 | 12,625 | |
Property and equipment, net | 6,256 | 6,347 | |
Depreciation expense | 1,179 | 1,070 | $ 960 |
Land and Buildings [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 7,839 | 7,559 | |
Property and equipment, accumulated depreciation | 4,641 | 4,375 | |
Machinery and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 3,606 | 3,392 | |
Property and equipment, accumulated depreciation | 2,982 | 2,689 | |
Motor Vehicles [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 2,620 | 2,440 | |
Property and equipment, accumulated depreciation | 1,513 | 1,244 | |
Promotional Displays [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 815 | 644 | |
Property and equipment, accumulated depreciation | 571 | 477 | |
Office Furniture and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 4,543 | 4,198 | |
Property and equipment, accumulated depreciation | 3,749 | 3,426 | |
Leasehold Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 790 | 739 | |
Property and equipment, accumulated depreciation | $ 501 | $ 414 |
INTANGIBLE ASSETS, NET (Schedul
INTANGIBLE ASSETS, NET (Schedule of Intangible Assets) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 14,356 | $ 12,507 |
Accumulated amortization | 10,584 | 8,862 |
Intangible assets, net | 3,772 | 3,645 |
Know-how and patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 4,780 | 4,194 |
Accumulated amortization | 4,755 | 4,162 |
Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 7,017 | 5,873 |
Accumulated amortization | 3,632 | 2,774 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,661 | 1,582 |
Accumulated amortization | 1,300 | 1,093 |
Backlog [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 898 | 858 |
Accumulated amortization | $ 897 | $ 833 |
INTANGIBLE ASSETS, NET (Sched_2
INTANGIBLE ASSETS, NET (Schedule of Amortization of Intangible Assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Amortization expense | $ 921 | $ 1,175 | $ 916 |
2020 | 866 | ||
2021 | 1,068 | ||
2022 | 884 | ||
2023 | 416 | ||
2024 | 274 | ||
2025 and thereafter | 264 | ||
Intangible assets, net | $ 3,772 | $ 3,645 |
GOODWILL (Narrative) (Details)
GOODWILL (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill [Line Items] | ||
Impairment loss of goodwill | $ 979 | |
Perimeter [Member] | ||
Goodwill [Line Items] | ||
Projected net cash flows, period | 5 years | |
Weighted average cost of capital rate | 13.00% | |
Long-term growth rate | 3.00% | |
Project segment [Member] | ||
Goodwill [Line Items] | ||
Projected net cash flows, period | 5 years | |
Weighted average cost of capital rate | 15.00% | |
Long-term growth rate | 1.50% |
GOODWILL (Schedule of Goodwill)
GOODWILL (Schedule of Goodwill) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill [Line Items] | ||
Goodwill, beginning balance | $ 11,120 | $ 12,692 |
Acquisition of ESC BAZ | 255 | |
Impairment of goodwill | (979) | |
Foreign currency translation adjustments | 384 | (848) |
Goodwill, ending balance | 11,504 | 11,120 |
Products [Member] | ||
Goodwill [Line Items] | ||
Goodwill, beginning balance | 10,881 | 12,692 |
Acquisition of ESC BAZ | ||
Impairment of goodwill | (979) | |
Foreign currency translation adjustments | 363 | (832) |
Goodwill, ending balance | 11,244 | 10,881 |
Projects [Member] | ||
Goodwill [Line Items] | ||
Goodwill, beginning balance | 239 | |
Acquisition of ESC BAZ | 255 | |
Impairment of goodwill | ||
Foreign currency translation adjustments | 21 | (16) |
Goodwill, ending balance | $ 260 | $ 239 |
OTHER ACCOUNTS PAYABLE AND AC_3
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Employees and payroll accruals | $ 4,658 | $ 4,250 |
Accrued expenses | 6,181 | 7,190 |
Government authorities | 917 | 156 |
Income tax payable and tax provision | 2,286 | 1,457 |
Others | 567 | 173 |
Other accounts payable and accrued expenses | $ 14,609 | $ 13,226 |
COMMITMENTS AND CONTINGENT LI_2
COMMITMENTS AND CONTINGENT LIABILITIES (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 | Dec. 31, 2014 | |
Royalty rate | 3.50% | ||||
Royalties, maximum percentage of grants received | 100.00% | ||||
Payment received from OCS | $ 134 | $ 118 | |||
Payment returned from OCS | |||||
Royalty expense | 23 | $ 6 | $ 33 | ||
Remaining contingent obligations | 1,702 | ||||
Accrued royalties to a third party | 55 | ||||
Line of Credit | 16,152 | 16,468 | |||
Performance guarantees | 9,098 | 9,345 | |||
Restricted deposits | 324 | $ 3,135 | |||
Amount of grant approved to be received | $ 113 |
SHAREHOLDERS' EQUITY (Narrative
SHAREHOLDERS' EQUITY (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2013 | Jan. 21, 2013 | Jun. 23, 2010 | May 31, 2008 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Ordinary shares, shares outstanding | 23,153,985 | 23,049,639 | ||||||
Weighted-average grant date fair value | $ 1.33 | $ 1.73 | ||||||
Total intrinsic value of options exercised | $ 37 | $ 17 | $ 174 | |||||
Non-vested share-based compensation arrangements, unrecognized compensation costs | $ 616 | |||||||
Unrecognized compensation cost, weighted-average recognition period | 4 years | |||||||
Issuance of common stock, shares, warrants | 898,203 | |||||||
Repurchase of warrants previously issued by the company, number | 838,203 | |||||||
Warrants issued upon the acquisition of CyberSeal | $ 1,500 | |||||||
Repurchase of warrants previously issued by the Company, amount | $ 375 | |||||||
Warrants, exercise price | $ 4.16 | |||||||
Warrants exercised | 60,000 | |||||||
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 | 154,252 | |||||||
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) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number of options | ||
Outstanding at January 1, 2019 | 889,118 | |
Granted | 124,000 | |
Exercised | (104,346) | |
Forfeited | (48,226) | |
Outstanding at December 31, 2019 | 860,546 | 889,118 |
Exercisable at December 31, 2019 | 168,547 | |
Weighted-average exercise price | ||
Outstanding at January 1, 2019 | $ 4.865 | |
Granted | 4.400 | |
Exercised | 4.841 | |
Forfeited | 4.984 | |
Outstanding at December 31, 2019 | 4.794 | $ 4.865 |
Exercisable at December 31, 2019 | $ 4.295 | |
Weighted-average remaining contractual life | ||
Outstanding | 49 years 5 months 5 days | 51 years 2 months 30 days |
Exercisable at December 31, 2019 | 21 years 3 months 19 days | |
Aggregate intrinsic value (in thousands) | ||
Outstanding at January 1, 2019 | ||
Outstanding at December 31, 2019 | ||
Exercisable at December 31, 2019 |
SHAREHOLDERS' EQUITY (Schedule
SHAREHOLDERS' EQUITY (Schedule of Stock Options Outstanding) (Details) | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2019 | 860,546 |
Weighted average remaining contractual life | 49 years 5 months 5 days |
Number of options exercisable as of December 31, 2019 | 168,547 |
$4.15 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2019 | 118,546 |
Exercise price | $ / shares | $ 4.15 |
Weighted average remaining contractual life | 19 years 9 months 14 days |
Number of options exercisable as of December 31, 2019 | 118,546 |
$4.40 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2019 | 24,000 |
Exercise price | $ / shares | $ 4.40 |
Weighted average remaining contractual life | 17 years 2 months 23 days |
Number of options exercisable as of December 31, 2019 | 24,000 |
$4.86 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2019 | 39,000 |
Exercise price | $ / shares | $ 4.86 |
Weighted average remaining contractual life | 31 years 11 months 12 days |
Number of options exercisable as of December 31, 2019 | 26,001 |
$4.18 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2019 | 74,000 |
Exercise price | $ / shares | $ 4.18 |
Weighted average remaining contractual life | 69 years 1 month 2 days |
Number of options exercisable as of December 31, 2019 | 0 |
$4.31 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2019 | 91,000 |
Exercise price | $ / shares | $ 4.31 |
Weighted average remaining contractual life | 59 years 11 months 1 day |
Number of options exercisable as of December 31, 2019 | 0 |
$4.51 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2019 | 30,000 |
Exercise price | $ / shares | $ 4.51 |
Weighted average remaining contractual life | 60 years 1 month 13 days |
Number of options exercisable as of December 31, 2019 | 0 |
$5.05 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2019 | 20,000 |
Exercise price | $ / shares | $ 5.05 |
Weighted average remaining contractual life | 66 years 18 days |
Number of options exercisable as of December 31, 2019 | 0 |
$5.15 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2019 | 440,000 |
Exercise price | $ / shares | $ 5.15 |
Weighted average remaining contractual life | 53 years 9 months 11 days |
Number of options exercisable as of December 31, 2019 | 0 |
$5.61 [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number of options outstanding as of December 31, 2019 | 24,000 |
Exercise price | $ / shares | $ 5.61 |
Weighted average remaining contractual life | 49 years 2 months 23 days |
Number of options exercisable as of December 31, 2019 | 0 |
BASIC AND DILUTED NET EARNING_3
BASIC AND DILUTED NET EARNINGS PER SHARE (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |||
Numerator - Income (loss) attributable to Magal shareholders' | $ 1,717 | $ 2,722 | $ (6,914) |
Denominator for basic net earnings (loss) per share weighted-average number of shares outstanding | 23,129,394 | 23,040,436 | 22,989,009 |
Effect of diluting securities - Employee stock options | 15,346 | 247,315 | |
Denominator for diluted net earnings (loss) per share - adjusted weighted average shares and assumed exercises | 23,144,740 | 23,287,751 | 22,989,009 |
TAXES ON INCOME (Narrative) (De
TAXES ON INCOME (Narrative) (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Jan. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred tax asset for operating tax losses carryforward | $ 4,730 | $ 3,313 | |||
Carry forward tax losses estimated by subsidiaries | $ 2,434 | ||||
Tax rate | 23.00% | 23.00% | 24.00% | ||
Unrecognized tax benefits | $ 2,286 | $ 1,611 | $ 908 | ||
Estimated tax expense | $ 377 | ||||
Minimum [Member] | |||||
Carry forward tax losses for subsidiaries, term | 1 year | ||||
Tax rate | 21.00% | ||||
Maximum [Member] | |||||
Carry forward tax losses for subsidiaries, term | 20 years | ||||
Tax rate | 35.00% | ||||
2017 [Member] | |||||
Tax rate | 24.00% | ||||
2018 [Member] | |||||
Tax rate | 23.00% | ||||
Subsidiary of Common Parent [Member] | |||||
Carry forward operating tax losses | $ 21,199 | ||||
Development area A [Member] | |||||
Tax rate | 7.50% | 9.00% | |||
Other areas [Member] | |||||
Tax rate | 16.00% | ||||
Non-Israeli subsidiaries [Member] | Minimum [Member] | |||||
Tax rate | 16.00% | ||||
Non-Israeli subsidiaries [Member] | Maximum [Member] | |||||
Tax rate | 30.00% | ||||
Parent Company [Member] | |||||
Carry forward operating tax losses | $ 3,419 | ||||
Parent Company [Member] | Latest Tax Year [Member] | |||||
Deferred tax asset for operating tax losses carryforward | $ 547 |
TAXES ON INCOME (Schedule of Re
TAXES ON INCOME (Schedule of Reconciliation of Income Tax Rate) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Income (loss) before taxes as reported in the statements of operations | $ 4,372 | $ 5,116 | $ (5,205) |
Tax rate | 23.00% | 23.00% | 24.00% |
Theoretical tax | $ 1,006 | $ 1,177 | $ (1,249) |
Increase (decrease) in taxes: | |||
Non-deductible items | 264 | 32 | 185 |
Losses and other items for which a valuation allowance was provided | 369 | 972 | 1,769 |
Realization of carryforward tax losses for which valuation allowance was provided | (386) | (1,293) | (28) |
Changes in valuation allowance | (862) | (377) | |
Tax rate differences in subsidiaries and benefit from reduced tax rates | (26) | 223 | (71) |
Adjustment of deferred tax balances following changes in tax rate for "preferred enterprise" | 410 | ||
Provision for uncertain tax positions | 654 | 717 | 245 |
Taxes in respect of prior years | (1) | (2) | 21 |
Tax withheld against which valuation allowance was provided this year | 694 | 755 | 638 |
Investment tax credit | (163) | (180) | (178) |
Other | 4 | 48 | (47) |
Total taxes on income | $ 1,553 | $ 2,072 | $ 1,695 |
TAXES ON INCOME (Schedule of In
TAXES ON INCOME (Schedule of Income Taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Taxes on income (tax benefit): | |||
Current | $ 2,184 | $ 3,003 | $ 2,162 |
Deferred | (631) | (931) | (467) |
Total taxes on income | 1,553 | 2,072 | 1,695 |
Taxes on income (tax benefit): | |||
Domestic | 820 | 1,460 | 893 |
Foreign | 733 | 612 | 802 |
Total taxes on income | $ 1,553 | $ 2,072 | $ 1,695 |
TAXES ON INCOME (Schedule of De
TAXES ON INCOME (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Operating losses carry forwards | $ 4,730 | $ 3,313 |
Reserves, tax allowances, capital losses carry forwards, operating lease and others | 6,128 | 7,207 |
Total deferred taxes before valuation allowance | 10,858 | 10,520 |
Valuation allowance | (4,460) | (5,207) |
Deferred tax assets, net: | 6,398 | 5,313 |
Deferred tax liabilities: | ||
Property and equipment, intangible assets, operating lease and others | (2,361) | (2,036) |
Deferred tax liabilities | (2,361) | (2,036) |
Net deferred tax assets | 4,037 | 3,277 |
Domestic Tax Authority [Member] | ||
Deferred tax liabilities: | ||
Net deferred tax assets | 886 | |
Foreign Tax Authority [Member] | ||
Deferred tax liabilities: | ||
Net deferred tax assets | $ 3,151 | $ 3,277 |
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, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ 1,730 | $ 1,705 | $ (1,605) |
Foreign | 2,642 | 3,411 | (3,600) |
Income (loss) before income taxes | $ 4,372 | $ 5,116 | $ (5,205) |
TAXES ON INCOME (Schedule of _2
TAXES ON INCOME (Schedule of Reconciliation of Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Balance at the beginning of the year | $ 1,611 | $ 908 |
Additions based on tax positions taken related to the current year | 654 | 717 |
Foreign currency translation adjustments | 21 | (14) |
Balance at the end of the year | $ 2,286 | $ 1,611 |
BALANCES AND TRANSACTIONS WIT_2
BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Details) - Board of Directors Chairman [Member] $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
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, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | $ 86,831 | $ 92,602 | $ 64,292 |
Depreciation, amortization and impairment of goodwill | 2,100 | 3,224 | 1,876 |
Operating income (loss), before financial expenses and taxes on income | 6,039 | 3,755 | (1,244) |
Financial income, net | (1,667) | 1,361 | (3,961) |
Taxes on income | (1,553) | (2,072) | (1,695) |
Net income (loss) | 2,819 | 3,044 | (6,900) |
Total long-lived assets | 21,532 | 21,112 | |
Products [Member] | |||
Revenues | 36,633 | 35,169 | 28,471 |
Depreciation, amortization and impairment of goodwill | 1,260 | 2,273 | 1,369 |
Operating income (loss), before financial expenses and taxes on income | 3,880 | 1,425 | (2,483) |
Total long-lived assets | 16,925 | 16,845 | |
Projects [Member] | |||
Revenues | 52,426 | 61,119 | 38,247 |
Depreciation, amortization and impairment of goodwill | 840 | 951 | 507 |
Operating income (loss), before financial expenses and taxes on income | 3,536 | 4,356 | 2,576 |
Total long-lived assets | 4,607 | 4,267 | |
Eliminations [Member] | |||
Revenues | (2,228) | (3,686) | (2,426) |
Depreciation, amortization and impairment of goodwill | |||
Operating income (loss), before financial expenses and taxes on income | $ (1,377) | $ (2,026) | $ (1,337) |
SEGMENT INFORMATION (Schedule_2
SEGMENT INFORMATION (Schedule of Major Customer Data) (Details) - Revenues [Member] | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 5.40% | 25.30% | 14.60% |
Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 17.20% | 10.90% | 10.20% |
SEGMENT INFORMATION (Schedule_3
SEGMENT INFORMATION (Schedule of Revenues and Long-Lived Assets Within Geographic Areas) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | $ 86,831 | $ 92,602 | $ 64,292 |
Long-lived assets | 21,532 | 21,112 | |
Israel [Member] | |||
Revenues | 18,975 | 13,577 | 9,599 |
Long-lived assets | 3,641 | 3,720 | |
Europe [Member] | |||
Revenues | 18,896 | 14,021 | 11,232 |
Long-lived assets | 914 | 970 | |
North America [Member] | |||
Revenues | 19,713 | 24,324 | 15,547 |
South And Latin America [Member] | |||
Revenues | 8,077 | 25,471 | 13,152 |
Africa [Member] | |||
Revenues | 11,144 | 7,126 | 9,370 |
Others [Member] | |||
Revenues | 10,026 | 8,083 | 5,392 |
Long-lived assets | 801 | 708 | |
USA [Member] | |||
Long-lived assets | 2,177 | 2,377 | |
Canada [Member] | |||
Long-lived assets | $ 13,999 | $ 13,337 |
SELECTED STATEMENTS OF INCOME_3
SELECTED STATEMENTS OF INCOME DATA (Schedule of Selected Statements of Income Data) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Financial expenses: | |||
Interest on short-term and long-term bank credit and bank charges and long-term debt | $ (360) | $ (412) | $ (349) |
Realization of foreign currency translation adjustments | (64) | ||
Foreign exchange loss, net | (1,971) | (4,010) | |
Total financial expenses | (2,331) | (412) | (4,423) |
Financial income: | |||
Interest on short-term and long-term bank deposits | 664 | 670 | 462 |
Foreign exchange gains, net | 1,103 | ||
Total financial income | 664 | 1,773 | 462 |
Financial income (expenses), net | $ (1,667) | $ 1,361 | $ (3,961) |