INVESTOR
PRESENTATION
May 2007
Page 1
Safe Harbor Statement
The attached presentation was filed with the Securities and Exchange Commission as part of the Form 8-K
filed by Argyle Security Acquisition Corporation (“Argyle”) on May 2, 2007. Argyle is holding presentations
for its stockholders regarding its purchase of ISI Detention Contracting Group, Inc. (“ISI”), as described in
an earlier Form 8-K filed by Argyle which describes the acquisition in more detail.
Rodman & Renshaw LLC (“Rodman”), the managing underwriter of Argyle’s initial public offering (“IPO”)
consummated in January 2006, is assisting Argyle in its efforts and will receive approximately $1.4 million,
the deferred portion of its underwriting discount from the IPO, upon consummation of the acquisition of ISI.
Argyle and its directors and executive officers and Rodman may be deemed to be participants in the
solicitation of proxies for the special meeting of Argyle’s stockholders to be held to approve this
transaction. Each of Argyle’s officers and directors are also stockholders of Argyle and have waived their
rights to any liquidation distribution Argyle makes with respect to shares they acquired before the IPO.
Therefore, their securities will be worthless if Argyle does not acquire a target business within two years of
the IPO date, as required by its Certificate of Incorporation. Interested persons can also read Argyle’s
registration statement on Form S-4, as amended, and definitive proxy statement, when available, as well
as Argyle’s final IPO prospectus, dated January 24, 2006, as well as periodic reports Argyle filed with the
SEC, for more information about Argyle, its officers and directors, and their individual and group security
ownership in Argyle, and interests in the successful consummation of the acquisition of ISI.
Argyle’s stockholders and other interested persons are advised to read Argyle’s registration statement on
Form S-4, as amended, and definitive proxy statement, when available, in connection with Argyle’s
solicitation of proxies for the special meeting to approve the acquisition because these documents will
contain important information. The definitive proxy statement will be mailed to stockholders as of a record
date to be established for voting on the acquisition. The definitive proxy statement will be mailed to
stockholders as of a record date to be established for voting on this transaction. Stockholders will also be
able to obtain a copy of the definitive proxy statement, the final prospectus, other documents relating to the
acquisition of ISI and periodic reports filed with the Securities and Exchange Commission, without charge,
by visiting the Securities and Exchange Commission’s Internet site at (http://www.sec.gov).
Page 2
Safe Harbor Statement
Certain statements in this presentation constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, as amended. When used in this press
release, words such as "will," "believe," "expect," "anticipate,"
"encouraged" and similar expressions, as they relate to the
company or its management, as well as assumptions made by
and information currently available to the company's
management identify forward-looking statements. Additional
information concerning forward looking statements is contained
under the heading of risk factors listed from time to time in the
company's filings with the Securities and Exchange Commission.
We do not assume any obligation to update the forward-looking
information.
Page 3
Safe Harbor Statement
This presentation contains disclosure of EBITDA and backlog (including “Total
Backlog”) for certain periods, which may be deemed to be non-GAAP financial
measures within the meaning of Regulation G promulgated by the Securities and
Exchange Commission. As used in this presentation, adjusted EBITDA reflects the
removal from the calculation of EBITDA of certain expenses that Argyle Security
and ISI agreed should not reduce EBITDA. The companies do not expect these
expenses to continue after the closing of the merger. Management believes that
adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization,
is an appropriate measure of evaluating operating performance and liquidity,
because it reflects the resources available for strategic opportunities including,
among others, investments in the business and strategic acquisitions. Management
believes that the backlog, or unearned revenues on projects that have been booked,
is an appropriate measure of evaluating operating performance, because it reflects
future potential revenues. Adjusted EBITDA or backlog may not be comparable to
similarly titled measures reported by other companies. Neither EBITDA nor backlog
is a recognized term under U.S. GAAP, and EBITDA and backlog should be
considered in addition to, and not as substitutes for, or superior to, operating
income, cash flows, revenue, or other measures of financial performance prepared
in accordance with generally accepted accounting principles. Neither adjusted
EBITDA nor backlog is a completely representative measure of either the historical
performance or, necessarily, the future potential of ISI.
Page 4
History of Argyle &
ISI Acquisition
June 2005: Forms a Special Purpose Acquisition Corporation
(“SPAC”) to acquire businesses in the security sector
January 2006: Raises $30.6 million
December 2006: Agrees to acquire ISI Security Group (“ISI”), a
total solutions provider in the U.S. physical security industry
May 2007: Expects the SEC to conclude its review of the proxy
statement with Argyle stockholder vote to follow
$18.2 million cash
$8.8 million Argyle stock*
$11.7 million borrowings**
*Based on 1,180,000 common shares of Argyle’s common stock, using the April 16, 2007 closing price of $7.46.
**Assumption of $6M in long-term debt and approximately $5.7 million of debt outstanding under ISI’s revolving line
of credit, as of April 16, 2007.
Page 5
ISI Security Group Acquisition:
Meets Our Objectives
Acquire a well established security industry company that meets
Argyle acquisition criteria:
Founded in San Antonio, TX in 1976, ISI is the privately-held parent company for
three security services / solutions providers:
Obtain a highly experienced security industry management team:
ISI’s senior management team has approximately 120 years of combined
experience in the physical security industry
Make acquisition at attractive purchase price:
Transaction Value of $38.7 million*, or 7.7 X 2006 Adjusted EBITDA**, represents
discount to market multiples and discounted cash flow value
*Calculated using April 16, 2007 market values of Argyle’s common stock.
**As used in this presentation, adjusted EBITDA reflects the removal from the calculation of EBITDA of certain expenses totaling
$900,000 that Argyle Security and ISI agreed should not reduce EBITDA.
ISI-Detention
MCS-Detention
MCS-Commercial
Page 6
ISI Highlights:
Strong Financial Trends
*Total backlog includes intercompany amounts. Amounts were as follows for each of the following years: 2004 ($4,166,421);
2005 ($12,190,414); 2006 ($17,316,943).
**EBITDA and backlog (including intercompany amounts) reflect non-GAAP financial measures within the meaning of Regulation
G promulgated by the Securities and Exchange Commission. As used in this presentation, adjusted EBITDA reflects the removal
from the calculation of EBITDA of certain expenses totaling $900,000 that Argyle Security and ISI agreed should not reduce
EBITDA. The companies do not expect these expenses to continue after the closing of the merger. ISI had income/(loss) before
tax for the twelve month periods ended December 31, 2006, 2005 and 2004 of ($695,587), ($1,709,318) and ($2,940,642),
respectively.
Page 7
ISI Q1 ’07 Update:
Strong Financial Trends
*Total backlog includes inter-company amounts. Amounts were as follows for each of the following years: 3/31/06 ($9,914,789);
3/31/07 ($19,242,534).
**EBITDA and backlog (including inter-company amounts) reflect non-GAAP financial measures within the meaning of
Regulation G promulgated by the Securities and Exchange Commission. As used in this presentation, adjusted EBITDA reflects
the removal from the calculation of EBITDA of certain expenses totaling $224,000 for 2006 and $118,000 for 2007 that Argyle
Security and ISI agreed should not reduce EBITDA. The companies do not expect these expenses to continue after the closing of
the merger. ISI had income/(loss) for the three month periods ended March 31, 2007 and 2006 of $185,903 and ($390,334),
respectively.
Page 8
ISI Acquisition:
Attractively Priced
$38.7 million purchase price
Received fairness opinion from Giuliani Capital Advisors (“GCA”)
GCA’s fairness opinion had average value indication of $76.6 million
ISI price is approximately 50% lower than average value indication
from GCA
7.7 X
0.7 X
ISI
10.2 X
13.1 X
1.0 X
1.2 X
Aggregate Median
10.3 X
12.9 X
1.3 X
1.5 X
Aggregate Mean
2007
2006
2007
2006
EV/EBITDA
EV/SALES
GIULIANI CAPITAL ADVISORS COMPARABLE MULTIPLE SUMMARY
GCA, in its fairness opinion, determined that the merger consideration for ISI is within or below the range of
enterprise values implied by the multiples of selected comparable companies (above). Comparable transaction
and DCF analyses performed by GCA also indicate that the merger consideration is within or below the range of
enterprise values implied by these analyses.
Page 9
Argyle / ISI Transaction Yields
Immediate Positive Effects
Equity $(13.0)M $37.0M
Current assets $25.8M $32.5M
Cash* $0.4M $7.0M
Bonding capacity Near Capacity Meets Needs
Current liabilities $19.7M $18.0M
Long-term debt $16.0M $6.0M
Interest on long-term debt $1.9M $0.7M
*Assumes Maximum Shareholder Approval
Page 10
Pro Forma Ownership:
Interests Well Aligned
7.4
440,288
ISI Institutional
Shareholder
100.0%
5,961,307
Total
62.1
3,700,046
ASAC Public Investors
12.4
739,712
ISI Management Team
18.1%
1,081,261
Argyle Executives,
Directors and Affiliated
Entities
% Ownership
Shares
Holder
Page 11
To Become a Leading Global
Company in the Physical
Electronic Security Industry
Argyle’s Vision
Channel Focus: Video Surveillance, Access Control,
Perimeter/Outdoor Protection, Intrusion Protection, Fire Detection
and Threat Analysis
Market Focus: Selected Commercial and Governmental sectors
Page 12
Video
()
Intrusion
Access
Outdoor/
Perimeter
Video
Surveillance
Intrusion
Access
Outdoor
Perimeter
ISI Fits Argyle’s Vision:
Market Focused Solutions
Products + Software + Service = Solutions
Digital convergence, cost effective new technologies and growing
addressable markets have positioned Argyle to offer its customers
total security solutions:
Control
Page 13
ISI Strongly Positioned
To Address Attractive Markets
Focus on key vertical markets/channel segments
Single source for a wide range of security solutions,
utilizing proprietary and third-party products
Strong brand equity and solid reputation with long
established customer base
Proven ability to capitalize on technological change
Deep and experienced management team with a track
record of managing both organic and acquisition growth
Expanding ability to serve growing target market segments
Page 14
ISI Services All Customers:
Public and Private Sectors
Detention
Commercial
Manufacturers
Municipal
Energy
Financial / Services
Technology
Education
Private Prison Operators
Page 15
Favorable Industry Dynamics
Benefit ISI
Over-crowding of inmate populations
In 2005, state prisons operated between 1% below and 14%
above capacity, while federal prisons were 34% above
capacity
Growth in detention facilities
Private prison capacity growing at much faster rate than the
2.5 - 3.0% overall inmate growth rate
Higher unit construction costs
Growth in Commercial Sector
MCS-Commercial participates in the two fastest growing
sectors: Video Surveillance and Access Control
Growth in demand for solutions
Page 16
More juveniles (Increase in crime rate and laws)
More women (Change in percentage population)
Violent sexual predators requiring special
facilities
Aging and 24/7 usage of existing facilities
Migration and relocation of population
Growth in inmate population
Aging of inmate population
Increase in illegal aliens
Retrofit demand continuing
Approximately 1,000 new
inmates per week
Correctional Market:
Summary Growth Drivers
ISI positioned to expand – new products, people, resources
Sources: “Public Safety Performance Report,” Pew Charitable Trust, 2007
“Correctional News,” February 2007
Page 17
Correctional Market:
Needs Exhibiting Significant Growth
Page 18
Correctional Market:
Capacity At Crisis Levels
Page 19
Correctional Market:
Strong Expenditure Cycle Expected
Source: McGraw-Hill
Page 20
ISI-Detention: Ideally Situated
To Capitalize On Market Trends
ISI-Detention
60% repeat customers – primarily negotiated sales
Incremental sales from new products, such as metal wall panels
New products can double the size of a contract
Travis County: $8M vs. $15.4M (with wall panels)
Benefits of wall panels to customer:
Increased beds/square foot
30% lighter than concrete
Speeds up construction
Lower cost than cement / concrete
Lower on-site labor (high costs / scarcity)
Economical
Benefits of wall panels to ISI:
Increases contract size without reducing margin percentage
Limits competition by size (Labor, Bonding, Ability)
Gives ISI something new to sell
Incremental sales from synergies created by depth and breadth of MCS product line
Page 21
MCS-Detention:
Growing Coverage Footprint
2000
Today
Page 22
Starting with a single offering, MCS-Detention has expanded and broadened its product line since 2000, making
it now possible to participate in 90% of available market opportunities.
MTI
______
20%
Basic
PLC
System
______
Omron
50%
Direct
Select
System
______
Added
Allen
Bradley
65%
Basic
Functional
Groups
________
Added
GE
80%
Enhanced
Functional
Groups
________
90%
%
Market
Opportunities
MCS-Detention:
Products Address Market Needs
2000
2006
Page 23
MCS-Commercial –
Largest/Fastest Growing Division
MCS-Commercial offers security and fire alarm solutions in
five locations:
San Antonio, Austin, Dallas, Houston and Denver
Successful strategic buildup over past five years, including
five acquisitions and two Greenfields
ISI's largest and fastest growing division
Over 39% of ISI's total revenues
Page 24
ISI Security:
Leveraging Growth Markets
Revenues
2000-2006
$ Millions
MCS was acquired in 2000 and split into MCS-Commercial and MCS-Detention.
Page 25
MCS-Commercial
Proven Strategy Based on Seven
Strategic Principles:
Offer broad range of products that provide
customers with total solutions
Cultivate strong sales relationships
focused on higher margin, negotiated
projects
Establish stringent estimating and cost
controls
Offer Best of Breed products
Focus on recurring service revenues and
repeat customers
“Control” the end user/customer
Take responsibility for building customer
relationships that will foster direct contact
with ISI
Ready for Expansion:
Strong management, currently
under-utilized, is poised to grow
business
Recent past financial performance
demonstrates proven ability to
generate profitable growth
Greater access to capital and
increased bonding capacity due to
Argyle will enable MCS-
Commercial to capture additional
sales
Carefully positioned to capitalize
on dynamically growing industry
ISI Security:
Strategically Positioned
Page 26
ISI Security:
Well Formulated Growth Plan
Grow organically in all three of ISI’s business segments
Expand geographically and penetrate new channels through both
organic growth and strategic acquisitions
Offer new technologies, products and solutions, utilizing the Argyle
team’s broad industry access
Capitalize on greater access to capital and bonding capacity
resulting from the merger
Leverage Argyle’s leadership experience in:
Developing and growing successful public companies
Gaining access to international markets
Page 27
Argyle Security:
Creating A Major Global Platform
Grow business organically and through strategic
acquisitions
Capitalize on abundance of acquisition targets in today’s
fragmented global physical security industry
Leverage technology, products, channels and skill sets
Enhance and leverage valuable brands, such as ISI,
across new geographic regions and markets
Page 28
Experienced Executive Team
Bob Marbut, Chairman, Co-CEO and Co-Founder, Argyle
Executive Chairman of Electronics Line 3000 LTD, an international security company
listed on the Frankfurt exchange (2004 – Present)
General Partner of Argyle Global Opportunities, an investment partnership focusing
on the physical electronic security industry (2001- Present)
Co-Founder, Chairman and Co-CEO of Hearst-Argyle Television, leading a strategic
buildup strategy that created the second largest independent television group (NYSE)
(1997 – 2002)
Co-Founder, Chairman and CEO of Argyle Television, a strategic buildup that
became a successful Nasdaq company (1995 -1997)
Founder and CEO of Argyle Television Holding, a $700M strategic buildup of a private
television group (1993 – 1995)
President and CEO of Harte-Hanks Communications, transforming it from a family-
owned Texas newspaper company into a nationwide Fortune 500 company that, as a
public NYSE company, had 50 consecutive quarters of EPS growth, compounding at
17% (1970 – 1991)
Instrumental in raising over $4B of private and public capital for a variety of
companies in which he served as senior executive
Page 29
Experienced Executive Team
Ron Chaimovski, Vice-Chairman, Co-CEO and Co-Founder, Argyle
Vice Chairman of Electronics Line 3000 LTD (2004 – Present)
General Partner of Argyle Global Opportunities, LLP (2001 – Present)
Israel Economic Minister to North America (1998-2001)
Founder and Chairman of Transplan Enterprises Group, an investment company
specializing in technology
Former Managing Partner of Tel-Aviv based corporate law firm
Former Naval Officer – Commanding officer of a ship and Commanding officer of a
flotilla
Page 30
Experienced Executive Team
Sam Youngblood, CEO, ISI Security Group (17 years)
Founder, President and CEO of Adtec, Inc., a detention hardware company which
was ranked as the ninth fastest growing public company in America in 1989
10-year tenure at Southern Steel, most recently as President and instrumental in
turning around the company through introduction of new detention hardware product
Page 31
Experienced Independent Directors
General (Ret.) Wesley Clark, Director, Argyle
Chairman and CEO of Wesley K. Clark & Associates, a business services and
development firm
Chairman of Rodman & Renshaw, a full service investment bank with an active
practice specializing in biotech and security
38 years of experience with the U.S. military, which included commanding NATO
forces; retired as a four-star general
John J. (Chip) Smith, Director, Argyle
Director of Security for the Bank of New York, supervising a multi-national staff
focusing on the investigation and prevention of fraud, as well as the physical
protection of corporate assets, employees, customers and executives
24 years of experience in the US Secret Service – agent in charge of largest office
(New York)
Page 32
Argyle Consultants
Mark Mellin, Financial Consultant
Former SVP and CFO of ILEX Oncology, Inc., a public biotech firm which was
acquired for $1B
20-year tenure through 2002 with Arthur Andersen LLP, most recently as Managing
Partner in the San Antonio office
Alan Wachtel, Security Consultant
SVP of SecTecGLOBAL, Inc., a marketing firm dedicated to developing residential
security business in the cable television and electrical utility sectors
22-year tenure through 2003 with Pittway Corp. (later Honeywell Security), most
recently as VP, International Marketing
Former Chairman and member of various SIA committees developing security
industry standards, and former Chairman of NBFAA Advisory Board developing
security industry training programs
Page 33
Argyle Consultants
Graham Wallis, Security Consultant
CEO of Wallis Consultancy, a management advisory firm
Former President and Director of Dedicated Micros USA Inc.
Founding member of various UK technology companies
Former President of Javelin Systems, the video security system group of Ademco
(later Honeywell)
Former President of Ferranti Semiconductors (later Plessey Semiconductors)
Page 34