Napco Security (NSSC) 8-K NAPCO Security Systems, Inc. Announces Second Quarter Financial Results

Exhibit 99.1

NAPCO Security Systems, Inc. Announces Second Quarter Financial Results

--Second Quarter Sales Increase to $16.2 Million, EPS $0.06--

AMITYVILLE, N.Y.--(BUSINESS WIRE)--NAPCO Security Systems, Inc., (Nasdaq: NSSC), one of the world’s leading suppliers of high performance electronic security equipment for over 30 years, today announced financial results for its second quarter ended December 31, 2007.

Net sales for the three months ended December 31, 2007 increased 1% to $16.2 million as compared to $16.1 million for the same quarter a year earlier. Net income for the quarter increased 2% to $1.2 million, or $0.06 per diluted share, compared to net income of $1.1 million, or $0.06 per diluted share, for the same year ago period.

Net sales for the six months ended December 31, 2007 was relatively constant at $30.0 million as compared to $30.1 million for the prior year period. Net income for the six months ended December 31, 2007 was $1.5 million or $0.08 per diluted share, a decrease of 26% as compared to $2.1 million or $0.10 per diluted share in the prior year period.

Net income for the three and six months benefited from a reduced provision for income taxes as a result of a more efficient tax structure. This new structure resulted in a tax benefit for the December quarter of $102,000, which compares to a tax provision of $617,000 for the same quarter a year ago. The provision for the six months ended December 31, 2007 was $163,000 as compared to $1,145,000 for the same period a year ago. Our highly efficient production facility in the Dominican Republic has allowed us to be very competitive in the marketplace. We also take pride in the fact that this is an ISO 9001 facility demonstrating the highest level of quality. An additional benefit it now provides relates to our increased profit advantages from the aforementioned more efficient structure.

Richard Soloway, Chairman and President, noted, “While our sales increase was modest, I am encouraged with our performance in light of the current state of the economy. I was particularly satisfied with the sales of our commercial contract driven access control product line as well as the success of our International sales, which both increased this quarter. Our new IP Video Monitoring Division, iSee Video, continues to grow steadily and has become an important contributor to our sales growth.”

Mr. Soloway continued, “Going forward, NAPCO, the pioneer in recurring revenue IP video monitoring, will continuously be expanding this division’s successful iSee Video product line. The iSee Video product line allows homeowners and businesses to remotely view live video or stored video clips of activity in their homes or businesses, from any computer or web-enabled cell phone, anywhere in the world. This video service provides NAPCO and its partners, some of which are the biggest names in the security installation business, with an incremental, recurring revenue income stream. In line with our business expansion plans, a full suite of enhanced products will be introduced early Spring, addressing virtually any residential, small business and commercial IP video monitoring application.

“The launch of our new NAPCO Freedom 64 digital, coded keypad ideally rounds out our Freedom 64 intelligent entry, false alarm resistant burglar and fire alarm platform”, Mr. Soloway added. This positions the Freedom 64 as the market’s most user-friendly and installer-flexible intrusion alarm systems.

Mr. Soloway concluded, “We strongly believe that our Company is entering a new era of growth and profitability in a highly secure industry.”

About NAPCO Security Systems, Inc.

NAPCO Security Systems, Inc. is one of the world’s leading manufacturers of technologically advanced -electronic security equipment including intrusion and fire alarm systems, access control systems and electronic locking devices. The Company's products, including those of Alarm Lock and Continental Instruments, feature some of the most popular and best-selling control panels, sensors, locking devices and access control products. They are used in residential, commercial, institutional, industrial and governmental applications. NAPCO security products have earned a reputation for technical excellence, reliability and innovation, poising the Company for revenue growth in the rapidly expanding electronic security market, a market whose current size exceeds $30 billion.

For additional information on NAPCO, please visit the Company’s web site at www.napcosecurity.com.

This press release contains forward-looking statements that involve numerous risks and uncertainties. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those set forth in the Company’s filings with the Securities and Exchange Commission.

Napco Security Systems, Inc and Subsidiaries Condensed Consolidated Statements of Income (Unaudited)
	Three Months Ended
	December 31,
	2007		2006
	(in thousands, except share and per share data)
Net sales	$	16,166	$	16,077
Cost of sales		10,910		10,252
Gross Profit		5,256		5,825
Selling, general and administrative expenses		3,971		3,981
Operating Income		1,285		1,844
Interest expense, net		224		119
Other expenses, net		11		5
Other expenses		235		124
Income Before Minority Interest and (Benefit) Provision for Income Taxes		1,050		1,720
Minority interest in net loss of subsidiary, net		20		41
Income Before (Benefit) Provision for Income Taxes		1,070		1,761
(Benefit) Provision for income taxes		(102)		617
Net Income	$	1,172	$	1,144
Earnings per common share:
Basic	$	0.06	$	0.06
Diluted	$	0.06	$	0.06
Weighted average number of shares outstanding:
Basic		19,066,588		20,034,552
Diluted		19,590,242		20,628,793

Napco Security Systems, Inc and Subsidiaries Condensed Consolidated Statements of Income (Unaudited)
	Six Months Ended
	December 31,
	2007		2006
	(in thousands, except share and per share data)
Net sales	$	30,042	$	30,106
Cost of sales		19,657		18,722
Gross Profit		10,385		11,384
Selling, general and administrative expenses		8,297		7,979
Operating Income		2,088		3,405
Interest expense, net		419		209
Other expenses, net		18		9
Other expenses		437		218
Income Before Minority Interest and Provision for Income Taxes		1,651		3,187
Minority interest in net loss of subsidiary, net		59		54
Income Before Provision for Income Taxes		1,710		3,241
Provision for income taxes		163		1,145
Net Income	$	1,547	$	2,096
Earnings per common share:
Basic	$	0.08	$	0.10
Diluted	$	0.08	$	0.10
Weighted average number of shares outstanding:
Basic		19,432,471		19,992,925
Diluted		19,985,412		20,715,830

Napco Security Systems, Inc and Subsidiaries Condensed Consolidated Balance Sheets
	December 31,				June 30,
ASSETS	2007 (unaudited)				2007
	(in thousands, except share data)
Current Assets:
Cash and cash equivalents	$	971		$	1,748
Accounts receivable, less allowance for doubtful accounts		21,251			25,579
Inventories, net		24,504			21,342
Prepaid expenses and other current assets		1,243			1,171
Deferred income taxes		1,182			1,050
Total current assets		49,151			50,890
Inventories-non-current, net		8,150			6,881
Property, plant and equipment, net		9,021			9,135
Goodwill, net		9,686			9,686
Other assets		374			193
Total Assets	$	76,382		$	76,785
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	5,027		$	5,045
Accrued expenses		1,072			1,638
Accrued salaries and wages		2,436			2,631
Accrued income taxes		268			96
Total current liabilities		8,803			9,410
Long-term debt		12,400			10,900
Accrued income taxes		2,653			1,836
Deferred income taxes		1,027			1,235
Minority interest in subsidiary		147			147
Total liabilities		25,030			23,528
Stockholders' Equity :
Common stock, par value $.01 per share; 40,000,000 shares
authorized, 20,091,393 and 20,090,313 shares issued and
19,109,064 and 19,665,141 shares outstanding, respectively		201			201
Additional paid-in capital		13,300			13,147
Retained earnings		43,361			42,299
		56,862			55,647
Less: Treasury Stock, at cost (982,329 and 425,172 shares, respectively)		(5,510	)		(2,390	)
Total stockholders' equity		51,352			53,257
Total Liabilities and Stockholders' Equity	$	76,382		$	76,785

CONTACT:
NAPCO Security Systems, Inc.
Richard Soloway, President
Kevin S. Buchel, Senior VP
631-842-9400 ext. 120
or
Wolfe Axelrod Weinberger Assoc. LLC
Donald Weinberger, 212-370-4500
Fax: 212-370-4505
don@wolfeaxelrod.com