Napco Security (NSSC) 8-K NAPCO Announces Third Quarter Sales Increase of 4.2% and EPS of $0.17 vs. $0.06 Last Year

Exhibit 99.1

NAPCO Announces Third Quarter Sales Increase of 4.2% and EPS of $0.17 vs. $0.06 Last Year

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 third quarter ended March 31, 2008.

Net sales for the three months ended March 31, 2008 were $16.2 million, compared to $15.6 million for the same quarter a year earlier, an increase of 4.2%. Net income for the quarter was $3.3 million, or $0.17 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 nine months ended March 31, 2008 was $46.3 million as compared to $45.7 million for the prior year period, an increase of 1.3%. Net income for the nine months ended March 31, 2008 was $4.8 million or $0.24 per diluted share, compared to $3.2 million or $0.16 per diluted share in the prior year period. The Company’s Net Income of $3.3 million was the highest quarterly net income ever in the Company’s history. This was largely due to a one-time tax benefit of $2.1 million, which represents a reversal of a previous tax liability that is no longer required and relates to the Company’s offshore operation in the Dominican Republic.

Richard Soloway, Chairman and President, noted, “I am pleased that for the second quarter in a row we produced year over year increases on both the top and bottom line. We have continued to see strong growth in our International Sales, which increased 18% and 25% for the three and nine months ended March 31, 2008, respectively, over the same periods a year ago. In addition, International Sales have now had sequential growth for 2 quarters in a row. Our door technology products, which carry a higher gross margin than many of our other products, grew 8% this quarter. In addition, the Company benefited this quarter as a result of the new tax structure we implemented last quarter. This benefit should continue in future quarters.

“The Company’s inventory levels continued to increase significantly during the third quarter of fiscal 2008 for the following reasons: we level-load our manufacturing plant; we built inventory to support the introduction of the Company’s new Freedom 64 coded and code-less intrusion alarm systems, the new iSeeVideo product line and several other key new products. The inventory also increased due to higher forecasted sales versus actual. The inventory increase has centered on core components and new products. The Company has previously initiated several steps in order to reduce inventory levels and it is our expectation that we will begin seeing noticeable reductions during the fourth quarter of fiscal 2008 and continuing in fiscal 2009.”

Mr. Soloway concluded, “We are extremely confident about our long-term growth prospects. We believe that even though many companies are struggling in the weak economic climate of today, our Company is in a very good position to grow and prosper in the essential security and life-safety industry. By providing cutting-edge products to an ever expanding population of worldwide security system dealers and adding product lines in burgeoning market segments such as our iSeeVideo that provides Napco and its dealers with new sources of recurring monthly service revenue, we believe we can achieve our objectives of continued greater sales, profits and gains in shareholder value.”

About NAPCO Security Systems, Inc.

NAPCO Security Systems, Inc. is one of the world’s leading manufactures of technologically advanced electronic security equipment including intrusion and fire alarm systems, access control systems and door technology products. The Company’s products, including those of Alarm Lock and Continental Instruments, feature some of the most popular and best-selling control panels, sensors, door technology products 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, visit the Company’s website 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 form 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
	March 31,
	2008		2007
	(in thousands, except share and per share data)
Net sales	$	16,222	$	15,566
Cost of sales		10,699		10,072
Gross Profit		5,523		5,494
Selling, general and administrative expenses		3,955		4,226
Operating Income		1,568		1,268
Interest expense, net		216		168
Other expenses, net		12	4
Other expenses		228		172
Income Before Minority Interest and
(Benefit) Provision for Income Taxes		1,340		1,096
Minority interest in loss of subsidiary		33		41
Income Before (Benefit) Provision for Income Taxes		1,373		1,137
(Benefit) provision for income taxes		(1,904)	5
Net Income	$	3,277	$	1,132
Earnings per common share:
Basic	$	0.17	$	0.06
Diluted	$	0.17	$	0.06
Weighted average number of common shares outstanding:
Basic		19,092,487		20,078,996
Diluted		19,626,043		20,576,505

NAPCO SECURITY SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
	Nine Months Ended
	March 31,
	2008			2007
	(in thousands, except share and per share data)
Net sales	$	46,264		$	45,672
Cost of sales		30,356			28,794
Gross Profit		15,908			16,878
Selling, general and administrative expenses		12,252			12,205
Operating Income		3,656			4,673
Interest expense, net		635			377
Other expenses, net		30			13
Other expenses		665			390
Income Before Minority Interest and
(Benefit) Provision for Income Taxes		2,991			4,283
Minority interest in loss of subsidiary		92			95
Income Before (Benefit) Provision for Income Taxes		3,083			4,378
(Benefit) Provision for income taxes		(1,741	)		1,150
Net Income	$	4,824		$	3,228
Earnings per common share:
Basic	$	0.25		$	0.16
Diluted	$	0.24		$	0.16
Weighted average number of common shares outstanding:
Basic		19,319,967			20,021,196
Diluted		19,873,655			20,673,139

NAPCO SECURITY SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
	March 31,			June 30,
ASSETS	2008 (unaudited)			2007
	(in thousands, except share data)
Current Assets:
Cash and cash equivalents	$	2,060		$	1,748
Accounts receivable, less reserve for doubtful accounts		21,808			25,579
Inventories, net		26,057			21,342
Prepaid expenses and other current assets		1,291			1,171
Income tax receivable		443		-
Deferred income taxes		765			1,050
Total Current Assets		52,424			50,890
Inventories - non-current, net		8,623			6,881
Property, plant and equipment, net		8,950			9,135
Goodwill, net		9,686			9,686
Other assets		306			193
Total Assets	$	79,989		$	76,785
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	6,173		$	5,045
Accrued expenses		1,062			1,638
Accrued salaries and wages		2,149			2,631
Accrued income taxes	-				96
Total Current Liabilities		9,384			9,410
Long-term debt		13,900			10,900
Accrued income taxes		288			1,836
Deferred income taxes		1,680			1,235
Minority interest in subsidiary		147			147
Total Liabilities		25,399			23,528
Stockholders' Equity:
Common stock, par value $.01 per share;
40,000,000 shares authorized, 20,092,473 and
20,090,313 shares issued and 19,092,473 and
19,665,141 shares outstanding, respectively		201			201
Additional paid-in capital		13,366			13,147
Retained earnings		46,638			42,299
		60,205			55,647
Less: Treasury Stock, at cost (1,000,000 and 425,172 shares, respectively)		(5,615	)		(2,390	)
Total stockholders' equity		54,590			53,257
Total Liabilities and Stockholders' Equity	$	79,989		$	76,785

CONTACT:
NAPCO Security Systems, Inc.
Richard L. Soloway, CEO
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