Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTACT:
Richard Soloway, CEO Stephen D. Axelrod, CFA
Kevin S. Buchel, Senior VP Andria Arena (Media)
NAPCO SECURITY SYSTEMS, INC. WOLFE AXELROD WEINBERGER ASSOC. LLC
(631) 842-9400 ext. 120 (212) 370-4500; (212) 370-4505 fax
steve@wolfeaxelrod.com
NAPCO SECURITY SYSTEMS, INC. ENGAGES MARCUM & KLIEGMAN LLP
AS ITS ACCOUNTING FIRM, ANNOUNCES UNAUDITED RESULTS, AND REQUESTS FURTHER
EXTENSION FROM NASDAQ
AMITYVILLE, NEW YORK - DECEMBER 29, 2003 -- NAPCO SECURITY SYSTEMS, INC.
(NASDAQ: NSSCE) one of the world's leading suppliers of high performance
electronic security equipment for over 30 years, announced today that it has now
resolved the accounting treatment for the previously disclosed international
tax matter. The resolution also results in the adjustment of net deferred tax
assets that were previously included in the fiscal 2002 audited financial
statements. Attached are unaudited financial statements for the fiscal years
ended June 30, 2003 and June 30, 2002, as adjusted. Net sales for fiscal 2003
were $57.3 million compared to $55.8 million reported in fiscal 2002. Income
before provision/benefit for income taxes increased to $1.6 million for fiscal
2003 from $1.4 million for fiscal 2002. Net income in fiscal 2003 was $1.0
million (after the effect of a $600,000 tax provision for the accounting of the
international tax matter), or $0.28 per fully diluted share as compared to net
income of $1.6 million (after the effect of a $300,000 tax benefit for the
adjustment of net deferred tax assets) in fiscal 2002, or $0.47 per fully
diluted share.
Richard Soloway, Chairman and CEO of NAPCO, stated, "We are glad to put the
distraction of this accounting situation behind us. It had no meaningful impact
on the financial soundness of our balance sheet and the fundamental strength of
our basic business. More importantly, there was no effect on operations and
pretax results. As noted above, pretax income actually increased by 20% in
fiscal 2003 compared to fiscal 2002. NAPCO's book value stands at over $10.00
per share, substantially higher than the current share price. The fundamental
outlook continues to be positive for security-related businesses and for NAPCO.
As is our historical norm the first fiscal quarter is our weakest and we expect
results to improve sequentially over the remainder of the fiscal year. For the
full year, we are cautiously optimistic that fiscal 2004 could result in
increased sales and earnings."
The Company has engaged Marcum & Kliegman LLP ("M&K") to replace KPMG LLP as its
auditors effective December 15, 2003. M&K is ranked by Newsday as the Top
Accounting Firm on Long Island and has been designated as the 35th largest firm
nationwide by Bowman's Accounting Report. The Company believes that M&K's size
and emphasis on regional companies will better enable it to service the
Company's audit needs. M&K is auditing both the 2003 and 2002 financial
statements. The audit of the Company's 2003 financial statements, which was
begun by KPMG LLP, had been delayed by a previously disclosed accounting issue
related to accounting for an international tax matter. As of the termination of
KPMG on December 15, 2003 this issue was still unresolved. Although KPMG was not
replaced as a result of any accounting disagreement, KPMG was not consulted on
and therefore did not agree to the resolution discussed in the first paragraph.
As a result of the engagement of M&K on December 15, 2003, the Company has
requested a further extension to file from NASDAQ of February 10, 2004 to file
its Form 10-K and February 15, 2004 to file its Form 10-Q. The Company is
awaiting a response from NASDAQ which previously set a December 22, 2003
deadline. If NASDAQ does not grant the Company's further extension request to
file its Form 10-K, the Company's securities will be delisted from the NASDAQ
National Market. Once it files its 10-K and 10-Q the Company sees no reason why
it could not quickly be relisted because it meets all relisting criteria. If the
Company's stock is delisted, the stock will be quoted in the pink sheets until
it can gain relisting on NASDAQ. Under such circumstances, the Company intends
to promptly file for relisting once it completes and files its audited Form 10-K
for the year ended June 30, 2003 and its Form 10-Q for the quarter ended
September 30, 2003. The Company believes such filing will occur in early
February 2004.
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NAPCO SECURITY SYSTEMS, INC. is one of the world's leading manufacturers of
technologically advanced electronic security equipment including burglary and
fire alarm systems, access control products 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 systems. They are used in residential,
commercial, institutional and industrial 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 $25 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.
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NAPCO SECURITY SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Three Months Ended Year Ended
6/30/03 6/30/02 6/30/03 6/30/02
------- ------- ------- -------
(Unaudited) (Unaudited)* (Unaudited) (Unaudited) *
Net sales $ 18,350 $ 19,124 $ 57,340 $ 55,836
Cost of sales 13,062 13,944 41,939 41,119
----------- ----------- ----------- -----------
Gross profit 5,288 5,180 15,401 14,717
Selling, general
and administrative expenses 3,263 3,272 13,176 11,900
----------- ----------- ----------- -----------
Income from operations 2,025 1,908 2,225 2,817
----------- ----------- ----------- -----------
Other income (expense):
Interest expense, net (150) (272) (727) (1,409)
Other, net 9 (12) 127 (49)
----------- ----------- ----------- -----------
(141) (284) (600) (1,458)
----------- ----------- ----------- -----------
Income before provision (benefit) for
income taxes 1,884 1,624 1,625 1,359
Provision (benefit) for income taxes 600 (284) 615 (284)
----------- ----------- ----------- -----------
Net income $ 1,284 $ 1,908 $ 1,010 $ 1,643
=========== =========== =========== ===========
Earnings per share:
Basic $ 0.40 $ 0.57 $ 0.30 $ 0.49
Diluted $ 0.37 $ 0.54 $ 0.28 $ 0.47
=========== =========== =========== ===========
Weighted average number of shares
Outstanding:
Basic 3,182,000 3,365,000 3,315,000 3,342,000
=========== =========== =========== ===========
Diluted 3,433,000 3,540,000 3,568,000 3,492,000
=========== =========== =========== ===========
* reflects the restatement due to an adjustment of the income tax provision from
the previously issued financial statements.
SELECTED BALANCE SHEET DATA
(IN THOUSANDS)
6/30/2003 6/30/2002
--------- ---------
(Unaudited) (Unaudited)
Total current assets $36,666 $38,957
Total current liabilities 9,158 8,480
Long term debt 14,100 16,588
Total stockholders' equity 33,395 34,597
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CONTACT: NAPCO Security Systems, Inc.
Richard Soloway
or Kevin S. Buchel
631/842-9400 ext. 120
or
Wolfe Axelrod Weinberger Assoc. LLC
Stephen D. Axelrod, CFA
or Andria Arena (Media)
212/370-4500; 212/370-4505 fax
steve@wolfeaxelrod.com