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.
REPORTS FISCAL 2004
2ND QUARTER AND SIX-MONTHS RESULTS
- COMPANY IN COMPLIANCE WITH SEC FILING REQUIREMENTS -
- STRONG SECOND QUARTER GENERATES $0.21 PER SHARE -
- NASDAQ SYMBOL EXPECTED TO REVERT TO NSSC -
AMITYVILLE, NEW YORK - FEBRUARY 17, 2004 -- 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 financial
results for its second quarter and six months ended December 31, 2003.
Net sales for the second quarter ended December 31, 2003 increased 5.6% to
$14,629,000 from $13,859,000 reported for the same quarter a year earlier. Net
income for the quarter increased to $728,000, or $0.21 per diluted share,
compared to net income of $145,000, or $0.04 per diluted share, as restated,
reported for the same year ago period. The increase in sales for the second
quarter were due primarily to increased sales of the Company's door locking and
access control products.
Net sales for the six months ended December 31, 2003 decreased 4.4% to
$24,464,000 from $25,584,000 reported for the six months ended December 31,
2002. Net income for the first half of fiscal 2003 increased to 446,000, or
$0.13 per diluted share, compared to a net loss of ($38,000), or ($0.01) per
share, as restated, for the same period a year earlier. The decrease in sales is
primarily due to the previously disclosed lower burglar and fire alarm sales as
a result of a major distributor's decision to institute a company-wide inventory
reduction program. NAPCO has realigned its distribution network and no longer
sells to this distributor.
Richard Soloway, Chairman and President, stated, "With the filing of our Form
10Q for the quarters ended September 30, 2003 and December 31, 2003, NAPCO is
now in compliance with all of the filing requirements as set forth by the SEC
and, thereby, we expect that the "E" designation on its NASDAQ Symbol will be
removed and trading will change back to the regular symbol: NSSC.
"Our second quarter fiscal 2004 results reflect the kind of performance that
NAPCO hopes to report going forward," stated Mr. Soloway. "That is, increased
revenues and significantly improved net income. Bolstering our performance in
the second quarter were improved sales in both access control and locking
devices."
- MORE -
"An additional factor which is having a positive impact on our results and is
expected to be more significant in subsequent quarters is the reorganization of
our distribution network. Our previous selling arrangement with a leading
distributor, who also installs and monitors alarms, pitted that company against
the many thousands of independent security dealers and independent distributors.
Now, with our distribution realignment, the independent alarm dealer no longer
has to concern himself that we are selling to an organization that will directly
compete with him for the installation of security systems. Our dealers, some of
which previously expressed concern about this situation, have reacted
enthusiastically to the new arrangement and we anticipate that this will
translate into the purchase of NAPCO burglar and fire alarm products in greater
quantities as a result," Mr. Soloway noted.
"NAPCO's commitment to its customers is further evidenced by the steady stream
of new products that are developed as a result of our substantial R&D budget.
Through the years, NAPCO has committed the resources to develop innovative,
leading edge security products, systems and solutions and will continue to do so
to maintain its leadership position. Each year we develop a host of new products
and solutions that incorporate the latest technologies improving performance and
pricing levels to help grow their market penetration."
NAPCO's strong financial position will allow the Company to aggressively pursue
opportunities as they arise. As of December 31, 2003, NAPCO had a current ratio
of 4.7-to-1, working capital of $27.3 million and a debt-to-equity ratio of
0.4-to-1. Borrowings continue to decline and stood at $13.55 million, a decrease
of $2.45 million since June 30, 2003. Book value stands at $10.57 per share.
Inventories while controlled at $17.5 million are up slightly from earlier
levels in anticipation of the normal cyclical rise in business in the second
half of the fiscal year.
The NAPCO Security Systems, Inc. annual meeting is set for April 16, 2004.
"NAPCO is back on track," Mr. Soloway concluded, "and we look forward to
reporting improved results in subsequent quarters."
-----------------------------
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.
- TABLES TO FOLLOW -
NAPCO SECURITY SYSTEMS, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
(restated) (restated)
Net sales $ 14,629 $ 13,859 $ 24,464 $ 25,584
Cost of sales 10,077 10,290 16,929 18,967
----------- ----------- ----------- -----------
Gross profit 4,552 3,569 7,535 6,617
Selling, general and administrative expenses 3,305 3,145 6,582 6,426
----------- ----------- ----------- -----------
Operating income (loss) 1,247 424 953 191
----------- ----------- ----------- -----------
Interest expense, net 102 187 230 436
Other (income) expense, net 24 13 36 (187)
----------- ----------- ----------- -----------
126 200 266 249
----------- ----------- ----------- -----------
Income (loss) before provision
(benefit) for income taxes 1,121 224 687 (58)
Provision (benefit) for income taxes 393 79 241 (20)
----------- ----------- ----------- -----------
Net income (loss) $ 728 $ 145 $ 446 $ (38)
=========== =========== =========== ===========
Net income (loss) per share:
Basic $ 0.23 $ 0.04 $ 0.14 $ (0.01)
=========== =========== =========== ===========
Diluted $ 0.21 $ 0.04 $ 0.13 $ (0.01)
=========== =========== =========== ===========
Weighted average number of shares outstanding:
Basic 3,215,776 3,423,346 3,210,083 3,393,796
=========== =========== =========== ===========
Diluted 3,488,567 3,654,569 3,486,129 3,393,796
=========== =========== =========== ===========
- MORE -
NAPCO SECURITY SYSTEMS, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
December 31, June 30,
2003 2003
-------- --------
ASSETS
Current Assets:
Cash $ 1,794 $ 1,794
Accounts receivable, less reserve for doubtful accounts:
December 31, 2003 $ 276
June 30, 2003 $ 215 13,257 17,425
Inventories, net 17,479 16,922
Prepaid expenses and other current assets 1,025 525
Deferred income taxes 1,253 1,253
-------- --------
Total current assets 34,808 37,919
Property, Plant and Equipment, net 9,152 9,466
Goodwill 9,686 9,686
Other assets 182 278
-------- --------
$ 53,828 $ 57,349
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 1,900 $ 1,900
Accounts payable 2,771 3,374
Accrued expenses 1,050 1,812
Accrued salaries and wages 1,122 1,501
Accrued income taxes 634 489
-------- --------
Total current liabilities 7,477 9,076
Long-term debt 11,650 14,100
Deferred income taxes 816 816
-------- --------
Total liabilities 19,943 23,992
-------- --------
Shareholders' Equity:
Common stock, par value $.01 per share; 21,000,000 shares
authorized, 6,076,172 and 6,069,752 shares issued,
respectively; 3,205,116 and 3,198,696 shares
outstanding, respectively 61 61
Additional paid-in capital 1,424 1,342
Retained earnings 40,259 39,813
Less: Treasury stock, at cost (2,871,056 shares) (7,859) (7,859)
-------- --------
Total stockholders' equity 33,885 33,357
-------- --------
$ 53,828 $ 57,349
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