Exhibit 99.1
NAPCO Security Systems, Inc. Announces Second Quarter Financial Results
-Second Quarter EPS $0.06 vs. $0.07 Last Year-
AMITYVILLE, N.Y.--(BUSINESS WIRE)--Feb. 6, 2007--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, 2006.
Net sales for the three months ended December 31, 2006 was $16.1 million as
compared to $17.2 million for the same quarter a year earlier, a decrease of 6%.
Net income for the quarter was $1.1 million, or $0.06 per diluted share,
compared to net income of $1.5 million, or $0.07 per diluted share, for the same
year ago period, a decrease of $400,000.
Net sales for the six months ended December 31, 2006 was $30.1 million as
compared to $31.4 million for the prior year period, a decrease of 4%. Net
income for the six months ended December 31, 2006 was $2.1 million or $0.10 per
diluted share, as compared to $2.3 million or $0.11 per diluted share in the
prior year period, a decrease of $200,000. Net sales and net income for the
three and six months declined due to lower sales in the Company's European
markets.
Richard Soloway, Chairman and President, noted, "We have taken several
steps that we believe will lead to improved European sales in the near term,
including the realignment of the European sales force in order to get better
penetration and increased presence in these markets.
"While Gross Profit was lower as a result of lower sales, the Company's
Gross Margin percentage increased during this past quarter to 36.2% from 35.1% a
year ago. The increase in Gross Margin percentage occurred primarily as a result
of increased overhead absorption resulting from increased production, a more
favorable product mix resulting from the increased sales of the Company's door
locking and access control products as well as the positive effect of the
Company's raw materials cost reduction program.
"The Company's inventory levels increased significantly during the first
two quarters of fiscal 2007. The Company's policy is to level-load its
production schedule during the year, even though its historical sales cycle is
with a larger portion of sales occurring in the latter fiscal quarters. This
stabilizes the Company's work force and increases manufacturing efficiencies.
This type of production planning also typically leads to significant increases
in inventory during the earlier quarters. In addition, the Company produced
additional inventory to support the introduction of the Company's new Freedom 64
code-less intrusion alarm system and several other key new products as well as
to support a projection of higher sales in the first two quarters of fiscal
2007. The inventory increase has centered on core components and new products.
The Company has recently taken several steps in order to reduce inventory
levels."
Mr. Soloway concluded, "Our fundamental strengths include the broadest line
of high quality, innovative products in the industry designed to serve the needs
of the residential, business, military and government markets and encompassing
products for access control, intrusion and fire alarm systems, and electronic
locking devices. We are one of the few independent but meaningful security
product and systems providers. This array of products and markets is supported
by a large R&D effort with the mandate of using the latest technologies to
develop new products and systems for the sole purpose of bringing greater
security into our customers' lives. I am looking forward to the benefits from
our many new product introductions, our new European sales structure as well as
our continuing search for accretive acquisitions."
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,
-------------------------
2006 2005
----------- -----------
(in thousands, except
share and per share
data)
Net sales $ 16,077 $ 17,223
Cost of sales 10,252 11,174
----------- -----------
Gross Profit 5,825 6,049
Selling, general and administrative expenses 3,981 3,785
----------- -----------
Operating Income 1,844 2,264
----------- -----------
Interest expense, net 119 60
Other expenses, net 5 2
----------- -----------
Other expenses 124 62
----------- -----------
Income Before Minority Interest and
Provision for Income Taxes 1,720 2,202
Minority interest in net loss of subsidiary,
net 41 54
----------- -----------
Income Before Provision for Income Taxes 1,761 2,256
Provision for income taxes 617 773
----------- -----------
Net Income $ 1,144 $ 1,483
=========== ===========
Earnings per share* : Basic $ 0.06 $ 0.07
=========== ===========
Diluted $ 0.06 $ 0.07
=========== ===========
Weighted average number of shares
outstanding* : Basic 20,034,552 19,775,998
=========== ===========
Diluted 20,628,793 20,593,902
=========== ===========
* The 3:2 stock split declared in May 2006 has been retroactively
reflected in all 2005 share and per share data.
Napco Security Systems, Inc and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
Six Months Ended
December 31,
-------------------------
2006 2005
------------ ------------
(in thousands,except
share and per share
data)
Net sales $ 30,106 $ 31,403
Cost of sales 18,722 20,229
------------ ------------
Gross Profit 11,384 11,174
Selling, general and administrative expenses 7,979 7,658
------------ ------------
Operating Income 3,405 3,516
------------ ------------
Interest expense, net 209 98
Other expenses, net 9 6
------------ ------------
Other expenses 218 104
------------ ------------
Income Before Minority Interest and
Provision for Income Taxes 3,187 3,412
Minority interest in net loss of subsidiary,
net 54 115
------------ ------------
Income Before Provision for Income Taxes 3,241 3,527
Provision for income taxes 1,145 1,229
------------ ------------
Net Income $ 2,096 $ 2,298
============ ============
Earnings per share*: Basic $ 0.10 $ 0.12
============ ============
Diluted $ 0.10 $ 0.11
============ ============
Weighted average number of shares
outstanding*: Basic 19,992,925 19,662,681
============ ============
Diluted 20,715,830 20,580,189
============ ============
* The 3:2 stock split declared in May 2006 has been retroactively
reflected in all 2005 share and per share data.
Napco Security Systems, Inc and Subsidiaries
Condensed Consolidated Balance Sheets
December 31,
ASSETS 2006 June 30,
(unaudited) 2006
- -------------------------------------------- ------------ ------------
(in thousands,except
share data)
Current Assets:
Cash and cash equivalents $ 731 $ 2,738
Accounts receivable, less allowance for
doubtful accounts 22,774 25,153
Inventories, net 30,766 22,666
Prepaid expenses and other current assets 1,168 755
Deferred income taxes 1,701 1,531
------------ ------------
Total current assets 57,140 52,843
Property, plant and equipment, net 9,065 9,038
Goodwill 9,686 9,686
Other assets 267 155
------------ ------------
Total Assets $ 76,158 $ 71,722
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------------
Current Liabilities:
Accounts payable $ 6,374 $ 6,060
Accrued expenses 1,325 1,372
Accrued salaries and wages 2,437 2,586
Accrued income taxes 558 1,877
------------ ------------
Total current liabilities 10,694 11,895
Long-term debt 7,700 4,700
Accrued income taxes 2,243 2,243
Deferred income taxes 2,032 1,887
Minority interest in subsidiary 147 147
------------ ------------
Total liabilities 22,816 20,872
------------ ------------
Stockholders' Equity :
Common stock, par value $.01 per share;
40,000,000 shares authorized, 20,090,313
and 19,950,453 shares issued and
outstanding, respectively 201 200
Additional paid-in capital 12,963 12,568
Retained earnings 40,178 38,082
------------ ------------
Total stockholders' equity 53,342 50,850
------------ ------------
Total Liabilities and Stockholders'
Equity $ 76,158 $ 71,722
=========================
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