NAPCO Reports Third Quarter Results for Fiscal 2009

Sales and Profits Down as a Result of Reduced Inventory Levels at Credit
Squeezed Distributors

Primary Dealer Demand For Intrusion and Locking Products Remain Healthy

Major Restructuring and Cost Savings Under Way

Management to Host Conference Call Today at 11am ET
AMITYVILLE, N.Y.--(Business Wire)--
NAPCO Security Technologies, 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, 2009.

Net sales for the three months ended March 31, 2009 were $14,024,000, a decrease
of 14% compared to $16,222,000 reported for the same quarter a year earlier. Net
sales for the nine months ended March 31, 2009 were $50,586,000, an increase of
9% compared to $46,264,000 reported for the same nine-month period a year
earlier.

Gross Profit before Restructuring costs (non-GAAP) for the three months ended
March 31, 2009 was $914,000 a decrease of 84% compared to $5,716,000 for the
same period a year earlier. Gross Profit before Restructuring costs (non-GAAP)
for the nine months ended March 31, 2009 was $12,734,000, an decrease of 22%
compared to $16,387,000 for the same nine-month period a year ago. The Company
recognized Restructuring costs of $1,110,000 in the three months ended March 31,
2009 relating to the consolidation of its European and Middle Eastern
warehousing operations into the Company`s headquarters in Amityville, New York.
The Company also plans to move all of the operations of its Marks subsidiary,
acquired in August 2008, into its Amityville, New York headquarters and its
Dominican Republic production facility. The Company began these initiatives in
the quarter ended March 31, 2009 and expects the majority of the move to be
completed by August 2009, with full integration to be achieved by December 31,
2009.

EBITDA* for the three months ended March 31, 2009 was $(4,896,000) as compared
to $1,882,000 for the same quarter a year earlier. EBITDA for the nine months
ended March 31, 2009 was $(2,324,000) as compared to $4,572,000 for the same
nine-month period a year ago.

Operating income for the three months ended March 31, 2009 was $(5,260,000) a
decrease of $6,828,000 from $1,568,000 a year ago. Operating income for the nine
months ended March 31, 2009 was $(3,663,000), a decrease of $7,319,000 from
$3,656,000 a year ago.

Net income for the three months ended March 31, 2009 was $(5,015,000), or
$(0.26) per fully diluted share, a decrease of $0.43 from $3,277,000, or $0.17
per fully diluted share last year. Net income for the nine months ended March
31, 2009 was $(4,360,000), or $(0.23) per fully diluted share, a decrease of
$0.47 from $4,824,000, or $0.24 per fully diluted share last year. Per share
results are based on 19,095,713 and 19,626,043 fully diluted weighted average
shares outstanding for the three months ended March 31, 2009 and 2008,
respectively, and, 19,269,896 and 19,873,655 fully diluted weighted average
shares outstanding for the nine months ended March 31, 2009 and 2008,
respectively.

Richard Soloway, Chairman and President, stated, "Ninety percent of the
Company's sales are conducted through distributors that sell to thousands of our
alarm and locking dealers, both domestically and internationally. As a result of
the unprecedented protracted economic downturn, these distributors dramatically
reduced their on-hand inventory levels this past quarter due to credit line and
banking pressures. This inventory reduction process, although expected to be
temporary, hurt the Company's third quarter sales and profit despite primary
demand from the dealers (who buy from those distributors) remaining steady. We
believe we are close to bottoming out on this de-inventorying process at the
distribution level. An increasing need for security, as a result of the decline
in the economy and the resultant increase in crime levels, has kept dealer
demand for alarm and locking products at a respectable level and we are
cautiously optimistic that such demand will lead to improvedsales and profits in
the near term."

Mr. Soloway continued, "While I believe that business will improve in the
ensuing quarters, no one can accurately predict when the economy will recover.
Thus, we have taken decisive restructuring actions to enhance our operational
execution, improve our financial performance, and cut our expenses. The steps we
have taken will allow us to be profitable at reduced sales levels yet still
enable us to promptly ramp up capacity when sales levels improve. These steps
include downsizing direct and indirect labor in our factories where capacity was
underutilized, consolidating our European and Middle East warehouses into our
U.S. facility, and reducing or eliminating discretionary spending. In addition,
we have implemented an across- the-board payroll reduction program that will
remain in place until we see a sustained improvement in the economic climate."

Mr. Soloway added "For fiscal 2010 and beyond, we expect savings of several
million dollars from the continued integration of Marks as well as the
aforementioned restructuring and cost-cutting measures. We continue to work hard
on inventory reduction and were encouraged by the approximately $1.9 million
decrease in inventory that occurred this quarter. Cash and cash equivalents as
of March 31, 2009 amounted to approximately $2.6 million. In addition we reduced
our debt level this quarter by approximately $3.9 million and our net debt
position (inclusive of cash) stands at $31.8 million. Net cash provided by
operating activities aggregated approximately $4.1 million for the nine months
ended March 31, 2009."

Mr. Soloway concluded "We are disappointed with our overall performance and we
are committed to achieving a meaningful turnaround as quickly as possible.
Despite slower economic conditions our business fundamentals remain strong. The
sell-through data we receive indicates that installations of our intrusion and
locking products are similar to last year, which means when the distributors
deplete their inventories (which we expect to occur in the near term), then
demand for our products will increase. Our strategy throughout our entire
history has been and continues to be a long-term commitment to profitable growth
by providing security solutions to our customers, which incorporate
state-of-the-art technology. Additionally, despite the uncertain economic
environment, we continue to invest in our growing recurring revenue businesses,
which will provide a buffer against future cyclical downturns. Our number one
priority is managing through the current economic slowdown so that we mitigate
its impact and emerge as a stronger, more efficient company."

NAPCO will host a conference call for the investment community today at 11:00 AM
EDT. Interested parties may participate in the call by dialing (877) 407-8291;
international callers dial (201) 689-8345 about 5 - 10 minutes prior to 11:00 AM
EDT. The conference call will also be available on replay starting at 3:00 PM
EDT on May 11, 2009 and ending on May 25, 2009. For the replay, please dial
(877) 660-6853 (replay account #332, replay conference #321837). The access
number for the replay for international callers is (201) 612-7415 (replay
account #332, replay conference #321837).

NAPCO Security Technologies, Inc. is one of the world's leading manufacturers of
technologically advanced electronic security equipment including intrusion and
fire alarm systems, access control and door locking systems. The Company
consists of NAPCO plus three wholly-owned subsidiaries: Alarm Lock, Continental
Instruments, and Marks USA. The products are installed by security professionals
worldwide in commercial, industrial, institutional, residential and government
applications. NAPCO products have earned a reputation for technical excellence,
reliability and innovation, poising the Company for growth in the rapidly
expanding electronic security market, a multi-billion dollar market .

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.

*EBITDA is defined as Earnings Before Interest, Taxes and
Depreciation/Amortization.

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended Nine Months Ended
March 31, March 31,
2009 2008 2009 2008
(In Thousands, Except Share and Per Share Data)

Net sales $ 14,024 $ 16,222 $ 50,586 $ 46,264
Cost of sales 13,110 10,506 37,852 29,877
Restructuring costs 1,110 -- 1,110 --
Gross (Loss) Profit (196 ) 5,716 11,624 16,387
Selling, general, and administrative expenses 4,919 4,148 15,142 12,731
Restructuring costs 145 -- 145 --
Operating (Loss) Income (5,260 ) 1,568 (3,663 ) 3,656
Interest expense, net 426 216 1,170 635
Other expense, net 76 12 101 30
Total Other expense 502 228 1,271 665
(Loss) Income Before Minority Interest and Benefit for Income Taxes (5,762 ) 1,340 (4,934 ) 2,991
Minority interest in loss of subsidiary (112 ) 33 -- 92
(Loss) Income Before Benefit for Income Taxes (5,874 ) 1,373 (4,934 ) 3,083
Benefit for income taxes (859 ) (1,904 ) (574 ) (1,741 )
Net (loss) income $ (5,015 ) $ 3,277 $ (4,360 ) $ 4,824

(Loss) Earnings per share:
Basic $ (0.26 ) $ 0.17 $ (0.23 ) $ 0.25
Diluted $ (0.26 ) $ 0.17 $ (0.23 ) $ 0.24

Weighted average number of shares outstanding:
Basic 19,095,713 19,092,487 19,095,595 19,319,967
Diluted 19,095,713 19,626,043 19,269,896 19,873,655

EBITDA $ (4,896 ) $ 1,882 $ (2,324 ) $ 4,572

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

March 31, 2009 June 30, 2008
ASSETS (in thousands, except share data)
Current
Assets:
Cash and cash $ 2,567 $ 2,765
equivalents
Accounts 18,574 25,823
receivable,
net of
reserves
Inventories 26,012 19,548
Prepaid 748 1,121
expenses and
other current
assets
Income tax 790 --
receivable
Deferred 861 769
income taxes

Total Current 49,552 50,026
Assets
Inventories - 8,777 7,724
non-current,
net
Property, 9,215 8,989
plant and
equipment,
net
Intangible 16,103 --
assets, net
Goodwill, net 10,609 9,686
Other assets 440 298

Total Assets $ 94,696 $ 76,723

LIABILITIES
AND
STOCKHOLDERS`
EQUITY

Current
Liabilities:
Current $ 3,572 $ --
portion of
long-term
debt
Accounts 4,946 4,857
payable
Accrued 1,603 1,333
expenses
Accrued 1,982 2,543
salaries and
wages
Accrued 350 --
income taxes

Total Current 12,453 8,733
Liabilities

Long-term 30,742 12,400
debt
Accrued 210 294
income taxes
Deferred 1,823 1,607
income taxes
Minority -- 147
interest in
subsidiary

Total 45,228 23,181
Liabilities

Commitments
and
Contingencies
Stockholders`
Equity:
Common stock,
par value
$.01 per
share;
40,000,000
shares
authorized,
20,095,713
and
20,092,473
shares issued
and
19,095,713
and
19,092,473
shares
outstanding,
respectively

201 201
Additional 13,710 13,424
paid-in
capital
Retained 41,172 45,532
earnings

55,083 59,157
Less: (5,615 ) (5,615 )
Treasury
Stock, at
cost
(1,000,000
shares)

Total 49,468 53,542
stockholders`
equity

Total $ 94,696 $ 76,723
Liabilities
and
Stockholders`
Equity

As of March 31, 2009, the Company was not in compliance with certain financial
covenants contained in its credit facility. It has received a proposed waiver
and amendment from its lenders. The Company expects to close on these waivers
and amendments within 30 days.

NAPCO Security Technologies, Inc.
Richard L. Soloway, CEO
Kevin S. Buchel, Senior VP
631-842-9400 ext. 120
or
Wolfe Axelrod Weinberger Assoc. LLC
Donald Weinberger
Diana Bittner (Media)
212-370-4500
Fax: 212-370-4505
don@wolfeaxelrod.com

Copyright Business Wire 2009