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Napco Security Systems Inc. Reports Operating Results (10-Q)

May 17, 2010 | About:
10qk

10qk

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Napco Security Systems Inc. (NSSC) filed Quarterly Report for the period ended 2010-03-31.

Napco Security Systems Inc. has a market cap of $41.06 million; its shares were traded at around $2.15 with and P/S ratio of 0.59.

Highlight of Business Operations:

Our sales return accrual is a subjective critical estimate that has a direct

impact on reported net sales and income. This accrual is calculated based on a

history of gross sales and actual sales returns, as well as management's

estimate of anticipated returns and allowances. As a percentage of gross sales,

sales returns, rebates and allowances were 6% and 10% for the nine months ended

March 31, 2010 and 2009, respectively. The percentage in fiscal 2009 was

impacted by a large number of returns in the company's middle east operation

which the Company is currently winding down. The percentage in fiscal 2010 has

returned to normal historical levels.



Results of Operations

-



Three months ended March 31, Nine months ended March 31,

(dollars in thousands) (dollars in thousands)

- -

% Increase/ % Increase/

2010 2009 (decrease) 2010 2009 (decrease)

- - - - - -

Net sales $16,015 $14,024 14.2% $47,121 $50,586 (6.8)%

Gross profit 4,151 (196) 2,218.9% 11,482 11,626 (1.2)%

Gross profit as a % of net sales 25.9% (1.4%) 27.3% 24.4% 23.0% 1.4%

Selling, general and administrative 4,979 4,919 1.2% 14,073 15,142 (7.1)%

Selling, general and administrative as a percentage of net sales 31.1% 35.1% (4.0)% 29.9% 29.9% -%

Impairment of goodwill 923 - 100.0% 923 - 100.0%

Operating (loss) income (1,750) (5,260) (66.7)% (3,513) (3,663) (4.1)%

Interest expense, net 591 426 38.7% 1,759 1,170 50.3%

Other expense (income) 14 76 (81.6)% (7) 101 (106.9)%

Net loss attributable to non-controlling interests - (112) (100.0)% - - -%

(Benefit) Provision for income taxes (491) (859) (42.8)% (672) (574) (17.1)%

Net (loss) income (1,864) (5,015) (62.8)% (4,594) (4,360) 5.4%



Sales for the three months ended March 31, 2010 increased by approximately 14%

to $16,015,000 as compared to $14,024,000 for the same period a year ago. Sales

for the nine months ended March 31, 2010 decreased by approximately 7% to

$47,121,000 as compared to $50,586,000 for the same period a year ago. The

increase in sales for the three months ended March 31, 2010 was primarily due to

increased sales in the Company's intrusion products ($1,573,000) as well as its

door-locking products ($418,000) The decrease in sales for the nine months ended

March 31, 2010 was primarily from decreased sales of the Company's intrusion

products ($188,000), door locking products ($2,210,000) and products specific to

the Company's Middle East operation ($1,067,000). The Company's sales continue

to be adversely affected by the worldwide economic downturn, primarily since the

quarter ended March 31, 2009.



Gross profit for the three months ended March 31, 2010 increased to $4,151,000

or 25.9% of sales as compared to a loss of $196,000 or (1.4)% of sales for the

same period a year ago. Gross profit for the nine months ended March 31, 2010

decreased to $11,482,000 or 24.4% of sales as compared to $11,626,000 or 23.0%

of sales for the same period a year ago. The increase in Gross profit in dollars

and as a percentage of sales for the three months was primarily due to the

restructuring charge incurred in the quarter ended March 31, 2009. The increase

in Gross profit as a percentage of sales for the nine months was also primarily

due to this restructuring charge in the prior fiscal year. In addition, the

decrease in Gross profit dollars for the nine months was primarily due to the

decrease in net sales as partially offset by the prior year's restructuring

charge.



Selling, general and administrative expenses for the three months ended March

31, 2010 remained relatively constant at $4,978,000, or 31.1% of sales, as

compared to $4,919,000, or 35.1% of sales a year ago. Selling, general and

administrative expenses for the nine months ended March 31, 2010 decreased by

$1,070,000 to $14,072,000, or 29.9% of sales, as compared to $15,142,000, or

29.9% of sales a year ago. The decrease in expenses as a percentage of sales for

the three months was primarily due to the increase in sales in the quarter ended

March 31, 2010 as compared to the same period a year ago. The decrease in

expenses for the nine months ended March 31, 2010 was due primarily to the

decrease in sales as well as reductions in personnel in response to the decrease

in sales. These reductions were initiated in the quarter ended March 31, 2009.



The Company's benefit for income taxes for the three months ended March 31, 2010

decreased by $369,000 to a benefit of $491,000 as compared to a benefit of

$859,000 for the same period a year ago. The Company's benefit for income taxes

for the nine months ended March 31, 2010 increased by $96,000 to a benefit of

$672,000 as compared to $574,000 for the same period a year ago. The decrease in

the benefit for income taxes for the three months was due primarily to the loss

before income taxes decreasing to $2,355,000 from a loss of $5,762,000 for the

same period a year ago. The increase in the benefit for income taxes for the

nine months was primarily due to the loss before income taxes increasing

slightly to a loss of $5,266,000 from a loss of $4,934,000 for the same period a

year ago. As a result, the Company's effective rate for income tax was 20.8% and

12.8% for the three and nine months ended March 31, 2010, respectively as

compared to 14.6% and 11.6% for the same period a year ago.



Read the The complete Report

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10qk
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