Second quarter sales were $9.8 million, compared to $11.9 million in the same period a year ago. The decrease was due to reduced sales of the CCTV component of the access control products, as well as lower revenue from access control projects in the domestic commercial accounts. The company experienced some difficulty in securing CCTV product supply, which adversely impacted the second quarter sales.

The gross profit margin was 25 percent in the second quarter of 2003, a decrease of 2.8 percent compared to the same period in 2002. The margin decrease can be attributed to $300,000 of inventory charges for older CCTV products. Without these charges, the gross profit margin for the three months ended June 30, 2003 would have been 28.6 percent. The new generation of the SAFEnet product line continues to grow as a percentage of total access control sales and contributed to the improved margins (before the charges).

Selling, general and administrative expenses (SG&A) of $5.5 million during the second quarter of 2003, an increase of $200,000, compared to the same period in 2002. Corporate SG&A decreased $1.5 million (48 percent), related primarily to expenses for executive positions that were eliminated in 2002. The corporate SG&A expense also included $200,000 in option compensation expense related to the company’s former CEO. The company incurred $400,000 in severance when eliminating several corporate positions. The company also expensed $100,000 in legal costs for enforcing a patent infringement case against Silent Witness. SG&A in the PSG segment increased $1.0 million over the comparable period in 2002 for additional investment in engineering, marketing and customer support infrastructure in California and an increase in the sales and sales support in Switzerland. SG&A expenses in the DSG segment increased $700,000 over the comparable period in 2002 due to additional advertising and marketing support for the consumer/do-it yourself business.

Interest expenses of $200,000 in the second quarter of 2003 were $600,000 less than a year ago. The decrease is attributable to $500,000 in interest expense savings from the utilization of the Honeywell December 2002 proceeds to reduce the company’s revolving credit facility to a zero balance. Other income in the second quarter of 2003 was $200,000, compared to $400,000 during the same period in 2002. During the second quarter of 2002, the company recorded $300,000 of other income for the successful enforcement of a patent.

If you enjoyed this article and want to receive more valuable industry content like this, click here to sign up for our FREE digital newsletters!

Related Content