Argyle Security, Inc. Announces Third Quarter 2008 Financial Results

Third Quarter 2008 Adjusted Pro Forma Financial Highlights vs. Third Quarter 2007 - Revenues increased by 13% to $31.7 million. - Gross profit declined by 27% to $4.7 million. - $16.9...

Argyle expects full-year 2008 revenues to be at the mid-range of the previously forecasted range of $128 to $142 million. Argyle now expects an EBITDA margin of approximately (10%) for the full-year 2008, which is significantly below previous guidance of approximately 7%, and is attributable to the $16.9 million in non-cash goodwill impairment charge, eroded gross margins in the Corrections segment, and higher-than-expected legal and accounting fees. Excluding the non-cash goodwill impairment charge and non- cash compensation expense, our expected EBITDA margin is approximately 3.5% for the 2008.

Conference Call Information

Argyle Security will host an investor conference call at 10:00 a.m. ET , on November 18, 2008 to discuss its results. Interested parties should call 888- 713-4213 (domestic) or 617-213-4865 (international) at least five minutes before the scheduled start time; the passcode is 89962604. This call may also be accessed via the Internet at:

For those who are unavailable to listen to the live broadcast, a replay will be available through December 5, 2008 and can be accessed by dialing 888- 286-8010 (domestic), and 617-801-6888 (international). The pass code is 84546898.

About Argyle Security, Inc.

Formed in 2005 and headquartered in San Antonio, TX , Argyle's goal is to become a leading global provider of services and solutions in the physical electronic security industry through an integrated buildup strategy. In July 2007 , Argyle acquired ISI Security Group, Inc. In February 2008 , Argyle created Argyle Security USA, which encompasses ISI Security Group's operations in both the corrections and commercial sectors, also including the assets and operations acquired as a result of the PDI, Com-Tec and Fire Quest acquisitions during 2008. Argyle's channel focus is Video Surveillance, Access Control, Perimeter Protection, Intrusion Protection, Fire Detection and Threat Analysis, serving selected commercial, governmental and residential markets. Argyle currently has two reporting segments: "Argyle Corrections" and "Argyle Commercial Security".

Argyle Corrections is the controlling entity for business units consisting of ISI, PDI, Com-Tec and MCS and is one of the nation's largest providers of detention equipment products and service solutions, as well as turnkey, electronic security systems. These systems include unique engineering competencies and proprietary software products. Currently, MCS-Commercial Fire & Security is the only business unit comprising Argyle Commercial Security. Argyle Commercial Security focuses on the commercial security sector and provides turnkey, electronic security systems to the commercial market.

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Disclosure Regarding Non-GAAP Financial Measures

Since Argyle acquired ISI Security Group, Inc. (which is now a part of Argyle Security USA) in July 2007 and Fire Quest, PDI and Com-Tec during January 2008 , the Company does not believe a comparison of the results of operations and cash flows for the three months ended September 30, 2008 versus September 30, 2007 is beneficial to stockholders. In order to assist investors in better understanding the changes in its business between the three months ended September 30, 2007 and September 30, 2008 , Argyle has provided adjusted pro forma results as if the acquisitions occurred on January 1, 2008 and January 1, 2007 , respectively. Argyle derived the adjusted pro forma results of operations from (i) the unaudited consolidated financial statements of Com- Tec for the three months ended September 30, 2007 , (ii) the unaudited financial statements of Peterson for the three months ended September 30, 2007 , (iii) the unaudited financial statements of Fire Quest for the three months ended September 30, 2007 and (iv) the unaudited consolidated financial statements of Argyle for the three months ended September 30, 2008 and 2007.