Devcon International Corp. Reports Second Quarter 2008 Financial Results

BOCA RATON, Fla., Aug. 18  /PRNewswire-FirstCall/ -- Devcon International Corp. (OTC:DEVC) (BULLETIN BOARD: DEVC)  today announced its second quarter financial results for the period ended June 30, 2008.

The Company reported revenues from continuing operations of $13.9 million for the second quarter of 2008, compared to revenues of $13.8 million for the same period last year. Net loss from continuing operations for the quarter ended June 30, 2008 was $(3.6) million or $(0.61) per fully diluted share, compared to a net loss from continuing operations of $(2.4) million, or ($0.39) per fully diluted share for the second quarter of 2007.

The $1.2 million increase in net loss from continuing operations for the quarter ended June 30, 2008 versus the quarter ended June 30, 2007 is primarily a result of the following factors:

-- A decrease in other income of $2.7 million related to the change in the fair value of the derivative instrument when performing a quarter over quarter comparison

-- The realized tax benefit of $0.4 million during the quarter ended June 30, 2007.

-- A net reduction in SG&A and depreciation and amortization of $1.8 million.

Revenues from continuing operations were $27.6 million for the six months ended June 30, 2008 compared to revenues of $28.0 million for the six months ended June 30, 2007.  The Company reported a net loss from continuing operations for the six month period ended June 30, 2008 of $(8.3) million or $(1.40) per fully diluted share, compared to a net loss from continuing operations of $(8.6) million, or ($1.39) per fully diluted share for the first six months of 2007.

The $0.3 million decrease in net loss from continuing operations for the six months ended June 30, 2008 versus the six months ended June 30, 2007 primarily resulted from the following:

-- A decrease in revenue of $0.3 million resulting from the softening of the housing market which impacted our new construction division along with an increase in cost of sales of $0.3 million due to an increase in service related expenses.

-- A reduction in SG&A, as well as depreciation and amortization of approximately $2.9 million.

-- A realized tax benefit of $1.0 million for the six months ended June 30, 2007 compared to $3,000 of expense for the six months ended June 30, 2008.

-- A decrease in other income of $1.2 million related to the change in the fair value of the derivative instrument when performing a six month comparison.

Robert C. Farenhem, the Company's President, stated: "We continue to focus on improving our efficiency and profitability after successfully integrating our back office systems. During the second quarter we have started to see these efforts reflected in our operating results."

Management will host a conference call for investors on Tuesday, August 19, 2008 at 9:00AM EDT /6:00AM PDT.  Parties interested in listening to the conference call should call 800-240-6709.  International callers should dial 303-262-2140. A replay will be available for 30 days on the Company's website http://www.devcon-security.com/

About Devcon

Devcon International's wholly-owned subsidiary, Devcon Security (http://www.devcon-security.com/), is a leading provider of installation, monitoring and related electronic security services, currently monitoring more than 140,000 commercial and residential sites in Florida, New York City and Staten Island.  Since February, 2005, Devcon has made 3 significant acquisitions of full-service electronic security services companies with significant concentrations throughout Florida and the New York Metropolitan region.  Currently, Devcon Security Services Corp. is the second largest security monitoring and alarm company in Florida and the eleventh largest in the U.S.

Forward-Looking Statements

This press release may contain statements, which are not historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements contain projections of Devcon's future results of operations, financial position or state other forward-looking information.  In some cases you can identify these statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words.  You should not rely on forward-looking statements because Devcon's actual results may differ materially from those indicated by these forward-looking statements as a result of a number of important factors.  These factors include, but are not limited to: general economic and business conditions; our business strategy for expanding our presence in our industry; anticipated trends in our financial condition and results of operation; the impact of competition and technology change; existing and future regulations effecting our business, and other risks and uncertainties discussed under the heading "Item 1A - Risk Factors" in Devcon's Annual Report on Form 10-K  for the period ended December 31, 2007 as filed with the Securities and Exchange Commission, and other reports Devcon files from time to time with the Securities and Exchange Commission.  Devcon does not intend to and undertakes no duty to update the information contained in this press release.

                      -- Financial Tables Follow --



                        DEVCON INTERNATIONAL CORP.
                             AND SUBSIDIARIES
             Condensed Consolidated Statements of Operations
       (Amounts shown in thousands except share and per share data)

                                               For the three months Ended
                                                         June 30,
                                                    2008           2007

  Revenue                                        $13,901        $13,797
  Cost of Sales                                    6,220          6,030
     Gross profit                                  7,681          7,767
  Operating expenses
     Selling                                         892          1,141
     General & administrative                      4,176          5,490
     Depreciation and amortization                 4,171          4,387
  Operating loss                                  (1,558)        (3,251)
  Other income (expense)
     Interest expense                             (2,401)        (2,586)
     Interest income                                   5             47
     Change in fair value of derivative
      instrument                                     336          3,004
  Loss from continuing operations before
   income taxes                                   (3,618)        (2,786)
     Income tax (benefit) provision                    -           (373)
  Net loss from continuing operations             (3,618)        (2,413)
  (Loss) from discontinued operations, net of
   income tax (benefit) expense of zero for
   the three months ended June 30, 2008 and 2007,
   respectively                                     (365)        (3,040)
  Net loss                                       $(3,983)       $(5,453)
     Preferred dividends                          (1,074)        (1,146)
     Accretion of Preferred Stock                   (180)          (216)
  Net loss available for common stockholders     $(5,237)       $(6,815)
  Basic and diluted (loss) per share:
  Continuing operations                           $(0.61)        $(0.39)
  Discontinued operations                         $(0.06)        $(0.49)
  Net loss                                        $(0.67)        $(0.88)
  Net loss available for common stockholders      $(0.88)        $(1.09)
  Weighted average number of shares
   outstanding:
  Basic                                        5,949,278      6,227,746
  Diluted                                      5,949,278      6,227,746



                        DEVCON INTERNATIONAL CORP.
                             AND SUBSIDIARIES
             Condensed Consolidated Statements of Operations
       (Amounts shown in thousands except share and per share data)

                                         For the six months Ended June 30,
                                              2008               2007

  Revenue                                   $27,617            $27,982
  Cost of Sales                              12,371             12,094
     Gross profit                            15,246             15,888
  Operating expenses
     Selling                                  2,127              2,482
     General & administrative                 8,875             10,941
     Depreciation and amortization            8,336              8,885
  Operating loss                             (4,092)            (6,420)
  Other income (expense)
     Interest expense                        (4,963)            (5,244)
     Interest income                             16                 86
     Change in fair value of derivative
      instrument                                732              1,944
  Loss from continuing operations
   before income taxes                       (8,307)            (9,634)
     Income tax (benefit) provision               3               (987)
  Net loss from continuing operations        (8,310)            (8,647)
  (Loss) from discontinued operations, net
   of income tax (benefit) expense of zero
   and $(48) for the six months ended
   June 30, 2008 and 2007, respectively      (1,627)            (3,688)
  Net loss                                  $(9,937)          $(12,335)
     Preferred dividends                     (2,122)            (2,271)
     Accretion of Preferred Stock              (360)              (421)
  Net loss available for common
   stockholders                            $(12,419)          $(15,027)
  Basic  and diluted (loss) per
   share:
  Continuing operations                      $(1.40)            $(1.39)
  Discontinued operations                    $(0.27)            $(0.59)
  Net loss                                   $(1.67)            $(1.99)
  Net loss available for common
   stockholders                              $(2.09)            $(2.42)
  Weighted average number of shares
   outstanding:
  Basic                                   5,949,278          6,213,885
  Diluted                                 5,949,278          6,213,885



                          DEVCON INTERNATIONAL CORP.
                               AND SUBSIDIARIES
                           Condensed Balance Sheet
                            (Amounts in thousands)

                                              June 30,          December 31,
                                                2008                 2007

  Working capital                             $(40,854)             $2,203
  Total assets                                $173,546            $179,785
  Long term debt, excluding current
   portion                                     $95,520             $94,440
  Stockholder's equity                         $(5,815)             $5,205


DATASOURCE: Devcon International Corp.



CONTACT:  Marilynn Meek of Financial Relations Board, [phone],

, for Devcon International Corp.



Web site:  http://www.devcon-security.com/ 

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