CompuDyne Reports GAAP Earnings Per Share of $0.10 for 2006 First Quarter - Adjusted Earnings Per Share, Excluding Stock Option Expense, Was $0.13 - Company's Recovery is Taking Hold

Institutional Security Systems revenue was $13.4 million in thefirst quarter of 2006 compared to $15.7 million in the first quarterof 2005. Pre-tax income declined from $1.2 million in the 2005 firstquarter to $0.1 million in the 2006 first quarter. First quarter 2006revenues and earnings were negatively impacted by delays in the startof some projects. Legal costs remained high at $138 thousand for thequarter as we continue to pursue recoveries on prior year contractlosses.

Attack Protection revenue was $11.7 million in the first quarterof 2006, up 69.4% compared to $6.9 million in the first quarter of2005. Pre-tax income improved from $499 thousand in the 2005 firstquarter to a pre-tax income of $1.2 million in the 2006 first quarter.The Norshield brand business, which supplies bullet, blast and attackresistant windows and doors as well as vehicle barrier systems,benefited from sharply increased backlogs as well as from significantprogress made during 2005 in reducing costs and improving quality. TheFiber SenSys ("FSI") brand business, which is one of the world'slargest supplier of fiber optic based perimeter alarm systems,continued to be negatively impacted by delays in military tests ofimportant new products. This process is now substantially behind usand FSI is expected to have much improved results during the balanceof the year.

Public Safety & Justice ("PS&J") revenues increased to $11.8million in the first quarter of 2006 compared to $11.7 million in thefirst quarter of 2005. Pre-tax results for PS&J in the first quarterof 2006 were breakeven compared to a loss of $482 thousand in thefirst quarter of 2005. While PS&J started the year with improvedbacklogs, they are still not at levels necessary for adequateprofitability, although the pipeline of prospective new business issharply higher. In addition, the decision was made in 2005 tosignificantly accelerate the research and development effort tomigrate to a full Service Oriented Architecture and .NET based productsuite, a commitment which is expected to negatively impact PS&J incomein 2006 by $2.5 million but which will materially improve futurerevenues and margins. The late 2005 acquisition of Xanalys, with oneof the country's foremost suites of investigative and case managementsoftware, is being introduced to PS&J's client base, and had animportant sale to the Australian Department of Defense in the firstquarter of 2006. During the first quarter of 2006 PS&J moved itsheadquarters to Pleasanton, California, a move that should bothincrease the efficiency and effectiveness of its headquartersoperations.

Integrated Electronic Systems revenue was $3.6 million in thefirst quarter of 2006 compared to $2.0 million in the first quarter of2005 and resulted in pre-tax income of $184 thousand for the firstquarter of 2006 compared to breakeven results for the first quarter of2005. The re-bid of the Bureau of Engraving & Printing contract,occasioned by a protest filed by the previous incumbent, remainsunresolved.

For the first quarter of 2006, our corporate pre-tax loss totaled$0.9 million. Full year audit and costs related to compliance withSection 404 of Sarbanes-Oxley are expected to be far below 2005levels.

While backlogs declined during the first quarter of 2006, by $19.7million to $128.5 million, quoting and bidding activity levelscontinue much higher than in recent years.

While the Company does not provide estimates of future results, wedo expect the second quarter of 2006 to generate positive results.

Certain statements made in this press release constitute"forward-looking statements" within the meaning of the PrivateSecurities Litigation Reform Act of 1995, including those statementsconcerning the Company's expectations with respect to future operatingresults and other events. Although the Company believes it has areasonable basis for these forward-looking statements, thesestatements involve risks and uncertainties that cannot be predicted orquantified and consequently, actual results may differ materially fromthose expressed or implied by such forward-looking statements. Factorswhich could cause actual results to differ from expectations include,among others, capital spending patterns of the security market and thedemand for the Company's products, competitive factors and pricingpressures, changes in legislation, regulatory requirements, governmentbudget problems, the Company's ability to secure new contracts, theability to remain in compliance with its bank covenants, delays ingovernment procurement processes, inability to obtain bid, payment andperformance bonds on various of the Company's projects, technologicalchange or difficulties, the ability to refinance debt when it becomesdue, product development risks, commercialization difficulties,adverse results in litigation, the level of product returns, theamount of remedial work needed to be performed, costs of compliancewith Sarbanes-Oxley requirements and the impact of the failure tocomply with such requirements, risks associated with internal controlweaknesses identified in complying with Section 404 of Sarbanes-Oxley,the Company's ability to realize anticipated cost savings, theCompany's ability to simplify its structure and modify its strategicobjectives, and general economic conditions. Risks inherent in theCompany's business and with respect to future uncertainties arefurther described in its other filings with the Securities ExchangeCommission, such as the Company's Form 10-K, Form 10-Q, and Form 8-Kreports.

COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)


March 31, December 31,
ASSETS 2006 2005
---------- ------------
(dollars in
thousands)
Current Assets
Cash and cash equivalents $ 9,647 $ 6,938
Marketable securities 6,522 11,429
Cash and marketable securities - pledged 440 -
Accounts receivable, net 32,741 39,625
Contract costs in excess of billings 11,994 13,764
Inventories 6,556 6,195
Prepaid expenses and other 2,318 2,809
---------- ------------
Total Current Assets 70,218 80,760

Cash and marketable securities - pledged 6,004 -
Property, plant and equipment, net 9,548 9,962
Goodwill 26,846 26,846
Other intangible assets, net 8,157 8,221
Other 807 903
---------- ------------
Total Assets $ 121,580 $ 126,692
========== ============



LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
Accounts payable and accrued liabilities $ 19,039 $ 23,030
Billings in excess of contract costs
incurred 11,315 13,847
Deferred revenue 8,688 8,094
Current portion of notes payable 440 440
---------- ------------
Total Current Liabilities 39,482 45,411

Notes payable 3,125 3,125
Convertible subordinated notes payable, net 39,352 39,305
Deferred tax liabilities 2,060 2,060
Other 328 369
---------- ------------
Total Liabilities 84,347 90,270
----------

Commitments and Contingencies

Shareholders' Equity 37,233 36,422
---------- ------------
Total Liabilities and Shareholders'
Equity $ 121,580 $ 126,692
========== ============





COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

Three Months Ended
March 31,
2006 2005
----------- ----------
(in thousands, except
per share data)

Revenues $ 40,470 $ 36,306
Cost of sales 27,961 23,923
----------- ----------

Gross profit 12,509 12,383

Selling, general and administrative expenses 9,736 10,027
Research and development 1,767 2,111
----------- ----------
Income from operations 1,006 245
----------- ----------

Total other expense, net 383 564
----------- ----------

Income (loss) before income taxes 623 (319)
Income tax benefit (184) -
----------- ----------
Net income (loss) $ 807 $ (319)
=========== ==========

Income (loss) per share:
------------------------
Basic income (loss) per common share $ .10 $ (.04)
=========== ==========

Weighted average number of common
shares outstanding 8,119 8,163
=========== ==========

Diluted income (loss) per common share $ .10 $ (.04)
=========== ==========

Weighted average number of common
shares and equivalents 8,159 8,163
=========== ==========





COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA
(in thousands, unaudited)

Three Months Ended
March 31,
2006 2005
---------- ---------

Revenues
Institutional Security Systems $ 13,355 $ 15,732
Attack Protection 11,684 6,898
Integrated Electronic Systems 3,587 2,019
Public Safety and Justice 11,844 11,657
---------- ---------
$ 40,470 $ 36,306
========== =========


Three Months Ended
March 31,
2006 2005
---------- ---------

Pre-tax income (loss)
Institutional Security Systems $ 136 $ 1,230
Attack Protection 1,205 499
Integrated Electronic Systems 184 (8)
Public Safety and Justice 7 (482)
Corporate (909) (1,558)
---------- ---------
$ 623 $ (319)
========== =========



March 31, December March 31,
2006 31, 2005 2005
--------- --------- ---------
Backlog
Institutional Security Systems $ 57,030 $ 58,128 $ 42,700
Attack Protection 20,961 28,802 20,139
Integrated Electronic Systems 6,590 7,503 8,395
Public Safety and Justice 43,874 53,705 44,488
--------- --------- ---------
$128,455 $148,138 $115,722
========= ========= =========





RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, unaudited)

Three Months Ended
March 31,
2006 2005
---------- ----------

Net income (loss) $ 807 $ (319)
Interest expense 815 803
Income tax benefit (184) -
Depreciation and amortization 795 877
Non-cash stock option expense 255 -
---------- ----------
EBITDA adjusted for non-cash stock option
expense
(EBITDAS) $ 2,488 $ 1,361
========== ==========

This press release contains unaudited financial information thatis not prepared in accordance with generally accepted accountingprincipals (GAAP). Investors are cautioned that the non-GAAP financialmeasures are not to be construed as an alternative to GAAP. TheCompany's management uses earnings before interest, taxes,depreciation and amortization, as adjusted for non-cash stock optionexpense (EBITDAS), in its internal analysis of results of operationsand monitors EBITDAS to evaluate the Company's compliance with certainof its bank covenants. Management believes that EBITDAS is useful toinvestors as a meaningful comparison between periods and as ananalysis of the critical components of the Company's results ofoperations. Management also believes that EBITDAS is useful toinvestors because it allows them to evaluate the Company's compliancewith certain of its bank covenants.