SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1995 Commission File No. 1-7939
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VICON INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
NEW YORK STATE 11-2160665
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
525 Broad Hollow Road, Melville, New York 11747
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 293-2200
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(Former name, address, and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
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At June 30, 1995, the registrant had outstanding 2,762,828 shares of
Common Stock, $.01 par value.
PART I - FINANCIAL INFORMATION
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VICON INDUSTRIES, INC. AND SUBSIDIARIES
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(CONDENSED) CONSOLIDATED STATEMENTS OF OPERATIONS
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(UNAUDITED)
Three Months Ended
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6/30/95 6/30/94
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Net sales....................... $10,287,108 $12,005,256
Costs and expenses:
Cost of goods sold............ 8,039,902 9,263,496
Selling, general & admin.
expenses.................... 2,534,706 2,515,369
Interest expense.............. 259,006 184,889
Unrealized foreign
exchange gain............... (6,021) -
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Total costs and expenses... 10,827,593 11,963,754
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Income (loss) before
income taxes................ (540,485) 41,502
Provision for
income taxes................ - 10,000
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Net income (loss)............... $ (540,485) $ 31,502
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Net income (loss) per share $ (.20) $ .01
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Shares outstanding 2,762,828 2,762,828
<FN>
See Notes to (Condensed) Consolidated Financial Statements.
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PART I - FINANCIAL INFORMATION
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VICON INDUSTRIES, INC. AND SUBSIDIARIES
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(CONDENSED) CONSOLIDATED STATEMENTS OF OPERATIONS
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(UNAUDITED)
Nine Months Ended
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6/30/95 6/30/94
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Net sales....................... $33,066,787 $35,948,363
Costs and expenses:
Cost of goods sold............ 25,770,958 27,983,840
Selling, general & admin.
expenses.................... 7,364,758 7,485,820
Interest expense.............. 792,588 506,824
Unrealized foreign
exchange loss (gain)........ 89,646 (23,041)
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Total costs and expenses... 34,017,950 35,953,443
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Loss before income taxes........ (951,163) (5,080)
Provision for
income taxes................ 40,000 22,000
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Net loss........................ $ (991,163) $ (27,080)
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Net loss per share $ (.36) $ (.01)
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Shares outstanding 2,762,828 2,762,828
<FN>
See Notes to (Condensed) Consolidated Financial Statements.
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VICON INDUSTRIES, INC. AND SUBSIDIARIES
(CONDENSED) CONSOLIDATED BALANCE SHEETS
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(UNAUDITED)
6/30/95 9/30/94
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ASSETS
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CURRENT ASSETS
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Cash................................. $ 1,829,218 $ 910,400
Accounts receivable (less allowance
of $530,000 at June 30, 1995 and
$309,000 at September 30, 1994).... 7,301,703 9,733,383
Other receivables.................... 223,647 301,548
Inventories:
Parts, components, and materials... 1,831,269 2,458,840
Work-in-process.................... 1,740,541 1,267,344
Finished products.................. 9,052,353 9,739,832
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12,624,163 13,466,016
Prepaid expenses..................... 450,831 322,953
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TOTAL CURRENT ASSETS................. 22,429,562 24,734,300
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Property, plant and equipment........ 13,105,617 12,476,239
Less: accumulated depreciation...... (9,793,560) (9,296,420)
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3,312,057 3,179,819
Other assets......................... 991,839 943,107
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TOTAL ASSETS......................... $26,733,458 $28,857,226
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VICON INDUSTRIES, INC. AND SUBSIDIARIES
(CONDENSED) CONSOLIDATED BALANCE SHEETS
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(UNAUDITED)
6/30/95 9/30/94
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES
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Borrowings under revolving credit
agreement.......................... $ 856,469 $ 936,466
Current maturities of long-term debt. 3,751,165 1,260,158
Accounts payable:
Related party...................... 6,847,476 5,711,951
Other.............................. 1,286,299 1,812,756
Accrued wages and expenses........... 1,445,219 1,289,511
Income taxes payable................. 33,066 32,270
Deferred gain on sale and leaseback.. 332,100 332,100
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TOTAL CURRENT LIABILITIES 14,551,794 11,375,212
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Long-term debt:
Related party...................... 2,007,673 2,332,632
Other.............................. 121,102 3,726,270
Deferred gain on sale and leaseback.. 517,018 766,093
Other long-term liabilities.......... 563,838 614,487
SHAREHOLDERS' EQUITY
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Common stock, par value $.01......... 27,882 27,882
Capital in excess of par value....... 9,396,890 9,396,890
Retained (deficit) earnings.......... (227,907) 763,256
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9,196,865 10,188,028
Less Treasury stock 25,400 shares,
at cost............................ (82,901) (82,901)
Foreign currency translation
adjustment......................... (141,931) (62,595)
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TOTAL SHAREHOLDERS' EQUITY 8,972,033 10,042,532
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TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY............................ $26,733,458 $28,857,226
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<FN>
See Notes to (Condensed) Consolidated Financial Statements
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VICON INDUSTRIES, INC. AND SUBSIDIARIES
(CONDENSED) CONSOLIDATED STATEMENTS OF CASH FLOWS
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(UNAUDITED)
Nine Months Ended
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6/30/95 6/30/94
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Cash flows from operating activities:
Net loss..................................... $ (991,163) $ (27,080)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization.............. 494,607 537,947
Amortization of deferred gain on
sale and leaseback....................... (249,075) (249,075)
Unrealized foreign exchange loss (gain) 89,646 (23,041)
Change in assets and liabilities:
Accounts receivable.......................... 2,443,523 250,446
Other receivables............................ 77,901 246,207
Inventories.................................. 855,550 (2,577,992)
Prepaid expenses............................. (127,467) (136,219)
Other assets................................. (48,732) (289,893)
Accounts payable............................. 607,823 28,008
Accrued wages and expenses................... 153,664 (53,496)
Income taxes payable......................... 1,813 1,427
Other liabilities............................ (50,649) (23,568)
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Total adjustments........................... 4,248,604 (2,289,249)
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Net cash provided by (used in)
operating activities................... 3,257,441 (2,316,329)
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Cash flows from investing activities:
Capital expenditures, net of minor disposals. (439,444) (514,351)
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Net cash used in investing activities.......... (439,444) (514,351)
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Cash flows from financing activities:
Increase in UK bank and other borrowings..... - 777,358
Issuance of promissory note to
related party.............................. - 2,000,000
Repayments of revolving credit
borrowings and other debt.................. (1,800,201) (607,390)
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Net cash (used in) provided by financing
activities................................... (1,800,201) 2,169,968
Effect of exchange rate changes on cash........ (98,978) 6,625
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Net increase (decrease) in cash................ 918,818 (654,087)
Cash at beginning of year...................... 910,400 1,039,113
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Cash at end of period.......................... $ 1,829,218 $ 385,026
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Non cash investing and financing activities:
Capital lease obligations entered into....... $ 178,151 $ -
<FN>
See Notes to (Condensed) Consolidated Financial Statements.
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VICON INDUSTRIES, INC. AND SUBSIDIARIES
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NOTES TO (CONDENSED) CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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June 30, 1995
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Note 1: Basis of Presentation
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The accompanying unaudited (condensed) consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the nine months ended June 30, 1995 are not necessarily
indicative of the results that may be expected for the fiscal year ended
September 30, 1995. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's
annual report on Form 10-K for the fiscal year ended September 30, 1994.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
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CONDITION AND RESULTS OF OPERATIONS
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Financial Condition and Changes Thereto
at June 30, 1995 and September 30, 1994
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Working capital declined by approximately $5.5 million to $7.9 million
at June 30, 1995. The decline in working capital resulted from the
current classification of $3.0 million of borrowings under the U.S.
revolving credit agreement which expires in October 1995, the repayment
of $1.5 million of borrowings under such agreement and current period
operating losses.
Accounts receivable decreased approximately $2.4 million to $7.3 million
at June 30, 1995. The decline was principally the result of lower sales.
Inventories decreased $.8 million to $12.6 million at June 30, 1995.
Inventories declined throughout the period as the Company sold certain
products which had high inventory levels at September 30, 1994.
Accounts payable - related party increased $1.1 million to $6.8 million
at June 30, 1995 due to the further extension of interest bearing payment
terms by a related party to meet financing needs not provided by bank lines
of credit.
Accounts payble - other decreased by $.5 million to $1.3 million due
primarily to the change in sourcing of certain product purchases to the
related party above.
The Company maintains a line of credit of 700,000 pounds sterling
(approximately $1,050,000) in the U.K. to support local operating cash
requirements. Borrowings under this line decreased approximately
$80,000 to $856,000 at June 30, 1995 as Vicon's U.K. subsidiary
inventory levels declined during the period.
At June 30, 1995, the Company was not in compliance with certain
financial covenants of its revolving credit agreement which was
subsequently waived by the banks. In connection with the granting
of this waiver, the Company paid the banks $200,000 and reduced the
revolving credit line to $2.8 million. The Company is no longer in the
process of seeking financing with alternative lenders and is discussing
with its current lenders a new credit agreement.
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Results of Operations
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Three Months Ended June 30, 1995 compared with June 30, 1994
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Net sales for the quarter ended June 30, 1995 were approximately
$10.3 million compared with $12.0 million in the corresponding quarter
last year. This decrease of 14.3% was due to lower sales in both the
United States and abroad. The backlog of orders increased by $1.0
million during the quarter to $2.7 million at June 30, 1995 due to
increased order intake for both domestic and European markets.
Gross profit margins for the current quarter were 21.8% compared with 22.8%
in the corresponding quarter one year ago. The margin decline was due
principally to the unfavorable impact of lower sales in relation to fixed
overhead costs.
Operating expenses for the current quarter were comparable to last year
at $2.5 million. Included in the current quarter was an additional provision
for bad debts of $150,000 required as a result of certain customer bank-
ruptcies. Interest expense increased by $74,000 to $259,000 for the current
year quarter as a result of higher interest rates.
During the current quarter, the Japanese yen remained fairly steady versus
the U.S. dollar resulting in a small foreign exchange gain of $6,000 from
the revaluation of a yen denominated mortgage obligation.
The increase in the pretax loss of $582,000 was due mainly to reduced
sales, higher interest costs and the additional provision for bad debts.
Nine Months Ended June 30, 1995 compared with June 30, 1994
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Net sales for the nine months ended June 30, 1995 were $33.1 million, a
decrease of 8.0% compared with $35.9 million for the comparable period last
fiscal year. The shortfall was due principally to lower sales in the U.S.
The gross margin was 22.1% compared with 22.2% in the corresponding period
last year. This slight margin decline was principally the result of the
unfavorable impact of lower sales in relation to fixed overhead costs,
offset in part by higher margins on U.S. produced products sold in Europe.
Operating expenses were $7.4 million for the current period compared to
$7.5 million last fiscal year. This decrease related primarily to ongoing
cost reduction efforts. Interest expense increased by $286,000 to $793,000
due to higher interest rates.
Since the beginning of the fiscal year, the Japanese yen has appreciated
significantly versus the U.S. dollar resulting in a foreign exchange loss
of $90,000 from the revaluation of a yen denominated mortgage obligation.
Last year, the yen depreciated against the dollar resulting in a foreign
exchange gain of $23,000.
The increase in the pretax loss of $946,000 was the result of lower sales,
higher interest costs, higher foreign currency losses and the additional
provision for bad debts referred to in the quarter commentary above.
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PART II
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ITEM 1 - LEGAL PROCEEDINGS
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The Company has no material outstanding litigation
ITEM 2 - CHANGES IN SECURITIES
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None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
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See "Management's Discussion and Analysis of Financial
Condition" for information regarding certain loan covenant
matters.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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None
ITEM 5 - OTHER INFORMATION
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None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
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No Form 8-K was required to be filed during the current quarter.
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Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
August 13, 1995
VICON INDUSTRIES, INC.
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VICON INDUSTRIES, INC.
KENNETH M. DARBY ARTHUR D. ROCHE
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KENNETH M. DARBY ARTHUR D. ROCHE
PRESIDENT EXECUTIVE VICE PRESIDENT
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER
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Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
May 11, 1995
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VICON INDUSTRIES, INC.
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Kenneth M. Darby Arthur D. Roche
President Executive Vice President
Chief Executive Officer Chief Financial Officer
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