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 March 31, 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 March 31, 1994, the registrant had outstanding 2,762,828 shares of
Common Stock, $.01 par value.
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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)
<CAPTION>
Three Months Ended
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3/31/95 3/31/94
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<S> <C> <C>
Net sales....................... $10,952,150 $12,326,473
Costs and expenses:
Cost of goods sold............ 8,601,648 9,632,776
Selling, general & admin.
expenses.................... 2,451,930 2,473,548
Interest expense.............. 253,974 167,627
Unrealized foreign
exchange loss............... 95,667 6,620
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Total costs and expenses... 11,403,219 12,280,571
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Income (loss) before
income taxes................ (451,069) 45,902
Provision for
income taxes................ 16,000 12,000
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Net income (loss)............... $ (467,069) $ 33,902
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Net income (loss) per share $ (.17) $ .01
====== =====
Shares outstanding 2,762,828 2,762,828
<FN>
See Notes to (Condensed) Consolidated Financial Statements.
</TABLE>
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<TABLE>
PART I - FINANCIAL INFORMATION
------------------------------
VICON INDUSTRIES, INC. AND SUBSIDIARIES
---------------------------------------
(CONDENSED) CONSOLIDATED STATEMENTS OF OPERATIONS
------------------------------------------------
(UNAUDITED)
<CAPTION>
Six Months Ended
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3/31/95 3/31/94
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<S> <C> <C>
Net sales....................... $22,779,679 $23,943,108
Costs and expenses:
Cost of goods sold............ 17,731,056 18,720,347
Selling, general & admin.
expenses.................... 4,830,051 4,970,434
Interest expense.............. 533,583 321,933
Unrealized foreign
exchange loss (gain)........ 95,667 (23,041)
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Total costs and expenses... 23,190,357 23,989,673
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Income (loss) before
income taxes................ (410,678) (46,565)
Provision for
income taxes................ 40,000 12,000
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Net income (loss)............... $ (450,678) $ (58,565)
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Net income (loss) per share $ (.16) $ (.02)
====== ======
Shares outstanding 2,762,828 2,762,828
<FN>
See Notes to (Condensed) Consolidated Financial Statements.
</TABLE>
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VICON INDUSTRIES, INC. AND SUBSIDIARIES
(CONDENSED) CONSOLIDATED BALANCE SHEETS
---------------------------------------
(UNAUDITED)
<CAPTION>
3/31/95 9/30/94
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<S> <C> <C>
ASSETS
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CURRENT ASSETS
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Cash................................. $ 747,182 $ 910,400
Accounts receivable (less allowance
of $384,000 at March 31, 1995 and
$309,000 at September 30, 1994).... 7,908,275 9,733,383
Other receivables.................... 264,927 301,548
Inventories:
Parts, components, and materials... 2,252,585 2,458,840
Work-in-process.................... 1,446,127 1,267,344
Finished products.................. 8,565,243 9,739,832
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12,263,955 13,466,016
Prepaid expenses..................... 403,329 322,953
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TOTAL CURRENT ASSETS................. 21,587,668 24,734,300
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Property, plant and equipment........ 12,896,032 12,476,239
Less: accumulated depreciation...... (9,612,241) (9,296,420)
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3,283,791 3,179,819
Other assets......................... 938,099 943,107
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TOTAL ASSETS......................... $25,809,558 $28,857,226
=========== ===========
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<TABLE>
VICON INDUSTRIES, INC. AND SUBSIDIARIES
(CONDENSED) CONSOLIDATED BALANCE SHEETS
---------------------------------------
(UNAUDITED)
<CAPTION>
3/31/95 9/30/94
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<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES
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Borrowings under revolving credit
agreement.......................... $ 499,711 $ 936,466
Current maturities of long-term debt. 4,166,893 1,260,158
Accounts payable:
Related party...................... 5,040,161 5,711,951
Other.............................. 1,357,753 1,812,756
Accrued wages and expenses........... 1,407,865 1,289,511
Income taxes payable................. 70,300 32,270
Deferred gain on sale and leaseback.. 332,100 332,100
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TOTAL CURRENT LIABILITIES 12,874,783 11,375,212
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Long-term debt:
Related party...................... 2,021,401 2,332,632
Other.............................. 137,789 3,726,270
Deferred gain on sale and leaseback.. 600,043 766,093
Other long-term liabilities.......... 576,713 614,487
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
Earnings retained in the business.... 312,578 763,256
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9,737,350 10,188,028
Less Treasury stock 25,400 shares,
at cost............................ (82,901) (82,901)
Foreign currency translation
adjustment......................... (55,620) (62,595)
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TOTAL SHAREHOLDERS' EQUITY 9,598,829 10,042,532
- -------------------------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY............................ $25,809,558 $28,857,226
=========== ===========
<FN>
See Notes to (Condensed) Consolidated Financial Statements
</TABLE>
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<TABLE>
VICON INDUSTRIES, INC. AND SUBSIDIARIES
(CONDENSED) CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------------------
(UNAUDITED)
<CAPTION>
Six Months Ended
----------------
3/31/95 3/31/94
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<S> <C> <C>
Cash flows from operating activities:
Net loss.................................. $ (450,678) $ (58,565)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation and amortization........... 305,325 360,422
Amortization of deferred gain on
sale and leaseback.................... (166,050) (166,050)
Unrealized foreign exchange (gain) loss. 95,667 (23,041)
Change in assets and liabilities:
Accounts receivable....................... 1,873,040 (432,483)
Other receivables......................... 36,621 203,937
Inventories............................... 1,247,311 (1,557,535)
Prepaid expenses.......................... (78,185) (123,488)
Other assets.............................. 5,008 (197,268)
Accounts payable.......................... (1,132,578) (239,642)
Accrued wages and expenses................ 109,274 (145,641)
Income taxes payable...................... 36,445 7,925
Other liabilities......................... (37,774) (9,046)
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Total adjustments........................ 2,294,104 (2,321,910)
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Net cash provided by (used in)
operating activities................ 1,843,426 (2,380,475)
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Cash flows from investing activities:
Capital expenditures, net of minor
disposals............................... (372,237) (262,686)
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Net cash used in investing activities....... (372,237) (262,686)
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Cash flows from financing activities:
Increase in UK bank and other borrowings... - 765,832
Issuance of promissory note to
related party............................ - 2,000,000
Repayments of revolving credit
borrowings and other debt................ (1,639,874) (933,890)
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Net cash (used in) provided by financing
activities................................. (1,639,874) 1,831,942
Effect of exchange rate changes on cash...... 5,467 80,216
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Net decrease in cash......................... (163,218) (731,003)
Cash at beginning of year.................... 910,400 1,039,113
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Cash at end of period........................ $ 747,182 $ 308,110
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<FN>
See Notes to (Condensed) Consolidated Financial Statements.
</TABLE>
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VICON INDUSTRIES, INC. AND SUBSIDIARIES
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NOTES TO (CONDENSED) CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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March 31, 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 six months ended March 31, 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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<PAGE>
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 March 31, 1995 and September 30, 1994
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Working capital declined by approximately $4.6 million to $8.7 million
at March 31, 1995. The decline in working capital resulted from the
current classification of $3.4 million of borrowings under the U.S.
revolving credit agreement which expires in October 1995 and the repayment
of $1.1 million of borrowings under such agreement.
Accounts receivable decreased approximately $1.8 million to $7.9 million
at March 31, 1995. The decline was principally the result of lower sales.
Inventories decreased $1.2 million to $12.3 million at March 31, 1995.
Inventories declined throughout the period as the Company sold certain
products which had high inventory levels at September 30, 1994.
Accounts payable to a related party and other decreased approximately
$1.1 million to $6.4 million at March 31, 1995, as cash generated from
the lower inventory levels was used to reduce these obligations.
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
$437,000 to $500,000 at March 31, 1995 as Vicon's U.K. subsidiary
inventory levels declined during the quarter.
As a result of the loss in the current quarter, the Company is not in
compliance with a financial covenant of its revolving credit agreement.
The Company has requested a waiver from the banks. The Company is in
the process of seeking financing with alternative lenders.
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<PAGE>
Results of Operations
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Three Months Ended March 31, 1995 compared with March 31, 1994
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Net sales for the quarter ended March 31, 1995 were $11.0 million
compared with $12.3 million in the corresponding quarter last year.
This decrease of 11.1% was due to lower sales in the United States.
The backlog of orders was $1.6 million at March 31, 1995 compared with
$2.6 million at December 31, 1994.
Gross profit margins for the current quarter were 21.5% compared with
21.9% in the corresponding quarter one year ago. The margin decline was
due to the unfavorable impact of lower sales in relation to fixed
production costs.
Operating expenses for the current quarter were comparable to last year
at $2.5 million. Interest expense increased by $86,000 to $254,000 for
the current year quarter as a result of higher interest rates.
In recent months, the Japanese yen appreciated significantly versus the
U.S. dollar resulting in a foreign exchange loss of $96,000 from the
revaluation of a yen denominated mortgage obligation.
The increase in the pretax loss of $497,000 was due to reduced sales, higher
interest costs and increased foreign currency losses.
Six Months Ended March 31, 1995 compared with March 31, 1994
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Net sales for the six months ended March 31,1995 were $22.8 million, a
decrease of 4.9% compared with $23.9 million for the comparable period last
fiscal year. The shortfall for the last year was due to lower sales in
the U.S. offset in part by higher sales in international markets.
The gross margin was 22.2% compared with 21.8% in the corresponding period
last year. The margin increase was due principally to higher margins on
U.S. produced products sold in Europe.
Operating expenses were $4.8 million for the current period compared to
$5.0 million last fiscal year. This decrease related primarily to ongoing
cost reduction efforts. Interest expense increased by $212,000 to $534,000
due to higher interest rates.
In recent months, the Japanese yen appreciated significantly versus the
U.S. dollar resulting in a foreign exchange loss of $96,000 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 $364,000 was the result of lower sales,
higher interest costs and higher foreign currency losses.
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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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The Company's annual meeting was held on April 27, 1995.
The following directors were elected at the meeting:
Milton F. Gidge
Michael D. Katz
W. Gregory Robertson
Arthur V. Wallace
The terms of the following directors continued after the meeting:
Peter F. Barry
Kenneth M. Darby
Donald N. Horn
Peter F. Neumann
Arthur D. Roche
Kazuyoshi Sudo
The matters voted upon at the meeting and the results of each
vote are as follows:
Nominees Withheld
For Directors: For Authority
-------------- --- ---------
Mr. Gidge 2,415,887 242,033
Mr. Katz 2,644,544 13,376
Mr. Robertson 2,416,187 241,733
Mr. Wallace 2,415,037 242,883
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Withheld
For Authority
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Approval of the
Ratification of
Auditors 2,451,245 202,158
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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<PAGE>
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
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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