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 December 31, 1995 Commission File No. 1-7939
---------------------------- -------
VICON INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
NEW YORK STATE 11-2160665
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
525 Broad Hollow Road, Melville, New York 11747
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 293-2200
(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
At December 31 1995, the registrant had outstanding 2,762,828 shares of Common
Stock, $.01 par value.
<PAGE>
PART I - FINANCIAL INFORMATION
VICON INDUSTRIES, INC. AND SUBSIDIARIES
(CONDENSED) CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
12/31/95 12/31/94
Net sales........................... $10,512,468 $11,827,529
Costs and expenses:
Cost of goods sold................ 7,806,854 9,129,409
Selling, general & admin.
expenses........................ 2,357,942 2,378,120
Interest expense.................. 235,372 279,609
Unrealized foreign
exchange gain................... (14,372) -
----------- -----------
Total costs and expenses....... 10,385,796 11,787,138
Income before income taxes.......... 126,672 40,391
Provision for
income taxes.................... 25,000 24,000
----------- -----------
Net income.......................... $ 101,672 $ 16,391
=========== ===========
Net income per share $ .04 $ .01
=== ===
Shares outstanding 2,763,000 2,763,000
See Notes to (Condensed) Consolidated Financial Statements.
2
<PAGE>
VICON INDUSTRIES, INC. AND SUBSIDIARIES
(CONDENSED) CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS 12/31/95 9/30/95
CURRENT ASSETS
Cash............................................ $ 825,200 $ 1,151,850
Accounts receivable (less allowance
of $593,000 at December 31, 1995 and
$542,000 at September 30, 1995)............... 8,267,254 8,352,845
Other receivables............................... 251,278 261,864
Inventories:
Parts, components, and materials.............. 1,625,270 1,594,462
Work-in-process............................... 2,014,132 1,686,287
Finished products............................. 9,038,826 8,831,852
----------- -----------
12,678,228 12,112,601
Prepaid expenses................................ 367,954 309,288
----------- -----------
TOTAL CURRENT ASSETS............................ 22,389,914 22,188,448
- --------------------
Property, plant and equipment................... 13,260,686 13,222,497
Less: accumulated depreciation................. (10,116,098) (9,960,558)
----------- -----------
3,144,588 3,261,939
Other assets.................................... 1,024,301 973,107
----------- -----------
TOTAL ASSETS.................................... $26,558,803 $26,423,494
- ------------ =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Borrowings under revolving credit agreement..... $ 820,624 $ 906,955
Current maturities of long-term debt............ 210,871 220,739
Accounts payable:
Related party................................. 8,276,120 6,895,073
Other......................................... 1,667,184 1,335,935
Accrued wages and expenses...................... 1,311,968 1,697,732
Income taxes payable............................ 105,275 78,583
Deferred gain on sale and leaseback............. 332,100 332,100
------------ -----------
TOTAL CURRENT LIABILITIES 12,724,142 11,467,117
- -------------------------
Long-term debt:
Related party................................. 2,277,267 2,437,259
Other......................................... 1,964,724 2,901,490
Deferred gain on sale and leaseback............. 350,968 433,993
Other long-term liabilities..................... 536,363 550,609
SHAREHOLDERS' EQUITY
Common stock, par value $.01.................... 27,882 27,882
Capital in excess of par value.................. 9,396,890 9,396,890
Accumulated deficit............................. (482,117) (583,789)
------------ -----------
8,942,655 8,840,983
Less Treasury stock 25,400 shares, at cost...... (82,901) (82,901)
Foreign currency translation adjustment......... (154,415) (125,056)
------------ -----------
TOTAL SHAREHOLDERS' EQUITY 8,705,339 8,633,026
- -------------------------- ------------ -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...... $ 26,558,803 $26,423,494
- ------------------------------------------ ============ ===========
See Notes to (Condensed) Consolidated Financial Statements.
3
<PAGE>
VICON INDUSTRIES, INC. AND SUBSIDIARIES
(CONDENSED) CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
12/31/95 12/31/94
Cash flows from operating activities:
Net income................................... $ 101,672 $ 16,391
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.............. 164,207 157,924
Amortization of sale and leaseback......... (83,025) (83,025)
Unrealized foreign exchange gain........... (14,372) -
Change in assets and liabilities:
Accounts receivable.......................... 45,762 1,056,318
Other receivables............................ 10,586 (75,785)
Inventories.................................. (591,402) 1,240,549
Prepaid expenses............................ (60,592) (165,178)
Other assets................................. (51,194) 8,334
Accounts payable............................ 1,721,152 (948,901)
Accrued wages and expenses................... (377,884) 212,011
Income taxes payable......................... 26,912 19,092
Other liabilities........................... (14,246) (13,075)
--------- ---------
Net cash provided by
operating activities.................. 877,576 1,424,655
--------- ---------
Cash flows from investing activities:
Capital expenditures, net of
minor disposals........................... (74,136) (82,354)
--------- ----------
Net cash used in investing activities.... (74,136) (82,354)
--------- ----------
Cash flows from financing activities:
Net borrowings under new credit and
security agreement......................... 1,882,078 -
Repayments of U.S. revolving credit
agreement.................................. (2,800,000) (500,000)
Decrease in borrowings under U.K. revolving
credit agreement........................... (69,556) (278,145)
Repayments of other debt..................... (178,639) (15,988)
---------- ----------
Net cash used in financing activities...... (1,166,117) (794,133)
---------- ----------
Effect of exchange rate changes on cash.......... 36,027 (62,877)
---------- ----------
Net increase (decrease) in cash.................. (326,650) 485,291
Cash at beginning of quarter..................... 1,151,850 910,400
---------- ----------
Cash at end of period............................ $ 825,200 $1,395,691
========== ==========
See Notes to (Condensed) Consolidated Financial Statements.
4
<PAGE>
VICON INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO (CONDENSED) CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
December 31, 1995
Note 1: Basis of Presentation
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 three months ended December 31, 1995
are not necessarily indicative of the results that may be expected for the
fiscal year ended September 30, 1996. 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,
1995.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Three Months Ended December 31, 1995 Compared with December 31, 1994
Net sales for the quarter ended December 31, 1995 were approximately $10.5
million compared with $11.8 million in the corresponding quarter last fiscal
year. This decrease of 11.1% was due principally to lower sales in Europe. Order
intake for the quarter was $11.1 million which increased backlog to $3.3 million
at December 31, 1995.
Gross profit margins for the current quarter were 25.7% compared with 22.8% in
the corresponding quarter one year ago. The margin increase was due principally
to a change in sales mix to products with higher margins including increased
control system sales.
Operating expenses for the current quarter were comparable to last year at $2.4
million. Interest expense decreased by approximately $44,000 to $235,000 for the
current year quarter due principally to a reduction in average interest rates
During the current quarter, the Company incurred an unrealized foreign exchange
gain of $14,000. This gain resulted from the Company's revaluation of its yen
denominated mortgage obligation into U.S. dollars as the value of the British
pound sterling gained against the Japanese yen during the period.
The increase in pretax income of $86,000 was due principally to increased gross
profit margins on sales during the quarter.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY AND FINANCIAL CONDITION
December 31, 1995 Compared with September 30, 1995
Working capital declined by approximately $1.1 million to $9.7 million at
December 31, 1995. The decline was principally due to the paydown of long term
bank debt pursuant to the refinancing discussed below.
Accounts receivable remained principally unchanged at December 31, 1995.
Inventories increased approximately $.6 million to $12.7 million at December 31,
1995 as a result of higher finished goods stocking levels and new product
inventories. Accounts payable to a related party, Chugai Boyeki Co., Ltd.,
increased approximately $1.4 million to $8.3 million at December 31, 1995. The
increase relates to inventory growth and bank refinancing.
The Company has a revolving line of credit of 700,000 pounds sterling (approx.
$1.1 million) in the U.K. to support local cash requirements. At December 31,
1995, borrowings under this agreement were approximately $821,000, which was
used for general working capital purposes.
In late December 1995, the Company repaid $2.8 million of bank debt with the
proceeds of a new bank loan. The new two year loan agreement provides for
maximum borrowings of $3,250,000 through June 30, 1996 and $4,000,000
thereafter, subject to an availability formula based on accounts receivable and
inventories. Borrowings under such agreement amounted to approximately $1.9
million at December 31, 1995. Concurrent with the new loan agreement, the
Company amended its $2,000,000 secured promissory note with Chugai Boyeki Co.,
Ltd., a related party, to defer all scheduled installments to July 1998. The
Company believes that the new loan agreement and its other sources of credit
provide adequate funding to meet its near term cash requirements.
7
<PAGE>
PART II
ITEM 1 - LEGAL PROCEEDINGS
The Company has no material outstanding litigation.
ITEM 2 - CHANGES IN SECURITIES
None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
During the quarter, the Company was in default of its then banks
Revolving Credit loan. The loan was repaid on December 28, 1995 with
the proceeds of a new two year credit agreement with another bank.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
No Form 8-K was required to be filed during the current quarter.
8
<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.
February 13, 1996
VICON INDUSTRIES, INC.
Kenneth M. Darby Arthur D. Roche
President Executive Vice President
Chief Executive Officer Chief Financial Officer
9
<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.
February 13, 1996
VICON INDUSTRIES, INC.
VICON INDUSTRIES, INC.
Kenneth M. Darby Arthur D. Roche
Kenneth M. Darby Arthur D. Roche
President Executive Vice President
Chief Executive Officer Chief Financial Officer
9
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 825,200
<SECURITIES> 0
<RECEIVABLES> 9,479,845
<ALLOWANCES> (593,359)
<INVENTORY> 12,678,228
<CURRENT-ASSETS> 22,389,914
<PP&E> 14,284,987
<DEPRECIATION> (10,116,098)
<TOTAL-ASSETS> 26,558,803
<CURRENT-LIABILITIES> 12,724,142
<BONDS> 5,129,322
0
0
<COMMON> 27,882
<OTHER-SE> 8,677,457
<TOTAL-LIABILITY-AND-EQUITY> 26,558,803
<SALES> 10,512,468
<TOTAL-REVENUES> 0
<CGS> 7,806,854
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,328,570
<LOSS-PROVISION> 15,000
<INTEREST-EXPENSE> 235,372
<INCOME-PRETAX> 126,672
<INCOME-TAX> 25,000
<INCOME-CONTINUING> 101,672
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 101,672
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
