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, 1999 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.)
89 Arkay Drive, Hauppauge, New York 11788
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 952-2288
(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 June 30, 1999, the registrant had outstanding 4,560,742 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
6/30/99 6/30/98
Net sales............................. $19,493,092 $16,106,001
Cost of sales......................... 12,878,903 10,655,224
----------- -----------
Gross profit........................ 6,614,189 5,450,777
Operating expenses:
Selling expense................... 3,138,201 2,376,629
General & administrative expense.. 1,259,465 1,194,222
--------- ---------
4,397,666 3,570,851
--------- ---------
Operating income.................... 2,216,523 1,879,926
Interest expense...................... 143,192 247,100
Interest income....................... (32,519) (16,651)
----------- -----------
Income before income taxes........ 2,105,850 1,649,477
Income tax expense.................... 760,000 75,000
----------- ------------
Net income........................ $ 1,345,850 $ 1,574,477
=========== ============
Earnings per share:
Basic $ .30 $ .40
=== ===
Diluted $ .28 $ .38
=== ===
Shares used in computing earnings per share:
Basic 4,527,006 3,900,699
Diluted 4,733,794 4,162,632
See Notes to Condensed Consolidated Financial Statements.
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<PAGE>
PART I - FINANCIAL INFORMATION
VICON INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine Months Ended
6/30/99 6/30/98
Net sales............................. $54,121,434 $45,711,106
Cost of sales......................... 36,003,014 30,805,651
----------- -----------
Gross profit........................ 18,118,420 14,905,455
Operating expenses:
Selling expense................... 8,801,196 6,777,591
General & administrative expense.. 3,382,154 3,241,103
---------- ----------
12,183,350 10,018,694
---------- ----------
Operating income.................... 5,935,070 4,886,761
Interest expense...................... 445,578 940,930
Interest income....................... (122,835) (16,651)
----------- -----------
Income before income taxes........ 5,612,327 3,962,482
Income tax expense.................... 2,045,000 225,000
----------- ------------
Net income........................ $ 3,567,327 $ 3,737,482
=========== ============
Earnings per share:
Basic $ .79 $ 1.13
=== ====
Diluted $ .76 $ 1.04
=== ====
Shares used in computing earnings per share:
Basic 4,503,237 3,315,510
Diluted 4,712,921 3,596,902
See Notes to Condensed Consolidated Financial Statements.
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<PAGE>
VICON INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS 6/30/99 9/30/98
CURRENT ASSETS
Cash............................................ $ 2,529,130 $ 4,854,557
Accounts receivable, net........................ 14,385,336 12,758,080
Inventories:
Parts, components, and materials.............. 3,548,770 2,944,303
Work-in-process............................... 3,555,056 2,374,769
Finished products............................. 13,629,900 12,079,335
----------- -----------
20,733,726 17,398,407
Deferred income taxes........................... 1,433,736 1,079,736
Prepaid expenses................................ 387,772 332,241
----------- -----------
TOTAL CURRENT ASSETS............................ 39,469,700 36,423,021
- --------------------
Property, plant and equipment................... 13,266,571 12,702,390
Less accumulated depreciation and amortization.. (6,160,713) (5,565,352)
---------- ----------
7,105,858 7,137,038
Deferred income taxes........................... 116,973 116,973
Other assets.................................... 846,266 709,369
----------- -----------
TOTAL ASSETS.................................... $47,538,797 $44,386,401
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Revolving credit borrowings...................... $ 572,435 $ 634,388
Current maturities of long-term debt............ 1,186,479 1,179,367
Accounts payable................................. 3,399,448 3,133,505
Accrued compensation and employee benefits...... 1,987,897 1,955,462
Accrued expenses................................. 1,704,668 1,316,855
Income taxes payable............................. 290,133 561,173
--------- ---------
TOTAL CURRENT LIABILITIES 9,141,060 8,780,750
Long-term debt.................................. 6,065,615 7,001,819
Other long-term liabilities..................... 1,045,727 767,528
SHAREHOLDERS' EQUITY
Common stock, par value $.01.................... 46,275 45,347
Capital in excess of par value.................. 21,148,573 20,947,515
Retained earnings............................... 10,658,215 7,090,888
------------ -----------
31,853,063 28,083,750
Less treasury stock at cost..................... (446,245) (409,687)
Foreign currency translation adjustment......... (120,423) 162,241
------------ -----------
TOTAL SHAREHOLDERS' EQUITY 31,286,395 27,836,304
- -------------------------- ------------ -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...... $47,538,797 $44,386,401
- ------------------------------------------ =========== ===========
See Notes to Condensed Consolidated Financial Statements.
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<PAGE>
VICON INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
-----------------
6/30/99 6/30/98
------- -------
Cash flows from operating activities:
Net income..................................... $ 3,567,327 $ 3,737,482
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization................ 644,736 568,129
Deferred income taxes........................ (354,000) -
Change in assets and liabilities:
Accounts receivable........................ (1,784,180) (2,558,375)
Inventories................................ (3,440,603) (333,730)
Prepaid expenses........................... (63,818) 23,576
Other assets............................... (136,897) 122,096
Accounts payable........................... 281,570 989,321
Accrued compensation and employee benefits. 37,302 311,017
Accrued expenses........................... 401,591 (26,287)
Income taxes payable....................... (263,971) 135,518
Other liabilities.......................... 278,199 (17,857)
------------ ------------
Net cash (used in) provided by
operating activities................... (832,744) 2,950,890
--------- --------------
Cash flows from investing activities:
Capital expenditures......................... (724,433) (4,005,944)
--------- -----------
Net cash used in investing activities..... (724,433) (4,005,944)
--------- -----------
Cash flows from financing activities:
Decrease in borrowings under U.S. bank
credit agreement........................... - (6,003,416)
Decrease in borrowings under U.K. revolving
credit agreement........................... (17,824) (172,136)
Net proceeds from sale of common stock....... - 10,800,916
Borrowings under mortgage and term loans..... - 2,900,000
Decrease in interest-bearing accounts
payable to related party................... - (1,812,228)
Repayment of promissory note to related party - (1,800,000)
Proceeds from exercise of stock options...... 165,428 111,720
Repayments of U.S. term loan................. (675,000) -
Repayments of other debt..................... (204,842) (168,789)
------------ ------------
Net cash (used in) provided by
financing activities................... (732,238) 3,856,067
----------- ------------
Effect of exchange rate changes on cash.......... (36,012) (60,423)
----------- ------------
Net (decrease) increase in cash.................. (2,325,427) 2,740,590
Cash at beginning of year........................ 4,854,557 287,580
------------ ------------
Cash at end of period............................ $ 2,529,130 $ 3,028,170
============= ============
See Notes to Condensed Consolidated Financial Statements.
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<PAGE>
VICON INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1999
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 nine months ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the fiscal year
ended September 30, 1999. 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, 1998.
Note 2: Earnings per Share
In accordance with Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings per Share" the Company is required to present basic and diluted
earnings per share (EPS). Basic EPS are computed based on the weighted average
number of shares outstanding for the period. Diluted EPS reflect the maximum
dilution that would have resulted from the exercise of stock options and
incremental shares issuable under a deferred compensation agreement. The
following table provides the components of the basic and diluted earnings per
share (EPS) computations for the three month and nine month periods ended June
30, 1999 and 1998:
Three Months Nine Months
Ended June 30, Ended June 30,
----------------------- ----------------------
1999 1998 1999 1998
---------- ---------- ---------- ---------
(Unaudited) (Unaudited)
Basic EPS Computation
Net income.................. $1,345,850 $1,574,477 $3,567,327 $3,737,482
Weighted average
shares outstanding......... 4,527,006 3,900,699 4,503,237 3,315,510
Basic earnings per share.... $ .30 $ .40 $ .79 $ 1.13
========== ========== ========== ==========
Diluted EPS Computation
Net income.................. $1,345,850 $1,574,477 $3,567,327 $3,737,482
Weighted average
shares outstanding....... 4,527,006 3,900,699 4,503,237 3,315,510
Stock options............. 190,350 251,401 197,452 273,597
Stock compensation
arrangement.............. 16,438 10,532 12,232 7,795
---------- ---------- ---------- ---------
Diluted shares outstanding.. 4,733,794 4,162,632 4,712,921 3,596,902
Diluted earnings per share. $ .28 $ .38 $ .76 $ 1.04
========== ========== ========== ==========
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<PAGE>
Note 3: Comprehensive Income
In accordance with Statement of Financial Accounting Standards (SFAS) No. 130,
"Reporting Comprehensive Income", the Company is required to present all
components of comprehensive income in the financial statements. The Company's
total comprehensive income for the three month and nine month periods ended June
30, 1999 and 1998 was as follows:
Three Months Nine Months
Ended June 30, Ended June 30,
----------------------- -----------------------
1999 1998 1999 1998
----------- ---------- ---------- ----------
(Unaudited) (Unaudited)
Net income.................. $1,345,850 $1,574,477 $3,567,327 $3,737,482
Other comprehensive income (loss), net of tax:
Change in equity due to
foreign currency
translation adjustments 1,067 (3,788) (282,664) 45,666
--------- ---------- ---------- ----------
Comprehensive income........ $1,346,917 $1,570,689 $3,284,663 $3,783,148
========== ========== ========== ==========
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Three Months Ended June 30, 1999 Compared with June 30, 1998
Net sales for the quarter ended June 30, 1999 increased $3.4 million or 21% to
$19.5 million compared with $16.1 million in the year ago period. The sales
growth was experienced in the U.S. as sales increased $3.7 million or 31% to
$15.4 million principally as a result of systems and components supplied under a
contract with the U.S. Postal Service. International sales declined $.3 million
or 6% to $4.1 million due to lower sales to a European private label reseller.
Gross profit margins for the third quarter of 1999 increased to 33.9% compared
with 33.8% in the year ago period. The margin improvement was primarily the
result of greater fixed cost absorption associated with the sales growth.
Operating expenses for the third quarter of 1999 were $4.4 million or 22.6% of
net sales compared with $3.6 million or 22.2% of net sales in the year ago
period. The increase was principally the result of higher selling expenses
associated with the sales growth.
Operating income increased to $2.2 million for the third quarter of 1999
compared with $1.9 million in the year ago period principally as a result of
increased sales.
Interest expense decreased $104,000 to $143,000 for the third quarter of 1999 as
$9.0 million of interest-bearing debt was repaid in May 1998 with the net
proceeds from a secondary stock offering.
Income tax expense was $760,000 for the third quarter of 1999 compared with
$75,000 in the year ago period. The current period reflects a normal income tax
provision whereas U.S. taxable income in the year ago period was substantially
reduced by the utilization of federal and state net operating tax loss
carryforwards.
As a result of the foregoing, net income was $1.3 million for the third quarter
of 1999, down $229,000 from the year ago period. However, periods in 1998
benefitted from the utilization of net operating tax loss carryforwards which
affect the comparability of operating results. Assuming the year ago period had
incurred income taxes at the same effective tax rate as the current year period,
net income for the third quarter of 1998 would have been $1.1 million ($.25 per
share diluted) compared with $1.3 million ($.28 per share diluted) reported for
the third quarter of 1999.
-8-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Nine Months Ended June 30, 1999 Compared with June 30, 1998
Net sales for the nine months ended June 30, 1999 increased $8.4 million or 18%
to $54.1 million compared with $45.7 million in the year ago period. The sales
growth was experienced in the U.S. as sales increased $11.2 million or 36% to
$42.4 million principally as a result of systems and components supplied under a
contract with the U.S. Postal Service. International sales declined $2.8 million
or 19% to $11.7 million due principally to lower sales in Asia and to a European
private label reseller. The backlog of unfilled orders was $13.3 million at June
30, 1999 compared with $11.4 million at June 30, 1998.
Gross profit margins for the first nine months of 1999 increased to 33.5%
compared with 32.6% in the year ago period. The margin improvement was primarily
the result of a favorable sales mix, lower procurement costs and greater fixed
cost absorption associated with the sales growth.
Operating expenses for the first nine months of 1999 were $12.2 million or 22.5%
of net sales compared with $10.0 million or 21.9% of net sales in the year ago
period. The increase was principally the result of higher selling expenses
associated with the sales growth.
Operating income increased to $5.9 million for the first nine months of 1999
compared with $4.9 million in the year ago period principally as a result of
increased sales and higher gross margins.
Interest expense decreased $495,000 to $446,000 for the first nine months of
1999 as $9.0 million of interest-bearing debt was repaid in May 1998 with the
net proceeds from a secondary stock offering.
Income tax expense was $2 million for the first nine months of 1999 compared
with $225,000 in the year ago period. The current period reflects a normal
income tax provision whereas U.S. taxable income in the year ago period was
substantially reduced by the utilization of federal and state net operating tax
loss carryforwards.
As a result of the foregoing, net income was $3.6 million for the first
nine months of 1999, down $170,000 from the year ago period. However, periods in
1998 benefitted from the utilization of net operating tax loss carryforwards
which affect the comparability of operating results. Assuming the year ago
period had incurred income taxes at the same effective tax rate as the current
year period, net income for the first nine months of 1998 would have been $2.5
million ($.70 per share diluted) compared with $3.6 million ($.76 per share
diluted) reported for the first nine months of 1999.
-9-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Liquidity and Financial Condition
Net cash used in operating activities was $.8 million for the first nine months
of 1999. Net income for the period of $3.6 million was offset by an increase in
inventory of $3.4 million to support new product production and an increase in
accounts receivable of $1.8 million due to increased sales. Net cash used in
investing activities was $.7 million for the first nine months of 1999 due
principally to capital expenditures for office equipment and expansion of the
Company's principal operating facility. Net cash used in financing activities
was $.7 million for the first nine months of 1999 due primarily to the scheduled
repayments of bank term and mortgage loans. As a result of the foregoing, cash
decreased by $2.3 million for the first nine months of 1999 after the effect of
exchange rate changes on cash.
The Company maintains a $7.5 million revolving credit facility with its bank
which expires in July 2002, with an option to increase the facility to $9.5
million at any time through July 2000. Borrowings under the facility bear
interest at the bank's prime rate minus 2% or, at the Company's option, LIBOR
plus 90 basis points (5.75% and 6.14%, respectively, at June 30, 1999). At June
30, 1999, there were no borrowings under this agreement. The agreement contains
restrictive covenants which, among other things, require the Company to maintain
certain levels of earnings and ratios of debt service coverage and debt to
tangible net worth.
In addition, the Company maintains a bank overdraft facility of 600,000 Pounds
Sterling (approximately $948,000) in the U.K. to support the local working
capital requirements of its U.K. subsidiary. At June 30, 1999, borrowings under
this facility were $572,000.
The Company believes that cash from operations and funds available under its
credit agreements will be sufficient to meet its anticipated operating, capital
expenditures and debt service requirements for at least the next twelve months.
Year 2000
The Company's software-based products have been tested for year 2000 compliance
and the Company believes that such products are year 2000 compatible. With
respect to its own computer operating systems, the Company has completed the
upgrade of its principal operating computer software to the most recent
available revisions sold by its software suppliers, which the suppliers have
represented to be year 2000 compliant. The Company believes that such upgrades
will solve those year 2000 problems that could affect its operating software.
The costs for such upgrades were not material. It is possible that certain
computer systems or software products of the Company's customers or suppliers
may experience year 2000 problems and that such problems could adversely affect
the Company. The Company is in the process of assessing the status of its
principal suppliers' year 2000 readiness and their plans to address problems
that their computer systems may face in correctly processing date information as
the year 2000 approaches. However, since the ultimate success of the Company's
customers and suppliers to become compliant is largely outside of the Company's
control, no assurances can be made that the Company will be unaffected by the
year 2000.
Should the Company's suppliers fail to achieve year 2000 compliance, the supply
of product to the Company may be interrupted resulting in possible lost revenue
to the Company due to its inability to supply finished product to its customers.
If such interruptions were prolonged, it could have a material adverse effect on
the Company. The Company intends to consider contingency plans to address the
risk its principal suppliers will not be year 2000 compliant during fiscal 1999.
-10-
<PAGE>
"Safe" Harbor Statement under the Private Securities Litigation Reform Act of
1995
Statements in this Report on Form 10-Q and other statements made by the Company
or its representatives that are not strictly historical facts including, without
limitation, statements included herein under the captions "Liquidity and
Financial Condition" and "Year 2000" are "forward-looking" statements within the
meaning of the Private Securities Litigation Reform Act of 1995 that should be
considered as subject to the many risks and uncertainties that exist in the
Company's operations and business environment. The forward-looking statements
are based on current expectations and involve a number of known and unknown
risks and uncertainties that could cause the actual results, performance and/or
achievements of the Company to differ materially from any future results,
performance or achievements, express or implied, by the forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, and that in light of the significant uncertainties
inherent in forward-looking statements, the inclusion of such statements should
not be regarded as a representation by the Company or any other person that the
objectives or plans of the Company will be achieved. The Company also assumes no
obligation to update its forward-looking statements or to advise of changes in
the assumptions and factors on which they are based.
-11-
<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
None.
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
EXHIBIT
NUMBER DESCRIPTION
10 Material Contracts
(.1) Advice of Borrowing Terms between the Registrant and National
Westminster Bank PLC dated February 22, 1999.
No Form 8-K was required to be filed during the current quarter.
-12-
<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.
August 13, 1999
VICON INDUSTRIES, INC.
Kenneth M. Darby Arthur D. Roche
Chairman and Executive Vice President
Chief Executive Officer Chief Financial Officer
-13-
<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.
August 13, 1999
VICON INDUSTRIES, INC.
VICON INDUSTRIES, INC.
Kenneth M. Darby Arthur D. Roche
Kenneth M. Darby Arthur D. Roche
Chairman and Executive Vice President
Chief Executive Officer Chief Financial Officer
Corporate Banking
Services
Advice of Borrowing Terms
for
Vicon Industries (UK) Limited
From:
Portsmouth Corporate Office
22 February 1999
<PAGE>
Advice of Borrowing Terms
Relationship Portsmouth Corporate Office Date: 22 February 1999
Office:
Borrower(s) Registered Number:
Vicon Industries (UK) Limited 1551194
We intend that the facilities listed in Part 1 of the attached Facility Schedule
(the "on-demand facilities") should remain available to the borrower(s) until 21
February 2000 and all facilities should be reviewed on or before that date. The
facilities are, however, subject to the following:-
o the terms and conditions below,
o the specific conditions applicable to an individual facility as detailed
in the Facility Schedule,
o the Security detailed in the attached Security Schedule, and
o the attached General Terms.
All amounts outstanding are repayable on demand which may be made by us at our
discretion at any time and the facilities may be withdrawn, reduced, made
subject to further conditions or otherwise varied by us giving notice in
writing.
Conditions:
The following conditions must be satisfied at all times while the facilities are
outstanding, but this will not affect our right to demand repayment at any time:
o Monthly management accounts in the existing format, including aged Debtor
profile, to be provided to us within 21 days of the end of the month to which
they relate.
o Audited accounts to be provided to us within 180 days of the financial year
end to which they relate.
o Lending formulae to continue to be adhered to whereby:
=> Debtors (less than 90 days) plus stock (minus Preferentials) to cover
Overdraft by 250%;
=> Debtors (less than 90 days) alone to cover Overdraft by 150%.
John McLellan
Corporate Manager
For and on behalf of
National Westminster Bank Plc
<PAGE>
Acceptance:
To signify your agreement to the terms and conditions outlined above please sign
and return the enclosed copy of this Advice of Borrowing Terms within 28 days.
Form of Acceptance
I accept the facility/facilities on the above terms and conditions and confirm
that I have been authorised by the Board(s) of Directors of the Borrower(s) to
sign this Form of Acceptance on behalf of the Borrower(s).
By (name and title): ................................ Date
For and on behalf of:
Vicon Industries (UK) Limited
<PAGE>
Facility Schedule
Part 1 - Facilities Repayable on Demand:
-------------------------
Overdraft: - Base rate
-------------------------
Account Number: 01144642 (56-00-64)
Name of Borrower Vicon Industries (UK) Limited
Limit: (pound)600,000 (Six hundred thousand pounds)
Purpose: To finance working capital
Repayment: Fully fluctuating
1st Debit Interest Rate: 2% above the Bank's Base rate
2nd Debit Interest Rate: 5% above the Bank's Base rate on borrowing over
(pound)600,000 or in excess of agreed facilities
Interest Payable: Quarterly
Arrangement Fee: (pound)1,850.00 will be debited on 25 March 1999
Excess Fees: We will be entitled to charge an excess fee at
the Bank's published rate for each day any agreed
limit is exceeded (see our "Services & Charges
for Business Customers" brochure for details).
-------------------------
Forward Exchange
-------------------------
Name of Borrower: Vicon Industries (UK) Limited
Contract Term: Maximum contract term of 6 months
Purpose: Currency Hedging
Limit: o We have adopted the mark to market methodology to
measure customer exposures on foreign exchange.
This enables risk to be measured on a basis
linked to current/future replacement costs rather
than a limit expressed in terms of maximum gross
face value contract values.
o On your request our dealers will advise you of
the amount of your exposure at that time as
measured by the Bank.
o Measured utilisation and availability will vary
with market movement
o There is no commitment on our part to enter into
any foreign exchange contract with you.
---------------------------
Terminable Indemnities
---------------------------
Name of Borrower: Vicon Industries (UK) Limited
Limit: (pound)200,000
Type and Purpose: HM Customs & Excise Duty deferment Bond
Basis of Expiry: Ongoing
Indemnity Fee: (pound)1,760.00 p.a. payable half yearly in advance,
debited biannually in instalments of (pound)875.00
<PAGE>
Part 2 - Facilities Subject to Separate Documentation:
The following facilities are made available on the terms of the separate
documentation between us.
Name of Borrower Facility and Purpose Amount Date
(pound) Agreement
Signed
- --------------------- -------------------------- -------------- ---------
Vicon Industries (UK) Commercial Fixed Rate Loan Originally 8 April
Limited To uplift Japanese Yen (pound)500,000 1997
loan from Chugai Boyeici (balance
Co Ltd and to provide (pound)408,334
working capital plus Interest)
-------------------------
Settlement Risk
-------------------------
Name of Borrower: Vicon Industries (UK) Limited
Limit/Frequency: (pound)20,000 at any one time
Type and Purpose: Inward Collections: to release Documents in Trust
-------------------------
Settlement Risk
-------------------------
Name of Borrower: Vicon Industries (UK) Limited
Limit/Frequency: (pound)250,000 per day
Type and Purpose: Daytime exposure limit to facilitate payments from
International Banking Centre in Southampton
Security Schedule
We rely on the security detailed below (and require additional security where
specified) to repay, on demand, all your current and future liabilities (both
actual and contingent) to us. These liabilities include, without limitation,
those incurred by you under the facility(ies) specified in the Facility
Schedule.
Date Security: Given/to be given by:
Executed/New:
- ---------------- ------------------------------ ----------------------------
6 July 1989 Guarantee for(pound)1 million Vicon Industries Inc.
9 April 1997 First legal mortgage over Vicon Industries (UK) Limited
Industrial Unit at Site P3,
Brunel Way,Segensworth
Industrial Estate, Fareham,
Hampshire
17 October 1990 Mortgage Debenture Vicon Industries (UK) Limited
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<ARTICLE> 5
<S> <C> <C>
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<PERIOD-END> JUN-30-1999 JUN-30-1999
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<PP&E> 14,229,810 14,229,810
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0 0
0 0
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</TABLE>
