-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ADKNJbICP6WwhonNhEsaM2ltHrM00WW6dbu1bwgk1wnqSyp3T2LrK7LYxNj7AeAm qKJkK/Mx33TXyvIy5eZA6g== 0000310056-99-000010.txt : 19990816 0000310056-99-000010.hdr.sgml : 19990816 ACCESSION NUMBER: 0000310056-99-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VICON INDUSTRIES INC /NY/ CENTRAL INDEX KEY: 0000310056 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 112160665 STATE OF INCORPORATION: NY FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07939 FILM NUMBER: 99687412 BUSINESS ADDRESS: STREET 1: 89 ARKAY DR CITY: HAUPPAUGE STATE: NY ZIP: 11788 BUSINESS PHONE: 5169522288 MAIL ADDRESS: STREET 1: 89 ARKAY DR CITY: HAUPPAUGE STATE: NY ZIP: 11788 10-Q 1 VICON QUARTERLY REPORT 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. 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. -2- 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. -3- 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. -4- 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. -5- 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 ========== ========== ========== ========== -6- 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 ========== ========== ========== ========== -7- 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- 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- 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- "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- 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- 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- 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 EX-10 2 VICON UK - NATWEST ADVICE OF BORROWING TERMS Corporate Banking Services Advice of Borrowing Terms for Vicon Industries (UK) Limited From: Portsmouth Corporate Office 22 February 1999 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 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 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 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 EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS 9-MOS SEP-30-1999 SEP-30-1999 JUN-30-1999 JUN-30-1999 2,529,130 2,529,130 0 0 17,091,317 17,091,317 (884,473) (884,473) 20,733,726 20,733,726 39,469,700 39,469,700 14,229,810 14,229,810 (6,160,713) (6,160,713) 47,538,797 47,538,797 9,141,060 9,141,060 7,111,342 7,111,342 0 0 0 0 46,275 46,275 31,240,120 31,240,120 47,538,797 47,538,797 19,493,092 54,121,434 0 0 12,878,903 36,003,014 0 0 4,337,666 12,003,350 60,000 180,000 110,673 322,743 2,105,850 5,612,327 760,000 2,045,000 1,345,850 3,567,327 0 0 0 0 0 0 1,345,850 3,567,327 .30 .79 .28 .76
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