Vicon Industries, Inc. (VII: NYSE-AMEX), a designer and producer of video security and surveillance systems, today reported operating results for the third fiscal quarter ended June 30, 2011. The announcement was made by Chairman and CEO Ken Darby, who said with the patent litigation resolved, the Company can move forward free of the management distraction and financial uncertainty caused by the patent litigation.
Net sales for the third fiscal quarter were $11.0 million, a decrease of 16% compared with $13.1 million in the third quarter of the prior fiscal year. A net loss was incurred of $9.5 million ($2.12 per share), compared with net income of $17,000 ($.004 per diluted share) in the prior year quarter.
For the nine months, net sales were $34.8 million, a decrease of 2% compared with $35.6 million in the first nine months of the prior fiscal year. The net loss totaled $10.7 million ($2.38 per share), compared with a net loss of $1,370,000 ($.30 per share) in the prior year nine-month period.
Commenting on the third quarter results, Mr. Darby said the quarter was a very difficult period from many perspectives. After eight plus years of litigation and U.S. Patent Office re-examinations, it was decided to mediate and settle the patent suit. The Company agreed to pay $5 million in settlement cost and $125,000 in legal fees to put the matter behind us. Also in the quarter, we fully reserved our deferred tax assets of $2.5 million due to the uncertainty surrounding their recoverability. In addition, the Company incurred charges of approximately $300,000 principally relating to a single project warranty claim and certain staff reduction expenses. Weak revenues for the June quarter was the principal reason for the year-over-year decline in gross margins since most production overhead is fixed.
“Putting the litigation behind us was a major step in allowing the Company to move forward. We can now look at strategic options from a different perspective,” said Mr. Darby.