Vicon Industries, Inc. (AMEX: VII), a designer and producer of video security and surveillance systems, today reported operating results for the third fiscal quarter ended June 30, 2010. The announcement was made by Chairman and CEO Ken Darby, who said the results reflect a slow improvement in U.S. market conditions. Net sales for the third fiscal quarter were $13.1 million, a decrease of 11% compared with $14.8 million in the third quarter of the prior fiscal year. Net income was $17,000 ($.004 per diluted share), compared with net income of $473,000 ($.10 per diluted share) in the prior year quarter. For the nine months, net sales were $35.6 million, a decrease of 21% compared with $45.2 million in the first nine months of the prior fiscal year. The net loss totaled $1,370,000 ($.30 per share), compared with net income of $1,371,000 ($.29 per diluted share) in the prior year nine-month period. Commenting on the third quarter results, Mr. Darby said U.S. sales declined 5% to $7.4 million while foreign sales were off 18% to $5.7 million. “In the current quarter we finally saw an increase in year-over-year domestic orders for the 2010 fiscal year. Unfortunately, the same cannot be said for our international business which continues to cope with weak European economies coupled with the effect of declining exchange rates. While shipments of product year to date are down from the prior year, we have added $2.7 million to backlog since the start of the 2010 fiscal year. We expect a good portion of the backlog buildup to ship in the fourth fiscal quarter,” said Mr. Darby. Gross margins in the third quarter were 42.8%, compared with 44.1% in the prior year quarter. The lower margins reflect competitive pressures as well as the effect of lower sales in relation to a primarily fixed production overhead structure. Operating costs in the third quarter declined $202,000 to $5.6 million, principally as a result of lower selling and G&A costs. “Vicon maintained its development plans as engineering and development expense increased $288,000 for the current quarter and $130,000 year to date. Notwithstanding weak worldwide economies, we stayed the course with our development roadmap,” said Mr. Darby.