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2009 Annual Report

Vicon Industries, Inc.

Letter To Our Shareholders
The 2009 fiscal year, which ended on
September 30, 2009, was a challenging year by any
measure. Throughout 2009, the Company experienced
consistent weakness worldwide in new orders as a result
of the global recession. Capital expenditures for new
construction and other projects incorporating electronic
security systems slowed considerably.

The negative

impact of the recession was felt throughout the entire
security industry. Most of the business the Company
competed for in 2009 was in the public sector, funded
by government or associated agencies, while private
sector projects virtually dried up. This condition has
persisted into fiscal year 2010.

Past experience has

shown that the nature of our business trails economic
$7 million in free cash flow which increased the

downturns and correspondingly trails the recovery.
Consequently,

we

anticipate

capital

Company’s cash position to $16.7 million.

expenditure

funding, particularly in the private sector, to remain

Believing its shares to be significantly

tight with intense competition for funded projects.

undervalued, the Company in fiscal 2009 purchased
226,119 shares of its common stock in open market

With the foregoing as a backdrop, the

transactions at an average price of $5.22 per share. Our

Company nevertheless achieved $60.4 million in sales

belief is supported by the fact that the common shares at

in fiscal 2009 while producing net income of $2.0

December 31, 2009 had a net tangible book value of

million. While the operating results were off from the

$7.56 per outstanding share of which $3.21 was

prior fiscal year, they were nonetheless respectable in a

represented

very tough economic environment. The strengthening

by

cash.

Further,

common

stock

repurchases have been and will continue to be made in

of the U.S. dollar in fiscal 2009 hurt foreign results as

fiscal 2010.

the flight to the dollar as a safe haven currency reduced
by nearly $3.0 million the value of reported sales and

In previous letters, I have discussed the

new orders compared with the figures for fiscal 2008.

emergence of IP video. The security industry transition

To some extent, the 2009 financial performance was

to IP or network video greatly accelerated in 2009. In

attained as a result of a fairly

backlog of

fact, almost all of the projects we now compete for

the Company headed into calendar

employ network video to some extent. The quicker than

2009. New orders were off 11% in fiscal 2009 at $59.3

anticipated market acceptance of IP video has

million versus $67.0 million for the prior year. Also

accelerated

noteworthy in fiscal 2009, was the generation of over

situational management applications.

unfilled orders as

robust

ii

camera

technology

and

related

user

The focus of

Vicon’s engineering effort is now exclusively in these

Given today’s user preference for IP based systems,

two areas.

Vicon’s future growth potential may be limited as a
video only company. Clearly the trend of IP system

Market and competitive forces continue to

design engineers is toward integration of various

strain our engineering resources, particularly in the area
of software development.

security filters, such as, video, access, intrusion, and

Anticipating the future of

biometrics. Accordingly, we have begun the process of

electronic security, it is apparent that software

evaluating acquisition opportunities. Specifically, we

development will be a significant hurdle for the
Company.

are interested in companies that would expand our

In spite of the weak economy and its

product offerings in the integrated solutions sector

negative effect on our recent operating results, we have

and/or expand our customer channel.

not diminished our development efforts. The reality is
that additional resources may be required to achieve our
ambitious development plans.

To meet the rapid technology shifts discussed

While not always

and related engineering demands, the Company’s

accomplished, one of our goals is to have a major

executive ranks have been reinforced. In January 2010,

software release annually to our physical security

Mark Provinsal joined the Company as Vice President,

information management platform branded ViconNet®.

Marketing and Product Management. Mark, who has

ViconNet V6, which has been in development for over a

over 10 years of executive industry experience, will

year, is now scheduled for June release. V6 supports the

guide the Company’s product strategy and marketing

latest video compression technology, expands the

programs.

capabilities of our virtual matrix, and adds browser

joined us as Vice President of Technology and

functionality among other enhancements. Since January

Development in charge of all product development.

2009, our engineers have been designing Vicon’s first

Frank’s expertise in software development management

all digital megapixel remote-positioning dome camera.

will be instrumental in taking our product offerings to

We expect to be in production by this time next year.

the next level.

Once complete, the dome camera will become the

Also, in February 2010, Frank Jacovino

With the underpinnings of a sound financial

foundation from which a full range of fixed-position

position, we move forward with confidence to meet the

megapixel cameras will follow.

challenges ahead.

I am particularly grateful to our

As the security industry inexorably moves to

customers and stockholders for their support in these

software solutions from a predominately hardware

difficult times. Also, thanks and gratitude go to the

orientation, the challenge of revenue growth becomes

Vicon employees and business partners worldwide for

more acute. Today Vicon’s business model, as with

their dedication and commitment to the Company and

most competitors, is largely dependent upon hardware

its mission.

sales to absorb the increasing cost of embedded and

Vicon’s 43 years of proud and successful history.

They are the backbone and reason for

application software. Our current model will require
modification as software and cameras evolve into the
principal elements of practically every video security
and surveillance system.
Traditionally, Vicon has sought growth by

Kenneth M. Darby
Chairman & CEO

geographic or channel expansion and/or through
additional product offerings. This strategy, however,
has not been enough to see meaningful stepped growth.

iii

iv

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: September 30, 2009
Commission File No. 1-7939

VICON INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation or organization)

11-2160665
(I.R.S. Employer identification No.)

89 Arkay Drive, Hauppauge, New York
(Address of principal executive offices)

11788
(Zip Code)

Registrant's telephone number, including area code: (631) 952-2288
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.01
(Title of class)

NYSE Amex
(Name of each exchange on which registered)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
No X_ _
Yes
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
No X__
Yes
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.
No __
Yes X
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and
No __
post such files)
Yes
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ____
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check one)
Large Accelerated Filer
Accelerated Filer
Non-Accelerated Filer
Smaller reporting company X_
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange
No X_ _
Act of 1934)
Yes
The aggregate market value of voting and non-voting Common Stock held by non-affiliates of the registrant based upon
the closing price of $5.32 per share as of March 31, 2009 was approximately $10,902,000.
The number of shares outstanding of the registrant's Common Stock as of December 15, 2009 was 4,575,456.
1

PART I
ITEM 1 - BUSINESS
General
Vicon Industries, Inc. (“the Company”), incorporated in 1967, designs, manufactures, assembles and
markets a wide range of video systems and system components used for security, surveillance, safety and
control purposes by a broad group of end users. A video system is typically a private network that can
transmit and receive video, audio and data signals in accordance with the operational needs of the user. The
Company's primary business focus is the design of network video systems that it produces and sells
worldwide, primarily to installing dealers, system integrators, government entities and security products
distributors.
The Company operates within the electronic protection segment of the security industry which includes,
among others: fire and burglar alarm systems, access control, biometric and video systems and asset
protection. The U.S. security industry consists of thousands of individuals and businesses (exclusive of
public sector law enforcement) that provide products and services for the protection and monitoring of
people, property and information. The security industry includes fire and detection systems, access control,
video systems, asset protection, guard services and equipment, locks, safes, armored vehicles, security
fencing, private investigations, biometric systems and others. The Company’s products are typically used
for crime deterrence, visual documentation, observation of inaccessible or hazardous areas, enhancing safety,
mitigating liability, obtaining cost savings (such as lower insurance premiums), managing control systems
and improving the efficiency and effectiveness of personnel. The Company’s products are used in, among
others, office buildings, manufacturing plants, apartment complexes, retail stores, government facilities,
airports, transportation operations, prisons, casinos, hotels, sports arenas, health care facilities and financial
institutions.
Products
The Company’s product line consists of various elements of a video system, beginning with a physical
security information management application (PSIM), which manages all network devices including
cameras. The Company also produces video system edge devices such as video encoders, decoders,
network/digital/hybrid video recorders, analog and IP fixed position or robotic cameras, megapixel digital
cameras, matrix video switchers and system controls. The Company provides a comprehensive line of
products due to the many varied climatic and operational environments in which the products are
expected to perform. In addition to selling from a standard catalog line, the Company at times produces to
specification or will modify an existing product to meet customer requirements. Recently, the Company
entered into an OEM agreement with an access control producer to supply such products on an integrated
basis with its video systems.
The Company’s products range from a simple camera mounting bracket to a large digital control,
transmission, recording, storage and video matrix switching system. The Company’s sales are
concentrated principally among its network video products (ViconNet and Kollector) and dome camera
(Surveyor) product lines.
Marketing
The Company’s marketing emphasizes engineered video system solutions, which includes system design,
project management, technical training and pre and post sales support. The Company promotes and
markets its products through industry trade shows worldwide, product brochures and catalogues, direct
marketing and electronic mailings to existing and prospective customers, webinars, training seminars for
system designers, customers and end users, road shows that preview new systems and system
components, and advertising through trade and end user magazines and the Company's website
(www.vicon-cctv.com).

2

The Company’s products are sold principally to independent dealers, system integrators and security
products distributors. Sales are effectuated principally by field sales engineers and inside customer service
representatives. The Company’s sales effort is supported by in-house customer service coordinators and
technical support groups which provide product information, application engineering, design detail, field
project management, and hardware and software technical support.
The Company’s products are utilized in video system installations by: (1) commercial and industrial
users, such as office buildings, manufacturing plants, warehouses, apartment complexes, shopping malls
and retail stores; (2) federal, state, and local governments for national security purposes, agency
facilities, prisons, and military installations; (3) financial institutions, such as banks, clearing houses,
brokerage firms and depositories, for security purposes; (4) transportation departments for highway traffic
control, bridge and tunnel monitoring, and airport, subway, bus and seaport security and surveillance; (5)
gaming casinos, where video surveillance is often mandated by regulatory authorities; (6) health care
facilities, such as hospitals; and (7) institutions of education, such as schools and universities.
The Company’s principal sales offices are located in Hauppauge, New York; Fareham, England;
Zaventem, Belgium; and Neumunster, Germany.
International Sales
The Company sells its products in the U.K., Europe, Scandinavia and the Middle East through its European
based subsidiaries and elsewhere outside the U.S. principally by direct export from its U.S. headquarters.
The Company has a few territorial exclusivity agreements with customers but primarily uses a wide range of
installation companies and security products distributors in international markets.
Export sales and sales from the Company’s foreign subsidiaries amounted to $28.4 million, $32.0 million
and $32.0 million or 47%, 48% and 46% of consolidated net sales in fiscal years 2009, 2008, and 2007,
respectively. The Company’s principal foreign markets are the U.K., Europe, Middle East and the Pacific
Rim, which together accounted for approximately 83% of international sales in fiscal 2009.
Competition
The Company operates in a highly competitive marketplace both domestically and internationally. The
Company competes by providing high-end video systems and system components that incorporate broad
capability together with high levels of customer service and technical support. Generally, the Company does
not compete based on price alone.
The Company’s principal video systems competitors include the following companies or their affiliates:
Matsushita Electric Corp. (Panasonic), Sony Corporation, Pelco Sales Company (a division of Schneider
Electric), Bosch Security Systems, Inc., Sensormatic Electronics Corp. (a division of Tyco International),
GE Security Systems, United Technologies, AXIS Communications, On-Net Surveillance Systems, Inc. and
Honeywell Security Systems. Many additional companies, both domestic and international, produce
products that compete against one or more of the Company’s product lines. Many of the Company’s
principal competitors are larger companies whose financial resources and scope of operations are
substantially greater than the Company’s.
Engineering and Development
The Company’s engineering and development is directed principally on new and improved video systems and
system components. In recent years, the trend of product development and demand within the video security and
surveillance market has been toward enhanced software applications involving the compression, analysis,
transmission, storage, manipulation, imaging and display of digital video over IP networks. As the demands of the
Company’s target market segment require the Company to keep pace with changes in technology, the Company
has focused its engineering effort in these developing areas. Development projects are chosen and prioritized
based on customer feedback, the Company's analysis as to the needs of the marketplace, anticipated technological
advances and market research.
At September 30, 2009, the Company employed a total of 36 engineers in the following areas: software
3

development, mechanical design, manufacturing/testing and electrical and circuit design. Engineering and
development expense amounted to approximately 9%, 8% and 7% of net sales in fiscal years 2009, 2008 and
2007, respectively.
Source and Availability of Raw Materials
The Company relies upon independent manufacturers and suppliers to manufacture and assemble most of its
proprietary products and expects to continue to rely on such entities in the future. The Company’s
relationships with certain of its independent manufacturers, assemblers and suppliers are not covered by
formal contractual agreements.
Raw materials and components purchased by the Company and its suppliers are generally readily available
in the market, subject to market lead times at the time of order. The Company is generally not dependent
upon any single source for a significant amount of its raw materials or components.
Intellectual Property
The Company owns a limited number of design and utility patents expiring at various times. The
Company owns certain trademarks and several other trademark applications are pending both in the
United States and in Europe. Most of the Company’s key products utilize proprietary software which is
protected by copyright. The Company considers its software to be unique and is a principal element in the
differentiation of the Company’s products from its competition. However, the laws of certain foreign
countries do not protect intellectual property rights to the same extent or in the same manner as the laws
of the U.S. The Company has no significant licenses, franchises or concessions with respect to any of its
products or business dealings. In addition, the Company does not believe its limited number of patents or
its lack of licenses, franchises and concessions to be of substantial significance. The Company is a
defendant in a patent infringement suit as discussed in “Item 3 - Legal Proceedings”, the outcome of
which could possibly have a material effect on the Company’s business.
Inventories
The Company generally maintains sufficient finished goods inventory levels to respond to customer
demand, since most sales are to installing dealers and system integrators who normally do not carry any
significant inventory. The Company principally builds inventory to known or anticipated customer
demand. In addition to normal safety stock levels, certain additional inventory levels may be maintained
for products with long purchase and manufacturing lead times. The Company believes that it is important
to carry adequate inventory levels of parts, components and products to avoid production and delivery
delays that may detract from the sales effort.
Backlog
The backlog of orders believed to be firm as of September 30, 2009 and 2008 was approximately $2.8
million and $3.9 million, respectively. Orders are generally cancelable without penalty at the option of the
customer. The Company prefers that its backlog of orders not exceed its ability to fulfill such orders on a
timely basis, since experience shows that long delivery schedules only encourage the Company’s
customers to look elsewhere for product availability.
Employees
At September 30, 2009, the Company employed 192 full-time employees, of whom 7 are officers, 41 are
in administration, 79 are in sales and technical service capacities, 36 are in engineering and 29 are
production employees. At September 30, 2008, the Company employed 199 persons. There are no
collective bargaining agreements with any of the Company’s employees and the Company considers its
relations with its employees to be good.

4

ITEM 1A – RISK FACTORS
The Company designs, manufactures and markets a wide range of video systems and components
worldwide and is subject to all business risks that similar technology companies and all other companies
encounter in their operations. Market risks that pertain particularly to the Company are discussed
elsewhere in this Form 10-K under Item 1 – Business; Item 3 – Legal Proceedings; Item 7 –
Management’s Discussion and Analysis of Financial Condition and Results of Operations; and Item 7A –
Quantitative and Qualitative Disclosures about Market Risk.
ITEM 1B – UNRESOLVED STAFF COMMENTS
None.
ITEM 2 - PROPERTIES
The Company principally operates from an 80,000 square-foot facility located at 89 Arkay Drive,
Hauppauge, New York, which it owns. The Company also owns a 14,000 square-foot sales, service and
warehouse facility in southern England which services the U.K., Europe and the Middle East. In addition,
the Company operates under leases from offices in Yavne, Israel; Neumunster, Germany; and various local
sales offices throughout Europe. The Company believes that its facilities are adequate to meet its current and
foreseeable operating needs.
ITEM 3 - LEGAL PROCEEDINGS
The Company is one of several defendants in a patent infringement suit commenced by Lectrolarm
Custom Systems, Inc. in May 2003 in the United States District Court for the Western District of
Tennessee. The alleged infringement by the Company relates to its camera dome systems and other
products that represent significant sales to the Company. Among other things, the suit seeks past and
enhanced damages, injunctive relief and attorney’s fees. In January 2006, the Company received the
plaintiff’s claim for past damages through December 31, 2005 that approximated $11.7 million plus prejudgment interest. The Company and its outside patent counsel believe that the complaint against the
Company is without merit. The Company is vigorously defending itself and is a party to a joint defense
with certain other named defendants.
In January 2005, the Company petitioned the U.S. Patent and Trademark Office (USPTO) to reexamine
the plaintiff’s patent, believing it to be invalid. In April 2006, the USPTO issued a non-final office action
rejecting all of the plaintiff’s patent claims asserted against the Company citing the existence of prior art
of the Company and another defendant. On June 30, 2006, the Federal District Court granted the
defendants’ motion for continuance (delay) of the trial, pending the outcome of the USPTO’s
reexamination proceedings. In February 2007, the USPTO issued a Final Rejection of the six claims in
the plaintiff’s patent asserted against the Company, which was reaffirmed in June 2007 after the plaintiff
filed a response with the USPTO requesting reconsideration of its Final Rejection. The plaintiff has
appealed the examiner’s decision to the USPTO Board of Patent Appeals and Interferences and has an
additional appeal available to it thereafter in the Court of Appeals for the Federal Circuit.
The Company is unable to reasonably estimate a range of possible loss, if any, at this time. Although the
Company has received favorable rulings from the USPTO with respect to the reexamination proceedings,
there is always the possibility that the plaintiff’s patent claims could be upheld in appeal and the matter
would proceed to trial. Should this occur and the Company receives an unfavorable outcome at trial, it
could result in a liability that is material to the Company’s results of operations and financial position.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None

5

PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s stock is traded on the NYSE Amex under the symbol (VII). The following table sets
forth for the periods indicated, the range of high and low prices for the Company's Common Stock:
Quarter Ended

High

Low

Fiscal 2009
December
March
June
September

6.00
6.45
6.07
6.76

3.54
4.40
4.52
5.11

Fiscal 2008
December
March
June
September

12.23
9.95
5.75
5.85

7.61
4.53
4.64
4.27

The last sale price of the Company’s Common Stock on December 15, 2009 as reported on the NYSE
Amex was $5.92 per share. As of December 15, 2009, there were approximately 150 shareholders of
record.
The Company has never declared or paid cash dividends on its Common Stock and anticipates that any
earnings in the foreseeable future will be retained to finance the growth and development of its business.
In May 2008, the Company’s Board of Directors authorized the purchase of up to $1 million worth of
shares of the Company’s outstanding common stock. In December 2008, the Board of Directors
authorized the purchase of an additional $1 million worth of shares of the Company’s outstanding
common stock. The following table summarizes repurchases of common stock for the three month period
ended September 30, 2009:

Period

Total
Number
of Shares
Purchased (1)

07/01/09-07/31/09
08/01/09-08/31/09
09/01/09-09/30/09
Total

14,627
13,390
12,787
40,804

Average
Price Paid
Per Share
$
$
$
$

5.96
5.69
5.83
5.83

Approximate Dollar Value
Of Shares that May Yet Be
Purchased Under the Programs
$ 794,885
$ 718,716
$ 644,121

(1) All repurchases were executed in open market transactions.
On December 3, 2009, the Company’s Board of Directors authorized the repurchase of an additional $1.5
million of shares of the Company’s common stock.

6

ITEM 6 - SELECTED FINANCIAL DATA
(in thousands, except per share data)
FISCAL YEAR
Net sales
Gross profit
Operating income (loss)
Income (loss) before income taxes
Net income (loss)
Net income (loss) per share:
Basic
Diluted
Total assets
Long-term debt
Working capital
Property, plant and equipment (net)

2009

2008

$ 60,445
27,293
3,031
3,219
2,017

$ 66,911
30,422
4,389
4,589
2,839

.44
.43
47,316
30,845
5,018

.59
.57
46,964
29,181
5,301

7

2007

2006

2005

$ 69,073
29,386
4,682
4,921
7,886

$ 56,279
22,094
(367)
(397)
(547)

$ 56,056
20,996
(2,931)
(3,069)
(2,885)

1.67
1.59
45,841
26,041
5,762

(.12)
(.12)
35,955
1,740
20,181
6,229

(.63)
(.63)
34,192
2,062
19,713
6,616

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
Management's Discussion and Analysis of Financial Condition and Results of Operations discusses our
consolidated financial statements for the periods indicated, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The preparation of these
financial statements requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. On
an on-going basis, management evaluates its estimates and judgments, including those related to revenue
recognition, bad debts, product warranties, inventories, long lived assets, income taxes and contingencies
and litigation. Management bases its estimates and judgments on historical experience and on various
other factors including general market conditions that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates under different assumptions or conditions.
Results for the periods reported herein are not necessarily indicative of results that may be expected in
future periods.
Overview
The Company designs, manufactures, assembles and markets a wide range of video systems and system
components used for security, surveillance, safety and communication purposes by a broad group of end
users worldwide. The Company’s product line consists of various elements of a video system, including
digital video and network video recorders, video encoders, decoders, servers and related physical security
information management software, analog, megapixel and IP fixed and robotic cameras, matrix video
switches, video displays and system peripherals.
The Company sells high-end video systems and system components in a highly competitive worldwide
marketplace principally to authorized security dealers and system integrators. Such dealers and integrators
typically resell the Company’s products directly to end users, among other services. The Company’s sales
are principally project based and are largely dependent upon winning projects, construction activities and
the timing of funding. Sales will vary from period to period depending upon many factors including
seasonal and geographic trends in construction activities and the timing of deliveries due to changes in
project schedules and funding. The Company does not maintain a sizable backlog as its customer orders
are typically deliverable within three months or often upon receipt of order. The Company’s operating
cost structure is principally fixed and therefore profitability is largely dependent upon sales levels. In
fiscal 2009, the Company’s sales levels were impacted by the worldwide economic downturn as capital
expenditure projects were cancelled and funding for new construction and renovation projects weakened.
Thus far in fiscal 2010, the Company is experiencing continued weak market conditions which have
significantly reduced its sales levels. The impact of such sales decline and continued lower incoming
order levels will have a material adverse impact on the Company’s near term financial results.
The Company competes in a market of rapid technology shifts which influence the performance
capability of security systems. As a result, the Company spends a significant amount on new product
development. In fiscal 2009 and 2008, the Company incurred $5.4 million and $5.6 million of
engineering and development expense or 9% and 8% of net sales, respectively. The Company’s
expenditures for product development are substantially less than its larger competitors. In recent years,
the rapid pace of technology changes has placed increased burden on the Company’s development
resources which may necessitate an increase in annual expense for product development. Further, the
Company’s sales effort requires a high level of customer service and technical support for its products.
Customer support levels were maintained during fiscal 2009 despite a reduction in sales and such
expenditure levels are expected to continue in fiscal 2010. The Company will also consider any strategic
initiative that may augment or supplement its present product offerings and technology platforms, among
other benefits.
The Company has a foreign sales and distribution subsidiary in Europe that conducts business in British
pounds and Euros that represented approximately 36% of the Company’s consolidated sales for fiscal
8

2009. It also has an Israel based engineering and development subsidiary that incurs a majority of its
operating expenses in shekels that represented approximately 15% of the Company’s operating expenses
for fiscal 2009. During fiscal 2009, there were material changes in exchange rates between world
currencies that affected the Company’s financial statements. In 2009, U.S. dollar gained on average 21%
against the British pound, 10% against the Euro and 8% against the shekel compared with 2008. This
served to reduce the Company’s consolidated reported sales and costs in these currencies on a translation
basis, increase the cost of European subsidiaries U.S. dollar based sourced product costs and incur
company-wide negative result impacts on the settlements of transactional balances between companies.
The Company has also historically secured selected forward currency exchange contracts to help stabilize
the impact of changing exchange rates and will continue to do so in fiscal 2010. Such contract settlements
have served to further impact currency transactions in fiscal 2009. The aggregate net negative impacts of
such complex currency exchange transactions on the fiscal year’s results were not reasonably
quantifiable.
RESULTS OF OPERATIONS
Fiscal Year 2009 Compared with 2008
Net sales for 2009 decreased $6.5 million (10%) to $60.4 million compared with $66.9 million in 2008.
Domestic sales decreased $2.9 million (8%) to $32.0 million compared with $34.9 million in 2008 while
international sales decreased $3.6 million (11%) to $28.4 million compared with $32.0 million in 2008.
Approximately $2.8 million of the decrease in international sales was due to negative currency exchange
rate changes in the current year as European currencies significantly weakened against the U.S. dollar.
The remaining sales decreases across all business segments was due to weakening worldwide economic
conditions as funding for new construction and renovation projects slowed during 2009. Order intake for
2009 decreased $7.7 million to $59.3 million compared with $67.0 million in 2008 and was similarly
impacted by negative exchange rate changes in the current year. The backlog of unfilled orders was $2.8
million at September 30, 2009 compared with $3.9 million at September 30, 2008.
Gross profit margins for 2009 decreased slightly to 45.2% compared with 45.5% in 2008. The decrease
included reduced European margins caused by weakening European currencies during 2009. The
Company’s Europe based subsidiaries experienced increased costs on U.S. dollar denominated product
purchases as a result of unfavorable currency exchange rate changes.
Operating expenses for 2009 decreased to $24.3 million or 40.1% of net sales compared with $26.0
million or 38.9% of net sales in 2008. Selling, general and administrative expenses decreased $1.5
million to $18.9 million for 2009 compared with $20.4 million in 2008. The decrease included a $1.1
million reduction in European subsidiary operating costs due principally to currency translation. In
addition, the Company continued to invest in new product development, incurring $5.4 million of
engineering and development expenses in 2009 compared with $5.6 million in 2008. Lower expenses
were incurred by the Company’s Israel based engineering and development operation as a result of a
stronger U.S. dollar in 2009.
The Company generated operating income of $3.0 million for fiscal 2009 compared with $4.4 million for
2008.
Interest expense decreased to $2,000 for 2009 compared with $45,000 in 2008 principally as a result of
the repayment of bank borrowings in January 2008. Interest and other income decreased to $190,000 for
2009 compared with $244,000 in 2008. Although the Company generated $7.1 million of cash in 2009, its
interest income decreased as a result of reduced yields on investments.
Income tax expense for 2009 decreased to $1.2 million compared with $1.8 million in 2008 as a result of
decreased taxable income. The current year tax expense includes a $1.1 million provision for U.S.
income taxes compared with a $1.2 million provision in 2008. The balance of tax expense for the years
presented represents foreign taxes on profits reported by the Company’s U.K. subsidiary.
As a result of the foregoing, the Company generated net income of $2.0 million in 2009 compared with
$2.8 million in 2008.
9

RESULTS OF OPERATIONS
Fiscal Year 2008 Compared with 2007
Net sales for 2008 decreased 3% to $66.9 million compared with $69.1 million in 2007. Domestic sales
decreased 6% to $34.9 million compared with $37.0 million in 2007 while international sales decreased
slightly to $32.0 million compared with $32.1 million in 2007. The sales decreases in these segments
were due in part to weakening economic conditions in certain of the Company’s markets during 2008.
However, order intake for 2008 increased to $67.0 million compared with $65.7 million in 2007. The
backlog of unfilled orders was $3.9 million at September 30, 2008 compared with $3.8 million at
September 30, 2007.
Gross profit margins for 2008 increased to 45.5% compared with 42.5% in 2007 as the Company
experienced higher margins on certain project business. The margin increase also included the benefit of
favorable exchange rate changes in Europe and reduced product component costs.
Operating expenses for 2008 increased to $26.0 million or 38.9% of net sales compared with $24.7
million or 35.8% of net sales in 2007. Selling, general and administrative expenses increased to $20.4
million for 2008 compared with $19.5 million in 2007 as the Company made certain investments in sales
organization infrastructure. In addition, the Company continued to invest in new product development,
incurring $5.6 million of engineering and development expenses in 2008 compared with $5.2 million in
2007. Increased expenses were incurred by the Company’s Israeli based engineering and development
operation as a result of a weaker U.S. dollar in 2008.
The Company generated operating income of $4.4 million for fiscal 2008 compared with $4.7 million for
2007.
Interest expense decreased to $45,000 for 2008 compared with $142,000 in 2007 principally as a result of
the paydown of bank borrowings. Interest and other income decreased to $244,000 for 2008 compared
with $380,000 in 2007. The prior year included $168,000 of gains from life insurance proceeds and
policies on the death of a retired executive. Excluding the effect of these gains, interest and other income
increased $32,000 principally as a result of increased cash balances during the current year period.
The Company recorded income tax expense of $1.8 million for 2008 compared with a benefit of $3.0
million for 2007. The current year tax expense includes a $1.2 million provision for U.S. income taxes as
compared with a $3.4 million tax benefit for 2007. The Company did not recognize income tax expense
on its U.S. pre-tax income of $3.9 million for 2007 as it utilized available net operating loss
carryforwards in the amount of $1.5 million (tax effected). In the fourth quarter of 2007, the Company
recorded a $3.4 million tax benefit relating to the recognition of remaining unrecognized U.S. net
deferred income tax assets. The deferred income tax asset recognition was made as a result of an updated
assessment of their realization. The 2008 income tax expense also included a $525,000 provision for
foreign taxes compared with $399,000 for 2007 relating primarily to profits recorded by the Company’s
U.K. subsidiary.
As a result of the foregoing, the Company generated net income of $2.8 million in 2008 compared with $7.9
million in 2007. Net income for 2007 would have been $3.1 million had income tax expense been provided
at an assumed effective tax rate.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $8.4 million for 2009, which included $2.0 million of net
income, $2.0 million of non-cash charges for the year and a $4.2 million reduction of accounts receivable
due to the decrease in 2009 sales levels. Net cash used in investing activities was $573,000 in 2009
consisting of general capital expenditures. Net cash used in financing activities was $865,000 in 2009,
which included $1.3 million of common stock repurchases offset in part by $397,000 of proceeds
received from the exercise of stock options. As a result of the foregoing, cash increased by $7.1 million in
10

2009 after the effect of exchange rate changes on the cash position of the Company.
The Company believes that it has sufficient cash to meet its anticipated operating costs and capital expenditure
requirements for at least the next twelve months.
The Company does not have any off-balance sheet transactions, arrangements or obligations (including
contingent obligations) that have, or are reasonably likely to have, a material effect on the Company’s
financial condition, results of operations, liquidity, capital expenditures or capital resources.
The Company is one of several defendants in a patent infringement suit commenced by Lectrolarm
Custom Systems, Inc. in May 2003 in the United States District Court for the Western District of
Tennessee. The alleged infringement by the Company relates to its camera dome systems and other
products that represent significant sales to the Company. Among other things, the suit seeks past and
enhanced damages, injunctive relief and attorney’s fees. In January 2006, the Company received the
plaintiff’s claim for past damages through December 31, 2005 that approximated $11.7 million plus prejudgment interest. The Company and its outside patent counsel believe that the complaint against the
Company is without merit. The Company is vigorously defending itself and is a party to a joint defense
with certain other named defendants.
In January 2005, the Company petitioned the U.S. Patent and Trademark Office (USPTO) to reexamine
the plaintiff’s patent, believing it to be invalid. In April 2006, the USPTO issued a non-final office action
rejecting all of the plaintiff’s patent claims asserted against the Company citing the existence of prior art
of the Company and another defendant. On June 30, 2006, the Federal District Court granted the
defendants’ motion for continuance (delay) of the trial, pending the outcome of the USPTO’s
reexamination proceedings. In February 2007, the USPTO issued a Final Rejection of the six claims in
the plaintiff’s patent asserted against the Company, which was reaffirmed in June 2007 after the plaintiff
filed a response with the USPTO requesting reconsideration of its Final Rejection. The plaintiff has
appealed the examiner’s decision to the USPTO Board of Patent Appeals and Interferences and has an
additional appeal available to it thereafter in the Court of Appeals for the Federal Circuit.
The Company is unable to reasonably estimate a range of possible loss, if any, at this time. Although the
Company has received favorable rulings from the USPTO with respect to the reexamination proceedings,
there is always the possibility that the plaintiff’s patent claims could be upheld in appeal and the matter
would proceed to trial. Should this occur and the Company receives an unfavorable outcome at trial, it
could result in a liability that is material to the Company’s results of operations and financial position.
Critical Accounting Policies
The Company’s significant accounting policies are fully described in Note 1 to the consolidated financial
statements included in Part IV. Management believes the following critical accounting policies, among
others, affect its more significant judgments and estimates used in the preparation of its consolidated
financial statements.
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has
occurred or services have been rendered, the selling price is fixed or determinable, and collectability of
the resulting receivable is reasonably assured. As it relates to product sales, revenue is generally
recognized when products are sold and title is passed to the customer. Shipping and handling costs are
included in cost of sales. Advance service billings under a national supply contract with one customer are
deferred and recognized as revenues on a pro rata basis over the term of the service agreement.
Pursuant to the adoption of Financial Accounting Standards Board (FASB) Accounting Standards
Codification (ASC) 605-25-05 (EITF Issue No. 00-21, “Revenue Arrangements with Multiple
Deliverables”), the Company evaluates multiple-element revenue arrangements for separate units of
accounting, and follows appropriate revenue recognition policies for each separate unit. Elements are
considered separate units of accounting provided that (i) the delivered item has stand-alone value to the
customer; (ii) there is objective and reliable evidence of the fair value of the undelivered item; and (iii) if
a general right of return exists relative to the delivered item, delivery or performance of the undelivered
item is considered probable and substantially within the control of the Company. As applied to the
11

Company, under arrangements involving the sale of product and the provision of services, product sales
are recognized as revenue when the products are sold and title is passed to the customer, and service
revenue is recognized as services are performed. For products that include more than incidental software,
and for separate licenses of the Company’s software products, the Company recognizes revenue in
accordance with the provisions of ASC 985-605 (Statement of Position 97-2, “Software Revenue
Recognition”), as amended.
The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability
of its customers to make required payments. If the financial condition of its customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional allowances may be required.
The Company provides for the estimated cost of product warranties at the time revenue is recognized.
While the Company engages in product quality programs and processes, including monitoring and
evaluating the quality of its component suppliers, its warranty obligation is affected by product failure
rates, material usage and service delivery costs incurred in correcting a product failure. Should actual
product failure rates, material usage or service delivery costs differ from its estimates, revisions to the
estimated warranty liability may be required.
The Company writes down its inventory for estimated obsolescence and slow moving inventory equal to
the difference between the carrying cost of inventory and the estimated net realizable market value based
upon assumptions about future demand and market conditions. Technology changes and market
conditions may render some of the Company’s products obsolete and additional inventory write-downs
may be required. If actual future demand or market conditions are less favorable than those projected by
management, additional inventory write-downs may be required.
The Company assesses the recoverability of the carrying value of its long-lived assets, including
identifiable intangible assets with finite useful lives, whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable. The Company evaluates the
recoverability of such assets based upon the expectations of undiscounted cash flows from such assets. If
the sum of the expected future undiscounted cash flows were less than the carrying amount of the asset, a
loss would be recognized for the difference between the fair value and the carrying amount.
The Company’s ability to recover the reported amounts of deferred income tax assets is dependent upon
its ability to generate sufficient taxable income during the periods over which net temporary tax
differences become deductible.
The Company is subject to proceedings, lawsuits and other claims related to labor, product and other
matters. The Company assesses the likelihood of an adverse judgment or outcomes for these matters, as
well as the range of potential losses. A determination of the reserves required, if any, is made after
careful analysis. The required reserves may change in the future due to new developments.
Recent Accounting Pronouncements
In September 2006, the FASB issued ASC 820 (Statement of Financial Accounting Standards (SFAS)
No. 157, “Fair Value Measurement”), which defines fair value, establishes a framework for measuring
fair value and expands disclosures regarding assets and liabilities measured at fair value, which was
amended in February 2008. The adoption of the provisions related to financial assets and financial
liabilities were effective for the Company’s first quarter of fiscal 2009 and did not have a material impact
on its consolidated financial position, results of operations or cash flows. The Company does not expect
that the adoption of the remaining provisions of ASC 820 will have a material impact on its consolidated
financial position, results of operations or cash flows.
In December 2007, the FASB issued ASC 805 (SFAS 141 and SFAS 141R , “Business Combinations”).
ASC 805 will significantly change the accounting for business combinations in a number of areas
including the treatment of contingent consideration, contingencies, acquisition costs, IPR&D and
restructuring costs. In addition, under ASC 805, changes in deferred tax asset valuation allowances and
acquired income tax uncertainties in a business combination after the measurement period will impact
12

income tax expense. ASC 805 is effective for fiscal years beginning after December 15, 2008. The
Company has not yet evaluated the impact, if any, of adopting this pronouncement.
In December 2007, the FASB issued ASC 810 (SFAS 160, “Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB No. 51” (“SFAS 160”)). ASC 810 will change the
accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests
(NCI) and classified as a component of equity. This new consolidation method will significantly change
the accounting for transactions with minority interest holders. ASC 810 is effective for fiscal years
beginning after December 15, 2008. The Company has not yet evaluated the impact, if any, of adopting
this pronouncement.
In October 2009, the FASB amended ASC 985-605 (Statement of Position 97-2, “Software Revenue
Recognition”) to provide new guidance on accounting for revenue arrangements that include tangible
products containing software and non-software components that function together to deliver the product’s
essential functionality. These amendments become effective on a prospective basis for fiscal years
beginning after June 15, 2010, although early adoption is permitted. The Company has not yet evaluated
the impact, if any, of adopting this pronouncement.
Foreign Currency Activity
The Company’s foreign exchange exposure is principally limited to the relationship of the U.S. dollar to
the British pound sterling, the Euro and the Israeli shekel.
Sales by the Company’s U.K. and German based subsidiaries to customers in Europe are made in British
pounds sterling or Eurodollars. In fiscal 2009, approximately $4.5 million of products were sold by the
Company to its U.K. based subsidiary for resale. The Company has also entered into certain engineering
cost sharing agreements with its U.K. based subsidiary that are denominated in U.S. dollars. The
Company attempts to minimize its currency exposure on these intercompany transactions through the
purchase of forward exchange contracts.
The Company’s Israeli based subsidiary incurs shekel based operating expenses which are funded by the
Company in U.S. dollars. In fiscal 2009, the Company purchased forward exchange contracts to hedge its
currency exposure on certain of these expenses.
As of September 30, 2009, the Company had forward exchange contracts outstanding with notional amounts
aggregating $2.0 million. The Company also attempts to reduce the impact of an unfavorable exchange rate
condition through cost reductions from its suppliers and shifting product sourcing to suppliers transacting in
more stable and favorable currencies.
In general, the Company seeks lower costs from suppliers and enters into forward exchange contracts to
mitigate short-term exchange rate exposures. However, there can be no assurance that such steps will be
effective in limiting long-term foreign currency exposure.

13

ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk Factors
The Company is exposed to various market risks, including changes in foreign currency exchange rates
and interest rates. The Company has a policy that prohibits the use of currency derivatives or other
financial instruments for trading or speculative purposes.
The Company enters into forward exchange contracts to hedge certain foreign currency exposures and
minimize the effect of such fluctuations on reported earnings and cash flow (see “Foreign Currency
Activity”, Note 1 “Derivative Instruments” and “Fair Value of Financial Instruments” to the
accompanying financial statements). At September 30, 2009, the Company’s foreign currency exchange
risks included an aggregate $2.6 million of intercompany account balances between the Company and its
subsidiaries, which are short term and will be settled in fiscal 2010.
Related Party Transactions
Refer to Item 13 and “Note 10. Related Party Transactions” to the accompanying financial statements.
Inflation
Inflation has increased the Company’s operating costs in recent years. To offset the effects of inflation,
the Company seeks to increase sales and lower its costs where possible.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995
Statements in this Report on Form 10-K and other statements made by the Company or its representatives
that are not strictly historical facts including, without limitation, statements included herein under the
Management’s Discussion and Analysis captions “Overview”, “Results of Operations” and “Liquidity and
Capital Resources” 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 publicly update or
revise its forward-looking statements or to advise of changes in the assumptions and factors on which
they are based.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Part IV, Item 15, for an index to consolidated financial statements and financial statement schedules.

14

ITEM 9A – CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of its Chief Executive Officer and Chief Financial
Officer, conducted an evaluation of the effectiveness of the design and operation of the Company’s
disclosure controls and procedures, as required by Exchange Act Rule 13a-15. Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period
covered by this report, the Company’s disclosure controls and procedures were effective to ensure that
information required to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified by the
Securities and Exchange Commission’s rules and forms and such information is accumulated and
communicated to management as appropriate to allow timely decisions regarding required disclosures.
Management's Report on Internal Control over Financial Reporting
The Company's management is responsible for establishing and maintaining adequate internal control
over financial reporting. The Company's internal control over financial reporting is a process designed
under the supervision of its Chief Executive Officer and Chief Financial Officer to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of the Company's financial
statements for external reporting in accordance with accounting principles generally accepted in the
United States of America. Management evaluates the effectiveness of the Company's internal control over
financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control—Integrated Framework. Management, under the
supervision and with the participation of the Company's Chief Executive Officer and Chief Financial
Officer, assessed the effectiveness of the Company's internal control over financial reporting as of
September 30, 2009 and concluded that it is effective.
This annual report does not include an attestation report of the Company's registered public accounting
firm regarding internal control over financial reporting. Management’s report was not subject to
attestation by the Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only management’s report in
this annual report.
Changes in Internal Controls
There were no changes in the Company's internal control over financial reporting identified in connection
with the evaluation referred to above that occurred during the fourth quarter of the fiscal year ended
September 30, 2009 that have materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Limitations on the Effectiveness of Controls
The Company believes that a control system, no matter how well designed and operated, cannot provide
absolute assurance that the objectives of the control system are met, and no evaluation of controls can
provide absolute assurance that all controls issues and instances of fraud, if any, within a Company have
been detected. The Company's disclosure controls and procedures are designed to provide reasonable
assurance of achieving their objectives and the Company's Chief Executive Officer and Chief Financial
Officer have concluded that such controls and procedures are effective at the "reasonable assurance"
level.
ITEM 9B – OTHER INFORMATION
None.

15

PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers and Directors of the Company are as follows:
Name

Age

Kenneth M. Darby

63

John M. Badke

50

Peter A. Horn
Bret M. McGowan
Yacov A. Pshtissky
Christopher J. Wall
Yigal Abiri
Peter F. Neumann
Bernard F. Reynolds
W. Gregory Robertson
Arthur D. Roche

54
44
58
56
60
75
67
66
71

Position
Chairman of the Board, President and
Chief Executive Officer
Senior Vice President, Finance and
Chief Financial Officer
Vice President, Operations
Vice President, U.S. Sales and Marketing
Vice President, Technology and Development
Managing Director, Vicon Industries Ltd.
General Manager, Vicon Systems Ltd.
Director
Director
Director
Director

The business experience, principal occupations and employment, as well as period of service, of each of the
officers and directors of the Company during at least the last five years are set forth below.
Kenneth M. Darby - Chairman of the Board, President and Chief Executive Officer. Mr. Darby has
served as Chairman of the Board since April 1999, as Chief Executive Officer since April 1992 and as
President since October 1991. He has served as a director since 1987. Mr. Darby also served as Chief
Operating Officer and as Executive Vice President, Vice President, Finance and Treasurer of the Company.
He joined the Company in 1978 as Controller after more than nine years at Peat Marwick Mitchell & Co., a
public accounting firm. Mr. Darby's current term on the Board ends in May 2011.
John M. Badke – Senior Vice President, Finance and Chief Financial Officer. Mr. Badke has been
Senior Vice President, Finance since May 2004 and Chief Financial Officer since December 1999.
Previously, he was Vice President, Finance since October 1998 and served as Controller since joining the
Company in 1992. Prior to joining the Company, Mr. Badke was Controller for NEK Cable, Inc. and an
audit manager with the international accounting firms of Arthur Andersen & Co. and Peat Marwick Main &
Co.
Peter A. Horn - Vice President, Operations. Mr. Horn has been Vice President, Operations since June
1999. From 1995 to 1999, he was Vice President, Compliance and Quality Assurance. Prior to that time, he
served as Vice President in various capacities since his promotion in May 1990.
Bret M. McGowan – Vice President, U.S. Sales and Marketing. Mr. McGowan has been Vice President,
U.S. Sales and Marketing since April 2005. From 2001 to 2005, he served as Vice President, Marketing.
Previously, he served as Director of Marketing since 1998 and as Marketing Manager since 1994. He joined
the Company in 1993 as a Marketing Specialist.
Yacov A. Pshtissky - Vice President, Technology and Development. Mr. Pshtissky has been Vice
President, Technology and Development since May 1990. Mr. Pshtissky was Director of Electrical Product
Development from March 1988 through April 1990.

16

Christopher J. Wall - Managing Director, Vicon Industries, Ltd. Mr. Wall has been Managing
Director, Vicon Industries Ltd. since February 1996. Previously he served as Financial Director, Vicon
Industries, Ltd. since joining the Company in 1989. Prior to joining the Company he held a variety of
senior financial positions within Westland plc, a UK aerospace company.
Yigal Abiri – General Manager, Vicon Systems Ltd. Mr. Abiri has been General Manager, Vicon
Systems Ltd. since joining the Company in August 1999. Previously, he served as President of QSR,
Ltd., a developer and manufacturer of remote video surveillance equipment.
Peter F. Neumann - Director. Mr. Neumann has been a director of the Company since 1987. He is the
retired President of Flynn-Neumann Agency, Inc., an insurance brokerage firm. Mr. Neumann's current term
on the Board ends in May 2012.
Bernard F. Reynolds - Director. Mr. Reynolds has been a director of the Company since May 2009. He has
been retired since 2004 and had previously served as the President of Aon Consulting’s Human Resources
Outsourcing Group. Prior to the merger of Aon Consulting Worldwide and ASI Solutions Incorporated in May
2001, Mr. Reynolds served as the Chairman and Chief Executive Officer of ASI, a company he founded in
1978. Mr. Reynolds’ current term on the Board ends in May 2012.
W. Gregory Robertson - Director. Mr. Robertson has been a director of the Company since 1991. He is
the Chairman of TM Capital Corporation, a financial services company which he founded in 1989. From
1985 to 1989, he was employed by Thomson McKinnon Securities, Inc. as head of investment banking and
public finance. Mr. Robertson’s current term on the Board ends in May 2010.
Arthur D. Roche - Director. Mr. Roche has been a director of the Company since 1992. He served as
Executive Vice President and co-participant in the Office of the President of the Company from
August 1993 until his retirement in November 1999. For the six months prior to that time, Mr. Roche
provided consulting services to the Company. In October 1991, Mr. Roche retired as a partner of Arthur
Andersen & Co., an international accounting firm which he joined in 1960. His current term on the Board
ends in May 2011.
There are no family relationships between any director, executive officer or person nominated or chosen by
the Company to become a director or officer.
Audit Committee Financial Expert
All named directors other than Mr. Darby are independent directors and members of the Audit
Committee. The Board of Directors has determined that Arthur D. Roche, Chairman of the Audit
Committee, qualifies as an “Audit Committee Financial Expert”, as defined by Securities and Exchange
Commission Rules, based on his education, experience and background. Mr. Roche is independent as
that term is used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.
Code of Ethics
The Company has adopted a Code of Ethics that applies to all its employees, including its chief executive
officer, chief financial and accounting officer, controller, and any persons performing similar functions. Such
Code of Ethics is published on the Company’s internet website (www.vicon-cctv.com).
Compliance with Section 16(a) of the Exchange Act
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company during the
year ended September 30, 2009 and certain written representations that no Form 5 is required, no person who,
at any time during the year ended September 30, 2009 was a director, officer or beneficial owner of more than
10 percent of any class of equity securities of the Company registered pursuant to Section 12 of the Exchange
Act failed to file on a timely basis, as disclosed in the above forms, reports required by Section 16(a) of the
Exchange Act during the year ended September 30, 2009, except that Mr. Reynolds filed one late report on
Form 3, Mr. Neumann filed two late reports on Form 4, and Messrs. Maloney and Reynolds each filed one
late report on Form 4.
17

ITEM 11 - EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Philosophy and Objectives of Our Compensation Program
The Company’s compensation programs are intended to enable it to attract, motivate, reward and retain
the management talent required to achieve corporate objectives, and thereby increase stockholder value. It
is the Company’s policy to provide incentives to senior management to achieve both short-term and longterm objectives and to reward exceptional performance and contributions to the development of the
business. To attain these objectives, the executive compensation program includes four key components:
Base Salary. Base salary for the Company’s executives is intended to provide competitive
remuneration for services provided to the Company over a one-year period. Base salaries are set at levels
designed to attract and retain the most appropriately qualified individuals for each of the key management
level positions within the Company.
Cash Incentive Bonuses. The Company's bonus programs are intended to reward executive
officers for the achievement of various annual performance goals approved by the Company’s Board of
Directors. For fiscal 2009, a performance based bonus plan was established for certain of the Company’s
executive officers, including among others Kenneth M. Darby, Chief Executive Officer and John M.
Badke, Chief Financial Officer, whereby the participants would share a specified pretax profit based
bonus pool of between seven percent (7%) and eleven percent (11%) upon the achievement of a certain
annual pretax profit targets ranging from $2.0 million to $4.5 million (and above), respectively. Under
such plan, Messrs. Darby and Badke earned bonuses of $176,000 and $88,000, respectively, based upon
the allocation of an aggregate bonus pool of ten percent (10%) of the Company’s consolidated pretax
profit for 2009, after certain adjustments. Mr. Darby’s and Mr. Badke’s bonus allocation represented
approximately 49% and 25%, respectively, of the available bonus pool.
In addition, a performance based bonus plan was established for Christopher J. Wall, the Company’s
European subsidiary Managing Director, for fiscal year 2009 whereby Mr. Wall would earn an amount
equal to between 2% and 6% (based on achievement levels) of the combined pretax operating profits of
the Company’s Europe based subsidiaries. Under such plan, Mr. Wall earned a bonus of $127,000
(82,083 Pounds Sterling) based upon the achievement of 5% of specified profits for fiscal 2009.
Equity-Based Compensation. Equity-based compensation is designed to provide incentives to the
Company’s executive officers to build shareholder value over the long term by aligning their interests
with the interest of shareholders. The Compensation Committee of the Board of Directors believes that
equity-based compensation provides an incentive that focuses the executive's attention on managing the
company from the perspective of an owner with an equity stake in the business. Among our executive
officers, the number of shares of stock awarded or common stock subject to options granted to each
individual generally depends upon the level of that officer's responsibility. The largest grants are
generally awarded to the most senior officers who, in the view of the Compensation Committee, have the
greatest potential impact on the Company’s profitability and growth. Previous grants of stock options or
stock grants are reviewed in determining the size of any executive's award in a particular year.
In March 2007, the Board of Directors adopted the Company’s 2007 Stock Incentive Plan, which was
approved by the Company’s stockholders at its Annual Meeting of Stockholders held on May 18, 2007.
Under such plan, a total of 500,000 shares of Common Stock were reserved for issuance and include the
grant of stock options, restricted stock and other stock awards as determined by the Compensation
Committee. The purpose of the Stock Incentive Plan is to attract and retain executive management by
providing them with appropriate equity-based incentives and rewards for superior performance and to
provide incentive to a broader range of employees. In fiscal 2009, the Compensation Committee awarded
a total of 43,000 stock options to named executive officers, including 25,000 to Mr. Darby, 8,000 to Mr.
Badke and 10,000 to Mr. Wall.
Retirement, Health and Welfare Benefits and Other Perquisites. The Company’s executive
officers are entitled to a specified retirement/severance benefit pursuant to employment agreements as
detailed below.
18

In addition, the executive officers are entitled to participate in all of the Company’s employee benefit
plans, including medical, dental, group life, disability, accidental death and dismemberment insurance and
the Company’s sponsored 401(k) and mandated foreign Retirement Plans. Further, Mr. Wall receives a
supplemental retirement benefit in the form of a defined contribution of five percent (5%) of his annual
salary. The Company also provides its Chief Executive Officer with a country club membership and
certain additional insurances not covered by primary insurance plans available to other employees and the
Company’s named executive officers are provided a leased car.
Employment Agreements
The Company has entered into employment agreements with its named executive officers that provide
certain benefits upon termination of employment or change in control of the Company without Board of
Director approval. Under Mr. Darby’s employment agreement, he is entitled to receive a lump sum
payment equal to the balance owing under his agreement in the event of a change in control of the
Company under any condition. All the other agreements provide the named executive officer with a
payment of three times their average annual compensation for the previous five year period if there is a
change in control of the Company without Board of Director approval, as defined. Such payment can be
taken in a present value lump sum or equal installments over a three year period. The agreements also
provide the named executive officers other than Mr. Darby with certain severance/retirement benefits
upon certain occurrences including termination of employment without cause as defined, termination of
employment due to the Company’s breach of specified employment conditions (good reason termination),
death, disability or retirement at a specified age. Such severance/retirement benefit provisions survive the
expiration of the agreements and include a fixed stated benefit of $350,000 for Mr. Badke and $159,000
(100,000 Pounds Sterling) for Mr. Wall. In addition, Mr. Badke receives an additional deferred
compensation benefit upon such employment termination occurrences in the form of 6,561 shares of the
Company’s common stock.
On November 13, 2009, the Company entered into a one-year employment agreement with Kenneth M.
Darby, the Company’s Chief Executive Officer, to expire on September 30, 2010. The terms of the new
agreement provide for an annual base salary of $400,000. In the event the agreement is terminated prior to
its expiration for reasons other than cause as defined, Mr. Darby is entitled to receive all remaining salary
owed him through its expiration.

19

2009 Summary Compensation Table
The following table sets forth all compensation for the fiscal year ended September 30, 2009 awarded to
or earned by the Company’s Chief Executive Officer and by each of our other named executive officers
whose total compensation exceeded $100,000 during such period.
Option
Awards
($)(1)

Non-Equity
Incentive Plan
Compensation
($)(3)

Nonqualified
Deferred
Compensation
Earnings ($)

All Other
Compensation
($)(2)

Total ($)

Year

Salary ($)

Bonus ($)

Stock
Awards
($)

Kenneth M. Darby

2009

$400,000

-

-

$34,353 (1)

$175,562 (2)

-

$21,026 (5)

$630,941

Chairman and Chief
Executive Officer

2008

$400,000

-

-

$ 9,792 (1)

$218,182 (4)

-

$23,693 (5)

$651,667

John M. Badke

2009

$190,000

-

-

$20,418 (1)

$ 87,781 (2)

-

$8,465 (6)

$306,664

Senior Vice President
and Chief Financial
Officer

2008

$190,000

-

-

$12,336 (1)

$109,091 (4)

-

$7,927 (6)

$319,354

Christopher J. Wall

2009

$159,856

-

-

$19,484 (1)

$127,393 (3)

-

$24,273 (7)

$331,006

Managing Director
Vicon Industries, Ltd.

2008

$203,013

-

-

$ 9,180 (1)

$190,891 (3)

-

$31,022 (7)

$434,106

Name and Principal
Position

(1) Represents the compensation costs recognized for financial statement reporting purposes for the fair value of stock
options in accordance with ASC 718 (Statement of Financial Accounting Standards No. 123R). (See “Note 1” under
the caption “Accounting for Stock-Based Compensation” to the accompanying financial statements.)
(2) For fiscal 2009, a performance based bonus plan was established for certain of the Company’s executive officers,
including among others Kenneth M. Darby, Chief Executive Officer, and John M. Badke, Chief Financial Officer,
whereby the participants would share a specified pretax profit based bonus pool of between seven percent (7%) and
eleven percent (11%) upon the achievement of a certain annual pretax profit targets ranging from $2.0 million to $4.5
million (and above), respectively. Under such plan, Messrs. Darby and Badke earned bonuses based upon the
allocation of an aggregate bonus pool of ten percent (10%) of the Company’s consolidated pretax profit for 2009, after
certain adjustments. Mr. Darby’s and Mr. Badke’s bonus allocation represented approximately 49% and 25%,
respectively, of the available bonus pool.
(3) A performance based bonus plan was established for Christopher J. Wall, the Company’s European subsidiary
Managing Director, for fiscal years 2009 and 2008, whereby Mr. Wall would earn an amount equal to between 2% and
6% (based on achievement levels) of the combined pretax operating profits of the Company’s Europe based
subsidiaries. Under such plans, Mr. Wall earned a bonus based upon the achievement of 5% of specified profits for
each of fiscal 2009 and 2008.
(4) For fiscal 2008, a performance based bonus plan was established for certain of the Company’s executive officers,
including among others Kenneth M. Darby, Chief Executive Officer, and John M. Badke, Chief Financial Officer,
whereby the participants would share a specified pretax profit based bonus pool of between eight percent (8%) and
fourteen percent (14%) upon the achievement of a certain annual pretax profit targets ranging from $4.0 million to $7.0
million (and above), respectively. Under such plan, Messrs. Darby and Badke earned bonuses based upon the
allocation of an aggregate bonus pool of nine percent (9%) of the Company’s consolidated pretax profit for 2008, after
certain adjustments. Mr. Darby’s and Mr. Badke’s bonus allocation represented approximately 47% and 24%,
respectively, of the available bonus pool.
(5) All other compensation represents: (a) automobile expense of $10,021 and $12,894 for fiscal 2009 and 2008,
respectively, (b) country club membership of $8,795 and $8,589 for fiscal 2009 and 2008, respectively, and (c) longterm disability insurance of $2,210 paid by the Company for Mr. Darby in both fiscal 2009 and 2008.
(6) Represents automobile expense paid by the Company.
(7) All other compensation represents: (a) automobile expense of $16,280 and $16,929 for fiscal 2009 and 2008,
respectively, and (b) supplemental retirement contributions of $7,993 and $14,093 for fiscal 2009 and 2008,
respectively.

20

Outstanding Equity Awards at Fiscal 2009 Year-End
The following table sets forth information with respect to the outstanding equity awards of the named
executive officers as of September 30, 2009.

Name

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable

Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)

Option
Exercise
Price
($)

Option
Expiration
Date

Kenneth M. Darby

3,000 (1)

7,000 (1)

-

$3.59

10/25/12

Chairman and Chief

4,000 (3)

16,000 (3)

-

$4.79

05/22/18

Executive Officer

-

25,000 (3)

-

$5.00

11/05/18

John M. Badke

5,000 (1)

-

-

$3.00

05/27/11

Senior Vice President

5,000 (2)

-

-

$3.17

12/09/10

and Chief Financial

4,500 (1)

10,500 (1)

-

$3.59

10/25/12

Officer

2,000 (3)

8,000 (3)

-

$4.79

05/22/18

-

8,000 (3)

-

$5.00

11/05/18

Christopher J. Wall

5,000 (1)

-

-

$3.00

05/27/11

Managing Director

3,000 (1)

2,000(1)

-

$3.17

12/09/11

Vicon Industries, Ltd.

1,500 (1)

3,500(1)

-

$3.59

10/25/12

2,000 (3)

8,000 (3)

-

$4.79

05/22/18

-

10,000 (1)

-

$5.00

11/05/14

(1) Options vest over a four year period at 30% of the shares on the first anniversary of the grant date, 30% of the shares
on the second anniversary of the grant date and the remaining 40% of the shares on the third anniversary of the grant
date. Options expire after the sixth anniversary of the grant date.
(2) Options vest over a three year period at 30% of the shares on the grant date, 30% of the shares on the first anniversary
of the grant date and the remaining 40% of the shares on the second anniversary of the grant date. Options expire after
the fifth anniversary of the grant date.
(3) Options vest over a five year period in five equal annual installments beginning on the first anniversary of the grant
date. Options expire after the tenth anniversary of the grant date.

21

Fiscal 2009 Directors' Compensation
The table below summarizes the compensation paid by the Company to non-employee directors for the
fiscal year ended September 30, 2009.
Fees Earned
or Paid in
Cash ($)(1)

Stock
Awards
($)

Option
Awards
($)(2)(3)

All Other
Compensation
($)

Total
($)

Clifton H.W. Maloney

$32,000

-

$23,819 (2)

-

$55,819

Peter F. Neumann

$30,400

-

$20,154 (2)

-

$50,554

Bernard F. Reynolds

$10,000

-

$ 9,922 (2)

-

$19,922

W. Gregory Robertson

$32,000

-

$23,819 (2)

-

$55,819

Arthur D. Roche

$40,000

-

$23,819 (2)

-

$63,819

Name

(1) Directors who are not employees of the Company received an annual fee of $22,400 for regular Board meetings
and $1,600 per committee meeting attended in person or by teleconference. The Chairman of the Audit
Committee also received an additional annual retainer of $8,000.
(2) Represents the compensation costs recognized for financial statement reporting purposes in fiscal 2009 for
the fair value of stock options in accordance with ASC 718 (Statement of Financial Accounting Standards
No. 123R). (See “Note 1” under the caption “Accounting for Stock-Based Compensation” to the
accompanying financial statements.)
(3) On November 5, 2008, Messrs. Maloney, Neumann, Robertson and Roche were each granted 7,500 options to
purchase common stock at the opening market price of $5.00 per share. On May 21, 2009, Mr. Neumann was
granted 3,500 options and Mr. Reynolds was granted 15,000 options to purchase common stock at the opening
market price of $5.51 per share. As of September 30, 2009, Messrs. Neumann, Reynolds, Robertson and Roche
held 14,500, 15,000, 14,500 and 14,500 stock options, respectively. On September 25, 2009, Mr. Maloney died
and his estate held 23,500 vested stock options as of September 30, 2009.

Directors’ Compensation and Term
Directors who are not employees of the Company (named directors other than Mr. Darby) receive an annual
fee of $22,400 for regular Board meetings and $1,600 per committee meeting attended in person or by
teleconference. The Chairman of the Audit Committee also receives an additional annual retainer of $8,000.
Employee directors are not compensated for Board or committee meetings. Directors may not stand for
reelection after age 70, except that any director may serve additional three-year terms after age 70 with the
unanimous consent of the Board of Directors.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors consists of Messrs. Neumann, Reynolds, Robertson
and Roche, none of whom has ever been an officer of the Company except for Mr. Roche, who served as
Executive Vice President from August 1993 until his retirement in November 1999.

22

Board Compensation Committee Report
The Compensation Committee’s compensation policies applicable to the Company’s officers for 2009 were to pay
a competitive market price for the services of such officers, taking into account the overall performance and
financial capabilities of the Company and the officer's individual level of performance.
Mr. Darby makes recommendations to the Compensation Committee as to the base salary and incentive
compensation of all officers other than himself. The Committee reviews these recommendations with Mr. Darby
and, after such review, determines compensation. In the case of Mr. Darby, the Compensation Committee makes
its determination after direct negotiation with him. For each officer, the Committee's determinations are based on
its conclusions concerning each officer's performance and comparable compensation levels for similarly situated
officers at comparable companies. The overall level of performance of the Company is taken into account but is
not specifically related to the base salary of these officers. Also, the Company has established incentive
compensation plans for certain officers, which provide for a specified bonus upon the Company’s achievement of
certain annual sales and/or profitability targets.
The Compensation Committee grants options to officers to link compensation to the performance of the Company.
Options are exercisable in the future at the fair market value at the time of grant, so that an officer granted an
option is rewarded by the increase in the price of the Company’s stock. The Committee grants options to officers
based on significant contributions of such officer to the performance of the Company. In addition, in determining
Mr. Darby’s salary and bonus for service as Chief Executive Officer, the Committee considers the responsibility
assumed by him in formulating, implementing and managing the operational and strategic objectives of the
Company.
The Compensation Committee has reviewed the Compensation Discussion and Analysis required by Item 402(b)
of Regulation S-K with the Company’s management. Based on such review and discussion, the Committee has
recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the
Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2009.
Submitted by the Compensation Committee,
Peter F. Neumann, Chairman
W. Gregory Robertson

Bernard F. Reynolds
Arthur D. Roche

23

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth the beneficial ownership of the Company’s Common Stock as of December
15, 2009 by (i) those persons known by the Company to be beneficial owners of more than 5% of the
Company’s outstanding Common Stock; (ii) each current executive officer named in the Summary
Compensation Table; (iii) each director; and (iv) all directors and executive officers as a group.
Name and Address
Of Beneficial Owner
CBC Co., Ltd. and affiliates
2-15-13 Tsukishima, Chuo-ku,
Tokyo, Japan 104

Number of Shares
Beneficially Owned (1)

% of Class

543,715

11.4%

Anita G. Zucker,
as Trustee of Jerry Zucker Revocable Trust
c/o The Inter Tech Group, Inc.
4838 Jenkins Ave.
North Charleston, SC 29405

463,214

(2)

9.7%

Dimensional Fund Advisors
1299 Ocean Avenue
Santa Monica, CA 90401

398,871

(3)

8.3%

Renaissance Technologies, Corp.
800 Third Avenue
New York, NY 10022

306,700

C/O Vicon Industries, Inc.
Kenneth M. Darby
Arthur D. Roche
Peter A. Horn
John M. Badke
W. Gregory Robertson
Peter F. Neumann
Christopher J. Wall
Bret McGowan
Bernard F. Reynolds
Total all Executive Officers and
Directors as a group (11 persons)

6.4%

347,903
79,821
66,797
64,419
39,150
38,572
35,207
35,100
20,000

(4)
(5)
(6)
(7)
(8)
(9)
(4)
(10)

7.3%
1.7%
1.4%
1.3%
*
*
*
*
*

769,942

(11)

16.1%

* Less than 1%
(1) Unless otherwise indicated, the Company believes that all persons named in the table have sole voting and investment
control over the shares of stock owned.
(2) These shares are owned directly by the Jerry Zucker Revocable Trust and indirectly by Anita Zucker, as trustee and as a
beneficiary of the trust.
(3) Dimensional Fund Advisors had voting control over 398,871 shares and investment control over 395,971 as investment
advisor and manager for various mutual funds and other clients. These shares are beneficially owned by such mutual funds
or other clients.
(4) Includes currently exercisable options to purchase 15,000 shares.
(5) Includes 15,000 shares held by Mr. Roche’s wife and currently exercisable options to purchase 7,250 shares.
(6) Includes currently exercisable options to purchase 15,100 shares.
(7) Includes currently exercisable options to purchase 22,600 shares.
(8) Includes currently exercisable options to purchase 7,250 shares.
(9) Includes currently exercisable options to purchase 5,500 shares.
(10) Includes currently exercisable options to purchase 19,100 shares.
(11) Includes currently exercisable options to purchase 120,800 shares.

24

EQUITY COMPENSATION PLAN INFORMATION
at September 30, 2009

Plan category
Equity compensation plans
approved by security holders

Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)

Weighted average
exercise price of
outstanding options,
warrants and rights
(b)

Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(c)

428,783

$4.35

269,658

-

-

-

428,783

$4.35

269,658

Equity compensation plans not
approved by security holders
Total

EQUITY COMPENSATION GRANTS NOT APPROVED BY SECURITY HOLDERS
Through September 30, 2009 the Company had granted certain of its officers with deferred compensation
benefits aggregating 33,251 shares of common stock currently held by the Company in treasury. Such shares
vest upon retirement. All shares vest earlier under certain occurrences including death, involuntary
termination or a change in control of the Company.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and CBC Co., Ltd. (CBC), a Japanese corporation which beneficially owns 11.4% of the
outstanding shares of the Company, have been conducting business with each other since 1979. During this
period, CBC has served as a lender, a product supplier and a private label reseller of the Company’s
products. In fiscal 2009, the Company purchased approximately $227,000 of products from or through CBC.
CBC competes with the Company in various markets, principally in the sale of video products and systems.
Sales of Vicon products to CBC were $30,000 in 2009.
All named directors other than Mr. Darby are independent directors in accordance with NYSE Amex listing
requirements.
ITEM 14 – PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table details: the aggregate fee arrangements with BDO Seidman, LLP for professional services
rendered for the audit of the Company’s consolidated annual financial statements and review of the financial
statements included in the Company’s quarterly reports on Form 10-Q; the aggregate fees billed by BDO
Seidman, LLP for audit related matters and; the aggregate fees billed by BDO Seidman, LLP for tax
compliance, tax advice and tax planning during fiscal years ended September 30, 2009 and 2008:
Audit fees
Audit related fees
Tax fees

2008
$ 252,000
$ 5,000
$ 42,000

2009
$ 262,000
$
$ 43,000

25

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent
Auditors
The Audit Committee pre-approves all audit and permissible non-audit services provided by the independent
auditors. These services may include audit services, audit related services, tax services and other services. The
Audit Committee has adopted a policy for the pre-approval of services provided by the independent auditors.
Under the policy, pre-approval generally is provided for an annual period and any pre-approval is detailed as
to the particular service or category of services and is subject to a specific limit. In addition, the Audit
Committee may also pre-approve particular services on a case-by-case basis, which must be accompanied by a
detailed explanation for each proposed service. The Audit Committee may delegate pre-approval authority to
one or more of its members. Such member must report any decisions to the Audit Committee at the next
scheduled meeting.
PART IV
ITEM 15 – EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) (1) Financial Statements
Included in Part IV, Item 15:
Report of Independent Registered Public Accounting Firm
Financial Statements:
Consolidated Statements of Operations, fiscal years ended September 30, 2009, 2008,
and 2007
Consolidated Balance Sheets at September 30, 2009 and 2008
Consolidated Statements of Shareholders’ Equity, fiscal years ended September 30, 2009,
2008, and 2007
Consolidated Statements of Cash Flows, fiscal years ended September 30, 2009, 2008,
and 2007
Notes to Consolidated Financial Statements, fiscal years ended September 30, 2009,
2008, and 2007
All schedules for which provision is made in the applicable accounting regulations of the Securities and
Exchange Commission are not required under the related instructions or are not applicable and, therefore,
have been omitted.

26

15(a)(3)
Number
3.1
3.2
3.3
4
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
21
23
31.1
31.2
32.1
32.2

Exhibits
Description
Articles of Incorporation and By-Laws, as amended (Incorporated by reference to the 1985 Annual Report on
Form 10-K; Form S-2 filed in Registration Statement No. 33-10435 and Exhibit A, B and C of the 1987
Proxy Statement)
Amendment of the Company’s By-Laws effective January 1, 2008 (Incorporated by reference to the 2007
Annual Report on Form 10-K)
Amendment of the Certificate of Incorporation dated May 7, 2002 (Incorporated by reference to the 2002
Annual Report on Form 10-K)
Rights Agreement dated December 4, 2001 between the Registrant and Computershare Investor Services
(Incorporated by reference to the 2001 Annual Report on Form 10-K)
Employment Agreement effective as of October 1, 2009 between the Registrant and Kenneth M. Darby
(Incorporated by reference to the Current Report on Form 8-K dated November 13, 2009)
1996 Incentive Stock Option Plan (Incorporated by reference to the 1997 Annual Report on Form 10-K)
1999 Incentive Stock Option Plan (Incorporated by reference to the 1999 Annual Report on Form 10-K)
1999 Non-Qualified Stock Option Plan (Incorporated by reference to the 1999 Annual Report on Form 10-K)
2002 Incentive Stock Option Plan (Incorporated by reference to the 2002 Annual Report on Form 10-K)
2002 Non-Qualified Stock Option Plan (Incorporated by reference to the 2002 Annual Report on Form 10-K)
Employment and Deferred Compensation Agreement dated January 1, 2006 between the Registrant and John
M. Badke (Incorporated by reference to the Current Report on Form 8-K dated March 6, 2006)
Amendment 1 to the Employment and Deferred Compensation Agreement dated November 13, 2006 between
the Registrant and John M. Badke (Incorporated by reference to the Current Report on Form 8-K dated
November 16, 2006)
Employment Agreement dated November 1, 2006 between the Registrant and Christopher J. Wall
(Incorporated by reference to the Current Report on Form 8-K dated November 16, 2006)
Side letter to the agreement dated November 14, 2007 between the Registrant and Christopher J. Wall
2007 Stock Incentive Plan (Incorporated by reference to the Proxy Statement filed on April 27, 2007)
Subsidiaries of the Registrant (Incorporated by reference to the Notes to the Consolidated Financial
Statements)
Consent of BDO Seidman, LLP
Rule 13a-14(a)/15d-14(a) Certifications
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Section 1350 Certifications
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002

No other exhibits are required to be filed.

27

Other Matters - Form S-8 and S-2 Undertaking
For the purposes of complying with the amendments to the rules governing Form S-8 (effective July 13,
1990) under the Securities Act of 1933, the undersigned registrant hereby undertakes as follows, which
undertaking shall be incorporated by reference into registrant’s Registration Statements on Form S-8 Nos.
33-7892 (filed June 30, 1986), 33-34349 (filed April 1, 1990), 33-90038 (filed February 24, 1995), 33330097 (filed June 26, 1997), 333-71410 (filed October 11, 2001), 333-116361 (filed June 10, 2004) and
333-146749 (filed October 16, 2007) and on Form S-2 No. 333-46841 (effective May 1, 1998):
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the
payment by the registrant in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by it is against public policy
as expressed in the Act and will be governed by the final adjudication of such issue.

28

Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Vicon Industries, Inc.:
We have audited the accompanying consolidated balance sheets of Vicon Industries, Inc. as of September
30, 2009 and 2008 and the related consolidated statements of operations, stockholders’ equity, and cash
flows for each of the three years ended September 30, 2009. These consolidated financial statements are
the responsibility of the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audits included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we
express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Vicon Industries, Inc. at September 30, 2009 and 2008, and the results
of its operations and its cash flows for each of the three years in the period ended September 30, 2009, in
conformity with accounting principles generally accepted in the United States of America.

/s/ BDO Seidman, LLP
Melville, New York
December 29, 2009

29

VICON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Fiscal Years Ended September 30, 2009, 2008 and 2007
2008

2009
Net sales
Cost of sales
Gross profit

$ 60,444,867
33,152,064
27,292,803

$ 66,911,442
36,489,172
30,422,270

$ 69,072,613
39,686,486
29,386,127

18,856,172
5,405,491
24,261,663

20,384,605
5,648,442
26,033,047

19,527,713
5,175,948
24,703,661

3,031,140

4,389,223

4,682,466

Operating expenses:
Selling, general and
administrative expense
Engineering and development expense

Operating income
Other expense (income):
Interest expense
Interest and other income

2,179
(189,680)

Income before income taxes
Income tax expense (benefit)
Net income

2007

$

44,549
(244,337)

141,507
(379,750)

3,218,641

4,589,011

4,920,709

1,202,000

1,750,000

(2,965,573)

2,016,641

$

2,839,011

$ 7,886,282

Earnings per share:
Basic

$ .44

$ .59

$ 1.67

Diluted

$ .43

$ .57

$ 1.59

See accompanying notes to consolidated financial statements.

30

VICON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 2009 and 2008
ASSETS
Current Assets:
Cash and cash equivalents
Marketable securities
Accounts receivable (less allowance of
$1,025,000 in 2009 and $1,196,000 in 2008)
Inventories:
Parts, components and materials
Work-in-process
Finished products

2009
$ 16,650,191
201,665

Deferred income taxes
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment:
Land
Buildings and improvements
Machinery, equipment and vehicles
Less accumulated depreciation and amortization
Deferred income taxes
Other assets
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable
Accrued compensation and employee benefits
Accrued expenses
Unearned revenue
Income taxes payable
Total current liabilities
Unearned revenue-non current
Other long-term liabilities
Total liabilities
Commitments and contingencies - Note 8
Shareholders' equity:
Common stock, par value $.01 per share
authorized - 25,000,000 shares
issued - 5,266,876 and 5,124,572 shares
Capital in excess of par value
Retained earnings
Treasury stock at cost, 645,288 shares
in 2009 and 384,867 shares in 2008
Accumulated other comprehensive income (loss)
Total shareholders' equity
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
See accompanying notes to consolidated financial statements.

31

2008
$

9,560,966
227,237

9,908,534

14,763,914

3,923,027
2,444,994
5,580,908
11,948,929
644,215
523,488
39,877,022

3,612,862
2,407,980
6,545,046
12,565,888
1,230,702
818,768
39,167,475

1,184,520
5,685,353
5,984,979
12,854,852
7,836,871
5,017,981
1,132,457
1,288,277
$ 47,315,737

1,219,300
5,780,763
5,971,651
12,971,714
7,670,717
5,300,997
1,224,120
1,271,683
$ 46,964,275

$

$

4,005,870
2,823,825
1,311,636
735,850
154,851
9,032,032

4,267,620
2,779,368
1,760,147
872,195
307,242
9,986,572

303,980
2,580,241
11,916,253

303,857
2,069,866
12,360,295

52,669
24,294,511
14,351,424

51,246
23,261,936
12,334,783

(3,145,204)
(153,916)
35,399,484
$ 47,315,737

(1,768,135)
724,150
34,603,980
$ 46,964,275

VICON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Fiscal Years Ended September 30, 2009, 2008, and 2007

Shares
Balance September 30, 2006
Comprehensive income (loss):
Net income
Foreign currency
translation adjustment
Unrealized loss on derivatives, net of tax
Change in unrealized loss on
marketable securities, net of tax
Total comprehensive income (loss)
Distribution of deferred comp. shares
Exercise of stock options
Stock-based compensation
Tax benefit from exercise of stock options
Deferred compensation amortization
Balance September 30, 2007
Comprehensive income (loss):
Net income
Foreign currency
translation adjustment
Unrealized gain on derivatives, net of tax
Change in unrealized loss on
marketable securities, net of tax
Total comprehensive income (loss)
FIN 48 income tax liability
Repurchases of common stock
Exercise of stock options
Tax benefit from exercise of stock options
Stock-based compensation
Deferred compensation amortization
Balance September 30, 2008
Comprehensive income (loss):
Net income
Foreign currency
translation adjustment
Unrealized loss on derivatives, net of tax
Change in unrealized gain on
marketable securities, net of tax
Total comprehensive income (loss)
Repurchases of common stock
Distribution of deferred comp. shares
Exercise of stock options
Tax benefit from exercise of stock options
Stock-based compensation
Deferred compensation amortization
Balance September 30, 2009

4,860,901

Common
Stock
$ 48,609

Capital in
excess of
par value
$ 22,562,126

-

-

-

-

-

-

192,602
5,053,503

1,926
$ 50,535

(472,187)
594,738
168,671
10,327
10,610
$ 22,874,285

-

-

-

-

-

-

71,069
5,124,572

711
$ 51,246

219,336
24,270
133,406
10,639
$ 23,261,936

-

-

-

-

-

-

1,800
140,504
5,266,876

18
1,405
$ 52,669

(18)
510,725
175,440
322,580
23,848
$ 24,294,511

See accompanying notes to consolidated financial statements.

32

Retained
earnings
$

1,734,490
7,886,282
-

$

9,620,772
2,839,011
-

(125,000)
$ 12,334,783
2,016,641
$ 14,351,424

Accumulated
other
comprehensive
income

Treasury
Stock
$ (1,299,999)

$

-

-

472,187
(311,916)
$ (1,139,728)

$

-

-

(1,262,169)
(114,900)
$ (3,145,204)

1,292
1,647,492

1,292
8,560,159
284,748
168,671
10,327
10,610
$ 33,053,356

1,230
724,150
-

-

$

7,886,282
689,151
(16,566)

(1,022,427)
97,855

$

$ 24,018,841

689,151
(16,566)

-

(628,407)
$ (1,768,135)

973,615

Total
shareholders'
equity

2,839,011
(1,022,427)
97,855
1,230
1,915,669
(125,000)
(628,407)
220,047
24,270
133,406
10,639
$ 34,603,980
2,016,641

(778,621)
(103,056)

(778,621)
(103,056)

3,611
(153,916)

3,611
1,138,575
(1,262,169)
397,230
175,440
322,580
23,848
$ 35,399,484

VICON INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Years Ended September 30, 2009, 2008 and 2007
2009
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred income taxes
Depreciation and amortization
Amortization of deferred compensation
Stock compensation expense
Loss (gain) on marketable securities
Change in assets and liabilities:
Accounts receivable, net
Inventories
Prepaid expenses and other current assets
Other assets
Accounts payable
Accrued compensation and employee benefits
Accrued expenses
Unearned revenue
Income taxes payable
Other liabilities
Net cash provided by operating activities

2008

2007

$ 2,016,641

$ 2,839,011

$ 7,886,282

904,963
728,138
23,848
322,580
31,303

1,136,612
778,276
10,639
133,406
3,661

(3,497,576)
892,534
10,611
168,671
(102,392)

4,230,079
281,925
143,853
(16,594)
(147,305)
95,497
(203,143)
(128,598)
(115,660)
232,935
8,400,462

(2,565,752)
(21,022)
(194,123)
(347,241)
1,194,754
(4,260)
64,408
(55,973)
(71,776)
521,778
3,422,398

(1,224,166)
(753,723)
(84,724)
(49,650)
(903,577)
393,240
349,128
(24,486)
249,190
221,919
3,531,281

Cash flows from investing activities:
Capital expenditures
Net cash used in investing activities

(573,384)
(573,384)

(502,896)
(502,896)

(296,332)
(296,332)

Cash flows from financing activities:
Repurchases of common stock
Proceeds from exercise of stock options
Repayments of long-term debt
Net cash used in financing activities

(1,262,169)
397,230
(864,939)

(628,407)
220,047
(1,740,335)
(2,148,695)

284,748
(327,309)
(42,561)

Effect of exchange rate changes on cash
Net increase in cash
Cash at beginning of year
Cash at end of year

127,086
7,089,225
9,560,966
$16,650,191

(17,951)
752,856
8,808,110
$ 9,560,966

(23,612)
3,168,776
5,639,334
$ 8,808,110

Cash paid during the fiscal year for:
Income taxes
Interest

$
$

$
$

$
$

See accompanying notes to consolidated financial statements.

33

472,797
2,179

635,522
55,181

217,873
143,159

VICON INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fiscal Years ended September 30, 2009, 2008, and 2007
NOTE 1. Summary of Significant Accounting Policies
Nature of Business
The Company designs, manufactures, assembles and markets video systems and system components for
use in security, surveillance, safety and control purposes by end users. The Company markets its products
worldwide primarily to installing dealers, systems integrators, government entities and distributors.
Basis of Presentation
The accompanying consolidated financial statements include the accounts of Vicon Industries, Inc. (the
Company) and its wholly owned subsidiaries: Vicon Industries Limited and subsidiary (Vicon
Deutschland GmbH) and TeleSite U.S.A., Inc. and subsidiary (Vicon Systems Ltd.), after elimination of
intercompany accounts and transactions. Events subsequent to September 30, 2009 were evaluated until
the time of the Form 10-K filing with the Securities and Exchange Commission on December 29, 2009.
Revenue Recognition
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has
occurred or services have been rendered, the selling price is fixed or determinable, and collectability of
the resulting receivable is reasonably assured. As it relates to product sales, revenue is generally
recognized when products are sold and title is passed to the customer. Shipping and handling costs are
included in cost of sales. Advance service billings under a national supply contract with one customer are
deferred and recognized as revenues on a pro rata basis over the term of the service agreement. The
Company evaluates multiple-element revenue arrangements for separate units of accounting, and follows
appropriate revenue recognition policies for each separate unit. Elements are considered separate units of
accounting provided that (i) the delivered item has stand-alone value to the customer, (ii) there is
objective and reliable evidence of the fair value of the undelivered item, and (iii) if a general right of
return exists relative to the delivered item, delivery or performance of the undelivered item is considered
probable and substantially within the control of the Company. As applied to the Company, under
arrangements involving the sale of product and the provision of services, product sales are recognized as
revenue when the products are sold and title is passed to the customer, and service revenue is recognized
as services are performed. For products that include more than incidental software, and for separate
licenses of the Company’s software products, the Company recognizes revenue in accordance with the
provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC)
985-605 (Statement of Position 97-2, “Software Revenue Recognition”, as amended).
Cash and Cash Equivalents
Cash and cash equivalents include cash on deposit and amounts invested in highly liquid money market
funds.
Marketable Securities
Marketable securities consist of mutual fund investments in U.S. government debt securities and holdings in
an equity security. Such mutual fund investments are stated at market value and are classified as availablefor-sale under ASC 320 (Statement of Financial Accounting Standards (SFAS) No. 115), with unrealized
gains and losses reported in other comprehensive income as a component of shareholders’ equity. The cost
of such securities was $198,208 and $227,391 at September 30, 2009 and 2008, respectively, with $3,457 of
unrealized gains and $154 of unrealized losses, net of tax, included in the carrying amounts at September 30,
2009 and 2008, respectively.
34

Allowances for Doubtful Accounts
The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability
of its customers to make required payments. If the financial condition of its customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional allowances may be required.
Inventories
Inventories are valued at the lower of cost (on a moving average basis which approximates a first-in, firstout method) or market. When it is determined that a product or product line will be sold below carrying
cost, affected on hand inventories are written down to their estimated net realizable values.
Long-Lived Assets
Property, plant, and equipment are recorded at cost. Depreciation and amortization of assets under capital
leases is computed by the straight-line method over the estimated useful lives of the related assets.
Machinery, equipment and vehicles are being depreciated over periods ranging from 2 to 10 years. The
Company's buildings are being depreciated over periods ranging from 25 to 40 years and leasehold
improvements are amortized over the lesser of their estimated useful lives or the remaining lease term.
Fully depreciated fixed assets are retired from the balance sheet when they are no longer in use.
The Company reviews its long-lived assets for impairment whenever events or circumstances indicate that
the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows,
undiscounted and without interest, is less than the carrying amount of the asset, an impairment loss is
recognized as the amount by which the carrying amount of the asset exceeds its fair value.
Engineering and Development
Product engineering and development costs are charged to expense as incurred, and amounted to
approximately $5,400,000, $5,600,000 and $5,200,000 in fiscal 2009, 2008, and 2007, respectively.
Earnings Per Share
Basic EPS is computed based on the weighted average number of common shares outstanding. Diluted
EPS reflects the maximum dilution that would have resulted from the exercise of stock options, warrants
and incremental shares issuable under a deferred compensation agreement (see Note 7). In periods when
losses are incurred, the effects of these securities are antidilutive and, therefore, are excluded from the
computation of diluted EPS.
Foreign Currency Translation
The Company translates the financial statements of its foreign subsidiaries by applying the current rate
method under which assets and liabilities are translated at the exchange rate on the balance sheet date,
while revenues, costs, and expenses are translated at the average exchange rate for the reporting period.
The resulting cumulative translation adjustment of $(114,000) and $665,000 at September 30, 2009 and
2008, respectively, is recorded as a component of shareholders' equity in accumulated other
comprehensive income.
Income Taxes
The Company accounts for income taxes under the provisions of ASC 740 (SFAS No. 109, “Accounting for
Income Taxes”), which requires recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Deferred U.S. income taxes are not provided on undistributed earnings
of foreign subsidiaries as the Company presently intends to reinvest such earnings indefinitely, and any plan
35

to repatriate any of such earnings in the future is not expected to result in a material incremental tax liability
to the Company. In fiscal 2007, the Company recognized $3.4 million of previously unrecognized U.S. net
deferred income tax assets based upon an updated assessment of their realization.
Product Warranties
The Company provides for the estimated cost of product warranties at the time revenue is recognized.
While the Company engages in product quality programs and processes, including monitoring and
evaluating the quality of its component suppliers, its warranty obligation is affected by product failure rates,
material usage and service delivery costs incurred in correcting a product failure. Should actual product
failure rates, material usage or service delivery costs differ from its estimates, revisions to the estimated
warranty liability may be required.
Derivative Instruments
ASC 815 (SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”), establishes
accounting and reporting standards for derivative instruments as either assets or liabilities in the statement
of financial position based on their fair values. Changes in the fair values are required to be reported in
earnings or other comprehensive income depending on the use of the derivative and whether it qualifies for
hedge accounting. Derivative instruments are designated and accounted for as either a hedge of a
recognized asset or liability (fair value hedge) or a hedge of a forecasted transaction (cash flow hedge). For
derivatives designated as effective cash flow hedges, changes in fair values are recognized in other
comprehensive income. Changes in fair values related to fair value hedges as well as the ineffective portion
of cash flow hedges are recognized in earnings.
The Company does not use derivative instruments for speculative or trading purposes. Derivative
instruments are primarily used to manage exposures related to transactions with the Company’s Europe and
Israel based subsidiaries. To accomplish this, the Company uses certain contracts, primarily foreign
currency forward contracts (“forwards”), which minimize cash flow risks from changes in foreign currency
exchange rates. These derivatives have been designated as cash flow hedges for accounting purposes.
As of September 30, 2009, the Company had currency forwards outstanding with notional amounts
aggregating $2.0 million, whose aggregate fair value was a liability of approximately $69,000. The change
in the fair value of these derivatives is reflected in other comprehensive income in the accompanying
statement of shareholders’ equity, net of tax where applicable. The forwards have maturities of less than
one year and require the Company to exchange currencies at specified dates and rates. The Company
considers the credit risk related to the forwards to be low because such instruments are entered into with
financial institutions having high credit ratings and are generally settled on a net basis. There were no gains
or losses recognized in operations due to hedge ineffectiveness during the three-year period ended
September 30, 2009. The Company does not expect that the amounts currently classified in accumulated
other comprehensive income that will be recognized in operations in the next fiscal year will be material.
Fair Value of Financial Instruments
The carrying amounts for trade accounts and other receivables, accounts payable and accrued expenses
approximate fair value due to the short-term maturity of these instruments. The fair value of the
Company’s foreign currency forward exchange contracts is estimated by obtaining quoted market prices.
The contracted exchange rates on committed forward exchange contracts was approximately $69,000 less
favorable than the market rates for similar term contracts at September 30, 2009.
Fair value estimates are made at a specific point in time based on relevant market information about the
financial instrument. These estimates are subjective in nature and involve uncertainties and matters of
significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.

36

Accounting for Stock-Based Compensation
The Company follows ASC 718 (SFAS No. 123(R), “Share-Based Payment”), which requires that all share
based payments to employees, including stock options, be recognized as compensation expense in the
consolidated financial statements based on their fair values and over the requisite service period. For the
years ended September 30, 2009, 2008 and 2007, the Company recorded non-cash compensation expense of
$322,580 ($.07 per basic and diluted share), $133,406 ($.03 per basic and diluted share) and $168,671 ($.04
and $.03 per basic and diluted share), respectively, relating to stock-based compensation. The Company
elected to utilize the modified-prospective application method, whereby compensation expense is recorded
for all awards granted after October 1, 2005 (adoption date) and for the unvested portion of awards granted
prior to this date. Accordingly, prior period amounts were not restated.
The fair value for options granted during the fiscal years ended September 30, 2009, 2008 and 2007 was
determined at the date of grant using a Black-Scholes valuation model and the straight-line attribution
approach using the following weighted average assumptions:
2009
Risk-free interest rate
Dividend yield
Volatility factor
Weighted average expected life

3.0%
0.0%
72.9%
7.0 years

2008

2007

3.6%
0.0%
76.3%
7.5 years

4.8%
0.0%
61.5%
5.0 years

The risk-free interest rate used in the Black-Scholes valuation method is based on the implied yield
currently available in U.S. Treasury securities at maturity with an equivalent term. The Company has not
recently declared or paid any dividends and does not currently expect to do so in the future. Expected
volatility is based on the annualized daily historical volatility of the Company’s stock over a
representative period. The weighted-average expected life represents the period over which stock-based
awards are expected to be outstanding and was determined based on a number of factors, including
historical weighted average and projected holding periods for the remaining unexercised shares, the
contractual terms of the Company’s stock-based awards, vesting schedules and expectations of future
employee behavior.
The Black-Scholes option valuation model was developed for use in estimating the fair value of traded
options which have no vesting restrictions and are fully transferable. In addition, option valuation models
require the input of highly subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly different from traded options,
and because changes in the subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable single measure of the fair
value of its employee stock options.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting period. Such estimates include, but are
not limited to, provisions for doubtful accounts receivable, net realizable value of inventory, warranty
obligations, deferred tax valuation and assessments of the recoverability of the Company’s long-lived
assets. Actual results could differ from those estimates.
Reclassifications
Certain prior year amounts have been reclassified to conform to current year presentation.

37

NOTE 2. Income Taxes
The components of income tax expense for the fiscal years indicated are as follows:
2008

2009
Current:
Federal
State
Foreign

Deferred:
Federal
State
Foreign
Total

$

243,000
22,000
117,000
382,000

$

729,000
63,000
28,000
820,000
$ 1,202,000

46,000
4,000
525,000
575,000

1,080,000
95,000
1,175,000
$ 1,750,000

2007
$

85,327
459,330
544,657

(3,151,837)
(298,063)
(60,330)
(3,510,230)
$ (2,965,573)

A reconciliation of the U.S statutory tax rate to the Company’s effective tax rate follows:
2008

2009
Amount
U.S. statutory tax
Increase (decrease) in
valuation allowance
Foreign tax rate
difference
Permanent differences
State tax, net of
federal benefit
Other, net
Effective tax rate

$ 1,094,000

2007

Percent

Amount

Percent

Amount

Percent

34.0%

$ 1,560,000

34.0%

$ 1,673,000

34.0%

(17,000)

(0.5)

43,000

0.9

(26,000)
78,000

(0.8)
2.4

(64,000)
54,000

(1.4)
1.2

87,000
(14,000)
$ 1,202,000

2.7
(0.5)
37.3%

38

100,000
57,000
$ 1,750,000

2.2
1.2
38.1%

(4,739,000)

(96.3)

51,000
(46,000)

1.0
(0.9)

95,000
$(2,966,000)

1.9
(60.3)%

The tax effects of temporary differences that give rise to deferred tax assets and liabilities at September
30, 2009 and 2008 are presented below:
2008

2009
Deferred tax assets:
Inventories
Accrued compensation
Warranty accrual
Depreciation
Allowance for doubtful accounts receivable
Unearned revenue
U.S. net operating loss carryforwards
Foreign net operating loss carryforwards
AMT credit carryforward
U.S. capital loss carryforward
Other
Gross deferred tax assets

$

459,000
149,000
378,000
334,000
372,000
347,000
15,000
151,000
2,205,000

Deferred tax liabilities:
Other
Gross deferred tax liabilities
Total deferred tax assets and liabilities
Less valuation allowance
Net deferred tax assets and liabilities

$

81,000
81,000

$

2,124,000
(347,000)
1,777,000

507,000
352,000
149,000
493,000
408,000
436,000
157,000
364,000
104,000
15,000
87,000
3,072,000

253,000
253,000

$

2,819,000
(364,000)
2,455,000

At September 30, 2009 and 2008, the Company maintained a valuation allowance against certain of its
deferred tax assets due to the uncertainty of future realization. Deferred U.S. income taxes are not
provided on undistributed earnings of foreign subsidiaries as the Company presently intends to reinvest
such earnings indefinitely, and any plan to repatriate any of such earnings in the future is not expected to
result in a material incremental tax liability to the Company.
Pretax domestic income amounted to approximately $2,660,000, $3,191,000 and $3,899,000 in fiscal
years 2009, 2008 and 2007, respectively. Pretax foreign income amounted to approximately $559,000,
$1,398,000 and $1,022,000 in fiscal years 2009, 2008 and 2007, respectively.
The Company adopted the provisions of ASC 740 (Financial Accounting Standards Board Interpretation No.
48, “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109” (“FIN
48”) effective as of October 1, 2007. The entire amount of unrecognized tax benefits at September 30, 2009
and 2008, if recognized, would reduce the Company’s effective tax rate.
Unrecognized tax benefits activity for the years ended September 30, 2009 and 2008 is summarized
below:
Beginning balance
Additions based on tax positions related to prior years
Additions based on tax positions related to the current
year
Ending balance

39

$

$

2009
250,000
264,000
514,000

$

$

2008
100,000
100,000
50,000
250,000

The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in
income tax expense. At September 30, 2009, the combined amount of accrued net interest and penalties
related to tax positions taken or to be taken on our tax returns and recorded as part of the reserves for
uncertain tax positions was $36,000. The Company files U.S. Federal and State income tax returns and
foreign tax returns in the United Kingdom, Germany and Israel. The Company is generally no longer
subject to tax examinations for fiscal years prior to 2003 in the U.S, 2004 in the U.K., 2005 in Germany
and 2002 in Israel.
NOTE 3. Other Comprehensive Income (Loss)
The accumulated other comprehensive income (loss) balances at September 30, 2009 and 2008 consisted
of the following:
2008
2009
Foreign currency translation adjustment
Unrealized gain (loss) on derivatives, net of tax
Unrealized gain (loss) on marketable securities, net of tax
Accumulated other comprehensive income (loss)

$

$

(113,765)
(43,608)
3,457
(153,916)

$

$

664,856
59,448
(154)
724,150

NOTE 4. Segment and Geographic Information
The Company operates in one business segment which encompasses the design, manufacture, assembly and
marketing of video systems and system components for the electronic protection segment of the security
industry. Its U.S. based operations consist of Vicon Industries, Inc., the Company’s corporate headquarters
and principal operating entity. Its Europe-based operations consist of Vicon Industries Limited and its
Videotronic subsidiary, which market and distribute the Company’s products principally within Europe and the
Middle East.
Net sales and long-lived assets related to operations in the United States and other foreign countries for
the fiscal years ended September 30, 2009, 2008, and 2007 are as follows:
Net sales
U.S.
Foreign
Total
Long-lived assets
U.S.
Foreign
Total

2009

2008

2007

$ 38,529,000
21,916,000
$ 60,445,000

$ 40,746,000
26,165,000
$ 66,911,000

$ 42,752,000
26,321,000
$ 69,073,000

$

$

$

$

3,686,000
1,332,000
5,018,000

$

3,835,000
1,466,000
5,301,000

$

4,129,000
1,633,000
5,762,000

U.S. sales include $6,485,000, $5,858,000 and $5,721,000 for export in fiscal years 2009, 2008, and
2007, respectively. Foreign sales principally represent sales from the Company’s Europe based
subsidiaries.
NOTE 5. Stock Option Plans
The Company maintains stock option plans and a stock incentive plan that provide for the grant of
incentive and non-qualified options covering a total of 698,441 shares of common stock reserved for
issuance to key employees, including officers and directors, as of September 30, 2009. All options are
issued at fair market value at the grant date and are exercisable in varying installments according to the
plans. The plans allow for the payment of option exercises through the surrender of previously owned
mature shares based on the fair market value of such shares at the date of surrender. Such surrendering of
mature shares by holders results in an increase to treasury stock based on the stock price on date of
40

surrender. During the years ended September 30, 2009 and 2007, employees and directors surrendered
mature shares for current exercises which resulted in an increase to treasury stock of $114,900 and
$311,916, respectively. No such exercises occurred in the year ended September 30, 2008. There were
269,658 options available for grant at September 30, 2009.
Changes in outstanding stock options for the three years ended September 30, 2009 are as follows:

Outstanding at September 30, 2006
Options granted
Options exercised
Options forfeited
Outstanding at September 30, 2007
Options granted
Options exercised
Options forfeited
Outstanding at September 30, 2008
Options granted
Options exercised
Options forfeited
Outstanding at September 30, 2009
Exercisable at September 30, 2009

Number
of Options
545,283
77,000
(192,602)
(23,000)
406,681
154,000
(71,069)
(22,325)
467,287
113,000
(140,504)
(11,000)
428,783
156,413

Weighted
Average
Exercise
Price
$
3.28
$
3.59
$
3.10
$
3.00
$
3.45
$
4.85
$
3.10
$
3.14
$
3.98
$
5.08
$
3.64
$
4.93
$
4.35
$
3.80

Weighted
Average
Remaining
Contractual
Term
(in years)

5.9
3.5

Aggregate
Intrinsic
Value

$
$

674,357
325,213

The weighted-average grant date fair value of options granted during the years ended September 30, 2009,
2008 and 2007 was $3.54, $3.61 and $2.03, respectively. The total intrinsic value of options exercised during
the years ended September 30, 2009, 2008 and 2007 was $294,021, $205,128 and $929,744, respectively.

41

A summary of the status of the Company’s nonvested shares and changes during the years presented is as
follows:

Number
of Options
212,356
77,000
(128,336)
(2,100)
158,920
154,000
(37,460)
(12,725)
262,735
113,000
(92,365)
(11,000)
272,370

Nonvested at September 30, 2006
Granted
Vested
Forfeited
Nonvested at September 30, 2007
Granted
Vested
Forfeited
Nonvested at September 30, 2008
Granted
Vested
Forfeited
Nonvested at September 30, 2009

$
$
$
$
$
$
$
$
$
$
$
$
$

Weighted
Average
Grant-Date
Fair Value
1.74
2.03
1.75
1.52
1.87
3.61
1.75
2.29
2.89
3.54
2.52
3.61
3.25

As of September 30, 2009, there was $645,758 of total unrecognized compensation cost, net of estimated
forfeitures, related to nonvested share-based compensation arrangements, which is expected to be recognized
over a weighted-average period of 1.7 years. The total fair value of shares vested during the years ended
September 30, 2009, 2008 and 2007 was $232,687, $65,417 and $224,609, respectively.

42

NOTE 6. Shareholder Rights Plan
On November 14, 2001, the Company’s Board of Directors adopted a Shareholder Rights Plan, which
declared a dividend of one Common Stock Purchase Right (a Right) for each outstanding share of
common stock of the Company to shareholders of record on December 21, 2001. Each Right entitles the
holder to purchase from the Company one share of common stock at a purchase price of $15 per share. In
the event of the acquisition of or tender offer for 20% or more of the Company’s outstanding common
stock by certain persons or group without the Board of Directors’ consent, such purchase price will be
adjusted to equal fifty percent of the average market price of the Company’s common stock for a period
of thirty consecutive trading days immediately prior to the event. Until the Rights become exercisable,
they have no dilutive effect on the Company’s earnings per share.
The Rights, which are non-voting and exercisable until November 30, 2011, can be redeemed by the
Company in whole at a price of $.001 per Right at any time prior to the acquisition by certain persons or
group of 50% of the Company’s common stock. Separate certificates for the Rights will not be distributed,
nor will the Rights be exercisable, until either (i) a person or group acquires beneficial ownership of 20% or
more of the Company’s common stock or (ii) the tenth day after the commencement of a tender or exchange
offer for 20% or more of the Company’s common stock. Following an acquisition of 20% or more of the
Company’s common shares, each Right holder, except for the 20% or more stockholder, can exercise their
Right(s), unless the 20% or more stockholder has offered to acquire all of the outstanding shares of the
Company under terms that a majority of the independent Directors of the Company have determined to be fair
and in the best interest of the Company and its stockholders.
NOTE 7. Earnings Per Share
The following table provides the components of the basic and diluted earnings per share (EPS)
computations:
2008

2009

2007

Basic EPS Computation
Net income

$ 2,016,641

$ 2,839,011

$ 7,886,282

4,626,230

4,781,103

4,719,444

Weighted average shares outstanding
Basic income per share

$

.44

$

.59

$

1.67

Basic and Diluted EPS Computation
Net income

$ 2,016,641

$ 2,839,011

$ 7,886,282

4,626,230
79,038
24,697
4,729,965

4,781,103
141,860
23,574
4,946,537

4,719,444
202,658
31,156
4,953,258

Weighted average shares outstanding
Stock options
Stock compensation arrangements
Diluted shares outstanding
Diluted income per share

$

.43

$

.57

$

1.59

NOTE 8. Commitments and Contingencies
The Company leases vehicles and occupies certain facilities under operating leases that expire at various
dates through 2013. The leases, which cover periods from three to eight years, generally provide for
renewal options at specified rental amounts. The aggregate operating lease commitment at September 30,
2009 was $943,000 with minimum rentals for the fiscal years shown as follows: 2010 - $537,000; 2011 $255,000; 2012 - $85,000; and 2013 - $66,000.
43

The Company is a party to employment agreements with certain of its officers that provide for, among
other things, the payment of compensation if there is a change in control without Board of Director
approval (as defined in the agreements). The contingent liability under such change in control provisions
at September 30, 2009 would have been approximately $2.4 million. Certain of the Company’s
employment agreements with its officers provide for a severance/retirement benefit upon certain
occurrences or at a specified date of retirement, absent a change in control, aggregating $1.4 million at
September 30, 2009. The Company is amortizing such obligation to expense on the straight-line method
through the specified dates of retirement. Such expense amounted to approximately $207,000 and
$128,000 in fiscal 2009 and 2008, respectively.
The Company has agreements with certain of its officers to provide a deferred compensation benefit in
the form of 33,251 shares of common stock currently held by the Company in treasury. Such shares vest
upon retirement or earlier under certain occurrences including death, involuntary termination or a change
in control of the Company. The market value of such shares approximated $123,000 at the dates of grant,
which is being amortized on the straight-line method through the specified dates of retirement.
NOTE 9. Litigation
The Company is one of several defendants in a patent infringement suit commenced by Lectrolarm
Custom Systems, Inc. in May 2003 in the United States District Court for the Western District of
Tennessee. The alleged infringement by the Company relates to its camera dome systems and other
products that represent significant sales to the Company. Among other things, the suit seeks past and
enhanced damages, injunctive relief and attorney’s fees. In January 2006, the Company received the
plaintiff’s claim for past damages through December 31, 2005 that approximated $11.7 million plus prejudgment interest. The Company and its outside patent counsel believe that the complaint against the
Company is without merit. The Company is vigorously defending itself and is a party to a joint defense
with certain other named defendants.
In January 2005, the Company petitioned the U.S. Patent and Trademark Office (USPTO) to reexamine
the plaintiff’s patent, believing it to be invalid. In April 2006, the USPTO issued a non-final office action
rejecting all of the plaintiff’s patent claims asserted against the Company citing the existence of prior art
of the Company and another defendant. On June 30, 2006, the Federal District Court granted the
defendants’ motion for continuance (delay) of the trial, pending the outcome of the USPTO’s
reexamination proceedings. In February 2007, the USPTO issued a Final Rejection of the six claims in
the plaintiff’s patent asserted against the Company, which was reaffirmed in June 2007 after the plaintiff
filed a response with the USPTO requesting reconsideration of its Final Rejection. The plaintiff has
appealed the examiner’s decision to the USPTO Board of Patent Appeals and Interferences and has an
additional appeal available to it thereafter in the Court of Appeals for the Federal Circuit.
The Company is unable to reasonably estimate a range of possible loss, if any, at this time. Although the
Company has received favorable rulings from the USPTO with respect to the reexamination proceedings,
there is always the possibility that the plaintiff’s patent claims could be upheld in appeal and the matter
would proceed to trial. Should this occur and the Company receives an unfavorable outcome at trial, it
could result in a liability that is material to the Company’s results of operations and financial position.
In the normal course of business, the Company is a party to certain other claims and litigation. Management
believes that the settlement of such claims and litigation, considered in the aggregate, will not have a
material adverse effect on the Company’s financial position and results of operations.
NOTE 10. Related Party Transactions
As of September 30, 2009, CBC Co., Ltd. and affiliates (“CBC”) owned approximately 11.8% of the
Company’s outstanding common stock. The Company, which has been conducting business with CBC
since 1979, imports certain finished products and components through CBC and also sells its products to
CBC. The Company purchased approximately $227,000, $448,000 and $362,000 of products and
components from CBC in fiscal years 2009, 2008, and 2007, respectively, and the Company sold
$30,000, $53,000 and $163,000 of products to CBC for distribution in fiscal years 2009, 2008, and 2007,
44

respectively. At September 30, 2009 and 2008, the Company owed $17,000 and $133,000, respectively,
to CBC and CBC owed $1,000 and $2,000, respectively, to the Company resulting from purchases and
sales of products.
NOTE 11: Recent Accounting Pronouncements
In September 2006, the FASB issued ASC 820 (Statement of Financial Accounting Standards (SFAS)
No. 157, “Fair Value Measurement”), which defines fair value, establishes a framework for measuring
fair value and expands disclosures regarding assets and liabilities measured at fair value, which was
amended in February 2008. The adoption of the provisions related to financial assets and financial
liabilities were effective for the Company’s first quarter of fiscal 2009 and did not have a material impact
on its consolidated financial position, results of operations or cash flows. The Company does not expect
that the adoption of the remaining provisions of ASC 820 will have a material impact on its consolidated
financial position, results of operations or cash flows.
In December 2007, the FASB issued ASC 805 (SFAS 141 and SFAS 141R, “Business Combinations”).
ASC 805 will significantly change the accounting for business combinations in a number of areas
including the treatment of contingent consideration, contingencies, acquisition costs, IPR&D and
restructuring costs. In addition, under ASC 805, changes in deferred tax asset valuation allowances and
acquired income tax uncertainties in a business combination after the measurement period will impact
income tax expense. ASC 805 is effective for fiscal years beginning after December 15, 2008. The
Company has not yet evaluated the impact, if any, of adopting this pronouncement.
In December 2007, the FASB issued ASC 810 (SFAS 160, “Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB No. 51” (“SFAS 160”)). ASC 810 will change the
accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests
(NCI) and classified as a component of equity. This new consolidation method will significantly change
the accounting for transactions with minority interest holders. ASC 810 is effective for fiscal years
beginning after December 15, 2008. The Company has not yet evaluated the impact, if any, of adopting
this pronouncement.
In October 2009, the FASB amended ASC 985-605 (Statement of Position 97-2, “Software Revenue
Recognition”) to provide new guidance on accounting for revenue arrangements that include tangible
products containing software and non-software components that function together to deliver the product’s
essential functionality. These amendments become effective on a prospective basis for fiscal years
beginning after June 15, 2010, although early adoption is permitted. The Company has not yet evaluated
the impact, if any, of adopting this pronouncement.

45

NOTE 12. Quarterly Financial Data (unaudited)
Earnings Per Share
Quarter
Ended

Net Sales

Gross Profit

Fiscal 2009
December
March
June
September
Total

$ 15,700,000
14,707,000
14,754,000
15,284,000
$ 60,445,000

$

7,147,000
6,557,000
6,513,000
7,076,000
$ 27,293,000

$

Fiscal 2008
December
March
June
September
Total

$ 15,643,000
15,335,000
16,027,000
19,906,000
$ 66,911,000

$

$

6,927,000
6,797,000
7,268,000
9,430,000
$ 30,422,000

Net
Income
$

$

508,000
390,000
474,000
645,000
2,017,000

345,000
206,000
528,000
1,760,000
2,839,000

Basic
$

$

$

$

.11
.08
.10
.14
.44

.07
.04
.11
.37
.59

Diluted
$

$

$

$

The Company has not declared or paid cash dividends on its common stock for any of the foregoing
periods.
Because of changes in the number of common shares outstanding and market price fluctuations affecting
outstanding stock options, the sum of quarterly earnings per share may not equal the earnings per share
for the full year.

46

.11
.08
.10
.14
.43

.07
.04
.11
.36
.57

SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
VICON INDUSTRIES, INC.
By /s/ Kenneth M. Darby
Kenneth M. Darby
Chairman and
Chief Executive Officer
(Principal Executive Officer)

By /s/ John M. Badke
John M. Badke
Senior Vice President, Finance
and Chief Financial Officer
(Principal Financial and Accounting Officer)

December 29, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below
by the following persons in the capacities and on the dates indicated:
VICON INDUSTRIES, INC.
/s/ Kenneth M. Darby
Kenneth M. Darby

Chairman and CEO

December 29, 2009
Date

/s/ Peter F. Neumann
Peter F. Neumann

Director

December 29, 2009
Date

/s/ Bernard F. Reynolds
Bernard F. Reynolds

Director

December 29, 2009
Date

/s/ W. Gregory Robertson
W. Gregory Robertson

Director

December 29, 2009
Date

/s/ Arthur D. Roche
Arthur D. Roche

Director

December 29, 2009
Date

47

Corporate Directory

Officers

Directors

Corporate Headquarters

Kenneth M. Darby
President and CEO

Kenneth M. Darby
Chairman

89 Arkay Drive
Hauppauge, NY 11788
(631) 952-CCTV (2288)

John M. Badke
Senior Vice President, Finance and
Chief Financial Officer

Peter F. Neumann
Retired President
Flynn-Neumann Agency, Inc.

Yigal Abiri
General Manager, Vicon Systems Ltd.
Peter A. Horn
Vice President, Operations

Bernard F. Reynolds
Retired President
Aon Consulting,
Human Resources
Outsourcing Group

Frank L. Jacovino
Vice President, Technology
and Development

W. Gregory Robertson
Chairman
TM Capital Corp.

Bret M. McGowan
Vice President, Sales

Arthur D. Roche
Retired Executive Vice President
Vicon Industries, Inc.
Retired Partner
Arthur Andersen & Co.

Mark S. Provinsal
Vice President, Marketing and Product
Management
Christopher J. Wall
Managing Director, Vicon Industries Ltd.

Principal Offices
Hauppauge, New York
Fareham, England
Neumunster, Germany
Yavne, Israel
Subsidiaries
Vicon Industries Ltd.
Vicon Systems Ltd.
Transfer Agent
Computershare Trust Company, N.A.
250 Royall Street
Canton, MA 02021
www.computershare.com
Bank
Citibank, N.A.
150 Motor Parkway
Hauppauge, NY 11788
General Counsel
Schoeman, Updike & Kaufman LLP
60 East 42nd Street
New York, NY 10165
Auditor
BDO Seidman, LLP
401 Broadhollow Road
Melville, New York, 11747

Vicon and its logo are registered trademarks of Vicon Industries, Inc. Copyright© 2010 Vicon Industries, Inc.
All rights reserved.



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