EDGEWOOD, N.Y., Aug. 15, 2011 /PRNewswire/ -- Tii Network
Technologies, Inc. (Nasdaq: TIII), a leader in designing,
manufacturing and marketing network products for the communications
industry, today reported results of operations for the three and
six months ended June 30, 2011.
Net sales for the three months ended June
30, 2011 were $13,576,000
compared to $10,345,000 for the
comparable prior year period, an increase of $3,231,000 or 31%. Net sales for the six
months ended June 30, 2011 were
$28,552,000 compared to $18,088,000 in the comparable prior year period,
an increase of $10,464,000 or 58%.
The sales growth was primarily due to sales from the Company's
Porta Copper Products Division acquired on May 19, 2010, sales from the Company's F2O
acquisition on March 11, 2011, and
increased sales to existing customers. Sales from the
acquisitions were $4,485,000 and
$10,807,000 during the three and six
months ended June 30, 2011,
respectively, accounting for 81% and 85% of the total sales
increase for the three and six month period, respectively.
Operating income for the three months ended June 30, 2011 was $1,366,000 compared to $323,000 in the comparable prior year period, an
increase of $1,043,000 or 322%.
The increase was primarily attributable to a $1,133,000 increase in gross profit as a result
of the increase in sales, partially offset by a $90,000 increase in operating expenses.
Operating income for the six months ended June 30, 2011 was $2,637,000 compared to an operating income of
$1,080,000 in the comparable prior
year period, an improvement of $1,557,000. The improvement was primarily
attributable to a $2,525,000 increase
in gross profit as a result of the increase in sales, partially
offset by a $968,000 increase in
operating expenses.
Net income for the three months ended June 30, 2011 was $828,000, or $0.06
per diluted share, compared to $192,000, or $0.01
per diluted share, for the same prior year period, an increase of
$636,000. The current quarter results
include a tax provision of $491,000
compared to a tax provision of $134,000 in the same prior year period. Net
income for the six months ended June 30,
2011 was $1,618,000, or
$0.11 per diluted share, compared to
net income of $655,000, or
$0.05 per diluted share, for the same
prior year period, an increase of $963,000. The results for the six months
ended June 30, 2011 include a tax
provision of $914,000 compared to
$434,000 in the same prior year
period.
Kenneth A. Paladino, President
and Chief Executive Officer, stated, "Sales grew more than 30% over
the prior year quarter and is the primary reason for the higher net
earnings of $828,000, more than four
times the prior year period. We are also very encouraged by
the growth of our fiber optic product sales and performance of our
new division. For the six-month comparative periods, our
fiber product sales have tripled and represent our fastest growing
product line.
The increase in sales was primarily due to our two acquisitions,
but our historical businesses also recorded sales growth as we
continue to successfully increase our market share. The sequential
sales decline for the quarter is primarily due to certain large
customers working down their inventory positions, resulting in
lower replenishment orders. Additionally, the slowing economy is
negatively affecting sales.
The primary reason for the increase in our inventory and
associated short-term borrowings is due to the lower sequential
sales, but we believe that changes we have made in our supply chain
will result in lower inventory and borrowings for the balance of
the year.
Though the pace of the global economic decline is reason for
concern, we believe that the combination of our flexible business
model and growing position in the marketplace will enable us to
continue to report positive financial results."
About Tii Network Technologies,
Inc.
Tii Network Technologies, Inc. (NASDAQ: TIII) headquartered in
Edgewood, New York, designs,
manufactures and sells products to service providers as well as
public and private networks. Our fiber and copper products are
typically found anywhere from the central office to local premise
indoor or outdoor networks. Additional information about the
company can be found at www.tiinetworktechnologies.com.
Forward Looking Statement
Certain statements are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
When used in this release, words such as "may," "should,"
"seek," "believe," "expect," "anticipate," "estimate," "project,"
"intend," "strategy" and similar expressions are intended to
identify forward looking statements regarding events, conditions
and financial trends that may affect our future plans, operations,
business strategies, operating results and financial position.
Forward-looking statements are subject to a number of known and
unknown risks and uncertainties that could cause our actual
results, performance or achievements to differ materially from
those described or implied in the forward-looking statements as a
result of several factors. We undertake no obligation to
update any forward-looking statement to reflect future events.
Among those factors are:
- exposure to increases in the cost of our products, including
increases in the cost of our petroleum-based plastic products and
precious and semi-precious metals;
- general economic and business conditions, especially as they
pertain to the telecommunications industry;
- potential changes in customers' spending and purchasing
policies and practices, which are effected by customers' internal
budgetary allotments that have been, and may continue to be,
impacted by the current economic climate;
- pressures from customers to reduce pricing without achieving a
commensurate reduction in costs;
- our ability to market and sell products to new markets beyond
our principal copper-based telephone operating company ("Telco")
market which has been declining over the last several years, due
principally to the impact of alternate technologies;
- our ability to timely develop products and adapt our products
to address technological changes, including changes in our
principal market;
- the ability of our contract manufacturer to obtain raw
materials and components used in manufacturing our products;
- competition in our principal market and new markets into which
we have been seeking to expand;
- our dependence on, and ability to retain, our "as-ordered"
general supply agreements with certain of our principal customers
and our ability to win new contracts;
- our dependence on third parties for certain product
development;
- our dependence on products and product components from our
China and Mexico contract manufacturer, including
on-time delivery that could be interrupted as a result of third
party labor disputes, political factors or shipping disruptions,
quality control and exposure to changes in costs, including wages,
and changes in the valuation of the Chinese Yuan and Mexican
Peso;
- weather and similar conditions, including the effect of
typhoons or hurricanes on our contract manufacturer's facilities in
China and Mexico, which can disrupt production;
- the effect of hurricanes in the
United States which can affect the demand for our products
and the effect of harsh winter conditions in the United States which can temporarily
disrupt the installation of certain of our products by Telcos;
- our ability to attract and retain technologically qualified
personnel; and
- the availability of financing on satisfactory terms.
Relating to our Recent Acquisitions:
- our ability to successfully complete the integration of our
recently acquired businesses, including their products, sales
forces and employees into our business;
- our ability to retain the general supply agreements of the
acquired Porta Copper Products Division with two significant
customers;
- our ability to penetrate the markets and customers of the
acquired products with our products, and to penetrate our existing
markets with the recently acquired products;
- our ability to execute our plans with our contract manufacturer
to improve gross margins of the products of the acquired
PortaCopper Products Division;
- the stability of the Pound Sterling and Mexican Peso relative
to the U.S. dollar exchange rate.
--
Statistical Tables Follow --
|
|
|
TII NETWORK
TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(in
thousands, except share and per share data)
|
|
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Net sales
|
$ 13,576
|
|
$ 10,345
|
|
$ 28,552
|
|
$ 18,088
|
|
Cost of sales
|
8,780
|
|
6,682
|
|
19,173
|
|
11,234
|
|
Gross profit
|
4,796
|
|
3,663
|
|
9,379
|
|
6,854
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Selling, general
and administrative
|
2,803
|
|
2,853
|
|
5,452
|
|
4,902
|
|
Research and
development
|
627
|
|
487
|
|
1,290
|
|
872
|
|
Total operating
expenses
|
3,430
|
|
3,340
|
|
6,742
|
|
5,774
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
1,366
|
|
323
|
|
2,637
|
|
1,080
|
|
|
|
|
|
|
|
|
|
|
Foreign currency transaction
loss
|
(33)
|
|
-
|
|
(91)
|
|
-
|
|
Interest expense
|
(14)
|
|
-
|
|
(14)
|
|
-
|
|
Interest income
|
-
|
|
3
|
|
-
|
|
9
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
1,319
|
|
326
|
|
2,532
|
|
1,089
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
491
|
|
134
|
|
914
|
|
434
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
828
|
|
$
192
|
|
$ 1,618
|
|
$
655
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
adjustment
|
-
|
|
79
|
|
49
|
|
79
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
$
828
|
|
$
271
|
|
$ 1,667
|
|
$
734
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
Basic
|
$ 0.06
|
|
$ 0.01
|
|
$ 0.12
|
|
$ 0.05
|
|
Diluted
|
$ 0.06
|
|
$ 0.01
|
|
$ 0.11
|
|
$ 0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
13,833
|
|
13,677
|
|
13,804
|
|
13,636
|
|
Diluted
|
14,800
|
|
14,316
|
|
14,913
|
|
14,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TII NETWORK
TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in
thousands, except share and per share data)
|
|
|
|
June
30,
|
|
December
31,
|
|
|
|
2011
|
|
2010
|
|
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
1,294
|
|
$
1,635
|
|
|
Accounts receivable, net of
allowance of $160 at
June 30, 2011 and
$149 at December 31, 2010
|
9,567
|
|
8,269
|
|
|
Other receivable
|
-
|
|
396
|
|
|
Inventories, net
|
18,940
|
|
15,737
|
|
|
Deferred tax assets,
net
|
1,934
|
|
2,091
|
|
|
Other current assets
|
881
|
|
463
|
|
|
Total current
assets
|
32,616
|
|
28,591
|
|
|
|
|
|
|
|
Property, plant and equipment,
net
|
9,279
|
|
9,350
|
|
Deferred tax assets,
net
|
5,774
|
|
6,460
|
|
Intangible assets,
net
|
2,845
|
|
2,822
|
|
Goodwill
|
4,611
|
|
4,102
|
|
Other assets
|
47
|
|
49
|
|
|
Total assets
|
$
55,172
|
|
$
51,374
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
$
7,137
|
|
$
8,697
|
|
|
Accrued liabilities
|
1,968
|
|
1,690
|
|
|
Credit facility debt
|
3,000
|
|
-
|
|
|
Total current
liabilities and total liabilities
|
12,105
|
|
10,387
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Preferred stock, par value $1.00
per share; 1,000,000 shares authorized;
no shares
issued
|
-
|
|
-
|
|
|
Common stock, par value $.01 per
share; 30,000,000 shares authorized;
14,637,249 shares
issued and 14,619,612 shares outstanding as of
June 30, 2011, and
14,601,322 shares issued and 14,583,685 shares
outstanding
as of December 31,
2010
|
147
|
|
146
|
|
|
Additional paid-in
capital
|
44,224
|
|
43,812
|
|
|
Accumulated deficit
|
(1,219)
|
|
(2,837)
|
|
|
Accumulated other comprehensive
income - foreign currency translation
|
196
|
|
147
|
|
|
|
43,348
|
|
41,268
|
|
|
Less: Treasury shares, at cost,
17,637 common shares at
June 30, 2011 and
December 31, 2010
|
(281)
|
|
(281)
|
|
|
Total
stockholders' equity
|
43,067
|
|
40,987
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
55,172
|
|
$
51,374
|
|
|
|
|
|
|
SOURCE Tii Network Technologies, Inc.