EDGEWOOD, N.Y., Nov. 14, 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
nine months ended September 30, 2011.
Net sales for the three months ended September 30, 2011 were $14,583,000 compared to $18,625,000 for the comparable prior year period,
a decrease of $4,042,000 or 22%.
The decrease in comparable sales for the three months ended
September 30, 2011 from the prior
year three month period was primarily due to the filling in the
reported 2010 periods of increased orders from certain customers to
replenish inventory that had been depleted prior to our acquisition
of the Porta Copper Products Division on May
19, 2010. Net sales for the nine months ended September 30, 2011 were $43,135,000 compared to $36,713,000 in the comparable prior year period,
an increase of $6,422,000 or 18%.
The sales growth for the nine month period was primarily due
to the inclusion of sales from the Company's Porta Copper Products
Division for the full nine month period in 2011 versus only from
its May 19, 2010 date of acquisition
in 2010, the inclusion of sales from F2O since its date of
acquisition on March 11, 2011, and
increased sales to existing customers. Sales from the
acquired Porta Copper Products Division and F2O accounted for 25%
and 33% of total sales for the three and nine month periods ended
September 30, 2011, as compared to
40% and 26% of total sales for the three and nine month periods
ended September 30, 2010.
Operating income for the three months ended September 30, 2011 was $1,351,000 compared to $1,308,000 in the comparable prior year period,
an increase of $43,000 or 3%.
The increase was primarily attributable to a $145,000 decrease in operating expenses,
partially offset by a $102,000
decrease in gross profit as a result of the decrease in sales.
Operating income for the nine months ended September 30, 2011 was $3,989,000 compared to $2,388,000 in the same prior year nine month
period, an improvement of $1,601,000.
The improvement was primarily attributable to a $2,423,000 increase in gross profit as a result
of the increase in sales, partially offset by a $822,000 increase in operating expenses primarily
due to the Company's increased size resulting from the Porta Copper
Products Division acquisition.
Net income for the three months ended September 30, 2011 was $844,000, or $0.06
per diluted share, compared to $815,000, or $0.06
per diluted share, for the same prior year period, an increase of
$29,000. The current quarter
results include a tax provision of $452,000 compared to a tax provision of
$511,000 in the same prior year
period. Net income for the nine months ended September 30, 2011 was $2,463,000, or $0.17 per diluted share, compared to net income
of $1,470,000, or $0.10 per diluted share, for the same prior year
period, an increase of $993,000.
The results for the nine months ended September 30, 2011 include a tax provision of
$1,366,000 compared to $945,000 in the same prior year period.
Brian J. Kelley, Interim
President and Chief Executive Officer, stated, "Tii achieved
significant balance sheet improvements as well as revenue
improvements for the third quarter over the second quarter of 2011.
In particular:
Revenues – Sequential increase in quarterly revenues of
$1,007,000, or 7.4%, as third quarter
revenue rose to $14,583,000, up from
$13,576,000 for the second
quarter.
Operating Income - Third quarter operating income totaled
$1,351,000, which approximated second
quarter operating income of $1,366,000, reflecting increases in inventory
obsolescence, changes in product mix and product cost
increases.
Cash Flow - Cash at the end of the third quarter was
$1,170,000, after repayment of all
the Company's outstanding debt of $3,000,000.
Inventory – Inventory at September
30, 2011 was reduced to $17,468,000, down $1,472,000 from the June
30, 2011 balance of $18,940,000.
Tii continues to gain industry recognition as a 'best in class'
provider to many of the largest communication providers in the
world. We believe that market share gains can best be
achieved through an engineering focus on progressive and cost
effective product design."
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 Porta
Copper 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 per share data)
|
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September 30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Net sales
|
$
14,583
|
|
$
18,625
|
|
$
43,135
|
|
$
36,713
|
|
Cost of sales
|
9,965
|
|
13,905
|
|
29,138
|
|
25,139
|
|
Gross profit
|
4,618
|
|
4,720
|
|
13,997
|
|
11,574
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Selling, general
and administrative
|
2,638
|
|
2,788
|
|
8,089
|
|
7,690
|
|
Research and
development
|
629
|
|
624
|
|
1,919
|
|
1,496
|
|
Total operating
expenses
|
3,267
|
|
3,412
|
|
10,008
|
|
9,186
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
1,351
|
|
1,308
|
|
3,989
|
|
2,388
|
|
|
|
|
|
|
|
|
|
|
Foreign currency transaction
(loss) gain
|
(39)
|
|
18
|
|
(130)
|
|
18
|
|
Interest expense
|
(16)
|
|
-
|
|
(30)
|
|
-
|
|
Interest income
|
-
|
|
-
|
|
-
|
|
9
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
1,296
|
|
1,326
|
|
3,829
|
|
2,415
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
452
|
|
511
|
|
1,366
|
|
945
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
844
|
|
$
815
|
|
$
2,463
|
|
$
1,470
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
adjustment
|
(28)
|
|
62
|
|
21
|
|
141
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
$
816
|
|
$
877
|
|
$
2,484
|
|
$
1,611
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
0.06
|
|
$
0.06
|
|
$
0.18
|
|
$
0.11
|
|
Diluted
|
$
0.06
|
|
$
0.06
|
|
$
0.17
|
|
$
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
13,853
|
|
13,712
|
|
13,816
|
|
13,662
|
|
Diluted
|
14,662
|
|
14,361
|
|
14,825
|
|
14,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TII NETWORK
TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in
thousands, except share and per share data)
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
|
2011
|
|
2010
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
1,170
|
|
$
1,635
|
|
|
|
Accounts receivable, net of
allowance of $145 at
September 30, 2011
and $149 at December 31, 2010
|
9,129
|
|
8,269
|
|
|
|
Other receivable
|
-
|
|
396
|
|
|
|
Inventories, net
|
17,468
|
|
15,737
|
|
|
|
Deferred tax assets,
net
|
1,812
|
|
2,091
|
|
|
|
Other current assets
|
759
|
|
463
|
|
|
|
Total current
assets
|
30,338
|
|
28,591
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment,
net
|
9,310
|
|
9,350
|
|
|
Deferred tax assets,
net
|
5,558
|
|
6,460
|
|
|
Amortizable intangible assets,
net
|
2,789
|
|
2,822
|
|
|
Goodwill
|
4,611
|
|
4,102
|
|
|
Other assets
|
20
|
|
49
|
|
|
|
Total assets
|
$
52,626
|
|
$
51,374
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
$
6,574
|
|
$
8,697
|
|
|
|
Accrued liabilities
|
1,964
|
|
1,690
|
|
|
|
Total current
liabilities and total liabilities
|
8,538
|
|
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;
14,688,915 shares
issued and 14,671,278 shares outstanding as of
September 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
|
44,428
|
|
43,812
|
|
|
|
Accumulated deficit
|
(374)
|
|
(2,837)
|
|
|
|
Accumulated other comprehensive
income - foreign currency translation
|
168
|
|
147
|
|
|
|
|
44,369
|
|
41,268
|
|
|
|
Less: Treasury shares, at cost,
17,637 common shares at
September 30, 2011
and December 31, 2010
|
(281)
|
|
(281)
|
|
|
|
Total
stockholders' equity
|
44,088
|
|
40,987
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
52,626
|
|
$
51,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Tii Network Technologies, Inc.