EDGEWOOD, N.Y., May 14, 2012 /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 months
ended March 31, 2012.
Net sales for the three months ended March 31, 2012 were $12,926,000 compared to $14,976,000 for the comparable prior year period,
a decrease of $2,050,000 or
13.7%. The sales decrease was primarily due to a decrease in
sales for the Porta Copper Products Division partially offset by
increased sales of core business products and increased Tii Fiber
Division sales of $520,000. Tii
Fiber is a business acquired during the end of the first quarter of
2011 and contributed $136,000 to
sales in the three months ended March 31,
2011. The Company has been advised that, beginning in about
the fourth quarter of 2012, components that it sells to a Telco
customer that support the customer's current method of deployment
will no longer be needed as an interface for its new deployment.
Sales of these components approximated $6
million in 2011. While the Company is seeking to have
the Telco substitute other of its products for the products
proposed to be discontinued, there can be no assurance that the
Company will be successful or, if it is, the degree to which it
will be successful.
Operating income for the three months ended March 31, 2012
was $173,000 compared to $1,271,000 in the comparable prior year period, a
decrease of $1,098,000 or
86.4%. The decrease was primarily attributable to the lower
level of sales and a decrease in profit margin from 30.6% in 2011
to 26.2% in 2012, resulting primarily from the lower level of sales
and a provision for excess and obsolete inventory of $643,000 in the three months ended March 31, 2012, compared to a provision of
$122,000 in the three months ended
March 31, 2011.
Net income for the three months ended March 31, 2012 was
$129,000, or $0.01 per diluted share, compared to $790,000, or $0.05
per diluted share, for the same prior year period, a decrease of
$661,000. The current quarter
results include a tax provision of $140,000 compared to a tax provision of
$423,000 in the same prior year
period.
Brian J. Kelley, President and
Chief Executive Officer, stated, "We continue to experience a
change in customer demand which has impacted sales and inventory.
Our results reflect the challenges we face as we respond to
inconsistent procurement patterns of our large customers. We
are addressing these issues with the goal of reducing our inventory
levels while also meeting our customers' needs."
About Tii Network Technologies, Inc.
Tii Network Technologies, Inc. (NASDAQ: TIII) headquartered in
Edgewood, New York, designs,
manufactures and sells products to the service providers in the
communications industry for use in their networks. Our
products are typically found in the Telco Central Office, outdoors
in the service providers' distribution network, at the interface
where the service providers' network connects to the users'
network, and inside the users' home or apartment, and are critical
to the successful delivery of voice and broadband communication
services. 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 Report, 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, including, but not limited to, the
following factors. We undertake no obligation to update any
forward-looking statement to reflect 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 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 affected 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,
our ability to receive orders under such general supply agreements
and our ability to win new contracts;
- our dependence on third parties for certain product;
- our dependence on our contract manufacturer for most of
the production of our products and for obtaining the
components needed for the production of our products;
- the potential effects of our contract manufacturer producing
most of our products in China and
Mexico, including that on-time
delivery 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;
- the availability of financing on satisfactory terms.
- 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 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 Copper
Products Division; and
- 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
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
AND
COMPREHENSIVE INCOME
(in
thousands, except per share data)
(Unaudited)
|
|
|
|
Three
months ended
March 31,
|
|
2012
|
|
2011
|
Net
sales
|
$
12,926
|
|
$
14,976
|
Cost of
sales
|
9,535
|
|
10,393
|
Gross
profit
|
3,391
|
|
4,583
|
|
|
|
|
Operating
expenses:
|
|
|
|
Selling, general and
administrative
|
2,537
|
|
2,649
|
Research and
development
|
681
|
|
663
|
Total
operating expenses
|
3,218
|
|
3,312
|
|
|
|
|
Operating
income
|
173
|
|
1,271
|
|
|
|
|
Foreign
currency transaction gain (loss)
|
96
|
|
(58)
|
|
|
|
|
Income
before income taxes
|
269
|
|
1,213
|
|
|
|
|
Income tax
provision
|
140
|
|
423
|
|
|
|
|
Net
income
|
$
129
|
|
$
790
|
|
|
|
|
Foreign
currency translation adjustment
|
81
|
|
49
|
|
|
|
|
Comprehensive income
|
$
210
|
|
$
839
|
|
|
|
|
Net income
per common share:
|
|
|
|
Basic
|
$
0.01
|
|
$
0.06
|
Diluted
|
$
0.01
|
|
$
0.05
|
|
|
|
|
Weighted
average common shares outstanding:
|
|
|
|
Basic
|
14,140
|
|
13,774
|
Diluted
|
14,474
|
|
15,027
|
Tii
NETWORK TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in
thousands, except share and per share data)
|
|
|
|
|
|
|
|
March
31,
|
|
|
|
|
2012
|
|
December 31,
|
|
|
(unaudited)
|
|
2011
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
|
$
4,368
|
|
$
3,715
|
|
Accounts
receivable, net of allowance of $156 at March 31, 2012 and
$172 at December 31, 2011
|
8,278
|
|
9,069
|
|
Other
receivable
|
9
|
|
16
|
|
Inventories
|
12,727
|
|
13,157
|
|
Deferred
tax assets, net
|
3,650
|
|
3,659
|
|
Other
current assets
|
258
|
|
401
|
|
Total current
assets
|
29,290
|
|
30,017
|
|
|
|
|
|
Property,
plant and equipment, net
|
8,187
|
|
8,186
|
Deferred
tax assets, net
|
5,706
|
|
5,741
|
Intangible
assets, net
|
2,828
|
|
2,920
|
Goodwill
|
460
|
|
460
|
|
Total assets
|
$
46,471
|
|
$
47,324
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
5,136
|
|
$
5,742
|
|
Accrued
liabilities
|
2,187
|
|
2,856
|
|
Total current liabilities
and total liabilities
|
7,323
|
|
8,598
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Preferred
stock, par value $1.00 per share; 1,000,000 shares authorized;
no shares outstanding
|
-
|
|
-
|
|
Common
stock, par value $.01 per share; 30,000,000 shares authorized;
14,882,252 shares issued and 14,864,615
shares outstanding as of
March 31, 2012, and 14,682,252 shares
issued and 14,664,615 shares
outstanding as of December 31,
2011
|
149
|
|
147
|
|
Additional
paid-in capital
|
44,928
|
|
44,718
|
|
Accumulated deficit
|
(5,841)
|
|
(5,970)
|
|
Accumulated other comprehensive income - foreign
currency translation
|
193
|
|
112
|
|
|
39,429
|
|
39,007
|
|
Less:
Treasury stock, at cost, 17,637 common shares at
March 31, 2012 and December 31,
2011
|
(281)
|
|
(281)
|
|
Total stockholders'
equity
|
39,148
|
|
38,726
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
$
46,471
|
|
$
47,324
|
|
|
|
|
|
SOURCE Tii Network Technologies, Inc.