EDGEWOOD, N.Y., March 30, 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 and
twelve months ended December 31, 2011.
Net sales for the three months ended December 31, 2011 were
$13,123,000 compared to $17,785,000 for the three months ended
December 31, 2010, a decrease of $4,662,000 or 26%. The decrease primarily
resulted from $5,281,000 of decreased
sales for the Porta Copper Products Division, partially offset by
sales of Tii Fiber Optics, Inc. ("Tii Fiber" formerly F2O) of
$712,000 which was acquired in March,
2011. The decrease in comparable sales for the three months
ended December 31, 2011 from the prior year three month period
was primarily due to the fulfilling in the post-acquisition 2010
period of increased orders from certain customers to replenish
inventory that had been depleted prior to our acquisition of the
Porta Copper Products Division which occurred on May 19, 2010. Net sales in 2011 were $56,258,000 compared to $54,498,000 in 2010, an increase of $1,760,000 or 3%. The sales growth for the
twelve month period was primarily due to the inclusion of sales of
Tii Fiber since its acquisition on March 11,
2011 of $2,145,000, partially
offset by decreased sales of the Porta Copper Products Division of
$1,713,000. Combined Porta
Copper Products Division and Tii Fiber sales accounted for 29% and
32% of total sales for the three and twelve month periods ended
December 31, 2011, respectively, as compared to 47% and 33% of
total sales for the three and twelve month periods ended
December 31, 2010. We do not expect sales in 2012 to Porta
Copper Products Division customers to return to the same levels as
2010.
Operating (loss) for the three months ended December 31,
2011 was ($7,719,000) compared to
operating income of $1,149,000 in the
comparable prior year period, a change of $8,868,000. The operating loss was
primarily attributable to a charge for the impairment of goodwill
of $4,101,000, a provision for excess
and obsolete inventory of $2,351,000,
a charge for accelerated depreciation for equipment taken out of
service of $849,000, and $527,000 of severance expense relating to the
termination of our former President and CEO. These expenses
amounted to $7,828,000, of which
$7,301,000 of these amounts being
non-cash charges. Operating (loss) for the year ended
December 31, 2011 was ($3,731,000) compared to operating income of
$3,537,000 in the comparable prior
year period, a decrease of $7,268,000. The decrease was
primarily a result of the charges described above.
The increases in operating expenses in 2011 over the comparable
2010 periods were primarily attributable to the goodwill impairment
charge, the severance expense and increased expense associated with
a full year of operations of the Porta Copper Products
Division.
Net (loss) for the three months ended December 31, 2011 was
($5,595,000), or ($0.40) per share, compared to net income of
$760,000, or $0.05 per diluted share, for the same prior year
period, a decrease of $6,355,000. The 2011 fourth quarter results
include a tax benefit of ($2,211,000)
compared to a tax provision of $420,000 in the same prior year period. Net
(loss) for the year ended December 31, 2011 was ($3,133,000), or ($0.23) per share, compared to net income of
$2,230,000, or $0.16 per diluted share, for the same prior year
period, a decrease in net income of $5,363,000. The results for the year ended
December 31, 2011 include a tax benefit of ($845,000) compared to a tax provision of
$1,365,000 in the same prior year
period.
Contract Renewal Award
The Company has been awarded a multi-year renewal of its
general supply contract from an existing customer to continue to
provide connectivity solutions for the service providers' network
installations. Tii will provide one of Europe's largest service providers with
products to support their ongoing network upgrades and expansion of
their broadband deployments, including LLU "Local Loop
Unbundling."
President's Remarks
Brian J. Kelley, President
and Chief Executive Officer, stated: "Over the preceding few
months, management has initiated an in-depth review of all company
operations. We focused primarily on operations and procedures,
including procurement, forecasting and inventory management.
The result of these efforts should provide an improved foundation
for meeting the increasing potential of our business. Despite our
loss from operations in 2011, we had positive cash flow from
operating activities of $4.2 million,
increasing our cash balances by $2.1
million from last year to $3.7
million at December 31, 2011.
We had stockholders' equity of $38.7
million as of December 31,
2011, down from $41 million at
December 31, 2010, as a result of the
net loss for the year."
Mr. Kelley continued "The Company continues to have multiple
prospects for long term growth. We are pursuing developing
opportunities in Mexico,
South America, Canada and Europe as well as other international markets.
Our business tends to be cyclical. As history demonstrates, this
can lead to variable results, as we respond to large customers
which often have inconsistent procurement patterns. By diversifying
into new markets, we hope to provide revenue growth through a more
diversified customer base and to do so on a continuously profitable
basis. We look forward to managing these challenges as the year
progresses."
"Finally, we are extremely pleased that we were awarded a
renewal of the general supply contract from our largest European
customer. Tii was able to quickly develop a new upgraded
connectivity solution that will meet the service provider's needs
for reducing training requirements. The new connectivity solution
incorporates functionality that will greatly reduce the
installation time, thereby reducing labor costs as well as training
time required for new technicians. This award tracks with our
strategy of diversifying our business internationally."
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.
Tii
NETWORK TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE (LOSS) INCOME
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
Three
Months Ended
December 31, (unaudited)
|
|
Years
Ended
December 31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
Net
sales
|
$
13,123
|
|
$
17,785
|
|
$
56,258
|
|
$
54,498
|
Cost of
sales
|
12,320
|
|
13,319
|
|
41,458
|
|
38,458
|
|
|
|
|
|
|
|
|
Gross
profit
|
803
|
|
4,466
|
|
14,800
|
|
16,040
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling,
general and administrative
|
3,756
|
|
2,574
|
|
11,846
|
|
10,264
|
|
Research
and development
|
665
|
|
743
|
|
2,584
|
|
2,239
|
|
Impairment
of Goodwill
|
4,101
|
|
-
|
|
4,101
|
|
-
|
Total
operating expenses
|
8,522
|
|
3,317
|
|
18,531
|
|
12,503
|
Operating
(loss) income
|
(7,719)
|
|
1,149
|
|
(3,731)
|
|
3,537
|
Foreign
currency transaction (loss) gain
|
(87)
|
|
31
|
|
(218)
|
|
48
|
Interest
income
|
-
|
|
-
|
|
-
|
|
10
|
Interest
expense
|
-
|
|
-
|
|
(29)
|
|
-
|
(Loss)
income before income taxes
|
(7,806)
|
|
1,180
|
|
(3,978)
|
|
3,595
|
Income tax
(benefit) provision
|
(2,211)
|
|
420
|
|
(845)
|
|
1,365
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
(5,595)
|
|
$
760
|
|
$
(3,133)
|
|
$
2,230
|
Foreign
currency translation adjustment
|
(57)
|
|
6
|
|
(35)
|
|
147
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income
|
$
(5,652)
|
|
$
766
|
|
$
(3,168)
|
|
$
2,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income per common share:
|
|
|
|
|
|
|
|
|
Basic
|
$
(0.40)
|
|
$
0.06
|
|
$
(0.23)
|
|
$
0.16
|
Diluted
|
$
(0.40)
|
|
$
0.05
|
|
$
(0.23)
|
|
$
0.16
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
14,019
|
|
13,723
|
|
13,878
|
|
13,677
|
|
Diluted
|
14,019
|
|
14,409
|
|
13,878
|
|
14,267
|
|
Tii NETWORK TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in
thousands, except share data)
|
|
|
|
|
|
December 31,
|
|
|
2011
|
|
2010
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
|
$
3,715
|
|
$
1,635
|
|
Accounts
receivable, net of allowance of $172 and $149 at
December 31, 2011 and 2010,
respectively
|
9,069
|
|
8,269
|
|
Other
receivable
|
16
|
|
396
|
|
Inventories
|
13,157
|
|
15,737
|
|
Deferred
tax assets, net
|
3,659
|
|
2,091
|
|
Other
current assets
|
401
|
|
463
|
|
Total current
assets
|
30,017
|
|
28,591
|
|
|
|
|
|
Property,
plant and equipment, net
|
8,186
|
|
9,350
|
Deferred
tax assets, net
|
5,741
|
|
6,460
|
Intangible
assets, net
|
2,920
|
|
2,822
|
Goodwill
|
460
|
|
4,102
|
Other
assets, net
|
-
|
|
49
|
|
Total assets
|
$
47,324
|
|
$
51,374
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
5,742
|
|
$
8,697
|
|
Accrued
liabilities
|
2,856
|
|
1,690
|
|
Total current liabilities
and total liabilities
|
8,598
|
|
10,387
|
|
|
|
|
|
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;
14,682,252
shares issued and 14,664,615 shares outstanding as of December 31,
2011,
and
14,601,322 shares issued and 14,583,685 shares outstanding as of
December 31, 2010
|
147
|
|
146
|
|
Additional
paid-in capital
|
44,718
|
|
43,812
|
|
Accumulated deficit
|
(5,970)
|
|
(2,837)
|
|
Accumulated other comprehensive income - foreign
currency translation
|
112
|
|
147
|
|
|
39,007
|
|
41,268
|
|
Less:
Treasury shares, at cost, 17,637 common shares at
December 31, 2011 and 2010
|
(281)
|
|
(281)
|
|
Total stockholders'
equity
|
38,726
|
|
40,987
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
$
47,324
|
|
$
51,374
|
|
SOURCE Tii Network Technologies, Inc.