EXHIBIT 99.1
[LOGO OF TII NETWORK TECHNOLOGIES]
CONTACTS:
Kenneth A. Paladino, CFO Van Negris / Lexi Terrero
TII Network Technologies, Inc. Van Negris & Company, Inc.
(631) 789-5000 (212) 759-0290
FOR IMMEDIATE RELEASE
TII NETWORK TECHNOLOGIES REPORTS FISCAL 2006 FIRST QUARTER RESULTS;
SEQUENTIAL SALES AND EARNINGS IMPROVEMENT
COPIAGUE, NY - NOVEMBER 9, 2005 - TII Network Technologies, Inc. (Nasdaq: TIII),
a leading provider of telecommunications network protection and management
products, today announced its results of operations for the first quarter of
fiscal 2006 ended September 30, 2005.
Net sales for the first quarter of fiscal 2006 were $11.0 million compared to
$7.0 million for the comparative prior year period, an increase of approximately
$4.1 million or 58.7%. The sharp increase was primarily due to the occurrence of
two specific events during the quarter: the receiving of initial stocking orders
for the expanded general supply agreement with the Company's largest customer
and the benefit of having one additional week to ship product as a result of a
fourteen week quarter compared to the typical thirteen weeks. In addition to
these events, the Company also benefited from increased shipments to existing
and new customers of recently introduced products, including DSL and VoIP
products, increased demand from the expanded general supply agreement discussed
above, and the ordering of product by certain customers in anticipation of its
need due to damage from the recent hurricanes. The increase in sales was
partially offset by the continuing reduction in the number of telephone access
lines being deployed due to competing technologies.
Gross profit for the first quarter of fiscal 2006 was $3.8 million compared to
$2.1 million for the comparable prior year period, an increase of $1.6 million
or 76.8%, and gross profit margins for those quarters increased to 34.2% from
30.7%, respectively. The higher gross profit levels and margin are primarily due
to the higher sales levels.
Net earnings for the first quarter of fiscal 2006 were $1.5 million or $0.12 per
diluted share, compared to net earnings of $597,000 or $0.05 per diluted share
in the year ago quarter.
Timothy J. Roach, President and Chief Executive Officer, stated: "Our strong
fiscal 2006 first quarter results reflect both a confirmation of our strategic
focus and several events occurring during the same quarter, as discussed above.
While we do not expect sales to continue at this level for the balance of the
fiscal year, we are pleased with the sales of the DSL and VoIP products and are
confident of the Company's continued strong performance during fiscal 2006.
"One of our successful strategic focuses over the last fiscal year has been our
development and introduction of products into the emerging market areas of
Telcos and MSOs (multi system operators). We are particularly pleased with the
acceptance of these products and expect them to continue their strong
performance during the fiscal year. A second strategic objective is to diversify
and expand our products beyond our historic focus. In October of 2006, we made
additional investments related to our new multi-service residential gateway
system. We believe the market for this product line is strong, particularly with
our current Telco and MSO customer base. As a result, we plan to significantly
increase our R&D and marketing expenditures related to this product line in
order to complete its development and late fiscal 2006 market introduction.
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TII NETWORK TECHNOLOGIES, INC.
November 9, 2005
Page Two
"Looking ahead to the rest of fiscal 2006, we will continue to leverage our
primary competitive advantage of providing the highest-quality products, with
cost-effective performance and innovative features that meet changing market
needs."
ABOUT TII NETWORK TECHNOLOGIES, INC.
TII is a proven technology leader specializing in providing the communications
industry with innovative network protection and management products, including
station protectors, network interface devices, DSL protectors, filters and
splitters, power and data-line and home networking protectors and a
multi-service residential gateway, as well as creative, custom design solutions
to meet customers' individual requirements.
Certain statements in this Report 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 the Company's 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 the Company's actual results,
performance or achievements to differ materially from those described or implied
in the forward-looking statements. These factors include, but are not limited
to: exposure to increases in the cost of the Company's products, including
increases in the cost of the Company's petroleum-based plastic products; the
Company's dependence for products and product components on Pacific Rim contract
manufacturers, including on-time delivery, quality and exposure to changes in
cost and changes in the valuation of the Chinese Yuan; dependence on, and
ability to retain, its "as-ordered" general supply agreements with its largest
three customers and win new contracts; continued dependence on the traditional
copper-based Telco market which has been declining over the last several years
due principally to the impact of alternate technologies and competition from
multi-system operators; the ability of the Company to market and sell products
to new markets beyond its principal market - the copper-based Telco market; the
Company's ability to timely develop products and adapt its existing products to
address technological changes, including changes in its principal market; the
potential for the disruption of shipments as a result of, among other things,
third party labor disputes and political unrest in or shipping disruptions from
countries in which the Company's contract manufacturers produce the Company's
products; weather and similar conditions, particularly the effect of
hurricanes/typhoons on the Company's manufacturing, assembly and warehouse
facilities in Puerto Rico or the Pacific Rim; competition in the Company's
traditional Telco market and new markets the Company is seeking to penetrate;
potential changes in customers' spending and purchasing policies and practices;
general economic and business conditions, especially as they pertain to the
Telco industry; dependence on third parties for product development; risks
inherent in new product development and sales, such as start-up delays and
uncertainty of customer acceptance; the Company's ability to attract and retain
technologically qualified personnel; the Company's ability to fulfill its growth
strategies; the level of inventories maintained by the Company's customers; the
Company's ability to maintain listing of its Common Stock on the Nasdaq SmallCap
market; the availability of financing on satisfactory terms.
-- more --
-- STATISTICAL TABLES FOLLOW --
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TII NETWORK TECHNOLOGIES, INC.
November 9, 2005
Page Three
TII NETWORK TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three months ended
----------------------
September 30, September 24,
2005 2004
-------- --------
(Unaudited)
Net sales $ 11,033 $ 6,952
Cost of sales 7,259 4,817
-------- --------
Gross profit 3,774 2,135
-------- --------
Operating expenses:
Selling, general and administrative 1,860 1,244
Research and development 378 291
-------- --------
Total operating expenses 2,238 1,535
-------- --------
Operating income 1,536 600
Interest expense (2) (2)
Interest income 33 14
Other expense (1) (3)
-------- --------
Earnings before income taxes 1,566 609
Provision for income taxes 49 12
-------- --------
Net earnings $ 1,517 $ 597
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Net earnings per common share:
Basic $ .12 $ .05
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Diluted $ .12 $ .05
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Weighted average common shares outstanding:
Basic 12,202 11,908
Diluted 12,733 12,474
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TII NETWORK TECHNOLOGIES, INC.
November 9, 2005
Page Four
TII NETWORK TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
September 30, June 24,
2005 2005
-------- --------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 4,717 $ 4,529
Accounts receivable, net of allowance for doubtful accounts of
$100,000 at September 30, 2005 and June 24, 2005 4,631 3,906
Inventories 8,368 8,899
Prepaid expenses and other current assets 402 404
-------- --------
Total current assets 18,118 17,738
Property, plant and equipment, net 4,097 4,229
Other assets 173 182
-------- --------
TOTAL ASSETS $ 22,388 $ 22,149
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,404 $ 3,733
Accrued liabilities 1,573 1,563
-------- --------
Total current liabilities 3,977 5,296
-------- --------
Commitments and contingencies
Stockholders' Equity:
Preferred stock, par value $1.00 per share; 1,000,000 shares authorized;
Series D Junior Participating, no shares
outstanding - -
Common stock, par value $.01 per share; 30,000,000 shares
authorized; 12,276,233 shares issued and 12,258,596 shares
outstanding as of September 30, 2005; and 12,178,733 shares issued and
12,161,096 shares outstanding as of June 24, 2005 123 122
Additional paid-in capital 38,029 37,989
Accumulated deficit (19,460) (20,977)
-------- --------
18,692 17,134
Less: Treasury shares, at cost, 17,637 common shares at
September 30, 2005 and June 24, 2005 (281) (281)
-------- --------
Total stockholders' equity 18,411 16,853
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 22,388 $ 22,149
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