Tii Network Technologies Reports Fourth Quarter 2009 Results

EDGEWOOD, N.Y., March 17 /PRNewswire-FirstCall/ -- 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, 2009.  

Net sales for the three months ended December 31, 2009 were $7,734,000 compared to $7,942,000 in the comparable prior year period, a decrease of $208,000 or 2.6%, primarily due to decreases in sales of network interface device and overvoltage surge protection products, partially offset by an increase in sales of broadband products.  For the year ended December 31, 2009, net sales were $27,437,000 compared to $35,190,000 in the prior year, a decrease of $7,753,000 or 22.0%, primarily due to the economic downturn, which negatively impacted sales of our connectivity and network interface device products, and the loss of landlines by the service providers which has negatively impacted sales of our network interface device products.  The decrease in sales was partially offset by an increase in sales of our broadband products into the growing broadband market and to new customers.

Operating income for the three months ended December 31, 2009 was $521,000 compared to $154,000 in the comparable prior year period, an increase of $367,000.  Despite lower sales, the increase was attributable to a $291,000 increase in gross profit primarily due to improved margins as a result of product mix, in addition to a $76,000 reduction in operating expenses.  Operating income for the year ended December 31, 2009 was $497,000 compared to $1,362,000 in the prior year, a decrease of $865,000.  The decrease was primarily attributable to a $2,794,000 decrease in gross profit resulting from the decrease in sales, partially offset by a $1,929,000 reduction in operating expenses. The reduction in operating expenses in 2009 was primarily due to cost reduction measures implemented in 2008 and early 2009 (the largest being a decrease in salary and related benefits resulting from a decrease in headcount), a decrease in commission expense resulting from the decrease in sales and a decrease in professional and consulting fees.

Net income for the quarter ended December 31, 2009 was $154,000, or $0.01 per diluted share, compared to a net loss of $68,000, or $0.01 per diluted share, for the same prior year period, an increase of $222,000. The current quarter results include a tax provision of $372,000 compared to $219,000 in the same prior year period.  For the year ended December 31, 2009, net income was $73,000, or $0.01 per diluted share, compared to net income of $578,000, or $0.04 per diluted share, for the prior year, a decrease of $505,000.  The results for the year ended December 31, 2009 include a tax provision of $434,000 compared to $810,000 in the prior year.  Our income tax provision for each period consists of amounts necessary to align our year-to-date tax provision with the effective tax rate we expect to achieve for the full year.  That rate differs from the U.S. statutory rate primarily as a result of the non-deductibility of certain share-based compensation expense for income tax purposes that has been recognized for financial statement purposes and state taxes.

Kenneth A. Paladino, President and Chief Executive Officer, stated, "The economic decline that began in the second half of 2008 and accelerated into 2009 appears to be abating as many facets of our economy are improving.  Though confronted with a dramatic business downturn, we successfully managed our company through the worst of this recession and have emerged as a stronger company. 

We have further strengthened our balance sheet and the efficiency of our operations, and have won important market share gains.  Our improved gross margin percent compared to the third quarter reflects reduced air freight costs and for the year, our operating expenses are down eighteen percent.