Northern, WI 5/14/12 (StreetBeat) -- 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. (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 atwww.tiinetworktechnologies.com.
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