-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gp1Fr8RtB+5+kdN6Ed9rtSqYuRK4Bvhjil4TEfI6nbe62Qy1eS6LpFlc3ntM2t5t gOrno0hSBnSdEVbM7mQtKg== 0000910680-02-000125.txt : 20020414 0000910680-02-000125.hdr.sgml : 20020414 ACCESSION NUMBER: 0000910680-02-000125 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011228 FILED AS OF DATE: 20020211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TII INDUSTRIES INC CENTRAL INDEX KEY: 0000277928 STANDARD INDUSTRIAL CLASSIFICATION: SWITCHGEAR & SWITCHBOARD APPARATUS [3613] IRS NUMBER: 660328885 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08048 FILM NUMBER: 02533673 BUSINESS ADDRESS: STREET 1: 1385 AKRON ST CITY: COPIAGUE STATE: NY ZIP: 11726 BUSINESS PHONE: 5167895000 MAIL ADDRESS: STREET 1: 1385 AKRON STREET CITY: COPIAGUE STATE: NY ZIP: 11726 10-Q 1 d780115_1.txt PERIOD ENDED: 12/28/01 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended DECEMBER 28, 2001 Commission file number 1-8048 TII NETWORK TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) State of incorporation: DELAWARE IRS Employer Identification No: 66-0328885 1385 AKRON STREET, COPIAGUE, NEW YORK 11726 (Address and zip code of principal executive office) (631) 789-5000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO __ The number of shares of the registrant's Common Stock, $.01 par value, outstanding as of February 5, 2002 was 11,682,284 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS TII NETWORK TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
December 28, 2001 June 29, 2001 -------------------- ------------------ (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 186 $ 233 Accounts receivable, net 3,821 7,190 Inventories 13,048 13,800 Other 247 109 -------- -------- Total current assets 17,302 21,332 -------- -------- Property, plant and equipment, net 7,962 8,398 Other 928 1,032 -------- -------- TOTAL ASSETS $ 26,192 $ 30,762 ======== ======== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current Liabilities Current portion of long-term debt and obligations under capital leases $ 251 $ 252 Borrowings under revolving credit facility 740 721 Accounts payable and accrued liabilities 3,193 6,112 Accrued re-alignment expenses 230 337 -------- -------- Total current liabilities 4,414 7,422 -------- -------- Long-Term Debt and Obligations Under Capital Leases 364 490 -------- -------- Series C Convertible Redeemable Preferred Stock, 1,626 shares outstanding at December 28, 2001 and June 29, 2001; liquidation preference of $1,150 per share 1,626 1,626 -------- -------- Stockholders' Investment Preferred Stock, par value $1.00 per share; 1,000,000 shares authorized; Series C Convertible Redeemable, 1,626 shares issued and outstanding at December 28, 2001 and June 29, 2001, respectively -- -- Series D Junior Participating, no shares outstanding -- -- Common Stock, par value $.01 per share; 30,000,000 shares authorized; 11,699,921 shares issued and 11,682,284 shares outstanding at December 28, 2001 and June 29, 2001, respectively 117 117 Warrants and options outstanding 369 369 Capital in excess of par value 37,122 37,122 Accumulated deficit (17,539) (16,103) -------- -------- 20,069 21,505 Less - Treasury stock, at cost; 17,637 common shares (281) (281) -------- -------- Total stockholders' investment 19,788 21,224 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 26,192 $ 30,762 ======== ========
See Notes to Consolidated Financial Statements 2 TII NETWORK TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
Three month period ended Six month period ended ------------------------ ---------------------- Dec. 28, Dec. 29, Dec. 28, Dec. 29, 2001 2000 2001 2000 ---- ---- ---- ---- (Unaudited) (Unaudited) Net sales $ 6,432 $ 10,805 $ 15,530 $ 21,315 Cost of sales 5,041 8,363 11,869 16,485 -------- -------- -------- -------- Gross profit 1,391 2,442 3,661 4,830 -------- -------- -------- -------- Operating expenses Selling, general and administrative 2,154 1,830 4,073 3,587 Research and development 426 576 987 1,174 -------- -------- -------- -------- Total operating expenses 2,580 2,406 5,060 4,761 -------- -------- -------- -------- Operating (loss) income (1,189) 36 (1,399) 69 Interest expense (12) (23) (40) (51) Interest income -- 52 1 101 Other income 2 5 2 1 -------- -------- -------- -------- Net (loss) earnings $ (1,199) $ 70 $ (1,436) $ 120 ======== ======== ======== ======== Net (loss) earnings per common share: Basic $ (0.10) $ 0.01 $ (0.12) $ 0.01 ======== ======== ======== ======== Diluted $ (0.10) $ 0.01 $ (0.12) $ 0.01 ======== ======== ======== ======== Weighted average common shares outstanding: Basic 11,682 11,682 11,682 11,682 Diluted 11,682 13,215 11,682 13,130
See Notes to Consolidated Financial Statements 3 TII NETWORK TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT (DOLLARS IN THOUSANDS) (UNAUDITED)
Warrants and Capital in Options excess of par Accumulated Common Stock Outstanding value Deficit Treasury Stock ------------ --------------- --------------- --------------- --------------- BALANCE, June 29, 2001 $ 117 $ 369 $ 37,122 $(16,103) $ (281) Net loss for the six month period ended December 28, 2001 -- -- -- (1,436) -- -------- -------- -------- -------- -------- BALANCE, December 28, 2001 $ 117 $ 369 $ 37,122 $(17,539) $ (281) ======== ======== ======== ======== ========
See Notes to Consolidated Financial Statements 4 TII NETWORK TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS)
For the six month period ended December 28, 2001 December 29, 2000 ----------------- -------------------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) earnings $(1,436) $ 120 Adjustments to reconcile net (loss) earnings to net cash provided by (used in) operating activities: Depreciation and amortization 673 888 Provision for inventory -- 198 Changes in operating assets and liabilities: Decrease (increase) in accounts receivables 3,369 (1,401) Decrease (increase) in inventories 752 (1,292) (Increase) decrease in prepaid expenses and other assets (98) 122 Decrease in accounts payable, accrued liabilities and accrued re-alignment expenses (3,025) (333) ------- ------- Net cash provided by (used in) operating activities 235 (1,698) ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures, net of dispositions (174) (562) ------- ------- Net cash used in investing activities (174) (562) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options -- 4 Payments of debt and obligations under capital leases (127) (691) Net borrowings under the revolving credit facility 19 -- ------- ------- Net cash used in financing activities (108) (687) ------- ------- Net decrease in cash and cash equivalents (47) (2,947) Cash and cash equivalents, at beginning of period 233 4,446 ------- ------- Cash and cash equivalents, at end of period $ 186 $ 1,499 ======= ======= SUPPLEMENTAL DISCLOSURE OF CASH TRANSACTIONS: Cash paid during the period for interest $ 48 $ 44
See Notes to Consolidated Financial Statements 5 TII NETWORK TECHNOLOGIES, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - INTERIM FINANCIAL STATEMENTS: The unaudited interim consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and in accordance with the instructions to Form 10-Q and Regulation S-X pertaining to interim financial statements. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments and accruals which, in the opinion of management, are considered necessary for a fair presentation of the Company's financial position and results of operations and cash flows for the interim periods presented. The consolidated financial statements should be read in conjunction with the summary of significant accounting policies and notes to consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended June 29, 2001. Results of operations for interim periods are not necessarily indicative of the results that may be expected for the full fiscal year. For the six-month period ended December 28, 2001 and December 29, 2000, respectively, comprehensive income (loss) equaled net earnings (loss). NOTE 2 - FISCAL YEAR: The Company reports on a 52-53 week fiscal year ending on the last Friday in June, with fiscal quarters ending on the last Friday of each calendar quarter. The Company's fiscal year ending June 28, 2002 will contain 52 weeks. Fiscal 2001 had 52 weeks. NOTE 3 - NET (LOSS) EARNINGS PER COMMON SHARE: Basic net (loss) earnings per common share is computed using the weighted average number of shares outstanding during the period. Diluted net earnings per common share is computed using the weighted average number of shares outstanding adjusted for dilutive incremental shares attributed to outstanding stock warrants and options to purchase common stock and preferred stock convertible into common stock. The following table sets forth the computation of basic and diluted earnings per share:
For the three month period ended For the six month period ended Dec. 28, Dec. 29, Dec. 28, Dec. 29, 2001 2000 2001 2000 ---------------- ------------- ------------- ----------- (in thousands) Numerator for diluted calculation: Net (loss) earnings $ (1,199) $ 70 $ (1,436) $ 120 ======== ======== ======== ======== Denominator: Weighted average common shares outstanding 11,682 11,682 11,682 11,682 Dilutive effect of stock warrants and options -- 28 -- 299 Dilutive effect of conversion of Series C Convertible Redeemable Preferred Stock -- 1 ,505 -- 1,149 -------- -------- -------- -------- Denominator for diluted calculation 11,682 13,215 11,682 13,130 ======== ======== ======== ========
6 Stock warrants and options to purchase approximately 6.1 million shares of common stock and approximately 2.5 million equivalent common shares related to the Series C Convertible Redeemable Preferred Stock for the six month period ended December 28, 2001 were outstanding but not included in the computation of diluted net earnings per common share since their inclusion would be antidilutive. NOTE 4 - INVENTORIES: Inventories consisted of the following major classifications: December 28, June 29, 2001 2001 ----------------- -------------- (in thousands) Raw materials and subassemblies $ 3,008 $ 3,967 Work in process 2,251 2,649 Finished goods 8,429 7,824 -------- -------- 13,688 14,440 Less: allowance for obsolescence (640) (640) -------- -------- $ 13,048 $ 13,800 ======== ======== NOTE 5 - OPERATIONS RE-ALIGNMENT: In the third quarter of fiscal 2001, as part of management's continuing strategy to improve profit margins by finding cost-effective ways of producing its products, and also as a result of the successes under a fiscal 1999 re-alignment plan, management committed to a plan to further re-align its operations. A key element of this 2001 plan was the expansion of the Company's outsourcing strategy with contract manufacturers to produce a substantial portion of the remaining components and subassemblies that the Company was still manufacturing. Included in this plan, were additional workforce and production facility reductions, the assessment of future usage and recoverability of certain inventories and manufacturing machinery, equipment and leasehold improvements as certain manufacturing activities conducted in Puerto Rico were outsourced and products were eliminated, and other cost saving measures. Accordingly, during the third quarter of fiscal 2001, the Company recorded a net re-alignment of operations charge on the Consolidated Statement of Operations of approximately $6.1 million, including an inventory write-down of approximately $2.7 million and net of a reversal of a remaining reserve of $96,000 from a fiscal 1999 re-alignment charge. The components of the remaining balance of this charge as of June 29, 2001, the corresponding cash activity in the six month period ended December 28, 2001 and the remaining reserve balances are reflected in "Accrued re-alignment expenses" in the accompanying Consolidated Balance Sheets, as follows: Employee Termination Manufacturing Benefits Space Total ------------ ------------- -------- Balance, June 29, 2001 $ 76,000 $ 261,000 $ 337,000 Cash payments during fiscal 2002 (76,000) (31,000) (107,000) --------- --------- --------- Balance, December 28, 2001 $ -- $ 230,000 $ 230,000 ========= ========= ========= 7 NOTE 6 - INCOME TAXES: The Company's policy is to provide for income taxes based on reported income, adjusted for differences that are not expected to enter into the computation of taxes under applicable tax laws. The Company has certain exemptions available until January 2009 for Puerto Rico income tax and Puerto Rico property tax purposes and the Company also has net operating loss carryforwards available through fiscal 2006. In addition, the Company, in its US subsidiaries, has net operating loss carryforwards that expire periodically through 2020, and general business tax credit carryforwards that expire periodically through 2012. Temporary differences between income tax and financial reporting assets and liabilities (primarily inventory valuation allowances, property and equipment and accrued employee benefits) and net operating loss carryforwards give rise to deferred tax assets for which a full (100%) offsetting valuation allowance has been provided due to the uncertainty of realizing any benefit in the future. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the foregoing consolidated financial statements and notes thereto. RESULTS OF OPERATIONS Net sales for the second quarter of fiscal 2002 were $6.43 million compared to $10.81 million for the comparable prior year period, a decrease of approximately $4.37 million or 40.5 percent. Net sales for the first six months of fiscal 2002 were $15.53 million compared to $21.32 million for the similar prior year period, a decrease of approximately $5.79 million or 27.1 percent. The decreases were primarily due to the continuing telecommunications industry-wide slowdown, cutbacks by telecommunications' service providers in their construction and maintenance budgets, actions taken by service providers to reduce inventory levels and a reduction in the number of telephone access lines per subscriber being deployed. Though the slowdown accelerated in the fiscal second quarter, management believes third quarter revenues should not decline further and that revenues should begin to increase in the fiscal fourth quarter. Gross profit for the second quarter of fiscal 2002 was $1.39 million compared to $2.44 million for the comparable prior year period, a decrease of approximately $1.05 million or 43.0 percent, while gross profit margins were 21.6 percent and 22.6 percent for the second quarters of fiscal 2002 and 2001, respectively. The lower gross profit margin for the fiscal 2002 second quarter was primarily due to the lower comparable sales level and the resulting effect on the Company's ability to absorb fixed and semi-variable overhead costs. Gross profit for the first six months of fiscal 2002 was $3.66 million compared to $4.83 million for the same prior year period, a decrease of approximately $1.17 million or 24.2 percent, while gross profit margins for the first half of fiscal 2002 and 2001, respectively, were 23.6 percent and 22.7 percent, respectively. The lower gross profit for the fiscal 2002 second quarter and six month period was primarily due to the lower comparable sales level. The improved gross profit margin for the fiscal 2002 six month period was due to the success of the Company's operations re-alignments, outsourcing strategy and an increased level of sales of technologically advanced higher margin products, partially offset by the effect of the fiscal 2002 second quarter lower gross profit margin, discussed above. 8 Selling, general and administrative expenses for the second quarter of fiscal 2002 were $2.15 million compared to $1.83 million for the comparable prior year period, an increase of approximately $.32 million or 17.7 percent. For the six month periods ended December 28, 2001 and December 29, 2000, these expenses were $4.07 million and $3.59 million, respectively, an increase over the comparable fiscal 2001 period of approximately $.49 million or 13.5 percent. The increases were principally due to increased marketing expenses related to the introduction and promotion of the Company's new Digital Closet product line. Research and development expenses for the second quarter of fiscal 2002 were $.42 million compared to $.58 million for the comparable prior year period, a decrease of approximately $.15 million or 26.0 percent. For the six month period ended December 28, 2001, research and development expenses decreased by $.18 million or 15.9 percent to $.99 million from $1.17 million for the six month period ended December 29, 2000. While the Company continues to invest in new product development, it has been able to reduce its direct outlays through the use of collaborative engineering efforts with its contract manufacturers. Interest expense for the second quarter and first six months of fiscal 2002 decreased by $11,000 to $12,000 and by $11,000 to $40,000 in the second quarter and first six month period of fiscal 2002. The declines were due to decreased borrowings during the second quarter of fiscal 2002 and lower interest rates throughout the periods under the Company's credit facility. There was no interest income for the second quarter of fiscal 2002 and only $1,000 for the first six months compared to $52,000 and $101,000 in the second quarter and first six months of fiscal 2001. The declines were due to reduced average cash and cash equivalents balances. The net loss for the second quarter and first six months of fiscal 2002 were $1.2 million and $1.4 million, respectively, compared to net earnings in the comparable prior fiscal 2001 similar periods of $70,000 and $120,000. LIQUIDITY AND CAPITAL RESOURCES The Company's cash and cash equivalents balance was $186,000 at December 28, 2001 compared to $233,000 at the end of fiscal 2001, a reduction of approximately $47,000, while working capital was approximately $12.9 million at December 28, 2001 compared to $13.9 million at the end of fiscal 2001. During the first six months of fiscal 2002, $235,000 of cash was provided by operations due to a reduction in receivables of $3.37 million and inventories of $752,000, offset, in large part, by the Company's loss (net of depreciation and amortization) and decreases in accounts payable, accrued liabilities and accrued re-alignment expenses aggregating $3.0 million. Investing activities used $174,000 for capital expenditures and financing activities used $108,000 for debt repayments. Although the Company has no current commitments for capital expenditures, it expects to purchase new equipment and incur leasehold improvements in the normal course of business, subject to the maximum amount permitted under its revolving credit facility discussed below. Each of the Company and the holders of the 1,626 outstanding shares of the Company's Series C Preferred Stock have the right to require conversion of the Preferred Stock into Company Common 9 Stock. Additionally, the holders of the Preferred Stock could require the Company to redeem all or a portion of the Preferred Stock at a price that presently would equal $1,150 per share (an aggregate of $1,869,900) under certain circumstances including, among other things, if the Company fails to maintain its listing on the Nasdaq National Market (the Company presently is not in compliance with that market's minimum market price listing maintenance requirement) or obtain listing of its Common Stock on the American Stock Exchange even though the Company's Common Stock is traded on another market. The Company has a credit facility ("Credit Facility"), consisting of a $6.0 million revolving credit facility and a term loan. The revolving credit facility enables the Company to have up to $6.0 million of revolving credit loans outstanding at any one time, limited by a borrowing base equal to 85 percent of the eligible accounts receivable and 50 percent of the eligible inventory, subject to certain reserves. Subject to extension in certain instances, the scheduled maturity date of revolving credit loans is April 30, 2003, while the term loan is to be repaid through March 31, 2003, subject to mandatory repayments from asset disposition proceeds and insurance proceeds in certain circumstances. As of December 28, 2001, $569,000 was outstanding under the term loan and $740,000 was outstanding under the revolving credit facility. The Company is in compliance with the covenants and terms of the Credit Facility. The Credit Facility requires the Company to maintain a minimum tangible net worth, which includes the value of outstanding Series C Redeemable Preferred Stock, of at least $19.5 million. If losses continue, the Company may cease to be in compliance with the tangible net worth covenant. In that event, if the Company is unable to obtain a waiver or amendment of the covenant, the Company may be unable to borrow under the Credit Facility and may have to repay all loans then outstanding under the Credit Facility. Funds anticipated to be generated from operations, together with available cash and borrowings under the Credit Facility, are considered to be adequate to finance the Company's operational and capital needs for the foreseeable future. If the slowdown in the telecommunications industry continues for an extended period of time, the Company will most likely need to seek additional capital to support its operations. FORWARD-LOOKING This Report contains and, from time to time, other reports and oral or written statements issued by the Company or on its behalf by its officers may contain forward-looking statements concerning, among other things, the Company's future plans and objectives that are or may be deemed to be forward-looking statements. Such 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, general economic and business conditions, including the regulatory environment applicable to the communications industry; weather and similar conditions; competition; potential technological changes, including the Company's ability to timely develop new products and adapt its existing products to technological changes; potential changes in customer spending and purchasing policies and practices; the level of inventories maintained by the Company's customers; loss or disruption of sales to major customers as a result of, among other things, third party labor disputes and shipping disruptions from countries in which the Company's contract manufacturers produce the Company's products; Company's ability to market its existing, recently developed and new products and retain and win contracts; risks inherent in new product introductions, such as start-up delays and uncertainty of 10 customer acceptance; dependence on third parties for products and product components; the Company's ability to maintain its relationship with or reduce its dependence upon its principal contract manufacturer which is an affiliate of a customer; the Company's ability to attract and retain technologically qualified personnel; the Company's ability to fulfill its growth strategies; the Company's ability to maintain the listing of its Common Stock on the Nasdaq National Market; the availability of financing on satisfactory terms; and other factors discussed elsewhere in this Report and in other Company reports hereafter filed with the Securities and Exchange Commission. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risks, including changes in U.S. dollar interest rates. The interest payable under the Company's Credit Facility is principally between 250 and 275 basis points above the London Interbank Offered Rate ("LIBOR") and, therefore, affected by changes in market interest rates. Historically, the effects of movements in the market interest rates have been immaterial to the consolidated operating results of the Company. The Company requires foreign sales to be paid in for in U.S. currency and all payments to foreign suppliers are also made in U.S. currency. The Company does not purchase future contracts, options or other instruments to hedge against changes in relative values of currencies, nor does the Company use derivatives. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Company's Annual Meeting of Stockholders held on December 5, 2001, the Company's stockholders: (a) Elected the following to serve as Class I directors of the Company until the Company's Annual Meeting of Stockholders to be held in the year 2004 and until their respective successors are elected and qualified by the following votes: For Withheld C. Bruce Barksdale 9,663,457 290,566 R. Dave Garwood 9,665,770 288,253 Joseph C. Hogan 9,675,662 278,361 11 (b) Approved the Amendment to the Company's Restated Certificate of Incorporation to change the name of the Company from "TII Industries, Inc." to "TII Network Technologies, Inc." by the following votes: For Against Abstain 9,864,358 64,570 25,095 (c) Ratified the selection by the Board of Directors of Arthur Andersen LLP as the Company's independent public accountants for the Company's fiscal year ending June 28, 2002 by the following votes: For Against Abstain 9,819,339 95,368 39,316 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TII NETWORK TECHNOLOGIES, INC. Date: February 11, 2002 By: /s/ Kenneth A. Paladino --------------------------- Kenneth A. Paladino Vice President-Finance, Treasurer and Chief Financial Officer 12 -----END PRIVACY-ENHANCED MESSAGE-----