-----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, NKDE2+6dx3V7UEbYq/NxwK/ZA/caVqtcLIazQMIfOMitRyjDF1h78m0pKc+udzc5 K27aygyhtmUaSBJ8rnvQtg== 0000910680-02-000508.txt : 20020517 0000910680-02-000508.hdr.sgml : 20020517 20020517171150 ACCESSION NUMBER: 0000910680-02-000508 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020329 FILED AS OF DATE: 20020517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TII NETWORK TECHNOLOGIES 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/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-08048 FILM NUMBER: 02656695 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 FORMER COMPANY: FORMER CONFORMED NAME: TII INDUSTRIES INC DATE OF NAME CHANGE: 19920703 10-Q/A 1 f10qa032902.txt FORM 10-Q/A - 3/29/02 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 29, 2002 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 May 3, 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)
March 29, June 29, 2002 2001 ----------- ----------- (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 90 $ 233 Accounts receivable, net 4,043 7,190 Inventories 10,427 13,800 Other 282 109 -------- -------- Total current assets 14,842 21,332 -------- -------- Property, plant and equipment, net 7,749 8,398 Other 922 1,032 -------- -------- TOTAL ASSETS $ 23,513 $ 30,762 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Current portion of long-term debt $ 536 $ 252 Borrowings under revolving credit facility -- 721 Accounts payable and accrued liabilities 2,180 6,112 Accrued re-alignment expenses 214 337 -------- -------- Total current liabilities 2,930 7,422 -------- -------- Long-term debt 17 490 -------- -------- Series C Convertible Redeemable Preferred Stock, 1,626 shares issued and outstanding at March 29, 2002 and June 29, 2001; Liquidation preference of $1,150 per share 1,626 1,626 -------- -------- Stockholders' Equity Preferred Stock, par value $1.00 per share; 1,000,000 shares authorized; Series C Convertible Redeemable, 1,626 shares issued and outstanding 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 117 117 Additional paid-in capital 37,491 37,491 Accumulated deficit (18,387) (16,103) -------- -------- 19,221 21,505 Less - Treasury stock, at cost; 17,637 common shares (281) (281) -------- -------- Total stockholders' equity 18,940 21,224 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 23,513 $ 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 months ended Nine months ended -------------------- --------------------- March 29, March 30, March 29, March 30, 2002 2001 2002 2001 -------------------- --------------------- (Unaudited) (Unaudited) Net sales $ 6,988 $ 8,228 $ 22,518 $ 29,543 Cost of sales 5,309 6,276 17,178 22,761 -------- -------- -------- -------- Gross profit 1,679 1,952 5,340 6,782 -------- -------- -------- -------- Operating expenses Selling, general and administrative 2,116 2,037 6,189 5,507 Research and development 420 775 1,407 2,066 Realignment of operations charge, net -- 6,100 -- 6,100 -------- -------- -------- -------- Total operating expenses 2,536 8,912 7,596 13,673 -------- -------- -------- -------- Operating loss (857) (6,960) (2,256) (6,891) Interest expense (15) (19) (55) (70) Interest income 1 30 2 132 Other income 23 12 25 12 -------- -------- -------- -------- Net loss $ (848) $ (6,937) $ (2,284) $ (6,817) ======== ======== ======== ======== Net loss per common share: Basic and diluted $ (0.07) $ (0.59) $ (0.20) $ (0.58) ======== ======== ======== ======== Weighted average common shares outstanding: Basic and diluted 11,682 11,682 11,682 11,682
See Notes to Consolidated Financial Statements 3 TII NETWORK TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (In thousands) (Unaudited)
Additional Common paid-in Accumulated Treasury stock capital deficit stock Total -------- ---------- ----------- -------- ------ BALANCE, June 29, 2001 $ 117 $ 37,491 $(16,103) $ (281) $ 21, 224 Net loss for the nine months ended March 29, 2002 -- -- (2,284) -- (2,284) -------- -------- -------- -------- -------- BALANCE, March 29, 2002 $ 117 $ 37,491 $(18,387) $ (281) $ 18,940 ======== ======== ======== ======== ========
See Notes to Consolidated Financial Statements 4 TII NETWORK TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
For the nine months ended March 29, March 30, 2002 2001 ----------- ---------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (2,284) $ (6,817) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 1,012 1,333 Provision for inventory -- 198 Re-alignment of operations charge, net -- 6,100 Changes in operating assets and liabilities: Accounts receivable 3,147 1,390 Inventories 3,373 (4,774) Other assets (151) 189 Accounts payable and accrued liabilities (4,055) 393 --------- --------- Net cash provided by (used in) operating activities 1,042 (1,988) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures, net of proceeds from dispositions (275) (1,271) --------- --------- Net cash used in investing activities (275) (1,271) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options -- 4 Payments of debt and obligations under capital leases (189) (756) Net repayments of borrowings under revolving credit facility (721) -- --------- --------- Net cash used in financing activities (910) (752) --------- --------- Net decrease in cash and cash equivalents (143) (4,011) Cash and cash equivalents, at beginning of period 233 4,446 --------- --------- Cash and cash equivalents, at end of period $ 90 $ 435 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH TRANSACTIONS: Cash paid during the period for interest $ 64 $ 20 ========= =========
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 notes 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. Certain reclassifications have been made to amounts reported in the prior year to conform to the fiscal 2002 presentation format. NOTE 2 - COMPREHENSIVE INCOME: For the nine-months ended March 29, 2002 and March 30, 2001, comprehensive loss equaled net loss. NOTE 3 - 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 also had 52 weeks. NOTE 4 - NET LOSS PER COMMON SHARE: Basic net loss per common share is computed using the weighted average number of common 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, when the inclusion of these potentially dilutive securities are dilutive. The following table sets forth the computation of basic and diluted earnings per share:
For the three months For the nine months ended ended -------------------- ------------------- Mar. 29, Mar. 30, Mar. 29, Mar. 30, 2002 2001 2002 2001 ---------- -------- -------- -------- (in thousands) Numerator for diluted calculation: Net loss $ (848) $ (6,937) $ (2,284) $ (6,817) ======== ======== ======== ======== Denominator: Weighted average common shares outstanding 11,682 11,682 11,682 11,682 Dilutive effect of stock warrants and options -- -- -- -- Dilutive effect of conversion of Series C Convertible Redeemable Preferred Stock -- -- -- -- -------- -------- -------- -------- Denominator for diluted calculation 11,682 11,682 11,682 11,682 ======== ======== ======== ========
6 Stock warrants and options to purchase approximately 6.1 million shares of common stock and approximately 4.0 million equivalent common shares related to the Series C Convertible Redeemable Preferred Stock were outstanding at March 29, 2002 but not included in the computation of diluted net loss per common share since their inclusion would be antidilutive. NOTE 5 - INVENTORIES: Inventories consisted of the following major classifications: March 29, June 29, 2002 2001 -------- -------- (in thousands) Raw materials and subassemblies $ 3,760 $ 3,967 Work in process 2,170 2,649 Finished goods 5,137 7,824 -------- -------- 11,067 14,440 Less: allowance for obsolescence (640) (640) -------- -------- $ 10,427 $ 13,800 ======== ======== NOTE 6 - OPERATIONS RE-ALIGNMENT: In the third quarter of fiscal 2001, as part of management's continuing strategy to improve profit margins by finding more cost-effective alternative 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 workforce and production facility reductions, the write-down of certain inventories and manufacturing machinery, equipment and leasehold improvements related to manufacturing activities conducted in Puerto Rico that were outsourced or products that 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 of approximately $6.1 million, including an inventory write-down of approximately $2.7 million (net of a reversal of a remaining allowance of $96,000 from a fiscal 1999 re-alignment charge). The corresponding cash activity for the nine months ended March 29, 2002 and the remaining allowance balances which are reflected in "Accrued re-alignment expenses" in the accompanying consolidated balance sheets, are as follows:
Employee Excess Termination Manufacturing Benefits Space Total ----------- ------------- ----------- Balance, June 29, 2001 $ 76,000 $ 261,000 $ 337,000 Cash payments during fiscal 2002 (76,000) (47,400) (123,400) ------------ ------------- ----------- Balance, March 29, 2002 $ -- $ 213,600 $ 213,600 ============= ============= ===========
7 NOTE 7 - 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 Puerto Rico net operating loss carryforwards available through fiscal 2007. In addition, the Company, in its US subsidiaries, has net operating loss carryforwards that expire periodically through 2021, 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 valuation allowance has been provided due to the uncertainty of realizing any benefit in the future. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to this report to be signed on its behalf by the undersigned thereunto duly authorized. TII NETWORK TECHNOLOGIES, INC. Date: May 16, 2002 By: /s/ Kenneth A. Paladino ----------------------- Kenneth A. Paladino Vice President-Finance, Treasurer and Chief Financial Officer 8 -----END PRIVACY-ENHANCED MESSAGE-----