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Tii Network Technologies Acquires Porta Systems' Copper Products Division
May 19, 2010 (05:05 PM EDT)
EDGEWOOD, N.Y. and LONG ISLAND, N.Y., May 19 /PRNewswire-FirstCall/ -- Tii Network Technologies, Inc. ("Tii", or the "Company") (Nasdaq: TIII), a leader in designing, manufacturing and marketing network products for the communications industry, today announced it has completed the acquisition of all of the assets and assumed certain operating obligations, primarily accounts payable, of the Copper Products Division ("CPD") of Porta Systems Corp. ("Porta") for cash of $8.2 million. The acquisition was paid for out of the Company's available cash on hand.
Included as part of the assets acquired are subsidiaries in the United Kingdom and Mexico. Concurrent with this acquisition, Tii sold, for $1.0 million in cash, a majority interest in the Mexican operations to its principal contract manufacturer who will operate this manufacturing facility. Tii will be paid an additional $1.5 million from its contract manufacturer for raw materials at the facility as these materials are used in production.
Porta Systems, headquartered on Long Island, is a globally recognized business that designs and manufactures surge protection modules, connectivity blocks and housings for the telecommunications industry. The addition of the Porta CPD product line expands Tii's offerings in the outside plant, central office and customer premise market sectors with the addition of remote terminal equipment, five pin protection modules and building entrance products.
The 2010 annual sales for the CPD are estimated to be approximately $25 million and it is expected that Tii's sales will now exceed $55 million on an annualized basis. Tii has hired 13 of Porta's employees consisting primarily of engineers and sales personnel. The acquisition is expected to be accretive to earnings beginning in the third quarter of 2010.
Kenneth A. Paladino, President and Chief Executive Officer, stated "This is a great acquisition for Tii, marking an exciting new era for our company. We have significantly increased our sales level, expanded into key markets and acquired new products and technology that will accelerate our strategy of becoming a significant competitor in the global telecommunications equipment marketplace.
"This acquisition demonstrates Tii's commitment to our customers of providing new and innovative copper based products to support the demands of our customers' networks, in addition to our emerging fiber product lines. Tii's 45 years of telecommunications industry experience, combined with Porta's 40 year history, positions our company to be the world-class leader in network connectivity solutions.
"The key strategic benefits of this acquisition include:
Mr. Paladino went on to say, "One of the key aspects to the success of this acquisition will be our ability to execute our plans with our manufacturing partner to improve the margins of these new product lines. We believe that, although these products have had a lower gross margin and will initially negatively impact our overall gross margin as a percent of sales, this acquisition will be accretive to our earnings beginning in the third quarter of 2010 and will contribute to the profitable growth of our company."
About Tii Network Technologies, Inc.
Tii Network Technologies, Inc. (Nasdaq: 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 at www.tiinettech.com.
Forward Looking Statement
Certain statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this release, 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 our 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 our actual results, performance or achievements to differ materially from those described or implied in the forward-looking statements as a result of several factors. We undertake no obligation to update any forward-looking statement to reflect future events. Among those factors are:
Relating to the Acquisition:
Relating to our existing business:
SOURCE Tii Network Technologies, Inc.