SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended March 29, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number 1-8048
-----------------------------
TII INDUSTRIES, INC.
-----------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 66-0328885
-------- ----------
(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation or organization)
1385 Akron Street, Copiague, New York 11726
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 516-789-5000
----------------------------
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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 1, 1996
- ---------------------------- --------------------------
Common Stock, par value $.01 7,420,838
<PAGE>
TII INDUSTRIES, INC. AND SUBSIDIARIES
Form 10-Q for the Quarter Ended March 29, 1996
INDEX
Part I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS: Page No.
--------
Consolidated Balance Sheets -
March 29, 1996 and June 30, 1995 3
Consolidated Statements of
Operations - Three and Nine Months Ended
March 29, 1996 and March 31, 1995 4
Consolidated Statement of Stockholders'
Investment - Three and Nine Months Ended
March 29, 1996 5
Consolidated Condensed Statements of
Cash Flows - Three and Nine Months Ended
March 29, 1996 and March 31, 1995 6
Notes to Consolidated Condensed
Financial Statements 7-11
Item 2: Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11-15
Part II- OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K 16
Signature 17
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<PAGE>
TII INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except share and per share data)
March 29, June 30,
ASSETS 1996 1995
------ ---- ----
(Unaudited)
----------- -----------
CURRENT ASSETS:
Cash $ 525 $ 1,152
Marketable securities 5,457 2,266
Trade receivables 7,151 5,655
Other receivables 462 478
Inventories 14,027 12,278
Prepaid expenses 578 645
------- -------
Total current assets 28,200 22,474
PROPERTY AND EQUIPMENT, AT COST:
Machinery and equipment 16,877 16,228
Tools, dies and molds 6,395 6,027
Leasehold improvements 5,877 5,655
Office fixtures, equipment and other 2,779 2,606
------- -------
31,928 30,516
Less - Accumulated depreciation and
amortization 21,576 20,302
------- -------
10,352 10,214
------- -------
OTHER ASSETS 1,475 1,726
------- -------
$40,027 $34,414
======= =======
March 29, June 30,
LIABILITIES AND STOCKHOLDERS' INVESTMENT 1996 1995
------ ---- ----
(Unaudited)
----------- -----------
CURRENT LIABILITIES:
Current portion of long-term debt $ 339 $ 63
Accounts payable 3,093 4,851
Accrued liabilities 975 1,613
------- -------
Total current liabilities 4,407 6,527
------- -------
LONG-TERM DEBT 2,415 2,704
------- -------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' INVESTMENT:
Preferred Stock, par value $1.00 per share;
1,000,000 authorized and issuable in series:
Series A Cumulative Convertible Redeemable
Preferred Stock, 100,000 shares authorized;
no shares outstanding at March 29, 1996 and
27,626 outstanding at June 30, 1995. (issued and
valued at liquidation value of $100.00 per share). 0 2,763
Series B Cumulative Redeemable Preferred Stock,
20,000 shares authorized; no shares outstanding
at March 29, 1996 and June 30, 1995. -- --
Common Stock, par value $.01 per share;
30,000,000 shares authorized (with one vote per share);
7,437,975 and 5,496,229 shares issued at March 29, 1996
and June 30, 1995, respectively. 75 55
Class B Stock, par value $.01 per share;
10,000,000 shares authorized (with each share having
ten votes and convertible into one share of Common Stock);
no shares outstanding at March 29, 1996 and 370,366 at
June 30, 1995. -- 4
Class C Stock, par value $.01 per share; 100,000 shares
authorized (non-voting); no shares issued -- --
Warrants outstanding 120 120
Capital in excess of par value 29,059 21,394
Retained earnings 4,232 1,118
Unrealized gain on marketable securities -- 10
------- -------
33,486 25,464
Less - 17,637 common shares in treasury, at cost 281 281
------- -------
33,205 25,183
------- -------
$40,027 $34,414
======= =======
The accompanying notes to consolidated financial
statements are an integral part of these consolidated balance sheets.
-3-
<PAGE>
TII INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
(Dollars and share amounts in thousands except per share data)
Three Months Ended Nine Months Ended
-------------------------- ---------------------------
March 29, March 31, March 29, March 31,
1996 1995 1996 1995
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
NET SALES $ 12,136 11,502 32,977 32,619
----------- ----------- ------------ -----------
COSTS AND EXPENSES
Cost of sales 7,946 7,501 23,110 22,326
Selling, general and administrative expenses 1,568 1,752 4,455 5,239
Research and development expenses 770 670 2,157 2,015
----------- ----------- ------------ -----------
Total costs and expenses 10,284 9,923 29,722 29,580
----------- ----------- ------------ -----------
Operating income 1,852 1,579 3,255 3,039
----------- ----------- ------------ -----------
OTHER INCOME (EXPENSE)
Interest expense (112) (194) (293) (487)
Other income 41 41 153 17
----------- ----------- ------------ -----------
Total other expense, net (71) (153) (140) (470)
----------- ----------- ------------ -----------
Net profit $ 1,781 1,426 3,115 2,569
=========== =========== ============ ===========
NET PROFIT PER SHARE - PRIMARY $ 0.23 0.22 0.40 0.43
=========== =========== ============ ===========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES
OUTSTANDING 7,893 8,116 7,861 7,959
=========== =========== ============ ===========
NET PROFIT PER SHARE FULLY-DILUTED $ 0.22 0.21 0.39 0.42
=========== =========== ============ ===========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES
OUTSTANDING 8,193 8,566 8,197 8,466
=========== =========== ============ ===========
</TABLE>
The accompanying notes to consolidated financial
statements are an integral part of these consolidated statements.
-4-
<PAGE>
TII INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands) Capital
Class B in excess Treasury
Preferred Common Common Warrants of par Retained Stock
Stock Stock Stock Outstanding Value Earnings Amount
------- ------- ----- ----------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, June 30, 1995 $ 2,763 $ 55 $ 4 $ 120 $21,394 $ 1,118 $ 281
Issuance of Common Stock from exercise of private
placement Warrants and Unit Purchase Options
net of $128 expenses -- 12 -- -- 5,481 -- --
Conversion of Class B Common Stock -- 4 (4) -- -- -- --
Redemption of Series A Preferred Stock (2,763) -- -- -- -- -- --
Exercise of stock options -- 4 -- -- 2,184 -- --
Net Income for the nine months
ended March 29, 1996 -- -- -- -- -- 3,115 --
BALANCE, March 29, 1996 $ -- $ 75 $ $ 120 $29,059 $ 4,233 $ 281
------- ------- ----- ------- ------- ------- -------
</TABLE>
The accompanying notes to consolidated financial
statements are an integral part of these condolidated statements
-5-
<PAGE>
TII INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands) Nine Months Ended
March 29, March 31,
1996 1995
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 3,115 $ 2,569
------- -------
Adjustments to reconcile net income to net cash
(used) provided by operating activities
Depreciation and amortization 1,265 1,312
Amortization of deferred charges and other assets, net 251 138
Loss on sale of marketable securities 17
Changes in assets and liabilities
Increase in trade receivables (1,487) (419)
Decrease in other receivables 16 49
Increase in inventories (1,749) (3,064)
Decrease (Increase) in prepaid expenses and other assets 67 (623)
(Decrease) Increase in accounts payable and accrued liabilities (2,396) 1,675
------- -------
Total adjustments (4,033) (915)
------- -------
Net cash (used) provided by operating activities (918) 1,654
------- -------
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures (1,379) (2,211)
Net (increase) decrease in marketable securities (3,191) 123
------- -------
Net cash used in investing activities (4,570) (2,088)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of options and warrants 7,670 918
Redemption of Preferred Stock (2,763)
Proceeds from issuance of long term debt 1,840 6,000
Payment of long term debt (1,886) (6,605)
------- -------
Net cash provided by financing activities 4,861 313
------- -------
Net decrease in cash (627) (121)
Cash at beginning of period 1,152 1,099
------- -------
Cash and cash equivalents at end of period $ 525 $ 978
======= =======
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
-6-
<PAGE>
TII INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 29, 1996
(1) INTERIM FINANCIAL STATEMENTS:
The unaudited interim financial statements presented herein have
been prepared in accordance with generally accepted accounting
principles for interim financial statements and 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 generally accepted accounting
principles for complete financial statements. The 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 financial position
at March 29, 1996 and results of operations for the three and nine
months ended March 29, 1996 and March 31, 1995. The 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 year ended June 30, 1995. The results of operations for the
three and nine months ended March 29, 1996 are not necessarily
indicative of the results that may be expected for the full year
ending June 28, 1996.
-7-
<PAGE>
(2) NET PROFIT PER COMMON SHARE:
Net profit per common and common equivalent share is calculated
using the weighted average number of common shares outstanding and
the net additional number of shares which would be issuable upon the
exercise of dilutive stock options and warrants assuming that the
Company used the proceeds received to purchase additional shares (up
to 20% of shares outstanding) at market value, retire debt and
invest any remaining proceeds in U.S. government securities. The
effect on net profit of these assumed transactions is considered in
the computation.
(3) STATEMENTS OF CASH FLOWS:
During the nine months ended March 29, 1996 and March 31, 1995, the
Company made cash payments of $112,000 and $487,000, respectively,
for interest.
(4) MARKETABLE SECURITIES AVAILABLE FOR SALE:
Prior to fiscal 1995, the portfolio of marketable securities was
valued at the lower of cost or market. Effective for fiscal 1995 and
thereafter, SFAS 115, Accounting for Certain Investments in Debt and
Equity Securities, requires the Company to categorize its
investments as: held-to-maturity securities, reported at cost;
trading securities, reported at fair value; or available-for-sale
securities, reported at fair value. Changes in the fair value of
trading securities are included in earnings, while changes in the
unrealized gains and losses of available-for-sale securities are
reported as a separate component of stockholders' investment. All of
the Company's marketable securities are classified as
available-for-sale. At March 29, 1996, the portfolio was valued at
market,
-8-
<PAGE>
which approximated unamortized cost of $5,456,913 and consisted of
U.S. Treasury Bills and Notes, other federal backed agency bonds and
notes and other liquid investment grade investments with the primary
investment goal being near-term liquidity and safety of principal.
(5) CAPITAL STOCK:
STOCK OPTIONS - The following summarizes stock option activity for
the quarter ended March 29, 1996:
Granted 0
Exercise Price
Exercised 3,820
Exercise Price $2.50 - $4.625
Options Cancelled/Expired/Terminated 0
Exercise Price
OTHER OPTIONS - During the quarter ended March 29, 1996, 320,000
shares were issued as a result of the exercise of the options issued
to a consultant and the Company received proceeds of approximately
$1,712,000 from such exercise.
(6) LONG TERM DEBT:
As of March 29, 1996, the Company's Long-Term Debt consisted of a
note in the amount of $750,000 payable to Overseas Private
Investment Corporation, various notes totaling $163,000, and a
series of notes payable to ChemLease WorldWide, Inc. for equipment
financing purposes totaling approximately $1,841,000 (see Note 7).
On January 31, 1995, the Company entered into an $8,000,000
Revolving Credit Loan Agreement with Chemical Bank, which, at March
29, 1996, entitled the Company to have outstanding borrowings of up
to $6,000,000, to be reduced by $400,000 each calendar quarter
thereafter. At March 29, 1996, there were no outstanding borrowings
-9-
<PAGE>
under the revolving loan facility. Loans bear interest equal to (a)
the greater of 1% above the bank's prime rate, 2% above a
certificate of deposit rate or 1.5% in excess of the federal funds
rate or (b) 3% above the LIBOR rate for periods selected by the
Company. A commitment fee of 1/4 of 1% is payable on the unused
portion of the bank's commitment. The loan is secured primarily by
the Company's accounts receivable and the Company's continental
United States assets. The loan agreement requires the Company to
maintain a minimum net worth of $17,500,000 in fiscal 1996 and
$20,000,000 thereafter, current ratio of 1.25 through fiscal 1997
and 1.50 thereafter, debt service ratio of 1.35 and maximum ratio
of debt to equity of 1.0, all as defined, limits capital
expenditures up to $3,500,000 per annum and lease obligations to
$400,000 per annum (excluding rentals for the Company's Dominican
Republic facilities and the Company's equipment lease with PRC
Leasing, Inc.). In addition, the Company may not incur a
consolidated net loss for any two fiscal quarters in any four
consecutive quarters and may not pay cash dividends or repurchase
capital stock without the consent of the bank.
7) EQUIPMENT FINANCING
In January 1996, a subsidiary of the Company entered into an
equipment financing agreement with ChemLease WorldWide, Inc.,
leasing company for $3,500,000 covering new equipment to be
purchased in 1996 and equipment previously delivered and installed
in 1995 ("1995 items"). In January 1996, the leasing company funded
approximately $1,841,000 of the 1995 items, leaving $1,659,000 still
-10-
<PAGE>
open for 1996 funding under this agreement. This agreement is
payable in monthly installments, including interest, and has various
maturity dates through the year 2003.
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 financial statements and notes thereto.
Key financial information follows:
<TABLE>
<CAPTION>
3rd Qtr 3rd Qtr Nine Months Nine Months
Fiscal Fiscal Ended Ended
1996 1995 March 29,1996 March 31,1995
----- ----- ---------- ----------
(Amounts in Thousands)
<S> <C> <C> <C> <C>
Net Sales $ 12,136 $ 11,502 $ 32,977 $ 32,619
Cost of Sales as a
percentage of sales 65.5% 65.2% 70.1% 68.4%
Selling, General
and Administrative
Expense, as a
percentage of sales 12.9% 15.2% 13.5% 16.1%
Research & Development
as a percentage of sales 6.3% 5.8% 6.5% 6.2%
Operating income $ 1,852 $ 1,579 $ 3,255 $ 3,039
Net income $ 1,781 $ 1,426 $ 3,115 $ 2,569
</TABLE>
RESULTS OF OPERATIONS
Net sales in the third quarter of fiscal 1996 increased 5.5% to
$12,136,000 from $11,502,000 in the third quarter of fiscal 1995 and,
increased 1.1% to $32,977,000 during the first nine months of fiscal
1996 from $32,619,000 during the comparable period in fiscal 1995. These
improvements in sales were primarily the result of increased sales of
the Company's core overvoltage protectors and network interface products
to its telephone company customers. Limited shipments of products
developed pursuant to the Company's
-11-
<PAGE>
agreement with Access Network Technologies ("ANT") have begun; however,
volume sales are not expected until fiscal 1997 as TII and ANT gear up
their production facilities as well as their marketing and sales
organizations. The increase in inventories relates principally to
preparations for sales under the ANT Agreement. The discussion in the
preceding two sentences is a forward looking statement under federal
securities laws. The success of the ANT product line and realization of
such inventories is subject to the inherent risks of new product
introductions, including production startup delays, uncertainty of
customer acceptance, dependence on third parties for product components
and reliance on third parties to market certain new products.
Included in net sales in the third quarters of fiscal years 1996 and
1995 are payments of $875,000 and $777,000, respectively, received from
AT&T Corp. for sales shortfalls corresponding to the contract years
ended December 31, 1995 and 1994, respectively, under an agreement which
has now been completed.
Cost of sales, as a percentage of sales, increased in the third quarter
and first nine months of fiscal 1996 (65.5% and 70.1%, respectively)
from the comparable periods in fiscal 1995 (65.2% and 68.4%,
respectively) principally due to increases in raw materials and other
manufacturing costs. The Company expects fiscal 1996 cost of sales
levels to remain at relatively the same percentage of sales for the
remainder of the fiscal year. This is a forward looking statement under
federal securities laws subject to a number of contingencies, including
product mix, amounts charged by suppliers for raw materials, the extent,
if
-12-
<PAGE>
any, to which the Company is able to pass along costs to customers and
inflationary factors.
Selling, general and administrative expenses decreased in dollar amount
and as a percentage of sales for the third quarter (by $184,000 to 12.9%
of sales from 15.2% of sales for the third quarter of fiscal 1995) and
the first nine months of fiscal 1996 (by $784,000 to 13.5% of sales from
16.1% of sales for the first nine months of fiscal 1995). The dollar
reduction was principally due to staff and expense reductions in both
the selling expense and general and administrative expense catagories.
The improvement as a percentage of sales resulted from the reduced level
of expenses as well as the increased level of sales.
Research and development expenses increased in dollar amount for the
third quarter and first nine months of fiscal 1996 (by $70,000 and
$42,000, respectively) from the comparable periods of fiscal 1995 due to
the development expenses associated with the ANT Agreement projects, as
well as other new products being developed by the Company for the
telecommunications industry.
Total other expense (net) decreased to $71,000 and $140,000,
respectively, during the third quarter and first nine months of fiscal
1996 from $153,000 and $470,000, respectively, during the same periods
of fiscal 1995 due principally to an increase in funds available to pay
off debt and for investment resulting from exercises, primarily during
the fourth quarter of fiscal 1995 and first quarter of fiscal 1996, of
warrants and options issued in connection with an August 1992 private
placement.
-13-
<PAGE>
As a result of the foregoing, the Company's net profit increased during
the third quarter and first nine months of fiscal 1996 to $1,781,000 and
$3,115,000, respectively, from $1,426,000 and $2,569,000, respectively,
during the third quarter and first nine months of fiscal 1995.
As a result of the effects of the exercise of previously outstanding
warrants and options and assumptions used in that methodology under the
modified treasury method for calculating earnings for shares, despite
the Company's 25% and 21% increases in net income for the three and nine
month reported periods in fiscal 1996 over the comparable periods in the
preceding year, earnings per share increased only $.01 (4.5%) for the
third quarter and decreased by $.03 for the nine month period in fiscal
1996 from the comparable periods of fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
Key factors in the Company's financial position were:
As Of
-------------------------
March 29, June 30,
---------- ---------
1996 1995
---- ----
(Dollars in Thousands)
Working capital $ 23,793 $ 15,947
Current ratio 6.40 3.44
Total debt to equity ratio .21 .37
During the first nine months of fiscal 1996, cash was provided
principally by the Company's net profit, $3,115,000; depreciation and
amortization, including amortization of deferred charges, $1,516,000; an
equipment financing arrangement, $1,841,000; and proceeds of
$7,670,000 resulting from the exercise of the remaining common stock
purchase warrants and unit purchase options issued in, and certain
options issued to a consultant at the time of, the Company's 1992
private placement for 1,450,000 shares of Common Stock. These sources
-14-
<PAGE>
and existing cash were used to support an increase in receivables
($1,487,000) and inventories ($1,749,000); for capital expenditures
($1,379,000); a decrease in payables ($1,758,000); the pay down of the
Company's revolving credit facility ($1,886,000) so that there were no
outstanding borrowings thereunder at March 29, 1996; the redemption of
all outstanding Series A Convertible Redeemable Preferred Stock at their
liquidation value and redemption amount ($2,763,000); and the purchase
of $3,191,000 of marketable securities for investment (see Note 4 of
Notes to Consolidated Financial Statements).
Funds anticipated to be generated from operations, together with
available cash and marketable securities and, if needed, borrowings
available under the Company's Revolving Credit Agreement, are believed
to be adequate to finance the Company's operational and capital needs
for the foreseeable future.
-15-
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11. Statement Re: Computation of Per Share Earnings
27. Financial Data Schedule
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the quarter ended
March 29, 1995.
-16-
<PAGE>
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 INDUSTRIES, INC.
(Registrant)
May 13, 1996 /s/ John T. Hyland, Jr.
------------ -----------------------
Date John T. Hyland, Jr.
Vice President, Treasurer and
Chief Financial Officer
-17-
<PAGE>
EXHIBIT 11
Page 1 of 2
<TABLE>
<CAPTION>
TII INDUSTRIES, INC AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
Three Months Nine Months
Ended Ended
March 29, 1996 March 29, 1996
-------------- --------------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE
Weighted Average of Common Stock
Beginning of period (shares)
Common Stock outstanding 7,097,000 5,479,000
Class B Common Stock -- 370,000
----------- -----------
7,097,000 5,849,000
Issuance of common stock 210,000 1,157,000
----------- -----------
7,307,000 7,006,000
Common Stock Equivalents
Options and warrants 586,000 749,000
Preferred Stock
Preferred Stock, Series A
convertible at $6.25 -- 106,000
----------- -----------
7,893,000 7,861,000
Primary Earnings Per Share Computation
Net profit $ 1,781,000 $ 3,115,000
----------- -----------
$ 1,781,000 $ 3,115,000
Adjusted Net profit / weighted average of common stock
$1,781,000/7,893,000 and $3,115,000/7,861,000 $ 0.23 $ 0.40
=========== ===========
Memo: Market price at end of period $ 6.38 $ 6.38
=========== ===========
Average market price for the period $ 7.44 $ 7.97
=========== ===========
EXHIBIT 11
Page 2 of 2
TII INDUSTRIES, INC AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
Three Months Nine Months
Ended Ended
March 29, 1996 March 29, 1996
FULLY DILUTED EARNINGS PER SHARE -------------- --------------
Weighted average of Common Stock outstanding 7,307,000 7,006,000
Incremental shares from options and warrants 586,000 785,000
Preferred stock conversion -- 106,000
OPIC loan 300,000 300,000
----------- -----------
8,193,000 8,197,000
=========== ===========
Fully Diluted Earnings Per Share Computation
Net profit $ 1,800,000 $ 3,172,000
=========== ===========
Adjusted net profit / weighted average of common stock
$1,800,000/8,193,000 and $3,172,000/8,197,000 $ 0.22 $ 0.39
=========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000277928
<NAME> TII INDUSTRIES, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-26-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-29-1996
<CASH> 525
<SECURITIES> 5,457
<RECEIVABLES> 7,613
<ALLOWANCES> 0
<INVENTORY> 14,027
<CURRENT-ASSETS> 28,200
<PP&E> 31,928
<DEPRECIATION> 21,576
<TOTAL-ASSETS> 40,027
<CURRENT-LIABILITIES> 4,407
<BONDS> 0
0
0
<COMMON> 75
<OTHER-SE> 33,130
<TOTAL-LIABILITY-AND-EQUITY> 40,027
<SALES> 32,977
<TOTAL-REVENUES> 32,977
<CGS> 23,110
<TOTAL-COSTS> 6,612
<OTHER-EXPENSES> (153)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 293
<INCOME-PRETAX> 3,115
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,115
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,115
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0.39
</TABLE>
