SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 27, 1997
Commission file number 1-8048
TII INDUSTRIES, INC.
(Exact Name of registrant AS specified in its charter)
State of incorporation: DELAWARE I.R.S. Employer Identification No. 66-0328885
1385 Akron Street, Copiague, New York 11726
(516) 789-5000
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock,
$.01 par value
Indicate by check mark whether the registrant (l) 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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock of the registrant outstanding as
of September 12, 1997 held by non-affiliates of the registrant was approximately
$53,000,000. While such market value excludes the market value of shares which
may be deemed beneficially owned by executive officers and directors, this
should not be construed as indicating that all such persons are affiliates.
The number of shares of the Common Stock of the registrant outstanding as of
September 12, 1997 was 7,513,640.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement relating to its 1997 Annual Meeting
of Stockholders are incorporated by reference into Part III of this report.
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
TII Industries, Inc. has been a leading supplier to United States
telephone operating companies ("Telcos") of overvoltage surge protectors for
over 25 years. Overvoltage protectors are required by the National Electric Code
to be installed on the subscriber's home or office telephone lines to prevent
injury to telecommunication users and damage to telecommunication equipment due
to overvoltage surges caused by lightning and other hazardous electrical
occurrences. Building on its sales and marketing base, the Company has added a
line of network interface devices (NIDs) to establish a separation point between
Telco property and subscriber property in response to Federal Communication
Commission and state public service commission requirements. In addition,
through a subsidiary acquired in September of 1993, the Company has begun
producing, selling and marketing a line of fiber optic enclosure products. The
Company markets its products to the Regional Bell Operating Companies ("RBOCs"),
independent phone companies and original equipment suppliers who sell to the
global telecommunication marketplace.
The Company's strategy is to develop new products which are
complementary to its current products, expand into new markets and capitalize on
its reputation as a quality manufacturer.
The Company is a Delaware corporation organized in 1971. Unless the
context otherwise requires, the term "Company" or TII as used herein refers to
TII Industries, Inc. and its subsidiaries. The Company's principal executive
office is located at 1385 Akron Street, Copiague, New York 11726 (telephone
number (516) 789-5000) and its principal operations office is located at Rd.
165, Kilometer 1.6, Toa Alta, Puerto Rico 00953 (telephone number (787)
870-2700).
FORWARD-LOOKING STATEMENTS
In order to keep the Company's stockholders and investors informed
of the Company's future plans, 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 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". The Company's ability to do this has
been fostered by the Private Securities Litigation Reform Act of 1995 which
provides a "safe harbor" for forward-looking statements to encourage companies
to provide prospective information so long as those statements are accompanied
by meaningful cautionary statements identifying important factors that could
cause actual results to differ materially from those discussed in the statement.
The Company believes that it is in the best interests of its stockholders to
take advantage of the "safe harbor" provisions of that Act. 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
telecommunications industry; competition (see "Competition"); potential
technological changes
-2-
<PAGE>
(see "Research and Development"), including the Company's ability to timely
develop new products and adapt its existing products to technological changes
(see "Products" and "Research and Development"); potential changes in customer
spending and purchasing policies and practices, as well as the Company's ability
to market its existing, recently developed and new products (see "Marketing and
Customers"); the risks inherent in new product introductions, such as start-up
delays, uncertainty of customer acceptance; dependence on third parties for its
product components (see "Raw Materials"); the Company's ability to attract and
retain technologically qualified personnel (see "Employees"); the renewal of the
Company's lease for its manufacturing facilities in Puerto Rico on satisfactory
terms or ability to find replacement facilities in Puerto Rico (see
"Properties"); the retention of the tax benefits provided by its Puerto Rico and
Dominican Republic operations (see "Certain Tax Attributes" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations-Income
Taxes"); the Company's ability to fulfill its growth strategies (see "Research
and Development"); the availability of financing on satisfactory terms to
support the Company's growth (see "Management's Discussion and Analysis of
Financial Condition and Results of Operations-Liquidity and Capital Resources");
and other factors discussed elsewhere in this report and in other Company
reports hereafter filed with the Securities and Exchange Commission.
PRODUCTS
TII is the premier manufacturer of overvoltage protection devices
based on gas tube technology. This core gas tube technology represents the
foundation upon which certain new products and technological enhancements of the
Company's traditional products are based. The Company's research and development
efforts are focused on the development of additional products for its
overvoltage surge protection, NIDs and fiber optic product lines.
OVERVOLTAGE SURGE PROTECTORS. The Company designs, manufactures and
markets overvoltage protectors primarily for use by the Telcos on the
subscriber's home or office telephone lines. These overvoltage protectors differ
in power capacity, application, configuration and price to meet the Telco's
varying needs.
The heart of the TII overvoltage protector is a proprietary two or
three electrode gas tube. Overvoltage protection is provided when the voltage on
a telephone line elevates to a level preset in the gas tube, at which time the
gases in the tube instantly ionize, momentarily disconnecting the phone or other
equipment from the circuit while safely conducting the hazardous surge into the
ground. When the voltage on the Telco's line drops to a safe level, the gases in
the tube return to their normal state, returning the phone and other connected
equipment to service. The Company's gas tubes have been designed to withstand
multiple high energy overvoltage surges while continuing to operate over a long
service life with minimal failure rates.
One of the Company's most advanced overvoltage protectors, embodied
in its Totel Failsafe(R) series, combines the Company's three electrode gas tube
with a thermally operated, failsafe mechanism, encapsulated in an
environmentally sealed module. The three electrode gas tube is designed to
protect the equipment from hazardous overvoltage surges and the failsafe
mechanism is designed to insure that, under sustained overvoltage conditions,
the protector will become permanently grounded. The sealed module is designed to
prevent damage to the protector from moisture and industrial pollution. Another
advanced overvoltage protector, jointly manufactured with Raychem Corporation
(Raychem), is the sealed modular station protector (MSP). This product is
-3-
<PAGE>
designed to withstand multiple high energy surges and be virtually impervious to
moisture and pollution by combining TII's Totel Failsafe protection element with
Raychem's proprietary gel technology which seals all wire termination points.
In October 1996, TII was granted a US patent for its new coaxial
transmission line surge arrestor. The patent provides broad coverage for
overvoltage protection on coaxial cable, which is becoming an alternate method
of providing high-bandwidth signals to residential and business users. TII's gas
tube coaxial surge protector is an in-line protector which is virtually
transparent to the network in which it is installed.
TII also designs, manufactures and markets special purpose models of
powerline protectors, utilizing the Company's gas tubes and solid state
protection technology, principally for use by the Company's Telco customers.
TII's powerline protectors protect the connected Telco equipment against damage
or destruction caused when overvoltage surges enter equipment through the
powerline.
Overvoltage protectors sold separately accounted for approximately
65%, 65% and 68% of the Company's net sales during the Company's fiscal years
1997, 1996 and 1995, respectively.
NETWORK INTERFACE DEVICES. The Company designs, molds, assembles and
markets various NIDs which typically contain wire terminals to connect a
subscriber's telephone, one or more overvoltage protectors and a demarcation
point to clearly separate the Telco's wires from the subscriber's wires. NIDs
were developed to establish a separation point between Telco property and
subscriber property in response to Federal Communication Commission and state
public service commission requirements. Certain Telcos have also begun
installing various station electronic products in NIDs, through which the Telcos
are able to remotely test the integrity of their lines.
To meet increasing customer demand for advanced voice, video and
data services, Telcos are expanding and upgrading their network infrastructure.
In response, TII has recently developed a line of patented broadband network
interface devices ("BNIDs). TII's BNIDs are designed to be installed by Telcos
at homes and businesses to provide multiple access lines, advanced overvoltage
protection and remote electronics. Designed with future technologies in mind,
the Company's BNIDs can also accommodate TII's patented Coaxial overvoltage
protector, as well as high performance fiber optic connectors, produced by the
Company's subsidiary TII-Ditel. This will allow for future upgrades by Telcos to
broadband services over twisted pair, coaxial or fiber optic lines.
NID sales represented approximately 23%, 21% and 20% of the
Company's net sales during fiscal 1997, 1996 and 1995, respectively.
STATION ELECTRONICS AND OTHER PRODUCTS. The Company designs,
manufactures and markets special purpose station electronic products that are
included in NIDs or sold separately. Most subscriber electronic devices are
designed to be installed with an overvoltage protector, typically in a NID. The
Company's station electronics products include maintenance termination units
designed to interface with the Telco's central office test equipment, offering
the Telco remote testing capabilities. With this product installed at the
subscriber's home or business, a Telco can determine whether a defect or fault
is in Telco or subscriber-owned equipment before dispatching a maintenance
vehicle. Another product automatically identifies the calling party on a party
line (located primarily
-4-
<PAGE>
in rural areas of the United States and Canada) without operator assistance. The
Company also designs, manufactures and markets other products, including plastic
housings, wire terminals, enclosures, cabinets and various hardware products
principally for use by the Telco industry. Station electronics and other
products sold separately, accounted for approximately 6%, 11% and 9% of the
Company's net sales in fiscal 1997, 1996 and 1995, respectively.
Fiber Optic Products. The Company's fiber optic product lines, sold
and marketed under the name TII-Ditel, include closures, splice trays, high
performance cable assemblies, and the LIGHTRAX cable management system. Using
its own manufactured products, as well as purchased components, the Company's
fiber subsidiary provides a totally protected environment for Telcos inside
cable systems from points along the long distance network to both the central
office and customer premise locations.
The fiber subsidiary develops niche markets by concentrating on a
technical method of generating sales. Technical personnel work closely with the
engineering staffs of its customers to provide applications help and formulate
unique solutions to fiber issues.
Primary customers for the fiber division include the RBOCs, original
equipment suppliers and interexchange carriers. Sales of fiber optic products
represented approximately 6%, 3% and 3% of the Company's net sales during fiscal
1997, 1996 and 1995, respectively.
MARKETING AND CUSTOMERS
The Company sells to Telcos both directly and through distributors.
TII also sells to long distance carriers, cable television providers and
telecommunication equipment manufacturers, including other NID suppliers, which
incorporate the Company's protectors into their products for resale to Telcos.
The following customers accounted for more than 10% of the Company's
consolidated revenues during one or more of the years presented below:
For Year Ended
----------------------------------
June 30, June 28, June 27,
1995 1996 1997
----------------------------------
Siecor Corporation(1) 30% 26% 20%
NYNEX Corporation(2) 13% 15% 18%
Keptel, Inc.(1) * 12% 11%
- ---------------
* Asterisk denotes less than 10% for the period presented.
(1) Siecor Corporation and Keptel, Inc. are original equipment manufacturers
that supply NIDs to RBOCs. Several RBOCs have standardized on TII
overvoltage station protectors and require Siecor Corporation and Keptel,
Inc. to purchase TII overvoltage surge protectors for inclusion into their
NIDs. Such purchases are made on open purchase order bases without minimum
purchase requirements.
(2) Subsequent to June 27, 1997, NYNEX Corporation merged into Bell Atlantic
Corporation.
-5-
<PAGE>
The Company has several master supply contracts with Bell Atlantic
Corporation and other RBOCs. Certain of such contracts permit the customer to
terminate the contract due to the availability of more advanced technology or
the Company's inability to deliver a product that meets the specifications on
time and certain supply contracts provide that the customer may terminate the
contract at any time upon notice.
Purchases of the Company's products are generally based on
individual customer purchase orders for delivery within thirty days under
general supply contracts. The Company, therefore, has no material firm backlog
of orders.
EXPORT SALES
The Company's export sales equaled approximately $1.3 million in
fiscal 1997 (3% of net sales), $1.6 million in fiscal 1996 (4% of net sales),
and $1.0 million in fiscal 1995 (2% of net sales). Export sales have been made
primarily to countries in the Caribbean, South and Central America, Canada and
Western Europe. The Company requires foreign sales to be paid for in U.S.
currency. Foreign sales are affected by such factors as exchange rates, changes
in protective tariffs and foreign government import controls.
MANUFACTURING
The Company produces its overvoltage protectors, NIDs and station
electronics at its facilities in Puerto Rico and the Dominican Republic. The
Company manufactures its fiber optic products at its facility in North Carolina.
The manufacture of the Company's gas tubes requires vacuum ovens,
specialized test equipment and various processes developed by the Company. TII
produces a substantial portion of its NIDs and other plastic enclosures in its
thermoplastic molding facility. All of the Company's products contain numerous
metal components produced with the Company's metal stamping and forming
equipment. The Company believes that this vertical integration of its
manufacturing processes gives the Company both cost and delivery advantages.
The Company's fiber optic products are assembled principally from
outside purchased components and, to a lesser extent, plastic parts molded at
its facility in North Carolina.
TII uses a statistical process control method within its
manufacturing and engineering operations to establish quality standards, qualify
vendors, inspect incoming components, maintain in-process inspection and lot
control and perform final testing of finished goods.
-6-
<PAGE>
RAW MATERIALS
The Company uses stamped, drawn and formed parts made out of a
variety of commonly available metals, ceramics and plastics as the primary
components of its gas tubes, overvoltage protectors, NIDs, other molded plastic
housings and fiber optic products. In manufacturing certain protectors and
station electronic products, the Company purchases commonly available solid
state components, printed circuit boards and standard electrical components such
as resistors, diodes and capacitors. In manufacturing its modular station
protector, the Company utilizes Gelguard(R) (a registered trademark of Raychem
Corporation) which is supplied exclusively by Raychem. The Company has no
contracts with suppliers of the components utilized in the manufacture of its
products which extend for more than one year. The Company believes that all raw
materials it uses will continue to be available in sufficient supply from a
number of sources at competitive prices.
PATENTS AND TRADEMARKS
The Company owns or has applied for a number of patents relating to
its products, and owns a number of registered trademarks which are considered to
be of value principally in identifying the Company and its products. While the
Company considers these important, it believes that, because of technological
advances in its industry, its success depends primarily upon its sales,
engineering and manufacturing skills.
RESEARCH AND DEVELOPMENT
As the Telcos upgrade and expand their networks to provide advanced
telecommunication services, new product opportunities continue to arise for the
Company. Currently, the Company's research and development (R&D) and related
marketing efforts are focused on several major projects including:
Developing broadband network interface devices (BNID) to address
anticipated future requirements of the Telcos.
Developing coaxial overvoltage protectors for the cable TV and
broadband communication markets.
Expanding the Company's fiber optic product line of enclosures and
fiber optic cable management systems to meet the growing needs
of existing and potential customers.
Designing custom overvoltage protectors for original equipment
manufacturers for installation throughout Telco and other
communication networks.
Designing gas tube, solid state and hybrid overvoltage protectors
for the worldwide telecommunication markets.
The Company's research and development ("R&D") department currently
consists of 24 persons skilled and experienced in various technical disciplines,
including physics, electrical and mechanical engineering, with specialization in
such fields as electronics, metallurgy, plastics and fiber
-7-
<PAGE>
optics. The Company maintains computer aided design equipment and laboratory
facilities, which contain sophisticated equipment, in order to develop and test
its existing and new products.
The Company's R&D expense was $3,085,000, $2,820,000, and $2,619,000
during fiscal 1997, 1996 and 1995, respectively.
COMPETITION
The Company faces significant competition, including competition
from NID manufacturers which have introduced their own line of overvoltage
protectors. The Company expects competition to continue in overvoltage
protectors and NIDs as well as the Company's other products.
In the overvoltage surge (station) protector market, the Company
competes principally with Siecor Corporation and with Joslyn, Inc., a subsidiary
of Danaher Corporation. In the NID market, the Company's principal competitors
are Siecor Corporation and Keptel, Inc., a subsidiary of Antec Corporation (see
"- Marketing and Customers").
Principal competitive factors include price, technology, delivery,
quality and reliability. Most of the Company's competitors have substantially
greater assets and financial resources, as well as larger sales forces,
manufacturing facilities and R&D staffs, than the Company.
The Company's gas tube overvoltage protectors not only compete with
other companies' gas tube overvoltage protectors, but also with solid state
overvoltage protection devices. While solid state protectors are faster reacting
to surges, gas tube overvoltage protectors have generally remained the
subscriber overvoltage protection technology of choice by virtually all Telcos
because of the gas tube's ability to repeatedly withstand significantly higher
energy surges while adding virtually no capacitance to the communication line.
Solid state overvoltage protectors are used principally in Telco's central
office switching centers where speed is perceived to be more critical than
energy handling capabilities. While the Company believes that, for the
foreseeable future, both gas tube and solid state devices will continue to be
used as overvoltage protectors within the telecommunication market, solid state
protectors may gain market share from gas tube protectors, especially where high
speed response is critical. Solid state and gas tube devices are produced from
different raw materials, manufacturing processes and equipment. The Company has
begun developing and marketing overvoltage protectors incorporating purchased
solid state devices on a limited basis.
The fiber optic market is characterized by innovation, rapidly
changing technology and new product development. The Company's success in this
area depends upon its ability to identify customer needs, develop new products
and keep pace with continuing changes in technology and customer preferences.
The Company believes that its present sales, marketing and R&D
departments, its high quality low-cost production facilities, and its present
protection technology, enable it to meet the competition.
-8-
<PAGE>
REGULATION
The National Electrical Code requires that an overvoltage protector
listed by Underwriters Laboratories or another qualified electrical testing
laboratory be installed on virtually all subscriber telephone lines. Listing by
Underwriters Laboratories has been obtained by the Company where required.
Compliance with applicable federal, state and local environmental
regulations has not had, and the Company does not believe that compliance in the
future will have, a material effect on its earnings, capital expenditures or
competitive position.
CERTAIN TAX ATTRIBUTES
The Company is incorporated in Delaware with its principal
operations office located in the Commonwealth of Puerto Rico. Its income would
normally be subject to income tax by both the United States and Puerto Rico.
However, as explained more fully below, the Company does not pay United States
federal or Puerto Rico income tax on most of its income.
The Company has elected the application of Section 936 of the US
Internal Revenue Code (Code), and presently intends to continue to operate in a
fashion that will enable it to qualify for the Section 936 election. Under that
section, as long as the Company (on a non-consolidated basis) has cumulatively
derived, in its current and two preceding tax years, at least 80% of its gross
income from sources within Puerto Rico and at least 75% of its gross income from
the active conduct of a trade or business within Puerto Rico, as defined in the
Code, the Company is entitled to a federal tax credit in an amount equal to the
lesser of the United States federal tax attributable to its taxable income
arising from the active conduct of its business within Puerto Rico or the
economic activity based credit limitation. To the extent the Company has taxable
income arising from United States sources (e.g., income from investment or
operating activity in the U.S.), the Company would not be entitled to offset the
related tax on such income with the Section 936 tax credit.
The economic activity limitation on the amount of allowable credits
under Section 936 is based upon qualified wages paid for services performed in
Puerto Rico, fringe benefits, depreciation deductions and taxes in Puerto Rico.
Based on fiscal 1997 levels of qualified wages, fringe benefits, depreciation
and taxes in Puerto Rico, the Company's economic activity based credit
limitation is approximately $3,550,000 per annum. The amount of the economic
activity based Section 936 credit limitation available for fiscal 1997 will be
sufficient to offset the United States federal income tax on Puerto Rico source
income for the Company's 1997 fiscal year.
Legislation included in the Minimum Wage/Small Business Job
Protection Act of 1996 repealed the Section 936 credit for taxable years
beginning after December 31, 1995, the Company's 1997 fiscal year. However,
since the Company's Section 936 election was in effect for its fiscal 1996 tax
year, it is eligible to continue to claim a Section 936 credit until the year
ended June 2006 under a special grandfather rule. If, however, the Company adds
a substantial new line of business, the Company would cease to be eligible to
claim the Section 936 credit beginning with the taxable year in which such new
line of business is added. Because the Company uses the economic activity
limitation, possession income eligible for the Section 936 credit in any tax
year beginning after
-9-
<PAGE>
December 31, 2001 and before January 1, 2006 is subject to a cap equal to the
Company's average inflation-adjusted possession income for the three of the five
most recent years ending before October 14, 1995 determined by excluding the
years in which the Company's adjusted possession income was the highest and the
lowest. In lieu of using a five-year period to determine the base period years,
the Company may elect to use its last tax year ending in 1992 or a deemed
taxable year which includes the first ten months of the calendar year 1995. The
Company's Section 936 credit for each year during the grandfather period would
continue to be subject to the economic activity limitation (as discussed above).
Based on the Company's current level of possession income and business plans,
the Company believes that it will be eligible to claim a Section 936 credit
under the grandfather rule discussed above.
As long as the Company's election under Section 936 is in effect,
the Company does not file a consolidated tax return with any of its subsidiaries
for United States income tax purposes, and the filing of consolidated returns is
not permitted under Puerto Rico income tax laws. Consequently, should the
Company itself sustain losses, those losses could not be used to offset the
federal taxable income of its subsidiaries; and, conversely, should the
Company's subsidiaries sustain losses, those losses could not be used to offset
the federal taxable income of the Company.
The Company also has been granted exemptions under Puerto Rico's
Industrial Incentive Act of 1963 until June 2009 for income tax and property tax
purposes. In each case, the level of exemption is 90%. The Company also has
substantial net operating loss carryforwards available through fiscal 1998 to
offset any remaining Puerto Rico taxable income. There are no limitations on the
Company's ability to utilize such net operating loss carryforwards to reduce its
Puerto Rico income tax. Furthermore, the Company's subsidiary operating in the
Dominican Republic is exempt from taxation in that country.
EMPLOYEES
On September 12, 1997, the Company had approximately 985 employees,
of whom 881 were engaged in manufacturing and 44 in engineering and new product
development, with the balance being employed in executive, sales and
administrative activities. Of these employees, approximately 300 are employed at
the Company's Puerto Rico facilities and approximately 615 are employed at its
Dominican Republic facilities. The Company has not experienced any work stoppage
as a result of labor difficulties and believes it has satisfactory employee
relations.
RECENT DEVELOPMENTS
COST REDUCTION PLAN. During the third quarter of fiscal year 1997,
the Company put into effect certain measures in accordance with a plan to reduce
costs and enhance profitability. This plan included the reduction of personnel,
movement of certain production processes to the Company's lower cost facility in
the Dominican Republic, outsourcing certain manufacturing steps, re-aligning its
sales and marketing forces and ceasing the sale of lower margin products. This
action resulted in non-recurring charges of $3.0 million, which consisted of an
increase to the allowance for inventory, severance related costs and costs to
close or move certain production processes.
ANT AGREEMENT. In August 1995, TII entered into a long-term
strategic agreement with Access Network Technologies (ANT) to develop and
manufacture advanced protectors for sale into
-10-
<PAGE>
the global telecommunication market. ANT was a joint venture between Lucent
Technologies, Inc. and Raychem Corporation. The first products introduced by the
joint venture, MSPS, combined TII's overvoltage protection with a proprietary
gel sealing technology (from Raychem) that makes these products impenetrable by
weather. During the third quarter of fiscal 1997 ANT dissolved. The Company and
Raychem have agreed to continue to manufacture and market the products, without
Lucent Technologies.
-11-
<PAGE>
Part II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock trades on the Nasdaq Stock Market -
National Market System under the symbol "TIII". The following table sets forth,
for each quarter during fiscal 1997 and fiscal 1996, the high and low sales
prices of the Company's Common Stock, as reported by Nasdaq. Such
over-the-counter market quotations reflect inter-dealer prices, without retail
mark up, mark down or commission and may not necessarily represent actual
transactions.
Fiscal 1997 High Low
---- ---
First Quarter Ended September 27, 1996 7 1/8 41/2
Second Quarter Ended December 27, 1996 7 1/8 5 1/4
Third Quarter Ended March 28, 1997 7 4 1/8
Fourth Quarter Ended June 27, 1997 5 7/8 4 5/16
Fiscal 1996 High Low
---- ---
First Quarter Ended September 29, 1995 10 1/8 6 5/8
Second Quarter Ended December 29, 1995 8 7/8 6 3/4
Third Quarter Ended March 29, 1996 9 1/8 6 3/8
Fourth Quarter Ended June 28, 1996 7 3/4 5 7/8
As of September 12, 1997, the Company had approximately 620 holders
of record of its Common Stock, exclusive of stockholders whose shares were held
by brokerage firms, depositories or other institutional firms in street name for
their customers.
To date, the Company has paid no cash dividends. For the foreseeable
future, the Company intends to retain all earnings generated from operations for
use in the Company's business. Additionally, the Company's borrowing
arrangements prohibit the payment of dividends until such indebtedness has been
repaid in full.
-12-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this Amendment
to be signed on its behalf by the undersigned, thereunto duly authorized.
TII INDUSTRIES, INC.
(Registrant)
Dated: May 14, 1998 By: /s/ Paul G. Sebetic
----------------------
Paul G. Sebetic,
Vice President-Finance and
Chief Financial Officer
-13-
