Exhibit 99.1
MTI Technology Corporation Reports Fiscal 2004 Third Quarter
and Nine Months Results;
MTI Delivers Second Quarter of Revenue Growth and Reports Net Income
TUSTIN, Calif.--(BUSINESS WIRE)--Feb. 17, 2004--MTI Technology
Corporation (Nasdaq:MTIC), a global provider of data storage, storage
management and data protection solutions, today announced financial
results for its fiscal 2004 third quarter and nine months ended
January 3, 2004. For the fiscal 2004 third quarter, the Company
reported net income of $1.5 million, or $0.04 per diluted share,
compared to a net loss of $1.4 million, or $0.04 net loss per share,
in fiscal 2003 third quarter. For the nine month period ended January
3, 2004, the net loss was $3.1 million, or $0.09 per share, compared
to a net loss of $11.8 million, or $0.36, in the first nine months of
fiscal 2003. The significant improvement in net income is due
primarily to revenue growth and cost reductions during fiscal 2004,
and the favorable resolution of income tax matters related to prior
years.
Total revenues for the third quarter were $21.2 million, compared
to $19.6 million in the prior year's quarter, up 8%. For the nine
month period ended January 3, 2004, total revenues were $59.5 million,
compared with revenues of $60.0 million for the first nine months of
fiscal 2003, virtually unchanged.
Product revenue for the third quarter of fiscal 2004 was $12.3
million, compared to $9.4 million in the third quarter of fiscal 2003,
an increase of almost 31%. For the nine month period ended January 3,
2004, product revenue was $31.8 million, compared to $27.7 million in
the first nine months of fiscal 2003, an increase of almost 15%.
Service revenue for the third quarter of fiscal 2004 was $8.9
million, compared to $10.2 million in the third quarter of fiscal
2003, a decrease of almost 13%. For the nine month period ended
January 3, 2004, service revenue was $27.7 million, compared to $32.3
million in the first nine months of fiscal 2003, a decrease of almost
15%. The decreases are attributable to a decrease in the Company's
maintenance base, partially off-set by a growth in the Company's
professional services business.
Gross profit margin percentage for the third quarter of fiscal
2004 was 22.0%, compared to 30.3% in the third quarter of fiscal 2003.
For the nine month period ended January 3, 2004, gross profit margin
percentage was 23.2%, compared to 23.4% in the first nine months of
fiscal 2003, virtually unchanged.
MTI settled certain tax matters with the IRS during the third
quarter. These settlements enabled us to reverse $1.5 million of
previously recorded tax liabilities, and to record an income tax
refund receivable of $1.7 million -- resulting in a total favorable
income effect of $3.2 million. We also expect to receive interest on
the refund; however, we have not recorded any such interest because
the amount is not estimable. We will record the interest when it is
received.
"We have continued to aggressively invest in our partnership with
EMC, which I believe is enhancing and accelerating our position in the
marketplace," said Tom Raimondi, President and CEO. "In Q3, we saw
continued growth in our product revenue, with a 31% increase from the
same quarter of last year and, more importantly, a 10% increase over
our last quarter. This is a clear indication of the success and
momentum that we are experiencing with our EMC partnership."
As of January 3, 2004, MTI had $3.3 million in cash and cash
equivalents, $4.6 million available under a $7.0 million line of
credit with Comerica Bank, $18.3 million of accounts receivable, and
$12 million of deferred revenues.
Conference Call Information
MTI Technology Corporation will hold its quarterly conference call
on Tuesday, February 17, 2004, at 11:00 a.m. Pacific Time/2:00 p.m.
Eastern Time. The call will be accessible live by dialing toll free
800-901-5217, pass code 50918772 (international callers, call
617-786-2964, pass code 50918772), or via webcast at www.mti.com. The
webcast will be available for 45 days on MTI's website at
www.mti.com/company/ir_calls.asp.
A replay of the call will be available for 48 hours by dialing
toll free 888-286-8010 and entering pass code 80741702 (international
callers, please call 617-801-6888, pass code 80741702).
About MTI Technology Corporation
MTI's mission as a global solutions provider is to deliver
superior business value to its customers in support of their data
storage and enhanced data protection needs. MTI has more than 20 years
of experience in delivering a full range of storage solutions --
including design, engineering, professional services and third-party
maintenance -- from midrange to Global 2000 customers. MTI is a
premier systems integrator focusing on providing end-to-end business
solutions in the storage marketplace. Headquartered in Tustin, MTI may
be reached by telephone at 800-999-9MTI (toll free) or 714-481-7800,
or by fax at 714-481-4135. Web address is www.mti.com.
MTI is a registered trademark of MTI Technology Corporation.
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such
statements include information regarding the Company's expectations,
goals or intentions regarding the future, including but not limited to
statements regarding the Company's strategy, capital position,
anticipated cost savings, operating results, the effects of additional
headcount reductions on the Company's business, as well as statements
regarding the Company's line of credit and its financial resources,
the potential growth of the storage industry and MTI, and the
commercial relationship between MTI and EMC, and EMC's product
offerings and solutions, all of which are subject to change. The
actual results may differ materially from those described in any
forward-looking statement. In particular, there can be no assurance
that MTI will improve revenues, margins, operating efficiencies,
operating results, or be successful with its new strategy. In
addition, there can be no assurance that MTI will be able to borrow
under the line of credit, have sufficient resources or that it or the
industry will grow. Important factors that may cause actual results to
differ include competition, evolving technology, and the economy and
other world events. Other important factors are set forth in the
Company's periodic filings with the U.S. Securities and Exchange
Commission, including its Form 10-K for the year ended April 5, 2003.
All forward-looking statements speak as of the date made and MTI
undertakes no obligation to update any such statement.
MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
January 3, April 5,
2004 2003
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents $3,331 $9,833
Accounts receivable, less allowance for doubtful
accounts and sales returns of $994 and $2,266
at January 3, 2004, and April 5, 2003,
respectively 18,280 13,913
Inventories 5,385 8,297
Income tax receivable 1,706 --
Prepaid expenses and other receivables 4,503 4,330
Total current assets 33,205 36,373
Property, plant and equipment, net 1,653 2,833
Goodwill, net 5,184 5,184
Other 234 166
Total assets $40,276 $ 44,556
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $2,400 $1,740
Current portion of capital lease obligations 172 161
Accounts payable 10,165 8,562
Accrued liabilities 6,372 7,321
Accrued restructuring charges 2,080 2,931
Deferred revenue 10,549 13,587
Total current liabilities 31,738 34,302
Capital lease obligations, less current portion 144 286
Other 1,445 994
Total liabilities 33,327 35,582
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $.001 par value; authorized
5,000 shares; issued and outstanding, none -- --
Common stock, $.001 par value; authorized
80,000 shares; issued (including treasury
shares) and outstanding 33,839 and 32,969
shares at January 3, 2004, and April 5,
2003, respectively 34 33
Additional paid-in capital 135,861 134,931
Accumulated deficit (125,405) (122,282)
Accumulated other comprehensive loss (3,362) (3,708)
Deferred compensation (179) --
Total stockholders' equity 6,949 8,974
Total liabilities and stockholders'
equity $ 40,276 $44,556
MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY JANUARY JANUARY JANUARY
3, 2004 4, 2003 3, 2004 4, 2003
Net product revenue $12,281 $9,413 $31,817 $27,687
Service revenue 8,929 10,231 27,697 32,316
Total revenue 21,210 19,644 59,514 60,003
Product cost of revenue 9,894 7,339 26,129 25,207
Service cost of revenue 6,642 6,348 19,591 20,776
Total cost of revenue 16,536 13,687 45,720 45,983
Gross profit 4,674 5,957 13,794 14,020
Operating expenses:
Selling, general and
administrative 6,531 6,444 19,402 21,348
Research and development -- 760 776 4,331
Restructuring charges -- 221 (211) 1,267
Total operating expenses 6,531 7,425 19,967 26,946
Operating loss (1,857) (1,468) (6,173) (12,926)
Interest and other income
(expense), net (40) (52) (104) 999
Gain on foreign currency
transactions 225 156 30 180
Loss before income taxes (1,672) (1,364) (6,247) (11,747)
Income tax (expense) benefit 3,130 (25) 3,123 (74)
Net income (loss) $1,458 $(1,389) $(3,124) $(11,821)
Net income (loss) per share:
Basic $0.04 $(0.04) $(0.09) $(0.36)
Diluted $0.04 $(0.04) $(0.09) $ (0.36)
Weighted average shares used in
per share computations:
Basic 33,602 32,880 33,243 32,812
Diluted 35,482 32,880 33,243 32,812
CONTACT: MTI Technology Corporation
Todd Schaeffer, 714-481-7808
tschaeffer@mti.com