Exhibit 99.1
MTI Technology Corp. Reports Fiscal 2005 Third Quarter
and Nine Months Financial Results;
Company Increases Market Share with 86 Percent Growth Rate
TUSTIN, Calif.--(BUSINESS WIRE)--Feb. 15, 2005--MTI Technology
Corp. (Nasdaq:MTIC), a leading multi-national total storage solutions
and services company, today announced financial results for its fiscal
2005 third quarter and nine months ended Jan. 1, 2005.
Total revenues for the fiscal 2005 third quarter were $39.5
million, 86 percent higher than the $21.2 million reported in the
comparable prior year quarter and an increase of 25 percent over the
$31.5 million reported in the second quarter of fiscal 2005. Total
revenues for the nine-month period ended Jan. 1, 2005, grew 63 percent
to $97.1 million compared with the $59.5 million reported for the
comparable period of fiscal 2004. The third quarter of fiscal 2005
marked the Company's sixth consecutive quarter of revenue growth.
Net product revenue for the fiscal 2005 third quarter was $29.3
million, a significant increase of 138 percent over the $12.3 million
reported in the comparable prior year quarter and 31 percent higher
than the $22.3 million reported in the second quarter of fiscal 2005.
Net product revenue for the nine-month period ended Jan. 1, 2005,
increased substantially, 116 percent, to $68.8 million compared with
the $31.8 million reported for the comparable period of fiscal 2004.
Service revenues for the fiscal 2005 third quarter were $10.2
million, an increase of 15 percent compared with the $8.9 million
reported for the prior year quarter and 11 percent higher than the
$9.2 million reported in the second quarter of fiscal 2005. Service
revenues for the nine-month period ended Jan. 1, 2005, slightly
increased to $28.2 million from the $27.7 million reported for the
comparable period of fiscal 2004. The increase in Service revenues was
driven primarily by increasing Professional Services revenue
associated with increased product sales.
Gross profit margin for the fiscal 2005 third quarter was 19.7
percent compared with 24.9 percent in the prior year quarter, and 22.9
percent in the second quarter of fiscal 2005. Gross profit margin for
the nine-month period ended Jan. 1, 2005, was 21.4 percent compared to
26.6 percent for the comparable period of fiscal 2004. Product gross
margins of 20.5 percent for the fiscal 2005 third quarter were at the
lower end of expectations due to a greater than normal number of
large, competitively priced transactions. Service margins were
depressed by the continued build-out of the Professional Services
organization in advance of expected higher revenues.
As planned, operating expenses grew from $9.6 million in the prior
quarter to $11.0 million as the Company continued to expand its Sales
organization in support of its growth strategy. We expect spending
growth to moderate in the upcoming quarter.
The Company reported results of operations for the third quarter
of fiscal 2005 compared to the same period of the prior year, as
follows (in thousands, except per share data):
THREE MONTHS ENDED
Jan. 1, 2005 Jan. 3, 2004
Amount Per Amount Per
Share Share
Net income (loss) $(2,612) $(0.07) $1,458 $0.04
Preferred stock dividends:
Beneficial conversion feature (293) -- -- --
Dividend payable (300) -- -- --
(593) (0.02) -- --
Net loss applicable to common
shareholders $(3,205) $(0.09) $1,458 $0.04
The Company reported results of operations for the nine months of
fiscal 2005 compared to the same period of the prior year, as follows
(in thousands, except per share data):
NINE MONTHS ENDED
Jan. 1, 2005 Jan. 3, 2004
Amount Per Amount Per
Share Share
Net income (loss) $(6,879) $(0.20) $(3,124) $(0.09)
Preferred stock dividends:
Beneficial conversion feature (573) -- -- --
Dividend payable (653) -- -- --
(1,226) (0.03) -- --
Net loss applicable to common
shareholders $(8,105) $(0.23) $(3,124) $(0.09)
The Company's cash balance grew in the fiscal 2005 third quarter
due to better asset performances. As of Jan. 1, 2005, the Company had
$14.2 million in cash and cash equivalents and $10.1 million in
working capital.
The Company also announced the closure of its Dublin, Ireland
facility, one of a combination of actions which include headcount
reductions and changes to processes and information systems. These
changes should be completed by the second quarter of fiscal 2006. When
fully in place, the Company expects improved order processing
performance with operating expenses reduced by approximately $0.7
million to $1 million per quarter. One time costs associated with the
changes are expected to be approximately $2 to $4 million.
"We have undertaken what we consider the remaining structural
changes necessary to support the transformation of the organization
from a developer and manufacturer of data storage to a unique provider
of professional services and comprehensive storage solutions for mid-
to large-sized organizations," said Scott Poteracki, the Company's
executive vice president and chief financial officer.
"Approximately 18 months ago, we set out an aggressive strategy to
build MTI's market share. Today we are continuing to experience solid
growth, with an 86 percent increase in revenues for the third quarter
of 2005, compared to the same period a year ago," said Thomas P.
Raimondi Jr., the Company's president and chief executive officer.
"The storage market is currently growing at approximately 10 percent
per year, while MTI is expanding at nearly eight times that rate,
having added a record number of new accounts this quarter alone. And
as we move into our new fiscal year, MTI will remain focused on
continued market share growth, while driving the Company to
profitability."
Conference Call Information
MTI Technology Corp. will hold its quarterly conference call on
Tuesday, Feb. 15, 2005, at 2 p.m. Pacific time / 5 p.m. Eastern time.
The call will be accessible live by dialing toll-free 800-299-8538
pass code 30098860 (international callers, please call 617-786-2902
pass code 30098860) or via webcast at www.mti.com.
A replay of the call will be available for 48 hours by dialing
toll-free 888-286-8010 and entering pass code 93839506 (international
callers, please call 617-801-6888 pass code 93839506). The webcast
will be available for 45 days in the Investor Relations section of
MTI's Web site at www.mti.com/Company/ir_calls.asp.
About MTI Technology Corp.
MTI (Nasdaq:MTIC) is a leading multi-national provider of
professional services and comprehensive data storage solutions for
mid- to large-sized organizations. With more than 20 years of
expertise as a storage technology innovator, MTI is uniquely qualified
to assess, design, implement and support whole-office data storage and
backup initiatives. As a strategic partner of EMC (NYSE:EMC), MTI
offers the best data storage, protection and management solutions
available today, and employs a strategic, consultative approach
providing a single point of contact that eliminates complexities while
delivering competitive advantages and operational efficiencies for its
customers. MTI currently serves more than 3,000 customers throughout
North America and Europe. With headquarters in Tustin, MTI can be
reached by telephone at 800-999-9MTI (toll-free) or 714-481-7800, or
by fax at 714-481-4135. For additional information visit www.mti.com.
MTI is a registered trademark of MTI Technology Corp. (the
"Company").
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 and operating results, as well as statements
regarding the Company's access to credit and its financial resources,
the potential growth of the storage industry and MTI, 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, we cannot assure you that MTI will improve
revenues, margins, operating efficiencies or operating results, or be
successful with its new strategy. In addition, we cannot assure you
that MTI will be able to have sufficient financial 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, as amended, for the year
ended April 3, 2004. All forward-looking statements speak as of the
date made and MTI undertakes no obligation to update any such
statement.
- Financial Tables To Follow -
MTI TECHNOLOGY CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Jan. 1, April 3,
2005 2004
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents $14,173 $3,017
Accounts receivable, less allowance for
doubtful accounts and sales returns of $459
and $437 at Jan. 1, 2005, and April 3, 2004,
respectively 34,379 22,734
Inventories, net 5,863 6,186
Income tax refund and interest receivable 115 2,464
Prepaid expenses and other receivables 6,251 5,792
Total current assets 60,781 40,193
Property, plant and equipment, net 1,082 1,401
Goodwill, net 5,184 5,184
Other 228 216
Total assets $67,275 $46,994
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $5,500 $3,933
Current portion of capital lease obligations 157 176
Accounts payable 21,996 13,650
Accrued liabilities 10,560 6,479
Accrued restructuring charges 1,321 1,830
Deferred revenue 11,137 11,382
Total current liabilities 50,671 37,450
Capital lease obligations, less current portion 69 95
Deferred revenue 3,163 2,308
Total liabilities 53,903 39,853
Redeemable convertible preferred stock, 567
shares issued and outstanding at Jan. 1,
2005, net of discount 6,738 --
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $.001 par value; authorized
5,000 shares; issued and outstanding 567
and 0 shares at Jan. 1, 2005, and April
3, 2004, respectively, included in
redeemable convertible preferred stock
above -- --
Common stock, $.001 par value; authorized
80,000 shares; issued and outstanding
34,931 and 34,473 shares at Jan. 1, 2005,
and April 3, 2004, respectively 35 34
Additional paid-in capital 144,612 136,549
Accumulated deficit (134,253) (126,149)
Accumulated other comprehensive loss (3,629) (3,060)
Deferred compensation (131) (233)
Total stockholders' equity 6,634 7,141
Total liabilities and
stockholders' equity $67,275 $46,994
MTI TECHNOLOGY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS NINE MONTHS ENDED
ENDED
JAN. 1 JAN. 3 JAN. 1 JAN. 3
2005 2004 2005 2004
Net product revenue $29,286 $12,281 $68,810 $31,817
Service revenue 10,229 8,929 28,241 27,697
Total revenue 39,515 21,210 97,051 59,514
Product cost of revenue 23,286 9,285 53,437 24,093
Service cost of revenue 8,457 6,642 22,863 19,591
Total cost of revenue 31,743 15,927 76,300 43,684
Gross profit 7,772 5,283 20,751 15,830
Operating expenses:
Selling, general and
administrative 11,027 7,140 28,112 21,438
Research and development -- -- -- 776
Restructuring charges -- -- -- (211)
Total operating expenses 11,027 7,140 28,112 22,003
Operating loss (3,255) (1,857) (7,361) (6,173)
Interest and other expense, net (64) (40) (312) (104)
Gain on foreign currency
transactions 713 225 805 30
Loss before income taxes (2,606) (1,672) (6,868) (6,247)
Income tax (expense) benefit (6) 3,130 (11) 3,123
Net income (loss) $(2,612) $1,458 $(6,879) $(3,124)
Accretion of beneficial conversion
related to preferred stock (293) -- (573) --
Dividend on preferred stock (300) -- (653) --
Net income (loss) applicable to
common shareholders $(3,205) $1,458 $(8,105) $(3,124)
Net income (loss) per share:
Basic and diluted $(0.09) $0.04 $(0.23) $(0.09)
Weighted-average shares used in
per share computations:
Basic 34,723 33,602 34,639 33,243
Diluted 34,723 35,482 34,639 33,243
CONTACT: MTI Technology Corp., Tustin
Scott Poteracki, 714-481-7878
spoteracki@mti.com