Exhibit 99.1
MTI Technology Reports Fiscal 2005 Fourth Quarter and Full Year
Financial Results; Revenue Increases 59% Year-Over-Year
TUSTIN, Calif.--(BUSINESS WIRE)--May 26, 2005--MTI Technology
Corporation (Nasdaq:MTIC), a leading multi-national storage solutions
and services company, today announced its financial results for the
fiscal year 2005 fourth quarter and year ended April 2, 2005.
Revenue for the quarter improved 50% year-over-year to $35.6
million compared to $23.7 million for the fiscal 2004 fourth quarter,
and declined 10% sequentially from $39.5 million in the third quarter.
Full year fiscal 2005 revenue grew 59% to $132.6 million compared with
$83.2 million in the prior year.
Net loss for the fourth quarter was $8.9 million or $.25 per share
compared to a net loss of $2.6 million or $0.08 per share for the
preceding quarter and a net loss of $0.7 million or $0.02 per share
for the same quarter of the prior fiscal year. Net loss for the full
fiscal 2005 was $15.8 million, or $0.45 per share compared to a net
loss of $3.9 million or $0.12 per share for the prior fiscal year.
Operating results for the fiscal year 2005 were negatively affected by
non-cash inventory charges in both product and service cost of
revenue, a restructuring charge related primarily to the closure of
the Dublin, Ireland facility, and continued investment in sales and
service - in line with the Company's growth strategy.
Product revenue for the fourth quarter increased 70% to $24.9
million from $14.6 million in the prior year period, and decreased 15%
quarter-over-quarter from $29.3 million in the third quarter. Full
year product revenue grew by 102% to $93.7 million compared to $46.4
million in the prior year. Service revenue for the fourth quarter was
$10.7 million, an 18% improvement year-over-year compared to $9.0
million in the comparable prior year quarter, and a 4% improvement
sequentially. Full year service revenue was $38.9 million compared to
$36.7 million for the full 2004 fiscal year, an increase of 6%.
Gross margins for the fourth quarter were 12.6% compared to 25.3%
in the prior year period and 19.7% in the third quarter. Gross margins
for the full-year were 19.2% compared to 26.2% in fiscal year 2004.
Fiscal 2005 fourth quarter gross margins were negatively impacted by
non-cash charges totaling $1.8 million, primarily related to an
inventory write-down. Gross margins for the full-year were further
impacted by the integration of 35 new professional services personnel
hired in the year.
SG&A expenses of $10.7 million in the fourth quarter were up
year-over-year from $7.5 million and down sequentially from $11.0
million. The increase in expenses year-over-year is due primarily to
increased selling expense associated with the addition of new
salespeople and higher commissions on increased sales. The Company
recorded a restructuring charge of $2.0 million in the fourth quarter
of fiscal 2005, principally related to the closing of the Dublin
manufacturing and logistics facility.
As of April 2, 2005, the Company had $12.2 million in cash and
cash equivalents. Cash, net of the $1.8 million paid against the
existing line of credit, was essentially unchanged from the prior
quarter.
"Fiscal 2005 represented an important milestone for the Company,
as we added more than 325 new customers and established a base from
which to continue building the pre-eminent total solutions provider in
the mid-enterprise storage infrastructure space," said Tom Raimondi,
Chairman, President and CEO of MTI. "We now have a proven track record
of year-over-year top-line growth."
Raimondi added, "We believe fiscal 2006 to be an inflection point
for the Company as we target a transition from a pure growth to a
profitable growth model. We believe we have reached a certain critical
mass in product sales at which the productivity of our existing sales
force offsets the majority of continued investment. We believe our
maintenance business has stabilized, and with our bolstered
professional services infrastructure, we plan to grow service revenues
and corresponding margins. We expect bottom-line results will follow."
Investor Conference Call
Management will discuss results followed by a question and answer
session today, May 26, 2005 at 1:30 p.m. Pacific Time (4:30 p.m.
Eastern Time). The call-in number is 800-299-8538, access code
91195230; International callers should dial 617-786-2902. If you are
unable to participate, a replay will be available for 48 hours,
beginning at 4:30 p.m. Pacific Time May 26, 2005. The replay call-in
number is 1-888-286-8010, access code 52430029. The replay for
international callers is 617-801-6888, access code 52430029. The
conference will be webcast live and archived for 365 days. To access
the live webcast, go to the MTI website at www.mti.com.
About MTI Technology
MTI is a leading multi-national provider of professional services
and comprehensive data storage solutions for mid to large-size
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. By employing a strategic, consultative approach, MTI provides
customers with a single point of contact that eliminates complexities
while delivering operational efficiencies and competitive advantages.
MTI currently serves more than 3,000 customers throughout North
America and Europe. Visit www.mti.com for more information.
Safe Harbor Statement
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 growth strategy, ability to build
the pre-eminent total solutions provider in our space, ability to
achieve and maintain top-line growth, ability to transition to a
profitable growth model, size of product sales, productivity of our
sales force, the stability of our maintenance business, the ability of
our professional services infrastructure to grow service revenues and
margins, and our bottom-line results. 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 within the
expected time frame or at all. Important factors that may cause actual
results to differ include competition, timing of customer orders,
unanticipated expenses, 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.
MTI is a registered trademark of MTI Technology Corporation (the
"Company").
Financial Tables to Follow.
MTI TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
April 2, April 3,
2005 2004
ASSETS
Current assets:
Cash and cash equivalents $12,191 $3,017
Accounts receivable, less allowance for doubtful
accounts and sales returns of $451 and $437 at
April 2, 2005, and April 3, 2004, respectively 33,866 22,734
Inventories, net 3,723 6,186
Income tax refund and interest receivable 112 2,464
Prepaid expenses and other receivables 6,859 5,792
Total current assets 56,751 40,193
Property, plant and equipment, net 708 1,401
Goodwill, net 5,184 5,184
Other 223 216
Total Assets $62,866 $46,994
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $3,667 $3,933
Current portion of capital lease obligations 78 176
Accounts payable 24,474 13,650
Accrued liabilities 9,489 6,479
Accrued restructuring charges 2,767 1,830
Deferred revenue 14,020 11,382
Total current liabilities 54,495 37,450
Capital lease obligations, less current portion -- 95
Deferred revenue 3,695 2,308
Total liabilities 58,190 39,853
Redeemable convertible preferred stock, 567 shares
issued and outstanding at April 2, 2005, net of
discount 7,045 --
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $.001 par value; authorized
5,000 shares; issued and outstanding 567 and 0
shares at April 2, 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 35,159
and 34,473 shares in 2005 and 2004
respectively 35 34
Additional paid-in capital 144,740 136,316
Accumulated deficit (143,768) (126,149)
Accumulated other comprehensive loss (3,376) (3,060)
Total stockholders' equity (2,369) 7,141
Total liabilities and stockholders'
equity $62,866 $46,994
MTI TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FISCAL YEARS ENDED APRIL 2, 2005, APRIL 3, 2004, AND APRIL 5, 2003
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2005 2004 2003
Net product revenue $93,703 $46,442 $40,101
Service revenue 38,910 36,723 42,285
Total revenue 132,613 83,165 82,386
Product cost of revenue 73,898 34,969 32,948
Service cost of revenue 33,196 26,390 27,640
Total cost of revenue 107,094 61,359 60,588
Gross profit 25,519 21,806 21,798
Operating expenses:
Selling, general and administrative 39,078 28,935 27,754
Research and development -- 776 5,238
Restructuring charges 2,024 (211) 1,467
Total operating expenses 41,102 29,500 34,459
Operating loss (15,583) (7,694) (12,661)
Interest and other income (expense), net (500) 631 1,008
Gain on foreign currency transactions 318 29 639
Loss before income taxes (15,765) (7,034) (11,014)
Income tax expense (benefit) 22 (3,168) 205
Net loss (15,787) (3,866) (11,219)
Amortization of preferred stock discount (880) -- --
Dividend on preferred stock (953) -- --
Net loss applicable to common
shareholders $(17,620) $(3,866) $(11,219)
Net loss per share:
Basic and diluted $(0.51) $(0.12) $(0.34)
Weighted average shares used in per share
computations:
Basic and diluted 34,746 33,482 32,852
MTI TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
FY 2005 FY 2004 FY 2005
Q4 Q4 Q3
Net product revenue $24,894 $14,625 $29,286
Service revenue 10,668 9,026 10,229
Total revenue 35,562 23,651 39,515
Product cost of revenue 20,741 10,876 23,286
Service cost of revenue 10,333 6,799 8,457
Total cost of revenue 31,074 17,675 31,743
Gross profit 4,488 5,976 7,772
Operating expenses:
Selling, general and administrative 10,686 7,498 11,027
Research and development -- -- --
Restructuring charges 2,024 -- --
Total operating expenses 12,710 7,498 11,027
Operating loss (8,222) (1,522) (3,255)
Interest and other income (expense), net (188) 735 (64)
Gain (loss) on foreign currency transactions (487) (1) 713
Loss before income taxes (8,897) (788) (2,606)
Income tax expense (benefit) 11 (44) 6
Net loss (8,908) (744) (2,612)
Amortization of preferred stock discount (306) -- (293)
Dividend on preferred stock (300) -- (300)
Net loss applicable to common shareholders $(9,514) $(744) $(3,205)
Net loss per share:
Basic and diluted $(0.27) $(0.02) $(0.09)
Weighted average shares used in per share
computations:
Basic and diluted 35,065 34,200 34,723
CONTACT: MTI Technology
Victor Chynoweth, 714-481-7828
vchynoweth@mti.com