Exhibit 99.1
MTI Technology Reports Fiscal 2006
First Quarter Financial Results; Revenue Increases 51% Year-Over-Year
and 10% Sequentially
TUSTIN, Calif.--(BUSINESS WIRE)--Aug. 15, 2005--MTI Technology
Corporation (Nasdaq:MTIC), a leading multi-national storage solutions
and services company, today announced its financial results for the
fiscal year 2006 first quarter, ended July 2, 2005.
Revenue for the quarter improved 51% year-over-year to $39.3
million compared to $26.0 million for the fiscal 2005 first quarter,
and increased 10% sequentially from $35.6 million in the fourth
quarter of fiscal 2005.
Net loss applicable to common shareholders for the quarter was
$3.6 million or $.10 per share compared to a net loss of $9.5 million
or $0.27 per share for the preceding quarter and a net loss of $1.9
million or $.06 per share for the same quarter of the prior fiscal
year. Net loss applicable to common shareholders for the current
quarter includes a restructuring charge of $894,000, a foreign
currency loss of $840,000, and $620,000 of costs associated with the
amortization of a beneficial conversion feature and dividends payable
on Series A securities. Excluding these charges, operating loss for
the quarter was $1.2 million, our best performance in eight quarters.
Product revenue for the first quarter increased 70% to $29.2
million from $17.2 million in the prior year period, and increased 17%
sequentially from $24.9 million in the fourth quarter of fiscal 2005.
Service revenue for the quarter was $10.1 million, a 15% improvement
year-over-year compared to $8.8 million in the comparable prior year
period, and a 5% decline sequentially.
Gross margin for the first quarter was 20.5% compared to 23.2% in
the prior year period and 12.6% in the prior quarter. Service gross
margins improved significantly from the prior quarter, boosted by
better utilization, cost improvements, and reduced depreciation
charges, in line with the Company's previously announced plans.
SG&A expenses of $9.3 million in the first quarter were up
year-over-year from $7.7 million and down sequentially from $10.7
million. The increase in expenses year-over-year is due primarily to
increased selling expense associated with the addition of new
salespeople and commissions on increased sales. Expenses were lower
than the prior quarter due to reduced administrative costs, including
the shutdown of our Irish facility.
The Company recognized a restructuring charge of $894,000 in the
period associated primarily with remaining costs of the Irish facility
closure and a revaluation of a previously recorded facilities reserve.
As of July 2, 2005, the Company had $7.8 million in cash and cash
equivalents. Uses of cash in the quarter primarily consisted of costs
associated with the Ireland facility closure and the operating loss.
"We grew revenue nicely in the first quarter and made very good
progress toward achieving profitability," said Tom Raimondi, chairman,
president and CEO of MTI. "We experienced strong improvement in our
bottom-line results, which we expect to further improve upon
throughout the year."
Raimondi added, "We are making very good progress and will
continue to drive aggressively towards profitability and increased
market share."
Investor Conference Call
Management will discuss results followed by a question and answer
session today, August 15, 2005 at 1:30 p.m. Pacific Time (4:30 p.m.
Eastern Time). The call-in number is 866-543-6411, access code
64245011; international callers should dial 617-213-8900. If you are
unable to participate, a replay will be available for 48 hours,
beginning at 4:00 p.m. Pacific Time August 15, 2005. The replay
call-in number is 1-888-286-8010, access code 63515600. The replay for
international callers is 617-801-6888, access code 63515600. A live
and archived webcast of the conference call will be available on 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.
MTI is a registered trademark of MTI Technology Corporation (the
"Company").
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 future revenue levels, continued
improvement in operating income, ability to achieve and maintain
profitability and ability to continue taking market share. 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,
currency movements, 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 2, 2005.
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 CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
July 2, April 2,
2005 2005
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents $7,801 $12,191
Accounts receivable, less allowance for
doubtful accounts and sales returns of $455
and $451 at July 2, 2005 and April 2, 2005,
respectively 34,550 33,866
Inventories, net 3,742 3,723
Prepaid expenses and other receivables 6,655 6,971
Total current assets 52,748 56,751
Property, plant and equipment, net 474 708
Goodwill, net 5,184 5,184
Other 224 223
Total assets $58,630 $62,866
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Line of credit $3,667 $3,667
Current portion of capital lease obligations 27 78
Accounts payable 26,518 24,474
Accrued liabilities 9,809 9,489
Accrued restructuring charges 1,836 2,767
Deferred revenue 11,197 14,020
Total current liabilities 53,054 54,495
Deferred revenue 3,448 3,695
Total liabilities 56,502 58,190
Redeemable convertible preferred stock, 567
shares issued and outstanding at July 2, 2005,
net of discount of $7,635 and $7,955 at July 2,
2005 and April 2, 2005, respectively 7,365 7,045
Commitments and contingencies -- --
Stockholders' deficit:
Preferred stock, $.001 par value; authorized
5,000 shares; issued and outstanding 567
shares at July 2, 2005 and April 2, 2005,
included in redeemable convertible preferred
stock above -- --
Common stock, $.001 par value; authorized
80,000 shares; issued and outstanding
35,387 and 35,159 shares at July 2, 2005 and
April 2, 2005, respectively 35 35
Additional paid-in capital 145,455 145,345
Accumulated deficit (147,392) (143,768)
Accumulated other comprehensive loss (2,834) (3,376)
Deferred compensation (501) (605)
Total stockholders' deficit (5,237) (2,369)
Total liabilities and stockholders'
deficit $58,630 $62,886
MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS
ENDED
JULY 2, JULY 3,
2005 2004
Net product revenue $29,204 $17,204
Service revenue 10,127 8,832
Total revenue 39,331 26,036
Product cost of revenue 23,481 13,096
Service cost of revenue 7,772 6,893
Total cost of revenue 31,253 19,989
Gross profit 8,078 6,047
Operating expenses:
Selling, general and administrative 9,274 7,744
Restructuring charges 894 --
Total operating expenses 10,168 7,744
Operating loss (2,090) (1,697)
Interest and other expense, net (63) (147)
Gain (loss) on foreign currency transactions (840) 53
Loss before income taxes (2,993) (1,791)
Income tax expense (benefit) 10 (2)
Net loss (3,003) (1,789)
Amortization of preferred stock discount (320) (77)
Dividend on preferred stock (300) (53)
Net loss applicable to common shareholders $(3,623) $(1,919)
Net loss per share applicable to common
shareholders:
Basic and diluted $(0.10) $(0.06)
Weighted-average shares used in per share
computations:
Basic and diluted 35,210 34,555
CONTACT: MTI Technology Corporation
Victor Chynoweth, 714-481-7828
vchynoweth@mti.com