Exhibit 99.1
MTI TECHNOLOGY CORPORATION REPORTS FISCAL 2007
FIRST QUARTER FINANCIAL RESULTS
IRVINE, Calif., Aug. 11 /PRNewswire-FirstCall/ -- MTI Technology
Corporation (Nasdaq: MTIC), a multi-national information and infrastructure
solutions provider, today announced first quarter results for fiscal year
2007.
Revenue for the quarter grew 8.4% to $42.6 million compared to $39.3 million
in the prior year period. Product revenue grew 13.6% year-over-year, to $33.2
million compared to $29.2 million in the prior year quarter, despite a slowdown
in telecom orders brought on by industry consolidation. Telecom segment sales
represented greater than 10% of MTI product revenue in the last fiscal year.
Service revenues for the first quarter of fiscal 2007 were $9.5 million compared
to $10.1 million in the prior year period, a decrease of 6.4%. Service revenues
were negatively affected by late bookings and are expected to rebound in the
next quarter, exclusive of incremental service revenues associated with the
recent acquisition of Collective Technologies.
The Company reported a significant year-over-year improvement in the fiscal
2007 first quarter net loss, from $3.0 million or $.10 per share in the prior
year period to $869,000 or $.07 per share, on a generally accepted accounting
principles (GAAP) basis. Included in the fiscal 2007 first quarter net loss are
charges for equity compensation expense totaling $613,000. Excluding these
items, non-GAAP net loss improved year-over-year to $256,000 or $.01 per share
from a net loss of $2.9 million or $.08 per share in the prior year period.
Reconciliations of non-GAAP measures to GAAP measures are included in the
accompanying financial data.
Gross margin for the first quarter was 18.6% compared to 20.5% in the prior
year period. Product gross margin for the first quarter was 18.5% compared to
19.6% in the prior year period, and service gross margins for the first quarter
were 19.2% compared to 23.3% in the prior year period. Service gross margins
were negatively impacted by lower professional service revenue attributable
primarily to late quarter bookings.
First quarter selling, general and administrative (SG&A) expense was $9.1
million, which includes charges of $564,000 for equity compensation expense,
compared to $9.3 million in the prior year period. Excluding these charges,
non-GAAP SG&A expense was $8.6 million compared to $9.2 million in the prior
year period. Non-GAAP SG&A as a percent of revenue decreased by approximately
14% year-over-year driven by programs focused on improving operational
efficiency and execution.
As of July 1, 2006, the Company had $21.6 million in cash and cash
equivalents, remaining relatively unchanged from April 1, 2006.
On July 10, 2006, MTI announced it had completed its acquisition of the
assets of Collective Technologies, a leading provider of enterprise-class IT
infrastructure services and solutions. As a result of this acquisition, MTI
believes its customers will now be able to take advantage of an expanded
solutions and services portfolio, which includes:
* Business Continuity (Disaster Recovery and Back-up and Recovery)
* Virtualization Technology
* Infrastructure Consolidation and Migration
* Mail & Messaging
* High Density Computing
* Data Storage Solutions and Assessments
* Systems Management
* Data Management, Migration & Consolidation
"We believe we improved the core business significantly in fiscal 2006, and
despite some revenue and margin growth challenges, our core business continued
to show improvement in the most recent quarter," said Tom Raimondi, President
and CEO of MTI Technology. "We believe the work we have done to improve MTI's
existing business, combined with the acquisition of Collective Technologies, has
provided the opportunity to increase shareholder value and we are focused on
continuing to execute our growth strategy and improve operational excellence."
Non-GAAP Measures
We provide non-GAAP measures as a supplement to financial results based on
GAAP. A detailed reconciliation of the non-GAAP results to the most directly
comparable GAAP measures is included in the accompanying financial data.
Investors are encouraged to review this reconciliation. We believe the
presentation of non-GAAP measures provides investors with additional insight
into underlying operating results and prospects for the future by excluding
stock-based compensation and other non-cash items associated with our
convertible preferred stock. We use non-GAAP measures internally to evaluate our
operating performance and for internal budgets and forecasts. We believe that
these non-GAAP measures can be useful to investors in allowing for greater
transparency with respect to supplemental information used by management in its
financial and operational decision making. We began recording equity
compensation expense in accordance with Financial Accounting Standards Board
(FASB) Statement No. 123R in the first quarter of fiscal 2007. We believe that
excluding equity compensation expense from non-GAAP measures facilitates a
comparison of our results with prior periods and can enhance the understanding
of our performance.
Investor Conference Call
Management will discuss results followed by a question and answer session
today, August 11, 2006 at 6:00 a.m. Pacific Time (9:00 a.m. Eastern Time). The
call-in number is 866-383-7998, access code 74043417; international callers
should dial 617-597-5329, access code 74043417. If you are unable to
participate, a replay will be available for 48 hours, beginning at 8:00 a.m.
Pacific Time today, August 11, 2006. The replay call-in number is 888-286-8010,
access code 47802056. The replay for international callers is 617-801-6888,
access code 47802056. 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 consulting services and
comprehensive information infrastructure solutions for mid to large-size
organizations. With more than 20 years of expertise as a technology innovator,
MTI is uniquely qualified to assess, design, implement and support a broad range
of information management and infrastructure 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 3,500 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 our expectations, goals or intentions regarding the future, including
but not limited to statements regarding our expectations regarding service
revenues in the second quarter of fiscal 2007, beliefs regarding our solutions
and services portfolio, beliefs about improvements in our core business and
expectations about future opportunities and areas of focus and our disclosure of
non-GAAP financial measures. The actual results may differ materially from those
described in any forward-looking statement. In particular, we cannot assure you
that our services revenue will rebound in the second quarter of fiscal 2007,
that our expanded solutions and services portfolio will lead to increased
revenues or that we will be able to effectively execute our growth and other
strategies. Important factors that may cause actual results to differ include
competition, timing of customer orders, unanticipated expenses, achievement of
volume-based rebates, currency movements, evolving technology, and the economy
and other world events. Other important factors are set forth in our periodic
filings with the U.S. Securities and Exchange Commission, including our Form
10-K, as amended, for the year ended April 1, 2006. All forward-looking
statements speak as of the date made and we undertake no obligation to update
any such statements.
(Logo: http://www.newscom.com/cgi-bin/prnh/20051010/LAM084LOGO )
Contact:
Joyce Shinn
MTI Technology Corporation
949-885-7337
jshinn@mti.com
MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended
----------------------------
July 1, July 2,
2006 2005
------------ ------------
Net product revenue $ 33,170 $ 29,204
Service revenue 9,474 10,127
Total revenue 42,644 39,331
Product cost of revenue 27,036 23,481
Service cost of revenue 7,658 7,772
Total cost of revenue 34,694 31,253
Gross profit 7,950 8,078
Operating expenses:
Selling, general and administrative 9,144 9,274
Restructuring charges -- 894
Total operating expenses 9,144 10,168
Operating loss (1,194) (2,090)
Interest and other income (expense), net 48 (63)
Gain (loss) on foreign currency transactions 313 (840)
Loss before income tax expense (833) (2,993)
Income tax expense 36 10
Net loss (869) (3,003)
Amortization of preferred stock discount (761) (320)
Dividend on preferred stock (724) (300)
Net loss applicable to common shareholders $ (2,354) $ (3,623)
Net loss per share applicable to common shareholders:
Basic and diluted $ (0.07) $ (0.10)
Weighted average shares used in per share computations:
Basic and diluted 36,048 35,210
MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT PER SHARE DATA)
July 1, April 1,
2006 2006
------------ ------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 21,626 $ 21,660
Accounts receivable, less allowance
for doubtful accounts and sales returns
of $390 and $514 at July 1, 2006 and
April 1, 2006, respectively 38,459 37,803
Inventories, net 6,928 10,466
Prepaid expenses and other receivables 8,719 8,712
Total current assets 75,732 78,641
Property, plant and equipment, net 662 555
Goodwill, net 5,184 5,184
Other assets 482 242
Total assets $ 82,060 $ 84,622
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Line of credit $ 5,167 $ 5,167
Accounts payable 35,064 36,952
Accrued liabilities 7,809 7,423
Accrued restructuring charges 637 847
Deferred revenue, current 11,716 11,820
Total current liabilities 60,393 62,209
Accrued preferred stock dividends 3,616 2,892
Deferred revenue, noncurrent 3,703 4,305
Total liabilities 67,712 69,406
Series A redeemable convertible preferred stock, 567
shares issued and outstanding at July 1, 2006 and
April 1, 2006 net of discount of $6,201 and $6,584 at
July 1, 2006 and April 1, 2006, respectively 8,799 8,416
Series B redeemable convertible preferred stock, 1,582
shares issued and outstanding July 1, 2006 and
April 1, 2006, net of discount of $9,192 and $9,570 at
July 1, 2006 and April 1, 2006, respectively 10,808 10,430
Stockholders' deficit:
Preferred stock, $.001 par value; 5,000 shares authorized;
issued and outstanding 2,149 shares at July 1, 2006 and
April 1, 2006, included in redeemable convertible
preferred stock -- --
Common stock, $.001 par value; 80,000 shares authorized;
issued and outstanding 36,062 and 36,024 shares at
July 1, 2006 and April 1, 2006, respectively 36 36
Additional paid-in capital 155,786 155,039
Accumulated deficit (158,132) (155,779)
Accumulated other comprehensive loss (2,949) (2,926)
Total stockholders' deficit (5,259) (3,630)
$ 82,060 $ 84,622
MTI TECHNOLOGY CORPORATION
SELECTED NON-GAAP DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
UNAUDITED
Three Months Ended July 1, 2006
-----------------------------------------------------------------------------
Selling Loss per
Service Cost General and Operating Share, Basic
of Revenue Administrative Loss Net Loss and Diluted
------------ -------------- ------------ ------------ ------------
GAAP $ 7,658 $ 9,144 $ (1,194) $ (869) $ (0.07)
Adjustments to
reconcile to
Non-GAAP:
Stock Option
Expense (1) (49) (507) 556 556 0.02
Restricted
Stock
Expense (1) -- (57) 57 57 --
Amortization
of Preferred
Stock
Discount (2) -- -- -- -- 0.02
Dividend on
Preferred
Stock (2) -- -- -- -- 0.02
Non-GAAP $ 7,609 $ 8,580 $ (581) $ (256) $ (0.01)
Three Months Ended July 1, 2005
-----------------------------------------------------------------------------
Selling Loss per
Service Cost General and Operating Share, Basic
of Revenue Administrative Loss Net Loss and Diluted
------------ -------------- ------------ ------------ ------------
GAAP $ 7,772 $ 9,274 $ (2,090) $ (3,003) $ (0.10)
Adjustments to
reconcile to
Non-GAAP:
Stock Option
Expense (1) -- -- -- -- --
Restricted
Stock
Expense (1) -- (62) 62 62 --
Amortization
of Preferred
Stock
Discount (2) -- -- -- -- 0.01
Dividend on
Preferred
Stock (2) -- -- -- -- 0.01
Non-GAAP $ 7,772 $ 9,212 $ (2,028) $ (2,941) $ (0.08)
(1) Represents equity compensation expense recognized pursuant to FASB
Statement No. 123R, "Share-Based Payment" adopted in Q1 FY 2007.
(2) Represents a non-cash charge to equity associated with the Series A and
Series B Convertible Preferred Stock.
SOURCE MTI Technology Corporation
-0- 08/11/2006
/CONTACT: Joyce Shinn of MTI Technology Corporation, +1-949-885-7337,
jshinn@mti.com/
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