Exhibit 99.1
Contact:
Joyce Shinn
MTI Technology Corporation
949-885-7337
jshinn@mti.com
MTI TECHNOLOGY CORPORATION REPORTS FISCAL 2007 SECOND QUARTER AND
SIX MONTHS FINANCIAL RESULTS
Irvine, CA, November 14, 2006 - MTI Technology Corporation (Nasdaq Capital
Market: MTIC), a leading multi-national provider of consulting services and
comprehensive information infrastructure solutions for mid to large-size
organizations, today reported financial results for its fiscal 2007 second
quarter ended September 30, 2006.
Total revenue for the quarter grew 27% to $40.3 million compared to $31.7
million in the prior year period. Product revenue grew to $25.4 million compared
to $22.1 million in the prior year quarter, despite continued slowness 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 second quarter of fiscal 2007 were $14.9 million
compared to $9.6 million in the prior year period, an increase of 55%. Second
quarter 2007 service revenues include revenues associated with the recent
acquisition of Collective Technologies.
The Company reported a net loss of $3.3 million or $0.13 per share in the second
quarter of fiscal 2007 compared to $3.5 million or $0.12 per share in the prior
year period, on a generally accepted accounting principles (GAAP) basis.
Included in fiscal 2007 second quarter net loss are charges for stock option and
restricted stock expense, amortization of intangible assets and restructuring
totaling $1.7 million. Excluding these items, non-GAAP net loss improved by 52%
year-over-year to $1.6 million or $0.04 per share from a net loss of $3.3
million or $0.09 per share in the prior year period.
Total gross margin for the second quarter of fiscal 2007 was 21.1% compared to
20.2% in the prior year period. Product gross margin for the second quarter was
18.3% compared to 20.0% in the prior year period, and service gross margins for
the second quarter were 26.0% compared to 20.6% in the prior year period.
Service gross margins began to benefit from the recent acquisition of Collective
Technologies.
Second quarter fiscal 2007 selling, general and administrative (SG&A) expense
was $10.6 million on a GAAP basis, which includes charges of $644,000 for equity
compensation expense. Excluding these charges, non-GAAP SG&A expense was $10.0
million compared to $9.7 million in the prior year period. The increase in SG&A
expense was primarily attributable to the addition of Collective Technologies.
The combined Company continues to focus on improving operational efficiency and
cost containment throughout the organization.
For the six months ended September 30, 2006, MTI reported total revenue of $83.0
million compared to $71.1 million in the prior year period. Product revenue for
the first six months of fiscal 2007 increased to $58.6 million from $51.3
million in the prior year, while service revenue increased to $24.4 million from
$19.8 million. The Company reported a net loss for the first six months of
fiscal 2007 of $4.2 million or $0.19 per share compared to $6.5 million or $0.22
per share in the prior year period, on a GAAP basis. Included in the first six
months of fiscal 2007 net loss are charges for stock option and restricted stock
expense, amortization of intangible assets and restructuring charges totaling
$2.3 million. Excluding these items, non-GAAP net loss improved by 65% to $1.9
million or $0.05 per share from a net loss of $5.4 million or $0.15 per share in
the prior year period.
As of September 30, 2006, the Company had $10.3 million in cash and cash
equivalents, compared to $21.6 million at the end of the prior quarter. Second
quarter cash use was driven by the Collective Technologies acquisition and a
reduction in accounts payable.
"We continue to focus on top and bottom-line improvements in the business," said
Tom Raimondi, President and CEO of MTI Technology. "We are now beginning to see
the benefits of the Collective Technologies acquisition and we believe the
business to be well positioned for growth. We plan to continue to focus on
improving operational efficiencies and execution."
NON-GAAP MEASURES
MTI provides 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. The Company believes 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 business
acquisitions and our convertible preferred stock. The Company uses non-GAAP
measures internally to evaluate operating performance and for internal budgets
and forecasts. The Company believes 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.
The Company began recording equity compensation expense in accordance with
Financial Accounting Standards Board (FASB) Statement No. 123R in the first
quarter of fiscal 2007. The Company believes that excluding equity compensation
expense from non-GAAP measures facilitates a comparison of results with prior
periods and can enhance the understanding of performance.
INVESTOR CONFERENCE CALL
Management will discuss results followed by a question and answer session today,
November 14, 2006 at 6:00 a.m. Pacific Time (9:00 a.m. Eastern Time). The
call-in number is 866-510-0712, access code 91148311; international callers
should dial 617-597-5380, access code 91148311. If you are unable to
participate, a replay will be available for 48 hours, beginning at 8:00 a.m.
Pacific Time today, November 14, 2006. The replay call-in number is
888-286-8010, access code 64526887. The replay for international callers is
617-801-6888, access code 64526887. 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 business being well positioned for
future growth and our plans to continue to focus on improving operational
efficiencies and execution, and our disclosure of non-GAAP financial measures.
The actual results may differ materially from those described in any
forward-looking statement. 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 and our Form 10-Q
for the period ended July 1, 2006. All forward-looking statements speak as of
the date made and we undertake no obligation to update any such statements.
# # #
Financial Tables to Follow
MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------- -----------------------------
September 30, October 1, September 30, October 1,
2006 2005 2006 2005
------------- ------------- ------------- -------------
Net product revenue ...................................... $ 25,409 $ 22,056 $ 58,579 $ 51,260
Service revenue .......................................... 14,882 9,629 24,404 19,802
------------- ------------- ------------- -------------
Total revenue ........................................ 40,291 31,685 82,983 71,062
------------- ------------- ------------- -------------
Product cost of revenue .................................. 20,772 17,640 47,808 41,121
Service cost of revenue .................................. 11,009 7,644 18,715 15,462
------------- ------------- ------------- -------------
Total cost of revenue .............................. 31,781 25,284 66,523 56,583
------------- ------------- ------------- -------------
Gross profit ....................................... 8,510 6,401 16,460 14,479
------------- ------------- ------------- -------------
Operating expenses:
Selling, general and administrative ...................... 10,629 9,732 19,773 19,006
Amortization of intangible assets ........................ 448 -- 448 --
Restructuring charges .................................... 555 132 555 1,026
------------- ------------- ------------- -------------
Total operating expenses ........................... 11,632 9,864 20,776 20,032
------------- ------------- ------------- -------------
Operating loss ..................................... (3,122) (3,463) (4,316) (5,553)
Interest and other expense, net .......................... (148) (82) (100) (145)
Gain (loss) on foreign currency transactions ............. (7) 32 306 (808)
------------- ------------- ------------- -------------
Loss before income tax expense ........................... (3,277) (3,513) (4,110) (6,506)
Income tax expense ....................................... 13 -- 49 10
------------- ------------- ------------- -------------
Net loss ................................................. (3,290) (3,513) (4,159) (6,516)
Amortization of preferred stock discount ................. (791) (335) (1,552) (655)
Dividend on preferred stock .............................. (751) (300) (1,475) (600)
------------- ------------- ------------- -------------
Net loss applicable to common shareholders ............... $ (4,832) $ (4,148) $ (7,186) $ (7,771)
============= ============= ============= =============
Net loss per share applicable to common shareholders:
Basic and diluted ...................................... $ (0.13) $ (0.12) $ (0.19) $ (0.22)
============= ============= ============= =============
Weighted average shares used in per share computations:
Basic and diluted ...................................... 38,435 35,497 37,241 35,353
============= ============= ============= =============
MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
September 30, April 1,
2006 2006
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents ................................................. $ 10,311 $ 21,660
Accounts receivable, less allowance for doubtful accounts and sales returns
of $405 and $514 at September 30, 2006 and April 1, 2006, respectively ... 36,776 37,803
Inventories, net .......................................................... 4,727 10,466
Prepaid expenses and other receivables .................................... 7,890 8,712
------------- -------------
Total current assets ............................................. 59,704 78,641
Property, plant and equipment, net ........................................ 794 555
Intangible assets net, .................................................... 3,053 --
Goodwill .................................................................. 13,361 5,184
Other assets .............................................................. 190 242
------------- -------------
Total assets ..................................................... $ 77,102 $ 84,622
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Line of credit ............................................................ $ 5,167 $ 5,167
Current portion of note payable ........................................... 798 --
Accounts payable .......................................................... 27,670 36,952
Accrued liabilities ....................................................... 7,686 7,423
Accrued restructuring charges ............................................. 993 847
Deferred revenue, current ................................................. 10,176 11,820
------------- -------------
Total current liabilities ........................................ 52,490 62,209
Note payable .............................................................. 1,202 --
Accrued preferred stock dividends ......................................... 4,367 2,892
Deferred revenue, noncurrent .............................................. 3,928 4,305
------------- -------------
Total liabilities ................................................ 61,987 69,406
------------- -------------
Series A redeemable convertible preferred stock, 567 shares issued and
outstanding at September 30, 2006 and April 1, 2006 net of discount of
$5,801 and $6,584 at September 30, 2006 and April 1, 2006, respectively .. 9,199 8,416
Series B redeemable convertible preferred stock, 1,582 shares issued and
outstanding September 30, 2006 and April 1, 2006, net of discount of
$8,801 and $9,570 at September 30, 2006 and April 1, 2006, respectively .. 11,199 10,430
Stockholders' deficit:
Preferred stock, $.001 par value; 5,000 shares authorized; issued and
outstanding 2,149 shares at September 30, 2006 and April 1, 2006,
included in redeemable convertible preferred stock ................. -- --
Common stock, $.001 par value; 80,000 shares authorized; issued and
outstanding 38,456 and 36,024 shares at September 30, 2006 and
April 1, 2006, respectively ........................................ 38 36
Additional paid-in capital ............................................. 160,580 155,039
Accumulated deficit .................................................... (162,965) (155,779)
Accumulated other comprehensive loss ................................... (2,936) (2,926)
------------- -------------
Total stockholders' deficit ...................................... (5,283) (3,630)
------------- -------------
$ 77,102 $ 84,622
============= =============
MTI TECHNOLOGY CORPORATION
SELECTED NON-GAAP DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
UNAUDITED
THREE MONTHS ENDED SEPTEMBER 30, 2006
----------------------------------------------------------------------------
Selling Loss per
Service Cost General and Operating Net Share, Basic
of Revenue Administrative Loss Loss and Diluted
------------ -------------- ------------ ---------- ------------
GAAP $ 11,009 $ 10,629 $ (3,122) $ (3,290) $ (0.13)
Adjustments to reconcile to Non-GAAP:
Stock Option Expense (1) (40) (490) 530 530 0.01
Restricted Stock Expense (1) (4) (154) 158 158 0.01
Amortization of Intangible Assets (2) - - 448 448 0.01
Restructuring Charges - - 555 555 0.01
Amortization of Preferred
Stock Discount (3) - - - - 0.02
Dividend on Preferred Stock (3) - - - - 0.02
------------ -------------- ------------ ---------- ------------
Non-GAAP $ 10,965 $ 9,985 $ (1,431) $ (1,599) (0.04)#
============ ============== ============ ========== ============
THREE MONTHS ENDED OCTOBER 1, 2005
----------------------------------------------------------------------------
Selling Loss per
Service Cost General and Operating Net Share, Basic
of Revenue Administrative Loss Loss and Diluted
------------ -------------- ------------ ---------- ------------
GAAP $ 7,644 $ 9,732 $ (3,463) $ (3,513) $ (0.12)
Adjustments to reconcile to Non-GAAP:
Stock Option Expense (1) - - - - -
Restricted Stock Expense (1) - (69) 69 69 -
Restructuring Charges - - 132 132 0.01
Amortization of Preferred
Stock Discount (3) - - - - 0.01
Dividend on Preferred Stock (3) - - - - 0.01
------------ -------------- ------------ ---------- ------------
Non-GAAP - $ 9,663 $ (3,262) $ (3,312) $ (0.09)
============ ============== ============ ========== ============
(1) Represents equity compensation recognized pursuant to Financial Accounting
Board Standard No. 123R, "Share-Based Payment."
(2) Represents amortization associated with intangible assets acquired in
connection with business combinations.
(3) Represents a non-cash charge to equity associated with the Series A and
Series B Convertible Preferred Stock.
# Amount may not add due to rounding.
MTI TECHNOLOGY CORPORATION
SELECTED NON-GAAP DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
UNAUDITED
SIX MONTHS ENDED SEPTEMBER 30, 2006
----------------------------------------------------------------------------
Selling Loss per
Service Cost General and Operating Net Share, Basic
of Revenue Administrative Loss Loss and Diluted
------------ -------------- ------------ ---------- ------------
GAAP $ 18,715 $ 19,773 $ (4,316) $ (4,159) $ (0.19)
Adjustments to reconcile to Non-GAAP:
Stock Option Expense (1) (89) (997) 1,086 1,086 0.03
Restricted Stock Expense (1) (4) (211) 215 215 0.01
Amortization of Intangible Assets (2) - - 448 448 0.01
Restructuring Charges - - 555 555 0.01
Amortization of Preferred
Stock Discount (3) - - - - 0.04
Dividend on Preferred Stock (3) - - - - 0.04
------------ -------------- ------------ ---------- ------------
Non-GAAP $ 18,622 $ 18,565 $ (2,012) $ (1,855) $ (0.05)
============ ============== ============ ========== ============
SIX MONTHS ENDED OCTOBER 1, 2005
----------------------------------------------------------------------------
Selling Loss per
Service Cost General and Operating Net Share, Basic
of Revenue Administrative Loss Loss and Diluted
------------ -------------- ------------ ---------- ------------
GAAP $ 15,462 $ 19,006 $ (5,553) $ (6,516) $ (0.22)
Adjustments to reconcile to Non-GAAP:
Stock Option Expense (1) - - - - -
Restricted Stock Expense (1) - (131) 131 131 0.00
Restructuring Charges - - 1,026 1,026 0.03
Amortization of Preferred
Stock Discount (3) - - - - 0.02
Dividend on Preferred Stock (3) - - - - 0.02
------------ -------------- ------------ ---------- ------------
Non-GAAP $ 15,462 $ 18,875 $ (4,396) $ (5,359) $ (0.15)#
============ ============== ============ ========== ============
(1) Represents equity compensation recognized pursuant to Financial Accounting
Board Standard No. 123R, "Share-Based Payment."
(2) Represents amortization associated with intangible assets acquired in
connection with business combinations.
(3) Represents a non-cash charge to equity associated with the Series A and
Series B Convertible Preferred Stock.
# Amount may not add due to rounding.