MTI Reports Fiscal 1997 Results
MTI Closes Fiscal Year with Record Revenues for Fourth Quarter
ANAHEIM, Calif., May 21 /PRNewswire/ -- MTI Technology Corp. (Nasdaq:MTIC) today reported net income for the fourth quarter of fiscal 1997 ended April 5, 1997, of $2.2 million, or 8 cents per share, compared to a net loss of $38.3 million, or $1.97 per share, in the same quarter of the previous year. Total revenue for the fourth quarter rose 46% to $42.1 million, the highest quarterly revenue in the Company's history, compared to $28.9 million for last year's fourth quarter, and $38.9 million for the third quarter of fiscal 1997. Net product revenue for the fourth quarter was $33.9 million, compared to $20.8 million in the fourth quarter last year, and $30.7 million for the immediately preceding quarter. Service revenue for the fourth fiscal quarter of $8.2 million represented a 1% increase from the $8.1 million reported in the fourth quarter of the previous year, and was essentially equal to the $8.2 million reported in the immediately preceding quarter.
Net income for fiscal 1997 was $5.7 million, or 21 cents per share, compared to a net loss of $49.2 million, or $2.54 per share, for the previous year. Total revenue for fiscal 1997 rose $21.8 million, or 17%, to $153.7 million, compared to $131.9 million for fiscal 1996. Net product revenue for fiscal 1997 was $120.4 million, compared to $97.7 million for the previous fiscal year. Service revenue for fiscal 1997 was $33.4 million, a decline of $0.9 million, or 3%, from the prior year.
The gross profit margin for the fourth quarter was 34.5%, compared to 9.8 percent for the same period last year, and 32.5% for the third quarter of fiscal 1997. The gross profit margin for fiscal 1997 was 32.5%, compared to 27.1% for fiscal 1996.
Revenue Trend:
During the fourth quarter of fiscal 1997, the Company continued to pursue its strategy of expanding the revenue contribution from sales to the Open Systems data storage and management market. The Company completed the fourth quarter with approximately 81% of product revenue derived from the sale of products for the Open Systems environment, compared to approximately 45% and 74% for the fourth quarter of last year and the third quarter of fiscal 1997, respectively.
``Management and the Board of Directors are very pleased with the Company's progress this past fiscal year, in terms of overall revenue and earnings growth, and in successfully pursuing our stated strategic direction, as evidenced by our continued shift towards the Open Systems market. MTI's employees have worked this past year to improve the performance of every functional area of the Company. We believe that through these efforts they have positioned the Company to take advantage of forthcoming new product releases and an expanding sales and service staff. The growth in the percentage mix of revenue from the Open Systems market along with the upward trend in gross margins during the four quarters of this past fiscal year continue to validate our strategy to pursue growth opportunities in this market, both through an increased sales presence and the introduction during fiscal 1998 of new and improved products. In addition, the Company will continue its commitment of supporting our historical DEC/VMS customers. As I have previously stated, as our first priority for the new fiscal year MTI will continue to focus on its core strengths in the development and marketing of customer-driven mass storage solutions. By maintaining this focus, we believe MTI will remain in position to take advantage of the expanding market opportunities that exist in the data storage and management market place,'' said Earl Pearlman, MTI president and chief executive officer.
Expense Overview:
Selling, general and administrative expenses for the fourth quarter were $9.6 million, compared to $34.3 million for the fourth quarter last year, and $8.6 million for the immediately preceding quarter.
Excluding certain non-recurring charges of $21.5 million charged in the fourth quarter of fiscal 1996, selling, general and administrative expenses declined $3.2 million versus the same period of the prior fiscal year, primarily due to lower staff costs as a result of a restructuring of operations, begun in the fourth quarter of fiscal 1996 and completed early in the first quarter of fiscal 1997, and reduced goodwill amortization expense. The increase of $1.0 million over the immediately preceding quarter was primarily due to higher compensation-related sales costs due to increased staff and higher revenues, and higher marketing and promotional costs.
Research and development expenses for the fourth quarter were $3.0 million, compared to $5.3 million in the same quarter last year and $2.4 million in the immediately prior quarter. The reduction in expenses year-to- year was primarily due to $1.4 million of certain non-recurring charges taken in the fourth quarter of fiscal 1996 and lower staff costs as a result of the restructuring of operations noted above. The increase over the immediately preceding quarter was primarily due to the beneficial effect of approximately $344,000 of non-refundable expense funding received during the third quarter by the Company as part of an arrangement with NFT Ventures, Inc. (``NFT''), the Company's largest stockholder and an affiliate of the Company's Chairman. No such benefit was received during the fourth quarter. In addition, the Company experienced higher development and prototyping expenses during the fourth quarter related to several new product development programs.
Balance Sheet Summary:
Cash on hand at the end of the fiscal year was $4.3 million, compared to $4.1 million at the end of the prior fiscal year. Due primarily to the increase in revenue, accounts receivable increased $10.8 million to $31.9 million from prior fiscal year-end levels. Inventories declined $6.9 million, or approximately 32% from the end of fiscal 1996, reflecting management's emphasis on improved operating efficiencies and cash management. Total bank debt and notes payable declined $10.9 million from the end of fiscal 1996, primarily due to the conversion of $10.1 million of debt to equity by NFT, while trade accounts payable and accrued liabilities decreased $3.3 million year over year. The decline was primarily the result of a reduction of accrued expenses.
MTI's mission is to be the premier provider of high-performance, cross- platform storage solutions for the enterprise. MTI integrates distributed data management software, modular storage systems and on-site service to meet the mass storage needs of its customers.
This press release includes forward-looking statements which are subject to change. The actual results may differ materially from those described in any forward-looking statement.
The computer industry in general, and the market for the Company's products in particular, is characterized by rapidly changing technology, evolving industry standards and frequent new product introductions, resulting in short product life cycles. Accordingly, the Company believes that its future success will depend in part on its ability to enhance existing products and to develop new products that maintain technological leadership, meet a wide range of changing customer needs and achieve market acceptance. In particular, the Company believes it must continue to respond quickly to customers' needs for innovative storage and data management solutions. Lack of market acceptance for the Company's existing or new products, the Company's failure to introduce new products in a timely or cost effective manner, or its failure to increase functionality of existing products or remain price competitive, would materially adversely affect the Company's operating results. There can be no assurance that the Company will be successful in its product development efforts. In addition, there can be no assurance that the Company's products, even if successfully developed, will achieve timely market acceptance. Additional information on potential factors that could affect the Company's financial results are included in the Company's Annual Report to the SEC on Form 10-K for the year ended April 6, 1996.
Headquartered in Anaheim, CA, the Company offers services and support from more than 40 offices in the United States and Europe. MTI may be contacted at 1-800-999-9MTI. Information can also be accessed via MTI On-Line, the Company's World Wide Web server on the Internet at: mti.com . |
