MTIC Fiscal results..now I see
MTI Reports Fiscal 2000 Results
ANAHEIM, Calif.--(BUSINESS WIRE)--May 24, 2000--MTI Technology Corp.
(Nasdaq:MTIC - news) today reported a net operating loss for the fourth quarter of fiscal 2000 ended April 1,
2000, of $1.4 million, compared to net operating income of $3.0 million in the same quarter of the previous
year, and $3.0 million for the immediately preceding quarter.
Total revenue for the fourth quarter was $60.6 million, up 7 percent and 3 percent as compared to last year's
fourth quarter and the third quarter of fiscal 2000, respectively. Net product revenue for the fourth quarter
was $47.9 million, compared to $44.7 million in the fourth quarter last year, and $46.6 million for the
immediately preceding quarter.
Service revenue for the fourth quarter of fiscal 2000 of $12.6 million represented a 6 percent increase over
the $11.9 million reported in the fourth quarter of the previous year, and a 2 percent increase over the $12.4
million reported in the immediately preceding quarter.
The gross profit margin for the fourth quarter of fiscal 2000 was 41.4 percent compared to 33.2 percent for
the same period last year and 39.6 percent for the third quarter of fiscal 2000.
Net income for the fourth quarter of fiscal year 2000 was $15.1 million, or 44 cents diluted earnings per share.
Excluding a one time tax benefit of $15.0 million related to the reversal of a tax valuation allowance, $1.9
million incremental patent royalty recognized in the fourth quarter, and $13,000 of loss recognized from the
investment in Caldera, the Company would have reported a net loss for the fourth quarter of fiscal 2000 of
$1.9 million, or 6 cents per share; total revenue and product revenue would have been $58.7 million and
$46.0 million, respectively, and gross profit margin would have been 39.5 percent.
Net income for fiscal 2000 was $26.2 million or 79 cents diluted earnings per share. Excluding the one time tax
benefit of $15.0 million and a $1.9 million loss related to the Company's pro rata share of Caldera's results
from operations plus amortization of goodwill relating to the investment, the Company would have reported
net income of $13.1 million, or 39 cents diluted earnings per share, as compared to $10.1 million, or 34 cents
diluted earnings per share for fiscal 1999. Total revenue for fiscal 2000 was $227.1 million, as compared to
$201.7 million for fiscal 1999. Product revenue was $177.8 million, up from $157.5 million last fiscal year, while
service revenue was $49.3 million, up from $44.2 million in fiscal 1999. The gross margin for fiscal 2000 was
39.7 percent, compared to 33.2 percent for fiscal 1999.
Business Trends:
``Although the Company continued to experience strong growth in its Vivant product line and an
improvement in the mix of core products sold during the fourth quarter, overall revenue growth and earnings
performance were below our goals,'' said Tom Raimondi, MTI president and chief executive officer.
``At the beginning of fiscal 2000 we implemented a new sales compensation plan designed to drive higher
product margins and development of new accounts over the course of the year. In both cases the plan was,
in general, very successful. New name accounts, primarily in the internet and e-commerce markets, grew
substantially, while gross margin increased materially over fiscal 1999. However, due to a disproportionate
amount of revenue being generated by a relatively small core group of salespersons, the impact of increasing
commission accelerators throughout the year, and substantial annual bonuses earned in the fourth quarter as
a result of the Company's strong margin percentage growth, the plan resulted in a considerable increase in
commissions and bonuses quarter-over-quarter, which negatively impacted the Company's earnings. Effective
with the new fiscal year, a new compensation plan has been put into effect that, while allowing top
performers the opportunity to earn a competitive compensation, is designed to be quarterly driven and much
more predictable in its impact on sales expense.
``In terms of overall revenue, the primary negative impact came as a result of a revenue shortfall in Europe.
Upon my appointment in December as CEO and president, I set clear revenue goals for both our domestic and
European operations, which in the case of our European unit, were not met. As a result, I have replaced
European top management with the clear intent of improving financial performance immediately.
``Although the Company's overall financial results for the fourth quarter were below our goals, MTI did
achieve several successes during the quarter and year, most notably in terms of the growth of its flagship
Vivant product line:
-- Revenue from the Vivant product family was $23.9 million for the
fourth quarter, an increase of 42 percent over the third quarter.
-- Revenue from the Vivant product family was $67.7 million for the
full fiscal year, up from essentially zero the preceding fiscal
year.
-- Sales of the Company's SAN software products more than doubled
quarter-over-quarter, slightly exceeding $1.0 million.
-- As a result of larger configurations being sold and the increase
in software content, the average selling price per Vivant unit
was approximately $217,000, up from $151,000 in the third
quarter, and the third consecutive quarterly increase.
-- Revenue from core server / SAN products grew 48 percent over last
year's fourth quarter and 46 percent year-over-year. This growth
was partially offset by declining tape and related software
revenues, which fell 48 percent in the fourth quarter from the
same period last year, and 31 percent year-over-year.
-- The gross margin percentage for fiscal 2000 was 39.7 percent as
compared to 33.2 percent for fiscal 1999.
-- The Company ended the year with zero bank debt outstanding and
has remained so through the date of this press release, a major
milestone in its operational plans.
``With the change in leadership in Europe, and significant changes being implemented to our sales and
marketing organizations domestically including the introduction of the new commission plan, I am committed
to improving the operational performance of the Company while we continue to take advantage of a robust
and growing market through the continued success of our flagship Vivant product line,'' stated Raimondi.
Expense Overview:
Selling, general and administrative expenses for the fourth quarter were $22.4 million, compared to $12.8
million for the fourth quarter last year, and $16.1 million for the immediately preceding quarter. The increase
in expenses was primarily due to increased sales commissions and bonuses, salary and related costs, and
employment agency fees due to increased head count.
Research and development expenses for the fourth quarter were $4.2 million, compared to $2.9 million in the
same quarter last year and $4.3 million in the immediately prior quarter. The increase in expenses over the
prior year was primarily due to increased project costs, and salary and related costs due to increased head
count.
Based on projected financial forecasts and available tax planning strategies, the Company's financial
management determined it is more likely than not that the existing deferred tax assets will be realized, and
have therefore reversed the Company's existing tax valuation allowance, resulting in a one time tax benefit of
$15.0 million.
Balance Sheet Summary:
Cash on hand at the end of the fourth quarter of fiscal 2000 was $8.8 million, compared to $7.2 million at the
end of the prior fiscal year and $2.0 million at the end of the immediately preceding quarter. Trade accounts
receivable increased $21.3 million from the end of the prior fiscal year, and $4.4 million from the immediately
preceding quarter, all within domestic operations, and was primarily the result of the timing of shipments late
within the quarter, and an increase in overall revenue. Inventories increased $8.5 million from the end of fiscal
1999, primarily as the result of an increase in trade inventories held both in the European and domestic
operations, but were down $5.3 million from the end of the third quarter of fiscal 2000. Total bank debt
decreased $5.8 million and $13.9 million from the end of fiscal year 1999 and the immediately preceding
quarter, respectively. At April 1, 2000, the Company had no bank debt outstanding. Short-term notes payable
increased $1.5 million from the end of fiscal 1999 as a result of the investment in Caldera.
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 news release includes forward-looking statements which are subject to change, including statements
regarding the market acceptance and success of the Vivant family of solutions, future market opportunities,
the anticipated effect of the commission plan, the effect of the change in European Operations' management,
and future operating performance. The actual results may differ materially from those described in any
forward-looking statement. In particular, there can be no assurances that the Company will be able to
improve its operating performance, successfully reduce compensation costs, or continue to increase sales of
its Vivant product line. 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 is included in the
Company's Annual Report to the SEC on Form 10-K for the year ended April 3, 1999.
With headquarters in Anaheim, Calif., the Company offers services and support from more than 40 offices in
the United States and Europe. MTI may be contacted at 800/999-9MTI. Information can also be accessed via
MTI On-Line, the Company's World Wide Web server on the Internet at: http//:www.mti.com.
MTI and Gladiator are trademarks of MTI Technology Corp. All other company, brand or product names are
registered trademarks or trademarks of their respective holders.
MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
FY00 FY99
Net product revenue $177,770 $157,456
Service revenue 49,327 44,193
------ ------
Total revenue 227,097 201,649
Product cost of revenue 106,568 106,767
Service cost of revenue 30,456 27,917
------ ------
Total cost of revenue 137,024 134,684
Gross profit 90,073 66,965
39.7% 33.2%
Operating expenses:
Selling, general and administrative 64,829 46,326
Research and development 16,017 12,765
------ ------
Total operating expenses 80,846 59,091
Operating income 9,227 7,874
Interest and other income, net 3,822 3,739
Equity in net loss of affiliate 1,906 --
Income before income taxes 11,143 11,613
Income tax expense (benefit) (15,095) 1,521
-------- -----
Net income $26,238 $10,092
Net income per share:
Basic $0.87 $0.35
Diluted $0.79 $0.34
Weighted average shares used in per
share computation:
Basic 30,268 28,451
Diluted 33,232 29,710
MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
FY00 FY99 FY00
Q4 Q4 Q3
Net product revenue $47,930 $44,699 $46,550
Service revenue 12,644 11,901 12,408
------ ------ ------
Total revenue 60,574 56,600 58,958
Product cost of revenue 27,480 30,408 27,959
Service cost of revenue 8,001 7,407 7,658
----- ----- -----
Total cost of revenue 35,481 37,815 35,617
Gross profit 25,093 18,785 23,341
41.4% 33.2% 39.6%
Operating expenses:
Selling, general and administrative 22,358 12,847 16,061
Research and development 4,183 2,891 4,253
----- ----- -----
Total operating expenses 26,541 15,738 20,314
Operating income (loss) (1,448) 3,047 3,027
Interest and other income, net 707 983 938
Equity in net loss of affiliate 13 -- 1,432
Income (loss) before income taxes (754) 4,030 2,533
Income tax expense (benefit) (15,824) 317 --
-------- --- --
Net income $15,070 $3,713 $2,533
Net income per share:
Basic $0.48 $0.13 $0.08
Diluted $0.44 $0.13 $0.08
Weighted average shares used in per
share computation:
Basic 31,576 28,617 30,025
Diluted 34,481 29,644 32,693
MTI TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
April 1, April 3,
2000 1999
-------------- ----------------
ASSETS:
Cash $ 8,791 $ 7,213
Trade accounts receivable, net 74,289 53,005
Inventories 25,515 16,987
Other current assets 7,427 11,272
----------- ------------
Total current assets 116,022 88,477
Non-current deferred income tax 26,715 --
Investment in affiliate 15,222 --
Goodwill and intangibles, net 8,998 10,890
Fixed assets and other non-current
assets, net 14,908 14,411
----------- ------------
Total assets $ 181,865 $ 113,778
LIABILITIES & STOCKHOLDERS' EQUITY:
Bank line $ -- $ 5,824
Notes payable 1,500 --
Trade payables and accrued liabilities 42,380 34,675
Deferred income 20,708 17,981
----------- ------------
Total current liabilities 64,588 58,480
Other non-current liabilities 2,864 1,157
----------- ------------
Total liabilities 67,452 59,637
Total stockholders' equity 114,413 54,141
----------- ------------
Total liabilities &
stockholders' equity $ 181,865 $ 113,778
MTI is a registered trademark and Continuous Access to Online Information is a service mark of MTI
Technology Corp. All other company, brand or product names are registered trademarks or trademarks of their
respective holders.
Contact:
MTI Technology Corp.
Kevin J. Liebl, 714/693-2740 (Media Relations)
kliebl@mti.com
Frank Yoshino, 714/693-2775 (Investor Relations)
fyoshino@mti.com
or
JPR Communications
Judy Smith, 818/386-0403
JPRCommun@aol.com |
