10-K/A 1 a00294e10vkza.htm AMENDMENT TO FORM 10-K MTI Technology Corporation
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10-K/A

(Amendment No. 1)


     
(Mark One)
   
þ
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
    For the fiscal year ended April 3, 2004
 
o
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
    For the transition period from           to           .

Commission file number 0-23418

MTI Technology Corporation
(Exact name of registrant as specified in its charter)
     
Delaware
  95-3601802
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

14661 Franklin Avenue

Tustin, California 92780
(Address of principal executive offices, zip code)

Registrant’s telephone number, including area code:

(714) 481-7800

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 Par Value
(Title of Class)

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

          Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes o          No þ

          The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant was $31,666,721 on October 4, 2003, based on the closing sale price of such stock on The Nasdaq SmallCap Market.

          The number of shares outstanding of Registrant’s Common Stock, $0.001 par value, was 32,974,882 on June 25, 2004.

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     þ

DOCUMENTS INCORPORATED BY REFERENCE:

      None.




EXPLANATORY NOTE
PART IV, ITEM 15:
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PART II, ITEM 7:
SIGNATURES
EXHIBIT INDEX
EXHIBIT 23.1
EXHIBIT 23.2
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2


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EXPLANATORY NOTE

      This Amendment No. 1 on Form 10-K/A to the MTI Technology Corporation (the “Company”) Annual Report on Form 10-K for the year ended April 3, 2004 (the “Original Filing”) is being filed to correct two incomplete disclosures in the Original Filing and to correct the title of the auditor’s report letter from Grant Thornton LLP and the consent from Grant Thornton LLP for the incorporation by reference of that report in Registration Statements on Forms S-8. Neither of the modifications affect our financial results for the period reported. The modifications were as follows:

        (1) Note 7, “Debt,” to the “Notes to Consolidated Financial Statements” included in Part IV, Item 15 of the Original Filing correctly stated that on December 5, 2002, we paid off the outstanding $1.685 million loan from the Canopy Group, Inc., but incorrectly stated that we terminated our loan agreement with Canopy at that time. The loan agreement was not actually terminated and remains in place, although we have no borrowings outstanding under the loan agreement and may not re-borrow any funds pursuant thereto. The loan agreement, as amended in June 2004, remains in effect, and Canopy’s liens on our assets remain in place, because, as discussed in the “Liquidity and Capital Resources” Section of Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Canopy has guaranteed a letter of credit issued in support of our credit facility with Comerica, and the liens in favor of Canopy, pursuant to said amendment, secure our obligation to reimburse Canopy for any draws against that guaranty. Accordingly, we are amending Note 7 of the “Notes to Consolidated Financial Statements” to correct the incomplete disclosure.
 
        (2) The risk factor entitled “Our stock ownership is concentrated in a single stockholder, and other stockholders may not be able to influence corporate decisions,” contained in Item 7 of the Original Filing, stated that other Company stockholders may not be able to influence corporate decisions. This statement is no longer complete since the closing of the Series A Convertible Preferred Stock private placement discussed in the “Liquidity and Capital Resources” Section of Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As a condition to that investment, the Canopy Group, Inc. entered into a proxy agreement with the Series A investors whereby the Series A investors are able to vote Canopy’s shares as it relates to certain significant corporate transactions. Accordingly, we are amending the risk factor to complete the disclosure.
 
        (3) The auditor’s report letter from Grant Thornton LLP was incorrectly titled as “Report of Independent Certified Public Accountants.” The title has been corrected to read, “Report of Independent Registered Public Accounting Firm.”
 
        (4) The consent from Grant Thornton LLP for the incorporation by reference of the audit report in Registration Statements on Forms S-8 was incorrectly titled, “Consent of Independent Certified Public Accountants.” The title has been corrected to read, “Consent of Independent Registered Public Accounting Firm.”

      The Original Filing as amended hereby continues to speak as of the date of the Original Filing and the disclosures have not been updated to speak to any later date. Any items in the Original Filing that are not expressly changed hereby shall be as set forth in the Original Filing. All information contained in this Amendment No. 1 and the Original Filing is subject to updating and supplementing as provided in our subsequent periodic reports filed with the Securities and Exchange Commission.

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PART IV, ITEM 15:

Report of Independent Registered Public Accounting Firm — Grant Thornton LLP

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

MTI Technology Corporation

      We have audited the accompanying consolidated balance sheet of MTI Technology Corporation and subsidiaries as of April 3, 2004, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the financial statements of MTI France SA, a consolidated subsidiary, which statements reflect total assets and revenue constituting 18% and 16%, respectively, in 2004 of the related consolidated totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for MTI France SA, is based solely on the report of the other auditors.

      We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

      In our opinion, based on our audit and the report of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of MTI Technology Corporation and subsidiaries as of April 3, 2004, and the results of their consolidated operations and their consolidated cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

      We have also audited Schedule II of MTI Technology Corporation for the year ended April 3, 2004. In our opinion, this schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

  /s/ GRANT THORNTON LLP

Irvine, California

June 7, 2004 (except for note 16,
as to which the date is June 18, 2004)
 
(7) Debt
 
Credit Agreement and Lines of Credit

      On December 5, 2002, the Company paid off the outstanding $1,685 loan with the Canopy Group, Inc. This loan agreement remains in effect, but with a zero balance and the Company may not re-borrow any funds thereunder. However, pursuant to the loan agreement, as amended in June 2004, Canopy has guaranteed a letter of credit in support of the Company’s obligations to Comerica Bank discussed below and the Company’s obligations to Canopy are secured by a security interest in substantially all of the Company’s assets. Ralph J. Yarro, III, one of the Company’s Directors, is also a Director, President and Chief Executive Officer of Canopy. Darcy G. Mott, one of the Company’s Directors, is also a Vice President, Treasurer and Chief Financial Officer of Canopy. Canopy beneficially owns approximately 44% of the Company’s outstanding common stock.

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      In November 2002, the Company entered into an agreement (the “Comerica Loan Agreement”) with Comerica Bank (“Comerica”) for a line of credit of $7.0 million at an interest rate equal to the prime rate. As discussed above, the line of credit is secured by a letter of credit that is guaranteed by Canopy. Canopy’s guarantee was to mature on November 30, 2003, but on June 30, 2003, the Company received an extension on the letter of credit for $7.0 million until June 30, 2004. The Comerica Loan Agreement was to mature on October 31, 2003, but on June 30, 2003, the Company received a renewal on the line of credit for $7.0 million until May 31, 2004. On June 18, 2004 the Company received an additional extension on the letter of credit for $7.0 million until June 30, 2005. Also on June 18, 2004, the Company received an additional renewal on the Comerica line of credit for $7.0 million until May 31, 2005 (see note 16).

      The Comerica Loan Agreement contains negative covenants placing restrictions on the Company’s ability to engage in any business other than the businesses currently engaged in, suffer or permit a change in control, and merge with or acquire another entity. Although we are currently in compliance with all of the terms of the Comerica Loan Agreement, and believe that we will remain in compliance, there can be no assurance that we will be able to continue to borrow under the Comerica Loan Agreement through the expiration date. Upon an event of default, Comerica may terminate the Comerica Loan Agreement and declare all amounts outstanding immediately due and payable. As of April 3, 2004, there was $3,933 million outstanding under the Comerica line of credit.

PART II, ITEM 7:

Our stock ownership is concentrated in a single stockholder, who has entered into a voting agreement with another major stockholder, and other stockholders may not be able to influence corporate decisions.

      Ralph J. Yarro III, one of our Directors, is also the Director and President and Chief Executive Officer of the Canopy Group, Inc., which beneficially owns approximately 44% of our outstanding common stock. Canopy is able to substantially affect our actions which require stockholder approval, including the election of the Board of Directors and the approval of significant corporate transactions. This concentration of ownership may delay or prevent a change in control of the Company and will make some transactions difficult or impossible without Canopy’s support. In addition, in connection with the closing of our Series A Convertible Preferred Stock private placement discussed in the “Liquidity and Capital Resources” Section of Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the Series A investors and Canopy entered into a proxy agreement whereby the Series A investors are able to vote Canopy’s shares as it relates to certain significant corporate transactions.

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SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 15th day of July 2004.

  MTI TECHNOLOGY CORPORATION

  BY:  /s/ THOMAS P. RAIMONDI, JR.
 
  Thomas P. Raimondi, Jr.
  Chairman, President and
  Chief Executive Officer
  (Principal Executive Officer)

  By:  /s/ TODD SCHAEFFER
 
  Todd Schaeffer
  Chief Financial Officer and Secretary
  (Principal Financial Officer)

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EXHIBIT INDEX

         
Exhibit
Number Description


  23.1     Consent of Independent Registered Public Accounting Firm — Grant Thornton LLP.
  23.2     Consent of Independent Registered Public Accounting Firm — KPMG LLP.
  31.1     Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
  31.2     Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
  32.1     Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  32.2     Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.