Wednesday, October 25, 2000

Ontrack Data International Inc. announces third quarter results

ONTRACK Data International, Inc. (NASDAQ: ONDI) today announced its full financial results for the third quarter and nine months ended September 30, 2000.

Total revenue for the quarter was $13.3 million, an 11 percent increase over revenue of $12.0 million in the third quarter of 1999. Net income decreased to $0.9 million, or nine cents per diluted share, compared to $1.6 million, or 16 cents per diluted share, in the same period a year ago. Excluding the amortization of goodwill, net income per diluted share in the third quarter of 2000 was 12 cents compared to 18 cents per diluted share in the third quarter of 1999.

Third quarter 2000 data recovery service and product revenue totaled $9.6 million, a one percent increase compared to $9.5 million in the third quarter of 1999. Of this total, Electronic Information Management (EIM) revenue totaled $1.8 million compared to $1.6 million in the third quarter of 1999, which included approximately $1.1 million from one large project that took place during the quarter. Software revenue of $3.7 million increased 47 percent compared to the third quarter of 1999. The increase was due primarily to increased sales of the Company's software utility products.

For the nine months ended September 30, 2000, total revenues grew 29 percent to $38.0 million compared to $29.5 million in the analogous period of 1999. Net income for the first nine months was 35 cents per share on a fully diluted basis versus 36 cents in 1999. Excluding goodwill, net income per diluted share for the first nine months of 2000 was 44 cents, a 16 percent increase over the same period a year ago.

“While we are pleased to report top line revenue growth, we were disappointed with our reported earnings per share as a result of a longer than expected sales cycle in our RapidRecallä product line. Our EIM business line continues to exhibit strong potential, but was impacted by seasonality in the third quarter," said Mike Rogers, chief executive officer of Ontrack. “We believe we are just beginning to tap the market potential of our unique Application Service Provider (ASP) delivery model. We are particularly pleased to announce our recent alliance with to offer OntrackÒ data recovery software and services to's subscriber base. Ontrack will aggressively pursue similar alliances with other consumer software vendors, enterprise software vendors and computer component and service suppliers looking to add value to their product offerings,” continued Rogers.

Ontrack will discuss its fourth quarter and full year 2001 outlook during the Company's quarterly conference call to be held on October 25, 2000, at 4:00 PM Central Daylight Time. Investors may access the call by dialing 888-343-2180 or may listen to a replay beginning two hours following the conclusion of the call and available for one week after by dialing 800-633-8284 and entering the code – 16548422. Investors also may access a live web cast of the conference call at Ontrack, a leading provider of data availability software and service solutions, helps customers protect, manage, recover and discover their valuable data. Using its hundreds of proprietary tools and techniques, Ontrack is able to recover lost or corrupted data from virtually all operating systems and types of storage devices through its do-it-yourself, remote and in-lab capabilities. Ontrack also offers award-winning PC utility software programs and services to help prevent critical data loss through a broad line of problem-solving, file-management and productivity utilities. Ontrack can be reached through its World Wide Web site at or by calling 800-872-2599 (612-937-5161). In addition to its Minneapolis headquarters, Ontrack operates other locations in Los Angeles, Boulder, Colo., Washington D.C., New York, London, Paris and Stuttgart. Ontrack also makes its data recovery services available in Tokyo through its strategic alliance with Y-E Data, a company with over 25 years of experience in storage devices.

ONTRACK and RAPIDRECALL are trademarks or registered trademarks of ONTRACK Data International, Inc. in the United States and/or other countries. All other brands or product names are trademarks or registered trademarks of their respective holders.

Statements in this release concerning the future prospects and plans of ONTRACK are “forward-looking statements” under the Federal securities laws. There can be no assurance that expected or projected results will be achieved, and actual results could differ materially from forecasts, estimates and summary information contained in this press release. Important factors that could cause actual results to differ materially are included but are not limited to those listed in the ONTRACK Annual Report on Form 10-K for the year ended December 31, 1999, under the caption “ Management's Discussion and Analysis of Financial Condition and Results of Operations -- Forward Looking Statements.”

ONTRACK Data International, Inc.
Consolidated Condensed Statements of Income
( In thousands, except per share amounts )

ONTRACK Data International, Inc.
Consolidated Condensed Statements of Income
( In thousands, except per share amounts )
Three MonthsNine Months
Ended September 30 Ended September 30
Data recovery services and products 9,603 9,522 28,416 $ 24,480
Software 3,722 2,525 9,622 5,042
Total revenues 13,325 12,047 38,038 29,522
Cost of Revenues:
Data recovery services and products 2,308 2,319 6,565 6,264
Software 1,043 515 2,684 939
Total cost of revenues 3,351 2,834 9,249 7,203
Gross Margin 9,974 9,213 28,789 22,319
Operating expenses:
sales and marketing 3,668 2,721 10,201 7,135
Research and development 2,442 1,994 6,822 4,914
General and administrative 2,300 2,037 6,583 5,398
Amortization of goodwill 463 357 1,388 357
Terminated merger costs - - (579) -
Total operating expenses 8,873 7,109 24,415 17,804
Operating income 1,101 2,104 4,374 4,515
Interest and other income 237 303 856 823
Income before income taxes 1,338 2,407 5,230 5,338
Provision for income taxes 408 819 1,595 1,773
Net income 930 $ 1,588 $ 3,635 $ 3,565
Diluted net income per share $ 0.09 $ 0.16 $ 0.35 $ 0.36
Diluted net income per share
excluding goodwill amortization $ 0.12 $ 0.18 $ 0.44 $ 0.38
Weighted average shares used in
computation of diluted net income per share 10,968 9,966 10,518 9,810
ONTRACK Data International, Inc.
Consolidated Condensed Balance Sheets
( In thousands )
September 30December 31
ASSETS 20001999
Current Assets:
Cash, cash equivalents and short-term investments $ 31,424 $ 28,705
Accounts receivable, net 7,448 6,382
Prepaid expenses and other current assets 3,773 2,962
Total Current Assets 42,645 38,049
Long term investment - cash 1,781 3,323
Furniture and equipment, net 6,000 6,002
Intangibles, net 6,558 8,467
Total Assets $ 56,984 $ 55,841
Total Current Liabilities $ 3,985 $ 6,810
Total Shareholders' Equity 52,999 49,031
Total Liabilities and Shareholders' Equity $ 56,984 $ 55,841

Media Contact:

Ben Blomberg, 952-516-3617,