Thursday, October 22, 1998

Ontrack Data International announces third quarter financial results

ONTRACK Data International, Inc.(Nasdaq: ONDI) today announced its financial results for the third quarter and nine months ended September 30, 1998.

Total revenues for the third quarter were $9,071,000 compared to revenues of $8,992,000 in the third quarter of 1997. Net income was $1,302,000 compared to $1,456,000 in the same period a year ago. Diluted net income per share was $.13 compared to $.14 in the third quarter of 1997.

For the nine months ended September 30, 1998 total revenues were $27,044,000, compared to revenues of $25,207,000 for the comparable period of 1997. Net income for the first nine months of 1998 was $4,354,000 compared to $3,947,000 in the same period a year ago. Diluted net income per share was $.43 compared to $.39 in the first nine months of 1997.

Third quarter 1998 service revenues totaled $7,601,000, an increase of 5.6% over third quarter 1997 and 5.1% over second quarter 1998 service revenues. Third quarter 1998 software revenues of $1,470,000, although in line with expectations, declined 18.1% compared to the prior year. Software revenues consist primarily of sales into the OEM channel of ONTRACK Disk Manager software, the company's hard disk drive installation utility software program. The decline was due principally to price pressure, which is expected to continue in future periods.

Third quarter net income and diluted net income per share were affected by the decline in software revenue and lower than anticipated growth of service revenues.

ONTRACK (NASDAQ: ONDI), the world leader in data recovery, specializes in services and software that help computer users access and recover their valuable data. Using hundreds of proprietary tools and techniques, ONTRACK is able to recover lost or corrupted data from all operating systems and types of storage devices. 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 customer service centers in Los Angeles, San Jose, Washington, D.C., New York, Tokyo, London, Paris and Stuttgart.

Statements in this release concerning the future prospects of ONTRACK are “forward-looking statements” under the Federal securities laws. There can be no assurance that future 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 incorporated by reference into the Form 10-K for the year ended December 31, 1997, under the caption “ Management's Discussion and Analysis of Financial Condition and Results of Operations -- Forward Looking Statements”.