Wednesday, February 6, 2002

Ontrack Data International Inc. announces record fourth quarter revenue and reports year-end results

MINNEAPOLIS, February 6, 2002 - ONTRACK Data International, Inc. (NASDAQ: ONDI) today reported total revenue for the fourth quarter of 2001 was a record $16.5 million, an 11 percent increase over revenue of $14.9 million in the fourth quarter of 2000. Diluted earnings per share excluding goodwill amortization totaled $0.15 per share compared to $0.17 per share in the fourth quarter of 2000.

Fourth quarter 2001 service revenues totaled $12.2 million, a 21 percent increase over the fourth quarter of 2000. Of this total, Data Recovery revenue increased 18 percent over last year’s fourth quarter to $8.7 million. DataTrail™ revenue was a record $3.5 million in the fourth quarter and was driven by two large merger and acquisition jobs totaling $2.5 million.

“We closed out the year with strong performances in all of our businesses,” stated Ben Allen, president & CEO. “Our strategy to penetrate the civil litigation market proved successful, as we saw a 25 percent increase over the third quarter of 2001 to approximately $1 million in electronic discovery revenue for litigation cases. We believe continuing to execute this strategy will help offset the significant fluctuations that go hand-in-hand with merger and acquisition work over time.”

Software revenue totaled $4.3 million compared to $4.9 million in the fourth quarter of 2000. The Company’s EasyRecovery™ do-it-yourself data recovery software generated $840,000 in revenue while Disk Manager® software revenues were $853,000. Software utility revenues totaled $2.3 million in the quarter, of which approximately $1.4 million represented revenue recognized from cash collections in the domestic retail channel. During the fourth quarter of 2001, Ontrack decided to transition out of the domestic retail channel and focus on reducing costs, collecting cash and searching for a partner to distribute its PC utility software titles. In January 2002, the Company signed an agreement with Activision Value Publishing, Inc. to become the primary distributor of four of its PC Utility software titles in the North American retail channel. Ontrack will continue to distribute its full line of software products through online channels, including its own storefront at www.ontrack.com, and expects to make this product line profitable in 2002.

Ontrack will discuss its fourth quarter 2001 and 2002 outlook during the Company’s quarterly conference call to be held on February 6, 2002, at 4:00 PM Central Time. Investors may access the call by dialing 888-391-0108. A replay of the call is available beginning two hours following the conclusion of the call and for one week after the call by dialing 800-633-8284 and entering the code – 19999251. Investors also may access a live web cast of the conference call at www.ontrack.com.

About Ontrack
Ontrack provides data availability software and service solutions, helping customers manage, recover and discover their valuable data. Using its hundreds of proprietary tools and techniques, Ontrack can 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 DataTrail™ electronic discovery solutions help companies, law firms and federal agencies quickly and cost-effectively recover electronic information for use in legal matters. 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 online at http://www.ontrack.com or by calling 800-872-2599. In addition to its Minneapolis headquarters, Ontrack operates other locations in Los Angeles, CA; Boulder, CO; Washington D.C.; New York; London, England; Paris, France; Stuttgart, Germany; Milan, Italy; and Lugano, Switzerland. Ontrack also makes its data recovery services available in Tokyo, Japan through its strategic alliance with Y-E Data, and in Katowice, Poland through its alliance with MBM.

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

Three Months Twelve Months
Ended December 31, Ended December 31
2001 2000 2001 2000
Revenues:
Services $12,152 $10,041 $41,402 $36,645
Software 4,325 4,852 14,445 16,286

Total revenues

16,477 14,893 55,847 52,931

Cost of revenues:

Services 3,492 2,285 10,751 7,906
Software 1,246 1,751 5,309 5,379
Total cost of revenues 4,738 4,036 16,060 13,285

Gross margin

11,739 10,857 39,787 39,646

Operating expenses:

Sales and marketing 4,301 3,746 16,249 13,947
Research and development 2,758 2,632 10,442 9,454
General and administrative 2,823 2,515 11,664 9,098
Amortization of goodwill 401 463 1,645 1,851
Workforce reduction costs - - 850 -
Terminated merger - - - (579)
Total operating expenses 10,283 9,356 40,850 33,771

Operating income (loss)

1,456 1,501 (1,063) 5,875
Interest and other income 224 491 1,178 1,345
Income before income taxes 1,680 1,992 115 7,220
Provision for income taxes 453 578 - 2,172
Net Income $1,227 $1,414 $115 $5,048
Diluted net income per share excluding goodwill amortization $0.15 $0.17 $0.12 $0.62
Diluted net income per share $0.12 $0.14 $0.01 $0.48
Shares used in computing net income per share 10,414 10,319 10,364 10,468

ONTRACK Data International, Inc.
Consolidated Condensed Balance Sheets
(In thousands)

December 31, 2001
December 31, 2000
ASSETS
2001
2000
Current assets:
Cash, cash equivalents and short-term
$32,610
$28,176
investments
Accounts receivable, net
6,805
9,570
Prepaid expenses and other current assets
3,716
4,313
Total current assets
43,131
42,059
Long term investment – cash
3,741
4,868
Deferred taxes
1,783
1,432
Furniture and equipment, net
9,285
6,464
Intangibles, net
4,086
5,865
Total assets
$62,026
$60,688
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities
$6,091
$6,017
Total shareholders' equity
55,935
54,671
Total liabilities and shareholders' equity
$62,026
$60,688