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Storage Engine Announces First Quarter 2003 Results

Storage Engine Inc (SEI), an innovative supplier of fault-tolerant information systems that store, protect, manage and replicate data in complex networks with greater ease and superior cost savings, has reported results for the First Quarter ended March 31, 2003.

Revenues for the First Quarter were $1.3 million, an increase of approximately $100 thousand or approximately 9% as compared to $1.2 million in the First Quarter of 2002. Such increase reflects an increase in both our sales to federal integrators for the US Air Force and sales to our imaging customers offset in part by a decrease in sales to our commercial and other federal customers. For the First Quarter of 2003, SEI reported a net loss of $1.0 million, or $.37 per share, on both a basic and diluted basis, which includes an additional reserve of $200 thousand for excess and obsolete inventory, as compared to a net loss in the First Quarter of 2002 of $1.0 million, or $.41 per share, on both a basic and diluted basis. The net loss in the First Quarter of 2003 and 2002 includes dividends associated with the 6% cumulative convertible preferred stock, Series A of $57 and $55 thousand, respectively.

The Company ended the first quarter with $1.9 million in cash and cash equivalents. This compares to $2.8 million in cash and cash equivalents as of December 31, 2002.

As announced on April 9, 2003, SEI reduced its staff by ten, which represents savings of approximately $950 thousand in annual salaries and benefits. As a result, SEI will take a charge for severance pay including benefits of approximately $170 thousand in the second quarter of 2003.

G. M. Azcuy, president and Chief Executive Officer, said, "We continue our efforts to transition our business as we are striving for growth and profitability. We also plan to scrutinize our cash burn in order to conserve our cash resources and explore financing alternatives. As the data storage industry struggles with reduced orders and increased competition, we will track our cash flow closely."

Brocade Reports Q2 Fiscal 2003 Financial Results

Brocade Communications Systems Inc (Brocade) has reported financial results for its second quarter of fiscal year 2003, which ended April 26, 2003 (Q2 03). Net revenue for Q2 03 was $130.9 million, which compares to $123.1 million reported in the first quarter of fiscal year 2003 (Q1 03), and $135.0 million reported in the second quarter of fiscal year 2002 (Q2 02).

Reporting on a Generally Accepted Accounting Principles (GAAP) basis, net loss for Q2 03 was $146.0 million, or $0.57 per share. This compares to a GAAP net loss for Q1 03 of $6.9 million, or $0.03 per share, and GAAP net income of $14.0 million or $0.06 per share in Q2 02.

Non-GAAP net loss for Q2 03 was $1.0 million or $0.00 per share, as compared to non-GAAP net income of $0.3 million or $0.00 per share in Q1 03. There was no difference between GAAP and non-GAAP net income in Q2 02. Non- GAAP net income for Q2 03 excludes in-process research and development, deferred stock compensation and other acquisition costs related to the acquisition of Rhapsody Networks Inc (Rhapsody) in Q2 03, and severance, asset impairment, and other charges related to the restructuring of business operations that was announced on April 10, 2003. A reconciliation between GAAP and non-GAAP information is attached to this press release.

"I am pleased with the results that we have delivered in meeting our expectations of revenue, gross margin and operating expense," said Greg Reyes, Brocade Chairman and CEO. "Moving forward, we remain committed to driving revenue growth and profitability."

Imation Declares Initial Quarterly Dividend Of $0.08

Imation Corp has announced that its Board of Directors initiated a dividend policy and declared the Company's initial regular quarterly cash dividend of $0.08 per share, payable June 27, 2003, to shareholders of record at the close of business on June 16, 2003. Any future dividends are at the discretion of and subject to the approval of Imation's board of directors.

"We are pleased to be able to return cash to our shareholders while making significant capital investments in advanced manufacturing technologies this year, maintaining our strategic investments in research and development and satisfying our long-term capital requirements," said Robert Edwards, Imation's CFO. "With our significant cash balance and continued operating cash flow, we have the resources necessary to invest in profitably growing the core data storage business as our first priority, while returning cash to shareholders."

"We view the declaration of a dividend as another way for Imation to deliver value to shareholders," said Bill Monahan, Imation's chairman and CEO. "Our data storage focused strategy has resulted in solid cash flows, a strong market position, and what we believe is a sustainable business model. We remain excited about the continued potential for growth in the data storage removable media industry. As these advantages have become more visible to investors over the past two years, Imation has enjoyed healthy stock price appreciation. We believe that initiation of a cash dividend will make Imation stock attractive to a broader range of investors as we continue to build value for customers, employees and shareholders," Monahan concluded.

As of March 31, 2003, cash and equivalents totaled $480.1 million, short-term debt totaled $4.9 million and the Company had no long-term debt. The Company had approximately 35.6 million shares outstanding and authorization for the open market purchase of up to 2.8 million shares of common stock.

Forward-Looking Statements on Business Outlook

The following statements are based on the Company's best estimate of all known factors, including the impacts of foreign currency fluctuations and the series of agreements with Moser Baer India Ltd. announced in February 2003. These forward-looking statements are subject to the risks and uncertainties outlined below.

• Data Storage and Information Management segment revenue is estimated to range between $1,050 million and $1,100 million in 2003 representing approximately between five and ten percent growth respectively, with the strongest growth coming primarily in the second half of the year;
• Gross margin is estimated to be in the range of 30 to 32 percent of revenues;
• Research and Development spending is targeted to be approximately five percent of revenues;
• Selling, General and Administrative spending is targeted to be in the range of 16 to 16.5 percent of revenues;
• Full year 2003 operating income is expected to range between $110 million and $115 million;
• Tax rate is estimated to be 36 percent;
• Primarily due to the slightly higher tax rate estimated for 2003, earnings per share is estimated to grow somewhat less than the comparable operating income growth achieved for the year;
• Capital spending is targeted to be as much as $80 million;
• Depreciation and amortization is estimated to be approximately $40 to $45 million.