**FOR IMMEDIATE RELEASE**

 

 

| **COMPANY CONTACT:** | **MEDIA CONTACT:** | **INVESTOR CONTACT:** |  
Carroll Wallace, CFO

Bill Marino

Charles Messman/Todd Kehrli

Exabyte Corp.

Trippe-Marino, Inc.

MKR Group, LLC

 
303-442-4333

303-988-5133

818-556-3700

 
cwallace@exabyte.com  

bmarino@trippemarino.com

ir@mkr-group.com

 
 

 

**EXABYTE ANNOUNCES SECOND QUARTER 2005 FINANCIAL RESULTS**

 

*Improved Gross Margin, Increasing Automation Revenue and Stronger Distribution Channel Hardware Revenue Keys to Quarterly Results*

 

**Boulder, Colo. – July 28, 2005** – Exabyte Corporation (OTCBB: EXBT), the leading innovator in tape backup, restore and archival systems, today announced financial results for the second quarter of 2005, ended June 30, 2005.

 

Total revenue for the second quarter was $23.8 million compared to $24.6 million for the previous quarter and $26.6 million for the second quarter of 2004. Loss from operations in the second quarter of 2005 totaled $889,000, versus $785,000 in the previous quarter and $1.1 million in the second quarter of 2004. Net loss for the second quarter of 2005, which included a provision for settlement of litigation of $1.1 million, was $2.2 million, as compared to a net loss of $931,000 in the prior quarter. Net loss for the second quarter of 2004, which included a gain on foreign currency translation of $1.1 million, was $456,000.

 

The decrease in revenue in the second quarter of 2005, as compared to the prior quarter and prior year, reflects the continuing decrease in revenue from Legacy products, which decreased $2.2 million, or 36%, both sequentially and year-over-year. Revenue from VXA hardware and media products increased 8% sequentially, but decreased 15% year-over-year. The sequential increase is primarily a result of increased shipments of the VXA PacketLoader automation product during the quarter. The year-over-year decrease reflects a significant decrease in VXA automation revenue, as the Company experienced strong initial demand for the VXA PacketLoader in the second quarter of 2004, the first full quarter after the introduction of the product. Increased shipments of LTO automation products offset a portion of the overall decrease in revenue, as LTO-related revenue increased 5% sequentially and 104%year-over-year. In particular, revenue from the new Magnum 1x7 LTO Autoloader increased 70% in the second quarter of 2005, as compared to the previous quarter.

 

 

Exabyte Q2-05 Earnings, page 2

 

 

**Second Quarter Highlights:**

**•**

Gross margin remained strong at 29.7%, consistent with the prior quarter and an increase over 2004 quarterly and annual results

**•**

Operating costs remained consistent sequentially and decreased year-over-year, in spite of increased engineering and research and development costs related to the development of new products to be released in 2005

**•**

Products developed and introduced to the market in the past three years contributed 69% of total revenue, reflecting the Company’s progress in transitioning to new product and technology platforms

**•**

Automation hardware revenue represented 40% of total revenue, an increase from 29% in the prior year-further confirmation of the Company’s strategy to focus on this expanding market segment

**•**

Revenue from OEM customers represented 21% of total revenue, and 35% of total hardware revenue, both decreases over the previous quarter and year

**•**

Hardware revenue from channel distribution customers increased 22% sequentially, lead by strong sales of VXA and LTO automation products

**•**

A non-operating provision for settlement of the D.I.C. Creditors’ Trust litigation in the amount of $1.1 million significantly increased net loss for the quarter

 

“While the decline in revenue from our Legacy products continues to hamper the Company’s efforts to increase total revenue, we are pleased with the market acceptance of our new products and technologies”, said Tom Ward, President and CEO of Exabyte. “The future success of the Company is dependant on a variety of factors, including our ability to continue to introduce new products that meet the real-time requirements of the market. We believe our VXA and LTO product lines are responsive to these needs.”

 

At June 30, 2005, the Company had negative working capital of $4.2 million, and had limited liquidity. Management continues to explore options that would provide additional capital for current operating needs and longer-term objectives. Since the Company has not yet achieved profitable operations, it is now necessary to raise additional capital to support current operations, including payments to vendors.

 

The Company will hold a conference call on Thursday morning, July 28 at 8:00 a.m. MDT to discuss second quarter financial results. Interested parties can join the call by dialing **866-578-5801**, in the U.S. or **617-213-8058** internationally and entering the participant code **39566836**. The call also will be webcast from the Company web site; for information, please visit http://www.exabyte.com/earnings. In addition, the call will be recorded and available on the Company’s web site after 5:00 p.m.

 

 

Exabyte Q2-05 Earnings, page 3

 

 

**About Exabyte Corporation**

Exabyte Corporation (OTCBB: EXBT) is the leading innovator and provider of tape storage products. For over 20 years, the company has been recognized for its innovative engineering approach and for consistently raising industry standards in technology, quality, and data reliability for tape drives and tape automation. The Company’s products back up and restore critical business information in a manner consistently ahead of its competitors in terms of storage capacity, reliability, and transfer speeds – all at competitive prices. With award-winning VXA Packet Technology, patented ExaBoticsTM and its innovative engineering approach, Exabyte’s VXATM and LTOTM (UltriumTM) products are ideally suited for SMB and departmental servers, workstations, LANs, and SANs. Exabyte has a worldwide network of OEMs, distributors, and resellers that share the company’scommitment to innovation and customer service, including IBM, Fujitsu Siemens, Apple, Imation, Toshiba, Logitec, Kontron, Tech Data, Ingram Micro, and CDW. For additional information, call 1-800-EXABYTE or visit www.exabyte.com.

 

*The foregoing contains forward-looking statements related to the Company’s products and business prospects. Such statements are subject to one or more risks. The actual results that the Company achieves may differ materially from such forward-looking statements due to risks and uncertainties related to customer dependence, competition, product development, market demand, management of the business and product transitions and other such risks as noted in the Company’s 2004 Form 10-K and subsequent Form 10-Qs.*

 

*Exabyte, VXA and M2 are registered trademarks, and, MammothTape is a trademark of Exabyte Corp. All other trademarks are the property of their respective owners.*

 

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Exabyte Q2-05 Earnings, page 4

 

 

 

Exabyte Q2-05 Earnings, page 5

 

 

 

Exabyte Q2-05 Earnings, page 6

 

 

 

 

 

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