JNI Amends Form 10-K to Reduce FY01 Revenues by $500,000; John Stiska Named Interim CEO.

Business Editors

SAN DIEGO--(BUSINESS WIRE)--May 20, 2002

JNI(R) Corporation (Nasdaq:JNIC) today announced that it discovered that its revenues for the fourth quarter of 2001 and for the year ended December 31, 2001, were overstated by approximately $501,000, which represents approximately 4% of fourth quarter revenues and less than 1% of annual revenues. As a result, JNI has filed an amendment to its 2001 annual report on Form 10-K to correct the overstatement.

The restated financial statements included in the amended 10-K exclude the effect of approximately $501,000 of revenue and $275,000 of cost of revenue recognized in connection with one order by an OEM customer in the fourth quarter of 2001. The revenue was recognized in violation of Company policy following a sale of products to an OEM customer where the Company's CEO granted the customer a right of return. The side agreement creating this right of return was not disclosed to Company financial personnel or PricewaterhouseCoopers LLP, the Company's independent accountants, which is a violation of Company policy. The right of return was not discovered by financial personnel until the second quarter of 2002 when the OEM customer returned some of the products and sought return credit.

Upon investigation, the Audit Committee of the Company's Board of Directors, in consultation with the Company's independent accountants, determined that the revenue that had been recognized in the fourth quarter of 2001 should not have been recognized until the return right lapsed, which occurs when the Company's products are incorporated into the OEM's products and sold through to the end user. Accordingly, the restated financial statements for the year ended December 31, 2001, reflect the reversal of the revenue and cost of revenue associated with the transaction. Approximately $409,000 of the products were sold-through in the first quarter of 2002, so the operating results for that period reflect a corresponding increase in revenue and cost of revenue. Because the Company was unaware of this circumstance when it released its earnings for the first fiscal quarter of 2002 on April 29, 2002, the financial data included in that release did not reflect the resulting increase in revenues and cost of revenues.

As a result of the restatement, revenues for the fourth quarter of 2001 were reduced from $13.5 million to $13.0 million, and loss per share for the quarter was increased from ($0.15) to ($0.16). For the year ended December 31, 2001, the restated revenues decreased from $75.8 million to $75.3 million, and loss per share increased from ($0.50) to ($0.51). The additional revenue recognized in the first quarter of 2002 due to the restatement resulted in reported revenues increasing from the $11.5 million disclosed on April 29 to $11.9 million. Loss per share for the first quarter of 2002 remained at ($0.16).

When made aware of the situation, the Company's Board of Directors and its Audit Committee conducted a thorough review of the circumstances surrounding this transaction and of substantially all OEM revenue and related accounting entries from the beginning of 2001 to May 13, 2002. After reviewing the results of this investigation, which revealed no other improper activities, the Audit Committee concluded that this incident represented an isolated departure from Company policies. Upon conclusion of the investigation, the Board of Directors asked for and received the resignation of Neal Waddington from his positions as CEO and director of the Company. The Company has informed the Staff of the SEC of the restatement and the reasons therefor.

The Board has named John Stiska, a director of the Company since 2000, to act as Interim CEO. Mr. Stiska is Chairman of Commercial Bridge Capital, LLC, a venture lending fund, and served as Of Counsel to the law firm of Latham & Watkins from July 1998 through June 2000. From February 1996 to February 1998, Mr. Stiska served as corporate Senior Vice President of QUALCOMM Incorporated, and as General Manager of QUALCOMM's Technology Applications Group. Prior to joining QUALCOMM, Mr. Stiska was Chairman and Chief Executive Officer of Triton Group from 1993 to 1996 (ASE:TGL). Mr. Stiska currently serves on the Board of Directors of another public company, as well as several privately held companies. Mr. Stiska earned a B.A. in accounting and a J.D. from the University of Wisconsin.

"While the Board regrets having to take such drastic measures over a transaction of relatively small amount, we believed that it is critical in this environment to send a clear message that we will not tolerate any improper conduct relating to financial reporting," said John Stiska, JNI's new Interim CEO. "I believe that JNI remains well-positioned in the Fibre Channel and InfiniBand markets. Our strong management team, shift in product composition and revenue mix to PCI, and the foundation we have laid in InfiniBand, all bode well for the future of our company. JNI's strong balance sheet, with over $108 million in cash at March 31, 2002, gives us the opportunity to build on past success and overcome the current adversity."

Conference Call

Management will hold a conference call today, May 20, 2002, at 6:00 p.m. Eastern Daylight Time (3:00 p.m. Pacific). The call can be accessed by phone at [phone]. For those who cannot listen to the live broadcast, an audio replay will be available through May 27, 2002, by calling [phone] or [phone] and entering the passcode 6011969.

About JNI Corporation

JNI Corporation is one of the leading manufacturers of connectivity products for the enterprise data center. JNI offers a broad line of Fibre Channel HBAs, ASICs and software for storage area networks, as well as HCA Modules for InfiniBand. JNI's PCI, SBus and CompactPCI HBAs operate on Solaris, Windows 2000, Windows NT, HP-UX, AIX, Novell, Linux and Mac OS systems. JNI's high availability HBAs and software are certified in single, multi-host and cluster environments for Windows NT and 2000, and Solaris. JNI customers, distributors and strategic partners include Acal FCS, Avid, Bell Microproducts, Brocade, Chaparral, Compaq StorageWorks, Consan, Crossroads, EMC, Eurologic, Hewlett-Packard, Hitachi Data Systems, IBM, InfiniSwitch Corporation, Info X, LSI Logic, McDATA, Mellanox Technologies, Nishan Systems, StorageTek, Sun Microsystems, TidalWire, Troika Networks and Veritas. Company headquarters is in San Diego, with offices throughout the U.S. and Europe. www.jni.com.

JNI -- enterprising solutions(TM)

Disclosure and Forward-Looking Statements

With the exception of historical information, the statements set forth above include forward-looking statements (including, but not limited to, statements regarding JNI's position in the Fibre Channel and InfiniBand markets and JNI's future prospects) that involve risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include: risks associated with management transition; the rapidly changing technology in JNI's markets; the evolving industry standards; frequent introductions of new products and enhancements; the very early stage of development of the InfiniBand market; competition in JNI's markets; JNI's reliance on certain contract manufacturers, OEMs, distributors and key customers; and the other risks discussed in its Annual Report on Form 10-K/A and other reports filed with the Securities and Exchange Commission.

FRB/Weber Shandwick serves as financial relations counsel to this company, and is acting on the company's behalf in issuing this bulletin and receiving compensation therefor. The information contained herein is furnished for information purposes only and is not to be construed as an offer to buy or sell securities.

Note: JNI, JNIC and `enterprising solutions' are trademarks or registered trademarks of JNI Corp. All other trademarks are the property of their respective holders.