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ZITEL CORP. ANNUAL RESULTS

 FREMONT, Calif., Nov. 2 /PRNewswire/ -- Zitel Corp. (NASDAQ-NMS: ZITL) today announced net sales of $3,612,000 for the fourth quarter of fiscal year 1993 ended Sept. 30 versus net sales of $11,420,000 for the same quarter of the prior year. The net loss for the quarter was $2,654,000 ($0.43 per share) versus a net loss of $163,000 ($0.02 per share) for the same quarter of the prior year. Fiscal 1992 financial information has been restated to reflect the acquisition of CHI Systems Inc., which was accounted for as a pooling of interest transaction.
 For the fiscal year ended Sept. 30, 1993, the company reported net sales of $21,780,000 versus $47,771,000 for the prior year and a net loss of $8,277,000 ($1.34 per share) for the year versus net income of $783,000 ($0.12 per share) for the prior year.
 Jack H. King, president and chief executive officer, said, "After six years of growth and positioning, the performance of the company this fiscal year was both disappointing and regrettable. While the company could do little to affect the worldwide economy and competitive actions, it is clear we need to accelerate our transition to broader markets and products and lessen our reliance on the Unisys market and European sales.
 "The company has reduced its headcount by about 45 percent, reduced other expenses significantly and focused on those new products and markets that represent the future," he continued. "Our major joint development program and key product development programs remain intact and moving forward.
 "We do not see a significant improvement in our performance in the current quarter. As we have stated previously, the multiple transitions the company needed to accomplish were going to make 1993 a difficult year. However, the company believes that, with the technology, skills and plans that are in place, 1994 has the potential to be a successful year," King concluded.
 Zitel Corp. specializes in the design, manufacture and marketing of high performance storage subsystems and high speed data communications products for varied applications across a range of UNIX file-servers, mainframes and proprietary systems. These products are offered through systems integrators, value added resellers and distributors, OEMs and directly to Unisys mainframe end-users. The company is headquartered at 47211 Bayside Parkway, Fremont, CA 94538. Telephone: 510-440-9600 or 800-622-5020 (outside California). FAX: 510-440-9696.
 ZITEL CORP.
 Consolidated Summary of Financial Statements
 (Thousands except per share amounts)
 Consolidated Statements of Operations
 (In Thousands Except Per Share Data)
 (Unaudited)
 Three Months Ended 12 Months Ended
 9/30/93 9/30/92(A) 9/30/93 9/30/92(A)
 Net sales $ 3,612 $11,420 $21,780 $47,771
 Cost of goods sold 2,120 4,240 12,079 17,079
 Research & development
 expenses 2,030 1,550 8,420 6,496
 Selling, general and
 administrative expenses 2,339 5,597 11,148 23,060
 Operating income (loss) (2,877) 33 (9,867) 1,136
 Other (income) expense 12 (65) 420 (232)
 Income (loss) before
 income taxes (2,889) 98 (10,287) 1,368
 Provision for income
 taxes (235) 261 (2,010) 585
 Net income (loss) $(2,654) $ (163) $(8,277) $ 783
 Net income (loss) per
 share (0.43) (0.02) (1.34) 0.12
 Number of shares used in
 per share calculation 6,228 6,561 6,179 6,555
 Consolidated Balance Sheets
 (In Thousands)
 (Unaudited)
 Sept. 30, Sept. 30,
 1993 1992(A)
 Assets
 Current assets
 Cash and cash equivalents $ 3,394 $ 7,067
 Accounts receivable 4,235 11,703
 Inventories 8,497 6,834
 Deferred and refundable taxes 1,656 458
 Other current assets 1,558 647
 Total current assets 19,340 26,709
 Fixed assets, net 3,595 4,283
 Other assets, net 1,295 1,450
 Total assets $24,230 $32,442
 Liabilities and shareholders' equity
 Current liabilities
 Current portion of long-term debt $ 1,069 $ 643
 Accounts payable 1,268 3,336
 Accrued liabilities 1,335 3,662
 Income taxes payable 0 694
 Total current liabilities 3,672 8,335
 Long-term debt 4,242 197
 Other liabilities 113 0
 Deferred income taxes 0 108
 Shareholders' equity:
 Common stock 14,727 14,049
 Retained earnings 1,476 9,753
 Total shareholders' equity 16,203 23,802
 Total liabilities and shareholders'
 equity $24,230 $32,442
 (A) Restated to reflect the acquisition of CHI Systems Inc. completed on Oct. 30, 1992, which is being accounted for as a pooling of interest transaction.
 NOTE: Zitel is a registered trademark of Zitel Corp.
 -0- 11/2/93
 /CONTACT: Henry C. Harris, chief financial officer of Zitel Corp., 510-440-9600 or 800-622-5020 (outside California)/
 (ZITL)


CO: Zitel Corp. ST: California IN: CPR SU: ERN

RB-TM -- SJ001 -- 9471 11/02/93 07:55 EST
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