Overland Storage Reports First Quarter Fiscal 2013 Results

Overland Storage Reports First Quarter Fiscal 2013 Results 
SAN DIEGO, CA -- (Marketwire) -- 11/14/12 --  Overland Storage
(NASDAQ: OVRL), a trusted global provider of effortless data
management and data protection solutions across the data lifecycle,
today reported financial results for its fiscal 2013 first quarter
ended September 30, 2012.  
Eric Kelly, President and CEO of Overland Storage, said, "With the
successful launch of our new clustered NAS solution in October, we
have three significant new branded products that are now positioned
to gain traction in the marketplace as planned, and in less than a
year, we have built a significant pipeline of new branded product
opportunities that continues to grow. These new products have
significantly expanded our total addressable market and have allowed
us to participate in new opportunities not previously available to
us. 
"While our fiscal first quarter has historically been a seasonally
down quarter, our lower than expected total revenue is largely due to
the difficult macroeconomic environment in Europe and longer sales
cycles, which we believe have similarly affected our competitors.
While we continued to win new business in Europe, customers delayed
taking product due to the market uncertainty, which negatively
affected our revenue across all our product families and has tempered
our outlook for our sales in the region. As a result, we are not
reiterating our guidance regarding achieving non-GAAP profitability
in the fourth quarter of calendar 2012, but we believe that with our
strong branded product portfolio and growing pipeline of new
business, we can achieve this profitability target by the end of our
2013 fiscal year."  
Recent Highlights 


 
--  Launched new clustered NAS product SnapScale X2(TM), significantly
    expanding the company's addressable market opportunity to include the
    $14 billion scale-out NAS market
--  Gross margins for the first quarter of fiscal 2013 improved
    sequentially to 33.7% from 31.6%
--  Announced availability of LTO6 technology in the company's line of NEO
    Series tape libraries, more than doubling user storage capacities from
    previous generation technology
--  SnapSAN 5000 product awarded highest honor of Gold Winner in the best
    new
 IT hardware category for the Golden Bridge Awards
--  ITC ruling in October beneficial to Overland's infringement claims
    against BDT in district court
--  Filed a petition with the ITC Commission in November requesting a
    review of infringement of the '581 mail slot patent based on the
    commission's new definition of a linear array

  
First Quarter Fiscal 2013 Financial Results
 Net revenue for the first
quarter of fiscal 2013 was $11.7 million, compared to $14.1 million
for the first quarter of fiscal 2012 and $15.3 million for the fourth
quarter of fiscal 2012. Product revenue for the first quarter of
fiscal 2013 was $6.6 million, compared to $7.9 million in the first
quarter of fiscal 2012 and $9.4 million for the fourth quarter of
fiscal 2012. 
Gross margin for the first quarter of fiscal 2013 was 33.7%, up from
32.6% for the first quarter of fiscal 2012 and 31.6% for the fourth
quarter of fiscal 2012.  
Operating expenses for the first quarter of fiscal 2013 were $8.6
million, compared to $10.0 million for the first quarter of fiscal
2012, and $8.5 million in the fourth quarter of fiscal 2012. Stock
compensation expense was approximately $1.3 million in the first
quarter of fiscal 2013, compared to approximately $1.4 million for
the first quarter of fiscal 2012 and approximately $1.1 million for
the fourth quarter of fiscal 2012. Depreciation and amortization was
approximately $0.3 million in the first quarter of fiscal 2013,
compared to $0.4 million in the first quarter of 2012.  
Net loss for the first quarter of fiscal 2013 was $4.9 million, or a
loss of $0.17 per share, compared to a net loss of $5.4 million, or a
loss of $0.23 per share, in the first quarter of fiscal 2012 and a
loss of $2.7 million, or a loss of $0.10 per share, in the fourth
quarter of fiscal 2012.  
Total cash and cash equivalents at September 30, 2012 was $7.2
million, compared to $10.5 million at June 30, 2012. At September 30,
2012, the Company had $4.0 million outstanding under its credit
facility. 
Patent Litigation:
 Based on the Commission's evaluation of the '581
mail slot patent, Overland filed a petition on November 8, 2012
arguing that claims 10,12 and 16 meet the new definition of "linear
array" put forward by the Commission, as the Commission agrees, and
thus the ITC now should decide for the first time whether the BDT
products include all the other elements of these claims. If the ITC
remands the '581 infringement issue on this basis, the Administrative
Law Judge could find BDT's products infringe claims 10, 12 and 16,
which Overland believes will result in BDT no longer being allowed to
ship products with mail slots into the United States. 
Overland reported on October 26, 2012 that the United States
International Trade Commission (ITC) released a Notice of Commission
Decision in the infringement action filed by Overland Storage against
IBM, Dell and BDT. Overland has previously reported that its ITC and
District Court actions against IBM and Dell have been resolved by
settlement. The Notice of Commission Decision makes several key
findings regarding Overland Storage's U.S. Patent No. 6,328,766,
which relates to partitioning media elements in automated media
devices, and its U.S. Patent No. 6,353,581, which relates to the
"mail slot" feature in automated media devices. Overland views this
decision by the full Commission as beneficial to pursuing patent
suits in civil court and another step in the process of proving that
BDT and others in the data storage industry have been using
Overland's intellectual property without permission. The company's
infringement case against BDT and its affiliates continues and
Overland plans to pursue monetary damages against BDT in District
Court. 
Investor Conference Call: 
 Overland will host an investor conference
call today, Wednesday, November 14, at 5:00 pm ET (2:00 pm PT) to
discuss the Company's first quarter fiscal 2013 financial results. To
access the call dial (877) 941-4774 (+1 (480) 629-9760 outside the
United States) and when prompted provide the pass code "Overland
Storage" to the operator. Participants are asked to call the assigned
number approximately 10 minutes before the conference call begins. In
addition, a live and archived webcast of the conference call will be
available over the Internet at www.overlandstorage.com in the
Investor Relations section. A replay of the conference call will also
be available via telephone by dialing (800) 406-7325 (+1 (303)
590-3030 outside the United States) and entering access code,
4573025#, beginning 8:00 p.m. ET on November 14, 2012 through 11:59
p.m. ET on November 21, 2012. 
About Overland Storage
 Overland Storage is a trusted global provider
of effortless data management and data protection solutions across
the data lifecycle. By providing an integrated range of technologies
and services for primary, nearline, offline, archival and cloud data
storage, Overland makes it easy and cost effective to manage
different tiers of information over time. Overland SnapServer(R),
SnapSAN(TM), NEO(R) and REO(R) solutions are available through a
select network of value added resellers and system integrators. For
more information, visit http://www.overlandstorage.com/. 
Safe Harbor State
ment
 Except for the factual statements made herein,
the information contained in this news release consists of
forward-looking statements that involve risks, uncertainties and
assumptions that are difficult to predict. Words and expressions
reflecting optimism, satisfaction or disappointment with current
prospects, as well as words such as "believes," "hopes," "intends,"
"estimates," "expects," "projects," "plans," "anticipates" and
variations thereof, or the use of future tense, identify
forward-looking statements, but their absence does not mean that a
statement is not forward-looking. Such forward-looking statements are
not guarantees of performance and our actual results could differ
materially from those contained in such statements. Factors that
could cause or contribute to such differences include, but are not
limited to: our ability to maintain and increase sales volumes of our
products; our ability to continue to aggressively control costs and
operating expenses; our ability to achieve the intended cost savings
and maintain quality with our new manufacturing partner; our ability
to generate cash from operations; the ability of our suppliers to
provide an adequate supply of components for our products at prices
consistent with historical prices; our ability to raise outside
capital and to repay our debt as it comes due; our ability to
introduce new competitive products and the degree of market
acceptance of such new products; the timing and market acceptance of
new products introduced by our competitors; our ability to maintain
strong relationships with branded channel partners; our ability to
maintain the listing of our common stock on the NASDAQ Capital
Market; customers', suppliers' and creditors' perceptions of our
continued viability; rescheduling or cancellation of customer orders;
loss of a major customer; our ability to enforce our intellectual
property rights and protect our intellectual property; general
competition and price measures in the market place; unexpected
shortages of critical components; worldwide information technology
spending levels; and general economic conditions. Reference is also
made to other factors detailed from time to time in our periodic
reports filed with the Securities and Exchange Commission. These
forward-looking statements speak only as of the date of this release
and we undertake no obligation to publicly update any forward-looking
statements to reflect new information, events or circumstances after
the date of this release. 
Connect with Overland Storage:
 Read the Overland blog:
http://overlandstorage.com/blog
 Follow Overland on Twitter:
http://www.twitter.com/OverlandStorage 
 Visit Overland on Facebook:
http://www.facebook.com/OverlandStorage 
Overland Storage, SnapSAN, SnapServer, NEO Series, REO Series and the
Overland logo are trademarks of Overland Storage, Inc., that may be
registered in some jurisdictions. All other trademarks used are owned
by their respective owners. 


 
                                                                            
                           OVERLAND STORAGE, INC.                           
                   CONSOLIDATED STATEMENTS OF OPERATIONS                    
                   (In thousands, except per share data)                    
                                                                            
                                                    Three Months Ended      
                                                       September 30,        
                                               ---------------------------- 
                                                    2012           2011     
                                               -------------  ------------- 
                                                (Unaudited)    (Unaudited)  
Net revenue                                    $      11,711  $      14,075 
Cost of revenue                                        7,768          9,488 
                                               -------------  ------------- 
Gross profit                                           3,943          4,587 
                                               -------------  ------------- 
                                                                            
Operating expenses:                                                         
  Sales and marketing                                  4,125          4,465 
  Research and development                             1,597          2,483 
  General and administrative                           2,884          3,081 
                                               -------------  ------------- 
    Total expenses                                     8,606         10,029 
                                               -------------  ------------- 
                                                                            
Operating loss                                        (4,663)        (5,442)
Interest income                                            3              - 
Interest expense                                         (42)            (9)
Other income (expense), net                             (112)           215 
                                               -------------  ------------- 
Loss before income taxes                              (4,814)        (5,236)
Provision for income taxes                                49            119 
                                               -------------  ------------- 
Net loss                                       $      (4,863) $      (5,355)
                                               =============  ============= 
                                                                            
Net loss per share:                                                         
  Basic and diluted                            $       (0.17) $       (0.23)
                                               =============  ============= 
                                                                            
Shares used in computing net loss per share:                                
  Basic and diluted                                   27,876         23,067 
                                                                            

 
                                                                            
                                                                            
                           OVERLAND STORAGE, INC.                           
                   CONSOLIDATED STATEMENTS OF OPERATIONS                    
                   (In thousands, except per share data)                    
                                                                            
                                                Three Months   Three Months 
                                                   Ended          Ended     
                                               September 30,     June 30,   
                                               -------------  ------------- 
                                                    2012           2012     
                                               -------------  ------------- 
                                                (Unaudited)    (Unaudited)  
Net revenue                                    $      11,711  $      15,300 
Cost of revenue   
                                     7,768         10,459 
                                               -------------  ------------- 
Gross profit                                           3,943          4,841 
                                               -------------  ------------- 
                                                                            
Operating expenses:                                                         
  Sales and marketing                                  4,125          3,880 
  Research and development                             1,597          1,791 
  General and administrative                           2,884          2,802 
                                               -------------  ------------- 
    Total expenses                                     8,606          8,473 
                                               -------------  ------------- 
                                                                            
Operating loss                                        (4,663)        (3,632)
Interest income                                            3            377 
Interest expense                                         (42)           (22)
Other income (expense), net                             (112)           589 
                                               -------------  ------------- 
Loss before income taxes                              (4,814)        (2,688)
Provision for income taxes                                49              6 
                                               -------------  ------------- 
Net loss                                       $      (4,863) $      (2,694)
                                               =============  ============= 
                                                                            
Net loss per share:                                                         
  Basic and diluted                            $       (0.17) $       (0.10)
                                               =============  ============= 
                                                                            
Shares used in computing net loss per share:                                
  Basic and diluted                                   27,876         27,644 
                                                                            
                                                                            
                                                                            
                           OVERLAND STORAGE, INC.                           
                     SELECTED BALANCE SHEETS INFORMATION                    
                               (In thousands)                               
                                                                            
                                                September 30,     June 30,  
                                                     2012           2012    
                                                -------------  -------------
                                                 (Unaudited)    (Unaudited) 
ASSETS                                                                      
Cash and cash equivalents                       $       7,226  $      10,522
Accounts receivable, net                                6,184          9,193
Inventories                                            11,044         10,658
Other current assets                                    3,576          3,779
                                                -------------  -------------
  Total current assets                                 28,030         34,152
Property and equipment, net                             1,635          1,446
Other assets                                            2,422          2,662
                                                -------------  -------------
  Total assets                                  $      32,087  $      38,260
                                                =============  =============
                                                                            
                                                                            
LIABILITIES & EQUITY (DEFICIT)                                              
Current liabilities                             $      28,514  $      26,759
Long-term debt                                              -          3,500
Other long-term liabilities                             4,110          4,960
Shareholders' equity (deficit)                           (537)         3,041
                                                -------------  -------------
  Total liabilities and equity (deficit)        $      32,087  $      38,260
                                                =============  =============

  
Investor Relations Contact:
Charles Messman or Todd Kehrli
MKR Group Inc.
323-468-2300
ovrl@mkr-group.com