Overland Storage Reports Second Quarter Fiscal 2013 Results

Overland Storage Reports Second Quarter Fiscal 2013 Results 
SAN DIEGO, CA -- (Marketwire) -- 02/13/13 --   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 second quarter
ended December 31, 2012.  
"During the second fiscal quarter, we experienced strong demand,
compared to the preceding quarter, which was reflected in our unit
sales across all product lines including a 34 percent increase in
SnapServer, a 30 percent increase in NEO Tape Libraries, and a 21
percent increase in SnapSAN," said Eric Kelly, President and CEO of
Overland Storage. "In addition, we achieved 42 percent sequential
revenue growth in Europe. With the release of our new clustered NAS
product, SnapScale X2(TM), last October, we have significantly
expanded our total addressable market, and we continue to see a
growing pipeline of new primary storage opportunities generated by
our SnapSAN and SnapScale X2 clustered NAS solutions. In addition, we
were pleased to announce today a $14.25 million financing comprised
of convertible notes and equity. We plan to use this additional
capital to fund further growth and capitalize on the substantial
opp
ortunities we see ahead."  
Second Quarter Fiscal 2013 Financial Results:  


 
--  Net revenue for the second quarter of fiscal 2013 was $12.6 million,
    up 8% sequentially from $11.7 million for the first quarter of fiscal
    2013, and down 17% from $15.1 million in the second quarter of fiscal
    2012.
    
    
--  Product revenue for the second quarter of fiscal 2013 was $7.8
    million, up 18% sequentially from $6.6 million for the first quarter
    of fiscal 2013, and down 14% from $9.1 million in the second quarter
    of fiscal 2012.
    
    
--  Gross margins of 36.5% for the second quarter of fiscal 2013 were up
    280 basis points sequentially from 33.7% in the first quarter of
    fiscal 2013, and up over 300 basis points from 33.2% in the second
    fiscal quarter of 2012.
    
    
--  Operating expenses for the second quarter of fiscal 2013 were $8.7
    million, compared to $8.6 million in the first quarter of fiscal 2013
    and $9.3 million for the second quarter of fiscal 2012.
    
    
--  Depreciation and amortization was $0.3 million in the second quarter
    of fiscal 2013 compared to $0.3 million in the first fiscal quarter of
    2013 and $0.4 million in the second quarter of fiscal 2012.
    
    
--  Stock compensation expense was $1.3 million in the second quarter of
    fiscal 2013, compared to $1.3 million for the first quarter of fiscal
    2013 and $1.4 million for the second quarter of fiscal 2012.
    
    
--  Net loss for the second fiscal quarter of 2013 was $4.3 million, or a
    loss of $0.15 per share, compared to a net loss of $4.9 million, or a
    loss of $0.17 per share, in the first quarter of fiscal 2013 and a net
    loss of $4.3 million, or a loss of $0.18 per share, in the second
    quarter of fiscal 2012.
    
    
--  Total cash and cash equivalents at December 31, 2012 was $3.2 million,
    compared to $10.5 million at June 30, 2012. At December 31, 2012, the
    Company had $3.5 million outstanding under its credit facility.

  
Product Developments: 


 
--  Released new clustered NAS product SnapScale X2(TM) in October 2012,
    significantly expanding the company's addressable market opportunity
    to include the $14 billion scale-out NAS market.
--  Released 10GbE for SnapScale X2 clustered NAS solutions.
--  First to market and first to ship LTO6 drives in NEO Series tape
    product portfolio.
--  Granted U.S patent covering clustered file system technology for
    large-scale computer file storage.

  
Patent Litigation: 
 Based on the United States International Trade
Commission's (ITC) evaluation of its '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, 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 would 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 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, February 13, at 5:00 pm ET (2:00 pm PT) to
discuss the Company's second quarter fiscal 2013 financial results.
To access the call dial (888) 846-5003 (+1 (480) 629-9856 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,
4595341#, beginning 8:00 p.m. ET on February 13, 2013 through 11:59
p.m. ET on February 20, 2013. 
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 Statement
 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 CONDENSED STATEMENTS OF OPERATIONS               
                   (In thousands, except per share data)                    
                                                                            
                                                                            
                                  Three Months Ended     Six Months Ended   
                                     December 31,          December 31,     
                                 --------------------  -------------------- 
                                    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
                                      (Unaudited)           (Unaudited)     
Net revenue                      $  12,599  $  15,105  $  24,310  $  29,180 
Cost of revenue                      8,002     10,083     15,770     19,571 
                                 ---------  ---------  ---------  --------- 
Gross profit                         4,597      5,022      8,540      9,609 
                                 ---------  ---------  ---------  --------- 
                                                                            
Operating expenses:                                                         
  Sales and marketing                4,353      4,073      8,478      8,538 
  Research and development           1,591      2,151      3,188      4,634 
  General and administrative         2,765      3,048      5,649      6,129 
                                 ---------  ---------  ---------  --------- 
   Total expenses                    8,709      9,272     17,315     19,301 
                                 ---------  ---------  ---------  --------- 
                                                                            
Operating loss                      (4,112)    (4,250)    (8,775)    (9,692)
Interest income                          -          -          3          - 
Interest expense                       (46)       (26)       (88)       (35)
Other income (expense), net            (47)        (8)      (159)       207 
                                 ---------  ---------  ---------  --------- 
Loss before income taxes            (4,205)    (4,284)    (9,019)    (9,520)
Provision for income taxes              68          8        117        127 
                                 ---------  ---------  ---------  --------- 
Net loss                         $  (4,273) $  (4,292) $  (9,136) $  (9,647)
                                 =========  =========  =========  ========= 
                                                                            
Net loss per share:                                                         
  Basic and diluted              $   (0.15) $   (0.18) $   (0.33) $   (0.42)
                                 =========  =========  =========  ========= 
                                                                            
Shares used in computing net                                                
 loss per share:                                                            
  Basic and diluted                 28,339     23,382     28,108     23,219 
                                                                            
                                                                            
                                                                            
                                                                            
                           OVERLAND STORAGE, INC.                           
              CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS               
                   (In thousands, except per share data)                    
                                                                            
                                                                            
                                                Three Months   Three Months 
                                                   Ended          Ended     
                                                December 31,  September 30, 
                                               -------------  ------------- 
                                                    2012           2012     
                                               -------------  ------------- 
                                                (Unaudited)    (Unaudited)  
Net revenue                                    $      12,599  $      11,711 
Cost of revenue                                        8,002          7,768 
                                               -------------  ------------- 
Gross profit                                           4,597          3,943 
                                               -------------  ------------- 
                                                                            
Operating expenses:                                                         
  Sales and marketing                                  4,353          4,125 
  Research and development                             1,591          1,597 
  General and administrative                           2,765          2,884 
                                               -------------  ------------- 
    Total expenses                                     8,709          8,606 
                                               -------------  ------------- 
                                                                            
Operating loss                                        (4,112)        (4,663)
Interest income                                            -              3 
Interest expense                   
                      (46)           (42)
Other income (expense), net                              (47)          (112)
                                               -------------  ------------- 
Loss before income taxes                              (4,205)        (4,814)
Provision for income taxes                                68             49 
                                               -------------  ------------- 
Net loss                                       $      (4,273) $      (4,863)
                                               =============  ============= 
                                                                            
Net loss per share:                                                         
  Basic and diluted                            $       (0.15) $       (0.17)
                                               =============  ============= 
                                                                            
Shares used in computing net loss per share:                                
  Basic and diluted                                   28,339         27,876 
                                                                            
                                                                            
                                                                            
                                                                            
                           OVERLAND STORAGE, INC.                           
                     SELECTED BALANCE SHEETS INFORMATION                    
                               (In thousands)                               
                                                                            
                                                                            
                                                 December 31,     June 30,  
                                                     2012           2012    
                                                -------------  -------------
                                                 (Unaudited)    (Unaudited) 
ASSETS                                                                      
Cash and cash equivalents                       $       3,163  $      10,522
Accounts receivable, net                                7,669          9,193
Inventories                                            10,375         10,658
Other current assets                                    2,886          3,779
                                                -------------  -------------
  Total current assets                                 24,093         34,152
Property and equipment, net                             1,875          1,446
Other assets                                            2,342          2,662
                                                -------------  -------------
  Total assets                                  $      28,310  $      38,260
                                                =============  =============
                                                                            
                                                                            
LIABILITIES & EQUITY (DEFICIT)                                              
Current liabilities                             $      26,828  $      26,759
Long-term debt                                              -          3,500
Other long-term liabilities                             4,408          4,960
Shareholders' equity (deficit)                         (2,926)         3,041
                                                -------------  -------------
  Total liabilities and equity (deficit)        $      28,310  $      38,260
                                                =============  =============

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