Overland Storage Reports First Quarter Fiscal 2014 Results

Overland Storage Reports First Quarter Fiscal 2014 Results 
SAN DIEGO, CA -- (Marketwired) -- 11/13/13 --  Overland Storage
(NASDAQ: OVRL), a trusted global provider of unified data management
and data protection solutions across the data lifecycle, today
reported financial results for its fiscal 2014 first quarter ended
September 30, 2013. 
"We are excited about our agreement to acquire Tandberg Data, which
would create a company which had approximately $110 million in annual
revenue in our last fiscal year and would provide substantial
resources and cost synergies, enabling us to compete more effectively
in the marketplace and move toward a clearer path to profitability
following integration of the two companies," said Eric Kelly,
President and CEO of Overland Storage. "With this acquisition, we
would have a larger sales engine and expanded market reach to realize
the growth potential of the innovative and award-winning products we
have developed over the last couple years. 
"During the quarter, we continued to see solid growth in revenue from
our SnapServer DX Series, both from the immediately preceding quarter
and year-over-year, and we remain on track to begin rolling out our
mobility business solution in the first quarter of calendar 2014,
which is designed to enable us to deliver the full functionality of
true native applications to any mobile device anywhere as a workforce
productivity solution. Moving forward, we expect our products to
benefit from a substantially expanded channel of 16,000 partners as a
result of our acquisition of Tandberg Data." 
Recent Highlights: 


 
--  Disk product revenue for the first quarter of fiscal 2014 was up 4%
    compared to the preceding quarter and up 26% compared to the first
    quarter of fiscal 2013.
    
    
--  SnapServer DX Series product revenue in the first quarter of fiscal
    2014 was $1.9 million, up 19% over the preceding quarter and up 34%
    compared to the first quarter of fiscal 2013.
    
    
--  We released SnapScale X4, a clustered NAS product that is designed to
    provide a high-density solution to more efficiently manage growing
    amounts of unstructured data.
    
    
--  We amended our San Diego lease reducing our square footage, resulting
    in an annual savings of over $1.2 million after February 2014.
    
    
--  We entered into a definitive agreement to acquire Tandberg Data
    Holdings S.a.r.l., a privately held global leader of data storage
    and data protection solutions. The sole consideration payable by us in
    the acquisition consists of shares of our common stock. The
    acquisition is currently expected to be completed by the end of
    December 2013, subject to customary closing conditions, shareholder
    and regulatory approvals.
    
    
--  Following the filing of the preliminary proxy for the Tandberg Data
    Holdings S.a.r.l. acquisition, the holders of our convertible
    notes converted $10.7 million of convertible notes into shares of our
    common stock at $1.30 per share.
    
    
--  We received gross proceeds of $3.0 million from the sale of
    convertible notes under our amended and restated note purchase
    agreement entered into in November 2013 which provides for the
    issuance of for up to $7.0 million of convertible notes in the
    aggregate.

  
First Quarter Fiscal 2014 Financial Results 


 
--  Net revenue for the first quarter of fiscal 2014 was $10.6 million,
    compared to $11.7 million for the first quarter of fiscal 2013 and
    $12.1 million in the fourth quarter of fiscal 2013. Product revenue
    for the first quarter of fiscal 2014 was $6.1 million, compared to
    $6.6 million for the first quarter of fiscal 2013 and $7.6 million in
    the fourth quarter of fiscal 2013.
    
    
--  Gross margin for both the first quarter of fiscal 2014 and 2013 was
    constant at 33.7% and 36.5% in the fourth quarter of fiscal 2013.
    
    
--  Operating expenses for the first quarter of fiscal 2014 were $7.7
    million, compared to $8.6 million in the first quarter of fiscal 2013
    and $9.4 million for the fourth quarter of fiscal 2013. Stock
    compensation expense was $0.9 million in the first quarter of fiscal
    2014, compared to $1.3 million in the first quarter of fiscal 2013 and
    $1.1 million in the fourth quarter of fiscal 2013. Depreciation and
    amortization was $0.3 million in both the first quarters of fiscal
    2014 and 2013, and in the fourth quarter of fiscal 2013.
    
    
--  Net loss for the first quarter of fiscal 2014 was $4.6 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 $5.4 million, or a loss of $0.18 per share, in the fourth
    quarter of fiscal 2013.
    
    
--  Cash and short-term investments at September 30, 2013 were $5.8
    million, compared to cash of $8.8 million at June 30, 2013. At
    September 30, 2013, the Company had $3.5 million outstanding under its
    credit facility and $13.25 million outstanding under its convertible
    notes.

  
Investor Conference Call: 
 Overland will host an investor conference
call today, Wednesday, November 13, at 5:00 pm ET (2:00 pm PT) to
discuss the Company's first quarter fiscal 2014 financial results. To
access the call dial 877-941-2069 (+1 480-629-9713 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,
4650271#, beginning 8:00 p.m. ET on November 13, 2013 through 11:59
p.m. ET on November 20, 2013. 
About Overland Storage
 Overland Storage is a trusted global provider
of unified data management and data protection solutions across the
data lifecycle. By providing an integrated range of technologies and
services for primary, nearline, offline, and archival data storage,
Overland makes it easy and cost effective to manage different tiers
of information over time whether distributed data is across the hall
or across the globe. Overland SnapScale, SnapServer, SnapSAN, NEO
Series and REO Series solutions are available through a select
network of value-added resellers and system integrators. For more
information, visit 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: the occurrence of any event, change or other
circumstances that could give rise to the termination of the
definitive acquisition agreement, the failure to obtain shareholder
approval or the failure to satisfy the closing conditions, the
failure to obtain the necessary regulatory approvals on conditions
permissible under the acquisition agreement, risks related to
disruption of management's attention from our ongoing business
operations due to the transaction, the effect of the announcement of
the acquisition on the ability of Overland and Tandberg to retain
customers and retain and hire key personnel and maintain
relationships with its suppliers, operating results and business
generally; 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 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
regain compliance with the continued listing requirements of, and
thereby 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
(including the outcome of our ongoing patent litigation); 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, SnapScale, 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      
                                                       September 30,        
                                               ---------------------------- 
                                                    2013           2012     
                                               -------------  ------------- 
                                                        (Unaudited)         
Net revenue                                    $      10,606  $      11,711 
Cost of revenue                                        7,037          7,768 
                                               -------------  ------------- 
Gross profit                                           3,569          3,943 
                                               -------------  ------------- 
                                                                            
Operating expenses:                                                         
  Sales and marketing                                  3,745          4,125 
  Research and development                             1,309          1,597 
  General and administrative                           2,611          2,884 
                                               -------------  ------------- 
    Total expenses                                     7,665          8,606 
                                               -------------  ------------- 
                                                                            
Loss from operations                                  (4,096)        (4,663)
Interest income                                            -              3 
Interest expense                                        (314)           (42)
Other income (expense), net                             (161)          (112)
                                               -------------  ------------- 
Loss before income taxes                              (4,571)        (4,814)
Provision for income taxes                                19             49 
                                               -------------  ------------- 
Net loss                                       $      (4,590) $      (4,863)
                                               =============  ============= 
                                                                            
Net loss per share:                                                         
  Basic and diluted                            $       (0.15) $       (0.17)
                                               =============  ============= 
                                                                            
Shares used in computing net loss per share:                                
  Basic and diluted                                   30,725         27,876 
                                                                            
                                                                            
                                                                            
                           OVERLAND STORAGE, INC.                           
              CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS               
                   (In thousands, except per share data)                    
                                                                            
                                                Three Months   Three Months 
                                                   Ended          Ended     
                                               September 30,     June 30,   
                                               -------------  ------------- 
                                                    2013           2013     
                                               -------------  ------------- 
                                                (Unaudited)    (Unaudit
ed)  
Net revenue                                    $      10,606  $      12,068 
Cost of revenue                                        7,037          7,660 
                                               -------------  ------------- 
Gross profit                                           3,569          4,408 
                                               -------------  ------------- 
                                                                            
Operating expenses:                                                         
  Sales and marketing                                  3,745          4,434 
  Research and development                             1,309          1,665 
  General and administrative                           2,611          3,271 
                                               -------------  ------------- 
    Total expenses                                     7,665          9,370 
                                               -------------  ------------- 
                                                                            
Loss from operations                                  (4,096)        (4,962)
Interest expense                                        (314)          (327)
Other income (expense), net                             (161)           (92)
                                               -------------  ------------- 
Loss before income taxes                              (4,571)        (5,381)
Provision for income taxes                                19             44 
                                               -------------  ------------- 
Net loss                                       $      (4,590) $      (5,425)
                                               =============  ============= 
                                                                            
Net loss per share:                                                         
  Basic and diluted                            $       (0.15) $       (0.18)
                                               =============  ============= 
                                                                            
Shares used in computing net loss per share:                                
  Basic and diluted                                   30,725         29,996 
                                                                            
                                                                            
                                                                            
                           OVERLAND STORAGE, INC.                           
                    SELECTED BALANCE SHEETS INFORMATION                     
                               (In thousands)                               
                                                                            
                                               September 30,     June 30,   
                                                    2013           2013     
                                               -------------  ------------- 
                                                (Unaudited)    (Unaudited)  
ASSETS                                                                      
Cash                                           $       3,934  $       8,831 
Short-term investment - related party                  1,865              - 
Accounts receivable, net                               6,366          6,640 
Inventories                                           10,029         10,354 
Other current assets                                   1,846          1,923 
                                               -------------  ------------- 
  Total current assets                                24,040         27,748 
Property and equipment, net                            2,039          2,014 
Other assets                                           1,799          1,641 
                                               -------------  ------------- 
  Total assets                                 $      27,878  $      31,403 
                                               =============  ============= 
                                                                            
                                                                            
LIABILITIES & EQUITY (DEFICIT)                                              
Current liabilities                            $      19,442  $      21,064 
Long-term debt                                        16,750         16,750 
Other long-term liabilities                            3,984          3,885 
Shareholders' equity (deficit)                       (12,298)       (10,296)
                                               -------------  ------------- 
  Total liabilities and equity (deficit)       $      27,878  $      31,403 
                                               =============  ============= 

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