Cash Flow Continues Positive SAN DIEGO, Oct. 30
/PRNewswire-FirstCall/ -- Overland Storage, Inc. (NASDAQ:OVRL)
today reported results for its fiscal 2008 first quarter ended
September 30, 2007. Net revenue for the fiscal 2008 first quarter
was $32.9 million, compared with $41.8 million for the same period
a year ago. The company reported a net loss of $4.5 million, or
$0.35 per share, for the fiscal 2008 first quarter compared with a
net loss of $20.0 million, or $1.54 per share, for the same period
a year earlier. The fiscal 2007 first quarter included an $8.4
million charge, or $0.65 per share, related to the impairment of
acquired technology. The company noted that revenue for the fiscal
2008 first quarter decreased 21.3 percent from the prior year
quarter primarily due to lower sales to OEM customers.
Specifically, sales to the company's largest OEM customer were down
45.4 percent compared with the fiscal first quarter, reflecting the
previously announced transition by the customer to a new product
from an alternate supplier. This reduction in sales level was
largely anticipated. Conversely, the company increased branded
revenue 5.1 percent compared to the prior year quarter due to
continued strong growth in the areas of warranty and other service
revenue. Branded revenue in the first fiscal quarter grew 7.4
percent on a sequential basis compared to the fiscal 2007 fourth
quarter, reflecting the expanded products now available as well as
increased sales of spares and service. Gross profit increased 22.2
percent from $5.3 million in the fiscal 2007 first quarter to $6.5
million in the fiscal 2008 first quarter; and gross margin improved
from 12.7 percent in the fiscal 2007 first quarter to 19.6 percent
in the fiscal 2008 first quarter. The company noted these
improvements occurred despite the decline in revenue and resulted
principally from the completion of transitioning its manufacturing
operations back to San Diego as well as a more favorable product
and customer mix. Excluding the $8.4 million impairment charge in
the prior year, operating expenses of $11.1 million in the fiscal
2008 first quarter declined 36.3 percent from $17.5 million in the
fiscal 2007 quarter. Double-digit percentage spending reductions
were posted in each of these areas: sales and marketing, R&D
and general and administrative. "Though we are disappointed with
the 3.4 percent sequential decline in revenue from the June 2007
quarter, we are encouraged by our progress in a number of areas,"
commented Vern LoForti, president and chief executive officer of
Overland Storage. "In what is normally a seasonally down quarter
for our branded channels due to summer holidays in Europe, sales in
the European channel increased 4.1 percent and sales in the
Americas gained 10.9 percent on a sequential basis. This growth was
driven by combined sales of our disk-based REO(R) and ULTAMUS(TM)
appliances that grew 19.2 percent sequentially. We achieved this
performance with a reduced sales force that we are now rebuilding.
"Additionally, we were pleased with the sequential improvement in
gross profit margin from 18.1 percent in the June 2007 quarter to
19.6 percent this quarter. Operating expenses also declined for the
fifth consecutive quarter, reaching the lowest level since the
fiscal 2003 fourth quarter. Finally, for the second quarter in a
row, our cash and investment balances grew, ending the quarter at
$23.8 million, an increase of $1.0 million over the prior quarter,
as we further reduced inventories and aggressively managed
receivables and payables. "At the start of fiscal 2008, we faced
three important near-term tasks: rebuild the confidence of our
channel partners, deliver our roadmap of disk-based products to
complete our tiered data protection strategy and rebuild our sales
force. I am pleased to report that we have made significant
progress in each of these areas. Our management team has met or
plans to meet with all of our top-tier partners to align strategy
and share the details of our corporate recovery plan. Thus far, the
feedback has been extremely positive and confirms that our product
strategy addresses the data protection needs of our end-user
customers. And, our channel partners remain committed to working
with Overland. On the product front, Overland already has launched
three new products in fiscal 2008. Under development, we have
additional products offering new and unique technologies with one
new product scheduled for a November launch. After several quarters
of development and product introductions, our sales force now has a
broad array of products which address a far wider variety of data
protection needs. Many of these products are more powerful and
complex than our earlier products, and we are rebuilding and
retraining our sales force to present the capabilities of these
products to the market. I'm pleased that we have already been able
to attract high-caliber individuals who appreciate the focus and
breadth of our strategy. "We still have a ways to go, but we are
encouraged by our progress to date. To reach our goals, we continue
to rely on the commitment of our dedicated employees and channel
partners to deliver quality products that enable end-user customers
to solve their data protection needs in the most efficient and
cost-effective way," concluded LoForti. About Overland Storage Now
in its 27th year, Overland Storage is a market leader and
innovative provider of simply protected storage solutions -- smart
data protection appliances and software modules designed to work
together, affordably, to ensure that information is automatically
safe, readily available and always there. Overland's award-winning
data protection solutions include the ULTAMUS(TM) RAID SERIES of
affordable, high-capacity storage; REO SERIES(R) of disk-based
backup, recovery and VTL appliances; and the NEO SERIES(R) and
ARCvault(TM) SERIES tape automation solutions. Overland sells its
products through leading OEMs, commercial distributors, direct
market resellers, storage integrators and value-added resellers.
For more information, visit Overland's web site at
http://www.overlandstorage.com/. 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 and satisfaction with current
prospects, as well as words such as "believe," "hopes," "intends,"
"estimates," "expects," "projects," "plans," "anticipates" and
variations thereof, 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
the company's actual results could differ materially from those
contained in such statements. Factors that could cause or
contribute to such differences include possible delays in new
product introductions and shipments; market acceptance of the
company's new product offerings; the performance of the company's
newly restructured management team; the need to hire additional
sales employees and train existing employees on new products, the
timing and market acceptance of new product introductions by
competitors; worldwide information technology spending levels;
unexpected shortages of critical components; rescheduling or
cancellation of customer orders; loss of a major customer; the
timing and amount of licensing royalties; general competition and
price pressures in the marketplace; the company's ability to
control costs and expenses; and general economic conditions.
Reference is also made to other factors detailed from time to time
in the company's filings with the Securities and Exchange
Commission. These forward-looking statements speak only as of the
date of this release and the company undertakes no obligation to
publicly update any forward-looking statements to reflect new
information, events or circumstances after the date of this
release. Overland, Overland Storage, REO Series, REO, NEO Series,
NEO, ARCvault Series, ARCvault and ULTAMUS are trademarks of
Overland Storage, Inc. Webcast: A live audio Webcast of Overland's
management conference call discussing fiscal 2008 first quarter
results will be held beginning at 9:30 a.m. EDT, October 30, 2007,
and will be posted at http://www.overlandstorage.com/. Please
provide adequate time to log on. Following the broadcast, the
conference call will be archived for future access on Overland's
website. OVERLAND STORAGE, INC. CONSOLIDATED STATEMENT OF
OPERATIONS (In thousands, except per share data) Three Months Ended
September 30, 2007 2006 (Unaudited) Net revenue $32,901 $41,827
Cost of revenue 26,429 36,529 Gross profit 6,472 5,298 Operating
expenses: Sales and marketing 6,663 8,753 Research and development
1,940 4,882 General and administrative 2,523 3,839 Impairment of
acquired technology -- 8,411 Total expenses 11,126 25,885 Operating
loss (4,654) (20,587) Interest income, net 289 697 Other expense,
net (101) (95) Loss before income taxes (4,466) (19,985) Income
taxes 55 12 Net loss $(4,521) $(19,997) Net loss per share: Basic
and Diluted $(0.35) $(1.54) Shares used in computing net loss per
share: Basic and Diluted 12,753 12,966 OVERLAND STORAGE, INC.
SELECTED BALANCE SHEET INFORMATION (In thousands) Sept 30, June 30,
2007 2007 (unaudited) ASSETS Cash and equivalents $16,075 $17,503
Short-term investments 7,773 5,322 Accounts receivable, net 22,033
22,572 Inventories 18,964 20,556 Other current assets 7,497 7,138
Total current assets 72,342 73,091 Property, plant and equipment,
net 10,558 11,052 Other assets 3,498 3,910 Total assets $86,398
$88,053 LIABILITIES & EQUITY Current liabilities $35,509
$33,525 Long-term debt -- -- Other long-term liabilities 5,888
5,418 Shareholders' equity 45,001 49,110 Total liabilities and
equity $86,398 $88,053 DATASOURCE: Overland Storage, Inc. CONTACT:
Vernon A. LoForti, President and CEO, , or Kurt L. Kalbfleisch, VP
Finance and Interim CFO, , both of Overland Storage, Inc.,
+1-858-571-5555 Web site: http://www.overlandstorage.com/
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