Overland Storage Announces Fiscal 2005 First Quarter Results
Results Exceed Expectations SAN DIEGO, Oct. 26
/PRNewswire-FirstCall/ -- Overland Storage, Inc. (NASDAQ:OVRL)
today announced results for its fiscal 2005 first quarter ended
Sept. 30, 2004, with better than anticipated results supported by
new product introductions and strong market demand for its branded
backup and recovery solutions. Revenue for the fiscal 2005 first
quarter was $59.5 million compared with $56.6 million for the same
period last year. Net income for the first quarter was $1.9
million, or $0.13 per diluted share, compared with $2.2 million, or
$0.16 per diluted share, for the fiscal 2004 first quarter.
Earnings per diluted share were based on 14,571,000 and 14,178,000
shares outstanding in fiscal 2005 and 2004, respectively. "Though
our fiscal first quarter typically exhibits a seasonal slowdown,
particularly in Europe, results for the period this year benefited
from strong sales to major account customers both in Europe and
APAC and from new product introductions," said Christopher Calisi,
president and chief executive officer. Overland's branded revenue
was up 19 percent over the prior year quarter, with double digit
contributions from each geographic sector. Sales in the Americas
grew 14 percent over the same period, EMEA was up 22 percent and
APAC 21 percent. Total OEM sales were off slightly from the first
quarter of 2004, but up sequentially compared to the fiscal 2004
fourth quarter. Calisi noted that profitability for the quarter was
impacted by increased expense levels, though expenses were not as
high as originally planned. As expected, the company significantly
increased its investment in research and development reflecting
product extensions of both its REO and NEO lines. Due to delayed
spending plans, sales and marketing expenses were essentially flat
compared to both the prior year and preceding quarter. The
combination of higher sales and lower spending resulted in per
share earnings that were double the company's earlier guidance. "I
am especially pleased with the steep ramp of REO, with unit sales
growing 78 percent sequentially over the fourth quarter of 2004,"
Calisi said. He further highlighted the July introduction of
Overland's REO 1000, a one terabyte product designed as a
cost-effective alternative to entry-level tape autoloaders. In
addition, he noted the introduction in late September of the REO
9000, a 9.6 terabyte appliance designed to address the backup and
recovery needs of larger organizations. "Both of these new products
complement our strategy to focus on the mid-market, and offer
innovative and cost-effective data protection solutions," Calisi
added. Forward Guidance The company issued guidance of $69 million
in revenue and net income of $0.20 per diluted share for the fiscal
2005 second quarter, which is historically the company's strongest
quarter. Operating expenses for the second quarter will include the
annual reseller conference, held in early October, as well as
anticipated increases in sales and marketing to support new
products. For fiscal 2005 the company confirmed its earlier
guidance of revenue growth of 10 percent, and earnings per diluted
share growth of 12 percent. This outlook does not assume any new
OEM wins, although the company continues to pursue additional OEM
business. The growth outlined above includes a significant
contribution from the REO product line. Additionally, the company
believes gross margins will increase in fiscal 2005, reflecting
higher margins from REO compared to tape automation. About Overland
Storage Now in its 25th year, Overland Storage continues to deliver
world-class data protection solutions designed to ensure business
continuity. Focused on backup and recovery, Overland's data
protection solutions are designed for midrange-computer
environments. These include NEO SERIES, the award-winning automated
storage libraries that set the standard for intelligent, automated
and scalable storage, and REO SERIES, the disk-based backup and
recovery acceleration appliance. Overland sells its products
worldwide through leading OEMs, commercial distributors, storage
integrators and value-added resellers. For more information, visit
Overland's website 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,"
"intends," "expects," "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 delays, unbudgeted expenses,
inefficiencies and production problems that may result from the
transition of manufacturing to Sanmina-SCI; difficulty of
predicting sales to the company's major OEM customer; worldwide
information technology spending levels; unexpected shortages of
critical components; rescheduling or cancellation of customer
orders; loss of a major customer; the timing and market acceptance
of new product introductions by the company, including the
company's new REO products, competitors or licensees of the
company; 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 set forth in
the company's filings with the Securities and Exchange Commission,
including the "Risk Factors," "Management's Discussion and
Analysis" and other sections of the company's Form 10-K for the
most recently completed fiscal year. 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, NEO SERIES, REO 1000 and REO 9000 are
trademarks or registered trademarks of Overland Storage, Inc.
Webcast: A live audio Webcast of Overland's management conference
call discussing first quarter 2005 results and the 2005 outlook
will be held beginning at 10:30 a.m. EDT, Oct. 26, 2004, 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 Web site.
CONTACT INFORMATION: Vernon A. LoForti, CFO Email: 858-571-5555
Cynthia A. Bond, Director of Corporate Communications Email:
858-571-5555 - Financial Tables Follow - OVERLAND STORAGE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except per
share data) Three Months Ended September 30, 2004 2003 (Unaudited)
Net revenues $59,526 $56,569 Cost of revenues 43,509 40,992 Gross
profit 16,017 15,577 Operating expenses: Sales and marketing 7,812
7,851 Research and development 2,929 1,810 General and
administrative 2,612 2,582 Total expenses 13,353 12,243 Operating
income 2,664 3,334 Interest income, net 274 96 Other income (loss),
net 69 (10) Income before income taxes 3,007 3,420 Income taxes
1,107 1,197 Net income $1,900 $2,223 Earnings per share: Basic
$0.14 $0.17 Diluted $0.13 $0.16 Shares used in computing earnings
per share: Basic 14,056 12,972 Diluted 14,571 14,178 OVERLAND
STORAGE, INC. SELECTED BALANCE SHEET INFORMATION (In thousands)
September 30, June 30, 2004 2004 (unaudited) ASSETS Cash and
equivalents $56,537 $58,422 Short term investments 16,182 11,235
Accounts receivable, net 34,960 31,424 Inventories 20,388 16,163
Other current assets 10,652 11,323 Total current assets 138,719
128,567 Property, plant and equipment, net 8,150 7,945 Other assets
7,264 7,514 Total assets $154,133 $144,026 LIABILITIES & EQUITY
Current liabilities $32,221 $25,460 Long-term debt -- -- Other
long-term liabilities 5,814 5,052 Shareholders' equity 116,098
113,514 Total liabilities and equity $154,133 $144,026 DATASOURCE:
Overland Storage, Inc. CONTACT: Vernon A. LoForti, CFO, , or
Cynthia A. Bond, Director of Corporate Communications, , both of
Overland Storage, Inc., +1-858-571-5555 Web site:
http://www.overlandstorage.com/
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