Overland: Fiscal 2Q11 Financial Results

Overland Storage, Inc. reported second quarter results for its fiscal quarter ended December 31, 2010.

Eric Kelly, President and Chief Executive Officer of Overland Storage, said: "With the support of our channel partners worldwide, we are executing on our plan to increase sales of our higher margin branded products and services. Branded product sales grew 21.7% sequentially and total branded revenue is now 92.3% of total sales, up significantly from the prior quarter," said Kelly. "Additionally I am happy to report that our revenue, gross margin and operating expenses for the first half of FY 2011 were all within the guidance that we previously announced. In addition to achieving these financial objectives, we introduced a new SAN product line and a new NAS product into the marketplace as planned."

Net Revenue for the second quarter of fiscal 2011 was $17.9 million, an increase of 2% from the prior quarter and a decrease of 12.2% from the second fiscal quarter of 2010. The net loss for the quarter was $0.9 million, or $0.07 per share, compared to a net loss of $6.5 million, or $0.59 per share, in the prior quarter and net loss of $2.6 million, or $0.47 per share, in the second quarter of 2010. Gross margins for the second quarter of fiscal 2011 were 31.1%, a significant increase from 23.6% the prior quarter, and an increase from the 28.5% in the second quarter of fiscal 2010. Operating expenses were $9.2 million, an improvement of $0.7 million from $9.9 million the prior quarter, including $1 million in non-cash stock compensation expenses in each quarter. We ended the second quarter of fiscal 2011 with cash and cash equivalents were $6.8 million, an increase of $2.5 million from $4.3 million at the end of the prior quarter.

Highlights:

• Total branded products revenue, excluding service, increased 21.7% sequentially and 3.2% over the same period a year ago.
• The SnapServer and SnapSAN series of disk based products increased 53% over the prior quarter and 95% in the same quarter in the prior year.
• NEO SERIES tape products increased 10.7% from the prior quarter.
• Gross Margins for the quarter were 31.1%, up 750 basis points from the first quarter and up 250 basis points from the same quarter in the prior year.
• The Company generated $3.0 million in other income from the sale of a minority interest in proceeds the company may receive in connection with the current IP litigation.
• The Company launched the SnapSAN S1000, a new entry in the midrange SAN marketplace. The S1000 has a modular, scalable, dual controller architecture and was designed to anchor our SnapSAN portfolio and expand our total available market.