Overland Storage (NASDAQ:OVRL)
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Overland Storage Announces Preliminary Third Quarter Results
SAN DIEGO, April 21 /PRNewswire-FirstCall/ -- Overland Storage, Inc.
(NASDAQ:OVRL) today said it expects revenue for the fiscal third quarter ended
March 31, 2005 to be approximately $58 million, below its previous guidance of
$62 million issued in early February 2005. Net income per diluted share, which
includes approximately $1.2 million of pretax outsourcing charges, is expected
to be approximately $0.09. Excluding the $0.04 per share impact of such
outsourcing charges, pro forma net income per diluted share is expected to be
approximately $0.13, rather than within the range of $0.17 to $0.19 as
originally forecast. Pro forma results are presented to provide a more
complete view of the company's financial results in light of the costs
associated with the outsourcing of all manufacturing, as announced in September
2004. These charges are expected to continue through the 2005 fourth quarter,
when the outsourcing transition will be complete. See "Non-GAAP Financial
Measures" below.
The company explained that the revenue shortfall against guidance resulted from
softness in both its branded and OEM sales channels. In comparison to the
third fiscal quarter of 2004, total revenue was essentially flat, though there
was a significant shift between OEM and branded sales. OEM sales were down
approximately 11 percent and branded channel sales grew 21 percent.
"Though disappointed with the results this quarter, and what appears to be a
soft patch in the economy, we are optimistic that IT spending will step up.
And, we believe a key IT focus will be on adding disk-based solutions to
existing systems," stated Christopher Calisi, president and chief executive
officer of Overland Storage. "Our third quarter operating expenses came in on
plan. At this point, we are investing in building our REO software development
team and augmenting our sales and marketing efforts to promote the future of
Overland and our family of disk-based appliances. We are focused on developing
and launching new products to capitalize on this emerging technology and the
growing demand from IT departments for disk-based appliances."
The company will report full results for its third quarter and first nine
months of fiscal 2005 ended March 31, 2005 on May 2, 2005.
Non-GAAP Financial Measures
To supplement the results in accordance with GAAP, the company has included Pro
Forma financial information that excludes the transition charges related to
outsourcing all of the company's manufacturing to Sanmina-SCI, a contract
manufacturer. Overland entered into a manufacturing service agreement with
Sanmina-SCI on November 23, 2004 and plans to complete the transfer of all
products to Sanmina-SCI by June 30, 2005. Over the second, third and fourth
quarters of fiscal year 2005 Overland expects to incur a total of between $2.5
million and $3.0 million of pretax charges related to the transition. These
charges will be comprised of termination benefits for approximately 135
employees, writedowns for excess facilities and other out-of-pocket expenses
incurred in connection with the transition. Because these are one-time charges
that will not be repeated in subsequent fiscal years, the company believes the
pro forma results provide useful information to investors concerning Overland's
operating results, and permit a more meaningful comparison to historical
financial results, which did not include such charges. Although management
believes the above non-GAAP financial measures enhance investors' understanding
of the company's business and performance, these non-GAAP financial measures
are inherently limited in that they exclude certain costs which are required to
be included in a GAAP presentation, and do not therefore present the full
measure of the company's recorded costs against its revenues. Accordingly,
these pro forma results should be considered together with GAAP results, rather
than as an alternative to GAAP basis financial measures.
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(TM), the
award-winning automated storage libraries that set the standard for
intelligent, automated and scalable storage, and REO SERIES(TM), 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 our expected results of operations for the quarter ended March 31,
2005 to differ from expectations include completion of our quarter end
accounting procedures and review of our results by our independent registered
public accounting firm. Factors that could affect expectations for our REO
disk-based appliances and other new product introductions include the general
market acceptance of disk-based appliances, the timing and market acceptance of
new REO software PACs by the company; 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; competition and price pressures in the
marketplace; 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 and NEO Series are trademarks of
Overland Storage, Inc.
DATASOURCE: Overland Storage
CONTACT: Vernon A. LoForti, CFO, , or
Cynthia A. Bond, Director of Corporate Communications,
, both of Overland Storage, +1-858-571-5555
Web site: http://www.overlandstorage.com/