Overland Data, Inc. today announced that it has signed an agreement to sell its Travan-based WS30 and EDT40 tape drive designs and related assets to Seagate Removable Storage Solutions (RSS) as part of the Company’s plan to improve future profitability by eliminating operations and assets outside of Overland’s core business. As a result of the sale of the entry-level tape drive business, Overland will reduce pre-tax R&D expenses by approximately $2.0 million per year and will record a non-recurring after-tax charge of approximately $1.4 million, or $.13 per share, in the fourth quarter ending June 30, 2001.
Overland entered the low-end tape drive business in February 2000 through the acquisition of certain Tecmar assets and operations. This acquisition has resulted in the development of next-generation technologies but generated insignificant revenues to date. Under the agreement announced today, Seagate will receive all intellectual property related to the WS30 and EDT40 tape drive designs and has the option to acquire certain fixed assets and inventories required to manufacture the products. Overland will receive royalty payments based on sales of the resulting tape drive products and related tape media cartridges. In addition, the tape drives will utilise Overland’s patented Variable Rate Randomizer (VR2™) technology which will be embedded in an ASIC chip within the drives and Seagate has entered into a supply agreement to purchase the VR2 chips from Overland.
In related actions, Overland also announced that it would write off the remaining balance of the optical jukebox design that it acquired in July 1999 and that it had settled two small lawsuits that had been pending for some time. The Company expects that these actions, together with severance pay associated with the reduction in force previously announced on April 19, 2001, would amount to approximately $700,000, or $.06 per share, in additional non-recurring charges for the fourth quarter.
Christopher Calisi, President and CEO of Overland, said, “Our agreement with Seagate is a win-win for both Seagate and Overland. Seagate is the dominant player in the Travan space and is well equipped to deliver next-generation Travan drives to the entry-level server market segment. As they are successful in deploying these product designs, Overland will receive a stream of royalty payments, as well as revenues from the sale of VR2 chips. Furthermore, all of our actions today help further my goal, since becoming Overland’s President three months ago, to eliminate non-core business-related assets, increase the Company’s profitability and focus on our core strength in the mid-range tape automation market. We believe that these actions, combined with the superior design and reliability of our new Neo™ Series of tape libraries, should position Overland well for the future. In addition, excluding the non-recurring charges associated with the actions announced today, we remain confident in our ability to meet current market expectations for earnings and revenues for the fourth quarter and fiscal year ending June 30, 2001.”
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Overland Data, Inc. (NASDAQ: OVRL) is a global supplier of innovative data storage and storage automation solutions for computer networks. The Company’s award-winning DLT LibraryXpress™ SmartScale Storage® architecture has set the standard for intelligent automated storage and scalability and established Overland as a leader in the mid-range tape storage market. Today, Overland is broadening its product line and technology offerings to address additional segments of the storage market, including the entry-level small-business market, as well as the higher-end enterprise environment. Overland's patented Variable Rate Randomizer (VR2™) data encoding technology, capable of substantially increasing the capacity and throughput of linear tape formats, is being applied by the Company to its entry-level tape drive offerings. It has also been licensed to Imation Corp., Seagate Technology, StorageTek and Tandberg Data. Overland products, acclaimed for their quality and reliability, are sold worldwide through leading OEMs, including Compaq, Fujitsu Siemens Computers, Groupe Bull, IBM and NCR commercial distributors such as Bell Microproducts, Ingram Micro and Tech Data Corp., as well as storage integrators and value-added resellers.
Overland Data (Europe) Ltd.
Tel: +44 (0)1189 898022
Paul Shlackman/Alex Murphy
Strategic Alliance International
Tel: +44 (0)1494 434434
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