Full-Year 2012 Non-GAAP Financial Detail:

Non-GAAP net revenue was $196.7 million for 2012, compared to $196.8 million for 2011. Non-GAAP gross margin was 27.9% for 2012, compared to 26.4% for 2011. The increase in non-GAAP gross margin was primarily due to increased diversification of our revenues in both customer and product mix. Total non-GAAP operating expenses for 2012 were $57.8 million, compared to $48.8 million for 2011. The increase in non-GAAP operating expenses was largely due to incremental engineering investments to support new customer customizations and launch preparation, as well as the development of our next generation entry-level product line due to launch this summer.

Non-GAAP net loss for 2012 was $3.7 million, or $0.06 per share, as compared to a 2011 non-GAAP net income of $3.0 million, or $0.05 per share. Non-GAAP EBITDA for 2012 was negative $0.4 million compared to positive $5.4 million for 2011.

Balance Sheet and Cash:

The company exited 2012 with cash and cash equivalents of $40.3 million compared to $46.2 million at the end of 2011 and $40.5 million at the end of the third quarter of 2012.

First Quarter 2013 Outlook:

Non-GAAP net revenues for the first quarter of 2013 are expected to be in the range of $43 million to $46 million. The non-GAAP loss per share is expected to be in the range of $0.02 to $0.04. 

"Despite global economic and industry specific headwinds, I remain excited about our prospects and opportunities as we begin 2013 with a strong new customer pipeline, a very competitive midrange product offering and a planned launch of our next generation entry-level product line in the summer," stated Hanif Jamal, chief financial officer, Dot Hill Systems.

Conference Call Information:

Dot Hill's fourth quarter 2012 financial results conference call is scheduled to take place on Thursday, March 14, 2013 at 11:00 am ET. Please join the Company for a live audio webcast at www.dothill.com in the Investor Relations section, or via telephone, please dial 877-303-3196 (U.S.) or 408-427-3864 (International) at least five minutes prior to the start of the call. A replay of the webcast is scheduled to be available for one week on the Dot Hill web site following the conference call. For a telephone replay, dial 855-859-2056 (U.S.) or 404-537-3406 (International) and enter conference ID# 15791055.

About Non-GAAP Financial Measures

In 2011 and/or 2012, the Company's non-GAAP financial measures exclude the impact of stock-based compensation expense, legal settlements and their associated expenses, intangible asset amortization, restructuring and severance charges, charges or credits for contingent consideration adjustments, charges for impairment of goodwill and other long-lived assets, contra-revenue charges from the extension of customer warrants, the recognition of deferred and amortized revenue and costs related to a long-term software contract which were deferred in the Company's GAAP financial statements, specific and significant warranty claims arising from a supplier's defective products, impacts associated with the AssuredUVS software business, which the Company has substantially closed down, and the effects of foreign currency gains or losses. The Company believes that these non-GAAP financial measures provide meaningful supplemental information to both management and investors that is indicative of the Company's core operating results and facilitates comparison of operating results across reporting periods. The Company used these non-GAAP measures when evaluating its financial results as well as for internal resource management, planning and forecasting purposes. These non-GAAP measures should not be viewed in isolation from or as a substitute for the Company's financial results in accordance with GAAP. A reconciliation of GAAP to non-GAAP measures is attached to this press release.

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