Can we confirm this in Cubase 6.01
Start a new project
Enter Keep History mode if its not on by default
Create an audio track
Move a few bars up the project and press record and record an empty audio segment (audio 1) for 6 or 7 seconds.
Now go before the part you recorded and record another segment (audio 2). When this recording just overlaps into the next one Stop.
Now move back into the mid region of the first recorded part (Audio 1) (second segment on the screen) and briefly hit record for a second or so so that the left and right of this third part are still within the first. This creates a small piece of audio 3 on top of audio 1
Now select audio 1 and 3 together by drawing a select box around both.
Hit Delete Overlaps function (Menu->Audio->Advanced->Delete Ovelaps)
The second recorded segment (Audio 2) is now deleted and all that is kept is the end of the piece that slightly overlapped the start of audio 1
This bug nearly got me into serious trouble today as you can delete a piece of pre audio thats off screen by accident