-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SeOd/jx6i9vJkX8I7EvIDthFF8RLbO2uRJp+eQFf19aImWDB9AhmNOgE+odTBHmR N46nLYiSvBLkBTYtZh3UKQ== 0001157523-06-009166.txt : 20060913 0001157523-06-009166.hdr.sgml : 20060913 20060913161055 ACCESSION NUMBER: 0001157523-06-009166 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060913 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060913 DATE AS OF CHANGE: 20060913 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUALSTAR CORP CENTRAL INDEX KEY: 0000758938 STANDARD INDUSTRIAL CLASSIFICATION: MAGNETIC & OPTICAL RECORDING MEDIA [3695] IRS NUMBER: 953927330 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-30083 FILM NUMBER: 061088686 BUSINESS ADDRESS: STREET 1: 3990-B HERITAGE OAK COURT CITY: SIMI VALLEY STATE: CA ZIP: 93063 BUSINESS PHONE: 805-583-7744 MAIL ADDRESS: STREET 1: 3990-B HERITAGE OAK COURT CITY: SIMI VALLEY STATE: CA ZIP: 93063 8-K 1 a5227306.txt QUALSTAR CORP. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) September 13, 2006 QUALSTAR CORPORATION (Exact name of registrant as specified in its charter) California 000-30083 95-3927330 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 3990-B Heritage Oak Court, Simi Valley, CA 93063 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (805) 583-7744 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Exhibit Index on page 3 1 Item 2.02 Results of Operations and Financial Condition. On September 13, 2006, Qualstar Corporation issued a press release regarding results of operations and financial condition for the fiscal Fourth quarter ended June 30, 2006. A copy of this press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K. In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933. Item 9.01 Financial Statements and Exhibits. (d) Exhibits. Exhibit Number Description 99.1 Press release of Qualstar Corporation dated September 13, 2006. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. QUALSTAR CORPORATION September 13, 2006 By: /s/ William J. Gervais --------------------------------- William J. Gervais President & CEO 2 EXHIBIT INDEX Exhibit Number Description 99.1 Press release of Qualstar Corporation dated September 13, 2006. 3 EX-99.1 2 a5227306ex99-1.txt EXHIBIT 99.1 EXHIBIT 99.1 Qualstar Reports Fiscal 2006 Fourth Quarter and Full Year Results SIMI VALLEY, Calif.--(BUSINESS WIRE)--Sept. 13, 2006--Qualstar(R) Corporation (Nasdaq:QBAK), a manufacturer of automated tape storage solutions, today reported financial results for the fourth quarter and full year of fiscal 2006 ended June 30, 2006. Fiscal 2006 Fourth Quarter Financial Results Revenues for the fourth quarter of fiscal 2006 were $4.9 million, compared to $6.7 million for the same quarter of the prior year. Loss from operations for the fourth quarter of fiscal 2006 was $1.1 million compared to $693,000 for the comparable prior year period. Net loss for the quarter totaled $694,000, or $(0.06) per basic and diluted share compared to a net loss of $429,000, or $(0.04) per basic and diluted share, in the fourth quarter of last year. The decrease in revenues was due primarily to an approximate $1.9 million decline in sales of tape libraries and tape drives incorporating AIT, SAIT, DLT and LTO tape technology. Partially offsetting the decline in sales of tape libraries and drives were increased sales of power supplies. Gross margin in the fiscal 2006 fourth quarter was 32.8 percent, compared to 31.5 percent in the year-ago quarter. The increase in gross margin was related to material costing efficiencies achieved. Research and development expenses for the fourth quarter of fiscal 2006 were $761,000, or 15.6 percent of revenues, compared to $1.0 million, or 15.3 percent of revenues, for the year-ago quarter. The decrease in research and development expenses in absolute dollars, was due primarily to lower compensation expenses associated with a decrease in headcount, and lower consulting fees. Sales and marketing expenses in the 2006 fiscal fourth quarter were $978,000, or 20.0 percent of revenues, compared to $813,000, or 12.1 percent of revenues, in the same quarter last year. The increase in sales and marketing expenses resulted primarily from higher compensation expense associated with an increase in headcount, increased promotion expenses related to the XLS product launch, and increased advertising expenses. General and administrative expenses in the fourth quarter of fiscal 2006 were $930,000, or 19.0 percent of revenues, compared to $963,000, or 14.4 percent of revenues, for the fourth quarter of fiscal 2005. The decrease in general and administrative expenses in absolute dollars, was due primarily to lower legal and bad debt expenses partially offset by increased compensation expense. Qualstar adopted the Share-Based Payment rules (SFAS 123R) issued by the Financial Accounting Standards Board, effective July 1, 2005, and reported stock-based compensation expense of $25,000 in the fourth quarter of fiscal 2006, compared to $0 in the comparable quarter in fiscal 2005. Cash, cash equivalents and marketable securities were $33.7 million at June 30, 2006, compared with $34.1 million at June 30, 2005. Days sales outstanding (DSOs) were approximately 50.3 days at June 30, 2006, compared to approximately 48 days at June 30, 2005. Inventory turns were 1.8 times on an annualized basis for the period ended June 30, 2006, compared to 2.5 times on an annualized basis for the period ended June 30, 2005. "During the fourth quarter, we successfully executed our business plan and revenues were in-line with our expectations," said William J. Gervais, president and chief executive officer of Qualstar. "I was pleased that our gross margin, which grew to 32.8 percent and increased on both a sequential quarter and year-over-year basis, returned to more normal levels after being impacted by inventory reserves that we recorded in the previous quarter. "Perhaps most importantly, we recently achieved a significant milestone in the commercialization of our XLS Enterprise Tape Library System. Last month we made initial shipments of revenue generating XLS units, culminating nearly four years of product development efforts. We believe our XLS tape libraries are among the highest capacity and most scalable tape libraries available on the market today, with a modular design that allows customers to easily expand their systems as their data storage requirements increase. We are gratified by the early customer acceptance of our new XLS libraries. Going forward, we continue to be optimistic that XLS tape libraries will be well received in the high-end enterprise-class tape storage marketplace, providing Qualstar with significant opportunities for growth," said Mr. Gervais. Fiscal 2006 Full-Year Financial Results Qualstar reported revenues of $21.7 million for the full-year of fiscal 2006, compared with $25.1 million for the full-year of fiscal 2005. The Company's net loss for the full-year of fiscal 2006 was $1.7 million, or $(0.14) per basic and diluted share, compared with a net loss of $1.6 million, or $(0.13) per basic and diluted share, in the full-year of fiscal 2005. Qualstar Corporation Conference Call Company management will hold a conference call to discuss its fiscal 2006 fourth quarter results today at 2:00 p.m. Pacific (5:00 p.m. Eastern). Investors are invited to listen to the call live via the Internet using the link under the "Investors" section at www.qualstar.com. Please go to the Website at least 15 minutes early to register, download and install any necessary audio software. A replay of the webcast will be available for 30 days. Additionally, participants can dial into the live conference call by calling 800-257-2182 or 303-262-2075. An audio replay will be available through September 20, 2006, by calling 800-405-2236 or 303-590-3000, and entering passcode 11070845. About Qualstar Corporation Qualstar is a manufacturer of automated tape libraries used for backup, archival storage, data protection and disaster recovery. Its products are known throughout the world for their rugged, Simply Reliable design yielding years of trouble-free operation. Qualstar tape libraries are sold, installed and supported worldwide by selected Value Added Resellers, Systems Integrators, Distributors and Original Equipment Manufacturers. Qualstar also designs, manufactures and sells ultra small, high efficiency open-frame switching power supplies under the "N2Power" brand name to OEMs. Qualstar Corporation is publicly traded on the NASDAQ National Market under the symbol QBAK. More information is available at www.qualstar.com or by phone at 805-583-7744. Forward-Looking Statements Statements in this press release concerning the future business, operating results and financial condition of the Company are "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements are based upon management's current expectations and are subject to a number of uncertainties that could cause actual performance and results to differ materially from the results discussed in the forward-looking statements. Factors that could affect the Company's actual results include whether the Company's new XLS enterprise-class tape libraries achieve customer acceptance, whether the Company is able to increase sales of its legacy TLS and RLS tape libraries, unexpected shortages of critical components, unexpected product design or quality problems, and adverse changes in market demand for tape libraries or Qualstar's products. Further information on these and other potential factors that could affect the Company's financial results or condition are included in Qualstar's filings with the Securities and Exchange Commission. In particular, reference is made to the "Risk Factors" section of the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2005, and to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of its Form 10-K and its most recent Quarterly Report on Form 10-Q. The Company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. QUALSTAR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (AUDITED) --------------------------------- Three Months Twelve Months Ended Ended June 30, June 30, 2006 2005 2006 2005 ------- ------- -------- -------- Net revenues $4,888 $6,706 $21,731 $25,144 Cost of goods sold 3,285 4,596 14,856 16,529 ------- ------- -------- -------- Gross profit 1,603 2,110 6,875 8,615 ------- ------- -------- -------- Operating expenses: Research and development 761 1,027 3,083 3,750 Sales and marketing 978 813 3,213 3,350 General and administrative 930 963 3,629 3,955 ------- ------- -------- -------- Total operating expenses 2,669 2,803 9,925 11,055 ------- ------- -------- -------- Loss from operations (1,066) (693) (3,050) (2,440) Investment Income 369 264 1,269 858 ------- ------- -------- -------- Loss before income taxes (697) (429) (1,781) (1,582) Provision (benefit) for income taxes (3) - (89) 65 ------- ------- -------- -------- Net Loss $(694) $(429) $(1,692) $(1,647) ======= ======= ======== ======== Loss per share: Basic $(0.06) $(0.04) $(0.14) $(0.13) ======= ======= ======== ======== Diluted $(0.06) $(0.04) $(0.14) $(0.13) ======= ======= ======== ======== Shares used to compute loss per share: Basic 12,253 12,253 12,253 12,398 ======= ======= ======== ======== Diluted 12,253 12,253 12,253 12,398 ======= ======= ======== ======== QUALSTAR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) --------- --------- June 30, June 30, 2006 2005 ASSETS (Audited) (Audited) --------- --------- Current assets: Cash and cash equivalents $6,845 $12,210 Marketable securities 26,822 21,854 Receivables, net of allowances of $118 as of June 30, 2006 and $248 as of June 30, 2005 2,700 3,532 Inventories 7,298 7,157 Prepaid expenses and other current assets 511 452 Prepaid income taxes 159 640 --------- --------- Total current assets 44,335 45,845 --------- --------- Property and equipment, net 924 1,188 Other assets 140 190 --------- --------- Total assets $45,399 $47,223 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $783 $763 Accrued payroll and related liabilities 466 496 Other accrued liabilities 1,292 1,311 --------- --------- Total current liabilities 2,541 2,570 --------- --------- Shareholders' equity: Common stock, no par value; 50,000 shares authorized, 12,253 shares issued and outstanding as of June 30, 2006 and June 30, 2005 18,503 18,370 Accumulated other comprehensive loss (395) (159) Retained earnings 24,750 26,442 --------- --------- Total shareholders' equity 42,858 44,653 --------- --------- Total liabilities and shareholders' equity $45,399 $47,223 ========= ========= CONTACT: Qualstar Corporation William J. Gervais, President & CEO, 805-583-7744 gervais@qualstar.com or Financial Relations Board Lasse Glassen, 310-854-8313 (General Information) lglassen@financialrelationsboard.com -----END PRIVACY-ENHANCED MESSAGE-----