Qualstar Corporation (ticker: QBAK, exchange: NASDAQ Global Market (.O))
News Release -
13-Sep-2006
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
SOURCE:
Qualstar Corporation
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Qualstar Corporation
