Qualstar: Fiscal 4Q12 Financial Results

(in US$ million)	4Q11	4Q12	FY11	FY12
Revenues	4.7	4.3	18.3	17.1
*Growth*		-9%		*-7%*
Net income (loss)	(0.04)	(2.6)	(0.7)	(4.1)

Qualstar Corporation reported financial results for the fourth quarter and the fiscal year ended June 30, 2012.

Revenues for the fourth quarter of fiscal 2012 were $4.3 million, compared to $4.7 million for the fourth quarter of fiscal 2011, a decrease of $0.4 million or 8.8%.

Revenue was impacted by uncertainty related to the proxy contest, discounted sales of legacy library equipment and product mix.

Loss from operations was $2.5 million compared to $96,000 in the fourth quarter of fiscal 2011. GAAP net loss was $2.6 million or $(0.22) per basic and diluted share. Excluding one-time charges of $1.0 million in inventory reserves, $0.3 million in legal fees and settlement costs and $0.4 million in proxy fees, pro forma non-GAAP net loss was $0.9 million or $(0.08) per share. This compares to a GAAP net loss of $37,000, or $0.00 per basic and diluted share for the fourth quarter of fiscal 2011.

Tape library segment revenues were $1.7 million for the fourth quarter of 2012, compared to $2.0 million for the same period last year, a decrease of $294,000 or 14.4%. Power supply segment revenues were $2.5 million for the quarter, compared to $2.7 million in the fourth quarter of 2011, a decrease of $0.2 million or 4.5%.

Gross margin was (0.9)% of revenues or a loss of $40,000 for the three months ended June 30, 2012, down from $1.6 million, or 34.6% of net revenues, for the three months ended June 30, 2011. The decrease in gross profit was primarily attributed to a change in product mix and inventory reserves of $1.2 million related to the end of life of the legacy TLS and RLS product lines and old drive technology, and other slow moving inventory.

Research and development expenses for the fourth quarter of fiscal 2012 were $663,000, or 15.4% of revenues, compared to $656,000, or 13.9% of revenues, for the fourth quarter of fiscal 2011.

Sales and marketing expenses were $548,000, or 12.8% of revenues, compared to $506,000 or 10.7% of revenues, in the corresponding period last year.

General and administrative expenses in the fourth quarter of fiscal 2012 were $1.3 million, or 29.4% of revenues, compared to $563,000, or 12.0% of revenues, for the same period last year. The increase in G&A was primarily attributed to one-time charges of $0.4 million in proxy fees and $0.2 million in legal fees.

Fiscal 2012 Full Year Financial Results
The company reported revenues of $17.1 million in fiscal 2012, a decrease of 6.7% compared with $18.3 million in fiscal 2011.

GAAP net loss in fiscal 2012 was $4.1 million or $(0.34) per basic and diluted share. Pro forma non-GAAP net loss excluding one-time charges of $1.0 million in inventory reserves, $0.3 million in legal fees and settlement costs and $0.4 million in proxy fees, was $2.4 million or $(0.19) per basic and diluted share. This compares with a GAAP net loss in fiscal 2011 of $680,000, or $(0.06) per basic and diluted share.

Cash, cash equivalents and marketable securities were $20.9 million at June 30, 2012, down $1.8 million from $22.7 million at June 30, 2011. Inventory, net of reserves, at June 30, 2012 was $4.5 million compared to $5.7 million at June 30, 2011.

"Fiscal 2012 was a challenging year, punctuated by the successful defense of the proxy contest at year-end," said Larry Firestone, president and CEO. "Despite this, we have begun to execute on our newly-announced strategic initiatives that include restructuring for greater efficiency, broadening our product portfolio and expanding our sales channels to address additional market opportunities. As an organization, we are committed to taking the necessary steps to drive profitable growth long-term and return value to our shareholders."