R
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the Quarterly Period Ended March 31, 2009
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|
OR
|
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£
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the Transition Period
From to
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CALIFORNIA
|
95-3927330
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(State
of incorporation
)
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(I.R.S.
Employer Identification No.)
|
PART
I — FINANCIAL INFORMATION
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Item
1.
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1
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2
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3
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4
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5
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Item
2.
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13
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Item
3.
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19
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Item
4T.
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19
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PART
II — OTHER INFORMATION
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Item
1A.
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20
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Item
4.
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20
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Item
6.
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21
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22
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March
31,
2009
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June
30,
2008
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|||||||
(Unaudited)
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(1 | ) | ||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 2,340 | $ | 6,744 | ||||
Marketable
securities, short-term
|
17,224 | 11,091 | ||||||
Receivables,
net of allowances of $112 at March 31, 2009, and $82 at June 30,
2008
|
2,178 | 2,962 | ||||||
Inventories,
net
|
6,880 | 6,109 | ||||||
Prepaid
expenses and other current assets
|
426 | 467 | ||||||
Total
current assets
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29,048 | 27,373 | ||||||
Property
and equipment, net
|
414 | 526 | ||||||
Marketable
securities, long-term
|
9,245 | 14,703 | ||||||
Other
assets
|
57 | 55 | ||||||
Total
assets
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$ | 38,764 | $ | 42,657 | ||||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 954 | $ | 1,197 | ||||
Accrued
payroll and related liabilities
|
410 | 519 | ||||||
Other
accrued liabilities
|
866 | 1,774 | ||||||
Total
current liabilities
|
2,230 | 3,490 | ||||||
Other
long term liabilities
|
46 | 46 | ||||||
Commitments
and contingencies
|
||||||||
Shareholders’
equity:
|
||||||||
Preferred
stock, no par value; 5,000 shares authorized; no shares
issued
|
— | — | ||||||
Common
stock, no par value; 50,000 shares authorized, 12,253 shares issued and
outstanding as of March 31, 2009 and June 30, 2008
|
18,773 | 18,705 | ||||||
Accumulated
other comprehensive income
|
191 | 108 | ||||||
Retained
earnings
|
17,524 | 20,308 | ||||||
Total
shareholders’ equity
|
36,488 | 39,121 | ||||||
Total
liabilities and shareholders’ equity
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$ | 38,764 | $ | 42,657 |
Three
Months Ended
March
31,
|
Nine
Months Ended
March
31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
Revenues
|
$ | 4,098 | $ | 5,171 | $ | 14,123 | $ | 16,552 | ||||||||
Cost
of goods sold
|
2,694 | 3,385 | 9,362 | 11,097 | ||||||||||||
Gross
profit
|
1,404 | 1,786 | 4,761 | 5,455 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development
|
807 | 772 | 2,315 | 2,270 | ||||||||||||
Sales
and marketing
|
679 | 810 | 2,127 | 2,409 | ||||||||||||
General
and administrative
|
842 | 904 | 2,410 | 2,561 | ||||||||||||
Total
operating expenses
|
2,328 | 2,486 | 6,852 | 7,240 | ||||||||||||
Loss
from operations
|
(924 | ) | (700 | ) | (2,091 | ) | (1,785 | ) | ||||||||
Investment
Income
|
210 | 378 | 781 | 1,215 | ||||||||||||
Loss
before income taxes
|
(714 | ) | (322 | ) | (1,310 | ) | (570 | ) | ||||||||
Provision
for income taxes
|
6 | - | 4 | 17 | ||||||||||||
Net
loss
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$ | (720 | ) | $ | (322 | ) | $ | (1,314 | ) | $ | (587 | ) | ||||
Loss
per common share:
|
||||||||||||||||
Basic
and Diluted
|
$ | (0.06 | ) | $ | (0.03 | ) | $ | (0.11 | ) | $ | (0.05 | ) | ||||
Weighted
average common shares outstanding:
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||||||||||||||||
Basic
and Diluted
|
12,253 | 12,253 | 12,253 | 12,253 | ||||||||||||
Cash
dividends declared per common share
|
$ | 0.06 | $ | 0.06 | $ | 0.18 | $ | 0.06 |
Nine
Months Ended
March
31,
|
||||||||
2009
|
2008
|
|||||||
OPERATING
ACTIVITIES:
|
||||||||
Net
loss
|
$ | (1,314 | ) | $ | (587 | ) | ||
Adjustments
to reconcile net loss to net cash (used in) provided by operating
activities:
|
||||||||
Share
based compensation
|
68 | 83 | ||||||
Gain
on sale of marketable securities
|
(98 | ) | — | |||||
Depreciation
and amortization
|
174 | 217 | ||||||
Provision
for bad debts and returns
|
55 | 2 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
729 | 370 | ||||||
Inventories
|
(771 | ) | 58 | |||||
Prepaid
expenses and other assets
|
39 | 55 | ||||||
Prepaid
income taxes
|
— | 137 | ||||||
Accounts
payable
|
(243 | ) | 354 | |||||
Accrued
payroll and accrued liabilities
|
(109 | ) | (61 | ) | ||||
Income
taxes payable
|
(7 | ) | 11 | |||||
Other
accrued liabilities
|
(166 | ) | (35 | ) | ||||
Net
cash (used in) provided by operating activities
|
(1,643 | ) | 604 | |||||
INVESTING
ACTIVITIES:
|
||||||||
Purchases
of property, equipment and leasehold improvements
|
(62 | ) | (113 | ) | ||||
Proceeds
from sale of marketable securities
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25,749 | 21,484 | ||||||
Purchases
of marketable securities
|
(26,243 | ) | (19,232 | ) | ||||
Net
cash (used in) provided by investing activities
|
(556 | ) | 2,139 | |||||
FINANCING
ACTIVITIES:
|
||||||||
Cash
dividends on common shares
|
(2,205 | ) | (735 | ) | ||||
Net
cash used in financing activities
|
(2,205 | ) | (735 | ) | ||||
Net
change in cash and cash equivalents
|
(4,404 | ) | 2,008 | |||||
Cash
and cash equivalents, beginning of period
|
6,744 | 7,697 | ||||||
Cash
and cash equivalents, end of period
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$ | 2,340 | $ | 9,705 | ||||
Supplemental
cash flow disclosure:
|
||||||||
Income
taxes paid
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$ | 11 | $ | 7 |
Accumulated
|
||||||||||||||||||||
Other
|
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Common
Stock
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Comprehensive
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Retained
|
||||||||||||||||||
Shares
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Amount
|
Income
|
Earnings
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Total
|
||||||||||||||||
Balance
at July 1, 2008
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12,253 | $ | 18,705 | $ | 108 | $ | 20,308 | $ | 39,121 | |||||||||||
Share-based
compensation
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— | 68 | — | — | 68 | |||||||||||||||
Cash
dividend on common shares
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— | — | — | (1,470 | ) | (1,470 | ) | |||||||||||||
Comprehensive
loss:
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||||||||||||||||||||
Net
loss
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— | — | — | (1,314 | ) | (1,314 | ) | |||||||||||||
Change
in unrealized losses on investments
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— | — | 83 | — | 83 | |||||||||||||||
Comprehensive
Loss
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— | — | — | — | (1,231 | ) | ||||||||||||||
Balance
at March 31, 2009
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12,253 | $ | 18,773 | $ | 191 | $ | 17,524 | $ | 36,488 |
Three
Months Ended
March
31,
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Nine
Months Ended
March
31,
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|||||||||||||||
In
thousands (except per share amounts):
|
2009
|
2008
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2009
|
2008
|
||||||||||||
Net
loss (a)
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$ | (720 | ) | $ | (322 | ) | $ | (1,314 | ) | $ | (587 | ) | ||||
Weighted
average outstanding shares of common stock (b)
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12,253 | 12,253 | 12,253 | 12,253 | ||||||||||||
Dilutive
potential common shares from employee stock options
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— | — | — | — | ||||||||||||
Common
stock and common stock equivalents (c)
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12,253 | 12,253 | 12,253 | 12,253 | ||||||||||||
Loss
per share:
|
||||||||||||||||
Basic
net loss per share (a)/(b)
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$ | (0.06 | ) | $ | (0.03 | ) | $ | (0.11 | ) | $ | (0.05 | ) | ||||
Diluted
net loss per share (a)/(c)
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$ | (0.06 | ) | $ | (0.03 | ) | $ | (0.11 | ) | $ | (0.05 | ) |
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•
|
Level
1 – inputs are based upon unadjusted quoted prices for identical
instruments traded in active
markets.
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|
•
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Level
2 – inputs are based upon quoted prices for similar instruments in active
markets, quoted prices for identical or similar instruments in markets
that are not active, and model-based valuation techniques for which all
significant assumptions are observable in the market or can be
corroborated by observable market data for substantially the full term of
the assets or liabilities.
|
|
•
|
Level
3 – inputs are generally unobservable and typically reflect management’s
estimates of assumptions that market participants would use in pricing the
asset or liability. The fair values are therefore determined using
model-based techniques that include option pricing models, discounted cash
flow models, and similar
techniques.
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Level
1
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Level
2
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Net
balance
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||||||||||
Assets
|
||||||||||||
Cash
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$ | 625 | $ | 625 | ||||||||
Money
Market Mutual fund
|
1,715 | 1,715 | ||||||||||
Commercial
paper
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– | $ | ||||||||||
U.S.
government and agency securities
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11,862 | 9,438 | 21,300 | |||||||||
Mortgage-backed
securities
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– | 3,050 | 3,050 | |||||||||
Corporate
bonds
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– | 1,619 | 1,619 | |||||||||
Municipal
securities
|
– | 500 | 500 | |||||||||
Total
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$ | 14,202 | $ | 14,607 | $ | 28,809 |
March
31, 2009
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June
30, 2008
|
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Raw
materials
|
$ | 6,770 | $ | 6,053 | ||||
Finished
goods
|
732 | 785 | ||||||
Subtotal
|
7,502 | 6,838 | ||||||
Less:
Inventory reserve
|
(622 | ) | (729 | ) | ||||
$ | 6,880 | $ | 6,109 |
Three
Months Ended
March
31, 2009
|
Nine
Months Ended
March
31, 2009
|
|||||||
Beginning
balance
|
$ | 179 | $ | 180 | ||||
Cost
of warranty claims
|
(16 | ) | (47 | ) | ||||
Accruals
for product warranties
|
8 | 38 | ||||||
Ending
balance
|
$ | 171 | $ | 171 |
Three
Months Ended
March
31,
|
Nine
Months Ended
March
31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Revenue
|
||||||||||||||||
Tape
Libraries:
|
||||||||||||||||
Product
|
$ | 2,325 | $ | 3,457 | $ | 7,922 | $ | 11,788 | ||||||||
Service
|
742 | 641 | 2,079 | 1,921 | ||||||||||||
Total
Tape Libraries
|
3,067 | 4,098 | 10,001 | 13,709 | ||||||||||||
Power
Supplies
|
1,031 | 1,073 | 4,122 | 2,843 | ||||||||||||
Consolidated
Revenue
|
$ | 4,098 | $ | 5,171 | $ | 14,123 | $ | 16,552 |
Three
Months Ended
March
31,
|
Nine
Months Ended
March
31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Income (Loss) before Taxes
|
||||||||||||||||
Tape
Libraries
|
$ | (638 | ) | $ | (440 | ) | $ | (1,424 | ) | $ | (748 | ) | ||||
Power
Supplies
|
(76 | ) | 118 | 114 | 178 | |||||||||||
Consolidated
Loss before Taxes
|
$ | (714 | ) | $ | (322 | ) | $ | (1,310 | ) | $ | (570 | ) |
March
31, 2009
|
June
30,
2008
|
|||||||
Total Assets
|
||||||||
Tape
Libraries
|
$ | 39,356 | $ | 41,257 | ||||
Power
Supplies
|
(592 | ) | 1,400 | |||||
Consolidated
Assets
|
$ | 38,764 | $ | 42,657 |
Three
Months Ended
March
31,
|
Nine
Months Ended
March
31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
revenues
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of goods sold
|
65.7 | 65.5 | 66.3 | 67.0 | ||||||||||||
Gross
profit
|
34.3 | 34.5 | 33.7 | 33.0 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development
|
19.7 | 14.9 | 16.4 | 13.7 | ||||||||||||
Sales
and marketing
|
16.6 | 15.7 | 15.1 | 14.6 | ||||||||||||
General
and administrative
|
20.5 | 17.5 | 17.1 | 15.5 | ||||||||||||
Total
operating expenses
|
56.8 | 48.1 | 48.6 | 43.8 | ||||||||||||
Loss
from operations
|
(22.5 | ) | (13.6 | ) | (14.9 | ) | (10.8 | ) | ||||||||
Investment
income
|
5.1 | 7.3 | 5.5 | 7.3 | ||||||||||||
Loss
before income taxes
|
(17.4 | ) | (6.3 | ) | (9.4 | ) | (3.5 | ) | ||||||||
Provision
for income taxes
|
0.1 | 0.0 | 0.0 | 0.1 | ||||||||||||
Net
loss
|
(17.5 | )% | (6.3 | )% | (9.4 | )% | (3.6 | )% |
Three
Months Ended
March
31,
|
Nine
Months Ended
March
31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Tape
Library revenues:
|
||||||||||||||||
TLS
|
20.9 | % | 31.4 | % | 23.5 | % | 32.4 | % | ||||||||
RLS
|
6.1 | 7.6 | 7.0 | 9.8 | ||||||||||||
XLS
|
7.5 | 4.4 | 6.9 | 6.7 | ||||||||||||
34.5 | 43.4 | 37.4 | 48.9 | |||||||||||||
Other
library revenues:
|
||||||||||||||||
Service
|
18.1 | 12.4 | 14.7 | 11.6 | ||||||||||||
Media
|
16.4 | 17.7 | 13.8 | 16.6 | ||||||||||||
Upgrades,
spares
|
5.8 | 5.7 | 4.9 | 5.7 | ||||||||||||
40.3 | 35.8 | 33.4 | 33.9 | |||||||||||||
Total
Library revenues
|
74.8 | 79.2 | 70.8 | 82.8 | ||||||||||||
Power
Supply revenues
|
25.2 | 20.8 | 29.2 | 17.2 | ||||||||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
Number of Votes Cast
|
||||||||
Name
|
For
|
Authority
|
||||||
|
Withheld
|
|||||||
William
J. Gervais
|
8,351,920 | 1,688,524 | ||||||
Richard
A. Nelson
|
8,351,920 | 1,688,524 | ||||||
Stanley
W. Corker
|
10,020,051 | 20,393 | ||||||
Carl
W. Gromada
|
10,020,051 | 20,393 | ||||||
Robert
A. Meyer
|
10,019,551 | 20,893 | ||||||
Robert
E. Rich
|
8,345,378 | 1,695,066 |
Exhibit
No.
|
Exhibit Index
|
|
2008
Stock Incentive Plan
|
||
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
||
Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
||
Certification
of Principal Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
||
Certification
of Principal Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of
2002.
|
QUALSTAR
CORPORATION
|
|||
Dated:
May 15, 2009
|
By:
|
/s/ WILLIAM J.
GERVAIS
|
|
William
J. Gervais
|
|||
Chief
Executive Officer and President
|
|||
(Principal
Executive Officer)
|
Dated:
May 15, 2009
|
/s/ WILLIAM J.
GERVAIS
|
William
J. Gervais
|
|
Principal
Executive Officer
|
Dated:
May 15, 2009
|
/s/ NICKI
ANDALON
|
Nicki
Andalon
|
|
Principal
Financial Officer
|
Dated:
May 15, 2009
|
/s/ WILLIAM J. GERVAIS
|
William
J. Gervais
|
|
Principal
Executive Officer
|
Dated:
May 15, 2009
|
/s/ NICKI ANDALON
|
Nicki
Andalon
|
|
Principal
Financial Officer
|