SIMI VALLEY, CA--(Marketwire - Jan 4, 2013) - Qualstar Corporation (NASDAQ: [ QBAK ]), a manufacturer of data storage solutions and high-efficiency power supplies, announced today that it has entered into a manufacturing and supply agreement with CTS Electronics Manufacturing Solutions, Inc. (NYSE: [ CTS ]), a global provider of electronic manufacturing services (EMS) for the automotive, communications, medical, industrial, defense, aerospace and computer markets. Under the agreement, CTS will provide turn-key manufacturing services to Qualstar, including the purchase of its existing inventory and ongoing inventory management. Utilizing its extensive supply chain, logistical resources and production expertise, CTS will manufacture all of Qualstar's RLS and XLS tape library products and related assemblies at its Moorpark, CA facility. Qualstar has already begun the process of transitioning production of its library products to CTS, and over time may also convert production of certain of its N2Power products to CTS, as well as service and logistical activities to help support Qualstar's growing international customer base.

"Our agreement with CTS is a significant milestone for the company, as we refocus our efforts on developing innovative product designs for customers and targeting key, emerging markets," said Larry Firestone, President and CEO. "By outsourcing our manufacturing, we are reducing our fixed overhead and eliminating a substantial portion of our inventory, which should result in improved gross margins and better utilization of our working capital. This is just one of the many decisive steps we are taking to operate a leaner, more streamlined organization, lower our breakeven and drive long-term growth, profitability and shareholder value."

About Qualstar Corporation
Qualstar, founded in 1984, is a diversified electronics manufacturer specializing in data storage and power supplies. The company's products are known throughout the world for high quality and Simply Reliable designs that provide years of trouble-free service. More information is available at [ www.qualstar.com ] or [ www.n2power.com ] or by phone at 805-583-7744.

About CTS
CTS is a leading designer and manufacturer of electronic components and sensors and a provider of electronics manufacturing services (EMS) to OEMs in the automotive, communications, medical, defense and aerospace, industrial and computer markets. CTS manufactures products in North America, Europe and Asia. CTS' stock is traded on the NYSE under the ticker symbol "CTS." For more information contact: Mitchell J. Walorski, Director of Investor Relations, CTS Corporation, 905 West Boulevard, Elkhart, IN 46514 Telephone: 574-523-3800

Forward-Looking Statements
Statements 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 the Company's ability to increase sales of its products; rescheduling or cancellation of customer orders; unexpected shortages of critical components; unexpected product design or quality problems; and, adverse changes in market demand for its products. The Company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. 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, 2012, and to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of its Form 10-K.