FOR IMMEDIATE RELEASE Contact: David W. Brunton, Chief Financial Officer
SBE, Inc.
(925) 355-7700
davidb@sbei.com
SBE, Inc. Announces Third Quarter 2003 Results
Reporting continued profitability
SAN RAMON, CA, August 28, 2003 - SBE, Inc. (NASDAQ: SBEI), a leading supplier of
high performance OEM communications solutions, today reported results for the
three-month and nine-month periods ended July 31, 2003.
Net sales for the quarter ended July 31, 2003 were $1.6 million, compared with
$2.8 million for the third quarter of 2002. Net income for the third quarter of
2003 was $141,000, or $0.03 (basic and diluted) per share, compared to a net
loss of $178,000, or $0.04 (basic and diluted) per share, for the same period
last year.
Net sales for the nine months ended July 31, 2003 were $5.2 million, compared
with $5.8 million for the same period last year. Net income for the first nine
months of fiscal 2003 was $284,000, or $0.07 (basic and diluted) per share,
compared with a net loss of $2.4 million, or $0.64 (basic and diluted) per
share, for the same period last year.
SBE's gross profit margin for the third quarter of 2003 was 66 percent, compared
with 61 percent for the third quarter of 2002. Gross profit margin for the nine
months ended July 31, 2003 was 62 percent, compared to 57 percent for the same
quarter last year. The increase gross profit margin in fiscal 2003 as compared
to fiscal 2002 is primarily attributable to lower materials and manufacturing
costs combined with a more profitable product mix in fiscal 2003 and sales of
previously written-down inventory used by HP.
Total operating expenses in the third quarter of 2003 were $922,000, net of a
benefit for restructuring costs of $154,000, compared to operating expenses in
the same quarter of 2002 of $1.9 million. Total operating expenses, including a
benefit for restructuring costs, for the third quarter of fiscal 2003 was $1.1
million. SBE continues to manage operating expenses in accordance with current
market conditions.
-more-
Effective as of August 7, 2003, SBE purchased the assets of California-based
Antares Microsystems, Inc. ("Antares"). None of Antares' liabilities were
assumed in the transaction. SBE funded the purchase from working capital and
proceeds from the recent sale of SBE common stock. "Prior to the market
downturn, Antares consistently produced $4-5 million in revenues from 1997 to
2001. Backed by SBE's solid support and operations infrastructure, the existing
Antares product line of Ethernet and Storage NICs is expected to generate $3-4
million in revenues in fiscal year 2004. In addition, SBE anticipates further
revenue growth with the future release of products based on Antares' investment
in TCP/IP Offload Engine (TOE), Serial Attach SCSI (SAS), and encryption
technologies," said William B. Heye, Jr., president and chief executive officer
of SBE.
"SBE's investment in next generation technologies and our new design wins in
high-profile applications, such as Wi-Fi and E-911, are evidence of the
significant steps we've taken to grow the business and return to profitability.
Integrating the Antares products and technologies into our portfolio
strategically positions SBE to penetrate new key accounts in the enterprise
arena while continuing to expand our presence in the embedded marketplace,"
commented Heye. "We plan to further build on this momentum in the coming months
by turning our technology investments into strong, customer-driven product
solutions, continuing to diversify our customer base, and actively seeking out
new market opportunities."
Conference Call Information
SBE's third quarter conference call will be held on Thursday, August 28, 2003 at
11:00 am Eastern Time / 8:00 am Pacific Time. To access the call, please dial
(800) 875-9124 ID #2351520 approximately 10 minutes prior to the start of the
call.
A replay of SBE's quarterly conference call will be available for 48 hours. To
access the replay, please dial (800) 875-9124 and enter code number 2351520. The
replay can also be accessed via the company web site at www.sbei.com.
About SBE
SBE architects and provides network communications solutions for an extensive
range of applied computing applications. SBE offers a robust portfolio of
standards-based WAN, LAN, Storage network interface cards (NICs) as well as
communications controllers designed to enable optimal performance and rapid
deployment across a full spectrum of next generation networking systems. Based
in San Ramon, California, SBE is a publicly traded company (Nasdaq: SBEI) with
products sold worldwide through direct sales, OEMs and system integration
partners. For additional information, please visit www.sbei.com.
Forward-Looking and Cautionary Statements
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This news release contains certain forward-looking statements that involve risks
and uncertainties, including statements about management's current estimates
regarding net sales, gross margins and operating costs for the remainder of
2003, as well as statements about new product features, market opportunity for
new products, and the demand for services that may be offered by SBE's
customers. Such statements are only predictions and the company's actual results
may differ materially from those anticipated in these forward-looking
statements. Factors that may cause such differences include, but are not limited
to, risks related to the company's reliance on a small number of OEM customers,
rapidly changing product requirements, the introduction of new products, market
acceptance of the company's products, and reliance on strategic partners. These
factors and others are more fully discussed in the documents the company files
from time to time with the Securities and Exchange Commission, particularly, the
company's most recent Form 10-K and Form 10-Q.
SBE and the SBE logo are registered trademarks of SBE, Inc. All other brand or
product names are trademarks or registered trademarks of their respective
holders.
- Tables Follow -
SBE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
for the three and nine months ended July 31, 2002 and 2001
(In thousands, except per share amounts)
(Unaudited)
Three months ended Nine months ended
July 31, July 31,
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net sales $ 1,621 $ 2,786 $ 5,249 $ 5,793
Cost of sales 559 1,091 1,971 2,488
----------- ----------- ----------- -----------
Gross profit 1,062 1,695 3,278 3,305
Product research and development 334 770 913 2,335
Sales and marketing 361 501 1,004 1,609
General and administrative 381 673 1,259 1,810
Restructuring costs (benefit) (154) --- (154) ---
------------ ----------- ------------ -----------
Total operating expenses 922 1,944 3,022 5,754
----------- ----------- ----------- -----------
Operating income (loss) 140 (249) 256 (2,449)
Interest and other income 2 38 11 60
----------- ----------- ----------- -----------
Income (loss) before income taxes 142 (211) 267 (2,389)
Provision (benefit) for income taxes 1 (33) (17) (33)
----------- ------------ ------------ ------------
Net income (loss) $ 141 $ (178) $ 284 $ (2,356)
=========== ============ =========== ============
Basic income (loss) per share $ 0.03 $ (0.04) $ 0.07 $ (0.64)
=========== =========== =========== ===========
Diluted loss per share $ 0.03 $ (0.04) $ 0.07 $ (0.64)
=========== =========== =========== ===========
Basic - shares used
in per share computations 4,288 4,042 4,145 3,659
=========== =========== =========== ===========
Diluted - shares used
in per share computations 4,614 4,042 4,276 3,659
=========== =========== =========== ===========
SBE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 31, October 31,
2003 2002
-------------- --------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 1,990 $ 1,582
Trade accounts receivable, net 1,005 888
Inventories 1,603 1,910
Other 281 220
----------- -----------
Total current assets 4,879 4,600
Property, plant and equipment, net 343 533
Capitalized software costs, net 93 110
Other 79 78
----------- -----------
Total assets $ 5,394 $ 5,321
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 305 $ 488
Accrued payroll and employee benefits 129 159
Other accrued expenses 435 531
Current portion of refundable deposit --- 477
----------- -----------
Total liabilities 869 1,625
----------- -----------
Stockholders' equity:
Common stock 15,232 14,711
Treasury stock (409) (409)
Note receivable from stockholder (245) (245)
Accumulated deficit (10,053) (10,336)
------------ ------------
Total stockholders' equity 4,525 3,696
----------- -----------
Total liabilities and stockholders' equity $ 5,394 $ 5,321
=========== ===========