EXHIBIT 99.1
FOR IMMEDIATE RELEASE Contact: David W. Brunton, Chief Financial Officer
SBE, Inc.
(925) 355-7700
davidb@sbei.com
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SBE, INC. ANNOUNCES FOURTH QUARTER AND FISCAL 2003 RESULTS
Reporting continued profitability and growth in revenue and backlog
SAN RAMON, CA, December 10, 2003 - SBE, Inc. (NASDAQ: SBEI), a leading supplier
of high performance OEM communications solutions, today reported results for the
three months and fiscal year ended October 31, 2003.
Net sales for the fiscal year ended October 31, 2003 were $7.5 million, compared
with $6.9 million for fiscal 2002. The Company reported net income of $563,000,
or $0.12 per share (diluted), for fiscal year 2003, compared to a net loss of
$1.7 million, or $0.46 per share (diluted), for fiscal 2002. Net sales for the
fourth quarter of fiscal 2003 were $2.2 million, compared with $1.1 million for
the fourth quarter ended October 31, 2002. The Company reported net income of
$280,000, or $0.05 per share (diluted), compared to net income of $626,000, or
$0.15 per share (diluted), for the fourth quarter of fiscal 2002.
SBE's gross profit margin for the fiscal year ended October 31, 2003 was 63
percent, compared to 54 percent for fiscal 2002. The Company's gross profit
margin for the fourth quarter of 2003 was 65 percent, compared with 38 percent
for the fourth quarter of 2002. The Company's gross profit margin includes the
sale of previously written-down inventory to HP. The gross margin would be
approximately 55 percent excluding the sales to HP, The Company's operating
expenses for fiscal 2003 were $4.2 million, compared to $8.5 million for fiscal
2002. Total operating expenses in the fourth quarter of fiscal 2003 were $1.2
million, compared to operating expense in the same quarter of fiscal 2002 of
$2.7 million. Management has taken aggressive steps to reduce overall operating
costs over the past two years, including reducing headcount and disposing of
excess real estate. The Company continues to focus on cost containment and cash
preservation with closely monitored expense levels.
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In the fourth quarter of fiscal 2003, the Company began to experience a recovery
in customer demand, ending the year with a sales backlog of $4.1 million,
compared to $2.2 million at the end of fiscal 2002 and with working capital of
$4.0 million compared to $3.0 million at the end of fiscal 2002.
The market environment for the Company's customer activity continues to be
uncertain; however, during fiscal 2003, SBE was successful in selling and
shipping our WAN, LAN and Storage products to 46 new customers in addition to
extending our reach to new customers by adding a network of stocking
distributors and value-added resellers in the United States, Europe and Asia.
Since the fourth quarter of fiscal 2001, SBE achieved twenty-one new "design
wins," of which, eight were garnered in fiscal 2003. A design win is defined as
a program with an OEM customer that will generate at least $400,000 in recurring
annual net sales typically within 12 to 18 months after the customer accepts and
confirms the use of the Company's product in their platform. The Company
believes the combination of new customers and design wins will provide the base
for future sales growth in the communications and enterprise equipment
marketplace.
"I'm pleased with the successes of the SBE team in fiscal 2003 in realizing
consecutive quarters of profitability throughout the year despite the continued
impact of the turbulent economic environment on the business. We continued to
maintain appropriate cost controls and aggressively pursued design wins, in
addition to strengthening our portfolio through ongoing customer-driven product
development and the acquisition of Antares Microsystems' product portfolio. Our
newly-expanded portfolio, coupled with our continued focus on delivering product
flexibility and dedicated customer support, well positions SBE to capture
opportunities in both the embedded and enterprise markets as we proceed into the
new year," commented William B. Heye president and chief executive officer of
SBE.
During the fourth quarter of fiscal 2003, Mr. Heye, sold shares of SBE common
stock and used the proceeds from the stock sale to pay a portion of a loan from
SBE. As a result of the fiscal 2003 payment by Heye, the Company recognized a
benefit related to the reversal of a loan impairment charge taken by the Company
in fiscal 2002. The loan was originated in 1998 and is due and payable on
December 14, 2003. Subsequent to fiscal 2003, Heye sold additional shares of SBE
common stock in November 2003 and used the proceeds to pay the remaining loan
balance in full. The Company expects to reflect a benefit of $239,000 for the
first quarter of fiscal 2004 resulting from the reversal of the remaining loan
impairment charge.
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BUSINESS OUTLOOK
The following statements are based on current expectations. These statements are
forward-looking, and actual results may differ materially.
"Given the current state of our business and the customer-driven product plans
we have in place, we are optimistic that revenue growth and profitability will
continue during fiscal 2004. Based on our current sales activity, backlog, and
forecasts, we anticipate net sales in our first quarter of fiscal 2004 will
range between $2.7 million and $3.0 million and diluted earnings per share will
range between $0.06 and $0.09. We believe that we have the Company structured
today to continue to generate net profit at a quarterly net sales rate of
between $2.2 million and $2.4 million. We remain committed to our strategies of
maintaining profitability in the near term while positioning the organization
for long-term growth as the markets begin to recover," said Heye.
"Our recent investments in next generation technologies, such as TCP/IP Offload
Engine, Serial Attached SCSI, and Fibre Channel, along with our new design wins
in high-profile applications, i.e. Wi-Fi and E-911, have played major roles in
growing the business. In fiscal 2004 we plan to further fuel this momentum by
turning our technology investments into robust, customer-driven product
solutions, continuing to expand and diversify our customer base, and actively
pursuing new market opportunities," continued Heye.
CONFERENCE CALL INFORMATION
SBE's fourth quarter conference call will be held Thursday, December 11, 2003
at 11:00 am Eastern Time / 8:00 am Pacific Time. To access the call, please dial
(800) 875-9124 and enter code number 4178482.
A replay of SBE's quarterly conference call will be available for 24 hours. To
access the replay, please dial (800) 642-1687 and enter code number 4178482. The
replay can also be accessed via the Internet at www.sbei.com for 14 days.
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ABOUT SBE
SBE designs and sells network communications solutions for an extensive range of
applied computing applications. SBE offers a broad 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 STATEMENTS
This news release contains, and our conference call will contain, certain
forward-looking statements that involve risks and uncertainties, including
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 reliance on a
small number of OEM customers, rapidly changing product requirements,
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.
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SBE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS For the three months and years ended
October 31, 2003 and 2002
(In thousands, except per share amounts)
Three months ended Fiscal years ended
October 31, October 31,
2003 2002 2003 2002
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Net sales $ 2,207 $ 1,105 $ 7,456 $ 6,898
Cost of sales 778 682 2,749 3,170
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Gross profit 1,429 423 4,707 3,728
Product research and development 418 692 1,330 3,027
Sales and marketing 481 542 1,484 2,151
General and administrative 491 572 1,751 2,364
Loan reserve (benefit) (235) 474 (235) 474
Restructuring costs (benefit) -- 396 (154) 446
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Total operating expenses 1,155 2,676 4,177 8,462
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Operating Income (loss) 274 (2,253) 530 (4,734)
Interest income 6 6 26 51
Other income (expense) -- 2,728 (10) 2,775
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Income (loss) before income taxes 280 481 546 (1,908)
Benefit for income taxes -- 145 17 177
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Net income (loss) $ 280 $ 626 $ 563 $ (1,731)
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Net income (loss) per common share:
Basic $ 0.06 $ 0.15 $ 0.13 $ (0.46)
Diluted $ 0.05 $ 0.15 $ 0.12 $ (0.46)
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Shares used in per share calculation:
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Basic 4,606 4,056 4,259 3,759
Diluted 5,566 4,092 4,709 3,759
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SBE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
October 31, October 31,
2003 2002
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Current assets:
Cash and cash equivalents $ 1,378 $ 1,582
Trade accounts receivable, net 1,818 888
Inventories 1,880 1,910
Other 240 220
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Total current assets 5,316 4,600
Property, plant and equipment, net 389 533
Capitalized software costs, net 120 110
Intellectual property, net 1,122 ---
Other 28 78
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Total assets $ 6,975 $ 5,321
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 696 $ 488
Accrued payroll and employee benefits 184 159
Other accrued expenses 491 521
Current portion of refundable deposit -- 477
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Total current liabilities 1,371 1,615
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Other long-term liabilities 217 10
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Total Liabilities 1,588 1,625
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Stockholders' equity:
Common stock 15,302 14,711
Treasury stock -- (409)
Note receivable from stockholder (142) (270)
Accumulated deficit (9,773) (10,336)
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Total stockholders' equity 5,387 3,696
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Total liabilities and stockholders' equity $ 6,975 $ 5,321
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