EXHIBIT 99.1
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
David Brunton, Chief Financial Officer
SBE, Inc.
(925) 355-7700
davidb@sbei.com
SBE, INC. ANNOUNCES PROFITABLE FIRST QUARTER
REPORTING 60% INCREASE IN FIRST QUARTER REVENUES AND 480% GAIN IN PROFITS
SAN RAMON, CA, FEBRUARY 24, 2004 - SBE, Inc. (NASDAQ: SBEI), a leading provider
of high performance OEM network connectivity solutions, today announced
financial results for the first quarter ended January 31, 2004.
Net sales for the first quarter of fiscal 2004 were $3.0 million, compared with
$1.9 million for the first quarter of fiscal 2003 and $2.2 million for the
fourth quarter of fiscal 2003. Net income for the first quarter of fiscal 2004
is $527,000, or $0.11 and $0.09 per share, basic and diluted, respectively
compared to net income of $91,000, or $0.02 per share, basic and diluted, for
the same period last year.
SBE's gross profit margin for the first quarter of fiscal 2004 was 55% compared
with 61% for the same quarter of fiscal 2003. The decrease in gross profit
margin in fiscal 2004, compared to fiscal 2003 is partially due to the inclusion
of $100,000 of non-cash intellectual property amortization expense in costs of
goods sold in the first quarter of fiscal 2004. The Company's total operating
expenses in the first quarter of fiscal 2004 were $1.1 million compared to
operating expenses in the same quarter of fiscal 2003 of $1.0 million.
During the first quarter of fiscal 2004, William B. Heye, president and chief
executive officer of SBE, used proceeds from the sale of SBE common stock that
he owned to pay the remaining outstanding principal and interest balance of a
loan from SBE. The loan was originated in 1998 and was due and payable on
December 14, 2003. The Company's results reflect a benefit of $239,000 for the
first quarter of fiscal 2004 related to the reversal of the loan reserve on the
note from Mr. Heye taken in fiscal 2002. This benefit is included in total
operating expense for the first quarter of fiscal 2004.
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SBE, INC.
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SBE ended the first quarter of fiscal 2004 with a sales backlog of $3.6 million
compared to $1.2 million at this time last year. "Our 200% increase in sales
backlog between this last quarter and the same time last year is evidence that
our existing customers are ramping up again and new design wins are moving into
production," remarked Dan Grey, senior vice president of sales and marketing of
SBE. We ended the quarter with working capital (current assets less current
liabilities) of $4.9 million compared to $3.9 million at the end of fiscal 2003.
No debt existed at either date.
"Our focus on pursuing new design wins, investing in strategic product
development, and maintaining appropriate cost controls has resulted in a strong
kick-off for fiscal 2004 with impressive gains in revenue and profits during
this first quarter," commented Heye. "We are seeing design wins garnered during
the economic downturn begin to generate increased revenues, in addition to a
gradual ramp up from long-time, existing customers. While it is still an uphill
battle for the communications market, we look forward to further growth as the
markets continue to recover and customer demand rises."
BUSINESS OUTLOOK
The following statements are based on current expectations. These statements are
forward-looking, and actual results may differ materially. Refer to the
cautionary statement at the end of this press release for a summary of the risks
associated with forward-looking statements and where to find more information
regarding such risks.
"Based on our current visibility into the state of our business and the overall
marketplace, we expect revenue growth and profitability will continue during
fiscal 2004. We anticipate net sales for fiscal 2004 to range between $12.0
million and $14.0 million and diluted earnings per share for the year will range
between $0.17 and $0.30. Although we only provide guidance in terms of annual
results, we will update our performance against this annual forecast on a
quarterly basis. Based on our current sales activity, current backlog, and
forecasts we are on plan. We remain committed to our strategy of maintaining
profitability in the near term while positioning the organization for long-term
growth," said Heye.
SBE, INC.
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"As part of our strategy to grow the company, we will continue to maintain keen
visibility on acquisition and investment opportunities that we believe offer
synergy and value-add from a technology and business perspective. To this
effect, we have proposed an increase in the number of authorized shares of
Common Stock of the company. We used stock to fund the acquisition of Lan Media
in fiscal 2000 and Antares Microsystems in fiscal 2003, and having adequate
common stock resources available will allow us to act swiftly if and when
accretive acquisition opportunities are identified in the future," continued
Heye.
CONFERENCE CALL INFORMATION
SBE's first quarter conference call will be held Wednesday February 25, 2004 at
11:00 am Eastern Time / 8:00 am Pacific Time. To access the call, please dial
(800) 875-9124 and enter code number 5552969 or visit www.sbei.com approximately
10 minutes prior to the start of the call.
A replay of SBE's quarterly conference call will be available for three days. To
access the replay, please dial (800) 642-1687 and enter code number 5552969. 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 wide area network (WAN), local area network (LAN), and 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.
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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
fiscal 2004, 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.
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SBE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JANUARY 31, 2004 AND 2003
(In thousands, except per share amounts)
(Unaudited)
Three months ended
January 31,
2004 2003
------- -------
Net sales $ 2,970 $ 1,861
Cost of sales 1,325 733
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Gross profit 1,645 1,128
Product research and development 505 285
Sales and marketing 489 307
General and administrative 364 441
Loan (benefit) (239) --
------- -------
Total operating expenses 1,119 1,033
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Operating income 526 95
Interest and other income 1 --
------- -------
Income before income taxes 527 95
Provision for income taxes -- 4
------- -------
Net income $ 527 $ 91
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Basic earnings per share $ 0.11 $ 0.02
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Diluted earnings per share $ 0.09 $ 0.02
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Basic - shares used
in per share computations 4,888 4,064
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Diluted - shares used
in per share computations 6,120 4,082
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SBE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
January 31, October 31,
2004 2003
-------- --------
Current assets:
Cash and cash equivalents $ 985 $ 1,378
Trade accounts receivable, net 3,377 1,818
Inventories 2,064 1,880
Other 540 240
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Total current assets 6,866 5,316
Property, plant and equipment, net 365 289
Capitalized software costs, net 109 120
Intellectual property, net 1,020 1,122
Other 28 28
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Total assets $ 8,388 $ 6,975
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 1,417 $ 696
Other accrued expenses 567 675
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Total current liabilities 1,984 1,371
Other long-term liabilities 93 217
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Total liabilities 2,077 1,588
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Stockholders' equity:
Common stock 15,557 15,302
Note receivable from stockholder -- (142)
Accumulated deficit (9,246) (9,773)
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Total stockholders' equity 6,311 5,387
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Total liabilities and stockholders' equity $ 8,388 $ 6,975
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