EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT: David W. Brunton, Chief Financial Officer
SBE, Inc.
(925) 355-7700
davidb@sbei.com
SBE, INC. ANNOUNCES FOURTH QUARTER AND
FISCAL 2004 RESULTS
FISCAL 2004 SALES OF $11.1 MILLION, UP 48% OVER FISCAL 2003
SAN RAMON, CA, DECEMBER 15, 2004 - 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, 2004.
Net sales for the fiscal year ended October 31, 2004, were $11.1 million,
including $4.9 million in sales to the Hewlett Packard Company ("HP"), compared
to net sales of $7.5 million for fiscal 2003, including sales to HP of $3.4
million. Net sales for the fourth quarter of fiscal 2004 were $2.2 million,
compared with $2.2 million for the corresponding quarter in fiscal 2003.
"This year has been marked by a lackluster economic environment, disappointing
activity in product consumption within the telecommunications and enterprise
arenas, and the anticipated phase-out of our multi-million-dollar legacy
customer from the early 90's (HP). After recording certain non-cash expenses, we
experienced a net loss in the fourth quarter of 2004 following eight consecutive
quarters of profitability." commented William B. Heye, President and CEO of SBE.
"Despite these challenges, we are pleased to report that we generated positive
cash flows from operations for the first time in three years. We are also
encouraged by the 53% increase in sales revenues in WAN and HighWire products
from fiscal 2003 to 2004 and the elevated customer activity, including design
wins in fixed wireless and point-of-sale ("POS") applications. I'm confident
that the company is well-positioned for growth as I pass the reins into the
experienced and capable hands of Dan Grey in January 2005," continued Heye.
Net loss for fiscal 2004 amounted to $1.7 million, or $0.33 per diluted share,
based on 5.0 million shares outstanding. The loss for fiscal year ended October
31, 2004 and the fourth quarter of fiscal 2004 includes certain non-cash
expenses recorded in the fourth quarter of fiscal 2004 totaling $1.5 million
including; $713,000 of an impairment write-down of the intellectual property
asset recorded when the company purchased Antares Microsystems, an $259,000
accrual for a severance package payable to the President and Chief Executive
Officer upon his retirement on December 31, 2004 and $547,000 in inventory
valuation charges. Net income for fiscal 2003 amounted to $563,000, or $0.12 per
diluted share, based on 4.7 million shares outstanding.
Net loss for the fourth quarter 2004 amounted to $2.3 million, or $0.46 per
diluted share, based on 5.1 million shares outstanding. Net income for the
fourth quarter 2003 amounted to $280,000, or $0.05 per diluted share, based on
5.6 million shares outstanding.
The Company's operations generated cash flow of $100,000 in fiscal 2004 compared
to a negative cash flow from operations of $100,000 in fiscal 2003. The
Company's cash balance amounted to $1.9 million and $1.4 million at October 31,
2004 and 2003, respectively, and no long-term debt existed at either date.
"We have focused on accomplishing significant milestones this past year. Our
strategy for growing the business involves a certain level of deferred
gratification as we expect that incurring critical investment expenses today
will position the company to reap much greater benefits and returns in the
long-term," said Heye. "We have developed strategic business alliances with
companies such as Diversified Technologies, GNP, and Concurrent Technologies, to
expand the market reach of our products and take advantage of the rapidly
emerging ATCA (Advanced Telecom Computing Architecture) opportunities. Over the
past few months, we have gained notable traction within the IP storage, super
computing and multimedia content delivery sectors from our beta rollout of our
TCP/IP Offload Engine ("TOE") and iSCSI solutions. We have also continued to
expand our product portfolio with the introduction of encryption/data security
modules, advanced multi-port T1/E1 adapters for the industry's highest density
applications, as well as one of the industry's first channelized T3 PMC cards.
Going forward, our objectives will continue to be strengthening our financial
position, delivering on customer priorities, presenting new product innovations
to the marketplace in areas such as TOE and IP storage, Voice over IP (VoIP),
and encryption, and leveraging channel sales worldwide to expand our reach into
new markets and applications," concluded Heye.
BUSINESS OUTLOOK
SBE adheres to the Securities and Exchange Commission's requirements governing
public company reporting obligations. The Company intends to provide its
investors, financial analysts, and the general public with guidance each quarter
in its earnings news release and its conference calls. SBE will not provide any
further guidance or updates on its performance during the quarter unless it does
so in a news release, such as this one, or in such other manner that is
compliant with Regulation FD and Regulation G, as the case may be. The Company's
statements about its future financial performance are based on current
information and expectations and the Company undertakes no duty to update such
statements. The statements are forward-looking and actual results could differ
materially due to various risks and uncertainties, some of which are described
below.
Based on current sales activity, backlog, and forecasts, the Company anticipates
revenue for the fiscal quarter ending January 31, 2005 to range between $2.8
million and $3.3 million and projected earnings per share to be approximately
$0.04 to $0.06 per diluted share.
CONFERENCE CALL INFORMATION
SBE's year-end and fourth quarter conference call will be held Thursday,
December 16, 2004 at 11:00am Eastern Time / 8:00am Pacific Time. To access the
call, please dial (800) 875-9124 and enter code number 2528888.
A replay of SBE's quarterly conference call will be available for 48 hours. To
access the replay, please dial (800) 642-1687 and enter code number 2528888. The
replay can also be accessed via the Internet at www.sbei.com for 90 days.
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.
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. Words such as
"will," "plans," "intends," "anticipates," "expects" and similar expressions are
intended to identify these forward-looking statements. 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.
- Tables Follow -
SBE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS For the three months and years ended
October 31, 2004 and 2003
(In thousands, except per share amounts)
Three months ended Fiscal years ended
October 31, October 31,
2004 2003 2004 2003
-------- -------- -------- --------
Net sales $ 2,220 $ 2,207 $ 11,066 $ 7,456
Cost of sales 2,545 778 6,646 2,749
-------- -------- -------- --------
Gross profit 1,429 4,420 4,707
(325)
Product research and development 815 418 2,411 1,330
Sales and marketing 585 481 2,177 1,484
General and administrative 615 491 1,755 1,751
Loan reserve (benefit) -- (235) (239) (235)
Restructuring costs (benefit) -- -- -- (154)
-------- -------- -------- --------
Total operating expenses 2,015 1,155 6,104 4,177
-------- -------- -------- --------
Operating Income (loss) (2,340) 274 (1,684) 530
Interest income 1 6 5 26
Other income (expense) -- -- -- (10)
-------- -------- -------- --------
Income (loss) before income taxes (2,339) 280 (1,679) 546
Benefit for income taxes -- -- -- 17
-------- -------- -------- --------
Net income (loss) $ (2,339) $ 280 $ (1,679) $ 563
======== ======== ======== ========
Net income (loss) per common share:
Basic $ (0.46) $ 0.06 $ (0.33) $ 0.13
Diluted $ (0.46) $ 0.05 $ (0.33) $ 0.12
======== ======== ======== ========
Shares used in per share calculation:
======== ======== ======== ========
Basic 5,087 4,606 5,022 4,259
Diluted 5,087 5,566 5,022 4,709
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- MORE -
SBE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
October 31, October 31,
2004 2003
-------- --------
Current assets:
Cash and cash equivalents $ 1,849 $ 1,378
Trade accounts receivable, net 1,668 1,818
Inventories 1,926 1,880
Other 227 240
-------- --------
Total current assets 5,670 5,316
Property, plant and equipment, net 427 389
Capitalized software costs, net 48 120
Intellectual property, net -- 1,122
Other 28 28
-------- --------
Total assets $ 6,173 $ 6,975
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 856 $ 696
Accrued payroll and employee benefits 391 184
Other accrued expenses 484 491
-------- --------
Total current liabilities 1,731 1,371
-------- --------
Other long-term liabilities 139 217
-------- --------
Total Liabilities 1,870 1,588
-------- --------
Stockholders' equity:
Common stock 15,755 15,302
Note receivable from stockholder -- (142)
Accumulated deficit (11,452) (9,733)
-------- --------
Total stockholders' equity 4,303 5,387
-------- --------
Total liabilities and stockholders' equity $ 6,173 $ 6,975
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