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
SAN RAMON, CA, February 23, 2005 - 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, 2005.
Net sales for the first quarter of fiscal 2005 were $2.8 million, compared with
$3.0 million for the first quarter of fiscal 2004. SBE's gross profit margin for
the first quarter of fiscal 2005 was 56%, compared with 55% for the same quarter
of fiscal 2004. The increase in gross profit margin in fiscal 2005 compared to
fiscal 2004 is partially due to the inclusion of $100,000 of non-cash
intellectual property amortization expense in cost of goods sold in the first
quarter of fiscal 2004. The company's total operating expenses in the first
quarter of fiscal 2005 were $1.4 million compared to operating expenses in the
same quarter of fiscal 2004 of $1.1 million. Net income for the first quarter of
fiscal 2005 was $177,000, or $0.03 per share, basic and diluted, compared to net
income of $527,000, or $0.11 basic and $0.09 per share and diluted, for the same
period last year. The company's results for the first quarter of fiscal 2004
reflect a benefit of $239,000 related to the reversal of the loan reserve on the
note from the former president and CEO taken in fiscal 2002. This benefit is
included as an offset to total operating expense for the first quarter of fiscal
2004.
The company ended the quarter with working capital (current assets less current
liabilities) of $4.3 million, compared to $3.9 million at the end of fiscal
2004. No debt existed at either date.
Of the company's revenues in the first quarter, $1M, or approximately 36%, was
attributable to a final Hewlett-Packard shipment of legacy WAN products. SBE's
core product lines of HighWire intelligent communications products and WAN
adapters accounted for 23% and 20% of quarterly revenues, respectively. In the
first quarter, the company's new TCP/IP Offload Engine (TOE) product also began
shipping to customers who seek to improve network connectivity and performance.
"We look forward to seeing a ramp up in customer activity as we continue to gain
traction in the offload marketplace. Based on positive demand and sales lead
activity for iSCSI and TOE, we are confident that our investments in these and
other `impact' technologies will play a major role in SBE's long-term growth,"
said Dan Grey, president and CEO of SBE.
- more -
SBE, Inc.
Page 2
Outlook and Financial Guidance Information
"Our strategy for growth is two-fold. In the near-term, we are working to
maximize our customer satisfaction and `going the extra mile' to satisfy both
standard and custom product business opportunities. Over the long-term, we will
be investing in product innovation to leapfrog the competition and achieve new
design wins in several markets, including Storage and Voice over IP," commented
Grey. "As of January 31, 2005, management determined that it would no longer
provide revenue or EPS guidance. We believe that it is in the best interests of
shareholders to avoid engaging in predictions of short-term financial
performance, which are inherently uncertain. We believe that this will allow the
management team to more effectively run operations and build long-term
shareholder value," concluded Grey.
Conference Call Information
SBE's first quarter conference call will be held on Thursday, February 24, 2005
at 11:00 am Eastern Time / 8:00 am Pacific Time. To access the call, please dial
(800) 875-9124 and enter code number 4027447 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 90 days. To
access the replay, please dial (800) 642-1687 and enter code number 4027447. 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 wide range 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.
- ### -
SBE, Inc.
Page 3
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 2005, 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.
Page 4
SBE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS for the three months ended
January 31, 2005 and 2004
(In thousands, except per share amounts)
(Unaudited)
Three months ended
January 31,
2005 2004
------- -------
Net sales $ 2,815 $ 2,970
Cost of sales 1,230 1,325
------- -------
Gross profit 1,585 1,645
Product research and development 473 505
Sales and marketing 559 489
General and administrative 369 364
Loan (benefit) -- (239)
------- -------
Total operating expenses 1,401 1,119
------- -------
Operating income 184 526
Interest and other income (2) 1
------- -------
Income before income taxes 182 527
Provision for income taxes 5 --
------- -------
Net income $ 177 $ 527
======= =======
Basic earnings per share $ 0.03 $ 0.11
======= =======
Diluted earnings per share $ 0.03 $ 0.09
======= =======
Basic - shares used
in per share computations 5,136 4,888
======= =======
Diluted - shares used
in per share computations 5,869 6,120
======= =======
SBE, Inc.
Page 5
SBE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
January 31, October 31,
2005 2004
-------- --------
Current assets:
Cash and cash equivalents $ 1,564 $ 1,849
Trade accounts receivable, net 2,048 1,668
Inventories 1,638 1,926
Other 276 227
-------- --------
Total current assets 5,526 5,670
Property, plant and equipment, net 408 427
Capitalized software costs, net 41 48
Other 33 28
-------- --------
Total assets $ 6,008 $ 6,173
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 526 $ 856
Other accrued expenses 663 875
-------- --------
Total current liabilities 1,189 1,731
Other long-term liabilities 146 139
-------- --------
Total liabilities 1,335 1,870
-------- --------
Stockholders' equity:
Common stock 16,068 15,755
Deferred compensation (120) --
Accumulated deficit (11,275) (11,452)
-------- --------
Total stockholders' equity 4,673 4,303
-------- --------
Total liabilities and stockholders' equity $ 6,008 $ 6,173
======== ========