<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
SBS TECHNOLOGIES, INC.
AMENDMENT NO. 1
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 1, 1998
New Mexico 1-10981 85-0359415
- ------------------------ --------------------- ----------------------
(State of Incorporation) (Commission File No.) (IRS Employer I.D. No.)
2400 Louisiana Blvd, NE AFC Bldg 5-600 Albuquerque, New Mexico 87110
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (505) 875-0600
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The audited financial statements and exhibits required under item 7 have been
completed and are filed herewith electronically.
(b) Pro Forma Financial Information
On July 1, 1998, SBS Technologies, Inc. ("SBS") acquired, through its newly
formed wholly-owned subsidiary, SBS Holdings GmbH, a 50.1% interest in OR
Industrial Computers GmbH, ("OR"), from the founder. OR is a German
corporation that produces CPU boards utilized in a wide range of embedded
computer applications. OR designs, manufactures and markets CPU boards based
on Intel computer architecture available in the VME, CompactPCI and PCCompact
form factors, as well as VME CPU boards based on the Motorola 680X0 series
processors and a series of computer input/output boards.
In addition, SBS acquired, through its newly formed wholly-owned subsidiary,
SBS Holdings GmbH, 50.2% of the shares of ORTEC Electronic Assembly, GmbH,
("ORTEC"), a related company, which manufactures OR's commercial products and
electronic products for other customers.
SBS acquired, through its wholly-owned subsidiary SBS Embedded Computers,
Inc., based in Raleigh, NC, 100% of the shares of OR Computers, Inc., based
in Fairfax, VA, which is the U.S. marketing and support organization for the
OR product line.
OR, ORTEC and OR Computers, Inc. are entities under common control and are
collectively referred to as the "German Group".
The acquisition will be accounted for under the purchase method, whereby the
purchase price will be allocated to the underlying assets acquired and
liabilities assumed based upon their estimated fair values. The allocation
of the purchase price is in process and it is expected that a portion of the
purchase price will be allocated to in-process research and development
which, under generally accepted accounting principles, will be immediately
expensed by SBS. The charge to SBS earnings will be recognized in the
quarter ending September 30, 1998, and it is possible that such charge will
result in SBS reporting a net loss for such quarter.
The unaudited Pro Forma Consolidated Financial Statements reflect the
following: (i) preliminary adjustment for the purchase accounting and
estimated fair value allocation of the assets acquired and the obligations
assumed; (ii) adjustment for the dividend to the former owner of the German
Group, and the associated increase in interest expense; (iii) the assumed
borrowing of funds on July 1, 1996 with which to acquire the German Group,
and the increase of interest expense; and (iv) reduction of interest income
on surplus cash used to relieve the assumed debt described above. On July 1,
1998, SBS actually used available cash on hand to consummate the cash portion
of the acquisition. The unaudited Pro Forma Consolidated Balance Sheet as of
March 31, 1998 was prepared as if the transaction had occurred on that date.
The unaudited Pro Forma Consolidated Statements of Operations for the
12-month period ended June 30, 1997 and the nine-month period ended March 31,
1998 were prepared as if the transaction had occurred on July 1, 1996.
In the opinion of SBS management, all adjustments necessary to present fairly
such Pro Forma Consolidated Financial Statements have been made based on the
terms and structure of the acquisition.
These unaudited Pro Forma Consolidated Financial Statements are not
necessarily indicative of what actual results would have been had the
transaction occurred at the beginning of the respective periods nor do they
purport to indicate the results of future operations of the Company.
These unaudited Pro Forma Consolidated Financial Statements should be read in
conjunction with the accompanying notes and with the Combined Financial
Statements of the German Group filed electronically herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SBS TECHNOLOGIES, INC.
Date: September 14, 1998 By: /s/ James E. Dixon
----------------------------------
James E. Dixon, Vice President
Finance & Administration
<PAGE>
SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Number Description Method of Filing
- -------------- -------------------------------- ----------------------------
23.2 Consent of KPMG Peat Marwick LLP Filed herewith electronically
<PAGE>
kpmg
OR Industrial Computers GmbH
ORTEC Electronic Assembly GmbH and
OR Computers Inc.
COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
With Independent Auditors' Report Thereon
<PAGE>
kpmg
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying combined balance sheets of OR Industrial
Computers GmbH, ORTEC Electronic Assembly GmbH and OR Computers Inc. as of
December 31, 1997 and 1996 and the related combined statements of operations,
changes in shareholders' equity and cash flows for each of the years then
ended, all expressed in United States dollars. These combined financial
statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with U.S. generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of OR Industrial
Computers GmbH, ORTEC Electronic Assembly GmbH and OR Computers Inc. as of
December 31, 1997 and 1996 and the results of their operations and their cash
flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
Munich, Germany
SEPTEMBER 2, 1998
<PAGE>
kpmg
OR Industrial Computers GmbH
ORTEC Electronic Assembly GmbH and
OR Computers Inc.
COMBINED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
Note December 31, December 31,
1997 1996
------------- --------------
USD USD
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS 571,826 160,317
------------- --------------
ACCOUNTS RECEIVABLE AND OTHER ASSETS
Trade accounts receivable, net 2 4,050,693 2,568,652
Due from shareholders 3 78,903 932,614
Other current assets 4 58,676 282,272
------------- --------------
Total accounts receivable and other assets 4,188,272 3,783,538
------------- --------------
INVENTORIES
Raw materials 1,010,824 1,146,290
Work in process 581,899 386,332
Finished goods and merchandise 107,750 1,225
Advance payments 13,153 0
------------- --------------
Total inventories 5 1,713,626 1,533,847
------------- --------------
PREPAID EXPENSES 20,308 19,668
------------- --------------
Total current assets 6,494,032 5,497,370
------------- --------------
PROPERTY AND EQUIPMENT, NET
Other equipment, operational and office equipment 6 191,866 224,045
------------- --------------
OTHER ASSETS 1,679 1,934
------------- --------------
6,687,577 5,723,349
------------- --------------
------------- --------------
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
OR Industrial Computers GmbH
ORTEC Electronic Assembly GmbH
OR Computers Inc.
COMBINED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(continued)
<TABLE>
<CAPTION>
Note December 31, December 31,
1997 1996
------------ ------------
USD USD
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings 7 0 90,614
Notes payable 8 69,907 80,604
Accounts payable 153,541 291,227
Income taxes payable 14 1,618,440 556,611
Deferred taxes 14 12,861 0
Due to shareholders 9 210,786 41,188
Other accrued expenses 10 757,669 869,321
Other liabilities 10 121,795 169,043
------------ ------------
Total current liabilities 2,944,999 2,098,608
------------ ------------
SHAREHOLDERS' EQUITY
Subscribed capital 87,443 87,443
Retained earnings 4,603,953 3,930,198
Cumulative foreign currency translation adjustments (948,818) (392,900)
------------ ------------
Total shareholders' equity 11 3,742,578 3,624,741
Commitments and Contingencies 12
------------ ------------
6,687,577 5,723,349
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
kpmg
OR Industrial Computers GmbH
ORTEC Electronic Assembly GmbH and
OR Computers Inc.
COMBINED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
Note December 31, December 31,
1997 1996
------------ ------------
USD USD
<S> <C> <C> <C>
Net Sales 13 12,056,675 12,480,005
Cost of goods sold (3,960,160) (4,960,602)
------------ ------------
Gross profit 8,096,515 7,519,403
Selling, general and administrative expenses (3,275,728) (2,998,777)
Research and development expenses (1,571,778) (1,197,113)
------------ ------------
Operating income 3,249,009 3,323,513
Interest income 7,325 110,306
Interest expense (28,632) (17,558)
------------ ------------
Income before income taxes 3,227,702 3,416,261
Income taxes 14 (1,435,441) (1,667,880)
------------ ------------
Net income 1,792,261 1,748,381
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
kpmg
OR Industrial Computers GmbH
ORTEC Electronic Assembly GmbH and
OR Computers Inc.
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
Notes December 31, December 31,
1997 1996
------------ ------------
USD USD
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 1,792,261 1,748,381
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation 214,471 308,047
Loss on disposition of assets 3,069 0
Deferred income taxes 12,861 0
Changes in operating assets and liabilities
Trade receivables (1,605,160) 233,938
Inventories (230,911) (1,193,696)
Other current assets 301,171 363,484
Prepaid expenses (1,243) (4,455)
Accounts payable (141,838) 73,170
Accrued expenses (114,542) (475,250)
Income taxes payable 1,095,958 (49,691)
Other liabilities (59,597) (930,917)
------------ ----------
Net cash provided by operating activities 1,266,500 73,011
------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (216,582) (412,937)
Proceeds from asset sales 2,528 0
------------ ----------
Net cash used in investing activities (214,054) (412,937)
------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Changes in short-term borrowings (81,083) 93,422
Profit distributed to shareholder (1,118,506) (2,308,486)
Decrease/increase of net due to/from shareholders 1,037,254 (438,370)
------------ ----------
Net cash used in financing activities (162,335) (2,653,434)
------------ ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (478,602) 315,819
------------ ----------
Net increase/decrease in cash and cash equivalents 411,509 (2,677,541)
Cash and cash equivalents, beginning of year 160,317 2,837,858
------------ ----------
Cash and cash equivalents, end of year 571,826 160,317
------------ ----------
------------ ----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid 28,632 17,558
Income taxes paid 280,565 1,678,084
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
kpmg
OR Industrial Computers GmbH
ORTEC Electronic Assembly GmbH and
OR Computers Inc.
COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
Cumulative
Foreign
Currency
Subscribed Retained Translation
Capital Earnings Adjustments Total
---------- -------- ------------- ---------
USD USD USD USD
<S> <C> <C> <C> <C>
Balance at January 1, 1996 87,443 4,490,303 31,958 4,609,704
Profit distribution to shareholders (2,308,486) (2,308,486)
Result for the year 1,748,381 1,748,381
Translation adjustment (424,858) (424,858)
---------- ---------- ------------- ----------
Balance at December 31, 1996 87,443 3,930,198 (392,900) 3,624,741
Profit distribution to shareholders (1,118,506) (1,118,506)
Result for the year 1,792,261 1,792,261
Translation adjustment (555,918) (555,918)
---------- ---------- ------------- ----------
Balance at December 31, 1997 87,443 4,603,953 (948,818) 3,742,578
---------- ---------- ------------- ----------
---------- ---------- ------------- ----------
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
kpmg
OR Industrial Computers GmbH
ORTEC Electronic Assembly GmbH and
OR Computers Inc.
Notes to Combined Financial Statements
- 1 -
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) GENERAL
The combined financial statements include the financial statements of OR
Industrial Computers GmbH, ORTEC Electronic Assembly GmbH and OR Computers
Inc.(collectively, the "Company"). All significant accounts and transactions
between these entities have been eliminated. Combined financial statements have
been presented because these entities are under common control and such
presentation is more meaningful than a presentation of separate statements.
OR Industrial Computers GmbH, a private limited company under German Commercial
Law (HGB), develops, manufactures and distributes electronic devices (hard and
software). The business activities are mainly based in Europe and the United
States.
The corporate purpose of ORTEC Electronic Assembly GmbH is electronic
manufacturing, particularly board assembling.
OR Computers Inc. sells industrial computers as well as pre- and
after-sales-services.
(b) SALES RECOGNITION
The sale of goods is recognised when the significant risks and reward of
ownership of the goods are transferred to the buyer (i.e. at delivery). Revenue
from long-term contracts is recognised according to the percentage-of-completion
method. Revenue from services is recognised when the service is rendered.
(c) CASH AND CASH EQUIVALENTS
Temporary investments with original maturities of ninety days or less are
classified as cash and cash equivalents. The Company's cash and cash equivalents
are limited to checking accounts.
(d) INVENTORIES
Inventories are valued at the lower of cost or net realisable value. Slow
moving and obsolete items are provided for. Raw materials cost is determined
on a first-in-first-out basis. Manufactured products are generally valued at
raw material cost, labour cost and a proportion of manufacturing overheads
and determined on a first-in-first-out basis.
(Continued)
<PAGE>
kpmg
OR Industrial Computers GmbH
ORTEC Electronic Assembly GmbH and
OR Computers Inc.
Notes to Combined Financial Statements
- 2 -
(e) PROPERTY AND EQUIPMENT
Property and equipment are shown at cost, less accumulated depreciation.
Depreciation on moveable assets follows the straight-line method and also, in
part, an accelerated method over the estimated useful lives of one to eight
years.
(f) ACCOUNTS RECEIVABLE AND OTHER ASSETS
Accounts receivable and other current assets are shown at nominal value. Risks
are reflected by allowances for doubtful amounts. General provisions to cover
bad debt expense amount to 3% of accounts receivable after deduction of VAT.
(g) INCOME TAXES
The Company accounts for income taxes under the asset and liability method of
accounting for income taxes in accordance with Statement of Financial
Accounting Standards, No. 109, `Accounting for Income Taxes'. Under this
method, deferred tax assets and liabilities are recognised for the estimated
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases.
(h) RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred.
(i) USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and to amounts of
revenues and expenses during the reporting period to prepare these financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
(j) FOREIGN CURRENCIES
Assets and liabilities of operations denominated in foreign currencies are
translated into USD using exchange rates in effect at the end of the period
while revenues and expenses are translated at average exchange rates.
The national currencies of the individual companies are the functional
currencies(German mark for OR Industrial Computers GmbH and ORTEC Electronic
Assembly GmbH, and the U.S. dollar for OR Computers Inc.). Translation gains
and losses are recorded as a separate component of shareholders' equity.
(Continued)
<PAGE>
kpmg
OR Industrial Computers GmbH
ORTEC Electronic Assembly GmbH and
OR Computers Inc.
Notes to Combined Financial Statements
- 3 -
Gains and losses from foreign currency transactions are included in net income
for the period. A net transaction gain of USD 23,349 for 1996 is included in
selling, general and administrative expenses in the accompanying combined
statements of operations. The current year income includes USD 2,617 realised
losses during the year and USD 30,158 unrealised gains at the year-end.
2. TRADE ACCOUNTS RECEIVABLES, NET
Receivables, net at December 31, 1997 and 1996 consist of the following:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
USD USD
<S> <C> <C>
Accounts receivable 4,184,214 2,643,708
Less: allowance for doubtful accounts 133,521 75,056
--------- ---------
4,050,693 2,568,652
--------- ---------
--------- ---------
</TABLE>
3. DUE FROM SHAREHOLDERS
The amounts result from short-term loans granted to the shareholders. The loans
bear interest of 5% p.a..
4. OTHER CURRENT ASSETS
Other current assets at December 31, 1997 and 1996 consist of:
<TABLE>
<CAPTION>
1997 1996
------- --------
USD USD
<S> <C> <C>
Taxes refundable 16,624 175,342
Deposits 27,963 32,241
Others 14,089 74,689
------ -------
58,676 282,272
------ -------
------ -------
</TABLE>
(Continued)
<PAGE>
kpmg
OR Industrial Computers GmbH
ORTEC Electronic Assembly GmbH and
OR Computers Inc.
Notes to Combined Financial Statements
- 4 -
5. INVENTORIES
Inventories at December 31, 1997 and 1996 consist of:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
USD USD
<S> <C> <C>
Raw materials 1,010,824 1,146,290
Work in process 581,899 386,332
Finished goods and merchandise 107,750 1,225
Advance payments 13,153 0
--------- ---------
1,713,626 1,533,847
--------- ---------
--------- ---------
</TABLE>
6. PROPERTY AND EQUIPMENT, NET
Property and equipment at December 31, 1997 and 1996 consist of the following:
<TABLE>
<CAPTION>
1997 1996
-------- --------
USD USD
<S> <C> <C>
Computer and communication equipment 176,945 103,031
Software 38,970 35,682
Furniture, fixtures and leasehold
improvements 736,439 768,070
Automobiles 70,316 81,076
--------- -------
1,022,670 987,859
--------- -------
Less accumulated depreciation and amortization 830,804 763,814
--------- -------
191,866 224,045
--------- -------
--------- -------
</TABLE>
Total depreciation expense amounts to USD 214,471 in fiscal year 1997 and USD
308,047 in fiscal year 1996.
(Continued)
<PAGE>
kpmg
OR Industrial Computers GmbH
ORTEC Electronic Assembly GmbH and
OR Computers Inc.
Notes to Combined Financial Statements
- 5 -
7. SHORT-TERM BORROWINGS
Short-term borrowings at December 31, 1997 and 1996 consist of:
<TABLE>
<CAPTION>
1997 1996
------ ------
USD USD
<S> <C> <C>
Bayerische Vereinsbank AG, Augsburg
Current account 0.00 90,614
----- ------
----- ------
</TABLE>
The current account bears interest of 7.75% p.a. at year-end 1996. Interest
expense was USD 938 for 1996 and USD 15,645 for 1997. Borrowings are granted
under a line-of-credit agreement with Bayerische Vereinsbank AG, Augsburg, which
totals DM 300,000.00 and expired at December 31, 1997. No collateral has been
provided.
8. NOTES PAYABLE
Madeleine Schlagbauer and Janet Schlagbauer both granted in 1993 a loan with a
nominal value of DM 50,000.00 to OR Industrial Computers GmbH. The loans bear an
interest of at least 8% and maximum 15% p.a. depending on the income for the
year. The notes payable agreements were terminated effective December 31, 1997.
The loans were repaid in May 1998.
9. DUE TO SHAREHOLDERS
The amounts result from short-tem loans granted by the shareholders. The loans
bear an interest rate of 5% p.a..
(Continued)
<PAGE>
kpmg
OR Industrial Computers GmbH
ORTEC Electronic Assembly GmbH and
OR Computers Inc.
Notes to Combined Financial Statements
- 6 -
10. OTHER ACCRUED EXPENSES AND OTHER LIABILITIES
Other accrued expenses for fiscal year 1996 mainly consist of bonus amounts for
1995 and 1996 for the managing directors (USD 631,987), advertising
contributions to foreign distributors (USD 95,767), outstanding vacation (USD
62,120) and warranty (USD 62,237).
In fiscal year 1997 other accrued expenses mainly consist of bonus amounts for
1996 and 1997 (USD 323,248), advertising contributions to foreign distributors
(USD 83,000), compensation payments to a former distributor (USD 99,000),
outstanding vacation (USD 84,329), warranty (USD 62,462) and outstanding
invoices (USD 25,848).
Other liabilities at December 31, 1997 and 1996 can be summarised as follows:
<TABLE>
<CAPTION>
1997 1996
------- -------
USD USD
<S> <C> <C>
Wage tax, social security 55,945 93,127
Sundry 65,850 75,916
------- -------
121,795 169,043
------- -------
------- -------
</TABLE>
11. SHAREHOLDERS' EQUITY
Shareholders' equity consists of subscribed capital, retained earnings and
cumulative foreign currency translation adjustments.
At December 31, 1997 and 1996 combined share capital amounted to USD 87,443.
(Continued)
<PAGE>
kpmg
OR Industrial Computers GmbH
ORTEC Electronic Assembly GmbH and
OR Computers Inc.
Notes to Combined Financial Statements
- 7 -
12. COMMITMENTS AND CONTINGENCIES
The Company leases office facilities and equipment under operating leases with
remaining terms of up to 4 years. Future minimum lease payments under
non-cancellable operating leases as of December 31, 1997 are as follows:
<TABLE>
<CAPTION>
USD (`000)
----------
<S> <C>
1998 186
1999 157
2000 157
2001 158
thereafter 162
----------
820
----------
----------
</TABLE>
13. NET SALES
Net sales comprise the following geographical areas:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
USD (`000) USD (`000)
<S> <C> <C>
Germany 5,898 7,901
United States 2,437 1,120
France 1,969 912
United Kingdom 261 605
Others 1,492 1,942
---------- ----------
12,057 12,480
---------- ----------
---------- ----------
</TABLE>
(Continued)
<PAGE>
kpmg
OR Industrial Computers GmbH
ORTEC Electronic Assembly GmbH and
OR Computers Inc.
Notes to Combined Financial Statements
- 8 -
14. INCOME TAXES
Income before taxation was subject to tax as follows:
<TABLE>
<CAPTION>
1997 1996
--------- -----------
USD USD
<S> <C> <C>
Corporate income tax
current 871,731 1,025,930
deferred 9,520 0
--------- -----------
881,251 1,025,930
--------- -----------
Trade income tax
current 550,849 641,950
deferred 3,341 0
--------- -----------
554,190 641,950
--------- -----------
Total income tax expense 1,435,441 1,667,880
--------- -----------
--------- -----------
</TABLE>
A reconciliation of Local Country statutory rate of corporate income tax and
trade income tax to the effective rate is as follows:
<TABLE>
<CAPTION>
1997 1996
----- ----
% %
<S> <C> <C>
Combined Local Country statutory rate 57 57
Diminution of corporate income tax due to profit distribution to
shareholders (13) (12)
Other 0 4
----- ----
44 49
----- ----
----- ----
</TABLE>
The tax effects of temporary differences are immaterial.
(Continued)
<PAGE>
kpmg
OR Industrial Computers GmbH
ORTEC Electronic Assembly GmbH and
OR Computers Inc.
Notes to Combined Financial Statements
- 9 -
15. SUBSEQUENT EVENTS
Effective July 1, 1998 SBS Technologies Inc. acquired a 100% voting in OR
Computers Inc., a 50.1% voting interest in OR Industrial Computers GmbH and a
50.2% voting interest in ORTEC Electronic Assembly GmbH. The remaining voting
interests in OR Industrial Computers GmbH and ORTEC Electronic Assembly GmbH
can be acquired by SBS Technologies Inc. effective March 1, 1999.
<PAGE>
SBS TECHNOLOGIES, INC.
PRO FORMA CONSOLIDATED
BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, 1998
----------------------------
GERMAN PRO FORMA
SBS GROUP ADJUSTMENTS PRO FORMA
------------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 21,952,739 364,608(2) (9,653,745) 12,663,602
Receivables 10,586,868 4,190,084 14,776,952
Inventories 10,153,737 2,190,059 12,343,796
Deferred Income Taxes 1,440,000 - 1,440,000
Income Tax Receivable 120,378 - 120,378
Prepaid Expenses 315,065 15,155 330,220
Other Current Assets 143,782 56 143,838
------------------------------------------------------------
Total Current Assets 44,712,569 6,759,962 (9,653,745) 41,818,786
Property and Equipment, Net 4,288,297 181,026 4,469,323
Intangible Assets:
Pre-acquisition Intangible Assets, Net 17,212,786 - - 17,212,786
Excess of Estimated Cost of Acquisition
Over the Estimated Fair Value of Net Assets
Acquired - - (3) 10,450,223 10,450,223(10)
------------------------------------------------------------
Intangible Assets, Net 17,212,786 - 10,450,223 27,663,009
Deferred Income Taxes 3,900,000 - 3,900,000
Other Assets 51,221 475,931 527,152
------------------------------------------------------------
TOTAL ASSETS $ 70,164,873 7,416,919 796,478 78,378,270
------------------------------------------------------------
------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------------------------------
Current Liabilities:
Notes Payable to Related Parties $ 2,954,063 - 2,954,063
Accounts Payable 2,629,971 422,474 3,052,445
Accrued Representative Commissions 349,085 - 349,085
Accrued Salaries 1,730,365 - 1,730,365
Accrued Compensated Absences 685,958 - 685,958
Income Taxes - 1,567,507 1,567,507
Other Current Liabilities 1,071,174 1,130,755(1) 4,204,935 6,406,864
------------------------------------------------------------
Total Current Liabilities 9,420,616 3,120,736 4,204,935 16,746,287
Minority Interest (4) 197,351 197,351
Stockholders' Equity:
Common Stock 47,168,488 - (2) 690,375 47,858,863
Common Stock Warrants 79,563 - - 79,563
Retained Earnings 13,496,206 - - 13,496,206(10)
German Group Combined Equity 4,296,183(4) (91,248) -
(1) (4,204,935)
------------------------------------------------------------
60,744,257 4,296,183 (3,605,808) 61,434,632
------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 70,164,873 7,416,919 796,478 78,378,270
------------------------------------------------------------
------------------------------------------------------------
See accompanying notes to pro forma consolidated financial statements.
</TABLE>
<PAGE>
SBS TECHNOLOGIES, INC.
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1997 PROFORMA
--------------------------- ---------------------------
SBS GERMAN GROUP ADJUSTMENTS COMBINED
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
REVENUE $52,814,568 10,955,911 63,770,479
COST OF SALES 24,910,271 4,441,394 29,351,665
--------------------------------------------------------
GROSS PROFIT 27,904,297 6,514,517 34,418,814
S G & A EXPENSES 10,223,374 3,061,979 13,285,353
R & D EXPENSES 4,422,152 1,350,745 5,772,897
ACQUIRED IN-PROCESS R & D CHARGE 11,000,000 - 11,000,000
AMORTIZATION OF INTANGIBLE ASSETS 1,504,524 - (5) 1,045,022 2,549,546
--------------------------------------------------------
OPERATING INCOME 754,247 2,101,793 (1,045,022) 1,811,018
INTEREST INCOME (EXPENSE) 14,438 56,014(6) (657,141) (870,934)
(7) (284,245)
--------------------------------------------------------
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 768,685 2,157,807 (1,986,408) 940,084
INCOME TAXES 307,000 1,051,020(8) (804,495) 553,525
--------------------------------------------------------
INCOME BEFORE MINORITY INTEREST 461,685 1,106,787 (1,181,913) 386,559
MINORITY INTEREST - (9) (701,325) (701,325)
--------------------------------------------------------
NET INCOME (LOSS) 461,685 1,106,787 (1,883,238) (314,766)
--------------------------------------------------------
--------------------------------------------------------
COMMON SHARES OUTSTANDING 4,535,746 4,559,746
INCOME (LOSS) PER COMMON SHARE 0.10 (0.07)
COMMON SHARES - ASSUMING DILUTION 5,280,221 4,559,746
INCOME (LOSS) PER COMMON SHARE -
ASSUMING DILUTION 0.09 (0.07)
See accompanying notes to pro forma consolidated financial statements.
</TABLE>
<PAGE>
SBS TECHNOLOGIES, INC.
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, 1998 PROFORMA
----------------------------- ------------------------------
SBS GERMAN GROUP ADJUSTMENTS COMBINED
------------ -------------- ------------- -----------
<S> <C> <C> <C> <C>
REVENUE 53,634,931 10,076,114 63,711,045
COST OF SALES 23,311,661 2,794,855 26,106,516
-------------------------------------------------------------
GROSS PROFIT 30,323,270 7,281,259 - 37,604,529
S G & A EXPENSES 11,935,699 2,547,825 14,483,524
R & D EXPENSES 5,607,995 1,181,274 6,789,269
AMORTIZATION OF INTANGIBLE ASSETS 1,418,721 (5) 783,766 2,202,487
-------------------------------------------------------------
OPERATING INCOME 11,360,855 3,552,160 (783,766) 14,129,249
INTEREST INCOME (EXPENSE) 690,303 (20,548)(6) (236,528) 71,352
(7) (361,875)
-------------------------------------------------------------
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 12,051,158 3,531,612 (1,382,169) 14,200,601
INCOME TAXES 4,880,600 1,336,147 (8) (573,600) 5,643,147
-------------------------------------------------------------
INCOME BEFORE MINORITY INTEREST 7,170,558 2,195,465 (808,569) 8,557,454
MINORITY INTEREST - (9) (1,065,998) (1,065,998)
-------------------------------------------------------------
NET INCOME 7,170,558 2,195,465 (1,874,567) 7,491,456
-------------------------------------------------------------
-------------------------------------------------------------
COMMON SHARES OUTSTANDING 5,557,505 5,581,505
INCOME PER COMMON SHARE 1.29 1.34
COMMON SHARES - ASSUMING DILUTION 6,143,406 6,167,406
INCOME PER COMMON SHARE -
ASSUMING DILUTION 1.17 1.21
See accompanying notes to pro forma consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1 Adjustment for dividend payable to former owner of German Group,
approximately $2.8 million to be paid on October 1, 1998 and the
remaining balance subsequent to December 31, 1999.
<TABLE>
<S> <C>
2 Adjustment to cash consists of the cash portion
of the purchase price plus acquisition costs $ (9,653,745)
3 Excess of estimated cost of acquisition over the
fair value of net assets:
Cash portion of the purchase price plus
acquisition costs $ 9,653,745
Issuance of SBS stock 690,375
Less estimated fair value of German Group net
assets (91,248)
Minority interest 197,351
-------------
Goodwill 10,450,223
-------------
-------------
</TABLE>
4 Elimination of remaining German Group historical stockholders' equity
and recognition of minority interest.
5 Amortization of intangible assets for the year ended June 30, 1997 and
the nine month period ended March 31, 1998 of $1,045,022 and $783,766,
respectively. Amortization has been computed utilizing a weighted average
ten year life (see note 10 below).
6 Interest expense for the year ended June 30, 1997 due to assumed
borrowing of $9,650,000 on July 1, 1996 for the purchase of the German
Group, with assumed repayment on November 30, 1996 (date of SBS common
stock offering), and the dividend payable to the former owner of the
German Group.
7 Reduction of interest income for the year ended June 30, 1997 and the
nine month period ended March 31, 1998 in the amount of $284,245 and
$361,875, respectively.
8 Record tax effect of amortization of intangible assets, increase in
interest expense and reduction of interest income at 40.5% and 41.5%
statutory income tax rates for the year ended June 30, 1997 and the
nine month period ended March 31, 1998, respectively.
9 Record minority interest effect in statement of operations.
10 The allocation of the purchase price is in process and it is expected
that a portion of the purchase price will be allocated to in-process
research and development which, under GAAP, will be immediately
expensed by SBS. The charge to SBS earnings will be recognized in the
quarter ending September 30, 1998, and it is possible that such charge
will result in SBS reporting a net loss for such quarter.
<PAGE>
Exhibit 23.2
The Board of Directors
SBS Technologies, Inc.:
We consent to incorporation by reference in the registration statements
(No.'s 333-23053 and 333-98558) on Form S-8 and (No. 33-20129) on Form S-3 of
SBS Technologies, Inc. of our report dated September 2, 1998, relating to the
combined balance sheets of OR Industrial Computers GmbH, ORTEC Electronic
Assembly GmbH and OR Computers, Inc. as of December 31, 1997 and 1996, and
the related combined statements of operations, changes in shareholders'
equity, and cash flows for each of the years then ended, which report appears
in the current report on Form 8-K/A of SBS Technologies, Inc. dated July 1,
1998.
/s/ KPMG Deutsche Treuhand-Gesellschaft AG
Munich, Germany
September 11, 1998
