<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- ----- Exchange Act of 1934 for the quarterly period ended MARCH 31, 1998 or
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
COMMISSION FILE NUMBER 1-10981
SBS TECHNOLOGIES, INC.
New Mexico 85-0359415
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
2400 Louisiana Blvd. NE
AFC Building 5, Suite 600
Albuquerque, New Mexico 87110
(505) 875-0600
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
YES X NO
--- ---
As of April 30, 1998, the Registrant had 5,658,035 shares
of its common stock outstanding.
<PAGE>
SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
ASSETS March 31, 1998 June 30, 1997
-------------------------- ---------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 21,952,739 21,661,671
Receivables, net (note 2) 10,586,868 9,244,269
Inventories (note 3) 10,153,737 7,705,470
Deferred income taxes 1,440,000 1,327,000
Income tax receivable 120,378 -
Prepaid expenses 315,065 232,283
Other current assets 143,782 128,560
---------------- ----------------
Total current assets 44,712,569 40,299,253
---------------- ----------------
Property and equipment, at cost 7,064,345 4,729,259
Less accumulated depreciation 2,776,048 2,247,408
---------------- ----------------
Net property and equipment 4,288,297 2,481,851
---------------- ----------------
Intangible assets, net 17,212,786 14,099,254
Deferred income taxes 3,900,000 4,253,000
Other assets 51,221 31,656
---------------- ----------------
Total assets $ 70,164,873 61,165,014
---------------- ----------------
---------------- ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (note 5) $ 2,954,063 13,316
Notes payable to related parties (note 5) - 1,000,000
Accounts payable 2,629,971 1,541,846
Accrued representative commissions 349,085 449,699
Accrued salaries 1,730,365 1,868,623
Accrued compensated absences 685,958 560,061
Income taxes - 1,095,162
Other current liabilities 1,071,174 1,493,368
---------------- ----------------
Total current liabilities 9,420,616 8,022,075
Long-term liabilities:
Notes payable to related parties (note 5) - 2,816,251
---------------- ----------------
Total long-term liabilities - 2,816,251
---------------- ----------------
Total liabilities 9,420,616 10,838,326
---------------- ----------------
Stockholders' equity:
Common stock, no par value; 100,000,000 shares authorized,
5,638,323 issued and outstanding at March 31, 1998
5,405,381 issued and outstanding at June 30, 1997 47,168,488 43,889,754
Common stock warrants 79,563 111,286
Retained earnings 13,496,206 6,325,648
---------------- ----------------
Total stockholders' equity 60,744,257 50,326,688
---------------- ----------------
Total liabilities and stockholders' equity $ 70,164,873 61,165,014
---------------- ----------------
---------------- ----------------
</TABLE>
See accompanying notes to condensed consolidated financial statements
Page 2
<PAGE>
SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Nine Months Ended March 31 Three Months Ended March 31
----------------------------------- -----------------------------------
1998 1997 1998 1997
---------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Sales $53,634,931 37,736,431 18,893,283 14,206,062
Cost of sales 23,311,661 17,975,657 8,049,751 6,609,181
---------------- --------------- ---------------- ----------------
Gross Profit 30,323,270 19,760,774 10,843,532 7,596,881
Selling, general and administrative expense 11,935,699 7,584,841 4,262,961 2,716,372
Research and development expense 5,607,995 2,871,852 1,935,026 1,355,886
Acquired in-process research and
development charge - 11,000,000 - -
Amortization of intangible assets 1,418,721 1,034,337 522,243 472,402
---------------- --------------- ---------------- ----------------
Operating income 11,360,855 (2,730,256) 4,123,302 3,052,221
---------------- --------------- ---------------- ----------------
Interest income 831,690 280,049 263,876 176,954
Interest expense (141,387) (426,996) (46,320) (124,831)
---------------- --------------- ---------------- ----------------
690,303 (146,947) 217,556 52,123
---------------- --------------- ---------------- ----------------
Income before income taxes 12,051,158 (2,877,203) 4,340,858 3,104,344
Income taxes 4,880,600 (1,151,500) 1,757,100 1,241,100
---------------- --------------- ---------------- ----------------
Net income (loss) $ 7,170,558 (1,725,703) 2,583,758 1,863,244
---------------- --------------- ---------------- ----------------
---------------- --------------- ---------------- ----------------
Net income (loss) per common share $ 1.29 (0.41) 0.46 0.35
==== ===== ==== ====
Net income (loss) per common share -
assuming dilution $ 1.17 (0.41) 0.42 0.31
==== ===== ==== ====
</TABLE>
See accompanying notes to condensed consolidated financial statements
Page 3
<PAGE>
SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Common Total
stock Common stock-
----------------------------------- stock Retained holders'
Shares Amount warrants earnings equity
------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Balance at June 30, 1997 5,405,381 $43,889,754 $111,286 $ 6,325,648 $50,326,688
Exercise of stock options
and warrants 232,942 1,640,757 (31,723) - 1,609,034
Income tax benefit from stock
options exercised 1,637,977 1,637,977
Net income - - - 7,170,558 7,170,558
------------- -------------- --------------- -------------- ---------------
Balance at March 31, 1998 5,638,323 $47,168,488 $ 79,563 $13,496,206 $60,744,257
------------- -------------- --------------- -------------- ---------------
------------- -------------- --------------- -------------- ---------------
</TABLE>
See accompanying notes to condensed consolidated financial statements
Page 4
<PAGE>
SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Nine Months Ended March 31
--------------------------------------
1998 1997
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $7,170,558 (1,725,703)
---------------- ----------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 672,315 432,191
Amortization of intangible assets 1,418,721 1,034,337
Bad debt expense 225,430 204,503
Deferred income taxes 240,000 (4,527,000)
Gain on disposition of assets (232,365) (503)
Imputed interest 137,812 82,327
Acquired in-process research and development charge - 11,000,000
Changes in assets and liabilities:
Receivables (624,112) (1,141,317)
Inventories (1,972,956) (831,037)
Prepaids and other assets (96,458) (12,330)
Accounts payable 911,388 (224,112)
Accrued representative commissions (140,854) 127,225
Accrued salaries (212,196) 632,379
Accrued compensated absences 115,926 39,074
Income taxes 368,400 1,083,777
Other current liabilities (263,408) (110,476)
---------------- ----------------
Net adjustments 547,643 7,789,038
---------------- ----------------
Net cash provided by operating activities 7,718,201 6,063,335
---------------- ----------------
Cash flows from investing activities:
Cash received from sale of assets 54,200 -
Business acquisitions (note 5) (5,565,603) (20,511,319)
Acquisition of property and equipment (2,511,448) (824,049)
---------------- ----------------
Net cash used by investing activities (8,022,851) (21,335,368)
---------------- ----------------
</TABLE>
(Continued)
Page 5
<PAGE>
SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Nine Months Ended March 31
--------------------------------------
1998 1997
---------------- ----------------
<S> <C> <C>
Cash flows from financing activities:
Payments on notes payable to related parties (1,000,000) -
Payments on long-term borrowings and capitalized leases (13,316) (7,067,839)
Proceeds from exercise of stock options and warrants 1,609,034 1,749,947
Net proceeds from sale of common stock - 35,524,448
---------------- ----------------
Net cash provided by financing activities 595,718 30,206,556
---------------- ----------------
Net increase in cash and cash equivalents 291,068 14,934,523
Cash and cash equivalents at beginning of period 21,661,671 1,130,030
---------------- ----------------
Cash and cash equivalents at end of period $21,952,739 16,064,553
---------------- ----------------
---------------- ----------------
Supplemental disclosure of cash flow information:
Interest paid $ 3,564 274,892
Income taxes paid 4,272,200 2,285,277
Noncash financing and investing activities:
Assets acquired through capital leases $ - 70,733
Income tax benefit of stock options exercised 1,637,977 1,645,740
Summary of assets, liabilities, and equity acquired through acquisition:
Cash and cash equivalents $ 239,021 23,489
Receivables 943,917 2,157,225
Inventories 475,311 2,412,589
Deferred income tax - 65,963
Prepaid expenses 21,111 213,115
Goodwill 4,532,254 10,032,643
Property and equipment 25,817 1,065,180
Accumulated depreciation - (609,322)
Accounts payable (176,737) (441,134)
Accrued representative commissions (40,240) (17,240)
Accrued salaries (73,938) (108,099)
Accrued compensated absences (9,971) (154,135)
Debt - (404,277)
Income taxes (54,037) 1,552
Other current liabilities (77,884) (278,733)
Common stock
- (68,000)
Retained earnings $ - (683,829)
---------------- ----------------
---------------- ----------------
</TABLE>
See accompanying notes to condensed consolidated financial statements
Page 6
<PAGE>
SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies as set forth in SBS Technologies, Inc.'s (the
"Company") Annual Report on Form 10-K dated September 26, 1997 have been
adhered to in preparing the accompanying interim consolidated financial
statements. These statements are unaudited but include all adjustments,
consisting of normal recurring adjustments, that the Company considers
necessary for a fair presentation of the results for such interim period.
Results for an interim period are not necessarily indicative of results
for a full year.
2) RECEIVABLES, NET
Receivables, net consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, 1998 JUNE 30, 1997
-------------- -------------
<S> <C> <C>
Accounts receivable $11,036,167 9,545,264
Less: allowance for doubtful accounts (449,299) (300,995)
------------ -------------
$10,586,868 9,244,269
------------ -------------
------------ -------------
</TABLE>
3) INVENTORIES
Inventories are valued at average cost, which does not exceed market.
<TABLE>
<CAPTION>
MARCH 31, 1998 JUNE 30, 1997
-------------- -------------
<S> <C> <C>
Raw materials $ 4,954,362 3,211,502
Work in process 3,164,681 2,953,140
Finished goods 2,034,694 1,540,828
----------- ----------
$ 10,153,737 7,705,470
----------- ----------
----------- ----------
</TABLE>
4) EARNINGS PER SHARE
Effective with the quarter ended December 31, 1997, the Company adopted
SFAS No. 128, "Earnings Per Share." In accordance with SFAS No. 128, all
previously reported earnings (loss) per share amounts have been restated
to comply with SFAS No. 128. Net income (loss) per share is based on
weighted average shares outstanding. Net income (loss) per share assuming
dilution includes the dilutive effects of potential common shares
outstanding during the period (i.e. options and warrants).
A reconciliation of the numerator and denominator of the per share and
per share - assuming dilution calculation follows:
Page 7
<PAGE>
SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(Continued)
<TABLE>
<CAPTION>
NINE MONTHS ENDED MARCH 31
------------------------------------------------------------------------
1998 1997
------------------------------------ -----------------------------------
Income Shares Per-Share Loss Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ---------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET INCOME (LOSS) PER COMMON SHARE
Income (Loss) Available to Common Stockholders $7,170,558 5,557,505 $ 1.29 ($1,725,703) 4,211,660 ($ 0.41)
------ --------
------ --------
EFFECT OF DILUTIVE SECURITIES
Dilutive options and warrants 585,901
----------- ------------- ----------- -------------
NET INCOME (LOSS) PER COMMON SHARE
- -ASSUMING DILUTION
Income (Loss) Available to Common Shareholders $7,170,558 6,143,406 $ 1.17 ($1,725,703) 4,211,660 ($ 0.41)
------ --------
------ --------
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
------------------------------------------------------------------------
1998 1997
------------------------------------ -----------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ---------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET INCOME (LOSS) PER COMMON SHARE
Income (Loss) Available to Common Stockholders $2,583,758 5,624,928 $ 0.46 $1,863,244 5,349,065 $ 0.35
------ --------
------ --------
EFFECT OF DILUTIVE SECURITIES
Dilutive options and warrants 555,061 690,377
----------- ------------- ----------- -------------
NET INCOME (LOSS) PER COMMON SHARE
- -ASSUMING DILUTION
Income (Loss) Available to Common Shareholders $2,583,758 6,179,989 $ 0.42 $1,863,244 6,039,442 $ 0.31
------ --------
------ --------
</TABLE>
For the nine and three months ended March 31, 1998 and for the three months
ended March 31, 1997, options to purchase 429,400, 352,934 and 220,510 shares of
common stock, respectively, were outstanding but were not included in the
computation of net income per common share - assuming dilution because the
options' exercise price was greater than the average market price of the common
shares.
5) BUSINESS ACQUISITIONS
On November 24, 1997, the Company completed the purchase of Micro
Alliance, Inc. ("Micro Alliance"), a privately held San Diego
county-based manufacturer of industrial computer enclosures and systems.
Micro Alliance specializes in the design and manufacture of
special-purpose PC-compatible computer systems offering a variety of CPU
boards and system enclosures, including rack mount, desktop and mobile
systems. Most systems contain passive backplanes that allow the addition
of up to 20 ISA and PCI cards. These systems are often customized to meet
the needs of particular OEM applications. The Company acquired all of the
outstanding capital stock of Micro Alliance for a total purchase price of
$5.8 million. The acquisition was accounted for using the purchase method
of accounting and $4.5 million of goodwill is being amortized over 10
years. The financial results of Micro Alliance have been included in the
Company's Consolidated Financial Statements from November 24, 1997.
The purchase price was paid as follows:
<TABLE>
<CAPTION>
<S> <C>
Cash $5,736,368
Acquisition costs 68,256
-----------
$5,804,624
</TABLE>
Page 8
<PAGE>
SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(Continued)
On November 18, 1996, the Company completed the purchase of Bit 3
Computer Corporation ("Bit 3"), a Minneapolis-based manufacturer of
computer networking and interconnection hardware. The Company acquired
all of the outstanding capital stock of Bit 3 for a total purchase price
of $24.0 million. Of this purchase price, $20.0 million was paid to the
sellers in cash upon closing of the public stock offering. Of the balance
of $4.0 million, $1.0 million was paid on July 1, 1997 and the balance of
$3.0 million will be paid on July 1, 1998. The financial results of Bit 3
have been included in the Company's Consolidated Financial Statements
from November 18, 1996. In connection with the acquisition of Bit 3, the
Company recorded an $11.0 million earnings charge in the quarter ended
December 31, 1996, based on an assessment by the Company, in conjunction
with an independent valuation firm, of purchased technology of Bit 3. The
assessment determined that $11.0 million of Bit 3's purchase price
represented technology that does not meet the accounting definitions of
"completed technology," and thus should be charged to earnings under
generally accepted accounting principles. In addition, as a result of the
acquisition, the Company recorded $10.0 million of goodwill that is being
amortized over a ten-year period.
The following (unaudited) proforma consolidated results of operations
have been prepared as if the acquisitions of Bit 3 and Micro Alliance had
occurred at July 1, 1996:
<TABLE>
<CAPTION>
($ in millions except per share amounts)
Nine Months Ended Three Months Ended
MARCH 31 MARCH 31
-------- --------
<S> <C> <C> <C> <C>
1998 1997 1998 1997
---- ---- ---- ----
Sales 55.9 48.1 18.9 15.5
Net income (loss) 7.1 (0.4) 2.6 1.9
Net income (loss) per common share 1.28 (.07) .46 .36
Net income (loss) per common share-
Assuming dilution 1.16 (.07) .42 .32
</TABLE>
The proforma information is presented for informational purposes only and
is not necessarily indicative of the results of operations that actually
would have been achieved had the acquisitions been consummated as of that
time, nor is it intended to be a projection of future results.
Page 9
<PAGE>
SBS TECHNOLOGIES INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1998
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
COMPANY'S FINANCIAL STATEMENTS AND NOTES THERETO. INFORMATION DISCUSSED HEREIN
MAY INCLUDE FORWARD-LOOKING STATEMENTS REGARDING FUTURE EVENTS OR THE FUTURE
FINANCIAL PERFORMANCE OF THE COMPANY, AND ARE SUBJECT TO A NUMBER OF RISKS AND
OTHER FACTORS WHICH COULD CAUSE THE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE CONTAINED IN ANY FORWARD LOOKING STATEMENTS. AMONG SUCH FACTORS ARE:
GENERAL BUSINESS AND ECONOMIC CONDITIONS; CUSTOMER ACCEPTANCE OF AND DEMAND FOR
THE COMPANY'S PRODUCTS; THE COMPANY'S OVERALL ABILITY TO DESIGN, TEST, AND
INTRODUCE NEW PRODUCTS ON A TIMELY BASIS; THE NATURE OF THE MARKETS ADDRESSED BY
THE COMPANY'S PRODUCTS; AND OTHER RISK FACTORS LISTED FROM TIME TO TIME IN
DOCUMENTS FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION.
PUBLIC STOCK OFFERING
On November 18, 1996, the Company consummated a fully underwritten public stock
offering of 1,500,000 shares of the Company's Common Stock at a price of $25.625
per share. In addition, certain selling shareholders sold an additional 300,000
shares in the offering. The proceeds of the sale of the 300,000 additional
shares did not benefit the Company; however, the Company did receive the
exercise price of $4.80 per share from the exercise of warrants covering 100,000
of the shares. The offering was managed by an underwriting group led by Cowen &
Co. and SoundView Financial Group, Inc. The net proceeds to the Company of the
public stock offering were used to fund the acquisition of Bit 3 (see Recent
Acquisition below), to repay long-term debt, and the balance will be used for
general working capital requirements and future business acquisitions.
RECENT ACQUISITIONS
On November 24, 1997, the Company completed the purchase of Micro Alliance, a
privately held San Diego county-based manufacturer of industrial computer
enclosures and systems. Micro Alliance specializes in the design and manufacture
of special-purpose PC-compatible computer systems offering a variety of CPU
boards and system enclosures, including rack mount, desktop and mobile systems.
Most systems contain passive backplanes that allow the addition of up to 20 ISA
and PCI cards. These systems are often customized to meet the needs of
particular OEM applications. Under the terms of the purchase agreement dated
November 24, 1997 (the "Agreement") among the Company, Micro Alliance, a
California corporation, and Jeffery Huston, Edward Larson, and Sherrin W. Larson
(together "Shareholders"), the Company acquired all of the outstanding capital
stock of Micro Alliance for a total purchase price of $5.8 million. Of this
total purchase price, $250,000 in cash was placed in a joint escrow account
until the earlier of resolution of certain tax issues or the end of any
applicable statute of limitations. The financial results of Micro Alliance have
been included in the Company's Consolidated Financial Statements from November
24, 1997. As a result of the acquisition, the Company recorded $4.5 million of
goodwill, which is being amortized over a ten-year period.
On November 18, 1996, the Company completed the purchase of Bit 3. Bit 3 is a
Minneapolis-based manufacturer of computer networking and interconnection
hardware for many of the most widely used computer architecture standards in the
standard bus embedded computer market. Under the terms of the purchase agreement
dated October 8, 1996 (the "Acquisition Agreement") among the Company and the
two shareholders of Bit 3 (the "Sellers"), the Company acquired all of the
outstanding capital stock of Bit 3 for a total purchase price of $24.0 million
paid or to be paid from proceeds from the public stock offering and cash flow
from the Company's operations. Of this total purchase price, $20.0 million was
paid to the sellers in cash upon the closing of the offering. Of the balance of
$4.0 million, $1.0 million was paid to the Sellers on July 1, 1997 and $3.0
million will be paid to the sellers on July 1, 1998, pursuant to secured
promissory notes according to the terms of the Acquisition Agreement. The
financial results of Bit 3 have been included in the Company's Consolidated
Financial Statements
Page 10
<PAGE>
SBS TECHNOLOGIES INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1998
(Continued)
from November 18, 1996. In connection with the acquisition of Bit 3, the Company
recorded an $11.0 million earnings charge in the quarter ended December 31,
1996, based on an assessment by the Company, in conjunction with an independent
valuation firm, of purchased technology of Bit 3. The assessment determined that
$11.0 million of Bit 3's purchase price represented technology that does not
meet the accounting definitions of "completed technology," and thus should be
charged to earnings under generally accepted accounting principles. In addition,
as a result of the acquisition, the Company recorded $10.0 million of goodwill,
which is being amortized over a ten-year period.
The following (unaudited) proforma consolidated results of operations have been
prepared as if the acquisitions of Micro Alliance and Bit 3 had occurred at July
1, 1996:
<TABLE>
<CAPTION>
($ in millions except per share amounts)
Nine Months Ended Three Months Ended
MARCH 31 MARCH 31
-------- --------
<S> <C> <C> <C> <C>
1998 1997 1998 1997
---- ---- ---- ----
Sales 55.9 48.1 18.9 15.5
Net income (loss) 7.1 (0.4) 2.6 1.9
Net income (loss) per common share 1.28 (.07) .46 .36
Net income (loss) per common share-
Assuming dilution 1.16 (.07) .42 .32
</TABLE>
The proforma information is presented for informational purposes only and is not
necessarily indicative of the results of operations that actually would have
been achieved had the acquisitions been consummated as of that time, nor is it
intended to be a projection of future results.
RESULTS OF OPERATIONS
NINE MONTHS ENDED MARCH 31, 1998 COMPARED TO NINE MONTHS ENDED MARCH 31, 1997
SALES. For the nine-month period ended March 31, 1998, sales
increased 42.2%, or $15.9 million, from $37.7 million for the nine
month period ended March 31, 1997, to $53.6 million. Of this 42.2%
increase, sales contributed by Micro Alliance, which was acquired
on November 24, 1997, comprised 6.8%, sales contributed by Bit 3,
which was acquired on November 18, 1996, comprised 18.7%, and
20.3% was attributable to the Company's other product lines,
offset by 3.6% due to the sale of the Company's Judgmental Use of
Force business on June 26, 1997. During the nine month period
ended March 31, 1998, prices for the Company's products remained
firm, and unit shipments increased across all product lines.
Historically, less than 5% of the Company's sales were direct
sales to Asian based customers. The Company experienced minimal
direct affect (less than 2% of sales) on its operations due to the
current Asian currency and economic crisis. Management believes
that any future direct affect on the Company from the Asian
currency and economic crisis will remain minimal; however, it is
difficult for the Company to predict any indirect effect derived
from sales to U.S. based customers whose products are sold into
Asia.
Page 11
<PAGE>
SBS TECHNOLOGIES INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1998
(Continued)
GROSS PROFIT. For the nine-month period ended March 31, 1998, gross profit
increased 53.0%, or $10.5 million, from $19.8 million for the nine-month period
ended March 31, 1997, to $30.3 million. For the nine-month period ended March
31, 1998, gross profit as a percentage of sales increased to 56.5% from 52.4%
for the nine-month period ended March 31, 1997. This increase was primarily due
to the acquisition of Micro Alliance and Bit 3, increased sales volume over
fixed costs, material cost improvements, a reduction in independent
representative sales commissions due to the movement from an independent sales
force to a direct sales force, and the sale of the Company's low margin
Judgmental Use of Force business.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. For the nine-month
period ended March 31, 1998, selling, general and administrative
(SG&A) expense increased 56.6%, or $4.3 million, from $7.6 million
for the nine-month period ended March 31, 1997, to $11.9 million,
resulting from the added expenditures due to the acquisitions of
Bit 3 and Micro Alliance, and additional salaried sales personnel
as the Company transitioned from an independent sales force to a
direct sales force, as well as additional administrative staffing
and promotional costs commensurate with the growth of the Company.
For the same reasons, for the nine-month period ended March 31,
1998, SG&A expense as a percentage of sales increased to 22.3%
from 20.2% in the nine-month period ended March 31, 1997.
RESEARCH AND DEVELOPMENT EXPENSE. For the nine-month period ended March 31,
1998, research and development expense (R&D) increased 93.1%, or $2.7 million,
from $2.9 million for the nine-month period ended March 31, 1997, to $5.6
million, as a result of the added expenditures due to the acquisitions of Bit 3
and Micro Alliance as well as increased investment in new products in the
Company's other product areas. For the same reasons, for the nine-month period
ended March 31, 1998, R&D expense as a percentage of sales increased to 10.5%
from 7.7% in the nine-month period ended March 31, 1997.
ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT CHARGE. For the nine-month period
ended March 31, 1997, in connection with the acquisition of Bit 3 completed on
November 18, 1996, the Company recorded an $11.0 million earnings charge based
on an assessment by the Company, in conjunction with an independent valuation
firm, of purchased technology of Bit 3. The assessment determined that $11.0
million of Bit 3's purchase price represented technology that does not meet the
accounting definitions of completed technology, and thus should be charged to
earnings under generally accepted accounting principles.
AMORTIZATION OF INTANGIBLE ASSETS. For the nine-month period ended March 31,
1998, amortization of intangible assets increased 40.0%, or $400,000, from $1.0
million for the nine-month period ended March 31, 1997, to $1.4 million. This
increase was the result of the amortization of goodwill associated with the
acquisitions of Bit 3 and Micro Alliance.
INTEREST INCOME. For the nine-month period ended March 31, 1998, interest income
increased 197.1%, or $552,000, from $280,000 for the nine-month period ended
March 31, 1997, to $832,000. This increase is due to earnings on surplus cash
from operations as well as earnings on cash received above the Company's
immediate requirements from the public offering consummated on November 18,
1996.
INTEREST EXPENSE. For the nine-month period ended March 31, 1998, interest
expense decreased 67.0%, or $286,000, from $427,000 for the nine-month period
ended March 31, 1997, to $141,000. This decrease is attributable to the
elimination of all bank debt effective November 22, 1996 by application of some
of the proceeds of the public offering . Of the $141,000 of interest expense for
the nine-month period ended March 31, 1998, $138,000 represents the imputed
interest associated with the remaining notes payable to the former owners of Bit
3 which will be completely paid down on July 1, 1998.
Page 12
<PAGE>
SBS TECHNOLOGIES INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1998
(Continued)
INCOME TAXES. For the nine-month period ended March 31, 1998 and the nine-month
period ended March 31, 1997, income taxes represented an effective income tax
rate of 40.5% and 40%, respectively. The increase in the effective income tax
rate is due to an increase in the federal tax rate associated with an increase
in the Company's estimated taxable income.
EARNINGS PER SHARE. For the nine-month period ended March 31, 1998, net income
(loss) per common share was $1.29 compared to ($0.41) for the nine-month period
ended March 31, 1997. The loss for the nine-month period ended March 31, 1997
was due to the $11.0 million charge (net of tax) to earnings associated with the
acquisition of Bit 3. For the nine-month period ended March 31, 1997, net income
per common share before the charge to earnings was $1.16. For the nine- month
period ended March 31, 1998, net income (loss) per common share assuming
dilution was $1.17 compared to ($0.41) for the nine-month period ended March 31,
1997. For the nine-month period ended March 31, 1997, net income per common
share assuming dilution before the charge to earnings was $0.96.
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
SALES. For the three-month period ended March 31, 1998, sales increased
33.1%, or $4.7 million, from $14.2 million for the three-month period ended
March 31, 1997, to $18.9 million. Of this 33.1% increase, sales contributed
by Micro Alliance, which was acquired on November 24, 1997, comprised 13.1%
of this increase and 24.0% of this increase was attributable to the Company's
other product lines, offset by 4.0% due to the sale of the Company's
Judgmental Use of Force business on June 26, 1997. During the three month
period ended March 31, 1998, prices for the Company's products remained firm,
and unit shipments increased in all product lines, with the exception of the
Company's telemetry product line, which declined compared to the three-month
period ended March 31, 1997. Historically, less than 5% of the Company's
sales were direct sales to Asian based customers. The Company experienced
minimal direct affect (less than 2% of sales) on its operations due to the
current Asian currency and economic crisis. Management believes that any
future direct affect on the Company from the Asian currency and economic
crisis will remain minimal; however, it is difficult for the Company to
predict any indirect effect derived from sales to U.S. based customers whose
products are sold into Asia.
GROSS PROFIT. For the three-month period ended March 31, 1998, gross profit
increased 42.1%, or $3.2 million, from $7.6 million for the three-month period
ended March 31, 1997, to $10.8 million. For the three-month period ended March
31, 1998, gross profit as a percentage of sales increased to 57.4% from 53.5%
for the three-month period ended March 31, 1997. This increase was primarily due
to the acquisition of Micro Alliance, increased sales volume over fixed costs,
material cost improvements, a reduction in independent representative sales
commissions due to the movement from an independent sales force to a direct
sales force, and the sale of the Company's low margin Judgmental Use of Force
business.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. For the three month period ended
March 31, 1998, selling, general and administrative (SG&A) expense increased
59.3%, or $1.6 million, from $2.7 million for the three-month period ended March
31, 1997, to $4.3 million, resulting from the added expenditures due to the
acquisition of Micro Alliance, additional salaried sales personnel as the
Company transitioned from an independent sales force to a direct sales force, as
well as additional administrative staffing and promotional costs commensurate
with the growth of the Company. For the same reasons, for the three-month period
ended March 31, 1998, SG&A expense as a percentage of sales increased to 22.6%
from 19.1% in the three-month period ended March 31, 1997.
Page 13
<PAGE>
SBS TECHNOLOGIES INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1998
(Continued)
RESEARCH AND DEVELOPMENT EXPENSE. For the three-month period ended March 31,
1998, research and development expense (R&D) increased 35.7%, or $500,000, from
$1.4 million for the three-month period ended March 31, 1997, to $1.9 million,
as a result of the added expenditures due to the acquisition of Micro Alliance
as well as increased investment in new products in the company's other product
areas. For the same reasons, for the three-month period ended March 31, 1998,
R&D expense as a percentage of sales increased to 10.2% from 9.5% in the
three-month period ended March 31, 1997.
AMORTIZATION OF INTANGIBLE ASSETS. For the three-month period ended March 31,
1998, amortization of intangible assets increased 10.6%, or $50,000, from
$472,000 for the three-month period ended March 31, 1997, to $522,000. This
increase was the result of the amortization of goodwill associated with the
acquisition of Micro Alliance.
INTEREST INCOME. For the three-month period ended March 31, 1998, interest
income increased 49.2%, or $87,000, from $177,000 for the three-month period
ended March 31, 1997, to $264,000. This increase is due to earnings on surplus
cash from operations as well as earnings on cash received above the Company's
immediate requirements from the public offering consummated on November 18,
1996.
INTEREST EXPENSE. For the three-month period ended March 31, 1998, interest
expense decreased 63.2%, or $79,000, from $125,000 for the three-month period
ended March 31, 1997, to $46,000. This decrease is primarily attributable to the
reduction of costs associated with the Company's bank borrowing facility with
NationsBank of Texas, N.A., originally entered into in April 1995 and expired on
October 30, 1997. Of the $46,000 of interest expense for the three-month period
ended March 31, 1998, $44,000 represents imputed interest associated with the
remaining notes payable to the former owners of Bit 3 which will be completely
paid down on July 1, 1998.
INCOME TAXES. For the three-month period ended March 31, 1998 and the
three-month period ended March 31, 1997 income taxes represented an effective
income tax rate of 40.5% and 40%, respectively. The increase in the effective
income tax rate is due to an increase in the federal tax rate associated with an
increase in the Company's estimated taxable income.
EARNINGS PER SHARE. For the three-month period ended March 31, 1998, net income
per common share was $0.46 compared to $0.35 for the three-month period ended
March 31, 1997. For the three-month period ended March 31, 1998, net income per
common share assuming dilution was $0.42 compared to $0.31 for the three-month
period ended March 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company uses a combination of the sale of equity securities, internally
generated funds, and bank borrowings to finance its acquisitions, working
capital requirements, capital expenditures, and operations.
Cash totaled $22.0 million at March 31, 1998, an increase of $300,000 from June
30, 1997. This increase is a result of cash flow from operations of $7.7 million
and $1.6 million received from the exercise of stock options and warrants,
reduced by $5.6 million for the purchase of Micro Alliance, net of cash
received, $2.5 million for the purchase of property and equipment, and $1.0
million for the payments to the former owners of Bit 3, in conjunction with its
acquisition. The Company's growth during the nine-month period ended March 31,
1998 caused the Company to increase accounts receivable and inventories.
Liabilities were in line with the current level of business. The exercise of
stock options related to Company stock option plans reduced the Company's tax
liability.
Page 14
<PAGE>
SBS TECHNOLOGIES INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1998
(Continued)
On April 26, 1996 and November 15, 1996, the Company amended its bank financing
agreement with NationsBank of Texas, N.A. ("NationsBank"), originally entered
into in April 1995, to provide the Company with a $6.8 million term loan and a
$2.5 million revolving line of credit. The term loan was completely paid down in
November 1996 with a portion of the proceeds from the public stock offering. For
the entire nine-month period ended March 31, 1998, there were no borrowings
drawn on the revolving line of credit, which expired on October 30, 1997. Based
on the Company's current cash position, management believes there is no
immediate requirement to put in place additional bank borrowing facilities.
Management believes that financial resources, including its internally generated
funds, debt capacity, and the remaining net proceeds from the public offering,
will be sufficient to finance the Company's current operations and capital
expenditures, excluding acquisitions, for the next twelve months.
For the nine-month period ended March 31, 1998, there was no material impact
from inflation or changing prices on the Company's sales or income from
operations.
YEAR 2000 ISSUE
The Year 2000 ("Y2K") issue refers to the inability of a date-sensitive
computer program to recognize a two-digit date field designated as "00" as
the Year 2000. Mistaking "00" for 1900 could result in a system failure or
miscalculations causing disruptions to operations, including manufacturing, a
temporary inability to process transactions, send invoices, or engage in
other normal business activities. This is a significant issue for most, if
not all companies, with far reaching implications, some of which cannot be
anticipated or predicted with any degree of certainty.
The Company has assembled an internal task force, chaired by the CEO, to
review its products, business and engineering applications for Y2K
compliance. Management understands the importance of compliance to the
Company and its customers. The Company is committed to provide as much
information as possible to ensure a smooth transition through the millennium.
From a product standpoint, the task force is reviewing current and legacy
products with respect to how the Company's boards and software use the year
date field and how this is passed on to the Company's customers in order to
determine if any compliance issues exist. In addition, products under
development are also being reviewed to ensure compliance prior to release.
From an operating standpoint, the task force is currently reviewing all
internal business/engineering systems as well as conducting reviews of the
Company's key suppliers to ensure compliance. All product reviews are
scheduled to be completed by August 1998 and appropriate communication with
the Company's customers will take place at that time. The review of key
suppliers will also be completed by August 1998, at which point management
will decide if any supplier actions are necessary. The Company has already
been assured that its business information system is Y2K compliant. All other
internal engineering development applications and systems will be modified,
if necessary, by the end of calendar 1998 to ensure compliance. Final
determination regarding the impact and materiality of Y2K issues will be
determined upon completion of these reviews.
Page 15
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults by the Company upon its Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information
Effective January 1, 1998, the Company appointed Norwest Bank
Minnesota, N.A. ("Norwest"), Shareowner Services, 161 North Concord
Exchange Street, South St. Paul, Minnesota 55075-1139, to serve as the
Company's stock transfer agent. In conjunction with that appointment,
the Company appointed Norwest as Successor Rights Agent. By the
signing of the Agreement to Serve as Successor Rights Agent, which was
effective as of January 1, 1998, Norwest accepted this appointment and
agreed to abide by the terms of the Shareholder Rights Agreement dated
September 15, 1997.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits (exhibit reference numbers refer to Item 601 of
Regulation S-K)
03.i (1) Articles of Incorporation, as amended.
03.ii (1) Bylaws, as amended.
10.ae Settlement Agreement and Release between
SBS Technologies Inc. and Stephen D.
Cooper
27. Financial Data Schedule
27.1 Financial Data Schedule, restated
Fiscal Years End 1997 and 1996
27.2 Financial Data Schedule, restated
Quarters 1 and 2 of Fiscal Year End 1998
27.3 Financial Data Schedule restated Quarters
1, 2, and 3 of Fiscal Year End 1997
99.1a Additional Exhibit
Legal Assignment: Agreement to Serve as
Rights Agent
(b) Reports on Form 8-K - None
(1) See Exhibit Index on Page 18
Page 16
<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: May 15, 1998 /s/ Christopher J. Amenson
President and Chief Executive Officer
Date: May 15, 1998 /s/ James E. Dixon, Jr.
Vice President of Finance & Administration
Page 17
<PAGE>
SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION METHOD OF FILING
- -------------- ----------- ----------------
<S> <C> <C>
03.i (1) Articles of Incorporation, as amended. --
03.ii (2) Bylaws, as amended. --
10.ae Settlement Agreement and Release between
SBS Technologies Inc. and Stephen D. Cooper. Filed herewith electronically
27. Financial Data Schedule Filed herewith electronically
27.1 Financial Data Schedule, restated.
Fiscal Years End 1997 and 1996 Filed herewith electronically
27.2 Financial Data Schedule, restated. Filed herewith electronically
Quarters 1 and 2 of Fiscal Year End 1998
27.3 Financial Data Schedule, restated.
Quarters 1, 2, and 3 of Fiscal Year End 1997 Filed herewith electronically
99.1a Agreement to Serve as Rights Agent
On January 1, 1998, pursuant to Section 21 of the
Shareholder Rights Agreement dated September 15,
1997, SBS Technologies, Inc. appointed Norwest Bank
Minnesota N.A. as Successor Rights Agent. Filed herewith electronically
</TABLE>
(1) Incorporated by reference to Exhibit 3.i, of the Registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1997.
(2) Incorporated by reference to Exhibit 3.ii, of the Registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1995.
Page 18
<PAGE>
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release ("Agreement") is made by and between
SBS Technologies, Inc. (the "Company"), and Stephen D. Cooper ("Employee").
WHEREAS, Employee was employed by the Company;
WHEREAS, the Company and Employee have entered into an Employment Agreement
(the "Employment Agreement");
WHEREAS, the Company and Employee have mutually agreed to terminate the
employment relationship;
NOW THEREFORE, in consideration of the mutual promises made herein, the
Company and Employee (collectively referred to as "the Parties") hereby agree as
follows:
1. RESIGNATION. (a) Employee resigns from his position as the Chief
Operating Officer and his position as a member of the Company's Board of
Directors effective immediately. Following his resignation from those
positions, Employee will be assigned to a strategic study effort and will devote
at least thirty hours per week to such effort. He may use an SBS office, but
not in a main building such as the headquarters or the main office of a
subsidiary. Employee will also be provided with reasonable administrative
support. Further, Employee will be permitted to seek other employment following
his resignation as Chief Operating Officer, and section 5 of his Employment
Agreement will no longer be in effect.
(b) Employee will also irrevocably resign from his position
as the Company's President and his position as an employee on May 14, 1998.
2. CONSIDERATION. (a) In consideration of this Agreement, the Company
agrees to pay Employee the equivalent of one month's salary in the amount of
Sixteen Thousand Six-Hundred Sixty-Six Dollars and Sixty-Seven Cents
($16,666.67), less applicable withholding, within ten days of the Effective Date
of this Agreement. Following Employee's resignation as set forth in section
1(a) and 1(b) of this Agreement and then his execution of Exhibit A attached
hereto, the Company agrees to pay Employee the equivalent of five months salary
as severance in the amount of Eighty-Three Thousand Three-Hundred Thirty-Three
Dollars and Thirty-Three Cents ($83,333.33), less applicable withholding. This
amount will be paid over a five month period in accordance with the Company's
payroll practices. During the five month payment period, Employee will no
longer be employed by the Company and will not be entitled to accrual of any
employee benefits, including, but not limited to, vacation benefits or bonuses.
(b) The Company will pay Drake Bean for its CEO program
of out placement services for Employee for the earlier of (a) one year or (b)
until Employee obtains other Employment.
(c) Employee may keep the Company laptop and facsimile
machine currently in his possession.
<PAGE>
3. VESTING OF COMMON STOCK. The Parties agree that for purposes of
determining the number of shares of the Company's common stock which Employee is
entitled to purchase from the Company, Employee will be entitled to continue
vesting of stock until May 14, 1998. The exercise of any stock options shall
continue to be subject to the terms and conditions of the Company's Stock Option
Plan and the applicable Stock Option Agreement between Employee and the Company.
4. REIMBURSEMENT OF EXPENSES. Within fifteen (15) days of his
resignation as Chief Operating Officer, Employee must present to the Company an
itemized voucher listing expenses paid by Employee in the performance of his
duties under the Employment Agreement and not previously reimbursed. Following
receipt of the voucher, the Company shall reimburse Employee for all reasonable
expenses itemized thereon, consistent with established Company policy. Any
future expenses of or travel or procurement by Employee must be approved in
writing in advance by Chris Amenson.
5. CONFIDENTIAL INFORMATION. Employee shall continue to maintain the
confidentiality of all confidential and proprietary information of the Company.
Further, Employee shall not, in any way, ever interfere with any acquisition
efforts of the Company, including but not limited to the Company's acquisition
efforts with candidates identified by Employee.
6. RETURN OF COMPANY PROPERTY AND RECORDS. Except as provided in
paragraph 2 (c) above, Employee shall return all the Company property and
confidential and proprietary information, including but not limited to drawings,
manuals, letters, notes, notebooks, reports, customer lists, customer data,
mailing lists, and other materials and records of any kind, and copies thereof,
in his possession. Employee shall return such property and information to the
Company by the Effective Date of this Agreement.
7. PAYMENT OF SALARY. Employee acknowledges and represents that the
Company has paid all salary, wages, bonuses, accrued vacation, commissions and
any and all other benefits due to Employee.
8. RELEASE OF CLAIMS. Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Employee by
the Company. Employee, on behalf of himself, and his respective heirs, family
members, executors and assigns, hereby fully and forever releases the Company
and its respective officers, directors, employees, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns, from, and agrees not to sue concerning, any claim,
duty, obligation or cause of action relating to any matters of any kind, whether
currently known or unknown, suspected or unsuspected, that he may possess
arising from any omissions, acts or facts that have occurred up until and
including the Effective Date of this Agreement including, without limitation,
(a) any and all claims relating to or arising from Employee's
employment relationship with the Company and the termination of that
relationship;
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<PAGE>
(b) any and all claims relating to, or arising from, Employee's right
to purchase, or actual purchase of shares of stock of the Company, including,
without limitation, any rights under any Company incentive plan and any claims
for fraud, misrepresentation, breach of fiduciary duty, breach of duty under
applicable state corporate law, and securities fraud under any state or federal
law;
(c) any and all claims for wrongful discharge of employment;
termination in violation of public policy; discrimination; breach of contract,
both express and implied; breach of a covenant of good faith and fair dealing,
both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence;
personal injury; assault; battery; invasion of privacy; false imprisonment; and
conversion;
(d) any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor
Standards Act, the Employee Retirement Income Security Act of 1974, The Worker
Adjustment and Retraining Notification Act, Older Workers Benefit Protection
Act, the California Fair Employment and Housing Act, and Labor Code section 201,
ET SEQ. and section 970, ET SEQ.;
(e) any and all claims for violation of the federal, or any state,
constitution;
(f) any and all claims arising out of any other laws and regulations
relating to employment or employment discrimination; and
(g) any and all claims for attorneys' fees and costs.
Employee agrees that the release set forth in this section shall be and remain
in effect in all respects as a complete general release as to the matters
released. This release does not extend to any obligations incurred under this
Agreement.
9. ACKNOWLEDGMENT OF WAIVER OF CLAIMS UNDER ADEA. Employee
acknowledges that he is waiving and releasing any rights he may have under
the Age Discrimination in Employment Act of 1967 ("ADEA") and that this
waiver and release is knowing and voluntary. Employee and the Company agree
that this waiver and release does not apply to any rights or claims that may
arise under ADEA after the Effective Date of this Agreement. Employee
acknowledges that the consideration given for this waiver and release
Agreement is in addition to anything of value to which Employee was already
entitled. Employee further acknowledges that he has been advised by this
writing that (a) he should consult with an attorney PRIOR to executing this
Agreement; (b) he has at least twenty-one (21) days within which to consider
this Agreement; (c) he has at least seven (7) days following the execution of
this Agreement by the parties to revoke the Agreement; and (d) this Agreement
shall not be effective until the revocation period has expired.
-3-
<PAGE>
10. CIVIL CODE SECTION 1542. Employee represents that he is not aware of
any claims against the Company other than the claims that are released by this
Agreement. Employee acknowledges that he has been advised by legal counsel and
is familiar with the provisions of California Civil Code Section 1542, which
provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
Employee, being aware of said code section, agrees to expressly waive any
rights he may have thereunder, as well as under any other statute or common law
principles of similar effect.
11. CONFIDENTIALITY. Employee agree to use his best efforts to maintain
in confidence the existence of this Agreement, the contents and terms of this
Agreement, and the consideration for this Agreement (hereinafter collectively
referred to as "Settlement Information"). Employee agrees to take every
reasonable precaution to prevent disclosure of any Settlement Information to
third parties and agrees that there will be no publicity, directly or
indirectly, concerning any Settlement Information, unless required by state or
federal law. Employee recognizes that the Company may be required to file the
Agreement under applicable security laws. Employee agrees to take every
precaution to disclose Settlement Information only to those attorneys,
accountants, governmental entities, and family members who have a reasonable
need to know of such Settlement Information.
12. EXCHANGE ACT FILINGS. Employee will file and will cooperate with
filing, in a timely manner, all reports and schedules required to be filed by
Employee or the Company under the Securities Exchange Act of 1934 or other
applicable law or regulation.
13. NO COOPERATION. Employee agrees he will not act in any manner that
might damage the business of the Company. Employee agrees that he will not
counsel or assist any attorneys or their clients in the presentation or
prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against the Company and/or any officer, director,
employee, agent, representative, shareholder or attorney of the Company, unless
under a subpoena or other court order to do so.
14. NON-DISPARAGEMENT. Employee agrees to refrain from any defamation,
libel or slander of the Company and its respective officers, directors,
employees, investors, shareholders, administrators, affiliates, divisions,
subsidiaries, predecessor and successor corporations, and assigns or tortious
interference with the contracts and relationships of the Company and its
respective officers, directors, employees, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns. All inquiries by potential future employers of
Employee will be directed to the Company 's Chairman and Chief Executive Officer
or Vice President of Finance and Administration. Upon inquiry, the Company
-4-
<PAGE>
shall only state the following: Employee's last position and
dates of employment.
15. NO ADMISSION OF LIABILITY. The Parties understand and acknowledge
that this Agreement constitutes a compromise and settlement of disputed claims.
No action taken by the Parties hereto, or either of them, either previously or
in connection with this Agreement shall be deemed or construed to be (a) an
admission of the truth or falsity of any claims heretofore made or (b) an
acknowledgment or admission by either party of any fault or liability whatsoever
to the other party or to any third party.
16. COSTS. The Parties shall each bear their own costs, expert fees,
attorneys' fees and other fees incurred in connection with this Agreement.
17. ARBITRATION. The Parties agree that any and all disputes arising out
of the terms of this Agreement, their interpretation, and any of the matters
herein released, shall be subject to binding arbitration in Santa Clara County
before the American Arbitration Association under its California Employment
Dispute Resolution Rules, or by a judge to be mutually agreed upon. EMPLOYEE
AGREES TO HEREBY WAIVE HIS RIGHT TO A JURY TRIAL AS TO MATTERS ARISING OUT OF
THE TERMS OF THIS AGREEMENT. The Parties agree that the prevailing party in any
arbitration shall be entitled to injunctive relief in any court of competent
jurisdiction to enforce the arbitration award. The Parties agree that the
prevailing party in any arbitration shall be awarded its reasonable attorney's
fees and costs.
18. AUTHORITY. The Company represents and warrants that the undersigned
has the authority to act on behalf of the Company and to bind the Company and
all who may claim through it to the terms and conditions of this Agreement.
Employee represents and warrants that he has the capacity to act on his own
behalf and on behalf of all who might claim through him to bind them to the
terms and conditions of this Agreement. Employee warrants and represents that
there are no liens or claims of lien or assignments in law or equity or
otherwise of or against any of the claims or causes of action released herein.
19. NO REPRESENTATIONS. Employee represents that he has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.
20. SEVERABILITY. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
21. ENTIRE AGREEMENT. This Agreement represents the entire agreement and
understanding between the Company and Employee concerning Employee's separation
from the Company, and supersedes and replaces any and all prior agreements and
understandings concerning Employee's relationship with the Company and his
compensation by the Company.
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<PAGE>
22. NO ORAL MODIFICATION. This Agreement may only be amended in writing
signed by Employee and the Chairman of the Board of the Company.
23. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California.
24. EFFECTIVE DATE. This Agreement is effective seven days after it has
been signed by both Parties.
25. COUNTERPARTS. This Agreement may be executed in counterparts, and
each counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.
26. VOLUNTARY EXECUTION OF AGREEMENT. This Agreement is executed
voluntarily and without any duress or undue influence on Employee, with the full
intent of releasing all claims. Employee acknowledges that:
(a) He has read this Agreement;
(b) He has been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of his own choice or that he has
voluntarily declined to seek such counsel;
(c) He understands the terms and consequences of this Agreement and
of the releases it contains;
(d) He is fully aware of the legal and binding effect of this
Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the
respective dates set forth below.
SBS TECHNOLOGIES, INC.
Dated: March 16, 1998 By /s/ Christopher J. Amenson
-------------------------------------
STEPHEN D. COOPER, an individual
Dated: March 13, 1998 By /s/ Stephen D. Cooper
-------------------------------------
Stephen D. Cooper
-6-
<PAGE>
APPENDIX A
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release ("Agreement") is made by and between
SBS Technologies, Inc. (the "Company"), and Stephen D. Cooper ("Employee").
WHEREAS, Employee was employed by the Company;
WHEREAS, the Company and Employee have entered into an Employment Agreement
(the "Employment Agreement");
WHEREAS, the Company and Employee have mutually agreed to terminate the
employment relationship;
NOW THEREFORE, in consideration of the mutual promises made herein, the
Company and Employee (collectively referred to as "the Parties") hereby agree as
follows:
1. RESIGNATION. Employee irrevocably resigns from his position as the
Company's President and his position as an employee effective immediately.
2. CONSIDERATION. (a) After the Effective Date of this Agreement, the
Company agrees to pay Employee the equivalent of five months salary as severance
in the amount of Eighty-Three Thousand Three-Hundred Thirty-Three Dollars and
Thirty-Three Cents ($83,333.33), less applicable withholding. This amount will
be paid over a five month period in accordance with the Company's payroll
practices. During the five month payment period, Employee will no longer be
employed by the Company and will not be entitled to accrual of any employee
benefits, including, but not limited to, vacation benefits or bonuses.
(b) Employee's ten thousand (10,000) non-qualified incentive stock
options awarded on July 31, 1997, will vest and become fully exercisable on the
Effective Date of this Agreement. If the Options for these shares are not
exercised within ninety (90) days of Employee's termination of employment with
the Company, any remaining unexercised options shall automatically terminate on
the end of the 90th day after Employee's termination of employment.
3. VESTING OF COMMON STOCK. The Parties agree that for purposes of
determining the number of shares of the Company's common stock which Employee is
entitled to purchase from the Company, Employee will be entitled to continue
vesting of stock until May 14, 1998. The exercise of any stock options shall
continue to be subject to the terms and conditions of the Company's Stock Option
Plan and the applicable Stock Option Agreement between Employee and the Company.
4. CONFIDENTIAL INFORMATION. The Employment Agreement between Employee
and the Company is terminated, except that the rights and obligations of the
parties arising under paragraph 7 ("Confidential Information") of the Employment
Agreement shall remain in full force and effect. Employee shall continue to
maintain the confidentiality of all confidential and proprietary information of
the Company. Further, Employee shall not, in any way, ever interfere with any
acquisition efforts of the Company, including but not limited to the Company's
acquisition efforts with candidates identified by Employee.
<PAGE>
5. RETURN OF COMPANY PROPERTY AND RECORDS. Employee shall return all the
Company property and confidential and proprietary information, including but not
limited to drawings, manuals, letters, notes, notebooks, reports, customer
lists, customer data, mailing lists, and other materials and records of any
kind, and copies thereof, in his possession, except the laptop computer and
facsimile machine. Employee shall return such property and information to the
Company by the Effective Date of this Agreement.
6. PAYMENT OF SALARY. Employee acknowledges and represents that the
Company has paid all salary, wages, bonuses, accrued vacation, commissions and
any and all other benefits due to Employee.
7. RELEASE OF CLAIMS. Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Employee by
the Company. Employee, on behalf of himself, and his respective heirs, family
members, executors and assigns, hereby fully and forever releases the Company
and its respective officers, directors, employees, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns, from, and agrees not to sue concerning, any claim,
duty, obligation or cause of action relating to any matters of any kind, whether
currently known or unknown, suspected or unsuspected, that he may possess
arising from any omissions, acts or facts that have occurred up until and
including the Effective Date of this Agreement including, without limitation,
(a) any and all claims relating to or arising from Employee's
employment relationship with the Company and the termination of that
relationship;
(b) any and all claims relating to, or arising from, Employee's right
to purchase, or actual purchase of shares of stock of the Company, including,
without limitation, any rights under any Company incentive plan and any claims
for fraud, misrepresentation, breach of fiduciary duty, breach of duty under
applicable state corporate law, and securities fraud under any state or federal
law;
(c) any and all claims for wrongful discharge of employment;
termination in violation of public policy; discrimination; breach of contract,
both express and implied; breach of a covenant of good faith and fair dealing,
both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence;
personal injury; assault; battery; invasion of privacy; false imprisonment; and
conversion;
(d) any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor
Standards Act, the Employee Retirement Income Security Act of 1974, The Worker
Adjustment and Retraining Notification Act, Older Workers Benefit Protection
Act, the California Fair Employment and Housing Act, and Labor Code section 201,
ET SEQ. and section 970, ET SEQ.;
-3-
<PAGE>
(e) any and all claims for violation of the federal, or any state,
constitution;
(f) any and all claims arising out of any other laws and regulations
relating to employment or employment discrimination; and
(g) any and all claims for attorneys' fees and costs.
Employee agrees that the release set forth in this section shall be and remain
in effect in all respects as a complete general release as to the matters
released. This release does not extend to any obligations incurred under this
Agreement.
8. ACKNOWLEDGMENT OF WAIVER OF CLAIMS UNDER ADEA. Employee
acknowledges that he is waiving and releasing any rights he may have under
the Age Discrimination in Employment Act of 1967 ("ADEA") and that this
waiver and release is knowing and voluntary. Employee and the Company agree
that this waiver and release does not apply to any rights or claims that may
arise under ADEA after the Effective Date of this Agreement. Employee
acknowledges that the consideration given for this waiver and release
Agreement is in addition to anything of value to which Employee was already
entitled. Employee further acknowledges that he has been advised by this
writing that (a) he should consult with an attorney PRIOR to executing this
Agreement; (b) he has at least twenty-one (21) days within which to consider
this Agreement; (c) he has at least seven (7) days following the execution of
this Agreement by the parties to revoke the Agreement; and (d) this Agreement
shall not be effective until the revocation period has expired.
9. CIVIL CODE SECTION 1542. Employee represents that he is not aware of
any claims against the Company other than the claims that are released by this
Agreement. Employee acknowledges that he has been advised by legal counsel and
is familiar with the provisions of California Civil Code Section 1542, which
provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
Employee, being aware of said code section, agrees to expressly waive any
rights he may have thereunder, as well as under any other statute or common law
principles of similar effect.
10. CONFIDENTIALITY. Employee agree to use his best efforts to maintain
in confidence the existence of this Agreement, the contents and terms of this
Agreement, and the consideration for this Agreement (hereinafter collectively
referred to as "Settlement Information"). Employee agrees to take every
reasonable precaution to prevent disclosure of any Settlement Information to
third parties and agrees that there will be no publicity, directly or
indirectly, concerning any Settlement Information, unless required by state or
federal law. Employee recognizes that the Company may be
-3-
<PAGE>
required to file the Agreement under applicable security laws. Employee
agrees to take every precaution to disclose Settlement Information only to
those attorneys, accountants, governmental entities, and family members who
have a reasonable need to know of such Settlement Information.
11. EXCHANGE ACT FILINGS. Employee will file and will cooperate with
filing, in a timely manner, all reports and schedules required to be filed by
Employee or the Company under the Securities Exchange Act of 1934 or other
applicable law or regulation.
12. NO COOPERATION. Employee agrees he will not act in any manner that
might damage the business of the Company. Employee agrees that he will not
counsel or assist any attorneys or their clients in the presentation or
prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against the Company and/or any officer, director,
employee, agent, representative, shareholder or attorney of the Company, unless
under a subpoena or other court order to do so.
13. NON-DISPARAGEMENT. Employee agrees to refrain from any defamation,
libel or slander of the Company and its respective officers, directors,
employees, investors, shareholders, administrators, affiliates, divisions,
subsidiaries, predecessor and successor corporations, and assigns or tortious
interference with the contracts and relationships of the Company and its
respective officers, directors, employees, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns. All inquiries by potential future employers of
Employee will be directed to the Company 's Vice President of Human Resources.
Upon inquiry, the Company shall only state the following: Employee 's last
position and dates of employment.
14. NO ADMISSION OF LIABILITY. The Parties understand and acknowledge
that this Agreement constitutes a compromise and settlement of disputed claims.
No action taken by the Parties hereto, or either of them, either previously or
in connection with this Agreement shall be deemed or construed to be (a) an
admission of the truth or falsity of any claims heretofore made or (b) an
acknowledgment or admission by either party of any fault or liability whatsoever
to the other party or to any third party.
15. COSTS. The Parties shall each bear their own costs, expert fees,
attorneys' fees and other fees incurred in connection with this Agreement.
16. ARBITRATION. The Parties agree that any and all disputes arising out
of the terms of this Agreement, their interpretation, and any of the matters
herein released, shall be subject to binding arbitration in Santa Clara County
before the American Arbitration Association under its California Employment
Dispute Resolution Rules, or by a judge to be mutually agreed upon. EMPLOYEE
AGREES TO HEREBY WAIVE HIS RIGHT TO A JURY TRIAL AS TO MATTERS ARISING OUT OF
THE TERMS OF THIS AGREEMENT. The Parties agree that the prevailing party in any
arbitration shall be entitled to injunctive relief in any court of competent
jurisdiction to enforce the arbitration award. The Parties agree that the
prevailing party in any arbitration shall be awarded its reasonable attorney's
fees and costs.
-4-
<PAGE>
17. AUTHORITY. The Company represents and warrants that the undersigned
has the authority to act on behalf of the Company and to bind the Company and
all who may claim through it to the terms and conditions of this Agreement.
Employee represents and warrants that he has the capacity to act on his own
behalf and on behalf of all who might claim through him to bind them to the
terms and conditions of this Agreement. Employee warrants and represents that
there are no liens or claims of lien or assignments in law or equity or
otherwise of or against any of the claims or causes of action released herein.
18. NO REPRESENTATIONS. Employee represents that he has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.
19. SEVERABILITY. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
20. ENTIRE AGREEMENT. This Agreement represents the entire agreement and
understanding between the Company and Employee concerning Employee's separation
from the Company, and supersedes and replaces any and all prior agreements and
understandings concerning Employee's relationship with the Company and his
compensation by the Company.
21. NO ORAL MODIFICATION. This Agreement may only be amended in writing
signed by Employee and the Chairman of the Board of the Company.
22. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California.
23. EFFECTIVE DATE. This Agreement is effective seven days after it has
been signed by both Parties.
24. COUNTERPARTS. This Agreement may be executed in counterparts, and
each counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.
25. VOLUNTARY EXECUTION OF AGREEMENT. This Agreement is executed
voluntarily and without any duress or undue influence on Employee, with the full
intent of releasing all claims. Employee acknowledges that:
(a) He has read this Agreement;
(b) He has been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of his own choice or that he has
voluntarily declined to seek such counsel;
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<PAGE>
(c) He understands the terms and consequences of this Agreement and
of the releases it contains;
(d) He is fully aware of the legal and binding effect of this
Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the
respective dates set forth below.
SBS TECHNOLOGIES, INC.
Dated: May 14, 1998 By /s/ Christopher J. Amenson
-------------------------------
STEPHEN D. COOPER, an individual
Dated: May 14, 1998 By /s/ Stephen D. Cooper
-------------------------------
Stephen D. Cooper
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND IN
THE COMPANY'S 10-Q FOR THE YEAR-TO-DATE, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 21,952,739
<SECURITIES> 0
<RECEIVABLES> 11,036,167
<ALLOWANCES> (449,299)
<INVENTORY> 10,153,737
<CURRENT-ASSETS> 44,712,569
<PP&E> 7,064,345
<DEPRECIATION> 2,776,048
<TOTAL-ASSETS> 70,164,873
<CURRENT-LIABILITIES> 9,420,616
<BONDS> 0
0
0
<COMMON> 47,168,488
<OTHER-SE> 13,575,769
<TOTAL-LIABILITY-AND-EQUITY> 70,164,873
<SALES> 53,634,931
<TOTAL-REVENUES> 53,634,931
<CGS> 23,311,661
<TOTAL-COSTS> 42,274,076
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 225,430
<INTEREST-EXPENSE> 141,387
<INCOME-PRETAX> 12,051,158
<INCOME-TAX> 4,880,600
<INCOME-CONTINUING> 12,051,158
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,170,558
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.17
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND IN
THE COMPANY'S 10-K FOR THE YEAR, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1996
<PERIOD-END> JUN-30-1997 JUN-30-1996
<CASH> 21,661,671 1,130,030
<SECURITIES> 0 0
<RECEIVABLES> 9,545,264 6,491,461
<ALLOWANCES> (300,995) (70,237)
<INVENTORY> 7,705,470 5,160,962
<CURRENT-ASSETS> 40,299,253 13,437,411
<PP&E> 4,729,259 2,389,289
<DEPRECIATION> 2,247,408 1,041,719
<TOTAL-ASSETS> 61,165,014 20,443,672
<CURRENT-LIABILITIES> 8,022,075 5,204,432
<BONDS> 0 0
0 0
0 0
<COMMON> 43,889,754 4,690,786
<OTHER-SE> 6,436,934 5,360,134
<TOTAL-LIABILITY-AND-EQUITY> 61,165,014 20,443,672
<SALES> 52,814,568 31,331,793
<TOTAL-REVENUES> 52,814,568 31,331,793
<CGS> 24,910,271 14,510,106
<TOTAL-COSTS> 52,060,321 21,687,498
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 223,004 56,933
<INTEREST-EXPENSE> 508,677 839,028
<INCOME-PRETAX> 768,865 5,968,177
<INCOME-TAX> 307,000 2,387,270
<INCOME-CONTINUING> 768,685 3,580,907
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 461,685 3,580,907
<EPS-PRIMARY> 0.10 1.19
<EPS-DILUTED> 0.09 0.97
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOUND IN THE COMPANY'S 10-Q FOR THE YEAR-TO-DATE, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1998 JUN-30-1998
<PERIOD-END> DEC-31-1997 SEP-30-1997
<CASH> 18,093,801 22,522,476
<SECURITIES> 0 0
<RECEIVABLES> 11,345,160 9,872,214
<ALLOWANCES> (477,053) (418,718)
<INVENTORY> 8,635,353 8,337,202
<CURRENT-ASSETS> 41,209,703 42,151,197
<PP&E> 6,232,878 5,398,947
<DEPRECIATION> 2,597,031 2,392,984
<TOTAL-ASSETS> 66,629,027 62,943,664
<CURRENT-LIABILITIES> 8,597,754 9,724,085
<BONDS> 0 0
0 0
0 0
<COMMON> 47,039,262 44,484,288
<OTHER-SE> 10,992,011 8,735,291
<TOTAL-LIABILITY-AND-EQUITY> 66,629,027 62,943,664
<SALES> 34,741,648 16,362,509
<TOTAL-REVENUES> 34,741,648 16,362,509
<CGS> 15,261,910 6,999,721
<TOTAL-COSTS> 27,504,095 12,689,152
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 171,486 130,853
<INTEREST-EXPENSE> 95,067 46,613
<INCOME-PRETAX> 7,710,300 3,911,418
<INCOME-TAX> 3,123,500 1,584,000
<INCOME-CONTINUING> 7,710,300 3,911,418
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 4,586,800 2,327,418
<EPS-PRIMARY> 0.83 0.43
<EPS-DILUTED> 0.76 0.39
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOUND IN THE COMPANY'S 10-Q FOR THE YEAR-TO-DATE, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1997 JUN-30-1997
<PERIOD-END> MAR-31-1997 DEC-31-1996 SEP-30-1996
<CASH> 16,064,553 13,573,585 2,101,573
<SECURITIES> 0 0 0
<RECEIVABLES> 9,793,931 9,213,217 7,954,380
<ALLOWANCES> (278,668) (264,551) (237,738)
<INVENTORY> 8,404,588 8,110,158 6,425,247
<CURRENT-ASSETS> 35,802,907 31,892,301 16,949,800
<PP&E> 4,347,868 4,087,870 3,532,581
<DEPRECIATION> 2,081,346 1,916,289 1,768,649
<TOTAL-ASSETS> 56,791,660 53,047,895 24,153,052
<CURRENT-LIABILITIES> 6,015,179 5,979,179 6,803,678
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 43,740,346 41,857,818 4,998,049
<OTHER-SE> 4,256,835 2,422,705 7,436,376
<TOTAL-LIABILITY-AND-EQUITY> 56,791,660 53,047,895 24,153,052
<SALES> 37,736,431 23,530,369 11,263,466
<TOTAL-REVENUES> 37,736,431 23,530,369 11,263,466
<CGS> 17,975,657 11,366,476 5,245,753
<TOTAL-COSTS> 40,466,687 29,312,846 8,793,717
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 204,503 186,002 167,501
<INTEREST-EXPENSE> 426,996 302,165 163,980
<INCOME-PRETAX> (2,877,203) (5,981,547) 2,320,613
<INCOME-TAX> (1,151,500) (2,392,600) 928,200
<INCOME-CONTINUING> (2,877,203) (5,981,547) 1,392,413
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (1,725,703) (3,588,947) 1,392,413
<EPS-PRIMARY> (0.41) (0.97) 0.41
<EPS-DILUTED> (0.41) (0.97) 0.33
</TABLE>
<PAGE>
EXHIBIT 99.
Agreement to Serve as Rights Agent
SBS Technologies, Inc., a New Mexico corporation ("Company"), and
Norwest Bank Minnesota, NA ("Norwest"), agree as follows:
RECITALS:
A. Company has entered into a Shareholder Rights Agreement dated
September 15, 1997.
B. Company appointed First Security Bank, Salt Lake City, Utah to
serve as Rights Agent pursuant to that agreement.
C. First Security Bank has resigned as Rights Agent as of December
31, 1997.
D. Company wishes to appoint a successor to serve in that capacity
on behalf of the Company.
APPOINTMENT.
Pursuant to Section 21 of the Shareholder Rights Agreement, Company
may and hereby does appoint Norwest Bank Minnesota, NA as successor Rights
Agent, effective upon the signing of this Agreement to Serve as Rights Agent.
ACCEPTANCE.
Effective with the signing of this Agreement to Serve as Rights
Agent, Norwest accepts appointment to serve as Successor Rights Agent and
agrees to abide by the terms of the Shareholder Rights Agreement.
Dated: January 1, 1998
SBS Technologies
By: /s/ James E. Dixon
--------------------------------
Its: VICE PRESIDENT
FINANCE & ADMINISTRATION
-------------------------------
Norwest Bank Minnesota, NA
By: Karri L. VanDell
--------------------------------
Its: Officer, Shareowner Services
