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SBS TECHNOLOGIES, INC.
3,100,000 SHARES OF COMMON STOCK
Issuable upon exercise of options covered by
1992 Employee Incentive Stock Option Plan (200,000 shares)
1993 Employee Incentive Stock Option Plan (300,000 shares)
1993 Director and Officer Stock Option Plan (2,000,000 shares)
1995 Employee Incentive Stock Option Plan (300,000 shares)
1996 Employee Incentive Stock Option Plan (300,000 shares)
and offered for sale by Selling Shareholders
Selling Shareholders, who are officers and directors of SBS
Technologies, Inc. ("SBS" or "we"), will, from time to time, be selling
shares ("Shares")of Common Stock which they may acquire, by exercise of
options or directly, under our 1992, 1993, 1995 and 1996 Employee Incentive
Stock Option Plans and our 1993 Director and Officer Stock Option Plan
(together, the "Plans"). The Selling Shareholders may make transfers,
assignments, devises, pledges or donations to other persons and successors in
interest, and we include those other persons in our use of the term Selling
Shareholders. THE SELLING SHAREHOLDERS WILL RECEIVE THE PROCEEDS FROM ANY
SALES OF THE SHARES. WE WILL NOT RECEIVE ANY PROCEEDS, EXCEPT THAT WE WILL
RECEIVE THE OPTION EXERCISE PRICE FOR ANY OPTIONS ISSUED UNDER THE PLANS AND
EXERCISED BY THE SELLING SHAREHOLDERS.
The Selling Shareholders may offer and sell the Shares as follows:
- - On the National Market System of the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") or otherwise.
- - At then prevailing or at negotiated fees.
- - By payment of all selling and other expenses, including discounts,
commissions or fees, except those paid by the purchasers of Shares. We will
pay only the expenses of preparing and filing this Prospectus and the
Registration Statement associated with it with the Securities and Exchange
Commission and for registering and qualifying the Shares. Please see
"Distribution" for more information.
The Selling Shareholders and brokers through whom sales of Shares are made
may be deemed to be "underwriters" under Section 2(a)(11) of the Securities
Act of 1933, as amended ("Securities Act"). If they are, any profits they
realize may be deemed to be underwriting commissions under the Securities Act.
Our Common Stock is listed on the NASDAQ National Market System under
the trading symbol "SBSE". The closing price of our stock as reported by
NASDAQ on March 2, 1999 was $18.625.
PROSPECTIVE INVESTORS IN THE SHARES SHOULD CAREFULLY READ THE RISK FACTORS
BEGINNING ON PAGE 6 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is March 4, 1999.
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TABLE OF CONTENTS
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Page:
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PROSPECTUS SUMMARY 3
The Company 3
RISK FACTORS 6
Growth Through Acquisition and
Integration of Acquired Companies 6
Acquisition Charges 7
Fluctuations in Operating Results 7
Reliance on Defense Spending 8
Reliance on Industry Standards;
Fundamental Technology Change 8
Product Market Might Not Develop 9
Potential Year 2000 Problems 9
Competition 10
Availability of Component Materials 11
Retention and Recruitment of Key Employees 11
No Patent Protection 12
Product Liability 12
International Sales in General 13
Changes in Exchange Rates 13
Trade Policies and Disputes 13
Potential Dilutive Effect of Outstanding
Warrants and Options and Registration Rights 13
Limited Public Float; Trading; Volatility
of Stock Price 14
Absence of Dividends 14
SELLING SHAREHOLDERS 14
PLAN OF DISTRIBUTION 17
LEGAL MATTERS 18
DOCUMENTS INCORPORATED BY REFERENCE 18
STATEMENT OF AVAILABLE INFORMATION 19
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You should rely only on the information in this Prospectus in making
your investment decision. We and the Selling Shareholders have not
authorized any one to give you any other information or representations.
This Prospectus is not an offer to sell or a solicitation of an offer to buy
the Shares in any state where the offer or sale is not permitted. The
information in the Prospectus is current only as of the date of the
Prospectus and not necessarily current as of any later date.
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PROSPECTUS SUMMARY
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS
AND UNCERTAINTIES. SBS' ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS. THESE FACTORS INCLUDE INACCURATE ASSUMPTIONS AND A BROAD VARIETY OF
OTHER RISKS AND UNCERTAINTIES, INCLUDING SOME THAT ARE KNOWN AND SOME THAT
ARE NOT. NO FORWARD-LOOKING STATEMENT CAN BE GUARANTEED AND ACTUAL FUTURE
RESULTS MAY VARY MATERIALLY. ALTHOUGH IT IS NOT POSSIBLE TO PREDICT OR
IDENTIFY ALL THOSE FACTORS, THEY MAY INCLUDE THOSE SET FORTH IN THE "RISK
FACTORS" SECTION AND ELSEWHERE IN THIS PROSPECTUS.
THE COMPANY
SBS Technologies, Inc. is a leading designer and manufacturer of
open-architecture, standard bus embedded computer components that system
designers can easily utilize to create a custom solution specific to the
user's unique application. SBS' product lines include CPU boards ("CPU"),
general purpose input/output modules ("I/O"), avionics interface modules and
analyzers, interconnection and expansion units, telemetry boards, data
acquisition software, and industrial computer systems and enclosures. SBS'
products are used in a variety of applications, such as telecommunications,
medical imaging, industrial control, and flight instrumentation in commercial
and aerospace markets. SBS capitalizes on its design expertise and customer
service capabilities to enhance product quality and reduce time to market for
OEM customers.
SBS' objective is to become a leading supplier of board level components to
the standard bus embedded computer market. SBS intends to continue its growth
through a combination of internal growth and acquisitions. SBS achieves
internal growth through expanding its existing product lines through new product
development and through increasing the types and amounts of its products used by
its existing customer base. SBS also grows by acquisition of businesses which it
believes will expand its products and marketing opportunities. From inception
through the end of its 1998 fiscal year, it acquired five businesses, now called
SBS Berg Telemetry Systems, Inc. ("Berg"), SBS GreenSpring Modular I/O, Inc.
("Greenspring"), SBS Embedded Computers, Inc. ("SBS Embedded"), SBS Bit 3
Operations, Inc. ("Bit 3") and SBS Micro Alliance, Inc. ("Micro Alliance")
(together, the "Consolidated Subsidiaries"). Shortly after the close of the
1998 fiscal year, SBS also acquired V-I Computer ("V-I") and interests in three
affiliated companies. The three affiliated companies (the "German Group") are:
or Industrial Computers GmbH (a German company of which a new SBS subsidiary,
SBS Technologies Holding GmbH, acquired
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50.1%) ("OR"), ORTEC Electronic Assembly, GmbH (a German company of which SBS
Technologies Holding GmbH acquired 50.2%) ("ORTEC") and OR Computers Inc. (a
Virginia-based company, 100% of which was acquired by SBS Embedded). The
purchase price, excluding transaction costs, for the majority interest in the
two companies based in Germany and 100% of OR Computers Inc. was DM 17.5
million, approximately $9.7 million, paid in cash and 24,000 shares of common
stock valued at $713,878 at closing. In addition, the Company and the
shareholders of both OR and ORTEC entered into exclusive option agreements
whereby the Company could acquire the remaining shares of both companies on
February 28, 1999. In December 1998, the Company modified the option
agreements, accelerating the purchase of the remaining interest in OR and
ORTEC from February 28, 1999 to December 9, 1998. The purchase price,
excluding transaction costs, for the remaining interest in the two companies
based in Germany was DM 17.2 million, approximately $10.3 million based on
the exchange rate on December 9, 1998, payable in cash. Additional purchase
price of DM 0.6 million, approximately $0.4 million was calculated based on
sales volume between July 1, 1998 and December 31, 1998. The Company
disbursed all but DM 1.0 million of the cash, including interest at 4.1% on
February 28, 1999. The balance is due March 15, 1999.
SBS is a leader in several segments of the multi-billion dollar embedded
computer market, with a continuing goal of expanding its market presence. In
the computer mezzanine board I/O segment, SBS has a line of
IndustryPacks-Registered Trademark- with over 120 variants and a recently
introduced series of ruggedized mezzanine I/O boards that serve a segment of
the market in which SBS had not previously participated. In the Avionics
business, SBS' interface boards and bus analyzers are the industry standard
for quality and innovation. SBS' Avionics customer base continues to
broaden. During fiscal 1998, SBS participated in such programs as the Joint
Strike Fighter Replacement Program, the C130J next generation military
transport aircraft, and Sweden's GRIPEN fighter program. SBS' telemetry
product line is focused toward the satellite test and control market in order
to serve the rapidly expanding satellite market driven by both
telecommunications and defense applications.
SBS markets its products both domestically and internationally, primarily
through direct sales, and, to a limited extent, through independent
manufacturers' representatives. Its direct sales force, members of which
typically hold engineering degrees, is organized into two groups, the aerospace
group and the computer group. The aerospace group is responsible for sales of
SBS' avionics interface and telemetry products. The computer group is
responsible for sales of SBS' CPU, I/O, interconnect and industrial computer
systems and enclosure products. Customers include, for instance, Flight Safety
International, General Electric, Boeing, Lockeed Martin, and Currency Systems
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International. In fiscal 1998, international sales comprised approximately
16% of SBS' sales.
SBS Technologies, Inc. was incorporated in New Mexico in November 1986.
The Company's executive offices are located at 2400 Louisiana Boulevard, NE,
AFC Building 5, Suite 600, Albuquerque, New Mexico 87110, and SBS' telephone
number is (505) 875-0600. SBS' e-mail address is [email protected] and our web
site is http://www.sbs.com. References to the "Company" or "SBS", "we" or
"our" include SBS Technologies, Inc.'s Consolidated Subsidiaries, V-I, and
the German Group. IndustryPack-Registered Trademark- is a registered
trademark of SBS. All other trademarks and tradenames referred to in this
prospectus are the property of their respective owners.
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RISK FACTORS
IF YOU ARE THINKING OF INVESTING IN SBS' COMMON STOCK, YOU SHOULD
CONSIDER THE RISKS WE DESCRIBE IN THIS SECTION AND YOU SHOULD READ ALL OF
THIS PROSPECTUS CAREFULLY, BEFORE YOU INVEST. STATEMENTS IN THIS PROSPECTUS
ABOUT SBS' OUTLOOK FOR ITS BUSINESS AND MARKETS, SUCH AS PROJECTIONS OF
FUTURE PERFORMANCE, STATEMENTS OF MANAGEMENT'S PLANS AND OBJECTIVES,
FORECASTS OF MARKET TRENDS AND OTHER MATTERS, ARE FORWARD-LOOKING STATEMENTS
THAT INVOLVE RISKS AND UNCERTAINTIES. SBS' ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.
FACTORS THAT MAY CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO,
THOSE DISCUSSED BELOW.
GROWTH THROUGH ACQUISITION AND INTEGRATION OF ACQUIRED COMPANIES.
SBS has increased the scope of its operations through the acquisition of
seven businesses and product lines acquired since 1992. SBS acquired Berg in
fiscal 1993, GreenSpring in fiscal 1995, SBS Embedded in fiscal 1997, Bit 3
in fiscal 1997, Micro Alliance in fiscal 1998, and, in fiscal 1999, OR,
ORTEC, and OR Computers Inc., and V-I. SBS' management and financial
controls, personnel, and other corporate support systems might not be
adequate to manage the increase in the size and the diversity of scope of
SBS' operations as a result of the recent acquisitions or any future
acquisitions. In addition, SBS' acquisitions might not increase earnings and
the companies acquired might not continue to perform at their historical
level.
A major element of SBS' business strategy is to continue to pursue
acquisitions that either expand or complement its business. In the future,
SBS might not be able to identify and acquire acceptable acquisition
candidates on terms favorable to SBS, and in a timely manner. SBS could use
a substantial portion of its capital resources for these acquisitions.
Consequently, SBS may require additional debt or equity financing for future
acquisitions. This financing may not be available on terms favorable to SBS,
if at all. Also, even if SBS does acquire other businesses, it will continue
to encounter the risks associated with the integration of the acquisitions
described above.
SBS anticipates that one or more potential acquisition opportunities,
including some that could be material, may become available in the near
future. If and when appropriate acquisition opportunities become available,
SBS intends to pursue them actively. An acquisition by SBS might or might
not, however, occur. An acquisition which does occur could potentially
materially and adversely affect SBS and might not be successful in enhancing
SBS' business.
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ACQUISITION CHARGES
As part of its strategy for growth, SBS acquires compatible businesses.
Not infrequently, in accounting for a newly acquired business, SBS is
required to amortize, over a period of years, intangible assets, including
goodwill. Although usually the acquired business' current operating profit
offsets the amortization expense, no one can assure that an acquired
business' operations will remain at their current levels. A decrease in the
acquired business' operating profit could reduce SBS' overall net income and
earnings per share. In addition, no one can assure that changes in future
markets or technologies will not require faster amortization of goodwill in
such a way that overall Company financial condition or results of operations
would be adversely affected. SBS may also be required, under generally
accepted accounting principles, to charge against earnings the value of an
acquired business' technology which does not meet the accounting definition
of "completed technology". When SBS acquired Bit 3 in 1996, it recorded
approximately $10.0 million in intangible assets, including goodwill. These
are being amortized on a straight line basis over the estimated benefit
period of ten years. Also, in connection with the Bit-3 acquisition, SBS
recorded an $11 million charge against earnings in the second fiscal quarter
of 1997. The amount of the charge against earnings was based on an
assessment by SBS, in conjunction with an independent valuation firm, of
purchased technology of Bit 3. SBS incurred a net loss of $5 million (or
$1.24 per share) for the second fiscal quarter of 1997 as a result of the
earnings charge. In connection with SBS' acquisition of Micro Alliance in
fiscal 1998, SBS recorded $4.5 million of goodwill, which is being amortized
over a ten-year period. As a result of its recent acquisitions of OR, ORTEC,
OR Computers, Inc. and V-I, SBS recorded approximately $13.5 million of
intangible assets, including goodwill. These are being amortized on a
straight line basis over the estimated benefit period of ten years. Also, in
connection with the acquisitions of OR, ORTEC and OR Computers, Inc., SBS
recorded during the quarter ended September 30, 1998 a $0.5 million earnings
charge, based on an assessment by the Company, in conjunction with an
independent valuation firm, of purchased technology of OR. The assessment
determined that $0.5 million of OR'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. This assessment analyzed certain VME, Compact PCI, and PC Compact
products that were under development at the time of the acquisition. These
programs were in various stages of completion ranging from initial
development to 90% of completion, with estimated completion dates ranging
from September 1998 through April 1999. The fair value of these development
programs was determined in accordance with the views expressed by the staff
of the Securities and Exchange Commission. In conjunction with the
acquisition of the remaining interest of OR and ORTEC completed on December
9, 1998, all projects in process at the date of the initial acquisition had
been substantially completed such that no additional in-process research and
development was acquired. See "-Fluctuations in Operating Results."
FLUCTUATIONS IN OPERATING RESULTS
SBS has experienced fluctuations in its operating results in the past and
may experience those fluctuations in the future. Sales, on both an annual and a
quarterly basis, can fluctuate as a result of a variety of factors, many of
which are beyond SBS' control. These factors include the timing of customer
orders, manufacturing delays, delays in shipment due to component shortages,
cancellations of orders, the mix of products sold, cyclicality or downturns in
the markets served by SBS' customers,
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including significant reductions in defense spending affecting certain of
SBS' customers, and regulatory changes. Because those fluctuations can
happen, SBS believes that comparisons of the results of its operations for
preceding quarters are not necessarily meaningful and that investors should
not rely on the results for any one quarter as an indication of how SBS will
perform in the future. Investors should also understand that, if SBS' sales
or earnings for any quarter are less than the level expected by securities
analysts or the market in general, the market price for SBS' Common Stock
could immediately and significantly decline.
RELIANCE ON DEFENSE SPENDING
In each of fiscal 1995, 1996, 1997,and 1998, SBS derived a significant
portion of its sales directly or indirectly from the U.S. Department of
Defense. SBS expects that the Department of Defense will continue to be a
significant source of sales. Changes in the geopolitical environment or in
national policy might result in significantly reduced defense spending.
Reduced spending could significantly reduce SBS' marketing opportunities and
revenues, and, therefore, materially adversely affect its financial
condition, results of operations, or liquidity. Also, SBS believes that many
of its potential customers will rely on U.S. government funding for the
purchase of SBS' products. Sales to these customers may be reduced if those
funds are unavailable or delayed because of budget constraints or
bureaucratic processes.
RELIANCE ON INDUSTRY STANDARDS; FUNDAMENTAL TECHNOLOGY CHANGE
Most of SBS' products are developed to meet certain industry standards,
which define the basis of compatibility in operation and communication of a
system supported by different vendors. Among such standards which SBS'
products meet are MIL-STD-1553, Telemetry IRIG Standards and various ANSI
standards. These standards are continuing to develop and can change. If
these standards are eliminated or changed, the design, manufacture or sale of
SBS' products could be inappropriate or obsolete and could require costly
redesign to meet new or emerging standards. SBS also believes that its
success will depend in part on its ability to develop products that evolve
with changing industry standards and customer preferences. SBS may or may not
be successful in developing those products in a timely manner, or in selling
the products it develops. SBS' delay or failure to adapt to changing
industry standards could significantly adversely affect its marketing and
sales, revenues and financial condition.
Many of SBS' product designs rely on state of the art digital technology.
Future advances in technology might make obsolete SBS' existing product lines,
which would require SBS to compete more and to undertake costly redesign of its
products to maintain its
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competitive position. SBS might not be able to incorporate the new technology
into its existing products or to redesign its existing products in order to
compete effectively.
SBS' competitors are continually introducing new and enhanced products
and solutions for business needs. These products and solutions probably will
affect the competitive environment in the markets in which they are
introduced. The development of new products and technologies, or the
adaptation or development of products and technologies in response to them,
requires commitments of financial resources, personnel and time well in
advance of sales. Decisions with respect to those commitments must accurately
anticipate both future demand and the technology that will be available to
meet that demand. SBS might not be able to adapt to future technological
changes. If it does not, SBS' business might be materially adversely
affected.
PRODUCT MARKET MIGHT NOT DEVELOP
Many of SBS' potential customers design and manufacture standard bus
embedded computers internally. Increased market acceptance of SBS' products
and services depends in part on these customers relying on SBS instead of
themselves to provide embedded computer components. SBS believes that
increased market acceptance of its products will also depend on a number of
factors. These factors include the quality of SBS' design and production
expertise, the increasing use and complexity of embedded computer systems in
new and traditional products, the expansion of markets that are served by
standard bus embedded computers, time-to-market requirements of the Company's
actual and potential products, the assessment of direct and indirect cost
savings, and customers' willingness to rely on SBS for mission-critical
applications. SBS believes that in many customer applications, the cost of
its products may exceed or be perceived to exceed the cost of internal
development. SBS will not be able to achieve its business growth objectives
if market acceptance of its products does not increase.
POTENTIAL YEAR 2000 PROBLEMS
The Year 2000 ("Y2K") issue refers to the inability of certain
date-sensitive computer chips, software, and systems to recognize a two-digit
date field as belonging to the 21st century. Mistaking "00" for 1900 or any
other incorrect year could result in a system failure or miscalculations causing
disruptions to operations, including manufacturing, a temporary inability to
process transactions, or 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 with any degree
of certainty. The Y2K issue may create unforeseen risks to SBS from its
internal computer systems as well as from computer systems of third
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parties with whom it deals. Failure of SBS' or third parties' computer
systems could have a material impact on SBS' ability to conduct business.
COMPETITION
The standard bus embedded computer industry is highly competitive and
fragmented, and SBS' competitors differ depending on product type, company
size, geographic market and application type. SBS faces competition in each
of its product lines. SBS believes that because of the diverse nature of
SBS' products and the fragmented nature of the embedded computer market,
there is little overlap of competitors for each product line. Competition in
all of SBS' product lines is based on: performance, customer support, product
longevity, supplier stability, breadth of product offerings, and reliability.
For the 1998 fiscal year, SBS had revenues of $74.2 million and net income
of $10.1 million. Many of SBS' existing and potential competitors are bigger
companies which have financial, technological and marketing resources
significantly greater than those of SBS, which may give them a competitive
advantage. They and other competitors may have established relationships with
customers or potential customers, which can make it harder for SBS to sell
its products to those customers. SBS cannot promise that it will be able to
compete effectively in its current or future markets. Also, competitive
pressures might significantly adversely affect SBS' marketing and sales,
revenues and financial condition.
In the CPU market in which SBS Embedded's products are marketed, SBS
competes with a number of other suppliers of CPU boards. SBS' direct
competitors include other companies that build CPU boards based on Intel
microprocessor technology, such as Force Computers, Inc. (a wholly-owned
subsidiary of Solectron Corporation), RadiSys Corporation, VME Microsystems,
Inc. and XYCOM, Inc. In addition, with the acquisition of OR and V-I, SBS
also competes with suppliers of CPU boards based on Motorola 68OxO, and
PowerPC architectures.
In the generalized computer I/0 product area served by GreenSpring and
its IP product line, SBS has two classes of competition. The first class
includes companies that compete directly by selling IP products. The second
class includes companies that compete with I/0 products using a different
implementation to provide functionally equivalent products. SBS' competitors
in each of these classes include Acromag, Inc., Systran, Inc. and VME
Microsystems, Inc.
In the telemetry market, SBS competes with suppliers such as Aydin
Vector Division, AVTECH Systems, Inc., L3 Communications, Inc., Terametrix,
Inc. and Veda, Inc.
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In the avionics interface market in which SBS' MIL-STD 1553 products are
marketed, SBS competes with a number of other companies that produce similar
avionics interface products. SBS' competitors include Ballard Technologies,
Inc., Data Devices Corporation, Excalibur Technologies Corporation, Condor
Engineering and Gesellschaft Fur Angewandte Informatik und Mikroelekemik,
GmbH.
In SBS' interconnect and expansion unit product line, SBS competes with
personal computer (PC) manufacturers that offer computer motherboards with
multiple PCI slots and with companies that have similar product lines. There
is no significant direct competitor in this market.
In SBS' industrial computer systems and enclosure business, SBS competes
with other suppliers of ISA/PCI systems and enclosures such as I-Bus, a
subsidiary of Maxwell Technologies, Texas Micro, Inc. and Industrial Computer
Source.
AVAILABILITY OF COMPONENT MATERIALS
Many of SBS' products contain state of the art digital electronic
components. SBS is dependent upon third parties for the continuing supply of
many of these components. Some of the components are obtained from a sole
supplier, such as Xylinx, Inc., or a limited number of suppliers, for which
alternate sources may be difficult to locate. Moreover, suppliers may
discontinue or upgrade some of the products incorporated into SBS' products,
which could require SBS to redesign a product to incorporate newer or
alternative technology. Although SBS believes that it has arranged for an
adequate supply of components to meet its short-term requirements, SBS does
not have contracts which would assure availability and price. If sufficient
components are not available when SBS needs them, SBS' product shipments
could be delayed, which could affect SBS' revenues during certain periods as
well as lead to customer dissatisfaction. If enough components are not
available, SBS might have to pay premiums for parts in order to make shipment
deadlines. Paying premiums for parts would lower or eliminate SBS' profit
margin and hurt its business and financial condition, or cause SBS to
increase its inventory of scarce parts, which would adversely affect SBS'
cash flow.
RETENTION AND RECRUITMENT OF KEY EMPLOYEES
SBS' ability to maintain its competitive position and to develop and market
new products depends, in part, upon its ability to retain key employees and to
recruit and retain additional qualified personnel, particularly engineers. If
SBS is unable to retain and recruit key employees, its product development,
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marketing and sales, and revenues and business condition could suffer
material adverse effects.
NO PATENT PROTECTION
Although SBS believes that some of its processes and equipment may be
proprietary, SBS has not sought patent protection for its technology. SBS
has relied upon trade secret laws, industrial know-how and employee
confidentiality agreements. SBS' processes and equipment might not provide it
with a sufficient competitive advantage to overcome its lack of patent
protection. Others could independently develop equivalent or superior
products or technology. Also, SBS might not be able to establish trade secret
protection, and secrecy obligations might not be honored. If consultants,
employees and other parties apply technological information developed
independently, by them or others, to Company projects, disputes may arise as
to the proprietary rights to that information. Those disputes may not be
resolved in favor of SBS.
SBS could have to litigate to enforce its proprietary rights, protect
its trade secrets, determine the validity and scope of the intellectual
property rights of others or defend against claims of infringement. That
litigation could be very expensive and could divert resources which SBS could
otherwise use in its business, which could hurt SBS and its business.
Patent applications in the United States are not publicly disclosed
until the patents issue, so patent applications may have been filed by
someone else that relate to SBS' products and technology. SBS does not
believe that it infringes any patents of which it is aware, but someone could
make a patent infringement claim against SBS. Such a claim might
significantly hurt SBS and its business. If someone asserts infringement or
invalidity claims against SBS, SBS might have to litigate to defend itself
against those claims. In certain circumstances, SBS might try to obtain a
license under the claimant's intellectual property rights. The claimant might
not be willing to give SBS a license at all or on terms acceptable to SBS.
PRODUCT LIABILITY
SBS' products and services could be subject to product liability or
government or commercial warranty claims. SBS maintains primary product
liability insurance with a general aggregate limit of $2.0 million, $1.0
million per occurrence, a $10.0 million excess policy, and a $40.0 million
excess umbrella policy. While SBS has never been the subject of any
significant claims of this kind, its products are widely used in a variety of
applications and claimants have a propensity initially to pursue all possible
contributors in a legal action. If a claim is made against SBS, SBS'
insurance coverage might not be adequate to pay for its defense or to pay
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for any award, in which case SBS would have to pay for it. Also, SBS might
not be able to continue that insurance in effect for premiums acceptable to
SBS. If a litigant were successful against SBS, a lack or insufficiency of
insurance coverage could have a material adverse effect upon SBS.
INTERNATIONAL SALES IN GENERAL
SBS sells its products in countries throughout the world from its United
States and European based offices. These sales subject SBS to various
governmental regulations, export controls, and the normal risks involved in
international sales. Sales of products internationally are subject to
political, economic and other uncertainties, including, among others, risk of
war, revolution, expropriation, renegotiation or modification of existing
contracts, standards and tariffs, and taxation policies. They are also
subject to international monetary fluctuations, which may make payment in
United States dollars more expensive for foreign customers (who may, as a
result, limit or reduce purchases).
CHANGES IN EXCHANGE RATES
Substantially all of SBS' revenues to date have been received in United
States dollars. However, some sales in the future may be in other
currencies. Any decline in the value of other currencies in which SBS makes
sales against the United States dollar will have the effect of decreasing
SBS' earnings when stated in United States dollars. SBS has not engaged in
any hedging transactions that might have the effect of minimizing the
consequences of currency fluctuations, but may do so in the future.
TRADE POLICIES AND DISPUTES
The political and economic policies and concerns of countries in which
SBS makes or could make sales could result in the adoption of new trade
policies in those countries or the United States or lead to trade disputes
between those countries and the United States. These could limit, reduce,
eliminate or disrupt SBS' sales outside the United States, which might
adversely affect SBS' total revenues and business prospects outside the
United States.
POTENTIAL DILUTIVE EFFECT OF OUTSTANDING WARRANTS AND OPTIONS AND REGISTRATION
RIGHTS
SBS, in connection with its acquisition of GreenSpring in August 1995,
issued warrants to purchase 400,000 shares of Common Stock at an exercise
price of $4.50 per share (the "GreenSpring Warrants"). SBS also registered
the Common Stock underlying the GreenSpring Warrants for sale under the
Securities Act. In April
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<PAGE>
1996, SBS registered under the Securities Act options from other shareholders
for 133,333 shares held by SBS' Chairman of the Board and Chief Executive
Officer, Mr. Amenson. As of January 31, 1999, 76,849 of the GreenSpring
Warrants remained, all of which were exercisable. The holders of the
GreenSpring Warrants also possess until August 2000 the right to sell shares
of Common Stock underlying the GreenSpring Warrants alongside SBS should SBS
file a registration statement during this period. Mr. Amenson's options were
also still outstanding and exercisable as of that date.
As of January 31, 1999, SBS had outstanding 666,402 options which could
be exercised and 1,108,984 options which were not yet eligible for exercise.
LIMITED PUBLIC FLOAT; TRADING; VOLATILITY OF STOCK PRICE
SBS' Common Stock is traded on the Nasdaq National Market. While a
public market currently exists for SBS' Common Stock and the number of shares
in the public float as of January 31, 1999, was 5,491,730, trading volume in
the four weeks ended January 31, 1999 averaged 82,633 shares traded per day.
Thus, trading of relatively small blocks of stock can have a significant
impact on the price at which the stock is traded. In addition, the Nasdaq
National Market has experienced, and is likely to experience in the future,
significant price and volume fluctuations which could adversely affect the
market price of the Common Stock without regard to the operating performance
of SBS. SBS believes factors such as quarterly fluctuations in financial
results, announcements of new technologies impacting SBS' products,
announcements by competitors or changes in securities analysts'
recommendations may cause the market price to fluctuate, perhaps
substantially. These fluctuations, as well as general economic conditions,
such as recessions or high interest rates, may adversely affect the market
price of the Common Stock. See "-Fluctuations in Operating Results."
ABSENCE OF DIVIDENDS
Since its inception, SBS has not paid cash dividends on its Common
Stock. SBS intends to retain future earnings, if any, to provide funds for
business operations and, accordingly, does not anticipate paying any cash
dividends on its Common Stock in the foreseeable future. Pursuant to its
Credit Agreement, dated December 1, 1998, with NationsBank, N.A., neither SBS
nor any of its subsidiaries may declare or pay any dividend or other
distribution (such as dividends) on or with respect to its stock.
SELLING SHAREHOLDERS
The following table sets forth the names of the Selling Shareholders who
are eligible to resell Shares (whether or not
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<PAGE>
they have a present intent to do so) and the positions, offices and other
material relationships which each Selling Shareholder had with SBS or any of
its predecessors or affiliates since January 31, 1996.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
POSITION WITH SBS
SELLING SHAREHOLDER SINCE JANUARY 31, 1996
- -------------------------------------------------------------------------------------
<S> <C>
Scott A. Alexander Director and Secretary(1991--);
Vice President (1991--)
- -------------------------------------------------------------------------------------
Christopher J. Amenson Director and President (1992--);
Chief Executive Officer(1996--);
- -------------------------------------------------------------------------------------
Warren W. Andrews Director (1996--)
- -------------------------------------------------------------------------------------
William J. Becker Director (1992--)
- -------------------------------------------------------------------------------------
Lawrence A. Bennigson Director (1995--)
- -------------------------------------------------------------------------------------
James E. Dixon, Jr. Director (1998--); Vice President of Finance &
Administration, Treasurer and Chief Financial
Officer (1995--)
- -------------------------------------------------------------------------------------
W. Keith McDonald Director (1998--)
- -------------------------------------------------------------------------------------
Alan F. White Director(1997--)
- -------------------------------------------------------------------------------------
Richard A. Schuh President--Aerospace Group (1998--)
- -------------------------------------------------------------------------------------
Joseph J. Zabkar President--Computer Group (1998--)
- -------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
The following table sets forth the name of each Selling Shareholder as
of January 31, 1999, the number of shares of Common Stock owned by each
Selling Shareholder as of January 31, 1999, the number of Shares issuable
upon exercise of options granted under the Plans, the number of Shares
eligible to be sold by each Selling Shareholder pursuant to this Registration
Statement and the percentage of outstanding Common Stock to be owned by each
Selling Shareholder after the offering, assuming the sale of all of the
Shares. Selling Shareholders may in the future receive additional shares
under the Plans and may sell those shares. The "*" indicates that the person
owns less than one percent of outstanding Common Stock.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
SHARES PERCENTAGE
ISSUABLE SHARES OWNED
SHARES OWNED UPON ELIGIBLE TO AFTER
SELLING SHAREHOLDER AT 1/31/99(1) EXERCISE BE SOLD OFFERING
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Scott A. Alexander 275,756 (2) 83,636 120,000 4.3%
- -------------------------------------------------------------------------------------
Christopher J. Amenson 264,475 (3) 139,561 161,783 3.3%
- -------------------------------------------------------------------------------------
Warren W. Andrews 11,150 (4) 15,000 15,000 *
- -------------------------------------------------------------------------------------
William J. Becker 34,100 (5) 18,500 28,500 *
- -------------------------------------------------------------------------------------
Lawrence A. Bennigson 18,150 (6) 20,000 20,000 *
- -------------------------------------------------------------------------------------
James E. Dixon 47,481 (7) 67,000 67,000 *
- -------------------------------------------------------------------------------------
W. Keith McDonald -- 5,000 5,000 *
- -------------------------------------------------------------------------------------
Richard A. Schuh 71,007 (8) 57,000 67,000 1.1%
- -------------------------------------------------------------------------------------
</TABLE>
- --------------------
(1) A person is deemed to be the beneficial owner of securities that may be
acquired by that person within 60 days from the date of this Prospectus upon
exercise of warrants or options. Each beneficial owner's percentage ownership
is determined by assuming that warrants or options that are held by that person
and that are exercisable within 60 days from the date of this Prospectus have
been exercised.
(2) Includes options for 33,636 shares which are exercisable as provided in
footnote 1 above, and 27,000 shares which are held by him as trustee for his
children under the Uniform Gifts to Minors Act .
(3) Includes options for 222,894 shares which are exercisable as provided in
footnote 1 above, 4,800 shares owned by Mr. Amenson's spouse, and 2,300 shares
which are held by him as trustee for his children under the Uniform Gifts to
Minors Act.
(4) Includes options for 10,000 shares which are exercisable as provided in
footnote 1 above.
(5) Includes options for 13,500 shares which are exercisable as provided in
footnote 1 above.
(6) Includes options for 15,000 shares which are exercisable as provided in
footnote 1 above.
(7) Includes options for 47,000 shares which are exercisable as provided in
footnote 1 above.
(8) Includes options for 44,500 shares which are exercisable as provided in
footnote 1 above and 4,000 shares owned by Mr. Schuh's spouse.
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Alan F. White 6,650 (9) 10,000 10,000 *
- -------------------------------------------------------------------------------------
Joseph Zabkar 15,214 (10) 35,000 35,000 *
- -------------------------------------------------------------------------------------
</TABLE>
PLAN OF DISTRIBUTION
The Selling Shareholders (including, as we previously noted, people to whom
they transfer, assign, devise, pledge or donate their Shares and other
successors in interest) may sell Shares in any of the following ways:
- through dealers,
- through agents, or
- directly to one or more purchasers.
The Shares may be distributed from time to time in one or more transactions
(which may involve crosses or block transactions) in the following ways:
- on the Nasdaq National Market System, where the Common Stock is
currently traded, or on national stock exchanges where it could become
traded in the future, in accordance with their rules,
- in the over-the-counter market, or
- in transactions other than on the Nasdaq National Market System or in
the over-the-counter market, or a combination of those transactions.
The Selling Shareholders may transfer the Shares at market prices
prevailing at the time of sale, at prices related to those prevailing market
prices, at negotiated prices or at fixed prices. They may sell the Shares to
or through broker-dealers, who may receive compensation in the form of
discounts, commissions, or commissions from the Selling Shareholders. The
broker-dealers may also be paid commissions by purchasers of Shares for whom
they may act as agent. The Selling Shareholders and any broker-dealers or
agents that participate in the distribution of Shares by them might be deemed
to be underwriters, and any discounts, commissions, or concessions received
by any such broker-dealers or agents might be deemed to be underwriting
discounts and commissions, under the Securities Act. Affiliates of one or
more of the Selling Shareholders may act as principals or agents in
connection with the offer or sale of Shares by the Selling Shareholders. In
addition, any Shares which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than pursuant to this
Prospectus.
- --------------------------
(9) Includes options for 5,000 shares which are exercisable as provided in
footnote 1 above.
(10) Includes options for 15,000 shares which are exercisable as provided in
footnote 1 above.
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<PAGE>
SBS will not receive any of the proceeds from the sale of the Shares,
although it will pay the expenses in preparing the Registration Statement and
registering the Shares. SBS does receive proceeds from the issuance of
Shares to the Selling Shareholders when they exercise options for the Shares.
The Selling Shareholders have been advised that they are subject to the
applicable provisions of the Securities Exchange Act of 1934, including
without limitation Rules 10b-5 and 10b-18 and Regulation M under that Act.
LEGAL MATTERS
Legal matters with respect to the Common Stock being offered by this
prospectus will be passed upon for the Company by Schuler, Messersmith,
McNeill & Daly, Albuquerque, New Mexico.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, which are on file with the Securities and
Exchange Commission (File No. 1-10981), are incorporated by reference and
made a part of this Prospectus:
A. SBS' Form 10-Q for the quarter ended December 31, 1998.
B. SBS' Form 10-Q for the quarter ended September 30, 1998.
C. SBS' Form 10-K for the fiscal year ended June 30, 1998.
D. The description of SBS' Common Stock contained in SBS' Registration
Statement on Form 8-A filed November 2, 1995 under Section 12 of the
Exchange Act, including any further amendment or report filed for the
purpose of updating that description.
E. SBS' Form 8-K filed on July 15, 1998
F. SBS' Form 8-K/A filed on September 14, 1998
All documents filed pursuant to Sections 13(a), 13(c), 14 and 15(d) of
the Exchange Act subsequent to the date of this Prospectus and before the
termination of this offering shall be deemed to be incorporated by reference
into this Prospectus and to be a part of it from their respective dates of
filing. Any statement contained in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified
or superseded for all purposes to the extent that a statement contained in
this Prospectus or any other subsequently filed document that is also
incorporated by reference in this Prospectus modifies or supersedes that
statement. Any such statements so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The documents incorporated by reference in this Prospectus (other than
exhibits not specifically incorporated by reference) are available without
charge upon the written or oral request of a
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<PAGE>
person, including a beneficial owner, to whom a Prospectus is delivered. The
written or oral request should be directed to James E. Dixon, Jr., Vice
President of Finance and Administration, 2400 Louisiana Boulevard, NE, AFC
Building 5, Suite 600, Albuquerque, New Mexico 87110; telephone (505)875-0600.
STATEMENT OF AVAILABLE INFORMATION
SBS has filed a Registration Statement on Form S-8, including amendments
to it, relating to the Common Stock offered by this Prospectus with the
Securities and Exchange Commission (the "Commission"), Washington, D.C.
20549. This Prospectus does not contain all of the information set forth in
the Registration Statement and the exhibits and schedules to it. For further
information with respect to SBS and the Common Stock, please refer to that
Registration Statement, and exhibits and schedules to it. Statements
contained in this Prospectus about any contract or other document are not
necessarily complete. In each instance, SBS refers to the copy of that
contract or other document filed as an exhibit to the Registration Statement,
and each such statement is qualified in all respects by that reference.
SBS Technologies, Inc. is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance with those requirements files reports and other information with
the Commission. The public may read and copy information, including reports
and proxy and information statements, filed by SBS Technologies, Inc. (and by
it under its previous name of SBS Engineering, Inc.) with the Commission and
a copy of the Registration Statement, including exhibits to it, at the public
reference facilities of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street N.W., in Washington, D.C., 20549, or at its Regional Office
located at 1801 California Street, Suite 4800, Denver, Colorado 80202-2648.
Copies of this material can be obtained from the Public Reference Section of
the Commission, 450 Fifth Street N.W., Washington, D.C., 20549, at prescribed
rates. The public may obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. SBS
Technologies, Inc. Common Stock is listed on the National Association of
Securities Dealers, Inc. National Market System. Reports, proxy and
information statements, and other information concerning SBS can be inspected
at the National Association of Securities Dealers, Inc. at 1735 K Street, NW,
Washington, D.C. 20006. The Commission maintains an Internet site that
contains reports, proxy and information statements and other information
regarding issuers, such as SBS, that file electronically with the Commission.
The address of that site is http://www.sec.gov. SBS' Internet e-mail address
is [email protected], and our website is http://www.sbs.com.
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