SBS Technologies, Inc. Acquires Bit 3 Computer Corporation
Acquisition Expands SBS Product Markets
SBS Technologies, Inc. (Nasdaq: SBSE) ("SBS") today announced the acquisition, for $24 million, of the outstanding common stock of Bit 3 Computer Corporation ("Bit 3"). An initial cash payment of $20 million was funded by an offering of SBS common stock. Subsequent cash payments of $1 million and $3 million will be due to Bit 3 in 1997 and 1998, respectively. Bit 3 was founded in 1979 and is a manufacturer of computer networking and interconnection hardware for some of the most widely used computer architecture standards in the standard bus embedded computer market. Bit 3's bus interconnect hardware product line complements SBS' existing input/output (I/O) and CPU product lines, and targets the general purpose segment of the standard bus embedded computer market. For its fiscal year ended December 31, 1995, Bit 3 had pretax income of approximately $4.7 million on sales of $12.5 million. SBS has recorded approximately $9.8 million of intangible assets, including goodwill, as a result of the acquisition. Also in connection with the acquisition, SBS has recorded an $11 million earnings charge. The earnings charge is based on an assessment by SBS, in conjunction with an independent valuation firm, that $11.0 million of the Bit 3 purchase price represented in-process research and development of purchased technology that does not meet the accounting definition of "completed technology." Based on SBS' historical financial performance and the historical financial performance of Bit 3, SBS currently expects to incur a significant net loss for the second fiscal quarter of 1997 as a result of the earnings charge.