<PAGE>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-K

(MARK ONE)

<TABLE>
<S>       <C>
/X/       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED
          JUNE 30, 2000 OR

/ /       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                         COMMISSION FILE NUMBER 1-10981
                            ------------------------

                             SBS TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                      <C>
              NEW MEXICO                               85-0359415
    (State or other jurisdiction of       (IRS Employer Identification Number)
    incorporation or organization)
</TABLE>

                            2400 LOUISIANA BLVD. NE
                           AFC BUILDING 5, SUITE 600
                         ALBUQUERQUE, NEW MEXICO 87110
          (Address of principal executive offices including zip code)

                                 (505) 875-0600
              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: NONE

          Securities registered pursuant to Section 12(g) of the Act:

                              TITLE OF EACH CLASS
                           COMMON STOCK, NO PAR VALUE
                         ------------------------------

    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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  /X/    No  / /

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  / /

    The aggregate market value of the voting stock held by non-affiliates of the
Registrant, based upon the closing sale price of the Common Stock on
September 1, 2000 as reported on The Nasdaq Stock Market-Registered Trademark-
was approximately $264,280,629. Shares of Common Stock held by each officer and
director as of August 16, 2000 and by each person who owns 5% or more of the
outstanding Common Stock according to filings with the Securities and Exchange
Commission dated June 30, 2000 have been excluded because these persons may be
deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.

    As of September 1, 2000, Registrant had 13,554,998 shares of Common Stock
outstanding (adjusted for the two-for-one stock-split declared August 18, 2000
and payable September 20, 2000)

                      DOCUMENTS INCORPORATED BY REFERENCE

    Parts of the following documents are incorporated by reference into
Part III of this Form 10-K Report: (1) Definitive Proxy Statement for
Registrant's 2000 Annual Meeting of Shareholders to be held November 9, 2000.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                     SBS TECHNOLOGIES INC. AND SUBSIDIARIES

                   FORM 10-K FOR THE YEAR ENDED JUNE 30, 2000

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                      --------
<S>       <C>           <C>                                                           <C>
PART I

          Item 1.       Business....................................................      1

          Item 2.       Facilities..................................................     14

          Item 3.       Legal Proceedings...........................................     15

          Item 4.       Submission of Matters to a Vote of Security Holders.........     15

PART II

          Item 5.       Market for Registrant's Common Equity and Related
                        Stockholder Matters.........................................     16

          Item 6.       Selected Financial Data.....................................     17

          Item 7.       Management's Discussion and Analysis of Consolidated
                        Financial Condition and Results of Operations...............     18

          Item 7a.      Quantitative and Qualitative Disclosures about Market
                        Risk........................................................     32

          Item 8.       Financial Statements and Supplementary Data.................     32

                        Independent Auditors' Report................................     33

                        Consolidated Balance Sheets.................................     34

                        Consolidated Statements of Operations.......................     35

                        Consolidated Statements of Changes in Stockholders'
                        Equity......................................................     36

                        Consolidated Statements of Cash Flows.......................     37

                        Notes To Consolidated Financial Statements..................     39

          Item 9.       Changes in and Disagreements with Accountants on Accounting
                        and Financial Disclosure....................................     55

PART III

          Items 10-13.  (Incorporated by reference to the Company's definitive proxy
                        statement)..................................................     55

PART IV

          Item 14.      Exhibits, Financial Statement Schedules and Reports on Form
                        8-K.........................................................     57

                        Signatures..................................................     58

                        Independent Auditors' Report................................     59

                        Schedule II--Valuation and Qualifying Accounts..............     60

                        Index to Exhibits...........................................     61
</TABLE>
<PAGE>
                                     PART I

ITEM 1.  BUSINESS

    THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH
"SELECTED FINANCIAL DATA" AND SBS' FINANCIAL STATEMENTS AND NOTES THERETO.
STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACT, THAT ADDRESS ACTIVITIES,
EVENTS OR DEVELOPMENTS THAT SBS OR MANAGEMENT INTENDS, EXPECTS, PROJECTS,
BELIEVES OR ANTICIPATES WILL OR MAY OCCUR IN THE FUTURE ARE FORWARD-LOOKING
STATEMENTS. THESE STATEMENTS ARE BASED UPON CERTAIN ASSUMPTIONS AND ASSESSMENTS
MADE BY MANAGEMENT OF SBS IN LIGHT OF ITS EXPERIENCE AND ITS PERCEPTION OF
HISTORICAL TRENDS, CURRENT CONDITIONS, EXPECTED FUTURE DEVELOPMENTS AND OTHER
FACTORS IT BELIEVES TO BE APPROPRIATE. THE FORWARD-LOOKING STATEMENTS INCLUDED
IN THIS FORM 10-K ARE ALSO SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES,
INCLUDING BUT NOT LIMITED TO ECONOMIC, COMPETITIVE, SUPPLY AND DEMAND,
GOVERNMENTAL AND TECHNOLOGICAL FACTORS AFFECTING SBS' OPERATIONS, MARKETS,
PRODUCTS, SERVICES, PRICES, AND OTHER RISK FACTORS LISTED IN THIS 10-K. THESE
FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ACTUAL
RESULTS; DEVELOPMENTS AND BUSINESS DECISIONS MAY DIFFER FROM THOSE EXPRESSED OR
IMPLIED BY THESE FORWARD-LOOKING STATEMENTS.

INTRODUCTION

    SBS Technologies, Inc. ("SBS") 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 embedded computer components are used in OEM
applications such as telecommunications base stations and routers, medical
imaging machines, automation and control equipment, and aerospace devices. SBS
has three operating segments: the Communications Group, the Computer Group, and
the Aerospace Group. SBS' product lines include CPU
(Pentium-Registered Trademark- and PowerPC-TM-) boards, input/output ("I/O")
modules, avionics modules and analyzers, computer connectivity products,
expansion units, real-time networks, telemetry boards, DIN-rail embedded PCs,
and industrial-grade computers. It is SBS' objective to continue to capitalize
on its design expertise and customer service capabilities to enhance product
quality and reduce time to market for OEM customers. SBS has grown, and intends
to continue to do so, through a combination of internal growth and acquisitions.
SBS achieves internal growth by expanding its existing product lines through new
product development, through increasing penetration of its existing customer
base, and by adding new customers.

    On August 18, 2000, SBS declared a two-for-one stock split for stockholders
of record on September 5, 2000, payable on September 20, 2000. All references to
net income per common share, net income per common share--assuming dilution,
common stock, and stockholders' equity have been restated as if the stock split
occurred as of the earliest period presented.

    SBS entered the embedded computer market in 1988 with the development of its
avionics interface board, which is used in ground-based avionics systems
development and test applications. Today SBS is a leading provider of
MIL-STD-1553 and ARINC 429/575 interface modules and bus analysis systems for
military, space and commercial avionics applications. SBS' products are the
industry standard for quality and innovation and have been selected for major
military programs, including the F-22, F-16, and B-2 aircraft, as well as in
aerospace projects such as the International Space Station.

    In 1992, SBS added a second embedded computer product line with the
acquisition of SBS Technologies, Inc., Telemetry and Communications Products
(formerly Berg Systems International) ("Telemetry"), a developer of telemetry
interface circuit boards. Telemetry provides open architecture telemetry boards
for aircraft, spacecraft, and launch-vehicle telemetry programs. Telemetry
pioneered the concept of single-board telemetry solutions nearly a decade ago.
The product line currently consists of telemetry receivers, downconverters,
BPSK/QPSK modems, bit synchronizers, PCM decommutators, and PCM simulators.
Telemetry was merged into SBS effective June 23, 2000.

                                       1
<PAGE>
    In 1995, SBS added a third embedded computer product line with the
acquisition of SBS Technologies, Inc., Modular I/O (formerly GreenSpring
Computer Corporation) ("Modular I/O"). Modular I/O designs, manufactures and
markets modular I/O solutions using mezzanine standards such as
IndustryPack-Registered Trademark-, PC-MIP-TM-, and PMC for use with PCI,
CompactPCI, VME, ISA, STD32, PC/104 and stand-alone embedded platforms.
Currently, Modular I/O offers over 125 I/O modules for communications
applications, network interface, video controller, digital I/O, analog I/O,
motion control, field bus, temperature measurement and memory applications. In
addition, Modular I/O has a line of conduction cooled mezzanine I/O boards for
use in non-air cooled, rugged environments.

    In August 1996, SBS acquired SBS Technologies, Inc., Embedded Computers
(formerly Logical Design Group, Inc.) ("Embedded Computers"), a manufacturer of
Intel processor-based CPU boards. This acquisition positioned SBS to take
advantage of the growth in the use of both Intel processors and Microsoft
software in the embedded computer market that utilizes the VME computer bus
architecture.

    In November 1996, SBS acquired SBS Technologies, Inc., Connectivity Products
(formerly Bit 3 Computer Corporation) ("Connectivity Products"), a provider of
high-performance, low latency bus connectivity products that include bus-to-bus
adapters, bus expansion units, and real-time coherent memory networks designed
to operate in the most demanding applications.

    SBS Technologies, Inc., Industrial Computers (formerly Micro
Alliance, Inc.) ("Industrial Computers") was added in November 1997 and
specializes in the design and manufacture of rugged, special-purpose PC, and
CompactPCI industrial and telecommunications platforms, enclosures and turnkey
systems. It offers a variety of Intel and PowerPC CPU boards and system
enclosures, including rackmount, benchtop, workstation and portable systems.

    On July 1, 1998, SBS acquired, through its newly formed subsidiary, SBS
Technologies Holding GmbH, a 50.1% interest in OR Industrial Computers GmbH
("OR"), a leading European designer of CPU boards utilized in a wide range of
embedded computer applications. Based in Augsburg, Germany, OR designs,
manufactures and markets CPU boards based on Intel computer architecture
available in the VME, CompactPCI, and PCCompact form factors, as well as VME CPU
boards based on the Motorola 680X0 series processors and a series of computer
I/O boards. As part of this acquisition, SBS acquired, through its newly formed
subsidiary, SBS Technologies Holding GmbH, a 50.2% interest in ORTEC Electronic
Assembly GmbH, ("ORTEC") based in Mindelheim, Germany, a related company which
manufactures OR's commercial products and electronic products for other
customers. SBS also acquired, through its wholly-owned subsidiary Embedded
Computers, based in Raleigh, NC, 100% of the shares of OR Computers, Inc., which
was the U.S. marketing support organization for the OR product line and was
subsequently merged into Embedded Computers. SBS purchased the remaining shares
in OR and ORTEC in December 1998.

    On August 12, 1998, SBS purchased 100% of the outstanding shares of SBS
Technologies, Inc., Communications Products (formerly V-I Computer)
("Communications Products"). Based in Carlsbad, California, Communications
Products designs, manufactures and markets CPU boards based on the PowerPC
processor for embedded computer applications based on the VME, CompactPCI, PMC
and standalone bus architecture standards.

    On December 20, 1999, SBS acquired SciTech, Inc. ("SciTech"), a Madison,
Wisconsin based designer and manufacturer of communications network I/O products
based on PMC and PCI form factors. SciTech was subsequently merged into
Communications Products.

    On April 12, 2000, SBS purchased 100% of the outstanding shares of SDL
Communications, Inc. ("SDL"). Based in Mansfield, Massachusetts, SDL specializes
in WAN I/O for the telecommunications and data communications market. SDL
designs, manufactures and markets T1/E1, T3/E3, HSSI and OC3 products based on
the PCI, CompactPCI and PMC form factors and supporting protocols such as Frame
Relay, HDLC, PPP, X.25 and ATM. SDL's products support the operating systems
most commonly used in communications applications.

                                       2
<PAGE>
    SBS was incorporated in New Mexico in November 1986 and began operations in
September 1987. SBS' executive offices are located at 2400 Louisiana Boulevard,
NE, AFC Building 5, Suite 600, Albuquerque, New Mexico, 87110, and its telephone
number is (505) 875-0600. References to "SBS" are to SBS Technologies, Inc. and
its consolidated subsidiaries. As of June 30, 2000, SBS had seven subsidiaries:
Modular I/O, Embedded Computers, Connectivity Products, Industrial Computers,
Communications Products, SDL and SBS Technologies, Inc. Foreign Holding Company.
SBS Technologies Holding GmbH is a subsidiary of SBS Technologies, Inc. Foreign
Holding Company. ORTEC is a subsidiary of SBS Technologies Holding GmbH. In
June 1999, SBS formed, through SBS Technologies Holding GmbH, SBS Technologies
Europe GmbH, to function as a sales and marketing agent in Europe. In August,
1999, SBS formed a partnership between SBS Technologies Holding GmbH, OR, and
the newly formed general partner, SBS OR Computers Verwaltungs GmbH.

    IndustryPack-Registered Trademark- is a registered trademark of SBS.
PC-MIP-TM- is a trademark of MEN Micro, Inc. of Carrollton, Texas, and SBS
Technologies, Inc. SBS has filed trademark applications for K2, Denali, Cascade,
Palomar, Omnispan, Reliaspan, and dataBLIZZARD. All other trademarks or
tradenames referred to in this document are the property of their respective
owners.

SBS' OPERATING SEGMENTS AND PRODUCTS

    The Company operates internationally through three operating segments, the
Communications Group, the Computer Group, and the Aerospace Group. These
segments are based on the markets that are served, the products that are
provided to those markets, and have managers who report directly to the chief
operating decision-maker. The Company designs and manufacturers a wide range of
products divided into general-purpose products, marketed and sold primarily by
the Communications Group and the Computer Group, and special purpose products,
marketed and sold primarily by the Aerospace Group.

COMMUNICATIONS GROUP PRODUCTS

    The Communications Group designs, manufactures and markets high performance
OEM telecommunications platforms and sub-systems that provide complete WAN
interface and enabling communications software protocol support for CompactPCI,
PMC and PCI form factors. The Communications Group's telecommunication platforms
target fault-tolerant capability and feature WAN interfaces supporting T1/E1,
T3/E3, HSSI, and OC3. The Communications Group's OEM platforms based on the
Intel and PowerPC CPU architecture enable the convergence of voice, video and
data using protocols such as PPP, Frame Relay, ATM and SS7. The Communications
Group provides OEM sub-system telecommunications products for CompactPCI, PMC
and PCI including stand-alone single board computers, WAN adapters, enclosures,
and systems. In fiscal years 2000, 1999 and 1998, sales of these products
comprised approximately 34.3%, 18.2%, and 6.5%, respectively, of SBS' total
sales. As of September 1, 2000, 1999 and 1998, backlog orders were
$40.0 million, $6.8 million and $2.8 million, respectively. All backlog orders
are expected to be filled within the current fiscal year.

COMPUTER GROUP PRODUCTS

    The Computer Group designs, manufactures and markets open-architecture
computer components and systems for CompactPCI, PCI, PMC, VME, and PC/104
standard bus architectures. The Computer Group's product lines include Intel and
PowerPC architecture CPU boards, serial and networking modules, analog and
digital I/O modules, computer interconnection and expansion units, and complete
computer systems. These products support OEM applications in communications,
industrial automation, medical imaging, military and aerospace, and the general
embedded computer market. In fiscal years 2000, 1999 and 1998, sales of these
products comprised approximately 45.3%, 51.7% and 54.3%, respectively, of SBS'
total sales. As of September 1, 2000, 1999 and 1998, backlog of orders were

                                       3
<PAGE>
$18.8 million, $10.4 million and $4.7 million, respectively. All backlog orders
are expected to be filled within the current fiscal year.

AEROSPACE GROUP PRODUCTS

    The Aerospace Group's avionics products interface an embedded computer
system with the MIL-STD-1553 avionics bus or analyze the performance of the bus
used in a wide variety of military and space applications including aircraft,
missiles, ground vehicles, the International Space Station, the Space Shuttle
and naval vessels. Over the past several years, the Company has expanded its
product line to include ruggedized interface products that are used in
operational systems, and monitor and test systems that can be used as diagnostic
tools for operational systems. The Aerospace Group's telemetry interface
products allow computers to receive, interpret and process telemetry data.
Telemetry is often used to transmit data from an object under test, such as an
aircraft, to a receiving station while the test is underway. This allows
engineers to monitor test performance in real time, often decreasing total test
costs and enhancing test safety. Use of this technology has expanded to include
continuous monitoring of remote sites and transmission of digital data from
satellites to the earth. The Aerospace Group pioneered the concept of using
boards specially designed for telemetry interface, which would be added to
standard ground station computers. The Aerospace Group has expanded its product
offerings to include specialized equipment designed to receive and process
satellite data. In fiscal years 2000, 1999 and 1998, sales of these products
comprised approximately 20.4%, 30.1% and 39.2%, respectively, of the Company's
total sales. As of September 1, 2000, 1999, and 1998, backlog orders were
$5.7 million, $3.5 million and $3.4 million, respectively. All backlog orders
are expected to be filled within the current fiscal year.

SEGMENT FINANCIAL DATA

    See Notes 13 and 14 to SBS' Consolidated Financial Statements for
information about SBS' industry segments, geographic areas, and major customers.

CUSTOMERS AND APPLICATIONS

    SBS' broad range of products support a wide range of applications. In fiscal
2000, 1999 and 1998, no one customer exceeded 10% of SBS' sales. The following
table highlights, by operating segment, some of SBS' representative customers
and their applications utilizing SBS' products.

COMMUNICATIONS GROUP

<TABLE>
<CAPTION>
APPLICATION                          CUSTOMER                             PRODUCT
-----------                          --------                             -------
<S>                                  <C>                                  <C>
Base Station Controllers             Ericsson                             CPU
Optical Switch                       Cienna                               CPU
Terabit Router                       Avici                                CPU
Router                               Lucent                               I/O
Networking                           Motorola                             I/O
Network Security Appliance           Nokia                                WAN I/O
Network Switching Platform           Netrix                               Systems
Network Monitoring                   Netscout                             WAN I/O
Network Test Equipment               GN Nettest                           CPU
DSL Equipment                        Tollbridge                           CPU, I/O
Voice over IP                        Nortel                               WAN I/O
Network Monitoring                   Network Associates                   WAN I/O
Router                               Virtual Access                       WAN I/O
Intrusive Network Monitoring         Visual Networks                      WAN I/O
</TABLE>

                                       4
<PAGE>
COMPUTER GROUP

<TABLE>
<CAPTION>
APPLICATION                          CUSTOMER                             PRODUCT
-----------                          --------                             -------
<S>                                  <C>                                  <C>
Aircraft Simulation                  FlightSafety International           I/O, Connectivity
Color Proof Copier                   Eastman Kodak                        I/O
Currency Inspection System           Currency Systems                     CPU
DVD Authoring                        Sonic Solutions                      Expansion Units
Library Material Flow                3M                                   Systems
  Management
License Plate Readers                Perceptics                           Connectivity
Nuclear Measurement System           Aquila                               CPU
Semiconductor Mfg Equipment          Delta Design                         I/O
Semiconductor Mfg Equipment          Applied Materials                    I/O, CPU
Semiconductor Mfg Equipment          Silicon Valley Group                 CPU
Semiconductor Mfg Equipment          GSI Lumonics                         Connectivity
Semiconductor Mfg Equipment          Lamm Research                        I/O
MRI Imaging                          Accuimage                            Connectivity
Turbine Control System               GE Motors                            CPU
Automotive Brake Tester              Burke Porter Machinery               CPU
Automotive Painting Systems          Behr Systems                         Connectivity
Nuclear Power Plant Controls         Bechtel Bettis                       Connectivity
Factory Automation                   General Electric                     CPU
Programmable Logic Controller        Reliance Electric                    Connectivity
CT/MRI                               Toshiba Medical                      Connectivity &
                                                                            Expansion Units
DNA Analyzer                         Applied Biosystems                   CPU
Electronic Scanning Microscopes      EDAX                                 Expansion Units
MRI                                  GE Medical                           Connectivity &
                                                                            Expansion Units
MRI                                  Hitachi Medical                      Connectivity
ABL                                  Raytheon                             I/O
Medical Imaging                      Advent Cable Technologies            Connectivity
Rocket Launch Controller             Orbital Sciences                     CPU
Extruder                             Krauss Maffei                        CPU
Test & Measurement                   Celerity Systems                     CPU
Sonar System                         STN Atlas                            CPU
Simulation & Radar                   Compaq Tandem                        Connectivity
Flight Equipment                     BAE Systems Aerospace                CPU
Communications Test                  Celerity Systems                     CPU
  Equipment
Air Traffic Control                  Litton                               CPU
Medical Imaging                      Elscint                              Expansion Units
Wafer Assembly                       ETEC Systems                         Connectivity
Communications Testing               NSA                                  CPU
Electron Microscopy                  JOEL                                 Connectivity
Medical Imaging                      Siemens                              Expansion Units
Semiconductor Manufacturing          KLA Tencor                           CPU
Military Ground Vehicles             Litton                               I/O
Mini-DAMA                            Titan Linkabit                       I/O
Machine Control                      Electro Scientific                   Systems
Automotive Test Systems              DaimlerChrysler                      CPU
</TABLE>

                                       5
<PAGE>

<TABLE>
<CAPTION>
APPLICATION                          CUSTOMER                             PRODUCT
-----------                          --------                             -------
<S>                                  <C>                                  <C>
Automated Plasma Processing Systems  Unaxis                               Systems
Space Station On-Board               Matra Marconi Space                  CPU
  Computers
</TABLE>

AEROSPACE GROUP

<TABLE>
<CAPTION>
APPLICATION                          CUSTOMER                             PRODUCT
-----------                          --------                             -------
<S>                                  <C>                                  <C>
Avionics Test Stands                 Aerospatiale                         Avionics
Communications Satellite             TRW                                  Telemetry
  Testing
Joint Strike Fighter                 Boeing                               Avionics
Military Ground Vehicles             General Dynamics                     Avionics
Test Equipment                       Litton                               Avionics
Ariane V Test Support                Lockheed Martin                      Telemetry
B-2 Flight Testing                   Northrop Grumman                     Telemetry
C-17 Aircraft Testing & Flight       Boeing                               Avionics
  Equipment
F-14                                 Northrop Grumman                     Avionics
F-14, F-15, F-16                     U.S. Government                      Avionics
F-16, F22, C-130                     Lockheed Martin                      Avionics
Flight Test/Satellite Integration &  Boeing                               Telemetry
  Test
Flight Test/Shuttle Command Launch   NASA                                 Telemetry
  Control System
Test Equipment                       BAE Systems Aerospace                Avionics
Military Satellite Telemetry         Lockheed Martin                      Telemetry
  Tracking & Control/Missile Test
J Stars                              Northrop Grumman                     Avionics
Missile Systems, F-15, F-18          Raytheon                             Avionics
Missile Test                         Raytheon                             Telemetry
Missile and Aircraft Test            NAWC                                 Telemetry
Missile and Aircraft Test            Lockheed Martin                      Telemetry
Missile and Aircraft Test            Boeing                               Telemetry
Flight Simulation                    Applied Dynamics                     Telemetry
Satellite Telemetry Tracking &       Real Time Logic                      Telemetry
  Control/ Satellite Integration
  Test
Helicopter Test & Simulation         Sikorsky                             Avionics
SBIRS Ground Stations                Lockheed Martin                      Telemetry
V-22 Test Support                    Bell Helicopter                      Avionics
Military Ground Vehicles             United Defense                       Avionics
Commercial Avionics System Test      Honeywell                            Avionics
</TABLE>

SALES AND MARKETING

    SBS markets its products both domestically and internationally utilizing a
combination of direct employee sales personnel, independent manufacturers'
representatives and distributors. As of September 1, 2000, SBS had 114
employees, who typically hold engineering degrees, in sales, marketing and
customer relations, 22 U.S. based independent manufacturers' representatives and
50 distributors located outside the U.S. The Computer Group and Aerospace Group
have a common sales force, separate from the Communications Group sales force,
each supporting its respective product lines, although employee sales personnel
are educated about each of SBS' product lines and refer

                                       6
<PAGE>
opportunities to appropriate product line managers. Primary sales methods vary
among SBS' operating segments. The Aerospace Group products generally have the
most complex applications and leads are generally identified and sales closed by
field sales personnel or independent manufacturers' representatives. In the case
of the Computer Group and Communications Group, sales in the United States are
either closed by the respective Group's sales force or independent
manufacturers' representatives, or are the result of catalog sales.
Internationally, sales are either closed by the respective Group's direct sales
employees or received directly from a distributor, although all quoting, pricing
and final order acceptance of international sales of United States built
products is controlled domestically. In each of the SBS' operating segments,
sales employees generally pursue "design in" applications where the SBS'
products are included as part of a system.

    SBS maintains its primary sales offices in Albuquerque, New Mexico for its
avionics interface and telemetry products, in Raleigh, North Carolina, Augsburg,
Germany, Newark, California, and St. Paul, Minnesota for its CPU products,
modular I/O products, and computer connectivity and expansion unit products, and
in Carlsbad, California and Mansfield, Massachusetts for its CPU processor
boards, WAN I/O, network I/O, and computer systems and enclosures. SBS' domestic
field sales employees are located throughout the United States. SBS also
maintains international sales offices in the United Kingdom, Germany and Sweden.
Sales and sales leads are generated through a range of activities, including
direct sales calls, identification of participants in key defense and government
related programs, participation in numerous trade shows, direct mail catalogs,
advertisements in leading trade publications, and SBS' web site on the Internet.

RESEARCH AND DEVELOPMENT

    SBS invests in research and development programs to develop new products in
related markets and to integrate state of the art technology into existing
products. As of September 1, 2000, SBS had approximately 153 employees engaged
in research and development activities. Of these employees, 71 have technical
degrees and 32 have advanced degrees. SBS seeks to combine special-purpose
hardware, firmware and software in its products to provide its customers with
the desired functionality. SBS' research and development expense was
$15.9 million, $14.4 million and $8.0 million in fiscal 2000, 1999 and 1998,
respectively, corresponding to 12.5%, 13.5% and 10.8% of sales, respectively.

    During fiscal 2000, research and development efforts continued in each of
SBS' operating segments.

    The Communications Group's research and development efforts concentrated on
developing next generation products for the telecommunications market. This
included standard and custom communications controllers based on the PowerPC 750
and 8260 microprocessors, an intelligent 24 port Ethernet switch, multiple port
T1/E1 interface modules, OC-3 transition modules and high availability systems
and associated controllers and alarm modules. The Communications Group also
invested in the development of a next generation WAN engine which allows for
modularity and scalability over the high bandwidth broadband spectrum at speeds
up to OC-3, serving applications such as ATM switches, integrated access devices
and optical switching platforms. In addition, the Communications Group developed
a next generation high-density WAN interface I/O module for computer telephony
and voice-over-IP applications and a cost reduced T/3 WAN interface module to
serve applications such as remote access devices, high-end routers, and VPN
gateways to public and private networks.

    The Computer Group's research and development efforts concentrated on
evolutionary improvement of existing technology targeted at the
commercial/industrial and military sectors of the embedded computer market.
Research and development efforts of the Computer Group's processor products
focused on evolutionary improvement of its Intel-based CPU product line. The
Computer Group made significant enhancements to its bus adapter and PCI
expansion product offerings. The bus adapter product line was significantly
enhanced with new features specifically targeting applications for

                                       7
<PAGE>
connecting systems based upon PCI bus architecture. The result of these
developments was the introduction of the dataBlizzard family of high bandwidth
connectivity products. The PCI expansion products added 64-bit capability with
the release of the Omnispan line of expansion systems and included improvements
in the cable interface allowing for greater cable distances between the host
computer and the expansion chassis. Also, the Computer Group introduced the
Reliaspan family of Compact PCI expansion systems that include features required
for high availability server applications. The Computer Group also introduced
new serial I/O and Ethernet products. The new serial I/O products offer
increased data throughput and are being deployed by customers building wireless
base station equipment, central office switches, and high-speed communications
for factory floor applications. During the year, the Computer Group broadened
its offering of PC-MIP products with the introduction of eleven new modules.

    The Aerospace Group's research and development efforts concentrated on
evolutionary product enhancements. A new high-end avionics interface module was
developed to take advantage of the latest technology providing more performance
and flexibility to the end user. In addition, the Aerospace Group continued to
redesign many of its existing products, traditionally used in laboratory and
test environments, for use in rugged and conduction-cooled environments.

    SBS cannot assure that it will be successful in developing and bringing to
market any products as a result of its research and development efforts.

SUPPLIERS

    SBS uses contract manufacturing to produce substantially all of its U. S.
built board-level products. SBS obtains parts from large electronics parts
suppliers and printed circuit boards from printed circuit board manufacturers
and provides these parts and boards as kits to contract manufacturing companies
that fabricate SBS' products. Following manufacturing, SBS performs test,
packaging and support functions for its products. SBS reduces dependence on a
particular contract manufacturer by using multiple contract manufacturers for
each of SBS' product lines. However, SBS may choose in the future to consolidate
its contract manufacturing to gain economies of scale and to shift its inventory
control to the contract manufacturer. If SBS did this it would become
increasingly dependent on a smaller number of manufacturers for the continued
timely and efficient production of all of its inventory. SBS' industrial
computer systems and enclosure business purchases all components from third
party vendors. SBS performs all assembly, test, packaging and support functions
for these products.

    SBS' German operation manufactures approximately 90% of its board-level
products at its Mindelheim facility, using contract manufacturing for the
balance, in order to meet certain rugged and military applications.

    Many of SBS' products consist in part of 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 or a limited number of suppliers, for which alternate sources may be
difficult to locate. SBS has experienced and expects to continue to experience
component part shortages. In order to help prevent shortages of critical
components, SBS has begun to build inventory of these components. To date, the
shortages have had minimal impact on SBS' results of operations. 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 short-term requirements, SBS does not have
contracts for all components which assure availability and price. However, SBS
has negotiated cash discount terms for prompt payment. If sufficient components
are not available when SBS needs them, SBS' product shipments could be delayed,
which could affect SBS' sales 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

                                       8
<PAGE>
premiums for parts would lower or eliminate SBS' profit margin, or cause SBS to
increase its inventory of scarce parts and thus affect SBS' cash flow. There is
no assurance that SBS will continue to be able to obtain all of the components
it requires or that the price of certain components in short supply will not
materially and adversely affect its business, financial condition or results of
operations.

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
operating segments. 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 operating segment. Competition in all of
SBS' operating segments is based on performance, time to market, customer
support, product longevity, supplier stability, breadth of product offerings and
reliability. Many of SBS' existing and potential competitors are bigger
companies that have financial, technological and marketing resources
significantly greater than that 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 assure 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, and financial
condition.

    The Communications Group's CPU product line competes against other suppliers
of CPU boards based on PowerPC and Intel microprocessor technology, including
Motorola, Inc., Force Computers, Inc (a wholly-owned subsidiary of Solectron
Corporation), RadiSys Corporation, Artesyn Technologies, Inc., Ziatech
Corporation and others. The WAN I/O products compete with other suppliers of
similar products supplying the telecommunications and data communications
segment of the embedded computer market. They include companies such as
Performance Technologies, Incorporated, Digi International, Inc.,
Brooktrout Inc., RadiSys Corporation, and Dialogic (a subsidiary of Intel
Corporation). The Communications Group systems and enclosure products compete
with other suppliers of special purpose PC and CompactPCI platforms, enclosures
and turnkey systems, such as I-Bus, a subsidiary of Maxwell Technologies,
RadiSys Corporation and Industrial Computer Source.

    The Computer Group's IP, PMC and PC-MIP I/O modules have two classes of
competition. The first class includes companies that compete directly by selling
these products. The second class includes companies that compete with these
products using a different implementation to provide functionally equivalent
products. Competitors in each of these classes include Acromag, Inc.,
Systran, Inc. and VMIC, Inc. The Computer Group's computer connectivity and
expansion unit product line competes with personal computer 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.
The Computer Group's CPU products primarily compete with other suppliers of CPU
boards based on Intel microprocessor technology serving the industrial segment
of the embedded computer market such as Force Computer, Inc. (a wholly-owned
subsidiary of Solectron), RadiSys Corporation, VMIC, Inc. and XYCOM, Inc.

    The Aerospace Group's avionics interface products compete with a number of
other companies that produce similar products. These competitors include Ballard
Technologies, Inc., Data Devices Corporation, Excalibur Technologies
Corporation, Condor Engineering and Gesellschaft Fur Angewandte Informatik und
Mikroelekemik GmbH. The Aerospace Group's telemetry products compete with
suppliers such as AVTECH Systems, Inc., L3 Communications, Inc. and Veridian
Systems.

                                       9
<PAGE>
EMPLOYEES

    As of September 1, 2000, SBS had approximately 522 employees at its nine
locations: Albuquerque, New Mexico; Carlsbad, California; Newark, California;
Raleigh, North Carolina; St. Paul, Minnesota; Madison, Wisconsin; Mansfield,
Massachusetts; and Augsburg and Mindelheim, Germany. Of these employees, 54 were
in executive and administrative positions; 114 were in sales, marketing and
customer relations; 153 were in research and development; 42 were clerical, and
159 were employed in support of ongoing production.

RISK FACTORS

    Statements in this Report 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:

    A MAJOR PART OF SBS' GROWTH STRATEGY IS TO ACQUIRE BUSINESSES, WHICH IT MAY
NOT BE ABLE TO IDENTIFY, OR IF ACQUIRED, TO INTEGRATE EFFECTIVELY.  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 or acquire acceptable acquisition candidates on terms favorable to
SBS, and in a timely manner. 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. SBS has increased the
scope of its operations through the acquisition of nine businesses and product
lines since 1992 (see "Introduction" above). 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 levels.

    SBS COULD USE A SUBSTANTIAL PORTION OF ITS CAPITAL RESOURCES FOR
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.

    SBS' EARNINGS COULD BE ADVERSELY AFFECTED BECAUSE OF CHARGES RESULTING FROM
ACQUISITIONS.  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, SBS cannot 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, SBS cannot assure that changes in future markets or
technologies will not require faster amortization of goodwill and other
intangible assets in such a way that the overall financial condition or results
of operations of SBS would be adversely affected. SBS may also be required,
under generally accepted accounting principles, to charge against earnings upon
consummation of an acquisition the value of an acquired business' technology
which does not meet the accounting definition of "completed technology."

    SBS' OPERATING RESULTS CAN FLUCTUATE AND CAN AFFECT THE MARKET PRICE FOR
SBS' COMMON STOCK.  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, including significant
reductions in defense spending affecting certain of SBS' customers, and
regulatory changes. Because

                                       10
<PAGE>
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.

    SBS' BUSINESS MIGHT BE MATERIALLY ADVERSELY AFFECTED IF DEFENSE SPENDING
DECREASES.  In each of fiscal 2000, 1999 and 1998, although no one customer or
group of entities known to be under common control exceeded 10% of SBS' sales,
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 sales, 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.

    CHANGES IN INDUSTRY STANDARDS, CUSTOMERS PREFERENCES, OR COMPETITORS'
PRODUCTS TECHNOLOGY COULD REQUIRE SBS TO EXPEND SUBSTANTIAL FUNDS TO REDESIGN
ITS TECHNOLOGY.  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. 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 or customer preferences could significantly and
adversely affect its marketing and sales, and financial condition.

    Many of SBS' product designs rely on state of the art digital technology.
Future advances in technology might render SBS' existing product lines obsolete,
which would require SBS to undertake costly redesign of its products to maintain
its 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 will most likely
affect the competitive environment in the markets in which they are introduced.
The development of new products and technologies, or the adaptation of existing
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
significantly decline.

    SBS' PRODUCT MARKETS 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
SBS' 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

                                       11
<PAGE>
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.

    SBS HAS SIGNIFICANT COMPETITION IN MOST OF ITS MARKETS.  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 (see "Competition" above). SBS faces competition in each of
its operating segments. 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 operating segment. Competition in all of
SBS' operating segments is based on: performance, time-to market, customer
support, product longevity, supplier stability, breadth of product offerings and
reliability. For the 2000 fiscal year, SBS had sales of $128.2 million and net
income of $8.9 million. Many of SBS' existing and potential competitors are
bigger companies that have financial, technological and marketing resources
significantly greater than that 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 assure 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, and financial
condition.

    SBS PURCHASES MANY OF THE COMPONENTS IT USES FROM THIRD PARTIES, AND ITS
BUSINESS COULD BE ADVERSELY AFFECTED IF SOME OF THOSE COMPONENTS ARE NOT
AVAILABLE ON TIME OR MUST BE PURCHASED AT A PREMIUM.  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 or a limited number of suppliers,
for which alternate sources may be difficult to locate. SBS has experienced and
expects to continue to experience component part shortages. In order to help
prevent shortages of critical components, SBS has begun to build inventory of
these components. 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 for all components 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'
sales 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.

    SBS IS DEPENDENT ON QUALIFIED 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 and marketing and sales could be
materially impaired, revenues could decline materially, and business condition
could suffer materially.

    SBS HAS LIMITED PATENT PROTECTION ON ITS TECHNOLOGY. SBS MAY NOT BE ABLE TO
ENFORCE OR DEFEND ITS PROPRIETARY RIGHTS, AND DISPUTES COULD BE
EXPENSIVE.  Although SBS believes that some of its processes and equipment may
be proprietary, SBS has sought limited 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

                                       12
<PAGE>
developed independently, by them or others, to SBS 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 that 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 patent is issued, so patent applications that relate to SBS' products and
technology may have been filed by someone else. 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.

    SBS COULD HAVE SIGNIFICANT PRODUCT LIABILITY.  SBS' products and services
could be subject to product liability or government or commercial warranty
claims. SBS maintains primary product liability insurance for its non-aviation
products with a general aggregate limit of $1.0/$2.0 million per occurrence, a
$10.0 million lead umbrella policy, and a $40.0 million excess umbrella policy.
SBS maintains, for its aviation products, a $100.0 million liability insurance
policy, per occurrence. SBS' products are widely used in a variety of
applications. If a claim is made against SBS, SBS' insurance coverage might not
be adequate to pay for its defense or to pay 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 significantly impair
SBS' financial condition.

    SBS' INTERNATIONAL SALES SUBJECT IT TO ADDITIONAL RISKS.  SBS sells its
products in countries throughout the world from its United States and European
based operations. 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
that may make payment more expensive for foreign customers who may, as a result,
limit or reduce purchases.

    EXCHANGE RATE FLUCTUATIONS COULD REDUCE SBS' EARNINGS WHEN STATED IN U.S.
DOLLARS.  Substantially all of SBS' U.S. export sales to date have been
denominated in United States dollars and substantially all sales generated by OR
have been denominated in Deutsche marks. However, some sales in the future may
be denominated in other currencies. Any decline in the value of other currencies
in which SBS makes sales against the United States dollar or Deutsche mark will
have the effect of decreasing SBS' consolidated earnings when stated in United
States dollars. SBS does not engage in any hedging transactions that might have
the effect of minimizing the consequences of currency fluctuations, and SBS does
not intend to do so in the immediate future.

    THE EURO CONVERSION MIGHT CAUSE A SIGNIFICANT DECLINE IN SBS' FINANCIAL
POSITION, RESULTS OF OPERATIONS, OR LIQUIDITY.  On January 1, 1999, eleven of
the fifteen member countries of the European Union adopted the euro as their
common legal currency and established fixed conversion rates between their
existing sovereign currencies and the euro. The legacy currencies of the
participating European Union members will remain legal tender in the
participating countries for the transition period from January 1, 1999 to
January 1, 2002. Beginning January 1, 2002, the participating countries will
issue new euro-denominated bills and coins for use in cash transactions. Legacy
currencies will no longer be legal tender for any transactions beginning
July 1, 2002, making conversion to the euro complete. SBS is assessing its need

                                       13
<PAGE>
to adapt information technology and other systems to accommodate
euro-denominated transactions, any potential impact on terms and enforceability
of legacy denominated contracts, and potential tax consequences of currency
conversion. This assessment is being conducted to determine whether the euro
conversion will have a material adverse effect on SBS' financial position,
results of operations, or liquidity.

    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 sales and business prospects outside the United States.

    OUTSTANDING OPTIONS AND REGISTRATION RIGHTS COULD HAVE A POTENTIAL DILUTIVE
EFFECT.  In April 1996, SBS registered under the Securities Act options for
266,666 shares held by SBS' Chairman of the Board and Chief Executive Officer,
Mr. Amenson. Mr. Amenson expects to exercise and sell, in accordance with
trading periods prescribed by SBS policy and in open market transactions, the
majority, if not all, of those shares before the options expire on December 31,
2000. As of September 1, 2000, Mr. Amenson had exercised and sold 66,666 shares.

    As of June 30, 2000, SBS had 1,019,170 options outstanding that could be
exercised and 2,788,316 options that were not yet eligible for exercise.

    SBS' COMMON STOCK HAS LIMITED PUBLIC FLOAT AND TRADING AND ITS STOCK PRICE
CAN BE VOLATILE.  SBS' Common Stock is traded on The Nasdaq Stock Market. While
a public market currently exists for SBS' Common Stock and the number of shares
in the public float as of June 30, 2000 was 10,292,009, trading volume in the
four weeks ended June 30, 2000 averaged 105,542 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 Stock Market has
experienced, and is likely to experience in the future, significant price and
volume fluctuations that 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.

    SBS HAS NOT PAID AND DOES NOT EXPECT TO PAY 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.

ITEM 2.  FACILITIES

    As of September 1, 2000, SBS leases office and manufacturing space in
Albuquerque, New Mexico, Carlsbad, California, Newark, California, Raleigh,
North Carolina, St. Paul, Minnesota, Madison, Wisconsin, Mansfield,
Massachusetts and Augsburg, and Mindelheim, Germany. SBS' standard practice is
to obtain all of its facilities through operating leases. SBS maintains an
insurance plan covering all its facilities and contents.

    The Albuquerque, New Mexico leased facility consists of 31,482 square feet
located in a multi-floor office building. This facility includes adequate
assembly and test space for SBS' avionics interface product line and the
telemetry product line, which was moved to the Albuquerque facility in July,
2000. The Albuquerque facility also serves as SBS' corporate headquarters. The
lease term for the Albuquerque, New Mexico facility runs through June 30, 2005,
with an option to extend the term for

                                       14
<PAGE>
an additional five years. Management believes that this facility will be
sufficient to serves the needs of the avionics interface and telemetry product
lines through the term of the lease.

    SBS' general purpose I/O business is located in Newark, California. The
approximately 27,000 square foot facility, which is leased for a five year term
expiring November 30, 2004, is a one story multi-tenant building in a business
park consisting of approximately 18,000 square feet of office space and
approximately 9,000 square feet of assembly and test areas.  The lease has an
option to extend the term for an additional three years. Management believes
that this facility will be sufficient to serve the needs of the general purpose
I/O business through the term of the lease.

    SBS' Intel-based CPU products business, located in Raleigh, North Carolina,
leases a one story multi-tenant facility consisting of approximately 4,000
square feet of office space and approximately 7,000 square feet of assembly and
test areas. The lease expires on November 30, 2002. Management believes that the
facility is adequate at the current level of business and expansion space is
available if required.

    SBS' computer connectivity and expansion unit business leases a 39,597
square foot facility, located in a business park, in St. Paul, Minnesota. This
facility, consisting of 14,813 square feet of office space and 24,784 square
feet of production and warehouse space, has been leased for a term of five years
expiring on November 30, 2002, with an option to extend the term of the lease
for one consecutive period of twenty-four to thirty-six months. Management
believes that this facility will be sufficient to serve the needs of the
computer connectivity and expansion unit business through the term of the lease.

    SBS' industrial computer and enclosure and PowerPC processor operations
lease, in Carlsbad, California, a 75,160 square foot facility, located in a
business park, consisting of 32,000 square feet of office space and 43,160
square feet of manufacturing space. The lease term is for seven years expiring
in April, 2006, plus one option to extend the lease for three additional years.
Management believes that this facility will be sufficient to serve the needs of
these operations through the term of the lease. The PowerPC processor operations
also lease, in Madison, Wisconsin, 1,865 square feet of office space used
primarily for research and development. The lease expires in April, 2001 and is
sufficient to serve the needs of the Madison operations through the term of the
lease.

    SBS leases, in Augsburg, Germany, four floors of a six floor building,
consisting of approximately 20,000 square feet of office and assembly and test
areas for its OR operations. The lease has a term of ten years expiring
December 31, 2005, with an option to expand to the additional two floors,
consisting of 5,000 square feet each, five years from the commencement of the
lease. Management believes that the facility is sufficient to serve the needs of
the OR operations through the term of the lease. In addition, SBS leases, on a
month to month basis, approximately 5,000 square feet of manufacturing space in
a multi-use facility in Mindelheim, Germany for its ORTEC operations. Management
believes that the facility is sufficient to serve the needs of ORTEC for the
foreseeable future.

    The Company's Mansfield, Massachusetts facility consists of 31,237 square
feet located in a one-story multi-tenant building in a business park. The lease
term is for five years, expiring on June 14, 2005, plus one option to extend the
lease for five additional years. Management believes that this facility will be
sufficient to serve the needs of the Mansfield operations through the term of
the lease.

ITEM 3.  LEGAL PROCEEDINGS

    SBS is subject to various claims which arise in the ordinary course of its
business. In the opinion of management, the amount of ultimate liability with
respect to these actions will not materially affect the financial position,
results of operations, or liquidity of SBS. SBS is not a party to, and none of
its property is subject to, any material pending legal proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    Not applicable.

                                       15
<PAGE>
                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    The following table sets forth the price range (adjusted for two-for-one
stock split declared August 18, 2000) of trading in SBS' Common Stock as
reported on The Nasdaq Stock Market for each full fiscal quarter within the last
two fiscal years:

<TABLE>
<CAPTION>
                                                            HIGH       LOW
                                                          --------   --------
<S>                                                       <C>        <C>
First Quarter Fiscal 1999...............................  $ 15.625   $10.6875
Second Quarter Fiscal 1999..............................     11.75     4.6875
Third Quarter Fiscal 1999...............................   12.1875       8.25
Fourth Quarter Fiscal 1999..............................   10.5315      8.875
First Quarter Fiscal 2000...............................   13.6875       9.75
Second Quarter Fiscal 2000..............................     20.00     10.875
Third Quarter Fiscal 2000...............................    27.875      9.625
Fourth Quarter Fiscal 2000..............................     20.50     12.094
</TABLE>

    SBS' Common Stock is traded over the counter on The Nasdaq Stock Market
using the symbol SBSE.

    Based on data provided by SBS' transfer agent and The Depository Trust
Company, management believes that as of September 1, 2000, the number of share
owner accounts of record, as defined by Rule 12g5-1 of the Exchange Act, was
approximately 250, at which date the closing market value of the SBS' Common
Stock was $25.0625 per share.

    SBS has not paid any cash dividends on its Common Stock. Management's
current policy is to retain earnings, if any, for use in the SBS' operations and
for expansion of the business. No dividend payments are anticipated in the
foreseeable future (see "Management's Discussion and Analysis: Liquidity").

                                       16
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

    The following selected financial data for the years ended June 30, 1996
through June 30, 2000 have been derived from the audited consolidated financial
statements of SBS. This information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the audited consolidated financial statements and related notes
thereto included elsewhere herein.

<TABLE>
<CAPTION>
                                                         YEAR ENDED JUNE 30
                                  -----------------------------------------------------------------
                                      2000          1999          1998         1997         1996
                                  ------------   -----------   ----------   ----------   ----------
<S>                               <C>            <C>           <C>          <C>          <C>
Sales...........................  $128,188,773   105,999,233   74,213,901   52,814,568   31,331,793
Net income......................  $  8,902,607    12,278,388   10,090,188      461,685    3,580,907
Net income per common share.....  $       0.71          1.05         0.90         0.05         0.59
Net income per common share--
  assuming dilution.............  $       0.66          1.00         0.82         0.05         0.49
Total assets....................  $133,160,257    92,007,855   74,315,187   61,165,014   20,443,672
Long-term debt, excluding
  current installments..........  $         --            --           --    2,816,251    5,188,320
Total liabilities...............  $ 34,146,494    14,779,882   10,051,200   10,838,326   10,392,752
Total stockholders' equity......  $ 99,013,763    77,227,973   64,263,987   50,326,688   10,050,920
</TABLE>

------------------------

Note:  SBS has not declared any dividends during the periods presented. No
       dividend payments are expected in the foreseeable future.

       On August 18, 2000, SBS declared a two-for-one stock split for
       stockholders of record on September 5, 2000, payable on September 20,
       2000. All references to net income per common share, net income per
       common share--assuming dilution, common stock, and stockholders' equity
       have been restated as if the stock split had occurred as of the earliest
       period presented.

       On April 12, 2000, SBS completed the purchase of SDL. In connection with
       the acquisition, SBS recorded a $4.0 million acquired in-process research
       and development charge in the fourth quarter of fiscal 2000.

       For fiscal 2000, net income excluding the $4.0 million acquired
       in-process research and development charge would have been $12,902,607,
       net income per common share would have been $1.04 and net income per
       common share--assuming dilution would have been $0.95.

       On December 20, 1999, SBS completed a pooling of interests transaction
       with SciTech. SciTech was subsequently merged into Communications
       Products. SciTech's historical results did not have a material effect on
       combined financial position or results of operations, therefore the
       financial position and results of operations of SBS and SciTech are
       combined from October 1, 1999 on a prospective basis.

       On August 12, 1998, SBS completed the purchase of Communications
       Products.

       On July 1, 1998, SBS acquired, through its newly formed subsidiary SBS
       Technologies Holding GmbH, a 50.1% interest in OR and a 50.2% interest in
       ORTEC. SBS also acquired, through its wholly-owned subsidiary, Embedded
       Computers, a 100% interest in OR Computers, Inc. On December 9, 1998, SBS
       completed the purchases of the minority interest in OR and ORTEC. On
       April 12, 1999, OR Computers, Inc. was merged into Embedded Computers.

       For fiscal 1999, net income per common share--assuming dilution, includes
       a net benefit of approximately $0.05 related to non-recurring foreign
       exchange gains, tax credit adjustments, and an acquired in-process
       research and development charge.

       On November 24, 1997, SBS completed the purchase of Industrial Computers.

                                       17
<PAGE>
       On November 18, 1996, SBS completed the purchase of Connectivity
       Products. In connection with the acquisition of Connectivity Products,
       SBS recorded an $11.0 million acquired in-process research and
       development charge in the second quarter of fiscal 1997.

       On November 18, 1996, SBS consummated a fully underwritten public
       offering of 3,000,000 shares of SBS' Common Stock at a price of $12.8125
       per share. The net proceeds to SBS from the public stock offering were
       used to fund the acquisition of Connectivity Products and to repay
       long-term debt, and the balance was used for general working capital
       requirements and acquisitions.

       For fiscal 1997, net income excluding the $11.0 million acquired
       in-process research and development charge would have been $7,061,685
       (net of income taxes). Net income per common share excluding the
       $11.0 million acquired in-process research and development charge would
       have been $0.78 and net income per common share--assuming dilution would
       have been $0.67.

       On August 19, 1996, SBS completed a pooling of interests transaction with
       Embedded Computers, the results of which are included in fiscal 1997 on a
       prospective basis.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS OF SBS TECHNOLOGIES, INC. AND
         SUBSIDIARIES

    ALL STATEMENTS IN THIS FORM 10-K, OTHER THAN STATEMENTS OF HISTORICAL FACT,
THAT ADDRESS ACTIVITIES, EVENTS OR DEVELOPMENTS THAT SBS OR MANAGEMENT INTENDS,
EXPECTS, PROJECTS, BELIEVES OR ANTICIPATES WILL OR MAY OCCUR IN THE FUTURE ARE
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS AND OTHER FORWARD-LOOKING
STATEMENTS ARE BASED UPON CERTAIN ASSUMPTIONS AND ASSESSMENTS MADE BY MANAGEMENT
OF SBS IN LIGHT OF ITS EXPERIENCE AND ITS PERCEPTION OF HISTORICAL TRENDS,
CURRENT CONDITIONS, EXPECTED FUTURE DEVELOPMENTS AND OTHER FACTORS IT BELIEVES
TO BE APPROPRIATE. THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS REPORT ARE
ALSO SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES, INCLUDING BUT NOT LIMITED
TO ECONOMIC, COMPETITIVE, SUPPLY AND DEMAND, GOVERNMENTAL AND TECHNOLOGICAL
FACTORS AFFECTING SBS' OPERATIONS, MARKETS, PRODUCTS, SERVICES AND PRICES. THESE
FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ACTUAL
RESULTS, DEVELOPMENTS, AND BUSINESS DECISIONS MAY DIFFER FROM THOSE EXPRESSED OR
IMPLIED BY THESE FORWARD-LOOKING STATEMENTS.

OVERVIEW

    SBS 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 embedded
computer components are used in OEM applications such as telecommunications base
stations and routers, medical imaging machines, automation and control
equipment, and aerospace devices. SBS has three operating segments: the
Communications Group, the Computer Group, and the Aerospace Group. SBS' product
lines include CPU (Pentium-Registered Trademark- and PowerPC-TM-) boards, I/O
modules, avionics modules and analyzers, computer connectivity products,
expansion units, real-time networks, telemetry boards, DIN-rail embedded PCs,
and industrial-grade computers. It is SBS' objective to continue to capitalize
on its design expertise and customer service capabilities to enhance product
quality and reduce time to market for OEM customers. SBS has grown, and intends
to continue to do so, through a combination of internal growth and acquisitions.
SBS achieves internal growth by expanding its existing product lines through new
product development, through increasing penetration of its existing customer
base, and by adding new customers.

    SBS entered the embedded computer market in 1988 with the development of its
avionics interface board, which is used in ground-based avionics systems
development and test applications. Today, SBS is a leading provider of
MIL-STD-1553 and ARINC 429/575 interface modules and bus analysis systems for
military, space and commercial avionics applications. SBS' products are the
industry standard for quality and innovation and have been selected for major
military programs, including the F-22, F-16, and B-2 aircraft, as well as in
aerospace projects such as the International Space Station.

                                       18
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

    In 1992, SBS added a second embedded computer product line with the
acquisition of SBS Technologies, Inc., Telemetry and Communications Products
(formerly Berg Systems International) ("Telemetry"), a developer of telemetry
interface circuit boards. Telemetry provides open architecture telemetry boards
for aircraft, spacecraft, and launch-vehicle telemetry programs. Telemetry
pioneered the concept of single-board telemetry solutions nearly a decade ago.
The product line currently consists of telemetry receivers, downconverters,
BPSK/QPSK modems, bit synchronizers, PCM decommutators and PCM simulators.
Telemetry was merged into SBS effective June 23, 2000.

    In 1995, SBS added a third embedded computer product line with the
acquisition of SBS Technologies, Inc., Modular I/O (formerly GreenSpring
Computer Corporation) ("Modular I/O"). Modular I/O designs, manufactures and
markets modular I/O solutions using mezzanine standards such as
IndustryPack-Registered Trademark-, PC-MIP-TM-, and PMC for use with PCI,
CompactPCI, VME, ISA, STD32, PC/104 and stand-alone embedded platforms.
Currently, Modular I/O offers over 125 I/O modules for communications
applications, network interface, video controller, digital I/O, analog I/O,
motion control, field bus, temperature measurement and memory applications. In
addition, Modular I/O has a line of conduction-cooled mezzanine I/O boards for
use in non-air cooled, rugged environments.

    In August 1996, SBS acquired Embedded Computers, a manufacturer of Intel
processor-based CPU boards. This acquisition positioned SBS to take advantage of
the growth in the use of both Intel processors and Microsoft software in the
embedded computer market that utilizes the VME computer bus architecture.

    In November 1996, SBS acquired Connectivity Products, a provider of
high-performance, low latency bus connectivity products that include bus-to-bus
adapters, bus expansion units, and real-time coherent memory networks designed
to operate in the most demanding applications.

    Industrial Computers was added in November 1997 and specializes in the
design and manufacture of rugged, special-purpose PC, and CompactPCI industrial
and telecommunications platforms, enclosures and turnkey systems. It offers a
variety of Intel and PowerPC CPU boards and system enclosures, including
rackmount, benchtop, workstation and portable systems.

    On July 1, 1998, SBS acquired, through its newly formed subsidiary SBS
Technologies Holding GmbH, a 50.1% interest in OR, a leading European designer
of CPU boards utilized in a wide range of embedded computer applications. Based
in Augsburg, Germany, OR designs, manufactures and markets CPU boards based on
Intel computer architecture available in the VME, CompactPCI, and PCCompact form
factors, as well as VME CPU boards based on the Motorola 680X0 series processors
and a series of computer I/O boards. As part of this acquisition, SBS acquired,
through its newly formed subsidiary SBS Technologies Holding GmbH, a 50.2%
interest in ORTEC, based in Mindelheim, Germany, a related company which
manufactures OR's commercial products and electronic products for other
customers. SBS also acquired, through its wholly-owned subsidiary Embedded
Computers, based in Raleigh, NC, 100% of the shares of OR Computers, Inc., which
was the U.S. marketing support organization for the OR product line and was
subsequently merged into Embedded Computers. SBS purchased the remaining shares
in OR and ORTEC in December 1998.

    On August 12, 1998, SBS purchased 100% of the outstanding shares of
Communications Products. Based in Carlsbad, California, Communications Products
designs, manufactures and markets CPU boards based on the PowerPC processor for
embedded computer applications based on the VME, CompactPCI, PMC and standalone
bus architecture standards.

                                       19
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

    On December 20, 1999, SBS acquired SciTech, a Madison, Wisconsin based
designer and manufacturer of communications network I/O products based on PMC
and PCI form factors. SciTech was subsequently merged into Communications
Products.

    On April 12, 2000, SBS purchased 100% of the outstanding shares of SDL.
Based in Mansfield, Massachusetts, SDL specializes in WAN I/O for the
telecommunications and data communications market. SDL designs, manufactures and
markets T1/E1, T3/E3, HSSI and OC3 products based on the PCI, CompactPCI and PMC
form factors and supporting protocols such as Frame Relay, HDLC, PPP, X.25 and
ATM. SDL's products support the operating systems most commonly used in
communications applications.

    See "Recent Acquisitions" below for additional information.

RECENT ACQUISITIONS

    On April 12, 2000, SBS completed the acquisition of SDL. Before the
acquisition, SDL was a privately held company. Located in Mansfield,
Massachusetts, SDL specializes in the design, manufacture and sale of WAN I/O
for the telecommunications and data communications markets. SDL designs,
manufactures, and markets T1/EI, T3/E3, HSSI and OC3 products based on the PCI,
CompactPCI, and PMC form factors, and supporting protocols such as Frame Relay,
HDLC, PPP, X.25 and ATM. In addition, SDL's products support the operating
systems most commonly used in communications, including Windows NT, Solaris, and
VxWorks. SBS acquired all of the outstanding stock of SDL for $25.6 million in
cash. Of the $25.6 million, $24.8 million was paid to the sellers at closing,
and $0.8 million was paid to the sellers on June 27, 2000, upon finalizing the
closing balance sheet. Acquisition costs associated with the purchase were
$0.6 million. The purchase price also includes $1.2 million for the fair value
of SBS options issued in exchange for unvested SDL options. The acquisition was
funded with existing cash and a $20.0 million borrowing under SBS' Credit
Agreement with Bank of America, N.A. The acquisition was accounted for under the
purchase method, whereby the purchase price was allocated to the underlying
assets and liabilities based upon their estimated fair values. Identifiable
intangibles are being amortized over four to eight years and goodwill is being
amortized over ten years. In connection with the acquisition, SBS recorded a
$4.0 million earnings charge, based on an assessment by SBS, in conjunction with
an independent valuation firm, of purchased technology of SDL. The assessment
determined that $4.0 million of SDL's purchase price represented technology that
did not meet the accounting definitions of "completed technology," and thus
should be charged to earnings under generally accepted accounting principles.
The assessment analyzed certain products that were in various stages of
completion ranging from 35% of completion to 85% of completion, with estimated
completion dates ranging from the third quarter of calendar 2000 to the second
quarter of calendar 2001. The value assigned to acquired in-process research and
development was determined based on estimates of the resulting net cash flows
from the evaluated technology of SDL and the discounting of those cash flows to
present value. In projecting net cash flows resulting from those products,
management estimated revenues, cost of sales, selling expenses, research and
development expenses, and income taxes for those products. These estimates were
based on the following assumptions:

    - Estimated revenues projected a compound annual growth rate over seven
      years of 18%. Projections of revenue growth were based on management's
      estimates of market size and growth supported by analyst's estimates and
      by the nature and expected timing of the development of the products by
      SBS and its competitors.

                                       20
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

    - The estimated cost of sales as a percentage of revenue, initially at 64%
      declining to 50%, was consistent with the historical rates for SDL's
      business as well as historical results of companies operating within the
      industry.

    - Estimated selling expenses were expected to remain consistent as a
      percentage of sales, with an average of 14% to 15%.

    - The estimated research and development costs were expected to remain
      consistent as a percentage of sales at 3.5% as most research and
      development efforts are in the maintenance phase.

    - An effective tax rate of 40% was estimated.

    The projected net cash flows for the in-process projects were discounted
using a 30% weighted-average cost of capital ("WACC"). The calculation produces
the average required rate of return of an investment in an operating enterprise.
The WACC selected was based upon the risk/return characteristics of the subject
asset class. A WACC of 25% or 26% was used to determine the value of the return
of the core developed technology, the customer list and all other intangibles
acquired as part of the purchase of SDL. The fair value of the purchased
technology was determined in accordance with the views expressed by the staff of
the Securities and Exchange Commission. The financial results of SDL have been
included in SBS' Consolidated Financial Statements from April 12, 2000.

    On December 20, 1999, SBS acquired SciTech, a Madison, Wisconsin based
designer and manufacturer of communications network I/O products based on PMC
and PCI form factors. The acquisition qualified as a pooling of interests for
accounting purposes and constituted a tax-free reorganization for federal income
tax purposes. Under the terms of the agreement, SciTech's shareholders exchanged
all outstanding shares of SciTech stock for 349,726 shares of SBS' stock.
SciTech was subsequently merged into Communications Products. SciTech's
historical results do not have a material effect on combined financial position
or results of operations, and as such, the financial position and results of
operations of SBS and SciTech are combined from October 1, 1999 on a prospective
basis.

    On August 12, 1998, SBS completed the purchase of Communications Products.
Based in Carlsbad, California, Communications Products designs, manufactures,
and markets CPU boards based on the PowerPC processor for computer applications
that utilize VME and CompactPCI bus standards. SBS acquired all of the
outstanding capital stock of Communications Products for a total purchase price
of $5.3 million. The acquisition was accounted for using the purchase method of
accounting, and goodwill is being amortized over ten years. The financial
results of Communications Products have been included in SBS' Consolidated
Financial Statements from August 12, 1998.

    On July 1, 1998, SBS acquired through its newly formed subsidiary, SBS
Technologies Holding GmbH, a 50.1% interest in OR. Based in Augsburg, Germany,
OR designs, manufactures, and markets CPU boards utilized in a wide range of
embedded computer applications. As part of the acquisition, SBS acquired,
through its newly formed subsidiary, SBS Technologies Holding GmbH, a 50.2%
interest in ORTEC, a Mindelheim, Germany based related company which
manufactures OR's commercial products and electronic products for other
customers. SBS also acquired, through its wholly-owned subsidiary, Embedded
Computers, based in Raleigh, North Carolina, a 100% interest in OR
Computers, Inc., based in Fairfax, Virginia, which was the U.S. marketing
support organization for the OR product line. Effective April 12, 1999, OR
Computers, Inc. was merged into Embedded Computers. The purchase price,
excluding transaction costs, for the majority interest in the two companies
based in Germany and

                                       21
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

100% of OR Computers, Inc. was DM 17.5 million, approximately $9.7 million, paid
in cash and 48,000 shares of common stock valued at $0.7 million at closing. In
addition, SBS and the shareholders of both OR and ORTEC entered into exclusive
option agreements whereby SBS could acquire the remaining shares of both
companies on February 28, 1999. In December 1998, SBS 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 18.2 million. SBS disbursed the cash, approximately
$10.4 million, including interest at 4.0%, during the quarter ended March 31,
1999. Acquisition costs associated with the purchases were approximately
$1.1 million. The acquisitions were accounted for using the purchase method of
accounting and goodwill is being amortized over a ten year period. In connection
with the initial acquisition, SBS recorded a $0.5 million earnings charge, based
on an assessment by SBS, 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 did 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, CompactPCI, and PC Compact products that were under development at the time
of 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 views expressed by the
staff of the Securities and Exchange Commission. In conjunction with the
acquisition of the remaining interest of OR completed on December 9, 1998, all
projects in process at the date of the initial acquisition had been
substantially completed so that no additional in-process research and
development was acquired. The financial results of OR, ORTEC, and OR
Computers, Inc. have been included in SBS' Consolidated Financial Statements
from July 1, 1998.

    In June 1999, SBS formed through SBS Technologies Holding GmbH, SBS
Technologies Europe GmbH ("SBS Europe") to act as a sales and marketing agent in
Europe. SBS also formed, SBS Technologies, Inc. Foreign Holding Company, a
Nevada Corporation, to act as the holding company for all current and future
off-shore owned entities.

    In August 1999, SBS formed a partnership between SBS Technologies Holding
GmbH, OR, and the newly formed general partner, SBS ORComputers Verwaltungs
GmbH.

    On November 24, 1997, SBS completed the purchase of Industrial Computers, a
privately held San Diego County, California based manufacturer specializing in
the design and manufacture of rugged, special-purpose PC, and CompactPCI
industrial and telecommunications platforms, enclosures and turnkey systems and
offering a variety of Intel and PowerPC CPU boards and system enclosures,
including rackmount, benchtop, workstation and portable systems. SBS acquired
all of the outstanding capital stock of Industrial Computers for a total
purchase price of $5.8 million. The acquisition was accounted for using the
purchase method of accounting and goodwill is being amortized over a ten year
period. The financial results of Industrial Computers have been included in SBS'
Consolidated Financial Statements from November 24, 1997.

                                       22
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

    The following pro forma consolidated results of operations have been
prepared as if the acquisitions of SDL, Communications Products, and the
minority interest in OR and ORTEC had occurred at the beginning of each year
presented to the extent not included in historical results.

<TABLE>
<CAPTION>
                                                              JUNE 30    JUNE 30
                                                                2000       1999
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)                       --------   --------
<S>                                                           <C>        <C>
Sales.......................................................  $139,536   117,497
Net income..................................................    10,745     7,910
Net income per common share.................................      0.86      0.68
                                                              ========   =======
Net income per common share--assuming dilution..............      0.79      0.64
                                                              ========   =======
</TABLE>

    The pro forma 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 those dates, nor
is it intended to be a projection of future results. For the years ended
June 30, 2000 and 1999, non-recurring acquired in-process research and
development charges directly attributable to the acquisition of SDL on
April 12, 2000 of $4.0 million, and $0.5 million related to the acquisition of
the majority interest in OR on July 1, 1998, were not included in the pro forma
consolidated results of operations.

RESULTS OF OPERATIONS

    The following table sets forth for the periods indicated certain operating
data as a percentage of sales:

<TABLE>
<CAPTION>
                                                                     YEAR ENDED JUNE 30
                                                               ------------------------------
                                                                 2000       1999       1998
                                                               --------   --------   --------
<S>                                                            <C>        <C>        <C>
Sales.......................................................     100.0%    100.0%      100.0%
Cost of sales...............................................      47.7      42.0        42.8
                                                                ------     -----      ------
    Gross profit............................................      52.3      58.0        57.2
Selling, general and administrative expense.................      20.5      22.6        22.8
Research and development expense............................      12.5      13.5        10.8
Acquired in-process research and development charge.........       3.1       0.5          --
Amortization of intangible assets...........................       3.9       3.8         2.6
                                                                ------     -----      ------
    Operating income........................................      12.3      17.6        21.0
Interest income (expense), net..............................        --        --         1.3
Foreign exchange gains (losses).............................      (0.1)      0.6          --
                                                                ------     -----      ------
    Income before income taxes and minority interest........      12.2      18.2        22.3
Income taxes................................................       5.2       6.3         8.7
                                                                ------     -----      ------
Income before minority interest.............................       7.0      11.9        13.6
Minority interest...........................................        --       0.4          --
                                                                ------     -----      ------
Net income..................................................       7.0%     11.5%       13.6%
                                                                ======     =====      ======
</TABLE>

YEAR ENDED JUNE 30, 2000 COMPARED TO YEAR ENDED JUNE 30, 1999

    SALES.  In fiscal 2000, sales increased 20.9%, or $22.2 million, from
$106.0 million in fiscal 1999, to $128.2 million. Of this 20.9% increase, sales
contributed by SDL, which was acquired on April 12, 2000,

                                       23
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

comprised 4.3%, and 16.6% was attributable to SBS' other product lines. Unit
shipments increased within the Computer Group segment, primarily due to an
increase in sales of the Group's computer processor products and general purpose
I/O products, partially offset by pricing pressure, the negative impact of
changes in exchange rates on sales, and a decrease in sales of the Group's
bus-to-bus adapter products. Unit shipments increased among all product lines
within the Communications Group (excluding the effect of the SDL acquisition),
but the increase in unit shipments was also partially offset by pricing
pressure. Unit shipments declined within the Aerospace Group, primarily due to a
decline in large project bookings, declines in the commercial satellite and
military markets which the Aerospace Group serves, and a decline in major new
aircraft development programs. Currently, management does not expect a further
decline in Aerospace Group sales or sales of bus-to-bus adapter products to
continue in fiscal 2001.

    GROSS PROFIT.  In fiscal 2000, gross profit increased 8.9%, or
$5.5 million, from $61.5 million in fiscal 1999, to $67.0 million. Of this 8.9%
increase, 3.8% was due to the acquisition of SDL. As expected, gross profit as a
percentage of sales decreased to 52.3% in fiscal 2000 from 58.0% in fiscal 1999,
primarily due to a higher percentage of sales of SBS' Communications Group
products, which generally yield lower margins than SBS' other products, and
lower margins experienced by the Computer Group and the Aerospace Group.
Management expects gross margins as a percentage of sales to continue to
decrease, as SBS' lower margin production and systems business is expected to
continue to represent a larger portion of the total sales mix.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSE.  In fiscal 2000, selling,
general and administrative expense increased 9.8%, or $2.3 million from
$24.0 million in fiscal 1999, to $26.3 million. Of this 9.8% increase, 2.0%
resulted from the acquisition of SDL, and 7.8% was primarily due to an increase
in costs commensurate with the growth of the Communications Group and to the
formation of SBS Europe to act as a sales and marketing agent in Europe,
partially offset by a decrease in costs within the Aerospace group. In fiscal
2000, selling, general and administrative expense as a percentage of sales
decreased to 20.5% from 22.6% in fiscal 1999, as the increase in sales volume
more than offset the increase in expense.

    RESEARCH AND DEVELOPMENT EXPENSE.  In fiscal 2000, research and development
expense increased by 11.1%, or $1.6 million, from $14.4 million in fiscal 1999,
to $15.9 million. Of this 11.1% increase, 3.7% resulted from the acquisition of
SDL, and 7.4% was primarily due to increased investment in product development
within the Communications Group commensurate with the growth of the segment,
partially offset by a reduction in costs within the Aerospace Group. In fiscal
2000, research and development expense as a percentage of sales decreased to
12.5% from 13.5% in fiscal 1999, as the increase in sales volume more than
offset the increase in expense.

    ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT CHARGE.  In fiscal 2000 and
fiscal 1999, in connection with the acquisition of SDL, completed on April 12,
2000, and in connection with the acquisition of the majority interest in OR
completed on July 1, 1998, SBS recorded earnings charges of $4.0 million, and
$0.5 million, respectively, based on assessments by SBS, in conjunction with
independent valuation firms, of purchased technology. These assessments
determined that $4.0 million of SDL's purchase price and $0.5 million of OR's
purchase price represented technology that did not meet the accounting
definitions of "completed technology", and thus should be charged to earnings
under generally accepted accounting principles (see "Recent Acquisitions"
above). In conjunction with the acquisition of the remaining interest in OR in
December 1998, all projects in process had been substantially completed so that
no additional in-process research and development was acquired.

                                       24
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

    AMORTIZATION OF INTANGIBLE ASSETS.  In fiscal 2000, amortization of
intangible assets increased 25.9%, or $1.0 million from $4.0 million in fiscal
1999, to $5.0 million. This increase was primarily the result of the
amortization of goodwill and identifiable intangibles associated with the
acquisition of SDL and the acquisition of the minority interest in OR and ORTEC
in December of 1998, partially offset by the favorable impact of changes in
exchange rates.

    INTEREST INCOME.  In fiscal 2000, interest income increased 50.5%, or
$151,000, from $298,000 in fiscal 1999, to $449,000. This increase was primarily
due to interest income associated with amendments of prior years' tax returns
for research and experimental tax credits, as well as an increase in interest
income associated with SBS' surplus cash.

    INTEREST EXPENSE.  In fiscal 2000, interest expense increased 56.8%, or
$163,000, from $288,000 in fiscal 1999, to $451,000. This increase was primarily
due to interest associated with the $20.0 million of borrowings used to fund the
acquisition of SDL, partially offset by the elimination of interest expense
associated with the $10.4 million payment made in February 1999 for the
remaining interest in OR and ORTEC.

    FOREIGN EXCHANGE GAINS (LOSSES).  In fiscal 2000, the $144,000 of foreign
exchange losses were primarily attributable to the change in exchange rates
relating to interest payable on debt from SBS' foreign subsidiary. In fiscal
1999, the $667,000 of foreign exchange gains was primarily attributable to the
change in exchange rates between December 9, 1998 and February 28, 1999,
relating to the DM 16.7 million of payments made during the quarter ended
March 31, 1999 for the remaining interests in OR and ORTEC (see "Recent
Acquisitions" above).

    INCOME TAXES.  For fiscal 2000 and fiscal 1999, income taxes represented
effective income tax rates of 42.9% and 34.3%, respectively. The increase in the
effective rate was primarily due to a non-deductible acquired in-process
research and development charge and non-deductible goodwill amortization expense
associated with the acquisition of SDL, partially offset by tax planning
strategies implemented by SBS, including minimization of SBS' tax liability
related to debt between SBS and its foreign subsidiaries, and increased use of
SBS' foreign sales corporation. Additionally, the fiscal 1999 effective tax rate
included a $0.5 million benefit from research and experimental tax credits
related to prior years.

    EARNINGS PER SHARE.  For fiscal 2000, net income per common share was $0.71
compared to $1.05 for fiscal 1999. Net income per common share--assuming
dilution was $0.66 for fiscal 2000 compared to $1.00 for fiscal 1999. For fiscal
2000, net income per common share--assuming dilution, excluding the acquired
in-process research and development charge, would have been $0.95. For fiscal
1999, net income per common share--assuming dilution, excluding the net benefits
related to non-recurring foreign exchange gains, tax credit adjustments, and an
acquired in-process research and development charge, would have been $0.95. Net
income per common share and net income per common share--assuming dilution have
been restated to reflect the two-for-one stock split declared August 18, 2000.

REVIEW OF BUSINESS SEGMENTS

    SBS is managed and operates through three operating segments: the
Communications Group, the Computer Group and the Aerospace Group. The
Communications Group was established this fiscal year and includes
Communications Products and Industrial Computers (which were included in the
Computer Group prior to this time), and SDL. The European Group which consisted
of OR and ORTEC has been merged into the Computer Group, as their business is
closely related to the processor and I/O

                                       25
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

product businesses and is now under the same management. Reportable segments for
all periods have been reclassified to conform to the new segment reporting
structure.

    The following is a discussion of sales to external customers and segment
profit for each reportable segment. SBS does not allocate to these segments
costs associated with its corporate headquarters, substantially all of the
amortization expense associated with acquisitions, substantially all interest
income earned on cash balances, interest expense associated with SBS borrowing
facilities and acquired in-process research and development charges. This
measure of segment profit described above is referred to in this review as
"Segment Profit."

COMMUNICATIONS GROUP

<TABLE>
<CAPTION>
                                          SALES TO EXTERNAL CUSTOMERS   SEGMENT PROFIT
                                          ---------------------------   --------------
<S>                                       <C>                           <C>
FY00....................................         $43.9 million          $10.2 million
FY99....................................         $19.3 million          $ 3.9 million
</TABLE>

    Communications Group sales to external customers in fiscal 2000 increased
127.1%, or $24.6 million, from $19.3 million in fiscal 1999, to $43.9 million.
Of this 127.1% increase, sales contributed from the acquisition of SDL on
April 12, 2000 accounted for 23.3% of the increase. Sales of the Group's system
and enclosure products and sales of the Group's PowerPC based processor products
increased 18.3% and 179.5%, respectively, as compared to fiscal 1999. These
increases in sales represent volume increases, partially offset by competitive
pricing pressure.

    Communications Group segment profit in fiscal 2000 increased 161.9%, or
$6.3 million, from $3.9 million in fiscal 1999, to $10.2 million. This increase
was primarily due to earnings contributed by the acquisition of SDL on
April 12, 2000 and an increase in sales among the Group's other product lines,
partially offset by an increase in selling, general and administrative and
research and development expenses commensurate with the growth of the segment.
For the same reasons, segment profit as a percentage of sales increased from
20.2% in fiscal 1999 to 23.2% in fiscal 2000.

COMPUTER GROUP

<TABLE>
<CAPTION>
                                          SALES TO EXTERNAL CUSTOMERS    SEGMENT PROFIT
                                          ---------------------------   ----------------
<S>                                       <C>                           <C>
FY00....................................        $  58.1 million         $  11.9 million
FY99....................................        $  54.8 million         $  12.8 million
</TABLE>

    Computer Group sales to external customers in fiscal 2000 increased 6.0%, or
$3.3 million from $54.8 million in fiscal 1999, to $58.1 million. Sales of the
Group's general purpose I/O products and sales of the Group's computer processor
products increased 11.4% and 12.2%, respectively, as compared to fiscal 1999.
This increase was partially offset by a decrease in sales of the Group's
bus-to-bus adapter products, primarily the result of a decrease in inventory
requirements from a large customer, a decrease in export sales, and continued
migration from older more expensive bus technologies to PCI-based applications.
Currently, management does not expect the decrease in sales of bus-to-bus
adapter products to continue in fiscal 2001. Overall, the Group experienced
competitive pricing pressure as well as the negative impact of changes in
exchange rates on sales, as the U.S. dollar strengthened against the Deutsche
mark.

                                       26
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

    Computer Group segment profit decreased 7.1%, or $900,000, from
$12.8 million in fiscal 1999 to $11.9 million. This decrease was primarily due
to lower margins experienced across the Group's product lines, the decrease in
sales of the Group's bus-to-bus adapter products, and an increase in selling,
general and administrative expense primarily associated with the formation of
SBS Europe to act as a selling and marketing agent in Europe. For the same
reasons, segment profit as a percentage of sales decreased from 23.4% in fiscal
1999 to 20.5% in fiscal 2000.

AEROSPACE GROUP

<TABLE>
<CAPTION>
                                          SALES TO EXTERNAL CUSTOMERS   SEGMENT PROFIT
                                          ---------------------------   --------------
<S>                                       <C>                           <C>
FY00....................................         $26.2 million          $ 6.9 million
FY99....................................         $31.9 million          $10.8 million
</TABLE>

    Aerospace Group sales to external customers in fiscal 2000 decreased 17.9%,
or $5.7 million, from $31.9 million for fiscal 1999, to $26.2 million. Sales of
the Group's avionics interface products and sales of the Group's telemetry
products decreased 12.6% and 31.6%, respectively, compared to fiscal 1999. These
decreases were primarily the result of declines in large project bookings and
declines in the commercial satellite and military markets which the Aerospace
Group serves, as well as a decline in major new aircraft development programs.
Management expects no growth in Aerospace Group sales to external customers in
fiscal 2001.

    Aerospace Group segment profit decreased 35.9%, or $3.9 million, from
$10.8 million for fiscal 1999, to $6.9 million. This decrease was primarily due
to lower sales of the Group's telemetry and avionics interface product lines and
a shift in sales mix to lower margin products, partially offset by reductions in
research and development and selling, general and administrative expense. For
the same reasons, segment profit as a percentage of sales decreased from 33.7%
in fiscal 1999 to 26.3% in fiscal 2000.

LIQUIDITY AND CAPITAL RESOURCES

    SBS 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 $3.6 million at June 30, 2000, an increase of $95,000 from
June 30, 1999. This increase was the result of $4.9 million of cash provided by
operating activities, $9.3 million from the exercise of stock options and
warrants, and $20.0 million drawn against SBS' $30.0 million Credit Agreement
with Bank of America, N.A., formerly NationsBank, N.A., used to finance the
acquisition of SDL, offset by the acquisition of SDL for $24.7 million, net of
cash acquired, $1.9 million for the acquisition of property and equipment,
$2.0 million to enter into a licensing agreement for fibre channel technology,
$4.0 million of payments on SBS' notes payable, $1.4 million of payments to the
former shareholder of OR, and $0.4 million of dividends paid to the former
shareholders of SciTech, in conjunction with the acquisition accounted for as a
pooling of interests. SBS' growth during the fiscal year caused SBS to increase
accounts receivable and inventory. Liabilities were in line with the current
level of business.

    In fiscal years ended June 30, 1999 and June 30, 1998, SBS generated
$10.3 million and $8.7 million, respectively, of positive cash flow from
operating activities. In fiscal 1999, the positive cash

                                       27
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

flow from operating activities and surplus cash, combined with borrowings under
SBS' Credit Agreement, provided sufficient funds to acquire Communications
Products, OR, ORTEC, and OR Computers Inc. In fiscal 1998, the positive cash
flow from operating activities provided SBS sufficient funds to acquire
Industrial Computers in November 1997.

    On December 1, 1998, SBS entered into a $15.0 million Credit Agreement
("Agreement") with Bank of America, N.A. The Agreement expired on November 30,
1999, but was modified to extend the expiration date to January 31, 2000.
Effective January 31, 2000, the Agreement was renewed and modified, allowing for
$25.0 million of borrowings with an expiration date of November 30, 2001.
Effective March 31, 2000, the Agreement was modified, allowing for
$30.0 million of borrowings with an expiration date of March 31, 2001. The
Agreement also amends the Tangible Net Worth covenant whereby stockholders'
equity less the net book value of intangible assets and unamortized debt
discount and expenses cannot be less than $30.0 million plus 75% of the
cumulative consolidated net income for each calendar quarter commencing on
October 1, 1998, through the quarter of measurement, plus 75% of the amount of
any proceeds received from the issuance of any additional shares of stock or
other equity instruments, excluding proceeds from the exercise of stock options,
reduced by $8,000,000. Additionally, in consideration of the increase in the
available commitment and other modifications, the Agreement was modified to
include a pledge of SBS' accounts receivable and inventory as collateral. As of
June 30, 2000, borrowings drawn on the Agreement totaled $20.0 million, and SBS
was in compliance with all of the covenants of the Agreement. Management
believes that its financial resources, including its internally generated funds
and debt capacity, will be sufficient to finance SBS' current operations and
capital expenditures, excluding acquisitions, for the next twelve months. At
June 30, 2000, there were no material outstanding commitments for capital
expenditures.

    For the period ended June 30, 2000, there was no significant impact from
inflation. However, competitive pricing pressure adversely impacted SBS' sales,
gross profit and income from operations (see "Results of Operations" above).
Additionally, SBS has experienced and expects to continue to experience
component part shortages. In order to help prevent shortages of critical
components, SBS has begun to build inventory of these components. To date, the
shortages have had minimal impact on results of operations. However, the impact
of these shortages on future periods cannot be predicted with certainty.

EURO CONVERSION

    On January 1, 1999, eleven of the fifteen member countries of the European
Union adopted the euro as their common legal currency and established fixed
conversion rates between their existing sovereign currencies and the euro. The
legacy currencies of the participating European Union members will remain legal
tender in the participating countries for the transition period from January 1,
1999 to January 1, 2002. Beginning January 1, 2002, the participating countries
will issue new euro-denominated bills and coins for use in cash transactions.
Legacy currencies will no longer be legal tender for any transactions beginning
July 1, 2002, making conversion to the euro complete. SBS is assessing its need
to adapt information technology and other systems to accommodate
euro-denominated transactions, any potential impact on terms and enforceability
of legacy denominated contracts, and potential tax consequences of currency
conversion. This assessment is being conducted to determine whether the euro
conversion will have a material adverse effect on SBS' financial position,
results of operations, or liquidity.

                                       28
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

NEW ACCOUNTING STANDARDS

    In June 2000, Statement of Financial Accounting Standards ("SFAS") 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities,
an Amendment of SFAS 133" was issued. SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities" establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. The provisions of this
statement are effective at the later of the first fiscal quarter beginning after
June 15, 2000 or upon adoption of SFAS 133. SBS will adopt the provisions of
this SFAS on July 1, 2000. SBS does not expect that adoption of this standard
will have a material effect on its financial position or results of operations.

    In March 2000, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation: an Interpretation of APB Opinion No. 25." This interpretation
clarifies the application of APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and is effective July 1, 2000. SBS does not expect the adoption of
this interpretation to have a material effect on its financial position or
results of operations.

    In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." This bulletin summarizes certain of the staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. In June 2000, the Securities and Exchange Commission issued SAB
No. 101B that delayed the implementation date of SAB No. 101 until the fourth
fiscal quarter of fiscal years beginning after December 15, 1999, although early
adoption is allowed. SBS does not expect the adoption of the provisions of this
statement to have a material effect on its financial position or results of
operations.

YEAR ENDED JUNE 30, 1999 COMPARED TO YEAR ENDED JUNE 30, 1998

    SALES.  In fiscal 1999, sales increased 42.8%, or $31.8 million, from
$74.2 million in fiscal 1998, to $106.0 million. Of this 42.8% increase, sales
contributed by Communications Products, which was acquired on August 12, 1998,
comprised 13.8%, sales contributed by OR, ORTEC, and OR Computers, Inc., which
were acquired on July 1, 1998, comprised 18.9%, sales contributed by Industrial
Computers, which was acquired on November 24, 1997, comprised 4.9%, and 5.2% was
attributable to SBS' other product lines. Throughout fiscal 1999, prices for
SBS' products remained firm, and unit shipments increased across all product
lines, with the exception of SBS' U.S. built CPU products manufactured by
Embedded Computers and Modular I/O product lines, which declined compared to
fiscal 1998. The sales of SBS' CPU and Modular I/O products decreased 9.0%
compared to fiscal 1998, primarily due to the effects of a slowdown in the
semiconductor industry and the Asian currency and economic crisis.

    GROSS PROFIT.  In fiscal 1999, gross profit increased 45.0%, or
$19.1 million, from $42.4 million in fiscal 1998, to $61.5 million. Of this
45.0% increase, 34.2% was due to the acquisitions of Communications Products,
OR, ORTEC, OR Computers, Inc., and Industrial Computers, and 10.8% was due to
increased sales volume over fixed costs and material cost improvements in SBS'
other product areas, as well as a higher percentage of sales of SBS' Aerospace
and Connectivity products, which generally yield higher margins than SBS' other
products. For the same reasons, in fiscal 1999, gross margin increased to 58.0%
of sales from 57.2% in fiscal 1998.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSE.  In fiscal 1999, selling,
general and administrative expense increased 42.0%, or $7.1 million from
$16.9 million in fiscal 1998, to $24.0 million. Of this 42.0% increase, 24.0%
resulted from the acquisitions of Communications Products, OR, ORTEC, OR

                                       29
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Computers, Inc., and Industrial Computers, and 18.0% was due to additional
salaried sales personnel as SBS 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 SBS. In fiscal 1999, selling,
general and administrative expense as a percentage of sales was consistent at
22.6%, compared to 22.8% in fiscal 1998, in line with the increase in sales
volume.

    RESEARCH AND DEVELOPMENT EXPENSE.  In fiscal 1999, research and development
expense increased by 79.8%, or $6.4 million, from $8.0 million in fiscal 1998,
to $14.4 million. Of this 79.8% increase, 41.3% resulted from the acquisitions
of Communications Products, OR, ORTEC, OR Computers, Inc., and Industrial
Computers, and 38.5% was due to increased investment in product development in
SBS' other product areas. For the same reasons, in fiscal 1999, research and
development expense increased to 13.5% of sales from 10.8% in fiscal 1998.

    ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT CHARGE.  In fiscal 1999, in
connection with the acquisition of the majority interest in OR completed on
July 1, 1998, SBS recorded a $0.5 million earnings charge based on an assessment
by SBS, 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 did not meet the accounting definitions of
"completed technology", and thus should be charged to earnings under generally
accepted accounting principles (see "Recent Acquisitions" above). In conjunction
with the acquisition of the remaining interest in OR, all projects in process
had been substantially completed so that no additional in-process research and
development was acquired.

    AMORTIZATION OF INTANGIBLE ASSETS.  In fiscal 1999, amortization of
intangible assets increased 105.4%, or $2.1 million from $1.9 million in fiscal
1998, to $4.0 million. This increase was the result of the amortization of
goodwill associated with the acquisitions of Communications Products, OR, ORTEC,
and Industrial Computers.

    INTEREST INCOME.  In fiscal 1999, interest income decreased 73.4%, or
$822,000, from $1.1 million in fiscal 1998, to $298,000. This decrease was
primarily due to the reduction in interest earned on cash, as SBS' cash
decreased due to the $3.0 million final payment to the former owners of
Connectivity Products on July 1, 1998, the $20.2 million of payments (net of
cash acquired) for the acquisitions of OR, ORTEC, and OR Computers, Inc., the
$5.1 million payment (net of cash acquired) for the acquisition of
Communications Products, $2.4 million for the acquisition of property and
equipment, and $1.6 million in capital expenditures for leasehold improvements
at SBS' new facility located in Carlsbad, California.

    INTEREST EXPENSE.  In fiscal 1999, interest expense increased 53.2%, or
$100,000, from $188,000 in fiscal 1998, to $288,000. This increase was due to
interest associated with the $7.9 million of borrowings drawn under SBS' line of
credit, as well as interest paid on the $10.4 million payment for the remaining
interest in OR and ORTEC, partially offset by the elimination of the imputed
interest expense associated with the notes payable to the former owners of
Connectivity Products.

    FOREIGN EXCHANGE GAINS.  In fiscal 1999, the $667,000 of foreign exchange
gains were primarily attributable to the change in exchange rates between
December 9, 1998 and February 28, 1999, relating to the DM 16.7 million of
payments made during the quarter ended March 31, 1999 for the remaining
interests in OR and ORTEC (see "Recent Acquisitions" above).

    INCOME TAXES.  For fiscal 1999 and fiscal 1998, income taxes represented
effective income tax rates of 34.3% and 39.0%, respectively. The decrease in the
effective rate was due to tax planning strategies

                                       30
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

implemented by SBS, including research and experimental tax credits (including
$0.5 million of credits related to prior years), and increased use of SBS'
foreign sales corporation, partially offset by a higher effective tax rate in
Germany.

    EARNINGS PER SHARE.  For fiscal 1999, net income per common share was $1.05
compared to $0.90 for fiscal 1998. Net income per common share--assuming
dilution was $1.00 for fiscal 1999 compared to $0.82 for fiscal 1998. Included
in net income per common share and net income per common share--assuming
dilution for fiscal 1999 is a net benefit of approximately $0.05 related to
non-recurring foreign exchange gains, tax credit adjustments, and an acquired
in-process research and development charge. Net income per common share and net
income per common share--assuming dilution have been restated to reflect the
two-for-one stock split declared August 18, 2000.

REVIEW OF BUSINESS SEGMENTS

    The following is a discussion of sales to external customers and segment
profit for each reportable segment. SBS does not allocate to these segments
costs associated with its corporate headquarters, substantially all of the
amortization expense associated with acquisitions, substantially all interest
income earned on cash balances, interest expense associated with SBS borrowing
facilities, and acquired in-process research and development charges. This
measure of segment profit described above is referred to in this review as
"Segment Profit."

COMMUNICATIONS GROUP

<TABLE>
<CAPTION>
                                          SALES TO EXTERNAL CUSTOMERS   SEGMENT PROFIT
                                          ---------------------------   --------------
<S>                                       <C>                           <C>
FY99....................................         $19.3 million           $3.9 million
FY98....................................         $ 4.8 million           $0.8 million
</TABLE>

    Communications Group sales to external customers in fiscal 1999 increased
301.9%, or $14.5 million, from $4.8 million in fiscal 1998, to $19.3 million. Of
this 301.9%, sales contributed from the acquisitions of Communications Products
and Industrial Computers accounted for 289.4% of the increase. The balance of
the increase, 12.5%, was attributable to organic growth in sales of the Group's
system and enclosure products.

    Communications Group segment profit in fiscal 1999 increased 390.6%, or
$3.1 million, from $0.8 million in fiscal 1998, to $3.9 million. This increase
was primarily due to earnings contributed by the acquisitions of Communications
Products and Industrial Computers and the net margin attributable to the organic
growth in sales of the Group's system and enclosure products. For the same
reasons, segment profit as a percentage of sales increased from 16.5% in fiscal
1998 to 20.2% in fiscal 1999.

COMPUTER GROUP

<TABLE>
<CAPTION>
                                          SALES TO EXTERNAL CUSTOMERS   SEGMENT PROFIT
                                          ---------------------------   --------------
<S>                                       <C>                           <C>
FY99....................................         $54.8 million          $12.8 million
FY98....................................         $40.3 million          $10.5 million
</TABLE>

    Computer Group sales to external customers in fiscal 1999 increased 36.0%,
or $14.5 million from $40.3 million in fiscal 1998, to $54.8 million. Of this
36.0%, sales contributed by the acquisitions of OR,

                                       31
<PAGE>
ORTEC, and OR Inc. accounted for 34.8% of the increase. Sales of the Group's
computer connectivity and expansion unit products increased 14.0% compared to
fiscal 1998, partially offset by a 9.0% decline in sales of the Group's I/O
products and the Group's U.S. built computer processor products. These declines
were primarily due to the effects of a slowdown in the semiconductor industry
and the Asian currency and economic crisis.

    Computer Group segment profit increased 22.4%, or $2.3 million, from
$10.5 million in fiscal 1998, to $12.8 million. This increase was primarily due
to earnings contributed by the acquisitions of OR, ORTEC, and OR Inc., and the
increase in net margin contribution attributable to the increase in sales of the
Group's computer connectivity and expansion products, partially offset by the
effect on net margin from the decrease in sales of the Group's I/O products and
the Group's U.S. built computer processor products, as well as an overall shift
to lower margin products. Segment profit as a percentage of sales decreased from
26.0% in fiscal 1998 to 23.4% in fiscal 1999, primarily due to an increase in
sales expense as the Group strengthened its sales force and increased investment
in product development.

AEROSPACE GROUP

<TABLE>
<CAPTION>
                                          SALES TO EXTERNAL CUSTOMERS   SEGMENT PROFIT
                                          ---------------------------   --------------
<S>                                       <C>                           <C>
FY99....................................         $31.9 million          $10.8 million
FY98....................................         $29.1 million          $11.0 million
</TABLE>

    Aerospace Group sales to external customers in fiscal 1999 increased 9.4%,
or $2.8 million, from $29.1 million in fiscal 1998, to $31.9 million. In fiscal
1999, sales of the Group's avionics interface products increased 4.8% over
fiscal 1998, a reduced rate of growth compared to that experienced by the Group
in the past several years. Management believes that this reduced growth was the
result of the Group's high market share of its avionics interface products and a
decline in defense electronics research and development expenditures. Sales of
the Group's telemetry products increased 23.5% in fiscal 1999 over fiscal 1998
as the Group increased its participation in the military and commercial
satellite market.

    Aerospace Group segment profit in fiscal 1999 decreased 2.0%, or $200,000,
from $11.0 million in fiscal 1998, to $10.8 million. The additional gross margin
realized from the Group's increased sales was offset by higher selling, general
and administrative expenses and product development costs primarily in the
telemetry products area as the Group positioned Telemetry for additional growth.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    SBS' liquid investment is cash invested either in money market accounts or
in overnight repurchase agreements. Due to the nature of these investments, SBS
believes that the market risk related to these investments is minimal. SBS'
revolving credit facility provides for interest on borrowings based on the prime
rate or LIBOR in accordance with the LIBOR margin defined in the Agreement. As a
result, increases or decreases in these rates will have the effect of reducing
or increasing net income during the period these notes remain outstanding.
Although SBS' notes payable at June 30, 2000 under the credit facility are due
upon expiration of the facility on March 31, 2001, management currently believes
that a portion of or all of these borrowings may be refinanced at prevailing
market rates, and as such, the refinanced notes will continue to carry a degree
of interest rate risk.

    SBS, as a result of its German operating and financing activities, is
exposed to market risk from changes in foreign currency exchange rates. To date,
SBS has not entered into any foreign exchange forward contracts to reduce its
exposure to changes in foreign currency exchange rates.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                       32
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
SBS Technologies, Inc.:

    We have audited the accompanying consolidated balance sheets of SBS
Technologies, Inc. and subsidiaries as of June 30, 2000 and 1999, and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for each of the years in the three-year period ended June 30,
2000. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of SBS
Technologies, Inc. and subsidiaries as of June 30, 2000 and 1999, and the
results of their operations and their cash flows for each of the years in the
three-year period ended June 30, 2000 in conformity with accounting principles
generally accepted in the United States of America.

                                          /s/ KPMG LLP

Albuquerque, New Mexico
August 11, 2000, except as to note 16,
which is as of August 18, 2000

                                       33
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                              JUNE 30, 2000   JUNE 30, 1999
                                                              -------------   -------------
<S>                                                           <C>             <C>
                           ASSETS
Current assets:
  Cash and cash equivalents.................................  $  3,595,078      3,500,556
  Receivables, net (note 3).................................    29,164,257     21,442,108
  Inventories (note 4)......................................    30,492,779     15,755,379
  Deferred income taxes (note 8)............................     5,185,853      2,179,143
  Income tax receivable.....................................     1,022,215         31,728
  Prepaid expenses..........................................       856,399        632,798
  Other current assets......................................       431,776        322,511
                                                              ------------     ----------
      Total current assets..................................    70,748,357     43,864,223
                                                              ------------     ----------
Property and equipment, net (note 5)........................     7,320,222      7,321,717
Intangible assets, net (note 6).............................    54,961,154     36,228,105
Deferred income taxes (note 8)..............................            --      4,488,059
Other assets................................................       130,524        105,751
                                                              ------------     ----------
      Total assets..........................................  $133,160,257     92,007,855
                                                              ============     ==========
            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Notes payable (note 7)....................................  $ 20,000,000      3,900,000
  Notes payable to related parties (note 7).................            --      1,391,216
  Accounts payable..........................................     5,556,479      3,319,664
  Accrued representative commissions........................       652,397        529,765
  Accrued salaries..........................................     3,171,690      2,632,993
  Accrued compensated absences..............................     1,229,307      1,201,653
  Other current liabilities.................................     2,603,812      1,804,591
                                                              ------------     ----------
      Total current liabilities.............................    33,213,685     14,779,882
                                                              ------------     ----------
Deferred income taxes (note 8)..............................       932,809             --
                                                              ------------     ----------
      Total liabilities.....................................    34,146,494     14,779,882
                                                              ------------     ----------
Stockholders' equity:
  Common stock, no par value; 200,000,000 shares authorized,
    13,302,144 and 11,674,966 issued and outstanding at June
    30, 2000 and 1999, respectively (note 16)...............    65,384,516     50,554,450
  Common stock warrants (note 11)...........................            --         38,425
  Accumulated other comprehensive loss......................    (3,967,584)    (2,059,126)
  Retained earnings.........................................    37,596,831     28,694,224
                                                              ------------     ----------
      Total stockholders' equity............................    99,013,763     77,227,973
                                                              ------------     ----------
      Total liabilities and stockholders' equity............  $133,160,257     92,007,855
                                                              ============     ==========
</TABLE>

          See accompanying notes to consolidated financial statements

                                       34
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                  YEAR ENDED JUNE 30
                                                        ---------------------------------------
                                                            2000          1999          1998
                                                        ------------   -----------   ----------
<S>                                                     <C>            <C>           <C>
Sales.................................................  $128,188,773   105,999,233   74,213,901
Cost of sales.........................................    61,173,851    44,480,959   31,793,078
                                                        ------------   -----------   ----------
  Gross Profit........................................    67,014,922    61,518,274   42,420,823
Selling, general and administrative expense...........    26,322,134    23,983,186   16,891,907
Research and development expense......................    15,946,882    14,350,995    7,983,570
Acquired in-process research and development charge...     4,000,000       527,514           --
Amortization of intangible assets.....................     5,009,818     3,980,036    1,937,353
                                                        ------------   -----------   ----------
  Operating income....................................    15,736,088    18,676,543   15,607,993
                                                        ------------   -----------   ----------
Interest income.......................................       449,150       298,372    1,120,871
Interest expense......................................      (450,962)     (287,576)    (187,676)
Foreign exchange gains (losses).......................      (143,597)      666,754           --
                                                        ------------   -----------   ----------
                                                            (145,409)      677,550      933,195
                                                        ------------   -----------   ----------
Income before income taxes and minority interest......    15,590,679    19,354,093   16,541,188
Income taxes (note 8).................................     6,688,072     6,631,322    6,451,000
                                                        ------------   -----------   ----------
Income before minority interest.......................     8,902,607    12,722,771   10,090,188
Minority interest.....................................            --       444,383           --
                                                        ------------   -----------   ----------
Net income............................................  $  8,902,607    12,278,388   10,090,188
                                                        ============   ===========   ==========
Net income per common share...........................  $       0.71          1.05         0.90
                                                        ============   ===========   ==========
Net income per common share--assuming dilution........  $       0.66          1.00         0.82
                                                        ============   ===========   ==========
</TABLE>

          See accompanying notes to consolidated financial statements

                                       35
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                         COMMON                                                      ACCUMULATED
                                         STOCK              COMMON                                      OTHER           TOTAL
                                ------------------------    STOCK      RETAINED     COMPREHENSIVE   COMPREHENSIVE   STOCKHOLDERS'
                                  SHARES       AMOUNT      WARRANTS    EARNINGS        INCOME           LOSS           EQUITY
                                ----------   -----------   --------   -----------   -------------   -------------   -------------
<S>                             <C>          <C>           <C>        <C>           <C>             <C>             <C>
BALANCE AT JUNE 30, 1997 (AS
  PREVIOUSLY REPORTED)........   5,405,378   $43,889,754   $111,286   $ 6,325,648                    $        --     $50,326,688
2-for-1 stock split declared
  August 18, 2000
  (note 16)...................   5,405,378            --         --            --                             --              --
Exercise of stock options and
  warrants....................     545,644     2,032,675    (41,168)           --    $        --              --       1,991,507
Income tax benefit from stock
  options exercised...........          --     1,855,604         --            --             --              --       1,855,604
Comprehensive income:
  Net income..................          --            --         --    10,090,188     10,090,188              --      10,090,188
                                ----------   -----------   --------   -----------    -----------     -----------     -----------
Total comprehensive income....                                                        10,090,188
                                                                                     ===========
BALANCE AT JUNE 30, 1998......  11,356,400    47,778,033     70,118    16,415,836                             --      64,263,987
Exercise of stock options and
  warrants....................     283,166     1,182,967    (31,693)           --             --              --       1,151,274
Stock issued to directors
  under restricted stock
  awards......................       7,400        74,000         --            --             --              --          74,000
Stock issued for business
  acquisition.................      48,000       713,878         --            --             --              --         713,878
Stock repurchased and
  retired.....................     (20,000)     (181,928)        --            --             --              --        (181,928)
Income tax benefit from stock
  options exercised...........          --       987,500         --            --             --              --         987,500
Comprehensive income:
  Net income..................          --            --         --    12,278,388     12,278,388              --      12,278,388
  Other comprehensive loss:
    Foreign currency
      translation
      adjustment..............          --            --         --            --     (2,059,126)     (2,059,126)     (2,059,126)
                                ----------   -----------   --------   -----------    -----------     -----------     -----------
Total comprehensive income....                                                        10,219,262
                                                                                     ===========
BALANCE AT JUNE 30, 1999......  11,674,966    50,554,450     38,425    28,694,224                     (2,059,126)     77,227,973
Exercise of stock options and
  warrants....................   1,264,010     9,348,679    (38,425)           --             --              --       9,310,254
Stock-based compensation......          --        28,124         --            --             --              --          28,124
Stock issued to directors
  under restricted stock
  awards......................      13,442        83,000         --            --             --              --          83,000
Acquisition of SciTech........     349,726       241,879         --       400,913             --              --         642,792
Dividends paid to former
  shareholders of SciTech.....          --            --         --      (400,913)            --              --        (400,913)
Fair value of SBS options
  issued in exchange for
  unvested SDL options........          --     1,231,739         --            --             --              --       1,231,739
Income tax benefit from stock
  options exercised...........          --     3,896,645         --            --             --              --       3,896,645
Comprehensive income:
  Net income..................          --            --         --     8,902,607      8,902,607              --       8,902,607
  Other comprehensive loss:
    Foreign currency
      translation
      adjustment..............          --            --         --            --     (1,908,458)     (1,908,458)     (1,908,458)
                                ----------   -----------   --------   -----------    -----------     -----------     -----------
Total comprehensive income....                                                       $ 6,994,149
                                                                                     ===========
BALANCE AT JUNE 30, 2000......  13,302,144   $65,384,516   $     --   $37,596,831                    $(3,967,584)    $99,013,763
                                ==========   ===========   ========   ===========                    ===========     ===========
</TABLE>

          See accompanying notes to consolidated financial statements

                                       36
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                   YEAR ENDED JUNE 30
                                                         ---------------------------------------
                                                             2000          1999          1998
                                                         ------------   -----------   ----------
<S>                                                      <C>            <C>           <C>
Cash flows from operating activities:
  Net income...........................................  $  8,902,607    12,278,388   10,090,188
                                                         ------------   -----------   ----------
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation.......................................     1,980,845     1,658,272      960,943
    Amortization of intangible assets..................     5,009,818     3,980,036    1,937,353
    Bad debt expense...................................       318,721       210,522      136,078
    Deferred income taxes..............................    (2,505,227)     (973,612)    (250,000)
    Income tax benefit of stock options exercised......     3,896,645       987,500    1,855,604
    Loss on disposition of assets......................       103,438        32,459        7,802
    Foreign exchange losses (gains)....................       143,597      (666,754)          --
    Stock-based compensation...........................        28,124            --           --
    Stock issued to directors under restricted stock
      awards...........................................        83,000        74,000           --
    Imputed interest...................................            --            --      183,749
    Acquired in-process research and development
      charge...........................................     4,000,000       527,514           --
    Minority interest..................................            --       444,383           --
    Changes in assets and liabilities:
      Receivables......................................    (6,830,705)   (3,079,001)  (3,066,609)
      Inventories......................................   (12,571,896)   (1,831,945)  (2,480,430)
      Prepaids and other assets........................      (308,828)     (350,462)    (262,465)
      Accounts payable.................................     1,025,611       308,474      343,790
      Accrued representative commissions...............       122,632       293,537     (253,711)
      Accrued salaries.................................        80,209    (1,131,302)      53,870
      Accrued compensated absences.....................       (20,986)      386,524      173,912
      Income taxes.....................................       366,449    (2,858,114)    (247,290)
      Other current liabilities........................     1,032,633         6,230     (460,937)
                                                         ------------   -----------   ----------
        Net adjustments................................    (4,045,920)   (1,981,739)  (1,368,341)
                                                         ------------   -----------   ----------
        Net cash provided by operating activities......     4,856,687    10,296,649    8,721,847
                                                         ------------   -----------   ----------
Cash flows from investing activities:
  Cash received from sale of assets....................            --         4,905       54,200
  Cash received from sale of marketable securities.....       248,299            --           --
  Business acquisitions, net of cash acquired (note
    2).................................................   (24,681,862)  (25,276,144)  (5,565,603)
  Purchase of license agreement........................    (2,000,000)           --           --
  Acquisition of property and equipment................    (1,909,973)   (4,019,741)  (2,975,552)
                                                         ------------   -----------   ----------
        Net cash used in investing activities..........   (28,343,536)  (29,290,980)  (8,486,955)
                                                         ------------   -----------   ----------
</TABLE>

                                       37
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE>
<CAPTION>
                                                                   YEAR ENDED JUNE 30
                                                         ---------------------------------------
                                                             2000          1999          1998
                                                         ------------   -----------   ----------
<S>                                                      <C>            <C>           <C>
Cash flows from financing activities:
  Payments on notes payable to related parties.........    (1,391,216)   (1,607,467)          --
  Proceeds from notes payable to bank..................    20,000,000     7,900,000           --
  Payments on notes payable to bank....................    (3,975,060)   (4,000,000)          --
  Dividends paid to former shareholders of SciTech.....      (400,913)           --           --
  Payments on long-term borrowings and capital
    leases.............................................            --    (3,000,000)  (1,013,316)
  Repurchase of common stock...........................            --      (181,928)          --
  Proceeds from exercise of stock options and
    warrants...........................................     9,310,254     1,151,274    1,991,507
                                                         ------------   -----------   ----------
        Net cash provided by financing activities......    23,543,065       261,879      978,191
                                                         ------------   -----------   ----------
Effect of exchange rate changes on cash................        38,306      (641,746)          --
                                                         ------------   -----------   ----------
Net increase (decrease) in cash and cash equivalents...        94,522   (19,374,198)   1,213,083
Cash and cash equivalents at beginning of period.......     3,500,556    22,874,754   21,661,671
                                                         ------------   -----------   ----------
Cash and cash equivalents at end of period.............  $  3,595,078     3,500,556   22,874,754
                                                         ============   ===========   ==========
Supplemental disclosure of cash flow information:
  Interest paid........................................  $     99,453       273,867        3,916
  Income taxes paid....................................     5,057,016     9,375,575    5,092,687
  Noncash financing and investing activities:
    Stock options issued in connection with the
      acquisition of SDL...............................     1,231,739            --           --
    Stock issued for acquisition.......................            --       713,878           --
  Summary of assets and equity acquired, and
    liabilities assumed through acquisitions:
    Cash and cash equivalents..........................     1,479,037       586,918      239,021
    Marketable securities..............................       248,299            --           --
    Receivables........................................     1,799,315     5,314,703      943,917
    Inventories........................................     2,431,739     3,378,652      475,311
    Prepaid expenses...................................        81,868       102,512       21,111
    Goodwill and identifiable intangible assets........    26,108,134    24,243,221    4,532,254
    Property and equipment.............................       270,931       556,258       25,817
    Accumulated depreciation...........................       (66,481)           --           --
    Notes payable to related parties...................            --    (2,865,603)          --
    Accounts payable...................................    (1,405,169)     (851,903)    (176,737)
    Accrued representative commissions.................            --            --      (40,240)
    Accrued salaries...................................      (463,551)   (1,753,948)     (73,938)
    Accrued compensated absences.......................       (62,124)      (82,225)      (9,971)
    Debt...............................................       (75,060)           --           --
    Deferred income taxes..............................    (5,024,324)     (105,638)          --
    Income taxes.......................................     1,481,077    (1,888,522)     (54,037)
    Other current liabilities..........................            --      (771,363)     (77,884)
    Common stock.......................................      (241,879)           --           --
    Retained earnings..................................      (400,913)           --           --
                                                         ============   ===========   ==========
</TABLE>

          See accompanying notes to consolidated financial statements

                                       38
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    (A)  GENERAL

        The consolidated financial statements include the accounts of SBS
    Technologies, Inc. and its wholly owned subsidiaries. All significant
    intercompany accounts and transactions have been eliminated.

        SBS 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 (Pentium-Registered Trademark-
    and PowerPC-TM-) boards, I/O modules, avionics modules and analyzers,
    computer connectivity products, expansion units, real-time networks,
    telemetry boards, DIN-rail embedded PCs, and industrial-grade computers. SBS
    has operations in New Mexico, Minnesota, North Carolina, California,
    Wisconsin, Massachusetts and Germany.

        See note 16 for a discussion of the two-for-one stock split declared on
    August 18, 2000 and applied retroactively in these consolidated financial
    statements.

    (B)  SALES RECOGNITION

        Sales are recognized when goods are shipped to the customer, except for
    goods delivered pursuant to a consignment agreement. Revenue is not
    recognized on consigned goods until title and the risks and rewards of
    ownership have passed to the consignee.

        Effective July 1, 1998, SBS adopted Statement of Position ("SOP") 97-2,
    "Software Revenue Recognition," which supersedes SOP 91-1. SOP 97-2 provides
    additional guidance on when revenue should be recognized and in what
    amounts, for licensing, selling, leasing, or otherwise marketing computer
    software. Adoption of SOP 97-2 did not have a material impact on SBS' sales
    recognition policies or the financial statements.

    (C)  CASH AND CASH EQUIVALENTS

        Temporary investments with original maturities of ninety days or less
    are classified as cash and cash equivalents. Substantially all cash is held
    at one financial institution.

    (D)  INVENTORIES

        Inventories are valued at standard cost, which approximates weighted
    average cost and does not exceed market.

    (E)  PROPERTY AND EQUIPMENT

        Property and equipment are carried at cost. Depreciation of property and
    equipment is provided over the estimated useful lives (one to twelve years)
    of the respective assets using straight-line and accelerated methods.

    (F)  INTANGIBLE ASSETS

        Intangible assets include goodwill, noncompete covenants, core-developed
    technology, assembled work force, customer lists and license agreements.
    Purchase price consideration relating to SBS' acquisitions has been
    allocated based on assessments by SBS in conjunction with

                                       39
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    independent valuation firms. Amortization of intangibles is being recognized
    using the straight-line method based upon the estimated economic useful
    lives of the assets (four to ten years). SBS periodically evaluates the
    carrying amounts of enterprise level goodwill, as well as the related
    amortization periods, to determine whether adjustments to these amounts or
    useful lives are required. The evaluation is based on the projection of
    undiscounted future operating cash flows of the acquired operations over the
    remaining useful life of the related goodwill. To the extent such
    projections indicate that future undiscounted cash flows are not sufficient
    to recover the carrying amounts of goodwill, a charge to expense is
    recognized so that the remaining carrying amount is equal to future
    undiscounted cash flows.

    (G)  INCOME TAXES

        SBS accounts for income taxes under the asset and liability method.
    Deferred income taxes are recognized for the tax consequences of differences
    between the financial statement carrying amounts and the tax bases of
    existing assets and liabilities by applying enacted statutory tax rates
    applicable to future years. The effect on deferred taxes of a change in tax
    rates is recognized in income in the period that includes the change.

    (H)  FINANCIAL INSTRUMENTS

        SFAS 107, "Disclosures about Fair Values of Financial Instruments,"
    requires the fair value of financial instruments be disclosed. SBS'
    financial instruments are cash and cash equivalents, accounts receivable,
    accounts payable, and notes payable. The carrying amounts of cash and cash
    equivalents, accounts receivable, accounts payable, and notes payable,
    because of their nature, approximate fair value.

    (I)  RECLASSIFICATIONS

        Certain amounts in the 1999 and 1998 financial statements have been
    reclassified to conform to the 2000 presentation.

    (J)  USE OF ESTIMATES

        The preparation of financial statements in conformity with generally
    accepted accounting principles requires management to make estimates and
    assumptions that affect the reported amounts of assets and liabilities and
    disclosure of contingent assets and liabilities at the date of the financial
    statements and the reported amounts of revenues and expenses during the
    reporting period. Actual results could differ from those estimates.

    (K)  STOCK OPTION PLANS

        SBS accounts for its stock option plans in accordance with the
    provisions of SFAS 123, "Accounting for Stock-Based Compensation." SFAS 123
    allows entities to continue to apply the provisions of APB Opinion 25 and
    provide pro forma net income and pro forma earnings per share disclosures
    for employee stock option grants made in fiscal 1996 and future years as if
    the fair-value-based method defined in SFAS 123 had been applied. SBS has
    elected to continue to

                                       40
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    apply the provisions of APB Opinion 25 and provide the pro forma disclosure
    provisions of SFAS 123.

    (L)  IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

        SBS reviews its long-lived assets and certain identifiable intangibles
    for impairment whenever events or changes in circumstances indicate that the
    carrying amount of the asset may not be recoverable. Recoverability of
    assets to be held and used is measured by a comparison of the carrying
    amount of an asset to future net cash flows (undiscounted and without
    interest charges) expected to be generated by the asset. If such assets are
    considered to be impaired, the impairment to be recognized is measured by
    the amount by which the carrying amounts of the assets exceed the fair value
    of the assets. Assets to be disposed of are reported at the lower of the
    carrying amount or fair value less costs to sell.

    (M)  COMPREHENSIVE INCOME

        SFAS 130, "Reporting Comprehensive Income," establishes standards for
    the reporting and presentation of changes in equity from non-owner sources
    in the financial statements.   Non-owner changes in stockholders' equity
    consists of net income and foreign currency translation adjustments and, as
    permitted under the provisions of SFAS 130, are presented in the
    Consolidated Statements of Changes in Stockholders' Equity. SFAS 130 does
    not affect SBS' financial position or results of operations.

    (N)  CURRENCY TRANSLATION

        For operations outside of the United States that prepare financial
    statements in functional currencies other than the U.S. dollar, SBS
    translates the statement of operations amounts at average exchange rates for
    the year and translates assets and liabilities at year-end exchange rates.
    The translation adjustments are presented as a component of accumulated
    other comprehensive loss within stockholders' equity. Foreign currency
    transaction gains and losses are recognized in the statement of operations
    based on changes in the exchange rates for transactions and balances
    denominated in non-functional currencies.

(2)  BUSINESS ACQUISITIONS

        On April 12, 2000, SBS completed the acquisition of SDL. Before the
    acquisition, SDL was a privately held company. Located in Mansfield,
    Massachusetts, SDL specializes in the design, manufacture and sale of WAN
    I/O for the telecommunications and data communications markets. SDL designs,
    manufactures, and markets T1/EI, T3/E3, HSSI and OC3 products based on the
    PCI, CompactPCI, and PMC form factors, and supporting protocols such as
    Frame Relay, HDLC, PPP, X.25 and ATM. In addition, SDL's products support
    the operating systems most commonly used in communications, including
    Windows NT, Solaris, and VxWorks. SBS acquired all of the outstanding stock
    of SDL for $25.6 million in cash. Of the $25.6 million, $24.8 million was
    paid to the sellers at closing, and $0.8 million was paid to the sellers on
    June 27, 2000, upon finalizing the closing balance sheet. Acquisition costs
    associated with the purchase were $0.6 million. The purchase price also
    includes $1.2 million for the fair value of SBS options issued in exchange
    for unvested SDL options. The acquisition was funded with existing cash and
    a $20.0 million borrowing under SBS'

                                       41
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(2)  BUSINESS ACQUISITIONS (CONTINUED)
    Credit Agreement with Bank of America, N.A. The acquisition was accounted
    for under the purchase method, whereby the purchase price was allocated to
    the underlying assets and liabilities based upon their estimated fair
    values. Identifiable intangibles are being amortized over four to eight
    years and goodwill is being amortized over ten years. In connection with the
    acquisition, SBS recorded a $4.0 million earnings charge, based on an
    assessment by SBS, in conjunction with an independent valuation firm, of
    purchased technology of SDL. The assessment determined that $4.0 million of
    SDL's purchase price represented technology that did not meet the accounting
    definitions of "completed technology," and thus should be charged to
    earnings under generally accepted accounting principles. The assessment
    analyzed certain products that were in various stages of completion ranging
    from 35% of completion to 85% of completion, with estimated completion dates
    ranging from the third quarter of calendar 2000 to the second quarter of
    calendar 2001. The fair value of the purchased technology was determined in
    accordance with the views expressed by the staff of the Securities and
    Exchange Commission. The financial results of SDL have been included in SBS'
    Consolidated Financial Statements from April 12, 2000.

        On December 20, 1999, SBS acquired SciTech, a Madison, Wisconsin based
    designer and manufacturer of communications network I/O products based on
    PMC and PCI form factors. The acquisition qualified as a pooling of
    interests for accounting purposes and constituted a tax free reorganization
    for federal income tax purposes. Under the terms of the agreement, SciTech's
    shareholders exchanged all outstanding shares of SciTech stock for 349,726
    shares of SBS' stock. SciTech was subsequently merged into Communications
    Products. SciTech's historical results do not have a material effect on
    combined financial position or results of operations, and as such, the
    financial position and results of operations of SBS and SciTech are combined
    from October 1, 1999 on a prospective basis.

        On August 12, 1998, SBS completed the purchase of Communications
    Products. Based in Carlsbad, California, Communications Products designs,
    manufactures, and markets CPU boards based on the PowerPC processor for
    computer applications that utilize VME, CompactPCI, PMC and standalone bus
    standards. SBS acquired all of the outstanding capital stock of
    Communications Products for a total purchase price of $5.3 million. Of the
    $5.3 million, $5.0 million was paid in cash to the sellers at closing, and
    $0.2 million was paid in cash to the sellers on October 13, 1998, upon
    finalizing the closing balance sheet. The remainder represents acquisition
    costs associated with the purchase. The acquisition was accounted for using
    the purchase method of accounting and goodwill is being amortized over a ten
    year period. The financial results of Communications Products have been
    included in SBS' Consolidated Financial Statements from August 12, 1998.

        On July 1, 1998, SBS acquired through its newly formed subsidiary, SBS
    Technologies Holding GmbH, a 50.1% interest in OR. Based in Augsburg,
    Germany, OR designs, manufactures, and markets CPU boards utilized in a wide
    range of embedded computer applications. As part of the acquisition, SBS
    acquired, through its newly formed subsidiary, SBS Technologies Holding
    GmbH, a 50.2% interest in ORTEC, a Mindelheim, Germany-based related company
    which manufactures OR's commercial products and electronic products for
    other customers. SBS also acquired, through its wholly-owned subsidiary,
    Embedded Computers, based in Raleigh, North Carolina, a 100% interest in OR
    Computers, Inc., based in Fairfax, Virginia, which was the U.S. marketing
    support organization for the OR product line. The purchase price, excluding
    transaction costs, for the majority interest in the two companies based in
    Germany and 100% of OR Computers, Inc. was

                                       42
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(2)  BUSINESS ACQUISITIONS (CONTINUED)

    DM 17.5 million, approximately $9.7 million, paid in cash and 48,000 shares
    of common stock valued at $0.7 million at closing. In addition, SBS and the
    shareholders of both OR and ORTEC entered into exclusive option agreements
    whereby SBS could acquire the remaining shares of both companies on
    February 28, 1999. In December 1998, SBS 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 interests in the two companies based in
    Germany was DM 18.2 million. SBS disbursed the cash, approximately
    $10.4 million, including interest at 4%, during the quarter ended March 31,
    1999. Acquisition costs associated with both purchases were approximately
    $1.1 million. The acquisitions were accounted for using the purchase method
    of accounting and goodwill is being amortized over a ten year period. In
    connection with the initial acquisition, SBS recorded a $0.5 million
    earnings charge, based on an assessment by SBS, 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 did 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, CompactPCI, and PC Compact
    products that were under development at the time of 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 views expressed by the staff of
    the Securities and Exchange Commission. In conjunction with the acquisition
    of the remaining interest of OR completed on December 9, 1998, all projects
    in process at the date of the initial acquisition had been substantially
    completed so that no additional in-process research and development was
    acquired. The financial results of OR, ORTEC, and OR Computers, Inc. have
    been included in SBS' Consolidated Financial Statements from July 1, 1998.

        On November 24, 1997, SBS completed the purchase of Industrial
    Computers, a privately held San Diego County, California based manufacturer
    specializing in the design and manufacture of rugged, special-purpose PC,
    and CompactPCI industrial and telecommunications platforms, enclosures and
    turnkey systems and offering a variety of Intel and PowerPC CPU boards and
    system enclosures, including rackmount, benchtop, workstation and portable
    systems. SBS acquired all of the outstanding capital stock of Industrial
    Computers for a total purchase price of $5.8 million. The acquisition was
    accounted for using the purchase method of accounting and goodwill is being
    amortized over a ten year period. The financial results of Industrial
    Computers have been included in SBS' Consolidated Financial Statements from
    November 24, 1997.

        The following unaudited pro forma consolidated results of operations
    have been prepared as if the acquisitions of SDL, Communications Products,
    and the minority interest in OR and ORTEC had occurred at the beginning of
    each year presented to the extent not included in historical results.

<TABLE>
<CAPTION>
                                                           JUNE 30    JUNE 30
                                                             2000       1999
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)                    --------   --------
<S>                                                        <C>        <C>
Sales....................................................  $139,536   117,497
Net income...............................................    10,745     7,910
Net income per common share..............................      0.86      0.68
                                                           ========   =======
Net income per common share--assuming dilution...........      0.79      0.64
                                                           ========   =======
</TABLE>

                                       43
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(2)  BUSINESS ACQUISITIONS (CONTINUED)
        The pro forma 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 such
    dates, nor is it intended to be a projection of future results. For the
    years ended June 30, 2000 and 1999, non-recurring acquired in-process
    research and development charges directly attributable to the acquisition of
    SDL on April 12, 2000 of $4.0 million, and $0.5 million related to the
    majority interest in OR on July 1, 1998, were not included in the unaudited
    pro forma consolidated results of operations.

(3)  RECEIVABLES

        Receivables, net consisted of the following:

<TABLE>
<CAPTION>
                                                              JUNE 30
                                                      ------------------------
                                                         2000          1999
                                                      -----------   ----------
<S>                                                   <C>           <C>
Accounts receivable.................................  $29,993,290   22,205,155
  Less allowance for doubtful accounts..............     (829,033)    (763,047)
                                                      -----------   ----------
                                                      $29,164,257   21,442,108
                                                      ===========   ==========
</TABLE>

(4)  INVENTORIES

        Inventories consisted of the following:

<TABLE>
<CAPTION>
                                                              JUNE 30
                                                      ------------------------
                                                         2000          1999
                                                      -----------   ----------
<S>                                                   <C>           <C>
Raw materials.......................................  $15,010,729    7,598,642
Work in process.....................................    8,902,019    4,150,779
Finished goods......................................    5,379,699    4,005,958
Inventory consigned to others.......................    1,200,332           --
                                                      -----------   ----------
                                                      $30,492,779   15,755,379
                                                      ===========   ==========
</TABLE>

(5)  PROPERTY AND EQUIPMENT

        Property and equipment, net consisted of the following:

<TABLE>
<CAPTION>
                                                              JUNE 30
                                                      ------------------------
                                                         2000          1999
                                                      -----------   ----------
<S>                                                   <C>           <C>
Computers...........................................  $ 3,855,413    3,252,977
Software............................................    2,232,509    1,826,394
Furniture and equipment.............................    3,928,372    3,255,039
Leasehold improvements..............................    2,554,981    2,430,838
                                                      -----------   ----------
                                                       12,571,275   10,765,248
  Less accumulated depreciation.....................   (5,251,053)  (3,443,531)
                                                      -----------   ----------
                                                      $ 7,320,222    7,321,717
                                                      ===========   ==========
</TABLE>

                                       44
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(6)  INTANGIBLE ASSETS

        Intangible assets, net consisted of the following:

<TABLE>
<CAPTION>
                                                 JUNE 30
                                         ------------------------    ESTIMATED
                                            2000          1999      USEFUL LIFE
                                         -----------   ----------   ------------
<S>                                      <C>           <C>          <C>
Goodwill...............................  $48,505,074   44,055,185   5 - 10 years
Core-developed technology..............   14,800,000           --     7 years
License agreement......................    2,000,000           --     5 years
Other..................................    2,517,841      227,894   3 - 8 years
                                         -----------   ----------
                                          67,822,915   44,283,079
  Less accumulated amortization........  (12,861,761)  (8,054,974)
                                         -----------   ----------
                                         $54,961,154   36,228,105
                                         ===========   ==========
</TABLE>

(7)  NOTES PAYABLE AND LINE OF CREDIT

        Notes payable and line of credit consisted of the following:

<TABLE>
<CAPTION>
                                                               JUNE 30
                                                       -----------------------
                                                          2000         1999
                                                       -----------   ---------
<S>                                                    <C>           <C>
Revolving credit facility notes......................  $20,000,000   3,900,000
                                                       ===========   =========
Related party notes payable to former shareholders of
  OR, including interest at 7.50% through June 30,
  1999, due no earlier than December 31, 1999, unless
  agreed to by both parties..........................  $        --   1,391,216
                                                       ===========   =========
</TABLE>

        On December 1, 1998, SBS entered into a $15.0 million credit agreement.
    The agreement expired on November 30, 1999, but was modified to extend the
    expiration date to January 31, 2000. Effective January 31, 2000, the
    agreement was renewed and modified, allowing for $25.0 million of borrowings
    with an expiration date of November 30, 2001. Effective March 31, 2000, the
    agreement was modified, allowing for $30.0 million of borrowings with an
    expiration date of March 31, 2001. The revolving credit facility provides,
    at SBS' option, interest at the prime rate or LIBOR in accordance with the
    LIBOR margin. Using the LIBOR, if SBS' Senior Funded Debt to EBITDA ratio is
    less than .50, the interest rate is LIBOR plus 1.50%. If SBS' Senior Funded
    Debt to EBITDA ratio is greater than or equal to .50 but less than or equal
    to 1.25, the interest rate is LIBOR plus 1.75%. The facility calls for a
    commitment fee, payable quarterly, of 0.20% times the average daily unused
    portion of the $30,000,000 commitment. As of June 30, 2000, the total
    outstanding amount under this facility was $20,000,000, bearing interest at
    a fixed rate of 8.16% until September 13, 2000, at which time the obligation
    matures under the existing LIBOR interest rate period. All outstanding
    borrowings are due upon expiration of the agreement. SBS is required, under
    this agreement, to maintain certain financial ratios. At June 30, 2000, SBS
    was in compliance with all of the covenants of the agreement. The facility
    is secured by accounts receivable and inventory and is guaranteed by each of
    SBS' U.S. subsidiaries.

                                       45
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(8)  INCOME TAXES

        Income before income taxes is comprised of the following:

<TABLE>
<CAPTION>
                                                   YEAR ENDED JUNE 30
                                          -------------------------------------
                                             2000          1999         1998
                                          -----------   ----------   ----------
<S>                                       <C>           <C>          <C>
U.S.....................................  $15,643,273   18,865,677   16,541,188
Foreign.................................      (52,594)     488,416           --
                                          -----------   ----------   ----------
                                          $15,590,679   19,354,093   16,541,188
                                          ===========   ==========   ==========
</TABLE>

        Income tax expense is comprised of the following:

<TABLE>
<CAPTION>
                                                     YEAR ENDED JUNE 30
                                             ----------------------------------
                                                2000        1999        1998
                                             ----------   ---------   ---------
<S>                                          <C>          <C>         <C>
Current:
  U.S. Federal.............................  $6,915,149   5,344,920   5,447,200
  State....................................   1,401,905   1,173,277   1,253,800
  Foreign..................................     824,272   1,055,965          --
Deferred:
  U.S. Federal.............................  (1,716,589)   (408,240)   (202,500)
  State....................................    (290,477)    (77,760)    (47,500)
  Foreign..................................    (446,188)   (456,840)         --
                                             ----------   ---------   ---------
                                             $6,688,072   6,631,322   6,451,000
                                             ==========   =========   =========
</TABLE>

        Income tax expense was provided for at an effective rate of 42.9, 34.3
    and 39.0 percent in 2000, 1999 and 1998, respectively. The actual tax
    expense differs from the "expected" tax expense (computed by applying the
    statutory U.S. Federal tax rate to income before income taxes) as follows:

<TABLE>
<CAPTION>
                                                     YEAR ENDED JUNE 30
                                             -----------------------------------
                                                2000         1999        1998
                                             ----------   ----------   ---------
<S>                                          <C>          <C>          <C>
Computed "expected" tax expense............  $5,456,738    6,773,933   5,735,651
State income tax, net of federal income tax
  benefit..................................     722,428      712,086     933,631
Non-deductible IPR&D.......................   1,400,000           --          --
Non-deductible goodwill and interest.......     504,215      395,000          --
Non-taxable interest income................    (411,852)          --          --
Non-taxable S-Corp income from SciTech.....    (117,788)          --          --
Foreign rate differential..................     (52,208)      33,180          --
Dividend from foreign sales corporation....    (350,000)    (192,500)   (102,000)
Research and experimental tax credits......    (420,000)  (1,095,000)   (250,000)
Other......................................     (43,461)       4,623     133,718
                                             ----------   ----------   ---------
                                             $6,688,072    6,631,322   6,451,000
                                             ==========   ==========   =========
</TABLE>

                                       46
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(8)  INCOME TAXES (CONTINUED)
        The significant components of deferred income tax assets and liabilities
    are as follows:

<TABLE>
<CAPTION>
                                                               JUNE 30
                                                       -----------------------
                                                          2000         1999
                                                       -----------   ---------
<S>                                                    <C>           <C>
Deferred tax assets:
  Vacation and severance accruals....................  $   402,000     406,000
  Inventory capitalization...........................    2,776,500     844,850
  Acquired IPR&D.....................................    3,375,636   3,697,500
  Accrued expenses...................................      219,000     190,460
  Amortization.......................................    1,496,300     933,500
  Allowance for uncollectible accounts...............      256,200     150,900
  Foreign tax credits................................      977,209     599,125
  Unbilled receivables...............................      476,500          --
  Fair value of unvested stock options...............      373,156          --
  Net operating loss carryforward....................    1,065,309          --
  Other..............................................      749,490     443,992
                                                       -----------   ---------
                                                        12,167,300   7,266,327
    Valuation allowance for deferred tax assets......   (1,433,147)   (599,125)
                                                       -----------   ---------
Total deferred tax assets............................   10,734,153   6,667,202

Deferred tax liabilities:
  Identifiable intangible assets.....................   (6,481,109)         --
                                                       -----------   ---------
Net deferred tax assets..............................  $ 4,253,044   6,667,202
                                                       ===========   =========
</TABLE>

        As of June 30, 2000, SBS had a foreign tax credit carryforward of
    approximately $1.0 million. Additionally, SBS had a net operating loss
    carryforward of approximately $1.1 million, as a result of the acquisition
    of SDL. Excess foreign tax credits may be carried back two years and forward
    five years. The net operating loss can be carried forward up to twenty years
    and is limited by Internal Revenue Code Section 382. In accordance with the
    provisions of Internal Revenue Code Section 382, utilization of SBS' net
    operating loss carryforward is estimated to be limited to approximately
    $0.6 million per year. Due to the uncertainty of the realization of the
    foreign tax credit carryforward and certain tax attributes of SDL, SBS has
    established a valuation allowance of approximately $1.4 million as of
    June 30, 2000. To the extent that $0.5 million of this valuation allowance
    related to SDL tax attributes is reduced in future periods, the benefit will
    be recognized as a reduction of goodwill. In assessing the realizability of
    the remaining deferred tax assets, management considered projected future
    taxable income and tax planning strategies. Based on SBS' historical taxable
    transactions, the timing of the reversal of existing temporary differences,
    and the evaluation of tax planning strategies, management believes it is
    more likely than not that SBS' future taxable income will be sufficient to
    realize the benefit of the remaining deferred tax assets existing at
    June 30, 2000.

(9)  EARNINGS PER SHARE

        Net income per common share is based on weighted average shares
    outstanding. Net income per common share--assuming dilution includes the
    dilutive effects of potential common shares outstanding during the period.

                                       47
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(9)  EARNINGS PER SHARE (CONTINUED)

        A reconciliation of the numerator and denominator of the per share and
    per share--assuming dilution calculation follows:

<TABLE>
<CAPTION>
                                                 INCOME         SHARES       PER-SHARE
YEAR ENDED JUNE 30                             (NUMERATOR)   (DENOMINATOR)    AMOUNT
------------------                             -----------   -------------   ---------
2000
----
<S>                                            <C>           <C>             <C>
NET INCOME PER COMMON SHARE
  Net income.................................  $ 8,902,607     12,463,056      $0.71
                                                                               =====
EFFECT OF DILUTIVE SECURITIES
  Dilutive options...........................           --      1,126,840
                                               -----------     ----------
NET INCOME PER COMMON SHARE--ASSUMING
  DILUTION
  Net income.................................  $ 8,902,607     13,589,896      $0.66
                                               ===========     ==========      =====

<CAPTION>
                                                 INCOME         SHARES       PER-SHARE
1999                                           (NUMERATOR)   (DENOMINATOR)    AMOUNT
----                                           -----------   -------------   ---------
NET INCOME PER COMMON SHARE
<S>                                            <C>           <C>             <C>
  Net income.................................  $12,278,388     11,655,052      $1.05
                                                                               =====
EFFECT OF DILUTIVE SECURITIES
  Dilutive options and warrants..............           --        681,184
                                               -----------     ----------
NET INCOME PER COMMON SHARE--ASSUMING
  DILUTION
  Net income.................................  $12,278,388     12,336,236      $1.00
                                               ===========     ==========      =====

<CAPTION>
                                                 INCOME         SHARES       PER-SHARE
1998                                           (NUMERATOR)   (DENOMINATOR)    AMOUNT
----                                           -----------   -------------   ---------
NET INCOME PER COMMON SHARE
<S>                                            <C>           <C>             <C>
  Net Income.................................  $10,090,188     11,166,858      $0.90
                                                                               =====
EFFECT OF DILUTIVE SECURITIES
  Dilutive options and warrants..............           --      1,160,024
                                               -----------     ----------
NET INCOME PER COMMON SHARE--ASSUMING
  DILUTION
  Net income.................................  $10,090,188     12,326,882      $0.82
                                               ===========     ==========      =====
</TABLE>

        For the years ended June 30, 2000, 1999 and 1998, options to purchase
    350,008, 1,890,098 and 776,534 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 underlying common shares.

(10)  LEASES

        SBS leases its main facilities in Albuquerque, New Mexico, Carlsbad,
    California, Newark, California, St. Paul, Minnesota, Raleigh, North
    Carolina, Madison, Wisconsin, Mansfield,

                                       48
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(10)  LEASES (CONTINUED)
    Massachusetts, Augsburg, Germany, and Mindelheim, Germany under
    noncancelable operating leases which expire at various dates through fiscal
    2006. SBS also leases various items of equipment under noncancelable
    operating leases which expire at various dates through fiscal 2006.

        The following is a five-year schedule of future minimum lease payments:

<TABLE>
<CAPTION>
                                         BUILDINGS        EQUIPMENT
                                          MINIMUM          MINIMUM
YEAR ENDING JUNE 30                    LEASE PAYMENTS   LEASE PAYMENTS     TOTAL
-------------------                    --------------   --------------   ----------
<S>                                    <C>              <C>              <C>
2001.................................    $ 2,445,856         92,565       2,538,421
2002.................................      2,504,652         55,343       2,559,995
2003.................................      2,384,796         52,890       2,437,686
2004.................................      2,340,264         45,938       2,386,202
2005.................................      2,236,116         31,264       2,267,380
                                         -----------        -------      ----------
                                         $11,911,684        278,000      12,189,684
                                         ===========        =======      ==========
</TABLE>

        Total rental expense for operating leases for the years ended June 30,
    2000, 1999, and 1998 was $2,519,193, $1,990,785 and $1,289,457,
    respectively.

(11)  STOCK OPTION PLANS AND WARRANTS

    (A)  1992, 1993, 1995, 1996 AND 1997 INCENTIVE STOCK OPTION PLANS

        SBS has 1992, 1993, 1995, 1996 and 1997 Incentive Stock Option Plans
    whereby a total of 2,800,000 shares of its common stock are reserved for
    discretionary grant of options by the Board to officers and employees. The
    plans all terminate ten years after inception, from the years 2001 to 2006.
    The options are intended to qualify as "incentive stock options" within the
    meaning of Section 422A of the Internal Revenue Code (the "Code"). The plans
    generally permit options to be granted (i) only to employees or officers and
    not to directors as such; (ii) for a period of up to ten years; and
    (iii) at prices not less than fair market value of the underlying common
    stock at the date of grant. Under the Code, holders of more than 10 percent
    of SBS' stock cannot be granted options with a duration of more than five
    years or exercisable at a price less than 110 percent of the fair market
    value of the underlying common stock on the date of grant. Options granted
    under the plans may be exercised as provided by the administering committee
    or Board of Directors of SBS. All of these options are exercisable at the
    quoted market value of SBS' common stock in effect on the respective dates
    of the grants.

    (B)  1993 DIRECTOR AND OFFICER STOCK OPTION PLAN

        SBS has a 1993 Director and Officer Stock Option Plan whereby a total of
    5% of the number of shares of its common stock outstanding at the first day
    of each fiscal year plus shares not awarded in prior years and underlying
    expired or terminated options are reserved for grant of options to all
    Directors of SBS who are not employees and all Executive Officers of SBS.
    Directors who are not employees of SBS receive automatic grants on the
    anniversary date of their service as a Director of SBS. Executive Officers
    receive grants at the discretion of the Board of Directors. All options are
    granted at a price equal to fair market value of the underlying common stock
    on the date of grant. The Directors' options become exercisable one year
    from the date of grant and

                                       49
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(11)  STOCK OPTION PLANS AND WARRANTS (CONTINUED)
    terminate twelve months from the date the optionee ceases to be a member of
    the Board of Directors or in five years, whichever occurs first.

    (C)  1996 EMPLOYEE STOCK PURCHASE PLAN

        The 1996 Employee Stock Purchase Plan was adopted by the Board of
    Directors on January 21, 1996 and was subsequently approved at the
    November 1996 Annual Shareholders' Meeting. The plan, as amended, provided
    for the grant of options to eligible employees on January 21, 1996 through
    January 21, 2003. In fiscal 1999, a subsequent amendment changed the grant
    date from January 21 to December 31 for grants made subsequent to
    January 21, 1999. Individual grants are issued for a percentage of the
    employee's annual base salary, as determined each year by the Board of
    Directors, up to 10%, divided by the fair market value of one share of SBS'
    common stock on the date of grant. Options are eligible to be exercised
    beginning 18 months after the date of grant for a period of nine months, at
    which time they will expire.

    (D)  1998 LONG-TERM EQUITY INCENTIVE PLAN

    The 1998 Long-Term Equity Incentive Plan was adopted by the Board of
Directors on September 15, 1997 and subsequently approved at the December 1997
reconvened Annual Shareholders' Meeting. All full-time employees of SBS and its
subsidiaries and all non-employee Directors of SBS are eligible to participate
in the plan, except that no person owning, directly or indirectly, more than 15%
of the total combined voting power of all classes of stock shall be eligible to
participate. The plan provides for the grant of any or all of the following
types of awards: (i) stock options, including incentive stock options;
(ii) stock appreciation rights; (iii) restricted stock; (iv) performance shares
and units; and (v) other stock-based awards. The maximum number of shares of
common stock that shall be available for grant of awards under the plan shall
not exceed 3,000,000, subject to adjustment in accordance with the provisions of
the plan. The exercise price of each option granted under (i) is determined by
the Board of Directors but cannot be less than 100% of the fair market value of
the underlying common stock on the date of grant. The exercise price of each
option granted under (v) is determined by the Board of Directors and can be less
than the fair market value of the underlying common stock on the date of grant.
The term of these options cannot exceed ten years from grant date. The plan
expires in January 2008.

    (E)  WARRANTS

        In connection with the acquisition of Modular I/O, warrants to purchase
    800,000 shares of common stock at $2.25 were issued to the former
    shareholders and option holders of Modular I/O. All of these warrants were
    fully vested at June 30, 1996. At June 30, 2000, all of the warrants had
    been exercised or were forfeited under the net issuance method.

                                       50
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(11)  STOCK OPTION PLANS AND WARRANTS (CONTINUED)
        Information regarding SBS' stock option plans and warrants is summarized
    in the table below:

<TABLE>
<CAPTION>
                                              ALL        1993       1996       1998
                                             ISOPS       D&O        ESPP        LT       WARRANTS     TOTAL
                                           ---------   --------   --------   ---------   --------   ---------
<S>                                        <C>         <C>        <C>        <C>         <C>        <C>
OUTSTANDING AT 6/30/97...................  1,594,668   614,000    117,710           --   445,142    2,771,520
  Granted................................    210,000    74,000     87,592      566,000        --      937,592
  Exercised..............................    129,772   207,000     68,062           --   140,810      545,644
  Cancelled..............................     77,500   235,000     10,708           --    23,860      347,068
                                           ---------   -------    -------    ---------   -------    ---------
OUTSTANDING AT 6/30/98...................  1,597,396   246,000    126,532      566,000   280,472    2,816,400
  Granted................................         --   100,000    158,034    1,248,942        --    1,506,976
  Exercised..............................     84,000    90,000         --           --   109,166      283,166
  Cancelled..............................         --        --     55,894      109,210    17,608      182,712
                                           ---------   -------    -------    ---------   -------    ---------
OUTSTANDING AT 6/30/99...................  1,513,396   256,000    228,672    1,705,732   153,698    3,857,498
  Granted................................         --    59,926    106,372    1,546,926        --    1,713,224
  Exercised..............................    609,872    72,000     58,014      370,426   153,698    1,264,010
  Cancelled..............................    130,000        --     71,540      297,686        --      499,226
                                           ---------   -------    -------    ---------   -------    ---------
OUTSTANDING AT 6/30/00...................    773,524   243,926    205,490    2,584,546        --    3,807,486
                                           =========   =======    =======    =========   =======    =========
  Exercisable at 6/30/98.................    492,394   155,000         --           --   280,472      927,866
  Exercisable at 6/30/99.................    840,060   206,000         --      208,330   153,698    1,408,088
  Exercisable at 6/30/00.................    421,854   184,000         --      413,316        --    1,019,170
                                           =========   =======    =======    =========   =======    =========
  Available for grant at 6/30/00.........    145,218   862,374    268,438       24,178        --    1,300,208
                                           =========   =======    =======    =========   =======    =========
</TABLE>

        Weighted average option exercise price information for fiscal years
    2000, 1999, and 1998 follows:

<TABLE>
<CAPTION>
                                                          2000       1999       1998
                                                        --------   --------   --------
<S>                                                     <C>        <C>        <C>
Outstanding at July 1.................................   $10.07      9.06       6.77
Granted during the year:
  Price = market value................................    15.08     10.45      12.76
  Exchanged in SDL acquisition........................     1.31        --         --
Exercised during the year.............................     7.38      5.10       3.88
Cancelled during the year.............................    11.40     11.95       8.91
Outstanding at June 30................................    12.71     10.07       9.06
Exercisable at June 30................................    10.78      7.94       4.95
                                                         ======     =====      =====
</TABLE>

                                       51
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(11)  STOCK OPTION PLANS AND WARRANTS (CONTINUED)

        Significant option groups outstanding and exercisable at June 30, 2000
    and related weighted average price and life information follows:

<TABLE>
<CAPTION>
                                                     WEIGHTED
                                                      AVERAGE                                      WEIGHTED
                                                     REMAINING    WEIGHTED AVERAGE                 AVERAGE
                                        NUMBER      CONTRACTUAL       EXERCISE         NUMBER      EXERCISE
RANGE OF EXERCISE PRICES              OUTSTANDING      LIFE            PRICE         EXERCISABLE    PRICE
------------------------              -----------   -----------   ----------------   -----------   --------
<S>                                   <C>           <C>           <C>                <C>           <C>
$ 0.78 - $11.25.....................   1,019,388        6.20           $ 7.10           454,436     $ 6.17
$11.28 - $14.38.....................     983,272        6.69           $12.64           230,334     $12.99
$14.44 - $15.63.....................     962,774        7.98           $14.86           150,000     $14.68
$15.75 - $23.00.....................     842,052        8.11           $17.10           184,400     $16.20
$ 0.78 - $23.00.....................   3,807,486        7.20           $12.71         1,019,170     $10.78
</TABLE>

        The per share weighted average fair value of stock options granted at a
    price equal to fair market value of the underlying common stock during 2000,
    1999 and 1998 was $8.06, $5.10 and $5.95, respectively, on the date of
    grant. The per share weighted average fair value of stock options exchanged
    in the SDL acquisition, recognized as a part of the purchase price of SDL,
    was $13.28. The fair value of options at date of grant was estimated using
    the Black-Scholes Model with the following weighted average assumptions:

<TABLE>
<CAPTION>
                                                        2000          1999          1998
                                                      --------      --------      --------
<S>                                                   <C>           <C>           <C>
Expected life (years)...........................        3.47          2.90          3.14
Risk free interest rate.........................        6.12%         5.93%         5.83%
Volatility......................................       70.09%        69.25%        62.59%
Dividend yield..................................          --            --            --
</TABLE>

        SBS applies APB Opinion 25 accounting for its plans. Had SBS determined
    compensation cost based on fair value at grant date for its stock options
    under SFAS 123, SBS' net income and EPS would have been reduced to the pro
    forma amounts indicated below:

<TABLE>
<CAPTION>
                                              2000         1999         1998
                                           ----------   ----------   ----------
<S>                                        <C>          <C>          <C>
Net income, as reported..................  $8,902,607   12,278,388   10,090,188
Net income, pro forma....................   3,473,193    6,139,834    6,333,362
EPS, as reported (basic).................        0.71         1.05         0.90
EPS, pro forma (basic)...................        0.28         0.53         0.57
EPS, as reported (diluted)...............        0.66         1.00         0.82
EPS, pro forma (diluted).................        0.28         0.53         0.55
</TABLE>

        Pro forma net income reflects only options granted since July 1, 1995.
    Therefore, the full impact of calculating compensation cost for stock
    options under SFAS 123 is not reflected in pro forma net income amounts
    presented above because compensation cost is reflected over the options'
    vesting periods and compensation cost for options granted prior to July 1,
    1995 is not considered.

(12)  RETIREMENT PLAN

        SBS maintains a retirement plan under Section 401(k) of the Code for all
    U.S. employees of SBS. The plan provides for employees to selectively defer
    a percentage of their wages, which SBS matches at a predetermined rate not
    to exceed 4 percent of the employee's wages. The plan also provides for
    additional contributions at the discretion of the Board of Directors. SBS
    contributions

                                       52
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(12)  RETIREMENT PLAN (Continued)
    to the plan during the years ended June 30, 2000, 1999 and 1998 were
    $846,664, $778,566 and $582,488, respectively.

(13)  SEGMENT FINANCIAL DATA

        SBS operates internationally through three operating segments: the
    Communications Group, the Computer Group, and the Aerospace Group. The
    Communications Group was established this fiscal year and includes
    Communications Products and Industrial Computers (which were included in the
    Computer Group prior to this time), and SDL. The European Group which
    consisted of OR and ORTEC has been merged into the Computer Group, as their
    business is closely related to the processor and I/O product businesses and
    is now under the same management. These segments are based on the markets
    that are served, the products that are provided to those markets, and have
    managers who report directly to the chief operating decision-maker.
    Reportable segments for all periods have been reclassified to conform to the
    new segment reporting structure. A description of these segments follows:

       - The Communications Group designs, manufactures and markets products
         that support the operating systems most commonly used in communications
         applications. These products include CPU boards based on the PowerPC
         processor, WAN I/O and network I/O and systems and enclosures.

       - The Computer Group develops, manufactures and markets SBS' processor
         boards, modular I/O boards and computer connectivity and expansion
         units. The principal customers of this group are OEM's which serve the
         industrial automation and control, and military systems industries.

       - The Aerospace Group develops, manufactures and markets avionics
         interfaces utilized for military aircraft and satellite development and
         test applications and products sold for telemetry ground stations,
         principally serving the satellite market.

        SBS measures its segments' results of operations based on income before
    income taxes and minority interest and prior to allocation of corporate
    overhead expenses, substantially all amortization of goodwill and
    intangibles, corporate interest income and expense and acquired in-process
    research and development charges associated with purchase business
    combinations. The accounting policies used to measure segment results of
    operations are the same as those described

                                       53
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(13)  SEGMENT FINANCIAL DATA (CONTINUED)
    in note 1. Intersegment sales are accounted for at prevailing market prices
    and were not significant in the fiscal year ended June 30, 1998.

<TABLE>
<CAPTION>
                                                                                      CORPORATE
                                          COMMUNICATIONS    COMPUTER    AEROSPACE      AND UN-
                                              GROUP          GROUP        GROUP      ALLOCATED(1)    OTHER(2)       TOTAL
                                          --------------   ----------   ----------   ------------   ----------   -----------
<S>                            <C>        <C>              <C>          <C>          <C>            <C>          <C>
Gross Sales..................    2000      $44,259,470     58,430,670   26,574,430            --            --   129,264,570
Intersegment sales...........                 (334,417)      (345,620)    (395,760)           --            --    (1,075,797)
                                           -----------     ----------   ----------                               -----------
  Sales to external
    customers................               43,925,053     58,085,050   26,178,670            --            --   128,188,773
Gross Sales..................    1999       19,583,433     54,922,364   32,002,628            --            --   106,508,425
Intersegment sales...........                 (238,255)      (155,541)    (115,396)           --            --      (509,192)
                                           -----------     ----------   ----------                               -----------
  Sales to external
    customers................               19,345,178     54,766,823   31,887,232            --            --   105,999,233
Sales to external
  customers..................    1998        4,813,155     40,263,837   29,136,909            --            --    74,213,901

Interest income..............    2000           13,761         15,488           --       419,901            --       449,150
                                 1999            1,026         14,173          980       282,193            --       298,372
                                 1998            9,827          1,171        3,596     1,106,277            --     1,120,871
Interest expense.............    2000           15,222         50,359           --       385,381            --       450,962
                                 1999            6,367         88,375           --       192,834            --       287,576
                                 1998               --          1,672           --       186,004            --       187,676
Depreciation and.............    2000          452,388        632,138      653,531     5,252,606            --     6,990,663
  amortization                   1999          197,384        639,113      607,522     4,194,289            --     5,638,308
                                 1998            5,287        374,913      454,743     2,063,353            --     2,898,296
Segment profit (Income
  before.....................    2000       10,207,381     11,919,386    6,892,785    (9,428,873)   (4,000,000)   15,590,679
  taxes and minority
    interest)                    1999        3,898,068     12,823,811   10,756,753    (7,597,025)     (527,514)   19,354,093
                                 1998          794,561     10,477,885   10,973,110    (5,704,368)           --    16,541,188
Total assets.................    2000       31,920,455     26,843,328    9,204,738    65,191,736            --   133,160,257
                                 1999       11,202,749     22,914,294   11,173,670    46,717,142            --    92,007,855
                                 1998        3,472,181     12,837,390   10,450,496    47,555,120            --    74,315,187
</TABLE>

--------------------------

    (1) The corporate and unallocated column includes amounts for corporate
       items. With regard to results of operations, corporate and unallocated
       includes corporate overhead, substantially all interest expense, interest
       income, and amortization expense associated with goodwill and intangibles
       not considered in assessing segment profit. Corporate assets primarily
       include cash and cash equivalents, deferred income tax assets and
       intangible assets.

    (2) Fiscal 2000 and 1999 include charges for acquired in-process research
       and development associated with purchase business combinations that
       management does not consider in assessing segment profit.

(14)  GEOGRAPHIC AREAS AND MAJOR CUSTOMERS

<TABLE>
<CAPTION>
                                     UNITED        UNITED
                                     STATES        STATES
                                    DOMESTIC      EXPORTS      GERMANY        TOTAL
                                   -----------   ----------   ----------   -----------
<S>                     <C>        <C>           <C>          <C>          <C>
Sales from External...    2000     $91,437,991   25,365,444   11,385,338   128,188,773
  Customers(1)            1999      79,150,230   16,878,726    9,970,277   105,999,233
                          1998      62,634,057   11,579,844           --    74,213,901
Long-lived assets,
  net.................    2000       6,995,148           --      325,074     7,320,222
                          1999       7,002,752           --      318,965     7,321,717
                          1998       4,460,276           --           --     4,460,276
</TABLE>

------------------------

(1) Sales are classified according to the location of the shipment.

                                       54
<PAGE>
(14)  GEOGRAPHIC AREAS AND MAJOR CUSTOMERS (CONTINUED)
        During the years ended June 30, 2000, 1999 and 1998, United States
    export sales as a percentage of total United States sales were 21.7%, 17.6%,
    and 15.6%, respectively. United States export sales were made primarily in
    the following foreign markets:

<TABLE>
<CAPTION>
                                       2000                  1999                  1998
                                -------------------   -------------------   -------------------
                                 SALES                 SALES                 SALES
                                (000'S)       %       (000'S)       %       (000'S)       %
                                --------   --------   --------   --------   --------   --------
<S>                             <C>        <C>        <C>        <C>        <C>        <C>
United Kingdom................  $ 1,929       7.6       1,680      10.0       1,400      12.1
Germany.......................    1,433       5.6       1,525       9.0       1,100       9.5
Korea.........................      934       3.7         420       2.5         700       6.0
France........................    1,495       5.9       1,415       8.4       1,150       9.9
Japan.........................    4,271      16.9       4,050      24.0       2,600      22.5
Canada........................    2,892      11.4       2,215      13.1       1,700      14.7
Sweden........................    9,097      35.9       2,100      12.4         480       4.1
Israel........................      691       2.7       1,035       6.1         220       1.9
All others....................    2,623      10.3       2,439      14.5       2,230      19.3
                                -------     -----      ------     -----      ------     -----
                                $25,365     100.0      16,879     100.0      11,580     100.0
                                =======     =====      ======     =====      ======     =====
</TABLE>

        In fiscal 2000, 1999 and 1998, no one customer, or group of entities
    known to be under common control, exceeded 10% of SBS' sales.

(15)  CONTINGENCIES

        SBS is subject to various claims which arise in the ordinary course of
    its business. In the opinion of management, the amount of ultimate liability
    with respect to these actions will not materially affect the financial
    position, results of operations, or liquidity of SBS.

(16)  SUBSEQUENT EVENT

        On August 18, 2000, SBS declared a two-for-one stock split for
    stockholders of record on September 5, 2000, payable on September 20, 2000.
    All references to net income per common share, net income per common
    share--assuming dilution, common stock, and stockholders' equity have been
    restated as if the stock split occurred as of the earliest period presented.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

    Not applicable.

                                    PART III

    Certain information required by Part III is incorporated by reference to the
SBS' definitive proxy statement pursuant to Regulation 14A (the "Proxy
Statement") for its annual meeting to be held November 9, 2000.

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE
          REGISTRANT

    The information required by this item, pertaining to information on
directors, is incorporated by reference to SBS' Proxy Statement under the
section entitled "Proxy Item No. 1--Election of Directors." The information
required by this item, pertaining to information on executive officers, is

                                       55
<PAGE>
incorporated by reference to SBS' Proxy Statement under the sub-section of Proxy
Item No. 1 entitled "Executive Officers Who Are Not Directors."

ITEM 11.  EXECUTIVE COMPENSATION

    The information required by this item is incorporated by reference to SBS'
Proxy Statement under the section entitled "Compensation of Named Executive
Officers."

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The information required by this item is incorporated by reference to of
SBS' Proxy Statement under the section entitled "Ownership of SBS Common Stock."

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The information required by this item is incorporated by reference to SBS'
Proxy Statement under the section entitled "Proxy Item No. 1--Election of
Directors" and sub-section of Proxy Item No. 1 entitled "Executive Officers Who
Are Not Directors."

                                       56
<PAGE>
                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Financial Statement Schedule

    Report of Independent Auditors' on Financial Statement Schedule
    Schedule II--Valuation and Qualifying Accounts

(b) Exhibits. The Exhibits listed on the accompanying Index to Exhibits at the
    end of this Report are filed as part of, or incorporated by reference into,
    this Report.

(c) Reports on Form 8-K during the fourth quarter.

    On April 26, 2000, SBS filed Form 8-K relating to the acquisition of all of
    the outstanding shares of SDL Communications, Inc. on April 12, 2000.

    On May 16, 2000, SBS filed Form 8-K related to options for 266,666 shares of
    common stock held by Christopher J. Amenson, SBS' Chairman and Chief
    Executive Officer and his intent to exercise and sell these shares before
    their expiration on December 31, 2000.

    On June 23, 2000, SBS filed Form 8-K/A relating to the acquisition of all of
    the outstanding shares of SDL Communications, Inc. on April 12, 2000.

                                       57
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) 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.

<TABLE>
<S>                                                    <C>  <C>
                                                       SBS TECHNOLOGIES, INC.

                                                       By:  /s/ CHRISTOPHER J. AMENSON
                                                            -----------------------------------------
                                                            Christopher J. Amenson
                                                            CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
                                                            OFFICER
</TABLE>

Date: September 22, 2000

                                       58
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
SBS Technologies, Inc.:

    Under date of August 11, 2000, except as to note 16, which is as of
August 18, 2000, we reported on the consolidated balance sheets of SBS
Technologies, Inc. and subsidiaries as of June 30, 2000 and 1999, and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for each of the years in the three-year period ended June 30,
2000, as contained in the annual report on Form 10-K for the year 2000. In
connection with our audits of the aforementioned consolidated financial
statements, we also audited the related consolidated financial statement
schedule as listed in the accompanying index. This financial statement schedule
is the responsibility of the Company's management. Our responsibility is to
express an opinion on this financial statement schedule based on our audits.

    In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

                                          /s/ KPMG LLP

Albuquerque, New Mexico
August 11, 2000

                                       59
<PAGE>
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                                            ADDITIONS    ADDITIONS
                                               BALANCE AT   CHARGED TO   CHARGED TO                      BALANCE AT
                                               BEGINNING    COSTS AND      OTHER                            END
DESCRIPTION                                     OF YEAR      EXPENSES     ACCOUNTS       DEDUCTIONS       OF YEAR
-----------                                    ----------   ----------   ----------      ----------      ----------
<S>                                            <C>          <C>          <C>             <C>             <C>
FOR THE YEAR ENDED JUNE 30, 2000:
Allowances deducted from assets
  Accounts receivable........................   $763,047     318,721           --          252,736(b)      829,032

FOR THE YEAR ENDED JUNE 30, 1999:
Allowances deducted from assets
  Accounts receivable........................    250,000     210,522      403,837(a)       101,312(b)      763,047

FOR THE YEAR ENDED JUNE 30, 1998:
Allowances deducted from assets
  Accounts receivable........................    269,293     136,078           --          155,371(b)      250,000
</TABLE>

------------------------

NOTES:

(a) Primarily bad debt reserves assumed through acquisition.

(b) Primarily accounts written off and foreign currency translation adjustments.

                                       60
<PAGE>
                             SBS TECHNOLOGIES, INC.
                           ANNUAL REPORT ON FORM 10-K
                        FISCAL YEAR ENDED JUNE 30, 2000
                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
       EXHIBIT
         NO.            DESCRIPTION
---------------------   -----------
<C>                     <S>
      3.i(3)            Articles of Incorporation, as amended on February 11, 1998

      3.ii(4)           By-laws, as amended on May 8, 1995

      4.a(5)            Article VI of the Articles of Incorporation, as amended, as
                          included in the Articles of Incorporation of SBS
                          Technologies, Inc.

      4.b(5)            Articles I, II of the Bylaws of SBS Engineering, Inc., as
                          amended

      4.c(5)            Form of certificate evidencing Common Stock

      4.1(8)            Rights Agreement dated as of September 15, 1997 between SBS
                          Technologies, Inc. and First Security Bank, National
                          Association, as Rights Agent, which includes the form of
                          Right Certificate as Exhibit A and the Summary of Rights
                          to Purchase Common Shares as Exhibit B.2

     10.b(6)            Employment agreement between Registrant and Scott A.
                          Alexander, dated October 1, 1993, as amended

     10.c(7)            1997 Employee Incentive Stock Option Plan

     10.d(6)            Employment agreement between Registrant and Christopher J.
                          Amenson, dated April 24, 1992, as amended

     10.f(1)(7)         1992 Incentive Stock Option Plan

     10.g(1)            Stock Bonus Plan

     10.h(2)(7)         1993 Incentive Stock Option Plan

     10.i(2)(7)         1993 Director and Officer Stock Option Plan

     10.v(6)(7)         1996 Employee Stock Purchase Plan, adopted January 21, 1996

     10.x(6)            Lease dated March 5, 1996, between Registrant and Bohannon
                          Trust Partnership II.

     10.z               Management Incentive Plan Filed herewith electronically

     10.ac(9)           Office/Warehouse Lease Between Lutheran Brotherhood, (a
                          Minnesota Corporation), and Bit 3 Computer Corporation, a
                          wholly owned subsidiary of SBS Technologies, Inc., dated
                          September 5, 1997.

     10.ad(9)           Amendment #1 to Lease between Lutheran Brotherhood, a
                          Minnesota Corporation, and Bit 3 Computer Corporation, a
                          wholly owned subsidiary of SBS Technologies, Inc., dated
                          December 23, 1997

     10.ae(10)          Settlement Agreement and Release between SBS Technologies,
                          Inc. and Stephen D. Cooper

     10.af(11)          Purchase Agreement dated July 1, 1998 between SBS
                          Technologies, Inc. and or Industrial Computers GmbH, et al

     10.ag(11)          Purchase Agreement dated August 12, 1998 between SBS
                          Technologies, Inc. and Themis Computer and the minority
                          shareholders of V-I Computer

     10.ah(12)          Standard Industrial Lease Between Carlsbad Business Park,
                          LLC, (a California Limited Liability Company), and SBS
                          Technologies, Inc. dated September 10, 1998

     10.ai(13)          Credit Agreement between SBS Technologies, Inc., as
                          borrower, and Bank of America N.A., formerly Nationsbank,
                          N.A., as lender, dated December 1, 1998
</TABLE>

                                       61
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
         NO.            DESCRIPTION
---------------------   -----------
<C>                     <S>
     10.aj(13)          Alterations Contract and Acceptance between SBS Technologies
                          Holding GmbH and or Industrial Computers GmbH dated
                          December 9, 1998

     10.ak(13)          Alteration Contract and Acceptance between SBS Technologies
                          Holding GmbH and ortec Electronic Assembly GmbH dated
                          December 9, 1998

     10.al(14)          Lease Agreement between Mair GmbH & Co. KG and or Industrial
                          Computers GmbH, a wholly-owned subsidiary of SBS Holding
                          GmbH, a wholly-owned subsidiary of SBS Technologies, Inc.

     10.am(15)          1998 Long-Term Equity Incentive Plan

     10.an(16)          Partnership Agreement between SBS or Industrial Computer
                          GmbH & Co. KG and SBS or Industrial Computers Verwaltungs
                          GmbH, general partner, and SBS Technologies Holding GmbH,
                          limited partner

     10.ao(17)          Lease Agreement between 8-L Newark 8371, LLC and SBS
                          Technologies, Inc.

     10.ap(18)          Pooling Agreement between SciTech, Inc., Robert Scidmore and
                          David Scidmore, and SBS Technologies, Inc., and its
                          wholly-owned subsidiary, SBS Technologies, Inc.,
                          Communications Products, dated December 20, 1999.

     10.aq(18)          Modification of Credit Agreement, Guaranty Agreements and
                          Related Loan Documents, between SBS Technologies, Inc.,
                          and Bank of America, N.A., formerly NationsBank, N.A.,
                          dated January 31, 2000.

     10.ar(18)          Amended and Restated Revolving Promissory Note, between SBS
                          Technologies, Inc. and Bank of America, N.A., formerly
                          NationsBank, N.A., dated January 31, 2000

     10.as(19)          Stock Purchase Agreement dated April 12, 2000 between SBS
                          Technologies, Inc., and SDL Communications, Inc. and the
                          stockholders of SDL Communications, Inc.

     10.at(20)          Second Modification of Credit Agreement, Guaranty Agreements
                          and Related Loan Documents, between SBS Technologies,
                          Inc., and Bank of America, N.A., and the Subsidiaries of
                          SBS Technologies, Inc. dated March 31, 2000.

     10.au(20)          Second Amended and Restated Revolving Promissory Note,
                          between SBS Technologies, Inc., and Bank of America, N.A.,
                          formerly NationsBank, N.A., dated March 31, 2000.

     10.av(20)          Supplement I to Loan Documents, made and executed as of
                          April 14, 2000 by SBS Technologies, Inc., and SDL
                          Communications, Inc.

     10.aw(20)          Security Agreement, entered into as of March 31, 2000, by
                          SBS Technologies, Inc., and all Subsidiaries of SBS
                          Technologies, Inc., in favor of Bank of America, N.A.,
                          formerly NationsBank, N.A.

     10.ax              Lease between AFC-5, LLC, a New Mexico limited Liability
                          Company, and SBS Technologies, Inc., dated May 16, 2000.
                          Filed herewith electronically

     10.ay              Lease between Long Gate, LLC, a Delaware limited liability
                          company, and SDL Communications, Inc., a Massachusetts
                          corporation, dated June 15, 2000. Filed herewith
                          electronically

     10.az              Employment agreement between Registrant and James E. Dixon,
                          dated August 8, 1995. Filed herewith electronically

     21                 Subsidiaries of the registrant Filed herewith electronically

     23.1               Consent of KPMG LLP Filed herewith electronically

     25                 Power of attorney Filed herewith electronically

     27                 Financial Data Schedules Filed herewith electronically

     27.1(10)           Financial Data Schedule, restated, Fiscal Years End 1997 and
                          1998
</TABLE>

                                       62
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
         NO.            DESCRIPTION
---------------------   -----------
<C>                     <S>
     99.1a(10)          Agreement to Serve as Rights Agent. On January 21, 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
</TABLE>

------------------------

 (1) Incorporated by reference to the exhibit filed with the Registrant's
     Registration Statement on Form S-18 (No 33-43256-D), originally filed
     October 8, 1991, which Registration Statement became effective January 9,
     1992.

 (2) Incorporated by reference to Exhibits "A" & "B" of the Registrant's Proxy
     Statement for its annual meeting held November 10, 1992.

 (3) Incorporated by reference to Exhibit 3.i of the Registrant's Quarterly
     Report on Form 10-Q for the quarter ended December 31, 1997.

 (4) Incorporated by reference to Exhibit 3.ii of the Registrant's Quarterly
     Report on Form 10-Q for the quarter ended December 31, 1995.

 (5) Incorporated by reference to Exhibits 4.1, 4.2 and 4.3 of Registrant's
     Registration Statement on Form S-3 originally filed on January 5, 1996 and
     Amendment No. 1 filed on March 14, 1996.

 (6) Incorporated by reference to Exhibits 10.b, 10.d, 10.v, and 10.x of the
     Registrant's Annual Report on Form 10-K for the fiscal year ended June 30,
     1996.

 (7) Incorporated by reference to the Registrant's Registration Statement on
     Form S-8 originally filed on March 10, 1997 and Amendment No.1 filed on
     April 4, 1997.

 (8) Incorporated by reference to Exhibit 4.1 to the Registrant's Form 8-K filed
     September 23, 1997.

 (9) Incorporated by reference to Exhibits 10.ac and 10.ad of the Registrant's
     Quarterly Report on Form 10-Q for the quarter ended December 31, 1997.

 (10) Incorporated by reference to Exhibits 10.ae, 27.1, and 99.1a of the
      Registrant's Quarterly Report on Form 10-Q for the quarter ended
      March 31, 1998.

 (11) Incorporated by reference to Exhibits 10.af and 10.ag of the Registrant's
      Annual Report on Form 10-K for the fiscal year ended June 30, 1998.

 (12) Incorporated by reference to Exhibit 10.ah of the Registrant's Quarterly
      Report on Form 10-Q for the quarter ended September 30, 1998.

 (13) Incorporated by reference to Exhibits 10.ai, 10.aj, and 10.ak of the
      Registrant's Quarterly Report on Form 10-Q for the quarter ended
      December 31, 1998.

 (14) Incorporated by reference to Exhibit 10.al of the Registrant's Quarterly
      Report on Form 10-Q for the quarter ended March 31, 1999.

 (15) Incorporated by reference to Exhibit "B" of the Registrant's Proxy
      Statement for its annual meeting held November 11, 1997, originally filed
      October 6, 1997.

 (16) Incorporated by reference to Exhibits 10.an of the Registrant's Annual
      Report on Form 10-K for the fiscal year ended June 30, 1999.

 (17) Incorporated by reference to Exhibit 10.ao of the Registrant's Quarterly
      Report on Form 10-Q for the quarter ended September 30, 1999.

 (18) Incorporated by reference to Exhibits 10.ap, 10.aq, and 10.ar of the
      Registrant's Quarterly Report on Form 10-Q for the quarter ended
      December 31, 1999.

 (19) Incorporated by reference to Exhibit 10.as of the Registrant's Form 8-K
      dated April 26, 2000.

 (20) Incorporated by reference to Exhibits 10.at, 10.au, 10.av and 10.aw of the
      Registrant's Quarterly Report on Form 10-Q for the quarter ended
      March 31, 2000.

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