<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>d90252e10-k.txt
<DESCRIPTION>FORM 10-K FOR FISCAL YEAR END JUNE 30, 2001
<TEXT>
<PAGE>   1

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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------
                                   FORM 10-K

<Table>
<C>          <S>
 (Mark One)
    [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934



             FOR THE FISCAL YEAR ENDED JUNE 30, 2001



                                   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
          incorporation or organization)                          Identification Number)
</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 August
31, 2001 as reported on The Nasdaq Stock Market(R) was approximately
$150,657,827. Shares of Common Stock held by each officer and director as of
August 27, 2001 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, 2001 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 August 31, 2001, Registrant had 14,537,730 shares of Common Stock
outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Parts of the following document are incorporated by reference into Part III
of this Form 10-K Report: (1) Definitive Proxy Statement for Registrant's 2001
Annual Meeting of Shareholders to be held November 8, 2001.
--------------------------------------------------------------------------------
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<PAGE>   2

                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
                   FORM 10-K FOR THE YEAR ENDED JUNE 30, 2001

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                                           PAGE
                                                                           ----
<S>          <C>                                                           <C>
PART I       ............................................................    2
  Item 1.    Business....................................................    2
  Item 2.    Properties..................................................   13
  Item 3.    Legal Proceedings...........................................   14
  Item 4.    Submission of Matters to a Vote of Security Holders.........   14
PART II      ............................................................   14
  Item 5.    Market for Registrant's Common Equity and Related
             Stockholder Matters.........................................   14
  Item 6.    Selected Financial Data.....................................   15
  Item 7.    Management's Discussion and Analysis of Consolidated
             Financial Condition and Results of Operations of SBS
               Technologies, Inc. and Subsidiaries.......................   16
  Item 7A.   Quantitative and Qualitative Disclosures About Market
             Risk........................................................   25
  Item 8.    Financial Statements and Supplementary Data.................   26
  Item 9.    Changes in and Disagreements with Accountants on Accounting
             and Financial Disclosure....................................   47
PART III     ............................................................   47
  Item 10.   Directors, Executive Officers, Promoters and Control Persons
               of the Registrant.........................................   47
  Item 11.   Executive Compensation......................................   47
  Item 12.   Security Ownership of Certain Beneficial Owners and
             Management..................................................   47
  Item 13.   Certain Relationships and Related Transactions..............   47
PART IV      ............................................................   47
  Item 14.   Exhibits, Financial Statement Schedules and Reports on Form
             8-K.........................................................   47
</Table>

                                        1
<PAGE>   3

     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.

                                     PART I

ITEM 1.  BUSINESS

  INTRODUCTION

     SBS Technologies, Inc. ("SBS") designs and builds open-architecture
embedded computer products that enable original equipment manufacturers to serve
the commercial, communications and government markets. SBS' products are
integrated into a variety of applications including communications networking,
medical imaging, industrial automation and military systems. The portfolio
includes an extensive line of CPU boards, computer interconnections, avionics,
telemetry, and fully integrated systems and enclosures, that system designers
can easily utilize to create a custom solution specific to the user's unique
application. SBS' objective is 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 completed nine
acquisitions between 1992 and 2000 that broadened SBS' product offerings and
customer base. 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, which was distributed 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 was incorporated in New Mexico in November 1986 and began operations in
September 1987. SBS has executive offices located at 2400 Louisiana Boulevard,
NE, AFC Building 5, Suite 600, Albuquerque, New Mexico, 87110, telephone number
(505) 875-0600, and 5791 Van Allen Way, Carlsbad, CA, 92008, telephone number
760-438-6900. References to "SBS" are to SBS Technologies, Inc. and its
consolidated subsidiaries. As of June 30, 2001, SBS had seven subsidiaries: SBS
Technologies, Inc., Modular I/O ("Modular I/O"), SBS Technologies, Inc.,
Embedded Computers ("Embedded Computers"), SBS Technologies, Inc., Connectivity
Products ("Connectivity Products"), SBS Technologies, Inc., Industrial Computers
("Industrial Computers"), SBS Technologies, Inc., Communications Products
("Communications Products"), SDL Communications, Inc. ("SDL") and SBS
Technologies, Inc. Foreign Holding Company ("Foreign Holding"). SBS Technologies
Holding GmbH ("Holding GmbH") is a subsidiary of Foreign Holding. ORTEC
Electronic Assembly GmbH ("ORTEC") is a subsidiary of Holding GmbH. In August,
1999, SBS formed a partnership between Holding GmbH, SBS OR Industrial Computers
GmbH ("OR"), and the general partner, SBS or Computers Verwaltungs GmbH.

     SBS Technologies(R) and IndustryPack(R) are registered trademarks of SBS.
PC-MIP(R) is a registered trademark of MEN Micro, Inc. of Carrollton, Texas, and
SBS. SBS has filed trademark applications for Gigaboards, 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.

     The following narrative should be read in conjunction with the Section
titled "Risk Factors."

                                        2
<PAGE>   4

  SBS' OPERATING SEGMENTS AND PRODUCTS

     Through June 30, 2001, SBS operated internationally through three operating
segments, the Communications Group, the Computer Group, and the Aerospace Group.
These segments were based on the markets that were served and the products that
were provided to those markets, and had managers who reported directly to the
chief executive officer, who is the chief operating decision-maker.

     In July 2001, in conjunction with management's realignment of operations
and market development efforts, SBS' segment structure was redefined. The
Commercial Group is primarily comprised of SBS entities that were formerly in
the Computer Group. The Commercial Group's primary focus is to serve customers
in the medical, semiconductor and other commercial markets. The Government
Group, formerly the Aerospace Group, continues to focus on the defense industry.
The Communications Group continues to serve the major telecommunications OEM's
as well as developing products for next generation OEM's.

  Communications Group Products

     The Communications Group designs and builds high performance OEM
telecommunications platforms that provide complete CPU, WAN and LAN hardware
interfaces plus enabling communications software protocol support for PPP, Frame
Relay, ATM and SS7. Hardware form factors supported include CompactPCI, VME, PMC
and PCI in single boards or systems. The Communications Groups' OEM CPU
platforms are based on PowerPC and Intel architectures, providing Blade Control
Modules and Line Control Modules for its customers. Because of a growing
industry interest in Switched Ethernet platforms, the Communications Group is
also designing cards and systems incorporating Ethernet as a switch fabric. In
fiscal years 2001, 2000 and 1999, sales of these products comprised
approximately 49.2%, 34.3%, and 18.2%, respectively, of SBS' total sales. As of
September 1, 2001, 2000, and 1999, backlog orders expected to be filled within
the current fiscal year were $17.7 million, $40.0 million, and $6.8 million,
respectively. However, SBS has recently experienced order cancellations and
requests for extensions of product shipments and may continue to experience
these cancellations and extensions, and as a result, shipments of the
Communications Group's current backlog may be delayed.

  Computer Group Products

     The Computer Group designs and builds 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 semiconductor manufacturing
equipment, industrial automation, medical imaging, military and aerospace, and
entertainment applications. In fiscal years 2001, 2000, and 1999, sales of these
products comprised approximately 37.4%, 45.3%, and 51.7%, respectively, of SBS'
total sales. As of September 1, 2001, 2000, and 1999, backlog orders expected to
be filled within the current fiscal year were $11.4 million, $18.8 million, and
$10.4 million, respectively. However, SBS has recently experienced order
cancellations and requests for extensions of product shipments and may continue
to experience these cancellations and extensions, and as a result, shipments of
the Computer Group's current backlog may be delayed.

  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. 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 allowing engineers to monitor test
performance in real time, often decreasing total test costs and enhancing test
safety. In fiscal years 2001, 2000, and 1999, sales of these products comprised

                                        3
<PAGE>   5

approximately 13.4%, 20.4%, and 30.1%, respectively, of the Company's total
sales. As of September 1, 2001, 2000, and 1999, backlog orders expected to be
filled within the current fiscal year were $4.9 million, $5.7 million, and $3.5
million, respectively. However, SBS has recently experienced order cancellations
and requests for extensions of product shipments and may continue to experience
these cancellations and extensions, and as a result, shipments of the Aerospace
Group's current backlog may be delayed.

  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 are used by a diversified OEM customer base in
a variety of applications including communications networking, medical imaging,
industrial automation and military systems. In fiscal 2001, 2000, and 1999, no
one customer equaled or exceeded 10% of SBS' sales. Most of the Communications
Group's customers are OEM's serving the telecommunications market. They use SBS'
products in applications such as wireless base station controllers, optical
switches, routers and network monitoring and security applications. The majority
of the Computer Group's customers are OEM's building products that are used in
semiconductor manufacturing, industrial automation, medical imaging, military
and aerospace, and entertainment applications. These products include, for
example, semiconductor manufacturing equipment, CT scan and MRI equipment,
automotive manufacturing and test equipment, test and measurement equipment,
industrial automation equipment, aircraft flight simulators, and audio mixing
and video authoring equipment. The Aerospace Group's customers are primarily
developers of systems and equipment for military aircraft, military ground
vehicles, telemetry equipment, and space exploration. These customers use SBS'
products in applications such as mission critical components in fighter aircraft
and ground vehicles, flight and ground simulation, electronic system test
solutions, and data link and command and control applications.

  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, 2001, SBS had 105
employees, who typically hold engineering degrees, in sales, marketing and
customer relations, 20 U.S.-based independent manufacturers' representatives and
55 distributors located outside the U.S. Domestically, SBS' direct employee
sales personnel are deployed regionally throughout the U.S. and represent all of
SBS' product lines within their region. Internationally, SBS has seven direct
employee sales personnel, located in the United Kingdom, Germany, Sweden,
France, Italy and China, who represent all of SBS' product lines. In addition,
domestically and internationally, the direct employee sales personnel are
supported by field application engineers that provide both pre-sale and
post-sale technical support to SBS' customers. All direct employee sales
personnel refer opportunities to appropriate product line managers. 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 U.S. are either closed by the direct employee sales personnel 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 through a distributor, although all quoting, pricing and final
order acceptance of international sales of U.S.-built products is controlled
domestically. Direct employee sales personnel generally pursue "design in"
applications in which SBS' products are included as part of a system.

     SBS maintains its primary sales offices in Albuquerque, New Mexico,
Raleigh, North Carolina, Augsburg, Germany, Newark, California, Carlsbad,
California and St. Paul, Minnesota. 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.

                                        4
<PAGE>   6

  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, 2001, SBS had approximately 168 employees engaged
in research and development activities. Of these employees, 61 have technical
degrees and 30 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 $20.1
million, $15.9 million and $14.4 million in fiscal 2001, 2000 and 1999,
respectively, corresponding to 10.7%, 12.5% and 13.5% of sales, respectively.

     SBS has several trademarks and has filed applications for other trademarks
as described in the Introduction above. However, SBS has generally sought only
limited patent protection for its technology. Currently, SBS has only one patent
issued and two patents pending.

     During fiscal 2001, 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 IBM's PowerPC 750 and 750Cxe plus Motorola's 8260
microprocessors, several intelligent multi-port Ethernet switches, multiple port
T1/E1 interface modules, and T3/E3, DS-3 and OC-3 solutions. The Communications
Group also developed and brought to market High Availability solutions with
systems, controllers and alarm modules, all aimed at meeting the reliability
needs of mission-critical applications. The Communications Group also developed
modular, yet integrated, solutions combining processor and Ethernet switch
technologies to meet the needs of emerging next generation control architectures
in telecommunication systems. The Communications Group also invested in the
development of a next generation WAN engine that 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 reduced cost T/3 WAN interface module to serve
applications such as remote access devices, high-end routers, and VPN gateways
to public and private networks.

     During fiscal 2001, the Computer Group's research and development efforts
concentrated on evolutionary improvement of existing technology targeted at the
commercial/industrial and military sectors, along with the introduction of
several new products. Research and development efforts related to the Computer
Group's processor products focused on evolutionary improvement of the Group's
CPU product line in two areas for single board computers. The first was the
continued evolution of the Intel based products to support newer technologies
such as Pentium III. The second area was the introduction of PowerPC based
products for the military market place. These included both VME and Compact PCI
based conduction-cooled products. The Computer Group increased its offering of
mezzanine I/O modules with the introduction of six new PC-MIP modules and eleven
PMC modules that provide serial and Ethernet networking capabilities. The
Computer Group also introduced three CompactPCI cards, including a hot-swap
carrier card that will support 2 PMC modules. The Computer Group also introduced
fifteen new 1-gigabit Fibre Channel host bus adapters for PMC, CompactPCI and
PCI form factors and two 2-gigabit PMC Fibre Channel host bus adapters. In
addition to releasing the hardware, the Computer Group broadened its offering of
software (drivers) required to make many of SBS' I/O modules easier for its
customers to integrate.

     During fiscal 2001, the Aerospace Group's research and development efforts
concentrated on evolutionary product enhancements. SBS' high-end avionics
interface module utilizing the latest technology to provide enhanced performance
and flexibility to the end user was expanded upon, adding multiple options for
different product applications. In addition, the Aerospace Group continued to
redesign many of its existing products, traditionally used in laboratory and
test environments, for use in rugged, conduction-cooled installed environments.

  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
                                        5
<PAGE>   7

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. In August
2001, SBS announced that it plans to consolidate the test, packaging and support
functions performed at its Newark, California facility with its St. Paul,
Minnesota facility and these same functions performed at its Mansfield,
Massachusetts facility to its Carlsbad, California facility. SBS has begun
complete turnkey outsourcing to contract manufacturers for a portion of its
products. SBS reduces dependence on a particular contract manufacturer by using
multiple contract manufacturers for each of SBS' product lines. SBS' industrial
computer systems and enclosure business purchases all components from either
third party vendors or from other SBS subsidiaries. SBS performs all assembly,
test, packaging and support functions for these products.

     SBS' German operation manufactures approximately 70% of its board-level
products at its Mindelheim facility, using contract manufacturers for its OEM
production business and certain rugged and military applications.

  COMPETITION

     The embedded computer industry is highly competitive and fragmented, and
SBS' competitors differ depending on product type, company size, geographic
market and application type. Consolidation within the communications, capital
equipment and defense industries has resulted in increased competition and may
result in an increase in pricing pressure across SBS' product lines. SBS'
competition in each of its operating segments is described below.

     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 (a wholly-owned subsidiary of Intel 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., VMIC, Inc., and a few small companies. Companies that directly compete in
the PMC Ethernet market include Znyx and Ramix. The Computer Group's computer
expansion unit product line competes directly with Magma (a subsidiary of
Mobility Electronics) and indirectly with personal computer manufacturers that
offer specialized computer motherboards with increasing numbers of PCI slots.
The Fiber Channel product line competes directly with Systran, Inc., VMIC, Inc.
and in some instances widely available SAN hardware. Specialized products such
as bus adapters and dataBLIZZARD have no direct competitors. 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.

                                        6
<PAGE>   8

  EMPLOYEES

     As of September 1, 2001, SBS had approximately 516 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, 62 were
in executive and administrative positions; 105 were in sales, marketing and
customer relations; 168 were in research and development; 167 were employed in
support of ongoing production, and 14 were employed on a part-time basis.

  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:

     SBS' OPERATING RESULTS CAN FLUCTUATE WHICH MAY AFFECT THE MARKET PRICE FOR
ITS COMMON STOCK.  SBS has experienced fluctuations in its operating results in
the past and may experience fluctuations in the future. SBS' sales, on both an
annual and a quarterly basis, can fluctuate as a result of a variety of factors,
many of which are beyond its control. These factors include:

     - the timing of customer orders and delays,

     - 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, communications and capital
       equipment expenditures,

     - regulatory changes, and

     - economic disruptions due to terrorist activity.

     Because 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' SALES, AND ITS ACCESS TO FINANCING, MIGHT BE SIGNIFICANTLY REDUCED IF
CHANGES OCCUR IN THE COMMUNICATIONS AND CAPITAL EQUIPMENT MARKETS OR IF A
DECLINE IN DEFENSE SPENDING OCCURS.  SBS has derived a significant portion of
its sales from products for communications and capital equipment applications
and directly or indirectly from the U.S. Department of Defense. The
communications and capital equipment markets are characterized by intense
competition and rapid technological change. The communications market has grown
rapidly in recent years, but is currently experiencing a slowdown and may not
continue to grow. Moreover, the Department of Defense has reduced its defense
industry spending in recent years, and may continue to reduce its spending. In
addition, significant consolidation in the defense industry has reduced the
number of defense contractors. These factors have resulted in increased
competition for companies like SBS in establishing customer relationships with
defense contractors. If spending by the Department of Defense continues to slow,
or if consolidation in the defense industry continues, SBS may be unable to
maintain existing customer relationships or make new relationships with defense
contractors. Even if SBS is successful in maintaining existing customers and
establishing new customer relationships with defense

                                        7
<PAGE>   9

contractors, sales of SBS' products to those customers may be reduced as a
result of any Department of Defense spending cutbacks.

     Changes in the communications and capital equipment markets, including
consolidation or domination by a small number of potential customers, and
reduced defense spending could significantly reduce SBS' marketing opportunities
and sales. If SBS' sales were reduced, SBS could experience difficulty or the
inability to obtain debt and equity financing, and, if SBS experienced losses
over an extended period of time, SBS could be in default of its bank covenants.
In those cases, SBS might not have funding available for acquisitions or
operations.

     IF SBS DOES NOT PERSUADE OEM'S TO USE ITS PRODUCTS INSTEAD OF THOSE OF
OTHER SUPPLIERS, SBS' SALES COULD BE HARMED.  SBS' sales depend, in part, on its
ability to obtain and maintain design wins for its components from OEM's. OEM's
that do not currently integrate SBS' components may not be willing to purchase
components from SBS because the cost of integrating new components into their
products may be more expensive than continuing to use existing components. OEM's
currently using SBS' components may elect to use another supplier's components
if the other supplier's designs are superior to SBS' designs. Also, OEM's
currently integrating SBS' components may redesign their products in a manner
that no longer requires SBS' components. If SBS fails to maintain existing
design wins or to achieve new design wins, SBS' sales could be reduced.

     SBS MIGHT HAVE TO EXPEND SUBSTANTIAL FUNDS TO REDESIGN ITS TECHNOLOGY
BECAUSE OF CHANGES IN INDUSTRY STANDARDS, CUSTOMER PREFERENCES OR
TECHNOLOGY.  Most of SBS' products are developed to meet industry standards that
define the basis of compatibility in operation and communication of a system
supported by different vendors. These standards are continuing to develop. If
these standards are eliminated or changed, the design of SBS' products could be
inappropriate or obsolete, and SBS could be required to undertake costly
redesign and research and development efforts. SBS' sales also depend in part on
the ability to develop state of the art products that comport with changing
customer preferences. SBS may, or may not, be successful in developing these
products in a timely manner, or in selling the products it develops. SBS' sales
could significantly decrease, and its products could become obsolete, if SBS
fails to adapt timely to changing industry standards, advances in technology, or
customer preferences.

     SBS' business depends upon continually introducing new and enhanced
products and solutions for business needs. The development or adaptation of
products and technologies requires SBS to commit financial resources, personnel
and time well in advance of sales. In order to compete, SBS' decisions with
respect to those commitments must accurately anticipate both future demand and
the technology that will be available to meet that demand.

     TO GROW, SBS MUST PERSUADE CUSTOMERS TO OUTSOURCE THEIR COMPONENT
NEEDS.  Many of SBS' potential customers design and manufacture embedded
computer components internally, which they may view as a cost-savings over
purchasing these components from suppliers like SBS. To increase its sales, SBS
needs to persuade them that use of SBS' components and services is
cost-effective.

     Increased market acceptance of SBS' products also depends on a number of
other factors, including:

     - the quality of its 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 embedded computers,

     - time-to-market requirements of SBS' products,

     - the assessment by SBS' customers of direct and indirect cost savings, and

     - SBS' customers' willingness to rely on SBS for mission-critical
       applications.

     SBS FACES SIGNIFICANT COMPETITION.  The embedded computer industry is
highly competitive and fragmented. SBS' competitors differ depending on product
and market type, company size, geographic market and application type. SBS faces
competition in each of its operating segments.

                                        8
<PAGE>   10

     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 a number of significant advantages over SBS, including:

     - significantly greater financial, technological and marketing resources,
       giving them the ability to respond more quickly to new or changing
       opportunities, technologies and customer requirements,

     - established relationships with customers or potential customers, which
       can make it harder for SBS to sell its products to those customers,

     - a longer operating history, and

     - more extensive name recognition and marketing power.

     In addition, existing or potential competitors may establish cooperative
relationships with each other or with third parties, or adopt aggressive pricing
policies to gain market share.

     Because of increased competition, SBS might encounter significant pricing
pressures across its product lines. These pricing pressures could result in
significantly lower average selling prices and reduced profit margins for SBS'
products. SBS may not be able to offset the effects of any price reductions with
an increase in the number of its customers, cost reductions or otherwise. SBS
cannot assure investors that it will be able to compete effectively in its
current or future markets.

     SBS PURCHASES MANY OF THE COMPONENTS IT USES FROM THIRD PARTY
MANUFACTURERS.  Many of SBS' products contain state of the art electronic
components. SBS depends upon third parties for its supply of many of these
components. SBS obtains some of these components from a sole supplier or a
limited number of suppliers, for which alternate sources may be difficult to
locate. SBS has experienced, and may continue to experience, component part
shortages, and has in the past built, and may in the future 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. SBS' inventory of
component parts may become obsolete. 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 that would assure availability and
price. If sufficient components are not available when SBS needs them, SBS'
product shipments could be delayed, which could affect its 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 or building inventory of scarce
parts, or having SBS' existing inventory become obsolete, could lower or
eliminate its profit margin, reduce its cash flow, and otherwise harm its
business.

     SBS HAS LIMITED PATENT PROTECTION ON ITS TECHNOLOGY, AND SBS MAY NOT BE
ABLE TO PROTECT ITS INTELLECTUAL PROPERTY. DISPUTES COULD BE EXPENSIVE.  SBS'
success depends, in part, on its ability to develop and protect its intellectual
property. SBS has sought only limited patent protection for its technology. SBS
currently has one patent issued and two patents pending. SBS cannot guarantee
that its pending patents will be issued, or that if issued, its pending or
existing patents will be enforced in a court of law if challenged. Patent
applications in the United States are not publicly disclosed until the patents
are issued. Therefore, undisclosed U.S. patent applications that relate to SBS'
products and technology may have been filed. Also, SBS cannot be certain
                                        9
<PAGE>   11

that foreign patents have not or will not be issued that would harm its ability
to commercialize its current and future products. Even as SBS obtains patent
protection for its intellectual property, third parties could independently
develop and patent equivalent or superior products or technology, in which case
SBS may be required to obtain licenses to that technology from those parties.

     In addition to patent rights, SBS relies upon trade secret laws, industrial
know-how and employee confidentiality agreements to protect its intellectual
property. Third parties may breach SBS' agreements with them or otherwise
attempt to disclose, obtain or use SBS' products and technologies. Further, if
consultants, employees and other parties apply technological information
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 SBS' favor.

     SBS may not be able to obtain court enforcement of its agreements, which
would leave SBS with inadequate remedies to protect its intellectual property
rights. This is particularly true in foreign countries, where laws or law
enforcement practices may not protect intellectual property as fully as in the
United States.

     SBS could have to litigate to enforce its intellectual proprietary rights.
In addition, companies frequently sue other companies as a means of delaying the
introduction of a competitor's products or technologies. Any litigation,
regardless of outcome, including any interference proceeding to determine
priority or inventions, oppositions to patents in foreign countries, or
litigation against SBS, may be costly and time consuming. Further, if it were
ultimately determined that SBS' claimed intellectual property rights are
unenforceable, or that its products infringe on the rights of others, SBS may be
required to pay past royalties or obtain licenses to use technologies. SBS may
not be able to obtain licenses for these technologies on commercially reasonable
terms, or at all.

     SBS' SUCCESS DEPENDS, IN PART, ON ITS ABILITY TO IDENTIFY AND TO ACQUIRE
AND SUCCESSFULLY INTEGRATE NEW BUSINESSES.  A major element of SBS' business
strategy is to pursue acquisitions that either expand or complement its
business. SBS has increased the scope of its operations through the acquisition
of nine businesses and product lines since 1992. SBS intends to continue to
pursue actively acquisition opportunities, including some that could be material
and that may become available in the near future. This acquisition strategy may
pose additional risks to SBS, including:

     - SBS might not be able to identify or acquire acceptable acquisition
       candidates on terms favorable to it, and in a timely manner.

     - 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 its operations as a result of acquisitions
       and to integrate effectively acquired businesses.

     - SBS' acquisitions might not increase its revenue or earnings and the
       companies acquired might not continue to perform at their historical
       levels.

     - SBS' shareholders may experience dilution if SBS uses its capital stock
       to pay for acquisitions, and

     - SBS' debt burden will increase as a result of borrowings SBS may make to
       pay for acquisitions.

     SBS MAY NEED TO RAISE ADDITIONAL CAPITAL TO FUND ITS OPERATIONS AND TO
COMPLETE ACQUISITIONS.  SBS depends on cash flow from operations to fund its
operations and pay for its acquisitions. If SBS experiences decreased sales,
increased expenses, or a combination of the two, it may need to raise additional
capital to fund its operations or acquire other businesses. If SBS decides to do
so, SBS could issue debt securities or capital stock. SBS may not be able to
sell these securities, particularly under the current market conditions. Even if
SBS is successful in finding buyers for its securities, the buyers may demand
commercially unreasonable terms. For example, if SBS had to sell debt
securities, it might be forced to pay high interest rates or agree to onerous
operating covenants, which could in turn harm SBS' ability to operate its
business by reducing its cash flow and increasing restrictions on its operating
activities. If SBS were to sell its capital stock, SBS might be forced to sell
shares at a significantly reduced price, resulting in increased dilution to its
existing shareholders. In addition, any shares of capital stock SBS may issue
may have rights, privileges, and preferences superior to those of SBS' common
shareholders. If SBS is unable to raise additional capital on commercially
reasonable
                                        10
<PAGE>   12

terms, it may be required to reduce its operations and delay or terminate any
potential acquisitions plans, which would harm SBS' ability to grow.

     SBS' EARNINGS COULD BE ADVERSELY AFFECTED BECAUSE OF CHARGES RESULTING FROM
ACQUISITIONS OR AN ACQUISITION COULD REDUCE SHAREHOLDER VALUE.  As part of SBS'
strategy for growth, SBS acquires compatible businesses. In accounting for a
newly acquired business, SBS is, in many cases, required to amortize, over a
period of years, certain identifiable intangible assets. Although usually the
acquired business' current operating profit offsets the amortization expense, a
decrease in the acquired business' operating profit could reduce SBS' overall
net income and earnings per share. Changes in future markets or technologies may
require SBS to amortize intangible assets faster and in such a way that SBS'
overall financial condition or results of operations are harmed. Additionally,
changes in economic and/or business conditions may cause impairment of goodwill
and other intangibles, resulting in a charge against SBS' earnings. 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 that does not meet the accounting definition of "completed
technology." An acquired business could reduce shareholder value if it should
generate a net loss or require invested capital.

     SBS MAY EXPEND RESOURCES WITHOUT RECEIVING BENEFIT FROM STRATEGIC ALLIANCES
WITH THIRD PARTIES.  From time to time, SBS may enter into strategic alliances
to deliver solutions to its customers. These alliances are typically formed to
provide products or services that SBS does not provide in its core businesses.
SBS may expend capital and resources on these alliances but may not receive any
immediate return or economic benefit from them.

     SBS' PRODUCTS HAVE LENGTHY SALES CYCLES THAT REQUIRE SBS TO EXPEND
RESOURCES IN ADVANCE OF RECEIVING REVENUE.  SBS' customers typically require
several months to test and evaluate SBS' products before designing their
products to incorporate SBS' components. Once SBS' customers have determined to
use SBS' components, they may require several more months to begin volume
production of products incorporating these components. Because of this lengthy
sales cycle, SBS may experience delays from the time it increases its operating
expenses and its investments in inventory until the time that SBS generates
sales from these components. SBS may never generate sales from components after
incurring development expenses if SBS' customers decide not to purchase them.
Even if SBS' customers select SBS' components to incorporate into their
products, SBS' customers may not market or sell their products successfully.

     SBS IS SUBJECT TO ORDER AND SHIPMENT UNCERTAINTIES THAT COULD HARM ITS
OPERATING RESULTS.  SBS typically sells its products pursuant to purchase orders
that customers can cancel or defer on short notice without incurring a
significant penalty. Cancellations or deferrals could cause SBS to hold excess
inventory, which could reduce its profit margins and restrict its ability to
fund its operations.

     SBS DEPENDS ON ITS EMPLOYEES FOR SUCCESS.  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. Competition for qualified employees
in the computer industry is intense. If SBS is unable to retain and recruit key
employees, SBS' product development and marketing and sales could be harmed.

     SBS IS SUBJECT TO SIGNIFICANT PRODUCT LIABILITY RISK.  SBS' products and
services could subject SBS 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 SBS' 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 its
insurance coverage for premiums acceptable to SBS. If a litigant were successful
against SBS, a lack or insufficiency of insurance coverage could significantly
harm its financial condition.

     SBS FACES POLITICAL, ECONOMIC AND REGULATORY RISKS ASSOCIATED WITH ITS
INTERNATIONAL SALES AND OPERATIONS NOT FACED BY BUSINESSES OPERATING ONLY IN THE
UNITED STATES.  SBS sells its products in countries throughout the world from
its United States and European based operations. SBS intends to continue to
expand its

                                        11
<PAGE>   13

operations and sales outside the United States. SBS' international operations
and sales subject SBS to risks not experienced by companies operating only in
the United States, including:

     - increased governmental regulations,

     - export and import controls,

     - political, economic and other uncertainties, including, risk of war,
       revolution, expropriation, renegotiation or modification of existing
       contracts, standards and tariffs, and taxation policies,

     - international monetary fluctuations that may make payment more expensive
       for foreign customers who may, as a result, limit or reduce purchases,

     - exposure to different legal standards, particularly with respect to
       intellectual property,

     - longer accounts receivable collection cycles,

     - trade disputes or new trading policies that could limit, reduce, disrupt
       or eliminate SBS' sales and business prospects outside the United States,
       and

     - unexpected changes in regulatory requirements that impose multiple
       conflicting tax laws and regulations.

     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
SBS' subsidiary based in Germany have been denominated either Deutsche marks or
Euros. 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, Deutsche mark or Euro will have the effect of
decreasing SBS' consolidated earnings when stated in United States dollars. SBS
may engage in hedging transactions that could have the effect of minimizing the
consequences of these types of currency fluctuations.

     SBS' COMMON STOCK PRICE CAN BE VOLATILE BECAUSE OF SEVERAL FACTORS,
INCLUDING A LIMITED PUBLIC FLOAT. During the twelve-month period ended June 30,
2001, the sale price of SBS' common stock has fluctuated from $12.00 to $38.00
per share. SBS believes that its common stock is subject to wide price
fluctuations because of several factors, including:

     - quarterly fluctuations in SBS' operating results,

     - a relatively thin trading market for SBS' common stock, which causes
       trades of small blocks of stock to have a significant impact on SBS'
       stock price,

     - announcements of new technologies by SBS' competitors, customers and us,

     - general conditions in the semiconductor, telecommunications and data
       communications equipment industries,

     - fluctuations in earnings of SBS' competitors,

     - changes in earnings estimates or investment recommendations by securities
       analysts, and

     - general volatility of the stock markets,

     - economic disruptions due to terrorist activity.

     In addition, the market prices of Internet-related, semiconductor and other
high technology companies have been especially volatile in recent months. This
volatility has significantly affected the market prices of securities of many
technology companies for reasons frequently unrelated to the operating
performance of the specific companies.

                                        12
<PAGE>   14

ITEM 2.  PROPERTIES

     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 approximately
36,000 square feet located in a multi-floor office building. This facility
includes adequate test, packaging and support space for SBS' avionics interface
and telemetry product lines. The Albuquerque facility also houses a portion of
SBS' executive offices. The lease term for approximately 32,400 square feet of
the Albuquerque, New Mexico facility runs through June 30, 2005, with an option
to extend the term for an additional five years, and the lease term for
approximately 3,500 square feet terminates on January 31, 2004. Management
believes that this facility will be sufficient to serve 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
approximate 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. It consists of approximately 18,000 square feet of office space and
approximately 9,000 square feet of test, packaging and support areas. In August
2001, SBS announced plans to consolidate this facility's test, packaging and
support functions with the SBS St. Paul, Minnesota facility, which may create
excess capacity in Newark. 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 test,
packaging and support 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 an
approximate 39,600 square foot facility, located in a business park, in St.
Paul, Minnesota. This facility, consisting of approximately 14,800 square feet
of office space and 24,800 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 plus
the test, packaging and support functions of the general purpose I/O business
through the term of the lease.

     SBS' Mansfield, Massachusetts facility consists of approximately 31,200
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. In August 2001, SBS announced that
the test, packaging and support functions performed at this facility would be
moved to SBS' Carlsbad facility, creating excess capacity in Mansfield.
Management intends to sub-lease the excess space in Mansfield, if possible.

     SBS' industrial computer and enclosure and PowerPC processor operations
lease, in Carlsbad, California, an approximate 75,200 square foot facility,
located in a business park, consisting of approximately 32,000 square feet of
office space and approximately 43,200 square feet of test, packaging and support
space. The Carlsbad facility also houses a portion of SBS' executive offices.
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, plus absorb
the functions transferred from Mansfield, through the term of the lease. The
PowerPC processor operations also lease, in Madison, Wisconsin, approximately
7,200 square feet of a 90,000 square foot multi-floor office building. This
space is used primarily for research and development. The lease expires on April
30, 2006 and management believes it 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, test, packaging and
support 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
                                        13
<PAGE>   15

approximately 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.

ITEM 3.  LEGAL PROCEEDINGS

     SBS is subject to various claims that 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.

                                    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 2000...................................  $13.688   $ 9.750
Second Quarter Fiscal 2000..................................   20.000    10.875
Third Quarter Fiscal 2000...................................   27.875     9.625
Fourth Quarter Fiscal 2000..................................   20.500    12.094
First Quarter Fiscal 2001...................................   26.219    16.000
Second Quarter Fiscal 2001..................................   35.563    18.250
Third Quarter Fiscal 2001...................................   38.000    13.688
Fourth Quarter Fiscal 2001..................................   24.790    12.000
</Table>

     SBS' Common Stock is traded 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 August 31, 2001, 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 price of SBS' common stock
was $12.95 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").

                                        14
<PAGE>   16

ITEM 6.  SELECTED FINANCIAL DATA

     The following selected financial data for the years ended June 30, 1997
through June 30, 2001 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
                           ----------------------------------------------------------------------
                               2001           2000           1999          1998          1997
                           ------------   ------------   ------------   -----------   -----------
<S>                        <C>            <C>            <C>            <C>           <C>
Sales....................  $187,180,052   $128,188,773   $105,999,233   $74,213,901   $52,814,568
Net income...............  $ 17,183,761   $  8,902,607   $ 12,278,388   $10,090,188   $   461,685
Net income per common
  share..................  $       1.23   $       0.71   $       1.05   $      0.90   $      0.05
Net income per common
  share- assuming
  dilution...............  $       1.14   $       0.66   $       1.00   $      0.82   $      0.05
Total assets.............  $147,171,900   $133,160,257   $ 92,007,855   $74,315,187   $61,165,014
Long-term debt, excluding
  current installments...  $         --   $         --   $         --   $        --   $ 2,816,251
Total liabilities........  $ 13,376,594   $ 34,146,494   $ 14,779,882   $10,051,200   $10,838,326
Total stockholders'
  equity.................  $133,795,306   $ 99,013,763   $ 77,227,973   $64,263,987   $50,326,688
</Table>

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

Notes: 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, distributed 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 ("IPR&D") charge in the fourth quarter of fiscal 2000.

     For fiscal 2000, net income excluding the $4.0 million acquired IPR&D
     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 Inc. ("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 subsidiary Holding GmbH, a 50.1%
     interest in OR and a 50.2% interest in ORTEC. SBS also acquired, through
     its 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 IPR&D charge.

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

     For fiscal 1997, net income excluding the $11.0 million acquired IPR&D
     charge related to the purchase of Connectivity Products, would have been
     $7,061,685 (net of income taxes). Net income per common

                                        15
<PAGE>   17

     share excluding the $11.0 million acquired IPR&D charge would have been
     $0.78 and net income per common share-assuming dilution would have been
     $0.67.

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

     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

  OVERVIEW

     SBS designs and builds open-architecture embedded computer products that
enable original equipment manufacturers to serve the commercial, communications
and government markets. SBS' products are integrated into a variety of
applications including communications networking, medical imaging, industrial
automation and military systems. The portfolio includes an extensive line of CPU
boards, computer interconnections, avionics, telemetry, and fully integrated
systems and enclosures that system designers can easily utilize to create a
custom solution specific to the user's unique application. SBS' objective is 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.

  ACQUISITIONS

     On April 12, 2000, SBS completed the acquisition of SDL. 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. Acquisition costs associated with the purchase were $0.6 million. The
purchase price included $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 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 IPR&D was determined based on

                                        16
<PAGE>   18

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.

     - 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.

                                        17
<PAGE>   19

  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
                                                              -----------------------
                                                              2001     2000     1999
                                                              -----    -----    -----
<S>                                                           <C>      <C>      <C>
Sales.......................................................  100.0%   100.0%   100.0%
Cost of sales...............................................   52.7     47.7     42.0
                                                              -----    -----    -----
     Gross profit...........................................   47.3     52.3     58.0
Selling, general and administrative expense.................   17.6     20.5     22.6
Research and development expense............................   10.7     12.5     13.5
Acquired IPR&D charge.......................................     --      3.1      0.5
Amortization of intangible assets...........................    4.1      3.9      3.8
                                                              -----    -----    -----
     Operating income.......................................   14.9     12.3     17.6
Interest income (expense), net..............................   (0.4)      --       --
Foreign exchange gains (losses).............................   (0.1)    (0.1)     0.6
                                                              -----    -----    -----
     Income before income taxes and minority interest.......   14.4     12.2     18.2
Income taxes................................................    5.2      5.2      6.3
                                                              -----    -----    -----
Income before minority interest.............................    9.2      7.0     11.9
Minority interest...........................................     --       --      0.4
                                                              -----    -----    -----
Net income..................................................    9.2%     7.0%    11.5%
                                                              =====    =====    =====
</Table>

  Year ended June 30, 2001 Compared to Year Ended June 30, 2000

     Sales.  In fiscal 2001, sales increased 46.0%, or $59.0 million, from
$128.2 million in fiscal 2000, to $187.2 million. Of this 46.0% increase, sales
contributed by SDL, which was acquired on April 12, 2000, comprised 14.3%, and
31.7% was attributable to SBS' other product lines. Unit shipments increased
among all product lines within the Communications Group segment and the Computer
Group segment. The increase in sales volume within the Computer Group's computer
processor products was partially offset by the negative impact of changes in
exchange rates, as the U.S. dollar strengthened against the Deutsche mark. Unit
shipments declined within the Aerospace Group, primarily due the continued
decline in the commercial satellite and military markets and in major new
aircraft development programs.

     Gross Profit.  In fiscal 2001, gross profit increased 32.2%, or $21.6
million, from $67.0 million in fiscal 2000, to $88.6 million. Of this 32.2%
increase, 13.3% was due to the acquisition of SDL on April 12, 2000, and 18.9%
was attributable to SBS' other products lines. As expected, gross profit as a
percentage of sales decreased to 47.3% in fiscal 2001 from 52.3% in fiscal 2000,
primarily due to the significant sales mix change that has been occurring, as
SBS continues to transition to higher volume, lower margin OEM production
orders, and becomes less dependent on its high-margin legacy products. For
fiscal 2002, due to the change in sales mix that is expected to occur as a
result of the slowdown of the Communication Group's infrastructure customers,
management expects gross margins as a percentage of sales to increase slightly.
Actual results may vary.

     Selling, General and Administrative Expense.  In fiscal 2001, selling,
general and administrative expense increased 25.5%, or $6.7 million from $26.3
million in fiscal 2000, to $33.0 million. Of this 25.5% increase, 5.4% resulted
from the acquisition of SDL on April 12, 2000, and 20.1% was primarily due to an
increase in costs commensurate with the growth of the Communications Group and
to the strengthening of SBS' sales and marketing efforts, partially offset by
cost reductions within the Aerospace Group, commensurate with the Group's
decline in sales volume. In fiscal 2001, selling, general and administrative
expense as a percentage of sales decreased to 17.6% from 20.5% in fiscal 2000,
as the increase in sales volume more than offset the increase in expense.

                                        18
<PAGE>   20

     Research and Development Expense.  In fiscal 2001, research and development
expense increased by 25.8%, or $4.2 million, from $15.9 million in fiscal 2000,
to $20.1 million. Of this 25.8% increase, 22.2% resulted from the acquisition of
SDL on April 12, 2000, and 3.6% was primarily due to increased investment in
product development within the Communications Group commensurate with the growth
of the segment, partially offset by cost reductions within the Aerospace Group,
commensurate with the Group's decline in sales volume. In fiscal 2001, research
and development expense as a percentage of sales decreased to 10.7% from 12.5%
in fiscal 2000, as the increase in sales volume more than offset the increase in
expense.

     Amortization of Intangible Assets.  In fiscal 2001, amortization of
intangible assets increased 54.6%, or $2.7 million from $5.0 million in fiscal
2000, to $7.7 million. This increase was the result of the amortization of
goodwill and identifiable intangibles associated with the acquisition of SDL on
April 12, 2000 and the amortization of SBS' license agreement for fibre channel
technology purchased in the fourth quarter of fiscal 2000.

     Interest Income.  In fiscal 2001, interest income of $410,000 consisted
primarily of interest associated with SBS' surplus cash.

     Interest Expense.  In fiscal 2001, interest expense of $1.1 million
consisted primarily of interest associated with the $20.0 million of borrowings
used to fund the acquisition of SDL on April 12, 2000.

     Foreign Exchange Gains (Losses).  In fiscal 2001, the $201,000 of foreign
exchange losses were primarily attributable to the change in exchange rates
relating to interest payable on debt from SBS' foreign subsidiary, partially
offset by a foreign exchange gain attributable to the change in exchange rates
relating to payments by SBS' U.S. subsidiaries to an SBS foreign subsidiary for
commissions accrued at June 30, 2000.

     Income Taxes.  For fiscal 2001 and fiscal 2000, income taxes represented
effective income tax rates of 36.1% and 42.9%, respectively. For fiscal 2000,
the effective income tax rate, excluding the non-deductible acquired in-process
research and development charge, would have been 34.1%.

     Earnings per Share.  For fiscal 2001, net income per common share was $1.23
compared to $0.71 for fiscal 2000. Net income per common share-assuming dilution
was $1.14 for fiscal 2001 compared to $0.66 for fiscal 2000. For fiscal 2000,
net income per common share-assuming dilution, excluding the acquired IPR&D
charge, would have been $0.95. For fiscal 2000, 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 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>
FY01..................................................    $92.0 million      $22.1 million
FY00..................................................    $43.9 million      $10.2 million
</Table>

     Communications Group sales to external customers in fiscal 2001 increased
109.5%, or $48.1 million, from $43.9 million in fiscal 2000, to $92.0 million.
Of this 109.5% increase, sales contributed from the acquisition of SDL on April
12, 2000 accounted for 41.8% of the increase. The balance of the increase was
primarily attributable to a 102.1% increase in sales of the Group's PowerPC
based processor products, I/O

                                        19
<PAGE>   21

products, and high availability systems products, resulting from growth in sales
to wireless internet access, high speed router, optical switch, wide area
network monitoring, and IP routing application customers. The Communications
Group is currently experiencing the effects of a slowdown of the Group's
telecommunications infrastructure customers, resulting in a 14.7% decline in
sales for the quarter ended June 30, 2001, as compared to the third quarter of
fiscal 2001. SBS expects that this trend will continue during the first two to
three quarters of fiscal 2002. Actual results may vary.

     Communications Group segment profit in fiscal 2001 increased 116.7%, or
$11.9 million, from $10.2 million in fiscal 2000, to $22.1 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 PowerPC based
processor products, I/O products and high availability systems products,
partially offset by an increase in selling, general and administrative and
research and development expenses commensurate with the growth of the segment.
Segment profit as a percentage of sales increased from 23.2% in fiscal 2000 to
24.0% in fiscal 2001, as the increase in sales volume more than offset the
increase in expense.

  Computer Group

<Table>
<Caption>
                                                             SALES TO
                                                        EXTERNAL CUSTOMERS   SEGMENT PROFIT
                                                        ------------------   --------------
<S>                                                     <C>                  <C>
FY01..................................................    $70.0 million      $14.1 million
FY00..................................................    $58.1 million      $11.9 million
</Table>

     Computer Group sales to external customers in fiscal 2001 increased 20.5%,
or $11.9 million from $58.1 million in fiscal 2000, to $70.0 million. Sales of
the Group's general purpose I/O products, computer processor products, and
computer connectivity and expansion unit products increased 44.2%, 14.2%, and
13.8%, respectively, as compared to fiscal 2000. This increase was primarily the
result of the Group's focus on OEM production business, as well as an increase
in sales to semiconductor equipment manufacturers, and an increase in sales to
entertainment production equipment and defense and aerospace customers. The
increase in sales volume of the Group's computer processor products was
partially offset by the approximate $1.5 million negative impact of changes in
exchange rates on sales, as the U.S. dollar strengthened against the Deutsche
mark during fiscal 2001.

     Computer Group segment profit increased 18.2%, or $2.2 million, from $11.9
million in fiscal 2000 to $14.1 million. This increase was primarily due to the
gross profit contributed by the increase in sales among all of the Group's
product lines, partially offset by the amortization of the Group's license
agreement for fibre channel technology purchased in the fourth quarter of fiscal
2000. Segment profit as a percentage of sales decreased from 20.5% in fiscal
2000 to 20.1% in fiscal 2001, primarily due to the shift in sales mix to lower
margin OEM production orders, partially offset by overhead cost control.

  Aerospace Group

<Table>
<Caption>
                                                              SALES TO
                                                         EXTERNAL CUSTOMERS   SEGMENT PROFIT
                                                         ------------------   --------------
<S>                                                      <C>                  <C>
FY01...................................................    $25.2 million       $7.3 million
FY00...................................................    $26.2 million       $6.9 million
</Table>

     Aerospace Group sales to external customers in fiscal 2001 decreased 3.8%,
or $1.0 million, from $26.2 million for fiscal 2000, to $25.2 million. This
decrease was primarily the result of the continued declines in the commercial
satellite and military markets served by the Group, and the decline in major new
aircraft development programs. Management expects that growth in Aerospace Group
sales will begin to accelerate due to increases in overall domestic defense
spending and through actions management is taking to enhance the business.
Actual results may vary.

     Aerospace Group segment profit increased 5.7%, or $390,000, from $6.9
million for fiscal 2000, to $7.3 million. This increase was primarily due to
research and development and selling, general and

                                        20
<PAGE>   22

administrative cost reductions, commensurate with the decline in the Group's
sales volume. For the same reasons, segment profit as a percentage of sales
increased from 26.3% in fiscal 2000 to 28.9% in fiscal 2001.

  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, 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.

     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.

     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 $1.5 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
ORcompleted on July 1, 1998, SBS recorded earnings charges of $4.0 million, and
$0.5 million, respectively, based on assessments 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. 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 IPR&D was
acquired.

     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.

                                        21
<PAGE>   23

     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.

     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 IPR&D 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 IPR&D 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 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.

                                        22
<PAGE>   24

     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. 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.

     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.

     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 $9.7 million at June 30, 2001, an increase of $6.1 million
from June 30, 2000. This increase was the result of $17.3 million of cash
provided by operating activities and $13.0 million from the exercise of stock
options, partially offset by $6.7 million for the acquisition of property and
equipment and $17.5 million of

                                        23
<PAGE>   25

payments on SBS' line of credit. SBS' growth during 2001 caused an increase in
accounts receivable and inventory. Inventory also increased due to the shortage
of critical components noted below. Liabilities were in line with the current
level of business. The exercise of stock options reduced SBS' income tax
liability.

     In fiscal years ended June 30, 2000 and June 30, 1999, SBS generated $4.9
million and $10.3 million, respectively, of positive cash flow from operating
activities. In fiscal 2000, the positive cash flow from operating activities and
surplus cash, combined with borrowings under SBS' Credit Agreement, provided
sufficient funds to acquire SDL. In fiscal 1999, the positive cash 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.

     Effective March 31, 2001, SBS renewed its $30.0 million Credit Agreement
("Agreement") with Bank of America, N.A. The Agreement expires December 31, 2002
and contains certain financial covenants that SBS must comply with as well as
restrictions against payment of dividends. As of June 30, 2001, borrowings drawn
on the Agreement totaled $2.5 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.

     SBS has experienced and may continue to experience component part
shortages. In order to help prevent shortages of critical components, during the
period ended June 30, 2001, SBS built an inventory of these components. To date,
the shortages have had minimal impact on results of operations. Currently, SBS
is experiencing increased availability of these components. However, the impact
of potential future shortages cannot be predicted with certainty.

     For the periods ended June 30, 2001, 2000 and 1999, there was no
significant impact from inflation.

  NEW ACCOUNTING STANDARDS

     In July 2001, the FASB issued SFAS 141, "Business Combinations," and SFAS
142, "Goodwill and Other Intangible Assets." SFAS 141 requires that the purchase
method of accounting be used for all business combinations initiated after June
30, 2001 as well as all purchase method business combinations completed after
June 30, 2001. SFAS 141 also specifies criteria intangible assets acquired in a
purchase method business combination must meet to be recognized and reported
apart from goodwill. Any purchase price allocable to an assembled workforce may
not be accounted for separately. SFAS 142 will require that goodwill and
intangible assets with indefinite useful lives no longer be amortized, but
instead be tested for impairment at least annually in accordance with the
provisions of SFAS 142. SFAS 142 will also require that intangible assets with
estimable useful lives be amortized over their respective estimated useful lives
to their estimated residual values, if any, and reviewed for impairment in
accordance with SFAS 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of."

     The Company is required to adopt the provisions of SFAS 141 on July 1,
2002. Before the adoption of SFAS 142, goodwill and intangible assets acquired
in business combinations completed before July 1, 2001 will continue to be
amortized and tested for impairment in accordance with the appropriate pre-SFAS
142 accounting requirements.

     SFAS 141 will require, upon adoption of SFAS 142, that SBS evaluate its
existing intangible assets and goodwill that were acquired in prior purchase
business combinations, and make any necessary reclassifications in order to
conform with the new criteria in Statement 141 for recognition apart from
goodwill. Upon adoption of SFAS 142, the Company will be required to reassess
the useful lives and residual values of all intangible assets acquired, and make
any necessary amortization period adjustments by the end of the first interim
period after adoption. In addition, to the extent an intangible asset is
identified as having an indefinite useful life, the Company will be required to
test the intangible asset for impairment in accordance with the provisions of
SFAS 142 within the first interim period. Any impairment loss will be measured
as of the date of adoption and recognized as the cumulative effect of a change
in accounting principle in the first interim period.

                                        24
<PAGE>   26

     In connection with SFAS 142's transitional goodwill impairment evaluation,
SBS will be required to perform an assessment of whether there is an indication
that goodwill is impaired as of the date of adoption. To accomplish this, the
Company must identify its reporting units and determine the carrying value of
each reporting unit by assigning the assets and liabilities, including the
existing goodwill and intangible assets, to those reporting units as of the date
of adoption. The Company will then have up to six months from the date of
adoption to determine the fair value of each reporting unit and compare it to
the reporting unit's carrying amount. To the extent a reporting unit's carrying
amount exceeds its fair value, an indication exists that the reporting unit's
goodwill may be impaired and SBS must perform the second step of the
transitional impairment test. In the second step, SBS must compare the implied
fair value of the reporting unit's goodwill, determined by allocating the
reporting unit's fair value to all of its assets (recognized and unrecognized)
and liabilities in a manner similar to a purchase price allocation in accordance
with SFAS 141, to its carrying amount, both of which would be measured as of the
date of adoption. This second step is required to be completed as soon as
possible, but no later than the end of the year of adoption. Any transitional
impairment loss will be recognized as the cumulative effect of a change in
accounting principle in SBS' statement of earnings.

     Because of the extensive effort needed to comply with adopting SFAS 141 and
SFAS 142, it is not practicable to reasonably estimate the impact of adopting
these standards on SBS' financial statements at the date of this report,
including whether it will be required to recognize any transitional impairment
losses as the cumulative effect of a change in accounting principle.

  BUSINESS OUTLOOK

     Consistent with SBS' press release dated August 14, 2001, management
expects that, due primarily to the weakness in SBS' Communications business,
total sales for the first quarter of fiscal 2002 will be between $30.0 and $33.0
million. Earnings are expected to be break-even or slightly profitable,
excluding a restructuring charge resulting from the consolidation of SBS' test,
packaging and support functions, and a reduction in workforce. See Note 17,
"Subsequent Event" to SBS' Consolidated Financial Statements for additional
information about the charge.

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. SBS'
outstanding notes payable at June 30, 2001 were paid off at maturity in July
2001.

     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.

                                        25
<PAGE>   27

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          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, 2001 and 2000, 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,
2001. 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 financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, the 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, 2001 and 2000, and the
results of their operations and their cash flows for each of the years in the
three-year period ended June 30, 2001 in conformity with accounting principles
generally accepted in the United States of America.

                                          KPMG LLP

Albuquerque, New Mexico
August 14, 2001

                                        26
<PAGE>   28

                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                                JUNE 30,       JUNE 30,
                                                                  2001           2000
                                                              ------------   ------------
<S>                                                           <C>            <C>
                                         ASSETS

Current assets:
  Cash and cash equivalents.................................  $  9,733,811   $  3,595,078
  Receivables, net..........................................    27,287,005     29,164,257
  Inventories...............................................    40,752,477     30,492,779
  Deferred income taxes.....................................     5,079,962      5,185,853
  Income tax receivable.....................................     3,416,875      1,022,215
  Prepaid expenses..........................................     1,124,806        856,399
  Other current assets......................................       802,047        431,776
                                                              ------------   ------------
       Total current assets.................................    88,196,983     70,748,357
                                                              ------------   ------------
Property and equipment, net.................................    11,475,487      7,320,222
Intangible assets, net......................................    45,106,819     54,961,154
Other assets................................................     2,392,611        130,524
                                                              ------------   ------------
       Total assets.........................................  $147,171,900   $133,160,257
                                                              ============   ============

                          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Notes payable.............................................  $  2,500,000   $ 20,000,000
  Accounts payable..........................................     3,771,376      5,556,479
  Accrued representative commissions........................       820,683        652,397
  Accrued salaries..........................................     2,581,725      3,171,690
  Accrued compensated absences..............................     1,488,943      1,229,307
  Other current liabilities.................................     1,752,507      2,603,812
                                                              ------------   ------------
       Total current liabilities............................    12,915,234     33,213,685
                                                              ------------   ------------
Deferred income taxes.......................................       461,360        932,809
                                                              ------------   ------------
       Total liabilities....................................    13,376,594     34,146,494
                                                              ------------   ------------
Commitments and contingencies (notes 7, 10, 12 and 16)
Stockholders' equity:
  Common stock, no par value; 200,000,000 shares authorized,
     14,522,080 and 13,302,144 issued and outstanding at
     June 30, 2001 and 2000, respectively...................    85,476,167     65,384,516
  Unearned compensation.....................................      (478,125)            --
  Accumulated other comprehensive loss......................    (5,983,328)    (3,967,584)
  Retained earnings.........................................    54,780,592     37,596,831
                                                              ------------   ------------
       Total stockholders' equity...........................   133,795,306     99,013,763
                                                              ------------   ------------
       Total liabilities and stockholders' equity...........  $147,171,900   $133,160,257
                                                              ============   ============
</Table>

          See accompanying notes to consolidated financial statements
                                        27
<PAGE>   29

                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                                 YEAR ENDED JUNE 30
                                                     ------------------------------------------
                                                         2001           2000           1999
                                                     ------------   ------------   ------------
<S>                                                  <C>            <C>            <C>
Sales..............................................  $187,180,052   $128,188,773   $105,999,233
Cost of sales......................................    98,614,691     61,173,851     44,480,959
                                                     ------------   ------------   ------------
       Gross profit................................    88,565,361     67,014,922     61,518,274
Selling, general and administrative expense........    33,031,564     26,322,134     23,983,186
Research and development expense...................    20,054,160     15,946,882     14,350,995
Acquired in-process research and development
  charge...........................................            --      4,000,000        527,514
Amortization of intangible assets..................     7,744,190      5,009,818      3,980,036
                                                     ------------   ------------   ------------
       Operating income............................    27,735,447     15,736,088     18,676,543
                                                     ------------   ------------   ------------
Interest income....................................       410,282        449,150        298,372
Interest expense...................................    (1,070,714)      (450,962)      (287,576)
Foreign exchange gains (losses)....................      (200,613)      (143,597)       666,754
                                                     ------------   ------------   ------------
                                                         (861,045)      (145,409)       677,550
                                                     ------------   ------------   ------------
Income before income taxes and minority interest...    26,874,402     15,590,679     19,354,093
Income taxes.......................................     9,690,641      6,688,072      6,631,322
                                                     ------------   ------------   ------------
Income before minority interest....................    17,183,761      8,902,607     12,722,771
Minority interest..................................            --             --        444,383
                                                     ------------   ------------   ------------
Net income.........................................  $ 17,183,761   $  8,902,607   $ 12,278,388
                                                     ============   ============   ============
Net income per common share........................  $       1.23   $       0.71   $       1.05
                                                     ============   ============   ============
Net income per common share -- assuming dilution...  $       1.14   $       0.66   $       1.00
                                                     ============   ============   ============
</Table>

          See accompanying notes to consolidated financial statements
                                        28
<PAGE>   30

                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<Table>
<Caption>
                                                                                                         ACCUMULATED
                                         COMMON STOCK          COMMON                                       OTHER
                                   ------------------------    STOCK       UNEARNED     COMPREHENSIVE   COMPREHENSIVE    RETAINED
                                     SHARES       AMOUNT      WARRANTS   COMPENSATION      INCOME           LOSS         EARNINGS
                                   ----------   -----------   --------   ------------   -------------   -------------   -----------
<S>                                <C>          <C>           <C>        <C>            <C>             <C>             <C>
BALANCE AT JUNE 30, 1998.........  11,356,400   $47,778,033   $ 70,118    $      --      $        --     $              $16,415,836
Exercise of stock options and
  warrants.......................     283,166     1,182,967    (31,693)          --               --              --             --
Stock issued to directors under
  restricted stock awards........       7,400        74,000         --           --               --              --             --
Stock issued for business
  acquisition....................      48,000       713,878         --           --               --              --             --
Stock repurchased and retired....     (20,000)     (181,928)        --           --               --              --             --
Income tax benefit from stock
  options exercised..............          --       987,500         --           --               --              --             --
Comprehensive income:
  Net income.....................          --            --         --           --       12,278,388              --     12,278,388
  Other comprehensive loss:
    Foreign currency translation
      adjustment.................          --            --         --           --       (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           --                       (2,059,126)    28,694,224
Exercise of stock options and
  warrants.......................   1,264,010     9,348,679    (38,425)          --               --              --             --
Stock-based compensation.........          --        28,124         --           --               --              --             --
Stock issued to directors under
  restricted stock awards........      13,442        83,000         --           --               --              --             --
Acquisition of SciTech...........     349,726       241,879         --           --               --              --        400,913
Dividends paid to former
  shareholders of SciTech........          --            --         --           --               --              --       (400,913)
Fair value of SBS options issued
  in exchange for unvested SDL
  options........................          --     1,231,739         --           --               --              --             --
Income tax benefit from stock
  options exercised..............          --     3,896,645         --           --               --              --             --
Comprehensive income:
  Net income.....................          --            --         --           --        8,902,607              --      8,902,607
  Other comprehensive loss:
    Foreign currency translation
      adjustment.................          --            --         --           --       (1,908,458)     (1,908,458)            --
                                   ----------   -----------   --------    ---------      -----------     -----------    -----------
Total comprehensive income.......                                                          6,994,149
                                                                                         ===========
BALANCE AT JUNE 30, 2000.........  13,302,144    65,384,516         --           --                       (3,967,584)    37,596,831
Exercise of stock options and
  warrants.......................   1,180,010    12,987,175         --           --               --              --             --
Stock-based compensation.........          --        28,124         --       28,125               --              --             --
Stock issued to officer and
  directors under restricted
  stock awards...................      39,926       611,250         --     (506,250)              --              --             --
Income tax benefit from stock
  options exercised..............          --     6,465,102         --           --               --              --             --
Comprehensive income:
  Net income.....................          --            --         --           --       17,183,761              --     17,183,761
  Other comprehensive loss:
    Foreign currency translation
      adjustment.................          --            --         --           --       (2,015,744)     (2,015,744)            --
                                   ----------   -----------   --------    ---------      -----------     -----------    -----------
Total comprehensive income.......                                                        $15,168,017
                                                                                         ===========
BALANCE AT JUNE 30, 2001.........  14,522,080   $85,476,167   $     --    $(478,125)                     $(5,983,328)   $54,780,592
                                   ==========   ===========   ========    =========                      ===========    ===========

<Caption>

                                       TOTAL
                                   STOCKHOLDERS'
                                      EQUITY
                                   -------------
<S>                                <C>
BALANCE AT JUNE 30, 1998.........  $ 64,263,987
Exercise of stock options and
  warrants.......................     1,151,274
Stock issued to directors under
  restricted stock awards........        74,000
Stock issued for business
  acquisition....................       713,878
Stock repurchased and retired....      (181,928)
Income tax benefit from stock
  options exercised..............       987,500
Comprehensive income:
  Net income.....................    12,278,388
  Other comprehensive loss:
    Foreign currency translation
      adjustment.................    (2,059,126)
                                   ------------
Total comprehensive income.......
BALANCE AT JUNE 30, 1999.........    77,227,973
Exercise of stock options and
  warrants.......................     9,310,254
Stock-based compensation.........        28,124
Stock issued to directors under
  restricted stock awards........        83,000
Acquisition of SciTech...........       642,792
Dividends paid to former
  shareholders of SciTech........      (400,913)
Fair value of SBS options issued
  in exchange for unvested SDL
  options........................     1,231,739
Income tax benefit from stock
  options exercised..............     3,896,645
Comprehensive income:
  Net income.....................     8,902,607
  Other comprehensive loss:
    Foreign currency translation
      adjustment.................    (1,908,458)
                                   ------------
Total comprehensive income.......
BALANCE AT JUNE 30, 2000.........    99,013,763
Exercise of stock options and
  warrants.......................    12,987,175
Stock-based compensation.........        56,249
Stock issued to officer and
  directors under restricted
  stock awards...................       105,000
Income tax benefit from stock
  options exercised..............     6,465,102
Comprehensive income:
  Net income.....................    17,183,761
  Other comprehensive loss:
    Foreign currency translation
      adjustment.................    (2,015,744)
                                   ------------
Total comprehensive income.......
BALANCE AT JUNE 30, 2001.........  $133,795,306
                                   ============
</Table>

          See accompanying notes to consolidated financial statements
                                        29
<PAGE>   31

                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                 YEAR ENDED JUNE 30
                                                     ------------------------------------------
                                                         2001           2000           1999
                                                     ------------   ------------   ------------
<S>                                                  <C>            <C>            <C>
Cash flows from operating activities:
  Net income.......................................  $ 17,183,761   $  8,902,607   $ 12,278,388
                                                     ------------   ------------   ------------
  Adjustments to reconcile net income to net cash
     provided by operating activities:
     Depreciation..................................     2,453,655      1,980,845      1,658,272
     Amortization of intangible assets.............     7,744,190      5,009,818      3,980,036
     Bad debt expense..............................       454,202        318,721        210,522
     Deferred income taxes.........................      (451,293)    (2,505,227)      (973,612)
     Income tax benefit of stock options
       exercised...................................     6,465,102      3,896,645        987,500
     Loss on disposition of assets.................        25,049        103,438         32,459
     Foreign exchange losses (gains)...............       200,613        143,597       (666,754)
     Stock-based compensation......................        56,249         28,124             --
     Stock issued to directors under restricted
       stock awards................................       105,000         83,000         74,000
     Acquired in-process research and development
       charge......................................            --      4,000,000        527,514
     Minority interest.............................            --             --        444,383
     Changes in assets and liabilities (net of
       effects of acquisitions):
       Receivables.................................     1,157,189     (6,830,705)    (3,079,001)
       Inventories.................................   (10,602,138)   (12,571,896)    (1,831,945)
       Prepaids and other assets...................    (2,907,293)      (308,828)      (350,462)
       Accounts payable............................    (2,116,150)     1,025,611        308,474
       Accrued representative commissions..........       168,286        122,632        293,537
       Accrued salaries............................      (540,887)        80,209     (1,131,302)
       Accrued compensated absences................       277,973        (20,986)       386,524
       Income taxes................................    (1,814,068)       366,449     (2,858,114)
       Other current liabilities...................      (572,994)     1,032,633          6,230
                                                     ------------   ------------   ------------
          Net cash provided by operating
            activities.............................    17,286,446      4,856,687     10,296,649
                                                     ------------   ------------   ------------
Cash flows from investing activities:
  Cash received from sale of assets................            --             --          4,905
  Cash received from sale of marketable
     securities....................................            --        248,299             --
  Business acquisitions, net of cash acquired......            --    (24,681,862)   (25,276,144)
  Purchase of license agreement....................      (236,000)    (2,000,000)            --
  Acquisition of property and equipment............    (6,712,638)    (1,909,973)    (4,019,741)
  Other............................................       396,025             --             --
                                                     ------------   ------------   ------------
          Net cash used in investing activities....    (6,552,613)   (28,343,536)   (29,290,980)
                                                     ------------   ------------   ------------
</Table>

                                        30
<PAGE>   32
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

              CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)

<Table>
<Caption>
                                                                 YEAR ENDED JUNE 30
                                                     ------------------------------------------
                                                         2001           2000           1999
                                                     ------------   ------------   ------------
<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................   (17,500,000)    (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)
  Repurchase of common stock.......................            --             --       (181,928)
  Proceeds from exercise of stock options and
     warrants......................................    12,987,175      9,310,254      1,151,274
                                                     ------------   ------------   ------------
          Net cash provided by (used in) financing
            activities.............................    (4,512,825)    23,543,065        261,879
                                                     ------------   ------------   ------------
Effect of exchange rate changes on cash............       (82,275)        38,306       (641,746)
                                                     ------------   ------------   ------------
Net increase (decrease) in cash and cash
  equivalents......................................     6,138,733         94,522    (19,374,198)
Cash and cash equivalents at beginning of period...     3,595,078      3,500,556     22,874,754
                                                     ------------   ------------   ------------
Cash and cash equivalents at end of period.........  $  9,733,811   $  3,595,078   $  3,500,556
                                                     ============   ============   ============
Supplemental disclosure of cash flow information:
  Interest paid....................................  $  1,415,397   $     99,453   $    273,867
  Income taxes paid................................     5,391,902      5,057,016      9,375,575
  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
       Marketable securities.......................            --        248,299             --
       Receivables.................................            --      1,799,315      5,314,703
       Inventories.................................            --      2,431,739      3,378,652
       Prepaid expenses............................            --         81,868        102,512
       Goodwill and identifiable intangible
          assets...................................            --     26,108,134     24,243,221
       Property and equipment......................            --        270,931        556,258
       Accumulated depreciation....................            --        (66,481)            --
       Notes payable to related parties............            --             --     (2,865,603)
       Accounts payable............................            --     (1,405,169)      (851,903)
       Accrued salaries............................            --       (463,551)    (1,753,948)
       Accrued compensated absences................            --        (62,124)       (82,225)
       Debt........................................            --        (75,060)            --
       Deferred income taxes.......................            --     (5,024,324)      (105,638)
       Income taxes................................            --      1,481,077     (1,888,522)
       Other current liabilities...................            --             --       (771,363)
       Common stock................................            --       (241,879)            --
       Retained earnings...........................            --       (400,913)            --
                                                     ============   ============   ============
</Table>

          See accompanying notes to consolidated financial statements
                                        31
<PAGE>   33

                    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 designs and builds open architecture embedded computer products that
enable original equipment manufacturers to serve the commercial, communications
and government markets. SBS products are integrated into a variety of
applications including communication networking, medical imaging, industrial
automation, and military systems. The portfolio includes an extensive line of
CPU boards, computer interconnections, avionics, telemetry and fully integrated
systems and enclosures. SBS has operations in New Mexico, Minnesota, North
Carolina, California, Wisconsin, Massachusetts and Germany.

     On August 18, 2000, SBS declared a two-for-one stock split for stockholders
of record on September 5, 2000, distributed 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.

  (b) REVENUE RECOGNITION

     Revenue is generally recognized when goods are shipped to the customer,
provided that SBS has received a valid purchase order, the price is fixed, title
has transferred, collection of the associated receivable is reasonably assured,
and there are no remaining significant obligations. Where customer acceptance
provisions exist, revenue is recognized only when SBS is certain that the
products meet all of the specified criteria prior to customer acceptance and all
other revenue recognition criteria have been met.

  (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. 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

                                        32
<PAGE>   34
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

     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 2000 and 1999 financial statements have been
reclassified to conform to the 2001 presentation.

  (j) USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America 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, "Accounting for Stock
Issued to Employees," 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 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

     SBS reports comprehensive income from non-owner changes in stockholders'
equity in the consolidated financial statements including net income and foreign
currency translation adjustments in the Consolidated

                                        33
<PAGE>   35
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Statements of Changes in Stockholders' Equity. Comprehensive income does not
affect SBS' consolidated 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

     SBS did not complete any acquisitions during the year ended June 30, 2001.
However, SBS completed the acquisitions described below during the fiscal years
ended June 30, 2000 and 1999. Unless otherwise disclosed, the acquisitions have
been accounted for as purchases, whereby the results of operations of the
acquired company have been combined with SBS' since the respective dates of
acquisition. The purchase price has been allocated to the underlying assets
acquired and liabilities assumed based on their estimated fair values with
goodwill, if any, representing the excess of the purchase price over the fair
value of the net assets acquired as indicated below.

     On April 12, 2000, SBS completed the acquisition of SDL. 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. Acquisition costs associated with the purchase were $0.6 million. The
purchase price also included $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. 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, 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.

     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.

                                        34
<PAGE>   36
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     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. Goodwill is being amortized over a ten year period.

     On July 1, 1998, SBS acquired through its subsidiary, 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 subsidiary, 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 subsidiary, Embedded Computers, a 100%
interest in OR Computers, Inc., 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 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. 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 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 ("IPR&D") was acquired.

(3) RECEIVABLES

     Receivables, net consisted of the following:

<Table>
<Caption>
                                                                      JUNE 30
                                                             -------------------------
                                                                2001          2000
                                                             -----------   -----------
<S>                                                          <C>           <C>
Accounts receivable........................................  $28,266,770   $29,993,290
  Less allowance for doubtful accounts.....................     (979,765)     (829,033)
                                                             -----------   -----------
                                                             $27,287,005   $29,164,257
                                                             ===========   ===========
</Table>

                                        35
<PAGE>   37
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(4) INVENTORIES

     Inventories consisted of the following:

<Table>
<Caption>
                                                                      JUNE 30
                                                             -------------------------
                                                                2001          2000
                                                             -----------   -----------
<S>                                                          <C>           <C>
Raw materials..............................................  $22,743,252   $15,010,729
Work in process............................................    6,873,090     8,902,019
Finished goods.............................................    9,892,156     5,379,699
Inventory consigned to others..............................    1,243,979     1,200,332
                                                             -----------   -----------
                                                             $40,752,477   $30,492,779
                                                             ===========   ===========
</Table>

(5) PROPERTY AND EQUIPMENT

     Property and equipment, net consisted of the following:

<Table>
<Caption>
                                                                      JUNE 30
                                                             -------------------------
                                                                2001          2000
                                                             -----------   -----------
<S>                                                          <C>           <C>
Computers..................................................  $ 4,820,366   $ 3,855,413
Purchased software.........................................    5,728,689     2,232,509
Furniture and equipment....................................    5,300,191     3,928,372
Leasehold improvements.....................................    3,248,368     2,554,981
                                                             -----------   -----------
                                                              19,097,614    12,571,275
  Less accumulated depreciation and amortization...........   (7,622,127)   (5,251,053)
                                                             -----------   -----------
                                                             $11,475,487   $ 7,320,222
                                                             ===========   ===========
</Table>

(6) INTANGIBLE ASSETS

     Intangible assets, net consisted of the following:

<Table>
<Caption>
                                                         JUNE 30
                                               ---------------------------    ESTIMATED
                                                   2001           2000       USEFUL LIFE
                                               ------------   ------------   -----------
<S>                                            <C>            <C>            <C>
Goodwill.....................................  $ 45,385,463   $ 48,505,074   5-10 years
Core-developed technology....................    14,800,000     14,800,000      7 years
License agreements...........................     2,236,000      2,000,000      5 years
Other........................................     2,505,171      2,517,841    3-8 years
                                               ------------   ------------
                                                 64,926,634     67,822,915
  Less accumulated amortization..............   (19,819,815)   (12,861,761)
                                               ------------   ------------
                                               $ 45,106,819   $ 54,961,154
                                               ============   ============
</Table>

(7) NOTES PAYABLE

     Notes payable consist of revolving credit facility notes. Effective March
31, 2001, SBS renewed its $30.0 million credit agreement. The agreement expires
December 31, 2002. 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

                                        36
<PAGE>   38
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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, 2001, the total outstanding amount under
this facility was $2,500,000, bearing interest at a fixed rate of 5.25% until
July 30, 2001, at which time the obligation matures under the existing LIBOR
interest rate period. In July, 2001, SBS paid off the $2,500,000 balance on the
facility. SBS is required, under this agreement, to maintain certain financial
ratios. At June 30, 2001, 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.

(8) INCOME TAXES

     Income before income taxes and minority interest is comprised of the
following:

<Table>
<Caption>
                                                          YEAR ENDED JUNE 30
                                                ---------------------------------------
                                                   2001          2000          1999
                                                -----------   -----------   -----------
<S>                                             <C>           <C>           <C>
U.S. .........................................  $27,127,833   $15,643,273   $18,865,677
Foreign.......................................     (253,431)      (52,594)      488,416
                                                -----------   -----------   -----------
                                                $26,874,402   $15,590,679   $19,354,093
                                                ===========   ===========   ===========
</Table>

     Income tax expense is comprised of the following:

<Table>
<Caption>
                                                           YEAR ENDED JUNE 30
                                                  -------------------------------------
                                                     2001         2000          1999
                                                  ----------   -----------   ----------
<S>                                               <C>          <C>           <C>
Current:
  U.S. Federal..................................  $8,572,328   $ 6,915,149   $5,344,920
  State.........................................   1,694,303     1,401,905    1,173,277
  Foreign.......................................    (210,432)      824,272    1,055,965
Deferred:
  U.S. Federal..................................    (536,523)   (1,716,589)    (408,240)
  State.........................................     (86,081)     (290,477)     (77,760)
  Foreign.......................................     257,046      (446,188)    (456,840)
                                                  ----------   -----------   ----------
                                                  $9,690,641   $ 6,688,072   $6,631,322
                                                  ==========   ===========   ==========
</Table>

                                        37
<PAGE>   39
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Income tax expense was provided for at an effective rate of 36.1, 42.9 and
34.3 percent in 2001, 2000 and 1999, 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
                                                          -------------------------------------
                                                             2001         2000         1999
                                                          ----------   ----------   -----------
<S>                                                       <C>          <C>          <C>
Computed "expected" tax expense.........................  $9,406,041   $5,456,738   $ 6,773,933
State income tax, net of federal income tax benefit.....   1,045,344      722,428       712,086
Non-deductible IPR&D....................................          --    1,400,000            --
Non-deductible goodwill and interest....................     324,922      504,215       395,000
Non-taxable interest income.............................    (211,438)    (411,852)           --
Non-taxable S-Corp income from SciTech..................          --     (117,788)           --
Foreign rate differential...............................     135,315      (52,208)       33,180
Dividend from foreign sales corporation.................    (700,000)    (350,000)     (192,500)
Research and experimental tax credits...................    (378,000)    (420,000)   (1,095,000)
Other...................................................      68,457      (43,461)        4,623
                                                          ----------   ----------   -----------
                                                          $9,690,641   $6,688,072   $ 6,631,322
                                                          ==========   ==========   ===========
</Table>

     The significant components of deferred income tax assets and liabilities
are as follows:

<Table>
<Caption>
                                                                       JUNE 30
                                                              -------------------------
                                                                 2001          2000
                                                              -----------   -----------
<S>                                                           <C>           <C>
Deferred tax assets:
  Vacation and severance accruals...........................  $   343,187   $   402,000
  Inventory.................................................    4,010,382     3,404,208
  Acquired IPR&D............................................    2,967,250     3,375,636
  Accrued expenses..........................................      302,949       219,000
  Amortization..............................................    1,844,015     1,496,300
  Allowance for uncollectible accounts......................      420,033       256,200
  Foreign tax credits.......................................    1,023,823       977,209
  Fair value of unvested stock options......................       98,497       373,156
  Net operating loss carryforward...........................           --     1,065,309
  Other.....................................................       86,979       598,282
                                                              -----------   -----------
                                                               11,097,115    12,167,300
     Valuation allowance for deferred tax assets............   (1,023,823)   (1,433,147)
                                                              -----------   -----------
Total deferred tax assets...................................   10,073,292    10,734,153
Deferred tax liabilities --
  Identifiable intangible assets............................   (5,454,690)   (6,481,109)
                                                              -----------   -----------
Net deferred tax assets.....................................  $ 4,618,602   $ 4,253,044
                                                              ===========   ===========
</Table>

     The decrease in the valuation allowance of $409,324 during the year ended
June 30, 2001 included a benefit of approximately $456,000 recorded as a
reduction of goodwill due to the realization of certain tax attributes recorded
in connection with the acquisition of SDL in April 2000. As of June 30, 2001,
SBS had a foreign tax credit carryforward of approximately $1.0 million. Excess
foreign tax credits may be carried back two years and forward five years. Due to
the uncertainty of the realization of the foreign tax credit

                                        38
<PAGE>   40
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

carryforward and certain tax attributes of SDL, SBS has established a valuation
allowance of approximately $1.0 million as of June 30, 2001. 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, 2001.

(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.

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

<Table>
<Caption>
YEAR ENDED JUNE 30
------------------                                  INCOME         SHARES       PER-SHARE
2001                                              (NUMERATOR)   (DENOMINATOR)    AMOUNT
----                                              -----------   -------------   ---------
<S>                                               <C>           <C>             <C>
NET INCOME PER COMMON SHARE
Net income......................................  $17,183,761    13,926,493       $1.23
                                                                                  =====
EFFECT OF DILUTIVE SECURITIES
Dilutive options................................           --     1,196,919
                                                  -----------    ----------
NET INCOME PER COMMON SHARE-ASSUMING DILUTION
Net income......................................  $17,183,761    15,123,412       $1.14
                                                  ===========    ==========       =====
</Table>

<Table>
<Caption>
                                                     INCOME         SHARES       PER-SHARE
2000                                               (NUMERATOR)   (DENOMINATOR)    AMOUNT
----                                               -----------   -------------   ---------
<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 and warrants....................          --      1,126,840
                                                   ----------     ----------
NET INCOME PER COMMON SHARE-ASSUMING DILUTION
Net income.......................................  $8,902,607     13,589,896       $0.66
                                                   ==========     ==========       =====
</Table>

<Table>
<Caption>
                                                    INCOME         SHARES       PER-SHARE
1999                                              (NUMERATOR)   (DENOMINATOR)    AMOUNT
----                                              -----------   -------------   ---------
<S>                                               <C>           <C>             <C>
NET INCOME PER COMMON SHARE
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
                                                  ===========    ==========       =====
</Table>

     For the years ended June 30, 2001, 2000 and 1999, options to purchase
420,517, 350,008 and 1,890,098 shares of common stock, respectively, were
outstanding but were not included in the computation of

                                        39
<PAGE>   41
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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, 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>
2002........................................   $ 2,617,596        $100,141      $ 2,717,737
2003........................................     2,479,009          96,967        2,575,976
2004........................................     2,453,621          85,819        2,539,440
2005........................................     2,240,208          30,143        2,270,351
2006........................................     1,052,806           1,228        1,054,034
                                               -----------        --------      -----------
                                               $10,843,240        $314,298      $11,157,538
                                               ===========        ========      ===========
</Table>

     Total rental expense for operating leases for the years ended June 30,
2001, 2000, and 1999 was $2,979,806, $2,519,193 and $1,990,785, 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

                                        40
<PAGE>   42
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

date of grant and 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) 2000 LONG-TERM EQUITY INCENTIVE PLAN

     The 2000 Long-Term Equity Incentive Plan was adopted by the Board of
Directors on August 31, 2000 and subsequently approved at the December 2000
reconvened Annual Shareholders' Meeting. Any employee of SBS or its
subsidiaries, and any consultants, directors, or other persons providing
services to SBS or its subsidiaries are eligible to participate in the plan. The
plan provides for the grant of nonqualified stock options and a limited number
of grants of restricted stock. The number of shares of stock available for award
under the plan during any fiscal year of SBS is equal to ten percent of the
adjusted average of the outstanding stock, as that number is determined by SBS
to calculate net income per common share -- assuming dilution for the preceding
fiscal year, reduced by any shares of stock under the plan subject to
unexercised options and any shares of stock under the plan subject to
restrictions. The exercise price of each option granted shall be the fair market
value of the underlying common stock on the date of grant unless otherwise
specified by the Board at the time of grant. If options are awarded in exchange
for previously earned cash compensation, or in connection with an acquisition,
merger, combination or other similar event involving SBS, or in substitution or
replacement for options granted to employees by the other entities, the Board
has the authority to establish an exercise price that is less that 100% of 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
July 2010.

                                        41
<PAGE>   43
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  (f) 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.

     Information regarding SBS' stock option plans and warrants is summarized in
the table below:

<Table>
<Caption>
                             ALL       1993      1996       1998       2000
                            ISOPS       D&O      ESPP        LT         LT      WARRANTS     TOTAL
                          ---------   -------   -------   ---------   -------   --------   ----------
<S>                       <C>         <C>       <C>       <C>         <C>       <C>        <C>
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
  Granted...............     50,012   325,000   115,850      79,560   746,500        --     1,316,922
  Exercised.............    433,964    50,043   108,788     587,215        --        --     1,180,010
  Cancelled.............         --        --    27,450     507,812    72,000        --       607,262
                          ---------   -------   -------   ---------   -------   -------    ----------
OUTSTANDING AT
  6/30/01...............    389,572   518,883   185,102   1,569,079   674,500        --     3,337,136
                          =========   =======   =======   =========   =======   =======    ==========
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
EXERCISABLE AT
  6/30/01...............    319,566   182,800    78,052     547,850        --        --     1,128,268
                          =========   =======   =======   =========   =======   =======    ==========
AVAILABLE FOR GRANT AT
  6/30/01...............     95,214   537,374   180,040     452,428   807,841        --     2,072,897
                          =========   =======   =======   =========   =======   =======    ==========
</Table>

     Weighted average option exercise price information for fiscal years 2001,
2000, and 1999 follows:

<Table>
<Caption>
                                                              2001     2000     1999
                                                             ------   ------   ------
<S>                                                          <C>      <C>      <C>
Outstanding at July 1......................................  $12.71   $10.07   $ 9.06
Granted during the year:
  Price = market value.....................................   25.33    15.08    10.45
  Exchanged in SDL acquisition.............................      --     1.31       --
Exercised during the year..................................   11.05     7.38     5.10
Cancelled during the year..................................   15.56    11.40    11.95
Outstanding at June 30.....................................   17.78    12.71    10.07
Exercisable at June 30.....................................   13.29    10.78     7.94
</Table>

                                        42
<PAGE>   44
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Significant option groups outstanding and exercisable at June 30, 2001 and
related weighted average price and life information follows:

<Table>
<Caption>
                                                  WEIGHTED
                                                   AVERAGE     WEIGHTED                 WEIGHTED
                                                  REMAINING    AVERAGE                  AVERAGE
                                     NUMBER      CONTRACTUAL   EXERCISE     NUMBER      EXERCISE
RANGE OF EXERCISE PRICES           OUTSTANDING      LIFE        PRICE     EXERCISABLE    PRICE
------------------------           -----------   -----------   --------   -----------   --------
<S>                                <C>           <C>           <C>        <C>           <C>
$ 0.88 - $14.00..................     904,665       5.97        $10.28       445,345     $ 9.23
$14.16 - $17.00..................   1,075,056       7.05        $15.66       548,955     $15.29
$17.25 - $29.94..................   1,298,415       8.14        $24.18       133,968     $18.57
$30.25 - $34.50..................      59,000       9.56        $31.58            --         --
                                    ---------       ----        ------     ---------     ------
$ 0.88 - $34.50..................   3,337,136       7.22        $17.78     1,128,268     $13.29
                                    =========       ====        ======     =========     ======
</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 2001,
2000 and 1999 was $12.43, $8.06 and $5.10, respectively, on the date of grant.
The fair value of options at date of grant was estimated using the Black-Scholes
Model with the following weighted average assumptions:

<Table>
<Caption>
                                                              2001    2000    1999
                                                              -----   -----   -----
<S>                                                           <C>     <C>     <C>
Expected life (years).......................................   3.09    3.47    2.90
Risk free interest rate.....................................   3.97%   6.12%   5.93%
Volatility..................................................  72.32%  70.09%  69.25%
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>
                                                    2001          2000         1999
                                                 -----------   ----------   -----------
<S>                                              <C>           <C>          <C>
Net income, as reported........................  $17,183,761   $8,902,607   $12,278,388
Net income, pro forma..........................    9,178,270    3,473,193     6,139,834
EPS, as reported (basic).......................         1.23         0.71          1.05
EPS, pro forma (basic).........................          .66         0.28          0.53
EPS, as reported (diluted).....................         1.14         0.66          1.00
EPS, pro forma (diluted).......................          .65         0.28          0.53
</Table>

(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 to
the plan during the years ended June 30, 2001, 2000 and 1999 were $1,080,792,
$846,664 and $778,566, respectively.

(13) SEGMENT FINANCIAL DATA

     SBS 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

                                        43
<PAGE>   45
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

products that are provided to those markets, and have managers who report
directly to the chief executive officer, who is the chief operating
decision-maker. A description of these segments follows:

     - The Communications Group designs 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 designs 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 designs 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 in
note 1.

<Table>
<Caption>
                                          COMMUNICATIONS    COMPUTER      AEROSPACE    CORPORATE AND
                                              GROUP           GROUP         GROUP      UNALLOCATED(1)    OTHER(2)       TOTAL
                                          --------------   -----------   -----------   --------------   ----------   ------------
<S>                                <C>    <C>              <C>           <C>           <C>              <C>          <C>
Gross Sales......................  2001    $96,923,425     $73,441,949   $25,476,101             --             --   $195,841,475
Intersegment sales...............           (4,902,961)     (3,473,188)     (285,274)            --             --     (8,661,423)
                                           -----------     -----------   -----------    -----------     ----------   ------------
  Sales to external customers....           92,020,464      69,968,761    25,190,827             --             --    187,180,052
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
Interest income..................  2001         15,110          22,879            --        372,293             --        410,282
                                   2000         13,761          15,488            --        419,901             --        449,150
                                   1999          1,026          14,173           980        282,193             --        298,372
Interest expense.................  2001            104           1,263            --      1,069,347             --      1,070,714
                                   2000         15,222          50,359            --        385,381             --        450,962
                                   1999          6,367          88,375            --        192,834             --        287,576
Depreciation and Amortization....  2001        811,880       1,100,703       590,533      7,694,729             --     10,197,845
                                   2000        452,388         632,138       653,531      5,252,606             --      6,990,663
                                   1999        197,384         639,113       607,522      4,194,289             --      5,638,308
Segment profit (Income before
  taxes and minority interest)...  2001     22,121,997      14,084,877     7,283,036    (16,615,508)            --     26,874,402
                                   2000     10,207,381      11,919,386     6,892,785     (9,428,873)    (4,000,000)    15,590,679
                                   1999      3,898,068      12,823,811    10,756,753     (7,597,025)      (527,514)    19,354,093
Total assets.....................  2001     38,358,069      28,647,750    10,105,797     70,060,284             --    147,171,900
                                   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
</Table>

                                        44
<PAGE>   46
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

(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 of goodwill and intangibles from acquisitions. Corporate assets
    primarily include cash and cash equivalents, deferred and current 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 STATES   UNITED STATES
                                       DOMESTIC         EXPORTS       GERMANY        TOTAL
                                     -------------   -------------   ----------   ------------
<S>                            <C>   <C>             <C>             <C>          <C>
Sales to External
  Customers(1)...............  2001  $140,887,080     34,447,915     11,845,057   $187,180,052
                               2000    91,437,991     25,365,444     11,385,338    128,188,773
                               1999    79,150,230     16,878,726      9,970,277    105,999,233
Long-lived assets, net.......  2001  $ 11,063,238             --        412,249   $ 11,475,487
                               2000     6,995,148             --        325,074      7,320,222
                               1999     7,002,752             --        318,965      7,321,717
</Table>

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

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

     During the years ended June 30, 2001, 2000 and 1999, United States export
sales as a percentage of total United States sales were 20.8%, 21.7%, and 17.6%,
respectively. United States export sales were made primarily in the following
foreign markets:

<Table>
<Caption>
                                         2001              2000              1999
                                    ---------------   ---------------   ---------------
                                     SALES             SALES             SALES
                                    (000'S)     %     (000'S)     %     (000'S)     %
                                    -------   -----   -------   -----   -------   -----
<S>                                 <C>       <C>     <C>       <C>     <C>       <C>
United Kingdom....................  $ 1,327     3.9   $ 1,929     7.6   $ 1,680    10.0
Germany...........................    2,275     6.6     1,433     5.6     1,525     9.0
Korea.............................      720     2.1       934     3.7       420     2.5
China.............................      762     2.2       360     1.4       220     1.4
France............................    1,752     5.1     1,495     5.9     1,415     8.4
Japan.............................    4,784    13.9     4,271    16.9     4,050    24.0
Canada............................    5,424    15.7     2,892    11.4     2,215    13.1
Sweden............................   12,539    36.4     9,097    35.9     2,100    12.4
Israel............................    1,865     5.4       691     2.7     1,035     6.1
All others........................    3,000     8.7     2,263     8.9     2,219    13.1
                                    -------   -----   -------   -----   -------   -----
                                    $34,448   100.0   $25,365   100.0   $16,879   100.0
                                    =======   =====   =======   =====   =======   =====
</Table>

     In fiscal 2001, 2000 and 1999, no one customer, or group of entities known
to be under common control, exceeded 10% of SBS' sales.

(15) RELATED PARTY TRANSACTIONS

     Effective March 9, 2001, Grahame E. Rance was appointed to the positions of
President and Chief Executive Officer of SBS and member of the Board of
Directors. Mr. Rance succeeds Christopher J. Amenson, who remains as Chairman of
the Board of Directors of SBS. As part of his compensation package, Mr. Rance
received a $1,893,750 interest free loan from SBS, paid in cash on April 4,
2001. Forgiveness of the

                                        45
<PAGE>   47
                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

loan will occur ratably over six annual anniversaries of Mr. Rance's employment
with SBS. At June 30, 2001, the balance on the loan was $1,798,608.
Additionally, Mr. Rance received a $570,000 interest free loan from SBS. This
loan is repayable upon the sale of the home.

(16) 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.

(17) SUBSEQUENT EVENT

     SBS announced to its employees on August 14, 2001, headcount reductions and
certain facility consolidation actions which were approved by the SBS Board of
Directors on July 18, 2001, as part of SBS' fiscal 2002 operating plan. These
actions included notification to 58 employees, approximately 11% of SBS' total
workforce, that their positions would be eliminated by the end of September
2001, and plans to consolidate the test, packaging and support functions
performed at SBS' Newark, California facility to its St. Paul, Minnesota
facility. Additionally SBS announced its plans to move the test, packaging, and
support functions performed at SBS' Mansfield, Massachusetts facility to its
Carlsbad, California facility. Costs associated with these actions that have
been incurred or that are accruable as of September 30, 2001 will be included in
SBS' operating results in its fiscal 2002 first quarter. Any remaining costs
will be expensed in the period incurred.

                                        46
<PAGE>   48

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 8, 2001.

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
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."

                                    PART IV

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

     (a) Financial Statements

        Consolidated Balance Sheets
        Consolidated Statements of Operations
        Consolidated Statements of Changes in Stockholders' Equity
        Consolidated Statements of Cash Flows

     (b) Financial Statement Schedule

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

     (c) 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. Management contracts or compensatory plans or arrangements are
indicated in the index by an asterisk (*).

                                        47
<PAGE>   49

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

     On April 30, 2001, SBS filed Form 8-K relating to the public sale of up to
160,000 shares of SBS common stock by Christopher J. Amenson, chairman of the
Board of Directors of SBS and former President and Chief Executive Officer of
SBS.

                                        48
<PAGE>   50

                                   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.

                                          SBS TECHNOLOGIES, INC.

                                          By:     /s/ GRAHAME E. RANCE
                                            ------------------------------------
                                                      Grahame E. Rance
                                               President and Chief Executive
                                                           Officer

                                          By:    /s/ JAMES E. DIXON, JR.
                                            ------------------------------------
                                                    James E. Dixon, Jr.
                                                 Vice President, Finance &
                                               Administration, Chief Financial
                                               Officer, Secretary and Treasurer

Date: September 24, 2001

                                        49
<PAGE>   51

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
SBS Technologies, Inc.:

     Under date of August 14, 2001, we reported on the consolidated balance
sheets of SBS Technologies, Inc. and subsidiaries as of June 30, 2001 and 2000,
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, 2001, as contained in the annual report on Form 10-K for the year 2001. 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.

                                          KPMG LLP

Albuquerque, New Mexico
August 14, 2001

                                        50
<PAGE>   52

                    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>
YEAR ENDED JUNE 30, 2001:
Allowances deducted from assets
  Accounts receivable...............   $829,033     $454,202     $     --       $303,470(b)    $979,765
YEAR ENDED JUNE 30, 2000:
Allowances deducted from assets
  Accounts receivable...............    763,047      318,721           --        252,735(b)     829,033
YEAR ENDED JUNE 30, 1999:
Allowances deducted from assets
  Accounts receivable...............    250,000      210,522      403,837(a)     101,312(b)     763,047
</Table>

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

NOTES:

(a)  Primarily bad debt reserves assumed through acquisition.

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

                                        51
<PAGE>   53

                    SBS TECHNOLOGIES, INC. AND SUBSIDIARIES
                           ANNUAL REPORT ON FORM 10-K
                        FISCAL YEAR ENDED JUNE 30, 2001

                               INDEX TO EXHIBITS

<Table>
<Caption>
  EXHIBIT
    NO.                                    DESCRIPTION
  -------                                  -----------
<S>           <C>  <C>
 3.i(19)      --   Restated Articles of Incorporation dated November 10, 2000
 3.ii(20)     --   Restated and amended By-laws dated November 10, 2000
 4.a(19)      --   Article VI of the Articles of Incorporation, as amended, as
                   included in the Articles of Incorporation of SBS
                   Technologies, Inc.
 4.b(20)      --   Articles I, II of the Bylaws of SBS Technologies, Inc., as
                   amended
 4.c(21)      --   Form of certificate evidencing Common Stock
 4.1(5)       --   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(3)*      --   Employment agreement between Registrant and Scott A.
                   Alexander, dated October 1, 1993, as amended
10.c(4)*      --   1997 Employee Incentive Stock Option Plan
10.f(1)(4)*   --   1992 Incentive Stock Option Plan
10.h(2)(4)*   --   1993 Incentive Stock Option Plan
10.i(2)(4)*   --   1993 Director and Officer Stock Option Plan
10.v(3)(4)*   --   1996 Employee Stock Purchase Plan, adopted January 21, 1996
10.z*         --   Management Incentive Plan -- Filed herewith electronically
10.ac(6)      --   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(6)      --   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.ah(8)      --   Standard Industrial Lease Between Carlsbad Business Park,
                   LLC, (a California Limited Liability Company), and SBS
                   Technologies, Inc. dated September 10, 1998
10.ai(9)      --   Credit Agreement between SBS Technologies, Inc., as
                   borrower, and Bank of America N.A., formerly Nationsbank,
                   N.A., as lender, dated December 1, 1998
10.al(10)     --   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(11)*    --   1998 Long-Term Equity Incentive Plan
10.an(12)     --   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(13)     --   Lease Agreement between 8-L Newark 8371, LLC and SBS
                   Technologies, Inc. dated August 14, 1999
10.ap(14)     --   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
</Table>
<PAGE>   54

<Table>
<Caption>
  EXHIBIT
    NO.                                    DESCRIPTION
  -------                                  -----------
<S>           <C>  <C>
10.aq(14)     --   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(14)     --   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(15)     --   Stock Purchase Agreement dated April 12, 2000 between SBS
                   Technologies, Inc., and SDL Communications, Inc. and the
                   stockholders of SDL Communications, Inc.
10.at(16)     --   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(16)     --   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(16)     --   Supplement I to Loan Documents, made and executed as of
                   April 14, 2000 by SBS Technologies, Inc., and SDL
                   Communications, Inc.
10.aw(16)     --   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(17)     --   Lease between AFC-5, LLC, a New Mexico limited liability
                   company, and SBS Technologies, Inc., dated May 16, 2000
10.ay(17)     --   Lease between Long Gate, LLC, a Delaware limited liability
                   company, and SDL Communications, Inc., a Massachusetts
                   corporation, dated June 15, 2000
10.ba(22)     --   Lease between Rosa Point II, LLC and SBS Technologies, Inc.,
                   dated February 15, 2001
10.bc(22)*    --   Employment agreement between SBS Technologies, Inc. and
                   Christopher J. Amenson, dated December 27, 2000 and addendum
                   to employment agreement between SBS Technologies, Inc. and
                   Christopher J. Amenson, dated April 27, 2001
10.bd(22)     --   Third Modification of Credit Agreement, Promissory Note,
                   Guaranty Agreements and Related Loan Documents, between SBS
                   Technologies, Inc., and Bank of America, N.A., formerly
                   NationsBank, N.A., dated March 31, 2001
10.be(18)*    --   2000 Long-Term Equity Incentive Plan
10.bf*        --   Employment agreement between Registrant and Grahame E.
                   Rance, dated March 9, 2001. Filed herewith electronically
10.bg*        --   Employment agreement between Registrant and James E. Dixon,
                   Jr. dated March 8, 2001. Filed herewith electronically
10.bh*        --   Employment agreement between Registrant and Charles
                   Tompkins, dated January 15, 2001. Filed herewith
                   electronically
10.bi*        --   Employment agreement between Registrant and Bret Farnum,
                   dated August 12, 1998. Filed herewith electronically
10.bj*        --   Employment agreement between Registrant and David Greig,
                   dated October 28, 1997. Filed herewith electronically
10.bk*        --   Employment agreement between Registrant and Clarence
                   Peckham, dated April 21, 1997. 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
99.1a(7)      --   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>
<PAGE>   55

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

NOTES:

 (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 Exhibits 10.b and 10.v of the Registrant's
     Annual Reports on Form 10-K for the fiscal year ended June 30, 1996.

 (4) 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.

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

 (6) 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.

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

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

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

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

(11) 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.

(12) 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.

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

(14) 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.

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

(16) 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.

(17) Incorporated by reference to Exhibits 10.ax and 10.ay of the Registrant's
     Annual Report on Form 10-K for the fiscal year ended June 30, 2000.

(18) Incorporated by reference to Exhibit "A" of the Registrant's Proxy
     Statement for its annual meeting held November 9, 2000, originally filed
     October 2, 2000.

(19) Incorporated by reference to Exhibit 3.i of the Registrant's Quarterly
     Report on Form 10-Q for the quarter ended September 30, 2000.

(20) Incorporated by reference to Exhibit 3.ii of the Registrant's Quarterly
     Report on Form 10-Q for the quarter ended September 30, 2000.

(21) Incorporated by reference to Exhibit 4.c, of the Registrant's Quarterly
     Report on Form 10-Q for the quarter ended March 31, 2001.

(22) Incorporated by reference to Exhibits 10.ba, 10.bc and 10.bd of the
     Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31,
     2001.

Note: An asterisk (*) indicates a management contract or compensatory plan or
      arrangement required to be filed as an exhibit.

</TEXT>
</DOCUMENT>
