-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, FD2glZwRza5b8LNvDB3NzFRP1zoA8W1hX93TurINNjYJlhZ0Zl7SNuRiBlp/umou QUGnSIg4/hFF5oi0fTAegw== 0000034285-94-000004.txt : 19940323 0000034285-94-000004.hdr.sgml : 19940323 ACCESSION NUMBER: 0000034285-94-000004 CONFORMED SUBMISSION TYPE: ARS PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940322 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RELIABILITY INC CENTRAL INDEX KEY: 0000034285 STANDARD INDUSTRIAL CLASSIFICATION: 3825 IRS NUMBER: 750868913 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: ARS SEC ACT: 34 SEC FILE NUMBER: 000-07092 FILM NUMBER: 94517149 BUSINESS ADDRESS: STREET 1: 16400 PARK ROW STREET 2: P O BOX 218370 CITY: HOUSTON STATE: TX ZIP: 77218 BUSINESS PHONE: 7134920550 FORMER COMPANY: FORMER CONFORMED NAME: FAIRLANE INDUSTRIES INC DATE OF NAME CHANGE: 19800519 ARS 1 1993 ANNUAL REPORT OF RELIABILITY INCORPORATED RELIABILITY INCORPORATED (Picture ri Logo) ANNUAL REPORT 1993 1 TABLE OF CONTENTS Selected Financial Information I To Our Shareholders II Corporate Information IV Form 10-K 1 Five Year Selected Financial Data 9 Management's Discussion 9 Consolidated Financial Statements F-1 Notes to Consolidated Financial Statements F-7 2 SELECTED FINANCIAL INFORMATION - -------------------------------------------------------------------------------- (In thousands, except per share data) 1992 1993 % Change - -------------------------------------------------------------------------------- Revenues $31,413 $27,022 -14% Net Income (Loss) (2,645) 2,369 N/M Net Income (Loss) Per Share (.62) .56 N/M Working Capital 2,413 5,846 +142 Stockholders' Equity 5,745 8,114 + 41 Total Assets 14,693 11,018 - 25 Average Shares Outstanding 4,243 4,243 - - -------------------------------------------------------------------------------- Graph Graph Graph Graph Graph See following pages for the graphs I 3 REVENUES (Thousands of Dollars) 1993 |XXXXXXXX|XXXXXXXX|XXXXX $27,022 1992 |XXXXXXXX|XXXXXXXX|XXXXXXXX|X $31,413 1991 |XXXXXXXX|XXXXXXXX|XXXXXXX $29,612 $0 $10,000 $20,000 $30,000 $40,000 TOTAL ASSETS (Thousands of Dollars) 1993 |XXXXXXXX|XXXXXXXX|X $11,018 1992 |XXXXXXXX|XXXXXXXX|XXXXXXX $14,693 1991 |XXXXXXXX|XXXXXXXX|XXX $13,615 $0 $5,000 $10,000 $15,000 WORKING CAPITAL (Thousands of Dollars) 1993 |XXXXXXXX|XXXXXXXX|XXXXXXX $ 5,846 1992 |XXXXXXXX|X $ 2,413 1991 |XXXXXXXX|XXXXXXXX|X $ 4,298 $0 $2,000 $4,000 $6,000 4 NET INCOME (Loss) (Thousands of Dollars 1993 |XXXXXX|X $2,369 1992 XX|XXXXXX| $(2,645) 1991 X|XXXXXX|XXXXXX| $(4,189) $(6,000) $(2,000) $2,000 ($4,000) $0 STOCKHOLDER'S EQUITY (Thousands of Dollars) 1993 |XXXXXXXXXX|XXXXXX $ 8,114 1992 |XXXXXXXXXX|XX $ 5,745 1991 |XXXXXXXXXX|XXXXXXX $ 8,390 $0 $5,000 $10,000 5 TO OUR SHAREHOLDERS 1993 Financial Review 1993 unfolded almost as planned, and exceeded our expectations in many ways. Reliability not only returned to profitability during the year, as forecasted, but generated net income of $2,369,000 vs. a loss of $2,645,000 in 1992. During 1993 the semiconductor manufacturers who purchase Reliability equipment and services saw their market increase by 30% instead of the 16% originally projected. Microprocessors and micrologic devices led the expansion, and memory joined the growth cycle later in the year. Due to the high average sales prices of complex integrated circuits, semiconductor unit demand expanded by only 8-9% but generated a 30% increase in dollars. The increased requirement for these ICs resulted in a higher demand for Reliability's more complex equipment and services, while the revenue from our more traditional lines suffered. We started 1993 on a low note by posting a $545,000 loss in the first quarter as we restructured again by reducing space and people in the U.S. This brought expenses in line with the forecasted revenues. The first quarter restructuring followed the closing of our Irish Power Sources manufacturing facility in 1991, the transfer of Power Sources operations from Singapore to Costa Rica in 1992, and the closing of our Japanese equipment and sales office in 1992. Although the first quarter was a disappointment, we actually lost less than forecasted. Since we had already closed facilities that were losing money, expense levels for the company were more in line with the lower revenues. The next three quarters produced earnings in excess of our plan. Reliability recorded profits of $848,000 in the second quarter, $1,198,000 in the third quarter, and $868,000 in the fourth quarter. Total 1993 profit after tax was $2,369,000. The cost reduction and restructuring also had a dramatic effect on the balance sheet. Cash as of December 31, 1993, was $2.9 million, compared to $362,000 on December 31, 1992. Total borrowing decreased from $2.4 million to $58,000, and net worth increased from $5.7 million to $8.1 million. The biggest disappointment of the year was a revenue decrease from $31.4 million in 1992 to $27.0 million in 1993. Revenue decreased in every business segment. Testing Services Testing Services revenue dropped slightly primarily due to lower volumes as the demand for 1 Meg DRAMs shifted to 4 and 16 Meg DRAMs. Our slightly higher processing prices for 4 Meg and 16 Meg DRAMs did not make up for the lower volumes. However, Testing Services still enjoyed its sixth straight profitable year. As the demand for 4Meg and 16Meg DRAMs increases in 1994, we plan to install additional capacity in both our Testing Services facilities. We feel that the additional capacity and our relationship with our existing customers puts us in a good position to participate in the forecasted growth in DRAMs in 1994. II 6 Conditioning Products Conditioning Products revenue was down by a little over $2.6 million in 1993. Part of the decrease was due to the closing of our plant in Japan, which had been operating at a loss. The revenue from sales of both Intersect(tm) and Criteria(r) systems coupled with the cost reductions achieved by the restructuring produced a 1993 operating profit of $1.9 million as compared to losses of $1.9 million in 1992 and $3.6 million in 1991. Conditioning Products started developing and introduced several new products during 1993. One new product is a burn-in board screener which allows our Intersect 30 customers to pre-screen and functionally test both 16 and 64 Meg DRAMs which are loaded into Intersect 30 boards. The machine improves the utilization of the Intersect system and, in some cases, eliminates the need for pre-testing devices on more expensive serial test systems. Another new product being developed is "BIB Management" (Burn-In Board Management) software which allows our customers to track the usage, history, and defect rate of burn-in boards. Based on reports generated by the program, customers will be able to make logical decisions about the price vs. performance of sockets and burn-in boards. It will also show when the burn-in boards are no longer reliable and need to be replaced. In addition, this software can be used in conjunction with Reliability's Interactive System Controller to prevent an operator from loading an inappropriate board into a system or running an incorrect test plan. The Innovation(r) 2000 loader/unloader is also under development. It will automate burn-in board and device handling and provide approximately 45 minutes of unattended device loading/unloading. As a result one equipment operator will be able to handle multiple machines. Shipping of the first Innovation 2000 is scheduled for 1994. Power Sources 1993 was not a good year for our Power Sources segment. Revenues dropped from $7.0 million in 1992 to $5.4 million in 1993. We expected that the restructuring would return the segment to profitability, but we were only able to approach breakeven. The consolidation of manufacturing in Costa Rica did not achieve the low cost objectives that we had set. However, some of our efforts to reduce our dependence on Local Area Network (LAN) products were successful as less than 30% of our sales came from LAN products, but, we were not able to expand our sales in the targeted higher wattage areas as fast as we had forecasted. We had several design wins with our new products such as the new 15 watt DC to DC converters which will be the specified converter by several of our customers in Europe. Also, we introduced several custom power supplies for key customers in 1993, which should start to produce revenue for us in 1994. Looking Ahead to 1994 We are approaching 1994 with cautious optimism, and cost reduction will remain a major portion of our 1994 plan. U.S. semiconductor manufacturers are entering 1994 with record backlogs, and sales are forecasted to grow by 7 10-20% according to most industry analysts. Although the growth rate is slower than 1993, it is still a good, solid, double-digit rate which should create strong demand for semiconductor manufacturing equipment. We expect the Power Sources operations to at least break even as we get our costs under control in Costa Rica. We will also realize the benefits of repositioning our product line away from LAN and into higher wattage DC to DC converters. Our increased capacity for processing 4 Meg and 16 Meg DRAMs, coupled with the strong forecasted demand for memory devices in 1994, should position Testing Services to have an excellent year. Conditioning and Test Products will specifically target micrologic and memory manufacturers who should experience better than the average industry growth during 1994 and 1995. Therefore, Reliability is looking forward to another successful year in 1994. Larry Edwards President and Chief Executive Officer March 1, 1994 8 CORPORATE INFORMATION DIRECTORS Paul Nesrsta INQUIRIES CONCERNING W.L. Hampton Vice President THE COMPANY Retired If you have any Margaret Bauer questions concerning Everett Hanlon Assistant Vice the Company's Retired President operations, recent results, historical John R. Howard Lane Petterson performance or wish Attorney Assistant Vice to receive previous President annual reports, press Thomas L. Langford releases or other President, Maggie A. Chapman Company information The Parsons Assistant Secretary please contact: Corporation* Investor Relations A.C. Lederer, Jr. Manager Investments Reliability Incorporated OFFICERS P.O. Box 218370 Larry Edwards LEGAL COUNSEL Houston, Texas 77218 President and Butler & Binion, L.L.P. TEL: (713) 492-0550 Chief Operating Houston, Texas FAX: (713) 492-0615 Officer AUDITORS INQUIRIES CONCERNING Max T. Langley Ernst & Young THE COMPANY'S STOCK Senior Vice President, Houston, Texas If you have any Finance, Chief Finan- questions concerning cial Officer, Secretary ANNUAL MEETING stock certificates, and Treasurer Shareholders are change of address, cordially invited consolidation of James M. Harwell to attend the annual accounts, transfer Vice President meeting of share- of ownership or holders of Reli- other stock account Robert W. ability Incorporated, matters, please Hildenbrand, Jr. to be held at the contact the Company's Vice President Company's executive stock transfer agent offices, the following on J.E. Johnson 16400 Park Row, address: Vice President Houston, Texas April 27, 1994 Society National Bank, at 10:00 a.m. c/o Society Shareholder Services, Inc., Texas Commerce Tower, Suite 1100, 600 Travis Street Houston, Texas 77002 TEL: (713) 216-2417 *The Parsons Corporation is a holding company whose subsidiaries are engaged in the engineering and construction business. 9 Reliability Incorporated P.O. Box 218370 Houston, Texas 77218 (713) 492-0550 Reliability Incorporated North Carolina Operations 2810 Meridian Parkway, #144 Durham, North Carolina 27713 (919) 544-6704 Reliability Singapore Pte Ltd. 5004 Ang Mo Kio Ave. 5 #04-01 Singapore 2056 65-481-9266 RICR de Costa Rica, S.A. P.O. Box 1-3006 Zona Franca Metropolitana Barreal, Heredia Costa Rica, A.C. 506-293-4384 ri Quality Is Reliability A Zero Defects Company 10 -----END PRIVACY-ENHANCED MESSAGE-----