-----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, bR6Yu8OQI9jq7XE7+GXInkwGOU/QPo9fT+86fCjQ/tsa2GlnFP4H879RUjPO4NP6 yjFMMzcaEGOtPzTH03gzMA== 0000034285-95-000007.txt : 19950616 0000034285-95-000007.hdr.sgml : 19950616 ACCESSION NUMBER: 0000034285-95-000007 CONFORMED SUBMISSION TYPE: ARS PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950322 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RELIABILITY INC CENTRAL INDEX KEY: 0000034285 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 750868913 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: ARS SEC ACT: 1934 Act SEC FILE NUMBER: 000-07092 FILM NUMBER: 95522264 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 graphic of integrated circuit wafer Logo RELIABILITY INCORPORATED ANNUAL REPORT 1994 g:\ofsusers\financial\anrpt95.wp1 1 TABLE OF CONTENTS SELECTED FINANCIAL INFORMATION I TO OUR SHAREHOLDERS II CORPORATE INFORMATION IV FORM 10-K 1 FIVE YEAR SELECTED FINANCIAL DATA 8 MANAGEMENT'S DISCUSSION 9 CONSOLIDATED FINANCIAL STATEMENTS F-1 NOTES TO CONSOLIDATED FINANCIAL F-7 STATEMENTS 2 SELECTED FINANCIAL INFORMATION - ----------------------------------------------------------------------- (IN THOUSANDS, EXCEPT PER SHARE DATA) 1993 1994 % Change - ----------------------------------------------------------------------- Revenues $27,022 $23,427 -13% Net Income 2,369 2,645 +12 Net Income Per Share .56 .62 +11 Working Capital 5,846 8,854 +52 Stockholders' Equity 8,114 10,759 +33 Total Assets 11,018 13,284 +21 Average Shares Outstanding 4,243 4,243 - - ----------------------------------------------------------------------- REVENUES NET INCOME (LOSS) Graph Graph WORKING CAPITAL STOCKHOLDERS' EQUITY Graph Graph TOTAL ASSETS Graph See following pages for the graphs I 3 REVENUES (Thousands of Dollars) 1994 |XXXXXX|XXXXXX|X $23,427 1993 |XXXXXX|XXXXXX|XXXX $27,022 1992 |XXXXXX|XXXXXX|XXXXXX|X $31,413 $0 $10,000 $20,000 $30,000 $40,000 WORKING CAPITAL (Thousands of Dollars) 1994 |XXXXX|XXXXX|XXXXX|XXXXX|XXX $ 8,854 1993 |XXXXX|XXXXX|XXXX $ 5,846 1992 |XXXXX|XX $ 2,413 $0 $2,000 $4,000 $6,000 $8,000 $10,000 TOTAL ASSETS (Thousands of Dollars) 1994 |XXXXXXXX|XXXXXXXX|XXXX $13,284 1993 |XXXXXXXX|XXXXXXXX|X $11,018 1992 |XXXXXXXX|XXXXXXXX|XXXXXXX $14,693 $0 $5,000 $10,000 $15,000 NET INCOME (Loss) (Thousands of Dollars 1994 $2,645 |XXXXXXXX|XXX 1993 $2,369 |XXXXXXXX|X 1992 | XXX|XXXXXXXX|$(2,645) $(4,000) $(2,000) 0 $2,000 $4,000 STOCKHOLDER'S EQUITY (Thousands of Dollars) 1994 |XXXXXXX|XXXXXXX|XXXXX $10,759 1993 |XXXXXXX|XXXXXXX|XX $ 8,114 1992 |XXXXXXX|XXXX $ 5,745 $0 $4,000 $8,000 $12,000 I 4 TO OUR SHAREHOLDERS 1994 FINANCIAL REVIEW 1994 was another good year for both the semiconductor industry and Reliability. We earned $2.6 million in profits on $23.4 million in revenue, as compared to $2.4 million in profits on revenue of $27.0 million in 1993. Although our fourth quarter was soft, as forecasted, the rate of new orders increased, raising our backlog by approximately $1.3 million during the fourth quarter. We continued to improve our balance sheet in 1994. Cash increased from $2.9 million as of December 31, 1993, to $6.0 million as of December 31, 1994. There was no debt at the end of 1994, and our working capital increased to $8.9 million. Our current ratio was 4.7 and book value was $2.53 per share. We have a strong balance sheet for a company of our size, and it should permit us to finance the programs we need to grow our revenues in 1995. OPERATIONS REVIEW During 1994 we continued to aggressively reduce cost and increase productivity, which resulted in profits in all our products and services for the first time since 1988. Increased productivity in 1994 allowed us to increase profits by $276,000 on $3.6 million less of revenues. However, we did not reduce our R&D expense to achieve these results. In fact, R&D expenditures increased to over $1 million to help position us for the balance of the '90s. Our R&D expenditures yielded our first low-cost Intersect(tm) Burn-In Test System specifically targeted at 16, 64, and 256 Meg DRAM manufacturers. The first system is scheduled to ship in the first quarter of 1995. Development was also started on a second low cost system in the Intersect family, which will be targeted at manufacturers of large volumes of 16, 64, and 256 Meg DRAMs that are 8, 16, and 32 BITs wide. This second new system II 5 is scheduled to begin shipping in the second quarter of 1995. These lower cost systems will offer our customers some of the functional test features of the high performance Intersect 30 at 30-50% of the cost. Development of the first Criteria(r) 18 Burn-In System with the capability to dissipate 15,000 watts of energy was completed in 1994, and shipments should begin in the first quarter of 1995. This system is specifically targeted at the new, high performance microprocessors and micrologic circuits that are sensitive to switching noise, operate at high frequencies, and require a high dissipating chamber for burn-in. Phase I of our new burn-in management software package was started, and we received our first order in 1994. This software will provide burn-in process control and data collection. Demand for all of these new products should be strong in 1995, and our growth will only be limited by our ability to tailor our products to the specifications of our customers and deliver them within a short window of opportunity. Our testing facilities had another good year. During 1994, we increased our capacity for processing high density DRAMs in both North Carolina and Singapore. This expansion meshed with our customers' increased demand for DRAM processing and led to another successful year in our service operations. Reliability would like to expand both of our test facilities by providing more functions on higher volumes to our existing customers. We are also actively looking for opportunities to provide similar services for other large volume memory and micrologic manufacturers who would benefit from a contract-captive facility operated to their specifications. Our DC/DC converter line was profitable for the first year since 1989 on slightly lower revenues. This is a market where prices constantly decrease, so cost reduction must continue to be a priority. Our facility 6 in Costa Rica decreased its total manufacturing costs by reducing scrap and rework, increasing productivity, and reducing lead times. Our R&D investment in this area also yielded a number of new products in 1994. We introduced our first wide input range 10 watt DC/DC converter and we completed the design for a new series of wide input range, 15 watt high power density 5, 12, and 15 volt converters. These are our first products in the new wide input range 15 watt family and are offered in the smallest package available to the commercial market. During 1995, we plan to introduce a new 3.3 volt model for portable applications plus some dual and triple output converters in this product family. Even though the DC/DC market softened during the fourth quarter of 1994, as predicted, we continue to feel that the correct strategy is to reposition our product line away from the low cost high volume LAN market to the higher watt, higher price, lower volume DC/DC market. In 1995, we plan to continue to lower our manufacturing costs, increase our R&D expenditures, develop more new high wattage products, and reduce our time to market. LOOKING AHEAD TO 1995 We look forward to 1995. We have taken a number of different actions in the past two years to reduce our expenses and target our new products at key customers who are producing semiconductors for the computer and communications markets, i.e. high performance memory and micrologic devices. Although some analysts who follow the semiconductor industry are forecasting that semiconductor growth will slow from the 30% rate of 1993 and 1994 to 15% for 1995, the majority agrees that DRAMs, microprocessors and micrologic devices will all sustain much higher growth rates through the balance of the '90s. Because our strategy is focused on the memory and micrologic market, and on key customers who are leaders in these markets, we believe the company is well positioned to enjoy another 7 good year in 1995. In fact, we believe that our growth in 1995 will only be limited by our ability to tailor our products to meet key customers' specifications within their defined window of opportunity. We are forecasting that the year will start slowly for Reliability, gain momentum through the year, and result in higher revenues for the year. Larry Edwards President and Chief Executive Officer February 20, 1995 III 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, Margaret A. Chapman Company information The Parsons Assistant Secretary please contact: Corporation* A.C. Lederer, Jr. Investor Relations Chairman LEGAL COUNSEL Manager Investments Butler & Reliability Binion, L.L.P. Incorporated OFFICERS Houston, Texas P.O. Box 218370 Larry Edwards Houston, Texas 77218 President and AUDITORS TEL: (713) 492-0550 Chief Executive Ernst & Young, L.L.P.FAX: (713) 492-0615 Officer Houston, Texas INQUIRIES CONCERNING Max T. Langley ANNUAL MEETING THE COMPANY'S STOCK Senior Vice President Shareholders are If you have any Finance, Chief Finan- cordially invited questions concerning cial Officer, Secretary to attend the annual stock certificates, and Treasurer meeting of share- change of address, holders of Relia- consolidation of James M. Harwell bility Incorporated, accounts, transfer Vice President to be held at the of ownership or Company's executive other stock account Robert W. offices, matters, please Hildenbrand, Jr. 16400 Park Row, contact the Company's Vice President Houston, Texas on stock transfer agent April 26, 1995 at the following J.E. (Jim) Johnson at 10:00 a.m. address: Vice President Society National Bank C/O KeyCorp Shareholder Services, Inc. 700 Louisiana St. Suite 2620 *The Parsons Corporation is a holding Houston, Texas 77002-2729 company whose subsidiaries are engaged TEL: (713) 546-5500 in the engineering and construction (800) 539-6549 business. FAX: (713) 546-5510 IV 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 logo Quality is Reliability A Zero-Defects Company 10 -----END PRIVACY-ENHANCED MESSAGE-----