Reliability Incorporated Reports Third Quarter 2002 Results.Business Editors & High-Tech high-tech also hi-tech adj. Informal Of, relating to, or resembling high technology. high-tech Adjective same as hi-tech Adj. 1. Writers HOUSTON--(BUSINESS WIRE)--Oct. 17, 2002 Reliability Incorporated (Nasdaq:REAL) today announced a net loss for the quarter ended Sept. 30, 2002 of $962,000 or $.15 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, on revenues of $807,000. Results for the third quarter of 2001 were a net loss of $1,910,000 or $.29 per diluted share, on revenues of $1,147,000. Results for the nine months ended Sept. 30, 2002 were a net loss of $3,668,000 or $.58 per share, on revenues of $3,588,000. Operations for the same period in 2001 resulted in a net loss of $2,302,000 or $.35 per diluted share on revenues $10,748,000. Operations for the quarter and nine months ended Sept. 30, 2002 included a $1,132,000 and $1,455,000, respectively, provision for asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges, restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of the Company's Power Sources segment and employee severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs. A tax benefit of $1,650,000 was recorded in the quarter ended Sept. 30, 2002 related to liquidating the Costa Rican subsidiary. The income tax benefit was partially offset by an asset impairment charge and the restructuring and severance costs, which reduced the net loss for the quarter and nine month period of 2002 by $518,000 or $.08 per diluted share. Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. was $250,000 at Sept. 30, 2002 compared to $538,000 at Sept. 30, 2001. Larry Lar´ry n. 1. Same as Lorry, or Lorrie. Edwards, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. commented, "Revenue for the third quarter at $807,000 was at the low end of the forecast of $0.8 to $1.1 million. The third quarter 2002 per share loss of $0.15 was better than the forecasted loss of $0.22-$0.26. Bookings of new orders were disappointing which caused backlog to decline to $250,000 as of Sept. 30, 2002. Net income was better than forecast primarily due to the Company recording a U.S. income tax benefit of $1,650,000, which resulted from restructuring the Power Sources segment, consolidating Power Sources in Houston Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; , and liquidating the Company's Costa Rican subsidiary. The Company expects to book an additional $550,000 U.S. tax benefit in the fourth quarter of 2002, as a result of liquidating the subsidiary. The tax benefit in the third quarter of 2002 was partially offset by a $200,000 charge associated with the closing of the Costa Rican facility, a $700,000 asset impairment charge to reduce the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of the North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. facility listed as an asset held for sale, and a $232,000 charge for employee severance costs. Assets held for sale were decreased by $700,000 due to the asset impairment charge on the North Carolina facility and increased by $670,000, which is the estimated net value of the land and building in Costa Rica Costa Rica (kŏs`tə rē`kə), officially Republic of Costa Rica, republic (2005 est. pop. 4,016,000), 19,575 sq mi (50,700 sq km), Central America. . "Virtually all of the Testing Products bookings and billings were from the Criteria(R) 18 HD Plus(TM) and Criteria 18 HP(TM) systems which deliver higher power Higher power is a term used in a 12-step program, such as Alcoholics Anonymous, to describe "a power greater than yourself." Although many participants equate their higher power with God, a belief in God or in formal religion is not mandatory; the higher power is intended as a levels to devices and remove greater amounts of heat from the devices under test. Although the quantity of production orders we have received has been disappointing, we believe that when the market recovers, the demand for systems for processing the new high-powered high-pow·ered also high-pow·er adj. Having great power or energy; dynamic: She's on a high-powered career track. high-powered Adjective 1. devices will be the first area to recover. Therefore, we plan to continue our R&D efforts in order to offer incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. improvements to our systems in the future and a new system on a totally new platform for customers who require a step function increase in performance. "Revenue for Services was soft in the third quarter of 2002. Although we did see some improvement in quote activity for processing DRAM devices, prices were very competitive, and the DRAM programs started, stopped, and were rescheduled several times. SRAM See static RAM. SRAM - static random-access memory demand remained very soft in the third quarter of 2002. Microprocessor microprocessor, integrated circuit containing the arithmetic, logic, and control circuitry required to interpret and execute instructions from a computer program. processing for the third quarter of 2002 was almost flat, but we are forecasting volumes will fall as production for the next generation of microprocessors This is a list of microprocessors. Intel
"The Power Sources segment revenue increased slightly in the third quarter of 2002, as compared to the second quarter of 2002, although revenue remains at very low levels. However, requests for samples of our new products, particularly 15 and 25 watt watt [for James Watt], abbr. W, unit of power, or work done per unit time, equal to 1 joule per second. It is used as a measure of electrical and mechanical power. converters, remained strong. Increased demand for samples is normally a sign more companies are accelerating their R&D activities in anticipation of the demand increasing for products with the latest new technology. We plan to continue our high rate of sampling and to push hard for design wins so we will be well positioned when our customers finally start to see good market acceptance of their new products. "Despite the fact that the markets the Company serve have been depressed for a very long period of time, our cash was $8.1 million as of Sept. 30, 2002, and our working capital was $11.5 million. Our current ratio was a very strong 9.0 to 1, and our net worth was $18.6 million or $2.93 per share. During these times, we continued to invest in our future, and at the same time we have maintained the debt free status of the Company. In 2002 we have invested over $2 million in R&D in the first nine months. A large portion of the R&D expense was used to develop the Criteria 20, which is our next generation micrologic Mi`cro`log´ic a. 1. Of or pertaining to micrology; very minute; as, micrologic examination s>. burn-in 1. (hardware) burn-in - screen saver. 2. (hardware, testing) burn-in - burn-in period. and test system. The Company will continue to review our expenses and cost controls, but will also continue to invest in the future via capital asset investments, research and development for new products, and may repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. Reliability stock, when appropriate. "The following statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. , based on our current expectations, and actual results may differ materially. We are still concerned by the uncertainty in the global economy, and the lack of growth in the semiconductor industry, which has caused the largest decrease in the demand for semiconductor equipment in history. In Reliability's second quarter 2002 press release, we reported the U.S. Test and Assembly Industry book-to-bill ratio Book-to-Bill Ratio The technology industry's demand-to-supply ratio for orders on a "firm's book" to number of orders filled. Notes: This ratio tells whether the company has more orders than it can deliver (if greater than 1), has the same amount of orders that it can , which had been below 1.0 since August of 2000, finally exceeded 1.0 in February February: see month. 2002 and was still above 1.0 in July July: see month. . Although this was good news for the industry, the good news was short lived as the ratio dropped to 0.77 in August of 2002. What appeared to be a bright spot, now seems to be a false start. Bookings and billings must both increase substantially for the industry and the Company's products and services to have a meaningful recovery. Therefore, we expect the Company's revenue to still bump along at depressed levels for the fourth quarter of 2002, as it has for the past five quarters. We are forecasting a loss of $.11 to $.18 per diluted share for the fourth quarter of 2002, including the anticipated tax benefit, on revenues of $0.6 to $1.0 million. "Nonetheless, we have refocused and repositioned our products and services, and we are excited about the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. opportunities and challenges that we face. We believe that when the semiconductor industry recovers, demand for Testing Products and Services that can provide equipment to deliver higher power and offer greater heat removal will lead the recovery. We also believe that Reliability has logical solutions to these more stringent technical specifications with our Criteria 18 HD Plus and Criteria 18 HP. We plan to continue our R&D expenditures so we can offer incremental improvements to these systems in the future and introduce the Criteria 20, which is on a totally new platform for customers who require a step function increase in performance. If we receive an order in early fourth quarter 2002, and provided we have no unanticipated technical challenges, we expect to be able to ship the initial production machine in the first half of 2003, depending on the exact feature set. With a solid balance sheet and a new set of product features and services, we believe the Company is positioned to take advantage of the increased demand when the market recovers. Our challenge is not only to stay financially healthy and satisfy current demand in the face of a prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. , but also to continue our investments in R&D and capital equipment in order to keep the Company positioned for growth in the future." Reliability Incorporated is based in Houston, with an operating facility in Singapore. Reliability manufactures burn-in and test equipment for sale to manufacturers and volume users of integrated circuits Integrated circuits Miniature electronic circuits produced within and upon a single semiconductor crystal, usually silicon. Integrated circuits range in complexity from simple logic circuits and amplifiers, about 1/20 in. (1. . The Company's Singapore subsidiary provides conditioning and testing services for integrated circuits. The Company also manufactures a line of power sources, including DC-to-DC power converters. For more information, see the Company's Web site at www.relinc.com. "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: Statements in this report regarding Reliability's business which are not historical facts are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " that involve risks and uncertainties that may affect the operations, performance, development and results of the Company's business and include, but are not limited to, adverse changes in the global economy, decreases in the demand for electronic products and semiconductors, market acceptance of the Company's products and services, the impact of competition, delays in product development schedules, delays due to technical difficulties related to developing and implementing technology, delays in delivery schedules, the ability to attract and maintain sufficient levels of people with specific technical talents, future results related to investments or liquidity, and changes in demand for the Company's products and services and the Company's customers' products and services. Actual results may materially differ from projections.
RELIABILITY INCORPORATED
STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
2002 2001 2002 2001
-------- -------- -------- --------
REVENUES $3,588 $10,748 $807 $1,147
COSTS AND EXPENSES:
Cost of revenues 3,502 7,846 1,107 1,942
Marketing, general and
administrative 3,075 3,988 1,005 1,162
Research and development 2,052 2,180 568 727
Asset impairment,
restructuring and
severance costs 1,455 54 1,132 --
-------- -------- -------- --------
Total expenses 10,084 14,068 3,812 3,831
-------- -------- -------- --------
Operating (loss) (6,496) (3,320) (3,005) (2,684)
Interest income 110 535 24 141
-------- -------- -------- --------
Income (loss) before
income taxes (6,386) (2,785) (2,981) (2,543)
Provision (benefit) for
income taxes (2,718) (483) (2,019) (633)
-------- -------- -------- --------
NET (LOSS) $(3,668) $(2,302) $(962) $(1,910)
======== ======== ======== ========
(LOSS) PER SHARE:
Basic $(.58) $(.35) $(.15) $(.29)
======== ======== ======== ========
Diluted $(.58) $(.35) $(.15) $(.29)
======== ======== ======== ========
Weighted average shares:
Basic 6,336 6,529 6,336 6,467
======== ======== ======== ========
Diluted 6,336 6,529 6,336 6,467
======== ======== ======== ========
RELIABILITY INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
Sept. 30, Dec. 31,
2002 2001
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $8,055 $12,302
Accounts receivable 469 717
Inventories 1,412 876
Refundable income taxes 2,590 345
Deferred tax assets 96 166
Other current assets 265 184
------- -------
Total current assets 12,887 14,590
------- -------
Property, plant and equipment,
at cost, net of accumulated
depreciation of $13,897 in 2002
and $13,649 in 2001 4,548 6,110
Investments 652 782
Assets held for sale 2,005 2,035
------- -------
$20,092 $23,517
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $204 $196
Accrued liabilities 1,103 847
Income taxes payable 19 29
Accrued restructuring costs 105 --
-------- --------
Total current liabilities 1,431 1,072
-------- --------
Deferred tax liabilities 96 128
Stockholders' equity:
Common stock, without par
value; 20,000,000 shares
authorized; 6,690,265 shares
issued in 2002 and 2001 9,614 9,614
Retained earnings, net of $7,772
in treasury stock retired during
1999 10,089 13,757
Accumulated other comprehensive
(loss) income (44) 40
Less treasury stock, at cost,
354,300 shares in 2002 and 2001 (1,094) (1,094)
-------- --------
Total stockholders' equity 18,565 22,317
-------- --------
$20,092 $23,517
======== ========
For more information, view our Web site, including SEC link, at www.relinc.com. |
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