Reliability Incorporated Reports a 122% Increase in Earnings Per Share On a 34% Increase in
Revenues For The Fourth Quarter OF 1997.
BusinessWire, Monday, February 09, 1998 at 16:34
HOUSTON--(BUSINESS WIRE)--Feb. 9, 1998--Reliability Incorporated
(Nasdaq symbol REAL) today announced net income of $2,403,000, or
$.40 per share, for the fourth quarter ended December 31, 1997, on
revenues of $14,426,000. Net income for the same quarter in 1996 was
$1,522,000 or $.18 per share on revenues of $10,789,000. Earnings
per share for all periods of 1996 and 1997 reflect the effect of a 2
for 1 stock split that was effective on September 22, 1997.
Net income for the twelve months ended December 31, 1997 was
$8,132,000 or $1.25 per share on revenues of $47,220,000. Net income
for the same period in 1996 was $4,846,000 or $.57 per share on
revenues of $35,760,000. Net income per share increased $.22 for the
fourth quarter of 1997 and increased $.68 for the year of 1997. The
Company purchased 1,270,000 shares of its common stock on March 12,
1997, resulting in a decrease in the average shares outstanding for
the 1997 periods. Approximately $.12 and $.29 of the increases for
the quarter and twelve months, respectively, were due to a decrease
in the average number of shares outstanding. Backlog was $14.1
million at December 31, 1997, an increase of 42% over the $9.9
million at December 31, 1996.
Larry Edwards, President and CEO commented,
"Our fourth quarter, with revenues up 34% and EPS up 122% over
the fourth quarter of 1996, was a great way to end a truly
outstanding year for Reliability. 1997 was a record year for
bookings ($51.4 million), revenues ($47.2 million), operating income
($12.3 million), net income after tax ($8.1 million), and EPS which
was 119% above EPS for 1996. The business level throughout 1997 was
very strong as bookings for new orders remained above $12 million in
each of the four quarters. In fact, fourth quarter bookings of $13.9
million and revenue of $14.2 million were the highest of all the four
quarters in 1997. Our $14.1 million backlog as of December 31, 1997
gives us an excellent start for 1998.
"Demand for the Company's latest Intersect(tm) functional memory
tester and our Criteria(R) 18-HD micrologic system remained very
strong in 1997. Even though we increased revenue by 33% in 1997 to
meet the demand in the Testing Products Segment, the backlog
increased by 64% to $11.2 million at December 31, 1997. Our forward
look at 1998 indicates the demand for Testing Products should remain
strong.
"The revenue level for our testing Services was at a record $6.3
million for the fourth quarter of 1997, and the unit demand for our
services in Singapore was up significantly. In North Carolina we
installed and qualified all of the equipment required to process 64
Meg DRAMs. Production quantities were processed in November and
December. However, we were notified in January 1998 that Mitsubishi
would be significantly reducing its output of DRAMs in North Carolina
and would no longer require Reliability's testing services after the
first quarter of 1998. Reliability announced in January that the
North Carolina plant will be closed in April 1998. Although the
plant closure had no impact on 1997 revenues, we estimate we will
record approximately a $500,000 ($0.05 per share) reserve in the
first quarter of 1998, subject to several negotiations, to cover the
cost of the closure. The North Carolina facility accounted for
approximately 10% of our total revenue in 1997.
"The following statements are forward looking, based on our
current expectations, and actual results may differ materially.
Although we are cautiously optimistic about 1998, our current
forecast still indicates that Reliability will report revenue growth
for 1998. To meet our forecast, the demand for Testing Products must
be sufficiently strong to offset the loss in revenue from the closure
of our North Carolina facility. Our forward looking forecast
indicates revenues for the first quarter of 1998 to be approximately
$10 million to $11 million, compared to first quarter 1997 revenues
of $6.7 million. We expect EPS for the first quarter of 1998 to be
approximately $0.16 vs. $0.09 for the first quarter of 1997. We
expect gross margins for 1998 as compared to 1997 will decrease a few
percentage points, to approximately 47%, due to changes in product
mix and competitive pressures on sales prices. We expect R&D expense
to increase a little in 1998 as we invest in new product development,
resulting in an increase in total G&A expense for the full year of
1998 as compared to 1997."
Reliability Incorporated is based in Houston, Texas with
operating facilities in Durham, North Carolina; San Jose, Costa Rica;
and Singapore. Reliability and its subsidiaries manufacture burn-in
and test equipment, automatic loading and unloading equipment and
other peripherals for sale to manufacturers and volume users of
integrated circuits. The Company also manufactures a line of power
sources, including DC-to-DC power converters, and provides
conditioning and testing services for integrated circuits in
Singapore and Durham.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: Statements in this document regarding
Reliability's business which are not historical facts are "forward
looking statements" that involve risk and uncertainties, including,
but not limited to, market acceptance of our products and services,
the effects of general economic conditions, the impact of
competition, product development schedules, problems with technology,
delivery schedules, and supply and demand changes for our products
and services and our customers products and services. Actual results
may materially differ from projections.
*T
First Add: RELIABILITY INCORPORATED REPORTS
RECORD REVENUES AND PROFITS FOR 1997
(In thousands, except per share data)
Twelve Months Ended Three Months Ended
------------------- ------------------
12/31/97 12/31/96 12/31/97 12/31/96
REVENUES $47,220 $35,760 $14,426 $10,789
COSTS AND EXPENSES:
Cost of revenues 23,653 18,027 7,433 5,927
Marketing, general
and administrative 9,679 8,043 3,045 1,977
Research and
development 1,578 2,197 402 528
------- ------- ------ -------
Total expenses 34,910 28,267 10,880 8,432
------ ------ ------ -----
Operating income 12,310 7,493 3,546 2,357
Interest expense
(income), net 66 53 (38) (30)
-------- ------- ------- -------
Income before income
taxes 12,244 7,440 3,584 2,387
Provision for income
taxes 4,112 2,594 1,181 865
-------- ------- ------ ------
NET INCOME $ 8,132 $ 4,846 $ 2,403 $1,522
======== ======= ====== ======
EARNINGS PER COMMON
SHARE $ 1.25 $ .57 $ .40 $ .18
======== ======= ======= ======
EARNINGS PER COMMON
SHARE - DILUTED $ 1.23 $ .57 $ .39 $ .18
======== ======= ======= ======
Weighted average
shares outstanding 6,500 8,486 6,028 8,486
Weighted average
shares outstanding
- diluted 6,604 8,486 6,226 8,486
RELIABILITY INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, December 31,
1997 1996
ASSETS
Current assets:
Cash and cash
equivalents $ 7,108 $ 8,504
Accounts receivable 6,753 4,188
Inventories 4,156 3,159
Prepaid income taxes - 286
Deferred tax assets 601 760
Other current assets 501 449
-------- --------
Total current assets 19,119 17,346
Property, plant and
equipment, at cost,
net of accumulated
depreciation of $14,347
($14,048 in 1996) 10,682 9,257
------ -------
$29,801 $26,603
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities on
long-term debt $ 401 $ 367
Accounts payable 1,659 700
Accrued liabilities 4,426 3,220
Income taxes payable 727 331
-------- --------
Total current liabilities 7,213 4,618
Long-term debt 1,560 1,961
Deferred tax liabilities 386 356
Stockholders' equity:
Common stock, 7,269,502
shares issued
(8,485,696 in 1996) 6,690 5,926
Retained earnings 21,844 13,742
------ -------
28,534 19,668
Less treasury stock at
cost, 1,214,211 shares
in 1997 7,892 -
------- -----------
Total stockholders' equity 20,642 19,668
------ ------
$29,801 $26,603
*T
CONTACT: Reliability Inc., Houston
Max T. Langley, 281/492-0550, ext. 203
FAX: 281/492-0615
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