Here we go!!
Wednesday April 22, 4:17 pm Eastern Time
Company Press Release
Reliability Incorporated Reports Record Backlog of $16.7
Million, a 222 Percent Increase in EPS and a 72 Percent
Increase in Revenues for the First Quarter of 1998
HOUSTON--(BUSINESS WIRE)--April 22, 1998--Reliability Incorporated (Nasdaq NMS
symbol:REAL - news) today announced net income of $1,787,000, or $.29 per diluted share, for
the first quarter ended March 31, 1998, on revenues of $11,480,000. Net income for the same
quarter in 1997 was $739,000 or $.09 per diluted share on revenues of $6,691,000. Earnings per
share for 1997 and 1998 reflect the Company's stock buy back in March of 1997 and the effect of
a 2 for 1 stock split on September 22, 1997. Backlog was $16.7 million at March 31, 1998, as
compared to the $15.9 million at March 31, 1997 and the $14.1 million at December 31, 1997.
Larry Edwards, president and CEO, commented, ''Record bookings of over $14 million for new
orders during the first quarter of 1998 demonstrated the strength in demand for the Company's latest
Intersect(tm) functional memory tester and Criteria(R) 18-HD micrologic system. The bookings
pushed our backlog to a new record of $16.7 million despite the strong shipments in the first quarter.
First quarter 1998 revenues were $11.5 million, and exceeded our forecast of $10-11 million. This
compares to revenue of $6.7 million in the first quarter of 1997. Gross margins for the first quarter of
1998 were 48.9 percent as compared to 44.6 percent for the first quarter of 1997. Although we
had a good start in 1998 due to the $14.1 million backlog as a result of a record setting 1997, we
were concerned that the demand for semiconductor capital equipment could soften during 1998.
However, demand for the Company's products and services was very strong in the first quarter, and
the backlog increased by $2.6 million. We were very pleased with the results, considering the string
of announcements from other semiconductor equipment suppliers who are reporting disappointments
in both bookings of new orders and revenue. Our financial position at the end of first quarter was
also very strong with cash at $7 million, working capital at $13.3 million, and current ratio at 3.4.
The only debt was a $1.8 million mortgage on the land and building of our Houston facility.
''As announced in January 1998, we stopped processing production quantities of memory devices
for Mitsubishi in our North Carolina facility at the end of March 1998, and we are now in the
process of disposing of all of the assets. We have included the anticipated costs (such as the
write-down of assets to the estimated fair market value) of closing the facility in our first quarter. In
spite of the costs associated with the North Carolina closure, the EPS for the first quarter of 1998
was $0.29 per share, which exceeded our forecast of $0.16, and compares to $0.09 for the first
quarter of 1997. We currently have $2.6 million of assets remaining on our books related to the
North Carolina facility pending disposition, which represents our best estimates of their current
realizable value. Although we do not anticipate additional substantial costs from the disposition of
these assets, actual results could materially differ since the results are still dependent upon the
successful completion of several negotiations.
''The following statements are forward looking, based on our current expectations, and actual
results may differ materially. Although we are very optimistic about the long-term outlook for both
the semiconductor equipment industry, and particularly Reliability Incorporated, we believe the
imbalance in supply and demand for certain semiconductors could adversely affect the
semiconductor equipment industry in the short term. We are encouraged by the strong bookings of
new orders during the first quarter of 1998, but we are still approaching 1998 cautiously. Our
forward looking forecast indicates revenues for the second quarter of 1998 to be approximately
$8-9 million compared to first quarter 1998 revenues of $11.5 million. This would make revenue for
the first half of 1998 approximately $19.5-20.5 million, as compared to $19.3 million for the first
half of 1997. We expect EPS for the second quarter of 1998 to be approximately $0.16, making
EPS for the first half of 1998 to be approximately $0.45 vs. $0.44 for the first half of 1997.
Beginning in the third quarter of 1998 we believe we will be in a position to start shipping a large
portion of the backlog which we booked late in the first quarter. Our current forecast still indicates
that Reliability will report revenue growth for 1998, as compared to the revenue of $47.2 million for
1997. To meet our forecast, the demand for Testing Products must continue to be sufficiently strong
to offset the loss in revenue from the closure of our North Carolina facility. We expect gross margins
for 1998 as compared to 1997 will decrease a few percentage points, to approximately 47 percent,
due to changes in product mix and competitive pressures on sales prices. We expect R&D expense
to increase 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.''
''Safe Harbor'' Statement under the Private Securities Litigation Reform Act of 1995: Statements in
this press release 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. |
