Reliability Inc. restructures power sources segment

HOUSTON, Texas, Aug. 5, 2002 — Reliability Inc. recently announced the company’s board of directors approved a plan to restructure the Power Sources business segment, which will result in all of Power Sources’ customers being serviced from Houston.

The restructuring will consolidate the company’s Power Sources operations in Houston and close the facility in Costa Rica effective Aug. 31, 2002. The company expects to incur expenses of approximately $200,000 for the quarter ending Sept. 30, 2002 to cover the estimated cost for the termination of 40 employees and the cost to shut down and dissolve the subsidiary.

The plant owned by the subsidiary will be listed for sale resulting in an approximate $700,000 increase in the company’s assets held for sale. In addition, the company expects to record a U.S. income tax benefit of approximately $2.0 million in the last half of 2002 as a result of the liquidation of the Costa Rican subsidiary. The company anticipates receiving a tax refund for the tax benefit in the second quarter of 2003.

Larry Edwards, president and CEO commented, “We have enjoyed a good relationship with the Costa Rican people and the government of Costa Rica, and we thank them for their hospitality, support and hard work for the past 12 years. However, the demand for our Power Sources has continued to decline for a number of years and is continuing to consume a disproportionate amount of cash. Also, we now believe that we will not see a recovery for Power Sources that we expected in the second half of 2002, and it may not occur in the first half of 2003. Therefore, we felt compelled to make the decision to reduce the cost and restructure the business.

“The prolonged downturn in the electronics industry, particularly telecom and semiconductors, is forcing Reliability, along with almost all other electronic companies, to control cash and take some very unpleasant actions. We will continue to review our expenses and conserve our assets so the company will be 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 downturn, 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 and its subsidiary manufacture burn-in and test equipment for sale to manufacturers and volume users of integrated circuits and provide conditioning and testing services for integrated circuits in Singapore. The company also manufactures a line of power sources, including DC-to-DC power converters.

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