SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15 (d) of
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
Commission File No. 2-83256
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
RELIABILITY INCORPORATED EMPLOYEE STOCK SAVINGS PLAN AND TRUST
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
RELIABILITY INCORPORATED
16400 Park Row
Houston, Texas 77084
P. O. Box 218370
Houston, Texas 77218-8370
1
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
December 31, 1994
TABLE OF CONTENTS
Financial Statements:
Report of Independent Public Accountants 3
Statements of Net Assets Available for Benefits 4
Statements of Changes in Net Assets Available for Benefits 5
Notes to Financial Statements 6
Additional Financial Information:
Line 27a - Schedule of Assets Held for Investment Purposes 25
Line 27e and 27f - Schedule of Nonexempt Transactions 27
Line 27b - Schedule of Loans or Fixed Income Obligations 27
Line 27c - Schedule of Leases in Default or Classified as
Uncollectible 27
Line 27d - Schedule of Reportable Transactions 28
Signatures 31
Exhibit 23 - Consent of Independent Public Accountants dated 33
June 28, 1995
2
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN AND TRUST
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Administrative Committee
Reliability Incorporated Employee
Stock Savings Plan and Trust
We have audited the accompanying statements of net assets available for
benefits of the Reliability Incorporated Employee Stock Savings Plan and
Trust (the Plan) as of December 31, 1994 and 1993, and the related
statements of changes in net assets available for benefits for each of the
three years in the period ended December 31, 1994. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits of
the Plan at December 31, 1994 and 1993, and the changes in net assets
available for benefits for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental
schedules of assets held for investment at December 31, 1994 and 1993, non-
exempt party-in-interest transactions at December 31, 1994 and 1993,
obligations in default at December 31, 1994 and 1993, leases in default or
classified as uncollectible at December 31, 1994 and 1993, and reportable
transactions for each of the three years in the period ended December 31,
1994, are presented for purposes of complying with the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 and are not a required part of the
basic financial statements. The Fund Information in Note F is presented for
purposes of additional analysis rather than to present the net assets
available for benefits and changes in net assets available for benefits of
each fund. The supplemental schedules and Fund Information have been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ ERNST & YOUNG, LLP
Houston, Texas
May 5, 1995
3
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31
----------------
1994 1993
---- ----
Plan assets:
Investment in common stock of Reliability
Incorporated at fair value (335,918 and
345,362 shares at cost of $1,045,604
and $1,062,723 at December 31, 1994
and 1993, respectively) $ 797,805 $1,165,597
Investment in securities of unaffiliated
issuers:
Short-term Investments at fair value,
which approximates cost (1,018,730
and 367,109 units at December 31,
1994 and 1993, respectively) 1,018,730 367,109
Investment (at fair value) in The
Victory Funds of KeyCorp:
Intermediate Income Fund (73 and 8,594
units at cost of $719 and $85,922 at
December 31, 1994 and 1993,
respectively) 668 85,515
Value Stock Fund (452 and 12,320 units
at cost of $4,509 and $123,226 at
December 31, 1994 and 1993,
respectively) 4,380 124,428
Growth Stock Fund (118 and 11,060 units
at cost of $1,183 and $110,570 at
December 31, 1994 and 1993,
respectively) 1,163 110,930
Special Growth Stock Fund (12 and 16,459
units at cost of $123 and $164,345 at
December 31, 1994 and 1993,
respectively) 106 168,872
Participant Loans Outstanding:
Loan Fund (63,636 and 56,098 units at
cost of $63,636 and $56,098 at
December 31, 1994 and 1993,
respectively) 63,636 56,098
--------- ---------
1,886,488 2,078,549
Other assets 5,681 1,148
--------- ---------
Total assets 1,892,169 2,079,697
Liabilities:
Stock purchases pending - 47,499
Other liabilities - 1,390
--------- ---------
Total liabilities - 48,889
--------- ---------
Net assets available for benefits $1,892,169 $2,030,808
========= =========
See accompanying notes.
4
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31
-------------------------------
1994 1993 1992
---- ---- ----
Investment income:
Interest $ 31,494 $ 18,070 $ 14,277
Realized gain (loss) on
disposition of securities (45,448) 111,392 78,775
--------- --------- ---------
Total investment income (loss) (13,954) 129,462 93,052
Unrealized appreciation
(depreciation) in fair value
of investments (334,584) 644,525 49,770
Contributions:
Employee 211,171 176,975 129,308
Employer 64,047 62,892 58,819
Employer voluntary 42,369 41,841 62,508
--------- --------- ---------
Total contributions 317,587 281,708 250,635
Withdrawals and terminations (98,622) (312,896) (134,748)
Fees and expenses (9,066) (10,193) -
--------- --------- ---------
Net increase (decrease) (138,639) 732,606 258,709
Net assets available for benefits
at beginning of year 2,030,808 1,298,202 1,039,493
--------- --------- ---------
Net assets available for
benefits at end of year $1,892,169 $2,030,808 $1,298,202
========= ========= =========
See accompanying notes.
5
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
NOTE A - PARTICIPATION AND CONTRIBUTIONS
In July 1983, Reliability Incorporated (the "Company" or "Employer") adopted
an Employee Stock Savings Plan and Trust (the "Plan"). Under the Plan,
employees of the Company who meet the requirements described below are
eligible to participate in the Plan.
The Plan is administered by an Administrative Committee (the "Committee")
appointed by the Board of Directors of the Company. All assets of the Plan
are held under discretionary trust agreements.
United States employees of the Employer who have attained the age of 21 and
have completed 1 year of service, as defined in the Plan, become a member
("Member") of the Plan on the January 1 or July 1 next following the date
on which they became eligible and may elect to make contributions to the
Plan as described below. A Member's election to make contributions is
entirely voluntary, and each Member assumes all investment risks connected
with the securities held for his account by the Trustee.
Under the Plan, a Member may contribute, through payroll deductions, an
amount ("Employee Contribution") equal to 2 to 15 percent of defined
compensation. The Member may further elect to have all or a portion of his
contributions not be subject to federal income taxes under Section 401(k)
of the Internal Revenue Code. Defined compensation excludes bonuses,
commissions, shift differentials, overtime premiums, and similar payments.
Participants may increase or decrease contribution percentages monthly.
The Employer matches the Employee Contribution by an amount ("Employer
Contribution") equal to 50 percent of the Employee Contributions to a
maximum of 2 percent of the Member's defined compensation. Also, the
Employer annually contributes to employed Members a supplemental amount
("Employer Voluntary Contribution") equal to 1 percent of the Members'
defined compensation for the period during which they were Members.
A Member receives a vested interest in the balances in the Employer
Contribution and Employer Voluntary Contributions for his benefit plus
allocated earnings and realized and unrealized gains and losses thereon (his
"Employer Account") based upon years of service (as defined in the Plan) as
follows:
Vested interest in
Years of Service Employer Accounts
---------------- ------------------
Less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 100%
A Member always has a 100 percent vested interest in the balance in his
Employee Contributions plus allocated earnings and realized and unrealized
gains and losses thereon (his "Employee Account").
6
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 1994
NOTE A - PARTICIPATION AND CONTRIBUTIONS - Continued
Upon death or total and permanent disability, a Member is automatically
fully vested in his Employer Accounts. If the Plan is terminated by the
Company, all Members become fully vested in all their accounts.
NOTE B - PLAN INVESTMENTS
On September 1, 1994 KeyCorp changed the names of the funds from The Society
Funds to The Victory Funds. The make-up of the funds did not change, it was
a change in name only.
A Member may elect to invest his Employee Contributions in one or more of
six funds: (i) the Reliability Incorporated ("RI") Common Stock Fund; (ii)
the EB Money Market Fund; (iii) the Victory Intermediate Income Fund; (iv)
the Victory Value Stock Fund; (v) the Victory Growth Stock Fund; and (vi)
the Victory Special Growth Stock Fund. The contribution to each fund
elected may not be less than 5 percent of the Member's total contributions.
The investment election for future contributions and existing fund balances
may be changed daily. The minimum investment balance in any selected fund
is 5% of the Member's Employee Account.
Employee Contributions to the RI Common Stock Fund are invested in the
common stock of the Company, which is purchased by the Trustee in the open
market, and in temporary short-term investments. The fair value of the RI
Common Stock Fund is based on quoted market prices.
Employee Contributions to the EB Money Market Fund are primarily invested
in high grade money market instruments. The average life of the Fund's
investments is less than 120 days and a minimum of 20% of the Fund is
invested in overnight investments. The fair value of the Fund is based on
the face value of its interest bearing certificates.
Employee Contributions to the Victory Intermediate Income Fund are invested
in investment-grade debt securities issued by corporations and obligations
of the U.S. Government and its agencies or instrumentalities. The Fund may
also invest in preferred stocks and intends to maintain a dollar weighted
average portfolio maturity of approximately three to eight years. The fair
value of the Fund is based on quoted market prices of those securities it
owns.
Employee Contributions to the Victory Value Stock Fund are primarily
invested in a diversified group of common stocks, with an emphasis on
companies with above average total return potential. The fair value of the
Fund is based on quoted market prices of those stocks it owns.
Employee Contributions to the Victory Growth Stock Fund are invested in a
diversified group of common stocks, with an emphasis on companies with
superior prospects for long-term earnings growth and price appreciation.
The fair value of the Fund is based on quoted market prices of those stocks
it owns.
7
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
December 31, 1994
NOTE B - PLAN INVESTMENTS - Continued
Employee Contributions to the Victory Special Growth Stock Fund are invested
in common stocks of small companies with a market value of less than $1
billion and medium-sized companies with a market value of $1-$5 billion that
are believed to have superior prospects for long-term earnings growth and
price appreciation. The fair value of the Fund is based on quoted market
prices of those stocks it owns.
Employer Contributions and Employer Voluntary Contributions are invested
solely in the RI Common Stock Fund. Purchases of securities are reflected
on the trade dates. A participant who is 55 years of age and who is 100%
vested in his Employer Accounts may elect to have a portion of his balance
in these accounts diversified to other investment funds offered under the
Plan. This election may be made only once during each Plan year.
Administrative expenses are paid by the Plan. As of December 31, 1994,
there were 139 Members in the Plan, of which 87 were making Employee
Contributions.
Gains and losses realized on the sale of securities in the RI Common Stock
Fund are recorded on an average cost basis.
NOTE C - WITHDRAWALS AND TERMINATIONS
A Member may elect to withdraw all or a portion of his Employee
Contributions. If the employee elected to have his contributions treated
as not subject to federal income taxes, as described in Note A, certain
restrictions may apply. A Member making such an election is not permitted
to make future Employee Contributions prior to the first day of the month
following the expiration of six months from the date of such withdrawal.
Upon a Member's termination of employment, the Member may elect the method
of distribution of his Employee and vested Employer Accounts from the
following settlement options:
(1) Lump-sum payment or
(2) Periodic (monthly or quarterly) installments over a period not
to exceed 20 years. If distributions are payable in this
manner, the Member's Employee and Employer Accounts are
segregated and placed in a Distribution Account where gains,
losses, and earnings thereon are allocated. The Distribution
Account is invested in one of the six funds as elected by the
Member as described in Note B.
Distributions of the vested portion of the Employer Accounts of terminated
Members during the Plan years ending December 31, 1994 and December 31, 1993
totalled $58,888 and $137,768, respectively.
8
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE C - WITHDRAWALS AND TERMINATIONS - continued
The nonvested portions of the Employer Accounts of a Member whose employment
is terminated prior to the attainment of seven years of service or who
retires prior to Normal Retirement Age (as defined in the Plan), are
forfeited and allocated among the other Members ($9,238 and $8,710 in 1994
and 1993, respectively) as follows:
(1) The portion related to Employer Contributions is allocated to
the Members who have made Employee Contributions through the
entire Plan year in the ratio of such Employee Contributions;
and
(2) The portion related to Employer Voluntary Contributions is
allocated to those Members receiving such contributions in the
ratio that each such Member's defined compensation for the Plan
Year, or that portion of the Plan Year during which he was a
Member of the Plan, bears to the total defined compensation for
all Members for the Plan year.
Forfeitures are not considered reductions of the Employer's Contribution or
the Employer's Voluntary Contribution.
NOTE D - PARTICIPANT LOANS
Under the Plan, a participant may borrow up to the lowest of 1) $50,000, 2)
50% of his or her non-forfeitable accrued benefit or 3) the total of his or
her Employee Account. The minimum loan amount is $1,000 and the maximum
loan term is five years. Loan payments are made through payroll deductions.
During 1994 and 1993, $25,025 and $61,575, respectively, were borrowed by
Plan participants.
NOTE E - FEDERAL INCOME TAX AND ERISA
A favorable determination letter dated August 26, 1991, was received from
the Internal Revenue Service for the Plan as amended on January 1, 1989,
regarding its qualification under Section 401(a) of the Internal Revenue
Code, and the Plan is exempt from federal income taxes under the provisions
of Section 501(a) of the Internal Revenue Code. The Plan was amended and
restated on August 26, 1991, and the Plan's Administrative Committee
believes that the Plan, as amended and restated, continues to be qualified.
The Administrative Committee is currently in the process of obtaining a
determination letter for the Plan.
The Plan is subject to certain provisions of the Employee Retirement Income
Security Act of 1974 (ERISA) relative to participation, vesting, and the
fiduciary responsibility of Plan Administrators, but is not subject to the
provisions which deal with funding requirements, prohibitions against
holding employer securities, or plan termination insurance.
9
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE F - STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS BY EACH INVESTMENT
FUND
December 31, 1994
-----------------------------------
Reliability Incorporated
Common Stock Fund
Non-Par-
Total Participant ticipant
Plan Directed Directed
----- ----------- --------
Plan assets (at fair value):
Investment in common stock of
Reliability Incorporated
(335,918 shares at cost
of $1,045,604) $ 797,805 $104,210 $693,595
Investment in securities of
unaffiliated issuers:
Short-term investments
(1,018,730 units at cost
which approximates fair
value) 1,018,730 6,324 42,094
Investment in The Victory Funds
of KeyCorp:
Intermediate Income Fund
(73 units at cost of $719) 668
Value Stock Fund (452
units at cost of $4,509) 4,380
Growth Stock Fund (118
units at cost of $1,183) 1,163
Special Growth Stock Fund
(12 units at a cost of $123) 106
Loan Fund (63,636 units at
cost which approximates
fair value) 63,636
--------- ------- -------
1,886,488 110,534 735,689
Other assets 5,681 3,502 39
--------- ------- -------
Net Assets Available for Benefits $1,892,169 $114,036 $735,728
========= ======= =======
10
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE F - STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS BY EACH INVESTMENT
FUND - continued
December 31, 1994
---------------------------
EB Interme-
Money diate Value
Market Income Stock
Fund Fund Fund
Participant Directed
-------- ------- ------
Plan assets (at fair value):
Investment in common stock of
Reliability Incorporated
(335,918 shares at cost
of $1,045,604) $ - $ -$ -
Investment in securities of
unaffiliated issuers:
Short-term investments
(1,018,730 units at cost
which approximates fair
value) 378,169 93,741 177,279
Investment in The Victory Funds
of KeyCorp:
Intermediate Income Fund
(73 units at cost of $719) 668
Value Stock Fund (452
units at cost of $4,509) 4,380
Growth Stock Fund (118
units at cost of $1,183)
Special Growth Stock Fund
(12 units at a cost of $123)
Loan Fund (63,636 units at
cost which approximates
fair value)
------- ------- -------
378,169 94,409 181,659
Other assets 1,821 1 2
------- ------- -------
Net Assets Available for Benefits $379,990 $94,410$181,661
======= ====== =======
11
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE F - STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS BY EACH INVESTMENT
FUND - Continued
December 31, 1994
-------------------------
Special
Growth Growth
Stock Stock Loan
Fund Fund Fund
Participant Directed
------ ------- ----
Plan assets (at fair value):
Investment in common stock of
Reliability Incorporated
(335,918 shares at cost
of $1,045,604) $ - $ - $ -
Investment in securities of
unaffiliated issuers:
Short-term investments
(1,018,730 units at cost
which approximates fair
value) 153,653 167,470
Investment in The Victory Funds
of KeyCorp:
Intermediate Income Fund
(73 units at cost of $719)
Value Stock Fund (452
units) at cost of $4,509)
Growth Stock Fund (118
units at cost of $1,183) 1,163
Special Growth Stock Fund
(12 units at a cost of $123) 106
Loan Fund (65,478 units at
cost which approximates
fair value) 63,636
------- ------- ------
154,816 167,576 63,636
Other assets 3 2 311
------- ------- ------
Net Assets Available for Benefits $154,819 $167,578 $63,947
======= ======= ======
12
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE F - STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS BY EACH INVESTMENT
FUND - continued
December 31, 1993
--------------------------------
Reliability Incorporated
Common Stock Fund
Non-Par-
Total Participant ticipant
Plan Directed Directed
------- ----------- ----------
Plan assets (at fair value):
Investment in common stock of
Reliability Incorporated
(345,362 shares at cost
of $1,062,723) $1,165,597 $163,450 $1,002,147
Investment in securities of
unaffiliated issuers:
Short-term investments
(367,109 units at cost
which approximates fair
value) 367,109 7,074 43,369
Investment in The Society Funds
of Society National Bank:
Intermediate Income Fund
(8,594 units at cost of
$85,922) 85,515
Value Stock Fund (12,320
units at cost of
$123,226) 124,428
Growth Stock Fund (11,060
units at cost of
$110,570) 110,930
Special Growth Stock Fund
(16,459 units at cost of
$164,345) 168,872
Loan Fund (56,098 units at
cost which approximates
fair value) 56,098
--------- ------- ---------
2,078,549 170,524 1,045,516
Other assets 1,148 3 17
--------- ------- ---------
Total Assets 2,079,697 170,527 1,045,533
Liabilities:
Pending Purchases 47,499 1,179 46,320
Fees and Expenses 1,390 - 997
--------- ------- ---------
Total Liabilities 48,889 1,179 47,317
--------- ------- ---------
Net Assets Available for Benefits $2,030,808 $169,348 $ 998,216
========= ======= =========
13
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE F - STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS BY EACH INVESTMENT
FUND - continued
December 31, 1993
---------------------------------
EB Inter-
Money mediate Value
Market Income Stock
Fund Fund Fund
Participant Directed
------- ------- -----
Plan assets (at fair value):
Investment in common stock of
Reliability Incorporated
(345,362 shares at cost
of $1,062,723) $ - $ - $ -
Investment in securities of
unaffiliated issuers:
Short-term investments
(367,109 units at cost
which approximates fair
value) 316,666
Investment in The Society Funds
of Society National Bank:
Intermediate Income Fund
(8,594 units at cost of
$85,922) 85,515
Value Stock Fund (12,320
units at cost of
$123,226) 124,428
Growth Stock Fund (11,060
units at cost of
$110,570)
Special Growth Stock Fund
(16,459 units at cost of
$164,345)
Loan Fund (56,098 units at
cost which approximates
fair value)
------- ------ -------
316,666 85,515 124,428
Other assets 938 21 54
------- ------ -------
Total Assets 317,604 85,536 124,482
Liabilities:
Pending Purchases - - -
Fees and Expenses 145 38 76
------- ------ -------
Total Liabilities 145 38 76
------- ------ -------
Net Assets Available for Benefits $317,459 $85,498 $124,406
======= ====== =======
14
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE F - STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS BY EACH INVESTMENT
FUND - Continued
December 31, 1993
--------------------------------
Special
Growth Growth
Stock Stock Loan
Fund Fund Fund
Participant Directed
------- ------- ------
Plan assets (at fair value):
Investment in common stock of
Reliability Incorporated
(345,362 shares at cost
of $1,062,723) $ - $ - $ -
Investment in securities of
unaffiliated issuers:
Short-term investments
(367,109 units at cost
which approximates fair
value)
Investment in The Society Funds
of Society National Bank:
Intermediate Income Fund
(8,594 units at cost
of $85,922)
Value Stock Fund (12,320
units at cost of
$123,226)
Growth Stock Fund (11,060
units at cost of
$110,570) 110,930
Special Growth Stock Fund
(16,459 units at cost of
$164,345) 168,872
Loan Fund (56,098 units at
cost which approximates
fair value) 56,098
------- ------- ------
110,930 168,872 56,098
Other assets 45 70 -
------- ------- ------
Total Assets 110,975 168,942 56,098
Liabilities:
Pending Purchases - - -
Fees and Expenses 62 72 -
------- ------- ------
Total Liabilities 62 72 -
------- ------- ------
Net Assets Available for Benefits $110,913 $168,870 $56,098
======= ======= ======
15
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE F - STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY EACH
INVESTMENT FUND
December 31, 1994
---------------------------
Reliability Incorporated
Common Stock Fund
Non-Par-
Total Participant ticipant
Plan Directed Directed
------- ------------ --------
Investment income:
Interest $ 31,494 $ 67 $ 445
Realized (loss) on disposition
of securities (45,448) (21) (142)
--------- ------- --------
Total investment income (loss) (13,954) 46 303
Unrealized appreciation
(depreciation) in fair value
of investments (334,584) (43,671) (290,664)
Contributions:
Employee 211,171 22,129 -
Employer 64,047 - 64,047
Employer voluntary 42,369 - 42,369
--------- ------- --------
Total contributions 317,587 22,129 106,416
Withdrawals and terminations (98,622) (15,076) (58,889)
Fees and expenses (9,066) - (8,042)
Investment transfers - (18,235) (11,424)
Transfers (to) from Loan Fund - (505) -
Forfeitures - - (188)
--------- ------- --------
Net increase (decrease) (138,639) (55,312) (262,488)
Net assets available for
benefits at beginning of year 2,030,808 169,348 998,216
--------- ------- --------
Net assets available for benefits
at end of year $1,892,169 $114,036 $ 735,728
========= ======= ========
16
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE F - STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY EACH
INVESTMENT FUND - Continued
December 31, 1994
-----------------------------------
EB Inter-
Money mediate Value
Market Income Stock
Fund Fund Fund
Participant Directed
------- ------- -----
Investment income:
Interest $ 14,808 $ 5,403 $ 4,378
Realized (loss) on disposition
of securities - (7,055) (2,973)
------- ------- -------
Total investment income (loss) 14,808 (1,652) 1,405
Unrealized appreciation
(depreciation) in fair value
of investments - (50) (158)
Contributions:
Employee 30,198 26,444 41,567
Employer - - -
Employer voluntary - - -
------- ------- -------
Total contributions 30,198 26,444 41,567
Withdrawals and terminations (22,592) - -
Fees and expenses (1,024) - -
Investment transfers 48,899 (16,967) 13,941
Transfers (to) from Loan Fund (7,946) 1,137 500
Forfeitures 188 - -
------- ------- -------
Net increase (decrease) 62,531 8,912 57,255
Net assets available for
benefits at beginning of year 317,459 85,498 124,406
------- ------- -------
Net assets available for benefits
at end of year $379,990 $ 94,410 $181,661
======= ======= =======
17
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE F - STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY EACH
INVESTMENT FUND - Continued
December 31, 1994
---------------------------------
Special
Growth Growth
Stock Stock Loan
Fund Fund Fund
Participant Directed
------- ------- ----
Investment income:
Interest $ 1,740 $ 851 $ 3,802
Realized (loss) on disposition
of securities (1,266) (33,991) -
------- ------- ------
Total investment income (loss) 474 (33,140) 3,802
Unrealized appreciation
(depreciation) in fair value
of investments (22) (19) -
Contributions:
Employee 58,233 32,600 -
Employer - - -
Employer voluntary - - -
------- ------- ------
Total Contributions 58,233 32,600 -
Withdrawals and terminations - (2,065) -
Fees and expenses - - -
Investment transfers (19,075) 2,861 -
Transfers (to) from Loan Fund 4,296 (1,529) 4,047
Forfeitures - - -
------- ------- ------
Net increase (decrease) 43,906 (1,292) 7,849
Net assets available for benefits
at beginning of year 110,913 168,870 56,098
------- ------- ------
Net assets available for benefits
at end of year $154,819 $167,578 $63,947
======= ======= ======
18
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE F - STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY EACH
INVESTMENT FUND - Continued
December 31, 1993
---------------------------------------
EB
Money
Reliability Inc. Market
Total Common stock Fund Fund
Plan Non-Part- Parti-
Participant ticipant cipant
Directed Directed Directed
----- ------------ --------- -------
Investment income:
Interest $ 18,070 $ 63 $ 389 $ 15,722
Realized gain on disposition
of securities 111,392 13,790 84,545 -
--------- -------- ------- -------
Total investment income 129,462 13,853 84,934 15,722
Unrealized appreciation
(depreciation) in fair value
of investments 644,525 89,585 549,258 -
Contributions:
Employee 176,975 11,215 40,746
Employer 62,892 - 62,892 -
Employer voluntary 41,841 - 41,841 -
--------- -------- ------- -------
Total Contributions 281,708 11,215 104,733 40,746
Withdrawals and terminations (312,896) (23,032) (82,619)(201,411)
Fees and expenses (10,193) - (6,560) (2,284)
Investment transfers - (81,063) (117,594) 496,907
Transfers (to) from Loan Fund - (4,442) - (40,931)
Forfeitures - - (8,710) 8,710
--------- -------- ------- -------
Net increase (decrease) 732,606 6,116 523,442 317,459
Net assets available for
benefits at beginning of year 1,298,202 163,232 474,774 -
--------- ------- ------- -------
Net assets available for
benefits at end of year $2,030,808 $169,348 $998,216 $317,459
========= ======= ======= =======
19
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE F - STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY EACH
INVESTMENT FUND - Continued
December 31, 1993
----------------------------------
Inter- Special
mediate Value Growth Growth
Income Stock Stock Stock
Fund Fund Fund Fund
Participant Directed
------- ------ ------- -------
Investment income:
Interest $ 263 $ 141 $ 71$ 55
Realized gain on disposition
of securities 1,467 3,346 2,653 5,591
------ ------- ------- -------
Total investment income 1,730 3,487 2,724 5,646
Unrealized appreciation
(depreciation) in fair value
of investments (407) 1,202 360 4,527
Contributions:
Employee 24,163 27,126 49,945 23,780
Employer - - - -
Employer voluntary - - - -
------ ------- ------- -------
Total Contributions 24,163 27,126 49,945 23,780
Withdrawals and terminations (2,106) (1,043) (2,401) (284)
Fees and expenses (254) (432) (354) (309)
Investment transfers 64,616 98,316 63,746 135,268
Transfers (to) from Loan Fund (2,244) (4,250) (3,107) 242
Forfeitures - - - -
------ ------- ------- -------
Net increase (decrease) 85,498 124,406 110,913 168,870
Net assets available for benefits
at beginning of year - - - -
------ ------- ------- -------
Net assets available for benefits
at end of year $85,498 $124,406 $110,913$168,870
====== ======= ======= =======
20
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE F - STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY EACH
INVESTMENT FUND - Continued
December 31, 1993
------------------------
Short
Loan Term Equity
Fund Fund Fund
Participant Directed
---- ------ ------
Investment income:
Interest $ 1,366 $ -$ -
Realized gain on disposition
of securities - - -
------- -------- --------
Total investment income 1,366 - -
Unrealized appreciation
(depreciation) in fair value
of investments - - -
Contributions:
Employee - - -
Employer - - -
Employer voluntary - - -
------ -------- --------
Total Contributions - - -
Withdrawals and terminations - - -
Fees and expenses - - -
Investment transfers - (317,355)(342,841)
Transfers (to) from Loan Fund 54,732 - -
Forfeitures - - -
------ -------- --------
Net increase (decrease) 56,098 (317,355)(342,841)
Net assets available for benefits
at beginning of year - 317,355 342,841
------ -------- --------
Net assets available for benefits
at end of year $56,098 $ -$ -
====== ======== ========
21
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE F - STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY EACH
INVESTMENT FUND - Continued
December 31, 1992
-----------------------------
Reliability Inc.
Common Stock Fund
Non-Par-
Total Participant ticipant
Plan Directed Directed
------ ------------ --------
Investment income:
Interest $ 14,277 $ 148 $ 496
Realized gain (loss) on
disposition of securities 78,775 (1,157) (3,863)
--------- ------- -------
Total investment
income (loss) 93,052 (1,009) (3,367)
Unrealized appreciation
(depreciation) in fair
value of investments 49,770 25,357 84,660
Contributions:
Employee 129,308 30,502 -
Employer 58,819 - 58,819
Employer voluntary 62,508 - 62,508
--------- ------- -------
Total contributions 250,635 30,502 121,327
Withdrawals and terminations (134,748) (13,651) (45,577)
Investment transfers - 9,911 -
--------- ------- -------
Net increase 258,709 51,110 157,043
Net assets available for
benefits at beginning
of year 1,039,493 112,122 317,731
--------- ------- -------
Net assets available for
benefits at end of year $1,298,202 $163,232 $474,774
========= ======= =======
22
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
NOTE F - STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY EACH
INVESTMENT FUND - Continued
December 31, 1992
-----------------
Short-
Equity Term
Fund Fund
Participant Directed
------- -------
Investment income:
Interest $ 821 $ 12,812
Realized gain (loss) on
disposition of securities 83,795 -
------- -------
Total investment
income (loss) 84,616 12,812
Unrealized appreciation
(depreciation) in fair
value of investments (60,247) -
Contributions:
Employee 51,364 47,442
Employer - -
Employer voluntary - -
------- -------
Total contributions 51,364 47,442
Withdrawals and terminations (35,399) (40,121)
Investment transfers 9,250 (19,161)
------- -------
Net increase 49,584 972
Net assets available for
benefits at beginning
of year 293,257 316,383
------- -------
Net assets available for
benefits at end of year $342,841 $317,355
======= =======
NOTE G - SUBSEQUENT EVENT
Subsequent to December 31, 1994, the Board of Directors of the Company
authorized the selection of a new trust company to manage and administer the
Plan. Plan assets were transferred to the new trust company during January
1995. In anticipation of this transfer, the Plan investments were
liquidated and invested in short-term investments in the EB Money Market
Fund prior to December 31, 1994.
23
ADDITIONAL FINANCIAL INFORMATION
24
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
LINE 27a - SCHEDULE OF ASSETS
HELD FOR INVESTMENT PURPOSES
December 31, 1994
------------------------------------
Shares Fair
or Units Cost Value
-------- ---- -----
Common stocks:
Reliability Incorporated 335,918 $1,045,604 $ 797,805
--------- ---------
Investment in The Victory Funds
of KeyCorp:
Intermediate Income Fund 73 719 668
Value Stock Fund 452 4,509 4,380
Growth Stock Fund 118 1,183 1,163
Special Growth Stock Fund 12 123 106
--------- ---------
6,534 6,317
--------- ---------
Short-term investments 1,018,730 1,018,730 1,018,730
--------- ---------
Loan Fund - Participant Loans
(Interest Rates: 7% - 9.5%) 63,636 63,636 63,636
--------- ---------
TOTAL INVESTMENTS $2,134,504 $1,886,488
========= =========
See accompanying notes.
25
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
LINE 27a - SCHEDULE OF ASSETS
HELD FOR INVESTMENT PURPOSES - continued
December 31, 1993
---------------------------------
Shares Fair
or Units Cost Value
-------- ---- -----
Common stocks:
Reliability Incorporated 345,362 $1,062,723 $1,165,597
--------- ---------
Investment in The Society Funds
of Society National Bank
Intermediate Income Fund 8,594 85,922 85,515
Value Stock Fund 12,320 123,226 124,428
Growth Stock Fund 11,060 110,570 110,930
Special Growth Stock Fund 16,459 164,345 168,872
--------- ---------
484,063 489,745
--------- ---------
Short-term investments 367,109 367,109 367,109
--------- ---------
Loan Fund - Participant Loans
(Interest Rate: 7%) 56,098 56,098 56,098
--------- --------
TOTAL INVESTMENTS $1,969,993 $2,078,549
========= =========
See accompanying notes.
26
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
December 31, 1994
LINE 27e and 27f - SCHEDULE OF NON-EXEMPT TRANSACTIONS
There were no transactions involving a party-in-interest, as defined by the
Employee Retirement Income Security Act in Title I, Sec. 3(14), during the
years ended December 31, 1994 and 1993, which were not disclosed elsewhere
in the financial statements, notes, or schedules.
LINE 27b - SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS
There were no loans or fixed income obligations in default or uncollectible
at December 31, 1994 and 1993.
LINE 27c - SCHEDULE OF LEASES IN DEFAULT OR
CLASSIFIED AS UNCOLLECTIBLE
There were no leases in default or uncollectible at December 31, 1994 and
1993.
See accompanying notes.
27
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
LINE 27d - SCHEDULE OF REPORTABLE TRANSCTIONS
1994
----------------------------------------------------
Purchases Dispositions Dispositions Gain(Loss) on
Price Cost Price Dispositions
--------- ------------ ------------ ------------
Common stocks:
Reliability
Incorporated $ 158,739 (1) $175,858 $192,032 (2) $ 16,174
========= ======= ======= =======
Investment in The
Victory Funds of
KeyCorp:
Intermediate
Income Fund 30,722 (3) 115,926 108,466 (4) (7,460)
Value Stock Fund 63,512 (5) 182,229 177,429 (6) (4,800)
Growth Stock Fund 71,723 (7) 181,110 179,505 (8) (1,605)
Special Growth
Stock Fund 40,651 (9) 204,874 175,407(10) (29,467)
--------- ------- ------- -------
$ 206,608 $684,139 $640,807 $(43,332)
========= ======= ======= =======
Short-term
investment funds $1,318,473(11) $666,852 $666,852(12) $ -
========= ======= ======= =======
Number of transactions:
(1) -19 (2) - 17
(3) -35 (4) - 7
(5) -25 (6) - 13
(7) -24 (8) - 16
(9) -28 (10) - 9
(11) -192 (12) - 189
See accompanying notes.
28
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
LINE 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
1993
----------------------------------------------------
Purchases Dispositions Dispositions Gain(Loss) on
Price Cost Price Dispositions
--------- ------------ ------------ ------------
Common stocks:
Reliability
Incorporated $ 150,140 (1)$ 227,054 $ 327,179 (2) $100,125
========= ========= ========= =======
Investment in The
Society Funds of
Society National
Bank:
Intermediate
Income Fund 171,068 (3) 85,146 86,613 (4) 1,467
Value Stock Fund 242,701 (5) 119,475 122,821 (6) 3,346
Growth Stock Fund 220,901 (7) 110,332 112,985 (8) 2,653
Special Growth
Stock Fund 300,427 (9) 136,081 141,672(10) 5,591
--------- --------- --------- -------
$ 935,097 $ 451,034 $ 464,091 $ 13,057
========= ========= ========= =======
Short-term
investment funds:
EB Money Market
Fund $1,407,566(11)$1,040,456 $1,040,456(12) $ -
Ameritrust Texas
Money Market
Fund - 696,997 696,997(13) -
--------- --------- --------- -------
$1,407,566 $1,737,453 $1,737,453 $ -
========= ========= ========= =======
Number of transactions:
(1) - 15 (2) - 22
(3) - 27 (4) - 15
(5) - 34 (6) - 19
(7) - 29 (8) - 26
(9) - 34 (10) - 16
(11) - 125 (12) - 149
(13) - 1
See accompanying notes.
29
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
1992
----------------------------------------------------
Purchases Dispositions Dispositions Gain(Loss) on
Price Cost Price Dispositions
--------- ------------ ------------ ------------
Common stocks:
Reliability
Incorporated $ 143,430 (1) $ 7,054 $ 2,034 (2) $ (5,020)
========= ======= ======= =======
Equity funds:
Ameritrust Texas
Stock Fund $ 11,000 (3) $ 87,915 $124,970 (4) $ 37,055
Ameritrust Texas
Value Stock Fund 11,699 (5) 95,191 122,613 (6) 27,422
Ameritrust Texas
Special Situation
Stock Fund 9,800 (7) 40,534 56,838 (8) 16,304
Ameritrust Texas
International
Stock Fund 2,400 (9) 30,255 33,269(10) 3,014
--------- ------- ------- -------
$ 34,899 $253,895 $337,690 $ 83,795
========= ======= ======= =======
Short-term investment
funds:
Ameritrust Texas
Cash Management
Fund $ 1,480 (11) $338,446 $338,446(12) $ -
Ameritrust Texas
Money Market
Fund 1,129,032 (13) 432,035 432,035(14) -
--------- ------- ------- -------
$1,130,512 $770,481 $770,481 $ -
========= ======= ======= =======
Number of transactions:
(1) - 15 (8) - 1
(2) - 1 (9) - 2
(3) - 3 (10) - 1
(4) - 1 (11) - 2
(5) - 3 (12) - 5
(6) - 1 (13) - 114
(7) - 3 (14) - 71
See accompanying notes.
30
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed by the undersigned
thereunto duly authorized.
RELIABILITY INCORPORATED EMPLOYEE
STOCK SAVINGS PLAN AND TRUST
/s/ Max T. Langley
- ------------------------
Max T. Langley
Administrative Committee Member Date: June 29, 1995
31
RELIABILITY INCORPORATED
EMPLOYEE STOCK SAVINGS PLAN AND TRUST
INDEX TO EXHIBITS
Exhibit Page
Number Description of Exhibits Number
- ------- ----------------------- ------
23. Consent of Independent Public Accountants dated Page 33
June 28, 1995.
32