-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MK2eL9sROyfvz6dxbaYiucTF20HnoLlhBYUtA5gD5St2hcTzaOSoC41Ywg3cAVDe o/nK2idIKR1FCA6A4LZZvA== 0000895755-01-500037.txt : 20010507 0000895755-01-500037.hdr.sgml : 20010507 ACCESSION NUMBER: 0000895755-01-500037 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010503 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010504 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VARI L CO INC CENTRAL INDEX KEY: 0000917173 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 060678347 STATE OF INCORPORATION: CO FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-23866 FILM NUMBER: 1623254 BUSINESS ADDRESS: STREET 1: 4895 PEORIA STREET CITY: DENVER STATE: CO ZIP: 80239 BUSINESS PHONE: 3033711560 MAIL ADDRESS: STREET 1: 11101 EAST 51ST AVENUE CITY: DENVER STATE: CO ZIP: 80239 8-K 1 v8k5301.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported): May 3, 2001 VARI-L COMPANY, INC. (Exact Name of Registrant as Specified in its Charter) COLORADO 0-23866 06-0678347 (State of Incorporation) (Commission File (IRS Employer ID Number) Number) 4895 Peoria Street Denver, Colorado 80239 (Address of Principal Executive Offices) (303) 371-1560 (Registrant's Telephone Number, including Area Code) ITEM 5. OTHER EVENTS Vari-L Company, Inc.(the "Registrant") issued a press release on May 3, 2001 releasing financial information which is attached as Exhibit 99.1 to this report and incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) None (b) None (c) Exhibits 99.1 Press Release dated May 3, 2001 99.2 Script for May 3, 2001 Conference Call ITEM 9. REGULATION FD DISCLOSURE In accordance with General Instruction B.2. of Form 8-K, the Script of the May 3, 2001 Conference Call is attached as Exhibit 99.2 to this report and incorporated herein by reference. The Script shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth in such filing. The conference call, which was open to the public, was also broadcast live over the Internet through PRNewswire's V-call web site. Date: May 3, 2001 VARI-L COMPANY, INC. By:/s/Richard P. Dutkiewicz Richard P. Dutkiewicz Vice President of Finance and Chief Financial Officer EX-99.1 2 v8kpr991.txt EXHIBIT 99.1 FOR IMMEDIATE RELEASE: NEWS May 3, 2001 OTC-VARL VARI-L COMPANY ANNOUNCES FINANCIAL RESULTS FOR THIRD QUARTER AND NINE MONTHS ENDED MARCH 31, 2001 DENVER, Colorado - Vari-L Company, Inc. (OTC-VARL), a leading provider of advanced components for the wireless industry, today announced results for the three- and nine-month periods ended March 31, 2001. RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2001 COMPARED WITH THE THREE MONTHS ENDED MARCH 31, 2000 Net sales for the three months ended March 31, 2001 increased 29.1% to $9,999,988 compared with $7,746,763 for the three months ended March 31, 2000. This improvement primarily reflects increased demand for the Company's commercial signal source products. Revenue from commercial signal source products was $8,282,330 for the three months ended March 31, 2001, a 30.7% increase from $6,336,396 for the three months ended March 31, 2000. Revenue from all other products was $1,717,658 for the three months ended March 31, 2001, a 21.8% increase from $1,410,367 for the three months ended March 31, 2000. Gross profit for the three months ended March 31, 2001 increased 66.1% to $5,561,124, or 55.6% of net sales, compared with $3,347,538, or 43.2% of net sales, for the three months ended March 31, 2000. Included in cost of goods sold for the three months ended March 31, 2000 is a charge of $143,465 for excess and obsolete inventory. The higher gross profit margin in the 2001 period is primarily attributable to reduced labor costs resulting from reduced overtime, reduced material costs due to an improvement in prices paid for materials and a substantial reduction in charges for expedited shipments of raw materials, along with improved production yields. Total operating expenses for the quarter ended March 31, 2001 were $5,345,970 versus $3,443,606 in the comparable quarter a year ago. Included in operating expenses are charges for non-cash stock compensation. The charges for stock compensation principally relate to amortization of deferred stock compensation attributable to stock options granted at less than the market price of the common stock on the date of grant. Of the $307,399 total amount of stock compensation recorded for the three months ended March 31, 2000, $285,542 relates to options granted in December 1999. In December 2000, these options were re-priced at $34.50 per share, the market price of the common stock at the date of the original grant. As a result, the remaining unamortized stock compensation associated with these option grants was reversed in December 2000. The quarter ended March 31, 2001 included $28,606 of non-cash stock compensation from options that were not re-priced. The net income for the three months ended March 31, 2001 was $42,957, or $0.01 per share (basic and diluted), compared with a net loss of $190,791, or $0.03 per share, for the three months ended March 31, 2000. Excluding the impact of stock compensation (which is a non-cash charge) and expenses relating to accounting restatements (which management believes are nonrecurring), net income for the three months ended March 31, 2001 would have been $537,052, or $0.08 per share (basic and diluted), compared with net income of $133,091, or $0.02 per share, for the three months ended March 31, 2000. RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 2001 COMPARED WITH THE NINE MONTHS ENDED MARCH 31, 2000 Net sales for the nine months ended March 31, 2001 increased 52.9% to $32,388,724 compared with $21,185,835 for the nine months ended March 31, 2000. This improvement primarily reflects increased demand for the Company's commercial signal source products. Revenue from commercial signal source products was $26,971,568 for the nine months ended March 31, 2001, a 64.7% increase from $16,379,270 for the nine months ended March 31, 2000. The nine months ended March 31, 2001 included a significant end- of-life production run generating net sales of $809,285 and fees earned from a contract modification of approximately $295,000. Revenue from all other products was $5,417,156 for the nine months ended March 31, 2001, a 12.7% increase from $4,806,565 for the nine months ended March 31, 2000. Gross profit for the nine months ended March 31, 2001 increased 68.5% to $16,107,204, or 49.7% of net sales, compared with $9,557,003, or 45.1% of net sales, for the nine months ended March 31, 2000. Included in cost of goods sold for the nine months ended March 31, 2001 is a charge of $739,580 for obsolete and excess inventory, compared to $216,339 for the nine months ended March 31, 2000. The higher gross profit margin in the 2001 period principally reflected the benefit from the end-of-life production run and contract modification, partially offset by a decrease in average net selling prices of the Company's products, a higher ratio of material costs to net sales, due in part to the Company's decision to pay higher costs in return for expedited delivery of raw materials, as well as a reduction in the provision for excess and obsolete inventory. Total operating expenses for the nine months ended March 31, 2001 were $15,722,210 versus $9,770,376 in the comparable period a year ago. Included in operating expenses are charges for non-cash stock compensation. The charges for stock compensation principally relate to amortization of deferred stock compensation attributable to stock options granted at less than the market price of the common stock on the date of the grant. Of the $473,719 total amount of stock compensation recorded in the nine months ended March 31, 2001, $408,559 relates to options granted in December 1999. In December 2000, these options were re-priced at $34.50 per share, the market price of the common stock at the date of the original grant. As a result, the remaining unamortized stock compensation associated with these option grants was reversed in December 2000. The net loss for the nine months ended March 31, 2001 was $168,127, or $0.02 per share, compared with a net loss of $589,954, or $0.09 per share, for the nine months ended March 31, 2000. Excluding the impact of stock compensation (which is a non-cash charge) and expenses relating to accounting restatements and related shareholder litigation (which management believes are nonrecurring), net income in the nine months ended March 31, 2001 would have been $2,639,041, or $0.37 per share, compared with a net loss of $208,558, or $0.03 per share, in the comparable period a year ago. LIQUIDITY The Company generated $1,590,132 of cash from operations, exclusive of the changes in working capital. This cash, along with a reduction in cash and cash equivalents of $6,325,479 for the nine months ended March 31, 2001 was used to reduce notes payable by $4,779,069, purchase property, equipment and other assets of $1,939,670. Included in the changes of non- cash working capital was a reduction in accounts payable to vendors of $2,077,312 which was partially offset by an increase in accounts receivable of $578,101. The Company's working capital at March 31, 2001 was $13,119,623, excluding notes payable under the Company's credit facility with its current bank of $6,720,931. Including the notes payable, working capital was $6,398,692. Working capital at March 31, 2001 includes cash and cash equivalents of $4,704,814. Working capital at June 30, 2000, excluding notes payable under the Company's credit facility with its current bank of $11,500,000, was $18,241,269. Including the notes payable, working capital at June 30, 2000 was $6,741,269. Working capital at June 30, 2000 includes cash and cash equivalents of $11,030,293. Pete Pappas, interim chief executive officer, said "We are pleased with our performance in the quarter and nine-month periods, particularly in light of the slowdown in the wireless industry and in the overall economy," Pappas said. "The Company will continue to focus on strengthening operations and improving efficiencies." Headquartered in Denver, Vari-L designs, manufactures and markets wireless communications components that generate or process radio frequency (RF) and microwave frequency signals. Vari-L's patented products are used in commercial infrastructure equipment (including cellular/paging/PCS base stations and repeaters, fixed terminal point to point/multi-point data radios including LMDS/MMDS), consumer subscriber products (advanced cellular/PCS/satellite handsets, web-enabled smart phones, 2-way pagers, wireless PDAs, home networking), and military/aerospace platforms (satellite communications/telemetry, missile guidance, electronic warfare, electronic countermeasures, battlefield communications). Vari-L serves a diverse customer base of the world's leading technology companies, including Adaptive Broadband, Agere, Agilent Technologies, Digital Microwave, Ericsson, Glenayre Technologies (Wireless Access), Boeing Satellite Systems, Harris, Lockheed Martin, Lucent Technologies, Microwave Data Systems, Mitsubishi, Motorola, NEC, NeoPoint, Netro, Nokia, Novatel Wireless, Raytheon, and Siemens. Financial tables follow on the next page. The Balance Sheet as of June 30, 2000 has been derived from the Company's audited financial statements included in the Company's Form 10-K/T for the transition period ended June 30, 2000, filed with the SEC. The other financial information is unaudited and has been derived from the Company's unaudited financial statements included in the Company's Form 10-Q for the period ended March 31, 2001, to be filed with the SEC. Some of the statements contained in this news release are forward-looking statements. The accuracy of these statements cannot be guaranteed as they are subject to a variety of risks, including but not limited to general economic conditions in the United States and the overseas markets served by the Company, the success of the products into which the Company's products are integrated, governmental action relating to wireless communications, licensing and regulation, the accuracy of the Company's internal projections as to the demand for certain types of technological innovation, competitive products and pricing, the success of new product development efforts, the timely release for production and the delivery of products under existing contracts, and the outcome of pending and threatened litigation and regulatory actions as well as other factors. CONTACTS: Vari-L Company, Inc. Pfeiffer High Public Relations, Inc. Pete Pappas, CEO Jay Pfeiffer 303/371-1560 303/393-7044 or Rick Dutkiewicz, CFO jay@pfeifferhigh.com 303/371-1560 www.vari-l.com
STATEMENT OF OPERATIONS (Unaudited) Three months ended March 31, 2000 2001 ------------------------------- Net Sales $ 9,999,988 $ 7,746,763 Cost of goods sold 4,438,864 4,399,225 ------------ ------------ Gross profit 5,561,124 3,347,538 ------------ ------------ Operating Expenses: Selling 1,101,996 888,719 General and administrative 2,823,555 1,075,797 Research and development 954,930 1,462,607 Expenses relating to accounting restatements and the related shareholder litigation 465,489 16,483 ------------ ------------ Total operating expenses 5,345,970 3,443,606 ------------ ------------ Operating profit (loss) 215,154 (96,068) Other income (expense): Interest income 92,322 151,697 Interest expense (258,293) (252,790) Other, net (6,226) 6,370 ------------ ------------ Total other income (expense) (172,197) (94,723) ------------ ------------ Net income (loss) $ 42,957 $ (190,791) ============ ============ Basic and diluted earnings (loss) per share $ 0.01 $ (0.03) ============ ============ Basic weighted average shares outstanding 7,087,048 7,014,347 ============ =========== Diluted weighted average shares outstanding 7,119,614 7,014,347 ============ ===========
(Unaudited) Nine months ended March 31, 2000 2001 ------------------------------- Net Sales $ 32,388,724 $ 21,185,835 Cost of goods sold 16,281,520 11,628,832 ------------ ------------ Gross profit 16,107,204 9,557,003 ------------ ------------ Operating Expenses: Selling 3,464,920 2,576,159 General and administrative 6,505,992 3,071,624 Research and development 3,417,849 4,106,110 Expenses relating to accounting restatements and the related shareholder litigation 2,333,449 16,483 ------------ ------------ Total operating expenses 15,722,210 9,770,376 ------------ ------------ Operating profit (loss) 384,994 (213,373) Other income (expense): Interest income 354,489 296,449 Interest expense (903,443) (671,619) Other, net (4,167) (1,411) ------------ ------------ Total other income (expense) (553,121) (376,581) ------------ ------------ Net income (loss) $ (168,127) $ (589,954) ============ ============ Basic and diluted earnings (loss) per share $ (0.02) $ (0.09) =========== =========== Basic weighted average shares outstanding 7,076,176 6,240,600 ============ ============ Diluted weighted average shares outstanding 7,076,176 6,240,600 ============ ============
BALANCE SHEETS (Unaudited) March 31, June 30, 2001 2000 ---- ---- ASSETS Current assets: Cash and cash equivalents $ 4,704,814 $11,030,293 Trade accounts receivable, less allowance for doubtful accounts of $258,030 and $174,634, respectively 6,459,381 5,881,280 Inventories 5,566,801 7,434,660 Prepaid expenses and other current assets 581,283 189,485 ----------- ----------- Total current assets 17,312,279 24,535,718 ----------- ----------- Property and equipment: Machinery and equipment 11,565,574 9,845,402 Furniture and fixtures 793,761 720,971 Leasehold improvements 1,576,730 1,538,575 ----------- ----------- 13,936,065 12,104,948 Less accumulated depreciation and amortization 5,969,899 4,767,159 ----------- ----------- Net property and equipment 7,966,166 7,337,789 Intangible and other assets 733,848 697,185 ----------- ----------- Total assets $26,012,293 $32,570,692 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Bank overdraft $ 301,312 $ 320,798 Trade accounts payable 2,104,958 4,182,270 Accrued compensation 1,483,803 1,499,890 Other accrued expenses 232,336 225,105 Notes payable and current installments of long-term obligations 6,791,178 11,566,386 ----------- ----------- Total current liabilities 10,913,587 17,794,449 Long-term obligations 53,507 91,666 ----------- ----------- Total liabilities 10,967,094 17,886,115 Stockholders' equity: Common stock, $.01 par value, 50,000,000 shares authorized; 7,106,811 and 7,070,423 shares issued and outstanding, respectively 71,068 70,704 Additional paid-in capital 36,827,924 40,524,974 Unamortized stock compensation cost (92,936) (4,318,371) Accumulated deficit (21,760,857) (21,592,730) ----------- ----------- Total stockholders' equity 15,045,199 14,684,577 ----------- ----------- Commitments and contingencies Total liabilities and stockholders' equity $26,012,293 $32,570,692 =========== ===========
EX-99.2 3 v8kpr992.txt EXHIBIT 99.2 Conference Call Script PETE PAPPAS Good afternoon and welcome to Vari-L's conference call for the third quarter and nine-month period ended March 31, 2001. With me again today is Rick Dutkiewicz, our chief financial officer. Rick will open up the presentation with a brief recap of our financial results, and then I will make some brief remarks on some other issues that may be on your mind before we open the call to questions. Rick? RICK DUTKIEWICZ o Good afternoon. As is customary, before getting started with our formal presentation I will read our required Safe Harbor statement. o Some of the statements contained in this conference call may be forward- looking statements. The accuracy of these statements cannot be guaranteed as they are subject to a variety of risks, including but not limited to general economic conditions in the United States and the overseas markets served by the Company, the success of the products into which the Company's products are integrated, governmental action relating to wireless communications, licensing and regulation, the accuracy of the Company's internal projections as to the demand for certain types of technological innovation, competitive products and pricing, the success of new product development efforts, the timely release for production and the delivery of products under existing contracts, and the outcome of pending and threatened litigation and regulatory actions as well as other factors. o By now you've all probably read and digested our financial results as published in our news release this morning, so I'll just cover a few of the highlights. o First and foremost, we are pleased to report a return to bottom line profitability for the third quarter after transitioning to an operating profit in the second quarter. On a pro forma basis, backing out the accounting and litigation expenses, the net income would have been substantially higher. Under that scenario, and also backing out the impact of stock compensation, the Company would have reported net income of $537,000, or 8 cents per share for the third quarter and $2.6 million or 37 cents per share, for the nine-month period. o We are also very pleased to report that net sales for the three and nine-month periods were up 29% and 53%, respectively, versus the corresponding periods a year ago. o Gross profit for the third quarter increased more than 12 points to 56% compared with the quarter ended March 31, 2000, reflecting reduced labor and material costs, a substantial reduction in expedited shipments and improved production yields. o As was the case in the second quarter, operating expenses in the third quarter included non-cash charges for stock compensation. In addition, S,G&A expenses were up significantly as a result of higher commissions paid to manufacturer's reps due to higher sales volume and to fees for independent contractors for interim management and for accounting services. o On the balance sheet at March 31st the Company had $17.3 million in current assets, including $4.7 million cash and cash equivalents. Working capital, excluding notes payable of $6.7 million, was $13.1 million. o We are continuing to reduce our cash invested in inventory. As of March 31, 2001, inventory is $5.6 million compared with $6.1 million at December 31, 2000 and $7.4 million at June 30, 2000. o On the liability side, you'll notice that we have reduced our notes payable and current portion of long-term debt by approximately $4.8 million over our June 30th fiscal year end. OTHER ISSUES o On April 3rd we announced an extension of our forbearance agreement with Bank One from March 31st to June 30th. The three-month extension, which is in line with Bank One's desire to keep extensions consistent with quarter ends, gives us an opportunity to work with other lenders in an effort to transition our banking relationship. There are four significant steps in the process of securing a new lender. The first step is obtaining term sheets from financial institutions interested in becoming the new lender. That step has been completed. Step two relates to collateral audits performed by auditors from these financial institutions. We are in that phase currently. The next step is a formal commitment from the institution to lend. Upon execution of the commitment letter, step four, which relates to drafting and executing all legal documentation, takes place. Upon completion of step four, we will make an announcement regarding the new lending relationship. o On that note, I will turn the call back over to Pete Pappas. Pete... PETE PAPPAS o Thank you, Rick. Prior to opening up the call to questions, I would like to address our recent change in management. o Over the past few months, we have been very busy strengthening our management team. Last week, we announced that Charles Bland has been hired as the Company's permanent CEO, effective May 7th, which is just next Monday. Our selection of Charles Bland is the result of an exhaustive search and a review of dozens of qualified candidates. We are confident that he will be an outstanding fit for Vari-L and our long-term strategic direction. Charles has tremendous credentials in my opinion and an excellent track record for managing and growing businesses and Vari-L's Board believes he is the ideal person to lead Vari-L into the future. Operator, you may now open the call for questions. -----END PRIVACY-ENHANCED MESSAGE-----