-----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, EI0Jn9FgMFS2HtILapFk371j/uTvkXOJolLG3qg5Z0tQ1HZQXtFAByO3GPKyz9XZ OvtYzlcWGg4zEyYvxdZD8A== 0000895755-96-000079.txt : 19961104 0000895755-96-000079.hdr.sgml : 19961104 ACCESSION NUMBER: 0000895755-96-000079 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961101 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VARI L CO INC CENTRAL INDEX KEY: 0000917173 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 060678347 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-23866 FILM NUMBER: 96652028 BUSINESS ADDRESS: STREET 1: 11101 E 51ST AVE CITY: DENVER STATE: CO ZIP: 80239 BUSINESS PHONE: 3033711560 MAIL ADDRESS: STREET 1: 11101 EAST 51ST AVENUE CITY: DENVER STATE: CO ZIP: 80239 10QSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC. 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended Commission File No. 0-23866 September 30, 1996 VARI-L COMPANY, INC. (Exact name of Registrant as specified in its charter.) Colorado 06-0679347 (State of Incorporation) (I.R.S. Employer identification No.) 11101 E. 51st Avenue Denver, Colorado 80239 (Address of principal executive offices) (303) 371-1560 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes----X---- No-------- The number of shares outstanding of each of the issuer's classes of common stock, as of September 30, 1996: Class of Securities Outstanding Securities $0.01 par value 3,805,838 shares Common shares PART I--FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS VARI-L COMPANY, INC. BALANCE SHEETS SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
9/30/96 12/31/95 ASSETS (UNAUDITED) (AUDITED) - ------ ----------- --------- Current Assets: Cash and cash equivalents $1,655,877 $5,868,210 Receivables: Trade, less $10,000 allowance for doubtful accounts 2,133,433 2,292,168 Lease acquisition costs advanced 656,485 0 Inventories 8,102,999 5,580,984 Prepaid expenses and other 1,205,583 737,083 ---------- ---------- Total Current Assets 13,754,377 14,478,445 ---------- ---------- Property and Equipment: Machinery and equipment 11,354,317 7,053,052 Furniture and fixtures 1,002,821 857,644 Leasehold improvements 2,269,098 1,366,977 ---------- ---------- 14,626,236 9,277,673 Less accumulated depreciation and amortization 2,536,611 2,229,593 ---------- ---------- Net Property and Equipment 12,089,625 7,048,080 ---------- ---------- Other Assets: Long-term inventories 307,000 307,000 Covenant not to compete 38,276 114,656 Other 545,373 292,253 ---------- ----------- Total Other Assets 890,649 713,909 ---------- ----------- TOTAL ASSETS $26,734,651 $22,240,434 - ------------ =========== ===========
(Continued) See Accompanying Notes to Financial Statements. VARI-L COMPANY, INC. BALANCE SHEETS, CONTINUED SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
9/30/96 12/31/95 LIABILITIES AND STOCKHOLDERS' EQUITY (UNAUDITED) (AUDITED) - ------------------------------------ ----------- --------- Current Liabilities: Bank line of credit $ 1,695,409 $1,847,302 Current installments of: Long-term debt 554,894 480,253 Obligations under capital leases 20,193 20,193 Subordinated debentures 0 112,500 Financed insurance premiums 71,343 0 Trade accounts payable 1,927,488 1,212,942 Accrued expenses 205,562 389,129 Income taxes payable 261,469 0 ---------- ---------- Total Current Liabilities 4,736,358 4,062,319 Long-term debt 4,327,079 1,730,275 Obligations under capital leases 4,309 22,563 Deferred income taxes 0 183,823 ---------- ---------- Total Liabilities 9,067,746 5,998,980 ---------- ---------- Stockholders' Equity: Common stock, $.01 par value, 50,000,000 and 10,000,000 shares authorized; 3,805,838 and 3,624,977 shares outstanding, respectively 40,288 38,479 Paid-in capital 12,631,239 11,845,327 Retained earnings 5,014,078 4,376,348 Less: Loans for purchase of stock (18,700) (18,700) ---------- ---------- Total Stockholders' Equity 17,666,905 16,241,454 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $26,734,651 $22,240,434 - ---------------------- =========== ===========
See Accompanying Notes To Financial Statements. VARI-L COMPANY, INC. STATEMENTS OF INCOME FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995 AND FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS 9/30/96 9/30/95 9/30/96 9/30/95 (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) ---------- ---------- ---------- ---------- Net sales $2,601,196 $2,232,336 $7,782,662 $6,479,756 Cost of products sold 1,316,680 1,090,088 3,904,934 3,157,970 ---------- ---------- ---------- ---------- Gross profit 1,284,516 1,142,248 3,877,728 3,321,786 ---------- ---------- ---------- ---------- Other costs and expenses: General and administrative 307,057 271,586 891,356 782,786 Engineering 149,641 143,048 470,932 404,605 Selling 340,602 338,493 1,035,047 927,579 Interest expense 127,110 108,148 335,451 245,860 Interest income (30,962) (93,424) (129,830) (135,331) Other 59,710 68,855 175,238 204,686 ---------- ---------- ---------- ---------- 953,158 836,706 2,778,194 2,430,185 ---------- ---------- ---------- ---------- Income before taxes 331,358 305,542 1,099,534 891,601 Income taxes 139,170 128,328 461,804 374,473 ---------- ---------- ---------- ---------- NET INCOME $ 192,188 $ 177,214 $ 637,730 $ 517,128 - ---------- ========== ========== ========== ========== Primary and fully- diluted earnings per common share and common share equivalents $ 0.05 $ 0.05 $ .16 $ $ 0.17 ========== ========== ========== ========= Weighted average shares outstanding 3,829,771 3,705,866 3,884,011 3,104,933 ========== ========== ========= =========
See Accompanying Notes to Financial Statements. VARI-L COMPANY, INC. STATEMENTS OF CASH FLOWS FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
NINE MONTHS NINE MONTHS ENDED ENDED 9/30/96 9/30/95 (UNAUDITED) (UNAUDITED) ----------- ----------- Net cash used in operating activities (Note 6) $(1,070,989) $(1,126,141) ----------- ----------- Cash flows from investing activities: Net purchases of property and equipment (5,348,563) (1,733,759) ----------- ----------- Net cash used in investing activities (5,348,563) (1,733,759) ----------- ----------- Cash flows from financing activities: Lease acquisition costs advanced (656,485) 0 Net increase in long-term debt 2,671,445 862,842 Net repayments of capital lease obligations (18,254) (222,541) Repayments of subordinated debentures (112,500) (12,500) Net (repayments) borrowings under bank line of credit (151,893) 740,148 Net proceeds under insurance financing 71,343 44,240 Proceeds from stock issuances, net of income tax benefit and offering costs. 403,563 6,856,574 ----------- ----------- Net cash provided by financing activities 2,207,219 8,268,763 ----------- ----------- Net (decrease) increase in cash (4,212,333) 5,408,863 Beginning cash 5,868,210 1,459,208 ----------- ---------- ENDING CASH $1,655,877 $6,868,071 =========== ========== Supplemental disclosure of cash flows information: Cash paid for interest $ 293,877 $ 239,136 =========== ========== Cash paid for income taxes $ 0 $ 25,743 =========== ==========
See Accompanying Notes to Financial Statements. VARI-L COMPANY, INC. NOTES TO FINANCIAL STATEMENTS Vari-L Company, Inc. (the Company), was founded in 1953 and is a manufacturer of electronic components used in commercial and military communications systems where electrical processing of radio frequency signals is required. NOTE 1 - FINANCIAL PRESENTATION These financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 1995 and notes thereto. In the opinion of management, the accompanying interim, unaudited financial statements contain all the adjustments necessary to present fairly the financial position of the Company as of September 30, 1996, the results of its operations for the three-month and nine-month periods ended September 30, 1996 and September 30, 1995 and its cash flows for the nine- month periods ended September 30, 1996 and September 30, 1995. All adjustments made are of a normal recurring nature. NOTE 2 - INVENTORIES Inventories consist of the following:
9/30/96 12/31/95 (Unaudited) (Audited) ------------ ---------- Finished goods $ 1,580,567 $ 963,556 Work in process 2,992,654 2,397,774 Raw materials 3,326,366 2,016,600 Gold bullion 203,412 203,054 ------------ ----------- $ 8,102,999 $ 5,580,984 =========== =========== Long-term inventories $ 307,000 $ 307,000 ============ ===========
NOTE 3 - INCOME TAXES Income tax expense reflects effective tax rates of 42%. NOTE 4 - COMMON STOCK Stock Grant Plan In their annual meeting held on June 26, 1996, the stockholders approved and ratified the Stock Grant Plan that was adopted by the Company in June 1995. Pursuant to the plan, selected persons will receive awards of shares of the Company's common stock. The plan is administered by the Company's Compensation Committee ("the Committee") and a maximum of 100,000 shares may be issued under the plan. Each Committee member is entitled to receive an automatic grant of 50 shares per month on the first day of each month. Pursuant to the plan, 1,650 shares of stock have been issued to the Committee members as of September 30, 1996. Authorized Number of Shares In their annual meeting held on June 26, 1996, the stockholders approved an amendment to the Company's Articles of Incorporation increasing the authorized number of the Company's $.01 par value Common Stock to 50 million shares. VARI-L COMPANY, INC. NOTES TO FINANCIAL STATEMENTS, CONTINUED NOTE 5 - CREDIT FACILITY The Company has a new Term Loan and Credit Agreement (The "Credit Agreement") with a bank (the "Bank") consisting of a line of credit and a term loan. The new Agreement is dated May 17, 1996 and increases the total credit facility to $8,500,000 from $5,000,000. The line of credit now provides for borrowings up to $3,500,000, up from $2,500,000 million, and interest is payable monthly, calculated at prime. The line matures April 30, 1997. At September 30, 1996 the balance due to the Bank under the line of credit was $1,695,409. The term loan portion of the facility was increased to $5,000,000 from approximately $2,029,000, the combined balance of the former two term loans. Interest accrues on the outstanding principal balance at 8.75% and monthly principal and interest payments of $79,812 are required. The term loan matures on May 17, 1999. Proceeds from the term loan were used to pay down the former line of credit and two term loans and to purchase $1,069,000 in U.S. Government securities. At September 30, 1996, the balance due to the Bank under the term loan was $4,827,728. NOTE 6 - RECONCILIATION OF NET INCOME TO NET CASH USED IN OPERATING ACTIVITIES The reconciliation of net income to net cash used in operating activities for the nine-month periods ended September 30, 1996 and September 30, 1995 is as follows:
NINE MONTHS NINE MONTHS ENDED ENDED 9/30/96 9/30/95 (UNAUDITED) (UNAUDITED) ----------- ----------- Net Income $ 637,730 $ 517,128 ----------- ---------- Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 307,018 119,488 Amortization of covenant not to compete 76,380 76,380 Changes in assets and liabilities: Decrease (increase) in accounts receivable 158,735 (678,385) (Increase)in inventories (2,522,015) (1,280,162) (Increase)in prepaid expenses and other (468,500) (388,716) (Increase) decrease in other assets (253,120) 27,116 Increase in accounts payable 714,546 91,255 (Decrease)increase in accrued expenses (183,567) 41,025 Increase in income taxes payable 461,804 348,730 ----------- ----------- Total adjustments (1,708,719) (1,643,269) ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES $(1,070,989) (1,126,141) =========== ===========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW The following discussion should be read in conjunction with the Company's financial statements and notes thereto included herein. The business of the Company is the design, manufacture and marketing of a wide range of signal processing components and devices which are used in communications equipment and systems such as cellular telephones and base stations, local area computer networks, and satellite communications equipment, as well as military and aerospace applications, such as advanced radar systems, missile guidance systems, and navigational systems. The Company sells its products primarily to original equipment manufacturers of communications systems. Over the last several years, the Company has focused on manufacturing and marketing its products for the commercial marketplace, rather than manufacturing primarily for the military and defense-related markets. This effort has included the introduction of new products, the redesign of existing products, implementation of various cost containment measures and increased advertising and marketing efforts. The Company's first product line is a line of Discrete components which are microwave signal processing components primarily used in military and space applications. Among these products are power dividers and combiners used for directing radio frequency ("RF") and microwave signals, solid state switches used to change the direction or timing of RF and microwave signals, transformers used to convert high-power signals to lower-powered signals, mixers, phase detectors which are used to convert RF and microwave signals into usable information, and data and frequency doublers and synthesizers used as sources for RF and microwave signals. This line currently accounts for approximately 17% of the Company's revenues. One of the Company's major product lines is based on the patented design of its voltage controlled oscillator ("VCO") and other components built with VCOs by the Company. VCOs are components which provide a precise signal source within a frequency range. They are widely used in transmitting and receiving equipment. The Company's patented technology enables its VCOs to operate with approximately 20% of the input power requirements of its competitors. This unique feature, combined with its high quality performance, allows the Company's VCOs to be utilized in battery operated and other low-power applications with better performance than competing products. The Company's "wide-band" VCO line currently accounts for approximately 35% of its revenues. The Company introduced its newest product, the narrow-band VCO, in February 1994. This product is a very narrow band VCO which is priced at approximately 75% less than the Company's wide-band VCOs. These VCOs are designed to perform at high levels of efficiency while being competitively priced. The narrow-band VCO line currently accounts for approximately 36% of the Company's revenues. The Company introduced its phase locked loop synthesizer ("PLL") line in 1993. The PLL is a device made up of several components, including a VCO and an integrated circuit. PLLs are utilized in both transmitting and receiving equipment. The PLL's function is to lock onto stable reference signals and convert them into stable frequencies which may be detected and utilized by communications equipment. This line currently accounts for approximately 5% of the Company's revenues. The PLL and the narrow-band VCO product lines, which comprise the Company's principal commercial products, have common raw materials, assembly and production techniques and are designed to take advantage of the economies of high volume, high speed, automated assembly. RESULTS OF OPERATIONS Three months ended September 30, 1996 and September 30, 1995 and the Nine Months ended September 30, 1996 and September 30, 1995 TOTAL REVENUES Sales revenues increased approximately $369,000 (17%) in the three months ended September 30, 1996 as compared with the three months ended September 30, 1995, from $2,232,336 to $2,601,196. Sales revenues also increased approximately $1,303,000 (20%) in the nine months ended September 30, 1996 as compared with the nine months ended September 30 1995, from $6,479,756 to $7,782,662. The increase in revenue reflects the continuing success of the Company in expanding its product mix to include commercial sales, in expanding its international business, and in increasing its market share of military and aerospace business. In the first nine months of 1996, the composition of sales revenues was 17% Discrete, 35% wide-band VCOs, 7% "Combination" sales of wide-band VCO and Discrete products, 36% narrow-band VCOs and 5% PLLs. In the first nine months of 1995, the sales revenues were comprised of 31% Discrete, 44% wide-band VCOs, 0% Combination" sales of Hybrid and Discrete products, 21% narrow-band VCO's, and 4% PLLs. COST OF GOODS SOLD Cost of goods sold, as a percent of sales revenues, was 51% in the three months ended September 30, 1996 and 49% in the three months ended September 30, 1995. Cost of goods sold, as a percent of sales revenues, was 50% in the nine months ended September 30, 1996 and 49% in the nine months ended September 30, 1995. The increases in the 3-month and 9-month periods ended September 30, 1996 reflect additional depreciation and amortization and related costs on the significant capital equipment purchases and leasehold improvements made during the prior 15-month period. SELLING AND ENGINEERING EXPENSE Selling expenses increased approximately $2,000, or 0.6%, for the three months ended September 30, 1996 as compared to the three months ended September 30, 1995. Selling expenses increased approximately $107,000, or 12%, for the nine months ended September 30, 1996 as compared to the nine months ended September 30, 1995. Increased selling expenses primarily reflect increased sales personnel. Engineering expenses increased approximately $7,000, or 5%, for the three months ended September 30, 1996 as compared to the three months ended September 30, 1995. Engineering expenses increased approximately $66,000, or 16%, for the nine months ended September 30, 1996 as compared to the nine months ended September 30, 1995. These increases reflect additional engineering staff, expenses and equipment costs to support development of the Company's product lines, including high-volume commercial products, military products, and space products. GENERAL AND ADMINISTRATIVE AND OTHER EXPENSES General and administrative expenses increased approximately $35,000 (13%) in the three months ended September 30, 1996 as compared with the three months ended September 30, 1995. General and administrative expenses increased approximately $109,000 (14%) in the nine months ended September 30, 1996 as compared with the nine months ended September 30, 1995. Increases to G & A primarily reflect increased staffing in the personnel and accounting departments, in line with the growth of the Company. Other expenses decreased approximately $9,000 (13%) in the three months ended September 30, 1996 as compared with the three months ended September 30, 1995. Other expenses decreased approximately $29,000 (14%) in the nine months ended September 30, 1996 as compared with the nine months ended September 30, 1995 due to full amortization in 1995 of costs related to the Company's December 1993 private offering. INTEREST INCOME AND EXPENSE The Company manages its credit facility and mutual fund in tandem. Interest income is earned on the Company's short-term investments in a U.S. government securities mutual fund. Interest income was approximately $31,000 for the three months ended September 30, 1996 as compared to approximately $93,000 for the three months ended September 30, 1995. Interest income was approximately $130,000 for the nine months ended September 30, 1996 as compared to approximately $135,000 for the nine months ended September 30, 1995. Interest expense increased approximately $19,000 (18%) for the three months ended September 30, 1996 as compared with the three months ended September 30, 1995. Interest expense increased approximately $90,000 (36%) for the nine months ended September 30, 1996 as compared with the nine months ended September 30, 1995. Changes in the amounts of interest income and expense reflect the underlying amounts of the mutual fund investment and debt outstanding under the credit facility. DEPRECIATION AND AMORTIZATION Depreciation and amortization increased approximately $188,000 (157%) for the nine months ended September 30, 1996 as compared with the nine months ended September 30, 1995, reflecting depreciation on acquisitions since September 1995 of property, equipment, and leasehold improvements, including but not limited to the retooling and remodeling of the commercial products manufacturing facility, test and lab setups for engineering staffing additions, the addition of high-speed testing equipment, new phone systems throughout the Company's three facilities, equipment and software for the management information systems upgrade, and the acquisition of equipment to perform machining, packaging and testing that had formerly been purchased outside. FINANCIAL CONDITION LIQUIDITY At September 30, 1996, the Company's working capital was $9.0 million compared to $10.4 million at December 31, 1995. The Company's current ratio was 2.9 to 1 as of September 30, 1996 and 3.6 to 1 at December 31, 1995. CAPITAL RESOURCES The Company has a new Term Loan and Credit Agreement (the "Credit Agreement") with a bank (the "Bank") consisting of a line of credit and a term loan. The Company and the Bank entered into a new loan agreement on May 17, 1996, increasing the size of the total credit facility to $8,500,000. The line of credit now provides for borrowings up to $3.5 million, and interest is payable monthly, calculated at prime. The line of credit matures on April 30, 1997. At September 30, 1996, the balance due to the Bank under the line of credit was $1,695,409. The term loan portion of the credit facility was increased to $5,000,000 from a balance of approximately $2,000,000. The term loan had a balance as of September 30, 1996 of $4,827,728. Interest accrues on the outstanding principal balance at 8.75%, and monthly principal and interest payments of $79,812 are required. This term loan matures on May 17, 1999. Proceeds from the term loan were used to pay down the former line of credit and the two term loans, and to purchase $1,069,000 of a U.S. government securities mutual fund. During 1993, the Company financed the acquisition of capital equipment through capital leases having maturity dates through 1998. At September 30, 1996, the balance due under these leases was $24,502. No new capital leases were entered into in 1995 or 1996 to date. The lease payments are calculated using interest rates with an average of approximately 11%. The Company finances certain of its annual insurance premiums through a financing company. The amounts due under these loans totaled $71,343 as of September 30, 1996 and are paid in monthly installments of $16,732 at interest rates of approximately 7.5% and 8.81%. The Company believes that it has sufficient financial resources available to meet its short-term working capital needs through cash flows generated by operating activities and through the management of its sources of financing. The Company has been utilizing its credit facility to significantly increase its inventories, facilities, and related fixed assets to address an anticipated increase in its production. BACKLOG Total backlog of unfilled firm customer orders ("backlog") at September 30, 1996 was $12.6 million compared with $13.7 million at September 30, 1995. Backlog at December 31, 1995 was $14.1 million. Levels of bookings of new customer orders are lower in the first nine months of 1996 as compared to the first nine months of 1995 due to industry-wide delays in the rollout of the domestic personal communications services (PCS) market. Orders have begun to accelerate in the 4th quarter of 1996 with customer announcements of wireless communications rollouts, such as that made in early October by AT&T. The Company is hopeful that this trend will continue and, with its products designed into many product developments programs in the commercial, military, and space arenas, expects to participate in many of the opportunities available to it. Some of the statements contained in this document 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, future economic conditions, competitive products and pricing, new product development, the delivery of products under existing contracts and other factors. VARI-L COMPANY, INC. PART II--OTHER INFORMATION ITEM 1 LEGAL PROCEEDINGS None ITEM 2 CHANGES IN SECURITIES None ITEM 3 DEFAULTS UPON SENIOR SECURITIES None ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5 OTHER INFORMATION None ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27 Financial Data Schedule (b) None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. VARI-L COMPANY, INC. Date: October 31, 1996 By:/s/ Jon L. Clark Jon L. Clark, V.P. Finance and Principal Accounting Officer EXHIBIT INDEX EXHIBIT METHOD OF FILING - ------- ---------------- 27 Financial Data Schedule Filed herewith electronically EX-27 2
5 This schedule contains summary financial information extracted from Vari-L's unaudited financial statements prepared as of September 30, 1996 and for the nine-month period then ended, included with its 3rd quarter 1996 10QSB filing with the Securities and Exchange Commission, and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 1656 0 2790 0 8103 13754 14626 2537 26735 4736 0 0 0 40 17627 26735 7783 7912 3905 3905 2573 0 335 1100 462 638 0 0 0 638 .16 .16
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