Wednesday February 14, 8:13 pm Eastern Time
Press Release
SOURCE: Vari-L Company, Inc.
Vari-L Company Announces Financial Results For Second Quarter and Six Months Ended December 31, 2000
DENVER, Feb. 14 /PRNewswire/ -- Vari-L Company, Inc. (OTC: VARL - news), a leading provider of advanced components for the wireless industry, today announced results for the three- and six-month periods ended December 31, 2000. The information pertaining to the three- and six-month periods ended December 31, 1999, included for comparative purposes, has been restated.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2000 COMPARED WITH THE THREE MONTHS ENDED DECEMBER 31, 1999
Net sales for the three months ended December 31, 2000 increased 57.6% to $10,893,607 compared with $6,913,517 for the three months ended December 31, 1999. This improvement primarily reflects increased demand for commercial signal source products. Net sales for the December 31, 2000 quarter also included approximately $295,000 in fees earned from a contract modification.
Gross profit for the three months ended December 31, 2000 increased 65.5% to $5,188,744, or 47.6% of net sales, compared with $3,136,047, or 45.4% of net sales, for the three months ended December 31, 1999. Included in cost of goods sold for the three months ended December 31, 2000 is a charge of $339,949 for obsolete and excess inventory, compared with $58,547 for the three months ended December 31, 1999. The higher gross profit margin in the 2000 period principally reflected the $295,000 benefit from the 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 the above noted provision.
Total operating expenses for the quarter ended December 31, 2000 were $4,969,199 versus $3,448,881 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 $234,574 total amount of stock compensation recorded for the three months ended December 31, 2000, $217,542 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 net loss for the three months ended December 31, 2000 was $9,879, or less than $0.01 per share, compared with a net loss of $441,641, or $0.07 per share, for the three months ended December 31, 1999. 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 quarter ended December 31, 2000 would have been $844,589, or $0.12 per share, versus a net loss of $411,667, or $0.07 per share, in the comparable quarter a year ago.
The Company's working capital at December 31, 2000 was $15,875,888, excluding notes payable under the Company's credit facility with its current bank of $8,800,000. Including the notes payable, working capital was $7,075,888. Working capital at December 31, 2000 includes cash and cash equivalents of $7,466,320.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2000 COMPARED WITH THE SIX MONTHS ENDED DECEMBER 31, 1999
Net Sales for the six months ended December 31, 2000 increased 66.6% to $22,388,736 compared with $13,439,072 for the six months ended December 31, 1999. This improvement primarily reflects increased demand for commercial signal source products. The six months ended December 31, 2000 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.
Gross profit for the six months ended December 31, 2000 increased 69.8% to $10,546,079, or 47.1% of net sales, compared with $6,209,465, or 46.2% of net sales, for the six months ended December 31, 1999. Included in cost of goods sold for the six months ended December 31, 2000 is a charge of $885,532 for obsolete and excess inventory, compared to $72,874 for the six months ended December 31, 1999. The higher gross profit margin in the 2000 period principally reflected the benefits 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 material, as well as the above noted provision.
Total operating expenses for the six months ended December 31, 2000 were $10,376,240 versus $6,326,770 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 $445,113 total amount of stock compensation recorded in the six months ended December 31, 2000, $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 six months ended December 31, 2000 was $211,084, or $0.03 per share, compared with a net loss of $399,163, or $0.07 per share, for the six months ended December 31, 1999. 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 six months ended December 31, 2000 would have been $2,101,989, or $0.30 per share, versus a net loss of $341,649, or $0.06 per share, in the comparable period a year ago.
Pete Pappas, chief executive officer, said, ``On a pro forma basis, excluding charges and costs that we do not anticipate will recur, the Company showed strong profitability in the first half of the fiscal year. We are pleased with these results and believe they speak for themselves in terms of Vari-L's status as a promising emerging growth company.''
Through its headquarters 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, Agilent Technologies, Digital Microwave, Ericsson, Glenayre Technologies (Wireless Access), Harris, Hughes, Lockheed Martin, Lucent Technologies, Microwave Data Systems, Mitsubishi, Motorola, NEC, NeoPoint, Netro, Newbridge Networks, Nokia, Northrop Grumman, Novatel Wireless, Raytheon, Samsung and Siemens.
Financial tables follow on 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 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 December 31, 2000, filed with the SEC.
Statement of Operations
(Unaudited)
Three months ended Six months ended
December 31, December 31,
2000 1999 2000 1999
(restated) (restated)
Net Sales $10,893,607 $6,913,517 $22,388,736 $13,439,072
Cost of goods sold 5,704,863 3,777,470 11,842,657 7,229,607
Gross profit 5,188,744 3,136,047 10,546,079 6,209,465
Operating Expenses:
Selling 1,295,543 881,579 2,362,924 1,687,440
General and
administrative 2,104,490 1,144,470 3,682,437 1,995,827
Research and
development 949,272 1,422,832 2,462,919 2,643,503
Expenses relating
to accounting
restatements and
the related
shareholder
litigation 619,894 -- 1,867,960 --
Total operating
expenses 4,969,199 3,448,881 10,376,240 6,326,770
Operating profit
(loss) 219,545 (312,834) 169,839 (117,305)
Other income (expense):
Interest income 104,461 87,861 262,167 144,752
Interest expense (316,016) (208,505) (645,150) (418,829)
Other, net (17,869) (8,163) 2,060 (7,781)
Total other income
(expense) (229,424) (128,807) (380,923) (281,858)
Net loss $(9,879) $(441,641) $(211,084) $(399,163)
Loss per share $* $(0.07) $(0.03) $(0.07)
Weighted average
shares outstanding 7,079,692 6,048,354 7,070,861 5,857,938
* Loss per share is less than $0.01
Balance Sheet
(Unaudited) (Audited)
December 31, June 30,
Assets 2000 2000
Current assets:
Cash and cash equivalents $7,466,320 $11,030,293
Trade accounts receivable, net 6,354,391 5,881,280
Inventories 6,141,567 7,434,660
Prepaid expenses and
other current assets 584,562 189,485
Total current assets 20,546,840 24,535,718
Property, plant and equipment:
Machinery and equipment 10,477,994 9,845,402
Furniture and fixtures 763,983 720,971
Leasehold improvements 1,565,241 1,538,575
12,807,218 12,104,948
Less accumulated depreciation
and amortization 5,586,453 4,767,159
Net property and equipment 7,220,765 7,337,789
Intangible and other assets 708,509 697,185
Total assets $28,476,114 $32,570,692
Liabilities and Stockholders' Equity
Current liabilities:
Bank overdraft $-- $320,798
Trade accounts payable 2,423,459 4,182,270
Accrued compensation 1,930,888 1,499,890
Other accrued expenses 238,478 225,105
Notes payable and current
installments of long-term obligations 8,878,127 11,566,386
Total current liabilities 13,470,952 17,794,449
Long-term obligations 77,596 91,666
Total liabilities 13,548,548 17,886,115
Stockholders' equity:
Common stock, $.01 par value,
50,000,000 shares authorized;
7,071,123 and 7,070,423 shares
issued and outstanding, respectively 70,711 70,704
Additional paid-in capital 36,796,243 40,524,974
Unamortized stock compensation cost (135,574) (4,318,371)
Accumulated deficit (21,803,814) (21,592,730)
Stockholders' equity 14,927,566 14,684,577
Total liabilities and
stockholders' equity $28,476,114 $32,570,692
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 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.
SOURCE: Vari-L Company, Inc. |
