Looks like sometime in the 4th. quarter from this. rod
tter From Vari-L
DENVER, Aug 11, 2000 /PRNewswire via COMTEX/ -- Joseph H. Kiser, Chairman of the Board,
and Pete Pappas, Chief Executive Officer, of Vari-L Company, sent the following letter, dated August
11, to customers, shareholders, vendors and friends of Vari-L:
To Our Customers, Shareholders, Vendors and Friends:
As you are aware, Vari-L Company (Nasdaq: VARLE chart, msgs) is undergoing a period of change and
reorganization. The purpose of this letter is threefold: First, we want to summarize and put in proper
perspective the issues driving these changes; second, we want to detail specific corrective actions that
have been or will be taken; and, third, we want to assure all concerned -- particularly our current and
prospective customers -- that Vari-L's business operations are sound and that the Company's ability to
manufacture and deliver high-quality products is as strong as ever. While the Board of Directors sincerely
regrets the current situation and is dealing with these issues in a very serious manner, we also believe it is
extremely important to reassure our customers and vendors in the wireless industry that our relationships
with them will not be negatively impacted, but rather will remain strong and mutually beneficial. In short,
Vari-L is a well-capitalized company whose engineering, manufacturing and sales operations are
continuing to function as efficiently and successfully as always.
Situation Analysis
As a result of our announcement that our previously filed financial statements contain accounting errors,
the Nasdaq Stock Market has halted trading of Vari-L's shares and the Company is out of compliance
with Securities and Exchange Commission reporting requirements pending a restatement and re-audit of
those financial statements. As a result, an initial lawsuit and subsequent "copycat" lawsuits have been filed
by lawyers representing certain shareholders. The Company has two insurance policies that it obtained to
cover such legal actions, and Vari-L intends to vigorously defend itself. In the meantime, Vari-L is
booking orders and shipping product at a strong pace as major wireless communications providers
continue to turn to us for critical, enabling components.
Actual and Planned Corrective Actions
Since May, when the Company announced that there were accounting errors, it has cooperated with
regulatory agencies while moving quickly to determine the nature and extent of the accounting errors, take
corrective actions and, most importantly, maintain "business as usual" in terms of developing and
delivering the finest wireless components available. In the meantime, the following important events have
occurred:
-- KPMG LLP has been retained to assist the Board and the Audit Committee
in investigating the accounting errors following the resignation of
the Company's previous independent accounting firm.
-- Chief Executive Officer David Sherman, Chief Financial Officer Jon
Clark, and Controller Sarah Hume have left the Company.
-- Pete Pappas has been appointed interim Chief Executive Officer and
William "Kriss" Andrews has been appointed interim Chief Financial
Officer. Mr. Pappas and Mr. Andrews, while they had no prior
affiliation with Vari-L, do have an aggregate 57 years of diversified
executive management experience, with individual strengths in high
technology operations and financial controls. They will serve until
permanent replacements are named, and an aggressive, thorough
executive search is underway.
-- Under the joint direction of the new management team and the Board of
Directors, and with the assistance of KPMG, rigorous new financial
controls and accounting practices are being developed and will soon be
implemented.
-- The Board and management are pursuing a strategy designed to bring
Vari-L back into compliance with SEC and Nasdaq requirements and to
deal with pending legal issues as expeditiously as possible. At
present we are not able to set a specific timetable, but the Company
intends to have restated financial statements in the fourth quarter of
this year.
Operational and Sales Highlights
-- Orders remain strong. While we cannot announce partial financial
information, we are delighted to report that there continues to be
heavy demand for our products. The trend in bookings established in
the first quarter of the year has been sustained in the second
quarter. Over the past six months the Company has signed significant
new purchase agreements with existing and new customers, setting the
stage for potential new orders for both infrastructure and subscriber
components. Correspondingly, product shipments remain strong.
-- Manufacturing operations have been uninterrupted. The Company's
longstanding history of on-time product deliveries has not been
impacted.
-- Advanced engineering and R&D activities are ongoing. Internal product
development efforts are yielding excellent results, and the Company
has recently applied for more new patents in an effort to protect and
extend our reputation as a technology leader in the industry. We are
also moving forward with several large customers in jointly developing
technology for third generation cellular platforms.
On behalf of the Board of Directors, we want to thank our customers, shareholders, vendors and other
supporters for their loyalty and patience during this time of transition. For the past 47 years Vari-L has
served its customers with diligence and integrity, in the process earning a strong reputation for high
quality, leading edge products and services. It is our intention to carry on that tradition for many years to
come.
Sincerely,
Joseph H. Kiser Pete Pappas
Chairman of the Board Chief Executive Officer
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, the outcome of pending and threatened litigation and
regulatory actions, the success of the Company's efforts to engage a new independent accounting firm
and that firm's efforts to re-audit prior years, future economic conditions generally, as well as other
factors.
Source: Vari-L Company
Contact:
Joseph H. Kiser, Chairman of the Board, or Pete Pappas, Chief Executive Officer |
