Vari-L Letter to Shareholders 11/15/00
siliconinvestor.com
DENVER, Nov 15, 2000 /PRNewswire via COMTEX/ -- The following is being issued by Pete Pappas, Chief Executive
Officer of Vari-L Company (OTC: VARLE chart, msgs):
To Our Shareholders, Customers, Vendors, Friends and Other Stakeholders:
As part of our intent to keep you informed about matters affecting your Company on a regular basis, I'd like to tell you about
some long-term strategic plans we have been developing, and about some recent events at the Company.
Strategic focus
As you know, Vari-L was originally formed to engineer, manufacture and market high-performance components for military
applications, such as missile guidance systems, advanced navigational systems and advanced radar systems. But beginning in
1993, the Company expanded its focus on the commercial marketplace -- in part to lessen our dependence on defense
spending, and in part to take advantage of the rapidly growing opportunities in the commercial sector for wireless
communications.
Over the past few years, our opportunities from the commercial marketplace have grown significantly, while our military
opportunities have been shrinking year after year. These trends have been typical for the RF component industry as a whole. In
1991, the vast majority of the Company's business originated from the military marketplace, while only a small portion was
derived from commercial customers. By 1999 this relationship had completely reversed.
Not only is the commercial side a larger part of our business these days, it is also more profitable. That is because the
extensive tracking, documenting, screening and testing required by military contracts is expensive to perform. Further, we
believe the commercial side of the wireless RF components marketplace will continue to grow at very healthy double-digit
rates, while the military business will continue to shrink.
In light of this, we have developed a long-term strategy to further reduce emphasis on our military business and to increase our
focus on commercial opportunities. We think this is a more profitable strategy, and it will allow us better capture opportunities
in commercial wireless communications. We expect to begin to shift manpower and other resources toward the commercial
sector beginning in 2001, and complete the implementation of this strategy by the year 2003. We plan to immediately begin the
process of contacting our military customers to apprise them of our long-term strategy and assure them that we will continue to
fulfill our commitments during the transition period.
Currently about 15% of our engineering, production management and production labor personnel is dedicated to the military
side of the business, and we would expect those people to become available for commercial design and production over the
next two years. We don't anticipate any layoffs in the transition, and we don't plan to take any material write-downs of plant or
equipment as we make this move.
We believe this is a very good move that should build shareholder value and allow us to participate to an even greater extent in
the telecommunications and wireless revolution that is occurring worldwide.
New product plans
We have mentioned in the past that we are developing a new technology for which we recently applied for a patent. The patent
involves an alternative construction technology that we believe will lead to lower manufacturing costs and higher performance
characteristics for passive RF (radio-frequency) components. We are very excited about this new product opportunity, and
we will be able to report more to you once we get to the point that our leading-edge ideas are fully protected by applicable
intellectual property laws.
Sales meeting
Last week, we held our annual sales meeting for the independent sales representatives and our internal sales force. The meeting
brought together about 40 representatives from around the world with 26 employees to discuss our products, technology and
market strategies.
This year's meeting was especially exciting because we included discussions of our strategic plans for improving focus in core
business strengths. The interactive meeting also provided technical round table sessions including both current product offering
and advanced research & development areas.
We will continue this policy of distributing frequent shareholder updates on the newswires and on our web site
(www.vari-l.com). Not only is this an efficient way to communicate with you, it ensures that all of our shareholders have access
to the same information at the same time. We encourage our shareholders and all other interested parties to look for these
regular communications as the best and most accurate way to get answers to their questions and find out what is going on with
your company.
Thank you for continuing to be a shareholder, customer, vendor or friend of Vari-L. We will be getting back to you soon with
additional information.
Sincerely,
Pete Pappas
Chief Executive Officer
Safe Harbor statement: 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 and timeliness of the Company's efforts to restate its prior financial statements, the ability of the
Company's new independent accounting firm to issue an unqualified audit report on those financial statements, future economic
conditions generally, as well as other factors.
Source: Vari-L Company
Contact:
Pete Pappas, Chief Executive Officer of Vari-L Company,
303-371-1560
URL: vari-l.com |
