SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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
March 31, 1998
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.)
4895 Peoria Street
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 March 31, 1998:
Class of Securities Outstanding Securities
- ------------------- ----------------------
$0.01 par value 5,310,118 shares
Common shares
PART 1-FINANCIAL INFORMATION
Item 1. Financial Statements
- -----------------------------
VARI-L COMPANY, INC.
BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
3/31/1998 12/31/1997
ASSETS (UNAUDITED) (AUDITED)
----------- -----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 5,805,573 $ 5,970,582
Trade receivables, less $18,000
allowance for doubtful accounts 5,057,853 5,172,874
Inventories 7,397,425 6,936,890
Prepaid expenses and other 1,257,719 887,272
----------- -----------
Total Current Assets 19,518,570 18,967,618
----------- -----------
Property and Equipment:
Machinery and equipment 16,901,851 15,730,870
Furniture and fixtures 1,323,540 1,200,453
Leasehold improvements 5,656,461 4,707,324
----------- -----------
23,881,852 21,638,647
Less accumulated depreciation
and amortization (3,553,850) (3,313,483)
----------- -----------
Net Property and Equipment 20,328,002 18,325,164
----------- -----------
Other Assets:
Long-term inventories 375,000 375,000
Covenant not to compete 58,091 66,389
Patents, net of accumulated
amortization of $101,410 and $88,210 539,668 504,895
Other 1,322,325 1,317,238
----------- -----------
Total Other Assets 2,295,084 2,263,522
----------- -----------
TOTAL ASSETS $42,141,656 $39,556,304
=========== ===========
</TABLE>
(CONTINUED)
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
VARI-L COMPANY, INC.
BALANCE SHEETS, CONTINUED
MARCH 31, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
3/31/1998 12/31/1997
LIABILITIES AND STOCKHOLDERS' EQUITY (UNAUDITED) (AUDITED)
- ------------------------------------ ----------- ----------
<S> <C> <C>
Current Liabilities:
Current installments of
long-term debt $ 660,902 $ 596,645
Financed insurance premiums 15,620 23,730
Trade accounts payable 1,937,523 1,851,057
Accrued expenses and other 492,106 628,718
Income taxes payable 386,180 0
----------- -----------
Total Current Liabilities 3,492,331 3,100,150
Bank line of credit 2,698,409 1,813,409
Long-term debt 4,783,184 4,464,021
Deferred income taxes 2,343,654 2,343,654
----------- -----------
Total Liabilities 13,317,578 11,721,234
----------- -----------
Stockholders' Equity:
Common stock, $.01 par value,
50,000,000 shares authorized;
5,310,118 and 5,251,288 shares
outstanding, respectively 53,101 52,513
Paid-in capital 20,620,740 20,211,589
Retained earnings 8,168,937 7,589,668
Less
Loans for purchase of stock (18,700) (18,700)
----------- -----------
Total Stockholders' Equity 28,824,078 27,835,070
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
- ---------------------- $42,141,656 $39,556,304
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
VARI-L COMPANY, INC.
STATEMENTS OF INCOME
FOR THE THREE MONTH PERIODS ENDED
MARCH 31, 1998 AND MARCH 31, 1997
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
3/31/1998 3/31/1997
(UNAUDITED) (UNAUDITED)
------------ ------------
<S> <C> <C>
Net sales $ 4,044,848 $ 3,299,733
Cost of products sold 1,843,213 1,667,785
----------- -----------
Gross profit 2,201,635 1,631,948
----------- -----------
Other costs and expenses:
General and administrative 471,052 372,601
Engineering 264,739 209,184
Selling 476,249 450,222
Interest expense 74,145 174,610
Interest income (76,126) (24,123)
Other 26,127 29,102
----------- -----------
1,236,186 1,211,596
----------- -----------
Income before taxes 965,449 420,352
Income taxes 386,180 176,548
----------- -----------
NET INCOME $ 579,269 $ 243,804
- ---------- =========== ===========
Basic earnings per share $0.11 $0.06
=========== ===========
Basic weighted average shares outstanding 5,289,603 3,822,303
=========== ===========
Diluted earnings per share $ 0.11 $ 0.06
=========== ===========
Diluted weighted average shares outstanding 5,370,494 3,934,127
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
VARI-L COMPANY, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED
MARCH 31, 1998 AND MARCH 31, 1997
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
3/31/1998 3/31/1997
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
Net cash provided by (used in) operating
activities (Note 7) $ 408,147 $(1,373,960)
----------- ------------
Cash flows from investing activities:
Purchases of property and equipment (2,243,205) (623,806)
----------- ------------
Net cash used in investing
activities (2,243,205) (623,806)
----------- ------------
Cash flows from financing activities:
Net increase (decrease) in long-term debt 383,420 (142,127)
Repayments of capital lease obligations 0 (967)
Net borrowings (repayments) under
bank line of credit 885,000 (247,000)
Net (repayments) borrowings for insurance
financing (8,110) 53,930
Net proceeds from debenture offering 0 4,562,500
Net proceeds from stock issuances 409,739 93,710
----------- -----------
Net cash provided by
financing activities 1,670,049 4,320,046
----------- -----------
Net (decrease) increase in cash (165,009) 2,322,280
Beginning cash 5,970,582 1,224,727
----------- -----------
ENDING CASH $ 5,805,573 $ 3,547,007
=========== ===========
Supplemental disclosure of cash flows
information:
Cash paid for interest $180,636 $151,610
=========== ===========
Cash paid for income taxes $0 $0
=========== ===========
</TABLE>
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. The Company's products are 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, 1997 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 March 31, 1998, and
the results of its operations, and its cash flows for the three months
ended March 31, 1998 and March 31, 1997. All adjustments made are of a
normal recurring nature.
NOTE 2 - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
3/31/1998 12/31/1997
(UNAUDITED) (AUDITED)
----------- ----------
<S> <C> <C>
Finished goods $1,163,736 $1,173,847
Work in process 2,415,996 2,405,396
Raw materials 3,659,755 3,202,454
Gold bullion 157,938 155,193
---------- ----------
$7,397,425 $6,936,890
========== ==========
Long-term inventories $ 375,000 $ 375,000
========== ==========
</TABLE>
NOTE 3 - INCOME TAXES
Income tax expense reflects effective tax rates of 40% for 1998 and 42%
for 1997.
NOTE 4 - CREDIT FACILITY
The Company has two credit facilities. The first consists of a line of
credit. The second consists of a term loan and a revolving equipment term
loan.
The line of credit provides for borrowings of up to $3.5 million.
Interest is payable monthly, calculated at prime. The line of credit
matures April 30, 1999. At March 31, 1998, the outstanding balance due
under the line of credit was $2,698,409.
Interest accrues on the outstanding principal balance of the term loan at
8.01% and monthly principal and interest payments of $73,279 are required.
The term loan matures February 13, 2001. At March 31, 1998 the balance
due under the term loan was $4,403,589.
The revolving equipment term loan provides for borrowings up to $2.5
million. Interest accrues on the outstanding principal balance of the
revolving equipment term loan at prime plus .25% when advances are made
under the revolver. These borrowings can be converted to term notes at
rates which adjust to the 3-year treasury note rate plus 1.95%. When
converted, the term debt requires monthly principal and interest payments
calculated on a seven-year amortization basis with a 42 month maturity.
The revolving loan matures on August 13, 1998. As of March 31, 1998,
the balance of the three advances under the revolving loan that had been
converted to term notes totaled $983,215. Interest accrues on the
outstanding principal balances of these term notes at rates ranging from
7.3% to 7.72% and monthly principal and interest payments totalling
$15,400 are required.
Continued
VARI-L COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 5 - SECURITIES PURCHASE AGREEMENT
On March 4, 1997, the Company entered into an agreement to sell up to 75
units of debentures and warrants. The units consisted of an aggregate of
$7,500,000 in 4-year, 7%, subordinated, convertible debentures and
750,000 non-redeemable warrants to purchase common stock at a price of
$9.50 per share, exercisable for a period of three years. As provided for
in the agreement, all of the debentures plus accrued interest were
converted into common stock during 1997. As of March 31, 1998, the
750,000 warrants were still outstanding.
In connection with the March 4, 1997 agreement, 45,000 agent's warrants to
purchase shares of the Company's common stock were issued to Neidiger,
Tucker, Bruner, Inc. ("NTB")and its assigns. All 45,000 of these agent's
warrants were exercised during the three months ended March 31, 1998 at
prices of $6.93 and $6.98 per share. Anthony Petrelli, who was appointed
to the Company's Board of Directors in October 1997, is Senior Vice
President of Investment Banking Services at NTB. Of the 45,000 agent's
warrants paid to NTB in March 1997, 8,418 warrants were issued to Mr.
Petrelli, all of which he converted to common stock in January 1998.
NOTE 6 - STOCK COMPENSATION PLANS
The Company has three stock-based compensations plans: a stock option
plan, an employee stock purchase plan and a stock grant plan.
Stock Option Plan
- -----------------
The Company has reserved 3,000,000 shares of its common stock for issuance
upon exercise of rights and options under the stock option plan.
Typically, rights and options have been granted subject to a vesting
schedule, vesting at the rate of 20 percent per year, becoming fully
vested upon the change of control of the Company, and expiring 10 years
from the date of issuance. Certain options granted to senior management
are fully vested upon issuance.
In the quarter ended March 31, 1998, the Company granted 533,324 options
pursuant to the plan. No options were exercised in the quarter.
Employee Stock Purchase Plan
- ----------------------------
Under the Company's employee stock purchase plan, eligible employees may
contribute up to 10 percent of their earnings, through payroll deductions,
to purchase shares of the Company's common stock. The purchase price is
equal to 85 percent of the fair value of the stock on specified dates. A
total of 800,000 shares were reserved under the plan and the maximum
number of shares to be issued is 200,000 per year. For the plan year
1997, a total of 13,530 shares were issued in January 1998 at $6.91 per
share.
Stock Grant Plan
- ----------------
During 1996, the Company adopted a stock grant plan under which stock
grants can be made to the Company's officers, directors, employees,
consultants, and advisors. The Company reserved 100,000 shares of its
common stock for issuance under the stock grant plan. The plan provides
for automatic grants of 50 shares per month to nonmanagement members of
the Compensation Committee of the Company's Board of Directors. During
the first quarter of 1998, those members received grants for 300 shares.
Compensation cost charged to operations was measured by the fair market
value of the stock on the date of the grants.
Continued
VARI-L COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 7 - RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES
The reconciliation of net income to net cash provided by (used in)
operating activities for the three months ended March 31, 1998 and March
31, 1997 is as follows:
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
3/31/1998 3/31/1997
(Unaudited) (Unaudited)
------------ -----------
<S> <C> <C>
Net Income $ 579,269 $ 243,804
----------- -----------
Adjustments to reconcile net
income to net cash used in
operating activities:
Depreciation and amortization 240,367 158,366
Amortization of covenant
not to compete 8,298 8,298
Changes in assets and liabilities:
Decrease (increase) in accounts
receivable 115,021 (340,551)
(Increase) in inventories (460,535) (686,879)
(Increase) in prepaid
expenses and other (370,447) (330,792)
(Increase) in patents and
other assets (39,860) (119,335)
Increase (decrease) in
accounts payable 86,466 (61,457)
(Decrease) in accrued
expenses (136,612) (396,415)
(Decrease) in amount due to
related party 0 (25,547)
Increase in income
taxes payable 386,180 176,548
----------- -----------
Total adjustments (171,122) (1,617,764)
----------- -----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ 408,147 $(1,373,960)
=========== ===========
</TABLE>
Continued
VARI-L COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 8 - EARNINGS PER SHARE
The following is a reconciliation of the net income (numerator) and number
of shares (denominator) for the computations of basic and diluted earnings
per shares:
<TABLE>
<CAPTION>
For the quarter ended Income Shares Per Share
March 31, 1997: (Numerator) (Denominator) Amount
--------------------- ----------- ------------- -----------
<S> <C> <C> <C>
Basic earnings per share $243,804 3,822,303 $0.06
==========
Effect of dilutive stock options 0 111,824
-------- ---------
Diluted earnings per share $243,804 3,934,127 $0.06
======== ========= ==========
For the quarter ended Income Shares Per Share
March 31, 1998: (Numerator) (Denominator) Amount
--------------------- ----------- ------------- -----------
Basic earnings per share 579,269 5,289,603 $0.11
===========
Effect of dilutive stock options 0 80,891
-------- ---------
Diluted earnings per share $579,269 5,370,494 $0.11
======== ========= ===========
</TABLE>
At March 31, 1998, the Company had 5,310,118 common shares outstanding.
During the three months ended March 31, 1998, the Company issued 58,830
shares. For purposes of computing earnings per share, the shares issued
during the period were weighted for the period of time they were
outstanding.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
- ------------------------------------------------------------------------
OVERVIEW
The Company achieved record financial results in the three-month period
ended March 31, 1998. Net sales were up 23%, to $4 million, over the
same quarter last year. Net income was up 138%, to $579,000, over the
same quarter last year. Basic and diluted earnings per share were 11
cents per share versus 6 cents per share for the same quarter last year
notwithstanding an increase in weighted average shares outstanding of more
than 35% from the prior year.
The Company received $3.9 million in firm customer orders during the third
quarter, up 24% from the same quarter a year ago. Commercial orders
continued to drive growth during the period, advancing 33% to $3.2
million, while military/aerospace orders totaled $714,000. Domestic
orders surged 76% to $3.1 million and international orders accounted for
$797,000 in the three-month period.
The Company was awarded ISO9001 certification for its commercial products
during the first quarter of 1998. ISO9001 is recognized worldwide as the
leading indication of product quality and reliability, providing the
Company with enhanced credibility as it competes in the various existing
and emerging commercial wireless markets across the globe. The primary
scope of the ISO9001 standard is to ensure that a company's quality
assurance systems are organized to produce consistent levels of durability
and excellence in its products. The standard covers every phase of a
product's life cycle, from design to manufacturing to servicing, and
requires an appropriate combination of statistical, engineering,
management and motivational effort. The International Standards
Organization awarded the Company ISO9001 certification after an
approximately three-month audit of the Company's quality assurance
systems. The Company expects the designation to be especially significant
to its ongoing efforts to increase international revenues.
In the quarter, the Company also began the process of preparing a
production facility for its newest line of products being developed for
the subscriber (pagers and handsets) marketplace. These subscriber
products will have a lower profit margin in order to be priced
competitively but are still expected to outperform competitors on quality
even while producing volume in the millions. In anticipation of several
such customer orders currently in the quotation and product design
process, the Company is installing high-speed automated assembly equipment
on the second floor of its new corporate headquarters facility. The
finishing of the second floor, including the installation of the new
equipment, is scheduled for May completion. The Company plans to commence
production in June with full utilization of the new line by year end.
Building 1, the Company's former corporate headquarters, was remodeled
during the first quarter of 1998. This facility now houses all of the
manufacturing and engineering functions related to the Company's Discrete
Signal Source Components, Wide-band VCOs and Optoelectronics products.
RESULTS OF OPERATIONS
Three Months Ended
- ------------------
March 31, 1998 and March 31, 1997
- ---------------------------------
TOTAL REVENUES
Sales revenues increased approximately $745,000 (23%) in the three months
ended March 31, 1998 as compared with the three months ended March 31,
1997, from $3,299,733 to $4,044,848. These increases reflect a growing
demand for the Company's products.
The Company currently has six major product lines, including the
subscriber line which is expected to begin production in June 1998:
1. Discrete signal processing components for industrial, military and
aerospace.
2. Hybrid signal source components, primarily wide-band VCOs, for
industrial, military and aerospace.
3. Assemblies that combine Discrete signal processing and Hybrid signal
source components.
4. Commercial signal source components including PLLs and narrow-band
VCOs.
5. Optoelectronic components and subassemblies used in magnetic and
electro-optic products for CATV applications.
6. Subscriber products components used in hand-held sets, pagers and
other consumer-oriented products. This line is expected to commence
production in June 1998.
In the first three months of 1998, the composition of sales revenues was
10% Discrete, 31% wide-band VCOs, 1% "Combination" sales of wide-band VCO
and Discrete products, 49% narrow-band VCOs, 5% PLLs and 4% Optoelectronic
products. In the first three months of 1997, the composition of sales
revenues was 10% Discrete, 40% wide-band VCOs, less than 1% "Combination"
sales of wide-band VCO and Discrete products, 44% narrow-band VCOs, 6%
PLLs and 0% Optoelectronic products.
COST OF GOODS SOLD
Cost of goods sold, as a percent of sales revenues, was 46% in the three
months ended March 31, 1998 and 51% in the three months ended March 31,
1997. The decrease in the 3-month period ended March 31, 1998 reflects
ongoing improvements in production processing that have increased
personnel efficiencies and reduced labor and material costs.
SELLING AND ENGINEERING EXPENSE
Selling expenses increased approximately $26,000, or 6%, for the three
months ended March 31, 1998 as compared to the three months ended March
31, 1997.
Engineering expenses increased approximately $56,000, or 27%, for the
three months ended March 31, 1998 as compared to the three months ended
March 31, 1997. These increases reflect the higher costs to obtain and
retain engineering staff, in addition to expenses and equipment costs to
expand and support development of the Company's product lines, including
high-volume commercial products, military products, space products,
optoelectronic products and the newest line of subscriber products.
GENERAL AND ADMINISTRATIVE AND OTHER EXPENSES
General and administrative expenses increased approximately $98,000 (26%)
in the three months ended March 31, 1998 as compared with the three months
ended March 31, 1997. Increases to G & A primarily reflect the higher
cost to retain staff in the administrative, finance and personnel
departments, as well as increasing shareholder relation expenses.
Other expenses decreased approximately $3,000 (10%) in the three months
ended March 31, 1998 as compared with the three months ended March 31,
1997.
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 purchased with proceeds from the
March 1997 convertible debenture and warrant offering. Interest income
increased approximately $52,000, to approximately $76,000, in the three
months ended March 31, 1998 compared to the three months ended March 31,
1997. This increase reflects varying levels of these mutual funds
investments during the periods reported.
Interest expense decreased approximately $100,000 (58%) for the three
months ended March 31, 1998 as compared with the three months ended March
31, 1997. Approximately $30,000 of the decrease is attributable to the
elimination of interest expense on $5,000,000 in subordinated debentures
that were converted to common stock during 1997 and the balance is
attributable to a one-time adjustment of 1997 interest expense.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased approximately $82,000 (52%) for
the three months ended March 31, 1998 as compared with the three months
ended March 31, 1997. The increase reflects depreciation on increased
investments in property, equipment and leasehold improvements.
Depreciation and amortization expense is expected to continue to increase
as a result of these and future capital investments.
FINANCIAL CONDITION
LIQUIDITY
At March 31, 1998, the Company's working capital was $16.0 million
compared to $15.9 million at December 31, 1997. The Company's current
ratio was 5.6 to 1 as of March 31, 1998 and 6.1 to 1 at December 31,
1997. The reduction in the Company's current ratio from December 31, 1997
to March 31, 1998 is attributable to the current provision in the quarter
for corporate income taxes.
CAPITAL RESOURCES
On August 13, 1997, the Company restructured its credit facilities,
renewing its line of credit agreement, which is secured by accounts
receivable, inventory and general intangibles, with its present banking
institution and taking its existing term loan, plus increasing its credit
facility, which is secured by all of the Company's fixed assets, to a
second banking institution.
The line of credit provides for borrowings of up to $3.5 million and
matures April 30, 1999. Interest is payable monthly, calculated at prime.
At March 31, 1998, the outstanding balance of the line of credit was
$2,698,409.
The Company has two separate loans under its term loan agreement. The
first loan is a conventional term loan. Interest accrues on the
outstanding principal balance of the term loan at 8.01 percent and monthly
principal and interest payments of $73,279 are required. Unpaid principal
and accrued interest are due February 13, 2001. The balance on the term
loan at March 31, 1998 was $4,403,589.
The second loan is a revolving equipment loan which provides for
borrowings up to $2,500,000. Interest accrues on the outstanding
principal balance of the revolving line at prime plus .25%. Borrowings
can be converted to term notes which bear interest at a rate which adjusts
to the 3-year treasury note rate plus 1.95%. When converted, the term
debt requires monthly principal and interest payments calculated on a
seven-year amortization basis with a 42 month maturity. The revolving
loan matures on August 13, 1998. As of March 31, 1998, the balance of the
three advances under the revolving loan that had been converted to term
notes totaled $983,215. Interest accrues on the outstanding principal
balances of these term notes at rates ranging from 7.3% to 7.72% and
monthly principal and interest payments totaling $15,400 are required.
The Company finances certain of its annual insurance premiums through a
financing company. The amounts due under these loans totaled $15,620 as
of March 31, 1998 and are paid in monthly installments of $8,051 with an
interest rate of 7.24%.
On March 4, 1997, the Company entered into an agreement to sell up to 75
units of debentures and warrants. The units consisted of an aggregate of
$7.5 million in four year, 7% convertible debentures and 750,000 non-
redeemable common stock purchase warrants exercisable at $9.50 per share
for a period of three years. As provided for in the agreement, all of the
debentures plus accrued interest were converted into common stock during
1997. All 750,000 warrants remained outstanding as of March 31, 1998.
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 also believes that, as the result of the sales of
the convertible debentures, it has adequate capital resources to continue
its growth plans.
BACKLOG
Total backlog of unfilled firm customer orders ("backlog") at March 31,
1998 was $16.5 million compared with $14.2 million at March 31, 1997.
Backlog at December 31, 1997 was $16.6 million.
FORWARD LOOKING STATEMENTS
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 the
success of the products into which the Company's products are integrated,
governmental action relating to wireless communications licensing and
regulation, 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, future economic conditions
generally, as well as 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
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
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: May 6, 1998 By: /s/ Jon L. Clark
------------- ----------------------
Jon L. Clark, V.P. Finance
and Principal Financial Officer
EXHIBIT INDEX
No. Description Method of Filing
- --- ----------- ----------------
27 Financial Data Schedule Filed herewith electronically
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VARI-L'S
UNAUDITED FINANCIAL STATEMENTS PREPARED AS OF MARCH 31, 1998 AND FOR THE
THREE-MONTH PERIOD THEN ENDED, INCLUDED WITH ITS 1ST QUARTER 1998 10QSB FILING
WITH THE SECURITIES AND EXCHANGE COMMISSION, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
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