SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): July 5, 2000
VARI-L COMPANY, INC.
(Exact Name of Registrant as Specified in its Charter)
COLORADO 0-23866 06-0678347
(State of Incorporation) (Commission File (IRS Employer ID
Number) Number)
4895 Peoria Street
Denver, Colorado 80239
(Address of Principal Executive Offices)
(303) 371-1560
(Registrant's Telephone Number,
including Area Code)
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
(a) By letter dated July 5, 2000, Haugen, Springer & Co., P.C.,
Denver, Colorado, resigned as auditors and independent accountants for
Vari-L Company, Inc. (the "Company"). In its letter of resignation,
Haugen Springer stated that its resignation was prompted by the
following circumstances: (a) the refusal of the Company's former
Controller to meet with Haugen Springer, (b) statements attributed to
other management personnel of the Company which led Haugen Springer to
question, inter alia, whether it could rely on management's
representations, and (c) the decision of the Audit Committee of the
Company's Board of Directors to engage KPMG LLP to assist the
Committee in the Committee's internal investigation of the Company's
prior financial statements, in place of Haugen Springer, and
therefore, the likelihood that the investigation by KPMG will be
prolonged, which will result in a delayed issuance of revised
financial statements and auditors' reports. Additionally, Haugen
Springer indicated that one or more "illegal acts", within the meaning
of Section 10A of the Securities and Exchange Act of 1934 (the
"Exchange Act"), has or may have occurred. The Haugen Springer letter
appears to constitute a "reportable event" pursuant to Item 304 of
Regulation S-K in that the report appears to constitute advice to the
management of the Company that information has come to the attention
of Haugen Springer that has made it unwilling to be associated with
the financial statements prepared by the Company.
In a prior letter dated May 12, 2000, Haugen Springer had advised
the Company that new information had come to its attention which
affected its reports on the Company's financial statements for the
years ended December 31, 1997 and 1998. In the Company's Form 8-K
filed on May 17, 2000, the Company announced that it would be
restating its previously reported financial results for the quarter
and year ended December 31, 1997, that the Audit Committee of the
Company's Board of Directors was continuing to investigate the
accuracy of its prior financial statements, and that there could be
further adjustments to those financial statements. The Company also
announced that the Audit Committee had engaged Haugen Springer to
assist with its internal investigation to evaluate certain of the
Company's accounting policies and practices, including but not limited
to the Company's policies and practices concerning the capitalization
of labor expense and other costs. The Audit Committee requested, upon
completion of that evaluation, that Haugen Springer issue new reports,
if required, regarding the Company's financial statements for the
years ending 1997, 1998 and 1999.
On May 22, 2000, the Company filed its Form 10-Q, which included
financial statements adjusted to reflect the correction of the 1997
overstatement of revenues and earnings. Attached as an exhibit to the
Form 10-Q was a letter addressed to the Audit Committee of the
Company's Board of Directors from Haugen Springer, dated May 19, 2000,
which stated that, because of the ongoing evaluation of the other
accounting issues relating to the Company's financial statements for
the years ending 1997 and thereafter, Haugen Springer would not permit
the use of their name or inclusion of their review report in
connection with the financial statements contained in the Company's
Form 10-Q.
As noted above, in its July 5, 2000, resignation letter, Haugen
Springer referenced its concern that, in light of certain statements
attributed to the Company's management and a lack of cooperation from
the Company's former Controller, it was uncertain whether it could
rely on management's representations. While Haugen Springer did not
specifically identify these management representations, the Company's
Audit Committee believes that it may refer to conflicting statements
by certain members of management and representatives of Haugen
Springer concerning the time at which Haugen Springer first became
aware of facts relating to the 1997 overstatement of revenues and
earnings as well as prior management representations concerning the
capitalization of certain expenses, and the depreciation and
amortization policies for certain assets.
In its July 5 letter, Haugen Springer also stated that, because
it had not yet completed its investigation of, among other things, the
recognition of certain of the Company's revenues, the capitalization
of certain expenses, and the Company's depreciation and amortization
policies for the years ended December 31, 1997, 1998 and 1999, and
because the completion of that investigation is likely to be
prolonged, the Company's financial statements for those years, and
Haugen Springer's reports thereon, are not to be relied upon.
Finally, Haugen Springer indicated that it has become aware of
information indicating that one or more illegal acts, within the
meaning of Section 10A of the Exchange Act, has or may have occurred.
A copy of Haugen Springer's letter of resignation was sent to the
Chief Accountant of the Commission.
The Audit Committee made the determination to retain KPMMPG LLP
to assist the Committee because it came to believe that, under the
circumstances, Haugen Springer could not effectively evaluate the
Company's prior financial statements which it had audited.
The reports of Haugen Springer on the Company's financial
statements for the two fiscal years in the period ended December 31,
1999, did not contain an adverse opinion or a disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope, or
accounting principles. In addition, prior to the commencement of the
Audit Committee's investigation of the Company's prior financial
statements earlier this year, there were no disagreements with Haugen
Springer on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or which, if not
resolved to the satisfaction of Haugen Springer would have caused
Haugen Springer to make reference to the matter in connection with its
report in connection with the audits of the Company's financial
statements for the years ended December 31, 1999. However, as stated
above, Haugen Springer did not permit the use of their name or
inclusion of their review report (which report was never completed or
submitted to the Company) in connection with the financial statements
contained in the Company's Form 10-Q for the period ending March 31,
2000, and now has withdrawn its reports on the Company's financial
statement for years ended December 31, 1997, 1998 and 1999.
Based on the information presented to the Company's Audit
Committee to date, the Company believes it is very likely that it will
restate its audited financial statements for each of the fiscal years
ending December 31, 1997, 1998 and 1999, and its unaudited financial
statements for the subsequent interim periods. While the overall
impact of the various possible adjustments to the financial statements
cannot be determined at this time, those adjustments could have a
material adverse effect on the Company's balance sheet as well as on
the revenue and net income recognized by the Company during certain
fiscal periods. Because KPMG LLP has only recently been retained, the
Company also cannot fairly estimate the amount of the required
adjustments that it expects to be made to its financial statements.
Revised financial statements of the Company for the affected periods
will be issued as soon as posiblepossible.
The Company requested Haugen Springer to furnish it with a letter
addressed to the Securities and Exchange Commission stating whether it
agrees with the above statements, a copy of which will be filed as an
exhibit in an amendment to this Form 8-K.
(b) The Company has not yet retained a new independent
accounting firm to audit its financial statements for the year ending
December 31, 2000.
ITEM 5. OTHER EVENTS
On July 7, 2000, the Company issued a press release relating to
the matters discussed in Item 4 above. A copy of the press release is
filed as Exhibit 99.1 hereto.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(a) None
(b) None
(c) Exhibits.
16.1 Letter of Resignation and Report of Haugen, Springer & Co., P.C.,
pursuant to Section 10A(b)(2) of the Securities Exchange Act of 1934,
as amended, dated July 5, 2000, addressed to the Board of Directors of
the Vari-L Company, Inc.
99.1 Press Release dated July 7, 2000
Date: July 12, 2000 VARI-L COMPANY, INC.
By:/s/David G. Sherman
David G. Sherman
President
