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
June 30, 1997
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.)
11101 E. 51st Avenue
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 June 30, 1997:
Class of Securities Outstanding Securities
$0.01 par value 4,389,992 shares
Common shares
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VARI-L COMPANY, INC.
BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
6/30/97 12/31/96
ASSETS (Unaudited) (Audited)
----------- ----------
Current Assets:
Cash and cash equivalents $ 2,224,755 $ 1,224,727
Receivables:
Trade, less $4,000 allowance
for doubtful accounts 3,686,051 2,744,180
Lease acquisition costs advanced 596,254 641,486
Inventories 8,241,058 7,740,976
Prepaid expenses and other 1,280,377 990,130
----------- -----------
Total Current Assets 16,028,495 13,341,499
----------- -----------
Property and Equipment:
Machinery and equipment 13,455,912 11,772,250
Furniture and fixtures 1,026,729 993,822
Leasehold improvements 3,399,009 2,993,081
----------- -----------
17,881,650 15,759,153
Less accumulated depreciation
and amortization (2,978,675) (2,654,405)
----------- -----------
Net Property and Equipment 14,902,975 13,104,748
----------- -----------
Other Assets:
Long-term inventories 332,000 332,000
Covenant not to compete 82,985 99,581
Patents, net of accumulated
amortization of 61,810 and $31,010 368,559 337,963
Other 1,001,121 899,572
----------- -----------
Total Other Assets 1,784,665 1,669,116
----------- -----------
TOTAL ASSETS $ 32,716,135 $ 28,115,363
=========== ===========
(Continued)
See Accompanying Notes to Financial Statements.
VARI-L COMPANY, INC.
BALANCE SHEETS, CONTINUED
JUEN 30, 1997 AND DECEMBER 31, 1996
6/30/97 12/31/96
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) (Audited)
----------- -----------
Current Liabilities:
Bank line of credit $ 1,878,409 $ 2,125,409
Current installments of:
Long-term debt 588,934 588,934
Obligations under capital leases 8,029 10,135
Financed insurance premiums 63,370 33,652
Trade accounts payable 1,350,986 1,499,992
Accrued expenses 374,275 584,938
Due to related party 37,325 77,774
Income taxes payable 466,405 0
----------- -----------
Total Current Liabilities 4,767,733 4,920,834
Long-term debt 3,869,943 4,155,121
Obligations under capital leases 0 6,131
Subordinated debentures 1,709,000 0
Deferred income taxes 1,036,865 1,036,865
----------- -----------
Total Liabilities 11,383,541 10,118,951
----------- -----------
Stockholders' Equity:
Common stock, $.01 par value,
50,000,000 shares authorized;
4,389,992 and 3,806,138 shares
outstanding, respectively 46,130 40,291
Paid-in capital 15,229,971 12,420,002
Retained earnings 6,198,903 5,554,819
Less:
Loans for purchase of stock (142,410) (18,700)
----------- -----------
Total Stockholders' Equity 21,332,594 17,996,412
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 32,716,135 $ 28,115,363
=========== ===========
See Accompanying Notes to Financial Statements.
VARI-L COMPANY, INC.
STATEMENTS OF INCOME
FOR THE THREE MONTH PERIODS ENDED
JUNE 30, 1997 AND JUNE 30, 1996
AND
FOR THE SIX MONTH PERIODS ENDED
JUNE 30, 1997 AND JUNE 30, 1996
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
6/30/97 6/30/96 6/30/97 6/30/96
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
Net sales $ 4,005,162 $ 2,563,370 $ 7,304,895 $ 5,181,466
Cost of products sold 2,055,452 1,305,677 3,723,237 2,588,254
----------- ----------- ----------- -----------
Gross profit 1,949,710 1,257,693 3,581,658 2,593,212
----------- ----------- ----------- -----------
Other costs and expenses:
General and administrative403,098 290,299 775,699 584,299
Engineering 219,236 157,981 428,420 321,291
Selling 450,234 326,703 900,456 694,445
Interest expense 206,028 108,808 380,638 208,341
Interest income (35,243) (35,960) (59,366) (98,868)
Other 16,220 59,059 45,322 115,528
1,259,573 906,890 2,471,169 1,825,036
----------- ----------- ----------- -----------
Income before taxes 690,137 350,803 1,110,489 768,176
Income taxes 289,857 147,337 466,405 322,634
----------- ----------- ----------- -----------
NET INCOME $ 400,280 $ 203,466 $ 644,084 $ 445,542
=========== =========== =========== ===========
Primary earnings per common
share and common share
equivalents $ 0.10 $ 0.05 $ 0.16 $ 0.11
=========== =========== =========== ===========
Fully-diluted earnings per
common share and common
share equivalents $ 0.09 $ 0.05 $ 0.16 $ 0.11
=========== =========== =========== ===========
Primary weighted average
shares outstanding 4,078,701 3,900,436 3,931,965 3,924,015
=========== =========== =========== ===========
Fully-diluted weighted
Average shares
outstanding 4,701,632 3,900,436 4,245,327 3,924,015
=========== =========== =========== ===========
See Accompanying Notes to Financial Statements
VARI-L COMPANY, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED
JUNE 30, 1997 AND JUNE 30, 1996
Six Months Ended Six Months Ended
6/30/97 12/31/96
(Unaudited) (Audited)
----------- ----------
Net cash used in
operating activities (Note 8) $(988,400) $(1,975,521)
----------- -----------
Cash flows from investing activities:
Net purchases of property and equipment (2,122,497) (2,987,138)
----------- -----------
Net cash used in investing
activities (2,122,497) (2,987,138)
----------- -----------
Cash flows from financing activities:
Lease acquisition costs reimbursed (advanced) 45,232 (569,254)
Net (repayments) increase in long-term debt (285,178) 2,794,046
Net repayments of
capital lease obligations (8,237) (15,310)
Repayments of subordinated debentures 0 (112,500)
Net (repayments) under
bank line of credit (247,000) (836,803)
Net proceeds under
insurance financing 29,718 97,203
Net proceeds from debenture offering 4,562,500 0
Loans for purchase of stock (123,710) 0
Net proceeds from stock issuances 137,600 472,780
----------- -----------
Net cash provided by
financing activities 4,110,925 1,830,162
----------- -----------
Net (increase) decrease in cash 1,000,028 (3,132,497)
Beginning cash 1,224,727 5,868,210
---------- -----------
ENDING CASH $2,224,755 $ 2,735,713
========== ===========
Supplemental disclosure of cash flows
information:
Cash paid for interest $ 340,580 $ 190,270
========== ===========
Cash paid for income taxes $ 0 $ 0
=========== ===========
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 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, 1996 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 June 30, 1997, the results of its
operations for the three-month and six-month periods ended June 30, 1997
and June 30, 1996 and its cash flows for the six-month periods ended June
30, 1997 and June 30, 1996. All adjustments made are of a normal recurring
nature.
NOTE 2 - INVENTORIES
Inventories consist of the following:
6/30/97 12/31/96
(Unaudited) (Audited)
---------- -----------
Finished goods $1,396,212 $ 1,353,584
Work in process 3,638,948 3,189,200
Raw materials 3,002,844 2,995,138
Gold bullion 203,054 203,054
---------- -----------
$8,241,058 $ 7,740,976
========== ===========
Long-term inventories $ 332,000 $ 332,000
========== ==========
NOTE 3 - INCOME TAXES
Income tax expense reflects effective tax rates of 42%.
NOTE 4 - CREDIT FACILITY
The Company's credit facility consists of a line of credit and a 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
October 31, 1997. At June 30, 1997, the outstanding balance due to the
Bank under the line of credit was $1,878,409. Interest accrues on the
outstanding principal balance of the term loan at 8.75% and monthly
principal and interest payments of $79,812 are required. The term loan
matures May 17, 1999. At June 30, 1997, the balance due to the Bank under
the term loan was $4,418,418.
NOTE 5 - LOAN FOR PURCHASE OF STOCK
During April 1997, the Compensation Committee of the Board of Directors
approved a loan of approximately $124,000 to Joseph H. Kiser in connection
with his exercise of stock options. The loan was made pursuant to the
terms of the Company's tandem stock option and appreciation rights plan.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 6 - SUBORDINATED DEBENTURES
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. Under the agreement, the
unpaid principal balance of the debentures plus accrued interest may be
converted into common stock at the election of the holder thereof at 84% of
the 10-day average closing bid price prior to receipt of written request
for conversion, or at $9.50, whichever is less.
As of June 30, 1997, the Company had sold 50 units for $5,000,000 and
received proceeds of $4,562,500, net of commissions and fees. As required
by the agreement, the common stock issuable upon conversion and/or exercise
of the debentures and warrants have been registered with the Securities and
Exchange Commission.
As of June 30, 1997, notices for conversion of the debentures pursuant to
the Securities Purchase Agreement had been received totalling $3,291,000
plus accrued interest. 562,852 shares of $.01 par common stock were issued
in connection with these conversions. As a result, the balance of
outstanding debentures as of June 30, 1997 was $1,709,000. All 500,000
warrants were outstanding as of June 30, 1997. During July 1997, the
$1,709,000 of debentures plus accrued interest were converted into 289,292
shares of common stock. Also, pursuant to the agreement, the Company sold
and simultaneously converted an additional $2.5 million of debentures into
412,634 shares of common stock and issued 250,000 in related warrants.
NOTE 7 - EARNINGS PER SHARE
Primary earnings per common share are computed by dividing net income by
the weighted average number of common shares and dilutive common stock
equivalents outstanding for a period. Vested stock options are considered
to be common stock equivalents.
Fully diluted earnings per common share reflect the maximum dilution that
would have resulted from the exercise of stock options and convertible
debentures. Fully diluted earnings per common share are computed by
dividing net income, after adding back the after-tax interest on the
convertible debentures, by the weighted average number of common shares and
all dilutive securities.
NOTE 8 - RECONCILIATION OF NET INCOME TO NET CASH
USED IN OPERATING ACTIVITIES
The reconciliation of net income to net cash used in operating activities
for the six-month periods ended June 30, 1997 and June 30, 1996 is as
follows:
VARI-L COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 8 - RECONCILIATION OF NET INCOME TO NET CASH
USED IN OPERATING ACTIVITIES, CONTINUED
Six Months Ended Six Months Ended
6/30/97 12/31/96
(Unaudited) (Audited)
----------- ----------
Net Income $ 644,084 $ 445,542
---------- ----------
Adjustments to reconcile net
income to net cash used in
operating activities:
Depreciation and amortization 324,270 192,588
Amortization of covenant
not to compete 16,596 50,920
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable (941,871) 55,892
Increase in inventories (500,082) (2,955,475)
Increase in prepaid expenses
and other current assets (290,247) (547,359)
(Increase) in patents and other
assets (307,437) (238,264)
(Decrease) increase in accounts
payable (149,006) 670,651
(Decrease) increase in accrued
expenses (210,663) 27,350
(Decrease) in amounts due to related
parties (40,449) 0
Increase in income taxes payable 466,405 322,634
---------- ----------
Total adjustments (1,632,484) (2,421,063)
---------- ----------
Net cash (used in) operating activities $(988,400) $(1,975,521)
========== ==========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Overview
The following discussion should be read in conjunction with the Company's
financial statements and notes thereto included herein.
The Company had one of its strongest sales quarters in history during the
second quarter of 1997. Demand was particularly strong in the domestic
commercial market sector, indicating that the long-awaited surge in parts
and equipment sales intended for the domestic personal communications
systems ("PCS") market has begun. Also of note was an agreement with
Hughes Network Systems in San Diego for the sale of VCOs which will result
in revenues of approximately $1.2 million over the next 18 months. These
products will be used in specialized mobile radio hand sets that will offer
two-way communications services, voice and group dispatch, vehicle location
and mobile data solutions. Because this particular program has a five-
year life the Company is hopeful that sales will continue beyond the next
18 months. The Hughes Network agreement underscores Vari-L's growing
presence in the expanding digital communications marketplace.
The Company also entered into a strategic alliance with the Optoelectronics
Unit of Lucent Technologies for the manufacturing and development of
magnetic and electro-optic products for CATV applications. Vari-L will be
the exclusive supplier of these products for the next two years with an
estimated value of $10 million in sales to the Company over that period.
This alliance has resulted in establishing a new product line for the
Company, Optoelectronic products.
During the quarter, the Company received approval from the U.S. Patent
Office on two new patents. In early June, Vari-L's patent for a 1.2 volt
VCO, which has the world's lowest energy consumption at .0035 watts, was
approved. Low energy consumption is vital for battery powered applications
such as hand-held telephones and pagers. The new patent establishes the
Company in the subscriber hand-held telephone and pager marketplace. In
April 1997, Vari-L's patent for a high impedance ratio wide-band
transformer circuit, used in the conversion of light wave signals to and
from radio frequency signals, was approved. Demand for the transformer
circuit is expected to come from a variety of applications, including CATV.
The Optoelectronics Unit of Lucent Technologies is expected to utilize the
circuit in magnetic and electro-optic products for CATV applications in its
strategic alliance with the Company.
Also during the second quarter of 1997, the Company acquired an in-house
pick and place manufacturing line. This high-speed assembly equipment is
capable of placing 10,000 parts per hour and is used in the manufacture of
commercial PLLs and VCOs. The return on investment for this equipment is
expected to be less than one year and has cut the Company's cost for this
assembly process in half. A second pick and place manufacturing line will
be installed during August 1997.
The Company continues to move forward with the development of its
manufacturing joint venture in China. This joint venture is expected to
consume a significant amount of the production on the pick and place lines.
It is currently anticipated that production in China will commence during
the first quarter of 1998.
Construction on the Company's newest facility, which will house Sales,
Administration, Personnel and Quality Assurance, is in progress. Occupancy
of this space is planned for October, 1997, at which time the space
currently occupied by those departments will be remodeled to accommodate
all of the manufacturing and engineering functions related to the Company's
Discrete Signal Source Components and wide-band VCO product lines.
RESULTS OF OPERATIONS
Three months ended
June 30, 1997 and June 30, 1996
and the Six months ended
June 30, 1997 and June 30, 1996
TOTAL REVENUES
Sales revenues increased approximately $1,442,000 (56%) in the three months
ended June 30, 1997 as compared with the three months ended June 30, 1996,
from $2,563,370 to $4,005,162. Sales revenues increased approximately
$2,123,000 (41%) in the six months ended June 30, 1997 as compared with the
six months ended June 30, 1996, from $5,181,466 to $7,304,895. The growth
in sales revenues continues to reflect the Company's ongoing success in
selling to the commercial marketplace with its narrow-band VCOs and PLLs
while maintaining its existing markets in military products.
The Company has five major product lines:
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.
In the first six months of 1997, the composition of sales revenues was 18%
Discrete, 31% wide-band VCOs, 0% "Combination" sales of wide-band VCO and
Discrete products, 41% narrow-band VCOs, 5% PLL and 5% Optoelectronic
products, the Company's newest product line. In the first six months of
1996, the composition of sales revenues was 17% Discrete, 34% wide-band
VCOs, 5% "Combination" sales of wide-band VCO and Discrete products, 38%
narrow-band VCOs, 6% PLLs and 0% Optoelectronic products.
COST OF GOODS SOLD
Cost of goods sold, as a percent of sales revenues, was 51% in both the
three months ended June 30, 1997 and the three months ended June 30, 1996.
Cost of goods sold, as a percent of sales revenues, was 51% in the six
months ended June 30, 1997 and 50% in the six months ended June 30, 1996.
SELLING AND ENGINEERING EXPENSE
Selling expenses increased approximately $124,000, or 38%, for the three
months ended June 30, 1997 as compared to the three months ended June 30,
1996. Selling expenses increased approximately $206,000, or 30%, for the
six months ended June 30, 1997 as compared to the six months ended June 30,
1996. These increases primarily reflect commissions paid on increased
sales revenues. The Company continues to actively advertise and travel to
promote its product lines; however, these expenses have increased at a rate
less than the increase in revenues.
Engineering expenses increased approximately $61,000, or 39%, for the three
months ended June 30, 1997 as compared to the three months ended June 30,
1996. Engineering expenses increased approximately $107,000, or 33%, for
the six months ended June 30, 1997 as compared to the six months ended June
30, 1996. These increases reflect ongoing additions to the engineering
staff, and related equipment costs and expenses, to support new product
development and expansion of existing product lines.
GENERAL AND ADMINISTRATIVE AND OTHER EXPENSES
General and administrative expenses increased approximately $113,000, or
39%, for the three months ended June 30, 1997 as compared to the three
months ended June 30, 1996. General and administrative expenses increased
approximately $191,000, or 33%, in the six months ended June 30, 1997 as
compared with the six months ended June 30, 1996. Increases to G&A
primarily reflect increased staffing in the personnel and accounting
departments, in line with the growth of the Company, as well as increasing
shareholder and other expenses related to being a public company.
Other expenses decreased approximately $43,000 (72%) in the three months
ended June 30, 1997 as compared with the three months ended June 30, 1996.
Other expenses decreased approximately $70,000 (61%) in the six months
ended June 30, 1997 as compared with the six months ended June 30, 1996,
due to full amortization in 1996 of costs related to a 1991 covenant not to
compete. The decrease was partially offset by the amortization of a 1996
covenant not to compete.
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 was
approximately $35,000 for both the three months ended June 30, 1997 and the
three months ended June 30, 1996. Interest income decreased approximately
$40,000 (40%) for the six months ended June 30, 1997 as compared to the six
months ended June 30, 1996, from $98,868 to $59,366. This decrease
reflects the use of funds in the first quarter for capital improvements and
the replenishment of the fund in the second quarter from the convertible
debenture and warrant offering.
Interest expense increased approximately $97,000 (89%) for the three months
ended June 30, 1997 as compared with the three months ended June 30, 1996.
Interest expense increased approximately $172,000 (83%) for the six months
ended June 30, 1997 as compared with the six months ended June 30, 1996.
Increases in interest expense for the 1997 periods primarily reflect
interest accrued on the $5,000,000 convertible debentures.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased approximately $132,000 (68%) for
the six months ended June 30, 1997 as compared with the six months ended
June 30, 1996, reflecting depreciation on property and equipment
acquisitions by the Company since June 30, 1996.
Financial Condition
LIQUIDITY
At June 30, 1997, the Company's working capital was $11.3 million compared
to $8.4 million at December 31, 1996. The Company's current ratio was 3.4
to 1 at June 30, 1997 and 2.7 to 1 at December 31, 1996.
CAPITAL RESOURCES
The Company has a Term Loan and Credit Agreement (the "Credit Agreement")
with a bank (the "Bank") consisting of a line of credit and a 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 on
October 31, 1997. At June 30, 1997, the outstanding balance of the line of
credit was $1,878,409.
Interest accrues on the outstanding principal balance of the term loan at
8.75 percent and monthly principal and interest payments of $79,812 are
required. Unpaid principal and accrued interest are due May 17, 1999. The
balance on the term loan at June 30, 1997 was $4,418,418.
During 1993, the Company financed the acquisition of capital equipment
through capital leases having maturity dates through 1998. At June 30,
1997, the balance due under these leases was $8,029. The lease payments are
calculated using interest rates with an average of approximately 11%.
The Company finances certain of its annual insurance premiums through a
financing company. The amounts due under these loans totaled $63,370 as of
June 30, 1997 and are paid in monthly installments of $8,051 at an interest
rate of 7.24%.
On March 4, 1997, the Company entered into an agreement to sell up to an
aggregate of $7.5 million in four year, 7% convertible debentures together
with 750,000 non-redeemable common stock purchase warrants exercisable at
$9.50 per share for a period of three years. The unpaid principal balance
and accrued interest of the debentures may be converted into shares of the
Company's common stock at the election of the holder thereof at $9.50 per
share or 84% of the 10-day average closing bid price prior to the date of
receipt by the Company of the holder's written request, whichever is less.
As of June 30, 1997 the Company had sold $5,000,000 of debentures and
500,000 of related warrants, and had converted $3,291,000 plus accrued
interest into 562,852 shares of $.01 par value common stock. As a result,
the balance of outstanding debentures as of June 30, 1997 was $1,709,000.
All 500,000 warrants were outstanding as of June 30, 1997. During July
1997, the $1,709,000 of debentures plus accrued interest were converted
into 289,292 shares of common stock. Also, pursuant to the agreement, the
Company sold and simultaneously converted an additional $2.5 million in
debentures into 412,634 shares of common stock and issued 250,000 in
related warrants.
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. By virtue of the sales of convertible debentures, the Company
also has the capital resources to continue its growth plans.
BACKLOG
The Company's total backlog of unfilled firm customer orders ("backlog") at
June 30, 1997 was $13.4 million compared with $13.6 million at June 30,
1996. Backlog at December 31, 1996 was $14.4 million.
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
The Company's annual meeting of shareholders was held on
June 20, 1997. At the meeting Joseph H. Kiser, David G.
Sherman, Sarah L. Booher and David A. Lisowski were elected
as directors. The shareholders also ratified the
appointment of Haugen, Springer & Co. as the Company's
independent public accountants for the year ending December
31, 1997. In addition, the shareholders approved and
ratified the terms of the Company's 1997 private placement
of securities consisting of convertible subordinated
debentures and warrants to purchase shares of the Company's
$.01 par value Common Stock. The shareholders also approved
certain amendments to both the Company's Tandem Stock Option
and Stock Appreciation Rights Plan and Stock Grant Plan to
conform with recent amendments to SEC Rule 16b-3, and to
permit greater flexibility in the administration of the
Plans.
The number of votes cast for, withheld or broker nonvotes
for each director nominee was as follows:
Broker
Nominee For Against Nonvotes
------- --- ------- --------
Joseph H. Kiser 3,399,115 201,946 0
David G. Sherman 3,396,015 205,046 0
Sarah L. Booher 3,287,357 313,704 0
David A. Lisowski 3,363,832 237,229 0
The number of votes cast for, against, abstentions and
broker nonvotes for ratification of auditors was as follows:
For Against Abstain Broker Nonvotes
--- ------- ------- ---------------
3,433,635 120,296 47,130 0
The number of votes cast for, against, abstentions and
broker nonvotes for the approval and ratification of the
terms of the Company's 1997 private placement of securities
consisting of convertible subordinated debentures and
warrants to purchase shares of the Company's $.01 par value
Common Stock was as follows:
For Against Abstain Broker Nonvotes
--- ------- ------- ---------------
1,723,063 329,131 69,660 1,479,207
The number of votes cast for, against, abstentions and
broker nonvotes for approval of certain amendments to the
Company's Tandem Stock Option and Stock Appreciation Rights
Plan to conform with recent amendments to SEC Rule 16b-3,
and to permit greater flexibility in the administration of
the Plan was as follows:
For Against Abstain Broker Nonvotes
--- ------- ------- ---------------
3,003,198 384,512 69,231 144,120
The number of votes cast for, against, abstentions and
broker nonvotes for approval of certain amendments to the
Stock Grant Plan to conform with recent amendments to SEC
Rule 16b-3, and to permit greater flexibility in the
administration of the Plan was as follows:
For Against Abstain Broker Nonvotes
--- ------- ------- ---------------
3,044,616 350,262 62,063 144,120
Because the election of directors and ratification of
auditors were considered routine under applicable stock
exchange rules, all proxy shares held in the names of
brokers as nominees which were not voted at the meeting by
the shareholders were voted by the brokers at their
discretion. The proposal to approve and ratify the private
placement was considered nonroutine, and therefore, the
brokers did not have the discretion to vote on this
proposal. In the case of the two other routine proposals
for the amendments to the Tandem Plan and Stock Grant Plan,
for certain proxy shares held by brokers as nominees which
were not voted at the meeting by shareholders, brokers
exercised their discretion by indicating the nonvotes on
those proposals.
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: 8/12/97 By:/s/Jon L. Clark
Jon L. Clark, V.P. Finance
and Principal Accounting Officer
EXHIBIT INDEX
EXHIBIT METHOD OF FILING
- ------- ----------------
27 Financial Data Schedule Filed herewith electronically