SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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, 2002
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, 2002:
Class of Securities Outstanding Securities
------------------- ----------------------
$0.01 par value 7,178,932 shares
Common shares
VARI-L COMPANY, INC.
March 31, 2002
Index
<Table>
Part I. Financial Information
Item 1. Financial Statements:
Balance Sheets, March 31, 2002 (unaudited) and June 30, 2001 2
Statements of Operations, three months ended March 31, 2002 and 2001
and nine months ended March 31, 2002 and 2001 (unaudited) 3-4
Statement of Stockholders' Equity, nine months ended March 31,
2002 (unaudited) 5
Statements of Cash Flows, nine months ended March 31, 2002
and 2001 (unaudited) 6
Notes to Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk 21
Part II. Other Information
Item 1. Legal Proceedings 22
Item 2. Changes in Securities 23
Item 3. Defaults upon Senior Securities 23
Item 4. Submission of Matters to a Vote of Security Holders 23
Item 5. Other Information 23
Item 6. Exhibits and Reports on Form 8-K 23
</Table>
1
VARI-L COMPANY, INC.
Balance Sheets
(in thousands of dollars)
<Table>
<Caption>
MARCH 31, JUNE 30,
ASSETS 2002 2001
------------ ------------
(unaudited)
Current assets:
Cash and cash equivalents $ 1,604 2,013
Trade accounts receivable, net of allowance for doubtful
accounts of $228 and $279, respectively 2,752 5,942
Inventories 2,851 3,640
Prepaid expenses and other current assets 687 645
------------ ------------
Total current assets 7,894 12,240
------------ ------------
Property and equipment:
Machinery and equipment 12,154 11,616
Furniture and fixtures 839 822
Leasehold improvements 1,509 1,500
------------ ------------
14,502 13,938
Less accumulated depreciation and amortization 7,687 6,362
------------ ------------
Net property and equipment 6,815 7,576
Intangible and other assets, net of accumulated amortization
of $148 and $109, respectively 787 638
------------ ------------
Total assets $ 15,496 20,454
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 1,147 1,669
Accrued compensation 949 1,286
Other accrued expenses 257 428
Notes payable and current installments of long-term
obligations 642 1,764
------------ ------------
Total current liabilities 2,995 5,147
Long-term obligations 1,190 1,321
Other liabilities 152 157
------------ ------------
Total liabilities 4,337 6,625
------------ ------------
Stockholders' equity:
Common stock, $.01 par value, 50,000,000 shares authorized;
7,178,932 and 7,107,161 shares issued and outstanding,
respectively 72 71
Additional paid-in capital 36,943 36,829
Unamortized stock compensation cost (39) (79)
Accumulated other comprehensive income 34 --
Accumulated deficit (25,851) (22,992)
------------ ------------
Total stockholders' equity 11,159 13,829
------------ ------------
Commitments and contingencies
Total liabilities and stockholders' equity $ 15,496 20,454
============ ============
</Table>
See accompanying notes to financial statements.
2
VARI-L COMPANY, INC.
Statements of Operations
(in thousands of dollars, except share and per share data)
<Table>
<Caption>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
2002 2001
------------- -------------
(unaudited) (unaudited)
Net sales $ 5,163 10,000
Cost of goods sold 3,235 4,521
------------- -------------
Gross profit 1,928 5,479
------------- -------------
Operating expenses:
Selling 691 1,058
General and administrative 1,551 2,916
Research and development 624 825
Expenses relating to accounting restatements and
related legal matters, net of recoveries 222 465
------------- -------------
Total operating expenses 3,088 5,264
------------- -------------
Operating income (loss) (1,160) 215
Other income (expense):
Interest income 11 92
Interest expense (47) (258)
Other, net (15) (6)
------------- -------------
Total other income (expense) (51) (172)
------------- -------------
Net income (loss) $ (1,211) 43
============= =============
Earnings (loss) per share, basic $ (0.17) 0.01
============= =============
Weighted average shares outstanding, basic 7,178,451 7,087,048
============= =============
Earnings (loss) per share, diluted $ (0.17) 0.01
============= =============
Weighted average shares outstanding, diluted 7,178,451 7,119,614
============= =============
</Table>
See accompanying notes to financial statements.
3
VARI-L COMPANY, INC.
Statements of Operations
(in thousands of dollars, except share and per share data)
<Table>
<Caption>
NINE MONTHS NINE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
2002 2001
------------- -------------
(unaudited) (unaudited)
Net sales $ 16,446 32,389
Cost of goods sold 10,050 16,364
------------- -------------
Gross profit 6,396 16,025
------------- -------------
Operating expenses:
Selling 1,973 3,326
General and administrative 4,951 6,860
Research and development 1,948 3,121
Expenses relating to accounting restatements and
related legal matters, net of recoveries 256 2,333
------------- -------------
Total operating expenses 9,128 15,640
------------- -------------
Operating income (loss) (2,732) 385
Other income (expense):
Interest income 40 354
Interest expense (145) (903)
Other, net (22) (4)
------------- -------------
Total other income (expense) (127) (553)
------------- -------------
Net loss $ (2,859) (168)
============= =============
Loss per share, basic and diluted $ (0.40) (0.02)
============= =============
Weighted average shares outstanding, basic and diluted 7,143,215 7,076,176
============= =============
</Table>
See accompanying notes to financial statements.
4
VARI-L COMPANY, INC.
Statement of Stockholders' Equity
(in thousands of dollars, except share amounts)
(Unaudited)
<Table>
<Caption>
UNAMORTIZED ACCUMULATED
COMMON STOCK ADDITIONAL STOCK OTHER
-------------------------- PAID-IN COMPENSATION COMPREHENSIVE
SHARES AMOUNT CAPITAL COST INCOME
----------- ----------- ----------- ------------ -------------
Balance, June 30, 2001 7,107,161 $ 71 36,829 (79) --
Common stock issued under employee stock
purchase plan 76,011 1 123 -- --
Common stock issued under stock award plan 2,000 -- 2 -- --
Amortization of stock compensation cost -- -- -- 36 --
Stock options forfeited -- -- (4) 4 --
Common stock repurchased and retired (6,240) -- (7) -- --
Unrealized gain on marketable securities -- -- -- -- 34
Net loss -- -- -- -- --
Comprehensive loss
----------- ----------- ----------- ----------- -----------
Balance, March 31, 2002 7,178,932 $ 72 36,943 (39) 34
=========== =========== =========== =========== ===========
<Caption>
TOTAL
ACCUMULATED COMPREHENSIVE STOCKHOLDERS'
DEFICIT LOSS EQUITY
----------- ------------- -------------
Balance, June 30, 2001 (22,992) 13,829
Common stock issued under employee stock
purchase plan -- 124
Common stock issued under stock award plan -- 2
Amortization of stock compensation cost -- 36
Stock options forfeited -- --
Common stock repurchased and retired -- (7)
Unrealized gain on marketable securities -- 34 34
Net loss (2,859) (2,859) (2,859)
-----------
Comprehensive loss $ (2,825)
============
----------- -----------
Balance, March 31, 2002 (25,851) 11,159
=========== ===========
</Table>
See accompanying notes to financial statements.
5
VARI-L COMPANY, INC.
Statement of Cash Flows
(in thousands of dollars)
<Table>
<Caption>
NINE MONTHS NINE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
2002 2001
------------ ------------
(unaudited) (unaudited)
Net loss $ (2,859) (168)
Adjustments to reconcile net loss to cash provided by (used in)
operating activities:
Depreciation and amortization 1,592 1,742
Loss on disposal of assets 30 6
Common stock issued under employee purchase and stock award plans 2 10
Changes in operating assets and liabilities:
Trade accounts receivable, net 3,190 (578)
Inventories, net 789 1,868
Prepaid expenses and other current assets (8) (392)
Trade accounts payable (522) (2,077)
Accrued compensation (337) (16)
Other accrued expenses and other liabilities (176) 7
------------ ------------
Total adjustments 4,560 570
------------ ------------
Cash provided by operating activities 1,701 402
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment (845) (1,904)
Proceeds from sale of equipment 59 22
Increase in other assets (129) (58)
------------ ------------
Cash used in investing activities (915) (1,940)
------------ ------------
Cash flows from financing activities:
Decrease in bank overdraft -- (19)
Proceeds from notes payable 7,089 --
Payments of notes payable (8,570) (4,779)
Proceeds from long-term obligations 485 --
Payments of long-term obligations (257) (34)
Payment of debt issue costs (59) --
Common stock repurchased (7) --
Proceeds from common stock issued under stock purchase plan 124 45
------------ ------------
Cash used in financing activities (1,195) (4,787)
------------ ------------
Decrease in cash and cash equivalents (409) (6,325)
Cash and cash equivalents at beginning of period 2,013 11,030
------------ ------------
Cash and cash equivalents at end of period $ 1,604 4,705
============ ============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 120 1,058
============ ============
Cash paid for income taxes $ -- --
============ ============
</Table>
See accompanying notes to financial statements.
6
VARI-L COMPANY, INC.
Notes to Financial Statements (unaudited)
Three and nine months ended March 31, 2002 and 2001
(1) BASIS OF PRESENTATION
The accompanying financial statements of the Company have been prepared
without audit (except for the balance sheet information as of June 30,
2001, which is derived from the Company's audited financial
statements). Certain information and note disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been omitted. These financial statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the
period ended June 30, 2001. In the opinion of management, the
accompanying unaudited financial statements include all adjustments,
consisting of normal recurring accruals, necessary for a fair
presentation of the financial position and results of operations for
the periods presented. Interim results of operations for the three and
nine months ended March 31, 2002 are not necessarily indicative of
operating results that can be expected for the full year.
Certain 2001 amounts have been reclassified to conform to the 2002
presentation.
(2) INVENTORIES
Inventories, net of allowances for excess and obsolete items, consist
of the following:
<Table>
<Caption>
MARCH 31, JUNE 30,
2002 2001
------------ ------------
(in thousands of dollars)
Finished goods $ 397 463
Work-in-process 541 623
Raw materials 1,913 2,554
------------ ------------
$ 2,851 3,640
============ ============
</Table>
(3) NOTES PAYABLE AND LONG-TERM OBLIGATIONS
Notes payable and long-term obligations consist of the following:
<Table>
<Caption>
MARCH 31, JUNE 30,
2002 2001
------------ ------------
(in thousands of dollars)
Notes payable under Credit Facility:
Revolving loan $ -- 1,481
Term Loan 1,629 1,500
Promissory notes 161 21
Capital lease obligations 42 83
------------ ------------
1,832 3,085
Less current installments 642 1,764
------------ ------------
Long-term obligations $ 1,190 1,321
============ ============
</Table>
7
VARI-L COMPANY, INC.
Notes to Financial Statements (unaudited)
Three and nine months ended March 31, 2002 and 2001
On June 28, 2001, the Company entered into a credit agreement with Wells
Fargo Business Credit, Inc (the "Credit Facility"). The Credit Facility
provides for a $6.0 million secured revolving line of credit ("Revolving
Loan"), up to a $2.5 million secured term loan ("Term Loan"), and a $1.5
million secured capital expenditures loan ("Capital Expenditures Loan").
The Credit Facility is secured by substantially all of the Company's
accounts receivable, inventories and equipment and is subject to
covenants that, among other things, impose limitations on capital
expenditures and investments, restrict certain payments and distributions
and require the Company to maintain certain financial ratios.
In September 2001, the Credit Facility was amended to establish revised
financial covenants for the fiscal years ending June 30, 2001 and June
30, 2002.
The Company periodically reviews the state of the wireless industry in
general and the impact on its financial projections that are provided to
Wells Fargo Business Credit, Inc. Due to continued softness of sales
demand in the wireless industry, financial projections for the remainder
of the fiscal year were revised in November 2001. Additionally, the
Company recognized that the continuing softness in the wireless industry
and the related impact on sales could have resulted in a violation of the
covenants. Accordingly, on February 8, 2002, the Company entered into a
second amendment to the Credit Facility. The maximum availability on the
Revolving Loan was reduced to $4.0 million, the interest rate was
increased to the lender's prime rate plus 1% and the formula for
calculating availability no longer includes inventories. The Term Loan
was modified to accelerate the amortization period of the loan from 84
months to 42 months and the interest rate was increased to the lender's
prime rate plus 2.5%. In addition, the commitment for the Capital
Expenditures Loan was cancelled.
At March 31, 2002, the interest rates on the Revolving Loan and the Term
Loan were 5.75% and 7.25%, respectively. The Company had additional
borrowing availability of $1.9 million under the Revolving Loan.
The Company is required to pay a minimum interest charge on the Credit
Facility of $30,000 per calendar quarter.
(4) INCOME TAXES
A valuation allowance was provided for the income tax benefit of the net
operating losses incurred during the three and nine months ended March
31, 2002 and 2001.
(5) EXPENSES OF ACCOUNTING RESTATEMENTS, SHAREHOLDER LITIGATION AND RELATED
MATTERS
In early 2000, management of the Company commenced efforts to restate its
previously issued financial statements after being notified by the
Securities and Exchange Commission (the Commission) that the Commission
was investigating its accounting and reporting practices. Certain costs
incurred in conjunction with these efforts have been separately
classified in the Company's
8
VARI-L COMPANY, INC.
Notes to Financial Statements (unaudited)
Three and nine months ended March 31, 2002 and 2001
Statements of Operations as "Expenses relating to accounting restatements
and related legal matters, net of recoveries." Expenses included in this
classification include the cost of external counsel for services provided
in connection with shareholder lawsuits, the Commission's investigation
of the Company, legal fees and expenses of the Special Litigation
Committee of the Board of Directors, the cost of certain consultants and
temporary labor hired to assist in the accounting restatements, and
reimbursements to current and former employees of the Company for their
legal fees and expenses. The accounting restatements were completed in
February 2001, however the Company continues to incur costs related to
shareholder litigation and legal fees and expenses of the Special
Litigation Committee.
(6) ACQUISITIONS
On January 25, 2002, the Company acquired certain assets of Asvan
Technologies, LLC ("Asvan") for approximately $313,000. The purchase
price included $100,000 in cash, a two year promissory note in the amount
of $175,000 secured by a letter of credit and approximately $38,000 in
direct costs of acquisition. The note has principal and interest payable
in equal monthly installments at an annual rate of 10%. The fair value of
assets acquired was approximately $201,000, resulting in goodwill of
approximately $112,000.
In July 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other
Intangible Assets," which was adopted by the Company. Under SFAS No. 142,
goodwill and intangible assets with indefinite useful lives will no
longer be amortized, but will instead be tested periodically for
impairment. SFAS No. 142 also requires that intangible assets with
definite lives be amortized over their respective estimated useful lives
to their estimated residual values, and reviewed periodically for
impairment. Accordingly, goodwill of $112,000 recorded in connection with
the acquisition of certain assets of Asvan will not be amortized and will
be reviewed for impairment at least annually.
(7) PROFIT SHARING AND STOCK OPTION PLANS
PROFIT SHARING PLAN
Effective December 31, 2001, the Company's Board of Directors terminated
the Vari-L Company, Inc. Profit Sharing Plan and Trust (the "Plan").
Under termination of the Plan, participants became fully vested in their
accounts. The assets of the Plan, which were primarily comprised of
shares of the Company's common stock, were distributed on March 15, 2002.
STOCK OPTION PLAN
Effective April 25, 2002, the Company filed a Tender Offer (the "Offer")
with the Securities and Exchange Commission which offers employees the
right to exchange all outstanding options to purchase shares of Company
common stock with an exercise price equal to $34.50 per share for
replacement options to be granted no earlier than six months and one day
from the expiration of the
9
VARI-L COMPANY, INC.
Notes to Financial Statements (unaudited)
Three and nine months ended March 31, 2002 and 2001
Offer at an exercise price equal to no less than the fair market value of
the common stock on that date.
(8) LITIGATION, COMMITMENTS AND CONTINGENCIES
SECURITIES AND EXCHANGE COMMISSION INVESTIGATION
In September 2001, the Company agreed to a settlement with the Securities
and Exchange Commission under which the Company, without admitting or
denying that it violated any laws, consented to the entry of an
injunction prohibiting future violations by the Company of certain
periodic reporting, record keeping, internal controls, proxy solicitation
and antifraud provisions of the Securities Exchange Act of 1934. On
November 9, 2001, the Company's settlement with the Securities and
Exchange Commission was approved by the United States District Court for
the District of Colorado.
PRIVATE SECURITIES CLASS ACTION
A number of private shareholder class actions alleging violations of
federal securities laws were filed against the Company and certain of its
former officers in the United States District Court for the District of
Colorado beginning in June 2000. Those actions have since been
consolidated and an amended consolidated complaint has been filed by the
class representatives. On November 21, 2001, the Company filed a motion
to dismiss all claims against the Company in the consolidated private
securities class action, Rasner v. Vari-L Company, Inc., Civ. No.
00-S-1181, D. Colo. The Company's motion argues that the amended
consolidated complaint alleges wrongdoing by former corporate employees
in furtherance of their personal interests, as opposed to corporate
interests, which does not state a claim for securities fraud against the
Company. The class action representatives have filed their response to
the Company's motion to dismiss and the Company has filed a reply to that
response but the court has not yet ruled on the motion.
The Company is engaged in settlement discussions with the class
representatives aimed at settling all claims against the Company. While
the Company is optimistic that it will be able to reach a settlement
agreement with the plaintiffs, there is no assurance that a settlement
acceptable to the Company can be achieved or that any settlement reached
will not have a material adverse effect on the Company. In addition, any
settlement will have to be approved by the court after giving all
affected class members an opportunity to express their views concerning
the settlement proposal. Moreover, irrespective of the outcome with
respect to the Company, the individual defendants may have claims against
the Company for advancement or indemnification of their attorneys fees
and other costs of defense, which claims may be material.
10
VARI-L COMPANY, INC.
Notes to Financial Statements (unaudited)
Three and nine months ended March 31, 2002 and 2001
SHAREHOLDER DERIVATIVE SUIT
On August 4, 2000, a shareholder derivative action was filed, purportedly
on behalf of the Company, in District Court, City and County of Denver
against the same officers named in the class action as well as the
members of the Company's board of directors at the time. The Company was
also named as a nominal defendant. The derivative complaint alleged many
of the same facts as in the federal securities class action, claiming
that those facts demonstrate that the individual defendants breached
their fiduciary duties to the Company and the shareholders. The action
was dismissed without prejudice in April 2001 but an amended complaint
was filed by the same plaintiff in September 2001.
On October 9, 2001, the Company filed a motion to dismiss the second
shareholder derivative action, on various grounds, including the failure
to make the required demands, the failure to commence a new action rather
than trying to revive the previously dismissed case, and the availability
of new management and a new independent Board member to evaluate the
merits, and the timing, of any claims which could be brought by the
Company against the individual defendants. Substantially all of the
individual named defendants subsequently joined in the Company's motion.
On April 4, 2002, the court granted the plaintiff's motion for a stay of
the shareholders derivative action against certain of the Company's
former officers and directors pending the results of the investigation by
the Company's Special Litigation Committee of the claims raised in that
action.
INSURANCE CLAIMS
Reliance Insurance Company ("Reliance") is the issuer of the $5 million
primary directors and officers' liability insurance policy in effect for
the period of time covered by the securities class action and the
derivative action. In January 2002, the Reliance liquidator notified
claimants concerning the procedures by which insureds and other claimants
may file claims against the Reliance estate.
DECLARATORY JUDGMENT ACTION BY EXCESS INSURER
On June 5, 2001, Agricultural Excess and Surplus Insurance Company
("AESIC"), which had issued to the Company a $2.5 million excess
directors and officers liability insurance policy for the period of time
covered by the shareholder and class action litigation referenced above,
filed suit in United States District Court for the District of Colorado
asking the court to find that it is not obligated to provide coverage, or
in the alternative, seeking permission to rescind its policy.
A settlement conference was held in February 2002 before the U.S.
Magistrate assigned to this declaratory judgment action brought by the
Company's excess liability directors and officers liability insurance
carrier. Representatives of the excess insurer, the Company, the
individual defendants in the securities class action, and the plaintiffs
in the securities class action attended the conference. While meaningful
discussions were held at that conference, no settlement was reached and
no further settlement conference has been scheduled.
11
VARI-L COMPANY, INC.
Notes to Financial Statements (unaudited)
Three and nine months ended March 31, 2002 and 2001
COMPANY ACTION AGAINST FORMER OFFICERS
On December 5, 2001, the Company formed a Special Litigation Committee of
the Board of Directors. The Special Litigation Committee is comprised of
two outside directors who joined the Company's Board subsequent to the
time of certain alleged wrongdoings as discussed below.
On December 20, 2001, the Special Litigation Committee (the "Committee")
retained independent counsel to advise the Committee in its investigation
of the allegations of wrongdoing during prior periods by former
employees, as well as current and former members of the Company's Board
of Directors. Additionally, the Special Litigation Committee suspended
the advancement of certain legal fees and expenses being paid on behalf
of former officers of the Company.
On March 19, 2002, the Company filed a lawsuit in the District Court,
City and County of Denver, against Mr. David Sherman, Mr. Joseph Kiser,
individuals, and J.C. Enterprises, a Colorado general partnership. Mr.
Sherman is the former president of the Company and Mr. Kiser is the
former Chairman of the Company's Board of Directors and Chief Scientific
Officer. Additionally, Mr. Kiser is the General Partner of J.C.
Enterprises. On April 2, 2002, the Company filed an Amended Complaint and
Jury Demand. In its lawsuit, the Company seeks to rescind certain
employment and consulting agreements between the Company and Messrs.
Kiser and Sherman, and to rescind certain stock option grants made to
them, on the basis that such agreements were entered into, and such
option grants were made, based upon mistaken or misrepresented
information regarding the Company's true financial performance. The
Company also seeks to recover the compensation and bonuses paid to them
as a result of such mistaken or misrepresented information. In addition,
the Company seeks to recover excessive rent it paid pursuant to a lease
agreement between the Company and J.C. Enterprises in reliance on
misrepresented information provided by Mr. Kiser and Mr. Sherman.
At March 31, 2002, the Company had approximately $422,000 recorded as
liabilities for post-employment benefits and severance payments related
to certain employment and consulting agreements between the Company and
Messrs. Kiser and Sherman. Included in this liability is approximately
$57,000 for which the Company is contingently liable for a guarantee of
indebtedness owed by Mr. Sherman to a former officer. Additionally, the
Company is contingently liable for a guarantee of indebtedness owed by
Mr. Kiser to a former officer for approximately $37,000.
FINANCIAL IMPACT OF LITIGATION
All of these legal actions have the potential of a possible loss to the
Company. The Insurance Claims, Declaratory Judgment Action by Excess
Insurer and the Company Action against Former Officers are potential gain
contingencies for the Company. At this time, we are unable to reasonably
estimate the possible future cost or net loss or gain, if any, associated
with these matters. Accordingly, we have not recorded any loss or gain
contingencies associated with these matters as of
12
VARI-L COMPANY, INC.
Notes to Financial Statements (unaudited)
Three and nine months ended March 31, 2002 and 2001
March 31, 2002. It is reasonably possible that such amounts could be
material to our financial condition, results of operations or liquidity.
OTHER
The Company is a party to other legal proceedings and claims in the
ordinary course of its business. The Company believes that the outcome of
these other matters will not have a material adverse affect on its
financial condition, results of operations or liquidity.
13
VARI-L COMPANY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations for the Three Months Ended March 31, 2002 Compared to the
Three Months Ended March 31, 2001
Net Sales
Net sales for the three months ended March 31, 2002 decreased 48.4% to $5.2
million compared with $10.0 million for the three months ended March 31, 2001.
This decline is primarily due to a decrease in demand for the quantity of
commercial signal source products consistent with an overall slowdown in the
wireless telecommunications industry. Revenue from commercial signal source
products was $3.6 million for the three months ended March 31, 2002, a 56.6%
decrease from $8.3 million for the three months ended March 31, 2001.
Revenue from all other products was $1.5 million for the three months ended
March 31, 2002, an 11.8% decrease from $1.7 million for the three months ended
March 31, 2001. Revenue from all other products for the three months ended March
31, 2002 included fees earned from contract termination of approximately
$179,000.
Gross Profit
Gross profit for the three months ended March 31, 2002 decreased 64.8% to $1.9
million, or 37.3% of net sales, compared with $5.5 million, or 54.8% of net
sales, for the three months ended March 31, 2001. The gross profit percent in
any period can be affected significantly by volume.
Fixed manufacturing overhead adversely affects gross profit at lower sales
volumes. Accordingly, the reduced sales level for the three months ended March
31, 2002 had the effect of lowering gross profit as a percentage of sales.
Additionally, changes in market demand for our products, combined with changes
in product design can result in excess inventory parts, such as printed circuit
boards. On a quarterly basis, we review our inventory on hand and firm purchase
commitments versus our sales forecast to determine the adequacy of the existing
reserve for excess and obsolete inventory.
Included in cost of goods sold for the three months ended March 31, 2002 and
2001 is a charge of $41,000 and $70,000, respectively, for excess and obsolete
inventory.
Selling Expenses
Selling expenses for the three months ended March 31, 2002 decreased 34.7% to
$691,000, or 13.4% of net sales, compared with $1.1 million, or 10.6% of net
sales, for the three months ended March 31, 2001. The dollar decrease in selling
expenses was primarily attributable to lower commissions paid to manufacturer's
representatives as a result of reduced sales volume.
14
General and Administrative Expenses
General and administrative expenses for the three months ended March 31, 2002
decreased 46.8% to $1.6 million, or 30.0% of net sales, compared with $2.9
million, or 29.2% of net sales, for the three months ended March 31, 2001. The
dollar decrease was primarily attributable to significantly reduced spending on
independent contractors for interim management and accounting services and the
timing of audit fees paid in connection with the audit of our financial
statements for the year ended June 30, 2000, partially offset by an increase in
salaries and wages for new employees hired in 2002. Additionally, for the three
months ended March 31, 2002 we recognized a $125,000 benefit from the recovery
of a disputed amount that was written off in a previous period.
Research and Development Expenses
Research and development expenses for the three months ended March 31, 2002
decreased 24.4% to $624,000, or 12.1% of net sales, compared with $825,000 or
8.3% of net sales, for the three months ended March 31, 2001. The dollar
decrease was primarily attributable to lower salaries and benefits from the
permanent transfer of personnel to assist in business development efforts and a
reduction in stay bonuses and production bonuses paid to employees.
Expenses Relating to Accounting Restatements and Related Legal Matters, Net of
Recoveries
Expenses relating to the accounting restatements and related legal matters, net
of recoveries for the three months ended March 31, 2002 and 2001 were $222,000
and $465,000, respectively. There were no amounts recorded as recoveries for the
three months ended March 31, 2002 and 2001. These expenses include the cost of
external counsel for services provided in connection with shareholder lawsuits
and the Securities and Exchange Commission (SEC) investigation, the cost of
certain consultants and temporary labor hired to assist in the accounting
restatements, and reimbursements to current and former employees for their legal
fees and expenses. The accounting restatements were completed in February 2001,
however we continue to incur costs related to shareholder litigation.
In September 2001, we agreed to a settlement with the SEC. In December 2001, we
formed a Special Litigation Committee of our Board of Directors. The Special
Litigation Committee (the "Committee") retained independent counsel to advise
the Committee in its investigation of allegations of wrong doing during prior
periods by former employees, as well as current and former members of our Board
of Directors. For the three months ended March 31, 2002, approximately $115,000
of these expenses related to fees charged by the independent counsel to our
Special Litigation Committee.
Other Income (Expense)
Interest income decreased 88.0% to $11,000 for the three months ended March 31,
2002 compared with $92,000 for the three months ended March 31, 2001. The
decrease was attributable to lower average cash balances available in the
quarter for investing, along with lower interest rates on invested balances.
Interest expense and other, net, decreased 76.5% to $62,000 for the three months
ended March 31, 2002 compared with $264,000 for the three months ended March 31,
2001. The decrease was primarily attributable to less interest expense as a
result of a reduction in the outstanding debt and a decrease in the lender's
prime rate.
15
Net Loss and Loss per Share
We believe that the disclosure of as adjusted net income (loss) and earnings
(loss) per share, calculated based on criteria determined by management,
provides useful information regarding our operations and excludes the impact of
stock compensation, which is a non-cash charge, expenses relating to accounting
restatements and related legal matters (which management believes are not
indicative of normal operating expenses, but will continue until the litigation
is resolved), offset by the benefit from recovery of a disputed amount. However,
as adjusted financial information should not be considered a substitute for
operating income (loss) or cash flow from operations determined in accordance
with generally accepted accounting principles.
The following table reconciles the reported net income (loss) to as adjusted net
income (loss) and earnings (loss) per share for the three months ended March 31,
2002 and 2001:
<Table>
<Caption>
Three Months Three Months
Ended Ended
March 31, 2002 March 31, 2001
-------------- --------------
Net income (loss), as reported $ (1,211,000) $ 43,000
Stock compensation 10,000 29,000
Expenses related to accounting restatements
and related legal matters, net of recoveries 222,000 465,000
Benefit of recovery of disputed amount (125,000) --
------------ ------------
As adjusted net income (loss) $ (1,104,000) $ 537,000
============ ============
Earnings (loss) per share - basic and diluted (0.17) 0.01
============ ============
As adjusted earnings (loss) per share - basic and diluted $ (0.15) $ 0.08
============ ============
</Table>
Results of Operations for the Nine Months Ended March 31, 2002 Compared to the
Nine Months Ended March 31, 2001
Net Sales
Net sales for the nine months ended March 31, 2002 decreased 49.2% to $16.4
million compared with $32.4 million for the nine months ended March 31, 2001.
This decline is primarily due to a decrease in demand for the quantity of
commercial signal source products consistent with an overall slowdown in the
wireless telecommunications industry. Revenue from commercial signal source
products was $12.3 million for the nine months ended March 31, 2002, a 54.4%
decrease from $27.0 million for the nine months ended March 31, 2001. Revenue
for the nine months ended March 31, 2001 included fees earned from a contract
modification of approximately $295,000.
Revenue from all other products was $4.1 million for the nine months ended March
31, 2002, a 24.1% decrease from $5.4 million for the nine months ended March 31,
2001. Revenue for the nine months ended March 31, 2001 included a significant
end-of-life production run generating net sales of approximately $809,000.
16
Gross Profit
Gross profit for the nine months ended March 31, 2002 decreased 60.1% to $6.4
million, or 38.9% of net sales, compared with $16.0 million, or 49.5% of net
sales, for the nine months ended March 31, 2001. The gross profit percent in any
period can be affected significantly by volume and unusual items.
Fixed manufacturing overhead adversely affects gross profit at lower sales
volumes. Accordingly, the reduced sales level for the nine months ended March
31, 2002 had the effect of lowering gross profit as a percentage of sales.
Additionally, changes in market demand for our products, combined with changes
in product design can result in excess inventory parts, such as printed circuit
boards. On a quarterly basis, we review our inventory on hand and firm purchase
commitments versus our sales forecast to determine the adequacy of the existing
reserve for excess and obsolete inventory.
Included in cost of goods sold for the nine months ended March 31, 2002 and 2001
are charges of $183,000 and $156,000, respectively, for excess and obsolete
inventory. Additionally, for the nine months ended March 31, 2002, we charged
$65,000 to cost of goods sold for severance costs related to a reduction in our
work force. These charges were offset by $268,000 of recoveries for previously
written-off inventory.
Operating Expenses
Included in operating expenses are charges for non-cash stock compensation. The
charges for stock compensation principally relate to amortization of deferred
stock compensation attributable to stock options granted at less than the market
price of the common stock on the date of the grant. Of the $474,000 total amount
of stock compensation expense recorded for the nine months ended March 31, 2001,
$409,000 relates to options granted in December 1999. In December 2001, these
options were re-priced at $34.50 per share, the market price of the common stock
at the date of the original grant. As a result, the remaining unamortized stock
compensation associated with these option grants was reversed in December 2001.
Selling Expenses
Selling expenses for the nine months ended March 31, 2002 decreased 40.7% to
$2.0 million, or 12.0% of net sales, compared with $3.3 million, or 10.3% of net
sales, for the nine months ended March 31, 2001. The dollar decrease in selling
expenses was primarily attributable to lower commissions paid to manufacturer's
representatives as a result of reduced sales volume and a decrease in charges
for non-cash stock compensation.
General and Administrative Expenses
General and administrative expenses for the nine months ended March 31, 2002
decreased 27.8% to $5.0 million, or 30.1% of net sales, compared with $6.9
million, or 21.2% of net sales, for the nine months ended March 31, 2001. The
dollar decrease was primarily attributable to reduced spending on independent
contractors for interim management and accounting services, the timing of audit
fees paid in connection with the audit of our financial statements for the year
ended June 30, 2001 and 2000 and a decrease in charges for non-cash stock
compensation, partially offset by an increase in salaries and wages for new
employees hired in 2002. Additionally, we recognized a $125,000 benefit from the
recovery of a disputed amount that was written off in a previous period and a
$145,000 benefit from an insurance recovery for undocumented travel advances to
a former officer, offset by $20,000 for severance costs related to a reduction
in our work force.
17
Research and Development Expenses
Research and development expenses for the nine months ended March 31, 2002
decreased 37.6% to $1.9 million, or 11.8% of net sales, compared with $3.1
million or 9.6% of net sales, for the nine months ended March 31, 2001. The
dollar decrease was primarily attributable to lower salaries and benefits from
the permanent transfer of personnel to assist in business development efforts,
fewer employees engaged in research and development efforts, a reduction in stay
bonuses and production bonuses paid to employees and a decrease in charges for
non-cash stock compensation offset by $16,000 for severance costs related to a
reduction in our work force.
Expenses Relating to Accounting Restatements and Related Legal Matters, Net of
Recoveries
Expenses relating to the accounting restatements and related legal matters, net
of recoveries for the nine months ended March 31, 2002 and 2001 were $256,000
and $2.3 million, respectively.
Included in these expenses for the nine months ended March 31, 2002, is a
benefit of $117,000 resulting from an adjustment of an estimated liability
recorded in a previous period. These expenses include the cost of external
counsel for services provided in connection with shareholder lawsuits and the
Securities and Exchange Commission investigation, the cost of certain
consultants and temporary labor hired to assist in the accounting restatements,
and reimbursements to current and former employees for their legal fees and
expenses. The accounting restatements were completed in February 2001, however
we continue to incur costs related to shareholder litigation.
In September 2001, we agreed to a settlement with the SEC. In December 2001, we
formed a Special Litigation Committee of our Board of Directors. The Special
Litigation Committee (the "Committee") retained independent counsel to advise
the Committee in its investigation of allegations of wrong doing during prior
periods by former employees, as well as current and former members of our Board
of Directors. For the nine months ended March 31, 2002, approximately $135,000
of these expenses related to fees charged by the independent counsel to our
Special Litigation Committee.
Other Income (Expense)
Interest income decreased 88.7% to $40,000 for the nine months ended March 31,
2002 compared with $354,000 for the nine months ended March 31, 2001. The
decrease was attributable to lower average cash balances available in the
quarter for investing, along with lower interest rates on invested balances.
Interest expense and other, net, decreased 81.6% to $167,000 for the nine months
ended March 31, 2002 compared with $907,000 for the nine months ended March 31,
2001. The decrease was primarily attributable to less interest expense as a
result of a reduction in the outstanding debt and a decrease in the lender's
prime rate.
Net Loss and Loss per Share
We believe that the disclosure of as adjusted net income (loss) and earnings
(loss) per share, calculated based on criteria determined by management,
provides useful information regarding our operations and excludes the impact of
stock compensation, which is a non-cash charge, expenses relating to accounting
restatements and related legal matters (which management believes are not
indicative of normal operating expenses, but will continue until the litigation
is resolved), and severance costs associated with the reduction in our
workforce, offset by the benefit from recovery of a disputed amount, the benefit
of an inventory recovery and an insurance recovery for undocumented travel
advances. However, as adjusted financial information should not be considered
18
a substitute for operating income (loss) or cash flow from operations determined
in accordance with generally accepted accounting principles.
The following table reconciles the reported net income (loss) to as adjusted net
income (loss) and earnings (loss) per share by each discrete element for the
nine months ended March 31, 2002 and 2001:
<Table>
<Caption>
Nine Months Nine Months
Ended Ended
March 31, 2002 March 31, 2001
------------- --------------
Net loss, as reported $ (2,859,000) $ (168,000)
Stock compensation 36,000 474,000
Expenses related to accounting restatements
and related legal matters, net of recoveries 256,000 2,333,000
Severance costs 101,000 --
Benefit of recoveries (538,000) --
------------ ------------
As adjusted net income (loss) $ (3,004,000) $ 2,639,000
============ ============
Loss per share - basic and diluted (0.40) (0.02)
============ ============
As adjusted earnings (loss) per share - basic and diluted $ (0.42) $ 0.37
============ ============
</Table>
Liquidity and Capital Resources
As of March 31, 2002, working capital was $4.9 million, including cash and cash
equivalents of $1.6 million. Working capital at June 30, 2001 was $7.1 million,
including cash and cash equivalents of $2.0 million. Operating activities
generated $1.7 million of cash, largely from the reduction of accounts
receivable through collections and lower sales volumes for the year to date
period. Additionally, we continued our focus on reducing inventory levels and
increasing inventory turns. The cash generated from these efforts was partially
offset by the net loss, adjusted for non-cash charges, the payment of
semi-annual bonuses to employees and reduced accounts payable due to lower costs
and expenses attributable to lower sales volumes.
Capital expenditures for the nine months ended March 31, 2002 were $854,000. We
focused capital expenditures primarily on information technology hardware and
software.
As of March 31, 2002 as compared to June 30, 2001, we reduced our notes payable
and long-term obligations by approximately $1.4 million offset by a $175,000 two
year note payable as part of our acquisition of certain assets of Asvan
Technologies, LLC. Our new credit facility from Wells Fargo Business Credit,
Inc. allows us to borrow and re-pay our obligations based upon our cash flow
needs at any time subject to maximum loan amounts as determined by a calculated
borrowing base.
At March 31, 2002, we had approximately $422,000 recorded as liabilities for
post-employment benefits and severance payments related to certain employment
and consulting agreements between us and Messrs. Kiser and Sherman. Included in
this liability is approximately $57,000 for which the Company is contingently
liable for a guarantee of indebtedness owed by Mr. Sherman to a former officer.
Additionally, the Company is contingently liable for a guarantee of indebtedness
owed by Mr. Kiser to a former officer for approximately $37,000.
19
We are involved in legal proceedings and claims, as discussed in Note 8, for
which we may be exposed to a certain amount of risk. At this time, we are unable
to reasonably estimate the possible future cost or net loss or gain, if any,
associated with these matters. Accordingly, we have not recorded any loss or
gain contingencies associated with these matters as of March 31, 2002. It is
reasonably possible that such amounts could be material to our financial
condition, results of operations or liquidity.
We believe that anticipated cash flows from operations and borrowings available
from the Credit Facility will be adequate to fund our currently planned working
capital and capital expenditure requirements at least through March 31, 2003.
Credit Facility
On June 28, 2001, we entered into a credit agreement with Wells Fargo Business
Credit, Inc (the "Credit Facility"). Concurrent with the closing of the Credit
Facility, we paid our former lender, Bank One, in full.
The Credit Facility provides for a $6.0 million secured revolving line of credit
("Revolving Loan"), a $2.5 million secured term loan ("Term Loan"), and a $1.5
million secured capital expenditures loan ("Capital Expenditures Loan").
The Credit Facility is secured by substantially all of our accounts receivable,
inventories and equipment and is subject to covenants that, among other things,
impose limitations on capital expenditures and investments, restrict certain
payments and distributions and requires us to maintain certain financial ratios.
In September 2001, the Credit Facility was amended to establish revised
financial covenants for the fiscal years ending June 30, 2001 and June 30, 2002.
The Company periodically reviews the state of the wireless industry in general
and the impact on its financial projections that are provided to Wells Fargo
Business Credit, Inc. Due to continued softness of sales demand in the wireless
industry, financial projections for the remainder of the fiscal year were
revised in November 2001. Additionally, the Company recognized that the
continuing softness in the wireless industry and the related impact on sales
could have resulted in a violation of the covenants. Accordingly on February 8,
2002, the Company entered into a second amendment to the Credit Facility. The
maximum availability on the Revolving Loan was reduced to $4.0 million, the
interest rate was increased to the lender's prime rate plus 1% and the formula
for calculating availability no longer includes inventories. The Term Loan was
modified to accelerate the amortization period of the loan from 84 months to 42
months and the interest rate was increased to the lender's prime rate plus 2.5%.
In addition, the commitment for the Capital Expenditures Loan was cancelled.
At March 31, 2002, the interest rates on the Revolving Loan and the Term Loan
were 5.75% and 7.25%, respectively. The Company had additional borrowing
availability of $1.9 million under the Revolving Loan.
We are required to pay a minimum interest charge on the Credit Facility of
$30,000 per calendar quarter.
20
Forward-Looking Statements
Some of the statements we make in this report are "forward-looking statements"
as that term is used in the Private Securities Litigation Reform Act of 1995. In
most cases, when we use words like "believe," "expect," "estimate,"
"anticipate," "project," or "plan" to describe something which has not yet
occurred, we are making a forward-looking statement. Forward-looking statements
we make are based on a number of assumptions by us about the future, usually
based on current conditions or on the broader expectations of others. These
assumptions may or may not prove to be correct and, as a result, our own
forward-looking statements may also be inaccurate. On the other hand, based on
what we know today and what we expect in the future, we believe that the
forward-looking statements we make in this report are reasonable.
Many events over the past twelve months have created broad uncertainty on the
global economy as a whole. We and our customers are still in the process of
assessing the impact on the telecommunications industry in general and more
specifically, on the wireless infrastructure market.
We cannot list here all of the risks and uncertainties that could cause our
actual future financial and operating results to differ materially from our
historical experience and our present expectations or projections but we can
identify many of them. For example, our future results could be affected by the
overall market for various types of wireless communications products, the
success of the specific products into which our products are integrated,
governmental action relating to wireless communications, licensing and
regulation, the accuracy of our internal projections as to the demand for
certain types of technological innovation, competitors' products and pricing,
the success of new product development efforts, the timely release for
production and the delivery of products under existing contracts and the
ultimate outcome of pending and threatened litigation and regulatory action. It
is also important to remember that forward-looking statements speak only as of
the date when they are made and we do not promise that we will publicly update
or revise those statements whenever conditions change or future events occur.
Accordingly, we do not recommend that any person seeking to evaluate our company
should place undue reliance on any forward-looking statement in this report.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks, including the effects of adverse changes
in interest rates. Our exposure to changes in interest rates results from
borrowings with floating interest rates. At the present time, we have no
financial instruments in place to manage the impact of changes in interest
rates. As of March 31, 2002, we had notes payable outstanding of approximately
$1.6 million under our Term Loan at an interest rate of 7.25%. No amounts were
outstanding on our Revolving Loan. Additionally, we had approximately $160,000
outstanding on a two-year promissory note at an interest rate of 10.0%.
21
VARI-L COMPANY, INC.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The following should be read in conjunction with Note 8 to the financial
statements.
PRIVATE SECURITIES CLASS ACTION
The Company continues to engage in meaningful settlement discussions with the
class representatives aimed at settling all claims against the Company. While
the Company is optimistic that it will be able to reach a settlement agreement
with the plaintiffs, there is no assurance that a settlement acceptable to the
Company can be achieved or that any settlement reached will not have a material
adverse effect on the Company. In addition, any settlement will have to be
approved by the court after giving all affected class members an opportunity to
express their views concerning the settlement proposal. Moreover, irrespective
of the outcome with respect to the Company, the individual defendants may have
claims against the Company for advancement or indemnification of their
attorneys' fees and other costs of defense, which claims may be material.
SHAREHOLDER DERIVATIVE SUIT
On April 4, 2002, the court granted the plaintiff's motion for a stay of the
shareholders derivative action against certain of the Company's former officers
and directors pending the results of the investigation by the Company's Special
Litigation Committee of the claims raised in that action.
DECLARATORY JUDGMENT ACTION BY EXCESS INSURER
A settlement conference was held in February 2002 before the U.S. Magistrate
assigned to this declaratory judgment action brought by the Company's excess
liability directors and officers liability insurance carrier. Representatives of
the excess insurer, the Company, the individual defendants in the securities
class action, and the plaintiffs in the securities class action attended the
conference. While meaningful discussions were held at that conference, no
settlement was reached and no further settlement conference has been scheduled.
COMPANY ACTION AGAINST FORMER OFFICERS
On December 20, 2001, the Company's Special Litigation Committee (the
"Committee") retained independent counsel to advise the Committee in its
investigation of allegations of wrongdoing during prior periods by former
employees, as well as current and former members of the Company's Board of
Directors. Additionally, the Special Litigation Committee suspended the
advancement of certain legal fees and expenses being paid on behalf of former
officers of the Company.
On March 19, 2002, the Company filed a lawsuit in the District Court, City and
County of Denver, against Mr. David Sherman, Mr. Joseph Kiser, individuals, and
J.C. Enterprises, a Colorado general partnership. Mr. Sherman is the former
president of the Company and Mr. Kiser is the former Chairman of the Company's
Board of Directors and Chief Scientific Officer.
22
Additionally, Mr. Kiser is the general partner of J.C. Enterprises. On April 2,
2002, the Company filed an Amended Complaint and Jury Demand. In its lawsuit,
the Company seeks to rescind certain employment and consulting agreements
between the Company and Messrs. Kiser and Sherman, and to rescind certain stock
option grants made to them, on the basis that such agreements were entered into,
and such option grants were made, based upon mistaken or misrepresented
information regarding the Company's true financial performance. The Company also
seeks to recover the compensation and bonuses paid to them as a result of such
mistaken or misrepresented information. In addition, the Company seeks to
recover excessive rent it paid pursuant to a lease agreement between the Company
and J.C. Enterprises in reliance on misrepresented information provided by Mr.
Kiser and Mr. Sherman.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On January 9, 2002, the Company issued 55,599 restricted shares of its $.01 par
value Common Stock to 30 of its employees who purchased the shares under the
Company's Employee Stock Purchase Plan (the "Purchase Plan"). The aggregate
amount paid for the shares was $75,614.64, which was 85% of the fair market
value per share on December 31, 2001, as provided in the Purchase Plan. The
offer and sale of these shares were exempt from registration under Section 4(2)
of the Securities Act of 1933. The securities were sold for investment purposes
only and not for resale or distribution. The transfer or resale of the shares
was appropriately restricted by the Company on the stock certificates.
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 10.1 Tandem Stock Option and Stock Appreciation Rights Plan as of
January 1, 2002.
Exhibit 10.2 Stock Grant Plan as of January 1, 2002.
(b) Reports on Form 8-K
A report on Form 8-K dated February 12, 2002 under Item 9 was filed with
the Commission on February 15, 2002, and a report on Form 8-K dated March
19, 2002 under Item 5 was filed with the Commission on March 22, 2002.
23
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 9, 2002 By: /s/ RICHARD P. DUTKIEWICZ
--------------------------- ------------------------------
Richard P. Dutkiewicz,
Vice President of Finance and
Chief Financial Officer
24
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
10.1 Tandem Stock Option and Stock Appreciation Rights Plan as of
January 1, 2002.
10.2 Stock Grant Plan as of January 1, 2002.
</Table>