Filed by Vari-L Company, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to rule 14a-12(b)
Subject Company: Vari-L Company, Inc.
Commission File No. 0-23866
[VARI-L LOGO]
FOR IMMEDIATE RELEASE: NEWS
January 29, 2003 OTC-VARL
VARI-L COMPANY REPORTS PRELIMINARY SECOND QUARTER RESULTS
AND THEIR IMPACT ON LOAN AGREEMENT AND
PENDING TRANSACTION WITH SIRENZA MICRODEVICES
DENVER, Colorado -- Vari-L Company, Inc. (OTC-VARL), a leading provider of
advanced components for the wireless telecommunications industry, today
announced preliminary unaudited sales and results for its second quarter and
six-month period ended December 31, 2002. The Company said it expects to report
a net loss of $2,971,000 on sales of $4,309,000 for the second quarter and a net
loss of $5,292,000 on sales of $8,291,000 for the six-month period. Included in
the net losses for the three- and six-month periods are charges related to a
proposed transaction with Sirenza Microdevices of $1,048,000 and $1,096,000,
respectively. The loss exceeds the loss allowed by approximately $71,000 and
causes an event of default under the loan agreement with Sirenza, which has
agreed to purchase substantially all of the assets of Vari-L.
"We are pleased with the progress we have made toward consummating our asset
purchase agreement with Vari-L and we are forging ahead with the process for
regulatory and shareholder approvals of the transaction," said Jerry Quinnell,
executive vice president of business development of Sirenza Microdevices. "While
Vari-L is out of compliance with one loan covenant, and Sirenza has reserved its
rights as a result of the noncompliance, Sirenza has not taken any action to
accelerate the loan at this point and we do not currently expect this
noncompliance to have an impact on our plans to successfully close the
transaction in a timely manner."
Chuck Bland, president and CEO of Vari-L, said the management teams of Vari-L
and Sirenza are continuing to work toward closing of the definitive asset
purchase agreement that was announced December 2, 2002.
The net operating loss covenant of the loan agreement requires that Vari-L's
cumulative operating loss not exceed a specified amount in any rolling
three-month period. The net operating loss covenant is defined as net operating
loss excluding costs such as restructuring, severance benefits, extraordinary
non-cash charges and legal and accounting fees incurred in connection with the
proposed transaction with Sirenza. The maximum permitted operating loss for the
three-month period ended December 31, 2002 was $1,585,000. Vari-L's actual
operating loss was $1,656,000. Under the terms of the loan agreement, the
default interest rate of 30% went into effect on January 1, 2003. In addition,
Sirenza has the right to declare all amounts due on the loan immediately due and
payable. At this time Sirenza
has not taken any action to accelerate the loan, but has reserved the right to
do so. Furthermore, Vari-L contractually can draw additional funds under the
loan agreement as required to fund operations. As of December 31, 2002, Vari-L
has approximately $1,900,000 of remaining availability under the loan agreement.
If Sirenza were to exercise its right to declare all amounts due under the loan,
Vari-L would likely be required to file for bankruptcy protection and would be
unable to consummate the proposed asset sale to Sirenza. Filing for bankruptcy
protection could have a material adverse effect on the Company's relationships
with its customers, suppliers and employees.
About Vari-L
Headquartered in Denver, Vari-L designs, manufactures and markets wireless
communications components that generate or process radio frequency (RF) and
microwave frequency signals. Vari-L's products are used in commercial
infrastructure equipment (including GSM/cellular/PCS base stations and
repeaters, fixed terminal point to point/multi-point,) consumer subscriber
products (advanced cellular/PCS/satellite handsets), and military/aerospace
platforms (satellite communications/telemetry, missile guidance, electronic
warfare, electronic countermeasures, battlefield communications). Vari-L serves
a diverse customer base of the world's leading technology companies, including
Agilent Technologies, Ericsson, Harris, Hughes Network Systems, Lockheed Martin,
Lucent Technologies, Microwave Data Systems, Marconi, Motorola, Netro, Nokia,
Raytheon, Textron, Siemens, and Solectron.
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FORWARD LOOKING STATEMENTS
Some of the statements in this news release are "forward looking statements" as
that term is defined in the Private Securities Litigation Reform Act of 1995.
These forward-looking statements 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. In most cases, when we use words like "believe," "expect,"
"estimate," "anticipate," "project," "plan," or "predict" to describe something
which has not yet occurred, we are making a forward-looking statement.
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, the ultimate
outcome of pending and threatened litigation and regulatory action as well as
those factors discussed in our Form 10-K for the year ended June 30, 2002. Our
future results could also be affected by risks and uncertainties related to the
proposed transaction with Sirenza, including whether such transaction can be
completed and the timing of the closing of such transaction, the amount of
additional loans that we incur under our bridge loan facility with Sirenza and
whether the $5.3 million credit facility will be adequate to fund the Company's
operations, whether Sirenza will exercise its rights under the loan agreement in
the event of default such as the right to accelerate the obligation to repay the
loans outstanding, whether the costs of completing the transaction exceed
management's estimates, and the reaction of our customers, vendors and
distributors to proposed transaction. 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.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
On December 20, 2002, Sirenza filed with the SEC a registration statement on
Form S-4 containing a preliminary proxy statement/prospectus regarding the
proposed acquisition of substantially all of the assets and assumption of
specified liabilities of Vari-L. Vari-L intends to mail the definitive proxy
statement/prospectus to its stockholders in connection with the transaction when
available. Investors and security holders of Vari-L are urged to read the
preliminary proxy statement/prospectus filed on December 20, 2002, as
subsequently amended on January 29, 2003, the definitive proxy
statement/prospectus when it becomes available, and any other relevant materials
filed by Sirenza or Vari-L with the SEC because they contain, or will contain,
important information about Sirenza, Vari-L and the transaction. Investors and
security holders may obtain free copies of the preliminary proxy
statement/prospectus filed with the SEC on December 20, 2002, the amendment to
the proxy statement/prospectus filed with the SEC on January 29, 2003, the
definitive proxy statement prospectus when it becomes available, and any other
relevant materials filed by Sirenza or Vari-L with the SEC at the SEC's website
at www.sec.gov. Free copies of these documents may also be obtained from Sirenza
or Vari-L. Sirenza and Vari-L and their respective executive officers and
directors may be deemed to be participants in the solicitation of proxies from
the stockholders of Vari-L in favor of the transaction. Information regarding
Sirenza's and Vari-L's executive officers and directors and a description of
employment agreements and other interests of Sirenza's and Vari-L's executive
officers and directors in the matters to be voted upon by the Vari-L
stockholders are available in the registration statement on Form S-4 and the
proxy statement/prospectus.
CONTACTS:
Vari-L Company, Inc. Pfeiffer High Public Relations, Inc.
Chuck Bland, President and CEO Jay Pfeiffer
Rick Dutkiewicz, CFO 303/393-7044
303/371-1560 jay@pfeifferhigh.com
www.vari-l.com