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Cost Controls Lift Xircom

June 15, 1993

I want to correct a statement The Times made when you reported Xircom's results for our second quarter of fiscal 1993, ended March 31. The April 27 article "Calabasas Electronics Firm Registers Jump in Profits" indicated the 59% increase in earnings for the quarter "reflected sales growth from new products and cost cutting ."

In our news release, Dirk Gates, Xircom's president and CEO, credited the 59% gain in net income to the 32% gain in sales and good cost controls . I'm sure you would agree that there is a significant difference between having to cut costs, which usually indicates a downturn in business, and controlling the growth of expenses as the business continues to expand.

In the second quarter of fiscal 1993, we, in fact, increased our spending by $1.2 million over the prior year, but the ratio of operating expenses was 35.6% of sales versus 38.1% in the fiscal 1992 period.

Since our business success depends so heavily on the people we are able to recruit from the Los Angeles and Ventura County areas, we are sensitive to the images created by widely read and respected publications such as the L.A. Times. Very few people would look favorably on a prospective employer which is cutting costs, whereas a company growing in a controlled and profitable fashion would be much more attractive.

JERRY N. ULRICH

Ulrich is vice president, finance and administration, and chief financial officer of Xircom, Calabasas.

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