Exhibit 99.1
VA LINUX REPORTS RESULTS FOR FIRST FISCAL QUARTER, 2002
FREMONT, Calif.-(BUSINESS WIRE)-November 20, 2001-VA Linux Systems, Inc.
(Nasdaq: LNUX), the provider of the SourceForge(TM) collaborative software
development (CSD) platform, today announced results for its first fiscal quarter
of 2002, ended October 27, 2001.
First quarter revenue totaled $5.6 million. Excluding residual revenue from the
Company's exited Linux hardware and related businesses, quarterly revenue was
$3.9 million. Net loss from operations was $8.7 million, or ($0.16) per share,
excluding non-cash, restructuring and special items. At the end of the first
quarter, the Company had approximately $71 million of cash and marketable
securities. Revenue was within guidance, and net loss and cash usage were better
than forecasts provided in VA's August 23, 2001 release.
VA now focuses primarily on its SourceForge enterprise software business. The
Company expects revenue in the second quarter of fiscal 2002 to fall in the
range of $4.0 to $4.5 million, with a net loss from operations in the range of
$8.0 to $8.5 million. Quarterly cash usage is expected to approximate the
operating loss.
"We were able to exit our Linux hardware and related businesses more quickly and
with lower costs than we originally expected. Our expense levels and cash usage
are down significantly," said VA Chairman and CEO Larry M. Augustin. "We have
put a seasoned team in place around our SourceForge product and are pleased with
the favorable response SourceForge Enterprise Edition 3.0 is receiving in the
market. We see business conditions for us stabilizing, and expect to see
continued declines in our cash usage combined with modest bottom line
improvements over the remainder of this fiscal year."
A conference call to review results will be held at 2:00 pm (Pacific) today. The
call may be accessed via webcast at http://www.valinux.com or by dialing (800)
700-7860 (access code 607990).
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RECENT HIGHLIGHTS
On November 6, VA announced SourceForge Enterprise Edition 3.0--the latest
version of its CSD platform. SourceForge 3.0 introduces key features such as
enterprise search, enhanced monitoring and reporting capabilities, as well as
improved performance through database integration with Oracle(R). SourceForge
Enterprise Edition helps engineering, R&D and IT organizations accelerate
development by improving internal visibility and control through a centralized,
integrated CSD platform.
OTHER NOTABLE EVENTS
- CUSTOMERS. SourceForge was selected by Cornell University as the
CSD platform for The National Science Digital Library (NSDL), and
by HP as the underlying platform for the HP Embedded Software
Developer's Network (devnet). Additional customers announced
during the quarter included IIJ Technology in Japan.
- OSDN. On November 13, Compaq announced its sponsorship of the
SourceForge.net Clustering Foundry, a central place for the Open
Source community to share ideas and collaborate on clustering
projects. Additional OSDN sponsors and advertisers include
leading technology companies such as Intel, Sun Microsystems and
IBM.
- MANAGEMENT TEAM. On October 16, Colin Bodell was named VA's
Senior Vice President of Product Development, reporting directly
to President and Chief Operating Officer Ali Jenab. Mr. Bodell
brings more than seventeen years of experience in software
engineering and product development, and previously served as a
senior executive at WebGain, Intellicorp and Merant.
- COMPANY NAME. In its Proxy Statement, filed October 30, the Board
of Directors recommended that stockholders approve a proposal to
change the Company's name to "VA Software Corporation." The Board
believes the new name would better identify the Company and its
primary business: developing, marketing, selling and supporting
the SourceForge CSD platform. The Board also believes that the
current name is primarily identified with the Company's former
Linux hardware systems and consulting businesses.
Note Regarding Forward-Looking Statements: This press release
contains forward-looking statements that involve risks and
uncertainties, including statements regarding VA's: future
financial performance and results of operations, including
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anticipated revenue, cash usage and net loss from operations;
technological trends in and emergence of collaborative software
development; the future functionality, market acceptance and
adoption of, business potential and demand for, and efficiencies
created by SourceForge enterprise software; management's
strategy, plans and objectives for future operations; the impact
of our restructuring, reductions in force and new business model
on our operating expenses and the amount of cash utilized by
operations each quarter; our intentions and strategies regarding
customers and customer relationships; our intent to continue to
invest significant resources in software development; our intent
to develop long-term relationships and strategic alliances;
competition, competitors, the bases of competition and our
ability to compete; liquidity and capital resources; and sales
strategy and anticipated benefits from such strategy. Actual
results may differ materially from those expressed or implied in
such forward-looking statements due to various factors,
including: unforeseen expenses that VA may incur in future
quarters; the possibility that VA will not identify sufficient
sources of expense reduction; VA's quarterly sales cycle and
fluctuation in demand for VA's products and services;
competition with, and pricing pressures from, more established
competitors; VA's success in expanding its SourceForge
enterprise software business; the risk that VA's restructuring
efforts will not succeed; VA's ability to successfully attract,
retain and motivate employees; the possibility of further
deterioration in the general economy and its impact on VA and
its current and potential customers; VA's reliance upon
strategic relationships with other companies and its ability to
negotiate, close and implement specific terms relating to them;
rapid technological and market change; future guidelines and
interpretations regarding software revenue recognition; and VA's
ability to protect and defend its intellectual property rights.
Investors should consult VA's filings with the Securities and
Exchange Commission, including its Annual Report on Form 10-K
for the fiscal year ended July 28, 2001, for further information
regarding these and the other risks of the Company's business.
These documents are available at the SEC Web site: www.sec.gov.
VA assumes no obligation to update the forward-looking
information contained in this news release.
Note to editors: SourceForge and OSDN are trademarks of VA Linux
Systems, Inc. Linux is a trademark of Linus Torvalds. All other
trademarks are property of their respective owners.
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Contact:
Patrick Fossenier, Investor Relations
VA Linux Systems
510-687-6854
pfossenier@valinux.com
Eureka Endo, Media Relations
VA Linux Systems
510-687-6754
eureka@valinux.com
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VA LINUX SYSTEMS, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
THREE MONTHS ENDED
--------------------------
OCTOBER 27, OCTOBER 27,
2001 2000
--------------------------
(unaudited)
Net revenues .............................................................. $ 5,578 $ 56,062
Cost of revenues (1) ...................................................... 4,419 43,450
-------- --------
Gross margin ........................................................... 1,159 12,612
Operating expenses:
Sales and marketing .................................................... 4,293 11,547
Research and development ............................................... 2,903 4,730
General and administrative (2) ......................................... 3,698 5,554
-------- --------
Total operating expenses (3) ......................................... 10,894 21,831
-------- --------
Loss from operations ...................................................... (9,735) (9,219)
Interest and other income, net ............................................ 1,082 2,179
-------- --------
Loss from continuing operations ........................................... $ (8,653) $ (7,040)
======== ========
Pro forma basic net loss per share ........................................ $ (0.16) $ (0.15)
Pro forma basic and diluted weighted-average shares outstanding (2) ....... 52,678 45,978
- ----------
(1) Excludes a net credit of $1,976k, consisting of a credit of $2,747k due to a
change in estimate for inventory reserves and warranty requirements, and a
charge of $771k primarily for severance and other related costs from the exit of
our professional service business.
(2) Excludes a credit of $823k due to a change in estimate in the allowance for
doubtful accounts.
(3) Excludes amortization of goodwill and intangible assets, amortization of
compensation expense related to acquisitions, amortization of deferred stock
compensation, and restructuring costs and other special charges.
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VA LINUX SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
THREE MONTHS ENDED
--------------------------
OCTOBER 27, OCTOBER 27,
2001 2000
--------------------------
(unaudited)
Net revenues .......................................... $ 5,578 $ 56,062
Cost of revenues ...................................... 2,443 43,450
-------- --------
Gross margin ....................................... 3,135 12,612
Operating expenses:
Sales and marketing ................................ 4,293 11,547
Research and development ........................... 2,903 4,730
General and administrative ......................... 2,875 5,554
Restructuring costs and other special charges ...... 44,956 --
Amortization of deferred stock compensation ........ 1,984 20,883
Amortization of goodwill and intangible assets ..... 2,087 23,424
-------- --------
Total operating expenses ......................... 59,098 66,138
-------- --------
Loss from operations .................................. (55,963) (53,526)
Interest and other income, net ........................ 1,082 2,179
-------- --------
Net loss .............................................. $(54,881) $(51,347)
======== ========
Basic and diluted net loss per share .................. $ (1.04) $ (1.12)
Weighted-average shares outstanding:
Basic and diluted ..................................... 52,678 45,978
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VA LINUX SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
THREE MONTHS ENDED
--------------------------
OCTOBER 27, JULY 28,
2001 2001
--------------------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents .................................... $ 51,491 $ 60,347
Marketable securities ........................................ 19,202 22,595
Accounts receivable, net ..................................... 1,040 10,107
Inventories .................................................. 711 343
Prepaid expenses and other current assets .................... 3,086 3,895
--------- ---------
Total current assets ....................................... 75,530 97,287
Property and equipment, net ..................................... 12,343 17,703
Goodwill and intangible assets, net ............................. 24,011 56,730
Other assets .................................................... 1,521 1,313
--------- ---------
$ 113,405 $ 173,033
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................. $ 4,300 $ 14,319
Accrued restructuring liabilities ............................ 2,483 3,135
Accrued liabilities and other ................................ 12,306 15,283
Current portion of loans and notes payable ................... 727 756
--------- ---------
Total current liabilities .................................. 19,816 33,493
Notes payable, net of current portion ........................... -- 42
Accrued restructuring liabilities, net of current portion ....... 13,605 6,378
Other long-term liabilities ..................................... 1,344 1,366
Minority interest ............................................... 5,095 5,392
COMMITMENTS AND CONTINGENCIES
Stockholders' equity:
Common stock ................................................. 55 54
Additional paid-in capital ................................... 765,982 768,793
Deferred stock compensation .................................. (1,533) (6,108)
Accumulated other comprehensive loss ......................... (1,191) (1,490)
Accumulated deficit .......................................... (689,768) (634,887)
--------- ---------
Total stockholders' equity ................................. 73,545 126,362
--------- ---------
$ 113,405 $ 173,033
========= =========
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