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EXHIBIT 99.1
VA LINUX REPORTS RESULTS FOR FOURTH FISCAL QUARTER, 2001
SOURCEFORGE TO LEAD VA LINUX'S APPLICATION SOFTWARE STRATEGY
FREMONT, Calif.--(BUSINESS WIRE)--Aug. 23, 2001--VA Linux Systems, Inc. (Nasdaq:
LNUX - news) today reported results for its fiscal fourth quarter and year ended
July 28, 2001. As indicated in its June 27, 2001 press release, VA Linux has now
exited the systems hardware business in all regions except for Japan. Final
systems hardware orders and deliveries of systems, excluding Japan, have now
been completed and closed.
Fourth quarter revenue totaled $16.0 million. Net loss per share for the quarter
was ($5.58), primarily due to $267 million of non-cash charges for goodwill and
intangible assets and restructuring charges associated with the exit from the
systems hardware business. At the end of the fourth quarter, the Company had
approximately $83 million of cash and marketable securities.
The VA Linux business model has dramatically evolved. The Company is now
primarily focused on its SourceForge application software business. With the new
model, the Company expects revenue in the first quarter of fiscal 2002,
excluding August hardware shipments, to fall in the range of $3 to $4 million,
with a net loss from operations in the range of $10 to $13 million. Cash usage
is expected to exceed the net loss by approximately $6 million in this quarter,
due to payments related to previously accrued restructuring charges.
"We have made a significant transition over the past two months," said VA Linux
CEO Larry M. Augustin. "We are now focused on delivering our software expertise
through our new application software strategy, with our SourceForge product at
its core. Our reduced levels of operating expense and cash use will provide
stability as we further develop and improve SourceForge."
A conference call to review results and the new VA Linux business model 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) 450-0785 (access code 595202).
Strategic Focus on SourceForge
VA Linux now offers two editions of the SourceForge(TM) collaborative software
development (CSD) platform to its customers:
o SourceForge Enterprise Edition. Installed behind corporate firewalls,
SourceForge Enterprise Edition helps customers
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maximize efficiencies and cut costs by enabling collaborative software
development. Major customers include R&D organizations in Global 2000
companies, as well as IT organizations.
o SourceForge Portal Edition. Developer relations organizations in
leading technology companies use SourceForge Portal Edition to build
external developer communities supporting their technologies.
By using the same software used by more than 25,000 projects and over 230,000
users on OSDN's SourceForge.net -- and incorporating key features for enterprise
integration -- VA Linux is bringing a proven, scalable CSD platform to the
enterprise market.
About VA Linux Systems
VA Linux Systems is a provider of application software, featuring the
SourceForge collaborative software development platform; Linux software
development and consulting services; and OSDN, the Open Source Development
Network.
Safe Harbor
Note Regarding Forward-Looking Statements: This press release contains
forward-looking statements that involve risks and uncertainties, including
statements regarding the Company's: future financial performance and results of
operations, including anticipated revenue, cash usage and net loss from
operations; ability to improve cash flow and reduce operating losses; sales
strategy and anticipated benefits from such strategy; expectations of future
growth and market acceptance of SourceForge software; demand for the Company's
consulting services and OSDN; and anticipated benefits from cost-cutting and
other restructuring actions. Actual results may differ materially from those
expressed or implied in such forward-looking statements due to various factors,
including: unforeseen expenses that VA Linux may incur in future quarters; the
possibility that VA Linux will not identify sufficient sources of expense
reduction; VA Linux's quarterly sales cycle and fluctuation in demand for our
products and services; competition with, and pricing pressures from, more
established competitors; VA Linux's success in expanding its CSD, OSDN and Linux
software development and consulting services businesses; the risk that VA
Linux's restructuring efforts will not succeed; VA Linux's ability to
successfully attract, retain and motivate employees; the possibility of further
deterioration in the general economy and its impact on VA Linux and its current
and potential customers; the rate of growth and acceptance of a software
development model incorporating both Open Source and proprietary software; VA
Linux's reliance upon strategic relationships with other companies and its
ability to negotiate, close and implement
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specific terms relating to them; the enforceability of the Mozilla Public
License; and rapid technological and market change. Investors should consult VA
Linux's filings with the Securities and Exchange Commission, including its
Quarterly Report on Form 10-Q for the quarter ended April 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 Linux assumes no
obligation to update the forward-looking information contained in this news
release.
Note to editors: VA Linux, 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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VA LINUX SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Year Ended
July 28, July 28,
2001 2000 2001 2000
--------- --------- --------- ---------
Net revenues $ 15,981 $ 50,662 $ 134,890 $ 120,296
Cost of revenues 35,864 39,499 154,103 98,181
--------- --------- --------- ---------
Gross margin (19,883) 11,163 (19,213) 22,115
Operating expenses:
Sales and marketing 7,266 9,711 39,981 29,479
Research and development 3,570 4,173 17,959 12,363
General and administrative 3,761 3,760 22,012 8,985
Restructuring costs and
other special charges 69,916 -- 113,302 --
Amortization of deferred
stock compensation (415) 5,178 7,667 16,877
Amortization of compensation
expense related to acquisitions 593 16,967 53,601 22,623
Amortization of goodwill
and intangible assets 26,504 16,286 97,887 18,175
Impairment of goodwill
and intangibles assets 160,000 -- 160,000 --
Write-off of in-process
research and development -- 5,000 -- 9,000
--------- --------- --------- ---------
Total operating expenses 271,195 61,075 512,409 117,502
--------- --------- --------- ---------
Loss from operations (291,078) (49,912) (531,622) (95,387)
Interest and other income, net 960 2,398 6,354 5,629
--------- --------- --------- ---------
Net loss $(290,118) $ (47,514) $(525,268) $ (89,758)
========= ========= ========= =========
Dividend related to
convertible preferred stock -- -- -- (4,900)
--------- --------- --------- ---------
Net loss attributable
to common stockholders $(290,118) $ (47,514) $(525,268) $ (94,658)
========= ========= ========= =========
Basic and diluted
net loss per share $ (5.58) $ (1.15) $ (10.78) $ (3.52)
Weighted-average
shares outstanding:
Basic and diluted 52,006 41,172 48,706 26,863
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VA LINUX SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 28, 2001 July 28, 2000
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 60,347 $ 123,849
Marketable securities 22,595 52,433
Accounts receivable, net 10,107 31,842
Inventories 343 1,018
Prepaid expenses and other current
assets 3,895 2,156
--------- ---------
Total current assets 97,287 211,298
Property and equipment, net 17,703 10,316
Goodwill and intangible assets, net 56,730 362,744
Other assets 1,313 741
--------- ---------
$ 173,033 $ 585,099
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,319 $ 26,715
Accrued liabilities and other 30,188 11,285
Current portion of loans and notes
payable 756 1,568
--------- ---------
Total current liabilities 45,263 39,568
Notes payable, net of current portion 42 1,104
Other long-term liabilities 1,366 552
Stockholders' equity:
Common stock 54 52
Additional paid-in capital 768,793 763,175
Deferred stock compensation (6,108) (109,686)
Accumulated other comprehensive loss (1,490) (47)
Accumulated deficit (634,887) (109,619)
--------- ---------
Total stockholders' equity 126,362 543,875
--------- ---------
$ 173,033 $ 585,099
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