VA Linux Reports Results for Fourth Fiscal Quarter, 2001
FREMONT, Calif. August 23, 2001 VA Linux Systems, Inc. (Nasdaq: LNUX) 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).
VA Linux now offers two editions of the SourceForgeTM collaborative software development (CSD) platform to its customers.
Strategic Focus on SourceForge
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.
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 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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