Press Release Index

VA Software Reports Fourth Quarter and Fiscal Year 2002 Results

Pro Forma Operating Results Represent Best Results as a Public Company

FREMONT, CA August 22, 2002 VA Software Corporation (Nasdaq: LNUX), provider of the SourceForge[tm] collaborative software development environment, today announced financial results for its fourth quarter and fiscal year 2002, ended July 27, 2002.

The fourth quarter fiscal 2002 pro forma net loss, excluding restructuring and other special charges, amortization of goodwill, intangible assets and deferred stock compensation and impairment of goodwill, intangible assets and other longterm assets, improved to $3.7 million, or $0.07 per share, as compared to its fourth quarter, fiscal 2001 pro forma net loss of $22.8 million, or $0.44 per share. Cash and investments remain strong at $54.4 million.

On a total reported basis, the fourth quarter loss was $18.8 million, or $0.35 per share, showing significant improvement compared to last year’s fourth quarter total reported loss of $290.1 million, or $5.58 per share. The fiscal year 2002 fourth quarter total reported loss included the effect of the charges for restructuring, an adjustment to previously recorded restructuring reserves and an impairment charge associated with goodwill and intangible assets. For the year ended July 27, 2002, total reported results were a net loss of $91.0 million, or $1.72 per share compared to the fiscal 2001 net loss of $525.3 million, or $10.78 per share.

Fourth quarter revenue totaled $4.6 million, compared to fourth quarter fiscal 2001 total revenue of $16.0 million. Total revenue for the year ended July 27, 2002 was $20.4 million, compared to $134.9 million for fiscal 2001.

“We met our objectives for the fourth quarter. We increased our customer base, minimized our net loss and cash usage, and shipped the SourceForge 3.1 release in May as planned,” said Ali Jenab, President and CEO. “We are very excited about our recently announced relationship with IBM. This commercial agreement opens IBM e-Business customers as sales opportunities for SourceForge Enterprise Edition. Our product offers development organizations a solution that helps them reduce the costs and risks inherent in enterprise software development while increasing quality and efficiency.”

A conference call to review results will be held at 5:00 pm (Eastern) today. The call may be accessed via webcast at or by dialing (800) 4500785 or (612) 3320923. A replay of the call will be available for 30 days by dialing (800) 4756701 or (320) 3653844; passcode 644854.

Recent Highlights

  • IBM Commercial Agreement. On August 13, 2002, VA announced a significant commercial agreement with IBM focused on joint marketing and sales of the next generation of SourceForge[tm] Enterprise Edition. SourceForge Enterprise Edition will offer full support for IBM’s DB2 database and IBM’s direct and indirect sales channels will engage with VA Software in joint sales activities. OSDN, a subsidiary of VA Software, also announced that, the world’s largest Open Source development web site, will be running exclusively on IBM’s DB2 database software by midJanuary, 2003.
  • Management Team. On July 10, 2002, VA Software announced the promotion of Ali Jenab to chief executive officer; he also retained his position as president. Mr. Jenab succeeded founder Larry M. Augustin, who remains as chairman of the VA Software board of directors. Also announced, was the appointment of David Appelbaum as senior vice president of marketing.
  • Products. SourceForge Enterprise Edition 3.1, the latest version of VA’s collaborative software development environment, was released on May 28, 2002. SourceForge 3.1 features broader integration with enterprise environments, enhanced functionality in project administration and knowledge management, and a redesigned user interface. SourceForge 3.1 offers integration with software configuration management tools including Rational® ClearCase® and Perforce and runs on the Solaris® operating environment, in addition to Linux®.
  • Customers. During the fourth quarter, VA Software added several bluechip customers to its existing installed base, including Los Alamos National Laboratory which joins Sandia National Laboratories as the latest government lab to deploy SourceForge Enterprise Edition. In addition, leading companies in the defense and aerospace industries, including Lockheed Martin and General Atomics, continued to roll out their SourceForge installations. Other new customer wins included communications companies such as Spectel, Spirent Communications and Nexterna. And, Creative Advanced Technology Center, a research and development group for Creative Labs, the leading developer of digital entertainment products for users of personal computers and the Internet, was also added to the list.
  • OSDN. OSDN continued to grow, reaching over six and a half million unique visitors monthly. According to Summer 2002 @plan data, OSDN is the No. 1 network for delivering people who look for technology news online and the No. 1 network for delivering people who buy software online, based on composition. Advertisers and sponsors of the network include Intel, IBM, Microsoft, Xerox, Oracle, Google and Rackspace.

About VA Software

VA Software is the provider of SourceForge[tm], the collaborative software development environment with more than 460,000 registered users worldwide. SourceForge Enterprise Edition helps IT and engineering organizations accelerate application development by integrating tools for developers to collaborate and for managers to gain insight into development activities across different locations, teams and participants. Information on VA Software’s SourceForge enterprise software product, services and support is available at

Note Regarding ForwardLooking Statements: This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding: the anticipated customer benefits from SourceForge Enterprise Edition 3.1. Actual results may differ materially from those expressed or implied in such forward-looking statements due to various factors, including: VA's success in expanding its SourceForge enterprise software business; VA's ability to successfully attract, retain and motivate employees; the possibility of further deterioration in the general economy; VA’s ability to achieve and sustain higher levels of revenue; VA's reliance upon strategic relationships with other companies; rapid technological and market change; future guidelines and interpretations regarding software revenue recognition; unforeseen expenses that VA may incur in future quarters; competition with, and pricing pressures from, more established competitors; 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 Quarterly Report on Form 10Q for the fiscal quarter ended April 27, 2002, for further information regarding these and the other risks of the Company's business. These documents are available at the SEC Web site: VA assumes no obligation to update the forwardlooking information contained in this news release.

Note to editors: VA Software, SourceForge and OSDN are trademarks or registered trademarks of VA Software Corporation in the United States and other countries. All other trademarks are property of their respective owners.


Investor Relations
VA Software Corporation
(510) 687-8731

Eureka Endo, Media Relations
VA Software Corporation
(510) 687-6754

(In thousands, except per share data)

  Three Months Ended Year Ended
  July 27, 2002 July 28, 2001 July 27, 2002 July 28, 2001
Net Revenues $ 4,615 $ 15,981 $ 20,385 $ 134,890
Cost of Revenues 629 35,864 9,661 154,103
Gross Margin 3,986 (19,883) 10,724 (19,213)
Operating Expenses
Sales and Marketing 2,060 7,266 12,513 39,981
Research and Development 1,930 3,570 8,122 17,959
General and Administrative 1,329 3,761 10,850 22,012
Restructuring Costs and other Special Charges 1,945 70,092 46,936 113,478
Amortization of Deferred Stock Compensation 38 178 1,671 61,268
Amortization of Goodwill and Intangible Assets 3,212 26,504 11,730 97,887
Total Operating Expenses 22,664 271,371 103,972 512,585
Loss from Operations (18,678) (291,254) (93,248) (531,798)
Interest and other income, net (94) 1,136 2,210 6,530
Net Loss $ (18,772) $ (290,118) $ (91,038) $ (525,268)
Basic and diluted net loss per share $ (0.35) $ (5.58) $ (1.72) $ (10.78)
Weighted-average shares outstanding: basic and diluted 53,478 52,006 53,064 48,741

Reconciliation of Net loss as reported to pro forma net loss

  Three Months Ended Year Ended
  July 27, 2002 July 28, 2001 July 27, 2002 July 28, 2001
Net Loss as Reported $ (18,772) $ (290,118) $ (91,038) $ (525,268)
Non recurring Charges:        
Restructuring cost of goods (2,423) 10,543 (4,639) 27,951
Restructuring Costs and other special charges 1,865 70,092 45,963 115,978
Amortization of Deferred Stock Compensation 38 178 1,671 61,268
Amortization of Goodwill and Intangible Assets 3,212 26,504 11,730 97,887
Impairment of Goodwill and Intangible Assets and other longterm assets 12,342 160,000 12,342 160,000
Net loss before non cash charges $ (3,738) $ (22,801) $ (23,971) $ (62,184)
Basic and diluted net loss per share pro forma $ (0.07) $ (0.44) $ (0.45) $ (1.28)
Weightedaverage shares outstanding Basic and diluted 53,487 52,006 53,064 48,741

(In thousands)

  July 27, 2002 July 28, 2001
Current Assets
Cash, cash equivalents, & marketable securities $ 41,956 $ 82,942
Accounts receivable, net 764 10,107
Inventories 300 343
Prepaid expenses and other current assets 877 3,895
Total current assets 43,897 97,287
Property and equipment, net 7,223 17,703
Goodwill and intangible assets, net 2,169 56,730
Longterm marketable securities 12,440
Other assets 1,239 1,313
Total assets $ 66,968 $ 173,033
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of loans and notes payable $ 42 $ 756
Accounts payable $ 2,075 $ 14,319
Accrued restructuring liabilities 3,397 3,135
Accrued liabilities and other 6,491 15,283
Total current liabilities 12,005 33,493
Notes payable, net of current portion - 42
Accrued restructuring liabilities, net of current portion 14,597 6,378
Other long-term liabilities 978 1,366
Minority interest - 5,392
Total Liabilities 27,580 46,671
Stockholders' Equity:
Common stock 54 54
Additional paid-in capital 765,418 768,793
Deferred stock compensation (245) (6,108)
Accumulated other comprehensive loss 86 (1,490)
Accumulated deficit (725,925) (634,887)
Total stockholders' equity 39,388 126,362
Total Liabilities and Stockholders' Equity $ 66,968 $ 173,033

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