VA Linux Systems Reports Results for Third Fiscal Quarter, 2001.Business Editors FREMONT Fremont (frē`mŏnt). 1 City (1990 pop. 173,339), Alameda co., W Calif., on San Francisco Bay; inc. 1956. Long an agricultural center, with champagne vineyards founded (1870) by Leland Stanford, it still ships fruits and vegetables. , Calif.--(BUSINESS WIRE)--May 22, 2001 VA Linux Linux Nonproprietary operating system (OS) for digital computers. In 1991 Linus Torvalds of Finland began asking for volunteer programmers over the Internet to collaborate on the development of a UNIX-like OS for personal computers; the “1. Systems, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : LNUX), the expert provider of Linux and Open Source solutions, today reported revenue of $20.3 million for its third fiscal quarter, 2001, ended April 28, compared to revenue of $34.6 million in the same quarter of fiscal 2000. Net loss for the quarter, on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis, excluding non-cash and non-recurring charges, was ($0.38) per share. In the same quarter last year the Company reported a pro forma loss per share of ($0.13). Revenue and net loss per share results were slightly better than indicated in the Company's press release dated April 26. VA Linux Systems also reported a non-recurring restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $46.8 million in the quarter. $33.8 million related to the acceleration of deferred stock compensation amortization, $4.9 million of the charge represented cash expenditures and the balance was comprised of other non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. . VA Linux Systems had approximately $100 million of cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has at the end of the quarter. "The difficult current market environment has significantly impacted our financial results," said VA Linux Systems CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Larry Lar´ry n. 1. Same as Lorry, or Lorrie. M. Augustin. "The market is very challenging and the competitive environment is very aggressive. Our focus is on ensuring that we come out of this slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. strong and well positioned to resume growth. We are balancing cost reductions and management structure improvements with the introduction of exciting new products and services. We have a strong cash position and are confident that we will successfully navigate (1) "Surfing the Web." To move from page to page on the Web. (2) To move through the menu structure in a software application. the current business conditions." Notable Quarterly Highlights: -- Servers. VA Linux introduced its next generation of high-performance 2U servers in the VA Linux 2200 series in April. The three new servers offer advanced remote management capabilities using VACM(TM), VA's Open Source cluster management software, and augment VA's industry-leading line of ultradense 1U and 2U rack-optimized Linux servers. Also, on May 1, VA Linux announced availability of the ultradense VA Linux 1221 server -- a full-featured, high-performance 1U Linux server, also offering remote management capabilities with VACM. -- Clusters. In March VA Linux introduced the VA Linux 100 -- a powerful remote management solution for 1U server farms. Leveraging VACM, the VA Linux 100 turns racks of VA Linux 1U servers into unified server arrays and enables systems administrators to manage them securely from anywhere in the world. -- Storage. In late April, VA Linux announced its 9450 NAS, a robust, scalable Network Attached Storage appliance. The 9450 NAS delivers a convenient cost-effective solution for online data archiving, application server storage, and shared data storage across heterogeneous corporate networks. -- Professional Services. In February, VA Linux's SourceForge Onsite won the Show Favorite Award for Best Productivity Application at the LinuxWorld Conference and Expo held in New York City. SourceForge Onsite is a ground-breaking subscription service, installed behind customers' corporate firewalls. It is built on the Web-based collaborative development system powering SourceForge.net, the world's largest Open Source development center. -- Open Source Development Network (OSDN). OSDN and BRIE, the Berkeley Roundtable on the International Economy, held a successful symposium "Rethinking Business in Light of Open Source" in April in San Francisco. Panelists and attendees examined and debated the Open Source movement and how it is challenging current notions of competition, collaboration and intellectual property in businesses across the globe. OSDN, a subsidiary of VA Linux, is the leading Linux and Open Source destination on the Internet. -- Management. In February, Ali Jenab was named President and Chief Operating Officer of VA Linux. Mr. Jenab now has day-to-day operational responsibility for VA Linux's business. Also in February, Greg Orzech was promoted to Senior Vice President of worldwide sales. Mr. Orzech reports directly to Mr. Jenab. In March, VA Linux announced the expansion of the VA Linux NAS team with the addition of Andrew Tridgell and Jeremy Allison, the leaders of the Samba team, as well as other key Open Source developers. Samba is a popular, highly acclaimed Windows(R)-compatible file and print server for UNIX(R)used in corporate networks worldwide. About VA Linux Systems VA Linux Systems is the world's Linux leader. The expert provider of Linux and Open Source solutions for the Web, VA Linux offers a single point of contact for Linux servers and network-attached storage See NAS. , as well as professional consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" and support. VA Linux Systems' mission is to make its customers successful through the use of Linux and Open Source software. As part of its commitment to expanding the Open Source community, VA Linux Systems operates the Open Source Development Network (OSDN OSDN Open Source Development Network OSDN Open Source Developer Network (TM)). A network of the leading Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the sites for Open Source development, distribution and discussion, OSDN includes SourceForge.net SourceForge.net is a centralized location for software developers to control and manage open source software development, and acts as a source code repository. SourceForge.net is operated by Sourceforge, Inc. , Freshmeat Freshmeat is a website that allows computer users to keep track of the latest software releases and updates as well as write/read reviews and articles, send or receive comments to or from the author, and many other features. .net, Slashdot This section needs additional to facilitate its . Please help [ improve this article] by adding reliable references Unverifiable material may be . This article has been tagged since July 2007. .org See .org. (networking) org - The top-level domain for organisations or individuals that don't fit any other top-level domain (national, com, edu, or gov). Though many have .org domains, it was never intended to be limited to non-profit organisations. RFC 1591. , ThinkGeek ThinkGeek is an electronic commerce company based in Fairfax, VA and a subsidiary of SourceForge, Inc.. It sells items that mostly cater to PC enthusiasts and other 'geeky' social groups. and Linux.com Linux.com is the name of a site owned by SourceForge, Inc. (formerly VA Software) and dedicated to providing news and services to the free and open source software community. See also Open Source Technology Group External links
Fremont (IPA: /ˈfriːmɒnt/) is a city in California that was incorporated on January 23, 1956, from the merger of five smaller communities: with offices across North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , Japan and Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. , VA Linux is
located on the Web at www.valinux.com.In 2000, D.H. Brown Associates rated VA Linux Systems as No. 1 in overall Linux strategy among major systems vendors. Note Regarding Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : This press release contains forward-looking statements that involve risks and uncertainties, including: statements regarding VA Linux's future financial performance and results of operations; the Company's ongoing restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). ; the Company's sales strategy and anticipated benefits from such strategy; future growth of SourceForge.net and expected benefits of SourceForge This article is about the revision control system. For the website, see SourceForge.net. For the company, see SourceForge, Inc.. SourceForge is a collaborative revision control and software development management system. OnSite; successful adoption of Open Source technologies by large corporations; VA Linux's ability to benefit from large corporation's adoption of Open Source technologies; demand for the Company's consulting services and Open Source Development Network; 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: VA Linux's quarterly sales cycle and fluctuation Fluctuation A price or interest rate change. in demand for our products and services, with increased fluctuation due to VA Linux's concentration of customers in the Internet infrastructure industry; competition with, and pricing pressures from, larger, more established companies and smaller, general purpose manufacturers; VA Linux's reliance on sales of server products and its success in expanding its services business; the effectiveness of VA Linux's ongoing restructuring; VA Linux's ability to successfully attract and retain enterprise customers; market acceptance of the SourceForge collaborative development system; the possibility of further deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the general economy; manufacturing and sourcing risks; the rate of growth and acceptance of Linux and the Open Source software development model; VA Linux's ability to continue to introduce new products and services, and to expand its business and operations; VA Linux's dependence upon an Open Source business model, independent third-party Linux developers, and its single source contract manufacturer and suppliers; VA Linux's reliance upon strategic relationships with other companies and its ability to negotiate and implement specific terms relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc them; the scarcity Scarcity The basic economic problem which arises from people having unlimited wants while there are and always will be limited resources. Because of scarcity, various economic decisions must be made to allocate resources efficiently. of Linux-based applications; the enforceability of the GNU General Public License A software license from the Free Software Foundation (FSF) that ensures every user receives the essential freedoms that define "free" software, which is free of restrictions (see free software). ; 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 Form 10-Q See 10-Q. for the quarter ended January January: see month. 27, 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. Note to Editors: VA Linux Systems, VACM VACM View-based Access Control Model (SNMP) VACM Vector Averaging Current Meter VACM Virus Alerts for the Common Man VACM Vacuum Assisted Compression Molding , OSDN and SourceForge are trademarks of VA Linux Systems, Inc. Linux is a registered trademark of Linus Torvalds Linus Benedict Torvalds (born December 28 1969 in Helsinki, Finland) is a Finnish software engineer best known for initiating the development of the Linux kernel. . All other trademarks are property of their respective owners.
VA LINUX SYSTEMS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Excluding pro forma adjustments
(In thousands, except per share data)
Three Months Ended Nine Months Ended
------------------ -----------------
April 28, April 28, April 28, April 28,
2001 2000 2001 2000
--------- --------- --------- ---------
(unaudited) (unaudited)
Net revenues $ 20,334 $ 34,595 $ 118,909 $ 69,634
Cost of revenues
(2)(6) 21,721 28,439 100,831 58,682
--------- --------- --------- ---------
Gross margin (1,387) 6,156 18,078 10,952
Operating expenses:
Sales and
marketing (3) 9,690 7,593 32,715 18,772
Research and
development 4,817 2,985 14,389 8,191
General and
administrative
(4) 4,787 2,071 15,751 5,224
--------- --------- --------- ---------
Total
operating
expenses
(1)(6) 19,294 12,649 62,855 32,187
--------- --------- --------- ---------
Loss from
operations (20,681) (6,493) (44,777) (21,235)
Interest and other
income, net 1,701 1,996 5,394 3,233
--------- --------- --------- ---------
Net loss $ (18,980) $ (4,497) $ (39,383) $ (18,002)
========= ========= ========= =========
Pro forma basic
and diluted net
loss per share $ (0.38) $ (0.13) $ (0.83) $ (0.57)
Pro forma basic
and diluted
weighted-average
shares
outstanding (5) 49,629 35,313 47,686 31,367
(1) Excludes amortization of goodwill and intangible assets,
amortization of compensation expense related to acquisitions,
amortization of deferred stock compensation, restructuring costs
and other special charges, the write-off of in-process research
and development, and the dividend related to convertible preferred
stock.
(2) Excludes a one-time inventory provision of $14 million in the nine
months ended April 28, 2001 to establish a reserve for excess
material.
(3) Excludes $997,000 of non-cash expense for stock grants to
consultants in the nine months ended April 28, 2000.
(4) Excludes a one-time provision for bad debt of $2.5 million in the
nine months ended April 28, 2001.
(5) Pro forma basic and diluted weighted-average shares for the nine
months ended April 28, 2000 includes the conversion of convertible
preferred stock using the if-converted method into an equivalent
number of common shares as if the shares had been converted on the
dates of issuance.
(6) Excludes a total of $46.8 million of restructuring costs and other
special charges, of which $3.4 million was in cost of revenues and
$43.4 million was in operating expenses. $41.9 million out of the
$46.8 million was for non-cash charges.
VA LINUX SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Nine Months Ended
------------------ -----------------
April 28, April 28, April 28, April 28,
2001 2000 2001 2000
--------- --------- --------- ---------
(unaudited) (unaudited)
Net revenues $ 20,334 $ 34,595 $ 118,909 $ 69,634
Cost of revenues 25,129 28,439 118,239 58,682
--------- --------- --------- ---------
Gross margin (4,795) 6,156 670 10,952
Operating expenses:
Sales and
marketing 9,690 7,593 32,715 19,769
Research and
development 4,817 2,985 14,389 8,191
General and
administrative 4,787 2,071 18,251 5,224
Restructuring
costs and other
special charges 43,386 -- 43,386 --
Amortization of
deferred stock
compensation 2,694 4,586 8,082 11,699
Amortization of
compensation
expense related
to acquisitions 17,217 5,656 53,008 5,656
Amortization of
goodwill and
intangible assets 23,970 1,889 71,383 1,889
Write-off of
in-process
research
and development -- 4,000 -- 4,000
--------- --------- --------- ---------
Total operating
expenses 106,561 28,780 241,214 56,428
--------- --------- --------- ---------
Loss from operations (111,356) (22,624) (240,544) (45,476)
Interest and other
income, net 1,701 1,996 5,394 3,233
--------- --------- --------- ---------
Net loss $(109,655) $ (20,628) $(235,150) $ (42,243)
========= ========= ========= =========
Dividend related to
convertible
preferred stock -- -- -- (4,900)
--------- --------- --------- ---------
Net loss
attributable to
common
stockholders $(109,655) $ (20,628) $(235,150) $ (47,143)
========= ========= ========= =========
Basic and diluted
net loss per share $ (2.21) $ (0.58) $ (4.93) $ (2.14)
Weighted-average
shares
outstanding:
Basic and diluted 49,629 35,313 47,686 22,029
VA LINUX SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
April 28, 2001 July 28, 2000
-------------- -------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 67,002 $123,849
Marketable securities 32,099 52,433
Accounts receivable, net 14,847 31,842
Inventories 8,268 1,018
Prepaid expenses and
other current assets 8,931 2,156
-------- --------
Total current assets 131,147 211,298
Property and equipment, net 20,116 10,316
Goodwill and intangible assets, net 296,554 362,744
Other assets 1,355 741
-------- --------
$449,172 $585,099
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 16,530 $ 26,715
Accrued liabilities and other 15,186 11,285
Current portion of loans
and notes payable 863 1,568
--------- ---------
Total current liabilities 32,579 39,568
Notes payable, net of
current portion 294 1,104
Other long-term liabilities 1,406 552
Stockholders' equity:
Common stock 54 52
Additional paid-in capital 772,862 763,175
Deferred stock compensation (11,969) (109,686)
Accumulated other
comprehensive loss (1,285) (47)
Accumulated deficit (344,769) (109,619)
--------- ---------
Total stockholders' equity 414,893 543,875
--------- ---------
$449,172 $585,099
========= =========
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