IPOs IN REGISTRATION – VA Linux Systems Inc. –

SUNNYVALE, Calif. – VA Linux Systems Inc., a Linux-based network equipment manufacturer, went public December 9, offering 4.4 million shares at $30 apiece. The company’s stock priced at the top of its $28 to $30 filing range.

Underwritten by Credit Suisse First Boston, Deutsche Banc Alex. Brown AG, Hambrecht & Quist Group and Lehman Brothers Holdings Inc., the initial public offering left 39.7 million shares outstanding.

There were no selling shareholders. Sequoia Capital and Intel Corp. were venture backers.

The company builds customized computers systems, including servers and Internet-related applications, and designs system-specific versions of the Linux operating system. In addition, VA Linux Systems provides a full range of technical and professional services for its products. Customers such as Cisco Systems Inc. and GTE Corp. can communicate with the company through its Web site.

The $121.4 million in proceeds expected from the IPO will be used for general corporate purposes, including working capital.

VA Linux Systems has earned $84,000 in 1998 but lost $14.5 million in 1999.

Douglas Leone, a general partner at Sequoia, joined the company’s board of directors in October 1998.

VA Linux Systems – Selected Financial

(in thousands, except per share data)

January 9, 1995 (inception) Year Ended July 31 Quarter Ended

to July 31, 1995* 1996* 1997 1998 1999 Oct. 31, 1998* Oct. 29, 1999*

Total revenue 1,135 2,257 2,743 5,556 17,710 2,435 14,848

Net income (loss) 111 -170 -474 84 -14,512 -97 -10,055

Net income (loss) per share 0.01 -0.01 -0.05 0.02 -2.62 -0.02 -2