RED HAT, INC.
             CONSOLIDATED STATEMENTS OF OPERATIONS
                          (Unaudited)
           (In thousands - except per share amounts)




                      Three Months Ended        Twelve Months Ended
                   ------------------------- -------------------------
                   February 28, February 28, February 28, February 28,
                       2006         2005         2006         2005
                    ------------ -----------  ------------ -----------
Revenue:

  Subscriptions    $    66,665  $    46,410  $   230,444  $   151,125
  Training and
   services             12,056       11,042       47,886       45,341
                    -----------  -----------  -----------  -----------


    Total
     subscription,
     training and
     services
     revenue            78,721       57,452      278,330      196,466
                    -----------  -----------  -----------  -----------

Cost of revenue:

  Subscriptions          5,214        5,024       21,003       13,488
  Training and
   services              7,214        6,184       27,504       24,999
                    -----------  -----------  -----------  -----------


    Total cost of
     subscription,
     training and
     services
     revenue            12,428       11,208       48,507       38,487
                    -----------  -----------  -----------  -----------


 Total gross profit     66,293       46,244      229,823      157,979

Operating expense:
 Sales and
  marketing             23,427       18,695       84,723       62,939
 Research and
  development           11,037        8,791       40,883       32,468
 General and
  administrative        12,068       11,292       46,135       35,626
                    -----------  -----------  -----------  -----------

  Total operating
   expense              46,532       38,778      171,741      131,033
                    -----------  -----------  -----------  -----------

Income from
 operations             19,761        7,466       58,082       26,946
Other income
 (expense), net          7,452        5,717       30,053       24,431
Interest expense        (1,507)      (1,634)      (6,119)      (6,436)
                    -----------  -----------  -----------  -----------

Income before
 provision for
 income taxes           25,706       11,549       82,016       44,941
Provision (benefit)
 for income taxes       (1,611)        (291)       2,331         (485)
                    -----------  -----------  -----------  -----------

Net income         $    27,317  $    11,840  $    79,685  $    45,426
                    ===========  ===========  ===========  ===========

Net income-diluted $    28,740  $    13,387  $    85,455  $    51,562
                    ===========  ===========  ===========  ===========

Net income per
 share:
 Basic             $      0.15  $      0.07  $      0.45  $      0.25
 Diluted           $      0.13  $      0.06  $      0.41  $      0.24

Weighted average
 shares
 outstanding:
 Basic                 180,898      178,233      178,112      181,636
 Diluted               213,482      210,956      207,815      215,882

      Note: certain prior year amounts have been reclassified to
       conform with current year presentation.



                           RED HAT, INC.
                    CONSOLIDATED BALANCE SHEETS
                          (In thousands)



                                ASSETS
                                            February, 28  February 28,
                                                 2006         2005
                                              -----------  -----------
                                              (unaudited)
Current assets:
 Cash and cash equivalents                   $   267,547  $   140,169
 Investments in debt securities                  537,324      181,028
 Accounts receivable, net                         58,294       48,402
 Earnings in excess of billings                    1,498        3,557
 Prepaid expenses and other current assets        16,576       12,097
                                              -----------  -----------

   Total current assets                          881,239      385,253

 Property and equipment, net                      35,822       32,726
 Goodwill                                         75,942       73,591
 Identifiable intangibles, net                    13,467       16,740
 Investments in debt securities                  272,669      607,566
 Other assets, net                                35,102       18,160
                                              -----------  -----------

   Total assets                              $ 1,314,241  $ 1,134,036
                                              ===========  ===========

                 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                            $     5,627  $     8,426
 Accrued expenses                                 31,960       21,065
 Deferred revenue                                162,934      109,426
 Other current obligations                           401          282
                                              -----------  -----------

  Total current liabilities                      200,922      139,199

 Deferred lease credits                            4,994        5,179
 Long term deferred revenue                       60,554       27,890
 Other long term obligations                         213           97
 Convertible debentures                          570,000      600,000
Stockholders' equity:
 Minority interest                                   771          557
 Common stock                                         19           19
 Additional paid-in capital                      763,906      714,604
 Deferred compensation                            (2,418)      (4,792)
 Accumulated deficit                            (152,113)    (231,798)
 Treasury stock, at cost                        (124,125)    (107,409)
 Accumulated other comprehensive loss             (8,482)      (9,510)
                                              -----------  -----------

   Total stockholders' equity                    477,558      361,671
                                              -----------  -----------

   Total liabilities and stockholders'
    equity                                   $ 1,314,241  $ 1,134,036
                                              ===========  ===========



                         RED HAT, INC.
             CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (Unaudited)
                        (In thousands)



                       Three Months Ended       Twelve Months Ended
                    ------------------------ -------------------------
                   February 28, February 28, February 28, February 28,
                       2006         2005         2006         2005
                     ----------- -----------  ------------ -----------

Cash flows from
 operating
 activities:
Net income          $   27,317  $    11,840  $    79,685  $    45,426
Adjustments to
 reconcile net
 income to net cash
 provided by
 operating
 activities:
  Depreciation and
   amortization          3,990        3,639       15,434       10,911
  Deferred income
   taxes                (1,584)      (1,673)      (2,090)      (3,602)
  Stock-based
   compensation
   expense                 508        1,212        4,105        4,719
  Gain from
   repurchase of
   convertible
   debentures                -            -       (3,140)           -
  Provision for
   doubtful accounts       674          411        1,043        1,969
  Amortization of
   debt issue costs        752          785        3,056        3,003
  Loss on disposal
   of property and
   equipment               224            -        1,349            -
  Other                    899            -        1,660          319
Changes in operating
 assets and
 liabilities:
  Accounts
   receivable and
   earnings in
   excess of
   billings             (4,516)      (4,766)     (10,790)      (9,284)
  Prepaid expenses
   and other current
   assets                 (565)          58       (3,085)        (238)
  Identifiable
   intangibles and
   other assets             22          (98)         371       (1,392)
  Accounts payable         442        1,671       (2,588)         962
  Accrued expenses      (1,073)       2,180       10,448        8,389
  Deferred revenue      23,049       15,330       91,278       61,214
  Deferred lease
   credits                 (58)         (28)        (184)        (179)
                     ----------  -----------  -----------  -----------

  Net cash provided
   by operating
   activities           50,081       30,561      186,552      122,217
                     ----------  -----------  -----------  -----------

Cash flows from
 investing
 activities:
 Purchase of
  investment
  securities          (160,266)     (37,554)    (523,344)    (854,481)
 Proceeds from sales
  and maturities of
  investment
  securities           169,932       54,835      502,905      529,819
 Acquisitions of
  businesses, net of
  cash acquired         (1,500)     (20,750)      (2,803)     (21,053)
 Purchase of other
  investments                -            -      (22,203)           -
 Purchase of
  property and
  equipment             (4,369)      (4,374)     (16,757)     (14,921)
 Other financing             -            -          (64)           -
                     ----------  -----------  -----------  -----------

  Net cash (used in)
   provided by
   investing
   activities            3,797       (7,843)     (62,266)    (360,636)
                     ----------  -----------  -----------  -----------

Cash flows from
 financing
 activities:
 Repurchase of
  convertible
  debentures                 -            -      (26,301)           -
 Structured stock
  repurchases                -            -        1,031            -
 Net proceeds from
  issuance of common
  stock under
  Employee Stock
  Purchase Plan          1,064          724        3,394        2,118
 Proceeds from
  exercise of common
  stock options         29,996        2,675       44,098       15,679
 Purchase of
  treasury stock           (27)     (54,781)     (16,716)     (99,973)
 Other financing          (318)        (243)         237       (1,195)
                     ----------  -----------  -----------  -----------

  Net cash provided
   by (used in)
   financing
   activities           30,715      (51,625)       5,743      (83,371)
                     ----------  -----------  -----------  -----------

Effect of foreign
 currency exchange
 rates on cash and
 cash equivalents        1,008         (643)      (2,652)         655
Net increase
 (decrease) in cash
 and cash
 equivalents            85,601      (29,550)     127,377     (321,135)
Cash and cash
 equivalents at
 beginning of the
 period                181,946      169,719      140,169      461,304
                     ----------  -----------  -----------  -----------

Cash and cash
 equivalents at end
 of period          $  267,547  $   140,169  $   267,546  $   140,169
                     ==========  ===========  ===========  ===========

      Note: certain prior year amounts have been reclassified to
       conform with current year presentation.