Red Hat, Inc. (Nasdaq:RHAT), the premier Linux and open source solutions provider, today reported results for the fourth quarter and fiscal year 2002. Red Hat's fiscal fourth quarter was characterized by continued strong performance in the Enterprise marketplace, as evidenced by the addition of ten enterprise customers who are making large scale deployments of Red Hat's Open Source technologies. These customers include AOL, UBS, Morgan Stanley, Amazon, Cisco, Nortel, Dell, GE Medical, Dreamworks, Oracle, Siemens, and BP.
Red Hat, Inc. reported an adjusted net income from continuing operations of $1.0 million, or $0.01 per share, excluding amortization of goodwill, stock based compensation, and restructuring charges, for the fourth quarter of fiscal 2002, compared to an adjusted net income of $1.9 million, or $0.01 per share, for the third quarter of fiscal 2002. This represents the fourth consecutive quarter in which the company has delivered profitable or breakeven results.
The company reported revenue of $18.6 million for the fourth quarter ended February 28, 2002, as compared to $20.0 million in the third quarter of fiscal 2002. The company showed continued Enterprise performance with Enterprise revenues increasing to $16.1 million in the fourth quarter from $15.7 million in the third quarter. Gross margin improved to 66% during the fourth quarter, compared to 64% in the previous quarter. On a GAAP basis, the company reported a net loss from continuing operations of $28.9 million, or $0.16 per share, compared with a net loss from continuing operations of $12.0 million, or $0.07 per share in the third quarter of fiscal 2002.
The primary differences between the company's pro forma net income from continuing operations and GAAP net income from continuing operations, in the fourth quarter of fiscal 2002, are non-cash charges related to amortization of stock based compensation, goodwill, and other intangible assets of $9.9 million, write-off of goodwill of $15.6 million and severance cost of $2.2 million related to the company's restructuring to focus on delivering Open Source solutions to the Global 2000.
For the fiscal year ended on February 28, 2002, the company reported revenues of $78.9 million, a decrease of 2% over the same period in year 2001. In terms of earnings, for the fiscal year ended on February 28, 2002, the company reported an adjusted net income from continuing operations of $3.3 million, or $0.02 per share, compared to an adjusted net loss of $6.5 million, or $0.04 per share, for the fiscal year ended in February of 2001. On a GAAP basis, the company reported a net loss of $139.9 million or $0.83 per share - for the fiscal year ended on February 28, 2002, compared to a net loss of $86.7 million or $0.53 per share for the fiscal year ended in February of 2001.
"In a challenging environment, Red Hat has consistently delivered positive adjusted earnings", stated Kevin Thompson, Executive Vice President and Chief Financial Officer. "Fiscal 2002 has been a successful year for Red Hat. It has been marked by the successful transition of the company from a retail software products company to a provider of Open Source Solutions to the Large Enterprise. This transition was accomplished while achieving and maintaining positive adjusted operating results".
In the fourth quarter the company completed the re-allocation of its resources to increase its focus on Unix to Linux migration opportunities in the Global 2000. This resulted in the company discontinuing its non-strategic Network Consulting business and restructuring its Embedded business.
About Red Hat, Inc.
Red Hat, the world's leading open source and Linux provider, is headquartered in Raleigh, NC with satellite offices spanning the globe. Red Hat is leading Linux and open source solutions into the mainstream by making high quality, low cost technology accessible. Red Hat provides operating system software along with middleware, applications and management solutions. Red Hat also offers support, training and consulting services to its customers worldwide and through top-tier partnerships. Red Hat's open source strategy offers customers a long term plan for building infrastructures that are based on and leverage open source technologies with focus on security and ease of management. Learn more: http://www.redhat.com
Forward-looking statements in this press release are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that statements in this press release that are not strictly historical statements, including, without limitation, management's plans and objectives for future operations, and management's assessment of market factors, constitute forward-looking statements which involve risks and uncertainties. These risks and uncertainties include, without limitation, reliance upon strategic relationships, management of growth, the possibility of undetected software errors, the risks of economic downturns generally, and in Red Hat's industry specifically, the risks associated with competition and competitive pricing pressures, the viability of the Internet, and other risks detailed in Red Hat's filings with the Securities and Exchange Commission, copies of which may be accessed through the SEC's Web site at http://www.sec.gov.
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Über Red Hat
Red Hat is the world’s leading provider of open source software solutions, using a community-powered approach to reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training, and consulting services. As the connective hub in a global network of enterprises, partners, and open source communities, Red Hat helps create relevant, innovative technologies that liberate resources for growth and prepare customers for the future of IT. Learn more at http://www.redhat.com.
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Certain statements contained in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: risks related to delays or reductions in information technology spending; the effects of industry consolidation; the ability of the Company to compete effectively; the integration of acquisitions and the ability to market successfully acquired technologies and products; uncertainty and adverse results in litigation and related settlements; the inability to adequately protect Company intellectual property and the potential for infringement or breach of license claims of or relating to third party intellectual property; the ability to deliver and stimulate demand for new products and technological innovations on a timely basis; risks related to data and information security vulnerabilities; ineffective management of, and control over, the Company’s growth and international operations; fluctuations in exchange rates; and changes in and a dependence on key personnel, as well as other factors contained in our most recent Quarterly Report on Form 10-Q (copies of which may be accessed through the Securities and Exchange Commission’s website at http://www.sec.gov), including those found therein under the captions "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations". In addition to these factors, actual future performance, outcomes, and results may differ materially because of more general factors including (without limitation) general industry and market conditions and growth rates, economic and political conditions, governmental and public policy changes and the impact of natural disasters such as earthquakes and floods. The forward-looking statements included in this press release represent the Company’s views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of this press release.