CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands - except per share amounts)
-------------------- ------------------
Nov. 30, Nov. 30, Nov. 30, Nov. 30,
2004 2003 2004 2003
-------------------- ------------------
(Unaudited)
Subscription and services
revenue:
Subscription:
Enterprise technologies $38,113 $17,210 $102,022 $43,284
Retail 512 4,091 1,448 11,859
Embedded 597 466 1,245 1,602
----------- -------- --------- --------
----------- -------- --------- --------
Services:
Enterprise technologies 10,771 9,887 31,749 28,073
Embedded development
services 932 1,229 2,549 3,148
----------- -------- --------- --------
----------- -------- --------- --------
services revenue 50,925 32,883 139,013 87,966
----------- -------- --------- --------
services revenue:
Subscription:
Enterprise technologies and
retail 3,554 2,365 8,274 7,052
Embedded 59 69 190 288
----------- -------- --------- --------
revenue 3,613 2,434 8,464 7,340
----------- -------- --------- --------
Services:
Enterprise technologies 5,684 5,356 16,411 15,197
Embedded development
services 792 1,003 2,405 2,482
----------- -------- --------- --------
Total cost of services
revenue 6,476 6,359 18,816 17,679
----------- -------- --------- --------
Total cost of
subscription and
services revenue 10,089 8,793 27,280 25,019
----------- -------- --------- --------
Gross profit enterprise
technologies and retail 40,158 23,467 110,534 60,967
Gross profit embedded 678 623 1,199 1,980
----------- -------- --------- --------
Gross profit on enterprise
technologies, retail and
embedded revenue 40,836 24,090 111,733 62,947
Sales and marketing 15,652 10,062 43,622 28,114
Research and development 7,883 7,002 23,353 18,885
General and administrative 8,360 4,873 21,006 13,288
Stock-based compensation and
amortization of intangibles 1,350 537 4,273 2,037
----------- -------- --------- --------
----------- -------- --------- --------
Other income (expense), net 5,384 2,694 18,715 8,556
Interest expense (1,684) (49) (4,802) (233)
----------- -------- --------- --------
income taxes 11,291 4,261 33,392 8,946
Provision (benefit) for income
taxes 447 - (194) -
----------- -------- --------- --------
=========== ======== ========= ========
Basic $0.06 $0.02 $0.18 $0.05
Diluted $0.06 $0.02 $0.17 $0.05
outstanding:
Basic 182,340 173,996 182,750 172,417
Diluted 192,226 184,210 194,283 185,641
CONSOLIDATED BALANCE SHEETS
(In thousands)
2004 2004
----------- -----------
(unaudited)
Current assets:
Cash and cash equivalents $234,436 $544,889
Investments in debt securities $69,751 $63,712
Accounts receivable, net 43,616 38,346
Estimated earnings in excess of billings 3,618 4,326
Inventory 2,085 2,794
Prepaid expenses and other current assets 8,581 5,971
----------- -----------
Goodwill and identifiable intangibles, net 69,810 69,713
Investments in debt securities 674,835 332,783
Debt issue costs-convertible notes 13,022 15,103
Other assets, net 5,905 4,568
----------- -----------
=========== ===========
Accounts payable $6,445 $7,154
Accrued expenses 19,322 15,619
Deferred revenue 97,284 62,751
Current portion of capital lease obligations 459 898
----------- -----------
Long term deferred revenue 24,153 10,945
Capital lease obligations 154 538
Convertible notes 600,000 600,000
Commitments and contingencies - -
Stockholders' equity:
Noncontrolling interest in subsidiary 537 359
Preferred stock - -
Common stock 19 18
Additional paid-in capital 710,554 695,722
Deferred compensation (5,786) (9,293)
Accumulated deficit (243,638) (277,224)
Treasury stock, at cost (52,628) (7,436)
Accumulated other comprehensive income (loss) (5,489) 6,243
----------- -----------
----------- -----------
equity $1,156,613 $1,111,653
=========== ===========
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
-------------------- -------------------
Nov. 30, Nov. 30, Nov. 30, Nov. 30,
2004 2003 2004 2003
----------- -------- --------- ---------
(Unaudited)
activities:
Net income $10,844 $4,261 $33,586 $8,946
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization 2,557 1,654 7,272 4,574
Deferred income taxes (693) - (1,929)
Stock-based compensation
expense 1,109 384 3,507 1,839
Earnings in noncontrolling
interest in subsidiary 133 48 178 176
Provision for doubtful
accounts 544 292 1,558 997
Amortization of debt issue
costs 785 - 2,218 -
Other 88 44 121 67
Changes in operating assets
and liabilities:
Accounts receivable and
estimated earnings in
excess of billings (7,516) (7,305) (4,518) (12,245)
Inventory 602 (110) 590 (681)
Prepaid expenses (756) 874 (886) (223)
Intangibles and other
assets (79) (24) (1,294) (343)
Accounts payable (894) (1,065) (709) (1,851)
Accrued expenses 3,876 931 6,209 1,017
Deferred revenue 19,163 12,095 45,884 25,644
Deferred lease credits (47) (40) (131) 17
----------- -------- --------- ---------
operating activities 29,716 12,039 91,656 27,934
----------- -------- --------- ---------
activities:
Purchase of investment
securities (111,164) (37,200) (579,772) (130,697)
Proceeds from sales and
maturities of investment
securities 110,342 32,870 218,961 107,460
Cash used to acquire
businesses (303) - (303) -
Purchase of property and
equipment (2,609) (1,416) (10,547) (5,260)
----------- -------- --------- ---------
activities (3,734) (5,746) (371,661) (28,497)
----------- -------- --------- ---------
activities:
Proceeds from short term
notes payable - 15,000 - 57,957
Repayments of short term
notes payable - (15,003) - (57,989)
Offering costs - issuance of
convertible debt (67) - (137) -
Proceeds from issuance of
common stock under Employee
Stock Purchase Plan 522 592 1,394 1,014
Proceeds from exercise of
common stock options 893 10,705 13,004 15,491
Purchase of treasury stock (45,192) - (45,192) -
Payments on capital lease
obligations (278) (449) (815) (1,033)
----------- -------- --------- ---------
provided by financing
activities (44,122) 10,845 (31,746) 15,440
----------- -------- --------- ---------
exchange rates on cash and
cash equivalents 3,124 809 1,298 1,188
Net decrease in cash and cash
equivalents (15,016) 17,947 (310,453) 16,065
Cash and cash equivalents at
beginning of the period 249,452 43,368 544,889 45,250
----------- -------- --------- ---------
end of period $234,436 $61,315 $234,436 $61,315
=========== ======== ========= =========
- About 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.
- Forward-Looking Statements
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.