-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Oe/4PmqnmvvpxpHBDUF+5QxwB7nfdhZnTpycW5WTFXuQco5ofaAIroo0hDWqfb2O MswYoJ0MzeJJ2qNBkWm+KQ== 0001157523-05-008419.txt : 20050928 0001157523-05-008419.hdr.sgml : 20050928 20050928164417 ACCESSION NUMBER: 0001157523-05-008419 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050928 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050928 DATE AS OF CHANGE: 20050928 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RED HAT INC CENTRAL INDEX KEY: 0001087423 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 061364380 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26281 FILM NUMBER: 051108637 BUSINESS ADDRESS: STREET 1: 1801 VARSITY DRIVE CITY: RALEIGH STATE: NC ZIP: 27606 BUSINESS PHONE: 9197543700 MAIL ADDRESS: STREET 1: 1801 VARSITY DR CITY: RALEIGH STATE: NC ZIP: 27606 8-K 1 a4983769.txt RED HAT, INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 28, 2005 RED HAT, INC. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 000-26281 06-1364380 - -------------------------------------------------------------------------------- (State or Other Juris- (Commission (IRS Employer diction of Incorporation File Number) Identification No.) 1801 Varsity Drive, Raleigh, NC 27606 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: 919-754-3700 Not Applicable - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition On Sepember 28, 2005, Red Hat, Inc. announced its financial results for the quarter ended August 31, 2005. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K. The information furnished pursuant to Item 2.02 of this Form 8-K (including Exhibit 99.1) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing. Item 9.01. Financial Statements and Exhibits (c) Exhibits The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed: 99.1 Press Release dated September 28, 2005. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Red Hat, Inc. Date: September 28, 2005 By:/s/ Charles E. Peters, Jr. -------------------------------- Charles E. Peters, Jr. EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Press release dated September 28, 2005 EX-99.1 2 a4983769ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 Red Hat Reports Fiscal Second Quarter Results RALEIGH, N.C.--(BUSINESS WIRE)--Sept. 28, 2005-- -- Revenue of $65.7 million up 42% year-over-year -- Cash Flow From Operations Grows 48% year-over-year to $45.8 million Red Hat, Inc. (NASDAQ:RHAT), the world's leading provider of open source solutions to the enterprise, today announced financial results for its fiscal second quarter ended August 31, 2005. Total revenue for the quarter was $65.7 million, a year-over-year increase of 42% and a sequential increase of 8%. Subscription revenue was $54.3 million, an increase of 56% year-over-year and 10% sequentially. The company reported operating income of $12.8 million, representing a 68% increase from the prior quarter and 90% from the year ago period. Net income for the quarter was $16.7 million, a sequential increase of 35% and year-over-year increase of 42%. Earnings per diluted share were $0.09 for the quarter, an increase from $0.07 in the prior quarter and $0.06 in the year ago period. The company reported $45.8 million in cash flow from operations during the second quarter, a 48% year-over-year increase. After repurchasing $11.6 million of common stock and $20.0 million face value of the Company's convertible bonds during the quarter, cash and investments totaled $966 million at the end of August 2005. At quarter end, the company's total deferred revenue balance was $184.0 million, an increase of 85% on a year-over-year basis and 17% on a sequential basis. Other highlights from the quarter included: -- Billings, as approximated by the sum of revenue and quarterly change in deferred revenue, was $91.8 million, up 58% year-over year. -- Gross margin improved to 83% from 80% in the prior quarter. -- Operating margin grew to 20% from 13% last quarter. "Our second quarter results show strong growth in revenue and cash flow," stated Charlie Peters, Executive Vice President and Chief Financial Officer of Red Hat. "We continue to focus on operational improvements and solid execution in all areas of our business. Our investments in people and systems have improved our productivity, positively impacting our results." 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 Any statements in this press release about future expectations, plans and prospects for the company, including statements containing the words "believes," "anticipates," "plans," "expects," "will," and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the factors discussed in our most recent Quarterly Report on Form 10-Q filed with the SEC (a copy of which may be accessed through the SEC's website at http://www.sec.gov), 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 and the viability of the Internet. In addition, 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 the press release. LINUX is a trademark of Linus Torvalds. RED HAT is a registered trademark of Red Hat, Inc. All other names and trademarks are the property of their respective owners. RED HAT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands - except per share amounts) Three Months Six Months Ended Ended ----------------------- ----------------------- August 31, August 31, August 31, August 31, 2005 2004 2005 2004 ----------------------- ----------------------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Subscription and services revenue: Subscription: Enterprise technologies $53,758 $33,941 $102,501 $63,909 Retail - 561 - 936 Embedded 569 423 1,067 648 ----------- ----------- ----------- ----------- Total subscription revenue 54,327 34,925 103,568 65,493 ----------- ----------- ----------- ----------- Services: Enterprise technologies 10,684 10,492 22,067 20,978 Embedded development services 707 907 863 1,617 ----------- ----------- ----------- ----------- Total services revenue 11,391 11,399 22,930 22,595 ----------- ----------- ----------- ----------- Total subscription and services revenue 65,718 46,324 126,498 88,088 ----------- ----------- ----------- ----------- Cost of subscription and services revenue: Subscription: Enterprise technologies and retail 4,295 2,807 9,414 4,720 Embedded 48 62 102 131 ----------- ----------- ----------- ----------- Total cost of subscription revenue 4,343 2,869 9,516 4,851 ----------- ----------- ----------- ----------- Services: Enterprise technologies 6,015 5,241 12,164 10,727 Embedded development services 574 736 1,220 1,613 ----------- ----------- ----------- ----------- Total cost of services revenue 6,589 5,977 13,384 12,340 ----------- ----------- ----------- ----------- Total cost of subscription and services revenue 10,932 8,846 22,900 17,191 ----------- ----------- ----------- ----------- Gross profit enterprise technologies and retail 54,132 36,946 102,990 70,376 Gross profit embedded 654 532 608 521 ----------- ----------- ----------- ----------- Gross profit on enterprise technologies, retail and embedded revenue 54,786 37,478 103,598 70,897 Operating expense: Sales and marketing 20,181 14,856 40,198 28,078 Research and development 10,450 8,435 20,298 15,710 General and administrative 10,388 7,265 20,731 14,884 Amortization of intangibles 957 178 1,915 337 ----------- ----------- ----------- ----------- Total operating expense 41,976 30,734 83,142 59,009 ----------- ----------- ----------- ----------- Income from operations 12,810 6,744 20,456 11,888 Other income (expense), net 7,337 5,995 15,073 13,331 Interest expense (1,556) (1,555) (3,122) (3,118) ----------- ----------- ----------- ----------- Income before provision for income taxes 18,591 11,184 32,407 22,101 Provision (benefit) for income taxes 1,859 (641) 3,241 (641) ----------- ----------- ----------- ----------- Net income $16,732 $11,825 $29,166 $22,742 =========== =========== =========== =========== Net income-diluted $18,079 $13,351 $31,889 $25,783 =========== =========== =========== =========== Net income per share: Basic $0.09 $0.06 $0.16 $0.12 Diluted $0.09 $0.06 $0.15 $0.12 Weighted average shares outstanding: Basic 177,208 183,422 176,995 182,952 Diluted 208,583 218,836 207,894 218,874 RED HAT, INC. CONSOLIDATED BALANCE SHEETS (In thousands) ASSETS Aug. 31, Feb. 28, 2005 2005 ----------- ---------- (unaudited) Current assets: Cash and cash equivalents $148,056 $140,169 Investments in debt securities 369,364 181,028 Accounts receivable, net 57,797 48,402 Estimated earnings in excess of billings 1,788 3,557 Prepaid expenses and other current assets 13,154 12,097 -------------- ----------- Total current assets 590,159 385,253 Property and equipment, net 34,037 32,726 Goodwill 75,996 73,591 Identifiable intangibles, net 14,825 16,740 Investments in debt securities 448,198 607,566 Other assets, net 16,561 18,160 -------------- ----------- Total assets $1,179,776 $1,134,036 ============== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $4,892 $8,426 Accrued expenses 28,544 21,065 Deferred revenue 144,973 109,426 Current portion of capital lease obligations 239 282 -------------- ----------- Total current liabilities 178,648 139,199 Deferred lease credits 5,080 5,179 Long term deferred revenue 39,061 27,890 Other long term obligations 223 97 Convertible notes 570,000 600,000 Commitments and contingencies - - Stockholders' equity: Noncontrolling interest in subsidiary 537 557 Preferred stock - - Common stock 19 19 Additional paid-in capital 724,867 714,604 Deferred compensation (3,109) (4,792) Accumulated deficit (202,632) (231,798) Treasury stock, at cost (124,097) (107,409) Accumulated other comprehensive income (loss) (8,821) (9,510) -------------- ----------- Total stockholders' equity 386,764 361,671 -------------- ----------- Total liabilities and stockholders' equity $1,179,776 $1,134,036 ============== =========== RED HAT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Three Months Ended Six Months Ended ---------------------------- ----------------------- Aug. 31, Aug. 31, Aug. 31, Aug. 31, 2005 2004/a 2005 2004/a ---------------- ----------- ----------- ----------- (Unaudited)(Unaudited) (Unaudited) (Unaudited) Cash flows from operating activities: Net income $16,732 $11,825 $29,166 $22,742 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,751 2,409 7,298 4,715 Deferred income taxes (606) (1,236) (799) (1,236) Stock-based compensation expense 1,310 1,110 2,495 2,398 Gain from repurchase of convertible debt (1,544) - (3,140) - Provision for doubtful accounts 57 266 141 1,014 Amortization of debt issue costs 770 776 1,552 1,433 Loss on disposal of property and equipment 891 - 996 - Other 102 102 22 78 Changes in operating assets and liabilities: Accounts receivable and estimated earnings in excess of billings (9,837) 849 (9,241) 2,998 Prepaid expenses and other current assets 615 321 (790) (142) Intangibles and other assets (29) (564) 325 (1,215) Accounts payable 735 922 (3,367) 185 Accrued expenses 5,091 2,901 7,555 2,333 Deferred revenue 27,760 11,186 50,246 26,721 Deferred lease credits (42) (44) (99) (84) ---------------- ----------- ----------- ----------- Net cash provided by operating activities 45,756 30,823 82,360 61,940 ---------------- ----------- ----------- ----------- Cash flows from investing activities: Purchase of investment securities (130,577) (57,232) (139,177) (642,512) Proceeds from sales and maturities of investment securities 19,731 61,154 111,017 285,342 Acquisitions of businesses, net of cash acquired (2,500) - (2,500) - Purchase of other investments - - (767) - Purchase of property and equipment (4,716) (2,570) (7,988) (7,938) ---------------- ----------- ----------- ----------- Net cash (used in) provided by investing activities (118,062) 1,352 (39,415) (365,108) ---------------- ----------- ----------- ----------- Cash flows from financing activities: Repurchase of convertible debt (18,091) - (26,301) - Structured stock repurchases - - 1,031 - Net proceeds from issuance of common stock under Employee Stock Purchase Plan 770 - 1,497 872 Proceeds from exercise of common stock options 5,418 1,701 7,124 12,111 Purchase of treasury stock (11,560) - (16,688) - Other financing 415 (359) 83 (607) ---------------- ----------- ----------- ----------- Net cash (used in) provided by financing activities (23,048) 1,342 (33,254) 12,376 ---------------- ----------- ----------- ----------- Effect of foreign currency exchange rates on cash and cash equivalents (958) (522) (1,804) (1,826) Net increase (decrease) in cash and cash equivalents (96,312) 32,995 7,887 (292,618) Cash and cash equivalents at beginning of the period 244,368 135,691 140,169 461,304 ---------------- ----------- ----------- ----------- Cash and cash equivalents at end of period $148,056 $168,686 $148,056 $168,686 ================ =========== =========== =========== /a: Reclassed to conform with current period. CONTACT: Red Hat, Inc. Leigh Day, 919-754-4369; lday@redhat.com or Linda Brewton, 919-754-4476; lbrewton@redhat.com -----END PRIVACY-ENHANCED MESSAGE-----