Linux distributor Red Hat Inc has published five years’ worth of financial results following a change in its revenue recognition policy for its Enterprise Linux software subscription agreements.
The Raleigh, North Carolina-based company has produced restated audited results for full year 2002, 2003 and 2004 to reflect the accounting change, as well as unaudited restated results for 2000 and 2001 for comparison.
Red Hat also restated its first quarter results for financial 2005 in July in response to the change. For the last five years the company has spread revenue from annual subscriptions evenly over the 12 months of that subscription. It is now recognizing it from the date the subscription starts to the date it ends.
That resulted in net income of $13.7m on revenue of $124.7m for financial 2004, compared to the net income of $14m and revenue of $126.1m originally reported. For 2003 Red Hat recorded a net loss of $6.7m on revenue of $90.2m, compared to the net loss of $6.6m and revenue of $90.9m originally reported.
For 2002, the company recorded a net loss of $140.0m on revenue of $79.5m, compared to the net loss $140.2m and revenue of $78.9m originally reported. Figures for the quarters during the restated periods were not provided.
Red Hat said that the restatement also responded to comments from the staff at the Securities and Exchange Commission and reflects non-recurring adjustments to its unaudited quarterly results for the first, second and third quarters of fiscal 2004.
Specifically it said that the adjustments related to subscription revenues related to lack of adequate vendor-specific objective evidence, or VSOE for five contracts entered into during fiscal 2004, deferral of services revenues related to the sale of training units and other miscellaneous operating expense adjustments.
Red Hat maintained that these adjustments were not material and had no effect on its annual results for fiscal 2004.