<PAGE>
EXHIBIT 99.2
------------
Unaudited Pro Forma Combined Statements
The unaudited pro forma combined balance sheets as of February 29, 2000 and May
31, 2000, and the unaudited pro forma combined statements of operations for the
year ended February 29, 2000 and the three months ended May 31, 2000 combine the
historical Red Hat and WireSpeed balance sheets and statements of operations as
if the acquisition of WireSpeed, which occurred on July 27, 2000, had been
completed on February 29, 2000 and May 31, 2000 for purposes of the presentation
of the unaudited pro forma combined balance sheets, and as of March 1, 1999 and
March 1, 2000 for purposes of the presentation of the unaudited pro forma
statements of operations.
We purchased all of the outstanding common stock of WireSpeed on July 27, 2000
in exchange for the issuance of up to a maximum of 3,963,463 shares of our
common stock. The total purchase price of the WireSpeed acquisition was
approximately $36.0 million and has been accounted for using the purchase method
of accounting. At closing, we issued 1,461,119 shares of our common stock with a
fair value of approximately $34.1 million to the stockholders of WireSpeed. We
committed to issue up to 2,502,344 shares of our common stock to certain
WireSpeed stockholders over a three year period contingent upon the achievement
by the WireSpeed business of certain performance targets which shares are not
reflected in these pro forma combined financial statements due to uncertainty of
whether they will be issued. The unaudited pro forma combined financial
statements should be read together with the consolidated financial statements
including the notes to these statements of Red Hat and the historical financial
statements of WireSpeed.
The pro forma adjustments reflecting the consummation of the WireSpeed
acquisition are based on the purchase method of accounting, available financial
information, and certain estimates and assumptions set forth in the notes to the
unaudited pro forma combined financial statements. The unaudited pro forma
combined financial statements reflects our best estimates; however, the final
purchase price allocation and the actual financial position and results of
operations may differ significantly from the pro forma amounts reflected herein
due to various factors, including, without limitation, access to additional
financial information and changes in value. The pro forma adjustments do not
reflect any operating efficiencies or cost savings that may be achievable with
respect to the combined business of Red Hat and WireSpeed.
The unaudited pro forma financial statements for the year ended February 29,
2000 and as of and for the three months ended May 31, 2000, do not purport to
represent what the actual financial condition or results of operations of the
combined businesses would have been if the acquisition of WireSpeed had occurred
on the dates indicated in these pro forma combined financial statements nor does
this information purport to project our results or financial position for any
future periods.
1
<PAGE>
Unaudited Pro Forma Combined Consolidated Balance Sheet
February 29, 2000
<TABLE>
<CAPTION>
February 29, 2000 December 31, 1999 Pro Forma Pro Forma
Red Hat WireSpeed Combined Adjustments Combined
----------------- ----------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash $ 242,426,032 $ 22,025 $ 242,448,057 $ - $242,448,057
Short-term investments 27,460,222 - 27,460,222 27,460,222
Trade accounts receivable 7,893,936 52,877 7,946,813 7,946,813
Related part accounts receivable - 110,701 110,701 110,701
Inventory 488,977 - 488,977 488,977
Prepaid and other current assets 1,874,973 - 1,874,973 1,874,973
Unbilled receivables - 59,922 59,922 59,922
----------------- ----------------- -------------- ------------- -------------
Total current assets 280,144,140 245,525 280,389,665 - 280,389,665
----------------- ----------------- -------------- ------------- -------------
Property and equipment, net 7,909,103 200,536 8,109,639 8,109,639
Goodwill and intangibles, net 58,267,419 - 58,267,419 36,012,353 (a) 94,279,772
Long-term investments 72,354,212 - 72,354,212 72,354,212
Other assets, net 4,859,958 - 4,859,958 4,859,958
----------------- ----------------- -------------- ------------- -------------
Total assets $ 423,534,832 $ 446,061 $ 423,980,893 $ 36,012,353 $459,993,246
================= ================= ============== ============= =============
Current liabilities:
Accounts payable $ 10,774,546 $ 47,239 $ 10,821,785 $ - $ 10,821,785
Royalties payable 115,117 - 115,117 115,117
Accrued expenses 7,571,058 179,678 7,750,736 7,750,736
Deferred revenue 11,030,337 - 11,030,337 11,030,337
Due to related party - 3,526 3,526 3,526
Capital lease obligation - current 366,062 - 366,062 366,062
Short-term borrowings - 385,407 385,407 385,407
----------------- ----------------- -------------- ------------- -------------
Total current liabilities 29,857,120 615,850 30,472,970 - 30,472,970
----------------- ----------------- -------------- ------------- -------------
Capital lease obligation 230,516 - 230,516 230,516
Notes payable - employee - 9,807 9,807 9,807
Stockholders' equity:
Common stock 15,334 13,380 28,714 (13,380) (b) 15,480
146 (a)
Additional paid-in capital 477,781,234 10,907,762 488,688,996 (10,907,762) (b) 513,613,845
35,832,611 (a)
Shareholders' receivables (66,899) - (66,899) (66,899)
Deferred compensation (35,159,127) - (35,159,127) (35,159,127)
Treasury stock (20,343) (20,343) 20,343 (b) -
Accumulated deficit (48,607,478) (11,080,395) (59,687,873) 11,080,395 (b) (48,607,478)
Accumulated other comprehensive loss (515,868) - (515,868) (515,868)
----------------- ----------------- -------------- ------------- -------------
Total stockholders' deficit 393,447,196 (179,596) 393,267,600 36,012,353 429,279,953
----------------- ----------------- -------------- ------------- -------------
Total liabilities & stockholders' $ 423,534,832 $ 446,061 $ 423,980,893 $ 36,012,353 $459,993,246
deficit
================= ================= ============== ============= =============
</TABLE>
(a) Reflects the value of the 1,461,119 shares of our common stock issued to
acquire WireSpeed and the assumption of 64,246 stock options on July 27,
2000, based on the average closing price of our common stock of $23.37 for
the three day period immediately preceding the date of our announcement of
the acquisition of WireSpeed and the assumption of approximately $179,000
in net liabilities of WireSpeed assuming that the acquisition occurred on
February 29, 2000.
(b) Reflects the elimination of the stockholders' equity balances of WireSpeed
as this acquisition is being accounted for using the purchase method of
accounting.
2
<PAGE>
<TABLE>
<CAPTION>
Unaudited Pro Forma Combined Consolidated Balance Sheet
May 31, 2000
May 31, 2000 March 31, 1999 Pro Forma Pro Forma
Red Hat WireSpeed Combined Adjustments Combined
------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash $ 106,050,164 $ 2,245 $ 106,052,409 $ - $ 106,052,409
Short-term investments 48,314,139 48,314,139 48,314,139
Trade accounts receivable 10,250,190 407,284 10,657,474 10,657,474
Related part accounts receivable - - -
Inventory 1,343,816 1,343,816 1,343,816
Prepaid and other current assets 2,175,166 2,175,166 2,175,166
Unbilled receivables - -
------------- ------------- ------------- ------------ -------------
Total current assets $ 168,133,475 $ 409,529 $ 168,543,004 $ - $ 168,543,004
------------- ------------- ------------- ------------ -------------
Property and equipment, net $ 8,894,542 $ 202,744 $ 9,097,286 $ - $ 9,097,286
Goodwill and intangibles, net 87,870,770 87,870,770 35,971,988 (a) 123,842,758
Long-term investments 176,260,633 176,260,633 176,260,633
Other assets, net 7,713,678 7,713,678 7,713,678
------------- ------------- ------------- ------------ -------------
Total assets 448,873,098 612,273 449,485,371 35,971,988 485,457,359
============= ============= ============= ============ =============
Current liabilities:
Accounts payable 5,909,724 133,367 6,043,091 6,043,091
Royalties payable 40,822 40,822 40,822
Accrued expenses 13,078,768 189,695 13,268,463 13,268,463
Deferred revenue 12,030,907 12,030,907 12,030,907
Due to related party - -
Capital lease obligation - current 366,315 366,315 366,315
Short-term borrowings 419,242 419,242 419,242
------------- ------------- ------------- ------------ -------------
Total current liabilities 31,426,536 742,304 32,168,840 - 32,168,840
------------- ------------- ------------- ------------ -------------
Capital lease obligation 190,483 190,483 190,483
Notes payable - 9,200 9,200 9,200
Stockholders' equity:
Common stock 15,639 14,813 30,452 (14,813) (b) 15,785
146 (a)
Additional paid-in capital 514,104,772 15,351,092 529,455,864 (15,351,092) (b) 549,937,383
35,832,611 (a)
Shareholders' receivables - - -
Deferred compensation (32,066,408) (32,066,408) (32,066,408)
Treasury stock (21,243) (21,243) 21,243 (b) -
Accumulated deficit (63,458,936) (15,483,893) (78,942,829) 15,483,893 (b) (63,458,936)
Accumulated other comprehensive loss (1,338,988) (1,338,988) (1,338,988)
------------- ------------- ------------- ------------ -------------
Total stockholders' deficit 417,256,079 (139,231) 417,116,848 35,971,988 453,088,836
------------- ------------- ------------- ------------ -------------
Total liabilities & stockholders'
deficit $ 448,873,098 $ 612,273 $ 449,485,371 $ 35,971,988 $ 485,457,359
============= ============= ============= ============ =============
</TABLE>
(a) Reflects the value of the 1,461,119 shares of our common stock issued to
acquire WireSpeed and the assumption of 64,246 on July 27, 2000, based on
the average closing price of our common stock of $23.37 for the three day
period immediately preceding and following the date of our announcement of
the acquisition of WireSpeed and the assumption of approximately $139,000
in net liabilities of WireSpeed assuming the acquisition occurred on May
31, 2000.
(b) Reflects the elimination of the stockholders' equity balances of WireSpeed
as this acquisition is being accounted for using the purchase method of
accounting.
3
<PAGE>
<TABLE>
<CAPTION>
Unaudited Pro Forma Combined Consolidated Statement of Operations
Year Ended February 29, 2000
February 29, 2000 December 31, 1999 Pro Forma Pro Forma
Red Hat WireSpeed Combined Adjustments Combined
----------------- ----------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenues:
Subscriptions $ 23,960,187 $ - $ 23,960,187 $ - $ 23,960,187
Services 17,160,678 1,621,049 18,781,727 18,781,727
Web 1,306,638 - 1,306,638 1,306,638
-------------- -------------- ------------- ------------- -------------
Total revenue 42,427,503 1,621,049 44,048,552 - 44,048,552
-------------- -------------- ------------- ------------- -------------
Cost of revenue:
Subscriptions 13,069,831 - 13,069,831 - 13,069,831
Services 9,071,079 484,856 9,555,935 9,555,935
Web 696,259 - 696,259 696,259
-------------- -------------- ------------- ------------- -------------
Total revenue 22,837,169 484,856 23,322,025 - 23,322,025
-------------- -------------- ------------- ------------- -------------
Gross profit 19,590,334 1,136,193 20,726,527 - 20,726,527
-------------- -------------- ------------- ------------- -------------
Operating expenses:
Sales and marketing (excludes
$5,635,167 of stock based
compensation) 22,584,069 284,940 22,869,009 22,869,009
Research and development (excludes
$1,191,810 of stock based
compensation) 10,929,815 - 10,929,815 10,929,815
General and administrative
(excludes $4,920,945 of stock based
compensation) 9,135,199 979,771 10,114,970 10,114,970
Amortization of goodwill and
intangibles 3,074,307 - 3,074,307 12,004,118 (a) 15,078,425
Non-cash stock based compensation 5,051,743 6,696,179 11,747,922 11,747,922
Mergers, acquisitions and other 12,727,945 - 12,727,945 12,727,945
-------------- -------------- ------------- ------------- -------------
Total operating expenses 63,503,078 7,960,890 71,463,968 12,004,118 83,468,086
-------------- -------------- ------------- ------------- -------------
Operating income (43,912,744) (6,824,697) (50,737,441) (12,004,118) (62,741,559)
-------------- -------------- ------------- ------------- -------------
Other income (expense):
Interest income 4,923,029 16,227 4,939,256 4,939,256
Interest expenses (558,326) (38,234) (596,560) (596,560)
-------------- -------------- ------------- ------------- -------------
Total other income (expense) 4,364,703 (22,007) 4,342,696 - 4,342,696
-------------- -------------- ------------- ------------- -------------
Loss before income taxes (39,548,041) (6,846,704) (46,394,745) (12,004,118) (58,398,863)
Provision for income taxes (294,325) - (294,325) (294,325)
-------------- -------------- ------------- ------------- -------------
Net loss (39,842,366) (6,846,704) (46,689,070) (12,004,118) (58,693,188)
Accretion of mandatorily redeemable
preferred (82,473) - (82,473) (82,473)
-------------- -------------- ------------- ------------- -------------
Net loss available to common
stockholders $ (39,924,839) $ (6,846,704) $(46,771,543) $(12,004,118) $(58,775,661)
============== ============== ============= ============= =============
Pro forma combined net loss per share -
basic and diluted ($0.5758)
=============
Pro forma combined weighted average
shares outstanding - basic and
diluted 102,071,609
=============
</TABLE>
(a) Reflects the amortization of goodwill and intangible assets recorded in the
acquisition of WireSpeed using a three year life assuming that the
acquisition occurred on March 1, 1999.
4
<PAGE>
Unaudited Pro Forma Combined Consolidated Statement of Operations
For the Three Months Ended May 31, 2000
<TABLE>
<CAPTION>
May 31, 2000 March 31, 2000 Pro Forma Pro Forma
Red Hat WireSpeed Combined Adjustments Combined
-------------- -------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Subscriptions $ 8,537,501 $ - $ 8,537,501 $ - $ 8,537,501
Services 6,260,334 672,368 6,932,702 6,932,702
Web 1,230,863 1,230,863 1,230,863
-------------- -------------- ------------ ----------- ------------
Total revenue 16,028,698 672,368 16,701,066 - 16,701,066
-------------- -------------- ------------ ----------- ------------
Cost of revenue:
Subscriptions 3,688,543 3,688,543 3,688,543
Services 3,629,234 242,833 3,872,067 3,872,067
Web 61,250 61,250 61,250
-------------- -------------- ------------ ----------- ------------
Total revenue 7,379,027 242,833 7,621,860 - 7,621,860
-------------- -------------- ------------ ----------- ------------
Gross profit 8,649,671 429,535 9,079,206 - 9,079,206
-------------- -------------- ------------ ----------- ------------
Operating expenses:
Sales and marketing (excludes
$3,217,357 of stock based
compensation) 9,493,407 64,871 9,558,278 - 9,558,278
Research and development (excludes
$0 of stock based
compensation) 3,271,184 3,271,184 3,271,184
General and administrative
(excludes $1,226,506 of stock based
compensation) 3,771,148 310,020 4,081,168 4,081,168
Amortization of goodwill and
intangibles 5,231,387 5,231,387 2,997,666 (a) 8,229,053
Non-cash stock based compensation 3,717,753 4,443,863 8,161,616 8,161,616
Mergers, acquisitions and other 3,359,026 3,359,026 3,359,026
-------------- -------------- ------------ ----------- ------------
Total operating expenses 28,843,905 4,818,754 33,662,659 2,997,666 36,660,325
-------------- -------------- ------------ ----------- ------------
Operating income (20,194,234) (4,389,219) (24,583,453) (2,997,666) (27,581,119)
-------------- -------------- ------------ ----------- ------------
Other income (expense):
Interest income 5,415,381 5,415,381 5,415,381
Interest expenses (8,191) (14,279) (22,470) (22,470)
-------------- -------------- ------------ ----------- ------------
Total other income (expense) 5,407,190 (14,279) 5,392,911 - 5,392,911
-------------- -------------- ------------ ----------- ------------
Loss before income taxes (14,787,044) (4,403,498) (19,190,542) (2,997,666) (22,188,208)
Provision for income taxes (64,414) (64,414) (64,414)
-------------- -------------- ------------ ----------- ------------
Net loss (14,851,458) (4,403,498) (19,254,956) (2,997,666) (22,252,622)
Accretion of mandatorily redeemable
preferred -
-------------- -------------- ------------ ----------- ------------
Net loss available to common
stockholders $ (14,851,458) $ (4,403,498) $(19,254,956) $(2,997,666) $(22,252,622)
============== ============== ============ =========== ============
Pro forma combined net loss per share -
basic and diluted ($0.1425)
============
Pro forma combined weighted average
shares outstanding 156,125,976
============
</TABLE>
(a) Reflects the amortization of goodwill and intangible assets recorded in the
acquisition of WireSpeed using a three year life assuming that the
acquisition occurred on March 1, 2000.
5
