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2001 Second-Quarter Financial Statements


• Condensed Consolidated Statements of Operations (view)
• Pro Forma Condensed Consolidated Statements of Operations (view)
• Condensed Consolidated Balance Sheets (view)


ENTRUST TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of dollars, except per share data)

    Three Months Ended   Six Months Ended
    June 30   June 30
    2001 2000   2001 2000
    (unaudited)   (unaudited)
Revenues:          
  License $12,554 $18,780   $23,113 $39,669
  Services and maintenance 17,462 10,536   38,408 18,709
  Total revenues 30,016 29,316   61,521 58,378
             
Cost of revenues:          
  Licenses 1,207 953   2,108 1,890
  Services and maintenance 11,312 6,064   24,658 10,632
  Total cost of revenues 12,519 7,017   26,766 12,522
             
Gross profit:          
  Licenses 11,347 17,827   21,005 37,779
  Services and maintenance 6,150 4,472   13,750 8,077
  Total gross profit 17,497 22,299   34,755 45,856
             
  Sales and marketing 32,987 14,905   59,567 27,762
  Research and development 8,345 5,825   17,832 10,818
  General and administrative 14,595 2,722   19,282 4,914
  Acquisition related costs:          
  Acquired in-process research & development - 29,614   - 29,614
  Amortization of purchased product rights 1,377 -   2,754 -
  Amortization of goodwill and other purchased intangibles 28,900 1,615   57,800 2,276
  Impairment of goodwill, purchased product rights and other purchased intangibles 326,953 -   326,953 -
Restructuring charges 65,511 -   65,511 -
Write-down of leaseholds and other long-lived assets 13,519 -   13,519 -
(Loss) from operations (474,690) (32,382)   (528,463) (29,528)
             
Interest income 2,399 3,727   5,643 5,613
Write-down of strategic long-term investments (6,100) -   (6,100) -
             
(Loss) before income taxes (478,391) (28,655)   (528,920) (23,915)
             
Provision for income taxes 396 287   746 1,709
             
Net (loss) $(478,787) $(28,942)   $(529,666) $(25,624)
             
Weighted average common shares used          
  Basic 63,205 53,581   63,058 51,415
  Diluted 63,205 53,581   63,058 51,415
             
Net loss per share          
  Basic ($7.58) ($0.54)   ($8.40) ($0.50)
  Diluted ($7.58) ($0.54)   ($8.40) ($0.50)
             


ENTRUST TECHNOLOGIES INC.

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of dollars, except per share data)

    Three Months Ended   Six Months Ended
    June 30   June 30
    2001 2000   2001 2000
    (unaudited)   (unaudited)
Revenues:          
  License $12,554 $18,780   $23,113 $39,669
  Services and maintenance 17,462 10,536   38,408 18,709
  Total revenues 30,016 29,316   61,521 58,378
             
Cost of revenues:          
  Licenses 1,207 953   2,108 1,890
  Services and maintenance 11,289 6,064   24,635 10,632
  Total cost of revenues 12,496 7,017   26,743 12,522
             
Gross profit:          
  Licenses 11,347 17,827   21,005 37,779
  Services and maintenance 6,173 4,472   13,773 8,077
  Total gross profit 17,520 22,299   34,778 45,856
             
  Sales and marketing 22,304 14,905   48,884 27,762
  Research and development 8,345 5,825   17,832 10,818
  General and administrative 3,767 2,722   8,454 4,914
Earnings/(Loss) from operations (16,896) (1,153)   (40,392) 2,362
             
Interest income 2,399 3,727   5,643 5,613
             
Earnings/(loss) before income taxes (14,497) 2,574   (34,749) 7,975
             
Provision for income taxes - 772   - 2,392
             
Net Earnings/(loss) $(14,497) $1,802   $(34,749) $5,583
             
Weighted average common shares used          
  Basic 63,205 53,581   63,058 51,415
  Diluted 63,205 58,279   63,058 58,019
             
Net earnings/(loss) per share          
  Basic ($0.23) $0.03   ($0.55) $0.11
  Diluted ($0.23) $0.03   ($0.55) $0.10
             

Note: The above unaudited pro forma condensed consolidated statement of operations exclude the effects of the following:

For all periods presented:

  • Acquired in-process research and development, amortization of purchased product rights, goodwill and other purchased intangibles.
  • Provision for income taxes adjusted to an effective tax rate of zero on losses and 30% on income.

For the three and six months ended June 30, 2001:

  • Impairment of purchased products rights, goodwill and other purchased intangibles ($327.0M).
  • Restructuring charges including: expenses associated with the workforce reduction ($13.5M), closure of facilities ($38.2M), and expenses related to the discontinuance of non-core products and programs ($13.8M).
  • Write-down of strategic long-term investments ($6.1M).
  • Special non-recurring charges including: workforce related expenses for Restructuring related employee relocations, CEO bonus and hiring fees ($4.1M), write-down of fixed assets and leasehold improvements related to facilities closures ($13.2M), expenses related to the write-off accounts receivable and increase in the allowance for doubtful accounts ($11.0M), and expenses and impairment of assets related to rebranding and expenses related to the discontinuance of non-core products and programs ($6.7M).


ENTRUST TECHNOLOGIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands of dollars)

    Jun. 30 Dec. 31
ASSETS   2001 2000
    (unaudited)  
       
Cash and short-term marketable investments   $ 169,350 $ 227,687
Accounts receivable, net of allowance for doubtful accounts   28,255 46,301
Other current assets   6,192 9,603
Property and equipment, net   19,690 25,168
Purchased product rights, net   3,406 19,259
Other purchased intangibles, net   6,333 22,054
Goodwill, net   9,195 365,127
Other long-term assets, net   13,457 18,907
       
  Total assets $ 255,878 $ 734,106
       
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
       
Accounts payable and accruals   $ 27,405 $ 39,300
Accrued restructuring charges   60,814 -
Deferred income   21,110 19,466
Due to related party   - 799
Long-term liabilities   248 477
       
  Total liabilities 109,577 60,042
       
Shareholders' equity   146,301 674,064
       
  Total liabilities and shareholders' equity $ 255,878 $ 734,106
 
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