Financials

2002 First-Quarter Financial Statements

ENTRUST, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (in thousands, except per share data)
		Three Months Ended March 31
		2002	2001
		(unaudited)
Revenues:
	License	$12,089	$10,559
	Services and maintenance	15,434	20,946
Total revenues		27,523	31,505
Cost of revenues:
	License	942	901
	Services and maintenance	8,494	13,346
Total cost of revenues		9,436	14,247
Gross profit:
	Licenses	11,147	9,658
	Services and maintenance	6,940	7,600
Total gross profit		18,087	17,258
Sales and marketing		12,145	26,580
Research and development		6,033	9,487
General and administrative		3,506	4,687
Acquisition related costs:
	Amortization of purchased product rights	284	1,377
	Amortization of goodwill and other purchased intangibles (a)	-	28,900
(Loss) from operations		(3,881)	(53,773)
Interest income		932	3,244
(Loss) before income taxes		(2,949)	(50,529)
Provision for income taxes		395	350
Net (loss)		$ (3,344)	$ (50,879)
Weighted average common shares used:
	Basic	64,762	62,911
	Diluted	64,762	62,911
Net (loss) per share
	Basic	$ (0.05)	$ (0.81)
	Diluted	$ (0.05)	$ (0.81)
(a) For comparative purposes, the Company's net (loss), on a pro forma basis, assuming the cessation of goodwill amortization as required under SFAS No. 142 had been in effect from January 1, 2001, is as follows:
Reported net (loss)		(3,344)	(50,879)
SFAS No. 142 adjustment		-	28,900
Adjusted net (loss)		(3,344)	(21,979)
Adjusted basic net (loss) per share		(0.05)	(0.35)

ENTRUST, INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands)
		Three Months Ended March 31
		2002	2001
		(unaudited)
Revenues:
	License	$12,089	$10,559
	Services and maintenance	15,434	20,946
Total revenues		27,523	31,505
Cost of revenues:
	License	942	901
	Services and maintenance	8,494	13,346
Total cost of revenues		9,436	14,247
Gross profit:
	Licenses	11,147	9,658
	Services and maintenance	6,940	7,600
Total gross profit		18,087	17,258
Sales and marketing		12,145	26,580
Research and development		6,033	9,487
General and administrative		3,506	4,687
(Loss) before interest		(3,597)	(23,496)
Interest income		932	3,244
(Loss) before income taxes		(2,665)	(20,252)
Provision for income taxes		-	-
Net (loss)		$ (2,665)	$ (20,252)
Weighted average common shares used:
	Basic	64,762	62,911
	Diluted	64,762	62,911
Net (loss) per share
	Basic	$ (0.04)	$ (0.32)
	Diluted	$ (0.04)	$ (0.32)
Note: The above unaudited pro forma condensed consolidated statements of operations are adjusted for income taxes to an effective tax rate of zero on losses and 30% on income and exclude the effects of the amortization of purchased product rights, for all periods presented, and the amortization of goodwill and other purchased intangibles, for the three months ended March 31, 2001.

ENTRUST, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
		Mar 31, 2002	Dec 31, 2001
		(unaudited)
ASSETS
Cash and marketable investments		$150,573	$162,593
Accounts receivable, net of allowance for doubtful accounts		25,123	23,732
Other current assets		6,581	5,202
Property and equipment, net		16,141	17,390
Purchased product rights, net		2,554	2,838
Goodwill, net		6,436	6,436
Other purchased intangibles, net		4,750	4,750
Other long-term assets, net		6,447	6,497
	Total assets	$218,605	$229,438
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accruals		$27,199	$28,936
Accrued restructuring charges		40,664	46,988
Deferred revenue		15,487	17,553
Long-term liabilities		737	116
	Total liabilities	84,087	93,593
Shareholders' equity		134,518	135,845
	Total liabilities and shareholders' equity	$218,605	$229,438

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