Financials

2003 Second-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
June 30		 Six Months Ended
June 30

2003
2002
2003
2002
(unaudited) (unaudited)
Revenues:          
  Licenses $8,365 $11,905   $15,577 $23,994
  Services and maintenance 14,075
14,601
  28,567
30,035
Total revenues 22,440
26,506
  44,144
54,029
             
Cost of revenues:          
  License 913 1,023   1,680 1,965
  Services and maintenance 7,756
8,551
  15,698
17,045
Total cost of revenues 8,669
9,574
  17,378
19,010
             
Gross profit:          
  License 7,452 10,882   13,897 22,029
  Services and maintenance 6,319
6,050
  12,869
12,990
Total gross profit 13,771
16,932
  26,766
35,019
             
Operating expenses:          
  Sales and marketing 10,354 10,732   18,981 22,877
  Research and development 6,319 6,476   12,229 12,509
  General and administrative 3,436 3,893   6,850 7,399
  Amortization of purchased product rights 284 284   568 568
  Impairment purchased product rights 1,134 -   1,134 -
  Restructuring charges 11,390
(1,079)
  11,390
(1,079)
Total operating expenses 32,917
20,306
  51,152
42,274
             
(Loss) from operations (19,146)
(3,374)
  (24,386)
(7,255)
             
Other income (expense):          
  Interest income 502 816   1,032 1,750
  Foreign exchange loss (239) (208)   (280) (210)
  Loss from equity investment (133) (370)   (238) (370)
  Write-down of long-term strategic investments (2,780)
(1,238)
  (2,780)
(1,238)
Total other income (expense) (2,650)
(1,000)
  (2,266)
(68)
             
(Loss) before income taxes (21,796) (4,374)   (26,652) (7,323)
             
Provision for income taxes 146
400
  320
795
             
Net (loss) $(21,942)
$(4,774)
  $(26,972)
$(8,118)
             
Weighted average common shares used          
  Basic 63,401 65,102   63,697 64,932
  Diluted 63,401 65,102   63,697 64,932
             
Net (loss) per share          
  Basic ($0.35) ($0.07)   ($0.42) ($0.13)
  Diluted ($0.35) ($0.07)   ($0.42) ($0.13)

ENTRUST, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)
Jun 30, 2003
 Dec 31, 2002
(unaudited)

ASSETS
Cash and marketable investments   $119,048 $131,446
Accounts receivable, net of allowance for doubtful accounts   17,022 22,323
Other current assets   4,506 4,500
Property and equipment, net   11,361 12,795
Purchased product rights, net   - 1,702
Goodwill and other purchased intangibles, net   11,186 11,186
Long-term equity investment   1,026 1,264
Other long-term assets, net   1,610
4,355
       
  Total assets $165,759
$189,571
       
       

LIABILITIES AND SHAREHOLDERS' EQUITY
       
Accounts payable and accruals   $16,727 $21,766
Accrued restructuring charges   39,724 33,166
Deferred revenue   20,408 16,547
Long-term liabilities   225
227
       
  Total liabilities 77,084 71,706
       
Shareholders' equity   88,675
117,865
       
  Total liabilities and shareholders' equity $165,759
$189,571
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