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Entrust Announces Financial Results for Fourth-Quarter and Fiscal 2008
Date:1/29/2009

DALLAS, Jan. 29 /PRNewswire-FirstCall/ -- Entrust, Inc. (Nasdaq: ENTU), a world leader in securing digital identities and information, today announced financial results for its fiscal quarter and year ended December 31, 2008.

Fourth-Quarter 2008

  • Total revenues of $24.9 million, a decrease of 7% over Q4 2007; total revenues were impacted by a strong U.S. dollar, and were $27.9 million, an increase of 5%, adjusting for currency
  • Product revenues of $10.2 million, an increase of 1% over Q4 2007; adjusted for currency was $11.6 million, an increase of 15% over Q4 2007
  • Deferred revenue increased to approximately $27.8 million, roughly flat to year-end 2007; adjusted for currency was $31.1 million, an increase of 11% over Q4 2007
  • Entrust recorded a net income for the quarter, calculated in accordance with GAAP, of $1.8 million, or $0.03 per share
  • Cash and Cash Equivalents increased to $24.3 million, an increase of $3.8 million over Q4 2007

Full-Year 2008

  • Entrust IdentityGuard and Entrust TransactionGuard combined for $9.3 million of product revenue, an increase of 70% year-over-year
  • SSL revenues were $9.6 million, an increase of 32% year-over-year
  • Subscription-based product revenue increased to $12.6 million, an increase of 22% year-over-year and accounted for 33% of product revenue
  • Subscription-based product bookings increased 48% to $17.5 million
  • Full-year non-GAAP cash flow from operations was $12.0 million, excluding the effects of the net change in accrued restructuring charges

Revenues for the fourth quarter were $24.9 million, a decrease of 7 percent from $26.7 million in Q4 2007, and an increase of 2 percent from $24.5 million in Q3 2008. Revenues were impacted by a strong U.S. dollar in Q4 2008. As a result, adjusted for currency total revenues were $27.9 million, an increase of 5 percent over Q4 2007 and 14 percent over Q3 2008. Product revenue increased to $10.2 million in the quarter, an increase of 1 percent from $10.1 million in Q4 2007, and 8 percent from $9.4 million in Q3, 2008. Product revenues adjusted for currency were $11.6 million, an increase of 15 percent over Q4 2007 and 23 percent over Q3 2008. The revenue figures, as adjusted for currency, are calculated based upon the actual currency rates in the comparable period.

Deferred revenue increased in the quarter to approximately $27.8 million, roughly flat to year-end 2007 and an increase of 1 percent from Q3 2008. Deferred revenues adjusted for currency were $31.1 million, an increase of 11 percent from year-end 2007 and an increase of 13 percent from Q3 2008. Services accounted for approximately 59 percent ($14.7 million) of total revenue in the quarter, a decrease of 11 percent from $16.5 million in Q4 2007 and a decrease of 2 percent from $15.0 million in Q3 2008. Services revenues, adjusted for currency, were $16.3 million, a decrease of 1 percent over Q4 2007 and an increase of 9 percent over Q3 2008.

"Entrust concluded a successful 2008. We increased our earnings by $4.3 million, generated $12 million of cash flow (excluding restructuring charges), and increased our subscription based product bookings by 48 percent to $17.5 million," said Entrust President and Chief Executive Officer Bill Conner. "2008 was a very difficult selling environment. The continued success of our IdentityGuard and TransactionGuard products, which were up 70 percent; our subscription-based product revenues, which increased 22 percent; and our focus on cost containment in the business helped deliver our strong earnings and cash flow in the quarter and year. Our focus on providing 'Trusted Security for Less' is serving us well in this market, and should help us amid shrinking IT budgets in 2009."

Entrust recorded a Q4 2008 net income, calculated in accordance with GAAP, of $1.8 million, or $0.03 per share, compared to Q4 2007 net income of $969,000, or $0.02 per share. On a non-GAAP basis, the company recorded a Q4 2008 non-GAAP income of $2.4 million, or $0.04 per share, compared to Q4 2007 non-GAAP income of $2.2 million or $0.04 per share. Adjusted for currency impact, non-GAAP income was $3.1 million or $0.05 per share. See the financial table below reconciling these non-GAAP figures to GAAP.

For the full year ended December 31, 2008, Entrust recorded a net loss, calculated in accordance with GAAP, of $1.0 million, or $0.02 per share, compared to 2007 net loss of $6.2 million, or $0.10 per share. On a non-GAAP basis, the company recorded a non-GAAP income of $4.3 million, or $0.07 per share, compared to 2007 non-GAAP income of $46,000, or $0.00 per share. Adjusted for currency impact, non-GAAP income was $5.4 million or $0.09 per share. The non-GAAP figures exclude amortization of purchased intangibles, stock-option based compensation expense, the write-down of long-term assets and adjustments to restructuring accruals. See the financial table below reconciling these non-GAAP figures to GAAP.

Entrust was also cash-flow-from-operations positive by $12.0 million for 2008, net of change in accrued restructuring charges. Entrust ended the quarter with cash and cash equivalents of over $24.3 million and no debt.

"I am pleased with the continued progress we made in 2008 at increasing our subscription revenue and decreasing our reliance on large transactions," said David Wagner, Entrust senior vice president of finance and chief financial officer. "We generated 92 percent of our product revenue from transactions less than $500,000 and grew our subscription product revenue 22 percent. We also initiated cost reduction measures early in 2008, which not only improved 2008 earnings and cash flow from operations but also has us well positioned to double our 2009 earnings over 2008."

Financial Outlook:

Entrust is guiding first-half 2009 revenue of between $44.0 million and $46.0 million. Entrust is guiding a net income, in accordance with GAAP, of between $0.03 and $0.05 per share for the first half of 2009. On a non-GAAP basis, the company is guiding a profit of between $0.05 and $0.07 per share for the first half of 2009. For the full year 2009, Entrust is targeting a net income, in accordance with GAAP, of approximately $0.11 per share. On a non-GAAP basis, the company is guiding a full-year profit of $0.15 per share. The company's Q1 2009 total expenses on a non-GAAP basis are expected to be between $20.0 and $21.0 million.

The Company expects to be cash-flow positive from operations before adjustments to exclude the effects of the net change in accrued restructuring charges for the full year by more than $15.0 million. The Company is also targeting bookings from subscription-based products of more than $20.0 million. See the financial table below reconciling the non-GAAP figures to GAAP. All guidance is predicated on current exchange rates.

"As I look ahead to our 2009 objectives, we are focused on meeting our earnings goals, generating cash and continuing to build our market share in risk-based authentication, subscription-based PKI solutions and global government," said Conner. "We are in very uncertain times; however, we are optimistic in our ability to execute our earnings plan. In a year where earnings and cash flow will be most important, we have removed costs from the business to enable the company to continue to drive increased earnings and cash flow in an uncertain top-line environment."

Q4 & Full-Year 2008 Highlights:

  • For the full year total revenues were $99.7 million, flat to 2007. Product revenues for the full year were $38.3 million, an increase of 5 percent from $36.4 million in 2007.
  • In the quarter, Entrust completed 143 total transactions, which represented a 4 percent increase from the fourth quarter of 2007. For the year, Entrust completed 512 total transactions in 2008, which represented an 8 percent increase from 2007.
  • In the quarter, Entrust added 49 new customers, which represented a 14 percent increase from the fourth quarter of 2007. For the year, Entrust added 166 new customers, which represented a 25 percent increase from 2007.
  • Revenue from transactions less than $500,000 decreased 1 percent from the fourth quarter of 2007. For the year, revenue from transactions less than $500,000 increased, continuing to drive the company's strategy to be less reliant on large deals. Transactions less than $500,000 accounted for 92 percent of product revenue in 2008.
  • Entrust IdentityGuard and Transaction Guard accounted for $2.4 million, up 17 percent from Q4 2007, and was more than $9.3 million for the full year 2008, up 70 percent over the full year 2007.
  • Entrust Public Key Infrastructure (PKI) products revenue increased 7 percent over the fourth quarter of 2007. For the full year, PKI product revenue was flat compared to 2007. Entrust's SSL certificate business increased 32 percent over 2007. Subscription-based product bookings, primarily within the PKI space, increased 48 percent to $17.5 million in 2008.
  • Entrust government vertical decreased by 6 percent over 2007 and was negatively impacted by slower U.S. government spending and exchange rate. Entrust delivered its next-generation ePassport solution (Extended Access Control), which led to winning four new ePassport projects in 2008.
  • Entrust financial vertical increased 28 percent over 2007 and was slightly higher than Q4 2007.
  • Entrust ended the year with $24.3 million in cash and cash equivalents and no debt.
  • Cash flow from operations net of change in accrued restructuring charges was positive $12.0 million for 2008, (including prior years restructuring charges the company generated $6.4 million in 2008).

Solutions Revenue Breakout and Transition to 2009 Reporting:

  • Entrust Emerging Growth Products accounted for 26 percent ($2.7 million) of product revenue for Q4 2008. For the full year 2007, Emerging Growth Product revenue accounted for 30 percent ($11.4 million) of total product revenue and increased 38 percent over 2007.
  • Entrust PKI Products accounted for 71 percent ($7.2 million) of product revenue for Q4 2008. For the full year 2008, PKI product revenue accounted for 70 percent ($25.6 million) of total product revenue and were flat compared to 2007.
  • Entrust Single Sign-On (SSO) products accounted for 3 percent ($336,000) of product revenue for Q4 2008. For the full year 2008, Single Sign-On product revenue accounted for 3 percent ($1.3 million) of total product revenue and decreased 48 percent over 2007.

In 2009, the Company will be transitioning to the following solution categories:

  • Entrust Fraud and Risk Based Authentication products accounted for 27 percent ($2.7 million) of product revenue for Q4 2008. For the full year 2008, Fraud and Risk Based Authentication Products revenue accounted for 28 percent ($10.6 million) of total product revenue, an increase of 34 percent year-over-year.
    • Subcategory IdentityGuard and Transaction Guard Products accounted for $2.4 million of product revenue for Q4 2008. For the full year 2008, Fraud and Risk Based Authentication products revenue accounted for $9.3 million of total product revenue, an increase of 70 percent year-over-year.
  • Entrust PKI products accounted for 73 percent ($7.4 million) of product revenue for Q4 2008. For the full year 2008, PKI product revenue accounted for 72 percent of total product revenue and decreased 3 percent over 2007.
    • Subcategory SSL accounted for $2.6 million of product revenue for Q4 2008. For the full-year 2008, SSL revenue accounted for $9.6 million of total product revenue, an increase of 32 percent year-over-year.
    • Subcategory Subscription Product accounted 32 percent ($3.3 million) of product revenue for Q4 2008. For the full year 2008, Subscription Product revenue accounted for 32 percent ($12.6 million) of total product revenue, an increase of 22 percent year-over-year.

A chart reconciling 2008 product revenue by reporting category has been posted to our web site at www.entrust.com/investor.

Q4 Technology and Industry Highlights:

  • Entrust improved the Entrust IdentityGuard platform with enhanced self-service capabilities, including the Entrust eGrid, an innovative approach to delivering strong second-factor authentication without deploying a physical device. Entrust's eGrid cards represent a new element to our dynamic multifactor authentication solutions. The advanced soft-grid format enables organizations to implement strong authentication without requiring end-users to carry expensive third-party hardware tokens.
  • Entrust IdentityGuard was named a finalist in the 2009 SC Awards -- 'Best Multi- and Second-factor Solution' category -- for outstanding achievement in information technology security. Entrust IdentityGuard was selected from more than 600 entries submitted in more than 30 technology categories.
  • Entrust advanced its role as the world's ePassport leader by being selected to supply the CA software for Finland's migration to advanced second-generation ePassports based on the Extended Access Control (EAC) standard. Finland's Population Register Centre expects the transition to the new EAC ePassport CA solution to be complete by the end of the first quarter in 2009. The Finnish Population Register Centre will be able to provide the Finnish Police the ePassport CA services needed for the issuing of EAC ePassports to its citizens.
  • Entrust and Adobe announced a partnership to provide specialized digital certificates in support of Adobe's Certified Document Services (CDS) program. Entrust Certificates for Adobe CDS enable organizations to digitally sign Adobe PDF files with confidence. Recipients will be able to take advantage of visual trust indicators to verify who published the document and confirm whether it has been altered. Entrust Certificates for Adobe CDS work seamlessly with both Adobe(R) Reader(R) and Adobe Acrobat(R) (version 6.0 or later) on the desktop and Adobe LiveCycle Digital Signatures ES on the server.
  • Entrust was named a 2009 finalist for Network Products Guide's "Hot Companies Award," ranking the organization among the world's elite "Software-as-a-Service" companies. This recognition distinguishes Entrust out of more than 600 companies worldwide. Entrust is identified as a leading information security company due to breadth and depth of products, strong commitment and quality of employees and executive leadership, and strategic market dynamics and market penetration.
  • Societe Generale displaced high-priced, third-party hardware tokens in favor of Entrust IdentityGuard versatile authentication platform. Facilitated by technology partner Digital People, Societe Generale, one of the largest banks in France, purchased 1,500 Entrust IdentityGuard grid cards with the potential of extending to thousands of users. The grid cards are leveraged to authenticate access to the company's investment Web portal for high-end clients.
  • Michigan's Oakland County, one of the first county governments in the nation to offer this level of Web site encryption, selected Entrust Extended Validation SSL certificates to help instill a high level of citizen trust for their online eCommerce applications and services. More than 1.2 million citizens in Oakland County, which borders Detroit, Mich., will be able to access their county eCommerce online services secured with Entrust EV SSL certificates.
  • Susquehanna Bancshares moved from high-priced, one-time-passcode (OTP) hardware tokens to Entrust IdentityGuard hardware tokens. As part of the rollout, Entrust assisted with the deployment of the Entrust IdentityGuard versatile authentication platform -- the foundation for the OTP token -- to help authenticate remote Susquehanna employees who leverage VPN applications to access corporate networks and resources.

GAAP to Non GAAP Reconciliation

The following charges for the fourth quarter and full year of 2008, reconcile the GAAP and non-GAAP earnings per share:

  • Stock-based compensation charge in accordance with SFAS 123R of approximately $277,000, or $(0.00) per share for the fourth quarter of 2008, and approximately $1.9 million, or $(0.03) per share for the full year of 2008.
  • Amortization charges of intangible assets primarily associated with the acquisition of Business Signatures, Orion and AmikaNow of approximately $378,000, or $(0.01) per share for the fourth quarter of 2008, and approximately $1.9 million, or $(0.03) per share for the full year of 2008.
  • Write-down of long-terms assets
  • Adjusting for currency to maintain a constant currency when comparing fourth quarter results to prior year.

See table below for further details of Entrust's supplemental reconciliation of GAAP to non-GAAP measures.

Entrust will host a live teleconference and Webcast today, January 29, 2009 at 5 p.m. EST, featuring President and CEO Bill Conner and Chief Financial Officer David Wagner, to discuss the company's fiscal fourth quarter and fiscal year-end 2008 results. The conference call audio will be available live via dial-in at 1-800-732-9307 and via the Internet at http://phx.corporate-ir.net/playerlink.zhtml?c=73119&s=wm&e=2063819. Please log on approximately 15 minutes before the Webcast begins in order to register and to download and install any necessary audio software. An archive of the Webcast will be available for 90 days at the above Internet address.

For those unable to attend the live conference call, an audio replay will be available beginning at 7 p.m. EST, January 29, 2009, through Thursday, February 5, 2009, at 11:59 p.m. EST. The North American replay number is 1- 877-289-8525 and the international replay number is 416-640-1917. Both numbers have a pass code of 21293673#.

Use of Non-GAAP Financial Measures

To supplement the financial results that are prepared and presented in accordance with accounting principles generally accepted in the United States, Entrust's management prepares and uses non-GAAP financial measures for many of its internal financial, operating and planning reports. The company's management believes that by excluding charges such as the purchased intangibles amortization in cost of goods sold, the amortization of purchased intangible assets in operating expenses, stock compensation expense, restructuring charges and write down of strategic investments from its GAAP-based results, these non-GAAP financial measures are more likely to facilitate investors' understanding of the company's ongoing business operating results. These non-GAAP financial measures also facilitate comparisons to the operating results of the company's competitors and provide investors with greater transparency with respect to the supplemental information used by management in its operational and financial decision making.

The non-GAAP measures are included to provide investors with supplemental information to facilitate their understanding of Entrust's operating results and future prospects. Management uses these non-GAAP measures to assess its success in reducing the company's cost structure, to measure its ongoing cash operating costs, and to establish budgets and operational goals. The presentation of this additional information should not be considered in isolation or as a substitute for financial and operating results prepared in accordance with accounting principles generally accepted in the United States, as non-GAAP measures are susceptible to varying calculations and they may not be comparable, as presented, to other similarly titled measures of other companies.

This press release contains forward-looking statements relating to Entrust's projected revenue, net income per share, non-GAAP income per share and cash flow from operations for the first half and full year 2009, the company's planned first quarter non-GAAP total expenses and bookings for Entrust's subscription based products. Such statements are based upon preliminary estimates which involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are unforeseen operating expenses, inaccuracy in preliminary estimates issues associated with revenue recognition, issues raised in connection with the review of quarterly financial results, currency fluctuations, and the risk factors detailed from time to time in Entrust's periodic reports and registration statements filed with the Securities and Exchange Commission, including without limitation Entrust's Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and Quarterly Reports on Form 10-Q for the quarter ended September 30, 2008. While Entrust may elect to update forward-looking statements in the future, Entrust specifically disclaims any obligation to do so, even if its estimates change.

About Entrust

Entrust [NASDAQ: ENTU] secures digital identities and information for consumers, enterprises and governments in more than 2,000 organizations spanning 60 countries. Leveraging a layered security approach to address growing risks, Entrust solutions help secure the most common digital identity and information protection pain points in an organization. These include SSL, authentication, fraud detection, shared data protection and e-mail security. For information, call 888-690-2424, e-mail entrust@entrust.com or visit www.entrust.com.

Entrust is a registered trademark of Entrust, Inc. in the United States and certain other countries. In Canada, Entrust is a registered trademark of Entrust Limited. All Entrust product names are trademarks of Entrust. All other company and product names are trademarks or registered trademarks of their respective owners.

                                 ENTRUST, INC.
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)


                                            Three Months
                                               Ended         Year Ended
                                          December 31st,   December 31st,
                                          ==============   ==============
                                          2008     2007     2008     2007
                                          ====     ====     ====     ====

    Revenues:
      Product                            10,179  $10,123   38,257  $36,367
      Services and maintenance           14,709   16,543   61,404   63,298
                                         ------   ------   ------   ------
    Total revenues                       24,888   26,666   99,661   99,665
                                         ------   ------   ------   ------

    Cost of revenues:
      Product                             1,917    2,011    8,605    7,796
      Services and maintenance            6,937    7,947   29,047   30,359
      Amortization of purchased
       product rights                       128      368      916    1,400
                                         ------   ------   ------   ------
    Total cost of revenues                8,982   10,326   38,568   39,555
                                         ------   ------   ------   ------

    Total gross profit                   15,906   16,340   61,093   60,110
                                         ------   ------   ------   ------

    Operating expenses:
      Sales and marketing                 7,479    8,255   31,805   34,368
      Research and development            3,804    4,586   17,249   20,176
      General and administrative          2,869    3,074   11,715   12,521
      Write-down of long-term asset           -        -    1,518        -
      Restructuring charges and
       adjustments                          (80)       -      (80)       -
                                         ------   ------   ------   ------
    Total operating expenses             14,072   15,915   62,207   67,065
                                         ------   ------   ------   ------

    Income (loss) from operations         1,834      425   (1,114)  (6,955)
                                         ------   ------   ------   ------

    Other income (expense):
      Interest income                        49      144      371      688
      Foreign exchange gain                  49     (313)     205     (331)
      Gain on sale of long-term
       strategic investments                  -      793       18      793
      Write-down of long-term
       strategic investments                (45)       -      (45)       -
      Loss from equity investments            -        -        -      (77)
                                         ------   ------   ------   ------
    Total other income (expense)             53      624      549    1,073
                                         ------   ------   ------   ------

    Income (loss) before income taxes     1,887    1,049     (565)  (5,882)

    Provision for income taxes               73       80      462      308
                                         ------   ------   ------   ------

    Net income (loss)                    $1,814     $969  $(1,027) $(6,190)
                                        =======  =======   =======  =======

    Weighted average common
     shares used
      Basic                              61,438   61,066   61,322   60,804
      Diluted                            61,438   61,066   61,322   60,804

    Net income (loss) per share
      Basic                               $0.03    $0.02   ($0.02)  ($0.10)
      Diluted                             $0.03    $0.02   ($0.02)  ($0.10)



                    ENTRUST, INC.
       UNAUDITED CONDENSED CONSOLIDATED BALANCE
                        SHEETS
                    (in thousands)


                            December 31,  December 31,
                                2008         2007
                            ===========   ===========

    ASSETS

    Cash and cash
     equivalents             $24,312       $20,485
    Accounts
     receivable, net of
     allowance for
     doubtful accounts        18,419        20,773
    Other current
     assets                    3,262         4,079
    Property and
     equipment, net            1,290         1,490
    Purchased product
     rights and other
     purchased
     intangible assets,
     net                       9,622        11,543
    Goodwill                  60,214        60,214
    Long-term
     strategic and
     equity investments           46            91
    Other long-term
     assets, net                 881         3,479
                            --------      --------

      Total assets          $118,046      $122,154
                            ========      ========


    LIABILITIES AND SHAREHOLDERS' EQUITY

    Accounts payable
     and accruals            $15,258      $16,330
    Accrued
     restructuring
     charges                  13,612       19,266
    Deferred revenue          27,756       27,894
    Long-term
     liabilities                 772          218
                            --------     --------

      Total liabilities       57,398       63,708

    Shareholders'
     equity                   60,648       58,446
                            --------     --------

      Total
       liabilities and
       shareholders'
       equity               $118,046     $122,154
                            ========     ========





    The following supplemental tables provide non-GAAP financial measures
    used by the company's management to evaluate operational results.  The
    company believes this information may be useful to investors.   In
    addition to disclosing financial results calculated in accordance with
    U.S. generally accepted accounting principles (GAAP), the company's
    earnings release contains non-GAAP financial measures that exclude the
    income statement effects of share-based compensation, amortization of
    purchase product rights and other purchased intangibles, write-down of
    long-term assets and non recurring restructuring and impairment charges,
    as well as adjusting for currency effects to maintain a constant
    currency with the prior year's results. The non-GAAP financial measures
    disclosed by the company should not be considered a substitute for, or
    superior to, financial measures calculated in accordance with GAAP, and
    the financial results calculated in accordance with GAAP and
    reconciliations to those financial statements should be carefully
    evaluated. The non-GAAP financial measures used by the company may be
    calculated differently from, and therefore may not be comparable to,
    similarly titled measures used by other companies.

    Set forth below are reconciliations of the non-GAAP financial measures to
     the most directly comparable GAAP financial measures.

    For additional information regarding these non-GAAP financial measures,
    see the Form 8-K dated January 29, 2009 that Entrust has filed with the
    Securities and Exchange Commission.


                              ENTRUST, INC.
                              SUPPLEMENTAL
               RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
                  (in thousands, except per share data)
                                     Three Months
                                         Ended         Year Ended
                                    December 31st,    December 31st,
                                    ==============    ==============
                                     2008     2007     2008     2007
                                     ====     ====     ====     ====


    Reconciliation of net
     income (loss) per GAAP
     to Non-GAAP income
     (loss):
    GAAP net income (loss)         $1,814     $969  $(1,027) $(6,190)
      Adjustments for
       share-based
       compensation
       expense:
              Cost of  revenues        35       61      183      286
              Sales and marketing      91      346      651    1,279
              Research and
               development            (47)      28      136      602
              General and
               administrative         198      189      957    1,639
      Amortization of other
       purchased intangibles:
              Cost of revenues         39       39      154      153
              Sales and marketing     211      211      844      877
      Amortization of purchased
       product rights                 128      368      916    1,400
      Restructuring charges and
       adjustments                    (80)       -      (80)       -
      Write-down of long-term
       strategic investments           45        -       45        -
      Write-down of long-term
       asset                            -        -    1,518        -
                                  -------  -------  -------  -------

    Non-GAAP income (loss)         $2,434   $2,211   $4,297      $46
                                  =======  =======  =======  =======


    Reconciliation of net
     income (loss) per
     diluted share according
     to GAAP to Non-GAAP
     income (loss) per
     diluted share:

    GAAP net income (loss)
     per diluted share              $0.03    $0.02   ($0.02)  ($0.10)
                                  -------  -------  -------  -------

      Adjustments for
       share-based compensation
       expense                       0.01     0.01     0.03     0.06
      Amortization of other
       purchased intangibles            -        -     0.02     0.02
      Amortization of purchased
       product rights                   -     0.01     0.01     0.02
      Restructuring charges and
       adjustments                      -        -        -        -
      Write-down of long-term
       strategic investments            -        -        -        -
      Write-down of long-term
       asset                            -        -     0.03        -
                                  -------  -------  -------  -------
                                     0.01     0.02     0.09     0.10
                                  -------  -------  -------  -------

    Non-GAAP income (loss)
     per diluted share              $0.04    $0.04    $0.07    $0.00
                                  =======  =======  =======  =======

    Weighted average common
     shares used                   61,438   61,066   61,322   60,804
                                  =======  =======  =======  =======


    Reconciliation of net cash
     flow from operating
     activities per GAAP to
     Non-GAAP cash flow from
     operations before the net
     change in restructuring
     accruals:

    GAAP net cash flow from
     operating activities          $2,176  $(1,642)  $6,369  $(4,529)
      Adjustments to exclude
       the effects of:
              Net change in
               accrued
               restructuring
               charges              1,484    1,312    5,654    5,252
                                  -------  -------  -------  -------

    Non-GAAP cash flow from operations
     before the net change in
     restructuring accruals        $3,660    $(330) $12,023     $723
                                  =======  =======  =======  =======




                          Three Months     Percentage Change
                             Ended             Versus:
                          December 31st,   -----------------
                              2008        Q4, 2007  Q3, 2008
                           ========       ========  ========
                          (in millions)
    Reconciliation of
     financial measures
     after adjusting for
     constant currency:

    Product revenues,
     as per GAAP                 $10.2        1%        8%
      Adjustment to exclude
       the effect of currency
       changes from the
       prior year                  1.4       14%       15%
                               -------   -------   -------

    Non GAAP product
     revenues,
     adjusting
     for currency                $11.6       15%       23%
                               =======   =======   =======

    Services and
     maintenance
     revenues, as per GAAP       $14.7      -11%       -2%
      Adjustment to exclude
       the effect of currency
       changes  from the
       prior year                  1.6       10%       11%
                               -------   -------   -------

    Non-GAAP services
     and maintenance
     revenues, adjusting for
     currency                    $16.3       -1%        9%
                               =======   =======   =======

    Total revenues, as
     per GAAP                    $24.9       -7%        2%
      Adjustment to exclude
       the effect of currency
       changes  from the
       prior year                  3.0       12%       12%
                               -------   -------   -------

    Non-GAAP total
     revenues, adjusting for
     currency                    $27.9        5%       14%
                               =======   =======   =======

    Net income, as per
     GAAP                         $1.8
      Adjustment to exclude
       the effect of currency
       changes from the
       prior year                  0.7
                               -------

    Non-GAAP net
     income,
     adjusting for
     currency                     $2.5
                               =======

    Deferred revenue,
     as per GAAP                 $27.8        0%        1%
      Adjustment to exclude
       the effect of currency
       changes from the
       prior year                  3.3       11%       12%
                               -------   -------   -------

    Non-GAAP deferred
     revenue, adjusting
     for currency                $31.1       11%       13%
                               =======   =======   =======



                Forward Looking Guidance
                Earnings Per Share Range
                ------------------------

                                 First Half          Full Year
                                    2009               2009
                                 ----------         ----------
      U.S. GAAP measure        $0.03     $0.05        $0.11

      Adjustments to exclude
       the effects of
       amortization of
       purchased
       intangible
       assets                   0.01      0.01         0.02

      Adjustments to exclude
       the effects of
       expenses related to
       stock-based
       compensation             0.01      0.01         0.02

                               -----     -----        -----
      Non-GAAP figures         $0.05     $0.07        $0.15
                               =====     =====        =====

           Forward Looking Guidance
             Total Quarterly Costs
             ---------------------
                               (in millions)
                                  Q1, 2009
                                  ---------
      U.S. GAAP measure        $20.7     $21.7

      Adjustments to exclude
       the effects of
       amortization of
       purchased
       intangible
       assets                    0.4       0.4

      Adjustments to exclude
       the effects of
       expenses related
       to stock-based
       compensation              0.3       0.3

                               ---------------
      Non-GAAP figures         $20.0     $21.0
                               ===============

           Forward Looking Guidance
           Cash Flow from Operating
                   Activities
           ------------------------
                                     (in millions)
                                       Full Year
                                         2009
                                      ----------
      U.S. GAAP measure                   $9.4

      Adjustments to exclude
       the effects of the
       net change in accrued
       restructuring charges               5.6

                                      ----------
      Non-GAAP figures                   $15.0
                                      ==========



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SOURCE Entrust, Inc.
Copyright©2009 PR Newswire.
All rights reserved


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