Entrust 8-K 2007
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 31, 2007
(Exact Name of Registrant as Specified in its Charter)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Attached hereto as Exhibit 99.1 and incorporated by reference herein is financial information for Entrust, Inc. for the quarter ended June 30, 2007 and forward-looking statements relating to 2007 as presented in a press release of July 31, 2007. The information in this Item 2.02 shall be deemed incorporated by reference into any registration statement heretofore or hereafter filed under the Securities Act of 1933, as amended, except to the extent that such information is superseded by information as of a subsequent date that is included in or incorporated by reference into such registration statement. The information in this Item 2.02 shall not be treated as filed for purposes of the Securities Exchange Act of 1934, as amended.
In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (GAAP), the companys earnings release contains non-GAAP financial measures. For non-GAAP financial measures presented in the earnings release, the most directly comparable financial measure is provided, along with a reconciliation of the differences between the non-GAAP financial measures. Additionally, the Company offers the following with respect to each non-GAAP adjustment item:
The reasons why the companys management believes theses non-GAAP financial measures provides useful information; and
If material, any additional purposes for which the companys management uses the non-GAAP financial measure.
Stock Compensation Expense
Management uses non-GAAP financial measures excluding Stock Compensation Expense for managerial assessment purposes, including as a means to compare prior periods and evaluate operational results. Internal management reports and reports to the Board of Directors present both the GAAP and non-GAAP measure. The trend of stock option expense is generally known and the plan details are fully disclosed in the Companys notes to its financial statements and the Companys critical accounting policies further discuss.
Management believes stock compensation expense non-GAAP adjustment is significant to investors because stock compensation expenses are non-cash items, their fair value in the financial statements is estimated, and the non-GAAP adjustment allows comparability to prior periods for which they were not expensed under GAAP, prior to the implementation of SFAS 123R.
Amortization of Intangibles
Management excludes the amortization of intangibles when assessing and making decision regarding operational and R&D funding decisions. Management believes the non-GAAP adjustment is significant to investors because the amortization of intangibles is a non-cash item, and the amount was determined as a result of a prior acquisition decision and is not indicative of future cash operating costs. Disclosure of this amount also allows investors to measure the amount of current funding in R&D. The trend of amortization is known and is detailed in the notes to the Companys accounting statements.
Management evaluates current operational performance by excluding restructuring charges, and as a means to compare prior periods which also exclude such charges. The Company believes the non-GAAP adjustment is significant to investors because it relates to an abandoned facility that was exited under a restructuring program. The change of estimate of sublease income is not indicative of future cash operations costs and it allows comparability to prior periods. The trend of restructuring expense is not generally known. However, the cash commitments and estimated recoveries are fully disclosed in the Companys notes to its financial statements and the Companys critical accounting policies further discuss the risks associated with the estimates.
Impairment of Strategic Investments
Management excludes impairment charges in its analysis of ongoing business operations, including both GAAP and non-GAAP measures in reports to the Board of Directors. Management also believes the non-GAAP adjustment is significant to investors because impairment charges are non-cash items that relate to an investment made in prior periods, and not central to the companys current operations or revenue stream. The impairments are not indicative of future cash operations costs and such disclosure allows comparability to prior periods. There is no trend of impairments as the expenses are not generally known. However, the Companys investments are fully disclosed in the Companys notes to its financial statements and the Companys critical accounting policies further discuss the risks associated with the estimates.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.