UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant x                             Filed by a Party other than the Registrant ¨

Check the appropriate box:

 

¨ Preliminary Proxy Statement

 

¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

¨ Definitive Proxy Statement

 

x Definitive Additional Materials

 

¨ Soliciting Material Pursuant to §240.14a-12

ENTRUST, INC.

 

(Name of Registrant as Specified In Its Charter)

  

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

¨ No fee required.

 

¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

  (1) Title of each class of securities to which transaction applies:

 

 
  (2) Aggregate number of securities to which transaction applies:

 

 
  (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 
  (4) Proposed maximum aggregate value of transaction:

 

 
  (5) Total fee paid:

 

 

 

x Fee paid previously with preliminary materials.

 

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

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This filing consists of information initially used on May 22, 2009 by Entrust, Inc. in connection with a presentation made to RiskMetrics Group.

Investor Relations
May-June 2009

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2
Today's Presentation contains forward-looking statements, within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Act of 1934, relating to Entrust Inc.’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 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, unconverted customer
opportunities, issues associated with revenue recognition, issues raised in connection with the review of
quarterly financial results, 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 and 10-Q for the fiscal quarter ended March 31, 2009. 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.
This presentation does not constitute an offer of any securities for sale.  In connection with the proposed
merger transaction, Entrust has filed a proxy statement regarding the proposed merger transaction with
the Securities and Exchange Commission.  Investors and security holders are urged to read the proxy
statement and other documents filed by Entrust with the SEC because they contain important
information about Entrust and the proposed merger transaction.  Investors and security holders may
obtain a free copy of the definitive proxy statement and other documents at the SEC’s website at
www.sec.gov.   The definitive proxy statement and other relevant documents may also be
obtained free of charge from Entrust by directing such requests to:  Entrust, Inc., 5400 LBJ
Freeway, Suite 1340, Dallas, Texas 75240, Attention:  Investor Relations.  Investors and security
holders are urged to read the proxy statement and other relevant materials before making any
voting or investment decisions with respect to the merger.

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Agenda
The Board of Directors of Entrust, Inc. believes that $1.85 per share would result in greater
value to the company’s stockholders than the other alternatives it has considered.
•
Company Background
•
Entrust Stock Price Performance
•
Transaction Overview
•
Conclusion

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Company Background

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Entrust is a World Leader in Identity Management and Security Software
•
Founded in 1994, publicly-listed in 1998 (NASDAQ: ENTU)
•
Best-in-class
technology,
service
and
support
–
industry
pioneer
•
Over
2000
customers
in
50
countries
–
global
reach
•
Geographic presence: U.S., Canada, UK, Japan, India,
Germany, and China
•
~400 employees and 110+ patents
•
2008 Revenue: ~$100.0 million

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Business Diversity and Complexity
Fraud/RBA
US
EMEA
CALA
46%
25%
29%
PKI
Product Platforms
Verticals
Geographies
Confidential ~ Entrust Board of Directors

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Revenue
Growth
~
Mix
shift
and
exchange
rate
flattening
growth
curve
$M
$91M
$98M
$95M
$100M
31% Growth;
7% CAGR on
Software
10% Total
Growth;
2% CAGR
$100M
Overall
Services
Flat
0
20
40
60
80
100
120
2004
2005
2006
2007
2008
Service
Product

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20.1
22.3
10.8
15.2
14.8
0.9
1.6
9.7
6.0
3.6
3.5
4.5
5.5
7.3
9.6
4.8
5.8
9.4
7.9
10.4
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
2004
2005
2006
2007
2008
Public Key Infrastruture
Pupblic Key Infrastructure Info Protection
SSL
Risk Based Authentication
Product Transition
~ New product strength is holding growth rate flat as PKI model transitions
$mm
$29.3
$34.2
$35.5
$36.4
$38.4

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Market Dynamics:
Security Software
MANAGED SERVICES
Enterprise Software
System Integrators/Networks
Entrust
Oracle
Cisco
Microsoft
CA
Verizon
SI’s
EMC
Verisign
Symantec
Local Vendors
Local Vendors
IBM
McAfee
Open Source
Checkpoint
HP
Microsoft
“SAAS”
Siemens
Thales
IBM
Open Source

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Company Challenges:
•
Uncertain economic outlook globally and especially in the financial
vertical
•
Public compliance costs are increasing for small companies
•
Increased competition from larger players requires increased scale
to compete
•
Risks involved with business changes that would be required to
remain stand alone
•
The thorough process has examined other strategic alternatives

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Entrust Stock Performance

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Source: FactSet.
Note: Security Comps include: ACTI, CA, CHKP, FIRE, GUID, MFE, SNWL, SYMC, VDSI, VRSN, WBSN. 
Sub-Scale Security Comps include: ACTI, GUID, FIRE, SNWL, VDSI.
May - 2006
Oct - 2006
Feb - 2007
Jul - 2007
Nov - 2007
Apr - 2008
Aug - 2008
Jan - 2009
May - 2009
(75)%
(50)%
(25)%
0%
25%
50%
75%
100%
Indexed Price
Entrust
NASDAQ
Security Comps
Sub-Scale Security
NASDAQ:
(21.2%)
Entrust:
(34.7%)
Security
Comps:
(14.4%)
3-Year Relative Stock Price Performance
Sub-Scale
Security:
(32.9%)

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Transaction Overview

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Transaction Background and Key Dates
Date
Event
10/15/2007
Board of directors approved the engagement of Barclays Capital as Entrust’s financial advisor to assist
Entrust in exploring various strategic alternatives
12/2007 - 3/2008
Entrust ran sell side process which ended in the Board determining the bid was insufficient
9/2008
Board directed company to evaluate "Go Private" alternatives
9/2008
Thoma Bravo contacted Entrust again in regards to exploring an acquisition of Entrust
9/2008 - 10/2008
Entrust management conducted initial discussions with Thoma Bravo and another private equity firm in
regards to a potential acquisition of the company
- Thoma Bravo and the other private equity firm negotiated NDAs and gave initial price guidance
11/2008 - 12/2008
Thoma Bravo and the other private equity firm conducted initial due diligence with access to data room
12/23/2008 - 12/24/2008
Received bid package from Thoma Bravo offering $1.75 and the other private equity firm conveyed it
was no longer interested in exploring a transaction with Entrust
12/26/2008
Strategic Planning Committee decided to continue negotiations with Thoma Bravo and grant access to
more diligence materials in an effort to receive a better offer price
1/2009 - 4/2009
Thoma Bravo conducted further diligence and held management meetings
2/20/2009
Thoma Bravo sent Letter of Intent offering $1.85 per share for Entrust
4/11/2009
Entrust Board of Directors approved transaction with Thoma Bravo

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Transaction Overview
•
Rigorous, deliberative Board process designed to ensure
stockholders receive maximum value for their investment
–
Considered all reasonable alternatives to deliver full value to stockholders
–
Advised by internationally recognized financial firm & leading law firm
•
Why this approach
–
Offers the company a higher baseline from which to promote the value of the business
to strategic acquirers
–
The strength of contract should give strategic buyers the comfort in the stability of the
business and quality of the diligence examination to make a superior bid
–
If the strategic bidders fail to compete, it validates a view that the strategic buyers had
shopped and found alternatives

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Transaction Overview (continued)
•
In the course of reaching its decision, over a period of several
months,
the Board consulted members of senior management, financial and legal
counsel and considered a number of factors, including:
–
None of the possible alternatives to the merger were reasonably likely to present superior opportunities for
Entrust or create greater stockholder value
–
Risks of Entrust meeting its operating plan given volatile and uncertain economic conditions, increasing costs
of operating a small public company, increased competition from large-scale competitors and Entrust’s
historical performance relative to its operating plan and strategic goals
–
Historical and projected challenges with growing revenue and maintaining profitability, including but not limited
to
the
decline
in
Entrust’s
revenue
in
Q1
2009
–
The view expressed by several significant stockholders, including Empire Capital, that such stockholders
were generally supportive of a merger transaction
–
The results of the process conducted to evaluate strategic alternatives available to Entrust
–
The
terms
of
the
Merger
Agreement
including
a
30-day
post-signing
“go-shop”
period

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Transaction Overview (continued)
•
Fair value of $1.85 cash per share
–
Premium to 30-day trading day average ending 4/9/09 (22.5% premium)
–
Valuation supported by publicly traded companies analysis, DCF analysis, selected
precedent transaction analysis, transaction premium analysis, historical share price
analysis
and
present
value
of
equity
research
analysts’
12-month
price
targets
•
Deal structure and certainty of terms
–
100% cash with no financing issues / condition
–
The
merger
agreement
contained
a
customary
“go-shop”
provision
under
which
Entrust
could solicit alternative proposals from third parties during the 30 calendar days post
announcement, which ended May 13, 2009
–
Deal Certainty

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Key Terms
•
Minimum cash balance of $21.5 million (or $23 million if the closing occurs
before July 15, 2009 or after September 15, 2009)
•
Break up fee:
–
2.0% ($2.3M) of the Company’s equity value on signing date during go-shop period; 4.0%
($4.6M) of the Company’s equity value on signing date after go-shop period
–
In case
of
a
stockholder
no-vote,
Company
to
pay
expenses
up
to
$1.0
million
to
Thoma
Bravo
•
HSR antitrust review waiting period terminated on May 23, 2009
•
Entrust stockholder vote scheduled for June 8, 2009

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Transaction Provides a Significant Premium
1.
Trading day averages ending 4/9/09.
2.
Intraday
low
during
period
in
which
the
original
Thoma
Bravo
offer
of
$1.75
per
share
had
been
outstanding.
3.
Per Entrust’s
1Q09 10-Q.
4.
Outstanding
lease
liability
per
Entrust’s
1Q09
10-Q.
5.
Street estimates per Wall Street research consensus estimates.
6.
Entrust Management projections.
Offer Price Per Share
$1.85
30-Trading Day Average
(1)
$1.51
22.5%
90-Trading Day Average
(1)
$1.47
25.8%
Intraday Low
(2)
$0.98
88.8%
Equity Value
$114.4
Less Existing Cash
(3)
$26.6
Debt
(4)
$14.8
Net Cash
$11.8
Enterprise Value
$102.6
Transaction Multiples
Revenue
CY2009E Revenue (Street)
(5)
1.12x
CY2009E Revenue (Management)
(6)
1.14x
Pro Forma EPS
CY2009E Cash P/E (Street)
(5)
12.7x
CY2009E Cash P/E (Management)
(6)
9.3x

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Transaction Rationale
•
Board carefully considered other strategic alternatives as sources of
stockholder value, but deemed them to have greater risk and lower
probability of a higher valuation now or in the future
•
Post-signing market check process
–
3
other
indications
of
interest
have
emerged,
there
can
be
no
assurances,
however,
that
any
of
these
non-
binding
indications
of
interest
will
result
in
a
“Superior
Proposal”
within
the
meaning
of
the
Merger
Agreement.
•
Why support this deal
–
The board has acted responsibly to secure a contract and financing certain deal at a
premium to market
–
A vote for this deal preserves the base line value while providing the board the
opportunity to secure a higher value, provided any higher value proposal offers
stockholders equivalent comfort in receiving the purchase consideration

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Conclusion

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22
Conclusion
•
Board
process
designed
to
ensure
stockholders
receive
full
value
for
their investment alternatives
–
Considered all reasonable alternatives to deliver full value to stockholders
•
Fair value of $1.85 cash per share
–
Fairness of price supported by valuation analysis
•
Optimal structure and certainty of terms
–
100% cash with no financing issues / condition
•
Customary “go-shop”
provision that allows Entrust to consider and
accept better offers
•
Entrust Board continues to believe the proposed transaction is in the
best interest of stockholders
•
The Board recommends stockholders vote FOR the proposed transaction
today.
Entrust (MM) (NASDAQ:ENTU)
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