EXHIBIT (a)(9)
To: All InterTrust Employees
Re: Supplement to InterTrust Technologies Corporation Option Exchange Program.
Please read this message in its entirety.
Dear InterTrust Employees:
We are sending this letter based on comments from the Securities and Exchange
Commission (the "SEC") received after filing the recent offer to exchange (the
"Offer") outstanding options granted under the InterTrust Technologies
Corporation 1995 Stock Plan, 1999 Equity Incentive Plan and 2000 Supplemental
Plan (together, the "Plans") with an exercise price of $5.00 or more (after
giving effect to InterTrust's two-for-one stock split on February 24, 2000) for
new options InterTrust will grant under the Plans. Attached to this letter you
will find financial information which supplements the information provided in
the Offer. In deciding whether to participate in (or to modify or rescind your
participation in) the Offer, please consider this supplemental financial
information in making your decision. Any terms that are not otherwise defined in
this letter shall have the meanings given to them in the Offer.
Additionally, we have attached a revised letter of transmittal (the "Letter of
Transmittal") which removes the language requiring employees to acknowledge that
they have "read" and "understood" the Offer. You will be required to properly
complete and return to us this revised Letter of Transmittal by the expiration
date of the Offer. We apologize for the inconvenience to those of you who had
already submitted the original Letter of Transmittal.
If you wish to tender your options for exchange, you must complete and sign the
Letter of Transmittal in accordance with its instructions, and mail or otherwise
deliver it and any other required documents to us by fax to (408) 855-0144 or by
email to jamster@intertrust.com or by post to InterTrust Technologies
----------------------
Corporation, 4750 Patrick Henry Drive, Santa Clara, California 95054, Attn:
John Amster, Vice President, Corporate Development. If you have any questions
about the Offer or this supplemental information, please call John Amster at
(408) 855-0100. The offer expires on June 22, 2001 at 9:00 p.m., Pacific time,
unless it is extended by us.
Sincerely,
David Ludvigson
President
E-MAIL ATTACHMENT:
Set forth below is a selected summary of our financial information. The
selected historical statement of operations data for the years ended December
1999 and 2000 and the selected historical balance sheet data as of December 31,
2000 have been derived from the consolidated financial statements included in
our annual report on Form 10-K for the year ended December 31, 2000 that have
been audited by Ernst & Young LLP, independent public accountants. The selected
historical statement of operations data for the three months ended March 31,
2000 and March 31, 2001 and the selected historical balance sheet data as of
March 31, 2001, which are included in InterTrust's quarterly report on Form 10-Q
for the quarter ended March 31, 2001, are unaudited, but include, in the opinion
of management, all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of such data. The information presented below
should be read together with our consolidated financial statements and related
notes. We have presented the following data in thousands, except per share
amounts.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS DATA
(in thousands, except per share amounts)
Three Months
Year Ended December 31, Ended March 31,
----------------------- --------------------
2000 1999 2001 2000
---- ---- ---- ----
(unaudited)
Revenues:
Licenses.............................................. $ 4,150 $ 778 $ 1,387 $ 687
Software support and training......................... 3,149 613 730 660
Services.............................................. 244 150 276 --
Hardware.............................................. 445 -- 12 --
-------- -------- -------- --------
Total revenues...................................... 7,988 1,541 2,405 1,541
Cost of revenues:
Licenses.............................................. 436 141 137 103
Software support and training......................... 910 470 438 147
Services.............................................. 3,670 436 1,915 643
Hardware.............................................. 445 -- 417 --
-------- -------- -------- --------
Total cost of revenues.............................. 5,461 1,047 2,907 893
-------- -------- -------- --------
Gross profit (loss).................................... 2,527 494 (502) 454
Operating costs and expenses:
Research and development.............................. 24,475 16,472 9,391 5,201
Sales and marketing................................... 18,539 6,886 7,610 3,657
General and administrative............................ 9,890 5,588 3,946 2,228
Purchased in-process research and development......... 6,100 -- -- 6,100
Amortization of goodwill and other intangible assets.. 3,004 -- 2,193 --
Amortization of deferred stock compensation........... 3,326 1,704 723 1,006
-------- -------- -------- --------
Total operating costs and expenses.................. 65,334 30,650 23,863 18,192
-------- -------- -------- --------
Loss from operations................................... (62,807) (30,156) (24,605) (17,738)
Interest income, net................................... 10,867 1,876 2,770 2,112
Loss on debt and equity investments.................... (3,699) -- -- --
Provision for foreign income taxes..................... (2) (325) -- --
-------- -------- -------- --------
Net loss............................................... $(55,641) $(28,605) $(21,595) $(15,626)
======== ======== ======== ========
Basic and diluted net loss per share................... $ (0.66) $ (0.71) $ (0.24) $ (0.20)
======== ======== ======== ========
Shares used in computing the net loss per share........ 84,016 40,426 91,485 78,931
======== ======== ======== ========
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
As of December 31, As March 31,
------------------ ------------
2000 1999 2001 2000
---- ---- ---- ----
ASSETS
Current assets:
Cash and cash equivalents................................. $ 23,811 $ 98,286 $ 23,513 $ 86,801
Short-term investments.................................... 134,707 42,548 124,625 26,715
Accounts receivable, net*................................. 3,928 2,562 3,126 1,240
Prepaids and other current assets......................... 2,771 1,182 3,509 2,226
--------- -------- --------- --------
Total current assets................................... 165,217 144,578 154,773 116,982
Property and equipment, net............................... 8,919 3,356 10,950 4,166
Long-term investments..................................... 16,783 -- 26,766 19,591
Restricted long-term investments.......................... 944 -- 944 --
Goodwill and other intangible assets, net................. 29,453 3,426 39,216 21,820
Other assets.............................................. 5,557 137 5,914 417
--------- -------- --------- --------
$ 226,873 $151,497 $ 226,873 $162,976
========= ======== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 2,728 $ 2,184 $ 2,089 $ 2,487
Accrued compensation...................................... 2,155 1,113 2,955 1,106
Other accrued liabilities................................. 1,110 1,678 3,378 2,653
Deferred revenue.......................................... 5,915 3,052 4,536 3,576
--------- -------- --------- --------
Total current liabilities.............................. 11,908 8,027 12,958 9.822
Deferred revenue--long-term portion......................... 7,617 10,118 7,948 9,258
Other long term liabilities................................. -- -- 2,008 --
--------- -------- --------- --------
Total liabilities........................................... $ 19,525 $ 18,145 $ 22,914 $ 18,145
========= ======== ========= ========
Commitments and contingencies
Stockholders' equity:
Common stock.............................................. 88 79 119 80
Additional paid-in capital................................ 340,380 214,241 372,635 239,632
Deferred stock compensation............................... (3,274) (6,600) (5,873) (5,593)
Notes receivable from stockholders........................ (516) (196) (475) (177)
Accumulated other comprehensive income (loss)............. 376 (107) 544 (355)
Accumulated deficit......................................... (129,706) (74,065) (151,301) (89,691)
--------- -------- --------- --------
Total stockholders' equity............................. 207,348 133,352 215,649 143,896
--------- -------- --------- --------
$ 226,873 $151,497 $ 238,563 $162,976
========= ======== ========= ========
_________________
* Accounts receivable for the periods ended December 31, 2000 and 1999 are net
of allowances of $178 and $0, respectively. Accounts receivable for the periods
ended March 31, 2001 and 2000 are net of allowances of $1,029 and $0,
respectively.
The information set forth on pages F-1 through F-23 of InterTrust's Annual
Report on Form 10-K for its fiscal year ended December 31, 2000 and pages 3
through 8 of InterTrust's Quarterly Report on Form 10-Q for its fiscal quarter
ended March 31, 2000 is incorporated herein by reference and may be inspected
at, and copies may be obtained from, the same places and in the same manner as
set forth in the Offer to Exchange under "Additional Information."