RSA Security Announces Third Quarter Results

Net income for the third quarter of 2003 was $3.6 million, or $0.06 per diluted share, compared with a net loss of $8.2 million, or ($0.14) per share, for the same period in 2002. The Companys third quarter 2002 net loss included restructuring charges of $2.7 million from the consolidation of facilities; a charge of $5.1 million for the decline in the fair value of the Companys investments; and charges totaling $3.3 million from amortization and accretion. Third Quarter Highlights: - Operating Results: RSA Security posted its sixth consecutive quarter of sequential revenue growth in the third quarter. The Company also generated a book-to-bill ratio of 1 to 1 and ended the quarter with more than $11 million in product and services backlog. In addition, RSA Securitys third quarter gross margin increased to 79.9 percent, and its operating margin expanded to 10.2 percent. - Cash Flow: Cash and cash equivalents increased by $61.8 million during the quarter to $191.2 million. This increase was due in part to positive operating cash flow, and in part as a result of the Companys receipt in early July 2003 of an income tax refund of $51.8 million from the recovery of income taxes paid in prior years. - Customer Base: RSA Security shipped product to more than 4,000 customers in the third quarter, including 700 new customers. The Company sold to a number of small- to mid-size organizations in a diverse range of vertical markets. Among the strongest vertical markets for RSA Securitys products in the third quarter were technology, financial services and telecommunications. - Technology Advances: In September, the Company announced RSA ClearTrust v5.5 web access management software. This product delivers advanced user management capabilities, web services support (including SAML v1.1-compliant federated identity management capabilities), robust transactional authorization functionality, and unparalleled integration with Microsoft platforms. - Product Recognition: The Companys RSA SecurID two-factor authentication software and RSA Keon e-Sign digital signing software were recently chosen as Best Security Products in Windows & .Net Magazines second annual Readers Choice Awards. Fourth Quarter Business Outlook RSA Securitys financial guidance for the fourth quarter of 2003 assumes no material change in the global IT spending environment. This guidance is current as of today only and is based upon the Companys expectation of an effective tax rate of approximately 22.5% for 2003. RSA Security undertakes no obligation to update its estimates: - Total revenue in the range of $63 million to $67 million. - Diluted earnings per share in the range of $0.04 to $0.0