SafeNet Reports First Quarter Financial Results

On a sequential basis, revenues increased by 28% from the fourth quarter of 2003, or approximately $5.3 million. With the closing of the merger with Rainbow Technologies, Inc. on March 15, 2004, SafeNets financial results for the first quarter of 2004 include two weeks of combined operations. The net loss calculated on a GAAP (Generally Accepted Accounting Principles) basis for the quarter ended March 31, 2004, was approximately $500,000, or $0.03 per diluted share, which compares to a net loss of $9.7 million, or $1.07 per diluted share, for the same period of 2003. Adjusted net income for the 2004 first quarter was $2.9 million, or $0.18 per diluted share, compared to $1.5 million, or $0.15 per diluted share, for the quarter ended March 31, 2003. The quarterly adjusted net income and per share information excludes acquisition-related expenses, restructuring charges, and assumes a 35% income tax rate. These adjustments increased net income by $3.3 million, or $0.21 per diluted share, for the quarter ended March 31, 2004, compared to a net income increase of $11.2 million, or $1.16 per diluted share, for the quarter ended March 31, 2003. Business Updates Since the beginning of the first quarter of 2004, SafeNet has announced: - The completion of the merger with Rainbow Technologies. The new company now boasts a combined client base of over 5,000 worldwide customers with distribution channels extending across more than 100 countries. - The selection of SafeNets SafeEnterpriseT Security System by the Indonesia Government to secure taxpayer information, adding a high assurance level of security against unauthorised access to tax records. - The establishment of the new Sentinel Business Unit and the appointment of Prakash Panjwani to lead the unit. The new unit reflects the importance of the Sentinel business and the conviction that its Sentinel brand of Software Protection and License Management products, which originated from Rainbow Technologies, will continue to contribute to SafeNets growth. - The appointment of L. Thomas Van Huben as Vice President, Human Resources, reflecting the Companys priority to recruit and retain top people throughout the world. - The selection of SafeNets SafeXcelT-1141 VPN chip by Allied Telesyn, a global leader in Ethernet networking solutions for the access edge. Allied Telesyn is using the SafeXcel-1141 for its AR450S Security Router, an enterprise-class security appliance. - The selection of SafeNets CGX Mobile Library by NEC Electronics for its wireless chip sets. Built upon the successes of SafeNets CGX Cryptographic Library, the CGX Mobile Library provides developers with cryptographic security designed for small footprint environments such as mobile phones and PDAs. - The plans to enable powerful trust services for wireless developers with the SafeZoneT Trusted Mobile Computing Toolkit and SafeZone Trusted Mobile Computing IP products. The SafeZone products will enable wireless phone and consumer electronics platform manufacturers to protect copyrighted content, provide digital rights management services, reduce fraud, and support a range of revenue-driving services including multimedia content and games. - The availability of SafeNets SafeXcelT IP, license-ready intellectual property, in the newly introduced Au1550T security network processor from Advanced Micro Devices, Inc. (AMD). AMD is a global supplier of integrated circuits for the computing, communications, and consumer electronics markets. AMD is also using SafeNets CGX Mobile Library in order to easily port security functionality to the processor. - Participation in the Symbian Platinum Program to support the growing market for smartphones based on Symbian OST. As a Platinum Partner, SafeNet will make the recently announced SafeZoneT Trusted Mobile Computing Products available for