VASCO Reports Second Quarter and First Six Months 2004 Results

Net income available to common shareholders for the second quarter of 2004 increased 106% to $888,000, or $0.03 per diluted share from $430,000, or $0.01 per diluted share in 2003. Net income available to common shareholders for the first six months of 2004 increased 124% to $1,390,000, or $0.04 per diluted share from $620,000, or $0.02 per diluted share in 2003. Financial Highlights: -- Results reflect the sixth consecutive quarter of operating profit and positive EBITDA. -- Gross profit was $5,075,000 or 71% of revenue for the second quarter and $9,521,000 or 72% of revenue for the first six months of 2004. Gross profit was $3,531,000 or 59% of revenue for the second quarter and $6,490,000 or 59% of revenue for the first six months of 2003. -- Operating expenses for the second quarter and first six months of 2004 were $3,596,000 and $7,143,000, respectively, an increase of 26% from $2,848,000 reported for the second quarter 2003 and an increase of 23% from $5,790,000 reported for the first six months of 2003. -- Operating income for the second quarter and first six months of 2004 was $1,479,000 and $2,378,000, respectively, an increase of 117% from $683,000 reported for the second quarter of 2003 and an increase of 240% from the $700,000 reported for the first six months of 2003. Operating income as a percentage of revenue for the second quarter and first six months of 2004 was 20.6% and 18.0%, respectively, compared to 11.5% and 6.3% for the comparable periods in 2003. -- Net income from continuing operations for the second quarter and first six months of 2004 was $953,000 and $1,536,000, respectively, an increase of 73% from $551,000 reported for the second quarter of 2003 and an increase of 114% from $719,000 reported for the first six months of 2003. -- Net income from total operations for the second quarter and first six months of 2004 was $953,000 and $1,536,000, respectively, an increase of 32% from $721,000 reported for the second quarter of 2003 and an increase of 28% from $1,202,000 reported for the first six months of 2003, respectively. Net income from total operations in 2003 included the results of its VACMAN Enterprise business, which was sold in the third quarter of 2003. -- Earnings before interest, taxes, depreciation and amortization (EBITDA) was $1,613,000 and $2,756,000 for the second quarter and first six months of 2004, respectively, an increase of 41% from $1,140,000 reported for the second quarter of 2003 and an increase of 69% from $1,630,000 reported for the first six months of 2003. -- Cash balances at June 30, 2004 totaled $6,350,000 compared to $4,167,000 and $4,817,000 at March 31, 2004 and December 31, 2003, respectively. Operational and Other Highlights: -- VASCO wins 115 new customers in Q2 2004 and 244 for the first six months of 2004. Year-to-date new customers include 33 new banks and 211 corporate customers. -- HSBC Brazil to use VASCOs Digipass GO3. -- VASCO launches four new products: VACMAN Middleware 2.2, Digipass 585, Digipass 850 Integration Toolkit for PKI and Digipass Plug-In for RACF. -- VASCOs Chairman & CEO and CFO present at Rodman & Renshaw Techvest Security Conference and AEA Microcap Conference. -- Soleil Securities Group initiates coverage of VDSI.