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NW_20000204_VASCO Reports Fourth Quarter and Record Fiscal 1999 Results

News Release
|   February 4, 2000

OAKBROOK TERRACE, Illinois – February 4, 2000 – VASCO Data Security International, Inc. (OTC BB: VDSI.OB; www.vasco.com), a leading provider of Internet and enterprise-wide security solutions worldwide, today released its preliminary consolidated results for the fourth quarter of $4.3 million in revenue, compared to $5.4 million for the same period in 1998. For the fiscal year ended December 31, 1999, the Company reported record total revenues of $19.4 million or an increase of 18% over revenues of $16.5 million for 1998. The Company’s fiscal 1998 financial results have been restated to reflect the acquisition of IntelliSoft Corp., which occurred in the fourth quarter of fiscal 1999 and is being accounted for as a pooling of interests.


For the fourth quarter of 1999, the Company reported a net loss of $1.4 million, or $0.05 per share on 26.3 million weighted average shares outstanding, as compared with a net loss of $700,000, or $0.03 per share, for the fourth quarter of 1998. For the year ended December 31, 1999, the net loss decreased to $2.7 million, or $0.11 per share, as compared to a net loss of $3.5 million, or $0.16 per share, for the same period of 1998.


The Company's results are subject to completion of the annual audit.


The key event in VASCO’s fourth quarter 1999 was the acquisition of IntelliSoft Corp., a privately held US provider of Internet and enterprise security software with customers that include John Hancock, 3M, Liberty Mutual, Duke University, Allmerica Financial, Cable and Wireless, and Banco Rio de la Plata in Argentina.


The acquisition instantly transformed VASCO from a worldwide provider of strong authentication security through its Digipass™ family of products to a true e-security and enterprise security solutions company. VASCO is offering IntelliSoft’s SnareWorks™ line of Single Sign-On, Web Security, PKI and LDAP enablement, access control, and user administration solutions to its customer base of hundreds of leading banks, corporations, and government agencies around the globe.


In addition, the Company is also aggressively expanding the sales, support, R&D, marketing, and business development infrastructure of its new IntelliSoft division to fully leverage its personnel and technology to present SnareWorks to major prospects worldwide. The Company is also actively expanding its IdentiSoft division’s global resources and capabilities to continue to grow its Digipass authentication business, with a particular focus on US expansion. These actions are reflected in higher sales and marketing expenses as well as higher general and administrative expenses in the fourth quarter of 1999.


"We have entered 2000 as a new company that is poised to take advantage of increased demand for enterprise and strong user authentication security, fueled by the exploding growth in the Internet economy," said Mario Houthooft, President and CEO of VASCO. "Every company today needs to protect its information and financial assets, and VASCO provides the enterprise security infrastructure for mainframe, client/server, and Internet platforms and applications to meet their needs rapidly and affordably."


Other Q4 and Fiscal Year 1999 Highlights



To prepare for anticipated rapid growth in the need for its security solutions, the Company announced that it is structuring its business to fully leverage its capabilities to meet that demand. During the fourth quarter, VASCO formalized its organization along two worldwide divisional lines, known as IdentiSoft™ and IntelliSoft™. Each division has global responsibilities for the development, sales, and support of its product lines, utilizing an expanding set of global corporate resources and personnel for activities such as business development, marketing, and administration. The two divisions are also working closely together on joint sales and partnership opportunities.

Also during the fourth quarter, VASCO’s IntelliSoft Division Joined Entrust® Technologies’ Partner Program, with VASCO’s SnareWorks™ Client/VPN achieving Entrust Ready™ certification. This special designation signifies to customers that the partner’s product works with the current version of Entrust products. SnareWorks can deliver Entrust/PKI software’s capabilities to a large population of applications with no programming or intervention of any kind.

In September 1999, VASCO launched a breakthrough security solution, VACMAN Optimum – the first product on the market to give companies complete in-house control over the management of strong user authentication solutions. VACMAN Optimum thus allows companies to gain control over the Total Cost of Ownership for strong user authentication.

In May 1999, the Company announced that it had acquired the global assets of SecureWare, a French security software firm. SecureWare’s focus on developing security solutions for every leading operating system – including Windows NT, UNIX, IBM’s S/390 and AS/400, Tandem, Digital, Stratus, Hewlett-Packard, and Sun Solaris, among others – has allowed VASCO to broaden its product line to virtually every computing platform in use by businesses today. In addition, SecureWare’s team of highly experienced security software engineers is providing expanded R&D capabilities to meet the rapidly evolving needs of the marketplace.

In April 1999, VASCO announced that it had raised $11.5 million through a private placement of its common stock to leading institutional investors in Belgium. The placement was organized and managed by Artesia Bank (now Fortis Bank) and Bank Degroof.

VASCO introduced two new members of its Digipass family of authentication devices in March 1999: the Series 600 and the Series 700. The Digipass 600 is a multi-purpose security device, acting as a proximity card for physical access, an ID card for locations secured by guards, and a logical access key for computer networks. The Digipass 700 features an interactive design that allows banks, brokerages and financial institutions to provide secure access to more complex and advanced applications, without compromising ease of use.

Also in March 1999, the Company announced that it had received a single opening order for 100,000 units of its flagship Digipass 300 authentication device from Zagrebacka Banka DD, the largest bank in Croatia. The order demonstrated VASCO’s continued success in expanding into new markets.


VASCO Data Security now has several hundred customers in more than 50 countries around the world, including more than 130 of the world’s leading banks and members of the Fortune 500.

About VASCO


VASCO helps organizations rapidly and effectively secure their e-business and e-commerce applications and services. The Company’s family of Digipass™, VACMAN®, and SnareWorks™ products offers end-to-end security through true Single Sign-On, PKI, web security, strong user authentication, access control, user administration and encryption solutions that also sharply reduce the time and effort required to deploy and manage them. With hundreds of financial institutions, blue-chip corporations, and government agencies as customers in more than 50 countries, VASCO Data Security is a global leader in security solutions that support the Internet economy. More information is available at www.vasco.com and www.isoft.com.


Forward Looking Statements


Statements made in this news release that relate to future plans, events or performances are forward-looking statements. Any statement containing words such as "believes," "anticipates," "plans," "expects," and similar words, is forward-looking, and these statements involve risks and uncertainties and are based on current expectations. Consequently, actual results could differ materially from the expectations expressed in these forward-looking statements.


Reference is made to the Company’s public filings with the US Securities and Exchange Commission for further information regarding the company and its operations.


For more information please contact:

Americas:
Media: Kerry Roche, Bridgeman Communications, +1 617 742 7270, kerry@bridgeman.com
Investor Relations: Todd Fromer, KCSA Public Relations Worldwide, +1 212 682 6300, tfromer@kcsa.com
VASCO: Mike Lange, +1 630 932 8844, mbl@vasco.com

Europe/Asia:
Media (Benelux): Bob Pieters, Anthonissen & Associates, +32 3 286 7777, bob.pieters@anthonissen.be
Media (Europe/Asia): Sven Kersten, HBI, +49 89 99 38 87 33, sven_kersten@hbi.de
Investor Relations: Annemieke Blondeel, LBConsult, +44 208 308 7080, a.blondeel@dial.pipex.com
VASCO: Ariane Bosmans, +32 2 456 9810, arb@vasco.com