NW_20021023_VASCO Reports Third Quarter Results

October 23, 2002

OAKBROOK TERRACE, Ill., and BRUSSELS, Belgium, October 23, 2002 - VASCO Data Security International, Inc. (Nasdaq NM: VDSI; Nasdaq Europe) ( www.vasco.com ), a global provider of security products that enable e-business and e-commerce, today announced financial results for the third quarter of 2002. Revenues for the quarter of $5,127,401 were 7% higher than the same quarter of the prior year and 24% higher than the second quarter of 2002.

Operating loss for the third quarter of 2002 was $692,841 compared with an operating loss of $4,023,885 for the third quarter of 2001. Operating expenses declined 42% from the previous year's third quarter from $6,463,891 to $3,752,969. The Company reported a net loss for the third quarter of 2002 of $808,882 or $0.04 per basic and diluted share compared with a net loss of $3,579,534 or $0.14 per basic and diluted share for the third quarter of 2001.

Revenues for the nine months ended September 30, 2002 were $15,310,082 compared with $20,696,011 for the first nine months of 2001. The operating loss for the nine months ended September 30, 2002 was $2,145,193 compared with $6,672,615 for the first nine months of 2001. Basic and diluted loss per share for the nine months ended September 30, 2002 was $0.12 compared with a basic and diluted loss per share of $0.25 for the first nine months of 2001.

The loss before interest, taxes, depreciation and amortization (EBITDA), and non-cash stock option compensation was $513,641 for the third quarter of 2002, and $1,257,846 for the first nine months of 2002, compared with a loss before these items of $3,306,012 in the third quarter of 2001, and $4,551,633 for the first nine months of 2001. The company had a cash balance at September 30, 2002 of $2,737,958 compared to $3,059,148 at June 30, 2002.

“The third quarter of 2002 was the second best third quarter in VASCO’s history both in terms of revenue and net result” said Mario Houthooft, VASCO’s President and CEO. “While Q3 is traditionally a weak quarter for VASCO, we were able to improve our position in comparison with the second quarter of 2002 and the third quarter of 2001 in spite of the challenging market conditions. These improvements reflect the benefits from our significant cost reduction program and the markets’ continued acceptance of VASCO’s Digipass and VACMAN products. We expect that the full effects of the cost reductions will be realized in the fourth quarter of this year and we believe that we are well positioned to move quickly to profitability and positive cash flow as market conditions return to more normal levels.”

Cliff Bown, Executive Vice President and CFO added, “As a result of our cost reduction programs and our increased focus on reducing Days Sales Outstanding (DSO) in receivables, we were able to reduce our cash outflow from over $900,000 in Q2 of 2002 to just over $300,000 in Q3. As the focus on DSO continues, I expect that we will see additional significant reductions in receivables. Those reductions along with the realization of the full benefits of the restructuring will further help solidify our cash position.”

(See table at the bottom of this release)

Highlights of the Quarter
- Skandia Bank Switzerland to use VASCO’s Digipass 250 to secure its customers’ assets
The customers of the international Internetbank Skandia Bank Switzerland, a subsidiary of the Swedish Skandia Group, are using VASCO’s Digipass 250 to securely perform e-banking and phone banking transactions.

- VASCO Continues its Growing Success in the Corporate Access Market by Partnering with STS/BUSINESSONE in the Middle East and Northern Africa .
VASCO and BUSINESSONE, a regional provider of e-Business solutions and services, joined forces in order to offer VASCO’s Digipass and VACMAN product families to the Middle Eastern market.

- VASCO Builds Strong Australian Reseller Network
By signing reseller agreements with 8 companies based in Sydney, Melbourne, Brisbane and Adelaide, VASCO has established a significant presence in the Australian market for its Digipass and VACMAN products.

- VASCO Data Security Appoints Clifford K. Bown Chief Financial Officer
VASCO announced the appointment of Clifford K. Bown to the position of Executive Vice President and Chief Financial Officer. In this position, Mr. Bown will be responsible for all accounting, treasury, investor relations, SEC reporting and compliance, financial controls, capital creation, and other financial matters for the Company worldwide.

- VASCO Continues Expansion in Corporate Network Access Market by Partnering with Miel, Leading Citrix and Netscreen Distributor in France
VASCO closed a partnership agreement with Miel a leading French distributor of Citrix and Netscreen. Miel delivers products to over 200 resellers in France

- VASCO Joins Liberty Alliance to Contribute to the Development of Open Network Standards for User Identification

Please join us during our upcoming conference call on October 23, 2002, at 10:00 a.m. EDT - 16:00h CET.
During the Conference Call, Mr Mario Houthooft, CEO and Mr Cliff Bown, CFO, will discuss VASCO’s Results for the Third Quarter 2002.
To participate in this Conference Call, please dial one of the following numbers:
USA/Canada: +1 800 374-0844 or +1 800 374-0868
International: +44 800 917-4860
and mention access code: VASCO to be connected to the Conference Call.

The Conference Call is also available in listen-only mode on www.vasco.com. Please log on 15 minutes before the start of the Conference Call in order to download and install any necessary software. The recorded version of the Conference Call will be available on the VASCO website 24 hours a day.

VASCO secures the enterprise from the mainframe to the Internet with infrastructure solutions that enable secure e-business and e-commerce, protect sensitive information, and safeguard the identity of users. The Company's family of Digipass® and VACMAN® products offers end-to-end security through strong authentication, digital signature and Radius, LAN and Web security, while sharply reducing the time and effort required to deploy and manage security. VASCO's customers include hundreds of financial institutions, blue-chip corporations, and government agencies in more than 50 countries. More information is available at www.vasco.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 contact:
VASCO Data Security:
Jochem Binst:: +32 2 456 9810, [email protected]
IR: Tony Schor, +1 847 945 2222, [email protected]