NW_20030213_VASCO Reports Fourth Quarter and Full Year 2002 Results

February 13, 2003

OAKBROOK TERRACE, Ill., and BRUSSELS, Belgium, February 13, 2003 - VASCO Data Security International, Inc. (Nasdaq SC: VDSI) ( www.vasco.com ), a global provider of security products that enable e-business and e-commerce, today announced financial results for the fourth quarter and full year 2002.

Revenues for the quarter of $3,603,000 were 40% lower than the same quarter of the prior year and 30% lower than the third quarter of 2002. Operating loss for the fourth quarter of 2002 was $1,999,000 compared with an operating loss of $6,433,000 for the fourth quarter of 2001. Operating expenses declined 56% from the previous year's fourth quarter from $9,921,000 to $4,374,000. The Company reported a net loss for the fourth quarter of 2002 of $1,900,000 or $0.07 per basic and diluted share compared with a net loss of $5,893,000 or $0.22 per basic and diluted share for the fourth quarter of 2001.

Revenues for the full year ended December 31, 2002 were $18,913,000 compared with $26,727,000 for the full year ended December 31, 2001. The operating loss for the full year ended December 31, 2002 was $4,144,000 compared with $13,106,000 for the full year 2001. Basic and diluted loss per share for the full year ended December 31, 2002 was $0.20 compared with a basic and diluted loss per share of $0.47 for the full year of 2001.

The loss before interest, taxes, depreciation and amortization (EBITDA), and non-cash stock option compensation was $1,570,000 for the fourth quarter of 2002, and $2,827,000 for the full year of 2002, compared with a loss before these items of $2,644,000 in the fourth quarter of 2001, and $7,196,000 for the full year of 2001. The company had a cash balance at December 31, 2002 of $2,616,000 compared to $2,738,000 at September 30, 2002.

“The fourth quarter of 2002 was a period where VASCO’s management team made a decision to assess and implement plans and programs that were best for the company going forward, irrespective of 4th quarter results.” said Ken Hunt, VASCO’s Chief Executive Officer. “During the fourth quarter 2002, we fine tuned VASCO’s focus on its core business, worked closely with our strategic customers to ensure that we could meet their needs in 2003, reviewed our expense base to ensure that only those activities related to the core business were carried forward into 2003 and analyzed our balance sheet to make sure that we were optimizing our cash flow. Going forward, we want to be known as the leading provider of “Identity Authentication” products. With that as our focus, we launched our Just-In-Time Delivery program with our key strategic customers which will improve both our ability to deliver our products when they need them, as well as lower VASCO’s expenses and improve its cash flow.”

“Many of our larger strategic customers have shown strong support for our Just-In-Time Delivery program,” stated Jan Valcke, President and COO. “Our customers appreciate the fact that we are a strategic supplier to them and welcome the opportunity to sit down with us and plan the details of what they need for the upcoming year. Our program gives them more control over when they will be receiving product and, by working off of an annual plan, we are able to offer them lower prices in exchange for the purchase commitment and cash deposit.”

Cliff Bown, Executive Vice President and CFO added, “There is no doubt that the Just-In-Time program had a negative effect on our revenues for the fourth quarter by moving some orders into 2003, but it also had a positive impact on our cash position and order backlog for 2003. We also reviewed our expense base in the fourth quarter and took some additional reserves for activities that are either not related to our core business or reflect excess capacity. We believe that we are well positioned now to meet the challenges in 2003, including the refinancing of our debt that is scheduled to mature during the year.”

VASCO also announced that it had received approval from The Nasdaq Stock Market, Inc. to move its listing from the Nasdaq National Market to the Nasdaq SmallCap Market. In addition, the Company announced that Mario Houthooft, the Company’s former President and CEO, had resigned his position as a Director of the Company.

During Q4 2002, VASCO reached the milestone of 8 million units of Digipass sold and delivered starting from the first Digipass models in 1992. Sales of Digipass are accelerating due to a broader market demand, including its traditional banking and finance market, as well as the growing demand in corporate network access. In 2002, Digipass 800, Digipass 250 and Digipass 300 were the most sold Digipass models.

Highlights of the Quarter
· Ken Hunt appointed Chairman & CEO; Jan Valcke President & COO;
· Introduction of just-in-time delivery program;
· VASCO sells and delivers the 8th million Digipass;
· VASCO Launches Digipass Go 2;
· VASCO Launches VACMAN Server 6.0.3;
· Brand new Internet bank Rabobank.be starts using VASCO’s Digipass 250 for every transaction of its account holders.

Please join us during our upcoming conference call on February 13,2003, at 10:00 a.m. EST - 16:00h CET.
During the Conference Call, Mr Ken Hunt, CEO and Mr Cliff Bown, CFO, will discuss VASCO’s Results for the Fourth Quarter and Full Year 2002.

To participate in this Conference Call, please dial one of the following numbers:
USA/Canada: +1 877-767-7154
or if calling from International: +44 5-008-92521
and mention access code: VASCO Conference Call to be connected.

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 designs, develops, markets and supports patented “Identity Authentication” products for e-business and e-commerce. VASCO’s Identity Authentication software is delivered via its Digipass security products, small “calculator” hardware devices carried by an end user, or in a software format on mobile phones, other portable devices, and PCs. For user access control, VASCO’s VACMAN Server products guarantee that only designated Digipass users get access to the application. VASCO’s target markets are the applications and their several hundred million users that utilize fixed passwords as security. VASCO’s time-based system generates a “one-time” password that changes with every use, and is virtually impossible to hack, or break. With 8 million current users of its Digipass products, VASCO has established itself as a world-leader for strong Identity Authentication with 180 international financial institutions, approximately 800 blue-chip corporations, and governments representing more than 50 countries.

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:
More information is available at www.vasco.com.
Media Contact: Jochem Binst: +32 2 456 9810, [email protected]
Investor Relations: Tony Schor, President, Investor Awareness, Inc.: 847-945-2222, [email protected]