Safeguard Scientifics (SFES) 8-K Safeguard Announces Fourth Quarter and Year-end Results

EXHIBIT 99.1

INVESTOR CONTACT:
Deirdre Blackburn
(610) 293-0600

SAFEGUARD ANNOUNCES FOURTH QUARTER AND YEAR-END RESULTS

Wayne, PA, February 10, 2004 –Safeguard Scientifics, Inc. (NYSE: SFE), a leader in developing companies primarily in the information technology and healthcare life sciences areas, today announced its operating results for the fourth quarter and year-ended December 31, 2003.

“We have substantially completed the transformation of Safeguard in 2003,” reports Anthony L. Craig, Safeguard’s President and Chief Executive Officer. “We achieved significant monetizations improving our cash balances, refined our strategic focus in defined areas and invested according to our previously stated strategic objectives.”

During the year, Safeguard’s accomplishments included:

– increased cash balances and balance sheet strength from the significant proceeds received from monetizing off-strategy assets including its holdings of Internet Capital Group, Kanbay International, Pac-West Telecomm, DocuCorp, and Verticalnet; and

– provided growth capital to Mantas and ChromaVision resulting in increased ownership.

Financial Highlights

Safeguard’s consolidated revenue for the fourth quarter of 2003 was $459 million, compared with $439 million for the fourth quarter of 2002 due primarily to an increase in revenue at CompuCom and the inclusion of Alliance Consulting’s revenue subsequent to acquiring a majority interest in Alliance Consulting in December 2002. For the year ended December 31, 2003, Safeguard’s consolidated revenue was $1.6 billion, compared with $1.7 billion at December 31, 2002, due primarily to a decrease in revenue at CompuCom, partially offset by the inclusion of Alliance Consulting’s revenue in 2003.

800 The Safeguard Building • 435 Devon Park Drive • Wayne, PA 19087-1945
Phone (610) 293-0600 • Fax (610) 293-0601 • Toll Free (877) 506-7371
http://www.safeguard.com

For the quarter ended December 31, 2003, Safeguard reported a net loss of $(32.9) million, or a diluted loss per share of $(0.28), compared with a net loss of $(31.2) million, or a $(0.27) diluted loss per share in the fourth quarter of 2002. The loss for the fourth quarter includes a $16.0 million impairment charge related to the Alliance reporting unit, which includes aligne and Lever 8, which were merged into Alliance Consulting. The fourth quarter results also include a $6.5 million impairment charge related to a private equity fund.

For the year ended December 31, 2003, Safeguard reported a net loss of $(33.3) million, or a diluted loss per share of $(0.30), compared with a net loss of $(129.1) million, or a $(1.12) diluted loss per share in 2002. Including the cumulative effect of a change in accounting principle, Safeguard reported a net loss of $(150.5) million or $(1.30) diluted loss per share in 2002. The improved results are due primarily to increased gains on sales of companies, reduced impairment charges and the elimination of the mark-to-market loss as a result of the sale of Verticalnet in 2003.

As of December 31, 2003, Safeguard’s parent company cash balance was $131 million and the market value of its ownership of public company marketable securities was $262 million. Safeguard’s parent company cash balance was $130 million and the market value of its public company marketable securities was $273 million as of February 9, 2004.

“During 2003, we generated $77.9 million in cash from the sale of companies and fund distributions and funded an additional $26.7 million to support our existing strategic operating companies” noted Chris Davis, Managing Director and CFO. “We are very pleased with our progress in monetizing non-strategic assets to enable us to support the growth of our strategic companies.”

Web Cast
Safeguard will host a Web cast today at 5:00 p.m. ET to discuss fourth quarter and year end 2003 results. You can access the Web cast, which will be accompanied by slides, at the Safeguard Web site at www.safeguard.com. The conference call is also available via a toll-free number. For listen only access, please call the toll-free number 877-818-2521 by 4:55 p.m.

About Safeguard(www.safeguard.com)
Safeguard Scientifics (NYSE:SFE) is a company that seeks to create long-term value by taking controlling interests primarily in the information technology and healthcare life sciences companies and developing them through superior operations

800 The Safeguard Building • 435 Devon Park Drive • Wayne, PA 19087-1945
Phone (610) 293-0600 • Fax (610) 293-0601 • Toll Free (877) 506-7371
http://www.safeguard.com

and management support. Safeguard’s existing strategic companies focus on the following vertical markets: financial services, healthcare and pharmaceutical, manufacturing, retail and distribution, and telecommunications.

Forward-Looking Statements
The statements contained in this press release and attachments that are not historical facts are forward-looking statements that involve certain risks and uncertainties, including risks associated with the uncertainty of future performance of our companies, acquisitions of additional companies and dispositions of companies, additional financing requirements, management of rapidly changing technologies, limited access to capital, competition, the ability to attract and retain qualified employees, the effect of economic conditions in the business sectors in which our companies operate, our ability to execute our business strategy, the ability of our companies to execute their respective strategies, and other uncertainties described in the Company’s filings with the Securities and Exchange Commission. The Company does not assume any obligation to update any forward-looking statements or other information contained in this press release.

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NOTE TO EDITORS: Safeguard is a service mark of Safeguard Scientifics, Inc.

800 The Safeguard Building • 435 Devon Park Drive • Wayne, PA 19087-1945
Phone (610) 293-0600 • Fax (610) 293-0601 • Toll Free (877) 506-7371
http://www.safeguard.com

Safeguard Scientifics, Inc.
Condensed Consolidated Balance Sheets
(in thousands)

			December 31,		December 31,
			2003		2002
			(unaudited)
Assets
Current Assets
	Cash and cash equivalents, restricted cash and short-term investments — Parent		$	131,065	$	126,334
		— Subsidiaries		94,945		142,065
	Accounts receivable			245,504		179,668
	Inventories			35,849		30,181
	Trading securities			—		832
	Prepaid expenses and other current assets			11,293		13,045
Total current assets				518,656		492,125
Property and equipment, net				34,007		38,610
Ownership interests in and advances to affiliates				53,119		74,859
Available-for-sale securities				—		4,548
Intangible assets, net				14,689		18,580
Goodwill				197,038		206,815
Deferred taxes				—		1,210
Other				20,208		31,919
Total Assets			$	837,717	$	868,666
Liabilities and Shareholders’ Equity
Total current liabilities			$	240,459	$	249,979
Long-term debt				2,537		1,998
Minority interest				140,948		130,384
Other long-term liabilities				14,620		14,032
Convertible subordinated notes (5%, due June 2006)				200,000		200,000
Total shareholders’ equity				239,153		272,273
Total Liabilities and Shareholders’ Equity			$	837,717	$	868,666

     Certain prior year amounts have been reclassified to conform to the current year presentation.

800 The Safeguard Building • 435 Devon Park Drive • Wayne, PA 19087-1945
Phone (610) 293-0600 • Fax (610) 293-0601 • Toll Free (877) 506-7371
http://www.safeguard.com

Safeguard Scientifics, Inc.
Condensed Consolidated Statements of Operations
(unaudited, in thousands except per share amounts)

		Three Months Ended December 31,						Twelve Months Ended December 31,
		2003			2002			2003			2002
Revenue
	Product sales	$	341,643		$	333,251		$	1,176,134		$	1,289,353
	Service sales		117,181			99,339			443,963			372,132
	Other		83			6,252			2,461			24,069
	Total revenue		458,907			438,842			1,622,558			1,685,554
Operating Expenses
	Cost of sales — product		315,168			302,050			1,080,790			1,168,948
	Cost of sales — service		84,865			64,891			301,272			241,741
	Selling and service		28,508			33,508			128,416			130,717
	General and administrative		25,910			34,641			110,585			141,501
	Depreciation and amortization		9,554			11,074			32,756			32,882
	Impairment		15,968			—			15,968			6,575
	Total operating expenses		479,973			446,164			1,669,787			1,722,364
			(21,066	)		(7,322	)		(47,229	)		(36,810	)
Other income (loss), net			653			1,680			48,930			(5,149	)
Impairment — related party			—			(11,434	)		(659	)		(11,434	)
Interest Income			545			1,911			3,311			8,260
Interest and financing expense			(3,218	)		(3,405	)		(13,568	)		(24,085	)
Loss before income taxes, minority interest, equity loss and cumulative effect of change in accounting principle			(23,086	)		(18,570	)		(9,215	)		(69,218	)
Income tax expense			(1,483	)		(2,188	)		(5,400	)		(7,418	)
Minority interest			(908	)		(671	)		(1,537	)		(1,453	)
Equity loss			(7,407	)		(9,767	)		(17,179	)		(51,004	)
Net loss before cumulative effect of change in accounting principle			(32,884	)		(31,196	)		(33,331	)		(129,093	)
Cumulative effect of change in accounting principle (a)			—			—			—			(21,390	)
Net loss		$	(32,884	)	$	(31,196	)	$	(33,331	)	$	(150,483	)
Basic loss per share
	Prior to cumulative effect of change in accounting principle	$	(0.28	)	$	(0.26	)	$	(0.28	)	$	(1.10	)
	Cumulative effect of change in accounting principle		—			—			—			(0.18	)
		$	(0.28	)	$	(0.26	)	$	(0.28	)	$	(1.28	)
Diluted loss per share
	Prior to cumulative effect of change in accounting principle	$	(0.28	)	$	(0.27	)	$	(0.30	)	$	(1.12	)
	Cumulative effect of change in accounting principle		—			—			—			(0.18	)
		$	(0.28	)	$	(0.27	)	$	(0.30	)	$	(1.30	)
Weighted average shares outstanding — basic and diluted			118,846			117,961			118,486			117,736

(a) We adopted the provisions of SFAS 142, “Goodwill and Other Intangible Assets” which required that transitional impairment losses for goodwill, and negative goodwill be included as a cumulative change as of January 1, 2002.

800 The Safeguard Building • 435 Devon Park Drive • Wayne, PA 19087-1945
Phone (610) 293-0600 • Fax (610) 293-0601 • Toll Free (877) 506-7371
http://www.safeguard.com

Safeguard Scientifics, Inc.
Results of Segment Operations
(unaudited, in thousands)

		Three Months Ended December 31,						Twelve Months Ended December 31,
		2003			2002			2003			2002
Summary
Strategic Initiative			(21,664	)		(6,305	)		(44,931	)		(29,708	)
Non-strategic			(6,979	)		(9,746	)		35,417			(63,862	)
CompuCom			4,202			5,675			13,197			19,002
Total segments			(24,441	)		(10,376	)		3,683			(74,568	)
Corporate operations			(6,960	)		(18,632	)		(31,614	)		(47,107	)
Income tax expense			(1,483	)		(2,188	)		(5,400	)		(7,418	)
			(32,884	)		(31,196	)		(33,331	)		(129,093	)
Cumulative effect of change in accounting principle			—			—			—			(21,390	)
			(32,884	)		(31,196	)		(33,331	)		(150,483	)
Strategic Initiative
	Revenue		32,547			20,563			122,940			55,637
	Net Loss		(21,664	)		(6,305	)		(44,931	)		(29,708	)
Non-strategic
	Revenue		9,852			14,328			44,182			58,759
	Net income (loss)		(6,979	)		(9,746	)		35,417			(63,862	)
Compucom
	Revenue		416,436			403,933			1,455,120			1,571,089
	Net income		4,202			5,675			13,197			19,002

800 The Safeguard Building • 435 Devon Park Drive • Wayne, PA 19087-1945
Phone (610) 293-0600 • Fax (610) 293-0601 • Toll Free (877) 506-7371
http://www.safeguard.com