EXHIBIT 99.1
INVESTOR CONTACT:
Deirdre Blackburn
(610) 293-0600
SAFEGUARD ANNOUNCES FIRST QUARTER RESULTS
Wayne, PA, April 29, 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 first quarter ended March 31, 2004.
“Over the last two years we have substantially completed the turnaround of Safeguard, culminating with the refinancing of our long-term debt in February 2004” said Anthony L. Craig, Safeguard’s President and Chief Executive Officer. “With $194 million of cash on hand at April 27, 2004, we are well positioned to continue the growth of our core strategic companies and to identify others for acquisition.”
Financial Highlights
Safeguard’s consolidated revenue for the first quarter of 2004 was $338.7 million, compared with $370.7 million for the first quarter of 2003 due primarily to a decline in revenues at CompuCom Systems, Inc.
For the quarter ended March 31, 2004, Safeguard reported a net loss of ($4.6) million, or a diluted loss per share of ($0.04), compared with a net loss of ($15.5) million, or a $(0.14) diluted loss per share in the first quarter of 2003.
As of March 31, 2004, Safeguard’s parent company cash balance was $183 million and the market value of its ownership of public company marketable securities was $267
million. Safeguard’s parent company cash balance was $194 million and the market value of its public company marketable securities was $226 million as of April 27, 2004.
Web Cast
Safeguard will host a Web cast on April 29, 2004 at 9:00 a.m. ET to discuss first quarter 2004 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 8:55 a.m.
About Safeguard(www.safeguard.com)
Safeguard Scientifics, Inc. (NYSE: SFE) is a company that seeks to create long-term value by taking controlling interests primarily in information technology and healthcare life sciences companies and developing them through superior operations 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. For more information, visitwww.safeguard.com.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties. These forward-looking statements that could cause actual results to differ materially, include, among others, managing rapidly changing technologies, limited access to capital, competition, the ability to attract and retain qualified employees, the ability to execute our strategy, the uncertainty of the future performance of our companies, acquisitions and dispositions of companies, the inability to manage growth, compliance with government regulations and legal liabilities, additional financing requirements, labor disputes, and the effect of economic conditions in the business sectors in which our companies operate, and other uncertainties described in the Company’s filings with the Securities and Exchange Commission. Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of
future performance. The Company does not assume any obligation to update any forward-looking statements or other information contained in this press release.
# # #
NOTE TO EDITORS: Safeguard is a service mark of Safeguard Scientifics, Inc.
Safeguard Scientifics, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
| March 31, | December 31, | |||||||
| 2004 | 2003 | |||||||
| (unaudited) | ||||||||
Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents, restricted cash and short-term investments - - Parent | $ | 183,477 | $ | 131,065 | ||||
| - Subsidiaries | 109,018 | 94,945 | ||||||
| Trading securities | 2,297 | — | ||||||
| Accounts receivable | 173,273 | 245,504 | ||||||
| Inventories | 28,524 | 35,849 | ||||||
| Prepaid expenses and other current assets | 13,535 | 11,293 | ||||||
| Total current assets | 510,124 | 518,656 | ||||||
| Property and equipment, net | 34,488 | 34,007 | ||||||
| Ownership interests in and advances to affiliates | 49,826 | 53,119 | ||||||
| Intangible assets, net | 13,222 | 14,689 | ||||||
| Goodwill | 195,999 | 195,652 | ||||||
| Other | 23,584 | 20,208 | ||||||
Total Assets | $ | 827,243 | $ | 836,331 | ||||
Liabilities and Shareholders’ Equity | ||||||||
| Current convertible subordinated notes | $ | 17,600 | $ | — | ||||
| Other current liabilities | 169,747 | 240,459 | ||||||
| Total current liabilities | 187,347 | 240,459 | ||||||
| Long-term debt | 2,084 | 2,537 | ||||||
| Minority interest | 145,338 | 142,159 | ||||||
| Other long-term liabilities | 13,277 | 15,005 | ||||||
| Convertible subordinated notes | 95,900 | 200,000 | ||||||
| Convertible senior debentures | 150,000 | — | ||||||
| Total shareholders’ equity | 233,297 | 236,171 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 827,243 | $ | 836,331 | ||||
Safeguard Scientifics, Inc.
Condensed Consolidated Statements of Operations
(in thousands except per share amounts)
| Three Months Ended March 31, | ||||||||
| 2004 | 2003 | |||||||
| Revenue | (unaudited) | |||||||
| Product sales | $ | 223,028 | $ | 260,311 | ||||
| Service sales | 115,618 | 109,489 | ||||||
| Other | 18 | 899 | ||||||
| Total revenue | 338,664 | 370,699 | ||||||
| Operating Expenses | ||||||||
| Cost of sales — product | 206,814 | 235,906 | ||||||
| Cost of sales — service | 76,646 | 73,226 | ||||||
| Selling and service | 34,694 | 34,296 | ||||||
| General and administrative | 24,309 | 30,626 | ||||||
| Depreciation and amortization | 6,843 | 7,878 | ||||||
| Total operating expenses | 349,306 | 381,932 | ||||||
| (10,642 | ) | (11,233 | ) | |||||
| Other income, net | 10,479 | 4,191 | ||||||
| Impairment — related party | — | (659 | ) | |||||
| Interest Income | 635 | 1,032 | ||||||
| Interest and financing expense | (3,298 | ) | (3,444 | ) | ||||
| Loss before income taxes, minority interest and equity loss | (2,826 | ) | (10,113 | ) | ||||
| Income tax expense | (768 | ) | (1,392 | ) | ||||
| Minority interest | 1,334 | (10 | ) | |||||
| Equity loss | (2,374 | ) | (4,024 | ) | ||||
| Net loss | $ | (4,634 | ) | $ | (15,539 | ) | ||
| Basic loss per share | $ | (0.04 | ) | $ | (0.13 | ) | ||
| Diluted loss per share | $ | (0.04 | ) | $ | (0.14 | ) | ||
| Weighted average shares outstanding — basic and diluted | 119,315 | 118,163 | ||||||
Safeguard Scientifics, Inc.
Results of Segment Operations
(in thousands)
| Three Months Ended March 31, | ||||||||
| 2004 | 2003 | |||||||
| (unaudited) | ||||||||
Summary | ||||||||
| Strategic | (6,023 | ) | (7,701 | ) | ||||
| Non-Strategic | 9,172 | 575 | ||||||
| CompuCom | 1,458 | 3,446 | ||||||
| Total segments | 4,607 | (3,680 | ) | |||||
| Corporate operations | (8,473 | ) | (10,467 | ) | ||||
| Income tax expense | (768 | ) | (1,392 | ) | ||||
| (4,634 | ) | (15,539 | ) | |||||
Strategic | ||||||||
| Revenue | 31,044 | 31,695 | ||||||
| Net Loss | (6,023 | ) | (7,701 | ) | ||||
Non-Strategic | ||||||||
| Revenue | 7,953 | 8,619 | ||||||
| Net income | 9,172 | 575 | ||||||
CompuCom | ||||||||
| Revenue | 299,656 | 330,297 | ||||||
| Net income | 1,458 | 3,446 | ||||||