Safeguard Scientifics (SFES) 8-K Safeguard Announces 32% Increase In Third Quarter 2005 Revenues

     

Exhibit 99.1

CONTACT: Janine Dusossoit
Vice President, Corporate Communications
Safeguard Scientifics, Inc.
610-975-4952

SAFEGUARD ANNOUNCES 32% INCREASE
IN THIRD QUARTER 2005 REVENUES

Information Technology Group Achieves Positive Operating Cash Flow

Wayne, PA, November 2, 2005 —Safeguard Scientifics, Inc. (NYSE: SFE), a strategic growth partner for information technology and life sciences companies, today announced its operating results for the third quarter of 2005.

“Our businesses continue to gain traction in their respective marketplaces,” said Peter J. Boni, Safeguard’s new President and Chief Executive Officer. ”The deal climate is healthy for acquiring new businesses in which we can build value, and we have the right team and balance sheet in place to execute on our plans. It is an exciting time to be at Safeguard and I look forward to building value in our partner companies and for our shareholders.”

For the three months ended September 30, 2005, Safeguard’s consolidated revenues from continuing operations (which included Laureate Pharma for the 2005 periods) were $46.0 million, up 32% from $34.9 million in the third quarter of 2004. Net loss from continuing operations in the third quarter of 2005 was $10.6 million, or $0.09 per share, compared with net loss from continuing operations of $19.1 million, or $0.16 per share in the third quarter of 2004.

For the nine months ended September 30, 2005, Safeguard’s consolidated revenues from continuing operations were $136.9 million, up 20% from $113.8 million in the first nine months of 2004. Net loss from continuing operations in the first nine months of 2005 was $34.4 million or $0.29 per share compared to net loss from continuing operations of $14.6 million or $0.12 per share in the year-ago period. The 2004 results included $40 million of other income primarily associated with sales of companies.

“Alliance, Mantas, Pacific Title and Clarient all recorded solid increases in revenues as well as improved operating results in the third quarter of 2005 compared to the year-ago quarter,” said Christopher Davis, Executive Vice President and Chief Administrative and Financial Officer of Safeguard Scientifics. “In addition, our Information Technology companies as a group achieved positive operating cash flow in the third quarter.”

Alliance Consulting, which provides custom software solutions and IT consulting services to Fortune 2000 clients, achieved a 7% increase in revenues compared to the prior year third quarter, as a result of growth in existing accounts as well as the success of new service offerings.

At Mantas, a leading provider of sophisticated analytic applications that address risk management, fraud detection, anti-money laundering and trading compliance, revenues grew 36% over the prior year third quarter as a result of increased service work at their largest customer and more product license revenue.

Pacific Title, which provides high technology digital and other specialized post-production services to the Hollywood motion picture and television industry, achieved 62% growth in revenues compared to last year’s third quarter, reflecting an increase in trailer production as well as expanded new digital intermediate services.

Revenues at Clarient (NASDAQ: CLRT), a technology and service resource for pathologists, oncologists and the pharmaceutical industry, jumped 91% in the third quarter of 2005 compared to the same period last year. Significant growth at its diagnostic laboratory services business and increased sales of its proprietary ACIS^® systems contributed to the gains.

Laureate Pharma, which provides bioprocessing and drug delivery services to support the development and commercialization of pharmaceutical and biopharmaceutical products, contributed $2.1 million of revenue in the third quarter of 2005. Safeguard acquired Laureate Pharma in December 2004.

Mr. Davis added, “Safeguard’s balance sheet remains strong, and we ended the third quarter with $146 million in cash and marketable securities. As Peter mentioned, we are now in a strong position and will continue to both support our partner companies and to identify attractive new opportunities in growing markets.”

Web Cast
Safeguard will host a conference call and Web cast on November 3, 2005 at 9:00 a.m. (ET) to discuss third quarter 2005 results. Interested parties may access the live Web cast through the Safeguard Web site atwww.safeguard.com. Web participants are encouraged to go to the site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. A replay of the Web cast will be archived and available at the Web site shortly after the call.

About Safeguard
Safeguard Scientifics, Inc. (NYSE: SFE) is a company advancing the value of revenue-stage information technology and life sciences companies. Safeguard provides growth capital as well as a range of strategic, operating and management resources to help its partner companies build value in their businesses. Safeguard participates in expansion financings, management buyouts, recapitalizations, industry consolidations and early-stage financings. For more information about Safeguard, visitwww.safeguard.com.

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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, 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.

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

	September 30,		December 31,
	2005		2004
	(unaudited)
Assets
Current Assets
Cash and cash equivalents, restricted cash and marketable securities — Parent	$	146,071	$	162,378
- Subsidiaries		10,327		19,170
Restricted marketable securities		3,725		3,771
Accounts receivable, net		37,202		37,677
Prepaid expenses and other current assets		21,735		8,974
Total current assets		219,060		231,970
Property and equipment, net		44,280		45,135
Ownership interests in and advances to companies		18,727		35,311
Long-term marketable securities		3,913		11,964
Long-term restricted marketable securities		9,443		13,045
Intangible assets, net		8,044		10,855
Goodwill		93,204		93,049
Other		9,278		12,483
Total Assets	$	405,949	$	453,812
Liabilities and Shareholders’ Equity
Lines of credit	$	18,900	$	11,636
Current maturities of long-term debt		3,410		3,820
Other current liabilities		43,260		47,026
Total current liabilities		65,570		62,482
Long-term debt		4,988		11,210
Minority interest		5,749		11,652
Other long-term liabilities		14,958		12,665
Convertible senior debentures		150,000		150,000
Total shareholders’ equity		164,684		205,803
Total Liabilities and Shareholders’ Equity	$	405,949	$	453,812

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

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
	(unaudited)						(unaudited)
Revenue
Product sales	$	1,619		$	1,284		$	7,125		$	5,363
Service sales		44,418			33,652			129,766			108,421
Total revenue		46,037			34,936			136,891			113,784
Operating Expenses
Cost of sales — product		598			858			2,321			3,123
Cost of sales — service		32,219			24,676			93,792			72,833
Selling, general and administrative		21,757			21,965			63,387			69,995
Research and development		3,065			2,983			8,557			9,726
Amortization of intangibles		917			819			2,749			2,728
Total operating expenses		58,556			51,301			170,806			158,405
Operating loss		(12,519	)		(16,365	)		(33,915	)		(44,621	)
Other income (loss), net		966			(921	)		2,216			39,556
Impairment — related party		—			—			(260	)		—
Interest Income		1,377			582			3,656			1,556
Interest expense		(1,672	)		(2,208	)		(4,772	)		(7,886	)
Equity loss		(599	)		(2,772	)		(6,006	)		(9,073	)
Minority interest		1,849			2,543			4,700			5,885
Net loss from continuing operations before income taxes		(10,598	)		(19,141	)		(34,381	)		(14,583	)
Income tax (expense) benefit		(42	)		72			(31	)		(57	)
Net loss from continuing operations		(10,640	)		(19,069	)		(34,412	)		(14,640	)
Discontinued operations, net of income taxes		—			(54	)		—			(21,578	)
Net Loss	$	(10,640	)	$	(19,123	)	$	(34,412	)	$	(36,218	)
Basic loss per share from continuing operations	$	(0.09	)	$	(0.16	)	$	(0.28	)	$	(0.12	)
Basic loss per share from discontinued operations		—			—			—			(0.18	)
Basic net loss per share	$	(0.09	)	$	(0.16	)	$	(0.28	)	$	(0.30	)
Diluted loss per share from continuing operations	$	(0.09	)	$	(0.16	)	$	(0.29	)	$	(0.12	)
Diluted loss per share from discontinued operations		—			—			—			(0.18	)
Diluted net loss per share (a)	$	(0.09	)	$	(0.16	)	$	(0.29	)	$	(0.30	)
Weighted average shares outstanding from continuing operations
Basic and Diluted		120,898			119,965			120,776			119,812
Weighted average shares outstanding from discontinued operations
Basic and Diluted		120,898			119,965			120,776			119,812

Certain prior year amounts have been reclassified to conform to the current year presentation.
As a result of the sale of CompuCom, in October 2004, the results of CompuCom are shown as a discontinued operation for all periods presented.

(a) If a consolidated or equity method company has dilutive options or securities outstanding, dilutive net loss per share is computed first by deducting from net loss the income attributable to the potential exercise of the dilutive options or securities of the company.

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
	(unaudited)						(unaudited)
Revenues
Alliance	$	23,286		$	21,749		$	66,542		$	69,008
Clarient		4,906			2,564			14,122			6,886
Laureate Pharma		2,155			—			8,592			—
Mantas		8,170			5,988			23,343			17,116
Pacific Title		7,520			4,635			24,292			19,496
Other Companies		—			—			—			1,278
Total Segment Results	$	46,037		$	34,936		$	136,891		$	113,784
Operating Income (Loss) (a)
Alliance	$	(32	)	$	(1,314	)	$	(416	)	$	(3,556	)
Clarient		(4,480	)		(5,700	)		(11,922	)		(14,896	)
Laureate Pharma		(3,473	)		—			(9,373	)		—
Mantas		(495	)		(2,817	)		(2,861	)		(11,332	)
Pacific Title		616			(1,311	)		3,831			947
Other Companies		—			—			—			(1,396	)
Total Segment Results		(7,864	)		(11,142	)		(20,741	)		(30,233	)
Other Items		(4,655	)		(5,223	)		(13,174	)		(14,388	)
	$	(12,519	)	$	(16,365	)	$	(33,915	)	$	(44,621	)
Safeguard Share of Net Income (Loss) from Continuing Operations (b)
Alliance	$	(242	)	$	(1,393	)	$	(977	)	$	(3,768	)
Clarient		(2,709	)		(3,374	)		(7,241	)		(9,220	)
Laureate Pharma		(3,585	)		—			(9,628	)		—
Mantas		(494	)		(2,865	)		(2,867	)		(11,704	)
Pacific Title		594			(1,098	)		4,042			870
Other Companies (c)		305			(4,000	)		(5,201	)		31,571
Total Segment Results		(6,131	)		(12,730	)		(21,872	)		7,749
Other Items (d)		(4,509	)		(6,339	)		(12,540	)		(22,389	)
Net Loss from Continuing Operations	$	(10,640	)	$	(19,069	)	$	(34,412	)	$	(14,640	)

(a)	Operating Income (Loss) represents the revenues less operating expenses of each segment, and excludes any allocation to minority interest.
(b)	Safeguard Share of Net Income (Loss) from Continuing Operations includes the net results of each segment, including interest, adjusted for any amount allocated to minority interest.
(c)	Other Companies includes those companies in which Safeguard has less than a majority interest, as well as our ownership in funds. Our share of Other Companies consists primarily of equity income (loss) and gains (loss) on companies, both of which are reported below the operating income (loss) line.
(d)	Other Items includes corporate expenses and income taxes.