Safeguard Announces 20% Increase in Second Quarter 2005 Revenues; Significant Progress in Reducing Operating Losses at Consolidated Companies

Business Wire, August 3, 2005

WAYNE, Pa. -- Safeguard Scientifics, Inc. (NYSE:SFE), a strategic growth partner for information technology and life sciences companies in the Time-to-Volume stage of development, today announced its operating results for the second quarter of 2005.

"We are very pleased with the revenue growth achieved by our companies in the second quarter," said Anthony L. Craig, President and Chief Executive Officer of Safeguard. "All five consolidated companies made significant progress toward achieving profitability as they continue to scale their businesses."

For the three months ended June 30, 2005, Safeguard's consolidated revenues from continuing operations (which included Laureate Pharma) were $48.0 million, up 20% from $39.9 million in the second quarter of 2004. Net loss from continuing operations in the second quarter of 2005 was $7.7 million, or $0.06 per share, compared with net income from continuing operations of $10.2 million, or $0.08 per share in the second quarter of 2004. The 2004 results included $30.0 million of other income primarily associated with sales of companies.

For the six months ended June 30, 2005, Safeguard's consolidated revenues from continuing operations were $90.9 million, up 15% from $78.8 million in the first six months of 2004. Net loss from continuing operations in the first six months of 2005 was $23.8 million or $0.20 per share compared to net income from continuing operations of $4.4 million or $0.04 per share in the year-ago period. The 2004 results included $40.5 million of other income primarily associated with sales of companies.

"Clarient, Mantas, and Pacific Title all recorded strong increases in revenues in the second quarter of 2005 compared to the year-ago quarter," said Christopher Davis, Executive Vice President and Chief Administrative and Financial Officer of Safeguard Scientifics. "These companies, along with Alliance Consulting, all reported improved operating results in the second quarter of 2005."

Revenues at Clarient (NASDAQ:CLRT), a technology and service resource for pathologists, oncologists and the pharmaceutical industry, jumped 118% in the second 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(R) 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 $3.8 million of revenues in the second quarter of 2005, an increase of 43% from the first quarter, its first quarter as a Safeguard company. Safeguard acquired Laureate Pharma in December 2004 and is helping the company scale its business through an expanded marketing and sales effort.

At Mantas, a leading provider of sophisticated analytic applications that address risk management, fraud detection, anti-money laundering and trading compliance, revenues grew 47% over the prior year second quarter as a result of strong growth in services as well as increased product license revenue. At June 30, 2005, backlog was $44 million compared to $37 million at March 31, 2005.

Pacific Title, which provides high technology digital and other specialized post-production services to the Hollywood motion picture and television industry, achieved 15% growth in revenues compared to last year's second quarter, reflecting an increase in trailer production as well as expanded new digital intermediate services.

During the second quarter of 2005, Alliance Consulting, which provides custom software solutions and IT consulting services to Fortune 2000 clients, achieved improved operating results and reached break-even despite a modest decline in revenues compared to the year-ago quarter. At that time, Alliance was engaged in a significant post-merger integration project for its largest customer. Alliance continues to successfully deploy its new, higher-margin Global Delivery and Master Data Management services.

"At the Parent Company level, Safeguard's balance sheet is strong," said Mr. Davis, "and we ended the second quarter with $151 million in cash and marketable securities available to support the funding of our companies and for making acquisitions."

"Safeguard's strategy is to create long-term value for our shareholders by acquiring companies and helping them to develop by applying operational and management expertise," said Mr. Craig. "We work closely with our companies to help them define their growth strategies and achieve their goals. We also recognize that young companies must invest to build growth. While these investments affect their profitability as well as Safeguard's consolidated results, we believe that the investments will enhance the long-term values of our companies. As their enhanced values become apparent in growing revenues and profitability, we expect to have opportunities to realize the increased values through liquidity events."

Web Cast

Safeguard will host a conference call and Web cast on August 4, 2005 at 9:00 a.m. (ET) to discuss second quarter 2005 results. Interested parties may access the live Web cast through the Safeguard Web site at www.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.