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VASCO Data Security Int., CEO Discusses Q3 2010 Results – Earnings Call Transcript

During the third quarter 2010, our cash and our working capital increased 14% and 10% respectively compared with our balances at the end of the second quarter. At September 30, 2010, our net cash balance was approximately $86.4 million and we have approximately $92.3 million of working capital. The strong cash balance gives us the flexibility to invest in our growth now that the economy seems to be improving. In past quarters, we told you that our banking business was recovering. We also told you that the number of RFPs was growing. These RFPs are now materializing in firm orders. Our order intake from the banking business is now growing quickly.

As demonstrated by our Q3 2010, earnings report the recovery and the financial vertical is beginning to result in improved financial performance for our company. The confidence that we communicated in past quarterly earnings calls is we believe being justified today. We firmly believe that the banking market will contribute to strong growth in 2011. We also believe VASCO’s banking and enterprise and application security businesses are evolving back to normal.

Looking back, we can say that VASCO is a much stronger and robust company now than it was before the financial and economic crisis began. We have several healthy sources of revenue from different markets both vertical and geographic. We believe that there will be strong, steady growth going forward. As we stated before, our traditional banking market is in recovery. Manufacturing challenges such as scarcity of parts due to general ramp up in the recovering electronics industry still exists and may cause delays in delivery. Nevertheless, we believe that VASCO is prepared to overcome these challenges due to our know-how and experience related to large volume hardware production and assembly. We believe this situation affects all of our competitors and may even turn into competitive advantage for VASCO. We are particularly proud that we can deliver positive short term results again, while investing heavily in the longer term.

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