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DATAKEY REPORTS SECOND-QUARTER AND FIRST-HALF RESULTS

 MINNEAPOLIS, Aug. 2 /PRNewswire/ -- Datakey, Inc. (NASDAQ-NMS: DKEY), today reported total revenue for the second quarter ended July 2, 1993, of $1,473,428, compared with $1,559,797 in the second quarter of 1992. Net income for the quarter was $45,972, or 2 cents per share, versus $121,664, or 4 cents per share, last year.
 Revenue for the 1993 first half was $3,169,762 compared with $3,101,970 for the 1992 period. Net income for the six-month period was $148,268, or 5 cents per share, versus $283,794, or 9 cents per share, last year.
 Chairman and chief executive officer, John Underwood, said, "Although second-quarter revenue and earnings were down from the comparable 1992 period, the results were generally in line with our expectations, and we continue to project an upturn in the second half. We expect Datakey's performance in the third quarter will be similar to that of the second quarter. However, the fourth quarter should be much stronger, as several of the company's new commercial programs ramp up into production.
 "Revenue for the 1993 first six months was roughly equivalent to the comparable 1992 period. Net income was lower, however, due to several factors including lower profit margins on newly developed products, higher operating expenses, and a lower level of interest income. The higher 1993 operating expenses resulted from the addition of critical management positions, continued new product development, and stepped-up marketing activity. We expect the company's expenses to remain at current levels moving forward."
 Company president, Mike Carenzo, added, "We are encouraged by Datakey's progress in developing new commercial opportunities, such as our recently announced program with Duncan Industries, which is projected to generate minimum sales of $2 million over the next few years with deliveries beginning in the third quarter of 1993. We also remain optimistic about our new SignaSURE(TM) products, a line of information security products incorporating advanced digital signature and encryption features. Datakey plans a major thrust into the marketplace with this product in the coming months. We expect these programs to exert a positive impact on Datakey's revenue performance in the months ahead."
 Datakey, Inc. designs, manufactures and markets portable-memory- based systems, subsystems and custom-designed components for security- driven markets. The company's proprietary memory keys, cards and other shaped tokens serve as a convenient way to carry electronic information and are packaged to survive in portable environments. These products enhance security and simplify equipment use for a wide range of applications by automating critical identification, data collection and control functions. Shares of Datakey's common stock are traded on the NASDAQ-NMS under the symbol DKEY.
 DATAKEY, INC.
 CONDENSED STATEMENTS OF INCOME
 (Unaudited)
 ($000's)
 Second quarter ended Six months ended
 7/02/93 6/26/92 7/02/93 6/26/92
 Total revenue $1,473 $1,560 $3,170 $3,102
 Costs and expenses:
 Cost of sales 779 880 1,687 1,603
 Research & development 212 234 424 503
 Sales & marketing 275 237 542 446
 General & administrative 203 120 423 313
 Total costs & expenses 1,469 1,471 3,076 2,865
 Operating income 4 89 94 237
 Interest income & other 65 87 128 193
 Net income before taxes $69 $176 $222 $430
 Provision for taxes 23 54 74 146
 Net income $46 $122 $148 $284
 Earnings per share $.02 $.04 $.05 $.09
 Weighted average common
 shares 2,959,154 3,053,716 2,959,343 3,126,745
 SELECTED BALANCE SHEET DATA
 (Unaudited)
 ($000's)
 7/02/93 12/31/92
 Assets
 Cash & marketable securities $7,772 $8,150
 Other current assets 2,114 1,720
 Non-current assets 1,425 1,160
 Total assets $11,311 $11,030
 Liabilities & Equity
 Current liabilities 785 662
 Other liabilities 70 60
 Equity 10,456 10,308
 Total liabilities & equity $11,311 $11,030
 -0- 8/02/93 R
 /CONTACT: Marian Briggs of Padilla Speer Beardsley, 612-871-8877, for Datakey; or Alan Shuler of Datakey, 612-890-6850/
 (DKEY)


CO: Datakey, Inc. ST: Minnesota IN: CPR SU: ERN

DB -- MN014R -- 8601 08/02/93 18:47 EDT
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Publication:PR Newswire
Date:Aug 2, 1993
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