Fargo Electronics Earns 10 Cents Per Share In Second Quarter.

Business Editors

MINNEAPOLIS--(BUSINESS WIRE)--July 25, 2002

Fargo Electronics, Inc. (Nasdaq:FRGO) today reported net sales for the second quarter ended June 30, 2002 of $14,742,000, compared with sales of $16,957,000 in the second quarter of 2001. Sales in the second quarter of 2001 included a major shipment of the card personalization systems for the U.S. Department of Defense "Common Access" Identification Card Project. Net income for the second quarter of 2002 was $1,202,000, or 10 cents per share, compared with net income of $1,287,000, or 11 cents per share, in the same period last year.

For the six months ended June 30, 2002, net sales were $29,763,000, compared with $30,129,000 for the first six months of 2001. Net income was $1,916,000, or 16 cents per share (diluted) for the first six months of 2002, compared with $1,599,000, or 13 cents per share (diluted) in the same period a year earlier. Excluding charges solely related to the now-terminated acquisition of Fargo by Zebra Technologies Corporation, earnings would have been 19 cents per share for the first six months of 2002, compared with 14 cents per share for the prior year period.

----------------------------------------------------------------------
Fargo Electronics, Inc.      Second Quarter Ended   Six Months Ended
(In thousands, except
 per share amounts)            June 30,  June 30,   June 30,  June 30,
                                 2002     2001       2002       2001
                              --------- ---------  --------- ---------
Net sales                       $14,742   $16,957    $29,763   $30,129
Operating income (1)              1,942     2,382      3,115     3,382
Net income (1)                    1,202     1,287      1,916     1,599
Diluted net income per
 common share                     $0.10     $0.11      $0.16     $0.13
Weighted average common
 shares outstanding - diluted    12,071    11,892     12,047    11,880

(1) Includes charges of $14,000 (Second Quarter 2002), $552,000 (Six
    Months 2002) and $62,000 (Six Months 2001) for expenses related to
    the now-terminated acquisition of Fargo by Zebra Technologies
    Corporation; without these charges, diluted net income per common
    share would have been $0.19 for the first six months of 2002 and
    $0.14 for the first six months of 2001.

----------------------------------------------------------------------

"We are pleased with Fargo's second quarter performance," said Gary R. Holland, President and CEO.

Holland noted that recent business highlights include:

-- Introduction of the world's first inkjet production card printer - the CardJet(TM) 410 - in April, after several years of work with technology partners Hewlett-Packard and PPG Industries.

-- Fargo's other new products announced at the CardTech/SecurTech trade show in April met with a positive response from the distribution channel, with more innovative products in the pipeline for release later this year.

-- The improved manufacturing processes initiated in 2001 are resulting in enhanced product performance in the field, lower manufacturing costs, and higher gross margins.

-- Recently announced orders for projects in Australia and Ukraine, which demonstrate that Fargo is capturing business in important new government markets.

-- Continued progress from research and development, including four new patents - three in the U.S. and one in Japan - which brings Fargo's intellectual property portfolio to 27 U.S. patents, with over 90 pending.

-- Successful completion of a secondary stock offering. The net proceeds after offering costs to Fargo were approximately $3.2 million, which will be used to repay debt and for general corporate purposes.

"We continue to pay down our debt on an accelerated schedule," continued Holland. "At June 30, 2002, our outstanding debt stood at $11 million and since the end of the quarter, we have paid down a further $3 million.

"The foundation has been laid for future growth, and Fargo is well positioned to participate in Homeland Security projects here in the U.S. and national ID card and other governmental identification projects around the globe," Holland said.

"Looking ahead, we presently estimate that earnings for the third quarter of fiscal 2002 will be in the range of $0.14 to $0.18 per common share, while the year, excluding the impact of acquisition-related charges, is estimated to be in the range of $0.50 to $0.58 per common share," he said.

About Fargo

Fargo Electronics, Inc. (Nasdaq:FRGO) is the world's leader in innovative technologies for desktop plastic card personalization systems. Based in Eden Prairie, Minnesota, Fargo is the only manufacturer to offer three distinct technologies in printing systems - High Definition Printing(TM) (reverse image), traditional Direct-to-Card printing (dye-sublimation), and CardJet Printing Technology(TM) (inkjet) - to personalize plastic identification cards, complete with digital images and text, lamination, and electronically encoded information.

Personalized identification cards provide physical, information, and transaction security for a wide variety of applications including Corporations, National IDs, Drivers' Licenses, Universities, Schools, Government Installations, Transportation, Casinos, Healthcare Facilities, E-commerce, Retail Stores, Correctional Institutions, Associations, Sports Events and Recreation Sites. More than 60,000 Fargo systems are currently installed throughout the U.S. and in over 100 other countries. For more information, visit Fargo's Web site at http://www.fargo.com.

Forward-looking Statements 

Statements made in this release concerning the company's expectations about future results or events are "forward-looking statements." Such statements are subject to the safe harbor created by the Private Securities Reform Act of 1995, and are necessarily subject to risks and uncertainties. Actual results may differ materially from those reflected in these forward-looking statements.

These risks include: product acceptance and customer demand for Fargo's card personalization systems and proprietary supplies; actions taken and alternative products marketed by Fargo's competitors; supplier relationships, including reliance on sole and single-source suppliers; lack of inventories of component parts or finished goods; our focus on the identification card personalization market; continuing technological changes in our industry; our dependence on a distribution network; domestic and international regulations and standards; our dependence on international sales; material changes in orders placed by end users; the speed of multiple system installations by large end users; challenges in effectively managing growth; our dependence on technologies we do not own; complex design and manufacturing delays; protecting and enforcing intellectual property rights; inadequate protection against infringement claims; adverse economic and business conditions, including conditions resulting from the terrorist attack on the U.S. on September 11, 2001 and the resulting hostilities; adverse changes in the Company's business and distribution network as a result of the announcement of the now-terminated acquisition of the Company by Zebra Technologies Corporation. For more detail, see the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2001.

Fargo Electronics, Inc.
Condensed Statement of Operations
(In thousands, except per share amounts)
(Unaudited)

                            Three Months Ended      Six Months Ended
                                 June 30,               June 30,
                              2002      2001        2002       2001
                           --------------------   --------------------
Net sales                   $14,742    $16,957     $29,763    $30,129
Cost of sales                 8,707     10,663      17,927     18,910
                           ---------  ---------   ---------  ---------
   Gross profit               6,035      6,294      11,836     11,219
                           ---------  ---------   ---------  ---------

Operating expenses:
  Research and development    1,139        979       2,395      2,011
  Selling, general and
   administrative             2,940      2,933       5,774      5,764
  Acquisition related costs      14       --           552         62
                           ---------  ---------   ---------  ---------
   Total operating expenses   4,093      3,912       8,721      7,837
                           ---------  ---------   ---------  ---------
Operating income              1,942      2,382       3,115      3,382
                           ---------  ---------   ---------  ---------
Other income (expense):
  Interest expense             (149)      (398)       (299)      (878)
  Other, net                      5         39          13         14
                           ---------  ---------   ---------  ---------
   Total other expense         (144)      (359)       (286)      (864)
                           ---------  ---------   ---------  ---------
Income before provision
 for income taxes             1,798      2,023       2,829      2,518
Provision for income taxes      596        736         913        919
                           ---------  ---------   ---------  ---------

Net income                   $1,202     $1,287      $1,916     $1,599
                           =========  =========   =========  =========

Net income per common share:
Basic earnings per share       $.10       $.11        $.16       $.14
Diluted earnings per share     $.10       $.11        $.16       $.13

Weighted average common
 shares outstanding:
Basic                        11,797     11,758      11,791     11,753
Diluted                      12,071     11,892      12,047     11,880





Fargo Electronics, Inc.
Condensed Balance Sheets
(In thousands, except per share amounts)

                                                June 30,  December 31,
                              ASSETS             2002         2001
                                              (Unaudited)

Current assets:
  Cash and cash equivalents                       $2,170       $3,586
  Accounts receivable, net                         8,269        7,713
  Inventories                                      5,300        5,244
  Prepaid expenses                                   330          177
  Deferred income taxes                            3,045        3,045
                                               ---------    ---------
    Total current assets                          19,114       19,765
                                               ---------    ---------

Equipment and leasehold improvements, net          1,589        1,367

Deferred income taxes                             24,081       24,994
Deferred offering costs                              512         --
Other                                                 86           87
                                               ---------    ---------
    Total assets                                 $45,382      $46,213
                                               =========    =========

            LIABILITIES AND STOCKHOLDERS'  EQUITY
Current liabilities:
  Current portion of notes payable,
   bank                                          $11,000       $4,000
  Accounts payable and accrued
   liabilities                                     6,749        6,575
                                               ---------    ---------
    Total current liabilities                     17,749       10,575
                                               ---------    ---------

  Notes Payable, bank, less
   current portion                                  --         10,000

Commitments

Stockholders' equity:
  Common stock, $.01 par value;
   50,000 shares authorized, 11,803
   and 11,781 shares issued and
   outstanding at June 30, 2002 and
   December 31, 2001, respectively                   118          118
  Additional paid-in capital                     145,294      145,229
  Accumulated deficit                           (117,124)    (119,040)
  Deferred compensation                              (30)         (44)
  Stock subscription receivable                     (625)        (625)
                                               ---------    ---------

    Total stockholders' equity                    27,633       25,638
                                               ---------    ---------
    Total liabilities and stockholders'
     equity                                      $45,382      $46,213
                                               =========    =========