SAN JOSE, CA, Jul 28, 2008 (MARKET WIRE via COMTEX) ----Secure Computing Corporation (NASDAQ: SCUR), a leading enterprise security company, today announced second quarter GAAP revenue of $61.7 million. This represents a 7% increase in revenue compared to $57.6 million in the same quarter last year. Second quarter non-GAAP revenue was $69.2 million. This represents a 9% increase compared to the same quarter last year. On a GAAP basis, net loss was $11.0 million or $0.18 per share. Second quarter non-GAAP net income was $3.9 million or $0.05 per fully diluted share. Billings for the quarter were $73.9 million, a 5% increase compared to the same quarter last year.

"Despite a difficult macro-economic environment, Secure delivered a solid second quarter based on good execution across the company," said Daniel Ryan, chief executive officer of Secure Computing. "In particular, I am pleased with the strong performance of our U.S. federal government business, which represented 25% of total billings."

"In the quarter we made excellent progress on directing our resources and efforts to the products and markets that should fuel Secure's growth," added Ryan.

Second Quarter Financial Highlights:

 -- GAAP revenue for the second quarter was $61.7 million, which is a 7% increase compared
   to $57.6 million in the same quarter last year. Non-GAAP revenue for the second quarter was $69.2 million and represents a
   9% increase compared to the same quarter last year. -- GAAP gross profit in the second quarter was 67% of revenue or $41.1
   million. Non-GAAP gross profit in the second quarter was 70% of revenue or $48.6 million. These non-GAAP results compare to
   76% of non-GAAP revenue, or $48.1 million, in the year ago quarter and 75% of non-GAAP revenue, or $49.1 million, in the prior
   quarter. -- GAAP operating expenses for the second quarter were $51.0 million, or 83% of revenue. Non-GAAP operating expenses
   for the second quarter were $43.8 million or 63% of non-GAAP revenue. These non-GAAP results compare to 63% of non-GAAP revenue
   in the year ago quarter and 65% in the prior quarter. -- GAAP operating loss for the second quarter was $9.9 million. Non-GAAP
   operating income for the second quarter was $4.8 million or 7% of non-GAAP revenue, compared to 12% in the same quarter last
   year and 10% in the prior quarter. -- GAAP net loss for the second quarter was $11.0 million or $0.18 per share. Non-GAAP
   net income for the second quarter was $3.9 million or $0.05 per fully-diluted share, compared to non-GAAP net income of $5.0
   million, or $0.07 per fully-diluted share in the year ago quarter. -- Deferred revenue increased $11.0 million, or 6%, in
   the second quarter bringing the total deferred revenue balance to a record $185.4 million at the end of June. -- Days sales
   outstanding (DSOs) were 89 days. As we have experienced in previous quarters, the change in DSOs from the prior quarter correlates
   to the change in deferred revenue. Excluding the impact of the increase in deferred revenue, DSOs were 73 days. -- Total cash
   and restricted cash was $21.6 million at June 30, 2008. Cash generated from operations in the quarter was $2.9 million. 

About Secure Computing

Secure Computing (NASDAQ: SCUR), a leading provider of enterprise gateway security, delivers a comprehensive set of solutions that help customers protect their critical Web, email and network assets. Over half of the Fortune 50 and Fortune 500 are part of our more than 22,000 global customers, supported by a worldwide network of more than 2,000 partners. The company is headquartered in San Jose, Calif., and has offices worldwide. For more information, see http://www.securecomputing.com.

Secure Computing's Outlook Publication Procedures

Secure Computing publishes an Outlook section in its quarterly operating results press release. The company continues its current practice of having corporate representatives meet privately during the quarter with investors, the media, investment analysts and others. At these meetings Secure Computing refers any questions regarding the current outlook back to the quarterly results press release Outlook section without updating or re-affirming the guidance contained in the Outlook section. The quarterly results press release, which includes the Outlook section, is available to the public on the company's Web site (www.securecomputing.com).

The Outlook section and other forward-looking statements contained in this operating results press release as well as in the company's filings with the SEC, should be considered to be historical, speaking as of the dates of this press release and the company's filings, as applicable, only and not subject to update by the company.

Current Outlook

The forward-looking statements in this Outlook section are based on current expectations and are subject to risks, uncertainties and assumptions described under the sub-heading "Forward-Looking Statements." Actual results may differ materially from the expectations expressed below.

On a GAAP basis for the third quarter of 2008, revenues are expected to be between $60 and $64 million and GAAP net loss, before the impact of any NOL utilization on tax expense, is expected to be $5.5 to $7.5 million.

On a non-GAAP basis for the third quarter of 2008, revenues are expected to be between $64 and $68 million and non-GAAP net income is expected to be between $3.5 and $5.5 million, or $0.04 and $0.07 per fully diluted share assuming a fully diluted weighted average count of approximately 75 million.

We expect to generate cash from operations in the range of $7 to $8 million.

Forward-Looking Statements

This release contains forward-looking statements concerning revenues, aggregate margins, profitability, shares outstanding and cash flows for the current and future quarters which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements in this release involve risks and uncertainties that could cause actual results to differ materially from current expectations. In order to meet these projections, the company must continue to obtain new enterprise relationships with major clients and overall demand for its products must continue to grow at current or greater levels. The company also must be able to motivate and retain key employees and staff current and future projects in a cost-effective manner and must effectively control its marketing, research, development and administrative costs, including personnel expenses. There can be no assurance that demand for the company's products will continue at current or greater levels, or that the company will continue to grow revenues, or be profitable. There are also risks that the company's pursuit of providing network security technology might not be successful, or that if successful, it will not materially enhance the company's financial performance; that changes in customer requirements and other general economic and political uncertainties and weaknesses in geographic regions of the world could impact the company's relationship with its customers, partners and alliances; and that delays in product development, competitive pressures or technical difficulties could impact timely delivery of next-generation products; and other risks and uncertainties that are described from time to time in Secure Computing's periodic reports and registration statements filed with the Securities and Exchange Commission. The company specifically disclaims any responsibility for updating these forward-looking statements.

Use of Non-GAAP Financial Measures

Secure Computing provides financial statements that are prepared in accordance with GAAP. In addition, this press release also provides financial measures of results of operations that are not calculated in accordance with GAAP. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Our Management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our historical and prospective financial performance and make operating decisions. Management also believes that these non-GAAP financial measures enhance investors' ability to evaluate the company's operating results and to compare current operating results to historical operating results. A reconciliation of the GAAP to non-GAAP financial measures for the first quarter, along with the use and economic substance of each non-GAAP financial measure, are provided at the end of this press release.

 Condensed Consolidated Statement of Operations
   (Unaudited, in thousands, except for per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2008 2007 2008
   2007 --------- --------- --------- --------- Revenues: Products $ 28,687 $ 30,722 $ 57,767 $ 60,893 Services 19,947 18,509
   40,973 35,909 Other (See Note) 13,070 8,417 23,667 14,618 --------- --------- --------- --------- Total revenues 61,704 57,648
   122,407 111,420 Cost of revenues: Products 11,959 8,960 21,752 18,557 Services 4,454 4,646 8,636 8,131 Other (See Note) 2,229
   1,399 3,817 2,488 Amortization of purchased intangibles 1,924 2,050 3,848 3,981 --------- --------- --------- --------- Total
   cost of revenues 20,566 17,055 38,053 33,157 --------- --------- --------- --------- Gross profit 41,138 40,593 84,354 78,263
   Operating expenses: Selling and marketing 30,981 29,635 61,363 58,102 Research and development 12,570 11,101 24,731 21,725
   General and administrative 5,221 3,702 10,949 7,392 Amortization of purchased intangibles 2,257 2,772 4,514 5,553 Litigation
   settlement --- --- 9,180 --- --------- --------- --------- --------- Total operating expenses 51,029 47,210 110,737 92,772
   --------- --------- --------- --------- Operating loss (9,891) (6,617) (26,383) (14,509) Other expense (761) (1,727) (1,856)
   (4,017) --------- --------- --------- --------- Loss before income tax (10,652) (8,344) (28,239) (18,526) Income tax expense
   (396) (2,604) (1,186) (2,997) --------- --------- --------- --------- Net loss (11,048) (10,948) (29,425) (21,523) Preferred
   stock accretion (966) (924) (1,932) (1,838) --------- --------- --------- --------- Net loss applicable to common shareholders
   $ (12,014) $ (11,872) $ (31,357) $ (23,361) ========= ========= ========= ========= Basic and diluted loss per share $ (0.18)
   $ (0.18) $ (0.46) $ (0.36) Weighted average shares outstanding - basic and diluted 67,915 65,756 67,667 65,518 NOTE: For certain
   multiple-element arrangements we are unable to establish vendor specific objective evidence (VSOE) of fair value for the undelivered
   bundled elements and are therefore unable to allocate the value of the arrangement between Products and Services Revenue and
   have reported these revenues and corresponding cost of revenues as 'Other.' Condensed Consolidated Balance Sheets (In thousands)
   Jun. 30, Dec. 31, 2008 2007 --------- --------- Assets Cash and cash equivalents $ 21,312 $ 12,084 Restricted cash 327 507
   Accounts receivable, net 61,101 64,056 Inventory, net 6,556 6,725 Other current assets 18,025 16,464 --------- --------- Total
   current assets 107,321 99,836 Property and equipment, net 21,799 18,595 Goodwill 528,416 528,264 Intangibles, net 53,677 61,494
   Other assets, net of current portion 11,268 10,560 --------- --------- Total assets $ 722,481 $ 718,749 ========= =========
   Liabilities and stockholders' equity Accounts payable 10,666 12,567 Accrued payroll 10,107 9,886 Accrued expenses 15,471 7,891
   Acquisition reserves 454 1,012 Deferred revenue 125,462 98,751 --------- --------- Total current liabilities 162,160 130,107
   Acquisition reserves, net of current portion 657 721 Deferred revenue, net of current portion 59,888 69,429 Deferred tax liability
   9,906 8,729 Debt, net of fees 41,641 41,461 Other liabilities 1,497 1,359 --------- --------- Total liabilities 275,749 251,806
   Convertible preferred stock 71,213 69,281 Stockholders' equity Common stock 683 673 Additional paid-in capital 573,138 564,108
   Accumulated deficit (197,385) (166,028) Accumulated other comprehensive loss (917) (1,091) --------- --------- Total stockholders'
   equity 375,519 397,662 --------- --------- Total liabilities and stockholders' equity $ 722,481 $ 718,749 ========= =========
   Condensed Consolidated Statement of Cash Flows (Unaudited, in thousands) Six months ended June 30, 2008 2007 --------- ---------
   Operating activities Net loss $ (29,425) $ (21,523) Adjustments to reconcile net loss from continuing operations to net cash
   provided by operating activities: Depreciation 4,962 3,422 Amortization of intangible assets 8,761 9,927 Loss on disposals
   of property and equipment and intangible assets 49 175 Amortization of debt fees 180 252 Deferred income taxes 617 1,652 Share-based
   compensation 6,958 8,057 Changes in operating assets and liabilities, excluding effects of acquisitions: Accounts receivable
   2,955 8,770 Inventories 169 (489) Other operating assets (2,547) (2,027) Accounts payable (1,683) (919) Accrued payroll 221
   (2,059) Accrued expenses 7,704 (158) Acquisition reserves (177) (595) Deferred revenue 17,170 20,174 --------- --------- Net
   cash provided by operating activities 15,914 24,659 Investing activities Purchase of property and equipment, net (8,058) (6,059)
   Increase in intangibles and other assets (817) (1,498) Sale/(purchases) of investments, net 195 (16) --------- --------- Net
   cash used in investing activities (8,680) (7,573) Financing activities Proceeds from issuance of common stock 2,082 3,828
   Repayment of term debt --- (22,000) --------- --------- Net cash provided by/(used in) financing activities 2,082 (18,172)
   Effect of exchange rates (88) 1,601 --------- --------- Net increase in cash and cash equivalents 9,228 515 Cash and cash
   equivalents, beginning of period 12,084 8,249 --------- --------- Cash and cash equivalents, end of period $ 21,312 $ 8,764
   ========= ========= Reconciliation of Consolidated GAAP Financial Measures to Non-GAAP Financial Measures (Unaudited, in thousands,
   except per share amounts) Three Months Ended Six Months Ended June 30, June 30, -------------------- --------------------
   2008 2007 2008 2007 --------- --------- --------- --------- NET REVENUES: GAAP net revenues $ 61,704 $ 57,648 $ 122,407 $
   111,420 Fair value adjustment to acquired deferred revenue (A) 1,090 2,894 2,358 6,741 VSOE adjustments to bundled product
   revenue (B) 6,387 3,128 10,069 6,047 --------- --------- --------- --------- Non-GAAP net revenues $ 69,181 $ 63,670 $ 134,834
   $ 124,208 ========= ========= ========= ========= GROSS PROFIT: GAAP gross profit $ 41,138 $ 40,593 $ 84,354 $ 78,263 Fair
   value adjustment to acquired deferred revenue (A) 1,090 2,894 2,358 6,741 VSOE adjustments to bundled product revenue (B)
   3,968 2,239 6,501 3,939 Stock-based compensation (C) 282 316 394 604 Amortization of acquired intangible assets (D) 1,924
   2,049 3,848 3,980 Non-recurring expenses (E) 189 - 189 - --------- --------- --------- --------- Non-GAAP gross profit $ 48,591
   $ 48,091 $ 97,644 $ 93,527 ========= ========= ========= ========= OPERATING EXPENSES: GAAP operating expenses $ 51,029 $
   47,210 $ 110,737 $ 92,772 Stock-based compensation (C) (2,906) (4,016) (6,564) (7,453) Amortization of acquired intangible
   assets (D) (2,257) (2,772) (4,514) (5,552) Non-recurring expenses (E) (2,054) - (3,897) - Litigation (F) - - (9,180) - ---------
   --------- --------- --------- Non-GAAP operating expenses $ 43,812 $ 40,422 $ 86,582 $ 79,767 ========= ========= =========
   ========= OPERATING (LOSS)/INCOME: GAAP operating loss $ (9,891) $ (6,617) $ (26,383) $ (14,509) Fair value adjustment to
   acquired deferred revenue (A) 1,090 2,894 2,358 6,741 VSOE adjustments to bundled product revenue (B) 3,968 2,239 6,501 3,939
   Stock-based compensation (C) 3,188 4,332 6,958 8,057 Amortization of acquired intangible assets (D) 4,181 4,821 8,362 9,532
   Non-recurring expenses (E) 2,243 - 4,086 - Litigation (F) - - 9,180 - --------- --------- --------- --------- Non-GAAP operating
   income $ 4,779 $ 7,669 $ 11,062 $ 13,760 ========= ========= ========= ========= NET (LOSS)/INCOME: GAAP net loss $ (11,048)
   $ (10,948) $ (29,425) $ (21,523) Fair value adjustment to acquired deferred revenue (A) 1,090 2,894 2,358 6,741 VSOE adjustments
   to bundled product revenue (B) 3,968 2,239 6,501 3,939 Stock-based compensation (C) 3,188 4,332 6,958 8,057 Amortization of
   acquired intangible assets (D) 4,181 4,821 8,362 9,532 Non-recurring expenses (E) 2,243 - 4,086 - Litigation (F) - - 9,180
   - Non-cash tax expense (G) 280 1,686 930 1,686 --------- --------- --------- --------- Non-GAAP net income $ 3,902 $ 5,024
   $ 8,950 $ 8,432 ========= ========= ========= ========= WEIGHTED AVERAGE SHARES OUTSTANDING: Weighted average shares outstanding
   - basic 67,915 65,756 67,667 65,518 Common stock equivalents (H) 576 1,139 904 1,171 Preferred stock as-if converted to common
   stock (I) 6,212 5,913 6,212 5,913 --------- --------- --------- --------- Shares used to compute net income per share - diluted
   74,703 72,808 74,783 72,602 ========= ========= ========= ========= Non-GAAP net income per share - diluted (I) $ 0.05 $ 0.07
   $ 0.12 $ 0.12 Reconciliation of Projected Financial Measure to Non-GAAP Financial Measures (Unaudited, in thousands, except
   per share amounts) Three Months Ended September 30, 2008 -------------------- REVENUES: GAAP revenue range $ 60,000 - $ 64,000
   Fair value adjustment to acquired deferred revenue (A) 900 VSOE adjustments to bundled product revenue (B) 3,100 --------
   -------- Non-GAAP revenue range $ 64,000 - $ 68,000 ======== ======== (LOSS)/INCOME BEFORE TAX IMPACT OF NOL UTILIZATION GAAP
   loss before taxes $ (7,500) $ (5,500) Fair value adjustment to acquired deferred revenue (A) 900 VSOE adjustments to bundled
   product revenue (B) 2,400 Stock-based compensation (C) 3,500 Amortization of acquired intangibles (D) 4,200 -------- --------
   Non-GAAP income before tax impact of NOL utilization $ 3,500 - $ 5,500 ======== ======== Shares used to compute income per
   share 75,000 75,000 Non-GAAP income per share $ 0.04 $ 0.07 

Our management regularly uses these non-GAAP financial measures internally to understand, manage and evaluate our historical and prospective financial performance and make operating decisions. We believe that presentation of the non-GAAP financial measures presented above is useful to an investors' ability to evaluate the company's operating results from management's perspective and to compare current operating results to historical operating results. Disclosure of these non-GAAP financial measures also facilitates comparisons of our operating performance with the performance of other companies in our industry that supplement their GAAP results with non-GAAP financial measures that are calculated in a similar manner. Our management adjusts for each of the items noted above for the reasons described below.

(A) Fair value adjustment to acquired deferred revenue. Non-GAAP revenues and gross profit include revenues associated with acquired deferred revenue that were excluded from GAAP revenue and gross profit as a result of purchase accounting adjustments to fair value. In our non-GAAP measures we have included these revenues and costs because we believe they are most reflective of our ongoing operating results and are useful for comparisons to historical operating performance. We further believe the impact of these purchase accounting adjustments will become immaterial in the near-term.

(B) VSOE adjustment to bundled product revenue. GAAP revenue and gross profit is negatively impacted by product billings that were deferred because we were unable to establish VSOE of fair value of the undelivered elements that were sold with the product. Non-GAAP revenues and gross profit presented above have been adjusted to include revenues and gross profits that would have been reported had we been able to establish VSOE of fair value of the undelivered elements that were sold with those product billings. We believe these adjustments are most reflective of our ongoing operations in the current period and are useful for comparisons to historical operating performance. We further believe the impact of this item on our GAAP revenues and gross profit will become immaterial in the future.

(C) Share-based compensation. Consists of expenses for employee stock options, restricted stock awards, and employee stock purchase plan determined in accordance with SFAS 123(R). We exclude these share-based compensation expenses when we review our operating performance because they represent compensation expense in the form of equity, rather than cash, and are not indicative of how we view our historical and prospective operational performance. Further, we believe it is useful to investors to understand the impact of the application of SFAS 123(R) to our results of operations. For the three and six months ended June 30, 2008 and 2007, share-based compensation was allocated as follows:

 Three Months Ended Six Months
   Ended June 30, June 30, ------------------- ------------------- 2008 2007 2008 2007 --------- --------- --------- ---------
   Cost of revenues $ 282 $ 316 $ 394 $ 604 Selling and marketing 1,418 2,461 3,520 4,417 Research and development 953 1,013
   1,954 1,935 General and administrative 535 542 1,090 1,101 --------- --------- --------- --------- Total stock-based compensation
   expense $ 3,188 $ 4,332 $ 6,958 $ 8,057 ========= ========= ========= ========= 

(D) Amortization of purchased intangible assets. The amounts recorded as amortization of purchased intangible assets arise from prior acquisitions and are non-cash in nature. We exclude these expenses when we review our operating performance because we believe that although these assets contribute to our revenue generating activities, they can be inconsistent in amount and frequency and are impacted by the timing and magnitude of our acquisitions. Further, they are not indicative of how we view our operating performance in the period incurred and in comparison to historical and prospective periods. For the three and six months ended June 30, 2008 and 2007, amortization of purchased intangibles was allocated as follows:

 Three Months Ended Six Months Ended June
   30, June 30, ------------------- ------------------- 2008 2007 2008 2007 --------- --------- --------- --------- Cost of revenues
   $ 1,924 $ 2,049 $ 3,848 $ 3,980 Operating expenses 2,257 2,772 4,514 5,552 --------- --------- --------- --------- Total amortization
   of intangible assets $ 4,181 $ 4,821 $ 8,362 $ 9,532 ========= ========= ========= ========= 

(E) Non-recurring expenses. These amounts arise from severance due to corporate organization restructurings and legal fees incurred defending a patent lawsuit. We exclude these expenses because we believe they are not reflective of how we view our operating performance in the period incurred, are not recurring in nature and are not meaningful in evaluating our operating performance in comparison to historical operating performance. There were no non-recurring expenses incurred for the three and six months ended June 30, 2007. For the three and six months ended June 30, 2008, non-recurring expenses were allocated as follows:

 Three
   Months Ended Six Months Ended June 30, June 30, ------------------- ------------------- 2008 2007 2008 2007 --------- ---------
   --------- --------- Cost of revenues $ 189 $ - $ 189 $ - Selling and marketing 819 - 876 - Research and development 316 -
   316 - General and administrative 919 - 2,705 - --------- --------- --------- --------- Total non-recurring expense $ 2,243
   $ - $ 4,086 $ - ========= ========= ========= ========= 

(F) Litigation. This amount represents the estimated royalty damages approved in the jury's verdict for the Finjan patent lawsuit. We exclude this expense in our non-GAAP operating results because we believe it is not reflective of how we view our operating performance in the period incurred and is not recurring in nature.

(G) Non-cash tax expense. These amounts represent the impact from the utilization of purchased net operating loss carry forwards and an increase in the valuation allowance that has been established against our net deferred tax asset. We exclude these expenses because they are non-cash expenses that we believe are not reflective of how we view our operating performance.

(H) Common stock equivalents. Represents the common stock equivalents for stock options and restricted stock outstanding at the end of the reported period.

(I) Preferred stock as-if converted to common stock. Represents the as-if conversion of outstanding preferred shares to common shares at the end of the reported period.

(J) Non-GAAP net income per share. Excludes the impact of preferred stock accretion.

Material Limitations Associated with Use of Non-GAAP Financial Measures

The non-GAAP financial measures provided in this press release may have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of the limitations in relying on these non-GAAP measures are:

 -- Items such as fair
   value adjustments to acquired deferred revenue and VSOE adjustments to our product revenue, do not generate additional cash
   and therefore should not be considered in analyzing cash flows. -- Items such as non-recurring expenses, litigation expenses,
   and non- recurring tax expenses that are excluded from non-GAAP operating results can have a material impact on cash flows
   and earnings per share. -- The adjustments for items such as stock-based compensation, amortization of acquired intangible
   assets, and tax impact of NOL utilization, though not directly affecting our cash position, do affect earnings per share.
   -- Other companies may calculate these non-GAAP measures differently than we do, limiting the usefulness of those measures
   for comparative purposes. 

Compensation for Limitations Associated with Use of Non-GAAP Financial Measures

We compensate for the limitations on our use of non-GAAP financial measures by primarily relying on our GAAP results and using non-GAAP financial measures only supplementally. We also provide detailed reconciliations of each non-GAAP financial measure to its most directly comparable GAAP measure within this press release and we encourage investors to carefully review those reconciliations.

 Editorial Contact: Ally Zwahlen Email Contact 925-288-4175 Investor Contact: Jane Underwood Email
   Contact 408-979-6186 

SOURCE: Secure Computing

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