Counterpane Internet Security Announces Record Second Quarter Results

Managed Security Leader Reports 47 Percent Sales Growth Over Previous Quarter

CUPERTINO, Calif., July 15, 2003 - Counterpane Internet Security, Inc., the leader in Managed Security Services, today announced that it closed its second quarter of 2003 with outstanding results, including a 47 percent increase in sales over the previous quarter.

Counterpane's bookings for the second quarter of 2003 increased 47 percent over the prior quarter. New account growth was distributed in multiple vertical markets, primarily financial at 60 percent, government at 15 percent, and healthcare and media industries each at 11 percent. Counterpane's revenue contribution from existing accounts remained evenly distributed among financial, government, healthcare, manufacturing and media industries. Over 25 percent of sales represented global deployments outside the U.S., focused primarily in Europe and Asia.

"With a renewal rate of over 90 percent, strong growth within existing clients, and a healthy increase in new clients, we far exceeded our growth expectations for the second quarter of 2003," said Paul Stich, president and COO of Counterpane. "Our recent success and the growing trend towards managed security services can be attributed to the cost effectiveness and higher level of security associated with outsourcing critical security functions to industry experts. By offering clients a full range of security services we can ensure protection of their most critical assets through a combination of the industry's most comprehensive and proven managed security services and the unmatched expertise of our security experts."

With the number of new security threats and vulnerabilities increasing at a tremendous rate and enterprise cost controls remaining a high priority, outsourcing in order to achieve more effective, faster, and more cost efficient security remains a driving force of growth for Counterpane. This, combined with Counterpane's best-in-class reputation and services, provides a solid foundation for continued growth.

Additional second quarter accomplishments include:

• Ongoing technology advancement: As part of its continuing effort to advance its system infrastructure at a rapid rate, Counterpane added increased interface options for user information access; a dozen new client specific intelligence engines; 26 new unique security engines; and an average of eight new updates per day to its core SecurityAI database. Additionally, the company announced the appointment of Doug Howard as vice president of strategy and product development.
• Commitment to client satisfaction: Counterpane continued to grow its direct sales force to further brand recognition, generate sales leads, and to provide support for direct sales. To lead this effort, Counterpane announced the addition of Kevin Senator as head of worldwide sales.
• Continued expansion in North America: Counterpane expanded its national presence to Newark, Dallas, and Atlanta, joining its existing presence in San Francisco, Los Angeles, Washington DC, Minneapolis, Miami, Tampa, and New York.
• Global expansion and support: With a solid presence in North America and Europe, Counterpane announced its intention to enter the Japanese market in order to expand its customer base, reduce reliance on U.S. and European markets, and provide localized support for existing clients spanning 32 different countries.
• Continued commitment to Certified Channel Partners: To further support its continued partner channel success, Counterpane added a director of strategic alliances, as well as increased the number of channel managers.

About Counterpane

Counterpane is the recognized leader in Managed Security, providing clients a single source for complete network security. Only Counterpane guarantees protection of clients' critical assets through a combination of the industry's most comprehensive and proven monitoring technology, and the unmatched expertise of its security experts working around the clock and around the globe. Counterpane's unique level of protection is based on data from hundreds of networks spanning 32 countries, and further extended with Counterpane's Global Enterprise Protection Suite of complementary managed security services including Vulnerability Scanning, Device Management, Active Response and Security Consulting Services. Counterpane eliminates clients' security worries so they can focus their attention on their business. The company is privately held and headquartered in Cupertino, CA.

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Counterpane is a trademark of Counterpane Internet Security, Inc. All other companies, brand names or products are trademarks or registered trademarks of their respective companies.