8-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 5, 2004

SAFEGUARD SCIENTIFICS, INC.

(Exact Name of Registrant as Specified in Charter)

PENNSYLVANIA	1-5620	23-1609753
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

800 The Safeguard Building, 435 Devon Park Drive, Wayne, PA	19087-1945
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (610) 293-0600

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

TABLE OF CONTENTS

PRESS RELEASE DATED AUGUST 5, 2004

ITEM 12. Results of Operations and Financial Condition

     On August 5, 2004, Safeguard Scientifics, Inc. (“Safeguard”) issued a press release setting forth Safeguard’s financial information for the second quarter ended June 30, 2004. A copy of Safeguard’s press release is attached hereto as Exhibit 99.1 and hereby incorporated by reference.

     This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”) or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Safeguard Scientifics, Inc.
Dated: August 5, 2004	By:	CHRISTOPHER J. DAVIS
		Christopher J. Davis
		Executive Vice President and Chief     Administrative & Financial Officer

Exhibit Index

99.1  Press release dated August 5, 2004 issued by Safeguard Scientifics, Inc.

EX-99.1

EXHIBIT 99.1

CONTACT:
Janine Dusossoit
Vice President, Investor Relations
(610) 293-0600

SAFEGUARD ANNOUNCES SECOND QUARTER 2004 RESULTS

Wayne, PA, August 5, 2004 – Safeguard Scientifics, Inc. (NYSE: SFE), a leader in developing companies primarily in the information technology and healthcare life sciences areas, today announced its operating results for the second quarter ended June 30, 2004.

“Revenues in our Strategic Companies Segment increased 19% from the second quarter last year,” said Anthony L. Craig, President and Chief Executive Officer of Safeguard Scientifics, Inc. “We are seeing real traction in the growth of these companies. Our strong balance sheet positions us well to continue funding their growth as well as to consider acquisitions. We also have enhanced our internal capabilities to source new businesses that meet our focused criteria.”

Financial Highlights

Safeguard’s consolidated revenue for the second quarter of 2004 was $381.8 million, compared with $419.2 million for the second quarter of 2003 primarily a result of lower revenues at CompuCom Systems, continuing a trend from the last several quarters.

For the Strategic Company segment, revenues increased 19% to $31.7 million in the three months ended June 30, 2004, and rose 7% to $62.7 million for the six months ended June 30, 2004.

800 The Safeguard Building • 435 Devon Park Drive • Wayne, PA 19087-1945
Phone (610) 293-0600 • Fax (610) 293-0601 • Toll Free (877) 506-7371
http://www.safeguard.com

For the quarter ended June 30, 2004, Safeguard reported a net loss of $12.5 million, or a diluted loss per share of $0.10, compared with a net loss of $3.2 million, or a $0.03 diluted loss per share in the second quarter of 2003. Included in the second quarter 2004 results was a gain of $31.7 million related to the sale of our interest in Sanchez Computer Associates, Inc. Also included in the results for the second quarter is an impairment charge related to the goodwill of CompuCom. As previously announced, in connection with the proposed merger of CompuCom with an affiliate of Platinum Equity LLC, Safeguard anticipated recording an impairment of goodwill in the second quarter. The total impairment charge included in the operating results for the second quarter is $23.3 million after income taxes. This includes $14.0 million related to our share of CompuCom’s goodwill impairment charge, and an additional impairment recorded by Safeguard of $9.3 million.

As of June 30, 2004, Safeguard’s parent company cash balance was $161 million and the market value of its ownership of public company marketable securities was $200 million.

Web Cast
Safeguard will host a Web cast on August 5, 2004 at 9:00 a.m. (ET) to discuss second quarter 2004 results. The call can be accessed live at the Safeguard Web site at www.safeguard.com and also will be archived and accessible following the live call.

About Safeguard
Safeguard Scientifics, Inc. (NYSE: SFE) is a company that seeks to create long-term value by taking controlling interests primarily in information technology and healthcare life sciences companies and helping them develop through superior operations and management. Safeguard’s existing strategic companies focus on the following vertical markets: financial services, healthcare and pharmaceutical, manufacturing, retail and distribution, and telecommunications. For more information, visit www.safeguard.com.

Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute “forward-looking statements” within the meaning

800 The Safeguard Building • 435 Devon Park Drive • Wayne, PA 19087-1945
Phone (610) 293-0600 • Fax (610) 293-0601 • Toll Free (877) 506-7371
http://www.safeguard.com

of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties. These forward-looking statements that could cause actual results to differ materially, include, among others, managing rapidly changing technologies, limited access to capital, competition, the ability to attract and retain qualified employees, the ability to execute our strategy, the uncertainty of the future performance of our companies, acquisitions and dispositions of companies, the inability to manage growth, compliance with government regulations and legal liabilities, additional financing requirements, labor disputes, the effect of economic conditions in the business sectors in which our companies operate, and other uncertainties described in the Company’s filings with the Securities and Exchange Commission. Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The Company does not assume any obligation to update any forward-looking statements or other information contained in this press release.

# # #

NOTE TO EDITORS: Safeguard is a service mark of Safeguard Scientifics, Inc.

800 The Safeguard Building • 435 Devon Park Drive • Wayne, PA 19087-1945
Phone (610) 293-0600 • Fax (610) 293-0601 • Toll Free (877) 506-7371
http://www.safeguard.com

Safeguard Scientifics, Inc.
Condensed Consolidated Balance Sheets
(in thousands)

	June 30,		December 31,
	2004		2003
	(unaudited)
Assets
Current Assets
Cash and cash equivalents, restricted cash and short-term investments - Parent	$	161,422	$	131,065
- Subsidiaries		140,004		94,945
Accounts receivable		191,286		245,504
Inventories		20,760		35,849
Prepaid expenses and other current assets		11,492		11,293
Total current assets		524,964		518,656
Property and equipment, net		33,832		34,007
Ownership interests in and advances to companies		35,763		53,119
Available-for-sale securities		14,464		—
Intangible assets, net		11,714		14,689
Goodwill		153,881		195,652
Other		27,153		20,208
Total Assets	$	801,771	$	836,331
Liabilities and Shareholders’ Equity
Total current liabilities	$	199,194	$	240,459
Long-term debt		4,812		2,537
Minority interest		143,720		142,159
Other long-term liabilities		13,044		15,005
Convertible subordinated notes		54,763		200,000
Convertible senior debentures		150,000		—
Total shareholders’ equity		236,238		236,171
Total Liabilities and Shareholders’ Equity	$	801,771	$	836,331

800 The Safeguard Building • 435 Devon Park Drive • Wayne, PA 19087-1945
Phone (610) 293-0600 • Fax (610) 293-0601 • Toll Free (877) 506-7371
http://www.safeguard.com

Safeguard Scientifics, Inc.
Condensed Consolidated Statements of Operations
(in thousands except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
	(unaudited)						(unaudited)
Revenue
Product sales	$	262,787		$	309,804		$	485,815		$	570,115
Service sales		118,898			108,519			234,516			218,008
Other		106			889			124			1,788
Total revenue		381,791			419,212			720,455			789,911
Operating Expenses
Cost of sales — product		244,992			288,246			452,073			524,152
Cost of sales — service		78,328			70,662			154,433			143,888
Selling and service		34,051			33,269			68,207			67,565
General and administrative		29,944			28,694			55,065			59,320
Depreciation and amortization		6,538			8,255			13,381			16,133
Impairment (a)		42,719			—			42,719			—
Total operating expenses		436,572			429,126			785,878			811,058
		(54,781	)		(9,914	)		(65,423	)		(21,147	)
Other income, net		29,598			12,881			40,077			17,072
Impairment — related party		—			—			—			(659	)
Interest Income		731			853			1,366			1,885
Interest and financing expense		(2,616	)		(3,477	)		(5,914	)		(6,921	)
Income (loss) before income taxes, minority interest and equity loss		(27,068	)		343			(29,894	)		(9,770	)
Income tax benefit (expense)		4,683			(1,465	)		3,915			(2,857	)
Minority interest		13,851			107			15,185			97
Equity loss		(3,927	)		(2,135	)		(6,301	)		(6,159	)
Net loss	$	(12,461	)	$	(3,150	)	$	(17,095	)	$	(18,689	)
Basic loss per share	$	(0.10	)	$	(0.03	)	$	(0.14	)	$	(0.16	)
Diluted loss per share	$	(0.10	)	$	(0.03	)	$	(0.14	)	$	(0.17	)
Weighted average shares outstanding - basic and diluted		119,505			118,348			119,410			118,256

Certain prior year amounts have been reclassified to conform to the current year presentation.

(a) This amount relates to impairment of goodwill related to CompuCom. Safeguard’s net share of the impairment charge included in consolidated net loss is calculated as follows:

Impairment	$	(42,719	)
Share of impairment allocated to minority shareholders of CompuCom (included on the Minority Interest line)		13,969
Safeguard’s share of CompuCom’s income tax benefit related to the impairment charge		5,456
Safeguard’s share of the impairment charge included in Consolidated Net Loss	$	(23,294	)

800 The Safeguard Building • 435 Devon Park Drive • Wayne, PA 19087-1945
Phone (610) 293-0600 • Fax (610) 293-0601 • Toll Free (877) 506-7371
http://www.safeguard.com

Safeguard Scientifics, Inc.
Results of Segment Operations
(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
	(unaudited)						(unaudited)
Summary
Strategic	$	(10,586	)	$	(10,481	)	$	(16,609	)	$	(18,182	)
Non-Strategic		28,314			12,858			37,486			13,433
CompuCom		(26,974	)		3,377			(25,516	)		6,823
Total segments		(9,246	)		5,754			(4,639	)		2,074
Corporate operations		(7,898	)		(7,439	)		(16,371	)		(17,906	)
Income tax benefit (expense)		4,683			(1,465	)		3,915			(2,857	)
	$	(12,461	)	$	(3,150	)	$	(17,095	)	$	(18,689	)
Strategic
Revenue		31,665			26,720			62,709			58,415
Net Loss		(10,586	)		(10,481	)		(16,609	)		(18,182	)
Non-Strategic
Revenue		8,186			14,678			16,139			23,297
Net income		28,314			12,858			37,486			13,433
CompuCom
Revenue		341,913			377,728			641,569			708,025
Net income (loss)		(26,974	)		3,377			(25,516	)		6,823

800 The Safeguard Building • 435 Devon Park Drive • Wayne, PA 19087-1945
Phone (610) 293-0600 • Fax (610) 293-0601 • Toll Free (877) 506-7371
http://www.safeguard.com