Exhibit 99.1

McAFEE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)

	March 31,			December 31,
	2004			2003
	(As Restated)
Assets:
Cash and marketable securities	$	941,210		$	766,257
Restricted cash		20,647			20,547
Accounts receivable, net		109,559			170,218
Prepaid expenses and other current assets		108,260			97,616
Assets held for sale		—			24,719
Property and equipment, net		110,294			111,672
Deferred taxes		346,313			359,746
Goodwill, intangibles and other long term assets, net		546,776			569,723
Total assets	$	2,183,059		$	2,120,498
Liabilities:
Accounts payable	$	25,847		$	32,099
Accrued liabilities		123,568			147,281
Liabilities related to assets held for sale		—			23,310
Deferred revenue		485,252			459,557
Convertible debt		345,275			347,397
Other long term liabilities		232,082			222,765
Total liabilities		1,212,024			1,232,409
Stockholders’ equity:
Common stock		1,648			1,621
Treasury stock		(4,707	)		(4,707	)
Additional paid-in capital		1,111,288			1,087,625
Deferred stock-based compensation		(537	)		(598	)
Accumulated other comprehensive income		35,252			34,027
Accumulated deficit		(171,909	)		(229,879	)
Total stockholders’ equity		971,035			888,089
Total liabilities and stockholders’ equity	$	2,183,059		$	2,120,498

McAFEE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)

	Three Months Ended
	March 31,
	2004			2003
	(As Restated)
Net revenue	$	219,078		$	219,314
Cost of net revenue		33,799			31,920
Amortization of purchased technology		3,393			1,741
Gross profit		181,886			185,653
Operating costs:
Research and development (1)		45,379			46,430
Marketing and sales (2)		92,958			88,941
General and administrative (3)		26,906			27,885
Gain on sale/disposal of assets and technology		(46,505	)		(37	)
Insurance reimbursement		(19,101	)		—
Amortization of intangibles		3,573			5,011
Restructuring costs		2,190			15,781
Restatement costs		(250	)		—
Acquisition retention bonuses and severance		1,410			—
Total operating costs		106,560			184,011
Income from operations		75,326			1,642
Interest and other income, net		4,593			5,596
Interest expense on convertible debt		(741	)		(3,171	)
Gain on sale of securities		246			—
Loss on redemption of debt		—			(2,591	)
Income before provision for income taxes and cumulative effect of change in accounting principle		79,424			1,476
Provision for income taxes		21,454			144
Income before cumulative effect of change in accounting principle		57,970			1,332
Cumulative effect of change in accounting principle, net of tax		—			11,142
Net income	$	57,970		$	12,474
Net income per share — basic	$	0.35		$	0.08
Net income per share — diluted (4)	$	0.33		$	0.08
Shares used in per share calculation — basic		163,423			159,552
Shares used in per share calculation — diluted		186,564			165,366

(1)	Includes stock-based compensation charges of $1,314 and $742 for the three months ended March 31, 2004 and 2003, respectively.
(2)	Includes stock-based compensation charges of $636 and $256 for the three months ended March 31, 2004 and 2003, respectively.
(3)	Includes stock-based compensation charges of $276 and $969 for the three months ended March 31, 2004 and 2003, respectively.
(4)	In computing net income per share on a diluted basis for the three months ended March 31, 2004 net income has been increased to $60,959 which includes $2,989 for the after-tax amount of interest expense recognized in the period associated with the dilutive convertible securities. The shares used in net income per share on a diluted basis include an additional 19.1 million shares that would have been outstanding if the dilutive securities has been converted as of the beginning of the period.

McAFEE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)

	Three Months Ended
	March 31,
	2004		2003
	(As Restated)
Net revenue	$	219,078	$	219,314
Cost of net revenue		33,799		31,920
Amortization of purchased technology		—		—
Gross profit		185,279		187,394
Operating costs:
Research and development		44,065		45,688
Marketing and sales		92,322		88,685
General and administrative		26,630		26,916
Gain on sale/disposal of assets and technology		—		—
Insurance reimbursement		—		—
Amortization of intangibles		—		—
Restructuring costs		—		—
Restatement costs		—		—
Acquisition retention bonuses and severance		—		—
Total operating costs		163,017		161,289
Income from operations		22,262		26,105
Interest and other income, net		4,593		5,596
Interest expense on convertible debt		—		—
Gain on sale of securities		—		—
Loss on redemption of debt		—		—
Income before provision for income taxes		26,855		31,701
Provision for income taxes		6,714		7,925
Pro forma net income	$	20,141	$	23,776
Net income per share — diluted	$	0.11	$	0.13
Shares used in per share calculation — diluted (1)		186,564		184,461

(1)

The above per share calculations treat outstanding convertible debt on an as-converted basis, resulting in an increase of 19.1 million shares for the three months ended March 31, 2004 and 2003.

The accompanying reconciliation of pro forma statements of income to the condensed consolidated statements of income is an integral part of the above pro forma financial information. The Company believes that the above pro forma information is an additional meaningful measure of operating performance. However, this pro forma information will necessarily be different from comparable information provided by other companies and should not be used as an alternative to our operating results and other financial information as determined under accounting principles generally accepted in the United States of America.

McAFEE, INC. AND SUBSIDIARIES
RECONCILIATION OF CONDENSED CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
TO THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)

	Three Months Ended
	March 31,
	2004			2003
	(As Restated)
McAfee, Inc. pro forma net income	$	20,141		$	23,776
Amortization of purchased technology		(3,393	)		(1,741	)
Amortization of intangibles		(3,573	)		(5,011	)
Stock compensation charge		(2,226	)		(1,967	)
Restructuring costs		(2,190	)		(15,781	)
Restatement costs		250			0
Acquisition retention bonuses and severance		(1,410	)		0
Insurance reimbursement		19,101			0
Interest expense on convertible debt		(741	)		(3,171	)
Gain on sale of securities		246			0
Gain on sale/disposal of assets and technology		46,505			37
Loss on redemption of debt		0			(2,591	)
Provision for income taxes		(14,740	)		7,781
Cumulative effect of change in accounting principle		0			11,142
McAfee, Inc. consolidated net income	$	57,970		$	12,474
Net income per share — diluted	$	0.33		$	0.08
Shares used in per share calculation — diluted		186,564			165,366