According to the docket posted, on July 28, 2003, the Court entered the Order by U.S. District Judge Vaughn R. Walker granting the motion for final approval of the class settlement. The Plaintiffs’ motion for expenses and sanctions was terminated, and the Plaintiffs' motion for an order authorizing distribution of net settlement fund to class members was granted. That same day, Final Judgment was entered, and the case terminated.

As reported by the Company’s FORM 10-Q/A for the quarterly period ended September 29, 2002, on October 16, 2002, Cylink entered into an agreement with all plaintiffs to settle the class action for $6.2 million. The settlement amount will be paid entirely from insurance proceeds under insurance policies held by Cylink. The settlement agreement is subject to approval by the United States District Court for the Northern District of California, and Cylink expects that the settlement agreement will be approved in March 2003.

Several securities class action complaints were filed against Cylink and certain of its current and former directors and officers in federal courts in California. These complaints allege, among other things, that Cylink's previously issued financial statements were materially false and misleading and that the defendants knew or should have known that these financial statements caused its common stock price to rise artificially. The complaints also allege violations of Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, and Section 20 of the Exchange Act. The securities class action lawsuits have been ordered consolidated into a single action pending in the United States District Court for the Northern District of California, captioned In Re Cylink Securities Litigation, No. C98-4292 (VRW).

The original Complaint alleges that during the Class Period defendants continuously disseminated materially false and misleading statements regarding the Company's current financial performance and business conditions. Specifically, the defendants published false and misleading financial statements, including financial statements that overstated first quarter 1998 revenue by approximately $5.0 million and second quarter 1998 revenue by approximately $6.7 million. The defendants also failed to disclose that there were substantial operating losses for the first and second quarter 1998, and that the Company's accounting practices throughout the Class Period failed to conform with generally accepted accounting principles ("GAAP").