AUSTIN, Texas-Axalto, the world’s leading provider of microprocessor cards, announced that it has been selected to provide all two million microprocessor cards for the Puerto Rico Department of Health’s new Health Smart Card (“Tarjeta Inteligente De Salud”) program. The project covers the entire Commonwealth of Puerto Rico and is the largest deployment of health care smart cards in North America to date.

“This project demonstrates how microprocessor cards can be a very valuable tool in North America for health care providers, insurers and patients alike,” said Paul Beverly, president of Axalto Americas. “Smart cards enable compliance with HIPAA regulations, as well as support for new applications that deliver clinical and administrative benefits. They support the delivery of fast, efficient and appropriate medical care and allow institutions to securely manage patient records while protecting privacy, verifying patient eligibility and billing appropriate entities for the proper amounts.”

Axalto collaborated with Puerto Rico-based Evertec Inc., the integrator that is providing for the complete system implementation. Total deployment is expected to be completed by the middle of 2005. Volume deliveries by Axalto have already started.

The Department of Health card deployed is the high-end Cyberflex cryptographic smart card from Axalto, a highly secure microprocessor card which features advanced cryptography and large data storage.

About Axalto Axalto is the world’s leading provider of microprocessor cards (Gartner Dataquest 2004) - the key to digital networks - and a major supplier of point-of-sale terminals. Its 4,500 employees come from 70 nationalities and serve customers in more than 100 countries, with worldwide sales reaching 3 billion smart cards to date. The company has 25 years’ experience in smart card innovation and leads its industry in security technology and open systems.

Axalto continuously creates new generations of products for use in a variety of applications in the telecommunications, finance, retail, transport, entertainment, healthcare, personal identification, information technology and public sector markets. Microprocessor cards provide convenience, security and privacy to public and private services operators, their customers and end users. For more information, visit www.axalto.com.

Background information The Health Smart Card is distributed to all beneficiaries of the plan who are certified as eligible for the Medicaid Program of the PRDOH. Current plans call for operating 220 issuing stations in several regions, and eventually issuing health cards for two million Medicaid recipients.

The rollout follows on the heels of a successful pilot conducted with 16,000 smart cards already deployed by PRDOH. The goal of the pilot was to assess and validate the integration of the Electronic Medical Record System with smart card technology in the delivery of health care services. During the pilot, the voluntary enrollment in the smart card program was close to 80% of total eligible beneficiaries.

The term HIPAA refers to a U.S. law, the Health Insurance Portability and Accountability Act of 1996, and also to a set of standards and regulations passed later to implement the law. HIPAA affects health care organizations in two ways: first, by strongly encouraging the conversion of paper-based health care information systems to electronic systems, and second, by mandating that the design and implementation of the electronic systems guarantee the privacy and security of patient information gathered as part of providing health care.