|
Aladdin Knowledge
Systems Ltd.
Condensed Consolidated Statements of Operations
(U.S. dollars, in thousands – except for per-share
amount)
(Unaudited)
|
|
Three month period
ended
September 30,
|
Nine month period
ended
September 30,
|
|
|
2006
|
2005
|
2006
|
2005
|
|
Revenues:
|
|
|
|
|
|
Software Security (DRM)
|
13,951
|
14,012
|
44,671
|
42,478
|
|
Enterprise
Security
|
7,087
|
5,616
|
20,097
|
17,544
|
|
Total Revenues
|
21,038
|
19,628
|
64,768
|
60,022
|
|
|
|
|
|
|
|
Cost of revenues
|
4,709
|
4,040
|
14,162
|
12,109
|
|
Gross profit
|
16,329
|
15,588
|
50,606
|
47,913
|
|
|
|
|
|
|
|
Research & development
|
3,551
|
2,976
|
10,642
|
8,756
|
|
Selling & marketing
|
6,533
|
6,254
|
20,703
|
19,982
|
|
General & administrative
|
3,044
|
2,698
|
9,300
|
8,375
|
|
One time lawsuit charge
|
-
|
-
|
-
|
2,000
|
|
|
|
|
|
|
|
Total operating expenses
|
13,128
|
11,928
|
40,645
|
39,113
|
|
|
|
|
|
|
|
Operating income
|
3,201
|
3,660
|
9,961
|
8,800
|
|
Financial income, net
|
720
|
450
|
2,230
|
533
|
|
Other income
|
25
|
9
|
221
|
17
|
|
|
|
|
|
|
|
Income before taxes
|
3,946
|
4,119
|
12,412
|
9,350
|
|
|
|
|
|
|
|
Taxes on income
|
652
|
468
|
1,996
|
875
|
|
|
|
|
|
|
|
Net Income
|
3,294
|
3,651
|
10,416
|
8,475
|
|
|
|
|
|
|
|
Basic earnings per
share
|
0.23
|
0.25
|
0.71
|
0.62
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
0.22
|
0.24
|
0.69
|
0.59
|
|
|
|
|
|
|
|
Weighted average number
of shares outstanding for Basic earnings
per share
|
14,612
|
14,391
|
14,580
|
13,722
|
|
|
|
|
|
|
|
Weighted average number
of shares outstanding for Diluted earnings
per share
|
14,998
|
15,044
|
15,137
|
14,437
|
Aladdin Knowledge Systems Ltd.
Condensed Consolidated Balance Sheets
(U.S. dollars, in thousands)
(Unaudited)
|
|
September 30,
2006
|
December 31,
2005
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
Cash & cash equivalents
|
39,759
|
28,426
|
|
Marketable securities
|
45,386
|
48,815
|
|
Trade receivables, net of allowance for
doubtful accounts
|
15,339
|
13,957
|
|
Other accounts receivable
|
7,545
|
4,676
|
|
Inventories
|
7,518
|
6,998
|
|
|
|
|
|
Total current assets
|
115,547
|
102,872
|
|
|
|
|
|
Severance pay fund
|
2,400
|
2,455
|
|
|
|
|
|
Fixed assets, net
|
3,546
|
3,081
|
|
|
|
|
|
Other long-term assets, net
|
16,995
|
17,470
|
|
|
|
|
|
Total Assets
|
138,488
|
125,878
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
Trade payables
|
4,323
|
4,454
|
|
Deferred revenues
|
5,632
|
5,645
|
|
Other current liabilities
|
7,593
|
7,799
|
|
|
|
|
|
Total current liabilities
|
17,548
|
17,898
|
|
|
|
|
|
Accrued severance pay
|
3,099
|
3,243
|
|
|
|
|
|
Shareholders’ Equity
|
117,841
|
104,737
|
|
|
|
|
|
Total Liabilities and Shareholders’ Equity
|
138,488
|
125,878
|
Aladdin Knowledge Systems Ltd.
Condensed Consolidated Statements of Cash
Flows
(U.S. dollars, in thousands)
(Unaudited)
|
|
Three month period
ended
September 30,
|
Nine month period
ended
September 30,
|
|
|
2006
|
2005
|
2006
|
2005
|
|
Cash flow from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
3,294
|
3,651
|
10,416
|
8,475
|
|
Adjustments to reconcile net income to
net cash provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
570
|
462
|
1,745
|
1,393
|
|
Increase in trade and other receivables,
net
|
(530)
|
(717)
|
(3,766)
|
(361)
|
|
Decrease (increase) in inventory
|
794
|
(813)
|
(428)
|
(1,802)
|
|
Increase (decrease) in trade payables and
accrued liabilities
|
(767)
|
2,108
|
(677)
|
2,729
|
|
Other adjustments
|
113
|
(484)
|
895
|
207
|
|
Net cash provided by operating activities
|
3,474
|
4,207
|
8,185
|
10,641
|
|
|
|
|
|
|
|
Cash flow from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
(224)
|
(436)
|
(1,820)
|
(1,752)
|
|
Investment in available–for-sale marketable
securities
|
-
|
(15,918)
|
-
|
(41,264)
|
|
Proceeds from sales of available–for-sale
marketable securities
|
1,885
|
-
|
3,371
|
-
|
|
Investment in other companies
|
(421)
|
(426)
|
(850)
|
(850)
|
|
Proceeds from return on investment in other
companies
|
-
|
-
|
1,724
|
910
|
|
Net cash provided by (used in) investing activities
|
1,240
|
(16,780)
|
2,425
|
(42,956)
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of options
|
181
|
119
|
587
|
244
|
|
Proceeds from issuance of shares, net of
issuance costs
|
-
|
-
|
-
|
38,778
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
181
|
119
|
587
|
39,022
|
|
|
|
|
|
|
|
Effect of exchange rate on cash and cash
equivalents
|
6
|
118
|
136
|
(206)
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
4,901
|
(12,336)
|
11,333
|
6,501
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning
of the period
|
34,858
|
36,150
|
28,426
|
17,313
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of
the period
|
39,759
|
23,814
|
39,759
|
23,814
|
|
|
|
|
|
|
Aladdin Knowledge
Systems Ltd.
Supplementary Financial Information
Reconciliation of GAAP Financial Information
to Non-GAAP
(U.S. dollars, in thousands – except for per-share amount)
(Unaudited)
|
|
Three month period ended September 30,
|
|
|
GAAP 2006
|
SFAS 123R Adjustment
|
Non-GAAP 2006
|
GAAP 2005
|
|
Revenues:
|
|
|
|
|
|
Software Security (DRM)
|
13,951
|
|
13,951
|
14,012
|
|
Enterprise
Security
|
7,087
|
|
7,087
|
5,616
|
|
Total Revenues
|
21,038
|
|
21,038
|
19,628
|
|
|
|
|
|
|
|
Cost of revenues
|
4,709
|
|
4,709
|
4,040
|
|
Gross profit
|
16,329
|
|
16,329
|
15,588
|
|
|
|
|
|
|
|
Research & development
|
3,551
|
190
|
3,361
|
2,976
|
|
Selling & marketing
|
6,533
|
197
|
6,336
|
6,254
|
|
General & administrative
|
3,044
|
225
|
2,819
|
2,698
|
|
|
|
|
|
|
|
Total operating expenses
|
13,128
|
612
|
12,516
|
11,928
|
|
|
|
|
|
|
|
Operating income
|
3,201
|
|
3,813
|
3,660
|
|
Financial income, net
|
720
|
|
720
|
450
|
|
Other income
|
25
|
|
25
|
9
|
|
|
|
|
|
|
|
Income before taxes
|
3,946
|
|
4,558
|
4,119
|
|
|
|
|
|
|
|
Taxes on income
|
652
|
|
652
|
468
|
|
|
|
|
|
|
|
Net income
|
3,294
|
612
|
3,906
|
3,651
|
|
|
|
|
|
|
|
Basic earnings per share
|
0.23
|
|
0.27
|
0.25
|
|
|
|
|
|
|
|
Diluted earnings per share
|
0.22
|
|
0.26
|
0.24
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding for Basic earnings per share
|
14,612
|
|
14,612
|
14,391
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding for Diluted earnings per share
|
14,998
|
|
14,998
|
15,044
|
Aladdin Knowledge
Systems Ltd.
Supplementary Financial Information
Reconciliation of GAAP Financial Information
to Non-GAAP
(U.S. dollars, in thousands – except for per-share amount)
(Unaudited)
|
|
Nine month period ended September 30,
|
|
|
GAAP 2006
|
SFAS 123R Adjustment
|
Non-GAAP 2006
|
GAAP 2005
|
|
Revenues:
|
|
|
|
|
|
Software Security (DRM)
|
44,671
|
|
44,671
|
42,478
|
|
Enterprise
Security
|
20,097
|
|
20,097
|
17,544
|
|
Total Revenues
|
64,768
|
|
64,768
|
60,022
|
|
|
|
|
|
|
|
Cost of sales
|
14,162
|
|
14,162
|
12,109
|
|
Gross profit
|
50,606
|
|
50,606
|
47,913
|
|
|
|
|
|
|
|
Research & development
|
10,642
|
498
|
10,144
|
8,756
|
|
Selling & marketing
|
20,703
|
554
|
20,149
|
19,982
|
|
General & administrative
|
9,300
|
662
|
8,638
|
8,375
|
|
One time lawsuit charge
|
-
|
|
-
|
2,000
|
|
Total operating expenses
|
40,645
|
1,714
|
38,931
|
39,113
|
|
|
|
|
|
|
|
Operating income
|
9,961
|
|
11,675
|
8,800
|
|
Financial income, net
|
2,230
|
|
2,230
|
533
|
|
Other income
|
221
|
|
221
|
17
|
|
|
|
|
|
|
|
Income before taxes
|
12,412
|
|
14,126
|
9,350
|
|
|
|
|
|
|
|
Taxes on income
|
1,996
|
|
1,996
|
875
|
|
|
|
|
|
|
|
Net income
|
10,416
|
1,714
|
12,130
|
8,475
|
|
|
|
|
|
|
|
Basic earnings per share
|
0.71
|
|
0.83
|
0.62
|
|
|
|
|
|
|
|
Diluted earnings per share
|
0.69
|
|
0.80
|
0.59
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding for Basic earnings per share
|
14,580
|
|
14,580
|
13,722
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding for Diluted earnings per share
|
15,137
|
|
15,137
|
14,437
|
|