Aladdin Knowledge Systems Ltd. Announces Increased Sales for Second Quarter of 1999; Company Continues to Invest in New Internet Security Products.NEW YORK/Tel Aviv, Israel--(BUSINESS WIRE)--Aug. 8, 1999-- Aladdin Knowledge Systems Aladdin Knowledge Systems NASDAQ: ALDN is a company that provides solutions for software digital rights management and Internet security since 1985. Its corporate headquarters are located in Tel Aviv, Israel. Ltd. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : ALDN) today reported financial results for the second quarter ended June 30, 1999. Second quarter sales rose 18% to $10.4 million, compared with sales of $8.8 million for the second quarter of 1998. Net income for the second quarter of 1999 was $0.3 million, compared with net income of $2.7 million for the corresponding quarter in 1998. Basic earnings-per-share for the second quarter were $0.03, compared with earnings-per-share of $0.27 in the second quarter of 1998, based on 11.370 million shares and 10.048 million shares in 1999 and 1998 second quarter periods, respectively. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the second quarter of 1999 were $0.03, compared with earnings of $0.27 per share in the second quarter of 1998, based on 11.487 million shares and 10.169 million shares for the respective periods. For the six-month period, sales were $21.2 million, compared with sales of $ 18.3 million for the six-month period of 1998. Net income for the six months of 1999 was $1.4 million, compared with net income of $5.3 million for the corresponding six months in 1998. The basic earnings-per-share for the six months period were $0.12, compared with earnings-per-share of $0.53 in the six- month period of 1998, based on 11.362 million shares and 10.043 million shares in the 1999 and 1998 the six months period, respectively. The diluted earnings per share were $0.12 compared with earnings of $0.52 per share in the six months of 1998, based on 11.526 million shares and 10.165 million shares for the period, respectively. Yanki Margalit, Aladdin's Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , stated, "The past six months were among the most exciting and eventful e·vent·ful adj. 1. Full of events: an eventful week. 2. Important; momentous: an eventful decision. in the history of Aladdin. It is our intention to continue and invest the resources needed to turn Aladdin into a global leader in Internet and digital content security." Mr. Margalit continued, "Following the merger with Eliashim, we successfully integrated its operations into Aladdin, and reorganized the Company into two dynamic business units addressing the Software Security and Internet Security ''This article or section is being rewritten at Internet security is the process of protecting data and privacy of devices connected to internet from information robbery, hacking, malware infection and unwanted software. markets. We also added offices in Seattle, and Holland, acquired eSafe's assets in the UK, and added affiliates in Brazil and South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. . As a result of this growth, Aladdin now employs nearly 300 people around the globe." Software Security Highlights Increased Sales -- In the U.S., the Software Security Unit experienced robust sales growth during the second quarter. HASP (Houston Automatic Spooling Program) A mainframe spooling program that provides task, job and data management functions. HASP - Houston Automatic Spooling Program and Hardlock sales increased over 20 percent compared to last year. The increase came from both new and existing customers. Received Top Rating from Leading Trade Publication - In April Secure Computing Magazine Secure Computing Magazine is a computer magazine emphasising security. awarded HASP a "Five Star" rating after a comprehensive analysis of "features, ease-of-use, performance, documentation, support, and overall rating." Released HASP CD 7.0 - Coming after a major victory in an objective comparison against competing products, HASP further enhanced its standing by improving its security and ease-of-use with the release of CD 7.0. Completed Privilege Beta Testing (programming) beta testing - Testing a pre-release (potentially unreliable) version of a piece of software by making it available to selected users. This term derives from early 1960s terminology for product cycle checkpoints, first used at IBM but later standard throughout the - Privilege, Aladdin's Software Licensing Platform for the Internet, neared its debut after performing well in beta tests. Internet Security Highlights Released New Internet See Web 2.0 and Internet2. Security Tools -- The eSafe 2.1 release was the first to be fully developed by Aladdin and it quickly proved its worth. eSafe 2.1 was able to detect the recent slew of viruses, vandals, and `Trojan Horses' on a generic threat basis - even before they were identified and named. Advanced eToken into Beta Testing - With successful preliminaries completed, eToken, Aladdin's USB-capable authentication/certification device, advanced to beta testing and stepped closer to its market launch. Signed Three Major eSafe OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and Agreements - Aladdin's eSafe Protect Desktop is now included with the new Zoom HomeLAN PCI (1) (Payment Card Industry) See PCI DSS. (2) (Peripheral Component Interconnect) The most widely used I/O bus (peripheral bus). Networking Product, offering critical Virus and Vandal protection to Zoom's customers. It is also now featured in Sterling Strategic Solution's "SOS SOS, code letters of the international distress signal. The signal is expressed in International Morse code as … — — — … (three dots, three dashes, three dots). Best Defense" for PC and Internet Protection. Installed eSafe with leading customers worldwide - including Ernst & Young in Israel, NOAA NOAA abbr. National Oceanic and Atmospheric Administration Noun 1. NOAA - an agency in the Department of Commerce that maps the oceans and conserves their living resources; predicts changes to the earth's environment; in the USA and Sony in Japan. Aladdin's eToken is being adopted by industry leaders such as Microsoft and Checkpoint - eToken is being integrated into industry leading company's products. About Aladdin Aladdin (NASDAQ/NMS: ALDN) is a global leader in securing digital content, from applications software to Internet use and access. Aladdin's products include HASP and Hardlock, software security systems that protect the revenues of developers and publishers; Privilege, a software licensing platform for the Internet; the eSafe line of anti-vandal, anti-virus and content filtering See Web filtering and parental control software. software for PCs and networks connected to the Internet; and eToken for Internet security and authentication (1) Verifying the integrity of a transmitted message. See message integrity, e-mail authentication and MAC. (2) Verifying the identity of a user logging into a network. . Aladdin serves its customers through eight offices located in the world's major software markets as well as a network of 50 distributors serving more than 100 countries. For more information, visit the Aladdin home page at www.ealaddin.com Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Except for the statements of historical fact, the information presented herein constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include general economic and business conditions, the loss of market share, changes in consumer buying habits and other factors over which Aladdin Knowledge Systems Ltd. has little or no control. -0-
-- Tables Follow -
Aladdin Knowledge Systems Ltd.
Summary of unaudited results
(U.S. dollars, in thousands -except for per share amount)
Three month Six month
period ended period ended
June 30 June 30
1999 1998 1999 1998
Sales $10,419 $8,837 $21,281 $18,318
Cost of sales 2,364 2,302 4,610 4,935
Gross profit 8,055 6,535 16,671 13,383
Research and 1,362 1,021 3,308 1,915
development, net
Selling and 4,351 2,483 8,401 4,892
marketing
General and 1,876 971 3,504 1,947
administrative
7,589 4,475 15,213 8,754
Operating income 466 2,060 1,458 4,629
Financial income, 241 378 529 715
net
Other income 97 682 121 710
Income before 804 3,120 2,108 6,054
taxes
Taxes on income 360 424 572 727
444 2,696 1,536 5,327
Equity in the loss
of affiliate, net (127) - (127) -
of taxes
Net income $317 $2,696 $1,409 $5,327
Basic earnings per $0.03 $0.27 $0.12 $0.53
share
Diluted earnings $0.03 $0.27 $0.12 $0.52
per share
Weighted average
number of shares 11,370 10,048 11,362 10,043
outstanding for
Basic EPS
Weighted average
number of shares
outstanding for 11,487 10,169 11,526 10,165
Diluted EPS
Aladdin Knowledge Systems Ltd.
Balance Sheets
(U.S. dollars, in thousands)
June 30, December 31,
1999 1998
Assets
Current assets
Cash and cash equivalents $10,506 $17,475
Marketable securities 6,910 1,697
Other accounts receivable 10,287 7,558
Inventories 4,525 4,793
32,228 31,523
Fixed assets, net 4,558 4,130
Other long term assets net 21,643 24,232
$58,429 $59,885
Liabilities and shareholders' equity
Current liabilities
Other current liabilities $6,926 $8,987
Accrued severance pay 1,423 1,223
Shareholders' Equity 50,080 49,675
$58,429 $59,885
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