Aladdin Knowledge Systems Ltd.

Condensed Consolidated Statements of Operations

(U.S. dollars, in thousands - except for per-share amount)

(Unaudited)

 

Three month period

ended

June 30,

 

Six month period

ended

June 30,

 

2008

2007

 

2008

 

2007

Revenues:

Software Security (DRM)

16,420

 

16,466

35,407

33,488

Enterprise Security

9,960

 

9,000

20,996

17,156

Total revenues

26,380

 

25,466

56,403

50,644

 

 

 

 

 

 

Cost of revenues

6,256

 

5,843

13,982

11,252

Gross profit

20,124

 

19,623

42,421

39,392

 

 

 

 

 

 

Research & development

6,679

 

4,585

12,944

9,174

Selling & marketing

9,751

 

7,917

19,248

15,994

General & administrative

4,211

 

3,370

8,205

6,765

Total operating expenses

20,641

 

15,872

 

40,397

 

31,933

 

 

 

 

 

 

Operating income (loss)

(517)

 

3,751

2,024

7,459

Financial income, net

284

 

1,042

997

2,047

Other income

-

 

5

613

14

Income (loss) before taxes

(233)

 

4,798

3,634

9,520

 

 

 

 

 

 

Taxes on income

(50)

 

770

450

1,512

Income (loss) before equity in loss of an affiliate

and non-controlling interest

(183)

 

4,028

 

 

3,184

 

 

8,008

 

 

 

 

 

 

Equity in loss of an affiliate

-

 

149

(68)

261

Income (loss) before non-controlling interest

(183)

 

3,879

 

3,116

 

7,747

Non-controlling interest

327

 

-

693

-

Net income

144

 

3,879

3,809

7,747

 

 

 

 

 

 

Basic earnings per share

0.01

 

0.27

0.27

0.53

Diluted earnings per share

0.01

 

0.26

0.27

0.52