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FalconStor Announces Q2 Results: Page 2 of 3

Non-GAAP income from operations increased 98% to $7.5 million for the six months ended June 30, 2008, compared with non-GAAP income from operations of $3.8 million in 2007. Non-GAAP operating margins increased to 17%, compared with non-GAAP operating margins of 11% in the same period a year ago. Non-GAAP net income was $5.4 million, or $0.11 per diluted share, compared with $5.0 million, or $0.10 per diluted share in the same period a year ago. The Company recorded a non-GAAP tax expense of $3.1 million compared with a tax benefit of $0.1 million in 2007. Non-GAAP results exclude the effects of stock-based compensation expense net of the related income taxes.

The Company closed the quarter with $53.7 million in cash, cash equivalents and marketable securities. Cash flows from operations for the second quarter of 2008 were $4.4 million. During the second quarter of 2008, the Company repurchased eight hundred thousand shares at a total purchase price of $6.9 million, or an average price of $8.59 per share. For the first six months of 2008, the Company repurchased a total of 2.6 million shares at a total price of $21.3 million or an average price of $8.34 per share.

The Company also announced that its Board of Directors approved another increase in the size of its Stock Repurchase Program by an additional three million shares. The Company has already repurchased 3.7 million shares. As a result of this increase, the Company may repurchase up to 4.3 million additional shares.

For the year ending December 31, 2008, the Company continues to anticipate:

  • Revenues to be in the range of $100 million to $104 million
  • Non-GAAP operating margins, which exclude stock-based compensation, to be in the range of 24% to 26%
  • Non-GAAP net income to be between $0.31 and $0.36 per diluted share, which excludes stock-based compensation, net of income taxes.

FalconStor Software Inc.