Revenue from continuing operations for the second quarter of 2012 increased 11% to $46.6 million from $42.1 million in the second quarter of 2011, and for the first six months of 2012, increased 1% to $78.9 million from $78.2 million for the first six months of 2011.

Net income from continuing operations for the second quarter of 2012 was $7.4 million, or $0.19 per diluted share, an increase of $4.1 million, or 122%, from $3.3 million, or $0.09 per diluted share, for the second quarter of 2011. Net income from continuing operations for the first six months of 2012 was $9.4 million, or $0.24 per diluted share, an increase of $2.4 million, or 34%, from $7.0 million, or $0.18 per diluted share, for the comparable period in 2011.

Net income, which includes the impact of our discontinued operations, for the second quarter of 2012 was $7.2 million, or $0.18 per diluted share, an increase of $4.5 million, or 173%, from $2.6 million, or $0.07 per diluted share, for the second quarter of 2011. Net income for the first six months of 2012 was $9.1 million, or $0.23 per diluted share, an increase of $4.0 million, or 77%, from $5.1 million, or $0.13 per diluted share, for the comparable period in 2011.

Other Financial Highlights:
• Gross profit from continuing operations was $29.5 million, or 63% of revenue, for the second quarter of 2012 and $51.3 million, or 65% of revenue, for the first six months of 2012. Gross profit was $25.7 million, or 61% of revenue, for the second quarter of 2011 and $48.3 million, or 62% of revenue the first six months of 2011.
• Operating expenses from continuing operations for the second quarter and first six months of 2012 were $20.5 million and $40.1 million, respectively, a decrease of 5% from $21.6 million reported for the second quarter of 2011 and essentially flat with operating expense reported for the first six months of 2011.
Operating expenses from continuing operations for the second quhe second qquarter and first six months of 2012 included $1.2 million and $2.2 million, respectively, of expenses related to stock-based incentives. Operating expenses for the second quarter and first six months of 2011 included $0.8 million and $1.3 million, respectively, of expenses related to stock-based incentives.
Operating expenses from continuing operations for the second quarter and first six months of both 2012 and 2011 also included $0.5 million and $1.0 million, respectively, of expenses related to the amortization of purchased intangible assets.
• Operating income from continuing operations for the second quarter and first six months of 2012 was $9.0 million and $11.2 million, respectively, an increase of $4.9 million, or 122%, from $4.1 million reported for the second quarter of 2011 and an increase of $3.0 million, or 36%, from $8.2 million reported for the first six months of 2011. Operating income as a percentage of revenue for the second quarter and first six months of 2012 was 19% and 14%, respectively, compared to 10% and 11% for the comparable periods in 2011.
• Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations was $10.2 million and $13.6 million for the second quarter and first six months of 2012, respectively, an increase of 90% from $5.4 million reported for the second quarter of 2011 and an increase of 26% from $10.8 million reported for the first six months of 2011.
• Cash balances at June 30, 2012 totaled $85.1 million compared to $93.4 million and $84.5 million at March 31, 2012 and December 31, 2011, respectively. There were no bank borrowings at any of the periods ended June 30, 2012, March 31, 2012 or December 31, 2011.
Operational and Other Highlights:
• VASCO launched MYDIGIPASS.COM for consumers. MYDIGIPASS.COM is VASCO's hosted consumer authentication platform, providing convenient and secure login services to various web applications.
• MYDIPGIPASS.COM's early adopters recognize the benefits VASCO's hosted authentication platform offers.
• Magento, e-commerce platform serving more than 110,000 merchants worldwide, incorporated MYDIGIPASS.COM in its platform enabling web developers to embed secure login access for their web shops.
• Totalserve, an international tax, trust and corporate services company, will utilize VASCO's DIGIPASS as a Service to authenticate instructions received from their global clientele and to protect their bank account transactions.
• VASCO introduced a new version of its IDENTIKEY Appliance which incorporates IDENTIKEY software version 3.4 and offers support for hardware security modules (HSM), typically used in online banking environments.
• VASCO strengthens its PKI offering with new release of CertiID Suite 3.4.3 and DIGIPASS KEY 202.
• Lebes, one of the largest department stores in the State of Rio Grande do Sul, in the South of Brazil, chose to deploy VASCO's DIGIPASS GO 3 and IDENTIKEY to ensure greater reliability and security when granting discounts to their customers.

Guidance for full-year 2012:
VASCO is reaffirming its guidance for the full-year 2012 as follows:
• Revenue for 2012 is expected to be $175 million or more, and
• Operating income as a percentage of revenue, excluding the amortization of purchased intangible assets, for full-year 2012 is projected to be in the range of 13% to 16%.

"Revenues for the second quarter and first six months of 2012 demonstrate that demand for our products has remained strong in spite of the difficult global economic environment," stated T. Kendall Hunt, Chairman & CEO. "The results of the second quarter also demonstrate the leverage of our core business model as modest growth in revenue combined with a modest increase in our gross margin rate resulted in more than a 100% increase in operating profits. We also continued to make good progress in the rollout of our DIGIPASS as a Service business line. As noted at the beginning of the year, we believe that 2012 will be a year in which we fortify and enhance our strong position in our core business while we develop the market for our DIGIPASS as a Service business line."

"Intake of new orders during the first six months of 2012 has been the strongest first half in the company's history. In addition, our pipeline of potential new orders remains strong," stated Jan Valcke, VASCO's President and COO. "Revenues in the second quarter of 2012 showed growth from both the banking market and the enterprise and application security market when compared to the second quarter of 2011. We were also pleased with the number of web sites that have integrated our DIGIPASS as a Service technology. We currently have more than 35 web sites that are live on our platform where the users of those sites can elect to use strong authentication when accessing their accounts. As noted previously, we do not expect a significant contribution to revenue from DIGIPASS as a Service in 2012, but believe that it will make a meaningful contribution to revenue in 2013."