Check Point(R) Software Technologies Ltd. (Nasdaq:CHKP), the
worldwide leader in securing the Internet, today announced its
financial results for the second quarter ended June 30, 2005.
Financial Highlights for the Second Quarter of 2005: -- Revenues:
$144.6 million, an increase of 14% compared to $126.9 million in
the second quarter of 2004. -- Net Income: $78.0 million, an
increase of 23% compared to $63.3 million in the second quarter of
2004. Net income excluding acquisition related charges(1) was $79.8
million, an increase of 21% compared to $65.9 million in the second
quarter of 2004. -- Earnings per Diluted Share: $0.31, an increase
of 30% compared to $0.24 in the second quarter of 2004. EPS
excluding net acquisition related charges was $0.32, an increase of
28% compared to $0.25 in the second quarter of 2004. -- Deferred
Revenues: increased by $4.0 million to a record $154.2 million. --
Share Repurchase Program: During the second quarter of 2005, Check
Point purchased 4.7 million shares at a total cost of close to $103
million. "We are pleased with our second quarter results, which
showed growth in profits and revenues from both existing and newly
announced product lines. We have also seen an increase in the large
deals we won during the quarter, including a few multi-year,
multi-million dollar licensing deals," said Gil Shwed, chairman and
chief executive officer of Check Point Software. "Additionally, Q2
marked a major milestone in Check Point history with the
introduction of the NGX platform; the industry's only unified
security architecture. As IT security remains a global focus, Check
Point NGX is resonating in the marketplace because it unifies
broad, intelligent security and delivers cost savings, reduced
complexity and deployment adaptability to businesses of all sizes."
Business Highlights and Introductions During the Second Quarter
Include: -- Introduced NGX(TM) Platform -- Industry's only Unified
Security Architecture -- the NGX platform is a major upgrade to
Check Point's core technology. It is the unified security platform
for perimeter, internal and Web security solutions enabling
enterprises of all sizes to reduce the cost and complexity of
security and ensure that their security systems can be easily
extended to adapt to new and evolving threats. -- Hosted Successful
Check Point Experience(TM) events for Partners and Customers --
held two major business and networking events to educate over 1,700
partners and customers on Check Point solutions. Participants
benefited from valuable technology and market information via
presentations, technical and business-focused tracks and product
demonstrations provided by Check Point and its partners. --
Introduced Check Point Express CI(TM) Unified Threat Management
(UTM) for Medium Business -- an easy to deploy and manage platform
that comprises multiple vital security features a mid-sized
business needs, including: firewall, VPN, intrusion prevention, and
integrated antivirus protection. -- Introduced Check Point VPN-1(R)
Edge(TM) W Wireless Security Appliance for Branch Offices -- a
series of enterprise-level VPN/firewall wireless security
appliances for remote site business locations, branch offices and
partner sites. Provides flexible high-speed wireless access,
unmatched security protection, simple and scalable management and
business continuity. -- Achieved Industry Leader Position in
METAspectrum(SM) Report -- Check Point was ranked as a market
leader in META Group's METAspectrum report on Network Intrusion
Control Systems. Of 12 vendors, Check Point ranked the highest for
"performance" -- a category that takes into account the company's
technology, services pricing and financial standing. List of Awards
in the Second Quarter: -- SC Magazine Global Awards 2005 (UK) --
The 2005 SC Magazine Global Awards Program reviewed over 1,000
security product and service nominations across 35 security-related
categories and the publication's panel of judges voted on the best
for 2005. Among others, Check Point products won Best Enterprise
Security Solution for Integrity and Best SOHO Security Solution for
ZoneAlarm Security Suite. -- VARBusiness Magazine's Midmarket
"Products of the Year" 2005 for Check Point Express CI(TM) --
Editors evaluated more than 400 nominated products to determine
which products and services were best for midmarket customers with
100 to 999 employees. -- eWEEK Excellence Awards for Integrity 5.0
-- recognized in the area of Vulnerability Assessment and
Remediation. The eWEEK Excellence Awards recognize vendors that
meet today's rigorous enterprise IT demands. -- PC World 2005 World
Class Awards for ZoneAlarm(R) Antivirus -- honored in the Antivirus
and Firewall Software category. -- Computerworld Hong Kong Best
Firewall Award for VPN-1(R)/FireWall-1(R) -- award based solely on
votes it receives from readers. Shwed continued, "We have embarked
on a major initiative with NGX, and in Q3, we will remain focused
on one thing: execution. We anticipate the delivery of new
NGX-based versions of our security products in the perimeter,
internal, Web and endpoint product categories as we continue
architecting a secure future for our customers." Conference Call
and Webcast Information Check Point will host a conference call
with the investment community on July 19, 2005 at 8:30 AM ET/5:30
AM PT. A replay of the conference call will be available through
August 2, 2005 at the Company's website
http://www.checkpoint.com/ir or by telephone at (973) 341-3080,
pass code 6235460. Safe Harbor Statement Certain statements in this
press release are forward-looking statements. Forward-looking
statements include statements regarding Check Point's anticipated
delivery of new NGX-based security products. Because such
statements deal with future events, they are subject to various
risks and uncertainties and actual results could differ materially
from Check Point's current expectations. Factors that could cause
or contribute to such differences include, but are not limited to:
timely availability and customer acceptance of Check Point's new
NGX-based products and other products; the impact on revenues of
economic and political uncertainties and weaknesses in various
regions of the world, including the commencement or escalation of
hostilities or acts of terrorism; the inclusion of network security
functionality in third-party hardware or system software; any
unforeseen developmental or technological difficulties with regard
to Check Point's products; changes in the competitive landscape,
including new competitors or the impact of competitive pricing and
products; a shift in demand for products such as Check Point's;
unknown factors affecting third parties with which Check Point has
formed business alliances; timely availability and customer
acceptance of Check Point's new and existing products, and other
factors and risks discussed in Check Point's Annual Report on Form
20-F for the year ended December 31, 2004, which is on file with
the Securities and Exchange Commission. Check Point assumes no
obligation to update information concerning its expectations. About
Check Point Software Technologies Ltd. Check Point Software
Technologies Ltd. (www.checkpoint.com) is the worldwide leader in
securing the Internet. It is the market leader in the worldwide
enterprise firewall, personal firewall and VPN markets. Through its
NGX platform, the company delivers a unified security architecture
for a broad range of perimeter, internal and Web security solutions
that protect business communications and resources for corporate
networks and applications, remote employees, branch offices and
partner extranets. The company's ZoneAlarm product line is one of
the most trusted brands in Internet security, creating
award-winning endpoint security solutions that protect millions of
PCs from hackers, spyware and data theft. Extending the power of
the Check Point solution is its Open Platform for Security (OPSEC),
the industry's framework and alliance for integration and
interoperability with "best-of-breed" solutions from over 350
leading companies. Check Point solutions are sold, integrated and
serviced by a network of more than 2,200 Check Point partners in 88
countries. (C)2003-2005 Check Point Software Technologies Ltd. All
rights reserved. Check Point, Application Intelligence, Check Point
Express, the Check Point logo, AlertAdvisor, ClusterXL, Cooperative
Enforcement, ConnectControl, Connectra, CoSa, Cooperative Security
Alliance, Eventia, Eventia Analyzer, Eventia Reporter, FireWall-1,
FireWall-1 GX, FireWall-1 SecureServer, FloodGate-1, Hacker ID,
IMsecure, INSPECT, INSPECT XL, Integrity, InterSpect, IQ Engine,
NGX, Open Security Extension, OPSEC, Policy Lifecycle Management,
Provider-1, Safe@Home, Safe@Office, SecureClient, SecureKnowledge,
SecurePlatform, SecuRemote, SecureXL Turbocard, SecureServer,
SecureUpdate, SecureXL, SiteManager-1, SmartCenter, SmartCenter
Pro, Smarter Security, SmartDashboard, SmartDefense, SmartLSM,
SmartMap, SmartUpdate, SmartView, SmartView Monitor, SmartView
Reporter, SmartView Status, SmartViewTracker, SofaWare, SSL Network
Extender, Stateful Clustering, TrueVector, Turbocard, UAM,
User-to-Address Mapping, UserAuthority, VPN-1, VPN-1 Accelerator
Card, VPN-1 Edge, VPN-1 Pro, VPN-1 SecureClient, VPN-1 SecuRemote,
VPN-1 SecureServer, VPN-1 VSX, VPN-1 XL, Web Intelligence,
ZoneAlarm, ZoneAlarm Pro, Zone Labs, and the Zone Labs logo, are
trademarks or registered trademarks of Check Point Software
Technologies Ltd. or its affiliates. All other product names
mentioned herein are trademarks or registered trademarks of their
respective owners. The products described in this document are
protected by U.S. Patent No. 5,606,668, 5,835,726, 6,496,935,
6,873,988 and 6,850,943 and may be protected by other U.S. Patents,
foreign patents, or pending applications. (1) "Acquisition related
charges" refer to the impact of the amortization of intangible
assets and stock-based compensation resulting from the acquisition
of Zone Labs Inc., in March 2004. -0- *T CHECK POINT SOFTWARE
TECHNOLOGIES LTD. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts) Three Months Ended Six
Months Ended June 30, June 30, 2005 2004 2005 2004 -----------
----------- ----------- ----------- (unaudited) (unaudited)
(unaudited) (unaudited) Revenues: Products and licenses $71,248
$67,899 $136,770 $130,908 Software subscriptions 58,892 48,681
117,339 92,694 ----------- ----------- ----------- -----------
Total product and license revenues 130,140 116,580 254,109 223,602
Services 14,423 10,339 28,115 19,379 ----------- -----------
----------- ----------- Total revenues 144,563 126,919 282,224
242,981 ----------- ----------- ----------- ----------- Operating
expenses: Cost of revenues 6,505 6,443 12,057 11,377 Research and
development 11,880 10,844 24,656 19,506 Selling and marketing
36,905 34,417 70,966 63,015 General and administrative 6,013 6,474
12,261 11,324 Amortization of intangible assets and deferred stock
compensation 2,353 3,144 4,978 3,144 Acquired in-process R&D -
- - 23,098 ----------- ----------- ----------- ----------- Total
operating expenses 63,656 61,322 124,918 131,464 -----------
----------- ----------- ----------- Operating income 80,907 65,597
157,306 111,517 Financial income, net 13,468 10,579 25,869 21,348
----------- ----------- ----------- ----------- Income before
income taxes 94,375 76,176 183,175 132,865 Income taxes 16,378
12,913 31,472 27,674 ----------- ----------- -----------
----------- Net income $77,997 $63,263 $151,703 $105,191
=========== =========== =========== =========== Net income
excluding in-process R&D and amortization of intangible assets
and deferred stock compensation $79,808 $65,865 $155,598 $130,891
=========== =========== =========== =========== Earnings per share
(basic) $0.32 $0.25 $0.61 $0.42 =========== =========== ===========
=========== Number of shares used in computing earnings per share
(basic) 245,398 254,778 246,674 252,484 =========== ===========
=========== =========== Earnings per share (fully diluted) $0.31
$0.24 $0.60 $0.40 =========== =========== =========== ===========
Earnings per share (fully diluted) excluding in-process R&D and
amortization of intangible assets and deferred stock compensation
$0.32 $0.25 $0.61 $0.50 =========== =========== ===========
=========== Number of shares used in computing earnings per share
(fully diluted) 252,179 266,800 254,165 263,315 ===========
=========== =========== =========== CHECK POINT SOFTWARE
TECHNOLOGIES LTD. SELECTED CONSOLIDATED BALANCE SHEET DATA (In
thousands) ASSETS June 30, December 31, 2005 2004 ---------------
--------------- (unaudited) (unaudited) Current Assets: Cash and
cash equivalents $127,532 $157,655 Marketable securities and
deposits 898,420 796,588 Trade receivables, net 89,289 96,006 Other
receivables and prepaid expenses 23,571 20,517 ---------------
--------------- Total current assets 1,138,812 1,070,766
--------------- --------------- Long-term assets: Long-term
investments 599,811 623,912 Property and equipment, net 7,699 8,144
Intangible assets 23,036 25,857 Goodwill 175,536 175,536 Deferred
income taxes, net 7,108 8,439 --------------- --------------- Total
long-term assets 813,190 841,888 --------------- ---------------
Total assets $1,952,002 $1,912,654 =============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Deferred
revenues $154,204 $141,114 Trade payables and other accrued
liabilities 137,640 137,932 ----------- ----------- Total current
liabilities 291,844 279,046 ----------- ----------- Accrued
severance pay, net 3,242 2,784 ----------- ----------- Total
liabilities 295,086 281,830 ----------- ----------- Shareholders'
Equity: Share capital 774 771 Additional paid-in capital 379,336
369,452 Deferred stock based compensation (4,944) (10,342) Treasury
shares (368,298) (244,586) Retained earnings 1,650,048 1,515,529
----------- ----------- Total shareholders' equity 1,656,916
1,630,824 ----------- ----------- Total liabilities and
shareholders' equity $1,952,002 $1,912,654 =========== ===========
Total cash and cash equivalents, deposits and marketable securities
1,624,899 1,577,291 =========== =========== CHECK POINT SOFTWARE
TECHNOLOGIES LTD. SELECTED CONSOLIDATED CASH FLOW DATA (In
thousands) Three Months Ended Six Months Ended June 30, June 30,
2005 2004 2005 2004 ----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited) Cash flow from
operating activities: Net income 77,997 63,263 151,703 105,191
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 1,320 1,424
2,625 2,681 Decrease (increase) in trade and other receivables, net
(9,803) 8,986 3,686 963 Increase in trade payables and other
accrued liabilities 8,662 4,785 13,256 9,044 Other adjustments
4,373 289 5,714 2,444 Amortization of intangible assets and
deferred stock compensation 2,353 3,144 4,978 3,144 Acquisition of
in- process R&D - - - 23,098 ----------- -----------
----------- ----------- Net cash provided by operating activities
84,902 81,891 181,962 146,565 ----------- ----------- -----------
----------- Cash flow from investing activities: Cash paid in
conjunction with the acquisition of Zone Labs, net - - - (95,343)
Investment in property and equipment (1,038) (966) (2,180) (2,327)
----------- ----------- ----------- ----------- Net cash used in
investing activities (1,038) (966) (2,180) (97,670) -----------
----------- ----------- ----------- Cash flow from financing
activities: Proceeds from issuance of shares upon exercise of
options 13,355 8,545 20,097 19,797 Purchase of treasury shares
(102,565) (78,649) (152,271) (78,649) ----------- -----------
----------- ----------- Net cash used in financing activities
(89,210) (70,104) (132,174) (58,852) ----------- -----------
----------- ----------- Increase (decrease) in cash and cash
equivalents, deposits and marketable securities (5,346) 10,821
47,608 (9,957) Cash and cash equivalents, deposits and marketable
securities at the beginning of the period 1,630,245 1,581,946
1,577,291 1,602,724 ----------- ----------- ----------- -----------
Cash and cash equivalents, deposits and marketable securities at
the end of the period 1,624,899 1,592,767 1,624,899 1,592,767
=========== =========== =========== =========== *T
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