Check Point� Software Technologies Ltd. (NASDAQ:CHKP), the
worldwide leader in securing the Internet, today announced its
financial results for the fourth quarter and fiscal year ended
December 31, 2007. �Our success in fourth quarter of 2007 is
representative of the entire year, which was one of our best ever,�
said Gil Shwed, chairman and chief executive officer of Check Point
Software. �We believe our performance is a result of the adoption
of our new and existing network security product lines, combined
with the successful expansion into data security earlier in the
year. Our Unified Security Architecture and total security
solutions enabled us to grow market share and deliver excellent
financial results in Q4 2007 and during the entire year.� Financial
Highlights for the Fourth Quarter Ended December 31, 2007: Total
Revenues: $206.7 million, an increase of 29 percent compared to
$160.1 million in the fourth quarter of 2006. Network security
accounted for a record $182.5 million in revenues, representing a
14 percent increase over the fourth quarter of 2006. Data security
contributed $24.2 million in revenues, representing a 17 percent
quarterly sequential increase over the third quarter of 2007. Net
Income � GAAP: $87.9 million, an increase of 11 percent compared to
$79.5 million in the fourth quarter of 2006. Net income in the
fourth quarter of 2007 includes acquisition-related charges of
$10.3 million and equity-based compensation expenses of $8.8
million. Net of taxes, these charges totaled $14.6 million.
Equity-based compensation expenses have been reported since the
beginning of 2006 pursuant to SFAS 123(R). Net Income � Non-GAAP1:
$102.5 million, an increase of 13 percent compared to $90.6 million
in the fourth quarter of 2006. Non-GAAP net income excludes
equity-based compensation expenses and acquisition-related
charges2. Earnings per Diluted Share � GAAP: $0.39, an increase of
11 percent compared to $0.35 in the fourth quarter of 2006. GAAP
earnings per diluted share for the fourth quarter of 2007 included
equity-based compensation expenses of $0.04 and acquisition-related
charges of $0.05. Net of taxes, these charges totaled $0.07.
Earnings per Diluted Share � Non-GAAP: $0.46, an increase of 15
percent compared to $0.40 in the fourth quarter of 2006. Non-GAAP
earnings per diluted share exclude equity-based compensation
expenses and acquisition-related charges. Deferred Revenues: $273.7
million, which represented an increase of $69.5 million or 34
percent compared to deferred revenues as of December 31, 2006. Cash
Flow: Cash flow from operations was $91.3 million, an increase of
10 percent compared to the fourth quarter of 2006. Share Repurchase
Program: During the fourth quarter of 2007, Check Point repurchased
2.8 million shares at a total cost of $61.9 million. �Throughout
the year, we experienced healthy growth in all geographies with 34
percent annual revenue growth in our European sales and 24 percent
growth in the Americas,� said Gil Shwed, chairman and chief
executive officer of Check Point Software. �Our new UTM-1 appliance
offerings and high-end integrated solutions have been adopted by
some of the largest corporations in the world and have been key in
driving these results. In addition, our new data security products
delivered 17 percent sequential growth in the fourth quarter of
2007 with increased sales in Europe and broader adoption by the
channel.� Financial Highlights for the Year Ended December 31, 2007
Revenues: $730.9 million, an increase of 27 percent compared to
$575.1 million for the year ended December 31, 2006. Network
security accounted for a record $648.1 million in revenues
representing a 13% increase over 2006. Data security contributed
$82.8 million in revenues for the year. Net Income � GAAP: $281.1
million, an increase of one percent compared to $278.0 million for
2006. Net income for 2007 includes equity-based compensation
expenses in the amount of $34.1 million, and acquisition-related
expenses of $57.0 million, which includes in-process R&D in the
amount of $17.0 million. Net of taxes, these charges totaled $77.7
million. Net Income � Non-GAAP: $358.7 million, an increase of 12
percent compared to $320.3 million for 2006. Non-GAAP net income
excludes equity-based compensation expenses and acquisition-related
charges. Earnings per Diluted Share � GAAP: $1.25, an increase of 7
percent compared to $1.17 for 2006. Net income in 2007 includes
equity-based compensation expenses of $0.15 and acquisition-related
charges of $0.25, which includes in-process R&D in the amount
of $0.07. Net of taxes, these charges totaled $0.34. Earnings per
Diluted Share � Non-GAAP: $1.59, an increase of 18 percent,
compared to $1.35 for 2006. Non-GAAP earnings per diluted share
exclude equity-based compensation expenses and acquisition-related
charges. Cash Flow: Cash flow from operations was $371.6 million,
an increase of 2 percent compared to $363.3 million for 2006. Cash
and Investments Balance: $1.2 billion as of December 31, 2007.
Share Repurchase Program: During 2007, Check Point repurchased 9.0
million shares at a total cost of $209.8 million. There is
approximately $73.2 million remaining of the cumulative $1.2
billion authorized under Check Point�s share repurchase program.
Fourth Quarter and Fiscal Year 2007 Business Highlights: Expanded
Unified Security Architecture into Data Security � In the first
quarter of 2007, we expanded our business into the data security
field with the acquisition Protect Data. The new data security
layer added to our architecture enables customers to keep their
mobile data secure and minimizes the risk of data loss and theft.
Increasing number of large transactions � We continued to see
growth in the number of large transactions originating from a
variety of industries, and across all geographies. During the
fourth quarter, we had 19 customers with transactions greater than
one million dollars. UTM-1 Solutions � In the first quarter of
2007, we introduced the UTM-1 Appliances representing an initial
entry into the mid-range gateway market providing unified threat
management. This was followed in the fourth quarter by the
introduction of the �UTM-1 Total Security Appliances� as we
expanded the product line to include 3-year all-inclusive packages
with messaging security and security updates. CoreXL Acceleration
Technology in VPN-1 Power Achieved Performance Breakthrough �
Leveraging state-of-art multi-core processors, VPN-1 Power with
CoreXL is the first network security gateway that enables security
administrators to gain data center level performance without
compromising on the level of security inspection. ZoneAlarm
ForceField � The first virtualized, on-demand browser security
solution to enable consumers to bank and shop online, or surf
dangerous areas of the Internet. ForceField leverages the power of
Check Point�s Smart Defense Advisor, a hosted service that enables
the company to offer users real-time protection against zero-hour
threats. �We are very pleased with our results for the fourth
quarter and fiscal year 2007. We believe this success is a
reflection of our ability to deliver comprehensive security
solutions to address our customer security needs,� said Gil Shwed,
chairman and chief executive officer of Check Point Software. �In
the coming year we look forward to expanding our product portfolio
and enabling our customers to further increase their level of
security with our solutions.� Conference Call and Webcast
Information Check Point will host a conference call with the
investment community on January 23, 2008 at 8:30 AM ET/5:30 AM PT.
To listen to the live webcast, please visit Check Point�s website
at http://www.checkpoint.com/ir. A replay of the conference call
will be available through February 6, 2008 at the company's website
http://www.checkpoint.com/ir or by telephone at +1.706.645.9291,
pass code #29930846. 1 See �Use of Non-GAAP Financial Information�
and �Reconciliation of Supplemental Financial Information� below
for more information regarding Check Point�s use of non-GAAP
measures. 2 �Equity-based compensation expenses� refer to the
amortized fair value of all equity based awards granted to
employees. �Acquisition- related charges� refer to the impact of
the amortization of intangible assets and other acquisition-related
expenses. About Check Point Software Technologies Ltd. Check Point
Software Technologies Ltd. (www.checkpoint.com) is a leader in
securing the Internet. The company is a market leader in the
worldwide enterprise firewall, personal firewall, data security and
VPN markets. Check Point�s PURE focus is on IT security with its
extensive portfolio of network security, data security and security
management solutions. Through its NGX platform, Check Point
delivers a unified security architecture for a broad range of
security solutions to protect business communications and resources
for corporate networks and applications, remote employees, branch
offices and partner extranets. The company also offers market
leading data security solutions through the Pointsec product line,
protecting and encrypting sensitive corporate information stored on
PCs and other mobile computing devices. Check Point's award-winning
ZoneAlarm Internet Security Suite and additional consumer security
solutions protect millions of consumer 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 hundreds of leading companies. Check
Point solutions are sold, integrated and serviced by a network of
Check Point partners around the world and its customers include 100
percent of Fortune 100 companies and tens of thousands of
businesses and organizations of all sizes. �2003�2008 Check Point
Software Technologies Ltd. All rights reserved. Check Point,
AlertAdvisor, Application Intelligence, Check Point Endpoint
Security, Check Point Express, Check Point Express CI, the Check
Point logo, ClusterXL, Confidence Indexing, ConnectControl,
Connectra, Connectra Accelerator Card, Cooperative Enforcement,
Cooperative Security Alliance, CoreXL, CoSa, DefenseNet, Dynamic
Shielding Architecture, Eventia, Eventia Analyzer, Eventia
Reporter, Eventia Suite, FireWall-1, FireWall-1 GX, FireWall-1
SecureServer, FloodGate-1, Hacker ID, Hybrid Detection Engine,
IMsecure, INSPECT, INSPECT XL, Integrity, Integrity Clientless
Security, Integrity SecureClient, InterSpect, IPS-1, IQ Engine,
MailSafe, NG, NGX, Open Security Extension, OPSEC, OSFirewall,
Pointsec, Pointsec Mobile, Pointsec PC, Pointsec Protector, Policy
Lifecycle Management, Provider-1, PureAdvantage, PURE Security, the
puresecurity logo, Safe@Home, Safe@Office, SecureClient,
SecureClient Mobile, SecureKnowledge, SecurePlatform,
SecurePlatform Pro, SecuRemote, SecureServer, SecureUpdate,
SecureXL, SecureXL Turbocard, Security Management Portal,
Sentivist, SiteManager-1, SmartCenter, SmartCenter Express,
SmartCenter Power, SmartCenter Pro, SmartCenter UTM, SmartConsole,
SmartDashboard, SmartDefense, SmartDefense Advisor, Smarter
Security, SmartLSM, SmartMap, SmartPortal, SmartUpdate, SmartView,
SmartView Monitor, SmartView Reporter, SmartView Status,
SmartViewTracker, SMP, SMP On-Demand, SofaWare, SSL Network
Extender, Stateful Clustering, TrueVector, Turbocard, UAM,
UserAuthority, User-to-Address Mapping, UTM-1, UTM-1 Edge, UTM-1
Edge Industrial, UTM-1 Total Security, VPN-1, VPN-1 Accelerator
Card, VPN-1 Edge, VPN-1 Express, VPN-1 Express CI, VPN-1 Power,
VPN-1 Power Multi-core, VPN-1 Power VSX, VPN-1 Pro, VPN-1
SecureClient, VPN-1 SecuRemote, VPN-1 SecureServer, VPN-1 UTM,
VPN-1 UTM Edge, VPN-1 VSX, Web Intelligence, ZoneAlarm, ZoneAlarm
Anti-Spyware, ZoneAlarm Antivirus, ZoneAlarm ForceField, ZoneAlarm
Internet Security Suite, ZoneAlarm Pro, ZoneAlarm Secure Wireless
Router, Zone Labs, and the Zone Labs logo are trademarks or
registered trademarks of Check Point Software Technologies Ltd. or
its affiliates. ZoneAlarm is a Check Point Software Technologies,
Inc. Company. 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, 5,987,611, 6,496,935, 6,873,988,
6,850,943, and 7,165,076 and may be protected by other U.S.
Patents, foreign patents, or pending applications. Use of Non-GAAP
Financial Information In addition to reporting financial results in
accordance with generally accepted accounting principles, or GAAP,
Check Point uses non-GAAP measures of net income, operating income
and earnings per share, which are adjustments from results based on
GAAP to exclude non-cash equity-based compensation charges in
accordance with SFAS 123R and acquisition related charges. Check
Point�s management believes the non-GAAP financial information
provided in this release is useful to investors� understanding and
assessment of Check Point�s on-going core operations and prospects
for the future. The presentation of this non-GAAP financial
information is not intended to be considered in isolation or as a
substitute for results prepared in accordance with GAAP. Management
uses both GAAP and non-GAAP information in evaluating and operating
business internally and as such has determined that it is important
to provide this information to investors. Safe Harbor Regarding
Forward Looking Statements This press release contains
forward-looking statements within the meaning of Section�27A of the
Securities Act of 1933 and Section�21E of the Securities Exchange
Act of 1934, including, but not limited to, statements related to
Check Point�s expectations that it will continue to deliver
comprehensive security solutions that address their customer
security needs and their ability to expand their product portfolio.
Because these statements pertain to future events they are subject
to various risks and uncertainties, actual results could differ
materially from Check Point's current expectations and beliefs.
Factors that could cause or contribute to such differences include,
but are not limited to: general market conditions in the Check
Point�s industry; economic and political uncertainties; the impact
of political changes and weaknesses in various regions of the
world, including hostilities or acts of terrorism�in Israel,
where�Check Point�s international headquarters are based; inclusion
of network security functionality in third-party hardware or system
software; any foreseen and 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; rapid technological
advances and changes in customer requirements to which Check Point
is unable to respond expeditiously, if at all; a shift in demand
for products such as Check Point's; 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; the amount of equity based compensation charges
and other factors and risks discussed in Check Point's Annual
Report on Form 20-F for the year ended December 31, 2006, which is
on file with the Securities and Exchange Commission. Check Point
assumes no obligation to update information concerning its
expectations or beliefs. CHECK POINT SOFTWARE TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS �(In thousands,
except per share amounts) � � Three Months Ended Year Ended
December 31, December 31, 2007 � 2006 2007 � 2006 (unaudited)
(unaudited) (unaudited) (unaudited) Revenues: Products and licenses
$93,529 $69,863 $309,785 $241,961 Software updates, maintenance and
services 113,175 90,232 421,092 333,180 Total revenues 206,704
160,095 730,877 575,141 � Operating expenses: Cost of products and
licenses 9,778 3,978 30,276 13,378 Cost of software updates,
maintenance and services 6,695 4,728 24,301 17,639 Amortization of
technology 7,154 1,353 27,724 5,414 Total cost of revenues 23,627
10,059 82,301 36,431 � Research and development 21,454 15,750
80,982 62,210 Selling and marketing 57,638 43,022 217,491 157,114
General and administrative 15,768 10,566 53,527 43,503 Acquired in
process research and development - 1,060 17,000 1,060 Total
operating expenses 118,487 80,457 451,301 300,318 � Operating
income 88,217 79,638 279,576 274,823 Financial income, net 13,443
16,326 49,725 63,647 Income before income taxes 101,660 95,964
329,301 338,470 Taxes on income 13,743 16,423 48,237 60,443 Net
income 87,917 79,541 281,064 278,027 Earnings per share (basic)
0.40 0.35 1.26 1.18 Number of shares used in computing earnings per
share (basic) 220,132 226,471 222,548 235,519 Earnings per share
(diluted) 0.39 0.35 1.25 1.17 Number of shares used in computing
earnings per share (diluted) 222,993 228,865 225,442 236,769 CHECK
POINT SOFTWARE TECHNOLOGIES LTD. RECONCILIATION OF SUPPLEMENTAL
FINANCIAL INFORMATION �(In thousands, except per share amounts) � �
� Three Months Ended Year Ended December 31, December 31, 2007 �
2006 2007 2006 (unaudited) (unaudited) (unaudited) (unaudited) �
GAAP operating income $88,217 $79,638 $279,576 $274,823 Stock-based
compensation (1) 8,827 9,004 34,052 36,392 Amortization of
intangible assets and acquisition related expenses (2) 10,338 1,504
39,977 6,945 Acquired in process research and development - 1,060
17,000 1,060 Non-GAAP operating income 107,382 91,206 370,605
319,220 � GAAP net income 87,917 79,541 281,064 278,027 Stock-based
compensation (1) 8,827 9,004 34,052 36,392 Amortization of
intangible assets and acquisition related expenses (2) 10,338 1,504
39,977 6,945 Acquired in process research and development - 1,060
17,000 1,060 Taxes on stock-based compensation and amortization of
intangible assets and acquisition related expenses (3) (4,576)
(542) (13,358) (2,166) Non-GAAP net income 102,506 90,567 358,735
320,258 � GAAP Earnings per share (diluted) 0.39 0.35 1.25 1.17
Stock-based compensation (1) 0.04 0.04 0.15 0.16 Amortization of
intangible assets and acquisition related expenses (2) 0.05 0.01
0.18 0.03 Acquired in process research and development 0.00 0.00
0.07 0.00 Taxes on stock-based compensation and amortization of
intangible assets and acquisition related expenses (3) (0.02) 0.00
(0.06) (0.01) Non-GAAP Earnings per share (diluted) 0.46 0.40 1.59
1.35 � Number of shares used in computing Non-GAAP earnings per
share (diluted) 222,993 228,865 225,442 236,769 � (1) Stock-based
compensation: Cost of products and licenses 14 5 65 39 Cost of
software updates, maintenance and services 197 247 668 470 Research
and development 1,014 1,945 4,309 9,371 Selling and marketing 1,973
2,214 8,780 7,997 General and administrative 5,629 4,593 20,230
18,515 Total before taxes 8,827 9,004 34,052 36,392 � (2)
Amortization of intangible assets and acquisition related expenses:
Cost of products and licenses 7,154 1,353 27,724 5,414 Selling and
marketing 3,184 151 12,253 604 General and administrative - - - 927
Total before taxes 10,338 1,504 39,977 6,945 � (3) Taxes on
stock-based compensation and amortization of intangible assets and
acquisition related expenses (4,576) (542) (13,358) (2,166) Total,
net 14,589 9,966 60,671 41,171 CHECK POINT SOFTWARE TECHNOLOGIES
LTD. CONDENSED CONSOLIDATED BALANCE SHEET DATA (In thousands)
ASSETS � � December 31, December 31, 2007 2006 (unaudited)
(unaudited) Current assets: Cash and cash equivalents $509,664
$519,443 Marketable securities 387,878 571,621 Trade receivables,
net 201,515 141,881 Other receivables and prepaid expenses 24,353
22,408 Total current assets 1,123,410 1,255,353 � Long-term assets:
Marketable securities 343,967 558,874 Property, plant and
equipment, net 56,947 47,192 Severance pay fund 9,302 6,631
Intangible assets, net 160,133 23,117 Goodwill 664,910 182,115
Deferred income taxes, net 14,950 6,977 Other assets 636 534 Total
long-term assets 1,250,845 825,440 � Total assets 2,374,255
2,080,793 � � � LIABILITIES AND SHAREHOLDERS� EQUITY � Current
liabilities: Deferred revenues $273,693 $204,149 Trade payables and
other accrued liabilities 197,739 153,900 Total current liabilities
471,432 358,049 � Deferred tax liability, net 31,465 - Accrued
severance pay 14,403 11,211 � Total liabilities 517,300 369,260 � �
Shareholders� equity: Share capital 774 774 Additional paid-in
capital 464,330 422,381 Treasury shares at cost (907,022) (728,909)
Accumulated other comprehensive income (loss) 1,233 (6,293)
Retained earnings 2,297,640 2,023,580 Total shareholders� equity
1,856,955 1,711,533 Total liabilities and shareholders� equity
2,374,255 2,080,793 Total cash and cash equivalents and marketable
1,241,509 1,649,938 CHECK POINT SOFTWARE TECHNOLOGIES LTD. SELECTED
CONSOLIDATED CASH FLOW DATA (In thousands) � � Three Months Ended
Year Ended December 31, December 31, 2007 � 2006 2007 � 2006
(unaudited) (unaudited) (unaudited) (unaudited) Cash flow from
operating activities: Net income $87,917 $79,541 $281,064 $278,027
Adjustments to reconcile net income to net cash provided by
operating activities: � Depreciation and amortization of property,
plant and equipment 3,995 1,461 8,541 5,707 Increase in trade and
other receivables, net (68,080) (47,582) (24,235) (10,296) Increase
in deferred revenues, trade payables and other accrued liabilities
65,467 43,722 48,246 51,826 Acquisition of in process research and
development - 1,060 17,000 1,060 Amortization of intangible assets
10,338 1,504 39,977 6,018 Stock-based compensation 8,827 9,004
34,052 36,392 Excess tax benefit from stock-based compensation
(6,828) 1,159 (6,828) (2,291) Deferred income taxes, net (10,359)
(7,130) (26,222) (3,150) Net cash provided by operating activities
91,277 82,739 371,595 363,293 � Cash flow from investing
activities: Cash paid in conjunction with the acquisition of NFR -
(14,371) - (14,371) Cash paid in conjunction with the acquisition
of Protect Data, net (456) - (594,964) - Investment in property,
plant and equipment (4,089) (2,975) (16,727) (44,890) Net cash used
in investing activities (4,545) (17,346) (611,691) (59,261) � Cash
flow from financing activities: Proceeds from issuance of shares
upon exercise of options 1,751 5,375 24,640 51,934 Purchase of
treasury shares (61,858) (31,693) (209,757) (435,491) Excess tax
benefit from stock-based compensation 6,828 (1,159) 6,828 2,291
Repayment of loans related to NFR - (1,833) - (1,833) Net cash used
in financing activities (53,279) (29,310) (178,289) (383,099) �
Unrealized gain on marketable securities, net 3,227 1,805 9,956
3,662 � Increase (decrease) in cash and cash equivalents and
marketable securities 36,680 37,888 (408,429) (75,405) � Cash and
cash equivalents and marketable securities at the beginning of the
period 1,204,829 1,612,050 1,649,938 1,725,343 � Cash and cash
equivalents and marketable securities at the end of the period
1,241,509 1,649,938 1,241,509 1,649,938
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