Check Point Software Reports Financial Results for the First Quarter o

Check Point Software Reports Financial Results for the First Quarter of 2005; 2005 First Quarter Revenues Increased 19% over First Quarter of 2004

    Business Editors/High-Tech Writers

    REDWOOD CITY, Calif.--(BUSINESS WIRE)--April 18, 2005--Check Point(R) Software Technologies Ltd. (Nasdaq:CHKP), the worldwide leader in securing the Internet, today announced its financial results for the first quarter ended March 31, 2005.

    Financial Highlights for the First Quarter of 2005:

--	Revenues: $137.7 million, an increase of 19% compared to $116.1 million in the first quarter of 2004.
--	Net Income: $73.7 million, an increase of 76% compared to $41.9 million in the first quarter of 2004. Net income excluding acquisition related charges(1) was $75.8 million, an increase of 17% compared to $65 million in the first quarter of 2004.
--	Earnings per Diluted Share: $0.29, an increase of 78% compared to $0.16 in the first quarter of 2004. EPS excluding net acquisition related charges was $0.30, an increase of 18% compared to $0.25 in the first quarter of 2004.
--	Deferred Revenues: increased by $9.1 million to a record $150.2 million, a 6% increase over deferred revenues as of December 31, 2004.
--	Share Repurchase Program: During the first quarter of 2005, Check Point purchased 2.1 million shares at a total cost of close to $50 million.

    "We are pleased with our first quarter results, which showed significant growth in profits and revenues," said Gil Shwed, chairman and chief executive officer of Check Point Software. "We continued to extend our annuity based revenues which were spearheaded by growing sales of two of our new offerings: ZoneAlarm security services for the consumer segment and SmartDefense real time security updates for our enterprise customers."
    Business Highlights and Introductions during the First Quarter Include:

    -- Unveiled Eventia(TM) Product Family of Security Event
    Management Solutions -- designed to help IT security
    departments reduce the cost and complexity of security event
    correlation, management, and reporting. The first product
    unveiled, Eventia Analyzer(TM), automatically prioritizes
    security events for decisive, intelligent action and turns
    volumes of raw data into actionable information to empower
    security administrators to make informed decisions on their
    security deployment.

    -- Unveiled Integrity(TM) 6.0 for Unmatched Endpoint Security --
    the most complete endpoint security solution, including
    intrusion prevention, outbound threat protection, access
    policy enforcement, advanced server and policy automation,
    protects PCs and enterprise networks proactively from the
    newest worms, viruses, spyware, and hacker attacks.

    -- Released Connectra(TM) 2.0 -- the newest version of Check
    Point's revolutionary Web Security Gateway that provides SSL
    VPN access with integrated application and endpoint security.
    In addition, Connectra 2.0 includes secure browser and cache
    cleaning, endpoint host checking and real-time security
    updates.

    -- Introduced a New Focus in our Highly Regarded OPSEC(TM)
    Partner Alliance -- to help customers overcome today's
    emerging network security threats through a comprehensive,
    best-of-breed security architecture. The new initiative
    focuses on six critical OPSEC (Open Platform for Security)
    solution areas -- internal security, Web security, content
    security, Total Access Protection (TAP), Voice over IP (VoIP)
    and regulatory compliance.

    Partial List of Awards in the First Quarter:

    -- Leader in the Prestigious Gartner Magic Quadrant -- for the
    fourth consecutive year Check Point ranked as a leader for
    Network Firewalls. This influential report evaluates both
    network and application firewall vendors on their ability to
    execute and completeness of vision.

    -- Dramatically Outperformed Competitors in Tolly Group Tests --
    independent tests confirmed that Check Point provides the
    broadest breadth of security coverage at the lowest Total Cost
    of Ownership (TCO) for today's complex security
    vulnerabilities.

    -- VARBusiness Magazine Five-Star Rating for Channel Partner
    Program -- The highest attainable ranking for outstanding
    breadth and depth of channel partner program offerings.

    -- Three Prestigious Awards for 2005 SC Magazine Global Awards --
    Best Firewall award for the VPN-1(R)/FireWall-1(R) Next
    Generation(TM) with Application Intelligence(TM), Best
    Enterprise Security Solution for VPN-1 Pro(TM) Next Generation
    with Application Intelligence and Best SOHO Security Solution
    for ZoneAlarm(R) Security Suite.

    Mr. Shwed continues: "In Q2, we will remain focused on execution and will continue to expand the depth and breadth of our intelligent perimeter, internal, Web and endpoint security solutions, providing customers with the highest levels of protection."

    Conference Call and Webcast Information

    Check Point will host a conference call with the investment community on April 18, 2005 at 8:30 AM ET/5:30 AM PT. A replay of the conference call will be available through May 2 at the Company's website http://www.checkpoint.com/ir or by telephone at 201-612-7415, access code 215 and conference ID 146033.

    Safe Harbor Statement

    Certain statements in this press release are forward-looking statements. 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: 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 Next Generation product line, the company delivers a broad range of intelligent 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, FireWall-1, FireWall-1 GX, FireWall-1 SecureServer, FloodGate-1, Hacker ID, IMsecure, INSPECT, INSPECT XL, Integrity, InterSpect, IQ Engine, 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 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.

CHECK POINT SOFTWARE TECHNOLOGIES LTD. CONDENSED CONSOLIDATED STATEMENT OF INCOME (In thousands, except per share amounts)

Three Months Ended March 31,

2005 2004 ----------- ----------- (unaudited) (unaudited) Revenues: Licenses $65,522 $63,009 Software subscriptions 58,447 44,013 ----------- ----------- Total product revenues 123,969 107,022 Support, training and consulting 13,692 9,040 ----------- ----------- Total revenues 137,661 116,062 ----------- -----------

Operating expenses: Cost of revenues 5,552 4,934 Research and development 12,776 8,662 Selling and marketing 34,061 28,598 General and administrative 6,248 4,850 Amortization of intangible assets and stock- based compensation 2,625 - Acquired in-process R&D - 23,098 ----------- ----------- Total operating expenses 61,262 70,142 ----------- -----------

Operating income 76,399 45,920 Financial income, net 12,401 10,769 ----------- ----------- Income before taxes on income 88,800 56,689 Taxes on income 15,094 14,761 ----------- ----------- Net income $73,706 $41,928 =========== =========== Net income excluding in-process R&D and amortization of intangible assets and stock- based compensation $75,789 $65,026 =========== =========== Earnings per share (basic) $0.30 $0.17 =========== =========== Number of shares used in computing earnings per share (basic) 247,894 250,189 =========== =========== Earnings per share (fully diluted) $0.29 $0.16 =========== =========== Earnings per share (fully diluted) excluding in-process R&D and amortization of intangible assets and stock-based compensation $0.30 $0.25 =========== =========== Number of shares used in computing earnings per share (fully diluted) 256,150 259,829 =========== ===========

CHECK POINT SOFTWARE TECHNOLOGIES LTD. SELECTED CONSOLIDATED BALANCE SHEET DATA (In thousands) ASSETS

March 31, December 31, 2005 2004 ------------ ------------ (unaudited) (unaudited) Current Assets: Cash and cash equivalents $189,134 $157,655 Marketable securities 864,667 796,588 Trade receivables, net 79,333 96,006 Other receivables and prepaid expenses 23,708 20,517 ------------ ------------ Total current assets 1,156,842 1,070,766 ------------ ------------

Long-term assets: Long-term investments 577,308 623,912 Property and equipment, net 7,981 8,144 Intangible assets, net 24,447 25,857 Goodwill 175,536 175,536 Deferred income taxes, net 8,597 8,439 ------------ ------------ Total long-term assets 793,869 841,888 ------------ ------------

Total assets $1,950,711 $1,912,654 ============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities: Deferred revenues $150,164 $141,114 Trade payables and other accrued liabilities 132,946 137,932 ------------ ------------ Total current liabilities 283,110 279,046 ------------ ------------

Accrued severance pay, net 3,316 2,784 ------------ ------------

Total liabilities 286,426 281,830 ------------ ------------

Shareholders' Equity: Share capital 774 771 Additional paid-in capital 375,138 369,452 Deferred stock-based compensation (6,570) (10,342) Treasury shares at cost (294,292) (244,586) Retained earnings 1,589,235 1,515,529 ------------ ------------ Total shareholders' equity 1,664,285 1,630,824 ------------ ------------ Total liabilities and shareholders' equity $1,950,711 $1,912,654 ============ ============ Total cash and cash equivalents, deposits and marketable securities 1,630,245 1,577,291 ============ ============

CHECK POINT SOFTWARE TECHNOLOGIES LTD. SELECTED CONSOLIDATED CASH FLOW DATA (In thousands)

Three Months Ended March 31,

2005 2004 ----------- ----------- (unaudited) (unaudited) Cash flow from operating activities: Net income $73,706 $41,928 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,305 1,257 Decrease (increase) in trade and other receivables, net 13,489 (8,023) Increase in trade payables and other accrued liabilities 4,594 4,259 Other adjustments 1,341 2,155 Amortization of intangible assets and stock- based compensation 2,625 - Acquisition of in-process R&D - 23,098 ----------- ----------- Net cash provided by operating activities 97,060 64,674 ----------- -----------

Cash flow from investing activities: Cash paid in conjunction with the acquisition of Zone Labs, net - (95,343) Investment in property and equipment (1,142) (1,361) ----------- ----------- Net cash used in investing activities (1,142) (96,704) ----------- -----------

Cash flow from financing activities: Proceeds from issuance of shares upon exercise of options 6,742 11,252 Purchase of treasury shares (49,706) - ----------- ----------- Net cash provided by (used in) financing activities (42,964) 11,252 ----------- -----------

Increase (decrease) in cash and cash equivalents and marketable securities 52,954 (20,778)

Cash and cash equivalents and marketable securities at the beginning of the period 1,577,291 1,602,724 ----------- -----------

Cash and cash equivalents and marketable securities at the end of the period 1,630,245 1,581,946 =========== ===========

--30--JR/sf*

CONTACT: Check Point Software Technologies Ltd. Molly Ford, 650-628-2022 (Media) press@us.checkpoint.com Janine Zanelli, 650-628-2040 (Investors) ir@us.checkpoint.com

KEYWORD: CALIFORNIA INDUSTRY KEYWORD: HARDWARE SOFTWARE NETWORKING INTERNET E-COMMERCE EARNINGS CONFERENCE CALLS SOURCE: Check Point Software Technologies Ltd.

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