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Check Point Software Technologies Reports Record 2012 First Quarter Financial Results

(April 23, 2012)

REDWOOD CITY, CA -- (Marketwire) -- 04/23/12 -- Check Point® Software Technologies Ltd. (NASDAQ: CHKP), the worldwide leader in securing the Internet, today announced its financial results for the first quarter ended March 31, 2012.

  • Total Revenue: $313.1 million, representing an 11 percent increase year over year
  • Non-GAAP Operating Income: $186.7 million, representing 60 percent of revenues
  • Non-GAAP EPS: $0.74, representing a 16 percent increase year over year
  • Cash Flow from Operations: $275.3 million, representing a 30 percent increase year over year

"I am very pleased with our strong start to the 2012 calendar year. Check Point delivered record first quarter results with good growth across all of our key financial metrics. The growth was driven by our latest network security appliances and the continued strength of our annuity software blades," said Gil Shwed, founder, chairman, and chief executive officer of Check Point Software Technologies.

Financial Highlights:

  • Total Revenue: $313.1 million, an increase of 11 percent, compared to $281.3 million in the first quarter of 2011.
  • GAAP Operating Income: $172.9 million, an increase of 22 percent, compared to $141.3 million the first quarter of 2011. GAAP operating margin was 55 percent, compared to 50 percent in the first quarter of 2011.
  • Non-GAAP Operating Income: $186.7 million, an increase of 16 percent, compared to $160.6 million in the first quarter of 2011. Non-GAAP operating margin was 60 percent, compared to 57 percent in the first quarter of 2011.
  • GAAP Net Income and Earnings per Diluted Share: GAAP net income was $143.6 million, an increase of 18 percent, compared to $122.1 million in the first quarter of 2011. GAAP earnings per diluted share were $0.68, an increase of 19 percent, compared to $0.57 in the first quarter of 2011.
  • Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $156.9 million, an increase of 14 percent, compared to $137.1 million in the first quarter of 2011. Non-GAAP earnings per diluted share were $0.74, an increase of 16 percent, compared to $0.64 in the first quarter of 2011.
  • Deferred Revenues: As of March 31, 2012, Check Point had deferred revenues of $542.2 million, an increase of 18 percent, compared to $460.4 million as of March 31, 2011.
  • Cash Flow: Cash flow from operations was $275.3 million, an increase of 30 percent, compared to $211.6 million in the first quarter of 2011.
  • Share Repurchase Program: During the first quarter of 2012, Check Point repurchased 1.29 million shares at a total cost of $75 million.
  • Cash Balances, Marketable Securities and Short Term Deposits: $3,121.2 million as of March 31, 2012, an increase of $549 million, compared to $2,572.2 million as of March 31, 2011.

For information regarding the Non-GAAP financial measures discussed in this release, please see "Use of Non-GAAP Financial Information" and "Reconciliation of GAAP to Non-GAAP Financial Information."


Check Point ThreatCloud™
On April 17, Check Point introduced ThreatCloud™, the first collaborative network to fight cybercrime. As enterprises fight threats separately, many threats are left undetected without a current way of sharing threat information across entities. To stay ahead of modern threats, businesses must collaborate -- sharing threat data between organizations -- to make security stronger and more effective.

ThreatCloud™ automatically gathers threat data from enterprises that choose to contribute and from an innovative worldwide network of threat sensors. It then analyzes the data and distributes threat intelligence to security gateways around the globe. ThreatCloud leverages Check Point's large installed base of security gateways, Check Point research and industry malware feeds enabling customers to quickly adapt their security response to new threats and protect their networks against threats that otherwise would go undetected.

ThreatCloud is available with Check Point's latest software blade release, R75.40, which also includes:

  • New Anti-Bot and enhanced Antivirus Software Blades that are powered by ThreatCloud, allowing them to get real-time updates and enforce pre-emptive protection against advanced threats and other forms of sophisticated malware.
  • Check Point GAiA™ unified operating system supporting all security gateways and software blades.
  • Over 100 additional security features, R75.40 brings customers advanced threat prevention, security consolidation and simplified management for better visibility and control.

Industry Accolades:
Check Point also continues to receive industry awards for innovative product development and leadership worldwide, including:

  • Leader in the Gartner Magic Quadrant for Unified Threat Management
  • Computing Security "Encryption Product of the Year" Award - Check Point Full Disk Encryption
  • SC Magazine Readers Choice Award - Best Intrusion Prevention (IPS) Solution
  • Frost & Sullivan Malaysia Excellence Award - Network Security Vendor of the Year

In addition, Check Point President, Amnon Bar-Lev, was named a 2012 Channel Chief by CRN Magazine for the fifth consecutive year, based on his program innovations, growth and experience in the channel.

Shwed concluded, "Check Point's continued network security leadership is a result of our focus on providing customers with the best security available in the marketplace. ThreatCloud™ creates the first collaborative network to fight cybercrime, empowering our customers with threat intelligence and real-time protections."

Second Quarter 2012 Investor Conference Participation Schedule:

  • Bank of America Merrill Lynch 2012 Technology Conference
    May 8, 2012 - San Francisco, CA
  • Jeffries Global TMT Conference
    May 9, 2012 - New York, NY
  • J.P. Morgan 40th Annual Technology, Media and Telecom Conference
    May 16, 2012 - Boston, MA
  • Cowen & Company 40th Annual Technology Media & Telecom Conference
    May 30, 2012 - New York, NY

Members of Check Point's management team will present at these conferences and discuss the latest company strategies and initiatives. Check Point's conference presentations are expected to be available via webcast on the company's web site. To view these presentations and access the most updated information please visit the company's web site at www.checkpoint.com/ir. The schedule is subject to change.

Conference Call and Webcast Information
Check Point will host a conference call with the investment community on April 23, 2012 at 8:30 AM ET/5:30 AM PT. To listen to the live webcast, please visit the website at: www.checkpoint.com/ir. A replay of the conference call will be available through May 1, 2012 on the company's website or by telephone at +1.201.612.7415, replay ID number 392351, account # 215.

About Check Point Software Technologies Ltd.
Check Point Software Technologies Ltd. (www.checkpoint.com), the worldwide leader in securing the Internet, provides customers with uncompromised protection against all types of threats, reduces security complexity and lowers total cost of ownership. Check Point first pioneered the industry with FireWall-1 and its patented stateful inspection technology. Today, Check Point continues to develop new innovations based on the Software Blade Architecture, providing customers with flexible and simple solutions that can be fully customized to meet the exact security needs of any organization. Check Point is the only vendor to go beyond technology and define security as a business process. Check Point 3D Security uniquely combines policy, people and enforcement for greater protection of information assets and helps organizations implement a blueprint for security that aligns with business needs. Customers include tens of thousands of organizations of all sizes, including all Fortune and Global 100 companies. Check Point's award-winning ZoneAlarm solutions protect millions of consumers from hackers, spyware and identity theft.

©2012 Check Point Software Technologies Ltd. All rights reserved

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, operating margin and earnings per share, which are adjustments from results based on GAAP to exclude non-cash stock-based compensation charges, amortization of intangible assets, net gain on marketable securities previously impaired, and the related tax effects. 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 ongoing core operations and prospects for the future. Historically, Check Point has also publicly presented these supplemental non-GAAP financial measures in order to assist the investment community to see the Company "through the eyes of management," and thereby enhance understanding of its operating performance. 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. A reconciliation of the non-GAAP financial measures discussed in this press release to the most directly comparable GAAP financial measures is included with the financial statements contained in this press release. 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.

CHECK POINT SOFTWARE TECHNOLOGIES LTD. CONSOLIDATED STATEMENT OF INCOME (In thousands, except per share amounts) Three Months Ended ----------------------- March 31, ----------------------- 2012 2011 ----------- ----------- (unaudited) (unaudited) Revenues: Products and licenses $ 110,182 $ 105,258 Software updates, maintenance and subscription 202,934 176,016 ----------- ----------- Total revenues 313,116 281,274 ----------- ----------- Operating expenses: Cost of products and licenses 19,604 17,652 Cost of software updates, maintenance and subscription 16,039 14,297 Amortization of technology 2,858 7,849 ----------- ----------- Total cost of revenues 38,501 39,798 Research and development 26,842 27,643 Selling and marketing 59,099 58,509 General and administrative 15,784 13,990 ----------- ----------- Total operating expenses 140,226 139,940 ----------- ----------- Operating income 172,890 141,334 Financial income, net 10,462 10,528 ----------- ----------- Income before taxes on income 183,352 151,862 Taxes on income 39,726 29,772 ----------- ----------- Net income $ 143,626 $ 122,090 =========== =========== Earnings per share (basic) $ 0.70 $ 0.59 =========== =========== Number of shares used in computing earnings per share (basic) 206,114 208,177 =========== =========== Earnings per share (diluted) $ 0.68 $ 0.57 =========== =========== Number of shares used in computing earnings per share (diluted) 212,469 214,934 =========== =========== CHECK POINT SOFTWARE TECHNOLOGIES LTD. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION (In thousands, except per share amounts) Three Months Ended ------------------------ March 31, ------------------------ 2012 2011 ----------- ----------- (unaudited) (unaudited) GAAP operating income $ 172,890 $ 141,334 Stock-based compensation (1) 9,785 8,245 Amortization of intangible assets (2) 4,004 11,031 ----------- ----------- Non-GAAP operating income $ 186,679 $ 160,610 =========== =========== GAAP net income $ 143,626 $ 122,090 Stock-based compensation (1) 9,785 8,245 Amortization of intangible assets (2) 4,004 11,031 Net gain on Sale of marketable securities previously impaired(3) - (1,368) Taxes on the above items (4) (503) (2,929) ----------- ----------- Non-GAAP net income $ 156,912 $ 137,069 =========== =========== GAAP Earnings per share (diluted) $ 0.68 $ 0.57 Stock-based compensation (1) 0.05 0.04 Amortization of intangible assets (2) 0.02 0.05 Net gain on Sale of marketable securities previously impaired(3) - (0.01) Taxes on the above items (4) (0.01) (0.01) =========== =========== Non-GAAP Earnings per share (diluted) $ 0.74 $ 0.64 =========== =========== Number of shares used in computing Non-GAAP earnings per share (diluted) 212,469 214,934 ----------- ----------- (1) Stock-based compensation: Cost of products and licenses $ 16 $ 11 Cost of software updates, maintenance and subscription 67 190 Research and development 1,939 1,433 Selling and marketing 2,089 1,891 General and administrative 5,674 4,720 ----------- ----------- 9,785 8,245 ----------- ----------- (2) Amortization of intangible assets: Amortization of technology - Cost of revenues 2,858 7,849 Selling and marketing 1,146 3,182 ----------- ----------- 4,004 11,031 ----------- ----------- (3) Net gain on Sale of marketable securities previously impaired - (1,368) ----------- ----------- (4) Taxes on the above items (503) (2,929) ----------- ----------- Total, net $ 13,286 $ 14,979 =========== =========== CHECK POINT SOFTWARE TECHNOLOGIES LTD. CONDENSED CONSOLIDATED BALANCE SHEET DATA (In thousands) ASSETS March 31, December 31, 2012 2011 ------------ ------------ (unaudited) (audited) Current assets: Cash and cash equivalents $ 416,152 $ 493,546 Marketable securities and short-term deposits 982,009 865,994 Trade receivables, net 243,391 357,418 Prepaid expenses and other current assets 50,760 53,045 ------------ ------------ Total current assets 1,692,312 1,770,003 ------------ ------------ Long-term assets: Marketable securities 1,722,993 1,519,865 Property and equipment, net 37,105 36,639 Severance pay fund 6,248 6,052 Deferred tax asset, net 24,328 25,296 Other intangible assets, net 22,235 26,239 Goodwill 727,875 727,875 Other assets 17,332 16,094 ------------ ------------ Total long-term assets 2,558,116 2,358,060 ------------ ------------ Total assets 4,250,428 $ 4,128,063 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Deferred revenues $ 485,278 $ 490,655 Trade payables and other accrued liabilities 267,683 271,815 ------------ ------------ Total current liabilities 752,961 762,470 ------------ ------------ Long-term deferred revenues 56,933 61,523 Income tax accrual 234,888 219,469 Deferred tax liability, net - 1,274 Accrued severance pay 10,927 10,236 ------------ ------------ 302,748 292,502 ------------ ------------ Total liabilities 1,055,709 1,054,972 ------------ ------------ Shareholders' equity: Share capital 774 774 Additional paid-in capital 656,155 630,508 Treasury shares at cost (1,595,573) (1,543,886) Accumulated other comprehensive income 16,691 12,650 Retained earnings 4,116,672 3,973,045 ------------ ------------ Total shareholders' equity 3,194,719 3,073,091 ------------ ------------ Total liabilities and shareholders' equity $ 4,250,428 $ 4,128,063 ============ ============ Total cash and cash equivalents, marketable securities and short-term deposits $ 3,121,154 $ 2,879,405 ============ ============ CHECK POINT SOFTWARE TECHNOLOGIES LTD. SELECTED CONSOLIDATED CASH FLOW (In thousands) Three Months Ended ------------------------ March 31, ------------------------ 2012 2011 ----------- ----------- (unaudited) (unaudited) Cash flow from operating activities: Net income $ 143,626 $ 122,090 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property, plant and equipment 1,952 1,729 Amortization of intangible assets 4,004 11,031 Stock-based compensation 9,785 8,245 Realized loss on marketable securities, net 62 - Decrease in trade and other receivables, net 113,161 83,225 Decrease in deferred revenues, trade payables and other accrued liabilities (1,110) (13,858) Excess tax benefit from stock-based compensation 378 (53) Deferred income taxes, net 3,475 (804) ----------- ----------- Net cash provided by operating activities 275,333 211,605 ----------- ----------- Cash flow from investing activities: Investment in property and equipment (2,418) (1,861) ----------- ----------- Net cash used in investing activities (2,418) (1,861) ----------- ----------- Cash flow from financing activities: Acquisition of non-controlling interest - (5,516) Proceeds from issuance of shares upon exercise of options 39,554 31,515 Purchase of treasury shares (74,999) (75,000) Excess tax benefit from stock-based compensation (378) 53 ----------- ----------- Net cash used in financing activities (35,823) (48,948) ----------- ----------- Unrealized (loss) gain on marketable securities, net 4,657 (3,539) ----------- ----------- Increase in cash and cash equivalents and marketable securities 241,749 157,257 Cash and cash equivalents, marketable securities and short term deposits at the beginning of the period 2,879,405 2,414,946 ----------- ----------- Cash and cash equivalents, marketable securities and short term deposits at the end of the period $ 3,121,154 $ 2,572,203 =========== ===========

INVESTOR CONTACT:
Kip E. Meintzer
Check Point Software Technologies
+1.650.628.2040
ir@checkpoint.com

MEDIA CONTACT:
Stephanie Look
Check Point Software Technologies
+1.650.628.2171
press@checkpoint.com


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