Annual Report on Form 20-F

     The following table sets forth certain information regarding ownership of the Company's ordinary shares as of February 16, 2004 for each person who is known by the Company to own beneficially more than five percent of the Company's outstanding ordinary shares:

Name of Five Percent Shareholders		Amount Beneficially Owned			Percentage of Class (3)
Gil Shwed	29,751,494 (1)		11.7%
Franklin Resources, Inc	27,306,935 (2)		11.0%
Marius Nacht	27,311,794 (1)		10.8%
Janus Capital Management LLC	17,335,164 (2)		7.0%
Shlomo Kramer	13,746,900 (1)		5.5%

     According to the Company's transfer agent, as of March 22, 2004 there were 281 holders of record of the Company's ordinary shares residing in the United States holding 202,596,715 ordinary shares, or 80.78% of the aggregate number of ordinary shares outstanding.

     The Company is not directly or indirectly controlled by another corporation or by any foreign government. The Company's major shareholders do not have different voting rights with respect to their shares.

Consolidated Financial Statements

     The Company's Consolidated Financial Statements included in this Annual Report on Form 20-F beginning on page F-1 are hereby incorporated into this Annual Report by reference.

Dividend Policy

     The Company anticipates that it will retain any future earnings to support operations and to finance the growth and development of its business. In addition, tax-exempt income attributable to the Company's status as an Approved Enterprise under Israeli tax law can be distributed to shareholders without subjecting the Company to taxes only upon the complete liquidation of the Company. Tax will be levied if the Company decides to distribute such income in the future. Currently, the Company intends to reinvest the amount of its tax-exempt income.

Legal Proceedings

     In 1996, Checkpoint Systems, Inc. (“CSI”) a manufacturer of theft prevention devices for retail stores has taken legal actions in respect of trademark infringement and unfair competition against the Company. In 2002 a trademark opposition was filed by CSI with the Patent and Trademark Office. In February 2003 the parties entered into an agreement that settled all of the disputes by definitively setting forth each company's trademark description. The agreement permits both parties to use the mark “Check Point” and to seek registration consistent with the descriptive aspects of their respective businesses.

     Beginning on August 29, 2003, Check Point received a number of class action complaints filed in the United States District Court for the Southern District of New York by holders of Check Point ordinary shares, alleging violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act. On November 20, 2003, the court consolidated all of the complaints into one action and appointed lead plaintiff. On January 14, 2004, the lead plaintiff filed a Consolidated Amended Complaint, purporting to represent a putative class of all purchasers of ordinary shares between July 10, 2001 and April 4, 2002. The complaint generally alleges that Check Point and certain of its senior officers made misrepresentations and omissions regarding, among other things, Check Point's sales, revenue, and future prospects. Check Point has retained experienced counsel and is currently moving to dismiss the complaint pursuant to Rule 12(b)(6) and Rule 9(b) of the Federal Rules of Civil Procedure and Section 21D(b)(3) of the Exchange Act. Further analysis cannot be provided until the resolution of the motion to dismiss. Check Point disputes the allegations of wrongdoing and intends to defend the matter vigorously.