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Check Point Software Technologies Ltd. and its Subsidiaries

   
 
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  U.S. dollars in thousands (except per share data)
NOTE 1:- GENERAL
  Check Point develops, markets and supports Internet security solutions for enterprise networks, and service providers (Telcos, ISPs, ASPs and MSPs), including Virtual Private Networks (VPNs), firewalls, intranet and extranet security. The Company delivers solutions that enable secure, reliable and manageable business-to-business communications over Internet Protocol ("IP") networks-including the Internet, intranets and extranets. Check Point product offerings also include traffic control/quality of service (QoS) and IP address management. Check Point products are fully integrated as a part of the Company's Secure Virtual Network (SVN) architecture and provide centralized management, distributed deployment, and comprehensive policy administration. The capabilities of Check Point products can be extended with the Open Platform for Security (OPSEC), enabling integration with best of breed hardware, security applications and enterprise software applications.

The Company's revenues are derived from the sales of Internet security and virtual private networking solutions (FireWall-1 and VPN-1 product families), Quality of Service (Flood Gate-1), IP address management (Meta IP) and related software subscription, support and training program offerings. The Company sells its software products worldwide through channel partners: distributors, Value Added Resellers (VAR's), system integrators, Original Equipment Manufacturers ("OEMs") and Managed Service Providers (MSP's).

No customer accounted for more than 10% of the Company's revenues in 2000 or 2001. During 1999, approximately 12% of revenues were derived from a single customer.

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
  The consolidated financial statements are prepared according to United States generally accepted accounting principles ("U.S. GAAP").

a. Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

b. Financial statements in United States dollars:

Most of the Company's revenues are denominated in United States dollars ("dollars"). In addition, a substantial portion of the Company's costs are incurred in dollars. The Company's management believes that the dollar is the primary currency of the economic environment in which Check Point Ltd. and each of its subsidiaries operate. Thus, the dollar is their functional and reporting currency. Accordingly, monetary accounts maintained in currencies other than the dollar are remeasured into dollars in accordance with Statement of Financial Accounting Standard ("SFAS") No. 52 "Foreign Currency Translation." All transaction gains and losses of the re-measurement of monetary balance sheet items are reflected in the statements of income as financial income or expenses, as appropriate.