Check Point Software Technologies Reports Second Quarter Financial Results

REDWOOD CITY, Calif. - July 21, 2003 - Check Point Software Technologies Ltd. (Nasdaq: CHKP), the worldwide leader in securing the Internet, today announced its financial results for the second quarter ended June 30, 2003.

Revenues for the second quarter were $106.1 million, compared to $104.8 million for the quarter ended March 31, 2003. Deferred revenues increased from $101.7 to $103.3 million in the second quarter. Net income for the quarter was $60.2 million, or $0.24 per share (diluted), compared to $60.1 million, or $0.24 per share (diluted) for the quarter ended March 31, 2003. During the second quarter, the company generated net cash flow of $73.1 million, bringing total cash and interest bearing investments as of June 30, 2003 to nearly $1.5 billion.

"We are pleased with our results this quarter, particularly with the strength we saw in the U.S. market, as well as the acceptance of the newest version of our NG product," said Gil Shwed, chairman and chief executive officer, Check Point Software Technologies. "In addition to releasing NG with Application Intelligence, we continued to expand into new and existing customer segments, furthering our mission to deliver innovative solutions which make Internet communications secure and available everywhere."

Recent news highlights included:

Groundbreaking Application Intelligence Technology - unveiled Check Point NG with Application Intelligence™, the industry's only comprehensive, integrated solution to protect against both network and application level attacks. Check Point NG with Application Intelligence sets a new standard for protection against an increasingly sophisticated Internet threat environment. 6,000 copies have been shipped in the second quarter to prospects and existing customers.
Check Point Partner Enhancements - began awarding new 'Platinum' Partner designation to partners who show the greatest expertise and success with Check Point solutions. Also launched a new partner web portal, PartnerMAP™, a one-stop site for Check Point information, delivering the business tools and market data Check Point partners need to grow their business.
Industry Accolades
- Check Point VPN-1/FireWall-1, was awarded "Best Internet Security Solution" by SC Magazine in the 2003 SC Awards.
- Check Point Next Generation with Application Intelligence was named 'Best of Show' in the category of Enterprise Systems Defense by eWeek and PC Magazine at CeBIT America 2003.

"Looking ahead, we will continue to focus on customers' security needs," continued Mr. Shwed. "In the second half of the year, we will enhance our solutions portfolio for our three areas of focus - perimeter security, internal security and web security."

Conference Call Information
The Company will host a conference call with the investment community on July 21, 2003 at 8:30 AM ET/5:30 AM PT. To listen to the live webcast, please visit Check Point's web site at www.checkpoint.com/ir. A replay of the conference call will be available through August 6, 2003, at the Company's website or by telephone at (973) 341-3080, confirmation code 4013366.

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 Report on Form 20-F for the year ended December 31, 2002, 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
Check Point Software Technologies is the worldwide leader in securing the Internet. It is the confirmed market leader of both the worldwide VPN and firewall markets. The company's Secure Virtual Network (SVN) architecture provides the VPN and security infrastructure that uniquely enables secure and reliable Internet communications. SVN solutions, as delivered in the company's Next Generation product family, secure business communications and resources for corporate networks, remote employees, branch offices and partner extranets. Extending the power of SVN is Check Point's 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 2,500 Check Point partners in 149 countries. For more information, please call us at (800) 429-4391 or (650) 628-2000 or visit us on the Web at http://www.checkpoint.com or at http://www.opsec.com.

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©2003 Check Point Software Technologies Ltd.
Check Point, the Check Point logo, Cluster XL, ConnectControl, FireWall-1, FireWall-1 GX, FireWall-1 SecureServer, FireWall-1 SmallOffice, FireWall-1 VSX, FireWall-1 XL, FloodGate-1, INSPECT, INSPECT XL, IQ Engine, Meta IP, MultiGate, Open Security Extension, OPSEC, Provider-1, SecureKnowledge, SecureXL, SiteManager-1, SmartCenter, SmartCenter Pro, SmartDashboard, SmartDefense, SmartLSM, SmartMap, SmartView, SmartView Monitor, SmartView Reporter, SmartView Status, SmartView Tracker, SVN, UAM, User-to-Address Mapping, UserAuthority, VPN-1 Accelerator Card, VPN-1 Net, VPN-1 Pro, VPN-1 SecureClient, VPN-1 SecuRemote, VPN-1 SecureServer, VPN-1 SmallOffice, and VPN-1 VSX are trademarks, service marks, 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.

CHECK POINT SOFTWARE TECHNOLOGIES LTD. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amount)
	Three Months Ended			Six Months Ended
	June 30, 2003	March 31, 2003	June 30, 2002	June 30, 2003	June 30, 2002

	(unaudited)			(unaudited)
Revenues:
Products	$54,778	$58,254	$65,967	$113,032	$130,211
Subscriptions and upgrades	40,751	36,895	32,553	77,646	62,191
Services	10,574	9,698	10,067	20,272	20,768

Total revenues	106,103	104,847	108,587	210,950	213,170


Operating expenses:
Cost of revenues	4,621	5,113	4,889	9,734	9,504
Research and development	7,263	6,858	7,383	14,121	14,782
Sales and marketing	26,768	26,688	27,865	53,456	52,898
General and administrative	4,581	4,344	4,364	8,925	9,201

Total operating expenses	43,233	43,003	44,501	86,236	86,385


Operating income	62,870	61,844	64,086	124,714	126,785
Financial income, net	10,497	11,343	12,332	21,840	24,559

Income before income taxes	73,367	73,187	76,418	146,554	151,344
Income taxes	13,189	13,108	11,684	26,297	23,074


Net income	$60,178	$60,079	$64,734	$120,257	$128,270



Earnings per share (basic)	$0.24	$0.24	$0.27	$0.49	$0.53


Number of shares used in computing earnings per share (basic)	247,221	246,255	243,740	246,738	243,673



Earnings per share (fully diluted)	$0.24	$0.24	$0.26	$0.47	$0.50


Number of shares used in computing earnings per share (fully diluted)	255,199	253,195	253,559	254,197	256,279

CHECK POINT SOFTWARE TECHNOLOGIES LTD. SELECTED CONSOLIDATED BALANCE SHEET DATA
(In thousands) ASSETS
	June 30, 2003	December 31, 2002

	(unaudited)	(audited)
Assets:
Cash and cash equivalents, deposits and marketable securities	$1,467,333	$1,314,752
Trade receivables, net	61,287	73,165
Other receivables and prepaid expenses	20,243	18,354
Property and equipment, net	8,649	10,453
Deferred income taxes	5,053	4,963
Total assets	$1,562,565	$1,421,687

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deferred revenues	$103,314	$99,227
Trade payables and other accrued liabilities	133,533	135,418

Total liabilities	236,847	234,645


Shareholders' Equity:
Share capital	744	740
Additional paid-in capital	181,460	163,045
Retained earnings	1,143,514	1,023,257

Total shareholders' equity	1,325,718	1,187,042

Total liabilities and shareholders' equity	$1,562,565	$1,421,687

CHECK POINT SOFTWARE TECHNOLOGIES LTD. SELECTED CONSOLIDATED CASH FLOW DATA
(In thousands)
	Three Months Ended		Six Months Ended
	June 30, 2003	June 30, 2002	June 30, 2003	June 30, 2002

	(unaudited)		(unaudited)

Cash flow from operating activities:
Net income	$60,178	$64,734	$120,257	$128,270

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,400	3,055	2,997	4,831
Decrease/(increase) in trade and other receivable, net	(2,395)	2,249	10,372	12,285
Increase/(decrease) in trade payables and other accrued liabilities	6,052	3,870	2,203	1,997
Other adjustments	2,416	620	8,773	1,756

Net cash provided by operating activities	67,651	74,528	144,602	149,139

Net cash invested in property and equipment	(997)	(1,318)	(1,634)	(2,443)

Net cash provided by issuance of shares upon exercise of options	6,447	2,423	9,613	7,348


Increase in cash and cash equivalents, deposits and marketable securities	73,101	75,633	152,581	154,044
Cash and cash equivalents, deposits and marketable securities at the beginning of the period	1,394,232	1,106,728	1,314,752	1,028,317

Cash and cash equivalents, deposits and marketable securities at the end of the period	$1,467,333	$1,182,361	$1,467,333	$1,182,361