Check Point Software Technologies Reports Fourth Quarter and Fiscal Year-End Financial Results
REDWOOD CITY, Calif.
— January 22, 2003 — Check
Point Software Technologies Ltd. (Nasdaq: CHKP), the worldwide leader
in securing the Internet, today announced its financial results
for the fourth quarter and fiscal year ended December 31, 2002.
The fourth quarter of 2002 showed an upward trend in the business.
Net income was $64.5 million or $0.26 per share (diluted), an increase
of 4% over the third quarter of 2002. Revenues for the quarter were
$110.3 million, a 6% increase over the third quarter. Deferred revenues
increased by $4.6 million to a total of $99.2 million. During the
fourth quarter, the company generated net cash flow of $74 million,
an increase from $58 million in the third quarter, bringing total
net cash flow for the year to $286 million. Total cash and interest
bearing investments as of December 31, 2002 was $1.3 billion.
Net income for the year was $255 million or $1.00 per share (diluted).
Revenues for the fiscal year ended December 31, 2002 were $427 million.
"Check Point finished the year with strong momentum in the fourth quarter," said Gil Shwed, chairman and chief executive officer of Check Point Software Technologies. "We experienced strength in all geographical areas, markets and product lines. Enormous progress was made in 2002 as we continued to grow our market lead, introduced numerous industry firsts and technological breakthroughs, established new partnerships with industry leaders and most importantly, continued to satisfy our customers."
Highlights from 2002 include:
- Technology Innovations
- Active Defense - introduced a new security category with SmartDefense™. SmartDefense will serve as the first comprehensive intelligence solution to combat cyber attacks. Active Defense incorporates type-based attack blocking, intelligent classification of security attacks and real-time updates of security policy and handles both known and unknown network attacks.
- Application Intelligence - extended Check Point's patented Stateful Inspection with the new Application Intelligence technology that enables enforcement of corporate policy and in-depth vulnerability protection for applications such as Web Services (XML/SOAP), Peer-to-Peer applications, Instant Messaging and DNS attacks.
- Wireless Infrastructure - FireWall-1 GX™ - introduced the first solution to protect GPRS 2.5G and 3G wireless infrastructures from the threats of untrusted networks.
- Virtualized Systems Security - VSX™ - introduced multi-platform support for virtualized security system for data centers, Internet carriers and enterprises' virtual LAN (VLAN) environments.
- SecurePlatform™ - expanded the choice of deployment options for security services by enabling unparalleled cost of ownership and price/performance for implementing security services on open servers. Utilizes One-Click technology to enable instant deployment.
- VPN-1® SecureClient™ - expanded the market leading VPN client with integrated personal
firewall with support for the Pocket PC OS on handheld PDA
devices.
- Market Leadership - During
the year we expanded our market leadership:
- Grew VPN/firewall market lead from 61% to 65% (IDC July 2002, Enterprise firewall/VPN software)
- #1 Market Share for VPN/firewall appliances with 36% with "Secured by Check Point" appliances (IDC November, 2002)
- Visionary and leader in both VPN and firewall reports in the prestigious Magic Quadrant from Gartner Group (September, 2002)
- Highest levels of government security certifications: Common Criteria (EAL4), Federal Information Processing Standard (FIPS 140-1) and IT Security Evaluation Criteria (ITSEC).
- #1 Performance - Independent tests by Tolly Group showed that Check Point solutions deliver 5x more performance at a fraction of the cost of competing solutions.
- Industry Accolades - Check Point continued to lead the market and win recognition
within the industry, for example:
- New SmartDefense Technology won "Hot Pick" spotlight from Information Security Magazine.
- PC Magazine applauded Check Point VPN-1 SmallOffice as extremely easy to deploy with the simplest and best-designed interface.
- Forbes Magazine named Check Point the Best Performing Internet Company and featured Check Point on the cover of its March issue.
- PC Magazine gave Safe@ software solution a four-star rating for its robust firewall capabilities and ease of installation.
- CIO Magazine named CEO Gil Shwed a 2002 winner of the CIO 20/20 Vision Awards.
- CRN Magazine named President Jerry Ungerman among the Top 25 Executives in 2002.
- NASA/Marshall Space Flight Center presented a special commendation to Check Point for outstanding support in implementing Internet security solutions.
- The American Academy of Achievement bestowed its Golden Plate Award upon CEO Gil Shwed for his innovative contribution to business and technology.
- Network World magazine
awarded Check Point VPN-1® a "World Class Winner"
for client deployment and manageability, multi-platform
client support and the suitability for enterprise use.
- Partnerships - expanded global
partnerships with more than 325 OPSEC technology partners, including
over 20 appliance partners. New and expanded partnerships include:
- New "Secured by Check Point" appliances with Sun Microsystems Inc.
- Expanded range of appliance offerings with Nokia - our Premier Partner.
- New "Secured by Check Point" appliances available from IBM and Siemens.
- Shipped some of the world's highest performing security platforms through expanded partnerships with Nortel Networks and Crossbeam Systems.
- New global partnership with Hewlett-Packard.
- Continued the OPSEC momentum with the introduction of the OPSEC Manager - multi-vendor security suite management software and with over 175 "OPSEC Certified" partner products.
Mr. Shwed continued: "In 2002, Check Point managed to extend its market and technology leadership while maintaining strong financial performance and unparalleled levels of profitability. Our team continues to focus on expanding this lead with the best and broadest range of solutions for securing the Internet."
Conference Call Information
The Company will host a conference call with the investment community
on January 22 at 5:00 PM ET/2:00 PM PT. To listen to the live webcast,
please visit Check Point's web site at http://www.checkpoint.com/ir.
A replay of the conference call will be available through Wednesday,
February 5, 2003, at the Company's website or by telephone at (973)
341-3080, confirmation code 3673476.
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, 2001, 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 market
leader in 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 325 leading companies. Check Point solutions
are sold, integrated and serviced by a network of 2,500 certified
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.
###
©2003 Check Point Software Technologies
Ltd.
All rights reserved. Check Point, the Check Point logo, ClusterXL,
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, Open Security Extension, OPSEC,
Provider-1, SecureKnowledge, SecurePlatform, SecureXL, SiteManager-1,
SmartCenter, SmartCenter Pro, SmartDashboard, SmartDefense, SmartLSM,
SmartMap, SmartUpdate, SmartView, SmartView Monitor, SmartView Reporter,
SmartView Status, SmartView Tracker, SVN, UAM, User-to-Address Mapping,
UserAuthority, VPN-1, 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 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 and 5,835,726
and may be protected by other U.S. Patents, foreign patents, or
pending applications.
|
CHECK POINT SOFTWARE TECHNOLOGIES
LTD. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
|||||||
|
(In thousands, except per share amount) |
|||||||
|
Three Months Ended |
Year Ended |
||||||
|
December 31, 2002 |
September 31, 2002 |
December 31, 2001 |
December 31, 2002 |
December 31, 2001 |
|||
 |
|
 |
|
|
|||
|
(unaudited) |
(audited) |
||||||
| Revenues: | |||||||
|
Products |
65,478 |
60,424 |
82,194 |
256,113 |
374,026 |
||
|
Subscriptions and upgrades |
35,326 |
33,362 |
31,360 |
130,879 |
110,236 |
||
|
Services |
9,456 |
9,773 |
8,976 |
39,997 |
43,381 |
||
|
|
|
|
|
|||
| Total revenues |
$110,260 |
$103,559 |
$122,530 |
$426,989 |
$527,643 |
||
|
|
|
|
|
|||
| Operating expenses: | |||||||
| Cost of revenues |
5,513 |
5,676 |
4,661 |
20,693 |
26,571 |
||
| Research and development |
6,939 |
6,988 |
7,341 |
28,709 |
33,221 |
||
| Sales and marketing |
27,083 |
24,625 |
26,490 |
104,606 |
109,086 |
||
| General and administrative |
4,553 |
4,215 |
4,442 |
17,969 |
22,002 |
||
|
|
|
|
|
|||
| Total operating expenses |
44,088 |
41,504 |
42,934 |
171,977 |
190,880 |
||
|
|
|
|
|
|||
| Operating income |
66,172 |
62,055 |
79,596 |
255,012 |
336,763 |
||
| Financial income, net |
12,479 |
12,276 |
11,645 |
49,314 |
44,760 |
||
|
|
|
|
|
|||
| Income before income taxes |
78,651 |
74,331 |
91,241 |
304,326 |
381,523 |
||
| Income taxes |
14,157 |
12,015 |
14,105 |
49,246 |
59,603 |
||
|
|
|
|
|
|||
| Net income |
$64,494 |
$62,316 |
$77,136 |
$255,080 |
$321,920 |
||
|
|
|
|
|
|||
|
|
|
|
|
|||
| Earnings per share (basic) |
$0.26 |
$0.25 |
$0.32 |
$1.04 |
$1.34 |
||
|
|
|
|
|
|||
|
|
|
|
|
|||
| Number of shares used in computing earnings per share (basic) |
245,503 |
244,739 |
242,353 |
244,097 |
240,008 |
||
|
|
|
|
|
|||
|
|
|
|
|
|||
| Earnings per share (fully diluted) |
$0.26 |
$0.25 |
$0.30 |
$1.00 |
$1.25 |
||
|
|
|
|
|
|||
|
|
|
|
|
|||
| Number of shares used in computing earnings per share (fully diluted) |
252,807 |
253,336 |
258,893 |
254,772 |
258,075 |
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|
|
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|||
|
|
|
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CHECK POINT SOFTWARE TECHNOLOGIES
LTD. SELECTED CONSOLIDATED BALANCE SHEET DATA |
||||
|
(In thousands) ASSETS |
||||
|
December 31, 2002 |
December 31, 2001 |
|||
|
|
|
|
|
|
(audited) |
||||
|
Assets: |
||||
|
Cash and cash equivalents, deposits and marketable
securities |
$1,314,752 |
$1,028,317 |
||
|
Trade receivables, net |
73,165 |
74,294 |
||
|
Other receivables and prepaid expenses |
18,354 |
21,290 |
||
| Property and equipment, net |
10,453 |
13,248 |
||
| Deferred income taxes |
4,963 |
5,759 |
||
|
Total assets |
$1,421,687 |
$1,142,908 |
||
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
||||
| Liabilities: | ||||
|
Deferred revenues |
$99,227 |
$95,703 |
||
|
Trade payables and other accrued liabilities |
135,418 |
131,477 |
||
|
|
|
|
|
|
Total liabilities |
234,645 |
227,180 |
||
|
|
|
|
|
| Shareholders' Equity: | ||||
|
Share capital |
740 |
735 |
||
|
Additional paid-in capital |
163,045 |
146,816 |
||
|
Retained earnings |
1,023,257 |
768,177 |
||
|
|
|
|
|
|
Total shareholders' equity |
1,187,042 |
915,728 |
||
|
|
|
|
|
| Total liabilities and shareholders' equity |
$1,421,687 |
$1,142,908 |
||
|
|
|
|
|
|
|
|
|
|
|
CHECK POINT SOFTWARE TECHNOLOGIES
LTD. SELECTED CONSOLIDATED CASH FLOW DATA |
||||||
|
(In thousands) |
||||||
|
Three Months Ended |
Year Ended |
|||||
|
December 31, 2002 |
December 31, 2001 |
December 31, 2002 |
December 31, 2001 |
|||
|
|
|
|
|
||
|
(unaudited) |
(audited) |
|||||
| Cash flow from operating activities: | ||||||
| Net income |
$64,494 |
$77,136 |
$255,080 |
$321,920 |
||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization |
1,887 |
2,231 |
7,390 |
8,068 |
||
|
(3,767) |
1,317 |
968 |
11,855 |
||
|
6,604 |
(1,057) |
7,464 |
(1,176) |
||
|
2,597 |
813 |
5,393 |
5,105 |
||
|
|
|
|
|
||
| Net cash provided by operating activities |
71,815 |
80,440 |
276,295 |
345,772 |
||
|
|
|
|
|
||
| Net cash invested in property and equipment |
(990) |
(2,197) |
(4,596) |
(9,678) |
||
|
|
|
|
|
||
| Net cash provided by issuance of shares upon exercise of options |
3,133 |
5,826 |
14,736 |
36,271 |
||
|
|
|
|
|
||
| Increase in cash and cash equivalents, deposits and marketable securities |
73,958 |
84,069 |
286,435 |
372,365 |
||
| Cash and cash equivalents,
deposits and marketable securities at the beginning of the period |
1,240,794 |
944,248 |
1,028,317 |
655,952 |
||
|
|
|
|
|
||
| Cash and cash equivalents,
deposits and marketable securities at the end of the period |
$1,314,752 |
$1,028,317 |
$1,314,752 |
$1,028,317 |
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