Check Point Software Reports Financial Results for the Second Quarter of 2006

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, 2006.

"During the second quarter, we continued to generate good financial results which were in-line with our projections," said Gil Shwed, chairman and chief executive officer of Check Point Software. "While our market environment remained challenging, we are pleased with the sequential increase in our key financial metrics over the first quarter."

Financial Highlights for the Second Quarter of 2006:

• Total Revenues: $138.9 million, an increase of 4 percent compared to $133.6 million in the first quarter of 2006 and a decrease of 4 percent compared to $144.6 million in the second quarter of 2005.
• Total Product and License Revenues: $122.0 million, an increase of 4 percent compared to $117.3 million in the first quarter of 2006 and a decrease of 6 percent compared to $130.1 million in the second quarter of 2005.
• Net Income – GAAP: $65.7 million, an increase of 7 percent compared to $61.6 million in the first quarter of 2006 and a decrease of 16 percent compared to $78.0 million in the second quarter of 2005. The primary difference in net income in the second quarter of 2006 compared to the second quarter of 2005 is equity based compensation expenses in the amount of $9.3 million which are being reported in the second quarter of 2006 GAAP results pursuant to SFAS 123(R), compared to $0.9 million in equity based compensation expenses included in the 2005 results.
• Net Income – Non GAAP: $76.0 million, an increase of 1 percent compared to $75.1 million in the first quarter of 2006 and a decrease of 5 percent compared to $79.8 million in the second quarter of 2005. Non-GAAP net income excludes equity based compensation expenses and acquisition related charges.
• Earnings per Diluted Share – GAAP: $0.27, an increase of 9 percent compared to $0.25 in the first quarter of 2006 and a decrease of 12 percent compared to $0.31 in the second quarter of 2005. Equity based compensation expenses are included in the second quarter of 2006 GAAP results pursuant to SFAS 123(R).
• Earnings per Diluted Share – Non GAAP: $0.32, an increase of 3 percent when compared to $0.31 in the first quarter of 2006 and the same when compared to $0.32 in the second quarter of 2005. Non-GAAP EPS excludes equity based compensation expenses and acquisition related charges.
• Deferred Revenues: $176.5 million, a decrease of $2.3 million or 1 percent compared to deferred revenues as of March 31, 2006 and an increase of $22.3 million or 14 percent compared to deferred revenues as of June 30, 2005.
• Share Repurchase Program: During the second quarter of 2006, Check Point repurchased 7.4 million shares at a total cost of approximately $138.4 million.
• Cash Flow: cash flow from operations was $87.2 million, an increase of 3 percent compared to the second quarter of 2005.

1"Equity based compensation expenses" refer to the amortized fair value of all equity based awards granted to employees. "Acquisition related charges" refer to the impact of the amortization of intangible assets and other acquisition related expenses.

See "Use of Non-GAAP Financial Information" and "Reconciliation of Supplemental Financial Information" below for more information regarding Check Point’s use of non-GAAP measures.

The highlight of our second quarter product evolution was the introduction of the new perimeter security solutions, VPN-1 Power and VPN-1 UTM, replacing our previous core products. Key products unveiled during the quarter included:

• VPN-1 Power – a complete line of products featuring integrated firewall, VPN and intrusion prevention along with patented SecureXL acceleration technologies for enterprises with demanding performance requirements.

• VPN-1 UTM – a complete line of unified threat management (UTM ) products combining firewall, VPN, intrusion prevention, antivirus and more in fully integrated and easy-to-manage solutions.

• New version of NGX Platform – the framework of our entire portfolio of security solutions now integrates endpoint security with perimeter, internal and Web security through unified security management console and introduces centralized, real-time updates of all Check Point security products to guard against the latest security threats and vulnerabilities.

• ZoneAlarm Internet Security Suite 6.5 – defends consumers against identity theft and advances spyware prevention.

Mr. Shwed continued, "We are executing on our product road map for 2006, enhancing our product offering with our new perimeter security product lines, VPN-1 Power and VPN-1 UTM. Furthering our strategy for a unified security architecture, we unveiled the latest version of the NGX security platform in the second quarter. We remain focused on providing proactive, comprehensive security solutions and executing on our business objectives."

About Check Point Software Technologies Ltd.
Check Point Software Technologies Ltd. (www.checkpoint.com) is a leader in securing the Internet. It is a market leader in the worldwide enterprise firewall, consumer Internet security and VPN markets. Through its NGX platform, the company delivers a unified security architecture for a broad range of perimeter, internal, Web, and endpoint security solutions that protect business communications and resources for corporate networks and applications, remote employees, branch offices and partner extranets. The company's ZoneAlarm Internet Security Suite and additional consumer security solutions are among the highest rated in the industry today, proactively protecting millions of people from hackers, spyware, viruses and identity theft. Extending the power of the Check Point solution is its 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 more than 2,200 Check Point partners in 88 countries and its customers include 100 percent of Fortune 100 companies and tens of thousands of businesses and organizations of all sizes.