CHECK POINT SOFTWARE REPORTS RECORD FOURTH QUARTER AND FISCAL YEAR 2009 FINANCIAL RESULTS

CALGARY, AB, February 2, 2010
Fourth Quarter 2009:

  • Revenue: $272.1 million, representing a 25 per cent increase year over year
  • Non-GAAP Operating Income: $152.7 million, representing 56 per cent of revenues
  • Non-GAAP EPS: $0.61, representing a 22 per cent increase year over year
  • Deferred Revenues: $425.3 million, representing a 29 per cent increase year over year
  • Cash Flow from Operations: $138.1 million, representing a 54 per cent increase year over year

Fiscal Year 2009:

  • Revenue: $924.4 million, representing a 14 per cent increase year over year
  • Non-GAAP Operating Income: $505.7 million, representing 55 per cent of revenues
  • Non-GAAP EPS: $2.05, representing a 15 per cent increase year over year
  • Cash Flow from Operations: $548.7 million, representing a 28 per cent increase year over year year

 
Check Point® Software Technologies Ltd. (NASDAQ: CHKP), the worldwide leader in securing the Internet, recently announced its financial results for the fourth quarter and fiscal year ending December 31, 2009.
“I am very pleased that we were able to deliver an all-time record fourth quarter and fiscal year 2009 results, which exceeded the high-end of our projections in both revenues and earnings per share,” said Gil Shwed, chairman and chief executive officer at Check Point. “Our product sales have shown the highest sequential growth recorded in our history this quarter. This growth came from all product lines and across all regions.”
Financial Highlights for the Fourth Quarter Ended December 31, 2009:

  • Total Revenues: $272.1 million, an increase of 25 per cent compared to $217.6 million in the fourth quarter of 2008.
  • GAAP Operating Income: $130.6 million, an increase of 26 per cent compared to $103.7 million in the fourth quarter of 2008. The GAAP operating income in the fourth quarter of 2009 included additional amortization of intangible assets in the amount of $4.9 million related to the acquisition of the Nokia security appliance business, which was completed during the second quarter of 2009.
  • Non-GAAP Operating Income: $152.7 million, an increase of 27 per cent compared to $120.7 million in the fourth quarter of 2008. Non-GAAP operating margin was 56 per cent, compared to 55 per cent in the fourth quarter of 2008.
  • GAAP Net Income and Earnings per Diluted Share: GAAP net income was $109.5 million, an increase of 27 per cent compared to $86.5 million in the fourth quarter of 2008. GAAP earnings per diluted share were $0.51, an increase of 24 per cent compared to $0.41 in the fourth quarter of 2008. GAAP net income in the fourth quarter of 2009 included additional amortization of intangible assets in the amount of $4.9 million (which represented $0.02 in GAAP earnings per diluted share) related to the acquisition of the Nokia security appliance business in 2009. Net of taxes, these charges totaled $4.5 million ($0.02 per diluted share).
  • Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $129.5 million, an increase of 23 per cent compared to $105.6 million in the fourth quarter of 2008, and non-GAAP EPS was $0.61, an increase of 22 per cent compared to $0.50 in the fourth quarter of 2008.
  • Deferred Revenues: As of December 31, 2009, we had deferred revenue of $425.3 million, an increase of 29 per cent compared to $330.8 as of December 31, 2008.
  • Cash Flow: Cash flow from operations was $138.1 million, an increase of 54 per cent compared to $89.4 million in the fourth quarter of 2008.
  • Share Repurchase Program: During the fourth quarter of 2009, we repurchased 1.5 million shares at a total cost of $50 million. There is approximately $31.4 million remaining of the $400 million authorized in 2008 under Check Point’s share repurchase program. The company also expanded the share buyback program enabling the purchase of up to $250 million for the year.

 
Financial Highlights for the Year Ended December 31, 2009:

  • Total Revenues: $924.4 million, an increase of 14 per cent compared to $808.5 million in 2008.
  • GAAP Operating Income: $415.0 million, an increase of 16 per cent compared to $356.5 million in 2008. The GAAP operating income in 2009 included additional amortization of intangible assets in the amount of $14.8 million related to the acquisition of the Nokia security appliance business in 2009.
  • Non-GAAP Operating Income: $505.7 million, an increase of 19 per cent compared to $425.8 million in 2008. Non-GAAP operating margin was 55 per cent, compared to 53 per cent in the 2008.
  • GAAP Net Income and Earnings per Diluted Share: GAAP net income was $357.5 million, an increase of 10 per cent compared to $324.0 million in 2008. GAAP earnings per diluted share were $1.68, an increase of 12 per cent compared to $1.50 in 2008. GAAP net income in 2009 included additional amortization of intangible assets in the amount of $14.8 million (which represented $0.07 in GAAP earnings per diluted share) related to the acquisition of the Nokia security appliance business in 2009. Net of taxes, these charges totaled $12.6 million ($0.06 per diluted share).
  • Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $435.3 million, an increase of 13 per cent compared to $386.0 million in 2008, and non-GAAP EPS was $2.05, an increase of 15 per cent compared to $1.78 in 2008.
  • Cash Flow: Cash flow from operations was $548.7 million, an increase of 28 per cent, compared to $429.9 million in 2008.
  • Cash and Investments Balance: $1,847 million as of December 31, 2009 compared to $1,444 million in 2008.
  • Share Repurchase Program: During 2009, we repurchased 7.8 million shares at a total cost of $202.3 million.

 
For information regarding the non-GAAP financial measures discussed in this release, please see “Use of Non-GAAP Financial Information” and “Reconciliation of Non-GAAP to GAAP Financial Information.”
“We generated revenue growth across all geographies. The Asia Pacific region was particularly strong, delivering over 40 per cent year over year growth. Our non-GAAP operating margins expanded to 55 per cent for 2009 from 53 per cent in 2008, as a result of increasing revenues and the realization of synergies from the acquisition of the Nokia security appliance business,” added Shwed.
In addition, we announced an expansion of our share buy back program. The Check Point Board of Directors has authorized the repurchase of up to an additional $250 million for the year of our outstanding ordinary shares in the open market or through privately negotiated transactions. Under the repurchase program, share purchases may be made from time to time depending on market conditions, share price, trading volume and other factors. Such purchases will be made in accordance with the requirements of the Securities and Exchange Commission. For a portion of the authorized repurchase amount, Check Point may enter into a plan that is compliant with Rule 10b5-1 of the United States Securities Exchange Act of 1934.
The repurchase program has no time limit, does not require Check Point to acquire a specific number of shares and may be suspended from time to time or discontinued. The share repurchases will be funded from available working capital. As of December 31, 2009, Check Point has approximately 209 million ordinary shares of outstanding stock. Since its initial share repurchase program announced in October 2003, Check Point has purchased approximately 73.6 million shares for a total of approximately $1.57 billion.
Business Highlights
During 2009, we introduced new and innovative security products and technologies including:

  • Our revolutionary Software Blade architecture provides customers with an integrated flexible security platform with over 30 software blades available to address their security needs.
  • The latest endpoint product innovations WebCheck and OneCheck technologies provide our customers with secure web browsing and single lock/unlock mechanism to multiple security subsystems.
  • New appliance products introduced during the year included:
    • UTM-1 130 entry-level appliance for branch offices and small businesses
    • High End Power-1 11000 appliances delivering up to 25Gbps throughput and 15Gbps of IPS performance
    • SMART-1 Management Appliances – for managing a security infrastructure of any size
    • IP Series appliance line which was acquired from Nokia and introduced bundled with Check Point’s Software Blade architecture
  • Acquired technology from FaceTime to detect and provide security for over 4,500 internet applications and 50,000 web 2.0 widgets.

 
Said Shwed, “I’m very proud of the record results we achieved this year – generated across our key metrics while continuing to invest and advance our security industry leadership. This was a great finish to the decade that we closed by exceeding our projections and delivering the best results to date. I’d like to thank our loyal customers, partners and employees for their contribution.”
 
Conference Call and Webcast Information
Check Point hosted a conference call with the investment community on January 28, 2010 at 8:30 AM ET/5:30 AM PT. A replay of the conference call is available through February 4, 2010 at the company’s website http://www.checkpoint.com/ir or by telephone at +1.201.612.7415, replay ID number 341795.

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