Check Point Software Technologies Ltd. (NASDAQ: CHKP), the world leader in securing the Internet, today announced its financial results for the first quarter ended March 31, 2004. Revenues for the first quarter were $116.1 million, an increase of 11% compared to $104.8 million in the first quarter of 2003.
The acquisition of Zone Labs was concluded on March 26, 2004 and its operating results were not included in the Statement of Operations. The impact of the acquisition is reflected in a one time in-process R&D charge and on the Balance Sheet.
Net income and earnings per diluted share for the first quarter of 2004, including the in-process R&D charge of $23.1 million related to the acquisition of Zone Labs, were $41.9 million and $0.16 respectively.
Net income and earnings per diluted share, excluding the impact of the in-process R&D charge, were $65.0 million and $0.25, an increase of 8% and 5%, respectively, compared to $60.1 million and $0.24 in the first quarter of 2003.
The Consolidated Balance Sheet as of March 31, 2004 includes all assets and liabilities of Zone Labs, including goodwill and intangible assets recorded as a result of the acquisition. Intangible assets and stock based compensation in the aggregate amount of $42 million will be amortized over the next four years.
Deferred revenues increased by a total of $18.5 million, $9.8 million of which was generated by the Check Point business during the quarter and $8.7 million is attributed to the consolidation of Zone Labs.
Cash flow in the first quarter was strong. Excluding the impact of the Zone Labs acquisition, the company generated net cash flow of $75 million. Total cash and interest bearing investments as of March 31, 2004 was $1.58 billion.
“The first quarter of 2004 proved to be a strong start to the year,” said Gil Shwed, chairman and CEO of Check Point. “We successfully executed our planned strategy of delivering perimeter and internal security solutions and delivered groundbreaking technology to protect networks from internal threats. This was evidenced by the success of our VPN-1 Edge and Check Point Express products introduced last year and our new InterSpect solution released in January.”
Recent News Highlights Include:
· Unveiled Revolutionary Internal Security Solution - the industry’s first complete internal security solution, Check Point InterSpect™, provides the deepest and most intelligent security available for safeguarding corporate networks from damaging cyber attacks that are introduced from inside the network. The introduction of InterSpect was followed by strong demand from our channel and customers.
· Poised to Deliver True End-to-End Security - with the completion of the Zone Labs acquisition. Combining the two companies’ market leadership, channel reach and broad security products portfolio, Check Point and Zone Labs form the basis for a powerful offering of best-of-breed solutions for a broad range of customers, from consumers to large enterprises.
· Effectively Penetrated the Medium Business Channel - realized momentum in Medium Business market segments with Check Point Express™, our security product specifically tailored to protect mid-size businesses.
· Success in Large Scale VPN Deployments – VPN-1 Edge™, designed to protect branch and remote offices of enterprises, continued to do well in the first quarter, as customers rolled out large scale VPN deployments with Check Point products.
· Channel Recognition - Check Point’s channel partner program received a 5-Star ranking, the highest level of recognition from VARBusiness magazine, for its depth and breadth of the channel partner program offerings it provides to the value-added resellers.
Mr. Shwed continued: “Over the next several months, we will continue to deliver innovative technologies and execute on our perimeter, internal and Web security strategy. More specifically, we will introduce a new line of Web security products that will offer unique, unified solutions for addressing today’s Web access and Web security challenges.”
Conference Call Information
The Company will host a conference call with the investment community on April 20, 2004 at 8:30 AM ET/5:30 AM 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 May 3, 2004, at the Company’s website or by telephone at (973) 341-3080, confirmation code 4652892.
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: Check Point’s ability to integrate Zone lab’s operations effectively, 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, 2003, which is on file with the Securities and Exchange Commission. Check Point assumes no obligation to update information concerning its expectations.
The acquisition of Zone Labs was concluded on March 26, 2004 and its operating results were not included in the Statement of Operations. The impact of the acquisition is reflected in a one time in-process R&D charge and on the Balance Sheet.
Net income and earnings per diluted share for the first quarter of 2004, including the in-process R&D charge of $23.1 million related to the acquisition of Zone Labs, were $41.9 million and $0.16 respectively.
Net income and earnings per diluted share, excluding the impact of the in-process R&D charge, were $65.0 million and $0.25, an increase of 8% and 5%, respectively, compared to $60.1 million and $0.24 in the first quarter of 2003.
The Consolidated Balance Sheet as of March 31, 2004 includes all assets and liabilities of Zone Labs, including goodwill and intangible assets recorded as a result of the acquisition. Intangible assets and stock based compensation in the aggregate amount of $42 million will be amortized over the next four years.
Deferred revenues increased by a total of $18.5 million, $9.8 million of which was generated by the Check Point business during the quarter and $8.7 million is attributed to the consolidation of Zone Labs.
Cash flow in the first quarter was strong. Excluding the impact of the Zone Labs acquisition, the company generated net cash flow of $75 million. Total cash and interest bearing investments as of March 31, 2004 was $1.58 billion.
“The first quarter of 2004 proved to be a strong start to the year,” said Gil Shwed, chairman and CEO of Check Point. “We successfully executed our planned strategy of delivering perimeter and internal security solutions and delivered groundbreaking technology to protect networks from internal threats. This was evidenced by the success of our VPN-1 Edge and Check Point Express products introduced last year and our new InterSpect solution released in January.”
Recent News Highlights Include:
· Unveiled Revolutionary Internal Security Solution - the industry’s first complete internal security solution, Check Point InterSpect™, provides the deepest and most intelligent security available for safeguarding corporate networks from damaging cyber attacks that are introduced from inside the network. The introduction of InterSpect was followed by strong demand from our channel and customers.
· Poised to Deliver True End-to-End Security - with the completion of the Zone Labs acquisition. Combining the two companies’ market leadership, channel reach and broad security products portfolio, Check Point and Zone Labs form the basis for a powerful offering of best-of-breed solutions for a broad range of customers, from consumers to large enterprises.
· Effectively Penetrated the Medium Business Channel - realized momentum in Medium Business market segments with Check Point Express™, our security product specifically tailored to protect mid-size businesses.
· Success in Large Scale VPN Deployments – VPN-1 Edge™, designed to protect branch and remote offices of enterprises, continued to do well in the first quarter, as customers rolled out large scale VPN deployments with Check Point products.
· Channel Recognition - Check Point’s channel partner program received a 5-Star ranking, the highest level of recognition from VARBusiness magazine, for its depth and breadth of the channel partner program offerings it provides to the value-added resellers.
Mr. Shwed continued: “Over the next several months, we will continue to deliver innovative technologies and execute on our perimeter, internal and Web security strategy. More specifically, we will introduce a new line of Web security products that will offer unique, unified solutions for addressing today’s Web access and Web security challenges.”
Conference Call Information
The Company will host a conference call with the investment community on April 20, 2004 at 8:30 AM ET/5:30 AM 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 May 3, 2004, at the Company’s website or by telephone at (973) 341-3080, confirmation code 4652892.
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: Check Point’s ability to integrate Zone lab’s operations effectively, 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, 2003, which is on file with the Securities and Exchange Commission. Check Point assumes no obligation to update information concerning its expectations.
