FORM 6-K
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule
13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of July, 2006
Commission File Number 0-28584
| CHECK POINT SOFTWARE TECHNOLOGIES LTD. |
| (Translation of registrant’s name into English) |
| 3A Jabotinsky Street, Ramat-Gan 52520, Israel |
| (Address of principal executive offices) |
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x w Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o No x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________
FOR IMMEDIATE RELEASE
| Media Contact: | Investor Contact: |
| Monica Walsh | Anne Marie McCauley |
| A&R Partners | Check Point Software Technologies |
| 650.762.2894 | 650.628.2040 |
| mwalsh@arpartners.com | ir@us.checkpoint.com |
CHECK
POINT SOFTWARE REPORTS FINANCIAL RESULTS FOR THE
SECOND QUARTER OF 2006
REDWOOD CITY, Calif., – July 18, 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 2006GAAP 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 charges1. |
| — | 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. |
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. |
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.
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.”
Conference Call and
Webcast Information
Check Point will host a conference
call with the investment community on July 18, 2006 at 5:00 PM ET/2:00 PM PT. To listen to
the live webcast, please visit Check Point’s website at
http://www.checkpoint.com/ir. A replay of the conference call will be available
through August 1, 2006 at the Company’s website http://www.checkpoint.com/ir
or by telephone at (973) 341-3080, pass code 7588035.
Use of Non-GAAP
Financial Information
In addition to reporting financial
results in accordance with generally accepted accounting principles, or GAAP, Check Point
uses non-GAAP measures of net income and earnings per share, which are adjustments from
results based on GAAP to exclude non-cash equity based compensation charges in accordance
with SFAS 123R in 2006 and APB 25 in 2005 and acquisition related charges. Check
Point’s management believes the non-GAAP financial information provided in this
release is useful to investors’ understanding and assessment of Check Point’s
on-going core operations and prospects for the future. The presentation of this non-GAAP
financial information is not intended to be considered in isolation or as a substitute for
results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP
information in evaluating and operating business internally and such as deemed it
important to provide all this information to investors.
Safe Harbor Statement
Certain statements in this press
release are forward-looking statements. Forward-looking statements include statements
regarding Check Point’s expectations regarding execution on product road map,
delivery of new products and execution on business objectives. Because these
statements pertain to future events they are subject to various risks and uncertainties,
and actual results could differ materially from Check Point’s current expectations
and beliefs. Factors that could cause or contribute to such differences include, but
are not limited to: general market conditions in the company’s industry; economic and
political uncertainties; the impact of political changes and weaknesses in various regions
of the world, including further escalation of hostilities or acts of
terrorism in Israel, where Check Point’s international headquarters are
based; inclusion of network security functionality in third-party hardware or system
software; any foreseen and 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; rapid technological
advances and changes in customer requirements to which Check Point is unable to respond
expeditiously, if at all; a shift in demand for products such as Check Point’s;
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; the amount of equity based compensation charges and other factors and risks
discussed in Check Point’s Annual Report on Form 20-F for the year ended December 31,
2005, 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 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.
© 2003-2006 Check Point Software
Technologies Ltd. All rights reserved.
Check Point, Application
Intelligence, Check Point Express, the Check Point logo, AlertAdvisor, ClusterXL,
Cooperative Enforcement, ConnectControl, Connectra, CoSa, Cooperative Security Alliance,
DefenseNet, Eventia, Eventia Analyzer, Eventia Reporter, FireWall-1, FireWall-1 GX,
FireWall-1 SecureServer, FloodGate-1, Hacker ID, IMsecure, INSPECT, INSPECT XL, Integrity,
InterSpect, IQ Engine, NGX, Open Security Extension, OPSEC, OSFirewall, Policy Lifecycle
Management, Provider-1, Safe@Office, SecureClient, SecureKnowledge, SecurePlatform,
SecuRemote, SecureXL Turbocard, SecureServer, SecureUpdate, SecureXL, SiteManager-1,
SmartCenter, SmartCenter Power, SmartCenter Pro, SmartCenter UTM, Smarter Security,
SmartDashboard, SmartDefense, SmartDefense Advisor, SmartLSM, SmartMap, SmartUpdate,
SmartView, SmartView Monitor, SmartView Reporter, SmartView Status, SmartViewTracker,
SofaWare, SSL Network Extender, Stateful Clustering, TrueVector, Turbocard, UAM,
User-to-Address Mapping, UserAuthority, VPN-1, VPN-1 Accelerator Card, VPN-1 UTM Edge,
VPN-1 Pro, VPN-1 SecureClient, VPN-1 SecuRemote, VPN-1 UTM, VPN-1 Power, VPN-1
SecureServer, VPN-1 VSX, VPN-1 Power VSX, Web Intelligence, ZoneAlarm, ZoneAlarm Pro,
ZoneAlarm Antivirus; ZoneAlarm Anti-Spyware, ZoneAlarm Internet Security Suite, Zone Labs,
and the Zone Labs logo, 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, 5,835,726, 6,496,935, 6,873,988
and 6,850,943 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 amounts)
| Three Months Ended |
Six Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, |
March 31, |
June 30, |
June 30, | ||||||||||||||
| 2006 |
2006 |
2005 |
2006 |
2005 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| Revenues: | |||||||||||||||||
| Products and licenses | $ | 58,492 | $ | 54,819 | $ | 71,248 | $ | 113,311 | $ | 136,770 | |||||||
| Software subscriptions | 63,550 | 62,527 | 58,892 | 126,077 | 117,339 | ||||||||||||
| Total product and license revenues | 122,042 | 117,346 | 130,140 | 239,388 | 254,109 | ||||||||||||
| Services | 16,894 | 16,246 | 14,423 | 33,140 | 28,115 | ||||||||||||
| Total revenues | 138,936 | 133,592 | 144,563 | 272,528 | 282,224 | ||||||||||||
| Operating expenses: | |||||||||||||||||
| Cost of revenues | 7,534 | 6,713 | 6,586 | 14,247 | 12,222 | ||||||||||||
| Research and development | 15,911 | 16,283 | 12,211 | 32,194 | 25,358 | ||||||||||||
| Selling and marketing | 39,565 | 36,212 | 37,385 | 75,777 | 72,105 | ||||||||||||
| General and administrative | 10,393 | 11,234 | 6,063 | 21,627 | 12,411 | ||||||||||||
| Amortization of intangible assets | |||||||||||||||||
| and acquisition related expenses | 1,505 | 2,432 | 1,411 | 3,937 | 2,822 | ||||||||||||
| Total operating expenses | 74,908 | 72,874 | 63,656 | 147,782 | 124,918 | ||||||||||||
| Operating income | 64,028 | 60,718 | 80,907 | 124,746 | 157,306 | ||||||||||||
| Financial income, net | 16,218 | 15,508 | 13,468 | 31,726 | 25,869 | ||||||||||||
| Income before income taxes | 80,246 | 76,226 | 94,375 | 156,472 | 183,175 | ||||||||||||
| Taxes on income | 14,530 | 14,593 | 16,378 | 29,123 | 31,472 | ||||||||||||
| Net income | $ | 65,716 | $ | 61,633 | $ | 77,997 | $ | 127,349 | $ | 151,703 | |||||||
| Earnings per share (basic) | $ | 0.27 | $ | 0.25 | $ | 0.32 | $ | 0.53 | $ | 0.61 | |||||||
| Number of shares used in computing | |||||||||||||||||
| earnings per share (basic) | 240,982 | 243,740 | 245,398 | 242,349 | 246,674 | ||||||||||||
| Earnings per share (diluted) | $ | 0.27 | $ | 0.25 | $ | 0.31 | $ | 0.52 | $ | 0.60 | |||||||
| Number of shares used in computing | |||||||||||||||||
| earnings per share (diluted) | 240,951 | 245,698 | 252,179 | 243,325 | 254,165 | ||||||||||||
CHECK POINT SOFTWARE
TECHNOLOGIES LTD.RECONCILIATION
OF SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands, except per share amounts)
| Three Months Ended |
Six Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, |
March 31, |
June 30, |
June 30, | ||||||||||||||
| 2006 |
2006 |
2005 |
2006 |
2005 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| GAAP Net income | $ | 65,716 | $ | 61,633 | $ | 77,997 | $ | 127,349 | $ | 151,703 | |||||||
| Stock-based compensation (1) | 9,315 | 11,600 | 942 | 20,915 | 2,156 | ||||||||||||
| Amortization of intangible assets | |||||||||||||||||
| and acquisition related expenses (2) | 963 | 1,890 | 869 | 2,853 | 1,739 | ||||||||||||
| Non-GAAP Net income | $ | 75,994 | $ | 75,123 | $ | 79,808 | $ | 151,117 | $ | 155,598 | |||||||
| Non-GAAP Earnings per share (diluted) | $ | 0.32 | $ | 0.31 | $ | 0.32 | $ | 0.62 | $ | 0.61 | |||||||
| Number of shares used in computing | |||||||||||||||||
| Non-GAAP earnings per share (diluted) | 240,951 | 245,698 | 252,179 | 243,325 | 254,165 | ||||||||||||
| (1) Stock-based compensation: | |||||||||||||||||
| Cost of revenues | $ | 59 | $ | 110 | $ | 81 | $ | 169 | $ | 165 | |||||||
| Research and development | 2,968 | 3,549 | 331 | 6,517 | 702 | ||||||||||||
| Selling and marketing | 2,197 | 2,619 | 480 | 4,816 | 1,139 | ||||||||||||
| General and administrative | 4,091 | 5,322 | 50 | 9,413 | 150 | ||||||||||||
| Total | $ | 9,315 | $ | 11,600 | $ | 942 | $ | 20,915 | $ | 2,156 | |||||||
| (2) Amortization of intangible assets | |||||||||||||||||
| and acquisition related expenses: | |||||||||||||||||
| Cost of revenues | $ | 1,354 | $ | 1,354 | $ | 1,354 | $ | 2,708 | $ | 2,708 | |||||||
| Selling and marketing | 151 | 151 | 57 | 302 | 114 | ||||||||||||
| General and administrative | - | 927 | - | 927 | - | ||||||||||||
| Taxes on income | (542 | ) | (542 | ) | (542 | ) | (1,084 | ) | (1,083 | ) | |||||||
| Total | $ | 963 | $ | 1,890 | $ | 869 | $ | 2,853 | $ | 1,739 | |||||||
CHECK POINT SOFTWARE
TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(In thousands)
ASSETS
| June 30, 2006 |
December 31, 2005 | |||||||
|---|---|---|---|---|---|---|---|---|
| (unaudited) | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 223,055 | $ | 298,531 | ||||
| Marketable securities and deposits | 953,732 | 1,044,312 | ||||||
| Trade receivables, net | 83,979 | 127,129 | ||||||
| Other receivables and prepaid expenses | 20,888 | 20,646 | ||||||
| Total current assets | 1,281,654 | 1,490,618 | ||||||
| Long-term assets: | ||||||||
| Long-term investments | 549,280 | 382,500 | ||||||
| Property and equipment, net | 44,930 | 7,665 | ||||||
| Intangible assets, net | 17,206 | 20,215 | ||||||
| Goodwill | 174,295 | 174,295 | ||||||
| Deferred income taxes, net | 7,957 | 8,694 | ||||||
| Other assets | 924 | 875 | ||||||
| Total long-term assets | 794,592 | 594,244 | ||||||
| Total assets | $ | 2,076,246 | $ | 2,084,862 | ||||
| LIABILITIES AND | ||||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Deferred revenues | $ | 176,542 | $ | 168,998 | ||||
| Trade payables and other accrued liabilities | 134,868 | 136,872 | ||||||
| Total current liabilities | 311,410 | 305,870 | ||||||
| Accrued severance pay, net | 3,864 | 3,271 | ||||||
| Total liabilities | 315,274 | 309,141 | ||||||
| Shareholders' equity: | ||||||||
| Share capital | 774 | 774 | ||||||
| Additional paid-in capital | 407,872 | 386,529 | ||||||
| Deferred stock-based compensation | - | (2,831 | ) | |||||
| Treasury shares at cost | (508,918 | ) | (380,834 | ) | ||||
| Accumulated other comprehensive loss | (13,506 | ) | (8,952 | ) | ||||
| Retained earnings | 1,874,750 | 1,781,035 | ||||||
| Total shareholders' equity | 1,760,972 | 1,775,721 | ||||||
| Total liabilities and shareholders' equity | $ | 2,076,246 | $ | 2,084,862 | ||||
| Total cash and cash equivalents, deposits and | ||||||||
| marketable securities | 1,726,067 | 1,725,343 | ||||||
CHECK POINT SOFTWARE TECHNOLOGIES
LTD.
SELECTED CONSOLIDATED CASH FLOW DATA
(In thousands)
| Three Months Ended |
Six Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, |
June 30, | |||||||||||||
| 2006 |
2005 |
2006 |
2005 | |||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||
| Cash flow from operating activities: | ||||||||||||||
| Net income | $ | 65,716 | $ | 77,997 | $ | 127,349 | $ | 151,703 | ||||||
| Adjustments to reconcile net income to net cash provided by | ||||||||||||||
| operating activities: | ||||||||||||||
| Depreciation and amortization | 1,334 | 1,320 | 2,745 | 2,625 | ||||||||||
| Decrease (increase) in trade and other receivables, net | 13,416 | (9,803 | ) | 42,884 | 3,686 | |||||||||
| Increase (decrease) in trade payables and other accrued | ||||||||||||||
| liabilities | (2,923 | ) | 8,662 | 6,133 | 13,256 | |||||||||
| Amortization of intangible assets | 1,505 | 1,411 | 3,010 | 2,822 | ||||||||||
| Stock-based compensation | 9,315 | 942 | 20,915 | 2,156 | ||||||||||
| Tax benefit related to exercise of stock options | - | 2,883 | - | 4,383 | ||||||||||
| Other adjustments | (1,193 | ) | 1,490 | (3,842 | ) | 1,331 | ||||||||
| Net cash provided by operating activities | 87,170 | 84,902 | 199,194 | 181,962 | ||||||||||
| Cash flow from investing activities: | ||||||||||||||
| Investment in property and equipment | (38,837 | ) | (1,038 | ) | (40,010 | ) | (2,180 | ) | ||||||
| Net cash used in investing activities | (38,837 | ) | (1,038 | ) | (40,010 | ) | (2,180 | ) | ||||||
| Cash flow from financing activities: | ||||||||||||||
| Proceeds from issuance of shares upon exercise of options | 23,040 | 13,355 | 40,448 | 20,097 | ||||||||||
| Purchase of treasury shares | (138,433 | ) | (102,565 | ) | (202,358 | ) | (152,271 | ) | ||||||
| Tax benefit related to exercise of stock options | 2,200 | - | 3,450 | - | ||||||||||
| Net cash used in financing activities | (113,193 | ) | (89,210 | ) | (158,460 | ) | (132,174 | ) | ||||||
| Increase (decrease) in cash and cash equivalents, deposits and | ||||||||||||||
| marketable securities | (64,860 | ) | (5,346 | ) | 724 | 47,608 | ||||||||
| Cash and cash equivalents, deposits and marketable securities | ||||||||||||||
| at the beginning of the period | 1,790,927 | 1,630,245 | 1,725,343 | 1,577,291 | ||||||||||
| Cash and cash equivalents, deposits and marketable securities | ||||||||||||||
| at the end of the period | 1,726,067 | 1,624,899 | 1,726,067 | 1,624,899 | ||||||||||
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CHECK POINT SOFTWARE TECHNOLOGIES LTD. By: /s/ Eyal Desheh —————————————— Eyal Desheh Executive Vice President & Chief Financial Officer |
July 18, 2006