Good morning ladies and gentlemen, my name is Sandra and I will be your conference facilitator today. At this time, I would like to welcome everyone to Check Point Software Technologies’ First Quarter 2006 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer period. If you would like to ask a question during this time, please press “*” and then “1” on your telephone keypad. If you would like to withdraw your question, press the “#” key. Thank you. It is now my pleasure to turn the call over to your host, Ms. Anne Marie McCauley. Mam, you may begin your conference.

Thank you Sandra. Good morning and afternoon. I’m Anne Marie McCauley, Director of Investor Relations for Check Point Software. Thank you for joining us to discuss the first quarter 2006 results. As a reminder, this call is being webcast live from out website and the same recorded. To access our live webcast and replay information, please visit the company’s website at www.checkpoint.com/ir. The replay will be available through May 8th. If you’d like to listen after the call, please contact the Investor Relations Department at 650-628-2050. On the call with me today is Gil Shwed, Chairman and CEO, Jerry Ungerman, Vice Chairman, Eyal Desheh, Executive Vice President and CFO. Before we start our management presentation, I would like to read the following disclaimer. During the course of this call, the company will make certain forward-looking statements; forward-looking statements include statements regarding Check Point’s expectations, regarding operating results for the second quarter of 2006 and for the full year 2006. Growth in product revenue, impact of deferred revenue on future periods, new initiatives for sales with expanded solutions, timing of delivery of product introductions, enhancements, and product acceptance, new activities with channel partners, continued importance of security solutions, activities with Sourcefire, and potential acquisitions. Because these statements pertain to future events, they are subject to various risks and uncertainties, and actual results could defer materially from Check Point’s current expectations and beliefs. Factors that could cause or contribute to such differences include but are not limited to the impact on revenues, general market conditions in the company’s industry, the mix of sales of new products and long-term subscriptions, economic and political uncertainties, the impact of political changes and weakness in various regions of the world including the commencement or escalation of hostilities or acts of terrorism, the inclusion of network security functionality and 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, factors affecting third parties with which Check Point has formed business alliances, timely availability, features, performance, and customer acceptance of Check Point’s new and existing products, the amount of equity-based compensation charges, the ability to recognize deferred revenues and other factors and risks discussed in Check Point’s annual report on the Form 20S 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. Now let me turn the call over to Eyal Desheh for financial reviews.

Thanks Anne Marie. Good morning and afternoon everyone. I’m going to share with you the results of the quarter and provide some more details on the financials. The first quarter results are in line with our preliminary results, which were previewed earlier this month. We’re encouraged by the strength of our subscription business driven by customer loyalty, the success of our SmartDefense program, and the resulting strong operating cash flow and increase in deferred revenues. This quarter, we included for the first time the impact of FAS 123R in our GAAP financial results. In our press release, we are presenting GAAP and non-GAAP results and reconciliation tables, which highlight this data. I’m going to share with you the financial details for the first quarter of 2006. Revenues for the first quarter were $134 million compared to $138 million in the first quarter of 2005. GAAP net income for the first quarter of 2006 was $62 million compared to $74 million in the first quarter last year. Equity-based compensation accounted for $11.1 million in this quarter. Please note that this expense does not appear in the following quarter. Non-GAAP net income excluding acquisition-related and equity-based compensation charges were $75 million compared to $76 million in the first quarter of 2005. GAAP earnings per diluted share for the first quarter of 2006 were $0.25 compared to $0.29 last year. The impact of equity-based compensation expenses was approximately $0.05. Finally and most importantly, non-GAAP earnings per share excluding acquisition-related and equity-based compensation charges were $0.31, an increase of 3% compared to $0.30 in the first quarter of 2005. Deferred revenues this quarter were $179 million, an increase of $10 million or 6% over the first quarter of 2005, an increase of 19% over the first quarter 2005. This was a result of many…

Thank you Eyal and hello everyone. Thank you for taking your time to be on the call with us today. I would like to spend my time today sharing with you my perspective on the market and our results this quarter as well as some insight into our plans going forward. During the first quarter, we again introduced new products and technologies across the various security segments we addressed through our expanding portfolio of security solutions. A few highlights include, first, the enhanced Connectra, our Remote Access SSL VPN solution with new security, application, and performance features. Second, we launched Eventia 2.0, a simple file security event management product that automatically prioritizes security events for decisive intelligent action. This solution extends support to the Endpoint and correlates data for antivirus applications, personal firewalls, and operating systems. Finally, we unveiled VPN-1 Edge NGX, extended security for remote offices with advanced intrusion prevention and antivirus to complement its firewall and VPN technologies, and ensure branch offices have protection from worms and viruses. These announcements are important long term as they add to our expanding security offerings and reinforce the substance and uniqueness of our Unified Security Architecture. We have talked in the past about the importance our customers and partners placed on having an understanding of where we are going with enhanced security; security solutions that they can go into over time and is more than just a collection of point solutions. And most importantly, they want the ability to manage from a single console a wide range of integrated security solutions to share the same code base, can be updated dynamically, and be deployed across multiple layers of the network architecture. In addition, we hear many positive comments regarding our flexible approach in allowing our customers to deploy our solutions on…

Thank you Jerry and good morning everyone. It looks like the beginning of 2006 was characterized by similar trends to what we’ve seen in the past -- business that is more backend loaded within the quarter and throughout the year, good traction and overachievement in our subscription program including the continuous trend of the SmartDefense sales. With that said, we are still working very hard to drive the growth of new installation with a variety of solutions available as part of our Unified Security Architecture. So this quarter, we are planning a significant change with the rollout of our next version of our core products, VPN-1 NGX. The new VPN-1 NGX line will include significant changes -- the technology and to the way it’s being offered in package. We will elevate the features and functions available to different types of users, we will continue to increase the level of security, continue to expand the unified management capabilities with more integration of endpoint securities, and we will increase the level of performance that certain products can deliver. We expect that these changes will drive a lot of activity in the marketplace during the second quarter and will drive the agenda for Check Point experience conferences that will take place between mid-May and the beginning of June. We also continue to develop our IPS capabilities and while our decision to withdraw the Sourcefire transaction, which will have some impact on the progress we make in that space, we’ll continue to pursue partnership options with Sourcefire and enjoy great success with our unique IPS capabilities as evidenced by increasing sales success with our SmartDefense offering. While it continues to be difficult to predict the market takeoff for the IP market in general and the security space in particular, our sales force continues to be optimistic about the prospects of the year. We already provided updated revenue and earnings forecast for the year and now we have some outlook into the second quarter. We expect the second quarter revenues to be in the range of $137 to $145 million, GAAP EPS in the range of $0.25 to $0.28, and non-GAAP EPS excluding the effects of stock-based compensation and acquisition-related charges to be in the range of $0.31 to $0.34. That concludes my comments and with that I’d like to open the call for your questions.

Thank you. At this time, if you wish to ask a question, please press “*” and then “1” on your telephone keypad. Your first question is coming from Gregg Moskowitz of Susquehanna Financial Group.

Okay thank you very much. Good morning or good afternoon gentleman. Maybe if we can start on the guidance now that we have a little bit of a better framework for the second quarter. To get, I guess, to the mid-to-high end of the revenue where the EPS ranged for the full year, it does imply a pretty significant second half ramp. I was just wondering if you can talk about what drives that growth and helps you to kind to get to that potential mid-to-high end of that range.

I think it’s a little bit early to give specific breakdown of things in third and mainly fourth quarter of the year. But that’s why I said in my comments and as we’ve seen previously, we are working on larger projects, we are working with more sophisticated architectures and installations, and the market as a whole tends to be more backend loaded. Last year, we had a very, very strong fourth quarter. This year, the trend seems to be heading in the same direction, which means again, as I said, both quarters are backend loaded within the quarter but even more so backend loaded towards the year end. So, I think that’s the general trend that we are seeing.

Okay and then historically, Gil, I know that a number of the EBS renewals typically end up falling into the first quarter instead of the fourth quarter, was the renewal activity this quarter that you saw typical to prior first quarters or was there any change there?

The renewal activity that we saw was typical to the quarter. We had a great fourth quarter. I think in the first quarter our deferred revenue grew by about $9 million. In the fourth quarter, deferred revenue grew by some $20 million, about $24 million I think. That shows you the impact of the fourth quarter and how big it is compared to any other quarter.

Okay and then maybe just lastly a question for Eyal, looking at Asia-Pacific, it sounds like you’re fairly please overall, although revenues were still down, I think, about 14% sequentially, 17% annually, I know that’s probably due to the weakness in Japan, just wondering if you could talk about how big roughly at this point Japan is as a percentage of total Asia-Pacific revenues, and when do you think we might see some improvement in that region?

We have never broken down Japan and Asia-Pacific area given that this is one number, but your assessment is right. While we are seeing very good results in our management replacement and realignment that we’ve done in Asia-Pacific, we’re seeing very nice traction mostly in China, in India, in Australia, and other parts of Asia. Japan hasn’t come to that phase yet and we’re working very hard to get Japan up and running as fast as the rate of Asia for us, so I think we are going to see the results pretty soon. But the assessment is correct, Asia in general was very strong, Japan was soft, the overall result for Asia was okay, but can’t be looked at as one unit.

Thank you, your next question is coming from Sarah Frier of Goldman Sachs.

Good morning guys, thanks for taking our questions, just a couple of questions. Firstly, I think on the preliminary call we had asked whether the softness was large customers, midsized, and small customers, and you hadn’t really had a chance to parse through the results at that point in time, was there anything that particularly stood out in terms of where softness came from in the quarter?

I don’t think so. I think that we can highlight one particular area as you saw. The average revenues coming from the large deals were 26%, which was higher than last year, so it’s not that large customers or small customers. We’ve looked at the geographical areas and we definitely could see some areas that were strong. The US is doing very well by our comparison. So, it’s an average, it’s not something that really stands out that we could put our finger on and say that here’s a major problem; there isn’t.

Got it, thank you for the kind of walking through the change of why subscription is stronger for you guys with the EBS program and so on, but I think on the preliminary call you talked about the contribution from SmartDefense in the subscription line, we know around $10 million this quarter, and I would presume that is pretty nicely from a year ago, but I guess the question is underneath SmartDefense does that mean that subscription revenues is in decline when I axe out SmartDefense or how should we be thinking about that on a year-over-year basis, is that also being impacted by some of that linearity that Gil talked to?

SmartDefense is not yet $1 million a quarter but I think heading there. I don’t have the specific numbers…and in revenues again remember it’s still not there because SmartDefense is also amortized. Those software subscription support programs in SmartDefense all grew year-over-year. So the trend is overall very positive and I think we made our plans on all those three elements in the first quarter.

Sorry we didn’t answer it correctly if you heard that all $10 million was SmartDefense based.

Okay got it, so it should be more thinking that it’s headed in that direction but also because it’s amortized it’s not that strong as a percentage of total revenue?

Subscription itself was well up also and has been.

Got it, and then just one final one on Zone Labs on the consumer side, I think you mentioned an increase in subscriptions from consumer in your preliminary comments. Again, could you talk a little bit about what’s going on there, you haven’t mentioned it so much recently, but is that still a strong area of focus for you?

Both the consumer products also have a subscription component and the new license component. What is important is that the amount of subscription and support attributed to consumer products percentage wise is higher than the regular enterprise product, and that’s important to note. The general consumer market is doing okay. We are selling more, we are winning a lot of awards, and we are pleased with the progress that we make there as well.

Okay great, thanks for your help.

Thank you, your next question is coming from Steve Mahedy of Banc of America.

Thank you. My first question would be for Jerry where you mentioned packaging, positioning, pricing, and promotion. Can you give us maybe a little more detail — it sounds like some of that is in the work — but specifically how that would have an impact in kind of reenergizing top line opportunity?

Steve, I’d love to but I can’t pre-announce it yet, but it’s going to be coming out very, very soon. We are looking across the board at all of the products, the positioning, where we stand relative to the market, working with our resellers, some of the insights we had as to where the slowness is coming from and why some of the delays in implementing some of these big projects we’re working on, and we just think we can be more proactive in a number of different elements, and like I said, we touched on the four P’s -- packaging, pricing, promotions, and positioning, and we’ve done a lot of work over the last three weeks on that. As you know, we’re doing work on it again this week, but I think we’ll be announcing a variety of things over time but some coming fairly soon, but I think we’ll help stimulate both the resellers and the customers and hopefully try to shorten their decision cycle from the purchasing.

Okay, when you look at that and you think about the various growth rates for the Firewall VPN versus perhaps authentication, what it is that you could do on the distribution side or is it still more a function of the technology on the product side that’s going forward?

I don’t know if I understand the last part about it with the technology side…

Well, is it the product backlog that eventually really makes the difference or is it the current product offering that you have and just doing a better job of communicating and educating the end-user market?

I think it is the technology we have today and how people can transition to it along with some of what Gil said in his comments about coming out with some new versions, some new pricing that we’re going to do with the whole VPN-1 NGX line that I think will help our partners get our customers there sooner rather than later by making it easier and more attractive for them, but I think we have the products and technologies in place today, and that’s why we’re looking at how we can better position it.

Just one followup question relative to Gregg’s initial question on the backend ramp and Gil has noted that more so with customers, how should we look at this September quarter now if we have upped June’s quarter slightly? You know, last year we saw a down September quarter, what’s the expectation relative to some of your modeling what the September quarter would look like perhaps relative to June?

I think it’s hard to predict right now, but I wouldn’t predict a strong third quarter. The third quarter tends to be slow, and again maybe if we get into the third quarter we’ll have different assessments, but at this point without knowing much we don’t anticipate very strong third quarter numbers.

Okay, thanks for the questions.

Thank you. We do ask that you please limit yourself to one question. Your next question is coming from Dino Diana of UBS.

Hi, thank you. Can you remind us first on the EBS guide, what percentage of your customers are under contract, and also can you just give us some color if you talk about kind of…when you have a customer that before wasn’t on the EBS program, if he took four years to upgrade, are you seeing anything in terms of that now your product update is maybe three years, or is there any kind of vectors you could provide along that front?

In terms of our installed base, over 70% of our install base is under subscription, and what we’ve seen — I think Jerry mentioned that in his talk — a consistent trend, it’s is not a revolution. It’s a revolution of customers that used to come every three or four years and buy an upgrade to the version that they were using, moving to EBS program and doing upgrades to their free upgrade rights that come with that program. That’s the trend that we are seeing and as a result of that there is a move from product revenues that used to appear when that was purchased into the EBS where upgrades are being done by using the service.

Okay, I have one other question separately. If you just look at your guidance for the full year and look at software subscriptions close to the double digit range, that implies license gross I guess of 9% or so, can you give us some sense of…I think you mentioned in your comments you’re looking to get license revenue back to growth, and can you just kind of give us some understanding, is it going to be NGX that does that, what are the things that you look for that’s really going to get you there?

I think there are several things that are going to help us grow with that. I mean first let’s not forget the general market trend. If people are going to deploy more Internet security, if people are going to connect more to the Internet, I think that’s the most important factor that we’ve seen over the last few quarters, maybe more than even few quarters, but I think that’s the main thing that we are dependent on and we spent a lot of time recently analyzing the general industry trend, and that is roughly speaking is the general industry trend. Even with that, we are trying to obviously do more regardless of the industry trend, to be better than just being industry averages. I think the first new versions and new product lines that we’re going to do in our core product line are going to cause more people to buy those and upgrade to those, and that’s going to be helpful. I think we’re still seeing a lot of interest and a lot of evaluation of some of our emerging products from the endpoint product going to our InterSpect internal security product and through XL VPN, Connectra, Eventia for security event management, the entire portfolio that we have, there’s a lot of activity, so that’s another area. And Jerry I think touched about the most important point and that’s the point product implementation, which goes into the factor about companies that are more and more deploying overall security strategies, and I think right now we’re very uniquely positioned to deliver overall. I don’t think that there’s any other competitor that has a fully integrated security systems that works together, that’s based on the same architecture, that’s focused on it, and that’s a very unique value proposition that Check Point has. I think that would be long term, that’s going to be the primary driver for our growth compared to the rest of the industry.

Thank you, your next question is coming from Chris Hovis of Morgan and Keegan. Chris Hovis, Morgan, Keegan & Company: Good morning, this is actually Fenobe. A quick question on the cash balance, obviously looking very attractive, any further plans that you can share with us in terms of uses of cash, any thoughts on divided or potentially increasing the buyback or other acquisitions?

Over the past two and half years we spent between $600 to $700 million in valued cash activities, some of it in acquisitions, most of it in stock buybacks, and we intend to continue in all those things. There’s nothing particular right now that I can update you on, except that we will continue every quarter to look at the options in all these areas and we’ll continue to use our cash in certain ways. But I think we’ve done a lot over the last two years in utilizing our cash and we intend to continue to do so. Chris Hovis, Morgan, Keegan & Company: Okay, thanks.

Thank you, your next question is coming from Eric Suppiger of Pacific Growth.

Good morning, good afternoon. First off, can you just comment about the Nokia relationship, how that is progressing? Then secondly, any comments in terms of Europe where you saw any pronounced weakness or anything like that?

Regarding Nokia, things are working great with Nokia. We have a good relationship with them, and the mix of our client’s platform continues to be an appliance platform. The mix of our platforms continues to be very balanced between open servers, Nokia systems, systems from Crossbeam, systems from other vendors, but Nokia is clearly the largest client partner that we have today. We are involved doing some very interesting and advanced projects with Nokia. Unfortunately, I cannot share any of those at this point, but there are more interesting and exciting projects that we are doing with Nokia. Regarding Europe, I think what we saw in the first quarter in Europe was sort of an average quarter. I think the US and Asia-Pacific did better than Europe this quarter, but there was nothing major happening in Europe for good or for bad so far.

No country stood out?

No country stood out in a major way.

What contribution was Nokia in terms of…I know you don’t sell directly to them, but you have a sense for how much of your appliance-based revenues would have been on Nokia platforms?

Between 25% and 30% of our gateways are currently being sold in conjunction with the Nokia appliance.

Very good, thank you.

It’s not necessarily translating one to one to revenues but in sort of the gateways that we said.

Thank you, your next question is coming from Todd Raker of Deutsche Bank.

Hey guys, a question, you said that the Sourcefire transactions are going to move into a partnership, what does that mean and how you guys are going to work with Sourcefire going forward? Secondly, can you just comment more broadly in terms of your ability to acquire US-based companies? Do you think there’s any constraint on that given the political environment?

I don’t think that there’s any constraint on our ability to acquire US-based companies, and we’ve actually developed good relationships with certain agencies of the US government, so we know better how to address many of the issues and how to work these things out better. We also don’t have yet the new partnership or what it will be if at all we have a partnership with Sourcefire, but we remain in good terms with Sourcefire. We are starting to work together to evaluate the different options for partnership, and hopefully within the coming weeks and months we’ll be able to announce more about that.

Alright and then one followup question, what do you guys feel is the right amount of cash to maintain on your balance sheet, what point in time does it become too much?

I don’t think there’s too little or too much at this point; there’s too little of course but I don’t think we’re heading in that direction and I don’t think there’s too much. I think that at any given point we are evaluating what’s the best use and what’s a reasonable use, because it’s not just to determine today that a certain amount is the right amount and get there within a month. It also comes down to how much we can get there. Let’s say if we want to invest a lot of acquisition, we have to find quality companies that will fit our portfolio to invest in; the same thing in stock buyback. We have to do it under certain rates and terms and we have a lot of responsibility to all the shareholders about how slowly or how quickly we do things, so I don’t have any number in mind that gives the right amount given the point that we are today.

Thank you. Your last question is coming from Katherine Egbert of Jefferies.

Hi, good morning, thanks for taking my question, just a followup on an earlier question. Can you maybe talk about your ability to acquire maybe not just in the US but to any company that sells into the US Federal Government? Then also to followup on the use of cash question, can you just talk about…you’re increasing your cash balance somewhere between 5% and 10% a quarter and the buyback program doesn’t exactly match that, would there be any staging of the buyback programs to maybe match the cash generation in the interim until you find sort of opportune uses for that?

Let’s start with the first question. We sell a lot to the US Federal Government and I don’t think, as I said, that we have too many restrictions in terms of dealing or acquisitions in that regard. As far as the cash balance goes, as I said, we’ll continue to evaluate that, we’ll continue this quarter, and if we have any different announcement to make about the usage of cash balances we will. This quarter we did intend to spend approximately $200 million on acquisition, which didn’t happen as you know, so that’s the effect of having slightly higher cash balance that we could anticipate.

Okay, can you just talk briefly about how much is left in your current buyback program?

Right now, from the last time that our board approved the program, we had about $50 million available.

Was that 50, five zero?

Yes.

Any plans to increase that?

We might, I mean the board will discuss that and unfortunately we cannot speak on behalf of the board at this point, but once the board decides to announce something we will share it with all of you.

Thanks.

I’d like to thank everyone for your participation. If you want to speak to management or to our Investor Relations Department following this call, please call our Investor Relations Department in Redwood City at 650-628-2050; again 650-628-2050, and we will be very happy to take your calls and answer them. Thank you very much and we’ll talk to you next time.

Thank you.

Thanks everyone.

Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day.